EXHIBIT 99.99
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UNDERWRITING AGREEMENT
January 19, 2005
Advantage Energy Income Fund
Advantage Oil & Gas Ltd.
Advantage Investment Management Ltd.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President, Finance and Chief
Financial Officer
Dear Sir:
Re: Offering of Trust Units of Advantage Energy Income Fund
Scotia Capital Inc., BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., National Bank Financial Inc., RBC
Dominion Securities Inc., CIBC World Markets Inc., FirstEnergy Capital Corp. and
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd. (collectively, the "UNDERWRITERS") understand that Advantage
Energy Income Fund (the "TRUST") proposes to issue and sell 5,250,000 trust
units (the "OFFERED SECURITIES").
The Underwriters further understand that the Trust plans to use the net proceeds
from the offering of the Offered Securities to repay indebtedness which was
incurred in connection with the acquisition of Defiant Energy Corporation, for
the 2005 capital expenditures and for general purposes.
Subject to the terms and conditions hereof, the Underwriters hereby severally,
and not jointly, agree to purchase from the Trust the Offered Securities at the
Closing Time (as hereinafter defined) in the respective percentages set forth in
paragraph 19, and the Trust hereby agrees to issue and sell to the Underwriters
at the Closing Time all, but not less than all, of the Offered Securities at the
price of $21.65 for each of the Offered Securities for an aggregate purchase
price of $113,662,500.
1. DEFINITIONS
In this agreement:
(a) "8.25% DEBENTURES" means the 8.25% convertible unsecured
subordinated debentures of the Trust;
(b) "9% DEBENTURES" means the 9.00% convertible unsecured
subordinated debentures of the Trust;
(c) "7.50% DEBENTURES" means the 7.50% convertible unsecured
subordinated debentures of the Trust;
(d) "7.75% DEBENTURES" means the 7.75% convertible unsecured
subordinated debentures of the Trust;
(e) "8.50% NOTES" means the 8.50% unsecured subordinated
promissory notes of Advantage Oil & Gas;
(f) "9 % NOTES" means the 9 % unsecured subordinated promissory
notes of Advantage Oil & Gas;
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(g) "10% DEBENTURES" means the 10.00% convertible unsecured
subordinated debentures of the Trust;
(h) "10 % NOTES" means the 10 % unsecured subordinated promissory
notes of Advantage Oil & Gas;
(i) "ABCA" means the BUSINESS CORPORATIONS ACT (Alberta), R.S.A.
2000, c. B-9, as amended, including the regulations
promulgated thereunder;
(j) "ADVANTAGE OIL & GAS" means Advantage Oil & Gas Ltd., a
corporation amalgamated pursuant to the ABCA;
(k) "AIF" means the revised annual information form of the Trust
dated May 12, 2004, including all schedules thereto;
(l) "ANADARKO" means Anadarko Canada Corporation;
(m) "ANADARKO'S AUDITORS" means KPMG LLP, chartered accountants,
Calgary, Alberta;
(n) "ANADARKO ENGINEERING REPORT" means the independent
engineering evaluations of Anadarko's oil, natural gas liquids
and natural gas interests in the Anadarko Properties prepared
by ▇▇▇▇▇▇▇ Associates Limited effective July 1, 2004;
(o) "ANADARKO FINANCIAL STATEMENTS" means the audited schedule of
revenues and operating expenses for the year ended December
31, 2003 with respect to the Anadarko Properties, together
with the notes thereto and auditors' report thereon and
interim unaudited schedule of revenues and expenses for the
six month periods ended June 30, 2004 and 2003 as contained in
the business acquisition report of the Trust dated September
30, 2004;
(p) "ANADARKO PROPERTIES" means the properties purchased by
Advantage Oil & Gas from Anadarko;
(q) "APPLICABLE SECURITIES LAWS" means all applicable Canadian
securities laws, rules, regulations, notices and policies in
the Qualifying Provinces and the corporate laws of Alberta;
(r) "ARRANGEMENT" means the plan of arrangement involving Defiant
Energy Corporation, its shareholders, Defiant Resources
Corporation, the Trust and Advantage Oil & Gas, which was
completed December21, 2004 under the provisions of the ABCA;
(s) "ASC" means the Alberta Securities Commission;
(t) "BUSINESS DAY" means a day which is not a Saturday or a Sunday
or a legal holiday in the City of Calgary, Alberta;
(u) "CLOSING DATE" means February 9, 2005 or such other date as
the Underwriters and the Trust may agree;
(v) "CLOSING TIME" means 6:15 a.m. (Calgary time) or such other
time, on the Closing Date, as the Underwriters and the Trust
may agree;
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(w) "DISTRIBUTION" means "DISTRIBUTION" or "DISTRIBUTION TO THE
PUBLIC", as the case may be, as defined under the Applicable
Securities Laws and "distribute" has a corresponding meaning;
(x) "DOCUMENTS" means, collectively, the documents incorporated by
reference in the Prospectuses and any Supplementary Material
including, without limitation:
(i) the AIF,
(ii) the audited comparative consolidated financial
statements of the Trust for the years ended December
31, 2003 and 2002, together with the notes thereto
and the auditor's report thereon,
(iii) the information circular - proxy statement of the
Trust dated April 16, 2004 relating to the annual and
special meeting of holders of Trust Units held on May
26, 2004 (excluding those portions thereof which
appear under the headings "Performance Chart" and
"Corporate Governance"),
(iv) the unaudited interim consolidated financial
statements of the Trust and management's discussion
and analysis of the financial condition and
operations of the Trust as at and for the three and
nine month periods ended September 30, 2004;
(v) pages C-1 to C-11 of the short form prospectus of the
Trust dated September 3, 2004 consisting of the
unaudited financial statements of MarkWest for the
nine months ended September 30,2003, together with
the notes thereto;
(vi) the business acquisition report of the Trust dated
September 30, 2004, including Schedules A and B
attached thereto, with respect to the acquisition by
the Trust of the Anadarko Properties;
(vii) the material change report of the Trust dated
November 4, 2004 describing the Arrangement; and
(viii) the material change report of the Trust dated
December 31, 2004 confirming the completion of the
Arrangement;
(y) "EXCHANGE" means the Toronto Stock Exchange;
(z) "EXCHANGEABLE SHARES" means exchangeable shares in the capital
of Advantage Oil & Gas, each such share being initially
exchangeable into one Trust Unit;
(aa) "MARKWEST" means MarkWest Resources Canada Corp.;
(bb) "MARKWEST AUDITOR'S" means PricewaterhouseCoopers LLP, the
former auditors of MarkWest;
(cc) "MANAGEMENT AGREEMENT" means the amended and restated
management agreement dated October 4, 2004 among Advantage Oil
& Gas, ManagementCo and the Trustee on behalf of the Trust;
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(dd) "MANAGEMENTCO" or the "MANAGER" means Advantage Investment
Management Ltd., a corporation incorporated under the ABCA;
(ee) "MATERIAL AGREEMENTS" means, collectively, the Trust
Indenture, Shareholder Agreement, Management Agreement, Note
Indentures and the Royalty Agreement;
(ff) "MISREPRESENTATION", "MATERIAL CHANGE" and "MATERIAL FACT"
shall have the meanings ascribed thereto under the Applicable
Securities Laws;
(gg) "MRRS PROCEDURES" means the mutual reliance review system and
procedures provided for by National Policy 43-201 of the
Canadian Securities Administrators relating to the Mutual
Reliance Review System;
(hh) "NI 44-101" means National Instrument 44-101 of the Canadian
Securities Administrators, as amended or replaced;
(ii) "NOTE INDENTURES" means the note indenture dated September 30,
2004 between Advantage Oil & Gas and Computershare Trust
Company of Canada providing for the issue of long term Notes
and the master note indenture dated September 30, 2004 between
Advantage Oil & Gas and Computershare Trust Company of Canada
providing for the issue of medium term Notes;
(jj) "NOTES" means the unsecured subordinated promissory notes of
Advantage Oil & Gas issued to the Trust from time to time
under the Note Indentures;
(kk) "PRELIMINARY PROSPECTUS" means the preliminary short form
prospectus of the Trust to be dated January 21, 2005 and any
amendments thereto, in respect of the distribution of the
Offered Securities, in the English and French languages,
including the documents incorporated by reference therein;
(ll) "PROSPECTUS" means the (final) short form prospectus of the
Trust and any amendments thereto, in respect of the
distribution of the Offered Securities, in the English and
French languages, including the documents incorporated by
reference therein;
(mm) "PROSPECTUS AMENDMENT" means any amendment to either the
Preliminary Prospectus or Prospectus, in the English and
French languages;
(nn) "PROSPECTUSES" means, collectively, the Preliminary Prospectus
and the Prospectus;
(oo) "PUBLIC RECORD" means all information filed after December 31,
2003 by or on behalf of the Trust and Advantage Oil & Gas with
the Securities Commissions, including without limitation, the
Documents, the Trust Financial Statements, the Prospectuses,
any Supplementary Material and any other information filed
with any Securities Commission in compliance, or intended
compliance, with any Applicable Securities Laws;
(pp) "QUALIFYING PROVINCES" means each of the provinces of Canada;
(qq) "ROYALTY" means the 95% interest in Advantage Oil & Gas'
Petroleum Substances (as defined in the Royalty Agreement)
within, upon or under certain of its Oil and Natural Gas
Properties (as defined in the Royalty Agreement) granted
pursuant to the Royalty Agreement;
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(rr) "ROYALTY AGREEMENT" means the amended and restated royalty
agreement entered into between Advantage Oil & Gas and the
Trust dated as of December 1, 2003 which provides for the
creation of the Royalty;
(ss) "SECURITIES COMMISSIONS" means the securities commissions or
similar regulatory authorities in the Qualifying Provinces;
(tt) "SELLING DEALER GROUP" means the dealers and brokers other
than the Underwriters who participate in the offer and sale of
the Offered Securities pursuant to this agreement;
(uu) "SHAREHOLDER AGREEMENT" means the shareholder agreement
entered into as of May 24, 2001 between Advantage Oil & Gas
and the Trustee, as trustee for and on behalf of the Trust;
(vv) "SPROULE" means ▇▇▇▇▇▇▇ Associates Limited, independent
petroleum consultants of Calgary, Alberta;
(ww) "SPROULE REPORT" means the independent engineering evaluation
of Advantage's oil, natural gas liquids and natural gas
interests prepared by ▇▇▇▇▇▇▇ dated April 19, 2004, and
effective December 31, 2003;
(xx) "SUBSIDIARY" has the meaning assigned thereto in the ABCA;
(yy) "Supplementary Material" means, collectively, any amendment to
the Preliminary Prospectus or Prospectus, any amended or
supplemented Preliminary Prospectus or Prospectus or any
ancillary material, information, evidence, return, report,
application, statement or document which may be filed by or on
behalf of the Trust under the Applicable Securities Laws;
(zz) "TAX ACT" means the INCOME TAX ACT (Canada) and the
regulations thereunder;
(aaa) "TRUST ASSETS" means, collectively, the Royalty, the Notes,
the Subsequent Investments, the Permitted Investments and
cash;
(bbb) "TRUST FINANCIAL STATEMENTS" means, collectively:
(i) the audited comparative consolidated financial
statements of the Trust and management's discussion
and analysis of the financial condition and
operations of the Trust for the years ended December
31, 2003 and 2002 together with the notes thereto and
auditor's reports thereon, and
(ii) the comparative interim unaudited consolidated
financial statements of the Trust and management's
discussion and analysis of the financial condition
and operations of the Trust for the nine months ended
September 30, 2004 and 2003;
(ccc) "TRUST INDENTURE" means the trust indenture dated as of April
17, 2001 as supplemented May 22, 2001 between the Trustee,
Advantage Oil & Gas and 687371 Alberta Ltd. as settlor as
amended and restated June 25, 2002, May 28, 2003 and May 26,
2004;
(ddd) "TRUST UNITS" means units of the Trust, each unit representing
an equal fractional undivided beneficial interest in the
Trust;
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(eee) "TRUST'S AUDITORS" means KPMG LLP, chartered accountants,
Calgary, Alberta;
(fff) "TRUST'S COUNSEL" means Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP or such
other legal counsel as the Trust, with the consent of the
Underwriters, may appoint;
(ggg) "TRUSTEE" means Computershare Trust Company of Canada, as
trustee of the Trust; and
(hhh) "UNDERWRITERS' COUNSEL" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP or such other
legal counsel as the Underwriters, with the consent of the
Trust, may appoint.
