Exhibit 4.10


 


GIBSON
ENERGY ULC


 


as Obligor


 


and


 


BNY TRUST
COMPANY OF CANADA


 


as Collateral Agent


 






 


DEMAND
DEBENTURE — GIBSON ENERGY ULC


 


May 27, 2009


 






 


STIKEMAN
ELLIOTT LLP


 

















 


DEMAND
DEBENTURE


 


Demand debenture dated as of May 27, 2009
made by Gibson Energy ULC, as obligor, to and in favour of BNY Trust Company of
Canada, as Collateral Agent for the benefit of the Secured Creditors.


 


RECITALS:


 


(a)                                  The Issuers may from time to time issue Notes to the
Noteholders pursuant to the Indenture with The Bank of New York Mellon, as
Trustee;


 


(b)                                 The Initial Purchasers have agreed pursuant to the
Note Purchase Agreement to purchase the Notes issued by the Issuers in the
aggregate principal amount of US $560,000,000 on the terms and conditions
contained in the Note Purchase Agreement;


 


(c)                                  The Collateral Agent has agreed to act as collateral
agent for the Secured Creditors for the purposes of holding any and all
security for the payment and performance of the obligations of the Issuers
under the Indenture, the Notes and the other Indenture Documents;


 


(d)                                 The Obligor has, pursuant to a Guarantee,
unconditionally guaranteed the obligations of GEP Midstream Finance Corp. and
each other Credit Party under the Indenture Documents;


 


(e)                                  The Issuers, including the Obligor, will receive
substantial benefits from the issuance of the Notes under the Indenture and the
other Indenture Documents and the Obligor is, therefore, willing to enter into
this Debenture; and


 


(f)                                    It is a condition precedent to the issuance of the Notes
that the Obligor execute and deliver this Debenture in favour of the Collateral
Agent as security for the payment and performance of the Obligor’s obligations
under the Indenture, the Notes, the Guarantees and the other Indenture
Documents to which it is a party;


 


In consideration of the foregoing, the sum of
$10.00 now paid by the Collateral Agent on its own behalf and on behalf of the
Noteholders to the Obligor and for other valuable consideration, including the
mutual agreements contained herein (the receipt and adequacy of which
consideration is hereby acknowledged by the Obligor), the Obligor agrees as
follows:


 


ARTICLE 1

INTERPRETATION


 


Section 1.1                Defined
Terms.


 


As used in this Debenture, the following terms
have the following meanings:


 


2

















 


“ABL Credit
Agent” has the meaning given to such term in the Security
Agreements.


 


“Additional
Secured Creditor Joinder” means a completed additional secured
creditor joinder in the form of Schedule “B”.


 


“Additional
Secured Creditors” means the holders from time to time of Additional
Secured Obligations.


 


“Additional
Secured Debt Documents” means any document or instrument executed
and delivered with respect to any Additional Secured Obligations.


 


“Additional
Secured Obligations” has the meaning specified in Section 5.20.


 


“Authorized
Representative” means (i) the Trustee and (ii) any other
trustee or agent designated as an “Authorized Representative” for any
Additional Secured Creditors in an Additional Secured Creditor Joinder
delivered to the Collateral Agent in accordance with Section 5.20 for so
long as the Additional Secured Obligations for which such party is serving in
such capacity constitutes Secured Obligations hereunder; provided that so long
as there are no Additional Secured Obligations, the Trustee will be deemed to
be the only Authorized Representative for the Secured Creditors.


 


“Charge”
has the meaning specified in Section 3.1.


 


“Charged
Property” has the meaning specified in Section 3.1.


 


“Collateral
Account” has the meaning given to such term in the Security
Agreements.


 


“Collateral
Agent” means BNY Trust Company of Canada, acting as Collateral Agent
on behalf of the Noteholders and other Secured Creditors and any successor
Collateral Agent appointed (i) in the case of the Noteholders, hereunder
and under the Indenture and (ii) in the case of the Additional Secured
Creditors, hereunder,  and its
successors and permitted assigns.


 


“Credit
Parties” means, collectively, the Issuers and each Guarantor and “Credit Party” means any one of them.


 


“Debenture”
means this demand debenture.


 


“Demand
Debentures” means, collectively, (i) this
Debenture; (ii) the demand debenture of even date herewith made by the
Subsidiary Guarantors, GEP Midstream Finance Corp. and the Parent to and in
favour of the Collateral Agent for the benefit of the Secured Creditors; and (iii) any
other debenture or mortgage made by any Credit Party to and in favour of the
Collateral Agent in connection with the Indenture Documents.


 


3

















 


“Environment”
shall mean ambient air, indoor air, surface water and groundwater (including
potable water, navigable water and wetlands), the land surface or subsurface
strata, natural resources, the workplace or as otherwise defined in any
Environmental Law.


 


“Environmental
Claim” shall mean any claim, notice, demand, order, action, suit,
proceeding alleging liability for or obligation with respect to any Response,
damages to natural resources, personal injury, property damage, fines,
penalties or other costs resulting from, related to or arising out of (i) the
presence, Release or threatened Release in or into the Environment of Hazardous
Materials at any location or (ii) any violation or alleged violation of any
Environmental Law, and shall include any claim seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from, related to or arising out of the presence, Release or threatened Release
of Hazardous Materials or alleged injury or threat of injury to health, safety
or the Environment.


 


“Environmental
Law” shall mean any and all present and future treaties, laws,
statutes, ordinances, regulations, rules, decrees, orders, judgments, consent
orders, consent decrees, code, agreements with any Governmental Entity or other
binding requirements, and the common law, relating to protection of public
health or the Environment, the Release or threatened Release of Hazardous
Materials, and any and all Environmental Permits.


 


“Environmental
Permit”  shall mean any
permit, license, approval, registration, notification, exemption, consent or
other authorization required by or from a Governmental Entity under
Environmental Law.


 


“Event of
Default” shall mean (i) any Event of Default under the
Indenture and (ii) any event of default under any Additional Secured Debt
Documents.


 


“Fixtures”
means all fixtures (including trade fixtures), facilities and equipment,
howsoever affixed or attached to real property or buildings or other structures
on real property, now owned or hereafter acquired by the Obligor, in its own
personal capacity and in its capacity as a partner, general partner or managing
partner of any Partnership Obligor in which it is a partner, general partner or
managing partner.


 


“Governmental
Entity”  means (i) any
international, foreign, federal, provincial or municipal government, or
political subdivision thereof, (ii) any governmental agency, authority,
board, bureau, commission, department or instrumentality, (iii) any court
or administrative tribunal, (iv) any non-governmental agency or entity
that is vested by a governmental agency with applicable jurisdiction over a
Person, or (v) any arbitration tribunal or other non-governmental
authority to whose jurisdiction a Person has given its general consent.


 


“Guarantees”
means, collectively, (i) the guarantee of even date herewith made by each
of the Subsidiary Guarantors in favour of the Collateral Agent, the Trustee and
the Noteholders (including the guarantees contained in the Indenture), (ii) the
guarantee of even date herewith made by Parent in favour of the Collateral
Agent,


 


4

















 


the Trustee and the Noteholders and (iii) the
guarantee of even date herewith made by the Issuers in favour of the Collateral
Agent, the Trustee and the Noteholders.


 


“Hazardous
Materials” shall mean the following: hazardous substances; hazardous
wastes; polychlorinated biphenyls (“PCBs”)
or any substance or compound containing PCBs; asbestos or any
asbestos-containing materials in any form or condition; radon or any other
radioactive materials including any source, special nuclear or by-product
material; petroleum, crude oil or any fraction thereof and any other pollutant
or contaminant or chemicals, wastes, materials, compounds, constituents or
substances, subject to regulation or which can give rise to liability under any
Environmental Laws.


 


“Hedging
Obligations” means “Hedging Obligations” as defined in the Indenture
and which constitutes First Lien Obligations pursuant to the terms of the
Indenture, if any.


 


“Indenture”
has the meaning given to such term in the Security Agreements.


 


“Indenture
Documents” means, collectively, the Indenture, the Guarantees, the
Notes, this Debenture, the Intercreditor Agreement, the Registration Rights
Agreement and each other Collateral Document.


 


“Initial
Purchasers” means UBS Securities LLC, RBS Securities Inc. d/b/a RBS
and RBC Capital Markets Corporation and their respective successors and
permitted assigns.


 


“Intercreditor
Agreement” has the meaning given to such term in the Security
Agreements.


 


“Issuers”
means (i) Gibson  Energy ULC,
an unlimited liability corporation amalgamated and existing under the laws of
Alberta, and its successors and permitted assigns, and (ii) GEP Midstream
Finance Corp., a corporation incorporated and existing under the laws of
Alberta, and its successors and permitted assigns.


 


“Lands”
has the meaning specified in Section 3.1(a).


 


“Lien”  means any mortgage, deed of trust, deed to
secure debt, pledge, hypothecation, assignment for security, security interest,
encumbrance, lien or charge of any kind, whether voluntarily incurred or
arising by operation of law, by statute, by contract, or otherwise, affecting
any Property, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature of
a security interest, and/or the filing of or agreement to give any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the PPSA, the UCC
or comparable law of any jurisdiction with respect to any Property.


 


5

















 


“Liquidity
Collateral” has the meaning given to such term in the Intercreditor
Agreement.


 


“Noteholder” means a Person in whose name a Note is registered in
the register maintained by the Registrar pursuant to the Indenture.


 


“Note
Obligations” means, collectively, (a) the
Obligations of the Obligor from time to time arising under or in respect of
this Debenture, the Indenture, the Notes, the Guarantees and the other
Indenture Documents and whether incurred by the Obligor alone or jointly with
another or others and whether as principal, guarantor or surety and in whatever
name or style and whether in its own personal capacity or in its capacity as a
partner, managing partner or general partner of any Partnership Obligor in
which it is a partner, managing partner or general partner, as applicable, (b) all
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Obligor under this Debenture,
the Indenture, the Notes, the Guarantees and the other Indenture Documents, and
whether incurred by the Obligor alone or jointly with another or others and
whether as principal, guarantor or surety and in whatever name or style and
whether in its own personal capacity or in its capacity as a partner, managing
partner or general partner of any Partnership Obligor in which it is a partner,
managing partner or general partner, as applicable; and (c) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Obligor under or pursuant to this Debenture, the Indenture, the Notes,
the Guarantees and the other Indenture Documents.


 


“Note
Purchase Agreement” means the purchase agreement dated as of May 21,
2009 among the Issuers, Parent and the Initial Purchasers.


 


“Notes”
means the notes issued and outstanding under the Indenture at any time and from
time to time, including Initial Notes, Additional Notes and Exchange Notes.


 


“Notice” has the meaning specified in Section 5.2.


 


“Obligations” has the meaning specified in the Security Agreements.


 


“Obligor”
means Gibson Energy ULC.


 


“Parent”
means Gibson Energy Holding ULC, an unlimited liability corporation
incorporated and existing under the laws of Alberta, and its successors and
permitted assigns.


