Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Close-end investment trust exempt fromprospectus and registration requirements in connection withissuance of units to existing unitholders pursuant to a distributionreinvestment plan whereby distributions of income are reinvestedin additional units of the trust, subject to certain conditions- first trade relief provided for additional units of trust,subject to certain conditions.

Statues Cited

Securities Act, R.S.O. 1990, c.S.5, as am.,ss. 25, 53, 72(5), 74(1).

Rules Cited

Rule 45-502 Dividend or Interest Reinvestmentand Stock Dividend Plans 21 OSCB 3685.

IN THE MATTER OF
THE SECURITIES LEGISLATION
OF BRITISH COLUMBIA, SASKATCHEWAN, MANITOBA, ONTARIO, QUÉBEC,
NEW BRUNSWICK, NOVA SCOTIA,
NEWFOUNDLAND AND LABRADOR,
PRINCE EDWARD ISLAND, YUKON,
NUNAVUT AND NORTHWEST TERRITORIES

AND

THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
PROVIDENT ENERGY TRUST

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Saskatchewan, Manitoba, Ontario, Québec,Nova Scotia, New Brunswick, Prince Edward Island, Newfoundlandand Labrador, Yukon, Nunavut and Northwest Territories (the"Jurisdictions") has received an application fromProvident Energy Trust ("Provident") for a decision,pursuant to the securities legislation of the Jurisdictions(the "Legislation"), that the requirements containedin the Legislation to be registered to trade in a security andto file and obtain a receipt for a preliminary prospectus anda prospectus (the "Registration and Prospectus Requirements")shall not apply to certain trades in units of Provident issuedpursuant to a distribution reinvestment plan;

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

AND WHEREAS Provident has representedto the Decision Makers that:

1) Provident is an unincorporated open-endedinvestment trust formed under the laws of the Province of Albertapursuant to a Trust Indenture dated January 25, 2001, as amendedpursuant to a Supplemental Trust Indenture dated as of March5, 2001 (the "Trust Indenture").

2) Provident has been a reporting issuer inAlberta, British Columbia, Ontario, Québec, Saskatchewanand Manitoba for more than 12 months and is currently a reportingissuer in each of the Provinces of Canada. To its knowledgeProvident is not in default of any requirements under the legislationof any of the Jurisdictions.

3) Provident is a "qualifying issuer"within the meaning of Multilateral Instrument 45-102 Resaleof Securities.

4) The trustee of Provident is ComputershareTrust Company of Canada. The entire beneficial interest in Providentis held by the holders of trust units ("Units") issuedby Provident.

5) The Units are listed and posted for tradingon The Toronto Stock Exchange (the "TSE") and theAmerican Stock Exchange.

6) Provident currently makes and expects tocontinue to make monthly distributions of distributable income,if any, to the holders of Units ("Unitholders"). Thedistributable income of Provident for any month is a functionof the amounts received by Provident pursuant to certain royalties,other income and certain expenses.

7) Provident is not a "mutual fund"under the Legislation as the holders of Units are not entitledto receive on demand an amount computed by reference to thevalue of a proportionate interest in the whole or in part ofthe net assets of Provident, as contemplated by the definitionof "mutual fund" in the Legislation.

8) Provident intends to establish a plan (the"Plan") pursuant to which eligible Unitholders may,at their option, purchase additional Units ("AdditionalUnits") of Provident by directing that Cash Distributionsbe applied to the purchase of Additional Units (the "DistributionReinvestment Option") or by making optional cash payments(the "Cash Payment Option").

9) The Plan also enables eligible Unitholderswho wish to reinvest cash distributions paid on their existingUnits ("Cash Distributions") to authorize and directComputershare Trust Company of Canada, in its capacity as agentunder the Plan (in such capacity, the "Plan Agent"),to presell through a designated broker (the "Plan Broker")that number of Additional Units issuable on such reinvestmentfor the account of such Unitholders who so elect and to transferthe Additional Units to the Plan Broker for the purposes ofsettling such presales in exchange for a cash payment equalto 102% of the reinvested Cash Distributions (the "PremiumDistribution Option"). The Plan Broker will be entitledto retain for its own account the difference between the proceedsrealized in connection with presales of such Units and the cashpayment equal to 102% of reinvested Cash Distributions.

