Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - relief from registration and prospectusrequirements, continuous disclosure requirements and the requirementto have a current AIF filed on SEDAR in connection with an arrangement.Also, corporation deemed to be a reporting issuer.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25, 53, 74(1), 80(b)(iii), 83.1(1) and 88(2)(b).

Applicable Ontario Rules

Ontario Securities Commission Rule 51-501 AnnualInformation Form and Management Discussion & Analysis.

Applicable Multilateral Instruments

Multilateral Instrument 45-102 - Resale of Securities.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ALBERTA, BRITISH COLUMBIA,SASKATCHEWAN,

MANITOBA, ONTARIO, QUÉBEC,NOVA SCOTIA AND

NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

BAYTEX ENERGY TRUST, BAYTEXENERGY LTD.,

BAYTEX ACQUISITION CORP.,CREW ENERGY INC.,

BAYTEX EXCHANGECO LTD., BAYTEXRESOURCES LTD.

AND BAYTEX EXPLORATION LTD.

 

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatoryauthority or regulator (collectively, the "Decision Makers")in each of Alberta, British Columbia, Saskatchewan, Manitoba,Ontario, Québec, Nova Scotia and Newfoundland and Labrador(the "Jurisdictions") has received an applicationfrom Baytex Energy Trust (the "Trust"), Baytex EnergyLtd. ("Baytex"), Baytex Acquisition Corp. ("AcquisitionCo"),Crew Energy Inc. ("Crew"), Baytex ExchangeCo Ltd.("ExchangeCo"), Baytex Resources Ltd. ("BaytexResources") and Baytex Exploration Ltd. ("BaytexExploration") for a decision under the securities legislationof the Jurisdictions (the "Legislation") that:

1.1 the requirements contained in the Legislationto be registered to trade in a security (the "RegistrationRequirements") and to file a preliminary prospectusand a prospectus, and to receive receipts therefor to distributea security (the "Prospectus Requirements"), inOntario and Québec, shall not apply to certain tradesof securities to be made in connection with a proposed planof arrangement (the "Arrangement") under section193 of the Business Corporations Act (Alberta) (the"ABCA") involving the Trust, AcquisitionCo, Baytex,Crew, ExchangeCo, Baytex Resources and Baytex Explorationand the security holders of Baytex;

1.2 the requirements contained in the Legislationwith respect to AcquisitionCo (or its successor on amalgamationwith Baytex ("AmalgamationCo")), in those Jurisdictionsin which it becomes a reporting issuer or the equivalentunder the Legislation, to issue a news release and filea report with the Jurisdictions upon the occurrence of amaterial change, file an annual report, where applicable,file interim financial statements and audited annual financialstatements with the Jurisdictions and deliver such statementsto security holders of AcquisitionCo and AmalgamationCo,file and deliver an information circular or make an annualfiling with the Jurisdictions in lieu of filing an informationcircular, file an annual information form and provide management'sdiscussion and analysis of financial condition and resultsof operations (the "Continuous Disclosure Requirements"),shall not apply to AcquisitionCo or AmalgamationCo; and

1.3 the requirement of Crew to have a "currentAIF" filed on SEDAR under Multilateral Instrument 45-102Resale of Securities ("MI 45-102") not apply.

2. AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System")the Alberta Securities Commission is the principal regulatorfor this application;

3. AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or Québec Commission Notice 14-101;

4. AND WHEREAS the Trust, Baytex, AcquisitionCo,Crew, ExchangeCo, Baytex Resources and Baytex Explorationhave represented to the Decision Makers that:

4.1 Baytex is a corporation amalgamatedand subsisting pursuant to the provisions of the ABCA;

4.2 the head and principal office of Baytexis located at 2200, 205 -- 5th Avenue S.W., Calgary,Alberta, T2P 2V7, and its registered office is located at1400, 350 --7th Avenue S.W., Calgary, AlbertaT2P 3N9;

4.3 Baytex is actively engaged in the explorationfor, and the acquisition, development and production of,oil and natural gas in the Provinces of Alberta, Saskatchewanand British Columbia;

4.4 the authorized capital of Baytex consistsof an unlimited number of common shares ("Common Shares");