 


“Partnership
Obligors” means, collectively, each of Moose Jaw Refinery
Partnership, CanWest Propane Partnership, MP Energy Partnership, Gibson Energy
Partnership and Battle River Terminal LP, and each other partnership which at
any 


 


6

















 


time and from time to time becomes a Credit
Party and “Partnership Obligor”
means any one of them.


 


“Property”
means any interest in any kind of property or asset, whether real, personal or
mixed, tangible or intangible.


 


“Receiver”
has the meaning specified in Section 4.2(a).


 


“Registration
Rights Agreement” has the meaning given to such term in the Security
Agreements.


 


“Release”
shall mean any spilling, leaking, seepage, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Materials in,
into, onto or through the Environment.


 


“Required
Secured Creditors” means (a) at any time there are any Secured
Obligations other than Hedging Obligations outstanding, the holders of a
majority in principal outstanding amount of the Secured Obligations other than
any Hedging Obligations; and (b) at any time there are no Secured
Obligations other than Hedging Obligations outstanding all the holders of
Hedging Obligations.


 


“Response”
shall mean all actions required by any Governmental Entity or voluntarily
undertaken to (i) clean up, remove, treat, abate or in any other way
address any Hazardous Material in the Environment; (ii) prevent the
Release or threat of Release, or minimize the further Release, of any Hazardous
Material; or (iii) perform studies and investigations in connection with,
or as a precondition to, or to determine the necessity of the activities
described in, clause (i) or (ii) above.


 


“Security
Agreements” means, collectively, (i) the security agreement of
even date herewith made by the Subsidiary Guarantors to and in favour of the
Collateral Agent for the benefit of the Secured Creditors (as defined therein);
(ii) the agreement of even date herewith made by the Issuers and the
Parent to and in favour of the Collateral Agent for the benefit of the Secured
Creditors (as defined therein); and (iii) any other security agreement
made by any of the Issuers or the Obligors to and in favour of the Collateral
Agent in connection with the Indenture Documents.


 


“Secured Agreements”
means, collectively, (i) the Indenture Documents and (ii) Additional
Secured Debt Documents.


 


“Secured
Creditors” means (a) the Collateral Agent, the Trustee and the
Noteholders at any time and from time to time and (b) the Additional
Secured Creditors and their Authorized Representatives; provided that such
Additional Secured Creditors and their Authorized Representative comply with Section 5.20
hereof and execute an Additional Secured Creditor Joinder.


 


“Secured
Obligations” means, collectively, (a) the Note Obligations and (b) if
any Additional Secured Obligations are incurred, all obligations, liabilities
and 


 


7

















 


indebtedness (including principal, premium and
interest (including all interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of the Obligor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding)) owing to any holder of Additional Secured
Obligations (that has been designated as Additional Secured Obligations
pursuant to Section 5.20) under any Additional Secured Debt Documents.


 


“Security
Documents” means collectively, the Security Agreements, the Demand
Debentures, the mortgages and each other security document or pledge agreement
delivered in accordance with applicable local or foreign law to grant a valid,
perfected security interest in any property as collateral for the First Lien
Obligations, and all UCC, PPSA or other financing statements or instruments of
perfection required by any Security Agreement, any Demand Debenture, any
mortgage or any other such security document or pledge agreement to be filed
with respect to the security interests in property and fixtures created
pursuant to any Security Agreement, any Demand Debenture or any mortgage and
any other document or instrument utilized to pledge or grant or purport to
pledge or grant a security interest or lien on any property as collateral for
the First Lien Obligations.


 


“Specified
Contract Rights” has the meaning given to such term in the Security
Agreements.


 


“Trustee”
means The Bank of New York Mellon, acting as trustee for the Noteholders and
any successor trustee appointed under the Indenture and its successors and
permitted assigns.


 


Section 1.2                Interpretation.


 


(1)                                  Capitalized terms used in this Debenture but not
defined have the meanings given to them in the Indenture.


 


(2)                                  Any reference in any Indenture Document to Liens
permitted by the Indenture and any right of the Obligor to create or suffer to
exist Liens permitted by the Indenture are not intended to and do not and will
not subordinate the Charge to any such Lien or give priority to any Person over
the Secured Creditors.


 


(3)                                  In this Debenture the words “including”, “includes” and “include”
mean “including (or includes or include)
without limitation”.  The
expressions “Article”, “Section” and other subdivision followed by
a number mean and refer to the specified Article, Section or other
subdivision of this Debenture.


 


(4)                                  Any reference in this Debenture to gender includes all
genders.  Words importing the singular
number only include the plural and vice versa.


 


(5)                                  The division of this Debenture into Articles, Sections
and other subdivisions and the insertion of headings are for convenient
reference only and do not affect its interpretation.


 


8

















 


(6)                                  The schedules attached to this Debenture form an
integral part of it for all purposes of it.


 


(7)                                  Any reference to this Debenture, any Indenture
Document or any other agreement refers to this Debenture or such Indenture
Document or other agreement as the same may have been or may from time to time
be amended, modified, extended, renewed, restated, replaced or supplemented and
includes all schedules attached to it. 
Except as otherwise provided in this Debenture, any reference in this
Debenture to a statute refers to such statute and all rules and
regulations made under it as the same may have been or may from time to time be
amended or re-enacted.


 


Section 1.3                                   Interest Act (Canada).


 


The Obligor acknowledges that certain of the
rates of interest applicable to the Secured Obligations may be computed on the
basis of a year of 360 days or 365 days, as the case may be and paid for the
actual number of days elapsed.  For
purposes of the Interest Act
(Canada), whenever any interest is calculated using a rate based on a year of
360 days or 365 days, as the case may be, such rate determined pursuant to such
calculation, when expressed as an annual rate is equivalent to (i) the
applicable rate based on a year of 360 days or 365 days, as the case may be, (ii) multiplied
by the actual number of days in the calendar year in which the period for such
interest is payable (or compounded) ends, and (iii) divided by 360 or 365,
as the case may be.


 


Section 1.4                                   Nominal Rates.


 


The principle of deemed reinvestment of
interest shall not apply to any interest calculation under this Debenture.  All interest payments to be made hereunder
shall be paid without allowance or deduction for deemed reinvestment or
otherwise, after as well as before maturity, default and judgment.  The rates of interest specified in this Debenture
are intended to be nominal rates and not effective rates.  Interest calculated hereunder shall be
calculated using the nominal rate method and not the effective rate method of
calculation.


 


ARTICLE 2

ACKNOWLEDGEMENT OF INDEBTEDNESS


 


Section 2.1                                   Promise to Pay.


 


The Obligor, for value received, hereby
acknowledges itself indebted to the Secured Creditors and promises to pay ON
DEMAND to or to the order of the Collateral Agent, for the benefit of the
Secured Creditors, the principal sum of 
ONE BILLION FIVE HUNDRED MILLION U.S. DOLLARS (U.S. $1,500,000,000) on
presentation and surrender of this Debenture at the offices of the Collateral
Agent located at Suite 1101, 4 King Street West, Toronto, Ontario, M5H
1B6, or at such other place as the Collateral Agent may designate by notice in
writing to the Obligor, and to pay interest thereon from the date hereof at the
rate per annum of thirty percent (30%) in like money at the same place,
monthly, on the last day of each month; and, if the Obligor should at any time
make default in the payment of any principal or interest, to pay interest on
the amount in default both before and after demand, default and judgment, with
interest on overdue interest at the same rate in lawful money of Canada at the
same place on the same dates.


 


9

















 


The Collateral Agent, on behalf of the Secured
Creditors, is the Person  entitled
to receive the principal of, and interest on, this Debenture, and all other
amounts payable hereunder.


 


ARTICLE 3

SECURITY


 


Section 3.1                                   Grant of Charge.


 


As security for the due payment and performance
of all Secured Obligations, and subject to the provisions of Section 3.5
hereof, the Obligor, in its own personal capacity and in its capacity as a
partner (other than as a limited partner), managing partner or general partner
of any Partnership Obligor in which it is a partner, managing partner or
general partner, hereby:


 


(a)                                  grants, assigns as security, conveys, mortgages,
pledges and charges, as and by way of a first fixed and specific mortgage,
charge and pledge, to and in favour of the Collateral Agent, for the benefit of
the Secured Creditors, all of its right, title, interest and estate in and to
the property set forth on Schedule “A” hereto (the “Lands”), together with all rights, leases, licenses,
easements, rights-of-way, profits a-prendre, interests in real property,
structures, underground facilities, power, fuel and water supply, storage,
waste disposal, roads and other transportation facilities and fixed plant,
milling, processing, service and other related infrastructures, buildings,
erections, improvements and Fixtures now or hereafter constructed or placed on
the Lands or used in connection with the Lands and all additions and accessions
thereto, and any and all proceeds of any of the foregoing; and


 


(b)                                 grants, assigns as security, conveys, mortgages and
charges, as and by way of a first floating charge, to and in favour of the
Collateral Agent, for the benefit of the Secured Creditors, all of the real
property of the Obligor and of such Partnership Obligor in which it is a
partner, managing partner or general partner, not subject to the fixed charge
in Section 3.1(a), both present and future, of every nature and kind and
wherever situate including, without limitation, all rights, leases, licenses,
easements, rights-of-way, profits a-prendre, interests in real property,
structures, underground facilities, power, fuel and water supply, storage,
waste disposal, roads and other transportation facilities and fixed plant,
milling, processing, service and other related infrastructures, buildings,
erections, improvements and Fixtures now or hereafter constructed or placed on
such real property or used in connection with such real property and all
additions and accessions thereto, which the Obligor and such Partnership
Obligor in which it is a partner, managing partner or general partner, now has,
may be possessed of, entitled to, or acquire, by way of amalgamation or
otherwise, now or hereafter, and any and all proceeds of any of the foregoing.


 


10






 










 


In this Debenture, the mortgages, charges and
security interests hereby created and provided for are called the “Charge” and the subject matter of the
Charge is called the “Charged Property”.


 


Section 3.2                                               Secured Obligations.


 


The Charge granted by this Debenture secures
the payment and performance of the Secured Obligations.


 


Section 3.3                                               Crystallization of Floating Charge.


 


Without limiting its rights hereunder to
crystallize the Charge set forth in Section 3.1(b) above in any other
manner, the Collateral Agent, upon the occurrence of and during the continuance
of an Event of Default, may to the extent permitted by applicable law
crystallize and fix the Charge set forth in Section 3.1(b) above in
respect of all or a portion of the Charged Property by notice in writing to the
Obligor without any requirement for further intervention by the Collateral
Agent (whether by the taking of possession, the appointment of a Receiver or
otherwise), but without in any way limiting the powers, rights and remedies of
the Collateral Agent hereunder in respect of the Charged Property.


 


Section 3.4                                   Attachment.


 


The Obligor acknowledges that: (i) value
has been given; (ii) it has rights in the Charged Property; (iii) it
has not agreed to postpone the time of attachment of the Charge created by this
Debenture; and (iv) it has received a duplicate original copy of this
Debenture.  The Charge is intended to,
and shall, attach to the existing Charged Property when the Obligor signs this
Debenture, and to any other after-acquired Charged Property subsequently
acquired by the Obligor immediately upon the Obligor acquiring any rights in
such after-acquired Charged Property.


 


Section 3.5                                   Scope of Charge.