Unless otherwise defined herein capitalized terms shall have the meanings
ascribed thereto in the AIF.
2. UNDERWRITING FEE
In consideration for their services in underwriting the distribution of and
purchasing the Offered Securities, the Trust agrees to pay the Underwriters a
fee of $1.0825 for each of the Offered Securities purchased (being an aggregate
amount of $5,683,125), and all such fees shall be payable from the general funds
of the Trust. Such payment shall be made in accordance with paragraph 14 hereof.
The foregoing fees (the "UNDERWRITING FEE") may, at the sole option of the
Underwriters, be deducted from the aggregate gross proceeds of the sale of the
Offered Securities and withheld for the account of the Underwriters. For greater
certainty, the services provided by the Underwriters in connection herewith will
not be subject to the Goods and Services Tax provided for in the Excise Tax Act
(Canada) and taxable supplies provided will be incidental to the exempt
financial services provided. However, in the event that Canada Customs and
Revenue Agency determines that Goods and Services Tax provided for in the Excise
Tax Act (Canada) is exigible on the Underwriting Fee, the Trust agrees to pay
the amount of Goods and Services Tax forthwith upon the request of the
Underwriters. In the event that this offering is not completed, the Trust also
agrees to pay the Underwriters' reasonable expenses incurred in connection with
this underwriting as set forth in paragraph 11 hereof.
3. QUALIFICATION FOR SALE
(a) The Trust represents and warrants to the Underwriters that it
is eligible to use the short form prospectus distribution
system described in NI 44-101 and the simplified prospectus
rules of the SECURITIES ACT (Quebec) for the distribution of
the Offered Securities.
(b) The Trust shall:
(i) not later than 5:00 p.m. (Calgary time) on January
21, 2005, have prepared and filed the Preliminary
Prospectus (in the English and French languages) and
other documents required under the Applicable
Securities Laws with the Securities Commissions and
designated the ASC as the principal regulator;
(ii) have obtained a preliminary MRRS decision document
from the ASC by 10:00 a.m. (Calgary time) on January
24, 2005 dated not later than January 21, 2005,
evidencing that a receipt has been issued for the
Preliminary Prospectus in each Qualifying Province;
(iii) forthwith after any comments with respect to the
Preliminary Prospectus have been received from the
Securities Commissions have:
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(A) prepared and filed not later than February 1,
2005 (or such later date as may be agreed to
in writing by the parties hereto) the
Prospectus (in the English and French
languages) and other documents required under
the Applicable Securities Laws with the
Securities Commissions; and
(B) obtained a final MRRS decision document dated
not later than February 1, 2005 from the ASC,
evidencing that a receipt has been issued for
the Prospectus in each Qualifying Province,
or otherwise obtained a receipt for the
Prospectus from each of the Securities
Commissions;
and otherwise fulfilled all requirements of
Applicable Securities Laws to enable the Offered
Securities to be offered and sold to the public in
each of the Qualifying Provinces through the
Underwriters or any other investment dealer or broker
registered in the applicable Qualifying Province; and
(iv) until the completion of the distribution of the
Offered Securities, promptly take all additional
steps and proceedings that from time to time may be
required under the Applicable Securities Laws in each
Qualifying Province to continue to qualify the
Offered Securities for distribution or, in the event
that the Offered Securities have, for any reason,
ceased to so qualify, to again qualify the Offered
Securities for distribution.
(c) Prior to the filing of the Prospectuses and, during the period
of distribution of the Offered Securities, prior to the filing
with any Securities Commissions of any Supplementary Material,
the Trust shall have allowed the Underwriters and the
Underwriters' counsel to participate fully in the preparation
of, and to approve the form of, such documents and to have
reviewed any documents incorporated by reference therein.
(d) During the period from the date hereof until completion of the
distribution of the Offered Securities, the Trust shall allow
the Underwriters to conduct all due diligence which they may
reasonably require in order to fulfil their obligations as
underwriters and in order to enable the Underwriters to
responsibly execute the certificates required to be executed
by them in the Prospectuses or in any Supplementary Material.
(e) During the period from the date hereof until completion of the
distribution of the Offered Securities, the Trust shall take
or cause to be taken all such other steps and proceedings,
including fulfilling all legal, regulatory and other
requirements, as required under Applicable Securities Laws to
qualify the Offered Securities for distribution to the public
in the Qualifying Provinces.
4. DELIVERY OF PROSPECTUS AND RELATED DOCUMENTS
The Trust shall deliver or cause to be delivered without charge to the
Underwriters and the Underwriters' counsel the documents set out below at the
respective times indicated:
(a) Prior to or contemporaneously, as nearly as practicable, with
the filing with the Securities Commissions of each of the
Preliminary Prospectus and the Prospectus:
(i) copies of the Preliminary Prospectus and the
Prospectus, each in the English and French languages,
signed as required by the Applicable Securities Laws
of the Qualifying Provinces; and
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(ii) copies of any documents incorporated by reference
therein which have not previously been delivered to
the Underwriters;
as soon as they are available and in any event, not
later than one Business Day following the filing with
the Securities Commissions of the Preliminary
Prospectus or the Prospectus;
(b) As soon as they are available, copies of any Supplementary
Material, in the English and French languages, as required,
signed as required by the Applicable Securities Laws of the
Qualifying Provinces and including, in each case, copies of
any documents incorporated by reference therein which have not
been previously delivered to the Underwriters;
(c) Prior to the filing of the Prospectus with the Securities
Commissions, a "comfort letter" from each of the Trust's
auditors, MarkWest's auditors and Anadarko's auditors, dated
the date of the Prospectus, addressed to the Underwriters and
reasonably satisfactory in form and substance to the
Underwriters and the Underwriters' counsel, to the effect that
they have carried out certain procedures performed for the
purposes of comparing certain specified financial information
and percentages appearing in the Prospectus and the documents
incorporated therein by reference with indicated amounts in
the financial statements or accounting records of the Trust,
Advantage Oil & Gas, MarkWest or Anadarko, as applicable, and
have found such information and percentages to be in
agreement, which comfort letter shall be based on the
respective auditors review having a cut-off date of not more
than two Business Days prior to the date of the Prospectus;
(d) At the respective times of delivery to the Underwriters of the
Preliminary Prospectus and the Prospectus, the Trust shall
deliver to the Underwriters:
(i) an opinion of local counsel in Quebec, addressed to
the Underwriters and the Underwriters' counsel and
dated at the date of the filing of the Preliminary
Prospectus and the Prospectus, respectively, in form
acceptable to the Underwriters and the Underwriters'
counsel, acting reasonably, to the effect that,
except for information in the Preliminary Prospectus
or Prospectus, as applicable, translated by the
Trust's auditors, MarkWest's auditors and Anadarko's
auditors the French language version of such document
(including information incorporated by reference
therein) is in all material respects a complete and
adequate translation of the English language versions
thereof and is not susceptible to any materially
different interpretation with respect to any material
matter contained therein; and
(ii) a letter from each of the Trust's auditors,
MarkWest's auditors and Anadarko's auditors addressed
to the Underwriters and the Underwriters' counsel and
dated the date of the filing of the Preliminary
Prospectus and the Prospectus, respectively, in form
acceptable to the Underwriters and the Underwriters'
counsel, acting reasonably, to the effect that the
information excepted from the opinion of counsel
referred to in subparagraph (d)(i) in the French
language version of such document (including
information incorporated by reference therein) is in
all material respects a complete and proper
translation of the information contained in the
English language versions thereof.
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Opinions and comfort letters similar to the foregoing shall be provided to the
Underwriters with respect to any Supplementary Material and any other relevant
document at the time the same is presented to the Underwriters for their
signature or, if the Underwriters' signature is not required, at the time the
same is filed. All such letters shall be in form and substance reasonably
satisfactory to the Underwriters and the Underwriters' counsel.
Such deliveries shall also constitute the Trust's consent to the use by the
Underwriters and other members of the Selling Dealer Group of the Documents, the
Prospectuses and any Supplementary Material in connection with the offering and
sale of the Offered Securities in the Qualifying Provinces.
5. COMMERCIAL COPIES
(a) The Trust shall, as soon as possible but in any event not
later than noon (local time at the place of delivery) on the
Business Day following the date of the filing of the
Preliminary Prospectus or the Prospectus, as the case may be,
and no later than noon (local time) on the first Business Day
after the execution of any Supplementary Material cause to be
delivered to the Underwriters, without charge, commercial
copies of the Preliminary Prospectus, the Prospectus or such
Supplementary Material (both English and French versions) in
such numbers and in such cities as the Underwriters may
reasonably request by oral or written instructions to the
Trust or the printer thereof given no later than the time when
the Trust authorizes the printing of the commercial copies of
such documents; and
(b) The Trust shall cause to be provided to the Underwriters such
number of copies of any documents incorporated by reference in
the Preliminary Prospectus, Prospectus or any Supplementary
Materials as the Underwriters may reasonably request.
