The following series of questions and
answers explains some of the key features of the Premium
Distribution, Distribution Reinvestment and Optional
Unit Purchase Plan (the “Plan”) of Provident
Energy Trust (“Provident”). The answers
are, however, of a summary nature only, and are expressly
subject to the complete text of the Plan. Unitholders
of Provident should carefully read the complete text
of the Plan before making any decisions regarding participation
in the Plan.
1. What is the Premium Distribution, Distribution
Reinvestment and Optional Unit Purchase Plan?
If you are an eligible unitholder of Provident, then
the Plan will enable you to either:
receive, in lieu of your declared cash distribution,
a premium cash payment equal of up to 102% of such
declared distribution by electing to reinvest your
cash distributions in additional units and directing
Computershare Trust Company of Canada (the "Agent")
under the Plan to deliver those additional units to
a designated broker (the "Plan Broker")
in exchange for the premium distribution cash payment
("premium distribution"), or
accumulate additional units by electing to reinvest
your cash distributions in additional units at a 5%
discount to the Average Market Price (as defined in
the Plan) which will be held under the Plan for your
account ("distribution reinvestment").
If you elect to participate in either the premium distribution
component or the distribution reinvestment component
of the Plan, then you will also be able to purchase
additional units at the Average Market Price (with no
discount) by directly investing additional amounts ("optional
cash payments") within the limits established by
the Plan.
The amount of the premium distribution and/or the number
of additional units that you are able to acquire under
the Plan, as applicable, may be reduced by proration
in certain events and by the effect of applicable withholding
taxes.
There is no obligation to participate in the Plan and
if you do not participate you will continue to receive
your distributions in the normal course.
[top]
2. What are the advantages of the Plan?
-
The Plan provides a mechanism for you to increase
your cash distributions by up to 2%.
-
The Plan provides a convenient and cost-effective
way for you to increase your investment in Provident
without incurring service charges or brokerage fees.
-
Units purchased with reinvested distributions are
bought at a 5% discount to the Average Market Price.
-
If you elect to participate in either the premium
distribution component or the distribution reinvestment
component of the Plan, then you may also purchase
additional units at the Average Market Price (with
no discount) by making optional cash payments, subject
to the requirements of the Plan.
-
Any funds to be invested in units on your behalf
can be fully invested because fractions of units
(to four decimal places) as well as whole units
may be credited to your account under the Plan.
- Any future distributions on fractional and whole
units held under the Plan for your account will be
automatically reinvested in new units which will be
retained in your account or exchanged for the premium
distribution in accordance with your election.
[top]
3. Am I eligible to participate in the Plan,
and if so, to what extent?
Except as noted below, registered holders of at least
one unit of Provident may enroll in the Plan at any
time. However, unless otherwise announced by Provident,
unitholders who are residents of the United States may
only participate in the Distribution Reinvestment Plan.
Unitholders who are resident in any other jurisdiction
outside of Canada (other than the United States) may
participate in the Plan if permitted by the laws of
the jurisdiction in which they reside. Distributions
to be reinvested under the Plan on behalf of unitholders
who are not residents of Canada will be subject to applicable
non-resident withholding tax.
If you are eligible to enroll in the Plan, then the
extent to which you may directly participate in the
Plan will depend on the manner in which you hold your
units, as only registered unitholders may directly enroll
in the Plan. Beneficial owners of units may, however,
participate in the Plan through their nominee.
Registered Unitholders. You are
a registered unitholder if your units are registered
in your own name with the Agent. If you are a registered
unitholder, you may directly enroll in either the
premium distribution component or the distribution
reinvestment component of the Plan. If you participate
in either of these components, then you may also purchase
additional units with optional cash payments.
Beneficial Owners. You are a beneficial
owner of units if you hold your units through a broker,
investment dealer, financial institution or other
nominee. If you are a beneficial owner of units and
wish to participate in either the premium distribution
component or the distribution reinvestment component
of the Plan, you must arrange for your broker or other
nominee to enroll in the Plan on your behalf. If your
broker will not support the DRIP Plan, according to
their internal policies, then you may arrange to transfer
your units in your own name and enroll in the Plan
as a registered unitholder. If your broker or other
nominee has enrolled in either the premium distribution
component or the distribution reinvestment component
of the Plan on your behalf, then you may make optional
cash payments through such nominee holder.
Nominee Holders. If you are a registered
unitholder who is a nominee for one or more beneficial
owners, and you wish to make an optional cash payment
on behalf of one or more beneficial owners, then you
must enclose with such payment an Optional Cash Payment
Form that includes a declaration that you are making
the optional cash payment on behalf of one or more
beneficial owners of units that are registered in
your name, that you have applied to participate in
the premium distribution component or the distribution
reinvestment component of the Plan on behalf of each
such beneficial owner, and that at least $1,000 per
remittance and not more than $100,000 per month is
being paid on behalf of each beneficial owner. Nominees
holding units registered in the name of CDS &
Co., or its nominee, must arrange for CDS & Co.
to enrol in the Plan on behalf of beneficial owners
of such units.