 


The Charge shall not extend or apply to the
last day of the term of any lease, sublease or agreement therefor now held or
hereafter acquired by the Obligor, but upon the enforcement of the Charge, the
Obligor shall thereafter stand possessed of such last day in trust for the
Collateral Agent to assign the same to any Person acquiring such term in the
course of enforcement of the Charge.


 


Section 3.6                                   Obligor Remains Liable.


 


Notwithstanding the provisions of this
Debenture: (i) the Obligor shall remain liable to perform all of its
duties and obligations in regard to the Charged Property (including, without
limitation, all of its duties and obligations arising under any leases,
licenses, permits, reservations, contracts, agreements, instruments,
contractual rights and governmental orders, authorizations, licenses and
permits now or hereafter pertaining thereto) to the same extent as if this
Debenture had not been executed; (ii) the exercise by or on behalf of the
Secured Creditors of any of their rights and remedies under or in regard to
this Debenture shall not release the Obligor from such duties and obligations
subject to applicable law; and (iii) the Secured Creditors (or any of
them) shall have no liability for such duties and obligations by reason of the
execution and delivery of this Debenture.


 


11

















 


Section 3.7                                               Restriction on Disposition.


 


The Obligor will not sell, assign, convey,
exchange, lease, release or abandon, or otherwise dispose of, any Charged
Property except in compliance with the Indenture.


 


Section 3.8                                               Negative Pledge.


 


The Obligor will not create or suffer to exist,
any Lien on the Charged Property, except for Permitted Liens.


 


Section 3.9                                   Continuing Security.


 


This Debenture shall be a continuing
obligation, shall cover and secure any ultimate balance of the Secured  Obligations owing to the Secured
Creditors, and shall be operative and binding notwithstanding that at any time
or times the Secured  Obligations
may be zero, or that any payments from time to time may be made to the Secured
Creditors, or any settlements of account effected, or any other thing
whatsoever done, suffered or permitted, or any other action short of complete
and irrevocable payment of all the Secured  Obligations
and any other amounts payable hereunder.


 


Section 3.10                            Revolving Credit.


 


For the purposes of Section 104(2) of
the Land Titles Act (Alberta), Section 27
of The  Land Titles Act, 2000 (Saskatchewan) and Section 28 of
the Property Law Act (British
Columbia), as they be amended or replaced from time to time, it is hereby
declared by and agreed between the Obligor and the Collateral Agent that this
Debenture may be held by the Collateral Agent as security for, among other
things, a revolving line of credit, re-advances of credit or a current or
running account up to the principal sum.


 


ARTICLE 4


ENFORCEMENT


 


Section 4.1                                   Enforcement.


 


The Charge becomes and is enforceable against
the Obligor upon the occurrence and during the continuance of an Event of
Default.


 


Section 4.2                                   Remedies.


 


Whenever the Charge is enforceable, the
Collateral Agent may, at any time, in its sole discretion, realize upon the
Charged Property and the Collateral Agent and the Secured Creditors shall have
the following rights and remedies:


 


(a)                                  the Collateral Agent may by appointment in writing
appoint a receiver or receiver and manager (each herein referred to as the “Receiver”) of the Charged Property and may
remove or replace such Receiver from time to time or may institute proceedings
in any court of competent jurisdiction for the appointment of a Receiver of the
Charged Property or any part thereof; and the term “Collateral Agent” when used
in this Section 4.2 shall include any Receiver so appointed and the
agents, officers and employees of such Receiver;


 


12

















 


(b)                                 the Collateral Agent may enter into and take
possession of the Charged Property and require the Obligor to make the Charged
Property available to the Collateral Agent;


 


(c)                                  the Collateral Agent may carry on or concur in the
carrying on of all or any part of the business of the Obligor relating to the
Charged Property;


 


(d)                                 the Collateral Agent may enforce any rights of the
Obligor in respect of the Charged Property by any manner permitted by
applicable law;


 


(e)                                  the Collateral Agent may sell, lease or otherwise
dispose of all or any part of the Charged Property, either as a whole or in
separate parcels, by public auction, public tender, private tender or private
sale at such time or times as the Collateral Agent may determine, with or
without notice to the Obligor, either for cash or upon credit or any other
arrangement providing for deferred payment, upon such terms and conditions as
the Collateral Agent may determine and without notice to the Obligor unless
required by applicable law, with or without advertisement, and with or without
a reserve bid as the Collateral Agent, in its sole discretion, may see fit, and
the Collateral Agent may also rescind or vary any contract of sale that may
have been entered into and resell with or under any of the powers conferred
hereunder and adjourn any such sale from time to time, and may execute and
deliver to the purchaser or purchasers of the Charged Property or any part
thereof a good and sufficient deed or conveyance or deeds or conveyances for
the same, any officer of the Collateral Agent being hereby constituted the
irrevocable attorney of the Obligor for the purpose of making such sale and
executing such deeds or conveyances, upon the Charge becoming enforceable, and
any such sale made as aforesaid shall be a perpetual bar both in applicable law
and in equity against the Obligor and all other Persons claiming all or any
part of the Charged Property by, from, through or under the Obligor;


 


(f)                                    the Collateral Agent may institute proceedings in any
court of competent jurisdiction for sale (including, without limitation, sale
by way of a deferred payment arrangement) or foreclosure or lease of all or any
part of the Charged Property;


 


(g)                                 the Collateral Agent may file proofs of claim and
other documents to establish its claims in any proceeding relative to the
Obligor;


 


(h)                                 the Collateral Agent may accept the Charged Property
in satisfaction or partial satisfaction of the Charge upon notice to the
Obligor of its intention to do so in the manner required by applicable law;


 


(i)                                     the Collateral Agent may commence, continue or defend
any judicial or administrative proceedings for the purpose of protecting,
seizing, collecting, realizing or obtaining possession or payment of the
Charged Property, and give good and valid receipts and discharges and
compromise or give time for


 


13

















 


the payment or performance of all or any part
of the accounts or any other obligation of any third party to the Obligor;


 


(j)                                     the Collateral Agent may borrow money on the security
of the Charged Property for the purpose of the carrying on of the business of
the Obligor or for the maintenance, preservation, protection or realization of
the Charged Property whether or not in priority to the Charge; and


 


(k)                                  the Collateral Agent may exercise any other right or
remedy permitted by applicable law, statute or equity.


 


Section 4.3                                               Additional Rights.


 


In addition to the remedies set forth in Section 4.2
and elsewhere in this Debenture, whenever the Charge is enforceable, the
Collateral Agent may:


 


(a)                                  redeem any prior Lien against any Charged Property,
procure the transfer of such Lien to itself, or settle and pass the accounts of
the prior mortgagee, chargee or encumbrancer (any accounts to be conclusive and
binding on the Obligor);


 


(b)                                 pay any liability secured by any Lien against any
Charged Property or discharge any Lien that may exist or be threatened against
the Charged Property (the Obligor will promptly upon receipt of written notice
reimburse the Collateral Agent for all such payments);


 


(c)                                  to facilitate the realization of the Charged Property,
enter upon, occupy and use all or any of the premises, buildings and plant
comprising the Charged Property and use all or any of the equipment and other
personal property of the Obligor for such time as the Collateral Agent requires
to facilitate such realization, free of charge (as between the Obligor and the
Collateral Agent), and the Secured Creditors shall not be liable to the Obligor
for any act, omission or neglect in so doing or in respect of any rent,
charges, depreciation or damages incurred in connection with such actions;


 


(d)                                 borrow for the purpose of carrying on the business of
the Obligor or for the maintenance, preservation or protection of the Charged
Property and grant a security interest in the Charged Property, whether or not
in priority to the Charge, to secure repayment;


 


(e)                                  commence, continue or defend any judicial or
administrative proceedings for the purpose of protecting, seizing, collecting,
realizing or obtaining possession or payment of the Charged Property, and give
good and valid receipts and discharges in respect of the Charged Property and
compromise or give time for the payment or performance of all or any part of
the accounts or any other obligation of any third party to the Obligor; and


 


(f)                                    at any public sale, and to the extent permitted by law
on any private sale, bid for and purchase any or all of the Charged Property
offered for sale and upon


 


14

















 


compliance with the terms of such sale, hold,
retain and dispose of such Charged Property without any further accountability
to the Obligor or any other Person with respect to such holding, retention or
disposition, except as required by law. 
In any such sale to the Collateral Agent, the Collateral Agent may, for
the purpose of making payment for all or any part of the Charged Property so
purchased, use any claim for Secured Obligations then due and payable to it as
a credit against the purchase price.


 


Section 4.4                                               Exercise of Remedies.


 


The remedies under Section 4.2 and Section 4.3
may be exercised from time to time separately or in combination and are in
addition to, and not in substitution for, any other rights of the Collateral
Agent and the Secured Creditors however arising or created.  The Collateral Agent and the Secured
Creditors are not bound to exercise any right or remedy, and the exercise of
rights and remedies is without prejudice to the rights of the Collateral Agent
and the Secured Creditors in respect of the Secured Obligations including the
right to claim for any deficiency.


 


Section 4.5                                               Appointment of Attorney.


 


The Obligor irrevocably appoints the Collateral
Agent (and each of its officers) as attorney of the Obligor (with full power of
substitution) to do, make and execute in the name of and on behalf of the
Obligor, upon (and only upon) the Charge becoming enforceable, all such further
acts, documents, matters and things which the Collateral Agent may reasonably
deem necessary or advisable to accomplish the purposes of this Debenture for
the recovery of all fees, tariffs and other sums of money that may become or
are now due or owing to the Obligor in respect of the Charged Property and for
the enforcement of all contracts, covenants or conditions binding on any lessee
or occupier of the Charged Property or on any Person in respect of it, and this
appointment shall take effect if the Charge has become enforceable, subject to
all applicable laws.  The Collateral
Agent or its nominees and transferees are empowered to exercise all rights and
powers and to perform all acts of ownership with respect to the Charged
Property and to deal with the Charged Property, to the same extent as the
Obligor might do.  All acts of any such
attorney are hereby ratified and approved, and the attorney shall not be liable
for any act, failure to act or any other matter or thing in connection
therewith, except for its own gross negligence or wilful misconduct.


 


Section 4.6                                   Dealing with the Charged Property.


 


(1)                                  Except as otherwise provided by law or this Debenture,
neither the Collateral Agent, the Secured Creditors, any Receiver nor any agent
of any of them (including any civil enforcement agent) shall be: (i) liable
or accountable for any failure to collect, realize or obtain payment in respect
of the Charged Property; (ii) bound to institute proceedings for the
purpose of collecting, enforcing, realizing or obtaining payment of the Charged
Property or for the purpose of preserving any rights of any Persons; (iii) responsible
for any loss occasioned by any sale or other dealing with the Charged Property
or by the retention of or failure to sell or otherwise deal with the Charged
Property; or (iv) bound to protect the Charged Property from depreciating
in value or becoming worthless.


 


15

















 


(2)                                  The Collateral Agent and the Secured Creditors may
grant extensions or other indulgences, take and give up securities, accept
compositions, grant releases and discharges and otherwise deal with the Obligor
and with other Persons, sureties or securities as they may see fit without
prejudice to the Secured  Obligations,
the liability of the Obligor or the rights of the Secured Creditors in respect
of the Charged Property.


