EXHIBIT 3.1
Enerplus Resources Fund
[?] Trust Units
Underwriting Agreement
New York, New York
November 25, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
CIBC World Markets Inc.
As Representatives of the several Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Enerplus Resources Fund (the "Trust"), a trust governed by the laws of
the Province of Alberta, Canada and formed pursuant to a Trust Indenture
dated as of July 7, 1986 between Enerplus Resources Corporation and The Royal
Trust Company, as amended and restated by the Amended and Restated Trust
Indenture dated June 21, 2001 (as amended April 25, 2002) among EnerMark
Inc., Enerplus Resources Corporation and CIBC Mellon Trust Company, as
trustee (the "Trustee"), (as amended and restated, the "Trust Indenture")
proposes to sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, an aggregate of [?] units (the "Trust Units"), each of which
represents an equal undivided beneficial interest in the Trust (said units to
be issued and sold by the Trust being hereinafter called the "Underwritten
Securities"). The Trust also proposes to grant to the Underwriters an option
as described in Section 2(b) hereof to purchase up to [?] additional Trust
Units to cover over-allotments, if any (the "Option Securities" and together
with the Underwritten Securities, the "Securities"). Certain terms used
herein are defined in Section 22 hereof.
The Representatives understand that EnerMark Inc. ("EnerMark") and Enerplus
Resources Corporation ("ERC"), both organized under the BUSINESS CORPORATIONS
ACT (Alberta), are, directly or indirectly, wholly owned subsidiaries of the
Trust. The Representatives further understand that Enerplus Global Energy
Management Company (the "Manager") is the manager of each of the Trust, EnerMark
and ERC, and provides management services to each of the Trust, EnerMark and
ERC. The Manager provides administrative and certain other services in relation
to the acquisition, disposition and management of petroleum and natural gas
properties and related assets of EnerMark and ERC, to each of the Trust,
EnerMark and ERC and is an advisor to each of the Trust, EnerMark and ERC. The
Trust, EnerMark and ERC are hereinafter collectively referred to as the
"Enerplus Entities". For purposes of this Agreement,
it is understood that each officer of the Enerplus Entities who also serves
as an officer of the Manager has the knowledge with respect to each of such
capacities.
1. REPRESENTATIONS AND WARRANTIES.
(A) Each of the Enerplus Entities and the Manager jointly and severally
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 1A.
(a) The Trust has prepared and filed with the securities regulatory
authorities (the "Qualifying Authorities") in each province of Canada (the
"Qualifying Provinces") a preliminary short form base PREP prospectus, including
the documents incorporated by reference therein, dated November 15, 2002
relating to the Securities (in the English and French languages, as applicable,
the "Canadian Preliminary Prospectus"). The Trust has designated the Alberta
Securities Commission (the "Reviewing Authority") as its principal regulator in
respect of the offering of the Securities, the Canadian Preliminary Prospectus
has been filed with the Qualifying Authorities pursuant to Canadian National
Policy 43-201 Mutual Reliance Review System for Prospectuses and Annual
Information Forms ("National Policy 43-201") and the Trust has obtained an MRRS
Decision Document from the Reviewing Authority evidencing the issuance by the
Qualifying Authorities of receipts for the Canadian Preliminary Prospectus. The
Trust has also prepared and filed pursuant to a multi-jurisdictional disclosure
system with the United States Securities and Exchange Commission (the
"Commission") a registration statement on Form F-10 (File No. 333-101240)
covering the registration of the Securities under the United States Securities
Act of 1933, as amended, and the applicable rules and regulations adopted
thereunder by the Commission (the "Act"), including the Canadian Preliminary
Prospectus in the English language (with such deletions therefrom and additions
thereto as are permitted or required by Form F-10 and the applicable rules and
regulations of the Commission) (the "U.S. Preliminary Prospectus"). Such
registration statement on Form F-10, including the exhibits thereto and the
documents incorporated by reference therein, as amended at the date and time
that this Agreement is executed and delivered by the parties hereto (the
"Execution Time") (or, if not effective at the Execution Time, in the form in
which it shall become effective) and including, if applicable, the PREP
Information (as defined herein), is herein called the "Registration Statement".
The Trust (A) has also prepared and filed (1) with the
Qualifying Authorities, a final short form base PREP prospectus relating to the
Securities (in the English and French languages, as applicable, the "Final PREP
Prospectus") omitting the PREP Information in accordance with the rules and
procedures established pursuant to Canadian National Instrument 44-103 - Post
Receipt Pricing ("National Instrument 44-103") for the pricing of securities
after the final receipt for a prospectus has been obtained (the "PREP
Procedures") and has obtained an MRRS Decision Document from the Reviewing
Authority evidencing the issuance by the Qualifying Authorities of receipts for
the Final PREP Prospectus and (2) with the Commission, an amendment to the
Registration Statement, including the Final PREP Prospectus in the English
language (with such deletions therefrom and additions thereto as are permitted
or required by Form F-10 and the applicable rules and regulations of the
Commission) omitting the PREP
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Information, which Registration Statement has become effective, and (B) will
prepare and file, promptly after the execution and delivery of this Agreement,
and, in any event, within two Business Days of this Agreement (1) with the
Qualifying Authorities, in accordance with the PREP Procedures, a supplemented
PREP prospectus prepared in accordance with National Instrument 44-103 setting
forth the PREP Information (in the English and French languages, as applicable,
the "Supplemented PREP Prospectus"), and (2) with the Commission, in accordance
with General Instruction II.L. of Form F-10, the Supplemented PREP Prospectus in
the English language (with such deletions therefrom and additions thereto as are
permitted or required by Form F-10 and the applicable rules and regulations of
the Commission) (the "U.S. Supplemented Prospectus"). The information, if any,
included in the Supplemented PREP Prospectus that is omitted from the Final PREP
Prospectus for which an MRRS Decision Document has been obtained from the
Reviewing Authority but that is deemed under the PREP Procedures to be
incorporated by reference into the Final PREP Prospectus as of the date of the
Supplemented PREP Prospectus is referred to herein as the "PREP Information".
The Trust has also prepared and filed with the Commission an Appointment of
Agent for Service of Process and Undertaking on Form F-X in conjunction with the
filing of the Registration Statement (the "Form F-X").
Any reference herein to the Canadian Preliminary Prospectus, the Final PREP
Prospectus, the Supplemented PREP Prospectus or the Canadian Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Canadian Securities Laws which were filed under Canadian Securities
Laws on or before the date of such prospectuses; any reference herein to the
Registration Statement, the U.S. Preliminary Prospectus, the U.S. Supplemented
Prospectus or the U.S. Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 4 of Form F-10
which were filed under the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder adopted by the Commission (the
"Exchange ACT") on or before the Effective Date of the Registration Statement or
the issue date of such U.S. Preliminary Prospectus, the U.S. Supplemented
Prospectus or the U.S. Prospectus, as the case may be; and any reference herein
to the terms "amend", "amendment" or "supplement" with respect to any of the
foregoing, as the case may be, shall be deemed to refer to and include the
filing of any document under Canadian Securities Laws or the Exchange Act that
are filed after the issue date of the prospectuses or after their respective
Effective Date, as the case may be, and which are deemed to be incorporated
therein by reference.
(b) The Trust meets the general eligibility requirements for use of a
short form prospectus under Canadian National Instrument 44-101 - Short Form
Prospectus Distributions ("National Instrument 44-101") and the simplified
prospectus rules of the SECURITIES ACT (Quebec) and for use of Form F-10 under
the 1933 Act and is eligible to use the PREP Procedures. No order preventing or
suspending the distribution of the Securities or the use of the Canadian
Prospectus has been issued by the Reviewing Authority, the Qualifying
Authorities or any court, governmental agency, authority or body and no
proceedings for that purpose are pending or, to the knowledge of any of the
Enerplus Entities or the Manager, are contemplated by the Reviewing Authority or
any
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Qualifying Authority, and any request on the part of the Reviewing Authority or
any Qualifying Authority for additional information in relation to the Canadian
Prospectus has been complied with.
(c) The Registration Statement, in the form delivered to the
Representatives, has become effective under the Act in such form; no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Act and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of any of the Enerplus Entities or the Manager, are
contemplated by the Commission; and any request on the part of the Commission
for additional information in relation to the Registration Statement has been
complied with.
(d) (A) At its date and at the Closing Date (and, if any Option Securities
are purchased, at each Settlement Date (as hereinafter defined)), the Canadian
Prospectus complied and will comply, as applicable, in all material respects,
with Canadian Securities Laws as interpreted or applied by the Qualifying
Authorities; (B) at the time that the Reviewing Authority has issued an MRRS
Decision Document for the Final PREP Prospectus, no other document with respect
to the Final PREP Prospectus was required to be filed with the Qualifying
Authorities by or on behalf of the Trust, except the Supplemented PREP
Prospectus and a copy of this Agreement in final form together with a blackline
showing changes to the draft of this Agreement previously filed; (C) the
prospectus included in the Registration Statement at the time it became
effective conformed to the Final PREP Prospectus and the U.S. Supplemented
Prospectus will conform to the Supplemented PREP Prospectus, in each case,
except for such deletions therefrom and additions thereto as are permitted or
required by Form F-10 and the applicable rules and regulations of the
Commission; (D) the Registration Statement and the Form F-X, and any amendments
or supplements thereto, when each became effective complied, and on the Closing
Date, and if any Option Securities are purchased, on each Settlement Date, will
comply in all material respects, with the requirements of the Act; (E) on the
Effective Date and at the Execution Time, the Registration Statement did not and
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; (F) each of the Canadian Prospectus, the U.S.
Prospectus and any Supplementary Material, together with any amendment or
supplement thereto, on its date or on the Closing Date or on a Settlement Date,
as the case may be, constituted and will constitute full, true and plain
disclosure of all material facts relating to the Securities, and did not and
will not include any 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, not misleading; and (G) all of the
information and statements contained in the Canadian Prospectus, the U.S.
Prospectus and any Supplementary Material (including the documents incorporated
by reference) are, at the respective dates of such documents, true and correct
in all material respects; PROVIDED, HOWEVER, that for clauses (E), (F) and (G)
above, each of the Trust and the Manager makes no representations or warranties
as to the information contained in or omitted from the Registration Statement,
the Canadian Prospectus, the U.S. Prospectus or any Supplementary Material (or
any amendment or supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Trust or the Manager by or on behalf of
any Underwriter through the Representatives specifically for inclusion in the
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Registration Statement, the Canadian Prospectus, the U.S. Prospectus or any
Supplementary Material (or any amendment or supplement thereto).
(e) Each document incorporated by reference in the Canadian Prospectus
complied or will comply when so filed in all material respects with applicable
Canadian Securities Laws (including the PREP Procedures) as interpreted and
applied by the Qualifying Authorities and, at the respective dates thereof, none
of such documents contained or will contain at the time of its filing any untrue
statement of a material fact or omitted or will omit at the time of its filing
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were or
are made, not misleading; and the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the U.S. Prospectus,
at the time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the applicable requirements of the
Exchange Act.
(f) There are no reports or other information that, in accordance with the
requirements of the Qualifying Authorities, must be made publicly available in
connection with the offering of the Securities that have not been made publicly
available as required; and there are no documents required to be filed with the
Qualifying Authorities in connection with the Canadian Prospectus that have not
been filed as required other than the Supplemented PREP Prospectus and a copy of
this Agreement in final form together with a blackline showing changes to the
draft of this Agreement previously filed.
(g) The Canadian Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical in substance to the
electronically transmitted copies thereof filed with the Qualifying Authorities
pursuant to the System for Electronic Document Analysis and Retrieval ("SEDAR"),
except to the extent permitted by Canadian Securities Laws. The Registration
Statement, U.S. Prospectus and any amendments or supplements thereto furnished
to the Underwriters will be identical in substance to the electronically
transmitted copies thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇"), except to the extent
permitted by Regulation S-T under the Act. (h) Each of the Enerplus Entities has
the necessary trust or corporate power and authority to execute and deliver the
Canadian Preliminary Prospectus, the U.S. Preliminary Prospectus, the Final PREP
Prospectus, the Supplemented PREP Prospectus, the U.S. Supplemented Prospectus
and the Registration Statement, as applicable; all necessary trust or corporate
action has been, or will at the appropriate time be, taken by each of the
Enerplus Entities and the Manager, as the case may be, to authorize the
execution, delivery and filing of the Registration Statement and the U.S.
Supplemented Prospectus with the Commission and the execution, delivery and
filing of the Canadian Prospectus with the Qualifying Authorities; and the
Registration Statement has been duly executed pursuant to such authorization by
and on behalf of the Trust.
(h) Each of the Enerplus Entities has the necessary trust or corporate
power and authority to execute and deliver the Canadian Preliminary
Prospectus, the U.S. Preliminary Prospectus, the Final PREP Prospectus, the
Supplemented PREP Prospectus, the U.S. Supplemented Prospectus and the
Registration Statement, as applicable; all necessary trust or corporate
action has been, or will at the appropriate time be, taken by each of the
Enerplus Entities and the Manager, as the case may be, to authorize the
execution, delivery and filing of the Registration Statement and the U.S.
Supplemented Prospectus with the Commission and the execution, delivery and
filing of the Canadian Prospectus with the Qualifying Authorities; and the
Registration Statement has been duly executed pursuant to such authorization
by and on behalf of the Trust.
(i) The Trust has been properly created and organized and is validly
existing as a trust under the laws of the Province of Alberta, Canada with full
power and
5
authority to own its properties and conduct its affairs as described
in the Canadian Prospectus and the U.S. Prospectus.
(j) Each of EnerMark and ERC has been duly formed and is validly
subsisting under the laws of the Province of Alberta, Canada; each of EnerMark
and ERC has all requisite corporate power and authority to own, lease and
operate its properties, as the case may be, and conduct its business as
described in the Canadian Prospectus and the U.S. Prospectus; and each of
EnerMark and ERC is duly qualified to carry on business as an extra-provincial
corporation or a foreign corporation, as the case may be, in the jurisdiction in
which 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 to
so qualify or be in good standing would not have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Enerplus Entities, taken as a whole, whether or not arising
from transactions in the ordinary course of business ("Material Adverse
Effect").
(k) EnerMark and ERC are the sole Significant Subsidiaries of the Trust.
ERC has no Significant Subsidiaries and EnerMark has no Significant Subsidiaries
except ERC.
(l) The Trust is a reporting issuer in good standing in the provinces of
Alberta, British Columbia, Newfoundland and Labrador, Nova Scotia, Ontario,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Island, Quebec and Saskatchewan within the meaning of the
applicable securities laws in such provinces and has equivalent status in the
provinces of Manitoba and New Brunswick and is a "foreign private issuer" under
the Act and under the Exchange Act.
(m) CIBC Mellon Trust Company at its principal offices in the cities of
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and Montreal has been duly appointed as the registrar and
transfer agent in respect of the Trust Units and Mellon 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.
(n) The Trustee has been duly appointed as the sole trustee of the Trust
pursuant to the Trust Indenture and duly authorized in accordance therewith to,
among other things, hold title to the property of the Trust, including, but not
limited to, the property of the Trust described in the Registration Statement,
the Canadian Prospectus and the U.S. Prospectus.
(o) All the outstanding shares in the capital stock of each of EnerMark
and ERC have been duly and validly authorized and issued and are fully paid and
non-assessable, and all outstanding shares in the capital stock of each of
EnerMark and ERC are owned directly by the Trust and EnerMark, respectively, in
each instance free and clear of any perfected security interest or any other
security interest, claim, lien or encumbrance.
(p) The Trust is authorized to issue an unlimited number of Trust Units,
the description of which conforms in all material respects to the description
thereof contained in the Canadian Prospectus and the U.S. Prospectus; as of
November 22, 2002, [o] Trust Units are issued and outstanding, all of which have
been duly and validly
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authorized and issued, are fully paid and non-assessable and are issued by the
Trust free and clear of all liens, encumbrances, equities and claims; the
Securities have been duly and validly authorized for issuance and sale to the
Underwriters pursuant to this Agreement, and, when issued and delivered to and
paid for by the Underwriters as contemplated by this Agreement, will be validly
issued, fully paid and non-assessable Trust Units of the Trust, free and clear
of any liens, encumbrances, equities and claims upon their issuance by the
Trust; the Securities (i) are duly listed, and admitted and authorized for
trading, subject to official notice of issuance, on the New York Stock Exchange
and (ii) have been conditionally approved for listing on the Toronto Stock
Exchange, subject to the filing by the Trust of the documents and listing fees
requested by the Toronto Stock Exchange in its letter dated November 20, 2002;
the certificates for the Securities have been duly approved and adopted by the
board of directors of EnerMark on behalf of the Trust, are in valid and
sufficient form and conform with the Trust Indenture and the rules of the
Toronto Stock Exchange and the New York Stock Exchange; the holders of
outstanding Trust Units in the Trust are not entitled to pre-emptive or other
rights to subscribe for the Securities from the Trust; and except as set forth
in the Canadian Prospectus and the U.S. Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, Trust Units of the
Trust are outstanding, except those options or rights that may have been issued
subsequent to the date on which information for options and rights is given in
the Canadian Prospectus and the U.S. Prospectus pursuant to any options plans
for directors, officers, employees and consultants of the Enerplus Entities or
the Manager described in the Canadian Prospectus and the U.S. Prospectus.
(q) There is no franchise, contract or document of a character required to
be described in the Registration Statement, the Canadian Prospectus or the U.S.
Prospectus or to be filed or incorporated by reference therein which is not
described or filed or incorporated by reference as required and, in the case of
those documents filed, delivered to the Underwriters; and the statements in the
Canadian Prospectus and the U.S. Prospectus under the headings "Risk Factors -
Risks Related to Our Business Our operation of oil and natural gas ▇▇▇▇▇ could
subject us to environmental claims and liability," "Risk Factors - Risks Related
to Our Structure and the Ownership of Our Trust Units - United States
unitholders may be subject to passive foreign investment company rules," "Risk
Factors - Risks Related to Our Structure and the Ownership of Our Trust Units -
There would be material adverse tax consequences if the Fund lost its status as
a mutual fund trust under Canadian tax laws," "Business - Regulatory
Environment," "Description of the Trust Units," "Description of the Royalties
and the Subordinated Note," "Certain Income Tax Considerations" and
"Underwriting," and in the Canadian Prospectus under the headings "Eligibility
for Investment" and "Statutory Rights of Withdrawal and Rescission," insofar as
such statements summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings.
(r) The execution and delivery of and the performance by each of the
Enerplus Entities of their respective obligations under this Agreement has
been duly and validly authorized by all necessary trust or corporate action
on the part of the Enerplus Entities; this Agreement has been duly executed
and delivered by each of the Enerplus
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Entities; EnerMark has the authority to enter into this Agreement on
behalf of the Trust and to execute and deliver, on behalf of the Trust, all
other necessary documents in connection with the offering of the Securities;
EnerMark has the authority under the Trust Indenture to authorize and direct the
sale of the Trust Units to the Underwriters in accordance with the terms of this
Agreement, and all necessary trust and corporate action has been taken to
authorize and direct such sale.
(s) The Trust is not and, after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Canadian Prospectus and the U.S. Prospectus, will not be an "investment company"
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
(t) The Trust qualifies and will at the Closing Date and at each
Settlement Date qualify as a "mutual fund trust" under the INCOME TAX ACT
(Canada), as the same may be amended from time to time (hereinafter the
"Canadian Tax Act") and each of the Enerplus Entities has conducted its affairs
so as to enable the Trust to qualify at all times as a "mutual fund trust" under
the Canadian Tax Act and, in particular, the Trust has restricted its activities
to investing the property of the Trust in property in which a "mutual fund
trust" is permitted by the Canadian Tax Act to invest.
(u) The Trust is not now and has not at any time been maintained primarily
for the benefit of non-resident persons (within the meaning of the Canadian Tax
Act) and a majority of the Trust Units are now and at all times have been held
by residents of Canada for the purposes of the Canadian Tax Act.
(v) The Trust anticipates that for the taxable year ended December 31,
2002, and each taxable year thereafter, more than 85% of the gross receipts of
the Enerplus Entities will be from operated and non-operated working interests.
To the extent that receipts from non-operated working interests during such
taxable years are included in the 85% of gross receipts, the Enerplus Entities
took, or will take, possession of the commodities and incurred, or will incur,
significant activities with respect to (i) the physical movement, handling and
storage of the commodities, including preparation of contracts and invoices,
arranging freight, insurance and credit, arranging for receipt, transfer or
negotiation of shipping documents, arranging storage or warehousing, and dealing
with quality claims, (ii) owning and operating facilities for storage or
warehousing, or (iii) owning or chartering vessels or vehicles for the
transportation of the commodities. With respect to the activities in the
preceding sentence, the majority of such activities is or will be performed by
persons at the Manager that perform such activities solely for the Enerplus
Entities (and for no other companies other than Enerplus Pension Resources
Corporation IV ("EPRC IV")) and at the direction and control of officers and
directors of the Enerplus Entities. With respect to the Enerplus Entities
operating working interests, the majority of the activities related to the
production and processing of the commodities is or will be performed by people
at the Manager that have been seconded to the Enerplus Entities.
(w) The Trust has not received any communication from any individual at
the United States Internal Revenue Service asserting that any of the Enerplus
Entities is a passive foreign investment company, and to the knowledge of each
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of the Enerplus Entities and the Manager, no holder of trust units has received
such a communication.
(x) No consent, approval, authorization, filing with or order of any court
or governmental agency or body is required in connection with the transactions
contemplated herein, except (i) such as have been obtained or made under
Canadian Securities Laws or the Act, (ii) such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated herein and in the
Canadian Prospectus and the U.S. Prospectus and (iii) such as have been obtained
or made in accordance with the rules of the National Association of Securities
Dealers, Inc.
(y) Neither the issue and sale of the Securities nor the consummation of
any other of the transactions herein contemplated nor the execution, delivery or
fulfillment of the terms hereof will conflict with, result in a breach or
violation of or imposition of any lien, charge or encumbrance upon any property
of any of the Enerplus Entities pursuant to, or create a state of facts which,
after notice or lapse of time or both, will result in a breach of, (i) the Trust
Indenture or the articles or by-laws of EnerMark or ERC, as the case may be, or
any resolutions of the directors (or any committee thereof), shareholders or
unitholders, as the case may be, of any of the Enerplus Entities which are in
effect at the date hereof, (ii) the Amended and Restated Royalty Agreement dated
June 21, 2001, as amended December 31, 2001, among the Trust, ERC and the
Trustee (the "ERC Royalty Agreement"), the Amended and Restated Royalty
Agreement dated June 21, 2001 between the Trust and EnerMark (the "EnerMark
Royalty Agreement" and together with the ERC Royalty Agreement, the "Royalty
Agreements"), the Amended and Restated Management, Advisory and Administrative
Agreement dated June 21, 2001, as amended December 31, 2001, among the Enerplus
Entities, the Manager and the Trustee (the "Management Agreement"), the
Governance Agreement dated June 21, 2001 among the Enerplus Entities, the
Manager and the Trustee (the "Governance Agreement") and the 8% unsecured
subordinated promissory note issued by EnerMark to the Trust as of June 21,
2001, as amended and restated May 21, 2002, in the current principal amount of
$949,578,757 (the "Grid Note"), (iii) the terms of any other indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which any of
the Enerplus Entities is a party or bound or to which their property is subject
or (iv) any statute, law, rule, regulation, judgment, order or decree applicable
to any of the Enerplus Entities of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction
over any of the Enerplus Entities or any of their properties, except, in the
case of clauses (iii) and (iv) above, for any such conflict, breach, violation
or imposition which could not reasonably be expected to have a Material Adverse
Effect or to materially and adversely affect the consummation of the
transactions contemplated in this Agreement or the performance of the Enerplus
Entities' or the Manager's obligations hereunder.
(z) No person has rights to require the Trust to file a registration
statement under the Act or a prospectus under Canadian Securities Laws with
respect to any securities of the Trust, except as described in the Canadian
Prospectus and the U.S.
9
Prospectus, or to require the Trust to include such securities with the
Securities registered pursuant to the Registration Statement or qualified under
the Canadian Prospectus.
(aa) The historical financial statements of the Trust and its consolidated
subsidiaries (collectively, the "Enerplus Financial Statements") as set forth or
incorporated by reference in the Canadian Prospectus, U.S. Prospectus and the
Registration Statement (i) present fairly in all material respects the financial
condition, results of operations and cash flows, of the Trust on a consolidated
basis as of the dates and for the periods indicated, (ii) comply in all material
respects with the applicable requirements of Canadian Securities Laws and, with
respect to the U.S. Prospectus and the Registration Statement, the Act and (iii)
have been prepared in conformity with Canadian generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as otherwise noted therein). The reconciliation of the Enerplus Financial
Statements to United States generally accepted accounting principles contained
in the notes accompanying such financial statements complies with the applicable
accounting rules of the Commission. The selected financial and operating data
set forth under the captions "Summary - Summary Financial Information", "Summary
- Summary Operating Information" and "Selected Financial Information" in the
Canadian Prospectus, the U.S. Prospectus and Registration Statement fairly
present, on the basis stated in the Canadian Prospectus, the U.S. Prospectus and
the Registration Statement, the information included therein.
(bb) The unaudited pro forma consolidated financial statements included in
the Canadian Prospectus, the U.S. Prospectus and the Registration Statement (the
"Unaudited Pro Forma Consolidated Financial Statements") (i) have been properly
compiled to give effect to the transactions and assumptions described in the
notes thereto and (ii) include assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to the transactions and
events described therein; the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma adjustments reflect the proper
application of those adjustments to the historical financial statement amounts
in the Unaudited Pro Forma Consolidated Financial Statements. The Unaudited Pro
Forma Consolidated Financial Statements comply in all material respects with the
applicable requirements of Canadian Securities Laws and Form F-10 under the Act
and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of those statements. The reconciliation of the
Unaudited Pro Forma Consolidated Financial Statements to United States generally
accepted accounting principles contained in the notes accompanying such
financial statements complies with the applicable accounting rules of the
Commission.
(cc) The consolidated historical financial statements of Enerplus Resources
Fund, prior to the merger with EnerMark Income Fund ("EIF"), for the fiscal
years ended December 31, 2000, 1999 and 1998 and for the three months ended
March 31, 2001 and 2000 (collectively, the "Pre-Merger Enerplus Financial
Statements"), as incorporated by reference in the Canadian Prospectus, U.S.
Prospectus and the Registration Statement, (i) present fairly in all material
respects the financial condition, results of operations and cash flows of
Enerplus Resources Fund on a consolidated basis as of the dates and for the
periods indicated, (ii) comply in all material respects with the applicable
requirements of Canadian Securities Laws and the Act and (iii) have been
10
prepared in conformity with Canadian generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). The reconciliation of the Pre-Merger Enerplus
Financial Statements to United States generally accepted accounting principles
contained in the notes accompanying such financial statements comply with the
applicable accounting rules of the Commission.
(dd) For the period between December 31, 1996 and June 21, 2001, the date
of the merger of Enerplus Resources Fund and EIF, (i) Enerplus Energy Services
Ltd. and EMR Resource Management Ltd. were both responsible for the accounts of,
and the financial reporting for, each of Enerplus Resources Fund prior to its
merger with EIF ("Pre-Merger Enerplus") and EIF, and the senior officers,
including the chief financial officer and controller, and the senior staff at
Enerplus Energy Services Ltd. and EMR Resource Management Ltd. responsible for
the accounts of, and the financial reporting for, Pre-Merger Enerplus also
performed those functions for EIF, (ii) the accounting policies and standards
that were applied to the Pre-Merger Enerplus Financial Statements were applied
in a manner consistent with their application to the Enerplus Financial
Statements and, in each instance, were consistent with Canadian generally
accepted accounting principles and industry practice and (iii) Pre-Merger
Enerplus and EIF shared the same accounting system, and the internal controls of
Pre-Merger Enerplus were in all material respects the same as those of EIF.
(ee) No action, suit, proceeding or inquiry brought by or before any court
or governmental agency, authority or body or any arbitrator involving any of the
Enerplus Entities or their property is pending or, to the best knowledge of any
of the Enerplus Entities or the Manager, threatened that (i) could reasonably be
expected to have a material adverse effect on the performance of this Agreement
or the consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to have a Material Adverse Effect, except as set forth in
or contemplated in the Canadian Prospectus and the U.S. Prospectus (each,
exclusive of any supplement thereto).
(ff) Each of EnerMark and ERC owns or leases all such properties as are
necessary to the conduct of its operations as presently conducted. The Enerplus
Entities have the right to produce and sell their petroleum, natural gas and
related hydrocarbons (for the purposes of this clause, the foregoing are
referred to as the "Interests"). To the best of the knowledge of the Enerplus
Entities, the Enerplus Entities have good and defensible title in accordance
with standards generally accepted in the oil and gas industry to all of their
properties reflected in the Enerplus Financial Statements or described in the
Registration Statement, the Canadian Prospectus or the U.S. Prospectus,
including, but not limited to, the royalty interests granted to the Trust
pursuant to the Royalty Agreements. To the best of the knowledge of the Enerplus
Entities, these properties are only subject to such liens, encumbrances or
impairments of title which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(gg) The working interests in crude oil, natural gas and natural gas
liquids held by the Enerplus Entities reflect in all material respects the right
of the Enerplus Entities to explore or receive production from such underlying
properties, and
11
the action taken by the Enerplus Entities with respect to acquiring or otherwise
procuring such leases or interests was generally consistent with standard
industry practices for acquiring or procuring leases and interests therein to
explore for such products.
(hh) None of the Enerplus Entities nor the Manager is aware of any defects,
failures or impairments in the title of any of the Enerplus Entities to its
properties (including in respect of any action, suit, proceeding or inquiry,
whether instituted, pending or, to the knowledge of any of the Enerplus Entities
or the Manager, 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 crude oil, natural gas and natural gas liquids
reserves attributable to properties owned by the Enerplus Entities as at January
1, 2002 as shown in the reserve report prepared by ▇▇▇▇▇▇▇ Associates Limited
referred to in the Registration Statement, the Canadian Prospectus and the U.S.
Prospectus (the "Reserve Report") together with the quantity and pre-tax
discounted present value of the estimated future net revenue values of crude
oil, natural gas and natural gas liquids reserves attributable to properties
owned by Celsius Energy Resources Ltd. ("Celsius") as at January 1, 2002 as
shown in the reserve reports prepared by ▇▇▇▇▇▇▇ Associates Limited and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ Associates Ltd. referred to in the Registration Statement, the
Canadian Prospectus and the U.S. Prospectus (the "Celsius Reserve Reports");
(ii) the current production of EnerMark and ERC (taken as a whole); or (iii) the
current cash flow of EnerMark and ERC.
(ii) The Enerplus Entities have made available to ▇▇▇▇▇▇▇ Associates
Limited, prior to the issuance of the Reserve Report, for the purposes of
preparing the Reserve Report, all information requested by ▇▇▇▇▇▇▇ Associates
Limited, which information did not contain any material misrepresentation. Since
the date of the Reserve Report, to the knowledge of the Enerplus Entities and
the Manager, and other than by reason of production of crude oil, natural gas
and natural gas liquids since the date of the Reserve Report, there has been no
material adverse change to EnerMark's or ERC's crude oil, natural gas and
natural gas liquids reserves as reported therein and such parties believe the
Reserve Report fairly presents the determination of the petroleum and natural
gas reserves of EnerMark and ERC attributable to the properties evaluated in
such Reserve Report and the production profile and costs associated therewith,
as of the date thereof.
(jj) Since the date of the Celsius Reserve Reports, to the knowledge of the
Enerplus Entities and the Manager, and other than by reason of production of
crude oil, natural gas and natural gas liquids since the date of the Celsius
Reserve Report, there has been no material adverse change to the crude oil,
natural gas and natural gas liquids reserves of Celsius (as it then was prior to
its amalgamation with EnerMark on October 22, 2002) as reported therein and such
parties believe the Celsius Reserve Reports fairly present the determination of
the petroleum and natural gas reserves of Celsius attributable to the properties
evaluated in such reports and the production profile and costs associated
therewith, as of the date thereof.
(kk) None of the Enerplus Entities is or with the giving of notice or lapse
of time or both, will be, in violation or default of (i) any provision of its
articles or
12
bylaws or, in the case of the Trust, the Trust Indenture, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over any of the Enerplus Entities or any of their
properties, as applicable, which violation or default would, in the case of
clauses (ii) and (iii) above, either individually or in the aggregate with all
other violations and defaults referred to in this paragraph (if any), have a
Material Adverse Effect. Each of the Enerplus Entities, as applicable, is in
compliance in all material respects with the terms and conditions of (A) the
Trust Indenture, (B) the Royalty Agreements, (C) the Management Agreement, (D)
the Governance Agreement and (E) the Grid Note (collectively, the "Principal
Agreements"), and each of the Principal Agreements is a legal, valid and binding
obligation of the respective parties thereto enforceable against such parties in
accordance with its terms subject to the general qualifications that
enforceability may be limited by bankruptcy, insolvency or other laws affecting
creditors' rights generally and equitable remedies, including the remedies of
specific performance and injunctive relief, are available only in the discretion
of the applicable court.
(ll) PricewaterhouseCoopers LLP, the former auditors of EIF, who have
audited certain financial statements of EIF and delivered reports with respect
to the audited consolidated financial statements included and incorporated by
reference in the Canadian Prospectus and the U.S. Prospectus, were, during the
periods covered by their reports, objective with respect to EIF within the
meaning of the Rules of Professional Conduct of the Institute of Chartered
Accountants of Alberta and independent chartered accountants with respect to EIF
as prescribed by the BUSINESS CORPORATIONS ACT (Alberta).
(mm) Deloitte & Touche LLP, the current auditors of the Enerplus Entities,
who have audited certain financial statements of the Enerplus Entities and
delivered reports with respect to the audited consolidated financial statements
included and incorporated by reference in the Canadian Prospectus and the U.S.
Prospectus, are, and during the periods covered by their reports were, objective
with respect to the Enerplus Entities 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 Enerplus Entities as
prescribed by the BUSINESS CORPORATIONS ACT (Alberta) and the Act.
(nn) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the former auditors of Enerplus Resources Fund
(both prior to and following the merger of Enerplus Resources Fund and EIF on
June 21, 2001), who audited certain financial statements of Enerplus Resources
Fund and delivered their report with respect to the Pre-Merger Enerplus
Financial Statements and the Enerplus Financial Statements included and
incorporated by reference in the Canadian Prospectus and the U.S. Prospectus,
were, during the periods covered by their report, independent chartered
accountants with respect to the Trust as prescribed by the BUSINESS CORPORATIONS
ACT (Alberta) and the Act.
(oo) 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
13
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 Securities.
(pp) Each of the Enerplus Entities has filed all foreign, Canadian federal,
U.S. federal, state, provincial and local tax returns that are required to be
filed or has requested extensions thereof (except in any case in which the
failure to so file would not have a Material Adverse Effect), except as set
forth in or contemplated in the Canadian Prospectus and the U.S. Prospectus
(each, exclusive of any supplement thereto) and has paid all taxes required to
be paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or
as would not have a Material Adverse Effect, except as set forth in or
contemplated in the Canadian Prospectus and the U.S. Prospectus (each, exclusive
of any supplement thereto). All material tax liabilities have been adequately
provided for in the Enerplus Financial Statements and the Pre-Merger Enerplus
Financial Statements, and none of the Enerplus Entities knows of any actual or
proposed additional material tax assessment.
(qq) No labor problem or dispute with the employees of any of the Enerplus
Entities exists or, to the knowledge of any of the Enerplus Entities or the
Manager, is threatened or imminent, and none of the Enerplus Entities is aware
of any existing or imminent labor disturbance by the employees of any of the
Enerplus Entities' principal suppliers, contractors or customers, that, in
either case, could have a Material Adverse Effect, except as set forth in or
contemplated in the Canadian Prospectus and the U.S. Prospectus (each, exclusive
of any supplement thereto).
(rr) Each of the Enerplus Entities 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 Enerplus Entities or their respective
businesses, assets, employees, officers and directors are in full force and
effect, except where the failure to be in full force and effect would not have a
Material Adverse Effect; each of the Enerplus Entities is in compliance with the
terms of such policies and instruments in all material respects; there are no
material claims by any of the Enerplus Entities under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause; none of the Enerplus Entities has been
refused any insurance coverage sought or applied for, except where such refusal
would not have a Material Adverse Effect; and none of the Enerplus Entities has
any reason to believe that it will not be able to renew its existing insurance
policies as and when such policies expire or be unable to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect, except as set forth in or
contemplated in the Canadian Prospectus and the U.S. Prospectus (each, exclusive
of any supplement thereto).
(ss) Neither EnerMark nor ERC is currently prohibited, directly or
indirectly, from paying any dividends or royalties to the Trust, from making any
other distribution on its capital stock, from repaying to the Trust any loans or
advances to it from the Trust or from transferring any of its property to the
Trust, except as described in or contemplated by the Canadian Prospectus and the
U.S. Prospectus.
14
(tt) Each of the Enerplus Entities possesses all licenses, certificates,
permits and other authorizations issued by the appropriate federal, provincial,
state or foreign regulatory authorities necessary to conduct their respective
businesses or affairs, except where the failure to so possess would not
reasonably be expected to have a Material Adverse Effect, and such businesses
and affairs are being conducted, in all material respects, in compliance with
all applicable laws, rules and regulations of each jurisdiction in which
EnerMark or ERC carries on business or the Trust conducts its affairs, and none
of the Enerplus Entities has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect, except as set forth in
or contemplated in the Canadian Prospectus and the U.S. Prospectus (each,
exclusive of any amendment or supplement thereto).
(uu) Each of the Enerplus Entities 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
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with Canadian generally
accepted accounting principles and to maintain asset accountability and (iii)
access to assets is permitted only in accordance with management's general or
specific authorization. "Ceiling tests" are performed at regular intervals as
required by Canadian generally accepted accounting principles and consistent
with industry practice.
(vv) None of the Enerplus Entities or the Manager has taken, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under Canadian Securities Laws,
the Exchange Act or otherwise, stabilization or manipulation of the price of any
security of the Enerplus Entities to facilitate the sale or resale of the
Securities.
(ww) Each of the Enerplus Entities (i) is in compliance with any and all
applicable foreign, Canadian federal, U.S. federal, state, provincial and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received and is in compliance with
all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its respective businesses and (iii) has not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except, in the case of clauses (i), (ii) and
(iii), where such non-compliance with Environmental Laws, failure to receive
required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect, except as set
forth in or contemplated in the Canadian Prospectus and the U.S. Prospectus
(each, exclusive of any supplement thereto). Except as set forth in the Canadian
Prospectus and the U.S. Prospectus, none of the Enerplus Entities has been named
as a "potentially responsible party" under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
15
(xx) In the ordinary course of its business, each of EnerMark and ERC
periodically reviews the effect of Environmental Laws on the business,
operations and properties of each of the Enerplus Entities, 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, each of
EnerMark and ERC has reasonably concluded that such associated costs and
liabilities would not, singly or in the aggregate, have a Material Adverse
Effect.
(yy) None of the Enerplus Entities nor any of their properties has any
immunity from the jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) under the federal laws of Canada or the laws of the
Province of Alberta.
(zz) Since January 1, 2002, the information and statements set forth in all
filings by or on behalf of the Trust with the Qualifying Authorities or the
Commission were true, correct and complete in all material respects and did not
contain any material misrepresentation, as of the date of such information or
statements.
(aaa) Other than as provided for in this Agreement, none of the Enerplus
Entities has incurred any obligation or liability, contingent or otherwise, for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation with respect to the transactions contemplated herein.
(B) The Manager represents and warrants to, and agrees with, each
Underwriter as set forth below in this Section 1B.
(a) The Manager has been duly continued to become an unlimited liability
company by amalgamation and is in good standing under the laws of the Province
of Nova Scotia; the Manager has all requisite corporate power and authority to
conduct its business as described in the Canadian Prospectus and the U.S.
Prospectus; the Manager is duly qualified to carry on business as an
extra-provincial corporation or a foreign corporation, as the case may be, in
the jurisdiction in which 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 to so qualify or be in good standing would not have a
material adverse effect on (i) the condition (financial or otherwise),
prospects, earnings, business or properties of the Enerplus Entities, taken as a
whole, or (ii) the ability of the Manager to manage the Enerplus Entities, in
each case whether or not arising from transactions in the ordinary course of
business (a "Managerial Material Adverse Effect").
(b) The Manager has no Significant Subsidiaries. Other than the Trust,
EnerMark, ERC and EPRC IV, the Manager is not actively involved in the
management or administration of any other corporations or entities.
(c) The execution and delivery of and the performance by each of the
Enerplus Entities and the Manager of its respective obligations under this
Agreement has
16
been duly and validly authorized by all necessary action on the part of the
Manager; this Agreement has been duly executed and delivered by the Manager.
(d) Neither the issue and sale of the Securities nor the consummation of
any other of the transactions herein contemplated nor the execution, delivery or
fulfillment of the terms hereof will conflict with, result in a breach or
violation of or imposition of any lien, charge or encumbrance upon any property
of any of the Manager pursuant to, or create a state of facts which, after
notice or lapse of time or both, will result in a breach of, (i) the constating
documents of the Manager, (ii) the terms of any other indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the Manager is
a party or bound or to which its property is subject or (iii) any statute, law,
rule, regulation, judgment, order or decree applicable to the Manager of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Manager or any of its properties,
except, in the case of clauses (ii) and (iii), for any such breach, violation or
imposition which could not reasonably be expected to have a Managerial Material
Adverse Effect.
(e) No action, suit, proceeding or inquiry brought by or before any court
or governmental agency, authority or body or any arbitrator involving the
Manager or its property is pending or, to the knowledge of the Manager,
threatened that (i) could reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected to have a
Managerial Material Adverse Effect, except as set forth in or contemplated in
the Canadian Prospectus and the U.S. Prospectus (each, exclusive of any
supplement thereto).
(f) The Manager owns or leases all such properties as are necessary to the
conduct of its operations as presently conducted, except where the failure to
own or lease such properties could not reasonably be expected to have a
Managerial Material Adverse Effect.
(g) The Manager is not or with the giving of notice or lapse of time or
both, will not be, in violation or default of (i) any provision of its
constating documents, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a party or bound or
to which its property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Manager or any of its properties, which violation or default would, in the case
of clauses (ii) and (iii) above, either individually or in the aggregate with
all other violations and defaults referred to in this paragraph (if any), have a
Managerial Material Adverse Effect. The Manager is in compliance in all material
respects with the terms and conditions of the Trust Indenture and the Management
Agreement.
(h) The Manager has filed all foreign, Canadian federal, U.S. federal,
state, provincial and local tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the failure to so file
would not have a
17
Managerial Material Adverse Effect), except as set forth in or contemplated in
the Canadian Prospectus and the U.S. Prospectus (each, exclusive of any
supplement thereto) and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that any of
the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as would not have a
Managerial Material Adverse Effect, except as set forth in or contemplated in
the Canadian Prospectus and the U.S. Prospectus (each, exclusive of any
supplement thereto).
(i) The Manager 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 the Manager are in full force and effect, except where the
failure to be in full force and effect would not have Managerial Material
Adverse Effect; the Manager is in compliance with the terms of such policies and
instruments in all material respects; there are no material claims by the
Manager under any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause; the Manager
has not been refused any insurance coverage sought or applied for, except where
such refusal would not have a Managerial Material Adverse Effect; the Manager
does not have any reason to believe that it will not be able to renew its
existing insurance policies as and when such policies expire or be unable to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Managerial Material Adverse Effect,
except as set forth in or contemplated in the Canadian Prospectus and the U.S.
Prospectus (each, exclusive of any supplement thereto).
(j) The Manager possesses all licenses, certificates, permits and other
authorizations issued by the appropriate federal, provincial, state or foreign
regulatory authorities necessary to conduct its business, except where the
failure to so possess could not reasonably be expected to have a Managerial
Material Adverse Effect, and its business is being conducted, in all material
respects, in compliance with all applicable laws, rules and regulations of each
jurisdiction in which it carries on business, and the Manager has not received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Managerial
Material Adverse Effect, except as set forth in or contemplated in the Canadian
Prospectus and the U.S. Prospectus (each, exclusive of any supplement thereto).
(k) Neither the Manager nor any of its properties has any immunity from
the jurisdiction of any court or from any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of execution or
otherwise) under the federal laws of Canada or the laws of the Province of
Alberta.
(l) Other than as provided for in this Agreement, the Manager has not
incurred any obligation or liability, contingent or otherwise, for brokerage
fees, finder's fees, agent's commissions or other similar forms of compensation
with respect to the transactions contemplated herein.
18
2. PURCHASE AND SALE. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Trust
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Trust, at a purchase price of $[o] per Trust
Unit for Underwritten Securities initially offered in Canada or US$[o] per Trust
Unit for Underwritten Securities initially offered in the United States, the
amount of the Underwritten Securities set forth opposite such Underwriter's name
in Schedule I hereto.
(b) Subject to the terms and conditions hereof and in reliance upon the
representations and warranties herein set forth, the Trust hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
1,425,000 Option Securities at the same purchase price per Trust Unit as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments, if any, in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time on or before the 30th day after the date of the U.S. Prospectus upon
written or telegraphic notice by the Representatives to the Trust setting forth
the number of Option Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option Securities. Any such time and date of payment and delivery (if not the
Closing Date, is herein referred to as a "Settlement Date") shall be determined
by the Representatives, but shall not be later than three Business Days after
the exercise of said option, nor in any event prior to the Closing Date (as
hereinafter defined). The number of Option Securities to be purchased by each
Underwriter shall be the same percentage of the total number of Trust Units of
the Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to eliminate any
fractional Trust Units.
(c) In consideration for the Underwriters' agreement to purchase the
Securities, and in consideration for their services hereunder, the Trust shall
pay to the Representatives, for the account of the Underwriters, a fee of $[o]
per Trust Unit for the Underwritten Securities and any Option Securities
initially offered in Canada or US$[o] per Trust Unit for the Underwritten
Securities and any Option Securities initially offered in the United States (the
"Underwriting Fee").
3. DELIVERY AND PAYMENT. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 8:45 AM, New York City time, on November 29,
2002, or at such time on such later date not more than three Business Days after
the foregoing date as the Representatives shall designate, which date and time
may be postponed by agreement between the Representatives and the Trust or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the Trust
by certified cheque, bank draft and/or wire transfer, at the option of the
Underwriters, payable in same-day funds to an account specified by the
19
Trust. Delivery of the Underwritten Securities and the Option Securities
shall be made through the facilities of The Depository Trust Company and the
Canadian Depository for Securities Ltd. unless the Representatives shall
otherwise instruct. Payment to the Trust with respect to Securities the
Underwriters have sold or expect to sell in the United States shall be made
in United States dollars and payment to the Trust with respect to Securities
the Underwriters have sold or expect to sell in Canada shall be made in
Canadian dollars as set forth in Section 2.
Concurrently with the payment by the Representatives of the purchase price
for the Underwritten Securities, the Trust shall pay to the Underwriters the
Underwriting Fee with respect to such Underwritten Securities, through and as
requested by the Representatives, by certified cheque, bank draft and/or wire
transfer, at the option of the Underwriters, payable in same-day funds to an
account specified by the Representatives.
If the option provided for in Section 2(b) hereof is exercised after the
third Business Day prior to the Closing Date, the Trust will deliver the Option
Securities (at the expense of the Trust) to the Representatives, at a place or
places designated by the Representatives, on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Trust by certified cheque, bank draft
and/or wire transfer, at the option of the Underwriters, payable in same-day
funds to an account specified by the Trust. Payment to the Trust with respect to
Option Securities the Underwriters have sold or expect to sell in the United
States shall be made in United States dollars and payment to the Trust with
respect to Option Securities the Underwriters have sold or expect to sell in
Canada shall be made in Canadian dollars as set forth in Section 2. Concurrently
with the payment by the Representatives of the purchase price for the Option
Securities, the Trust shall pay to the Underwriters the Underwriting Fee with
respect to such Option Securities through and as requested by the
Representatives, by certified cheque, bank draft and/or wire transfer, at the
option of the Underwriters, payable in same-day funds to an account specified by
the Representatives. If settlement for the Option Securities occurs after the
Closing Date, the Trust will deliver to the Representatives on the Settlement
Date for the Option Securities, and the obligation of the Underwriters to
purchase the Option Securities shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Canadian Prospectus and the U.S. Prospectus.
5. AGREEMENTS. Each of the Enerplus Entities and the Manager jointly and
severally agrees with the several Underwriters that:
(a) The Trust will comply with the requirements of the PREP Procedures and
General Instruction II.L. of Form F-10 and will notify the Representatives
promptly, and confirm the notice in writing, (i) when any post-effective
amendment to
20
the Registration Statement, shall have been filed with the Commission or shall
have become effective, and when any supplement to the Canadian Prospectus or the
U.S. Prospectus or any amendment to the Canadian Prospectus or the U.S.
Prospectus or any Supplementary Material shall have been filed, (ii) of the
receipt of any comments from any Qualifying Authority or the Commission, (iii)
of any request by any Qualifying Authority to amend or supplement the Final PREP
Prospectus or the Canadian Prospectus or for additional information or of any
request by the Commission to amend the Registration Statement or to amend or
supplement the U.S. Prospectus or for additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any Qualifying Authority of any order preventing or
suspending the use of any prospectus; or of the prevention or suspension of the
qualification of the Securities for offer or sale in any jurisdiction, or of the
institution or, to the knowledge of any of the Enerplus Entities or the Manager,
threatening of any proceeding for that purpose and (v) of the issuance by any
Qualifying Authority or any stock exchange or any court of any order having the
effect of ceasing or suspending the distribution of the Securities or the
trading in the securities of the Trust, or of the institution or, to the
knowledge of any of the Enerplus Entities or the Manager, threatening of any
proceeding for any such purpose. The Trust will use its best efforts to prevent
the issuance of any such stop order or of any order preventing or suspending
such use of any prospectus or such order ceasing or suspending the distribution
of the Securities or the trading in the securities of the Trust and, if any such
order is issued, to obtain as soon as possible the withdrawal thereof.
(b) The Trust will give the Representatives notice of its intention to
file or prepare any amendment to the Registration Statement, any amendment or
supplement to the Canadian Prospectus or any amendment, supplement or revision
to any of the prospectuses included in the Registration Statement at the time it
became effective, the U.S. Supplemented Prospectus, the Supplemented PREP
Prospectus, and Supplementary Material, or any documents incorporated therein,
whether pursuant to the Act, the Exchange Act, Canadian Securities Laws or
otherwise, and will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall reasonably object.
(c) If, at any time when a prospectus relating to the Securities is
required to be delivered under Canadian Securities Laws or the Act, any event
occurs as a result of which the Canadian Prospectus or the U.S. Prospectus as
then supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or amend or supplement the
Canadian Prospectus or the U.S. Prospectus to comply with the Act, the Exchange
Act or Canadian Securities Laws, the Trust promptly will (1) notify the
Representatives of any such event, (2) prepare and file with the Commission and
the Qualifying Authorities, subject to paragraph (b) of this Section 5, an
amendment or supplement which will correct such statement or omission or effect
such compliance, and (3) supply and deliver any amended or supplemented Canadian
Prospectus or U.S. Prospectus to you in such quantities as you may reasonably
request,
21
which delivery shall constitute a joint and several representation by each of
the Enerplus Entities and the Manager to each Underwriter that such amended
or supplemented Canadian Prospectus or U.S. Prospectus at its date or at the
Closing Date (or, if any Option Securities are purchased, at each Settlement
Date), as the case may be: (i) complies, in all material respects, with
Canadian Securities Laws as interpreted or applied by the Qualifying
Authorities and (ii) constitutes full, true and plain disclosure of all
material facts relating to the Securities and does not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make such statements therein, in light of the circumstances under
which they were made, not misleading, PROVIDED, HOWEVER, that each of the
Trust and the Manager makes no representations or warranties as to the
information contained in or omitted from any amended or supplemented Canadian
Prospectus or U.S. Prospectus in reliance upon and in conformity with
information furnished in writing to the Trust or the Manager by or on behalf
of any Underwriter through the Representatives specifically for inclusion in
any amended or supplemented Canadian Prospectus or U.S. Prospectus.
(d) As soon as practicable, the Trust will make generally available to its
security holders and to the Representatives an earnings statement or statements
of the Enerplus Entities which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(e) The Trust will furnish to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration Statement
(including exhibits thereto), the Canadian Preliminary Prospectus and Canadian
Prospectus and to each other Underwriter a copy of the Registration Statement
(without exhibits thereto), Canadian Preliminary Prospectus and Canadian
Prospectus and, so long as delivery of a prospectus by an Underwriter or dealer
may be required by Canadian Securities Laws and the Act, as many copies of each
Canadian Preliminary Prospectus and U.S. Preliminary Prospectus and the Canadian
Prospectus and the U.S. Prospectus and any amendment or supplement thereto as
the Representatives may reasonably request and such delivery shall constitute
the Trust's consent to the use by the Underwriters or other dealers forming part
of the soliciting dealers group of the Registration Statement, the Canadian
Preliminary Prospectus, the U.S. Preliminary Prospectus, 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 Securities (including the Option Securities).
(f) The Trust will arrange, if necessary, for the qualification of the
Securities for sale under the laws of such jurisdictions as the Representatives
may designate and will maintain such qualifications in effect so long as
required for the distribution of the Securities; provided that in no event shall
the Trust be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject. The Trust will
also supply the Representatives with such information as is necessary for the
determination of the legality of the Securities for investment under the laws of
such jurisdictions as the Representatives may request.
22
(g) The Trust will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. and CIBC World Markets Inc., offer, sell, contract to sell, pledge,
or otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Trust or any affiliate of the Trust or any person in privity
with the Trust or any affiliate of the Trust) directly or indirectly, including
the filing (or participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Exchange Act, any other Trust Units or any securities convertible
into, or exercisable, or exchangeable for, Trust Units, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of the Underwriting Agreement; PROVIDED, HOWEVER, that the Trust may issue and
sell Trust Units in connection with (i) the grant or exercise of options or
rights pursuant to the Trust's trust unit option plan and trust unit rights
incentive plan, (ii) the issuance of trust units pursuant to its distribution
reinvestment and optional unit purchase plan and (iii) the direct issuance of
trust units pursuant to one or more acquisitions whose purchase prices do not,
in the aggregate, exceed $400 million. For greater certainty, the issuance of
Trust Units pursuant to the existing instruments listed in Note 4 to the
Enerplus Financial Statements shall be deemed to be an acquisition for the
purposes of (iii) above.
(h) None of the Enerplus Entities nor the Manager will take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Trust to facilitate the sale or resale of the Securities.
(i) The Trust agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and filing with
the Commission and the Qualifying Authorities, as the case may be, of the
Registration Statement (including financial statements and exhibits thereto),
the Form F-X, each of the Canadian Preliminary Prospectus, the U.S. Preliminary
Prospectus, the Canadian Prospectus and the U.S. Prospectus, and each amendment
or supplement to any of them; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Registration Statement, each of the Canadian Preliminary
Prospectus, the U.S. Preliminary Prospectus, the Canadian Prospectus and the
U.S. Prospectus, and all amendments or supplements to any of them, as may, in
each case, be reasonably requested for use in connection with the offering and
sale of the Securities; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this Agreement,
any blue sky memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Securities; (v)
the registration of the Securities under the Exchange Act and the listing of the
Securities on the New York Stock Exchange and the Toronto Stock Exchange; (vi)
any registration or qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to such
registration and
23
qualification); (vii) any filings required to be made with the National
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to such
filings); (viii) the transportation and other expenses incurred by or on behalf
of Trust representatives in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the Trust's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Trust; and (x) all other costs and expenses incident to the
performance by the Trust of its obligations hereunder. It is understood,
however, that, except as provided in this Section 6, Section 7 and Section 8
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel.
(j) The Trust shall apply the net proceeds of its sale of the Securities
as set forth in the Canadian Prospectus and the U.S. Prospectus under the
heading "Use of Proceeds". The Trust shall not invest, or otherwise use the
proceeds received by the Trust from its sale of the Trust Units in such a manner
as would require the Trust to register as an Investment Company under the 1940
Act.
(k) The Trust shall not, between the date hereof and prior to the Closing
Date (or the Settlement Date, if any) pay out any distributions other than
distributions payable on December 20, 2002.
(l) The Trust will maintain a transfer agent as may be required in
accordance with the rules of each of the Toronto Stock Exchange and the New York
Stock Exchange and, if necessary under the Trust Indenture, a registrar for the
Trust Units.
(m) The Trust will take all necessary steps to ascertain promptly whether
the Supplemented PREP Prospectus was received for filing by the Qualifying
Authorities and whether the form of prospectus transmitted for filing pursuant
to General Instruction II.L. of Form F-10 was received for filing by the
Commission and, in the event that any such prospectuses were not received for
filing, it will promptly file any such prospectus not then received for filing.
(n) For a period of three years after the Closing Date, the Trust shall
furnish to the Representatives and, upon request, to each Underwriter, copies of
all reports filed with the Commission on Forms 40-F, 20-F and 6-K, as
applicable, or such similar forms as may be designated by the Commission, annual
information forms, management proxy circulars and such other documents as shall
be furnished by the Trust to its unitholders generally (collectively, the
"Filings"), except for all such Filings filed by the Trust with the Commission
in electronic format on ▇▇▇▇▇ or with the Qualifying Authorities on SEDAR.
(o) Each of the Trust and the Manager will use its reasonable best efforts
to monitor all aspects of the Trust's affairs relevant to its continuing
qualification as a "mutual fund trust" for purposes of the Canadian Tax Act, and
will promptly notify the Representatives upon becoming aware of any circumstance
that may cause the Trust to fail to continue to so qualify. Each of the Enerplus
Entities will conduct its affairs so as to enable the Trust to qualify at all
times as a "mutual fund trust" under the Canadian Tax Act. The Trust will at all
times restrict its activities such that its only undertaking
24
will be the investing of its funds in property in which a mutual fund trust is
permitted to invest under the Canadian Tax Act.
Notwithstanding the provisions of this Section 5, the Manager shall have no
responsibility under Sections 5(a), (b) or (c) to the extent that any
non-compliance with the provisions therein results:
(i) from a decision taken or approved subsequent to the Execution
Time by, or a direction of, the board of directors of EnerMark on behalf of
the Trust or EnerMark or the board of directors of ERC on behalf of ERC;
(ii) after the Closing Date from any matter which has been approved by
the unitholders of the Trust in accordance with the constating documents of
the Trust; or
(iii) from the implementation of a decision, approval or direction
referred to in (i) or (ii) in the manner so decided, approved or directed,
as the case may be.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of each of the Enerplus Entities and
the Manager contained herein as of the Execution Time, the Closing Date and any
Settlement Date pursuant to Section 3 hereof, to the accuracy of the statements
of each of the Enerplus Entities and the Manager made in any certificates
pursuant to the provisions hereof, to the performance by each of the Enerplus
Entities and the Manager of its respective obligations hereunder and to the
following additional conditions:
(a) An MRRS Decision Document shall have been obtained from the Reviewing
Authority evidencing issuance by the Qualifying Authorities of a receipt in
respect of the Final PREP Prospectus and the Supplemented PREP Prospectus shall
have been filed with the Qualifying Authorities as promptly as practicable after
the date hereof and, in any event, within the time period prescribed under the
PREP Procedures. No order having the effect of ceasing or suspending the
distribution of or the trading in the Trust Units or any other securities of the
Trust shall have been issued by any Qualifying Authority or any stock exchange
and no proceedings for that purpose shall have been instituted or threatened by
any Qualifying Authority or any stock exchange and any request for additional
information shall have been complied with.
(b) The Registration Statement shall have become effective under the Act
prior to the Execution Time or at such later time or on such later date as the
Representatives shall have agreed to in writing. The U.S. Supplemented
Prospectus shall have been filed in the manner and within the time period
required by General Instruction II.L. of Form F-10. No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened by the
Commission and any request for additional information shall have been complied
with.
25
(c) The Trust shall have requested and caused ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.,
United States counsel for the Trust, to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the Representatives, as
set forth in Exhibit A hereto.
(d) The Trust shall have requested and caused Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, Canadian counsel for the Trust, to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the Representatives and
Canadian counsel for the Underwriters, as set forth in Exhibit B hereto.
(e) The Representatives shall have received from Shearman & Sterling,
United States counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the issuance
and sale of the Securities, the Registration Statement, the U.S. Prospectus
(together with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Trust shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(f) The Representatives shall have received from Burnet, ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, Canadian counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Canadian Prospectus (together with any
supplement thereto) and other related matters as the Representatives may
reasonably require, and the Trust shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(g) The Representatives shall have received from ▇▇▇▇▇▇▇ Associates
Limited, independent petroleum engineering consultants, one or more letters in
form and substance satisfactory to the Representatives confirming that (i)
although the definitions of proved reserves under SEC Regulation S-X and
Canadian National Policy 2-B are different, in their opinion the estimates of
net proved reserves using constant price and cost assumptions that are included
or incorporated by reference in the Canadian Prospectus and the U.S. Prospectus
(including any supplements thereto) are, in all material respects, equivalent to
those which would be determined under SEC Regulation S-X and (ii) although there
are discrepancies between the Reserve Report generated for the Enerplus 2001
year-end evaluation and the "Merak" reports generated by Enerplus, those
discrepancies are based solely on the respective decisions of the Enerplus
Entities and ▇▇▇▇▇▇▇ Associates Limited to categorize certain revenues, costs
and expenses, the "Merak" reports were derived from the Reserve Report and the
information contained in the "Merak" reports is representative of the
information contained in the Reserve Report in all material respects.
(h) Each of the Trust and the Manager shall have furnished to the
Representatives a certificate of the Trust or the Manager, as applicable, signed
by the Chairman of the Board or the President and the principal financial or
accounting officer of EnerMark (both on behalf of itself and the Trust) and ERC
and, in the case of the certificate delivered by the Manager, by the Chairman of
the Board or the President and the principal financial or accounting officer of
the Manager, each dated the Closing Date,
26
to the effect that the signers of such certificate have carefully examined the
Registration Statement, the Canadian Prospectus, the U.S. Prospectus, any
amendments or supplements to the Canadian Prospectus and the U.S. Prospectus and
this Agreement and that:
(i) the representations and warranties of the Enerplus Entities or
the Manager, as applicable, in this Agreement are true and correct on and
as of the Closing Date with the same effect as if made on the Closing Date
and the Trust or the Manager, as applicable, has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any prospectus, the
qualification of the Securities for offer or sale in any jurisdiction, the
distribution of the Securities or the trading in the securities of the
Trust has been issued and no proceedings for that purpose have been
instituted or, to the knowledge of any of the Enerplus Entities or the
Manager, threatened; and
(iii) since the date of the most recent financial statements included
in the Canadian Prospectus and the U.S. Prospectus (each, exclusive of any
amendment or supplement thereto), there has been no Material Adverse
Effect, except as set forth in or contemplated in the Canadian Prospectus
and the U.S. Prospectus (each, exclusive of any amendment or supplement
thereto).
(i) The Trust shall have requested and caused each of
PricewaterhouseCoopers LLP and Deloitte & Touche LLP, independent chartered
accountants, to have furnished to the Representatives, at the Execution Time and
at the Closing Date, letters, dated respectively as of the Execution Time and as
of the Closing Date, in form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letter for each of the
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement, the Canadian Prospectus and the U.S. Prospectus;
provided, however, that such letters need not include any affirmation of any
opinion expressed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP on the consolidated historical
financial statements of Pre-Merger Enerplus for the fiscal years ended December
31, 2000, 1999 and 1998.
(j) At the time of delivery to the Underwriters of the Canadian
Preliminary Prospectus and the Canadian Prospectus, the Trust shall deliver to
the Underwriters:
(i) one or more opinions of local counsel in Quebec, addressed to the
Underwriters and the Underwriters' counsel and dated as of the date of the
filing of the Canadian Preliminary Prospectus and Canadian Prospectus, in a
form acceptable to the Underwriters, acting reasonably, to the effect that,
except for information in the Canadian Preliminary Prospectus or Canadian
Prospectus, as the case may be, translated by the auditors described in
clause (ii) below, the
27
French language version of such document (including information
incorporated by reference therein) is in all material respects a complete
and proper translation of the English language version thereof; and
(ii) a letter from the auditors of the Trust, and from the auditors of
EIF (prior to the merger with Enerplus Resources Fund), as applicable,
addressed to the Underwriters and the Underwriters' counsel and dated the
date of the filing of the Canadian Preliminary Prospectus and the Canadian
Prospectus in the form acceptable to the Underwriters, acting reasonably,
to the effect that the information excepted from the opinion of counsel
referred to in Clause 6(j)(i) in the French language version of such
document (including information incorporated by reference therein) is in
all material respects a complete and proper translation of the information
contained in the English language version thereof.
(k) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Registration Statement (each, exclusive of any
amendment thereof), the Canadian Prospectus and the U.S. Prospectus (each,
exclusive of any supplement thereto), there shall not have been (i) any change
or decrease specified in the letter or letters referred to in paragraph (i) of
this Section 6; (ii) any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), earnings,
business or properties of the Enerplus Entities taken as a whole, or the
Manager, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Canadian Prospectus and
the U.S. Prospectus (each, exclusive of any amendment or supplement thereto);
(iii) any inquiry, investigation (whether formal or informal) or other
proceeding in relation to the Enerplus Entities or the Manager or any of their
directors or senior officers is announced, commenced or threatened by any
securities commission or similar regulatory authority or a stock exchange or by
any other competent authority or there is a change in a law, regulation or
policy or the interpretation or administration thereof, the effect of which, in
any case referred to in clauses (i) to (iii) above, is, in the sole judgment of
the Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Canadian Prospectus and the U.S. Prospectus (each, exclusive of any
amendment or supplement thereto).
(l) Prior to the Closing Date, the Enerplus Entities and the Manager each
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
(m) The Trust shall have furnished to the Representatives on or prior to
the Closing Date satisfactory evidence of its due and valid authorization of CT
Corporation as its agent to receive service of process as set forth in Section
12 hereof, and satisfactory evidence from CT Corporation accepting its
appointment as such agent.
(n) The Securities shall (i) have been listed and admitted and authorized
for trading on the New York Stock Exchange and (ii) conditionally approved for
listing on the Toronto Stock Exchange, and satisfactory evidence of such actions
shall have been provided to the Representatives.
28
(o) At the Execution Time, the Trust shall have furnished to the
Representatives a letter substantially in the form of Exhibit C hereto from each
officer and director of each of EnerMark, ERC and the Manager and the
unitholders listed in Annex A addressed to the Representatives, and such letter
agreements shall continue to be in full force and effect on the Closing Date. To
the knowledge of each of the Enerplus Entities and the Manager, neither El Paso
Corporation nor any of its subsidiaries other than those listed in Annex A, owns
more than 0.5% of the issued and outstanding Trust Units.
(p) The Trust shall have requested and caused Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, Canadian counsel for the Trust, to have furnished to the Representatives an
opinion related to the Trust's "mutual fund trust" status, dated the Closing
Date and addressed to the Representatives and Canadian counsel for the
Underwriters, in form and substance reasonably satisfactory to the
Representatives.
Opinions and cover letters similar to the foregoing shall be provided to
the Underwriters with respect to any amendment or supplement to the Canadian
Preliminary Prospectus, U.S. Preliminary Prospectus, Canadian Prospectus, U.S.
Prospectus, Supplemented PREP Prospectus and U.S. Supplemented Prospectus and
any other relevant document at the time the same is presented to the
Underwriters for their signature or, if the Underwriters' signature is not
required, at the time same is filed. All such letters shall be in form and
substance reasonably satisfactory to the Underwriters and the Underwriters'
counsel.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Trust in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, Canadian counsel for the Trust,
at Bankers Hall, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇, on the Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of any of the Enerplus Entities or the Manager
to perform any agreement herein or comply with any provision hereof other than
by reason of a default by any of the Underwriters, the Enerplus Entities and the
Manager shall be jointly and severally obligated to reimburse the Underwriters
severally through ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been reasonably incurred by them in connection
29
with the proposed purchase and sale of the Securities. If this Agreement shall
be terminated pursuant to Section 9 hereof, then neither the Enerplus Entities
nor the Manager shall then be under any liability to any Underwriter except as
provided in Section 5(i) and 8 hereof.
8. INDEMNIFICATION AND CONTRIBUTION. (a) Each of the Enerplus Entities
and the Manager jointly and severally agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees, shareholders and agents of each
Underwriter and each person who controls any Underwriter within the meaning of
either the Act, Canadian Securities Laws, or the Exchange Act against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Act, Canadian Securities Laws, the
Exchange Act or other Canadian Federal, United States Federal, state or
provincial statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in the Canadian Preliminary Prospectus or U.S. Preliminary Prospectus or the
Canadian Prospectus or the U.S. Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) any
misrepresentation or alleged misrepresentation contained in the Canadian
Preliminary Prospectus, U.S. Preliminary Prospectus, Canadian Prospectus, U.S.
Prospectus, or any amendment or supplement thereto; (iii) any prohibition or
restriction of trading in the securities of the Trust or any prohibition or
restriction affecting the distribution of the Securities (including the Option
Securities) imposed by any competent authority if such prohibition or
restriction is based on any misrepresentation or alleged misrepresentation of a
kind referred to in item (ii) immediately above; (iv) any order made or inquiry,
investigation (whether formal or informal) or other proceeding commenced or
threatened by any one or more competent authorities (not based upon the
activities or alleged activities of the Underwriters or their banking or dealer
selling group members, if any) relating to or materially affecting the trading
or distribution of the Securities (including the Option Securities); (v) any
breach of, default under or non-compliance by the Enerplus Entities or the
Manager with any representation, warranty, term or condition of this Agreement;
or (vi) the Trust not complying with any requirement of Canadian Securities Laws
or the Act in connection with the transactions contemplated herein, and each of
the Enerplus Entities and the Manager agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that none of the Enerplus Entities or
the Manager will be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Trust by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein; PROVIDED FURTHER, that with respect to any
untrue statement or omission of material fact made in any Canadian Preliminary
Prospectus or U.S. Preliminary Prospectus, the indemnity agreement contained in
this Section 8(a) shall not inure to the benefit of any Underwriter from whom
the person
30
asserting any such loss, claim, damage or liability purchased the securities
concerned, to the extent that any such loss, claim, damage or liability of such
Underwriter occurs under the circumstance where it shall have been determined by
a court of competent jurisdiction by final and nonappealable judgment that (a)
the Company had previously furnished copies of the Canadian Prospectus or the
U.S. Prospectus, as applicable, to the Representatives, (b) delivery of such
Canadian Prospectus or such U.S. Prospectus was required by the Canadian
Securities Laws or by the Act, as applicable, to be made to such person, (c) the
untrue statement or omission of a material fact contained in the Canadian
Preliminary Prospectus or the U.S. Preliminary Prospectus, as applicable, was
corrected in such Canadian Prospectus or such U.S. Prospectus and (d) there was
not sent or given to such person, at or prior to the written confirmation of the
sale of such securities to such person, a copy of such Canadian Prospectus or
such U.S. Prospectus, as applicable. This indemnity agreement will be in
addition to any liability which the Enerplus Entities or the Manager may
otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless each of the Enerplus Entities and the Manager and each of their
respective trustee or directors, each of their respective officers who sign the
Registration Statement, and each person who controls the Trust within the
meaning of either the Act, Canadian Securities Laws, or the Exchange Act, to the
same extent as the foregoing indemnity from each of the Enerplus Entities and
the Manager to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Trust by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have. Each
of the Enerplus Entities and the Manager acknowledges that the statements set
forth in the last paragraph of the cover page regarding delivery of the
Securities and, under the heading "Underwriting", (i) the list of Underwriters
and their respective participation in the sale of the Securities and (ii) the
paragraphs related to certain of the offering terms, over-allotment, price
stabilization and short-positions in any Canadian Preliminary Prospectus, U.S.
Preliminary Prospectus, Canadian Prospectus and U.S. Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Canadian Prospectus, U.S.
Preliminary Prospectus, Canadian Prospectus or U.S. Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any
31
separate counsel retained by the indemnified party or parties except as set
forth below); PROVIDED, HOWEVER, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based on the advice of independent counsel that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, (iii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of the institution of such action or (iv) the indemnifying party shall authorize
the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Enerplus Entities and the Manager jointly and
severally and the Underwriters severally agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Enerplus Entities, the Manager and one or
more of the Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Enerplus Entities or the Manager
on the one hand and by the Underwriters on the other from the offering of the
Securities; PROVIDED, HOWEVER, that in no case shall any Underwriter (except as
may be provided in any agreement among underwriters relating to the offering of
the Securities) be responsible for any amount in excess of the underwriting
discount or commission applicable to the Securities purchased by such
Underwriter hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Enerplus Entities and the Manager
jointly and severally and the Underwriters severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Enerplus Entities and the Manager on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Enerplus Entities and the Manager shall
be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by them, and benefits received by the Underwriters
shall be deemed to be equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of the Canadian Prospectus and the
U.S. Prospectus. Relative fault shall be determined by
32
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Enerplus Entities and the
Manager on the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Enerplus Entities and
the Manager and the Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act, Canadian
Securities Laws or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Trust within the meaning of either
the Act, Canadian Securities Laws or the Exchange Act, each officer of the
Enerplus Entities and the Manager who shall have signed the Registration
Statement and each director of the Enerplus Entities shall have the same rights
to contribution as the Trust, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall fail
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such non-defaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any non-defaulting Underwriter or
the Trust. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement, the Canadian Prospectus or the
U.S. Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Trust and any non-defaulting Underwriter for
damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Trust prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Trust Units shall have been suspended by the Commission, the
Reviewing Authority, any of the
33
Qualifying Authorities or the Toronto Stock Exchange or the New York Stock
Exchange or trading in securities generally on the Toronto Stock Exchange or
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on either of such Exchanges, (ii) a
banking moratorium shall have been declared either by Canadian Federal,
United States Federal or New York State authorities, or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States or Canada of a national emergency or war, or other calamity or
crisis or there should develop, occur or come into effect or existence any
other event, action, state, condition or major financial occurrence of
national or international consequence, any regulation, or other occurrence of
any nature whatsoever, the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or
inadvisable to proceed with the offering, distribution or delivery of the
Securities as contemplated by the Canadian Prospectus and the U.S. Prospectus
(exclusive of any amendment or supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective agreements,
representations, warranties, indemnities and other statements of each of the
Enerplus Entities and the Manager or their officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Enerplus Entities, the Manager or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. SUBMISSION TO JURISDICTION; AGENT FOR SERVICE; WAIVER OF IMMUNITIES.
Each of the Enerplus Entities and the Manager irrevocably (i) agrees that any
legal suit, action or proceeding against the Enerplus Entities or the Manager
brought by any Underwriter or by any person who controls any Underwriter arising
out of or based upon this Agreement or the transactions contemplated thereby may
be instituted in any New York Court, (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such proceeding and (iii) submits to the non-exclusive
jurisdiction of such courts in any such suit, action or proceeding. Each of the
Enerplus Entities and the Manager has appointed CT Corporation, New York, New
York, as its authorized agent (the "Authorized Agent") upon whom process may be
served in any such action arising out of or based on this Agreement or the
transactions contemplated hereby which may be instituted in any New York Court
by any Underwriter or by any person who controls any Underwriter, expressly
consents to the jurisdiction of any such court in respect of any such action,
and waives any other requirements of or objections to personal jurisdiction with
respect thereto. Such appointment shall be irrevocable. Each of the Enerplus
Entities and the Manager represents and warrants that the Authorized Agent has
agreed to act as such agent for service of process and agrees to take any and
all action, including the filing of any and all documents and instruments, that
may be necessary to continue such appointment in full force and effect as
aforesaid. Service of process upon the Authorized Agent and written notice of
such service to the Enerplus Entities or the Manager, as applicable, shall be
deemed, in every respect, effective service of process upon the Enerplus
Entities or the Manager, as applicable.
34
To the extent that any of the Enerplus Entities or the Manager has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations under the above-referenced documents, to the extent permitted by
law.
The provisions of this Section 12 shall survive any termination of this
Agreement, in whole or in part.
13. JUDGMENT CURRENCY. The obligation of each of the Enerplus Entities and
the Manager in respect of any sum due to any Underwriter shall, notwithstanding
any judgment in a currency other than United States dollars, not be discharged
until the first Business Day following receipt by such Underwriter of any sum
adjudged to be so due in such other currency on which (and only to the extent
that) such Underwriter may in accordance with normal banking procedures purchase
United States dollars with such other currency; if the United States dollars so
purchased are less than the sum originally due to such Underwriter hereunder,
each of the Enerplus Entities and the Manager jointly and severally agree, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Underwriter against such loss. If the United States dollars so purchased are
greater than the sum originally due to such Underwriter hereunder, such
Underwriter agrees to pay to the Enerplus Entities or the Manager, as
applicable, an amount equal to the excess of the dollars so purchased over the
sum originally due to such Underwriter hereunder.
14. WAIVER OF JURY TRIAL. To the fullest extent permitted by applicable
law, each of the Underwriters and each of the Enerplus Entities and the Manager
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) relating to or
arising out of this Agreement. The provisions of this Section 14 shall survive
any termination of this Agreement, in whole or in part.
15. NOTICES. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telefaxed to both of (1) the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. General Counsel (fax
no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to the General Counsel, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: General
Counsel and (2) CIBC World Markets Inc. (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed
to CIBC World Markets Inc., at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: T. ▇▇▇▇▇▇▇ Kitchen; or, if sent to the
Enerplus Entities or the Manager will be mailed, delivered or telefaxed to (403)
298-2299 and confirmed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, attention: President.
16. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers,
directors, employees, agents and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
35
17. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
18. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
19. HEADINGS. The section headings used herein are for convenience only
and shall not affect the construction hereof.
20. RELATIONSHIP BETWEEN THE TRUST AND THE UNDERWRITERS. The Trust: (i)
acknowledges and agrees that the Underwriters have certain statutory obligations
as registrants under the Canadian Securities Laws and have fiduciary
relationships with their clients; (ii) acknowledges and agrees that the
Underwriters are neither the agents of the Trust nor otherwise fiduciaries of
the Trust; and (iii) consents to the Underwriters acting hereunder while
continuing to act for their clients. To the extent that the Underwriters'
statutory obligations as registrants under Canadian Securities Laws or fiduciary
relationships with their clients conflicts with their obligations hereunder the
Underwriters shall be entitled to fulfill their statutory obligations as
registrants under Canadian Securities Laws and their duties to their clients.
Nothing in this agreement shall be interpreted to prevent the Underwriters from
fulfilling their statutory obligations as registrants under Canadian Securities
Laws or to act as a fiduciary of their clients.
21. CONTRACTUAL OBLIGATIONS OF THE TRUST. The parties hereto acknowledge
that the obligations of the Trust hereunder shall not be personally binding upon
any of the unitholders of the Trust and that any recourse against the Trust or
any unitholder in any manner in respect of any indebtedness, obligation or
liability of the Trust arising hereunder or arising in connection herewith or
from the matters to which this Agreement relates, if any, including without
limitation claims based on negligence or otherwise tortious behavior, shall be
limited to, and satisfied only out of, the Fund Assets as defined in the Trust
Indenture.
22. DEFINITIONS. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"$" shall mean Canadian dollars except as otherwise stated.
"Act" has the meaning provided in paragraph (a) of Section 1A of this
Agreement.
"Agreement" shall mean this underwriting agreement dated November 25, 2002.
"Authorized Agent" has the meaning provided in Section 12 hereof.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City or Calgary, Alberta.
36
"Canadian Preliminary Prospectus" has the meaning provided in paragraph (a)
of Section 1A of this Agreement.
"Canadian Prospectus" shall mean the Final PREP Prospectus for which a MRRS
Decision Document has been obtained from the Reviewing Authority, or, in respect
of any time after the execution of this Agreement, the Supplemented PREP
Prospectus containing the PREP Information filed with the Qualifying
Authorities.
"Canadian Securities Laws" means all applicable securities, corporate and
other laws in each of the Qualifying Provinces and the respective rules or
regulations made thereunder including, without limitation, applicable published
policy statements, blanket orders, multilateral instruments, national policies
and applicable notices of the securities regulatory authorities in such
provinces.
"Closing Date" has the meaning provided in Section 3 hereof.
"Commission" has the meaning provided in paragraph (a) of Section 1A of
this Agreement.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto became or becomes
effective.
"Environmental Laws" has the meaning provided in paragraph (ww) of Section
1 hereof.
"Exchange Act" has the meaning provided in paragraph (a) of Section 1A of
this Agreement.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final PREP Prospectus" has the meaning provided in paragraph (a) of
Section 1A of this Agreement.
"Form F-X" has the meaning provided in the paragraph (a) of Section 1A of
this Agreement.
"Losses" has the meaning provided in paragraph (d) of Section 8 of this
Agreement.
"misrepresentation" shall have the meaning ascribed thereto under Canadian
Securities Laws of the Qualifying Provinces, "distribution" means "distribution"
or "distribution to the public", as the case may be, as defined under Canadian
Securities Laws of the Qualifying Provinces and "distribute" has a corresponding
meaning.
37
"MRRS Decision Document" shall mean a decision document issued by the
Reviewing Authority on behalf of itself and the Qualifying Authorities under the
mutual reliance review system pursuant to National Policy 43-201.
"National Instrument 44-101" has the meaning provided in paragraph (b) of
Section 1A of this Agreement.
"National Instrument 44-103" has the meaning provided in paragraph (a) of
Section 1A of this Agreement.
"National Policy 43-201" has the meaning provided in paragraph (a) of
Section 1A of this Agreement.
"preliminary prospectus" shall mean each prospectus relating to the
Securities (i) used in the United States (A) before the time such registration
statement on Form F-10 becomes effective or (B) after such effectiveness and
prior to the execution and delivery of this Agreement or (ii) filed in Canada
before a MRRS Decision Document for the Final PREP Prospectus has been obtained
from the Reviewing Authority, in each case, including the documents incorporated
by reference therein, that omits the PREP Information.
"PREP Information" has the meaning provided in paragraph (a) of Section 1A
of this Agreement.
"PREP Procedures" has the meaning provided in paragraph (a) of Section 1A
of this Agreement.
"Qualifying Authorities" has the meaning provided in paragraph (a) of
Section 1A of this Agreement.
"Qualifying Provinces" has the meaning provided in paragraph (a) of Section
1A of this Agreement.
"Registration Statement" has the meaning provided in paragraph (a) of
Section 1A of this Agreement.
"Reviewing Authority" has the meaning provided in paragraph (a) of Section
1A of this Agreement.
"Settlement Date" has the meaning provided in paragraph (b) of Section 2 of
this Agreement.
"Significant Subsidiary" shall have the meaning set forth under Rule 1-02
of Regulation S-X under the Act.
"Supplementary Material" shall mean any amendment to the Canadian
Prospectus or auxiliary material, information, evidence, return, report,
application, statement or document that may be filed by or on behalf of the
Trust under the securities laws of the Province of Alberta prior to the Closing
Date or, where such document is
38
deemed to be incorporated by reference into the Final PREP Prospectus, prior to
the expiry of the period of distribution of the Securities.
"Supplemented PREP Prospectus" has the meaning provided in paragraph (a) of
Section 1A hereof.
"Trust Units" has the meaning provided in the first paragraph of this
Agreement but shall also include, where the context reasonably requires, all of
the trust units of the Trust.
"US$" shall mean United States dollars except as otherwise stated.
"U.S. Preliminary Prospectus" has the meaning provided in paragraph (a) of
Section 1A hereof.
"U.S. Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to General Instruction II.L of Form F-10 under the Act
after the Execution Time or, if no filing pursuant to General Instruction II.L
of Form F-10 under the Act is required, shall mean the form of final prospectus
relating to the Securities included in the Registration Statement at the
Effective Date.
"U.S. Supplemented Prospectus" has the meaning provided in paragraph (a) of
Section 1A hereof.
39
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among Enerplus
Resources Fund, EnerMark Inc., Enerplus Resources Corporation, Enerplus Global
Energy Management Company and the several Underwriters.
Very truly yours,
ENERPLUS RESOURCES FUND
by EnerMark Inc.
By:
--------------------------------------
Name:
Title:
ENERMARK INC.
By:
--------------------------------------
Name:
Title:
ENERPLUS RESOURCES CORPORATION
By:
--------------------------------------
Name:
Title:
ENERPLUS GLOBAL ENERGY
MANAGEMENT COMPANY
By:
--------------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
CIBC World Markets Inc.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
By:
--------------------------------------
Name:
Title:
By: CIBC World Markets Inc.
By:
--------------------------------------
Name:
Title:
For themselves and the other several Underwriters named in Schedule I to the
foregoing Agreement.
SCHEDULE I
NUMBER OF UNDERWRITTEN
SECURITIES TO BE
UNDERWRITERS PURCHASED
------------ ----------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ..............................
CIBC World Markets Inc. ................................
RBC Dominion Securities Inc. ...........................
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. ..................................
▇▇▇▇▇▇ Brothers Inc. ....................................
Scotia Capital Inc. .....................................
UBS Warburg LLC .........................................
National Bank Financial Inc. ............................
TD Securities Inc. ......................................
Canaccord Capital Corporation ...........................
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd. ......................................
-----------
Total .............................................. [?]
EXHIBIT A
Form of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. Opinion
Pursuant to the Underwriting Agreement, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. shall
furnish a letter to the effect that, in such counsel's opinion:
(a) The Trust meets the general eligibility requirements for use of Form
F-10 under the Act; the Registration Statement has become effective under the
Act; any required filing of the U.S. Prospectus, and any supplements thereto,
pursuant to General Instruction II.L. of Form F-10 has been made in the manner
and within the time period required by General Instruction II.L. of Form F-10;
the Form F-X was filed with the Commission prior to the effectiveness of the
Registration Statement; to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or threatened.
(b) The Securities are duly listed, subject to official notice of
issuance, on the New York Stock Exchange.
(c) The statements included in the U.S. Prospectus under the headings
"Certain Income Tax Considerations--United States Federal Income Tax
Considerations" and "Underwriting" (with respect solely to the description of
this Agreement contained therein) insofar as such statements summarize legal
matters, agreements, documents or proceedings discussed therein, are accurate
and fair summaries of such legal matters, agreements, documents or proceedings.
(d) Assuming the due authorization, execution and delivery of the
Underwriting Agreement by the Enerplus Entities and the Manager under the
applicable laws of the Province of Alberta and the applicable federal laws of
Canada, the Underwriting 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 each of the Enerplus Entities and the Manager.
(e) The Trust is not and, immediately after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the U.S. Prospectus under the heading "Use of Proceeds", will not
be an "investment company" (as defined in the Investment Company Act of 1940, as
amended) under the Investment Company Act of 1940, as amended.
(f) No consent, approval, authorization, filing with or order of any court
or governmental agency authority or body or any arbitrator of the State of New
York or the United States is required in connection with the transactions
contemplated by the Underwriting Agreement, except such as have been obtained or
made under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Securities
by the Underwriters in the manner
A - 1
contemplated in the Underwriting Agreement and in the U.S. Prospectus and such
other approvals (specified in such opinion) as have been obtained.
(g) Neither the issue and sale of the Securities, nor the consummation of
any other of the transactions contemplated in the Underwriting Agreement nor the
fulfillment of the terms of the Underwriting Agreement will result in a breach
or violation of or imposition of any lien, charge or encumbrance upon any
property of any of the Enerplus Entities or the Manager pursuant to any United
States federal or New York State statute, law, rule, regulation or, any
judgment, order or decree known to such counsel applicable to any of the
Enerplus Entities or the Manager of any United States federal or New York State
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over any of the Enerplus Entities or the
Manager or any of their properties in the United States, except for any such
breach, violation or imposition which could not reasonably be expected, either
individually or in the aggregate with all other violations and defaults referred
to in this paragraph (if any), to have a Material Adverse Effect or to
materially and adversely affect the consummation of the transactions
contemplated in this Agreement or the performance of the Enerplus Entities' or
the Manager's obligations hereunder.
(h) Each of the Registration Statement and the U.S. Prospectus (other than
the financial statements and related notes thereto and other financial
information included or incorporated by reference therein and the crude oil,
natural gas and natural gas liquids reserves data for the Enerplus Entities and
Celsius Energy Resources Ltd. included or incorporated by reference therein, as
to which such counsel need express no opinion), as of its respective effective
or issue date, appears on its face to be appropriately responsive in all
material respects to the requirements of the Act; and the Form F-X, as of its
date, appears to be appropriately responsive in all material respects to the
requirements of the Act.
(i) Under the laws of the State of New York relating to submission to
jurisdiction, each of the Enerplus Entities and the Manager has, pursuant to
Section 12 of the Underwriting Agreement, validly and irrevocably submitted to
the non-exclusive personal jurisdiction of any state or federal court located in
the State of New York, in any action arising out of or relating to the
Underwriting Agreement or the transactions contemplated by the Underwriting
Agreement and has validly and irrevocably appointed CT Corporation as its
authorized agent for the purpose described in the Underwriting Agreement; and
service of process effected on such agent in the manner set forth therein will
be effective to confer valid personal jurisdiction over each of the Enerplus
Entities and the Manager.
In addition to rendering the opinions set forth above, such counsel shall
also include a statement to the effect that such counsel has participated in the
preparation of the Registration Statement and the U.S. Prospectus and in
conferences with certain officers and other representatives of and counsel for
each of the Enerplus Entities and the Manager, representatives of the
independent accountants for each of the Trust and representatives of and counsel
for the Underwriters in connection with the preparation of the U.S. Prospectus
and the Registration Statement at which the contents of the U.S.
A - 2
Prospectus and the Registration Statement and related matters were discussed
and, although we have not independently verified and are not passing upon, and
do not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the U.S. Prospectus
(except to the extent specified in paragraph (c) above), on the basis of such
participation (relying with respect to factual matters to the extent we deem
appropriate on statements by officers and other representatives of the Enerplus
Entities and the Manager), such counsel has no reason to believe (a) that on the
Effective Date, the Registration Statement (other than the financial statements
and related notes thereto and other financial information included or
incorporated by reference therein and the crude oil, natural gas and natural gas
liquids reserves data for the Enerplus Entities and Celsius Energy Resources
Ltd. included or incorporated by reference therein, as to which such counsel
need express no opinion) contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (b) that, (i) as of its date, the
U.S. Prospectus, as amended or supplemented, (ii) as of the date of its issue,
any amendment or supplement to the U.S. Prospectus and (iii) on the Closing
Date, the U.S. Prospectus, as amended or supplemented as of such date, included
or includes any untrue statement of a material fact or omitted or omits to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (in each case, other
than the financial statements and related notes thereto and other financial
information included or incorporated by reference therein, and the crude oil,
natural gas and natural gas liquids reserves data for the Enerplus Entities and
Celsius Energy Resources Ltd. included or incorporated by reference therein, as
to which such counsel need express no opinion).
In rendering such opinion, such counsel may rely (i) as to matters
involving the application of laws of any jurisdiction other than the State of
New York, State of Delaware 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
satisfactory to counsel for the Underwriters and (ii) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Enerplus Entities or the Manager and public officials. References to the
Canadian Prospectus and the U.S. Prospectus in this section include any
supplements thereto at the Closing Date.
A - 3
EXHIBIT B
Form of Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP Opinion
Pursuant to the Underwriting Agreement, Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP shall
furnish a letter to the effect that, in such counsel's opinion:
(a) The Trust has been validly created and is validly existing as a trust
under the laws of the Province of Alberta, Canada with full power and authority
to own its properties and conduct its affairs as described in the Canadian
Prospectus and the U.S. Prospectus. The Trust and the attributes of the Trust
Units conform in all material respects with the description thereof described in
the Canadian Prospectus and the U.S. Prospectus.
(b) Each of EnerMark and ERC has been duly amalgamated and is validly
subsisting under the laws of the province of Alberta, Canada; the Manager has
been duly continued to become an unlimited liability company by amalgamation and
is in good standing pursuant to the COMPANIES ACT (Nova Scotia); each of
EnerMark, ERC and the Manager has all requisite corporate power and authority to
own, lease and operate its properties, as the case may be, and conduct its
business as described in the Canadian Prospectus and the U.S. Prospectus; and
each of EnerMark and ERC is duly qualified to carry on business as an
extra-provincial corporation or a foreign corporation, as the case may be, in
the jurisdiction in which such business is carried on and is in good standing
under the laws of each such jurisdiction which requires such qualification.
(c) All the issued and outstanding shares in the capital stock of each of
EnerMark and ERC have been duly and validly authorized and issued and are fully
paid and nonassessable and are owned directly by the Trust and EnerMark,
respectively, and, to our knowledge, based solely and relying entirely on
searches of the database maintained at the Personal Property Registry (Alberta)
current as of November [o], 2002 for registrations or recordings against the
Trust or EnerMark, free and clear of any perfected security interest.
(d) The Trust is authorized to issue, pursuant to the Trust Indenture, an
unlimited number of Trust Units, the description of which conforms in all
material respects to the description thereof contained in the Canadian
Prospectus and the U.S. Prospectus; as of the date hereof, [o] Trust Units are
issued and outstanding (prior to giving effect to the issue contemplated by the
Canadian Prospectus and the U.S. Prospectus). The Securities have been duly and
validly authorized, and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be validly issued, fully paid and
non-assessable Trust Units of the Trust, free and clear of any liens,
encumbrances, equities and claims upon the issuance by the Trust; the Securities
(i) are duly listed, and admitted and authorized for trading, subject to
official notice of issuance, on the New York Stock Exchange and (ii) have been
conditionally approved for listing on the Toronto Stock Exchange, subject to the
filing by the Trust of the documents and listing fees requested by the Toronto
Stock Exchange in its letter dated November 20, 2002; the form and terms of the
definitive certificates representing the Securities have
B - 1
been duly approved and adopted by the board of directors of EnerMark on behalf
of the Trust and comply with all requirements of the Trust Indenture and the
rules of the Toronto Stock Exchange and the New York Stock Exchange; to the
knowledge of such counsel, the holders of outstanding Trust Units in the Trust
are not entitled to pre-emptive or other rights to subscribe for the Securities
from the Trust; and except as set forth in the Canadian Prospectus and the U.S.
Prospectus, no options, warrants or other rights to purchase, agreements or
other obligations to issue, or rights to convert any obligations into or
exchange any securities for, Trust Units in the Trust are outstanding, except
those options or rights that may have been issued subsequent to the date on
which information for options and rights is given in the Canadian Prospectus and
the U.S. Prospectus pursuant to any option plans for directors, officers,
employees and consultants of the Enerplus Entities or the Manager described in
the Canadian Prospectus and the U.S. Prospectus.
(e) To the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding in Canada by or before any court or governmental
agency, authority or body or any arbitrator involving any of the Enerplus
Entities or the Manager or their property, which might reasonably be expected to
result in a Material Adverse Effect.
(f) To the knowledge of such counsel, there is no franchise, contract or
other document of a character required to be described in the Canadian
Prospectus, or to be filed or incorporated by reference therein, which is not
described, filed or incorporated by reference as required; the descriptions in
the U.S. Prospectus and the Canadian Prospectus of (i) the Canadian statutes,
regulations, governmental franchises and licenses and legal or governmental
proceedings and (ii) contracts and other documents, in each case of, or with
respect to, any of the Enerplus Entities or the Manager are accurate and fair
summaries of the legal matters, agreements, documents or proceedings discussed
therein.
(g) The statements in the Canadian Prospectus and the U.S. Prospectus
under the headings "Risk Factors - Risks Related to Our Structure and the
Ownership of Our Trust Units - There would be material adverse tax consequences
if the Fund lost its status under Canadian tax laws" and "Certain Income Tax
Considerations - Canadian Federal Income Tax Considerations," and the statements
included in the Registration Statement under "Indemnification", insofar as such
statements summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings.
(h) To the knowledge of such counsel, after due inquiry, no order having
the effect of ceasing or suspending the distribution of the Securities has been
issued by the Reviewing Authority, the Qualifying Authorities, the Toronto Stock
Exchange or the New York Stock Exchange and no proceedings for that purpose have
been instituted or threatened.
(i) Each of the Enerplus Entities have the necessary trust or corporate
power and authority to execute and deliver the Canadian Preliminary Prospectus,
the
B - 2
Final PREP Prospectus and the Supplemented PREP Prospectus on behalf of the
Trust and any other material filed prior to the completion of the sale of the
Securities and related to the sale thereof by the Trust and all necessary trust
and corporate action has been taken by each of the Enerplus Entities to
authorize the execution and delivery by or on behalf of the Trust of the
Prospectus and any other material filed prior to such completion and the filing
thereof, as the case may be, with the Qualifying Authorities under Canadian
Securities Laws.
(j) Each of the Trust, EnerMark, ERC and the Manager has all necessary
trust and corporate power and authority to execute and deliver the Underwriting
Agreement and to perform its obligations and to carry out the transactions
contemplated thereunder. The execution and delivery of and the performance by
each of the Enerplus Entities and the Manager of their respective obligations
under the Underwriting Agreement has been duly and validly authorized by all
necessary trust or corporate action on the part of each of the Enerplus Entities
and the Manager; the Underwriting Agreement has been duly executed and delivered
by each of the Enerplus Entities and the Manager; EnerMark has the authority to
enter into the Underwriting Agreement on behalf of the Trust and to execute and
deliver, on behalf of the Trust, all other necessary documents in connection
with the offering of the Securities; EnerMark has the authority under the Trust
Indenture to authorize and direct the sale of the Trust Units to the
Underwriters in accordance with the terms of the Underwriting Agreement; and all
necessary trust and corporate action on the part of each of the Enerplus
Entities and the Manager, as the case may be, has been taken to authorize and
direct such sale.
(k) The Trust Indenture has been duly authorized, executed and delivered
by EnerMark and ERC and constitutes a valid and legally binding obligation of
the Trust, enforceable against the Trust in accordance with its terms, subject
to the qualification that the enforceability of the Trust Indenture and
obligations referred to therein may be limited by: (i) any applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally, (ii) the qualification that the granting of
equitable remedies such as specific performance and injunction are in the
discretion of the court having jurisdiction, (iii) the equitable or statutory
power of the court having jurisdiction to stay proceedings before it and the
execution of judgments and (iv) the qualification that the enforceability of the
indemnity, contribution and waiver provisions of the Trust Indenture may be
limited by applicable law.
(l) The filing of the Registration Statement and the U.S. Supplemented
Prospectus with the Commission and the filing of the Canadian Prospectus with
the Reviewing Authority and the applicable Qualifying Authorities, in each case,
have been duly authorized by and on behalf of each of the Trust, EnerMark and
the Manager; and the Registration Statement has been duly executed pursuant to
such authorization by and on behalf of the Trust.
(m) No consent, approval, authorization, filing or qualification with or
order of any court or governmental agency, authority or body in the Province of
Alberta (or pursuant to the federal laws of Canada applicable therein) is
required in connection with the execution, delivery and performance by each of
the Enerplus Entities and the
B - 3
Manager of the Underwriting Agreement, the consummation by each of them of the
transactions contemplated therein or the purchase and distribution of the
Securities by the Underwriters in the manner contemplated in the Underwriting
Agreement and in the Canadian Prospectus, except such as have been obtained or
made under Canadian Securities Laws.
(n) Neither the issue and sale of the Securities nor the consummation of
any other of the transactions contemplated in the Underwriting Agreement nor the
execution, delivery or fulfillment of the terms of the Underwriting Agreement
will result in a breach or violation of or imposition of any lien, charge or
encumbrance upon any property of any of the Enerplus Entities or the Manager
pursuant to, or create a state of facts which, after notice or lapse of time or
both, will result in a breach of, (i) the Trust Indenture or the charter,
articles or by-laws of EnerMark, ERC or the Manager, as the case may be, or any
resolutions of the directors (or any committee thereof), shareholders or
unitholders, as the case may be, of any of the Enerplus Entities or the Manager
which are in effect at the date hereof, (ii) the terms of the Royalty
Agreements, the Management Agreement, the Governance Agreement and the Grid
Note, (iii) the terms of the Note Purchase Agreement dated June 19, 2002
relating to the issuance by EnerMark of U.S.$175,000,000 6.62% Senior Notes due
June 19, 2014, the Credit Agreement dated March 20, 2002 among EnerMark, ERC,
the Trust, the lenders, the administrative agent, the syndication agent, the
co-documentation agents and the co-lead arrangers and co-bookrunners, and the
Operating Facility Agreement dated March 20, 2002 between EnerMark and Canadian
Imperial Bank of Commerce, (iv) any statute, law, rule, regulation, or, to our
knowledge, any judgment, order or decree applicable to any of the Enerplus
Entities or the Manager of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over any of
the Enerplus Entities or the Manager or any of their properties, except, in the
case of clauses (iii) and (iv) above, for any such breach, violation or
imposition which could not reasonably be expected, either individually or in the
aggregate with all other violations and defaults referred to in this paragraph
(if any), to have a Material Adverse Effect.
(o) The Trust is eligible to use the PREP Procedures and is eligible to
use the short form prospectus procedures under National Instrument 44-101 and
the simplified prospectus rules of the SECURITIES ACT (Quebec);
(p) The documents incorporated by reference in the Canadian Prospectus
(other than the financial statements and other financial data included or
incorporated or deemed to be incorporated therein and the crude oil, natural gas
and natural gas liquids reserves data for the Enerplus Entities and Celsius
Energy Resources Ltd. included or incorporated by reference therein, as to which
such counsel need express no opinion) when they were filed with the Reviewing
Authority, complied as to form in all material respects to the requirements of
the securities laws, rules, and regulations of the Province of Alberta as
interpreted and applied by the relevant Qualifying Authorities under applicable
Canadian Securities Laws.
(q) The Canadian Prospectus and the Supplementary Material in connection
with the offering of the Securities, if any, (including the PREP Information,
B - 4
but excluding the financial statements and other financial data included or
incorporated or deemed to be incorporated therein and the information and data
with respect to the Enerplus Entities' and Celsius Energy Resources Ltd.'s crude
oil, natural gas and natural gas liquids reserves included or incorporated by
reference therein from the reports of ▇▇▇▇▇▇▇ Associates Limited or ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Jung Associates Ltd., as applicable, both independent petroleum
engineering consultants, in reliance on the authority of such firms as "experts"
within the meaning of the Act, as to which such counsel need express no opinion)
complies as to form in all material respects to the requirements, including the
PREP Procedures, of the securities laws, rules, and regulations of the Province
of Alberta as interpreted and applied by the relevant Qualifying Authorities
under applicable Canadian Securities Laws.
(r) All necessary documents have been filed, all necessary proceedings
have been taken and all other legal requirements under Canadian Securities Laws
have been fulfilled to qualify distribution and sale of the Securities to the
public in each of the Qualifying Jurisdictions and to permit the sale and
delivery of the Securities to the public through investment dealers or brokers
duly registered under the applicable laws of the Qualifying Jurisdictions who
have complied with the relevant provisions of such laws.
(s) The Trust is a reporting issuer in good standing and is not in default
of any requirements of the SECURITIES ACT (Alberta) and has similar status under
the Securities Laws of each of the Qualifying Provinces.
(t) The Trust qualifies as a "mutual fund trust" within the meaning of the
Canadian Tax Act.
(u) The Securities are, as of the date hereof, qualified investments under
the Canadian Tax Act for trusts governed by registered retirement savings plans,
registered retirement income funds, deferred profit sharing plans and registered
education savings plans and do not constitute "foreign property" for such plans.
(v) CIBC Mellon Trust Company has been duly appointed as the registrar and
transfer agent in Canada in respect of the Securities and Mellon Investor
Services LLC has been duly appointed as the co-transfer agent in the United
States in respect of the Securities.
(w) No stamp duty, registration or documentary taxes, duties or similar
charges are payable under the laws of the Qualifying Jurisdictions or the
federal laws of Canada applicable therein in connection with the creation,
issuance and delivery to the Underwriters of the Securities or the
authorization, execution and delivery of the Underwriting Agreement.
(x) All laws of the Province of Quebec relating to the use of the French
language (other than those relating to oral communications) will have been
complied with in connection with the sale of the Trust Units (including the
Optioned Units) to purchasers in the Province of Quebec if such purchasers
receive copies of the
B - 5
Prospectus and of all documents which constitute the contract of sale, including
forms of order and confirmation, invoices and receipts, in the French and
English language or the French language only.
(y) A court of competent jurisdiction in the Province of Alberta (a
"Canadian Court") would give effect to the choice of the law of the State of New
York ("New York law") as the proper law governing the Underwriting Agreement,
provided that such choice of law is bona fide (in the sense that it was not made
with a view to avoiding the consequences of the laws of any other jurisdiction)
and provided that such choice of law is not contrary to public policy, as that
term is applied by a Canadian Court. There are no reasons under the laws of the
Province of Alberta or the federal laws of Canada applicable therein for
avoiding the choice of New York law to govern the Underwriting Agreement and the
Securities.
(z) In an action on a final and conclusive judgment for a fixed sum of
money of any federal or state court in the State of New York (a "New York
Court") that is not impeachable as void or voidable under New York law, a
Canadian Court (A) would not refuse to recognize the jurisdiction of the court
rendering such judgment on the basis of process being served on CT Corporation
as the agent of each of the Enerplus Entities and the Manager to receive service
of process in the United States under the Underwriting Agreement provided the
Company, EnerMark, ERC or the Manager, as applicable, has not purported to
revoke the appointment or CT Corporation has not terminated the agency or
otherwise rendered service on it ineffective and (B) would give effect to the
provisions in the Underwriting Agreement whereby each of the Enerplus Entities
and the Manager submits to the non-exclusive jurisdiction of a New York Court.
(aa) If the Underwriting Agreement is sought to be enforced in the Province
of Alberta in accordance with the laws applicable thereto as chosen by the
parties, namely New York Law, a Canadian Court would, subject to paragraph (y)
above and to the extent specifically pleaded and proved as a fact by expert
evidence, recognize the choice of New York law and, upon appropriate evidence as
to such law being adduced, apply such law to all issues that under the conflict
of laws rules of the Province of Alberta are to be determined in accordance with
the proper or general law of a contract, provided that none of the provisions of
the Underwriting Agreement or the Securities, or of New York Law, are contrary
to public policy as that term is applied by a Canadian Court; provided, however,
that, in matters of procedure, the laws of the Province of Alberta will be
applied, including the LIMITATIONS ACT (Alberta), and a Canadian Court will
retain discretion to decline to hear such action if it is contrary to public
policy, as that term is applied by a Canadian Court, for it to do so, or if it
is not the proper forum to hear such an action, or if concurrent proceedings are
being brought elsewhere. In such counsel's opinion, there are no reasons under
the laws of the Province of Alberta or the federal laws of Canada applicable
therein and no reasons, to the best of our knowledge, with respect to the
application of New York law by a Canadian Court, for avoiding enforcement of the
Underwriting Agreement, based on public policy, as that term is applied by a
Canadian Court.
B - 6
(bb) The laws of the Province of Alberta and the federal laws of Canada
applicable therein permit an action to be brought in a Canadian Court on a final
and conclusive judgment in personam for a fixed sum of money of a New York Court
that is subsisting and unsatisfied respecting the enforcement of the
Underwriting Agreement that is not impeachable as void or voidable under New
York law for a sum certain if: (A) such judgment was not obtained by fraud or in
a manner contrary to natural justice and the enforcement thereof would not be
inconsistent with public policy as such term is applied by a Canadian Court, or
contrary to any order made by the Attorney General of Canada under the FOREIGN
EXTRATERRITORIAL MEASURES ACT (Canada); (B) the enforcement of such judgment
does not constitute, directly or indirectly, the enforcement of foreign revenue,
expropriatory or penal laws or other laws of a public nature; (C) the action to
enforce such judgment is commenced within applicable limitation periods, except
that under the CURRENCY ACT (Canada), a Canadian Court may only give judgment in
Canadian dollars; (D) a court rendering such judgment had jurisdiction over the
judgment debtor as recognized by the courts of the Province of Alberta
(submission under the provisions of the Underwriting Agreement to the
jurisdiction of a New York Court will be sufficient for this purpose) and the
judgment debtor was properly served in the action leading to such judgment; and
(E) no new admissible evidence relevant to the action is discovered prior to
rendering of judgment by the court in the Province of Alberta. In such counsel's
opinion, there are no reasons under the laws of the Province of Alberta or the
federal laws of Canada applicable therein for avoiding recognition of judgments
of a New York Court under the Underwriting Agreement or the Securities based on
public policy, as that term is applied by a Canadian Court.
In addition to rendering the opinions set forth above, such counsel shall
also include a statement to the effect that such counsel has participated in the
preparation of the Canadian Prospectus and in conferences with certain officers
and other representatives of, and United States counsel for each of, the
Enerplus Entities and the Manager, representatives of the independent
accountants for the Trust and representatives of and Canadian counsel for the
Underwriters in connection with the preparation of the Canadian Prospectus at
which the contents of the Canadian Prospectus and related matters were discussed
and, although we are not passing upon and do not assume any responsibility for
the accuracy, completeness or fairness of statements contained in the Canadian
Prospectus (except to the extent specified in paragraphs (f) and (g) above), on
the basis of such participation (relying with respect to factual matters to the
extent we deem appropriate on statements by officers and other representatives
of the Enerplus Entities and the Manager), no facts have to come to such
counsel's attention that have led such counsel to believe that (i) as of its
date, the Canadian Prospectus, as amended or supplemented, (ii) as of the date
of its issue, any amendment or supplement to the Canadian Prospectus, and (iii)
on the Closing Date, the Canadian Prospectus, as amended or supplemented as of
such date, included or includes any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (in each case, other than the financial statements and related
notes thereto and other financial information included or incorporated by
reference therein and the crude oil, natural gas and natural gas liquids
reserves data for the Enerplus Entities and Celsius Energy Resources Ltd.
included or incorporated by reference therein, as to which such
B - 7
counsel need express no opinion).
In rendering such opinion, such counsel may rely (i) as to matters
involving the application of laws of any jurisdiction other than the Province of
Alberta or the federal laws of Canada applicable therein, 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 satisfactory to
counsel for the Underwriters, acting reasonably, and (ii) as to matters of fact,
to the extent they seem proper, on certificates of responsible officers of the
Enerplus Entities or the Manager and public officials. References to the
Canadian Prospectus in this section include any supplements thereto as of the
Closing Date.
B - 8
EXHIBIT C
Form of Lock-Up Agreement
ENERPLUS RESOURCES FUND
PUBLIC OFFERING OF TRUST UNITS
November ___, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
CIBC World Markets Inc.
As Representatives of the several Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), among Enerplus Resources
Fund (the "Trust"), EnerMark Inc. ("EnerMark"), Enerplus Resources Corporation
("ERC"), Enerplus Global Energy Management Company (the "Manager" and each of
you as representatives of a group of Underwriters named therein, relating to a
the sale by the Trust to the Underwriters of trust units (the "Trust Units"),
each of which represents an equal fractional undivided beneficial interest in
the Trust.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and CIBC World Markets Inc., offer, sell,
contract to sell, pledge or otherwise dispose of, (or enter into any transaction
which is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise) by the undersigned or any affiliate of the
undersigned or any person in privity with the undersigned or any affiliate of
the undersigned), directly or indirectly, including the filing (or participation
in the filing) of a registration statement with the Securities and Exchange
Commission in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any trust units of the Trust or any securities convertible
into, or exercisable or exchangeable for such trust units, or publicly announce
an intention to effect any such transaction, for a period of 60 days after the
date of the Underwriting Agreement, other than: (i) the sale or transfer of
Trust Units in connection with the exercise of a currently outstanding warrant,
option or right that would otherwise expire prior to 60 days after the date of
the Underwriting Agreement or (ii) Trust Units disposed of as bona fide gifts
approved by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. and CIBC World Markets Inc.
C - 1
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
[INCLUDE FOR UNITHOLDERS LISTED ON ANNEX A - If for any reason or by any
manner the Management, Advisory and Administration Agreement dated as of June
21, 2001 (as amended December 31, 2001) among Enerplus Resources Fund, EnerMark
Inc., Enerplus Resources Corporation, Enerplus Global Management Company and
CIBC Mellon Trust Company (the "Management Agreement") shall be purchased or
terminated or shall in any other manner be amended or affected such that
Enerplus Global Management Company, its successor or an affiliate, is no longer
a party to the Management Agreement, or if Enerplus Global Management Company is
no longer controlled, directly or indirectly, by El Paso Corporation or its
successor, the agreement set forth above shall be terminated.]
Yours very truly,
NAME: _____________________________
(please print)
SIGNATURE: _________________________
ADDRESS: ___________________________
___________________________
___________________________
___________________________
C - 2
ANNEX A
LIST OF UNITHOLDERS
El Paso Merchant Energy
Enerplus Global Energy Management Company
