VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 30th of June, 2004.
AMONG:
HARVEST ENERGY TRUST, a trust organized under the laws of Alberta
(hereinafter referred to as "Harvest Energy Trust")
- and -
HARVEST OPERATIONS CORP., a corporation incorporated under the laws of
Alberta (hereinafter referred to as "Harvest")
- and -
HARVEST EXCHANGECO LTD., a corporation incorporated under the laws of
Alberta (hereinafter referred to as "ExchangeCo")
- and -
VALIANT TRUST COMPANY, a trust company incorporated under the laws of
Canada (hereinafter referred to as "Trustee")
WHEREAS pursuant to an arrangement agreement dated as of April 18, 2004
among Harvest Energy Trust, Harvest, Storm Energy Ltd. and 1106789 Alberta Ltd.
(such agreement, as it may be amended or restated, is hereafter referred to as
the "Arrangement Agreement"), the parties agreed that on the Effective Date (as
defined in the Arrangement Agreement) the parties would execute and deliver a
voting and exchange trust agreement which would govern the relationship among
the parties as it related to the issuance and existence of exchangeable shares
(the "Exchangeable Shares") in the capital of Harvest, which were issued
pursuant to the Arrangement;
AND WHEREAS the articles of Harvest set forth the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares;
AND WHEREAS the parties hereto have agreed to enter into this Agreement
in order to give effect to those exchange rights;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the following
meanings:
"ACT" means the BUSINESS CORPORATIONS ACT (Alberta), as amended;
"AFFILIATE" has the meaning given to that term in the Securities Act;
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"AGGREGATE EQUIVALENT VOTE AMOUNT" means, with respect to any matter,
proposition or question on which Harvest Unitholders are entitled to vote,
consent or otherwise act, the number of Exchangeable Shares issued and
outstanding and held by Beneficiaries;
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of Harvest
Energy Trust and ExchangeCo to effect the automatic exchange of Exchangeable
Shares for Harvest Trust Units as defined in Section 5.12(c);
"BENEFICIARY VOTES" has the meaning given to that term in Section 4.2;
"BENEFICIARIES" means the registered holders from time to time of Exchangeable
Shares, other than Harvest Energy Trust and ExchangeCo;
"BOARD OF DIRECTORS" means the Board of Directors of Harvest from time to time;
"BUSINESS DAY" means any day on which commercial banks are generally open for
business in Calgary, Alberta, other than a Saturday, a Sunday or a day observed
as a holiday in Calgary, Alberta under the laws of the Province of Alberta or
the federal laws of Canada;
"CALL RIGHTS" has the meaning given to that term in the Share Provisions;
"CURRENT MARKET PRICE" has the meaning given to that term in the Share
Provisions;
"EXCHANGE RATIO" has the meaning given to that term in the Share Provisions;
"EXCHANGE RIGHTS" has the meaning given to that term in Section 5.1(a);
"EXCHANGEABLE SHARES" means the non-voting exchangeable shares of Harvest,
having the rights, privileges, restrictions and conditions set out in the Share
Provisions;
"HARVEST" means Harvest Operations Corp., the corporation resulting from the
amalgamation of Harvest Operations and Storm Energy Ltd. pursuant to the Plan of
Arrangement;
"HARVEST CONSENT" has the meaning given to that term in Section 4.2;
"HARVEST MEETING" has the meaning given to that term in Section 4.2;
"HARVEST TRUST UNITS" means the trust units of Harvest Energy Trust as
constituted on the date hereof;
"HARVEST UNITHOLDERS" means the registered holders of Harvest Trust Units from
time to time;
"HARVEST LIQUIDATION EVENT" has the meaning given to that term in Section
5.12(b);
"HARVEST LIQUIDATION EVENT EFFECTIVE DATE" has the meaning given to that term in
Section 5.12(c);
"HARVEST SUCCESSOR" has the meaning given to that term in Section 10.1(a);
"INDEMNIFIED PARTIES" has the meaning given to that term in Section 8.1;
"INSOLVENCY EVENT" means the institution by Harvest of any proceeding to be
adjudicated a bankrupt or insolvent or to be wound up, or the consent of Harvest
to the institution of bankruptcy, insolvency, dissolution or winding-up
proceedings against it, or the filing of a petition, answer or consent seeking
dissolution or winding-up under any bankruptcy, insolvency or analogous laws,
including without limitation the COMPANIES CREDITORS' ARRANGEMENT ACT (Canada)
and the BANKRUPTCY AND INSOLVENCY ACT (Canada), and the failure by Harvest to
contest in good faith any such proceedings commenced in respect of Harvest
within 15 days of becoming aware thereof, or the consent by Harvest to the
filing of any such petition or to the appointment of a receiver, or the making
by Harvest of a general
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assignment for the benefit of creditors, or the admission in writing by Harvest
of its inability to pay its debts generally as they become due, or Harvest not
being permitted, pursuant to solvency requirements of applicable law, to redeem
any Retracted Shares pursuant to Section 4.6 of the Share Provisions;
"LIQUIDATION CALL RIGHT" has the meaning given to that term in the Share
Provisions;
"LIST" has the meaning given to that term in Section 4.6;
"OFFICER'S CERTIFICATE" means, with respect to Harvest, a certificate signed by
any officer or director of Harvest.
"PERSON" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, government body, syndicate or other entity, whether
or not having legal status;
"PLAN OF ARRANGEMENT" means the Plan of Arrangement substantially in the form
set out in Schedule A to the Arrangement Agreement as amended or supplemented
from time to time;
"REDEMPTION CALL RIGHT" has the meaning given to that term in the Share
Provisions;
"RETRACTED SHARES" has the meaning given to that term in Section 5.7;
"RETRACTION CALL RIGHT" has the meaning given to that term in the Share
Provisions;
"SECURITIES ACT" means the SECURITIES ACT (Alberta), as amended;
"SHARE PROVISIONS" means the rights, privileges, restrictions and conditions
attaching to the Exchangeable Shares, all as set forth in the articles of
Harvest dated the date hereof;
"SPECIAL VOTING UNIT" means the one special voting unit of Harvest Energy Trust,
issued by Harvest Energy Trust to and deposited with the Trustee, which entitles
the holders of record of Exchangeable Shares who are Beneficiaries to a number
of votes at meetings of Harvest Unitholders equal to the Aggregate Equivalent
Vote Amount;
"SUPPORT AGREEMENT" means that certain support agreement made as of even date
herewith among Harvest Energy Trust, Harvest, ExchangeCo and the Trustee;
"TRUST" means the trust created by this Agreement;
"TRUST ESTATE" means the Voting Rights, the Exchange Rights, the Automatic
Exchange Rights and any money or other property which may be held by the Trustee
from time to time pursuant to this Agreement;
"TRUSTEE" means Valiant Trust Company and, subject to the provisions of Article
9, includes any successor trustee; and
"VOTING RIGHTS" means the voting rights attached to the Special Voting Unit.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into Articles, Sections and other
portions and the insertion of headings are for convenience of reference only and
should not affect the construction or interpretation of this Agreement. Unless
otherwise indicated, all references to an "Article" or "section" followed by a
number and/or a letter referred to the specified Article or Section of this
Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and
similar expressions refer to this Agreement and not to any particular Article,
Section or other portion hereof and include any agreement or instrument
supplementary or ancillary hereto.
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1.3 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and
vice versa. Words importing any gender shall include all genders.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this
Agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
ARTICLE 2
PURPOSE OF AGREEMENT
2.1 ESTABLISHMENT OF TRUST
The purpose of this Agreement is to create the Trust for the benefit of
the Beneficiaries, as herein provided. The Trustee will hold the Voting Rights
and the Exchange Rights and the Automatic Exchange Rights in order to enable the
Trustee to exercise such rights, in each case as trustee for and on behalf of
the Beneficiaries as provided in this Agreement.
ARTICLE 3
SPECIAL VOTING UNIT
3.1 ISSUANCE AND OWNERSHIP OF THE SPECIAL VOTING UNIT
Harvest Energy Trust has issued to and has deposited with the Trustee
the Special Voting Unit to be hereafter held of record by the Trustee as trustee
for and on behalf of, and for the use and benefit of, the Beneficiaries and in
accordance with the provisions of this Agreement. Harvest Energy Trust hereby
acknowledges receipt from the Trustee as trustee for and on behalf of the
Beneficiaries of good and valuable consideration (and the adequacy thereof) for
the issuance of the Special Voting Unit by Harvest Energy Trust to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
Agreement, the Trustee shall possess and be vested with full legal ownership of
the Special Voting Unit and shall be entitled to exercise all of the rights and
powers of an owner with respect to the Special Voting Unit, provided that the
Trustee shall:
(a) hold the Special Voting Unit and the legal title thereto as trustee
solely for the use and benefit of the Beneficiaries in accordance with
the provisions of this Agreement; and
(b) except as specifically authorized by this agreement, have no power or
authority to sell, transfer, vote or otherwise deal in or with the
Special Voting Unit, and the Special Voting Unit shall not be used or
disposed of by the Trustee for any purpose other than the purposes for
which this Trust is created pursuant to this Agreement.
3.2 LEGENDED SHARE CERTIFICATES
Harvest will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Beneficiaries of their right to
instruct the Trustee with respect to the exercise of the Voting Rights with
respect to the Exchangeable Shares held by a Beneficiary.
3.3 SAFE KEEPING OF CERTIFICATE
The certificate representing the Special Voting Unit shall at all times
be held in safe keeping by the Trustee or its agent.
