**Exhibit 4.3**

 

**ARRANGEMENT AGREEMENT**

** **

July 24, 2003

 

**AMONG:**

 

**BAYTEX ENERGY LTD.**, a corporation incorporated under the laws ofAlberta (“**Baytex**”)

 

- and -

 

**CREW ENERGY INC.**, a corporation incorporated under the laws ofAlberta (“**Crew**”)

 

- and -

 

**BAYTEX ACQUISITIONCORP.**, acorporation incorporated under the laws of Alberta (“**AcquisitionCo**”)

 

- and -

 

**BAYTEX EXCHANGECOLTD.**, acorporation incorporated under the laws of Alberta (“**ExchangeCo**”)

 

- and -

 

**BAYTEX RESOURCES LTD.**, a corporation incorporated under the laws ofAlberta (“**Baytex Resources**”)

 

- and -

 

**BAYTEX EXPLORATIONLTD.**, acorporation incorporated under the laws of Alberta (“**Baytex Exploration**”)

 

- and -

 

**VALIANT TRUST COMPANY**, a trust company incorporated under the lawsof Alberta with offices in Calgary, Alberta as trustee for and on behalf of **BAYTEX ENERGY TRUST**, a trust settledpursuant to the laws of Alberta (the “**Trust**”)

 

**Recitals**

** **

A.                            Baytexwishes to propose an arrangement with Crew, AcquisitionCo, ExchangeCo, BaytexResources, Baytex Exploration and the Trust and with holders of securities ofBaytex in order to reorganize its affairs and therefore wishes to carry outcertain transactions on the basis hereinafter set forth; and

 

B.                            Eachof the parties to this Agreement has agreed to participate in the Arrangement.

 

**The parties agree asfollows:**

 

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**ARTICLE 1INTERPRETATION**

** **

1.1                           **Definitions**

 

In thisAgreement, the following terms have the following meanings:

 

“**ABCA**”means the *Business Corporations Ac*t,R.S.A. 2000, c. B-9, as amended, including the regulations promulgatedthereunder;

 

“**AcquisitionCo**”means Baytex AcquisitionCorp., a corporation incorporated under the ABCA;

 

“**AcquisitionCoArrangement Resolution**” means the resolution of the AcquisitionCocommon shareholders approving the Arrangement;

 

“**Agreement**”,“**herein**”, “**hereof**”, “**hereto**”,“**hereunder**” and similarexpressions mean and refer to this arrangement agreement (including theschedules hereto) as supplemented, modified or amended, and not to anyparticular article, section, schedule or other portion hereof;

 

“**AmalgamationCo**”means Baytex Energy Ltd., the corporation resulting from the amalgamation ofBaytex and AcquisitionCo pursuant to the Arrangement;

 

“**Arrangement**”means the arrangement pursuant to section 193 of the ABCA set forth in the Planof Arrangement as supplemented, modified or amended;

 

“**Articlesof Arrangement**” means the articles of arrangement in respect of theArrangement required under subsection 193(10) of the ABCA to be filed with theRegistrar after the Final Order has been made to give effect to theArrangement;

 

“**BaytexExploration**” means Baytex Exploration Ltd., a corporationincorporated under the ABCA;

 

“**BaytexExploration Arrangement Resolution**” means the resolution of BaytexExploration common shareholders approving the Arrangement;

 

“**BaytexResources**” means Baytex Resources Ltd., a corporation incorporatedunder the ABCA;

 

“**BaytexResources Arrangement Resolution**” means the resolution of BaytexResources common shareholders approving the Arrangement;

 

“**Baytex**”means Baytex Energy Ltd., a corporation incorporated under the ABCA;

 

“**BaytexArrangement Resolution**” means the special resolution to approve theArrangement to be presented to Common Shareholders and Optionholders at theMeeting;

 

“**BusinessDay**” means a day, other than a Saturday, Sunday or statutoryholiday, when banks are generally open in the city of Calgary, in the provinceof Alberta, for the transaction of banking business;

 

“**Certificate**”means the certificate or certificates or other confirmation of filing to beissued by the Registrar pursuant to subsection 193(11) of the ABCA givingeffect to the Arrangement;

 

“**CommonShares**” means the common shares in the capital of Baytex and “**Common Shareholders**” means the holders fromtime to time of Common Shares;

 

“**Court**”means the Court of Queen’s Bench of Alberta;

 

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“**Crew**”means Crew Energy Inc., a corporation incorporated under the laws of Alberta;

 

“**CrewArrangement Resolution**” means the resolution of Crew commonshareholders approving the Arrangement;

 

“**CrewCommon Shares**” or “**Crew Shares**”means common shares in the capital of Crew;

 

“**Depositary**”means Valiant Trust Company;

 

“**EffectiveDate**” means the date the Arrangement becomes effective under theABCA;

 

“**EffectiveTime**” means the time at which the Articles of Arrangement are filedwith the Registrar on the Effective Date;

 

“**ExchangeableShare Provisions**” means the rights, privileges, restrictions andconditions attaching to the Exchangeable Shares substantially in the form setout in Exhibit 2 hereto;

 

“**ExchangeableShares**” means the exchangeable shares in the capital ofAcquisitionCo;

 

“**ExchangeCo**”means Baytex Exchangeco Ltd., a corporation incorporated under the ABCA;

 

“**ExchangeCoArrangement Resolution**” means the resolution of ExchangeCo commonshareholders approving the Arrangement;

 

“**FinalOrder**” means the final order of the Court approving the Arrangementpursuant to subsection 193(9) of the ABCA to be applied for following theMeeting, as such order may be affirmed, amended or modified by any court ofcompetent jurisdiction;

 

“**InformationCircular**” means the information circular to be prepared by Baytexand forwarded as part of the proxy solicitation materials to CommonShareholders and Optionholders in respect of the Meeting;

 

“**InterimOrder**” means an interim order of the Court under subsection 193(4)of the ABCA containing declarations and directions with respect to theArrangement, as such order may be affirmed, amended or modified by any court ofcompetent jurisdiction;

 

“**ITA**”means the *Income Tax Act*(Canada),as amended;

 

“**Meeting**”means the special meeting of holders of Common Shares and Options to be held toconsider the Arrangement, and any adjournments thereof;

 

“**Non-Resident**”means:  (i) a person who is not aresident of Canada for the purposes of the ITA; or (ii) a partnership that isnot a Canadian partnership for the purposes of the ITA;

 

“**Options**”means the outstanding stock options, whether or not vested, to acquire CommonShares and “**Optionholders**” meansthe holders from time to time of Options;

 

“**Person**”means an individual, partnership, association, body corporate, trust,unincorporated organization, government, regulatory authority, or other entity;

 

“**Plan ofArrangement**” means the plan of arrangement attached hereto asExhibit 1;

 

“**Registrar**”means the Registrar appointed under section 263 of the ABCA;

 

“**subsidiary**”has the meaning ascribed to it in the ABCA;

 

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“**SupportAgreement**” means the support agreement to be entered into on theEffective Date substantially in the form set out in Exhibit 3 hereto;

 

“**Trust**”means Baytex Energy Trust, a trust duly settled under the laws of Alberta;

 

“**Trust Unit**”means a unit of the Trust issued by the Trust; and

 

“**TSX**”means the Toronto Stock Exchange;

 

“**Voting andExchange Trust Agreement**” means the voting and exchange trustagreement to be entered into on the Effective Date substantially in the formset out in Exhibit 4 hereto.

