ARRANGEMENT AGREEMENT Among ENERPLUS RESOURCES FUND and ENERMARK INC. and FOCUS ENERGY TRUST and FET RESOURCES LTD. Effective December 2, 2007
Exhibit
99.1
Among
and
ENERMARK
INC.
and
FOCUS
ENERGY TRUST
and
FET
RESOURCES LTD.
Effective
December 2, 2007
TABLE OF CONTENTS
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ARTICLE
1
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INTERPRETATION
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1.1
|
Definitions
|
1
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1.2
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Interpretation
Not Affected by
Headings, etc
|
9
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1.3
|
Number,
etc
|
9
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1.4
|
Date
for Any
Action
|
9
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1.5
|
Entire
Agreement
|
9
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1.6
|
Currency
|
9
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1.7
|
Accounting
Matters
|
9
|
|
1.8
|
Disclosure
in
Writing
|
10
|
|
1.9
|
Interpretation
Not Affected by
Party Drafting
|
10
|
|
1.10
|
Trust
Power and
Capacity
|
10
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1.11
|
Exhibit
|
10
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ARTICLE
2
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|
THE
ARRANGEMENT
|
||
|
2.1
|
Plan
of
Arrangement
|
10
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2.2
|
Interim
Order
|
11
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2.3
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Information
Circular and
Meeting
|
11
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2.4
|
Employees
|
12
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2.5
|
Effective
Date
|
13
|
|
2.6
|
United
States Tax
Considerations
|
13
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|
2.7
|
Post-Closing
Wind-up
|
13
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ARTICLE
3
|
||
|
COVENANTS
|
||
|
3.1
|
Covenants
of Enerplus and
EnerMark
|
14
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3.2
|
Covenants
of Focus and FET
Resources
|
16
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3.3
|
Mutual
Covenants Regarding the
Arrangement
|
21
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3.4
|
Focus
and FET Resources Covenants
Regarding Non-Solicitation
|
23
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|
3.5
|
Provision
of Information;
Access
|
25
|
|
ARTICLE
4
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||
|
REPRESENTATIONS
AND
WARRANTIES
|
||
|
4.1
|
Representations
and Warranties of
Enerplus
|
25
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|
4.2
|
Representations
and Warranties of
Focus
|
35
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|
4.3
|
Privacy
Issues
|
46
|
|
ARTICLE
5
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|
CONDITIONS
PRECEDENT
|
||
|
5.1
|
Mutual
Conditions
Precedent
|
47
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5.2
|
Additional
Conditions to
Obligations of Enerplus and EnerMark
|
49
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|
5.3
|
Additional
Conditions to
Obligations of Focus and FET Resources
|
51
|
|
5.4
|
Notice
and Effect of Failure to
Comply with Conditions
|
52
|
|
5.5
|
Satisfaction
of
Conditions
|
52
|
-
i -
TABLE
OF
CONTENTS
(Continued)
| Page | ||
|
ARTICLE
6
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AGREEMENT
AS TO DAMAGES AND OTHER
ARRANGEMENTS
|
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|
6.1
|
Enerplus
Damages
|
52
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6.2
|
Liquidated
Damages
|
53
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ARTICLE
7
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|
AMENDMENT
|
||
|
7.1
|
Amendment
of
Agreement
|
54
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|
7.2
|
Amendment
of Plan of
Arrangement
|
54
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|
7.3
|
Alternative
Transaction
|
54
|
|
ARTICLE
8
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|
TERMINATION
|
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8.1
|
Termination
|
55
|
|
ARTICLE
9
|
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|
NOTICES
|
||
|
9.1
|
Notices
|
55
|
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ARTICLE
10
|
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|
GENERAL
|
||
|
10.1
|
Binding
Effect
|
56
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10.2
|
Assignment
|
56
|
|
10.3
|
Disclosure
|
56
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|
10.4
|
Costs
|
57
|
|
10.5
|
Severability
|
57
|
|
10.6
|
Further
Assurances
|
57
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|
10.7
|
Time
of
Essence
|
57
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|
10.8
|
Governing
Law
|
57
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|
10.9
|
Waiver
|
57
|
|
10.10
|
Third
Party
Beneficiaries
|
58
|
|
10.11
|
Obligations
|
58
|
|
10.12
|
Counterparts
|
59
|
EXHIBIT A - PLAN OF ARRANGEMENT
-
ii -
THIS
ARRANGEMENT AGREEMENT is
dated effective as of the 2nd day of December, 2007,
AMONG:
ENERPLUS
RESOURCES FUND, a
trust created under the Laws of the Province of Alberta (hereinafter referred
to
as "Enerplus")
-
and
-
ENERMARK
INC., a corporation
subsisting under the Laws of the Province of Alberta (hereinafter referred
to as
"EnerMark")
-
and
-
FOCUS
ENERGY TRUST, a trust
created under the Laws of the Province of Alberta (hereinafter referred to
as
"Focus")
-
and
-
FET
RESOURCES LTD., a
corporation subsisting under the Laws of the Province of Alberta (hereinafter
referred to as "FET
Resources")
WHEREAS:
A.
The Parties originally entered into the Original Agreement and now desire,
in
accordance with Section 2 of the Original Agreement, to enter into this
Agreement to implement the merger of Enerplus and Focus and the other
transactions contemplated by the Original Agreement, which Agreement shall
supersede and replace the Original Agreement;
B.
The Parties intend to carry out the transactions contemplated herein by way
of
an arrangement under the provisions of the ABCA; and
C.
The Parties have entered into this Agreement to provide for the matters referred
to in the foregoing recitals and for other matters relating to such
arrangement.
NOW
THEREFORE, in
consideration of the covenants and agreements herein contained and other
good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Parties hereto do hereby covenant and agree as
follows:
ARTICLE
1
INTERPRETATION
|
1.1
|
Definitions
|
In
this
Agreement (including the recitals hereto), unless there is something in the
context or subject matter inconsistent therewith, the following defined terms
have the meanings hereinafter set forth:
"ABCA"
means the Business Corporations
Act
(Alberta), R.S.A. 2000, c. B-9, as amended, including the regulations
promulgated thereunder;
"Acquisition
Proposal" means
any inquiry or the making of any proposal to Focus or FET Resources or the
Focus
Unitholders and/or Focus Exchangeable LP Holders from any Person or group
of
Persons "acting jointly or in concert" (within the meaning of the Securities Act (Alberta))
which constitutes, or may reasonably be expected to lead to (in either case
whether in one transaction or a series of transactions): (i) an acquisition
from
Focus or the Focus Securityholders of 20% or more of the voting securities
of
Focus or its Subsidiaries; (ii) any acquisition of a substantial amount of
assets of Focus or its Subsidiaries; (iii) an amalgamation, arrangement,
merger,
or consolidation involving Focus or its Subsidiaries; (iv) any take-over
bid,
issuer bid, exchange offer, recapitalization, liquidation, dissolution,
reorganization or similar transaction involving Focus or its Subsidiaries;
or
(v) any other transaction, the consummation of which would or could reasonably
be expected to impede, interfere with, prevent or delay the transactions
contemplated by this Agreement or the Arrangement or which would or could
reasonably be expected to materially reduce the benefits to Enerplus and
EnerMark under this Agreement or the Arrangement; except that for the purpose
of
the definition of "Superior
Proposal", the references in this definition of "Acquisition Proposal" to "20%
or more of the voting securities" shall be deemed to be references to "50%
or
more of the voting securities", and the references to "a substantial amount
of
assets" shall be deemed to be references to "all or substantially all of
the
assets";
"Aggregate
Equivalent Vote
Amount" means, with respect to any matter, proposition or question which
the holder of the Focus Special Voting Right is entitled to vote upon, consent
to, or otherwise act upon at a meeting of Focus Unitholders and the holder
of
the Focus Special Voting Right, the number of votes that the holder of the
Focus
Special Voting Right would be entitled to had the Focus Exchangeable LP
Unitholders exchanged all of the Focus Exchangeable LP Units then held by
such
holders for Focus Units immediately prior to the record date set for such
meeting;
"Agreement",
"herein", "hereof",
"hereto", "hereunder"
and similar
expressions mean and refer to this arrangement agreement (including the exhibit
hereto) as supplemented, modified or amended, and not to any particular article,
section, schedule or other portion hereof;
"Applicable
Canadian Securities
Laws", in the context that refers to one or more Persons, means,
collectively, and as the context may require, the securities legislation
of each
of the provinces and territories of Canada, and the rules, regulations and
policies published and/or promulgated thereunder, as such may be amended
from
time to time prior to the Effective Date that apply to such Person or Persons
or
its or their business, undertaking, property or securities and emanate from
a
Person having jurisdiction over the Person or Persons or its or their business,
undertaking, property or securities;
"Applicable
Laws", in the
context that refers to one or more Persons, means the Laws that apply to
such
Person or Persons or its or their business, undertaking, property or securities
and emanate from a Person having jurisdiction over the Person or Persons
or its
or their business, undertaking, property or securities;
"Arrangement"
means the
arrangement pursuant to Section 193 of the ABCA set forth in the Plan of
Arrangement;
"Arrangement
Resolution" means
the special resolution in respect of the Arrangement to be considered at
the
Focus Meeting;
"Articles
of Arrangement" means
the articles of arrangement in respect of the Arrangement required under
Subsection 193(10) of the ABCA to be sent to the Registrar after the Final
Order
has been granted, giving effect to the Arrangement;
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2
-
"Business
Day" means a day
other than a Saturday, Sunday or a day when banks in the City of Calgary,
Alberta are not generally open for business;
"Closing
Time" shall be 10:00
a.m. (Calgary time) on the Effective Date, unless otherwise agreed to by
Enerplus and Focus;
"Code"
has the meaning ascribed
thereto in Section 2.6;
"Combination
Transactions" has
the meaning ascribed thereto in Section 2.6;
"Competition
Act" means the
Competition Act
(Canada), R.S.C. 1985, c. C-34, as amended;
"Confidentiality
Agreement"
means the mutual confidentiality and standstill agreement dated November 7,
2007 between Focus and Enerplus;
"Continuing
Employees" has the
meaning set forth in Section 2.4(a);
"Court"
means the Court of
Queen's Bench of Alberta;
"D&M"
means XxXxxxxx and
XxxXxxxxxxx, independent geological and petroleum engineering
consultants;
"Effective
Date" means the date
the Arrangement is effective under the ABCA;
"Effective
Time" means the time
when the Arrangement becomes effective pursuant to the ABCA;
"EnerMark"
means EnerMark Inc.,
a corporation amalgamated under the ABCA and an indirect wholly-owned Subsidiary
of Enerplus;
"Enerplus"
means Enerplus
Resources Fund, a trust organized under the laws of the Province of Alberta
and
governed by the Enerplus Trust Indenture;
"Enerplus
Balance Sheet" has
the meaning ascribed thereto in Section 4.1(p);
"Enerplus
Board" means the
board of directors of EnerMark as it may be comprised from time to
time;
"Enerplus
Credit Facilities"
means, collectively: (i) the unsecured, covenant based, extendible three
year
term syndicated credit facility with an aggregate borrowing limit of $1.0
billion that has been extended to November 2010; and (ii) the Enerplus
Senior Unsecured Notes;
"Enerplus
Damages Event" has
the meaning set forth in Section 6.1;
"Enerplus
DRIP" means the
distribution reinvestment and optional unit purchase plan of
Enerplus;
"Enerplus
Employment
Agreements" means the executive employment agreements between EnerMark
and each of its senior officers;
"Enerplus
Financial Statements"
means, collectively, the audited comparative consolidated financial statements
of Enerplus as at and for the years ended December 31, 2006 and 2005, together
with the notes thereto and the auditors' report thereon, and the unaudited
comparative consolidated financial statements of Enerplus as at and for the
three and nine month periods ended September 30, 2007 and 2006, together
with
the notes thereto;
-
3
-
"Enerplus
Incentive Plans"
means, collectively, Enerplus': (i) Trust Unit Rights Incentive Plan; (ii)
Executive Full Value Unit Plan; (ii) Employee Full Value Unit Plan; (iv)
Employee Performance Incentive Plan; (v) 2006 Employee Performance Incentive
Plan; (vi) Restricted Unit Long-Term Incentive Plan; (vii) Executive Performance
Trust Unit Plan; (viii) Employee Performance Trust Unit Plan; and (ix) Executive
Restricted Trust Unit Plan;
"Enerplus
Information" means
the information to be included in the Focus Information Circular describing
Enerplus and its business, operations and affairs;
"Enerplus
Employee Plans" has
the meaning ascribed thereto in Section 4.1(v);
"Enerplus
Reserve Reports" has
the meaning ascribed thereto in Section 4.1(y);
"Enerplus
Senior Unsecured
Notes" means the US$229 million principal amount of senior unsecured
notes issued by EnerMark;
"Enerplus
Trust Indenture"
means the amended and restated trust indenture dated effective as of November
8,
2007 among EnerMark, Enerplus Resources Corporation and the Enerplus
Trustee;
"Enerplus
Trustee" means CIBC
Mellon Trust Company, in its capacity as the trustee under the Enerplus Trust
Indenture;
"Enerplus
Unitholders" means
the holders from time to time of Enerplus Units;
"Enerplus
Units" means the
trust units of Enerplus;
"Environmental
Laws" means,
with respect to any Person or its business, activities, property, assets
or
undertaking, all federal, municipal or local Laws of any Governmental Entity
or
of any court, tribunal or other similar body, relating to environmental or
health matters in the jurisdictions applicable to such Person or its business,
activities, property, assets or undertaking, including legislation governing
the
use and storage of Hazardous Substances;
"FET
Resources" means Focus
Resources Ltd., a corporation amalgamated under the ABCA and a wholly-owned
subsidiary of Focus;
"Final
Order" means the order
of the Court approving the Arrangement pursuant to Subsection 193(9) of the
ABCA
in respect of the Focus Securityholders, the Enerplus Arrangement Parties
(as
defined in the Plan of Arrangement) and the Focus Arrangement Parties (as
defined in the Plan of Arrangement), as such order may be affirmed, amended
or
modified by any court of competent jurisdiction;
"Focus"
means Focus Energy
Trust, a trust organized under the laws of the Province of Alberta and governed
by the Focus Trust Indenture;
"Focus
Balance Sheet" has the
meaning ascribed thereto in Section 4.2(p);
"Focus
Board" means the board
of directors of FET Resources as it may be comprised from time to
time;
-
4
-
"Focus
Change of Control
Payments" has the meaning ascribed thereto in Section
2.4(c);
"Focus
Credit Facilities" means
Focus' secured, revolving, syndicated credit facility with an aggregate
borrowing limit of $350 million with a 364-day revolving period ending June
24,
2008 (whereupon it may be renewed for a further 364-day term subject to review
by the lenders and if not extended, principal payments will commence after
expiry of the revolving period and will consist of three quarterly payments
of
eight and one-third percent commencing 15 months after the term date and
the
remaining 75 percent at the end of the term), plus a $15 million demand
operating line of credit;
"Focus
Disclosure Letter" means
the disclosure letter dated effective December 2, 2007 from Focus and FET
Resources to Enerplus and EnerMark;
"Focus
DRIP" means the
distribution reinvestment and optional unit purchase plan of Focus;
"Focus
Employee Plans" has the
meaning ascribed thereto in Section 4.2(w);
"Focus
Employees" means the
employees of Focus' Subsidiaries;
"Focus
Employment Agreements"
means the employment agreements between FET Resources and each of its senior
officers;
"Focus
Exchangeable LP Unit
Agreements" means, collectively: (i) the Focus LP Agreement, including
the Exchangeable Securities Provisions attached thereto; (ii) the support
agreement dated as of June 27¸ 2006 among Focus,
Focus
Commercial Trust, Focus LP, and FET Management Ltd., and (iii) the voting
and
exchange trust agreement dated as of June 27¸ 2006 among Focus,
Focus LP,
and Valiant Trust Company;
"Focus
Exchangeable LP Units"
means the Class B limited partnership units of Focus, which are non-transferable
and are exchangeable for no additional consideration into Focus Units on
a
one-for-one basis;
"Focus
Exchangeable LP
Unitholders" means the holders from time to time of Focus Exchangeable LP
Units;
"Focus
Fairness Opinion" has
the meaning set forth in Section 4.2(v) hereof;
"Focus
Financial Statements"
means, collectively, the audited comparative consolidated financial statements
of Focus as at and for the years ended December 31, 2006 and 2005, together
with
the notes thereto and the auditors' report thereon and the unaudited comparative
consolidated financial statements of Focus as at and for the three and nine
month periods ended September 30, 2007 and 2006, together with the notes
thereto;
"Focus
Incentive Plans" means,
collectively, the Focus Unit Award Incentive Plan and the Focus
TURIP;
"Focus
Information" means the
information to be included in the Focus Information Circular describing Focus
and its business, operations and affairs and the matters to be considered
at the
Focus Meeting;
"Focus
Information Circular"
means the information circular of Focus to be sent by Focus to the Focus
Securityholders in connection with the Focus Meeting;
-
5
-
"Focus
LP" means Focus Limited
Partnership, a limited partnership organized under the Laws of
Alberta;
"Focus
LP Agreement" means the
limited partnership agreement dated as of June 21, 2006 among FET Management
Ltd., as general partner, Focus Commercial Trust and each Person who from
time
to time is accepted as and becomes a limited partner pursuant thereto, as
amended, supplemented or restated;
"Focus
Material Agreements"
means, collectively, the Focus Trust Indenture, the Focus Exchangeable LP
Unit
Agreements, the Focus Unit Award Incentive Plan, the Focus TURIP, the Focus
Credit Facilities and those other documents and agreements listed under the
heading "Material Contracts" in Focus' annual information form for the year
ended December 31, 2006 dated March 21, 2007;
"Focus
Meeting" means the
special meeting of Focus Securityholders to be held to consider the Arrangement
Resolution and related matters, and any adjournment(s) thereof;
"Focus
Reserve Reports" has the
meaning ascribed thereto in Section 4.2(aa);
"Focus
Rights" means,
collectively, all rights to receive or acquire Focus Units under the Focus
Incentive Plans;
"Focus
Securities" means,
collectively, the Focus Units and the Focus Exchangeable LP Units;
"Focus
Securityholders" means,
collectively, the Focus Unitholders and the Focus Exchangeable LP Unitholders
(and where the term "Focus Securityholders" is used in the context of the
voting
or approval of the Focus Securities, shall be deemed to include the Focus
Exchangeable LP Unitholders voting or approving the applicable matter through
the holder of the Focus Special Voting Right);
"Focus
Special Voting Right"
means the special voting right of Focus which entitles the holders of record
of
the Focus Exchangeable LP Units to a number of votes of the Focus Meeting
equal
to the Aggregate Equivalent Vote Amount;
"Focus
Trust Indenture" means
the trust indenture dated as of July 15, 2002 between Storm Energy Inc. (a
predecessor to FET Resources) and the Focus Trustee, as amended;
"Focus
Trustee" means Valiant
Trust Company, in its capacity as the trustee under the Focus Trust
Indenture;
"Focus
TURIP" means the Trust
Unit Rights Incentive Plan of Focus effective August 23, 2002 as amended
as of
May 17, 2007;
"Focus
Unit Award Incentive
Plan" means, collectively, the Unit Award Incentive Plan of Focus
effective March 26, 2007 and the Schedule of Performance Multipliers made
pursuant to such plan;
"Focus
Unitholders" means the
holders from time to time of Focus Units;
"Focus
Units" means the trust
units of Focus;
"GAAP"
has the meaning ascribed
thereto in Section 1.7;
"GLJ"
means GLJ Petroleum
Consultants Ltd., independent geological and petroleum engineering consultants
of Calgary, Alberta;
-
6
-
"Governmental
Entity" means
any: (a) multinational, federal, provincial, state, regional, municipal,
local
or other government or any governmental or public department, court, tribunal,
arbitral body, commission, board, bureau or agency; (b) any subdivision,
agent,
commission, board or authority of any of the foregoing; or (c) any
quasi-governmental or private body exercising any regulatory, expropriation
or
taxing authority under or for the account of any of the foregoing;
"Hazardous
Substances" means
any pollutant, contaminant, waste of any nature, hazardous substance, hazardous
material, toxic substance, dangerous substance or dangerous good as defined,
judicially interpreted or identified in any Environmental Laws;
"Interim
Order" means the
interim order of the Court under Subsection 193(4) of the ABCA containing
declarations and directions with respect to the Arrangement, as such order
may
be affirmed, amended or modified by any court of competent
jurisdiction;
"Investment
Canada Act" means
the Investment Canada
Act (Canada), R.S.C. 1985, c. 28 (1st
Supp.),
and the regulations promulgated thereunder, as amended from time to
time;
"ITA"
means the Income Tax Act (Canada),
R.S.C. 1985, c. 1 (5th Supp.), as amended, including the regulations promulgated
thereunder, as amended from time to time;
"Laws"
means all laws,
statutes, regulations, by-laws, statutory rules, orders, ordinances, protocols,
codes, guidelines, notices, directions (including all Applicable Canadian
Securities Laws and U.S. Securities Laws), and terms and conditions of any
grant
of approval, permission, authority or license of any court, Governmental
Entity,
statutory body or self-regulatory authority (including the TSX and the NYSE,
as
applicable);
"Material
Adverse Change" or
"Material Adverse
Effect" means, with respect to any Person, any matter or action that has
an effect or change that is, or would reasonably be expected to be, material
and
adverse to the business, operations, assets, capitalization, financial condition
or prospects of such Person and its Subsidiaries, taken as a whole, other
than
any matter, action, effect or change relating to or resulting from: (i) general
economic, financial, currency exchange, securities or commodity prices in
Canada
or elsewhere; (ii) conditions affecting the oil and gas exploration,
exploitation, development and production industry as a whole, and not
specifically relating to any Person and/or its Subsidiaries, including changes
in Laws (including Tax Laws) and royalties; (iii) any decline in crude oil
or
natural gas prices on a current or forward basis; (iv) any matter which has
been
publicly disclosed or has been communicated in writing to the Other Party
as of
the date hereof; or (v) any changes or effects arising from matters permitted
or
contemplated by this Agreement, the Focus Disclosure Letter or consented
to or
approved in writing by the Other Party;
"Material
Subsidiary" means a
Subsidiary, the total assets of which constitute more than 5% of the
consolidated assets of Enerplus or Focus (as applicable) as at September
30,
2007, or the total revenues of which constitute more than 5% of the consolidated
revenues of Enerplus or Focus (as applicable) for the nine month period ended
September 30, 2007;
"NYSE"
means the New York Stock
Exchange;
"Original
Agreement" means the
letter agreement dated December 2, 2007 among Enerplus, EnerMark, Focus and
FET Resources;
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7
-
"Other
Party" means: (i) with
respect to Enerplus and EnerMark, Focus and FET Resources; and (ii) with
respect
to Focus and FET Resources, Enerplus and EnerMark;
"Paddock"
means Paddock
Xxxxxxxxx Associates Ltd., independent geological and petroleum engineering
consultants of Calgary, Alberta;
"Parties"
means, collectively,
the parties to this Agreement, and "Party" means any one
of them,
or where implied by the context, means Enerplus and EnerMark or Focus and
FET
Resources, as the case may be;
"Person"
includes any
individual, firm, partnership, joint venture, venture capital fund, association,
trust, trustee, executor, administrator, legal personal representative, estate
group, body corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having legal
status;
"Plan
of Arrangement" means the
plan of arrangement substantially in the form set out in Exhibit A hereto,
as
amended or supplemented from time to time in accordance with Article 6 thereof
and Article 7 hereof;
"Profico
Financial Statements"
means, collectively, the audited comparative consolidated financial statements
of Profico Energy Management Ltd. as at and for the years ended December
31,
2005 and 2004, together with the notes thereto and the auditors' report thereon
and the unaudited comparative consolidated financial statements of Profico
Energy Management Ltd. as at and for the three month periods ended March
31,
2006 and 2005, together with the notes thereto;
"Public
Record" means all
information filed by either Enerplus or Focus, as the case may be, after
December 31, 2006 with any Securities Authority in compliance, or intended
compliance, with any Applicable Canadian Securities Laws;
"Registrar"
means the Registrar
of Corporations for the Province of Alberta duly appointed under Section
263 of
the ABCA;
"SEC"
means the United States
Securities and Exchange Commission;
"Securities
Authorities" means
the securities commissions or similar securities regulatory authorities in
each
of the Provinces of Canada;
"Sproule"
means Xxxxxxx
Associates Limited, independent geological and petroleum engineering consultants
of Calgary, Alberta;
"Subsidiary"
has the meaning
ascribed thereto in the Securities Act (Alberta)
(and, for greater certainty, includes all partnerships (general or limited)
and
trusts directly or indirectly owned by Enerplus or Focus, as the case may
be);
"Superior
Proposal" has the
meaning set forth in Section 3.4(b)(v)(A);
"Tax"
or "Taxes" shall mean all
taxes,
however denominated, including any interest, penalties or other additions
that
may become payable in respect thereof, imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision
of any
such government, which taxes shall include, without limiting the generality
of
the foregoing, all income or profits taxes (including, but not limited to,
federal income taxes and provincial income taxes), payroll and employee
withholding taxes, unemployment insurance, social insurance taxes, sales
and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, capital taxes, workers
compensation and other governmental charges, and other obligations of the
same
or of a similar nature to any of the foregoing, which Enerplus or Focus (or
any
of their respective Subsidiaries), as the case may be, is required to pay,
withhold, remit or collect;
-
8
-
"Tax
Returns" shall mean all
reports, estimates, elections, designations, forms, declarations of estimated
tax, information statements and returns relating to, or required to be filed
in
connection with, any Taxes;
"TCP"
means "taxable Canadian
property" for the purpose of paragraph 132(7)(a) of the ITA;
"TSX"
means the Toronto Stock
Exchange;
"U.S.
Exchange Act" means the
United States Securities
Exchange Act of 1934, as amended;
"U.S.
Securities Act" means the
United States Securities
Act
of 1933, as amended; and
"U.S.