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ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS
The Trustee, as the holder of record of the Special Voting Unit, shall
be entitled to all of the Voting Rights, including the right to consent to or to
vote in person or by proxy the Special Voting Unit, on any matter, question or
proposition whatsoever that may properly come before the Harvest Unitholders at
a Harvest Meeting or in connection with a Harvest Consent (in each case, as
hereinafter defined). The Voting Rights shall be and remain vested in and
exercised by the Trustee. Subject to Section 6.15 hereof, the Trustee shall
exercise the Voting Rights only on the basis of instructions received pursuant
to this Article 4 from Beneficiaries entitled to instruct the Trustee as to the
voting thereof at the time at which a Harvest Consent is sought or a Harvest
Meeting is held. To the extent that no instructions are received from a
Beneficiary with respect to the Voting Rights to which such Beneficiary is
entitled, the Trustee shall not exercise or permit the exercise of such
Beneficiary's Voting Rights.
4.2 NUMBER OF VOTES
With respect to all meetings of Harvest Unitholders at which
Beneficiaries of Harvest Energy Trust Units are entitled to vote (a "Harvest
Meeting") and with respect to all written consents sought by Harvest from
Harvest Unitholders (a "Harvest Consent"), each Beneficiary shall be entitled to
instruct the Trustee to cast and exercise, in the manner instructed, one vote
for each Exchangeable Share owned of record by such Beneficiary on the record
date established by Harvest or by applicable law for such Harvest Meeting or
Harvest Consent, as the case may be, (the "Beneficiary Votes") in respect of
each matter, question or proposition to be voted on at such Harvest Meeting or
to be consented to in connection with such Harvest Consent.
4.3 MAILINGS TO UNITHOLDERS
With respect to each Harvest Meeting and Harvest Consent, the Trustee
will mail or cause to be mailed (or otherwise communicate in the same manner as
Harvest utilizes in communications to Harvest Unitholders, subject to the
Trustee's ability to provide this method of communication and upon being advised
in writing of such method) to each of the Beneficiaries named in the List on the
same day as the initial mailing or notice (or other communication) with respect
thereto is given by Harvest Energy Trust to Harvest Unitholders:
(a) a copy of such notice, together with any proxy or information statement and
related materials (but excluding proxies to vote Harvest Trust Units) to be
provided to Harvest Unitholders;
(b) a statement that such Beneficiary is entitled to instruct the Trustee as to
the exercise of the Beneficiary Votes with respect to such Harvest Meeting
or Harvest Consent, as the case may be, or, pursuant to Section 4.7 hereof,
to attend such Harvest Meeting and to exercise personally the Beneficiary
Votes thereat;
(c) a statement as to the manner in which such instructions may be given to the
Trustee, including an express indication that instructions may be given to
the Trustee to give:
(i) a proxy to such Beneficiary or such Beneficiary's designee to exercise
personally the Beneficiary Votes; or
(ii) a proxy to a designated agent or other representative of the
management of Harvest Energy Trust to exercise such Beneficiary Votes;
(d) a statement that if no such instructions are received from the Beneficiary,
the Beneficiary Votes to which such Beneficiary is entitled will not be
exercised;
(e) a form of direction whereby the Beneficiary may so direct and instruct the
Trustee as contemplated herein; and
(f) a statement of (i) the time and date by which such instructions must be
received by the Trustee in order to be binding upon it, which in the case
of a Harvest Meeting shall not be earlier than 24 hours prior to such
meeting, and (ii) the method for revoking or amending such instructions.
The materials referred to above are to be provided by Harvest Energy
Trust to the Trustee, but shall be subject to review and comment by the Trustee.
For the purposes of determining Beneficiary Votes to which a
Beneficiary is entitled in respect of any such Harvest Meeting or Harvest
Consent, the number of Exchangeable Shares owned as of record by the Beneficiary
shall be determined at the close of business on the record date established by
Harvest Energy Trust or by applicable law for purposes of determining Harvest
Unitholders entitled to vote at such Harvest Meeting or to give written consent
in connection with such Harvest Consent. Harvest Energy Trust will notify the
Trustee in writing of any decision of the board of directors of Harvest with
respect to the calling of any such Harvest Meeting or the seeking of such
Harvest Consent and shall provide all necessary information and materials to the
Trustee in each case promptly and in any event in sufficient time to enable the
Trustee to perform its obligations contemplated by this Section 4.3.
4.4 COPIES OF UNITHOLDER INFORMATION
Harvest Energy Trust will deliver to the Trustee copies of all proxy
materials, (including notices of Harvest Meetings, but excluding proxies to vote
Harvest Trust Units), information statements, reports (including without
limitation all interim and annual financial statements) and other written
communications that are to be distributed from time to time to Harvest
Unitholders in sufficient quantities and in sufficient time so as to enable the
Trustee to send those materials to each Beneficiary at the same time as such
materials are first sent to Harvest Unitholders. The Trustee will mail or
otherwise send to each Beneficiary, at the expense of Harvest Energy Trust,
copies of all such materials (and all materials specifically directed to the
Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Harvest
Energy Trust) received by the Trustee from Harvest Energy Trust at the same time
as such materials are first sent to Harvest Unitholders. The Trustee will make
copies of all such materials available for inspection by any Beneficiary at the
Trustee's principal transfer office in the cities of Calgary and Toronto.
4.5 OTHER MATERIALS
Immediately after receipt by Harvest Energy Trust or any Harvest
Unitholders of any material sent or given generally to the Harvest Unitholders
by or on behalf of a third party, including without limitation dissident proxy
and information circulars (and related information and material) and tender and
exchange offer circulars (and related information and material), Harvest Energy
Trust shall use its reasonable efforts to obtain and deliver to the Trustee
copies thereof in sufficient quantities so as to enable the Trustee to forward
such material (unless the same has been provided directly to Beneficiaries by
such third party) to each Beneficiary as soon as possible thereafter. As soon as
practicable after receipt thereof, the Trustee will mail or otherwise send to
each Beneficiary, at the expense of Harvest Energy Trust, copies of all such
materials received by the Trustee from Harvest Energy Trust. The Trustee will
also make copies of all such materials available for inspection by any
Beneficiary at the Trustee's principal transfer office in the cities of Calgary
and Toronto.
4.6 LIST OF PERSONS ENTITLED TO VOTE
Harvest shall: (i) prior to each annual, general or special Harvest
Meeting or the seeking of any Harvest Consent and (ii) forthwith upon each
request made at any time by the Trustee in writing, prepare or cause to be
prepared a list (a "List") of the names and addresses of the Beneficiaries
arranged in alphabetical order and showing the number of Exchangeable Shares
held of record by each such Beneficiary, in each case at the close of business
on the date specified by the Trustee in such request or, in the case of a List
prepared in connection with Harvest Meeting or a Harvest Consent, at the close
of business on the record date established by Harvest Energy Trust or pursuant
to applicable law for determining the Harvest Unitholders entitled to receive
notice of and/or to vote at such Harvest Meeting or to give consent in
connection with such Harvest Consent. Each such List shall be delivered to the
Trustee promptly after receipt by AcquisitionCo of such request on the record
date for such meeting or seeking of consent, as the case may be, and in any
event within sufficient time as to enable the Trustee to perform
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its obligations under this agreement. Harvest Energy Trust agrees to give
Harvest written notice (with a copy to the Trustee) of the calling of any
Harvest Meeting or the seeking of any Harvest Consent, together with the record
dates therefor, sufficiently prior to the date of the calling of such meeting or
seeking of such consent so as to enable Harvest to perform its obligations under
this Section 4.6
4.7 ENTITLEMENT TO DIRECT VOTES
Any Beneficiary named in a List prepared in connection with any Harvest
Meeting or any Harvest Consent will be entitled: (i) to instruct the Trustee in
the manner described in Section 4.3 hereof with respect to the exercise of the
Beneficiary Votes to which such Beneficiary is entitled; or (ii) to attend such
meeting and personally to exercise thereat (or to exercise with respect to any
written consent), as the proxy of the Trustee, the Beneficiary Votes to which
such Beneficiary is entitled.
4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT MEETING
(a) In connection with each Harvest Meeting and Harvest Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with the
instructions received from a Beneficiary pursuant to Section 4.3 hereof,
the Beneficiary Votes as to which such Beneficiary is entitled to direct
the vote (or any lesser number thereof as may be set forth in the
instructions); provided, however, that such written instructions are
received by the Trustee from the Beneficiary prior to the time and date
fixed by it for receipt of such instructions in the notice given by the
Trustee to the Beneficiary pursuant to section 4.3 hereof;
(b) The Trustee shall cause such representatives as are empowered by it to sign
and deliver, on behalf of the Trustee, proxies for Voting Rights to attend
each Harvest Meeting. Upon submission by a Beneficiary (or its designee) of
identification satisfactory to the Trustee's representatives, and at the
Beneficiary's request, such representatives shall sign and deliver to such
Beneficiary (or its designee) a proxy to exercise personally the
Beneficiary Votes as to which such Beneficiary is otherwise entitled
hereunder to direct the vote, if such Beneficiary either:
(i) has not previously given the Trustee instructions pursuant to Section
4.3 hereof in respect of such meeting; or
(ii) submits to the Trustee's representatives written revocation of any
such previous instructions.
At such meeting, the Beneficiary exercising such Beneficiary Votes shall have
the same rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in respect of
any matter, question or proposition and to vote at such meeting by way of a show
of hands in respect of any matter, question or proposition.
4.9 DISTRIBUTION OF WRITTEN MATERIALS
Any written materials to be distributed by the Trustee to the
Beneficiaries pursuant to this Agreement shall be delivered or sent by mail (or
otherwise communicated in the same manner as Harvest Energy Trust utilizes in
communications to Harvest Unitholders subject to the Trustee's ability to
provide this method of communication and upon being advised in writing of such
method) to each Beneficiary at its address as shown on the books of Harvest.