6. MATERIAL CHANGE
(a) During the period of distribution of the Offered Securities,
the Trust, Advantage Oil & Gas and ManagementCo will promptly
inform the Underwriters of the full particulars of:
(i) any material change (actual, anticipated or
threatened) in or affecting the business, operations,
capital, condition (financial or otherwise) of the
Trust, Advantage Oil & Gas or their respective
properties, assets, liabilities (contingent or
otherwise), operations, revenue or subsidiaries, or
affecting the ability of ManagementCo to manage the
Trust and Advantage Oil & Gas;
(ii) any change in any material fact contained or referred
to in the Preliminary Prospectus, the Prospectus or
any Supplementary Material; and
(iii) the occurrence or discovery of a material fact or
event, which, in any such case, is, or may be, of
such a nature as to:
(A) render the Preliminary Prospectus, Prospectus
or any Supplementary Material untrue, false
or misleading in a material respect;
(B) result in a misrepresentation in the
Preliminary Prospectus, the Prospectus or any
Supplementary Material; or
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(C) result in the Preliminary Prospectus, the
Prospectus or any Supplementary Material not
complying in any material respect with
Applicable Securities Laws,
provided that if the Trust, Advantage Oil & Gas or
ManagementCo is uncertain as to whether a material change,
change, discovery, occurrence or event of the nature referred
to in this paragraph has occurred, the Trust, Advantage Oil &
Gas, or ManagementCo as the case may be, shall promptly inform
the Underwriters of the full particulars of the occurrence
giving rise to the uncertainty and shall consult with the
Underwriters as to whether the occurrence is of such nature;
(b) During the period of distribution of the Offered Securities,
the Trust, Advantage Oil & Gas and ManagementCo will promptly
inform the Underwriters of the full particulars of:
(i) any request of any Securities Commission for any
amendment to the Preliminary Prospectus, the
Prospectus or any other part of the Public Record or
for any additional information;
(ii) the issuance by any Securities Commission or similar
regulatory authority, the Exchange or by any other
competent authority of any order to cease or suspend
trading of any securities of the Trust or Advantage
Oil & Gas or of the institution or threat of
institution of any proceedings for that purpose; and
(iii) the receipt by the Trust, Advantage Oil & Gas or
ManagementCo of any material communication from any
Securities Commission or similar regulatory
authority, the Exchange or any other competent
authority relating to the Preliminary Prospectus, the
Prospectus, any other part of the Public Record or
the distribution of the Offered Securities;
(c) The Trust, Advantage Oil & Gas and ManagementCo will promptly
comply to the reasonable satisfaction of the Underwriters and
the Underwriters' counsel with Applicable Securities Laws with
respect to any material change, change, occurrence or event of
the nature referred to in paragraphs 6(a) or (b) above and the
Trust, Advantage Oil & Gas and ManagementCo will prepare and
file promptly at the Underwriters' reasonable request any
amendment to the Preliminary Prospectus, the Prospectus or
Supplementary Material as may be required under Applicable
Securities Laws; provided that the Trust, Advantage Oil & Gas
and ManagementCo shall have allowed the Underwriters and the
Underwriters' counsel to participate fully in the preparation
of any Supplementary Material, to have reviewed any other
documents incorporated by reference therein and conduct all
due diligence investigations which the Underwriters may
reasonably require in order to fulfill their obligations as
underwriters and in order to enable the Underwriters
responsibly to execute the certificate required to be executed
by them in, or in connection with, any Supplementary Material,
such approval not to be unreasonably withheld and to be
provided in a timely manner. The Trust shall further promptly
deliver to each of the Underwriters and the Underwriters'
counsel a copy of each Supplementary Material in the English
and French languages as filed with the Securities Commissions,
and of opinions and letters with respect to each such
Supplementary Material substantially similar to those referred
to in paragraph 4 above; and
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(d) During the period of distribution of the Offered Securities,
the Trust will promptly provide to the Underwriters, for
review on a confidential basis by the Underwriters and the
Underwriters' counsel, prior to filing or issuance:
(i) any financial statement of the Trust or Advantage Oil
& Gas;
(ii) any proposed document, including without limitation
any amendment to the AIF, new annual information
form, material change report, interim report, or
information circular, which may be incorporated, or
deemed to be incorporated, by reference in the
Prospectus; and
(iii) any press release of the Trust.
7. REPRESENTATIONS AND WARRANTIES OF THE TRUST AND ADVANTAGE OIL & GAS
(a) Each delivery of the Preliminary Prospectus, the Prospectus
and any Prospectus Amendment pursuant to paragraph 4 above
shall constitute a joint and several representation and
warranty to the Underwriters by each of the Trust and
Advantage Oil & Gas (and each of the Trust and Advantage Oil &
Gas hereby acknowledges that each of the Underwriters is
relying on such representations and warranties in entering
into this agreement) that:
(i) all of the information and statements (except
information and statements furnished by and relating
solely to the Underwriters) contained in the
Preliminary Prospectus, the Prospectus or any
Prospectus Amendment, as applicable, including,
without limitation, the documents incorporated by
reference, as the case may be:
(A) are at the respective dates of such
documents, true and correct in all material
respects;
(B) contain no misrepresentation; and
(C) constitute full, true and plain disclosure of
all material facts relating to the Trust,
Advantage Oil & Gas, ManagementCo and the
Offered Securities.
(ii) the Preliminary Prospectus, the Prospectus and any
Prospectus Amendment, as applicable, including,
without limitation, the documents incorporated by
reference, as the case may be, complies in all
material respects with the Applicable Securities Laws
of the Qualifying Provinces, including without
limitation NI 44-101 and the simplified prospectus
rules of the Securities Act (Quebec); and
(iii) except as is disclosed in the Public Record, there
has been no intervening material change (actual,
proposed or prospective, whether financial or
otherwise), from the date of the Preliminary
Prospectus, the Prospectus and any Prospectus
Amendment to the time of delivery thereof, in the
affairs, operations, assets, liabilities (contingent
or otherwise), or ownership of the Trust or Advantage
Oil & Gas, or to the extent (if any) to which it
affects the ability of the Manager to manage the
Trust, the Manager.
(b) In addition to the representations and warranties contained in
clause 7(a) hereof, each of the Trust and Advantage Oil & Gas
jointly and severally represents and warrants to the
Underwriters, and acknowledges that each of the Underwriters
is relying upon such representations and warranties in
entering into this agreement, that:
(i) the Trust has been properly created and organized and
is a valid and subsisting trust under the laws of the
Province of Alberta and has all requisite trust
authority and power to carry on its activities as
described in the Prospectuses including, without
limitation, to perform its obligations under the
Material Agreements to which it is a party and to own
and administer its properties and assets including,
without limitation, the Trust Assets;
(ii) each of Advantage Oil & Gas and ManagementCo has been
duly incorporated and organized and is valid and
subsisting in good standing under the laws of its
jurisdiction of incorporation, and has all requisite
corporate authority and power to carry on its
business as described in the Prospectuses and to own,
lease and operate its properties and assets as
described in the Prospectuses including, without
limitation, to perform its obligations under the
Material Agreements to which it is a party;
(iii) each of Advantage Oil & Gas and ManagementCo is
qualified to carry on business and is validly
subsisting under the laws of each jurisdiction in
which it carries on a material portion of its
business and the Trust is qualified to carry on its
activities including, without limitation, owning the
Trust Assets in each jurisdiction where it carries on
such activities;
12
(iv) except for Advantage ExchangeCo Ltd. and other
non-material inactive subsidiaries and except as
described in the AIF neither the Trust nor Advantage
Oil & Gas has any subsidiaries (as defined in the
ABCA) and neither the Trust nor Advantage Oil & Gas
is "affiliated" with or a "holding corporation" of
any body corporate (within the meaning of those terms
in the ABCA);
(v) the Trust is a "unit trust" and a "mutual fund trust"
under the Tax Act and the Trust shall at all times
conduct its affairs so as to continue to qualify as a
"unit trust" and a "mutual fund trust", including by
limiting its activities to investing the property of
the Trust in the Trust Assets and other property in
which a "mutual fund trust" is permitted by the Tax
Act to invest, and will not carry on any other
business;
(vi) to the best of the knowledge of the Trust and
Advantage Oil & Gas, after reasonable inquiry,
non-residents of Canada (as that term is used in the
Tax Act) do not beneficially own more than 50% of the
issued and outstanding Trust Units;
(vii) the authorized capital of Advantage Oil & Gas
consists of an unlimited number of common shares, an
unlimited number of non-voting common shares, an
unlimited number of preferred shares, issuable in
series and an unlimited number of Exchangeable Shares
of which 12,445,032 common shares are outstanding and
1,450,030 Exchangeable Shares are outstanding;
13
(viii) all of the issued and outstanding common shares in
the capital of Advantage Oil & Gas are fully paid and
non-assessable and legally and beneficially owned by
the Trust and, except for bank security, are free and
clear of all mortgages, liens, charges, pledges,
security interests, encumbrances, claims or demands
whatsoever and no person holds any securities
convertible into or exchangeable for issued or
unissued shares of Advantage Oil & Gas or has any
agreement, warrant, option, right or privilege
(whether pre-emptive or contractual) being or capable
of becoming an agreement, warrant, option or right
for the acquisition of any unissued or issued
securities of Advantage Oil & Gas;
(ix) the Trust has full power and authority to issue the
Offered Securities;
(x) upon receipt of the purchase price therefor, the
Offered Securities will be duly and validly issued as
fully paid and non-assessable Trust Units;
(xi) none of the Trust, Advantage Oil & Gas and
ManagementCo is in default or breach of, and the
execution and delivery of, and the performance of and
compliance with the terms of this agreement by the
Trust, Advantage Oil & Gas and ManagementCo or any of
the transactions contemplated hereby does not and
will not result in any breach of, or constitute a
default under, and does not and will not create a
state of facts which, after notice or lapse of time
or both, would result in a breach of or constitute a
default under, the Trust Indenture, any term or
provision of the articles, by-laws or resolutions, as
applicable, of the Trust, Advantage Oil & Gas or
ManagementCo, or any indenture, mortgage, note,
contract, agreement (written or oral), instrument,
lease or other document including, without
limitation, any Material Agreement to which the
Trust, Advantage Oil & Gas or ManagementCo is a party
or by which any of the Trust, Advantage Oil & Gas or
ManagementCo is bound, or any judgment, decree,
order, statute, rule or regulation applicable to the
Trust, Advantage Oil & Gas or ManagementCo, which
default or breach might reasonably be expected to
materially adversely affect the business, operations,
capital, ownership or condition (financial or
otherwise) of the Trust and Advantage Oil & Gas (on a
consolidated basis) or their respective properties or
assets (taken as a whole);
(xii) each of the Trust, Advantage Oil & Gas and
ManagementCo has full trust or corporate power and
authority to enter into this agreement and to perform
its obligations set out herein and this agreement has
been duly authorized, executed and delivered by the
Trust, Advantage Oil & Gas and ManagementCo and this
agreement is a legal, valid and binding obligation of
the Trust, Advantage Oil & Gas and ManagementCo
enforceable against the Trust, Advantage Oil & Gas
and ManagementCo in accordance with its terms subject
to the general qualifications set forth in the
opinion of the Trust's counsel to be delivered
pursuant to paragraph 13(a)(v);
(xiii) there has not been any material change in the
capital, assets, liabilities or obligations
(absolute, accrued, contingent or otherwise) of the
Trust and Advantage Oil & Gas from the position set
forth in the Trust Financial Statements except as
contemplated by the Prospectuses and there has not
been any adverse material change in the business,
operations, capital or condition (financial or
otherwise) or results of the operations of the Trust
or Advantage Oil & Gas since December 31, 2003 except
as disclosed in the Prospectuses or the Public
14
Record; and since that date there have been no
material facts, transactions, events or occurrences
which could materially adversely affect the capital,
assets, liabilities (absolute, accrued, contingent or
otherwise), business, operations or condition
(financial or otherwise) or results of the operations
of the Trust, Advantage Oil & Gas or ManagementCo (on
a consolidated basis) which have not been disclosed
in the Prospectuses or the Public Record;
(xiv) the Trust Financial Statements fairly present, in
