Document:

exv4w3

 

Exhibit 4.3

MANAGEMENT’S REPORT

Management’s Responsibility to the
Unitholders

     
The financial statements are the responsibility
of the management of Pengrowth Energy Trust. They have been
prepared in accordance with generally accepted accounting
principles, using management’s best estimates and
judgements, where appropriate.

     
Management is responsible for the reliability and
integrity of the financial statements, the notes to the
financial statements, and other financial information contained
in this report. In the preparation of these statements,
estimates are sometimes necessary because a precise
determination of certain assets and liabilities is dependent on
future events. Management believes such estimates have been
based on careful judgements and have been properly reflected in
the accompanying financial statements.

     
Management is also responsible for ensuring the
management fulfills its responsibilities for financial reporting
and internal control. The Board is assisted in exercising its
responsibilities through the Audit Committee of the Board, which
is composed of three non-management directors. The Committee
meets periodically with management and the auditors to satisfy
itself that management’s responsibilities are properly
discharged, to review the financial statements and to recommend
approval of the financial statements to the Board.

     
KPMG, the independent auditors appointed by the
unitholders, have audited Pengrowth Energy Trust’s
consolidated financial statements in accordance with generally
accepted auditing standards and provided an independent
professional opinion. The auditors have full and unrestricted
access to the Audit Committee to discuss their audit and their
related findings as to the integrity of the financial reporting
process.

	 	 	 
	
    /s/ JAMES S. KINNEAR
    	 	
    /s/ GORDON M. ANDERSON
    
	
	 	

	
    James S. Kinnear
    	 	
    Gordon M. Anderson
    
	
    President and Chief Executive Officer
    	 	
    Vice President and Interim Chief Financial
    
	
    February 25, 2002
    	 	
    Officer
    

 

AUDITORS’ REPORT

To the Unitholders of

Pengrowth Energy Trust

     
We have audited the consolidated balance sheets
of Pengrowth Energy Trust as at December 31, 2001 and 2000
and the consolidated statements of income and distributable
income, unitholders’ equity and cash flow for the years
then ended. These financial statements are the responsibility of
the Trust’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

     
We conducted our audits in accordance with
Canadian generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.

     
In our opinion, these consolidated financial
statements present fairly, in all material respects, the
financial position of the Trust as at December 31, 2001 and
2000 and the results of its operations and its cash flow for the
years then ended in accordance with Canadian generally accepted
accounting principles.

Chartered Accountants

Calgary, Canada

February 25, 2002

2

 

PENGROWTH ENERGY TRUST

CONSOLIDATED BALANCE SHEETS

	 	 	 	 	 	 	 	 	 	 
			
			As at December 31
			

			2001		2000
			
		

			
			(stated in thousands of
			dollars)
	
    ASSETS
	
    
    CURRENT ASSETS
    

    	 	 	 	 	 	 	 	 
	 	
    
    Cash
    

    	 	$	3,797	 	 	$	4,533	 
	 	
    
    Accounts receivable
    

    	 	 	27,859	 	 	 	33,103	 
	 	
    
    Inventory
    

    	 	 	2,687	 	 	 	8,509	 
	 	 	 	
	 	 	 	
	 
	 	 	 	34,343	 	 	 	46,145	 
	
    
    REMEDIATION TRUST FUND (Note 3)
    

    	 	 	6,470	 	 	 	5,515	 
	
    
    PROPERTY, PLANT AND EQUIPMENT AND OTHER ASSETS
    (Note 5)
    

    	 	 	1,208,526	 	 	 	1,038,823	 
	 	 	 	
	 	 	 	
	 
	 	 	$	1,249,339	 	 	$	1,090,483	 
	 	 	 	
	 	 	 	
	 
	
    LIABILITIES AND UNITHOLDERS’
    EQUITY
	
    
    CURRENT LIABILITIES
    

    	 	 	 	 	 	 	 	 
	 	
    
    Accounts payable and accrued liabilities
    

    	 	$	31,359	 	 	$	40,396	 
	 	
    
    Distributions payable to unitholders
    

    	 	 	22,207	 	 	 	48,010	 
	 	
    
    Due to Pengrowth Management Limited (Note 10)
    

    	 	 	523	 	 	 	1,941	 
	 	
    
    Current portion of obligation under capital lease
    

    	 	 	—	 	 	 	553	 
	 	 	 	
	 	 	 	
	 
	 	 	 	54,089	 	 	 	90,900	 
	
    
    LONG-TERM DEBT (Note 6)
    

    	 	 	345,456	 	 	 	286,823	 
	
    
    FUTURE SITE RESTORATION COSTS
    

    	 	 	32,591	 	 	 	25,285	 
	
    
    FUTURE INCOME TAXES (Note 9)
    

    	 	 	—	 	 	 	45,510	 
	
    
    TRUST UNITHOLDERS’ EQUITY
    (Note 7)
    

    	 	 	817,203	 	 	 	641,965	 
	 	 	 	
	 	 	 	
	 
	 	 	$	1,249,339	 	 	$	1,090,483	 
	 	 	 	
	 	 	 	
	 

Approved on behalf of Pengrowth Energy Trust by
Pengrowth Corporation, as Administrator:

	 	 	 
	
    /s/ THOMAS A. CUMMING
    	 	
    /s/ FRANCIS G. VETSCH
    
	
	 	

	
    Thomas A. Cumming
    	 	
    Francis G. Vetsch
    
	
    Director
    	 	
    Director
    

See accompanying notes to the consolidated
financial statements.

3

 

PENGROWTH ENERGY TRUST

CONSOLIDATED STATEMENTS OF INCOME AND
DISTRIBUTABLE INCOME

	 	 	 	 	 	 	 	 	 	 
			
			Years ended December 31
			

			2001		2000
			
		

			
			(stated in thousands of
			dollars)
	
    
    REVENUES
    

    	 	 	 	 	 	 	 	 
	 	
    
    Oil and gas sales
    

    	 	$	469,929	 	 	$	416,228	 
	 	
    
    Processing and other income
    

    	 	 	7,071	 	 	 	5,520	 
	 	
    
    Crown royalties
    

    	 	 	(65,703	)	 	 	(70,111	)
	 	
    
    Alberta Royalty Tax Credit
    

    	 	 	500	 	 	 	517	 
	 	
    
    Freehold royalties and mineral taxes
    

    	 	 	(6,757	)	 	 	(6,994	)
	 	 	 	
	 	 	 	
	 
	 	 	 	405,040	 	 	 	345,160	 
	 	
    
    Interest and other income
    

    	 	 	1,348	 	 	 	5,788	 
	 	 	 	
	 	 	 	
	 
	
    
    NET REVENUE
    

    	 	 	406,388	 	 	 	350,948	 
	
    
    EXPENSES
    

    	 	 	 	 	 	 	 	 
	 	
    
    Operating
    

    	 	 	104,943	 	 	 	65,195	 
	 	
    
    Amortization of injectants for miscible floods
    

    	 	 	47,448	 	 	 	32,463	 
	 	
    
    Interest
    

    	 	 	18,806	 	 	 	17,354	 
	 	
    
    General and administrative
    

    	 	 	7,467	 	 	 	7,081	 
	 	
    
    Management fee (Note 10)
    

    	 	 	7,120	 	 	 	6,873	 
	 	
    
    Capital taxes
    

    	 	 	2,659	 	 	 	1,830	 
	 	
    
    Depletion and depreciation
    

    	 	 	124,208	 	 	 	89,253	 
	 	
    
    Future site restoration
    

    	 	 	8,529	 	 	 	7,612	 
	 	 	 	
	 	 	 	
	 
	 	 	 	321,180	 	 	 	227,661	 
	 	 	 	
	 	 	 	
	 
	
    
    INCOME BEFORE THE FOLLOWING
    

    	 	 	85,208	 	 	 	123,287	 
	
    
    Royalty income attributable to royalty units
    other than those held by Pengrowth Energy Trust
    

    	 	 	58	 	 	 	72	 
	 	 	 	
	 	 	 	
	 
	
    
    NET INCOME
    

    	 	 	85,150	 	 	 	123,215	 
	
    
    Add: Depletion, depreciation and future site
    restoration
    

    	 	 	132,737	 	 	 	96,865	 
	
    
    Alberta Royalty Credit received during year
    

    	 	 	517	 	 	 	1,378	 
	
    
    Deduct: Alberta Royalty Credit accrued for year
    

    	 	 	(500	)	 	 	(517	)
	
    
    Remediation expenses and trust fund contributions
    (Note 3)
    

    	 	 	(2,117	)	 	 	(2,601	)
	 	 	 	
	 	 	 	
	 
	
    
    DISTRIBUTABLE INCOME
    

    	 	$	215,787	 	 	$	218,340	 
	 	 	 	
	 	 	 	
	 
	
    
    NET INCOME PER UNIT (Note 11) Basic
    

    	 	$	1.201	 	 	$	2.213	 
	 	 	 	
	 	 	 	
	 
	
    
    Diluted
    

    	 	$	1.197	 	 	$	2.194	 
	 	 	 	
	 	 	 	
	 
	
    
    DISTRIBUTABLE INCOME PER UNIT (Note 11)
    

    	 	 	 	 	 	 	 	 
	 	
    
    Based on weighted average units outstanding
    

    	 	$	3.043	 	 	$	3.922	 
	 	 	 	
	 	 	 	
	 
	 	
    
    Based on actual distributions paid or declared
    

    	 	$	3.010	 	 	$	3.785	 
	 	 	 	
	 	 	 	
	 

See accompanying notes to the consolidated
financial statements.

4

 

PENGROWTH ENERGY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOW

	 	 	 	 	 	 	 	 	 	 
			
			Years ended
			December 31
			

			2001		2000
			
		

			
			(stated in thousands of
			dollars)
	
    
    CASH PROVIDED BY (USED FOR):

    	 	 	 	 	 	 	 	 
	
    
    OPERATING
    

    	 	 	 	 	 	 	 	 
	 	
    
    Net income
    

    	 	$	85,150	 	 	$	123,215	 
	 	
    
    Items not involving cash
    

    	 	 	 	 	 	 	 	 
	 	
    
    Depletion, depreciation and future site
    restoration
    

    	 	 	132,737	 	 	 	96,865	 
	 	
    
    Amortization of injectants
    

    	 	 	47,448	 	 	 	32,463	 
	 	
    
    Purchase of injectants
    

    	 	 	(56,352	)	 	 	(46,782	)
	 	
    
    Expenditures on remediation
    

    	 	 	(1,223	)	 	 	(871	)
	 	
    
    Gain on sale of marketable securities
    

    	 	 	—	 	 	 	(2,741	)
	 	 	 	
	 	 	 	
	 
	
    
    Funds generated from operations
    

    	 	 	207,760	 	 	 	202,149	 
	 	
    
    Distributions
    

    	 	 	(241,590	)	 	 	(197,826	)
	 	
    
    Changes in non-cash operating working capital
    (Note 8)
    

    	 	 	(2,919	)	 	 	4,976	 
	 	 	 	
	 	 	 	
	 
	 	 	 	(36,749	)	 	 	9,299	 
	 	 	 	
	 	 	 	
	 
	
    
    FINANCING
    

    	 	 	 	 	 	 	 	 
	 	
    
    Change in long-term debt
    

    	 	 	58,080	 	 	 	56,571	 
	 	
    
    Proceeds from issue of trust units
    

    	 	 	305,875	 	 	 	178,500	 
	 	 	 	
	 	 	 	
	 
	 	 	 	363,955	 	 	 	235,071	 
	 	 	 	
	 	 	 	
	 
	
    
    INVESTING
    

    	 	 	 	 	 	 	 	 
	 	
    
    Expenditures on property acquisitions
    

    	 	 	(280,058	)	 	 	(181,628	)
	 	
    
    Expenditures on property, plant and equipment
    

    	 	 	(74,026	)	 	 	(59,759	)
	 	
    
    Proceeds on property dispositions
    

    	 	 	23,567	 	 	 	—	 
	 	
    
    Change in Remediation Trust Fund
    

    	 	 	(955	)	 	 	(1,730	)
	 	
    
    Marketable securities
    

    	 	 	—	 	 	 	5,333	 
	 	
    
    Change in non-cash investing working capital
    (Note 8)
    

    	 	 	3,530	 	 	 	(798	)
	 	 	 	
	 	 	 	
	 
	 	 	 	(327,942	)	 	 	(238,582	)
	 	 	 	
	 	 	 	
	 
	
    
    INCREASE (DECREASE) IN CASH
    

    	 	 	(736	)	 	 	5,788	 
	
    
    CASH AND TERM DEPOSITS (BANK INDEBTEDNESS) AT
    BEGINNING OF YEAR
    

    	 	 	4,533	 	 	 	(1,255	)
	 	 	 	
	 	 	 	
	 
	
    
    CASH AND TERM DEPOSITS AT END OF YEAR
    

    	 	$	3,797	 	 	$	4,533	 
	 	 	 	
	 	 	 	
	 

See accompanying notes to the consolidated
financial statements

5

 

PENGROWTH ENERGY TRUST

CONSOLIDATED STATEMENTS OF TRUST
UNITHOLDERS’ EQUITY

	 	 	 	 	 	 	 	 	 
			
			Years ended
			December 31
			

			2001		2000
			
		

			
			(stated in thousands of
			dollars)
	
    
    Unitholders’ equity at beginning of year
    

    	 	 	641,965	 	 	$	558,590	 
	
    
    Units issued, net of issue costs
    

    	 	 	305,875	 	 	 	178,500	 
	
    
    Net income for year
    

    	 	 	85,150	 	 	 	123,215	 
	
    
    Distributable income
    

    	 	 	(215,787	)	 	 	(218,340	)
	 	 	 	
	 	 	 	
	 
	
    
    TRUST UNITHOLDERS’ EQUITY AT END OF YEAR
    

    	 	$	817,203	 	 	$	641,965	 
	 	 	 	
	 	 	 	
	 

6

 

PENGROWTH ENERGY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years ended December 31, 2001 and
2000

(tabular amounts are stated in thousands of
dollars except per unit amounts.)

1.     Structure of
the Trust

     
Pengrowth Energy Trust (“EnergyTrust”)
is a closed-end investment trust created under the laws of the
Province of Alberta pursuant to a Trust Indenture dated
December 2, 1988 (as amended) between Pengrowth Corporation
(“Corporation”) and ComputerShare Investor Services
Inc. (formerly Montreal Trust Company of Canada). Operations
commenced on December 30, 1988. The beneficiaries of
EnergyTrust are the holders of trust units (the
“unitholders”).

     
EnergyTrust acquires and holds royalty units
issued by the Corporation, which entitles EnergyTrust to the net
revenue generated by Corporation’s petroleum and natural
gas properties less certain defined charges. In addition,
unitholders are entitled to receive the net cash flows from
other investments that are held directly by EnergyTrust. As at
December 31, 2001 EnergyTrust owned 99.9 percent of
the royalty units issued by the Corporation.

     
Pengrowth Management Limited (the
“Manager”) is responsible for the management of the
business affairs of the Corporation and the administration of
EnergyTrust. At December 31, 2001, the shares of the
Corporation were wholly owned by the Manager, and the Manager is
controlled by a director of the Corporation. Subsequent to
year-end, Corporation issued 1,000 common shares to EnergyTrust
for proceeds of $1,000 resulting in EnergyTrust owning 91% of
the common shares of Corporation.

     
Under the terms of the Royalty Indenture,the
Corporation is entitled to retain a one percent share of royalty
income and all miscellaneous income (the “Residual
Interest”) to the extent this amount exceeds the aggregate
of debt service charges, general and administrative expenses,
and management fees. In 2001 and 2000, the Corporation was not
eligible to retain this Residual Interest.

2.     Significant
Accounting Policies

     Basis of
Presentation

     
EnergyTrust’s consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles in Canada and they include the
accounts of EnergyTrust and the accounts of Corporation
(collectively referred to as “Pengrowth”). All
inter-entity transactions have been eliminated. These financial
statements do not contain the accounts of the Manager.

     
Although there is no legal ownership between
EnergyTrust and Corporation, EnergyTrust, through the royalty,
obtains substantially all the economic benefits of Corporation.
In addition, the unitholders of EnergyTrust have the right to
elect the majority of the board of directors of Corporation (see
note 1).

     Property
Plant and Equipment

     
Pengrowth follows the full cost method of
accounting for oil and gas properties and facilities whereby all
costs of acquiring such interests are capitalized and depleted
on the unit of production method based on proved reserves before
royalties as estimated by independent engineers. Natural gas
production and reserves are converted to equivalent units of
crude oil using their relative energy content.

     
General and administrative costs are not
capitalized other than to the extent they are directly related
to a successful acquisition, or to the extent of
Pengrowth’s working interest in capital expenditure
programs to which overhead fees can be recovered from partners.
Overhead fees are not charged on 100 percent owned projects.

7

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

     
Proceeds from disposals of oil and gas properties
and equipment are credited against capitalized costs unless the
disposal would alter the rate of depletion and depreciation by
more than 20 percent, in which case a gain or loss on
disposal is recorded.

     
Pengrowth places a limit on the aggregate
carrying value of property, plant and equipment and deferred
injectant costs that may be carried forward for depletion
against revenues of future periods (the “ceiling
test”). The cost of these assets less accumulated depletion
and depreciation is limited to an amount equal to the estimated
future net revenue from production of proved reserves (based on
unescalated prices and costs at the balance sheet date) less
estimated future general and administrative costs, financing
costs and management fees.

 

		
	     	
    Injectant Costs

     
Injectants (mostly ethane and methane) are used
in miscible flood programs to stimulate incremental oil
recovery. The cost of injectants purchased from third parties
for miscible flood projects is deferred and amortized over the
period of expected future economic benefit which is estimated as
30 months.

 

		
	     	
    Inventory

     
Inventories of crude oil, natural gas and natural
gas liquids are stated at the lower of cost and net realizable
value.

 

		
	     	
    Future Site Restoration Costs

     
Provisions for future site restoration costs are
made over the life of the oil and gas properties and facilities
using the unit of production method. Costs are based on
engineering estimates considering current regulations, costs and
industry standards. Pengrowth has placed cash in a segregated
remediation trust account to fund certain site restoration costs
for the Judy Creek and Swan Hills properties. Contributions to
the remediation trust account and remediation expenditures not
funded by the trust account are charged against distributable
income in the period incurred.

 

		
	     	
    Income Taxes

     
EnergyTrust is a taxable trust under the Income
Tax Act (Canada). No provision has been made for income taxes by
EnergyTrust in these financial statements, as income taxes are
the responsibility of the individual unitholders and EnergyTrust
distributes all of its income to its unitholders. In 2001,
EnergyTrust allocated $124.3 million in taxable income or
$1.795 per unit to unitholders (2000 —
$110.4 million, or $1.983 per unit).

     
The Corporation follows the tax liability method
of accounting for income taxes. Under this method, income tax
liabilities and assets are recognized for the estimated tax
consequences attributable to differences between the amounts
reported in the Corporation’s financial statements and
their respective tax bases, using enacted income tax rates. The
effect of a change in income tax rates on future income tax
liabilities and assets is recognized in income in the period
that the change occurs. In determining its taxable income, the
Corporation deducts royalty payments to the unitholders. In
2001, net income of the Corporation, after deducting royalty
payments to royalty unitholders, was nil. If the Corporation
ever lacked sufficient deductions to reduce taxable income to
nil, the taxes would be deducted from royalty payments to
unitholders.

 

		
	     	
    Trust unit compensation plans

     
Pengrowth has a number of trust unit compensation
plans, the accounting policies for which are described in
Note 7.

8

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

 

		
	     	
    Risk Management

     
Pengrowth uses forward and futures contracts to
manage its exposure to commodity price fluctuations. The net
receipts or payments arising from these contracts are recognized
in income as a component of oil and gas sales during the same
period as the corresponding hedged position.

     
Interest rate swaps are used to manage exposure
to changes in interest rates. The net receipts or payments
arising from interest rate swaps are recognized in income as a
component of interest expense during the same period as the
corresponding hedged position.

 

		
	     	
    Measurement Uncertainty

     
The preparation of financial statements in
conformity with Canadian generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at
the date of the financial statements and revenues and expenses
for the period then ended.

     
The amounts recorded for depletion, depreciation
and amortization of injectants and the provision for abandonment
costs are based on estimates. The ceiling test calculation is
based on estimates of proved reserves, production rates, oil and
natural gas prices, future costs and other relevant assumptions.
By their nature, these estimates are subject to measurement
uncertainty and may impact the consolidated financial statements
of future periods.

     Earnings per
unit

     
In the fourth quarter of fiscal 2000,Pengrowth
adopted the Canadian Institute of Chartered Accountants’
new standard with respect to the computation,presentation and
disclosure of earnings per unit. The impact of adopting the new
standard on the periods presented is not significant. Under the
new standard,the treasury stock method is used to determine the
dilutive effect of stock options and other dilutive instruments.
Under the treasury stock method,only “in the money”
dilutive instruments impact the diluted calculations.

3.     Remediation
Trust Fund

     
Pursuant to a Purchase and Sale Agreement dated
August 15,1997 between Pengrowth and Imperial Oil Resources
(“Imperial”),a trust was established to fund certain
remediation obligations of the Judy Creek and Swan Hills
properties. ComputerShare Investor Services Inc. is the trustee
for the Remediation Trust Fund. With respect to the current and
future years,Pengrowth agreed to make a contribution of $250,000
on October 15,2001 and a contribution of $250,000 per annum
for each year subsequent to 2001 to the Remediation Trust Fund.
In addition,Pengrowth makes a monthly trust fund contribution
equivalent to $0.10 per boe of production from the Judy Creek
properties.

     
Every five years Pengrowth must deliver a report
to Imperial evaluating the assets in the trust fund and the
outstanding remediation obligations, and make recommendations as
to whether contribution levels should be changed. If Imperial
does not consent to recommended changes in the contribution
level,the matter may be arbitrated.

     
The following summarizes Pengrowth’s
Remediation Trust Fund contributions for 2001 and 2000 and
Pengrowth’s expenditures on remediation activities not
covered by the trust fund:

	 	 	 	 	 	 	 	 	 
			2001		2000
			
		

	
    
    Contributions to Remediation Trust Fund
    

    	 	$	1,002	 	 	$	2,461	 
	
    
    Remediation expenditures not covered by the Trust
    Fund
    

    	 	 	1,115	 	 	 	140	 
	 	 	 	
	 	 	 	
	 
	 	 	$	2,117	 	 	$	2,601	 
	 	 	 	
	 	 	 	
	 

9

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

4.     Acquisitions

     
In June 2001,Pengrowth acquired an 8.4% royalty
interest in the Sable Offshore Energy Project for cash
consideration of $252.0 million and forgiveness of a note
payable of $4.2 million. The acquisition has been accounted
for by the purchase method with the results of operations of the
acquired assets included in the financial statements from the
date of acquisition.

     
The following unaudited proforma information
provides an indication of what Pengrowth’s results of
operations would have been had the acquisition taken place on
January 1.

	 	 	 	 	 	 	 	 	 	 
			2001(a)		2000(b)
			
		

			unaudited		unaudited
	
    
    Oil and gas sales
    

    	 	$	537,954	 	 	$	504,010	 
	
    
    Net income
    

    	 	$	122,014	 	 	$	162,742	 
	
    
    Net income per unit
    

    	 	 	 	 	 	 	 	 
	 	
    
    Basic
    

    	 	$	1.618	 	 	$	2.445	 
	 	
    
    Diluted
    

    	 	$	1.613	 	 	$	2.432	 

		
	(a) 	
    assumes acquisition took place on
    January 1,2001
    
	 
	(b) 	
    assumes acquisition took place on
    January 1,2000
    

5.     Property,
Plant and Equipment and Other Assets

	 	 	 	 	 	 	 	 	 	 
			2001		2000
			
		

	
    
    PROPERTY, PLANT AND EQUIPMENT
    

    	 	 	 	 	 	 	 	 
	 	
    
    Property, plant and equipment at cost
    

    	 	$	1,583,102	 	 	$	1,298,096	 
	 	
    
    Accumulated depletion and depreciation
    

    	 	 	(437,599	)	 	 	(313,391	)
	 	 	 	
	 	 	 	
	 
	
    
    Net book value of property, plant and equipment
    

    	 	$	1,145,503	 	 	$	984,705	 
	
    
    OTHER ASSETS
    

    	 	 	 	 	 	 	 	 
	 	
    
    Deferred injectant costs
    

    	 	 	63,023	 	 	 	54,118	 
	 	 	 	
	 	 	 	
	 
	 	
    
    Net book value of property, plant and equipment
    and other assets
    

    	 	$	1,208,526	 	 	$	1,038,823	 
	 	 	 	
	 	 	 	
	 

     
As at December 31, 2001, Pengrowth had a
surplus in its ceiling test using year-end prices.

     
Total estimated undiscounted future site
restoration costs are approximately $165.4 million of which
$32.6 million has been accrued to date.

6.     Long Term
Debt

	 	 	 	 	 	 	 	 	 
			2001		2000
			
		

	
    
    Revolving credit facility
    

    	 	$	345,456	 	 	$	286,823	 
	
    
    Obligation under capital lease
    

    	 	 	—	 	 	 	553	 
	
    
    Less: current portion of lease obligation
    

    	 	 	—	 	 	 	(553	)
	 	 	 	
	 	 	 	
	 
	 	 	$	345,456	 	 	$	286,823	 
	 	 	 	
	 	 	 	
	 

     
The Corporation has a $415 million revolving
credit facility syndicated among nine financial institutions
with an extendible 364 day revolving period and a three
year amortization term period. In addition, it has a
$35 million demand operating line of credit that is
currently reduced by outstanding letters of credit in the amount
of approximately $14 million. The facilities are secured by
a $500 million first fixed and floating

10

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

charge debenture on all of the Corporation’s
assets. In addition, EnergyTrust has issued a guarantee and a
$200 million debenture granting a first fixed security
interest in the Judy Creek and Swan Hills facilities to the
financial institutions in the credit facility. Interest payable
on amounts drawn is at the prevailing bankers’ acceptance
rates plus stamping fees, lenders’ prime lending rates, or
U.S. libor rates plus applicable margins, depending on the
form of borrowing by the Corporation. The margins and stamping
fees vary depending on financial statement ratios and can range
from 0.625 percent to 1.125 percent. Interest expense
for the year ended December 31, 2001 includes $23,630,851
in cash interest payments (2000 — $15,620,843).

     
The credit facility will revolve until
June 23, 2002, whereupon it is expected to be renewed for a
further 364 days, subject to satisfactory review by the
lenders. If the lenders were to convert the facility to a
non-revolving term facility, then amounts outstanding under the
facility become repayable in 12 equal quarterly installments. As
at December 31, 2001, the obligation outstanding under the
revolving credit facility is classified as long term debt as the
lenders have advised management that subject to the Corporation
complying with the terms and conditions of the Credit Agreement,
no principal repayments are required in 2002.

     
On June 15, 2002, the total amount of
letters of credit outstanding will increase to $39 million.

7.     Trust
Units

     
The authorized capital of Pengrowth is
500,000,000 trust units.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			2001		2000
			
		

			Number of				Number of		
	Trust Units Issued		Units		Amount		Units		Amount
	
		
		
		
		

	
    
    Balance, beginning of year
    

    	 	 	63,852,198	 	 	$	974,724	 	 	 	53,639,338	 	 	$	796,224	 
	
    
    Issued for cash
    

    	 	 	17,622,500	 	 	 	311,974	 	 	 	8,165,000	 	 	 	155,135	 
	
    
    Less: issue expenses
    

    	 	 	—	 	 	 	(18,727	)	 	 	—	 	 	 	(8,303	)
	
    
    Issued for cash on exercise of stock options
    

    	 	 	628,828	 	 	 	10,060	 	 	 	1,915,833	 	 	 	29,299	 
	
    
    Issued for cash under Distribution Reinvestment
    (“DRIP”) Plan
    

    	 	 	136,543	 	 	 	2,568	 	 	 	132,027	 	 	 	2,369	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Balance, end of year
    

    	 	 	82,240,069	 	 	$	1,280,599	 	 	 	63,852,198	 	 	$	974,724	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

     
Pursuant to the terms of the Royalty Indenture
and the Trust Indenture, there is attached to each royalty unit
granted by the Corporation the right to exchange such royalty
unit for an equivalent number of trust units. ComputerShare, as
Trustee has reserved 18,940 trust units for such future
conversion.

     Distribution
Reinvestment Plan

     
The Distribution Reinvestment Plan
(“DRIP”) entitles unitholders to reinvest cash
distributions in additional units of EnergyTrust. The trust
units under the plan may be acquired in the open market at
prevailing market prices or issued from treasury at the weighted
average price of all EnergyTrust units traded on the Toronto
Stock Exchange for the 20 trading days preceding a distribution
payment date.