 


(3)                                  Neither the Collateral Agent nor the Secured Creditors
shall be obliged to exhaust their recourse against the Obligor or any other
Person  or against any other
security they may hold in respect of the Secured  Obligations before realizing upon or otherwise dealing with
the Charged Property in such manner as the Collateral Agent may consider
desirable.


 


Section 4.7                                   Status of the Receiver.


 


(1)                                  Subject to all applicable laws, any Receiver appointed
by the Collateral Agent is vested with the rights and remedies which could have
been exercised by the Collateral Agent in respect of the Obligor or the Charged
Property and such other powers and discretions as are granted in the instrument
of appointment and any supplemental instruments including, without limitation,
any or all of the powers of the Collateral Agent or of the officer of the
Collateral Agent referred to above.  The
identity of the Receiver, its replacement and its remuneration are within the
sole and unfettered discretion of the Collateral Agent.


 


(2)                                  The Receiver shall, for all purposes relating to the
Receiver’s acts or defaults and remuneration, be deemed to be the agent of the
Obligor and not of the Collateral Agent or any of the Secured Creditors, and
the Obligor shall be solely responsible for the Receiver’s acts or defaults and
remuneration.  The Receiver may sell,
lease, or otherwise dispose of Charged Property as agent for the Obligor or as
agent for the Collateral Agent or the Secured Creditors as the Collateral Agent
may determine in its discretion.


 


(3)                                  All amounts from time to time received by the
Collateral Agent or the Receiver may (but need not) be applied in the following
order: (i) in discharge of all operating expenses and other outgoings
affecting the Charged Property; (ii) in keeping in good standing all Liens
on the Charged Property having priority over the Charge; (iii) in payment
of the remuneration and disbursements of the Receiver (if any); (iv) in
payment to the Collateral Agent of the amounts payable hereunder; (v) to
such reserves against potential claims that the Collateral Agent or the
Receiver in good faith believes should be maintained, until such potential
claims are settled, and the balance, if any, shall be paid in accordance with
the provisions of Section 5.14.


 


(4)                                  The Collateral Agent, in appointing or refraining from
appointing any Receiver, does not incur liability to the Receiver, the Obligor
or otherwise and is not responsible for any misconduct or negligence of such
Receiver.


 


16

















 


Section 4.8                                   Powers of Privately Appointed
Receiver.


 


Any Receiver appointed by instrument in writing
shall, to the extent permitted by law, have power to:


 


(a)                                  take possession of, collect and get in all or any part
of the Charged Property and, for that purpose, to take proceedings in the name
of the Obligor or otherwise, and to make any arrangement or compromise;


 


(b)                                 from time to time and without any previous notice or
demand and free of charge, enter upon or into and occupy and use all or any
part of the premises, buildings, plant and undertaking of or occupied or used
by the Obligor without being or being deemed to be a mortgagee in possession;


 


(c)                                  carry on or concur in carrying on all or any part of
the business of the Obligor;


 


(d)                                 borrow or raise money on all or any part of the
Charged Property in priority to this Debenture or otherwise for such purposes
as may be approved by the Collateral Agent; and


 


(e)                                  sell or lease or concur in selling or leasing all or
any part of the Charged Property without notice and in such manner as may seem
advisable to the Receiver (including, without limitation, sale by way of
deferred payment arrangement), and to effect such sale by conveying in the name
and on behalf of the Obligor or otherwise.


 


Section 4.9                                   Dealings by Third Parties.


 


(1)                                  No Person dealing with the Collateral Agent, any of
the Secured Creditors or an agent or a Receiver is required to determine: (i) whether
the Charge has become enforceable; (ii) whether the powers which such
Person is purporting to exercise have become exercisable; (iii) whether
any money remains due to the Secured Creditors by the Obligor; (iv) the
necessity or expediency of the stipulations and conditions subject to which any
sale or lease shall be made; (v) the propriety or regularity of any sale
or any other dealing by the Collateral Agent or any Secured Creditor with the
Charged Property; or (vi) how any money paid to the Collateral Agent or
the Secured Creditors has been applied.


 


(2)                                  Any bona fide
purchaser of all or any part of the Charged Property from the Collateral Agent
or any Receiver or agent will hold the Charged Property absolutely, free from
any claim or right of whatever kind, including any equity of redemption, of the
Obligor, which it specifically waives (to the fullest extent permitted by law)
as against any such purchaser and all rights of redemption, stay or appraisal
which the Obligor has or may have under any rule of law now existing or
hereafter adopted.


 


Section 4.10                            No Right of Set-Off.


 


The principal, interest and other monies and
liabilities secured by this Debenture shall be paid when due by the Obligor
without regard to any equities existing between the


 


17

















 


Obligor and any other party including, without
limitation, the Collateral Agent or any Secured Creditor and without regard to
any right of set-off or cross-claim or of any other claim or demand of the
Obligor against the Collateral Agent or any Secured Creditor.


 


ARTICLE 5


GENERAL


 


Section 5.1                                   Indenture Governs.


 


Notwithstanding anything to the contrary
contained herein, this Debenture is issued subject always to the covenants,
conditions, limitations and other provisions contained in the Indenture.  In the event of any conflict, discrepancy,
difference or ambiguity in or between any of the provisions of this Debenture
and any of the provisions of the Indenture, including, without limitation, in
the amount payable thereunder, the principal sum for which this Debenture is
expressed to be security, the interest payable and the interest rate on such
principal sum, the default rate of interest, the time at which demand may be
made, the covenants therein and the remedies available to the Secured
Creditors, the provisions of the Indenture shall prevail and the provisions of
this Debenture shall be deemed to be rendered inoperative by the Indenture, to
the extent necessary to eliminate such conflict, discrepancy, difference or
ambiguity.


 


Section 5.2                                   Notices.


 


Any notice, direction or other communication
(each a “Notice”) given regarding
the matters contemplated by this Debenture must be in writing, sent by personal
delivery, courier or facsimile (but not by electronic mail) and addressed:


 


	
  (a)

  	
  to the Obligor at:

  
	
   

  	
   

  
	
   

  	
  Gibson Energy ULC

  
	
   

  	
  1700, 440 - 2nd Avenue S.W.

  
	
   

  	
  Calgary, AB, Canada 

  
	
   

  	
  T2P 5E9

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Executive Vice President, Finance and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
  Email:

  	
  rtaylor@gibsons.com

  
	
   

  	
  Facsimile:

  	
  (403) 206-4011

  



 


With a copy to:


 


	
   

  	
  Gibson Energy ULC

  
	
   

  	
  1700, 440 - 2nd Avenue S.W.

  
	
   

  	
  Calgary, AB, Canada 

  
	
   

  	
  T2P 5E9

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Vice President and 

  
	
   

  	
   

  	
  General Counsel

  
	
   

  	
  Facsimile:

  	
  (403) 206-4011

  



 


18

















 


 


With a copy to:


 


	
   

  	
  Riverstone Holdings LLC

  
	
   

  	
  712 Fifth Avenue

  
	
   

  	
  51st Floor

  
	
   

  	
  New York, New York

  
	
   

  	
  10019

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Robert Tichio

  
	
   

  	
  Email:

  	
  robert@riverstonellc.com

  
	
   

  	
  Facsimile:

  	
  (212) 993-0077

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  to the Collateral Agent at:

  
	
   

  	
   

  
	
   

  	
  BNY Trust Company of Canada

  4 King Street West, Suite 1101

  Toronto, Ontario

  M5H 1B6

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Angela Ikhimokpa

  
	
   

  	
  Telephone:

  	
  (416) 933-8505 

  
	
   

  	
  Facsimile:

  	
  (416) 360-1727

  
	
   

  	
   

  	
   

  
	
  (c)

  	
  to the other Authorized Representatives at
  the address designated for this purpose in its Additional Secured Creditor
  Joinder.

  



 


The Obligor, the Collateral Agent, the Trustee
or other Authorized Representatives, by notice to the others, may designate
additional or different addresses for subsequent notices or communications.


 


All notices and communications will be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; five (5) Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if transmitted by
facsimile; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.


 


If a notice or communication is mailed in the
manner provided above within the time prescribed, it is duly given, whether or
not the addressee receives it.


 


Section 5.3                                   Discharge.


 


(1)                                  Except as otherwise expressly provided in Section 5.3(2) and
5.3(3), the Charge will be discharged upon, but only upon, full payment and
performance of the Secured Obligations and termination of all commitments
thereunder other than contingent indemnity obligations, if any.  Upon
discharge of the Charge and at the request and expense of the Obligor, the
Collateral Agent will execute and deliver to the Obligor such financing
statements and other documents or instruments as the Obligor may reasonably
require and the Collateral Agent will redeliver to the Obligor against receipt
and without recourse to or warranty by the Collateral Agent, or as the


 


19

















 


Obligor may otherwise direct
the Collateral Agent, any Charged Property in its possession which shall not
have been sold or otherwise applied pursuant to the terms hereof.


 


(2)                                  The Charge in proceeds of Charged Property which:


 


(a)                                  constitute any Accounts (other than Accounts
comprising part of the Specified Contract Rights), Assigned Claims (other than
Assigned Claims comprising part of the Specified Contract Rights), cash, cash
equivalents, currency and moneys (other than cash, cash equivalents, currency
or moneys directed to be and deposited in or credited to the Collateral
Account) which arise, become payable or are paid or collected prior to the
Proceeds Date in the following circumstances:


 


(i)                                   where the ABL Credit Agent had no actual knowledge
that same constituted proceeds of Charged Property (x) at the time any
such Accounts or Assigned Claims giving rise to the payments, collections,
cash, cash equivalents, currency or moneys were created or, (y) in the
case of payments or collections, not resulting from any Account or Assigned
Claim, at the time such payments, collections, cash, cash equivalents, currency
or moneys were paid or collected; and


 


(ii)                                where at such Proceeds Date, there are outstanding
Loan Agreement Obligations; and


 


(iii)                             where the ABL Credit Agent in its sole discretion has
not expressly agreed that any such proceeds constitute proceeds of  Charged Property; and


 


(b)                                 which form part of the Liquidity Collateral;


 


will be automatically
released on the Proceeds Date without any further action by the Collateral
Agent.


 


For the purposes of this Section 5.3(2),
the terms “Accounts”, “Assigned Claims”, “Loan Agreement Obligations” and “Proceeds
Date” have the meaning ascribed thereto in the Intercreditor Agreement.


 


(3)                                  The Charged Property shall be released from the Charge
created hereunder pursuant to provisions of Section 8.04 and Section 8.07
of the Indenture; provided that after the issuance of Additional Secured
Obligations, no Charged Property shall be released from the Charge pursuant to
this Section 5.3(3), unless such release is also permitted by the
Additional Secured Debt Documents.


 


(4)                                  At any time that the Obligor desires that the
Collateral Agent take any action to acknowledge or give effect to any release
of Charged Property pursuant to Section 5.3(1), Section 5.3(2) or
Section 5.3(3) the Obligor shall deliver to the Collateral Agent (a) a
certificate signed by an officer of such Obligor stating that the release of
the


 


20














 


respective Charged Property
is permitted pursuant to such Section 5.3(1), Section 5.3(2) or Section 5.3(3) and
(b) any other documents required by Section 8.04 of the Indenture.