Harvest shall provide or cause to be provided to the Trustee for this purpose,
on a timely basis and without charge or other expense:
(a) current lists of the Beneficiaries; and
(b) on the request of the Trustee, mailing labels to enable the Trustee to
carry out its duties under this agreement.
The materials referred to above are to be provided by Harvest to the Trustee,
but shall be subject to review and comment by the Trustee.
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4.10 TERMINATION OF VOTING RIGHTS
Except as otherwise provided herein or in the Share Provisions, all of
the rights of a Beneficiary with respect to the Beneficiary Votes exercisable in
respect of the Exchangeable Shares held by such Beneficiary, including the right
to instruct the Trustee as to the voting of or to vote personally such
Beneficiary Votes, shall be deemed to be surrendered by the Beneficiary to
Harvest Energy Trust, and such Beneficiary Votes and the Voting Rights
represented thereby shall cease immediately, upon the delivery by such
Beneficiary to the Trustee of the certificates representing such Exchangeable
Shares in connection with the exercise by the Beneficiary of the Exchange Rights
or the occurrence of the Automatic Exchange Rights (unless in any case Harvest
Energy Trust or ExchangeCo shall not have delivered the consideration
deliverable in exchange therefor to the Trustee for delivery to the
Beneficiaries), or upon the redemption of Exchangeable Shares pursuant to
Article 4 or Article 5 of the Share Provisions, or upon the effective date of
the liquidation, dissolution or winding-up of Harvest or any other distribution
of the assets of Harvest among its shareholders for the purpose of winding up
its affairs pursuant to Article 6 of the Share Provisions, or upon the purchase
of Exchangeable Shares from the Beneficiary thereof by Harvest Energy Trust or
ExchangeCo pursuant to the exercise by Harvest Energy Trust or ExchangeCo of the
Retraction Call Right, the Redemption Call Right or the Liquidation Call Right.
ARTICLE 5
EXCHANGE RIGHTS AND AUTOMATIC EXCHANGE
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHTS
Each of Harvest Energy Trust and ExchangeCo hereby grants to the
Trustee as trustee for and on behalf of, and for the use and benefit of, the
Beneficiaries:
(a) the right (the "Exchange Rights"), upon the occurrence and during the
continuance of: (i) an Insolvency Event or (ii) circumstances in which
Harvest Energy Trust and ExchangeCo may exercise any of the Call Rights but
elect not to exercise such Call Rights (such event being referred to herein
as an "Exchange Rights Trigger Event") to require Harvest Energy Trust or
ExchangeCo to purchase from each or any Beneficiary all or any part of the
Exchangeable Shares held by that Beneficiary; and
(b) the Automatic Exchange Rights,
all in accordance with the provisions of this Agreement. Each of Harvest Energy
Trust and ExchangeCo hereby acknowledges receipt from the Trustee as trustee for
and on behalf of the Beneficiaries of good and valuable consideration (and the
adequacy thereof) for the grant of the Exchange Rights and the Automatic
Exchange Rights by Harvest Energy Trust and ExchangeCo to the Trustee. During
the term of the Trust and subject to the terms and conditions of this Agreement,
the Trustee shall possess and be vested with full legal ownership of the
Exchange Rights and the Automatic Exchange Rights and shall be entitled to
exercise all of the rights and powers of an owner with respect to the Exchange
Rights and the Automatic Exchange Rights, provided that the Trustee shall:
(c) hold the Exchange Rights and the Automatic Exchange Rights and the legal
title thereto as trustee solely for the use and benefit of the
Beneficiaries in accordance with the provisions of this Agreement; and
(d) except as specifically authorized by this Agreement, have no power or
authority to exercise or otherwise deal in or with the Exchange Rights or
the Automatic Exchange Rights, and the Trustee shall not exercise any such
rights for any purpose other than the purposes for which the Trust is
created pursuant to this Agreement.
5.2 LEGENDED SHARE CERTIFICATES
Harvest will cause each certificate representing Exchangeable
Shares to bear an appropriate legend notifying the Beneficiaries of:
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(a) their right to instruct the Trustee with respect to the exercise of the
Exchange Rights in respect of the Exchangeable Shares held by a
Beneficiary; and
(b) the Automatic Exchange Rights.
5.3 GENERAL EXERCISE OF EXCHANGE RIGHTS
The Exchange Rights shall be and remain vested in and exercisable by
the Trustee. Subject to Section 6.15, the Trustee shall exercise the Exchange
Rights only on the basis of instructions received pursuant to this Article 5
from Beneficiaries entitled to instruct the Trustee as to the exercise thereof.
To the extent that no instructions are received from a Beneficiary with respect
to the Exchange Rights, the Trustee shall not exercise or permit the exercise of
the Exchange Rights.
5.4 PURCHASE PRICE
The purchase price payable by Harvest Energy Trust or ExchangeCo, as
applicable, for each Exchangeable Share to be purchased by Harvest Energy Trust
or ExchangeCo, as applicable, under the Exchange Rights shall be an amount per
share equal to the amount determined by multiplying the Exchange Ratio on the
last Business Day prior to the date of closing of the purchase and sale of such
Exchangeable Shares under the Exchange Rights (as provided for in Section 5.6)
by the Current Market Price of a Harvest Trust Unit on the last Business Day
prior to such date.
In connection with each exercise of the Exchange Rights, Harvest Energy
Trust or ExchangeCo shall provide to the Trustee an Officer's Certificate
setting forth the calculation of the purchase price for each Exchangeable Share.
The purchase price for each such Exchangeable Share so purchased may be
satisfied only by Harvest Energy Trust or ExchangeCo, as applicable, delivering
or causing to be delivered to the Trustee, on behalf of the relevant
Beneficiary, a certificate or certificates representing that number of Harvest
Trust Units (which securities shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance)
equal to the Exchange Ratio as at the last Business Day prior to the date of
closing of the purchase and sale of such Exchangeable Shares under the Exchange
Rights, such purchase price to be paid in accordance with Section 5.6 (but less
any amounts withheld pursuant to Section 5.13). Upon payment by Harvest Energy
Trust or ExchangeCo, as applicable, of such purchase price, the relevant
Beneficiary shall cease to have any right to be paid any amount in respect of
accrued and unpaid dividends (but not in respect of dividends which have been
declared and are unpaid) on each such Exchangeable Share by Harvest.
5.5 EXERCISE INSTRUCTIONS
Subject to the terms and conditions herein set forth, a Beneficiary
shall be entitled, upon the occurrence and during the continuance of an Exchange
Rights Trigger Event, to instruct the Trustee to exercise the Exchange Rights
with respect to all or any part of the Exchangeable Shares registered in the
name of such Beneficiary on the books of Harvest. To cause the exercise of the
Exchange Rights by the Trustee, the Beneficiary shall deliver to the Trustee, in
person or by certified or registered mail, at its principal office in Calgary or
Toronto or at such other places in Canada as the Trustee may from time to time
designate by written notice to the Beneficiaries, the certificates representing
the Exchangeable Shares which such Beneficiary desires Harvest Energy Trust or
ExchangeCo to purchase, duly endorsed in blank for transfer, and accompanied by
such other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of Harvest and such additional
documents and instruments as the Trustee, Harvest Energy Trust, ExchangeCo and
Harvest may reasonably require, together with:
(a) a duly completed form of notice of exercise of the Exchange Rights,
contained on the reverse of or attached to the Exchangeable Share
certificates, stating: (i) that the Beneficiary thereby instructs the
Trustee to exercise the Exchange Rights so as to require Harvest Energy
Trust or ExchangeCo to purchase from the Beneficiary the number of
Exchangeable Shares specified therein; (ii) that such Beneficiary has good
title to and owns all such Exchangeable Shares to be acquired by Harvest
Energy Trust or ExchangeCo, as applicable, free and clear of all liens,
claims and encumbrances; (iii) the names in which the certificates
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representing Harvest Trust Units issuable in connection with the exercise
of the Exchange Rights are to be issued; and (iv) the names and addresses
of the persons to whom such new certificates should be delivered; and
(b) payment (or evidence satisfactory to the Trustee, Harvest Energy Trust,
ExchangeCo and Harvest of payment) of the taxes (if any) payable as
contemplated by Section 5.8 of this Agreement. If only a part of the
Exchangeable Shares represented by any certificate or certificates
delivered to the Trustee are to be purchased by Harvest Energy Trust or
ExchangeCo under the Exchange Rights, a new certificate for the balance of
such Exchangeable Shares shall be issued to the holder at the expense of
Harvest.
