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## fs, Westshore Terminals Income Fund Notes to Financial Statements 

December 31, 2002 and 2001 

(Figures in tables are expressed in thousands of dollars, except unit amounts) 

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## 4. Trust units 

The Declaration of Trust provides that an unlimited number of trust units may be issued. Each unit represents an equal and undivided beneficial interest in any distribution from the Fund and in the net assets in the event of termination or wind-up. All units are of the same class with equal rights and privileges. Units may be issued for consideration payable in instalments, with such units being held as security for unpaid instalments. 

Trust units ate redeemable at the holders’ option at amounts related to market prices at the time, subject to a maximum of $250,000 in cash redemptions by the Fund in any particular month. This limitation can be waived at the discretion of the Trustees. Redemption in excess of this amount, assuming no waiving of the limitation, shall be paid by way of a distribution in specie of a pro rata number of Westshore common shares and Notes. 

Units outstanding as at December 31 are as follows: 

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Also see note 5. 

## 5. Distributions to unitholders 

During the year ended December 31, 2002, the Fund declared cash distributions to unitholders of $43,354,000 (2001 - $49,441,000) or $0.616 (2001 - $0.702) per unit. The amounts and record dates of the distributions were as follows: 

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The distribution of $10,979,000 ($0.156 per unit) payable to unitholders of record on December 31, 2002 was paid on or before January 15, 2003. 

Certain costs incurred in issuing trust units by the Fund of $40,197,000 are deductible for income tax purposes on a straight-line basis over a five-year period. The Fund can designate these deductions as a “return of capital,” which will reduce the taxable amounts of distributions to unitholders. Additionally, any payments received from Westshore relating to the repurchase of share capital can also be designated as a return of capital for distribution to unitholders. As at December 31, 2002, $nil (2001 - $19,000) of issue costs was available for future designation as a return of capital. 

The distributions declared in 2002 and 2001 have been allocated as follows for income tax purposes: 

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## 6. Related party transactions 

## Administration agreement 

The Fund has entered into an administration agreement with Westar, which is owned indirectly by a significant unitholder of the Fund. Under the terms of the agreement, Westar is responsible for administering and managing the Fund. Westar earns a fee of $250,000 per annum plus reimbursement of certain out-of-pocket costs for providing these services, and if the costs of administering the Fund exceed $400,000 in any yeat, Westar will also be retmbursed for such excess costs. The agreement can be terminated on 180 days’ notice, of immediately under certain circumstances. 