 

1.2                           **Currency**

 

All sums ofmoney which are referred to in this Agreement are expressed in lawful money ofCanada unless otherwise specified.

 

1.3                           **Interpretation Not Affected by Headings**

 

The divisionof this Agreement into articles, sections and schedules and the insertion ofheadings are for convenience of reference only and shall not affect theconstruction or interpretation of this Agreement.

 

1.4                           **ArticleReferences**

 

Unlessreference is specifically made to some other document or instrument, allreferences herein to articles, sections and schedules are to articles, sectionsand schedules of this Agreement.

 

1.5                           **Incorporation of Schedules**

 

The followingschedules are incorporated into and form an integral part of this Agreement:

 

Exhibit 1 - Plan of Arrangement

Exhibit 2 - Exchangeable Share Provisions tobe Included in the Articles of AcquisitionCo

Exhibit 3 - Support Agreement

Exhibit 4 - Voting and Exchange TrustAgreement

 

1.6                           **Extended Meanings**

 

Unless thecontext otherwise requires, words importing the singular number shall includethe plural and vice versa; words importing any gender shall include allgenders; and words importing persons shall include individuals, partnerships,associations, bodies corporate, trusts, unincorporated organizations,governments, regulatory authorities, and other entities.

 

1.7                           **Date for any Action**

 

In the eventthat any date on which any action required to be taken hereunder by any of theparties hereto is not a Business Day in the place where the action is requiredto be taken, such action shall be required to be taken on the next succeedingday which is a Business Day in such place.

 

1.8                           **Entire Agreement**

 

ThisAgreement, together with the schedules attached hereto, constitutes the entireagreement between the parties pertaining to the subject matter hereof andsupersedes all prior agreements, understandings, negotiations and discussions,whether oral or written, between the parties with respect to the subject matterhereof.

 

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1.9                           **Governing Law**

 

This Agreementshall be governed by and construed in accordance with the laws of Alberta andthe laws of Canada applicable in Alberta and shall be treated in all respectsas an Alberta contract.

 

**ARTICLE 2COVENANTS**

** **

2.1                           **Covenants of Baytex**

 

Baytex covenantsand agrees that it will:

 

(a)                                  take all actions necessary to give effect to the transactionscontemplated by this Agreement and the Arrangement;

 

(b)                                 use all reasonable efforts to obtain all necessary consents,assignments, waivers and amendments to or terminations of any instruments andtake such measures as may be appropriate to fulfill its obligations hereunderand to carry out the transactions contemplated hereby;

 

(c)                                  apply to the Court for the Interim Order;

 

(d)                                 solicit proxies to be voted at the Meeting in favour of the BaytexArrangement Resolution and prepare, in consultation and cooperation withAcquisitionCo, ExchangeCo, Crew, Baytex Resources, Baytex Exploration and theTrust, the Information Circular and proxy solicitation materials and anyamendments or supplements thereto as required by, and in compliance with, theInterim Order, and applicable corporate and securities laws, and file anddistribute the same to the Common Shareholders and Optionholders in a timelyand expeditious manner in all jurisdictions where the same are required to befiled and distributed;

 

(e)                                  convene the Meeting as ordered by the Interim Order and conduct suchMeeting in accordance with the Interim Order and as otherwise required by law;

 

(f)                                    until the Effective Date, conduct its operations and those of itssubsidiaries in the ordinary and normal course of business and in accordancewith applicable laws, generally accepted industry practice and any operatingand other agreements applicable to its properties and assets and those of itssubsidiaries;

 

(g)                                 use all reasonable efforts to cause each of the conditions precedentset forth in Article 4 which are within its control to be satisfied on orbefore the Effective Date;

 

(h)                                 subject to the approval of the Baytex Arrangement Resolution by theCommon Shareholders and by the Optionholders, voting as a class, submit theArrangement to the Court and apply, in conjunction with AcquisitionCo,ExchangeCo, Crew, Baytex Resources, Baytex Exploration and the Trust, for theFinal Order;

 

(i)                                     upon issuance of the Final Order and subject to the conditionsprecedent in Article 4, forthwith proceed to file the Articles of Arrangement,the Final Order and all related documents with the Registrar pursuant tosubsection 193(9) of the ABCA;

 

(j)                                     until the Effective Date, except pursuant to the exercise ofoutstanding Options in accordance with the terms thereof, not issue anyadditional Common Shares or other securities or allow any of its subsidiariesto issue any shares or securities;

 

(k)                                  until the Effective Date, not issue or enter into, or allow any ofits subsidiaries to issue or enter into, any agreement or agreements to issueor grant options, warrants or rights to purchase any of its shares or othersecurities or those of such subsidiaries;

 

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(l)                                     not, except in the ordinary course of business or as contemplated inconnection with the Arrangement, merge into or with, or consolidate with, anyother Person or, perform any act or enter into any transaction or negotiationwhich might interfere or be inconsistent with the consummation of thetransactions contemplated by this Agreement;

 

(m)                               until the Effective Date, except as specifically provided forhereunder, not alter or amend its articles or by-laws or those of itssubsidiaries as the same exist at the date of this Agreement; and

 

(n)                                 prior to the Effective Date, make application to list the CrewShares and the Trust Units (including Trust Units to be issued from time totime upon exchange of the Exchangeable Shares) on the TSX.

 

2.2                           **Covenants of Crew**

 

Crew covenantsand agrees that it will:

 

(a)                                  take all action necessary to give effect to the transactionscontemplated by this Agreement and the Arrangement;

 

(b)                                 use all reasonable efforts to obtain all necessary consents,assignments, waivers and amendments to or terminations of any instruments andtake such measures as may be appropriate to fulfill its obligations hereunderand to carry out the transactions contemplated hereby;

 

(c)                                  cooperate with and support Baytex in its application for the InterimOrder;

 

(d)                                 take all steps necessary to ensure that the Crew ArrangementResolution is passed;

 

(e)                                  until the Effective Date, other than as contemplated herein or inthe Information Circular, not carry on any business, enter into any transactionor effect any corporate act whatsoever other than as contemplated herein or inthe Information Circular without the prior written consent of Baytex, not to beunreasonably withheld;

 

(f)                                    until the Effective Date, other than as contemplated herein or inthe Information Circular, not issue any securities or enter into any agreementsto issue or grant options, warrants or rights to purchase any of itssecurities;

 

(g)                                 use all reasonable efforts to cause each of the conditions precedentset forth in Article 4 which are within its control to be satisfied on orbefore the Effective Date;

 

(h)                                 submit the Arrangement to the Court and apply, in conjunction withBaytex, AcquisitionCo, ExchangeCo, Baytex Resources, Baytex Exploration and theTrust, for the Final Order;

 

(i)                                     forthwith carry out the terms of the Final Order to the extentapplicable to Crew;

 

(j)                                     upon issuance of the Final Order and subject to the conditionsprecedent in Article 4, forthwith proceed to file the Articles of Arrangement,the Final Order and all related documents with the Registrar pursuant tosection 193(9) of the ABCA;

 

(k)                                  until the Effective Date, not disclose to any Person, other than itsofficers, directors and key employees and professional advisors, anyconfidential information relating to AcquisitionCo, ExchangeCo, BaytexResources, Baytex Exploration, the Trust or Baytex or its subsidiaries exceptinformation disclosed in the Information Circular, required to be disclosed bylaw, or otherwise publicly known; and

 

(l)                                     prior to the Effective Date, cooperate with Baytex in making theapplication to list the Crew Shares on the TSX.