Securities Laws" means
the federal and state securities legislation of the United States and all
rules,
regulations and orders promulgated thereunder, as amended from time to
time.
|
1.2
|
Interpretation
Not Affected by Headings, etc.
|
The
division of this Agreement into articles, sections and subsections is for
convenience of reference only and does not affect the construction or
interpretation of this Agreement. The terms "this Agreement", "hereof",
"herein" and "hereunder"
and similar
expressions refer to this Agreement (including the exhibit attached hereto)
and
not to any particular article, section or other portion hereof and include
any
agreement or instrument supplementary or ancillary hereto.
|
1.3
|
Number,
etc.
|
Words
importing the singular number include the plural and vice versa, words importing
the use of any gender include all genders, and words importing persons include
firms and corporations and vice versa.
|
1.4
|
Date
for Any Action
|
If
any
date on which any action is required to be taken hereunder by any of the
Parties
is not a Business Day and a business day in the place where an action is
required to be taken, such action is required to be taken on the next succeeding
day which is a Business Day and a business day, as applicable, in such
place.
|
1.5
|
Entire
Agreement
|
This
Agreement and the Confidentiality Agreement, together with the agreements
and
documents herein and therein referred to, constitute the entire agreement
among
the Parties pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, among the Parties with respect to the subject matter hereof, including
without limitation the Original Agreement.
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9
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1.6
|
Currency
|
All
references to "$" or sums of money that are referred to in this Agreement
are
expressed in lawful money of Canada, unless specified otherwise.
|
1.7
|
Accounting
Matters
|
Unless
otherwise stated, all accounting terms used in this Agreement shall have
the
meanings attributable thereto under Canadian generally accepted accounting
principles ("GAAP") and
all determinations of an accounting nature are required to be made shall
be made
in a manner consistent with GAAP.
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1.8
|
Disclosure
in Writing
|
Reference
to disclosure in writing herein shall, in the case of disclosure to Enerplus,
include disclosure to Enerplus or its representatives, or in the case of
disclosure to Focus, include disclosure to Focus or its
representatives.
|
1.9
|
Interpretation
Not Affected by Party Drafting
|
The
Parties hereto acknowledge that their respective legal counsel have reviewed
and
participated in settling the terms of this Agreement, and the Parties agree
that
any rule of construction to the effect that any ambiguity is to be resolved
against the drafting party will not be applicable in the interpretation of
this
Agreement.
|
1.10
|
Trust
Power and Capacity
|
In
this
Agreement references to the power and capacity of Enerplus and Focus, as
the
case may be, are deemed to be references to that of the Enerplus Trustee
and the
Focus Trustee, or their respective duly authorized delegates or agents, pursuant
to the power and capacity of trustees generally under the Laws of the Province
of Alberta, and pursuant to the powers of the trustees specified in the Enerplus
Trust Indenture and the Focus Trust Indenture, respectively.
|
1.11
|
Exhibit
|
The
following exhibit attached hereto is incorporated into and forms an integral
part of this Agreement:
A
- Plan of Arrangement
ARTICLE
2
THE
ARRANGEMENT
|
2.1
|
Plan
of Arrangement
|
|
(a)
|
The
Parties agree to carry out the Arrangement pursuant to which (among
other
things): (i) Focus Unitholders shall receive, for each Focus Unit
held,
0.425 of an Enerplus Unit; and (ii) Focus Exchangeable LP Unitholders
will
not exchange Focus Exchangeable LP Units for Enerplus Units pursuant
to
the Arrangement, but following completion of the Arrangement such
Focus
Exchangeable LP Units will instead become exchangeable for Enerplus
Units
on the basis that each Focus Exchangeable LP Unit shall be exchangeable,
for no additional consideration, into 0.425 of an Enerplus Unit
in
accordance with the terms of the Focus Exchangeable LP Unit Agreements;
all as more particularly described in the Plan of Arrangement attached
as
Exhibit A hereto.
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10
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(b)
|
The
Arrangement has been and shall continue to be structured:
|
|
|
(i)
|
to
allow Focus Unitholders to receive Enerplus Units on a tax-deferred
basis
for Canadian and United States income tax purposes, unless
a Focus
Unitholder elects to have the exchange of their Focus Units for
Enerplus
Units pursuant to the Arrangement carried out on a taxable basis
for
Canadian federal income tax purposes; and
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|
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(ii)
|
such
that the issuance of the Enerplus Units under the Arrangement qualifies
for the exemption from registration provided by Section 3(a)(10)
of the
U.S. Securities Act.
|
|
(c)
|
Focus
and FET Resources shall, with assistance from and the participation
of
Enerplus and EnerMark, file, proceed with and diligently prosecute
an
application for an Interim Order providing for, among other things,
the
calling and holding of the Focus Meeting for the purpose of considering
and, if deemed advisable, approving the Arrangement Resolution
and related
matters to be considered at the Focus Meeting.
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|
(d)
|
Provided
all necessary approvals for the Arrangement Resolution are obtained
from
the Focus Securityholders, Focus and FET Resources shall, with
assistance
from and the participation of Enerplus and EnerMark, submit the
Arrangement to the Court and apply for the Final Order.
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|
(e)
|
Upon
issuance of the Final Order and subject to the conditions precedent
in
Article 5, each of Enerplus and EnerMark on the one hand and Focus
and FET
Resources on the other hand shall execute and deliver such closing
documents and instruments and forthwith proceed at the Closing
Time to
file the Articles of Arrangement, the Final Order and such other
documents
as may be required to give effect to the Arrangement with the Registrar
pursuant to Subsection 193(9) of the ABCA, whereupon the transactions
comprising the Arrangement shall occur and shall be deemed to have
occurred in the order set out therein without any further act or
formality.
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|
2.2
|
Interim
Order
|
The
Interim Order shall provide that:
|
(a)
|
the
securities of Focus for which holders shall be entitled to vote
on the
Arrangement Resolution at the Focus Meeting shall be the Focus
Units and
the Focus Special Voting Right;
|
|
(b)
|
the
Focus Unitholders and the holder of the Focus Special Voting Right
shall
be entitled to vote on the Arrangement Resolution together as a
single
class, and not as separate classes, with each Focus Unitholder
being
entitled to one vote for each Focus Unit held by such holder and
the
holder of the Focus Special Voting Right being entitled to that
number of
votes equal to the Aggregate Equivalent Vote Amount; and
|
|
(c)
|
the
requisite majority for the approval of the Arrangement Resolution
shall
be: (i) two thirds of the votes cast by the Focus Unitholders and
the
holder of the Focus Special Voting Right present in person or by
proxy at
the Focus Meeting; and (ii) if required, a majority
of the
votes cast by the Focus Unitholders and the holder of the Focus
Special
Voting Right present in person or by proxy, after excluding the
votes by
those persons whose votes must be excluded pursuant to Ontario
Securities
Commission Rule 61-501.
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2.3
|
Information
Circular and Meeting
|
As
promptly as practicable following the execution of this Agreement and in
compliance with the Interim Order and Applicable Laws, including Applicable
Canadian Securities Laws and U.S. Securities Laws, Focus and FET Resources
shall, with assistance from and the participation of Enerplus and EnerMark:
(i)
prepare the Focus Information Circular and cause such circular to be mailed
to
the Focus Securityholders and filed with applicable regulatory authorities
and
other governmental authorities in all jurisdictions where the same are required
to be mailed and filed; and (ii) convene and hold the Focus Meeting, at which
meeting the Arrangement Resolution shall be submitted to the Focus
Securityholders entitled to vote upon such resolution for approval.
|
2.4
|
Employees
|
|
(a)
|
Unless
otherwise agreed among the Parties, EnerMark will, in accordance
with
Section 3.1(c), not less than one week prior to the Effective Date,
determine the Focus Employees who will either be offered employment
with
EnerMark or be provided with confirmations of employment, as the
case may
be (such Focus Employees being the "Continuing Employees").
The Continuing Employees, unless their employment is terminated,
shall
continue their employment on the terms and conditions comparable,
in the
aggregate, to the terms and conditions on which they are currently
employed.
|
|
(b)
|
In
the event that the employment of any Focus Employee is not continued
as a
Continuing Employee by EnerMark and such employee is thereby entitled
to a
severance payment, or such employee is otherwise entitled to a
severance
payment at law, the amount of such severance payment shall be agreed
on by
the Parties, acting reasonably.
|
|
(c)
|
The
Parties acknowledge that the Arrangement will result in a "change
of
control" for purposes of the Focus Incentive Plans and the Focus
Employment Agreements. The Focus Disclosure Letter includes a bona fide, good
faith
estimate by Focus as of the date hereof, having regard to the assumptions
set forth therein, of all obligations of Focus pursuant to all
employment
or consulting services agreements (other than those consulting
agreement
contemplated in Section 5.2(h)), termination, severance and retention
plans or policies for severance, termination or bonus payments
or any
other payments related to any Focus incentive plan (including,
without
limitation, the Focus Incentive Plans and the Focus Employment
Agreements), arising out of or in connection with the Arrangement
(collectively, the "Focus
Change of Control Payments"). For greater certainty, the
Focus Change of Control Payments disclosed in the Focus Disclosure
Letter
exclude any severance payments that may become payable as a result
of the
events described in Section 2.4(b), other than pursuant to the
Focus
Employment Agreements.
|
|
(d)
|
(i)
|
The
Parties agree that upon approval of the Arrangement by Focus
Securityholders, and prior to the Effective Date, all outstanding
unit and
right entitlements under the Focus Incentive Plans may be amended,
to the
extent necessary, to allow the payment of all such entitlements
in cash.
In calculating the cash entitlement under the Focus Unit Award
Incentive
Plan, Focus shall use the five day volume weighted average trading
price
of the Focus Units during the five trading days ending on the second
Business Day immediately prior to the Effective Date (the "VWAP"), and
in
calculating the cash entitlement under the Focus TURIP, Focus shall
use
the VWAP less the exercise price (adjusted for the February 15,
2008
distribution payment). In addition, Focus may purchase and
cancel all of the "out-of-the-money" rights under the Focus TURIP
at an
amount of not more that $0.01 per right. To the extent that the
holders do not elect to receive cash under the Focus Incentive
Plans, as
so amended, such entitlements shall be paid in Focus Units issued
from
treasury. To the extent that all of the holders of rights under
the Focus TURIP do not exercise such rights, elect to receive cash
or sell
to Focus the "out-of-the-money" rights, the rights outstanding
under the
Focus TURIP plan shall be amended such that holders of rights shall
only
be entitled receive Enerplus Units upon the exercise of such rights,
adjusted in accordance with the exchange ratio set forth in Section
2.1(a).
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12
-
|
|
|
(adjusted
for the February 15, 2008 distribution payment). In addition,
Focus may purchase and cancel all of the "out-of-the-money" rights
under
the Focus TURIP at an amount of not more that $0.01 per
right. To the extent that the holders do not elect to receive
cash under the Focus Incentive Plans, as so amended, such entitlements
shall be paid in Focus Units issued from treasury. To the
extent that all of the holders of rights under the Focus TURIP
do not
exercise such rights, elect to receive cash or sell to Focus
the
"out-of-the-money" rights, the rights outstanding under the Focus
TURIP
plan shall be amended such that holders of rights shall only
be entitled
receive Enerplus Units upon the exercise of such rights, adjusted
in
accordance with the exchange ratio set forth in Section 2.1(a).
|
|
|
(ii)
|
The
Parties agree that the Focus Change of Control Payments that are
payable
in cash shall be paid to the Focus Employees entitled thereto in
accordance with their terms and in any event as soon as practicable
following the Effective Time concurrent with the execution of releases
in
substantially the forms thereof appended to the Focus Employment
Agreements.
|
|
(e)
|
The
Parties acknowledge that the Arrangement will not result in a "change
of
control" or any other form of accelerated vesting for the purposes
of the
Enerplus Incentive Plans and any executive employment or change
of control
agreements applicable to the employees of Enerplus and its Subsidiaries
or
the directors of EnerMark (including the Enerplus Employment Agreements)
and will not constitute a "change of control" or result in accelerated
vesting for the purposes of any other employment or consulting
services
agreement, incentive, bonus or similar plan.
|
|
(f)
|
The
Parties agree that is the current intention of Enerplus and EnerMark
to
appoint two of the current directors of FET Resources to the Enerplus
Board at the Effective Time, such individuals currently anticipated
to be
Xx. Xxxxx X. X'Xxxxx and Xx. Xxxxxxx X. Xxxxxx.
|
|
2.5
|
Effective
Date
|
The
Arrangement shall become effective at the Effective Time on the Effective
Date. The Parties shall use their reasonable commercial efforts to
cause the Effective Date to occur on or about February 13, 2008 or as soon
thereafter as reasonably practicable and in any event by February 28,
2008. The parties agree that the Effective Date will not occur prior
during the period from January 31, 2008 to February 10, 2008
inclusive.
|
2.6
|
United
States Tax Considerations
|
The
Parties intend that the series of transactions to be conducted pursuant to
the
Plan of Arrangement ("Combination Transactions"),
considered together as a single integrated transaction for United States
federal
income tax purposes, will qualify as a "reorganization" within the meaning
of
Section 368(a)(1) of the U.S. Internal Revenue Code (the "Code"). This
Agreement is intended to constitute a "plan of reorganization" within the
meaning of Treasury Regulation Section 1.368-2(g). Each Party agrees
that it shall: (a) treat the Combination Transactions as a single integrated
transaction for U.S. federal income tax purposes; (b) treat the Combination
Transactions as a single integrated transaction that qualifies as a
"reorganization" within the meaning of Section 368(a)(1) of the Code; and
(c)
retain such records and file such information as is required to be retained
and
filed pursuant to Treasury Regulation Section 1.368-3 in connection with
the
Combination Transactions. Excluding the transactions contemplated by
this Agreement and the Plan of Arrangement, no Party shall take any action,
fail
to take any action, cause any action to be taken or cause any action to fail
to
be taken that could reasonably be expected to prevent the Combination
Transactions, considered together as a single integrated transaction, from
qualifying as a "reorganization" within the meaning of Section 368(a)(1)
of the
Code with respect to Focus and the Focus Unitholders.
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13
-
|
2.7
|
Post-Closing
Wind-up
|
On
the
date after the Effective Date, Enerplus shall cause Focus to file an election
on
U.S. Internal Revenue Service Form 8832 (Entity Classification Election)
to
classify Focus as a disregarded entity for United States federal income tax
purposes as permitted under Section 7701 of the Code and the Treasury
Regulations promulgated thereunder and at all times after the Effective Time,
Enerplus shall be the sole unitholder and equity holder in
Focus. Furthermore, Focus shall not engage in any business or hold
any assets (other than a minimal amount of cash) from the Effective Time
until
the day after such election is filed with the U.S. Internal Revenue
Service.
ARTICLE
3
COVENANTS
|
3.1
|
Covenants
of Enerplus and EnerMark
|
From
the
date hereof until the Effective Date or termination of this Agreement, except
with the prior written consent of Focus (such consent not to be unreasonably
withheld or delayed), and except as otherwise expressly permitted or
specifically contemplated by this Agreement (including the Plan of Arrangement)
or required by Applicable Laws:
|
(a)
|
Enerplus'
affairs and the business of EnerMark and each of Enerplus' other
Subsidiaries shall be conducted only in the usual and ordinary
course
consistent with past practices (for greater certainty, where it
is an
operator of any property, it shall operate and maintain such property
in a
proper and prudent manner in accordance with good industry practice
and
the agreements governing the ownership and operation of such property)
and
it shall use all commercially reasonable efforts to maintain and
preserve
its business, assets and advantageous business relationships, provided
that it shall be entitled and authorized to comply with all pre
emptive
rights, first purchase rights or rights of first refusal that are
applicable to its assets and that become operative by virtue of
this
Agreement or any of the transactions contemplated by this Agreement,
and
further provided
that this
Section 3.1(a) shall not restrict Enerplus or any Subsidiary of
Enerplus
from resolving to, or entering into or performing any contract,
agreement,
commitment or arrangement with respect to, the acquisition or disposition
of any oil and/or natural gas assets or properties or of the security
interests in any person engaged in the oil and/or natural gas business
in
any manner, including other than in the usual and ordinary course
consistent with past practices, and provided that the doing of
any such
thing does not have a Material Adverse Effect on
Enerplus;
|
|
(b)
|
Enerplus
shall not, and shall not permit any of its Subsidiaries to, directly
or
indirectly, do or permit to occur any of the following: (i) except
with
respect to (A) the amendment and restatement of the Enerplus Trust
Indenture to clarify Enerplus' eligibility for the "direct registration
system" requirement for U.S.-listed issuers, and (B) the amendment
to the
articles of amalgamation of EnerMark to increase the maximum number
of
directors of EnerMark, amend its constating documents; (ii) declare,
set
aside or pay any dividend or distribution or make any other payment
(whether in cash, trust units, shares or property) in respect of
its
outstanding securities other than regular monthly cash distributions
not
to exceed $0.42 per Enerplus Unit (it being
|
-
14
-
|
|
understood
that Enerplus has no current intention to change its distribution
policy);
(iii) make any change to the days upon which it normally declares
distribution record dates and distribution payment dates in respect
of
monthly cash distributions; (iv) redeem, purchase or otherwise
acquire any
of its outstanding trust units or other securities (other than
redemptions
required pursuant to the Enerplus Trust Indenture); (v) split,
combine or
reclassify any of its trust units; (vi) adopt a plan of liquidation
or
resolutions providing for its liquidation, dissolution, merger,
consolidation or reorganization; or (vii) enter into or modify
any
contract, agreement, commitment or arrangement with respect to
any of the
foregoing; provided
that this
Section 3.1(b) shall not restrict Enerplus or any of Enerplus'
Subsidiaries from resolving to, or entering into or performing
any
contract, agreement, commitment or arrangement with respect to
the
acquisition or disposition of any oil and/or natural gas assets
or
properties or of the security interests in any Person engaged
in the oil
and/or natural gas business in any manner, including by doing
any of the
things specifically enumerated herein and provided that the doing
of any
such thing does not have a Material Adverse Effect on
Enerplus;
|
|
(c)
|
EnerMark
will, not less than one week prior to the Effective Date, determine
the
list of Focus Employees who will not be Continuing Employees and
the
amounts payable in respect of severance obligations to those Focus
Employees who will not be Continuing Employees, if any, and will,
on or
before the Effective Date, provide offers or continuations of employment,
as the case may be, to be made to the Continuing Employees;
|
|
(d)
|
Enerplus
shall not take any action that would render, or may reasonably
be expected
to render, any representation or warranty made by it in this Agreement
untrue in any material respect at any time prior to completion
of the
Arrangement or termination of this Agreement, whichever first occurs;
|
|
(e)
|
Enerplus
shall promptly notify Focus in writing of any material change (actual,
anticipated, contemplated or, to the knowledge of Enerplus, threatened,
financial or otherwise) in its business, operations, affairs, assets,
capitalization, financial condition, prospects, licenses, permits,
rights,
privileges or liabilities, whether contractual or otherwise, or
of any
change in any representation or warranty provided by Enerplus in
this
Agreement which change is or may be of such a nature to render
any
representation or warranty misleading or untrue in any material
respect,
and Enerplus shall in good faith discuss with Focus any change
in
circumstances (actual, anticipated, contemplated, or to the knowledge
of
Enerplus, threatened) which is of such a nature that there may
be a
reasonable question as to whether notice need to be given to Focus
pursuant to this provision;
|
|
(f)
|
Enerplus
shall use its reasonable commercial efforts to obtain the consent
of its
bankers (if required) and any other third party consents required
for the
transactions contemplated hereby and provide the same to Focus
on or prior
to the Effective Date;
|
|
(g)
|
Enerplus
shall use its reasonable commercial efforts to satisfy or cause
satisfaction of the conditions set forth in Sections 5.1 and 5.3
as soon
as reasonably possible following execution of this Agreement to
the extent
that the satisfaction of the same is within the control of Enerplus;
|
|
(h)
|
Enerplus
will assist Focus in the preparation of the Focus Information Circular
and
provide to Focus, in a timely manner, all information as may be
reasonably
requested by Focus with respect to Enerplus for inclusion in the
Focus
Information Circular and any amendments or supplements thereto,
in each
case complying in all material respects with all applicable legal
requirements on the date of issue thereof and to enable Focus to
meet the
standard referred to in Section 3.2(q) with respect to Enerplus
and the
Arrangement;
|
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15
-
|
(i)
|
Enerplus
shall indemnify and save harmless Focus and the directors, officers
and
agents of Focus and FET Resources, as applicable, from and against
any and
all liabilities, claims, demands, losses, costs, damages and expenses
(excluding any loss of profits or consequential damages) to which
Focus or
FET Resources, or any director, officer or agent thereof, may be
subject
or which Focus or FET Resources, or any director, officer or agent
thereof, may suffer, whether under the provisions of any statute
or
otherwise, in any way caused by, or arising, directly or indirectly,
from
or in consequence of:
|
|
|
(i)
|
any
misrepresentation or alleged misrepresentation contained solely
in the
Enerplus Information included in the Focus Information Circular
or in any
material filed by Enerplus in compliance or intended compliance
with any
Applicable Laws;
|
|
|
(ii)
|
any
order made or any inquiry, investigation or proceeding by any securities
commission or other competent authority based upon any untrue statement
or
omission or alleged untrue statement or omission of a material
fact or any
misrepresentation or any alleged misrepresentation in any material
filed
by or on behalf of Enerplus in compliance or intended compliance
with
Applicable Canadian Securities Laws, which prevents or restricts
the
trading in the Enerplus Units; and
|
|
|
(iii)
|
Enerplus
not complying with any requirement of Applicable Laws in connection
with
the transactions contemplated in this Agreement;
|
except
that Enerplus shall not be liable in any such case to the extent that any
such
liabilities, claims, demands, losses, costs, damages and expenses arise out
of
or are based upon any misrepresentation or alleged misrepresentation of a
material fact based solely on the Focus Information included in the Focus
Information Circular, on information provided by Focus for inclusion in the
Focus Information Circular or the negligence of Focus;
|
(j)
|
except
for non-substantive communications with securityholders, Enerplus will
furnish promptly to Focus or Focus' counsel, a copy of each notice,
report, schedule or other document delivered, filed or received
by
Enerplus in connection with: (i) the Arrangement; (ii) any filings
under
Applicable Laws in connection with the transactions contemplated
hereby;
and (iii) any dealings with Governmental Entities in connection
with the
transactions contemplated hereby;
|
|
(k)
|
Enerplus
will make all necessary filings and applications under Applicable
Laws,
including Applicable Canadian Securities Laws and U.S. Securities
Laws,
required to be made on the part of Enerplus in connection with
the
transactions contemplated herein and shall take all reasonable
action
necessary to be in compliance with such Applicable Laws;
|
|
(l)
|
if
required, for so long as (i) any "affiliate" (as such term is defined
in
Rule 405 under the U.S. Securities Act) of Focus (determined immediately
prior to the Closing Time) holds Enerplus Units that were received
in
exchange for its Focus Units pursuant to the Arrangement and (ii)
the
provisions of Rule 145(d)(2) or (3) under the U.S. Securities Act
are not
available for the resale of such Enerplus Units by such affiliate
within
the United States, Enerplus shall make available adequate current
public
information with respect to Enerplus as contemplated by Rule 144(c)
under
the U.S. Securities Act;
|
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16
-
|
(m)
|
prior
to the Effective Date, Enerplus will: (i) make application to list
the
Enerplus Units issuable or to be made issuable pursuant to the
Arrangement
on the TSX and on the NYSE, and (ii) use its reasonable commercial
efforts
to obtain approval for the listing of such Enerplus Units on the
TSX and
on the NYSE; and
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|
(n)
|
Enerplus
shall not take any action, refrain from taking any action, permit
any
action to be taken or not taken, inconsistent with this Agreement,
which
might directly or indirectly interfere or affect the consummation
of the
Arrangement, and Enerplus shall take all commercially reasonable
actions
to give effect to the transactions contemplated by this Agreement
and the
Arrangement.
