PLAN OF ARRANGEMENT. Involving

Transcription

1 PLAN OF ARRANGEMENT Involving CANADIAN OIL SANDS TRUST, CANADIAN OIL SANDS LIMITED, ALBERTA LTD. AND THE UNITHOLDERS OF CANADIAN OIL SANDS TRUST NOTICE OF ANNUAL AND SPECIAL MEETING and NOTICE OF PETITION TO THE COURT OF QUEEN S BENCH OF ALBERTA and MANAGEMENT PROXY CIRCULAR FOR THE ANNUAL AND SPECIAL MEETING OF UNITHOLDERS TO BE HELD ON APRIL 29, 2010 March 15, 2010

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3 Invitation to Unitholders 2:30 p.m. April 29, 2010 The Metropolitan Conference Centre Calgary, Alberta YOU ARE INVITED TO THE ANNUAL AND SPECIAL MEETING OF UNITHOLDERS Dear Fellow Unitholders On behalf of Canadian Oil Sands Board of Directors, Management and employees, I invite you to the 2010 Annual and Special Meeting of Unitholders on April 29, 2010 at 2:30 p.m. (Calgary time) in the Ballroom, The Metropolitan Conference Centre, th Avenue S.W., Calgary, Alberta. With the changes made by the federal government to tax income trusts taking effect January 1, 2011, Management and the Board have determined that the best course of action for Canadian Oil Sands and its Unitholders is to convert from an income trust to a corporation on or about January 1, In this way, we can continue to benefit from the current tax structure for income trusts until the end of the year, just before the federal government rules change to no longer give a tax advantage to being a trust versus a corporation. The fundamentals of our business remain strong and this change in structure should be seen as business as usual. This Circular contains the details of how and when the proposed conversion is to take place and it is important that you read the information and understand and vote on the conversion at the Meeting. We plan to continue to seek the optimal return for our Unitholders whether as a trust or a corporation, directing cash from operating activities after capital expenditures to either value-added growth opportunities or as distributions/dividends to our Unitholders. Since its formation in October 1995 to January 1, 2010, Canadian Oil Sands has returned a historic total shareholder return of over 2,900% to its Unitholders. We hope to continue our effective management of this great asset and look forward to continued success. Please take the time to review the accompanying Circular and provide your votes on the business items of the Meeting. You can vote by phone, on the enclosed proxy, or at the Meeting on April 29, If you have any questions, please call our proxy solicitation and information agent, Alliance Trust Company at telephone number or toll free at or them at inquiries@alliancetrust.ca. We look forward to your support. Yours truly, Signed Marcel R. Coutu Marcel R. Coutu President and Chief Executive Officer March 15, 2010

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5 IN THE COURT OF QUEEN S BENCH OF ALBERTA JUDICIAL CENTRE OF CALGARY IN THE MATTER OF SECTION 193 OF THE BUSINESS CORPORATIONS ACT (ALBERTA), R.S.A. 2000, c. B-9, AS AMENDED AND IN THE MATTER OF A PROPOSED ARRANGEMENT INVOLVING CANADIAN OIL SANDS TRUST, CANADIAN OIL SANDS LIMITED, ALBERTA LTD. AND THE HOLDERS OF UNITS OF CANADIAN OIL SANDS TRUST NOTICE OF PETITION NOTICE IS HEREBY GIVEN that a petition (the Petition ) has been filed with the Court of Queen s Bench of Alberta, Judicial Centre of Calgary (the Court ) on behalf of Canadian Oil Sands Trust (the Trust ), Canadian Oil Sands Limited (the Corporation ) and Alberta Ltd. ( Acquireco ) with respect to a proposed arrangement (the Arrangement ) under section 193 of the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended (the ABCA ), involving the Trust, the Corporation, Acquireco and the holders ( Unitholders ) of units of the Trust, which Arrangement is described in greater detail in the management proxy circular of the Trust dated March 15, 2010, accompanying this Notice of Petition. At the hearing of the Petition, the Trust, the Corporation and Acquireco intend to seek: (a) (b) (c) (d) a declaration that the terms and conditions of the Arrangement, and the procedures relating thereto, are fair to the persons affected; an order approving the Arrangement pursuant to the provisions of section 193 of the ABCA; a declaration that the Arrangement will, upon the filing of the Articles of Arrangement pursuant to the provisions of section 193 of the ABCA, become effective in accordance with its terms and will be binding on and after the Effective Date, as defined in the Arrangement Agreement; and such other and further orders, declarations and directions as the Court may deem just. The Court has been advised that its order approving the Arrangement, if granted, will constitute the basis for an exemption from the registration requirements of the United States Securities Act of 1933, as amended, provided by section 3(a)(10) thereof with respect to the securities of Acquireco to be issued pursuant to the Arrangement. AND NOTICE IS FURTHER GIVEN that the said Petition was directed to be heard before a Justice of the Court, 601 5th Street S.W., Calgary, Alberta, on April 30, 2010 at 1:30 p.m. (Calgary time), or as soon thereafter as counsel may be heard. Any Unitholder or any other interested party desiring to support or oppose the Petition may appear at the time of the hearing in person or by counsel for that purpose. Any Unitholder or any other interested party desiring to appear at the hearing is required to file with the Court and serve upon the Trust on or before 5:00 p.m. (Calgary time) on April 23, 2010, a notice of intention to appear, including an address for service in the Province of Alberta, together with any evidence or materials which are to be presented to the Court. Service on the Trust is to be effected by delivery to the solicitors for the Trust at their address set out below. If any Unitholder or any other such interested party does not attend, either in person or by counsel, at that time, the Court may approve the Arrangement as presented, or may approve it subject to such terms and conditions as the Court shall deem fit, without any further notice. AND NOTICE IS FURTHER GIVEN that no further notice of the Petition will be given by the Trust and that in the event the hearing of the Petition is adjourned, only those persons who have appeared before the Court for the application at the hearing shall be served with notice of the adjourned date. AND NOTICE IS FURTHER GIVEN that the Court, by the Interim Order, has given directions as to the calling and holding of a meeting of the Unitholders for the purpose of such Unitholders voting upon a resolution to approve the Arrangement

