EXHIBIT 1
---------
CONTROLLED EQUITY OFFERING(SM)
SALES AGREEMENT
July 28, 2006
CANTOR XXXXXXXXXX & CO.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
PRIMEWEST ENERGY TRUST (the "TRUST"), a open-ended investment trust
created under the laws of the Province of Alberta, Canada ("ALBERTA") and
PRIMEWEST ENERGY INC., a corporation amalgamated under the laws of Alberta
("PRIMEWEST ENERGY"), confirm their respective agreements (collectively, this
"AGREEMENT") with Cantor Xxxxxxxxxx & Co. ("CF&CO" and together with the Trust
and PrimeWest Energy, the "PARTIES" and individually a "PARTY"), as follows:
1. ISSUANCE AND SALE OF TRUST UNITS. The Trust agrees that, from time
to time during the term of this Agreement, on the terms and subject to the
conditions set forth herein, it may issue and sell through CF&Co, acting as
agent and/or principal, up to 3,000,000 (the "DESIGNATED UNITS") trust units of
the Trust, each of which represents an equal undivided beneficial interest in
the Trust (the "TRUST UNITS"); provided, however, that with respect to "at the
market" sales (as defined in Section 3) of Trust Units, the market value of the
Trust Units distributed shall not exceed 10% of the aggregate market value of
the Trust's outstanding Trust Units calculated in accordance with Section 9.2
of National Instrument 44-102 ("NI 44-102") of the Canadian Securities
Administrators (the "CSA"). Notwithstanding anything to the contrary contained
herein, the parties hereto agree that compliance with the limitations set forth
in this Section 1 on the number of Trust Units issued and sold under this
Agreement shall be the sole responsibility of the Trust, and CF&Co shall have
no obligation in connection with such compliance. The issuance and sale of
Trust Units through CF&Co will be effected pursuant to the Registration
Statement (as defined in Section 6(b)) filed by the Trust and declared
effective by the Securities and Exchange Commission (the "COMMISSION").
2. PLACEMENTS. Each time that the Trust wishes to issue and sell Trust
Units hereunder (each, a "PLACEMENT"), it will notify CF&Co by electronic mail
(or such other method mutually agreed to in writing by the Parties) (a
"PLACEMENT NOTICE") containing the parameters in accordance with which it
desires the Trust Units to be sold, which shall at a minimum include the number
of Trust Units (the "PLACEMENT UNITS") to be issued and sold, the manner(s) in
which sales are to be made, the time period during which sales are requested to
be made, any limitation on the number of Trust Units that may be sold in any
one day and any minimum price below which sales may not be made a form of which
containing such minimum sales parameters necessary is attached hereto as
SCHEDULE 1. The Placement Notice shall originate from any two of the
individuals from PrimeWest Energy, on behalf of the Trust, set forth on
SCHEDULE 2 (with a copy to each of the other individuals from PrimeWest Energy,
on behalf of the Trust, listed on such schedule), and shall be addressed to
each of the individuals from CF&Co set forth on SCHEDULE 2, as such SCHEDULE 2
may be amended from time to time. The Placement Notice shall be effective upon
receipt by CF&Co unless and until (i) in accordance with the notice
requirements set forth in Section 4, CF&Co declines to accept the terms
contained therein and the terms and provisions of this Agreement; (ii) the
entire amount of the Placement Units have been sold, (iii) in accordance with
the notice requirements set forth in Section 4, the Trust suspends or
terminates the Placement Notice, (iv) the Trust issues a subsequent Placement
Notice with parameters superseding those on the earlier dated Placement Notice,
or (v) the Agreement has been terminated under the provisions of Section 11.
CF&Co shall be paid compensation equal to two and one-half percent (2.5%) of
the gross proceeds from the sales of the Placement Units pursuant to the terms
of this Agreement (the "AGENT'S FEE"). It is expressly acknowledged and agreed
that neither the Trust nor CF&Co will have any obligation whatsoever with
respect to a Placement or any Placement Units unless and until the Trust
delivers and CF&Co receives a Placement Notice pursuant to the terms set forth
above, and then only upon the terms specified therein and herein. In the event
of a conflict between the terms of this Agreement and the terms of a Placement
Notice, the terms of the Placement Notice will control.
3. SALE OF PLACEMENT UNITS BY CF&CO. Subject to the terms and
conditions herein set forth, upon the Trust's issuance and CF&Co's receipt of a
Placement Notice, and unless the sale of the Placement Units described therein
has been declined, suspended, or otherwise terminated in accordance with the
terms of this Agreement, CF&Co, for the period specified in the Placement
Notice, will use its commercially reasonable efforts consistent with its normal
trading and sales practices and applicable state and federal laws, rules and
regulations and the NYSE rules to sell such Placement Units up to the amount
specified, and otherwise in accordance with the terms of such Placement Notice.
CF&Co will provide written confirmation to the Trust no later than the opening
of the Trading Day (as defined below) immediately following the Trading Day on
which it has made sales of Placement Units hereunder setting forth the number
of Placement Units sold on such day, the prices at which the Placement Units
were sold, the gross proceeds from such sales, the compensation payable by the
Trust to CF&Co pursuant to Section 2 with respect to such sales, and the Net
Proceeds (as defined in Section 5(a)) payable to the Trust, with an itemization
of the deductions made by CF&Co (as set forth in Section 5(a)) from the gross
proceeds that it receives from such sales. After consultation with the Trust
and subject to the terms of the Placement Notice, CF&Co may sell Placement
Units by any method permitted by law deemed to be an "at the market" offering
as defined in Rule 415 of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), including without limitation sales made directly on the
NYSE, on any other existing trading market for the Trust Units or to or through
a market maker. The Trust acknowledges and agrees that (i) there can be no
assurance that CF&Co will be successful in selling Placement Units, and (ii)
CF&Co will incur no liability or obligation to the Trust or any other person or
entity if it does not sell Placement Units for any reason other than a failure
by CF&Co to use its commercially reasonable efforts consistent with its normal
trading and sales practices and applicable state and federal laws, rules and
regulations and the New York Stock Exchange ("NYSE") rules to sell such
Placement Units as required under this Section 3. For the purposes hereof,
"TRADING DAY" means any day on which Trust Units are purchased and sold on the
principal market on which the Trust Units are listed or quoted, which for the
purposes of this agreement means the NYSE.
-2-
4. SUSPENSION OF SALES. The Trust or CF&Co may, upon notice to the
other party in writing (including by electronic mail correspondence to each of
the individuals of the other Party set forth on SCHEDULE 2, if receipt of such
correspondence is actually acknowledged by any of the individuals to whom the
notice is sent, other than via auto-reply) or by telephone (confirmed
immediately by verifiable facsimile transmission or electronic mail
correspondence to each of the individuals of the other Party set forth on
SCHEDULE 2), suspend any sale of Placement Units; provided, however, that such
suspension shall not affect or impair either party's obligations with respect
to any Placement Units sold hereunder prior to the receipt of such notice.
Except as set forth in Section 11 herein, each of the Parties agrees that no
such notice under this Section 4 shall be effective against the other Parties
unless it is made to one of the individuals named on SCHEDULE 2 hereto, as such
Schedule may be amended from time to time by any Party by notice to each other
Party.
5. SETTLEMENT.
(a) SETTLEMENT OF PLACEMENT UNITS. Unless otherwise
specified in the applicable Placement Notice, settlement for sales
of Placement Units will occur on the third (3rd) Trading Day (or
such earlier day as is industry practice for regular-way trading)
following the date on which such sales are made (each, a
"SETTLEMENT DATE"). The amount of proceeds to be delivered to the
Trust on a Settlement Date against receipt of the Placement Units
sold (the "NET PROCEEDS") will be equal to the aggregate sales
price received by CF&Co at which such Placement Units were sold,
after deduction for (i) the Agent's Fee for such sales payable by
the Trust pursuant to Section 2 hereof, (ii) any other amounts due
and payable by the Trust to CF&Co hereunder pursuant to SECTION
7(U) (Expenses), and (iii) any transaction fees imposed by any
governmental or self-regulatory organization in respect of such
sales.
(b) DELIVERY OF PLACEMENT UNITS. On or before each
Settlement Date, the Trust will, or will cause its transfer agent
to, electronically transfer the Placement Units being sold by
crediting CF&Co's or its designee's account at The Depository Trust
Company through its Deposit and Withdrawal at Custodian System or
by such other means of delivery as may be mutually agreed upon by
the parties hereto which in all cases shall be freely tradeable
(subject to "control block" and other applicable legal
restrictions), transferable, registered Trust Units in good
deliverable form. On each Settlement Date, CF&Co will deliver the
related Net Proceeds in same day funds to an account designated by
the Trust on, or prior to, the Settlement Date. The Trust agrees
that if the Trust defaults in its obligation to deliver Placement
Units on a Settlement Date, the Trust agrees that in addition to
and in no way limiting the rights and obligations set forth in
Section 9(a) (Indemnification and Contribution) hereto, it will
hold CF&Co harmless against any loss, claim, damage, or expense
(including reasonable out-of-pocket fees and expenses of external
counsel), as incurred, arising out of or in connection with such
default by the Trust; provided that under no circumstances will
CF&Co be entitled to the Agent's Fee in connection with such
default.
-3-
6. REPRESENTATIONS AND WARRANTIES OF THE TRUST AND PRIMEWEST. Each of
the Trust and PrimeWest Energy jointly and severally represents and warrants
to, and agrees with, CF&Co that as of the date of this Agreement, as of each
Representation Date (as defined in Section 7(l) below) on which a certificate
is required to be delivered pursuant to Section 7(l) of this Agreement, and as
of the time of each sale of any Trust Units pursuant to this Agreement (the
"APPLICABLE TIME"):
(a) (i) the Trust meets the requirements under the securities
laws, rules, regulations and orders applicable to the Trust in
Alberta (collectively, "ALBERTA SECURITIES LAW") as interpreted and
applied by the Alberta Securities Commission (the "REVIEWING
AUTHORITY") for the use of a short form shelf prospectus with
respect to the Trust Units and for the distribution of securities
under the rules and procedures established in NI 44-102 and
National Instrument 44-101 (collectively, the "SHELF PROCEDURES");
(ii) a preliminary short form base shelf prospectus and a short
form base shelf prospectus (each in the English and French
languages, as applicable) in respect of the issue and sale of Trust
Units have been filed with the Reviewing Authority and with the
securities regulatory authorities (collectively, together with the
Reviewing Authority, the "QUALIFYING AUTHORITIES") in each of the
other provinces of Canada (collectively, together with Alberta, the
"QUALIFYING PROVINCES"); (iii) receipts have been obtained by the
Trust from the Reviewing Authority on its own behalf and on behalf
of the other Qualifying Authorities in respect of both the
preliminary short form base shelf prospectus and the short form
base shelf prospectus and any amendment thereto; the short form
base shelf prospectus for which a receipt has been obtained from
the Reviewing Authority on its own behalf and on behalf of the
other Qualifying Authorities, as such prospectus may have been most
recently amended or supplemented (excluding any supplement relating
only to a prior offering of Trust Units) prior to the date hereof,
if applicable, together with all documents incorporated or deemed
to be incorporated therein by reference, being hereinafter called
the "CANADIAN SHELF PROSPECTUS"; and the prospectus supplement
relating to the Designated Units that is to be filed by the Trust
with the Qualifying Authorities pursuant to the Shelf Procedures
and Alberta Securities Law in accordance with Section 7(a) hereof
is hereinafter referred to as the "CANADIAN PROSPECTUS SUPPLEMENT"
(the Canadian Shelf Prospectus, as supplemented by the Canadian
Prospectus Supplement, is hereinafter called the "CANADIAN
PROSPECTUS"); and (iv) no order having the effect of preventing or
suspending the use of any prospectus or prospectus supplement
relating to the Trust Units or otherwise preventing or suspending
the distribution of the Trust Units has been issued by any of the
Qualifying Authorities and, to the knowledge of the Trust, no
proceeding for that purpose has been initiated or is pending,
contemplated or threatened by any of the Qualifying Authorities;
(b) (i) the Trust meets the general eligibility requirements
for use of Form F-10 under the Securities Act (including the rules
and regulations (the "SECURITIES ACT REGULATIONS") of the
Commission thereunder), (ii) the Trust has filed with the
Commission (A) a registration statement, on Form F-10, File No.