4.5 as at July 23, 2003, 53,611,083 CommonShares were issued and outstanding. Baytex has also reserveda total of 4,426,103 Common Shares for issuance pursuantto outstanding options ("Options") to purchaseCommon Shares;

4.6 the Common Shares are listed on theToronto Stock Exchange (the "TSX");

4.7 Baytex is a reporting issuer in theProvinces of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Québec, Nova Scotia and Newfoundland andhas been for more than 12 months;

4.8 Baytex has filed all the informationthat it has been required to file as a reporting issuerin each of the Provinces of British Columbia, Alberta, Saskatchewan,Manitoba, Ontario, Québec, Nova Scotia, Newfoundlandand is not in default of the securities legislation in anyof these jurisdictions;

4.9 the Trust is an open end unincorporatedinvestment trust governed by the laws of the Province ofAlberta and created pursuant to a trust indenture datedJuly 24, 2003 between Baytex and Valiant Trust Company,as trustee;

4.10 the Trust was established for the purposeof, among other things:

4.10.1 investing in shares of AcquisitionCoand acquiring the Common Shares and the unsecured, subordinatepromissory notes issuable by AcquisitionCo (the "Notes")pursuant to the Arrangement;

4.10.2 acquiring a net profits interestpursuant to a net profits interest agreement to be enteredinto between AmalgamationCo and the Trust; and

4.10.3 acquiring or investing in othersecurities of AmalgamationCo and in the securities ofany other entity including without limitation bodies corporate,partnerships or trusts, and borrowing funds or otherwiseobtaining credit for that purpose;

4.11 the head and principal office of theTrust is located at located at 2200, 205 -- 5thAvenue S.W., Calgary, Alberta, T2P 2V7;

4.12 the Trust was established with nominalcapitalization and currently has only nominal assets andno liabilities. The only activity which will initially becarried on by the Trust will be the holding of securitiesof AcquisitionCo and AmalgamationCo;

4.13 the Trust is authorized to issue anunlimited number of trust units ("Trust Units")and an unlimited number of special voting rights ("SpecialVoting Rights");

4.14 as of the date hereof, there is oneTrust Unit issued and outstanding, which is owned by Baytex,and no Special Voting Rights are outstanding;

4.15 the Trust has received conditionalapproval from the TSX for the listing on the TSX of theTrust Units to be issued in connection with the Arrangementsubject to, among other things, completion of the Arrangement.The Trust Units issuable from time to time in exchange forexchangeable shares ("Exchangeable Shares") ofAcquisitionCo will also be listed on the TSX, subject toreceipt of final approval from the TSX;

4.16 the Trust is not a reporting issuerin any of the Jurisdictions;

4.17 AcquisitionCo is a wholly-owned subsidiaryof the Trust and was incorporated pursuant to the ABCA onJune 12, 2003. AcquisitionCo was incorporated to participatein the Arrangement by acquiring Common Shares of Baytex(other than those held by dissenting Shareholders);

4.18 the head and principal office of AcquisitionCois located at 2200, 205 -- 5th Avenue S.W., Calgary, Alberta,T2P 2V7 and its registered office is located at 1400, 350-- 7th Avenue S.W., Calgary, Alberta, T2P 3N9;

4.19 the authorized capital of AcquisitionCocurrently consists of an unlimited number of common shares.Prior to the Arrangement, the articles of AcquisitionCowill be amended to create the Exchangeable Shares;

4.20 as of the date hereof there is one(1) common share of AcquisitionCo issued and outstanding,which is owned by the Trust. All common shares of AcquisitionCowill be owned beneficially (directly or indirectly) by theTrust, for as long as any outstanding Exchangeable Sharesare owned by any person other than the Trust or any of theTrust's subsidiaries and other affiliates;

4.21 AcquisitionCo is not a reporting issuerin any of the Jurisdictions;

4.22 Crew was incorporated pursuant to theABCA on May 12, 2003. Crew has not carried on any activebusiness since incorporation;

4.23 the head and principal office of Crewwill be located at 1920, 205 -- 5th Avenue S.W.,Calgary, Alberta, T2P 2V7, and its registered office islocated at 1400, 350 -- 7th Avenue S.W., Calgary,Alberta, T2P 3N9;