[top]
4. How do I become a participant in the Plan?
If you are an eligible registered or beneficial holder
of units of Provident and wish to participate in the
Plan, complete and deliver to Computershare Trust Company
of Canada, as Agent under the Plan (or have your broker
or other nominee complete and deliver to the Agent or
CDS & Co., as applicable, on your behalf) an Authorization
Form. Do not send unit certificates or distribution
cheques with your Authorization Form. Once you have
enrolled, your participation in the Plan continues automatically
until terminated by you voluntarily, until the Agent
receives written notice of your death or until you cease
to be an eligible unitholder or until the Plan is terminated
by Provident. No further action is required by you unless
you wish to change your election as between the premium
distribution and distribution reinvestment components
of the Plan.
The Agent must receive your initial Authorization Form
on or before a distribution record date in order for
the cash distribution to which such record date relates
to be reinvested under the Plan. If your units are registered
through your nominee in the name of CDS & Co., or
its nominee, then your nominee must deliver such Authorization
Form to CDS & Co. prior to such distribution record
date. If the Agent receives an initial Authorization
Form after a distribution record date or if CDS &
Co. receives an Authorization Form on or after a distribution
record date, the distribution to which such record date
relates will not be reinvested under the Plan and the
Authorization Form will be effective for purposes of
subsequent distributions.
[top]
5. Will certificates be issued for new units
purchased for me under the Plan?
For registered holders, certificates will not normally
be issued for new units that are purchased and held
for your account under the Plan. Instead, such units
will be held by the Agent either in its own name or
the name of its nominee and shown on your periodic statement.
You may, however, specifically request a certificate
for any number of whole units held by the Agent for
your account by writing to the Agent. A unit certificate
will normally be sent within three weeks of the Agent
receiving your written request. If you elect to receive
the premium distribution, you will not be able to receive
a certificate for units purchased with your reinvested
distributions as such units are exchanged for the premium
distribution.
[top]
6. How can I change my election and terminate
my participation under the Plan?
Once you have enrolled in either the premium distribution
component or the distribution reinvestment component
of the Plan, your participation in the manner elected
by you continues automatically until your enrolment
in the Plan is terminated or until you change your election
in accordance with the Plan. If you or your nominee
have units registered in the name of CDS & Co. you
may need to elect to participate monthly.
You may voluntarily terminate your participation in
the Plan by delivering to the Agent (or, if you are
a beneficial owner of units, by having your broker or
other nominee deliver to the Agent (through CDS &
Co., if applicable) on your behalf) a written notice
of termination signed by you or your broker or other
nominee, as applicable.
[top]
7. What are the Canadian federal income tax
consequences of participating in the Plan?
The fact that distributions are reinvested or premium
distributions are received under the terms of the Plan
does not relieve you of any liability for Canadian income
taxes (or, if you are a non-resident of Canada, for
any Canadian withholding taxes) that may be payable
on the distribution.
Reinvestment of Distributions. The
Canada Customs and Revenue Agency (the "CCRA")
generally takes the position that the amount, if any,
by which the fair market value of any units you acquire
pursuant to the premium distribution component or
the distribution reinvestment component of the Plan
on the date of purchase of such units exceeds the
purchase price must be included in your income for
income tax purposes. The amount reinvested by you
will be your cost of the units acquired under the
distribution reinvestment component of the Plan plus,
as described above, the amount of any income included
as a result of the CCRA position relating to the discounted
purchase price. Such total cost must be averaged with
the cost of all other units you hold for the purpose
of determining the adjusted cost base of all your
units. Capital gains or losses arising on a disposition
of your units will be measured by reference to the
adjusted cost base of all your units.
Premium Distribution. If you elect
to receive the premium distribution, the CCRA may
take the position that you have sold Units held as
inventory (unless you have made an election under
subsection 39(4) of the Income Tax Act Canada) and
that you will have realized additional income for
income tax purposes equal to 2% of the regular distribution
received from Provident Energy Trust by the Agent
on your behalf. No tax information will be issued
for the additional cash received under the Premium
Plan.
Additional summary information regarding the income
tax consequences of participating in the Plan is set
forth in the text of the Plan itself.
You should consult your tax advisors concerning the
tax implications of your participation in the Plan having
regard to your particular circumstances.
[top]
8. Where can I get further information?
If you have any questions regarding the Plan, please
direct them to the Agent or to Provident as follows:
Computershare Trust Company of Canada
9th Floor, 100 University Avenue
Toronto, Ontario M5J 2Y1
Attention: Reinvestment Department
Telephone: 1-800-564-6253
Fax: 1-888-453-0330 OR 1-416-263-9394
Provident Energy Trust
800– 112-4th Avenue S.W.
Calgary, Alberta T2P 0H3
Attention: Investor Relations
Telephone: (403) 296-2233
Fax: (403) 294-0111
Email: info@providentenergy.com
[top]
|