accordance with generally accepted accounting
principles in Canada, consistently applied, the
financial position and condition, the results of
operations, cash flows and the other information
purported to be shown therein of the Trust and
Advantage Oil & Gas as at the dates thereof and for
the periods then ended and reflect all assets,
liabilities and obligations (absolute, accrued,
contingent or otherwise) of the Trust and Advantage
Oil & Gas as at the dates thereof required to be
disclosed by generally accepted accounting principles
in Canada, and include all adjustments necessary for
a fair presentation;
(xv) to the best of the knowledge of the Trust and
Advantage Oil & Gas, the Anadarko Financial
Statements fairly present, in all material respects,
in accordance with generally accepted accounting
principles in Canada, consistently applied, as they
apply to a statement of revenue and operating costs,
the revenues, royalties, operating costs, operating
income and other information purported to be shown
therein attributable to the Anadarko Properties as at
the dates thereof and for the periods then ended;
(xvi) the pro forma financial statements, including the
notes thereto, of the Trust contained in the
Prospectuses have been prepared in accordance with
Canadian generally accepted accounting principles,
consistently applied, have been prepared and
presented in accordance with Applicable Securities
Laws, and include all adjustments necessary for a
fair presentation; the assumptions contained in such
pro forma financial statements are suitably supported
and consistent with the financial results of the
Trust, MarkWest, Advantage Oil & Gas and the Anadarko
Properties, and such statements provide a reasonable
basis for the compilation of the pro forma financial
statements and such pro forma financial statements,
accurately reflect such assumptions;
(xvii) no authorization, approval or consent of any court or
governmental authority or agency is required to be
obtained by the Trust in connection with the sale and
delivery of the Offered Securities, except such as
may be required by the Exchange or under the
Applicable Securities Laws;
(xviii) there are no actions, suits, proceedings or inquiries
existing or (as far as the Trust or Advantage Oil &
Gas are aware) pending or threatened against or
affecting the Trust, Advantage Oil & Gas or
ManagementCo at law or in equity or before or by any
federal, provincial, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality which in any way materially adversely
affects, or may in any way materially adversely
affect, the business, operations or condition
(financial or otherwise) of the Trust, Advantage Oil
& Gas or ManagementCo (on a consolidated basis) or
their respective properties and assets or which
affects or may affect the distribution of the Offered
Securities;
15
(xix) each of the Trust, Advantage Oil & Gas and
ManagementCo has conducted and is conducting its
business in all material respects in compliance with
all applicable laws, rules and regulations of each
jurisdiction in which it carries on business and
holds all material licences, registrations and
qualifications in all jurisdictions in which it
carries on business necessary to carry on its
business as now conducted and as contemplated to be
conducted in the Prospectuses except where such
non-compliance or lack of license, registration or
qualification, in aggregate, would not have a
material adverse affect on the capital, assets,
liabilities (absolute, accrued, contingent or
otherwise), business, operations or condition
(financial or otherwise) or the results of the
operations of the Trust, Advantage Oil & Gas and
ManagementCo (on a consolidated basis);
(xx) each of the Material Agreements is properly described
as to parties, dates and as to amendments thereto,
each of such agreements is a legal, valid and binding
obligation of the Trust, Advantage Oil & Gas and
ManagementCo, as the case may be, enforceable against
such parties in accordance with its terms subject to
the general qualifications set forth in the opinion
of the Trust's counsel to be delivered pursuant to
paragraph 13(a)(v) and each of the Trust, Advantage
Oil & Gas and ManagementCo, as applicable, are in
compliance with the terms of such Material Agreements
except where such non-compliance, in aggregate, would
not have a material adverse affect on the capital,
assets, liabilities (absolute accrued, contingent or
otherwise), business, operations or condition
(financial or otherwise) or the results of the
operations of the Trust, Advantage Oil & Gas or
ManagementCo (on a consolidated basis) and neither
the Trust or Advantage Oil & Gas is aware of any
default or breach of a material nature under any of
such Material Agreements by any other party thereto;
(xxi) the information and statements set forth in the
Public Record to the extent incorporated by reference
in the Prospectuses were true, correct, and complete
and did not contain any misrepresentation, as of the
date of such information or statements;
(xxii) the authorized capital of the Trust consists of an
unlimited number of Trust Units and an unlimited
number of Special Voting Units of which 50,457,474
Trust Units (which amount includes an aggregate of
763,373 Trust Units issued as partial payment of the
performance fee to the Manager and employees of
Advantage Oil & Gas on January 19, 2005 for services
rendered during the year ended December 31, 2004) and
one Special Voting Unit are issued and outstanding;
(xxiii) except for the 10% Debentures, 9% Debentures, 8.25%
Debentures, 7.75% Debentures, 7.5% Debentures,
Exchangeable Shares and trust unit incentive rights
granted under the Trust Unit Rights Incentive Plan,
no person holds any securities convertible or
exchangeable into Trust Units or Special Voting Units
or has any agreement, warrant, option, right or
privilege being or capable of becoming an agreement,
warrant, option or right for the purchase of any
unissued Trust Units or Special Voting Units or other
securities of the Trust;
(xxiv) no Securities Commission, the Exchange nor any
similar regulatory authority has issued any order
preventing or suspending trading in any securities of
the Trust and no proceedings, investigations or
16
inquiries for such purpose are pending or
contemplated or (as far as the Trust or Advantage Oil
& Gas are aware) threatened;
(xxv) Computershare Trust Company of Canada at its
principal offices in the cities of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, is the duly appointed registrar
and transfer agent of the Trust with respect to the
Trust Units, the 10% Debentures, 9% Debentures, 8.25%
Debentures, 7.75% Debentures, 7.5% Debentures and
Exchangeable Shares;
(xxvi) the minute books of the Trust, Advantage Oil & Gas
and ManagementCo contain true and correct copies of
the constating documents of the Trust, Advantage Oil
& Gas and ManagementCo and at the Closing Date will
contain true and correct copies or draft copies of
the minutes of all meetings and all resolutions of
the trustees and of the directors, shareholders and
unitholders of the Trust, Advantage Oil & Gas and
ManagementCo;
(xxvii) other than as provided for in this agreement, neither
the Trust, Advantage Oil & Gas nor ManagementCo has
incurred any obligation or liability, contingent or
otherwise, for brokerage fees, finder's fees, agent's
commission or other similar forms of compensation
with respect to the transactions contemplated herein;
(xxviii) the issued and outstanding Trust Units are listed and
posted for trading on the Exchange and, absent any
circumstances that the Trust is not aware of at this
time, the Offered Securities will be listed and
posted for trading on the Exchange upon the Trust
complying with the usual conditions imposed by the
TSX with respect thereto;
(xxix) the Trust is a "reporting issuer" in the provinces of
British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, Quebec, Newfoundland and Labrador, New
Brunswick and Nova Scotia, and within the meaning of
the Applicable Securities Laws in such provinces and
has the equivalent status in the province of ▇▇▇▇▇▇
▇▇▇▇▇▇ Island and is not in default of any material
requirement of Applicable Securities Laws;
(xxx) the definitive form of certificate for the Trust
Units is in due and proper form under the laws
governing the Trust and in compliance with the
material requirements of the Exchange;
(xxxi) Advantage Oil & Gas has made available to ▇▇▇▇▇▇▇,
prior to the issuance of the ▇▇▇▇▇▇▇ Report, for the
purpose of preparing the ▇▇▇▇▇▇▇ Report, all
information requested by ▇▇▇▇▇▇▇, which information
did not contain any material misrepresentation at the
time such information was provided. Except with
respect to changes in the prices of oil and gas,
neither the Trust nor Advantage Oil & Gas has any
knowledge of a material adverse change in any
production, cost, reserves or other relevant
information provided to ▇▇▇▇▇▇▇ since the date that
such information was so provided. Each of the Trust
and Advantage Oil & Gas believes that the ▇▇▇▇▇▇▇
Report reasonably presents the quantity and pre-tax
present worth values of the oil and gas reserves
associated with the crude oil, natural gas liquids
and natural gas properties evaluated in such report
as at December 31, 2003 based upon information
available at the time such reserves information was
prepared, and the Trust and Advantage Oil & Gas
17
believe that at the date of such report it did not
overstate the aggregate quantity or pre-tax present
worth values of such reserves or the estimated
monthly production volumes therefrom;
(xxxii) to the best of the knowledge of the Trust and
Advantage Oil & Gas at the date of the Anadarko
Engineering Report such report did not overstate the
aggregate quantity or pre-tax present worth values of
such reserves or the estimated monthly production
volumes therefrom;
(xxxiii) neither the Trust nor Advantage Oil & Gas is aware of
any defects, failures or impairments in the title of
Advantage Oil & Gas to the crude oil, natural gas
liquids and natural gas properties, 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: (A) the quantity and pre-tax
present worth values of crude oil, natural gas
liquids and natural gas reserves of Advantage Oil &
Gas; (B) the current production volumes of Advantage
Oil & Gas; or (C) the current cash flow of Advantage
Oil & Gas;
(xxxiv) to the knowledge of the Trust and Advantage Oil &
Gas, the Trust has good and marketable title to the
Trust Assets, free and clear of all liens, charges,
encumbrances and security interests of any nature or
kind, except for bank security and as otherwise
described in the Prospectuses;
(xxxv) except where such non-compliance or lack of obtaining
the items listed below would not have a material
adverse effect on the Trust (on a consolidated
basis), each of the Trust and Advantage Oil & Gas and
their subsidiaries have been and are in material
compliance with all applicable environmental
legislation, have obtained all material licences,
permits, approvals, consents, certificates,
registrations and other authorizations under
applicable environmental legislation necessary for
the operation of their projects as currently operated
and none of the Trust nor Advantage Oil & Gas nor
their subsidiaries (including, if applicable, any
predecessor companies thereof) have received any
notice of, or been prosecuted for, an offence
alleging material non-compliance with any
environmental legislation which remains outstanding
and which would have a material adverse effect on the
Trust (on a consolidated basis);
(xxxvi) Advantage Oil & Gas has the necessary power and
authority to execute and deliver the Prospectuses on
behalf of the Trust and all requisite action has been
taken by Advantage Oil & Gas to authorize the
execution and delivery by it of the Prospectuses on
behalf of the Trust;
(xxxvii) the Trust is not an "Investment Company" within the
meaning of that term under the UNITED STATES
INVESTMENT COMPANY ACT of 1940;
(xxxviii) the attributes and characteristics of the Offered
Securities conform in all material respects to the
attributes and characteristics thereof described in
the Prospectuses;
(xxxix) with such exceptions as are not material to the Trust
and Advantage Oil & Gas (taken as a whole), each of
the Trust and Advantage Oil & Gas has duly and on a
timely basis filed all tax returns required to be
filed by it, has paid all taxes due and payable by it
18
and has paid all assessments and re-assessments and
all other taxes, governmental charges, penalties,
interest and other fines due and payable by it and
which were claimed by any governmental authority to
be due and owing and adequate provision has been made
for taxes payable for any completed fiscal period for
which tax returns are not yet required and there are
no agreements, waivers, or other arrangements
providing for an extension of time with respect to
the filing of any tax return or payment of any tax,
governmental charge or deficiency by the Trust or
Advantage Oil & Gas and to the best of the knowledge,
information and belief of the Trust and Advantage Oil
& Gas there are no actions, suits, proceedings,
investigations or claims threatened or pending
against the Trust or Advantage Oil & Gas in respect
of taxes, governmental charges or assessments or any
matters under discussion with any governmental
authority relating to taxes, governmental charges or
assessments asserted by any such authority; and
(xl) the Trust has sufficient funds to pay to unitholders
of record on January 31, 2005 the distribution of
$0.28 per Trust Unit, such distribution to be paid on
February 15, 2005 and the Trust will have sufficient
funds to pay to unitholders of record on February 28,
2005 the cash distribution payable on each Trust
Unit, such distribution to be paid on March 15, 2005;
8. REPRESENTATIONS AND WARRANTIES OF MANAGEMENTCO
ManagementCo represents and warrants to the Underwriters, and acknowledges that
each of the Underwriters is relying upon such representations and warranties in
entering into this agreement, that:
(a) ManagementCo has been duly incorporated and organized and is
valid and subsisting under the laws of the Province of
Alberta, and has all requisite corporate authority and power
to carry on its business as described in the Prospectuses and
to own, lease and operate its properties and assets as
described in the Prospectuses including, without limitation,
to perform its obligations under the Material Agreements to
which it is a party;
(b) ManagementCo is qualified to carry on business and is validly
subsisting under the laws of each jurisdiction in which it
carries on a material portion of its business;
(c) ManagementCo is not in default or breach of, and the execution
and delivery of, and the performance of and compliance with
the terms of this agreement by ManagementCo or any of the
transactions contemplated hereby does not and will not result
in any breach of, or constitute a default under, and does not
and will not create a state of facts which, after notice or
lapse of time or both, would result in a breach of or
constitute a default under, any term or provision of the
articles, by-laws or resolutions of ManagementCo, or any
indenture, mortgage, note, contract, agreement (written or
oral), instrument, lease or other document to which
ManagementCo is a party or by which ManagementCo is bound
including, without limitation, the Material Agreements to
which it is a party, or any judgment, decree, order, statute,
rule or regulation applicable to ManagementCo, which default
or breach might reasonably be expected to materially adversely
affect the business, operations, capital, ownership or
condition (financial or otherwise) of ManagementCo or its
properties or assets (taken as a whole);
19
(d) ManagementCo has full corporate power and authority to enter
into this agreement and to perform its obligations set out
herein and this agreement has been duly authorized, executed
and delivered by ManagementCo and this agreement is a legal,
valid and binding obligation of ManagementCo enforceable
against ManagementCo in accordance with its terms subject to
the general qualifications set forth in the opinion of the
Trust's counsel to be delivered pursuant to paragraph
13(a)(v);
(e) there are no actions, suits, proceedings or inquiries pending
or (as far as ManagementCo is aware) threatened against or
affecting ManagementCo at law or in equity or before or by any
federal, provincial, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality which in any way materially adversely affects,
or may in any way materially adversely affect, the business,
operations or condition (financial or otherwise) of
ManagementCo or its properties and assets (taken as a whole)
or its ability to manage the Trust;
(f) except where such non-compliance or lack of license,
registration or qualification, in aggregate, would not have a
material adverse affect on the business, operations or
condition (financial or otherwise) of ManagementCo or its
properties or assets (taken as a whole) or its ability to
manage the Trust, ManagementCo has conducted and is conducting
its business in all material respects in compliance with all
applicable laws, rules and regulations of each jurisdiction in
which it carries on business and holds all material licences,
registrations and qualifications in all jurisdictions in which
it carries on business necessary to carry on its business as
now conducted and as contemplated to be conducted in the
Prospectuses including, without limitation, performing its
obligations under the Material Agreements to which it is a
party;
(g) each of the Material Agreements to which ManagementCo is a
party is properly described as to parties, dates and as to
amendments thereto, each of such agreements is a legal, valid
and binding obligation of the respective parties thereto
enforceable against such parties in accordance with its terms
subject to the general qualifications set forth in the opinion
of the Trust's counsel to be delivered pursuant to paragraph
13(a)(v), ManagementCo is in compliance with the terms of such
Material Agreements to which it is a party except where such
non-compliance, in aggregate, would not have a material
adverse affect on the business, operations or conditions
(financial or otherwise) of ManagementCo or its properties or
assets (taken as a whole) or its ability to manage the Trust
and ManagementCo is not aware of any default or breach of a
material nature under any of such Material Agreements by any
other party thereto;
(h) the minute books of ManagementCo contain true and correct
copies of its constating documents and at the Closing Date
will contain true and correct copies or draft copies of the
minutes of all meetings and all resolutions of the directors
and shareholders of ManagementCo; and
(i) other than as provided for in this agreement, ManagementCo has
not incurred any obligation or liability, contingent or
otherwise, for brokerage fees, finder's fees, agent's
commission or other similar forms of compensation with respect
to the transactions contemplated herein.
9. INDEMNITY
(a) The Trust and Advantage Oil & Gas, jointly and severally,
shall indemnify and save the Underwriters, and each of the
Underwriters' agents, directors, officers, shareholders and
employees harmless against and from all liabilities, claims,
20
demands, losses (other than losses of profit in connection
with the distribution of the Offered Securities), costs
(including, without limitation, reasonable legal fees and
disbursements on a full indemnity basis), damages and expenses
to which the Underwriters, or any of the Underwriters' agents,
directors, officers, shareholders or employees may be subject
or which the Underwriters, or any of the Underwriters' agents,
directors, officers, shareholders or employees may suffer or
incur, 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 information or statement contained in or
incorporated by reference into the Preliminary
Prospectus, the Prospectus, any Supplementary
Material or in any other document or material filed
or delivered pursuant hereto (other than any
information or statement relating solely to the
Underwriters and furnished to the Trust by the
Underwriters or the Underwriters' counsel expressly
for inclusion in the Preliminary Prospectus or
Prospectus) which is or is alleged to be untrue or
any omission or alleged omission to provide any
information or state any fact (other than any
information or fact relating solely to the
Underwriters) the omission of which makes or is
alleged to make any such information or statement
untrue or misleading in light of the circumstances in
which it was made;
(ii) any misrepresentation or alleged misrepresentation
(except a misrepresentation which is based upon
information relating solely to the Underwriters and
furnished to the Trust by the Underwriters or the
Underwriters' counsel, as the case may be, expressly
for inclusion in the Preliminary Prospectus or
Prospectus) contained in or incorporated by reference
into the Preliminary Prospectus, the Prospectus, any
Supplementary Materials or in any other document or
any other part of the Public Record filed by or on
behalf of the Trust;
(iii) any prohibition or restriction of trading in the
securities of the Trust or any prohibition or
restriction affecting the distribution of the Offered
Securities imposed by any competent authority (not
based on the activities or alleged activities of the
Underwriters or their banking or Selling Dealer Group
members, if any) if such prohibition or restriction
is based on any misrepresentation or alleged
misrepresentation of a kind referred to in
subparagraph 9(a)(ii);
(iv) any order made or any inquiry, investigation (whether
formal or informal) or other proceeding commenced or
threatened by any one or more competent authorities
(not based upon the activities or the alleged
activities of the Underwriters or their banking or
Selling Dealer Group members, if any) prohibiting,
restricting, relating to or materially affecting the
trading or distribution of the Offered Securities; or
(v) any breach of, default under or non-compliance by the
Trust, Advantage Oil & Gas or ManagementCo with any
requirements of Applicable Securities Laws, the
by-laws, rules or regulations of the Exchange or any
representation, warranty, term or condition of this
agreement or in any certificate or other document
delivered by or on behalf of the Trust, Advantage Oil
& Gas or ManagementCo hereunder or pursuant hereto;
21
provided, however, no party who has engaged in any fraud,
wilful misconduct, fraudulent misrepresentation or negligence
shall be entitled, to the extent that the liabilities, claims,
losses, costs, damages or expenses were caused by such
activity, to claim indemnification from any person who has not
engaged in such fraud, wilful misconduct, fraudulent
misrepresentation or negligence (provided that, for greater
certainty, the foregoing shall not disentitle an Underwriter
from claiming indemnification hereunder to the extent that the
negligence, if any, relates to the Underwriter's failure to
conduct adequate "due diligence").
(b) If any claim contemplated by paragraph 10(a) shall be asserted
against any of the persons or corporations in respect of which
indemnification is or might reasonably be considered to be
provided for in such paragraphs, such person or corporation
(the "Indemnified Person") shall notify the Trust and
Advantage Oil & Gas as applicable (collectively the
"Indemnifying Parties") (provided that failure to so notify
the Indemnifying Parties of the nature of such claim in a
timely fashion shall relieve the Indemnifying Parties of
liability hereunder only if and to the extent that such
failure materially prejudices the Indemnifying Parties'
ability to defend such claim) as soon as possible of the
nature of such claim and the Indemnifying Parties shall be
entitled (but not required) to assume the defence of any suit
brought to enforce such claim, provided however, that the
defence shall be through legal counsel selected by the
Indemnifying Parties and acceptable to the Indemnified Person
acting reasonably and that no settlement or admission of
liability may be made by the Indemnifying Parties or the
Indemnified Person without the prior written consent of the
other, such consent not to be unreasonably withheld. The
Indemnified Person shall have the right to retain its own
counsel in any proceeding relating to a claim contemplated by
paragraph 10(a) if:
(i) the Indemnified Person has been advised by counsel
that there may be a reasonable legal defense
available to the Indemnified Person which is
different from or additional to a defense available
to an Indemnifying Party and that representation of
the Indemnified Person and any one or more of the
Indemnifying Parties by the same counsel would be
inappropriate due to the actual or potential
differing interests between them (in which case the
Indemnifying Parties shall not have the right to
assume the defense of such proceedings on the
Indemnified Person's behalf);
(ii) the Indemnifying Parties shall not have taken the
defense of such proceedings and employed counsel
within ten (10) days after notice has been given to
the Indemnifying Parties of commencement of such
proceedings; or
(iii) the employment of such counsel has been authorized by
the Indemnifying Parties in connection with the
defense of such proceedings; and, in any such event,
the reasonable fees and expenses of such Indemnified
Person's counsel (on a solicitor and his client
basis) shall be paid by the Indemnifying Parties,
provided that the Indemnifying Parties shall not, in
connection with any one such action or separate but
substantially similar or related actions in the same
jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees
and expenses of more than one separate law firm (in
addition to any local counsel) for all such
Indemnified Persons.
(c) Each of the Indemnifying Parties hereby waives its rights to
recover contribution from the Underwriters with respect to any
liability of the Indemnifying Party by reason of or arising
out of any misrepresentation in the Preliminary Prospectus,
the Prospectus, any Supplementary Material or any other part
22
of the Public Record provided, however, that such waiver shall
not apply in respect of liability caused or incurred by reason
of any misrepresentation which is based upon information
relating solely to the Underwriters contained in such document
and furnished to the Trust by the Underwriters expressly for
inclusion in the Preliminary Prospectus or the Prospectus.
(d) If any legal proceedings shall be instituted against an
Indemnifying Party in respect of the Preliminary Prospectus,
the Prospectus, any Supplementary Material or any other part
of the Public Record, or if any regulatory authority or stock
exchange shall carry out an investigation of an Indemnifying
Party in respect of the Preliminary Prospectus, the
Prospectus, any Supplementary Material or any other part of
the Public Record, and, in either case, any Indemnified Person
is required to testify, or respond to procedures designed to
discover information, in connection with or by reason of the
services performed by the Underwriters hereunder, the
Indemnified Persons may employ their own legal counsel and the
Indemnifying Parties shall pay and reimburse the Indemnified
Persons for the reasonable fees, charges and disbursements (on
a full indemnity basis) of such legal counsel, the other
expenses reasonably incurred by the Indemnified Persons in
connection with such proceedings or investigation and a fee at
the normal per diem rate for any director, officer or employee
of the Underwriters involved in the preparation for or
attendance at such proceedings or investigation.
(e) The rights and remedies of the Indemnified Persons set forth
in paragraphs 9, 10 and 11 hereof are to the fullest extent
possible in law cumulative and not alternative and the
election by any Underwriter or other Indemnified Person to
exercise any such right or remedy shall not be, and shall not
be deemed to be, a waiver of any other rights and remedies.
(f) The Indemnifying Parties hereby acknowledge that the
Underwriters are acting as agents for the Underwriters'
respective agents, directors, officers, shareholders and
employees under this paragraph 9 and under paragraph 10 with
respect to all such agents, directors, officers, shareholders
and employees.
(g) The Indemnifying Parties waive any right they may have of
first requiring an Indemnified Person to proceed against or
enforce any other right, power, remedy or security or claim or
to claim payment from any other person before claiming under
this indemnity. It is not necessary for an Indemnified Person
to incur expense or make payment before enforcing such
indemnity.
(h) The rights of indemnity contained in this paragraph 9 shall
not apply if the Indemnifying Parties have complied with the
provisions of paragraphs 3 and 4 and the person asserting any
claim contemplated by this paragraph 9 was not provided with a
copy of the Prospectus or any amendment to the Prospectus or
other document which corrects any misrepresentation or alleged
misrepresentation which is the basis of such claim and which
was required, under Applicable Securities Laws, to be
delivered to such person by the Underwriters.
(i) If the Indemnifying Parties have assumed the defense of any
suit brought to enforce a claim hereunder, the Indemnified
Person shall provide the Indemnifying Parties copies of all
documents and information in its possession pertaining to the
claim, take all reasonable actions necessary to preserve its
rights to object to or defend against the claim, consult and
reasonably cooperate with the Indemnifying Parties in
determining whether the claim and any legal proceeding
23
resulting therefrom should be resisted, compromised or settled
and reasonably cooperate and assist in any negotiations to
compromise or settle, or in any defense of, a claim undertaken
by the Indemnifying Parties.
10. CONTRIBUTION
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this agreement is due in accordance
with its terms but is, for any reason, held by a court to be unavailable from
one or more of the Indemnifying Parties on grounds of policy or otherwise, the
Indemnifying Parties and the party or parties seeking indemnification shall
contribute to the aggregate liabilities, claims, demands, losses (other than
losses of profit in connection with the distribution of the Offered Securities),
costs (including, without limitation, reasonable legal fees and disbursements on
a full indemnity basis), damages and expenses to which they may be subject or
which they may suffer or incur:
(a) in such proportion as is appropriate to reflect the relative
benefit received by the Indemnifying Parties on the one hand,
and by the Underwriters on the other hand, from the offering
of the Offered Securities; or
(b) if the allocation provided by paragraph 10(a) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in paragraph 10(a) above but also to reflect the relative
fault of the Underwriters on the one hand, and the
Indemnifying Parties, on the other hand, in connection with
the statements, commissions or omissions or other matters
which resulted in such liabilities, claims, demands, losses,
costs, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Indemnifying Parties, on the one hand, and
the Underwriters, on the other hand, shall be deemed to be in the same
proportion that the total proceeds of the offering received by the Indemnifying
Parties (net of fees but before deducting expenses) bear to the fees received by
the Underwriters. In the case of liability arising out of the Preliminary
Prospectus, the Prospectus, any Supplementary Material or any other part of the
Public Record, the relative fault of the Indemnifying Parties, on the one hand,
and of the Underwriters, on the other hand, shall be determined by reference,
among other things, to whether the misrepresentation or alleged
misrepresentation, order, inquiry, investigation or other matter or thing
referred to in paragraph 9 relates to information supplied or which ought to
have been supplied by, or steps or actions taken or done on behalf of or which
ought to have been taken or done on behalf of, one or more of the Indemnifying
Parties or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such misrepresentation or
alleged misrepresentation, order, inquiry, investigation or other matter or
thing referred to in paragraph 9.
The amount paid or payable by an Indemnified Person as a result of liabilities,
claims, demands, losses (other than losses of profit in connection with the
distribution of the Offered Securities), costs, damages and expenses (or claims,
actions, suits or proceedings in respect thereof) referred to above shall,
without limitation, include any legal or other expenses reasonably incurred by
the Indemnified Person in connection with investigating or defending such
liabilities, claims, demands, losses, costs, damages and expenses (or claims,
actions, suits or proceedings in respect thereof) whether or not resulting in
any action, suit, proceeding or claim.
Each of the Indemnifying Parties and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this agreement were determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraphs. The rights to contribution provided in this paragraph 10
shall be in addition to, and without prejudice to, any other right to
contribution which the Underwriters or other Indemnified Persons may have.
24
Any liability of the Underwriters under this paragraph 10 shall be limited to
the amount actually received by the Underwriters under paragraph 2.
11. EXPENSES
Whether or not the transactions contemplated herein shall be completed, all
costs and expenses (including applicable goods and services tax) of or
incidental to the transactions contemplated hereby including, without
limitation, those relating to the distribution of the Offered Securities shall
be borne by the Trust including, without limitation, all costs and expenses of
or incidental to the preparation, filing, reproduction (including the commercial
copies thereof) and translation of the Preliminary Prospectus, the Prospectus
and any Supplementary Material and the delivery thereof to the Underwriters, the
fees and expenses of the Trust's counsel, the fees and expenses of agent counsel
retained by the Trust or the Trust's counsel, the fees and expenses of the
Trust's transfer agent, auditors, engineers and other outside consultants, all
stock exchange listing fees, the cost of preparing record books for all of the
parties to this agreement and their respective counsel, any newspaper
advertisements on behalf of the Trust and all other reasonable costs and
expenses relating to this transaction. In the event that the offering of the
Offered Securities is not completed, the Trust will pay the reasonable fees and
expenses of the Underwriters' counsel and all other reasonable out-of-pocket
expenses incurred by the Underwriters.
12. TERMINATION
(a) The Underwriters, or any of them, may, without liability,
terminate their obligations hereunder, by written notice to
the Trust in the event that after the date hereof and at or
prior to the Closing Time:
(i) any order to cease or suspend trading in any
securities of the Trust or Advantage Oil & Gas or
prohibiting or restricting the distribution of any of
the Offered Securities is made, or proceedings are
announced, commenced or threatened for the making of
any such order, by any securities commission or
similar regulatory authority, the Exchange or by any
other competent authority, and has not been
rescinded, revoked or withdrawn;
(ii) any inquiry, investigation (whether formal or
informal) or other proceeding in relation to the
Trust, Advantage Oil & Gas, ManagementCo or any of
the directors or senior officers of Advantage Oil &
Gas or ManagementCo is announced, commenced or
threatened by any securities commission or similar
regulatory authority, the Exchange or by any other
competent authority or there is a change in law,
regulation or policy or the interpretation or
administration thereof, if, in the reasonable opinion
of the Underwriters or any one of them, the change,
announcement, commencement or threatening thereof
adversely affects the trading or distribution of the
Offered Securities or any other securities of the
Trust;
(iii) there shall have occurred any adverse change, as
determined by the Underwriters or any one of them in
their sole discretion, acting reasonably, in the
business, operations, capital or condition (financial
or otherwise), business or business prospects of the
Trust, Advantage Oil & Gas, ManagementCo (taken as a
whole) or the respective properties, assets,
liabilities or obligations (absolute, accrued,
25
contingent or otherwise) of the Trust, Advantage Oil
& Gas, ManagementCo (taken as a whole) which in the
Underwriters' opinion, could reasonably be expected
to have a significant adverse effect on the market
price or value of the Offered Securities or any other
securities of the Trust or the investment quality or
marketability of the Offered Securities or any other
securities of the Trust;
(iv) there should develop, occur or come into effect or
existence any event, action, state, condition or
major financial occurrence of national or
international consequence or any law, action or
regulation or other occurrence of any nature
whatsoever which, in the sole opinion of the
Underwriters or any one of them, acting reasonably,
seriously adversely affects, or involves, or will
seriously adversely affect, or involve, the financial
markets or the business, operations or affairs of the
Trust, Advantage Oil & Gas and ManagementCo (taken as
a whole), such that it would not be practical (in the
sole opinion of the Underwriters, or any one of them,
acting reasonably) to market the Offered Securities
or any other securities of the Trust;
(v) the Underwriters shall become aware of any material
fact (including an adverse material change) with
respect to the Trust, Advantage Oil & Gas or
ManagementCo which had not been publicly disclosed or
disclosed in writing to the Underwriters at or prior
to the date hereof which, in the sole opinion of the
Underwriters or any one of them, could reasonably be
expected to have a significant adverse effect on the
market price or value of the Offered Securities or
any other securities of the Trust or the investment
quality or marketability of the Offered Securities or
any other securities of the Trust;
(vi) the Trust, Advantage Oil & Gas or ManagementCo shall
be in breach or default under or non-compliance with
any representation, warranty, term or condition of
this agreement, in any material respect; or
(vii) there is announced any change or proposed change in
the income tax laws of Canada or the interpretation
or administration thereof and such change, which in
the sole opinion of the Underwriters, or any one of
them, could reasonably be expected to have a
significant adverse effect on the market price or
value of the Offered Securities or any other
securities of the Trust.
(b) The Underwriters, or any of them, may exercise any or all of
the rights provided for in paragraph 12(a) or paragraph 18
notwithstanding any material change, change, event or state of
facts and (except where the Underwriter purporting to exercise
any of such rights is in breach of its obligations under this
agreement) notwithstanding any act or thing taken or done by
the Underwriters or any inaction by the Underwriters, whether
before or after the occurrence of any material change, change,
event or state of facts including, without limitation, any act
of the Underwriters related to the offering or continued
offering of the Offered Securities for sale and any act taken
by the Underwriters in connection with any amendment to the
Prospectus (including the execution of any amendment or any
other Supplementary Material) and the Underwriters shall only
be considered to have waived or be estopped from exercising or
relying upon any of their rights under or pursuant to
paragraph 12(a) or paragraph 18 if such waiver or estoppel is
in writing and specifically waives or estops such exercise or
reliance.
26
(c) Any termination pursuant to the terms of this agreement shall
be effected by notice in writing delivered to the Trust,
provided that no termination shall discharge or otherwise
affect any obligation of the Trust, Advantage Oil & Gas under
paragraphs 9, 10, or 18. The rights of the Underwriters to
terminate their obligations hereunder are in addition to, and
without prejudice to, any other remedies they may have.
(d) If an Underwriter elects to terminate its obligation to
purchase the Offered Securities as aforesaid, whether the
reason for such termination is within or beyond the control of
the Trust, Advantage Oil & Gas or ManagementCo, the liability
of the Trust, Advantage Oil & Gas or ManagementCo hereunder
shall be limited to the indemnity referred to in paragraph 9,
the contribution rights referred to in paragraph 10 and the
payment of expenses referred to in paragraph 11; provided,
however, an Underwriter shall not be entitled to the payment
of expenses referred to in paragraph 11 if an Underwriter is
in breach of or default under or non-compliance with any
representation, warranty, term or condition of this Agreement,
in any material respect.