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|
3.2
|
Covenants
of Focus and FET Resources
|
From
the
date hereof until the Effective Date or termination of this Agreement, except
with the prior written consent of Enerplus (such consent not to be unreasonably
withheld or delayed), and except as otherwise expressly permitted or
specifically contemplated by this Agreement (including the Plan of Arrangement)
or required by Applicable Laws:
|
(a)
|
Focus'
affairs and the business of FET Resources and each of Focus' other
Subsidiaries shall be conducted only in the usual and ordinary
course
consistent with past practices (for greater certainty, where it
is an
operator of any property, it shall operate and maintain such property
in a
proper and prudent manner in accordance with good industry practice
and
the agreements governing the ownership and operation of such property)
and
it shall use all commercially reasonable efforts to maintain and
preserve
its business, assets and advantageous business relationships, provided
that it shall be entitled and authorized to comply with all pre
emptive
rights, first purchase rights or rights of first refusal that are
applicable to its assets and that become operative by virtue of
this
Agreement or any of the transactions contemplated by this Agreement;
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|
(b)
|
Focus
shall not, and shall not permit any of its Subsidiaries to, directly
or
indirectly, do or permit to occur any of the following: (i) amend
its
constating documents; (ii) declare, set aside or pay any dividend
or
distribution or make any other payment (whether in cash, trust
units,
shares or property) in respect of its outstanding securities other
than
regular monthly cash distributions of an amount equal to $0.14
per Focus
Unit and Focus Exchangeable LP Unit; (iii) make any change to the
days
upon which it normally declares distribution record dates and distribution
payment dates in respect of monthly cash distributions (and for
greater
certainty, the only distribution record dates occurring from the
date
hereof until February 28, 2008 inclusive are December 31, 2007
and January 31, 2008); (iv) issue or agree to issue, grant, sell or
pledge or agree to issue, grant, sell or pledge any trust units
or other
securities of Focus or any of its Subsidiaries (other than to Focus
or any
of its Subsidiaries), including, without limitation, securities
convertible into or exchangeable or exercisable for trust units,
or
otherwise evidencing a right to acquire trust units, other than
the
issuance of Focus Units pursuant to the exercise of currently
outstanding Focus Rights or pursuant to the Focus DRIP; (v)
redeem, purchase or otherwise acquire any of its outstanding trust
units
or other securities (other than redemptions required pursuant to
the Focus
Trust Indenture); (vi) split, combine or reclassify any of its
trust
units; (vii) adopt a plan of liquidation or resolutions providing
for its
liquidation, dissolution, merger, consolidation or reorganization;
or
(viii) enter into or modify any contract, agreement, commitment
or
arrangement with respect to any of the foregoing;
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17
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(c)
|
Focus
will not, and will not permit any of its Subsidiaries to, directly
or
indirectly, do or permit to occur any of the following (except
as
previously disclosed on the Public Record): (i) sell, pledge, dispose
of
or encumber any assets having an individual value in excess of
$3 million
or $10 million in the aggregate, other than production in the ordinary
course of business; (ii) expend or commit to expend more than $3
million
individually or $10 million in the aggregate with respect to any
capital
expenditures except to the extent that such expenditures are set
forth in
the capital budgets disclosed to Enerplus or EnerMark prior to
the date
hereof; (iii) expend or commit to expend any amounts with respect
to any
operating expenses other than in the ordinary course of business
or
pursuant to the Arrangement; (iv) reorganize, amalgamate, merge
or
otherwise combine Focus or any of its Subsidiaries with any other
Person;
(v) acquire (by merger, amalgamation, consolidation or acquisition
of
shares or assets) any corporation, trust, partnership or other
business
organization or division thereof which is not a Subsidiary or affiliate
of
Focus as of the date hereof, or make any investment therein either
by
purchase of shares or securities, contributions of capital or property
transfer; (vi) except as disclosed to Enerplus and EnerMark in
writing in
the Focus Disclosure Letter, acquire any assets with an acquisition
cost
in excess of $3 million individually or $10 million in the aggregate;
(vii) incur any indebtedness for borrowed money in excess of existing
credit facilities, or any other material liability or obligation
or issue
any debt securities or assume, guarantee, endorse or otherwise
become
responsible for, the obligations of any other individual or entity,
or
make any loans or advances, other than in respect of fees payable
to
legal, financial and other advisors in the ordinary course of business
or
in respect of the Arrangement; (viii) authorize, recommend or propose
any
release or relinquishment of any material contract right; (ix)
waive,
release, grant or transfer any material rights of value or modify
or
change in any material respect any existing material license, lease,
contract, production sharing agreement, government land concession
or
other material document; (x) pay, discharge or satisfy any material
claims, liabilities or obligations other than as reflected or reserved
against in the Focus Financial Statements or otherwise in the ordinary
course of business; (xi) enter into or terminate any xxxxxx, swaps
or
other financial instruments or like transactions; (xii) enter into
any
agreements for the sale of production having a term of more than
thirty
(30) days; (xiii) enter into any material consulting or contract
operating
agreement that cannot be terminated on thirty (30) days or less
notice
without penalty; or (xiv) authorize or propose any of the foregoing,
or
enter into or modify any contract, agreement, commitment or arrangement
to
do any of the foregoing;
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(d)
|
except
so as to permit the acceleration of the vesting of currently outstanding
Focus Rights and the payment of the Focus Change of Control Payments
as
contemplated by Section 2.4, neither Focus nor any of its Subsidiaries
shall adopt or amend or make any contribution to any bonus, employee
benefit plan, profit sharing, trust unit, option, pension, retirement,
deferred compensation, insurance, incentive compensation, other
compensation or other similar plan, agreement, trust unit incentive
or
purchase plan, fund or arrangements for the benefit of employees,
except
as is necessary to comply with Applicable Laws or with respect
to existing
provisions of any such plans, programs, arrangements or agreements;
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|
(e)
|
except
so as to permit the acceleration of the vesting of currently outstanding
Focus Rights and the payment of the Focus Change of Control Payments
as
contemplated by Section 2.4, Focus shall not, and shall cause each
of its
Subsidiaries to not, make any payment to any employee, officer
or director
outside of their ordinary and usual compensation for services provided,
except to the extent that any such entitlement to payment to a
former
employee or officer has accrued prior to the date hereof and except
pursuant to the Focus Change of Control Payments;
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(f)
|
except
so as to permit the acceleration of the vesting of currently outstanding
Focus Rights and the payment of the Focus Change of Control Payments
as
contemplated by Section 2.4, Focus shall not, and shall cause each
of its
Subsidiaries to not: (i) grant any officer, director, employee
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18
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|
or
consultant an increase in compensation in any form; (ii) grant
any general
salary increase; (iii) take any action with respect to the amendment
or
grant of any "change of control", severance or termination pay
policies or
arrangements for any directors, officers, employees or consultants;
(iv)
adopt or amend or make any contribution to any bonus, profit-sharing,
option, pension, retirement, deferred compensation, insurance,
incentive
compensation or other compensation or other similar plan (or
amend any
outstanding rights thereunder), or form a trust fund or arrangement
for
the benefit of directors, officers, employees or consultants,
except as is
necessary to comply with Applicable Laws or with the existing
provisions
of any such plans, programs, arrangements or agreements (including
the
Focus Incentive Plans and the Focus Rights); or (v) advance any
loan to
any officer, director or any other party not at arm's length
to Focus and
its Subsidiaries;
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|
(g)
|
each
of Focus and FET Resources shall use its commercially reasonable
efforts
to ensure that all outstanding Focus Rights are either paid, issued,
terminated, expired or surrendered prior to the Effective Time,
provided
that, other than as contemplated by Section 2.4, Focus and FET
Resources
shall not pay the holders any amount of consideration therefor
nor shall
they make any amendment to outstanding Focus Rights, except to
permit the
accelerated vesting of Focus Rights (if required) and to cause
the
payment, issue, cancellation, termination, expiry or surrender
of the
Focus Rights prior to the Effective Time without payment therefor;
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|
(h)
|
Focus
shall use its reasonable commercial efforts to cause its current
insurance
(or re-insurance) policies not to be cancelled or terminated or
any of the
coverage thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by insurance
or
re-insurance companies of nationally recognized standing providing
coverage equal to or greater than the coverage under the cancelled,
terminated or lapsed policies for substantially similar premiums
are in
full force and effect, and Focus will pay all premiums in respect
of such
insurance policies that become due after the date hereof;
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|
(i)
|
each
of Focus and FET Resources shall use reasonable commercial efforts
to
cause the resignation of each of the directors and officers of
FET
Resources immediately following the Effective Time and to cause
such
directors and officers to provide releases in substantially the
form
appended to the Focus Employment Agreements;
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(j)
|
Focus
shall suspend or terminate the Focus DRIP prior to the record date
of
January 31, 2008 for the distribution to be paid in February 15,
2008;
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|
(k)
|
Focus
shall not take any action that would render, or may reasonably
be expected
to render, any representation or warranty made by it in this Agreement
untrue in any material respect at any time prior to completion
of the
Arrangement or termination of this Agreement, whichever first occurs;
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|
(l)
|
Focus
shall promptly notify Enerplus in writing of any material change
(actual,
anticipated, contemplated or, to the knowledge of Focus, threatened,
financial or otherwise) in its business, operations, affairs, assets,
capitalization, financial condition, prospects, licenses, permits,
rights,
privileges or liabilities, whether contractual or otherwise, or
of any
change in any representation or warranty provided by Focus in this
Agreement which change is or may be of such a nature to render
any
representation or warranty misleading or untrue in any material
respect
and Focus shall in good faith discuss with Enerplus any change
in
circumstances (actual, anticipated, contemplated, or to the knowledge
of
Focus, threatened) which is of such a nature that there may be
a
reasonable question as to whether notice need to be given to Enerplus
pursuant to this provision;
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19
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(m)
|
Focus
shall ensure that it has available funds under its lines of credit
or
other bank facilities to permit the payment of the maximum amount
which
may be required by Section 6.1 having regard to its other liabilities
and
obligations, and shall take all such actions as may be necessary
to ensure
that it maintains such availability to ensure that it is able to
pay such
amount when required;
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(n)
|
Focus
shall use its reasonable commercial efforts to obtain the consent
of its
bankers (if required) and any other third party consents required
for the
transactions contemplated hereby and provide the same to Enerplus
on or
prior to the Effective Date;
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(o)
|
Focus
shall use its reasonable commercial efforts to satisfy or cause
satisfaction of the conditions set forth in Sections 5.1 and 5.2
as soon
as reasonably possible following execution of this Agreement to
the extent
that the satisfaction of the same is within the control of Focus;
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(p)
|
Focus
shall convene and hold the Focus Meeting, at which meeting the
Arrangement
Resolution shall be submitted to the Focus Securityholders entitled
to
vote upon such resolution for approval, and Focus shall provide
notice to
Enerplus of the Focus Meeting and allow Enerplus' representatives
to
attend such meeting;
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|
(q)
|
subject
to compliance by Enerplus with Section 3.1(h), Focus will ensure
that the
Focus Information Circular provides Focus Securityholders with
information
in sufficient detail to permit them to form a reasoned judgment
concerning
the matters before them, and will set out the Enerplus Information
in the
Focus Information Circular in the form approved by Enerplus, acting
reasonably, and shall include or incorporate by reference, without
limitation: (i) any financial statements in respect of prior acquisitions
made by Focus or Enerplus that are required to be included therein
in
accordance with Applicable Laws; (ii) the unanimous determination
of the
Focus Board that the Arrangement is fair to Focus Securityholders
and is
in the best interests of Focus and Focus Securityholders, and include
the
unanimous recommendation of the Focus Board that the Focus Securityholders
vote in favour of the Arrangement Resolution; and (iii) the fairness
opinion of Focus' financial advisor dated as of the date of the
Focus
Information Circular that the consideration to be received by the
Focus
Securityholders under the Arrangement is fair, from a financial
point of
view, to Focus Securityholders; provided that, notwithstanding
the
covenants of Focus in this subsection, prior to the completion
of the
Arrangement, the Focus Board may withdraw, modify or change the
recommendation regarding the Arrangement if, in the opinion of
such board
of directors acting reasonably, having received the advice of its
outside
legal counsel which is reflected in minutes of the meeting of the
Focus
Board, such withdrawal, modification or change is required to act
in a
manner consistent with the fiduciary duties of the Focus Board
and, if
applicable, provided the Focus Board shall have complied with the
provisions of Sections 3.4 and 6.1;
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(r)
|
Focus
shall indemnify and save harmless Enerplus and the directors, officers
and
agents of Enerplus and EnerMark, as applicable, from and against
any and
all liabilities, claims, demands, losses, costs, damages and expenses
(excluding any loss of profits or consequential damages) to which
Enerplus
or EnerMark, or any director, officer or agent thereof, may be
subject or
which Enerplus or EnerMark, or any director, officer or agent thereof
may
suffer, whether under the provisions of any statute or otherwise,
in any
way caused by, or arising, directly or indirectly, from or in consequence
of:
|
|
|
(i)
|
any
misrepresentation or alleged misrepresentation in the Focus Information
Circular or in any material filed in compliance or intended compliance
with any Applicable Laws;
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20
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(ii)
|
any
order made or any inquiry, investigation or proceeding by any securities
commission or other competent authority based upon any untrue statement
or
omission or alleged untrue statement or omission of a material
fact or any
misrepresentation or any alleged misrepresentation in the Focus
Information Circular or in any material filed by or on behalf of
Focus in
compliance or intended compliance with Applicable Canadian Securities
Laws, which prevents or restricts the trading in the Focus Units;
and
|
|
|
(iii)
|
Focus
not complying with any requirement of Applicable Laws in connection
with
the transactions contemplated in this Agreement;
|
except
that Focus shall not be liable in any such case to the extent that any such
liabilities, claims, demands, losses, costs, damages and expenses arise out
of
or are based upon any misrepresentation or alleged misrepresentation of a
material fact based solely on the Enerplus Information included in the Focus
Information Circular or the negligence of Enerplus;
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(s)
|
except
for proxies and other non-substantive communications with securityholders,
Focus will furnish promptly to Enerplus or Enerplus' counsel, a
copy of
each notice, report, schedule or other document delivered, filed
or
received by Focus in connection with: (i) the Arrangement; (ii)
the Focus
Meeting; (iii) any filings under Applicable Laws in connection
with the
transactions contemplated hereby; and (iv) any dealings with Governmental
Entities in connection with the transactions contemplated hereby;
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|
(t)
|
Focus
shall solicit proxies to be voted at the Focus Meeting in favour
of
matters to be considered at the Focus Meeting, including the Arrangement
Resolution, provided that Focus may, but shall not be required
to, engage
a proxy solicitation agent for such purpose;
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|
(u)
|
Focus
shall use reasonable commercial efforts to cause the mailing of
the Focus
Information Circular to Focus Securityholders by January 5, 2008 and
in any event by January 22, 2008, and Focus shall conduct the Focus
Meeting in accordance with the Focus Trust Indenture and any other
instrument governing the Focus Meeting (including, without limitation,
the
Interim Order), as applicable, and as otherwise required by Applicable
Laws;
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|
(v)
|
Focus
will make all necessary filings and applications under Applicable
Laws,
including Applicable Canadian Securities Laws and U.S. Securities
Laws,
required to be made on the part of Focus in connection with the
transactions contemplated herein and shall take all reasonable
action
necessary to be in compliance with such Applicable Laws;
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|
(w)
|
in
the event that dissent rights are given to Focus Securityholders
under the
terms of the Interim Order, Focus shall promptly advise Enerplus
of the
number of Focus Securities for which Focus receives notices of
dissent or
written objections to the Arrangement and provide Enerplus with
copies of
such notices and written objections;
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|
(x)
|
prior
to the Effective Date, Focus will cooperate with Enerplus in making
application to list the Enerplus Units issuable or to be made issuable
pursuant to the Arrangement on the TSX and on the NYSE;
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|
(y)
|
Focus
shall use reasonable commercial efforts to cause all Focus Rights
to be
exercised, paid surrendered or cancelled prior to the Effective
Time,
including to obtain agreements from holders of Focus Rights to
agree to so
exercise, pay, surrender or cancel such Focus Rights; and
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-
21
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(z)
|
Focus
shall not take any action, refrain from taking any action, permit
any
action to be taken or not taken, inconsistent with this Agreement,
which
might directly or indirectly interfere or affect the consummation
of the
Arrangement, and Focus shall take all commercially reasonable actions
to
give effect to the transactions contemplated by this Agreement
and the
Arrangement.
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|
3.3
|
Mutual
Covenants Regarding the Arrangement
|
From
the
date hereof until the Effective Date, each of Enerplus, EnerMark, Focus and
FET
Resources will use its reasonable commercial efforts to satisfy (or cause
the
satisfaction of) the conditions precedent to its obligations hereunder and
to
take, or cause to be taken, all other action and to do, or cause to be done,
all
other things necessary, proper or advisable under Applicable Laws to complete
the Arrangement, including using reasonable commercial efforts:
|
(a)
|
to
obtain all necessary waivers, consents and approvals required to
be
obtained by it from other parties to loan agreements, leases and
other
contracts;
|
|
(b)
|
to
obtain all necessary consents, assignments, waivers and amendments
to or
terminations of any instruments and take such measures as may be
appropriate to fulfill its obligations hereunder and to carry out
the
transactions contemplated hereby;
|
|
(c)
|
to
effect all
necessary registrations and filings and submissions of information
requested by Governmental Entities required to be effected by it
in
connection with the Arrangement, and to obtain all necessary
waivers, consents and approvals required to be obtained by it in
connection with the Arrangement, including, without limitation,
including
under the Competition Act and the Investment Canada Act, and each
of the
Parties will use its reasonable commercial efforts to cooperate
with the other in connection with the performance by the other
of their
obligations under this Section 3.3 including, without limitation,
assisting with the preparation and filing of any applications;
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|
(d)
|
to
cooperate such that EnerMark (or its successor under the Arrangement)
shall enter into written agreements effective as of the Effective
Date
satisfactory to each of Enerplus and Focus, acting reasonably,
pursuant to
which EnerMark shall agree that, for a period of six years after
the
Effective Date, EnerMark shall cause to be maintained in effect
the
current policies of directors' and officers' liability insurance
maintained by each of Enerplus and Focus (provided that EnerMark
may
substitute therefor policies of at least the same claims coverage
and
amounts containing terms and conditions that are no less advantageous)
providing coverage on a "trailing" or "run-off" basis for all present
and
former directors and officers of EnerMark and FET Resources with
respect
to claims arising from facts or events which occurred before the
Effective
Date, or such that Focus shall have arranged for such insurance
utilizing
its current insurance broker on terms satisfactory to Enerplus
and
EnerMark, acting reasonably;
|
|
(e)
|
to
ensure that the aggregate value of Enerplus' TCP following completion
of
the Agreement is not greater than 7% of the aggregate fair market
value of
the issued and outstanding Enerplus Units at such time; and
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|
(f)
|
to
cooperate with the Other Party and its tax advisors in structuring
the
Arrangement in a tax effective manner, and assist the Other Party
and its
tax advisors in making such investigations and inquiries with respect
to
such Party in that regard, as the Other Party and its tax advisors
shall
consider necessary, acting reasonably, provided that: (i) Focus
and FET
Resources shall not be obligated to consent or agree to any structuring
that has the effect of reducing the consideration to
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22
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|
|
to
be received under the Arrangement by the Focus Securityholders;
and (ii)
Enerplus and EnerMark shall not be obligated to consent or agree
to any
structuring that: (A) could have an adverse effect on its "mutual
fund
trust" status under the ITA or its level of ownership of property
that is
TCP; (B) has the effect of increasing the consideration to be
paid by
Enerplus under the Arrangement; or (C) that would reduce, for
the purposes
of the ITA, the aggregate cost amount of assets held directly
by Focus to
less than $1.1 billion,
|
and
each
of Enerplus and Focus will use its reasonable commercial efforts to cooperate
with the other in connection with the performance by the other of their
obligations under this Section 3.3 including, without limitation, continuing
to
provide reasonable access to information and to maintain ongoing communications
as between officers of EnerMark and FET Resources, subject in all cases to
the
Confidentiality Agreement.
|
3.4
|
Focus
and FET Resources Covenants Regarding Non-Solicitation
|
|
(a)
|
Focus
and FET Resources shall immediately cease and cause to be terminated
all
existing discussions and negotiations (including, without limitation,
through any advisors or other parties on its behalf), if any, with
any
parties conducted before the date of this Agreement with respect
to any
Acquisition Proposal and shall immediately request the return or
destruction of all information provided to any third parties who
have
entered into a confidentiality agreement with Focus or FET Resources
relating to an Acquisition Proposal and shall use all reasonable
commercial efforts to ensure that such requests are honoured.
|
|
(b)
|
Neither
Focus or FET Resources shall, directly or indirectly, do or authorize
or
permit any of its officers, directors or employees or any financial
advisor, expert or other representative retained by it to do, any
of the
following:
|
|
|
(i)
|
solicit,
knowingly facilitate, initiate or encourage any Acquisition Proposal;
|
|
|
(ii)
|
enter
into or participate in any discussions or negotiations regarding
an
Acquisition Proposal, or furnish to any other Person any information
with
respect to its businesses, properties, operations, prospects or
conditions
(financial or otherwise) in connection with an Acquisition Proposal
or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt of any other Person
to do
or seek to do any of the foregoing;
|
|
|
(iii)
|
waive,
or otherwise forbear in the enforcement of, or enter into or participate
in any discussions, negotiations or agreements to waive or otherwise
forbear in respect of, any rights or other benefits under confidential
information agreements, including, without limitation, any "standstill
provisions" thereunder; or
|
|
|
(iv)
|
accept,
recommend, approve or enter into an agreement to implement an Acquisition
Proposal;
|
provided,
however, that notwithstanding any other provision hereof, Focus and FET
Resources and their officers, directors and advisers may:
|
|
(v)
|
enter
into or participate in any discussions or negotiations with a third
party
who (without any solicitation, initiation or encouragement, directly
or
indirectly, after the date of this Agreement, by Focus or FET Resources
or
any of their officers, directors or employees or
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-
23
-
|
|
|
any
financial advisor, expert or other representative retained by
them) seeks
to initiate such discussions or negotiations and, subject to
execution of
a confidentiality and standstill agreement in favour of Focus
substantially similar to the Confidentiality Agreement (provided
that such
confidentiality agreement shall provide for disclosure thereof
(along with
all information provided thereunder) to Enerplus as set out below),
may
furnish to such third party information concerning Focus or FET
Resources
and its business, properties and assets, in each case if, and
only to the
extent that:
|
|
|
(A)
|
the
third party has first made a written bona fide Acquisition
Proposal which the Focus Board determines in good faith: (1) that
funds or
other consideration necessary for the Acquisition Proposal are
or are
likely to be available; (2) (after consultation with its financial
advisor) would, if consummated in accordance with its terms, result
in a
transaction financially superior for Focus Unitholders than the
transaction contemplated by this Agreement; and (3) after receiving
the
advice of outside counsel as reflected in minutes of the Focus
Board that
the taking of such action is necessary for the Focus Board in discharge
of
its fiduciary duties under Applicable Laws and the constating documents
of
Focus (a "Superior
Proposal"); and
|
|
|
(B)
|
prior
to furnishing such information to or entering into or participating
in any
such discussions or negotiations with such third party, Focus and
FET
Resources provide prompt notice to Enerplus to the effect that
it is
furnishing information to or entering into or participating in
discussions
or negotiations with such Person together with a copy of the
confidentiality agreement referenced above and if not previously
provided
to Enerplus, copies of all information provided to such third party
concurrently with the provision of such information to such third
party,
and provided further that Focus and FET Resources shall notify
the
Enerplus orally and in writing of any inquiries, offers or proposals
with
respect to a Superior Proposal (which written notice shall include,
without limitation, a copy of any such proposal (and any amendments
or
supplements thereto), the identity of the Person making it, if
not
previously provided to the Enerplus, copies of all information
provided to
such Party and all other information reasonably requested by Enerplus),
within 24 hours of the receipt thereof, shall keep Enerplus informed
of
the status and details of any such inquiry, offer or proposal and
answer
Enerplus' questions with respect thereto; and
|
|
|
(vi)
|
comply
with Section 172 of the Securities Act
(Alberta) and similar provisions under Applicable Canadian Securities
Laws
relating to the provision of directors' circulars and make appropriate
disclosure with respect thereto to its securityholders; and
|
|
|
(vii)
|
accept,
recommend, approve or enter into an agreement to implement a Superior
Proposal from a third party, but only if prior to such acceptance,
recommendation, approval or implementation, the Focus Board shall
have
concluded in good faith, after considering all proposals to adjust
the
terms and conditions of this Agreement as contemplated by Section
3.4(c)
and after receiving the advice of outside counsel as reflected
in minutes
of the Focus Board, that the taking of such action is necessary
for the
Focus Board in discharge of its fiduciary duties under Applicable
Laws and
Focus and FET Resources comply with their obligations set forth
in Section
3.4(c) and terminate this Agreement in accordance with Section
8.1(d), and
concurrently therewith pay the amount required by Section 6.1 to
Enerplus.
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24
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(c)
|
Following
receipt of a Superior Proposal, Focus and FET Resources shall give
Enerplus, orally and in writing, at least 72 hours advance notice
of any
decision by the Focus Board to accept, recommend, approve or enter
into an
agreement to implement a Superior Proposal, which notice shall
confirm
that the Focus Board has determined that such Acquisition Proposal
constitutes a Superior Proposal, shall identify the third party
making the
Superior Proposal and shall provide a true and complete copy thereof
and
any amendments thereto. During such 72 hour period, Focus and FET
Resources agree not to accept, recommend, approve or enter into
any
agreement to implement such Superior Proposal and not to release
the party
making the Superior Proposal from any standstill provisions and
shall not
withdraw, redefine, modify or change its recommendation in respect
of the
Arrangement. In addition, during such 72 hour period Focus and
FET
Resources shall, and shall cause their financial and legal advisors
to,
negotiate in good faith with Enerplus and its financial and legal
advisors
to make such adjustments in the terms and conditions of this Agreement
and
the Arrangement as would enable Focus and FET Resources to proceed
with
the Arrangement as amended rather than the Superior Proposal. In
the event
Enerplus and EnerMark propose to amend this Agreement and the Arrangement
to provide the Focus Unitholders with a value per Focus Unit equal
to or
having a value greater than the value per Focus Unit provided in
the
Superior Proposal and so advise the Focus Board prior to the expiry
of
such 72 hour period, the Focus Board shall not accept, recommend,
approve
or enter into any agreement to implement such Superior Proposal
and shall
not release the party making the Superior Proposal from any standstill
provisions and shall not withdraw, redefine, modify or change its
recommendation in respect of the Arrangement.
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(d)
|
Enerplus
and EnerMark agree that all information that may be provided to
them by
Focus and FET Resources with respect to any Superior Proposal pursuant
to
this Section 3.4 shall be treated as if it were "Evaluation Material"
as
that term is defined in the Confidentiality Agreement and shall
not be
disclosed or used except in accordance with the provisions of the
Confidentiality Agreement or in order to enforce their rights under
this
Agreement in legal proceedings.
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(e)
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Each
Party shall ensure that its officers, directors and employees and
any
investment bankers or other advisers or representatives retained
by it are
aware of the provisions of this Section 3.4 applicable to such
Party. Each
Party shall be responsible for any breach of this Section 3.4 by
such
Party's officers, directors, employees, investment bankers, advisers
or
representatives.
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3.5
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Provision
of Information; Access
|
From
and
after the date hereof, Focus and FET Resources shall provide Enerplus and
EnerMark and their representatives access, during normal business hours and
at
such other time or times as Enerplus and EnerMark may reasonably request,
to
their premises (including field offices and sites), books, contracts, records,
computer systems, properties, employees and management personnel and shall
furnish promptly to Enerplus and EnerMark all information concerning their
businesses, properties and personnel as Enerplus and EnerMark may reasonably
request, which information shall remain subject to the Confidentiality
Agreement, in order to permit Enerplus and EnerMark to be in a position to
expeditiously and efficiently integrate the businesses and operations of
Focus
and Enerplus immediately upon but not prior to the Effective
Date. Without limitation, representatives of Enerplus and EnerMark
will be permitted to attend FET Resources' weekly operations
meetings. Focus and FET Resources agree to keep Enerplus and EnerMark
fully appraised in a timely manner of every circumstance, action, occurrence
or
event occurring or arising after the date hereof that would be relevant and
material to a prudent operator of the business and operations of Focus and
FET
Resources. Focus and FET Resources shall confer with and obtain
Enerplus' and EnerMark's approval (not to be unreasonably withheld or delayed),
prior to taking action (other than in emergency situations) with respect
to any
material operational matters involved in its business.
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25
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ARTICLE
4
REPRESENTATIONS
AND WARRANTIES
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4.1
|
Representations
and Warranties of Enerplus
|
Each
of
Enerplus and EnerMark hereby jointly and severally make the representations
and
warranties set forth in this Section 4.1 to and in favour of Focus and FET
Resources and acknowledge that each of Focus and FET Resources is relying
upon
such representations and warranties in connection with the matters contemplated
by this Agreement (and for the purposes of this Section 4.1, all references
to
Enerplus shall be deemed to be references to Enerplus and its Subsidiaries,
taken as a whole, except where the context requires otherwise).