 

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2.3                           **Covenants of AcquisitionCo**

 

AcquisitionCocovenants and agrees that it will:

 

(a)                                  take all action necessary to give effect to the transactionscontemplated by this Agreement and the Arrangement;

 

(b)                                 use all reasonable efforts to obtain all necessary consents,assignments, waivers and amendments to or terminations of any instruments andtake such measures as may be appropriate to fulfill its obligations hereunderand to carry out the transactions contemplated hereby;

 

(c)                                  cooperate with and support Baytex in its application for the InterimOrder;

 

(d)                                 take all steps necessary to ensure that the AcquisitionCoArrangement Resolution is passed;

 

(e)                                  until the Effective Date, not carry on any business, enter into anytransaction or effect any corporate act whatsoever other than as contemplatedherein or in the Information Circular without the prior written consent ofBaytex, not to be unreasonably withheld;

 

(f)                                    until the Effective Date, not issue any securities or enter into anyagreements to issue or grant options, warrants or rights to purchase any of itssecurities;

 

(g)                                 use all reasonable efforts to cause each of the conditions precedentset forth in Article 4 which are within its control to be satisfied on orbefore the Effective Date;

 

(h)                                 submit the Arrangement to the Court and apply, in conjunction withBaytex, Crew, ExchangeCo and the Trust, for the Final Order;

 

(i)                                     forthwith carry out the terms of the Final Order to the extentapplicable to AcquisitionCo;

 

(j)                                     upon issuance of the Final Order and subject to the conditionsprecedent in Article 4, forthwith proceed to file the Articles of Arrangement,the Final Order and all related documents with the Registrar pursuant tosection 193(9) of the ABCA; and

 

(k)                                  until the Effective Date, not disclose to any Person, other than itsofficers, directors and key employees and professional advisors, anyconfidential information relating to the Trust, Crew, ExchangeCo, BaytexResources, Baytex Exploration or Baytex or its subsidiaries except informationdisclosed in the Information Circular, required to be disclosed by law, orotherwise publicly known.

 

2.4                           **Covenants of ExchangeCo**

 

ExchangeCocovenants and agrees that it will:

 

(a)                                  take all action necessary to give effect to the transactionscontemplated by this Agreement and the Arrangement;

 

(b)                                 use all reasonable efforts to obtain all necessary consents,assignments, waivers and amendments to or terminations of any instruments andtake such measures as may be appropriate to fulfill its obligations hereunderand to carry out the transactions contemplated hereby;

 

(c)                                  cooperate with and support Baytex in its application for the InterimOrder;

 

(d)                                 take all steps necessary to ensure that the ExchangeCo ArrangementResolution is passed;

 

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(e)                                  until the Effective Date, not carry on any business, enter into anytransaction or effect any corporate act whatsoever other than as contemplatedherein or in the Information Circular without the prior written consent ofBaytex, not to be unreasonably withheld;

 

(f)                                    until the Effective Date, not issue any securities or enter into anyagreements to issue or grant options, warrants or rights to purchase any of itssecurities;

 

(g)                                 use all reasonable efforts to cause each of the conditions precedentset forth in Article 4 which are within its control to be satisfied on orbefore the Effective Date;

 

(h)                                 submit the Arrangement to the Court and apply, in conjunction withBaytex, Crew and the Trust, for the Final Order;

 

(i)                                     forthwith carry out the terms of the Final Order to the extent applicableto ExchangeCo;

 

(j)                                     upon issuance of the Final Order and subject to the conditionsprecedent in Article 4, forthwith proceed to file the Articles of Arrangement,the Final Order and all related documents with the Registrar pursuant tosection 193(9) of the ABCA; and

 

(k)                                  until the Effective Date, not disclose to any Person, other than itsofficers, directors and key employees and professional advisors, anyconfidential information relating to the Trust, Crew, AcquisitionCo, Baytex,Baytex Resources, Baytex Exploration or its subsidiaries except informationdisclosed in the Information Circular, required to be disclosed by law, orotherwise publicly known.

 

2.5                           **Covenants of Baytex Resources**

 

BaytexResources covenants and agrees that it will:

 

(a)                                  take all action necessary to give effect to the transactionscontemplated by this Agreement and the Arrangement;

 

(b)                                 use all reasonable efforts to obtain all necessary consents,assignments, waivers and amendments to or terminations of any instruments and takesuch measures as may be appropriate to fulfill its obligations hereunder and tocarry out the transactions contemplated hereby;

 

(c)                                  cooperate with and support Baytex in its application for the InterimOrder;

 

(d)                                 take all steps necessary to ensure that the Baytex ResourcesArrangement Resolution is passed;

 

(e)                                  until the Effective Date, not carry on any business, enter into anytransaction or effect any corporate act whatsoever other than as contemplatedherein or in the Information Circular without the prior written consent ofBaytex, not to be unreasonably withheld;

 

(f)                                    until the Effective Date, not issue any securities or enter into anyagreements to issue or grant options, warrants or rights to purchase any of itssecurities;

 

(g)                                 use all reasonable efforts to cause each of the conditions precedentset forth in Article 4 which are within its control to be satisfied on orbefore the Effective Date;

 

(h)                                 submit the Arrangement to the Court and apply, in conjunction withBaytex, Crew and the Trust, for the Final Order;

 

(i)                                     forthwith carry out the terms of the Final Order to the extentapplicable to Baytex Resources;

 

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(j)                                     upon issuance of the Final Order and subject to the conditionsprecedent in Article 4, forthwith proceed to file the Articles of Arrangement,the Final Order and all related documents with the Registrar pursuant tosection 193(9) of the ABCA; and

 

(k)                                  until the Effective Date, not disclose to any Person, other than itsofficers, directors and key employees and professional advisors, anyconfidential information relating to the Trust, Crew, AcquisitionCo,ExchangeCo, Baytex Exploration, Baytex or its subsidiaries except informationdisclosed in the Information Circular, required to be disclosed by law, orotherwise publicly known.