6 AND NOTICE IS FURTHER GIVEN that a copy of the said Petition and other documents in the proceedings will be furnished to any Unitholder or any other interested party requesting the same by the under mentioned solicitors for the Trust upon written request delivered to such solicitors as follows: Osler, Hoskin & Harcourt LLP Suite 2500, TransCanada Tower st Street S.W. Calgary, Alberta T2P 5H1 Attention: Tristram J. Mallett DATED at Calgary, Alberta on March 15, By Order of the Directors of Canadian Oil Sands Limited on behalf of Canadian Oil Sands Trust Signed Trudy M. Curran Trudy M. Curran General Counsel and Corporate Secretary - 2 -

7 CANADIAN OIL SANDS TRUST NOTICE OF ANNUAL AND SPECIAL MEETING OF UNITHOLDERS to be held on Thursday, April 29, 2010 NOTICE IS HEREBY GIVEN that the Annual and Special Meeting (the Meeting ) of the holders (the Unitholders ) of trust units ( Units ) of Canadian Oil Sands Trust (the Trust ) will be held in the Ballroom, The Metropolitan Conference Centre, th Avenue S.W., Calgary, Alberta on Thursday, April 29, 2010 commencing at 2:30 p.m. (Calgary time) for the following purposes: 1. to consider, pursuant to an interim order of the Court of Queen s Bench of Alberta dated March 9, 2010, as the same may be amended (the Interim Order ), and if deemed advisable, to pass, with or without variation, a special resolution of Unitholders (the Arrangement Resolution ), the full text of which is set forth in Appendix A to the accompanying management proxy circular (the Circular ) to approve an arrangement under Section 193 of the Business Corporations Act (Alberta) and all transactions contemplated thereby (the Arrangement ), all as more particularly described in the Circular; 2. if the Arrangement Resolution is passed, to consider and, if deemed advisable, to pass an ordinary resolution, the full text of which is set out in the Circular, approving the adoption of the following incentive plans of the entity resulting from the amalgamation of Alberta Ltd. ( Acquireco ) and Canadian Oil Sands Limited (the Corporation ) as part of the Arrangement ( New COSL ), all as more particularly described in the Circular: (a) (b) (c) (d) the Transition Option Plan, including the approval of a maximum number of Common Shares equal to the number of options outstanding under the current 2005 Option Plan of the Trust as of the date immediately prior to the Effective Date to be issued thereunder; the Equity Incentive Plan, including the approval of a maximum of six million Common Shares to be issued thereunder; the New Incentive Option Plan, including the approval of up to a maximum of 2% of the issued and outstanding Common Shares to be issued thereunder; and the Deferred Share Unit Plan, including the approval of a maximum of one million Common Shares to be issued thereunder; 3. if the Arrangement Resolution is passed, to consider and, if deemed advisable, to pass an ordinary resolution, the full text of which is set out in the Circular, approving the adoption of the new shareholder rights plan of Acquireco, which will become New COSL, all as more particularly described in the Circular; 4. to receive the consolidated financial statements of the Trust for the year ended December 31, 2009, together with the auditors report thereon; 5. to consider the appointment of PricewaterhouseCoopers LLP as the auditor of the Corporation and to direct the Trustee to vote the common shares of the Corporation so as to appoint PricewaterhouseCoopers LLP as the auditor of the Corporation for the ensuing year at a remuneration to be fixed by the Corporation and approved by the directors thereof; 6. to consider the appointment of PricewaterhouseCoopers LLP as the auditor of the Trust for the ensuing year at a remuneration to be fixed by the Corporation and approved by the directors thereof; 7. to consider the Trustee s nominees for election as directors of the Corporation for the ensuing year, and to direct the Trustee to vote the common shares of the Corporation so as to elect directors of the Corporation and to fill any vacancies among the directors of the Corporation that may arise between the Meeting and - 1 -

8 the first meeting of Unitholders thereafter that considers the election of directors, by appointing to any such vacancy a person selected by the Board of the Corporation; 8. to consider and, if deemed appropriate, to pass with or without variation, an ordinary resolution, the full text of which is set out in the Circular, approving and confirming the Unitholder Rights Plan of the Trust, as more fully described and set forth in the accompanying Circular; 9. to consider and, if deemed appropriate, to pass with or without variation, a special resolution, the full text of which is set out in the Circular, approving and authorizing certain amendments to Section 5.1 of the Trust Indenture to assist with the interpretation of certain accounting rules under IFRS, as more fully described and as set forth in the accompanying Circular; and 10. to transact such other business as may properly be brought before the Meeting or any adjournment or adjournments thereof. DATED at Calgary, Alberta on March 15, By Order of the Directors of Canadian Oil Sands Limited on behalf of Canadian Oil Sands Trust Signed Trudy M. Curran Trudy M. Curran General Counsel and Corporate Secretary Unitholders are referred to the accompanying Circular dated March 15, 2010 for more detailed information regarding the matters to be considered at the Meeting. A copy of the Plan of Arrangement in respect of the Arrangement is attached as Schedule One to the Arrangement Agreement, which is attached as Appendix C to the Circular. Capitalized terms used in this Notice that are not defined herein shall have the meanings given to such terms in the Circular. Only persons registered as holders of Units on the records of the Trust as of the close of business on March 12, 2010 are entitled to receive notice of, and to vote or act at, the Meeting. No person who becomes a Unitholder after the Record Date will be entitled to vote or act at the Meeting or any adjournment thereof. Unitholders who are unable to attend the Meeting in person are requested to date and sign the enclosed form of proxy and to mail it to, or deposit it with, the Trustee of the Trust, Computershare Trust Company of Canada, 100 University Avenue, Toronto, Ontario, M5J 2Y1 (Attention: Proxy Department). In order to be valid and acted upon at the Meeting, properly completed forms of proxy must be received by the Trustee not less than twenty-four (24) hours (excluding Saturdays, Sundays and holidays in Alberta) before the Meeting or any adjournment thereof

9 TABLE OF CONTENTS GLOSSARY OF TERMS... 1 MAKE YOUR VOTE COUNT QUESTIONS AND ANSWERS ON VOTING... 9 MANAGEMENT PROXY CIRCULAR Notice to Unitholders in the United States Reporting Currency Cautionary Statement Regarding Forward-Looking Information Information Contained in this Circular SUMMARY OF MANAGEMENT PROXY CIRCULAR The Meeting The Arrangement Current Organizational Structure Post-Arrangement Structure Dividend Policy Benefits of the Arrangement Approval and Recommendation of the Board of Directors Approvals Certain Canadian Federal Income Tax Considerations Certain United States Federal Income Tax Considerations Other Tax Considerations Timing of Completion of the Arrangement Risk Factors Other Matters to be Considered at the Meeting SOLICITATION OF PROXIES Solicitation of Proxies by Management Costs and Manner of Solicitation APPOINTMENT AND REVOCATION OF PROXY Appointment of Proxy Revocation of Proxy Voting of Proxies and Exercise of Discretion by Proxyholders Advice to Beneficial Holders of Units Procedure and Votes Required THE ARRANGEMENT Background to the Arrangement Benefits of the Arrangement Approval and Recommendation of the Board of Directors Effect of the Arrangement on Unitholders Treatment of Employee Equity Rights Premium Distribution, Distribution Reinvestment and Optional Unit Purchase Plan Effect on Debt and Operating Facilities and Other Material Contracts Details of the Arrangement Dividend Policy Arrangement Agreement Approvals Timing of Completion of the Arrangement Procedure for Exchange of Securities i - Page

10 TABLE OF CONTENTS Interests of Certain Persons or Companies in the Arrangement Expenses of the Arrangement Securities Law Matters Judicial Developments Experts CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS Unitholders Resident in Canada Eligibility for Investment Non-Resident Unitholders CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS Arrangement Ownership and Disposition of Common Shares Other Considerations OTHER TAX CONSIDERATIONS INFORMATION CONCERNING CANADIAN OIL SANDS The Trust The Corporation Documents Incorporated by Reference Market for Securities Distributable Income Legal Proceedings and Regulatory Actions INFORMATION CONCERNING NEW COSL AND ACQUIRECO RISK FACTORS Risk Factors Relating to the Arrangement Risk Factors Relating to the Activities of New COSL and the Ownership of Common Shares VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF OTHER MATTERS TO BE CONSIDERED AT THE MEETING Approval of the Incentive Plans Approval of the Shareholder Rights Plan Financial Statements Appointment of Auditor Election of Directors Approval and Reconfirmation of the Unitholder Rights Plan of the Trust Amendments to Section 5.1 of the Trust Indenture STATEMENT OF CORPORATE GOVERNANCE PRACTICES Responsibilities of the Board Code of Business Conduct Audit Committee Reserves Committee Corporate Governance and Compensation Committee ii - Page

11 TABLE OF CONTENTS Roles and Responsibilities of the Chairman of the Board Roles and Responsibilities of the President and Chief Executive Officer Independence of Board Other Directorships Board Succession Orientation and Continuing Education Directors Unit Ownership Requirements Directors Compensation Summary of Board and Committee Meetings Held Summary of Directors Attendance Unitholder Communications COMPENSATION DISCUSSION AND ANALYSIS Executive Summary Compensation Structure, Policies and Principles Performance Graph Annual Base Salary Annual Target Bonus or Short Term Incentive Plan Long Term Incentive Plan Securities Authorized for Issuance Under Equity Compensation Plans Pension/Savings Plan Benefits Executive Ownership Guidelines Report of the Corporate Governance and Compensation Committee CURRENT OFFICERS EXECUTIVE COMPENSATION Summary Compensation Table Outstanding Option-Based Awards and Unit-Based Awards as at December 31, Incentive Plan Awards Value Vested or Earned During the Most Recently Completed Financial Year Termination and Change of Control Benefits INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS MANAGEMENT CONTRACTS Management Agreement INQUIRIES/ADDITIONAL INFORMATION AUDITORS CONSENT CONSENT OF BURNET, DUCKWORTH & PALMER LLP CONSENT OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP APPENDIX A ARRANGEMENT RESOLUTION... A-1 APPENDIX B INTERIM ORDER... B-1 APPENDIX C ARRANGEMENT AGREEMENT... C-1 APPENDIX D INFORMATION CONCERNING NEW COSL AND ACQUIRECO... D-1 APPENDIX E PRO FORMA FINANCIAL STATEMENTS OF ACQUIRECO... E-1 APPENDIX F TRANSITION OPTION PLAN... F-1 - iii - Page

12 TABLE OF CONTENTS APPENDIX G EQUITY INCENTIVE PLAN... G-1 APPENDIX H NEW INCENTIVE OPTION PLAN... H-1 APPENDIX I DEFERRED SHARE UNIT PLAN... I-1 APPENDIX J SHAREHOLDER RIGHTS PLAN...J-1 Page - iv -

13 CANADIAN OIL SANDS TRUST 2500 First Canadian Centre 350-7th Avenue S.W. Calgary, Alberta T2P 3N9 MANAGEMENT PROXY CIRCULAR Relating to the Annual and Special Meeting of Unitholders to be held on Thursday, April 29, 2010 GLOSSARY OF TERMS To assist you in understanding this Circular, the following is a glossary of certain terms used in this Circular, including the Summary. Terms and abbreviations used in the Appendices to this Circular (other than Appendix D ) are defined separately and the terms and abbreviations defined below are not used therein, except where otherwise indicated Act means the United States Securities Act of 1933, as amended Act means the United States Securities Exchange Act of 1934, as amended Option Plan means the current unit option incentive plan of the Corporation which was originally adopted by Unitholders on April 25, ABCA means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended, including the regulations promulgated thereunder. Acquireco Amended DRIP means Alberta Ltd. means the DRIP, as assigned to and amended and restated by New COSL pursuant to the Arrangement to provide for, among other things, the reinvestment of cash dividends by eligible Shareholders in additional Common Shares and the election by eligible Shareholders to have these additional Common Shares delivered to the designated plan broker in exchange for a premium cash payment. Annual Information Form means the annual information form of the Trust dated March 13, 2009 in respect of the Trust s financial year ended December 31, 2008, incorporated by reference in this Circular and then the new annual information form to be filed by the Trust with the securities commission or similar regulatory authority in each of the provinces of Canada subsequent to the date of this Circular and prior to completion of the Arrangement, which new annual information form shall be deemed to replace this earlier annual information form

14 Arrangement Arrangement Agreement Arrangement Resolution Articles of Arrangement Beneficial Unitholders Board or Board of Directors business day Canadian Oil Sands or We CGC Circular Common Share Certificate Common Shares Corporation Court Depositary means the proposed arrangement, under the provisions of section 193 of the ABCA, on the terms and conditions set forth in the Plan of Arrangement and includes any supplement, modification or amendment thereto made in accordance with section 5.1 of the Arrangement Agreement. means the agreement made as of March 5, 2010, as amended on March 15, 2010 among the Trust, the Corporation and Acquireco pursuant to which such parties have proposed to implement the Arrangement, which agreement is attached as Appendix C to this Circular, and any amendment thereto. means the special resolution in respect of the Arrangement, substantially in the form attached as Appendix A to this Circular, to be voted upon by Unitholders at the Meeting. means the articles of arrangement in respect of the Arrangement required under subsection 193(10) of the ABCA to be filed with the Registrar of Corporations under the ABCA after the Final Order has been made to give effect to the Arrangement. has the meaning set out in Appointment and Revocation of Proxy Advice to Beneficial Holders of Units. means the board of directors of the Corporation prior to the completion of the Arrangement and the board of directors of New COSL following the completion of the Arrangement, as each may be constituted from time to time. means a day, other than a Saturday, Sunday or statutory holiday, when banks are generally open for business in the City of Calgary, in the Province of Alberta, for the transaction of commercial banking business. means the Trust and its Subsidiaries. is the Corporate Governance and Compensation Committee of the Board of Directors of the Corporation. is this Management Proxy Circular. means a certificate representing Common Shares. means the common shares in the capital of Acquireco prior to the completion of the Arrangement and New COSL following the completion of the Arrangement. is Canadian Oil Sands Limited, which is both the manager of the Trust and a Subsidiary of the Trust. means the Court of Queen s Bench of Alberta. means Computershare Investor Services Inc., at its offices set out in the Letter of Transmittal

15 Direct Registration Advice DRIP DSU DSU Plan Early Retirement has the meaning set out in The Arrangement Procedure for Exchange of Securities. means the Premium Distribution, Distribution Reinvestment and Optional Unit Purchase Plan of the Trust made as of January 23, 2002, as set out in The Arrangement Premium Distribution, Distribution Reinvestment and Optional Unit Purchase Plan. means a deferred share unit granted under the DSU Plan, as more particularly described in Other Matters to be Considered at the Meeting Approval of the Incentive Plans DSU Plan. means the deferred share unit plan of New COSL to be approved by the Unitholders at the Meeting, a copy of which is attached as Appendix I to this Circular. means retirement from active employment with New COSL or a related entity at age 55 up to and including age 64, provided such employee must have had five years of continuous service with New COSL or its predecessors and further provided that such employee does not meet the definition of Normal Retirement. Effective Date means on or about January 1, Eligible Institution Encumbrance Equity Award Equity Incentive Plan Final Order means a Canadian schedule I chartered bank, a member of the Securities Transfer Agent Medallion Program (STAMP), a member of the Stock Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP); members of these programs are usually members of a recognized stock exchange in Canada or the United States, members of the Investment Industry Regulatory Organization of Canada, members of the Financial Industry Regulatory Authority or banks and trust companies in the United States. means any encumbrance, lien, charge, security interest, option, privilege or other restriction or right of any kind or nature, and any right or privilege capable of becoming any of the foregoing. means, collectively, Performance Awards and RSUs granted under the Equity Incentive Plan, as more particularly described in Other Matters to be Considered at the Meeting Approval of the Incentive Plans Equity Incentive Plan. means the equity incentive plan of New COSL to be approved by the Unitholders at the Meeting, a copy of which is attached as Appendix G to this Circular. means the order of the Court approving the Arrangement to be applied for following the Meeting and to be granted pursuant to the provisions of subsection 193(9) of the ABCA, as such order may be affirmed, amended or modified by any court of competent jurisdiction

16 GAAP IFRS Incentive Plan Resolution Income Tax Act or Tax Act Interim Order Letter of Transmittal Management Meeting Mercer Minister NEOs or Named Executive Officers New COSL means generally accepted accounting principles in Canada or the United States, as the case may be, as in effect from time to time. means the International Financial Reporting Standards issued by the International Accounting Standards Board. means the ordinary resolution in respect of the adoption of each of the Transition Option Plan, the Equity Incentive Plan, the New Incentive Option Plan and the DSU Plan, including the approval of the maximum number of Common Shares to be issued under each such plan, in substantially the form set out in this Circular, with each such plan to be voted upon separately by Unitholders at the Meeting. means the Income Tax Act, R.S.C. 1985, c. 1 (5 th Supp.), as amended, including the regulations promulgated thereunder. means the order of the Court dated March 9, 2010 under subsection 193(4) of the ABCA containing declarations and directions with respect to the Arrangement and the Meeting and issued pursuant to the petition of the Trust, the Corporation and Acquireco, which order is attached as Appendix B to this Circular. means the letter of transmittal to be distributed at a later date following the Meeting pursuant to which a Unitholder is required to deliver certificates representing Units to receive, on completion of the Arrangement, Common Shares Certificates or Direct Registration Advice. is the management of the Corporation. is the annual and special meeting of the Unitholders to be held on Thursday, April 29, 2010 at 2:30 p.m. (Calgary time), and any adjournment(s) thereof. means Mercer (Canada) Limited, the external national consulting firm engaged to provide compensation advice to the CGC and the Board. means the Minister of Finance (Canada). are the five senior officers of the Corporation, being Messrs. Coutu, Kubik, Hagerman and Roberts and Ms. Curran. means the entity resulting from the amalgamation of Acquireco and the Corporation as part of the Arrangement

17 New DRIP New Incentive Option Plan Non-Resident means the new premium distribution, distribution reinvestment and optional share purchase plan to be created by New COSL on substantially similar terms and conditions as the DRIP if the DRIP and all associated agreements are not assigned to and amended and restated by New COSL and implemented by New COSL as the Amended DRIP. means the incentive option plan of New COSL to be approved by the Unitholders at the Meeting, a copy of which is attached as Appendix H of this Circular. means a non-resident of Canada within the meaning of the Tax Act. Normal Growth Guidelines means the guidelines released by the Minister on December 15, 2006 as to what would be considered normal growth as opposed to undue expansion under the SIFT Rules. Normal Retirement Notice of Meeting Notice of Petition Performance Award Performance Unit Award Performance Unit Incentive Plan Person Plan of Arrangement means retirement from active employment with New COSL at or after age 65 or where the employee s age plus service with New COSL or its predecessors equals at least 70, provided that such employee must have had three years of continuous service with New COSL or its predecessors and be at least age 55. means the Notice of Annual and Special Meeting of Unitholders, which accompanies this Circular. means the Notice of Petition by the Trust, the Corporation and Acquireco to the Court for the Final Order, which accompanies this Circular. means a performance award granted under the Equity Incentive Plan, as more particularly described in Other Matters to be Considered at the Meeting Approval of the Incentive Plans Equity Incentive Plan. means a performance award granted under the Performance Unit Incentive Plan, as more particularly described in Compensation Discussion and Analysis Long Term Incentive Plan Performance Unit Incentive Plan. means the performance unit incentive plan of the Trust effective as of January 1, means any individual, partnership, association, body corporate, trustee, executor, administrator, legal representative, government, regulatory authority or other entity. means the plan of arrangement attached as Schedule One to the Arrangement Agreement, which is attached as Appendix C to this Circular, as amended or supplemented from time to time in accordance with the terms thereof. Record Date means March 12,

18 Registrar of Corporations Regulation S Reserves Committee Resident ROCE RSU SCO Shareholder Rights Plan Shareholder Rights Plan Resolution Shareholders SIFT Rules Subsidiary Syncrude Syncrude Joint Venture means the Registrar of Corporations appointed under section 263 of the ABCA. means Regulation S under the 1933 Act. is the Reserves, Marketing Operations and Environmental, Health and Safety Committee of the Board of Directors of the Corporation. means a person who is not a Non-Resident. means return on average productive capital employed, as more particularly described in Compensation Discussion and Analysis Executive Summary and Annual Target Bonus or Short Term Incentive Plan. means a restricted share unit granted under the Equity Incentive Plan, as more particularly described in Other Matters to be Considered at the Meeting Approval of the Incentive Plans Equity Incentive Plan. means sweet synthetic crude oil. means the shareholder rights plan of Acquireco, attached hereto as Appendix J. means the ordinary resolution in respect of the Shareholder Rights Plan, substantially in the form set out in this Circular, to be voted upon by Unitholders at the Meeting. means, collectively, the holders of Common Shares from time to time. means the legislative provisions governing the taxation of specified investment flow-throughs and their unitholders, which were announced by the Minister on October 31, 2006 and which were enacted on June 22, 2007, pursuant to Bill C-52. means, with respect to any Person, a subsidiary (as that term is defined in the ABCA (for such purposes, if such Person is not a corporation, as if such Person were a corporation)) of such Person and includes any limited partnership, joint venture, trust, limited liability company, unlimited liability company or other entity, whether or not having legal status, that would constitute a subsidiary (as described above) if such entity were a corporation. means, collectively, the Syncrude Joint Venture and the Syncrude Project. means the joint venture formed by the Syncrude Participants for the purpose of exploiting the Athabasca oil sands, which includes the Syncrude Plant and leases acquired or developed in connection therewith

19 Syncrude Participants means ConocoPhillips Oil Sands Partnership II (9.03%), Imperial Oil Resources (25%), Mocal Energy Limited (5%), Murphy Oil Company Ltd. (5%), Nexen Oil Sands Partnership (7.23%) and Suncor Energy Oil & Gas Partnership, a subsidiary partnership of Suncor Energy Inc. (12%) and the Corporation (36.74%), as the corporations or partnerships that own the undivided interests in the Syncrude Project and their respective successors and assigns in interest from time to time. Syncrude Plant Syncrude Project Transition Option Plan Trust Trust Indenture Trustee or Computershare TSR means all of the plant and facilities owned by the Syncrude Participants and operated by Syncrude Canada Ltd. located at Mildred Lake, approximately 40 kilometres north of Fort McMurray, Alberta, where upgrading of bitumen occurs along with the plants and facilities owned by the Syncrude Participants and operated by Syncrude Canada Ltd. located at the Aurora site approximately 35 kilometres north of Mildred Lake. means (a) the scheme for recovery of oil sands, crude bitumen or products derived therefrom originally approved in Approval No of the Energy Resources Conservation Board of Alberta that was the successor to the Alberta Energy Utilities Board ( AEUB ) and currently approved in Approval Nos and 10781, as issued by the AEUB, as such scheme may be amended or superseded from time to time, (b) all property now owned or hereafter acquired or developed by the owners participating from time to time in such scheme or by Syncrude Canada Ltd. on their behalf in connection with such scheme, (c) the oil sands leases, and (d) any other scheme or schemes implemented for the purpose of recovering oil sands, crude bitumen or products derived from those oil sands leases related to such scheme or schemes and all property acquired or developed in connection with such scheme or schemes. means the 2005 Option Plan, as amended and restated to provide for, among other things, officers and employees of the Corporation who have been issued Unit options pursuant to the 2005 Option Plan to receive Common Shares instead of Units thereunder, to be approved by the Unitholders at the Meeting, a copy of which is attached as Appendix F to this Circular. is Canadian Oil Sands Trust. is the Fifth Amended and Restated Trust Indenture dated April 26, 2006, as further amended from time to time. is Computershare Trust Company of Canada, the entity appointed as trustee of the Trust pursuant to the Trust Indenture and is also the transfer agent for the Units. means total Unitholder return, as more particularly described in Compensation Discussion and Analysis Executive Summary and Annual Target Bonus or Short Term Incentive Plan

20 TSX Units Unitholder Rights Plan WTI You or Unitholder means the Toronto Stock Exchange. are the trust units in the capital of Canadian Oil Sands Trust. means the second amended and restated unitholder rights plan agreement dated as of April 25, 2007 between the Trust and Computershare Trust Company of Canada, as rights agent. means West Texas Intermediate crude oil. means a person who holds Units in the Trust

21 As your vote is important to us, we have given you some guidelines on voting your Units. Note that unless otherwise specified, the answers relate to all Unitholders regardless of whether you are a registered or Beneficial Unitholder (as explained below). Q: Am I entitled to vote? MAKE YOUR VOTE COUNT QUESTIONS AND ANSWERS ON VOTING Q: Am I a Beneficial (non-registered) Unitholder? A: You are a Beneficial Unitholder if your Units are held in an account and are recorded in the name of a nominee (bank, trust company, securities broker or other). Your Units are not represented by a physical Unit certificate but are recorded on an electronic system. A: If you are a holder of Units at the close of business on Friday, March 12, 2010, you are entitled to vote at the Meeting, or at any adjournment of that Meeting, on the following items: Arrangement Resolution; If the Arrangement Resolution is passed, the adoption of each of the Transition Option Plan, the Equity Incentive Plan, the New Incentive Option Plan and the DSU Plan, including the approval of the maximum number of Common Shares to be issued under each such plan, pursuant to the Incentive Plan Resolution; If the Arrangement Resolution is passed, the adoption of the Shareholder Rights Plan; Appointment of auditors for the Trust and the Corporation; Election of directors of the Corporation for the ensuing year; Approval and confirmation of the Unitholder Rights Plan; Approval and authorization of certain amendments to Section 5.1 of the Trust Indenture to assist with the interpretation of certain accounting rules under IFRS; and Other business, if any, properly brought before the Meeting. Q: Am I a registered Unitholder? A: You are a registered Unitholder if you hold any Units in your own name. Your Units are represented by a physical Unit certificate. Q: How many votes am I entitled to? A: You are entitled to one vote for each Unit you hold. Q: How will the items of business be decided at the Meeting? A: An affirmative vote of not less than 66 % of the votes cast by Unitholders who are represented in person or by proxy at the Meeting (other than the Trust or its affiliates) is required to approve the Arrangement Resolution. A simple majority of the votes cast (not less than 50% plus one vote) by the Unitholders who are represented in person or by proxy at the Meeting (other than Canadian Oil Sands or its affiliates) is required to approve the adoption of each of the Transition Option Plan, the Equity Incentive Plan, the New Incentive Option Plan and the DSU Plan, including the approval of the maximum number of Common Shares to be issued under each such plan, pursuant to the Incentive Plan Resolution, the adoption of the Shareholder Rights Plan, the appointment of auditors, the election of directors and the approval and confirmation of the Unitholder Rights Plan. An affirmative vote of not less than 66 % of the votes cast by Unitholders who are represented in person or by proxy at the Meeting (other than Canadian Oil Sands or its affiliates) is required to approve and authorize the amendments to Section 5.1 of the Trust Indenture to assist with the interpretation of certain accounting rules under IFRS, as more fully described and as set forth in this Circular. Q: How do I vote? A: If you are a registered Unitholder, you can vote in person at the Meeting or by proxy. (a) To vote in person Do not complete and return the form of proxy but simply attend the Meeting where your vote will be taken and counted. Be sure to register with Computershare, our transfer - 9 -

22 agent and registrar, when you arrive at the Meeting. (b) To vote by proxy you can convey your voting instructions by completing your proxy and returning it to Computershare. By doing so your Units will be voted at the Meeting by Donald J. Lowry or Marcel R. Coutu who are the appointees set forth in the accompanying form of proxy or by such other person as you may specify in your completed proxy. See below for further details. Instructions as to how to convey your voting instructions by any of these means are set forth on the back of the form of proxy and should be carefully followed. (c) If you convey your instructions by mail, your instructions must be received by 2:30 p.m. (Calgary time) on the last business day (Wednesday, April 28, 2010) preceding the day of the Meeting, or any adjournment of that Meeting. If you are a Beneficial Unitholder, your nominee will have their own means of conveying voting instructions which should be carefully followed. Most nominees will mail you a voting instruction form that will need to be completed and returned. In addition to conveying voting instructions by mail, a nominee may also provide you with the option to convey your voting instructions by telephone, facsimile or internet. If you hold your Units both as a registered and Beneficial Unitholder, you will need to convey your vote using each of the applicable procedures set forth above applicable to the Units for each type of holding. Q: As a Beneficial Unitholder can I vote in person at the Meeting? A: Yes, but only if you are appointed as proxyholder in respect of your Units. We do not have the names of the Beneficial Unitholders and so, if you attend the Meeting, we will not have a record of the number of Units you beneficially own or your entitlement to vote, unless your nominee has appointed you as proxyholder. To be appointed, you should insert your own name in the space provided on the voting instruction form provided to you by your nominee and carefully follow the instructions provided. Do not otherwise complete the form. This will allow you to attend the Meeting and vote your Units in person. Be sure to register with Computershare when you arrive at the Meeting. Q: Can I appoint a person as proxyholder other than the Management nominees, Donald J. Lowry and Marcel R. Coutu? A: Whether or not you attend the Meeting, you have the right to appoint a person, who does not need to be a Unitholder, to represent you and vote your Units in accordance with your voting instructions at the Meeting. To exercise this right, insert the name of the person you wish to act as proxyholder, or complete another proper form of proxy. Q: Who is soliciting my proxy? A: Management is soliciting your proxy and the costs of doing so are being borne by the Trust. We have hired Alliance Trust Company to solicit proxies. In addition to soliciting proxies on behalf of the Trustee by mail and by Alliance Trust Company, directors, officers and employees of the Corporation may also, without additional compensation, solicit proxies in person or by telephone, facsimile or other form of electronic communication. Q: How will my proxy be voted? A: Your proxyholder, whether it is the Management nominees or another person designated by you, must vote or withhold your vote in accordance with the instructions you have given. If you do not convey any instructions and appoint a proxyholder, you can let your proxyholder decide your vote for you. If you do not give any instructions and appoint the Management nominees as proxyholder or your proxyholder does not give specific instructions, your Units will be voted FOR the Arrangement Resolution, the adoption of each of the Transition Option Plan, the Equity Incentive Plan, the New Incentive Option Plan and the DSU Plan, including the approval of the maximum number of Common Shares to be issued under each such plan, pursuant to the Incentive Plan Resolution, the adoption of the Shareholder Rights Plan, the appointment of auditors, the election of directors, the approval and confirmation of the Unitholder Rights Plan and the approval and authorization of certain amendments to Section 5.1 of the Trust Indenture to assist with the interpretation of certain accounting rules under IFRS. Q: What if there are amendments or variations to the items of business set forth in the notice of Meeting or other matters are brought before the Meeting? A: The enclosed form of proxy gives the person named in it the authority to use their discretion on voting on amendments or variations of the items set

23 forth in the notice of Meeting and on any other matters properly brought before the Meeting. Proxyholders will vote in accordance with their best judgment pursuant to this discretionary authority. As at the date of this Circular, the Board and Management do not know of any variations or amendments to the proposed items of business or any additional matters which may be presented for consideration at the Meeting. Q: Can I change my mind once I have submitted my proxy? A: Yes. You can revoke your proxy at any time before it is acted upon. As a registered Unitholder, if your proxy was submitted by mail, you can revoke it by depositing an instrument in writing executed by you, or by your attorney authorized in writing, or if the Unitholder is a corporation, under corporate seal or by an officer or attorney duly authorized at the registered office of the Corporation or with Computershare at the address shown on the proxy form. If you conveyed your voting instructions by telephone or internet then conveying new instructions will revoke prior instructions. Instructions can be revoked at any time up to and including 2:30 p.m. (Calgary time) on the business day preceding the Meeting (Wednesday, April 28, 2010), or any adjournment of that Meeting, or by depositing the revoking instrument with the Chair of the Meeting on the day of the Meeting, or any adjournment of that Meeting; or in any other manner permitted by law, including personal attendance at the Meeting, or any adjournment of that Meeting. If an instrument of revocation is deposited with the Chair, it will not be effective with respect to any item of business that has been voted upon prior to the deposit. If you are a Beneficial Unitholder, you should contact your nominee for instructions on how to revoke your proxy. Q: Who counts the votes? A: Computershare, our transfer agent and registrar, who will also act as scrutineer at the Meeting. Q: How are my Units voted if a ballot is called at the Meeting on any of the items of business and a proxyholder other than myself is appointed? A: Your Units will be voted as you specified in your voting instructions or in your proxy. If no such specification is made, then your Units will be voted FOR the Arrangement Resolution, the adoption of each of the Transition Option Plan, the Equity Incentive Plan, the New Incentive Option Plan and the DSU Plan, including the approval of the maximum number of Common Shares to be issued under each such plan, pursuant to the Incentive Plan Resolution, the adoption of the Shareholder Rights Plan, the appointment of auditors, the election of directors of the Corporation, the approval and confirmation of the Unitholder Rights Plan and the approval and authorization of certain amendments to Section 5.1 of the Trust Indenture to assist with the interpretation of certain accounting rules under IFRS. Q: Who can I contact if I have any further questions on voting at the Meeting? A: You can contact: Computershare, our transfer agent and registrar: By service@computershare.com By Telephone: OR Alliance Trust Company, our proxy solicitation agent and information agent: By inquiries@alliancetrust.com By Telephone: Toll free: Q: How do I exchange my Units for Common Shares? A: A Letter of Transmittal will be sent to all registered Unitholders prior to the Effective Date. The Letter of Transmittal will contain instructions on how Unitholders may obtain Common Share Certificates or other evidence of their right to obtain Common Share Certificates. Beneficial Unitholders whose Units are registered in the name of a broker, dealer, bank, trust company or other nominee should contact their nominee for assistance in exchanging their Units for Common Shares

24 MANAGEMENT PROXY CIRCULAR This Circular is furnished in connection with the solicitation of proxies on behalf of the Trustee by the Management of the Corporation pursuant to the terms of the Management Agreement between the Corporation and the Trust dated July 5, 2001, as amended, for use at the Meeting of the Unitholders of the Trust to be held on Thursday, April 29, 2010 at the time and place and for the purposes set forth in the accompanying Notice of Annual and Special Meeting of Unitholders (the Notice of Meeting ), and at any adjournment thereof. A glossary of certain terms used in this Circular can found on pages 1 to 8 of this Circular. Notice to Unitholders in the United States None of the securities to be issued to Unitholders in exchange for their securities under the Arrangement have been or will be registered under the 1933 Act, and such securities are being issued to Unitholders in reliance on the exemption from registration set forth in Section 3(a)(10) of the 1933 Act. The solicitation of proxies for the Meeting is not subject to the proxy requirements of Section 14(a) of the 1934 Act. Accordingly, the solicitations and transactions contemplated in this Circular are made in the United States for securities of a Canadian issuer in accordance with Canadian corporate and securities laws and, unless otherwise indicated, this Circular has been prepared solely in accordance with disclosure requirements applicable in Canada. Unitholders in the United States should be aware that such requirements are different from those of the United States applicable to registration statements under the 1933 Act and proxy statements under the 1934 Act. Specifically, information concerning the operations of the Trust contained or incorporated by reference herein has been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to United States disclosure standards. The audited and unaudited historical financial statements of the Trust and the pro forma financial statements and audited balance sheet of Acquireco included in or incorporated by reference in this Circular are presented in Canadian dollars, were prepared in accordance with Canadian GAAP and are subject to Canadian auditing and auditor independence standards, which differ from United States GAAP and auditing and auditor independence standards in certain material respects, and thus may not be comparable to financial statements of United States companies. Additionally, oil and gas reserves information contained or incorporated by reference in this Circular has been prepared in accordance with Canadian disclosure standards, which may not be comparable in all respect to United States disclosure standards. Unitholders should be aware that the acquisition of the Common Shares as a result of the implementation of the Arrangement described herein may have tax consequences both in the United States and in Canada. See Certain Canadian Federal Income Tax Considerations and Certain United States Federal Income Tax Considerations. U.S. Unitholders should consult their own tax advisors with respect to their own particular circumstances. The enforcement by investors of civil liabilities under the United States securities laws may be affected adversely by the fact that the Trust, the Corporation and Acquireco are or will be organized under the laws of the Province of Alberta, that certain of their respective trustees, directors and officers are residents of countries other than the United States and that certain assets of the Trust, the Corporation and Acquireco are, or will be, located outside the United States. As a result, it may be difficult or impossible for U.S. Unitholders to effect service of process within the United States upon, the Trust, the Trustee, the Corporation and Acquireco and their directors and officers, or to realize, against them, upon judgments of courts of the United States predicated upon civil liabilities under the federal securities laws of the United States or blue sky laws of any state within the United States. In addition, U.S. Unitholders should not assume that the courts of Canada: (a) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of the United States or blue sky laws of any state within the United States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or blue sky laws of any state within the United States