5.6 DELIVERY OF HARVEST TRUST UNITS; EFFECT OF EXERCISE
Promptly after the receipt of the certificates representing the
Exchangeable Shares which the Beneficiary desires Harvest Energy Trust or
ExchangeCo to purchase under the Exchange Rights, together with such documents
and instruments of transfer and a duly completed form of notice of exercise of
the Exchange Rights (and payment of taxes, if any, payable as contemplated by
Section 5.8 or evidence thereof), duly endorsed for transfer to Harvest Energy
Trust or ExchangeCo, as applicable, the Trustee shall notify Harvest Energy
Trust, ExchangeCo and Harvest of its receipt of the same, which notice to
Harvest Energy Trust, ExchangeCo and Harvest shall constitute exercise of the
Exchange Rights by the Trustee on behalf of the holder of such Exchangeable
Shares, and Harvest Energy Trust or ExchangeCo, as applicable, shall promptly
thereafter deliver or cause to be delivered to the Trustee, for delivery to the
holder of such Exchangeable Shares (or to such other persons, if any, properly
designated by such holder) the number of Harvest Trust Units issuable in
connection with the exercise of the Exchange Rights, provided, however, that no
such delivery shall be made unless and until the Beneficiary requesting the same
shall have paid (or provided evidence satisfactory to the Trustee, Harvest
Energy Trust, ExchangeCo and Harvest of the payment of) the taxes (if any)
payable as contemplated by Section 5.8 of this Agreement. Immediately upon the
giving of notice by the Trustee to Harvest Energy Trust, ExchangeCo and Harvest
of the exercise of the Exchange Rights as provided in this Section 5.6, the
closing of the transaction of purchase and sale contemplated by the Exchange
Rights shall be deemed to have occurred and the holder of such Exchangeable
Shares shall be deemed to have transferred to Harvest Energy Trust or
ExchangeCo, as determined by Harvest Energy Trust at the time, all of such
holder's right, title and interest in and to such Exchangeable Shares and the
related interest in the Trust Estate and shall cease to be a holder of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than: (i) the right to receive his
proportionate part of the total purchase price therefor, unless the requisite
number of Harvest Trust Units is not delivered by Harvest Energy Trust or
ExchangeCo, as applicable, to the Trustee within three Business Days of the date
of the giving of such notice by the Trustee, in which case the rights of the
Beneficiary shall remain unaffected until such Harvest Trust Units are so
delivered, by Harvest Energy Trust or ExchangeCo, as applicable; and (ii) the
right to receive declared but unpaid dividends in respect of such Exchangeable
Shares. Upon delivery to the Trustee of such Harvest Trust Units, the Trustee
shall deliver such Harvest Trust Units to such Beneficiary (or to such other
persons, if any, properly designated by such Beneficiary). Concurrently with
such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary
shall be considered and deemed for all purposes to be the holder of the Harvest
Trust Units delivered to it pursuant to the Exchange Rights.
5.7 EXERCISE OF EXCHANGE RIGHTS SUBSEQUENT TO RETRACTION
In the event that a Beneficiary has exercised its right under Article 4
of the Share Provisions to require Harvest to redeem any or all of the
Exchangeable Shares held by the Beneficiary (the "Retracted Shares") and is
notified by Harvest pursuant to Section 4.6 of the Share Provisions that Harvest
will not be permitted as a result of solvency requirements of applicable law to
redeem all such Retracted Shares, and provided that neither Harvest Energy Trust
nor ExchangeCo shall have exercised the Retraction Call Right with respect to
the Retracted Shares and that the Beneficiary has not revoked the retraction
request delivered by the Beneficiary to Harvest pursuant to Section 4.1 of the
Share Provisions and provided further that the Trustee has received written
notice of same from Harvest Energy Trust, ExchangeCo or Harvest, the retraction
request will constitute and will be deemed to constitute notice from the
Beneficiary to the Trustee instructing the Trustee to exercise the Exchange
Rights with respect to those Retracted Shares that Harvest is unable to redeem.
In any such event, Harvest hereby agrees with the Trustee and in favour of the
Beneficiary promptly to forward or cause to be forwarded to the Trustee all
relevant materials delivered by the Beneficiary to Harvest or to the transfer
agent of the Exchangeable Shares (including
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without limitation, a copy of the retraction request delivered pursuant to
Section 4.1 of the Share Provisions) in connection with such proposed redemption
of the Retracted Shares and the Trustee will thereupon exercise the Exchange
Rights with respect to the Retracted Shares that Harvest is not permitted to
redeem and will require Harvest Energy Trust or ExchangeCo to purchase such
shares in accordance with the provisions of this Article 5.
5.8 STAMP OR OTHER TRANSFER TAXES
Upon any sale of Exchangeable Shares to Harvest Energy Trust or
ExchangeCo pursuant to the Exchange Rights or the Automatic Exchange Rights, the
certificate or certificates representing Harvest Trust Units to be delivered in
connection with the payment of the total purchase price therefor shall be issued
in the name of the Beneficiary of the Exchangeable Shares so sold or in such
names as such Beneficiary may otherwise direct in writing without charge to the
holder of the Exchangeable Shares so sold; provided, however, that such
Beneficiary: (a) shall pay (and none of Harvest Energy Trust, ExchangeCo,
Harvest or the Trustee shall be required to pay) any documentary, stamp,
transfer or other taxes that may be payable in respect of any transfer involved
in the issuance or delivery of such shares to a person other than such
Beneficiary, or (b) shall have evidenced to the satisfaction of the Trustee,
Harvest Energy Trust, ExchangeCo and Harvest that such taxes, if any, have been
paid.
5.9 NOTICE OF INSOLVENCY EVENT, CALL RIGHTS NOT EXERCISED
As soon as practicable following the occurrence of either an Exchange
Rights Trigger Event or any event that with the giving of notice or the passage
of time would be an Exchange Rights Trigger Event, Harvest Energy Trust,
ExchangeCo and Harvest shall give written notice thereof to the Trustee. As soon
as practicable following the receipt of notice from Harvest Energy Trust,
ExchangeCo and Harvest of the occurrence of an Exchange Rights Trigger Event, or
upon the Trustee becoming aware of an Exchange Rights Trigger Event, the Trustee
will mail to each Beneficiary, at the expense of Harvest Energy Trust, a notice
of such Exchange Rights Trigger Event in the form provided by Harvest Energy
Trust, which notice shall contain a brief statement of the rights of the
Beneficiaries with respect to the Exchange Rights.
5.10 QUALIFICATION OF HARVEST TRUST UNITS
Harvest Energy Trust and ExchangeCo covenant that if any Harvest Trust
Units to be issued and delivered pursuant to the Exchange Rights or the
Automatic Exchange Rights require registration or qualification with or approval
of or the filing of any document, including any prospectus or similar document,
or the taking of any proceeding with or the obtaining of any order, ruling or
consent from any governmental or regulatory authority under any Canadian,
federal or provincial law or regulation or pursuant to the rules and regulations
of any regulatory authority or the fulfillment of any other Canadian federal or
provincial legal requirement before such securities may be issued and delivered
by or on behalf of Harvest Energy Trust or ExchangeCo to the initial holder
thereof or in order that such securities may be freely traded thereafter (other
than any restrictions of general application on transfer by reason of a holder
being a "control person" of Harvest Energy Trust for purposes of Canadian
provincial securities law), Harvest Energy Trust and ExchangeCo will in good
faith expeditiously take all such actions and do all such things as are
necessary or desirable to cause such Harvest Trust Units to be and remain duly
registered, qualified or approved. Harvest Energy Trust and ExchangeCo will in
good faith expeditiously take all such actions and do all such things as are
reasonably necessary or desirable to cause all Harvest Trust Units to be
delivered pursuant to the Exchange Rights or the Automatic Exchange Rights to be
listed, quoted or posted for trading on the Toronto Stock Exchange or such other
stock exchanges or quotation systems on which outstanding Harvest Trust Units
are then principally listed, quoted or posted for trading at such time.
5.11 HARVEST TRUST UNITS
Harvest Energy Trust and ExchangeCo hereby represent, warrant and
covenant that the Harvest Trust Units issuable as described herein will be duly
authorized and validly issued as fully paid and non-assessable and shall be free
and clear of any lien, claim or encumbrance.
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5.12 AUTOMATIC EXCHANGE ON LIQUIDATION OF HARVEST ENERGY TRUST
(a) Harvest Energy Trust will give the Trustee written notice of each of the
following events at the time set forth below:
(i) in the event of any determination by the board of directors of Harvest
to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to Harvest Energy Trust or to effect any
other distribution of assets of Harvest Energy Trust among its
unitholders for the purpose of winding up its affairs, at least 60
days prior to the proposed effective date of such liquidation,
dissolution, winding-up or other distribution; and
(ii) as soon as practicable following the earlier of: (A) receipt by
Harvest Energy Trust or Harvest of notice of; and (B) Harvest Energy
Trust or Harvest otherwise becoming aware of, any threatened or
instituted claim, suit, petition or other proceedings with respect to
the involuntary liquidation, dissolution or winding-up of Harvest
Energy Trust or to effect any other distribution of assets of Harvest
Energy Trust among its unitholders for the purpose of winding up its
affairs, in each case where Harvest Energy Trust has failed to contest
in good faith any such proceeding commenced in respect of Harvest
Energy Trust within 30 days of becoming aware thereof.
(b) As soon as practicable following receipt by the Trustee from Harvest Energy
Trust of notice of any event (a "Harvest Liquidation Event") contemplated
by Section 5.12(a)(i) or 5.12(a)(ii) above, the Trustee will give notice
thereof, in the form provided by Harvest Energy Trust, to the
Beneficiaries. Such notice shall include a brief description of the
Automatic Exchange Rights.
(c) In order that the Beneficiaries will be able to participate on a pro rata
basis with the holders of Harvest Trust Units in the distribution of assets
of Harvest Energy Trust in connection with a Harvest Liquidation Event, on
the fifth Business Day prior to the effective date (the "Harvest
Liquidation Event Effective Date") of a Harvest Liquidation Event all of
the then outstanding Exchangeable Shares shall be automatically exchanged
for Harvest Trust Units (the benefit in favour of Beneficiaries of the
obligation of Harvest Energy Trust and ExchangeCo to effect the automatic
exchange of Exchangeable Shares for Harvest Trust Units as aforesaid is
defined as the "Automatic Exchange Rights"). To effect such automatic
exchange, Harvest Energy Trust or ExchangeCo shall purchase on the fifth
Business Day prior to the Harvest Liquidation Event Effective Date each
Exchangeable Share then outstanding and held by Beneficiaries, and each
Beneficiary shall sell the Exchangeable Shares held by it at such time, for
a purchase price per share determined by multiplying the Current Market
Price of a Harvest Trust Unit on the sixth Business Day prior to the
Harvest Liquidation Event Effective Date and the Exchange Ratio as at the
sixth Business Day prior to the Harvest Liquidation Event Effective Date.