13. CLOSING DOCUMENTS
The obligations of the Underwriters hereunder, as to the Offered Securities to
be purchased at the Closing Time shall be conditional upon the Trust, Advantage
Oil & Gas and ManagementCo having performed in all material respects, at the
Closing Time, all of their obligations hereunder theretofore to be performed and
the Underwriters receiving at the Closing Time:
(a) favorable legal opinions of the Trust's counsel and the
Underwriters' counsel addressed to the Underwriters, in form
and substance reasonably satisfactory to the Underwriters,
with respect to such matters as the Underwriters may
reasonably request relating to the offering of the Offered
Securities, the Trust, Advantage Oil & Gas and ManagementCo
and the transactions contemplated hereby, including, without
limitation, that:
(i) the Trust is valid and existing as a trust under the
laws of the Province of Alberta and having the
Trustee as its trustee;
(ii) the Trust has the capacity and power to own and lease
its properties and assets and to conduct its business
as described in the Prospectuses;
(iii) each of Advantage Oil & Gas and ManagementCo has been
duly incorporated, is validly subsisting and has all
requisite corporate power and authority to carry on
its business as now conducted by it and to own its
properties and assets and is qualified to carry on
business under the laws of the jurisdictions where it
carries on a material portion of its business;
(iv) the Trust is the registered holder of all issued and
outstanding common shares and Notes of Advantage Oil
& Gas, all of which common shares have been duly
authorized and validly issued as fully paid and
non-assessable;
(v) each of the Trust, ManagementCo and Advantage Oil &
Gas has all necessary trust or corporate power and
authority to enter into this agreement and the
Material Agreements and to perform its obligations,
as applicable, and this agreement and the Material
Agreements have been duly authorized, executed and
delivered, as applicable, by the Trust, Advantage Oil
& Gas and ManagementCo, respectively, and constitute
legal, valid and binding obligations of each of the
27
Trust, Advantage Oil & Gas and ManagementCo,
enforceable against the Trust, Advantage Oil & Gas
and ManagementCo, as applicable, in accordance with
their terms except that the validity, binding effect
and enforceability of the terms of agreements and
documents are subject to the qualification that such
validity, binding effect and enforceability may be
limited by:
(A) applicable bankruptcy, insolvency,
moratorium, reorganization or other laws
affecting creditors' rights generally;
(B) equitable remedies, including the remedies of
specific performance and injunctive relief,
being available only in the discretion of the
applicable court;
(C) the statutory and inherent powers of a court
to grant relief from forfeiture, to stay
execution of proceedings before it and to
stay executions on judgments;
(D) the applicable laws regarding limitations of
actions;
(E) enforceability of provisions which purport to
sever any provision which is prohibited or
unenforceable under applicable law without
affecting the enforceability or validity of
the remainder of such document would be
determined only in the discretion of the
court;
(F) enforceability of the provisions exculpating
a party from liability or duty otherwise owed
by it may be limited under applicable law;
and
(G) that rights to indemnity, contribution and
waiver under the documents may be limited or
unavailable under applicable law;
(vi) the execution and delivery of this agreement and the
fulfilment of the terms hereof by each of the Trust,
Advantage Oil & Gas and ManagementCo, and the
performance of and compliance with the terms of this
agreement by the Trust, Advantage Oil & Gas and
ManagementCo does not and will not result in a breach
of, or constitute a default under, and does not
create a state of facts which, after notice or lapse
of time or both, will result in a breach of or
constitute a default under, any applicable laws or
any term or provision of the Trust Indenture, the
articles, by-laws or resolutions of the unitholders
or the directors or shareholders of the Trust,
Advantage Oil & Gas or ManagementCo, as applicable,
or any mortgage, note, indenture, contract, agreement
(written or oral), instrument, lease or other
document to which the Trust, Advantage Oil & Gas or
ManagementCo is a party or by which it is bound, of
which such counsel is aware including, without
limitation, the Material Agreements, which default
might reasonably be expected to materially adversely
affect the business, operations, capital or condition
(financial or otherwise) of the Trust or its assets
(taken as a whole);
(vii) the form of the definitive certificate representing
the Trust Units has been approved and adopted by the
Trust and each complies with all legal requirements
(including all applicable requirements of the
Exchange) relating thereto;
28
(viii) the Offered Securities have been duly and validly
created, allotted and issued as fully paid and
non-assessable Trust Units;
(ix) the Offered Securities conform in all material
respects with the description thereof contained in
the Prospectuses;
(x) the Offered Securities are eligible investments as
set out under the heading "Eligibility for
Investment" in the Prospectuses;
(xi) all necessary documents have been filed, all
necessary proceedings have been taken and all legal
requirements have been fulfilled as required under
the Applicable Securities Laws of each of the
Qualifying Provinces in order to qualify the Offered
Securities for distribution and sale to the public in
each of such Qualifying Provinces by or through
investment dealers and brokers duly registered under
the applicable laws of such provinces who have
complied with the relevant provisions of such
Applicable Securities Laws;
(xii) the Trust is a "reporting issuer" not in default of
any requirement of the Securities Act (Alberta) and
the regulations thereunder and has a similar status
under the Applicable Securities Laws of each of the
other Qualifying Provinces that have the "reporting
issuer" concept;
(xiii) each of the Trust and Advantage Oil & Gas have the
necessary power and authority to execute and deliver
the Prospectuses and all necessary action has been
taken by each of the Trust and Advantage Oil & Gas to
authorize the execution and delivery by it of the
Prospectuses and the filing thereof, as the case may
be, in each of the Qualifying Provinces in accordance
with Applicable Securities Laws;
(xiv) subject to the qualifications and assumptions set out
therein, the statements in the Prospectus under the
heading "Canadian Federal Income Tax Considerations"
constitute a fair summary of the principal Canadian
federal income tax consequences arising under the Tax
Act to persons referred to therein who will hold the
Offered Securities;
(xv) all laws of the Province of Quebec relating to the
use of the French language have been complied with in
connection with the sale of the Offered Securities to
purchasers in the Province of Quebec;
(xvi) the Offered Securities are conditionally listed and,
upon notification to the Exchange of the issuance and
sale thereof and fulfilment of the conditions of the
Exchange, will be posted for trading on the Exchange;
(xvii) the authorized and issued capital of the Trust; and
(xviii) Computershare Trust Company of Canada, at its
principal offices in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ has been duly appointed the transfer agent
and registrar for the Trust ▇▇▇▇▇,
▇▇
and as to all other legal matters, including compliance with
Applicable Securities Laws in any way connected with the
issuance, sale and delivery of the Offered Securities as the
Underwriters may reasonably request.
It is understood that Trust's counsel may rely on the opinions
of local counsel acceptable to them as to matters governed by
the laws of jurisdictions other than where they are qualified
to practice law, and on certificates of officers of the Trust,
Advantage Oil & Gas, ManagementCo, the transfer agent and the
Trust's auditors as to relevant matters of fact. It is further
understood that the Underwriters' counsel may rely on the
opinion of the Trust's counsel as to matters which
specifically relate to the Trust, Advantage Oil & Gas,
ManagementCo and the Offered Securities;
(b) a certificate of each of the Trust and Advantage Oil & Gas
dated the Closing Date addressed to the Underwriters and
signed on behalf of the Trust and Advantage Oil & Gas by the
President and Chief Executive Officer and the Vice President,
Finance and Chief Financial Officer of Advantage Oil & Gas or
such other officers or directors of Advantage Oil & Gas
satisfactory to the Underwriters, acting reasonably,
certifying that:
(i) each of the Trust and Advantage Oil & Gas has
complied with and satisfied in all material respects
all terms and conditions of this agreement on its
part to be complied with or satisfied at or prior to
the Closing Time;
(ii) the representations and warranties of the Trust and
Advantage Oil & Gas set forth in this agreement are
true and correct in all material respects at the
Closing Time as if made at such time; and
(iii) no event of a nature referred to in paragraphs 6(a),
6(b), 12(a)(i), (ii) or (vi) has occurred or to the
knowledge of such officer is pending, contemplated or
threatened;
and the Underwriters shall have no knowledge to the contrary;
(c) a certificate of ManagementCo dated the Closing Date addressed
to the Underwriters and signed on behalf of ManagementCo by
the President and Vice President of ManagementCo or such other
officers or directors of ManagementCo satisfactory to the
Underwriters, acting reasonably, certifying that:
(i) ManagementCo has complied with and satisfied in all
material respects all terms and conditions of this
agreement on its part to be complied with or
satisfied at or prior to the Closing Time; and
(ii) the representations and warranties of ManagementCo
set forth in this agreement are true and correct in
all material respects at the Closing Time as if made
at such time;
and the Underwriters shall have no knowledge to the contrary;
(d) a comfort letter of each of the Trust's auditors, Anadarko's
auditors and MarkWest's auditors addressed to the Underwriters
and dated the Closing Date satisfactory in form and substance
to the Underwriters, acting reasonably, bringing the
30
information contained in the comfort letters referred to in
paragraph 4(d) hereof up to the Closing Time which comfort
letter shall be not more than two Business Days prior to the
Closing Date;
(e) evidence satisfactory to the Underwriters that the Offered
Securities have been conditionally listed on the Exchange not
later than the close of business on the last Business Day
preceding the Closing Date; and
(f) such other certificates and documents as the Underwriters may
request, acting reasonably.
14. DELIVERIES
The sale of the Offered Securities shall be completed at the Closing Time at the
offices of the Trust's counsel in Calgary, Alberta or at such other place as the
Trust and the Underwriters may agree. Subject to the conditions set forth in
Section 13, the Underwriters, on the Closing Date, shall deliver to the Trust a
wire transfer payable to the Trust at par in Calgary in respect of the Offered
Securities (less the fee of the Underwriters to be calculated as provided in
Section 2(a)) against delivery by the Trust of:
(a) the opinions, certificates and documents referred to in
Section 13; and
(b) definitive certificates representing, in the aggregate, all of
the Offered Securities, registered in the name of Scotia
Capital Inc. or in such name or names as the Underwriters
shall notify the Trust in writing not less than twenty four
(24) hours prior to the Closing Time.
15. RESTRICTIONS ON OFFERINGS
The Trust agrees that, prior to 90 days after the Closing Date except in respect
of Trust Units issued on conversion of the 8.25% Debentures, the 9% Debentures,
the 10% Debentures, the 7.75% Debentures, the 7.50% Debentures, Exchangeable
Shares or upon the exercise of trust unit incentive rights, it shall not,
directly or indirectly, sell or offer to sell any Trust Units, or otherwise
lend, transfer or dispose of any securities exchangeable, convertible or
exercisable into Trust Units or enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of Trust Units, whether any such transaction is settled by delivery of
Trust Units or other such securities, in cash or otherwise, or announce an
intention to do any of the foregoing without the consent of Scotia Capital Inc.,
such consent not to be unreasonably withheld.
16. NOTICES
Any notice or other communication to be given hereunder shall, in the case of
notice to be given to the Trust, Advantage Oil & Gas or ManagementCo, be
addressed to ManagementCo, c/o ▇▇▇▇▇ ▇▇▇▇▇▇, President, at the above address,
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ with a copy to:
Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
31
and, in the case of notice to be given to the Underwriters, be addressed to:
Scotia Capital Inc.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ Centre
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
National Bank Financial Inc.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Tower
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
RBC Dominion Securities Inc.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
CIBC World Markets Inc.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: T. ▇▇▇▇▇▇▇ Kitchen
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
FirstEnergy Capital Corp.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
32
and a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party may designate by notice given to the
other. Each communication shall be personally delivered to the addressee or sent
by facsimile transmission to the addressee, and:
(a) a communication which is personally delivered shall, if
delivered before 4:00 p.m. (local time at the place of
delivery) on a Business Day, be deemed to be given and
received on that day and, in any other case be deemed to be
given and received on the first Business Day following the day
on which it is delivered; and
(b) a communication which is sent by facsimile transmission shall,
if sent on a Business Day before 4:00 p.m. (local time at the
place of receipt), be deemed to be given and received on that
day and, in any other case, be deemed to be given and received
on the first Business Day following the day on which it is
sent.