(333-133818) that registers the Designated Units, which
registration statement includes the Canadian Shelf Prospectus with
such deletions therefrom and additions thereto as are permitted or
-4-
required by Form F-10 and the applicable Securities Act Regulations
(such registration statement, at any given time, including any
amendments thereto at such time, the exhibits and any schedules
thereto at such time, the documents incorporated or deemed to be
incorporated by reference therein at such time through the Canadian
Shelf Prospectus contained in such registration statement or
otherwise, is hereinafter called the "REGISTRATION STATEMENT"), and
(B) an appointment of agent for service of process upon both the
Trust and Computershare Trust Company of Canada ("COMPUTERSHARE"),
as the trustee of the Trust (the "TRUSTEE"), each on Form F-X
(collectively, the "FORM F-X") in conjunction with the filing of
the Registration Statement with the Commission; (iii) the
Registration Statement became effective on May 15, 2006 pursuant to
Rule 467(b) of the Securities Act upon notification of the
Commission by the Trust that a receipt had been issued in respect
of the Canadian Shelf Prospectus; (iv) subsequent to the date of
the effectiveness of the Registration Statement, no other document
with respect to the Registration Statement has heretofore been
filed or transmitted for filing with the Commission and no other
document incorporated or deemed to be incorporated by reference in
the prospectus contained therein has heretofore been filed with any
of the Qualifying Authorities, except for any documents filed with
the Commission in the same form as such document was heretofore
delivered to CF&Co ; (v) any post-effective amendments to the
Registration Statement are in the form previously delivered to
CF&Co and have been declared effective by the Commission in such
form; (vi) no stop order preventing or suspending the use of any
prospectus or the effectiveness of the Registration Statement has
been issued and, to the knowledge of the Trust, no proceeding for
that purpose has been initiated or is pending, contemplated or
threatened by the Commission; (vii) the Canadian Shelf Prospectus
(with such deletions therefrom and additions thereto as are
permitted or required by Form F-10 and the applicable Securities
Act Regulations) filed as part of the Registration Statement
relating to the Trust Units, in the form in which it has most
recently been filed, or transmitted for filing, with the Commission
on or prior to the date of this Agreement, including the documents
incorporated or deemed to be incorporated by reference therein at
the time of the execution of this Agreement, is hereinafter called
the "U.S. BASIC PROSPECTUS"; and (viii) the prospectus supplement
relating to the Designated Units to be filed with the Commission
pursuant to General Instruction II.L of Form F-10 under the
Securities Act in accordance with Section 7(a)(ii) is hereinafter
called the "U.S. PROSPECTUS SUPPLEMENT" (the U.S. Basic Prospectus,
as supplemented by the U.S. Prospectus Supplement, is hereinafter
called the "U.S. PROSPECTUS").
(c) as of the Applicable Time, and as of the Settlement Date,
the Registration Statement did not or will not include any untrue
statement of a material fact or omit or will omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(d) (i) the Canadian Prospectus complies, and any further
amendments or supplements to the Canadian Prospectus as of their
respective filing or effective dates, as the case may be, will
-5-
comply, in all material respects, with the applicable requirements
of Alberta Securities Law and the securities laws of the other
Qualifying Provinces as interpreted and applied by the Reviewing
Authority and the other Qualifying Authorities, respectively, and
the Canadian Prospectus (from and after the filing of a Canadian
Prospectus Supplement) and any amendment or supplement thereto, as
of their applicable dates and at all times subsequent thereto up to
and including the Settlement Date will constitute full, plain and
true disclosure of all material facts relating to the Trust and the
Designated Units; (ii) at the respective times the Registration
Statement (along with the Form F-X) and each amendment thereto
became effective, at each deemed effective date with respect to
CF&Co of the Designated Units pursuant to the applicable provisions
of the Securities Act and at the Settlement Date, the Registration
Statement complied and will comply in all material respects with
the requirements of the Securities Act and did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; (iii) the U.S. Prospectus
complies, and any further amendments or supplements thereto
complies or will comply, as applicable, as of their respective
issue dates and at the Settlement Date in all material respects
with the applicable requirements of the Securities Act, each such
prospectus delivered to CF&Co for their use in connection with the
offering of the Designated Units was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX (except to the extent permitted by Regulation
S-T), and the U.S. Prospectus, and any amendment or supplement to
such prospectus, at the time such prospectus or any such amendment
or supplement was issued and at the Settlement Date, did not
contain or will not contain an untrue statement of a material fact
or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
(e) the representations and warranties in subsections (a)
through (d) above of this Section 6 shall not apply to statements
in or omissions from the Canadian Prospectus, the Registration
Statement or the U.S. Prospectus made in reliance upon and in
conformity with any written information furnished to the Trust by
CF&Co expressly for use therein;
(f) the Trust has been properly created and organized and is
validly existing as a trust under the laws of Alberta.
Computershare has been duly appointed as the sole trustee of the
Trust pursuant to the Declaration of Trust of the Trust dated
August 2, 1996, as amended and restated as of November 6, 2002,
amended as of May 6, 2004 and as further amended from time to time
(the "DECLARATION OF TRUST"). The Trustee has the capacity and
power to own and lease the properties and assets of the Trust and
to conduct the business of the Trust as described in the Canadian
Prospectus, the Registration Statement and the U.S. Prospectus
(including the documents incorporated by reference therein);
(g) each of the Trust's wholly-owned or majority-owned
subsidiaries or partnerships which constitute a significant
subsidiary of the Trust (as that term is defined under Rule 1-02 of
Regulation S-X under the Securities Exchange Act of 1934, as
-6-
amended (including the rules and regulations of the Commission
thereunder, the "EXCHANGE ACT")) as at the date hereof (each a
"SIGNIFICANT SUBSIDIARY" and, collectively, the "SIGNIFICANT
SUBSIDIARIES") is listed in SCHEDULE 3 to this Agreement. All other
wholly-owned or majority-owned subsidiaries of the Trust do not as
of the date of this Agreement, singly or in the aggregate,
constitute "significant subsidiaries" (as such term is defined
under Rule 1-02 of Regulation S-X under the Exchange Act);
(h) PrimeWest Energy and each other Significant Subsidiary
(1) has been duly incorporated, amalgamated or organized and is
validly subsisting under the laws of its jurisdiction of
incorporation, amalgamation or organization, as applicable, (2) has
all requisite power and authority to own, lease and operate its
properties and conduct its business as described in the Canadian
Prospectus and the U.S. Prospectus and (3) is duly qualified to
carry on such business in the respective jurisdictions under which
they were incorporated, amalgamated or organized, as applicable,
and each other jurisdiction in which a material portion of such
business is carried on and is in good standing under the laws of
each such jurisdiction which requires such qualification, except
where the failure of PrimeWest Energy and each other Significant
Subsidiary to be so qualified would not individually or in the
aggregate, have a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs or
business prospects of the Trust and its subsidiaries, taken as a
whole (a "MATERIAL ADVERSE EFFECT");
(i) the Trust has the requisite power, authority and capacity
to issue the Designated Units to enter into this Agreement and to
perform its obligations hereunder;
(j) Computershare Trust Company of Canada, at its principal
offices in the cities of Calgary and Toronto, has been duly
appointed as the registrar and transfer agent in respect of the
Trust Units and Computershare Investor Services, LLC, at its
principal office in the City of New York, has been duly appointed
as co transfer agent in respect of the Trust Units;
(k) the issuance of Trust Units by the Trust is authorized
under the Declaration of Trust. The Trust is authorized to issue an
unlimited number of Trust Units. The number of outstanding Trust
Units as of a recent date is as set forth in the notes to the
financial statements of the Trust that are most recently
incorporated or deemed to be incorporated by reference in the
Canadian Prospectus and the U.S. Prospectus. All the issued Trust
Units have been duly and validly authorized and issued. The
Designated Units referred to in this Agreement will at the
Settlement Date be duly and validly issued;
(l) all the issued and outstanding shares in the capital
stock of PrimeWest Energy have been duly and validly authorized and
issued and are fully paid and non-assessable, and all outstanding
shares in the capital stock of PrimeWest Energy, except for the
exchangeable shares described in the U.S. Prospectus and the
Canadian Prospectus, are owned directly by the Trust free and clear
of any perfected security interest or any other security interest,
-7-
claim, lien or encumbrance except as described in the audited
annual consolidated financial statements of the Trust, together
with the notes thereto;
(m) each of the Trust and its Significant Subsidiaries has
conducted its business in compliance in all material respects with
all applicable laws, regulations and rules of each jurisdiction in
which its business is carried on and holds and maintains in good
standing all necessary licences, leases, permits, authorizations
and other approvals necessary to permit it to conduct its business
or to own, lease or operate its properties and assets (including
without limitation any rights or registrations relating to any
intellectual property rights) except where the failure to obtain
any licence, lease, permit, authorization or other approval would
not have a Material Adverse Effect;
(n) each of the Trust and its Significant Subsidiaries owns
or leases all such properties as are necessary to the conduct of
its operations as presently conducted. Each of Trust and its
Significant Subsidiaries has good and defensible title to all of
its properties including, but not limited to, the royalty interest
granted to the Trust pursuant to the Royalty Agreements (as defined
herein), reflected in its financial statements or described in the
Canadian Prospectus, the Registration Statement or the U.S.
Prospectus, subject only to the encumbrances identified as
"permitted encumbrances" in the credit agreements to which the
Trust or any of its Significant Subsidiaries is a party;
(o) the working interests in crude oil, natural gas, natural
gas liquids and sulphur held, directly or indirectly, by PrimeWest
Energy reflect in all material respects the right of PrimeWest
Energy or its subsidiaries to explore for or receive production
from such underlying properties;
(p) except as set forth in the Registration Statement, the
U.S. Prospectus and the Canadian Prospectus (in each case,
exclusive of any supplement or amendment thereto after execution of
this Agreement), neither of the Trust or any of its Significant
Subsidiaries is aware of any defects, failures or impairments in
the title of either of the Trust or any of its Significant
Subsidiaries to its properties (including in respect of any action,
suit, proceeding or inquiry, whether instituted, pending or, to the
knowledge of either of the Trust or any of its Significant
Subsidiaries, threatened or whether or not discovered by any third
party) which, in the aggregate, could reasonably be expected to
have a material adverse effect on (i) the quantity and pre-tax
discounted present value of the estimated future net revenue values
of oil and natural gas reserves attributable to properties owned by
PrimeWest Energy as at the date of the most recent reserve report
prepared in respect of those properties by an independent reserve
engineer (the "INDEPENDENT RESERVE ENGINEER") and described in the
Registration Statement, the U.S. Prospectus and the Canadian
Prospectus (the "RESERVE REPORT"); (ii) the current production of
PrimeWest Energy; or (iii) the current cash flow of PrimeWest
Energy;
-8-
(q) except as otherwise disclosed in the Registration
Statement, the U.S. Prospectus and the Canadian Prospectus (in each
case, exclusive of any supplement or amendment thereto after
execution of this Agreement), there has been no material adverse
change to PrimeWest's oil and natural gas reserves as reported in
the Reserve Report since the date of the Reserve Report and the
Reserve Report fairly presents the determination of the oil and
natural gas reserves of PrimeWest attributable to the properties
evaluated in such Reserve Report and the production profile and
costs associated therewith, as of the effective date of the Reserve
Report; and PrimeWest Energy has made available to the Independent
Reserve Engineer, prior to the issuance of the Reserve Report, all
information requested by the Independent Reserve Engineer for the
purposes of preparing the Reserve Report, which information did not
contain any material misrepresentation or omission;
(r) except as set forth in the Registration Statement, the
U.S. Prospectus and the Canadian Prospectus (in each case,
exclusive of any supplement or amendment thereto after execution of
this Agreement), or as would not individually or in the aggregate
result in a Material Adverse Effect, (i) each of the Trust and its
Significant 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; (ii) each of the Trust and its
Significant 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, expect in each case where the result would
not have a Material Adverse Effect; (iii) neither the Trust nor any
of its Significant Subsidiaries (including, if applicable, any
predecessor companies thereof) have received any notice of, or been
prosecuted for any offence alleging, material non-compliance with
any Environmental Laws, or liability for the investigation or
remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, and neither the
Trust nor any of its Significant Subsidiaries (including, if
applicable, any predecessor companies) have settled any allegation
of material non-compliance or liability short of prosecution; and
(iv) 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 its Significant Subsidiaries, nor have either the
Trust or any of its Significant Subsidiaries received notice of any
of the same and which orders directions or notices remain
outstanding as unresolved;
-9-
(s) in the ordinary course of its business, PrimeWest Energy
periodically reviews the effect of Environmental Laws on the
business, operations and properties of the Trust and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean up,
closure of properties or compliance with Environmental Laws, or any
permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the
basis of such review, PrimeWest Energy has reasonably concluded
that such associated costs and liabilities are reflected in all
material respects in the financial statements of the Trust
incorporated or deemed to be incorporated by reference in the
Canadian Prospectus and the U.S. Prospectus;
(t) no labor problem or dispute with the employees of
PrimeWest Energy exists or, to the knowledge of the Trust, is
threatened or imminent, and neither the Trust nor PrimeWest Energy
is aware of any existing or imminent labor disturbance by the
employees of PrimeWest Energy's principal suppliers, contractors or
customers, that would reasonably be expected to have a Material
Adverse Effect, except as set forth in the Registration Statement,
the U.S. Prospectus and the Canadian Prospectus;
(u) each of the Trust and PrimeWest Energy is in compliance
in all material respects with all presently applicable provisions
of Canadian federal and provincial pension and employee benefit
laws and has not incurred and does not expect to incur material
liability under such laws in excess of similar liabilities that are
reflected in the financial statements of the Trust incorporated or
deemed to be incorporated by reference in the Canadian Prospectus
and the U.S. Prospectus;
(v) each of the Trust and its Significant Subsidiaries is
insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and
customary in the businesses in which it is engaged; all policies of
insurance insuring each of the Trust and its Significant
Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; there are no
material claims by either of the Trust or its Significant
Subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a
reservation of rights clause;
(w) except as otherwise disclosed in the Canadian Prospectus,