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(a)
|
Organization
and
Qualification. Enerplus and each Subsidiary of Enerplus
that is a trust is a trust duly created and validly existing under
the
Laws of the jurisdiction of its formation and has the requisite
trust
power and authority to own its assets and to conduct its affairs
as now
conducted. Each Subsidiary of Enerplus that is a partnership is
a partnership duly created and validly existing under the Laws
of the
jurisdiction of its formation, the partners of which have the requisite
partnership power and authority to own the assets and to carry
on its
business on behalf of such partnership as now conducted by such
partnership. EnerMark and each other Subsidiary of Enerplus
that is a corporation is a corporation duly incorporated or amalgamated
and validly existing under the Laws of its jurisdiction of incorporation
and has the requisite corporate power and authority to own its
assets as
now owned and to carry on its business as now
conducted. Enerplus and each of its Subsidiaries is duly
registered to conduct its affairs or do business, as applicable,
in each
jurisdiction in which the character of its assets, owned or leased,
or the
nature of its activities makes such registration necessary, except
where
the failure to be so registered would not have a Material Adverse
Effect
on Enerplus. Copies of the constating documents of Enerplus
(including the Enerplus Trust Indenture) made available to Focus
or its
counsel, together with all amendments to date, are accurate and
complete
as of the date hereof and have not been amended or superseded.
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(b)
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Authority
Relative to
this Agreement. EnerMark has the requisite corporate
power and authority to execute this Agreement, in its own capacity
and in
its capacity as administrator of Enerplus, as applicable, and each
of
Enerplus and EnerMark has the requisite trust or corporate power
and
authority, as applicable, to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation by Enerplus and EnerMark of the Arrangement have been
duly
authorized by the Enerplus Board and no other proceedings on the
part of
Enerplus or EnerMark are necessary to authorize this Agreement
or the
Arrangement. This Agreement has been duly executed and
delivered by each of Enerplus and EnerMark and constitutes a legal,
valid
and binding obligation of each of Enerplus and EnerMark enforceable
against them in accordance with its terms, subject to the qualification
that such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other Laws of
general
application relating to or affecting rights of creditors and that
equitable remedies, including specific performance, are discretionary
and
may not be ordered.
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(c)
|
Material
Subsidiaries. Enerplus has no Material Subsidiaries
other than EnerMark, Enerplus Resources Corporation, Enerplus Oil
&
Gas Ltd., Enerplus Commercial Trust and Enerplus Resources (USA)
Corporation.
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26
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(d)
|
No
Violations. Except as contemplated by this Agreement:
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(i)
|
neither
the execution and delivery of this Agreement by Enerplus and EnerMark
nor
the consummation of the Arrangement nor compliance by Enerplus
and
EnerMark with any of the provisions hereof will: (A) violate, conflict
with, or result in a breach of any provision of, require any consent,
approval or notice under, or constitute a default (or an event
which, with
notice or lapse of time or both, would constitute a default) or
result in
a right of termination or acceleration under, or result in the
creation of
any encumbrance upon any of the properties or assets of Enerplus
or cause
any indebtedness to come due before its stated maturity or cause
any
credit to cease to be available, under any of the terms, conditions
or
provisions of (1) the Enerplus Trust Indenture or the articles,
by-laws,
shareholder agreements or other constating document of Enerplus,
or (2)
any material note, bond, mortgage, indenture, loan agreement, deed
of
trust, agreement, lien, contract or other instrument or obligation
to
which Enerplus is a party or to which it, or any of its properties
or
assets, may be subject or by which Enerplus is bound (including,
without
limitation, the agreements and instruments governing the Enerplus
Credit
Facilities); or (B) subject to compliance with applicable statutes
and
regulations, violate any judgment, ruling, order, writ, injunction,
determination, award, decree, statute, ordinance, rule or regulation
applicable to Enerplus or any of its properties or assets (except,
in the
case of each of clauses (A) and (B) above, for such violations,
conflicts,
breaches, defaults, terminations, accelerations or creations of
encumbrances which, or any consents, approvals or notices which
if not
given or received, would not have any Material Adverse Effect on
Enerplus,
or significantly impede the ability of Enerplus to consummate the
Arrangement); or (C) cause the suspension or revocation of any
authorization, consent, approval or license currently in effect
which
would have a Material Adverse Effect on Enerplus; and
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(ii)
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other
than in connection with or in compliance with the provisions of
Applicable
Laws or which are required to be filed post-Arrangement, (A) there
is no
legal impediment to Enerplus' consummation of the Arrangement,
and (B) no
filing or registration with, or authorization, consent or approval
of, any
domestic or foreign public body or authority is required of Enerplus
in
connection with the consummation of the Arrangement, except for
such
filings or registrations which, if not made, or for such authorizations,
consents or approvals which, if not received, would not have a
Material
Adverse Effect on Enerplus, or significantly impede the ability
of
Enerplus to consummate the Arrangement.
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(e)
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Litigation. There
are no actions, suits or proceedings in existence or pending or,
to the
knowledge of Enerplus and EnerMark, threatened or for which there
is a
reasonable basis, affecting or that would reasonably be expected
to affect
Enerplus or affecting or that would reasonably be expected to affect
any
of its property or assets at law or equity or before or by any
court or
Governmental Entity which action, suit or proceeding involves a
possibility of any judgment against or liability of Enerplus which,
if
successful, would reasonably be expected to have a Material Adverse
Effect
on Enerplus, or would significantly impede the ability of Enerplus
to
consummate the Arrangement.
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27
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(f)
|
Taxes,
etc.
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(i)
|
All
Tax Returns required to be filed by or on behalf of Enerplus have
been
duly filed on a timely basis and such Tax Returns are correct in
all
material respects. All Taxes shown to be payable on the Tax Returns
or on
subsequent assessments with respect thereto have been paid in full
on a
timely basis, and no other Taxes are payable by Enerplus with respect
to
items or periods covered by such Tax Returns.
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(ii)
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Enerplus
has paid or provided adequate accruals in its consolidated financial
statements for the period from inception to December 31, 2006 for
Taxes,
including income taxes and related future taxes, if applicable,
for such
periods, in conformity with GAAP.
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(iii)
|
For
all periods ended on and after December 31, 2006, Enerplus has
made
available to Focus true and complete copies of: (A) material portions
of
income tax audit reports, statement of deficiencies, closing or
other
agreements or correspondence concerning assessments or audits pursuant
to
which a taxing authority has proposed amendments to previously
filed
returns received by Enerplus or on behalf of Enerplus relating
to the
Taxes; and (B) any material federal, provincial, state, local or
foreign
income or franchise Tax Returns for Enerplus.
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(iv)
|
No
material deficiencies exist or have been asserted with respect
to Taxes of
Enerplus.
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(v)
|
Enerplus
is not a party to any action or proceeding for assessment or collection
of
Taxes, nor, to the knowledge of Enerplus and EnerMark, has such
an event
been asserted or threatened against Enerplus or any of its assets
that
would have a Material Adverse Effect on Enerplus. No waiver or
extension
of any statute of limitations is in effect with respect to Taxes
or Tax
Returns of Enerplus. No audit by tax authorities of Enerplus is
in process
or pending, to the knowledge of Enerplus, which individually, or
in
aggregate, could reasonably be expected to have a Material Adverse
Effect
on Enerplus.
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(vi)
|
Enerplus
has provided adequate accruals in its consolidated financial statements
in
accordance with GAAP for the period ended December 31, 2006 (or
such
amounts are fully funded) for all pension or other employee benefit
obligations of Enerplus arising under or relating to each of the
pension
or retirement income plans or other employee benefit plans or agreements
or policies maintained by or binding on Enerplus.
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(g)
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Reporting
Issuer
Status. Enerplus is a reporting issuer (where such
concept exists) in all provinces of Canada and is in material compliance
with all Applicable Canadian Securities Laws therein. The
Enerplus Units are registered pursuant to Section 12 of the U.S.
Exchange
Act and Enerplus is in material compliance with all applicable
U.S.
Securities Laws, including the applicable provisions of the Sarbanes Oxley
Act of
2002. The Enerplus Units are listed and posted for
trading on the TSX and the NYSE and Enerplus is in material compliance
with the rules of the TSX and the NYSE.
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(h)
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Capitalization. As
of the date hereof, the authorized capital of Enerplus consists
of an
unlimited number of Enerplus Units, and EnerMark
may also
authorize the creation and issuance of Special Voting Rights (as
defined
in the Enerplus Trust Indenture). As of the date hereof, there
were issued and outstanding not more than 130 million
Enerplus
Units and no Special Voting Rights, and other than: (i) not more
than
3.5 million Enerplus Units issuable upon the exercise of rights that
are currently issued and outstanding under the Enerplus Trust Unit
Rights
Incentive Plan, and
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28
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(ii)
Enerplus Units which may be issued pursuant to the Enerplus DRIP,
(the
securities listed in Subsections 4.1(h)(i) and (ii) are collectively,
the
"Enerplus
Instruments"), there are no options, warrants or other rights,
agreements or commitments of any character whatsoever requiring
the
issuance, sale or transfer by Enerplus of any securities of Enerplus
(including Enerplus Units) or any securities convertible into,
or
exchangeable or exercisable for, or otherwise evidencing a right
to
acquire, any securities of Enerplus (including Enerplus
Units). All outstanding Enerplus Units have been duly
authorized and validly issued, are fully paid and non-assessable
and are
not subject to, nor were they issued in violation of, any pre-emptive
rights and all Enerplus Units issuable pursuant to the Enerplus
Instruments in accordance with their respective terms will be
duly
authorized and validly issued as fully paid and non-assessable
and will
not be subject to any pre-emptive rights.
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(i)
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Ownership
of
Subsidiaries. As of the date hereof, Enerplus is the
beneficial direct or indirect owner of all of the outstanding shares,
trust units and partnership units, as applicable, of the Subsidiaries
of
Enerplus with good title thereto free and clear of any and all
encumbrances. There are no options, warrants or other rights,
shareholder or unitholder rights plans, agreements or commitments
of any
character whatsoever requiring the issuance, sale or transfer by
any of
Enerplus' Subsidiaries of any securities of Enerplus' Subsidiaries
or any
securities convertible into, or exchangeable or exercisable for,
or
otherwise evidencing a right to acquire, any securities of Enerplus'
Subsidiaries. All outstanding securities of Enerplus'
Subsidiaries have been duly authorized and validly issued, are
fully paid
and non-assessable and are not subject to, nor were they issued
in
violation of, any pre-emptive rights.
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(j)
|
No
Orders. No order, ruling or determination having the
effect of suspending the sale of, or ceasing the trading of, the
Enerplus
Units or any other securities of Enerplus has been issued by any
regulatory authority and is continuing in effect and no proceedings
for
that purpose have been instituted, are pending or, to the knowledge
of
Enerplus and EnerMark, are contemplated or threatened under any
Applicable
Laws or by any other regulatory authority.
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(k)
|
Material
Agreements. There are no agreements material to the
conduct of Enerplus' affairs or businesses, as applicable, except
for
those agreements disclosed in the Public Record, or those entered
into in
the ordinary course of business, and all such material agreements
are
valid and subsisting and Enerplus is not in material default under
any
such agreement.
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(l)
|
Filings. Enerplus
has filed all documents required to be filed by it with all applicable
Governmental Entities and all such documents were, as of their
respective
dates, in compliance in all material respects with all Applicable
Laws and
at the time filed did not contain any untrue statement of a material
fact
or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. EnerMark will
deliver to FET Resources, as soon as they become available, true
and
complete copies of any material reports or statements required
to be filed
by Enerplus with any Governmental Entity subsequent to the date
hereof. As of their respective dates, such reports and
statements (excluding any information therein provided by Focus,
as to
which Enerplus and EnerMark make no representation) will not contain
any
untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements
therein,
in light of the circumstances in which they are made, not misleading
and
will comply in all material respects with all Applicable Laws.
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(m)
|
No
Material Adverse
Change. Since January 1, 2007, other than as disclosed
in the Public Record: (i) Enerplus has conducted its business only
in the
ordinary and normal course, (ii) no liability or obligation of
any nature
(whether absolute, accrued, contingent or otherwise) material to
Enerplus
has been incurred other than in the ordinary course of business,
and (iii)
there has not been any Material Adverse Change in respect of Enerplus.
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29
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(n)
|
Books
and
Records. The records and minute books of Enerplus and
its Subsidiaries have been maintained substantially in accordance
with all
Applicable Laws and are complete and accurate in all material respects.
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(o)
|
Reports. As
of their respective dates: (i) the Enerplus Financial Statements;
(ii)
Enerplus' Annual Information Form dated March 12, 2007 (including
all documents incorporated by reference therein); (iii) Enerplus'
information circular and proxy statement dated March 12, 2007 for the
annual general meeting of Enerplus Unitholders held on May 4, 2007;
(iv) all Enerplus press releases, material change reports, business
acquisition reports or similar documents filed with the Securities
Authorities since January 1, 2007; (v) Enerplus' annual report
of Form
40-F filed with the SEC on March 12, 2007; and (vi) all prospectuses
or other offering documents used by Enerplus in the offering of
its
securities or filed with the Securities Authorities since January
1, 2007,
did not contain any untrue statement of a material fact or omit
to state a
material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances in which they
were made,
not misleading and complied in all material respects with all Applicable
Laws. Since January 1, 2007, Enerplus has not filed any
material change reports which continue to be confidential. The
Enerplus Financial Statements and other financial statements of
Enerplus
included or incorporated by reference in such forms, statements,
prospectuses and other offering documents were prepared in accordance
with
GAAP and present fairly in accordance with GAAP the consolidated
financial
position, results of operations and cash flows of Enerplus on a
consolidated basis as of the dates thereof and for the periods
indicated
therein (subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments) and reflect appropriate
and adequate reserves in respect of contingent liabilities, if
any, of
Enerplus on a consolidated basis. There has been no material
change in Enerplus' accounting policies, except as described in
the notes
to the Enerplus Financial Statements, since January 1, 2006.
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(p)
|
Absence
of Undisclosed
Liabilities. Enerplus has no material liabilities of any
nature (matured or unmatured, fixed or contingent), other than:
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(i)
|
those
set forth or adequately provided for in the most recent balance
sheet and
associated notes thereto included in the Enerplus Financial Statements
(the "Enerplus Balance
Sheet");
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(ii)
|
those
incurred in the ordinary course of business and not required to
be set
forth in the Enerplus Balance Sheet under GAAP;
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|
(iii)
|
those
incurred in the ordinary course of business since the date of the
Enerplus
Balance Sheet and consistent with past practice; and
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(iv)
|
those
incurred in connection with the execution of this Agreement;
|
which
would reasonably be expected to have a Material Adverse Effect on
Enerplus.
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30
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(q)
|
Environmental. Except
as disclosed in the Public Record or disclosed to Focus in writing
prior
to the date hereof, there have not occurred any material spills,
emissions
or pollution on any property of Enerplus, nor has Enerplus been
subject to
any stop orders, control orders, clean-up orders or reclamation
orders
under applicable Environmental Laws, any of which might reasonably
be
expected to have a Material Adverse Effect on Enerplus. All
operations of Enerplus have been and are now being conducted in
compliance
with all applicable Environmental Laws, except where the failure
to be in
compliance would not reasonably be expected to have a Material
Adverse
Effect on Enerplus. Enerplus is not subject to nor are Enerplus
or EnerMark aware of:
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|
|
(i)
|
any
proceeding, application, order or directive which relates to
environmental, health or safety matters, and which may require
any
material work, repairs, construction, or expenditures; or
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|
(ii)
|
any
demand or notice with respect to the breach of any Environmental
Laws
applicable to Enerplus, including, without limitation, any regulations
respecting the use, storage, treatment, transportation, or disposition
of
any Hazardous Substances,
|
which
would reasonably be expected to have a Material Adverse Effect on
Enerplus.
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(r)
|
Title. Although
they do not warrant title, neither Enerplus nor EnerMark has any
knowledge
or is aware of any defects, failures or impairments in the title
of
Enerplus to its assets, whether or not an action, suit, proceeding
or
inquiry is pending or threatened or whether or not discovered by
any third
party, which in aggregate could have a Material Adverse Effect
on: (i) the
quantity and pre-tax present worth values of such assets; (ii)
the current
production volumes of Enerplus; or (iii) the current consolidated
cash
flow of Enerplus.
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(s)
|
Licences. Except
as disclosed in the Public Record, Enerplus has obtained and is
in
compliance with all licences, permits, certificates, consents,
orders,
grants and other authorizations of or from any Governmental Entity
necessary to conduct its businesses as they are now being or are
proposed
to be conducted, other than such licences, permits, certificates,
consents, orders, grants and other authorizations the absence of
which
would not have a Material Adverse Effect on Enerplus.
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(t)
|
Compliance
with
Laws. Enerplus has complied with and is in compliance
with all Laws applicable to the operation of its business, except
where
such non-compliance would not have a Material Adverse Effect on
Enerplus
or on the ability of Enerplus to consummate the Arrangement.
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|
(u)
|
Long
Term and
Derivative Transactions. Except as disclosed in the
Public Record or as otherwise disclosed in writing to Focus prior
to the
date hereof, Enerplus has no obligations or liabilities, direct
or
indirect, vested or contingent in respect of any rate swap transactions,
basis swaps, forward rate transactions, commodity swaps, commodity
options, equity or equity index swaps, equity or equity index options,
bond options, interest rate options, foreign exchange transactions,
cap
transactions, floor transactions, collar transactions, currency
swap
transactions, cross-currency rate swap transactions, currency options,
production sales transactions having terms greater than 90 days
or any
other similar transactions (including any option with respect to
any of
such transactions) or any combination of such transactions.
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31
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(v)
|
Employee
Benefit
Plans. Enerplus has made available to Focus or its
counsel prior to the date hereof true, complete and correct copies
of each
employee benefits plan (the "Enerplus Employee
Plans") covering active, former or retired employees of Enerplus,
any related trust agreement, annuity or insurance contract or other
funding vehicle, and: (i) each Enerplus Employee Plan has been
maintained
and administered in material compliance with its terms and is,
to the
extent required by Applicable Law or contract, fully funded without
having
any deficit or unfunded actuarial liability or adequate provision
has been
made therefore; (ii) all required material employer contributions
under
any such plans have been made and the applicable funds have been
funded in
accordance with the terms thereof; (iii) each Enerplus Employee
Plan that
is required or intended to be qualified under Applicable Law or
registered
or approved by a governmental agency or authority has been so qualified,
registered or approved by the appropriate governmental agency or
authority, and nothing has occurred since the date of the last
qualification, registration or approval to materially adversely
affect, or
cause, the appropriate governmental agency or authority to revoke
such
qualification, registration or approval; (iv) to the knowledge
of Enerplus
and EnerMark, there are no pending or anticipated material claims
against
or otherwise involving any of the Enerplus Employee Plans and no
suit,
action or other litigation (excluding claims for benefits incurred
in the
ordinary course of Enerplus Employee Plan activities) has been
brought
against or with respect to any Enerplus Employee Plan; (v) all
material
contributions, reserves or premium payments required to be made
to the
Enerplus Employee Plans have been made or provided for; and (vi)
Enerplus
has no material obligations for retiree health and life benefits
under any
Enerplus Employee Plan.
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(w)
|
Insurance. Policies
of insurance are in force as of the date hereof naming Enerplus
as an
insured that adequately cover all risks as are customarily covered
by oil
and gas producers in the industry in which Enerplus
operates. All such policies shall remain in force and effect
and shall not be cancelled or otherwise terminated as a result
of the
transactions contemplated by this Agreement.
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(x)
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Indebtedness
To and By
Officers, Directors and Others. Enerplus is not indebted
to any of the directors, officers, employees or consultants or
any of
their respective associates or affiliates or other parties not
at arm's
length to Enerplus, except for amounts due as normal compensation
or
reimbursement of ordinary business expenses, nor is there any indebtedness
owing by any such parties to Enerplus.
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(y)
|
Information
to
Independent Engineers. Enerplus and EnerMark have no
reason to believe that: (i) the report prepared by Xxxxxxx dated
February
14, 2007 and effective as at December 31, 2006, evaluating the
crude oil,
natural gas liquids and natural gas reserves and future net production
revenues attributable to certain of the properties of Enerplus
as of
December 31, 2006; (ii) the report prepared by GLJ dated February
2, 2007
and effective as at December 31, 2006, evaluating the crude oil,
natural
gas liquids, natural gas and bitumen reserves and resources and
future net
production revenues attributable to certain of the properties of
Enerplus
as of December 31, 2006; and (iii) the report prepared by D&M dated
February 1, 2007 and effective as at December 31, 2006, evaluating
the
crude oil, natural gas liquids and natural gas reserves and future
net
production revenues attributable to certain of the properties of
Enerplus
as of December 31, 2006 (collectively, the "Enerplus Reserve
Reports") and, if applicable, any updates to such reports or any
other reserve evaluation reports which may be, or be deemed to
be,
included or incorporated by reference in the Focus Information
Circular,
whether in addition to or as a replacement to the Enerplus Reserve
Reports, were not accurate in all material respects as at the effective
date of such reports and, except for any impact of changes in commodity
prices, which may or may not be material, Enerplus and EnerMark
have no
knowledge of a Material Adverse Change in the production, costs,
price,
reserves, estimates of future net production revenues or other
relevant
information from that disclosed in those reports. Enerplus has
provided to Xxxxxxx, GLJ and D&M all material information concerning
land descriptions, well data, facilities and infrastructure, ownership
and
operations, future development plans and historical technical and
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32
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operating
data respecting the principal oil and gas assets of Enerplus,
in each case
as at the effective dates of such reports and, in particular,
all material
information respecting the interests of Enerplus in its principal
oil and
gas assets and royalty burdens and net profits interest burdens
thereon
and such information was accurate and correct in all material
respects as
at the respective dates thereof and did not omit any information
necessary
to make any such information provided not misleading as at the
respective
dates thereof and there has been no Material Adverse Change in
any of the
material information so provided since the date thereof.
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(z)
|
No
Insider
Rights. No director, officer, insider or other party not
at arm's length to Enerplus has any right, title or interest in
(or the
right to acquire any right, title or interest in) any royalty interest,
participation interest or any other interest whatsoever, in any
properties
of Enerplus.
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(aa)
|
No
Defaults under
Leases and Agreements.
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(i)
|
Enerplus
has not received notice of any default under any of the leases
and other
title and operating documents or any other agreement or instrument
pertaining to Enerplus' oil and gas assets to which Enerplus is
a party or
by or to which Enerplus or any such assets are bound or subject
except to
the extent that such defaults would not in the aggregate have a
Material
Adverse Effect on Enerplus.
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(ii)
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To
its knowledge:
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(A)
|
Enerplus
is in good standing under all, and is not in default under any;
and
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(B)
|
there
is no existing condition, circumstance or matter which constitutes
or
which, with the passage of time or the giving of notice, would
constitute
a default under any,
|
leases
and other title and operating documents or any other agreements and instruments
pertaining to its oil and gas assets to which it is a party or by or to which
it
or such assets are bound or subject and, to their knowledge, all such leases,
title and operating documents and other agreements and instruments are in
good
standing and in full force and effect and none of the counterparties to such
leases, title and operating documents and other agreements and instruments
is in
default thereunder except to the extent that such defaults would not in the
aggregate have a Material Adverse Effect on Enerplus.
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(bb)
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No
Encumbrances. Enerplus has not encumbered or alienated
its interest in its oil and gas assets or agreed to do so and such
assets
are free and clear of all encumbrances disclosed in the Public
Record, any
governmental registry (including the personal property registry
in British
Columbia, Alberta, Saskatchewan or Manitoba) or those arising in
the
ordinary course of business, which are not material in the aggregate.
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(cc)
|
No
Reduction of
Interests. Except as is reflected in the Enerplus
Reserve Reports, none of Enerplus' oil and gas assets are subject
to
reduction by reference to payout of or production penalty on any
well or
otherwise or to change to an interest of any other size or nature
by
virtue of or through any right or interest granted by, through
or under
Enerplus except to the extent that such reduction or change to
an interest
would not in the aggregate have a Material Adverse Effect on Enerplus.
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(dd)
|
Royalties,
Rentals and
Taxes Paid. All royalties and rentals payable on or
before the date hereof under the leases and other title and operating
documents pertaining to Enerplus' oil and gas assets and all ad
valorem,
property, production, severance and similar taxes and assessments
based
upon or measured by the ownership of such assets or the production
of
petroleum substances derived therefrom or allocated thereto or
the
proceeds of sales thereof payable on or before the date hereof
have been
properly paid in full and in a timely manner except to the extent
that
such non-payment would not in the aggregate have a Material Adverse
Effect
on Enerplus.
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(ee)
|
Operation
and
Condition of Xxxxx. All xxxxx in which Enerplus holds an
interest:
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(i)
|
for
which Enerplus was or is operator, were or have been drilled and,
if and
as applicable, completed, operated and abandoned in accordance
with good
and prudent oil and gas industry practices in Canada and all Applicable
Law; and
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(ii)
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for
which Enerplus was not or is not operator, to its knowledge, were
or have
been drilled and, if and as applicable, completed, operated and
abandoned
in accordance with good and prudent oil and gas industry practices
in
Canada and all Applicable Law;
|
except,
in either case, to the extent that such non-compliance with prudent oil and
gas
industry practices or Applicable Law would not in the aggregate have a Material
Adverse Effect on Enerplus.
|
(ff)
|
Operation
and
Condition of Tangibles. Enerplus' tangible depreciable
property used or intended for use in connection with its oil and
gas
assets:
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(i)
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for
which Enerplus was or is operator, was or has been constructed,
operated
and maintained in accordance with good and prudent oil and gas
industry
practices in Canada and all Applicable Law during all periods in
which
Enerplus was operator thereof and is in good condition and repair,
ordinary wear and tear excepted, and is useable in the ordinary
course of
business; and
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(ii)
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for
which Enerplus was not or is not operator, to its knowledge, was
or has
been constructed, operated and maintained in accordance with good
and
prudent oil and gas industry practices in Canada and all Applicable
Law
during all periods in which Enerplus was not operator thereof and
is in
good condition and repair, ordinary wear and tear excepted, and
is useable
in the ordinary course of business;
|
except
to
the extent that such non-compliance with prudent oil and gas industry practices
or Applicable Law would not in the aggregate have a Material Adverse Effect
on
Enerplus.