     Trust Unit
Option Plan

     
Pengrowth has a trust unit option plan under
which employees and directors of the Corporation and the Manager
are eligible to receive options. As options are issued at the
market price on date of grant, no compensation expense is
recognized when new options are issued. Under the terms of the
plan, up to 10% of the issued and outstanding trust units to a
maximum of 7 million units may be reserved for these option
grants. One third of the options vest on the grant date, one
third on the first anniversary of the date of grant, and the

11

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

remaining third on the second anniversary. The
options expire five years from the date of grant. As at
December 31, 2001, options to purchase 3,106,635 trust
units were outstanding (2000 — 2,893,554) that expire
at various dates to August 31, 2006.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			2001		2000
			
		

					Weighted				Weighted
			Number of		Average		Number of		Average
	Trust Unit Options		Options		Exercise Price		Options		Exercise Price
	
		
		
		
		

	
    
    Outstanding at beginning of year
    

    	 	 	2,893,554	 	 	$	17.45	 	 	 	4,041,287	 	 	$	16.16	 
	
    
    Granted
    

    	 	 	905,979	 	 	 	17.66	 	 	 	821,100	 	 	 	18.73	 
	
    
    Exercised
    

    	 	 	(628,828	)	 	 	16.00	 	 	 	(1,915,833	)	 	 	15.29	 
	
    
    Cancelled
    

    	 	 	(64,070	)	 	 	18.98	 	 	 	(53,000	)	 	 	16.85	 
	 	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 
	
    
    Outstanding at year end
    

    	 	 	3,106,635	 	 	 	17.78	 	 	 	2,893,554	 	 	 	17.45	 
	 	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 
	
    
    Exercisable at year end
    

    	 	 	2,238,406	 	 	 	17.69	 	 	 	2,171,087	 	 	 	17.51	 
	 	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 

     
The following table summarizes information about
trust unit options outstanding at December 31,2001:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Options Outstanding		Options Exercisable
			
		

					Weighted				
			Number		Average		Weighted		Number		Weighted
			Outstanding		Remaining		Average		Exercisable		Average
	Range of Exercise Prices		At 12/31/01		Contractual Life		Exercise Price		At 12/31/01		Exercise Price
	
		
		
		
		
		

	
    
    $12.00 to $14.99
    

    	 	 	181,650	 	 	 	2.3 years	 	 	$	12.68	 	 	 	181,650	 	 	$	12.68	 
	
    
    $15.00 to $16.99
    

    	 	 	289,220	 	 	 	1.4	 	 	 	15.86	 	 	 	273,720	 	 	 	15.85	 
	
    
    $17.00 to $17.99
    

    	 	 	1,504,759	 	 	 	3.0	 	 	 	17.49	 	 	 	935,953	 	 	 	17.49	 
	
    
    $18.00 to $20.50
    

    	 	 	1,131,006	 	 	 	3.0	 	 	 	19.47	 	 	 	847,083	 	 	 	19.59	 
	 	 	 	
	 	 	 	 	 	 	 	 	 	 	 	
	 	 	 	 	 
	
    
    $12.00 to $20.50
    

    	 	 	3,106,635	 	 	 	2.8	 	 	$	17.78	 	 	 	2,238,406	 	 	$	17.69	 
	 	 	 	
	 	 	 	 	 	 	 	 	 	 	 	
	 	 	 	 	 

     Share
Appreciation Rights

     
As at December 31, 2001 and 2000, 426,000
Share Appreciation Rights (“SAR’s”) were held by
an officer of Pengrowth. They are fully vested, have a weighted
average exercise price of $18.39 and expiry dates ranging from
October 15 to December 1, 2002.

     
The SAR’s grant the right to receive a
Payment Amount equal to any increase in the market price of the
426,000 trust units above the exercise price. Pengrowth may, at
its option, satisfy this Payment Amount with either a cash
payment or the issue of trust units from treasury based on
market prices at the time of exercise. No compensation expense
is recognized for the SAR’s until a cash payment is made.

     Trust Unit
Savings Plan

     
Pengrowth has a trust unit savings plan whereby
qualifying employees may contribute from 1 to 10 percent of
their basic annual salary. Employee contributions are invested
in EnergyTrust units purchased on the open market. Pengrowth
matches the employees’ contribution, investing in
additional trust units purchased on the open market.
Pengrowth’s share of contributions is recorded as
compensation expense and amounted to $729,730 in 2001
(2000 — $532,014).

     Trust Unit
Margin Purchase Plan

     
Pengrowth has a plan whereby the Manager, and
employees, directors, and certain consultants of Corporation can
purchase trust units and finance up to 75% of the purchase price
through an investment

12

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

dealer, subject to certain participation limits
and restrictions. Participants maintain personal margin accounts
with the investment dealer and are responsible for all interest
costs and obligations with respect to their margin loans. The
Corporation has provided a $5 million letter of credit to
the investment dealer to guarantee amounts owing with respect to
the plan. The amount of the letter of credit may fluctuate
depending on the amounts financed pursuant to the plan. At
December 31, 2001, 2,446,896 trust units were deposited
under the plan (2000 — 1,925,518) with a market value
of $34.8 million (2000 — $37.0 million) and
a corresponding margin loan of $13.9 million
(2000 — $11.6 million).

     Redemption
Rights

     
Trust Units are redeemable at the request of a
Unitholder. The redemption right permits Unitholders in the
aggregate to redeem a maximum of $25,000 of Trust Units in a
month.

8.     Change in
Non-Cash Operating Working Capital

	 	 	 	 	 	 	 	 	 
			2001		2000
			
		

	
    
    Accounts receivable
    

    	 	$	5,244	 	 	$	(10,193	)
	
    
    Inventory
    

    	 	 	5,822	 	 	 	(6,742	)
	
    
    Accounts payable and accrued liabilities
    

    	 	 	(12,567	)	 	 	21,246	 
	
    
    Due to Pengrowth Management Limited
    

    	 	 	(1,418	)	 	 	665	 
	 	 	 	
	 	 	 	
	 
	 	 	$	(2,919	)	 	$	4,976	 
	 	 	 	
	 	 	 	
	 

          Change
in Non-Cash Investing Working Capital

	 	 	 	 	 	 	 	 	 
			2001		2000
			
		

	
    
    Accounts payable for capital accruals
    

    	 	$	3,530	 	 	$	(798	)
	 	 	 	
	 	 	 	
	 

9.     Income
Taxes

     
During 2000, the Corporation changed its method
of accounting for income taxes from the deferral method to the
liability method as described in note 2, and has applied
this change retroactively without restating prior periods.

     
In 2001, the cost basis for income tax purposes
of property, plant and equipment exceeded the net book value by
$152,507,000 principally as a result of the acquisition of oil
and gas properties during the year. A future tax asset of
$64,968,000 has been reduced to nil through a valuation
allowance of $64,968,000. In 2000, the net book value of
property, plant and equipment exceeded the cost basis for income
tax purposes by $102,040,000 and a future income tax liability
of $45,510,000 was recorded in respect thereof.

     
In 2001, the Corporation made cash payments of
$2,702,000 in respect of capital taxes (2000 —
$1,827,000).

10.     Related Party
Transactions

     
Pengrowth Management Limited provides certain
services pursuant to a management agreement for which Pengrowth
was charged $2,235,224 (2000 — $1,238,000) for
acquisition fees and $7,120,419 (2000 — $6,872,570)
for a management fee. The law firm controlled by the corporate
secretary charged $147,850 (2000 — $284,456) for legal
services provided to Pengrowth. A corporate finance firm
controlled by a member of the immediate family of the corporate
secretary charged $1,513,250 (2000 — nil) for
acquisition-related advisory services provided to Pengrowth by
the corporate secretary.

13

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

     
The Corporation has provided a $5 million
letter of credit to an investment dealer to guarantee amounts
owing to the investment dealer. See note 7 —
Trust Unit Margin Purchase Plan.

11.     Amounts Per
Unit

     
The per unit amounts for net income and
distributable income are based on weighted average units
outstanding for the year. The weighted average units outstanding
for 2001 were 70,910,746 units (2000 — 55,672,865
units). In computing diluted net income per unit, 205,453 units
were added to the weighted average number of units outstanding
during the year ended December 31, 2001 (2000 —
354,331) for the dilutive effect of employee stock options. The
per unit amount of distributions paid or declared reflect actual
distributions paid or declared based on units outstanding at the
time.

     
Distributions are declared payable during the
month following the month in which the distributions were
earned. Distributions are paid to unitholders on the 15th day of
the second month after the distributions are earned. As at
December 31, 2001 there was a balance of $823,334 or $0.010
per unit that had been earned but had not yet been paid or
declared (2000 — $700,188 or $0.011 per unit).

12.     Financial
Instruments

     Interest Rate
Risk

     
As at December 31, 2001, Pengrowth had
entered into interest rate swaps on $100 million of its
long term debt for periods of three years ending
November 30, 2004 ($75 million) and December 31,
2004 ($25 million) at an average borrowing cost of 4.7825%.

     
The estimated fair value of the interest rate
swaps has been determined based on the amount that Pengrowth
would receive or pay to terminate the contracts at year-end. At
December 31, 2001 the amount that Pengrowth would pay to
terminate the interest rate swaps is $328,000.

     Foreign
Currency Exchange Risk

     
Pengrowth is exposed to foreign currency
fluctuations as crude oil and natural gas prices received are
referenced to U.S. dollar denominated prices. Pengrowth has
mitigated some of this exchange risk by entering into fixed
Canadian dollar crude oil price swaps as outlined below.

     Credit
Risk

     
A portion of Pengrowth’s accounts receivable
are with joint venture partners in the oil and gas industry and
are subject to normal industry credit risks. The use of
commodity price swap agreements involves a degree of credit risk
that Pengrowth manages through its credit policies which are
designed to limit eligible counterparties to those with
“A” credit ratings or better.

     Forward and
Futures Contracts

     
Pengrowth has a price risk management program
whereby the commodity price associated with a portion of its
future production is fixed. Pengrowth sells forward a portion of
its future production through a combination of fixed price sales
contracts with customers and commodity swap agreements with
financial counterparties. The forward and futures contracts are
subject to market risk from fluctuating commodity prices and
exchange rates however, gains or losses on the contracts are
offset by changes in the value of Pengrowth’s production.

14

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

     
As at December 31, 2001, Pengrowth had fixed
the price applicable to future production as follows:

Financial Swap Contracts

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Crude Oil		Natural Gas
			
		

			Volume		Price		Volume		
			(bbl/d)		C$/bbl		(MMbtu/d)		Fixed Price
			
		
		
		

	
    
    2002
    

    	 	 	2,000	 	 	$	35.04	 	 	 	7,000	 	 	$	3.90 US/MMbtu	 
	
    
    2003
    

    	 	 	—	 	 	 	—	 	 	 	7,000	 	 	$	3.90 US/MMbtu	 
	
    
    2004
    

    	 	 	—	 	 	 	—	 	 	 	7,000	 	 	$	3.90 US/MMbtu	 

     
As well, Pengrowth had natural gas fixed price
sales contracts which fixed the price on 7,262 mcf/d for
2002 at a price of $2.99 Cdn/mcf.

     
The estimated fair value of the crude oil
financial swap contracts and the natural gas fixed price sales
contracts have been determined based on the amounts Pengrowth
would receive or pay to terminate the contracts at year-end. At
December 31, 2001, the amount Pengrowth would receive if
the crude oil and natural gas contracts were terminated would be
$1,727,600 and $36,000, respectively.

     Fair Value of
Financial Instruments

     
The carrying value of financial instruments
included in the balance sheet, other than bank debt, approximate
their fair value due to their short maturity. The fair value of
the Remediation Trust Fund was $6,473,000 (2000 —
$5,544,077).

 

		
	13.	
    Reconciliation of Financial Statements to
    United States Generally Accepted Accounting Principles

     
The significant differences between Canadian
generally accepted accounting principles (“Canadian
GAAP”) which, in most respects, conforms to generally
accepted accounting principles in the United States
(“U.S. GAAP”), as they apply to Pengrowth, are as
follows:

     
(a) Under U.S. GAAP, the carrying value
of petroleum and natural gas properties and related facilities,
net of future or deferred income taxes, is limited to the
present value of after tax future net revenue from proven
reserves, discounted at 10 percent (based on prices and
costs at the balance sheet date), plus the lower of cost and
fair value of unproven properties. Under Canadian GAAP, this
“ceiling test” is calculated without application of a
discount factor. At December 31, 1998 and 1997 the
application of the full cost ceiling test under U.S. GAAP
resulted in a write-down of capitalized costs of
$328.6 million and $49.8 million, respectively. At
December 31, 2001 and 2000, the application of the full
cost ceiling test under U.S. GAAP did not result in a
write-down of capitalized costs.

     
Where the amount of a ceiling test writedown
under Canadian GAAP differs from the amount of the write-down
under U.S. GAAP, the charge for depletion, depreciation,
and amortization will differ in subsequent years.

     
(b) Under U.S. GAAP, the provision for
abandonment costs is recorded as a reduction of capital assets.

     
(c) Under U.S. GAAP, interest and other
income would not be included as a component of Net Revenue.

     
(d) SFAS 123, “Accounting for
Stock-based Compensation”, establishes financial accounting
and reporting standards for stock-based employee compensation
plans as well as transactions in which an entity issues its
equity instruments to acquire goods or services from
non-employees. As permitted by the SFAS 123, Pengrowth has
elected to continue to follow the intrinsic value method of
accounting for stock-based compensation arrangements, as
provided for in Accounting Principles Board Opinion 25
(“APB 25”). Since

15

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

all options were granted with an exercise price
equal to the market price at the date of the grant, no
compensation cost has been charged to income.

     
Had compensation cost for Pengrowth’s stock
options been determined based on the fair market value at the
grant dates of the awards consistent with methodology prescribed
by SFAS 123, “Accounting for Stock-Based
Compensation”, Pengrowth’s net income and net income
per unit for years ended December 31, 2001 and 2000 would
have been the pro forma amounts indicated below:

	 	 	 	 	 	 	 	 	 	 
			
			Years ended
			December 31,
			

			2001		2000
			
		

	
    
    Net income:
    

    	 	 	 	 	 	 	 	 
	 	
    
    As reported
    

    	 	$	110,748	 	 	$	150,654	 
	 	
    
    Pro forma
    

    	 	 	110,457	 	 	 	150,498	 
	
    
    Net income per unit:
    

    	 	 	 	 	 	 	 	 
	 	
    
    As reported
    

    	 	$	1.56	 	 	$	2.71	 
	 	
    
    Pro forma
    

    	 	 	1.56	 	 	 	2.70	 

     
Under the provisions of SFAS 123 the pro forma
disclosures above include only the effects of stock options
granted by Pengrowth subsequent to December 31, 1996.
During this initial phase-in period, the pro-forma disclosures
as required by SFAS 123 are not representative of the effects on
reported income for future years as options vest over several
years and additional awards are generally made each year.

     
The weighted average fair market value of options
granted in 2001 and 2000 was $0.50 and $0.26 per option
respectively. The fair value of each option granted was
estimated on the date of grant using the Modified Black-Scholes
option-pricing model with the following assumptions for 2001 and
2000 respectively: risk-free interest rate of 4 and
5 percent, dividend yield of 14.0 and 19.0 percent,
volatility of 27 and 16 percent, normalized dilution
of 7 percent and liquidity discount of 10 percent for
both years, and expected life of five years in both years.

     
APB 25 also requires recognition of compensation
cost with respect to Stock Appreciation Rights granted to
employees. No compensation cost results from application of the
above provisions for the year ended December 31, 2001.
Application of provisions of APB 25 resulted in a
compensation cost of $510,000 for the year ended
December 31, 2000 for U.S. GAAP purposes.

     
(e) Marketable securities held by Pengrowth
are classified as available-for-sale in accordance with
definitions of SFAS 115. Under provisions of this
Statement, available-for-sale securities are reported at the
fair value, with unrealized holding gains and losses included in
comprehensive income and reported as a separate component of
unitholders’ equity until realized.

     
(f) SFAS 130 requires the reporting of
comprehensive income in addition to net earnings. Comprehensive
income includes net income plus other comprehensive income;
specifically, all changes in equity of a company during a period
arising from non-owner sources.

     
(g) Statement of Financial Accounting
Standards No. 133, “Accounting for Derivative
instruments and Hedging Activities” (SFAS 133), is
effective for all fiscal years beginning after June 15,
2000. Pengrowth has implemented the standards set out in
SFAS 133 for the fiscal year commencing January 1,
2001, with no restatement of prior periods. SFAS 133
establishes new accounting and reporting standards for
derivative instruments and for hedging activities. This
statement requires an entity to establish, at the inception of a
hedge, the method it will use for assessing the effectiveness of
the hedging derivative and the measurement approach for
determining the ineffective aspect of the hedge. Those methods
must be consistent with the entity’s approach to managing
risk.

16

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

     
On initial adoption of SFAS No. 133 on
January 1, 2001, additional liabilities of
$2.1 million were recorded for U.S. GAAP purposes to
reflect the fair value of derivatives designated as cash flow
hedges. A charge of $2.1 million relating to the fair value
of these hedges was recognized in other comprehensive income as
the cumulative effect of the initial adoption os SFAS
No. 133.

     
At December 31, 2001, $2,522,000 has been
recorded as an asset in respect of the fair value of crude oil
and natural gas hedges outstanding at year-end with a
corresponding increase in other comprehensive income. This
amount will be amortized against crude oil and natural gas sales
over the remaining terms of the related hedges. Also at
December 31, 2001, a liability of $328,000 has been
recorded in respect of the fair value of interest rate swaps
outstanding at year-end with a corresponding decrease in other
comprehensive income.

Consolidated Statements of Income and
Distributable Income

     
The application of U.S. GAAP would have the
following effect on net earnings as reported:

	 	 	 	 	 	 	 	 	 	 
			
			Years ended December 31
			

			2001		2000
			
		

			
			(Stated in thousands of
			Canadian Dollars, except
			per unit amounts)
	
    
    Net income for the year, as reported
    

    	 	$	85,150	 	 	$	123,215	 
	
    
    Adjustments net of tax
    

    	 	 	 	 	 	 	 	 
	 	
    
    Depletion and depreciation (a)
    

    	 	 	25,598	 	 	 	27,949	 
	 	
    
    Compensation cost (d)
    

    	 	 	—	 	 	 	(510	)
	 	 	 	
	 	 	 	
	 
	
    
    Net income for the year — U.S. GAAP
    

    	 	$	110,748	 	 	$	150,654	 
	
    
    Other comprehensive income:
    

    	 	 	 	 	 	 	 	 
	 	
    
    Cumulative effect of the initial adoption of SFAS
    No. 133 (f)(g)
    

    	 	 	2,128	 	 	 	—	 
	 	
    
    Unrealized hedging gains (f)(g)
    

    	 	 	2,522	 	 	 	—	 
	 	
    
    Unrealized hedging losses (f)(g)
    

    	 	 	(328	)	 	 	—	 
	 	
    
    Realized gain on available-for-sale
    securities (e)(f)
    

    	 	 	—	 	 	 	(1,613	)
	 	 	 	
	 	 	 	
	 
	
    
    Comprehensive income — U.S. GAAP
    

    	 	$	115,070	 	 	$	149,041	 
	 	 	 	
	 	 	 	
	 
	
    
    Net income per unit — U.S.
    GAAP — Basic
    

    	 	$	1.56	 	 	$	2.71	 
	 	 	 	
	 	 	 	
	 
	
    
    — Diluted
    

    	 	$	1.56	 	 	$	2.67	 
	 	 	 	
	 	 	 	
	 

17

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

Consolidated Balance Sheets

     
The application of U.S. GAAP would have the
following effect on the Balance Sheets as reported:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
			As Reported		Increase (Decrease)		U.S. GAAP
			
		
		

			
			(Stated in thousands of Canadian Dollars)
	
    
    December 31, 2001
    

    	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Assets:

    	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Capital assets (a)(b)
    

    	 	$	1,208,526	 	 	$	(328,895	)	 	$	879,631	 
	 	
    
    Unrealized hedging gain (g)
    

    	 	 	—	 	 	 	2,522	 	 	 	2,522	 
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	 	 	 	$	(326,373	)	 	 	 	 
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Liabilities:

    	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Provision for abandonment costs (b)
    

    	 	$	32,591	 	 	$	(32,591	)	 	$	—	 
	 	
    
    Unrealized hedging loss (g)
    

    	 	 	—	 	 	 	328	 	 	 	328	 
	
    
    Unitholders’ equity:

    	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Other comprehensive income (f)(g)
    

    	 	 	—	 	 	 	2,194	 	 	 	2,194	 
	 	
    
    Trust Unitholders’ Equity (a)
    

    	 	 	817,203	 	 	 	(296,304	)	 	 	520,899	 
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	 	 	 	$	(326,373	)	 	 	 	 
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    December 31, 2000
    

    	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Assets:

    	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Capital assets (a)(b)
    

    	 	$	1,038,823	 	 	$	(347,187	)	 	$	691,636	 
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	 	 	 	$	(347,187	)	 	 	 	 
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Liabilities:

    	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Provision for abandonment costs (b)
    

    	 	$	25,285	 	 	$	(25,285	)	 	$	—	 
	 	
    
    Other (d)
    

    	 	 	—	 	 	 	510	 	 	 	510	 
	
    
    Unitholders’ equity:

    	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Trust Unitholders’ Equity (a)
    

    	 	 	641,965	 	 	 	(322,412	)	 	 	319,553	 
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	 	 	 	$	(347,187	)	 	 	 	 
	 	 	 	
	 	 	 	
	 	 	 	
	 

Additional Disclosures Required Under U.S.
GAAP

     
The components of accounts receivable are as
follows:

	 	 	 	 	 	 	 	 	 
			
			December 31,
			

			2001		2000
			
		

	
    
    Trade
    

    	 	$	20,292	 	 	$	27,716	 
	
    
    Prepaids
    

    	 	 	3,968	 	 	 	2,795	 
	
    
    Other
    

    	 	 	3,599	 	 	 	2,592	 
	 	 	 	
	 	 	 	
	 
	 	 	$	27,859	 	 	$	33,103	 
	 	 	 	
	 	 	 	
	 

18

 

PENGROWTH ENERGY TRUST

Notes to Consolidated Financial
Statements — (Continued)

     
The components of accounts payable and accrued
liabilities are as follows:

	 	 	 	 	 	 	 	 	 
			
			December 31,
			

			2001		2000
			
		

	
    
    Accounts payable
    

    	 	$	19,566	 	 	$	29,573	 
	
    
    Accrued liabilities
    

    	 	 	11,793	 	 	 	10,823	 
	 	 	 	
	 	 	 	
	 
	 	 	$	31,359	 	 	$	40,396	 
	 	 	 	
	 	 	 	
	 

19exv4w5

 

Exhibit 4.5

PENGROWTH CORPORATION

     

     

     

     

PENGROWTH ENERGYTRUST

NOTICES OF MEETINGS

INFORMATION CIRCULAR — PROXY STATEMENT

     

     

     

     

     

MARCH 15, 2002

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	NOTICE OF SHAREHOLDER MEETING
	 	 	 	 
	NOTICE OF ROYALTY MEETING
	 	 	 	 
	NOTICE OF TRUST MEETING
	 	 	 	 
	 
	 	 	 	 
	INFORMATION CIRCULAR
	 	 	 	 
	SOLICITATION OF PROXIES
	 	 	1	 
	 	Shareholder Meeting
	 	 	1	 
	 	Royalty Meeting
	 	 	1	 
	 	Trust Meeting
	 	 	2	 
	APPOINTMENT OF PROXYHOLDERS AND REVOCATION OF PROXIES
	 	 	2	 
	notice to beneficial holders of trust units
	 	 	3	 
	PERSONS MAKING THE SOLICITATION
	 	 	3	 
	EXERCISE OF DISCRETION BY PROXY
	 	 	3	 
	VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
	 	 	4	 
	EXECUTIVE COMPENSATION
	 	 	4	 
	 	Long Term Incentive Plans
	 	 	5	 
	 	Summary of Compensation and Securities under Option
	 	 	7	 
	 	Options Granted During the Year Ended December 31, 2001
	 	 	8	 
	 	Aggregate Option Exercises During the Year Ended December 31, 2001 and Year-End Option
Values
	 	 	9	 
	 	Performance Graph
	 	 	10	 
	DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
	 	 	10	 
	INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
	 	 	10	 
	INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
	 	 	11	 
	MANAGEMENT AGREEMENT
	 	 	11	 
	CORPORATE GOVERNANCE
	 	 	12	 
	OTHER MATTERS
	 	 	17	 
	MATTERS TO BE CONSIDERED AT THE SHAREHOLDER MEETING
	 	 	17	 
	APPOINTMENT OF AUDITORS
	 	 	17	 
	ELECTION OF DIRECTORS
	 	 	17	 
	AMENDMENTS TO UNANIMOUS SHAREHOLDER AGREEMENT
	 	 	18	 
	AMENDMENTS TO ARTICLES OF THE CORPORATION
	 	 	19	 
	MATTERS TO BE CONSIDERED AT THE ROYALTY MEETING
	 	 	20	 
	AMENDMENTS TO ROYALTY INDENTURE
	 	 	20	 
	AMENDMENTS TO MANAGEMENT AGREEMENT
	 	 	21	 
	SUBORDINATION OF THE ROYALTY
	 	 	21	 
	MATTERS TO BE CONSIDERED AT THE TRUST MEETING
	 	 	22	 
	APPOINTMENT OF AUDITORS
	 	 	22	 
	AMENDMENT TO TERM OF TRUST UNIT OPTION PLAN
	 	 	22	 
	ISSUANCE OF ADDITIONAL TRUST UNIT OPTIONS
	 	 	23	 
	CREATION OF A TRUST UNIT RIGHTS INCENTIVE PLAN
	 	 	23	 
	TRUST UNIT DISTRIBUTIONS AND REINVESTMENT
	 	 	25	 
	AMENDMENTS TO THE TRUST INDENTURE
	 	 	26	 
	GUARANTEES AND SUBORDINATION
	 	 	27	 
	ADDITIONAL INFORMATION
	 	 	28	 
	APPROVAL AND CERTIFICATION
	 	 	29	 
	 
	 	 	 	 
	SCHEDULES
	 	 	 	 
	 	SUMMARY OF AMENDMENTS
	 	 	A	 
	 	RESOLUTIONS
	 	 	B	 
	 	AMENDED AND RESTATED AGREEMENTS
	 	 	C	 

 

 

PENGROWTH CORPORATION

NOTICE OF THE ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS

TAKE NOTICE that an annual general and special meeting of the Shareholders (the
“Shareholder
Meeting”) of Pengrowth Corporation (the “Corporation”) will be held at the
Calgary Petroleum Club,
McMurray Room, 319 — 5th Avenue S.W., Calgary, Alberta, at 3:00 p.m. (Calgary
Time) on April 23, 2002
for the following purposes:

	 	1.	 	to receive and consider financial statements of the Corporation for the
year ended December 31, 2001 and auditors’ report thereon;
	 
	 	2.	 	to appoint auditors;
	 
	 	3.	 	to elect directors of the Corporation;
	 
	 	4.	 	to consider an Extraordinary Resolution approving certain amendments to
the Unanimous Shareholder Agreement, and approving a Restated Unanimous Shareholder
Agreement;
	 
	 	5.	 	to consider a Special and Extraordinary Resolution approving certain
amendments to the Articles of the Corporation;
	 
	 	6.	 	to transact any other business which may properly come before the
Shareholder Meeting.

Calgary, March 15, 2002

	 
	By Order of the Board of Directors
	 
	(Signed) Charles V. Selby, Corporate Secretary

The specific details of the matters proposed to be put before the Royalty
Meeting and the text of the resolutions are set
forth in the Information Circular-Proxy Statement accompanying this notice.

Royalty Unitholders of the Corporation and Trust Unitholders of Pengrowth
Energy Trust (collectively
“Unitholders”) are entitled to vote on matters regarding the Corporation as if
they were shareholders of the
Corporation. Unitholders are requested to date and sign the enclosed Form of
Proxy and to mail it to, or deposit
it with the Corporate Secretary of the Corporation in care of Computershare
Trust Company of Canada, Stock
and Bond Transfer Department, 7th floor, 530 — 8th Avenue S.W., Calgary,
Alberta, T2P 3S8. In order to be
valid and acted upon at the Shareholder Meeting, Forms of Proxy must be
returned not less than 48 hours
before the time for holding the Shareholder Meeting or any adjournment thereof.
Unitholders who wish to
attend and vote in person should appoint themselves as proxy.

Unitholders of record at the close of business on March 8, 2002, will be
entitled to notice of, and to attend and vote at,
the Shareholder Meeting, unless the Unitholder has transferred any Units
subsequent to that date and the transferee
Unitholder, not later than 10 days before the Shareholder Meeting, establishes
his ownership of the Units and demands
his name be included on the list of Unitholders, in which such transferee will
be entitled to vote such Units at the
Shareholder Meeting.

 

 

PENGROWTH CORPORATION

NOTICE OF THE SPECIAL MEETING OF ROYALTY UNITHOLDERS

TAKE NOTICE that a special meeting of the Royalty Unitholders (the “Royalty
Meeting”) of Pengrowth
Corporation (the “Corporation”) will be held at the Calgary Petroleum Club,
McMurray Room, 319 — 5th
Avenue S.W., Calgary, Alberta, at 3:15 p.m. (Calgary Time) on April 23, 2002
for the following purposes:

	 	1.	 	to consider an Extraordinary Resolution approving certain amendments to
the Royalty Indenture, and approving a Restated Royalty Indenture;
	 
	 	2.	 	to consider an Extraordinary Resolution approving certain amendments to
the Third Amended Management Agreement, and approving an Amended and
Restated Management Agreement;
	 
	 	3.	 	to consider an Extraordinary Resolution approving a subordination of
the rights of Royalty Unitholders to be paid the Royalty by the Corporation;
	 
	 	4.	 	to transact any other business which may properly come before the
Royalty Meeting.

Calgary, March 15, 2002

	 
	By Order of the Board of Directors
	 
	(Signed) Charles V. Selby, Corporate Secretary

The specific details of the matters proposed to be put before the Royalty
Meeting and the text of the resolutions are set
forth in the Information Circular-Proxy Statement accompanying this notice.

Unitholders of the Corporation are requested to date and sign the enclosed Form
of Proxy and to mail it to, or
deposit it with the Transfer Agent of the Corporation, Computershare Trust
Company of Canada, Stock and
Bond Transfer Department, 7th floor, 530 — 8th Avenue S.W., Calgary, Alberta,
T2P 3S8. In order to be valid
and acted upon at the Royalty Meeting, Forms of Proxy must be returned not less
than 48 hours before the time
for holding the Royalty Meeting or any adjournment thereof. Unitholders who
wish to attend and vote in
person should appoint themselves as proxy.

Unitholders of record at the close of business on March 8, 2002, will be
entitled to notice of, and to attend and vote at,
the Royalty Meeting, unless the Unitholder has transferred any Units subsequent
to that date and the transferee
Unitholder, not later than 10 days before the Royalty Meeting, establishes his
ownership of the Units and demands his
name be included on the list of Unitholders, in which such transferee will be
entitled to vote such Units at the Royalty
Meeting.