4.24 pursuant to the Arrangement, Crew willacquire, directly and indirectly, certain oil and gas assetsfrom Baytex. Upon completion of the Arrangement, Crew willbe engaged in the exploration for, and acquisition, developmentand production of, oil and natural gas reserves, primarilyin the Provinces of Alberta and British Columbia;

4.25 the authorized capital of Crew consistsof an unlimited number of Crew Common Shares. Prior to theArrangement becoming effective, the authorized capital ofCrew will consist of an unlimited number of Crew CommonShares, an unlimited number of class B non-voting sharesand an unlimited number of class C performance shares;

4.26 as of the date hereof, one (1) CrewCommon Share is issued and outstanding;

4.27 Crew has made application for conditionalapproval from the TSX for the listing on the TSX of theCrew Common Shares to be issued in connection with the Arrangementsubject to, among other things, completion of the Arrangement.The Crew Common Shares issuable from time to time will alsobe listed on the TSX, subject to receipt of final approvalfrom the TSX;

4.28 Crew is not a reporting issuer in anyof the Jurisdictions;

4.29 ExchangeCo was incorporated pursuantto the ABCA on June 12, 2003. ExchangeCo has not carriedon any active business since incorporation;

4.30 the head and principal office of ExchangeCois located at 2200, 205 -- 5th Avenue S.W., Calgary,Alberta, T2P 2V7, and its registered office is located at1400, 350 -- 7th Avenue S.W., Calgary, Alberta,T2P 3N9;

4.31 the authorized capital of ExchangeCoconsists of an unlimited number of common shares;

4.32 as of the date hereof, one (1) commonshare was issued and outstanding and owned by the Trust;

4.33 Baytex Resources was incorporated pursuantto the ABCA. Baytex Resources is a wholly-owned subsidiaryof Baytex and is engaged in the oil and natural gas business;

4.34 the head and principal office of BaytexResources is located at 2200, 205 -- 5th AvenueS.W., Calgary, Alberta, T2P 2V7, and its registered officeis located at 1400, 350 -- 7th Avenue S.W., Calgary,Alberta, T2P 3N9;

4.35 Baytex Exploration was incorporatedpursuant to the ABCA. Baytex Exploration is a wholly-ownedsubsidiary of Baytex and is engaged in the oil and naturalgas business;

4.36 the head and principal office of BaytexExploration is located at 2200, 205 -- 5th AvenueS.W., Calgary, Alberta, T2P 2V7, and its registered officeis located at 1400, 350 -- 7th Avenue S.W., Calgary,Alberta, T2P 3N9;

4.37 the Arrangement will be effected byway of plan of arrangement (the "Plan") pursuantto section 193 of the ABCA. The Arrangement will require:(i) approval by not less than two-thirds of the votes castby the shareholders (the "Shareholders") and theoptionholders of Baytex (collectively, the "Securityholders")(present in person or represented by proxy), voting togetheras a single class, at the special meeting (the "Meeting")of Securityholders to be held for the purpose of approvingthe Arrangement, and thereafter; (ii) approval of the Courtof Queen's Bench of Alberta;

4.38 Baytex's information circular datedJuly 25, 2003 (the "Information Circular") containsprospectus-level disclosure concerning the respective businessand affairs of Baytex, Crew, the Trust and AmalgamationCoand a detailed description of the Arrangement, and has beenmailed to Securityholders in connection with the Meeting.The Information Circular has been prepared in conformitywith the provisions of the ABCA and applicable securitieslaws and policies;

4.39 the assets that will make up the businessof Crew have been the subject of continuous disclosure onan ongoing basis for more than 12 months, in accordancewith Baytex's responsibilities as a reporting issuer subjectto the Continuous Disclosure Requirements;

4.40 the Arrangement provides for a transactionwhere, commencing at the time the Arrangement takes effect(the "Effective Time"), the events set out belowshall be deemed to occur in the following order:

4.40.1 the Common Shares and Options heldby dissenting Securityholders who have exercised dissentrights which remain valid immediately prior to the EffectiveTime shall, as of the Effective Time, be deemed to havebeen transferred to Baytex and be cancelled and ceaseto be outstanding, and as of the Effective Time, suchdissenting Securityholders shall cease to have any rightsas securityholders of Baytex other than the right to bepaid the fair value of their Common Shares or Options;