Harvest Energy Trust or ExchangeCo shall provide the Trustee with an
Officer's Certificate in connection with each automatic exchange setting
forth the calculation of the purchase price for each Exchangeable Share.
The purchase price for each such Exchangeable Share so purchased may be
satisfied only by Harvest Energy Trust or ExchangeCo, as applicable,
delivering or causing to be delivered to the Trustee, on behalf of the
relevant Beneficiary, that number of Harvest Trust Units equal to the
Exchange Ratio as at the sixth Business Day prior to the Harvest
Liquidation Event Effective Date, such purchase price to be paid in
accordance with Section 5.12(d) (but less any amounts withheld pursuant to
Section 5.13).
(d) On the fifth Business Day prior to the Harvest Liquidation Event Effective
Date:
(i) the closing of the transaction of purchase and sale contemplated by
the automatic exchange of Exchangeable Shares for Harvest Trust Units
shall be deemed to have occurred;
(ii) each Beneficiary shall be deemed to have transferred to Harvest Energy
Trust or ExchangeCo, as determined by Harvest Energy Trust at that
time, all of the Beneficiary's right, title and interest in and to
such Beneficiary's Exchangeable Shares and the related interest in the
Trust Estate;
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(iii) any right of each such Beneficiary to receive declared and unpaid
dividends from Harvest shall be deemed to be satisfied and discharged;
(iv) each such Beneficiary shall cease to be a holder of such Exchangeable
Shares; and
(v) Harvest Energy Trust or ExchangeCo, as applicable, shall deliver or
cause to be delivered to the Trustee on behalf of such Beneficiary the
Harvest Trust Units issuable upon the automatic exchange of
Exchangeable Shares for Harvest Trust Units.
(e) Concurrently with such Beneficiary ceasing to be a holder of Exchangeable
Shares, the Beneficiary shall be considered and deemed for all purposes to
be the holder of the Harvest Trust Units issued pursuant to the automatic
exchange of Exchangeable Shares for Harvest Trust Units and the
certificates held by the Beneficiary previously representing the
Exchangeable Shares exchanged by the Beneficiary with Harvest Energy Trust
or ExchangeCo, as applicable, pursuant to such automatic exchange shall
thereafter be deemed to represent Harvest Trust Units issued to the
Beneficiary pursuant to such automatic exchange. Upon the request of a
Beneficiary and the surrender by the Beneficiary of Exchangeable Share
certificates deemed to represent Harvest Trust Units, duly endorsed in
blank and accompanied by such instruments of transfer as Harvest Energy
Trust and ExchangeCo may reasonably require, Harvest Energy Trust or
ExchangeCo, as applicable, shall deliver or cause to be delivered to the
Beneficiary certificates representing Harvest Trust Units of which the
Beneficiary is the holder.
5.13 WITHHOLDING RIGHTS
Harvest Energy Trust, ExchangeCo and the Trustee shall be entitled to
deduct and withhold from any consideration otherwise payable under this
Agreement to any holder of Exchangeable Shares or Harvest Trust Units such
amounts as Harvest Energy Trust, ExchangeCo or the Trustee is required to deduct
and withhold with respect to such payment under the INCOME TAX ACT (Canada) or
any provision of provincial, local or foreign tax law, in each case as amended
or succeeded. The Trustee may act on the advice of counsel with respect to such
matters. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes as having been paid to the holder of the shares in
respect of which such deduction and withholding was made, provided that such
withheld amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required to be deducted or withheld from any
payment to a holder exceeds the cash portion of the consideration otherwise
payable to the holder, Harvest Energy Trust, ExchangeCo and the Trustee are
hereby authorized to sell or otherwise dispose of such portion of the
consideration as is necessary to provide sufficient funds to Harvest Energy
Trust, ExchangeCo or the Trustee, as the case may be, to enable it to comply
with such deduction or withholding requirement and Harvest Energy Trust,
ExchangeCo or the Trustee shall notify the holder thereof and remit to such
holder any unapplied balance of the net proceeds of such sale.
5.14 NON-RESIDENT HOLDERS
Notwithstanding anything contained in this Agreement, the obligation of
Harvest Energy Trust or ExchangeCo to pay the purchase price for the
Exchangeable Shares pursuant to the Exchange Rights or the Automatic Exchange
Rights in respect of Exchangeable Shares held by a person whom the transfer
agent of the Exchangeable Shares believes is a U.S. Person (as defined in the
Share Provisions) or a resident of any foreign country, shall be satisfied by
delivering the Harvest Trust Units which would have been received by the
Trustee, on behalf of affected holder to the transfer agent and registrar for
the Exchangeable Shares who shall sell such Harvest Trust Units on the stock
exchange on which the Harvest Trust Units are then listed and, upon such sale,
the rights of the affected holder shall be limited to receiving the net proceeds
of sale (net of applicable taxes).
5.15 NO FRACTIONAL ENTITLEMENTS
Notwithstanding anything contained in this Agreement, including without
limitation Article 5, no Beneficiary (or the Trustee as trustee for and on
behalf of, and for the use and benefit of a Beneficiary) shall be entitled to
and Harvest Energy Trust and ExchangeCo will not deliver fractions of Harvest
Trust Units. Where the application of the provisions of this Agreement,
including, without limitation, Article 5, would otherwise result in a
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Beneficiary (or the Trustee, on behalf of the Beneficiary) receiving a fraction
of a Harvest Unit, the Beneficiary (or the Trustee on behalf of the Beneficiary)
shall be entitled to receive the nearest whole number of Harvest Trust Units.
ARTICLE 6
CONCERNING THE TRUSTEE
6.1 POWERS AND DUTIES OF THE TRUSTEE
The rights, powers, duties and authorities of the Trustee under this
Agreement, in its capacity as Trustee of the Trust, shall include:
(a) receipt and deposit of the Special Voting Unit as Trustee for and on behalf
of the Beneficiaries in accordance with the provisions of this Agreement;
(b) delivery of proxies and distributing materials to Beneficiaries as provided
in this Agreement;
(c) voting the Beneficiary Votes in accordance with the provisions of this
Agreement;
(d) receiving the grant of the Exchange Rights and the Automatic Exchange
Rights from Harvest Energy Trust and ExchangeCo as Trustee for and on
behalf of the Beneficiaries in accordance with the provisions of this
Agreement;
(e) exercising the Exchange Rights and enforcing the benefit of the Automatic
Exchange Rights, in each case in accordance with the provisions of this
Agreement, and in connection therewith receiving from Beneficiaries
Exchangeable Shares and other requisite documents and distributing to such
Beneficiaries Harvest Trust Units and cheques, if any, to which such
Beneficiaries are entitled upon the exercise of the Exchange Rights or
pursuant to the Automatic Exchange Rights, as the case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the Trust Estate
as provided in this Agreement;
(h) taking action on its own initiative or at the direction of a Beneficiary or
Beneficiaries to enforce the obligations of Harvest Energy Trust,
ExchangeCo and Harvest under this Agreement; and
(i) taking such other actions and doing such other things as are specifically
provided in this Agreement.
In the exercise of such rights, powers, duties and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers, duties and
authority not in conflict with any of the provisions of this Agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the Trust.
Any exercise of such discretionary rights, powers, duties and authorities by the
Trustee shall be final, conclusive and binding upon all persons.
The Trustee in exercising its rights, powers, duties and authorities hereunder
shall act honestly and in good faith and with a view to the best interests of
the Beneficiaries and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.
The Trustee shall not be bound to give notice or do or take any act, action or
proceeding by virtue of the powers conferred on it hereby unless and until it
shall be specifically required to do so under the terms hereof; nor shall the
Trustee be required to take any notice of, or to do, or to take any act, action
or proceeding as a result of any default or breach of any provision hereunder,
unless and until notified in writing of such default or breach, which notices
shall distinctly specify the default or breach desired to be brought to the
attention of the Trustee, and in the absence of such notice the Trustee may for
all purposes of this Agreement conclusively assume that no default or breach has
15
been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein.
6.2 NO CONFLICT OF INTEREST
The Trustee represents to Harvest Energy Trust, ExchangeCo and Harvest
that at the date of execution and delivery of this Agreement there exists no
material conflict of interest in the role of the Trustee as a fiduciary
hereunder and the role of the Trustee in any other capacity. The Trustee shall,
within 90 days after it becomes aware that such material conflict of interest
exists, either eliminate such material conflict of interest or resign in the
manner and with the effect specified in Article 9. If, notwithstanding the
foregoing provisions of this Section 6.2, the Trustee has such a material
conflict of interest, the validity and enforceability of this Agreement shall
not be affected in any manner whatsoever by reason only of the existence of such
material conflict of interest. If the Trustee contravenes the foregoing
provisions of this Section 6.2, any interested party may apply to the Court of
Queen's Bench of Alberta for an order that the Trustee be replaced as Trustee
hereunder.
6.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC.
