EXHIBIT 4
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UNDERWRITING AGREEMENT
July 11, 2005
Harvest Energy Trust
Harvest Operations Corp.
#▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, President
Dear Sirs:
Re: Offering of Subscription Receipts and 6.5% Convertible Extendible
Unsecured Subordinated Debentures of Harvest Energy Trust
1. Proposed Offering
National Bank Financial Inc., TD Securities Inc., CIBC World Markets
Inc., Scotia Capital Inc., Canaccord Capital Corporation, GMP Securities Ltd.,
FirstEnergy Capital Corp., Tristone Capital Inc., ▇▇▇▇▇▇▇ Securities Inc. and
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd. (collectively, the "Underwriters") understand that Harvest
Energy Trust (the "Trust") proposes to issue and sell 6,505,600 Subscription
Receipts (as defined herein) (the "Offered Receipts") and 75,000 Debentures (as
defined herein) (the "Offered Debentures") with a face value of $1,000 principal
amount per Offered Debenture, a coupon of 6.5% per annum, payable semi-annually
in arrears on June 30 and December 31 of each year commencing December 31, 2005.
Each Subscription Receipt will entitle the holder either:
(a) if the closing of the Acquisition (as defined herein) takes
place by 5:00 p.m. (Calgary time) on September 30, 2005, to
receive one Trust Unit (as defined herein), together with the
Special Interest (as defined herein), if applicable, without
payment of additional consideration or further action,
forthwith upon the closing of the Acquisition; or
(b) if the closing of the Acquisition does not take place by 5:00
p.m. (Calgary time) on September 30, 2005, the Acquisition is
terminated at any earlier time or the Trust has advised the
Underwriters or announced to the public that it does not
intend to proceed with the Acquisition (in any case, the
"Termination Time"), to have the full purchase price of the
Subscription Receipts returned, plus the pro rata portion of
the interest earned by the Escrow Agent (as defined herein) on
such funds, calculated from the Closing Date to and including
the Termination Time.
If the closing of the Acquisition takes place by the Termination Time,
the Offered Debentures shall be convertible into Trust Units (as defined herein)
at a conversion price of $31.00 per Trust Unit at any time prior to the earlier
of the close of business on the date on which the Offered Debentures mature (the
"Maturity Date") and the business day immediately preceding the date\
specified by the Trust for redemption of the Offered Debentures, subject to
adjustment in certain circumstances, and shall otherwise have such attributes as
are described in the Prospectus (as defined herein).
If closing of the Acquisition does not take place by the Termination
Time, the Maturity Date will be September 30, 2005 (the "Initial Maturity
Date"). Upon the closing of the Acquisition, the Maturity Date will be
automatically extended to December 31, 2010 (the "Final Maturity Date").
Subject to the terms and conditions hereof, the Underwriters hereby
severally, and not jointly, agree to purchase from the Trust the Offered
Receipts and the Offered Debentures at the Closing Time (as defined herein) in
the respective percentages set forth in paragraph 19 hereof, and the Trust
hereby agrees to issue and sell to the Underwriters at the Closing Time all, but
not less than all, of the Offered Receipts and the Offered Debentures at the
purchase price of $26.90 per Subscription Receipt and $1,000 per Offered
Debenture, for an aggregate purchase price of $250,000,640.
2. Definitions
In this agreement:
(a) "8% Debentures" means the 8% convertible unsecured
subordinated debentures of the Trust;
(b) "8% Debenture Indenture Supplement" means the supplement to
the 9% Debenture Trust Indenture dated July 30, 2004 governing
the terms of the 8% Debentures;
(c) "9% Debentures" means the 9% convertible unsecured
subordinated debentures of the Trust;
(d) "9% Debenture Trust Indenture" means the trust indenture dated
January 29, 2004 among the Trust, Harvest and Valiant Trust
Company governing the terms and conditions of the 9%
Debentures;
(e) "ABCA" means the BUSINESS CORPORATIONS ACT (Alberta), R.S.A.
2000, c. B-9, as amended, including the regulations
promulgated thereunder;
(f) "Acquisition" means the acquisition by HBT1 and HBT2 of the
New Properties pursuant to the Acquisition Agreement;
(g) "Acquisition Agreement" means the partnership interest
purchase and sale agreement dated June 24, 2005 between the
Vendor, as vendor, and HBT1 and HBT2, as purchasers;
(h) "AIF" means the renewal annual information form of the Trust
dated March 30, 2005;
(i) "Applicable Securities Laws" means all applicable Canadian
securities, corporate and other laws, rules, regulations,
notices and policies in the Qualifying Provinces;
(j) "ASC" means the Alberta Securities Commission;
(k) "BRP" means Breeze Resources Partnership, a general
partnership formed under the laws of Alberta;
(l) "Business Day" means a day which is not Saturday or Sunday or
a legal holiday in the City of Calgary, Alberta;
(m) "Closing Date" means August 2, 2005 or such other date as the
parties hereto may agree, but in any event, not later than
August 25, 2005;
(n) "Closing Time" means 6:30 a.m. (Calgary time) or such other
time, on the Closing Date, as the Underwriters and the Trust
may agree;
(o) "Debenture Trust Indenture" means, collectively, the 9%
Debenture Trust Indenture as supplemented by the 8% Debenture
Indenture Supplement and the supplemental indenture thereto to
be dated on or before the Closing Date between the Trust and
Valiant Trust Company, governing the terms and conditions of
the Offered Debentures;
(p) "Debentures" means the 6.5% convertible extendible unsecured
subordinated debentures of the Trust having the rights and
entitlements set forth in this agreement and otherwise as
being provided in the supplemental indenture governing the
terms and conditions of the Offered Debentures to be dated on
or before the Closing Date;
(q) "distribution" means "distribution" or "distribution to the
public", as the case may be, as defined under the Applicable
Securities Laws and "distribute" has a corresponding meaning;
(r) "Documents" means, collectively, the documents
incorporated by reference in the Prospectuses and any
Supplementary Material including, without limitation:
(i) the AIF;
(ii) the Trust Financial Statements;
(iii) the Information Circular - Proxy Statement of the Trust
dated March 16, 2005 in connection with the annual and special
meeting of unitholders of the Trust held on May 4, 2005
(excluding those portions thereof which, pursuant to NI
44-101, are not required to be incorporated by reference in
the Prospectuses);
(iv) the Storm Financial Statements;
(v) the EnCana Financial Statements; and
(vi) the material change reports of the Trust subsequent to
December 31, 2004;
(s) "Due Diligence Session" means, collectively, the management
due diligence session to be held with the Underwriters prior
to the filing of the Preliminary Prospectus, together with any
updates or bring-down sessions held prior to the Closing Time;
(t) "Engineers" means collectively, ▇▇▇▇▇▇▇▇, GLJ and Paddock;
(u) "EnCana Financial Statements" means, collectively, (i) the
audited schedule of revenues, royalties and expenses of the
EnCana Properties for the years ended December 31, 2003 and
2002, (ii) the unaudited interim schedule of revenues,
royalties and expenses of the EnCana Properties for the six
month period ended June 30, 2004, which financial statements
are attached to the Exchange Offer Prospectus;
(v) "EnCana Properties' auditors" means PricewaterhouseCoopers
LLP, chartered accountants, Calgary, Alberta;
(w) "EnCana Properties" means the petroleum and natural gas
properties and related assets indirectly acquired by HBT1 and
HBT2 from a subsidiary of EnCana Corporation on September 2,
2004;
(x) "Escrow Agent" means Valiant Trust Company in its capacity as
escrow agent pursuant to the Subscription Receipt Agreement;
(y) "Exchange" means the Toronto Stock Exchange;
(z) "Exchange Offer Prospectus" means the short form prospectus of
Harvest dated January 10, 2005 in respect of an exchange offer
for the then-outstanding 7(7)/8 % senior notes of Harvest due
2011, unconditionally guaranteed by the Trust;
(aa) "GLJ" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ Associates Ltd., independent
petroleum consultants of Calgary, Alberta;
(bb) "Harvest" means Harvest Operations Corp., a corporation
amalgamated pursuant to
the ABCA and a wholly-owned subsidiary of the Trust;
(cc) "HBT1" means Harvest Breeze Trust No. 1, a trust established
pursuant to the laws of Alberta and which is a wholly-owned
subsidiary of HST;
(dd) "HBT2" means Harvest Breeze Trust No. 2, a trust established
pursuant to the laws of Alberta and which is a wholly-owned
subsidiary of the Trust;
(ee) "Harvest Exchangeable Shares" means exchangeable shares,
series 1 of Harvest;
(ff) "HST" means Harvest Sask Energy Trust, a trust established
under the laws of the Province of Alberta and a wholly-owned
subsidiary of the Trust;
(gg) "Material Agreements" means, collectively, the Acquisition
Agreement, the Trust Indenture, the Subscription Receipt
Agreement, the Debenture Trust Indenture, the Administration
Agreement, the Voting Trust Agreement and the NPI Agreements;
(hh) "material change", "material fact" and "misrepresentation"
shall have the meanings ascribed thereto under the Applicable
Securities Laws;
(ii) "▇▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇▇ & Associates Consultants Ltd.,
independent oil and natural gas reservoir engineers, Calgary,
Alberta;
(jj) "MRRS Procedures" means the mutual reliance review system and
procedures provided for by National Policy 43-201 of the
Canadian Securities Administrators relating to the Mutual
Reliance Review System, as amended or replaced;
(kk) "New Properties" means the petroleum and natural gas
properties and related assets owned by the Vendor that HBT1
and HBT2 will own following completing of the Acquisition;
(ll) "New Properties' auditors" means Deloitte & Touche LLP,
chartered accountants, Calgary, Alberta;
(mm) "New Properties Financial Statements" means, collectively, (i)
the audited schedule of revenues, royalties and operating
expenses for the New Properties for each of the years ended
December 31, 2004 and 2003, together with the report of the
New Properties' auditors thereon and notes thereto, and (ii)
the unaudited interim schedule of revenues, royalties and
operating expenses for the New Properties for the three month
period ended March 31, 2005, together with the notes thereto;
(nn) "NI 44-101" means National Instrument 44-101 of the Canadian
Securities Administrators, as amended or replaced;
(oo) "Offered Securities" means, collectively, the Offered Receipts
and the Offered Debentures;
(pp) "Operating Subsidiaries" means, collectively, Harvest, HST,
Red Earth Energy Inc.,
Red Earth Partnership, BRP, HBT1 and HBT2 and "Operating
Subsidiary" means any of the Corporation, HST, Red Earth
Energy Inc., Red Earth Partnership, BRP, HBT1 or HBT2;
(qq) "Paddock" means Paddock ▇▇▇▇▇▇▇▇▇ & Associates Ltd.,
independent petroleum consultants of Calgary, Alberta;
(rr) "Preliminary Prospectus" means the preliminary short form
prospectus of the Trust to be dated July 11, 2005 and any
amendments thereto, in respect of the distribution of the
Offered Securities, including the documents incorporated by
reference therein;
(ss) "Prospectus" means the (final) short form prospectus of the
Trust and any amendments thereto, in respect of the
distribution of the Offered Securities, including the
documents incorporated by reference therein;
(tt) "Prospectuses" means, collectively, the Preliminary Prospectus
and the Prospectus;
(uu) "Public Record" means all information filed by or on behalf of
the Trust and Harvest with the Securities Commissions,
including without limitation, the Documents, the Exchange
Offer Prospectus, the Prospectuses, any Supplementary Material
and any other information filed with any Securities Commission
in compliance, or intended compliance, with any Applicable
Securities Laws;
(vv) "Qualifying Provinces" means each of the provinces of Canada
other than Quebec;
(ww) "Reserve Report" means the independent engineering evaluation
dated January 1, 2005 of the oil and natural gas reserves of
the Operating Subsidiaries as at December 31, 2004 conducted
by the Engineers on behalf of the Trust;
(xx) "Securities Commissions" means the securities commissions or
similar regulatory authorities in the Qualifying Provinces;
(yy) "Selling Dealer Group" means the dealers and brokers other
than the Underwriters who participate in the offer and sale of
the Offered Securities pursuant to this agreement;
(zz) "Special Interest" means an amount per Subscription Receipt
equal to the amount per Trust Unit of any cash distributions
on the Trust Units for which record dates have occurred during
the period from the Closing Date to and including the date
immediately preceding the date the Trust Units are issued
pursuant to the Subscription Receipts;
(aaa) "▇▇▇▇▇▇▇ Report" means, the independent engineering
evaluations dated March 31, 2005 of the oil and natural gas
reserves associated with the New Properties as at March 31,
2005 conducted by ▇▇▇▇▇▇▇ on behalf of the Vendor;
(bbb) "Storm" means Storm Energy Ltd., a corporation incorporated
under the ABCA and amalgamated with Harvest on June 30, 2004
pursuant to the Storm Arrangement;
(ccc) "Storm Arrangement" means the arrangement under the provisions
of Section 193 of the ABCA involving Storm, Storm Exploration
Inc., the Trust and Harvest, on the terms and conditions set
forth in the Plan of Arrangement pursuant to which,
inter-alia, all shares of Storm were transferred to Harvest
and Storm became a wholly-owned subsidiary of Harvest;
(ddd) "Storm Financial Statements" means, collectively, (i) the
audited comparative consolidated financial statements of Storm
for the year ended December 31, 2003, together with the report
of Storm's auditors thereon and the notes thereto, and (ii)
the unaudited interim comparative consolidated financial
statements of Storm as at and for the three months ended March
31, 2004, together with the notes thereto, which financial
statements are attached to the Exchange Offer Prospectus;
(eee) "Storm's auditors" means Deloitte & Touche LLP, chartered
accountants, Calgary, Alberta;
(fff) "Subscription Receipt Agreement" means the agreement to be
dated the Closing Date and made between the Trust, the
Underwriters and the Escrow Agent governing the terms and
conditions of the Subscription Receipts;
(ggg) "Subscription Receipts" means the subscription receipts having
the rights and entitlements set forth in this agreement and
otherwise being as provided in the Subscription Receipt
Agreement;
(hhh) "subsidiary" has the meaning assigned thereto in the ABCA and,
in respect of the Trust includes the Operating Subsidiaries;
(iii) "Supplementary Material" means, collectively, any amendment to
the Preliminary Prospectus or Prospectus, any amended or
supplemented Preliminary Prospectus or Prospectus or any
ancillary material, information, evidence, return, report,
application, statement or document which may be filed by or on
behalf of the Trust under the Applicable Securities Laws;
(jjj) "Tax Act" means the Income Tax Act (Canada) and the
regulations thereunder;
(kkk) "Trust Assets" means, collectively, the Direct Royalties, the
NPI, the Subsequent Investments (as defined in the Trust
Indenture), the Permitted Investments (as defined in the Trust
Indenture) and cash;
(lll) "Trust Financial Statements" means, collectively:
(i) the audited comparative consolidated financial
statements of the Trust as at and for the years ended
December 31, 2004 and 2003, together with the report
of the Trust's auditors thereon and the notes thereto
and management's discussion and analysis of the
financial condition and results of operations of the
Trust for the year ended December 31, 2004;
(ii) the unaudited interim comparative consolidated
financial statements of the Trust as at and for the
three month periods ended March 31, 2005 and 2004,
together with the notes thereto and management's
discussion and analysis of the financial condition
and results of operations of the Trust for the three
months ended March 31, 2005;
(mmm) "Trust Indenture" means the Amended and Restated Trust
Indenture dated January 1, 2004 pursuant to which the Trust
has been established, as such indenture may be further amended
by supplemental indentures from time to time;
(nnn) "Trust Units" means units of the Trust, each unit representing
an equal fractional undivided beneficial interest in the
Trust;
(ooo) "Trust's auditors" means KPMG LLP, chartered accountants,
Calgary, Alberta;
(ppp) "Trust's counsel" means Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP or such
other legal counsel as the Trust, with the consent of the
Underwriters, may appoint;
(qqq) "Trustee" means Valiant Trust Company and its successors, as
trustee of the Trust;
(rrr) "U.S. Memorandum" means the U.S. Private Placement Memorandum
and any amendments thereto, to be attached to all copies of
the Prospectus to be delivered in connection with the offer
and sale of the Offered Securities in the United States and
referred to in Schedule "A" hereto;
(sss) "Underwriters' counsel" means Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP or
such other legal counsel as the Underwriters, with the consent
of the Trust may appoint;
(ttt) "Unitholders" means the holders from time to time of Trust
Units;
(uuu) "Vendor" means Nexen Inc. and certain corporations and
partnerships controlled by it; and
(vvv) "Voting Trust Agreement" means the voting and exchange trust
agreement dated June 30, 2004 among the Trust, Harvest
Exchangeco Ltd. and Valiant Trust Company, as trustee.
In addition, unless otherwise defined herein capitalized terms shall
have the meanings ascribed thereto in the Prospectuses.
3. Underwriting Fee
In consideration for their services in underwriting the distribution of
and purchasing the Offered Securities, the Trust agrees to pay the Underwriters:
(a) at the Closing Time a fee of $0.6725 per Offered Receipt
for each Offered Receipt purchased and $40 per Offered
Debenture (being an aggregate amount of $7,375,016; and
(b) at the time of release of the funds held by the Escrow Agent
to the Trust pursuant to the Subscription Receipt Agreement,
if applicable, a fee of $0.6725 per Offered Receipt purchased
(being an aggregate amount of $4,375,016), payable from the
funds
held by the Escrow Agent pursuant to the Subscription Receipt
Agreement.
The foregoing fees (collectively, the "Underwriting Fee") may, at the
sole option of the Underwriters, be deducted from the aggregate gross proceeds
of the sale of the Offered Securities and withheld for the account of the
Underwriters. For greater certainty, the services provided by the Underwriters
in connection herewith will not be subject to the Goods and Services Tax
provided for in the EXCISE TAX ACT (Canada) and taxable supplies provided will
be incidental to the exempt financial services provided. However, in the event
that Revenue Canada, Taxation, Customs and Excise determines that Goods and
Services Tax provided for in the EXCISE TAX ACT (Canada) is exigible on the
Underwriting Fee, the Trust agrees to pay the amount of Goods and Services Tax
forthwith upon the request of the Underwriters. The Trust also agrees to pay the
Underwriters' expenses as set forth in paragraph 11 hereof.
4. Qualification for Sale
(a) The Trust represents and warrants to the Underwriters that it
is eligible to use the prompt offering qualification system
described in NI 44-101 for the distribution of the Offered
Securities.
(b) The Trust shall:
(i) not later than 5:00 p.m. (Calgary time) on July 11,
2005, have prepared and filed the Preliminary
Prospectus and other documents required under the
Applicable Securities Laws with the Securities
Commissions and designated the ASC as the principal
regulator; and
(ii) have obtained from the ASC a preliminary MRRS
decision document dated not later than July 11, 2005,
evidencing that a receipt has been issued for the
Preliminary Prospectus in each Qualifying Province;
(iii) forthwith after any comments with respect to the
Preliminary Prospectus have been received from the
Securities Commissions:
(A) but not later than July 20, 2005 (or such
later date as may be agreed to in writing by
the Trust, Harvest and the Underwriters),
have prepared and filed the Prospectus and
other documents required under the
Applicable Securities Laws with the
Securities Commissions; and
(B) have obtained from the ASC a final MRRS
decision document dated not later than July
20, 2005 (or such later date as may be
agreed to in writing by the Trust, Harvest
and the Underwriters), evidencing that a
receipt has been issued for the Prospectus
in each Qualifying Province, or otherwise
obtained a receipt for the Prospectus from
each of the Securities Commissions;
and otherwise fulfilled all legal requirements to enable the Offered
Securities to be offered and sold to the public in each of the
Qualifying Provinces through the Underwriters or any other investment
dealer or broker registered in the applicable Qualifying Province;
and
(iv) until the completion of the distribution of the
Offered Securities, promptly take all additional
steps and proceedings that from time to time may be
required under the Applicable Securities Laws in each
Qualifying Province to continue to qualify the
Offered Securities for distribution or, in the event
that the Offered
Securities have, for any reason, ceased to so
qualify, to again qualify the Offered Securities for
distribution and to ensure the Trust Units issuable
pursuant to the Offered Receipts are freely tradeable
in the Qualifying Provinces, save and except for a
trade that is a control distribution.
(c) Prior to the filing of the Prospectuses and, during the period
of distribution of the Offered Securities, prior to the filing
with any Securities Commissions of any Supplementary Material,
the Trust shall have allowed the Underwriters and the
Underwriters' counsel to participate fully in the preparation
of, and to approve the form of, such documents (including,
without limitation the U.S. Memorandum) and to have reviewed
any documents incorporated by reference therein.
(d) During the period from the date hereof until completion of the
distribution of the Offered Securities, the Trust shall allow
the Underwriters to conduct all due diligence which they may
reasonably require in order to fulfil their obligations as
underwriters and in order to enable the Underwriters
responsibly to execute the certificates required to be
executed by them in the Prospectuses or in any Supplementary
Material.
(e) The Trust shall take or cause to be taken all such other steps
and proceedings, including fulfilling all legal, regulatory
and other requirements, as required under Applicable
Securities Laws to qualify the Offered Securities for
distribution to the public in the Qualifying Provinces, to
ensure that Trust Units issuable pursuant to the Offered
Receipts are freely tradeable in the Qualifying Provinces,
save and except for a trade that is a control distribution,
and to qualify the Offered Securities for sale in transactions
exempt from registration under the United States SECURITIES
ACT OF 1933 (the "U.S. Act") and on a "private placement"
basis in the United States and for sale internationally as
permitted by applicable laws.
5. Delivery of Prospectus and Related Documents
The Trust shall deliver or cause to be delivered without charge to the
Underwriters and the Underwriters' counsel the documents set out below at the
respective times indicated:
(a) prior to or contemporaneously, as nearly as practicable, with
the filing with the Securities Commissions of each of the
Preliminary Prospectus and the Prospectus:
(i) copies of the Preliminary Prospectus and the
Prospectus, signed as required by the Applicable
Securities Laws;
(ii) copies of the U.S. Memorandum if required by the
Underwriters; and
(iii) copies of any documents incorporated by reference
therein which have not previously been delivered
to the Underwriters;
as soon as they are available and in any event, not later than
one Business Day following the filing with the Securities
Commissions of the Preliminary Prospectus or the Prospectus,
as the case may be;
(b) as soon as they are available, copies of any Supplementary
Material, as required, signed as required by the Applicable
Securities Laws and including, in each case, copies of any
documents incorporated by reference therein which have not
been previously delivered to the Underwriters;
(c) prior to the filing of the Prospectus with the Securities
Commissions, a "comfort letter" from each of the Trust's
auditors, the New Properties' auditors, Storm's auditors and
the EnCana Properties' auditors, dated the date of the
Prospectus, addressed to the Underwriters and reasonably
satisfactory in form and substance to the Underwriters and the
Underwriters' counsel, to the effect that they have carried
out certain procedures performed for the purposes of comparing
certain specified financial information and percentages
appearing in the Prospectus and the documents incorporated
therein by reference with indicated amounts in the financial
statements or accounting records of the Trust, Harvest, the
New Properties, Storm and the EnCana Properties, as
applicable, and have found such information and percentages to
be in agreement, which comfort letter shall be based on the
Trust's auditors, the New Properties' auditors, Storm's
auditors and the EnCana Properties' auditors review having a
cut-off date of not more than two Business Days prior to the
date of the Prospectus;
Opinions and comfort letters similar to the foregoing shall be provided
to the Underwriters with respect to any Supplemental Material and any other
relevant document at the time the same is presented to the Underwriters for
their signature or, if the Underwriters' signature is not required, at the time
the same is filed. All such letters shall be in form and substance acceptable to
the Underwriters and the Underwriters' counsel, acting reasonably.
Such deliveries shall also constitute the Trust's consent to the use by
the Underwriters and other members of the Selling Dealer Group of the Documents,
the Prospectuses, the U.S. Memorandum and any Supplementary Material in
connection with the offering and sale of the Offered Securities.
6. Commercial Copies
(a) The Trust shall, as soon as possible but in any event not
later than noon (local time at the place of delivery) on the
Business Day following the date of the filing of the
Preliminary Prospectus or the Prospectus, as the case may be,
with the Securities Commissions and no later than noon (local
time) on the first Business Day after the execution of any
Supplementary Material in connection with the Prospectuses
cause to be delivered to the Underwriters, without charge,
commercial copies of the Preliminary Prospectus, the
Prospectus or such Supplementary Material in such numbers and
in such cities as the Underwriters may reasonably request by
oral or written instructions to the Trust or the printer
thereof given no later than the time when the Trust authorizes
the printing of the commercial copies of such documents.
(b) The Trust shall cause to be provided to the Underwriters such
number of copies of any documents incorporated by reference in
the Preliminary Prospectus, the Prospectus or
any Supplemental Materials as the Underwriters may reasonably
request.
7. Material Change
(a) During the period of distribution of the Offered Securities,
the Trust and Harvest will promptly inform the Underwriters of
the full particulars of:
(i) any material change (actual, anticipated or
threatened) in or affecting the business,
operations, revenues, capital, properties,
assets, liabilities (absolute, accrued,
contingent or otherwise), condition (financial or
otherwise) or results of operations of the Trust
and its subsidiaries, taken as a whole, or
affecting the ability of Harvest to manage the
Trust or the other Operating Subsidiaries;
(ii) any change in any material fact contained or
referred to in the Preliminary Prospectus, the
Prospectus or any Supplementary Material; and
(iii) the occurrence of a material fact or event which,
in any such case, is, or may be, of such a nature
as to:
(A) render the Preliminary Prospectus, the
Prospectus or any Supplementary Material
untrue, false or misleading in any material
respect;
(B) result in a misrepresentation in the
Preliminary Prospectus, the Prospectus or
any Supplementary Material; or
(C) result in the Preliminary Prospectus, the
Prospectus or any Supplementary Material not
complying in any material respect with the
Applicable Securities Laws,
provided that if the Trust or Harvest is uncertain as to whether a
material change, change, occurrence or event of the nature referred to
in this paragraph has occurred, the Trust and Harvest shall promptly
inform the Underwriters of the full particulars of the occurrence
giving rise to the uncertainty and shall consult with the Underwriters
as to whether the occurrence is of such nature.
(b) During the period of distribution of the Offered
Securities, the Trust and Harvest will promptly inform the
Underwriters of the full particulars of:
(i) any request of any Securities Commission for any
amendment to the Preliminary Prospectus, the
Prospectus or any other part of the Public Record or
for any additional information;
(ii) the issuance by any Securities Commission or similar
regulatory authority, the Exchange or any other
competent authority of any order to cease or suspend
trading of any securities of the Trust or Harvest or
of the institution or threat of institution of any
proceedings for that purpose; and
(iii) the receipt by the Trust or Harvest of any
communication from any
Securities Commission or similar regulatory
authority, the Exchange or any other competent
authority relating to the Preliminary Prospectus, the
Prospectus, any other part of the Public Record or
the distribution of the Offered Securities or the
Trust Units issuable pursuant to the Offered Receipts
or the Trust Units issuable on the conversion or
redemption of the Offered Debentures.
(c) The Trust and Harvest will promptly comply to
the reasonable satisfaction of the Underwriters and the
Underwriters' counsel with Applicable Securities Laws with
respect to any material change, change, occurrence or event of
the nature referred to in paragraphs 7(a) or 6(b) above and
the Trust and Harvest will prepare and file promptly at the
Underwriters' request any amendment to the Prospectus or
Supplementary Material as may be required under Applicable
Securities Laws; provided that the Trust and Harvest shall
have allowed the Underwriters and the Underwriters' counsel to
participate fully in the preparation of any Supplementary
Material, to have reviewed any other documents incorporated by
reference therein and conduct all due diligence investigations
which the Underwriters may reasonably require in order to
fulfill their obligations as underwriters and in order to
enable the Underwriters responsibly to execute the certificate
required to be executed by them in, or in connection with, any
Supplementary Material, such approval not to be unreasonably
withheld and to be provided in a timely manner. The Trust
shall further promptly deliver to each of the Underwriters and
the Underwriters' counsel a copy of each Supplementary
Material as filed with the Securities Commissions, and of
opinions and letters with respect to each such Supplementary
Material substantially similar to those referred to in
paragraph 5 above.
(d) During the period of distribution of the Offered Securities,
the Trust will promptly provide to the Underwriters, for
review by the Underwriters and the Underwriters' counsel,
prior to filing or issuance:
(i) any publicly released financial statement of the
Trust;
(ii) any proposed document, including without limitation
any amendment to the AIF, new annual information
form, material change report, interim report, or
information circular, which may be incorporated, or
deemed to be incorporated, by reference in the
Prospectus; and
(iii) any press release of the Trust.
8. Representations and Warranties of the Trust and Harvest
(a) Each delivery of the Preliminary Prospectus, the Prospectus
and any Supplementary Material pursuant to paragraph 5 above
shall constitute a joint and several representation and
warranty to the Underwriters by each of the Trust and Harvest
(and each of the Trust and Harvest hereby acknowledges that
each of the Underwriters is relying on such representations
and warranties in entering into this agreement) that:
(i) all of the information and statements (except
information and statements furnished by and relating
solely to the Underwriters) contained in the
Preliminary Prospectus, the Prospectus or any
Supplementary Material, as applicable, including,
without limitation, the documents incorporated by
reference, as the case may be:
(A) are at the respective dates of such
documents, true and correct in all material
respects;
(B) contain no misrepresentation; and
(C) constitute full, true and plain disclosure
of all material facts relating to the Trust
and its subsidiaries (taken as a whole) and
the Offered Securities;
(ii) the Preliminary Prospectus, the Prospectus, or any
Supplementary Material, as applicable, including,
without limitation, the documents incorporated by
reference, as the case may be, complies in all
material respects with the Applicable Securities
Laws, including without limitation NI 44-101; and
(iii) except as is disclosed in the Public Record, there
has been no intervening material change (actual,
proposed or prospective, whether financial or
otherwise), from the date of the Preliminary
Prospectus, the Prospectus and any Supplementary
Material to the time of delivery thereof, in the
business, operations, revenues, capital, properties,
assets, liabilities (absolute, accrued, contingent or
otherwise), condition (financial or otherwise) or
results of operations, or ownership of the Trust and
its subsidiaries, taken as a whole.
(b) In addition to the representations and warranties contained in
clause 8(a) hereof, each of the Trust and Harvest jointly and
severally represents and warrants to the Underwriters, and
acknowledges that each of the Underwriters is relying upon
such representations and warranties in entering into this
agreement that:
(i) the Trust has been properly created and organized and
is a valid and subsisting trust under the laws of the
Province of Alberta, having Valiant Trust Company as
its duly appointed trustee, and has all requisite
trust authority and power to carry on its business as
described in the Prospectuses including, without
limitation, to perform its obligations under the
Material Agreements to which it is a party and to own
and administer its properties and assets including,
without limitation, the Trust Assets;
(ii) each of the Operating Subsidiaries has been duly
incorporated or otherwise created, as applicable, and
organized and is valid and subsisting in good
standing under the laws of its jurisdiction of
incorporation or creation, as applicable, and has all
requisite corporate or trust authority, as
applicable, and power to carry on its business as
described in the Prospectuses and to own, lease and
operate its properties and assets as described in the
Prospectuses including, without limitation, to
perform its obligations under the Material Agreements
to which it is a party;
(iii) each of the Operating Subsidiaries is qualified to
carry on business and is
validly subsisting under the laws of each
jurisdiction in which it carries on its business and
the Trust is qualified to carry on its activities
including, without limitation, owning the Trust
Assets in each jurisdiction where it carries on such
activities;
(iv) except as described in the Prospectuses, neither the
Trust nor Harvest has any material subsidiaries and
neither the Trust nor Harvest is "affiliated" with or
a "holding corporation" of any body corporate (within
the meaning of those terms in the ABCA);
(v) the Trust is a "unit trust" and a "mutual fund trust"
under the Tax Act and the Trust shall at all times
conduct its affairs so as to continue to enable the
Trust to qualify as a "unit trust" and a "mutual fund
trust", including by limiting its activities to
investing the property of the Trust in the Trust
Assets and other property in which a "mutual fund
trust" is permitted by the Tax Act to invest, and
will not carry on any other business;
(vi) to the knowledge of the Trust and Harvest, after
reasonable inquiry, non-residents of Canada (as that
term is used in the Tax Act) do not beneficially own
more than 20% of the issued and outstanding Trust
Units;
(vii) all of the issued and outstanding shares and trust
units in the capital of each of the Operating
Subsidiaries, as applicable, are fully paid and
non-assessable and, other than the Harvest
Exchangeable Shares and the Red Earth Partnership,
legally and beneficially wholly-owned (directly or
indirectly) by the Trust free and clear of all
mortgages, liens, charges, pledges, security
interests, encumbrances, claims or demands whatsoever
(other than as provided in the credit facilities of
the Trust or Harvest and as described in the Trust
Financial Statements) and no person holds any
securities convertible into or exchangeable for
issued or unissued shares or trust units, as
applicable, of any of the Operating Subsidiaries or
has any agreement, warrant, option, right or
privilege (whether pre-emptive or contractual) being
or capable of becoming an agreement warrant, option
or right for the acquisition of any unissued or
issued securities of any of the Operating
Subsidiaries;
(viii) the Trust has full power and authority to issue the
Offered Receipts, the Offered Debentures, the Trust
Units issuable pursuant to the Offered Receipts and
the Trust Units issuable on the conversion or
redemption of the Offered Debentures and, at the
Closing Date (a) the Offered Receipts, the Offered
Debentures and the Trust Units issuable pursuant to
the Offered Receipts and the Trust Units issuable
upon conversion or redemption of the Offered
Debentures will be duly and validly authorized,
allotted and reserved for issuance in accordance with
the Subscription Receipt Agreement, the Debenture
Trust Indenture and the Trust Indenture, as
applicable, and, upon receipt of the purchase price
therefor, the Offered Receipts and the Offered
Debentures will be duly and validly
issued as fully paid and nonassessable, and (b) the
Trust Units issuable pursuant to the Offered Receipts
and the Trust Units issuable on the conversion or
redemption of the Offered Debentures will be duly and
validly authorized, allotted and reserved for
issuance, and upon the issuance of such Trust Units
in accordance with the terms of the Subscription
Receipt Agreement, the Debenture Trust Indenture and
the Trust Indenture, as applicable, such Trust Units
will be duly and validly issued as fully paid and
nonassessable;
(ix) none of the Trust or any Operating Subsidiary is in
default or breach of, and the execution and delivery
of, and the performance of and compliance with the
terms of this agreement, the Subscription Receipt
Agreement or the Debenture Trust Indenture by the
Trust and Harvest or any of the transactions
contemplated hereby or thereby does not and will not
result in any breach of, or constitute a default
under, and does not and will not create a state of
facts which, after notice or lapse of time or both,
would result in a breach of or constitute a default
under, (i) the Trust Indenture, (ii) any term or
provision of the articles, bylaws or constating
documents of the Trust or any Operating Subsidiary,
as applicable, (iii) any resolutions of the
unitholders or the directors (or any committee
thereof) or shareholders of the Trust or any
Operating Subsidiary, as applicable, (iv) any
indenture, mortgage, note, contract, agreement
(written or oral), instrument, lease or other
document including, without limitation, any Material
Agreement to which the Trust or any Operating
Subsidiary is a party or by which any of the Trust or
any Operating Subsidiary is bound, or (v) any
judgment decree, order, statute, rule or regulation
applicable to the Trust or any Operating Subsidiary,
which default or breach might reasonably be expected
to materially adversely affect the business,
operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise),
ownership or condition (financial or otherwise) or
results of operations of the Trust, Harvest and their
subsidiaries (taken as a whole);
(x) each of the Trust and Harvest has full trust or
corporate power and authority to enter into this
agreement, the Subscription Receipt Agreement and the
Debenture Trust Indenture, as the case may be, and to
perform its obligations set out herein and therein
and this agreement has been and, at the Closing Time,
the Subscription Receipt Agreement and the Debenture
Trust Indenture will be duly authorized, executed and
delivered by the Trust and Harvest, as the case may
be, and this agreement is and, at the Closing Time,
the Subscription Receipt Agreement and the Debenture
Trust Indenture will be a legal, valid and binding
obligation of the Trust and Harvest, as the case may
be, enforceable against the Trust and Harvest, as the
case may be, in accordance with its terms subject to
the general qualifications set forth in the opinion
of the Trust's counsel to be delivered pursuant to
paragraph 13(a)(viii);
(xi) there has not been any material change in the
capital, assets, liabilities or obligations
(absolute, accrued, contingent or otherwise) of the
Trust and the Operating Subsidiaries (taken as a
whole) from the position set forth in the Trust
Financial Statements except as contemplated by the
Prospectuses and the Public Record and there has not
been any adverse material change in the business,
operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise),
condition (financial or otherwise) or results of
operations of the Trust, Harvest and their
subsidiaries (taken as a whole) since March 31, 2005
except as disclosed in the Prospectuses and the
Public Record; and since that date there have been no
material facts, transactions, events or occurrences
which could materially adversely affect the business,
operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise),
condition (financial or otherwise) or results of
operations of the Trust, Harvest and their
subsidiaries (taken as a whole) which have not been
disclosed in the Prospectuses and the Public Record;
(xii) to the knowledge of the Trust and Harvest, after due
enquiry, the EnCana Properties Financial Statements
fairly present in all material respects, in
accordance with generally accepted accounting
principles in Canada, consistently applied, the
revenues and expenses attributable to the EnCana
Properties and the other information purported to be
shown therein of the EnCana Properties as at the
dates thereof and for the periods then ended and
reflect all revenues, royalties and operating
expenses in respect of the EnCana Properties as at
the dates thereof required to be disclosed by
generally accepted accounting principles in Canada,
and include all adjustments necessary for a fair
presentation;
(xiii) to the knowledge of the Trust and Harvest, after due
enquiry, the Storm Financial Statements fairly
present, in all material respects, in accordance with
generally accepted accounting principles in Canada,
consistently applied, the financial position and
condition, the results of operations, cash flows and
the other information purported to be shown therein
of Storm as at the dates thereof and for the periods
then ended and reflect all assets, liabilities and
obligations (absolute, accrued, contingent or
otherwise) of Storm as at the dates thereof required
to be disclosed by generally accepted accounting
principles in Canada, and include all adjustments
necessary for a fair presentation;
(xiv) to the knowledge of the Trust and Harvest, the New
Properties Financial Statements fairly present in all
material respects, in accordance with generally
accepted accounting principles in Canada,
consistently applied, the revenues and expenses
attributable to the New Properties and the other
information purported to be shown therein of the New
Properties as at the dates thereof and for the
periods then ended and reflect all revenues,
royalties and operating expenses in respect of the
New Properties as at the dates thereof required to be
disclosed by generally accepted accounting
principles in Canada, and include all adjustments
necessary for a fair presentation;
(xv) the Trust Financial Statements fairly present, in
accordance with generally accepted accounting
principles in Canada, consistently applied, except as
disclosed therein, the financial position and
condition, the results of operations, cash flows and
the other information purported to be shown therein
of the Trust, Harvest and their subsidiaries on a
consolidated basis as at the dates thereof and for
the periods then ended and reflect all assets,
liabilities and obligations (absolute, accrued,
contingent or otherwise) of the Trust, Harvest and
their subsidiaries on a consolidated basis as at the
dates thereof required to be disclosed by generally
accepted accounting principles in Canada, and include
all adjustments necessary for a fair presentation;
(xvi) the pro forma financial statements, including the
notes thereto, of the Trust contained in the
Prospectuses have been prepared in accordance with
Canadian generally accepted accounting principles,
consistently applied, have been prepared and
presented in accordance with Applicable Securities
Laws, and include all adjustments necessary for a
fair presentation; the assumptions contained in such
pro forma financial statements are suitably supported
and consistent with the financial results of the
Trust, Storm, the EnCana Properties and the New
Properties and such statements provide a reasonable
basis for the compilation of the pro forma financial
statements and such pro forma financial statements
accurately reflect such assumptions;
(xvii) no authorization, approval or consent of any court or
governmental authority or agency is required to be
obtained by the Trust or Harvest in connection with
the sale and delivery of the Offered Securities or
the Trust Units issuable pursuant to the Offered
Receipts or the Trust Units issuable upon the
conversion or redemption of the Offered Debentures
hereunder, except such as may be required by the
Exchange or under the Applicable Securities Laws;
(xviii) to the knowledge of the Trust and Harvest after due
enquiry, there are no actions, suits, proceedings or
inquiries pending or (as far as the Trust or Harvest
are aware) threatened against or affecting the Trust,
Harvest or their subsidiaries at law or in equity or
before or by any federal provincial, municipal or
other governmental department, commission, board,
bureau, agency or instrumentality which in any way
materially adversely affects, or may in any way
materially adversely affect, the business,
operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise),
condition (financial or otherwise) or results of
operations of the Trust, Harvest and their
subsidiaries (taken as a whole) or which affects or
may affect the distribution of the Offered
Securities, the Trust Units issuable pursuant to the
Offered Receipts or the Trust Units issuable on the
conversion or redemption of the Offered Debentures;
(xix) each of the Trust and the Operating Subsidiaries has
conducted and is conducting its business in all
material respects in compliance with all applicable
laws, rules and regulations of each jurisdiction in
which it carries on business and holds all material
licences, registrations and qualifications in all
jurisdictions in which it carries on business
necessary to carry on its business as now conducted
and as contemplated to be conducted in the
Prospectuses, including, without limitation,
performing its obligations under the Material
Agreements to which it is a party, except where such
non-compliance or lack of license, registration or
qualification, in aggregate, would not have a
material adverse affect on the capital, assets,
liabilities (absolute, accrued, contingent or
otherwise), business, operations or condition
(financial or otherwise) or the results of the
operations of the Trust, Harvest and their
subsidiaries (taken as a whole);
(xx) each of the Material Agreements is properly described
as to parties, dates, terms, conditions and
amendments thereto, each of such agreements is a
legal, valid and binding obligation of the Trust and
the Operating Subsidiaries, as the case may be,
enforceable against such parties in accordance with
its terms subject to the general qualifications set
forth in the opinion of the Trust's counsel to be
delivered pursuant to paragraph 13(a)(viii) and each
of the Trust and the Operating Subsidiaries, as
applicable, are in compliance with the terms of such
Material Agreements except where such noncompliance,
in aggregate, would not have a material adverse
affect on the capital, assets, liabilities (absolute,
accrued, contingent or otherwise), business,
operations or condition (financial or otherwise) or
the results of the operations of the Trust, Harvest
and their subsidiaries (taken as a whole) and neither
the Trust or Harvest is aware of any default or
breach of a material nature under any such Material
Agreements by any other party thereto;
(xxi) the information and statements set forth in the
Public Record to the extent incorporated by reference
in the Prospectuses were true, correct, and complete
in all material respects and did not contain any
misrepresentation, as of the date of such information
or statements;
(xxii) the authorized capital of the Trust consists of an
unlimited number of Trust Units of which 43,813,598
Trust Units were issued and outstanding, as at July
8, 2005;
(xxiii) no person holds any securities convertible into or
exchangeable for Trust Units or has any agreement,
warrant, option, right or privilege being or capable
of becoming an agreement, warrant, option or right
for the acquisition of any unissued Trust Units or
other securities of the Trust except for (a)
1,537,025 Trust Units issuable on exercise of rights
granted to directors, officers and employees of
Harvest pursuant to the Trust's Unit
Incentive Plan, (b) 10,930 Trust Units issuable
pursuant to the Trust's Unit Award Incentive Plan,
(c) Trust Units issuable from time to time pursuant
to the Trust's DRIP Plan, (d) any Trust Units that
may be issued from time to time pursuant to the
Equity Bridge Notes, (e) Trust Units issuable in
accordance with the terms of 239,882 Harvest
Exchangeable Shares which as at July 8, 2005 were
outstanding, (f) Trust Units issuable on the
conversion or redemption of the $2,601,000 principal
amount of 9% Debentures which as at July 8, 2005 were
outstanding, (g) Trust units issuable on the
conversion or redemption of the $7,573,000 principal
amount of 8% Debentures which as at July 8, 2005 were
outstanding, and (h) Trust Units issuable from time
to time pursuant to the Trust's Unit Award Incentive
Plan;
(xxiv) no Securities Commission, the Exchange or similar
regulatory authority has issued any order preventing
or suspending trading in any securities of the Trust
and no proceedings, investigations or inquiries for
such purpose are pending or contemplated or (as far
as the Trust or Harvest are aware) threatened;
(xxv) Valiant Trust Company at its principal office in the
cities of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ is
the duly appointed registrar and transfer agent of
the Trust with respect to the Trust Units;
(xxvi) Valiant Trust Company will on the Closing Date be the
duly appointed transfer agent of the Subscription
Receipts, escrow agent under the Subscription Receipt
Agreement, trustee under the Debenture Trust
Indenture, and, at its principal office in the cities
of Calgary and Toronto will on the Closing Date be
the duly appointed registrar and transfer agent of
the Trust with respect to the Offered Debentures;
(xxvii) the record or minute books of the Trust and the
Operating Subsidiaries are true and correct and at
the Closing Date will contain the minutes of all
meetings (either executed or in draft form) and all
resolutions of the trustees and of the directors,
shareholders and unitholders of the Trust and the
Operating Subsidiaries;
(xxviii) other than as provided for in this agreement, neither
the Trust nor any of the Operating Subsidiaries has
incurred any obligation or liability (absolute,
accrued, contingent or otherwise) for brokerage fees,
finder's fees, agent's commission or other similar
forms of compensation with respect to the offering
contemplated herein;
(xxix) the issued and outstanding Trust Units are listed and
posted for trading on the Exchange and the Offered
Receipts, the Offered Debentures and the Trust Units
issuable pursuant to the Offered Receipts and the
Trust Units issuable on the conversion or redemption
of the Offered Debentures will be listed and posted
for trading on the Exchange upon the Trust complying
with the usual conditions imposed by the Exchange
with respect thereto;
(xxx) the Trust is a "reporting issuer" in the provinces of
British Columbia, Alberta, Saskatchewan, Ontario,
Quebec, New Brunswick, Newfoundland and Labrador and
Nova Scotia within the meaning of the Applicable
Securities Laws in such provinces and has equivalent
status in the provinces of Manitoba and ▇▇▇▇▇▇ ▇▇▇▇▇▇
Island and is not in default of any requirement of
the Applicable Securities Laws;
(xxxi) the definitive form of certificates for the Trust
Units are, and the definitive form of certificates
for the Offered Receipts and the Offered Debentures
will on the Closing Date be, in due and proper form
under the laws governing the Trust and in compliance
with the requirements of the Exchange;
(xxxii) the Trust and Harvest have made available to the
Engineers, prior to the issuance of the Reserve
Report, for the purpose of preparing the Reserve
Report, all information requested by the Engineers,
which information did not contain any material
misrepresentation at the time such information was
provided. Except with respect to changes in the
prices of oil and gas, neither the Trust nor Harvest
has any knowledge of a material adverse change in any
production, operating expenses, reserves or other
relevant information provided to the Engineers (taken
as a whole) since the date that such information was
so provided. Each of the Trust and Harvest believes
that. taken as a whole, the Reserve Report reasonably
presents the quantity and pre-tax present worth
values of the oil and gas reserves attributable to
the crude oil, natural gas liquids and natural gas
properties evaluated in such report as at December
31, 2004 based upon information available at the time
such reserves information was prepared, and the Trust
and Harvest believe that at the date of such reports
they did not (and as of the date hereof, except as
may be attributable to production since the date of
such reports does not) overstate the aggregate
quantity or pre-tax present worth values of such
reserves or the estimated monthly production volumes
therefrom;
(xxxiii) neither the Trust nor Harvest has any knowledge of a
material adverse change in any reserves information
contained in the ▇▇▇▇▇▇▇ Report and the Trust and
Harvest believe that the Prospectuses reasonably
present the quantity and pre-tax present worth values
of the crude oil, natural gas liquids and natural gas
reserves attributable to the New Properties as at
March 31, 2005 (or as of the date hereof, except as
may be attributable to production since the
respective date of each such report) based upon
information available at the time such information
was prepared;
(xxxiv) neither the Trust nor Harvest is aware of any
defects, failures or impairments in the title of
Harvest or any of the Operating Subsidiaries to the
crude oil, natural gas liquids and natural gas
properties disclosed in the
Prospectuses, whether or not an action, suit,
proceeding or inquiry is pending or threatened or
whether or not discovered by any third party, which
in aggregate could have a material adverse effect on:
(a) the quantity and pre-tax present worth values of
crude oil, natural gas liquids and natural gas
reserves of Harvest or the Operating Subsidiaries as
disclosed in the Prospectuses; (b) the current
production volumes of the Operating Subsidiaries; or
(c) the current cash flow of the Operating
Subsidiaries;
(xxxv) neither the Trust nor Harvest is aware of any
defects, failures or impairments in the title the
Vendor or any of its subsidiaries to the New
Properties, whether or not an action, suit,
proceeding or inquiry is pending or threatened or
whether or not discovered by any third party which in
aggregate could have a material adverse effect on:
(A) the quantity and pre-tax present worth values of
the New Properties; (B) the current production
volumes of the New Properties; or (C) the current
cash flow of the New Properties;
(xxxvi) to the knowledge of the Trust and Harvest, the Trust
has good and marketable title to the Trust Assets,
free and clear of all liens, charges, encumbrances
and security interests of any nature or kind, except
as described in the Prospectuses or the Trust
Financial Statements;
(xxxvii) each of the Trust and the Operating Subsidiaries have
been and are in material compliance with all
applicable federal, state, municipal and local laws,
statutes, ordinances, by-laws and regulations and
orders, directives and decisions rendered by any
ministry, department or administrative or regulatory
agency, domestic or foreign, ("Environmental Laws")
relating to the protection of the environment,
occupational health and safety or the processing,
use, treatment, storage, disposal, discharge,
transport or handling of any pollutants,
contaminants, chemicals or industrial, toxic or
hazardous wastes or substance;
(xxxviii)each of the Trust and the Operating Subsidiaries have
obtained all material licences, permits, approvals,
consents, certificates, registrations and other
authorizations under Environmental Laws (the
"Environmental Permits") necessary for the operation
of their projects as currently operated and each
Environmental Permit is valid, subsisting and in good
standing and the holders of the Environmental Permits
are not in default or breach thereof and no
proceeding is pending or threatened to revoke or
limit any Environmental Permit, except in each case
where the result would not have a material adverse
effect on either the Trust or the Operating
Subsidiaries;
(xxxix) neither the Trust nor any Operating Subsidiary
(including, if applicable, any predecessor companies
thereof) have received any notice of, or been
prosecuted for an offence alleging, material
noncompliance with any Environmental Laws, and
neither the Trust nor any Operating Subsidiary
(including, if applicable, any predecessor companies)
have settled any
allegation of material non-compliance short of
prosecution. There are no order or directions
relating to environmental matters requiring any
material work, repairs, construction or capital
expenditures to be made with respect to any of the
assets of the Trust or any Operating Subsidiary, nor
has either the Trust or any Operating Subsidiary
received notice of any of the same and which orders
directions or notices remain outstanding as
unresolved;
(xl) Harvest has the necessary power and authority to
execute and deliver the Prospectuses on behalf of the
Trust and all requisite action has been taken by
Harvest to authorize the execution and delivery by it
of the Prospectuses on behalf of the Trust;
(xli) the Trust is not an "investment company" within the
meaning of that term under the United States
Investment Company Act of 1940 and the Trust has
complied and will comply with the representations,
warranties and covenants of the Trust set forth in
Schedule "A" hereto;
(xlii) the attributes and characteristics of the Offered
Receipts, the Offered Debentures and the Trust Units
conform in all material respects to the attributes
and characteristics thereof described in the
Prospectuses; and
(xliii) with such exceptions as are not material to the
Trust, Harvest and their subsidiaries (taken as a
whole), the Trust and each of the Operating
Subsidiaries has duly and on a timely basis filed all
tax returns required to be filed by it, has paid all
taxes due and payable by it and has paid all
assessments and reassessments and all other taxes,
governmental charges, penalties, interest and other
fines due and payable by it and which were claimed by
any governmental authority to be due and owing and
adequate provision has been made for taxes payable
for any completed fiscal period for which tax returns
are not yet required and there are no agreements,
waivers, or other arrangements providing for an
extension of time with respect to the filing of any
tax return or payment of any tax, governmental charge
or deficiency by the Trust or any of the Operating
Subsidiaries and to the best of the knowledge,
information and belief of the Trust and Harvest there
are no actions, suits, proceedings, investigations or
claims threatened or pending against the Trust or any
of the Operating Subsidiaries, in respect of taxes,
governmental charges or assessments or any matters
under discussion with any governmental authority
relating to taxes, governmental charges or
assessments asserted by any such authority;
(xliv) the representations and warranties of HBT1 and HBT2
in the Acquisition Agreement, true copies of which
have been provided to the Underwriters, are true and
correct as of the date hereof, except as such would
not have a material adverse effect on the business,
operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise),
condition (financial or otherwise) or results of
operations of the Trust, Harvest and their
subsidiaries (taken as a whole);
(xlv) neither the Trust nor Harvest has any reason to
believe that the representations and warranties of
the Vendor in the Acquisition Agreement are not true
and correct as of the date hereof or that the Vendor,
is in breach of any covenants of the Vendor, in the
Acquisition Agreement, except, such as would not have
a material adverse effect on the business,
operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise) or
results of operations of the New Properties, the
Trust or Harvest;
(xlvi) to the knowledge of the Trust and Harvest, no event
has occurred or condition exists which will prevent
the Acquisition from being completed prior to 5:00
p.m. (Calgary time) on August 2, 2005; and
(xlvii) the Trust shall pay the Special Interest on the Trust
Units issued upon exercise of the Offered Receipts.
9. Indemnity
(a) Each of the Trust and Harvest, jointly and severally, shall
indemnify and save harmless each of the Underwriters, and each
of the Underwriters' agents, directors, officers, shareholders
and employees harmless against and from all liabilities,
claims, demands, losses (other than losses of profit in
connection with the distribution of the Offered Securities),
costs (including, without limitation, legal fees and
disbursements on a full indemnity basis), damages and expenses
to which the Underwriters, or any of the Underwriters' agents,
directors, officers, shareholders or employees may be subject
or which the Underwriters, or any of the Underwriters' agents,
directors, officers, shareholders or employees may suffer or
incur, whether under the provisions of any statute or
otherwise, in any way caused by, or arising directly or
indirectly from or in consequence of:
(i) any information or statement contained in the
Preliminary Prospectus, the Prospectus, any
Supplementary Material or in any other document or
material filed or delivered pursuant hereto (other
than any information or statement relating solely to
the Underwriters and furnished to the Trust by the
Underwriters expressly for inclusion in the
Preliminary Prospectus, the Prospectus or any
Supplementary Material or in any other document or
material filed or delivered pursuant hereto) which is
or is alleged to be untrue or any omission or alleged
omission to provide any information or state any fact
(other than any information or fact relating solely
to the Underwriters) the omission of which makes or
is alleged to make any such information or statement
untrue or misleading in light of the circumstances in
which it was made;
(ii) any misrepresentation or alleged misrepresentation
(except a misrepresentation which is based upon
information relating solely to the Underwriters and
furnished to the Trust by the Underwriters expressly
for inclusion in the Preliminary Prospectus, the
Prospectus or any Supplementary Materials or in any
other document or material filed or
delivered pursuant hereto) contained in the
Preliminary Prospectus, the Prospectus, any
Supplementary Materials or in any other document or
any other part of the Public Record filed by or on
behalf of the Trust;
(iii) any misrepresentation or alleged misrepresentation
contained in the responses (taken as a whole)
provided to the Underwriters by the Trust, Harvest or
the directors of Harvest, any committee of the
directors of Harvest or any one member of such
committee, or officers of Harvest, in the Due
Diligence Session (other than any portion of such
responses that are forward-looking or related to
projections or forecasts);
(iv) any prohibition or restriction of trading in the
securities of the Trust or any prohibition or
restriction affecting the distribution of the Offered
Securities or Trust Units issuable pursuant to the
Offered Receipts or the Trust Units issuable upon
conversion or redemption of the Offered Debentures
imposed by any competent authority if such
prohibition or restriction is based on any
misrepresentation or alleged misrepresentation of a
kind referred to in subparagraph 9(a)(ii);
(v) any order made or any inquiry, investigation (whether
formal or informal) or other proceeding commenced or
threatened by any one or more competent authorities
(not based upon the activities or the alleged
activities of the Underwriters or their banking or
Selling Dealer Group members, if any) prohibiting,
restricting, relating to or materially affecting the
trading or distribution of the Offered Securities or
the Trust Units issuable pursuant to the Offered
Receipts or the Trust Units issuable upon the
conversion or redemption of the Offered Debentures;
or
(vi) any breach of, default under or non-compliance by the
Trust or Harvest with any requirements of the
Applicable Securities Laws, the by-laws, rules or
regulations of the Exchange or any representation,
warranty, term or condition of this agreement or in
any certificate or other document delivered by or on
behalf of the Trust or Harvest hereunder or pursuant
hereto; provided, however, no party who has engaged
in any fraud, wilful misconduct, fraudulent
misrepresentation or negligence shall be entitled, to
the extent that the liabilities, claims, losses,
costs, damages or expenses were caused by such
activity, to claim indemnification from any person
who has not engaged in such fraud, wilful misconduct,
fraudulent misrepresentation or negligence (provided
that for greater certainty, the foregoing shall not
disentitle an Underwriter from claiming
indemnification hereunder to the extent that the
negligence, if any, relates to the Underwriter's
failure to conduct adequate "due diligence").
(b) If any claim contemplated by paragraph 9(a) shall be
asserted against any of the persons or corporations in respect
of which indemnification is or might reasonably be considered
to be provided for in such paragraphs, such person or
corporation (the "Indemnified Person") shall notify the Trust
and Harvest (collectively the "Indemnifying Parties")
(provided that failure to so notify the Indemnifying Parties
of the nature of such claim in a timely fashion shall relieve
the Indemnifying Parties of liability hereunder only if and to
the extent that such failure materially prejudices the
Indemnifying Parties' ability to defend such claim) as soon as
possible of the nature of such claim and the Indemnifying
Parties shall be entitled (but not required) to assume
the defence of any suit brought to enforce such claim,
provided however, that the defence shall be through legal
counsel selected by the Indemnifying Parties and acceptable to
the Indemnified Person acting reasonably and that no
settlement may be made by the Indemnifying Parties or the
Indemnified Person without the prior written consent of the
other, such consent not to be unreasonably withheld. The
Indemnified Person shall have the right to retain its own
counsel in any proceeding relating to a claim contemplated by
paragraph 9(a) if:
(i) the Indemnified Person has been advised by counsel
that there may be a reasonable legal defense
available to the Indemnified Person which is
different from or additional to a defense available
to an Indemnifying Party and that representation of
the Indemnified Person and any one or more of the
Indemnifying Parties by the same counsel would be
inappropriate due to the actual or potential
differing interests between them (in which case the
Indemnifying Parties shall not have the right to
assume the defense of such proceedings on the
Indemnified Person's behalf);
(ii) the Indemnifying Parties shall not have taken the
defense of such proceedings and employed counsel
within ten (10) business days after notice has been
given to the Indemnifying Parties of commencement of
such proceedings; or
(iii) the employment of such counsel has been authorized by
the Indemnifying Parties in connection with the
defense of such proceedings;
and, in any such event, the reasonable fees and expenses of
such Indemnified Person's counsel (on a solicitor and his
client basis) shall be paid by the Indemnifying Parties,
provided that the Indemnifying Parties shall not, in
connection with any one such action or separate but
substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more
than one separate law firm (in addition to any local counsel)
for all such Indemnified Persons.
(c) Each of the Indemnifying Parties hereby waives its rights to
recover contribution from the Underwriters with respect to any
liability of the Indemnifying Party by reason of or arising
out of any misrepresentation in the Preliminary Prospectus,
the Prospectus, any Supplementary Material or any other part
of the Public Record provided, however, that such waiver shall
not apply in respect of liability caused or incurred by reason
of any misrepresentation which is based upon information
relating solely to the Underwriters contained in such document
and furnished to the Trust by the Underwriters expressly for
inclusion in the Preliminary Prospectus or the Prospectus.
(d) If any legal proceedings shall be instituted against an
Indemnifying Party in respect of the Preliminary Prospectus,
the Prospectus, any Supplementary Material or any other part
of the Public Record or the Offered Securities or the Trust
Units issuable pursuant to the Offered Receipts or if any
regulatory authority or stock exchange shall carry out an
investigation of an Indemnifying Party in respect of the
Preliminary Prospectus, the Prospectus, any Supplementary
Material or any other part of the Public Record or the Offered
Securities or the Trust Units issued pursuant to the Offered
Receipts and, in either case, any Indemnified Person is
required to testify, or respond to procedures
designed to discover information, in connection with or by
reason of the services performed by the Underwriters
hereunder, the Indemnified Persons may employ their own legal
counsel and the Indemnifying Parties shall pay and reimburse
the Indemnified Persons for the reasonable fees, charges and
disbursements (on a full indemnity basis) of such legal
counsel, the other expenses reasonably incurred by the
Indemnified Persons in connection with such proceedings or
investigation and a fee at the normal per diem rate for any
director, officer or employee of the Underwriters involved in
the preparation for or attendance at such proceedings or
investigation.
(e) The rights and remedies of the Indemnified Persons set
forth in paragraphs 9, 10 and 11 hereof are to the fullest
extent possible in law cumulative and not alternative and the
election by any Underwriter or other Indemnified Person to
exercise any such right or remedy shall not be, and shall not
be deemed to be, a waiver of any other rights and remedies.
(f) The Indemnifying Parties hereby acknowledge that the
Underwriters are acting as agents for the Underwriters'
respective agents, directors, officers, shareholders and
employees under this paragraph 9 and under paragraph 10 with
respect to all such agents, directors, officers, shareholders
and employees.
(g) The Indemnifying Parties waive any right they may have of
first requiring an Indemnified Person to proceed against or
enforce any other right, power, remedy or security or claim or
to claim payment from any other person before claiming under
this indemnity. It is not necessary for an Indemnified Person
to incur expense or make payment before enforcing such
indemnity.
(h) The rights of indemnity contained in this paragraph 9 shall
not apply if the Indemnifying Parties have complied with the
provisions of paragraphs 4 and 5 and the person asserting any
claim contemplated by this paragraph 9 was not provided with a
copy of the Prospectus or any amendment to the Prospectus or
other document which corrects any misrepresentation or alleged
misrepresentation which is the basis of such claim and which
was required, under Applicable Securities Laws, to be
delivered to such person by the Underwriters.
(i) If the Indemnifying Parties have assumed the defense of any
suit brought to enforce a claim hereunder, the Indemnified
Person shall provide the Indemnifying Parties copies of all
documents and information in its possession pertaining to the
claim, take all reasonable actions necessary to preserve its
rights to object to or defend against the claim, consult and
reasonably cooperate with the Indemnifying Parties in
determining whether the claim and any legal proceeding
resulting therefrom should be resisted, compromised or settled
and reasonably cooperate and assist in any negotiations to
compromise or settle, or in any defense of, a claim undertaken
by the Indemnifying Parties.
10. Contribution
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this agreement is due
in accordance with its terms but is, for any reason, held by a court to be
unavailable from one or more of the Indemnifying Parties on grounds of policy or
otherwise, the Indemnifying Parties and the party or parties seeking
indemnification shall contribute to the aggregate liabilities, claims, demands,
losses (other than losses of profit in connection with the distribution of the
Offered Securities), costs (including, without limitation, legal
fees and disbursements on a full indemnity basis), damages and expenses to which
they may be subject or which they may suffer or incur:
(a) in such proportion as is appropriate to reflect the relative
benefit received by the Indemnifying Parties on the one hand,
and by the Underwriters on the other hand, from the offering
of the Offered Securities; or
(b) if the allocation provided by paragraph 10(a) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in paragraph 10(a) above but also to reflect the relative
fault of the Underwriters on the one hand, and the
Indemnifying Parties, on the other hand, in connection with
the statements, commissions or omissions or other matters
which resulted in such liabilities, claims, demands, losses,
costs, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Indemnifying Parties, on the one
hand, and the Underwriters, on the other hand, shall be deemed to be in the same
proportion that the total proceeds of the offering received by the Indemnifying
Parties (net of fees but before deducting expenses) bear to the fees received by
the Underwriters. In the case of liability arising out of the Preliminary
Prospectus, the Prospectus, any Supplementary Material or any other part of the
Public Record, the relative fault of the Indemnifying Parties, on the one hand,
and of the Underwriters, on the other hand, shall be determined by reference,
among other things, to whether the misrepresentation or alleged
misrepresentation, order, inquiry, investigation or other matter or thing
referred to in paragraph 9 relates to information supplied or which ought to
have been supplied by, or steps or actions taken or done on behalf of or which
ought to have been taken or done on behalf of, one or more of the Indemnifying
Parties or the Underwriters and the parties' relative intent knowledge, access
to information and opportunity to correct or prevent such misrepresentation or
alleged misrepresentation, order, inquiry, investigation or other matter or
thing referred to in paragraph 9.
The amount paid or payable by an Indemnified Person as a result of
liabilities, claims, demands, losses (other than losses of profit in connection
with the distribution of the Offered Securities), costs, damages and expenses
(or claims, actions, suits or proceedings in respect thereof) referred to above
shall, without limitation, include any legal or other expenses reasonably
incurred by the Indemnified Person in connection with investigating or defending
such liabilities, claims, demands, losses, costs, damages and expenses (or
claims, actions, suits or proceedings in respect thereof) whether or not
resulting in any action, suit, proceeding or claim.
Each of the Indemnifying Parties and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this agreement were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in the
immediately preceding paragraphs. The rights to contribution provided in this
paragraph 10 shall be in addition to, and without prejudice to, any other right
to contribution which the Underwriters or other Indemnified Persons may have.
Any liability of the Underwriters under this paragraph 10 shall be
limited to the amount actually received by the Underwriters under paragraph 2.
11. Expenses
(a) Whether or not the transactions contemplated herein shall be
completed, subject to paragraph 11(b), all costs and expenses
(including applicable goods and services tax) of or incidental
to the transactions contemplated hereby including, without
limitation, those relating to the distribution of the Offered
Securities shall be borne by the Trust including, without
limitation, all costs and expenses of or incidental to the
preparation, filing and reproduction (including the commercial
copies thereof) of the Preliminary Prospectus, the Prospectus,
any Supplementary Material and the delivery thereof to the
Underwriters, the fees and expenses of the Trust's counsel,
the fees and expenses of agent counsel retained by the Trust
or the Trust's counsel, the fees and expenses of the Trust's
transfer agent, auditors, engineers and other outside
consultants, all stock exchange listing fees, the expenses
related to audio-visual and teleconference presentations,
including the costs associated with audio-visual personnel,
hotel, food and travel expenses incurred in connection with
marketing meetings, and reasonable hotel and travel expenses
for the Underwriters incurred in connection with the marketing
meetings, the reasonable fees and expenses of the
Underwriters' counsel, the fees and expenses related to any
newspaper advertisements, all reasonable out-ofpocket expenses
incurred by the Underwriters, the cost of preparing record
books for all of the parties to this agreement and their
respective counsel and all other costs and expenses relating
to this transaction.
(b) If the purchase and sale of the Offered Securities is not
completed in accordance with the terms hereof by reason of a
breach by or default of the Underwriters, the Underwriters
shall be responsible for all fees, disbursements and expenses
of the Underwriters set forth in paragraph 11(a).
12. Termination
(a) The Underwriters, or any of them, may, without liability,
terminate their obligations hereunder, by written notice to
the Trust in the event that after the date hereof and at or
prior to the Closing Time:
(i) any order to cease or suspend trading in any
securities of the Trust or Harvest or prohibiting or
restricting the distribution of any of the Offered
Securities, the Trust Units issuable pursuant to the
Offered Receipts or the Trust Units issuable upon the
conversion or redemption of the Offered Debentures is
made, or proceedings are announced, commenced or
threatened for the making of any such order, by any
securities commission or similar regulatory
authority, the Exchange or any other competent
authority, and has not been rescinded, revoked or
withdrawn;
(ii) any inquiry, action, suit, investigation (whether
formal or informal) or other proceeding in relation
to the Trust or any of the Operating Subsidiaries or
any of the directors or senior officers of Harvest is
announced, commenced or threatened by any securities
commission or similar regulatory authority, the
Exchange or any other competent authority or there is
a change in law, regulation or policy or the
interpretation or administration thereof, if, in the
reasonable opinion of the Underwriters or any one of
them, the change, announcement, commencement or
threatening thereof is expected to adversely affect
the
trading or distribution of the Offered Securities,
the Trust Units issuable pursuant to the Offered
Receipts or the Trust Units issuable upon the
conversion or redemption of the Offered Debentures or
any other securities of the Trust or would be
expected to have a material adverse effect on the
market price or value of the Trust Units or other
securities of the Trust;
(iii) there shall have occurred any adverse change, as
determined by the Underwriters or any one of them in
their sole discretion, acting reasonably, in the
senior management of Harvest, or in the business,
operations, capital or condition (financial or
otherwise), business or business prospects of the
Trust or any of the Operating Subsidiaries or the
respective properties, assets, liabilities or
obligations (absolute, accrued, contingent or
otherwise) of the Trust or any of the Operating
Subsidiaries which in the Underwriters' opinion,
could reasonably be expected to have a material
adverse effect on the market price or value of the
Offered Receipts, Offered Debentures, the Trust Units
issuable pursuant to the Offered Receipts or the
Trust Units issuable upon the conversion or
redemption of the Offered Debentures or any other
securities of the Trust or the investment quality or
marketability of the Offered Receipts, the Offered
Debentures, the Trust Units issuable pursuant to the
Offered Receipts or the Trust Units issuable upon the
conversion or redemption of the Offered Debentures;
(iv) there should develop, occur or come into effect or
existence, or be announced, any event, action, state,
condition or occurrence of national or international
consequence, or any law, action, regulation or other
occurrence of any nature whatsoever, which, in the
sole opinion of the Underwriters or any one of them,
acting reasonably, materially adversely affects or
involves, or will materially adversely affect or
involve, the financial markets generally or the
business, operations or affairs of the Trust and its
Operating Subsidiaries on a consolidated basis;
(v) the Underwriters shall become aware of any adverse
material change with respect to the Trust and its
Operating Subsidiaries (taken as a whole) which had
not been publicly disclosed or disclosed in writing
to the Underwriters at or prior to the date hereof;
(vi) the Trust or Harvest shall be in breach or default
under or noncompliance with any representation,
warranty, term or condition of this agreement in any
material respect;
(vii) there is announced any change or proposed change in
the income tax laws of Canada or the interpretation
or administration thereof and such change, which in
the sole opinion of the Underwriters, or any one of
them, acting reasonably, could be expected to have a
material adverse effect on the market price or value
of the Offered Receipts, the Offered Debentures or
the Trust Units; or
(viii) the Acquisition Agreement is terminated or the Trust
has advised the Underwriters or announced to the
public that it does not intend to proceed with the
Acquisition.
(b) The Underwriters, or any of them, may exercise any or all of
the rights provided for in
paragraph 12(a) or paragraph 13 or 17 notwithstanding any
material change, change, event or state of facts and (except
where the Underwriter purporting to exercise any of such
rights is in breach of its obligations under this agreement)
notwithstanding any act or thing taken or done by the
Underwriters or any inaction by the Underwriters, whether
before or after the occurrence of any material change, change,
event or state of facts including, without limitation, any act
of the Underwriters related to the offering or continued
offering of the Offered Securities for sale and any act taken
by the Underwriters in connection with any amendment to the
Prospectus (including the execution of any amendment or any
other Supplementary Material) and the Underwriters shall only
be considered to have waived or be estopped from exercising or
relying upon any of their rights under or pursuant to
paragraph 12(a) or paragraph 13 or 17 if such waiver or
estoppel is in writing and specifically waives or estops such
exercise or reliance;
(c) Any termination pursuant to the terms of this agreement shall
be effected by notice in writing delivered to the Trust
provided that no termination shall discharge or otherwise
affect any obligation of the Trust or Harvest under paragraph
9, 10, 11 or 17. The rights of the Underwriters to terminate
their obligations hereunder are in addition to, and without
prejudice to, any other remedies they may have; and
(d) If an Underwriter elects to terminate its obligation to
purchase the Offered Securities as aforesaid, whether the
reason for such termination is within or beyond the control of
the Trust or Harvest the liability of the Trust and Harvest
hereunder shall be limited to the indemnity referred to in
paragraph 9, the contribution rights referred to in paragraph
9 and the payment of expenses referred to in paragraph 11.
13. Closing Documents
The obligations of the Underwriters hereunder, as to the Offered
Securities to be purchased at the Closing Time, shall be conditional upon all
representations and warranties and other statements of the Trust and Harvest
herein being, at and as of the Closing Time, true and correct in all material
respects, the Trust and Harvest having performed in all material respects, at
the Closing Time, all of their obligations hereunder theretofore to be performed
and the Underwriters receiving at the Closing Time:
(a) favourable legal opinions of the Trust's counsel and the
Underwriters' counsel addressed to the Underwriters, in form
and substance reasonably satisfactory to the Underwriters,
with respect to such matters as the Underwriters may
reasonably request relating to the offering of the Offered
Securities, the Trust, the Operating Subsidiaries and the
transactions contemplated hereby, including, without
limitation, that:
(i) the Trust is valid and existing as a trust under the
laws of the Province of Alberta and having the
Trustee as its trustee;
(ii) each of HST, HBT1 and HBT2 is valid and existing as a
trust under the
laws of the Province of Alberta;
(iii) each of Red Earth Partnership and BRP is duly formed
and validly existing as a general partnership under
the laws of the Province of Alberta;
(iv) each of Harvest and Red Earth Energy Inc. has been
duly incorporated and is validly subsisting under the
jurisdiction of its incorporation;
(v) the Trust has all requisite power and authority to
own and lease its assets;
(vi) each of the Operating Subsidiaries has the requisite
power and authority to own and lease its properties
and assets and to conduct its business and to own its
properties and assets under the laws of the
jurisdictions where it carries on a material part of
its business;
(vii) the Trust is the registered and beneficial holder of
all issued and outstanding shares of Harvest (other
than the Harvest Exchangeable Shares) and trust units
of each of HST and HBT2, and HST is the registered
and beneficial owner of all issued and outstanding
trust units of HBT1, in each case all of which have
been duly authorized and validly issued as fully paid
and non-assessable;
(viii) each of Harvest, on behalf of the trustee of the
Trust, Harvest (on its own behalf and as trustee of
HST), 1115638 Alberta Ltd. as trustee of HBTI,
1115650 Alberta Ltd. as trustee of HBT2 and the other
Operating Subsidiaries has all necessary trust or
corporate power and authority to enter into this
agreement, the Subscription Receipt Agreement, the
Debenture Trust Indenture and the Material Agreements
to which it is a party and to perform its obligations
set out herein and therein, as applicable, and each
of this agreement, the Subscription Receipt
Agreement, the Debenture Trust Indenture and the
Material Agreements have been duly authorized,
executed and delivered, as applicable, by Harvest, on
behalf of the trustee of the Trust, Harvest (on its
own behalf and as trustee of HST), 1115638 Alberta
Ltd. as trustee of HBT1, 1115650 Alberta Ltd. as
trustee of HBT2 and the other Operating Subsidiaries,
as applicable, and constitutes a legal, valid and
binding obligation of each of the Trust, Harvest and
the other Operating Subsidiaries enforceable against
the Trust, Harvest and the other Operating
Subsidiaries, as applicable, in accordance with their
terms except that the validity, binding effect and
enforceability of the terms of agreements and
documents are subject to the qualification that such
validity, binding effect and enforceability may be
limited by:
(A) applicable bankruptcy, insolvency,
moratorium, reorganization or other laws
affecting creditors' rights generally;
(B) general principles of equity, including the
fact that equitable remedies, including the
remedies of specific performance and
injunctive relief, are available only in the
discretion of the applicable court;
(C) the statutory and inherent powers of a court
to grant relief from forfeiture, to stay
execution of proceedings before it and to
stay executions on judgments; and
(D) the applicable laws regarding limitations of
actions.