4.40.2 the class A preferred shares ("ClassA Preferred Shares"), the class D common shares ("NewCommon Shares"), the class B non-voting shares ("ClassB Non-Voting Shares") and the class C preferred shares("Class C Preferred Shares") shall be createdas new classes of shares of Baytex and each Common Share,other than Common Shares held by non-resident Shareholders("Non Residents"), will be exchanged pursuantto a reorganization of the capital of Baytex for one (1)Class A Preferred Share, one (1) New Common Share and0.333333 Class B Non-Voting Share and the stated valueof each:

4.40.2.1 Class A Preferred Share shallbe set at the paid up capital of each Common Share exchangedless: (A) 0.333333 multiplied by the Class B Non-VotingShare Stated Value, as adjusted; less (B) $0.01;

4.40.2.2 New Common Share shall be setat $0.01; and

4.40.2.3 whole Class B Non-Voting Shareshall initially be set at $1.65 subject to adjustment,to the Weighted Average Trading Price of the Crew CommonShares (the "Class B Non-Voting Share Stated Value");

4.40.3 each whole Class B Non-Voting Shareheld by a Shareholder who acquired Common Shares on theexercise of an employee stock option in circumstancesthat subsection 1(1.1) or (8) of the Income TaxAct (Canada) (the "Tax Act") apply and suchShareholder has elected to receive common shares ("BaytexResources Common Shares") of Baytex Resources (an"Option Shareholder") will be transferred toBaytex Resources, for delivery to Baytex for cancellationin consideration of the repayment of inter-company indebtednessof Baytex Resources to Baytex, in exchange for one (1)Baytex Resources Common Share;

4.40.4 Baytex and Baytex Resources willconvey certain oil and natural gas assets (the "CrewAssets") to Baytex Resources and Baytex Resourceswill convey its interest in the Baytex Energy Partnership(the "Baytex Partnership") and all of the oiland gas assets of Baytex Resources to Baytex;

4.40.5 each remaining whole Class B Non-VotingShare will be transferred to Crew in exchange for one(1) Crew Common Share;

4.40.6 each Baytex Resources Common Shareheld by Baytex will be transferred to Crew in exchangefor one (1) unsecured, subordinate promissory note ofCrew (the "Crew Note");

4.40.7 each Baytex Resources Common Shareheld by an Option Shareholder will be transferred to Crewin exchange for one (1) Crew Common Share with a statedcapital equal to the Class B Non-Voting Share Stated Value;

4.40.8 each Class B Non-Voting Share willbe exchanged pursuant to a reorganization of the capitalof Baytex for one (1) Class C Preferred Share;

4.40.9 all of the Crew Notes shall besatisfied by the return by Crew to Baytex of all of theClass C Preferred Shares and the issuance of Crew CommonShares;

4.40.10 each Crew Class B Non-Voting Sharewill be exchanged pursuant to a reorganization of thecapital of Crew for one (1) Crew Common Share;

4.40.11 subject to the Plan, each NewCommon Share and each Class A Preferred Share, other thanNew Common Shares and Class A Preferred Shares held byShareholders exempt from tax under Part 1 of the Tax Act("Tax Exempt Shareholders") and Option Shareholderswill be transferred to AcquisitionCo in accordance withthe election or deemed election of the holder of suchNew Common Shares and Class A Preferred Shares for one(1) Trust Unit or one (1) Exchangeable Share (togetherwith the ancillary rights associated with the ExchangeableShares);

4.40.12 each New Common Share and eachClass A Preferred Share held by Tax-Exempt Shareholdersand Option Shareholders will be transferred to AcquisitionCoin exchange for one (1) Trust Unit;

4.40.13 each Common Share held by NonResidents will be transferred to AcquisitionCo in exchangefor one (1) Trust Unit and the right to receive one (1)Crew Common Share;

4.40.14 AcquisitionCo will issue one (1)unsecured, subordinate promissory note ("Note")to the Trust for each Trust Unit issued pursuant to sections3.1(k), (l) and (m) of the Plan;

4.40.15 any outstanding Options shallcease to represent the right to acquire Common Sharesand shall only entitle the holder to acquire one (1) TrustUnit for each Common Share which the holder was previouslyentitled to acquire under the Option at a price per TrustUnit equal to the existing price less an amount equalto the Class B Non-Voting Share Stated Value;