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(gg)
|
Brokers
and
Finders. Enerplus has not retained nor will it retain
any financial advisor, broker, agent or finder or pay, or agree
to pay any
financial advisor, broker, agent or finder on account of this Agreement,
any transaction contemplated hereby or any transaction presently
ongoing
or contemplated, except for those advisors which have been retained
by
Enerplus as financial or strategic advisors in connection with
certain
matters including the transactions contemplated hereby, as publicly
disclosed. After the payment of such financial obligations to
Enerplus' financial advisors, Enerplus will not have any continuing
obligations to such advisors other than those related to indemnification,
confidentiality and the payment of expenses.
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34
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(hh)
|
Employment
and Officer
Obligations. Other than the Enerplus Employment
Agreements, EnerMark's existing employee health and benefit plans
and the
Enerplus Incentive Plans, there are no other material employment
or
consulting services agreements, termination, severance and retention
plans
or policies of Enerplus. Except as otherwise agreed by the
Parties, the obligations of Enerplus under the Enerplus Employment
Agreements and all other employment or consulting services agreements,
termination, severance plans or policies for severance, termination
or
bonus payments or any other payments related to any Enerplus incentive
plan, arising out of or in connection with the Arrangement shall
be nil.
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(ii)
|
Mutual
Fund
Trust. Enerplus is a "mutual fund trust" and a "unit
trust" within the meaning of the ITA.
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(jj)
|
Place
of Principal
Offices. The principal offices of Enerplus are not
located within the United States.
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(kk)
|
Foreign
Private
Issuer. Enerplus is a "foreign private issuer" within
the meaning of Rule 405 of Regulation C adopted by the SEC under
the U.S.
Securities Act.
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(ll)
|
Investment
Company and
PFIC. Enerplus is not registered, and to the best of its
knowledge is not required to be registered, as an investment company
pursuant to the United States Investment Company
Act of
1940, as amended, and Enerplus believes that it was not, in
2006
and prior years, and does not expect to be in 2007, a "passive
foreign
investment company" for the purposes of United States tax laws.
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(mm)
|
Off-Balance
Sheet
Arrangements. Enerplus does not have any material
"off-balance sheet arrangements" as such term is defined in Form
40-F
adopted by the SEC.
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(nn)
|
Board
Approval. The Enerplus Board has unanimously approved
the Arrangement and approved this Agreement and has unanimously
determined
that the Arrangement and this Agreement are in the best interests
of
Enerplus and the Enerplus Unitholders.
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(oo)
|
Disclosure. To
the knowledge of Enerplus, Enerplus has not withheld from Focus
any
material information or documents concerning Enerplus or any of
its
Subsidiaries or their respective assets or liabilities during the
course
of Focus' review of Enerplus and its assets. No representation
or warranty contained herein and no statement contained in any
schedule or
other disclosure document provided or to be provided to Focus by
Enerplus
pursuant hereto contains or will contain any untrue statement of
a
material fact or omits to state a material fact which is necessary
in
order to make the statements herein or therein not misleading.
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4.2
|
Representations
and Warranties of Focus
|
Each
of
Focus and FET Resources hereby jointly and severally make the representations
and warranties set forth in this Section 4.2 to and in favour of Enerplus
and
EnerMark and acknowledge that each of Enerplus and EnerMark is relying upon
such
representations and warranties in connection with the matters contemplated
by
this Agreement (and for the purposes of this Section 4.2, all references
to
Focus shall be deemed to be references to Focus and its Subsidiaries, taken
as a
whole, except where the context requires otherwise).
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35
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(a)
|
Organization
and
Qualification. Focus and each Subsidiary of Focus that
is a trust is a trust duly created and validly existing under the
Laws of
the jurisdiction of its formation and has the requisite trust power
and
authority to own its assets and to conduct its affairs as now
conducted. Each Subsidiary of Focus that is a partnership is a
partnership duly created and validly existing under the Laws of
the
jurisdiction of its formation, the partners of which have the requisite
partnership power and authority to own the assets and to carry
on its
business on behalf of such partnership as now conducted by such
partnership. FET Resources and each other Subsidiary of Focus
that is a corporation is a corporation duly incorporated or amalgamated
and validly existing under the Laws of its jurisdiction of incorporation
and has the requisite corporate power and authority to own its
assets as
now owned and to carry on its business as now conducted. Focus
and each of its Subsidiaries is duly registered to conduct its
affairs or
do business, as applicable, in each jurisdiction in which the character
of
its assets, owned or leased, or the nature of its activities makes
such
registration necessary, except where the failure to be so registered
would
not have a Material Adverse Effect on Focus. Copies of the
constating documents of Focus and its Subsidiaries (including the
Focus
Trust Indenture and the Focus Exchangeable LP Unit Agreements)
provided to
EnerMark, together with all amendments to date, are accurate and
complete
as of the date hereof and have not been amended or superseded.
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|
(b)
|
Authority
Relative to
this Agreement. FET Resources has the requisite
corporate power and authority to execute this Agreement, in its
own
capacity and in its capacity as administrator of Focus, as applicable,
and
each of Focus and FET Resources has the requisite trust or corporate
power
and authority, as applicable, to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation by Focus and FET Resources of the Arrangement have
been duly
authorized by the Focus Board and, subject to the requisite approval
of
the Focus Securityholders, no other proceedings on the part of
Focus or
FET Resources are necessary to authorize this Agreement or the
Arrangement. This Agreement has been duly executed and
delivered by each of Focus and FET Resources and constitutes a
legal,
valid and binding obligation of each of Focus and FET Resources
enforceable against them in accordance with its terms, subject
to the
qualification that such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
other Laws
of general application relating to or affecting rights of creditors
and
that equitable remedies, including specific performance, are discretionary
and may not be ordered.
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(c)
|
Material
Subsidiaries. Focus has no Material Subsidiaries other
than FET Resources, Focus Commercial Trust, Focus LP, FET Operating
Partnership, FET Energy LP, Focus B.C. Trust and Xxxxx Lakes Partnership.
|
|
(d)
|
No
Violations. Except with respect to the change of control
provisions in the Focus Credit Facilities and FET Resources' office
lease
agreement or as contemplated by this Agreement:
|
|
|
(i)
|
neither
the execution and delivery of this Agreement by Focus and FET Resources
nor the consummation of the Arrangement nor compliance by Focus
and FET
Resources with any of the provisions hereof will: (A) violate,
conflict
with, or result in a breach of any provision of, require any consent,
approval or notice under, or constitute a default (or an event
which, with
notice or lapse of time or both, would constitute a default) or
result in
a right of termination or acceleration under, or result in the
creation of
any encumbrance upon any of the properties or assets of Focus or
cause any
indebtedness to come due before its stated maturity or cause any
credit to
cease to be available, under any of the terms, conditions or provisions
of: (1) the Focus Material Agreements or the articles, by-laws,
shareholder agreements or other constating document of Focus; or
(2) any
material note, bond, mortgage, indenture, loan agreement, deed
of trust,
agreement, lien, contract or other instrument or obligation to
which Focus
is a party or to which it, or any of its
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36
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|
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properties
or assets, may be subject or by which Focus is bound; or (B)
subject to
compliance with applicable statutes and regulations, violate
any judgment,
ruling, order, writ, injunction, determination, award, decree,
statute,
ordinance, rule or regulation applicable to Focus or any of its
properties
or assets (except, in the case of each of clauses (A) and (B)
above, for
such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of encumbrances which, or any consents,
approvals or notices which if not given or received, would not
have any
Material Adverse Effect on Focus, or significantly impede the
ability of
Focus to consummate the Arrangement); or (C) cause the suspension
or
revocation of any authorization, consent, approval or license
currently in
effect which would have a Material Adverse Effect on Focus; and
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|
|
(ii)
|
other
than in connection with or in compliance with the provisions of
Applicable
Laws or which are required to be filed post-Arrangement, and except
for
the requisite approval of Focus Securityholders: (A) there is no
legal
impediment to Focus' consummation of the Arrangement; and (B) no
filing or
registration with, or authorization, consent or approval of, any
domestic
or foreign public body or authority is required of Focus in connection
with the consummation of the Arrangement, except for such filings
or
registrations which, if not made, or for such authorizations, consents
or
approvals which, if not received, would not have a Material Adverse
Effect
on Focus, or significantly impede the ability of Focus to consummate
the
Arrangement.
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|
(e)
|
Litigation. There
are no actions, suits or proceedings in existence or pending or,
to the
knowledge of Focus and FET Resources, threatened or for which there
is a
reasonable basis, affecting or that would reasonably be expected
to affect
Focus or affecting or that would reasonably be expected to affect
any of
its property or assets at law or equity or before or by any court
or
Governmental Entity which action, suit or proceeding involves a
possibility of any judgment against or liability of Focus which,
if
successful, would reasonably be expected to have a Material Adverse
Effect
on Focus, or would significantly impede the ability of Focus to
consummate
the Arrangement.
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|
(f)
|
Taxes,
etc.
|
|
|
(i)
|
All
Tax Returns required to be filed by or on behalf of Focus have
been duly
filed on a timely basis and such Tax Returns are correct in all
material
respects. All Taxes shown to be payable on the Tax Returns or on
subsequent assessments with respect thereto have been paid in full
on a
timely basis, and no other Taxes are payable by Focus with respect
to
items or periods covered by such Tax Returns;
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|
|
(ii)
|
Focus
has paid or provided adequate accruals in its consolidated financial
statements for the period from inception to December 31, 2006 for
Taxes,
including income taxes and related future taxes, if applicable,
for such
periods, in conformity with GAAP;
|
|
|
(iii)
|
For
all periods ended on and after December 31, 2006, Focus has made
available
to Enerplus true and complete copies of: (A) material portions
of income
tax audit reports, statement of deficiencies, closing or other
agreements
or correspondence concerning assessments or audits pursuant to
which a
taxing authority has proposed amendments to previously filed returns
received by Focus or on behalf of Focus relating to the Taxes;
and (B) any
material federal, provincial, state, local or foreign income or
franchise
Tax Returns for Focus;
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37
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|
|
(iv)
|
No
material deficiencies exist or have been asserted with respect
to Taxes of
Focus;
|
|
|
(v)
|
Focus
is not a party to any action or proceeding for assessment or collection
of
Taxes, nor, to the knowledge of Focus and FET Resources, has such
an event
been asserted or threatened against Focus or any of its assets
that would
have a Material Adverse Effect on Focus. No waiver or extension
of any
statute of limitations is in effect with respect to Taxes or Tax
Returns
of Focus. No audit by tax authorities of Focus is in process or
pending,
to the knowledge of Focus, which individually, or in aggregate,
could
reasonably be expected to have a Material Adverse Effect on Focus;
and
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|
|
(vi)
|
Focus
has provided adequate accruals in its consolidated financial statements
in
accordance with GAAP for the period ended December 31, 2006 (or
such
amounts are fully funded) for all pension or other employee benefit
obligations of Focus arising under or relating to each of the pension
or
retirement income plans or other employee benefit plans or agreements
or
policies maintained by or binding on Focus.
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|
(g)
|
Reporting
Issuer
Status. Focus is a reporting issuer (where such concept
exists) in all provinces of Canada and is in material compliance
with all
Applicable Canadian Securities Laws therein. The Focus Units
are listed and posted for trading on the TSX and Focus is in material
compliance with the rules of the TSX.
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|
(h)
|
Capitalization. The
authorized capital of Focus consists of an unlimited number of
Focus Units
and the Special Voting Right. The authorized capital of Focus
consists of an unlimited number of Class A limited partnership
units and
an unlimited number of Focus Exchangeable LP Units. As of the
date hereof, there were issued and outstanding not more than
70.67 million Focus Units and not more than 9.2 million Focus
Exchangeable LP Units. Other than: (i) not more than 2,018,031
Focus Units issuable pursuant to issued and outstanding grants
made under
the Focus TURIP; (ii) Focus Units that may be issued pursuant to
330,000
restricted awards and 630,000 performance awards granted under
the Focus
Unit Award Incentive Plan; (iii) not more than 9.2 million Focus
Units issuable upon the exchange of the Focus Exchangeable LP Units;
and
(iv) Focus Units which may be issued pursuant to the Focus DRIP,
(the
securities listed in Subsection 4.2(h)(i) through (iv) are collectively
the "Focus Securities
Instruments"), there are no options, warrants or other rights,
agreements or commitments of any character whatsoever requiring
the
issuance, sale or transfer by Focus of any securities of Focus
(including
Focus Units) or any securities convertible into, or exchangeable
or
exercisable for, or otherwise evidencing a right to acquire, any
securities of Focus (including Focus Units). All outstanding
Focus Units have been duly authorized and validly issued, are fully
paid
and non-assessable and are not subject to, nor were they issued
in
violation of, any pre-emptive rights and all Focus Units issuable
pursuant
to the Focus Securities Instruments in accordance with their respective
terms will be duly authorized and validly issued as fully paid
and
non-assessable and will not be subject to any pre-emptive rights.
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|
(i)
|
Ownership
of
Subsidiaries. As of the date hereof, and except with
respect to not more than 9.2 million Focus Exchangeable LP Units,
Focus is the beneficial direct or indirect owner of all of the
outstanding
shares, trust units and partnership units, as applicable, of the
Subsidiaries of Focus with good title thereto free and clear of
any and
all encumbrances. There are no options, warrants or other
rights, shareholder or unitholder rights plans, agreements or commitments
of any character whatsoever requiring the issuance, sale or transfer
by
any of Focus' Subsidiaries of any securities of Focus' Subsidiaries
or any
securities convertible into, or exchangeable or exercisable for,
or
otherwise evidencing a right to acquire, any securities of any
of Focus'
Subsidiaries. All outstanding securities of Focus' Subsidiaries
have been duly authorized and validly issued, are fully paid and
non-assessable and are not subject to, nor were they issued in
violation
of, any pre-emptive rights.
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38
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(j)
|
No
Orders. No order, ruling or determination having the
effect of suspending the sale of, or ceasing the trading of, the
Focus
Units, the Focus Exchangeable LP Units or any other securities
of Focus
has been issued by any regulatory authority and is continuing in
effect
and no proceedings for that purpose have been instituted, are pending
or,
to the knowledge of Focus and FET Resources, are contemplated or
threatened under any Applicable Laws or by any other regulatory
authority.
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|
(k)
|
Material
Agreements. There are no agreements material to the
conduct of Focus' affairs or businesses, as applicable, except
for those
agreements disclosed in the Public Record or those entered into
in the
ordinary course of business, and all such material agreements are
valid
and subsisting and Focus is not in material default under any such
agreement.
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|
(l)
|
Filings. Focus
has filed all documents required to be filed by it with all applicable
Governmental Entities and all such documents were, as of their
respective
dates, in compliance in all material respects with all Applicable
Laws and
at the time filed did not contain any untrue statement of a material
fact
or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. FET Resources will
deliver to EnerMark, as soon as they become available, true and
complete
copies of any material reports or statements required to be filed
by Focus
with any Governmental Entity subsequent to the date hereof. As
of their respective dates, such reports and statements (excluding
any
information therein provided by Enerplus, as to which Focus and
FET
Resources make no representation) will not contain any untrue statement
of
a material fact or omit to state a material fact required to be
stated
therein or necessary to make the statements therein, in light of
the
circumstances in which they are made, not misleading and will comply
in
all material respects with all Applicable Laws.
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|
(m)
|
No
Material Adverse
Change. Since January 1, 2007, other than as disclosed
in the Public Record: (i) Focus has conducted its business only
in the
ordinary and normal course, (ii) no liability or obligation of
any nature
(whether absolute, accrued, contingent or otherwise) material to
Focus,
has been incurred other than in the ordinary course of business,
and (iii)
there has not been any Material Adverse Change in respect of Focus.
|
|
(n)
|
Books
and
Records. The records and minute books of Focus and its
Subsidiaries have been maintained substantially in accordance with
all
Applicable Laws and are complete and accurate in all material respects.
|
|
(o)
|
Reports. As
of their respective dates: (i) the Focus Financial Statements and
the
Profico Financial Statements; (ii) Focus' Annual Information Form
dated
March 21, 2007 (including all documents incorporated by reference
therein); (iii) Focus' information circular and proxy statement
dated
March 15, 2007 for the annual and special meeting of Focus Unitholders
held on May 17, 2007; (iv) all Focus press releases, material change
reports, business acquisition reports or similar documents filed
with the
Securities Authorities since January 1, 2007; and (v) all prospectuses
or
other offering documents used by Focus in the offering of its securities
or filed with the Securities Authorities since January 1, 2007,
did not
contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances in which they
were made,
not misleading and complied in all material
|
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39
-
|
|
respects
with all Applicable Laws. Since January 1, 2007, Focus has not
filed any material change reports which continue to be
confidential. The Focus Financial Statements, the Profico
Financial Statements and other financial statements of Focus
included or
incorporated by reference in such forms, statements, prospectuses
and
other offering documents were prepared in accordance with GAAP,
and
present fairly in accordance with GAAP the consolidated financial
position, results of operations and changes in financial position
of Focus
on a consolidated basis as of the dates thereof and for the periods
indicated therein (subject, in the case of any unaudited interim
financial
statements, to normal year-end audit adjustments) and reflect
appropriate
and adequate reserves in respect of contingent liabilities, if
any, of
Focus on a consolidated basis. There has been no material
change in Focus' accounting policies, except as described in
the notes to
the Focus Financial Statements, since January 1, 2006.
|
|
(p)
|
Absence
of Undisclosed
Liabilities. Focus has no material liabilities of any
nature (matured or unmatured, fixed or contingent), other than:
|
|
|
(i)
|
those
set forth or adequately provided for in the most recent balance
sheet and
associated notes thereto included in the Focus Financial Statements
(the
"Focus Balance
Sheet");
|
|
|
(ii)
|
those
incurred in the ordinary course of business and not required to
be set
forth in the Focus Balance Sheet under GAAP;
|
|
|
(iii)
|
those
incurred in the ordinary course of business since the date of the
Focus
Balance Sheet and consistent with past practice; and
|
|
|
(iv)
|
those
incurred in connection with the execution of this Agreement;
|
which
would reasonably be expected to have a Material Adverse Effect on
Focus.
|
(q)
|
Environmental. Except
as disclosed in the Public Record, there have not occurred any
material
spills, emissions or pollution on any property of Focus, nor has
Focus
been subject to any stop orders, control orders, clean-up orders
or
reclamation orders under applicable Environmental Laws, any of
which might
reasonably be expected to have a Material Adverse Effect on
Focus. All operations of Focus have been and are now being
conducted in compliance with all applicable Environmental Laws,
except
where the failure to be in compliance would not reasonably be expected
to
have a Material Adverse Effect on Focus. Focus is not subject
to nor are Focus or FET Resources aware of:
|
|
|
(i)
|
any
proceeding, application, order or directive which relates to
environmental, health or safety matters, and which may require
any
material work, repairs, construction, or expenditures; or
|
|
|
(ii)
|
any
demand or notice with respect to the breach of any Environmental
Laws
applicable to Focus, including, without limitation, any regulations
respecting the use, storage, treatment, transportation, or disposition
of
any Hazardous Substances,
|
which
would reasonably be expected to have a Material Adverse Effect on
Focus.
|
(r)
|
Title. Although
they do not warrant title, neither Focus nor FET Resources has
any
knowledge or is aware of any defects, failures or impairments in
the title
of Focus to its assets, whether or not an action, suit, proceeding
or
inquiry is pending or threatened or whether or not discovered by
any third
party, which in aggregate could have a Material Adverse Effect
on: (i) the
quantity and pre-tax present worth values of such assets, (ii)
the current
production volumes of Focus, or (iii) the current consolidated
cash flow
of Focus.
|
-
40
-
|
(s)
|
Licences. Except
as disclosed in the Public Record, Focus has obtained and is in
compliance
with all licences, permits, certificates, consents, orders, grants
and
other authorizations of or from any Governmental Entity necessary
to
conduct its businesses as they are now being or are proposed to
be
conducted, other than such licences, permits, certificates, consents,
orders, grants and other authorizations the absence of which would
not
have a Material Adverse Effect on Focus.
|
|
(t)
|
Compliance
with
Laws. Focus has complied with and is in compliance with
all Laws applicable to the operation of its business, except where
such
non-compliance would not have a Material Adverse Effect on the
business,
affairs, operations, assets, prospects or financial condition of
Focus or
on the ability of Focus to consummate the Arrangement.
|
|
(u)
|
Long
Term and
Derivative Transactions. Except as disclosed in the
Public Record or as disclosed to Enerplus in the Focus Disclosure
Letter,
Focus has no obligations or liabilities, direct or indirect, vested
or
contingent in respect of any rate swap transactions, basis swaps,
forward
rate transactions, commodity swaps, commodity options, equity or
equity
index swaps, equity or equity index options, bond options, interest
rate
options, foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, production
sales
transactions having terms greater than 90 days or any other similar
transactions (including any option with respect to any of such
transactions) or any combination of such transactions.
|
|
(v)
|
Fairness
Opinion. The Focus Board received a verbal opinion on
December 2, 2007 from Scotia Waterous Inc. that the consideration
to be
received by Focus Securityholders pursuant to the Arrangement is
fair,
from a financial point of view, to the Focus Securityholders, and
expects
to receive a written fairness opinion to the same effect prior
to the
mailing of the Focus Information Circular for inclusion therein
(the
"Focus Fairness
Opinion").
|
|
(w)
|
Employee
Benefit
Plans. Focus has made available to Enerplus prior to the
date hereof true, complete and correct copies of each employee
benefits
plan (the "Focus Employee
Plans") covering active, former or retired employees of Focus,
any
related trust agreement, annuity or insurance contract or other
funding
vehicle, and: (i) each Focus Employee Plan has been maintained
and
administered in material compliance with its terms and is, to the
extent
required by Applicable Law or contract, fully funded without having
any
deficit or unfunded actuarial liability or adequate provision has
been
made therefor, (ii) all required material employer contributions
under any
such plans have been made and the applicable funds have been funded
in
accordance with the terms thereof, (iii) each Focus Employee Plan
that is
required or intended to be qualified under Applicable Law or registered
or
approved by a governmental agency or authority has been so qualified,
registered or approved by the appropriate governmental agency or
authority, and nothing has occurred since the date of the last
qualification, registration or approval to materially adversely
affect, or
cause, the appropriate governmental agency or authority to revoke
such
qualification, registration or approval, (iv) to the knowledge
of Focus
and FET Resources, there are no pending or anticipated material
claims
against or otherwise involving any of the Focus Employee Plans
and no
suit, action or other litigation (excluding claims for benefits
incurred
in the ordinary course of Focus Employee Plan activities) has been
brought
against or with respect to any Focus Employee Plan, (v) all material
contributions, reserves or premium payments required to be made
to the
Focus Employee Plans have been made or provided for, and (vi) Focus
has no
material obligations for retiree health and life benefits under
any Focus
Employee Plan.
|
-
41
-
|
(x)
|
Insurance. Policies
of insurance are in force as of the date hereof naming Focus as
an insured
that adequately cover all risks as are customarily covered by oil
and gas
producers in the industry in which Focus operates. All such
policies shall remain in force and effect and shall not be cancelled
or
otherwise terminated as a result of the transactions contemplated
by this
Agreement.
|
|
(y)
|
Indebtedness
To and By
Officers, Directors and Others. Focus is not indebted to
any of the directors, officers, employees or consultants or any
of their
respective associates or affiliates or other parties not at arm's
length
to Focus, except for amounts due as normal compensation or reimbursement
of ordinary business expenses, nor is there any indebtedness owing
by any
such parties to Focus.
|
|
(z)
|
No
Limitation. Except as disclosed in writing to Enerplus
and EnerMark in the Focus Disclosure Letter, there is no non-competition,
exclusivity or other similar agreement, commitment or understanding
in
place to which Focus is a party or by which it is otherwise bound
that
would now or hereafter in any way limit the business or operations
of
Focus in a particular manner or to a particular locality or geographic
region or for a limited period of time, and the execution, delivery
and
performance of this Agreement does not and will not result in the
restriction of Focus from engaging in this business or from competing
with
any Person or in any geographic area.
|
|
(aa)
|
Information
to
Independent Engineers. Focus and FET Resources have no
reason to believe that: (i) the report prepared by Paddock dated
January 25, 2007 and effective as at December 31, 2006,
evaluating certain of the crude oil, natural gas liquids and natural
gas
reserves and future net production revenues attributable to certain
of the
properties of Focus as of December 31, 2006; (ii) the report prepared
by
GLJ dated February 6, 2007 and effective as at December 31, 2006,
evaluating certain of the crude oil, natural gas liquids and natural
gas
reserves and future net production revenues attributable to certain
of the
properties of Focus as of December 31, 2006; and (iii) the report
prepared
by Paddock dated November 27, 2007 and effective November 30, 2007,
evaluating the crude oil, natural gas liquids and natural gas reserves
and
future net production revenues attributable to certain of the properties
of Focus as of November 30, 2007 (collectively, the "Focus Reserve
Reports")
and, if applicable, any updates to such reports or any other reserve
evaluation reports which may be, or be deemed to be, included or
incorporated by reference in the Focus Information Circular, whether
in
addition to or as a replacement for the Focus Reserve Reports,
were not
accurate in all material respects as at the effective date of such
reports
and, except for any impact of changes in commodity prices, which
may or
may not be material, Focus and FET Resources have no knowledge
of a
Material Adverse Change in the production, costs, price, reserves,
estimates of future net production revenues or other relevant information
from that disclosed in those reports. Focus has provided to GLJ
and Paddock, as applicable, all material information concerning
land
descriptions, well data, facilities and infrastructure, ownership
and
operations, future development plans and historical technical and
operating data respecting the principal oil and gas assets of Focus,
in
each case as at the effective date of such reports and, in particular,
all
material information respecting Focus' interests in its principal
oil and
gas assets and royalty burdens and net profits interest burdens
thereon
and such information was accurate and correct in all material respects
as
at the respective dates thereof and did not omit any information
necessary
to make any such information provided not misleading as at the
respective
dates thereof and there has been no Material Adverse Change in
any of the
material information so provided since the dates thereof.
|
-
42
-
|
(bb)
|
No
Insider
Rights. No director, officer, insider or other party not
at arm's length to Focus has any right, title or interest in (or
the right
to acquire any right, title or interest in) any royalty interest,
participation interest or any other interest whatsoever, in any
properties
of Focus, other than as a limited partner of Range Royalty Limited
Partnership.
|
|
(cc)
|
Debt. As
at December 2, 2007, Focus' debt (being Focus total indebtedness,
including long-term debt, bank debt and working capital deficiency,
but
excluding hedging obligations), did not exceed $310 million.
|
|
(dd)
|
No
Defaults under
Leases and Agreements.
|
|
|
(i)
|
Focus
has not received notice of any default under any of the leases
and other
title and operating documents or any other agreement or instrument
pertaining to Focus' oil and gas assets to which Focus is a party
or by or
to which Focus or any such assets are bound or subject except to
the
extent that such defaults would not in the aggregate have a Material
Adverse Effect on Focus.
|
|
|
(ii)
|
To
its knowledge:
|
|
|
(A)
|
Focus
is in good standing under all, and is not in default under any;
and
|
|
|
(B)
|
there
is no existing condition, circumstance or matter which constitutes
or
which, with the passage of time or the giving of notice, would
constitute
a default under any,
|
leases
and other title and operating documents or any other agreements and instruments
pertaining to its oil and gas assets to which it is a party or by or to which
it
or such assets are bound or subject and, to their knowledge, all such leases,
title and operating documents and other agreements and instruments are in
good
standing and in full force and effect and none of the counterparties to such
leases, title and operating documents and other agreements and instruments
is in
default thereunder except to the extent that such defaults would not in the
aggregate have a Material Adverse Effect on Focus.
|
(ee)
|
No
Encumbrances. Focus has not encumbered or alienated its
interest in its oil and gas assets or agreed to do so and such
assets are
free and clear of all encumbrances except for or pursuant to encumbrances
securing the Focus Credit Facilities and derivative transactions
with the
lenders (and other affiliates) thereunder or encumbrances disclosed
in the
Public Record, any governmental registry (including the personal
property
registry in British Columbia, Alberta or Saskatchewan) or those
arising in
the ordinary course of business, which are not material in the
aggregate.
|
|
(ff)
|
No
Reduction of
Interests. Except as is reflected in the Focus Reserve
Reports, none of Focus' oil and gas assets are subject to reduction
by
reference to payout of or production penalty on any well or otherwise
or
to change to an interest of any other size or nature by virtue
of or
through any right or interest granted by, through or under Focus
except to
the extent that such reduction or change to an interest would not
in the
aggregate have a Material Adverse Effect on Focus.
|
|
(gg)
|
Royalties,
Rentals and
Taxes Paid. All royalties and rentals payable on or
before the date hereof under the leases and other title and operating
documents pertaining to Focus' oil and gas assets and all ad valorem,
property, production, severance and similar taxes and assessments
based
upon or measured by the ownership of such assets or the production
of
petroleum substances derived therefrom or allocated thereto or
the
proceeds of sales thereof payable on or before the date hereof
have been
properly paid in full and in a timely manner except to the extent
that
such non-payment would not in the aggregate have a Material Adverse
Effect
on Focus.
|
-
43
-
|
(hh)
|
Production
Allowables
and Production Penalties.
|
|
|
(i)
|
None
of the xxxxx in which Focus holds an interest has been produced
in excess
of applicable production allowables imposed by any Applicable Law
or any
governmental authority and Focus has no knowledge of any impending
change
in production allowables imposed by any Applicable Law or any governmental
authority that may be applicable to any of the xxxxx in which it
holds an
interest, other than changes of general application in the jurisdiction
in
which such xxxxx are situate except to the extent that such non
compliance
or changes would not in the aggregate have a Material Adverse Effect
on
Focus.
|
|
|
(ii)
|
Focus
has not received notice of any production penalty or similar production
restriction of any nature imposed or to be imposed by any governmental
authority, including gas-oil ratio, off-target and overproduction
penalties imposed by the Alberta Energy and Utilities Board, and,
to its
knowledge, none of the xxxxx in which it holds an interest is subject
to
any such penalty or restriction except to the extent that any such
penalty
or restriction would not in the aggregate have a Material Adverse
Effect
on Focus.
|
|
(ii)
|
Operation
and
Condition of Xxxxx. All xxxxx in which Focus holds an
interest:
|
|
|
(i)
|
for
which Focus was or is operator, were or have been drilled and,
if and as
applicable, completed, operated and abandoned in accordance with
good and
prudent oil and gas industry practices in Canada and all Applicable
Law;
and
|
|
|
(ii)
|
for
which Focus was not or is not operator, to its knowledge, were
or have
been drilled and, if and as applicable, completed, operated and
abandoned
in accordance with good and prudent oil and gas industry practices
in
Canada and all Applicable Law;
|
except,
in either case, to the extent that such non-compliance with prudent oil and
gas
industry practices or Applicable Law would not in the aggregate have a Material
Adverse Effect on Focus.
|
(jj)
|
Operation
and
Condition of Tangibles. Focus' tangible depreciable
property used or intended for use in connection with its oil and
gas
assets:
|
|
|
(i)
|
for
which Focus was or is operator, was or has been constructed, operated
and
maintained in accordance with good and prudent oil and gas industry
practices in Canada and all Applicable Law during all periods in
which
Focus was operator thereof and is in good condition and repair,
ordinary
wear and tear excepted, and is useable in the ordinary course of
business;
and
|
|
|
(ii)
|
for
which Focus was not or is not operator, to its knowledge, was or
has been
constructed, operated and maintained in accordance with good and
prudent
oil and gas industry practices in Canada and all Applicable Law
during all
periods in which Focus was not operator thereof and is in good
condition
and repair, ordinary wear and tear excepted, and is useable in
the
ordinary course of business;
|
-
44
-
except
to
the extent that such non-compliance with prudent oil and gas industry practices
or Applicable Law would not in the aggregate have a Material Adverse Effect
on
Focus.
|
(kk)
|
Outstanding
AFEs. There are no outstanding authorizations for
expenditure pertaining to any of Focus' oil and gas assets or any
other
commitments, approvals or authorizations pursuant to which an expenditure
may be required to be made in respect of such assets after the
date of the
most recent Focus Financial Statements in excess of $3.0 million for
each such commitment, approval or authorization other than pursuant
to the
2007 capital budget disclosed in writing to Enerplus prior to the
date
hereof.
|
|
(ll)
|
Brokers
and
Finders. Focus has not retained nor will it retain any
financial advisor, broker, agent or finder or pay, or agree to
pay any
financial advisor, broker, agent or finder on account of this Agreement,
any transaction contemplated hereby or any transaction presently
ongoing
or contemplated, except for those advisors which have been retained
by
Focus as financial or strategic advisors in connection with certain
matters including the transactions contemplated hereby, as publicly
disclosed, copies of which engagement agreements have been provided
to Enerplus. After
the payment
of such financial obligations to Focus' financial advisors, Focus
will not
have any continuing obligations to such advisors other than those
related
to indemnification, confidentiality and the payment of expenses.
|
|
(mm)
|
Employment
and Officer
Obligations. Other than the Focus Employment Agreements,
FET Resources' existing employee health and benefit plans and the
Focus
Incentive Plans, there are no other material employment or consulting
services agreements, termination, severance and retention plans
or
policies of Focus. The obligations of Focus under the Focus
Employment Agreements and all other employment or consulting services
agreements, termination, severance plans or policies for severance,
termination or bonus payments or any other payments related to
any Focus
incentive plan, arising out of or in connection with the Arrangement
(but
for greater certainty, not including any severance amounts which
may be
payable in accordance with Section 2.4(b)) shall not exceed the
amounts
set forth in the Focus Disclosure Letter, which amounts represent
Focus'
bona fide, good
faith estimate of such amounts based on the assumptions contained
therein.
|
|
(nn)
|
Confidentiality
Agreements. All agreements entered into by Focus with
persons other than Enerplus regarding the confidentiality of information
provided to such persons or reviewed by such persons with respect
to the
sale of Focus or a substantial portion of its assets or any other
business
combination or similar transaction with another party are in substantially
the form of the Confidentiality Agreement and Focus has not waived
the
standstill or other provisions of any of such agreements.
|
|
(oo)
|
Outstanding
Acquisitions. Except as disclosed in writing to Enerplus
prior to the date hereof, Focus has no rights to purchase assets,
properties or undertakings of third parties under any agreements
to
purchase that have not closed.
|
|
(pp)
|
Mutual
Fund
Trust. Focus is a "mutual fund trust" and a "unit trust"
within the meaning of the ITA.
|
|
(qq)
|
Place
of Principal
Offices. The principal offices of Focus are not located
within the United States.
|
-
45
-
|
(rr)
|
Location
of Assets and
U.S. Sales. Focus and its Subsidiaries, taken as a
whole, currently hold less than U.S.$59.8 million of assets (on
a fair
market value basis) located in the United States and had sales
in or into
the United States of less than U.S.$59.8 million in its most recently
completed fiscal year.
|
|
(ss)
|
Foreign
Private
Issuer. Focus is a "foreign private issuer" within the
meaning of Rule 405 of Regulation C adopted by the SEC under the
U.S.
Securities Act.
|
|
(tt)
|
Investment
Company and
PFIC. Focus is not registered and, to the best of its
knowledge, is not required to be registered as an investment company
pursuant to the United States Investment Company
Act of
1940, as amended, and Focus was not, in 2006 and prior years,
and
does not expect to be, in 2007, a "passive foreign investment company"
for
the purposes of United States tax laws.
|
|
(uu)
|
Board
Approval. The Focus Board has unanimously approved the
Arrangement and approved this Agreement, has unanimously determined
that
the Arrangement and this Agreement are in the best interests of
Focus and
the Focus Securityholders, and has unanimously determined that
the
Arrangement is fair to Focus Securityholders and has resolved to
unanimously recommend approval of the Arrangement by Focus
Securityholders.
|
|
(vv)
|
Disclosure. To
the knowledge of Focus, Focus has not withheld from Enerplus any
material
information or documents concerning Focus or any of its Subsidiaries
or
their respective assets or liabilities during the course of Enerplus'
review of Focus and its assets. No representation or warranty
contained herein and no statement contained in any schedule or
other
disclosure document provided or to be provided to Enerplus by Focus
pursuant hereto (including without limitation, any matter disclosed
by
Focus in the Focus Disclosure Letter) contains or will contain
any untrue
statement of a material fact or omits to state a material fact
which is
necessary in order to make the statements herein or therein not
misleading.
|
|
4.3
|
Privacy
Issues
|
|
(a)
|
For
the purposes of this Section 4.3, the following definitions shall
apply:
|
|
|
(i)
|
"applicable
law" means,
in relation to any Person, transaction or event, all applicable
provisions
of Laws by which such Person is bound or having application to
the
transaction or event in question, including applicable privacy
laws;
|
|
|
(ii)
|
"applicable
privacy laws"
means any and all Applicable Laws relating to privacy and the collection,
use and disclosure of Personal Information in all applicable
jurisdictions, including but not limited to the Personal Information
Protection and Electronic Documents Act (Canada) and/or any
comparable provincial law including the Personal Information
Protection Act (Alberta);
|
|
|
(iii)
|
"authorized
authority"
means, in relation to any Person, transaction or event, any (a)
federal,
provincial, municipal or local governmental body (whether administrative,
legislative, executive or otherwise), both domestic and foreign,
(b)
agency, authority, commission, instrumentality, regulatory body,
court,
central bank or other entity exercising executive, legislative,
judicial,
taxing, regulatory or administrative powers or functions of or
pertaining
to government, (c) court, arbitrator, commission or body exercising
judicial, quasi-judicial, administrative or similar functions,
and (d)
other body or entity created under the authority of or otherwise
subject
to the jurisdiction of any of the foregoing, including any stock
or other
securities exchange, in each case having jurisdiction over such
Person,
transaction or event; and
|
-
46
-
|
|
(iv)
|
"Personal
Information"
means information about an individual transferred to a Party by
another
Party in accordance with this Agreement and/or as a condition of
the
Arrangement.
|
|
(b)
|
The
Parties hereto acknowledge that they are responsible for compliance
at all
times with applicable privacy laws which govern the collection,
use and
disclosure of Personal Information acquired by or disclosed to
either
Party pursuant to or in connection with this Agreement (the "Disclosed Personal
Information").
|
|
(c)
|
Neither
Party shall use the Disclosed Personal Information for any purposes
other
than those related to the performance of this Agreement and the
completion
of the Arrangement.
|
|
(d)
|
Each
Party acknowledges and confirms that the disclosure of Personal
Information is necessary for the purposes of determining if the
Parties
shall proceed with the Arrangement, and that the disclosure of
Personal
Information relates solely to the carrying on of the business and
the
completion of the Arrangement.
|
|
(e)
|
Each
Party acknowledges and confirms that it has and shall continue
to employ
appropriate technology and procedures in accordance with applicable
law to
prevent accidental loss or corruption of the Disclosed Personal
Information, unauthorized input or access to the Disclosed Personal
Information, or unauthorized or unlawful collection, storage, disclosure,
recording, copying, alteration, removal, deletion, use or other
processing
of such Disclosed Personal Information.
|
|
(f)
|
Each
Party shall at all times keep strictly confidential all Disclosed
Personal
Information provided to it, and shall instruct those employees
or advisors
responsible for processing such Disclosed Personal Information
to protect
the confidentiality of such information in a manner consistent
with the
Parties' obligations hereunder. Each Party shall ensure that access
to the
Disclosed Personal Information shall be restricted to those employees
or
advisors of the respective Party who have a bona fide need to access
such
information in order to complete the Arrangement.
|
|
(g)
|
Each
Party shall promptly notify the Other Party to this Agreement of
all
inquiries, complaints, requests for access, and claims of which
the Party
is made aware in connection with the Disclosed Personal Information.
The
Parties shall fully co-operate with one another, with the persons
to whom
the Personal Information relates, and any authorized authority
charged
with enforcement of applicable privacy laws, in responding to such
inquiries, complaints, requests for access, and claims.
|
|
(h)
|
Upon
the expiry or termination of this Agreement, or otherwise upon
the
reasonable request of either Party, the counterparty shall forthwith
cease
all use of the Personal Information acquired by the counterparty
in
connection with this Agreement and will return to the Party or,
at the
Party's request, destroy in a secure manner, the Disclosed Personal
Information (and any copies).
|
-
47
-
ARTICLE
5
CONDITIONS
PRECEDENT
|
5.1
|
Mutual
Conditions Precedent
|
The
respective obligations of the Parties to consummate the transactions
contemplated hereby, and in particular the Arrangement, are subject to the
satisfaction, on or before the Effective Date or such other time specified,
of
the following conditions, any of which may be waived by the mutual consent
of
such Parties without prejudice to their right to rely on any other of such
conditions:
|
(a)
|
on
or prior to January 22, 2008, the Interim Order shall have been
granted in form and substance satisfactory to each of Enerplus
and Focus,
acting reasonably, and such order shall not have been set aside
or
modified in a manner unacceptable to Enerplus and Focus, acting
reasonably, on appeal or otherwise;
|
|
(b)
|
the
Arrangement Resolution shall have been passed by the Focus
Securityholders, voting together as a single class, on or prior
to
February 28, 2008 in accordance with the Interim Order and in form
and substance satisfactory to each of Enerplus and Focus, acting
reasonably;
|
|
(c)
|
in
the event that dissent rights are given to Focus Securityholders
under the
terms of the Interim Order, holders of not greater than 5% of the
aggregate outstanding Focus Securities shall have validly exercised
rights
of dissent in respect of the Arrangement that have not been withdrawn
as
of the Effective Date;
|
|
(d)
|
on
or prior to February 28, 2008, the Final Order shall have been
granted in form and substance satisfactory to Enerplus and Focus,
acting
reasonably;
|
|
(e)
|
the
Articles of Arrangement to be filed with the Registrar in accordance
with
the Arrangement shall be in form and substance satisfactory to
each of
Enerplus and Focus, acting reasonably;
|
|
(f)
|
the
Arrangement shall have become effective on or prior to February 28,
2008;
|
|
(g)
|
either
one or more of the following shall have occurred:
|
|
|
(i)
|
the
relevant waiting period in Section 123 of the Competition Act shall
have
expired and there shall be no threatened or actual application
by the
Commissioner for an order under Section 92 or 100 of the Competition
Act;
|
|
|
(ii)
|
the
Commissioner of Competition appointed under the Competition Act
(the
"Commissioner")
shall have issued a "no action letter" under Section 123 of the
Competition Act satisfactory to each of Enerplus and Focus, acting
reasonably, indicating that the Commissioner has determined not
to make,
at that time, an application for an order under Section 92 of the
Competition Act and any terms and conditions attached to any such
letter
shall be acceptable to each of Enerplus and Focus, acting reasonably;
or
|
|
|
(iii)
|
the
Commissioner shall have issued an advance ruling certificate pursuant
to
Section 102 of the Competition Act;
|
|
(h)
|
in
addition to the approval required by Section 5.1(g), all other
required
domestic and foreign regulatory, governmental (including, without
limitation and to the extent required, approval under the Investment
Canada Act) and third party approvals and consents in respect of
the
completion of the Arrangement shall have been obtained on terms
and
conditions satisfactory to Enerplus and Focus, each acting reasonably,
including, without limitation, conditional approval to the listing
of the
Enerplus Units issuable or to be made issuable pursuant to the
Arrangement
on the TSX and approval, subject to official notice of issuance,
of the
listing of such securities on the NYSE, and all applicable domestic
and
foreign statutory and regulatory waiting periods shall have expired
or
have been terminated and no unresolved material objection or opposition
shall have been filed, initiated or made during any applicable
statutory
or regulatory period;
|
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48
-
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(i)
|
no
act, action, suit, proceeding, objection or opposition shall have
been
threatened or taken before or by any domestic or foreign court,
tribunal
or Governmental Entity or other regulatory or administrative agency
or
commission by any elected or appointed public official or private
person
in Canada or elsewhere, whether or not having the force of Law,
and no
Law, regulation, policy, judgment, decision, order, ruling or directive
(whether or not having the force of Law) shall have been proposed,
enacted, promulgated, amended or applied, which in the sole judgment
of
Enerplus or Focus (as applicable), acting reasonably, in either
case has
had or, if the Arrangement was consummated, would result in a Material
Adverse Change in the affairs, operations or business of Focus
or
Enerplus, respectively, or would have a Material Adverse Effect
on the
ability of the Parties to complete the Arrangement;
|
|
(j)
|
the
Parties shall be satisfied, acting reasonably, that each of Focus
and
Enerplus is a "mutual fund trust" within the meaning of the ITA
immediately prior to the time of completion of the Arrangement,
and the
completion of the Arrangement shall not cause Enerplus to cease
to be a
"mutual fund trust" within the meaning of the ITA, cause the value
of the
TCP of Enerplus to exceed 7% of the aggregate fair market value
of the
issued and outstanding Enerplus Units at the Effective Time or
cause the
tax measures announced by the Minister of Finance (Canada) on October
31,
2006 and contained in Xxxx C-52 which received royal assent on
June 22,
2007 to apply to Enerplus or to any direct or indirect Subsidiary
trust or
partnership of Focus before 2011 or to Focus for any period prior
to
completion of the Arrangement.
|
The
foregoing conditions are for the mutual benefit of Focus and Enerplus and
may be
asserted by Focus and Enerplus regardless of the circumstances and may be
waived
by Focus and Enerplus (with respect to such Party) in their sole discretion,
in
whole or in part, at any time and from time to time without prejudice to
any
other rights which Focus or Enerplus may have.
|
5.2
|
Additional
Conditions to Obligations of Enerplus and EnerMark
|
The
obligations of Enerplus and EnerMark to consummate the transactions contemplated
hereby, and in particular the Arrangement, is subject to the satisfaction,
on or
before the Effective Date or such other time specified, of the following
conditions:
|
(a)
|
Focus
shall have mailed the Focus Information Circular and other documentation
required in connection with the Focus Meeting on or before
January 22, 2008;
|
|
(b)
|
Focus
shall have furnished Enerplus with:
|
|
|
(i)
|
certified
copies of the resolutions duly passed by the Focus Board approving
this
Agreement and the consummation of the transactions contemplated
hereby;
and
|
|
|
(ii)
|
certified
copies of the resolutions of Focus Securityholders duly passed
at the
Focus Meeting, approving the Arrangement Resolution;
|
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49
-
|
(c)
|
the
representations and warranties made by Focus in this Agreement
shall be
true and correct as of the Effective Date as if made on and as
of such
date (except to the extent such representations and warranties
speak as of
an earlier date or except as affected by transactions contemplated
or
permitted by this Agreement, except where the failure of such
representations and warranties to be true and correct, individually
or in
the aggregate, would not result or would not reasonably be expected
to
result in a Material Adverse Change in respect of Focus or would
not, or
would not reasonably be expected to, materially impede completion
of the
Arrangement, and Focus shall have provided to Enerplus a certificate
of
two senior officers certifying such accuracy on the Effective Date;
provided that Focus shall be entitled to cure any breach of a
representation and warranty within five Business Days after receipt
of
written notice thereof from Enerplus (except that no cure period
shall be
provided for a breach which by its nature cannot be cured and,
in no
event, shall any cure period extend beyond February 28, 2008);
|
|
(d)
|
no
Material Adverse Change shall occur in the affairs, operations
or business
of Focus from and after the date hereof and prior to the Effective
Date,
and no Material Adverse Change in the financial condition of Focus
shall
have occurred prior to the date hereof or shall occur from and
after the
date hereof and prior to the Effective Date from that reflected
in the
Focus Financial Statements;
|
|
(e)
|
Focus
shall not be in material breach of its obligations under this Agreement,
which breach, individually or in the aggregate, would or would
reasonably
be expected to cause a Material Adverse Change in respect of Focus
or
would, or would reasonably be expected to, materially impede the
completion of the Arrangement;
|
|
(f)
|
Focus
shall have complied in all material respects with its covenants
herein,
except where the failure to comply in all material respects with
its
covenants, individually or in the aggregate, would not result or
would not
reasonably be expected to result in a Material Adverse Change in
respect
of Focus or would not, or would not reasonably be expected to,
materially
impede completion of the Arrangement, and Focus shall have provided
to
Enerplus a certificate of two senior officers certifying compliance
with
such covenants; provided that Focus shall be entitled to cure any
breach
of a covenant within five Business Days after receipt of written
notice
thereof from Enerplus (except that no cure period shall be provided
for a
breach which by its nature cannot be cured and, in no event, shall
any
cure period extend beyond February 28, 2008);
|
|
(g)
|
Enerplus
and EnerMark shall have: (i) received resignations from the directors
and
officers of FET Resources, which resignations shall be effective
immediately following the Effective Time; and (ii) provided the
cash Focus
Change of Control Payments described in Section 2.4(d)(ii) have
been made
as contemplated therein, received releases executed by the directors
and
officers of FET Resources, which releases shall be delivered and
effective
immediately following the Effective Time and shall be in substantially
the
forms thereof appended to the Focus Employment Agreements;
|
|
(h)
|
each
of the current officers of FET Resources shall have entered into
consulting agreements with EnerMark on terms satisfactory to EnerMark,
acting reasonably, under which such officers of FET Resources shall
provide transitional services to EnerMark on a consulting basis
until
March 31, 2008;
|
-
50
-
|
(i)
|
the
aggregate cost amount of assets held directly by Focus, for the
purpose of
the ITA, shall not be less than $1.1 billion; and
|
|
(j)
|
as
at December 2, 2007, Focus' Debt did not exceed
$310 million. "Focus' Debt" means
total
indebtedness, including long-term debt, bank debt and working capital
deficiency, but excluding hedging obligations.
|
The
conditions in this Section 5.2 are for the exclusive benefit of Enerplus
and
EnerMark and may be asserted by Enerplus and EnerMark regardless of the
circumstances or may be waived by Enerplus and EnerMark in their sole
discretion, in whole or in part, at any time and from time to time without
prejudice to any other rights which Enerplus and EnerMark may have.
|
5.3
|
Additional
Conditions to Obligations of Focus and FET Resources
|
The
obligations of Focus and FET Resources to consummate the transactions
contemplated hereby, and in particular the Arrangement, is subject to the
satisfaction, on or before the Effective Date or such other time specified,
of
the following conditions:
|
(a)
|
Enerplus
shall have furnished Focus with certified copies of the resolutions
duly
passed by the Enerplus Board approving this Agreement and the consummation
of the transactions contemplated hereby;
|
|
(b)
|
the
representations and warranties made by Enerplus in this Agreement
shall be
true and correct as of the Effective Date as if made on and as
of such
date (except to the extent such representations and warranties
speak as of
an earlier date or except as affected by transactions contemplated
or
permitted by this Agreement, except where the failure of such
representations and warranties to be true and correct, individually
or in
the aggregate, would not result or would not reasonably be expected
to
result in a Material Adverse Change in respect of Enerplus or would
not,
or would not reasonably be expected to, materially impede completion
of
the Arrangement, and Enerplus shall have provided to Focus a certificate
of two senior officers certifying such accuracy on the Effective
Date;
provided that Enerplus shall be entitled to cure any breach of
a
representation and warranty within five Business Days after receipt
of
written notice thereof from Focus (except that no cure period shall
be
provided for a breach which by its nature cannot be cured and,
in no
event, shall any cure period extend beyond February 28, 2008);
|
|
(c)
|
no
Material Adverse Change shall occur in the affairs, operations
or business
of Enerplus from and after the date hereof and prior to the Effective
Date, and no Material Adverse Change in the financial condition
of
Enerplus shall have occurred prior to the date hereof or shall
occur from
and after the date hereof and prior to the Effective Date from
that
reflected in the Enerplus Financial Statements;
|
|
(d)
|
Enerplus
shall not be in material breach of its obligations under this Agreement,
which breach, individually or in the aggregate, would or would
reasonably
be expected to cause a Material Adverse Change in respect of Enerplus
or
would, or would reasonably be expected to, materially impede the
completion of the Arrangement;
|
|
(e)
|
Enerplus
shall have complied in all material respects with its covenants
herein,
except where the failure to comply in all material respects with
its
covenants, individually or in the aggregate, would not result or
would not
reasonably be expected to result in a Material Adverse Change in
respect
of Enerplus or would not, or would not reasonably be expected to,
materially impede completion of the Arrangement, and Enerplus shall
have
provided to Focus a certificate of two senior officers certifying
compliance with such covenants; provided that Enerplus shall be
entitled
to cure any breach of a covenant within five Business Days after
receipt
of written notice thereof from Focus (except that no cure period
shall be
provided for a breach which by its nature cannot be cured and,
in no
event, shall any cure period extend beyond February 28, 2008); and
|
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51
-
|
(f)
|
the
Arrangement shall be completed in a manner which will result in
a
tax-deferred exchange of Focus Units for Enerplus Units for Canadian
and
United States income tax purposes, other than for those Focus Unitholders
who validly exercise rights of dissent in relation to the Arrangement
and
those Focus Unitholders who elect to have the exchange of their
Focus
Units for Enerplus Units pursuant to the Arrangement carried out
on a
taxable basis for Canadian federal income tax purposes.
|
The
conditions in this Section 5.3 are for the exclusive benefit of Focus and
FET
Resources and may be asserted by Focus and FET Resources regardless of the
circumstances or may be waived by Focus and FET Resources in their sole
discretion, in whole or in part, at any time and from time to time without
prejudice to any other rights which Focus and FET Resources may
have.
|
5.4
|
Notice
and Effect of Failure to Comply with Conditions
|
|
(a)
|
Each
of Enerplus and Focus shall give prompt notice to the other of
the
occurrence, or failure to occur, at any time from the date hereof
to the
Effective Date of any event or state of facts which occurrence
or failure
would, or would be likely to: (i) cause any of the representations
or
warranties of any Party contained herein to be untrue or inaccurate
in any
material respect, or (ii) result in the failure to comply with
or satisfy
any covenant, condition or agreement to be complied with or satisfied
by
any Party hereunder; provided, however, that no such notification
will
affect the representations or warranties of the Parties or the
conditions
to the obligations of the Parties hereunder.
|
|
(b)
|
If
any of the conditions precedents set forth in Sections 5.1, 5.2
or 5.3
hereof shall not be complied with or waived by the Party or Parties
for
whose benefit such conditions are provided on or before the date
required
for the performance thereof, then a Party for whose benefit the
condition
precedent is provided may, rescind and terminate this Agreement
as
provided in Section 8.1 hereof; provided that, prior to the filing
of the
Articles of Arrangement for the purpose of giving effect to the
Arrangement, the Party intending to rely thereon has delivered
a written
notice to the Other Party, specifying in reasonable detail all
breaches of
covenants, representations and warranties or other matters which
the Party
delivering such notice is asserting as the basis for the non-fulfillment
of the applicable conditions precedent. More than one such notice
may be
delivered by a Party.
|
|
5.5
|
Satisfaction
of Conditions
|
The
conditions set out in this Article 5 are conclusively deemed to have been
satisfied, waived or released when, with the agreement of the Parties, Articles
of Arrangement are filed under the ABCA to give effect to the
Arrangement.