the Registration Statement and the U.S. Prospectus (in each case
exclusive of any supplement or amendment thereto after execution of
this Agreement), or except as would not, individually or in the
aggregate, result in a Material Adverse Effect, all tax returns
required to be filed by the Trust and its Significant Subsidiaries
have been filed, and all taxes and other assessments of a similar
nature (whether imposed directly or through withholding) including
any interest, additions to tax or penalties applicable thereto due
or claimed to be due from such entities have been paid, other than
those being contested in good faith and for which adequate reserves
have been provided;
-10-
(x) there are no contracts or documents which are required to
be described in the Registration Statement, in the U.S. Prospectus
or the Canadian Prospectus, including any of the documents
incorporated by reference therein, or to be filed as exhibits
thereto which have not been so described and filed as required; and
there are no reports or information that in accordance with the
requirements of the Reviewing Authority or any of the other
Qualifying Authorities must be made publicly available in
connection with the offering of the Designated Units that have not
been made publicly available as required; and there are no
documents, other than the Canadian Prospectus Supplement relating
to the Designated Units, required to be filed with the Reviewing
Authority or any of the other Qualifying Authorities in connection
with the Canadian Prospectus that have not been filed as required;
(y) the Trust qualifies as a mutual fund trust under the
INCOME TAX ACT (Canada) (the "TAX ACT") and the Trust and PrimeWest
Energy have conducted and will conduct their affairs so as to
enable the Trust to continue to qualify as a mutual fund trust
under the Tax Act, including (in the case of the Trust) by limiting
its activities to investing the property of the Trust in: (i) the
royalty payable by PrimeWest Energy to the Trust pursuant to the
amended and restated royalty agreement dated May 5, 2005 between
PrimeWest Energy and the trustee of the Trust, as amended; (ii) the
royalty payable by PrimeWest Gas to the Trust pursuant to a royalty
agreement dated January 24, 2003 between PrimeWest Energy and
PrimeWest Gas, as assigned to the Trust (along with the royalty
agreement dated May 5, 2005, and in each case as amended at the
time, the "ROYALTY AGREEMENTS"); and (iii) other property in which
a mutual fund trust is permitted by the Tax Act to invest;
(z) for the most recently ended taxable year, the Trust was
not a passive foreign investment company ("PFIC") within the
meaning of Section 1297 of the United States Internal Revenue Code
of 1986 (the "CODE"), as amended, and each of the Trust and
PrimeWest Energy reasonably believes it is not likely to become a
PFIC in subsequent taxable years; neither the Trust nor PrimeWest
Energy has received any communication from any individual at the
United States Internal Revenue Service asserting that either the
Trust or PrimeWest Energy was a PFIC for the most recently ended
taxable year;
(aa) the Trust is not an "Investment Company" within the
meaning of that term under the United States INVESTMENT COMPANY ACT
OF 1940;
(bb) at the time of filing the Registration Statement the
Trust was not an "ineligible issuer," as defined under Rule 405
under the Securities Act;
(cc) each of the Trust and PrimeWest Energy has, or will at
the appropriate time have, the necessary trust or corporate power
and authority to execute and deliver the Canadian Prospectus, the
U.S. Prospectus and the Registration Statement and all necessary
trust or corporate action has been, or will at the appropriate time
be, taken by each of the Trust and PrimeWest Energy to authorize
-11-
the execution and delivery by it of such documents and the filing
thereof, as the case may be, with the Reviewing Authority, the
Qualifying Authorities and the Commission, as applicable;
(dd) each of the Trust and PrimeWest Energy has the necessary
trust or corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to carry out
the transactions contemplated herein and by the Canadian Prospectus
and the U.S. Prospectus and this Agreement has been duly
authorized, executed and delivered by the Trust and PrimeWest
Energy and constitutes a legal, valid and binding obligation of the
Trust and PrimeWest Energy enforceable against them in accordance
with its terms subject to the qualifications set forth in the
opinion of counsel delivered pursuant to SECTION 7(n);
(ee) the execution and delivery of this Agreement, the
performance by the Trust and PrimeWest Energy of their obligations
hereunder, the sale by the Trust at a Settlement Date of Placement
Units and the delivery of those Placement Units at a Settlement
Date do not and will not result in a breach of, and do not and will
not create a state of facts which, after notice or lapse of time or
both, will result in a breach of, and do not and will not conflict
with (i) any statute, rule or regulation applicable to the Trust or
its Significant Subsidiaries; (ii) any terms, conditions or
provisions of the articles, by-laws, constating documents or
resolutions of the directors (or any committee thereof),
shareholders or unitholders, as the case may be, of the Trust or
its Significant Subsidiaries which are in effect at the date
hereof; (iii) any terms, conditions or provisions of any material
indenture, agreement or instrument to which any of the Trust or its
Significant Subsidiaries is a party or by which it is contractually
bound as at the date hereof or the Settlement Date, including, but
not limited to, the Royalty Agreements; or (iv) any judgment,
decree or order of any court, governmental agency or body or
regulatory authority having jurisdiction over or binding the Trust
or its Significant Subsidiaries or their properties or assets; and
will not result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Trust or its
Significant Subsidiaries pursuant to any material mortgage, note,
indenture, contract, agreement, instrument, lease or other document
to which the Trust or its Significant Subsidiaries is a party or by
which it is bound or to which any of the property or assets of the
Trust or its Significant Subsidiaries is subject, except, in the
case of clauses (iii) and (iv) for any breach or conflict would
not, individually or in the aggregate, result in a Material Adverse
Effect or materially and adversely affect the ability of the Trust
or PrimeWest Energy to perform any of their respective obligations
under this Agreement;
(ff) except such as shall have been made or obtained, no
consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental agency or body or
regulatory authority is required for the execution, delivery and
performance by each of the Trust and PrimeWest Energy of this
Agreement, the sale of the Designated Units as contemplated herein,
or the completion by the Trust and PrimeWest Energy of the
-12-
transactions contemplated herein, other than filing of the Canadian
Prospectus Supplement and the U.S. Prospectus Supplement in
accordance with SECTION 7(a) hereof;
(gg) none of the Trust or its Significant Subsidiaries is in
violation of its constating documents or by-laws; and each of the
Trust and its Significant Subsidiaries is not in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, note, lease or other
agreements or instrument to which it is a party or by which it may
be bound or to which any of its property or assets is subject;
(hh) no person has any agreement, option, right or privilege
with or against the Trust or PrimeWest Energy for the purchase,
subscription or issuance of Trust Units or shares, issued or
unissued, in the capital of PrimeWest Energy except for (i) Trust
Units issuable pursuant to vested unit appreciation rights granted
under the Trust's long term incentive plan; (ii) Trust Units
issuable under the Trust's Premium Distribution, Distribution
Reinvestment and Optional Trust Unit Purchase Plan; (iii) Trust
Units issuable pursuant to the exchange of Exchangeable Shares (as
defined in the Canadian Prospectus and the U.S. Prospectus) of
PrimeWest Energy; and (iv) any other agreements, options, rights
and privileges described in the Canadian Prospectus and the U.S.
Prospectus; no person has rights to require the Trust to file a
registration statement under the Securities Act or a prospectus
under applicable Canadian securities laws to register or qualify,
as applicable, the offer or sale of any securities of the Trust,
except as described in the Canadian Prospectus and the U.S.
Prospectus, or to require the Trust to include such securities with
the Trust Units registered pursuant to the Registration Statement
or qualified under the Canadian Prospectus, in each case as
described in the Canadian Prospectus, the Registration Statement
and the U.S. Prospectus;
(ii) the Trust is a reporting issuer or the equivalent in
good standing in each of the Qualifying Provinces having such a
concept within the meaning of the applicable securities laws in
such Qualifying Provinces; the Trust is not in default of any
requirement of Alberta Securities Law, and has a similar status
under the securities laws of each of the other Qualifying
Provinces; and the Trust is a "foreign private issuer" as defined
under Rule 405 of the Securities Act;
(jj) the consolidated financial statements (including any
supporting schedules) of the Trust included or incorporated by
reference in the Registration Statement, the U.S. Prospectus and
the Canadian Prospectus, together with the related notes (the
"PRIMEWEST FINANCIAL STATEMENTS"), (1) present fairly the financial
position, results of operations and cash flows of the Trust and its
consolidated subsidiaries at the dates and for the periods
indicated, (2) comply in all material respects with the applicable
requirements of Alberta Securities Laws and, with respect to the
Registration Statement and the U.S. Prospectus, the Securities Act,
and (3) have been prepared in accordance with generally accepted
accounting principles in Canada ("CANADIAN GAAP") applied on a
consistent basis (except as otherwise described therein); the
-13-
reconciliation of the PrimeWest Financial Statements to generally
accepted accounting principles in the United States contained in
the notes to such financial statements complies with the applicable
accounting rules of the Commission and the Exchange Act;
(kk) the accountants who audited the audited PrimeWest
Financial Statements included in the Registration Statement are,
and during the period covered by their report thereon were, (1)
independent public accountants with respect to the Trust and
PrimeWest Energy as required by the Securities Act and the
Securities Act Regulations, and (2) objective with respect to the
Trust and PrimeWest Energy within the meaning of the Rules of
Professional Conduct of the Institute of Chartered Accountants of
Alberta and independent chartered accountants with respect to the
Trust as prescribed by Alberta Securities Laws;
(ll) the inclusion of the non-GAAP financial measures
relating to the Trust included or incorporated by reference in the
Registration Statement and the U.S. Prospectus complies with the
requirements of Regulation G, as applicable to a foreign private
issuer filing a registration statement on Form F-10 under the
multijurisdictional disclosure system;
(mm) since the respective dates as of which information is
given in the Registration Statement, the U.S. Prospectus or the
Canadian Prospectus, except as otherwise stated therein:
(i) there has not been any material adverse change in the
condition (financial or otherwise), earnings, business
affairs or business prospects of the Trust and its
subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business;
(ii) the Trust and its Significant Subsidiaries have carried on
business in the ordinary course and there have been no
transactions entered into by the Trust or any of its
subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Trust and
its subsidiaries considered as one enterprise; and
(iii) except for regular monthly distributions on the Trust Units
in the amounts and at the times disclosed, there has been
no dividend or distribution of any kind declared, paid or
made by the Trust on its Trust Units;
(nn) except as otherwise disclosed in the Registration
Statement, the U.S. Prospectus and the Canadian Prospectus, there
are no actions, suits, proceedings or inquiries, whether on behalf
of or against the Trust or any of its subsidiaries, to the
knowledge of the Trust or PrimeWest Energy, pending or threatened
against or affecting the Trust or any of its subsidiaries at law or
in equity, before or by any court or federal, provincial, municipal
or governmental or regulatory department, commission, board,
bureau, agency, authority, body or instrumentality, domestic or
foreign, or any arbitrator which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect or
have a material adverse effect on the consummation of any of the
transactions contemplated by this Agreement;
-14-
(oo) neither the Trust nor PrimeWest has any knowledge of any
outstanding rights of first refusal or other pre-emptive rights of
purchase which entitle any person to acquire any material amount of
the property or assets of the Trust or its Significant
Subsidiaries;
(pp) except as disclosed in the PrimeWest Financial
Statements, the Trust does not have any material contingent
liabilities;
(qq) the Designated Units referred to in this Agreement have
attributes substantially as shall be set forth in the Registration
Statement, the U.S. Prospectus and the Canadian Prospectus;
(rr) there are no transfer taxes or other similar fees or
charges under the federal laws of Canada or the United States or
the laws of any state or province, or any political subdivision
thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance or sale by the Trust of
the Designated Units pursuant thereto;
(ss) the Trust maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences; except
as described in the Registration Statement, the U.S. Prospectus and
the Canadian Prospectus (in each case, exclusive of any supplement
or amendment thereto after execution of this Agreement), since the
end of the Trust's most recent audited fiscal year, to the
knowledge of PrimeWest Energy (x) any material weaknesses in the
Trust's internal control over financial reporting (whether or not
remediated) or (y) any change in the Trust's internal control over
financial reporting that has materially affected, or is reasonably
likely to materially affect, the Trust's internal control over
financial reporting;
(tt) the Trust has established and maintains "disclosure
controls and procedures" (as such term is defined in Rule 13a - 15e
and 15d - 15e under the Exchange Act and Multilateral Instrument
52-109 of the CSA); and such disclosure controls and procedures are
effective to perform the functions for which they were established;
PrimeWest Energy is not aware of: (i) any significant deficiencies
in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
Trust's ability to record, process, summarize, and report financial
information in respect of which PrimeWest Energy has not advised
CF&Co prior to the date of this Agreement; or (ii) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the Trust's internal
control over financial reporting; any material weaknesses in the
design or operation of internal control over financial reporting of
-15-
which PrimeWest is aware have been identified for the Trust's
auditors; and since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant
changes in internal control over financial reporting that are
reasonably likely to materially adversely affect internal control
over financial reporting;
(uu) the Trust has provided to CF&Co true, correct, and
complete copies of all documentation pertaining to any extension of
credit in the form of a personal loan made, directly or indirectly,
by the Trust to any director or executive officer of PrimeWest
Energy, and since July 30, 2002, the Trust has not, directly or
indirectly, including through any subsidiary: (i) extended credit,
arranged to extend credit, or renewed any extension of credit, in
the form of a personal loan, to or for any director or executive
officer of PrimeWest Energy; or (ii) made any material
modification, including any renewal thereof, to any term of any
personal loan to any director or executive officer of PrimeWest
Energy which loan was outstanding on July 30, 2002;
(vv) there is and has been no failure on the part of the
Trust or any of PrimeWest Energy's directors or officers, in their
capacities as such, to comply with any provision of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith applicable to the Trust,
including Sections 302 and 906 related to certifications, in each
case applicable to the Trust or any of PrimeWest Energy's directors
or officers, in their capacities as such;
(ww) to the knowledge of the Trust, the Registration
Statement is not the subject of a pending proceeding or examination
under Section 8(d) and 8(e) of the Securities Act, and neither the
Trust or PrimeWest Energy is the subject of a pending proceeding
under Section 8A of the Securities Act in connection with the
offering of the Trust Units;
(xx) neither the sale of the Designated Units by the Trust
hereunder nor the use of proceeds thereof will cause any U.S.
