Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Statutory arrangement - Relief from therequirement to have a current AIF filed on SEDAR in order tobe a qualifying issuer under MI 45-102.

Applicable Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 74, 83.1(1).

Applicable Multilateral Instruments

Multilateral Instrument 45-102 - Resale of Securities.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN, MANITOBA,

ONTARIO, QUÉBEC, NOVASCOTIA, NEW BRUNSWICK,

PRINCE EDWARD ISLAND AND NEWFOUNDLANDAND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ACCLAIM ENERGY TRUST, ACCLAIMENERGY INC.,

ELK POINT RESOURCES INC. ANDBURMIS ENERGY INC.

 

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") ineach of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Québec, Nova Scotia, New Brunswick, PrinceEdward Island and Newfoundland and Labrador (the "Jurisdictions")has received an application (the "Application")from Acclaim Energy Trust ("Acclaim"), Elk PointResources Inc. ("Elk Point") and Burmis Energy Inc.("Burmis") (collectively, the "Filers")for a decision under the securities legislation of the Jurisdictions(the "Legislation") that:

1.1 the registration and prospectus requirementsof the Legislation in the Provinces of Manitoba, New Brunswick,Newfoundland and Labrador and Québec shall not applyto certain trades made by Acclaim in connection with a proposedplan of arrangement (the "Arrangement") underthe Canada Business Corporations Act (the "CBCA")involving Acclaim, Acclaim Energy Inc. ("AEI"),3967336 Canada Inc. ("AcquisitionCo"), Elk Point,Burmis and the holders ("Elk Point Shareholders")of Common Shares of Elk Point ("Common Shares")and holders ("Elk Point Optionholders") of options("Options") to purchase Common Shares;

1.2 (i) the registration and prospectusrequirements of the Legislation of Alberta, Saskatchewan,Manitoba, Quebec, New Brunswick, Prince Edward Island andNewfoundland and Labrador shall not apply to certain tradesmade by Burmis in connection with or subsequent to the Arrangement;and (ii) would allow the immediate resale of common sharesof Burmis ("Burmis Shares") issued in connectionwith the Arrangement,

1.3 would deem or declare Burmis to be areporting issuer at the time of the Arrangement becomingeffective for the purposes of the Legislation in the Jurisdictionswhere such concept exists; and

1.4 the requirement of Burmis to have acurrent AIF filed on SEDAR in order to be a Qualifying Issuerunder Multilateral Instrument 45-102 ("MI 45-102")would not apply;

2. AND WHEREAS under the Mutual Reliance ReviewSystem for Exemptive Relief Applications (the "System"),the Alberta Securities Commission is the Principal Regulatorfor the Application;

3. AND WHEREAS unless otherwise defined, theterms herein have the meaning set out in National Instrument14-101 Definitions or Québec Commission Notice 14-101;

4. AND WHEREAS the Filers have representedto the Decision Makers that:

Background

4.1 on November 27, 2002, Elk Point andAcclaim jointly announced that they had entered into anarrangement agreement (the "Arrangement Agreement")in respect of a transaction (the "Transaction")to be effected pursuant to the Arrangement under section192 of the Canada Business Corporations Act (the "CBCA").While the mechanics of the Transaction are more preciselydescribed below, the effect of the Arrangement will be toprovide Elk Point Shareholders (other than dissenting shareholders)with, for each Common Share, at the holder's election: (i)0.95 of a trust unit of Acclaim ("Trust Unit"),(ii) $3.70 cash, or (iii) a combination thereof, such considerationto be prorated in the event that Elk Point Shareholderselect to receive in aggregate greater than $15 million cashor 26.3 million Trust Units of Acclaim, plus one half ofone share of Burmis. Burmis will acquire Elk Point's U.S.and certain minor Canadian properties prior to closing;

4.2 an information circular (the "InformationCircular") was mailed to the Elk Point Shareholdersand Elk Point Optionholders (collectively, the "ElkPoint Securityholders") on or about December 17, 2002;

4.3 the Transaction has been the subjectof a separate MRRS application, dated December 2, 2002,under which Acclaim, Elk Point and Burmis requested relieffrom the requirements of subsection 152(1) of the ASA andof section 13.2 of National Instrument 44-101. The earlierapplication was made separately because the relief requestedthereunder related to the contents of the Information Circular,and the timing of such request necessitated making the applicationon an expedited basis;

Acclaim

4.4 Acclaim is an open-ended trust settledunder the laws of Alberta and is headquartered in Calgary,Alberta;

4.5 Acclaim's business is the acquisitionof interests in crude oil and natural gas rights and theexploration, development, production, marketing and saleof crude oil and natural gas;