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52
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ARTICLE
6
AGREEMENT
AS TO DAMAGES AND OTHER ARRANGEMENTS
|
6.1
|
Enerplus
Damages
|
If
at any
time after the execution of this Agreement and prior to its
termination:
|
(a)
|
the
Focus Board has withdrawn or changed any of its recommendations
or
determinations referred to in Section 3.2(q) and Section 4.2(uu)
in a
manner adverse to Enerplus or shall have resolved to do so prior
to the
Effective Date;
|
|
(b)
|
a
bona fide
Acquisition Proposal is publicly announced, proposed, offered or
made to
the Focus Unitholders and/or the Focus Exchangeable LP Unitholders
or to
Focus and the Focus Securityholders do not approve the Arrangement
or the
Arrangement is not submitted for their approval, and such Acquisition
Proposal, an amended version thereof or any other Acquisition Proposal
relating to Focus is consummated within twelve months of the date
the
first Acquisition Proposal is publicly announced, proposed, offered
or
made;
|
|
(c)
|
Focus
accepts, recommends, approves or enters into an agreement to implement
a
Superior Proposal;
|
|
(d)
|
Focus
is in breach of any of its covenants made in this Agreement, which
breach
individually or in the aggregate causes or would reasonably be
expected to
cause a Material Adverse Change with respect to Focus or materially
impedes the completion of the Arrangement, and Focus fails to cure
such
breach within five Business Days after receipt of written notice
thereof
from Enerplus (except that no cure period shall be provided for
a breach
which by its nature cannot be cured and, in no event, shall any
cure
period extend beyond February 28, 2008); or
|
|
(e)
|
Focus
is in breach of any of its representations or warranties made in
this
Agreement (without giving effect to any materiality qualifiers
contained
therein) which breach individually or in the aggregate causes or
would
reasonably be expected to cause a Material Adverse Change with
respect to
Focus or materially impedes the completion of the Arrangement,
and Focus
fails to cure such breach within five Business Days after receipt
of
written notice thereof from Enerplus (except that no cure period
shall be
provided for a breach which by its nature cannot be cured and,
in no
event, shall any cure period extend beyond February 28, 2008),
|
(each
of
the above being an "Enerplus
Damages Event"), then in the event of the termination of this Agreement
pursuant to Section 8.1, Focus shall pay to Enerplus $48 million as liquidated
damages in immediately available funds to an account designated by Enerplus
within one Business Day after the first to occur of the events described
above,
and after such event but prior to payment of such amount, Focus shall be
deemed
to hold such funds in trust for Enerplus. Focus shall only be
obligated to pay a maximum of $48 million pursuant to this Section
6.1. In the event that a bona fide Acquisition
Proposal is publicly announced, proposed, offered or made to the Focus
Unitholders or to
Focus and the Focus Securityholders do not approve the Arrangement and such
Acquisition Proposal, an amended version thereof or any other Acquisition
Proposal relating to Focus is not consummated within twelve months of the
date
the first Acquisition Proposal is publicly announced, proposed, offered or
made,
then Focus shall pay to Enerplus $5 million, in full satisfaction of, and
as a
fixed amount for reimbursement of, all expenses, including all third party
expenses and costs, of Enerplus in relation to the Arrangement.
-
53
-
|
6.2
|
Liquidated
Damages
|
Each
Party acknowledges that all of the payment amounts set out in this Article
6 are
payments of liquidated damages which are a genuine pre-estimate of the damages
which Enerplus and EnerMark will suffer or incur as a result of the event
giving
rise to such damages and resultant termination of this Agreement and are
not
penalties. Each of Focus and FET Resources irrevocably waives any
right it may have to raise as a defence that any such liquidated damages
are
excessive or punitive. For greater certainty, the Parties agree that
the payment of the amount pursuant to this Article 6 is the sole monetary
remedy
of Enerplus and EnerMark provided, however, that this limitation shall not
apply
in the event of fraud or wilful breach of this Agreement by Focus and/or
FET
Resources. Nothing herein shall preclude a Party from seeking
injunctive relief to restrain any breach or threatened breach of the covenants
or agreements set forth in this Agreement or the Confidentiality Agreement
or
otherwise to obtain specific performance of any of such act, covenants or
agreements, without the necessity of posting bond or security in connection
therewith.
ARTICLE
7
AMENDMENT
|
7.1
|
Amendment
of Agreement
|
This
Agreement (excluding the Plan of Arrangement) may at any time and from time
to
time before or after the holding of the Focus Meeting be amended by written
agreement of the Parties hereto without, subject to Applicable Law, further
notice to or authorization on the part of the Focus Securityholders and any
such
amendment may, without limitation:
|
(a)
|
change
the time for performance of any of the obligations or acts of the
Parties;
|
|
(b)
|
waive
any inaccuracies or modify any representation or warranty contained
herein
or in any document delivered pursuant hereto;
|
|
(c)
|
waive
compliance with or modify any of the covenants herein contained
and waive
or modify performance of any of the obligations of the Parties;
or
|
|
(d)
|
waive
compliance with or modify any other conditions precedent contained
herein;
|
provided
that no such amendment which is agreed to after the Parties are granted the
Interim Order by the Court may reduce or materially adversely affect the
consideration to be received by Focus Unitholders or result in Focus Unitholders
receiving Enerplus Units on a non-tax deferred basis for Canadian or United
States income tax purposes (other than pursuant to an election which may
be made
by Focus Unitholders with respect to Canadian federal income tax treatment)
without approval by the Focus Securityholders given in the same manner as
required for the approval of the Arrangement or as may be ordered by the
Court.
|
7.2
|
Amendment
of Plan of Arrangement
|
|
(a)
|
The
Parties may agree to amend the Plan of Arrangement at any time
and from
time to time prior to the Effective Time, provided that each such
amendment must be: (i) set out in writing; (ii) filed with the
Court and,
if made following the Focus Meeting, approved by the Court; and
(iii)
communicated to Focus Securityholders if and as required by the
Court.
|
-
54
-
|
(b)
|
Any
amendment to the Plan of Arrangement agreed to by the Parties at
any time
prior to or at the Focus Meeting, which is proposed and accepted
by the
holders of Focus Securities voting at the Focus Meeting, shall
become part
of the Plan of Arrangement for all purposes.
|
|
(c)
|
Any
amendment to the Plan of Arrangement that is approved by the Court
following the Focus Meeting shall be effective only if it is consented
to
by each of the Parties.
|
|
7.3
|
Alternative
Transaction
|
Notwithstanding
anything else in this Agreement but subject to Section 3.3(f), if the Parties
are unable to implement the transactions contemplated in this Agreement by
way
of plan of arrangement, the Parties shall cooperate to implement such
transactions by way of a merger whereby Enerplus would effectively acquire
all
or substantially all of the assets of Focus within approximately the same
time
periods and on economic terms (including trust unit exchange ratio and tax
treatment that allows Focus Unitholders to receive Enerplus Units on a
tax-deferred basis for Canadian and United States income tax purposes and
that,
to the extent practicable, allows Focus Unitholders to elect to exchange
their
Focus Units for Enerplus Units on a taxable basis for Canadian federal income
tax purposes) having consequences to the Focus Unitholders and the Enerplus
Unitholders that are economically equivalent to those contemplated by this
Agreement (an "Alternative
Transaction"). If necessary, the Parties agree to use their
reasonable commercial efforts to execute and deliver an agreement to give
effect
to an Alternative Transaction, to otherwise fulfill their respective covenants
contained in this Agreement in respect of the Alternative Transaction and
to
prepare the Focus Information Circular within the time frames contemplated
in
this Agreement with respect to the Arrangement.
ARTICLE
8
TERMINATION
|
8.1
|
Termination
|
This
Agreement may be terminated at any time prior to the Effective
Date:
|
(a)
|
by
mutual written consent of Enerplus, EnerMark, Focus and FET Resources;
|
|
(b)
|
as
provided in Section 5.4(b);
|
|
(c)
|
by
Enerplus and EnerMark upon the occurrence of an Enerplus Damages
Event as
provided in Section 6.1; or
|
|
(d)
|
by
Focus and FET Resources upon the occurrence of an Enerplus Damages
Event
as provided in Section 6.1(c) (carried out in accordance with Section
3.4(b)(vii) and provided Focus has complied with its obligations
set forth
in Section 3.4(c)) and the payment by Focus to Enerplus of the
amount
required by Section 6.1.
|
In
the
event of the termination of this Agreement in the circumstances set out in
paragraphs (a) through (d) of this Section 8.1, this Agreement shall forthwith
become void and neither Party shall have any liability or further obligation
to
the Other Party hereunder, except with respect to the obligations set forth
in
Article 6 and Section 4.3 and each Party's obligations in the Confidentiality
Agreement which shall survive such termination.
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55
-
ARTICLE
9
NOTICES
|
9.1
|
Notices
|
All
notices that may or are required to be given pursuant to any provision of
this
Agreement are to be given or made in writing and served personally or sent
by
telecopy:
|
(a)
|
in
the case of Enerplus or EnerMark, to:
|
c/o
EnerMark Inc.
Xxxxx
0000, 000 -0xx Xxxxxx X.X.
Xxxxxxx,
XX X0X 0X0
Attention:
Xxxxxx X. Xxxx
Facsimile:
(000) 000-0000
with
a
copy to:
Blake,
Xxxxxxx & Xxxxxxx LLP
000
- 0xx
Xxxxxx X.X.
Xxxxx
0000, Bankers Hall East Tower
Calgary,
AB T2P 4J8
Attention:
Xxxxx Xxxxxx
Facsimile:
(000) 000-0000
|
(b)
|
in
the case of Focus or FET Resources, to:
|
Focus
Energy Trust
c/o
FET
Resources Ltd.
3300,
000
- 0xx Xxxxxx X.X.
Xxxxxxx,
XX X0X 0X0
Attention:
Xxxxx X. Xxxxx
Facsimile:
(000) 000-0000
with
a
copy to:
Burnet,
Xxxxxxxxx & Xxxxxx LLP
0000,
000
- 0xx Xxxxxx XX
Xxxxxxx,
XX X0X 0X0
Attention:
Grant A. Zawalsky
Facsimile:
(000) 000-0000
or
such
other address as the Parties may, from time to time, advise to the other
Parties
hereto by notice in writing. The date or time of receipt of any such
notice will be deemed to be the date of delivery or the time such telecopy
is
received.
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56
-
ARTICLE
10
GENERAL
|
10.1
|
Binding
Effect
|
This
Agreement shall be binding upon and enure to the benefit of the Parties
hereto.
|
10.2
|
Assignment
|
No
Party
to this Agreement may assign any of its rights or obligations under this
Agreement without prior written consent of the Other Party.
|
10.3
|
Disclosure
|
Each
Party shall receive the prior consent, not to be unreasonably withheld, of
the
Other Party prior to issuing or permitting any director, officer, employee
or
agent to issue, any press release or other written statement with respect
to
this Agreement or the transactions contemplated
hereby. Notwithstanding the foregoing, if either Party is required by
law or administrative regulation to make any disclosure relating to the
transactions contemplated herein, such disclosure may be made, but that Party
will consult with the Other Party as to the wording of such disclosure prior
to
its being made.
|
10.4
|
Costs
|
Except
as
contemplated herein (including Section 6.1 hereof), each Party hereto covenants
and agrees to bear its own costs and expenses in connection with the
transactions contemplated hereby, whether or not the Arrangement is
completed. Enerplus and Focus shall share equally any filing fees
payable for applications made under the Competition Act in respect of the
transactions contemplated by the Arrangement.
|
10.5
|
Severability
|
If
any
one or more of the provisions or parts thereof contained in this Agreement
should be or become invalid, illegal or unenforceable in any respect in any
jurisdiction, the remaining provisions or parts thereof contained herein
shall
be and shall be conclusively deemed to be, as to such jurisdiction, severable
therefrom and:
|
(a)
|
the
validity, legality or enforceability of such remaining provisions
or parts
thereof shall not in any way be affected or impaired by the severance
of
the provisions or parts thereof severed; and
|
|
(b)
|
the
invalidity, illegality or unenforceability of any provision or
part
thereof contained in this Agreement in any jurisdiction shall not
affect
or impair such provision or part thereof or any other provisions
of this
Agreement in any other jurisdiction.
|
|
10.6
|
Further
Assurances
|
Each
Party hereto shall, from time to time and at all times hereafter, at the
request
of the Other Party hereto, but without further consideration, do all such
further acts, and execute and deliver all such further documents and instruments
as may be reasonably required in order to fully perform and carry out the
terms
and intent hereof.
-
57
-
|
10.7
|
Time
of Essence
|
Time
shall be of the essence of this Agreement.
|
10.8
|
Governing
Law
|
This
Agreement shall be governed by and construed in accordance with the Laws
of the
Province of Alberta and the Parties hereto irrevocably attorn to the
jurisdiction of the courts of the Province of Alberta.
|
10.9
|
Waiver
|
No
waiver
by any Party shall be effective unless in writing and any waiver shall affect
only the matter, and the occurrence thereof, specifically identified and
shall
not extend to any other matter or occurrence.
|
10.10
|
Third
Party Beneficiaries
|
The
provisions of Sections 3.3(d) and 10.11 are: (i) intended for the benefit
of all
present and former trustees, directors and officers of Enerplus and its
Subsidiaries and Focus and its Subsidiaries, as and to the extent applicable
in
accordance with their terms, and shall be enforceable by each of such persons
and his or her heirs, executors administrators and other legal representatives
(collectively, the "Third Party
Beneficiaries") and EnerMark shall hold the rights and benefits of
Sections 3.3(d) and 10.11 in trust for and on behalf of the Third Party
Beneficiaries and EnerMark hereby accepts such trust and agrees to hold the
benefit of and enforce performance of such covenants on behalf of the Third
Party Beneficiaries, and (ii) are in addition to, and not in substitution
for,
any other rights that the Third Party Beneficiaries may have by contract
or
otherwise.
|
10.11
|
Obligations
|
|
(a)
|
The
Parties acknowledge that, with respect to Enerplus being a party
to this
Agreement, EnerMark is entering into this Agreement solely on behalf
of
Enerplus and the obligations of Enerplus hereunder shall not be
personally
binding upon the Enerplus Trustee, EnerMark or any of the Enerplus
Unitholders and that any recourse against Enerplus or any Enerplus
Unitholder in any manner in respect of any indebtedness, obligation
or
liability of Enerplus arising hereunder or arising in connection
herewith
or from the matters to which this Agreement relates, if any, including,
without limitation, based on negligence or otherwise tortious behaviour,
shall be limited to, and satisfied only out of, the Trust Fund
as defined
in the Enerplus Trust Indenture.
|
|
(b)
|
The
Parties acknowledge that, with respect to Focus being a party to
this
Agreement, FET Resources is entering into this Agreement solely
on behalf
of Focus and the obligations of Focus hereunder shall not be personally
binding upon the Focus Trustee, FET Resources or any of the Focus
Unitholders and that any recourse against Focus or any Focus Unitholder
in
any manner in respect of any indebtedness, obligation or liability
of
Focus arising hereunder or arising in connection herewith or from
the
matters to which this Agreement relates, if any, including, without
limitation, based on negligence or otherwise tortious behaviour,
shall be
limited to, and satisfied only out of, the Trust Fund as defined
in the
Focus Trust Indenture.
|
-
58
-
|
10.12
|
Counterparts
|
This
Agreement may be executed by facsimile or other electronic signature and
in
counterparts, each of which shall be deemed an original, and all of which
together constitute one and the same instrument.
IN
WITNESS WHEREOF the Parties have executed this Agreement as of the date first
above written.
|
By
EnerMark Inc.
Per: "Xxxxxx
X. Xxxx"
Xxxxxx
X. Xxxx
President
&
Chief
Executive
Officer
Per: "Xxx
X. Xxxxxx"
Xxx X. Xxxxxx Senior
Vice
President,
Business
Development
|
FOCUS
ENERGY TRUST,
By
FET Resources Ltd.
Per: "Xxxxx
X. Xxxxx"
Xxxxx
X. Xxxxx
President
and Chief Executive
Officer
Per: "Xxxxxxx
X. Xxxxxxx"
Xxxxxxx
X. Xxxxxxx
Senior
Vice-President
and
Chief
Financial
Officer
|
|
ENERMARK
INC.
Per: "Xxxxxx
X. Xxxx"
Xxxxxx
X. Xxxx
President
&
Chief
Executive
Officer
Per: "Xxx
X. Xxxxxx"
Xxx
X. Xxxxxx
Senior
Vice
President,
Business
Development
|
FET
RESOURCES LTD.
Per: "Xxxxx
X. Xxxxx"
Xxxxx
X. Xxxxx
President
and Chief Executive
Officer
Per: "Xxxxxxx
X. Xxxxxxx"
Xxxxxxx
X. Xxxxxxx
Senior
Vice-President
and
Chief
Financial
Officer
|
-
59
-
EXHIBIT
A
Plan
of Arrangement under Section 193
of
the
Business
Corporations Act (Alberta)
ARTICLE 1
INTERPRETATION
| 1.1 | In this Plan of Arrangement, the following terms have the following meanings: |
|
(a)
|
"ABCA"
means the Business Corporations
Act, R.S.A. 2000, c. B-9, as amended, including the regulations
promulgated thereunder;
|
|
(b)
|
"AmalgamationCo"
means
the corporation formed upon the amalgamation of FET ExchangeCo
and FET
Management pursuant to this
Arrangement;
|
|
(c)
|
"AmalgamationCo
Common
Shares" means the common shares of
AmalgamationCo;
|
|
(d)
|
"AmalgamationCo
Notes"
means interest bearing, unsecured, subordinated promissory notes
of
AmalgamationCo;
|
|
(e)
|
“AmalgamationCo
Notes
Contribution Agreement” means the contribution agreement between
Enerplus and Enerplus Finance LP to be dated the Effective Date
effecting
the contribution by Enerplus to Enerplus Finance LP of the AmalgamationCo
Notes in consideration of Enerplus Finance LP issuing Enerplus
Finance LP
Units to Enerplus;
|
|
(f)
|
"AmalgamationCo
Shares
Contribution Agreement" means the contribution agreement between
Focus and Enerplus Finance LP to be dated the Effective Date effecting
the
contribution by Focus to Enerplus Finance LP of the AmalgamationCo
Common
Shares in consideration of Enerplus Finance LP issuing Enerplus
Finance LP
Units to Focus;
|
|
(g)
|
"AmalgamationCo
Unit
Notes" means non-interest bearing, unsecured, subordinated
promissory notes of AmalgamationCo;
|
|
(h)
|
"Arrangement
Agreement"
means the arrangement agreement dated effective December 2, 2007
among Enerplus, EnerMark, Focus and FET Resources with respect
to the
Arrangement and all amendments thereto and restatements
thereof;
|
|
(i)
|
"Arrangement
Resolution"
means the special resolution in respect of the Arrangement to be
considered at the Focus Meeting;
|
|
(j)
|
"Arrangement",
"herein", "hereof",
"hereto", "hereunder"
and similar
expressions mean and refer to the arrangement pursuant to Section 193
of the ABCA set forth in this Plan of Arrangement as supplemented,
modified or amended, and not to any particular article, section
or other
portion hereof;
|
|
(k)
|
"Articles
of Arrangement"
means the articles of arrangement in respect of the Arrangement
required
under Subsection 193(10) of the ABCA to be filed with the Registrar
after the Final Order has been granted giving effect to the
Arrangement;
|
|
(l)
|
"Business
Day" means a
day other than a Saturday, Sunday or a day when banks in the City
of
Calgary, Alberta are not generally open for
business;
|
|
(m)
|
"Certificate"
means the
certificate or certificates or confirmation of filing which may
be issued
by the Registrar pursuant to Subsection 193(11) of the
ABCA;
|
|
(n)
|
"Court"
means the Court
of Queen's Bench of Alberta;
|
|
(o)
|
"Depositary"
means CIBC
Mellon Trust Company or such other nationally recognized trust
company as
may be designated by Enerplus and
Focus;
|
|
(p)
|
"Dissenting
Securityholders" means registered holders of Focus Securities who
validly exercise the rights of dissent with respect to the Arrangement
provided to them under the Interim Order and whose dissent rights
remain
valid immediately before the Effective
Time;
|
|
(q)
|
"Effective
Date" means
the date the Arrangement is effective under the
ABCA;
|
|
(r)
|
"Effective
Time" means
the time when the Arrangement becomes effective pursuant to the
ABCA;
|
|
(s)
|
"Election
Deadline" means
4:30 p.m. (Calgary time) on the second Business Day immediately
prior to
the date of the Focus Meeting or, if the Focus Meeting is adjourned,
the
adjourned meeting;
|
|
(t)
|
"EnerMark"
means EnerMark
Inc., a corporation amalgamated under the
ABCA;
|
|
(u)
|
"Enerplus"
means Enerplus
Resources Fund, a trust organized under the laws of the Province
of
Alberta and governed by the amended and restated trust indenture
dated
November 8, 2007 among EnerMark, Enerplus Resources Corporation and
CIBC Mellon Trust Company, as amended or supplemented from time
to
time;
|
|
(v)
|
"Enerplus
Arrangement
Parties" means Enerplus, EnerMark and Enerplus Finance
LP;
|
|
(w)
|
"Enerplus
Fair Market
Value" means the weighted average trading price of an Enerplus
Unit
on the Toronto Stock Exchange for the five trading days immediately
preceding the Effective Date, provided that if the Enerplus Units
are not
then listed on the Toronto Stock Exchange, or if in the opinion
of the
board of directors of EnerMark, acting reasonably and in good faith,
the
public distribution or trading activity in Enerplus Units for that
period
does not result in a weighted average trading price which reflects
the
fair market value of the Enerplus Units, then the Enerplus Fair
Market
Value shall be determined by the board of directors of EnerMark,
in good
faith and in its sole discretion, acting
reasonably;
|
|
(x)
|
"Enerplus
Finance LP"
means Enerplus Finance Limited Partnership, a limited partnership
organized pursuant to the laws of
Alberta;
|
|
(y)
|
"Enerplus
Finance LP
Units" means the limited partnership units of Enerplus Finance
LP;
|
-
2
-
|
(z)
|
"Enerplus
Special Voting
Right" means the special voting right to be issued by Enerplus
to
the Voting and Exchange Trustee entitling the holder thereof to
vote,
consent to, or otherwise act at a meeting or in respect of a resolution
of
Enerplus Unitholders, and representing the number of votes that
the Focus
Exchangeable LP Unitholders would be entitled to had the Focus
Exchangeable LP Unitholders exchanged all of the Focus Exchangeable
LP
Units then held by such holders for Enerplus Units immediately
prior to
the record date set for such meeting or at such other time as may
be
determined by applicable law for determining Enerplus Unitholders
entitled
to so vote, consent or otherwise act at such a meeting or in respect
of
such a resolution;
|
|
(aa)
|
"Enerplus
Units" means
trust units of Enerplus;
|
|
(bb)
|
"FET
ExchangeCo" means
FET ExchangeCo Ltd., a corporation incorporated under the ABCA
which is a
wholly-owned subsidiary of Focus;
|
|
(cc)
|
"FET
Management" means
FET Management Ltd., a corporation incorporated under the ABCA
which is a
wholly-owned subsidiary of Focus;
|
|
(dd)
|
"FET
Resources" means FET
Resources Ltd., a corporation amalgamated under the ABCA which
is an
indirect wholly-owned subsidiary of
Focus;
|
|
(ee)
|
"Filed
Letter of
Transmittal" means a duly completed Letter of Transmittal deposited
(with such Focus Unitholder's certificate(s) representing the Focus
Unitholder's Focus Units) with the Depository on or before the
Election
Deadline;
|
|
(ff)
|
"Final
Order" means the
order of the Court approving this Arrangement pursuant to
Subsection 193(9) of the ABCA in respect of the Focus
Securityholders, the Enerplus Arrangement Parties and the Focus
Arrangement Parties, as such order may be affirmed, amended or
modified by
any court of competent
jurisdiction;
|
|
(gg)
|
"Focus"
means Focus
Energy Trust, a trust organized under the laws of the Province
of Alberta
and governed by the Focus Trust
Indenture;
|
|
(hh)
|
"Focus
Arrangement
Parties" means Focus, FET Management, FET Resources, FET
ExchangeCo, AmalgamationCo, Focus CT and Focus
LP;
|
|
(ii)
|
"Focus
Asset
Contribution" means the contribution by Focus of all of its
directly owned interest in Focus LP, Focus CT and the Focus CT
Notes to
AmalgamationCo in consideration of AmalgamationCo issuing AmalgamationCo
Common Shares and AmalgamationCo Notes to Focus in accordance with
the
Focus Asset Contribution Agreement;
|
|
(jj)
|
"Focus
Asset Contribution
Agreement" means the contribution agreement between Focus and
AmalgamationCo to be dated the Effective Date effecting the Focus
Asset
Contribution;
|
|
(kk)
|
"Focus
Assets" means all
of the assets of Focus;
|
|
(ll)
|
"Focus
Assumed
Liabilities" means all of the liabilities and obligations of
Focus;
|
-
3
-
|
(mm)
|
"Focus
CT" means Focus
Commercial Trust, an unincorporated trust organized pursuant to
the laws
of Alberta and a wholly-owned subsidiary of
Focus;
|
|
(nn)
|
"Focus
CT Notes" means
the non-interest bearing, unsecured, subordinated promissory notes
of
Focus CT held by Focus which have an aggregate principal amount
of
$664 million;
|
|
(oo)
|
"Focus
Exchangeable LP
Unitholders" means the holders from time to time of Focus
Exchangeable LP Units;
|
|
(pp)
|
"Focus
Exchangeable LP
Units" means the Class B limited partnership units of Focus
LP;
|
|
(qq)
|
"Focus
LP" means Focus
Limited Partnership, a limited partnership formed pursuant to the
laws of
Alberta;
|
|
(rr)
|
"Focus
LP Limited Partnership
Agreement" means the limited partnership agreement dated June 21,
2006 of Focus LP, as such may be amended, supplemented or restated
from
time to time;
|
|
(ss)
|
"Focus
LP Unit Support
Agreement" means the support agreement dated June 27, 2006 among
Focus, Focus LP and FET Management, as such may be amended, supplemented
or restated from time to time;
|
|
(tt)
|
"Focus
LP Unit Support Agreement
Supplement" means a supplemental agreement to the Focus LP Unit
Support Agreement, or an amendment and restatement of such agreement,
to
be dated the Effective Date between Enerplus (and any other applicable
Enerplus Arrangement Parties), AmalgamationCo and the parties to
the Focus
LP Unit Support Agreement, as may be necessary or desirable to
provide for
the assumption by Enerplus of the covenants and obligations of
Focus
therein with respect to the Enerplus
Units;
|
|
(uu)
|
Focus
LP Voting and Exchange
Agreement" means the voting and exchange trust agreement dated June
27, 2006 among Focus, Focus LP and Valiant Trust Company, as such
may be
amended, supplemented or restated from time to
time;
|
|
(vv)
|
"Focus
LP Voting and Exchange
Agreement Supplement" means a supplemental agreement to the Focus
LP Voting and Exchange Agreement, or an amendment and restatement
of such
agreement, to be dated the Effective Date between Enerplus (and
any other
applicable Enerplus Arrangement Parties) and the parties to the
Focus LP
Voting and Exchange Agreement, as may be necessary or desirable
to provide
for the assumption by Enerplus of the covenants and obligations
of Focus
therein with respect to the Enerplus
Units;
|
|
(ww)
|
"Focus
Meeting" means the
special meeting of Focus Securityholders to be held to consider
the
Arrangement Resolution and related matters, and any adjournment(s)
thereof;
|
|
(xx)
|
"Focus
Sale Agreement"
means the sale agreement between Focus and Enerplus to be dated
the
Effective Date effecting the sale, transfer, conveyance, assignment
and
delivery to Enerplus by Focus of all of the Focus Assets and the
assumption by Enerplus of all the Focus Assumed Liabilities in
consideration of the number of Enerplus Units determined in accordance
with this Arrangement;
|
-
4
-
|
(yy)
|
"Focus
Securities" means,
collectively, the Focus Units and the Focus Exchangeable LP
Units;
|
|
(zz)
|
"Focus
Securityholders"
means the holders from time to time of Focus
Securities;
|
|
(aaa)
|
"Focus
Special Voting
Right" means the special voting right of Focus entitling the
Voting
and Exchange Trustee to vote, consent to, or otherwise act at a
meeting of
Focus Unitholders and representing that number of voting rights
(each such
voting right equal to the voting rights attached to one Focus Unit)
equal
to the number of outstanding Focus Exchangeable LP Units outstanding
immediately prior to the record date set for such meeting or at
such other
time as may be determined by applicable law for determining Focus
Unitholders entitled to so vote, consent or otherwise act at such
a
meeting or in respect of such a
resolution;
|
|
(bbb)
|
"Focus
Trust Indenture"
means the trust indenture dated as of July 15, 2002 among 1198329
Alberta
Ltd., the settlor and Valiant Trust Company, as such may be amended,
supplemented or restated from time to
time;
|
|
(ccc)
|
“Focus
TURIP” means the
Trust Unit Rights Incentive Plan of Focus effective as of August
23, 2002
and amended as of May 17, 2007;
|
|
(ddd)
|
"Focus
Unitholders" means
the holders from time to time of Focus
Units;
|
|
(eee)
|
"Focus
Units" means the
trust units of Focus;
|
|
(fff)
|
"Interim
Order" means the
interim order of the Court under Subsection 193(4) of the ABCA
containing declarations and directions with respect to this Arrangement,
as such order may be affirmed, amended or modified by any court
of
competent jurisdiction;
|
|
(ggg)
|
"Letter
of Transmittal"
means the letter of transmittal and election form accompanying
the
information circular sent to the Focus Unitholders, pursuant to
which such
holders are required to deliver certificates representing Focus
Units in
order to receive the consideration payable to them pursuant to
the
Arrangement and to make certain elections regarding the identity
of the
Focus Arrangement Party which will acquire their Focus Units pursuant
to
the Arrangement;
|
|
(hhh)
|
"Registrar"
means the
Registrar appointed under Section 263 of the ABCA;
and
|
|
(iii)
|
"Voting
and Exchange
Trustee" means Valiant Trust Company in its capacity as trustee
under the Focus LP Voting and Exchange Agreement and any successor
trustee
appointed pursuant to the provisions
thereof.