 


(5)                                  The Collateral Agent shall have no liability
whatsoever to any other Secured Creditor as the result of any release of
Charged Property by it in accordance with (or which the Collateral Agent
believes to be in accordance with) this Section 5.3.


 


Section 5.4                                   No Merger.


 


This Debenture shall not operate by way of
merger of any of the Secured  Obligations
and no judgment recovered by the Collateral Agent or any of the Secured
Creditors shall operate by way of merger of, or in any way affect, the Charge,
which is in addition to, and not in substitution for, any other security held
by the Collateral Agent and the Secured Creditors in respect of the Secured  Obligations. The representations,
warranties and covenants of the Obligor in this Debenture survive the execution
and delivery of this Debenture and the issuance of Notes.  Notwithstanding any investigation made by or
on behalf of the Collateral Agent or the Secured Creditors these covenants,
representations and warranties continue in full force and effect.


 


Section 5.5                                   Undertaking to Provide Fixed Charge.


 


If an Event of Default has occurred and is at
the time of the determination by the Collateral Agent pursuant to this Section 5.5
continuing and the Collateral Agent considers it necessary for adequate
protection of the Secured Creditors, the Obligor, at the request of the
Collateral Agent, will forthwith grant or cause to be granted to the Collateral
Agent for and on behalf of itself and the Secured Creditors a fixed charge and
Lien in such of the Obligor’s real property, as the Collateral Agent will, in
its sole discretion, determine as security for all then present and future
indebtedness of the Obligor to the Collateral Agent or the Secured Creditors in
connection with this Debenture.  In this
regard, the Obligor will:


 


(a)                                  provide the Collateral Agent with such information as
is reasonably required by it to identify the property to be so charged;


 


(b)                                 do all such things as are reasonably required to grant
in favour of the Collateral Agent for and on behalf of itself and the Secured
Creditors a fixed charge and Lien in respect of such property to be so charged;


 


(c)                                  provide the Collateral Agent with all corporate
resolutions and other action, as reasonably required for the Obligor, to grant
to the Collateral Agent for and on behalf of itself and the Secured Creditors a
fixed charge and Lien in its property identified by the Collateral Agent to be
so charged;


 


(d)                                 provide the Collateral Agent with such security
instruments and other documents which the Collateral Agent, acting reasonably,
deems are necessary to give full force and effect to the provisions of this
Section;


 


(e)                                  assist the Collateral Agent in the registration or
recording of such agreements and instruments in such public registry offices as
the Collateral Agent, acting


 


21

















 


reasonably, deems necessary to give full force
and effect to these provisions; and


 


(f)                                    pay all reasonable costs and expenses incurred by the
Collateral Agent in connection with the preparation, execution and registration
of all agreements, documents and instruments, including any amendments to the
Indenture Documents, made in connection herewith.


 


Section 5.6                                   Further Assurances.


 


The Obligor will do all acts and things and
execute and deliver, or cause to be executed and delivered, all agreements,
documents and instruments that the Collateral Agent may require and take all
further steps relating to the Charged Property or any other property or assets
of the Obligor that the Collateral Agent may require for: (i) protecting
the Charged Property; (ii) perfecting, preserving or protecting the
Charge; and (iii) exercising all powers, authorities and discretions
hereby conferred upon the Collateral Agent. 
After the Charge becomes enforceable, the Obligor will do all acts and
things and execute and deliver all documents and instruments as the Collateral
Agent may require for facilitating the sale or other disposition of the Charged
Property in connection with its realization.


 


Section 5.7                                   Supplemental Security.


 


This Debenture is in addition and without
prejudice to and supplemental to all other security now held or which may
hereafter be held by the Collateral Agent or the  Secured Creditors.


 


Section 5.8                                   Successors and Assigns.


 


This Debenture creates a continuing Charge in
the Charged Property and shall (i) be binding on the Obligor and its
successors and assigns, and (ii) enure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent and the other Secured Creditors and each of their respective successors,
permitted transferees and permitted assigns. 
No other Person (including any other creditor of the Obligor) shall have
any interest herein or any right or benefit with respect hereto.  Without limiting the generality of the
foregoing, any Secured Creditor may transfer any indebtedness held by it
secured by this Debenture to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
such Secured Creditor, herein or otherwise, subject however, in the case of a
Noteholder, to the provisions of the Indenture, and in the case of an
Additional Secured Creditor, to the provisions of the Additional Secured Debt
Documents. 
The Obligor may not assign, transfer or delegate any of its
rights or obligations under this Debenture without the prior written consent of
the Collateral Agent which may be unreasonably withheld except pursuant to
transactions permitted under the Indenture. 
The Obligor agrees that its obligations hereunder and the Charge shall
continue to be effective or be reinstated, as applicable, if at any time
payment, or any part thereof, of all or any part of the Secured Obligations is
rescinded or must otherwise be restored by the Secured Creditors upon the
bankruptcy or reorganization of the Obligor or otherwise.


 


22

















 


Section 5.9                                               Amalgamation.


 


The Obligor acknowledges and agrees that in the
event it amalgamates with any other corporation or corporations, it is the
intention of the parties that the Charge (i) subject to Section 3.5,
extends to: (A) all of the property of the type and description set forth
in Section 3.1 that any of the amalgamating corporations then owns, (B) all
of the property of the type and description set forth in Section 3.1 that
the amalgamated corporation thereafter acquires, (C) all of the property
of the type and description set forth in Section 3.1 in which any of the
amalgamating corporations then has any interest and (D) all of the
property of the type and description set forth in Section 3.1 in which the
amalgamated corporation thereafter acquires any interest; and (ii) secures
the payment and performance of all debts, liabilities and obligations of each
of the amalgamating corporations and the amalgamated corporation of type and
description set forth in Section 3.2 and whether incurred prior to, at the
time of or subsequent to the amalgamation. 
The Charge attaches to the additional collateral at the time of
amalgamation and to any collateral thereafter owned or acquired by the
amalgamated corporation when such becomes owned or is acquired.  Upon any such amalgamation, the defined term “Obligor” includes, collectively, each of
the amalgamating corporations and the amalgamated corporation, the defined term
“Charged Property” means all of
the property and undertaking and interests described in (i) above, and the
defined term “Secured Obligations”
means the obligations described in (ii) above.


 


Section 5.10                            Dollars or “$”.


 


A reference herein to “$”, “U.S. $” or the word
“dollar” or “Dollars”, without more, shall be a reference to lawful money of
the United States of America.


 


Section 5.11                                        Severability.


 


If any court of competent jurisdiction from
which no appeal exists or is taken, determines any provision of this Debenture
to be illegal, invalid or unenforceable, that provision will be severed from
this Debenture and the remaining provisions will remain in full force and
effect.


 


Section 5.12                                        Amendment.


 


This Debenture may only be amended,
supplemented or otherwise modified by written agreement executed by the
Collateral Agent and the Obligor and subject to any consent of the Noteholders
required in accordance with the Indenture and any consent of the Additional
Secured Creditors required by the Additional Secured Debt Documents.


 


Section 5.13                                        Waivers, etc.


 


(1)                                  No consent or waiver by the Collateral Agent or the
Secured Creditors in respect of this Debenture is binding unless made in
writing and signed by an authorized officer of the Collateral Agent and subject
to any consent of the Noteholders required in accordance with the Indenture and
any consent of the Additional Secured Creditors required by the Additional
Secured Debt Documents.  Any consent or
waiver given under this Debenture is effective only in the specific instance
and for the specific purpose for which given. 
No waiver of any of the provisions of this Debenture constitutes a
waiver of any other provision.


 


23

















 


(2)                                  A failure or delay on the part of the Collateral Agent
or the Secured Creditors in exercising a right under this Debenture does not
operate as a waiver of, or impair, any right of the Collateral Agent or the
Secured Creditors however arising.  A
single or partial exercise of a right on the part of the Collateral Agent or
the Secured Creditors does not preclude any other or further exercise of that
right or the exercise of any other right by the Collateral Agent or the Secured
Creditors.


 


Section 5.14                                        Application of Proceeds of Security.


 


(1)                                  Prior to the joinder of any Additional Secured
Creditors pursuant to Section 5.20, all monies collected by the Collateral
Agent upon the enforcement of the Collateral Agent’s or the Secured Creditors’
rights and remedies under the Security Documents and the Liens created by them
including any sale or other disposition of the Charged Property, together with
all other monies received by the Collateral Agent and the Secured Creditors
under the Collateral Documents, will be applied as provided in the Indenture.


 


(2)                                  After the joinder of any Additional Secured Creditors
pursuant to Section 5.20, all monies collected by the Collateral Agent
upon the enforcement of the Collateral Agent’s or the Secured Creditors’ rights
and remedies under the Security Documents and the Liens created by them
including any sale or other disposition of the Charged Property, together with
all other monies received by the Collateral Agent and the Secured Creditors
under the Security Documents will be applied as follows:


 


(a)                                  First, to the payment of all reasonable costs and
expenses, fees, commissions and taxes of such sale, collection or other
realization including compensation to the Collateral Agent and its agents and
counsel, and all expenses, liabilities and advances made or incurred by the Collateral
Agent in connection therewith and all amounts for which the Collateral Agent is
entitled to indemnification pursuant to the provisions of any Indenture
Document, together with interest on each such amount at the highest rate then
in effect under this Debenture from and after the date such amount is due,
owing or unpaid until paid in full;


 


(b)                                 Second, to the Trustee and the Authorized
Representative, all amounts payable to the Trustee, its agents and attorneys
for amount due under Section 7.07 under the Indenture, including payment
of all compensation, expenses and liabilities incurred, and all advances made,
by the Trustee and the costs and expenses of collection and similar amounts due
to any other Authorized Representative under the Additional Secured Debt
Documents;


 


(c)                                  Third, without duplication of amounts applied pursuant
to clause (1) above, to the payment in full in cash, pro rata, of interest
and other amounts constituting Secured Obligations (other than principal) and
any fees and premiums constituting Secured Obligations and any interest accrued
thereon, in each case equally and ratably in accordance with the respective
amounts thereof then due and owing;


 


24

















 


(d)                                 Fourth, to the payment in full in cash, pro rata, of
principal amount of the Secured Obligations and any premium thereon; and


 


(e)                                  Fifth, the balance, if any, to the Person lawfully
entitled thereto (including the applicable Credit Party or its successors or
assigns) or as a court of competent jurisdiction may direct.


 


All applications of proceeds
pursuant to clauses (a) though (d) above shall be allocated among the
Secured Creditors on a pro rata basis according to the principal (or, in the
case of discount notes, accreted value), interest and other amounts owing in
respect of the Secured Obligations at the time of the distribution.  In the event that any such proceeds are
insufficient to pay in full the items described in clauses (1) through (3) of
this Section 5.14(2), the Obligor shall remain liable for any deficiency.


