EXHIBIT 26
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DECLARATION OF TRUST
FIFTH SUPPLEMENTAL AMENDING AGREEMENT
This Declaration of Trust Fifth Supplemental Amending Agreement is made
effective the 30th day of May, 2000
Between
PRIMEWEST ENERGY INC.
a body corporate incorporated under the laws of the
Province of Alberta, with an office in the City of Calgary, in
the Province of Alberta (the "Corporation")
and
THE TRUST COMPANY OF BANK OF MONTREAL
a trust company incorporated under the laws of Canada,
with offices in the City of Calgary, in the Province of Alberta
(the "Trustee")
WHEREAS by Declaration of Trust dated August 2, 1996 among the
Corporation, Montreal Trust Company of Canada (the "Initial Trustee") and the
Initial Unitholder, the Initial Unitholder settled the Trust upon the terms set
forth in the Declaration of Trust; and
WHEREAS the Declaration of Trust provides that the Declaration of Trust
may be amended by the Trustee with the consent of the Unitholders by Special
Resolution; and
WHEREAS the Unitholders by Special Resolution passed at the Annual
General and Special Meeting of Unitholders held on May 25, 2000 approved certain
amendments to the Declaration of Trust; and
WHEREAS the Corporation and the Trustee propose to enter into this
Declaration of Trust Fifth Supplemental Amending Agreement to effect the
amendments so approved by Unitholders at the Annual General and Special Meeting
held May 25, 2000;
NOW THEREFOR THIS DECLARATION OF TRUST FIFTH SUPPLEMENTAL AMENDING
AGREEMENT WITNESSETH that the Corporation and the Trustee agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Supplemental Amending Agreement, unless the context otherwise
requires, words and phrases used herein and which are defined in the Declaration
of Trust shall have the meaning herein which are given to such words and phrases
in the Declaration of Trust. In addition, the following terms have the following
meanings:
DECLARATION OF TRUST means that certain Declaration of Trust dated
August 2, 1996 made among the Corporation, the Initial Trustee and the
Initial Unitholder and restated July 19, 1999 by the Corporation and
the Trustee; and
SUPPLEMENTAL AMENDING AGREEMENT means this Declaration of Trust Fifth
Supplemental Amending Agreement.
1.2 HEADINGS
The division of this Supplemental Amending Agreement into Articles and
Sections, the provision of a table of contents, and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Supplemental Amending Agreement.
1.3 CONSTRUCTION OF TERMS
In this Supplemental Amending Agreement, words importing the singular
number include the plural and vice versa; words importing gender include the
masculine, feminine and neuter genders; references to dollar amounts refer to
such amounts in Canadian currency; references to "this Supplemental Amending
Agreement", "hereto", "herein", "hereof", "hereby", "hereunder" and similar
expressions refer to this Supplemental Amending Agreement, and not to any
particular Article, Section or other portion hereof, and include any and every
instrument supplemental or ancillary hereto or in implementation hereof; and the
expressions "Article" and "Section" followed by a number, letter, or combination
of numbers and letters refer to the specified Article or Section of this
Supplemental Amending Agreement.
