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1.
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The
purpose of the Plan is to provide directors, officers, consultants,
employees and other service providers, as applicable (all of which are
hereinafter called "Service Providers"), of
the Trust and any of its subsidiaries, including Baytex, with an
opportunity to acquire rights ("Rights") to acquire
units ("Units") of
the Trust as designated from time to time by the Board of
Baytex. This will provide an increased incentive for these
Service Providers to contribute to the future success and prosperity of
the Trust, thus enhancing the value of the Units for the benefit of all
the unitholders of the Trust.
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2.
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The
Plan shall come into effect on the Effective Date and shall be approved by
unitholders of the Trust every three
years.
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3.
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Unless
otherwise approved by the Toronto Stock Exchange ("TSX") and the
unitholders of the Trust, the Trust will set aside and reserve for
granting of Rights under the Plan up to 10% of the aggregate number of
issued and outstanding Units of the Trust plus the number of Units which
may be issued on the exchange of all outstanding Exchangeable Shares
(collectively, the "Total
Units"). Any increase in the issued and outstanding
Units will result in an increase in the available number of Units issuable
under the Plan, and any exercises of Rights will create an equivalent
number of Units available under the Plan. The number of Units
issuable pursuant to the Plan to non-management directors will be limited
to a maximum of 1% of the Total Units. In accordance with the
rules of the TSX, the number of Units: (a) issued to Insiders within a one
year period; and (b) issuable to Insiders, at any time under the Plan, or
when combined with all other securities based compensation arrangements,
may not exceed 10% of the Total
Units.
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4.
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Rights
shall be granted by the Board from time to time, at its sole discretion,
to Service Providers, provided that the aggregate number of Rights held by
any single holder of Rights at any given time shall not exceed 1% of the
Total Units. No Service Provider shall have any rights to be granted
Rights hereunder, except as may be specifically granted by the
Board.
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5.
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Rights
granted under the Plan may not be assigned or transferred by a holder
thereof.
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6.
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The
Plan is subject to the approval of the TSX and no Rights which may be
granted prior to the receipt of such approval may be exercised until such
approval has been received.
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7.
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Subject
to the restrictions on exercise set out in paragraph 6 above and subject
to paragraphs 10, 11, 12 and 15 below, Rights granted under the Plan may
be exercised during a period (the "Exercise Period") not
exceeding five (5) years from the date upon which the Rights were granted
(the "Grant
Date"), pursuant to vesting schedules determined by the Board in
its sole discretion. At the expiration of the Exercise Period
any Rights which have not been exercised shall expire and become null and
void. If the Expiry Date of any Rights falls within any
Blackout Period (as defined in paragraph 19) or within ten business days
(being a day other than a Saturday, Sunday or any other day when banks are
generally not open in the City of Calgary for the transaction of business)
following the end of any Blackout Period (the "Restricted Rights"),
then the Expiry Date of such Restricted Rights shall, without any further
action, be extended to the date that is ten business days, following the
end such Blackout Period. The foregoing extension applies to
all Rights whatever the date of grant and shall not be considered an
extension of the term of the Rights as referred to in paragraph 11
hereof. Unless approved by the Board of Directors, no Rights
may be exercised by a holder during a Blackout
Period.
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8.
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The
grant price ("Grant
Price") per Right granted hereunder shall be the volume weighted
average trading price of the Units on the TSX for the five trading days
prior to the Grant Date (or, if the Units are not then listed and posted
for trading on the TSX, such price is required by such stock exchange in
Canada on which such Units are listed and posted for trading as may be
selected for such purpose by the Board). In the event that the
Units are not listed and posted for trading on any stock exchange in
Canada, the Grant Price shall be determined by the Board in its sole
discretion. Notwithstanding the foregoing, in certain
circumstances, such as when a Right is offered to an individual as an
inducement to secure employment, the Grant Price may be otherwise
determined, but only with the prior consent of all stock exchanges on
which the Units are at that time
listed.
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9.
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The
exercise price ("Exercise
Price") per Right granted hereunder shall be calculated by
deducting from the Grant Price all monthly distributions, on a per Unit
basis, made by the Trust after the Grant Date where all such monthly
distributions represent a return of more than 0.833% of the Trust's
recorded cost of oil and natural gas properties less accumulated
depreciation and depletion and any future income tax liability associated
with such oil and natural gas properties at the end of that
month. For greater certainty, where a Grant Date falls other
than on the first day of a calendar month, the per Unit amount of the
distribution deducted from the Grant Price for that calendar month shall
be pro-rated from the Grant Date to the end of such calendar
month. In no event shall the Exercise Price be less than
$1.00.
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10.
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The
Plan shall be administered by the Board. The Board may
establish a minimum Exercise Price and vary the vesting and expiry periods
under the Plan provided that the duration of the Rights shall not exceed
seven years.
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11.