person participating in the offering, either as underwriter and/or
purchaser of the Designated Units, to violate the regulations of
the United States Treasury Department set forth under 31 CFR,
Subtitle B, Chapter V, as amended, or any enabling legislation or
executive order relating thereto (the "SANCTIONS REGULATIONS");
(yy) the Trust and its Significant Subsidiaries have not,
directly or indirectly, (i) made or authorized any contribution,
payment or gift of funds or property to any official, employee or
agent of any governmental agency, authority or instrumentality of
any jurisdiction or (ii) made any contribution to any candidate for
public office, in either case, where either the payment or the
purpose of such contribution, payment or gift was, is, or would be
prohibited under the U.S. FOREIGN CORRUPT PRACTICES ACT OF 1977, as
amended, or the CANADA CORRUPTION OF FOREIGN PUBLIC OFFICIALS ACT,
or the rules and regulations promulgated thereunder;
(zz) neither the Trust nor PrimeWest Energy, nor any
affiliate of either, has taken, nor will the Trust or PrimeWest
Energy, or any affiliate of either, take, directly or indirectly,
-16-
any action which is designed to or which has constituted or which
would be expected to cause or result in stabilization or
manipulation of the price of any security of the Trust to
facilitate the sale or resale of the Designated Units;
(aaa) The Trust has not relied upon CF&Co or legal counsel
for CF&Co for any legal, tax or accounting advice in connection
with the offering and sale of the Placement Units;
(bbb) Neither the Trust nor any of the Significant
Subsidiaries has incurred any liability for any finder's fees or
similar payments in connection with the transactions herein
contemplated, except as may otherwise exist with respect to CF&Co
pursuant to this Agreement; and
(ccc) Other than as would not individually or in the
aggregate result in a Material Adverse Effect, the Trust and the
Significant Subsidiaries are in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Trust and the
Significant Subsidiaries would have any liability; the Trust and
the Subsidiaries have not incurred and do not expect to incur
liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Code; and each "pension plan" for which the Trust or
the Significant Subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss
of such qualification.
(ddd) No forward looking statement within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange
Act contained in the U.S. Prospectus, the Registration Statement,
or any other document filed with the Commission has been made or
reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
(eee) The Trust acknowledges and agrees that CF&Co has
informed the Trust that CF&Co may, to the extent permitted under
the Securities Act and the Exchange Act, purchase and sell Trust
Units for its own account while this Agreement is in effect
provided that (i) no such purchase or sale shall take place while a
Placement Notice is in effect (except to the extent CF&Co may
engage in sales of Placement Units purchased or deemed purchased
from the Trust as a "riskless principal" or in a similar capacity),
(ii) the Trust shall not be deemed to have authorized or consented
to any such purchase or sale by CF&Co and (iii) CF&Co will not
over-allot Trust Units in connection with the distribution of
Placement Units in an at the market distribution or effect any
other transactions that are intended to stabilize or maintain the
market price of the Trust Units.
-17-
7. COVENANTS OF THE TRUST AND PRIMEWEST ENERGY. The Trust and
PrimeWest Energy jointly and severally covenant and agree with CF&Co:
(a) to prepare each of the Canadian Prospectus Supplement and
the U.S. Prospectus Supplement in relation to the applicable
Designated Units in a form approved by CF&Co, acting reasonably,
and to file (i) the Canadian Prospectus Supplement with the
Reviewing Authority in accordance with the Shelf Procedures not
later than the Reviewing Authority's close of business on the
second Business Day (as defined in SECTION 12) following the
execution and delivery of this Agreement relating to the Designated
Units; and (ii) the U.S. Prospectus Supplement with the Commission
pursuant to General Instruction II.L. of Form F-10 not later than
the Commission's close of business on the Business Day following
the date of the filing thereof with the Reviewing Authority;
(b) if a Placement Notice is pending, (i) to give CF&Co
notice of their intention to file or prepare any further amendment
or supplement to the Registration Statement, the U.S. Basic
Prospectus, the U.S. Prospectus or the Canadian Prospectus,
including pursuant to filings with the Qualifying Authorities or
the Commission that are incorporated by reference therein, in each
case after the execution of this Agreement and prior to the
Settlement Date for such Designated Units, (ii) to furnish CF&Co
with copies of any such documents a reasonable amount of time prior
to such proposed filing, amendment or supplement and (iii) to not
file or use any such document to which CF&Co or counsel for CF&Co
shall reasonably object, unless the filing or use of such document
is required by applicable law;
(c) (i) to advise CF&Co promptly of any amendment or
supplement to the Registration Statement, the U.S. Basic
Prospectus, the U.S. Prospectus or the Canadian Prospectus after
the Settlement Date and furnish CF&Co with copies thereof and (ii)
to file promptly all reports required to be filed by the Trust with
the Reviewing Authority pursuant to Alberta Securities Law and the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the
Exchange Act, in each case, for so long as the delivery of a
prospectus (or in lieu thereof the notice referred to in Rule
173(a) under the Securities Act) is required in connection with the
offering or sale of such Designated Units, and during such period
to advise CF&Co, promptly after it receives notice thereof, of the
time when any amendment to the Canadian Prospectus has been filed
or receipted, when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the U.S. Basic
Prospectus, the U.S. Prospectus or the Canadian Prospectus or any
amended U.S. Prospectus or Canadian Prospectus has been filed with
the Qualifying Authorities or the Commission;
(d) if a Placement Notice is pending, to advise CF&Co of the
issuance by the Qualifying Authorities or the Commission of any
stop order or of any order preventing or suspending the use of any
prospectus relating to the Designated Units, of the suspension of
the qualification of such Designated Units for offering or sale in
any jurisdiction, of the initiation or, to the knowledge of the
-18-
Trust, the threatening of any proceeding for any such purpose, or
of any request by the Qualifying Authorities or the Commission for
the amending or supplementing of the Registration Statement, the
Canadian Prospectus, the U.S. Basic Prospectus or the U.S.
Prospectus or for additional information relating to the Designated
Units and, in the event of the issuance of any such stop order or
of any such order preventing or suspending the use of any
prospectus relating to the Designated Units or suspending any such
qualification, or such order ceasing or suspending the distribution
of the Designated Units or the trading in the securities of the
Trust, to promptly use its commercially reasonable efforts to
obtain the withdrawal of such order;
(e) to furnish CF&Co, as soon as practicable on the second
Business Day following the date of this Agreement, with copies of
the U.S. Prospectus and the Canadian Prospectus in New York, New
York, if so requested, as amended or supplemented in such
quantities as CF&Co may reasonably request, and, if the delivery of
a prospectus (or in lieu thereof the notice referred to in Rule
173(a) under the Securities Act) is required with respect to any
Designated Units at any time in connection with the offering or
sale of the Designated Units and if at such time any event shall
have occurred as a result of which the U.S. Prospectus or the
Canadian Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
U.S. Prospectus or the Canadian Prospectus (or in lieu thereof the
notice referred to in Rule 173(a) under the Securities Act) is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Canadian
Prospectus or the U.S. Prospectus or to file any document
incorporated by reference in the Canadian Prospectus or the U.S.
Prospectus in order to comply with Alberta Securities Law, the
securities laws of each of the Qualifying Provinces, the Securities
Act, the Exchange Act or the Trust Indenture Act, to notify CF&Co
and upon its approval, acting reasonably, to file such document and
to prepare and furnish without charge to CF&Co and to any dealer in
securities as many copies as CF&Co may from time to time reasonably
request of an amended U.S. Prospectus and Canadian Prospectus or a
supplement to the U.S. Prospectus and Canadian Prospectus which
will correct such statement or omission or effect such compliance;
and in case CF&Co is required to deliver a prospectus (or in lieu
thereof the notice referred to in Rule 173(a) under the Securities
Act) in connection with sales of any of the Designated Units at any
time nine months or more after the time of issue of the U.S.
Prospectus, upon CF&Co's request but at the expense of CF&Co, to
prepare and deliver to CF&Co as many written and electronic copies
as CF&Co may reasonably request of an amended or supplemented U.S.
Prospectus complying with Section 10(a)(3) of the Securities Act;
(f) to make generally available to holders of its Trust Units
("UNITHOLDERS") as soon as practicable, but in any event not later
than 18 months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act), an
earnings statement of the Trust and its subsidiaries on a
-19-
consolidated basis (which need not be audited) complying with
Section 11(a) of the Securities Act and the Securities Act
Regulations (including, at the option of the Trust, Rule 158);
(g) that neither the Trust nor any of its Significant
Subsidiaries will take, directly or indirectly, any action that
will result in a violation by any U.S. person participating in the
offering of the Sanctions Regulations with respect to the sale of
the Designated Units hereunder and the use of proceeds thereof.
Without limiting the foregoing, the Trust will not use the proceeds
of the sale of the Designated Units to fund any activities or
business with any entity or individual with respect to which U.S.
persons are prohibited from doing business under the Sanctions
Regulations; provided, however, that the Trust makes no covenant
under this paragraph that would violate Canadian law;
(h) to furnish to CF&Co copies of the Registration Statement,
as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto and documents incorporated
by reference therein), and the Canadian Prospectus and, so long as
delivery of a prospectus by CF&Co may be required by applicable
Canadian securities laws and the Securities Act, as many copies of
the Canadian Prospectus and the U.S. Prospectus and any amendment
or supplement thereto as CF&Co may reasonably request and such
delivery shall constitute the Trust's consent to the use by CF&Co
of the Registration Statement, the Canadian Prospectus, the U.S.
Prospectus and any supplements or amendments thereto (and the
documents incorporated therein by reference) in connection with the
offering and sale to the public of the Designated Units;
(i) that other than in the circumstances contemplated in
Section 6(ii), to the extent and on the terms provided for in this
Agreement, the Trust will not, without the prior written consent of
CF&Co, such consent not to be unreasonably withheld, offer, sell,
contract to sell, pledge, or otherwise dispose of any Trust Units
(other than the Designated Units specified in this Agreement) or
any securities convertible into, or exercisable, or exchangeable
for, Trust Units, or publicly announce an intention to effect any
such transaction, during the period beginning on the fifth (5th)
Trading Day immediately prior to the date on which a Placement
Notice is delivered to, and received by, CF&Co and ending on the
fifth (5th) Trading Day immediately following the Settlement Date
with respect to Placement Units sold pursuant to such Placement
Notice;
(j) unless publicly available on SEDAR or XXXXX, to furnish
to CF&Co promptly for a period of two years from the date of this
Agreement (i) copies of any reports, proxy statements, or other
communications which the Trust shall send to its Unitholders or
shall from time to time publish or publicly disseminate, (ii)
copies of all annual and current reports filed with the Commission
on Form 40-F or Form 6-K (each as defined in Section 7(m)), as
applicable, or such other similar forms as may be designated by the
Commission, and (iii) copies of documents or reports filed with any
national securities exchange on which any class of securities of
the Trust is listed;
-20-
(k) unless publicly available on SEDAR or XXXXX, upon written
request, to furnish to CF&Co as early as practicable prior to the
time of purchase and any additional time of purchase of Designated
Units, as the case may be, but not later than two Business Days
prior thereto, a copy of the latest available unaudited interim and
monthly consolidated financial statements, if any, of the Trust
which have been read by the Trust's independent auditors, as stated
in their letter to be furnished pursuant to SECTION 8(f) hereof;
(l) During the term of this Agreement, on or prior to the
date that the first Trust Units are sold pursuant to the terms of
this Agreement and each time the Trust (i) files the U.S.
Prospectus relating to the Placement Units or amends or supplements
the Registration Statement or the U.S. Prospectus relating to the
Placement Units (other than a prospectus supplement filed in
accordance with Section 7(a) of this Agreement) by means of a
post-effective amendment, sticker, or supplement but not by means
of incorporation of document(s) by reference to the Registration
Statement or the U.S. Prospectus relating to the Placement Units;
(ii) files an annual report on Form 40-F under the Exchange Act
("FORM 40-F"); or (iii) furnishes a quarterly report on Form 6-K
under the Exchange Act ("FORM 6-K") or furnishes an amended
quarterly report or any amended financial statement on Form 6-K
(each date of filing of one or more of the documents referred to in
clauses (i) through (iii) shall be a "REPRESENTATION DATE"); the
Trust shall furnish CF&Co with a certificate, in the form attached
hereto as EXHIBIT 7(l). The requirement to provide a certificate
under this SECTION 7(l) shall be waived for any Representation Date
occurring at a time at which no Placement Notice is pending, which
waiver shall continue until the earlier to occur of the date the
Trust delivers a Placement Notice hereunder (which for such
calendar quarter shall be considered a Representation Date) and the
next occurring Representation Date; provided, however, that such
waiver shall not apply for any Representation Date on which the
Trust files its annual report on Form 40-F. Notwithstanding the
foregoing, if the Trust subsequently decides to sell Placement
Units following a Representation Date when the Trust relied on such
waiver and did not provide CF&Co with a certificate under this
Section 7(l), then before the Trust delivers the Placement Notice
or CF&Co sells any Placement Units, the Trust shall provide CF&Co
with a certificate, in the form attached hereto as EXHIBIT 7(l),
dated the date of the Placement Notice.
(m) LEGAL OPINION. On or prior to the date that the first
Trust Units are sold pursuant to the terms of this Agreement, and
within three (3) Trading Days of each Representation Date with
respect to which the Trust is obligated to deliver a certificate in
the form attached hereto as EXHIBIT 7(l) for which no waiver is
applicable, the Trust shall cause to be furnished to CF&Co a
written opinion of Stikeman Elliott LLP, counsel to the Trust and
PrimeWest Energy (the "TRUST COUNSEL") and a written opinion of
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP (or such other counsel
determined by the Trust and PrimeWest) U.S. counsel to the Trust
and PrimeWest Energy ("SPECIAL TRUST COUNSEL"), dated the date that
the first Trust Units are sold pursuant to the terms of this
Agreement or the Representation Date, as applicable, substantially
similar to the applicable form attached hereto as EXHIBIT 7(m)(1)
-21-
(for the filing of the Canadian Prospectus Supplement and U.S.
Prospectus Supplement relating to the Placement Units), and EXHIBIT
7(m)(2) (for subsequent Representation Dates), but modified, as
necessary, to relate to the Canadian Prospectus and the U.S.
Prospectus and any amendment or supplement thereto; provided,
however, that in lieu of such opinion, counsel may furnish CF&Co
with a letter to the effect that CF&Co may rely on a prior opinion
delivered under this SECTION 7(n) to the same extent as if it were
dated the date of such letter (except that statements in such prior
opinion shall be deemed to relate to the Registration Statement and
the Prospectus as amended or supplemented at such Representation
Date).
(n) COMFORT LETTER. On or prior to the date that the first
Trust Units are sold pursuant to the terms of this Agreement and
thereafter within three (3) Trading Days of each Representation
Date occurring during any period in which the U.S. Prospectus
relating to the Placement Units is required to be delivered by
CF&Co (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Act) and each
Representation Date with respect to which the Trust is obligated to
deliver a certificate in the form attached hereto as EXHIBIT 7(l)
for which no waiver is applicable, the Trust shall cause its
independent accountants to furnish CF&Co letters (the "COMFORT
LETTERS"), dated the date that the first Trust Units are sold
pursuant to the terms of this Agreement or the Representation Date,
as applicable, and having a cut-off not more than three Business
Days prior to such date, in form and substance satisfactory to
CF&Co, (i) confirming that they are independent public accountants
with respect to the Trust and PrimeWest Energy within the meaning
of the Securities Act and the Securities Act Regulations and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of such date, the conclusions and
findings of such firm with respect to the financial information and
other matters ordinarily covered by accountants' "comfort letters"
to underwriters in connection with registered public offerings (the
first such letter, the "INITIAL COMFORT LETTER") and (iii) updating
the Initial Comfort Letter with any information that would have
been included in the Initial Comfort Letter had it been given on
such date and modified as necessary to relate to the Canadian
Prospectus and the U.S. Prospectus, as amended and supplemented to
the date of such letter;
(o) to apply the net proceeds from the sale of the Designated
Units in the manner set forth under the caption "USE OF PROCEEDS"
in the Canadian Prospectus and the U.S. Prospectus;
(p) that the Trust will maintain a transfer agent in
accordance with the applicable rules of each of the Toronto Stock
Exchange ( the "TSX") and the NYSE and, if necessary under the
Declaration of Trust, a registrar for the Trust Units;
(q) that each of the Trust and PrimeWest Energy will use its
reasonable best efforts to monitor all aspects of the Trust's
affairs relevant to its continuing qualification as a "mutual fund
-22-
trust" for purposes of the Canadian Tax Act, and will promptly
notify CF&Co upon becoming aware of any circumstance that may cause
the Trust to fail to continue to so qualify;
(r) each Placement Notice issued by the Trust to CF&Co to
solicit offers to purchase Placement Units shall be deemed to be an
affirmation that the representations and warranties made by it in
this Agreement are true and correct in all material respects at the
time such Placement Notice is issued, except to the extent such
representation and warranty is solely as of a specific date, and
that the Trust has complied in all material respects with all of
the agreements to be performed by it hereunder at or prior to such
time; and
(s) Neither the Trust nor the Significant Subsidiaries will
be or become, at any time prior to the termination of this
Agreement, an "Investment Company," within the meaning of that term
under the United States Investment Company Act of 1940, assuming no
change in the Commission's current interpretation as to entities
that are not considered an investment company.
(t) Each of the Trust and PrimeWest, jointly and severally
agree, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, in accordance with the
provisions of SECTION 11 hereunder, will pay the following all
expenses incident to the performance of its obligations hereunder,
including, but not limited to, expenses relating to (i) the
preparation, printing and filing of the Registration Statement,
Canadian Prospectus, U.S. Prospectus, and each amendment and
supplement thereto, (ii) the preparation, issuance and delivery of
the Designated Units, (iii) the printing and delivery to CF&Co of
copies of the U.S. Prospectus and any amendments or supplements
thereto, and of this Agreement, and (iv) the fees and expenses
incurred in connection with the listing of the Placement Shares for
trading on the NYSE.
8. CONDITIONS TO CF&CO'S OBLIGATIONS. The obligations of CF&Co
hereunder with respect to any sale of Placement Units will be subject to the
completion by CF&Co of a due diligence review satisfactory to CF&Co in its
reasonable judgment, and to the continuing satisfaction (or waiver by CF&Co in
its sole discretion) of the following additional conditions:
(a) (i) the Canadian Prospectus Supplement in relation to the
applicable Designated Units shall have been filed with the
Reviewing Authority under the Shelf Procedures; and (ii) the U.S.
Prospectus Supplement in relation to the applicable Designated
Units shall have been filed with the Commission pursuant to General
Instruction II.L. of Form F-10 under the Securities Act, in each
case, within the applicable time period prescribed for such filing
and in accordance with Section 7(a) hereof; and all requests for
additional information on the part of the Qualifying Authorities
and the Commission shall have been complied with to the reasonable
satisfaction of counsel to CF&Co ;
(b) no Canadian Prospectus, U.S. Prospectus or amendment or
supplement to the Registration Statement, the Canadian Prospectus
or the U.S. Prospectus, including documents deemed to be
-23-
incorporated by reference therein, shall have been filed to which
CF&Co, acting reasonably, objects;
(c) at the Applicable Time and at the Settlement Date for
such Placement Units (i) no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated
or threatened by the Commission; (ii) no order of any of the
Qualifying Authorities to cease distribution of the Designated
Units shall have been issued, and no proceedings for such purpose
shall have been instituted or threatened; and (iii) no stop order
suspending or preventing the use of any prospectus shall have been
initiated or threatened by the Commission;
(d) all the representations and warranties of the Trust and
PrimeWest Energy contained in this Agreement shall be true and
correct on each Representation Date, with the same force and effect
as if made on and as of such Representation Date, and the Trust
shall have complied with all agreements and all conditions on its
part to be performed or satisfied hereunder at or, prior to such
Representation Date;
(e) CF&Co shall have received the opinions of Trust Counsel
and Special Trust Counsel required to be delivered pursuant SECTION
7(m) on or before the date on which delivery of such opinion is
required pursuant to SECTION 7(m);
(f) CF&Co shall have received the Comfort Letter required to
be delivered pursuant SECTION 7(o) on or before the date on which
delivery of such letter is required pursuant to SECTION 7(O);
(g) CF&Co shall have received the certificate required to be
delivered pursuant to SECTION 7(l) on or before the date on which
delivery of such certificate is required pursuant to SECTION 7(l);
(h) the Trust shall have complied with the provisions of
SECTION 7(f) hereof with respect to the furnishing of prospectuses;
(i) the Designated Units shall (i) have been listed and
admitted and authorized for trading on the NYSE and (ii)
conditionally approved for listing on the TSX, and satisfactory
evidence of such actions shall have been provided to CF&Co ;
(j) the Trust shall have furnished to CF&Co and its counsel
such other documents and certificates as it may reasonably request
for the purpose of enabling them to pass upon the issuance and sale
of the Placement Units as herein contemplated or in order to
evidence the accuracy of any of the representations or warranties
or the fulfillment of any of the conditions herein contained or to
the accuracy and completeness of any statement in the Registration
Statement, the U.S. Prospectus or the Canadian Prospectus as of the
Settlement Date; and
-24-
(k) on or prior to the date that the first Trust Units are
sold pursuant to the terms of this Agreement, and within three (3)
Trading Days of each Representation Date, with respect to which the
Trust is obligated to deliver a certificate in the form attached
hereto as to Exhibit 7(l) for which no waiver is applicable, CF&Co
shall have received from Shearman & Sterling LLP, special counsel
for CF&Co, such opinion or opinions with respect to the
Registration Statement, the Canadian Prospectus and the U.S.
Prospectus and other related matters as CF&Co may require; and
(l) there shall not have occurred any event that would permit
CF&Co to terminate this Agreement pursuant to SECTION 11(a).
9. INDEMNIFICATION AND CONTRIBUTION.
(a) TRUST INDEMNIFICATION. The Trust and PrimeWest Energy
jointly and severally agree to indemnify and hold harmless CF&Co,
the directors, officers, partners, employees and agents of CF&Co
and each person, if any, who (i) controls CF&Co within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange
Act, or (ii) is controlled by or is under common control with CF&Co
(a "CF&CO AFFILIATE") from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to,
any and all investigative, legal and other expenses reasonably
incurred in connection with, and any and all amounts paid in
settlement, provided that any such settlement is effected with the
written consent of the Trust (in accordance with this Section 9(a))
of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as
and when incurred, to which CF&Co, or any such person, may become
subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based, directly or indirectly, on (i) any
untrue statement or alleged untrue statement of a material fact
contained in the Canadian Prospectus, the U.S. Basic Prospectus,
the U.S. Prospectus, or any amendment or supplement thereto, or in
any other material or document filed under any applicable
securities laws or delivered by or on behalf of the Trust or
PrimeWest Energy or pursuant to this Agreement or (ii) the omission
or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in
it not misleading; provided, however, that the indemnity contained
in this SECTION 9(a) shall not apply to the extent that such loss,
claim, liability, expense or damage arises from the sale of the
Placement Units pursuant to this Agreement and is caused directly
or indirectly by an untrue statement or omission made in reliance
on and in conformity with information relating to CF&Co and
furnished in writing to the Trust or PrimeWest Energy by CF&Co
expressly for inclusion in any of the Canadian Prospectus, U.S.
Basic Prospectus or U.S. Prospectus or any amendment or supplement
thereto or any other material or document filed under any
applicable securities laws or delivered pursuant to this Agreement.
These indemnity provisions will be in addition to any liability
that the Trust or PrimeWest Energy might otherwise have;
-25-
(b) CF&CO INDEMNIFICATION. CF&Co agrees to indemnify and hold
harmless the Trust, PrimeWest Energy and their respective
directors, trustees or officers, and each person, if any, who (i)
controls the Trust within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act or (ii) is
controlled by or is under common control with the Trust (a "TRUST
AFFILIATE") against any and all losses, liabilities, claims,
damages and expenses described in the indemnity contained in
SECTION 9(a), as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions,
made in the Canadian Prospectus, the U.S. Basic Prospectus the U.S.
Prospectus, the Registration Statement or any amendment or
supplement thereto or any other material or document filed under
any applicable securities laws or delivered pursuant to this
Agreement in reliance upon and in conformity with written
information relating to CF&Co and furnished to the Trust or
PrimeWest Energy by CF&Co expressly for inclusion in any of the
Canadian Prospectus, U.S. Basic Prospectus, U.S. Prospectus or
Registration Statement or any amendment or supplement thereto or
any other material or document filed under applicable securities
laws or delivered pursuant to this Agreement;
(c) PROCEDURE. Any party that proposes to assert the right to
be indemnified under this Section 9 will, promptly after receipt of
notice of commencement of any action against such party in respect
of which a claim is to be made against an indemnifying party or
parties under this SECTION 9, notify each such indemnifying party
of the commencement of such action, enclosing a copy of all papers
served, but the omission so to notify such indemnifying party will
not relieve the indemnifying party from (i) any liability that it
might have to any indemnified party otherwise than under this
SECTION 9 and (ii) any liability that it may have to any
indemnified party under the foregoing provision of this SECTION 9
unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the
extent that it elects by delivering written notice to the
indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with
any other indemnifying party similarly notified, to assume the
defense of the action, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to
the indemnified party of its election to assume the defense, the
indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for
the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified
party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized
in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based on advice of counsel to the indemnified
party) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential
-26-
conflict exists (based on advice of counsel to the indemnified
party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or
(4) the indemnifying party has not in fact employed counsel to
assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of
which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties
shall not, in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time for all
such indemnified party or parties. All such fees, disbursements and
other charges will be reimbursed by the indemnifying party promptly
as they are incurred. An indemnifying party will not, in any event,
be liable for any settlement of any action or claim effected
without its written consent. No indemnifying party shall, without
the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending
or threatened claim, action or proceeding relating to the matters
contemplated by this Section 9 (whether or not any indemnified
party is a party thereto), unless such settlement, compromise or
consent includes an unconditional release of each indemnified party
from all liability arising or that may arise out of such claim,
action or proceeding; and
(d) CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided
for in the foregoing paragraphs of this SECTION 9 is applicable in
accordance with its terms but for any reason is held to be
unavailable from the Trust and PrimeWest Energy, on one hand, or
CF&Co, on the other, the Trust and PrimeWest Energy, and CF&Co, as
applicable, will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative,
legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any
contribution received by the Trust or PrimeWest Energy from persons
other than CF&Co, such as persons who control the Trust or
PrimeWest Energy within the meaning of the Securities Act, officers
of the Trust who signed the Registration Statement and directors of
PrimeWest Energy, who also may be liable for contribution) to which
the Trust, PrimeWest and CF&Co may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by
the Trust and PrimeWest Energy on the one hand and CF&Co on the
other from the offering of the Designated Units. The relative
benefits received by the Trust and PrimeWest Energy on the one hand
and CF&Co on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the sale of Placement
Units (before deducting expenses) received by the Trust bear to the
total compensation (before deducting expenses) received by CF&Co
from the sale of Placement Units on behalf of the Trust. If, but
only if, the allocation provided by the foregoing sentence is not
permitted by applicable law, the allocation of contribution shall
be made in such proportion as is appropriate to reflect not only
the relative benefits referred to in the foregoing sentence but
-27-
also the relative fault of the Trust, on the one hand, and CF&Co,
on the other, with respect to the statements or omission that
resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Trust or CF&Co, the intent of the
Parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Trust, PrimeWest Energy and CF&Co agree that it would not be just
and equitable if contributions pursuant to this SECTION 9(d) were
to be determined by PRO RATA allocation or by any other method of
allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, liability,
expense, or damage, or action in respect thereof, referred to above
in this SECTION 9(d) shall be deemed to include, for the purpose of
this SECTION 9(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or
defending any such action or claim to the extent consistent with
SECTION 9(c) hereof. Notwithstanding the foregoing provisions of
this SECTION 9(d), CF&Co shall not be required to contribute any
amount in excess of the aggregate Agent's Fee received by it under
this Agreement and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For
purposes of this SECTION 9(d), any person who controls a party to
this Agreement within the meaning of the Securities Act, and any
officers, directors, partners, employees or agents of CF&Co, will
have the same rights to contribution as that party, and each
officer of PrimeWest Energy who signed the Registration Statement
will have the same rights to contribution as the Trust, subject in
each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim for
contribution may be made under this SECTION 9(d), will notify any
such party or parties from whom contribution may be sought, but the
omission to so notify will not relieve that party or parties from
whom contribution may be sought from any other obligation it or
they may have under this SECTION 9(d) except to the extent that the
failure to so notify such other party materially prejudiced the
substantive rights or defenses of the party from whom contribution
is sought. Except for a settlement entered into pursuant to the
last sentence of SECTION 9(c) hereof, no party will be liable for
contribution with respect to any action or claim settled without
its written consent if such consent is required pursuant to SECTION
9(c) hereof.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. The indemnity
and contribution agreements contained in SECTION 9 of this Agreement and all
representations and warranties of the Trust herein or in certificates delivered
pursuant hereto shall survive, as of their respective dates, regardless of (i)
any investigation made by or on behalf of CF&Co, any controlling persons, or
the Trust (or any of their respective officers, directors or controlling
-28-
persons), (ii) delivery and acceptance of the Placement Units and payment
therefor or (iii) any termination of this Agreement.
11. TERMINATION.
(a) CF&Co shall have the right by giving notice as
hereinafter specified at any time to terminate this Agreement if
(i) any Material Adverse Effect, or any development that has
actually occurred and that is reasonably expected to cause a
Material Adverse Effect has occurred that, in the reasonable
judgment of CF&Co, may materially impair the ability of CF&Co to
sell the Placement Units hereunder, (ii) the Trust shall have
failed, refused or been unable to perform any material agreement on
its part to be performed hereunder; provided, however, in the case
of any failure of the Trust to deliver (or cause another person to
deliver) any certification, opinion, or letter required under
SECTIONS 7(l), 7(m), or 7(n), CF&Co's right to terminate shall not
arise unless such failure to deliver (or cause to be delivered)
continues for more than thirty (30) days from the date such
delivery was required; or (iii) any other condition of CF&Co's
obligations hereunder is not fulfilled in any material respect, or
(iv) any suspension or limitation of trading in the Placement Units
or in securities generally on the NYSE or TSX shall have occurred.
Any such termination shall be without liability of any Party to any
other Party except that the provisions of SECTION 7(u), SECTION 9
(Indemnification), SECTION 10 (Survival of Representations),
SECTION 16 (Applicable Law; Consent to Jurisdiction) and SECTION 18
(Waiver of Jury Trial) hereof shall remain in full force and effect
notwithstanding such termination. If CF&Co elects to terminate this
Agreement as provided in this Section 11(a), CF&Co shall provide
the required notice as specified in Section 12 (Notices);
(b) the Trust shall have the right, by giving ten (10) days
notice as hereinafter specified to terminate this Agreement in its
sole discretion at any time following the period of three (3)
months after the date of this Agreement. Any such termination shall
be without liability of any Party to any other Party except that
the provisions of SECTION 7(u), SECTION 9, SECTION 10, SECTION 16
and SECTION 18 hereof shall remain in full force and effect
notwithstanding such termination;
(c) CF&Co shall have the right, by giving ten (10) days
notice as hereinafter specified to terminate this Agreement in its
sole discretion at any time following the period of three (3)
months after the date of this Agreement. Any such termination shall
be without liability of any Party to any other Party except that
the provisions of SECTION 7(u), SECTION 9, SECTION 10, SECTION 16
and SECTION 18 hereof shall remain in full force and effect
notwithstanding such termination;
(d) unless earlier terminated pursuant to this Section 11,
this Agreement shall automatically terminate upon the issuance and
sale of all of the Placement Units through CF&Co on the terms and
subject to the conditions set forth herein; provided that the
provisions of SECTION 7(u), SECTION 9, SECTION 10, SECTION 16 and
SECTION 18 hereof shall remain in full force and effect
notwithstanding such termination;
-29-
(e) this Agreement shall remain in full force and effect
unless terminated pursuant to Sections 11(a), (b), or (c) above or
otherwise by mutual agreement of the parties; provided, however,
that any such termination by mutual agreement shall in all cases be
deemed to provide that the provisions of SECTION 7(u), SECTION 9,
SECTION 10, SECTION 16 and SECTION 18 hereof shall remain in full
force and effect; and
(f) any termination of this Agreement shall be effective on
the date specified in such notice of termination; provided,
however, that such termination shall not be effective until the
close of business on the date of receipt of such notice by CF&Co or
the Trust, as the case may be. If such termination shall occur
prior to the Settlement Date for any sale of Placement Units, such
Placement Units shall settle in accordance with the provisions of
this Agreement.
12. NOTICES. All notices or other communications required or permitted
to be given by any party to any other party pursuant to the terms of this
Agreement shall be in writing, unless otherwise specified, and if sent to
CF&Co, shall be delivered to CF&Co at Cantor Xxxxxxxxxx & Co., 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, fax no. (000) 000-0000, Attention:
ITD-Investment Banking, with copies to Xxxxxxx Xxxxxx, General Counsel, at the
same address, and DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, XX 00000, fax no. (000) 000-0000, Attention: Xxxx X.
Xxxxxxx; or if sent to the Trust or PrimeWest Energy, shall be delivered to
PrimeWest Energy Trust, Suite 5100, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx,
Xxxxxx, X0X 0X0, fax no. (000) 000-0000, Attention: Xxxxxx X. Xxxxxxx, Senior
Vice-President and Chief Financial Officer, with a copy to Stikeman Elliott
LLP, 4300 Bankers Hall West, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, Xxxxxx,
X0X 0X0, fax no. (000) 000-0000, Attention: Xxxxxx X. Xxxxxxx. Each Party to
this Agreement may change such address for notices by sending to the Parties to
this Agreement written notice of a new address for such purpose. Each such
notice or other communication shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 4:30 p.m., New York City time, on a Business Day or, if such day
is not a Business Day, on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to a nationally-recognized overnight courier
and (iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid). For
purposes of this Agreement, "BUSINESS DAY" shall mean any day on which the NYSE
and commercial banks in the City of New York are open for business.
13. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the Trust, PrimeWest Energy, and CF&Co and their
respective successors and the affiliates, controlling persons, officers and
directors referred to in Section 9 hereof. References to any of the Parties
contained in this Agreement shall be deemed to include the successors and
permitted assigns of such Party. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the Parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement. No Party may assign its rights or obligations under
this Agreement without the prior written consent of the other Parties.
-30-
14. ADJUSTMENTS FOR STOCK SPLITS. The Parties acknowledge and agree
that all Trust Unit-related numbers contained in this Agreement shall be
adjusted to take into account any Trust Unit split, dividend or similar event
effected with respect to the Trust Units.
15. ENTIRE AGREEMENT; AMENDMENT; SEVERABILITY. This Agreement
(including all schedules and exhibits attached hereto and Placement Notices
issued pursuant hereto) constitutes the entire agreement and supersedes all
other prior and contemporaneous agreements and undertakings, both written and
oral, among the Parties hereto with regard to the subject matter hereof.
Neither this Agreement nor any term hereof may be amended except pursuant to a
written instrument executed by the Trust and CF&Co. In the event that any one
or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable as determined by a
court of competent jurisdiction, then such provision shall be given full force
and effect to the fullest possible extent that it is valid, legal and
enforceable, and the remainder of the terms and provisions herein shall be
construed as if such invalid, illegal or unenforceable term or provision was
not contained herein, but only to the extent that giving effect to such
provision and the remainder of the terms and provisions hereof shall be in
accordance with the intent of the Parties as reflected in this Agreement.
16. APPLICABLE LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of New York without regard to the principles of conflicts of laws. Each Party
hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each Party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such Party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.
17. ABSENCE OF FIDUCIARY RELATIONSHIP. Each of the Trust and PrimeWest
Energy acknowledges and agrees that:
(a) CF&Co has been retained solely to act as underwriter in
connection with the sale of the Trust Units that no fiduciary
relationship between the Trust and CF&Co has been created in
respect of any of the transactions contemplated by this Agreement,
irrespective of whether CF&Co has advised or is advising the Trust
on other matters;
(b) the Trust is capable of evaluating and understanding and
understands and accept the terms, risks and conditions of the
transactions contemplated by this Agreement;
(c) the Trust has been advised that CF&Co and its affiliates
are engaged in a broad range of transactions which may involve
interests that differ from those of the Trust and that CF&Co has no
-31-
obligation to disclose such interests and transactions to the Trust
by virtue of any fiduciary relationship; and
(d) each of the Trust and PrimeWest Energy waives, to the
fullest extent permitted by law, any claims they may have against
CF&Co, for breach of fiduciary duty or alleged breach of fiduciary
duty and agrees that CF&Co shall have no liability (whether direct
or indirect) to either in respect of such a fiduciary claim or to
any person asserting a fiduciary duty claim on behalf of or in
right of the Trust or PrimeWest Energy, including stockholders,
employees or creditors of the Trust and PrimeWest Energy.