 


(3)                                  Upon the request of the Collateral Agent prior to any
distribution under this Section 5.14, each Secured Creditor or its
Authorized Representative shall provide to the Collateral Agent certificates,
in form and substance reasonably satisfactory to the Collateral Agent, setting
forth the respective amounts referred to in Section 5.14(2), that each
such Secured Creditor or its Authorized Representative believes it is entitled
to receive, and the Collateral Agent shall be fully entitled to rely on such
certificates.


 


(4)                                  If, despite the provisions of this Debenture, any
Secured Creditor shall receive any payment or other recovery in excess of its
portion of payments on account of the Secured Obligations to which it is then
entitled in accordance with this Debenture, such Secured Creditor shall hold
such payment or recovery in trust for the benefit of all Secured Creditors for
distribution in accordance with this Section 5.14.


 


Section 5.15                                        Governing Law.


 


(1)                                  This Debenture
shall be governed by and construed in accordance with the laws of Alberta and
the laws of Canada applicable therein save in respect of the security created
pursuant hereto upon real property situated in any province of Canada other
than Alberta, and upon income therefrom, which shall be governed by the laws of
the province in which such property is situate.


 


(2)                                  The Obligor hereby irrevocably consents to the service
of any and all process in any such action or proceeding by the delivery of
copies of such process to the Obligor as set forth in Section 12.02 of the
Indenture.  Nothing in this Section affects
the right of the Collateral Agent to serve process in any manner permitted by
law.


 


Section 5.16                                        Application of Saskatchewan Law.


 


(1)                                  The Land Contracts
(Actions) Act (Saskatchewan) shall have no application to any
action, as defined therein, with respect to this Debenture.


 


(2)                                  The Limitation of
Civil Rights Act (Saskatchewan) shall have no application to (i) this
Debenture, (ii) any mortgage, charge or other security for the payment of
money made, given or created by this Debenture, (iii) any agreement or
instrument


 


25

















 


renewing or extending or
collateral to this Debenture or any mortgage, charge or other security referred
to or mentioned in (ii) above, or (iv) the rights, powers or remedies
of the Collateral Agent under this Debenture or any mortgage, charge, other
security, agreement or instrument referred to or mentioned in (ii) or (iii) above.


 


Section 5.17                            Time of the Essence.


 


Time shall be of the essence of this Debenture.


 


Section 5.18                                        Charging Clause.


 


For better securing to the Collateral Agent the
repayment in the manner set out above of the principal sum set forth herein
together with all other Secured  Obligations,
the Obligor hereby mortgages to the Collateral Agent and its successors and
permitted assigns, for the benefit of the Secured Creditors and their
respective successors and permitted assigns, all of its estate and interest in
the Charged Property.


 


Section 5.19                            Waiver of Financing Statement, Etc.


 


The Obligor hereby
waives the right to receive from the Collateral Agent or the Secured Creditors
a copy of any financing statement, financing change statement or other
statement or document filed or registered at any time in respect of this
Debenture or any verification statement or other statement or document issued
by any registry that confirms or evidences registration of or relates to this
Debenture.


 


Section 5.20                                        Additional Secured Obligations.


 


On or after the date hereof, the Issuers may
from time to time designate additional Obligations as additional Secured
Obligations hereunder (the “Additional
Secured Obligations”) by delivering to the Collateral Agent (a) a
certificate signed by the chief financial officer of the Issuers (i) identifying
the obligations so designated and the aggregate principal amount or face amount
thereof, stating that such obligations are designated as Additional Secured
Obligations for purposes hereof, (ii) representing that such designation
of such obligations as Additional Secured Obligations complies with the terms
of the Indenture and (iii) specifying the name and address of the
Authorized Representative for such obligations, and (b) a fully executed
Additional Secured Creditor Joinder (in the form attached as Schedule “B”).  Each Authorized Representative agrees that
upon the satisfaction of all conditions set forth in the preceding sentence,
the Collateral Agent shall act as agent under and subject to the terms of this
Debenture for the benefit of all Secured Creditors, including any Additional
Secured Creditors that hold any such Additional Secured Obligations, and each
Authorized Representative agrees to the appointment, and acceptance of the
appointment, of the Collateral Agent as agent for the holders of such
Additional Secured Obligations as set forth in the Additional Secured Creditor
Joinder, and the Authorized Representative providing such Additional Secured
Creditor Joinder shall, on behalf of itself and each Additional Secured
Creditor it represents, be bound by this Debenture.  For purposes of this Debenture, all
Obligations arising under or in connection with the Notes (including Additional
Notes and Exchange Notes) constitute Note Obligations rather than Additional
Secured Obligations; however upon the issuance of Additional Notes, the Issuers
shall deliver to the Collateral Agent a certificate signed by the chief
financial officer of the Issuers setting forth the particulars of the
Additional Notes


 


26

















 


including
the aggregate principal amount or face amount thereof and certifying that such
issuance of First Lien Obligations complies with the terms of the Indenture.


 


Section 5.21                                        Collateral Agent.


 


(1)                                  Each
Noteholder, by its acceptance of the Indenture, and each—Authorized
Representative of any Additional Secured Creditors on behalf of itself and the
Additional Secured Creditors that it represents, by its execution of an
Additional Secured Creditor Joinder, has appointed, and each other Secured
Creditor, by accepting the benefits hereof, hereby appoints, BNY Trust Company
of Canada to serve as Collateral Agent and representative of itself and any
other Secured Creditors that it represents under each of the Security
Documents, and authorizes the Collateral Agent to act as agent for itself and
such Secured Creditors for the purpose of executing and delivering, on behalf
of itself and such Secured Creditors, each of the Security Documents and any
other documents or instruments related thereto or necessary or, as determined
by the Collateral Agent, desirable to perfect the Liens granted to the
Collateral Agent thereunder, for the purpose of holding the Liens on the
Collateral granted pursuant to the Security Documents, and, subject to the
provisions of this Debenture, for the purpose of enforcing its and such Secured
Creditors’ rights in respect of the Collateral and the obligations of the
Obligors under the Security Documents, and for the purpose of, or in connection
with, releasing the obligations of the Obligors under the Security
Documents.  The Collateral Agent hereby
agrees that it shall so act as Collateral Agent and representative of the
Secured Creditors subject to, in respect of any Additional Secured Creditors,
compliance by the Authorized Representative on behalf of such Additional
Secured Creditors with Section 5.20. The Collateral Agent shall have the
sole authority to exercise remedies under the Security Documents.  The Collateral Agent shall have the right
hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including the
release or substitution of the Collateral), in accordance with the Secured
Agreements.  The Collateral Agent may resign, may be
removed and a successor Collateral Agent may be appointed in the manner
provided under Section 5.22.


 


(2)                                  The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Charged Property in its
possession if such Charged Property is accorded treatment substantially
equivalent to that which a reasonable person accords his own property
consisting of similar property, instruments or interests, it being understood
that neither the Collateral Agent nor any of the Secured Creditors shall have
responsibility for taking any necessary steps to preserve rights against any
Person with respect to any Charged Property.


 


(3)                                  The Collateral Agent shall be entitled to rely upon
any written notice, statement, certificate, order or other document or any
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person, and, with respect to all matters
pertaining to the Secured Agreements and its duties thereunder, upon advice of
counsel selected by it (who may be counsel to the Obligor).  The Collateral Agent shall not be deemed to
have actual, constructive,


 


27

















 


direct or indirect knowledge
or notice of the occurrence of any Default or Event of Default unless and until
the Collateral Agent has received written notice from a Secured Creditor, the
Issuers or the Obligor referring to the applicable Secured Agreement,
describing such Default or Event of Default and stating that it is a “notice of
default” or a “notice of event of default”, setting forth in reasonable detail
the facts and circumstances thereof and stating that the Collateral Agent may
rely on such notice without further inquiry. 
The Collateral Agent shall have no obligation or duty prior to or after
receiving any such notice to inquire whether a Default or Event of Default has
in fact occurred and shall be entitled to conclusively rely, and shall be fully
protected in so relying, on any such notice furnished to it.


 


(4)                                  If any item of Charged Property also constitutes
collateral granted to the Collateral Agent under any other deed of trust,
mortgage, security agreement, pledge or instrument of any type, in the event of
any conflict between the provisions hereof and the provisions of such other
deed of trust, mortgage, security agreement, pledge or instrument of any type
in respect of such collateral, the terms of this Debenture shall apply.


 


(5)                                  Notwithstanding anything to the contrary contained
herein, the Collateral Agent is authorized, but not obligated, (i) to take
any action reasonably required to perfect or continue the perfection of the
liens on the Charged Property for the benefit of the Secured Creditors and (ii) when
instructions from the Authorized Representatives on behalf of the applicable
Secured Creditors have been requested by the Collateral Agent but have not yet
been received, to take any action which the Collateral Agent, in good faith,
believes to be reasonably required to promote and protect the interests of the
Secured Creditors in the Charged Property; provided that once instructions have
been received, the actions of the Collateral Agent shall be governed thereby
and the Collateral Agent shall not take any further action which would be
contrary thereto.


 


(6)                                  Notwithstanding
anything to the contrary contained herein or in any Security Document, the
Collateral Agent shall not be required to take or refrain from taking, and
shall have no liability to any Secured Creditor for taking or refraining from
taking, any action that exposes or, in the good faith judgment of the
Collateral Agent may expose, the Collateral Agent or its officers, directors,
agents or employees to personal liability, unless the Collateral Agent shall be
adequately indemnified, or that is, or in the good faith judgment of the
Collateral Agent may be, contrary to any Security Document, any other Secured
Agreement or applicable law.  Upon
receipt of such indemnity, however, the Collateral Agent shall act upon the
specific instructions of the Authorized Representatives provided in accordance
with the provisions of this Debenture, except for any instructions that in the
good faith judgment of the Collateral Agent may be contrary to any Security
Document, any other Secured Agreement or applicable law.


 


(7)                                  For purposes of
this Debenture and other Security Documents, each Secured Creditor shall
appoint a Person as its Authorized Representative for the purpose of giving or
delivering any notices or instructions hereunder and thereunder.  Any 


 


28

















 


instructions given by the Authorized Representatives (other than the
Trustee) on behalf of the applicable Secured Creditors to the Collateral Agent
pursuant to the Security Documents shall be in writing signed by the Authorized
Representative(s) of the applicable Secured Creditors with respect to such
instructions and such instructions shall certify to and for the benefit of the
Collateral Agent the outstanding aggregate principal amount (or, in the case of
discount notes, accreted value) of all Secured Obligations that the Secured
Creditors authorizing such instructions hold. 
In determining whether the applicable Secured Creditors have consented
to any action under the Security Documents, the Collateral Agent may
conclusively rely on each Authorized Representative as to the amount of Secured
Obligations held by holders represented by such Authorized Representative.  The Collateral
Agent shall be entitled to conclusively and absolutely rely on such
instructions and certification as to the identity of the applicable Secured
Creditors with respect to such instructions, and the Collateral Agent shall not
be required to take any action, and shall not be liable to any Secured Creditor
for failing or refusing to act, pursuant to any instructions which are not
given or delivered by the Authorized Representatives of various Secured
Creditors comprising the applicable Secured Creditors as required by Section 3.11
of the Security Agreements.