Harvest Energy Trust, ExchangeCo and Harvest irrevocably authorize the
Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective registrars and
transfer agents, and with any such subsequent registrar or transfer agent,
of the Exchangeable Shares and Harvest Trust Units; and
(b) requisition, from time to time: (i) from any such registrar or transfer
agent any information readily available from the records maintained by it
which the Trustee may reasonably require for the discharge of its duties
and responsibilities under this Agreement; and (ii) from the transfer agent
of Harvest Trust Units, and any subsequent transfer agent of such Harvest
Trust Units, the Harvest Trust Unit certificates issuable upon the exercise
from time to time of the Exchange Rights and pursuant to the Automatic
Exchange Rights.
Harvest Energy Trust and Harvest irrevocably authorize their respective
registrars and transfer agents to comply with all such requests. Harvest Energy
Trust covenants that it will supply its transfer agent with duly executed trust
unit certificates for the purpose of completing the exercise from time to time
of the Exchange Rights and the Automatic Exchange Rights.
6.4 BOOKS AND RECORDS
The Trustee shall keep available for inspection by Harvest Energy
Trust, ExchangeCo and Harvest at the Trustee's principal office in Calgary
correct and complete books and records of account relating to the Trust created
by this Agreement, including without limitation, all relevant data relating to
mailings and instructions to and from Beneficiaries and all transactions
pursuant to the Special Voting Unit, the Exchange Rights and the Automatic
Exchange Rights. On or before January 15, 2004, and on or before January 15th in
every year thereafter, so long as this Agreement has not been terminated, the
Trustee shall transmit to Harvest Energy Trust, ExchangeCo and Harvest a brief
report, dated as of the preceding December 31st , with respect to:
(a) the property and funds comprising the Trust Estate as of that date;
(b) the number of exercises of the Exchange Rights, if any, and the aggregate
number of Exchangeable Shares received by the Trustee on behalf of
Beneficiaries in consideration of the issuance of Harvest Trust Units in
connection with the Exchange Rights, during the calendar year ended on such
December 31st; and
(c) any action taken by the Trustee in the performance of its duties under this
Agreement which it had not previously reported and which, in the Trustee's
opinion, materially affects the Trust Estate.
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6.5 INCOME TAX RETURNS AND REPORTS
The Trustee shall, to the extent necessary, prepare and file on behalf
of the Trust appropriate Canadian income tax returns and any other returns or
reports as may be required by applicable law or pursuant to the rules and
regulations of any securities exchange or other trading system through which the
Exchangeable Shares are traded. In connection therewith, the Trustee may obtain
the advice and assistance of such experts or advisors as the Trustee considers
necessary or advisable (who may be experts or advisors to Harvest Energy Trust,
ExchangeCo and Harvest). If requested by the Trustee, Harvest Energy Trust,
ExchangeCo and Harvest shall retain qualified experts or advisors for the
purpose of providing such tax advice or assistance.
6.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this Agreement at the request, order or direction of
any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable
funding, security or indemnity against the costs, expenses and liabilities which
may be incurred by the Trustee therein or thereby, provided that no Beneficiary
shall be obligated to furnish to the Trustee any such security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties, powers
and authorities with respect to the Voting Rights pursuant to Article 4, subject
to Section 6.15, and with respect to the Exchange Rights pursuant to Article 5,
subject to Section 6.15, and with respect to the Automatic Exchange Rights
pursuant to Article 5.
None of the provisions contained in this Agreement shall
require the Trustee to expend or risk its own funds or otherwise incur financial
liability in the exercise of any of its rights, powers, duties, or authorities
unless funded, given security and indemnified as aforesaid.
6.7 ACTION OF BENEFICIARIES
No Beneficiary shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this Agreement for the
purpose of enforcing any of its rights or for the execution of any trust or
power hereunder unless the Beneficiary has requested the Trustee to take or
institute such action, suit or proceeding and furnished the Trustee with the
funding, security or indemnity referred to in Section 6.6 and the Trustee shall
have failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Beneficiary shall be entitled to take proceedings in any court of
competent jurisdiction such as the Trustee might have taken; it being understood
and intended that no one or more Beneficiaries shall have any right in any
manner whatsoever to affect, disturb or prejudice the rights hereby created by
any such action, or to enforce any right hereunder or the Voting Rights, the
Exchange Rights or the Automatic Exchange Rights except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted, had
and maintained by the Trustee, except only as herein provided, and in any event
for the equal benefit of all Beneficiaries.
6.8 RELIANCE UPON DECLARATIONS
The Trustee shall not be considered to be in contravention of any of
its rights, powers, duties and authorities hereunder if, when required, it acts
and relies in good faith upon statutory declarations, certificates, opinions or
reports furnished pursuant to the provisions hereof or required by the Trustee
to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder if such statutory declarations, certificates, opinions or
reports comply with the provisions of Section 6.9, if applicable, and with any
other applicable provisions of this Agreement.
6.9 EVIDENCE AND AUTHORITY TO TRUSTEE
Harvest Energy Trust, ExchangeCo and/or Harvest shall furnish to the
Trustee evidence of compliance with the conditions provided for in this
Agreement relating to any action or step required or permitted to be taken by
Harvest Energy Trust, ExchangeCo and/or Harvest or the Trustee under this
Agreement or as a result of any obligation imposed under this Agreement,
including, without limitation, in respect of the Voting Rights, the
17
Exchange Rights or the Automatic Exchange Rights and the taking of any other
action to be taken by the Trustee at the request of or on the application of
Harvest Energy Trust, ExchangeCo and/or Harvest promptly if and when:
(a) such evidence is required by any other Section of this Agreement to be
furnished to the Trustee in accordance with the terms of this Section 6.9;
or
(b) the Trustee, in the exercise of its rights, powers, duties and authorities
under this Agreement, gives Harvest Energy Trust, ExchangeCo and/or Harvest
written notice requiring it to furnish such evidence in relation to any
particular action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of ExchangeCo and/or
Harvest or a statutory declaration or a certificate made by persons entitled to
sign an Officer's Certificate stating that any such condition has been complied
with in accordance with the terms of this Agreement.
Whenever such evidence relates to a matter other than the Voting Rights, the
Exchange Rights or the Automatic Exchange Rights or the taking of any other
action to be taken by the Trustee at the request or on the application of
Harvest Energy Trust, ExchangeCo and/or Harvest, and except as otherwise
specifically provided herein, such evidence may consist of a report or opinion
of any solicitor, attorney, auditor, accountant, appraiser, valuer, engineer or
other expert or any other person whose qualifications give authority to a
statement made by him, provided that if such report or opinion is furnished by a
director, officer or employee of ExchangeCo and/or Harvest it shall be in the
form of an Officer's Certificate or a statutory declaration.
Each statutory declaration, Officer's Certificate, opinion or report furnished
to the Trustee as evidence of compliance with a condition provided for in this
Agreement shall include a statement by the person giving the evidence:
(c) declaring that he or she has read and understands the provisions of this
Agreement relating to the condition in question;
(d) describing the nature and scope of the examination or investigation upon
which he or she based the statutory declaration, certificate, statement or
opinion; and
(e) declaring that he or she has made such examination or investigation as he
or she believes is necessary to enable him or her to make the statements or
give the opinions contained or expressed therein.
6.10 EXPERTS, ADVISERS AND AGENTS
The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice of or
information obtained from any solicitor, attorney, auditor, accountant,
appraiser, valuer, engineer or other expert, whether retained by the
Trustee or by Harvest Energy Trust, ExchangeCo and/or Harvest or otherwise,
and may retain or employ such assistants as may be necessary to the proper
discharge of its powers and duties and determination of its rights
hereunder and may pay proper and reasonable compensation for all such legal
and other advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require for
the proper determination and discharge of its powers and duties hereunder,
and may pay reasonable remuneration for all services performed for it (and
shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation for
all disbursements, costs and expenses made or incurred by it in the
discharge of its duties hereunder and in the management of the Trust.
6.11 INVESTMENT OF MONEYS HELD BY TRUSTEE
Unless otherwise provided in this Agreement, any moneys held by or on
behalf of the Trustee which under the terms of this Agreement may or ought to be
invested or which may be on deposit with the Trustee
18
or which may be in the hands of the Trustee may be invested and reinvested in
the name or under the control of the Trustee, in trust for Harvest, in
securities in which, under the laws of the Province of Alberta, trustees are
authorized to invest trust moneys, provided that such securities are stated to
mature within two years after their purchase by the Trustee, and the Trustee
shall so invest such moneys on the written direction of Harvest. Pending the
investment of any moneys as hereinbefore provided, such moneys may be deposited
in the name of the Trustee in any chartered bank in Canada (including an
affiliate of the Trustee) or, with the consent of Harvest, in the deposit
department of the Trustee or any other loan or trust company authorized to
accept deposits under the laws of Canada or any province thereof at the rate of
interest then current on similar deposits, and the Trustee shall be entitled to
receive a fee from such bank, loan or trust company for so depositing such
moneys.
6.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts, rights, duties, powers and authorities
of this Agreement or otherwise in respect of the premises.
6.13 TRUSTEE NOT BOUND TO ACT ON REQUEST
Except as in this Agreement otherwise specifically provided, the
Trustee shall not be bound to act in accordance with any direction or request of
Harvest Energy Trust, ExchangeCo and/or Harvest or of the directors thereof
until a duly authenticated copy of the instrument or resolution containing such
direction or request shall have been delivered to the Trustee, and the Trustee
shall be empowered to act upon any such copy purporting to be authenticated and
believed by the Trustee to be genuine.