ARTICLE 2
AMENDMENTS TO DECLARATION OF TRUST
2.1 ADDITIONAL DEFINITIONS
The Declaration of Trust is hereby amended as of the date hereof by
inserting the following defined terms in Section 1.1 thereof in the appropriate
alphabetical order:
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"DEBT SERVICE COSTS means, in respect of any period and without
duplication, on a consolidated basis:
(a) all interest, penalties, fees, indemnities, legal costs, and
other costs, expenses and disbursements for which the Trust,
the Corporation, and their respective subsidiaries are liable
under their respective credit facilities and which, in each
case, accrue during such period;
(b) plus all amounts payable during such period on account of
principal pursuant to such credit facilities including,
without limitation, scheduled, prepaid (voluntary or
mandatory) and accelerated principal and (subject to the
provisos below) amounts required to be paid on account of
banker's acceptances and letters of credit (other than fees
described in (a) above);
(c) plus (if there is a net loss) or minus (if there is a net
profit) the net profit or loss from interest rate swaps which
accrues during such period;
provided that the difference between the face amount of a banker's
acceptance which is issued and accepted pursuant to such credit
facilities and its discount proceeds (such difference being the
"imputed interest") shall be treated as interest accruing at the times
that it is considered to accrue in accordance with generally accepted
accounting principles and provided that when the Trust, the Corporation
or their respective subsidiaries become liable under any credit
facility to pay the face amount of a banker's acceptance, the face
amount less the amount of imputed interest for such banker's acceptance
shall be included in the Debt Service Costs;"
"DISCOUNT RATE means an annual rate equal to the then current annual
yield of long-term (10 year) Government of Canada bonds plus 400 basis
points, subject to a maximum Discount Rate of 15%;"
"RESERVE VALUE means the present worth of all of the estimated pre-tax
net cash flow from the proved reserves and 50% of the estimated pre-tax
net cash flow from the probable reserves shown in the most recent
engineering report relating thereto, discounted at the Discounted Rate
and using escalating price and cost assumptions;"
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2.2 REINVESTMENT OF DISTRIBUTIONS
The Declaration of Trust is hereby amended as of the date hereof by
deleting Section 5.5 thereof in its entirety and replacing it with the
following:
"5.5 REINVESTMENT OF DISTRIBUTIONS
(a) Subject to receipt of all regulatory approvals, the
Trust will make available to Unitholders the
opportunity to reinvest distributions from the Trust
in additional Units by participating in a
distribution reinvestment plan (the "Plan"). Upon a
Unitholder electing to be enrolled in the Plan, all
distributions from the Trust will automatically be
reinvested on such Unitholder's behalf pursuant to
the Plan until such Unitholder terminates his
enrolment in the Plan or the Trust terminates the
Plan.
(b) Distributions due to participants in the Plan will be
paid to the Trustee in its capacity as agent under
the Plan (the "Plan Agent") and be applied to the
purchase of Units. The Plan Agent shall make such
purchases from the Trust at a discount to the
prevailing market price of 5%.
(c) The Plan Agent shall furnish to each participant
after each distribution a report of the Units
purchased for the participant's account in respect of
such distribution and the cumulative total of all
Units purchased for that account. The Trust shall pay
out of the Trust Fund the Plan Agent's charges for
administering the Plan. Certificates representing
Units purchased under the Plan will be issued only
upon request of the Unitholder, upon termination of
the Unitholder's participation in the Plan or upon
termination of the Plan. Distributions on fractional
Units will be credited to each participant's account.
However, no certificates for fractional Units will be
issued. A cash adjustment for any fractional Units
shall be paid to such Unitholders, when necessary, by
cheque or, with the concurrence of the Plan Agent, as
such Unitholder shall otherwise direct.
(d) Unitholders may terminate their participation in the
Plan by written notice to the Plan Agent. Such
notice, if actually received prior to a Distribution
Date, will be given effect to on that Distribution
Date. Thereafter, distributions to such Unitholders
will be by cheque. The Trust may terminate the Plan,
in its sole discretion, upon not less than 30 days'
notice to the participants."
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2.3 POWERS OF THE TRUSTEE AND THE CORPORATION
The Declaration of Trust is hereby amended as of the date hereof by
deleting Section 8.1 thereof in its entirety and replacing it with the
following:
"8.1 POWERS OF THE TRUSTEE AND PRIMEWEST
(a) Subject to the terms and conditions of this
Declaration of Trust and any contracts or obligations
of the Trust or the Trustee, the Trustee may exercise
from time to time in respect of the Trust Fund any
and all rights, powers and privileges that could be
exercised by a beneficial owner thereof, except as
specifically designated in subsection (b) below.