18. WAIVER OF JURY TRIAL. Each of the Trust, PrimeWest Energy and CF&Co
hereby irrevocably waives any right it may have to a trial by jury in respect
of any claim based upon or arising out of this Agreement or any transaction
contemplated hereby.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
Agreement by one Party to the others may be made by facsimile transmission.
20. REFERENCES.
(a) Any reference herein to the Canadian Prospectus, the U.S.
Basic Prospectus or the U.S. Prospectus shall be deemed to refer to
and include the documents incorporated or deemed to be incorporated
by reference therein as of the applicable date; and
(b) any reference to any amendment or supplement to any
Canadian Prospectus, the U.S. Basic Prospectus or the U.S.
Prospectus shall be deemed to refer to and include any documents
that are (i) filed after the date of such prospectus under Alberta
Securities Law with the Qualifying Authorities and, in the case of
the U.S. Basic Prospectus or the U.S. Prospectus, under the
Exchange Act with the Commission and (ii) incorporated by reference
or deemed under Alberta Securities Law to be incorporated by
reference therein.
21. ACKNOWLEDGEMENT REGARDING THE TRUST. The parties hereto acknowledge
that PrimeWest is entering into this Agreement solely on behalf of the Trust
and the obligations of the Trust hereunder shall not be personally binding upon
PrimeWest or any of the unitholders of the Trust and that any recourse against
the Trust, PrimeWest or the unitholders 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 behavior, shall be limited to, and satisfied only out of, the Trust
Fund as defined in the Declaration of Trust dated August 2, 1996, restated as
of November 6, 2002, amended as of May 6, 2004, and as further amended from
time to time.
-32-
If the foregoing correctly sets forth the understanding among the
Trust, PrimeWest Energy and CF&Co, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among the Trust, PrimeWest Energy and CF&Co.
Very truly yours,
PRIMEWEST ENERGY TRUST, BY ITS PRIMEWEST ENERGY INC.
AUTHORIZED ATTORNEY, PRIMEWEST
ENERGY INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Vice-President, Title: Vice-President,
Finance and Chief Finance and Chief
Financial Officer Financial Officer
ACCEPTED AS OF THE DATE
FIRST-ABOVE WRITTEN:
CANTOR XXXXXXXXXX & CO.
By: /s/ Xxxxxxx XxXxxxxx
----------------------------
Name: Xxxxxxx XxXxxxxx
Title: Managing Director
-33-
SCHEDULE 1
----------
FORM OF PLACEMENT NOTICE
From: [ ]
Cc: [ ]
To: [ ]
Subject: Controlled Equity Offering--Placement Notice
Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Controlled
Equity OfferingSM Sales Agreement among Primewest Energy Trust (the "TRUST"),
PrimeWest Energy Inc. ("PRIMEWEST") and Cantor Xxxxxxxxxx & Co. ("CF&CO") dated
July 28, 2006 (the "AGREEMENT"), I hereby request, as a duly authorized officer
of PrimeWest, for and on behalf of the Trust, that CF&Co sell up to
____________ Trust Units, at a minimum market price of US$_______ per Trust
Unit.
[ADDITIONAL SALES PARAMETERS MAY BE ADDED, SUCH AS THE TIME PERIOD IN WHICH
SALES ARE REQUESTED TO BE MADE, SPECIFIC DATES THE TRUST UNITS MAY NOT BE SOLD
ON, THE MANNER IN WHICH SALES ARE TO BE MADE BY CF&CO, AND/OR THE CAPACITY IN
WHICH CF&CO MAY ACT IN SELLING TRUST UNITS (AS PRINCIPAL, AGENT, OR BOTH)]
SCHEDULE 2
----------
CANTOR XXXXXXXXXX & CO.
-----------------------
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxx
Xxxxxxx XxXxxxxx
PRIMEWEST ENERGY TRUST
----------------------
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxx
Xxxxx X. Xxxxx
Xxxx Xxxx
SCHEDULE 3
----------
SIGNIFICANT SUBSIDIARIES
------------------------
PrimeWest Energy Inc.
EXHIBIT 7(m)(1)
---------------
MATTERS TO BE COVERED BY INITIAL OPINION OF US COUNSEL
(i) the Registration Statement and the U.S. Prospectus, as of their
respective effective or issue times, appear on their face to be
appropriately responsive in all material respects to the
requirements of the Securities Act and the rules and regulations of
the Commission under the Securities Act (the "Rules and
Regulations"), except for the financial statements, financial
statement schedules and other financial data included or
incorporated by reference in or omitted from either of them, as to
which such counsel expresses no opinion; the Form F-X, as of its
date, appears on its face to be appropriately responsive in all
material respects to the requirements of the Securities Act,
including the Securities Act Regulations;
(ii) such counsel does not know of any contract or other document which
is required to be filed as an exhibit to the Registration Statement
by the Securities Act or the Rules and Regulations which has not
been so filed or incorporated by reference as an exhibit to the
Registration Statement as permitted by the Rules and Regulations;
(iii) no consent, approval, authorization or order of, or filing,
registration or qualification with, any Governmental Authority,
which has not been obtained, taken or made is required by the Trust
or PrimeWest Energy under any Applicable Law for the issuance or
sale of the Designated Units or the performance by the Trust and
PrimeWest Energy of their respective obligations under the
Agreement. For purposes of this opinion, the term "GOVERNMENTAL
AUTHORITY" means any executive, legislative, judicial,
administrative or regulatory body of the State of New York or the
United States of America. For purposes of this opinion, the term
"APPLICABLE LAW" means those laws, rules and regulations of the
United States of America and the State of New York, in each case
which in such counsel's experience are normally applicable to the
transactions of the type contemplated by the Agreement except that,
"Applicable Law" does not include the anti-fraud provisions of the
securities laws of any applicable jurisdiction or any state
securities or Blue Sky laws of the various states;
(iv) assuming the due authorization of the Agreement by the Trust and
PrimeWest Energy under the applicable laws of the Province of
Alberta, the Agreement (to the extent execution and delivery are
governed by the laws of the State of New York) has been duly
executed and delivered by the Trust and PrimeWest Energy;
(v) to such counsel's knowledge, there are no legal or governmental
actions, suits or proceedings pending or overtly threatened in the
United States which are required to be disclosed in the
Registration Statement, other than those described therein;
(vi) the Trust is not and, after giving effect to the offering and the
sale of the Designated Units and the application of their proceeds
as described in the U.S. Prospectus under the heading "USE OF
PROCEEDS," will not be required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission promulgated thereunder;
(vii) the statements in the U.S. Prospectus under the caption "CERTAIN
INCOME TAX CONSIDERATIONS - CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS", to the extent that they constitute summaries of
United States federal law or regulation or legal conclusions, and
under the caption "PLAN OF DISTRIBUTION", with respect solely to
the description of the Agreement contained therein,? have been
reviewed by such counsel and fairly summarize the matters described
under that heading in all material respects; and
(viii) the execution and delivery of the Agreement by PrimeWest Energy (on
its own behalf and in its capacity as attorney of the Trust), the
issuance and sale of the Designated Units by the Trust, the
compliance by the Trust and PrimeWest Energy with all of the
provisions of the Agreement and the performance by the Trust and
PrimeWest Energy of their respective obligations thereunder will
not violate Applicable Law or any judgment, order or decree of any
court or arbitrator in the United States known to such counsel,
except where the violation could not reasonably be expected to have
a material adverse effect on the Trust and its subsidiaries taken
as a whole.
In addition, such counsel shall state that they have participated in the
preparation of the Registration Statement and the U.S. Prospectus and in
conferences and telephone conversations with officers and other
representatives of the Trust and PrimeWest Energy and the independent
auditors for the Trust during which the contents of the Registration
Statement, the U.S. Prospectus and related matters were discussed and,
although the limitations inherent in the independent verification of
factual matters and the role of outside counsel are such that such counsel
has not undertaken to verify independently, and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the U.S. Prospectus
or the documents incorporated by reference therein, except for those
referred to in paragraph (vii) above, on the basis of the foregoing, such
counsel's work in connection with this matter did not disclose any
information that gave such counsel reason to believe that (A) at the time
it became effective, the Registration Statement, or any amendment thereto
prior to the Settlement Date (except for the financial statements,
financial statement schedules and other financial data included or
incorporated by reference therein or omitted therefrom or from those
documents incorporated by reference and the information derived from the
-2-
Reserve Report of the Independent Reserve Engineer (the "RESERVE ENGINEER
INFORMATION"), in reliance on the authority of such firm as "experts"
within the meaning of the Securities Act, included or incorporated by
reference in the Registration Statement as to which such counsel need
express no such belief), included an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements therein not misleading, or (B) that at the time the U.S.
Prospectus was issued, at the time any amended or supplemented prospectus
as issued or at the Settlement Date, the U.S. Prospectus or any amendment
or supplement thereto (except for the financial statements, financial
statement schedules and other financial data, included or incorporated by
reference therein or omitted therefrom or from those documents
incorporated by reference and the information derived from the Reserve
Engineer Information in reliance on the authority of the Independent
Reserve Engineer as "experts" within the meaning of the Securities Act,
included or incorporated by reference in the U.S. Prospectus as to which
such counsel need express no such belief) included an untrue statement of
a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
In addition, such counsel shall state that (i) such counsel has been
advised by the Commission that the Registration Statement is effective
under the Securities Act and the Form F-X was filed with the Commission
prior to the effectiveness of the Registration Statement, (ii) any
required filing of the U.S. Prospectus or any supplement thereto pursuant
to General Instruction II.L. of Form F-10 has been made in the manner and
within the time period required by said General Instruction II.L., and
(iii) to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and to such
counsel's knowledge no proceedings for that purpose have been instituted
or are pending or are threatened by the Commission.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
reasonably satisfactory to counsel for CF&Co and (B) as to matters of
fact, to the extent they deem proper, on certificates of officers of the
Trust and PrimeWest Energy and public officials.
-3-
MATTERS TO BE COVERED BY INITIAL OPINION OF CANADIAN COUNSEL
STIKEMAN ELLIOTT LLP
(i) the Trust has been properly created and is validly existing as a
trust under the laws of the Province of Alberta. Computershare
has been duly appointed as the sole trustee of the Trust pursuant
to the Declaration of Trust. Computershare, in its capacity as
trustee of the Trust, has the capacity and power to own and lease
the properties and assets of the Trust and to conduct the
business of the Trust as described in the Canadian Prospectus and
the documents incorporated by reference therein;
(ii) each of PrimeWest Energy and each other corporate Significant
Subsidiary organized under the laws of Alberta (collectively, the
"ALBERTA SUBSIDIARIES") (1) is a corporation duly incorporated or
amalgamated and validly subsisting under the laws of the Province
of Alberta, (2) has all requisite corporate capacity and power to
own and lease its properties and assets and to conduct its
business as described in the Canadian Prospectus and the
documents incorporated by reference therein, (3) is duly
qualified to carry on such business in the Province of Alberta
and, as an extraprovincial corporation or a foreign corporation,
as the case may be, in the each other jurisdiction in which a
material portion of such business is carried on (as identified in
a certificate of an officer of PrimeWest Energy dated the
Settlement Date) and is in good standing under the laws of each
such jurisdiction which requires such qualification;
(iii) the Trust and the attributes and characteristics of the
Designated Units conform in all material respects with the
descriptions thereof in the U.S. Prospectus and the documents
incorporated by reference therein;
(iv) the form of the definitive certificate representing Trust Units
has been duly approved and adopted by the board of directors of
PrimeWest Energy on behalf of the Trust and complies with all
legal requirements, including all applicable requirements of the
TSX and the NYSE relating thereto;
(v) PrimeWest Energy (on its own behalf and in its capacity as
attorney of the Trust) has (or had at all relevant times) the
necessary power and authority to execute and deliver (on its own
behalf and in its capacity as attorney of the Trust) the Canadian
Prospectus and the U.S. Prospectus and any other specified
material filed prior to the completion of the sale of the
Designated Units by the Trust and all necessary action has been
taken by PrimeWest Energy (on its own behalf and in its capacity
as attorney of the Trust) to authorize the execution and delivery
by PrimeWest Energy (on its own behalf and in its capacity as
attorney of the Trust) of the Canadian Prospectus and the U.S.
