AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT - between - FET MANAGEMENT LTD. - and - FOCUS COMMERCIAL TRUST Dated as of February 13, 2008
Exhibit
99.1
AMENDED
AND RESTATED
-
between -
FET
MANAGEMENT LTD.
-
and -
FOCUS
COMMERCIAL TRUST
Dated
as of February 13, 2008
TABLE
OF CONTENTS
Article 1
INTERPRETATION
|
1 | |||
1.1 Definitions
|
1 | |||
1.2 Interpretation
Not Affected by Headings, etc.
|
5 | |||
1.3 Currency
|
5 | |||
1.4 Number,
etc.
|
5 | |||
1.5 Date
for Any Action
|
5 | |||
1.6 Entire
Agreement
|
5 | |||
1.7 Accounting
Matters
|
5 | |||
1.8 Construction
|
5 | |||
1.9 Governing
Law
|
6 | |||
1.10 Schedule
|
6 | |||
Article 2
THE PARTNERSHIP
|
6 | |||
2.1 Nature
of Partnership
|
6 | |||
2.2 Subscription
|
6 | |||
2.3 Action
and Consent
|
6 | |||
2.4 Filing
of Certificates
|
6 | |||
Article 3
NAME, PLACE OF BUSINESS AND DURATION OF THE PARTNERSHIP
|
7 | |||
3.1 Name of
Partnership
|
7 | |||
3.2 Place
of Business
|
7 | |||
3.3 Term of
Partnership
|
7 | |||
Article 4
BUSINESS OF THE PARTNERSHIP
|
7 | |||
4.1 Business of the
Partnership
|
7 | |||
4.2 Business in
Other Jurisdictions
|
8 | |||
4.3 Other
Business
|
8 | |||
4.4 Partnership
Property
|
8 | |||
4.5 Title
to Partnership Property
|
8 | |||
Article 5
PARTNERSHIP CAPITAL AND UNITS
|
8 | |||
5.1 Classes
of Partnership Units
|
8 | |||
5.2 Attributes of
Class A Units
|
8 | |||
5.3 Attributes of
Class B Units
|
9 | |||
5.4 Initial
Limited Partner
|
9 | |||
5.5 Priority
Between Partnership Units of the Same Class or Series
|
9 | |||
5.6 Additional
Issuances of Securities and Classes of Partnership Units
|
9 | |||
5.7 No
Pre-Emptive Rights
|
11 | |||
5.8 No
Fractional Interests in the Partnership
|
11 | |||
5.9 Advances to
Partnership
|
11 | |||
5.10 No
Additional Contribution
|
11 | |||
5.11
Subdivision or Consolidation of Partnership Units
|
11 | |||
5.12
General Partnership Interests
|
11 | |||
5.13 Unit
Certificates
|
12 | |||
5.14
Replacement, Cancellation
|
12 | |||
5.15 Restriction
on Transfers
|
12 | |||
5.16
Exception
|
12 | |||
5.17
Requirements for Transfer
|
13 | |||
Article 6
CAPITAL CONTRIBUTION AND ACCOUNTS
|
13 | |||
6.1 Capital
Subscription
|
13 | |||
6.2 Contribution of
Limited Partners
|
14 | |||
6.3 Contribution of
the General Partner
|
14 | |||
6.4 Separate
Capital Accounts
|
14 |
6.5 Separate
Current Accounts
|
14 | |||
6.6 No
Interest Payable
|
14 | |||
6.7 Return
of Capital
|
14 | |||
Article 7
ALLOCATION OF INCOME AND LOSS
|
15 | |||
7.1 Allocation of
Net Income
|
15 | |||
7.2 Allocation of
Net Losses
|
16 | |||
7.3 Allocation of
Income and Loss for Tax Purposes
|
16 | |||
7.4 Tax and
Other Information
|
16 | |||
Article 8
LOANS AND DISTRIBUTIONS
|
16 | |||
8.1 Loans
and Distributions on Class B Units
|
16 | |||
8.2 Distributions
on Class A Units
|
16 | |||
8.3 Distributions
to the General Partner
|
16 | |||
8.4 Payment
|
17 | |||
8.5 Partial
Payment
|
17 | |||
8.6 Right
of Set-Off
|
17 | |||
8.7 Borrowings by
Holders of Class A Units
|
17 | |||
8.8 Loan
Accounts
|
18 | |||
8.9 Withholdings
|
18 | |||
Article 9
SUPPORT AGREEMENT AND VOTING AND EXCHANGE TRUST AGREEMENT
|
18 | |||
9.1 Support
Agreement and Voting and Exchange Trust Agreement
|
18 | |||
9.2 Further
Actions
|
18 | |||
Article 10
VOTING RIGHTS
|
18 | |||
10.1
Voting Rights
|
18 | |||
10.2
Approval for Change to Class or Series of Partnership
Units
|
19 | |||
10.3
Evidence of Approval
|
19 | |||
10.4
Interested Parties
|
19 | |||
10.5
Resolutions Binding
|
19 | |||
Article 11
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARTNERS
|
19 | |||
11.1
Representations and Warranties of the General Partner
|
19 | |||
11.2
Covenants of the General Partner
|
19 | |||
11.3
Representations and Warranties of Limited Partners
|
20 | |||
11.4
Covenants of Limited Partners
|
20 | |||
11.5
Validity Beyond Execution
|
20 | |||
Article 12
LIABILITIES OF THE PARTNERS AND INDEMNITIES
|
20 | |||
12.1
Liability of General and Limited Partners
|
20 | |||
12.2
Indemnity of Limited Partners
|
21 | |||
12.3 Costs
of Litigation
|
22 | |||
12.4
Relationship - No Representations
|
22 | |||
12.5
Indemnity of Officers of Partnership
|
22 | |||
12.6
Costs of Litigation
|
22 | |||
Article 13
FUNCTIONS AND POWERS OF THE PARTNERS
|
22 | |||
13.1
Exclusive Authority
|
22 | |||
13.2
Rights, Powers and Obligations of the General Partner
|
23 | |||
13.3
Authority of the General Partner
|
24 | |||
13.4
Advances and Loans to Partnership
|
24 | |||
13.5
Delegation and Termination
|
25 | |||
13.6
Exercise of Good Faith
|
25 | |||
13.7
Indemnification
|
25 | |||
13.8
Exception
|
25 |
13.9
Resolution of Conflicts of Interest
|
25 | |||
Article 14
ACCOUNTING AND REPORTING
|
26 | |||
14.1
Fiscal Year
|
26 | |||
14.2
Books and Records
|
26 | |||
14.3
Register
|
26 | |||
14.4
Access to Books and Records
|
26 | |||
14.5
Banking
|
26 | |||
Article 15
POWER OF ATTORNEY
|
26 | |||
15.1
Appointment
|
26 | |||
15.2
Irrevocable
|
28 | |||
Article 16
AMENDMENT
|
28 | |||
16.1
Amendment Procedures
|
28 | |||
16.2
Consent Required
|
28 | |||
16.3
Approval by Extraordinary Resolution
|
29 | |||
16.4
Notice of Limited Partners
|
29 | |||
Article 17
NOTICES
|
29 | |||
17.1
Address
|
29 | |||
17.2
Change of Address
|
29 | |||
Article 18
DISSOLUTION AND LIQUIDATION
|
29 | |||
18.1
Events of Dissolution
|
29 | |||
18.2
No Dissolution
|
30 | |||
18.3
Continuation After Event of Dissolution
|
30 | |||
18.4
Procedure on Dissolution
|
30 | |||
18.5
Cancellation of Certificate
|
31 | |||
18.6
No Right to Dissolve
|
31 | |||
18.7
Agreement Continues
|
31 | |||
Article 19
CHANGE OF GENERAL PARTNER
|
31 | |||
19.1
Removal of the General Partner
|
31 | |||
19.2
Deemed Resignation of the General Partner
|
31 | |||
19.3
Transfer to New General Partner
|
31 | |||
19.4
Transfer of Title to New General Partner
|
31 | |||
19.5
Release by Partnership
|
32 | |||
19.6
New General Partner
|
32 | |||
19.7
Transfer of General Partner Interest
|
32 | |||
19.8
Resignation and Removal of the General Partner
|
32 | |||
19.9
Effective Date of Resignation or Deemed Resignation of the General
Partner
|
32 | |||
19.10
Continuity of Partnership
|
32 | |||
Article 20
MISCELLANEOUS
|
32 | |||
20.1
Counterparts
|
33 | |||
20.2
Default by the General Partner
|
33 | |||
20.3
Severability
|
33 | |||
20.4
Successors and Assigns
|
33 | |||
20.5
Governing Law
|
33 | |||
20.6
Limitation on Liability
|
33 |
Schedule A - Provisions
Attaching to the Class B Units and Certain Provisions Attaching to the Class A
Units
THIS AMENDED AND RESTATED LIMITED
PARTNERSHIP AGREEMENT is dated as of February 13, 2008, amending and
restating the Limited Partnership Agreement dated June 21, 2006.
AMONG:
FET MANAGEMENT LTD., a body
corporate incorporated pursuant to the ABCA (the "General Partner")
- and
-
FOCUS COMMERCIAL TRUST, an
unincorporated investment trust established under the laws of Alberta, by its
Administrator, FET Resources Ltd. (the "Initial Limited
Partner")
- and
-
Each
Person who, from time to time, is accepted as and becomes a limited partner of
the partnership formed pursuant to this Agreement in accordance with the terms
and conditions of this Agreement (the "Limited
Partners")
WHEREAS on June 26, 2006, the
General Partner and the Initial Limited Partner formed and organized the
Partnership upon and subject to the terms of the limited partnership agreement
dated June 26, 2006 (the "Original LP Agreement") and
registered with Alberta Corporate Registry under Certificate of Limited
Partnership No. LP12511507;
AND WHEREAS the Original LP
Agreement is amended and restated in connection with a plan of arrangement
effective as of the date hereof among Enerplus, EnerMark Inc., Focus Energy
Trust ("Focus") and FET
Resources Ltd., pursuant to which, inter alia, Enerplus has
assumed the covenants and obligations of Focus with respect to the issue of
Enerplus Units pursuant to the Exchange Right.
NOW THEREFORE THIS AGREEMENT
WITNESSES that in consideration of the premises, mutual covenants and
agreements herein set forth, the parties covenant and agree, each with the
others, as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this
Agreement unless the context otherwise requires:
(a)
|
"ABCA" means the Business Corporations
Act (Alberta), as amended from time to time, including the
regulations from time to time promulgated
thereunder;
|
(b)
|
"Administration
Agreement" means the agreement entered into on June 21, 2006 among
FCT and the General Partner pursuant to which the General Partner provides
certain administrative and support services to FCT, as from time to time
amended, supplemented or restated;
|
(c)
|
"affiliate" or "associate" when used to
indicate a relationship with a Person or company, has the same meaning as
set forth in the Securities Act
(Alberta);
|
(d)
|
"applicable law" means
any applicable law including any statute, regulation, by law, treaty,
guideline, directive, rule, standard, requirement, policy, order,
judgement, decision, injunction, award, decree or resolution of any
governmental authority, whether or not having the force of
law;
|
(e)
|
"Board of Directors"
means the board of directors of the General
Partner;
|
(f)
|
"Business" means the
business of the Partnership as set out in Section
4.1;
|
(g)
|
"Business Day" means a
day, other than a Saturday, Sunday or statutory holiday, when banks are
generally open in Calgary, Alberta for the transaction of banking
business;
|
(h)
|
"Capital Account" has the
meaning ascribed thereto in Section
6.4;
|
(i)
|
"Capital Contribution"
means the capital contributed by a Partner or agreed to be contributed by
a Partner pursuant to
Article 6;
|
(j)
|
"Certificate" means a
certificate in respect of the Partnership filed pursuant to the
Partnership Act and as amended in accordance with all notices to such
certificates filed pursuant to the Partnership
Act;
|
(k)
|
"Certificate Date" means
the date on which the Certificate was initially filed in accordance with
Section 2.4;
|
(l)
|
"Class A Units" means the
Class A limited partnership units in the Partnership having the rights,
privileges, restrictions and conditions set forth
herein;
|
(m)
|
"Class B Units" means the
Class B limited partnership units in the Partnership having the rights,
privileges, restrictions and conditions set forth
herein;
|
(n)
|
"Current Account" has the
meaning ascribed thereto in Section
6.5;
|
(o)
|
"Eligible Person" means a
Person who is not a Non-Resident or a
Tax-Exempt;
|
(p)
|
"Eligible Transferee"
means, in relation to a holder of Class B Units, an Eligible Person that
does not deal at arms' length with such holder, within the meaning of the
Tax Act, and is approved as an "Eligible Transferee" by the General
Partner, which approval shall not be unreasonably
withheld;
|
(q)
|
"Enerplus" means Enerplus
Resources Fund, a trust established under the laws of the Province of
Alberta pursuant to the Enerplus Trust
Indenture;
|
(r)
|
"Enerplus Record Date"
means any record date for determining the holders of Enerplus Units
entitled to a distribution in accordance with the Enerplus Trust
Indenture, including for greater certainty any Distribution Record Date
(as defined in the Enerplus Trust Indenture) but excluding any such date
which occurred before February 13,
2008;
|
(s)
|
"Enerplus Special Voting
Right" means the special voting right of Enerplus issued by
Enerplus and deposited with the Voting and Exchange Trustee, which shall
entitle, inter
alia, the holders of Class B Units to such number of votes at
meetings of holders of Enerplus Units as equals the number of Enerplus
Units issuable from time to time on the redemption, retraction or exchange
of those Class B Units;
|
(t)
|
"Enerplus Subsidiary"
means any direct or indirect subsidiary (within the meaning of the Securities Act
(Alberta)) of Enerplus;
|
(u)
|
"Enerplus Trust
Indenture" means the Amended and Restated Trust Indenture dated
November 8, 2007 among EnerMark Inc., Enerplus Resources Corporation and
CIBC Mellon Trust Company, as may be amended, supplemented or restated
from time to time;
|
(v)
|
"Enerplus Unit" means a
trust unit of Enerplus, each such unit representing an equal undivided
beneficial interest therein;
|
(w)
|
"Enerplus Unitholders"
means the holders of record of Enerplus
Units;
|
- 2
-
(x)
|
"Exchange Ratio" means,
in respect of the exchange of Class B Units for Enerplus Units, 0.425 of
an Enerplus Unit for each Class B
Unit;
|
(y)
|
"Exchange Ratio
Percentage" means 42.5%;
|
(z)
|
"Exchange Right" means
the right of a holder of Class B Units to require Enerplus to exchange
Enerplus Units for such Class B Units in accordance with the Exchange
Ratio in accordance with the rights, privileges, restrictions and
conditions of the Class B Units and the Voting and Exchange Trust
Agreement;
|
(aa)
|
"Extraordinary
Resolution" means a written resolution in one or more counterparts
consented to in writing by the General Partner and by the Limited Partners
holding Class A Units, and approved by the holders of Class B Units in
accordance with Section 11.1 of Schedule A
hereto;
|
(bb)
|
"FCT" means Focus
Commercial Trust, an unincorporated trust established under the laws of
Alberta;
|
(cc)
|
"FCT Trust Indenture"
means the declaration of trust dated June 21, 2006 between Focus Energy
Trust and FET Resources Ltd., as may be amended, supplemented or restated
from time to time;
|
(dd)
|
"FCT Trustee" means FET
Resources Ltd., as initial trustee of FCT, or such other Person as becomes
the trustee of FCT in accordance with the FCT Trust
Indenture;
|
(ee)
|
"Fiscal Year" has the
meaning ascribed thereto in Section
14.1;
|
(ff)
|
"FLP Subsidiary" means
any Person that is, from time to time, owned and controlled by the
Partnership;
|
(gg)
|
"General Partner" means
FET Management Ltd. and each other Person who becomes an additional or
substituted General Partner pursuant to the terms and conditions of this
Agreement;
|
(hh)
|
"General Partnership
Interest" means the interest of the General Partner in the
Partnership;
|
(ii)
|
"governmental authority"
includes any court (including a court of equity); any multinational,
federal, provincial, state, regional, municipal or other government or
governmental department, ministry, commission, board, bureau, agency or
instrumentality; any securities commission, stock exchange or other
regulatory or self-regulatory body; any arbitrator or arbitration
authority; or any other governmental
authority;
|
(jj)
|
"holder" means, when used
with reference to Class A Units or Class B Units, the holder of such units
as shown from time to time on the register of Partners maintained by or on
behalf of the Partnership in respect of such
units;
|
(kk)
|
"Indemnity" means the
indemnity referred to in Section
12.5;
|
(ll)
|
"insolvent" means the
inability of the Partnership to pay its debts as they become due in the
ordinary course of business;
|
(mm)
|
"Limited Partners" means
the Initial Limited Partner, those Persons who from time to time become
holders of Class A Units or Class B Units, a Person who has subscribed for
and paid for one or more Class A Units or Class B Units and whose
subscription has been accepted by the General Partner who is registered as
a limited partner in accordance with this Agreement and their respective
successors and permitted assignees;
|
(nn)
|
"Loan Account" has the
meaning ascribed thereto in Section
8.8;
|
(oo)
|
"Net Income" or "Net Loss" means, with
respect to any period, the gross revenue of the Partnership from all
sources, interest and other income for the period (including any gain or
loss derived or sustained by the Partnership from any disposition of any
capital property of the Partnership) less all expenses properly incurred
by or on behalf of the Partnership, all as determined by the General
Partner in accordance with generally accepted accounting
principles;
|
- 3
-
(pp)
|
"Non-Resident" means (i)
a Person (within the meaning of the Tax Act but, for greater certainty,
not including a partnership) who is not resident in Canada for purposes of
the Tax Act; or (ii) a partnership that is not a "Canadian partnership" as
defined in the Tax Act;
|
(qq)
|
"Ordinary Resolution"
means a written resolution in one or more counterparts consented to in
writing by the General Partner and by Limited Partners holding a simple
majority of the number of Class A Units outstanding in the
Partnership;
|
(rr)
|
"Partners" means,
collectively, the Limited Partners and the General Partner, and "Partner"
means any one of the Partners;
|
(ss)
|
"Partnership" means the
limited partnership formed pursuant to this
Agreement;
|
(tt)
|
"Partnership Act" means
the Partnership
Act (Alberta), as amended from time to
time;
|
(uu)
|
"Partnership Assets"
means, at any time, all monies, properties and other assets as are at such
time held by or on behalf of the Partnership or held by the General
Partner on behalf of the
Partnership;
|
(vv)
|
"Partnership Units" means
limited partnership units in the Partnership, initially consisting of
Class A Units and Class B Units;
|
(ww)
|
"Person" includes any
individual, body corporate, partnership, association, joint venture,
trust, other organization or entity (whether or not a legal entity) or
governmental authority;
|
(xx)
|
"Register" has the
meaning ascribed thereto in Section
14.3;
|
(yy)
|
"Securities" has the
meaning ascribed thereto in Section
5.6(c);
|
(zz)
|
"Securities Legislation"
means the securities legislation of each province and territory of Canada,
the rules, regulations and forms made or promulgated under such
legislation, the policies, bulletins and notices of the regulatory
authorities administering that legislation and the rules, regulations,
bylaws and policies of the TSX and the New York Stock Exchange, as any of
the foregoing may be amended from time to
time;
|
(aaa)
|
"Support Agreement" means
the amended and restated support agreement dated as of February 13, 2008,
among Enerplus, the Partnership and the General Partner, as amended or
further restated from time to time;
|
(bbb)
|
"Tax Act" means the Income Tax Act
(Canada), R.S.C. 1985, c.1 (5th Supp), as amended from time to time,
including the regulations from time to time promulgated
thereunder;
|
(ccc)
|
"Tax-Exempt" means a
Person that is exempt from tax under Part I of the Tax
Act;
|
(ddd)
|
"Transfer" has the
meaning ascribed thereto in Section
5.15;
|
(eee)
|
"Transfer Agent" means
such entity including the General Partner as may from time to time be
appointed by the General Partner to act as registrar and transfer agent of
the Class B Units, together with any sub-transfer agent duly appointed by
the Transfer Agent;
|
(fff)
|
"Trustee" means CIBC
Mellon Trust Company, as the trustee of Enerplus, or such other Person as
becomes the trustee of Enerplus in accordance with the Enerplus Trust
Indenture;
|
(ggg)
|
"TSX" means the Toronto
Stock Exchange;
|
- 4
-
(hhh)
|
"Unit Certificate" means
a certificate in such form or forms as may be approved by the General
Partner, evidencing one or more Partnership Units, issued in accordance
with the provisions hereof;
|
(iii)
|
"Voting and Exchange Trust
Agreement" means the amended and restated voting and exchange trust
agreement dated as of February 13, 2008, among Enerplus, the Partnership
and CIBC Mellon Trust Company, as amended or further restated from time to
time; and
|
(jjj)
|
"Voting and Exchange
Trustee" means CIBC Mellon Trust Company, as trustee under the
Voting and Exchange Trust Agreement, or such other person as becomes
trustee under the Voting and Exchange Trust Agreement in accordance with
such agreement.
|
1.2 Interpretation Not
Affected by Headings, etc.
The
division of this Agreement into sections and other portions, the provision of a
table of contents and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation
hereof. Unless otherwise indicated, all references in this Agreement
to an "Article" or a "Section" followed by a number and/or a letter refer to the
specified article or section of this Agreement. Unless otherwise
indicated, the terms "this Agreement", "hereof", "herein", "hereunder" and
"hereby" and similar expressions refer to this Limited Partnership Agreement
(including the Schedule hereto), as from time to time amended, supplemented or
restated, and not to any particular article, section schedule or other portion
hereof.
1.3 Currency
Unless
otherwise indicated, all sums of money referred to in this Agreement are
expressed in lawful money of Canada.
1.4 Number,
etc.
Unless
the context otherwise requires, words importing the singular shall include the
plural and vice versa and words importing any gender shall include all
genders.
1.5 Date for Any
Action
In the
event that any date on which any action is required to be taken hereunder by any
of the parties hereto is not a Business Day, such action shall be required to be
taken on the next succeeding day which is a Business Day.
1.6 Entire
Agreement
This
Agreement and the agreements and other documents referred to herein constitute
the entire agreement between the parties with respect to the transactions
contemplated hereby and thereby and supersede all other prior agreements,
understandings, negotiations and discussions, whether oral or written, between
the parties with respect thereto.
1.7 Accounting
Matters
Unless
otherwise indicated, all accounting terms used in this Agreement shall have the
meanings attributable thereto under Canadian generally accepted accounting
principles and all determinations of an accounting nature required to be made
shall be made in a manner consistent with Canadian generally accepted accounting
principles and past practice.
1.8 Construction
In this
Agreement, unless otherwise indicated:
- 5
-
(a)
|
the
words "include", "including" or "in particular", when following any
general term or statement, shall not be construed as limiting the general
term or statement to the specific items or matters set forth or to similar
items or matters, but rather as permitting the general term or statement
to refer to all other items or matters that could reasonably fall within
the broadest possible scope of the general term or
statement;
|
(b)
|
a
reference to a statute means that statute, as amended and in effect as of
the date of this Agreement, and includes each and every regulation and
rule made thereunder and in effect as of the date
hereof;
|
(c)
|
where
a word, term or phrase is defined, its derivatives or other grammatical
forms have a corresponding meaning;
|
(d)
|
time
is of the essence; and
|
(e)
|
references
to a "party" or "parties" are references to a party or parties to this
Agreement.
|
1.9 Governing
Law
This
Agreement shall be governed by and construed in accordance with the laws of
Alberta and the federal laws of Canada applicable therein.
1.10
Schedule
The
following Schedule is annexed to this Agreement and is hereby incorporated by
reference into this Agreement and forms an integral part hereof:
Schedule
A - Provisions Attaching to the Class B Units and Certain Provisions Attaching
to the Class A Units.
ARTICLE 2
THE
PARTNERSHIP
2.1 Nature of
Partnership
The
General Partner and the Limited Partners established the Partnership as a
limited partnership pursuant to the laws of Alberta and the provisions of the
Original Partnership Agreement on June 21, 2006 and agree to and hereby do amend
and restate the Original Partnership Agreement.
2.2 Subscription
A Person
shall become a Limited Partner of the Partnership upon acceptance by the General
Partner of that Person's subscription for Class A Units or Class B
Units.
2.3 Action and
Consent
Except as
provided in this Agreement, no action or consent by any other Limited Partner
shall be required for the admission of any new Limited Partners.
2.4 Filing of
Certificates
As soon
as practicable following the execution hereof and as required from time to time
thereafter, the General Partner shall cause to be executed and filed such
certificates, instruments and documents as may be required under the Partnership
Act or other laws of Alberta to evidence the admission of the Limited Partners
to the Partnership or otherwise. The General Partner and each Limited
Partner shall execute and deliver as promptly as possible any documents that may
be necessary or desirable to accomplish the purposes of this Agreement or to
give effect to the formation and continuance of the Partnership under applicable
laws. The General Partner shall take all necessary actions on the
basis of information available to the General Partner in order to maintain the
status of the Partnership as a limited partnership.
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ARTICLE 3
NAME,
PLACE OF BUSINESS AND DURATION OF THE PARTNERSHIP
3.1 Name of
Partnership
The name
of the Partnership is "Focus Limited Partnership", or such other name as the
General Partner may from deem appropriate to comply with the laws of the
jurisdictions in which the Partnership may carry on business. The
General Partner shall have the right to change the name of the Partnership and
to file an amendment to the Certificate changing the name of the
Partnership.
3.2 Place of
Business
The
principal place of business of the Partnership shall be located at The Dome
Tower, Suite 3000, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx
X0X 0X0. The General Partner shall have the right to change the
office and place of business of the Partnership from time to time in its sole
discretion.
3.3 Term of
Partnership
Each of
the General Partner and the Limited Partners covenants and agrees to continue
the Partnership pursuant to the provisions of the Partnership Act and this
Agreement until such time as the Partnership is dissolved in accordance with the
terms of this Agreement. In the event of the admission, resignation
or withdrawal of a General Partner or Limited Partner, the business of the
Partnership shall be continued by the General Partner without
novation.
ARTICLE 4
BUSINESS
OF THE PARTNERSHIP
4.1 Business of
the Partnership
(a)
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The
business of the Partnership (the "Business") shall consist
of acquiring, investing in, holding, transferring, disposing of and
otherwise dealing with securities of whatever nature and kind of, or
issued by, Enerplus or any associate or affiliate thereof, or of, or
issued by, any other corporation, partnership, trust or other Person
involved, directly or indirectly, in any business which involves exploring
for or drilling, extracting, gathering, processing, transporting, buying,
storing or selling of petroleum, natural gas, natural gas liquids, water,
minerals or other related products, power or other forms of energy, and
all related businesses and such other businesses as the Board of Directors
may determine, and activities ancillary and incidental thereto, whether
carried on directly or indirectly or through another Person; provided that
for so long as the Partnership is the holder of securities of any FLP
Subsidiaries, the Business shall be conducted solely through its
investment in such FLP
Subsidiaries.
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(b)
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Except
with the approval by Extraordinary Resolution, the Partnership shall not
vote its securities of any FLP Subsidiary to
authorize:
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(i)
|
a
sale, exchange or other disposition of all or substantially all of the
assets of an FLP Subsidiary (either in a single transaction or a series of
transactions);
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(ii)
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any
merger, amalgamation, arrangement, reorganization, recapitalization, or
similar transaction involving an FLP Subsidiary;
or
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(iii)
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the
winding-up, liquidation or dissolution of an FLP Subsidiary prior to the
end of the term of Enerplus;
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except in
each case in conjunction with, or pursuant to, or as part of, an internal
reorganization of Enerplus, the Partnership or such FLP Subsidiary.
4.2 Business in
Other Jurisdictions
(a)
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The
Partnership shall not carry on business in any jurisdiction unless the
General Partner has taken all steps which may be required by the laws of
that jurisdiction for the Limited Partners to benefit from the limited
liability provisions applicable in such jurisdiction. The Partnership
shall not carry on business in any jurisdiction in which the laws do not
recognize the liability of the Limited Partners to be limited unless, in
the opinion of the General Partner, the risks associated with the possible
absence of limited liability in such jurisdiction are not significant
considering the relevant
circumstances.
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(b)
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The
Partnership shall carry on business in such a manner as to ensure, to the
greatest extent possible, the limited liability of the Limited Partners,
and the General Partner shall register the Partnership in other
jurisdictions where the General Partner considers it appropriate to do
so.
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4.3 Other
Business
The
Partnership shall not carry on any active business, other than the Business,
provided that the foregoing shall not be interpreted so as to prevent the
Partnership from investing and re-investing its funds.
4.4 Partnership
Property
Except as
otherwise specifically provided in this Agreement, the Partnership shall hold
the property of the Partnership and apply it exclusively for the purposes of the
Partnership in accordance with this Agreement.
4.5 Title to
Partnership Property
The
General Partner is authorized to take legal title in its name to any or all
property of the Partnership, which will be held in trust for the Partnership,
but with authority to replace and dispose of it as deemed prudent in the conduct
of the business and affairs of the Partnership.
ARTICLE 5
PARTNERSHIP
CAPITAL AND UNITS
5.1 Classes of
Partnership Units
The
authorized capital of the Partnership consists of the General Partnership
Interest, an unlimited number of Class A Units and an unlimited number of Class
B Units.
5.2 Attributes of
Class A Units
In
addition to the rights and privileges, restrictions, conditions and limitations
attached to the Class A Units and set out elsewhere herein, the Class A Units
shall have attached thereto the following rights and privileges and be subject
to the following restrictions, conditions and limitations:
(a)
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Class
A Units shall be issuable solely to and held solely by the Initial Limited
Partner or an affiliate of the Initial Limited
Partner;
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(b)
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holders
of Class A Units shall have the right to one vote for each Class A Unit on
any Ordinary Resolution or Extraordinary Resolution, except in respect of
any matter that holders of Class B Units are entitled to vote separately
as a class herein; and
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(c)
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on
a distribution of Partnership Assets in the event of the liquidation,
dissolution or winding-up of the Partnership, whether voluntary or
involuntary, or any other distribution of the assets of the Partnership
among the Partners for the purpose of winding-up its affairs, the holders
of the Class A Units shall be entitled to share in the distribution of the
Partnership Assets as provided in Schedule
A.
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5.3 Attributes of
Class B Units
In
addition to the rights and privileges, restrictions, conditions and limitations
attached to the Class B Units and set out elsewhere herein, the Class B Units
shall have attached thereto the following rights and privileges and be subject
to the following restrictions, conditions and limitations:
(a)
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the
voting rights of the holders of Class B Units shall be as set out in
Section 10.1 hereof; and
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(b)
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the
Class B Units shall have attached thereto the rights, privileges,
restrictions and conditions set forth in Schedule A
hereto.
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5.4 Initial
Limited Partner
On June
21, 2006, the Initial Limited Partner subscribed for one Class A Unit for an
aggregate capital contribution of $100 and such subscription was accepted by the
General Partner.
5.5 Priority
Between Partnership Units of the Same Class or Series
Each
Partnership Unit of the same class or series shall rank equally with all other
Partnership Units of the same class or series and shall entitle the holder
thereof to the same rights and obligations as the holder of any other
Partnership Unit of the same class or series and no Limited Partner shall be
entitled to any privilege, priority or preference hereunder in relation to any
other Limited Partner holding Partnership Units of the same class or
series.
5.6 Additional
Issuances of Securities and Classes of Partnership Units
(a)
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The
General Partner, in addition to the Class A Units and Class B Units, is
authorized to cause the Partnership to issue at any time Partnership Units
of any class or series or other Securities, to the General Partner, to any
Limited Partners or to other Eligible Persons, all without any consent or
approval of the Limited Partners or any percentage thereof. The
General Partner shall determine the consideration and terms and conditions
with respect to any future issuance of Securities in a manner that it in
good faith determines to be in the best interests of the Partnership,
which classes or series of Securities, if any, shall have such
designations, preferences, privileges, participation rights or other
special rights and restrictions as shall be fixed by the General Partner
and, if the Securities are Partnership Units may include, without
limitation:
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(i)
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the
allocation of Partnership income, gain, loss, deduction and credit to each
class or series of Partnership Units, if
any;
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(ii)
|
the
right of each class or series of Partnership Units to share in Partnership
distributions;
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(iii)
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the
rights of each class or series of Partnership Units upon dissolution and
liquidation of the Partnership;
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(iv)
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the
price at which and the terms and conditions upon which each class or
series of Partnership Units may be redeemed by the Partnership, if any
class or series is so redeemable;
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(v)
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the
rate at which and the terms and conditions upon which each class or series
of Partnership Units, if any, may be converted into another class or
series of Partnership Units, as the case may be, if any class or series is
so convertible;
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(vi)
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the
terms and conditions upon which each class or series of Partnership Units,
if any, will be issued and assigned or transferred;
and
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(vii)
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the
right of each class or series of Partnership Units to vote on Partnership
matters including matters relating to the relative designations,
preferences, privileges, participation rights or other special rights and
restrictions of such class or series, if any class or series is granted
any voting rights,
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provided,
however, that in fixing the designations, preferences, privileges, participation
rights or other special rights and restrictions of any class or series of
Partnership Units, the General Partner shall act in a manner that it in good
faith determines to be in the best interests of the Partnership.
(b)
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Upon
or prior to the issuance of any new class or series of Partnership Units
having designations, preferences, privileges, participation rights or
other special rights and restrictions which shall not be identical to or
more favourable than the designations, preferences, privileges,
participation rights or other special rights and restrictions of the Class
A Units or the Class B Units, the General Partner, without the consent at
the time of any Limited Partner (each Limited Partner hereby consenting to
any and each amendment), may amend any provision of this Agreement and,
pursuant to the exercise of the power of attorney granted to the General
Partner pursuant to Section 15.1, may execute, swear to, acknowledge,
deliver, file and record such documents as the General Partner may
determine necessary or appropriate in connection with such amendment in
order to reflect the authorization and issuance of each class or series of
Partnership Units or other Securities and the designations, preferences,
privileges, participation rights or other special rights or restrictions
thereof as to the matters set forth in Section
5.6(a).
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(c)
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Subject
to Section 5.6(e), the General Partner is also authorized, subject to the
Partnership Act, to cause the Partnership to issue any other type of
security including, without limitation, secured and unsecured debt
obligations of the Partnership, debt obligations of the Partnership
convertible into any class or series of Partnership Units that may be
issued by the Partnership, or options, rights, warrants, appreciation
rights or subscription rights relating to any class or series of
Partnership Units, any debt obligations or any combination of any of the
foregoing (collectively, "Securities") from time
to time to the General Partner, to Limited Partners or to other Eligible
Persons on terms and conditions established by the General Partner acting
in a manner that it in good faith determines to be in the best interests
of the Partnership.
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(d)
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The
General Partner shall do all such things as it deems to be appropriate or
necessary to comply with the Partnership Act and is authorized and
directed to do all things which it deems to be necessary or advisable in
connection with any future issuance of Securities, including compliance
with any statute, rule, regulation or guideline of any securities
regulatory authority or other governmental authority, which shall or may
have jurisdiction over the Securities or the issuance, sale or transfer
thereof.
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(e)
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Notwithstanding
anything to the contrary in this Agreement, the General Partner shall not
permit or cause the Partnership to issue Partnership Units or other
Securities ranking ahead of or on a parity with the Class A Units or Class
B Units as to loans, distributions, allocations of Net Income and Net
Loss, liquidation or voting rights, other than the issuance, from time to
time, of additional Class A Units or Class B Units, unless the General
Partner is satisfied that the issuance of such Partnership Units or other
Securities and the adherence to the preferences, privileges, participation
rights and other special rights and restrictions, if any, thereof will
not:
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(i)
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prevent
the allocations to the Class A Units and the Class B Units required under
Article 7;
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(ii)
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prevent
the loans and distributions required under Article 8 in respect of
the Class A Units and the Class B Units;
or
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(iii)
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adversely
affect the rights of the holders of Class B Units under the rights,
privileges, restrictions and conditions attaching to the Class B Units,
including under the Voting and Exchange Trust
Agreement.
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5.7 No
Pre-Emptive Rights
Except as
the General Partner may otherwise provide in connection with the issuance of
additional Securities pursuant to Section 5.6, and except as otherwise provided
in this Agreement, no Partner shall have any pre-emptive, preferential or other
similar right with respect to:
(a)
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additional
Capital Contributions;
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(b)
|
issuance
or sale of Partnership Units, whether unissued or held in
treasury;
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(c)
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issuance
of any obligations, evidences of indebtedness or other Securities whether
or not convertible into or exchangeable for or carrying or accompanied by
any rights to receive, purchase or subscribe for, any Partnership Units,
whether unissued or held in
treasury;
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(d)
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issuance
of any right of, subscription to or right to receive, or any warrant or
option for the purchase of, any of the foregoing Securities;
or
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(e)
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issuance
or sale of any other Securities that may be issued or sold by the
Partnership.
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5.8 No Fractional
Interests in the Partnership
No
fractional Partnership Units or other interests in the Partnership may be issued
by the Partnership or transferred by Partners.
5.9 Advances to
Partnership
No
Limited Partner shall be required to advance funds to the Partnership in excess
of an amount equal to the Limited Partner's Capital Contribution. If
any Limited Partner shall advance funds to the Partnership in excess of the
Limited Partner's Capital Contribution, the making of the advances shall not
result in any increase in the Capital Contribution of the Limited
Partner. The amounts of any such advances in excess of such Partner's
Capital Contribution shall be a debt of the Partnership to the Limited Partner
and shall be payable or collectible only out of the Partnership Assets in
accordance with the terms and conditions upon which the advances are
made. Default by the Partnership in repayment of such an advance
shall not give the Limited Partner the right to demand or receive the return of
any part of the Capital Account or Capital Contributions of such Limited
Partner.
5.10
No Additional Contribution
Each
Partnership Unit on issuance shall be fully paid and shall not be subject to any
assessment for additional Capital Contributions.
5.11
Subdivision or Consolidation of Partnership Units
Without
limitation to Section 3.2 of Schedule A hereto, the General Partner may at any
time subdivide or consolidate any class or series of the Partnership Units on
such basis as the General Partner in its discretion may determine provided that
the General Partner shall only subdivide, redivide, reduce, combine, consolidate
or change then outstanding Class B Units into a greater or lesser number of
Class B Units, after giving effect to the Exchange Ratio, if an equivalent
change has been made concurrently in the Enerplus Units. After any
subdivision or consolidation, the General Partner shall give to each Limited
Partner such notice thereof as the General Partner in its discretion may
consider reasonable in the circumstances.
5.12
General Partnership Interests
No
certificate shall be issued to evidence the General Partnership
Interest.
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5.13
Unit Certificates
The
General Partner shall, within 10 days after a Person becomes a Limited Partner,
issue to such Limited Partner a copy of a Unit Certificate indicating that the
registered holder thereof is the owner of the number of Partnership Units set
out thereon and the original Unit Certificates shall be deposited with the
Transfer Agent and may only be released upon a direction by the General
Partner. Each Unit Certificate shall be signed by at least one
officer or director of the General Partner. The General Partner, upon
request by a transferee (a "Transferee") that is permitted
in accordance with this Agreement, shall issue a new Unit Certificate for any
Partnership Units transferred (which certificate shall be deposited with the
Transfer Agent and may only be released upon a direction by the General
Partner). In the case of a transfer of less than all of the
Partnership Units represented by a Unit Certificate, the General Partner, upon
request by the transferor, shall issue and deposit with the Transfer Agent a new
Unit Certificate for the balance of the Partnership Units retained by the
transferor which may only be released upon a direction by the General
Partner. The Unit Certificates evidencing the Class B Units shall
contain or have affixed thereto such further legend as is provided in Section
14.1 of Schedule A hereto. The provisions of this Section 5.13
dealing with the deposit and legending of Unit Certificates shall not apply to
certificates representing Class B Units acquired by Enerplus pursuant to the
Exchange Right or to any transferee thereof.
5.14
Replacement, Cancellation
The
General Partner may, in its discretion, direct the Transfer Agent to issue a new
Unit Certificate in lieu of and upon cancellation of a Unit Certificate that has
been mutilated or in substitution of a Unit Certificate that has been lost,
apparently destroyed or wrongfully taken, upon payment of such fee and on such
terms as to indemnification, reimbursement of expenses, and evidence of loss and
of title as the General Partner and the Transfer Agent may from time to time
prescribe which Unit Certificates will be held as provided in Section
5.13.
5.15
Restriction on Transfers
No holder
of Class B Units may sell, assign, encumber, grant a security interest in, cause
the Partnership to redeem or otherwise dispose of or transfer (or permit any of
the foregoing to occur) whether voluntarily or involuntarily or otherwise (any
such transaction being hereinafter called a "Transfer") its Class B Units,
except in accordance with operation of law or with respect to a re-registration
of Unit Certificates evidencing Class B Units that does not involve a change in
beneficial ownership. Notwithstanding the foregoing, the General
Partner may refuse to recognize any Transfer of Class B Units if such Transfer
fails to comply with Section 5.17 or if, in the opinion of the General Partner,
such Transfer might result in the termination of the Partnership, a lien or
charge on the properties of the Partnership or a breach of applicable Securities
Legislation or if the transferee is a Non-Resident; and provided further that if
any Limited Partner proposes a Transfer of all the Class B Units held by that
Limited Partner then, unless the General Partner otherwise agrees, the Limited
Partner will only be permitted to transfer all but one Class B Unit and such
Class B Unit shall continue to be held by that Limited Partner until the first
day of the Fiscal Year immediately following the Fiscal Year in which such
Transfer occurs.
5.16
Exception
Nothing
contained in this Agreement shall prohibit or prevent:
(a)
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a
Limited Partner from Transferring Class B Units to the Partnership, an
Enerplus Subsidiary or Enerplus pursuant to the rights, privileges,
restrictions and conditions attaching to the Class B Units, including
under the Voting and Exchange Trust
Agreement;
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(b)
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a
Partner from mortgaging, charging, assigning, pledging, hypothecating or
granting a security interest in or otherwise encumbering any or all of its
General Partnership Interest or Class A Units as security for any one or
more bona fide
loans to, guarantees given by or any other present and future
indebtedness, liabilities or other obligations of such Partner to another
Person provided the General Partner has directed the release, pursuant to
Section 5.13, of the Class A Units which are the subject of such
security;
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(c)
|
the
holder of any mortgage, charge, assignment, pledge, hypothecation,
security interest or other encumbrance permitted by Section 5.16(b) from
taking all such steps as may be necessary or desirable to exercise or
enforce its rights and remedies under and realize upon the security of any
such mortgage, charge, assignment, pledge, hypothecation, security
interest or other encumbrance; or
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(d)
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the
completion of any sale or transfer of any or all of the General
Partnership Interest or Class A Units of a Partner to any Person pursuant
to any enforcement or realization of security contemplated by Section
5.16(b) provided such transferee provides the General Partner with the
acknowledgment in writing provided for in Section
5.17(c),
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provided
that, in the case of (b), (c) or (d) above, the Person, holder or transferee,
respectively, is not a Non-Resident.
5.17
Requirements for Transfer
No
Transfer of Partnership Units shall be effective or shall be registered on the
register of transfers of the Partnership maintained by the Transfer Agent except
upon delivery to the Transfer Agent of:
(a)
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the
Unit Certificate(s) representing such Partnership Units (if not already
held by the Transfer Agent) and a stock power of attorney in form
acceptable to the Transfer Agent, duly endorsed for Transfer by the
transferor to the Transferee;
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(b)
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such
assurance or evidence of signatures, identifications or authority to
Transfer the Partnership Units as the Transfer Agent may from time to time
prescribe;
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(c)
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acknowledgment
in writing from the Transferee agreeing to be bound by the terms of this
Agreement and to assume all obligations of the transferor under this
Agreement that pertain to the Partnership Units being transferred in a
form acceptable to the General
Partner;
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(d)
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evidence,
acceptable to the General Partner, that the Transferee is an Eligible
Transferee;
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(e)
|
confirmation
that the provisions of all applicable Securities Legislation are being
complied with, in a form acceptable to the General
Partner;
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(f)
|
a
power of attorney and certificate of assumption in form acceptable to the
General Partner, duly executed by the Transferee;
and
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(g)
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a
cheque to the General Partner for such amount as the General Partner
determines is necessary to pay any expenses incurred by the Partnership in
respect of the Transfer including, without limitation, any land transfer
taxes payable in any jurisdiction as a result of such Transfer provided
that, if the amount of any taxes payable by the Partnership as a result of
such Transfer is determined subsequently and such amount as subsequently
determined exceeds the amount previously paid by the transferring holder,
the difference shall, on written notice by the General Partner to such
transferring holder, be payable immediately by such transferring holder to
the Partnership.
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ARTICLE
6
CAPITAL
CONTRIBUTION AND ACCOUNTS
6.1 Capital
Subscription
Subject
to Section 5.6, the General Partner may raise capital for the Partnership by
selling and issuing Partnership Units and may determine the terms and conditions
of any such sale and issuance and may do all things in that regard including
preparing and filing a preliminary prospectus and a prospectus, or an offering
memorandum, and such other documents as may be necessary or advisable, paying
the expenses of issuing and entering into agreements with any Person providing
for a commission or fee in respect of such sale, either to agents or purchasers
provided that no subscription for Partnership Units may be made or shall be
accepted for less than that number of Partnership Units necessary to comply with
prospectus exemption requirements of applicable Securities Legislation in the
provinces or territories of Canada in which Partnership Units are offered for
sale.
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6.2 Contribution
of Limited Partners
The
Capital Contribution of each Limited Partner shall be the subscription price for
Partnership Units paid by such Limited Partner. Where the
subscription price for Partnership Units is satisfied by the delivery of assets,
securities or other property, the amount of the Capital Contribution of the
Limited Partner contributing such assets, securities or other property shall be
the amount determined by the General Partner, in its sole
discretion.
6.3 Contribution
of the General Partner
The
General Partner shall have no obligation to contribute to the capital of the
Partnership. The foregoing shall not be interpreted to prevent the
General Partner or officers, directors, shareholders and other parties related
to the General Partner from subscribing for or otherwise acquiring Partnership
Units.
6.4 Separate
Capital Accounts
The
General Partner shall maintain a separate capital account (a "Capital Account") for each
Partner and shall, on receipt of an amount in respect of a Capital Contribution,
credit the Capital Account of such Partner with such Capital Contribution and
shall debit the Capital Account of such Partner with the amount of any Capital
Contribution actually returned from time to time by the Partnership to the
Partner. The interest of a Partner in the Partnership shall not
terminate by reason of there being a negative or nil balance in the Partner's
Capital Account. Where a Person holds Partnership Units of different
classes or series, the Partnership shall maintain a separate Capital Account for
such Person in respect of each class or series of Partnership Units in like
manner as if the Partnership Units were held by a separate Person and any
reference in this Agreement shall be deemed to be a reference to the Capital
Account or Capital Accounts as the context requires.
6.5 Separate
Current Accounts
A
separate current account ("Current Account") shall be
established and maintained by the General Partner for each Partner, and all
allocations of Net Income or Net Loss, including allocations under
Article 7, shall be credited or debited, as the case may be, to the Current
Account of the Partner for whom the allocation was made. Where a
Person holds Partnership Units of different classes or series, the Partnership
shall maintain a separate Current Account for such Person in respect of each
class or series of Partnership Units in like manner as if the Partnership Units
were held by a separate Person and any reference in this Agreement shall be
deemed to be a reference to the Current Account or Current Accounts as the
context requires. No Limited Partner shall be responsible for any
losses of any other Limited Partner, nor share in the allocation of Net Income
or Net Loss attributable to the Partnership Units of any other Limited
Partner.
6.6 No Interest
Payable
No
Partner shall be entitled to receive interest on the amount of its Capital
Account or any balance in its Current Account from the Partnership and no
Partner shall be liable to pay interest to the Partnership on any negative
balance in its Capital Account or on any negative balance in its Current
Account. No Partner shall be entitled to withdraw any funds from the
Capital Account or Current Account maintained for such Partner except in
compliance with this Agreement.
6.7 Return of
Capital
Except
upon dissolution of the Partnership or as otherwise specifically provided in
this Agreement, no Partner shall have any right to demand or to receive the
return of any part of the Capital Account or Capital Contributions of the
Partner. Notwithstanding the foregoing, in the event any distribution required
to be made pursuant to this Agreement to any Partner is in excess of the balance
in the Current Account maintained for such Partner, the excess shall be paid
from the Capital Account maintained for such Partner and the Certificate shall
be amended to reflect the return of capital to the Partner.
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ARTICLE 7
ALLOCATION
OF INCOME AND LOSS
7.1 Allocation of
Net Income
For
Fiscal Years ending after December 31, 2007, the Net Income shall be
allocated by the Partnership as follows:
(a)
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to
the Person who is the General Partner at the end of the relevant Fiscal
Year, an amount equal to 0.001% of the Net Income for such Fiscal
Year;
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(b)
|
for
the Fiscal Year which began on January 1, 2008, to each Person who
held Class B Units on January 31, 2008, the lesser
of:
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(i)
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the
aggregate amount of the loans made to such person by the Partnership on
February 15, 2008 pursuant to Section 8.1;
and
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(ii)
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the
product obtained when 99.999% of the Net Income for the Fiscal Year which
began on January 1, 2008 is multiplied by the quotient obtained when
the aggregate number of Class B Units held by such Person on
January 31, 2008 is divided by the aggregate number of Class B Units
which were outstanding on January 31,
2008;
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(c)
|
to
each Person who holds, or at any time in the relevant Fiscal Year held,
Class B Units, an amount equal to the amount determined by the following
formula:
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RNE
|
x
|
DPP
AD
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where:
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(i)
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RNE
is the amount of Net Income for the relevant Fiscal Year which is not
allocated pursuant to Sections 7.1(a) and
(b);
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(ii)
|
DPP
is the aggregate of those amounts, determined for each Enerplus Record
Date during the relevant Fiscal Year, which are equal to the product
obtained when:
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(A)
|
the
amount equal to that portion of the distribution in respect of a single
Enerplus Unit which became payable on such date for which Enerplus claims
a deduction pursuant to subsection 104(6) of the Tax Act in computing its
income for its taxation year that includes such Enerplus Record
Date;
|
is
multiplied by
|
(B)
|
the
aggregate number of Class B Units held by the Person on such date;
and
|
|
(iii)
|
AD
is the aggregate of those amounts, determined for each Enerplus Record
Date during the relevant Fiscal Year, which are equal to the product
obtained when:
|
|
(A)
|
the
amount of the distribution which became
payable in respect of a single Enerplus Unit on such
date;
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is
multiplied by
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-
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(B)
|
the
aggregate number of Class B Units outstanding on such date;
and
|
(d)
|
to
each Person who holds Class A Units at the end of the relevant Fiscal
Year, the amount equal to the product obtained when the amount of Net
Income for the relevant Fiscal Year which is not allocated pursuant to
Sections 7.1(a), (b) and (c) is multiplied by the quotient obtained when
the aggregate number of Class A Units held by such Person at the end of
such Fiscal Year is divided by the aggregate number of Class A Units
outstanding at the end of such Fiscal
Year.
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7.2 Allocation of
Net Losses
For any
Fiscal Year ending after December 31, 2007, an amount equal to 0.001% of
the Net Loss for the relevant Fiscal Year shall be allocated to the Person who
is the General Partner at the end of the relevant Fiscal Year and 99.999% of the
Net Loss for the relevant Fiscal Year shall be allocated to Persons who were
holders of Class A Units pro rata in accordance with their respective holdings
of Class A Units at the end of such Fiscal Year.
7.3 Allocation of
Income and Loss for Tax Purposes
For tax
purposes, the income or loss of the Partnership for any Fiscal Year shall be
allocated to the Partners in the same manner that Net Income or Net Loss for
that year would have been allocated if any reference to "Net Income" and "Net
Loss" in Sections 7.1 and 7.2 were read as references to "income of the
Partnership for the purposes subsection 96(1) of the Tax Act" and "loss of the
Partnership for the purposes of subsection 96(1) of the Tax Act",
respectively. All other amounts allocable for tax purposes by the
Partnership for a particular Fiscal Year shall be allocated to the Partners in
the same manner that a Net Loss for that year would have been
allocated.
7.4 Tax and Other
Information
In
accordance with the Tax Act, the General Partner will provide each Limited
Partner with information on Net Income and Net Losses of the
Partnership.
ARTICLE 8
LOANS
AND DISTRIBUTIONS
8.1 Loans and
Distributions on Class B Units
A holder
of a Class B Unit shall be entitled to receive and the General Partner shall,
subject to applicable law, make loans and pay distributions on each Class B Unit
as set forth in Article 3 of Schedule A hereto. Such loans shall be
paid out of money, assets or property of the Partnership properly applicable to
the making of loans.
8.2 Distributions
on Class A Units
A holder
of Class A Units shall be entitled to receive and the General Partner shall,
subject to applicable law, from time to time pay distributions on each Class A
Unit as the General Partner determines. Such distributions shall be
paid out of money, assets or property of the Partnership properly applicable to
the payment of distributions or out of authorized but unissued Class A Units, as
applicable.
8.3 Distributions
to the General Partner
The
General Partner shall be entitled to receive and the General Partner shall,
subject to applicable law, pay itself from the assets of the Partnership a
distribution in each Fiscal Year equal to 0.001% of the Net Income of the
Partnership. Such distributions shall be paid out of money, assets or
property of the Partnership properly applicable to the payment of
distributions.
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8.4 Payment
The
Partnership shall issue or cause to be issued cheques payable upon presentation
in respect of any cash loans or distributions contemplated by Sections 8.1 to
8.3 hereof and the sending of such a cheque to each Partner entitled to such
loan or distribution shall satisfy the cash loans or distributions represented
thereby unless the cheque is not paid on presentation. Unit
Certificates registered in the name of the registered holder of Class A Units or
Class B Units shall be issued or transferred in respect of any Class A Unit or
Class B Unit, as the case may be, distribution and the sending of a copy of such
a Unit Certificate to each holder of a Class A Unit or Class B Unit, as the case
may be, (and the deposit of the original of such certificate with the Transfer
Agent), as applicable, shall satisfy the Class B Unit distributions represented
thereby. Any other type and amount of property in respect of any
loans or distributions shall be issued, distributed or transferred by the
Partnership in such manner as the General Partner shall determine and the
issuance, distribution or transfer thereof by the Partnership to each holder of
a Class B Unit shall satisfy the loans or distributions represented
thereby. No holder of a Class B Unit shall be entitled to recover by
action or other legal process against the Partnership any cash loan or
distribution that is represented by a cheque that has not been duly presented
for payment or that otherwise remains unclaimed for a period of six years from
the date on which such loan or distribution was payable.
8.5 Partial
Payment
If on any
advance or payment date for any loans or distributions declared under Sections
8.1, 8.2 or 8.3, the loans or distributions are not paid in full on all of the
Partnership Units or the General Partnership Interest then outstanding and
entitled to receive such a loan or distribution, any such advances or
distributions that remain unadvanced or unpaid shall be advanced or paid on a
subsequent date or dates determined by the General Partner on which the
Partnership shall have sufficient money, assets or property properly applicable
to the advancement of such loans or payment of such distributions, as the case
may be.
8.6 Right of
Set-Off
The
General Partner may, in its sole discretion, set-off and apply any sums
otherwise payable to a Partner as a distribution hereunder against any amounts
due to the Partnership from such Partner.
8.7 Borrowings by
Holders of Class A Units
The
holders of Class A Units shall be entitled, upon written request therefor to the
General Partner, to borrow from the Partnership such amount as may be agreed to
by the Limited Partners and the General Partner and subject to the holders of
Class A Units entering into a full recourse grid note lending agreement with the
Partnership which agreement shall include the following terms and
conditions:
(a)
|
the
principal amount to be lent by the Partnership to the Limited Partner
shall not exceed the estimated cash distribution by the Partnership to
such Limited Partner on its Class A Units during the term of the
loan;
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(b)
|
the
loan shall be interest free;
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(c)
|
the
loan shall be repaid in full on the 1st day of the taxation year following
the year in which the loan was made and the Limited Partner may (subject
to the provision of Section 8.7(e)) elect to repay the loan by requesting
that the Partnership set-off against the Capital Account of the Limited
Partner an amount equal to the
loan;
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(d)
|
if
the balance in the Capital Account is less than the amount of the loan,
the Limited Partner shall forthwith pay to the Partnership the difference
between the loan amount and the amount of the Capital Account and if the
Capital Account is greater than the loan, the Partnership shall forthwith
pay to the Limited Partner the difference between the amount of the
Capital Account and the loan
amount;
|
(e)
|
as
security for the Limited Partner's obligations to the Partnership, the
Limited Partner's cash distributions while the loan is outstanding shall
be credited to such Limited Partner's Capital Account;
and
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(f)
|
such
other terms and conditions as the General Partner or Limited Partner,
acting reasonably, may decide are
necessary.
|
8.8 Loan
Accounts
A
separate loan account ("Loan
Account") shall be established and maintained by the General Partner for
each Partner, and all amounts loaned (including loans pursuant to Section 3.1 of
Schedule A hereto) and all amounts paid in respect thereof (including amounts
set off in respect of such loans) shall be debited or credited, as the case may
be, to the Loan Account of the Partner to whom the loan or payment was
made. Where a Person holds Partnership Units of different classes or
series, the Partnership shall maintain a separate Loan Account for such Person
in respect of each class or series of Partnership Units in like manner as if the
Partnership Units were held by a separate Person and any reference in this
Agreement shall be deemed to be a reference to the Loan Account or Loan Accounts
as the context requires. No Limited Partner shall be responsible for
any amounts owed by any other Limited Partner.
8.9 Withholdings
The
Partnership shall be entitled to deduct and withhold from any loan, distribution
or consideration otherwise payable to any holder of Partnership Units hereunder
such amounts as the Partnership is required to deduct and withhold with respect
to such payment under the Tax Act or any provision of provincial, state, local
or foreign tax law, in each case, as amended. To the extent that any
amounts are so withheld, such withheld amounts shall be treated for all purposes
hereof as having been paid to the holder of the Partnership Units in respect of
which such deduction and withholding was made, provided that such withheld
amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required to be deducted or withheld from any
payment to a holder exceeds the cash portion of the consideration otherwise
payable to the holder, the Partnership is hereby authorized to sell or otherwise
dispose of such portion of the consideration as is necessary to provide
sufficient funds to the Partnership to enable it to comply with such deduction
or withholding requirement and the Partnership shall notify the holder thereof
and remit any unapplied balance of the net proceeds of such sale.
ARTICLE 9
SUPPORT
AGREEMENT AND VOTING AND EXCHANGE TRUST AGREEMENT
9.1 Support
Agreement and Voting and Exchange Trust Agreement
The
Partnership has entered into the Voting and Exchange Trust
Agreement. The Partnership has entered into the Support Agreement
whereunder the parties agree to use their best efforts to ensure that the
Partnership has sufficient financial resources (including Enerplus Units) to
permit it to declare and pay loans and distributions on the Class B Units in
accordance with Section 8.1 hereof.
9.2 Further
Actions
The
General Partner on behalf of the Partnership will take all such actions and do
all such things as shall be necessary or advisable to perform and comply with
all applicable provisions of the Support Agreement and the Voting and Exchange
Trust Agreement applicable to the Partnership and the holders of Class B Units
in accordance with the terms thereof including, without limitation, taking all
such actions and doing all such things as shall be necessary or advisable to
enforce to the fullest extent possible for the direct benefit of the Partnership
and the holders of Class B Units all rights and benefits in favour of the
Partnership and the holders of Class B Units under or pursuant to the Support
Agreement and the Voting and Exchange Trust Agreement.
ARTICLE 10
VOTING
RIGHTS
10.1
Voting Rights
Subject
to Article 16 and except as otherwise provided herein, the holders of Class
B Units shall not be entitled as such to receive notice of or to attend any
meeting of the Partners or to vote at any such meeting.
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-
10.2 Approval for
Change to Class or Series of Partnership Units
Except as
set forth in Article 11 of Schedule A hereto, the rights, privileges,
restrictions and conditions attaching to any class or series of Partnership
Units may only be added to, changed or removed with the approval of the holders
of the Partnership Units of such class or series given as specified in Section
10.3.
10.3 Evidence of
Approval
Any
approval given by the holders of any class or series of Partnership Units to add
to, change or remove any right, privilege, restriction or condition attaching to
such class or series of Partnership Units or any other matter requiring the
approval or consent of the holders of the Partnership Units of any class or
series shall be deemed to have been sufficiently given, other than in respect of
holders of Class B Units, if it shall have been approved by an Ordinary
Resolution.
10.4 Interested
Parties
Partnership
Units owned by a Limited Partner who is party to a contract or proposed contract
or who has a material interest in a contract, proposed contract or transaction
(either directly or indirectly, including through an affiliate) which is the
subject matter of a resolution shall not be entitled to a vote on such
resolution; provided, however, that a Limited Partner shall be deemed not to
have a material interest in a contract, proposed contract or transaction if the
interest arises merely from the ownership of Partnership Units where the Limited
Partner will have or receive no extra or special benefit or advantage not shared
or enjoyed on a pro rata basis by all other Limited Partners.
10.5 Resolutions
Binding
Any
resolution passed in accordance with this Agreement will be binding on all the
Partners and their respective heirs, executors, administrators, successors and
assigns, whether or not any such Partner was present in Person or voted against
any resolution so passed.
ARTICLE 11
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF PARTNERS
11.1 Representations and
Warranties of the General Partner
The
General Partner hereby represents and warrants to the Limited Partners
that:
(a)
|
it
is a corporation duly amalgamated under the laws of Alberta and it is and
shall continue to be duly existing and in good standing under the laws of
any jurisdiction in which it carries on
business;
|
(b)
|
it
has and shall continue to have the capacity to act as the General Partner
and its obligations herein do not conflict with or constitute a default
under its constating documents or any agreement by which it is
bound;
|
(c)
|
it
holds and shall maintain the registrations necessary for the conduct of
its business and it has and shall continue to have the licenses and
permits necessary to exploit the Business;
and
|
(d)
|
this
Agreement constitutes a valid and legally binding obligation of it,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization and other laws of general
application limiting the enforcement of creditors' rights generally and to
the fact that specific performance is an equitable remedy available only
in the discretion of the court.
|
11.2 Covenants of
the General Partner
The
General Partner hereby covenants that:
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-
(a)
|
subject
to Section 4.2 hereof, it will maintain the registrations necessary for
the conduct of its business and will have the licences and permits
necessary to carry on the Business in all jurisdictions where the
activities of the Partnership require such licensing or other form of
registration;
|
(b)
|
it
will not take any action, or permit any action to be taken, to cause the
Partnership to not be a "Canadian partnership" as defined in the Tax
Act;
|
(c)
|
it
will make in a timely manner all filings respecting the Partnership which
may be required to be made pursuant to the terms of this Agreement or
applicable laws; and
|
(d)
|
it
will exercise the powers conferred upon it hereunder in furtherance of the
Business and will devote such time and appropriate personnel to the
conduct of the affairs of the Partnership as may be reasonably required
for the proper management of the affairs of the
Partnership.
|
11.3 Representations and
Warranties of Limited Partners
Each
Limited Partner represents and warrants to each of the General Partner and to
all the other Limited Partners that:
(a)
|
if
an individual, the Limited Partner has attained the age of majority and
has the legal capacity and competence to execute this Agreement and to
take all actions required pursuant
hereto;
|
(b)
|
if
not an individual, the Limited Partner has the legal power and capacity to
execute this Agreement and to take all actions required pursuant hereto
and all necessary approvals by directors, shareholders and members of the
Limited Partner, or otherwise, have been given to authorize it to execute
this Agreement and to take all actions required pursuant hereto;
and
|
(c)
|
the
Limited Partner, or any other beneficial owner of the Partnership Units
registered in its name, is not a Non-Resident and is not a
Tax-Exempt.
|
11.4 Covenants of
Limited Partners
Each of
the Limited Partners hereby covenants that it will ensure that its status as
described above will not be modified and it will not transfer its Partnership
Units in whole or in part to any Person who would be unable to make such
representations and warranties.
11.5 Validity
Beyond Execution
The
representations, warranties and covenants contained in this Article 11
shall remain valid after execution of this Agreement and each party shall ensure
that each representation and warranty made by such party shall remain true as
long as it remains a Partner.
ARTICLE 12
LIABILITIES
OF THE PARTNERS AND INDEMNITIES
12.1 Liability of
General and Limited Partners
(a)
|
The
General Partner shall have unlimited liability for the debts, liabilities
and obligations of the Partnership. The General Partner will
not be liable to the Limited Partners for any mistakes or errors in
judgment, or for any act or omission believed by it in good faith to be
within the scope of the authority conferred upon it by this Agreement
(other than an act or omission which is in contravention of this Agreement
or which results from or arises out of negligence or wilful misconduct in
the performance of, or wilful disregard of, the obligations or duties of
the General Partner under this Agreement) or for any loss or damage to any
of the property of the Partnership attributable to an event beyond the
control of the General Partner or its
affiliates.
|
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(b)
|
Subject
to applicable law, the liability of each Limited Partner for the
undertakings, liabilities and obligations of the Partnership will be
limited to the amount of such Limited Partner's Capital Contribution plus
his or her pro rata share of any undistributed Net Income of the
Partnership. Except as provided in Sections 12.1(d) and (e), a
Limited Partner will have no further personal liability and, following
payment in full of the subscription price for Partnership Units it has
agreed to purchase, a Limited Partner will not be liable for any further
calls or assessments or further contributions to the
Partnership.
|
(c)
|
The
Limited Partners acknowledge the possibility that, among other reasons,
they may lose their limited
liability:
|
|
(i)
|
to
the extent that the principles of Canadian law recognizing the limitation
of liability of limited partners have not been authoritatively established
with respect to limited partnerships formed under the laws of one province
but operating, owning property or incurring obligations in another
province;
|
|
(ii)
|
by
taking part in the control or management of the Business;
or
|
|
(iii)
|
as
a result of false statements in the public filings made pursuant to the
Partnership Act, in which case they may be liable to third
parties.
|
(d)
|
Subject
to Section 4.2 hereof, the General Partner will cause the Partnership to
be registered as an extra-provincial limited partnership in those
jurisdictions in which the Partnership operates, owns property, incurs
obligations or otherwise carries on business, to keep such registrations
up to date, and to otherwise comply with the relevant legislation of such
jurisdictions. To ensure, to the greatest extent possible, the
limited liability of the Limited Partners with respect to activities
carried on by the Partnership in any jurisdiction where limitation of
liability may not be recognized, the General Partner will cause the
Partnership to operate, if at all, in such a manner as the General
Partner, on the advice of counsel to the Partnership, deems
appropriate.
|
(e)
|
Each
Limited Partner shall indemnify and hold harmless the Partnership, the
General Partner and each other Limited Partner from and against all
losses, liabilities, expenses and damages suffered or incurred by the
Partnership, the General Partner or the other Limited Partners by reason
of misrepresentation or breach of any of the representations, warranties
or covenants of such Limited Partner as set out in Sections 11.3 and
11.4.
|
12.2 Indemnity of
Limited Partners
(a)
|
The
General Partner shall indemnify and hold harmless each Limited Partner
from any and all losses, liabilities, expenses and damages suffered by
such Limited Partner where the liability of such Limited Partner is not
limited, provided that such loss of limited liability was caused by the
negligence or wilful misconduct by the General Partner in the performance
of, or wilful disregard or breach by the General Partner of, the
obligations or duties of the General Partner under this
Agreement. Such indemnity shall apply only with respect to
losses in excess of the Capital Contribution of the Limited
Partner. The General Partner shall also indemnify and hold
harmless the Partnership and each Limited Partner from any costs, damages,
liabilities, expenses or losses suffered or incurred by the Partnership
and/or the Limited Partner, as the case may be, resulting from or arising
out of negligence or wilful misconduct by the General Partner in the
performance of, or wilful disregard or breach by the General Partner of,
the obligations or duties of the General Partner
hereunder.
|
(b)
|
The
amount of any such indemnity shall be limited to the extent of the assets
of the General Partner and shall under no circumstance include the assets
of the General Partner's parent or any affiliate of the General
Partner. Except as specifically provided for in this Section
12.2, the General Partner shall not otherwise be called upon or be liable
to indemnify the Partnership or any Limited
Partner.
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12.3 Costs of
Litigation
In any
action, suit or other proceeding commenced by a Limited Partner against the
General Partner, other than a claim for indemnity under Section 12.2(a), the
Partnership shall bear the reasonable expenses (including legal fees on a
solicitor and his own client basis) of the General Partner in such action, suit
or other proceedings in which or in relation to which the General Partner is
adjudged not to be in breach of any duty or responsibility imposed upon it
hereunder, otherwise such costs will be borne by the General
Partner.
12.4 Relationship
- No Representations
The
General Partner will not have or represent that it has the authority or power,
as agent or otherwise, to act for or to undertake or create any obligation or
responsibility, express or implied, on behalf of, or in the name of any of the
other Partners or the Partnership, except as specifically provided herein and
then only to achieve the objectives and purposes of the Partnership set out in
this Agreement.
12.5 Indemnity of
Officers of Partnership
The
Partnership shall indemnify and hold harmless each officer of the Partnership
from any and all losses, liabilities, expenses and damages suffered by such
officer where liability of such officer is not limited as a result of having
taken part in the control or management of the Business or having exercised any
power in connection therewith.
12.6 Costs of
Litigation
In any
action, suit or other proceeding commenced against a director or officer of the
General Partner, the Partnership shall bear the reasonable expenses (including
legal fees on a solicitor and his own client basis) of such director or officer
in such action, suit or other proceedings and unless otherwise agreed to, such
director or officer shall have carriage of any such action, suit or other
proceeding and shall be entitled to counsel of his or her choice.
ARTICLE 13
FUNCTIONS
AND POWERS OF THE PARTNERS
13.1 Exclusive
Authority
The
General Partner shall have exclusive authority to administer, manage conduct,
control and operate the business and affairs of the Partnership, to make all
decisions regarding the Business and to bind the Partnership. No
Limited Partner in its capacity as such shall:
(a)
|
take
part in the control or management of the Business or exercise any power in
connection therewith;
|
(b)
|
execute
any document on behalf of the
Partnership;
|
(c)
|
represent
that it has authority to bind the
Partnership;
|
(d)
|
have
any authority to act for, bind or undertake any obligation or
responsibility on behalf of the Partnership or any other
Partner;
|
(e)
|
except
as provided in Section 16.2, propose any Extraordinary Resolution for
approval by the holders of Class B Units unless there are, at the time, no
general partners of the
Partnership;
|
(f)
|
bring
any action for partition or sale or otherwise, in connection with the
Partnership or any interest in any Partnership Assets or register or
permit to be filed, registered or remain undischarged any lien or charge
in respect of any Partnership
Assets;
|
(g)
|
compel
or seek a partition, judicial or otherwise, of any of the Partnership
Assets distributed or to be distributed to the Partners in kind;
or
|
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(h)
|
take
any action which will jeopardize or eliminate the status of the
Partnership as a limited
partnership,
|
except
that the General Partner may do the foregoing in its capacity as a general
partner of the Partnership, notwithstanding that it may also be a Limited
Partner.
13.2 Rights,
Powers and Obligations of the General Partner
The
General Partner will have all of the rights, powers and obligations that may be
possessed by a general partner pursuant to the Partnership Act and such rights,
powers and obligations otherwise conferred by law and under this
Agreement. Any action taken by the General Partner in the name of or
on behalf of the Partnership shall be deemed to be an act of and shall bind the
Partnership. Without limiting the foregoing, the General Partner
shall be vested with the power and authority for and on behalf of and in the
name of the Partnership to:
(a)
|
carry
out all of the Partnership's obligations
under:
|
|
(i)
|
the
Support Agreement, the Voting and Exchange Trust Agreement and the
Administration Agreement; and
|
|
(ii)
|
all
other agreements which require execution by or on behalf of the
Partnership involving matters or transactions which are within the
ordinary course of the Partnership's
Business;
|
(b)
|
open
and manage bank accounts in the name of the Partnership and to name
signing officers for these accounts and to borrow funds in the name of the
Partnership and to spend the capital of the Partnership in the exercise of
any right or power possessed by the General Partner. The
General Partner shall have the right to secure a line of credit with
established financial institutions for the benefit of the
Partnership;
|
(c)
|
manage,
control and develop all the activities of the Partnership and to take all
measures necessary or appropriate for the Business or ancillary thereto
(including without limitation to exercise any and all voting rights held
directly or indirectly by the Partnership in an FLP Subsidiary (subject to
Section 4.1(b)), or any other affiliate or associate of the
Partnership);
|
(d)
|
conclude
agreements with third parties so that services may be rendered to the
Partnership in the normal course of its
affairs;
|
(e)
|
manage,
administer, conserve, develop, operate and dispose of (subject to the
provisions of Section 18.1(b)) any and all Partnership Assets and in
general to engage in any and all phases of
Business;
|
(f)
|
employ
such Persons necessary or appropriate to carry out the Business and
affairs of the Partnership and/or to assist it in the exercise of its
powers and the performance of its duties hereunder and to pay such fees,
expenses, salaries, wages and other compensation to such Persons as the
General Partner in its sole discretion shall
determine;
|
(g)
|
make
any and all expenditures and payments which, in its sole discretion, the
General Partner deems necessary or appropriate in connection with the
management of the business and affairs of the Partnership and the carrying
out of its obligations and responsibilities under this Agreement,
including, without limitation:
|
|
(i)
|
all
legal, accounting and other related expenses incurred in connection with
the organization and financing of the Partnership;
and
|
|
(ii)
|
the
fees payable to the General
Partner;
|
(h)
|
file
any income tax and annual returns required by any governmental or like
authority, including (on behalf of itself and each Limited Partner) the
information return required each year under Regulation 229 to the Tax
Act;
|
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(i)
|
make,
on behalf of each and every Limited Partner, all elections under the Tax
Act and any provincial taxing
statute;
|
(j)
|
keep
adequate books and records reflecting the activities of the
Partnership;
|
(k)
|
subject
to the provisions of Article 5, admit any Person as a Limited
Partner;
|
(l)
|
appoint
and rescind the appointment of agents of the Partnership and grant and
revoke powers of attorney of the
Partnership;
|
(m)
|
commence
and/or defend any and all actions and/or proceedings in connection with
the Partnership;
|
(n)
|
execute
any and all deeds, documents and instruments and to do all acts as may be
necessary or desirable, in the opinion of the General Partner, to carry
out the intent and purpose of this
Agreement;
|
(o)
|
borrow
money in the name of the Partnership from time to time as the General
Partner may determine, without limitation or regard to the amount, cost or
conditions of repayment of such
loan;
|
(p)
|
give
guarantees in the name of the Partnership in respect of the present and
future indebtedness, liabilities and obligations of any of its direct or
indirect subsidiaries or affiliates to any third
party;
|
(q)
|
mortgage,
charge, assign, hypothecate, pledge or otherwise create a security
interest in or otherwise encumber any or all of the property, assets and
undertaking of the Partnership, whether now owned or hereafter acquired,
to secure any present and future borrowings and related expenses of the
Partnership or any one or more guarantees given by the Partnership and to
sell all or any of such property pursuant to a foreclosure under or other
realization upon the foregoing encumbrances;
and
|
(r)
|
provide
to any Person holding any property or assets, or any interest therein, as
trustee or agent for and on behalf of the Partnership any and all
consents, authorizations and directions on behalf of the Partnership as
may be necessary or desirable in connection with the granting of any
mortgage, charge, assignment, hypothecation, pledge or other encumbrance
of or security interest in any or all of such property or assets as are
held in such capacity for and on behalf of the
Partnership;
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and,
without limiting the generality of the foregoing, shall have the power and
authority to enter into the Support Agreement, the Voting and Exchange Trust
Agreement and the Administration Agreement.
13.3 Authority of
the General Partner
No Person
dealing with the Partnership or the General Partner purporting to act in the
name or on behalf of the Partnership shall be required to enquire into the
authority of the General Partner to do any act, take any proceeding, make any
decision or execute and deliver any instrument, deed, agreement or document for
or on behalf of or in the name of the Partnership.
13.4 Advances and
Loans to Partnership
The
General Partner may advance or loan to the Partnership the funds which may be
necessary for the payment of administrative expenses of the
Partnership. The rate of interest and any other expense relating to
such advances or borrowing shall correspond to that which the General Partner
pays in relation to borrowings from its principal lenders, but shall never
surpass that which the Partnership could obtain from recognized financial
establishments with respect to similar borrowings. In addition, the
General Partner may guarantee certain obligations of the Partnership provided
that in no event will funds advanced to the Partnership pursuant to any such
guarantee be disbursed by the Partnership to the Limited Partners.
- 24
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13.5 Delegation
and Termination
The
General Partner may contract with any Person to carry out any of the duties of
the General Partner hereunder and may delegate to such Person any power and
authority of the General Partner hereunder but no such contract or delegation
will relieve the General Partner of any of its obligations
hereunder.
13.6 Exercise of
Good Faith
(a)
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The
General Partner, except to the extent that it is permitted to do otherwise
by acting in accordance with the provisions regarding the resolutions of
conflicts of interest set out in Section 13.9, shall exercise its powers
and discharge its duties and obligations hereunder honestly, in good
faith, and in what it reasonably believes to be the best interests of the
Limited Partners and the Partnership and shall, in discharging its duties,
exercise the degree of care, diligence and skill that a reasonably prudent
and qualified manager would exercise in similar circumstances; provided
that the best interests of the holders of Class B Units shall be deemed to
be protected if the exercise of its powers and the discharge of its duties
by the General Partner will neither prevent the distributions that Section
8.1 requires in respect of the Class B Units nor adversely affect the
rights of the holders of Class B Units under the Support
Agreement.
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(b)
|
During
the existence of the Partnership, the officers of the General Partner
shall devote such time and effort to the Business as may be necessary to
promote adequately the interests of the Partnership and the interests of
the Limited Partners.
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13.7 Indemnification
The
Partnership shall indemnify the General Partner against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by it, including an amount paid to settle an
action or satisfy a judgment in a civil, criminal or administrative action or
proceeding to which it is made a party by reason of being or having been the
General Partner if:
(a)
|
the
General Partner has acted honestly, in good faith and in a manner that is
in the best interests of the Partnership and in accordance with its
fiduciary obligations to the Partnership;
and
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(b)
|
the
conduct of the General Partner does not constitute negligence or wilful
misconduct.
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13.8 Exception
The
Partnership shall not incur the cost of that portion of liability insurance
which insures the General Partner for any liability for which the General
Partner is not permitted to be indemnified under Section 13.7.
13.9 Resolution of
Conflicts of Interest
Unless
otherwise expressly provided in this Agreement, whenever a potential conflict of
interest exists or arises between the General Partner or any of its respective
affiliates, on the one hand, and the Partnership, or any Limited Partner on the
other hand, any resolution or course of action by the General Partner in respect
of such conflict of interest shall be permitted and deemed approved by all
Limited Partners, and shall not constitute a breach of this Agreement, or of any
standard of care or duty stated or implied by applicable law, if the resolution
or course of action is fair and reasonable to the Partnership. The
General Partner shall be authorized in connection with the resolution of any
conflict of interest to consider:
(a)
|
the
relative interests of any party to such conflict, agreement, transaction
or situation and the benefits and burdens relating to such
interests;
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(b)
|
any
customary or accepted industry
practices;
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(c)
|
any
applicable generally accepted accounting principles;
and
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(d)
|
such
additional factors as the General Partner determines in its sole
discretion to be relevant, reasonable or appropriate under the
circumstances.
|
Nothing
contained in this Agreement, however, is intended to nor shall it be construed
to require the General Partner to consider the interests of any Person other
than the Partnership. In the absence of bad faith by the General
Partner, the resolution, action or terms so made, taken or provided by the
General Partner with respect to such matter shall be deemed to be fair and
reasonable, shall be deemed to be in, or not opposed to, the best interests of
the Partnership, and shall not constitute a breach of this Agreement or a breach
of any standard of care or duty imposed herein or stated or implied under the
Partnership Act or any other applicable law.
ARTICLE 14
ACCOUNTING
AND REPORTING
14.1 Fiscal
Year
The
fiscal year of the Partnership will end on December 31 in each year or as the
General Partner may otherwise determine. Each such fiscal year is
herein referred to as a "Fiscal
Year".
14.2 Books and
Records
The
General Partner shall keep, during the term of the Partnership and for a period
of six years thereafter, at the principal place of business of the Partnership,
proper and complete records and books of account reflecting the assets,
liabilities, income and expenditures of the Partnership and a register listing
the names and addresses of all the Limited Partners and the number of
Partnership Units held by each of them.
14.3 Register
The
General Partner shall maintain, or appoint the Transfer Agent to maintain, a
register of Partners (the "Register") in which every
Person to whom a Partnership Unit is allotted shall be registered as a
Partner. A register of transfers of Partnership Units in which every
transfer of Partnership Units shall be registered shall also be maintained by
the General Partner or the Transfer Agent, subject to compliance with this
Agreement. With respect to any register or branch register, the
General Partner may also appoint a registrar who may, but need not be, the same
Person as the transfer agent.
14.4 Access to
Books and Records
The
books, records and registers required to be maintained by the General Partner
shall be kept available for inspection and audit by any Limited Partner for
income tax purposes during business hours at the office of the General
Partner. A Limited Partner, however, will not have access to any
information of the Partnership which, in the opinion of the General Partner,
should be kept confidential in the interests of the Partnership, and each
Limited Partner hereby waives any right, statutory or otherwise, to greater
access to the books, records and registers of the Partnership than is permitted
herein.
14.5 Banking
The
bankers of the Partnership and lenders to the Partnership will be determined by
the General Partner, in its sole discretion.
ARTICLE 15
POWER
OF ATTORNEY
15.1 Appointment
Each
Limited Partner and each Person who is a transferee of a Partnership Unit or is
an assignee of the interest of a Limited Partner as the beneficial owner or
holder of a Partnership Unit hereby irrevocably nominates, constitutes and
appoints the General Partner, with full power of substitution, as its true and
lawful attorney and agent, both before and after dissolution of the Partnership,
with full power and authority in its name, place and stead to execute, under
seal or otherwise, swear to, acknowledge, deliver, make, record and file when,
as and where required or appropriate, any and all of the following:
- 26
-
(a)
|
this
Agreement and counterparts hereof, and all documents and instruments
necessary or appropriate to form, qualify or continue the qualification of
the Partnership as a valid and subsisting limited partnership in any
jurisdiction where the Partnership may carry on business or own or lease
property in order to establish or maintain the limited liability of the
Limited Partners and to comply with the applicable laws of any such
jurisdiction;
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(b)
|
all
instruments and certificates necessary to reflect any amendments to the
Partnership Agreement or the Certificate which are approved pursuant to
Article 16;
|
(c)
|
all
instruments and certificates necessary to effect the realization or the
seizure of any Limited Partner's Unit Certificate, including but not
limited to any certificate of
transfer;
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(d)
|
all
conveyances and other instruments necessary to effect the dissolution and
termination of the Partnership (provided such dissolution and termination
has been approved hereunder), including cancellation of any Unit
Certificates and the signing of any elections under subsection 98(3) of
the Tax Act, as may be amended or re-enacted from time to time, and any
analogous provincial legislation;
|
(e)
|
such
documents on behalf of and in the name of the Partnership and for the
Limited Partners as may be necessary to give effect to the purpose of the
Partnership as described in this
Agreement;
|
(f)
|
all
instruments, deeds, agreements or documents executed by the General
Partner in carrying on the Business as authorized in this Agreement,
including those necessary to purchase, sell, or hold the Partnership
Assets;
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(g)
|
all
information returns, applications, elections, determinations or
designations under the Tax Act or any other taxation or other legislation
or similar laws of Canada or of any other jurisdiction in respect of the
affairs of the Partnership or of a Partner's interest in the Partnership
including all information returns, applications, elections, determinations
or designations under the Tax Act or other legislation or similar laws of
Canada or of any other jurisdiction with respect to any other governmental
credit, grant or benefit, the sale or transfer of the Partnership Assets,
the distribution of the Partnership Assets, or the dissolution and
termination of the Partnership;
|
(h)
|
any
instrument or document which may be required to effect the continuation of
the Partnership, or the admission of an additional or substitute
Partner;
|
(i)
|
any
instrument or document which may be required to effect or reflect a return
pursuant to this Agreement of capital contributed by a Partner and/or the
consent of the Limited Partner
thereto;
|
(j)
|
the
Support Agreement and the Voting and Exchange Trust Agreement and any
amendments thereto; and
|
(k)
|
any
instrument or document required or appropriate to be filed with any
governmental authority or respecting the business or property of the
Partnership, the Partnership Assets or this
Agreement,
|
but the
foregoing grant of authority shall not include the authority to transfer the
interest of the Limited Partner in its Partnership Units or to vote in respect
of or execute any Ordinary Resolution or any Extraordinary Resolution on behalf
of any Limited Partner except to the extent required to comply with the
provisions of the Voting and Exchange Trust Agreement. By purchasing
Partnership Units or accepting the transfer of a Partnership Unit or accepting
assignment of the interest of a Limited Partner as the beneficial owner or
holder of a Partnership Unit, each Limited Partner acknowledges and agrees that
it has given such power of attorney and will ratify any and all actions taken by
the General Partner pursuant to such power of attorney.
- 27
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15.2 Irrevocable
The power
of attorney granted herein is irrevocable, is a power coupled with an interest,
shall continue despite the mental incompetence of the Limited Partner, shall
survive the death or disability of a Limited Partner and shall survive the
transfer or assignment by the Limited Partner, to the extent of the obligations
of a Limited Partner hereunder, of the whole or any part of the interest of the
Limited Partner in the Partnership, extends to the heirs, executors,
administrators, other legal representatives and successors, transferees and
assigns of the Limited Partner, and may be exercised by the General Partner on
behalf of each Limited Partner in executing any instrument by a facsimile
signature or by listing all the Limited Partners and executing such instrument
with a single signature as attorney and agent for all of them. Each
Limited Partner agrees to be bound by any representations or actions made or
taken by the General Partner pursuant to this power of attorney and hereby
waives any and all defences which may be available to contest, negate or
disaffirm the action of the General Partner taken in good faith under this power
of attorney. In accordance with the Power of Attorney Act
(Alberta), and corresponding legislation in other jurisdictions, each Limited
Partner declares that these powers of attorney may be exercised during any legal
incapacity or mental infirmity on his or her part. The General
Partner may require, in connection with the subscription for, or any transfer
of, Partnership Units, that the subscription form or transfer form be
accompanied by the explanatory notes set out in the Power of Attorney Act
(Alberta). This power of attorney shall continue in respect of the
General Partner so long as it is the General Partner of the Partnership, and
shall terminate thereafter, but shall continue in respect of a new General
Partner as if the new General Partner were the original attorney.
ARTICLE 16
AMENDMENT
16.1 Amendment
Procedures
All
amendments to this Agreement shall be made in accordance with the requirements
of this Article 16. Amendments to this Agreement may be proposed
solely by the General Partner. Any such amendment will, subject to
Section 16.2, be deemed to be effective if approved by the General
Partner.
16.2 Consent
Required
Notwithstanding
the provisions of Section 16.1:
(a)
|
this
Article 16 may not be amended without the unanimous consent in
writing of each of the Limited Partners and the General
Partner;
|
(b)
|
except
as provided in Section 16.3, no amendment shall be made to this Agreement
which would have the effect of:
|
|
(i)
|
preventing
the loans or distributions that Section 8.1 requires or the allocation of
Net Income or Net Loss that Section 7.1 or 7.2 requires in respect of the
Class B Units or adversely affecting the rights of the holders of Class B
Units under the Support Agreement;
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|
(ii)
|
changing
the proviso set forth in Section 4.1 of Schedule
A;
|
|
(iii)
|
changing
the liability of any Limited
Partner;
|
|
(iv)
|
allowing
any Limited Partner to exercise control over the
Business;
|
|
(v)
|
changing
the right of a Limited Partner to vote on resolutions as provided in this
Agreement; or
|
|
(vi)
|
changing
the Partnership from a limited partnership to a general
partnership;
|
(c)
|
no
amendment shall be made to this Agreement to add to, change or remove any
right, privilege, restriction or condition attaching to the Class B Units
or which would have an adverse impact on the holders of the Class B Units
without the approval of the holders of Class B Units given in accordance
with Section 11.1 of Schedule A;
and
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-
(d)
|
no
amendment made to this Agreement which would have the effect of adversely
affecting the rights and obligations of the General Partner will become
effective before 45 days after the date of notice of such resolution
approving such amendment is provided to the General
Partner.
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16.3 Approval by
Extraordinary Resolution
Any
amendment of the kind contemplated by Section 16.2(b) may be and will be deemed
to be approved if passed by an Extraordinary Resolution.
16.4 Notice of
Limited Partners
Limited
Partners shall be notified of the full details of any amendments to this
Agreement within 30 days of the effective date of the amendment.
ARTICLE 17
NOTICES
17.1 Address
Any
notice, request or other written communication which must be given or documents
which must be sent under this Agreement shall be in writing and shall be valid
and effective if given by courier, by mail (postage prepaid) or by telecopy to
the address of each of the General Partner and the Limited Partners as
follows:
in the
case of the General Partner:
FET
Management Ltd.
The Dome
Tower, Suite 3000
000 - 0xx
Xxxxxx X.X.
Xxxxxxx,
XX X0X 0X0
Attention:
Vice President, General Counsel & Corporate Secretary
Facsimile: (000)
000-0000
and in
the case of the Limited Partners, to the address thereof in the
Register. Any such notice, request or other communication, if given
by delivery or telecopy shall be deemed to be given and received on the day it
is delivered or received or, if delivered or received on a day that is not a
Business Day, on the next Business Day following delivery or receipt and, if
given by mail, shall be deemed to be given and received on the fifth Business
Day following its sending.
17.2 Change of
Address
A Limited
Partner may, at any time, change its address for the purpose of service by
written notice to the General Partner and the Transfer Agent. The
General Partner may change the address to which, or the Person to whose
attention, notices should be delivered from time to time by written notice in
accordance herewith.
ARTICLE 18
DISSOLUTION
AND LIQUIDATION
18.1 Events of
Dissolution
The
Partnership shall follow the procedure for dissolution established in Section
18.4 upon the occurrence of any of the following events or dates:
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(a)
|
the
passage of an Extraordinary Resolution to dissolve the
Partnership;
|
(b)
|
the
sale, exchange or other disposition of all or substantially all of the
property of the Partnership, if approved by an Extraordinary
Resolution;
|
(c)
|
the
Partnership ceasing to have any General Partner unless a new General
Partner is appointed as provided in Article 19;
or
|
(d)
|
June
21, 2050.
|
18.2 No
Dissolution
Notwithstanding
any rule of law to the contrary, the Partnership shall not be terminated and
dissolved except as provided in this Agreement. The Partnership shall
not come to an end by the admission of any new Partner or by reason of the
death, bankruptcy, assignment of property for the benefit of creditors,
insolvency, mental incompetency or other disability of any Limited Partner or
upon transfer of any Partnership Units or upon the issue or exchange of
Partnership Units.
18.3 Continuation
After Event of Dissolution
Upon the
occurrence of any event described in Section 18.1(c), if within 90 days
thereafter, the Partners so elect by an Extraordinary Resolution, the Limited
Partners shall reconstitute the Partnership and continue its business on the
same terms and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and having
as a general partner a Person approved by the Partners pursuant to the
Extraordinary Resolution. Upon any such election by Extraordinary
Resolution, all Partners shall be bound thereby and shall be deemed to have
approved thereof. Unless such an election is made within the
applicable time period as set forth above, the Partnership shall conduct only
activities necessary to wind-up its affairs. If such an election is
so made, then:
(a)
|
the
reconstituted Partnership shall continue until the end of the term set
forth in Section 18.1(d) unless earlier dissolved in accordance with this
Article 18; and
|
(b)
|
all
necessary steps shall be taken to cancel this Agreement and the
Certificate and to enter into and, as necessary, to file a new partnership
agreement and Certificate and the successor general partner may for this
purpose exercise the powers of attorney granted pursuant to Section 15.1,
provided that the right of the Partners by an Extraordinary Resolution to
approve a successor general partner and to reconstitute and to continue
the Business shall not exist and may not be exercised unless the
Partnership has received an opinion of counsel that the exercise of the
right would not result in the loss of limited liability of any Limited
Partner.
|
18.4 Procedure on
Dissolution
Upon the
occurrence of any of the events set forth in Section 18.1, the General Partner
(or in the event of any occurrence specified in Section 18.1(c), such other
Person as may be appointed by Ordinary Resolution) shall act as a receiver and
liquidator of the assets of the Partnership and shall:
(a)
|
sell
or otherwise dispose of such part of the Partnership Assets as the
receiver shall consider
appropriate;
|
(b)
|
pay
or provide for the payment of the debts and liabilities of the Partnership
and liquidation expenses;
|
(c)
|
if
there are any Partnership Assets remaining, distribute such remaining
Partnership Assets to the holders of Class A Units and Class B Units in
accordance with Article 2 of Schedule A;
and
|
(d)
|
file
the notice of dissolution prescribed by the Partnership Act and satisfy
all applicable formalities in such circumstances as may be prescribed by
the laws of the other jurisdictions where the Partnership is
registered. In addition, the General Partner shall give prior
notice of the dissolution of the Partnership by mailing to each Limited
Partner such notice at least 21 days prior to the filing of the
declaration of dissolution prescribed by the Partnership
Act.
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- 30
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18.5 Cancellation
of Certificate
The
Partnership Certificate shall be cancelled upon the completion of all matters
set forth in Section 18.4.
18.6 No Right to
Dissolve
Except as
provided for in Section 18.1, no Limited Partner shall have the right to ask for
the dissolution of the Partnership, the winding-up of its affairs or the
distribution of the Partnership Assets.
18.7 Agreement
Continues
Notwithstanding
the dissolution of the Partnership, this Agreement shall not terminate until the
provisions of Section 18.4 shall have been satisfied.
ARTICLE 19
CHANGE
OF GENERAL PARTNER
19.1 Removal of
the General Partner
No
General Partner may be removed as a General Partner of the
Partnership.
19.2 Deemed
Resignation of the General Partner
The
General Partner shall be deemed to resign as the General Partner of the
Partnership in the event of: (a) the bankruptcy, insolvency,
dissolution, liquidation or winding up of the General Partner (or the
commencement of any act or proceeding in connection therewith which is not
contested in good faith by the General Partner); (b) the appointment of a
trustee, receiver or receiver and manager of the affairs of the General Partner,
a mortgagee or other encumbrancer shall take possession of all of the property
or assets beneficially owned by the General Partner or a substantial part
thereof; (c) levy or execution or any similar process shall be levied or
enforced against all of the property or assets of the General Partner or a
substantial part thereof; or (d) the General Partner sells all or substantially
all of its assets. The General Partner shall forthwith advise the
Limited Partners by written notice of the occurrence of any event referred to in
this Section 19.2.
19.3 Transfer to
New General Partner
On the
admission of a new General Partner to the Partnership, the new General Partner
shall become a party to this Agreement by signing a counterpart hereof and the
resigning General Partner will do all things and take all steps to transfer the
administration, management, control and operation of the Business and the books,
records and accounts of the Partnership to the new General Partner and will
execute and deliver all deeds, certificates, declarations and other documents
necessary or desirable to effect such transfer in a timely fashion.
Notwithstanding
anything contained in this Agreement, no Person may be a General Partner unless
such Person is an affiliate of Enerplus.
19.4 Transfer of
Title to New General Partner
On the
resignation of a General Partner and the admission of a new General Partner, the
resigning General Partner will, at the cost of the Partnership, transfer title
to the Partnership's property which is registered in the name of such resigning
or retiring General Partner to such new General Partner and will execute and
deliver all deeds, certificates, declarations and other documents necessary or
desirable to effect such transfer in a timely fashion.
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-
19.5 Release by
Partnership
On the
resignation of a General Partner, the Partnership will release and hold harmless
the General Partner resigning from any costs, expenses, damages or liabilities
suffered or incurred by the General Partner as a result of or arising out of
events which occur in relation to the Partnership after such
resignation.
19.6 New General
Partner
A new
General Partner may be appointed at any time by the General Partner in writing
provided that such new General Partner will not become a General Partner unless
such new General Partner is not a Non-Resident and such new General Partner
becomes a party to this Agreement by signing a counterpart hereof and agrees to
be bound by all of the provisions hereof and to assume the obligations, duties
and liabilities of a General Partner hereunder as from the date the new General
Partner becomes a party to this Agreement.
19.7 Transfer of
General Partner Interest
A General
Partner may transfer all, but not less than all, of its General Partnership
Interest to any Person provided that such transferee assumes the rights and
duties of a General Partner and agrees to be bound by the provisions of this
Agreement.
19.8 Resignation
and Removal of the General Partner
A General
Partner may resign as the General Partner at any time on not less than 45 days
notice to the Limited Partners; provided that the General Partner shall not be
permitted to resign if resignation of such General Partner would:
(a)
|
accelerate
or cause to be due and payable any indebtedness of the Partnership other
than payments due in the normal
course;
|
(b)
|
result
in dissolution or winding-up of the Partnership;
or
|
(c)
|
constitute
the Partnership a general
partnership.
|
19.9 Effective
Date of Resignation or Deemed Resignation of the General
Partner
In the
event of the resignation of a General Partner pursuant to Section 19.8 or the
deemed resignation of a General Partner of the Partnership, such resignation or
deemed resignation shall be effective upon the admission of a new General
Partner to the Partnership by Ordinary Resolution (and the filing of an
amendment to the Certificate to evidence such fact) or, in the event of there
being another General Partner at such time, the expiration of 120 days from the
date of the giving of the notice of resignation in the case of Section 19.8 or
on the occurrence of the event referred to in Section 19.2 in the case of
Section 19.2.
19.10 Continuity
of Partnership
In the
event of the bankruptcy, dissolution, liquidations or winding-up of the General
Partner, the Business shall be continued by any new General Partner or remaining
General Partner, as the case may be.
ARTICLE 20
MISCELLANEOUS
20.1 Counterparts
This
Agreement may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument, which shall be sufficiently evidenced by
any such original counterpart and notwithstanding their date of execution shall
be deemed to be dated the date of this Agreement.
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20.2 Default by
the General Partner
Any
default of the General Partner resulting from an omission to take any measure
within a prescribed period shall be deemed to have been corrected if the measure
is taken within 30 days following a notice of a Limited Partner enjoining the
General Partner to remedy this default.
20.3 Severability
The
provisions of this Agreement are intended to be severable and if any provisions
are in conflict with any applicable law, the conflicting provisions shall be
deemed never to have constituted a part of this Agreement and shall not affect
or impair any of the remaining provisions thereof. If any provision
of this Agreement shall be held invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect or render invalid or
unenforceable such provision in any other jurisdiction or any other provision of
this Agreement in any jurisdiction.
20.4 Successors
and Assigns
The
provisions of this Agreement shall enure to the benefit of, and be binding upon,
the parties and their respective successors and permitted assigns.
20.5 Governing
Law
This
Agreement shall be interpreted and governed by and take effect and be construed
exclusively in accordance with, the laws of Alberta and the laws of Canada
applicable therein. Any and all disputes arising under this
Agreement, whether as to interpretation, performance or otherwise, shall be
subject to the exclusive jurisdiction of the courts of the Province of Alberta
and the parties hereto hereby irrevocably attorn to the exclusive jurisdiction
of the courts of such province.
20.6 Limitation on
Liability
The
parties hereto acknowledge that the FCT Trustee is entering into this Agreement
solely in its capacity as trustee on behalf of the FCT and the obligations of
the FCT hereunder shall not be personally binding upon the FCT Trustee or any of
the unitholders of the FCT and that any recourse against the FCT, the FCT
Trustee, or any unitholder of the FCT in any manner in respect of any
indebtedness, obligation or liability of the FCT arising hereunder or arising in
connection herewith or from the matters to which this Agreement relates, if any,
including without limitation claims based on negligence or otherwise tortious
behaviour, shall be limited to, and satisfied only out of, the FCT Trust Assets
as defined in the FCT Trust Indenture.
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-
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement at Calgary, Alberta as of the date
first written above.
FET
MANAGEMENT LTD.
|
FOCUS
COMMERCIAL TRUST,
by
its Trustee FET RESOURCES LTD.
|
|
Per:
"Xxxxx
X. XxXxx"
Name:
Xxxxx X. XxXxx
Title:
Vice President, General Counsel
& Corporate Secretary
|
Per:
"Xxxxx
X. Xxxxx"
Name: Xxxxx
X. Xxxxx
Title: President
and Chief Executive Officer
|
|
Per: "Xxxxxxx
X. Xxxxxxx"
Name: Xxxxxxx
X. Xxxxxxx
Title: Senior
Vice-President and
Chief
Financial Officer
|
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EXCHANGEABLE
SECURITIES PROVISIONS
PROVISIONS
ATTACHING TO THE CLASS B UNITS AND
CERTAIN
PROVISIONS ATTACHING TO THE CLASS A UNITS
The Class
B Units shall have the following rights, privileges, restrictions and
conditions:
ARTICLE 1
INTERPRETATION
1.1
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For
the purposes of these provisions:
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(a)
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"ABCA" means the Business Corporations
Act (Alberta), as from time to time amended, including the
regulations from time to time promulgated
thereunder;
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(b)
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"affiliate" or "associate" when used to
indicate a relationship with a person or company, has the same meaning as
set forth in the Securities Act
(Alberta);
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(c)
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"applicable law" means
any applicable law including any statute, regulation, by-law, treaty,
guideline, directive, rule, standard, requirement, policy, order,
judgement, decision, injunction, award, decree or resolution of any
governmental authority, whether or not having the force of
law;
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(d)
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"Automatic Redemption"
has the meaning ascribed thereto in Section
8.1(b);
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(e)
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"Automatic Redemption
Price" has the meaning ascribed thereto in Section
8.1(b);
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(f)
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"Board of Directors"
means the board of directors of the General
Partner;
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(g)
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"Business Day" means a
day, other than a Saturday, Sunday or statutory holiday, when banks are
generally open in Calgary, Alberta, for the transaction of banking
business;
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(h)
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"Canadian Dollar
Equivalent" means in respect of an amount expressed in a currency
other than Canadian dollars (the "Foreign Currency
Amount") at any date the product obtained by multiplying the
Foreign Currency Amount by the noon spot exchange rate on such date for
such foreign currency expressed in Canadian dollars as reported by the
Bank of Canada or, in the event such spot exchange rate is not available,
such spot exchange rate on such date for such foreign currency expressed
in Canadian dollars as may be deemed by the Board of Directors to be
appropriate for such purpose;
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(i)
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"Change of Law" means any
amendment to the Tax Act and other applicable provincial income tax laws
that permits holders of Class B Units who are resident in Canada, who hold
the Class B Units as capital property and deal at arm's length with
Enerplus (all for the purposes of the Tax Act and other applicable
provincial income tax laws) to exchange their Class B Units for Enerplus
Units in accordance with the Exchange Ratio on a basis that will not
require such holders to recognize any gain or loss in respect of such
exchange for the purposes of the Tax Act or applicable provincial income
tax laws;
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(j)
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"Change of Residency
Date" has the meaning ascribed thereto in Section
8.1(a);
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(k)
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"Class A Units" or "FLP A Units" means the
Class A limited partnership units in FLP having the rights, privileges,
restrictions and conditions set forth in the Limited Partnership
Agreement;
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(l)
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"Class B Units" or "FLP B Units" means the
Class B limited partnership units in FLP having the rights, privileges,
restrictions and conditions set forth in the Limited Partnership Agreement
and these provisions;
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(m)
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"Class B Unit
Consideration" applicable on any date means, with respect to each
Class B Unit, for any acquisition of, redemption of or distribution of
assets of FLP in respect of, or purchase pursuant to, these provisions,
the Support Agreement or the Voting and Exchange Trust Agreement, of such
Class B Unit:
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(i)
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0.425
of an Enerplus Unit; plus
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(ii)
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a
cheque or cheques payable at par at any branch of the payor's bankers in
the amount of the Exchange Ratio Percentage of all cash distributions
declared and paid or (where the record date for determining the holders of
Enerplus Units entitled to receive such distribution has occurred)
declared and unpaid on an Enerplus Unit in respect of which a
corresponding cash loan was not made in respect of the Class B Unit;
plus
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(iii)
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all
Enerplus Units (or fraction thereof), multiplied by the Exchange Ratio
Percentage, constituting distributions declared and paid or (where the
record date for determining the holders of Enerplus Units entitled to
receive such distribution has occurred) declared and unpaid on an Enerplus
Unit, in respect of which a corresponding Subdivision of the Class B Unit
was required to be but not made;
plus
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(iv)
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the
Exchange Ratio Percentage of such other property constituting
distributions declared and paid or (where the record date for determining
the holders of Enerplus Units entitled to receive such distribution has
occurred) declared and unpaid on an Enerplus Unit in respect of which a
corresponding non-cash loan was not made in respect of the Class B
Unit;
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provided
that: (a) the part of the consideration which represents (i) and (iii) above
shall be fully paid and satisfied by the delivery of the applicable number of
Enerplus Units, such Enerplus Units to be duly issued, fully paid and
non-assessable; (b) the part of the consideration which represents (iv) above
shall be fully made and satisfied by delivery of such non-cash items; (c) any
such consideration shall be delivered free and clear of any lien, claim,
encumbrance, security interest or adverse claim or interest; and (d) any such
consideration shall be made less any tax required to be deducted and withheld
therefrom and without interest;
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(n)
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"Class B Unit Price"
applicable on any date means, for each Class B Unit, an amount equal to
the aggregate of:
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(i)
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the
Exchange Ratio Percentage of the Current Market Price on such date of one
Enerplus Unit; plus
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(ii)
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an
amount equal to the Exchange Ratio Percentage of all cash distributions
declared and paid or (where the record date for determining the holders of
Enerplus Units entitled to receive such distribution has occurred)
declared and unpaid on an Enerplus Unit in respect of which a
corresponding cash loan was not made in respect of the Class B Unit;
plus
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(iii)
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the
Exchange Ratio Percentage of the Current Market Price on such date of all
Enerplus Units (or fraction thereof) constituting distributions declared
and paid or (where the record date for determining the holders of Enerplus
Units entitled to receive such distribution has occurred) declared and
unpaid on an Enerplus Unit in respect of which a corresponding Subdivision
of the Class B Unit was required to be but not made;
plus
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(iv)
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the
Exchange Ratio Percentage of the full value of such other property
constituting distributions declared and paid or (where the record date for
determining the holders of Enerplus Units entitled to receive such
distribution has occurred) declared and unpaid on an Enerplus Unit in
respect of which a corresponding non-cash loan was not made in respect of
the Class B Unit;
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2
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(o)
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"Class B Unit Voting
Event" means any matter in respect of which holders of Class B
Units are entitled to vote as unitholders of FLP, other than an Exempt
Class B Unit Voting Event, and, for greater certainty, excluding any
matter in respect of which holders of Class B Units are entitled to vote
(or instruct the Voting and Exchange Trustee to vote) in their capacity as
Beneficiaries under, and as that term is defined in, the Voting and
Exchange Trust Agreement;
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(p)
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"Court" means the Court
of Queen's Bench of Alberta;
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(q)
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"Current Market Price"
means, in respect of an Enerplus Unit on any date, the per Enerplus Unit
average of the closing sale price of a board lot of Enerplus Units on each
trading day on which there was a closing sale price (and, in the event
that there was no closing sale price on a given trading day, the closing
sale price for such trading day shall be deemed to be the simple average
of the highest bid price and the lowest ask price on such trading day),
during a period of 20 consecutive trading days ending not more than three
trading days before such date on the TSX, or, if Enerplus Units are not
then quoted on the TSX, on such other stock exchange or automated
quotation system on which Enerplus Units are listed or quoted, as the case
may be, as may be selected by General Partner, acting reasonably, for such
purpose; provided, however, that if Enerplus Units are not quoted on any
stock exchange or automated quotation system, then the Current Market
Price of an Enerplus Unit shall be determined by General Partner, acting
reasonably, in good faith and in its sole discretion, and provided further
that any such selection or determination by General Partner shall be
conclusive and binding;
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(r)
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"Distribution Payment
Date" has the meaning ascribed thereto in the Enerplus Trust
Indenture;
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(s)
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"Enerplus" means Enerplus
Resources Fund, a trust established under the laws of the Province of
Alberta pursuant to the Enerplus Trust
Indenture;
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(t)
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"Enerplus Special Voting
Right" means a special voting right of Enerplus to be issued by
Enerplus and deposited with the Voting and Exchange Trustee, which shall
entitle, inter
alia, the holders of Class B Units to such number of votes at
meetings of holders of Enerplus Units as equals the number of Enerplus
Units issuable from time to time on the redemption, retraction or exchange
of those Class B Units;
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(u)
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"Enerplus Subsidiary"
means any direct or indirect subsidiary (within the meaning of the
Securities Act) of Enerplus;
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(v)
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"Enerplus Trust
Indenture" means the Amended and Restated Trust Indenture dated
November 8, 2007 among EnerMark Inc., Enerplus Resources Corporation and
CIBC Mellon Trust Company, as may be amended, supplemented or restated
from time to time;
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(w)
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"Enerplus Units" means a
trust unit of Enerplus, each such unit representing an equal undivided
beneficial interest therein;
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(x)
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"Exchange Ratio" means,
in respect of the exchange of Class B Units for Enerplus Units, 0.425 of
an Enerplus Unit for each Class B
Unit;
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(y)
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"Exchange Ratio
Percentage" means 42.5%;
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(z)
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"Exempt Class B Unit Voting
Event" means any matter in respect of which holders of Class B
Units are entitled to vote as unitholders of FLP in order to approve or
disapprove, as applicable, any change to, or in the rights of the holders
of, the Class B Units, where the approval or disapproval, as applicable,
of such change would be required to maintain the equivalence, after taking
into account the Exchange Ratio, of the Class B Units and Enerplus
Units;
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3
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(aa)
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"General Partner" means
FET Management Ltd., a corporation amalgamated pursuant to the ABCA, and
each other person who becomes an additional or substituted General Partner
pursuant to the terms and conditions of the Limited Partnership
Agreement;
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(bb)
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"governmental authority"
includes any court (including a court of equity); any multinational,
federal, provincial, state, regional, municipal or other government or
governmental department, ministry, commission, board, bureau, agency or
instrumentality; any securities commission, stock exchange or other
regulatory or self-regulatory body; any arbitrator or arbitration
authority; or any other governmental
authority;
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(cc)
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"holder" means, when used
with reference to the Class B Units, a holder of Class B Units shown from
time to time in the register maintained by or on behalf of FLP in respect
of the Class B Units;
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(dd)
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"Insolvency Event" means
any admission in writing of the General Partner of the inability of FLP to
pay its debts as they become due in the ordinary course of
business;
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(ee)
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"Limited Partners" means
the persons who from time to time hold Class A Units or Class B
Units;
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(ff)
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"Limited Partnership
Agreement" means the Amended and Restated Focus Limited Partnership
limited partnership agreement dated as of February 13, 2008 between the
General Partner and Focus Commercial Trust and each person who from time
to time is accepted as and becomes a limited partner pursuant thereto, to
which these provisions are attached as a Schedule, as from time to time
amended, supplemented or restated;
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(gg)
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"Liquidation Amount" has
the meaning ascribed thereto in Section
5.1;
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(hh)
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"Liquidation Call Right"
has the meaning ascribed thereto in Section
10.1;
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(ii)
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"Liquidation Date" has
the meaning ascribed thereto in Section
5.1;
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(jj)
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"Non-Resident" means: (i)
a person (within the meaning of the Tax Act but, for greater certainty,
not including a partnership) who is not resident in Canada for the
purposes of the Tax Act; or (ii) a partnership that is not a "Canadian
partnership" as defined in the Tax
Act;
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(kk)
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"Partners" means,
collectively, the Limited Partners and the General Partner, and "Partner" means any one
of the Partners;
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(ll)
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"Partnership" means the
limited partnership formed pursuant to the Limited Partnership
Agreement;
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(mm)
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"person" includes any
individual, body corporate, partnership, association, joint venture,
trust, other organization or entity (whether or not a legal entity) or
governmental authority;
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(nn)
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"Redemption Date" means
the date, if any, established by the Board of Directors for the redemption
by FLP of all but not less than all of the outstanding Class B Units
(other than Class B Units held by Enerplus or its affiliates) pursuant to
Article 7, which date shall be no earlier than January 8, 2017,
unless:
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(i)
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there
are less than one million Class B Units outstanding (other than Class B
Units held by Enerplus or its affiliates), such number to be adjusted as
determined by the Board of Directors, in good faith and in its sole
discretion, to give effect to any subdivision, consolidation or
distribution in specie of the Class B Units, any issue or distribution of
rights, options or warrants to acquire Class B Units (or securities
exchangeable for or convertible into or carrying rights to acquire Class B
Units), any issue or distribution of other securities or rights or
evidences of indebtedness or assets, or any other capital reorganization
or other transaction affecting the Class B Units, in which case the
redemption date shall be the Business Day determined by the Board of
Directors and the Board of Directors shall give such number of days' prior
written notice to the registered holders of the Class B Units and the
Voting and Exchange Trustee as the Board of Directors may determine to be
reasonably practicable in such
circumstances;
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4
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(ii)
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a
Trust Control Transaction occurs, in which case, provided that the Board
of Directors determines, in good faith and in its sole discretion, that it
is not reasonably practicable to substantially replicate the terms and
conditions of the Class B Units in connection with such a Trust Control
Transaction and that the redemption of all but not less than all of the
outstanding Class B Units is necessary to enable the completion of such
Trust Control Transaction in accordance with its terms, the redemption
date shall be the Business Day determined by the Board of Directors and
the Board of Directors shall give such number of days' prior written
notice to the registered holders of the Class B Units and to the Voting
and Exchange Trustee as the Board of Directors may determine to be
reasonably practicable in such
circumstances;
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(iii)
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a
Change of Law occurs, in which case the redemption date shall be the
Business Day determined by the Board of Directors and the Board of
Directors shall give such number of days' prior written notice to the
registered holders of the Class B Units and the Voting and Exchange
Trustee as the Board of Directors may determine to be reasonably
practicable in such circumstances;
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(iv)
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a
Class B Unit Voting Event is proposed, in which case, provided that the
Board of Directors has determined, in good faith and in its sole
discretion, that it is not reasonably practicable to accomplish the
business purpose intended by the Class B Unit Voting Event, which business
purpose must be bona fide and not for the primary purpose of causing the
occurrence of a Redemption Date, the redemption date shall be the Business
Day prior to the record date for any meeting or vote of the holders of the
Class B Units to consider the Class B Unit Voting Event and the Board of
Directors shall give such number of days' prior written notice of such
redemption to the registered holders of the Class B Units and the Voting
and Exchange Trustee as the Board of Directors may determine to be
reasonably practicable in such circumstances;
or
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(v)
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an
Exempt Class B Unit Voting Event is proposed and the holders of the Class
B Units fail to take the necessary action at a meeting or other vote of
holders of Class B Units, to approve or disapprove, as applicable, the
Exempt Class B Unit Voting Event, in which case the redemption date shall
be the Business Day following the day on which the holders of the Class B
Units fail to take such action,
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provided,
however, that the accidental failure or omission to give any notice of
redemption under clauses (i), (ii) or (iii) above to any of such holders of
Class B Units shall not affect the validity of any such redemption;
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(oo)
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"Redemption Price" has
the meaning ascribed thereto in Section
7.1;
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(pp)
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"Retracted Units" has the
meaning ascribed thereto in Section
6.1(a)(i);
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(qq)
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"Retraction Date" has the
meaning ascribed thereto in Section
6.1(a)(ii);
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(rr)
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"Retraction Price" has
the meaning ascribed thereto in Section
6.1;
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5
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(ss)
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"Retraction Request" has
the meaning ascribed thereto in Section
6.1(a);
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(tt)
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"Securities Act" means
the Securities
Act (Alberta) and the rules, regulations and policies made
thereunder, as now in effect and as they may be amended from time to
time;
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(uu)
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"Subdivision" has the
meaning ascribed thereto in Section
3.2;
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(vv)
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"Support Agreement" means
the amended and restated support agreement dated as February 13, 2008
among Enerplus, FLP and the General Partner, as amended or further
restated from time to time;
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(ww)
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"Tax Act" means the Income Tax Act (Canada),
R.S.C. 1985, c. 1. (5th Supp), as from time to time amended, including the
regulations promulgated from time to time
thereunder;
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(xx)
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"Transfer Agent" means
CIBC Mellon Trust Company or such other
person as may from time to time be appointed by FLP as the registrar and
transfer agent for the Class B
Units;
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(yy)
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"Trust Control
Transaction" means: (i) any merger or similar transaction involving
Enerplus as a result of which all of the outstanding Enerplus Units are to
be sold to or exchanged for securities and/or cash of another entity; (ii)
any offer to acquire securities of Enerplus to which are attached 50% or
more of the voting rights attached to all outstanding securities of
Enerplus; (iii) any sale of all or substantially all of the assets and
investments of Enerplus or of all or substantially all of the business and
undertaking of Enerplus; or (iv) any publicly announced proposal to do any
of the foregoing;
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(zz)
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"TSX" means the Toronto
Stock Exchange;
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(aaa)
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"Voting and Exchange Trust
Agreement" means the amended and restated voting and exchange trust
agreement dated February 13, 2008 among Enerplus, FLP and CIBC Mellon
Trust Company, as amended or further restated from time to time;
and
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(bbb)
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"Voting and Exchange
Trustee" means CIBC Mellon Trust Company, as trustee under the
Voting and Exchange Trust Agreement, or such other person as becomes
trustee under the Voting and Exchange Trust Agreement in accordance with
such agreement.
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ARTICLE 2
RANKING
OF CLASS B UNITS
2.1
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Subject
to Article 5, on a distribution of assets in the event of the
liquidation, dissolution or winding-up of FLP, whether voluntary or
involuntary, or any other distribution of the assets of FLP among its
Partners for the purpose of winding-up its
affairs:
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(a)
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the
holders of Class A Units shall be distributed an amount equal to the
Exchange Ratio Percentage of the aggregate of all
liabilities of Enerplus and all other Enerplus Subsidiaries that are not
direct or indirect wholly-owned subsidiaries of FLP (other than those due
among them); and
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(b)
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the
balance of the assets of FLP shall be
distributed:
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(i)
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as
to that proportion of such assets equal to the result obtained by dividing
the amount of such assets by the sum of: (A) the number of Class B Units
multiplied by the Exchange Ratio Percentage; and (B) the number of
Enerplus Units, in each case as outstanding on the date of such
distribution, in respect of each Class B Unit outstanding;
and
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6
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(ii)
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as
to the remaining portion of such assets, to the holders of Class A Units
rateably in accordance with the number of Class A Units held
thereby.
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ARTICLE 3
LOANS
AND DISTRIBUTIONS
3.1
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A
holder of a Class B Unit shall be entitled to receive and FLP shall,
subject to applicable law, on each Distribution Payment Date, make a loan
in respect of each Class B Unit:
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(a)
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in
the case of a cash distribution declared on Enerplus Units, in an amount
in cash for each Class B Unit equal to the Exchange Ratio Percentage of
the cash distribution (or Canadian Dollar Equivalent thereof in the case
of a cash distribution declared in other than Canadian dollars) declared
on each Enerplus Unit; or
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(b)
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in
the case of a distribution declared on Enerplus Units in property other
than cash or Enerplus Units, in such type and in accordance with the
Exchange Ratio Percentage of the amount of property for each Class B Unit
as is the same as or economically equivalent to (to be determined by the
Board of Directors as contemplated by Section 3.6) the type and amount of
property declared as a distribution on each Enerplus
Unit.
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3.2
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In
the case of a distribution declared on Enerplus Units to be paid in
Enerplus Units, the Board of Directors shall subdivide, redivide or change
(the "Subdivision") each
issued and unissued Class B Unit on the basis that each Class B Unit
before the subdivision becomes a number of Class B Units equal to the sum
of: (i) 0.425 of an Enerplus Unit; and (ii) the number of Enerplus Units,
multiplied by the Exchange Ratio Percentage, to be paid as a unit
distribution on each Enerplus Unit. In making such Subdivision, the Board
of Directors shall consider the effect thereof upon the then outstanding
Class B Units and the general taxation consequences of the Subdivision to
the holders of the Class B Units. In such instance, and notwithstanding
any other provision hereof, such Subdivision shall become effective on the
effective date specified in Section 3.4 without any further act or
formality on the part of the Board of Directors, FLP or of the holders of
Class B Units. For greater certainty, subject to applicable law, no
approval of the holders to an amendment to the Limited Partnership
Agreement shall be required to give effect to such Subdivision.
Notwithstanding the foregoing, no such Subdivision shall be made if the
distribution of Enerplus Units by Enerplus is immediately followed by an
automatic consolidation of the outstanding Enerplus Units in accordance
with the Enerplus Trust Indenture and such
consolidation is effective.
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3.3
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Cheques
of FLP payable at par at any branch of the bankers of FLP shall be issued
in respect of any cash loans contemplated by Section 3.1(a) and the
sending of such a cheque to each holder of a Class B Unit shall satisfy
FLP's obligation to make the cash loan represented thereby unless the
cheque is not paid on presentation. Subject to applicable law,
certificates registered in the name of the registered holder of Class B
Units shall be issued or transferred in respect of any Subdivision
contemplated by Section 3.2 and the sending of such certificates to each
holder of a Class B Unit shall satisfy the unit distribution represented
thereby. Such other type and amount of property in respect of FLP's
obligation to make the loans contemplated by Section 3.1(b) shall be
issued, distributed or transferred by FLP in such manner as it shall
determine and the issuance, distribution or transfer thereof by FLP to
each holder of a Class B Unit shall satisfy FLP's obligation to make the
loan represented thereby. No holder of a Class B Unit shall be
entitled to recover by action or other legal process against FLP any loan
advance that is represented by a cheque that has not been duly presented
to FLP's bankers for payment or that otherwise remains unclaimed for a
period of six years from the date on which such loan advance was first
payable.
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3.4
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The
record date for the determination of the holders of Class B Units entitled
to receive and the date for making any loan in respect of the Class B
Units under Section 3.1 shall be the same dates as the record date and
payment date, respectively, for the corresponding distribution declared on
Enerplus Units. The record date for the determination of the holders of
Class B Units entitled to receive additional Class B Units in connection
with any Subdivision of the Class B Units under Section 3.2 and the
effective date of such Subdivision shall be the same dates as the record
date and payment date, respectively, for the corresponding distribution
declared on Enerplus Units.
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7
3.5
|
If
on any date any loan on the Class B Units under Section 3.1 is required to
be made, the loan is not made in full in respect of all of the Class B
Units then outstanding, any such loan that remains unadvanced shall be
made on the earliest subsequent date or dates determined by the Board of
Directors on which FLP shall have sufficient moneys, assets or property
properly applicable to the making of such
loan.
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3.6
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The
Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence (as adjusted for the Exchange Ratio) for
the purposes of Sections 3.1 and 3.2 and Article 12, and each such
determination shall be conclusive and binding on FLP and all Partners. In
making each such determination, the following factors shall, without
excluding other factors determined by the Board of Directors to be
relevant, be considered by the Board of
Directors:
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(a)
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in
the case of the distribution of any rights, options or warrants to
subscribe for or purchase Enerplus Units (or securities exchangeable for
or convertible into or carrying rights to acquire Enerplus Units), the
relationship between the exercise price of each such right, option or
warrant and the Current Market Price, the volatility of Enerplus Units and
the term of any such instrument;
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(b)
|
in
the case of the distribution of any other form of property (including any
securities of Enerplus of any class other than Enerplus Units, any rights,
options or warrants other than those referred to in Section 3.6(a) above,
any evidences of indebtedness of Enerplus or any assets of Enerplus) the
relationship between the fair market value (as determined by the Board of
Directors in the manner above contemplated) of such property to be issued
or distributed with respect to each outstanding Enerplus Unit and the
Current Market Price;
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(c)
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in
the case of any subdivision, redivision or change of the then outstanding
Enerplus Units into a greater number of Enerplus Units or the reduction,
combination, consolidation or change of the then outstanding Enerplus
Units into a lesser number of Enerplus Units or any merger, reorganization
or other transaction affecting Enerplus Units, the effect thereof upon the
then outstanding Enerplus Units;
and
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(d)
|
in
all such cases, the general taxation consequences of the relevant event to
holders of Class B Units to the extent that such consequences may differ
from the taxation consequences to holders of Enerplus Units (except for
any differing consequences arising as a result of differing marginal
taxation rates and without regard to the individual circumstances of
holders of Class B Units).
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3.7
|
Notwithstanding
anything set forth in Sections 3.1 to 3.6, inclusive, any amount or
property loaned in respect of Class B Units pursuant to Section
3.1:
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(a)
|
shall
not constitute a distribution of profits or other compensation by way of
income in respect of such Class B Units or a distribution of Partnership
capital; and
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(b)
|
shall
constitute a loan of the amount thereof or, in the case of property, the
fair market value thereof as determined in good faith by the Board of
Directors as of the date of such loan, to the holder of the Class B Units
receiving the same, which loan shall be repayable, without interest, by
such holder to FLP on the earlier
of:
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(i)
|
January
1 of the calendar year next following the making
thereof;
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(ii)
|
the
5th Business Day preceding any Insolvency
Event;
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|
(iii)
|
the
Business Day prior to the redemption pursuant to Article 6, 7 or 8 of the
Class B Unit in respect of which the loan was
made;
|
|
(iv)
|
the
Business Day prior to the purchase pursuant to Article 10 of the Class B
Unit in respect of which the loan was made;
and
|
8
|
(v)
|
the
Business Day prior to any other transfer of the Class B Unit in respect of
which the loan was made.
|
3.8
|
FLP
shall make (and be deemed to make) a distribution in respect of each Class
B Unit equal to the amount of the loans outstanding in respect thereof as
provided in Section 3.7 on the date such loans are repayable to FLP
pursuant to Section 3.7.
|
3.9
|
FLP
shall set off and apply the amount of any distribution made (or deemed to
have been made) pursuant to Section 3.8 against the obligations of any
holder of Class B Units under any loan outstanding in respect thereof as
provided in Section 3.7. Each holder of Class B Units shall have the right
to set off and apply any amount owed by such holder of Class B Units under
any loan outstanding in respect thereof as provided in Section 3.7 against
the amount of any distribution made pursuant to Section
3.8.
|
3.10
|
Except
as provided in Article 2, this Article 3 and Article 5, the
holders of Class B Units shall not be entitled to receive distributions in
respect thereof.
|
ARTICLE 4
CERTAIN
RESTRICTIONS
4.1
|
So
long as any of the Class B Units are outstanding, FLP shall not at any
time without, but may at any time with, the approval of the holders of the
Class B Units given as specified in Section
11.1:
|
|
(a)
|
pay
any distributions on the Class A Units other than distributions payable in
Class A Units;
|
|
(b)
|
redeem
or purchase or make any capital distribution in respect of Class A Units;
or
|
|
(c)
|
issue
any Class B Units or any other units of FLP ranking superior to the Class
B Units other than by way of distributions to the holders of Class B
Units;
|
provided
that such restrictions shall not apply if: (i) all loans on the outstanding
Class B Units corresponding to distributions declared and paid to date on
Enerplus Units shall have been made in respect of the Class B Units; or (ii) the
amount or property to be loaned has been set aside for loan in respect of the
Class B Units on a forthcoming Distribution Payment Date corresponding with the
payment of a distribution on Enerplus Units, adjusted for the Exchange Ratio,
reflected by such loan.
ARTICLE 5
DISTRIBUTION
ON LIQUIDATION
5.1
|
In
the event of the liquidation, dissolution or winding-up of FLP, whether
voluntary or involuntary, or any other distribution of the assets of FLP
among its Partners for the purpose of winding up its affairs, a holder of
Class B Units shall be entitled, subject to applicable law and to the
exercise by the applicable Enerplus Subsidiary of the Liquidation Call
Right, to receive from the assets of FLP in respect of each Class B Unit
held by such holder on the effective date (the "Liquidation Date") of such
liquidation, dissolution, winding-up or distribution of assets an amount
per Class B Unit equal to the Class B Unit Price applicable on the last
Business Day prior to the Liquidation Date (the "Liquidation Amount")
payable as provided in Section 5.2.
|
5.2
|
On
or promptly after the Liquidation Date, and subject to the exercise by the
applicable Enerplus Subsidiary of the Liquidation Call Right, FLP shall
cause to be delivered to the holders of the Class B Units the Liquidation
Amount for each such Class B Unit upon presentation and surrender of the
certificates representing such Class B Units, together with such other
documents and instruments as may be required to effect a transfer of Class
B Units under the Limited Partnership Agreement and such additional
documents and instruments as the Transfer Agent and FLP may reasonably
require, at the registered office of the General Partner or at any office
of the Transfer Agent as may be specified by FLP by notice to the holders
of the Class B Units. Payment of the total Liquidation Amount for such
Class B Units shall be made by delivery to each holder, at the address of
the holder recorded in the register of FLP for the Class B Units or by
holding for pick-up by the holder at the registered office of the General
Partner or at any office of the Transfer Agent as may be specified by FLP
by notice to the holders of Class B Units, on behalf of FLP of the Class B
Unit Consideration representing the total Liquidation Amount (less any
amount withheld pursuant to
Article 14).
|
9
5.3
|
On
and after the Liquidation Date, the holders of the Class B Units shall
cease to be holders of such Class B Units and shall not be entitled to
exercise any of the rights of holders in respect thereof (including any
rights under the Voting and Exchange Trust Agreement), other than the
right to receive their proportionate part of the total Liquidation Amount
(less any amount withheld pursuant to Article 14), unless upon
presentation and surrender of certificates in accordance with the
foregoing provisions payment of the total Liquidation Amount (less any
amount withheld pursuant to Article 14) for such Class B Units shall
not be made, in which case the rights of the holders shall remain
unaffected until the total Liquidation Amount (less any amount withheld
pursuant to Article 14) to which such holders are entitled shall have
been paid to such holders in the manner hereinbefore
provided.
|
5.4
|
FLP
shall have the right at any time on or before the Liquidation Date to
deposit or cause to be deposited the Class B Unit Consideration
representing the Liquidation Amount (less any amount withheld pursuant to
Article 14) in respect of the Class B Units represented by
certificates that have not at the Liquidation Date been surrendered by the
holders thereof in a custodial account with any chartered bank or trust
company in Canada. Upon such deposit being made, the rights of the holders
of Class B Units, after such deposit, shall be limited to receiving their
proportionate part of the total Liquidation Amount for such Class B Units
so deposited (less any amount withheld pursuant to Article 14),
against presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of such Class B Unit Consideration, the holders of the
Class B Units shall thereafter be considered and deemed for all purposes
to be holders of Enerplus Units delivered to them or the custodian on
their behalf.
|
5.5
|
After
FLP has satisfied its obligations to pay the holders of the Class B Units
the Liquidation Amount per Class B Unit pursuant to Section 5.1, such
holders shall not be entitled to share in any further distribution of the
assets of FLP.
|
ARTICLE 6
RETRACTION
OF CLASS B UNITS BY HOLDER
6.1
|
A
holder of Class B Units shall be entitled at any time after January 1,
2007, upon compliance with the provisions of this Article 6, to
require FLP to redeem any or all of the Class B Units registered in the
name of such holder for an amount per Class B Unit equal to the Class B
Unit Price applicable on the last Business Day prior to the Retraction
Date (the "Retraction
Price"), which shall be satisfied in full by FLP causing to be
delivered to such holder the Class B Unit Consideration representing the
Retraction Price. To effect such redemption, the holder shall present and
surrender at the registered office of the General Partner or at any office
of the Transfer Agent as may be specified by FLP by notice to the holders
of Class B Units, the certificate or certificates representing the Class B
Units which the holder desires to have FLP redeem, together with such
other documents and instruments as may be required to effect a transfer of
Class B Units under the Limited Partnership Agreement and such additional
documents and instruments as the Transfer Agent and the General Partner
may reasonably require, and together
with:
|
|
(a)
|
a
duly executed statement (the "Retraction Request") in
the form of Schedule A hereto or in such other form as may be acceptable
to the General Partner:
|
|
(i)
|
specifying
that the holder desires to have all or any number specified therein of the
Class B Units represented by such certificate or certificates (the "Retracted Units")
redeemed by FLP; and
|
|
(ii)
|
stating
the Business Day on which the holder desires to have FLP redeem the
Retracted Units (the "Retraction Date"),
provided that the Retraction Date shall be not less than three (3)
Business Days nor more than five (5) Business Days after the date on which
the Retraction Request is received by the General Partner and further
provided that, in the event that no such Business Day is specified by the
holder in the Retraction Request, the Retraction Date shall be deemed to
be the fifth (5th)
Business Day after the date on which the Retraction Request is received by
the General Partner; and
|
10
|
(b)
|
payment
(or evidence satisfactory to the General Partner of payment) of the taxes
(if any) payable as contemplated by Section
14.4.
|
6.2
|
Upon
receipt by the General Partner or the Transfer Agent in the manner
specified in Section 6.1 of a certificate or certificates representing the
number of Retracted Units, together with a Retraction Request and such
additional documents and instruments as the Transfer Agent and the General
Partner may reasonably require, and provided that the Retraction Request
is not revoked by the holder in the manner specified in Section 6.6, FLP
shall redeem the Retracted Units effective at the close of business on the
Retraction Date and shall cause to be delivered to such holder the total
Retraction Price with respect to such Class B Units in accordance with
Section 6.3. If only a part of the Class B Units represented by any
certificate is redeemed, a new certificate for the balance of such Class B
Units shall be issued to the holder at the expense of
FLP.
|
6.3
|
FLP
shall deliver or cause the Transfer Agent to deliver to the relevant
holder, at the address of the holder recorded in the register of FLP for
the Class B Units or at the address specified in the holder's Retraction
Request or, if specified in such Retraction Request, by holding for
pick-up by the holder at the registered office of the General Partner or
at any office of the Transfer Agent as may be specified by FLP by notice
to such holder of Class B Units, the Class B Unit Consideration
representing the total Retraction Price (less any amount withheld pursuant
to Article 14) and such delivery to the Transfer Agent shall be
deemed to be payment of and shall satisfy and discharge all liability for
the total Retraction Price to the extent that the same is represented by
such Class B Unit Consideration.
|
6.4
|
On
and after the close of business on the Retraction Date, the holder of the
Retracted Units shall cease to be a holder of such Retracted Units and
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive the total Retraction Price (less
any amount withheld pursuant to Article 14) unless upon presentation
and surrender of certificates in accordance with the foregoing provisions,
payment of the total Retraction Price (less any amount withheld pursuant
to Article 14) shall not be made as provided in Section 6.3, in which
case the rights of such holder shall remain unaffected until the total
Retraction Price (less any amount withheld pursuant to Article 14)
has been paid in the manner hereinbefore provided. On and after the close
of business on the Retraction Date, provided that presentation and
surrender of certificates and payment of the total Retraction Price (less
any amount withheld pursuant to Article 14) has been made in
accordance with the foregoing provisions, the holder of the Retracted
Units so redeemed by FLP shall thereafter be considered and deemed for all
purposes to be the holder of Enerplus Units delivered to
it.
|
6.5
|
Notwithstanding
any other provision of this Article 6, FLP shall not be obligated to
redeem Retracted Units specified by a holder in a Retraction Request to
the extent that such redemption of Retracted Units would be contrary to
provisions of applicable law. If FLP believes, acting reasonably, that on
any Retraction Date it would not be permitted by any of such provisions to
redeem the Retracted Units tendered for redemption on such date, FLP shall
only be obligated to redeem Retracted Units specified by a holder in a
Retraction Request to the extent of the maximum number that may be so
redeemed (rounded down to a whole number of Class B Units) as would not be
contrary to such provisions and shall notify the holder at least one
Business Day prior to the Retraction Date as to the number of Retracted
Units which will not be redeemed by FLP. In any case in which the
redemption by FLP of Retracted Units would be contrary to applicable law,
FLP shall redeem the maximum number of Class B Units which the Board of
Directors determines FLP is permitted to redeem as of the Retraction Date
on a pro rata
basis and shall issue to each holder of Retracted Units a new certificate,
at the expense of FLP, representing the Retracted Units not redeemed by
FLP pursuant to Section 6.2. Provided that the Retraction Request is not
revoked by the holder in the manner specified in Section 6.6, the holder
of any such Retracted Units not redeemed by FLP pursuant to Section 6.2 as
a result of applicable law shall be deemed by giving the Retraction
Request to have instructed the Voting and Exchange Trustee to require
Enerplus to purchase such Retracted Units from such holder on the
Retraction Date or as soon as practicable thereafter on payment by
Enerplus to such holder of the Retraction Price for each such Retracted
Unit, all as more specifically provided in Section 5.7 of the Voting and
Exchange Trust Agreement.
|
11
6.6
|
A
holder of Retracted Units may, by notice in writing given by the holder to
FLP before the close of business on the Business Day immediately preceding
the Retraction Date, withdraw its Retraction Request, in which event such
Retraction Request shall be null and
void.
|
ARTICLE 7
REDEMPTION
OF CLASS B UNITS BY FLP
7.1
|
Subject
to applicable law, FLP shall on the Redemption Date redeem all but not
less than all of the then outstanding Class B Units for an amount per
Class B Unit equal to the Class B Unit Price applicable on the last
Business Day prior to the Redemption Date (the "Redemption Price"), which shall be
satisfied in full by FLP causing to be delivered to such holder the Class
B Unit Consideration representing the Redemption
Price.
|
7.2
|
In
any case of a redemption of Class B Units under this Article 7, FLP
shall, at least 30 days before the Redemption Date (other than a
Redemption Date established in connection with a Trust Control
Transaction, a Change of Law, a Class B Unit Voting Event or an Exempt
Class B Unit Voting Event), send or cause to be sent to each holder of
Class B Units a notice in writing of the redemption by FLP of the Class B
Units held by such holder. In the case of a Redemption Date established in
connection with a Trust Control Transaction, a Change of Law, a Class B
Unit Voting Event or an Exempt Class B Unit Voting Event, the written
notice of redemption by FLP will be sent on or before the Redemption Date,
on as many days prior written notice as may be determined by the Board of
Directors to be reasonably practicable in the circumstances. In any such
case, such notice shall set out the formula for determining the Redemption
Price and the Redemption Date. In the case of any notice given in
connection with a possible Redemption Date, such notice will be given
contingently and will be withdrawn if the contingency does not
occur.
|
7.3
|
On
or after the Redemption Date, FLP shall cause to be delivered to the
holders of the Class B Units to be redeemed the Redemption Price (less any
amount withheld pursuant to Article 14) for each such Class B Unit
upon presentation and surrender at the registered office of the General
Partner or at any office of the Transfer Agent as may be specified by FLP
in the notice described in Section 7.2 of the certificates representing
such Class B Units, together with such other documents and instruments as
may be required to effect a transfer of Class B Units under the Limited
Partnership Agreement and such additional documents and instruments as the
Transfer Agent and the General Partner may reasonably require. Payment of
the total Redemption Price for such Class B Units shall be made by
delivery to each holder, at the address of the holder recorded in the
securities register of FLP or by holding for pick-up by the holder at the
registered office of the General Partner or at any office of the Transfer
Agent as may be specified by FLP in such notice, on behalf of FLP of the
Class B Unit Consideration representing the total Redemption Price (less
any amount withheld pursuant to Article 14) for the holder's Class B
Units.
|
7.4
|
On
and after the Redemption Date, the holders of the Class B Units called for
redemption shall cease to be holders of such Class B Units and shall not
be entitled to exercise any of the rights of holders in respect thereof,
other than the right to receive their proportionate part of the total
Redemption Price (less any amount withheld pursuant to Article 14),
unless payment of the total Redemption Price for such Class B Units shall
not be made upon presentation and surrender of certificates in accordance
with the foregoing provisions, in which case the rights of the holders
shall remain unaffected until the total Redemption Price (less any amount
withheld pursuant to Article 14) has been paid in the manner
hereinbefore provided.
|
7.5
|
FLP
shall have the right at any time after the sending of notice of its
intention to redeem the Class B Units as aforesaid to deposit or cause to
be deposited the Class B Unit Consideration with respect to the Class B
Units so called for redemption, or of such of the said Class B Units
represented by certificates that have not at the date of such deposit been
surrendered by the holders thereof in connection with such redemption, in
a custodial account with any chartered bank or trust company in Canada
named in such notice. Upon the later of such deposit being made and the
Redemption Date, the Class B Units in respect whereof such deposit shall
have been made shall be redeemed and the rights of the holders thereof
after such deposit or Redemption Date, as the case may be, shall be
limited to receiving their proportionate part of the total Redemption
Price for such Class B Units so deposited (less any amount withheld
pursuant to Article 14), against presentation and surrender of the
said certificates held by them, respectively, in accordance with the
foregoing provisions. Upon such payment or deposit of such Class B Unit
Consideration, the holders of the Class B Units shall thereafter be
considered and deemed for all purposes to be holders of Enerplus Units
delivered to them or the custodian on their
behalf.
|
12
ARTICLE 8
AUTOMATIC
REDEMPTION
8.1
|
(a)
|
Each
holder of Class B Units shall notify FLP of any event or circumstance
which would result in such holder becoming or being deemed to become a
Non-Resident, as soon as practicable and, in any event, at least 30 days
prior to the anticipated effective date of such change (the "Change of Residency
Date").
|
|
(b)
|
On
and as of the fifth Business Day prior to the Change of Residency Date,
all but not less than all of such holder's Class B Units shall be and be
deemed to be transferred to FLP for the Class B Unit Price applicable on
the last Business Day prior to the Change of Residency Date (the "Automatic Redemption
Price") in accordance with Section 8.1(c) (the "Automatic
Redemption").
|
|
(c)
|
For
the purposes of completing the purchase of the Class B Units pursuant to
the Automatic Redemption, FLP shall deposit or cause to be deposited with
the Transfer Agent, as soon as practicable after the Change of Residency
Date, the Class B Unit Consideration representing the total Automatic
Redemption Price. From and after the fifth Business Day prior to the
Change of Residency Date, the holder of the Class B Units referred to in
Section 8.1(a) shall cease and be deemed to cease to be a holder of the
Class B Units and shall not be entitled to exercise any of the rights of
holders in respect thereof (including any rights under the Voting and
Exchange Trust Agreement ), other than the right to receive the total
Automatic Redemption Price payable by FLP to such holder (less any amount
withheld pursuant to Article 14), without interest, upon presentation
and surrender by the holder of certificates representing the Class B Units
held by such holder and the holder shall on and after the Change of
Residency Date be considered and deemed for all purposes to be the holder
of Enerplus Units to which such holder is entitled. Upon surrender to the
Transfer Agent of a certificate or certificates representing Class B
Units, together with such other documents and instruments as may be
required to effect a transfer of Class B Units under the Limited
Partnership Agreement and such additional documents and instruments as the
Transfer Agent may reasonably require, the holder of such surrendered
certificate or certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of FLP shall deliver to such
holder, the Class B Unit Consideration (less any amount withheld pursuant
to Article 14) to which such holder is
entitled.
|
ARTICLE 9
PURCHASE
FOR CANCELLATION
9.1
|
Subject
to applicable law and the Limited Partnership Agreement and
notwithstanding Section 9.2, FLP may at any time and from time to time
purchase for cancellation all or any part of the Class B Units by private
agreement with any holder of Class B
Units.
|
9.2
|
Subject
to applicable law and the Limited Partnership Agreement, FLP may at any
time and from time to time purchase for cancellation all or any part of
the outstanding Class B Units by invitation to tender made to all the
holders of record of Class B Units then outstanding at any price per Class
B Unit. If in response to an invitation for tenders under the provisions
of this Section 9.2, more Class B Units are tendered at a price or prices
acceptable to FLP than FLP is prepared to purchase, the Class B Units to
be purchased by FLP shall be purchased as nearly as may be pro rata according to
the number of Class B Units tendered by each holder who submits a tender
to FLP, provided that when Class B Units are tendered at different prices,
the pro rating shall be effected (disregarding fractions) only with
respect to the Class B Units tendered at the price at which more Class B
Units were tendered than FLP is prepared to purchase after FLP has
purchased all the Class B Units tendered at lower prices. If only part of
the Class B Units represented by any certificate shall be purchased, a new
certificate for the balance of such Class B Units shall be issued at the
expense of FLP.
|
13
ARTICLE 10
CERTAIN
RIGHTS TO ACQUIRE CLASS B UNITS
10.1
|
(a)
|
Enerplus,
through the applicable Enerplus Subsidiary, shall have the overriding
right (the "Liquidation
Call Right"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding-up of FLP or any other distribution of
the assets of FLP among its Partners for the purpose of winding-up its
affairs, to purchase from all but not less than all of the holders (other
than Enerplus and its affiliates) of Class B Units on the Liquidation Date
all but not less than all of the Class B Units held by each such holder
upon payment by the applicable Enerplus Subsidiary to each such holder of
the Liquidation Amount for each of such holder's Class B Units in
accordance with Section 10.1(c). In the event of the exercise of the
Liquidation Call Right by the applicable Enerplus Subsidiary, each holder
shall be obligated to sell all the Class B Units held by such holder to
such Enerplus Subsidiary on the Liquidation Date upon payment by such
Enerplus Subsidiary to such holder of the Liquidation Amount for each such
Class B Unit, whereupon FLP shall have no obligation to pay any
Liquidation Amount to the holders of such Class B Units so purchased by
such Enerplus Subsidiary.
|
|
(b)
|
To
exercise the Liquidation Call Right, the applicable Enerplus Subsidiary
must notify FLP and the Transfer Agent of such Enerplus Subsidiary's
intention to exercise such right at least 15 days before the Liquidation
Date, in the case of a voluntary liquidation, dissolution or winding-up of
FLP or any other voluntary distribution of the assets of FLP among its
Partners for the purpose of winding-up its affairs, and at least five (5)
Business Days before the Liquidation Date, in the case of an involuntary
liquidation, dissolution or winding-up of FLP or any other involuntary
distribution of the assets of FLP among its Partners for the purpose of
winding up its affairs. The Transfer Agent will notify the holders of
Class B Units as to whether such Enerplus Subsidiary has exercised the
Liquidation Call Right forthwith after the expiry of the period during
which the same may be exercised by such Enerplus Subsidiary. If such
Enerplus Subsidiary exercises the Liquidation Call Right, then on the
Liquidation Date, such Enerplus Subsidiary will purchase and the holders
of Class B Units will sell all of the Class B Units then outstanding for a
price per Class B Unit equal to the Liquidation
Amount.
|
|
(c)
|
For
the purposes of completing the purchase of the Class B Units pursuant to
the Liquidation Call Right, the applicable Enerplus Subsidiary shall
deposit or cause to be deposited with the Transfer Agent, on or before the
Liquidation Date, the Class B Unit Consideration representing the total
Liquidation Amount. Provided that such Class B Unit Consideration has been
so deposited with the Transfer Agent, on and after the Liquidation Date,
the holders of the Class B Units shall cease to be holders of the Class B
Units and shall not be entitled to exercise any of the rights of holders
in respect thereof (including any rights under the Voting and Exchange
Trust Agreement), other than the right to receive their proportionate part
of the total Liquidation Amount payable by the applicable Enerplus
Subsidiary (less any amount withheld pursuant to Article 14), without
interest, upon presentation and surrender by the holder of certificates
representing the Class B Units held by such holder and the holder shall on
and after the Liquidation Date be considered and deemed for all purposes
to be the holder of Enerplus Units to which such holder is entitled. Upon
surrender to the Transfer Agent of a certificate or certificates
representing Class B Units, together with such other documents and
instruments as may be required to effect a transfer of Class B Units under
the Limited Partnership Agreement and such additional documents and
instruments as the Transfer Agent may reasonably require, the holder of
such surrendered certificate or certificates shall be entitled to receive
in exchange therefor, and the Transfer Agent on behalf of the applicable
Enerplus Subsidiary shall deliver to such holder, the Class B Unit
Consideration (less any amount withheld pursuant to Article 14) to
which such holder is entitled. If such Enerplus Subsidiary does not
exercise the Liquidation Call Right in the manner described above, on the
Liquidation Date the holders of the Class B Units will be entitled to
receive in exchange therefor the Liquidation Amount otherwise payable by
FLP in connection with the liquidation, dissolution or winding-up of FLP
pursuant to Section 5.2.
|
14
ARTICLE 11
AMENDMENT
AND APPROVAL
11.1
|
Any
approval given by the holders of the Class B Units to add to, change or
remove any right, privilege, restriction or condition attaching to the
Class B Units or any other matter requiring the approval or consent of the
holders of Class B Units shall be deemed to have been sufficiently given
if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be given by resolution in writing
executed by all holders of Class B Units entitled to vote on that
resolution or passed by the affirmative vote of at least two-thirds of the
votes cast on such resolution by holders of Class B Units (other than
Enerplus and its affiliates) represented in person or by proxy at a
meeting of holders of Class B Units duly called for such purpose and held
upon at least 21 days' notice at which the holders of at least 25% of the
outstanding Class B Units (other than Class B Units held by Enerplus and
its affiliates) at that time are present or represented by proxy; provided
that if at any such meeting the holders of at least 25% of the outstanding
Class B Units at that time are not present or represented by proxy within
half an hour after the time appointed for such meeting, then the meeting
shall be adjourned to such date not less than five (5) days thereafter and
to such time and place as may be designated by the Chair of such meeting.
At such adjourned meeting, the holders of Class B Units (other than
Enerplus and its affiliates) present or represented by proxy thereat may
transact the business for which the meeting was originally called and a
resolution passed thereat by the affirmative vote of at least two-thirds
of the votes cast on such resolution by holders (other than Enerplus and
its affiliates) represented in person or by proxy at such meeting shall
constitute the approval or consent of the holders of the Class B Units.
For purposes of this section, any spoiled votes, illegible votes,
defective votes and abstentions shall be deemed to be votes not cast. On
every vote taken at every such meeting or adjourned meeting each holder of
Class B Units shall be entitled to one vote in respect of each Class B
Unit held by such holder.
|
ARTICLE 12
RECIPROCAL
CHANGES, ETC. IN RESPECT OF ENERPLUS UNITS
12.1
|
Each
holder of a Class B Unit acknowledges that the Support Agreement provides,
in part, that Enerplus will not, without the prior approval of FLP and the
prior approval of the holders of the Class B Units given in accordance
with Section 11.1:
|
|
(a)
|
issue
or distribute Enerplus Units (or securities exchangeable for or
convertible into or carrying rights to acquire Enerplus Units) to the
holders of all or substantially all of the then outstanding Enerplus Units
by way of a distribution, other than an issue of Enerplus Units (or
securities exchangeable for or convertible into or carrying rights to
acquire Enerplus Units) to holders of Enerplus Units (i) who exercise an
option to receive distributions in Enerplus Units (or securities
exchangeable for or convertible into or carrying rights to acquire
Enerplus Units) in lieu of receiving cash distributions, or (ii) pursuant
to any distribution reinvestment
plan;
|
|
(b)
|
issue
or distribute rights, options or warrants to the holders of all or
substantially all of the then outstanding Enerplus Units entitling them to
subscribe for or to purchase Enerplus Units (or securities exchangeable
for or convertible into or carrying rights to acquire Enerplus Units);
or
|
|
(c)
|
issue
or distribute to the holders of all or substantially all of the then
outstanding Enerplus Units:
|
|
(i)
|
securities
of Enerplus of any class other than Enerplus Units (other than securities
exchangeable for or convertible into or carrying rights to acquire
Enerplus Units);
|
15
|
(ii)
|
rights,
options or warrants other than those referred to in Section
12.1(b);
|
|
(iii)
|
evidences
of indebtedness of Enerplus; or
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(iv)
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assets
of Enerplus,
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unless
the economic equivalent (after giving effect to the Exchange Ratio) on a per
Class B Unit basis of such rights, options, warrants, securities, shares,
evidences of indebtedness or other assets is issued or loaned simultaneously to
holders of the Class B Units; provided that, for greater certainty, the above
restrictions shall not apply to give effect to a redemption by Enerplus of
Enerplus Units in accordance with the Enerplus Trust Indenture.
12.2
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Each
holder of a Class B Unit acknowledges that the Support Agreement further
provides, in part, that Enerplus will not without the prior approval of
FLP and the prior approval of the holders of the Class B Units given in
accordance with Section 11.1:
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(a)
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subdivide,
redivide or change the then outstanding Enerplus Units into a greater
number of Enerplus Units;
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(b)
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reduce,
combine, consolidate or change the then outstanding Enerplus Units into a
lesser number of Enerplus Units; or
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(c)
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reclassify
or otherwise change Enerplus Units or effect a merger, reorganization or
other transaction affecting Enerplus
Units;
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unless
the same or an economically equivalent change (after giving effect to the
Exchange Ratio) shall simultaneously be made to, or in the rights of the holders
of, the Class B Units.
12.3
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Notwithstanding
the foregoing provisions of this Article 12, in the event of a Trust
Control Transaction:
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(a)
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which
does not result in an acceleration of the Redemption Date in accordance
with paragraph (b) of the definition of "Redemption Date";
and
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(b)
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in
which all or substantially all of the then outstanding Enerplus Units are
converted into or exchanged for securities or rights to receive such
securities (the "Other
Securities ") of another person (the "Other Entity") that,
immediately after such Trust Control Transaction, owns or controls,
directly or indirectly, Enerplus;
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then all
references herein to "Enerplus" shall thereafter be and be deemed to be
references to the "Other Entity" and all references herein to "Enerplus Units"
shall thereafter be and be deemed to be references to "Other Securities" (with
appropriate adjustments, if any, as are required to result in a holder of Class
B Units on the exchange, redemption or retraction of such securities pursuant to
these provisions or exchange of such securities pursuant to the Voting and
Exchange Trust Agreement immediately subsequent to the Trust Control Transaction
being entitled to receive that number of Other Securities equal to the number of
Other Securities such holder of Class B Units would have received if the
exchange, redemption or retraction of such securities pursuant to these
provisions or exchange of such securities pursuant to the Voting and Exchange
Trust Agreement had occurred immediately prior to the Trust Control Transaction
and the Trust Control Transaction was completed) without any need to amend the
terms and conditions of the Class B Units and without any further action
required.
ARTICLE 13
ACTIONS
BY FLP UNDER SUPPORT AGREEMENT
13.1
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FLP
shall not propose, agree to or otherwise give effect to any amendment to,
or waiver or forgiveness of its rights or obligations under, the Support
Agreement or the Voting and Exchange Trust Agreement without the approval
of the holders of the Class B Units given in accordance with Section 11.1
other than such amendments, waivers and/or forgiveness as may be necessary
or advisable for the purposes of:
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16
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(a)
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adding
to the covenants of the other parties to such agreement for the protection
of FLP or the holders of the Class B Units
thereunder;
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(b)
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making
such provisions or modifications not inconsistent with such agreement as
may be necessary or desirable with respect to matters or questions arising
thereunder which, in the good faith opinion of the Board of Directors, it
may be expedient to make, provided that the Board of Directors shall be of
the good faith opinion, after consultation with counsel, that such
provisions and modifications will not be prejudicial to the interests of
the holders of the Class B Units;
or
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(c)
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making
such changes in or corrections to such agreement which, on the advice of
counsel to FLP, are required for the purpose of curing or correcting any
ambiguity or defect or inconsistent provision or clerical omission or
mistake or manifest error contained therein, provided that the Board of
Directors shall be of the good faith opinion, after consultation with
counsel, that such changes or corrections will not be prejudicial to the
interests of the holders of the Class B
Units.
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ARTICLE 14
LEGEND;
CALL RIGHTS; WITHHOLDING RIGHTS
14.1
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The
certificates evidencing the Class B Units shall contain or have affixed
thereto a legend in form and on terms approved by the Board of Directors,
with respect to the Support Agreement, the provisions relating to the
Liquidation Call Right, Automatic Redemption, and the Voting and Exchange
Trust Agreement (including the provisions with respect to the voting
rights, exchange right and automatic exchange
thereunder).
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14.2
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Each
holder of a Class B Unit, whether of record or beneficial, by virtue of
becoming and being such a holder shall be deemed to acknowledge the
Automatic Redemption in favour of FLP, and the Liquidation Call Right in
favour of the applicable Enerplus Subsidiary and the overriding nature
thereof in connection with the liquidation, dissolution or winding-up of
FLP or any other distribution of the assets of FLP among its Partners for
the purpose of winding-up its affairs, or a change of residency, as the
case may be, and to be bound thereby as therein
provided.
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14.3
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FLP,
Enerplus, the applicable Enerplus Subsidiary and the Transfer Agent shall
be entitled to deduct and withhold from any loan, distribution or
consideration otherwise payable to any holder of Class B Units such
amounts as FLP, Enerplus, the applicable Enerplus Subsidiary or the
Transfer Agent is required to deduct and withhold with respect to such
payment under the Tax Act or any provision of provincial, territorial,
local or foreign tax law, in each case, as amended. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all
purposes hereof as having been paid to the holder of the Class B Units in
respect of which such deduction and withholding was made, provided that
such withheld amounts are actually remitted to the appropriate taxing
authority. To the extent that the amount so required or permitted to be
deducted or withheld from any payment to a holder exceeds the cash portion
of the consideration otherwise payable to the holder, FLP, Enerplus, the
applicable Enerplus Subsidiary and the Transfer Agent are hereby
authorized to sell or otherwise dispose of such portion of the
consideration as is necessary to provide sufficient funds to FLP,
Enerplus, the applicable Enerplus Subsidiary or the Transfer Agent, as the
case may be, to enable it to comply with such deduction or withholding
requirement and FLP, Enerplus, the applicable Enerplus Subsidiary or the
Transfer Agent shall notify the holder thereof and remit any unapplied
balance of the net proceeds of such
sale.
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14.4
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Upon
any transfer or redemption of Class B Units, the certificate or
certificates representing Enerplus Units to be delivered in connection
with the payment of the total Redemption Price, Liquidation Amount,
Retraction Price or Automatic Redemption Price, as the case may be,
therefore shall be made without charge to the holder of the Class B Units
so transferred or redeemed subject to these provisions and provided,
however that such holder:
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(a)
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shall
pay (and none of Enerplus, FLP or the applicable Enerplus Subsidiary shall
be required to pay) on an after-tax basis any documentary, stamp, transfer
or other taxes that may be payable in respect of any transfer or
redemption, including, without limitation, any sales or land transfer
taxes payable in any jurisdiction as a result of such transfer or
redemption; or
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(b)
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shall
have provided evidence to the satisfaction of FLP that such taxes, if any,
have been paid in full.
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18
SCHEDULE
A
RETRACTION
REQUEST
[TO BE
PRINTED ON CLASS B UNIT CERTIFICATES]
To:
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Focus
Limited Partnership (the "Partnership") and
Enerplus Resources Fund (the "Trust")
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This
notice is given pursuant to Article 6 of the rights, privileges,
restrictions and conditions (the "Exchangeable Securities
Provisions") attaching to the Class B Units of FLP represented by this
certificate and all capitalized words and expressions used in this notice that
are defined in the Exchangeable Securities Provisions have the meanings ascribed
to such words and expressions in such Exchangeable Securities
Provisions.
The
undersigned hereby notifies FLP that the undersigned desires to have FLP redeem
in accordance with Article 6 of the Exchangeable Securities
Provisions:
[ ] all
Class B Unit (s) represented by this certificate; or
[ ] Class
B Unit (s) (only) represented by this certificate.
The
undersigned hereby notifies FLP that the Retraction Date shall be
_____________.
NOTE:
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The
Retraction Date must be a Business Day and must not be less than three (3)
Business Days nor more than five (5) Business Days after the date upon
which this notice is received by FLP. If no such Business Day is specified
above, the Retraction Date shall be deemed to be the fifth (5th)
Business Day after the date on which this notice is received by the
General Partner.
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This
Retraction Request may be revoked and withdrawn by the undersigned only by
notice in writing given to FLP at any time before the close of business on the
Business Day immediately preceding the Retraction Date.
The
undersigned acknowledges that if, as a result of applicable law, FLP is unable
to redeem all Retracted Units, the undersigned will be deemed to have exercised
the Exchange Right (as defined in the Voting and Exchange Trust Agreement) so as
to require Enerplus to purchase the unredeemed Retracted Units.
The
undersigned hereby represents and warrants to FLP and Enerplus that the
undersigned has good title to, and owns, the Class B Unit(s) represented by this
certificate to be acquired by FLP or Enerplus, as the case may be, free and
clear of all liens, claims and encumbrances.
(Date) | (Signature of Class B Unit holder) | (Guarantee of Signature) |
[ ]
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Please
check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Units are to be held for pick-up
by the Class B Unit holder from the Transfer Agent, failing which the
securities and any cheque(s) will be mailed to the last address of the
Class B Unit holder as it appears on the
register.
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NOTE:
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This
panel must be completed and this certificate, together with such
additional documents as the Transfer Agent may require, must be deposited
with the Transfer Agent. The securities and any cheque(s) resulting from
the retraction or purchase of the Retracted Units will be issued and
registered in, and made payable to, respectively, the name of the Class B
Unit holder as it appears on the register of FLP and the securities and
any cheque(s) resulting from such retraction or purchase will be delivered
to such Class B Unit holder as indicated above, unless the form appearing
immediately below is duly
completed.
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Date:
__________________________________
19
Name of
person in Whose Name Securities or Cheque(s) Are to be Registered, Issued or
Delivered (please print):
Street Address or P.O. Box: | ||
Signature of Class B Unit holder: | ||
City, Province and Postal Code: | ||
Signature Guaranteed by: |
NOTE:
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If
this Retraction Request is for less than all of the Class B Unit(s)
represented by this certificate, a certificate representing the remaining
Class B Unit(s) of FLP represented by this certificate will be issued and
registered in the name of the Class B Unit holder as it appears on the
register of FLP, unless the Class B Unit Transfer Power on the Class B
Unit(s) certificate is duly completed in respect of such Class B
Unit(s).
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20