 

 

PENGROWTH CORPORATION

NOTICE OF THE ANNUAL AND SPECIAL MEETING OF TRUST UNITHOLDERS

TAKE NOTICE that an annual and special meeting of the Trust Unitholders (the
“Trust Meeting”) of Pengrowth
Energy Trust (the “EnergyTrust”) will be held at the Calgary Petroleum Club,
McMurray Room, 319 — 5th Avenue
S.W., Calgary, Alberta, at 3:30 p.m. (Calgary Time) on April 23, 2002 for the
following purposes:

	 	1.	 	to receive and consider the financial statements of EnergyTrust for the
year ended December 31, 2001 and the auditors’ report thereon;
	 
	 	2.	 	to appoint auditors;
	 
	 	3.	 	to consider an Extraordinary Resolution approving certain amendments to
the Trust Unit Option Agreement and the Trust Unit Option Plan, and approving the reservation of
additional Trust Unit Options;
	 
	 	4.	 	to consider an Extraordinary Resolution approving the creation of a
Trust Unit Rights Incentive Plan, and approving certain amendments to the Trust Unit Option Plan;
	 
	 	5.	 	to consider an Extraordinary Resolution approving certain amendments to
the Distribution Reinvestment Plan;
	 
	 	6.	 	to consider an Extraordinary Resolution approving certain amendments to
the Trust Indenture, and approving an Amended and Restated Trust Indenture;
	 
	 	7.	 	to consider an Extraordinary Resolution approving guarantee and
subordination agreements;
	 
	 	8.	 	to transact any other business which may properly come before the Trust
Meeting.

Calgary, March 15, 2002

	 
	By Order of Computershare Trust Company of Canada

as Trustee
	 
	 
	 
	(Signed) M. Rose Allen

Vice-President Western Region and General Manager

Corporate Trust
	 
	 
	 
	(Signed) Stacie A. Moore

Corporate Trust Manager

The specific details of the matters proposed to be put before the Trust Meeting
and the text of the resolutions are set forth in the
Information Circular-Proxy Statement accompanying this notice.

Trust Unitholders of EnergyTrust are requested to date and sign the enclosed
Form of Proxy and to mail it to, or deposit
it with the Trustee of EnergyTrust, Computershare Trust Company of Canada,
Stock and Bond Transfer Department, 7th
floor, 530 — 8th Avenue S.W., Calgary, Alberta, T2P 3S8. In order to be valid
and acted upon at the Trust Meeting, Forms
of Proxy must be returned not less than 48 hours before the time for holding
the Trust Meeting or any adjournment
thereof. Trust Unitholders who wish to attend and vote in person should
appoint themselves as proxy.

Trust Unitholders of record at the close of business on March 8, 2002, will be
entitled to notice of, and to attend and vote at, the
Trust Meeting, unless the Trust Unitholder has transferred any Trust Units
subsequent to that date and the transferee Trust
Unitholder, not later than 10 days before the Trust Meeting, establishes his
ownership of the Trust Units and demands his name
be included on the list of Trust Unitholders, in which such transferee will be
entitled to vote such Trust Units at the Trust
Meeting.

 

 

PENGROWTH CORPORATION

PENGROWTH ENERGY TRUST

INFORMATION CIRCULAR — PROXY STATEMENT

	 	 	 
	For:	 	
Annual General and Special Meeting of Shareholders
Special Meeting of Royalty Unitholders
Annual and Special Meeting of Trust Unitholders

SOLICITATION OF PROXIES

This Information Circular-Proxy Statement (“Circular”) is provided in
connection with the
solicitation of proxies by Pengrowth Management Limited for use at the Annual
General and
Special Meeting of Shareholders of Pengrowth Corporation (the “Corporation”)
(the “Shareholder
Meeting”), the Special Meeting of Royalty Unitholders of the Corporation (the
“Royalty
Meeting”) and the Annual and Special Meeting of Trust Unitholders (the “Trust
Meeting”) of
Pengrowth Energy Trust (“EnergyTrust”) (collectively referred to as the
“Meetings”) and at any
adjournments of the Meetings. The Meetings are to be held on April 23, 2002 at
3:00, 3:15 and
3:30 p.m. (Calgary time), respectively, at the Calgary Petroleum Club, McMurray
Room, 319 — 5th
Avenue S.W., Calgary, Alberta. This Circular is provided for the purposes set
forth in the
accompanying Notices of Meetings. Information contained herein is given as of
March 8, 2002
unless otherwise specifically stated. Each term that is defined in this
Circular has that same
meaning when used in the schedules to this Circular.

Shareholder Meeting

Pursuant to the terms of a Unanimous Shareholder Agreement dated December 2,
1988 (as
amended) (the “Unanimous Shareholder Agreement”), holders of
royalty units (“Royalty
Unitholders”) issued by the Corporation (the “Royalty Units”) and holders of
trust units (“Trust
Unitholders”) issued by EnergyTrust (the “Trust Units”) (collectively, the
“Unitholders”) are
entitled to notice of, and to attend at, the Shareholder Meeting and to one
vote per Royalty Unit or
Trust Unit held on any matter put before the Shareholder Meeting, other than
the election of two
directors who may be elected by Pengrowth Management Limited (the “Manager”).
The
Manager has agreed to refrain from exercising its voting rights as a
shareholder except in respect
of the election of two directors or as may be necessary or desirable to
implement any resolutions
passed by the Unitholders. EnergyTrust will not exercise its voting rights as
a shareholder except
as may be necessary or desirable to implement any resolutions passed by the
Unitholders. In this
Circular, Royalty Units and Trust Units are collectively referred to as the
“Units”.

Royalty Meeting

Pursuant to the terms of the Royalty Indenture dated December 2, 1988 (as
amended) (the
“Royalty Indenture”) between the Corporation and Computershare Trust Company of
Canada (the
“Trustee”), Royalty Unitholders and Trust Unitholders are entitled to notice
of, and to attend at,
the Royalty Meeting and to one vote per Unit held on any matter put before the
Royalty Meeting
provided that the Trustee is not entitled to vote in respect of any Royalty
Units held in its capacity
as Trustee under the Trust Indenture.

 

 

Trust Meeting

Pursuant to the terms of the Trust Indenture dated December 2, 1988 (as
amended) (the “Trust Indenture”) between the Corporation and the Trustee, Trust
Unitholders are entitled to notice of, and to attend at, the Trust Meeting and
to one vote per Trust Unit held on any matter put before the Trust Meeting.

APPOINTMENT OF PROXYHOLDERS AND REVOCATION OF PROXIES

The persons named in the accompanying Form of Proxy are directors of the
Corporation. A Unitholder has the right to appoint a person (who need not be a
Unitholder) to represent the Unitholder at the Meetings other than James S.
Kinnear or Stanley H. Wong (the “Management Designees”). To exercise the
right, the Unitholder must either insert the name of the other person in the
blank space provided on the Form of Proxy or submit another appropriate form of
proxy. Non-registered Unitholders (Unitholders who hold their Units through
brokerage accounts or other intermediaries) who wish to appear in person and
vote at the Meetings should be appointed as their own representatives at the
Meetings in accordance with the directions of their intermediaries. See
“Notice to Beneficial Holders of Trust Units”.

In order to be used at the Meetings, proxies must be addressed to the Corporate
Secretary of Pengrowth Corporation and must be deposited with Computershare
Trust Company of Canada, 7th Floor, 530 — 8th Avenue S.W., Calgary, Alberta,
T2P 3S8, not less than 48 hours, excluding Saturdays and holidays, before the
time for the holding of the Meetings or any adjournments of the Meetings. The
record date for the Meetings has been established as the close of business on
March 8, 2002. Only Unitholders of record as at the record date are entitled
to receive notice of, and to vote at, the Meetings, subject to the following.
In the event a Unitholder of record transfers his Units and the transferee,
upon producing properly endorsed certificates evidencing such Units or
otherwise establishing that he owns such Units, requests no later than ten (10)
days before the Meetings that the transferee’s name be included in the list of
Unitholders entitled to vote, then such transferee shall be entitled to vote
such Units at the Meetings.

The instrument appointing a proxyholder shall be in writing and shall be
executed by the registered Unitholder or his attorney authorized in writing or,
if the registered Unitholder is a corporation, under its corporate seal or by
an officer or attorney thereof duly authorized.

A registered Unitholder who has submitted a proxy may revoke it by an
instrument in writing signed by the registered Unitholder or by an authorized
attorney, or, if the registered Unitholder is a corporation by a duly
authorized officer provided such instrument is deposited either: (i) at the
offices of Computershare Trust Company of Canada, Suite 600, 530 — 8th Avenue
S.W., Calgary, Alberta, T2P 3S8, at any time up to and including the last
business day preceding the day of the Meetings, or any adjournments of the
Meetings, or (ii) with the Chairman of the Meetings on the day of the Meetings,
or any adjournments of the Meetings. In addition, a proxy may be revoked: (i)
by the registered Unitholder personally attending at the Meetings, and voting
the Units represented thereby or, if the Unitholder is a corporation, by a
representative of that corporation attending at the Meetings and voting such
Units; or (ii) in any other manner permitted by law. Non-registered
Unitholders should follow the directions of their intermediaries with respect
to procedures to be followed for revoking a proxy.

2

 

NOTICE TO BENEFICIAL HOLDERS OF TRUST UNITS

The information set forth in this section is of significant importance to many
Trust Unitholders, as a substantial number of the Trust Unitholders do not hold
Trust Units in their own name. Trust Unitholders who do not hold their Trust
Units in their own name (referred to herein as “Beneficial Unitholders”) should
note that only proxies deposited by Trust Unitholders whose names appear on the
records of EnergyTrust as the registered holders of Trust Units can be
recognized and acted upon at the Meetings. If Trust Units are listed in an
account statement provided to a Beneficial Unitholder by a broker, then in
almost all cases those Trust Units will not be registered in the Beneficial
Unitholder’s name on the records of EnergyTrust. Such Trust Units will more
likely be registered under the name of the Beneficial Unitholder’s broker or an
agent of that broker. In Canada, the vast majority of such Trust Units are
registered under the name of CDS & Co. (the registration name for The Canadian
Depositary for Securities Limited, which acts as nominees for many Canadian
brokerage firms). Trust Units held by brokers or their nominees can only be
voted (for or against resolutions) upon the instructions of the Beneficial
Unitholder. Without specific instructions, the broker/nominees are prohibited
from voting Trust Units for their clients. EnergyTrust does not know for whose
benefit the Trust Units registered in the name of CDS & Co. are held.

Applicable regulatory policy requires intermediaries/brokers to seek voting
instructions from Beneficial Unitholders in advance of the Unitholders’
Meetings. Every intermediary/broker has its own mailing procedures and
provides its own return instructions, which should be carefully followed by
Beneficial Unitholders in order to ensure that their Trust Units are voted at
the Meetings. Often, the form of proxy supplied to a Beneficial Unitholder by
its broker is identical to the Form of Proxy provided to registered Trust
Unitholders; however, its purpose is limited to instructing the registered
Trust Unitholder how to vote on behalf of the Beneficial Unitholder. The
majority of brokers now delegate responsibility for obtaining instructions from
clients to Independent Investor Communications Corporation (“IICC”). IICC
typically mails a scannable Voting Instruction Form in lieu of the Form of
Proxy. The Beneficial Unitholder is requested to complete and return the
Voting Instruction Form to them by mail or facsimile. Alternatively, the
Beneficial Unitholder can call a toll-free telephone number to vote the Trust
Units held by the Beneficial Unitholder. IICC then tabulates the results of
all instructions received and provides appropriate instructions respecting the
voting of Trust Units to be represented at the Meetings. A Beneficial
Unitholder receiving a Voting Instruction Form cannot use that Voting
Instruction Form to vote Trust Units directly at the Meetings as the Voting
Instruction Form must be returned as directed by IICC well in advance of the
Meetings in order to have the Trust Units voted.

PERSONS MAKING THE SOLICITATION

This solicitation of proxies is made by management. The costs incurred to
prepare and mail the Notices of Meetings, this Circular and the Form of Proxy
will be borne by the Corporation and will be deducted in computing the royalty
payable by the Corporation to EnergyTrust. Proxies are being solicited by mail
and may also be solicited by personal interviews, telephone, telegraph or
facsimile by directors, officers and proposed directors and officers of the
Corporation, who will not be remunerated therefor.

EXERCISE OF DISCRETION BY PROXY

The Units represented by a proxy in favour of management nominees shall be
voted at the Meetings and, where the Unitholder specifies a choice with respect
to any matter to be acted

3

 

upon, the Units shall be voted in accordance with the specification so made.
In the absence of such specification, Units will be voted in favour of the
proposed resolutions. The persons appointed by a proxy in the Form of Proxy
provided with this circular are conferred with discretionary authority with
respect to amendments or variations to those matters specified in the Notices
of Meetings. At the time of mailing of this circular, management knows of no
such amendment, variation, or other matter.

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

The Corporation has 1,100 issued and outstanding common shares (the “Common
Shares”). Of the 1,100 outstanding Common Shares of the Corporation, 1,000 are
owned by EnergyTrust and 100 are owned by the Manager. Subject to the
Unanimous Shareholder Agreement, registered holders of Common Shares are
entitled to attend and vote at the Shareholder Meeting on the basis of one vote
for each share held. The Manager has agreed to refrain from exercising its
voting rights as a shareholder except in respect of the election of two
directors or as may be necessary or desirable to implement any resolutions
passed by the Unitholders. EnergyTrust will not exercise its voting rights as
a shareholder except as may be necessary or desirable to implement any
resolutions passed by the Unitholders.

As at March 8, 2002, EnergyTrust had 82,277,072 issued and outstanding Trust
Units. The registered holders thereof are entitled to attend and vote at the
Trust Meeting, the Royalty Meeting and the Shareholder Meeting on the basis of
one vote for each Trust Unit held.

As at March 8, 2002, the Corporation had 76,913,471 issued and outstanding
Royalty Units. The registered holders thereof (other than Royalty Units held by
the Trustee in its capacity as Trustee under the Trust Indenture) are entitled
to attend and vote at the Royalty Meeting and the Shareholder Meeting on the
basis of one vote for each Royalty Unit held. Issued and outstanding Royalty
Units held by registered holders other than the Trustee total 18,940.

To the best of the knowledge of management, no persons beneficially own,
directly or indirectly, Units carrying more than 10% of the voting rights
attached to the issued and outstanding Units.

EXECUTIVE COMPENSATION

During 2001, the Corporation had seven executive officers. The salaries and
bonuses paid by the Corporation to the five highest officers and employees
during 2001 was $1,032,996 in the aggregate.

Two of the Corporation’s executive officers were paid cash compensation other
than salary and bonuses. The President of the Corporation is the controlling
shareholder of the Manager which is the advisor to the Corporation under a
management agreement dated December 2, 1988 (as amended) (the “Management
Agreement”) and as such provides management advisory services to the
Corporation (see “Management Agreement”). The Manager received $2,235,224 for
acquisition fees and $7,120,419 for management advisory services provided to
the Corporation during 2001. In February, 2002, the Manager paid bonuses to
employees of the Corporation for 2001 of $637,042. The Manager annually incurs
additional expenses related to the business development of the Corporation.
The law firm controlled by the Corporate Secretary earned $147,850 for legal
services provided to the Corporation. A corporate finance firm controlled by
an associate of the Corporate Secretary earned $1,513,250 for
acquisition-related services provided to the Corporation by the Corporate
Secretary during 2001. Nothing was paid to that firm during 2000 for
acquisition-related services that were provided to the Corporation by the

4

 

Corporate Secretary. Officers of the Corporation also participated in the
incentive programs available to directors, officers, employees and special
consultants discussed elsewhere in this Circular.

The directors of the Corporation, other than Mr. Kinnear, receive an annual
retainer of $15,000 and $1,000 for each board or committee meeting attended
plus expenses of attending such meetings. Mr. Kinnear receives no remuneration
as a director. The remuneration paid to directors during 2001 was $98,000 in
aggregate.

Long Term Incentive Plans

Long Term Incentive Plans have been implemented to encourage ownership of Trust
Units, to maintain a direct link between pay and performance and to motivate
directors, officers, employees and special consultants to improve EnergyTrust’s
long-term financial success. The compensation policies of the Corporation and
the Manager are designed to recognize and reward corporate performance and
individual performance as well as to provide a competitive level of
compensation.

Options to acquire Trust Units (“Trust Unit Options”) are issuable pursuant to
a Trust Unit Option Plan (the “Option Plan”) and are issued from time to time
at the discretion of the Board of Directors. The maximum number of Trust Units
issuable upon exercise of Trust Unit Options under the Option Plan is
authorized from time to time by the holders of Trust Units. Currently that
maximum is 7 million Trust Units provided however that the number of Trust
Units issuable upon the exercise of outstanding Trust Unit Options shall not at
any time exceed 10% of the issued and outstanding Trust Units.

The Corporation offers a Trust Unit Purchase Plan and a Registered Retirement
Savings Plan under which the Corporation will match each participant’s
contributions to an aggregate of 10% of the participant’s salary.

In February, 2000, the Corporation instituted a Trust Unit Margin Purchase Plan
(the “Margin Purchase Plan”) which is available to directors, officers,
employees and special consultants of the Corporation. Participants are
permitted to acquire Trust Units of EnergyTrust through individual margin
accounts with a specified Canadian investment dealer which will provide
participants with up to 75% margin, supported by a guarantee by the
Corporation. Participants maintain personal margin accounts with the investment
dealer and are responsible for all interest costs and obligations in respect to
their margin loans. The Margin Purchase Plan is terminable upon two years
notice by the Corporation or by the specified investment dealer. The amount of
the guarantee (currently $5 million) may vary on the basis of interest rates,
Trust Unit distributions and the trading price of the Trust Units. Costs of
administration of the Margin Purchase Plan are shared equally between the
participants and the Corporation, and participants’ share costs amongst
themselves on a pro rata basis.

5

 

The following summarizes participation in the Trust Unit Margin Purchase Plan
as at March 8, 2002.

	 	 	 	 	 
	 	 	Number of Trust Units Held Under
	Directors and Officers	 	the Trust Unit Margin Purchase Plan
	
	 	

	James S. Kinnear (1)
	 	 	2,035,357	 
	Charles V. Selby
	 	 	94,720	 
	Stanley H. Wong
	 	 	20,000	 
	John B. Zaozirny
	 	 	15,652	 
	Lianne K. Bigham
	 	 	76,500	 
	Henry D. McKinnon
	 	 	3,330	 
	Lynn Kis
	 	 	3,500	 
	Employees and Special Consultants
	 	 	176,450	 
	TOTAL
	 	 	2,425,509	 

Note:

	(1)	 	Comprised of 457,656 Trust Units registered in the name of
James S. Kinnear, 309,946 Trust Units registered in the name of
Kinnear Financial Consulting Limited and 1,267,755 Trust Units
registered in the name of the Manager.

In March, 2000, the Board of Directors approved an Executive Long Term
Incentive Plan (the “ELTI Plan”) under which the Corporation will provide
bonuses to plan recipients in the form of Trust Units purchased by the
Corporation in the market from time to time. The Trust Unit entitlements under
the ELTI Plan have a four year holding period. The Corporation pays cash
bonuses to the executives participating in the ELTI Plan to offset the taxable
benefit resulting from the Trust Unit entitlements and bonuses under the ELTI
Plan. In 2001, no bonuses were paid under the ELTI Plan.

6

 

Summary of Compensation and Securities under Option

The following table provides a summary of compensation earned during each of
the last three fiscal years ended December 31, 2001 by the Corporation’s Chief
Executive Officer and for the next two most highly compensated executive
officers of the Corporation. Except as disclosed below, no executive officer
of the Corporation received in excess of $100,000 per annum by way of salary
and bonuses during any of the last three fiscal years ended December 31, 2001.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Long Term	 	 
	 	 	 	 	 	 	Annual Compensation	 	Compensation	 	 
	 	 	 	 	 	 	
	 	Securities Under	 	All Other
	 	 	 	 	 	 	Salary	 	Bonus	 	Options Granted	 	Compensation (4)
	Name and Principal Position	 	Year	 	($)	 	($)	 	(#)	 	($)
	
	 	
	 	
	 	
	 	
	 	

	James S. Kinnear (1)

President and Chief Executive
Officer	 	 	
2001
2000
1999
	 	 	Nil(1)

Nil (1)

Nil(1)
	 	Nil (1)

Nil (1)

Nil(1)
	 	 	89,700
89,700
69,000
	 	 	Nil (1)

Nil (1)

Nil(1)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Henry D. McKinnon

Vice President, Operations	 	 	2001

2000
	 	 	170,723

144,266
	 	69,818

61,673
	 	 	34,670

31,200
	 	 	Nil

58,089
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gordon M. Anderson (2)

Vice President and Interim Chief
Financial Officer	 	 	2001

2000

1999
	 	 	106,532

93,558

91,747
	 	46,972

38,794

18,964
	 	 	24,523

23,400

21,000
	 	 	Nil

39,059

Nil

Notes:

	(1)	 	Management fees are paid by the Corporation to the Manager. James S.
Kinnear, the President and Chief Executive
Officer of the Corporation, is also the President and Chief Executive
Officer of the Manager.
	 
	(2)	 	In addition to the amounts shown above, Mr. Anderson received a salary from
the Manager.
	 
	(3)	 	In addition to the amounts set out in the table in accordance with a
resolution of the Board of Directors of Pengrowth
Corporation dated May 12, 1999, 300,000 options to acquire Trust Units at
a price of $17.50 and 126,000 options to
acquire Trust Units at a price of $20.50 held in the name of James S.
Kinnear were cancelled and replaced with “Stock
Appreciation Rights” entitling the holder to receive, upon exercise, a
cash payment equal to any increase in market price of
300,000 Trust Units of EnergyTrust above $17.50 and of 126,000 Trust Units
of EnergyTrust above $20.50. The Stock
Appreciation Rights have the same terms as to expiry and vesting as the
cancelled Trust Unit Options.
	 
	(4)	 	“All Other Compensation” is amounts paid under the Executive Long Term
Incentive Plan.

7

 

Options Granted During the Year Ended December 31, 2001

The table below provides details of grants of Trust Unit Options made to
directors and officers of the Corporation during the fiscal year ended December
31, 2001.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Securities	 	Securities	 	Total	 	% of Total	 	 	 	 	 	 	 	 
	 	 	Under Option	 	Under Option	 	Securities	 	Options	 	Exercise	 	 	 	 
	 	 	(Vested) (1)	 	(Not Vested) (1)	 	Under	 	Granted in	 	Price	 	 	 	 
	Name	 	(#)	 	(#)	 	Option	 	2001	 	($/unit)(2)	 	Expiration Date
	
	 	
	 	
	 	
	 	
	 	
	 	

	James S. Kinnear
	 	 	29,900	 	 	 	59,800	 	 	 	89,700	 	 	 	9.9	 	 	 	17.48	 	 	June 29, 2006
	Thomas A. Cumming
	 	 	2,600	 	 	 	5,200	 	 	 	7,800	 	 	 	0.9	 	 	 	17.48	 	 	June 29, 2006
	John B. Zaozirny
	 	 	2,600	 	 	 	5,200	 	 	 	7,800	 	 	 	0.9	 	 	 	17.48	 	 	June 29, 2006
	Stanley H. Wong
	 	 	2,600	 	 	 	5,200	 	 	 	7,800	 	 	 	0.9	 	 	 	17.48	 	 	June 29, 2006
	Francis G. Vetsch
	 	 	2,600	 	 	 	5,200	 	 	 	7,800	 	 	 	0.9	 	 	 	17.48	 	 	June 29, 2006
	Henry D. McKinnon
	 	 	11,556	 	 	 	23,114	 	 	 	34,670	 	 	 	3.8	 	 	 	17.48	 	 	June 29, 2006
	Gordon M. Anderson
	 	 	8,174	 	 	 	16,349	 	 	 	24,523	 	 	 	2.7	 	 	 	17.48	 	 	June 29, 2006
	Lynn Kis
	 	 	9,049	 	 	 	18,098	 	 	 	27,147	 	 	 	3.0	 	 	 	17.48	 	 	June 29, 2006
	Lianne K. Bigham
	 	 	4,263	 	 	 	8,526	 	 	 	12,789	 	 	 	1.4	 	 	 	17.48	 	 	June 29, 2006
	Christopher G. Webster
	 	 	4,650	 	 	 	9,300	 	 	 	13,950	 	 	 	1.5	 	 	 	17.48	 	 	June 29, 2006
	Charles V. Selby
	 	 	13,334	 	 	 	26,668	 	 	 	40,002	 	 	 	4.4	 	 	 	17.48	 	 	June 29, 2006

Notes:

	(1)	 	In addition to the restrictions contained in the Option Plan, the Board of
Directors resolved that Trust Unit Options issued
from and after October 6, 1995 shall vest as to one third upon the date of
issuance, one third upon the first anniversary of
the date of issuance and the remaining one third upon the second
anniversary of the date of issuance to provide a
continuing incentive to directors, officers, employees and special
consultants.
	 
	(2)	 	The exercise price of the Trust Unit Options is equal to the closing price
of the Trust Units on the Toronto Stock Exchange
on the day prior to the date of grant of the Trust Unit Options.

8

 

Aggregate Option Exercises During the Year Ended December 31, 2001 and Year-End

Option Values

The following table summarizes, for the directors and officers, the number of
Trust Units acquired pursuant to the exercise of Trust Unit Options during the
year ended December 31, 2001, if any, the aggregate value realized upon
exercise, if any, and the number of Trust Units covered by unexercised Trust
Unit Options under the Option Plan as at December 31, 2001. Value realized
upon exercise is the difference between the market value of the Trust Units
acquired on the exercise date and the aggregate exercise price of the Trust
Unit Options. The value of the unexercised and in the money options is the
difference between the exercise price of the Trust Unit Options and the closing
stock market value of the Trust Units on December 31, 2001, which was $14.22
per Trust Unit.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Value of Unexercised in
	 	 	 	 	 	 	 	 	 	 	Unexercised Options at	 	the Money Options at
	 	 	 	 	 	 	 	 	 	 	December 31, 2001	 	December 31, 2001
	 	 	 	 	 	 	 	 	 	 	(#)	 	($)
	 	 	 	 	 	 	 	 	 	 	
	 	

	 	 	Securities Acquired	 	Aggregate Value	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	on Exercise	 	Realized	 	 	 	 	 	Not	 	 	 	 	 	Not
	Name	 	(#)	 	($)	 	Vested	 	Vested	 	Vested	 	Vested
	
	 	
	 	
	 	
	 	
	 	
	 	

	James S. Kinnear
	 	 	141,000	 	 	 	430,050	 	 	 	172,700	 	 	 	89,700 	(1)	 	 	33,810	 	 	Nil
	Thomas A. Cumming
	 	Nil	 	Nil	 	 	11,800	 	 	 	9,800	 	 	Nil	 	Nil
	John B. Zaozirny
	 	 	29,000	 	 	 	101,060	 	 	 	54,800	 	 	 	7,800	 	 	 	2,940	 	 	Nil
	Stanley H. Wong
	 	 	20,000	 	 	 	57,600	 	 	 	56,800	 	 	 	7,800	 	 	 	4,680	 	 	Nil
	Francis G. Vetsch
	 	 	20,000	 	 	 	61,000	 	 	 	63,800	 	 	 	7,800	 	 	 	8,820	 	 	Nil
	Henry D. McKinnon
	 	 	21,900	 	 	 	58,356	 	 	 	67,456	 	 	 	33,514	 	 	Nil	 	Nil
	Gordon M. Anderson
	 	 	14,500	 	 	 	54,491	 	 	 	108,274	 	 	 	24,129	 	 	Nil	 	Nil
	Lynn Kis
	 	 	6,500	 	 	 	32,660	 	 	 	55,149	 	 	 	25,898	 	 	 	55,335	 	 	Nil
	Lianne K. Bigham
	 	 	36,000	 	 	 	109,890	 	 	 	107,383	 	 	 	12,036	 	 	 	7,350	 	 	Nil
	Christopher G. Webster
	 	Nil	 	Nil	 	 	13,984	 	 	 	16,467	 	 	Nil	 	Nil
	Charles V. Selby
	 	 	12,000	 	 	 	36,600	 	 	 	101,634	 	 	 	31,668	 	 	 	3,969	 	 	Nil

Note:

	(1)	 	In addition to the amounts set out in the table in accordance with a
resolution of the Board of Directors of Pengrowth
Corporation dated May 12, 1999, 300,000 options to acquire Trust Units at
a price of $17.50 and 126,000 options to
acquire Trust Units at a price of $20.50 held in the name of James S.
Kinnear were cancelled and replaced with “Stock
Appreciation Rights” entitling the holder to receive, upon exercise, a
cash payment equal to any increase in market price of
300,000 Trust Units of EnergyTrust above $17.50 and of 126,000 Trust Units
of EnergyTrust above $20.50. The Stock
Appreciation Rights have the same terms as to expiry and vesting as the
cancelled Trust Unit Options.

9

 

Performance Graph

The following graph and table compares the yearly percentage change in the
cumulative Unitholder return over the last five years (assuming a $100
investment was made on December 31, 1996) on the Trust Units of EnergyTrust
with the cumulative total return of the TSE Composite 300 Index, assuming
reinvestment of distributions.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	1996	 	1997	 	1998	 	1999	 	2000	 	2001
	 	 	
	 	
	 	
	 	
	 	
	 	

	Pengrowth Energy
Trust
	 	 	100	 	 	 	112	 	 	 	75	 	 	 	131	 	 	 	197	 	 	 	176	 
	TSE 300
	 	 	100	 	 	 	115	 	 	 	113	 	 	 	149	 	 	 	160	 	 	 	140	 

DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE

The Corporation provides directors’ and officers’ liability insurance to its
directors and officers, to pay on behalf of each insured person all loss,
subject to the limits of the policy, for which they become legally obligated,
and for which the insured person is not indemnified by the Corporation. The
insurance shall also pay, on behalf of the Corporation, all loss, subject to
the limits of the policy, for which the Corporation grants indemnification to
the directors and officers as permitted or required by law. The cost of the
insurance is borne entirely by the Corporation.

INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS

Since the incorporation of the Corporation and the creation of EnergyTrust,
none of the directors or officers of the Corporation has been indebted to the
Corporation or EnergyTrust. However, the Corporation has delivered a guarantee
to a specified Canadian investment dealer to support margin loans by certain
directors, officers, employees and special consultants under the terms of the
Trust Unit Margin Purchase Plan and the Instalment Receipt Purchase Plan. See
“Long Term Incentive Plans”. To the extent that the market value of the Trust
Units plus accumulated distributions less interest charges held within the Plan
is less than the amount of the margin loan to any participant at maturity, the
specified Canadian investment dealer shall be entitled to realize on the
guarantee and the participant shall be required to repay the Corporation his or
her pro rata share of such amount.