 


(8)                                  The Obligor acknowledges that the rights and
responsibilities of the Collateral Agent under this Debenture with respect to
any action taken by the Collateral Agent or the exercise or nonexercise by the
Collateral Agent of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Debenture
shall, as between the Collateral Agent and the other Secured Creditors, be
governed by the provisions of this Debenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Obligor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Collateral Agent and the other Secured
Creditors with full and valid authority so to act or refrain from acting, and
the Obligor shall not be under any obligation, or entitlement, to make any
inquiry respecting such authority.


 


(9)                                  Subject to clause (6) of this Section 5.21,
neither the Collateral Agent nor any of its officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of
the Charged Property or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Charged Property upon the
request of the Obligor or any other Person or to take any other action
whatsoever with regard to the Charged Property or any part thereof.  The powers conferred on the Collateral Agent
hereunder are solely to protect the interests of the Collateral Agent in the
Charged Property and, subject to clause (6) of this Section 5.21,
shall not impose any duty upon the Collateral Agent to exercise any such
powers.  The Collateral Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall have any duty or liability or be responsible to the
Obligor for any act or failure to act hereunder, except for its own gross
negligence or wilful misconduct.  The
Collateral Agent shall have no duty or liability as to the taking of any
necessary steps to preserve or protect the Charged Property or to preserve
rights


 


29

















 


against prior parties.  Nothing contained in this Debenture shall be
construed as requiring or obligating the Collateral Agent, and the Collateral
Agent shall not be required or obligated, to (i) present or file any claim
or notice or take any action with respect to any Charged Property or in
connection therewith or (ii) notify the Obligor of any decline in the
value of any Charged Property.  The
Collateral Agent shall have no duty as to the collection of any Charged
Property in its possession or control or in the possession or control of any
agent or nominee of the Collateral Agent, or any income thereon or any other
rights pertaining thereto.


 


(10)                            No provision of the Secured Agreements shall be deemed
to impose any duty or obligation on the Collateral Agent to perform any act or
acts, receive or obtain any interest in property or exercise any interest in
property, or exercise any right, power, duty or obligation conferred or imposed
on it in any jurisdiction in which it shall be illegal, or in which the
Collateral Agent shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts, to receive or obtain any such
interest in property or to exercise any such right, power, duty or obligation;
and no permissive or discretionary power or authority available to the
Collateral Agent shall be construed to be a duty.


 


(11)                            The Collateral Agent shall have the right hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including the release or
substitution of Charged Property), in each case in accordance with the Secured
Agreements.


 


(12)                            Upon resignation of the Collateral Agent in accordance
with the terms of Section 5.22, the Collateral Agent shall thereupon be
discharged from its duties and obligations under the Secured Agreements.  Following the resignation of the Collateral
Agent, the provisions of the Secured Agreements shall inure to its benefit as
to any actions taken or omitted to be taken by it under the Secured Agreements
while it was the Collateral Agent.


 


(13)                            The Collateral Agent shall not have any liability
hereunder except for its own gross negligence or wilful misconduct, or material
breach and under no circumstances shall the Collateral Agent be liable for any special,
punitive, exemplary or consequential damages.


 


(14)                            The Collateral
Agent shall be vested with all of the rights, powers, benefits, privileges and
protections of the Collateral Agent set forth in the Indenture, all of which
are incorporated herein and shall apply to all of the Security Documents.


 


(15)                            The Collateral
Agent may perform any and all of its duties and exercise its rights and powers
hereunder or under any other Indenture Document by or through, or delegate any
and all such rights and powers to, any one or more sub-agents appointed by such
Agent, including a sub-agent which is a non-U.S. affiliate of the Collateral
Agent. Except as otherwise provided in this Section 5.21, neither the
Collateral Agent nor any of its respective officers, directors, employees,
attorney or agents will be responsible or liable for the existence,
genuineness, value or protection of any Collateral, for the legality,
enforceability, effectiveness or sufficiency of the


 


30

















 


Security
Documents, for the creation, perfection, priority, sufficiency or protection of
any Lien securing the First Lien Obligations, or for any defect or deficiency
as to any such matters, or for any failure to demand, collect, foreclose or
realize upon or otherwise enforce any such Liens or Security Documents or any
delay in doing so provided that if instructed by the Required Secured Creditors
in accordance with the provisions of the Security Documents, the Collateral
Agent (subject to receipt of an indemnity requested by it and acceptable to it
and any other applicable provisions of the Security Documents) shall comply
with instructions from such Required Secured Creditors.  The Collateral Agent and any such sub-agent
may perform any and all of its duties and exercise its rights and powers by or
through their respective Affiliates.  The exculpatory provisions of
this Section 5.21 shall apply to any agent, attorneys-in-fact or sub-agent
and to the Affiliates of the Collateral Agent and any such agent,
attorneys-in-fact or sub-agent, and shall apply to their respective activities
in connection with the exercise of the rights and remedies of the Collateral
Agent provided for hereunder, as well as all other activities as Collateral
Agent.


 


Section 5.22                                        Resignation and Removal of Collateral
Agent.


 


(1)                                  A resignation or removal of the Collateral Agent and
appointment of a successor Collateral Agent will become effective only upon the
successor Collateral Agent’s acceptance of appointment as provided in this Section 5.22.


 


(2)                                  The Collateral Agent may resign in writing at any time
and be discharged from its obligations hereunder created by so notifying the
Issuers.  Prior to the incurrence of
Additional Secured Obligations, the Holders of a majority in aggregate
principal amount of the then outstanding Notes may remove the Collateral Agent
by so notifying the Collateral Agent and the Issuers in writing.  After incurrence of the Additional Secured
Obligations, the Required Secured Creditors may remove the Collateral Agent by
so notifying the Collateral Agent and the Issuers in writing.  The Issuers may remove the Collateral Agent
if:


 


(a)                                  the Collateral Agent is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Collateral
Agent under any Bankruptcy Law;


 


(b)                                 a custodian or public officer takes charge of the
Collateral Agent or its property; or


 


(c)                                  the Collateral Agent becomes incapable of acting.


 


(3)                                  If the Collateral Agent resigns or is removed or if a
vacancy exists in the office of Collateral Agent for any reason, the Issuers
will promptly appoint a successor Collateral Agent.  Within one year after the successor
Collateral Agent takes office, the Holders of a majority in aggregate principal
amount of the then outstanding Notes (and, after the issuance of any Additional
Secured Obligations, solely the Required Secured Creditors) may appoint a
successor Collateral Agent to replace the successor Collateral Agent appointed
by the Issuers.


 


31














 


(4)                                  If a successor Collateral Agent does not take office
within sixty (60) days after the retiring Collateral Agent resigns or is
removed, the retiring Collateral Agent, the Issuers, or the Holders of at least
10% in aggregate principal amount of the then outstanding Notes (and, after the
issuance of any Additional Secured Obligations, the holders of at least 10% in
aggregate principal amount of the then outstanding Secured Obligations) may
petition any court of competent jurisdiction for the appointment of a successor
Collateral Agent.


 


(5)                                  A successor
Collateral Agent will deliver a written acceptance of its appointment to the
retiring Collateral Agent and to the Issuers. 
The resignation or removal of a Collateral Agent shall become effective
only upon (a) the execution and delivery of such documents or instruments
as are necessary to transfer the rights and obligations of the Collateral Agent
under the Security Documents and (b) the recording or filing of such
documents, instruments or financing statements and the delivery of such
Collateral as may be necessary to maintain the priority and perfection of any
security interest granted by the Security Documents.  Upon the acceptance of any appointment as the
Collateral Agent by a successor Collateral Agent and compliance with the
immediately preceding sentence, the resignation or removal of the retiring
Collateral Agent will become effective, and the successor Collateral Agent will
have all the rights, powers and duties of the Collateral Agent under the Indenture
and the Security Documents, and the retiring Collateral Agent shall thereupon
be discharged from its duties and obligations under the Secured
Agreements.  After any retiring
Collateral Agent’s resignation, the provisions hereof shall inure to its benefit
as to any actions taken or omitted to be taken by it under the Secured
Agreements while it was the Collateral Agent. 
The successor Collateral
Agent will mail a notice of its succession to each Authorized
Representative.  Notwithstanding
replacement of the Collateral Agent pursuant to this Section 5.22, the
Issuers’ obligations under Section 5.24 hereof will continue for the
benefit of the retiring Collateral Agent.


 


If the Collateral Agent consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act will be the successor Collateral Agent.


 


Section 5.23                                        Assignment of Rents


 


As further security to the Collateral Agent for
the due payment and performance of all Secured Obligations, the Obligor, in its
own personal capacity and in its capacity as a partner (other than as a limited
partner), managing partner or general partner of any Partnership Obligor in
which it is a partner, managing partner or general partner, hereby assigns,
transfers and sets over to the Collateral Agent, for the benefit of the Secured
Creditors, to the extent not constituting Liquidity Collateral, all leases now
or hereafter granted by the Obligor (or any predecessor or successor in title)
of all or any part of the Charged Property and any rents and other revenues
from the Charged Property now or hereafter due or to become due, provided that:


 


(a)                                  the Collateral Agent will not be entitled to receive
and recover such rents and other revenues until an Event of Default has
occurred which is continuing;


 


32

















 


(b)                                 the Collateral Agent will have no obligation to
collect any such rents or other revenues at any time and will be liable only
for monies actually received nor will the Collateral Agent be responsible for
the performance of any terms and conditions of any lease assigned hereunder;


 


(c)                                  nothing contained in this clause nor the exercise by
the Collateral Agent of any rights or remedies arising herefrom will place or
be deemed to place the Collateral Agent in possession of the Charged Property;


 


(d)                                 neither this assignment, nor the collection of rents
pursuant to it, will be construed as a recognition or acceptance of any lease
with respect to the Charged Property;


 


(e)                                  whenever requested by the Collateral Agent the Obligor
will assign to the Collateral Agent its interest in each specific lease of the
Charged Property and will execute such further specific or general assignments
as may be requested by the Collateral Agent from time to time;


 


(f)                                    the Collateral Agent or its agents may separately
register this assignment wherever the Collateral Agent in its discretion deems
appropriate; and


 


(g)                                 neither this assignment nor any act of the Collateral
Agent thereof shall operate to delay, hinder or prejudice any of the Collateral
Agent’s rights or remedies under this Debenture.


 


Section 5.24                                        Costs and Expenses.


 


(1)                                  The Obligor shall pay all reasonable out of pocket
expenses incurred by the Trustee or the Collateral Agent (including the fees,
charges and disbursements of not more than one counsel plus, if necessary, one
local counsel per jurisdiction for the Trustee or the Collateral Agent), in
connection with the enforcement or protection of its rights (i) in
connection with this Debenture and the other Indenture Documents including its
rights under this Section 5.24 (ii) in connection with the Indenture
Documents, the Charge created thereunder or the Charged Property, including all
legal fees, court costs, receiver’s or agent’s remuneration and other expenses
of taking possession of, repairing, protecting, insuring, preparing for
disposition, realizing, collecting, selling, transferring, delivering or
obtaining payment for the Charged Property, and of taking, defending or
participating in any action or proceeding in connection with any of the
foregoing matters or otherwise in connection with the interest of the
Collateral Agent, the Secured Creditors’ (or any one of them) interest in any
Charged Property, whether or not directly relating to the enforcement of this
Debenture and the other Indenture Documents, or (iii) in connection with
the issuance of Notes made under the Indenture, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such issuance of Notes and (iv) all documentary
and similar taxes and charges in respect of the Indenture Documents.