4.40.16 Baytex and AcquisitionCo shallbe amalgamated and continued as one corporation, AmalgamationCo,in accordance with the following:

4.40.16.1 the shares of Baytex, allof which are owned by AcquisitionCo, shall be cancelledwithout any repayment of capital;

4.40.16.2 the articles of AmalgamationCoshall be the same as the articles of AcquisitionCo,and the name of AmalgamationCo shall be "BaytexEnergy Ltd.";

4.40.16.3 no securities shall be issuedby AmalgamationCo in connection with the amalgamationand for greater certainty, the common shares, Notesand Exchangeable Shares of AcquisitionCo shall surviveand continue to be common shares, Notes and ExchangeableShares of AmalgamationCo without amendment;

4.40.16.4 the property of each of theamalgamating corporations shall continue to be the propertyof AmalgamationCo;

4.40.16.5 AmalgamationCo shall continueto be liable for the obligations of each of the amalgamatingcorporations;

4.40.16.6 any existing cause of action,claim or liability to prosecution of either of the amalgamatingcorporations shall be unaffected;

4.40.16.7 any civil, criminal or administrativeaction or proceeding pending by or against either ofthe amalgamating corporations may be continued to beprosecuted by or against AmalgamationCo;

4.40.16.8 a conviction against, or ruling,order or judgment in favour of or against, either ofthe amalgamating corporations may be enforced by oragainst AmalgamationCo;

4.40.16.9 the Articles of Amalgamationof AcquisitionCo shall be deemed to be the Articlesof Incorporation of AmalgamationCo and the Certificateof Amalgamation of AcquisitionCo shall be deemed tobe the Certificate of Incorporation of AmalgamationCo;

4.40.16.10 the by-laws of AmalgamationCoshall be the by-laws of AcquisitionCo;

4.40.16.11 the first directors of AmalgamationCoshall be the directors of AcquisitionCo;

4.40.16.12 the first officers of AmalgamationCoshall be the officers of AcquisitionCo; and

4.40.16.13 the registered office ofAmalgamationCo shall be the registered office of AcquisitionCo;

4.40.17 Baytex Partnership shall be dissolvedin accordance with the following:

4.40.17.1 all of the property of theBaytex Partnership shall be transferred to AmalgamationCoand Baytex Exploration in accordance with their respectivepartnership interest; and

4.40.17.2 AmalgamationCo and BaytexExploration shall be liable for the obligations of theBaytex Partnership in accordance with their respectivepartnership interest;

4.40.18 Baytex Exploration shall be dissolved,in accordance with the following:

4.40.18.1 all of the property of BaytexExploration shall be transferred to AmalgamationCo;and

4.40.18.2 AmalgamationCo shall be liablefor all of the obligations of Baytex Exploration;

4.40.19 AmalgamationCo will grant a netprofits interest (the "NPI") pursuant to a netprofits interest agreement to be entered into betweenAmalgamationCo and the Trust to the Trust in considerationof return of Notes in an amount equal to the fair marketvalue of the NPI as determined by AmalgamationCo; and

4.40.20 AmalgamationCo shall deliver theCrew Common Shares to the Non Residents entitled to suchCrew Common Shares referred to in section 3.1(m) of thePlan.

4.41 AmalgamationCo will become a reportingissuer under the Legislation in British Columbia, Alberta,Saskatchewan, Manitoba, Ontario, Québec, Nova Scotiaand Newfoundland, and will be subject to the ContinuousDisclosure Requirements in such Jurisdictions;

4.42 the Trust will become a reporting issuerunder the Legislation in British Columbia, Alberta, Saskatchewan,Manitoba, Ontario, Québec, Nova Scotia and Newfoundlandand will be subject to the Continuous Disclosure Requirementsin such Jurisdictions;

4.43 Crew will not be a reporting issuerwithin the definitions of all of the applicable Jurisdictionsat the Effective Time;

4.44 following the completion of the Arrangement,Crew anticipates the need to carry out one or more privateplacements of Crew Common Shares in order to fund its explorationand production activities;

4.45 the Exchangeable Shares provide a holderwith a security having economic and voting rights whichare, as nearly as practicable, equivalent to those of theTrust Units;

4.46 under the terms of the ExchangeableShares and certain rights to be granted in connection withthe Arrangement, holders of Exchangeable Shares will beable to exchange them at their option for Trust Units;

4.47 under the terms of the ExchangeableShares and certain rights to be granted in connection withthe Arrangement, the Trust, ExchangeCo or AmalgamationCowill redeem, retract or otherwise acquire Exchangeable Sharesin exchange for Trust Units in certain circumstances;

4.48 in order to ensure that the ExchangeableShares remain the voting and economic equivalent of theTrust Units prior to their exchange, the Arrangement providesfor:

4.48.1 a voting and exchange trust agreementto be entered into among the Trust, AcquisitionCo, ExchangeCoand Valiant Trust Company (the "Voting and ExchangeAgreement Trustee") which will, among other things,(i) grant to the Voting and Exchange Agreement Trustee,for the benefit of holders of Exchangeable Shares, theright to require the Trust or ExchangeCo to exchange theExchangeable Shares for Trust Units, and (ii) triggerautomatically the exchange of the Exchangeable Sharesfor Trust Units upon the occurrence of certain specifiedevents;

4.48.2 the deposit by the Trust of a SpecialVoting Right with the Voting and Exchange Agreement Trusteewhich will effectively provide the holders of ExchangeableShares with voting rights equivalent to those attachedto the Trust Units; and

4.48.3 a support agreement to be enteredinto between the Trust, AcquisitionCo, ExchangeCo andthe Voting and Exchange Agreement Trustee which will,among other things, restrict the Trust from issuing ordistributing to the holders of all or substantially allof the outstanding Trust Units:

4.48.3.1 additional Trust Units or securitiesconvertible into Trust Units;

4.48.3.2 rights, options or warrantsfor the purchase of Trust Units; or

4.48.3.3 units or securities of theTrust other than Trust Units, evidence of indebtednessof the Trust or other assets of the Trust;

unless the same or an equivalent distributionis made to holders of Exchangeable Shares, an equivalentchange is made to the Exchangeable Shares, such issuanceor distribution is made in connection with a distributionreinvestment plan instituted for holders of Trust Unitsor a unitholder rights protection plan approved for holdersof Trust Units by the board of directors of AcquisitionCo,or the approval of holders of Exchangeable Shares hasbeen obtained;

4.49 the steps under the Arrangement andthe terms of the Exchangeable Shares and the exercise ofcertain rights provided for in connection with the Arrangementinvolve a number of trades or potential trades of securities,including Common Shares, Class A Preferred Shares, New CommonShares, Class B Non-Voting Shares, Class C Preferred Shares,Baytex Resources Common Shares, Crew Common Shares, CrewNotes, Notes, Exchangeable Shares, Trust Units, Options,the Special Voting Right and certain rights to acquire TrustUnits, Exchangeable Shares and Crew Common Shares underthe Arrangement, and rights to otherwise make a trade ofa security that was derived from the Arrangement (collectively,the "Trades");

4.50 there are no exemptions from the RegistrationRequirement or the Prospectus Requirement available underthe Legislation of Ontario and Québec for certainof the Trades;

4.51 the Information Circular disclosesthat the securities that are the subject of the Trades willbe issued in reliance on exemptions, including discretionaryexemptions, from the Registration Requirement and the ProspectusRequirement and discloses that application will be madeto relieve AmalgamationCo from the Continuous DisclosureRequirements; and

4.52 the Trust will concurrently send toholders of Exchangeable Shares resident in the Jurisdictionsall disclosure material it sends to holders of Trust Unitspursuant to the Legislation;

5. AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

6. AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to makethe Decision has been met;

7. THE DECISION of the Decision Makers underthe Legislation is that:

7.1 the Registration Requirement and theProspectus Requirement contained in the Legislation of Ontarioand Québec shall not apply to the Trades, providedthat the first trade in securities acquired pursuant tothe Arrangement shall be deemed to be a distribution ora primary distribution to the public;

7.2 the Prospectus Requirement containedin the Legislation of Ontario and Québec shall notapply to the first trade in securities acquired by Shareholdersunder the Arrangement and the first trade of securitiesacquired on the exercise of all rights, automatic or otherwise,under such securities, provided that:

7.2.1 in Ontario, the conditions in subsection(3) or (4), as applicable, of section 2.6 of MI 45-102are satisfied and, for the purposes of determining theperiod of time that the Trust or Crew has been a reportingissuer under section 2.6 of MI 45-102, the period of timethat Baytex was a reporting issuer in at least one ofthe jurisdictions listed in Appendix B of MI 45-102 immediatelybefore the Arrangement may be included; and

7.2.2 in Québec:

7.2.2.1 the Trust is and has been areporting issuer in Québec for the 12 monthsimmediately preceding the trade, including the periodof time that Baytex was a reporting issuer in Québecimmediately before the Arrangement;

7.2.2.2 no unusual effort is made toprepare the market or create a demand for the securitiesthat are the subject of the trade;

7.2.2.3 no extraordinary commissionor consideration is paid to a person or company in respectof the trade; and

7.2.2.4 if the selling securityholderis an insider or officer of the Trust, the selling securityholderhas no reasonable grounds to believe that the Trustis in default of securities legislation;

7.3 the Continuous Disclosure Requirementsof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Québec, Nova Scotia and Newfoundland and Labradorshall not apply to AmalgamationCo for so long as:

7.3.1 the Trust is a reporting issuerin Québec and at least one of the jurisdictionslisted in Appendix B of MI 45-102 and is an electronicfiler under National Instrument 13-101;

7.3.2 the Trust sends to all holders ofExchangeable Shares resident in the Jurisdictions alldisclosure material furnished to holders of Trust Unitsunder the Continuous Disclosure Requirements;

7.3.3 the Trust complies with the requirementsof the TSX, or such other market or exchange on whichthe Trust Units may be quoted or listed, in respect ofmaking public disclosure of material information on atimely basis;

7.3.4 AmalgamationCo is in compliancewith the requirements of the Legislation to issue a pressrelease and file a report with the Jurisdictions uponthe occurrence of a material change in respect of theaffairs of AmalgamationCo that is not also a materialchange in the affairs of the Trust;

7.3.5 the Trust includes in all futuremailings of proxy solicitation materials to holders ofExchangeable Shares a clear and concise insert explainingthe reason for the mailed material being solely in relationto the Trust and not to AmalgamationCo, such insert toinclude a reference to the economic equivalency betweenthe Exchangeable Shares and Trust Units and the rightto direct voting at meetings of Unitholders;

7.3.6 the Trust remains the direct orindirect beneficial owner of all of the issued and outstandingvoting securities of AmalgamationCo; and

7.3.7 AmalgamationCo does not issue anypreferred shares or debt obligations other than debt obligationsissued to its affiliates or to banks, loan corporations,trust corporations, treasury branches, credit unions,insurance companies or other financial institutions;

7.4 upon the completion of the Arrangement:

7.4.1 in British Columbia, Alberta, Saskatchewan,Ontario, Nova Scotia and Newfoundland and Labrador therequirement contained in the Legislation to have a "currentAIF" filed on SEDAR in order to be a "QualifyingIssuer" under MI 45-102 shall not apply to Crew providedthat:

7.4.1.1 Crew files a notice on SEDARadvising that the Information Circular has been filedas an alternate form of annual information form andidentifying the SEDAR Project Number under which theInformation Circular was filed and Appendix H to theInformation Circular containing disclosure specificto Crew; and

7.4.1.2 Crew files a copy of AppendixH of the Information Circular under Crew's SEDAR profile;and

7.4.1.3 Crew files a Form 45-102F2 onor before the tenth day after the distribution day ofany securities certifying that it is a Qualifying Issuerexcept for the requirement to have a current AIF;

this exemption to expire 140 days afterCrew's financial year ended December 31, 2003; and

7.4.2 in Québec, Crew will be exemptfrom the requirements of subparagraph 1(e) of decisionno. 2003-C-0016 of the Commission des valeurs mobilièresdu Québec given that the Information Circular inconnection with the Arrangement contains prospectus leveldisclosure including financial statements for the threemonths ended March 31, 2003 and the year ended December31, 2002, for the purpose of Crew qualifying for the shortenedhold period. This exemption will expire on May 20, 2004.

August 29, 2003.

"Glenda A. Campbell"
"Stephen R. Murison"