Securities Law & Instruments

IN THE MATTER OF THE SECURITIES ACT (ONTARIO)(the "Act")

AND

IN THE MATTER OFENERMARK INCOME FUND

RULING
(Subsection 74(1))

UPON the Application (the "Application") of EnerMark Income Fund (the "Applicant") to the Ontario Securities Commission (the "Commission") for a ruling pursuant to subsection 74(1)of the Act that the trade of the Put Option (as defined below) and the trades in Shares (as defined below) pursuant to the exercise of the Put Option shall not be subject to sections 25 or 53 of the Act;

AND UPON considering the Application and recommendation of the staff of the Commission;

AND UPON the Applicant having represented to the Commission as follows:

1.The Applicant is an unincorporated, open-end energy investment trust created under the laws of Alberta pursuant to a declaration of trust and is a reporting issuer in all relevant Canadian jurisdictions.

2.The Applicant's trust units (the "Trust Units") are listed on the Toronto Stock Exchange, and the Applicant has a current market capitalization of approximately $850 million.

3.EnerMark Inc. ("EnerMark") is a corporation amalgamated under the laws of Alberta, is not a reporting issuer in any jurisdiction in Canada, and is a wholly-owned subsidiary of the Applicant.

4.ACT Energy Inc. ("ACT") is a corporation which was incorporated under the Business Corporations Act (Alberta) on August 25, 2000, and is at arm's length to EnerMark and the Applicant.

5.ACT has entered into a joint venture agreement (the "Joint Venture Agreement") with EnerMark pursuant to which it will acquire an interest, or an option to acquire an interest, in oil and gas properties owned by EnerMark by financing exploration programs and incurring Canadian exploration expense ("CEE") and Canadian development expense ("CDE").

6.ACT is proposing to distribute units (the "Offering") in Ontario, with each unit (the "Units") consisting of 900 flow-through common shares (the "Flow-Through Shares") and 100 common shares (the "Common Shares").

7.Each Unit will be issued at a price of $1,000, with an allocation of $900 to the Flow-Through Shares and $100 to the Common Shares, and will be issued in reliance on the prospectus exemption in section 2.4 (the "Exemption") of the Commission's Rule 45-501 - Exempt Distributions (the "Rule").

8.As required by the Exemption, ACT will provide each prospective purchaser with an offering memorandum thatincludes the information required by the Exemption.

9.The Units will be distributed by Omni Capital Inc. (the "Agent") pursuant to an agency agreement entered into by the Agent and ACT.

10.The Agent is registered as an investment dealer under Ontario securities law, and is controlled by Michael Weinberg, who is a director of ACT and currently its principal shareholder; accordingly, ACT may be deemed a "related issuer" or "connected issuer" of the Agent under the Act.

11.ACT will use the net proceeds from the Offering (whose maximum size it is anticipated will be approximately $1,500,000) to incur such expenses, will use its best efforts to spend, on or before December 31, 2001, the proceeds from the sale of the Flow-Through Shares for the purpose of incurring CEE and CDE eligible for a 100% deduction under the Income Tax Act (Canada), and will renounce such CEE and CDE in favour of the subscribers of Flow-Through Shares.

12.It is proposed that ACT, on its behalf and on behalf of the subscribers of Units, the Applicant and EnerMark enter into a put option agreement (the "Option Agreement") prior to the closing of the Offering, pursuant to which the subscribers shall have the option to sell (the "Put Option") to EnerMark, which shall have the obligation to purchase, all, but not less than all, of the Flow-Through Shares and Common Shares (collectively, the "Shares") which they hold in the capital of ACT on the agreed date and subject to the following terms:

(a)On or about March 12, 2003, the subscribers shall have the option to sell to EnerMark their Shares at a price equal to the fair market value of the Shares (discounted at 15% on an after-tax basis) on February 1, 2003 (the "Purchase Price"). The fair market value of the Shares shall be determined in accordance with the criteria set out in the Option Agreement by an independent valuator (the "Valuator"), chosen jointly by ACT and EnerMark.

(b)On or before February 15, 2003, EnerMark will forward to each subscriber a notice setting out the Purchase Price, to which will be attached a copy of the report of the Valuator, in which the fair market value of the Shares shall be set out. In addition, if EnerMark intends to pay the Purchase Price by causing the issuance of Trust Units (as described in paragraph (f) below), EnerMark shall forward to each subscriber the most recent annual report of the Applicant, the most recent financial statements and interim financial statements of the Applicant, if applicable, as well as a copy of all the documents filed within the previous twelve months by the Applicant with the relevant regulatory authorities pursuant to its continuous disclosure obligations as a reporting issuer.

(c)Unless EnerMark receives from a subscriber, on or before March 12, 2003, a notice indicating that he does not intend to exercise the Put Option, the subscriber shall be deemed to have exercised the Put Option.

(d)If, on or before, March 12, 2003, subscribers holding less than 75% of the Shares exercise the Put Option or are deemed to have exercised the Put Option, EnerMark shall not have the obligation to purchase the Shares and the subscribers will remain shareholders of ACT. ACT will continue to carry on its business in accordance with the Joint Venture Agreement.

(e)If, on or before, March 12, 2003, subscribers holding 75% or more of the Shares exercise the Put Option or are deemed to have exercised the Put Option, the subscribers who did not exercise their Put Option shall have the obligation to sell their Shares to EnerMark.

(f)The Purchase Price shall be paid by EnerMark, at its option, by payment of an amount in cash or by causing the issuance of Trust Units. If EnerMark decides to pay for the Shares by causing the issuance of Trust Units, the number of Trust Units to be issued shall be determined in the following manner:

Fair market value of the Shares as Determined by the Valuator 95% x the weighted average trading price of the Trust Units on The Toronto Stock Exchange during the 60 days preceding February 1, 2003 with the fair market value discounted at 15% on an after-tax basis.

13.ACT is not, nor does it intend to become, a reporting issuer; there currently is no, nor is there anticipated or intended to be, a published market in respect of the Shares; and there will be no more than fifty holdersof Shares at the time the Put Option is to be exercised.

14.The purpose of the Option Agreement and the issuance of the Put Option is to provide subscribers of the Shares with the possibility of an exit strategy, by providing that if the holders of Shares issued pursuant to the Offering exercise the Put Option in 2003, their Shares will be purchased by EnerMark for cash or in exchange for the Trust Units.

15.Pursuant to the terms of the Put Option, each of the subscribers for Shares has covenanted to EnerMark that it will not transfer or otherwise dispose of the Put Option other than in connection with a transfer or disposition, in accordance with applicable securities laws, of the Shares to which such Put Option applies.

16.The issuance of the Trust Units, if required, will be carried out pursuant to registration and prospectus exemptions contained in subclauses 35(1)12(iii) and 72(1)(f)(iii) of the Act.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS RULED, pursuant to subsection 74(1) of the Act, that :

(a)the trade of the Put Option is not subject to sections 25 or 53 of the Act, provided that the first trade in the Put Option shall be a distribution; and

(b)the trades of Shares to EnerMark pursuant to the exercise of the Put Option shall not be subject to sections 25 or 53 of the Act, provided that the first trade by Enermark in the Shares acquired pursuant to this ruling shall be a distribution unless such trade is made in compliance with subsection 72(5) of the Act and section 2.18(3) of Commission Rule 45-501 as if the Shares had been acquired pursuant to an exemption referred to in section 72(5) of the Act.

November 28th , 2000.



"Robert W. Davies""Robert W. Korthals"