 

2.6                           **Covenants of Baytex Exploration**

 

BaytexExploration covenants and agrees that it will:

 

(a)                                  take all action necessary to give effect to the transactionscontemplated by this Agreement and the Arrangement;

 

(b)                                 use all reasonable efforts to obtain all necessary consents,assignments, waivers and amendments to or terminations of any instruments andtake such measures as may be appropriate to fulfill its obligations hereunderand to carry out the transactions contemplated hereby;

 

(c)                                  cooperate with and support Baytex in its application for the InterimOrder;

 

(d)                                 take all steps necessary to ensure that the Baytex ExplorationArrangement Resolution is passed;

 

(e)                                  until the Effective Date, not carry on any business, enter into anytransaction or effect any corporate act whatsoever other than as contemplatedherein or in the Information Circular without the prior written consent ofBaytex, not to be unreasonably withheld;

 

(f)                                    until the Effective Date, not issue any securities or enter into anyagreements to issue or grant options, warrants or rights to purchase any of itssecurities;

 

(g)                                 use all reasonable efforts to cause each of the conditions precedentset forth in Article 4 which are within its control to be satisfied on orbefore the Effective Date;

 

(h)                                 submit the Arrangement to the Court and apply, in conjunction withBaytex, Crew and the Trust, for the Final Order;

 

(i)                                     forthwith carry out the terms of the Final Order to the extentapplicable to Baytex Exploration;

 

(j)                                     upon issuance of the Final Order and subject to the conditionsprecedent in Article 4, forthwith proceed to file the Articles of Arrangement,the Final Order and all related documents with the Registrar pursuant tosection 193(9) of the ABCA; and

 

(k)                                  until the Effective Date, not disclose to any Person, other than itsofficers, directors and key employees and professional advisors, anyconfidential information relating to the Trust, Crew, AcquisitionCo,ExchangeCo, Baytex Resources, Baytex or its subsidiaries except informationdisclosed in the Information Circular, required to be disclosed by law, orotherwise publicly known.

 

2.7                           **Covenants of the Trust**

 

The Trustcovenants and agrees that it will:

 

(a)                                  take all action necessary to give effect to the transactionscontemplated by this Agreement and the Arrangement;

 

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(b)                                 use all reasonable efforts to obtain all necessary consents,assignments, waivers and amendments to or terminations of any instruments andtake such measures as may be appropriate to fulfill its obligations hereunderand to carry out the transactions contemplated hereby;

 

(c)                                  cooperate with and support Baytex in its application for the InterimOrder;

 

(d)                                 until the Effective Date, not carry on any activity or effect anyact whatsoever other than as contemplated herein or in the InformationCircular;

 

(e)                                  use all reasonable efforts to cause each of the conditions precedentset forth in Article 4 which are within its control to be satisfied on orbefore the Effective Date;

 

(f)                                    until the Effective Date, not disclose to any Person, other thanofficers, directors and key employees and professional advisors, anyconfidential information relating to AcquisitionCo, Crew, ExchangeCo, BaytexResources, Baytex Exploration or Baytex or its subsidiaries except informationdisclosed in the Information Circular, required to be disclosed by law, orotherwise publicly known;

 

(g)                                 until the Effective Date, except as specifically provided for hereunder,not alter or amend its governing fund documents as the same exist at the dateof this Agreement without the prior consent of Baytex;

 

(h)                                 prior to the Effective Date, cooperate with Baytex in making theapplication to list the Trust Units (including Trust Units to be issued fromtime to time upon exchange of the Exchangeable Shares) on the TSX; and

 

(i)                                     reserve and authorize for issuance the Trust Units which are to beissued from time to time upon exchange of the Exchangeable Shares.

 

2.8                           **Additional Covenants**

 

Each of theTrust, AcquisitionCo and ExchangeCo further covenants and agrees as follows:

 

(a)                                  on the Effective Date, the Trust, AcquisitionCo and ExchangeCo shallexecute and deliver the Support Agreement containing the terms and conditionsset forth in Exhibit 3, together with such other terms and conditions as may beagreed to by the parties acting reasonably; and

 

(b)                                 on the Effective Date, the Trust, AcquisitionCo and ExchangeCo shallexecute and deliver the Voting and Exchange Trust Agreement containing theterms and conditions set forth in Exhibit 4, together with such other terms andconditions as may be agreed to by the parties acting reasonably.

 

**ARTICLE 3REPRESENTATIONS AND WARRANTIES**

** **

3.1                           **Representations and Warranties of Baytex**

 

Baytexrepresents and warrants to and in favour of Crew, AcquisitionCo, ExchangeCo,Baytex Resources and the Trust as follows, and acknowledges that Crew,AcquisitionCo, ExchangeCo, Baytex Resources and the Trust are relying upon suchrepresentations and warranties:

 

(a)                                  Baytex is a corporation duly incorporated and validly existing underthe laws of Alberta and has the corporate power and capacity to own or leaseits property and assets, to carry on its business as now conducted by it, toenter into this Agreement, and to perform its obligations hereunder;

 

(b)                                 the authorized capital of Baytex consists of an unlimited number ofCommon Shares of which a total of 53,611,083 Common Shares are issued andoutstanding as at July 23, 2003; and all of such issued and outstandingCommon Shares are fully paid and non-assessable;

 

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(c)                                  as at July 23, 2003, up to a maximum of 4,426,103 Common Sharesmay be issued under the terms of the Options;

 

(d)                                 the execution and delivery of this Agreement and all documents to bedelivered pursuant hereto and the completion of the transactions contemplatedhereby:

 

(i)                                     do not and will not result in the breach of, or violate any term orprovision of, the articles or by-laws of Baytex;

 

(ii)                                  except as previously disclosed in writing to AcquisitionCo or theTrust, do not, and will not as of the Effective Date, conflict with, result inthe breach of, constitute a default under, or accelerate or permit theacceleration of the performance required by, any agreement, instrument,license, permit or authority to which Baytex is a party or by which it is boundand which is material to Baytex or to which any material property of Baytex issubject, or result in the creation of any encumbrance upon any of the assets ofBaytex under any such agreement, instrument, license, permit or authority, orgive to any Person any interest or right, including rights of purchase,termination, cancellation or acceleration, under any such agreement,instrument, license, permit or authority; and

 

(iii)                               do not, and will not as of the Effective Date, violate any provisionof law or administrative regulation or any judicial or administrative order,award, judgment or decree applicable and known to Baytex, the breach of whichwould have a material adverse effect on Baytex;

 

(e)                                  except as disclosed to AcquisitionCo and the Trust or as set out inthe Information Circular, there are no actions, suits, proceedings, claims orinvestigations commenced or, to the knowledge of Baytex, contemplated orthreatened against or affecting Baytex in law or in equity before or by anydomestic or foreign government department, commission, board, bureau, court,agency, arbitrator, or instrumentality of any kind, nor, to the knowledge ofBaytex, are there any facts which may reasonably be expected to be a properbasis for any actions, suits, proceedings or investigations (other than inconnection with the exercise of rights of dissent referred to in theArrangement) which in any case would prevent or hinder the completion of thetransactions contemplated by this Agreement or which can reasonably be expectedto have a material adverse effect on the business, operations, properties,assets or affairs, financial or otherwise, of Baytex and its subsidiaries takenas a whole;

 

(f)                                    the execution and delivery of this Agreement and the completion ofthe transactions contemplated hereby have been duly approved by the board ofdirectors of Baytex and this Agreement constitutes a valid and bindingobligation of Baytex enforceable against it in accordance with its terms;

 

(g)                                 Baytex is under no obligation, contractual or otherwise, to issueany securities, except for securities to be issued pursuant to the exercise ofOptions or as disclosed in the Information Circular;

 

(h)                                 as of the dates as of which the information is given, suchinformation set forth in the Information Circular regarding Baytex and itssubsidiaries shall be true and complete in all material respects and shall notcontain any misrepresentation as defined in applicable securities legislationand there shall have been no material adverse changes to such information tothe date hereof; and

 

(i)                                     as of the date hereof, the Board of Directors of Baytex hasdetermined unanimously that:

 

(i)                                     the Arrangement is fair to the Common Shareholders and theOptionholders and is in the best interest of Baytex; and

 

(ii)                                  the Board of Directors of Baytex has recommended that CommonShareholders and Optionholders vote in favour of the Arrangement.

 

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3.2                           **Representations and Warranties of Crew**

 

Crewrepresents and warrants to and in favour of Baytex, AcquisitionCo, ExchangeCo,Baytex Resources and the Trust as follows, and acknowledges that Baytex,AcquisitionCo, ExchangeCo, Baytex Resources and the Trust are relying upon suchrepresentations and warranties:

 

(a)                                  Crew is duly incorporated and validly existing under the laws ofAlberta and has the corporate power and capacity to own or lease its propertyand assets, to carry on its business as now conducted by it, to enter into thisAgreement, and to perform its obligations hereunder;

 

(b)                                 the execution and delivery of this Agreement and all documents to bedelivered pursuant hereto and the completion of the transactions contemplatedhereby:

 

(i)                                     do not and will not result in the breach of, or violate any term orprovision of, the articles or by-laws of Crew;

 

(ii)                                  except as previously disclosed in writing to AcquisitionCo and theTrust, do not, and will not as of the Effective Date, conflict with, result inthe breach of, constitute a default under, or accelerate or permit theacceleration of the performance required by, any agreement, instrument,license, permit or authority to which Crew is a party or by which it is boundand which is material to Crew or to which any material property of Crew issubject, or result in the creation of any encumbrance upon any of the assets ofCrew under any such agreement, instrument, license, permit or authority, orgive to any Person any interest or right, including rights of purchase,termination, cancellation or acceleration, under any such agreement,instrument, license, permit or authority; and

 

(iii)                               do not, and will not as of the Effective Date, violate any provisionof law or administrative regulation or any judicial or administrative order,award, judgment or decree applicable and known to Crew, the breach of whichwould have a material adverse effect on Crew;

 

(c)                                  there are no actions, suits, proceedings, claims or investigationscommenced or, to the knowledge of Crew, contemplated or threatened against oraffecting Crew in law or in equity before or by any domestic or foreigngovernment department, commission, board, bureau, court, agency, arbitrator, orinstrumentality of any kind, nor, to the knowledge of Crew, are there any factswhich may reasonably be expected to be a proper basis for any actions, suits,proceedings or investigations;

 

(d)                                 the execution and delivery of this Agreement and the completion ofthe transactions contemplated hereby have been duly approved by the board ofdirectors of Crew and this Agreement constitutes a valid and binding obligationof Crew enforceable in accordance with its terms;

 

(e)                                  Crew is under no obligation, contractual or otherwise, to issue anyCrew Shares or other securities, except as required pursuant to this Agreement;and

 

(f)                                    Crew has not carried on any business since its incorporation otherthan as provided for herein or as contemplated in the Information Circular.

 

3.3                           **Representations and Warranties ofAcquisitionCo**

 

AcquisitionCorepresents and warrants to and in favour of Baytex, ExchangeCo, Crew, BaytexResources and the Trust as follows, and acknowledges that Baytex, ExchangeCo,Crew, Baytex Resources and the Trust are relying upon such representations andwarranties:

 

(a)                                  AcquisitionCo is duly incorporated and validly existing under thelaws of Alberta and has the corporate power and capacity to own or lease itsproperty and assets, to carry on its business as now conducted by it, to enterinto this Agreement, and to perform its obligations hereunder;

 

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(b)                                 the authorized capital of AcquisitionCo consists, or will consist asof the Effective Date, of an unlimited number of common shares and an unlimitednumber of Exchangeable Shares having the terms and conditions substantially asset forth in Exhibit 2, of which as at the date hereof only 100 common sharesand are issued and outstanding, all of which are owned legally and beneficiallyby the Trust and are fully paid and non-assessable;

 

(c)                                  the execution and delivery of this Agreement and all documents to bedelivered pursuant hereto and the completion of the transactions contemplatedhereby:

 

(i)                                     do not and will not result in the breach of, or violate any term orprovision of, the articles or by-laws of AcquisitionCo;

 

(ii)                                  except as previously disclosed in writing to Baytex and Crew, donot, and will not as of the Effective Date, conflict with, result in the breachof, constitute a default under, or accelerate or permit the acceleration of theperformance required by, any agreement, instrument, license, permit orauthority to which AcquisitionCo is a party or by which it is bound and whichis material to AcquisitionCo or to which any material property of AcquisitionCois subject, or result in the creation of any encumbrance upon any of the assetsof AcquisitionCo under any such agreement, instrument, license, permit orauthority, or give to any Person any interest or right, including rights ofpurchase, termination, cancellation or acceleration, under any such agreement,instrument, license, permit or authority; and

 

(iii)                               do not, and will not as of the Effective Date, violate any provisionof law or administrative regulation or any judicial or administrative order,award, judgment or decree applicable and known to AcquisitionCo, the breach ofwhich would have a material adverse effect on AcquisitionCo;

 

(d)                                 there are no actions, suits, proceedings, claims or investigationscommenced or, to the knowledge of AcquisitionCo, contemplated or threatenedagainst or affecting AcquisitionCo in law or in equity before or by anydomestic or foreign government department, commission, board, bureau, court,agency, arbitrator, or instrumentality of any kind, nor, to the knowledge ofAcquisitionCo, are there any facts which may reasonably be expected to be aproper basis for any actions, suits, proceedings or investigations;

 

(e)                                  the execution and delivery of this Agreement and the completion ofthe transactions contemplated hereby have been duly approved by the board ofdirectors of AcquisitionCo and this Agreement constitutes a valid and bindingobligation of AcquisitionCo enforceable in accordance with its terms;

 

(f)                                    AcquisitionCo is under no obligation, contractual or otherwise, toissue any AcquisitionCo shares or other securities, except as required pursuantto this Agreement; and

 

(g)                                 AcquisitionCo has not carried on any business since itsincorporation other than as provided for herein or as contemplated in theInformation Circular.

 

3.4                           **Representations and Warranties ofExchangeCo**

 

ExchangeCorepresents and warrants to and in favour of Baytex, AcquisitionCo, Crew, BaytexResources and the Trust as follows, and acknowledges that Baytex, AcquisitionCo,Crew, Baytex Resources and the Trust are relying upon such representations andwarranties:

 

(a)                                  ExchangeCo is duly incorporated and validly existing under the lawsof Alberta and has the corporate power and capacity to own or lease itsproperty and assets, to carry on its business as now conducted by it, to enterinto this Agreement, and to perform its obligations hereunder;

 

(b)                                 the authorized capital of ExchangeCo consists, or will consist as ofthe Effective Date, of an unlimited number of common shares of which as at thedate hereof only 100 common shares and are issued and

 

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outstanding, all of which are owned legallyand beneficially by the Trust and are fully paid and non-assessable;

 

(c)                                  the execution and delivery of this Agreement and all documents to bedelivered pursuant hereto and the completion of the transactions contemplatedhereby:

 

(i)                                     do not and will not result in the breach of, or violate any term orprovision of, the articles or by-laws of ExchangeCo;

 

(ii)                                  except as previously disclosed in writing to Baytex and Crew, donot, and will not as of the Effective Date, conflict with, result in the breachof, constitute a default under, or accelerate or permit the acceleration of theperformance required by, any agreement, instrument, license, permit orauthority to which ExchangeCo is a party or by which it is bound and which ismaterial to ExchangeCo or to which any material property of ExchangeCo issubject, or result in the creation of any encumbrance upon any of the assets ofExchangeCo under any such agreement, instrument, license, permit or authority,or give to any Person any interest or right, including rights of purchase,termination, cancellation or acceleration, under any such agreement,instrument, license, permit or authority; and

 

(iii)                               do not, and will not as of the Effective Date, violate any provisionof law or administrative regulation or any judicial or administrative order,award, judgment or decree applicable and known to ExchangeCo, the breach ofwhich would have a material adverse effect on ExchangeCo;

 

(d)                                 there are no actions, suits, proceedings, claims or investigationscommenced or, to the knowledge of ExchangeCo, contemplated or threatenedagainst or affecting ExchangeCo in law or in equity before or by any domesticor foreign government department, commission, board, bureau, court, agency,arbitrator, or instrumentality of any kind, nor, to the knowledge ofExchangeCo, are there any facts which may reasonably be expected to be a properbasis for any actions, suits, proceedings or investigations;

 

(e)                                  the execution and delivery of this Agreement and the completion ofthe transactions contemplated hereby have been duly approved by the board ofdirectors of ExchangeCo and this Agreement constitutes a valid and bindingobligation of ExchangeCo enforceable in accordance with its terms;

 

(f)                                    ExchangeCo is under no obligation, contractual or otherwise, toissue any ExchangeCo shares or other securities, except as required pursuant tothis Agreement; and

 

(g)                                 ExchangeCo has not carried on any business since its incorporationother than as provided for herein or as contemplated in the InformationCircular.

 

3.5                           **Representations and Warranties of BaytexResources**

 

Baytex Resourcesrepresents and warrants to and in favour of Baytex, Crew, AcquisitionCo,ExchangeCo and the Trust, as follows, and acknowledges that Baytex, Crew,AcquisitionCo, ExchangeCo and the Trust are relying upon such representationsand warranties:

 

(a)                                  Baytex Resources is duly incorporated and validly existing under thelaws of Alberta and has the corporate power and capacity to own or lease itsproperty and assets, to carry on its business as now conducted by it, to enterinto this Agreement, and to perform its obligations hereunder;

 

(b)                                 the execution and delivery of this Agreement and all documents to bedelivered pursuant hereto and the completion of the transactions contemplatedhereby:

 

(i)                                     do not and will not result in the breach of, or violate any term orprovision of, the articles or by-laws of Baytex Resources;

 

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(ii)                                  except as previously disclosed in writing to Baytex and Crew, donot, and will not as of the Effective Date, conflict with, result in the breachof, constitute a default under, or accelerate or permit the acceleration of theperformance required by, any agreement, instrument, license, permit orauthority to which Baytex Resources is a party or by which it is bound andwhich is material to Baytex Resources or to which any material property ofBaytex Resources is subject, or result in the creation of any encumbrance uponany of the assets of Baytex Resources under any such agreement, instrument,license, permit or authority, or give to any Person any interest or right,including rights of purchase, termination, cancellation or acceleration, underany such agreement, instrument, license, permit or authority; and

 

(iii)                               do not, and will not as of the Effective Date, violate any provisionof law or administrative regulation or any judicial or administrative order,award, judgment or decree applicable and known to Baytex Resources, the breachof which would have a material adverse effect on Baytex Resources;

 

(c)                                  there are no actions, suits, proceedings, claims or investigationscommenced or, to the knowledge of Baytex Resources, contemplated or threatenedagainst or affecting Baytex Resources in law or in equity before or by anydomestic or foreign government department, commission, board, bureau, court,agency, arbitrator, or instrumentality of any kind, nor, to the knowledge ofBaytex Resources, are there any facts which may reasonably be expected to be aproper basis for any actions, suits, proceedings or investigations;

 

(d)                                 the execution and delivery of this Agreement and the completion ofthe transactions contemplated hereby have been duly approved by the board ofdirectors of Baytex Resources and this Agreement constitutes a valid andbinding obligation of Baytex Resources enforceable in accordance with itsterms; and

 

(e)                                  Baytex Resources is under no obligation, contractual or otherwise,to issue any Baytex Resources shares or other securities, except as requiredpursuant to this Agreement.

 

3.6                           **Representations and Warranties of BaytexExploration**

 

BaytexExploration represents and warrants to and in favour of Baytex, Crew,AcquisitionCo, ExchangeCo and the Trust, as follows, and acknowledges thatBaytex, Crew, AcquisitionCo, ExchangeCo and the Trust are relying upon suchrepresentations and warranties:

 

(a)                                  Baytex Exploration is duly incorporated and validly existing underthe laws of Alberta and has the corporate power and capacity to own or leaseits property and assets, to carry on its business as now conducted by it, toenter into this Agreement, and to perform its obligations hereunder;

 

(b)                                 the execution and delivery of this Agreement and all documents to bedelivered pursuant hereto and the completion of the transactions contemplatedhereby:

 

(i)                                     do not and will not result in the breach of, or violate any term orprovision of, the articles or by-laws of Baytex Exploration;

 

(ii)                                  except as previously disclosed in writing to Baytex and Crew, donot, and will not as of the Effective Date, conflict with, result in the breachof, constitute a default under, or accelerate or permit the acceleration of theperformance required by, any agreement, instrument, license, permit orauthority to which Baytex Exploration is a party or by which it is bound andwhich is material to Baytex Exploration or to which any material property ofBaytex Exploration is subject, or result in the creation of any encumbranceupon any of the assets of Baytex Exploration under any such agreement,instrument, license, permit or authority, or give to any Person any interest orright, including rights of purchase, termination, cancellation or acceleration,under any such agreement, instrument, license, permit or authority; and

 

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(iii)                               do not, and will not as of the Effective Date, violate any provisionof law or administrative regulation or any judicial or administrative order,award, judgment or decree applicable and known to Baytex Exploration, thebreach of which would have a material adverse effect on Baytex Exploration;

 

(c)                                  there are no actions, suits, proceedings, claims or investigationscommenced or, to the knowledge of Baytex Exploration, contemplated orthreatened against or affecting Baytex Exploration in law or in equity beforeor by any domestic or foreign government department, commission, board, bureau,court, agency, arbitrator, or instrumentality of any kind, nor, to theknowledge of Baytex Exploration, are there any facts which may reasonably beexpected to be a proper basis for any actions, suits, proceedings orinvestigations;

 

(d)                                 the execution and delivery of this Agreement and the completion ofthe transactions contemplated hereby have been duly approved by the board ofdirectors of Baytex Exploration and this Agreement constitutes a valid andbinding obligation of Baytex Exploration enforceable in accordance with itsterms; and

 

(e)                                  Baytex Exploration is under no obligation, contractual or otherwise,to issue any Baytex Exploration shares or other securities, except as requiredpursuant to this Agreement.

 

3.7                           **Representations and Warranties of the Trust**

 

The Trustrepresents and warrants to and in favour of Baytex, AcquisitionCo, ExchangeCo,Crew, Baytex Resources and Baytex Exploration as follows, and acknowledges thatBaytex, AcquisitionCo, ExchangeCo, Crew, Baytex Resources and BaytexExploration are relying upon such representations and warranties:

 

(a)                                  the Trust is a trust duly settled and validly existing under thelaws of Alberta and has the power and capacity to enter into this Agreement,and to perform its obligations hereunder;

 

(b)                                 the execution and delivery of this Agreement and all documents to bedelivered pursuant hereto and the completion of the transactions contemplatedhereby:

 

(i)                                     do not and will not result in the breach of, or violate any term orprovision of, the governing documents of the Trust;

 

(ii)                                  except as previously disclosed in writing to Baytex or Crew, do not,and will not as of the Effective Date, conflict with, result in the breach of,constitute a default under, or accelerate or permit the acceleration of theperformance required by, any agreement, instrument, license, permit orauthority to which the Trust is a party or by which it is bound and which ismaterial to the Trust or to which any material property of the Trust is subject,or result in the creation of any encumbrance upon any of the assets of theTrust under any such agreement, instrument, license, permit or authority, orgive to any Person any interest or right, including rights of purchase,termination, cancellation or acceleration, under any such agreement,instrument, license, permit or authority; and

 

(iii)                               do not, and will not as of the Effective Date, violate any provisionof law or administrative regulation or any judicial or administrative order,award, judgment or decree applicable and known to the Trust, the breach ofwhich would have a material adverse effect on the Trust;

 

(c)                                  there are no actions, suits, proceedings, claims or investigationscommenced or, to the knowledge of the Trust, contemplated or threatened againstor affecting the Trust in law or in equity before or by any domestic or foreigngovernment department, commission, board, bureau, court, agency, arbitrator, orinstrumentality of any kind, nor, to the knowledge of the Trust, are there anyfacts which may reasonably be expected to be a proper basis for any actions,suits, proceedings or investigations;

 

(d)                                 the Trust has no subsidiaries other than AcquisitionCo andExchangeCo, and the Trust owns all issued and outstanding shares of AcquisitionCoand ExchangeCo;

 

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(e)                                  the execution and delivery of this Agreement and the completion ofthe transactions contemplated hereby have been duly approved by the board oftrustees of the Trust and this Agreement constitutes a valid and bindingobligation of the Trust enforceable in accordance with its terms;

 

(f)                                    a total of one (1) Trust Unit is issued and outstanding and, exceptas contemplated by this Agreement, the Trust is under no obligation, contractualor otherwise, to issue any Trust Units or other securities; and

 

(g)                                 the Trust has not carried on any activity since it was settled otherthan as provided for herein.

 

**ARTICLE 4CONDITIONS PRECEDENT**

** **

4.1                           **Mutual Conditions Precedent**

 

The respectiveobligations of Baytex, Crew, AcquisitionCo, ExchangeCo, Baytex Resources,Baytex Exploration and the Trust to complete the transactions contemplated bythis Agreement shall be subject to the fulfilment or satisfaction, on or beforethe Effective Date, of each of the following conditions, any of which may bewaived collectively by them without prejudice to their right to rely on anyother condition:

 

(a)                                  the Interim Order shall have been granted in form and substancesatisfactory to Baytex, Crew, AcquisitionCo, ExchangeCo, Baytex Resources,Baytex Exploration and the Trust, acting reasonably, not later thanJuly 30, 2003 or such later date as the parties hereto may agree and shallnot have been set aside or modified in a manner unacceptable to such parties onappeal or otherwise;

 

(b)                                 the Baytex Arrangement Resolution shall have been approved by therequisite number of votes cast by the Common Shareholders and the Optionholdersat the Meeting in accordance with the provisions of the Interim Order and anyapplicable regulatory requirements;

 

(c)                                  the Final Order shall have been granted in form and substancesatisfactory to Baytex, Crew, AcquisitionCo, ExchangeCo, Baytex Resources,Baytex Exploration and the Trust acting reasonably not later thanOctober 31, 2003 or such later date as the parties hereto may agree;

 

(d)                                 the Articles of Arrangement and all necessary related documents, inform and substance satisfactory to Baytex, Crew, AcquisitionCo, ExchangeCo,Baytex Resources, Baytex Exploration and the Trust, acting reasonably, shallhave been accepted for filing by the Registrar together with the Final Order inaccordance with subsection 193(9) of the ABCA;

 

(e)                                  there shall not be in force any order or decree of a court ofcompetent jurisdiction or of any federal, provincial, municipal or othergovernmental department, commission, board, agency or regulatory bodyrestraining, interfering with or enjoining the consummation of the transactionscontemplated by this Agreement;

 

(f)                                    all necessary third party and regulatory and similar reviews,consents and approvals with respect to the transactions contemplated herebyshall have been completed or obtained including, without limitation, consentsand approvals from Baytex’s principal lenders;

 

(g)                                 there shall not, as of the Effective Date, be holders of CommonShares or holders of Options that hold, in aggregate, in excess of 5% of allCommon Shares and Options, that have validly exercised their rights of dissentunder the ABCA and the Interim Order; and

 

(h)                                 the approval of the TSX of the listing of the Trust Units and CrewShares to be issued pursuant to the Arrangement and the Initial PrivatePlacement shall be obtained, subject only to the filing of required documentswhich cannot be filed prior to the Effective Date.

 

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4.2                           **Additional Conditions to Obligations ofBaytex and Crew**

 

In addition tothe conditions contained in Section 4.1, the obligation of Baytex and Crew tocomplete the transactions contemplated by this Agreement is subject to thefulfillment or satisfaction, on or before the Effective Date, of each of thefollowing conditions, any of which may be waived by them without prejudice totheir right to rely on any other condition:

 

(a)                                  each of the covenants, acts and undertakings of AcquisitionCo andthe Trust to be performed or complied with on or before the Effective Datepursuant to the terms of this Agreement shall have been duly performed orcomplied with;

 

(b)                                 the representations and warranties of AcquisitionCo and the Trustcontained in Article 3 shall be true in all material respects with the sameeffect as if made at and as of the Effective Date; and

 

(c)                                  the board of directors of Baytex shall not have determined in itssole and absolute discretion that to proceed with the Arrangement would not bein the best interests of the Common Shareholders and the Optionholders.

 

4.3                           **Additional Conditions to Obligations ofAcquisitionCo and the Trust**

 

In addition tothe conditions contained in Section 4.1, the obligation of AcquisitionCo andthe Trust to complete the transactions contemplated by this Agreement issubject to the fulfillment or satisfaction, on or before the Effective Date, ofthe following conditions, any of which may be waived by AcquisitionCo and theTrust without prejudice to their right to rely on any other condition:

 

(a)                                  each of the covenants, acts and undertakings of Baytex and Crew tobe performed or complied with on or before the Effective Date pursuant to theterms of this Agreement shall have been duly performed or complied with;

 

(b)                                 except as affected by the transactions contemplated by thisAgreement, the representations and warranties of Baytex and Crew contained inArticle 3 shall be true in all material respects on the Effective Date, with thesame effect as if made at and as of such date; and

 

(c)                                  prior to the Effective Date, there shall have been no materialadverse change in the affairs, operations, financial condition or business ofCrew or Baytex or any of its subsidiaries from that reflected in theInformation Circular.

 

**ARTICLE 5NOTICES**

** **

5.1                           **Notices**

 

All noticeswhich may or are required to be given pursuant to any provision of thisAgreement shall be given or made in writing and shall be served personally, andin the case of:

 

(a)                                  Baytex, Baytex Resources and Baytex Exploration, addressed to:

 

Baytex Energy Ltd.

2200, 205 – 5thAvenue S.W.

Calgary, AB T2P 2V7

Attention: President and ChiefExecutive Officer

 

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(b)                                 Crew, addressed to:

 

Crew Energy Inc.

1920, 205 – 5thAvenue S.W.

Calgary, AB T2P 2V7

Attention: President and ChiefExecutive Officer

 

(c)                                  ExchangeCo, addressed to:

 

Baytex Exchangeco Ltd.

2200, 205 – 5thAvenue S.W.

Calgary, AB T2P 2V7

Attention:  President and Chief Executive Officer

 

(d)                                 AcquisitionCo, addressed to:

 

Baytex Acquisition Corp.

2200, 205 – 5thAvenue S.W.

Calgary, AB T2P 2V7

Attention: President and ChiefExecutive Officer

 

(e)                                  the Trust, addressed to:

 

Baytex Energy Trust

2200, 205 – 5thAvenue S.W.

Calgary, AB T2P 2V7

Attention: President and ChiefExecutive Officer

 

**ARTICLE 6AMENDMENT**

** **

6.1                           **Amendments**

 

This Agreementmay, at any time and from time to time before or after the Meeting, be amendedin any respect whatsoever by written agreement of the parties hereto withoutfurther notice to or authorization on the part of their respectivesecurityholders; provided that any such amendment is brought to the attentionof the Court before court approval of the Final Order.

 

6.2                           **Termination**

 

This Agreementshall be terminated in each of the following circumstances:

 

(a)                                  an agreement to terminate it is executed and delivered by allparties; and

 

(b)                                 on November 1, 2003, if the Certificate is not issued on orbefore October 31, 2003, unless such dates are otherwise extended byagreement among all of the parties hereto.

 

6.3                           **Exclusivity**

 

None of thecovenants of Baytex contained herein shall prevent the board of directors ofBaytex from responding as required by law to any unsolicited submission orproposal regarding any acquisition or disposition of assets or any unsolicitedproposal to amalgamate, merge or effect an arrangement or any unsolicitedacquisition proposal generally or make any disclosure to its shareholders withrespect thereto which in the judgement of the board of directors of Baytexacting upon the written advice of outside counsel is required under applicablelaw.

 

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**ARTICLE 7GENERAL**

** **

7.1                           **Binding Effect**

 

This Agreementshall be binding upon and enure to the benefit of the parties hereto and theirrespective successors and permitted assigns.

 

7.2                           **No Assignment**

 

No party mayassign its rights or obligations under this Agreement.

 

7.3                           **Equitable Remedies**

 

All covenantsherein and opinions to be given hereunder as to enforceability in accordancewith the terms of any covenant, agreement or document shall be qualified as toapplicable bankruptcy and other laws affecting the enforcement of creditors’rights generally and to the effect that specific performance, being anequitable remedy, may only be ordered at the discretion of the court.

 

7.4                           **Survival of Representations and Warranties**

 

Therepresentations and warranties contained herein shall survive the performanceby the parties of their respective obligations hereunder for a period of oneyear.

 

7.5                           **Severability**

 

If anyone ormore of the provisions or parts thereof contained in this Agreement should beor become invalid, illegal or unenforceable in any respect in any jurisdiction,the remaining provisions or parts thereof contained herein shall be and shallbe conclusively deemed to be, as to such jurisdiction, severable therefrom and:

 

(a)                                  the validity, legality or enforceability of such remainingprovisions or parts thereof shall not in any way be affected or impaired by theseverance of the provisions or parts thereof severed; and

 

(b)                                 the invalidity, illegality or unenforceability of any provision orpart thereof contained in this Agreement in any jurisdiction shall not affector impair such provision or part thereof or any other provisions of thisAgreement in any other jurisdiction.

 

7.6                           **Time of Essence**

 

Time shall beof the essence.

 

7.7                           **Liability of the Trust**

 

The partieshereto acknowledge that the trustee of the Trust (the “Trustee”) is enteringinto this agreement solely in its capacity as Trustee on behalf of the Trustand the obligations of the Trust hereunder shall not be personally binding uponthe Trustee or any holder of Trust Units and that any recourse against theTrust or any holder of Trust Units in any manner in respect of anyindebtedness, obligation or liability of the Trust arising hereunder or arisingin connection herewith or from the matters to which this agreement relates, ifany, including without limitation claims based on negligence or otherwisetortious behaviour, shall be limited to, and satisfied only out of, the TrustFund as defined in the Trust Indenture dated as of July 24, 2003 as amendedfrom time to time.

 

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IN WITNESSWHEREOF this Agreement has been executed and delivered by the parties heretoeffective as of the date first above written.

 
|   | **BAYTEX ENERGY LTD.**                                                            |
|--------|-----------------------------------------------------------------------------------|
|   |                                                                              |   |
|   | Per:                                                                              | *“Raymond T. Chan”* |
|   |                                                                              |   |
|   | Per:                                                                              | *“Dale O. Shwed”* |
|   |                                                                              |   |
|   |                                                                              |
|   | **CREW ENERGY INC.**                                                              |
|   |                                                                              |   |
|   | Per:                                                                              | *“Raymond T. Chan”* |
|   |                                                                              |   |
|   | Per:                                                                              | *“Dale O. Shwed”* |
|   |                                                                              |   |
|   |                                                                              |   |
|   | **BAYTEX ACQUISITION CORP.**                                                      |
|   |                                                                              |   |
|   | Per:                                                                              | *“Raymond T. Chan”* |
|   |                                                                              |   |
|   | Per:                                                                              | *“Dale O. Shwed”* |
|   |                                                                              |   |
|   |                                                                              |   |
|   | **BAYTEX EXCHANGECO LTD.**                                                        |
|   |                                                                              |   |
|   | Per:                                                                              | *“Raymond T. Chan”* |
|   |                                                                              |   |
|   |                                                                              |   |
|   | Per:                                                                              | *“Dale O. Shwed”* |
|   |                                                                              |   |
|   |                                                                              |   |
|   | **BAYTEX RESOURCES LTD.**                                                         |
|   |                                                                              |   |
|   | Per:                                                                              | *“Raymond T. Chan”* |
|   |                                                                              |   |
|   | Per:                                                                              | *“Dale O. Shwed”* |
|   |                                                                              |   |
|   |                                                                              |   |
|   | **BAYTEX EXPLORATION LTD.**                                                       |
|   |                                                                              |   |
|   | Per:                                                                              | *“Raymond T. Chan”* |
|   |                                                                              |   |
|   | Per:                                                                              | *“Dale O. Shwed”* |
|   |                                                                              |   |
|   |                                                                              |   |
|   | **VALIANT TRUST COMPANY** as trustee for and on behalf of **BAYTEX ENERGY TRUST** |
|   |                                                                              |   |
|   | Per:                                                                              | *“Zinat Damji”* |
|   |                                                                              |   |
|   |                                                                              |   |
|   | Per:                                                                              | *“Jenny Hart”* |

 

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