10

 

INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS

There were no material interests, direct or indirect, of directors and officers
of the Corporation, any shareholder or Unitholder who beneficially owns more
than 10% of the shares or Units of the Corporation or EnergyTrust, or any known
associate or affiliate of these persons in any transaction since the
incorporation of the Corporation and establishment of EnergyTrust and in any
proposed transaction which has materially affected or would materially affect
the Corporation or EnergyTrust other than the interests of the Manager under
the terms of the Management Agreement.

MANAGEMENT AGREEMENT

Pursuant to the Management Agreement, the activities of the Corporation and
EnergyTrust are managed by the Manager, a corporation controlled by James S.
Kinnear. James S. Kinnear, Charles V. Selby and Gordon M. Anderson are
officers of the Corporation and of the Manager. The Management Agreement has a
rolling three year term. Pursuant to its provisions the Manager will continue
as manager until a date which is no earlier than three years from the date it
receives a written notice of termination. The Management Agreement was
considered and amended by the Unitholders at the Annual Meeting held on April
26, 2000 and will be considered again at the annual meeting of Unitholders to
be held in 2003.

EnergyTrust pays a management fee to the Manager based upon an “Income Amount”,
which is the aggregate of the net production revenue of the Corporation and
income earned by EnergyTrust from certain other categories of permitted
investments other than Royalty Units. The management fee is calculated as of
the end of each calendar year as the sum of 3.5% of the first $50 million of
the Income Amount, 3.0% of the next $50 million of the Income Amount and 2.5%
of any Income Amount in excess of $100 million.

In addition, the Manager earns a fee on the acquisition of oil and gas
properties based upon a sliding scale. The acquisition fee is 1% of a “Base
Amount”. The “Base Amount” is defined as a minimum of $100 million or the
purchase price of Established Reserves acquired to replace production from the
preceding calendar year. If the reserve replacement amount is greater than
$100 million in any year then it becomes the minimum Base Amount for subsequent
years. The acquisition fee is 0.5% in respect of any acquisitions in excess of
the Base Amount. The Base Amount for 2001 was $100 million. For 2002 and
future years, if the Corporation succeeds in replacing production from the
previous year the Base Amount shall be increased (but not decreased) to the
actual purchase price of replacing production, if greater than $100 million.
There is no fee in respect to the disposition of properties.

11

 

CORPORATE GOVERNANCE

Mandates of the Trustee, the Manager and the Board of Directors of the Corporation

The Corporation holds petroleum and natural gas rights and other assets. Under
the Royalty Indenture, a royalty was created representing 99% of the “Royalty
Income”, which is payable to Royalty Unitholders. EnergyTrust was created for
the purpose of issuing Trust Units to the public facilitating an indirect
investment in Royalty Units and other permitted investments under the Trust
Indenture. EnergyTrust holds Royalty Units, interests in certain petroleum and
natural gas facilities, cash and other assets. The Trust Units of EnergyTrust
are listed on the Toronto Stock Exchange and an application has been made to
list the Trust Units on the New York Stock Exchange.

Under the terms of the Trust Indenture, the Trustee is empowered to exercise
those rights and privileges that could be exercised by a beneficial owner of
the assets of EnergyTrust in respect of the administration and management of
EnergyTrust. The Trustee is permitted to delegate certain of the powers and
duties of the Trustee to any one or more agents, representatives, officers,
employees, independent contractors or other persons. However, specific powers
are delegated to the Corporation as “Administrator” under the Trust Indenture
and the Trustee has granted broad discretion to the Manager to administer and
regulate the day to day operations of EnergyTrust. The powers of the Trustee
are also limited through the voting rights of Trust Unitholders.

Under the Management Agreement, the Manager is empowered to act as agent for
EnergyTrust, to execute documents on behalf of the Trustee and to make
executive decisions which conform to general policies and general principles
previously established by the Trustee. The Manager is empowered to undertake,
on behalf of the Corporation and EnergyTrust, subject to the Royalty Indenture,
all matters pertaining to the properties of the Corporation. These matters
include a requirement to keep the Corporation fully informed with respect to
the acquisition, development, operation and disposition of, and other dealings
with, the properties held by the Corporation, a review of opportunities to
acquire properties, the conduct of negotiations for the acquisition of
properties and the operation, administration and retention of consultants,
legal and accounting advisors in respect of the foregoing. The Manager is also
given broad responsibility for Unitholder services including the collection and
keeping of accounts in respect of cash distributions to Royalty Unitholders and
Trust Unitholders.

Under the Royalty Indenture, the Corporation makes all operating decisions with
respect to the properties of the Corporation. Under the Trust Indenture,
general powers have been delegated to the Corporation as the “Administrator” of
EnergyTrust to perform those functions of the Trustee which are largely
discretionary, subject to the powers and duties of the Manager. Additionally,
specific powers have been delegated to the Corporation in relation to the
offering of securities, the acquisition of facilities and other assets, the
incurring of indebtedness, the granting of security and the determination of
distributable income.

In accordance with the terms of the Unanimous Shareholder Agreement, all
Royalty Unitholders other than the Trustee, and all Trust Unitholders are
entitled to attend at, and vote upon, all resolutions brought before meetings
of the shareholders of the Corporation on the basis of one vote for each Unit
held. Currently, the Unanimous Shareholder Agreement also provides that the
Board of Directors of the Corporation shall consist of two nominees of the
Manager and up to five independent directors who are elected by the Trust
Unitholders of EnergyTrust. The Board of Directors meets a minimum of four
times each year, once in each fiscal quarter. In addition, the Board of
Directors meets at other times when matters requiring its approval are raised
and the

12

 

timing is such that it is not prudent or possible to await a regularly
scheduled quarterly meeting. During 2001, ten regularly constituted Board of
Directors meetings were held.

Board Independence

Four of the six directors recommended for election to the Board of Directors
are independent directors. An independent director is defined as one who is
independent of management and is free from any interest or any business or
other relationship which could, or could reasonably be perceived to, materially
interfere with the director’s ability to act with a view to the best interests
of the Corporation, other than interests and relationships arising from
shareholdings.

Mr. James S. Kinnear, who is President and Chief Executive Officer of the
Corporation as well as President and Chief Executive Officer of the Manager, is
a related director. Mr. Stanley H. Wong may be considered to be a related
director as he is the Manager’s additional appointee to the Board of Directors
pursuant to the terms of the Unanimous Shareholder Agreement. However, Mr.
Wong is neither engaged by the Manager nor by the Corporation and receives
remuneration solely in his capacity as a director of the Corporation. The
remainder of the directors are independent in that they have not worked for the
Corporation (or the Manager) nor do they have material contracts with the
Corporation (or the Manager) or receive remuneration from the Corporation (or
the Manager), other than Trust Unit Options, in excess of director’s fees
payable by the Corporation.

Board Approvals and Structure

The Board of Directors assumes responsibility for the strategic direction of
the Corporation and EnergyTrust through annual consideration of a budget and
strategic plan. Criteria are approved by the Board of Directors for the
acquisition and disposition of oil and natural gas properties which govern
future growth and seek to limit risk to Unitholders. Reliance is placed upon
independent engineering, legal and accounting consultants where appropriate.

The Board of Directors responds to recommendations brought forward by the
Manager’s representatives to the Board of Directors or by other directors on
material acquisitions and dispositions, operational matters and other matters
impacting the Corporation and Trust Unitholders. As a practical matter, the
Manager defers to the Board of Directors in respect of all matters which may
have a material impact upon the business and undertaking of the Corporation,
the Royalty Unitholders or the Trust Unitholders.

The Board of Directors represents a cross-section of experience in matters of
oil and gas, finance and directors’ responsibilities. Four of the six nominated
members of the Board of Directors have been directors since the formation of
the Corporation and EnergyTrust. Thomas A. Cumming has been a director since
April 2000 and Michael A. Grandin has been nominated as a new director.

Board Committees

The Audit Committee is comprised of the three independent directors. The Board
of Directors has formed a Corporate Governance Committee which is also
comprised of the three independent directors. The Board of Directors has also
formed a Reserves Committee comprised of two directors, one of whom is an
independent director, to review the assumptions and practices and results in
respect to the preparation of independent reserve reports for the oil and gas
assets of the Corporation and the reporting thereof. There are no other
committees of the Board of Directors.

13

 

At present as the Board of Directors is comprised of five members and can
operate efficiently as a committee of the whole.

In respect of matters such as discussions concerning the Management Agreement
or related party transactions, representatives of the Manager disclose their
conflict of interest and absent themselves from discussions and voting.

Statement of Corporate Governance Practices

In February, 1995, The Toronto Stock Exchange Committee on Corporate Governance
in Canada issued its final report (the “TSE Report”) which included proposed
guidelines for effective corporate governance. These guidelines, which are not
mandatory, deal with the constitution of boards of directors and board
committees, their functions, their independence from management and other means
of addressing corporate governance practices. The Corporation’s Board of
Directors, the Manager and senior management consider good corporate governance
to be central to the effective and efficient operation of EnergyTrust and the
Corporation. Listed below are the 14 guidelines proposed by the TSE Report and
a brief discussion of the Board of Directors’ compliance with the guidelines.
In fulfilling its responsibilities, the Board of Directors cooperates with the
Manager. The Board of Directors has general corporate authority over the
business and affairs of the Corporation and derives its authority in respect to
EnergyTrust by virtue of the delegation of powers by the Trustee to the
Corporation as “Administrator” in accordance with the Trust Indenture. The
Manager derives its authority from the Management Agreement with both the
Corporation and EnergyTrust. Although overall responsibilities are shared
between the Board of Directors and the Manager, in practise, the Manager defers
to the Board of Directors on all matters material to the Corporation and
EnergyTrust.

	1.	 	The Board of Directors should explicitly assume responsibility for
stewardship of the Corporation, and specifically for adoption of a
strategic planning process, identification of principal risks, succession
planning and monitoring, communications policy and integrity of internal
control and management information systems.
	 
	 	 	The Board of Directors is responsible for the overall stewardship of the
Corporation and EnergyTrust and in setting corporate strategy and
direction. The Board of Directors considers management development and
succession programs, strategic business developments such as significant
acquisitions, and financing proposals including the issuance of trust
units and other securities, as well as those matters requiring Board of
Directors approval.
	 
	2.	 	A majority of directors should be “unrelated” (free from conflicting
interest).
	 
	 	 	The Board of Directors is presently comprised of five members, of whom
three are independent and unrelated and two are appointments of the
Manager, one of whom is the President and Chief Executive Officer of the
Corporation. Resolutions are proposed in this Circular to appoint an
additional unrelated director and to increase the total number of
authorized directors of the Corporation from seven to eight. The Manager
is entitled to appoint two members to the Board of Directors in accordance
with the Management Agreement. The balance are to be appointed by the
Trust Unitholders, provided that the Board of Directors may appoint a
successor to a person who ceases to be a director and 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

14

 

	 	 	the expiration of the last annual meeting of the Corporation. If six
directors are elected at the Shareholder Meeting, the directors may,
therefore, appoint two additional directors before the next annual meeting
of the Corporation.
	 
	3.	 	Disclose for each director whether he or she is related, and how that
conclusion was reached.
	 
	 	 	Mr. James S. Kinnear (President, Chief Executive Officer and director) and
Mr. Stanley Wong (director) are the only related directors by virtue of
their appointment by the Manager and would also be considered inside
directors. The remainder of the directors are independent in that they
have not worked for the Corporation (or the Manager) nor do they have
material contracts with the Corporation (or the Manager) or receive
remuneration from the Corporation (or the Manager), other than Trust Unit
Options, in excess of director’s fees payable by the Corporation.
	 
	4.	 	Appointment of a Committee responsible for appointment/assessment of
directors.
	 
	 	 	The Corporate Governance Committee is composed of three directors, all of
whom are independent directors. This Committee’s responsibilities include
proposing to the Board of Directors new nominees to the Board of Directors
and assessing each director’s performance on an ongoing basis.
	 
	5.	 	Implement a process for assessing the effectiveness of the Board of
Directors, its Committees and individual directors.
	 
	 	 	The Corporate Governance Committee is responsible for assessing the
effectiveness of the Board of Directors, its committees and individual
directors. The Corporate Governance Committee is also responsible for
evaluating the performance of the Manager and, if necessary, negotiating
the Management Agreement and making recommendations to the Trust
Unitholders as to the Manager and the terms of the Management Agreement.
	 
	6.	 	Provide orientation and education programs for new directors.
	 
	 	 	The Corporation proposes to implement a formal orientation and education
program for new directors beginning with the appointment of the new
director proposed in this Circular.
	 
	7.	 	Consider reducing size of Board of Directors with a view to improving
effectiveness.
	 
	 	 	A board of directors must have enough directors to carry out its duties
efficiently while presenting a diversity of views and experiences. The
Board of Directors believes that the present size of five directors is not
sufficient, and proposes the election of one additional director at the
Shareholder Meeting with the flexibility of appointing two additional
members to the Board of Directors as the Board of Directors’ needs are
reviewed by the Corporate Governance Committee and suitable candidates are
identified.
	 
	8.	 	Review the compensation of directors in light of risks and
responsibilities.
	 
	 	 	The Corporate Governance Committee will review the adequacy and form of
the compensation of directors and the compensation to be paid to committee
members and to the “Lead Director”.

15

 

	9.	 	Committees should generally be composed of outside directors, a majority
of whom are unrelated.
	 
	 	 	The Committees presently established by the Board of Directors are
composed as follows:

	 	 	 	 	 	 	 	 	 
	Committee	 	Related Directors	 	Unrelated Directors
	
	 	
	 	

	Audit
	 	 	—	 	 	 	3	 
	Corporate Governance
	 	 	—	 	 	 	3	 
	Reserves
	 	 	1	 	 	 	1	 

	10.	 	Appoint a Committee responsible for the approach to corporate governance issues.
	 
	 	 	The Corporate Governance Committee is responsible for corporate governance
issues and the implementation of the guidelines set forth in the TSE
Report. In conjunction with the Manager, the Committee’s duties include:

	 	•	 	hiring officers and other key employees on behalf of the
Corporation;
	 
	 	•	 	planning for the succession of the directors, officers and key
employees; and
	 
	 	•	 	reviewing the performance of senior management.

	11.	 	The Board of Directors should develop position descriptions for the Board
of Directors and for the Chief Executive Officer and the Board of
Directors should approve or develop corporate objectives which the Chief
Executive Officer is responsible for meeting.
	 
	 	 	The Board of Directors has proposed guidelines for Board of Directors
responsibilities and has described the responsibilities of the “Lead
Director” of the Corporation. The responsibilities of the Manager are set
out in the Management Agreement. The Corporate Governance Committee will
set annual performance objectives in discussions with the Manager in
conjunction with the Board of Directors’ strategic planning and budgeting
processes.
	 
	12.	 	Establish procedures to enable the Board of Directors to function independently of management.
	 
	 	 	The Board of Directors derives its authority with respect to EnergyTrust
from the duties delegated to the Corporation as “Administrator” by the
Trustee in accordance with the Trust Indenture. The Trustee also
delegates certain powers to the Manager in accordance with the terms of
the Management Agreement. In practice, the Manager defers to the Board of
Directors on all material matters. The Board of Directors is composed of
a majority of independent directors. In matters that require independence
of the Board of Directors, only the independent directors participate in
the decision making and evaluation.

16

 

	13.	 	Establish an Audit Committee with a specifically defined mandate (all
members should be non-management directors).
	 
	 	 	The Audit Committee is composed of three directors, all of whom are
independent directors. The mandate of the Audit Committee is defined in
its Terms of Reference. The Audit Committee has direct communication with
the external auditors.
	 
	14.	 	Implement a system to enable individual directors to engage outside
advisors, at the Corporation’s expense.
	 
	 	 	The charter of the Corporate Governance Committee permits independent
directors to engage outside advisors at the Corporation’s expense. With
the approval of the Corporate Governance Committee, any director is
entitled to retain independent advisors at the Corporation’s expense.

OTHER MATTERS

Management knows of no amendment, variation or other matter to come before the
Meetings other than the matters referred to in the Notices of Meetings. If any
other matter properly comes before the Meetings, however, the accompanying
proxies will be voted on such matter in accordance with the best judgement of
the person or persons voting the proxies.

MATTERS TO BE CONSIDERED AT THE SHAREHOLDER MEETING

APPOINTMENT OF AUDITORS

The Unitholders will be asked to consider a resolution to appoint the firm of
KPMG LLP, Chartered Accountants, of Calgary, Alberta, as auditors of the
Corporation, to hold office until the next annual meeting of the Shareholders
or until their successor is elected or appointed, at the remuneration to be
fixed by the directors. KPMG LLP, Chartered Accountants have served as
auditors of the Corporation since 1988.

ELECTION OF DIRECTORS

The current directors of the Corporation are James S. Kinnear, John B.
Zaozirny, Stanley H. Wong, Francis G. Vetsch, and Thomas A. Cumming.

Pursuant to the Unanimous Shareholder Agreement, the Corporation shall have a
Board of Directors of a minimum of three and up to seven members, two of whom
are to be appointed by the Manager. It is the intention of the Manager to
appoint James S. Kinnear and Stanley H. Wong as directors. The persons named in
the enclosed Form of Proxy intend to vote for the election of Francis G.
Vetsch, John B. Zaozirny, Thomas A. Cumming and Michael A. Grandin as directors
of the Corporation. Should any of the nominees be unable to serve as a
director for any reason, the persons named in the enclosed Form of Proxy
reserve the right to vote for another nominee at their discretion. Each
director elected will hold office until the close of the next Annual Meeting of
Shareholders of the Corporation.

Mr. Grandin is a proposed new director of the Corporation and has not
previously served on the Board of Directors. Prior to assuming his current
position as President of PanCanadian Energy Corporation, Mr. Grandin held
several other senior executive positions including Managing

17

 

Director, ScotiaMcLeod Inc. (1986-1991); Senior Vice-President and Chief
Financial Officer, PanCanadian Petroleum Limited (1991-1994); Director,
President and Chief Executive Officer, Sceptre Resources Limited (1994-1996);
Vice Chairman and Director, Midland Walwyn Capital Inc. (1996-1998); and
Executive Vice-President and Chief Financial Officer, Canadian Pacific Limited
(1998-2001). He also has held numerous directorships and is currently a
director of Fording Coal Limited, Enerflex Systems Ltd. and PanCanadian Energy
Corporation. Mr. Grandin has a Bachelor of Science degree in Civil Engineering
from the University of Alberta (1966) and an MBA degree from Harvard Business
School (1978).

The following table sets forth the names of the nominees together with their
principal occupations, municipality of residence, the year in which they became
directors and the number of Trust Units over which they exercised control or
direction as at December 31, 2001.

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Trust Units of
	 	 	 	 	 	 	EnergyTrust
	 	 	 	 	 	 	Controlled or
	Name, Principal Occupation and Municipality of Residence	 	Director Since	 	Beneficially Owned(1)
	
	 	
	 	

	James S. Kinnear, President of Pengrowth Corporation and
Pengrowth Management Limited

Calgary, Alberta	 	 	
1988
	 	 	3,014,469	 (4)
	 	 	 	 	 	 	 
	John B. Zaozirny, (2) Counsel, McCarthy Tétrault, (Barristers &
Solicitors)

Calgary, Alberta	 	 	
1988
	 	 	20,652
	 	 	 	 	 	 	 
	Stanley H. Wong, (3) President, Carbine Resources Ltd. (Private Oil
and Gas Company)

Calgary, Alberta	 	 	
1988
	 	 	36,476	 (5)
	 	 	 	 	 	 	 
	Francis G. Vetsch, (2) (3) President, Quantex Resources Ltd. (Private
Oil and Gas Company)

Calgary, Alberta	 	 	
1988
	 	 	26,500
	 	 	 	 	 	 	 
	Thomas A. Cumming, (2) Businessman

Calgary, Alberta	 	 	2000	 	 	500
	 	 	 	 	 	 	 
	Michael A. Grandin, President, PanCanadian Energy Corporation

Calgary, Alberta (6)	 	 	—	 	 	—

Notes:

	(1)	 	Does not include Trust Units issuable upon the exercise of outstanding
Trust Unit Options.
	 
	(2)	 	Member of Audit Committee and the Corporate Governance Committee.
	 
	(3)	 	Member of the Reserves Committee.
	 
	(4)	 	Comprised of 1,101,090 Trust Units held personally, 1,603,433 Trust Units
held by Pengrowth Management Limited and
309,946 Trust Units held by Kinnear Financial Consulting Limited In
addition, Mr. Kinnear exercises control over 13,152
Royalty Units which are held by Pengrowth Management Limited.
	 
	(5)	 	In addition, Mr. Wong exercises control over 3,288 Royalty Units held by
Carbine Resources Ltd.
	 
	(6)	 	In the five years preceding 2002, Mr. Grandin’s principal employments were
as follows: 1996 — 1998: Vice Chairman and
Director, Midland Walwyn Capital Inc.; 1998 — 2001: Executive
Vice-President and Chief Financial Officer, Canadian
Pacific Limited; 2001 — Present: President, PanCanadian Energy
Corporation.

AMENDMENTS TO UNANIMOUS SHAREHOLDER AGREEMENT

The Unitholders will be asked to consider an Extraordinary Resolution approving
certain amendments to the Unanimous Shareholder Agreement and approving of an
Amended and Restated Unanimous Shareholder Agreement. The text of the Special
Resolution is set forth in Schedule B-1 to this Circular.

The amendments that are proposed, and the specific reasons therefor, are set
forth in Part C of Schedule A hereto. These amendments, along with those
approved on April 28, 1999 and April 26, 2000, are incorporated in the Amended
and Restated Unanimous Shareholder Agreement,

18

 

which is attached hereto as Schedule C-1. A general explanation of the
amendments and the reasons for them follows.

The Board of Directors must be comprised of a sufficient number of directors to
carry out its duties efficiently while representing a diversity of views and
experiences. The Board of Directors believes that the present size of five
directors, with three independent directors, is not adequate. An additional
nominee, Michael A. Grandin, is proposed for the Board of Directors in this
Circular. The Board of Directors also wishes to obtain the flexibility to
appoint up to two additional directors to the Board of Directors during the
next year as the needs of the Corporation and EnergyTrust are defined and
suitable candidates are identified. It is proposed to amend the Articles of
the Corporation to increase the authorized maximum number of directors from
seven to eight. If Management’s nominees are approved at the Shareholder
Meeting, there will be six directors. The Articles of the Corporation permit
the Board of Directors to appoint one or more additional directors 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. If six directors
are elected at the Shareholder Meeting, the directors may appoint two
additional directors before the next annual meeting of the Corporation.

The Unanimous Shareholder Agreement has been amended to reflect all amendments
made in previous shareholder meetings in a single consolidated document.
Drafting inconsistencies have been corrected and the document has been
conformed to the Royalty Indenture and Trust Indenture.

EnergyTrust recently filed a Form 40-F with the U. S. Securities and Exchange
Commission (the “SEC”) to become a registrant in the United States.
EnergyTrust has applied to list the Trust Units on the New York Stock Exchange
and may pursue equity or debt offerings in the United States in reliance upon
the Multi-Jurisdictional Disclosure System (“MJDS”). Following discussions
with EnergyTrust’s U.S. counsel and with the SEC, it was suggested that if
EnergyTrust amended its structure EnergyTrust might be able to rely upon the
MJDS. As a result, the Corporation issued 1,000 common shares from treasury to
EnergyTrust, representing in excess of 90% of the outstanding common shares of
the Corporation. The balance of the common shares is held by the Manager.
Amendments to the Unanimous Shareholder Agreement are proposed which will add
EnergyTrust as a party.

AMENDMENTS TO ARTICLES OF THE CORPORATION

The Unitholders will also be asked to consider a Special and Extraordinary
Resolution approving the amendment of the Articles of the Corporation to
increase the authorized maximum number of directors from 7 to 8. The text of
the Special Resolution is set forth in Schedule B-2 to this Circular.

19

 

MATTERS TO BE CONSIDERED AT THE ROYALTY MEETING

The amendments to the Royalty Indenture, which are proposed for consideration
at the Royalty Meeting, are made subject to implementation in whole, or in
part, or not at all, at the discretion of the Board of Directors of the
Corporation based upon advice as to the taxation consequences of such
amendments and such other factors as the Board of Directors may consider
relevant, such as available business opportunities, applicable securities laws
and other applicable laws.

AMENDMENTS TO ROYALTY INDENTURE

The Unitholders will be asked to consider an Extraordinary Resolution approving
certain amendments to the Royalty Indenture and approving an Amended and
Restated Royalty Indenture. The text of the Extraordinary Resolution is set
forth in Schedule B-3 to this Circular.

The amendments that are proposed, and the specific reasons therefore, are set
forth in Part A of Schedule A to this Circular. The Amended and Restated
Royalty Indenture incorporates these amendments, together with amendments
previously made to the Royalty Indenture, as set forth as Schedule C-2 to this
Circular. A general explanation of the amendments and the reasons for them
follows.

The Royalty Indenture, dated December 12, 1988, was prepared in conjunction
with the formation of the Corporation and EnergyTrust. Since that time, the
industry has evolved and the Corporation has grown through equity and debt
issuances and the acquisition of petroleum and natural gas properties in
Western Canada and Offshore Nova Scotia. Changes to the Royalty Indenture have
been considered and approved by the Unitholders, from time to time, in response
to changing circumstances and the broadening of business objectives of the
Corporation. These amendments have been reflected in a series of Supplemental
Indentures which, in their present form, have become very complex.
Requirements arise, with increasing frequency, to provide interpretations and
legal opinions in conjunction with the Corporation’s acquisitions and financing
activities. It is proposed to replace the original Royalty Indenture and all
of the Supplemental Indentures with a single Amended and Restated Royalty
Indenture. In addition to the amendments which have been specifically approved
in past Unitholder meetings and the amendment to permit subordination to the
banks’ obligations discussed below, the important matters which have been
proposed for amendment can be summarized as follows:

	 	•	 	The Supplemental Indentures have given rise to a significant
number of drafting errors and inconsistencies which have been
corrected in the consolidated document.
	 
	 	•	 	The right to take petroleum substances in kind has been amended
to bring it in line with legal counsel’s understanding of Canada
Customs and Revenue Agency’s most recent views on appropriate rights
for Royalty Unitholders to take in kind.
	 
	 	•	 	The right to exchange Royalty Units for Trust Units has been
conformed to the Trust Indenture such that the Royalty Units are
exchanged for Trust Units of equal value under a clear mechanism.

20

 

	 	•	 	General restrictions on borrowing have been removed.
Borrowings will be governed by approval of the Board of Directors
from time to time and the provisions of any credit facility.
	 
	 	•	 	The Royalty Indenture will permit a vote at a meeting of
Royalty Unitholders to be held by telephonic, electronic or other
communication facility. There is the possibility of saving
considerable expense and of increasing the efficiency of the
distribution of proxy materials and receipt of proxies for future
meetings.
	 
	 	•	 	A provision has been added which will allow the Board of
Directors to retain, within the Corporation, up to 20% of its gross
revenue for a particular period if the Board of Directors determines
that it would be advisable to do so in accordance with prudent
business practices to provide for the payment of future capital
expenditures or for the payment of royalty income in any future
period or periods. Accordingly, the Corporation would be able to
apply these revenues towards capital should it be prudent to do so or
to keep the funds in another form to be paid out in the future,
potentially stabilizing the profile of the distributions made by
EnergyTrust.

AMENDMENTS TO MANAGEMENT AGREEMENT

The Unitholders will also be asked to consider an Extraordinary Resolution
approving certain amendments to the Third Amended Management Agreement and
approving an Amended and Restated Management Agreement. The text of
Extraordinary Resolution is set forth in Schedule B-4.

The proposed amendments, and the specific reasons therefore, are set forth in
Part D of Schedule A hereto. The Amended and Restated Management Agreement,
incorporating the original Management Agreement, the proposed amendments, and
all amendments made and approved effective April 21, 1994, April 29, 1997 and
April 26, 2000, is set forth as Schedule C-3 to this Circular.

The purpose of the amendments is to consolidate changes previously approved by
Unitholders into a single document, to correct any drafting errors which may
have occurred and to conform the document with the Royalty Indenture and the
Trust Indenture. No changes have been made to any of the terms of the business
deal between the Manager, EnergyTrust and the Corporation.

SUBORDINATION OF THE ROYALTY

The Unitholders will be asked to consider an Extraordinary Resolution approving
the subordination of their rights to be paid the Royalty by the Corporation to
the rights of Lenders under its Credit Facility, as described below. The text
of the Extraordinary Resolution is set forth in Schedule B-5 to this Circular.

21

 

The Corporation has negotiated the terms of a credit facility with a Canadian
chartered bank (the “Bank”) and a syndicate of lenders (collectively the
“Lenders”), in an authorized aggregate amount of up to Cdn. $415,000,000 (the
“Credit Facility”) together with an additional operating line provided by the
Bank. In addition, the Corporation may, from time to time, enter into
commodity, currency or interest swaps, hedging agreements or other derivative
arrangements, the purpose of which are to hedge, mitigate or eliminate the
Corporation’s exposure to fluctuations in commodity prices, currency exchange
or interest rates (collectively the “Swap Agreements”).

Although it has always been the case that the Corporation’s obligation to repay
its lenders ranked ahead of the Corporation’s obligation to pay the Royalty, in
order to update the current agreements with the Bank and the other Lenders to
reflect such subordination and in order to increase the Corporation’s financing
options, the Corporation, the Bank and the other Lenders have asked the Royalty
Unitholders to confirm the subordination of their rights to be paid the Royalty
by the Corporation to the rights of the Lenders to be paid obligations owing to
them by the Corporation under or in connection with the Credit Facility, the
Swap Agreements or otherwise, and to confirm that, in the event of a default by
the Corporation in respect of any of its obligations to any of the Lenders,
including a default in connection with the Credit Facility or in connection
with the Swap Agreements, the Corporation will not make any further payments in
respect of the Royalty.

MATTERS TO BE CONSIDERED AT THE TRUST MEETING

APPOINTMENT OF AUDITORS

It is the intention of the persons named in the enclosed Form of Proxy, if not
expressly directed to the contrary in the proxy, to vote in favour of a
resolution to appoint the firm of KPMG LLP, Chartered Accountants, of Calgary,
Alberta, as auditors of EnergyTrust, to hold office until the next annual
meeting of Unitholders or until their successor is elected or appointed, at the
remuneration to be fixed by the directors of the Corporation.