10) All Additional Units purchased under thePlan will be purchased by the Plan Agent directly from Providenton the relevant distribution payment date at a price determinedby reference to the Average Market Price (defined in the Planas the arithmetic average of the daily volume weighted averagetrading prices of the Units on the TSE for the trading daysfrom and including the second business day following the distributionrecord date to and including the second business day prior tothe distribution payment date on which at least a board lotof Units was traded such period not to exceed 20 trading days).

11) Additional Units purchased under the DistributionReinvestment Option or the Premium Distribution Option willbe purchased at a 5% discount to the Average Market Price. AdditionalUnits purchased under the Cash Payment Option will be purchasedat the Average Market Price.

12) Under the Premium Distribution Option thePlan Broker's prima facie return will be approximately 3% ofthe reinvested Cash Distributions (based on presales of Unitshaving a market value of approximately 105% of the reinvestedCash Distributions and a cash payment to the Plan Agent forthe account of applicable Unitholders of 102% of the reinvestedCash Distributions). The Plan Broker may, however, realize moreor less than this prima facie amount, as the actual return willdepend on intervening movements in the market price of the Units.We note in this regard that the Plan Broker bears the entirerisk of adverse changes in the market, as Participants underthe Premium Distribution Option are assured a premium cash paymentequal to 102% of the reinvested Cash Distributions.

13) All activities of the Plan Broker on behalfof the Plan Agent which relate to the presales of Units forthe account of Unitholders who elect the Premium DistributionOption will be in compliance with applicable Legislation andthe rules and policies of the TSE (subject to any exemptiverelief granted). The Plan Broker will also be a member of theInvestment Dealers Association of Canada.

14) Eligible Unitholders who choose to participatein the Plan ("Participants") may elect either theDistribution Reinvestment Option or the Premium DistributionOption in respect of their Cash Distributions. The Cash PaymentOption is available to eligible Unitholders who elect to reinvesttheir Cash Distributions under either the Distribution ReinvestmentOption or the Premium Distribution Option. Eligible Unitholdersmay elect to participate in the Premium Distribution Optionat their sole option and are free to terminate their participationin the Premium Distribution Option in accordance with the termsof the Plan.

15) Under the Distribution Reinvestment Option,Cash Distributions will be paid to the Plan Agent and appliedby the Plan Agent to the purchase of Additional Units, whichwill be held under the Plan for the account of appropriate Participants.

16) Under the Premium Distribution Option, CashDistributions will be paid to the Plan Agent and applied bythe Plan Agent to the purchase of Additional Units for the accountof applicable Participants, but the Additional Units purchasedthereby will be automatically transferred to the Plan Brokerto settle presales of Units made by the Plan Broker on behalfof the Plan Agent for the account of such Participants in exchangefor a cash payment equal to 102% of the reinvested Cash Distributions.

17) Under the Cash Payment Option, a Participantmay, through the Plan Agent, purchase Additional Units up toa stipulated maximum dollar amount per month and subject toa minimum amount per remittance. The aggregate number of AdditionalUnits that may be purchased under the Cash Payment Option byall Participants in any financial year of Provident will belimited to a maximum of 2% of the number Units issued and outstandingat the start of the financial year.

18) No brokerage fees or service charges willbe payable by Participants in connection with the purchase ofAdditional Units under the Plan.

19) Additional Units purchased and held underthe Plan will be registered in the name of the Plan Agent orits nominee as agent for the Participants, and all cash distributionson Units so held for the account of a Participant will be automaticallyreinvested in Additional Units in accordance with the termsof the Plan and the election of the Participant.

20) The Plan permits full investment of reinvestedCash Distributions and optional cash payments because fractionsof Units, as well as whole Units, may be credited to Participants'accounts with the Plan Agent.

21) Provident reserves the right to determinefor any distribution payment date how many Additional Unitswill be available for purchase under the Plan.

22) If, in respect of any distribution paymentdate, fulfilling all of the elections under the Plan would resultin Provident exceeding either the limit on Additional Unitsset by Provident or the aggregate annual limit on AdditionalUnits issuable pursuant to the Cash Payment Option, then electionsfor the purchase of Additional Units on such distribution paymentdate will be accepted: (i) first, from Participants electingthe Distribution Reinvestment Option; (ii) second, from Participantselecting the Cash Payment Option; and (iii) third, from Participantselecting the Premium Distribution Option. If Provident is notable to accept all elections in a particular category, thenpurchases of Additional Units on the applicable distributionpayment date will be pro rated among all Participants in thatcategory according to the number of Additional Units soughtto be purchased.

23) If Provident determines that no AdditionalUnits will be available for purchase under the Plan for a particulardistribution payment date, then all Participants will receivethe Cash Distribution announced by Provident for that distributionpayment date.

24) A Participant may terminate its participationin the Plan at any time by submitting a termination form tothe Plan Agent. A termination form received between a distributionrecord date and a distribution payment date will become effectiveafter that distribution payment date.

25) Provident reserves the right to amend, suspendor terminate the Plan at any time, provided that such actionshall not have a retroactive effect which would prejudice theinterests of the Participants. All Participants will be sentwritten notice of any such amendment, suspension or termination.

26) Pending receipt of the appropriate U.S.regulatory approvals, the Plan will not be available to Unitholderswho are residents of the United States. Provident expects toseek such approvals and expects to be able to make the Planavailable to residents of the United States later in 2002;

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

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

AND WHEREAS the Decision of the DecisionMakers pursuant to the Legislation is that the trades of AdditionalUnits by Provident to the Plan Agent for the account of Participantspursuant to the Plan shall not be subject to the Registrationand Prospectus Requirements of the Legislation provided that:

1) at the time of the trade Provident is a reportingissuer or the equivalent under the Legislation and is not indefault of any requirements of the Legislation;

2) no sales charge is payable in respect ofthe trade;

3) Provident has caused to be sent to the personor company to whom the Additional Units are traded, not morethan 12 months before the trade, a statement describing:

a) their right to withdraw from the Plan andto make an election to receive cash instead of Units on themaking of a distribution of income by Provident, and

b) instructions on how to exercise the rightreferred to in paragraph 6.3.1 above;

4) the aggregate number of Additional Unitsissued under the Cash Payment Option of the Plan in any financialyear of Provident shall not exceed 2% of the aggregate numberof Units outstanding at the start of that financial year;

5) except in Québec, the first tradein Additional Units acquired pursuant to this Decision willbe a distribution or primary distribution to the public unlessthe conditions in subsections 2.6(3) or (4) of MultilateralInstrument 45-102 Resale of Securities are satisfied; and

6) in Québec, the first trade in AdditionalUnits acquired pursuant to this Decision will be a distributionunless:

a) the issuer is and has been a reporting issuerin Québec for the 12 months preceding the alienation;

b) no unusual effort is made to prepare themarket or to create a demand for the securities that are thesubject of the alienation;

c) no extraordinary commission or other considerationis paid in respect of the alienation;

d) if the seller of the securities is an insiderof the issuer, the seller has no reasonable grounds to believethat the issuer is in default of any requirement of securitieslegislation;

7) disclosure of the initial distribution ofAdditional Units pursuant to this Decision is made to the relevantJurisdictions by providing particulars of the date of the distributionof such Additional Units, the number of such Additional Unitsand the purchase price paid or to be paid for such AdditionalUnits in:

a) an information circular or take?over bidcircular filed in accordance with the Legislation; or

b) a letter filed with the Decision Maker inthe relevant Jurisdiction by a person or company certifyingthat the person or company has knowledge of the facts containedin the letter;

8) when Provident distributes such AdditionalUnits for the first time Provident will provide disclosure tothe relevant Jurisdictions which sets forth the date of suchdistribution, the number of such Additional Units and the purchaseprice paid for such Additional Units, and thereafter not lessfrequently than annually, unless the aggregate number of AdditionalUnits so distributed in any month exceeds 1 % of the aggregatenumber of Units outstanding at the beginning of the month inwhich the Additional Units were distributed, in which case thedisclosure required under this paragraph shall be made in eachrelevant Jurisdiction (other than Québec) in respectof that month within ten days of the end of such month.

May 3, 2002.

"Howard I. Wetston"      "H. Lorne Morphy"