(b) The Corporation may exercise from time to time any
and all rights, powers and privileges in relation to
all matters relating to the maximization of
Unitholder value in the context of a response to an
offer for Trust Units or for all or substantially all
of the assets of the Trust or the Corporation or any
subsidiary of the Corporation or the Trust (an
"Offer") including (i) any Unitholder rights
protection plan (or amendment or waiver thereof)
either prior to or during the course of any Offer;
(ii) any defensive action either prior to or during
the course of any Offer; (iii) the preparation of any
"Directors' Circular" in response to any Offer; (iv)
consideration on behalf of Unitholders and
recommendations to Unitholders in response to any
Offer; (v) any regulatory or court action in respect
of any related matters and (vi) the carriage of all
related and ancillary matters; and the Corporation
accepts such responsibility and agrees that, in
respect of such matters, it shall carry out its
functions honestly, in good faith and in the best
interests of the Trust and the Unitholders and, in
connection therewith, shall exercise that degree of
care, diligence and skill that a reasonably prudent
Person would exercise in comparable circumstances.
The Corporation, may, and if directed by the
Corporation in writing, the Trustee shall, execute
any agreements on behalf of the Trust as the
Corporation shall have authorized within the scope of
the exercise of any such rights, powers or
privileges."
2.4 LIMITATIONS ON BORROWING
The Declaration of Trust is hereby amended as of the date hereof by
inserting the following as Section 8.16 at the end of Article 8 thereof:
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"8.16 LIMITATIONS ON BORROWING
The Trust will not borrow, and will not permit the Corporation or any
of their respective subsidiaries to borrow, any funds from any third party
(whether by way of direct cash advances, requesting the issuance of bankers'
acceptances or letters of credit or otherwise), unless at the time of such
borrowings and after giving effect to such borrowings:
(a) the aggregate amount of all third party borrowings on
a consolidated basis outstanding are not greater than
40% of the Reserve Value of all of the oil and gas
properties (including any properties being acquired
with such borrowings) owned by the Trust, the
Corporation and their respective subsidiaries
(without duplication) plus 40% of the net asset value
of all non-reserve based assets at that time; and
(b) the Trust's bona fide estimate of the Debt Service
Costs which will accrue during the 12 month period
thereafter will not exceed 30% of the Trust's bona
fide estimate of the aggregate of the following for
such period:
(i) the Trust's consolidated cashflow; plus
(ii) the Trust's consolidated interest expense."
ARTICLE 3
MISCELLANEOUS
3.1 CONFIRMATION OF AMENDED DECLARATION OF TRUST
The Declaration of Trust as amended by this Supplemental Amending
Agreement is hereby ratified and confirmed.
3.2 SUCCESSORS AND ASSIGNS
The provisions of this Supplemental Amending Agreement shall enure to
the benefit of, and be binding upon, the parties hereto and their successors and
assigns.
3.3 COUNTERPARTS
This Supplemental Amending Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same instrument
which shall be sufficiently evidenced by any such original counterparts.
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3.4 SEVERABILITY
If any provision of this Supplemental Amending Agreement shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect or render invalid or unenforceable such provision
in any other jurisdiction or any other provision of this Supplemental Amending
Agreement in any jurisdiction.
3.5 TIME OF THE ESSENCE
Time shall be of the essence in this Supplemental Amending Agreement.
3.6 GOVERNING LAW
This Supplemental Amending Agreement shall be governed by and construed
in accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein and shall be treated in all respects as Alberta contracts.
The parties hereto hereby irrevocably submit to the jurisdiction of the courts
of the Province of Alberta.
IN WITNESS WHEREOF each of the parties hereto has caused this
Supplemental Amending Agreement to be duly executed.
PRIMEWEST ENERGY INC.
Per: /s/
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Per: /s/
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THE TRUST COMPANY OF BANK
OF MONTREAL
Per: /s/
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