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The
Plan and any outstanding Rights may be amended, modified or terminated by
the Board without unitholder approval subject to the approval of the
TSX. Notwithstanding the foregoing, the Plan may not be amended
without Unitholder approval to: (a) make any amendment to the Plan to
increase the percentage of Units issuable on exercise of outstanding Right
at any time pursuant to paragraph 3 hereof; (b) reduce the exercise price
of any outstanding Rights held by Insiders; (c) extend the term of any
outstanding Rights held by Insiders beyond the original expiry date of
such Right; (d) make any amendment to the Plan that would permit a holder
to transfer or assign Rights to a new beneficial holder other than in the
case of death of the holder; (e) any amendment to increase the number of
Units that may be issued to Insiders above the restriction contained in
paragraph 3; or (f) an amendment to amend this paragraph 11. In
addition, no amendment to the Plan or Rights granted pursuant to the Plan
may be made without the consent of the holder, if it adversely alters or
impairs any Right previously granted to such holder under the
Plan.
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12.
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Upon
any holder of Rights ceasing to be a Service Provider for any reason
whatsoever, other than the death or disability of such holder of Rights,
during the Exercise Period, all Rights which have not vested at such date
shall terminate and become null and void, and such holder of Rights shall
have until the earlier of:
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(a)
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30
days from the date such holder of Rights ceased to be a Service Provider;
or
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(b)
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the
end of the Exercise Period,
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13.
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Upon
the death of any individual holder of Rights during the Exercise Period,
all Rights which have not vested at such date shall terminate and become
null and void, and the executor, administrator or personal representative
of such holder of Rights shall have until the earlier
of:
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(a)
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6
months from
the date of the death of such holder of Rights;
or
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(b)
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the
end of the Exercise Period,
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14.
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Rights
granted hereunder shall be exercisable by a holder of Rights by delivering
written notice in the form attached as Schedule "A" hereto to the Trust
specifying the number of Rights being exercised, accompanied by payment in
full of the Exercise Price for the number of Rights for which such
exercise is made. The calculation of the Exercise Price shall
be ratified and confirmed by the Chief Financial Officer of Baytex. (In
the event of the exercise of Rights by the Chief Financial Officer, the
calculation of the Exercise Price shall be ratified and confirmed by the
Chief Executive Officer). Upon receipt of such notice made in
accordance with the terms and conditions of the Plan, the Trust shall
cause to be issued, and deliver to such holder of Rights, a certificate
representing the Units for which such Rights have been
exercised.
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15.
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In
the event, during any Exercise Period of any Rights granted hereunder, of
any consolidation, subdivision, re-division or change of the Units of the
Trust into a greater or lesser number of Units, then such outstanding
Rights shall be deemed to be amended to be for such greater or lesser
number of Units as would have resulted if the Units represented by such
Rights had been issued and outstanding at the date of such consolidation,
subdivision, re-division or change, and the Exercise Price shall be deemed
to be adjusted on a pro rata basis.
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16.
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The
vesting provisions set out in paragraph 7 above shall be accelerated and
all unexercised Rights may be exercised upon the effective date of a
change of control of the Trust or Baytex. For the purposes
hereof, a "change of control" shall be deemed to occur upon the effective
date of the earlier of any of the following events, provided that such
event results in an actual change of control of the Trust or
Baytex:
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(a)
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a
successful "take-over bid" as defined in the Securities Act
(Alberta), as amended, or any successor legislation thereto, pursuant to
which the "offeror" would as a result of such take-over bid, if
successful, beneficially own in excess of 50% of the outstanding Total
Units of the Trust or common shares of
Baytex;
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(b)
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the
issuance to or acquisition by any person, or group of persons acting in
concert, of Units of the Trust which in the aggregate total 50% or more of
the then issued and outstanding Total
Units;
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(c)
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the
sale of all or substantially all of the assets of Baytex;
and
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(d)
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the
termination of the Trust,
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(e)
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pursuant
to an arrangement, merger or other from of reorganization of the Trust
where the holders of the outstanding voting securities or interests of the
Trust immediately prior to the completion of the reorganization will hold
more than 90% of the outstanding voting securities or interests of the
continuing entity upon completion of the reorganization;
or
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(f)
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if
a majority of the Board determines that in substance the arrangement,
merger or reorganization are such that a Change of Control should be
deemed to not have occurred and any such determination shall be binding
and conclusive for all purposes of the
Plan.
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17.
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The
granting of Rights hereunder to any holder of Rights shall not obligate
such holder of Rights to exercise such Rights or any portion
thereof.
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18.
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Unless
approved by the Board, no Rights may be exercised by a Service Provider
during a Blackout Period which is applicable to such Service
Provider.
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19.
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In
this Plan the following terms shall have the meaning set forth
below:
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(a)
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"Blackout Period" means a
period of time imposed by the Board of Directors pursuant to the policies
of Baytex upon certain holders during which those persons may not trade in
any securities of the Trust; and
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(b)
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"Insider" has the meaning
set forth in Company Manual of the
TSX.
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BAYTEX ENERGY TRUST, by
Baytex Energy Ltd.
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Per:
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(signed)
"Raymond T. Chan"
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Per:
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(signed)
"R. Shaun Paterson"
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Date
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Signature
of Holder of Rights
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Name
(please print)
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Address
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Please
have my Unit certificate sent to me at:
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______ above
address
______ c/o
1100, 321 – 6th
Avenue S.W.
Calgary, Alberta
T2P 3H3
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RATIFIED
AND CONFIRMED this
day
of ,
20
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BAYTEX
ENERGY LTD.
Per:
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