17. CONDITIONS
All terms, covenants and conditions of this agreement to be performed by the
Trust, Advantage Oil & Gas and ManagementCo shall be construed as conditions,
and any breach or failure to comply with any material terms and conditions which
are for the benefit of the Underwriters shall entitle the Underwriters to
terminate their obligations to purchase the Offered Securities, by written
notice to that effect given to the Trust prior to the Closing Time. The
Underwriters may waive in whole or in part any breach of, default under or
non-compliance with any representation, warranty, term or condition hereof, or
extend the time for compliance therewith, without prejudice to any of their
rights in respect of any other representation, warranty, term or condition
hereof or any other breach of, default under or non-compliance with any other
representation, warranty, term or condition hereof, provided that any such
waiver or extension shall be binding on the Underwriters only if the same is in
writing.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, terms and conditions herein (including, without
limitation, those contained in paragraphs 7 and 8 hereof) or contained in
certificates or documents submitted pursuant to or in connection with the
transactions contemplated herein shall survive the payment by the Underwriters
for the Offered Securities, the termination of this agreement and the
distribution of the Offered Securities pursuant to the Prospectus and shall
continue in full force and effect for the benefit of the Underwriters regardless
of any investigation by or on behalf of the Underwriters with respect thereto.
33
19. SEVERAL LIABILITY OF UNDERWRITERS
The Underwriters' rights and obligations under this agreement are several and
not joint and several including, without limitation, that:
(a) each of the Underwriters shall be obligated to purchase only
the percentage of the total number of Offered Securities set
forth opposite their names set forth in this paragraph 19; and
(b) if an Underwriter (a "Refusing Underwriter") does not complete
the purchase and sale of the Offered Securities which that
Underwriter has agreed to purchase under this Agreement (other
than in accordance with section 12) (the "Defaulted
Securities"), the remaining Underwriters (the "Continuing
Underwriters") will be entitled, at their option, to purchase
all but not less than all of the Defaulted Securities pro rata
according to the number of Offered Securities to have been
acquired by the Continuing Underwriters under this Agreement
or in any proportion agreed upon, in writing, by the
Continuing Underwriters. If no such arrangement has been made
and the number of Defaulted Securities to be purchased by the
Refusing Underwriter(s) does not exceed 3% of the Offered
Securities, the Continuing Underwriters will be obligated to
purchase the Defaulted Securities on the terms set out in this
Agreement in proportion to their obligations under this
Agreement. If the number of Defaulted Securities to be
purchased by the Refusing Underwriters exceeds 3% of the
Offered Securities, the Continuing Underwriters will not be
obligated to purchase the Defaulted Securities and, if the
Continuing Underwriters do not elect to purchase the Defaulted
Securities:
(i) the Continuing Underwriters will not be obligated to
purchase any of the Offered Securities;
(ii) the Trust will not be obligated to sell less than all
of the Offered Securities; and
(iii) the Trust, Advantage Oil & Gas and ManagementCo will
be entitled to terminate their obligations under this
Agreement, in which event there will be no further
liability on the part of such parties or the
Continuing Underwriters, except pursuant to the
provisions of sections 9, 10 and 11 hereof.
The applicable percentage of the total number of Offered Securities which each
of the Underwriters shall be separately obligated to purchase is as follows:
Scotia Capital Inc. 39%
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. 17.5%
National Bank Financial Inc. 17.5%
RBC Dominion Securities Inc. 13%
CIBC World Markets Inc. 10%
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ltd. 2%
FirstEnergy Capital Corp. 1%
Nothing in this agreement shall obligate the Trust to sell one or any of the
Underwriters less than all of the Offered Securities or shall relieve any
Underwriter in default from liability to the Trust, Advantage Oil & Gas or
ManagementCo, or to any non-defaulting Underwriter in respect of its default
hereunder. In the event of a termination by the Trust, Advantage Oil & Gas or
ManagementCo of their obligations under this agreement, there shall be no
34
further liability on the part of the Trust, Advantage Oil & Gas or ManagementCo
to the Underwriters except in respect of any liability which may have arisen or
may thereafter arise under sections 9, 10 and 11.
20. AUTHORITY TO BIND UNDERWRITERS
The Trust, Advantage Oil & Gas and ManagementCo shall be entitled to and shall
act on any notice, waiver, extension or communication given by or on behalf of
the Underwriters by Scotia Capital Inc., which shall represent the Underwriters
and which shall have the authority to bind the Underwriters in respect of all
matters hereunder, except in respect of any settlement under paragraphs 9 or 10,
any matter referred to in paragraph or any agreement under paragraph 20.
While not affecting the foregoing, Scotia Capital Inc. shall consult with the
other Underwriters with respect to any such notice, waiver, extension or other
communication.
21. UNDERWRITERS COVENANTS
Each of the Underwriters covenants and agrees with the Trust that it will:
(a) offer the Offered Securities for sale to the public only in
the Qualifying Provinces;
(b) conduct activities in connection with the proposed offer and
sale of the Offered Securities in compliance with all
Applicable Securities Laws and cause a similar covenant to be
contained in any agreement entered into with any Selling
Dealer Group established in connection with the distribution
of the Offered Securities;
(c) use all reasonable efforts to complete the distribution of the
Offered Securities as soon as possible;
(d) not solicit subscriptions for the Offered Securities, trade in
Offered Securities or otherwise do any act in furtherance of a
trade of Offered Securities outside of the Qualifying
Provinces including, without limitation:
(i) the Underwriters agree that they will not (and will
cause the Selling Dealer Group not to) sell or offer
to sell the Offered Securities within the United
States of America, its territories or possessions
(the "U.S.") or to, or for the account of, "United
States persons" (as that term is defined in
Regulation S to the United States Securities Act of
1933, as amended (the "1933 ACT"));
(ii) at the time any buy order for the Offered Securities
is originated, the buyer is outside the U.S., or the
Underwriters or any person acting on its behalf
reasonably believes the buyer is outside the U.S. and
the buyer shall not be a "United States person"; and
(iii) no "directed selling efforts" (as that term is
defined under Regulation S of the ▇▇▇▇ ▇▇▇) have been
or will be made in the U.S. by the Underwriters or
any person acting on behalf of the Underwriters in
respect of the sale of the Offered Securities offered
for sale hereunder; and
(e) as soon as reasonably practicable after the Closing Date
provide the Trust with a break down in writing of the number
of Offered Securities sold in each of the Qualifying Provinces
and, upon completion of the distribution of the Offered
35
Securities, provide to the Trust, the Exchange and to the
Securities Commissions prompt notice in writing to that
effect.
22. SEVERANCE
If one or more of the provisions contained herein shall, for any reason, be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
agreement, but this agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained herein.
23. RELATIONSHIP BETWEEN THE TRUST, ADVANTAGE OIL & GAS AND MANAGEMENTCO
AND THE UNDERWRITERS
The Trust, Advantage Oil & Gas and ManagementCo: (i) acknowledge and agree that
the Underwriters have certain statutory obligations as registrants under the
Applicable Securities Laws and have fiduciary relationships with their clients;
(ii) acknowledge and agree that the Underwriters are neither the agents of the
Trust, Advantage Oil & Gas or ManagementCo nor otherwise fiduciaries of the
Trust, Advantage Oil & Gas or ManagementCo; and (iii) consent to the
Underwriters acting hereunder while continuing to act for their clients. To the
extent that the Underwriters' statutory obligations as registrants under
Applicable Securities Laws or fiduciary relationships with their clients
conflicts with their obligations hereunder the Underwriters shall be entitled to
fulfil their statutory obligations as registrants under Applicable Securities
Laws and their duties to their clients. Nothing in this agreement shall be
interpreted to prevent the Underwriters from fulfilling their statutory
obligations as registrants under Applicable Securities Laws or to act as a
fiduciary of their clients.
24. STABILIZATION
In connection with the distribution of the Offered Securities, the Underwriters
may over-allot or effect transactions which stabilize or maintain the market
price of the securities of the Trust at levels other than those which might
otherwise prevail in the open market, but in each case only as permitted by
Applicable Securities Laws. Such stabilizing transactions, if any, may be
discontinued at any time.
25. GOVERNING LAW
This agreement shall be governed by and construed in accordance with the laws of
the Province of Alberta and the laws of Canada applicable therein. Each of the
Trust, Advantage Oil & Gas and ManagementCo and the Underwriters hereby attorn
to the non-exclusive jurisdiction of the courts of the Province of Alberta.
26. TIME OF THE ESSENCE TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT.
27. COUNTERPART EXECUTION
This agreement may be executed in one or more counterparts each of which so
executed shall constitute an original and all of which together shall constitute
one and the same agreement. Delivery of counterparts may be effected by
facsimile transmission.
28. CONTRACTUAL OBLIGATIONS OF TRUST
The parties hereto acknowledge that the obligations of the Trust hereunder shall
not be personally binding upon the Trustee, or any of the unitholders of the
Trust and that any recourse against the Trust, the Trustee or any unitholder in
36
any manner in respect of any indebtedness, obligation or liability of the Trust
arising hereunder or arising in connection herewith or from the matters to which
this agreement relates, if any, including without limitation claims based on
negligence or otherwise tortious behaviour, shall be limited to, and satisfied
only out of, the Trust Fund, as defined in the Trust Indenture, as amended from
time to time.
29. FURTHER ASSURANCES
Each party to this agreement covenants and agrees that, from time to time, it
will, at the request of the requesting party, execute and deliver all such
documents and do all such other acts and things as any party hereto, acting
reasonably, may from time to time request be executed or done in order to better
evidence or perfect or effectuate any provision of this agreement or of any
agreement or other document executed pursuant to this agreement or any of the
respective obligations intended to be created hereby or thereby.
30. USE OF PROCEEDS
Each of Advantage Oil & Gas, ManagementCo and the Trust hereby covenant and
agree to use the net proceeds of the sale of the Offered Securities hereunder in
accordance with the disclosure in the Prospectus.
31. ENTIRE AGREEMENT
It is understood that the terms and conditions of this agreement supersede any
previous verbal or written agreement between the Underwriters and the Trust,
Advantage Oil & Gas or ManagementCo.
If the foregoing is in accordance with your understanding and is agreed to by
you, please confirm your acceptance by signing the enclosed copies of this
letter at the place indicated and by returning the same to Scotia Capital Inc.
SCOTIA CAPITAL INC.
Per: "▇▇▇▇ ▇▇▇▇▇▇"
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ INC. NATIONAL BANK FINANCIAL INC.
Per: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Per: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
RBC DOMINION SECURITIES INC.
Per: ▇▇▇▇▇ ▇. ▇▇▇▇▇
CIBC WORLD MARKETS INC.
Per: T. ▇▇▇▇▇▇▇ Kitchen
▇▇▇▇▇▇▇ ▇▇▇▇▇ LTD.
Per: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
FIRSTENERGY CAPITAL CORP.
Per: ▇▇▇▇ ▇. Sanderon
ACCEPTED AND AGREED to this 19th
day of January, 2005
ADVANTAGE ENERGY INCOME FUND, ADVANTAGE INVESTMENT MANAGEMENT LTD.
by Advantage Oil & Gas Ltd.
Per: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Per: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ADVANTAGE OIL & GAS LTD.
Per: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