AMENDMENT TO TERM OF OPTION PLAN

The Trust Unitholders will be asked to consider an Extraordinary Resolution to
amend the Trust Unit Option Agreement and Option Plan to extend the term of any
presently issued and outstanding Trust Unit Options and any Trust Unit Options
which are subsequently created under the Plan from 5 years to 7 years. The
text of the Extraordinary Resolution is set forth in Schedule B-6 to this
Circular.

The market price of Trust Units has exhibited considerable fluctuation
corresponding to volatility in oil and natural gas prices resulting in changes
in the amount of distributable income of EnergyTrust. Current Trust Unit
Options have a two year vesting period limiting the period of time during which
Trust Unit Options may be exercised. The market price of Trust Units is
dependent upon many factors including commodity prices. In the current
commodity price environment, a substantial portion of the outstanding Trust
Unit Options are “out of the money”. The Board of Directors considers it
reasonable to extend the term of the outstanding Trust Unit Options to mitigate
the impact of current commodity prices and to provide a longer period for
directors, officers, employees and special consultants to demonstrate growth in
value within the Corporation.

22

 

ISSUANCE OF ADDITIONAL TRUST UNIT OPTIONS

The Trust Unitholders will be asked to consider an Extraordinary Resolution to
reserve up to a maximum of 10 million Trust Units for issuance upon exercise of
Trust Unit Options granted under the Option Plan, provided that the number of
Trust Units issuable upon exercise of Trust Unit Options does not exceed 10% of
the issued and outstanding Trust Units. The text of the Extraordinary
Resolution is set forth in Schedule B-7 to this Circular.

At the Special and Annual General Meeting of Trust Unitholders held on April
26th, 2000, Trust Unitholders authorized 7 million Trust Units to be reserved
for issuance upon exercise of Trust Unit Options granted under the Option Plan
subject to the restriction that the total number of Trust Units issuable upon
exercise of the Trust Unit Options does not exceed 10% of the issued and
outstanding Trust Units. EnergyTrust has completed three prospectus issuances
since the April 26, 2000 Special and Annual Meeting to fund the acquisition of
additional assets by the Corporation and to reduce indebtedness. As a result,
as at March 8, 2002, EnergyTrust had 82,277,072 issued and outstanding Trust
Units. The Board of Directors believes that there is a reasonable probability
that the Corporation will continue to make acquisitions of properties and other
interests and that EnergyTrust will issue Trust Units to finance those
purchases. Therefore, it is foreseeable that the total capital of EnergyTrust
will reach or exceed 100 million Trust Units. It is therefore proposed,
subject to the creation of a Trust Unit Rights Incentive Plan, that the Trust
Unitholders consider an Extraordinary Resolution to reserve for issuance up to
a maximum of 10 million Trust Units for issuance upon exercise of Trust Unit
Options granted under the Option Plan and ratifying the issuance of Trust Unit
Options exercisable for 1,325,401 Trust Units which were issued subject to
Trust Unitholder approval and to the restriction that the number of Trust Units
issuable upon the exercise of Trust Unit Options created under the Option Plan
shall not exceed 10% of the issued and outstanding Trust Units. In the event
that the Trust Unit Rights Incentive Plan is approved as recommended in this
Circular, any authorized and unissued Trust Unit Options and any Trust Unit
Options issued subject to ratification will be governed by the new Trust Unit
Rights Incentive Plan. Pengrowth Corporation has completed a series of
acquisitions and financings since the Special and Annual Meeting held on April
26, 2000, causing the total number of Trust Units to significantly exceed the
70 million contemplated in the Information Circular — Proxy Statement prepared
for that meeting.

In the event that the Trust Unit Rights Incentive Plan proposed in this
Circular is approved by the Trust Unitholders, it will be unnecessary for the
Board of Directors to implement this resolution.

CREATION OF A TRUST UNIT RIGHTS INCENTIVE PLAN

Trust Unitholders will be asked to consider an Extraordinary Resolution
adopting a new Trust Unit Rights Incentive Plan (the “Incentive Plan”) pursuant
to which rights to acquire Trust Units may be granted to the directors,
officers, employees and special consultants of the Corporation as designated
from time to time by the Board of Directors of the Corporation and personal
holding corporations controlled by or registered retirements savings plans of
any such persons. The text of the Extraordinary Resolution is set forth in
Schedule B-8 to this Circular.

The directors, officers, employees and special consultants of the Corporation
presently hold Trust Unit Options that have been issued from time to time at
fixed exercise prices in relation to the prevailing market price for Trust
Units. The Trust Unit Options issued under the current Option Plan are
designed to encourage ownership of Trust Units by, and to act as an essential
component of the compensation of, the directors, officers, employees and
special consultants of EnergyTrust. The objective of EnergyTrust is to
maximize distributable income and to create and add to long-

23

 

term value in order to maximize the benefits to Trust Unitholders. Options
with a fixed exercise price only reflect a benefit to the holders from
achieving additions to value and do not reflect any benefit to option holders
from maximizing the distributions. The Corporation and EnergyTrust presently
have a policy of distributing cash flow as opposed to reinvesting in the
Corporation’s operations, reducing the possibility for achieving value growth
while nonetheless providing returns to Trust Unitholders.

The Board of Directors of the Corporation, together with the Manager, have
determined it to be in the best interests of the Trust Unitholders to implement
the Incentive Plan to reflect the benefit due to achieving success on each of
these two fundamental objectives. The purpose of the Incentive Plan is to
provide effective incentives to such persons and to reward them on the basis of
both the long-term trading price performance of the Trust Units and
distributions paid on Trust Units, thereby reflecting the total returns to
Trust Unitholders.

If approved by the Trust Unitholders, the proposed Incentive Plan will bring
EnergyTrust in line with similar plans approved for other Canadian oil and gas
trusts.

The maximum number of Trust Units which may be set aside for issuance under the
current EnergyTrust Option Plan is 7 million Trust Units. The Trust Units
reserved for issuance pursuant to outstanding Trust Unit Options granted under
the current Option Plan will continue to be governed by the Option Plan until
such options are exercised or expire, at which time the current Option Plan
will be terminated. The aggregate number of Trust Units reserved for issuance
under the Incentive Plan, together with Trust Units reserved for issuance
pursuant to outstanding options granted under the current Option Plan, will be
limited to a maximum 10 million Trust Units provided that the aggregate
authorized number of Trust Units issuable under both plans shall not exceed 10%
of the issued and outstanding Trust Units. Similar to the Option Plan, the
Incentive Plan will permit the Board of Directors of the Corporation to
increase such maximum number from time to time, subject to the approval of the
Trust Unitholders.

The Corporation granted options to acquire 740,401 Trust Units at an exercise
price of $15.00 on October 3, 2001 and granted options to acquire 585,000 Trust
Units at an exercise price of $12.98 on December 19, 2001. These options were
granted in anticipation of an approval to either increase the number of
permitted Trust Unit Options under the current Option Plan or that the
Incentive Plan resolution would be approved. The holders of such proposed
options or rights may elect to have such options governed by the terms of the
Incentive Plan described below.

The exercise price of rights granted under the Incentive Plan will be based
upon the market price of the Trust Units on the Toronto Stock Exchange at the
date of grant or, at the election of the grantee, based upon such market price
and the Trust Unit distribution levels subsequently achieved by EnergyTrust.
The Incentive Plan will provide that the “rights exercise price” will be equal
to either: (a) the market price of the Trust Units on the date of the grant of
the right or (b) if so elected by the holder no later than the exercise of the
applicable right, the market price of the Trust Units on the date of grant of
the rights reduced from time to time for each calendar quarter ending after the
date of grant by the positive amount, if any, equal to:

	 	(i)	 	the amount by which the aggregate Trust Unit distributions made
to Unitholders in any calendar quarter ending after the date of the
grant exceed 2.5% of EnergyTrust’s oil and gas interests (as defined
below) on its balance sheet at the beginning of the applicable
calendar quarter,
	 
	 	 	 	divided by

24

 

	 	(ii)	 	the number of issued and outstanding Trust Units as at the beginning
of the applicable calendar quarter.

The Board of Directors of the Corporation believes that the provisions of the
Incentive Plan will reflect EnergyTrust’s primary objective of maximizing
distributions and will allow it to compete for the employment of qualified
professionals in the oil and gas business. The exercise price of rights will
effectively allow the holders of rights granted under the Incentive Plan, at
their election, to indirectly participate in Trust Unit distributions in excess
of 2.5% of the net book value per unit of EnergyTrust’s consolidated oil and
gas royalty and property interests (the “Oil and Gas Interests”) on a quarterly
basis. This aspect of the Incentive Plan, which is similar to plans which have
been adopted by several other oil and gas trusts, is expected to more fairly
reflect the fundamental structure and objectives of EnergyTrust and operate to
align the interests of the plan participants with those of Trust Unitholders.
As an illustration, based on Oil and Gas Interests of $1.145 billion as
reflected on EnergyTrust’s consolidated balance sheet as at December 31, 2001,
Incentive Plan participants who so elect would indirectly participate in Trust
Unit distributions in excess of $0.35 per Trust Unit for the quarter ended
March 31, 2002.

Rights granted under the Incentive Plan may be exercised during a period not
exceeding five years, subject to earlier termination upon a plan participant
ceasing to be an employee, officer, director or special consultant of the
Corporation, as applicable, or upon the plan participant retiring, becoming
permanently disabled or dieing. The rights will be non-transferable. The
Incentive Plan will contain provisions for adjustment of the number of Trust
Units issuable in the event of a subdivision, consolidation, reclassification
or change of the Trust Units, or a merger or other relevant changes in
EnergyTrust’s capitalization. EnergyTrust may, from time to time, amend or
revise the terms of the Incentive Plan or may terminate the Incentive Plan at
any time.

Trust Units beneficially owned by persons to whom rights may be granted
pursuant to the Incentive Plan and their associates are not entitled to vote in
respect of the Extraordinary Resolution concerning the Incentive Plan.

Implementation of the Incentive Plan is also subject to the receipt of all
necessary regulatory approvals, including the approval of the Toronto Stock
Exchange.

TRUST UNIT DISTRIBUTIONS AND REINVESTMENT

The Trust Unitholders will be asked to consider an Extraordinary Resolution
authorizing the directors of the Corporation to amend the Dividend Reinvestment
Plan (“DRIP”) in their discretion to permit issuances from treasury of Trust
Units at up to a 5% discount to the prevailing market price for Trust Units, to
consider and implement incentives under the DRIP to investment dealers and to
make such amendments as may be required or desirable to enable participants to
receive distributions in Trust Units. The text of the Extraordinary Resolution
is set forth in Schedule B-9 to this Circular.

At a Special and Annual General Meeting of Trust Unitholders held on March 24,
1992, the Trust Unitholders approved the DRIP. The Board of Directors of the
Corporation is considering amendments to the DRIP to encourage greater Trust
Unitholder participation. Active participation in the DRIP would provide the
Corporation with an ongoing source of funds which could be applied towards the
Corporation’s capital obligations on its existing properties. These
obligations are presently financed with debt, which is typically repaid in
whole or in part in conjunction with equity issues which accompany significant
acquisitions of new petroleum and natural gas properties by the Corporation.
The DRIP presently stipulates that distributions paid

25

 

on any new Trust Units held within the DRIP will be applied to acquire new
Trust Units. Purchases will be made either on the market at the prevailing
market price, or issued from treasury at a price equal to the 10 day weighted
average trading price of the Trust Units, whichever price is lower. Amendments
under consideration include the authorization of purchases of Trust Units from
treasury at a price of 95% of the prevailing market price, which would bring
EnergyTrust in line with similar plans by other royalty trusts.

Other amendments under consideration include the possibility of incentivizing
investment dealers to have their clients participate in the DRIP by having a
portion of the distribution allocated as a commission while continuing to
provide a net discount to the prevailing market price to any participating
Trust Unitholders. The Board of Directors is also considering an option
whereby Trust Unitholders can elect to receive their distributions in the form
of additional Trust Units, at a discount of up to 5%, which may or may not
themselves be held within the DRIP.

AMENDMENTS TO THE TRUST INDENTURE

The Trust Unitholders will be asked to consider an Extraordinary Resolution
approving certain amendments to the Trust Indenture and an Amended and Restated
Trust Indenture. The text of the Extraordinary Resolution is set forth in
Schedule B-10 to this Circular.

The proposed amendments, and the specific reasons therefor, are set forth in
Part B of Schedule A hereto. The Amended and Restated Trust Indenture, which
incorporates these amendments and all other amendments heretofore made to the
Trust Indenture, is attached as Schedule C-4 to this Circular. A general
explanation of the amendments and the reasons for them follows.

The Trust Indenture, dated December 12, 1988, was prepared in conjunction with
the formation of the Corporation and EnergyTrust. Since that time, the
industry has evolved and the Corporation has grown. Changes to the Trust
Indenture have been considered and approved by the Trust Unitholders from time
to time in response to changing circumstances and the broadening of business
objectives of the Corporation and EnergyTrust. These amendments have been
reflected in a series of Supplemental Indentures which, in their present form,
have become very complex. Requirements arise, with increasing frequency, to
provide interpretations and legal opinions in conjunction with EnergyTrust’s
financing activities. It is proposed to replace the original Trust Indenture
and all of the Supplemental Indentures with a single Amended and Restated Trust
Indenture. In addition to the amendments which have been specifically approved
in past Trust Unitholder meetings, and the amendment to permit a guarantee of
the Corporation’s bank obligations and a subordination of the obligation to pay
distributions to Trust Unitholders discussed below, the important matters which
have been addressed can be summarized as follows:

	 	•	 	The Supplemental Indentures have given rise to a significant
number of drafting errors and inconsistencies which have been
corrected in the consolidated document.
	 
	 	•	 	Previously, all matters proposed for consideration at a meeting
of Trust Unitholders required approval by an Extraordinary Resolution
of Trust Unitholders unless otherwise expressly provided in the Trust
Indenture. Under the proposed amendments, an ordinary resolution
will be sufficient in respect of matters to be decided at a meeting
of Trust Unitholders unless they are a specifically enumerated class
of significant matters or an amendment to the Trust Indenture itself.

26

 

	 	•	 	The obligations of the Corporation in respect of past
distributions and the provision of financial statements have been
restated in the Trust Indenture where they are more appropriate.
	 
	 	•	 	Under the Trust Indenture, the Trustee has delegated certain
powers to the Corporation as Administrator. On the advice of
counsel, the specific delegation of responsibility to the Corporation
for borrowings by EnergyTrust and provision of guarantees and the
ability of the Corporation to give certain directions to the Trustee
have been removed. The validity of the Trust might otherwise be
compromised were the Trustee required to follow the Corporation’s
directives in circumstances where there could be a potential
conflict.
	 
	 	•	 	The Manager is presently required to provide a certificate of
compliance with all material covenants, duties or obligations under
the Trust Indenture and the Royalty Indenture. As the Manager is not
a party to the Trust Indenture, there can be no such binding
obligation. The provision has therefore been deleted and a similar
provision included in the consolidated form of Management Agreement,
where it is enforceable against the Manager.
	 
	 	•	 	As described under the amendments to the Royalty Indenture,
amendments have been made to permit meetings of Trust Unitholders to
be held partially or entirely by means of a telephonic, electronic or
other communication facility and the distribution and receipt of
proxies in respect thereof, thereby potentially increasing the
efficiency and reducing the expense of the process.

GUARANTEES AND SUBORDINATION

The Trust Unitholders will be asked to consider an Extraordinary Resolution
approving the guarantee and subordination agreements described below. The
text of Extraordinary Resolution is set forth in Schedule B-11 hereto.

As described under “Matters to be considered at the Royalty Meeting”, the
Corporation has negotiated the Credit Facility with the Lenders along with
certain Swap Agreements.

In addition to requesting that the Corporation subordinate the obligation to
pay the Royalty to the Lenders obligations, the Lenders have requested that
EnergyTrust guarantee the obligations of the Corporation under the Credit
Facility and subordinate any obligation to make distributions to the Trust
Unitholders to the obligation to the Lenders.

It is therefore proposed that EnergyTrust guarantee all of the obligations,
liabilities and indebtedness of the Corporation to the Lenders relating to the
Credit Facility and all of the Corporation’s obligations or liabilities
pursuant to the Swap Agreements.

The Corporation is also a party to an Amended and Restated Preliminary Net
Royalty Agreement (the “Net Royalty Agreement”) with Emera Inc., dated as of
April 26, 2001 pursuant to which the Corporation agreed to deliver to Emera
Inc., subject to the approval of the Trust Unitholders, a guarantee duly
executed by EnergyTrust of the Corporation’s obligations under the Net Royalty
Agreement in a form satisfactory to both Emera and the Corporation. Therefore
it is also proposed that EnergyTrust guarantee all of the obligations,
liabilities and indebtedness of the Corporation to each of Emera Inc. and Emera
Offshore Incorporated (separately and collectively, “Emera”) relating to: (i)
the Net Royalty Agreement; (ii) the Miscellaneous Covenants
Agreement.

27

 

dated April 26, 2001 between the Corporation and Emera; and (iii) any agreement
between the Corporation and Emera entered into pursuant to any of the foregoing
agreements, as each such agreement may be amended, restated, supplemented or
replaced from time to time (collectively, the “Emera Obligations”).

Under the proposed subordination, Trust Unitholders will subordinate their
rights to be paid distributions by EnergyTrust to the rights of the Lenders to
be paid obligations owing to them by EnergyTrust under the proposed guarantee
by EnergyTrust of the Corporation’s obligations under the Credit Agreement or
the Swap Agreements. In the event of a default by the Corporation, EnergyTrust
may not make any further distributions to Trust Unitholders until the
obligations are repaid.

ADDITIONAL INFORMATION

Additional information regarding the business of the Corporation and
EnergyTrust is contained in EnergyTrust’s Annual Information Form dated May 14,
2001. Additional financial information is provided in EnergyTrust’s
consolidated financial statements and Management’s Discussion and Analysis of
Financial Condition and Results of Operations for the financial year ended
December 31, 2001, which are contained in EnergyTrust’s 2001 Annual Report.
Copies of those documents and additional copies of this Information Circular -
Proxy Statement may be obtained upon request from Investor Relations at Suite
700, 112 — 4th Avenue S.W., Calgary, AB T2P 0H3 (403) 233-0224 or
1-800-223-4122 and at 1200, 141 Adelaide Street West, Toronto, Ontario, M5H
3L5, (416) 362-1748 or 1-888-744-1111.

28

 

APPROVAL AND CERTIFICATION

The contents and the sending of this Circular have been approved by the
directors of the Corporation.

The foregoing contains no untrue statement of a material fact and does not omit
to state a material fact that is required to be stated or that is necessary to
make a statement not misleading in the light of the circumstances in which it
was made.

DATE: March 15, 2002

PENGROWTH CORPORATION

	 	 	 	 	 	 	 
	(Signed)	 	
James S. Kinnear

President,

Chief Executive Officer
	 	(Signed)
	 	Gordon M. Anderson

Vice President and Interim Chief

Financial Officer

PENGROWTH ENERGY TRUST

BY: PENGROWTH MANAGEMENT LIMITED, AS MANAGER

	 	 	 	 	 	 	 
	(Signed)	 	
James S. Kinnear

President
	 	(Signed)
	 	Gordon M. Anderson

Vice President, Financial Services

29

 

SCHEDULE A

Summary of the amendments proposed to be made to the Royalty Indenture,
Trust
Indenture, Management Agreement and Unanimous Shareholder Agreement

The Royalty Indenture, Trust Indenture, Management Agreement and Unanimous
Shareholder Agreement are collectively referred to as the Constating Documents.
When used below, the word “update” means that the change is made to reflect
current circumstances or other amendments.

A.     Royalty Indenture

	 	 	 	 	 	 	 	 	 
	Reference	 	 	 	Change	 	 	 	Reason
	

	Document	 	
-
	 	The document has been renumbered and
reformatted. All cross-references have been
updated to correspond to the renumbered
document. Unless otherwise specified as an
“Old” section number, the section numbers
referred to in this summary are the section
numbers as they now exist in the proposed
revised document.
	 	-
	 	To reflect numbering and styles
that resulted from the many
amendments conducted in
previous years.
	

	Title	 	
-
	 	Changed to Amended and Restated Royalty
Indenture.
	 	-
	 	Update.
	

	Introductory

Sentence	 	
-
	 	Changed opening line to: “THIS AMENDED
AND RESTATED ROYALTY INDENTURE
is made as of the 23rd day of April, 2002, and is
an amendment and restatement of the Royalty
Indenture dated December 2, 1988 as amended
by nine successive Supplemental Royalty
Indentures”.
	 	-
	 	Update.
	

	Introduction	 	
-
	 	Changed
“AMONG” to “BETWEEN”.
	 	-
	 	There are only 2 parties to the
Royalty Indenture.
	

	Agreement Parties	 	
-
	 	The Trustee has been changed from Montreal
Trust Company of Canada to Computershare
Trust Company of Canada.
	 	-
	 	Montreal Trust has sold its
corporate trust and stock transfer
business of to Computershare
Investor Services, which
subsequently formed
Computershare Trust Company of
Canada. Last year’s Unitholder
Meeting approved the succession
and the relevant documents are
being assigned.
	 	 	
-
	 	Deleted “OF THE FIRST PART” and “OF THE
SECOND PART”.
	 	-
	 	No longer a useful practice.
	

	First Recital	 	
-
	 	Capitalized
“Grantor”.
	 	-
	 	Defined term.
	

	Third Recital	 	
-
	 	Deleted comma
after “rights”.
	 	-
	 	Punctuation correction.
	

	Definitions	 	
-
	 	Defined terms in the definitions section have
been bolded and moved to alphabetical order (if
there were not so already).
	 	-
	 	Update.
	

 

	 	 	 	 	 	 	 	 	 
	

	1.01 (a)
Definition of
“Acquisition Fee”	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	“Properties” refers only to
properties already owned by the
Corporation. This reference
should be to prospective
Properties, i.e. not yet owned by
the Corporation, so the Canadian
Resources Properties definition is
proposed to be created.
	

	1.01 (b)
Definition of “Act”	 	
-
	 	Replaced old definition with: “means the
Income Tax Act (Canada), RSC 1985, c.1, 5th
Supp., and the rules and regulations applicable
thereto;”.
	 	-
	 	Current correct citation added.
No need for “as amended”
language – see new Section 1.08
proposed below.
	

	Old 1.01 b.1
Definition of
“Adjusted Debt
Service Charges”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	1.01 (d)
Definition of
“Affiliate”	 	
-

-
	 	Deleted “as
amended”.

Changed “person, corporation or entity” to
“Person”.
	 	-

-
	 	See new Section 1.08 proposed
below.

Defined term.
	

	Old 1.01 e.
Definition of
“Agency
Agreement”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term is used only in
the Trust Indenture and defined
therein.
	

	1.01 (e)
Definition of
“ARC”	 	
-
	 	Removed initial
capitals from “royalty credit”.
	 	-
	 	The expression is not capitalized
in the Alberta Corporate Tax Act
	

	Old 1.01 g.
Definition of
“Asset Value”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	1.01 (h)
Definition of
“Canadian
Resource
Properties”	 	
-
	 	New definition added:
“Canadian Resource Properties” means
Canadian resource properties within the
meaning of subsection 66(15) of the Act;”.
	 	-
	 	This will properly allow for the
description of properties not yet
acquired by the Corporation.
	

	1.01 (i)
Definition of
“Capital
	 	-	 	In (i), changed
semi-colon to comma.	 	-	 	Punctuation correction.
	Expenditures”	 	-
	 	In (ii), changed “n” to “in”.
	 	-
	 	Typographical correction.

		 	-
	 	In ending clause, changed “Revenue Canada,
Taxation” to “Canada Customs and Revenue
Agency”.
	 	-
	 	Name of agency has changed.
	

	1.01 (j)
Definition of
	 	
-
	 	Capitalized “Board of Directors”.
	 	-
	 	Uniformity correction.

	
“Cash
Distributions”	 	
-
	 	
In (i), inserted comma after “Cash Distribution
date”, deleted comma after “calendar quarter”.
	 	-
	 	Punctuation corrections.

		 	
-
	 	
Capitalized “Charges” in “Reimbursed Crown
Charges”.
	 	-
	 	
Defined term.

2

 

	 	 	 	 	 	 	 	 	 
	 	 	
-
	 	Redrafted (ii): “the monthly payments made
with respect to any calendar month on the 45th
day following the end of such month by the
Grantor to the Royalty Unitholders of record on
the tenth Business Day preceding the Cash
Distribution date, their respective shares of
payments representing, in each month, the
monthly payment which will result in the
payments by the Grantor to the Royalty
Unitholders for each calendar month
aggregating the Royalty, less by way of set-off,
Reimbursed Crown Charges for the calendar
month;”.
	 	-
	 	(ii) formerly incorrectly described
monthly distributions that were
nonetheless based on a quarterly
calculation. The new language
more accurately describes the
nature of monthly distributions.
	

	Old 1.01 l.
Definition of
“Certified
Resolution”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	1.01 (n)
Definition of
“Debt Service
Charges”	 	
-
	 	Changed “relating to the borrowing of funds by
the Grantor including without limitation, the
funding of ...” to “... relating to the borrowing
of funds by the Grantor for purposes including,
without limitation, the funding of ...”.
	 	-
	 	Grammatical correction.
	 	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	 	 	
-
	 	Deleted “and the retirement of Take or Pay
Obligations and or any repayment of the Take
or Pay Amount by virtue of the borrowing of
funds pursuant to subsection 7.01(c) (ii)”.
	 	-
	 	Take or Pay Obligations are no
longer relevant.
	

	Old 1.01 q.
Definition of
“Discount Rate”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term is used only in
the old definition of Asset Value,
which is proposed to be deleted in
its entirety as it is not used in the
Constating Documents.
	

	1.01 (q)
Definition of
“Fund”	 	
-
	 	Deleted commas before and after “and
maintained”.
	 	-
	 	Punctuation correction.
	

	1.01 (s)
Definition of
“Gross Revenue”	 	
-
	 	Added “plus to end of (vii), added new (viii):
“any amount paid into the Reserve in a prior
period pursuant to subsection 13.02 (c) hereof
that the Grantor determines, in its reasonable
discretion in accordance with good business
practices, ought to be paid to the Royalty
Unitholders;”.
	 	-
	 	This change, along with the
changes proposed for new
subsection 13.02(c), will allow the
Corporation limited discretion to
pay Gross Revenue into and from
the Reserve for future anticipated
Capital Expenditures or to reduce
the volatility of distributions.
	 	 	
-
	 	The vii. added to the inclusion list by the First
Supplement has been moved and renumbered as
exclusion (iv). The Sixth Supplemental
Royalty Indenture dated April 29, 1997,
purported to make a change to vi, but such
change should actually have been made to vii.,
not exclusion (iv) – the change is correctly
made in this restatement.
	 	-
	 	Borrowed funds should be
expressly excluded from Gross
Revenue as they should be.
	 	 	
-
	 	In the second (iii) (exclusion list), changed
“Properties” to “Canadian Resource Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.

3

 

	 	 	 	 	 	 	 	 	 
	 	 	
-
	 	In the second (iv), deleted “authorized pursuant
to Section 7.01”.
	 	-
	 	7.01 is proposed to be deleted (see
below).
	

	1.01 (v)
Definition of
“Management
Agreement”	 	
-

 

-
	 	Added
“Amended and Restated” prior to

“Management Agreement”.

Changed “made as of the date hereof” to “made
and in force from time to time”.
	 	-

 

-
	 	Reflects proposed new name of
Management

Agreement.

The date of the Management
Agreement is changed with each
amendment.
	

	1.01 (y)
Definition of
“Management
Fee”	 	
-
	 	Definition has been changed to: “means the fee
payable in accordance with the Management
Agreement and described therein as the
Management Fee;”.
	 	-
	 	This makes the calculations in the
Royalty Indenture and
Management Agreement identical
as they should be, and were not
before.
	

	Old 1.01 aa.
Definition of
“Material
Contracts”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	Old 1.01 dd.
Definition of
“Officer’s
Certificate”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	1.01 (x)
Definition of
“Operating Costs”	 	
-

 

-
	 	In exclusion list (i), deleted “, as amended from
time
to time,”.

In exclusion list item (vi), changed “Revenue
Canada, Taxation” to “Canada Customs and
Revenue Agency”.
	 	-

-
	 	See new Section 1.08 proposed
below.

Agency has changed names.
	 	 	
-
	 	At end of exclusion list item (vii), changed
period to semi-colon.
	 	-
	 	Punctuation correction.
	

	1.01 (y)
Definition of
“Other Revenues”	 	
-
	 	Changed first “Properties” to “Canadian
Resource Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	 	 	
-
	 	In (vi), changed
“operating” to “operated”.
	 	-
	 	Grammatical correction.
	

	Old 1.01 hh.
Definition of
“Permitted
Encumbrances”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	1.01 (aa)
Definition of
“Person”	 	
-
	 	New definition added:
“Person” includes any natural person,
corporation, limited partnership, general
partnership, joint stock property, joint venture,
association, company, limited liability
company, trust, bank, trust company or other
organization, whether or not a legal entity, and
government authority;
	 	-
	 	Referred to in the Royalty
Indenture.
	

	Old 1.01 ii.1
Definition of
“Projected Royalty
Income”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	1.01 (cc)
Definition of
“Properties”	 	
-
	 	In i), “Canadian resource properties within the
meaning of subsection 66(15) of the Act”
changed to “Canadian Resource Properties”.
	 	-
	 	Proposed new defined term,
explained above.
	 	 	
-
	 	In (ii), deleted “and at all times”
	 	-
	 	Not strictly accurate.

4

 

	 	 	 	 	 	 	 	 	 
	

	1.01 (ff)
Definition of
“Replacement
Properties”	 	
-

-
	 	Changed “properties” to “Canadian Resource
Properties”.

Added “: (i)” before “pension funds”, and
added to end “and (ii) mutual fund trusts
pursuant to subsection 132(6) of the Act;”
	 	-
	 	Proposed to be a defined term.

Clarifies the nature of
Replacement Properties allowed
to be acquired.
	

	1.01 (ii)
Definition of
“Royalty Income”	 	
-

-
	 	In iv), changed “other charges” to “other similar
charges”.

Changed “are paid with funds in the Reserve” to
“are not paid with funds in the Reserve”
	 	-

-
	 	Clarification.

Because amounts paid into the
Reserve are deducted from
Royalty Income in subclause (v),
if the listed costs and charges paid
from the Reserve were deducted
from Royalty Income, such
amounts would be twice deducted.
	 	 	
-
	 	Added comma after “Reserve”, deleted commas
before and after “referred to in (i) to (v) above”
	 	-
	 	Punctuation correction.
	 	 	
-
	 	Changed period at end to semi-colon
	 	-
	 	Punctuation correction.
	

	1.01 (ll)
Definition of
“Special
Distribution”	 	
-

-
	 	Added “the
Grantor” to the beginning of (ii).

In (ii), changed “Properties” to “Canadian
Resource Properties”
	 	-

-
	 	Grammatical
correction.

As above, reference should be to
properties not yet owned by the
Corporation.
	

	1.01 (nn)
Definition of
“Trust Indenture”	 	
-
	 	Changed name to “Amended and Restated Trust
Indenture”
	 	-
	 	Reflects proposed new name of
Trust Indenture.
	

	1.01 (rr)
Definition of
“Unanimous
Shareholder
Agreement”	 	
-

-
	 	Inserted
“Amended and Restated” prior to

“Unanimous Shareholder Agreement”.

Changed “between” to “among”
	 	-

-
	 	Reflects proposed new name of
Unanimous
Shareholder
Agreement.

More than 2 parties to the
Unanimous Shareholder
Agreement.
	 	 	
-
	 	Added “the Fund” as a listed party
	 	-
	 	Pengrowth Energy Trust is now a
shareholder of the Corporation
and should be included as a party
to the Unanimous Shareholder
Agreement.
	

	1.01 (tt)
Definition of
“Units”	 	
-
	 	Added “and” to end
	 	-
	 	Grammatical correction.
	

	1.01 (uu)
Definition of “this
indenture ...”	 	
-
	 	Added “this Agreement” to the list, deleted “this
royalty indenture” from the list
	 	-
	 	In the Royalty Indenture, “this
Agreement” is used; “this royalty
indenture” is not used.
	

	Old 1.01 (bbb)
Definition of “A &
S”	 	
-
	 	Deleted definition entirely
	 	-
	 	This defined term has been
deleted as all of the provisions
requiring this definition are
proposed to be deleted. They are
no longer relevant.
	

	Old 1.01 (ccc)
Definition of “A &
S Contract”	 	
-
	 	Deleted definition entirely
	 	-
	 	This defined term has been
deleted as all of the provisions
requiring this definition are proposed to be deleted. They are no longer relevant.
	

5

 

	 	 	 	 	 	 	 	 	 
	

	Old 1.01 (ddd)
Definition of
“Take or Pay
Obligations”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as all of the provisions
requiring this definition are
proposed to be deleted. They are
no longer relevant.
	

	Old 1.01 (eee)
Definition of
“Take or Pay
Amount”	 	
-
	 	Deleted
definition entirely.
	 	-
	 	This defined term has been
deleted as all of the provisions
requiring this definition are
proposed to be deleted. They are
no longer relevant.
	

	1.02	 	
-
	 	“Montreal” changed to “Computershare”.
	 	-
	 	Reflects assignment, see above.
	

	1.05	 	
-
	 	Changed
“rime” to “time”.
	 	-
	 	Typographical correction.
	

	1.08	 	
-
	 	Added new section: “1.08 References – Unless
otherwise specified herein, reference herein to
any contract, agreement, legislation, regulation
or rule shall be a reference to such contract,
agreement, legislation, regulation or rule as
amended from time to time.”
	 	-
	 	Ensures that documents are
referred to as amended, and means
that “as amended” language
throughout the Royalty Indenture
is no longer needed.
	

	2.01, 2.02, 2.04	 	
-
	 	Replaced semi-colons at end of all subclauses
with periods.
	 	-
	 	Punctuation correction.
	

	2.01 (a)	 	
-
	 	Replaced semi-colon before “provided” with
comma.
	 	-
	 	Punctuation correction.
	 	 	
-
	 	Removed “and subject to the provisions of
Article Six of this Agreement”.
	 	-
	 	What was then Article VI has
previously been deleted in its
entirety.
	

	2.01 (d)	 	
-
	 	Changed
“Grantors” to “Grantor’s”.
	 	-
	 	Grammatical correction.
	 	 	
-
	 	Capitalized
“Crown” in “crown royalties”.
	 	-
	 	Crown is typically a capitalized
term in the Constating
Documents.
	

	2.01 (f)	 	
-
	 	“Charter
Bank” de-capitalized.
	 	-
	 	Not a defined term.
	 	 	
-
	 	Changed “in
the Trustee” to “with the Trustee”.
	 	-
	 	Grammatical correction.
	

	2.01 (i)	 	
-
	 	Deleted “Subject to the provisions of Article
Six,” and capitalized sentence.
	 	-
	 	What was then Article VI has
been previously deleted in its
entirety.
	

	2.01 (j)	 	
-
	 	Deleted “Subject to the provisions of Article
Six,” and capitalized sentence.	 	-
	 	What was then Article VI has
been previously deleted in its
entirety.
	 	 	
-
	 	At end of first line, changed semi-colon to
colon.
	 	
-
	 	Punctuation correction.
	 	 	
-
	 	In (iii) D., changed “other charges” to “other
similar charges”.	 	
-
	 	Clarifying what is meant here.

	 	 	
-
	 	In (iv), added “or pursuant to subsection
13.02(c)” after “Debt Service Charges”.
	 	-

	 	
Update in light of proposed
addition at 13.02(c).
	

6

 

	 	 	 	 	 	 	 	 	 
	

	2.01 (k)	 	
-

 

-

 

-

-
	 	Added “If the Corporation is insolvent” to the
beginning”.

Added “(but not less than all)” after “right to
take all”.

Deleted comma after “following”.

Added new condition (i): “(i) the Royalty
Unitholder shall give the Corporation not less
than ninety (90) days’ notice of its intention to
take in kind in accordance with this
subsection;”, then renumbered subsequent
conditions.
	 	-
	 	These changes bring the right to
take in kind in line with legal
counsel’s understanding of Canada
Customs and Revenue Agency’s
most recent views on Royalty
Unitholders’ most appropriate
rights to take in kind.
	 	 	
-
	 	Added “the Royalty Unitholder shall” to the
beginning of (iii).	 	 	 	 
	

	2.02 (e)	 	
-
	 	Changed “person or persons” to “Person or
Persons”.
	 	-
	 	Proposed to be a defined term.
	

	2.02 (j)	 	
-
	 	Deleted comma
after “Special Distributions”.
	 	-
	 	Punctuation correction.
	

	2.02 (k)	 	
-
	 	Replaced “neither the Nominee nor the Royalty
Unitholders shall” with “the Royalty
Unitholders shall not”.
	 	-
	 	There is no Nominee.
	

	2.03	 	
-
	 	Deleted: “Any funds received by the Grantor
from the Canadian Exploration and
Development Incentive Program will be used
by the Grantor to fund Capital Expenditures or
to repay amounts borrowed by it for Capital
Expenditures.”
	 	-
	 	Canadian Exploration and
Development Incentive Program
no longer exists.
	

	2.04 (a)	 	
-
	 	Deleted comma
after “located”.
	 	-
	 	Punctuation correction.
	

	2.04 (b)	 	
-
	 	The Eighth Supplemental Royalty Indenture
made April 26, 2000, amended 2.04 (b) by
deleting the text after (i) and replacing it with
certain text. The replacement text’s next
number was to be (iii), which did not make
sense if (ii) was to be deleted. It is proposed to
clean up this section as follows:	 	 	 	 
	 	 	
-
	 	Capitalized
“Board of Directors”.
	 	-
	 	Uniformity correction.
	 	 	
-
	 	Changed reference to “the Royalty Indenture as
revised by the Third Supplemental Royalty
Indenture”, to just “this indenture”.
	 	-
	 	Updated.
	 	 	
-
	 	Deleted (ii) (if it has not already been deleted
by the Eighth Supplemental Royalty Indenture
above): “on behalf of the Trustee, payment to
each Trust Unitholder of his respective share of
the Cash Distribution plus ARC, plus any
interest earned by the Fund; and”.
	 	-
	 	What was previously in (ii)
(payment to Trust Unitholders) is
proposed to be moved to the Trust
Indenture where it properly
belongs.
	 	 	
-
	 	Made (i) part of the immediately preceding
sentence (i.e. no separate (i) ), inserted period
after what was previously in i), deleted “or
Trust Unitholders”, and made (iii) part of the
immediately preceding sentence (i.e. no
separate (iii) ).	 	 	 	 
	 	 	
-
	 	De-capitalized “dates” in “Cash Distribution
Dates”.
	 	-
	 	Not a defined term.
	

	2.04 (c)	 	
-
	 	Added “of” before “Unitholders’ income tax
returns”.
	 	-
	 	Grammatical correction.
	

7

 

	 	 	 	 	 	 	 	 	 
	

	Old 2.04 d	 	
-
	 	Deleted this clause (re: forwarding Fund
financial statements to Unitholders).
	 	-
	 	This is a matter for the Trust
Indenture and has been reinserted
there.
	

	2.05	 	
-
	 	Changed “Province of Alberta” to “province or
area of production”.
	 	-
	 	Production is no longer taken
solely from Alberta as was
originally the case.
	

	Old 2.06 c	 	
-
	 	Deleted entirely (re: use of proceeds from
Prospectus for acquisition of Dunvegan Unit).
	 	-
	 	No longer relevant.
	

	2.06 (c)	 	
-
	 	At end of (i),
changed comma to semi-colon.
	 	-
	 	Punctuation correction.
	 	 	
-
	 	In final paragraph, inserted period after
“property” and before “in the event” and then
capitalized “In”.
	 	-
	 	Grammatical corrections.
	 	 	
-
	 	In final sentence, inserted “Properties” in
between “become” and “subject”.
	 	-
	 	Clarification.
	

	2.06 (f)	 	
-
	 	Changed “Properties to “Canadian Resource
Properties” throughout this section.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	

	2.06 (g)	 	
-
	 	Added new subsection: “ In the event that any
bank or other lender to the Grantor, or any
Person to whom the Grantor owes obligations
in connection with swap or hedging obligations,
realizes against assets (including, without
limitation, Properties) in connection with
collecting upon any of the obligations owing by
the Grantor to any such bank, other lender or
Person owed swap or hedging obligations,
whether pursuant to any security granted by the
Grantor or otherwise, upon any sale conducted
in connection with such realization process the
Royalty with respect to such assets shall merge
with the interest of the Grantor sold in such
assets and such assets may be sold free and
clear of any remaining obligations to
Unitholders with respect to the Royalty and the
Royalty Unitholders consent and agree to the
release of the Royalty on the assets realized
upon.”
	 	-
	 	This type of merging/release of
the Royalty in connection with
assets sold to satisfy obligations to
creditors will be required by
lenders to the Corporation in
connection with the Corporation’s
necessary financing activities.
	

	2.08	 	
-
	 	Changed all references to Pengrowth and/or the
Grantor in (a) or (b) of this section to “the
Corporation”.
	 	-
	 	Pengrowth is defined to mean
Pengrowth Management Limited,
not Pengrowth Corporation. Also,
Pengrowth Management Limited
is not a party to this indenture and
cannot assume obligations
pursuant to this indenture.
	

	2.08 (a)	 	
-
	 	Removed comma after “Thus the Corporation
and its management”.
	 	-
	 	Punctuation correction.
	 
	2.08 (c)	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As stated above, reference should
to properties not yet acquired by
the Corporation.
	 	 	
-
	 	Changed “Grantor of Pengrowth” to “Grantor or
Pengrowth”.
	 	-
	 	Typographical correction.
	 	 	
-
	 	Changed
“persons” to “Persons”.
	 	-
	 	Proposed to be a defined term.
	

8

 

	 	 	 	 	 	 	 	 	 
	

	2.11	 	
-
	 	Replaced “the Grantor no longer has an interest
in any of the Properties; and” with “there are
no longer any Properties; and”.
	 	-
	 	Properties are by definition those
in which the Corporation has an
interest in the Properties, or else
they are not Properties.
	

	3.01	 	
-
	 	Deleted second sentence: “Only persons who
are residents of Canada for the purpose of the
Act can acquire Royalty Units.”
	 	-
	 	No longer necessary.
	

	3.02 (a)	 	
-
	 	Replaced “consist of and be limited to
500,000,000 Royalty Units, each representing”
with “each represent”.
	 	-
	 	The deleted number limit is
repetitive of 3.01.
	

	3.02 (b)	 	
-
	 	Moved comma after “evidencing Royalty
Units” to after “authorized pursuant to section
3.02(a) above”.
	 	-
	 	Punctuation correction.
	

	3.02 (c)	 	
-
	 	Changed “for Royalty Unit, shall” to “for
Royalty Units shall”.
	 	-
	 	Grammatical correction.
	

	3.06 (a)	 	
-
	 	Inserted missing end bracket in middle of
paragraph – “by the President or Secretary)
entitling holders thereof”.
	 	-
	 	Typographical correction.
	

	3.07 (a)	 	
-
	 	In (i), changed “holders of Royalty Units” to
“Royalty Unitholders”.
	 	-
	 	Defined term.
	 	 	
-
	 	In ending paragraph, changed “holder” to
“Royalty Unitholder”.
	 	-
	 	Defined term.
	

	3.07 (c)	 	
-
	 	Changed “The holder of a Royalty Unit” to “A
Royalty Unitholder”.
	 	-
	 	Defined term.
	

	3.07 (d)	 	
-
	 	Changed
“persons” to “Persons”.
	 	-
	 	Proposed to be a defined term.
	

	3.08 (a)	 	
-
	 	Changed
“persons” to “Persons”.
	 	-
	 	Proposed to be a defined term.
	

	3.07 (b)	 	
-
	 	Changed
“person” to “Person”.
	 	-
	 	Proposed to be a defined term.
	

	Article IV	 	
-
	 	Article structurally revised as follows:
	 	-
	 	This provision should be identical
to the analogous Trust Indenture
provision.
	

ARTICLE IV

EXCHANGE FOR TRUST UNITS

4.01     Exchange Right

     A holder of Royalty Units (other than the Trustee) shall have the right,
at his option, to exchange any or all such Royalty Units for a number of Trust
Units having a value on the date of exchange equal to the value of such Royalty
Units as conclusively determined by the Corporation. Such exchange may be made
at any time so long as there are Trust Units outstanding, and subject to the
foregoing, such exchange shall occur on the terms and conditions set forth
below and in the Trust Indenture.

4.02     Exercise of Exchange Right

	a)	 	The holder of Royalty Units desiring to exchange such Royalty Units in
whole or in part for Trust Units shall surrender his Royalty Unit
Certificate to the Trustee at its principal office in any of the cities of
Calgary, Vancouver or Toronto, together with the exchange form on the back
of such Royalty Unit Certificate or any other written notice in a form
satisfactory to the Trustee, in either case duly executed by the holder or
his executors or administrators or other legal representatives or his or
their attorney duly appointed by an instrument in writing in form and
executed in a manner satisfactory to the Trustee,

9

 

	 	 	exercising his right to exchange such Royalty Units in accordance with the
provisions of this Article and the Trust Indenture. Thereupon such Royalty Unitholder
and/or, subject to payment of all applicable stamp or security transfer taxes or other
governmental charges and compliance with all reasonable requirements of the Trustee,
his nominee(s) or assignee(s) shall be entitled:
	 

	 	i)	 	to be entered in the books of the Fund as at the Date of Exchange (or such later
date as is specified in subsection 4.02(b)) as the holder of the number of Trust
Units into which such Royalty Units are exchangeable in accordance with the
provisions of this Article and, as soon as practicable thereafter, the Trustee shall
deliver to such Royalty Unitholder and/or, subject as aforesaid, his nominee(s) or
assignee(s) a certificate or certificates for such Trust Units; and
	 
	 	ii)	 	to receive from the Trustee a Royalty Unit Certificate representing those Royalty
Units (if any) which were not exchanged for Trust Units.
	 

	 	 	Thereupon, the Trustee shall be entitled to be entered into the books of the Corporation as
the holder of the number of Royalty Units which are so exchanged.
	 
	b)	 	For the purposes of this Article, Royalty Units shall be deemed to be surrendered for
exchange on the date (herein called the “Date of Exchange”) on which they are so
surrendered in accordance with the provisions of this Article and, in the case of Royalty
Units surrendered by post or other means of transmission, on the date on which they are
received by the Trustee at one of its offices specified in Section 4.02(a); provided that if
Royalty Units are surrendered for exchange on a day which is not a Business Day, the
Person or Persons entitled to receive Trust Units shall become the holder or holders of
record of such Trust Units as at the date on which such registers are next reopened.

4.03     Issue of Royalty Unit Certificates

     All Royalty Unit Certificates representing Royalty Units exchanged under the provisions
of this Article shall be forthwith delivered to and, if necessary, cancelled
and destroyed by the Trustee and Royalty Unit Certificates representing the Royalty Units exchanged
for Trust Units shall be delivered to or, if necessary, issued to the Trustee as trustee under
the Trust Indenture. Royalty Unit Certificates representing the Royalty Units not so exchanged shall
be issued to the Royalty Unitholder.

10

 

	 	 	 	 	 	 	 	 	 
	

	5.01	 	
-
	 	Inserted “, and other than somebody who
acquires Royalty Units after April 23, 2002
with respect to such Royalty Units” after
“other than the Fund”.
	 	-
	 	This has been added so that
existing Royalty Unitholders will
be “grandfathered” but subsequent
Royalty Unitholders will not have
the conversion right. The
Corporation believes that Royalty
Units can in the future be used as
consideration in property
acquisitions, but that the vendors
of those properties should not
have the right to convert such
Royalty Units to a working
interest in all of the Properties
areas owned by the Corporation.
	

	5.02 (a)	 	
-
	 	Changed “person or persons” to “Person or
Persons”.
	 	-
	 	Proposed to be a defined term.
	

	5.02 (b)	 	
-
	 	Inserted comma after “from the revenue
attributed to the converted interest”.
	 	-
	 	Punctuation correction.
	

	6.01	 	
-
	 	Deleted “and” at end of (c), de-capitalized
“it” at beginning of (e).
	 	-
	 	Uniformity corrections.
	

	Old 8.01 and 8.02	 	
-
	 	These sections (restrictions on borrowing)
are deleted in their entirety.
	 	-
	 	The Corporation’s lenders have
expressed concern regarding the
need for these restrictions, and
some of the restrictions (such at
that related to take-or-pay) are no
longer relevant. Section 8.01
contains restrictions on the
businesses that the Corporation
may carry on, and these will limit
the purposes for which the
Corporation can borrow.
	

	Old 8.04	 	
-
	 	This section (re: means of financing capital
expenditures) is deleted in its entirety.
	 	-
	 	Outdated and unnecessarily
limiting of the Corporation’s
financing options.
	

	7.01 (b)	 	
-
	 	Changed “partnerships – general and limited,
and partnerships and beneficial interests . . .
” to “partnerships – general and limited, and
beneficial interests . . . ”.
	 	-
	 	Grammatical correction.
	 	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	

	7.01 (c)	 	
-
	 	Capitalized “Board of Directors”
	 	-
	 	Uniformity correction.
	 	 	
-
	 	Added
“and” to end.
	 	-
	 	Grammatical correction.
	

	8.01	 	
-
	 	Added to end: “To the extent permitted by
applicable law, meetings of Unitholders may
be held partially or entirely by means of a
telephonic, electronic or other
communication facility, including
teleconferencing, video conferencing,
computer link, webcasting and other similar
means.”
	 	-
	 	This provision will allow for the
use of modern technology.
	

11

 

	 	 	 	 	 	 	 	 	 
	

	8.07	 	
-
	 	Added new (d): “Notwithstanding the
foregoing, to the extent permitted by
applicable law, a person entitled to vote at a
meeting of Unitholders may vote by means
of a telephonic, electronic or other
communication facility that the Trustee and
Corporation have made available for that
purpose.”
	 	-
	 	This provision will allow for the
use of modern technology.
	

	8.08 (a)	 	
-
	 	 	 	-
	 	Proposed to be a defined term.
	

	8.08 (d)	 	
-
	 	Deleted
“and” at end.
	 	-
	 	Grammatical correction.
	

	8.08 (e)	 	
-
	 	Added new (e): “the depositing and
tabulation of proxies by telephonic,
electronic or other communication means;
and”.
	 	-
	 	This provision will allow for the
use of modern technology.
	

	8.09	 	
-
	 	Replaced with: “The Corporation and the
Trustee, by their respective directors,
officers and counsel, may attend any meeting
of the Unitholders, but shall have no right to
vote in their respective capacity as such.”
	 	-
	 	Grammatical clean-up.
	

	8.14	 	
-
	 	Changed
“which” to “that”.
	 	-
	 	Uniformity correction.
	

	8.16	 	
-
	 	Changed
“person” to “Person”.
	 	-
	 	Proposed defined term.
	

	9.01 (b)	 	
-
	 	Capitalized “Counsel”.
	 	-
	 	Defined term in relation to the
Trustee.
	

	10.01 (a)	 	
-
	 	Capitalized
“Corporation”.
	 	-
	 	Defined term.
	 	 	
-
	 	Updated Pengrowth Corporation address:
Suite 700, 112 – 4th Avenue S.W., Calgary,
Alberta, T2P 0H3.
	 	-
	 	Update.
	

	10.01 (b)	 	
-
	 	Changed
“persons” to “Persons”.
	 	-
	 	Proposed to be a defined term.
	

	10.03	 	
-
	 	Changed “corporation” and “Corporation” to
“Trustee”.
	 	-
	 	Correction.
	 	 	
-
	 	Updated Trustee address: Suite 710 – 530
8th Avenue S.W., Calgary, Alberta, T2P
3S8.
	 	-
	 	Update.
	

	11.03	 	
-
	 	At end of (b), replace semi-colon with
period.
	 	-
	 	Punctuation correction.
	 	 	
-
	 	Replaced “Royalty Agreement” with “this
Agreement”.
	 	-
	 	Royalty Agreement is not one of
the defined terms.
	

	11.06 (b)	 	
-
	 	Capitalized
“Trustee”.
	 	-
	 	Defined term.
	

	11.06 (c)	 	
-
	 	Changed “person or persons” to “Person or
Persons”.
	 	-
	 	Defined term.
	

	11.06 (d)	 	
-
	 	Capitalized
“Corporation”.
	 	-
	 	Defined term.
	

	11.10	 	
-
	 	Changed
“person related to” to “Affiliate of”.
	 	-
	 	Clarification.
	

	11.11	 	
-
	 	Changed
“person” to “Person or Persons”.
	 	-
	 	Defined term.
	 	 	
-
	 	Added “or “Administrator” as the case may
be” after “the “Manager””.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.
	 	 	
-
	 	Added “, without regard to whether such
authority is normally granted or delegated by
Trustees” after “under this indenture”.
	 	-
	 	Conforms with current royalty
trust practice, whereby managers
often exercise discretion in
administrative matters.
	 	 	
-
	 	Added “or
Administrator” after “Manager”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.

12

 

	 	 	 	 	 	 	 	 	 
	 	 	
-
	 	Added “broad discretion and” prior to
“authority”.
	 	-
	 	Conforms with current royalty
trust practice, whereby managers
often exercise discretion in
administrative matters.
	 	 	
-
	 	Added “and
regulate the” after “administer”.
	 	-
	 	Drafting improvement.
	 	 	
-
	 	Added “the Trustee and” after “Corporation
and”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.
	 	 	
-
	 	Deleted
“executive” in “executive decisions”.
	 	-
	 	Drafting improvement.
	 	 	
-
	 	Added “or previously established by the
Corporation and the Trustee after “general
principles established hereunder”.
	 	-
	 	Allows Corporation and Trustee
to establish principles to be
followed by appointees.
	 	 	
-
	 	Added “or
contracts” after “contract”.
	 	-
	 	Reflects current situation – there
is more than 1 contract pursuant to
which duties are delegated.
	 	 	
-
	 	Added “or
Administrator” after “Manager”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.
	 	 	
-
	 	Added “or Administrator’s” after
“Manager’s”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.
	 	 	
-
	 	Changed final sentence to “The Corporation,
the Trustee, Pengrowth and the Fund shall
enter into the Management Agreement
pursuant to which Pengrowth shall first be
appointed “Advisor” and assigned certain
duties of the Manager.”
	 	-
	 	Properly reflects current situation.
	

	12.01	 	
-
	 	Replaced “(when authorized by a resolution
of the directors)” with “(when authorized by
a resolution of its Board of Directors)”.
	 	-
	 	Clarification.
	

	13.02	 	
-
	 	Deleted “and” at end of (a), deleted “will be
paid into the Reserve” and replaced with
comma in (b), changed period at end of (b)
to semi-colon and added “and”, and added
new (c): “such additional amounts of Gross
Revenue, not to exceed twenty percent
(20%) of Gross Revenue for the particular
period, if, as and when the Grantor
determines, in its reasonable discretion, that
it would be prudent to do so in accordance
with prudent business practices to provide
for the payment of future Capital
Expenditures or for the payment of Royalty
Income in any future period or periods.”
	 	-
	 	Allows Grantor greater discretion
to fund future Capital
Expenditures with Gross Revenue.
	

	13.04	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	

	13.05	 	
-
	 	Changed “Income Tax Canada Act
(Canada)” to “Act”.
	 	-
	 	Defined term.
	 	 	
-
	 	Changed
“such Act” to “the Act”.
	 	-
	 	Defined term.
	

	Execution Page	 	
-
	 	“Montreal” changed to “Computershare”.
	 	-
	 	Reflects assignment, see above.
	

13

 

	 	 	 	 	 	 	 	 	 
	

	Schedule A	 	
-
	 	“Montreal” changed to “Computershare”
	 	-
	 	Reflects assignment, see above.
	 	 	
-
	 	Changed date to April 23, 2002.
	 	-
	 	Update – date of indenture
changed.
	

	Schedule B	 	
-
	 	Deleted this Schedule (Fixed and Floating
Charge Debenture).
	 	-
	 	No longer relevant.
	

B.     Trust Indenture

	 	 	 	 	 	 	 	 	 
	

	Reference	 	 	 	Change	 	 	 	Reason
	

	Document	 	
-
	 	The document has been renumbered and
reformatted. All cross-references have been
updated to correspond with the renumbered
document. Unless otherwise specified as an
“Old” section number, the section numbers
referred to in this summary are the section
numbers as they now exist in the proposed
revised document.
	 	-
	 	To reflect numbering and styles
that resulted from the many
amendments conducted in
previous years.
	

	Title	 	
-
	 	Changed to Amended and Restated Trust
Indenture
	 	-
	 	Update.
	

	Introduction	 	
-
	 	Changed opening line to: “THIS
AMENDED AND RESTATED TRUST
INDENTURE is made as of the 23rd day of
April, 2002, and is an amendment and
restatement of the Trust Indenture dated
December 2, 1988 as amended by ten
successive Supplemental Trust Indentures.”
	 	-
	 	Update.
	

	Agreement Parties	 	
-
	 	Deleted “OF THE FIRST PART” and “OF
THE SECOND PART”.
	 	-
	 	No longer a useful practice.
	 	 	
-
	 	The Trustee has been changed from
Montreal Trust Company of Canada to
Computershare Trust Company of Canada.
	 	-
	 	Montreal Trust has sold its
corporate trust and stock transfer
business of to Computershare
Investor Services, which
subsequently formed
Computershare Trust Company of
Canada. Last year’s Unitholder
Meeting approved the succession
and the relevant documents are
being assigned.
	

	1.01 (a)
Definition of
“Administrator”	 	
-
	 	Added new definition:
“Administrator” means the Person referred
to in Article X;
	 	-
	 	Administrator is referred to later
in the Trust Indenture.
	

	1.01 (c)
Definition of
“Amended Tax
Ruling”	 	
-
	 	New definition added:
“Amended Tax Ruling” means,
collectively, the advance income tax rulings
dated December 15, 1988 and December 15,
1998 received by legal counsel to the
Corporation and the Fund from the Canada
Customs and Revenue Agency (formerly
named Revenue Canada);
	 	-
	 	Referred to in the Trust Indenture.
	

	1.01 (d)
Definition of
“Auditors”	 	
-
	 	“Thorn Ernst & Whinney” changed to
“KPMG LLP”.
	 	-
	 	Reflects current situation.
	

14

 

	 	 	 	 	 	 	 	 	 
	

	1.01 (e)
Definition of
“Available
Redemption Funds”	 	
-

-
	 	Added comma to end of (ii).

Deleted “all Trust Expenses” and replaced
with “without duplication, all expenses paid
or incurred in respect of the administration
of the Fund, including without limitation the
fees earned by the Trustee in connection
with the administration of its duties
hereunder or under the Royalty Indenture,”
	 	-

-
	 	Punctuation correction.

Trust Expenses is not a defined
term.
	 	 	
-
	 	Changed period at end to semi-colon.
	 	-
	 	Punctuation correction.
	

	Old 1.01 c.
Definition of
“Certified
Resolution”	 	
-
	 	Deleted definition entirely.
	 	-
	 	This defined term is not used in
the Constating Documents.
	

	1.01 (h)
Definition of
“Closing Market
Price”	 	
-
	 	Changed period at end to semi-colon.
	 	-
	 	Punctuation correction.
	

	1.01 (j)
Definition of
“Distributable
Income”	 	
-

-

-
	 	Changed ARTC to ARC.

In (i), changed “reimbursed” to “paid”.

Changed (iii) to: “without duplication of any
other amount already deducted from the
Royalty or otherwise in determining
Distributable Income, all general and
administrative expenses, management fees,
debt repayments and or other expenses of the
Fund;”
	 	-

-

-
	 	Reflects legislative change.

Clarification.

Clarification.
	

	1.01 (p)
Definition of
“Management
Agreement”	 	
-

-
	 	Inserted “Amended and Restated” prior to
“Management Agreement”.

Changed “made as of the date hereof” to
“made and in force from time to time”
	 	-

-
	 	Reflects proposed new name of
Management Agreement.

The date of the Management
Agreement is changed with each
amendment.
	 	 	
-
	 	Changed “between” to “among”.
	 	-
	 	More than 2 parties to the
Management Agreement.
	

	1.01 (q)
Definition of
“Manager”	 	
-
	 	Capitalized “Person”.
	 	-
	 	Proposed to be a defined term.
	

	1.01 (r)
Definition of “Market
Price”	 	
-
	 	Changed period at end to semi-colon
	 	-
	 	Punctuation correction.
	

	Old 1.01 n.
Definition of
“Offering Price”	 	
-
	 	Deleted definition entirely.
	 	-
	 	This defined term is not used in
the Constating Documents.
	

	Old 1.01 o.
Definition of
“Officers’ Certificate”	 	
-
	 	Deleted definition entirely.
	 	-
	 	This defined term is not used in
the Constating Documents.
	

	1.01 (t)
Definition of
“Ordinary
Resolution”	 	
-

-
	 	Added definition:

“Ordinary Resolution” has the meaning
attributed to it in subsection 12.06(b);
	 	-
	 	To accommodate the proposed
changes to Section 12.05 and
12.06.
	

15

 

	 	 	 	 	 	 	 	 	 
	

	1.01 (u)
Definition of
“Permitted
Investments”	 	
-

-

-
	 	Replaced “Income Tax Act” with “Act”.

Inserted semi-colon at end of (i).

At end of (iv), added “to the extent they are
permitted investments of a mutual fund trust
under the provisions of subsection 132(6) of
the Act”.
	 	-

-

-
	 	Proper definition incorporated
from Royalty Indenture.

Punctuation correction.

Ensuring royalties are permitted to
be held.
	 	 	
-
	 	In (vi), deleted “person or partnership or
other”.
	 	-
	 	Unnecessary.
	 	 	
-
	 	In (vii), changed “tangible” to “real”.
	 	-
	 	Reflects legislative requirement.
	

	1.01 (v)
Definition of
“Person”	 	
-
	 	New definition added:
“Person” includes any natural person,
corporation, limited partnership, general
partnership, joint stock property, joint
venture, association, company, limited
liability company, trust, bank, trust company
or other organization, whether or not a legal
entity, and government authority;
	 	-
	 	Referred to in the Trust Indenture.
	

	Old 1.01 p.
Definition of
“Properties”	 	
-
	 	Deleted definition entirely.
	 	-
	 	This defined term has been
deleted as it is not used in the
Constating Documents.
	

	1.01 (x)
Definition of
“Redemption
Payment Date”	 	
-
	 	Changed period at end to semi-colon.
	 	-
	 	Punctuation correction.
	

	1.01 (y)
Definition of
“Redemption Price”	 	
-
	 	Changed period at end to semi-colon.
	 	-
	 	Punctuation correction.
	

	1.01 (cc)
Definition of
“Royalty Indenture”	 	
-

-
	 	Inserted “Amended and Restated” prior to
“Royalty Indenture”.

Deleted “, as the same may be amended from
time to time”.
	 	-

-
	 	Reflects proposed new name of
Royalty Indenture.

See new Section 1.09 proposed
below.
	

	1.01 (ii)
Definition of “Trust
Fund”	 	
-
	 	In the Sixth Supplemental Trust Indenture,
Old section 1.01 aa. was to be replaced with
a definition of “Trust Fund”. However, the
previous definition of Trust Fund was
actually found in Old 1.01 cc. Therefore
there were 2 different definitions of Trust
Fund in place. The older definition from Old
1.01 cc. is now deleted. The definition that
was previously in Old 1.01 aa., “Transfer
Agent”, is not referred to anywhere else in
the Constating Documents and remains
deleted.
	 	-
	 	Correction of erroneous earlier
amendment.
	

	1.01 (ll)
Definition of
“Unanimous
Shareholder
Agreement”	 	
-

-
	 	Inserted “Amended and Restated” prior to
“Unanimous Shareholder Agreement”.

Changed “between” to “among”.
	 	-

-
	 	Reflects proposed new name of
Unanimous Shareholder
Agreement.

More than 2 parties to Unanimous
Shareholder Agreement.
	 	 	
-
	 	Added the Fund to the list of Parties.
	 	-
	 	Pengrowth Energy Trust is now a
shareholder of the Corporation
and should be included as a party
to the Unanimous Shareholder
Agreement.
	

16

 

	 	 	 	 	 	 	 	 	 
	

	1.01 (mm)

Definition of “year”	 	
-
	 	Added
“and” to end.
	 	-
	 	Grammatical correction.
	

	Old 1.04	 	
-
	 	This section (re: reference to Income Tax
Act as amended from time to time) has been
deleted in its entirety.
	 	-
	 	Covered by definition of Act in
the Royalty Indenture and new
Section 1.09 proposed below.
	

	1.09

(proposed new)	 	
-
	 	Added: “1.09 References – Unless otherwise
specified herein, reference herein to any
contract, agreement, legislation, regulation
or rule shall be a reference to such contract,
agreement, legislation, regulation or rule as
amended from time to time.”
	 	-
	 	Ensures that documents are
referred to as amended, and means
that “as amended” language
throughout the Trust Indenture is
no longer needed.
	

	2.05	 	
-
	 	Updated Pengrowth Corporation address:
Suite 700, 112 – 4th Avenue S.W., Calgary,
Alberta, T2P 0H3.
	 	-
	 	Update.
	

	2.06	 	
-
	 	Capitalized
“Person”.
	 	-
	 	Proposed to be a defined term.
	

	2.07	 	
-
	 	Capitalized
“Person”.
	 	-
	 	Proposed to be a defined term.
	

	2.08	 	
-
	 	Added references to “the Administrator”
throughout this section.
	 	-
	 	Administrator should be treated in
much the same way as the
Manager.
	

	3.01	 	
-
	 	Added “Subject to subsection 104(7.1) of the
Act,” to the beginning of the second
sentence,

de-capitalized next word.
	 	-
	 	Qualifies entitlement based on Act
requirements.
	 	 	
-
	 	Capitalized
“Board of Directors”.
	 	-
	 	Uniformity correction.
	 	 	
-
	 	Removed comma after “Board of Directors
of the Corporation”.
	 	-
	 	Punctuation correction.
	 	 	
-
	 	Deleted “obtained by the Fund from Canada
Customs and Revenue Agency”.
	 	-
	 	Amended Tax Ruling is proposed
to be a defined term that will
include this information.
	

	3.02	 	
-
	 	The Sixth Supplemental Trust Indenture
provided that 3.01 be amended by replacing
100,000,000 with 500,000,000. The correct
reference should have been to 3.02. This
change is confirmed by this proposed revised
Trust Indenture.
	 	-
	 	Correction of erroneous previous
amendment.
	

	3.03 (a)	 	
-
	 	Inserted comma after “pursuant to section
3.02”.
	 	-
	 	Punctuation correction.
	

	3.03 (d)	 	
-
	 	Revised clause to read: “The definitive form
of the Trust Units and the certificate of the
Trustee endorsed thereon shall be in the
English language only, shall be in the form
set forth in the Schedule hereto, shall be
dated as of the Date of Closing (including all
replacements issued in accordance with this
indenture), shall include such distinguishing
letters and numbers as the Corporation, with
the approval of the Trustee, may prescribe,
and shall be issuable in Unit denominations.”
	 	-
	 	Grammatical corrections.
	

	3.04	 	
-
	 	Insert “of the Corporation” after “Board of
Directors”.
	 	-
	 	Clarification.
	

	3.05	 	
-
	 	Capitalized
“Person”.
	 	-
	 	Proposed to be a defined term.
	

17

 

	 	 	 	 	 	 	 	 	 
	

	3.07	 	
-
	 	The Sixth Supplemental Trust Indenture
made changes to Section 3.07. However,
due to a numbering error in the original
document, there never was a Section 3.07. It
appears that the changes in question relate to
what was actually numbered as 3.08 and
such change was never made. Therefore, the
change needed to be made to 3.08: deleted
the reference to “conduct the business of the
Fund” and replaced it with “manage the
investments of the Fund”.
	 	-
	 	Correction.
	

	3.11	 	
-
	 	Changed “Income Tax Act (Canada)” to
“Act”.
	 	-
	 	Defined term from Royalty
Indenture.
	

	4.02	 	
-
	 	Changed references to “Income Tax Act” to
“Act”.
	 	-
	 	Defined term from Royalty
Indenture.
	 	 	
-
	 	Deleted “obtained from the Fund from
Canada Customs and Revenue Agency”.
	 	-
	 	Amended Tax Ruling is proposed
to be a defined term.
	

	5.02	 	
-
	 	Rewritten: “The Trustee shall be obligated
to (i) apply for ARC, and (ii) reimburse the
Corporation for Reimbursed Crown Charges
paid by the Corporation except to the extent
that the Corporation has elected to waive its
right to reimbursement, in accordance with
the Royalty Indenture.”
	 	-
	 	The reference to ARC is proposed
to be reinserted – it was deleted by
a previous amendment at a time
when it was expected that ARC
would cease to exist.
	

	5.04	 	
-
	 	Capitalized
“Person”.
	 	-
	 	Proposed to be a defined term.
	

	5.05	 	
-
	 	Added to the end of the first sentence: “,
subject to subsection 104(7.1) of the Act”.
	 	-
	 	Reminder of legislative
requirement and clarification.
	 	 	
-
	 	Changed
“Income Tax Act” to “Act”.
	 	-
	 	Defined term in Royalty
Indenture.
	

	5.06	 	
-
	 	New section added:
	 	-
	 	Moved from the Royalty
Indenture because more
appropriate here.
	

5.06     Obligations of Corporation

	a)	 	On the dates in each year in which the Board of Directors of the Corporation elects to
make Cash Distributions in accordance with section 1.01(k) of the Royalty Indenture, the
Corporation will furnish or cause to be furnished to the Trustee and to the Royalty
Unitholders or Trust Unitholders of record on the tenth business day immediately
preceding each of such dates, on behalf of the Trustee, payment to each Trust Unitholder
of his respective share of the Cash Distribution plus ARC, plus any interest earned by the
Fund.
	 
	b)	 	Not later than 140 days after December 31 in each calendar year, the Corporation will
forward to the Trustee and to the Unitholders of record consolidated annual financial
statements of the Fund. The Corporation will also forward the interim consolidated
unaudited financial statements of the Fund to the Trustee and to the Unitholders of record
within the periods prescribed by applicable corporate and securities legislation, if it is not
exempted from such reporting requirements.

18

 

	 	 	 	 	 	 	 	 	 
	

	Article VI	 	
-
	 	Article VI has been structurally revised:
	 	-
	 	To reflect current situation and
to make identical to analogous
provision in Royalty Indenture.
	

ARTICLE VI

EXCHANGE OF ROYALTY UNITS

6.01 Exchange Right

     A holder of Royalty Units (other than the Trustee) shall have the right,
at his option, to exchange any or all such Royalty Units for a number of Trust
Units having a value on the date of exchange equal to the value of such Royalty
Units as conclusively determined by the Corporation. Such exchange may be made
at any time so long as there are Trust Units outstanding, and subject to the
foregoing, such exchange shall occur on the terms and conditions set forth
below and in the Royalty Indenture.

6.02 Exercise of Exchange Right

	a)	 	The holder of Royalty Units desiring to exchange such Royalty Units in
whole or in part for Trust Units shall surrender his Royalty Unit
Certificate to the Trustee at its principal office in any of the cities of
Calgary, Vancouver or Toronto, together with the exchange form on the back
of such Royalty Unit Certificate or any other written notice in a form
satisfactory to the Trustee, in either case duly executed by the holder or
his executors or administrators or other legal representatives or his or
their attorney duly appointed by an instrument in writing in form and
executed in a manner satisfactory to the Trustee, exercising his right to
exchange such Royalty Units in accordance with the provisions of this
Article and the Royalty Indenture. Thereupon such Royalty Unitholder
and/or, subject to payment of all applicable stamp or security transfer
taxes or other governmental charges and compliance with all reasonable
requirements of the Trustee, his nominee(s) or assignee(s) shall be
entitled:

	 	i)	 	to be entered in the books of the Fund as at the Date of
Exchange (or such later date as is specified in subsection 4.02(b))
as the holder of the number of Trust Units into which such Royalty
Units are exchangeable in accordance with the provisions of this
Article and, as soon as practicable thereafter, the Trustee shall
deliver to such Royalty Unitholder and/or, subject as aforesaid, his
nominee(s) or assignee(s) a certificate or certificates for such
Trust Units; and
	 
	 	ii)	 	to receive from the Trustee a Royalty Unit Certificate
representing those Royalty Units (if any) which were not exchanged
for Trust Units.

		
	 	     Thereupon, the Trustee shall be entitled to be entered into the books of
the Corporation as the holder of the number of Royalty Units which are so
exchanged.

	b)	 	For the purposes of this Article, Royalty Units shall be deemed to be
surrendered for exchange on the date (herein called the “Date of
Exchange”) on which they are so surrendered in accordance with the
provisions of this Article and, in the case of Royalty Units surrendered
by post or other means of transmission, on the date on which they are

19

 

	 	 	received by the Trustee at one of its offices specified in Section
4.02(a); provided that if Royalty Units are surrendered for exchange on a
day which is not a Business Day, the Person entitled to receive Trust
Units shall become the holder or holders of record of such Trust Units as
at the date on which such registers are next reopened.

6.03 Issue of Royalty Unit Certificates

     All Royalty Unit Certificates representing Royalty Units exchanged under
the provisions of this Article shall be forthwith delivered to and, if
necessary, cancelled and destroyed by the Trustee and Royalty Unit Certificates
representing the Royalty Units exchanged for Trust Units shall be delivered to
or, if necessary, issued to the Trustee as trustee under the Trust Indenture.
Royalty Unit Certificates representing the Royalty Units not so exchanged shall
be issued to the Royalty Unitholder.

	 	 	 	 	 	 	 	 	 
	

	7.02	 	
-
	 	Added “and
conditions” after “limitations”.
	 	-
	 	Clarification.
	

	7.03	 	
-
	 	Added “(excluding facilities, pipelines or
other assets associated with oil and natural
gas production)” prior to “held by the Fund at
such time.”
	 	-
	 	Such facilities should not be
available on redemption.
	

	8.01	 	
-
	 	Replaced
“Montreal” with “Computershare”.
	 	-
	 	Reflects assignment, see above.
	

	9.02	 	
-
	 	In (e), ARTC
changed to ARC.
	 	-
	 	Reflects legislative change.
	 	 	
-
	 	In (g),
capitalized “Person”.
	 	-
	 	Proposed to be a defined term.
	 	 	
-
	 	In (h),
capitalized “Persons”.
	 	-
	 	Proposed to be a defined term.
	 	 	
-
	 	In (i),
capitalized “Persons”.
	 	-
	 	Proposed to be a defined term.
	 	 	
-
	 	In (k),
capitalized “Person”.
	 	-
	 	Proposed to be a defined term.
	 	 	
-
	 	In (l),
capitalized “Person” and “Persons”.
	 	-
	 	Proposed to be a defined term.
	 	 	
-
	 	In (n),
“Income Tax Act” changed to “Act”.
	 	-
	 	Defined term in Royalty
Indenture.
	 	 	
-
	 	In (o),
de-capitalized “to”.
	 	-
	 	Uniformity correction.
	 	 	
-
	 	In (o), added to the end: “that are real
property or otherwise permitted to be held by
a mutual fund trust under the provisions of
subsection 132(6) of the Act”.
	 	-
	 	Confirms Trust’s allowed
acquisitions.
	 	 	
-
	 	In (p), added “to” to the beginning and
removed “and” from the end.
	 	-
	 	Uniformity correction.

20

 

	 	 	 	 	 	 	 	 	 
	 	 	
-
	 	In (q), added “to” to the beginning and
changed period at end to semi-colon.
	 	-
	 	Uniformity correction.
	 	 	-	 	In (q),
capitalized “Person”.
	 	-
	 	Defined term.
	 	 	
-
	 	In (q), deleted “, to charge, pledge,
hypothecate and grant security interests over
or with respect to all or any property of the
Fund”.
	 	-
	 	Repetitive of
9.02(x).
	 	 	
-
	 	In (x), changed “any of the assets” to “all or
any of the assets”.
	 	-
	 	Clarification.
	 	 	
-
	 	In (x), removed
“and” from end.
	 	-
	 	Uniformity correction.
	 	 	
-
	 	In (x), added “or the Corporation to the end
	 	-
	 	Allows the Fund to support the
Corporation’s necessary
financing activities.
	 	 	
-
	 	In (y),
de-capitalized “Offering Documents”.
	 	-
	 	Not a defined term.
	 	 	
-
	 	In (y), changed
“issued” to “issue”.
	 	-
	 	Grammatical correction.
	 	 	
-
	 	In (y), changed period to semi-colon and
added “and” to the end.
	 	-
	 	Uniformity corrections.
	 	 	
-
	 	Added new (z):
	 	-
	 	This is required to authorize the
Trust to enter into certain
agreements required by lenders
to the Corporation for necessary
financing activities.
	

	(z)	 	to enter into a subordination agreement with any lender or lenders to the
Corporation pursuant to which the Fund agrees to subordinate its right to
be paid the Royalty by the Corporation to the right of any such lender or
lenders to be paid obligations owing to it by the Corporation, and which
agreement may further provide, without limitation, that in the event of a
default by the Corporation to any of its lenders, including any such
default in connection with credit facilities, swap or hedging agreements
or otherwise, the Corporation will not make any further payments in
respect of the Royalty to the Fund, or that the Fund will not make any
further distributions to Trust Unitholders, or that in the event any such
lenders realize against the assets of the Corporation (including, without
limitation, Properties) in connection with collecting upon any of the
obligations owing by the Corporation to any of such lenders, whether
pursuant to any security granted by the Corporation or otherwise, the
Trustee shall release the Royalty on the assets realized upon and the
lenders shall be entitled to realize on the assets of the Corporation free
and clear of the Royalty.

	 	 	 	 	 	 	 	 	 
	
	 	 
	9.05	 	
-
	 	Capitalized
“Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	9.09	 	
-
	 	Capitalized
“Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	10.01	 	
-
	 	Changed
“person” to “Person or Persons”.
	 	-
	 	Defined term.	 	 
	 	 	
-
	 	Added “or “Administrator” as the case may
be” after “the “Manager”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.	 	 
	 	 	
-
	 	Added “to the Manager or Administrator”
after “The Trustee may grant”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.	 	 

21

 

	 	 	 	 	 	 	 	 	 
	 	 	
-
	 	After “broad discretion”, added “and
authority” and deleted “to the Manager”.
	 	-
	 	Conforms with current royalty
trust practice, whereby
managers often exercise
discretion and act with authority
in administrative matters.	 	 
	 	 	
-
	 	Deleted
“executive” in “executive decisions”.
	 	-
	 	Drafting improvement.	 	 
	 	 	
-
	 	Added “established hereunder or” prior to
“previously established by the Trustee”.
	 	-
	 	Binds appoints to principle of
the Royalty Indenture.	 	 
	 	 	
-
	 	Added “or
contracts” after “contract”.
	 	-
	 	Reflects current situation – there
is more than 1 contract pursuant
to which duties are delegated.	 	 
	 	 	-	 	Added “or
Administrator” after “Manager”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.	 	 
	 	 	
-
	 	Added “or Administrator’s” after
“Manager’s”.
	 	-
	 	Reflects current situation –
Corporation is appointed as
Administrator under the Trust
Indenture.	 	 
	 	 	
-
	 	Changed final sentence to “The Corporation,
the Trustee, Pengrowth and the Fund shall
enter into the Management Agreement
pursuant to which Pengrowth shall first be
appointed “Advisor” and assigned certain
duties of the Manager.”
	 	-
	 	Properly reflects current
situation.	 	 
	
	 	 
	10.02 and 10.03	 	
-
	 	At the beginning of 10.02, inserted:
“Pursuant to its ability to delegate in
accordance with Section 10.01,”, and de-
capitalized next word.
	 	-
	 	Clarification and correction.	 	 
	 	 	
-
	 	In 10.02 (a), changed “Offering” to “an
offering of Trust Units to prospective Trust
Unitholders”.
	 	-
	 	Offering is not a defined term.	 	 
	 	 	
-
	 	In 10.02 (a) (ii), changed “Offering
Documents” to “documents prepared and
issued in respect of such offering”.
	 	-
	 	Offering Documents is not a
defined term.	 	 
	 	 	
-
	 	In 10.02 (a) (iv), changed “Rights Units” to
“rights to acquire Units”.
	 	-
	 	Rights Units is not a defined
term.	 	 
	 	 	
-
	 	Deleted 10.02 (c), re: delegated
responsibility to Corporation for matters
relating to borrowings by the Fund and
provision of guarantees for the obligations of
the Corporation and loans by Fund to
Corporation.
	 	-
	 	Trust law dictates that the
Trustee should not grant
authority to a nominee in
circumstances where the
nominee has a conflict of
interest with respect to the
authority so delegated.	 	 
	 	 	
-
	 	In the final paragraph of 10.02, deleted
comma after administrator, and deleted “, and
if directed by the Corporation in writing the
Trustee shall,”.
	 	-
	 	The validity of the Trust might
be compromised if the Trustee
was absolutely obligated to
follow the Corporation’s
directives in this explicit
manner.	 	 
	 	 	
-
	 	In 10.03, de-capitalized “Offering
Documents”.
	 	-
	 	Offering Documents is not a
defined term.	 	 
	
	 	 
	10.04	 	
-
	 	Capitalized “Contracts” in “Material
contracts”.
	 	-
	 	Defined term.	 	 
	
	 	 
	10.06	 	
-
	 	Changed to the following: “The Corporation
as Administrator shall, and shall cause the
	 	-
	 	The Manager, being Pengrowth
Management Limited, is not a	 	 

22

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Manager to, furnish to the Trustee annually,
within 120 days of the fiscal year end of the
Fund, a certificate signed by the Chief
Executive Officer and the Chief Financial
Officer of the Administrator and Manager, or
such other officers of the Administrator and
the Manager as may be acceptable to the
Trustee certifying that the Administrator and
the Manager are in compliance in all material
respects of its covenants, duties or obligations
under the Trust Indenture and Royalty
Agreements relating to the business and
affairs of the Fund, or if such is not the case,
specifying the covenants, duties or
obligations which have not been complied
with and giving particulars of such non
compliance.”
	 	 	 	party to the Trust Indenture and
cannot be subjected to binding
obligations in the Trust
Indenture. The amendment
requires the Corporation to
cause the Manager to provide
the certificate, and it is proposed
that the Management
Agreement be amended to
require the Manager to provide
the certificate (the Manager is a
party to the Management
Agreement and therefore its
obligations thereunder can be
enforced).	 	 
	
	 	 
	11.01	 	
-
	 	In (a) changed “Income Tax Act” to “Act”.
	 	-
	 	Defined term in Royalty
Indenture.	 	 
	 	 	
-
	 	In ending paragraph, moved comma after
“and” to before “and”.
	 	-
	 	Punctuation correction.	 	 
	 	 	
-
	 	Capitalized “Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	12.01	 	
-
	 	Prior to last sentence, inserted: “To the
extent permitted by applicable law, meetings
of Trust Unitholders may be held partially or
entirely by means of a telephonic, electronic
or other communication facility, including
teleconferencing, video conferencing,
computer link, webcasting and other similar
means.”
	 	-
	 	This provision will allow for the
use of modern technology.	 	 
	
	 	 
	12.02	 	
-
	 	Changed “passe” to “passed”.
	 	-
	 	Typographical correction.	 	 
	
	 	 
	12.04	 	
-
	 	Capitalized “Persons”.
	 	-
	 	Proposed to be a defined term.	 	 
	 	 	
-
	 	Added sentence to the end: “ To the extent
permitted by applicable law, the Trustee may
from time to time make, vary or revoke such
regulations as it shall think fit providing for
and governing the depositing and tabulation
of proxies by telephonic, electronic or other
communication means. To the extent
permitted by applicable law, a person entitled
to vote at a meeting of Trust Unitholders may
vote by means of a telephonic, electronic or
other communication facility that the Trustee
has made available for that purpose.”
	 	-
	 	This provision will allow for the
use of modern technology.	 	 

23

 

	 	 	 	 	 	 	 	 	 
	
	 	 
	12.05	 	
-
	 	At end of (g), deleted “and”.
	 	-
	 	Uniformity correction.	 	 
	 	 	
-
	 	At end of (h), changed period to semi-colon
and added “and”.
	 	-
	 	Uniformity correction.	 	 
	 	 	
-
	 	Add new (i): “ authorizing and directing the
Trustee to subordinate its rights to receive
Royalty Income and all other sums and to
distribute Distributable Income in
circumstances where a default by the
Corporation has occurred in respect of any of
its obligations to pay any of the Corporation’s
lenders, including a default in connection
with any credit facility or in connection with
any swap or hedging agreement, or to
guarantee all or any of the obligations,
liabilities or indebtedness of the Corporation
to all or any of the Corporation’s lenders,
including without limitation in respect of all
or any of the obligations, liabilities and
indebtedness of the Corporation to any or all
of such lenders under, pursuant or relating to
any credit facility, swap or hedging
agreement or otherwise, or to any other
Person or Persons.”
	 	-
	 	This language is required to
enable the Trust Unitholders to
pass resolutions to be proposed
at the meeting directing the
Trustee to enter certain
subordination and guarantee
agreements that may be required
by lenders to the Corporation
for necessary financing
activities.	 	 
	
	 	 
	12.05	 	-

	 	Added the following sentence after the first
sentence of the last paragraph: “Actions
taken or resolutions passed in respect of
matters described in subsection (i), (iv), (v),
(vi), (vii), (viii) and (ix) shall be by
Extraordinary Resolution.”
	 	-
	 	The general approach is that
matters require the approval of a
simple majority and that
Extraordinary Resolutions are to
be required only in
extraordinary situations, which
the Corporation believes are
those presently 	 	 
		 	-

	 	
Added “other” before “action taken or
resolution passed”, changed “Extraordinary”
to “Ordinary”, deleted “, and except for the
matters set out in subsection (ii) and (iii)
above.”
	 	
	 	specifically
identified in the indenture and
include the removal or
appointment of a trustee, the
stale of all or substantially all of
the property of the Trust Fund
and the amendments to the
indenture.	 	 
	
	 	 
	12.06	 	
-
	 	Inserted new (b) in-between previous (a) and
(b): “The expression “Ordinary Resolution”
when used in this indenture means, subject as
hereinafter in this Article provided, a
resolution proposed to be passed as an
ordinary resolution at a meeting of Trust
Unitholders (including an adjourned meeting)
duly convened for the purpose and held in
accordance with the provisions of this Article
at which two or more holders of at least 5%
of the aggregate number of Trust Units then
outstanding are present in person or by proxy
and passed by the affirmative votes of the
holders of more than 50% of the Trust Units
represented at the meeting and voted on a poll
upon such resolution.”
	 	-
	 	These changes are ancillary to
those described in respect of
Section 12.05 above.	 	 

24

 

	 	 	 	 	 	 	 	 	 
	 	 	
-
	 	In (c), changed “shall be an Extraordinary
Resolution within the meaning of this
indenture” to “shall be an Extraordinary
Resolution or an Ordinary Resolution within
the meaning of this indenture, as the case
may be,”.	 	 	 	 	 	 
	 	 	
-
	 	In (d), added “or an Ordinary Resolution”
after “Extraordinary Resolution”.	 	 	 	 	 	 
	
	 	 
	13.01	 	
-
	 	Capitalized “Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	13.02	 	
-
	 	Capitalized
“Trustee”.
	 	-
	 	Defined term.	 	 
	
	 	 
	13.03	 	
-
	 	In (b), capitalized “Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	 	 	
-
	 	At end of (d), replaced comma with semi-colon.
	 	-
	 	Punctuation correction.	 	 
	
	 	 
	13.04	 	
-
	 	Capitalized “Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	13.05	 	
-
	 	Capitalized “Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	13.06	 	
-
	 	Capitalized “Person” and “Persons”.
	 	-
	 	Proposed to be a defined term.	 	 
	 	 	
-
	 	Changed “by described” to “be described”.
	 	-
	 	Typographical correction.	 	 
	
	 	 
	13.07	 	
-
	 	Capitalized “Person”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	13.10	 	
-
	 	Capitalized “Person” and “Persons”.
	 	-
	 	Proposed to be a defined term.	 	 
	
	 	 
	14.01	 	
-
	 	Changed “is” to “are” (“when there are no
longer any Trust Units outstanding”).
	 	-
	 	Grammatical correction.	 	 
	
	 	 
	14.02 (a)	 	
-
	 	Changed “RRSPs, RRIFs and DPSPs” to
“registered retirement savings plans,
registered retirement income funds, deferred
profit sharing plans or registered education
savings plans, as those terms are defined in
the Act.”
	 	-
	 	Clarification (not defined terms)
and addition of RESPs which
should be included in the list.	 	 
	
	 	 
	14.07	 	
-
	 	Deleted “the Fund shall automatically
terminate with respect to the Royalty Units
and”.
	 	-
	 	The Fund should not terminate
in any sense in such case.	 	 
	 	 	
-
	 	Added sentence to end: “If the balance of the
other investments or assets comprising the
Trust Fund are sold or otherwise disposed of,
the Trustee will distribute to the Trust
Unitholders on a pro rata basis the net
proceeds from such disposition and the Fund
shall terminate.”
	 	-
	 	Clarifying when the Fund
should actually terminate.	 	 
	
	 	 
	16.04	 	
-
	 	Capitalized “Persons”.
	 	-
	 	Proposed to be a defined term.	 	 
	 	 	
-
	 	Changed “interest” to “interested” (“all
Persons interested in the Trust Units
concerned”).
	 	-
	 	Grammatical correction.	 	 
	
	 	 
	16.06, 07, 08	 	
-
	 	Changed “ARTC” to “ARC”.
	 	-
	 	Reflects legislative change.	 	 
	 	 	
-
	 	Changed “Income Tax Act” to “Act”.
	 	-
	 	Defined term.	 	 
	
	 	 
	17.02 and 17.03	 	
-
	 	Capitalized “Auditor” and “Auditors”
throughout.
	 	-
	 	Defined term.	 	 
	 	 	
-
	 	Changed to “Thorne Ernst & Whinney,
Chartered Accountants” to “KPMG LLP”.
	 	-
	 	Reflects current situation.	 	 
	
	 	 
	18.04	 	
-
	 	Updated Trustee
address: Suite 710 – 530
8th Avenue S.W., Calgary, Alberta, T2P 3S8.
	 	-
	 	Update.	 	 
	
	 	 
	18.05	 	
-
	 	Updated Pengrowth Corporation’s address:
Suite 700, 112 – 4th Avenue S.W., Calgary,
Alberta, T2P 0H3.
	 	-
	 	Update.	 	 
	 	 	
-
	 	(c) has been rewritten: “If, by reason of a
strike, lockout or other work stoppage, actual
or threatened, involving postal employees,
	 	-
	 	Typographical corrections.	 	 

25

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	any notice to be given to the Corporation
could be reasonably considered unlikely to
reach its destination, such notice shall be
valid and effective only if it is delivered to
the named officer of the Corporation, or if it
is delivered to such party at the appropriate
address provided in Section 18.05(a), by
cable, telegram, telex or other means of
prepaid, transmitted and recorded
communication.”	 	 	 	 	 	 
	
	 	 
	Execution Page	 	
-
	 	“Montreal” changed to “Computershare”.

	 	-
	 	Reflects assignment, see above.	 	 
	
	 	 
	Schedules	 	
-

-
	 	Changed first date to April 23, 2002.

“Montreal” changed to “Computershare”.
	 	-

-
	 	Update – date of indenture changed.

Reflects assignment, see above.
	 	
	

C. Unanimous Shareholder Agreement

	 	 	 	 	 	 	 	 	 
	

	Reference	 	 	 	Change	 	 	 	Reason
	

	Document	 	
-
	 	The document has been reformatted. All
cross-references have been updated in light of
the amendments. Unless otherwise specified
as an “Old” section number, the section
numbers referred to in this summary are the
section numbers as they now exist in the
proposed revised document.	 	 	 	 
	

	Title	 	
-
	 	Changed name to “Amended and Restated
Unanimous Shareholder Agreement”.
	 	-
	 	Conformity correction.
	

	Introductory Sentence	 	
-
	 	Date changed: “THIS AGREEMENT is
made as of April 23, 2002, and is an
amendment and restatement of the
Unanimous Shareholder Agreement dated
December 2, 1988, as amended April 28,
1999, April 26, 2000, ...”
	 	-
	 	Update.
	 	 	
-
	 	Removed “and by the addition of the
Pengrowth Directors Trust as a Shareholder
in accordance with the Extraordinary
Resolutions”.
	 	-
	 	Correction and update.
	

	Agreement Parties	 	
-
	 	Changed defined term for Pengrowth
Management Limited to “Pengrowth”.
	 	-
	 	“Shareholder” is no longer an
appropriate reference as there is
more than one shareholder.
	 	 	
-
	 	Added Pengrowth Energy Trust as a party.
	 	-
	 	Pengrowth Energy Trust is now
a shareholder of the Corporation
and should be included as a
party to the Unanimous
shareholder Agreement.
	 	 	
-
	 	Changed Pengrowth Gas Corporation to
Pengrowth Corporation.
	 	-
	 	Name change.
	 	 	
-
	 	Changed “Montreal” to “Computershare”.
	 	-
	 	Reflects assignment, see above.
	 	 	
-
	 	Deleted “OF THE FIRST PART”, “OF THE
SECOND PART” and “OF THE THIRD
PART”.
	 	-
	 	No longer a useful practice.
	

	Recital B.	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As above, reference should be
to properties not yet owned by
the Corporation.

26

 

	 	 	 	 	 	 	 	 	 
	Reference	 	 	 	Change	 	 	 	Reason
	

	Recital C.	 	
-
	 	Changed to read: “The authorized capital of
the Corporation consists of an unlimited
number of common shares and at the date
hereof Pengrowth and the Fund are the only
registered owners of the issued and
outstanding common shares of the
Corporation;”
	 	-
	 	Updates to current ownership
structure.
	

	Recital E.	 	
-
	 	Changed
“Shareholder” to “Shareholders”,
changed syntax throughout.
	 	-
	 	Update.
	

	Recital F.	 	
-
	 	De-capitalized “parties”.
	 	-
	 	Not a defined term.
	

	Recital G.	 	
-
	 	Changed “Shareholder” to “Shareholders”,
changed syntax throughout.
	 	-
	 	Update.
	

	Definitions	 	
-
	 	Defined terms in the definitions section have
been moved to alphabetical order (if they
were not so already).
	 	-
	 	Update.
	

	1.02 (a)
Definition of “Act”	 	
-
	 	Changed definition of Act to include updated
citation: “RSA 2000, Chapter B-9”.
	 	-
	 	Update.
	

	1.02 (b)
Definition of
“Affiliate”	 	
-
	 	Changed “Business Corporations Act” to
“Act”.
	 	-
	 	Defined term.
	

	1.02 (g)
Definition of
“Management
Agreement”	 	
-
	 	Added “Amended and Restated” prior to
“Management Agreement”.
	 	-
	 	Reflects proposed new complete
name of Management
Agreement.
	

	1.02 (h)
Definition of
“Person”	 	
-
	 	Changed to: “includes any natural person,
corporation, limited partnership, general
partnership, joint stock property, joint
venture, association, company, limited
liability company, trust, bank, trust company
or other organization, whether or not a legal
entity, and government authority;”
	 	-
	 	Improved definition, conforms
to proposed Trust Indenture
definition.
	

	1.02 (k)
Definition of
“Royalty Indenture”	 	
-
	 	Added “Amended and Restated” prior to
“Royalty Indenture”.
	 	-
	 	Reflects proposed new complete
name of Royalty Indenture.
	

	1.02 (n)
Definition of
“Shareholders”	 	
-

-
	 	Added new definition:

“Shareholders” means Pengrowth and the
Fund;
	 	-
	 	Definition required now that
there are 2 shareholders.
	

	1.02 (o)
Definition of
“Shares”	 	
-
	 	Deleted “which, as of the date hereof,
consists of one hundred common shares
without nominal or par value”.
	 	-
	 	No longer accurate.
	

	1.02 (p)
Definition of “Trust
Indenture”	 	
-
	 	Added “Amended and Restated” prior to
“Trust Indenture”.
	 	-
	 	Reflects proposed new complete
name of Trust Indenture.
	

	1.02 (q)
Definition of “Trust
Unitholders”	 	
-
	 	Changed “Trust Unitholder” to “Trust
Unitholder”.
	 	-
	 	Correction.
	

	2.02	 	
-
	 	Changed “Shareholder agrees” to
“Shareholders agree”, changed “owned by it”
to “owned by them”.
	 	-
	 	Now more than 1 shareholder.

27

 

	 	 	 	 	 	 	 	 	 
	Reference	 	 	 	Change	 	 	 	Reason
	

	3.01	 	
-
	 	Changed
“seven (7)” to “eight (8)”.
	 	-
	 	Number of directors proposed to
be increased.
	 	 	
-
	 	Added additional sentence to end: “If the
appointment of (2) members by the Manager
would result in the Trust Unitholders not
having appointed a majority of the Board of
Directors, then the Manager shall appoint
only one (1) member of the Board of
Directors.”
	 	-
	 	This should more accurately
reflect the intent for the Board
of Directors, which was that the
Trust Unitholders should in all
cases appoint a majority.
	

	4.01	 	
-
	 	Changed “Shareholder” to “Shareholders”,
“its” to “theirs”.
	 	-
	 	Now more than 1 shareholder.
	 	 	
-
	 	Changed “the Manager shall have the right to
elect two directors of the Corporation” to “the
Manager shall have the right to elect directors
of the Corporation in accordance with Section
3.01 of this Agreement.”
	 	-
	 	Reflects proposed changes to
3.01.
	

	4.03	 	
-
	 	De-capitalized first word of each of (a), (b)
and (c).
	 	-
	 	Uniformity correction.
	

	4.05	 	
-
	 	Changed
“The” to “A”.
	 	-
	 	Grammatical correction.
	

	6.01	 	
-
	 	Changed “Shareholder waives” to
“Shareholders waive”.
	 	-
	 	Now more than 1 shareholder.
	

	8.01	 	
-
	 	Changed “the Shareholder” to “a
Shareholder”.
	 	-
	 	Now more than 1 shareholder.
	

	9.01	 	
-
	 	Changed
“Shareholder” to “Shareholders”.
	 	-
	 	Now more than 1 shareholder.
	

	10.02	 	
-
	 	Inserted notice address for Pengrowth Energy
Trust.
	 	-
	 	Trust is now a shareholder.
	 	 	
-
	 	Changed
“Montreal” to “Computershare”.
	 	-
	 	Reflects assignment, see above.
	 	 	
-
	 	Updated Trustee address: Suite 710 – 530
8th Avenue S.W., Calgary, Alberta, T2P 3S8.
	 	-
	 	Update.
	

	10.03	 	
-
	 	Capitalize
“Business Day.
	 	-
	 	Defined term in Royalty
Indenture.
	

	10.08	 	
-
	 	Changed
“Shareholder” to “Shareholders”.
	 	-
	 	Now more than 1 shareholder.
	

	10.11	 	
-
	 	Changed
“Shareholder” to “Shareholders”.
	 	-
	 	Now more than 1 shareholder.
	

	Execution Page	 	
-
	 	Added signature
line for Trust.
	 	-
	 	Trust is now a shareholder.
	 	 	
-
	 	Changed
“Montreal” to “Computershare”.
	 	-
	 	Reflects assignment, see above.
	

D. Management Agreement

	 	 	 	 	 	 	 	 	 
	Reference	 	 	 	Change	 	 	 	Reason
	

	Document	 	
-
	 	The document has been reformatted. All
cross-references have been updated in light
of the amendments. Unless otherwise
specified as an “Old” section number, the
section numbers referred to in this summary
are the section numbers as they now exist in
the proposed revised document.	 	 	 	 
	

28

 

	 	 	 	 	 	 	 	 	 
	Reference	 	 	 	Change	 	 	 	Reason
	

	Title	 	
-
	 	Changed name to “Amended and Restated
Management Agreement”.
	 	-
	 	Conformity correction.
	

	Introduction	 	
-
	 	Changed to: “THIS AGREEMENT is
made as of April 23, 2002, and is an
amendment and restatement of the
Management Agreement dated December 2,
1988, the Amended Management Agreement
dated April 21, 1994, the Second Amended
Management Agreement dated April 29,
1997, and the Third Amended Management
Agreement dated April 26, 2000.”
	 	-
	 	Update.
	

	Agreement Parties	 	
-
	 	Changed “Montreal” to Computershare”
	 	-
	 	Reflects assignment, see above.
	 	 	
-
	 	Deleted “OF THE FIRST PART”, “OF THE
SECOND PART”, “OF THE THIRD PART”
and “OF THE FOURTH PART”.
	 	-
	 	No longer a useful practice.
	

	Recital A.	 	
-
	 	Changed “the Properties” to “Canadian
Resource Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	

	Recital E.	 	
-
	 	Added reference to Third Amended
Management Agreement dated April 26,
2000.
	 	-
	 	Update.
	

	Definitions	 	
-
	 	Defined terms in the definitions section have
been moved to alphabetical order (if there
were not so already).
	 	-
	 	Update.
	

	1.01 (a)
Definition of
“Acquisition Fee”	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties” in numerous instances.
	 	-
	 	Changed where reference should
be to properties not yet owned
by the Corporation.
	 	 	
-
	 	In (ii), added endquote after “Established
Reserves”.
	 	-
	 	Typographical correction.
	 	 	
-
	 	Changed
“Proved” to “Proved Reserves”.
	 	-
	 	Uniformity correction.
	

	1.01 (e)
Definition of
“RESPs”	 	
-
	 	Added new definition:
“RESPs” means Registered Education
Savings Plan, as defined in the Act;
	 	-
	 	Should be included in list.
	

	1.01 (g)
Definition of
“Royalty Indenture”	 	
-
	 	Added “Amended and Restated” prior to
“Royalty Indenture”.
	 	-
	 	Reflects proposed new complete
name of Royalty Indenture.
	

	1.01 (j)
Definition of “Trust
Payments”	 	
-
	 	Changed ARTC to ARC and removed
ending bracketed comment (about ARTC
now being known as ARC).
	 	-
	 	Reflects legislative change.
	

	2.01 (b), (c) and (q)	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	

	2.01 (o),	 	
-
	 	Changed ARTC to
ARC.
	 	-
	 	Reflects legislative change.
	2.02 (b) and (c)	 	 	 	 	 	 	 	 
	

	2.01 (p)	 	
-
	 	Deleted
“and” at end.
	 	-
	 	Uniformity correction.
	

	2.01 (q)	 	
-
	 	Changed period to semi-colon, add “and” to
the end.
	 	-
	 	Uniformity correction.
	

	2.01 (r)	 	
-
	 	Added new power: to “execute documents
on behalf of the Fund in connection with its
duties hereunder”
	 	-
	 	Clarifies a power that should be
available to the Advisor.
	

	2.02 (c)	 	
-
	 	Changed “Holders of Trust Units” to “Trust
Unitholders”.
	 	-
	 	Defined term.
	

	2.02 (h)	 	
-
	 	Added
“RESPs”.
	 	-
	 	Should be included in list.
	

29

 

	 	 	 	 	 	 	 	 	 
	Reference	 	 	 	Change	 	 	 	Reason
	

	2.04	 	
-
	 	Added new section:
2.04 Certificate of Compliance
The Advisor shall furnish to the Trustee
annually, within 120 days of the fiscal year
end of the Fund, a certificate signed by the
Chief Executive Officer and the Chief
Financial Officer of the Advisor, or such
other officers of the Advisor as may be
acceptable to the Trustee, certifying that the
Advisor is in compliance in all material
respects of its covenants, duties or
obligations under this Agreement, or if such
is not the case, specifying the covenants,
duties or obligations which have not been
complied with and giving particulars of such
non compliance.
	 	-
	 	This is a carry over from Section
10.06 of the Trust Indenture,
which previously required the
Manager to provide the
certificate thereunder. As the
Manager is not a party to the
Trust Indenture and the Trustee
wants to be able to enforce the
covenant directly against the
Manager, this section is
proposed to be added here.
	

	3.01	 	
-
	 	Deleted comma
after Acquisition Fee.
	 	-
	 	Punctuation correction.
	

	3.02	 	
-
	 	Deleted
calculation of Income Amount.
	 	-
	 	Income Amount is a defined
term with the method of
calculation defined.
	 	 	
-
	 	In (e), de-capitalized first word and added
period to end.
	 	-
	 	Uniformity correction.
	 	 	
-
	 	In (e), added “to the Advisor” after “payable
by the Investor”.
	 	-
	 	Clarification.
	

	4.01	 	
-
	 	Capitalized
“Canadian Resource Properties”.
	 	-
	 	Proposed to be a defined term.
	

	4.03 (b)	 	
-
	 	Capitalized
“Canadian Resource Properties”.
	 	-
	 	Proposed to be a defined term.
	

	4.04 (a)	 	
-
	 	Changed “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	

	4.04 (f)	 	
-
	 	Change “Properties” to “Canadian Resource
Properties”.
	 	-
	 	As above, reference should be to
properties not yet owned by the
Corporation.
	 	 	
-
	 	Removed comma after “will not be
acquired”.
	 	-
	 	Punctuation correction.
	

	7.03	 	
-
	 	Changed
“2000” to “2003”.
	 	-
	 	Update.
	

	7.04	 	
-
	 	Replaced semicolon with colon after “(a
fundamental change)”.
	 	-
	 	Punctuation correction.
	

	7.06 (a) (v)	 	
-
	 	Replaced
“all” with “shall”.
	 	-
	 	Typographical correction.
	

	7.06 (b) (ii)	 	
-
	 	Added “with respect to the Advisor” to the
end.
	 	-
	 	Clarification.
	

	7.10	 	
-
	 	Changed “Advisor” to “Advisor’s business
offices”.
	 	-
	 	Clarification.
	

	8.06	 	
-
	 	Changed
“Montreal” to “Computershare”.
	 	-
	 	Reflects assignment, see above.
	 	 	
-
	 	Updated Trustee address: Suite 710 – 530
8th Avenue S.W., Calgary, Alberta, T2P
3S8.
	 	-
	 	Update.
	

	Execution Page	 	
-
	 	Changed
“Montreal” to “Computershare”.
	 	-
	 	Reflects assignment; see above.
	

30

 

SCHEDULE B-1

EXTRAORDINARY RESOLUTION REGARDING THE AMENDMENTS TO THE UNANIMOUS SHAREHOLDER

AGREEMENT

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

     the amendments to the Unanimous Shareholder Agreement set forth in Part C
of Schedule A to the Information Circular – Proxy Statement of the Corporation
and EnergyTrust dated March 15, 2002 be and they are hereby adopted and
approved, with immediate effect;

     the Amended and Restated Unanimous Shareholder Agreement attached to
Schedule C-1 to the said Information Circular – Proxy Statement be and it is
hereby adopted and approved and it shall replace in its entirety the Unanimous
Shareholder Agreement dated December 2, 1988, as amended;

     the Trustee is hereby authorized, for and in the name of EnergyTrust, and
any officer or director of the Corporation is hereby authorized, for and in the
name of the Corporation, to execute and deliver the said Amended and Restated
Unanimous Shareholder Agreement, and execution thereof shall evidence approval
of the said amendments and the Amended and Restated Unanimous Shareholder
Agreement pursuant to this Extraordinary Resolution; and

     the Trustee is hereby authorized for and on behalf of EnergyTrust to do
all acts or sign any further documents as may be necessary or desirable to
implement this Extraordinary Resolution.

     All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-2

SPECIAL AND EXTRAORDINARY RESOLUTION REGARDING AMENDMENTS TO ARTICLES

RESOLVED AS A SPECIAL AND EXTRAORDINARY RESOLUTION THAT:

	1.	 	the amendment to the Articles of the Corporation to increase the maximum
number of directors from 7 to 8 is hereby adopted and approved, with immediate
effect; and
	 
	2.	 	any one of the directors, officers or solicitors of the Corporation is
hereby authorized to do all other acts or sign any further documents as may be
necessary or desirable to implement this Special and Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Special and Extraordinary Resolution if used herein.

 

SCHEDULE B-3

EXTRAORDINARY RESOLUTION OF THE ROYALTY UNITHOLDERS REGARDING THE AMENDMENTS TO

THE ROYALTY INDENTURE

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	the amendments to the Royalty Indenture set forth in Part A of Schedule A
to the Information Circular – Proxy Statement of the Corporation and
EnergyTrust dated March 15, 2002 be and they are hereby adopted and
approved, with immediate effect;
	 
	2.	 	the Amended and Restated Royalty Indenture attached as Schedule C-2 to
the said Information Circular – Proxy Statement be and it is hereby
adopted and approved, and shall replace in its entirety the Royalty
Indenture dated December 2, 1988, as amended;
	 
	3.	 	Computershare Trust Company of Canada, the Trustee and Grantee
thereunder, is hereby authorized, for and in the name of EnergyTrust, to
execute and deliver the said Amended and Restated Royalty Indenture, and
execution thereof shall evidence approval of the said amendments and the
Amended and Restated Royalty Indenture pursuant to this Extraordinary
Resolution; and
	 
	4.	 	Computershare Trust Company of Canada, the Trustee and Grantee
thereunder, is hereby authorized for and on behalf of EnergyTrust to do
all acts or sign any further documents as may be necessary or desirable to
implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-4

EXTRAORDINARY RESOLUTION OF THE ROYALTY UNITHOLDERS REGARDING THE AMENDMENTS TO

THE MANAGEMENT AGREEMENT

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	the amendments to the Third Amended Management Agreement dated April 26,
2000, set forth in Part D of Schedule A to the Information Circular –
Proxy Statement of the Corporation and EnergyTrust, dated March 15, 2002,
be and they are hereby adopted and approved, with immediate effect;
	 
	2.	 	the Amended and Restated Management Agreement attached as Schedule C-3 to
the said Information Circular — Proxy Statement be and it is hereby
adopted and approved, and it shall replace in its entirety the Third
Amended Management Agreement dated April 26, 2000;
	 
	3.	 	the Trustee is hereby authorized, for and on behalf of the Royalty
Unitholders, to execute and deliver the said Amended and Restated
Management Agreement, and execution thereof shall evidence approval of the
said amendments and the Amended and Restated Management Agreement pursuant
to this Extraordinary Resolution; and
	 
	4.	 	the Trustee is hereby authorized for and on behalf of the Royal
Unitholders to do all acts or sign any further documents as may be
necessary or desirable to implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-5

EXTRAORDINARY RESOLUTION OF THE ROYALTY UNITHOLDERS REGARDING SUBORDINATION OF

THE ROYALTY

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	in connection with the Credit Facility, the Royalty Unitholders hereby
consent and agree to subordinate their rights to be paid the Royalty by
the Corporation to the rights of the Lenders to be paid obligations owing
to them by the Corporation in respect of obligations owing under or in
connection with the Credit Facility, the Swap Agreements or otherwise, and
in the event of a default by the Corporation in respect of any of its
obligations to any of the Lenders, including a default in connection with
the Credit Facility or in connection with the Swap Agreements, the
Corporation may not make any further payments in respect of the Royalty to
the Royalty Unitholders;
	 
	2.	 	in connection with collecting upon any of the obligations owing by the
Corporation to any of the Lenders, whether pursuant to any security
granted by the Corporation to the Bank or to any of the other Lenders or
otherwise, the Royalty Unitholders hereby consent and agree that the
Lenders or any of them shall be entitled to realize on the assets of the
Corporation and that in the event of a realization the Trustee shall
release the Royalty insofar as it relates to the assets so realized upon;
and
	 
	3.	 	the Trustee is hereby authorized for and on behalf of the Royal
Unitholders to do all acts or sign any further documents as may be
necessary or desirable to implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-6

EXTRAORDINARY RESOLUTION OF THE TRUST UNITHOLDERS REGARDING AMENDMENTS TO THE

TRUST UNIT OPTION AGREEMENT AND TRUST UNIT OPTION PLAN

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	the amendments to the Trust Unit Option Agreement and Trust Unit Option
Plan as set forth in the Information Circular – Proxy Statemet of the
Corporation and EnergyTrust dated March 15, 2002 is hereby approved;
	 
	2.	 	any one of the directors, officers or solicitors of the Corporation is
hereby authorized and directed to do all acts or sign any documents as may
be necessary or desirable to implement this Extraordinary Resolution; and
	 
	3.	 	Computershare Trust Company of Canada is hereby authorized for and on
behalf of EnergyTrust to do all acts or sign any documents as may be
necessary or desirable to implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-7

EXTRAORDINARY RESOLUTION OF THE TRUST UNITHOLDERS REGARDING THE RESERVATION OF

ADDITIONAL TRUST UNIT OPTIONS

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	the reservation of additional Trust Unit Options in the manner, and
subject to the restrictions, set forth in the Information Circular – Proxy
Statement of the Corporation and Energy Trust dated March 15, 2002 is
hereby approved; and
	 
	2.	 	the Trustee is hereby authorized for and on behalf of EnergyTrust to do
all acts or sign any documents as may be necessary or desirable to
implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-8

EXTRAORDINARY RESOLUTION OF THE TRUST UNITHOLDERS REGARDING THE CREATION OF A

TRUST UNIT RIGHTS INCENTIVE PLAN

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	the creation of a Trust Unit Rights Incentive Plan in the manner, and on
the essential terms, set forth in the Information Circular – Proxy
Statement of the Corporation and EnergyTrust dated March 15, 2002 is
hereby approved;
	 
	2.	 	in connection with the approval of the Trust Unit Rights Incentive Plan,
the amendments to the Option Plan as set forth in the Information
Circular-Proxy Statement of the Corporation and EnergyTrust dated March
15, 2002 are hereby approved; and
	 
	3.	 	Computershare Trust Company of Canada is hereby authorized for and on
behalf of EnergyTrust, to do all acts or sign any documents as may be
necessary or desirable to implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-9

EXTRAORDINARY RESOLUTION OF THE TRUST UNITHOLDERS REGARDING THE DISTRIBUTION

REINVESTMENT PLAN

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	The Board of Directors of the Corporation is hereby authorized to make
such amendments to the EnergyTrust Distribution Reinvestment and Trust
Unit Purchase Plan (the “DRIP”) as the Board, in its discretion, considers
appropriate or expedient to cause or encourage greater participation in
the DRIP by Trust Unitholders;
	 
	2.	 	Such amendments may include but shall not be limited to the authorization
of purchases of Trust Units from treasury at a price discounted from the
prevailing market price, the incentivization of investment dealers and
brokers to have their clients participate in the DRIP, provision for an
option whereby Trust Unitholders can elect to receive their distributions
of in the form of additional Trust Units and a provision for the issuance
from treasury of Trust Units at a discount from the prevailing market
price;
	 
	3.	 	The Board of Directors of the Corporation is hereby authorized to make
such consequential amendments to the Trust Indenture between the
Corporation and the Trustee dated December 2, 1988, as amended, or to the
Restated and Amended Trust Indenture between the Corporation and the
Trustee dated April 23, 2002 if the latter is adopted and approved, as the
case may be, in the opinion of the said Board, be required in order to
implement the aforementioned amendments to the DRIP; and
	 
	4.	 	the Trustee is hereby authorized, for and in the name of EnergyTrust or
as Plan Agent in respect of the DRIP, as the case may be, to execute and
deliver any and all documents (including without limitation the amended
DRIP and a further Amended and Restated Trust Indenture) and do all such
further acts and things as are or may be reasonably required to give
effect to this Extraordinary Resolution, and the execution thereof shall
evidence approval of the said amendments and, if applicable, the further
Amended and Restated Trust Indenture pursuant to this Extraordinary
Resolution and all such other documents.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-10

EXTRAORDINARY RESOLUTION OF THE TRUST UNITHOLDERS REGARDING THE AMENDMENTS TO

THE TRUST INDENTURE

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	the amendments to the Trust Indenture set forth in Part B of Schedule A
to the Information Circular – Proxy Statement of the Corporation and
EnergyTrust dated March 15, 2002 be and they are hereby adopted and
approved, with immediate effect;
	 
	2.	 	the Amended and Restated Trust Indenture attached as Schedule C-4 to the
said Information Circular-Proxy Statement be and it is hereby adopted and
approved and shall replace in its entirety the Trust Indenture dated
December 2, 1988, as amended;
	 
	3.	 	the Trustee is hereby authorized for and on behalf of EnergyTrust to
execute and deliver the said Amended and Restated Trust Indenture and
execution thereof shall evidence approval of the said amendments and the
Amended and Restated Trust Indenture pursuant to this Extraordinary
Resolution; and
	 
	4.	 	the Trustee is hereby authorized for and on behalf of EnergyTrust to do
all acts or sign any further documents as may be necessary or desirable to
implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

SCHEDULE B-11

EXTRAORDINARY RESOLUTION OF TRUST UNITHOLDERS REGARDING GUARANTEES AND

SUBORDINATION

RESOLVED AS AN EXTRAORDINARY RESOLUTION THAT:

	1.	 	Provided that in the opinion of legal counsel the granting of such
guarantees is a permissible activity of a mutual fund trust under the
Income Tax Act (Canada), RSC 1985, 5th Supp., as amended, EnergyTrust is
hereby authorized to guarantee in favour of the Lenders all of the Lender
Obligations and in favour of Emera all of the Emera Obligations;
	 
	2.	 	In order to settle upon the specific form of guarantee agreement
necessary to implement the guarantee authorized in the foregoing paragraph
any one officer or director of the Corporation is hereby authorized to
negotiate on behalf of EnergyTrust a guarantee agreement or agreements in
favour of the Lenders relating to the guarantee of the Lender Obligations
and a guarantee agreement or agreements in favour of Emera relating to the
guarantee of the Emera Obligations;
	 
	3.	 	The Trustee is hereby authorized, for and in the name of EnergyTrust, to
execute and deliver, such guarantee agreements and the execution of any
such agreements by the Trustee shall be conclusive evidence of the
approval of such agreements pursuant to these resolutions;
	 
	4.	 	In connection with the guarantee of the Lender Obligations, the Trustee
be and it is hereby authorized for and on behalf of EnergyTrust to execute
and deliver any security or security documents over all the assets of
EnergyTrust in favour of the Lenders (collectively, the “Security
Documents”), and the execution and delivery of any and all such Security
Documents by the Trustee for and on behalf of EnergyTrust be and is hereby
authorized and approved;
	 
	5.	 	The Trustee is authorized to enter into a subordination agreement with
the Lenders pursuant to which EnergyTrust agrees to subordinate its right
to be paid the Royalty by the Corporation to the right of any Lender to be
paid obligations owing to it by the Corporation, and which agreement may
further provide, without limitation, that in the event of a default by the
Corporation to any of the Lenders, including any such default in
connection with the Credit Facility, the Swap Agreements or otherwise, the
Corporation will not make any further payments in respect of the Royalty
to EnergyTrust, that EnergyTrust will not make any further distributions
to Trust Unitholders, that in connection with collecting upon any of the
obligations owing by the Corporation to any such Lender, whether pursuant
to any security granted by the Corporation or otherwise, the Lenders shall
be entitled to realize on the assets of the Corporation and that in the
event of a realization the Trustee shall release the Royalty insofar as it
relates to the assets so realized upon;
	 
	6.	 	In order to settle upon the specific form of subordination agreement
necessary to implement the subordination authorized in the foregoing
paragraph any officer or

 

	 	 	director of the Corporation is hereby authorized to negotiate on behalf of
EnergyTrust a subordination agreement in favour of the Lenders;
	 
	7.	 	The Trustee is hereby authorized, for and in the name of EnergyTrust, to
execute and deliver, such subordination agreement and the execution of any
such agreement by the Trustee shall be conclusive evidence of the approval
of such agreement pursuant to these resolutions; and
	 
	8.	 	the Trustee is hereby authorized for and on behalf of EnergyTrust to do
all acts or sign any further documents as may be necessary or desirable to
implement this Extraordinary Resolution.

All terms defined in the Information Circular — Proxy Statement of the
Corporation and EnergyTrust dated March 15, 2002, have the same respective
meanings in this Extraordinary Resolution if used herein.

 

 

 

Schedule C

 

 

[Filed as Exhibit 7.1, 7.2, 7.3 and 7.4 to this Registration Statement on Form 10]

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