4.6 the authorized capital of Acclaim consistsof an unlimited number of Trust Units and an unlimited numberof special voting units ("Special Voting Units"),of which, as at November 27, 2002, 97,293,159 Trust Unitsand one Special Voting Unit (representing 29,171,824 votes)were issued and outstanding;

4.7 Acclaim is, and has been for a periodof time in excess of 12 months, a reporting issuer (wheresuch concept exists) under the securities legislation ofthe Jurisdictions. To the best of it's knowledge, informationand belief, Acclaim is not in default of the requirementsunder the Legislation or the regulations made thereunder(the "Regulations");

4.8 the Trust Units are listed and postedfor trading on the Toronto Stock Exchange (the "TSX")under the trading symbol "AE.UN";

Elk Point

4.9 Elk Point is a corporation incorporatedunder the CBCA and is headquartered in Calgary, Alberta;

4.10 Elk Point's business is the explorationfor, development of, production and marketing of petroleumand natural gas in the Western Canadian Sedimentary Basin,in the Powder River Basin of the U.S.A. and in the San JoaquinBasin of the U.S.A.;

4.11 the authorized capital of Elk Pointconsists of an unlimited number of Common Shares, of which,as at November 27, 2002, 29,335,164 Common Shares were issuedand outstanding. Also, as of November 27, 2002, 2,395,901Common Shares were issuable in connection with the exerciseof outstanding Options;

4.12 Elk Point is, and has been for a periodof time in excess of 12 months, a reporting issuer (wheresuch concept exists) under the securities legislation ofthe Jurisdictions. To the best of its knowledge, informationand belief, Elk Point is not in default of the requirementsunder the Legislation or the Regulations;

4.13 the Common Shares are listed and postedfor trading on the TSX under the trading symbol "ELK";

Burmis

4.14 Burmis is a corporation incorporatedunder the Business Corporations Act (Alberta) (the "ABCA")and is headquartered in Calgary, Alberta. Burmis was incorporatedon November 25, 2002 as 1018743 Alberta Ltd. and changedits name to Burmis Energy Inc. on December 4, 2002;

4.15 Burmis has not conducted any businessto date, but has executed the Arrangement Agreement;

4.16 the authorized capital of Burmis consistsof an unlimited number of Burmis Shares. As of the datehereof, there is issued and outstanding 100 Burmis Shares,which are owned by Elk Point;

4.17 Burmis is not a reporting issuer inany jurisdiction;

4.18 after giving effect to the Arrangement,all of the shares of Elk Point's U.S. subsidiary BellevueResources Inc. and certain minor Canadian properties (collectively,the "Retained Assets") will be transferred byElk Point to Burmis;

4.19 Burmis applied to the TSX on or aboutDecember 17, 2002 to list the Burmis Shares on the TSX uponthe completion of the Arrangement;

The Arrangement

4.20 prior to the Meeting, Elk Point willapply under section 192 of the CBCA for an interim order(the "Interim Order") of the Court of Queen'sBench of Alberta (the "Court") which order willspecify, among other things, certain procedures and requirementsto be followed in connection with the calling and holdingof the Meeting and the completion of the Arrangement;

4.21 the Interim Order will provide thatwith respect to matters to be brought before the Meetingpertaining to matters of business affecting Burmis, eachElk Point Shareholder shall be entitled to one vote on aballot at the Meeting for each Common Share held, and suchresolutions will be effective resolutions of the securityholdersof Burmis as if passed at a meeting of the securityholdersof Burmis entitled to vote on such matters;

4.22 the Meeting of the Elk Point Securityholdersis anticipated to be held on or about January 28, 2003 atwhich Elk Point will seek the requisite Elk Point Securityholderapproval (which, pursuant to the Interim Order, is expectedto be 66 2/3% of the votes attached to the Elk Point CommonShares and the Elk Point Options, voting as one class, representedat the Meeting) for the special resolution approving theArrangement;

4.23 in connection with the Meeting andpursuant to the Interim Order, Elk Point mailed on or aboutDecember 17, 2002 to each Elk Point Securityholder (i) anotice of special meeting, (ii) a form of proxy, and (iii)the Information Circular. A letter of transmittal and electionform by which Elk Point Shareholders will be entitled toelect the consideration to be received in exchange for theirElk Point Common Shares as described in paragraph 4.27.3below. The Information Circular was prepared in accordancewith OSC Rule 54-501, except with respect to any reliefgranted therefrom, and contains disclosure of the Transactionand the business and affairs of each of Acclaim, Elk Pointand Burmis;

4.24 for the Arrangement to become effective,a number of transactions and trades, which are outlinedbelow, must take place. Such transactions and trades areset out in the Plan of Arrangement which is appended tothe Information Circular as an exhibit to the ArrangementAgreement. No one transaction or trade will be effectiveunless all are effective;

The Trades

4.25 under the terms of a Retained AssetsAgreement of Purchase and Sale, dated as of November 27,2002, (the "Burmis Conveyance Agreement"), ElkPoint has agreed to transfer the Retained Assets to Burmisconcurrently with the effective time of the Arrangement.Elk Point will then combine the remaining business of ElkPoint with Acclaim pursuant to the Arrangement Agreement;

4.26 in connection with the Arrangement,Elk Point has agreed to arrange for current holders of Optionsto be permitted in their discretion to exercise (conditionalon closing of the Arrangement) all or any portion theirOptions by notice and direction in writing to Elk Pointin form and substance satisfactory to Acclaim, acting reasonably,received by Elk Point not later than the deadline for electingthe form of consideration to be received by Elk Point Shareholdersin the Arrangement (as described below). Options that arenot exercised by such deadline will be dealt with in theArrangement as described in paragraph 4.27.2 below;

4.27 the Arrangement provides for the followingtransactions to occur on the effective date:

4.27.1 the Retained Assets shall be transferredby Elk Point to Burmis, and Burmis shall issue BurmisShares to Elk Point in consideration therefor in accordancewith the terms and conditions of the Burmis ConveyanceAgreement. The number of Burmis shares to be issued toElk Point shall be the difference between the number ofElk Point shares outstanding immediately prior to theeffective time of the Arrangement and the number of BurmisShares held by Elk Point immediately prior to the effectivetime;

4.27.2 each unexercised Option (otherthan Options held by Elk Point Optionholders who exercisedissent rights) shall be exchanged by the holder thereofwith Elk Point for a cash payment per Option in an amountequal to $0.05. Each Elk Point Optionholder shall transferall unexercised Options to Elk Point. All such unexercisedOptions shall be cancelled and terminated;

4.27.3 each issued and outstanding CommonShare shall be transferred to AcquisitionCo, which isa wholly-owned subsidiary of Acclaim, and each holderthereof shall be entitled to received from Acclaim (inthe case of the Trust Units issuable pursuant to paragraphs4.27.3.2.1 and 4.27.3.2.3 below) and AcquisitionCo (inthe case of cash payable pursuant to clause 4.27.3.2.2and 4.27.3.2.3 below), subject to the limits set forthin paragraph 4.28 below and adjustment as described inparagraph 4.29 below, consideration comprised of:

4.27.3.1 one half of a Burmis Sharefor each Common Share held; and

4.27.3.2 in accordance with the electionor deemed election of the holder of such Common Share:

4.27.3.2.1 0.95 of a Trust Unit foreach Common Share held (the "Trust Unit Consideration");

4.27.3.2.2 $3.70 cash for each CommonShare held (the "Cash Consideration"); or

4.27.3.2.3 the Trust Unit Considerationfor an elected portion of the Common Shares held andthe Cash Consideration for the balance of the CommonShares held (the "Combined Consideration");

4.27.4 AcquisitionCo shall issue one unsecuredsubordinated demand note to Acclaim for each Trust Unitissued in accordance with paragraph 4.27.3.2 above;

4.27.5 Elk Point and AcquisitionCo shallbe amalgamated and continue as one corporation ("AmalgamationCo");

4.27.6 AmalgamationCo will deliver theBurmis Shares referred to in paragraph 4.27.3.1 aboveto former Elk Point Shareholders. Upon the delivery ofsuch Burmis Shares, AmalgamationCo will cease to be aholder of Burmis Shares and the former Elk Point Shareholderswill be added to the share register of Burmis;

4.27.7 any holder of Common Shares whodoes not duly elect the form of consideration in accordancewith the terms of the Arrangement and any holders of CommonShares who exercise their right of dissent, shall be deemedto have elected to receive the Trust Unit Considerationfor such Common Shares;

4.27.8 the number of Trust Units issuablefor each Common Share shall be subject to adjustment toreflect the effect of any split, reverse split, distributionof Trust Unit, reorganization, recapitalization or othersimilar change with respect to Trust Units occurring afterNovember 27, 2002 and prior to the effective time of theArrangement;

4.28 the aggregate amount of cash availableto pay the Cash Consideration is limited to $15,000,000(the "Cash Limit"). The aggregate number of TrustUnits that may be issued in connection with the electionabove is limited to 26,293,160 (the "Trust Unit Limit").If the aggregate cash elected exceeds the Cash Limit, theamount of Cash Consideration paid to the holders so electingshall be pro rated among all such holders who made an electionto receive Cash Consideration or the Combined Consideration.If the aggregate number of Trust Units elected exceeds theTrust Unit Limit, the amount of Trust Unit Considerationissued to the holders so electing shall be pro rated amongthe holders who made an election to receive the Trust UnitConsideration or the Combined Consideration;

4.29 no fractional Trust Units or BurmisShares shall be issued and in lieu of any fractional TrustUnit or Burmis Share, each registered Shareholder or Optionholderwill receive the next lowest number of Trust Units or BurmisShares, as the case may be;

4.30 the end result of the trades describedabove is that (a) each holder of a Common Share will receiveone half of a Burmis Share and either (i) 0.95 of a TrustUnit (ii) $3.70 cash or (iii) a combination of Trust Unitsand cash; (b) the Retained Assets will be transferred toBurmis and Burmis will be owned by the existing Elk PointShareholders of Elk Point and (c) Elk Point will be amalgamatedwith a wholly owned subsidiary of Acclaim;

4.31 at the Meeting, Elk Point Shareholderswill also vote on two ordinary resolutions approving furtherissuances of up to a specified number of Burmis Shares followingthe completion of the Arrangement. If this resolution isapproved, Burmis intends to issue a number of Burmis Sharesby way of one or more private placements exempt from theprospectus and registration requirements of the Legislationincluding a private placement which Burmis intends to completeshortly after the completion of the Arrangement;

General

4.32 the Information Circular in connectionwith the Arrangement provided to all holders of Common Sharesand Options, and filed in all of the Jurisdictions contains(or, to the extent permitted, incorporates by reference)prospectus-level disclosure in respect of Acclaim, Elk Pointand Burmis, including the following financial information:

4.32.1 Pro forma consolidated balancesheet as at December 1, 2002 and unaudited pro forma consolidatedincome statements for the nine-month period ended September30, 2002 and the year ended December 31, 2001;

4.32.2 Audited balance sheets of BellevueResources, Inc. as at December 31, 2001 and 2000 and thestatement of earnings (loss) and deficit and cash flowsfor each of the years in the three-year period ended December31, 2001;

4.32.3 Audited statements of revenue andoperating expenses of the other properties to be transferredto Burmis for each of the years in the three-year periodended December 31, 2001;

4.32.4 Audited balance sheet of Burmisas at December 1, 2002.

4.33 the assets that will make up the businessof Burmis have been the subject of continuous disclosureon an ongoing basis for more than 12 months, in accordancewith Elk Point's responsibilities as a reporting issuer;

4.34 the Arrangement will require the approvalof the holders of Common Shares and Options voting as orderedin the Interim Order of the Court and the Court. In consideringwhether to approve the arrangement, the Court will considerwhether the Arrangement is fair to such Elk Point Shareholdersand Optionholders;

4.35 the Board of Directors of Elk Pointhas (i) received a fairness opinion from CIBC World MarketsInc. to the effect that the consideration received by theElk Point Shareholders under the Arrangement is fair, froma financial point of view, to Elk Point Shareholders, (ii)approved the Arrangement and (iii) recommended that ElkPoint Securityholders vote in favour of the Arrangement;

4.36 Holders of Common Shares and Optionswill have the right to dissent from the Arrangement underSection 190 of the CBCA, and the Information Circular disclosesfull particulars of this right in accordance with applicablelaw;

4.37 exemptions from registration and prospectusrequirements of the Legislation of Manitoba, Quebec, NewBrunswick and Newfoundland and Labrador in respect of tradesmade in securities of Acclaim may not be available. Exemptionsfrom registration and prospectus requirements of the Legislationin respect of trades made in securities of Burmis in connectionwith the Arrangement and exemptions from prospectus requirementsof the Legislation in respect of first trades in Trust Unitsand Burmis Shares following the Arrangement may not be otherwiseavailable in certain Jurisdictions.

5. AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

6. AND WHEREAS, each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to makethe Decision has been met;

7. THE DECISION of the Decision Makers underthe Legislation is that:

7.1 all trades made in securities of Acclaimin connection with the Arrangement shall not be subjectto the registration and prospectus requirements of the Legislationof each of Manitoba, Quebec, New Brunswick and Newfoundlandand Labrador;

7.2 all trades made in securities of Burmisin connection with the Arrangement shall not be subjectto the registration and prospectus requirements of the Legislationof Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick,Prince Edward Island and Newfoundland and Labrador;

7.3 except in British Columbia, Québecand Nova Scotia, the first trade in a Jurisdiction of BurmisShares acquired by former holders of Common Shares in connectionwith the Arrangement shall be a distribution or primarydistribution to the public under the Legislation of suchJurisdiction, except that where:

7.3.1 Burmis is a reporting issuer ina jurisdiction listed in Appendix B to MI 45-102 precedingthe trade;

7.3.2 the seller is in a special relationshipwith Burmis, as defined in the Legislation, the sellerhas reasonable grounds to believe that Burmis is not indefault of any requirement of the Legislation; and

7.3.3 no unusual effort is made to preparethe market or to create a demand for the securities andno extraordinary commission or consideration is paid inrespect of the first trades;

then such a first trade shall be a distributionor a primary distribution to the public only if it is fromthe holdings of any person, company or combination of personsor companies holding a sufficient number of securities ofBurmis, as the case may be, to affect materially the controlof Burmis, but any holding of any person, company or combinationof persons or companies holding more than 20% of the outstandingvoting securities of Burmis shall, in the absence of evidenceto the contrary, be deemed to affect materially the controlof Burmis;

7.4 in Québec the alienation of:

7.4.1 Burmis Shares acquired by formerholders of Common Shares in connection with the Arrangementshall be distributions under the legislation of Québecexcept where:

7.4.1.1 Burmis is a reporting issuerin Québec immediately preceding the trade;

7.4.1.2 no unusual effort is made toprepare the market or to create a demand for the securitiesthat are the subject of the trade;

7.4.1.3 no extraordinary commissionor consideration is paid to a person or company in respectof the trade;

7.4.1.4 if the selling shareholder isan insider or officer of Burmis, the selling securityholderhas no reasonable grounds to believe that Burmis isin default of any requirement of securities legislation;and

7.4.1.5 the trade does not constitutea secondary distribution with solicitation as contemplatedby Policy Statement Q-12 of the Commission de valeursmobilières du Québec; and

7.4.2 Trust Units acquired by former holdersof Common Shares in connection with the Arrangement shallbe distributions under the legislation of Québecexcept where:

7.4.2.1 Acclaim is a reporting issuerin Québec immediately preceding the trade;

7.4.2.2 no unusual effort is made toprepare the market or to create a demand for the securitiesthat are the subject of the trade;

7.4.2.3 no extraordinary commissionor consideration is paid to a person or company in respectof the trade;

7.4.2.4 if the selling shareholder isan insider or officer of Acclaim, the selling securityholderhas no reasonable grounds to believe that Acclaim isin default of any requirement of securities legislation;and

7.4.2.5 the trade does not constitutea secondary distribution with solicitation as contemplatedby Policy Statement Q-12 of the Commission de valeursmobilières du Québec; and

7.5 Upon the effectiveness of the Arrangement:

7.5.1 in British Columbia, Alberta, Saskatchewan,Ontario, Nova Scotia and Newfoundland and Labrador, therequirement contained in the Legislation to have a CurrentAIF filed on SEDAR in order to be a Qualifying Issuerunder MI 45-102 shall not apply to Burmis provided that:

7.5.1.1 Burmis files a notice on SEDARadvising that the Information Circular has been filedas an alternate form of annual information form andidentifying the SEDAR Project Number under which theInformation Circular was filed; and

7.5.1.2 Burmis files a Form 45-102F2on or before the tenth day after the distribution dayof any securities certifying that it is a QualifyingIssuer except for the requirement to have a currentAIF;

such order to expire 140 days after Burmis'financial year ended December 31, 2003;

7.5.2 in Québec, the InformationCircular shall be deemed to be the annual informationform required by section 159 of the Regulation adoptedunder the Securities Act (Québec), for the purposesof Burmis qualifying for the shortened hold period contemplatedby the Québec equivalent to MI 45-102, namely decisionno. 2002-C-0422 of the Commission des valeurs mobilièresdu Québec; and

7.6 Burmis shall be deemed or declared areporting issuer at the time of the Arrangement becomingeffective for the purposes of the Legislation of the Jurisdictionsother than Saskatchewan, Manitoba, New Brunswick and PrinceEdward Island.

January 27, 2003.

"Glenda A. Campbell"                    "EricT. Spink"