Notwithstanding the foregoing:
(E) no opinion shall be expressed as to the
enforceability of provisions which purport
to sever any provision which is prohibited
or unenforceable under applicable law
without affecting the enforceability or
validity of the remainder of such documents
would be determined only in the discretion
of the court;
(F) the enforceability of any provisions
exculpating a party from liability or duty
otherwise owed by it may be limited under
applicable law; and
(G) the enforceability of rights to indemnity,
contribution and waiver under the documents
may be limited or unavailable under
applicable law;
(ix) the execution and delivery of this agreement, the
Subscription Receipt Agreement and the Debenture
Trust Indenture and the fulfillment of the terms
hereof and thereof by each of the Trust and Harvest
and the performance of and compliance with the terms
of each of this agreement, the Subscription Receipt
Agreement and the Debenture Trust Indenture by
Harvest on behalf of the trustee of the Trust and
Harvest, on its own behalf, does not and will not
result in a breach of, or constitute a default under,
and does not create a state of facts which, after
notice or lapse of time or both, will result in a
breach of or constitute a default under, (i) any
applicable laws; (ii) any term or provision of the
Trust Indenture, (iii) the articles, by-laws or
constating documents of the Trust or Harvest, as
applicable, (iv) any resolutions of the unitholders
or the directors (or any committee thereof) or
shareholders of the Trust or Harvest, as applicable,
(v) any mortgage, note, indenture, contract,
agreement (written or oral), instrument, lease or
other document to which the Trust or Harvest is a
party or by which it is bound, of which such counsel
is aware including, without limitation, the Material
Agreements, or (vi) any judgment, order or decree of
any court, governmental agency or body or regulatory
authority having jurisdiction over or binding the
Trust or Harvest or their respective properties or
assets or the Offered Securities, of which such
counsel is aware;
(x) the forms of the definitive certificate representing
the Offered Receipts, Offered Debentures and Trust
Units have been approved and adopted by the Trust and
comply with all legal requirements (including all
applicable requirements of the Exchange) relating
thereto;
(xi) the Offered Receipts and the Offered Debentures have
been duly and validly created, allotted and issued as
fully paid and non-assessable Subscription Receipts
and Debentures, respectively, of the Trust;
(xii) the Trust Units issuable pursuant to the Offered
Receipts and the Trust Units issuable upon conversion
or redemption of the Offered Debentures will, upon
issuance in accordance with the terms of the
Subscription Receipt Agreement, the Debenture Trust
Indenture and the Trust Indenture, as applicable, be
issued as fully paid and nonassessable Trust Units of
the Trust;
(xiii) the Trust and the attributes of the Offered Receipts,
the Offered Debentures and the Trust Units issuable
pursuant to the Offered Receipts
or upon the conversion or redemption of the Offered
Debentures conform in all material respects with the
description thereof contained in the Prospectuses;
(xiv) the Offered Receipts, the Offered Debentures and the
Trust Units issuable pursuant to the Offered Receipts
or upon the conversion or redemption of the Offered
Debentures are eligible investments as set out under
the heading "Eligibility for Investment" in the
Prospectuses;
(xv) all necessary documents have been filed, all
necessary proceedings have been taken and all legal
requirements have been fulfilled as required under
the Applicable Securities Laws of each of the
Qualifying Provinces in order to qualify the Offered
Securities for distribution and sale to the public in
each of such Qualifying Provinces by or through
investment dealers and brokers duly registered under
the applicable laws of such provinces who have
complied with the relevant provisions of such
Applicable Securities Laws;
(xvi) based on Applicable Securities Laws in effect as of
the Closing Date, neither the distribution of Trust
Units issuable pursuant to the Offered Receipts or on
the conversion or redemption of the Offered
Debentures, nor the first trade in such Trust Units,
will be subject to the prospectus requirements of
Applicable Securities Laws, and no other filing,
proceeding, approval, consent or authorization will
be required to be made, taken or obtained pursuant to
Applicable Securities Laws in connection with such
issuance or trade;
(xvii) the Trust is a "reporting issuer" not in default of
any requirement of the Securities Act (Alberta) and
the regulations thereunder and has a similar status
under the Applicable Securities Laws of each of the
other Qualifying Provinces that have the "reporting
issuer" concept;
(xviii) each of the Trust and Harvest have the necessary
power and authority to execute and deliver the
Prospectuses and all necessary action has been taken
by each of the Trust and Harvest to authorize the
execution and delivery by it of the Prospectuses and
the filing thereof, as the case may be, in each of
the Qualifying Provinces in accordance with
Applicable Securities Laws;
(xix) subject to the qualifications set out therein, the
statements in the Prospectus under the heading
"Canadian Federal Income Tax Considerations"
constitute a fair summary of the principal Canadian
federal income tax consequences arising under the Tax
Act to persons referred to therein who hold Offered
Securities;
(xx) the Offered Receipts, the Offered Debentures, the
Trust Units issuable pursuant to the Offered Receipts
and the Trust Units issuable upon the conversion or
redemption of the Offered Debentures are
conditionally listed on the Exchange and, upon
notification to the Exchange of the issuance and sale
thereof and fulfillment of the conditions of the
Exchange, will be posted for trading on the Exchange;
(xxi) the authorized and issued capital of the Trust;
(xxii) Valiant Trust Company at its principal offices in
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ has been duly
appointed the transfer agent and registrar for the
Trust Units, the Offered Receipts and the Offered
Debentures, and has been duly appointed the trustee
under the Debenture Trust Indenture and the escrow
agent under the Subscription Receipt Agreement;
and as to all other legal matters, including compliance with Applicable
Securities Laws in any way connected with the issuance, sale and delivery of the
Offered Securities as the Underwriters may reasonably request.
It is understood that the respective counsel may rely on the opinions of local
counsel acceptable to them as to matters governed by the laws of jurisdictions
other than where they are qualified to practice law, and on certificates of
officers of the Trust, Harvest, the transfer agent and the Trust's auditors as
to relevant matters of fact. It is further understood that the Underwriters'
counsel may rely on the opinion of the Trust's counsel as to matters which
specifically relate to the Trust, the Operating Subsidiaries or the Trust Units,
including the issuance of the Offered Securities;
(b) a certificate of each of the Trust and Harvest dated the
Closing Date addressed to the Underwriters and signed on
behalf of the Trust and Harvest by the President and Vice
President, Finance of Harvest or such other officers or
directors of Harvest satisfactory to the Underwriters, acting
reasonably, certifying that:
(i) each of the Trust and Harvest has complied with
and satisfied in all material respects all terms
and conditions of this agreement on its part to
be complied with or satisfied at or prior to the
Closing Time;
(ii) the representations and warranties of the Trust
and Harvest set forth in this agreement are true
and correct in all material respects at the
Closing Time, as if made at such time; and
(iii) no event of a nature referred to in paragraph
7(a), 7(b), 12(a)(i), 12(a)(ii), 12(a)(iii) or
12(a)(vi) has occurred or to the knowledge of
such officer is pending, contemplated or
threatened;
and the Underwriters shall have no knowledge to the contrary;
(c) a comfort letter of each of the Trust's auditors, the New
Properties' auditors, Storm's auditors and the EnCana
Properties' auditors addressed to the Underwriters and dated
the Closing Date, satisfactory in form and substance to the
Underwriters, acting reasonably, bringing the information
contained in the comfort letter or letters referred to in
paragraph 5(c) hereof up to the Closing Time, which comfort
letter shall be not more than two Business Days prior to the
Closing Date;
(d) evidence satisfactory to the Underwriters that the Offered
Receipts, the Offered Debentures, the Trust Units issuable
pursuant to the Offered Receipts and the Trust Units issuable
on the conversion of the Offered Debentures have been
conditionally listed on the Exchange, in each case not later
than the close of business on the last
Business Day preceding the Closing Date, in the case of the
Offered Receipts and Offered Debentures, and upon notice to
the Exchange, in the case of the Trust Units issuable pursuant
to the Offered Receipts and the Trust Units issuable on the
conversion or redemption of the Offered Debentures, and shall
be posted for trading as at the opening of business on the
Closing Date or first trading date after notice of such
issuance, as applicable;
(e) evidence satisfactory to the Underwriters that the Special
Interest, if any, will be paid on the Trust Units issuable
pursuant to the Offered Receipts;
(f) evidence satisfactory to the Underwriters that the Acquisition
Agreement has not been terminated and that no event has
occurred or condition exists which will prevent the
Acquisition from being completed prior to 5:00 p.m. (Calgary
time) on September 30, 2005 substantially and in all material
respects as contemplated in the Acquisition Agreement, and as
such agreements are described in the Prospectus; and
(g) such other certificates and documents as the Underwriters may
request, acting reasonably.
14. Deliveries
(a) The sale of the Offered Receipts and Offered Debentures to be
purchased hereunder shall be completed at the Closing Time at
the offices of the Trust's counsel in Calgary, Alberta or at
such other place as the Trust and the Underwriters may agree.
Subject to the conditions set forth in paragraph 13, the
Underwriters, on the Closing Date, shall deliver (A) to the
Trust the amount of $1,000 for each Offered Debenture (which
amount will be $75,000,000) by wire transfer, in respect of
the Offered Debentures); and (B) to the Escrow Agent, on
behalf of the Trust, the amount of $26.90 for each Offered
Receipt (which amount will be $175,000,640), by wire transfer,
against delivery by the Trust of:
(i) the opinions, certificates and documents referred to
in paragraph 13;
(ii) definitive certificates representing, in the
aggregate, all of the Offered Receipts and Offered
Debentures registered, subject to paragraph (b)
below, in the name of National Bank Financial Inc. or
in such name or names as the Underwriters shall
notify the Trust in writing not less than 24 hours
prior to the Closing Time; and
(iii) payment to National Bank Financial Inc., by certified
cheque, bank draft or wire transfer or such other
means as Harvest and the Underwriters may agree, of
the fee provided for in paragraph 3(a) in respect of
the Offered Receipts and Offered Debentures, being an
aggregate fee of $7,375,016.
(b) If the Trust determines to issue the Offered Debentures as a
book-entry only security in accordance with the rules and
procedures of The Canadian Depository for Securities Limited
("CDS"), then, as an alternative to the Trust delivering to
the
Underwriters definitive certificates representing the Offered
Debentures in the manner and at the times set forth in this
paragraph 14:
(i) the Underwriters will provide a direction to CDS
with respect to the crediting of the Offered
Debentures to the accounts of the participants of
CDS as shall be designated by the Underwriters in
writing in sufficient time prior to the Closing
Date to permit such crediting; and
(ii) the Trust shall cause Valiant Trust Company, as
registrar and transfer agent of the Offered
Debentures, to deliver to CDS, on behalf of the
Underwriters, one fully registered global
certificate for the Offered Debentures to be
purchased hereunder, registered in the name of
"CDS & Co." as the nominee of CDS, to be held by
CDS as a book-entry only security in accordance
with the rules and procedures of CDS.
15. Restrictions on Offerings
The Trust agrees that prior to 90 days after the Closing Date, it shall
not directly or indirectly, sell or offer to sell any Trust Units or debentures
having attributes similar to those of the Offered Debentures, or otherwise lend,
transfer or dispose of any securities exchangeable, convertible or exercisable
into Trust Units or debentures having attributes similar to those of the Offered
Debentures or enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Trust Units or debentures having attributes similar to those of the Offered
Debentures, whether any such transaction is settled by delivery of Trust Units
or debentures having attributes similar to those of the Offered Debentures or
other such securities, in cash or otherwise, or announce any intention to do any
of the foregoing, without the consent of National Bank Financial Inc., on behalf
of the Underwriters, such consent not to be unreasonably withheld (provided that
the foregoing will not restrict the Trust from granting rights pursuant to the
Trust's Unit Incentive Plan or the Trust's Unit Award Incentive Plan or issuing
Trust Units pursuant to (a) the exercise of rights to purchase Trust Units
outstanding under the Unit Incentive Plan or the Trust's Unit Award Incentive
Plan, (b) the conversion or redemption of any of the 8% Debentures, the 9%
Debentures or the Offered Debentures, (c) the payment of interest on the 8%
Debentures, the 9% Debentures or the Offered Debentures, (d) pursuant to the
Trust's DRIP Plan, (e) an acquisition, merger, consolidation or amalgamation or
the issuance of Trust Units upon the exercise of currently existing rights or
instruments, or (f) pursuant to the terms of the Harvest Exchangeable Shares.
16. Notices
Any notice or other communication to be given hereunder shall, in the
case of notice to be given to the Trust or Harvest be addressed to Harvest, c/o
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, President, at the above address, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ with a
copy to:
Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and, in the case of notice to be given to the Underwriters, be addressed to:
National Bank Financial Inc.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
TD Securities Inc.
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
CIBC World Markets Inc.
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: T. ▇▇▇▇▇▇▇ Kitchen Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Scotia Capital Inc.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Canaccord Capital Corporation
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ -▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
GMP Securities Ltd.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇. ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
FirstEnergy Capital Corp.
▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tristone Capital Inc.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇ ▇▇▇, ▇▇▇ -▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party may designate by notice given to the
other. Each communication shall be personally delivered to the addressee or sent
by facsimile transmission to the addressee, and:
(a) a communication which is personally delivered shall, if
delivered before 4:00 p.m. (local time at the place of
delivery) on a Business Day, be deemed to be given and
received on that day and, in any other case be deemed to be
given and received on the first Business Day following the day
on which it is delivered; and
(b) a communication which is sent by facsimile transmission shall,
if sent on a Business Day before 4:00 p.m. (local time at the
place of receipt), be deemed to be given and received on that
day and, in any other case, be deemed to be given and received
on the first Business Day following the day on which it is
sent.
17. Conditions
All terms, covenants and conditions of this agreement to be performed
by the Trust and Harvest, or either of them, shall be construed as conditions,
and any breach or failure to comply with any material terms and conditions which
are for the benefit of the Underwriters shall entitle the Underwriters to
terminate their obligations to purchase the Offered Securities, by written
notice to that effect given to the Trust prior to the Closing Time. The
Underwriters may waive in whole or in part any breach of, default under or
non-compliance with any representation, warranty, term or condition hereof, or
extend the time for compliance therewith, without prejudice to any of their
rights in respect of any other representation, warranty, term or condition
hereof or any other breach of, default under or non-compliance with any other
representation, warranty, term or condition hereof, provided that any such
waiver or extension shall be binding on the Underwriters only if the same is in
writing.
18. Survival of Representations and Warranties
All representations, warranties, terms and conditions herein
(including, without limitation, those contained in paragraph 8) or contained in
certificates or documents submitted pursuant to or in connection with the
transactions contemplated herein shall survive the payment by the Underwriters
for the Offered Securities, the termination of this agreement and the
distribution of the Offered
Securities pursuant to the Prospectus and shall continue in full force and
effect for the benefit of the Underwriters regardless of any investigation by or
on behalf of the Underwriters with respect thereto.
19. Several Liability of Underwriters
The Underwriters' rights and obligations under this agreement are
several and not joint and several including, without limitation, that:
(a) each of the Underwriters shall be obligated to purchase only
the percentage of the total number of Offered Securities set
forth opposite their names set forth in this paragraph 19; and
(b) if at the Closing Time any one or more of the Underwriters
shall fail or refuse to purchase its respective percentage set
forth below of the aggregate number of the Offered Securities
(other than in accordance with section 11) and the number of
such Offered Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not
more than 7% of the aggregate number of Offered Securities to
be purchased on such date, the non-defaulting Underwriters
shall be obligated severally, in the proportions that the
respective percentage set forth below opposite the names of
all such non-defaulting Underwriters, to purchase the Offered
Securities which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase at such time; and
(c) if any one or more of the Underwriters shall not purchase its
applicable percentage of the Offered Securities at the Closing
Time and the number of such securities which such defaulting
Underwriters or Underwriters agreed but failed or refused to
purchase is more than 7% of the aggregate number Offered
Securities to be purchased at such time, then the other
Underwriters shall have the right, but shall not be obligated,
to purchase all of the percentage of Offered Securities which
would otherwise have been purchased by such one or more of the
Underwriters; the Underwriters exercising such right shall
purchase such Offered Securities pro rata to their respective
percentages aforesaid or in such other proportions as they may
otherwise agree. In the event such right is not exercised, the
Underwriters which are not in default shall be entitled by
written notice to the Trust to terminate this agreement
without liability.
The applicable percentage of the total number Offered Securities which
each of the Underwriters shall be separately obligated to purchase is as
follows:
National Bank Financial Inc. 33.0%
TD Securities Inc. 24.0%
CIBC World Markets Inc. 15.0%
Scotia Capital Inc. 10.0%
Canaccord Capital Corporation 5.0%
GMP Securities Inc. 5.0%
FirstEnergy Capital Corp. 3.0%
Tristone Capital Inc. 3.0%
▇▇▇▇▇▇▇ Securities Inc. 1.0%
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd. 1.0%
Nothing in this agreement shall obligate the Trust to sell the
Underwriters less than all of the Offered Receipts and Offered Debentures or
shall relieve any Underwriter in default from liability to the Trust, Harvest or
any non-defaulting Underwriter in respect of the defaulting Underwriter's
default hereunder. In the event of a termination by the Trust or Harvest of
their obligations under this agreement there shall be no further liability on
the part of the Trust or Harvest to the Underwriters except in respect of any
liability which may have arisen or may thereafter arise under paragraphs 9, 10
and 11.
20. Authority to Bind Underwriters
The Trust and Harvest shall be entitled to and shall act on any notice,
waiver, extension or communication given by or on behalf of the Underwriters by
National Bank Financial Inc., which shall represent the Underwriters and which
shall have the authority to bind the Underwriters in respect of all matters
hereunder, except in respect of any settlement under paragraph 9 or 10, any
matter referred to in paragraph 12 or any agreement under paragraph 19. While
not affecting the foregoing, National Bank Financial Inc. shall consult with the
other Underwriters with respect to any such notice, waiver, extension or other
communication.
21. Underwriters Covenants
Each of the Underwriters covenants and agrees with the Trust that it will:
(a) offer the Offered Securities for sale to the public in the
Qualifying Provinces and may, subject to the terms of this
agreement, offer them for sale in the United States in the
manner contemplated by Schedule "A" attached hereto;
(b) conduct activities in connection with the proposed offer and
sale of the Offered Securities in compliance with all the
Applicable Securities Laws and cause a similar covenant to be
contained in any agreement entered into with any Selling
Dealer Group established in connection with the distribution
of the Offered Securities;
(c) use all reasonable efforts to complete the distribution of
Offered Securities as soon as possible;
(d) not solicit subscriptions for the Offered Securities, trade in
Offered Securities or otherwise do any act in furtherance of a
trade of Offered Securities in any jurisdictions outside of
the Qualifying Provinces, except as contemplated in Schedule
"A" attached hereto or in such other jurisdictions outside of
Canada and the United States provided that such sales are made
in accordance with the applicable securities laws of such
jurisdictions and not engage in the Directed Selling Efforts
as described in Schedule "A";
(e) as soon as reasonably practicable after the Closing Date
provide the Trust with a break down of the number of Offered
Securities sold in each of the Qualifying Provinces and, upon
completion of the distribution of the Offered Securities,
provide to the Trust
and to the Securities Commissions notice to that effect, if
required by Applicable Securities Laws.
No Underwriter will be liable to the Trust under this paragraph 20 with
respect to a default by any of the other Underwriters but will be liable to the
Trust only for its own default.
22. Severance
If one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this agreement, but this agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never been contained
herein.
23. Relationship Between the Trust, Harvest and the Underwriters
The Trust and Harvest: (i) acknowledge and agree that the Underwriters
have certain statutory obligations as registrants under the Applicable
Securities Laws and have fiduciary relationships with their clients; (ii)
acknowledge and agree that the Underwriters are neither the agents of the Trust
or Harvest nor otherwise fiduciaries of the Trust or Harvest; and (iii) consent
to the Underwriters acting hereunder while continuing to act for their clients.
To the extent that the Underwriters' statutory obligations as registrants under
the Applicable Securities Laws or fiduciary relationships with their clients
conflicts with their obligations hereunder the Underwriters shall be entitled to
fulfil their statutory obligations as registrants under the Applicable
Securities Laws and their duties to their clients. Nothing in this agreement
shall be interpreted to prevent the Underwriters from fulfilling their statutory
obligations as registrants under the Applicable Securities Laws or to act as a
fiduciary of their clients.
24. Stabilization
In connection with the distribution of the Offered Securities, the
Underwriters may over-allot or effect transactions which stabilize or maintain
the market price of the Offered Receipts, Offered Debentures and Trust Units at
levels other than those which might otherwise prevail in the open market, but in
each case only as permitted by applicable law. Such stabilizing transactions, if
any, may be discontinued at any time.
25. Governing Law
This agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta and the laws of Canada applicable therein.
Each of the Trust, Harvest and the Underwriters hereby attorn to the
non-exclusive jurisdiction of the courts of the Province of Alberta.
26. Time of the Essence
Time shall be of the essence of this agreement.
27. Counterpart Execution
This agreement may be executed in one or more counterparts each of
which so executed shall
constitute an original and all of which together shall constitute one and the
same agreement. Delivery of counterparts may be effected by facsimile
transmission.
28. Contractual Obligations of Trust
The parties hereto acknowledge that the obligations of the Trust
hereunder shall not be personally binding upon the Trustee, or any of the
unitholders of the Trust and that any recourse against the Trust, the Trustee or
any unitholder in any manner in respect of any indebtedness, obligation or
liability of the Trust arising hereunder or arising in connection herewith or
from the matters to which this agreement relates, if any, including without
limitation claims based on negligence or otherwise tortious behaviour, shall be
limited to, and satisfied only out of, the Trust Fund, as defined in the Trust
Indenture, as amended or restated from time to time.
29. Further Assurances
Each party to this agreement covenants agrees that from time to time,
it will, at the request of the requesting party, execute and deliver all such
documents and do all such other acts and things as any party hereto, acting
reasonably, may from time to time request be executed or done in order to better
evidence or perfect or effectuate any provision of this agreement or of any
agreement or other document executed pursuant to this agreement or any of the
respective obligations intended to be created hereby or thereby.
30. Use of Proceeds
Each of Harvest and the Trust hereby covenant and agree to use the net
proceeds of the sale of the Offered Securities hereunder in accordance with the
disclosure in the Prospectus.
31. Distributions
The Trust agrees that it shall not prior to the Closing Date declare or
pay or establish a record date for any distributions to Unitholders of the Trust
prior to the Closing Date, other than the regular monthly distribution of $0.25
per Trust Unit (or such greater amount determined by the Board of Directors of
Harvest) which is payable on August 15, 2005 to Unitholders of record on July
29, 2005 and if the Closing Date is extended to August 31, 2005, the anticipated
regular monthly distribution of $0.25 per Unit (or such greater amount
determined by the Board of Directors of Harvest) which will be payable on or
about September 15, 2005 to Unitholders of record on August 25, 2005.
32. U.S. Offers
(a) The Underwriters make the representations, warranties and
covenants applicable to them in Schedule "A" hereto and agree,
on behalf of themselves and their United States affiliates,
for the benefit of the Trust and Harvest, to comply with the
U.S. selling restrictions imposed by the laws of the United
States and set forth in Schedule "A" hereto, which forms part
of this agreement. Notwithstanding the foregoing provisions of
this paragraph, an Underwriter will not be liable to the Trust
under this paragraph or Schedule "A" with respect to a
violation by another Underwriter of the provisions of this
paragraph or Schedule "A" if the former Underwriter is not
itself also in violation.
(b) The Trust makes the representations, warranties and covenants
applicable to it in Schedule "A" hereto.
33. Entire Agreement
It is understood that the terms and conditions of this agreement
supersede any previous verbal or written agreement between the Underwriters and
the Trust or Harvest.
If the foregoing is in accordance with your understanding and is agreed
to by you, please confirm your acceptance by signing the enclosed copies of this
letter at the place indicated and by returning the same to National Bank
Financial Inc.
NATIONAL BANK FINANCIAL INC.
By: "L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇"
CIBC WORLD MARKETS INC.
By: "T. ▇▇▇▇▇▇▇ KITCHEN"
CANACCORD CAPITAL CORPORATION
By: "▇▇▇▇ ▇. ▇▇▇▇▇▇▇"
TD SECURITIES INC.
By: ALEC ▇.▇. ▇▇▇▇▇"
SCOTIA CAPITAL INC.
By: "▇▇▇▇ ▇▇▇▇▇▇"
GMP SECURITIES LTD.
By: "▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇"
TRISTONE CAPITAL INC.
By: "R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇"
▇▇▇▇▇▇▇ ▇▇▇▇▇ LTD.
By: "▇▇▇▇▇ ▇▇▇▇▇▇"
FIRSTENERGY CAPITAL CORP.
By: "▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇"
▇▇▇▇▇▇▇ SECURITIES INC.
By: "▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇"
ACCEPTED AND AGREED to as of the 11th day of July, 2005.
HARVEST ENERGY TRUST, by its attorney Harvest Operations Corp.
By: "▇▇▇▇▇ ▇. RAIN"
HARVEST OPERATIONS CORP.
By: "▇▇▇▇▇ ▇. RAIN"
SCHEDULE "A"
TERMS AND CONDITIONS FOR UNITED STATES OFFERS AND SALES
THIS IS SCHEDULE "A" TO THE UNDERWRITING AGREEMENT AMONG NATIONAL BANK
FINANCIAL INC., TD SECURITIES INC., CIBC WORLD MARKETS INC., SCOTIA
CAPITAL INC., CANACCORD CAPITAL CORPORATION, GMP SECURITIES LTD.,
FIRSTENERGY CAPITAL CORP., TRISTONE CAPITAL INC., ▇▇▇▇▇▇▇ SECURITIES
INC., ▇▇▇▇▇▇▇ ▇▇▇▇▇ LTD.., HARVEST ENERGY TRUST AND HARVEST OPERATIONS
CORP. MADE AS OF JULY 11, 2005.
As used in this Schedule "A", capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the underwriting
agreement to which this Schedule is annexed and the following terms shall have
the meanings indicated:
"Directed Selling Efforts" means directed selling efforts as that term
is defined in Regulation S. Without limiting the foregoing, but for
greater clarity in this Schedule, it means, subject to the exclusions
from the definition of directed selling efforts contained in Regulation
S, any activity undertaken for the purpose of, or that could reasonably
be expected to have the effect of, conditioning the market in the
United States for any of the Offered Securities and includes the
placement of any advertisement in a publication with a general
circulation in the United States that refers to the offering of the
Offered Securities;
"Institutional Accredited Investors" means institutional "accredited
investors" as such term is defined in Rule 501(a)(1), (2), (3) or (7)
of the U.S. Securities Act;
"Qualified Institutional Buyer" means a qualified institutional buyer
as that term is defined in Rule 144A;
"Regulation D" means Regulation D adopted by the SEC under the U.S.
Securities Act;
"Regulation S" means Regulation S adopted by the SEC under the U.S.
Securities Act;
"Rule 144A" means Rule 144A adopted by the SEC under the U.S.
Securities Act;
"SEC" means the United States Securities and Exchange Commission;
"Substantial U.S. Market Interest" means substantial U.S. market
interest as that term is defined in Regulation S;
"U.S. Exchange Act" means the United States Securities Exchange Act of
1934, as amended;
"U.S. Person" means a U.S. person as that term is defined in Regulation
S; "U.S. Securities Act" means the United States Securities Act of
1933, as amended; and
"United States" means the United States of America, its territories and
possessions, any state of the United States, and the District of
Columbia.
All other capitalized terms used but not otherwise defined in this
Schedule "A" shall have the meanings assigned to them in the Agreement to which
the Schedule "A" is attached.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERWRITERS
Each Underwriter acknowledges that the Offered Securities have not been
and will not be registered under the U.S. Securities Act and may be offered and
sold only in transactions exempt from or not subject to the registration
requirements of the U.S. Securities Act. Accordingly, neither the Underwriter
nor any of its affiliates, nor any person acting on their behalf, has made or
will make any Directed Selling Efforts in the United States with respect to the
Offered Securities or the Trust Units issuable pursuant to the Offered Receipts
and the Trust Units issuable upon conversion or redemption of the Offered
Debentures.
Each Underwriter represents and agrees to and with the Trust that:
1 It acknowledges that the Offered Securities, the Trust Units issuable
pursuant to the Offered Receipts and the Trust Units issuable upon
conversion or redemption of the Offered Debentures have not been and
will not be registered under the U.S. Securities Act and may not be
offered or sold within the United States except pursuant to an
exemption from the registration requirements of the U.S. Securities
Act. It has not offered and sold, and will not offer and sell, any
Offered Securities forming part of its allotment except (a) in an
offshore transaction in accordance with Rule 903 of Regulation S or (b)
in the United States in accordance with a private placement exemption
from registration as provided in paragraphs 3 through 8 below.
2 It has not entered and will not enter into any contractual arrangement
with respect to the distribution of the Offered Securities, except with
its affiliates, any selling group members or with the prior written
consent of the Trust. It shall require each of its U.S. broker-dealer
affiliates and each selling group member to agree, for the benefit of
the Trust to comply with, and shall use its best efforts to ensure that
each of its U.S. broker-dealer affiliates and each selling group member
complies with, the same provisions of this Schedule as apply to such
Underwriter as if such provisions applied to such U.S. broker-dealer
affiliate and selling group member.
3 All offers and sales of Offered Securities in the United States shall
be made through the U.S. registered broker-dealer affiliate of the
applicable underwriter in compliance with all applicable U.S.
broker-dealer requirements. Such broker-dealer affiliate is a Qualified
Institutional Buyer, is a duly registered broker-dealer with the SEC,
and is a member in good standing with the National Association of
Securities Dealers, Inc.
4 Offers and sales of Offered Securities in the United States by the
Underwriters or their U.S. registered broker-dealer affiliate shall not
be made by any form of general solicitation or general advertising (as
those terms are used in Regulation D) or in any manner involving a
public offering within the meaning of Section 4(2) of the U.S.
Securities Act.
5 Offers to sell and solicitations of offers to buy the Offered
Securities shall be made to a limited number of Institutional
Accredited Investors and in compliance with applicable state securities
laws of the United States. Offers to sell and solicitations of offers
to buy the Offered Securities by any Underwriter or its U.S. registered
broker-dealer affiliate shall also be made only to persons that in
purchasing such Offered Securities will be deemed to have represented
and agreed as provided in paragraphs 7(A) through (G) below (to the
extent such representations are applicable to the purchaser concerned).
6 All purchasers of the Offered Securities in the United States shall be
informed by an Underwriter, or its U.S. registered broker-dealer
affiliate, that the Offered Securities have not been and will not be
registered under the U.S. Securities Act and are being offered and sold
to such purchasers in reliance on an exemption from the registration
requirements of the U.S. Securities Act.
7 Each offeree in the United States has been or shall be provided by the
Underwriter through its U.S. registered broker-dealer affiliate, with a
U.S. placement memorandum (the "U.S. Memorandum") including the
Preliminary Prospectus and/or the Prospectus, as applicable, and each
purchaser will have received at or prior to the time of purchase of any
Offered Securities the U.S. Memorandum including the Prospectus. The
U.S. Memorandum shall set forth the following:
Each U.S. purchaser will, by its purchase of such Subscription Receipts
or Debentures, as applicable, be required to represent and agree for
the benefit of the Trust, the Underwriters and the U.S. Affiliates as
follows:
(A) it is authorized to consummate the purchase of the
Subscription Receipts and Debentures, as applicable;
(B) it is an Institutional Accredited Investor and is acquiring
such Subscription Receipts and Debentures, as applicable, for
its own account or for one or more investor accounts for which
it is exercising sole investment discretion and each such
investor is an Institutional Accredited Investor;
(C) it has received a copy of the Final Short Form Prospectus
dated _________, 2005, together with a United States covering
memorandum relating to the offering in the United States (all
such documents, the "Offering Documents") and it has been
afforded the opportunity (i) to ask such questions as we have
deemed necessary of, and to receive answers from,
representatives of the Trust concerning the terms and
conditions of the offering of the Securities and (ii) to
obtain such additional information which the Trust possesses
or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy and completeness of the
information contained in the Offering Documents and that it
has considered necessary in connection with our decision to
invest in the securities;
(D) it understands and acknowledges that the Subscription
Receipts, Debentures and Trust Units issuable pursuant thereto
or upon conversion thereof, as applicable, have not been and
will not be registered under the U.S. Securities Act or the
securities laws of any state of the United States, and are
therefore "restricted securities" within the meaning of the
Rule 144, and that if in the future it shall decide to resell,
pledge or otherwise transfer such Securities, the same may be
resold, pledged or otherwise transferred only (A) to the
Trust, (B) in the United States, in accordance with Rule 144A
to a person it reasonably believes is a "Qualified
Institutional Buyer" that purchases for its own account or for
the account of a Qualified Institutional Buyer and to whom
notice is given that the offer, sale or transfer is being made
in reliance on Rule 144A, and in compliance with any
applicable state securities laws of the United States, (C)
outside the United States, in accordance with Rule 904 of
Regulation S and in compliance with applicable local laws and
regulations, (D) in a transaction
exempt from registration under the U.S. Securities Act
pursuant to Rule 144 and in compliance with any applicable
state securities laws of the United States, or (E) in a
transaction that does not require registration under the U.S.
Securities Act or any applicable United States state
securities laws, and in the case of subparagraph (D) or (E),
it has furnished to the Trust an opinion of counsel of
recognized standing reasonably satisfactory to the Trust to
that effect;
(E) it understands that all Subscription Receipts, Debentures and
Trust Units issuable pursuant thereto or upon conversion
thereof, as applicable, sold in the United States as part of
this offering will bear a legend to the following effect:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR STATE SECURITIES LAWS. THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF HARVEST ENERGY TRUST THAT SUCH SECURITIES MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO HARVEST ENERGY
TRUST, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, OR (E) PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION AFTER PROVIDING A LEGAL OPINION OR OTHER EVIDENCE
SATISFACTORY TO HARVEST ENERGY TRUST.
IF THESE SECURITIES ARE BEING SOLD IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT AT A TIME WHEN
HARVEST ENERGY TRUST IS A "FOREIGN ISSUER" AS DEFINED IN
REGULATION S, A NEW CERTIFICATE BEARING NO LEGEND MAY BE
OBTAINED FROM VALIANT TRUST COMPANY UPON DELIVERY OF THIS
CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO VALIANT TRUST COMPANY AND HARVEST ENERGY
TRUST, TO THE EFFECT THAT THE SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT.
If the Subscription Receipts, Debentures or Trust Units
issuable pursuant thereto or upon conversion thereof, as
applicable are being sold in compliance with the requirements
of Rule 904 of Regulation S at a time when the Trust is a
"foreign issuer" as defined in Regulation S, the legend may be
removed by providing a declaration to Valiant Trust Company
substantially in the form of Exhibit II hereto, or as the
Trust may prescribe from time to time.
If the Subscription Receipts, Debentures or Trust Units
issuable pursuant thereto or upon conversion thereof, as
applicable are being sold under Rule 144 of the U.S.
Securities Act, the legend may be removed by delivery to
Valiant Trust Company of
an opinion of counsel of recognized standing and reasonably
satisfactory to the Trust, to the effect that such legend is
no longer required under the U.S. Securities Act or state
securities laws;
(F) it understands and acknowledges that it is making the
representations and warranties and agreements contained herein
with the intent that they may be relied upon by the Trust, the
Underwriters and the U.S. Affiliates in determining its
eligibility or (if applicable) the eligibility of others on
whose behalf it is contracting hereunder to purchase the
Subscription Receipts and Debentures; and
(G) it understands that it is required to sign and deliver a
purchaser's letter substantially in the form of Exhibit I
hereto in which it will agree to certain restrictions on the
transfer of the Subscription Receipts, Debentures or Trust
Units issuable pursuant thereto or upon conversion thereof, as
applicable.
8. At closing, the Underwriters, together with their U.S. Affiliates
selling Offered Securities in the United States, will provide a
certificate, substantially in the form of Exhibit III to this Schedule
relating to the manner of the offer and sale of the Offered Securities
in the United States.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE TRUST
The Trust represents, warrants, covenants and agrees that:
9. (a) The Trust is a "foreign issuer" within the meaning of Regulation S
and reasonably believes that there is no Substantial U.S. Market
Interest in the Offered Securities or Trust Units issuable pursuant
thereto or upon conversion thereof; (b) the Trust is not now and as a
result of the sale of Offered Securities contemplated hereby will not
be required to be registered as an "investment company" under the
United States Investment Company Act of 1940, as amended; and (c) none
of the Trust any of its affiliates, or any person acting on their
behalf has made or will make any Directed Selling Efforts in the United
States, or has engaged or will engage in any form of general
solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of the Offered
Securities in the United States.
Exhibit I
FORM OF U.S. PURCHASER'S LETTER
Dear Sirs:
In connection with our proposed purchase of Subscription Receipts
("SUBSCRIPTION RECEIPTS") representing the right to receive Trust Units ("TRUST
UNITS") of Harvest Energy Trust or 6.50% Convertible Subordinated Debentures
(the "Debentures") of Harvest Energy Trust (the "Trust"), we confirm and agree
as follows:
(a) we are authorized to consummate the purchase of the Subscription
Receipts and the Debentures, as applicable;
(b) we understand that the Subscription Receipts, Debentures and Trust
Units issuable pursuant thereto or upon conversion or redemption thereof, as
applicable, have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "Securities Act"), and that the sale
contemplated hereby is being made to Institutional Accredited Investors (as
defined in paragraph (c) below) in reliance on a private placement exemption
from registration under the Securities Act;
(c) we are an institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional
Accredited Investor") and are acquiring the Securities for our own account or
for one or more investor accounts for which we are exercising sole investment
discretion and each such investor account is an Institutional Accredited
Investor;
(d) we agree that if we decide to offer, sell or otherwise transfer or
pledge all or any part of the Subscription Receipts, Debentures and Trust Units
issuable pursuant thereto or upon conversion or redemption thereof, as
applicable, we will not offer, sell or otherwise transfer or pledge any of such
securities (other than pursuant to an effective registration statement under the
Securities Act), directly or indirectly unless:
(i) the sale is to the Trust; or
(ii) the sale is made in accordance with Rule 144A under
the Securities Act to a person it reasonably believes
is a "qualified institutional buyer" (as such term is
defined in Rule 144A under the Securities Act) that
purchases for its own account or for the account of a
qualified institutional buyer and to whom notice is
given that the offer, sale or transfer is being made
in reliance on Rule 144A, and in compliance with
applicable state securities laws of the United
States; or
(iii) the sale is made outside the United States in
accordance with the requirements of Rule 904 of
Regulation S under the Securities Act and in
compliance with
applicable local laws and regulations; or
(iv) the sale is made pursuant to the exemption from
registration under the Securities Act provided by
Rule 144 thereunder, and in compliance with any
applicable state securities laws of the United
States; or
(v) such securities are sold in a transaction that does
not require registration under the Securities Act or
any applicable United States state laws and
regulations governing the offer and sale of
securities;
and in the case of subparagraph (iv) or (v), we have furnished
to the Trust an opinion of counsel, of recognized standing
reasonably satisfactory to the Trust, to that effect;
(e) we understand and acknowledge that the Subscription Receipts,
Debentures and Trust Units issuable pursuant thereto or upon conversion thereof,
as applicable, are "restricted securities" as defined in Rule 144 under the
Securities Act, and upon the original issuance thereof, and until such time as
the same is no longer required under applicable requirements of the Securities
Act or state securities laws, the certificates representing the Securities, and
all certificates issued in exchange therefor or in substitution thereof, shall
bear on the face of such certificates the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF HARVEST ENERGY TRUST THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
HARVEST ENERGY TRUST, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(D) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER, OR (E) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION AFTER PROVIDING A LEGAL OPINION OR OTHER
EVIDENCE SATISFACTORY TO HARVEST ENERGY TRUST.
IF THESE SECURITIES ARE BEING SOLD IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT AT A TIME WHEN HARVEST ENERGY
TRUST IS A "FOREIGN ISSUER" AS DEFINED IN REGULATION S, A NEW
CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM VALIANT TRUST
COMPANY UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO VALIANT TRUST COMPANY AND
HARVEST ENERGY TRUST, TO THE EFFECT THAT THE SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT;
If Securities are being sold in compliance with the requirements of
Rule 904 of Regulation S at a time when the Trust is a "foreign issuer" as
defined in Regulation S, the legend may be removed by providing a declaration to
Valiant Trust Company substantially in the form of Exhibit II to the United
States memorandum referred to in paragraph (f) below (or as the Trust may
prescribe from
time to time);
If any such Securities are being sold pursuant to Rule 144 of the Securities
Act, the legend may be removed by delivery to Valiant Trust Company of an
opinion of counsel, of recognized standing reasonably satisfactory to the Trust,
to the effect that such legend is no longer required under applicable
requirements of the Securities Act or state securities laws;
(f) we have received a copy of the Final Short Form Prospectus dated
_________, 2005, together with a United States covering memorandum relating to
the offering in the United States (all such documents, the "Offering Documents")
and we have been afforded the opportunity (i) to ask such questions as we have
deemed necessary of, and to receive answers from, representatives of the Trust
concerning the terms and conditions of the offering of the Securities and (ii)
to obtain such additional information which the Trust possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
and completeness of the information contained in the Offering Documents and that
we have considered necessary in connection with our decision to invest in the
securities;
(g) we acknowledge that we are not purchasing the Subscription Receipts
and Debentures, as applicable, as a result of any general solicitation or
general advertising, as those terms are used in Regulation D under the
Subscription Receipts and/or Debentures Act including, without limitation,
advertisements, articles, notices and other communications published in any
newspaper, magazine or similar media or broadcast over television or radio or
any seminar or meeting whose attendees have been invited by general solicitation
or general advertising; and
(h) we understand and acknowledge that the Trust (i) is under no
obligation to be or to remain a "foreign issuer," (ii) may not, at the time we
sell the Subscription Receipts and Debentures and Trust Units, as applicable, or
at any other time, be a "foreign issuer," and (iii) may engage in one or more
transactions which could cause the Trust not to be a "foreign issuer." If the
Trust is not a "foreign issuer" at the time of any sale pursuant to Rule 904 of
Regulation S, the certificate delivered to the buyer may continue to bear the
legend contained in paragraph (e) above.
We acknowledge that the representations and warranties and agreements
contained herein are made by us with the intent that they may be relied upon by
you, the Underwriters referred to in the Offering Documents and the U.S.
affiliates of the Underwriters, in determining our eligibility or (if
applicable) the eligibility of others on whose behalf we are contracting
hereunder to purchase the Subscription Receipts and/or Debentures. We further
agree that by accepting the Subscription Receipts and/or Debentures we shall be
representing and warranting that the foregoing representations and warranties
are true as at the closing time with the same force and effect as if they had
been made by us at the closing time and that they shall survive the purchase by
us of the Subscription Receipts and/or Debentures and shall continue in full
force and effect notwithstanding any subsequent disposition by us of the
Subscription Receipts and/or Debentures.
You, the Underwriters and the Underwriters' U.S. affiliates are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Dated: [NAME OF PURCHASER]
________________________________ ________________________________
By:_____________________________
Name:___________________________
Title: _________________________
Exhibit II
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: Valiant Trust Company
as registrar, transfer agent and trustee
for Subscription Receipts, Debentures and Trust Units
The undersigned:
(A) acknowledges that the sale of the securities of Harvest Energy
Trust (the "Trust") to which this declaration relates is being made in reliance
on Rule 904 of Regulation S ("Regulation S") under the United States Securities
Act of 1933, as amended (the "1933 Act"); and
(B) certifies that
(1) it is not an affiliate of the Trust (as defined in
Rule 405 under the 1933 Act),
(2) the offer of such securities was not made to a person
in the United States and either (a) at the time the buy order was
originated, the buyer was outside the United States, or we and any
person acting on its behalf reasonably believe that the buyer was
outside the United States, or (b) the transaction was executed on or
through the facilities of the Toronto Stock Exchange and neither we nor
any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States,
(3) neither we nor any affiliate of the seller nor any
person acting on any of our or their behalf has engaged or will engage
in any "directed selling efforts" (as such term is defined in
Regulation S) in the United States in connection with the offer and
sale of such securities,
(4) the sale is bona fide and not for the purpose of
"washing off" the resale restrictions imposed because the securities
are "restricted securities" (as such term is defined in Rule 144(a)(3)
under the 1933 Act),
(5) we do not intend to replace such securities with
fungible unrestricted securities; and
(6) the contemplated sale is not a transaction, or part
of a series of transactions which, although in technical compliance
with Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. Terms used herein have the
meanings given to them by Regulation S.
Dated: _____________________________________ By:______________________________
Name:
Title:
Exhibit III
UNDERWRITERS' CERTIFICATE
In connection with the private placement in the United States of
subscription receipts and 6.50% convertible extendible subordinated debentures
(collectively, the "Securities") of Harvest Energy Trust (the "Trust") pursuant
to the Underwriting Agreement dated July 11, 2005 among the Trust, Harvest
Operations Corp. and the Underwriters named therein (the "Underwriting
Agreement"), each of the undersigned does hereby certify as follows:
(i) x is a duly registered broker or dealer with the United
States Securities and Exchange Commission and is a member of
and in good standing with the National Association of
Securities Dealers, Inc. On the date hereof, and all offers
and sales of the Securities in the United States will be
effected by x in accordance with all U.S. broker-dealer
requirements;
(ii) each offeree was provided with a copy of the U.S. placement
memorandum, including the Canadian final prospectus dated x,
2005 for the offering of the Securities in the United States,
and no other written material has been used by us in
connection with the offering of the Securities;
(iii) immediately prior to our transmitting such U.S. placement
memorandum to such offerees, we had reasonable grounds to
believe and did believe that each offeree was an institutional
"accredited investor" (an "Institutional Accredited Investor")
within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933, as amended (the "U.S. Securities
Act") and, on the date hereof, we continue to believe that
each U.S. person purchasing Securities from us is a
Institutional Accredited Investor;
(iv) no form of general solicitation or general advertising (as
those terms are used in Regulation D under the U.S. Securities
Act) was used by us, including advertisements, articles,
notices or other communications published in any newspaper,
magazine or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees had been
invited by general solicitation or general advertising, in
connection with the offer or sale of the Securities in the
United States; and
(v) the offering of the Securities in the United States has been
conducted by us in accordance with the terms of the
Underwriting Agreement.
Terms used in this certificate have the meanings given to them in the
Underwriting Agreement unless otherwise defined herein.
Dated this __________ day of___________ 2005.
By: By:
___________________________________ ___________________________________
Name: Name:
Title: Title:
By: By:
___________________________________ ___________________________________
Name: Name:
Title: Title:
