Exhibit 4.1


 


ARTICLES OF AMALGAMATION


 


Business Corporations Act


(Alberta)


Section 185


1.                        Name of Amalgamated
Corporation:


 


BAYTEX ENERGY LTD.


 


2.                        The classes of shares, and
any maximum number of shares that the Corporation is authorized to issue:


 


See
Schedule ”A” attached hereto


 


3.                        Restriction on share
transfers, if any:


 


None


 


4.                        Number, or minimum and
maximum number of directors:


 


Minimum
of three (3); Maximum of eleven (11)


 


5.                        If the corporation is
restricted FROM carrying on a certain business or restricted TO carrying on a
certain business, specify the restriction(s):


 


None


 


6.                        Other Provisions, if any:


 


See
Schedule ”B” attached hereto


 


	
  7.

  	
  Name of
  Amalgamating Corporations:

  	
  Corporate Access Number:

  
	
  Baytex Energy Ltd.

  	
  209673466

  
	
  Baytex Acquisition Corp.

  	
  2010518252

  



 


 


	
  Shannon
  M. Gangl

  	
   

  	
   

  
	
  Name
  of Person Authorizing (please print)

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Solicitor

  	
   

  	
  September 2,
  2003

  
	
  Title
  (please print)

  	
   

  	
  Date

  



 


This information is being
collected for purposes of corporate registry records in accordance with the
Business Corporations Act.  Questions about the collection of this
information can be directed to the Freedom of Information and Protection of
Privacy Co-ordinator for Alberta Registries, Research and Program Support, 3rd
Floor, Commerce Place, 10155 – 102 Street, Edmonton, Alberta T5J 4L4, (780)
422-7330.


 

















 


SCHEDULE ”A”


 


The Corporation is
authorized to issue:


 


(a)                                      
an unlimited number of
Common Shares without nominal or par value; and


 


(b)                                    
an unlimited number of
Exchangeable Shares without nominal or par value.


 


The right, privileges,
restrictions and conditions attached to each class of shares are set forth
below.


 


PROVISIONS
RELATING TO THE COMMON SHARES


 


The unlimited number of
Common Shares shall have attached thereto the following rights, privileges,
restrictions and conditions:


 


1.                                       The holders of Common Shares shall be
entitled to notice of, to attend and to one vote per share held at any meeting
of the shareholders of the Corporation (other than meetings of a class or
series of shares of the Corporation other than the Common Shares as such);


 


2.                                       The holders of Common Shares shall be
entitled to receive dividends as and when declared by Board of Directors of the
Corporation on the Common Shares as a class, subject to prior satisfaction of
all preferential rights to dividends attached to all shares of other classes of
shares of the Corporation ranking in priority to the Common Shares in respect
of dividends; and


 


3.                                       The holders of Common Shares shall be
entitled in the event of any liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of the
assets of the Corporation among its shareholders for the purpose of winding-up
its affairs, and subject to prior satisfaction of all preferential rights to
return of capital on dissolution attached to all shares of other classes of
shares of the Corporation ranking in priority to the Common Shares in respect
of return of capital on dissolution, to share rateably, together with the
holders of the shares of any other class of shares of the Corporation ranking
equally with the Common Shares in respect of return of capital on dissolution,
in such assets of the Corporation as are available for distribution.


 


PROVISIONS
ATTACHING TO THE EXCHANGEABLE SHARES


 


The Exchangeable Shares
shall have the following rights, privileges, restrictions and conditions:


 


1.            


INTERPRETATION


 


1.1          
For the purposes of these share provisions:


 


“Act” means the Business
Corporations Act (Alberta), as amended;


 


“affiliate” has the meaning given to that term in the
Securities Act;


 


“Annual Redemption” has the meaning given to that term in
Section 5.1(d) of these share provisions;


 


“Annual Redemption Date” means any date that is within the first
90 days of any calendar year commencing in 2004;


 


“Automatic Redemption” has the meaning given to that term in
Section 5.1(a) of these share provisions;


 


“Automatic Redemption Date” means the date that is the tenth
anniversary of the Effective Date;


 


“Baytex ExchangeCo” means Baytex ExchangeCo Ltd., a corporation
incorporated under the Act;


 


“Baytex Energy Trust” means the Baytex Energy Trust, a trust
established under the laws of Alberta;


 


“Baytex Units” means the trust units of Baytex Energy Trust as
constituted on the Effective Date;


 


“Baytex Unitholders” means holders of Baytex Units;


 


“Board of Directors” means the Board of Directors of the
Corporation;


 


“Business Day” means any day on which commercial banks are
generally open for business in Calgary, Alberta, other than a Saturday, a
Sunday or a day observed as a holiday in Calgary, Alberta under the laws of the
Province of Alberta or the federal laws of Canada;


 


“Call Notice” has the meaning given to that term in
Section 4.3 of these share provisions;


 


“Call Rights” means the Liquidation Call Right, the Redemption
Call Right and the Retraction Call Right, collectively;


 

















 


“Common Shares” means the common shares in the capital of the
Corporation;


 


“Corporation” means Baytex Acquisition Corp., a corporation
incorporated under the Act;


 


“Cumulative Dividend Amount Exchange Ratio”, at any time, shall
equal the Exchange Ratio at such time less one;


 


“Current Market Price” means, in respect of an Baytex Unit on
any date, the weighted average trading price of an Baytex Unit on the TSX for
the 5 trading days preceding that date, or, if the Baytex Units are not then
listed on the TSX, on such other stock exchange or automated quotation system
on which the Baytex Units are listed or quoted, as the case may be, as may be
selected by the Board of Directors for such purpose; provided, however, that if
in the opinion of the Board of Directors the public distribution or trading
activity of Baytex Units for that period does not result in a weighted average
trading price which reflects the fair market value of an Baytex Unit, then the
Current Market Price of an Baytex Unit shall be determined by the Board of
Directors, in good faith and in its sole discretion, and provided further that
any such selection, opinion or determination by the Board of Directors shall be
conclusive and binding;


 


“De Minimus Redemption” has the meaning given to that term in
Section 5.1(c) of these share provisions;


 


“De Minimus Redemption Date” has the meaning given to that term
in Section 5.1(c) of these share provisions;


 


“Distribution” means a distribution paid by Baytex Energy Trust
in respect of the Baytex Units, expressed as an amount per Baytex Unit;


 


“Distribution Payment Date” means a date on which a
Distribution is paid to Baytex Unitholders, generally being the 15th
day of the month following any Distribution Record Date (or if such day is not
a Business Day, on the next Business Day);


 


“Distribution Record Date” means the day on which Baytex
Unitholders are identified for purposes of determining entitlement to a
Distribution, generally being the last Business Day of each month;


 


“Dividend Record Date” has the meaning given to that term in
Section 3.3 of these share provisions;


 


“Effective Date” means September 2, 2003 or such other date
as may be designated by the Board of Directors;


 


“Exchange Ratio”, at any time and in respect of each
Exchangeable Share, shall be equal to 1.00000, as at the Effective Date, and
shall be cumulatively adjusted thereafter by: (a) increasing the Exchange Ratio
on each Distribution Payment Date between the Effective Date and the time as of
which the Exchange Ratio is calculated by an amount, rounded to the nearest
five decimal places, equal to a fraction having as its numerator the
Distribution, expressed as an amount per Baytex Unit, paid on that Distribution
Payment Date, multiplied by the Exchange Ratio immediately prior to the
Distribution Record Date for such Distribution and having as its denominator
the Current Market Price on the first Business Day following the Distribution
Record Date for such Distribution; and (b) decreasing the Exchange Ratio on
each Dividend Record Date between the Effective Date and the time as of which
the Exchange Ratio is calculated by an amount, rounded to the nearest five decimal
places, equal to a fraction having as its numerator the dividend declared on
that Dividend Record Date, expressed as an amount per Exchangeable Share
multiplied by the Exchange Ratio immediately prior to that Dividend Record
Date, and having as its denominator the Current Market Price on the date that
is seven Business Days prior to that Dividend Record Date;


 


“Exchange Rights” has the meaning given to that term in the
Voting and Exchange Trust Agreement;


 


“Exchangeable Shares” mean the non-voting exchangeable shares
in the capital of the Corporation, having the rights, privileges, restrictions
and conditions set forth herein;


 


“Governmental Entity” means any (a) multinational, federal,
provincial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau or agency, domestic or foreign, (b) any subdivision, agent,
commission, board, or authority of any of the foregoing, or (c) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foregoing;


 


“holder” means, when used with reference to the Exchangeable
Shares, the holders of Exchangeable Shares shown from time to time in the
register maintained by or on behalf of the Corporation in respect of the
Exchangeable Shares;


 


“LCR Exercising Party” has the meaning given to that term in
Section 6.5 of these share provisions;


 


“Liquidation Amount” has the meaning given to that term in
Section 6.1 of these share provisions;


 


“Liquidation Call Right” has the meaning ascribed thereto in
Section 6.5 of these share provisions;


 


“Liquidation Date” has the meaning given to that term in
Section 6.1 of these share provisions;


 


“Liquidation Offer” has the meaning given to that term in
Section 6.5 of these share provisions;


 


“Optional Redemption” has the meaning given to that term in
Section 5.1(b) of these share provisions;


 


“Optional Redemption Date” means any date that is after the
second anniversary of the Effective Date;


 

















 


“Person” includes any individual, firm, partnership, joint
venture, venture capital fund, limited liability company, unlimited liability
company, association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other entity,
whether or not having legal status;


 


“Promissory
Note” means the
promissory note of the Corporation in favour of Baytex Energy Trust dated the
Effective Date;


 


“Purchase Price” has the meaning given to that term in
Section 4.3 of these share provisions;


 


“RCR Exercising Party”, for the purpose of Article 4 of
these share provisions, has the meaning given to the term in Section 4.3
of these share provisions and, for the purpose of Article 5 of these share
provisions, has the meaning given to that term in Section 5.5 of these
share provisions;


 


“Redemption Call Right” has the meaning given to that term in
Section 5.5 of these share provisions;


 


“Redemption Date” means any of the Automatic Redemption Date,
the Optional Redemption Date, the De Minimus Redemption Date or the Annual
Redemption Date, as the context requires;


 


“Redemption Offer” has the meaning given to that term in
Section 5.5 of these share provisions;


 


“Redemption Price” means a price per Exchangeable Share equal
to the amount determined by multiplying the Exchange Ratio on the last Business
Day prior to the applicable Redemption Date by the Current Market Price of a
Baytex Unit on the last Business Day prior to such Redemption Date;


 


“Regulation S” means Regulation S under the U.S.
Securities Act;


 


“Retracted Shares” has the meaning given to that term in
Section 4.1(a) of these share provisions;


 


“Retraction Call Right” has the meaning given to that term in
Section 4.1(b) of these share provisions;


 


“Retraction Date” means the date that is three Business Days
after the date on which the Corporation or the Transfer Agent receives a
Retraction Request in respect of the Retracted Shares;


 


“Retraction Offer” has the meaning given to that term in
Section 4.1(b) of these share provisions;


 


“Retraction Price” has the meaning given to that term in
Section 4.1 of these share provisions;


 


“Retraction Request” has the meaning given to that term in
Section 4.1 of these share provisions;


 


“Securities Act” means the Securities
Act (Alberta) and the rules, regulations and policies made
thereunder, as now in effect and as they may be amended from time to time prior
to the Effective Date;


 


“Support Agreement” means the agreement made among Baytex
Energy Trust, Baytex ExchangeCo, the Corporation and the Trustee and dated as
of the Effective Date;


 


“TSX” means the Toronto Stock Exchange;


 


“Transfer Agent” means Valiant Trust Company or such other
Person as may from time to time be appointed by the Corporation as the
registrar and transfer agent for the Exchangeable Shares;


 


“Trustee” means the trustee chosen by Baytex Energy Trust to
act as trustee under the Voting and Exchange Trust Agreement, being a
corporation organized and existing under the laws of Canada and authorized to
carry on the business of a trust company in all the provinces of Canada, and
any successor trustee appointed under the Voting and Exchange Trust Agreement;


 


“U.S. Person” means a U.S. Person as defined in
Rule 902(k) under Regulation S;


 


“U.S. Securities Act” means the United States Securities Act of 1933, as amended;


 


“United States” or “U.S.”
means the United States of America, its territories and possessions, any State
of the United States and the District of Columbia; and


 


“Voting and Exchange Trust Agreement” means the agreement made
among Baytex Energy Trust, Baytex ExchangeCo, the Corporation and the Trustee
and dated as of the Effective Date.


 


2.            


AUTHORIZED NUMBER OF EXCHANGEABLE SHARES AND RANKING OF EXCHANGEABLE SHARES


 


2.1                                                                                 The Corporation is authorized to issue an
unlimited number of Exchangeable Shares without nominal or par value.


 


2.2                                                                                 The Exchangeable Shares shall, subject to the
following, be entitled to a preference over the Common Shares and any other
shares ranking junior to the Exchangeable Shares with respect to the payment of
dividends and the distribution of


 

















 


assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary, or any other distribution of the assets of the Corporation among
its shareholders for the purpose of winding up its affairs; provided that
notwithstanding such ranking the Corporation shall not be restricted in any way
from repaying indebtedness of the Corporation to Baytex Energy Trust from time
to time, including without limitation, the indebtedness evidenced by the
Promissory Note.


 


3.            


DIVIDENDS


 


3.1                                                                                 The holders of Exchangeable Shares, in
priority to the Common Shares and any class of shares of the Corporation
ranking junior to the Exchangeable Shares with respect to the payment of
dividends, shall be entitled to receive, and the Corporation shall pay on each
Exchangeable Share, if, as and when declared by the Board of Directors in its
sole discretion from time to time out of the money, assets or property of the
Corporation properly applicable to the payment of dividends, (which may include
Baytex Units), cumulative preferential cash dividends in an amount per
Exchangeable Share as set out in this Section 3.1.  The accrued
amount of such preferential cumulative dividend with respect to an Exchangeable
Share on any date from time to time shall be the Cumulative Dividend Amount
Exchange Ratio in effect on the last Business Date prior to such date
multiplied by the Current Market Price on the last Business Day prior to such
date.  Such dividends, whether or not declared, shall accrue and shall be
cumulative from the Effective Date.


 


3.2                                                                                 Cheques of the Corporation payable at par at
any branch of the bankers of the Corporation shall be issued in respect of any
cash dividends by the sending of such a cheque to each holder of an
Exchangeable Share, which shall satisfy the cash dividend represented thereby
unless the cheque is not paid on presentation. Certificates registered in the
name of the registered holder of Exchangeable Shares shall be issued or
transferred in respect of any stock dividends by the sending of such a
certificate to each holder of an Exchangeable Share, which shall satisfy the
stock dividend represented thereby. Such other type and amount of property in
respect of any dividends shall be issued, distributed or transferred by the
Corporation in such manner as it shall determine and the issuance, distribution
or transfer thereof by the Corporation to each holder of an Exchangeable Share
shall satisfy the dividend represented thereby. No holder of an Exchangeable
Share shall be entitled to recover by action or other legal process against the
Corporation any dividend that is represented by a cheque that has not been duly
presented to the Corporation’s bankers for payment or that otherwise remains
unclaimed for a period of six years from the date on which such dividend was
payable.


 


3.3                                                                                 The record date (a “Dividend Record Date”)
for the determination of the holders of Exchangeable Shares entitled to receive
payment of, and the payment date for, any dividend declared on the Exchangeable
Shares under Section 3.1 of these share provisions and whether any such
dividend is in fact declared shall be determined in the sole discretion of the
Board of Directors.


 


3.4                                                                                 If on any payment date for any dividends
declared on the Exchangeable Shares under Section 3.1 of these share
provisions the dividends are not paid in full on all of the Exchangeable Shares
then outstanding, any such dividends that remain unpaid shall be paid on a
subsequent date or dates determined by the Board of Directors on which the
Corporation shall have sufficient moneys, assets or property properly
applicable to the payment of such dividends.


 


4.            


RETRACTION OF EXCHANGEABLE SHARES BY HOLDER


 


4.1                                 Subject to applicable law, and provided
neither Baytex Energy Trust nor Baytex ExchangeCo has exercised the Retraction
Call Right, a holder of Exchangeable Shares shall be entitled at any time, upon
compliance with the provisions of this Article 4, to require the
Corporation to redeem any or all of the Exchangeable Shares registered in the
name of such holder for an amount per share (the “Retraction Price”) equal to
the amount determined by multiplying the Exchange Ratio on the last Business
Day prior to the Retraction Date by the Current Market Price of a Baytex Unit
on the last Business Day prior to the Retraction Date, which payment of the
Retraction Price shall be satisfied in full by the Corporation delivering or
causing to be delivered to such holder that number of Baytex Units equal to the
Exchange Ratio as at the last Business Day prior to Retraction Date in accordance
with Section 4.2 of these share provisions, for each Exchangeable Share
presented and surrendered by the holder. To effect such redemption, the holder
shall present and surrender to the Corporation at the principal office of the
Transfer Agent in Toronto or Calgary or at such other address as may be
specified by the Corporation by notice to the holders of Exchangeable Shares
from time to time the certificate or certificates representing the Exchangeable
Shares which the holder desires to have the Corporation redeem, together with
such other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent and the Corporation
may reasonably require, and together with a duly executed statement (the
“Retraction Request”) in the form of Schedule A hereto or in such other
form as may be acceptable to the Corporation:


 

















 


(a)                                  specifying that the holder desires to have
all or any number specified therein of the Exchangeable Shares represented by
such certificate or certificates (the “Retracted Shares”) redeemed by the
Corporation; and


 


(b)                                 appointing the Corporation as its agent for
the purpose of offering its Retracted Shares for sale to Baytex Energy Trust
and Baytex ExchangeCo (the “Retraction Offer”) on the terms and conditions set
out in Section 4.3 below  (Baytex Energy Trust’s and Baytex
ExchangeCo’s right to accept the Retraction Offer and to complete the purchase
of the Retracted Shares pursuant to the Retraction Offer is referred to as the
“Retraction Call Right”).


 


4.2                                 Subject to the exercise by Baytex Energy
Trust or Baytex ExchangeCo of the Retraction Call Right, upon receipt by the
Corporation or the Transfer Agent in the manner specified in Section 4.1
hereof of documents including, without limitation, a certificate or
certificates representing the number of Retracted Shares, together with a
Retraction Request, and provided that the Retraction Request is not revoked by
the holder in the manner specified in Section 4.7, the Corporation shall
redeem the Retracted Shares effective at the close of business on the
Retraction Date and shall cause to be delivered to such holder the Retraction
Price. If only a part of the Exchangeable Shares represented by any certificate
is redeemed (or purchased by Baytex Energy Trust or Baytex ExchangeCo pursuant
to the Retraction Call Right), a new certificate for the balance of such
Exchangeable Shares shall be issued to the holder at the expense of the
Corporation.


 


4.3                                 Baytex ExchangeCo shall only be entitled to
exercise its Retraction Call Right with respect to those Exchangeable Shares,
if any, in respect of which Baytex Energy Trust has not exercised its
Retraction Call Right.  Upon receipt by the Corporation of a Retraction
Request, the Corporation shall immediately provide to Baytex Energy Trust and
Baytex ExchangeCo a copy of the Retraction Request and, as agent for the holder
who submitted the Retraction Request, shall be deemed to have made the
Retraction Offer to Baytex Energy Trust and Baytex ExchangeCo in respect of the
holder’s Retracted Shares by providing to Baytex Energy Trust and Baytex
ExchangeCo a copy of the Retraction Request as aforesaid.  In order to
exercise the Retraction Call Right and accept the Retraction Offer, Baytex
Energy Trust or Baytex ExchangeCo must notify the Corporation of its
determination to do so (the “Call Notice”) on or before 4:30 p.m. (Calgary
time) on the date of notification to Baytex Energy Trust and Baytex ExchangeCo
by the Corporation of the receipt by the Corporation of the Retraction
Request.  If Baytex Energy Trust or Baytex ExchangeCo does not so notify
the Corporation on or before 4:30 p.m. (Calgary time) on the date of notification
by the Corporation of the receipt by the Corporation of the Retraction Request,
the Corporation will notify the holder as soon as possible thereafter that
neither Baytex Energy Trust nor Baytex ExchangeCo will exercise the Retraction
Call Right and accept the Retraction Offer.  If Baytex Energy Trust or
Baytex ExchangeCo delivers the Call Notice on or before 4:30 p.m. (Calgary
time) on the date of notification by the Corporation of the receipt by the
Corporation of the Retraction Request and provided that the Retraction Offer is
not revoked by the holder in the manner specified in Section 4.7, the
Retraction Request shall thereupon be considered only the Retraction Offer by
the holder to sell the Retracted Shares to Baytex Energy Trust or Baytex ExchangeCo,
as applicable (in this Article 4, the “RCR Exercising Party”), and all
other aspects of the Retraction Request will be null and void. In such event,
the Corporation shall not redeem the Retracted Shares and the RCR Exercising
Party shall purchase from such holder and such holder shall sell to the RCR
Exercising Party on the Retraction Date the Retracted Shares for an amount per
share (the “Purchase Price”) equal to the Retraction Price, which payment of
the Purchase Price shall be satisfied in full by the RCR Exercising Party
delivering or causing to be delivered to such holder that number of Baytex
Units equal to the Exchange Ratio as at the last Business Day prior to the
Retraction Date for each Retracted Share.  To the extent that the RCR
Exercising Party pays the Purchase Price in respect of the Retracted Shares,
the Corporation shall no longer be obligated to pay any amount in respect of
the Retraction Price for such Retracted Shares.  Provided that the RCR
Exercising Party has complied with Section 4.4, the closing of the
purchase and sale of the Retracted Shares pursuant to the Retraction Call Right
shall be deemed to have occurred as at the close of business on the Retraction
Date and, for greater certainty, no redemption by the Corporation of such Retracted
Shares shall take place on the Retraction Date. In the event that neither
Baytex Energy Trust nor Baytex ExchangeCo delivers a Call Notice within the
time required for the exercise of the Retraction Call Right as set forth above,
and provided that the Retraction Request is not revoked by the holder in the
manner specified in Section 4.7, the Corporation shall redeem the
Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in this Article 4.


 


4.4                                 The Corporation, Baytex Energy Trust or
Baytex ExchangeCo, as the case may be, shall deliver or cause the Transfer
Agent to deliver to the relevant holder, at the address of the holder recorded
in the register of shareholders of the Corporation for the Exchangeable Shares
or at the address specified in the holder’s Retraction Request, or by holding
for pick-up by the holder at the office of the Transfer Agent specified in the
holder’s Retraction Request, certificates representing the Baytex Units (which
securities shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim or encumbrance) registered in the name of the
holder or in such other name as the holder may request in payment of the total
Retraction Price or the total Purchase Price, as the case may be, in each case
less any amounts withheld on account of tax required to be deducted and
withheld therefrom, and such delivery of such certificates by or on behalf of
the Corporation, Baytex Energy Trust or Baytex ExchangeCo, as the case may be,
or by the Transfer Agent shall be deemed to be payment of and shall satisfy and
discharge all liability for the total Retraction Price or the total Purchase
Price, as the case may be, to the extent that the same is represented by such
certificates (plus any tax deducted and withheld therefrom and remitted to the
proper tax authority).


 

















 


4.5                                 On and after the close of business on the
Retraction Date, the holder of the Retracted Shares shall cease to be a holder
of such Retracted Shares and shall not be entitled to exercise any of the
rights of a holder in respect thereof, other than:  (i) the right to
receive his proportionate part of the total Retraction Price or the total
Purchase Price, as the case may be, unless upon presentation and surrender of
certificates in accordance with the foregoing provisions, payment of the total
Retraction Price or the total Purchase Price, as the case may be, shall not be
made as provided in Section 4.4, in which case the rights of such holder
shall remain unaffected until the total Retraction Price or the total Purchase
Price, as the case may be, has been paid in the manner hereinbefore provided;
and (ii) the right to receive any declared and unpaid dividends on the
Retracted Shares.  On and after the close of business on the Retraction
Date, provided that presentation and surrender of certificates and payment of
the total Retraction Price or the total Purchase Price, as the case may be, has
been made in accordance with the foregoing provisions, the holder of the
Retracted Shares so redeemed by the Corporation or purchased by Baytex Energy
Trust or Baytex ExchangeCo shall thereafter be considered and deemed for all
purposes to be a holder of the Baytex Units delivered to it.


 


4.6                                 Notwithstanding any other provision of this Article 4,
the Corporation shall not be obligated to redeem Retracted Shares specified by
a holder in a Retraction Request to the extent that such redemption of
Retracted Shares would be contrary to solvency requirements or other provisions
of applicable law. If the Corporation believes that on any Retraction Date it
would not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that neither Baytex Energy
Trust nor Baytex ExchangeCo shall have exercised the Retraction Call Right with
respect to the Retracted Shares, the Corporation shall only be obligated to
redeem Retracted Shares specified by a holder in a Retraction Request to the
extent of the maximum number that may be so redeemed (rounded down to a whole
number of shares) as would not be contrary to such provisions and shall notify
the holder and the Trustee at least two Business Days prior to the Retraction
Date as to the number of Retracted Shares which will not be redeemed by the Corporation.
In any case in which the redemption by the Corporation of Retracted Shares
would be contrary to solvency requirements or other provisions of applicable
law, the Corporation shall redeem Retracted Shares in accordance with
Section 4.2 of these share provisions on a pro rata basis and shall issue
to each holder of Retracted Shares a new certificate, at the expense of the
Corporation, representing the Retracted Shares not redeemed by the Corporation
pursuant to Section 4.2 hereof. Provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 4.7, the
holder of any such Retracted Shares not redeemed by the Corporation pursuant to
Section 4.2 of these share provisions as a result of solvency requirements
or other provisions of applicable law shall be deemed by giving the Retraction
Request to have exercised the Exchange Rights so as to require Baytex Energy
Trust or Baytex ExchangeCo to purchase such Retracted Shares from such holder
on the Retraction Date or as soon as practicable thereafter on payment by
Baytex Energy Trust or Baytex ExchangeCo to such holder of the Purchase Price
for each such Retracted Share, all as more specifically provided in the Voting
and Exchange Trust Agreement.


 


4.7                                 A holder of Retracted Shares may, by notice
in writing given by the holder to the Corporation before the close of business
on the Business Day immediately preceding the Retraction Date, revoke its
Retraction Request or Retraction Offer, as applicable, in which event such
Retraction Request or Retraction Offer shall be null and void


 


5.            


REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION


 


5.1                                 Subject to applicable law, and provided
neither Baytex Energy Trust nor Baytex ExchangeCo has exercised the Redemption
Call Right, the Corporation:


 


(a)                                  shall, on the Automatic Redemption Date,
redeem all but not less than all of the then outstanding Exchangeable Shares
for the Redemption Price (such redemption being an “Automatic Redemption”);


 


(b)                                 may, on any Optional Redemption Date, redeem
all but not less than all of the then outstanding Exchangeable Shares (such
redemption being an “Optional Redemption”);


 


(c)                                  may, on any date when the aggregate number of
issued and outstanding Exchangeable Shares is less than 1,000,000 (such
redemption date being the “De Minimus Redemption Date”), redeem all but not
less than all of the then outstanding Exchangeable Shares for the Redemption
Price (such redemption being a “De Minimus Redemption”); and


 


(d)                                 may, on any Annual Redemption Date, redeem up
to that number of Exchangeable Shares equal to 40% of the Exchangeable Shares
outstanding on the Effective Date (such redemption being an “Annual
Redemption”);


 


such payment of the
Redemption Price per Exchangeable Share to be satisfied in full in all cases by
the Corporation delivering or causing to be delivered, at the election of the
Corporation, either that number of Baytex Units equal to the Exchange Ratio as
at the last Business Day prior to the applicable Redemption Date or an amount
in cash equal to the Redemption Price, in accordance with Section 5.3 of
these share provisions.  In case only part of the then outstanding
Exchangeable Shares are at any time to be redeemed pursuant to an Annual
Redemption, the Exchangeable Shares to be redeemed shall be redeemed pro rata,
excluding


 

















 


fractions, from the holdings
of all shareholders of Exchangeable Shares, other than the Baytex Energy Trust
and Baytex ExchangeCo, or in such other manner as the Board of Directors deems
reasonable.


 


5.2                                 In any case of a redemption of Exchangeable
Shares under this Article 5, the Corporation shall, at least 90 days
before the applicable Redemption Date, send or cause to be sent to each holder
of Exchangeable Shares a notice in writing of the redemption by the Corporation
or the purchase by Baytex Energy Trust or Baytex ExchangeCo under the
Redemption Call Right, as the case may be, of the Exchangeable Shares held by
such holder.  Such notice shall set out the formula for determining the
Redemption Price, the Redemption Date and, if applicable, particulars of the
Redemption Call Right and/or Annual Redemption.  The accidental failure or
omission to give any notice of redemption under this Section 5.2 to less
than 10% of the holders of Exchangeable Shares (other than Baytex Energy Trust
and Baytex ExchangeCo) shall not affect the validity of any redemption of
Exchangeable Shares pursuant to such notice.


 


5.3                                 On or after the applicable Redemption Date
and subject to the exercise by Baytex Energy Trust or Baytex ExchangeCo of the
Redemption Call Right, the Corporation shall deliver or cause to be delivered
to the holders of the Exchangeable Shares to be redeemed the Redemption Price
for each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent and the Corporation
may reasonably require, at the registered office of the Corporation or at any
office of the Transfer Agent as may be specified by the Corporation in such
notice. Payment of the total Redemption Price for such Exchangeable Shares,
shall be made by delivery to each holder, at the address of the holder recorded
in the register of holders of the Exchangeable Shares maintained by or on
behalf of the Corporation or by holding for pick-up by the holder at the
registered office of the Corporation or at any office of the Transfer Agent as
may be specified by the Corporation in such notice, on behalf of the
Corporation, of certificates representing Baytex Units (which securities shall
be duly issued as fully paid and non-assessable and shall be free and clear of
any lien, claim or encumbrance), or, if applicable, a cheque of the Corporation
payable at par at any branch of the bankers of the Corporation, in each case
less any amounts withheld on account of tax required to be deducted and withheld
therefrom. On and after the applicable Redemption Date, the holders of the
Exchangeable Shares called for redemption shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof, other than:  (i) the right to receive their
proportionate part of the total Redemption Price, unless payment of the total
Redemption Price for such Exchangeable Shares shall not be made upon
presentation and surrender of certificates in accordance with the foregoing
provisions, in which case the rights of the holders shall remain unaffected
until the total Redemption Price has been paid in the manner hereinbefore
provided; and (ii) the right to receive any declared and unpaid dividends on
such Exchangeable Shares.  If only part of the Exchangeable Shares
represented by any certificate are to be redeemed, a new certificate for the
balance shall be issued at the expense of the Corporation.


 


5.4                                 The Corporation shall have the right at any
time after the sending of notice of its intention to redeem the Exchangeable
Shares as aforesaid to deposit or cause to be deposited the total Redemption
Price for the Exchangeable Shares so called for redemption, or of such of the
said Exchangeable Shares represented by certificates that have not at the date
of such deposit been surrendered by the holders thereof in connection with such
redemption, in a custodial account with any chartered bank or trust company in
Canada named in such notice, less any amounts withheld on account of tax
required to be deducted and withheld therefrom. Upon the later of such deposit
being made and the applicable Redemption Date, the Exchangeable Shares in
respect whereof such deposit shall have been made shall be redeemed and the
rights of the holders thereof after such deposit or that Redemption Date, as
the case may be, shall be limited to:  (i) receiving their proportionate
part of the total Redemption Price (in each case less any amounts withheld on
account of tax required to be deducted or withheld therefrom) for such
Exchangeable Shares so deposited, against presentation and surrender of the
said certificates held by them, respectively, in accordance with the foregoing
provisions; and (ii) receiving any declared and unpaid dividends on such
Exchangeable Shares. Upon such payment or deposit of the total Redemption
Price, the holders of the Exchangeable Shares that have been so redeemed shall
thereafter be considered and deemed for all purposes to be holders of the
Baytex Units or to have had cash delivered to them or the custodian on their
behalf; as applicable.


 


5.5                                 Subject to the limitations set forth in
Section 5.6 of these share provisions, the Corporation is appointed as
agent for the holders of Exchangeable Shares for the purpose of offering to
Baytex Energy Trust and Baytex ExchangeCo (the “Redemption Offer”) the
overriding right (Baytex Energy Trust’s and Baytex ExchangeCo’s right to accept
the Redemption Offer and complete the purchase of the Exchangeable Shares is
referred to as the “Redemption Call Right”), in the event of any proposed
redemption of Exchangeable Shares by the Corporation pursuant to this
Article 5, to purchase from all but not less than all of the holders of
Exchangeable Shares (other than Baytex Energy Trust or Baytex ExchangeCo) on
the applicable Redemption Date all but not less than all of the Exchangeable
Shares held by each such holder, in the case of an Automatic Redemption, an
Optional Redemption or a De Minimus Redemption, or to purchase from all but not
less than all of the holders of Exchangeable Shares (other than Baytex Energy
Trust or Baytex ExchangeCo) on the applicable Redemption Date the designated
percentage of the Exchangeable Shares held by each such holder, in the case of
an Annual Redemption, on payment by whichever of Baytex Energy Trust or Baytex
ExchangeCo is exercising such right (in this Article 5, the “RCR
Exercising Party”) to each such holder of an


 

















 


amount per Exchangeable
Share equal to the Redemption Price, which payment of the Redemption Price
shall be satisfied in full by the RCR Exercising Party delivering or causing to
be delivered to such holder, at the election of the RCR Exercising Party,
either that number of Baytex Units equal to the Exchange Ratio as at the last
Business Day prior to the applicable Redemption Date or an amount in cash equal
to the Redemption Price, in accordance with Section 5.7 of these share
provisions.  In the case of a redemption of Exchangeable Shares under this
Article 5, the Corporation, as agent for the holders of Exchangeable
Shares, shall make the Redemption Offer to Baytex Energy Trust and Baytex
ExchangeCo by sending or causing to be sent to Baytex Energy Trust and Baytex
ExchangeCo a notice in writing of the redemption by the Corporation of the
Exchangeable Shares.  In the event of the exercise of the Redemption Call
Right and the acceptance of the Redemption Offer, each holder of Exchangeable
Shares shall be obligated to sell all of the Exchangeable Shares held by that
holder to the RCR Exercising Party on the applicable Redemption Date on payment
by the RCR Exercising Party to such holder of the Redemption Price for each
such share, and the Corporation shall have no obligation to redeem, or to pay
any amount in respect of, such shares so purchased by the RCR Exercising Party.


 


5.6                                 Baytex ExchangeCo shall only be entitled to
exercise its Redemption Call Right with respect to those Exchangeable Shares,
if any, in respect of which Baytex Energy Trust has not exercised its
Redemption Call Right.  To exercise the Redemption Call Right and accept
the Redemption Offer, the RCR Exercising Party must notify the Transfer Agent,
as agent for the holders of Exchangeable Shares, and the Corporation of its
intention to exercise such right (and accept such offer) at least 60 days
before the applicable Redemption Date.  The Corporation shall cause the
Transfer Agent to notify the holders of the Exchangeable Shares as to whether
or not Baytex Energy Trust or Baytex ExchangeCo has exercised the Redemption Call
Right forthwith after the expiry of the period during which such right may be
exercised. If an RCR Exercising Party exercises its Redemption Call Right, such
RCR Exercising Party shall on the applicable Redemption Date purchase, and each
of the holders of Exchangeable Shares will sell, all of the Exchangeable Shares
then outstanding for a price per Exchangeable Share equal to the Redemption
Price.


 


5.7                                 For the purposes of completing the purchase
of the Exchangeable Shares pursuant to the Redemption Call Right, the RCR
Exercising Party shall deposit with the Transfer Agent, on or before the
applicable Redemption Date, certificates representing the aggregate number of
Baytex Units deliverable by the RCR Exercising Party (which securities shall be
duly issued as fully paid and non-assessable and shall be free and clear of any
lien, claim or encumbrance) or, if applicable, a cheque of the RCR Exercising
Party payable at par at any branch of the bankers of the RCR Exercising Party
in payment of the total Redemption Price, in each case less any amounts
withheld on account of tax required to be deducted and withheld
therefrom.  Provided that the total Redemption Price has been so deposited
with the Transfer Agent, on and after the applicable Redemption Date the rights
of each holder of Exchangeable Shares (other than Baytex Energy Trust and
Baytex ExchangeCo) shall be limited to:  (i) receiving such holder’s
proportionate part of the total Redemption Price payable by the RCR Exercising
Party upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the holder shall
on and after that Redemption Date be considered and deemed for all purposes to
be the holder of the Baytex Units to which it is entitled; and (ii) receiving
any declared and unpaid dividends on such Exchangeable Shares.  Upon
surrender to the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Act and the
by-laws of the Corporation and such additional documents and instruments as the
Transfer Agent and the Corporation may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in
exchange therefor, and the Corporation shall cause the Transfer Agent on behalf
of the RCR Exercising Party to deliver to such holder, certificates
representing the Baytex Units to which the holder is entitled or a cheque of
the RCR Exercising Party payable at par at any branch of the bankers of the RCR
Exercising Party, of the total Redemption Price, less any amounts withheld on
account of tax required to be deducted and withheld therefrom.  If neither
Baytex Energy Trust nor Baytex ExchangeCo exercises the Redemption Call Right
in the manner described above, on the applicable Redemption Date the holders of
the Exchangeable Shares shall be entitled to receive in exchange therefor the
Redemption Price otherwise payable by the Corporation in connection with the
redemption of the Exchangeable Shares pursuant to Section 5.1 of these
share provisions.


 


6.            


DISTRIBUTION ON LIQUIDATION


 


6.1                                 In the event of the liquidation, dissolution
or winding-up of the Corporation or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding up its affairs, a
holder of Exchangeable Shares shall be entitled, subject to applicable law, to
receive from the assets of the Corporation in respect of each Exchangeable
Share held by such holder on the effective date (the “Liquidation Date”) of
such liquidation, dissolution or winding-up, before any distribution of any
part of the assets of the Corporation among the holders of the Common Shares or
any other shares ranking junior to the Exchangeable Shares, an amount per share
(the “Liquidation Amount”) equal to the amount determined by multiplying the
Exchange Ratio on the last Business Day prior to the Liquidation Date by the
Current Market Price of an Baytex Unit on the last Business Day prior to the
Liquidation Date, which payment of the Liquidation Amount shall be satisfied in
full by the Corporation


 

















 


delivering or causing to be
delivered to such holder that number of Baytex Units equal to the Exchange
Ratio as at the last Business Day prior to the Liquidation Date, in accordance
with Section 6.2 of these share provisions.


 


6.2                                 On or promptly after the Liquidation Date,
and subject to the exercise by Baytex Energy Trust or Baytex ExchangeCo of the
Liquidation Call Right, the Corporation shall deliver or cause to be delivered
to the holders of the Exchangeable Shares the Liquidation Amount for each such
Exchangeable Share upon presentation and surrender of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares
under the Act and the by-laws of the Corporation and such additional documents
and instruments as the Transfer Agent and the Corporation may reasonably
require, at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation by notice to the holders
of the Exchangeable Shares. Payment of the total Liquidation Amount for such
Exchangeable Shares shall be made by delivery to each holder, at the address of
the holder recorded in the register of holders of the Exchangeable Shares
maintained by or on behalf of the Corporation or by holding for pick-up by the
holder at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation by notice to the holders
of Exchangeable Shares, on behalf of the Corporation, of certificates
representing Baytex Units (which securities shall be duly issued as fully paid
and non-assessable and shall be free and clear of any lien, claim or
encumbrance), less any amounts withheld on account of tax required to be
deducted and withheld therefrom. On and after the Liquidation Date, the holders
of the Exchangeable Shares shall cease to be holders of such Exchangeable
Shares and shall not be entitled to exercise any of the rights of holders in
respect thereof, other than:  (i) the right to receive their proportionate
part of the total Liquidation Amount, unless payment of the total Liquidation
Amount for such Exchangeable Shares shall not be made upon presentation and
surrender of certificates in accordance with the foregoing provisions, in which
case the rights of the holders shall remain unaffected until the total
Liquidation Amount has been paid in the manner hereinbefore provided; and (ii)
the right to receive any declared and unpaid dividends on such Exchangeable
Shares.


 


6.3                                 The Corporation shall have the right at any
time after the Liquidation Date to deposit or cause to be deposited the total
Liquidation Amount in respect of the Exchangeable Shares represented by
certificates that have not at the Liquidation Date been surrendered by the
holders thereof in a custodial account with any chartered bank or trust company
in Canada, less any amounts withheld on account of tax required to be deducted
or withheld therefrom. Upon such deposit being made, the rights of the holders
of Exchangeable Shares after such deposit shall be limited to:  (i)
receiving their proportionate part of the total Liquidation Amount (less any
amounts withheld on account of tax required to be deducted and withheld
therefrom) for such Exchangeable Shares so deposited, against presentation and
surrender of the said certificates held by them, respectively, in accordance
with the foregoing provisions; and (ii) receiving any declared and unpaid
dividends on such Exchangeable Shares. Upon such payment or deposit of the
total Liquidation Amount, the holders of the Exchangeable Shares shall thereafter
be considered and deemed for all purposes to be holders of the Baytex Units
delivered to them or the custodian on their behalf.


 


6.4                                 After the Corporation has satisfied its
obligations to pay the holders of the Exchangeable Shares the Liquidation
Amount per Exchangeable Share pursuant to Section 6.1 of these share
provisions, such holders shall not be entitled to share in any further
distribution of the assets of the Corporation.


 


6.5                                 Subject to the limitations set forth in
Section 6.6 of these share provisions, the Corporation is appointed as
agent for the holders of Exchangeable Shares for the purpose of offering to
Baytex Energy Trust and Baytex ExchangeCo (the “Liquidation Offer”) the
overriding right (Baytex Energy Trust’s and Baytex ExchangeCo’s right to accept
the Liquidation Offer and complete the purchase of the Exchangeable Shares is
referred to as the “Liquidation Call Right”), in the event of and
notwithstanding any proposed liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among
its shareholders for the purpose of winding up its affairs, to purchase from
all but not less than all of the holders of Exchangeable Shares (other than
Baytex Energy Trust or Baytex ExchangeCo) on the Liquidation Date all but not
less than all of the Exchangeable Shares held by each such holder, on payment
by whichever of Baytex Energy Trust or Baytex ExchangeCo is exercising such
right (in this Article 6, the “LCR Exercising Party”) to each such holder
of an amount per Exchangeable Share equal to the Liquidation Amount, which
shall be satisfied in full by the LCR Exercising Party delivering or causing to
be delivered to such holder that number of Baytex Units equal to the Exchange
Ratio as at the last Business Day prior to the Liquidation Date, in accordance
with Section 6.7 of these share provisions.  In the event of the
exercise of the Liquidation Call Right and the acceptance of the Liquidation
Offer, each holder of Exchangeable Shares shall be obligated to sell all of the
Exchangeable Shares held by that holder to the LCR Exercising Party on the
Liquidation Date on payment by the LCR Exercising Party to such holder of the
Liquidation Amount for each such share, and the Corporation shall have no obligation
to pay any amount on account of the Liquidation Amount in respect of such
shares so purchased by the LCR Exercising Party.


 


6.6                                 Baytex ExchangeCo shall only be entitled to
exercise its Liquidation Call Right with respect to those Exchangeable Shares,
if any, in respect of which Baytex Energy Trust has not exercised its
Liquidation Call Right.  In the event of any proposed liquidation,
dissolution or winding-up of the Corporation or any other distribution of the
assets of the Corporation among its shareholders for the purpose of winding-up
its affairs, the Corporation, as agent for the holders of Exchangeable Shares,
shall make the Liquidation Offer by sending or causing to be sent to Baytex
Energy Trust and Baytex ExchangeCo a notice in


 

















 


writing of the Liquidation
Offer.  To exercise the Liquidation Call Right and accept the Liquidation
Offer, the LCR Exercising Party must notify the Transfer Agent, as agent for
the holders of Exchangeable Shares, and the Corporation of its intention to exercise
such right (and accept such offer) at least 30 days before the Liquidation
Date, in the case of a voluntary liquidation, dissolution or winding-up of the
Corporation, and at least five Business Days before the Liquidation Date, in
the case of an involuntary liquidation, dissolution or winding-up of the
Corporation.  The Corporation shall cause the Transfer Agent to notify the
holders of the Exchangeable Shares as to whether or not Baytex Energy Trust or
Baytex ExchangeCo has exercised the Liquidation Call Right forthwith after the
expiry of the period during which such right may be exercised. If an LCR
Exercising Party exercises its Liquidation Call Right, such LCR Exercising
Party will on the Liquidation Date purchase, and each of the holders of Exchangeable
Shares will sell, all of the Exchangeable Shares then outstanding for a price
per Exchangeable Share equal to the Liquidation Amount.


 


6.7                                 For the purposes of completing the purchase
of the Exchangeable Shares pursuant to the Liquidation Call Right, the LCR
Exercising Party shall deposit with the Transfer Agent, on or before the
Liquidation Date, certificates representing the aggregate number of Baytex
Units deliverable by the LCR Exercising Party (which securities shall be duly
issued as fully paid and non-assessable and shall be free and clear of any
lien, claim or encumbrance), in payment of the total Liquidation Amount, less
any amounts withheld on account of tax required to be deducted and withheld
therefrom.  Provided that the total Liquidation Amount has been so
deposited with the Transfer Agent, on and after the Liquidation Date the rights
of each holder of Exchangeable Shares (other than Baytex Energy Trust and
Baytex ExchangeCo) shall be limited to:  (i) receiving such holder’s
proportionate share of the total Liquidation Amount payable by the LCR
Exercising Party upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the holder shall
on and after the Liquidation Date be considered and deemed for all purposes to
be the holder of the Baytex Units to which it is entitled; and (ii) receiving
any declared and unpaid dividends on such Exchangeable Shares.  Upon
surrender to the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Act and the
by-laws of the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, the holder of such surrendered
certificate or certificates shall be entitled to receive in exchange therefor,
and the Corporation shall cause the Transfer Agent on behalf of the LCR
Exercising Party to deliver to such holder, certificates representing the
Baytex Units to which the holder is entitled, less any amounts withheld on
account of tax required to be deducted and withheld therefrom.  If neither
Baytex Energy Trust nor Baytex ExchangeCo exercises the Liquidation Call Right
in the manner described above, on the Liquidation Date the holders of the
Exchangeable Shares shall be entitled to receive in exchange therefor the
Liquidation Amount otherwise payable by the Corporation in connection with the
liquidation, dissolution or winding-up of the Corporation pursuant to
Section 6.1 of these share provisions.


 


7.            


CERTAIN RESTRICTIONS


 


7.1                                 So long as any of the Exchangeable Shares are
outstanding, the Corporation shall not at any time without, but may at any time
with, the approval of the holders of the Exchangeable Shares given as specified
in Section 10.2 of these share provisions:


 


(a)                                  pay any dividends on the Common Shares or any
other shares ranking junior to the Exchangeable Shares, other than stock
dividends payable in Common Shares or any such other shares ranking junior to
the Exchangeable Shares, as the case may be;


 


(b)                                 redeem or purchase or make any capital
distribution in respect of the Common Shares or any other shares ranking junior
to the Exchangeable Shares;


 


(c)                                  redeem or purchase any other shares of the
Corporation ranking equally with the Exchangeable Shares with respect to the
payment of dividends or on any liquidation distribution; or


 


(d)                                 issue any shares, other than Exchangeable
Shares or Common Shares, which rank superior to the Exchangeable Shares with
respect to the payment of dividends or on any liquidation distribution.


 


The restrictions in
Sections 7.1(a), (b) and (c) above shall only be applicable if dividends
which have been declared on the outstanding Exchangeable Shares have not been
paid as provided for herein.


 

















 


8.            


PURCHASE FOR CANCELLATION


 


8.1                                 Subject to applicable law and notwithstanding
Section 8.2 and Section 8.3, the Corporation may at any time and from
time to time purchase for cancellation all or any part of the Exchangeable
Shares by private agreement with any holder of Exchangeable Shares for
consideration consisting of cash .


 


8.2                                 Subject to applicable law, the Corporation
may at any time and from time to time purchase for cancellation all or any part
of the outstanding Exchangeable Shares at any price by tender to all the
holders of record of Exchangeable Shares then outstanding or through the
facilities of any stock exchange on which the Exchangeable Shares are listed or
quoted at any price per share. If in response to an invitation for tenders
under the provisions of this Section 8.2, more Exchangeable Shares are
tendered at a price or prices acceptable to the Corporation than the
Corporation is prepared to purchase, the Exchangeable Shares to be purchased by
the Corporation shall be purchased as nearly as may be pro rata according to
the number of shares tendered by each holder who submits a tender to the
Corporation, provided that when shares are tendered at different prices, the
pro rating shall be effected (disregarding fractions) only with respect to the
shares tendered at the price at which more shares were tendered than the
Corporation is prepared to purchase after the Corporation has purchased all the
shares tendered at lower prices.  If part only of the Exchangeable Shares
represented by any certificate shall be purchased, a new certificate for the
balance of such shares shall be issued at the expense of the Corporation.


 


8.3                                 Subject to applicable law, the Corporation by
notice from time to time to Baytex Energy Trust or Baytex ExchangeCo, as
applicable, shall be entitled at any time to redeem all or any part of the
Exchangeable Shares held by Baytex Energy Trust or Baytex ExchangeCo which were
acquired by them pursuant to the Call Rights, the Exchange Rights or the
Automatic Exchange Rights (as defined in the Voting and Exchange Trust
Agreement) in exchange for the delivery of Baytex Units (the “Delivered Baytex
Units”) to or for the account of a holder(s) of Exchangeable Shares.  The
Exchangeable Shares to be redeemed as set forth in this Section 8.3 shall
be acquired by the Corporation in exchange for the issue by the Corporation to
Baytex Energy Trust or Baytex ExchangeCo, as applicable of a promissory note in
the principal amount equal to the fair market value of the Delivered Baytex
Units (where the fair market value of the Delivered Baytex Units is determined
by multiplying the number of Delivered Baytex Units by the weighted average
trading price of an Baytex Unit on the TSX for the ten trading days preceding
the date of purchase by Baytex Energy Trust or Baytex ExchangeCo, as applicable
of such Delivered Baytex Units).  All Exchangeable Shares which are
redeemed as set forth in this Section 8.3 shall be cancelled by the
Corporation.


 


9.            


VOTING RIGHTS


 


9.1                                 Except as required by applicable law and by
Article 10 hereof, the holders of the Exchangeable Shares shall not be
entitled as such to receive notice of or to attend any meeting of the shareholders
of the Corporation or to vote at any such meeting.


 


10.          


AMENDMENT AND APPROVAL


 


10.1                        
The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.


 


10.2                        
Any approval given by the holders of the Exchangeable Shares to add to, change
or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of
the holders of the Exchangeable Shares shall be deemed to have been
sufficiently given if it shall have been given in accordance with applicable
law subject to a minimum requirement that such approval be evidenced by
resolution passed by not less than two-thirds of the votes cast on such
resolution (other than the Exchangeable Shares held by Baytex Energy Trust,
Baytex ExchangeCo or any of their respective subsidiaries and other affiliates)
at a meeting of holders of Exchangeable Shares duly called and held at which
the holders of at least 10% of the outstanding Exchangeable Shares (other than
the Exchangeable Shares held by Baytex Energy Trust, Baytex ExchangeCo or any
of their respective subsidiaries and other affiliates) at that time are present
or represented by proxy; provided that if at any such meeting holders of at
least 10% of such outstanding Exchangeable Shares at that time are not present
or represented by proxy within one-half hour after the time appointed for such
meeting, then the meeting shall be adjourned to such place and time (not less
than ten days later) as may be designated by the Chairman of such meeting. At
such adjourned meeting the holders of Exchangeable Shares present or
represented by proxy thereat may transact the business for which the meeting
was originally called and a resolution passed thereat by the affirmative vote
of not less than two-thirds of the votes cast on such resolution at such
meeting shall constitute the approval or consent of the holders of the
Exchangeable Shares.


 

















 


11.          


RECIPROCAL CHANGES, ETC. IN RESPECT OF BAYTEX UNITS


 


11.1                        
Each holder of an Exchangeable Share acknowledges that the Support Agreement
provides, in part, that the number of Baytex Units for which the Exchangeable
Shares are exchangeable shall, in addition to being adjusted from time to time
to conform to the Exchange Ratio, be simultaneously adjusted on an economically
equivalent basis if Baytex Energy Trust:


 


(a)                                  issues or distributes Baytex Units (or
securities exchangeable for or convertible into or carrying rights to acquire
Baytex Units) to the holders of all or substantially all of the then
outstanding Baytex Units by way of stock distribution or other distribution,
other than an issue of Baytex Units (or securities exchangeable for or
convertible into or carrying rights to acquire Baytex Units) to holders of
Baytex Units who exercise an option to receive distributions in Baytex Units
(or securities exchangeable for or convertible into or carrying rights to
acquire Baytex Units) in lieu of receiving cash distributions;


 


(b)                                 issues or distributes rights, options or
warrants to the holders of all or substantially all of the then outstanding
Baytex Units entitling them to subscribe for or to purchase Baytex Units (or
securities exchangeable for or convertible into or carrying rights to acquire
Baytex Units); or


 


(c)                                  issues or distributes to the holders of all
or substantially all of the then outstanding Baytex Units:


 


(i)                                     securities of Baytex Energy Trust of any
class other than Baytex Units (other than securities convertible into or
exchangeable for or carrying rights to acquire Baytex Units);


 


(ii)                                  rights, options or warrants other than those
referred to in Section 11.1(b) above;


 


(iii)                               evidences of indebtedness of Baytex Energy
Trust; or


 


(iv)                              assets of Baytex Energy Trust other than
Distributions which result in an adjustment to the Exchange Ratio,


 


(d)                                 subdivides, redivides or changes the then
outstanding Baytex Units into a greater number of Baytex Units;


 


(e)                                  reduces, combines, consolidates or changes
the then outstanding Baytex Units into a lesser number of Baytex Units; or


 


(f)                                    reclassifies or otherwise changes the Baytex
Units or effects an amalgamation, merger, reorganization or other transaction
affecting the Baytex Units.


 


The Support Agreement
further provides, in part, that the aforesaid provisions of the Support
Agreement shall not be changed without the approval of the holders of the
Exchangeable Shares given in accordance with Section 10.2 of these share
provisions.


 


12.          


ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT


 


12.1                        
The Corporation shall take all such actions and do all such things as shall be
necessary or advisable to perform and comply with and to ensure performance and
compliance by the Corporation, Baytex Energy Trust and Baytex ExchangeCo with
all provisions of the Support Agreement applicable to the Corporation, Baytex
Energy Trust and Baytex ExchangeCo, respectively, in accordance with the terms
thereof including, without limitation, taking all such actions and doing all
such things as shall be necessary or advisable to enforce to the fullest extent
possible for the direct benefit of the Corporation all rights and benefits in
favour of the Corporation under or pursuant to such agreement.


 


12.2                        
The Corporation shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Support Agreement without the approval of the holders of the Exchangeable
Shares given in accordance with Section 10.2 of these share provisions
other than such amendments, waivers and/or forgiveness as may be necessary or
advisable for the purposes of:


 


(a)                                  adding to the covenants of the other parties
to such agreement for the protection of the Corporation or the holders of the
Exchangeable Shares thereunder;


 


(b)                                 making such provisions or modifications not
inconsistent with such agreement as may be necessary or desirable with respect
to matters or questions arising thereunder which, in the good faith opinion of
the Board of Directors, it may be expedient to make, provided that the Board of
Directors shall be of the good faith opinion, after consultation with counsel,


 

















 


that
such provisions and modifications shall not be prejudicial to the interests of
the holders of the Exchangeable Shares; or


 


(c)                                  making such changes in or corrections to such
agreement which, on the advice of counsel to the Corporation, are required for
the purpose of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error contained therein,
provided that the Board of Directors shall be of the good faith opinion, after
consultation with counsel, that such changes or corrections shall not be
prejudicial to the interests of the holders of the Exchangeable Shares.


 


13.          


LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS


 


13.1                        
The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the Call Rights and the Voting
and Exchange Trust Agreement (including the provisions with respect to the
voting rights and exchange rights thereunder).


 


13.2                        
Each holder of an Exchangeable Share, whether of record or beneficial, by
virtue of becoming and being such a holder shall be deemed to acknowledge each
of the Liquidation Call Right, the Retraction Call Right and the Redemption
Call Right, in each case, in favour of Baytex Energy Trust and Baytex
ExchangeCo, and the overriding nature thereof in connection with the
liquidation, dissolution or winding-up of the Corporation or the retraction or
redemption of Exchangeable Shares, as the case may be, and to be bound thereby
in favour of Baytex Energy Trust and Baytex ExchangeCo as therein provided.


 


13.3                        
The Corporation, Baytex Energy Trust, Baytex ExchangeCo and the Transfer Agent
shall be entitled to deduct and withhold from any dividend or consideration
otherwise payable to any holder of Exchangeable Shares such amounts as the Corporation,
Baytex Energy Trust, Baytex ExchangeCo or the Transfer Agent is required to
deduct and withhold with respect to such payment under the Income Tax Act (Canada) or any provision
of provincial, local or foreign tax law, in each case, as amended.  To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to the holder of the Exchangeable
Shares in respect of which such deduction and withholding was made, provided
that such withheld amounts are actually remitted to the appropriate taxing
authority.  To the extent that the amount so required or permitted to be
deducted or withheld from any payment to a holder exceeds the cash
consideration otherwise, if any, payable to the holder, the Corporation, Baytex
Energy Trust, Baytex ExchangeCo and the Transfer Agent are hereby authorized to
sell or otherwise dispose of such portion of the consideration as is necessary
to provide sufficient funds to the Corporation, Baytex Energy Trust, Baytex ExchangeCo
or the Transfer Agent, as the case may be, to enable it to comply with such
deduction or withholding requirement and the Corporation, Baytex Energy Trust,
Baytex ExchangeCo or the Transfer Agent shall notify the holder thereof and
remit any unapplied balance of the net proceeds of such sale.


 


14.          


NON-RESIDENT HOLDERS


 


14.1                        
Notwithstanding anything contained in these share provisions the obligation of
the Corporation, Baytex Energy Trust or Baytex ExchangeCo to pay the Retraction
Price, Purchase Price, Liquidation Price or Redemption Price, other than in
circumstances where the Corporation, Baytex Energy Trust or Baytex ExchangeCo
elects to pay the Redemption Price in cash, in respect of Exchangeable Shares
held by a person whom the Transfer Agent believes is a U.S. Person or a
resident of any foreign country, shall be satisfied by delivering the Baytex
Units which would have been received by the affected holder to the Transfer
Agent who shall sell such Baytex Units on the stock exchange on which the
Baytex Units are then listed and, upon such sale, the rights of the affected
holder shall be limited to receiving the net proceeds of sale (net of
applicable taxes) upon surrender of the certificates representing such Exchangeable
Shares.


 


15.          


SPECIFIED AMOUNT


 


15.1                        
The amount specified in respect of each Exchangeable Share for the purposes of
subsection 191(4) of the Income Tax Act
(Canada) shall be an amount equal to the fair market value of one
Baytex Unit on the Effective Date.


 


16.          


NO FRACTIONAL ENTITLEMENTS


 


16.1                        
Notwithstanding anything contained in this Agreement including, without
limitation, Articles 4, 5 or 6, no holder of an Exchangeable Share shall be
entitled to and neither the Corporation, Baytex Energy Trust, Baytex ExchangeCo
nor the Trustee shall deliver fractions of Baytex Units.  Where the
application of the provisions of this Agreement, including, without


 

















 


limitation, Articles 4, 5
and 6 would otherwise result in a holder of Exchangeable Shares receiving a
fraction of an Baytex Unit, such holder of Exchangeable Shares shall only be
entitled to receive the nearest whole number of Baytex Units.


 


17.          


NOTICES


 


17.1                        
Any notice, request or other communication to be given to the Corporation by a
holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Corporation and addressed to the attention of the
President of the Corporation. Any such notice, request or other communication,
if given by mail, telecopy or delivery, shall only be deemed to have been given
and received upon actual receipt thereof by the Corporation.


 


17.2                        
Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction or redemption of Exchangeable Shares shall be
made by registered mail (postage prepaid) or by delivery to the registered
office of the Corporation or to such office of the Transfer Agent as may be
specified by the Corporation, in each case, addressed to the attention of the
President of the Corporation. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective upon
actual receipt thereof by the Corporation or the Transfer Agent, as the case
may be. Any such presentation and surrender of certificates made by registered
mail shall be at the sole risk of the holder mailing the same.


 


17.3                        
Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the register of shareholders of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the third Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received on the
date of delivery. Accidental failure or omission to give any notice, request or
other communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be taken by
the Corporation pursuant thereto.


 

















 


SCHEDULE ”B”


 


a.                                       The directors of the corporation may, without
authorization of the shareholders:


 


i.                                          borrow money on the credit of the
Corporation;


 


ii.                                       issue, reissue, sell or pledge debt
obligations of the Corporation;


 


iii.                                    subject to the Business Corporations Act (Alberta), give a guarantee on
behalf of the Corporation to secure performance of an obligation of any person;
and


 


iv.                                   mortgage, hypothecate, pledge or otherwise
create a security interest in all or any property of the Corporation, owned or
subsequently acquired, to secure any obligation of the Corporation.


 


b.                                      The directors may, by resolution, delegate
the powers referred to in subsection (c) hereof to a director, a committee
of directors or an officer.


 


c.                                       The directors may, between annual general
meetings, appoint one or more additional directors of the Corporation to serve
until the next annual general meeting, but the number of additional directors
shall not at any time exceed 1/3 of the number of directors who held office at
the expiration of the last annual meeting of the Corporation.


 


d.                                      Meetings of the shareholders may be held:


 


i.                                          at any place within Alberta that the
directors determine from time to time; and


 


ii.                                       at any place outside Alberta that the
directors determine from time to time, including, without limitation, the
following cities:  Vancouver, British Columbia; Victoria, British
Columbia; Winnipeg, Manitoba; Toronto, Ontario; Ottawa, Ontario; Montreal,
Quebec; or Halifax, Nova Scotia.