|
The
division of this Plan of Arrangement into articles and sections and the
insertion of headings are for convenience of reference only and shall not
affect
the construction or interpretation of this Plan of Arrangement.
Unless
reference is specifically made to some other document or instrument, all
references herein to articles and sections are to articles and sections of
this
Plan of Arrangement.
-
5
-
Unless
the context otherwise requires, words importing the singular number shall
include the plural and vice versa; words importing any gender shall include
all
genders; and words importing persons shall include individuals, partnerships,
associations, corporations, funds, unincorporated organizations, governments,
regulatory authorities, and other entities.
In
the
event that the date on which any action is required to be taken hereunder
by any
of the parties is not a Business Day in the place where the action is required
to be taken, such action shall be required to be taken on the next succeeding
day which is a Business Day in such place.
References
in this Plan of Arrangement to any statute or sections thereof shall include
such statute as amended or substituted and any regulations promulgated
thereunder from time to time in effect.
ARTICLE 2
2.1 This
Plan
of Arrangement is made pursuant to the Arrangement Agreement.
2.2 This
Plan
of Arrangement, upon the filing of the Articles of Arrangement and the issue
of
the Certificate, if any, shall become effective on, and be binding on and
after,
the Effective Time on: (i) Focus Securityholders; (ii) the Enerplus
Arrangement Parties; and (iii) the Focus Arrangement Parties.
2.3 The
Articles of Arrangement and Certificate shall be filed and issued, respectively,
with respect to this Arrangement in its entirety. The Certificate
shall be conclusive evidence that the Arrangement has become effective and
that,
subject to the provisions of Section 3.1, each of the provisions of
Article 3 has become effective in the sequence and at the times set out
therein. If no Certificate is required to be issued by the Registrar
pursuant to Subsection 193(11) of the ABCA, the Arrangement shall become
effective on the date the Articles of Arrangement are filed with the Registrar
pursuant to Subsection 193(10) of the ABCA.
ARTICLE 3
ARRANGEMENT
3.1 Commencing
at the Effective Time, each of the events set out below shall occur and shall
be
deemed to occur in the following order without any further act or formality
except as otherwise provided herein:
Amendments
to the Focus Trust Indenture and Other Constating Documents
|
(a)
|
the
Focus Trust Indenture and other constating documents of Focus shall
be
amended:
|
|
(i)
|
to
provide for the redemption of all of the issued and outstanding
Focus
Units (other than the two (2.0) Focus Units to be held by
Enerplus);
|
|
(ii)
|
to
cause the Focus Securities held by Dissenting Securityholders to
be
transferred to Focus, as of the Effective Date, in accordance with
the
terms of the Plan of Arrangement;
and
|
|
(iii)
|
otherwise
to the extent necessary to facilitate the
Arrangement;
|
-
6
-
Dissenting
Securityholders
|
(b)
|
the
Focus Securities held by Dissenting Securityholders shall be deemed
to
have been transferred to Focus, in the case of the Focus Units,
or Focus
LP, in the case of the Focus Exchangeable LP Units, (free of any
claims)
and such Dissenting Securityholders shall cease to have any rights
as
Focus Securityholders other than the right to be paid the fair
value of
their Focus Securities in accordance with Article
4;
|
Amalgamation
of FET ExchangeCo and FET Management
|
(c)
|
FET
ExchangeCo and FET Management shall
be
amalgamated and continued as one corporation, AmalgamationCo, in
accordance with the following:
|
|
(i )
|
the
articles of Amalgamation shall be the same as the articles of FET
Management and the name of AmalgamationCo shall be "FET Management
Ltd.";
|
|
(ii)
|
the
shares of FET ExchangeCo shall
be cancelled
without any repayment of capital;
|
|
(iii)
|
the
stated capital of FET ExchangeCo shall be added to the stated capital
of
the shares of FET Management;
|
|
(iv)
|
the
property of each of the amalgamating corporations shall continue
to be the
property of AmalgamationCo;
|
|
(v)
|
AmalgamationCo
shall continue to be liable for the obligations of each of the
amalgamating corporations;
|
|
(vi)
|
any
existing cause of action, claim or liability to prosecution of
each of the
amalgamating corporations shall be
unaffected;
|
|
(vii)
|
any
civil, criminal or administrative action or proceeding pending
by or
against each of the amalgamating corporations may be continued
to be
prosecuted by or against
AmalgamationCo;
|
|
(viii)
|
a
conviction against, or ruling, order or judgment in favour of or
against,
each of the amalgamating corporations may be enforced by or against
AmalgamationCo;
|
|
(ix)
|
the
Articles of Amalgamation of AmalgamationCo shall be deemed to be
the
Articles of Incorporation of AmalgamationCo and the Certificate
of
Amalgamation of AmalgamationCo shall be deemed to be the Certificate
of
Incorporation of AmalgamationCo;
|
|
(x)
|
the
by-laws of AmalgamationCo shall be the by-laws of FET
Management;
|
|
(xi)
|
the
first directors of AmalgamationCo shall be Xxxxxx X. Xxxxxx, Xxx
X. Xxxxxx
and Xxxxx X. XxXxx;
|
|
(xii)
|
the
first officers of AmalgamationCo shall be as
follows:
|
-
7
-
|
Name
of Officer
|
Office
Held
|
|
Xxxxxx
X.
Xxxx
|
President
&
Chief
Executive
Officer
|
|
Xxxxx
X.
Xxxxxx
|
Executive
Vice President &
Chief Operating Officer
|
|
Xxxxxx
X.
Xxxxxx
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Senior
Vice President & Chief
Financial Officer
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Xxx
X.
Xxxxxx
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Senior
Vice President, Business
Development
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Xxxxx
X.
XxXxx
|
Vice
President, General Counsel
& Corporate Secretary
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Xxxxx
X.
Xxxxxxx
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Vice
President,
Operations
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Xxxxxx
X.
Xxxxxxx
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Vice
President, Development
Services
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Xxxxxx
X.
Xxxx
|
Vice
President,
Finance
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Xx-Xxxx
X.
Xxxx
|
Vice
President, Investor
Relations
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Xxxx
X. Xx
Xxxx
|
Vice
President,
Marketing
|
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Xxxxxxxx
X.
Xxxxx
|
Vice
President, Corporate
Services
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Xxxxxx
X.
Xxxx
|
Vice
President, Information
Services
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Xxxxxxx
X.
Xxxxxxx
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Vice
President, Oil
Xxxxx
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Xxxxx
X.
Xxxx
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Controller,
Operations
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Xxxxxx
X. Xxxxxx
Xxxxxx
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Controller,
Finance
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(xiii)
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the
registered office of AmalgamationCo shall be 3000, 000 – 0xx
Xxxxxx XX, Xxxxxxx, Xxxxxxx, X0X
0X0;
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AmalgamationCo
Exchange with Focus Unitholders
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(d)
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Enerplus
shall issue to AmalgamationCo that number of Enerplus Units to
be
exchanged by AmalgamationCo pursuant to the next subsection of
this Plan
of Arrangement in exchange for the issuance to Enerplus by AmalgamationCo
of that principal amount of AmalgamationCo Unit Notes equal to
the product
of: (i) that number of Enerplus Units, in aggregate, to be transferred
by
AmalgamationCo to Focus Unitholders pursuant to the next subsection
of
this Plan of Arrangement multiplied by; (ii) the Enerplus Fair
Market
Value;
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(e)
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subject
to Section 3.3, the Focus Units held by each Focus Unitholder who
so
elects in a Filed Letter of Transmittal with respect to such Focus
Units
shall be transferred to, and acquired by, AmalgamationCo free and
clear of
all liens, claims and encumbrances in exchange for the transfer
of
Enerplus Units to the Focus Unitholder by AmalgamationCo on the
basis of
0.425 of an Enerplus Unit for each one (1.0) Focus Unit held, subject
to
the rounding provisions of this Plan of
Arrangement;
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Focus
Asset Contribution
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(f)
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pursuant
to the Focus Asset Contribution Agreement, Focus shall sell, transfer,
convey, assign and deliver to AmalgamationCo and AmalgamationCo
shall
purchase and accept from Focus, all of the directly owned interests
of
Focus in Focus LP, Focus CT and the Focus CT Notes and AmalgamationCo
shall issue to Focus (i) AmalgamationCo Notes with a principal
amount
equal to the sum of (A) the amount which was the aggregate adjusted
cost
base of Focus, determined pursuant to the provisions of the Income Tax Act (Canada)
and immediately prior to the Focus Asset Contribution, in the assets
acquired by AmalgamationCo pursuant to the Focus Asset Contribution
Agreement and (B) two times the aggregate amount of distributions
which
became payable to Focus Unitholders during 2008 and prior to the
Effective
Date; and (ii) one AmalgamationCo
Common Share;
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AmalgamationCo
Share Contribution
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(g)
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pursuant
to the AmalgamationCo Share Contribution Agreement, Focus shall
sell,
transfer, convey, assign and deliver to Enerplus Finance LP and
Enerplus
Finance LP shall purchase and accept from Focus the AmalgamationCo
Common
Shares and Enerplus Finance LP shall issue to Focus that number
of
Enerplus Finance LP Units that have an aggregate fair market value
equal
to the aggregate fair market value of the AmalgamationCo Common
Shares;
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Focus
Qualifying Exchange with Enerplus
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(h)
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Enerplus
shall subscribe for two (2.0) Focus Units in consideration of one
(1.0)
Enerplus Unit;
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(i)
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pursuant
to the Focus Sale Agreement, Focus shall sell, transfer, convey,
assign
and deliver to Enerplus and Enerplus shall purchase and accept
from Focus,
all of the Focus Assets (other than one (1.0) Enerplus Unit) and
Enerplus
shall: (i) assume and become liable to pay, satisfy, discharge
and
observe, perform and fulfill the Focus Assumed Liabilities in accordance
with their terms; and (ii) issue to Focus an aggregate number of
Enerplus
Units equal to: (A) 0.425 multiplied by the number of Focus Units
outstanding (less two (2.0) Focus Units); plus (B) that number
of Enerplus
Units required to be delivered to Focus Unitholders for rounding
in
accordance with this Plan of
Arrangement;
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(j)
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in
connection with the assumption of the Focus Assumed Liabilities
by
Enerplus, Enerplus shall assume all the covenants and obligations
of Focus
under the Focus LP Support Agreement and the Focus LP Voting and
Exchange
Agreement in respect of the Focus Exchangeable LP Units such that
the
obligations under such agreements will be valid and binding obligations
of
Enerplus entitling the holders of Focus Exchangeable LP Units,
as against
Enerplus and in respect of the Enerplus Units, to all the rights
of the
holders of Focus Exchangeable LP Units under the Focus LP Support
Agreement and the Focus LP Voting and Exchange Agreement, including
that
following completion of the Arrangement, each Focus LP Unit shall
be
exchangeable, for no additional consideration, into 0.425 of an
Enerplus
Unit; and in connection with the foregoing, the applicable Enerplus
Arrangement Parties and Focus Arrangement Parties shall enter into
the
Focus LP Unit Support Agreement Supplement and the Focus LP Voting
and
Exchange Agreement Supplement, and the general partner of Focus
LP shall
make such amendments to the Focus LP Agreement as may be necessary
or
desirable to evidence the assumption by Enerplus of the obligations
under
the Focus LP Support Agreement and the Focus LP Voting and Exchange
Agreement, all in accordance with the applicable requirements of
such
agreements and otherwise comply with any additional requirements
of the
such agreements relating thereto;
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(k)
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Focus
shall redeem all of the issued and outstanding Focus Units (other
than the
two (2.0) Focus Units held by Enerplus) in exchange for all but
one (1.0)
of the Enerplus Units held by Focus and, upon such redemption the
Enerplus
Units shall be distributed by Focus to the Focus Unitholders on
the basis
of 0.425 of an Enerplus Unit for each one (1.0) Focus Unit held,
subject
to the rounding provisions of this Plan of
Arrangement;
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Additional
Matters Relating to Focus Exchangeable LP Units
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(l)
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Enerplus
shall issue the Enerplus Special Voting Right to the Voting and
Exchange
Trustee and Focus shall redeem the Focus Special Voting
Right;
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Cancellation
of AmalgamationCo Unit Notes and Enerplus Units held by
AmalgamationCo
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(m)
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all
of the Enerplus Units held by AmalgamationCo shall be cancelled
in
consideration of the cancellation of the AmalgamationCo Unit Notes
held by
Enerplus;
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AmalgamationCo
Notes Contribution
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(n)
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pursuant
to the AmalgamationCo Notes Contribution Agreement Enerplus shall
sell,
transfer, convey, assign and deliver to Enerplus Finance LP and
Enerplus
Finance LP shall purchase and accept from Enerplus the AmalgamationCo
Notes and Enerplus Finance LP shall issue to Enerplus that number
of
Enerplus Finance LP Units that have an aggregate fair market value
equal
to the principal amount of the AmalgamationCo Notes;
and
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Amendment
of the Focus TURIP
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(o)
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the
Focus TURIP shall be amended such
that:
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(i)
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all
references to "Focus Energy Trust" shall be amended to "Enerplus
Resources
Fund";
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(ii)
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all
references to "FET Resources Ltd. " shall be amended to "EnerMark
Inc.";
and
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(iii)
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from
and after the Effective Time each Right (as defined in the Focus
TURIP)
shall only represent the right to acquire 0.425 of an Enerplus
Unit at the
Exercise Price (as defined in the Focus TURIP) in effect on the
date of
exercise.
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3.2 The
Enerplus Arrangement Parties and Focus Arrangement Parties, shall make the
appropriate entries in their securities registers to reflect the matters
referred to under Section 3.1.
3.3 With
respect to the election required to be made by a former holder of Focus Units
pursuant to Section 3.1(d):
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(a)
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each
of such holders of Focus Units shall make such election by depositing
with
the Depositary, prior to the Election Deadline, a duly completed
Letter of
Transmittal indicating such holder's election, together with certificates
representing such holder's Focus Units;
and
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(b)
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any
Focus Unitholder who does not deposit with the Depositary a duly
completed
Letter of Transmittal prior to the Election Deadline, or otherwise
fails
to comply with the requirements of Section 3.3(a) and the Letter
of
Transmittal or to elect to exchange Focus Units as contemplated
by Section
3.1(d), shall be deemed to have elected not to receive the consideration
to be received under Section
3.1(d).
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ARTICLE 4
DISSENTING
SECURITYHOLDERS
4.1 Each
registered holder of Focus Securities shall have the right to dissent with
respect to the Arrangement in accordance with the Interim Order. A
Dissenting Securityholder shall, at the Effective Time, cease to have any
rights
as a holder of Focus Securities and shall only be entitled to be paid the
fair
value of the holder's Focus Securities by Focus, in the case of the Focus
Units,
or Focus LP, in the case of the Focus Exchangeable LP Units. A
Dissenting Securityholder who is entitled to be paid the fair value of the
holder's Focus Securities shall be deemed to have transferred the holder's
Focus
Securities to Focus, in the case of the Focus Units, or Focus LP, in the
case of
the Focus Exchangeable LP Units for cancellation at the Effective Time,
notwithstanding the provisions of Section 191 of the ABCA. A
Dissenting Securityholder who for any reason is not entitled to be paid the
fair
value of the holder's Focus Securities shall be treated as if the holder
had
participated in the Arrangement on the same basis as a non-dissenting holder
of
Focus Securities notwithstanding the provisions of the Interim Order or
Section 191 of the ABCA. The fair value of the Focus Securities
shall be determined as of the close of business on the last Business Day
before
the day on which the Arrangement is approved by the holders of Focus Securities
at the Focus Meeting; but in no event shall Enerplus or Focus be required
to
recognize such Dissenting Securityholder as a securityholder of Enerplus
or
Focus or Focus LP or their successors after the Effective Time and the name
of
such holder shall be removed from the applicable register of Focus
Securityholders as at the Effective Time. For greater certainty, in
addition to any other restrictions in Section 191 of the ABCA, no person
who has voted in favour of the Arrangement shall be entitled to dissent with
respect to the Arrangement.
ARTICLE 5
OUTSTANDING
CERTIFICATES AND FRACTIONAL SECURITIES
5.1 From
and
after the Effective Time, certificates formerly representing Focus Units
that
were exchanged pursuant to Section 3.1 shall represent only the right to
receive the consideration to which the holders are entitled under the
Arrangement, or as to those certificates representing Focus Units held by
Dissenting Securityholders, other than those Dissenting Securityholders deemed
to have participated in the Arrangement pursuant to Section 4.1, to receive
the fair value of the Focus Units represented by such certificates.
5.2 Enerplus
and Focus shall, as soon as practicable following the later of the Effective
Date and the date of deposit by a former holder of Focus Units of a duly
executed and completed Letter of Transmittal and the certificates representing
such Focus Units, either:
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(a)
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forward
or cause to be forwarded by first class mail (postage prepaid)
to such
former holder at the address specified in the Letter of Transmittal;
or
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(b)
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if
requested by such holder in the Letter of Transmittal, make available
or
cause to be made available at the Depositary for pickup by such
holder;
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certificates
representing the number of Enerplus Units to be delivered to such holders
under
the Arrangement.
5.3 If
any
certificate which immediately prior to the Effective Time represented an
interest in outstanding Focus Units that were exchanged pursuant to
Section 3.1, has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to have been
lost, stolen or destroyed, the Depositary shall issue and deliver in exchange
for such lost, stolen or destroyed certificate the consideration to which
the
holder is entitled pursuant to the Arrangement (and any dividends or
distributions with respect thereto) as determined in accordance with the
Arrangement. The person who is entitled to receive such consideration shall,
as
a condition precedent to the receipt thereof, give a bond to each of Enerplus
and Focus and their respective transfer agents, which bond is in form and
substance satisfactory to each of the Enerplus and Focus and their respective
transfer agents, or shall otherwise indemnify Enerplus and Focus and their
respective transfer agents against any claim that may be made against any
of
them with respect to the certificate alleged to have been lost, stolen or
destroyed.
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5.4 All
distributions made with respect to any Enerplus Units allotted and issued
to
former holders of Focus Units pursuant to this Plan of Arrangement but for
which
a certificate has not been issued shall be paid or delivered to the Depositary
to be held by the Depositary in trust for the registered holder
thereof. The Depositary shall pay and deliver to any such registered
holder, as soon as reasonably practicable after application therefor is made
by
the registered holder to the Depositary in such form as the Depositary may
reasonably require, such distributions to which such holder is entitled,
net of
applicable withholding and other taxes.
5.5 Any
certificate formerly representing Focus Units that is not deposited with
all
other documents as required by this Plan of Arrangement on or before the
sixth
anniversary of the Effective Date shall cease to represent a right or claim
of
any kind or nature including the right of the holder of such Focus Units
to
receive Enerplus Units and, as applicable, cash. In such case, such
Enerplus Units shall be returned to Enerplus for cancellation and any
distributions in respect of Enerplus Units shall be returned to
Enerplus.
5.6 No
certificates representing fractional Enerplus Units shall be issued under
this
Plan of Arrangement. In lieu of any fractional Enerplus Unit, each
registered holder of Focus Units otherwise entitled to a fractional interest
in
Enerplus Units, shall receive the nearest whole number of Enerplus Units,
as
applicable (with fractions equal to exactly 0.5 being rounded up).
ARTICLE 6
AMENDMENTS
6.1 Enerplus,
Focus, EnerMark and FET Resources may amend this Plan of Arrangement at any
time
and from time to time prior to the Effective Time in accordance with the
provisions of the Arrangement Agreement.
6.2 Any
amendment to this Plan of Arrangement may be made following the Effective
Time
by Enerplus, Focus, EnerMark and FET Resources, provided that it is not adverse
to the financial or economic interests of any former holder of Focus Units
or
any holder of Focus Exchangeable LP Units.
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