Prospectus and any other specified material filed prior to the
completion and the filing thereof, as
-4-
the case may be, with the Reviewing Authority and each of the
other Qualifying Authorities under applicable securities laws and
with the TSX and NYSE;
(vi) PrimeWest Energy (on its own behalf and in its capacity as
attorney of the Trust) has (or had at all relevant times) the
necessary power and authority to execute and deliver the
Agreement, and each of the Trust and PrimeWest Energy has (or had
at all relevant times) the necessary power and authority to
perform its obligations thereunder and to carry out the
transactions contemplated thereby;
(vii) the Agreement has been duly authorized and, to the extent
execution and delivery are governed by Alberta law, duly executed
and delivered by PrimeWest Energy (on its own behalf and in its
capacity as attorney of the Trust);
(viii) the execution and delivery of the Agreement by PrimeWest Energy
(on its own behalf and in its capacity as attorney of the Trust)
and the fulfilment of the terms thereof by the Trust and
PrimeWest Energy (including the sale and delivery by the Trust of
the Designated Units at the Settlement Date) do not result in a
breach of, and do not create a state of facts which, after notice
or lapse of time or both, will result in a breach of, and do not
conflict with:
(A) any applicable laws of the Province of Alberta or of the
federal laws of Canada applicable therein;
(B) any terms, conditions or provisions of the constating
documents of the Trust or PrimeWest Energy; or
(C) any resolutions of the directors (or any committee
thereof), unitholders or shareholders, as the case may be,
of the Trust or PrimeWest Energy and of which counsel is
aware or any judgment, order or decree of which counsel is
aware of any court in the Province of Alberta or
governmental agency or body or regulatory authority of the
Province of Alberta having jurisdiction over the Trust or
any of its subsidiaries or any of their properties, assets
or operations in Canada or the Designated Units, in each
case, identified in a certificate of the Chief Executive
Officer and Chief Financial Officer of PrimeWest Energy
dated the Settlement Date;
which default or breach, in the case of paragraph (D) above,
might individually or in the aggregate reasonably be expected to
have a Material Adverse Effect or materially and adversely affect
the ability of the Trust or PrimeWest Energy to perform any of
their respective obligations under the Agreement;
-5-
(ix) the authorized capital of the Trust consists of an unlimited
number of Trust Units and an unlimited number of special voting
units. Based, and in reliance, on a letter of Computershare, in
its capacity as registrar and transfer agent of the Trust, a copy
of which has been delivered to CF&Co at the date hereof, as at
the close of business on the business day immediately preceding
the date hereof, there were issued and outstanding the number of
Trust Units referred to in that letter and, to the knowledge of
such counsel, none of the outstanding Trust Units was issued in
violation of pre-emptive or other similar rights of any
securityholder of the Trust;
(x) Computershare has been duly appointed as registrar and transfer
agent of the Trust in Canada in respect of the Trust Units and
Computershare Investor Services, LLC has been duly appointed as
the co-transfer agent of the Trust in the United States in
respect of the Trust Units;
(xi) the Placement Units issued at the Settlement Date by the Trust
have been duly authorized and, once the Trust has received
delivery of payment by CF&Co of the purchase price therefor, the
Placement Units will have been validly issued by the Trust as
fully paid and non-assessable Trust Units. The Placement Units
have been approved for listing on the TSX, subject to
notification by the Trust prior to the TSX opening for trading;
(xii) the Trust is a "reporting issuer" or the equivalent in each of
the Qualifying Provinces which has such a concept and is not on
the list of defaulting issuers maintained by the Reviewing
Authority;
(xiii) a final receipt has been obtained from the Reviewing Authority on
behalf of itself and the other Qualifying Authorities in respect
of the final base shelf prospectus of the Trust dated May 12,
2006 and, to the best of such counsel's knowledge, the Reviewing
Authority has not revoked such receipt and no order having the
effect of ceasing or suspending the distribution of the
securities of the Trust has been issued by the Reviewing
Authority and no proceeding for that purpose has been initiated
or threatened by the Reviewing Authority;
(xiv) except such as have been made or obtained under applicable
securities laws or other applicable laws, to the knowledge of
such counsel, no consent, approval, authorization or order of or
filing, registration or qualification with any court,
governmental agency or body or regulatory authority is required,
under the laws of the Province of Alberta or the federal laws of
Canada applicable therein for the execution, delivery and
performance by the Trust or PrimeWest Energy of the Agreement or
the completion by the Trust or PrimeWest Energy of the
transactions contemplated therein;
(xv) all necessary approvals, permits, consents, orders and
authorizations required under Alberta Securities Laws have been
obtained, and all necessary documents have been filed and all
other
-6-
legal requirements under the Canadian Securities Laws have been
fulfilled in order to qualify the distribution and sale of the
Designated Units to the public in Alberta and to permit the sale
and delivery of the Designated Units to the public through
registrants duly registered under the applicable laws of Alberta
who have complied with the relevant provisions of such laws;
(xvi) to such counsel's knowledge, there are no actions, suits, claims,
investigations or proceedings pending or threatened in Canada to
which the Trust or any of its subsidiaries or any of their
respective directors or officers is or would be a party or to
which any of their respective properties is or would be subject
at law or in equity, before or by any Canada or any of the
provinces of Canada federal, provincial or local governmental or
regulatory commission, board, body, authority or agency which (1)
are required to be described in the Canadian Prospectus but are
not so described or (2) might reasonably be expected,
individually or in the aggregate, to result in a Material Adverse
Effect;
(xvii) to the knowledge of such counsel, there are no contracts or
documents that are of a character required by Alberta Securities
Laws or the Shelf Procedures to be described in the Canadian
Prospectus, or to be filed or incorporated by reference therein,
which have not been so described, filed or incorporated by
reference as required. All descriptions in the Canadian
Prospectus or the U.S. Prospectus (other than financial
statements, including the notes thereto, and financial data) of
(1) Canadian statutes, regulations, governmental franchises and
licenses and legal or governmental proceedings and (2) contracts
and other documents which are governed by the laws of Canada, in
each case with respect to the Trust or its Significant
Subsidiaries or to which the Trust or its Significant
Subsidiaries are a party, are accurate in all material respects
and fair summaries of the legal matters, agreements, documents or
proceedings discussed therein;
(xviii) the Trust is eligible to file a short form prospectus with the
Reviewing Authority and the other Qualifying Authorities and use
the rules and procedures for the use of a short form shelf
prospectus with respect to the Designated Units and for the
distribution of securities established in the Shelf Procedures;
(xix) based and in reliance on a certificate of the Chief Executive
Officer of PrimeWest Energy, a copy of which certificate has been
delivered to CF&Co at the Settlement Date, the Trust qualifies as
a "mutual fund trust" within the meaning of the Tax Act;
(xx) subject to the assumptions and qualifications set out therein,
the statements in the U.S. Prospectus under the heading "Canadian
Federal Income Tax Considerations" describe the principal
-7-
Canadian federal income tax considerations under the Tax Act and
the regulations thereunder generally applicable to unitholders
who acquire Designated Units pursuant to the offering of the
Designated Units and who, for the purposes of the Tax Act and at
all relevant times hold Designated Units as capital property and
deal at arm's length with, and are not affiliated with, the
Trust. The information in the Canadian Prospectus under the
heading "Description of Share Capital" and in Part II of the
Registration Statement under the heading "Indemnification of
Directors and Officers," insofar as such statements constitute a
summary of documents or matters of law, are accurate in all
material respects and present fairly the information required to
be shown;
(xxi) the Trust is subject to the relevant commercial law and common
laws of the Province of Alberta and is generally subject to suit
in the Province of Alberta and the Trust does not have any right
of immunity from any judicial proceedings in the Province of
Alberta;
(xxii) no goods and services tax imposed under the federal laws of
Canada or the laws of the Province of Alberta will be collectible
by CF&Co in respect of the issuance and sale to CF&Co of the
Designated Units as contemplated by the Agreement, including the
payment or crediting of any discount, commission or fee as
contemplated by the Agreement; and
(xxiii) no stamp duty, registration or documentation taxes, duties or
similar charges are payable by CF&Co under the laws of the
Province of Alberta or the federal laws of Canada applicable
therein in connection with the creation, issuance and delivery to
CF&Co of the Designated Units, the sale and delivery outside
Canada by CF&Co of the Designated Units to the initial purchasers
thereof or the authorization, execution and delivery of the
Agreement.
In addition, such counsel shall state that they have participated in the
preparation of the Registration Statement and the U.S. Prospectus and in
conferences with officers and other representatives of the Trust and
PrimeWest Energy, representatives of the independent auditors for the
Trust and CF&Co at which the contents of the Registration Statement, the
U.S. Prospectus and related matters were discussed and, although the
limitations inherent in the independent verification of factual matters
and the role of outside counsel are such that such counsel has not
undertaken to investigate or verify independently, and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the U.S. Prospectus
except for those referred to in paragraph (xx) above, on the basis of the
foregoing, no facts have come to such counsel's attention that cause such
counsel to believe (A) that any part of the Registration Statement, or any
further amendment thereto made by the Trust prior to the Settlement Date
(other than the financial statements, financial statement schedules and
other financial data, either contained in, incorporated by reference in or
-8-
omitted from the Registration Statement and the information derived from
the Reserve Engineer Information, in reliance on the authority of such
firm as "experts" within the meaning of the Securities Act, included or
incorporated by reference in the Registration Statement as to which such
counsel need express no belief) when such part or amendment became
effective contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (B) that, as of its date and as
of the Settlement Date, the U.S. Prospectus or any further amendment or
supplement thereto made by the Trust prior to the Settlement Date (other
than the financial statements, financial statement schedules and other
financial data, either contained in, incorporated by reference in or
omitted from the U.S. Prospectus and the information derived from the
Reserve Engineer Information in reliance on the authority of such firm as
"experts" within the meaning of the Securities Act, included or
incorporated by reference in the U.S. Prospectus as to which such counsel
need express no belief) contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
Province of Alberta or the federal laws of Canada, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are reasonably
satisfactory to counsel for CF&Co and (B) as to matters of fact, to the
extent they deem proper, on certificates of officers of the Trust and
PrimeWest Energy and public officials.
-9-
EXHIBIT 7(m)(2)
---------------
MATTERS TO BE COVERED BY SUBSEQUENT TRUST COUNSEL AND SPECIAL TRUST COUNSEL
OPINIONS
To such counsel's knowledge and other than as set forth in the U.S.
Prospectus, there are no legal or governmental actions, suits or proceedings,
pending or overtly threatened in the United States which are required to be
disclosed in the U.S. Prospectus, other than those disclosed therein.
In addition, such counsel shall state that they have participated in the
preparation of the Registration Statement and the U.S. Prospectus and in
conferences and telephone conversations with officers and other representatives
of the Trust and PrimeWest Energy and the independent auditors for the Trust
during which the contents of the Registration Statement, the U.S. Prospectus
and related matters were discussed and, although the limitations inherent in
the independent verification of factual matters and the role of outside counsel
are such that such counsel has not undertaken to verify independently, and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the U.S. Prospectus or
the documents incorporated by reference therein, on the basis of the foregoing,
such counsel's work in connection with this matter did not disclose any
information that gave such counsel reason to believe that (A) at the time it
became effective, the Registration Statement or any amendment thereto prior to
the Settlement Date (except for the financial statements, financial statement
schedules and other financial data included or incorporated by reference
therein or omitted therefrom or from the documents incorporated by reference
and the information derived from the Reserve Report of the Independent Reserve
Engineer (the "RESERVE ENGINEER INFORMATION"), in reliance on the authority of
such firm as "experts" within the meaning of the Securities Act, included or
incorporated by reference therein as to which such counsel need express no such
belief), included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein not misleading,
or (B) that, at the time the U.S. Prospectus was issued, at the time any
amended or supplemental prospectus was issued or at the Settlement Date, or any
amendment or supplement thereto (except for the financial statements, financial
statement schedules and other financial data, included or incorporated by
reference therein or omitted therefrom or from those documents incorporated by
reference and the information derived from the Reserve Engineer Information in
reliance on the authority of the Independent Reserve Engineer as "experts"
within the meaning of the Securities Act, included or incorporated by reference
therein as to which such counsel need express no such belief) included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In addition, such counsel shall state that (i) such counsel has been
advised by the Commission that the Registration Statement is effective under
the Securities Act and (ii) to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
to such counsel's knowledge no proceedings for that purpose have been
instituted or are pending or are threatened by the Commission.
EXHIBIT 7(l)
------------
OFFICER CERTIFICATE
The undersigned, the duly qualified and elected _______________________, of
PRIMEWEST ENERGY INC. ("PRIMEWEST"), the duly authorized attorney of PRIMEWEST
ENERGY TRUST (the "TRUST"), a trust created under the laws of the Province of
Alberta, Canada, does hereby certify in such capacity and not in a personal
capacity and for and on behalf of the Trust and PrimeWest pursuant to Section
7(l) of the Sales Agreement dated July 28, 2006 (the "SALES AGREEMENT") among
the Trust, PrimeWest and Cantor Xxxxxxxxxx & Co., that to the best of the
knowledge of the undersigned:
(i) the representations and warranties of the Trust and PrimeWest
Energy in Section 6 of the Sales Agreement are true and correct on and as of
the date hereof, except for those representations and warranties that speak
solely as of a specific date and which were true and correct as of such date,
with the same force and effect as if expressly made on and as of the date
hereof; and
(ii) the Trust and PrimeWest Energy have complied with all agreements
and satisfied all conditions on their respective part to be complied with or
satisfied pursuant to the Sales Agreement at or prior to the date hereof.
By:___________________________________
Name:
Title:
Date:____________________________