6.14 AUTHORITY TO CARRY ON BUSINESS
The Trustee represents to Harvest Energy Trust, ExchangeCo and/or
Harvest that at the date of execution and delivery by it of this Agreement it is
authorized to carry on the business of a trust company in each of the Provinces
of Canada but if, notwithstanding the provisions of this Section 6.14, it ceases
to be so authorized to carry on business, the validity and enforceability of
this Agreement and the Voting Rights, the Exchange Rights and the Automatic
Exchange Rights shall not be affected in any manner whatsoever by reason only of
such event but the Trustee shall, within 90 days after ceasing to be authorized
to carry on the business of a trust company in any Province of Canada, either
become so authorized or resign in the manner and with the effect specified in
Article 9.
6.15 CONFLICTING CLAIMS
If conflicting claims or demands are made or asserted with respect to
any interest of any Beneficiary in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Beneficiary in any
Exchangeable Shares, resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claims or demands.
In so refusing, the Trustee may elect not to exercise any portion of the Voting
Rights, Exchange Rights or Automatic Exchange Rights subject to such conflicting
claims or demands and, in so doing, the Trustee shall not be or become liable to
any person on account of such election or its failure or refusal to comply with
any such conflicting claims or demands. The Trustee shall be entitled to
continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting Rights,
Exchange Rights or Automatic Exchange Rights subject to such conflicting
claims or demands have been adjudicated by a final judgment of a court of
competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Rights or
Automatic Exchange Rights subject to such conflicting claims or demands
have been conclusively settled by a valid written agreement binding on all
such adverse claimants, and the Trustee shall have been furnished with an
executed copy of such agreement certified to be in full force and effect.
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If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate to fully indemnify it as between all conflicting claims
or demands.
6.16 ACCEPTANCE OF TRUST
The Trustee hereby accepts the Trust created and provided for by and in
this Agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Beneficiaries, subject to all the terms and conditions herein set forth.
ARTICLE 7
COMPENSATION
7.1 FEES AND EXPENSES OF THE TRUSTEE
Harvest Energy Trust, ExchangeCo and Harvest jointly and severally
agree to pay the Trustee reasonable compensation for all of the services
rendered by it under this Agreement and will reimburse the Trustee for all
reasonable expenses (including, but not limited to, taxes other than taxes based
on the net income of the Trustee, fees paid to legal counsel and other experts
and advisors (provided however that the payment of fees to legal counsel and
other experts and advisors shall be required to be pre-approved by Harvest) and
travel expenses) and disbursements, including the cost and expense of any suit
or litigation of any character and any proceedings before any governmental
agency reasonably incurred by the Trustee in connection with its duties under
this Agreement; provided that Harvest Energy Trust, ExchangeCo and Harvest shall
have no obligation to reimburse the Trustee for any expenses or disbursements
paid, incurred or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted in bad faith or with gross negligence,
recklessness or willful misconduct.
ARTICLE 8
INDEMNIFICATION AND LIMITATION OF LIABILITY
8.1 INDEMNIFICATION OF THE TRUSTEE
Harvest Energy Trust, ExchangeCo and Harvest jointly and severally
agree to indemnify and hold harmless the Trustee and each of its directors,
officers, employees, shareholders and agents appointed and acting in accordance
with this Agreement (collectively, the "Indemnified Parties") against all
claims, losses, damages, reasonable costs, penalties, fines and reasonable
expenses (including reasonable expenses of the Trustee's legal counsel) which,
without fraud, gross negligence, recklessness, willful misconduct or bad faith
on the part of such Indemnified Party, may be paid, incurred or suffered by the
Indemnified Party by reason or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its duties set forth in this
Agreement, or any written or oral instruction delivered to the Trustee by
Harvest Energy Trust, ExchangeCo or Harvest pursuant hereto.
Harvest Energy Trust, ExchangeCo and Harvest shall be notified by the
Trustee of the written assertion of a claim or of any action commenced against
the Indemnified Parties, promptly after any of the Indemnified Parties shall
have received any such written assertion of a claim or shall have been served
with a summons or other first legal process giving information as to the nature
and basis of the claim, provided that the omission to so notify Harvest Energy
Trust, ExchangeCo and Harvest shall not relieve Harvest Energy Trust, ExchangeCo
and Harvest of any liability which any of them may have to any Indemnified Party
except and only to the extent that any such delay in or failure to give notice
as herein required prejudices the defence of such claim or action or results in
any increase in the liability which Harvest Energy Trust, ExchangeCo and Harvest
have under this indemnity. Subject to (ii) below, Harvest Energy Trust,
ExchangeCo and Harvest shall be entitled to participate at their own expense in
the defense and, if Harvest Energy Trust, ExchangeCo and Harvest so elect at any
time after receipt of such notice, any of them may assume the defense of any
suit brought to enforce any such claim in which case, the Trustee shall have the
right to employ separate counsel in any such suit and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Trustee unless: (i) the employment
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of such counsel has been authorized by Harvest Energy Trust, ExchangeCo and
Harvest; or (ii) the named parties to any such suit include both the Trustee and
Harvest Energy Trust, ExchangeCo or Harvest and the Trustee shall have been
advised by counsel acceptable to Harvest Energy Trust, ExchangeCo or Harvest
that there may be one or more legal defenses available to the Trustee that are
different from or in addition to those available to Harvest Energy Trust,
ExchangeCo or Harvest and that, in the judgment of such counsel, would present a
conflict of interest were a joint representation to be undertaken (in which case
Harvest Energy Trust, ExchangeCo and Harvest shall not have the right to assume
the defense of such suit on behalf of the Trustee but shall be liable to pay the
reasonable fees and expenses of counsel for the Trustee). This indemnity shall
survive the termination of this Agreement and the resignation or removal of the
Trustee.
8.2 LIMITATION OF LIABILITY
The Trustee shall not be held liable for any loss which may occur by
reason of depreciation of the value of any part of the Trust Estate or any loss
incurred on any investment of funds pursuant to this Agreement, except to the
extent that such loss is principally and directly attributable to the gross
fraud, negligence, recklessness, willful misconduct or bad faith on the part of
the Trustee.
ARTICLE 9
CHANGE OF TRUSTEE
9.1 RESIGNATION
The Trustee, or any trustee hereafter appointed, may at any time resign
by giving written notice of such resignation to Harvest Energy Trust, ExchangeCo
and Harvest specifying the date on which it desires to resign, provided that
such notice shall not be given less than thirty (30) days before such desired
resignation date unless Harvest Energy Trust, ExchangeCo and Harvest otherwise
agree and provided further that such resignation shall not take effect until the
date of the appointment of a successor trustee and the acceptance of such
appointment by the successor trustee. Upon receiving such notice of resignation,
Harvest Energy Trust, ExchangeCo and Harvest shall promptly appoint a successor
trustee, which shall be a corporation organized and existing under the laws of
Canada and authorized to carry on the business of a trust company in all
provinces of Canada, by written instrument in duplicate, one copy of which shall
be delivered to the resigning trustee and one copy to the successor trustee.
Failing the appointment and acceptance of a successor trustee, a successor
trustee may be appointed by order of a court of competent jurisdiction upon
application of one or more of the parties to this Agreement. If the retiring
trustee is the party initiating an application for the appointment of a
successor trustee by order of a court of competent jurisdiction, Harvest Energy
Trust, ExchangeCo and Harvest shall be jointly and severally liable to reimburse
the retiring trustee for its legal costs and expenses in connection with same.
9.2 REMOVAL
The Trustee, or any trustee hereafter appointed, may (provided a
successor trustee is appointed) be removed at any time on not less than 30 days'
prior notice by written instrument executed by Harvest Energy Trust, ExchangeCo
and Harvest, in duplicate, one copy of which shall be delivered to the trustee
so removed and one copy to the successor trustee.
9.3 SUCCESSOR TRUSTEE
(a) Any successor trustee appointed as provided under this Agreement shall
execute, acknowledge and deliver to Harvest Energy Trust, ExchangeCo and
Harvest and to its predecessor trustee an instrument accepting such
appointment. Thereupon the resignation or removal of the predecessor
trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor under this Agreement,
with the like effect as if originally named as trustee in this Agreement.
However, on the written request of Harvest Energy Trust, ExchangeCo and
Harvest or of the successor trustee, the trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of this
Agreement, execute and deliver an instrument transferring to such successor
trustee all the rights and powers of the trustee so ceasing to act. Upon
the
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request of any such successor trustee, Harvest Energy Trust, ExchangeCo,
Harvest and such predecessor trustee shall execute any and all instruments
in writing for more fully and certainly vesting in and confirming to such
successor trustee all such rights and powers. Notwithstanding the
foregoing, any corporation to which all or substantially all of the
business of the Trustee is transferred shall automatically become the
successor trustee without any further act.
(b) Notwithstanding paragraph (a) above and Section 9.4, any corporation into
or with which the Trustee may be merged or consolidated or amalgamated, or
any corporation resulting therefrom to which the Trustee shall be a party,
or any corporation succeeding to the trust business of the Trustee shall be
the successor to the Trustee hereunder without any further act on its part
or any of the parties hereto.
9.4 NOTICE OF SUCCESSOR TRUSTEE
Upon acceptance of appointment by a successor trustee as provided
herein, Harvest Energy Trust, ExchangeCo or Harvest shall cause to be mailed
notice of the succession of such trustee hereunder to each Beneficiary shown on
the register of holders of Exchangeable Shares. If Harvest Energy Trust,
ExchangeCo or Harvest shall fail to cause such notice to be mailed within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of Harvest Energy
Trust, ExchangeCo and Harvest.
ARTICLE 10
HARVEST ENERGY TRUST SUCCESSORS
10.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
Harvest Energy Trust shall not complete any transaction (whether by way
of reconstruction, reorganization, consolidation, merger, transfer, sale, lease
or otherwise) whereby all or substantially all of its undertaking, property and
assets would become the property of any other person or, in the case of a
merger, of the continuing entity resulting therefrom unless, but may do so if:
(a) such other person or continuing entity (herein called the "Harvest
Successor"), by operation of law, becomes, without more, bound by the terms
and provisions of this Agreement or, if not so bound, executes, prior to or
contemporaneously with the consummation of such transaction, a trust
agreement supplemental hereto and such other instruments (if any) as are
satisfactory to the Trustee, acting reasonably, and in the opinion of legal
counsel to the Trustee are reasonably necessary or advisable to evidence
the assumption by the Harvest Successor of liability for all moneys payable
and property deliverable hereunder and the covenant of such Harvest
Successor to pay and deliver or cause to be delivered the same and its
agreement to observe and perform all the covenants and obligations of
Harvest Energy Trust under this Agreement; and
(b) such transaction shall, to the satisfaction of the Trustee, acting
reasonably, and in the opinion of legal counsel to the Trustee, be upon
such terms and conditions as substantially to preserve and not to impair in
any material respect any of the rights, duties, powers and authorities of
the Trustee or of the Beneficiaries hereunder.
10.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 10.1 have been duly observed and
performed, the Trustee, Harvest Successor, ExchangeCo and Harvest shall, if
required by Section 10.1, execute and deliver the supplemental trust agreement
provided for in Article 11 and thereupon Harvest Successor shall possess and
from time to time may exercise each and every right and power of Harvest Energy
Trust under this Agreement in the name of Harvest Energy Trust or otherwise and
any act or proceeding by any provision of this Agreement required to be done or
performed by the Board of Directors of Harvest or any officers of Harvest on
behalf of Harvest Energy Trust may be done and performed with like force and
effect by the directors or officers of such Harvest Successor.
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10.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing the combination of any
wholly-owned direct or indirect subsidiary of Harvest Energy Trust with or into
Harvest Energy Trust or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of Harvest Energy Trust provided that all of the assets
of such subsidiary are transferred to Harvest Energy Trust or another
wholly-owned direct or indirect subsidiary of Harvest Energy Trust and any such
transactions are expressly permitted by this Article 10.
ARTICLE 11
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
11.1 AMENDMENTS, MODIFICATIONS, ETC.
This Agreement may not be amended or modified except by an agreement in
writing executed by Harvest Energy Trust, ExchangeCo, Harvest and the Trustee
and approved by the Beneficiaries in accordance with Section 10.2 of the Share
Provisions.
11.2 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of Section 11.1, the parties to this
Agreement may in writing, at any time and from time to time, without the
approval of the Beneficiaries, amend or modify this Agreement for the purposes
of:
(a) adding to the covenants of any or all parties hereto for the protection of
the Beneficiaries hereunder provided that the Board of Directors of each of
ExchangeCo and Harvest shall be of the good faith opinion that such
additions will not be prejudicial to the rights or interests of the
Beneficiaries;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which, in the good faith opinion of the Board of Directors of
each of ExchangeCo and Harvest and in the opinion of the Trustee, having in
mind the best interests of the Beneficiaries it may be expedient to make,
provided that such Boards of Directors and the Trustee, acting on the
advice of counsel, shall be of the opinion that such amendments and
modifications will not be prejudicial to the interests of the
Beneficiaries; or
(c) making such changes or corrections which, on the advice of counsel to
Harvest Energy Trust, ExchangeCo, Harvest and the Trustee, are required for
the purpose of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error, provided that
the Trustee, acting on the advice of counsel, and the Board of Directors of
Harvest shall be of the opinion that such changes or corrections will not
be prejudicial to the rights and interests of the Beneficiaries.
11.3 MEETING TO CONSIDER AMENDMENTS
Harvest, at the request of Harvest Energy Trust, shall call a meeting
or meetings of the Beneficiaries for the purpose of considering any proposed
amendment or modification requiring approval pursuant hereto. Any such meeting
or meetings shall be called and held in accordance with the by-laws of Harvest,
the Share Provisions and all applicable laws.
11.4 CHANGES IN CAPITAL OF HARVEST ENERGY TRUST AND HARVEST
At all times after the occurrence of any event contemplated pursuant to
Section 2.6 or 2.7 of the Support Agreement or otherwise, as a result of which
either Harvest Trust Units or the Exchangeable Shares or both are in any way
changed, this Agreement shall forthwith be amended and modified as necessary in
order that it shall apply with full force and effect, mutatis mutandis, to all
new securities into which Harvest Trust Units or the Exchangeable Shares or both
are so changed and the parties hereto shall execute and deliver a supplemental
trust agreement giving effect to and evidencing such necessary amendments and
modifications.
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11.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS
No amendment to or modification or waiver of any of the provisions of
this Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto. From time to time Harvest (when
authorized by a resolution of its Board of Directors), Harvest Energy Trust
(when authorized by a resolution of the Board of Directors of Harvest) and
ExchangeCo (when authorized by a resolution of the Board of Directors of
ExchangeCo) and the Trustee may, subject to the provisions of these presents,
and they shall, when so directed by these presents, execute and deliver by their
proper officers, trust agreements or other instruments supplemental hereto,
which thereafter shall form part hereof, for any one or more of the following
purposes:
(a) evidencing the succession of Harvest Successors and the covenants of and
obligations assumed by each such Harvest Successor in accordance with the
provisions of Article 10 and the successors of any successor trustee in
accordance with the provisions of Article 9;
(b) making any additions to, deletions from or alterations of the provisions of
this Agreement or the Exchange Rights or the Automatic Exchange Rights
which, in the opinion of the Trustee, will not be prejudicial to the
interests of the Beneficiaries or are, in the opinion of counsel to the
Trustee, necessary or advisable in order to incorporate, reflect or comply
with any legislation the provisions of which apply to Harvest Energy Trust,
ExchangeCo, Harvest, the Trustee or this Agreement; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement, including without limitation, to make or evidence any amendment
or modification to this Agreement as contemplated hereby, provided that, in
the opinion of the Trustee, the rights of the Trustee and Beneficiaries
will not be prejudiced thereby.
ARTICLE 12
TERMINATION
12.1 TERM
The Trust created by this Agreement shall continue until the earliest
to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Beneficiary;
(b) each of Harvest Energy Trust, ExchangeCo and Harvest elects in writing to
terminate the Trust and such termination is approved by the Beneficiaries
in accordance with Section 10.2 of the Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of His
Majesty King George VI of Canada and the United Kingdom of Great Britain
and Northern Ireland living on the date of the creation of the Trust.
12.2 SURVIVAL OF AGREEMENT
This Agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by a
Beneficiary; provided, however, that the provisions of Article 7 and Article 8
shall survive any such termination of this Agreement.
ARTICLE 13
GENERAL
13.1 SEVERABILITY
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and the agreement
shall be carried out as nearly as possible in accordance with its original terms
and conditions.
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13.2 ENUREMENT
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns and to the
benefit of the Beneficiaries.
13.3 NOTICES TO PARTIES
All notices and other communications between the parties hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for such party as shall be specified in like notice):
(a) if to Harvest Energy Trust, Harvest or ExchangeCo, at:
c/o Harvest Operations Corp.
1900, 330 - 4th Avenue SW
Calgary, Alberta
T2P 0L4
Attention: President
Telecopier No.: (403) 265-3490
(b) if to the Trustee, at:
Valiant Trust Company
510, 550 - 6th Avenue SW
Calgary, Alberta
T2P 0S2
Attention: Manager, Corporate Trust Department
Telecopier No.: (403) 233-2857
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
13.4 NOTICE TO BENEFICIARIES
Any and all notices to be given and any documents to be sent to any
Beneficiaries may be given or sent to the address of such Beneficiary shown on
the register of holders of Exchangeable Shares in any manner permitted by the
by-laws of Harvest from time to time in force in respect of notices to
shareholders and shall be deemed to be received (if given or sent in such
manner) at the time specified in such by-laws, the provisions of which by-laws
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
Beneficiaries.
13.5 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
13.6 JURISDICTIONS
This Agreement shall be construed and enforced in accordance with the
laws of the Province of Alberta and the laws of Canada applicable therein.
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13.7 ATTORNMENT
Each of the Trustee, Harvest Energy Trust, ExchangeCo and Harvest
agrees that any action or proceeding arising out of or relating to this
Agreement may be instituted in the courts of Alberta, waives any objection which
it may have now or hereafter to the venue of any such action or proceeding,
irrevocably submits to the jurisdiction of the such courts in any such action or
proceeding, agrees to be bound by any judgment of the such courts and not to
seek, and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction.
13.8 LIABILITY OF THE TRUST
The parties hereto acknowledge that Harvest is entering into this
agreement solely in its capacity as authorized attorney on behalf of Harvest
Energy Trust and the obligations of Harvest Energy Trust hereunder shall not be
personally binding upon the Trustee, Harvest or any holder of Harvest Trust
Units and that any recourse against Harvest Energy Trust, the Trustee, Harvest
or any holder of Harvest Trust Units in any manner in respect of any
indebtedness, obligation or liability of Harvest Energy 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 dated as of September 27, 2002
as amended from time to time.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
HARVEST ENERGY TRUST,
by its authorized attorney,
Harvest Operations Corp.
By:
------------------------------------
Name:
Title:
HARVEST OPERATIONS CORP.
By:
------------------------------------
Name:
Title:
HARVEST EXCHANGECO LTD.
By:
------------------------------------
Name:
Title:
VALIANT TRUST COMPANY
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title: