EXHIBIT 99.1
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ARRANGEMENT AGREEMENT
AMONG:
HARVEST ENERGY TRUST
- AND -
HARVEST OPERATIONS CORP.
- AND -
VIKING ENERGY ROYALTY TRUST
- AND -
VIKING HOLDINGS INC.
DECEMBER 23, 2005
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TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION......................................................1
1.1 DEFINITIONS........................................................1
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC......................12
1.3 NUMBER, ETC.......................................................12
1.4 DATE FOR ANY ACTION...............................................12
1.5 ENTIRE AGREEMENT..................................................12
1.6 CURRENCY..........................................................12
1.7 ACCOUNTING MATTERS................................................12
1.8 DISCLOSURE IN WRITING.............................................12
1.9 INTERPRETATION NOT AFFECTED BY PARTY DRAFTING.....................13
1.10 TRUST POWER AND CAPACITY..........................................13
1.11 SCHEDULES.........................................................13
ARTICLE 2 THE ARRANGEMENT....................................................13
2.1 PLAN OF ARRANGEMENT...............................................13
2.2 INTERIM ORDER.....................................................13
2.3 INFORMATION CIRCULARS AND MEETINGS................................14
2.4 MFCORP............................................................15
2.5 EMPLOYEES.........................................................15
2.6 COMPLETION OF TRANSACTIONS........................................16
2.7 EFFECTIVE DATE....................................................16
2.8 UNITED STATES TAX CONSIDERATIONS..................................16
2.9 POST-CLOSING WIND-UP..............................................17
2.10 REDEMPTION OF HARVEST EXCHANGEABLE SHARES.........................17
2.11 VIKING NPI........................................................17
ARTICLE 3 COVENANTS..........................................................17
3.1 COVENANTS OF HARVEST AND HOC......................................17
3.2 COVENANTS OF VIKING AND VHI.......................................22
3.3 MUTUAL COVENANTS REGARDING THE ARRANGEMENT........................26
3.4 MUTUAL COVENANTS REGARDING NON-SOLICITATION.......................27
3.5 PROVISION OF INFORMATION; ACCESS..................................30
ARTICLE 4 AMENDMENTS TO INCENTIVE PLANS......................................30
4.1 AMENDMENTS TO INCENTIVE PLANS.....................................30
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.....................................30
5.1 REPRESENTATIONS AND WARRANTIES OF HARVEST.........................30
5.2 REPRESENTATIONS AND WARRANTIES OF VIKING..........................42
5.3 PRIVACY ISSUES....................................................54
ARTICLE 6 CONDITIONS PRECEDENT...............................................55
6.1 MUTUAL CONDITIONS PRECEDENT.......................................55
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF HARVEST...................57
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF VIKING....................59
6.4 NOTICE AND EFFECT OF FAILURE TO COMPLY WITH CONDITIONS............60
6.5 SATISFACTION OF CONDITIONS........................................60
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ARTICLE 7 AGREEMENT AS TO DAMAGES AND OTHER ARRANGEMENTS.....................60
7.1 HARVEST DAMAGES...................................................60
7.2 VIKING DAMAGES....................................................61
7.3 LIQUIDATED DAMAGES................................................62
ARTICLE 8 AMENDMENT..........................................................62
8.1 AMENDMENT.........................................................62
ARTICLE 9 TERMINATION........................................................63
9.1 TERMINATION.......................................................63
ARTICLE 10 NOTICES...........................................................63
10.1 NOTICES...........................................................63
ARTICLE 11 GENERAL...........................................................64
11.1 BINDING EFFECT....................................................64
11.2 ASSIGNMENT........................................................65
11.3 DISCLOSURE........................................................65
11.4 COSTS.............................................................65
11.5 SEVERABILITY......................................................65
11.6 FURTHER ASSURANCES................................................65
11.7 TIME OF ESSENCE...................................................65
11.8 GOVERNING LAW.....................................................66
11.9 WAIVER............................................................66
11.10 THIRD PARTY BENEFICIARIES.........................................66
11.11 OBLIGATIONS.......................................................66
11.12 COUNTERPARTS......................................................67
SCHEDULE "A" - Plan of Arrangement
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196577\714592.V8
196577\714592.V8
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT is dated as of the 23rd day of
December, 2005,
AMONG:
HARVEST ENERGY TRUST, a trust created under the Laws of the
Province of Alberta (hereinafter referred to as "HARVEST")
AND:
HARVEST OPERATIONS CORP., a corporation subsisting under the
Laws of the Province of Alberta (hereinafter referred to as
"HOC")
AND:
VIKING ENERGY ROYALTY TRUST, a trust created under the Laws of
the Province of Alberta (hereinafter referred to as "VIKING")
AND:
VIKING HOLDINGS INC., a corporation subsisting under the Laws
of the Province of Alberta (hereinafter referred to as "VHI")
WHEREAS:
A. Harvest, HOC, Viking and VHI wish to propose an arrangement
involving HOC, Harvest, VHI and Viking and the securityholders of HOC, Harvest,
Viking and VHI;
B. the Parties intend to carry out the transactions contemplated
herein by way of an arrangement under the provisions of the BUSINESS
CORPORATIONS ACT (Alberta);
C. the Parties have entered into this Agreement to provide for the
matters referred to in the foregoing recitals and for other matters relating to
such arrangement;
NOW THEREFORE, in consideration of the covenants and agreements
herein contained and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the Parties hereto do hereby
covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless there is something in the context or
subject matter inconsistent therewith, the following defined terms have the
meanings hereinafter set forth:
(a) "ABCA" means the BUSINESS CORPORATIONS ACT, R.S.A. 2000, c. B-9, as
amended, including the regulations promulgated thereunder;
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(b) "ACQUISITION PROPOSAL" means, with respect to Harvest or Viking, any
inquiry or the making of any proposal to such Party or its
unitholders from any Person which constitutes, or may reasonably be
expected to lead to (in either case whether in one transaction or a
series of transactions): (i) an acquisition from such Party or its
unitholders of any securities of such Party (other than on exercise
of currently outstanding Harvest Rights or Viking Rights, as
applicable) or its Subsidiaries; (ii) any acquisition of a
substantial amount of assets of such Party or its Subsidiaries; (iii)
an amalgamation, arrangement, merger, or consolidation involving such
Party or its Subsidiaries; (iv) any take-over bid, issuer bid,
exchange offer, recapitalization, liquidation, dissolution,
reorganization into a royalty trust or income fund or similar
transaction involving such Party or its Subsidiaries; or (v) any
other transaction, the consummation of which would or could
reasonably be expected to impede, interfere with, prevent or delay
the transactions contemplated by this Agreement or the Arrangement or
which would or could reasonably be expected to materially reduce the
benefits to the Other Party under this Agreement or the Arrangement;
(c) "AGREEMENT", "HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar
expressions mean and refer to this arrangement agreement (including
the schedules hereto) as supplemented, modified or amended, and not
to any particular article, section, schedule or other portion hereof;
(d) "AMENDED INCENTIVE PLANS" means the Harvest Unit Award Incentive Plan
and the Harvest Trust Unit Rights Incentive Plan, each as amended as
contemplated by Section 4.1 hereof;
(e) "APPLICABLE CANADIAN SECURITIES LAWS" means, collectively, and as the
context may require, the securities legislation of each of the
provinces and territories of Canada, and the rules, regulations and
policies published and/or promulgated thereunder, as such may be
amended from time to time prior to the Effective Date;
(f) "APPLICABLE LAW", in the context that refers to one or more Persons,
means that the Laws that apply to such Person or Persons or its or
their business, undertaking, property or securities and emanate from
a Person having jurisdiction over the Person or Persons or its or
their business, undertaking, property or securities;
(g) "ARRANGEMENT" means the arrangement pursuant to Section 193 of the
ABCA set forth in the Plan of Arrangement;
(h) "ARTICLES OF ARRANGEMENT" means the articles of arrangement in
respect of the Arrangement required under Subsection 193(10) of the
ABCA to be sent to the Registrar after the Final Order has been
granted, giving effect to the Arrangement;
(i) "BJORN" means Bjorn Holdings Inc., a corporation incorporated under
the ABCA;
(j) "BRP" means Breeze Resources Partnership, a general partnership
formed under the laws of Alberta;
(k) "BUSINESS DAY" means a day other than a Saturday, Sunday or other
than a day when banks in the City of Calgary, Alberta are not
generally open for business;
(l) "CONTINUING EMPLOYEES" has the meaning set forth in Section 2.5(a);
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(m) "CERTIFICATE" means the certificate or certificates or confirmation
of filing which may be issued by the Registrar pursuant to Subsection
193(11) of the ABCA giving effect to the Arrangement;
(n) "CLOSING TIME" shall be 8:00 a.m. (Calgary time) on the later of
February 3, 2006 and the Business Day immediately following the date
the Final Order is granted, unless otherwise agreed to by Harvest and
Viking;
(o) "CODE" has the meaning ascribed thereto in Section 2.8;
(p) "COMBINATION TRANSACTIONS" has the meaning ascribed thereto in
Section 2.8;
(q) "COMPETITION ACT" means the COMPETITION ACT, R.S. 1985, c. C-34, as
amended;
(r) "CONFIDENTIAL INFORMATION" has the meaning ascribed thereto in
Section 3.4(d);
(s) "CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated
November 17, 2005 between Viking and Harvest;
(t) "COURT" means the Court of Queen's Bench of Alberta;
(u) "EFFECTIVE DATE" means the date the Arrangement becomes effective
under the ABCA;
(v) "EFFECTIVE TIME" means 12:01 a.m. (Calgary time) on the Effective
Date;
(w) "ENVIRONMENTAL LAWS" means, with respect to any Person or its
business, activities, property, assets or undertaking, all federal,
municipal or local Laws of any Governmental Entity or of any court,
tribunal or other similar body, relating to environmental or health
matters in the jurisdictions applicable to such Person or its
business, activities, property, assets or undertaking, including
legislation governing the use and storage of Hazardous Substances;
(x) "XXXX" means Xxxx Holdings Trust, a trust established under the laws
of the Province of Alberta pursuant to a trust indenture dated
October 6, 2003, as amended and restated;
(y) "XXXX TRUST INDENTURE" means the Trust Indenture dated as of October
6, 2003 as amended and restated as of September 2, 2004 and May 1,
2005 between BJORN, in its capacity as trustee of XXXX and Viking, as
the sole holder of trust units of XXXX, as may be amended,
supplemented or restated from time to time;
(z) "FINAL ORDER" means the order of the Court approving the Arrangement
pursuant to Subsection 193(9) of the ABCA in respect of the Harvest
Securityholders, the Viking Unitholders, the Harvest Arrangement
Parties, the Viking Arrangement Parties and MFCorp, as such order may
be affirmed, amended or modified by any court of competent
jurisdiction;
(aa) "GAAP" has the meaning ascribed thereto in Section 1.7;
(bb) "GLJ" means GLJ Petroleum Consultants Ltd. (previously Xxxxxxx
Xxxxxxxx Jung Associates Ltd.);
(cc) "GOVERNMENTAL ENTITY" means any (a) multinational, federal,
provincial, state, regional, municipal, local or other government or
any governmental or public department, court, tribunal, arbitral
body, commission, board, bureau or agency, (b) any subdivision,
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agent, commission, board or authority of any of the foregoing, or (c)
any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of
the foregoing;
(dd) "HARVEST" means Harvest Energy Trust, an open-ended unincorporated
investment trust established under the laws of the Province of
Alberta pursuant to the Harvest Trust Indenture;
(ee) "HARVEST ACQUISITION AGREEMENT" means the partnership interest
purchase and sale agreement dated June 23, 2005 between Nexen Inc.
(and certain corporations and partnerships controlled by it), as
vendor, and HBTI and HBT2, as purchasers;
(ff) "HARVEST ADMINISTRATION AGREEMENT" means the administration agreement
dated September 27, 2002 between HOC and the Harvest Trustee;
(gg) "HARVEST AWARDS" shall have the meaning ascribed thereto in the
Harvest Information Circular;
(hh) "HARVEST BALANCE SHEETS" has the meaning ascribed thereto in Section
5.1(p);
(ii) "HARVEST BOARD OF DIRECTORS" means the board of directors of HOC as
it may be comprised from time to time;
(jj) "HARVEST CREDIT FACILITIES" shall mean the credit facilities
described in the Harvest Information Circular under the heading
"Information Concerning Harvest Energy Trust - External Debt - Senior
Secured Debt";
(kk) "HARVEST DAMAGES EVENT" has the meaning set forth in Section 7.1;
(ll) "HARVEST DEBENTURE TRUSTEE" means Valiant Trust Company;
(mm) "HARVEST DEBENTURES" means, collectively, the Harvest 6.5%
Debentures, the Harvest 8% Debentures and the Harvest 9% Debentures;
(nn) "HARVEST 6.5% DEBENTURES" means the 6.5% convertible extendible
unsecured subordinated debentures of Harvest;
(oo) "HARVEST 6.5% DEBENTURE INDENTURE SUPPLEMENT" means the supplement to
the Harvest Debenture Indenture dated August 2, 2005 governing the
terms of the Harvest 6.5% Debentures;
(pp) "HARVEST 8% DEBENTURES" means the 8% convertible extendible unsecured
subordinated debentures of Harvest;
(qq) "HARVEST 8% DEBENTURE INDENTURE SUPPLEMENT" means the supplement to
the Harvest Debenture Indenture dated July 30, 2004 governing the
terms of the Harvest 8% Debentures;
(rr) "HARVEST 9% DEBENTURES" means the 9% convertible extendible unsecured
subordinated debentures of Harvest;
(ss) "HARVEST DEBENTURE INDENTURE" means the indenture dated January 29,
2004 among Harvest, HOC and the Harvest Debenture Trustee governing
the terms and conditions of the Harvest 9% Debentures together with
all supplemental indentures thereto;
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(tt) "HARVEST DEPARTING OFFICERS" means the existing members of senior
management of HOC who will not continue to be members of senior
management of HOC as of the Effective Date as contemplated in Section
6.1(i) hereof;
(uu) "HARVEST DISCLOSURE LETTER" means the disclosure letter dated
November 28, 2005 from Harvest and HOC to Viking;
(vv) "HARVEST DRIP" means the premium distribution(TM), distribution
reinvestment and optional unit purchase plan of Harvest;
(ww) "HARVEST EMPLOYEES" means the employees of, and consultants to,
Harvest or its Subsidiaries;
(xx) "HARVEST EMPLOYMENT AGREEMENTS" means the employment agreements
between HOC and each of its senior officers;
(yy) "HARVEST EXCHANGEABLE SHARES" means the exchangeable shares, Series 1
of HOC;
(zz) "HARVEST FINANCIAL STATEMENTS" means, collectively, the audited
comparative consolidated financial statements of Harvest as at and
for the years ended December 31, 2004 and 2003, together with the
notes thereto and the auditors' report thereon and the unaudited
comparative consolidated financial statements of Harvest as at and
for the nine months ended September 30, 2005 and 2004, together with
the notes thereto;
(aaa) "HARVEST INFORMATION CIRCULAR" means the information circular of
Harvest to be sent by Harvest to the Harvest Securityholders in
connection with the Harvest Meeting, which, unless otherwise
determined by Harvest and Viking, shall be part of a joint
information circular that shall also be sent to Viking Unitholders in
connection with the Viking Meeting;
(bbb) "HARVEST INFORMATION" means the information included in the Harvest
Information Circular describing Harvest and its business, operations
and affairs and the matters to be considered at the Harvest Meeting;
(ccc) "HARVEST MATERIAL AGREEMENTS" means, collectively, the Harvest
Acquisition Agreement, the Harvest Trust Indenture, the Harvest
Debenture Indenture, the Harvest Administration Agreement, the
Harvest Voting Trust Agreement and the Harvest NPI Agreements;
(ddd) "HARVEST MEETING" means the special meeting of Harvest
Securityholders to be held to consider the Merger Resolution and
related matters, and any adjournment(s) thereof;
(eee) "HARVEST NOTE INDENTURES" means the note indentures between Harvest
and HOC governing the Harvest Notes;
(fff) "HARVEST NOTES" means the 7d% senior notes of HOC due October 15,
2011 unconditionally guaranteed by Harvest;
(ggg) "HARVEST NPI AGREEMENTS" means, collectively, the amended and
restated net profit interest agreement dated September 27, 2002
between HOC and Harvest, the royalty agreement dated effective
January 17, 2003 between Westcastle Energy Inc. and BNY Trust Company
of Canada and the net profit interest agreement dated October 17,
2003 between HST and Harvest and "NPI AGREEMENT" means any one of
these agreements, as applicable;
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(hhh) "HARVEST PARTIES" means, collectively and taken as a whole, Xxxxxxx,
XXX, XXX, XXX0, XXX0, HST, REP and Hay River, each a direct or
indirect wholly-owned Subsidiary of Harvest, and "Harvest Party"
means any one of them;
(iii) "HARVEST PLANS" has the meaning ascribed thereto in Section 5.1(x);
(jjj) "HARVEST REPORT" has the meaning ascribed thereto in Section 5.1(cc);
(kkk) "HARVEST RIGHTS" shall have the meaning ascribed thereto in the
Harvest Information Circular;
(lll) "HARVEST SECURITIES" means, collectively, the Harvest Units and the
Harvest Exchangeable Shares;
(mmm) "HARVEST SECURITYHOLDERS" means, collectively, the Harvest
Unitholders and the Harvest Exchangeable Shareholders;
(nnn) "HARVEST SERVICE PROVIDERS" means persons, firms or corporations who
are employees, senior officers or directors of the New Trust or any
affiliates or who are consultants or other service providers to the
New Trust or any affiliates;
(ooo) "HARVEST TRUST INDENTURE" means the amended and restated trust
indenture dated January 1, 2004 between the Harvest Trustee and HOC,
as such indenture may be further amended by supplemental indentures
from time to time or as may be amended and restated from time to
time;
(ppp) "HARVEST TRUSTEE" means Valiant Trust Company, in its capacity as the
trustee under the Harvest Trust Indenture;
(qqq) "HARVEST UNITHOLDERS" means the holders of issued and outstanding
Harvest Units;
(rrr) "HARVEST UNITS" means the trust units of Harvest;
(sss) "HARVEST VOTING TRUST AGREEMENT" means the voting and exchange trust
agreement dated June 30, 2004 among Harvest, Harvest Exchangeco Ltd.
and Valiant Trust Company, as trustee;
(ttt) "HAY RIVER" means Hay River Partnership, a general partnership
established under the laws of Alberta;
(uuu) "HAZARDOUS SUBSTANCES" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
dangerous substance or dangerous good as defined, judicially
interpreted or identified in any Environmental Laws;
(vvv) "HBT1" means Harvest Breeze Trust No. 1, a trust established under
the laws of Alberta pursuant to a trust indenture dated October 7,
2004;
(www) "HBT2" means Harvest Breeze Trust No. 2, a trust established under
the laws of Alberta pursuant to a trust indenture dated October 7,
2004;
(xxx) "HOC" means Harvest Operations Corp., a corporation amalgamated under
the ABCA;
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(yyy) "HST" means Harvest Sask Energy Trust, a trust established under the
laws of the Province of Alberta pursuant to a trust indenture dated
October 7, 2004;
(zzz) "INTERIM ORDER" means an interim order of the Court concerning the
Arrangement under Subsection 193(4) of the ABCA in respect of the
Harvest Securityholders, the Viking Unitholders, the Harvest
Arrangement Parties, the Viking Arrangement Parties, and MFCorp,
containing declarations and directions with respect to the
Arrangement and the holding of the Harvest Meeting and the Viking
Meeting, as such order may be affirmed, amended or modified by any
court of competent jurisdiction;
(aaaa) "ITA" means the INCOME TAX ACT (Canada), including the regulations
thereunder, as amended;
(bbbb) "LAWS" means all laws, statutes, regulations, by-laws, statutory
rules, orders, ordinances, protocols, codes, guidelines, notices,
directions (including all Applicable Canadian Securities Laws and US
Securities Laws), and terms and conditions of any grant of approval,
permission, authority or license of any court, Governmental Entity,
statutory body or self-regulatory authority (including the TSX),
(cccc) "MAILING DATE" has the meaning ascribed thereto in Section 3.3(f);
(dddd) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, with
respect to any Person, any matter or action that has an effect or
change that is, or would reasonably be expected to be, material and
adverse to the business, operations, assets, capitalization,
financial condition or prospects of such Person and its Subsidiaries,
taken as a whole, other than any matter, action, effect or change
relating to or resulting from: (i) general economic, financial,
currency exchange, securities or commodity prices in Canada or
elsewhere, (ii) conditions affecting the oil and gas exploration,
exploitation, development and production industry as a whole, and not
specifically relating to any Person and/or its Subsidiaries,
including changes in Tax Laws (iii) any decline in crude oil or
natural gas prices on a current or forward basis (iv) any matter
which has been publicly disclosed or has been communicated in writing
to the Other Party as of November 28, 2005, or (v) any changes
arising from matters consented to or approved in writing by the Other
Party;
(eeee) "MATERIAL SUBSIDIARIES" means, with respect to Harvest, the Harvest
Parties (other than Harvest), and with respect to Viking, the Viking
Parties (other than Viking);
(ffff) "XXXXXXXX" means XxXxxxxx & Associates Consultants Ltd.
(gggg) "MERGER RESOLUTION" means, in respect of the Harvest Meeting, the
special resolutions in respect of the Arrangement to be considered at
the Harvest Meeting, and in respect of the Viking Meeting, the
special resolutions in respect of the Arrangement to be considered at
the Viking Meeting, as the case may be;
(hhhh) "MFCORP" has the meaning set forth in Section 2.4;
(iiii) "NYSE" means the New York Stock Exchange;
(jjjj) "OLAF" means Olaf Energy Limited Partnership, a limited partnership
formed under the PARTNERSHIP ACT (Alberta) on October 15, 2003;
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(kkkk) "OLAF 1 ROYALTY AGREEMENT" means the Royalty Agreement dated as of
May 1, 2005 between OLAF and Viking, as may be amended, supplemented
or restated from time to time;
(llll) "OLAF 2 ROYALTY AGREEMENT" means the Royalty Agreement dated as of
May 1, 2005 between OLAF and VHT, as may be amended, supplemented or
restated from time to time;
(mmmm) "OLAF PARTNERSHIP AGREEMENT" means the amended and restated limited
partnership agreement dated as of October 6, 2003 as amended and
restated as of September 2, 2004 and as of May 1, 2005 pursuant to
which OLAF is governed and may be amended, supplemented and restated
from time to time;
(nnnn) "OTHER PARTY" means with respect to the applicable Harvest
Party(ies), the applicable Viking Party(ies) and, with respect to the
applicable Viking Party(ies), the applicable Harvest Party(ies);
(oooo) "PLA" means Paddock, Xxxxxxxxx & Associates Ltd.;
(pppp) "PARTIES" means, collectively, the parties to this Agreement, and
"PARTY" means any one of them, or where implied by the context, means
the Harvest Parties or the Viking Parties, as the case may be;
(qqqq) "PERSON" includes any individual, firm, partnership, joint venture,
venture capital fund, association, trust, trustee, executor,
administrator, legal personal representative, estate group, body
corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having
legal status;
(rrrr) "PLAN OF ARRANGEMENT" means the plan of arrangement substantially in
the form set out in SCHEDULE A hereto as amended or supplemented from
time to time in accordance with Article 6 thereof and Article 8
hereof;
(ssss) "PRE-ARRANGEMENT AGREEMENT" means the agreement dated November 28,
2005 among Harvest, HOC, Viking and VHI in respect of the Arrangement
and related matters;
(tttt) "PUBLIC RECORD" means all information filed by either Harvest or
Viking, as the case may be, after December 31, 2004 with any
securities commission or similar regulatory authority in compliance,
or intended compliance, with any Applicable Canadian Securities Laws;
(uuuu) "RECEIVING PARTY" has the meaning ascribed thereto in Section 3.4(c);
(vvvv) "RECEIVING PARTY SECURITIES" has the meaning ascribed thereto in
Section 3.4(c);
(wwww) "REP" means Red Earth Partnership, a general partnership formed under
the laws of Alberta;
(xxxx) "REGISTRAR" means the Registrar of Corporations for the Province of
Alberta duly appointed under the ABCA;
(yyyy) "RESPONDING PARTY" has the meaning ascribed thereto in Section
3.4(c);
(zzzz) "RETENTION BONUS PLAN" has the meaning ascribed thereto in Section
2.5(b);
(aaaaa) "SEC" means the United States Securities and Exchange Commission;
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(bbbbb) "SECURITIES AUTHORITIES" means the securities commissions or similar
securities regulatory authorities in each of the Provinces of Canada;
(ccccc) "XXXXXXX" means Xxxxxxx Associates Limited;
(ddddd) "SUBSIDIARY" has the meaning ascribed thereto in the SECURITIES ACT
(Alberta) (and, for greater certainty, includes all partnerships
(general or limited) and trusts directly or indirectly owned by
Harvest or Viking, as the case may be);
(eeeee) "SUPERIOR PROPOSAL" has the meaning set forth in Section
3.4(b)(v)(A);
(fffff) "TAX" or "TAXES" shall mean all taxes, however denominated, including
any interest, penalties or other additions that may become payable in
respect thereof, imposed by any federal, territorial, state, local or
foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes (including,
but not limited to, federal income taxes and provincial income
taxes), payroll and employee withholding taxes, unemployment
insurance, social insurance taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers
compensation and other governmental charges, and other obligations of
the same or of a similar nature to any of the foregoing, which
Harvest or Viking (or any of their respective Subsidiaries), as the
case may be, is required to pay, withhold, remit or collect;
(ggggg) "TAX RETURNS" shall mean all reports, estimates, elections,
designations, forms, declarations of estimated tax, information
statements and returns relating to, or required to be filed in
connection with, any Taxes;
(hhhhh) "TSX" means the Toronto Stock Exchange;
(iiiii) "U.S. SECURITIES ACT" means the UNITED STATES SECURITIES ACT OF 1933,
as amended;
(jjjjj) "U.S. SECURITIES LAWS" means the federal and state securities
legislation of the United States and all rules, regulations and
orders promulgated thereunder, as amended from time to time;
(kkkkk) "VHI" means Viking Holdings Inc., a corporation incorporated under
the ABCA;
(lllll) "VHT" means Viking Holdings Trust, a trust established under the laws
of the Province of Alberta pursuant to a trust indenture dated
October 24, 1997, as amended and restated;
(mmmmm) "VHT TRUST INDENTURE" means the Amended and Restated Trust Indenture
dated as of July 1, 2004 and as amended and restated as of May 1,
2005 between BJORN, in its capacity as trustee of VHT and Viking, as
the sole holder of trust units of VHT, as may be amended,
supplemented or restated from time to time;
(nnnnn) "VIKING" means Viking Energy Royalty Trust, an open-ended
unincorporated investment trust established under the laws of the
Province of Alberta pursuant to a trust indenture dated November 5,
1996, as amended and restated effective July 1, 2003;
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(ooooo) "VIKING ADMINISTRATION AGREEMENT" means the administration agreement
dated as of July 1, 2003 between VHI and the Viking Trustee, as may
be amended, supplemented or restated from time to time;
(ppppp) "VIKING AWARDS" shall have the meaning ascribed thereto in the Viking
Information Circular;
(qqqqq) "VIKING BALANCE SHEETS" has the meaning ascribed thereto in Section
5.2(p);
(rrrrr) "VIKING BOARD OF DIRECTORS" means the board of directors of VHI as it
may be comprised from time to time;
(sssss) "VIKING CREDIT FACILITIES" shall mean the credit facilities described
in the Viking Information Circular under the heading "Information
Concerning Viking Energy Royalty Trust - External Debt - Credit
Facilities";
(ttttt) "VIKING DAMAGES EVENT" has the meaning set forth in Section 7.2;
(uuuuu) "VIKING 6.4% DEBENTURES" means the 6.40% convertible unsecured
subordinated debentures issued on October 20, 2005 pursuant to the
Viking 6.40% Debenture Indenture;
(vvvvv) "VIKING 6.40% DEBENTURE INDENTURE SUPPLEMENT" means the supplement to
the Viking 10.5% Debenture Indenture dated October 20, 2005 governing
the terms of the 6.40% Debentures;
(wwwww) "VIKING 10.5% DEBENTURES" means the 10.5% extendible convertible
unsecured subordinated debentures issued on January 15, 2003 pursuant
to the Viking 10.5% Debenture Indenture;
(xxxxx) "VIKING 10.5% DEBENTURE INDENTURE" means the trust indenture dated as
of January 15, 2003 between Viking and the Viking Debenture Trustee
governing the terms of the Viking 10.5% Debentures together with the
supplemental indenture thereto;
(yyyyy) "VIKING DEBENTURES" means the Viking 6.40% Debentures and the Viking
10.5% Debentures;
(zzzzz) "VIKING DEBENTURE INDENTURE" means the Viking 6.40% Debenture
Indenture Supplement and the Viking 10.5% Debenture Indenture;
(aaaaaa) "VIKING DEBENTURE TRUSTEE" means Computershare Trust Company of
Canada;
(bbbbbb) "VIKING DISCLOSURE LETTER" means the disclosure letter dated November
28, 2005 from Viking and VHI to Harvest;
(cccccc) "VIKING DRIP" means the premium distribution(TM), distribution
reinvestment and optional unit purchase plan of Viking;
(dddddd) "VIKING EMPLOYEES" means the employees of, and consultants to, Viking
or its Subsidiaries;
(eeeeee) "VIKING EMPLOYMENT AGREEMENTS" means the employment agreements
between VHI and each of its senior officers;
(ffffff) "VIKING FINANCIAL STATEMENTS" means, collectively, the audited
comparative consolidated financial statements of Viking as at and for
the years ended December 31, 2004 and 2003, together with the notes
thereto and the auditors' report thereon and the unaudited
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comparative consolidated financial statements of Viking as at and for
the nine months ended September 30, 2005;
(gggggg) "VIKING INFORMATION CIRCULAR" means the management proxy circular of
Viking to be sent by Viking to the Viking Unitholders in connection
with the Viking Meeting, which, unless otherwise determined by
Harvest and Viking, shall be part of a joint information circular
which shall also be sent to Harvest Securityholders in connection
with the Harvest Meeting;
(hhhhhh) "VIKING INFORMATION" means the information included in the Viking
Information Circular describing Viking and its business, operations
and affairs and the matters to be considered at the Viking Meeting;
(iiiiii) "VIKING MANAGEMENT AGREEMENT" means the Management Agreement dated as
of July 1, 2003 as amended and restated as of May 1, 2005 among VHI,
VHT and various subsidiaries of Viking as may be amended,
supplemented and restated from time to time;
(jjjjjj) "VIKING NPI" means the 99% net profit interest in the resource
properties of VHI, other than the resource properties covered by the
EHT NPI #1, EHT NPI #2, VHT NPI #1 and VHT NPI #2 (as such terms are
defined in the Plan of Arrangement), to be granted by VHI to Harvest
following the completion of the Arrangement;
(kkkkkk) "VIKING MATERIAL AGREEMENTS" means, collectively, the Viking
Administration Agreement, the Viking Management Agreement, the Viking
Trust Indenture; the OLAF 1 Royalty Agreement, the OLAF 2 Royalty
Agreement, the VHT Trust Indenture, the XXXX Trust Indenture and the
OLAF Partnership Agreement;
(llllll) "VIKING MEETING" means the special meeting of Viking Unitholders to
be held to consider the Merger Resolution and related matters, and
any adjournment(s) thereof;
(mmmmmm) "VIKING PARTIES" means, collectively and taken as a whole, Viking,
VHI, VHT, BJORN, ERIK and OLAF, each a direct or indirect
wholly-owned Subsidiary of Viking, and "Viking Party" means any one
of them;
(nnnnnn) "VIKING PLANS" has the meaning ascribed thereto in Section 5.2(x);
(oooooo) "VIKING REPORT" has the meaning ascribed thereto in Section 5.2(cc);
(pppppp) "VIKING RIGHTS" shall have the meaning ascribed thereto in the Viking
Information Circular;
(qqqqqq) "VIKING SECURITIES" means the Viking Units;
(rrrrrr) "VIKING TRUST INDENTURE" means the Amended and Restated Trust
Indenture dated as of July 1, 2003 between the Viking Trustee and
VHI, as may be amended, supplemented or restated from time to time;
(ssssss) "VIKING TRUSTEE" means Computershare Trust Company of Canada, in its
capacity as the trustee under the Viking Trust Indenture;
(tttttt) "VIKING UNITHOLDERS" means the holders from time to time of Viking
Units; and
(uuuuuu) "VIKING UNITS" means the trust units of Viking.
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1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into articles, sections and
subsections is for convenience of reference only and does not affect the
construction or interpretation of this Agreement. The terms "this Agreement",
"hereof", "herein" and "hereunder" and similar expressions refer to this
Agreement (including SCHEDULE A hereto) and not to any particular article,
section or other portion hereof and include any agreement or instrument
supplementary or ancillary hereto.
1.3 NUMBER, ETC.
Words importing the singular number include the plural and vice
versa, words importing the use of any gender include all genders, and words
importing persons include firms and corporations and vice versa.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken
hereunder by any of the Parties is not a Business Day and a business day in the
place where an action is required to be taken, such action is required to be
taken on the next succeeding day which is a Business Day and a business day, as
applicable, in such place.
1.5 ENTIRE AGREEMENT
This Agreement and the Confidentiality Agreement together with
the agreements and documents herein and therein referred to, constitute the
entire agreement among the Parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, among the Parties with respect to the subject matter
hereof including, without limitation, the Pre-Arrangement Agreement.
1.6 CURRENCY
All sums of money that are referred to in this Agreement are
expressed in lawful money of Canada.
1.7 ACCOUNTING MATTERS
Unless otherwise stated, all accounting terms used in this
Agreement shall have the meanings attributable thereto under Canadian generally
accepted accounting principles ("GAAP") and all determinations of an accounting
nature are required to be made shall be made in a manner consistent with GAAP.
1.8 DISCLOSURE IN WRITING
Reference to disclosure in writing herein shall, in the case of
disclosure to Harvest, include disclosure to Harvest or its representatives, or
in the case of disclosure to Viking, include disclosure to Viking or its
representatives.
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1.9 INTERPRETATION NOT AFFECTED BY PARTY DRAFTING
The Parties hereto acknowledge that their respective legal
counsel have reviewed and participated in settling the terms of this Agreement,
and the Parties agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party will not be applicable
in the interpretation of this Agreement.
1.10 TRUST POWER AND CAPACITY
In this Agreement references to the power and capacity of
Harvest and Viking, as the case may be, are deemed to be references to that of
the Harvest Trustee and the Viking Trustee, or their respective duly authorized
delegates or agents, pursuant to the power and capacity of trustees generally
under the Laws of the Province of Alberta and pursuant to the powers of the
trustees specified in the Harvest Trust Indenture and Viking Trust Indenture,
respectively.
1.11 SCHEDULES
The following schedules attached hereto are incorporated into
and form an integral part of this Agreement:
A - PLAN OF ARRANGEMENT
ARTICLE 2
THE ARRANGEMENT
2.1 PLAN OF ARRANGEMENT
Each of Harvest and HOC on the one hand and Viking and VHI on
the other hand will forthwith jointly file, proceed with and diligently
prosecute an application for an Interim Order providing for, among other
things, the calling and holding of the Harvest Meeting and the Viking Meeting,
which shall be held concurrently on the same date, if practicable, for the
purpose of considering and, if deemed advisable, approving the Merger
Resolution and the other matters to be considered at the Harvest Meeting and
the Viking Meeting. Provided all necessary approvals for the Merger Resolution
are obtained from the Harvest Securityholders and the Viking Unitholders, each
of Harvest and HOC on the one hand and Viking and VHI on the other hand shall
submit the Arrangement to the Court and jointly apply for the Final Order. Upon
issuance of the Final Order and subject to the conditions precedent in Article
6, each of Harvest and HOC on the one hand and Viking and VHI on the other hand
shall forthwith proceed to file the Articles of Arrangement, the Final Order
and such other documents as may be required to give effect to the Arrangement
with the Registrar pursuant to Subsection 193(9) of the ABCA, whereupon the
transactions comprising the Arrangement shall occur and shall be deemed to have
occurred in the order set out therein without any further act or formality.
Each of the Parties agree that, in the event the Interim Order is not obtained
on terms reasonably satisfactory to each of the Parties, or the Parties
otherwise determine, after consultation with their respective legal, tax and
financial advisors, that it would be advisable to complete the transactions
contemplated hereunder (including in the Plan of Arrangement) by means other
than a plan of arrangement under the ABCA, such transactions shall be carried
out as so determined and the Parties shall amend and restate this Agreement to
provide for the completion of such transactions by such other means on
substantially the same terms and conditions as contained herein.
2.2 INTERIM ORDER
The Interim Order shall provide that:
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(a) for the purpose of the Harvest Meeting:
(i) the securities of Harvest for which holders shall be entitled
to vote on the Merger Resolution shall be the Harvest Units
and the Harvest Exchangeable Shares;
(ii) the Harvest Unitholders and the Harvest Exchangeable
Shareholders shall be entitled to vote on the Merger
Resolution and the other matters to be considered at the
Harvest Meeting together as a single class, and not as
separate classes, with each Harvest Unitholder being entitled
to one vote for each Harvest Unit held by such holder and
each Harvest Exchangeable Shareholder being entitled to one
vote for each Harvest Exchangeable Share held by such holder;
and
(iii) the requisite majority for the approval of the Merger
Resolution shall be two-thirds of the votes cast by the
Harvest Securityholders present in person or by proxy at the
Harvest Meeting, voting together as a single class, and not
as separate classes;
(b) for the purpose of the Viking Meeting:
(i) the securities of Viking for which holders shall be entitled
to vote on the Merger Resolution shall be the Viking Units;
(ii) the Viking Unitholders shall be entitled to vote on the
Merger Resolution as a single class with each Viking
Unitholder being entitled to one vote for each Viking Unit
held by such holder; and
(iii) the requisite majority for the approval of the Merger
Resolution shall be two-thirds of the votes cast by the
Viking Unitholders present in person or by proxy at the
Viking Meeting.
2.3 INFORMATION CIRCULARS AND MEETINGS
(a) As promptly as practical following the execution of this Agreement
and in compliance with the Interim Order and applicable corporate,
trust and securities Laws:
(i) Harvest and HOC shall:
(A) prepare the Harvest Information Circular and cause such
circular to be mailed to the Harvest Securityholders
and filed with applicable regulatory authorities and
other governmental authorities in all jurisdictions
where the same are required to be mailed and filed; and
(B) convene the Harvest Meeting; and
(ii) Viking and VHI shall:
(A) prepare the Viking Information Circular and cause such
circular to be mailed to the Viking Unitholders and
filed with applicable regulatory authorities and other
governmental authorities in all jurisdictions where the
same are required to be mailed and filed; and
(B) convene the Viking Meeting.
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2.4 MFCORP
(a) Prior to the Effective Date, Harvest shall cause a new corporation to
be incorporated under the ABCA ("MFCORP"). MFCorp shall have such
provisions included in its articles of incorporation as may be agreed
by Harvest and Viking, acting reasonably. Prior to the Effective
Time, Harvest shall not cause or permit MFCorp to: (i) issue any
securities or enter into any agreements to issue or grant options,
warrants or rights to purchase any of its securities except for the
issuance of a nominal number of common shares on incorporation; or
(ii) carry on any business, enter into any transaction or effect any
corporate act whatsoever, other than as contemplated herein or as
reasonably necessary to carry out the transactions contemplated by
the Plan of Arrangement unless previously consented to in writing by
Viking.
2.5 EMPLOYEES
(a) Unless otherwise agreed between Viking and Harvest, the employment of
all Viking Employees and Harvest Employees (other than the Harvest
Departing Officers and Xxxxx Xxxx) (the "CONTINUING EMPLOYEES") will
be continued by HOC or VHI, or one of their Subsidiaries, as the case
may be. Continuing Employees, unless their employment is terminated,
shall continue their employment on terms and conditions comparable,
in the aggregate, to the terms and conditions on which they are
currently employed.
(b) Harvest and Viking shall agree, acting reasonably, on retention plans
for the Viking Employees and the Harvest Employees (the "RETENTION
BONUS PLANS").
(c) The Parties acknowledge that the Arrangement will result in a "change
of control" for purposes of their respective unit incentive plans and
executive and employee (if applicable) employment and "change of
control" agreements and that all unit awards will be accelerated
thereunder. The Parties agree that, upon approval of the Arrangement
by the Viking Unitholders and the Harvest Unitholders, and prior to
the Effective Date, all outstanding entitlements under such unit
incentive plans shall be paid in applicable trust units that will
participate in the Arrangement on the same basis as the existing
Harvest Units and Viking Units, as applicable, or, at the option of
the Harvest Board of Directors or the Viking Board of Directors, as
applicable, the cash equivalent thereof.
(d) The Harvest Disclosure Letter sets forth:
(i) all obligations of Harvest pursuant to all employment or
consulting services agreements, termination, severance and
retention plans or policies for severance, termination or
bonus payments or any other payments related to any Harvest
incentive plan, arising out of or in connection with the
Transaction (collectively, the "HARVEST CHANGE OF CONTROL
PAYMENTS");
(ii) the maximum amount of employee bonuses payable by Harvest to
the Harvest Employees in respect of the 2005 year (the
"HARVEST 2005 BONUSES"), which amount is consistent with
Harvest's existing bonus policies; and
(iii) the maximum amount of 2006 salary adjustments for the Harvest
Employees, which adjustments shall be effective as of January
1, 2006.
(e) The Viking Disclosure Letter sets forth:
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(i) all obligations of Viking pursuant to all employment or
consulting services agreements, termination, severance and
retention plans or policies for severance, termination or
bonus payments or any other payments related to any Viking
incentive plan, arising out of or in connection with the
Transaction (collectively, the "VIKING CHANGE OF CONTROL
PAYMENTS");
(ii) the maximum amount of employee bonuses payable by Viking to
the Viking Employees in respect of the 2005 year (the "VIKING
2005 BONUSES"), which amount is consistent with Viking's
existing bonus policies; and
(iii) the maximum amount of 2006 salary adjustments for Viking
employees, which adjustments shall be effective as of January
1, 2006.
(f) The Harvest Change of Control Payments and Viking Change of Control
Payments shall be paid as soon as is reasonably practicable following
the Effective Date. The Harvest 2005 Bonuses and Viking 2005 Bonuses
shall vest on a date prior to the Effective Date to be determined by
Harvest and Viking, acting reasonably, and shall be paid on or before
January 31, 2006.
2.6 COMPLETION OF TRANSACTIONS
Harvest shall cause MFCorp to complete the transactions
contemplated herein and in the Plan of Arrangement.
2.7 EFFECTIVE DATE
The Arrangement shall become effective at the Effective Time on
the Effective Date. The Parties shall use their reasonable commercial efforts
to cause the Effective Date to occur on or about February 3, 2006 or as soon
thereafter as reasonably practicable and in any event by March 31, 2006.
2.8 UNITED STATES TAX CONSIDERATIONS
The Parties intend that the series of transactions contemplated
in Sections 3.1(aaa) through 3.1(iii) (but excluding Section 3.1(ddd)) of the
Plan of Arrangement ("COMBINATION TRANSACTIONS"), considered together as a
single integrated transaction for United States federal income tax purposes,
will qualify as a "reorganization" within the meaning of Section 368(a)(1) of
the U.S. Internal Revenue Code (the "CODE"). This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Treasury Regulation
Section 1.368-2(g). Each Party agrees that it shall (a) treat the Combination
Transactions as a single integrated transaction for U.S. federal income tax
purposes, (b) treat the Combination Transactions as a single integrated
transaction that qualifies as a "reorganization" within the meaning of Section
368(a)(1) of the Code, and (c) retain such records and file such information as
is required to be retained and filed pursuant to Treasury Regulation Section
1.368-3 in connection with the Combination Transactions. Excluding the
transactions contemplated by this Agreement and the Plan of Arrangement, no
Party shall take any action, fail to take any action, cause any action to be
taken or cause any action to fail to be taken that could reasonably be expected
to prevent the Combination Transactions, considered together as a single
integrated transaction, from qualifying as a "reorganization" within the
meaning of Section 368(a)(1) of the Code with respect to Viking and the Viking
Unitholders.
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2.9 POST-CLOSING WIND-UP
Provided the Arrangement is completed, Harvest shall completely
dissolve and liquidate Viking, MFCorp, HST, XXXX and VHT as soon as reasonably
practicable after the Effective Date and in any event within twelve (12) months
following the Effective Date, and Harvest shall cause each of Viking, MFCorp,
HST, XXXX and VHT not to engage in any business following the Effective Date.
2.10 REDEMPTION OF HARVEST EXCHANGEABLE SHARES
All Harvest Exchangeable Shares outstanding following the
Effective Date shall be redeemed as soon as reasonably practicable following
the Effective Date and, in connection therewith, Harvest or one of its
Subsidiaries (other than HOC) shall exercise the overriding redemption call
right held by Harvest pursuant to the rights, privileges, restrictions and
conditions attached to the Harvest Exchangeable Shares.
2.11 VIKING NPI
As soon as is reasonably practicable following the Effective
Date, VHI will grant the Viking NPI to Harvest.
ARTICLE 3
COVENANTS
3.1 COVENANTS OF HARVEST AND HOC
From November 28, 2005 until the Effective Date or termination
of this Agreement, except with the prior written consent of Viking (such
consent not to be unreasonably withheld or delayed), and except as otherwise
expressly permitted or specifically contemplated by this Agreement (including
the Plan of Arrangement) or required by Applicable Laws:
(a) Harvest's affairs and the business of HOC and each of its other
Subsidiaries shall be conducted only in the usual and ordinary course
consistent with past practices (for greater certainty, where it is an
operator of any property, it shall operate and maintain such property
in a proper and prudent manner in accordance with good industry
practice and the agreements governing the ownership and operation of
such property) and it shall use all commercially reasonable efforts
to maintain and preserve its business, assets and advantageous
business relationships, provided that it shall be entitled and
authorized to comply with all pre-emptive rights, first purchase
rights or rights of first refusal that are applicable to its assets
and that become operative by virtue of this Agreement or any of the
transactions contemplated by this Agreement;
(b) Harvest shall not directly or indirectly do or permit to occur any of
the following: (i) amend its constating documents; (ii) declare, set
aside or pay any dividend or other distribution or payment (whether
in cash, trust units, shares or property) in respect of its
outstanding trust units or the Harvest Exchangeable Shares other than
regular monthly cash distributions on the Harvest Units of an amount
equal to $0.35 per Harvest Unit; (iii) issue, grant, sell or pledge
or agree to issue, grant, sell or pledge any trust units or other
securities of Harvest or any of its Subsidiaries (other than to
Harvest or any of its Subsidiaries), including, without limitation
securities convertible into or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, trust units of Harvest
(other than on exercise of currently outstanding Harvest Exchangeable
Shares, Harvest Awards or Harvest Rights or to employees hired after
November 28, 2005
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(in a manner consistent with past practice) or pursuant to the
Harvest DRIP or the Harvest Debentures); (iv) redeem, purchase or
otherwise acquire any of its outstanding trust units or other
securities, other than redemptions required pursuant to the Harvest
Trust Indenture; (v) split, combine or reclassify any of its trust
units; (vi) adopt a plan of liquidation or resolutions providing for
the liquidation, dissolution, merger, consolidation or reorganization
of Harvest; or (vii) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(c) Harvest will not, and will not permit any of its Subsidiaries to,
directly or indirectly, do any of the following: (i) sell, pledge,
dispose of or encumber any assets, except for production in the
ordinary course of business, for consideration in excess of $1
million individually; (ii) expend or commit to expend amounts in
respect of capital or operating expenses in excess of $2 million
individually or $25 million in the aggregate, except to the extent
that such expenditures are set forth in the capital budget of Harvest
disclosed to Viking prior to November 28, 2005; (iii) expend or
commit to expend any amounts with respect to any operating expenses
other than in the ordinary course of business or pursuant to the
Arrangement and other transactions contemplated by this Agreement;
(iv) reorganize, amalgamate, merge or otherwise continue Harvest or
any of its Subsidiaries with any other Person; (v) acquire (by
merger, amalgamation, consolidation or acquisition of shares or
assets) any corporation, trust, partnership or other business
organization or division thereof, which is not a Subsidiary or
affiliate of Harvest, or make any investment therein either by
purchase of shares or securities, contributions of capital or
property transfer, with an acquisition cost in excess of $100 million
in the aggregate; (vi) acquire any assets with an acquisition cost in
excess of $100 million in the aggregate; (vii) incur any indebtedness
for borrowed money in excess of existing credit facilities or any
other material liability or obligation or issue any debt securities
or assume, guarantee, endorse or otherwise become responsible for,
the obligations of any other individual or entity, or make any loans
or advances, other than in respect of fees payable to legal,
financial and other advisors in the ordinary course of business or in
respect of the Arrangement; (viii) authorize, recommend or propose
any release or relinquishment of any material contract right; (ix)
waive, release, grant or transfer any material rights of value or
modify or change in any material respect any existing material
license, lease, contract, production sharing agreement, government
land concession or other material document; (x) pay, discharge or
satisfy any material claims, liabilities or obligations other than as
reflected or reserved against in the Harvest Financial Statements or
otherwise in the ordinary course of business; (xi) enter into or
terminate any xxxxxx, swaps or other financial instruments or like
transactions; (xii) enter into any agreements for the sale of
production having a term of more than thirty (30) days; (xiii) enter
into any material consulting or contract operating agreement that
cannot be terminated on thirty (30) days or less notice without
penalty; or (xiv) authorize or propose any of the foregoing, or enter
into or modify any contract, agreement, commitment or arrangement to
do any of the foregoing;
(d) except as permitted by Section 2.5, neither Harvest nor any of its
Subsidiaries shall adopt or amend or make any contribution to any
bonus, employee benefit plan, profit sharing, option, pension,
retirement, deferred compensation, insurance, incentive compensation,
other compensation or other similar plan, agreement, trust unit
incentive or purchase plan, fund or arrangements for the benefit of
employees, except as is necessary to comply with Applicable Laws or
with respect to existing provisions of any such plans, programs,
arrangements or agreements;
(e) except as permitted by Section 2.5, Harvest shall not, and shall
cause each of its Subsidiaries to not: (i) grant any officer,
director, employee or consultant an increase in
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compensation in any form; (ii) grant any general salary increase;
(iii) take any action with respect to the amendment or grant of any
severance or termination pay policies or arrangements for any
directors, officers, employees or consultants; (iv) adopt or amend or
make any contribution to any bonus, profit-sharing, option, pension,
retirement, deferred compensation, insurance, incentive compensation,
other compensation or other similar plan (or amend any outstanding
rights thereunder) from a trust fund or arrangement for the benefit
of directors, officers, employees or consultants, except to permit
accelerated vesting of currently outstanding Harvest Rights or as is
necessary to comply with Applicable Laws the existing provisions of
any such plans, programs, arrangements or agreements; or (v) advance
any loan to any officer or director of Harvest or any of its
Subsidiaries or any other party not at arm's length to Harvest or any
of its Subsidiaries;
(f) Harvest shall use its reasonable commercial efforts to cause its
current insurance (or re-insurance) policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance or re-insurance
companies of nationally recognized standing providing coverage equal
to or greater than the coverage under the cancelled, terminated or
lapsed policies for substantially similar premiums are in full force
and effect;
(g) no amendments shall be made to outstanding Harvest Rights or Harvest
Awards except as shall be described in the Harvest Information
Circular or as otherwise agreed to between Viking and Harvest;
(h) each of Harvest and HOC shall use its commercially reasonable efforts
to cause the resignation of all of the Harvest Departing Officers at
the Effective Time (and for such officers to provide releases in form
and substance satisfactory to Viking and Harvest, each acting
reasonably);
(i) Harvest shall not take any action that would render, or may
reasonably be expected to render, any representation or warranty made
by it in this Agreement untrue in any material respect at any time
prior to completion of the Arrangement or termination of this
Agreement, whichever first occurs;
(j) Harvest shall promptly notify Viking in writing of any material
change (actual, anticipated, contemplated or, to the knowledge of
Harvest threatened, financial or otherwise) in its business,
operations, affairs, assets, capitalization, financial condition,
prospects, licenses, permits, rights, privileges or liabilities,
whether contractual or otherwise, or of any change in any
representation or warranty provided by Harvest in this Agreement
which change is or may be of such a nature to render any
representation or warranty misleading or untrue in any material
respect and Harvest shall in good faith discuss with Viking any
change in circumstances (actual, anticipated, contemplated, or to the
knowledge of Harvest, threatened) which is of such a nature that
there may be a reasonable question as to whether notice need to be
given to Viking pursuant to this provision;
(k) Harvest shall ensure that it has available funds under its lines of
credit or other bank facilities to permit the payment of the maximum
amount which may be required by Section 7.2 having regard to its
other liabilities and obligations, and shall take all such actions as
may be necessary to ensure that it maintains such availability to
ensure that it is able to pay such amount when required;
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(l) Harvest shall use its reasonable commercial efforts to obtain the
consent of its bankers (if required) and any other third party
consents required for the transactions contemplated hereby and
provide the same to Viking on or prior to the Effective Date;
(m) Harvest shall use its reasonable commercial efforts to satisfy or
cause satisfaction of the conditions set forth in Sections 6.1 and
6.3 as soon as reasonably possible following execution of this
Agreement to the extent that the satisfaction of the same is within
the control of Harvest;
(n) Harvest shall provide notice to Viking of the Harvest Meeting and
allow Viking's representatives to attend such meeting;
(o) subject to compliance by Viking with Section 3.2(q), Harvest will
ensure that the Harvest Information Circular provides Harvest
Securityholders with information in sufficient detail to permit them
to form a reasoned judgment concerning the matters before them, and
will set out the Viking Information in the Harvest Information
Circular in the form approved by Viking and shall include or
incorporate by reference, without limitation; (i) any financial
statements in respect of prior acquisitions made by it that are
required to be included therein in accordance with Applicable Laws;
(ii) the unanimous determination of the Harvest Board of Directors
that the Arrangement is fair to Harvest Securityholders and is in the
best interests of Harvest and Harvest Securityholders, and include
the unanimous recommendation of the Harvest Board of Directors that
the Harvest Securityholders vote in favour of the Merger Resolution;
and (iii) the fairness opinion of Harvest's financial advisor that
the Arrangement is fair, from a financial point of view, to Harvest
Securityholders; provided that, notwithstanding the covenants of
Harvest in this subsection, prior to the completion of the
Arrangement, the Harvest Board of Directors may withdraw, modify or
change the recommendation regarding the Arrangement if, in the
opinion of such board of directors acting reasonably, having received
the advice of its outside legal counsel which is reflected in minutes
of the meeting of the board of directors, such withdrawal,
modification or change is required to act in a manner consistent with
the fiduciary duties of the Harvest Board of Directors and, if
applicable, provided the board of directors shall have complied with
the provisions of Sections 3.4 and 7.2;
(p) Harvest will assist Viking in the preparation of the Viking
Information Circular and provide to Viking, in a timely and
expeditious manner, all information as may be reasonably requested by
Viking with respect to Harvest for inclusion in the Viking
Information Circular and any amendments or supplements thereto, in
each case complying in all material respects with all applicable
legal requirements on the date of issue thereof and to enable Viking
to meet the standard referred to in Section 3.2(p) with respect to
Harvest, the Arrangement and the transactions to be considered at the
Viking Meeting;
(q) Harvest shall indemnify and save harmless Viking and the directors,
officers and agents of Viking and VHI, as applicable, from and
against any and all liabilities, claims, demands, losses, costs,
damages and expenses (excluding any loss of profits or consequential
damages) to which Viking or VHI, or any director, officer or agent
thereof, may be subject or which Viking or VHI, or any director,
officer or agent thereof may suffer, whether under the provisions of
any statute or otherwise, in any way caused by, or arising, directly
or indirectly, from or in consequence of:
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(i) any misrepresentation or alleged misrepresentation in the
Harvest Information Circular or in any material filed in
compliance or intended compliance with any Applicable Laws;
(ii) any order made or any inquiry, investigation or proceeding by
any securities commission or other competent authority based
upon any untrue statement or omission or alleged untrue
statement or omission of a material fact or any
misrepresentation or any alleged misrepresentation in the
Harvest Information Circular or in any material filed by or
on behalf of Harvest in compliance or intended compliance
with Applicable Canadian Securities Laws, which prevents or
restricts the trading in the Harvest Units; and
(iii) Harvest not complying with any requirement of Applicable Laws
in connection with the transactions contemplated in this
Agreement;
except that Harvest shall not be liable in any such case to the
extent that any such liabilities, claims, demands, losses, costs,
damages and expenses arise out of or are based upon any
misrepresentation or alleged misrepresentation of a material fact
based solely on the Viking Information included in the Harvest
Information Circular or the negligence of Viking;
(r) except for proxies and other non-substantive communications with
securityholders, Harvest will furnish promptly to Viking or Viking's
counsel, a copy of each notice, report, schedule or other document
delivered, filed or received by Harvest in connection with: (i) the
Arrangement; (ii) the Harvest Meeting; (iii) any filings under
Applicable Laws; and (iv) any dealings with Governmental Entities in
connection with the transactions contemplated hereby;
(s) Harvest shall solicit proxies to be voted at the Harvest Meeting in
favour of matters to be considered at the Harvest Meeting, including
the Merger Resolution;
(t) Harvest shall conduct the Harvest Meeting in accordance with the
Harvest Trust Indenture and any instrument governing the Harvest
Meeting (including, without limitation, the Interim Order) as
applicable, and as otherwise required by Applicable Laws;
(u) Harvest will make all necessary filings and applications under
Applicable Laws, including U.S. Securities Laws, required to be made
on the part of Harvest in connection with the transactions
contemplated herein and shall take all reasonable action necessary to
be in compliance with such Applicable Laws;
(v) Harvest will use its reasonable commercial efforts to obtain approval
for the listing of (i) the Harvest Units issuable pursuant to the
Arrangement and (ii) the additional Harvest Units to be reserved for
issuance pursuant to the Harvest Unit Award Incentive Plan (as shall
be further described in the Harvest Information Circular) and will
cooperate with Viking in making application for the substitutional
listing on the TSX of the Viking Debentures which shall be assumed by
Harvest under the Plan of Arrangement;
(w) in the event that dissent rights are given to Harvest Securityholders
under the terms of the Interim Order, Harvest shall promptly advise
Viking of the number of Harvest Securities for which Harvest receives
notices of dissent or written objections to the Arrangement and
provide Viking with copies of such notices and written objections;
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(x) Harvest shall take all commercially reasonable actions to give effect
to the transactions contemplated by this Agreement and the
Arrangement.
3.2 COVENANTS OF VIKING AND VHI
From November 28, 2005 until the Effective Date or termination
of this Agreement, except with the prior written consent of Harvest (such
consent not to be unreasonably withheld or delayed), and except as otherwise
expressly permitted or specifically contemplated by this Agreement (including
the Plan of Arrangement) or required by Applicable Laws:
(a) Viking's affairs and the business of VHI and each of its other
Subsidiaries shall be conducted only in the usual and ordinary course
consistent with past practices (for greater certainty, where it is an
operator of any property, it shall operate and maintain such property
in a proper and prudent manner in accordance with good industry
practice and the agreements governing the ownership and operation of
such property) and it shall use all commercially reasonable efforts
to maintain and preserve its business, assets and advantageous
business relationships, provided that it shall be entitled and
authorized to comply with all pre-emptive rights, first purchase
rights or rights of first refusal that are applicable to its assets
and become operative by virtue of this Agreement or any of the
transactions contemplated by this Agreement;
(b) Viking shall not directly or indirectly do or permit to occur any of
the following: (i) amend its constating documents; (ii) declare, set
aside or pay any dividend or other distribution or payment (whether
in cash, trust units, shares or property) in respect of its
outstanding trust units other than regular monthly cash distributions
on the Viking Units of an amount equal to $0.12 per Viking Unit;
(iii) issue, grant, sell or pledge or agree to issue, grant, sell or
pledge any trust units or other securities of Viking or any of its
Subsidiaries (other than to Viking or any of its Subsidiaries),
including, without limitation, securities convertible into or
exchangeable or exercisable for, or otherwise evidencing a right to
acquire, trust units of Viking (other than on exercise of currently
outstanding Viking Awards or Viking Rights, to employees hired after
November 28, 2005 (in a manner consistent with past practice) or
pursuant to the Viking DRIP or the Viking Debentures); (iv) redeem,
purchase or otherwise acquire any of its outstanding trust units or
other securities, other than redemptions required pursuant to the
Viking Trust Indenture; (v) split, combine or reclassify any of its
trust units; (vi) adopt a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation or
reorganization of Viking; or (vii) enter into or modify any contract,
agreement, commitment or arrangement with respect to any of the
foregoing;
(c) Viking will not, and will not permit any of its Subsidiaries to,
directly or indirectly, do any of the following: (i) sell, pledge,
dispose of or encumber any assets, except for production in the
ordinary course of business, for consideration in excess of $1
million individually; (ii) expend or commit to expend amounts in
respect of capital or operating expenses in excess of $2 million
individually or $25 million in the aggregate, except to the extent
that such expenditures are set forth in the capital budget of Viking
disclosed to Harvest prior to November 28, 2005; (iii) expend or
commit to expend any amounts with respect to any operating expenses
other than in the ordinary course of business or pursuant to the
Arrangement and other transactions contemplated by this Agreement;
(iv) reorganize, amalgamate, merge or otherwise continue Viking or
any of its Subsidiaries with any other Person; (v) acquire (by
merger, amalgamation, consolidation or acquisition of shares or
assets) any corporation, trust, partnership or other business
organization or division thereof, which is not a Subsidiary or
affiliate of Viking, or make any investment therein either by
purchase of shares or securities, contributions of capital or
-23-
property transfer with an acquisition cost in excess of $100 million
in the aggregate; (vi) acquire any assets with an acquisition cost in
excess of $100 million in the aggregate; (vii) incur any indebtedness
for borrowed money in excess of existing credit facilities or any
other material liability or obligation or issue any debt securities
or assume, guarantee, endorse or otherwise become responsible for,
the obligations of any other individual or entity, or make any loans
or advances, other than in respect of fees payable to legal,
financial and other advisors in the ordinary course of business or in
respect of the Arrangement; (viii) authorize, recommend or propose
any release or relinquishment of any material contract right; (ix)
waive, release, grant or transfer any material rights of value or
modify or change in any material respect any existing material
license, lease, contract, production sharing agreement, government
land concession or other material document; (x) pay, discharge or
satisfy any material claims, liabilities or obligations other than as
reflected or reserved against in the Viking Financial Statements or
otherwise in the ordinary course of business; (xi) enter into or
terminate any xxxxxx, swaps or other financial instruments or like
transactions; (xii) enter into any agreements for the sale of
production having a term of more than thirty (30) days; (xiii) enter
into any material consulting or contract operating agreement that
cannot be terminated on thirty (30) days or less notice without
penalty; or (xiv) authorize or propose any of the foregoing, or enter
into or modify any contract, agreement, commitment or arrangement to
do any of the foregoing;
(d) except as permitted by Section 2.5, neither Viking nor any of its
Subsidiaries shall adopt or amend or make any contribution to any
bonus, employee benefit plan, profit sharing, option, pension,
retirement, deferred compensation, insurance, incentive compensation,
other compensation or other similar plan, agreement, trust unit
incentive or purchase plan, fund or arrangements for the benefit of
employees, except as is necessary to comply with Applicable Laws or
with respect to existing provisions of any such plans, programs,
arrangements or agreements;
(e) except as permitted by Section 2.5, Viking shall not and shall cause
each of its Subsidiaries to not: (i) grant any officer, director,
employee or consultant an increase in compensation in any form; (ii)
grant any general salary increase; (iii) take any action with respect
to the amendment or grant of any severance or termination pay
policies or arrangements for any directors, officers, employees or
consultants; (iv) adopt or amend or make any contribution to any
bonus, profit-sharing, option, pension, retirement, deferred
compensation, insurance, incentive compensation, other compensation
or other similar plan (or amend any outstanding rights thereunder)
from a trust fund or arrangement for the benefit of directors,
officers, employees or consultants, except to permit accelerated
vesting of currently outstanding Viking Rights or as is necessary to
comply with Applicable Laws or with the existing provisions of any
such plans, programs, arrangements or agreements; or (v) advance any
loan to any officer or director of Viking or any of its Subsidiaries
or any other party not at arm's length to Viking or any of its
Subsidiaries;
(f) Viking shall use its reasonable commercial efforts to cause its
current insurance (or re-insurance) policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance or re-insurance
companies of nationally recognized standing providing coverage equal
to or greater than the coverage under the cancelled, terminated or
lapsed policies for substantially similar premiums are in full force
and effect;
(g) no amendments shall be made to outstanding Viking Rights or Viking
Awards without the prior written consent of Harvest;
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(h) each of Viking and VHI shall use its commercially reasonable efforts
to cause the resignation of all of the directors of VHI at the
Effective Time (and for such directors to provide releases in form
and substance satisfactory to Harvest and Viking, each acting
reasonably);
(i) Viking and VHI shall use its commercially reasonable efforts to
ensure that all outstanding Viking Rights are either exercised,
terminated, expired or surrendered prior to the Effective Time
provided that Viking and VHI shall not pay the holders any amount of
consideration therefor nor shall they make any amendment to
outstanding Viking Rights without the prior written consent of
Harvest, except to permit the early vesting of Viking Rights and to
cause the cancellation, termination, expiry or surrender of the
Viking Rights prior to the Effective Time without payment therefor;
(j) Viking shall not take any action that would render, or may reasonably
be expected to render, any representation or warranty made by it in
this Agreement untrue in any material respect at any time prior to
completion of the Arrangement or termination of this Agreement,
whichever first occurs;
(k) Viking shall promptly notify Harvest in writing of any material
change (actual, anticipated, contemplated or, to the knowledge of
Viking threatened, financial or otherwise) in its business,
operations, affairs, assets, capitalization, financial condition,
prospects, licenses, permits, rights, privileges or liabilities,
whether contractual or otherwise, or of any change in any
representation or warranty provided by Viking in this Agreement which
change is or may be of such a nature to render any representation or
warranty misleading or untrue in any material respect and Viking
shall in good faith discuss with Harvest any change in circumstances
(actual, anticipated, contemplated, or to the knowledge of Viking,
threatened) which is of such a nature that there may be a reasonable
question as to whether notice need to be given to Harvest pursuant to
this provision;
(l) Viking shall ensure that it has available funds under its lines of
credit or other bank facilities to permit the payment of the maximum
amount which may be required by Section 7.1 having regard to its
other liabilities and obligations, and shall take all such actions as
may be necessary to ensure that it maintains such availability to
ensure that it is able to pay such amount when required;
(m) Viking shall use its reasonable commercial efforts to obtain the
consent of its bankers (if required) and any other third party
consents required for the transactions contemplated hereby and
provide the same to Harvest on or prior to the Effective Date;
(n) Viking shall use its reasonable commercial efforts to satisfy or
cause satisfaction of the conditions set forth in Sections 6.1 and
6.2 as soon as reasonably possible to the extent that the
satisfaction of the same is within the control of Viking;
(o) Viking shall provide notice to Harvest of the Viking Meeting and
allow Harvest's representatives to attend such meeting;
(p) subject to compliance by Harvest with Section 3.1(p), Viking will
ensure that the Viking Information Circular provides Viking
Unitholders with information in sufficient detail to permit them to
form a reasoned judgment concerning the matters before them, and will
set out the Harvest Information in the Viking Information Circular in
the form approved by Harvest and shall include or incorporate by
reference, without limitation; (i) any financial statements in
respect of prior acquisitions made by it that are required to be
-25-
included therein in accordance with Applicable Laws; (ii) the
unanimous determination of the Viking Board of Directors that the
Arrangement is fair to Viking Unitholders and is in the best
interests of Viking and Viking Unitholders, and include the unanimous
recommendation of the Viking Board of Directors that the Viking
Unitholders vote in favour of the Merger Resolution; and (iii) the
fairness opinion of Viking's financial advisor that the Arrangement
is fair, from a financial point of view, to Viking Unitholders;
provided that, notwithstanding the covenants of Viking in this
subsection, prior to the completion of the Arrangement, the Viking
Board of Directors may withdraw, modify or change the recommendation
regarding the Arrangement if, in the opinion of such board of
directors acting reasonably, having received the advice of its
outside legal counsel which is reflected in minutes of the meeting of
the board of directors, such withdrawal, modification or change is
required to act in a manner consistent with the fiduciary duties of
the Viking Board of Directors and, if applicable, provided the board
of directors shall have complied with the provisions of Sections 3.4
and 7.1,
(q) Viking will assist Harvest in the preparation of the Harvest
Information Circular and provide to Harvest, in a timely and
expeditious manner, all information as may be reasonably requested by
Harvest with respect to Viking for inclusion in the Harvest
Information Circular and any amendments or supplements thereto, in
each case complying in all material respects with all applicable
legal requirements on the date of issue thereof and to enable Harvest
to meet the standard referred to in Section 3.1(o) with respect to
Viking, the Arrangement and the transactions to be considered at the
Harvest Meeting;
(r) Viking shall indemnify and save harmless Harvest and the directors,
officers and agents of Harvest and HOC, as applicable, from and
against any and all liabilities, claims, demands, losses, costs,
damages and expenses (excluding any loss of profits or consequential
damages) to which Harvest or HOC, or any director, officer or agent
thereof, may be subject or which Harvest or HOC, or any director,
officer or agent thereof may suffer, whether under the provisions of
any statute or otherwise, in any way caused by, or arising, directly
or indirectly, from or in consequence of:
(i) any misrepresentation or alleged misrepresentation in the
Viking Information Circular or in any material filed in
compliance or intended compliance with any Applicable Laws;
(ii) any order made or any inquiry, investigation or proceeding by
any securities commission or other competent authority based
upon any untrue statement or omission or alleged untrue
statement or omission of a material fact or any
misrepresentation or any alleged misrepresentation in the
Viking Information Circular or in any material filed by or on
behalf of Viking in compliance or intended compliance with
Applicable Canadian Securities Laws, which prevents or
restricts the trading in the Viking Units; and
(iii) Viking not complying with any requirement of Applicable Laws
in connection with the transactions contemplated in this
Agreement;
except that Viking shall not be liable in any such case to the extent
that any such liabilities, claims, demands, losses, costs, damages
and expenses arise out of or are based upon any misrepresentation or
alleged misrepresentation of a material fact based solely on the
Harvest Information included in the Viking Information Circular or
the negligence of Harvest;
-26-
(s) except for proxies and other non-substantive communications with
securityholders, Viking will furnish promptly to Harvest or Harvest's
counsel, a copy of each notice, report, schedule or other document
delivered, filed or received by Viking in connection with: (i) the
Arrangement; (ii) the Viking Meeting; (iii) any filings under
Applicable Laws; and (iv) any dealings with Governmental Entities in
connection with the transactions contemplated hereby;
(t) Viking shall solicit proxies to be voted at the Viking Meeting in
favour of matters to be considered at the Viking Meeting, including
the Merger Resolution;
(u) Viking shall conduct the Viking Meeting in accordance with the Viking
Trust Indenture and any instrument governing the Viking Meeting
(including, without limitation, the Interim Order), as applicable,
and as otherwise required by Applicable Laws;
(v) Viking will make all necessary filings and applications under
Applicable Laws, including U.S. Securities Laws, required to be made
on the part of Viking in connection with the transactions
contemplated herein and shall take all reasonable action necessary to
be in compliance with such Applicable Laws;
(w) in the event that dissent rights are given to Viking Unitholders
under the terms of the Interim Order, Viking shall promptly advise
Harvest of the number of Viking Units for which Viking receives
notices of dissent or written objections to the Arrangement and
provide Harvest with copies of such notices and written objections;
(x) prior to the Effective Date, Viking will cooperate with Harvest in
making application to list the Harvest Units issuable pursuant to the
Arrangement and the Amended Incentive Plans on the TSX and on the
NYSE; and
(y) Viking shall take all commercially reasonable actions to give effect
to the transactions contemplated by this Agreement and the
Arrangement.
3.3 MUTUAL COVENANTS REGARDING THE ARRANGEMENT
From the date hereof until the Effective Date, each of Harvest,
HOC, Viking and VHI will use its reasonable commercial efforts to satisfy (or
cause the satisfaction of) the conditions precedent to its obligations
hereunder and to take, or cause to be taken, all other action and to do, or
cause to be done, all other things necessary, proper or advisable under
Applicable Laws to complete the Arrangement, including using reasonable
efforts:
(a) to obtain all necessary waivers, consents and approvals required to
be obtained by it from other parties to loan agreements, leases and
other contracts;
(b) to, on or before the Effective Date, cause confirmations of
employment to be made to the Continued Employees;
(c) to obtain all necessary consents, assignments, waivers and amendments
to or terminations of any instruments and take such measures as may
be appropriate to fulfill its obligations hereunder and to carry out
the transactions contemplated hereby;
(d) to effect all necessary registrations and filings and submissions of
information requested by Governmental Entities required to be
effected by it in connection with the Arrangement, and each of
Harvest and Viking will use its reasonable commercial efforts to
-27-
cooperate with the other in connection with the performance by the
other of their obligations under this Section 3.3 including, without
limitation, continuing to provide reasonable access to information
and to maintain ongoing communications as between officers of HOC and
VHI, subject in all cases to the Confidentiality Agreement;
(e) reasonably cooperate with the other Party and its tax advisors in
structuring the Arrangement in a tax effective manner, and assist the
other Party and its tax advisors in making such investigations and
inquiries with respect to such Party in that regard, as the other
Party and its tax advisors shall consider necessary, acting
reasonably, provided that such Party shall not be obligated to
consent or agree to any structuring that has the effect of reducing
the consideration to be received under the Arrangement by any of its
securityholders;
(f) use their reasonable commercial efforts to cause the mailing of the
Information Circular to their respective securityholders (the
"MAILING DATE") to occur as soon as reasonably practicable following
the date hereof and in any event by February 15, 2006; and
(g) use their reasonable commercial efforts to continue the listing on
the NYSE of the outstanding Harvest Units and to obtain the approval
of the NYSE for the additional listing as of the Effective Date of
the Harvest Units issuable pursuant to (i) the Arrangement, (ii) the
Harvest Unit Award Incentive Plan, (iii) the Harvest Trust Unit
Rights Incentive Plan and (iv) the Viking Debentures.
3.4 MUTUAL COVENANTS REGARDING NON-SOLICITATION
(a) Each Party shall immediately cease and cause to be terminated all
existing discussions and negotiations (including, without limitation,
through any advisors or other parties on its behalf), if any, with
any parties conducted before the date of this Agreement with respect
to any Acquisition Proposal and shall immediately request the return
or destruction of all information provided to any third parties who
have entered into a confidentiality agreement with such Party
relating to an Acquisition Proposal and shall use all reasonable
commercial efforts to ensure that such requests are honoured.
(b) Neither Party shall, directly or indirectly, do or authorize or
permit any of its officers, directors or employees or any financial
advisor, expert or other representative retained by it to do, any of
the following:
(i) solicit, facilitate, initiate or encourage any Acquisition
Proposal;
(ii) enter into or participate in any discussions or negotiations
regarding an Acquisition Proposal, or furnish to any other
Person any information with respect to its business,
properties, operations, prospects or conditions (financial or
otherwise) in connection with an Acquisition Proposal or
otherwise cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt of any
other Person to do or seek to do any of the foregoing;
(iii) waive, or otherwise forbear in the enforcement of, or enter
into or participate in any discussions, negotiations or
agreements to waive or otherwise forbear in respect of, any
rights or other benefits under confidential information
agreements, including, without limitation, any "standstill
provisions" thereunder; or
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(iv) accept, recommend, approve or enter into an agreement to
implement an Acquisition Proposal;
provided, however, that notwithstanding any other provision hereof,
each Party and its officers, directors and advisers may:
(v) enter into or participate in any discussions or negotiations
with a third party who (without any solicitation, initiation
or encouragement, directly or indirectly, after the date of
this Agreement, by such Party or any of its officers,
directors or employees or any financial advisor, expert or
other representative retained by it) seeks to initiate such
discussions or negotiations and, subject to execution of a
confidentiality and standstill agreement substantially
similar to the Confidentiality Agreement (provided that such
confidentiality agreement shall provide for disclosure
thereof (along with all information provided thereunder) to
the other Party as set out below), may furnish to such third
party information concerning such Party and its business,
properties and assets, in each case if, and only to the
extent that:
(A) the third party has first made a written bona fide
Acquisition Proposal which the board of directors of
the administrator of such Party determines in good
faith: (1) that funds or other consideration necessary
for the Acquisition Proposal are or are likely to be
available; (2) (after consultation with its financial
advisor) would, if consummated in accordance with its
terms, result in a transaction financially superior for
securityholders of the Receiving Party than the
transaction contemplated by this Agreement; and (3)
after receiving the advice of outside counsel as
reflected in minutes of the board of directors of the
administrator of such Party, that the taking of such
action is necessary for the board of directors in
discharge of its fiduciary duties under Applicable Laws
(a "SUPERIOR PROPOSAL"); and
(B) prior to furnishing such information to or entering
into or participating in any such discussions or
negotiations with such third party, such Party provides
prompt notice to the other Party to the effect that it
is furnishing information to or entering into or
participating in discussions or negotiations with such
Person together with a copy of the confidentiality
agreement referenced above and if not previously
provided to the other Party, copies of all information
provided to such third party concurrently with the
provision of such information to such third party, and
provided further that such Party shall notify the other
Party orally and in writing of any inquiries, offers or
proposals with respect to a Superior Proposal (which
written notice shall include, without limitation, a
copy of any such proposal (and any amendments or
supplements thereto), the identity of the Person making
it, if not previously provided to the other Party,
copies of all information provided to such Party and
all other information reasonably requested by the other
Party), within 24 hours of the receipt thereof, shall
keep the other Party informed of the status and details
of any such inquiry, offer or proposal and answer the
other Party's questions with respect thereto; or
(vi) comply with Section 172 of the SECURITIES ACT (Alberta) and
similar provisions under Applicable Canadian Securities Laws
relating to the provision of directors' circulars and make
appropriate disclosure with respect thereto to its
securityholders; and
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(vii) accept, recommend, approve or enter into an agreement to
implement a Superior Proposal from a third party, but only if
prior to such acceptance, recommendation, approval or
implementation, the board of directors of its administrator
shall have concluded in good faith, after considering all
proposals to adjust the terms and conditions of this
Agreement as contemplated by Section 3.4(c) and after
receiving the advice of outside counsel as reflected in
minutes of the board of directors of such Party, that the
taking of such action is necessary for the board of directors
in discharge of its fiduciary duties under Applicable Laws
and such Party complies with its obligations set forth in
Section 3.4(c) and terminates this Agreement in accordance
with Section 9.1(e) or Section 91(f), as applicable, and
concurrently therewith pays the amount required by Section
7.1 or 7.2, as applicable, to the other Party.
(c) Each Party in receipt of a Superior Proposal (a "RECEIVING PARTY")
shall give the other Party (the "RESPONDING PARTY"), orally and in
writing, at least 72 hours advance notice of any decision by the
board of directors of its administrator to accept, recommend, approve
or enter into an agreement to implement a Superior Proposal, which
notice shall confirm that the board of directors of the administrator
of the Receiving Party has determined that such Acquisition Proposal
constitutes a Superior Proposal, shall identify the third party
making the Superior Proposal and shall provide a true and complete
copy thereof and any amendments thereto. During such 72 hour period,
the Receiving Party agrees not to accept, recommend, approve or enter
into any agreement to implement such Superior Proposal and not to
release the party making the Superior Proposal from any standstill
provisions and shall not withdraw, redefine, modify or change its
recommendation in respect of the Arrangement. In addition, during
such 72 hour period the Receiving Party shall and shall cause its
financial and legal advisors to, negotiate in good faith with the
Responding Party and its financial and legal advisors to make such
adjustments in the terms and conditions of this agreement and the
Arrangement as would enable the Receiving Party to proceed with the
Arrangement as amended rather than the Superior Proposal. In the
event the Responding Party proposes to amend this agreement and the
Arrangement to provide that the holders of the Harvest Securities or
Viking Units, as applicable, (the "RECEIVING PARTY SECURITIES") shall
receive a value per Receiving Party Security equal to or having a
value greater than the value per Receiving Party Security provided in
the Superior Proposal and so advises the board of directors of the
administrator of the Receiving Party prior to the expiry of such 72
hour period, the board of directors of the administrator of the
Receiving Party shall not accept, recommend, approve or enter into
any agreement to implement such Superior Proposal and shall not
release the party making the Superior Proposal from any standstill
provisions and shall not withdraw, redefine, modify or change its
recommendation in respect of the Arrangement.
(d) Each Party agrees that all information that may be provided to it by
the other Party with respect to any Superior Proposal pursuant to
this Section 3.4 shall be treated as if it were "CONFIDENTIAL
INFORMATION" as that term is defined in the Confidentiality Agreement
and shall not be disclosed or used except in accordance with the
provisions of the Confidentiality Agreement or in order to enforce
its rights under this Agreement in legal proceedings.
(e) Each Party shall ensure that its officers, directors and employees
and any investment bankers or other advisers or representatives
retained by it are aware of the provisions of this Section 3.4.
Harvest shall be responsible for any breach of this Section 3.4 by
its officers, directors, employees, investment bankers, advisers or
representatives, and Viking shall be responsible for any breach of
this Section 3.4 by its officers, directors, employees, investment
bankers, advisers or representatives.
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3.5 PROVISION OF INFORMATION; ACCESS
(a) From and after the date hereof, Viking shall provide Harvest and its
representatives access, during normal business hours and at such
other time or times as Harvest may reasonably request, to its
premises (including field offices and sites), books, contracts,
records, computer systems, properties, employees and management
personnel and shall furnish promptly to Harvest all information
concerning its business, properties and personnel as Harvest may
reasonably request, which information shall remain subject to the
Confidentiality Agreement, in order to permit Harvest to be in a
position to expeditiously and efficiently integrate the business and
operations of each of Viking and Harvest immediately upon but not
prior to the Effective Date. Without limitation, representatives of
Harvest will be permitted to attend any operations meetings of
Viking. Viking agrees to keep Harvest fully appraised in a timely
manner of every circumstance, action, occurrence or event occurring
or arising after the date hereof that would be relevant and material
to a prudent operator of the business and operations of Viking.
Viking shall confer with and obtain Harvest's approval (not to be
unreasonably withheld or delayed), prior to taking action (other than
in emergency situations) with respect to any material operational
matters involved in its business.
(b) From and after the date hereof, Harvest shall provide Viking and its
representatives access, during normal business hours and at such
other time or times as Viking may reasonably request, to its premises
(including field offices and sites), books, contracts, records,
computer systems, properties, employees and management personnel and
shall furnish promptly to Viking all information concerning its
business, properties and personnel as Viking may reasonably request,
which information shall remain subject to the Confidentiality
Agreement, in order to permit Viking to be in a position to
expeditiously and efficiently integrate the business and operations
of each of Viking and Harvest immediately upon but not prior to the
Effective Date. Without limitation, representatives of Viking will be
permitted to attend any operations meetings of Harvest. Harvest
agrees to keep Viking fully appraised in a timely manner of every
circumstance, action, occurrence or event occurring or arising after
the date hereof that would be relevant and material to a prudent
operator of the business and operations of Harvest. Harvest shall
confer with and obtain Viking's approval (not to be unreasonably
withheld or delayed), prior to taking action (other than in emergency
situations) with respect to any material operational matters
involving in its business.
ARTICLE 4
AMENDMENTS TO INCENTIVE PLANS
4.1 AMENDMENTS TO INCENTIVE PLANS
Subject to receipt of all necessary approvals, Harvest will adopt the
amendments to the Harvest Unit Award Incentive Plan as further described in the
Harvest Information Circular, together with such additional amendments to the
Harvest Unit Award Incentive Plan and Harvest Trust Unit Rights Incentive Plan
as may be agreed between Harvest and Viking, acting reasonably.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF HARVEST
Harvest and HOC hereby jointly and severally make the
representations and warranties set forth in this Section 5.1 to and in favour
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of Viking and VHI and acknowledge that each of Viking and VHI is relying upon
such representations and warranties in connection with the matters contemplated
by this Agreement.
(a) ORGANIZATION AND QUALIFICATION. Each of Harvest, HBT1, HBT2 and HST
is a trust duly created and validly existing under the Laws of the
Province of Alberta and has the requisite trust power and authority
to own its assets and to conduct its affairs as now conducted. Each
of BRP, REP and Hay River is a partnership duly created and validly
existing under the Laws of the Province of Alberta, the partners of
which have the requisite partnership power and authority to own the
assets and to carry on its business on behalf of each of BRP, REP and
Hay River as now conducted by each of BRP, REP and Hay River. HOC is
a corporation duly incorporated or amalgamated and validly existing
under the Laws of its jurisdiction of incorporation and has the
requisite corporate power and authority to own its assets as now
owned and to carry on its business as now conducted. Each of the
Harvest Parties is duly registered to conduct its affairs or do
business, as applicable, in each jurisdiction in which the character
of its assets, owned or leased, or the nature of its activities makes
such registration necessary, except where the failure to be so
registered would not have a Material Adverse Effect on the Harvest
Parties. Copies of the constating documents of the Harvest Parties
(including the Harvest Material Agreements) provided to VHI, together
with all amendments to date, are accurate and complete as of the date
hereof and have not been amended or superseded.
(b) AUTHORITY RELATIVE THIS AGREEMENT. HOC has the requisite corporate
power and authority to execute this Agreement, in its own capacity
and in its capacity as administrator of Harvest, as applicable, and
each of Harvest and HOC has the requisite trust or corporate power
and authority, as applicable, to carry out its obligations hereunder.
The execution and delivery of this Agreement and the consummation by
Harvest and HOC of the Arrangement have been duly authorized by the
Harvest Board of Directors and, subject to the requisite approval of
the Harvest Unitholders, no other proceedings on the part of Harvest
or HOC are necessary to authorize this Agreement or the Arrangement.
This Agreement has been duly executed and delivered by each of
Harvest and HOC and constitutes a legal, valid and binding obligation
of each of Harvest and HOC enforceable against them in accordance
with its terms, subject to the qualification that such enforceability
may be limited by bankruptcy, insolvency, reorganization or other
Laws of general application relating to or affecting rights of
creditors and that equitable remedies, including specific
performance, are discretionary and may not be ordered.
(c) SUBSIDIARIES. Harvest has no Subsidiaries (other than the Material
Subsidiaries) that are material to its business, operation or
financial condition.
(d) NO VIOLATIONS. Except as disclosed to Viking in writing prior to
November 28, 2005, or as contemplated by this Agreement:
(i) neither the execution and delivery of this Agreement by
Harvest and HOC nor the consummation of the Arrangement nor
compliance by the Harvest Parties with any of the provisions
hereof will: (A) violate, conflict with, or result in a
breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a
default) or result in a right of termination or acceleration
under, or result in the creation of any encumbrance upon any
of the properties or assets of the Harvest Parties or cause
any indebtedness to come due before its stated maturity or
cause any credit to cease to be available, under any of the
terms, conditions or provisions of (1) the Harvest Material
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Agreements or the articles, by-laws, shareholder agreements
or other constating document of any Harvest Party, or (2) any
material note, bond, mortgage, indenture, loan agreement,
deed of trust, agreement, lien, contract or other instrument
or obligation to which a Harvest Party is a party or to which
any of them, or any of their respective properties or assets,
may be subject or by which a Harvest Party is bound; or (B)
subject to compliance with applicable statutes and
regulations, violate any judgment, ruling, order, writ,
injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to the Harvest Parties or any
of their respective properties or assets (except, in the case
of each of clauses (A) and (B) above, for such violations,
conflicts, breaches, defaults, terminations, accelerations or
creations of encumbrances which, or any consents, approvals
or notices which if not given or received, would not have any
Material Adverse Effect on the Harvest Parties taken as a
whole, or significantly impede the ability of the Harvest
Parties to consummate the Arrangement); or (C) cause the
suspension or revocation of any authorization, consent,
approval or license currently in effect which would have a
Material Adverse Effect on the Harvest Parties; and
(ii) other than in connection with or in compliance with the
provisions of applicable Laws or which are required to be
filed post Arrangement, and except for the requisite approval
of Harvest Unitholders, (A) there is no legal impediment to
the Harvest Parties' consummation of the Arrangement, and (B)
no filing or registration with, or authorization, consent or
approval of, any domestic or foreign public body or authority
is required of the Harvest Parties in connection with the
consummation of the Arrangement, except for such filings or
registrations which, if not made, or for such authorizations,
consents or approvals which, if not received, would not have
a Material Adverse Effect on the Harvest Parties, or
significantly impede the ability of the Harvest Parties to
consummate the Arrangement.
(e) LITIGATION. There are no actions, suits or proceedings in existence
or pending or, to the knowledge of HOC, threatened or for which there
is a reasonable basis, affecting or that would affect the Harvest
Parties or affecting or that would affect any of their respective
property or assets at law or equity or before or by any court or
Governmental Entity which action, suit or proceeding involves a
possibility of any judgment against or liability of the Harvest
Parties which, if successful, would have a Material Adverse Effect on
the Harvest Parties, or would significantly impede the ability of the
Harvest Parties to consummate the Arrangement.
(f) TAXES, ETC. Except as disclosed in writing to Viking prior to
November 28, 2005:
(i) All Tax Returns required to be filed by or on behalf of any
Harvest Parties have been duly filed on a timely basis and
such tax returns are correct in all material respects. All
Taxes shown to be payable on the Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a
timely basis, and no other Taxes are payable by any Harvest
Parties with respect to items or periods covered by such Tax
Returns;
(ii) Harvest has paid or provided adequate accruals in its
consolidated financial statements for the period from
inception to December 31, 2004 for Taxes, including income
taxes and related future taxes, if applicable, for such
periods, in conformity with GAAP;
(iii) for all periods ended on and after December 31, 2004, Viking
has been furnished by Harvest true and complete copies of:
(A) material portions of income tax audit reports, statement
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of deficiencies, closing or other agreements or
correspondence concerning assessments or audits pursuant to
which a taxing authority has proposed amendments to
previously filed returns received by any Harvest Party or on
behalf of any Harvest Party relating to the Taxes; and (B)
any material federal, provincial, state, local or foreign
income or franchise tax returns for each Harvest Party;
(iv) no material deficiencies exist or have been asserted with
respect to Taxes of Harvest or any of its Subsidiaries;
(v) none of Harvest or its Material Subsidiaries is a party to
any action or proceeding for assessment or collection of
Taxes, nor, to the knowledge of Harvest and HOC, has such an
event been asserted or threatened against Harvest or its
Material Subsidiaries or any of their respective assets that
would have a Material Adverse Effect on the Harvest Parties.
No waiver or extension of any statute of limitations is in
effect with respect to Taxes or Tax Returns of Harvest or its
Material Subsidiaries. No audit by tax authorities of Harvest
or its Material Subsidiaries is in process or pending, to the
knowledge of Harvest except for the audit of 2003 and 2002
federal income tax returns of HOC as previously disclosed to
Viking; and
(vi) Harvest has provided adequate accruals in its consolidated
financial statements in accordance with GAAP for the period
ended December 31, 2004 (or such amounts are fully funded)
for all pension or other employee benefit obligations of
Harvest and its Subsidiaries arising under or relating to
each of the pension or retirement income plans or other
employee benefit plans or agreements or policies maintained
by or binding on Harvest or its Material Subsidiaries.
(g) REPORTING ISSUER STATUS. (i) Harvest is a reporting issuer (where
such concept exists) in all provinces of Canada and is in material
compliance with all Applicable Canadian Securities Laws therein and
the Harvest Units, the Harvest 6.5% Debentures, the Harvest 8%
Debentures and the Harvest 9% Debentures are listed and posted for
trading on the TSX; and (ii) the Harvest Units are registered under
Section 12 of the UNITED STATES SECURITIES EXCHANGE ACT of 1934, as
amended, and Harvest is in material compliance with all applicable
U.S. Securities Laws. The Harvest Units are listed and posted for
trading on the NYSE.
(h) CAPITALIZATION. As of the date hereof, the authorized capital of
Harvest consists of an unlimited number of Harvest Units and an
unlimited number of Special Voting Units (as defined in the Harvest
Trust Indenture). As of December 15, 2005 there were issued and
outstanding approximately 52,732,000 Harvest Units and one Special
Voting Unit. Other than (i) the Harvest Rights and 1,575,000 Harvest
Units reserved for issuance pursuant to the Harvest Rights under
Harvest's Trust Unit Rights Incentive Plan, (ii) the Harvest Awards
and 36,000 Harvest Units which may be issued upon the payment of
Harvest Awards made under Harvest's Unit Award Incentive Plan, (iii)
the Harvest Exchangeable Shares and 215,000 Harvest Units which may
be issued upon exercise of the Harvest Exchangeable Shares, (iv)
Harvest Units which may be issued pursuant to the Harvest DRIP, and
(v) the Harvest Debentures and the Harvest Units which may be issued
upon the conversion, redemption or maturity of, or interest payments
on, the Harvest Debentures (the securities listed in subsections
5.1(h)(i) through (v) are collectively, the "HARVEST SECURITIES
INSTRUMENTS"), there are no options, warrants or other rights,
agreements or commitments of any character whatsoever requiring the
issuance, sale or transfer by Harvest of any securities of Harvest
(including Harvest Units) or any securities convertible into, or
exchangeable or exercisable for, or otherwise evidencing a right to
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acquire, any securities of Harvest (including Harvest Units). All
outstanding Harvest Units have been duly authorized and validly
issued, are fully paid and non-assessable and are not subject to, nor
were they issued in violation of, any pre-emptive rights and all
Harvest Units issuable pursuant to the Harvest Securities Instruments
in accordance with their respective terms will be duly authorized and
validly issued as fully paid and non-assessable and will not be
subject to any pre-emptive rights.
(i) OWNERSHIP OF SUBSIDIARIES. As of the date hereof, Harvest is the
beneficial direct or indirect owner of all of the outstanding shares,
partnership units and trust units, as applicable, of the Harvest
Parties (other than Harvest) with good title thereto free and clear
of any and all encumbrances, except for security interests in such
securities for the benefit of the lenders under Harvest's credit
facilities. There are no options, warrants or other rights,
shareholder or unitholder rights plans, agreements or commitments of
any character whatsoever requiring the issuance, sale or transfer by
any of the Harvest Parties (other than Harvest) of any securities of
the Harvest Parties (other than Harvest) or any securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, any securities of any of the Harvest
Parties (other than Harvest). All outstanding securities of the
Harvest Parties (other than Harvest) have been duly authorized and
validly issued, are fully paid and non-assessable and are not subject
to, nor were they issued in violation of, any pre-emptive rights.
(j) NO ORDERS. No order, ruling or determination having the effect of
suspending the sale of, or ceasing the trading of, the Harvest Units,
the Harvest Debentures or any other securities of Harvest has been
issued by any regulatory authority and is continuing in effect and no
proceedings for that purpose have been instituted, are pending or, to
the knowledge of Harvest and HOC, are contemplated or threatened
under any Applicable Laws or by any other regulatory authority.
(k) MATERIAL AGREEMENTS. There are no agreements material to the conduct
of the Harvest Parties' affairs or businesses, as applicable, and
HOC, except for those agreements disclosed in the Public Record,
disclosed in writing to Viking prior to November 28, 2005 or those
entered into in the ordinary course of business, and all such
material agreements are valid and subsisting and the Harvest Party
that is a party thereto is not in material default under any such
agreements.
(l) FILINGS. Harvest has filed all documents required to be filed by it
with all applicable Governmental Entities and all such documents
were, as of their respective dates, in compliance in all material
respects with all Applicable Laws and at the time filed did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. HOC will deliver to VHI, as soon as they
become available, true and complete copies of any material reports or
statements required to be filed by Harvest with any Governmental
Entity subsequent to the date hereof. As of their respective dates,
such reports and statements (excluding any information therein
provided by the Viking Parties, as to which Harvest and HOC make no
representation) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading and will comply
in all material respects with all Applicable Laws.
(m) NO MATERIAL ADVERSE CHANGE. Since January 1, 2005, other than as
disclosed in the Public Record, (i) the Harvest Parties have
conducted their respective businesses only in the ordinary and normal
course, (ii) no liability or obligation of any nature (whether
absolute, accrued, contingent or otherwise) material to Harvest,
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taken as a whole, has been incurred other than in the ordinary course
of business, and (iii) there has not been any Material Adverse Change
in respect of the Harvest Parties taken as a whole.
(n) BOOKS AND RECORDS. The records and minute books of the Harvest
Parties have been maintained substantially in accordance with all
Applicable Laws and are complete and accurate in all material
respects.
(o) REPORTS. As of their respective dates, (i) the Harvest Financial
Statements, (ii) Harvest's Renewal Annual Information Form dated
March 30, 2005 (including all documents incorporated by reference
therein), (iii) Harvest's information circular and proxy statement
dated March 16, 2005, (iv) all Harvest press releases, material
change reports, business acquisition reports or similar documents
filed with the Securities Authorities since January 1, 2005, and (v)
all prospectuses or other offering documents used by Harvest in the
offering of its securities or filed with the Securities Authorities
since January 1, 2005, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading and complied in
all material respects with all Applicable Laws. The Harvest Financial
Statements and other financial statements of Harvest included or
incorporated by reference in such forms, statements, prospectuses and
other offering documents were prepared in accordance with GAAP
(except (x) as otherwise indicated in such financial statements and
the notes thereto or, in the case of audited statements, in the
related report of Harvest's independent auditors or (y) in the case
of unaudited interim statements, to the extent they may not include
footnotes, are subject to normal year end adjustments or may be
condensed or summary statements), and present fairly in accordance
with GAAP the consolidated financial position, results of operations
and changes in financial position of Harvest on a consolidated basis
as of the dates thereof and for the periods indicated therein
(subject, in the case of any unaudited interim financial statements,
to normal year-end audit adjustments) and reflect appropriate and
adequate reserves in respect of contingent liabilities, if any, of
Harvest on a consolidated basis. There has been no material change in
Harvest accounting policies, except as described in the notes to the
Harvest Financial Statements, since January 1, 2005.
(p) ABSENCE OF UNDISCLOSED LIABILITIES. The Harvest Parties have no
material liabilities of any nature (matured or unmatured, fixed or
contingent), other than:
(i) those set forth or adequately provided for in the balance
sheets and associated notes thereto included in the Harvest
Financial Statements (the "HARVEST BALANCE SHEETS");
(ii) those incurred in the ordinary course of business and not
required to be set forth in the Harvest Balance Sheets under
GAAP;
(iii) those incurred in the ordinary course of business since the
dates of the Harvest Balance Sheets and consistent with past
practice; and
(iv) those incurred in connection with the execution of this
Agreement.
(q) ENVIRONMENTAL. Except as disclosed in writing to Viking prior to
November 28, 2005 or than has been disclosed in the Public Record,
there has not occurred any material spills, emissions or pollution on
any property of any Harvest Party, nor has any Harvest Party been
subject to any stop orders, control orders, clean-up orders or
reclamation orders under applicable Environmental Laws, any of which
might reasonably be expected to have a Material Adverse Effect on
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Harvest. All operations of the Harvest Parties have been and are now
being conducted in compliance with all applicable Environmental Laws,
except where the failure to be in compliance would not have a
Material Adverse Effect on the Harvest Parties, taken as a whole. The
Harvest Parties are not subject to nor are Harvest or HOC aware of:
(i) any proceeding, application, order or directive which relates
to environmental, health or safety matters, and which may
require any material work, repairs, construction, or
expenditures; or
(ii) any demand or notice with respect to the breach of any
Environmental Laws applicable to the Harvest Parties,
including, without limitation, any regulations respecting the
use, storage, treatment, transportation, or disposition of
any Hazardous Substances,
which would have a Material Adverse Effect on the Harvest Parties.
(r) TITLE. Although they do not warrant title, except as disclosed in
writing to Viking prior to November 28, 2005, neither Harvest nor HOC
has any knowledge or is aware of any defects, failures or impairments
in the title of the Harvest Parties to their respective assets,
whether or not an action, suit, proceeding or inquiry is pending or
threatened or whether or not discovered by any third party, which in
aggregate could have a Material Adverse Effect on: (i) the quantity
and pre-tax present worth values of such assets; (ii) the current
production volumes of the Harvest Parties; or (iii) the current
consolidated cash flow of the Harvest Parties.
(s) LICENCES. Except as disclosed in the Public Record, each of the
Harvest Parties has obtained and is in compliance with all licences,
permits, certificates, consents, orders, grants and other
authorizations of or from any Governmental Entity necessary to
conduct its businesses as they are now being or are proposed to be
conducted, other than such licences, permits, certificates, consents,
orders, grants and other authorizations the absence of which would
not have a Material Adverse Effect on the Harvest Parties.
(t) COMPLIANCE WITH LAWS. Each of the Harvest Parties has complied with
and is in compliance with all Laws applicable to the operation of its
business, except where such non-compliance would not have a Material
Adverse Effect on the business, affairs, operations, assets,
prospects or financial condition of the Harvest Parties or on the
ability of the Harvest Parties to consummate the Arrangement.
(u) LONG TERM AND DERIVATIVE TRANSACTIONS. Except as disclosed in the
Public Record or as disclosed to Viking, none of the Harvest Parties
has any obligations or liabilities, direct or indirect, vested or
contingent in respect of any rate swap transactions, basis swaps,
forward rate transactions, commodity swaps, commodity options, equity
or equity index swaps, equity or equity index options, bond options,
interest rate options, foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency
options, production sales transactions having terms greater than 90
days or any other similar transactions (including any option with
respect to any of such transactions) or any combination of such
transactions.
(v) FAIRNESS OPINION. The Harvest Board of Directors has received a
written opinion as of December 21, 2005 from National Bank Financial
Inc. that the consideration to be provided by Harvest to the Viking
Unitholders in connection with the Arrangement is fair, from a
financial point of view, to the Harvest Unitholders.
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(w) INVESTMENT CANADA ACT. Harvest is a "Canadian" within the meaning of
the INVESTMENT CANADA ACT (Canada).
(x) EMPLOYEE BENEFIT PLANS. Harvest has made available to Viking true,
complete and correct copies of each employee benefits plan (the
"HARVEST PLANS") covering active, former or retired employees of the
Harvest Parties, any related trust agreement, annuity or insurance
contract or other funding vehicle, and: (i) each Harvest Plan has
been maintained and administered in material compliance with its
terms and is, to the extent required by Applicable Law or contract,
fully funded without having any deficit or unfunded actuarial
liability or adequate provision has been made therefor; (ii) all
required employer contributions under any such plans have been made
and the applicable funds have been funded in accordance with the
terms thereof; (iii) each Harvest Plan that is required or intended
to be qualified under applicable law or registered or approved by a
governmental agency or authority has been so qualified, registered or
approved by the appropriate governmental agency or authority, and
nothing has occurred since the date of the last qualification,
registration or approval to adversely affect, or cause, the
appropriate governmental agency or authority to revoke such
qualification, registration or approval; (iv) to the knowledge of
Harvest and HOC, there are no pending or anticipated material claims
against or otherwise involving any of the Harvest Plans and no suit,
action or other litigation (excluding claims for benefits incurred in
the ordinary course of Harvest Plan activities) has been brought
against or with respect to any Harvest Plan; (v) all material
contributions, reserves or premium payments required to be made to
the Harvest Plans have been made or provided for; and (vi) no Harvest
Party has any material obligations for retiree health and life
benefits under any Harvest Plan.
(y) INSURANCE. Policies of insurance are in force as of the date hereof
naming a Harvest Party as an insured that adequately cover all risks
as are customarily covered by oil and gas producers in the industry
in which the Harvest Parties operate. All such policies shall remain
in force and effect and shall not be cancelled or otherwise
terminated as a result of the transactions contemplated by this
Agreement.
(z) INDEBTEDNESS TO AND BY OFFICERS, DIRECTORS AND OTHERS. None of the
Harvest Parties is indebted to any of the directors, officers,
employees or consultants or any of their respective associates or
affiliates or other parties not at arm's length to any Harvest Party,
except for amounts due as normal compensation or reimbursement of
ordinary business expenses, nor is there any indebtedness owing by
any such parties to any of the Harvest Parties.
(aa) NO LIMITATION. There is no non-competition, exclusivity or other
similar agreement, commitment or understanding in place to which any
Harvest Party is a party or by which it is otherwise bound that would
now or hereafter in any way limit the business or operations of any
Harvest Party in a particular manner or to a particular locality or
geographic region or for a limited period of time and the execution,
delivery and performance of this Agreement does not and will not
result in the restriction of any Harvest Party from engaging in this
business or from competing with any Person or in any geographic area.
(bb) GUARANTEES AND INDEMNIFICATION. Other than as disclosed in writing to
Viking, no Harvest Party is a party to or bound by any agreement of
guarantee, indemnification (other than an indemnification of
directors and officers in accordance with the by-laws of the
respective corporation or applicable Laws and other than standard
indemnity agreements in underwriting and agency agreements and in the
ordinary course provided to service providers) or any like commitment
in respect of the obligations, liabilities (contingent or otherwise)
of indebtedness of any other Person, other than guarantees of
obligations of any other Harvest Party.
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(cc) INFORMATION TO INDEPENDENT ENGINEER. Harvest and HOC have no reason
to believe that (i) the report prepared by XxXxxxxx, GLJ and PLA
(collectively, the "INDEPENDENT RESERVES EVALUATORS") dated January
1, 2005 and effective as at December 31, 2004, evaluating the crude
oil, natural gas liquids and natural gas reserves of the Operating
Subsidiaries as of December 31, 2004 (the "HARVEST Report"); (ii) the
report prepared by Xxxxxxx Associates Limited dated March 31, 2005
and effective as at March 31, 2005, evaluating the certain crude oil,
natural gas liquids and natural gas reserves attributable to certain
properties of Nexen Inc. acquired by Harvest (the "XXXXXXX REPORT");
and (iii) if applicable, any updates to such reports or any other
reserve evaluation reports which may be, or be deemed to be, included
or incorporated by reference in the Harvest Information Circular,
whether in addition to or as a replacement for the reports referred
to in clauses (i) through (iii); was not accurate in all material
respects as at the effective date of such report, and, except for any
impact of changes in commodity prices, which may or may not be
material, Harvest and HOC have no knowledge of a Material Adverse
Change in the production, costs, price, reserves, estimates of future
net production revenues or other relevant information from that
disclosed in that report. Harvest (or, to its knowledge, Nexen Inc.)
has provided to each of the Independent Reserves Evaluators and
Xxxxxxx all material information concerning land descriptions, well
data, facilities and infrastructure, ownership and operations, future
development plans and historical technical and operating data
respecting the principal oil and gas assets of the Harvest Parties,
in each case as at the effective dates of such reports, and, in
particular, all material information respecting the Harvest Parties'
interests in their principal oil and gas assets and royalty burdens
and net profits interest burdens thereon and such information was
accurate and correct in all material respects as at the respective
dates thereof and did not omit any information necessary to make any
such information provided not misleading as at the respective dates
thereof and there has been no Material Adverse Change in any of the
material information so provided since the date thereof.
(dd) NO INSIDER RIGHTS. No director, officer, insider or other party not
at arm's length to any Harvest Party has any right, title or interest
in (or the right to acquire any right, title or interest in) any
royalty interest, participation interest or any other interest
whatsoever, in any properties of any Harvest Party.
(ee) DISCLOSURE. The data and information in respect of the Harvest
Parties and their respective assets, reserves, liabilities,
businesses, affairs and operations provided by or on behalf of
Harvest to or on behalf of Viking was and is accurate and correct in
all material respects as at the respective dates thereof and does not
omit any material data or information necessary to make any data or
information provided not misleading as at the respective dates
thereof.
(ff) DEBT. As at October 31, 2005, Harvest's consolidated indebtedness did
not exceed $375 million exclusive of the Harvest Debentures and
hedging obligations.
(gg) PRODUCTION. For the month of November 2005, the Harvest Parties'
production was not less than 39,000 boe/d.
(hh) NO DEFAULTS UNDER LEASES AND AGREEMENTS. Except as disclosed in
writing to Viking:
(i) no Harvest Party has received notice of any default under any of
the leases and other title and operating documents or any other
agreement or instrument pertaining to the Harvest Parties' oil and
gas assets to which a Harvest Party is a party or by or to which a
Harvest Party or any such assets are bound or subject except to the
extent that such defaults would not in the aggregate have a Material
Adverse Effect; and
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(ii) to their knowledge:
(A) each of the Harvest Parties is in good standing under
all, and is not in default under any; and
(B) there is no existing condition, circumstance or matter
which constitutes or which, with the passage of time or
the giving of notice, would constitute a default under
any,
leases and other title and operating documents or any other
agreements and instruments pertaining to its oil and gas
assets to which it is a party or by or to which it or such
assets are bound or subject and, to their knowledge, all such
leases, title and operating documents and other agreements
and instruments are in good standing and in full force and
effect and none of the counterparties to such leases, title
and operating documents and other agreements and instruments
is in default thereunder except to the extent that such
defaults would not in the aggregate have a Material Adverse
Effect.
(ii) NO ENCUMBRANCES. None of the Harvest Parties has encumbered or
alienated its interest in the Harvest Parties' oil and gas assets or
agreed to do so and such assets are free and clear of all
encumbrances except for or pursuant to encumbrances securing the
Harvest Credit Facilities and derivative transactions with the
lenders (and other affiliates) thereunder or encumbrances disclosed
in the Public Record, any governmental registry (including the
personal property registry in British Columbia, Alberta or
Saskatchewan) or those arising in the ordinary course of business,
which are not material in the aggregate or have been disclosed in
writing to Viking.
(jj) NO REDUCTION OF INTERESTS. Except as disclosed in writing to Viking
prior to November 28, 2005, none of the Harvest Parties' oil and gas
assets are subject to reduction by reference to payout of or
production penalty on any well or otherwise or to change to an
interest of any other size or nature by virtue of or through any
right or interest granted by, through or under a Harvest Party except
to the extent that such reduction or change to an interest would not
in the aggregate have a Material Adverse Effect.
(kk) ROYALTIES, RENTALS AND TAXES PAID. All royalties and rentals payable
on or before the date hereof under the leases and other title and
operating documents pertaining to the Harvest Parties' oil and gas
assets and all ad valorem, property, production, severance and
similar taxes and assessments based upon or measured by the ownership
of such assets or the production of petroleum substances derived
therefrom or allocated thereto or the proceeds of sales thereof
payable on or before the date hereof have been properly paid in full
and in a timely manner except to the extent that such non-payment
would not in the aggregate have a Material Adverse Effect.
(ll) PRODUCTION ALLOWABLES AND PRODUCTION PENALTIES.
(i) None of the xxxxx in which any of the Harvest Parties holds
an interest has been produced in excess of applicable
production allowables imposed by any applicable law or any
governmental authority and none of the Harvest Parties has
any knowledge of any impending change in production
allowables imposed by any applicable law or any governmental
authority that may be applicable to any of the xxxxx in which
any of them holds an interest, other than changes of general
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application in the jurisdiction in which such xxxxx are
situate except to the extent that such non-compliance or
changes would not in the aggregate have a Material Adverse
Effect.
(ii) None of the Harvest Parties has received notice of any
production penalty or similar production restriction of any
nature imposed or to be imposed by any governmental
authority, including gas-oil ratio, off-target and
overproduction penalties imposed by the Alberta Energy and
Utilities Board, and, to their knowledge, none of the xxxxx
in which any of them holds an interest is subject to any such
penalty or restriction except to the extent that any such
penalty or restriction would not in the aggregate have a
Material Adverse Effect.
(mm) OPERATION AND CONDITION OF XXXXX. All xxxxx in which any of the
Harvest Parties holds an interest:
(i) for which any of the Harvest Parties was or is operator, were
or have been drilled and, if and as applicable, completed,
operated and abandoned in accordance with good and prudent
oil and gas industry practices in Canada and all applicable
Law; and
(ii) for which none of the Harvest Parties was or is operator, to
their knowledge, were or have been drilled and, if and as
applicable, completed, operated and abandoned in accordance
with good and prudent oil and gas industry practices in
Canada and all applicable Law;
except, in either case, to the extent that such non-compliance with
prudent oil and gas industry practices or applicable Law would not in
the aggregate have a Material Adverse Effect;
(nn) OPERATION AND CONDITION OF TANGIBLES. The Harvest Parties' tangible
depreciable property used or intended for use in connection with
their oil and gas assets:
(i) for which any of the Harvest Parties was or is operator, was
or has been constructed, operated and maintained in
accordance with good and prudent oil and gas industry
practices in Canada and all applicable Law during all periods
in which a Harvest Party was operator thereof and is in good
condition and repair, ordinary wear and tear excepted, and is
useable in the ordinary course of business; and
(ii) for which none of the Harvest Parties was or is operator, to
their knowledge, was or has been constructed, operated and
maintained in accordance with good and prudent oil and gas
industry practices in Canada and all applicable Law during
all periods in which none of the Harvest Parties was operator
thereof and is in good condition and repair, ordinary wear
and tear excepted, and is useable in the ordinary course of
business;
except to the extent that such non-compliance with prudent oil and
gas industry practices or applicable Law would not in the aggregate
have a Material Adverse Effect.
(oo) OUTSTANDING AFES. There are no outstanding authorizations for
expenditure pertaining to any of the Harvest Parties' oil and gas
assets or any other commitments, approvals or authorizations pursuant
to which an expenditure may be required to be made in respect of such
assets after the date of the most recent Harvest Financial Statements
in excess of $5 million for each such commitment, approval or
authorization other than pursuant to the 2005 and 2006 capital
budgets disclosed in writing to Viking.
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(pp) BROKERS AND FINDERS. The Harvest Parties have not retained nor will
they retain any financial advisor, broker, agent or finder or pay, or
agree to pay any financial advisor, broker, agent or finder on
account of this Agreement, any transaction contemplated hereby or any
transaction presently ongoing or contemplated (except as disclosed to
Viking), except for those advisors which have been retained by
Harvest as financial, mergers and acquisitions, and strategic
advisors as set forth in the Harvest Disclosure Letter, in connection
with certain matters including the transactions contemplated hereby.
The total obligation of the Harvest Parties to such advisors is set
forth in the Harvest Disclosure Letter, a copy of which has been
provided to Viking. After the payment of such financial obligations
to Harvest's advisors, the Harvest Parties will not have any
continuing obligations to such advisors other than those related to
indemnification, confidentiality and the payment of expenses.
(qq) EMPLOYMENT AND OFFICER OBLIGATIONS. Other than the Harvest Employment
Agreements, HOC's existing employee health and benefit plans,
employee savings plans, pension obligations and as disclosed in
writing to Viking, in connection with the Arrangement there are no
other employment or consulting services agreements, termination,
severance and retention plans or policies of the Harvest Parties. The
obligations of Harvest Parties under the Harvest Employment
Agreements and all such employment or consulting services agreements,
termination, severance plans or policies for severance, termination
or bonus payments or any other payments related to any Harvest
incentive plan, arising out of or in connection with the Arrangement,
shall not exceed the amounts set forth in the Harvest Disclosure
Letter.
(rr) CONFIDENTIALITY AGREEMENTS. All agreements entered into by Harvest
with persons other than Viking regarding the confidentiality of
information provided to such persons or reviewed by such persons with
respect to the sale of Harvest or a substantial portion of its assets
or any other business combination or similar transaction with another
party are in substantially the form of the Confidentiality Agreement
and Harvest has not waived the standstill or other provisions of any
of such agreements.
(ss) OUTSTANDING ACQUISITIONS. The Harvest Parties have no rights to
purchase assets, properties or undertakings of third parties under
any agreements to purchase that have not closed.
(tt) MUTUAL FUND TRUST. Harvest is a "mutual fund trust" and a "unit
trust" within the meaning of the ITA.
(uu) PLACE OF PRINCIPAL OFFICES. The principal offices of the Harvest
Parties are not located within the United States.
(vv) LOCATION OF ASSETS AND U.S. SALES. The assets and property of the
Harvest Parties are located outside the United States and did not
generate sales in or into the United States exceeding U.S.$50 million
during Harvest's most recent completed fiscal year.
(ww) FOREIGN PRIVATE ISSUER. Harvest is a "foreign private issuer" within
the meaning of Rule 405 of Regulation C adopted by the SEC under the
U.S. Securities Act.
(xx) INVESTMENT COMPANY. To its knowledge and awareness, and without
investigation, Harvest is not an "investment company" within the
meaning of the UNITED STATES INVESTMENT COMPANY ACT OF 1940, as
amended.
(yy) INVESTMENT CANADA ACT. Harvest is not a "non-Canadian" within the
meaning of the INVESTMENT CANADA ACT (Canada).
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(zz) BOARD APPROVAL. The Harvest Board of Directors has unanimously
endorsed the Arrangement and approved this Agreement, has unanimously
determined that the Arrangement and this Agreement are in the best
interests of Harvest and the Harvest Unitholders, and has, based on
the opinion of its financial advisor, unanimously determined that the
Arrangement is fair, from a financial point of view, to Harvest
Unitholders and has resolved to unanimously recommend approval of the
Arrangement by Harvest Unitholders.
(aaa) HARVEST DISCLOSURE LETTER. The matters disclosed to Viking in the
Harvest Disclosure Letter remain true and correct as of the date
hereof.
(bbb) DISCLOSURE. To the knowledge of Harvest, Harvest has not withheld
from Viking any material information or documents concerning Harvest
or any of its Subsidiaries or their respective assets or liabilities
during the course of Viking's review of Harvest and its assets. No
representation or warranty contained herein and no statement
contained in any schedule or other disclosure document provided or to
be provided to Viking by Harvest pursuant hereto (including without
limitation, any matter disclosed by Harvest in the Harvest Disclosure
Letter) contains or will contain any untrue statement of a material
fact or omits to state a material fact which is necessary in order to
make the statements herein or therein not misleading.
5.2 REPRESENTATIONS AND WARRANTIES OF VIKING
Each of Viking and VHI hereby jointly and severally make the
representations and warranties set forth in this Section 5.2 to and in favour
of Harvest and HOC and acknowledge that each of Harvest and HOC is relying upon
such representations and warranties in connection with the matters contemplated
by this Agreement.
(a) ORGANIZATION AND QUALIFICATION. Each of Viking, VHT and XXXX is a
trust duly created and validly existing under the Laws of the
Province of Alberta and has the requisite trust power and authority
to own its assets and to conduct its affairs as now conducted. OLAF
is a partnership duly created and validly existing under the Laws of
the Province of Alberta and its general partner has the requisite
partnership power and authority to own the assets and to carry on its
business on behalf of OLAF as now conducted by OLAF. Each of VHI and
BJORN is a corporation duly incorporated or amalgamated and validly
existing under the Laws of its jurisdiction of incorporation and has
the requisite corporate power and authority to own its assets as now
owned and to carry on its business as now conducted. Each of the
Viking Parties is duly registered to conduct its affairs or do
business, as applicable, in each jurisdiction in which the character
of its assets, owned or leased, or the nature of its activities makes
such registration necessary, except where the failure to be so
registered would not have a Material Adverse Effect on the Viking
Parties. Copies of the constating documents of the Viking Parties
(including the Viking Material Agreements) provided to HOC, together
with all amendments to date, are accurate and complete as of the date
hereof and have not been amended or superseded.
(b) AUTHORITY RELATIVE THIS AGREEMENT. VHI has the requisite corporate
power and authority to execute this Agreement, in its own capacity
and in its capacity as administrator of Viking, as applicable, and
each of Viking and VHI has the requisite trust or corporate power and
authority, as applicable, to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation by
Viking and VHI of the Arrangement have been duly authorized by the
Viking Board of Directors and, subject to the requisite approval of
the Viking Unitholders, no other proceedings on the part of Viking or
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VHI are necessary to authorize this Agreement or the Arrangement.
This Agreement has been duly executed and delivered by each of Viking
and VHI and constitutes a legal, valid and binding obligation of each
of Viking and VHI enforceable against them in accordance with its
terms, subject to the qualification that such enforceability may be
limited by bankruptcy, insolvency, reorganization or other Laws of
general application relating to or affecting rights of creditors and
that equitable remedies, including specific performance, are
discretionary and may not be ordered.
(c) SUBSIDIARIES. Viking has no Subsidiaries (other than the Material
Subsidiaries) that are material to its business, operation or
financial condition.
(d) NO VIOLATIONS. Except as disclosed to Harvest in writing prior to
November 28, 2005, or as contemplated by this Agreement:
(i) neither the execution and delivery of this Agreement by
Viking and VHI nor the consummation of the Arrangement nor
compliance by the Viking Parties with any of the provisions
hereof will: (A) violate, conflict with, or result in a
breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a
default) or result in a right of termination or acceleration
under, or result in the creation of any encumbrance upon any
of the properties or assets of the Viking Parties or cause
any indebtedness to come due before its stated maturity or
cause any credit to cease to be available, under any of the
terms, conditions or provisions of (1) the Viking Material
Agreements or the articles, by-laws, shareholder agreements
or other constating document of any Viking Party, or (2) any
material note, bond, mortgage, indenture, loan agreement,
deed of trust, agreement, lien, contract or other instrument
or obligation to which a Viking Party is a party or to which
any of them, or any of their respective properties or assets,
may be subject or by which a Viking Party is bound; or (B)
subject to compliance with applicable statutes and
regulations, violate any judgment, ruling, order, writ,
injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to the Viking Parties or any of
their respective properties or assets (except, in the case of
each of clauses (A) and (B) above, for such violations,
conflicts, breaches, defaults, terminations, accelerations or
creations of encumbrances which, or any consents, approvals
or notices which if not given or received, would not have any
Material Adverse Effect on the Viking Parties taken as a
whole, or significantly impede the ability of the Viking
Parties to consummate the Arrangement); or (C) cause the
suspension or revocation of any authorization, consent,
approval or license currently in effect which would have a
Material Adverse Effect on the Viking Parties; and
(ii) other than in connection with or in compliance with the
provisions of applicable Laws or which are required to be
filed post Arrangement, and except for the requisite approval
of Viking Unitholders, (A) there is no legal impediment to
the Viking Parties' consummation of the Arrangement, and (B)
no filing or registration with, or authorization, consent or
approval of, any domestic or foreign public body or authority
is required of the Viking Parties in connection with the
consummation of the Arrangement, except for such filings or
registrations which, if not made, or for such authorizations,
consents or approvals which, if not received, would not have
a Material Adverse Effect on the Viking Parties, or
significantly impede the ability of the Viking Parties to
consummate the Arrangement.
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(e) LITIGATION. There are no actions, suits or proceedings in existence
or pending or, to the knowledge of VHI, threatened or for which there
is a reasonable basis, affecting or that would affect the Viking
Parties or affecting or that would affect any of their respective
property or assets at law or equity or before or by any court or
Governmental Entity which action, suit or proceeding involves a
possibility of any judgment against or liability of the Viking
Parties which, if successful, would have a Material Adverse Effect on
the Viking Parties, or would significantly impede the ability of the
Viking Parties to consummate the Arrangement.
(f) TAXES, ETC. Except as disclosed in writing to Harvest prior to
November 28, 2005:
(i) All Tax Returns required to be filed by or on behalf of any
Viking Parties have been duly filed on a timely basis and
such tax returns are correct in all material respects. All
Taxes shown to be payable on the Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a
timely basis, and no other Taxes are payable by any Viking
Parties with respect to items or periods covered by such Tax
Returns;
(ii) Viking has paid or provided adequate accruals in its
consolidated financial statements for the period from
inception to December 31, 2004 for Taxes, including income
taxes and related future taxes, if applicable, for such
periods, in conformity with GAAP;
(iii) for all periods ended on and after December 31, 2004, Harvest
has been furnished by Viking true and complete copies of: (A)
material portions of income tax audit reports, statement of
deficiencies, closing or other agreements or correspondence
concerning assessments or audits pursuant to which a taxing
authority has proposed amendments to previously filed returns
received by any Viking Party or on behalf of any Viking Party
relating to the Taxes; and (B) any material federal,
provincial, state, local or foreign income or franchise tax
returns for each Viking Party;
(iv) no material deficiencies exist or have been asserted with
respect to Taxes of Viking or any of its Subsidiaries;
(v) none of Viking or its Material Subsidiaries is a party to any
action or proceeding for assessment or collection of Taxes,
nor, to the knowledge of Viking and VHI, has such an event
been asserted or threatened against Viking or its Material
Subsidiaries or any of their respective assets that would
have a Material Adverse Effect on the Viking Parties. No
waiver or extension of any statute of limitations is in
effect with respect to Taxes or Tax Returns of Viking or its
Material Subsidiaries. No audit by tax authorities of Viking
or its Material Subsidiaries is in process or pending, to the
knowledge of Viking; and
(vi) Viking has provided adequate accruals in its consolidated
financial statements in accordance with GAAP for the period
ended December 31, 2004 (or such amounts are fully funded)
for all pension or other employee benefit obligations of
Viking and its Subsidiaries arising under or relating to each
of the pension or retirement income plans or other employee
benefit plans or agreements or policies maintained by or
binding on Viking or its Material Subsidiaries.
(g) REPORTING ISSUER STATUS. Viking is a reporting issuer (where such
concept exists) in all provinces of Canada and is in material
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compliance with all Applicable Canadian Securities Laws therein and
the Viking Units, the Viking 6.40% Debentures and the Viking 10.5%
Debentures are listed and posted for trading on the TSX.
(h) CAPITALIZATION. As of the date hereof, the authorized capital of
Viking consists of an unlimited number of Viking Units and an
unlimited number of Special Voting Rights (as defined in the Viking
Trust Indenture). As of December 15, 2005, there were issued and
outstanding 180,733,714 Viking Units and nil Special Voting Rights.
Other than (i) the Viking Rights and up to 940,700 Viking Units
issuable pursuant to the Viking Rights under Viking's Trust Unit
Option Plan, (ii) the Viking Awards and 1,158,200 Viking Units
reserved for issuance pursuant to the Viking Awards outstanding under
Viking's Unit Award Incentive Plan, (iii) Viking Units which may be
issued pursuant to the Viking DRIP, and (iv) the Viking Debentures
and the Viking Units which may be issued upon the conversion,
redemption or maturity of, or interest payments on, the Viking
Debentures (the securities listed in subsection 5.2(h)(i) through
(iv) are collectively, the "VIKING SECURITIES INSTRUMENTS"), there
are no options, warrants or other rights, agreements or commitments
of any character whatsoever requiring the issuance, sale or transfer
by Viking of any securities of Viking (including Viking Units) or any
securities convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any securities of Viking
(including Viking Units). All outstanding Viking Units have been duly
authorized and validly issued, are fully paid and non-assessable and
are not subject to, nor were they issued in violation of, any
pre-emptive rights and all Viking Units issuable pursuant to the
Viking Securities Instruments in accordance with their respective
terms will be duly authorized and validly issued as fully paid and
non-assessable and will not be subject to any pre-emptive rights.
(i) OWNERSHIP OF SUBSIDIARIES. As of the date hereof, Viking is the
beneficial direct or indirect owner of all of the outstanding shares,
limited partnership units and trust units, as applicable, of the
Viking Parties (other than Viking) with good title thereto free and
clear of any and all encumbrances, except for security interests in
such securities for the benefit of the lenders under Viking's credit
facilities. There are no options, warrants or other rights,
shareholder or unitholder rights plans, agreements or commitments of
any character whatsoever requiring the issuance, sale or transfer by
any of the Viking Parties (other than Viking) of any securities of
the Viking Parties (other than Viking) or any securities convertible
into, or exchangeable or exercisable for, or otherwise evidencing a
right to acquire, any securities of any of the Viking Parties (other
than Viking). All outstanding securities of the Viking Parties (other
than Viking) have been duly authorized and validly issued, are fully
paid and non-assessable and are not subject to, nor were they issued
in violation of, any pre-emptive rights.
(j) NO ORDERS. No order, ruling or determination having the effect of
suspending the sale of, or ceasing the trading of, the Viking Units,
the Viking Debentures or any other securities of Viking has been
issued by any regulatory authority and is continuing in effect and no
proceedings for that purpose have been instituted, are pending or, to
the knowledge of Viking and VHI, are contemplated or threatened under
any Applicable Laws or by any other regulatory authority.
(k) MATERIAL AGREEMENTS. There are no agreements material to the conduct
of the Viking Parties' affairs or businesses, as applicable, and VHI,
except for those agreements disclosed in the Public Record, disclosed
in writing to Harvest prior to November 28, 2005 or those entered
into in the ordinary course of business, and all such material
agreements are valid and subsisting and the Viking Party that is a
party thereto is not in material default under any such agreements.
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(l) FILINGS. Viking has filed all documents required to be filed by it
with all applicable Governmental Entities and all such documents
were, as of their respective dates, in compliance in all material
respects with all Applicable Laws and at the time filed did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. VHI will deliver to HOC, as soon as they
become available, true and complete copies of any material reports or
statements required to be filed by Viking with any Governmental
Entity subsequent to the date hereof. As of their respective dates,
such reports and statements (excluding any information therein
provided by the Harvest Parties, as to which Viking and VHI make no
representation) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading and will comply
in all material respects with all Applicable Laws.
(m) NO MATERIAL ADVERSE CHANGE. Since January 1, 2005, other than as
disclosed in the Public Record, (i) the Viking Parties have conducted
their respective businesses only in the ordinary and normal course,
(ii) no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) material to Viking, taken as a
whole, has been incurred other than in the ordinary course of
business, and (iii) there has not been any Material Adverse Change in
respect of the Viking Parties taken as a whole.
(n) BOOKS AND RECORDS. The records and minute books of the Viking Parties
have been maintained substantially in accordance with all Applicable
Laws and are complete and accurate in all material respects.
(o) REPORTS. As of their respective dates, (i) the Viking Financial
Statements, (ii) Viking's Renewal Annual Information Form dated March
30, 2005 (including all documents incorporated by reference therein),
(iii) Viking's information circular and proxy statement dated March
15, 2005, (iv) all Viking press releases, material change reports,
business acquisition reports or similar documents filed with the
Securities Authorities since January 1, 2005, and (v) all
prospectuses or other offering documents used by Viking in the
offering of its securities or filed with the Securities Authorities
since January 1, 2005, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading and complied in
all material respects with all applicable Laws. The Viking Financial
Statements and other financial statements of Viking included or
incorporated by reference in such forms, statements, prospectuses and
other offering documents were prepared in accordance with GAAP
(except (x) as otherwise indicated in such financial statements and
the notes thereto or, in the case of audited statements, in the
related report of Viking's independent auditors or (y) in the case of
unaudited interim statements, to the extent they may not include
footnotes, are subject to normal year end adjustments or may be
condensed or summary statements), and present fairly in accordance
with GAAP the consolidated financial position, results of operations
and changes in financial position of Viking on a consolidated basis
as of the dates thereof and for the periods indicated therein
(subject, in the case of any unaudited interim financial statements,
to normal year-end audit adjustments) and reflect appropriate and
adequate reserves in respect of contingent liabilities, if any, of
Viking on a consolidated basis. There has been no material change in
Viking accounting policies, except as described in the notes to the
Viking Financial Statements, since January 1, 2005.
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(p) ABSENCE OF UNDISCLOSED LIABILITIES. The Viking Parties have no
material liabilities of any nature (matured or unmatured, fixed or
contingent), other than:
(i) those set forth or adequately provided for in the balance
sheets and associated notes thereto included in the Viking
Financial Statements (the "VIKING BALANCE SHEETS");
(ii) those incurred in the ordinary course of business and not
required to be set forth in the Viking Balance Sheets under
GAAP;
(iii) those incurred in the ordinary course of business since the
dates of the Viking Balance Sheets and consistent with past
practice; and
(iv) those incurred in connection with the execution of this
Agreement.
(q) ENVIRONMENTAL. Except as disclosed in writing to Harvest prior to
November 28, 2005 or than has been disclosed in the Public Record,
there has not occurred any material spills, emissions or pollution on
any property of any Viking Party, nor has any Viking Party been
subject to any stop orders, control orders, clean-up orders or
reclamation orders under applicable Environmental Laws, any of which
might reasonably be expected to have a Material Adverse Effect on
Viking. All operations of the Viking Parties have been and are now
being conducted in compliance with all applicable Environmental Laws,
except where the failure to be in compliance would not have a
Material Adverse Effect on the Viking Parties, taken as a whole. The
Viking Parties are not subject to nor are Viking or VHI aware of:
(i) any proceeding, application, order or directive which relates
to environmental, health or safety matters, and which may
require any material work, repairs, construction, or
expenditures; or
(ii) any demand or notice with respect to the breach of any
Environmental Laws applicable to the Viking Parties,
including, without limitation, any regulations respecting the
use, storage, treatment, transportation, or disposition of
any Hazardous Substances,
which would have a Material Adverse Effect on the Viking Parties.
(r) TITLE. Although they do not warrant title, except as disclosed in
writing to Harvest prior to November 28, 2005, neither Viking nor VHI
has any knowledge or is aware of any defects, failures or impairments
in the title of the Viking Parties to their respective assets,
whether or not an action, suit, proceeding or inquiry is pending or
threatened or whether or not discovered by any third party, which in
aggregate could have a Material Adverse Effect on: (i) the quantity
and pre-tax present worth values of such assets; (ii) the current
production volumes of the Viking Parties; or (iii) the current
consolidated cash flow of the Viking Parties.
(s) LICENCES. Except as disclosed in the Public Record, each of the
Viking Parties has obtained and is in compliance with all licences,
permits, certificates, consents, orders, grants and other
authorizations of or from any Governmental Entity necessary to
conduct its businesses as they are now being or are proposed to be
conducted, other than such licences, permits, certificates, consents,
orders, grants and other authorizations the absence of which would
not have a Material Adverse Effect on the Viking Parties.
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(t) COMPLIANCE WITH LAWS. Each of the Viking Parties has complied with
and is in compliance with all Laws applicable to the operation of its
business, except where such non-compliance would not have a Material
Adverse Effect on the business, affairs, operations, assets,
prospects or financial condition of the Viking Parties or on the
ability of the Viking Parties to consummate the Arrangement.
(u) LONG TERM AND DERIVATIVE TRANSACTIONS. Except as disclosed in the
Public Record or as disclosed to Harvest none of the Viking Parties
has any obligations or liabilities, direct or indirect, vested or
contingent in respect of any rate swap transactions, basis swaps,
forward rate transactions, commodity swaps, commodity options, equity
or equity index swaps, equity or equity index options, bond options,
interest rate options, foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency
options, production sales transactions having terms greater than 90
days or any other similar transactions (including any option with
respect to any of such transactions) or any combination of such
transactions.
(v) FAIRNESS OPINION. The Viking Board of Directors has received a
written opinion as of December 21, 2005 from CIBC World Markets Inc.
that the consideration to be received by Viking Unitholders in
connection with the Arrangement is fair, from a financial point of
view, to the Viking Unitholders.
(w) INVESTMENT CANADA ACT. Viking is a "Canadian" within the meaning of
the INVESTMENT CANADA ACT (Canada).
(x) EMPLOYEE BENEFIT PLANS. Viking has made available to Harvest true,
complete and correct copies of each employee benefits plan (the
"VIKING PLANS") covering active, former or retired employees of the
Viking Parties, any related trust agreement, annuity or insurance
contract or other funding vehicle, and: (i) each Viking Plan has been
maintained and administered in material compliance with its terms and
is, to the extent required by Applicable Law or contract, fully
funded without having any deficit or unfunded actuarial liability or
adequate provision has been made therefor; (ii) all required employer
contributions under any such plans have been made and the applicable
funds have been funded in accordance with the terms thereof; (iii)
each Viking Plan that is required or intended to be qualified under
applicable law or registered or approved by a governmental agency or
authority has been so qualified, registered or approved by the
appropriate governmental agency or authority, and nothing has
occurred since the date of the last qualification, registration or
approval to adversely affect, or cause, the appropriate governmental
agency or authority to revoke such qualification, registration or
approval; (iv) to the knowledge of Viking and VHI, there are no
pending or anticipated material claims against or otherwise involving
any of the Viking Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of
Viking Plan activities) has been brought against or with respect to
any Viking Plan; (v) all material contributions, reserves or premium
payments required to be made to the Viking Plans have been made or
provided for; and (vi) no Viking Party has any material obligations
for retiree health and life benefits under any Viking Plan.
(y) INSURANCE. Policies of insurance are in force as of the date hereof
naming a Viking Party as an insured that adequately cover all risks
as are customarily covered by oil and gas producers in the industry
in which the Viking Parties operate. All such policies shall remain
in force and effect and shall not be cancelled or otherwise
terminated as a result of the transactions contemplated by this
Agreement.
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(z) INDEBTEDNESS TO AND BY OFFICERS, DIRECTORS AND OTHERS. None of the
Viking Parties is indebted to any of the directors, officers,
employees or consultants or any of their respective associates or
affiliates or other parties not at arm's length to any Viking Party,
except for amounts due as normal compensation or reimbursement of
ordinary business expenses, nor is there any indebtedness owing by
any such parties to any of the Viking Parties.
(aa) NO LIMITATION. There is no non-competition, exclusivity or other
similar agreement, commitment or understanding in place to which any
Viking Party is a party or by which it is otherwise bound that would
now or hereafter in any way limit the business or operations of any
Viking Party in a particular manner or to a particular locality or
geographic region or for a limited period of time and the execution,
delivery and performance of this Agreement does not and will not
result in the restriction of any Viking Party from engaging in this
business or from competing with any Person or in any geographic area.
(bb) GUARANTEES AND INDEMNIFICATION. Other than as disclosed in writing to
Harvest, no Viking Party is a party to or bound by any agreement of
guarantee, indemnification (other than an indemnification of
directors and officers in accordance with the by-laws of the
respective corporation or applicable Laws and other than standard
indemnity agreements in underwriting and agency agreements and in the
ordinary course provided to service providers) or any like commitment
in respect of the obligations, liabilities (contingent or otherwise)
of indebtedness of any other Person, other than guarantees of
obligations of any other Viking Party.
(cc) INFORMATION TO INDEPENDENT ENGINEER. Viking and VHI have no reason to
believe that (i) the report prepared by GLJ dated February 10, 2005
and effective as at December 31, 2004, evaluating the crude oil,
natural gas liquids and natural gas reserves and future net
production revenues attributable to the properties of Viking as of
December 31, 2004 (the "VIKING REPORT"); (ii) the report prepared by
GLJ dated February 23, 2005 and effective as at December 31, 2004,
evaluating the crude oil, natural gas liquids and natural gas
reserves and future net production revenues attributable to the
properties of Calpine Natural Gas Trust (the "CNGT REPORT"); (iii)
the report prepared by GLJ dated February 24, 2005 and effective as
at December 31, 2004, evaluating the crude oil, natural gas liquids
and natural gas reserves and future net production revenues
attributable to the properties of Kensington Energy Inc. as of
December 31, 2004 (the "KENSINGTON REPORT"); (iv) the report prepared
by GLJ dated May 18, 2005 and effective as at April 30, 2005
evaluating the crude oil, natural gas liquids and natural gas
reserves and future net production revenues attributable to the
properties of Krang Energy Inc. (the "KRANG REPORT"); and (v) if
applicable, any updates to such reports or any other reserve
evaluation reports which may be, or be deemed to be, included or
incorporated by reference in the Viking Information Circular, whether
in addition to or as a replacement for the reports referred to in
clauses (i) through (iv); was not accurate in all material respects
as at the effective date of such report, and, except for any impact
of changes in commodity prices, which may or may not be material,
Viking and VHI have no knowledge of a Material Adverse Change in the
production, costs, price, reserves, estimates of future net
production revenues or other relevant information from that disclosed
in that report. Viking (or, to its knowledge, Calpine Natural Gas
Trust, Kensington Energy Ltd. or Krang Energy Inc., as applicable)
has provided to GLJ all material information concerning land
descriptions, well data, facilities and infrastructure, ownership and
operations, future development plans and historical technical and
operating data respecting the principal oil and gas assets of the
Viking Parties, in each case as at the effective dates of such
reports, and, in particular, all material information respecting the
Viking Parties' interests in their principal oil and gas assets and
royalty burdens and net profits interest burdens thereon and such
information was accurate and correct in all material respects as at
the respective dates thereof and did not omit any information
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necessary to make any such information provided not misleading as at
the respective dates thereof and there has been no Material Adverse
Change in any of the material information so provided since the date
thereof.
(dd) NO INSIDER RIGHTS. No director, officer, insider or other party not
at arm's length to any Viking Party has any right, title or interest
in (or the right to acquire any right, title or interest in) any
royalty interest, participation interest or any other interest
whatsoever, in any properties of any Viking Party.
(ee) DISCLOSURE. The data and information in respect of the Viking Parties
and their respective assets, reserves, liabilities, businesses,
affairs and operations provided by or on behalf of Viking to or on
behalf of Harvest was and is accurate and correct in all material
respects as at the respective dates thereof and does not omit any
material data or information necessary to make any data or
information provided not misleading as at the respective dates
thereof.
(ff) DEBT. As at October 31, 2005, Viking's consolidated indebtedness did
not exceed $350 million including the Viking Debentures but excluding
hedging obligations.
(gg) PRODUCTION. For the month of November 2005, the Viking Parties'
production was not less than 24,000 boe/d.
(hh) NO DEFAULTS UNDER LEASES AND AGREEMENTS. Except as disclosed in
writing to Harvest:
(i) no Viking Party has received notice of any default under any
of the leases and other title and operating documents or any
other agreement or instrument pertaining to the Viking
Parties' oil and gas assets to which a Viking Party is a
party or by or to which a Viking Party or any such assets are
bound or subject except to the extent that such defaults
would not in the aggregate have a Material Adverse Effect;
and
(ii) to their knowledge:
(A) each of the Viking Parties is in good standing under
all, and is not in default under any; and
(B) there is no existing condition, circumstance or matter
which constitutes or which, with the passage of time or
the giving of notice, would constitute a default under
any,
leases and other title and operating documents or any other
agreements and instruments pertaining to its oil and gas
assets to which it is a party or by or to which it or such
assets are bound or subject and, to their knowledge, all such
leases, title and operating documents and other agreements
and instruments are in good standing and in full force and
effect and none of the counterparties to such leases, title
and operating documents and other agreements and instruments
is in default thereunder except to the extent that such
defaults would not in the aggregate have a Material Adverse
Effect.
(ii) NO ENCUMBRANCES. None of the Viking Parties has encumbered or
alienated its interest in the Viking Parties' oil and gas assets or
agreed to do so and such assets are free and clear of all
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encumbrances except for or pursuant to encumbrances securing the
Viking Credit Facilities and derivative transactions with the lenders
(and other affiliates) thereunder or encumbrances disclosed in the
Public Record, any governmental registry (including the personal
property registry in Alberta or Saskatchewan) or those arising in the
ordinary course of business, which are not material in the aggregate
or have been disclosed in writing to Harvest.
(jj) NO REDUCTION OF INTERESTS. Except as disclosed in writing to Harvest
prior to November 28, 2005, none of the Viking Parties' oil and gas
assets are subject to reduction by reference to payout of or
production penalty on any well or otherwise or to change to an
interest of any other size or nature by virtue of or through any
right or interest granted by, through or under a Viking Party except
to the extent that such reduction or change to an interest would not
in the aggregate have a Material Adverse Effect.
(kk) ROYALTIES, RENTALS AND TAXES PAID. All royalties and rentals payable
on or before the date hereof under the leases and other title and
operating documents pertaining to the Viking Parties' oil and gas
assets and all ad valorem, property, production, severance and
similar taxes and assessments based upon or measured by the ownership
of such assets or the production of petroleum substances derived
therefrom or allocated thereto or the proceeds of sales thereof
payable on or before the date hereof have been properly paid in full
and in a timely manner except to the extent that such non-payment
would not in the aggregate have a Material Adverse Effect.
(ll) PRODUCTION ALLOWABLES AND PRODUCTION PENALTIES.
(i) None of the xxxxx in which any of the Viking Parties holds an
interest has been produced in excess of applicable production
allowables imposed by any applicable law or any governmental
authority and none of the Viking Parties has any knowledge of
any impending change in production allowables imposed by any
applicable law or any governmental authority that may be
applicable to any of the xxxxx in which any of them holds an
interest, other than changes of general application in the
jurisdiction in which such xxxxx are situate except to the
extent that such non-compliance or changes would not in the
aggregate have a Material Adverse Effect.
(ii) None of the Viking Parties has received notice of any
production penalty or similar production restriction of any
nature imposed or to be imposed by any governmental
authority, including gas-oil ratio, off-target and
overproduction penalties imposed by the Alberta Energy and
Utilities Board, and, to their knowledge, none of the xxxxx
in which any of them holds an interest is subject to any such
penalty or restriction except to the extent that any such
penalty or restriction would not in the aggregate have a
Material Adverse Effect.
(mm) OPERATION AND CONDITION OF XXXXX. All xxxxx in which any of the
Viking Parties holds an interest:
(i) for which any of the Viking Parties was or is operator, were
or have been drilled and, if and as applicable, completed,
operated and abandoned in accordance with good and prudent
oil and gas industry practices in Canada and all applicable
Law; and
(ii) for which none of the Viking Parties was or is operator, to
their knowledge, were or have been drilled and, if and as
applicable, completed, operated and abandoned in accordance
with good and prudent oil and gas industry practices in
Canada and all applicable Law;
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except, in either case, to the extent that such non-compliance with
prudent oil and gas industry practices or applicable Law would not in
the aggregate have a Material Adverse Effect;
(nn) OPERATION AND CONDITION OF TANGIBLES. The Viking Parties' tangible
depreciable property used or intended for use in connection with
their oil and gas assets:
(i) for which any of the Viking Parties was or is operator, was
or has been constructed, operated and maintained in
accordance with good and prudent oil and gas industry
practices in Canada and all applicable Law during all periods
in which a Viking Party was operator thereof and is in good
condition and repair, ordinary wear and tear excepted, and is
useable in the ordinary course of business; and
(ii) for which none of the Viking Parties was or is operator, to
their knowledge, was or has been constructed, operated and
maintained in accordance with good and prudent oil and gas
industry practices in Canada and all applicable Law during
all periods in which none of the Viking Parties was operator
thereof and is in good condition and repair, ordinary wear
and tear excepted, and is useable in the ordinary course of
business;
except to the extent that such non-compliance with prudent oil and
gas industry practices or applicable Law would not in the
aggregate have a Material Adverse Effect.
(oo) OUTSTANDING AFES. There are no outstanding authorizations for
expenditure pertaining to any of the Viking Parties' oil and gas
assets or any other commitments, approvals or authorizations pursuant
to which an expenditure may be required to be made in respect of such
assets after the date of the most recent Viking Financial Statements
in excess of $5 million for each such commitment, approval or
authorization other than pursuant to the 2005 and 2006 capital
budgets disclosed in writing to Harvest.
(pp) BROKERS AND FINDERS. The Viking Parties have not retained nor will
they retain any financial advisor, broker, agent or finder or pay, or
agree to pay any financial advisor, broker, agent or finder on
account of this Agreement, any transaction contemplated hereby or any
transaction presently ongoing or contemplated (except as disclosed to
Harvest), except for those advisors which have been retained by
Viking as financial, mergers and acquisitions, and strategic advisors
as set forth in the Viking Disclosure Letter, in connection with
certain matters including the transactions contemplated hereby. The
total obligation of the Viking Parties to such advisors is set forth
in the Viking Disclosure Letter, a copy of which has been provided to
Harvest. After the payment of such financial obligations to Viking's
advisors, the Viking Parties will not have any continuing obligations
to such advisors other than those related to indemnification,
confidentiality and the payment of expenses.
(qq) EMPLOYMENT AND OFFICER OBLIGATIONS. Other than the Viking Employment
Agreements, VHI's existing health plan, pension obligations and as
disclosed in writing to Harvest, in connection with the Arrangement
there are no other employment or consulting services agreements,
termination, severance and retention plans or policies of the Viking
Parties. The obligations of Viking Parties under the Viking
Employment Agreements and all such employment or consulting services
agreements, termination, severance plans or policies for severance,
termination or bonus payments or any other payments related to any
Viking incentive plan, arising out of or in connection with the
Arrangement, shall not exceed the amounts set forth in the Viking
Disclosure Letter.
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(rr) CONFIDENTIALITY AGREEMENTS. All agreements entered into by Viking
with persons other than Harvest regarding the confidentiality of
information provided to such persons or reviewed by such persons with
respect to the sale of Viking or a substantial portion of its assets
or any other business combination or similar transaction with another
party are in substantially the form of the Confidentiality Agreement
and Harvest has not waived the standstill or other provisions of any
of such agreements.
(ss) OUTSTANDING ACQUISITIONS. The Viking Parties have no rights to
purchase assets, properties or undertakings of third parties under
any agreements to purchase that have not closed.
(tt) MUTUAL FUND TRUST. Viking is a "mutual fund trust" and a "unit trust"
within the meaning of the ITA.
(uu) PLACE OF PRINCIPAL OFFICES. The principal offices of the Viking
Parties are not located within the United States.
(vv) LOCATION OF ASSETS AND U.S. SALES. The assets and property of the
Viking Parties are located outside the United States and did not
generate sales in or into the United States exceeding U.S.$50 million
during Viking's most recent completed fiscal year.
(ww) FOREIGN PRIVATE ISSUER. Viking is a "foreign private issuer" within
the meaning of Rule 405 of Regulation C adopted by the SEC under the
U.S. Securities Act.
(xx) INVESTMENT COMPANY. To its knowledge and awareness, and without
investigation, Viking is not an "investment company" within the
meaning of the UNITED STATES INVESTMENT COMPANY ACT OF 1940, as
amended.
(yy) INVESTMENT CANADA ACT. Viking is not a "non-Canadian" within the
meaning of the INVESTMENT CANADA ACT (Canada).
(zz) BOARD APPROVAL. The Viking Board of Directors has unanimously
endorsed the Arrangement and approved this Agreement, has unanimously
determined that the Arrangement and this Agreement are in the best
interests of Viking and the Viking Unitholders, and has, based on the
opinion of its financial advisor, unanimously determined that the
Arrangement is fair, from a financial point of view, to Viking
Unitholders and has resolved to unanimously recommend approval of the
Arrangement by Viking Unitholders.
(aaa) VIKING DISCLOSURE LETTER. The matters disclosed to Harvest in the
Viking Disclosure Letter remain true and correct as of the date
hereof.
(bbb) DISCLOSURE. To the knowledge of Viking, Viking has not withheld from
Harvest any material information or documents concerning Viking or
any of its Subsidiaries or their respective assets or liabilities
during the course of Harvest's review of Viking and its assets. No
representation or warranty contained herein and no statement
contained in any schedule or other disclosure document provided or to
be provided to Harvest by Viking pursuant hereto (including without
limitation, any matter disclosed by Viking in the Viking Disclosure
Letter) contains or will contain any untrue statement of a material
fact or omits to state a material fact which is necessary in order to
make the statements herein or therein not misleading.
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5.3 PRIVACY ISSUES.
(a) For the purposes of this Section 5.3, the following definitions shall
apply:
(i) "APPLICABLE LAW" means, in relation to any Person,
transaction or event, all applicable provisions of Laws by
which such Person is bound or having application to the
transaction or event in question, including applicable
privacy laws.
(ii) "APPLICABLE PRIVACY LAWS" means any and all applicable Laws
relating to privacy and the collection, use and disclosure of
Personal Information in all applicable jurisdictions,
including but not limited to the PERSONAL INFORMATION
PROTECTION AND ELECTRONIC DOCUMENTS ACT (Canada) and/or any
comparable provincial law including the PERSONAL INFORMATION
PROTECTION ACT (Alberta).
(iii) "AUTHORIZED AUTHORITY" means, in relation to any Person,
transaction or event, any (a) federal, provincial, municipal
or local governmental body (whether administrative,
legislative, executive or otherwise), both domestic and
foreign, (b) agency, authority, commission, instrumentality,
regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or
pertaining to government, (c) court, arbitrator, commission
or body exercising judicial, quasi-judicial, administrative
or similar functions, and (d) other body or entity created
under the authority of or otherwise subject to the
jurisdiction of any of the foregoing, including any stock or
other securities exchange, in each case having jurisdiction
over such Person, transaction or event.
(iv) "PERSONAL INFORMATION" means information about an individual
transferred to Viking by Harvest in accordance with this
Agreement and/or as a condition of the Arrangement.
(b) The Parties hereto acknowledge that they are responsible for
compliance at all times with applicable privacy laws which govern the
collection, use and disclosure of Personal Information acquired by or
disclosed to either Party pursuant to or in connection with this
Agreement (the "DISCLOSED PERSONAL INFORMATION").
(c) Neither Party shall use the Disclosed Personal Information for any
purposes other than those related to the performance of this
Agreement and the completion of the Arrangement.
(d) Each Party acknowledges and confirms that the disclosure of Personal
Information is necessary for the purposes of determining if the
Parties shall proceed with the Arrangement, and that the disclosure
of Personal Information relates solely to the carrying on of the
business and the completion of the Arrangement.
(e) Each Party acknowledges and confirms that it has and shall continue
to employ appropriate technology and procedures in accordance with
applicable law to prevent accidental loss or corruption of the
Disclosed Personal Information, unauthorized input or access to the
Disclosed Personal Information, or unauthorized or unlawful
collection, storage, disclosure, recording, copying, alteration,
removal, deletion, use or other processing of such Disclosed Personal
Information.
(f) Each Party shall at all times keep strictly confidential all
Disclosed Personal Information provided to it, and shall instruct
those employees or advisors responsible for processing such Disclosed
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Personal Information to protect the confidentiality of such
information in a manner consistent with the Parties' obligations
hereunder. Each Party shall ensure that access to the Disclosed
Personal Information shall be restricted to those employees or
advisors of the respective Party who have a bona fide need to access
to such information in order to complete the Arrangement.
(g) Each Party shall promptly notify the other Party to this Agreement of
all inquiries, complaints, requests for access, and claims of which
the Party is made aware in connection with the Disclosed Personal
Information. The Parties shall fully co-operate with one another,
with the persons to whom the Personal Information relates, and any
authorized authority charged with enforcement of applicable privacy
laws, in responding to such inquiries, complaints, requests for
access, and claims.
(h) Upon the expiry or termination of this Agreement, or otherwise upon
the reasonable request of either Party, the counterparty shall
forthwith cease all use of the Personal Information acquired by the
counterparty in connection with this Agreement and will return to the
Party or, at the Party's request, destroy in a secure manner, the
Disclosed Personal Information (and any copies).
ARTICLE 6
CONDITIONS PRECEDENT
6.1 MUTUAL CONDITIONS PRECEDENT
The respective obligations of the Parties to consummate the
transactions contemplated hereby, and in particular the Arrangement, are
subject to the satisfaction, on or before the Effective Date or such other time
specified, of the following conditions, any of which may be waived by the
mutual consent of such Parties without prejudice to their right to rely on any
other of such conditions:
(a) on or prior to February 15, 2006, the Interim Order shall have been
granted in form and substance satisfactory to each of Harvest and
Viking, acting reasonably, and such order shall not have been set
aside or modified in a manner unacceptable to Harvest and Viking,
acting reasonably, on appeal or otherwise;
(b) the Merger Resolution shall have been passed by the holders of Viking
Units, on or prior to March 31, 2006 in accordance with the Interim
Order and in form and substance satisfactory to each of Harvest and
Viking, acting reasonably;
(c) the Merger Resolution shall have been passed by the holders of
Harvest Securities, on or prior to March 31, 2006 in accordance with
the Interim Order and in form and substance satisfactory to each of
Harvest and Viking, acting reasonably;
(d) in the event that dissent rights are given to Viking Unitholders
under the terms of the Interim Order, holders of not greater than 5%
of the outstanding Viking Units shall have exercised rights of
dissent in respect of the Arrangement that have not been withdrawn as
of the Effective Date;
(e) in the event that dissent rights are given to Harvest Securityholders
under the terms of the Interim Order, holders of not greater than 5%
of the outstanding Harvest Securities shall have exercised rights of
dissent in respect of the Arrangement that have not been withdrawn as
of the Effective Date;
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(f) on or prior to March 31, 2006, the Final Order shall have been
granted in form and substance satisfactory to Harvest and Viking,
acting reasonably;
(g) the Articles of Arrangement to be filed with the Registrar in
accordance with the Arrangement shall be in form and substance
satisfactory to each of Harvest and Viking, acting reasonably;
(h) the Arrangement shall have become effective on or prior to March 31,
2006;
(i) As of the Effective Date:
(i) the following individuals shall be added to the Harvest Board
of Directors:
Xxxx X. Blue
Xxxxx X. Xxxxx
Xxxxxxx Xxxxxx
and (ii) the following individuals shall be appointed as the officers
of HOC:
Xxxx Xxxxxx - President and Chief Executive Officer
Xxxxxx Xxxxxxxxxxxx - Vice President, Finance and Chief
Financial Officer Xxxxxx Xxxxxx - Vice President,
Engineering and Chief Operating Officer Xx Xxxxxxx - Vice
President, Production Xxxxx Xxxxxxxx - Vice President,
Geosciences Xxxxx Xxxxxx - Vice President, Corporate
Xxxxx Xxxx - Corporate Secretary
(j) HOC shall enter into written agreements effective as of the Effective
Date satisfactory to each of Harvest and Viking, acting reasonably,
pursuant to which HOC shall agree that, for a period of six years
after the Effective Date, HOC shall cause to be maintained in effect
the current policies of directors' and officers' liability insurance
maintained by each of Harvest and Viking (provided that HOC may
substitute therefor policies of at least the same claims coverage and
amounts containing terms and conditions that are no less
advantageous) providing coverage on a "trailing" or "run-off" basis
for all present and former directors and officers of HOC and VHI with
respect to claims arising from facts or events which occurred before
the Effective Date;
(k) the relevant waiting period in section 123 of the Competition Act
shall have expired and: (i) an advance ruling certificate ("ARC")
pursuant to section 102 of the Competition Act shall have been issued
by the Commissioner of the Competition Bureau ("COMMISSIONER")
appointed under the Competition Act; or (ii) a "no action letter"
satisfactory to each of Harvest and Viking, acting reasonably,
indicating that the Commissioner has determined not to make an
application for an order under section 92 of the Competition Act
shall have been received from the Commissioner, and any terms and
conditions attached to any such letter shall be acceptable to each of
Harvest and Viking, acting reasonably; and in addition, in the event
that the ARC or "no action" letter described in (i) or (ii) in the
foregoing is issued, there shall be no threatened or actual
application by the Commissioner for an order under section 92 or 100
of the Competition Act;
(l) in addition to the approval required by Section 6.1(k), all other
required domestic and foreign regulatory, governmental and third
party approvals and consents in respect of the completion of the
Arrangement shall have been obtained on terms and conditions,
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satisfactory to Harvest and Viking, each acting reasonably,
including, without limitation, conditional listing approval for the
additional listing on the TSX of the Harvest Units to be issued (i)
pursuant to the Arrangement and (ii) pursuant to the Harvest Unit
Award Incentive Plan, as amended as contemplated in the Harvest
Information Circular, and all applicable domestic and foreign
statutory and regulatory waiting periods shall have expired or have
been terminated and no unresolved material objection or opposition
shall have been filed, initiated or made during any applicable
statutory or regulatory period;
(m) if required, the Arrangement, and the consummation thereof, shall
have been approved by Harvest's lenders on a basis acceptable to
Harvest and Viking, each acting reasonably;
(n) if required, the Arrangement, and the consummation thereof, shall
have been approved by Viking's lenders on a basis acceptable to
Harvest and Viking, each acting reasonably;
(o) Harvest and Viking shall have executed such instruments, and the
Viking Debenture Trustee shall have received such opinions, as
contemplated and required by Article 12 of the Viking Debenture
Indenture, in order to provide for the assumption as of the Effective
Date by Harvest of all of the covenants and obligations of Viking
under the Viking Debenture Indenture in respect of the Viking
Debentures such that, as of the Effective Date, the Viking Debentures
become valid and binding obligations of Harvest entitling the holders
thereof, as against Harvest, to all the rights of holders of Viking
Debentures under the Viking Debenture Indenture;
(p) there shall be no action taken under any existing Applicable Law, nor
any statute, rule, regulation or order which is enacted, enforced,
promulgated or issued by any Governmental Entity, that:
(i) makes illegal or otherwise directly or indirectly restrains,
enjoins or prohibits the Arrangement or any other
transactions contemplated herein; or
(ii) results in a judgment or assessment of material damages
directly or indirectly relating to the transactions
contemplated herein; and
(q) Harvest and HOC shall have received resignations and releases, in
form satisfactory to Harvest and Viking, each acting reasonably, from
the directors of Viking and from the Harvest Departing Officers,
which releases shall contain exceptions for amounts or obligations
owing to such directors or officers for accrued but unpaid salary,
bonus, benefits and other compensation or pursuant to indemnity or
directors' and officers' insurance arrangements.
The foregoing conditions are for the mutual benefit of Viking
and Harvest and may be asserted by Viking and Harvest regardless of the
circumstances and may be waived by Viking and Harvest (with respect to such
Party) in their sole discretion, in whole or in part, at any time and from time
to time without prejudice to any other rights which Viking or Harvest may have.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF HARVEST
The obligation of Harvest to consummate the transactions
contemplated hereby, and in particular the Arrangement, is subject to the
satisfaction, on or before the Effective Date or such other time specified, of
the following conditions:
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(a) Viking shall have mailed the Viking Information Circular and other
documentation required in connection with the Viking Meeting on or
before February 15, 2006;
(b) each of the acts and undertakings of Viking to be performed on or
before the Effective Date pursuant to the terms of this Agreement
shall have been duly performed by Viking;
(c) Viking shall have furnished Harvest with:
(i) certified copies of the resolutions duly passed by the Viking
Board of Directors approving this Agreement and the
consummation of the transactions contemplated hereby; and
(ii) certified copies of the resolutions of Viking Unitholders,
duly passed at the Viking Meeting, approving the Merger
Resolution;
(d) except as affected by the transactions contemplated by this
Agreement, the representations and warranties of Viking and VHI
contained in Section 5.2 shall be true in all respects as at the
Effective Date, or as at the date specified in such representation or
warranty, where applicable, with the same effect as though such
representations and warranties had been made at and as of such time
and each of Viking and VHI shall have complied in all respects with
its covenants in this Agreement and Harvest shall have received a
certificate to that effect dated the Effective Date from the Chief
Executive Officer and Chief Financial Officer of VHI acting solely on
behalf of VHI and not in their personal capacity, to the best of his
information and belief having made reasonable inquiry and Harvest
will have no knowledge to the contrary;
(e) any director, officer, insider or other non-arm's length party that
is indebted to Viking shall have repaid such indebtedness on or prior
to completion of the Arrangement;
(f) there shall not have occurred any change after November 28, 2005, or
prior to November 28, 2005 which has not been publicly disclosed or
disclosed to Harvest in writing prior to November 28, 2005, (or any
condition, event or development involving a prospective change) in
the business, affairs, operations, assets, capitalization, financial
condition, prospects, licenses, permits, rights, privileges or
liabilities, whether contractual or otherwise, of Viking and which,
in the judgment of Harvest, acting reasonably, is materially adverse
to Viking other than: (i) a change directly resulting from an action
taken by Viking permitted by this Agreement or to which Harvest has
consented in writing; (ii) a change resulting from conditions
affecting the oil and gas industry generally including, without
limitation, changes in commodity prices or taxes of any kind at any
time; or (iii) a change resulting from general economic, financial,
currency exchange, securities or commodities market conditions; and
(g) all Viking Rights shall have been exercised or terminated.
The conditions in this Section 6.2 are for the exclusive
benefit of Harvest and may be asserted by Harvest regardless of the
circumstances or may be waived by Harvest in its sole discretion, in whole or
in part, at any time and from time to time without prejudice to any other
rights which Harvest may have.
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6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF VIKING
The obligation of Viking to consummate the transactions
contemplated hereby, and in particular the Arrangement, is subject to the
satisfaction, on or before the Effective Date or such other time specified, of
the following conditions:
(a) Harvest shall have mailed the Harvest Information Circular and other
documentation required in connection with the Harvest Meeting on or
before February 15, 2006;
(b) each of the acts and undertakings of Harvest to be performed on or
before the Effective Date pursuant to the terms of this Agreement
shall have been duly performed by Harvest;
(c) Harvest shall have furnished Viking with:
(i) certified copies of the resolutions duly passed by the
Harvest Board of Directors approving this Agreement and the
consummation of the transactions contemplated hereby; and
(ii) certified copies of the resolutions of Harvest
Securityholders, duly passed at the Harvest Meeting,
approving the Merger Resolution;
(d) except as affected by the transactions contemplated by this
Agreement, the representations and warranties of Harvest and HOC
contained in Section 5.1 shall be true in all respects as at the
Effective Date, or as at the date specified in such representation or
warranty, where applicable, with the same effect as though such
representations and warranties had been made at and as of such time
and each of Harvest and HOC shall have complied in all respects with
its covenants in this Agreement and Viking shall have received a
certificate to that effect dated the Effective Date from the Chief
Executive Officer and Chief Financial Officer of HOC acting solely on
behalf of HOC and not in their personal capacity, to the best of his
information and belief having made reasonable inquiry and Viking will
have no knowledge to the contrary;
(e) any director, officer, insider or other non-arm's length party that
is indebted to Harvest shall have repaid such indebtedness on or
prior to completion of the Arrangement;
(f) there shall not have occurred any change after November 28, 2005, or
prior to November 28, 2005 which had not been publicly disclosed or
disclosed to Viking in writing prior to November 28, 2005, (or any
condition, event or development involving a prospective change) in
the business, affairs, operations, assets, capitalization, financial
condition, prospects, licenses, permits, rights, privileges or
liabilities, whether contractual or otherwise, of Harvest and which,
in the judgment of Viking, acting reasonably, is materially adverse
to Harvest other than: (i) a change directly resulting from an action
taken by Harvest permitted by this Agreement to which Viking has
consented in writing; (ii) a change resulting from conditions
affecting the oil and gas industry generally including, without
limitation, changes in commodity prices or taxes of any kind at any
time; or (iii) a change resulting from general economic, financial,
currency exchange, securities or commodities market conditions; and
(g) the Harvest Board of Directors shall have authorized the application
for listing of the Harvest Units issuable to Viking Unitholders
pursuant to the Arrangement on the NYSE.
The conditions in this Section 6.3 are for the exclusive
benefit of Viking and may be asserted by Viking regardless of the circumstances
or may be waived by Viking in its sole discretion, in whole or in part, at any
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time and from time to time without prejudice to any other rights which Viking
may have.
6.4 NOTICE AND EFFECT OF FAILURE TO COMPLY WITH CONDITIONS
(a) Each of Harvest and Viking shall give prompt notice to the other of
the occurrence, or failure to occur, at any time from the date hereof
to the Effective Date of any event or state of facts which occurrence
or failure would, or would be likely to, (i) cause any of the
representations or warranties of any Party contained herein to be
untrue or inaccurate in any material respect, or (ii) result in the
failure to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by any Party hereunder;
provided, however, that no such notification will affect the
representations or warranties of the Parties or the conditions to the
obligations of the Parties hereunder.
(b) If any of the conditions precedents set forth in Sections 6.1, 6.2 or
6.3 hereof shall not be complied with or waived by the Party or
Parties for whose benefit such conditions are provided on or before
the date required for the performance thereof, then a Party for whose
benefit the condition precedent is provided may, in addition to any
other remedies they may have at law or equity, rescind and terminate
this Agreement; provided that, prior to the filing of the Articles of
Arrangement for the purpose of giving effect to the Arrangement, the
Party intending to rely thereon has delivered a written notice to the
other Party, specifying in reasonable detail all breaches of
covenants, representations and warranties or other matters which the
Party delivering such notice is asserting as the basis for the
non-fulfillment of the applicable conditions precedent. More than one
such notice may be delivered by a Party.
6.5 SATISFACTION OF CONDITIONS
The conditions set out in this Article 6 are conclusively
deemed to have been satisfied, waived or released when, with the agreement of
the Parties, Articles of Arrangement are filed under the ABCA to give effect to
the Arrangement.
ARTICLE 7
AGREEMENT AS TO DAMAGES AND OTHER ARRANGEMENTS
7.1 HARVEST DAMAGES
If at any time after the execution of this Agreement and prior
to its termination:
(a) the Viking Board of Directors has withdrawn or changed any of its
recommendations or determinations referred to in Sections 3.2(p) and
5.2(zz) in a manner adverse to Harvest or shall have resolved to do
so prior to the Effective Date;
(b) a bona fide Acquisition Proposal is publicly announced, proposed,
offered or made to the Viking Unitholders or to Viking and the Viking
Unitholders do not approve the Arrangement or the Arrangement is not
submitted for their approval;
(c) Viking accepts, recommends, approves or enters into an agreement to
implement a Superior Proposal; or
(d) Viking is in breach of any of its covenants made in this Agreement
which breach individually or in the aggregate causes or would
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reasonably be expected to cause a Material Adverse Change with
respect to Viking or materially impedes the completion of the
Arrangement, and Viking fails to cure such breach within five
business days after receipt of written notice thereof from Harvest
(except that no cure period shall be provided for a breach which by
its nature cannot be cured and, in no event, shall any cure period
extend beyond March 31, 2006) or
(e) Viking is in breach of any of its representations or warranties made
in this Agreement (without giving effect to any materiality
qualifiers contained therein) which breach individually or in the
aggregate causes or would reasonably be expected to cause a Material
Adverse Change with respect to Viking or materially impedes the
completion of the Arrangement, and Viking fails to cure such breach
within five business days after receipt of written notice thereof
from Harvest (except that no cure period shall be provided for a
breach which by its nature cannot be cured and, in no event, shall
any cure period extend beyond March 31, 2006),
(each of the above being a "HARVEST DAMAGES EVENT"), then in the event of the
termination of this Agreement pursuant to Section 9.1, Viking shall pay to
Harvest $65 million (the "HARVEST TERMINATION FEE") as liquidated damages in
immediately available funds to an account designated by Harvest within one
business day after the first to occur of the events described above; provided,
however, that if the sole reason that the Harvest Termination Fee becomes
payable is because of a breach of a representation or warranty that is not
cured as contemplated in Section 7.1(e) , the Harvest Termination Fee shall be
reduced to $10 million. Following a Harvest Damages Event but prior to payment
of the applicable Harvest Termination Fee, Viking shall be deemed to hold such
applicable Harvest Termination Fee in trust for Harvest. Viking shall only be
obligated to pay one Harvest Termination Fee pursuant to this Section 7.1.
7.2 VIKING DAMAGES
If at any time after the execution of this Agreement and prior
to its termination:
(a) the Harvest Board of Directors has withdrawn or changed any of its
recommendations or determinations referred to in Sections 3.1(o) and
5.1(yy) in a manner adverse to Viking or shall have resolved to do so
prior to the Effective Date;
(b) a bona fide Acquisition Proposal is publicly announced, proposed,
offered or made to the Harvest Unitholders or to Harvest and the
Harvest Securityholders do not approve the Arrangement or the
Arrangement is not submitted for their approval;
(c) Harvest accepts, recommends, approves or enters into an agreement to
implement a Superior Proposal; or
(d) Harvest is in breach of any of its covenants made in this Agreement
which breach individually or in the aggregate causes or would
reasonably be expected to cause a Material Adverse Change with
respect to Harvest or materially impedes the completion of the
Arrangement, and Harvest fails to cure such breach within five
business days after receipt of written notice thereof from Viking
(except that no cure period shall be provided for a breach which by
its nature cannot be cured and, in no event, shall any cure period
extend beyond March 31, 2006); or
(e) Harvest is in breach of any of its representations or warranties made
in this Agreement (without giving effect to any materiality
qualifiers contained therein) which breach individually or in the
aggregate causes or would reasonably be expected to cause a Material
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Adverse Change with respect to Harvest or materially impedes the
completion of the Arrangement, and Harvest fails to cure such breach
within five business days after receipt of written notice thereof
from Viking (except that no cure period shall be provided for a
breach which by its nature cannot be cured and, in no event, shall
any cure period extend beyond March 31, 2006),
(each of the above being a "VIKING DAMAGES EVENT"), then in the event of the
termination of this Agreement pursuant to Section 9.1, Harvest shall pay to
Viking $65 million (the "VIKING TERMINATION FEE") as liquidated damages in
immediately available funds to an account designated by Viking within one
business day after the first to occur of the events described above; provided,
however, that if the sole reason that the Viking Termination Fee becomes
payable is because of a breach of a representation or warranty that is not
cured as contemplated in Section 7.2(e), the Viking Termination Fee shall be
reduced to $10 million. Following a Viking Damages Event but prior to payment
of the applicable Viking Termination Fee, Harvest shall be deemed to hold such
applicable Viking Termination Fee in trust for Viking. Harvest shall only be
obligated to pay one Viking Termination Fee pursuant to this Section 7.2.
7.3 LIQUIDATED DAMAGES
Each Party acknowledges that all of the payment amounts set out
in this Article 7 are payments of liquidated damages which are a genuine
pre-estimate of the damages which the Party entitled to such damages will
suffer or incur as a result of the event giving rise to such damages and
resultant termination of this Agreement and are not penalties. Each Party
irrevocably waives any right it may have to raise as a defence that any such
liquidated damages are excessive or punitive. For greater certainty, the
Parties agree that the payment of the applicable amount pursuant to this
Article 7 is the sole monetary remedy of the Party receiving such payment.
Nothing herein shall preclude a Party from seeking injunctive relief to
restrain any breach or threatened breach of the covenants or agreements set
forth in this Agreement or the Confidentiality Agreement or otherwise to obtain
specific performance of any of such act, covenants or agreements, without the
necessity of posting bond or security in connection therewith.
ARTICLE 8
AMENDMENT
8.1 AMENDMENT
This Agreement may at any time and from time to time before or
after the holding of the Viking Meeting and the Harvest Meeting be amended by
written agreement of the Parties hereto without, subject to Applicable Law,
further notice to or authorization on the part of their respective
securityholders and any such amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of
the Parties;
(b) waive any inaccuracies or modify any representation or warranty
contained herein or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
and waive or modify performance of any of the obligations of the
Parties; or
(d) waive compliance with or modify any other conditions precedent
contained herein;
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provided that no such amendment reduces or materially adversely affects the
consideration to be received by Harvest Securityholder or a Viking Unitholder,
as the case may be, without approval by the affected securityholders given in
the same manner as required for the approval of the Arrangement or as may be
ordered by the Court.
ARTICLE 9
TERMINATION
9.1 TERMINATION
This Agreement may be terminated at any time prior to the
Effective Date:
(a) by mutual written consent of Harvest and Viking;
(b) as provided in Sections 6.1, 6.2 and 6.3;
(c) by Harvest upon the occurrence of an Harvest Damages Event as
provided in Section 7.1 provided that in the event of an Harvest
Damages Event provided for in Section 7.1(a), this Agreement may not
be terminated by Harvest unless Viking Unitholders do not approve the
Arrangement as required in the Interim Order or the Arrangement is
not submitted for their approval;
(d) by Viking upon the occurrence of a Viking Damages Event as provided
in Section 7.2 provided that in the event of a Viking Damages Event
provided for in Section 7.2(a), this Agreement may not be terminated
by Viking unless the Harvest Securityholders do not approve the
Arrangement as required in the Interim Order or the Arrangement is
not submitted for their approval;
(e) by Harvest, in the event that Harvest accepts, recommends, approves
or enters into an agreement to implement a Superior Proposal in
accordance with Section 3.4(b)(vii), provided that Harvest has
complied with its obligations set forth in Section 3.4(c) hereof and
concurrently pays to Viking the applicable Viking Termination Fee;
and
(f) by Viking, in the event that Viking accepts, recommends, approves or
enters into an agreement to implement a Superior Proposal in
accordance with Section 3.4(b)(vii), provided that Viking has
complied with its obligations set forth in Section 3.4(c) hereof and
concurrently pays to Harvest the applicable Harvest Termination Fee.
In the event of the termination of this Agreement in the
circumstances set out in paragraphs (a) through (f) of this Section 9.1, this
Agreement shall forthwith become void and neither Party shall have any
liability or further obligation to the other Party hereunder except with
respect to the obligations set forth in Article 7 and each Part's obligations
in the Confidentiality Agreement which shall survive such termination.
ARTICLE 10
NOTICES
10.1 NOTICES
All notices that may or are required to be given pursuant to
any provision of this Agreement are to be given or made in writing and served
personally or sent by telecopy:
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(a) in the case of Harvest or HOC, to:
Harvest Energy Trust
c/o Harvest Operations Corp.
0000, 000 - 0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx Xxxxxx, President
Facsimile: (000) 000-0000
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx LLP
0000, 000 - 0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Grant Zawalsky
Facsimile: (000) 000-0000
(b) in the case of Viking or VHI, to:
Viking Energy Trust
c/o Viking Holdings Inc.
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, XX X0X 0X0
Attention: Xxxx Xxxxxx, President and Chief
Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx LLP
3700, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx Xxxxxxxx, Q.C.
Facsimile: (000) 000-0000
or such other address as the Parties may, from time to time, advise to the
other Parties hereto by notice in writing. The date or time of receipt of any
such notice will be deemed to be the date of delivery or the time such telecopy
is received.
ARTICLE 11
GENERAL
11.1 BINDING EFFECT
This Agreement shall be binding upon and enure to the benefit
of the Parties hereto.
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11.2 ASSIGNMENT
No Party to this Agreement may assign any of its rights or
obligations under this Agreement without prior written consent of the other
Party.
11.3 DISCLOSURE
Each Party shall receive the prior consent, not to be
unreasonably withheld, of the other Party prior to issuing or permitting any
director, officer, employee or agent to issue, any press release or other
written statement with respect to this Agreement or the transactions
contemplated hereby. Notwithstanding the foregoing, if either Party is required
by law or administrative regulation to make any disclosure relating to the
transactions contemplated herein, such disclosure may be made, but that Party
will consult with the other Party as to the wording of such disclosure prior to
its being made.
11.4 COSTS
Except as contemplated herein (including Sections 7.1 and 7.2
hereof), each Party hereto covenants and agrees to bear its own costs and
expenses in connection with the transactions contemplated hereby. Harvest and
Viking shall share equally any filing fees payable for applications made under
the Competition Act in respect of the transactions contemplated by the
Arrangement.
11.5 SEVERABILITY
If any one or more of the provisions or parts thereof contained
in this Agreement should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, the remaining provisions or parts thereof
contained herein shall be and shall be conclusively deemed to be, as to such
jurisdiction, severable therefrom and:
(a) the validity, legality or enforceability of such remaining provisions
or parts thereof shall not in any way be affected or impaired by the
severance of the provisions or parts thereof severed; and
(b) the invalidity, illegality or unenforceability of any provision or
part thereof contained in this Agreement in any jurisdiction shall
not affect or impair such provision or part thereof or any other
provisions of this Agreement in any other jurisdiction.
11.6 FURTHER ASSURANCES
Each Party hereto shall, from time to time and at all times
hereafter, at the request of the other Party hereto, but without further
consideration, do all such further acts, and execute and deliver all such
further documents and instruments as may be reasonably required in order to
fully perform and carry out the terms and intent hereof.
11.7 TIME OF ESSENCE
Time shall be of the essence of this Agreement.
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11.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with the Laws of the Province of Alberta and the Parties hereto irrevocably
atom to the jurisdiction of the courts of the Province of Alberta.
11.9 WAIVER
No waiver by any Party shall be effective unless in writing and
any waiver shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or occurrence.
11.10 THIRD PARTY BENEFICIARIES.
The provisions of Sections 6.1(j) and 11.11 are (i) intended
for the benefit of all present and former trustees, directors and officers of
Harvest and its Subsidiaries and Viking and its Subsidiaries, as and to the
extent applicable in accordance with their terms, and shall be enforceable by
each of such persons and his or her heirs, executors administrators and other
legal representatives (collectively, the "THIRD PARTY BENEFICIARIES") and HOC
shall hold the rights and benefits of Sections 6.1(j) and 11.11 in trust for
and on behalf of the Third Party Beneficiaries and HOC hereby accepts such
trust and agrees to hold the benefit of and enforce performance of such
covenants on behalf of the Third Party Beneficiaries, and (ii) are in addition
to, and not in substitution for, any other rights that the Third Party
Beneficiaries may have by contract or otherwise.
11.11 OBLIGATIONS
(a) The Parties hereto acknowledge that, with respect to
Harvest being a party to this Agreement, HOC is entering into this Agreement
solely in its capacity as agent on behalf of Harvest and the obligations of
Harvest hereunder shall not be personally binding upon the Harvest Trustee, HOC
or any of the Harvest Unitholders or any annuitant under a plan of which an
Harvest Unitholder is a trustee or carrier (an "ANNUITANT") and that any
recourse against Harvest, the Harvest Trustee, HOC or any Harvest Unitholder or
annuitant in any manner in respect of any indebtedness, obligation or liability
of Harvest 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 tortuous behaviour or otherwise tortious
behaviour, shall be limited to, and satisfied only out of, the Trust Fund as
defined in the Harvest Trust Indenture.
(b) The Parties hereto acknowledge that VHI is entering
into this Agreement solely on behalf of Viking and the obligations of Viking
hereunder shall not be personally binding upon VHI or any of the Viking
Unitholders and that any recourse against Viking, VHI or any Viking Unitholder
in any manner in respect of any indebtedness, obligation or liability 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 other tortious behaviour, shall be limited to, and satisfied only
out of, the Trust Fund as defined in the Viking Trust Indenture.
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11.12 COUNTERPARTS
This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which together constitute one and the
same instrument.
IN WITNESS WHEREOF the Parties have executed this Agreement as
of the date first above written.
HARVEST ENERGY TRUST, BY ITS VIKING ENERGY ROYALTY TRUST, BY
ADMINISTRATOR, HARVEST OPERATIONS CORP. ITS ADMINISTRATOR, VIKING HOLDINGS INC.
Per: /s/ Xxxxx Xxxxxx Per: /s/ Xxxx Xxxxxx
--------------------------------------- -------------------------------------------
Name: Xxxxx Xxxxxx Name: Xxxx Xxxxxx
Title: President Title: President and Chief Executive Officer
Per: /s/ Xxxxx Xxxx Per: /s/ Xxxxxx Xxxxxxxxxxxx
--------------------------------------- -------------------------------------------
Name: Xxxxx Xxxx Name: Xxxxxx Xxxxxxxxxxxx
Title: Vice President and Title: Vice President, Finance and
Chief Financial Officer Chief Financial Officer
HARVEST OPERATIONS CORP. VIKING HOLDINGS INC.
Per: /s/ Xxxxx Xxxxxx Per: /s/ Xxxx Xxxxxx
--------------------------------------- -------------------------------------------
Name: Xxxxx Xxxxxx Name: Xxxx Xxxxxx
Title: President Title: President and Chief Executive Officer
Per: /s/ Xxxxx Xxxx Per: /s/ Xxxxxx Xxxxxxxxxxxx
--------------------------------------- -------------------------------------------
Name: Xxxxx Xxxx Name: Xxxxxx Xxxxxxxxxxxx
Title: Vice President and Title: Vice President, Finance and
Chief Financial Officer Chief Financial Officer
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SCHEDULE A
PLAN OF ARRANGEMENT UNDER SECTION 193
OF THE
BUSINESS CORPORATIONS ACT (ALBERTA)
ARTICLE 1
INTERPRETATION
1.1 In this Plan of Arrangement, the following terms have the following
meanings:
(a) "ABCA" means the BUSINESS CORPORATIONS ACT, R.S.A. 2000, c. B-9, as
amended, including the regulations promulgated thereunder;
(b) "AMALGAMATIONCO" means the corporation form upon the amalgamation of
Harvest ExchangeCo, Bjorn and Krang pursuant to this Arrangement;
(c) "ARRANGEMENT", "HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar
expressions mean and refer to the arrangement pursuant to Section 193
of the ABCA set forth in this Plan of Arrangement as supplemented,
modified or amended, and not to any particular article, section or
other portion hereof;
(d) "ARRANGEMENT AGREEMENT" means the agreement dated December 23, 2005
among Harvest, Operations, Viking and VHI with respect to the
Arrangement and all amendments thereto;
(e) "ARRANGEMENT RESOLUTION" means the applicable special resolutions in
respect of the Arrangement to be considered at the Harvest Meeting and
the Viking Meeting, as the case may be;
(f) "ARTICLES OF ARRANGEMENT" means the articles of arrangement in respect
of the Arrangement required under Subsection 193(10) of the ABCA to be
sent to the Registrar after the Final Order has been granted, giving
effect to the Arrangement;
(g) "BJORN" means Bjorn Holdings Inc., a corporation incorporated under
the ABCA;
(h) "BJORN SHARES" means the common shares of Bjorn;
(i) "BUSINESS DAY" means a day other than a Saturday, Sunday or a day when
banks in the City of Calgary, Alberta are not generally open for
business;
(j) "CDE" means Cumulative Canadian development expense as defined in the
Tax Act;
(k) "CEE" means Cumulative Canadian exploration expense as defined in the
Tax Act;
(l) "CERTIFICATE" means the certificate or certificates or confirmation of
filing which may be issued by the Registrar pursuant to subsection
193(11) of the ABCA;
(m) "COGPE" means Cumulative Canadian oil and gas property expense as
defined in the Tax Act;
2
(n) "COURT" means the Court of Queen's Bench of Alberta;
(o) "DEPOSITARY" means Valiant Trust Company or such other company as may
be designated by Harvest and Viking;
(p) "DESIGNATED BENEFICIARIES" means a designated beneficiary as defined
in the Tax Act;
(q) "DISSENTING SECURITYHOLDERS" means registered holders of Harvest
Securities and registered holders of Viking Units who validly exercise
the rights of dissent with respect to the Arrangement provided to them
under the Interim Order and whose dissent rights remain valid
immediately before the Effective Time;
(r) "EFFECTIVE DATE" means the date the Arrangement is effective under the
ABCA;
(s) "EFFECTIVE TIME" means 12:01 a.m. (Calgary time) on the Effective
Date;
(t) "EHT" means the Xxxx Holdings Trust, a trust created under the laws of
the Province of Alberta and a wholly-owned Subsidiary of Viking;
(u) "EHT ASSUMED LIABILITIES" means all of the liabilities and obligations
of EHT, whether or not reflected on the books of EHT;
(v) "EHT CRP TRANSFER NOTE" means a note in an amount equal to the total
of the COGPE, CDE and CEE balances of EHT immediately prior to the EHT
First Resource Property Conveyance;
(w) "EHT FIRST RESOURCE PROPERTIES" means the oil and natural gas assets
(excluding EHT Tangible Assets) of EHT having a fair market value
equal to the EHT CRP Transfer Note plus $1.00;
(x) "EHT FIRST RESOURCE PROPERTY CONVEYANCE" means the conveyance of the
EHT First Resource Properties to VHI in exchange for the EHT CRP
Transfer Note and VHI Preferred Shares Series 1 for the balance of the
consideration pursuant to the EHT First Resource Property Conveyance
Agreement;
(y) "EHT FIRST RESOURCE PROPERTY CONVEYANCE AGREEMENT" means the
conveyance agreement between EHT and VHI to be dated the Effective
Date effecting the EHT First Resource Property Conveyance;
(z) "EHT NOTE" means the promissory note in the principal amount of $71
million issued by EHT to VHT;
(aa) "EHT NPI #1" means the 99% net profit interest in the EHT First
Resources Properties granted by VHI to EHT;
(bb) "EHT NPI #2" means the 99% net profit interest in the EHT Second
Resources Properties granted by VHI to EHT;
(cc) "EHT OTHER ASSETS" means the assets of EHT other than the EHT First
Resource Assets, the EHT Second Resource Assets and the EHT Tangible
Assets;
3
(dd) "EHT OTHER ASSET CONVEYANCE" means the conveyance of the EHT Other
Assets to Viking, and the assumption of the EHT Assumed Liabilities by
Viking, in exchange for that number of Viking Units having a value
equal to the fair market value of the EHT Other Assets less the EHT
Assumed Liabilities pursuant to the EHT Other Asset Conveyance
Agreement;
(ee) "EHT OTHER ASSET CONVEYANCE AGREEMENT" means the conveyance agreement
between EHT and Viking to be dated the Effective Date effecting the
EHT Other Asset Conveyance;
(ff) "EHT PREFERRED UNITS" means the preferred units of EHT;
(gg) "EHT SECOND RESOURCE PROPERTIES" means all of the oil and natural gas
assets (excluding EHT First Resources Properties and EHT Tangible
Assets) of EHT;
(hh) "EHT SECOND RESOURCE PROPERTY CONVEYANCE" means the conveyance of the
EHT Second Resource Properties to VHI in exchange for the EHT NPI #2
and VHI Preferred Shares Series 2 pursuant to the EHT Second Resource
Property Conveyance Agreement;
(ii) "EHT SECOND RESOURCE PROPERTY CONVEYANCE AGREEMENT" means the
conveyance agreement between EHT and VHI to be dated the Effective
Date effecting the EHT Second Resource Property Conveyance;
(jj) "EHT TANGIBLE ASSETS" means the tangible assets of EHT;
(kk) "EHT TANGIBLE CONVEYANCE" means the conveyance of the EHT Tangible
Assets to VHI in exchange for the EHT Tangible Transfer Note and VHI
Preferred Shares Series 3 pursuant to the EHT Tangible Conveyance
Agreement;
(ll) "EHT TANGIBLE CONVEYANCE AGREEMENT" means the conveyance agreement
between EHT and VHI to be dated the Effective Date effecting the EHT
Tangible Conveyance;
(mm) "EHT TANGIBLE TRANSFER NOTE" means a note in an amount equal to the
UCC balance of EHT immediately prior to the EHT Tangible Conveyance;
(nn) "EHT UNITS" means the trust units of EHT;
(oo) "FINAL ORDER" means the order of the Court approving this Arrangement
pursuant to Subsection 193(9) of the ABCA in respect of the Harvest
Securityholders, the Viking Unitholders, the Harvest Arrangement
Parties, the Viking Arrangement Parties and MFCorp., as such order may
be affirmed, amended or modified by any court of competent
jurisdiction;
(pp) "HARVEST" means Harvest Energy Trust, a trust organized under the laws
of the Province of Alberta;
(qq) "HARVEST ARRANGEMENT PARTIES" means Harvest, HST and Operations;
(rr) "HARVEST EXCHANGEABLE SHAREHOLDERS" means the holders from time to
time of Harvest Exchangeable Shares;
4
(ss) "HARVEST EXCHANGEABLE SHARES" means the Exchangeable Shares, Series 1
of Operations;
(tt) "HARVEST EXCHANGECO" means Harvest ExchangeCo Inc., a corporation
incorporated under the ABCA;
(uu) "HARVEST EXCHANGECO SHARES" means the common shares of Harvest
ExchangeCo;
(vv) "HARVEST MEETING" means the special meeting of Harvest Securityholders
to be held to consider the Arrangement Resolution and related matters,
and any adjournment thereof;
(ww) "HARVEST SECURITIES" means, collectively, the Harvest Units and the
Harvest Exchangeable Shares;
(xx) "HARVEST SECURITYHOLDERS" means, collectively, the Harvest Unitholders
and the Harvest Exchangeable Shareholders;
(yy) "HARVEST SPECIAL UNITS" means the special trust units of Harvest;
(zz) "HARVEST TRUST INDENTURE" means Harvest's trust indenture dated as of
July 10, 2002, as amended, between Operations and Valiant Trust
Company;
(aaa) "HARVEST UNITHOLDERS" means the holders from time to time of Harvest
Units;
(bbb) "HARVEST UNITS" means the trust units of Harvest;
(ccc) "HST" means Harvest Sask Energy Trust, a trust organized under the
laws of the Province of Alberta;
(ddd) "HST ASSUMED LIABILITIES" means all of the liabilities and obligations
of HST, whether or not reflected on the books of HST;
(eee) "HST CRP TRANSFER NOTE" means a note in an amount equal to the COGPE,
CDE and CEE balances of HST immediately prior to the HST First
Resource Property Conveyance;
(fff) "HST FIRST RESOURCE PROPERTIES" means the oil and natural gas assets
(excluding HST Tangible Assets) of HST having a fair market value
equal to the HST CRP Transfer Note plus $1.00;
(ggg) "HST FIRST RESOURCE PROPERTY CONVEYANCE" means the conveyance of the
HST First Resource Properties to Operations in exchange for the HST
CRP Transfer Note and Operations Preferred Shares Series 1 for the
balance of the consideration pursuant to the HST First Resource
Property Conveyance Agreement;
(hhh) "HST FIRST RESOURCE PROPERTY CONVEYANCE AGREEMENT" means the
conveyance agreement between HST and Operations to be dated the
Effective Date effecting the HST First Resource Property Conveyance;
(iii) "HST NPI #1" means the 99% net profit interest in the HST First
Resources Properties granted by Operations to HST;
5
(jjj) "HST NPI #2" means the 99% net profit interest in the HST Second
Resources Properties granted by Operations to HST;
(kkk) "HST OTHER ASSETS" means the assets of HST other than the HST First
Resource Assets, the HST Second Resource Assets and the HST Tangible
Assets including, for greater certainty, the HST NPI #1 and the HST
NPI #2;
(lll) "HST OTHER ASSET CONVEYANCE" means the conveyance of the HST Other
Assets to Harvest, and the assumption of the HST Assumed Liabilities
by Harvest, in exchange for that number of Harvest Units having a
value equal to the fair market value of the HST Other Assets less the
HST Assumed Liabilities pursuant to the HST Other Asset Conveyance
Agreement;
(mmm) "HST OTHER ASSET CONVEYANCE AGREEMENT" means the conveyance agreement
between HST and Harvest to be dated the Effective Date effecting the
HST Other Asset Conveyance;
(nnn) "HST PREFERRED UNITS" means the preferred trust units of HST;
(ooo) "HST SECOND RESOURCE PROPERTIES" means all of the oil and natural gas
assets (excluding HST First Resources Properties and HST Tangible
Assets) of HST;
(ppp) "HST SECOND RESOURCE PROPERTY CONVEYANCE" means the conveyance of the
HST Second Resource Properties to Operations in exchange for the HST
NPI #2 and Operations Preferred Shares Series 2 pursuant to the HST
Second Resource Property Conveyance Agreement;
(qqq) "HST SECOND RESOURCE PROPERTY CONVEYANCE AGREEMENT" means the
conveyance agreement between HST and Operations to be dated the
Effective Date effecting the HST Second Resource Property Conveyance;
(rrr) "HST TANGIBLE ASSETS" means all of the tangible assets of HST;
(sss) "HST TANGIBLE CONVEYANCE" means the conveyance of the HST Tangible
Assets to Operations in exchange for the HST Tangible Transfer Note
and Operations Preferred Shares Series 3 pursuant to the HST Tangible
Conveyance Agreement;
(ttt) "HST TANGIBLE CONVEYANCE AGREEMENT" means the conveyance agreement
between HST and Operations to be dated the Effective Date effecting
the HST Tangible Conveyance;
(uuu) "HST TANGIBLE TRANSFER NOTE" means a note in an amount equal to the
UCC balance of HST immediately prior to the HST Tangible Conveyance;
(vvv) "HST UNITS" means the common trust units of HST;
(www) "HST UNITHOLDERS" means holders from time to time of HST Units or HST
Preferred Units;
6
(xxx) "INTERIM ORDER" means the interim order of the Court under subsection
193(4) of the ABCA containing declarations and directions with respect
to this Arrangement, as such order may be affirmed, amended or
modified by any court of competent jurisdiction;
(yyy) "KRANG" means Krang Energy Inc., a corporation incorporated under the
ABCA;
(zzz) "KRANG SHARES" means the common shares of Krang;
(aaaa) "LETTERS OF TRANSMITTAL" means the letters of transmittal accompanying
the information circular sent to the Harvest Exchangeable Shareholders
and the Viking Securityholders pursuant to which such holders are
required to deliver certificates representing Harvest Exchangeable
Shares and Viking Securities in order to receive the consideration
payable to them pursuant to the Arrangement;
(bbbb) "MEETING" means either the Harvest Meeting or the Viking Meeting, as
the context requires;
(cccc) "MFCORP" means 1206623 Alberta Ltd., a corporation incorporated under
the ABCA;
(dddd) "MFCORP ASSETS" means all of the property, assets and undertaking of
MFCorp of whatsoever nature or kind, present and future, and
wheresoever located, including, for greater certainty, the Harvest
Special Units and Harvest Exchangeable Shares (other than $10.00);
(eeee) "MFCORP ASSUMED LIABILITIES" means all of the liabilities and
obligations of MFCorp, whether or not reflected on the books of
MFCorp;
(ffff) "MFCORP SHARES" means common shares of MFCorp;
(gggg) "MFCORP SPECIAL SHARES" means special shares of MFCorp;
(hhhh) "NON-RESIDENT" means: (i) a person who is not a resident of Canada for
the purposes of the Tax Act; or (ii) a partnership that is not a
Canadian partnership for the purposes of the Tax Act;
(iiii) "OLAF" means Olaf Energy Limited Partnership, a limited partnership
organized under the laws of the Province of Alberta;
(jjjj) "OLAF NPI #1" means the net profits interest granted by Olaf to
Viking;
(kkkk) "OLAF NPI #1 CONVEYANCE" means the conveyance by Viking of the Olaf
NPI #1 to Olaf in exchange for the units of Olaf pursuant to the Olaf
NPI #1 Conveyance Agreement;
(llll) "OLAF NPI #1 CONVEYANCE AGREEMENT" means the conveyance agreement
between Viking and Olaf to be dated the Effective Date effecting the
Olaf NPI #1 Conveyance;
(mmmm) "OLAF NPI #2" means the net profits interest granted by Olaf to VHT;
(nnnn) "OLAF NPI #2 CONVEYANCE" means the conveyance by VHT of the Olaf NPI
#2 to Olaf in exchange for the units of Olaf pursuant to the Olaf NPI
#2 Conveyance Agreement;
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(oooo) "OLAF NPI #2 CONVEYANCE AGREEMENT" means the conveyance agreement
between VHT and Olaf to be dated the Effective Date effecting the Olaf
NPI #2 Conveyance;
(pppp) "OLAF UNIT CONVEYANCE" means the conveyance by Viking of the units of
Olaf received by Viking pursuant to the Olaf NPI #1 Conveyance to EHT
for no consideration pursuant to the Olaf Unit Conveyance Agreement;
(qqqq) "OLAF UNIT CONVEYANCE AGREEMENT" means the conveyance agreement
between Viking and Olaf to be dated the Effective Date effecting the
Olaf Unit Conveyance;
(rrrr) "OPERATIONS" means Harvest Operations Corp., a corporation amalgamated
under the ABCA;
(ssss) "OPERATIONS COMMON SHARES" means the common shares of Operations;
(tttt) "OPERATIONS PREFERRED SHARES SERIES 1" means the Preferred Shares,
Series 1 of Operations;
(uuuu) "OPERATIONS PREFERRED SHARES SERIES 2" means the Preferred Shares,
Series 2 of Operations;
(vvvv) "OPERATIONS PREFERRED SHARES SERIES 3" means the Preferred Shares,
Series 3 of Operations;
(wwww) "PROPERTY SWAP CONVEYANCE" means the exchange of certain oil and
natural gas assets (including related tangibles) among VHI, EHT and
VHT pursuant to the Property Swap Conveyance Agreement;
(xxxx) "PROPERTY SWAP CONVEYANCE AGREEMENT" means the conveyance agreement
among VHI, EHT and VHT to be dated the Effective Date effecting the
Property Swap Conveyance;
(yyyy) "REGISTRAR" means the Registrar appointed under Section 263 of the
ABCA;
(zzzz) "RESIDENT" means a person who is not a Non-Resident;
(aaaaa) "SECURITIES" means the Harvest Securities and/or Viking Units, as the
case may be;
(bbbbb) "SECURITYHOLDERS" means the holders from time to time of Harvest
Securities and/or Viking Units, as the case may be;
(ccccc) "UCC" means "undepreciated capital cost" as defined in the Tax Act, in
respect of all classes of properties;
(ddddd) "VHI" means Viking Holdings Inc., a corporation amalgamated under the
ABCA;
(eeeee) "VHI COMMON SHARES" means the common shares of VHI;
(fffff) "VHI NOTE" means the promissory note in the principal amount of $217
million issued by VHI to VHT;
8
(ggggg) "VHI PREFERRED SHARES SERIES 1" means the Preferred Shares, Series 1
of VHI;
(hhhhh) "VHI PREFERRED SHARES SERIES 2" means the Preferred Shares, Series 2
of VHI;
(iiiii) "VHI PREFERRED SHARES SERIES 3" means the Preferred Shares, Series 3
of VHI;
(jjjjj) "VHI PREFERRED SHARES SERIES 4" means the Preferred Shares, Series 4
of VHI;
(kkkkk) "VHI PREFERRED SHARES SERIES 5" means the Preferred Shares, Series 5
of VHI;
(lllll) "VHI PREFERRED SHARES SERIES 6" means the Preferred Shares, Series 6
of VHI;
(mmmmm) "VHT" means the Viking Holdings Trust, a trust created under the laws
of the Province of Alberta and a wholly-owned Subsidiary of Viking;
(nnnnn) "VHT ASSUMED LIABILITIES" means all of the liabilities and obligations
of VHT, whether or not reflected on the books of VHT;
(ooooo) "VHT CRP TRANSFER NOTE" means a note in an amount equal to the COGPE,
CDE and CEE balances of VHT immediately prior to the VHT First
Resource Property Conveyance;
(ppppp) "VHT FIRST RESOURCE PROPERTIES" means the oil and natural gas assets
(excluding VHT Tangible Assets) of VHT having a fair market value
equal to the VHT CRP Transfer Note plus $1.00;
(qqqqq) "VHT FIRST RESOURCE PROPERTY CONVEYANCE" means the conveyance of the
VHT First Resource Properties to VHI in exchange for the VHT CRP
Transfer Note and VHI Preferred Shares Series 4 for the balance of the
consideration pursuant to the VHT First Resource Property Conveyance
Agreement;
(rrrrr) "VHT FIRST RESOURCE PROPERTY CONVEYANCE AGREEMENT" means the
conveyance agreement between VHT and VHI to be dated the Effective
Date effecting the EHT First Resource Property Conveyance;
(sssss) "VHT NPI #1" means the 99% net profit interest in the VHT First
Resources Properties granted by VHI to VHT;
(ttttt) "VHT NPI #2" means the 99% net profit interest in the VHT Second
Resources Properties granted by VHI to VHT;
(uuuuu) "VHT NOTE" means the promissory note in the principal amount of $649
million issued by VHT to Viking;
(vvvvv) "VHT OTHER ASSETS" means the assets of VHT other than the VHT First
Resource Assets, the VHT Second Resource Assets and the VHT Tangible
Assets;
(wwwww) "VHT OTHER ASSET CONVEYANCE" means the conveyance of the VHT
Other Assets to Viking, and the assumption of the VHT Assumed
Liabilities by Viking, in exchange for that number of Viking
Units having a value equal to the fair market value of the VHT
9
Other Assets less the VHT Assumed Liabilities pursuant to the VHT
Other Asset Conveyance Agreement;
(xxxxx) "VHT OTHER ASSET CONVEYANCE AGREEMENT" means the conveyance agreement
between VHT and Viking to be dated the Effective Date effecting the
VHT Other Asset Conveyance;
(yyyyy) "VHT PREFERRED UNITS" means the preferred units of VHT;
(zzzzz) "VHT SECOND RESOURCE PROPERTIES" means all of the oil and natural gas
assets (excluding VHT First Resources Properties and VHT Tangible
Assets) of VHT;
(aaaaaa) "VHT SECOND RESOURCE PROPERTY CONVEYANCE" means the conveyance of the
VHT Second Resource Properties to VHI in exchange for the VHT NPI #2
and VHI Preferred Shares Series 5 pursuant to the VHT Second Resource
Property Conveyance Agreement;
(bbbbbb) "VHT SECOND RESOURCE PROPERTY CONVEYANCE AGREEMENT" means the
conveyance agreement between VHT and VHI to be dated the Effective
Date effecting the VHT Second Resource Property Conveyance;
(cccccc) "VHT TANGIBLE ASSETS" means the tangible assets of VHT;
(dddddd) "VHT TANGIBLE CONVEYANCE" means the conveyance of the VHT Tangible
Assets to VHI in exchange for the VHT Tangible Transfer Note and VHI
Preferred Shares Series 6 pursuant to the VHT Tangible Conveyance
Agreement;
(eeeeee) "VHT TANGIBLE CONVEYANCE AGREEMENT" means the conveyance agreement
between VHT and VHI to be dated the Effective Date effecting the VHT
Tangible Conveyance;
(ffffff) "VHT TANGIBLE TRANSFER NOTE" means a note in an amount equal to the
UCC balance of VHT immediately prior to the VHT Tangible Conveyance;
(gggggg) "VHT UNITS" means the trust units of VHT;
(hhhhhh) "VIKING" means Viking Energy Royalty Trust, a trust organized under
the laws of the Province of Alberta; (iiiiii) "VIKING 10.5%
DEBENTURES" means the 10.5% convertible unsecured subordinated
debentures of Viking issued on January 15, 2003 pursuant to the Viking
Debenture Indenture;
(jjjjjj) "VIKING 6.4% DEBENTURES" means the 6.4% convertible unsecured
subordinated debentures of Viking issued on October 20, 2005 pursuant
to the Viking Debenture Indenture;
(kkkkkk) "VIKING ARRANGEMENT PARTIES" means Viking, VHI, EHT, VHT and Olaf;
(llllll) "VIKING ASSETS" means all of the property, assets and undertaking of
Viking of whatsoever nature or kind, present and future, and
wheresoever located, including the shares, units, notes, royalties or
other interests in the capital of or granted by Viking's direct
Subsidiaries and any rights to purchase assets, properties or
10
undertakings of third parties under agreements to purchase that have
not yet closed, if any, and whether or not reflected on the books of
Viking (other than one (1) Harvest Unit), but excluding, in all cases,
an amount that Viking may be required to pay to Dissenting Unitholders
pursuant to Article 4 hereof;
(mmmmmm) "VIKING ASSUMED LIABILITIES" means all of the liabilities and
obligations of Viking, whether or not reflected on the books of Viking
including, for greater certainty, the Viking 10.5% Debentures and the
Viking 6.4% Debentures, but excluding, in all cases, an amount that
Viking may be required to pay to Dissenting Unitholders pursuant to
Article 4 hereof;
(nnnnnn) "VIKING DEBENTURE INDENTURE" means the trust indenture dated January
15, 2003 between Viking and the Viking Debenture Trustee governing the
terms and conditions of the Viking 10.5% Debentures together with the
first supplemental trust indenture dated October 20, 2005 governing
the terms and conditions of the Viking 6.4% Debentures;
(oooooo) "VIKING DEBENTURE TRUSTEE" means Computershare Trust Company of
Canada;
(pppppp) "VIKING MEETING" means the special meeting of Viking Unitholders to be
held to consider the Arrangement Resolution and related matters, and
any adjournment thereof;
(qqqqqq) "VIKING TRUST INDENTURE" means Viking's amended and restated trust
indenture dated as of July 1, 2003 between VHI and Computershare Trust
Company of Canada;
(rrrrrr) "VIKING UNITHOLDERS" means the holders from time to time of Viking
Units;
(ssssss) "VIKING UNITS" means the trust units of Viking;
(tttttt) "SUBSIDIARY" means, with respect to any Person, a subsidiary (as that
term is defined in the ABCA (for such purposes, if such person is not
a corporation, as if such person were a corporation)) of such Person
and includes any limited partnership, joint venture, trust, limited
liability company, unlimited liability company or other entity,
whether or not having legal status, that would constitute a subsidiary
(as described above) if such entity were a corporation; and
(uuuuuu) "TAX ACT" means the INCOME TAX ACT (Canada), R.S.C. 1985, c. 1 (5th
Supp.), as amended, including the regulations promulgated thereunder,
as amended from time to time.
1.2 The division of this Plan of Arrangement into articles and sections
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Plan of Arrangement.
1.3 Unless reference is specifically made to some other document or
instrument, all references herein to articles and sections are to articles and
sections of this Plan of Arrangement.
1.4 Unless the context otherwise requires, words importing the singular
number shall include the plural and vice versa; words importing any gender
shall include all genders; and words importing persons shall include
individuals, partnerships, associations, corporations, funds, unincorporated
organizations, governments, regulatory authorities, and other entities.
11
1.5 In the event that the date on which any action is required to be taken
hereunder by any of the parties is not a Business Day in the place where the
action is required to be taken, such action shall be required to be taken on
the next succeeding day which is a Business Day in such place.
1.6 References in this Plan of Arrangement to any statute or sections
thereof shall include such statute as amended or substituted and any
regulations promulgated thereunder from time to time in effect.
ARTICLE 2
ARRANGEMENT AGREEMENT
2.1 This Plan of Arrangement is made pursuant to the Arrangement Agreement.
2.2 This Plan of Arrangement, upon the filing of the Articles of
Arrangement and the issue of the Certificate, if any, shall become effective
on, and be binding on and after, the Effective Time on: (i) Harvest
Securityholders; (ii) Viking Unitholders; (iii) the Harvest Arrangement
Parties; (iv) the Viking Arrangement Parties; and (v) MFCorp.
2.3 The Articles of Arrangement and Certificate shall be filed and issued,
respectively, with respect to this Arrangement in its entirety. The Certificate
shall be conclusive evidence that the Arrangement has become effective and that
each of the provisions of Article 3 has become effective in the sequence and at
the times set out therein. If no Certificate is required to be issued by the
Registrar pursuant to subsection 193(11) of the ABCA, the Arrangement shall
become effective on the date the Articles of Arrangement are filed with the
Registrar pursuant to subsection 193(10) of the ABCA.
ARTICLE 3
ARRANGEMENT
3.1 Commencing at the Effective Time, each of the events set out below
shall occur and shall be deemed to occur in the following order without any
further act or formality except as otherwise provided herein:
AMENDMENTS TO THE TRUST INDENTURES AND OTHER CONSTATING DOCUMENTS
(a) the Harvest Trust Indenture and other constating documents of the
Harvest Arrangement Parties shall be amended:
(i) by creating the Harvest Special Units;
(ii) by creating the HST Preferred Units;
(iii) by creating the Operations Preferred Shares Series 1,
Operations Preferred Shares Series 2 and Operations Preferred
Shares Series 3; and
(iv) otherwise to the extent necessary to facilitate the
Arrangement;
(b) the Viking Trust Indenture and other constating documents of the
Viking Arrangement Parties shall be amended:
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(i) by creating the VHI Preferred Shares Series 1, the VHI
Preferred Shares Series 2, the VHI Preferred Shares Series 3,
VHI Preferred Shares Series 4, the VHI Preferred Shares
Series 5 and the VHI Preferred Shares Series 6,
(ii) to cause 99% of the Viking Units held by each Viking
Unitholder to be exchanged, as of the Effective Date in
accordance with the terms of this Plan of Arrangement, for
MFCorp Special Shares on the basis of 1.000 MFCorp Special
Share for each Viking Unit pursuant to subsection 3.1(ccc) of
this Plan of Arrangement;
(iii) to cause 1% of the Viking Units held by each Viking
Unitholder to be exchanged, as of the Effective Date in
accordance with the terms of this Plan of Arrangement, for
Harvest Units on the basis of 1.0000 Harvest Unit for each
4.0000 Viking Units pursuant to subsection 3.1(fff) of this
Plan of Arrangement;
(iv) to cause the MFCorp Special Shares received by Viking
Unitholders pursuant to subsection 3.1(ccc) of this Plan of
Arrangement to be exchanged, as of the Effective Date in
accordance with the terms of this Plan of Arrangement, for
Harvest Units upon the redemption of the MFCorp Special
Shares pursuant to subsection 3.1(iii) of this Plan of
Arrangement on the basis of 1.000 Harvest Unit for each 4.000
MFCorp Special Shares; and
(v) otherwise to the extent necessary to facilitate the
Arrangement;
DISSENTING SECURITYHOLDERS
(c) the Harvest Units held by Dissenting Securityholders shall be deemed
to have been transferred to Harvest (free of any claims) and such
Dissenting Securityholders shall cease to have any rights as Harvest
Unitholders other than the right to be paid the fair value of their
Harvest Units in accordance with Article 4;
(d) the Harvest Exchangeable Shares held by Dissenting Securityholders
shall be deemed to have been transferred to Harvest (free of any
claims) and such Dissenting Securityholders shall cease to have any
rights as Harvest Exchangeable Shareholders other than the right to be
paid the fair value of their Harvest Exchangeable Shares in accordance
with Article 4;
(e) the Viking Units held by Dissenting Securityholders shall be deemed to
have been transferred to Viking (free of any claims) and such
Dissenting Securityholders shall cease to have any rights as Viking
Unitholders other than the right to be paid the fair value of their
Viking Units in accordance with Article 4;
HST TRANSACTIONS
HST ASSET TRANSFER
(f) the HST First Resource Property Conveyance shall become effective and
the HST First Resource Properties shall be transferred by HST to
Operations and Operations shall issue the HST CRP Transfer Note and
the Operations Preferred Shares Series 1 to HST in satisfaction of the
purchase price for the HST First Resource Properties pursuant to the
HST First Resource Property Conveyance Agreement;
13
(g) Operations shall grant the HST NPI #1 to HST for consideration of
$10.00;
(h) the HST Second Resource Property Conveyance shall become effective and
the HST Second Resource Properties shall be transferred by HST to
Operations and Operations shall issue the HST NPI #2 and the
Operations Preferred Shares Series 2 to HST in satisfaction of the
purchase price for the HST Second Resource Properties pursuant to the
HST Second Resource Property Conveyance Agreement;
(i) the HST Tangible Conveyance shall become effective and the HST
Tangible Assets shall be transferred by HST to Operations and
Operations shall issue the HST Tangible Asset Transfer Note and the
Operations Preferred Shares Series 3 to HST in satisfaction of the
purchase price for the HST Tangible Assets pursuant to the HST
Tangible Asset Conveyance Agreement;
HST CONVERSION TO A MUTUAL FUND TRUST
(j) the trust indenture governing HST shall be amended by creating the HST
Preferred Units;
(k) Harvest shall subscribe for that number of HST Preferred Units of HST
necessary for Harvest to satisfy its obligations under Subsection
3.1(l) for aggregate subscription proceeds of $1 million;
(l) Harvest shall distribute all of the HST Preferred Units to Harvest
Unitholders who are not Designated Beneficiaries on the basis of one
(1) HST Preferred Unit for each one (1) Harvest Unit held;
HST QUALIFYING EXCHANGE WITH HARVEST
(m) HST will transfer to Harvest the HST CRP Transfer Note and the HST
Tangible Asset Transfer Note in partial satisfaction of the amounts
owing by HST to Harvest;
(n) Harvest shall subscribe for that number of HST Units having an
aggregate subscription amount equal to any remaining amounts owing by
HST to Harvest in full satisfaction of any such remaining
indebtedness;
(o) the HST Other Asset Conveyance shall become effective and the HST
Other Assets shall be transferred by HST to Harvest and Harvest shall
issue and deliver to HST that number of Harvest Units having a value
equal to the fair market value of the HST Other Assets less the HST
Assumed Liabilities in satisfaction of the purchase price for the HST
Other Assets pursuant to the HST Other Asset Conveyance Agreement;
(p) Harvest shall subscribe for one (1) HST Unit for $10.00;
(q) HST shall redeem all of the issued and outstanding HST Preferred Units
and HST Units (other than the one (1) HST Trust Unit subscribed for by
Harvest pursuant to Subsection 3.1(p)) in exchange for Harvest Units
and HST shall distribute the Harvest Units to the HST Unitholders on a
pro rata basis based on the fair market value of the HST Preferred
Units and the HST Trust Units surrendered;
(r) all of the Harvest Units received by Harvest pursuant to subsection
3.1(q) shall be cancelled;
14
(s) immediately after the pro rata distribution of Harvest Units to HST
Unitholders who are not Designated Beneficiaries pursuant to
Subsection 3.1(q), the number of outstanding Harvest Units held by
such unitholders will be consolidated such that each Harvest
Unitholder will hold after the consolidation the same number of
Harvest Units as the Harvest Unitholder held before the distribution
of additional Harvest Units. In such case, each Harvest Unit
certificate representing a number of Harvest Units prior to the
distribution of additional Harvest Units is deemed to represent the
same number of Harvest Units after the distribution of additional
Harvest Units and the consolidation;
VIKING ENTITY TRANSACTIONS
DEBT MATTERS
(t) VHT shall assign and transfer its interest in:
(i) the VHI Note; and
(ii) the EHT Note,
to Viking in partial satisfaction of the amount owing by VHT
to Viking pursuant to the VHT Note;
ROYALTY MATTERS
(u) the Olaf NPI #1 Conveyance shall become effective and the Olaf NPI #1
shall be transferred by Viking to Olaf in exchange for units of Olaf
pursuant to the Olaf NPI #1 Conveyance Agreement;
(v) the Olaf Unit Conveyance shall become effective and the Olaf Units
received by Viking pursuant to the Olaf NPI #1 Conveyance shall be
transferred by Viking to EHT for no consideration pursuant to the Olaf
Unit Conveyance Agreement;
(w) the Olaf NPI #2 Conveyance shall become effective and the Olaf NPI #2
shall be transferred by VHT to Olaf in exchange for units of Olaf
pursuant to the Olaf NPI #2 Conveyance Agreement;
DISSOLUTION OF OLAF
(x) Olaf shall be dissolved in accordance with the following:
(i) all of the property of Olaf shall be distributed to VHI, EHT
and VHT in accordance with their respective partnership
interests immediately prior to the dissolution;
(ii) VHI, EHT and VHT shall be liable for all of the obligations
of Olaf in accordance with their respective partnership
interests immediately prior to the dissolution;
(iii) the Property Swap Conveyance shall become effective and
certain oil and natural gas assets (including related
tangibles) will be exchanged among VHI, EHT and VHT pursuant
to the Property Swap Conveyance Agreement;
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EHT ASSET TRANSFER
(y) the EHT First Resource Property Conveyance shall become effective and
the EHT First Resource Properties shall be transferred by EHT to VHI
and VHI shall issue the EHT CRP Transfer Note and the VHI Preferred
Shares Series 1 to EHT in satisfaction of the purchase price for the
EHT First Resource Properties pursuant to the EHT First Resource
Property Conveyance Agreement;
(z) VHI shall grant the EHT NPI #1 to EHT for consideration of $10.00;
(aa) the EHT Second Resource Property Conveyance shall become effective and
the EHT Second Resource Properties shall be transferred by EHT to VHI
and VHI shall issue the EHT NPI #2 and the VHI Preferred Shares Series
2 to EHT in satisfaction of the purchase price for the EHT Second
Resource Properties pursuant to the EHT Second Resource Property
Conveyance Agreement;
(bb) the EHT Tangible Conveyance shall become effective and the EHT
Tangible Assets shall be transferred by EHT to VHI and VHI shall issue
the EHT Tangible Transfer Note and the VHI Preferred Shares Series 3
to EHT in satisfaction of the purchase price for the EHT Tangible
Assets pursuant to the EHT Tangible Conveyance Agreement;
VHT ASSET TRANSFER
(cc) the VHT First Resource Property Conveyance shall become effective and
the VHT First Resource Properties shall be transferred by VHT to VHI
and VHI shall issue the VHT CRP Transfer Note and the VHI Preferred
Shares Series 4 to VHT in satisfaction of the purchase price for the
VHT First Resource Properties pursuant to the VHT First Resource
Property Conveyance Agreement;
(dd) VHI shall grant the VHT NPI #1 to VHT for consideration of $10.00;
(ee) the VHT Second Resource Property Conveyance shall become effective and
the VHT Second Resource Properties shall be transferred by VHT to VHI
and VHI shall issue the VHT NPI #2 and the VHI Preferred Shares Series
5 to VHT in satisfaction of the purchase price for the VHT Second
Resource Properties pursuant to the VHT Second Resource Property
Conveyance Agreement;
(ff) the VHT Tangible Conveyance shall become effective and the VHT
Tangible Assets shall be transferred by VHT to VHI and VHI shall issue
the VHT Tangible Transfer Note and the VHI Preferred Shares Series 6
to VHT in satisfaction of the purchase price for the VHT Tangible
Assets pursuant to the VHT Tangible Conveyance Agreement;
EHT CONVERSION TO A MUTUAL FUND TRUST
(gg) the trust indenture governing EHT shall be amended by creating the EHT
Preferred Units;
(hh) Viking shall subscribe for that number of EHT Preferred Units of EHT
necessary for Viking to satisfy its obligations under Subsection
3.1(ii) for aggregate subscription proceeds of $1 million;
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(ii) Viking shall distribute all of the EHT Preferred Units to Viking
Unitholders who are not Designated Beneficiaries on the basis of one
(1) EHT Preferred Unit for each one (1) Viking Unit held;
EHT QUALIFYING EXCHANGE WITH VIKING
(jj) EHT will transfer to Viking the EHT CRP Transfer Note and the EHT
Tangible Transfer Note in partial satisfaction of the amounts owing by
EHT to Viking;
(kk) Viking shall subscribe for that number of EHT Units having an
aggregate subscription amount equal to any remaining amounts owing by
EHT to Viking in full satisfaction of any such remaining indebtedness;
(ll) the EHT Other Asset Conveyance shall become effective and the EHT
Other Assets shall be transferred by EHT to Viking and Viking shall
issue and deliver to EHT that number of Viking Units having a value
equal to the fair market value of EHT Other Assets less the EHT
Assumed Liabilities in satisfaction of the purchase price for the EHT
Other Assets pursuant to the EHT Other Asset Conveyance Agreement;
(mm) Viking shall subscribe for one (1) EHT Unit for $10.00;
(nn) EHT shall redeem all of the issued and outstanding EHT Preferred Units
and EHT Units (other than the one (1) EHT Trust Unit subscribed for by
Viking pursuant to Subsection 3.1(mm)) in exchange for Viking Units
and EHT shall distribute the Viking Units to the EHT Unitholders on a
pro rata basis based on the fair market value of the EHT Preferred
Units and the EHT Trust Units surrendered;
(oo) all of the Viking Units received by Viking pursuant to subsection
3.1(nn) shall be cancelled;
(pp) immediately after the pro rata distribution of Viking Units to EHT
Unitholders who are not Designated Beneficiaries pursuant to
Subsection 3.1(nn), the number of outstanding Viking Units held by
such unitholders will be consolidated such that each Viking Unitholder
will hold after the consolidation the same number of Viking Units as
the Viking Unitholder held before the distribution of additional
Viking Units. In such case, each Viking Unit certificate representing
a number of Viking Units prior to the distribution of additional
Viking Units is deemed to represent the same number of Viking Units
after the distribution of additional Viking Units and the
consolidation;
VHT CONVERSION TO A MUTUAL FUND TRUST
(qq) the trust indenture governing VHT shall be amended by creating the VHT
Preferred Units;
(rr) Viking shall subscribe for that number of VHT Preferred Units of VHT
necessary for Viking to satisfy its obligations under Subsection
3.1(ss) for aggregate subscription proceeds of $1 million;
(ss) Viking shall distribute all of the VHT Preferred Units to Viking
Unitholders who are not Designated Beneficiaries on the basis of one
(1) VHT Preferred Unit for each one (1) Viking Unit held;
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VHT QUALIFYING EXCHANGE WITH VIKING
(tt) VHT will transfer to Viking the VHT CRP Transfer Note and the VHT
Tangible Transfer Note in partial satisfaction of the amounts owing by
VHT to Viking;
(uu) Viking shall subscribe for that number of VHT Units having an
aggregate subscription amount equal to any remaining amounts owing by
VHT to Viking in full satisfaction of any such remaining indebtedness;
(vv) the VHT Other Asset Conveyance shall become effective and the VHT
Other Assets shall be transferred by VHT to Viking and Viking shall
issue and deliver to EHT that number of Viking Units having a value
equal to the fair market value of EHT Other Assets less the EHT
Assumed Liabilities in satisfaction of the purchase price for the VHT
Other Assets pursuant to the VHT Other Asset Conveyance Agreement;
(ww) Viking shall subscribe for one (1) VHT Unit for $10.00;
(xx) VHT shall redeem all of the issued and outstanding VHT Preferred Units
and VHT Units (other than the one (1) VHT Trust Unit subscribed for by
Viking pursuant to Subsection 3.1(ww)) in exchange for Viking Units
and VHT shall distribute the Viking Units to the VHT Unitholders on a
pro rata basis based on the fair market value of the VHT Preferred
Units and the VHT Trust Units surrendered;
(yy) all of the Viking Units received by Viking pursuant to subsection
3.1(xx) shall be cancelled;
(zz) immediately after the pro rata distribution of Viking Units to VHT
Unitholders who are not Designated Beneficiaries pursuant to
Subsection 3.1(xx), the number of outstanding Viking Units held by
such unitholders will be consolidated such that each Viking Unitholder
will hold after the consolidation the same number of Viking Units as
the Viking Unitholder held before the distribution of additional
Viking Units. In such case, each Viking Unit certificate representing
a number of Viking Units prior to the distribution of additional
Viking Units is deemed to represent the same number of Viking Units
after the distribution of additional Viking Units and the
consolidation;
HARVEST PURCHASE OF VIKING ASSETS
(aaa) Viking shall sell, transfer, convey, assign and deliver to Harvest and
Harvest shall purchase and accept from Viking, all of the Viking
Assets and Harvest shall (i) assume and become liable to pay, satisfy,
discharge and observe, perform and fulfill the Viking Assumed
Liabilities in accordance with their terms, and (ii) issue to Viking
an aggregate number of Harvest Special Units and Harvest Units equal
in number to the number of Viking Units outstanding with the
allocation between Harvest Special Units and Harvest Units being such
that Viking can meet its distribution obligations under Subsection
3.1(fff);
(bbb) in connection with the assumption of the Viking Assumed Liabilities by
Harvest, Harvest shall assume all the covenants and obligations of
Viking under the Viking Debenture Indenture in respect of the Viking
10.5% Debentures and the Viking 6.4% Debentures such that the Viking
10.5% Debentures and the Viking 6.4% Debentures will be valid and
binding obligations of Harvest entitling the holders thereof, as
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against Harvest, to all the rights of the Viking Debentureholders
under the Viking Debenture Indenture, and, in connection therewith,
shall enter into a supplemental debenture indenture with the Viking
Debenture Trustee in accordance with the applicable requirements of
the Viking Debenture Indenture and otherwise comply with any
additional requirements of the Viking Debenture Indenture relating
thereto;
MFCORP ACQUISITION OF VIKING SECURITIES AND HARVEST EXCHANGEABLE SHARES
(ccc) each Viking Unitholder shall transfer ninety-nine (99%) percent of
his/her Viking Units to MFCorp in exchange for MFCorp Special Shares
on the basis of 1.000 MFCorp Special Share for each Viking Unit
transferred;
(ddd) each Harvest Exchangeable Shareholder so electing shall transfer one
hundred (100%) percent of his/her Harvest Exchangeable Shares to
MFCorp in exchange for MFCorp Special Shares on the basis of 4.0000
MFCorp Special Share for each Harvest Unit that would be issuable if
the Harvest Exchangeable Shares transferred were exchanged into
Harvest Units in accordance with their terms immediately prior to the
Effective Time;
(eee) Harvest shall subscribe for one (1) Viking Unit in exchange for one
(1) Harvest Unit;
(fff) Viking shall redeem all of the issued and outstanding Viking Units
(other than the one (1) Viking Unit held by Harvest) in exchange for
all of the Harvest Special Units and Harvest Units held by Viking and,
upon such redemption the Harvest Special Units shall be distributed by
Viking to MFCorp on the basis of 1.0000 Harvest Special Unit for each
1.0000 Viking Unit held and the Harvest Units shall be distributed to
the remaining Viking Unitholders on the basis of 1.0000 Harvest Unit
for each 4.0000 Viking Units held;
HARVEST PURCHASE OF MFCORP ASSETS
(ggg) MFCorp shall sell, transfer, convey, assign and deliver to Harvest and
Harvest shall purchase and accept from MFCorp, all of the MFCorp
Assets and Harvest shall (i) assume and become liable to pay, satisfy,
discharge and observe, perform and fulfill the MFCorp Assumed
Liabilities in accordance with their terms, and (ii) issue to MFCorp
an aggregate number of Harvest Units equal in number to one fourth the
number of MFCorp Special Shares and the number of MFCorp Shares
outstanding;
(hhh) Harvest shall subscribe for one (1) MFCorp Share for $10.00;
(iii) MFCorp shall redeem all of the issued and outstanding MFCorp Special
Shares in exchange for Harvest Units, which shall be distributed to
the holders of MFCorp Special Shares on the basis of 1.0000 Harvest
Unit for each 4.0000 MFCorp Special Shares;
EXCHANGE OF EXCHANGEABLE SHARES
(jjj) all of the Harvest Exchangeable Shares held by Harvest shall be
exchanged with Operations for that number of common shares of
Operations having a value equal to the fair market value of the
Harvest Exchangeable Shares so exchanged;
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EXCHANGE OF VHI COMMON SHARES
(kkk) all of the VHI Common Shares held by Harvest shall be exchanged with
Operations for that number of common shares of Operations having a
value equal to the fair market value of the VHI Common Shares so
exchanged.
EXCHANGE OF HARVEST EXCHANGECO SHARES WITH OPERATIONS
(lll) all of the Harvest ExchangeCo Shares held by Harvest shall be
exchanged with Operations for that number of common shares of
Operations having a value equal to the fair market value of the
Harvest ExchangeCo Shares so exchanged;
EXCHANGE OF HARVEST EXCHANGECO SHARES WITH VHI
(mmm) all of the Harvest ExchangeCo Shares held by Operations shall be
exchanged with VHI for that number of common shares of VHI having a
value equal to the fair market value of the Harvest ExchangeCo Shares
so exchanged;
EXCHANGE OF KRANG AND BJORN SHARES
(nnn) all of the Krang Shares and Bjorn Shares held by VHI shall be
exchanged with Harvest ExchangeCo for that number of Harvest
ExchangeCo Shares having a value equal to the fair market value of the
Krang Shares and Bjorn Shares so exchanged;
AMALGAMATION OF KRANG, BJORN AND HARVEST EXCHANGECO
(ooo) Krang, Bjorn and Harvest ExchangeCo shall be amalgamated and continued
as one corporation, AmalgamationCo, in accordance with the following:
(i) the stated capital of the common shares of Krang, Bjorn and
Harvest ExchangeCo shall be reduced, in each case, to $1.00
in aggregate immediately prior to the amalgamation;
(ii) the articles of Amalgamation shall be the same as the
articles of Harvest ExchangeCo and the name of AmalgamationCo
shall be "Harvest ExchangeCo Ltd.";
(iii) the shares of Krang and Bjorn shall be cancelled without any
repayment of capital;
(iv) the property of each of the amalgamating corporations shall
continue to be the property of AmalgamationCo;
(v) AmalgamationCo shall continue to be liable for the
obligations of each of the amalgamating corporations;
(vi) any existing cause of action, claim or liability to
prosecution of each of the amalgamating corporations shall be
unaffected;
(vii) any civil, criminal or administrative action or proceeding
pending by or against each of the amalgamating corporations
may be continued to be prosecuted by or against
AmalgamationCo;
20
(viii) a conviction against, or ruling, order or judgment in favour
of or against, each of the amalgamating corporations may be
enforced by or against AmalgamationCo;
(ix) the Articles of Amalgamation of AmalgamationCo shall be
deemed to be the Articles of Incorporation of AmalgamationCo
and the Certificate of Amalgamation of AmalgamationCo shall
be deemed to be the Certificate of Incorporation of
AmalgamationCo;
(x) the by-laws of AmalgamationCo shall be the by-laws of Harvest
ExchangeCo;
(xi) the first directors of AmalgamationCo shall be Xxxx X. Xxxxxx
and Xxxxxx Xxxxxxxxxxxx;
(xii) the first officers of AmalgamationCo shall be the officers of
Operations; and
(xiii) the registered office of AmalgamationCo shall be the
registered office of Harvest ExchangeCo; and
ELECTION OF OPERATIONS DIRECTORS
(ppp) the number of directors of Operations shall be increased to 9 members
and each of Xxxx Blue, Xxxxx Xxxxx and Xxxxxxx Xxxxxx shall be elected
as directors of Operations to hold office until the next annual
meeting of shareholders of Operations.
3.2 The Harvest Arranged Parties and Viking Arranged Parties shall make
the appropriate entries into their securities registers to reflect the matters
referred to under Section 3.1.
3.3 A holder who (i) has exchanged Securities for MFCorp Special Shares
under the Arrangement; and (ii) is not a Non-Resident; shall be entitled to
make an income tax election, pursuant to subsection 85(1) and 85(2) of the Tax
Act as applicable (and the analogous provisions of provincial income tax law)
with respect to the exchange by the holder of Securities for MFCorp Special
Shares by providing two signed copies of the necessary election forms to
Operations within 90 days following the Effective Date, duly completed with the
details of the number and type of Securities transferred and the applicable
agreed amounts for the purposes of such elections. Thereafter, the election
forms will be signed and returned to such former holders of Securities within
30 days after the receipt thereof by Operations for filing with the Canada
Revenue Agency (or the applicable provincial taxing authority). Operations will
not be responsible for the proper completion and filing of any election form
and, except for the obligation of Operations to so sign and return election
forms which are received by Operations within 90 days of the Effective Date,
Operations will not be responsible for any taxes, interest or penalties
resulting from the failure by a former holder of Operations to properly
complete or file the election forms in the form and manner and within the time
prescribed by the Tax Act (or any applicable provincial legislation). In its
sole discretion, Operations may choose to sign and return an election form
received by it more than 90 days following the Effective Date, but Operations
will have no obligation to do so.
ARTICLE 4
DISSENTING SECURITYHOLDERS
4.1 Each registered holder of Harvest Securities and Viking Units shall
have the right to dissent with respect to the Arrangement in accordance with
the Interim Order. A Dissenting Securityholder shall, at the Effective Time,
cease to have any rights as a holder of Harvest Securities and Viking Units and
shall only be entitled to be paid the fair value of the holder's Harvest
Securities and Viking Units by Harvest, Viking or Operations, as the case may
21
be. A Dissenting Securityholder who is paid the fair value of the holder's
Harvest Securities and Viking Units, shall be deemed to have transferred the
holder's Harvest Securities and Viking Units to Harvest, Viking or Operations,
as the case may be, for cancellation at the Effective Time, notwithstanding the
provisions of Section 191 of the ABCA. A Dissenting Securityholder who for any
reason is not entitled to be paid the fair value of the holder's Harvest
Securities and Viking Units shall be treated as if the holder had participated
in the Arrangement on the same basis as a non dissenting holder of Harvest
Securities and Viking Units notwithstanding the provisions of Section 191 of
the ABCA. The fair value of the Harvest Securities and Viking Units shall be
determined as of the close of business on the last business day before the day
on which the Arrangement is approved by the holders of Harvest Securities and
Viking Units at the applicable Meeting; but in no event shall Harvest, Viking
or Operations be required to recognize such Dissenting Securityholder as a
Securityholder of Harvest, Viking or Operations after the Effective Time and
the name of such holder shall be removed from the applicable register of
Securityholders as at the Effective Time. For greater certainty, in addition to
any other restrictions in section 191 of the ABCA, no person who has voted in
favour of the Arrangement shall be entitled to dissent with respect to the
Arrangement.
ARTICLE 5
OUTSTANDING CERTIFICATES AND FRACTIONAL SECURITIES
5.1 From and after the Effective Time, certificates formerly representing
Harvest Exchangeable Shares and Viking Units that were exchanged pursuant to
Section 3.1 shall represent only the right to receive the consideration to
which the holders are entitled under the Arrangement, or as to those held by
Dissenting Securityholders, other than those Dissenting Securityholders deemed
to have participated in the Arrangement pursuant to Section 4.1, to receive the
fair value of the Harvest Securities and Viking Units represented by such
certificates.
5.2 Harvest and Viking shall, as soon as practicable following the later
of the Effective Date and the date of deposit by a former holder of Harvest
Exchangeable Shares and Viking Units of a duly completed Letter of Transmittal
and the certificates representing such Harvest Exchangeable Shares and Viking
Units, either:
(a) forward or cause to be forwarded by first class mail (postage prepaid)
to such former holder at the address specified in the Letter of
Transmittal; or
(b) if requested by such holder in the Letter of Transmittal, make
available or cause to be made available at the Depositary for pickup
by such holder,
certificates representing the number of Harvest Units to be delivered to such
holder under the Arrangement.
5.3 If any certificate which immediately prior to the Effective Time
represented an interest in outstanding Harvest Exchangeable Shares or Viking
Units that were exchanged pursuant to Section 3.1 has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to have been lost, stolen or destroyed, the Depositary shall
issue and deliver in exchange for such lost stolen or destroyed certificate the
consideration to which the holder is entitled pursuant to the Arrangement (and
any dividends or distributions with respect thereto) as determined in
accordance with the Arrangement. The person who is entitled to receive such
consideration shall, as a condition precedent to the receipt thereof, give a
bond to each of Harvest and Viking and their respective transfer agents, which
bond is in form and substance satisfactory to each of the Harvest and Viking
and their respective transfer agents, or shall otherwise indemnify Harvest and
22
Viking and their respective transfer agents against any claim that may be made
against any of them with respect to the certificate alleged to have been lost,
stolen or destroyed.
5.4 All distributions made with respect to any Harvest Units allotted and
issued to former holders of Harvest Exchangeable Shares and Viking Units
pursuant to this Arrangement but for which a certificate has not been issued
shall be paid or delivered to the Depositary to be held by the Depositary in
trust for the registered holder thereof. The Depositary shall pay and deliver
to any such registered holder, as soon as reasonably practicable after
application therefor is made by the registered holder to the Depositary in such
form as the Depositary may reasonably require, such distributions to which such
holder, is entitled, net of applicable withholding and other taxes.
5.5 Any certificate formerly representing Harvest Exchangeable Shares or
Viking Units that is not deposited with all other documents as required by this
Plan of Arrangement on or before the sixth anniversary of the Effective Date
shall cease to represent a right or claim of any kind or nature including the
right of the holder of such shares to receive Harvest Units. In such case, such
Harvest Units shall be returned to Harvest thereof for cancellation and any
distributions in respect of Harvest Units shall be returned to Harvest.
5.6 No certificates representing fractional Harvest Units shall be issued
under the Arrangement. In lieu of any fractional trust unit or share, each
registered holder of Harvest Exchangeable Shares and Viking Units otherwise
entitled to a fractional interest in a Harvest Unit, shall receive the nearest
whole number of Harvest Units (with fractions equal to exactly 0.5 being
rounded up).
ARTICLE 6
AMENDMENTS
6.1 Harvest, Viking, Operations and VHI may amend this Plan of Arrangement
at any time and from time to time prior to the Effective Time, provided that
each such amendment must be: (i) set out in writing; (ii) approved by the other
parties; (iii) filed with the Court and, if made following the Meetings,
approved by the Court; and (iv) communicated to holders of Harvest Securities
and Viking Units if and as required by the Court.
6.2 Any amendment to this Plan of Arrangement may be proposed by Harvest,
Viking, Operations or VHI at any time prior to or at the Meetings (provided
that the other parties shall have consented thereto) with or without any other
prior notice or communication, and if so proposed and accepted by the persons
voting at the Meetings (other than as may be required under the Interim Order),
shall become part of this Plan of Arrangement for all purposes.
6.3 Any amendment to this Plan of Arrangement that is approved by the
Court following the Meetings shall be effective only if it is consented to by
each of Harvest, Viking, Operations and VHI.
6.4 Any amendment to this Plan of Arrangement may be made prior to or
following the Effective Time by Harvest, Viking, Operations and VHI, provided
that it concerns a matter which, in the reasonable opinion of Harvest, Viking,
Operations and VHI, is of an administrative nature required to better give
effect to the implementation of this Plan of Arrangement and is not adverse to
the financial or economic interests of Harvest, Viking, Operations and VHI, or
any former holder of Harvest Securities or Viking Units.