 


33

















 


(2)                                  The Obligor shall indemnify the Trustee (and any
sub-trustee thereof) and the Collateral Agent (and any sub-agent thereof), and
their respective Affiliates and each officer, director, employee or agent
thereof (each such person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including reasonable fees, charges
and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee
or asserted against any Indemnitee by any party hereto or any third party
arising out of, in connection with, or as a result of any action,
investigation, suit or proceeding (whether commenced or threatened) relating to
or arising out of (i) the execution or delivery of this Debenture, any
other Indenture  Document, or any
amendment, amendment and restatement, modification or waiver of the provisions
hereof or thereof, or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) any issuance of Notes or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or Release or threatened
Release of Hazardous Materials on, at, under or from any property or facility
owned, leased or operated by any Credit Party at any time, or any Environmental
Claim related in any way to any Credit Party, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Issuer or any other Credit Party, and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction to have resulted from the gross
negligence, bad faith or wilful misconduct of such Indemnitee or (y) result
from a claim brought by any Credit Party against an Indemnitee for breach in
bad faith of such Indemnitee’s obligations hereunder or under any other
Indenture Document, if such Credit Party has obtained a judgment in its favor
on such claim as determined by a court of competent jurisdiction.


 


(3)                                  All amounts due under this Section 5.24 shall be
payable not later than three (3) Business Days after demand therefor.


 


[Remainder of page left intentionally blank.]


 


34

















 


IN WITNESS
WHEREOF the Obligor has executed
and delivered this Debenture as of the date first above written.


 


 


	
   

  	
  GIBSON ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Stewart Hanlon

  
	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Authorized Signing Officer

  



 


35

















 


Accepted
and Agreed:


 


	
  BNY TRUST
  COMPANY OF CANADA

  as Collateral Agent

  
	
   

  
	
  By:

  	
  /s/ Angela Ikhimokpa

  	
   

  
	
   

  	
  Name:  Angela Ikhimokpa

  
	
   

  	
  Title:  Authorized Signatory

  



 


36

















 


SCHEDULE “A”


LANDS


 


ALBERTA PROPERTY


 


FEE SIMPLE INTEREST


 


1.                                       PLAN 0520897


BLOCK 1


LOT 2


EXCEPTING THEREOUT ALL MINES AND MINERALS


AREA: 
36.97 HECTARES (91.35 ACRES) MORE OR LESS


 


2.                                       ALL THAT PORTION OF THE NORTH EAST QUARTER OF SECTION SIX
(6)


TOWNSHIP FIFTY THREE (53)


RANGE TWENTY THREE (23)


WEST OF THE FOURTH MERIDIAN WHICH LIES EAST OF
THE EASTERLY LIMIT OF RAILWAY PLAN 309EO, CONTAINING 25.8 HECTARES (63.82
ACRES) MORE OR LESS.


EXCEPTING THEREOUT:


(A)                              0.117 HECTARES (0.29 ACRES) MORE OR LESS, FOR EXTRA RIGHT-OF-WAY ON
RAILWAY PLAN 1661EO.


(B)                                2.11 HECTARES (5.22 ACRES) MORE OR LESS, DESCRIBED AS FOLLOWS:


COMMENCING AT THE SOUTH EAST CORNER OF THE SAID
QUARTER SECTION; THENCE NORTHERLY ALONG THE EAST BOUNDARY THEREOF SIX HUNDRED
AND SEVENTY FIVE (675) FEET; THENCE SOUTH WESTERLY IN A STRAIGHT LINE TO A
POINT IN THE SOUTH BOUNDARY OF THE SAID QUARTER SECTION SIX HUNDRED AND SEVENTY
FIVE (675) FEET WESTERLY FROM THE SAID SOUTH EAST CORNER; THENCE EASTERLY ALONG
THE SAID SOUTH BOUNDARY TO THE POINT OF COMMENCEMENT.


(C)                                0.607 HECTARES (1.50 ACRES) MORE OR LESS, FOR ROAD AS SHOWN ON ROAD PLAN
6877MC.


EXCEPTING THEREOUT ALL MINES AND MINERALS


 


3.                                       PLAN 6237NY


LOT(F)


CONTAINING 11.9 HECTARES (29.49 ACRES) MORE OR
LESS


EXCEPTING THEREOUT:  1.58 HECTARES (3.91 ACRES) MORE OR LESS FOR
POWER LINE RIGHT OF WAY AS SHOWN ON PLAN 3987MC


EXCEPTING THEREOUT ALL MINES AND MINERALS


 


4.                                       PLAN 6068MC


RIGHT OF WAY (METER STATION SITE)


CONTAINING 12.77 HECTARES (31.66 ACRES) MORE OR
LESS


 


A-1

















 


EXCEPTING THEREOUT ALL MINES AND MINERALS AND
THE RIGHT TO WORK THE SAME


 


5.                                       ALL THAT PORTION OF THE NORTH WEST QUARTER OF SECTION TWENTY (20)


TOWNSHIP FORTY TWO (42)


RANGE NINE (9)


WEST OF THE FOURTH MERIDIAN, DESCRIBED AS
FOLLOWS: ---------


COMMENCING AT THE SOUTH WEST CORNER OF THE TRAP
SITE AS SHOWN ON THE RIGHT OF WAY PLAN 1051NY THENCE EASTERLY ALONG THE SOUTH
BOUNDARY OF THE SAID SITE TWO HUNDRED AND EIGHT AND SEVEN TENTHS (208.7) FEET,
MORE OR LESS, TO THE SOUTH EAST CORNER THEREOF, THENCE SOUTHERLY AND PARALLEL
TO THE WEST BOUNDARY OF THE SAID QUARTER SECTION TWO HUNDRED AND EIGHT AND
SEVEN TENTHS (208.7) FEETY THENCE WESTERLY AND PARALLEL TO THE SAID SOUTH
BOUNDARY TO A POINT ON THE SAID WEST BOUNDARY THENCE NORTHERLY ALONG THE SAID
WEST BOUNDARY TO THE POINT OF COMMENCEMENT, CONTAINING ONE (1) ACRE, MORE
OR LESS.


EXCEPTING THEREOUT:  0.03 HECTARES (0.08 ACRES) MORE OR LESS FOR ROAD
PLAN 8722505


EXCEPTING THEREOUT ALL MINES AND MINERALS


 


6.                                       ALL THAT PORTION OF THE SOUTH EAST QUARTER OF SECTION TWENTY NINE
(29)


TOWNSHIP FORTY TWO (42)


RANGE NINE (9)


WEST OF THE FOURTH MERIDIAN LYING TO THE SOUTH
OF THE SOUTHERLY LIMIT OF A SURVEYED HIGHWAY AS SHOWN ON ROAD PLAN 3490JY AS
SHOWN ON A PLAN OF SURVEY OF THE SAID TOWNSHIP SIGNED AT OTTAWA ON THE 8TH DAY
OF FEBRUARY 1916, CONTAINING 58.8 HECTARES (145.42 ACRES) MORE OR LESS.


EXCEPTING THEREOUT ALL MINES AND MINERALS AND
THE RIGHT TO WORK THE SAME


 


7.                                       LEGAL SUBDIVISION SEVEN (7) AND LEGAL SUBDIVISION EIGHT (8)


SECTION THIRTY (30)


TOWNSHIP FORTY TWO (42)


RANGE NINE (9)


WEST OF THE FOURTH MERIDIAN CONTAINING 32.2
HECTARES (79.50 ACRES) MORE OR LESS.


EXCEPTING THEREOUT ALL MINES AND MINERALS


 


8.                                       PLAN 3970NY


RIGHT OF WAY (METER
STATION SITE)


CONTAINING 14.28 HECTARES (35.18 ACRES) MORE OR
LESS


	
  EXCEPTING THEREOUT:

  	
  HECTARES

  	
  (ACRES) MORE OR LESS

  
	
  A) PLAN 0925671 - SUBDIVISION

  	
  4.50

  	
  11.12

  



 


A-2

















 


EXCEPTING THEREOUT ALL MINES AND MINERALS AND
THE RIGHT TO WORK THE SAME


 


9.                                       PLAN 0925671


BLOCK 1


LOT 1


EXCEPTING THEREOUT ALL MINES AND MINERALS AREA:
4.5 HECTARES (11.12 ACRES) MORE OR LESS


 


10.                                 THE WESTERLY ONE THOUSAND, THREE HUNDRED AND ELEVEN
(1,311) FEET IN PERPENDICULAR WIDTH THROUGHOUT OF THE NORTH WEST QUARTER OF SECTION TWENTY
(20) TOWNSHIP FORTY TWO (42) RANGE NINE (9) WEST OF THE FOURTH MERIDIAN,
CONTAINING SEVENTY NINE AND FORTY SEVEN HUNDREDTHS (79.47) ACRES MORE OR LESS.


EXCEPTING THEREOUT:  (A) ONE (1) ACRE, MORE OR LESS, FOR
TRAP-SITE AS SHOWN ON RIGHT OF WAY PLAN 1051NY


(B) ONE (1) ACRE, MORE OR LESS,
DESCRIBED AS FOLLOWS:


COMMENCING AT THE SOUTH WEST CORNER OF THE
TRAP-SITE AS SHOWN ON RIGHT OF WAY PLAN 1051NY THENCE EASTERLY ALONG THE SOUTH
BOUNDARY OF THE SAID SITE TWO HUNDRED AND EIGHT 
AND SEVEN TENTHS (208.7) FEET MORE OR LESS, TO THE SOUTH EAST CORNER OF
THE SAID SITE; THENCE SOUTHERLY AND PARALLEL TO THE WEST BOUNDARY OF THE SAID
QUARTER SECTION TWO HUNDRED AND EIGHT 
AND SEVEN TENTHS (208.7) FEET; THENCE WESTERLY AND PARALLEL TO THE SOUTH
BOUNDARY OF THE SAID SITE TO THE WEST BOUNDARY OF THE SAID QUARTER SECTION,
THENCE NORTHERLY ALONG THE SAID WEST BOUNDARY TO THE POINT OF COMMENCEMENT.


(C) THE SOUTHERLY TWO HUNDRED (200) FEET
IN PERPENDICULAR WIDTH OF THE ABOVE DESCRIBED LAND CONTAINING SIX AND TWO
HUNDREDTHS (6.02) ACRES, MORE OR LESS


(D) 0.31 HECTARES (0.76 ACRES) MORE OR
LESS FOR ROAD PLAN 8722505.


EXCEPTING THEREOUT ALL MINES AND MINERALS


 


11.                                 PLAN 9925747


BLOCK 15


LOT 6


EXCEPTING THEREOUT ALL MINES AND MINERALS AREA:  2 HECTARES (4.94 ACRES) MORE OR LESS


 


A-3

















 


BRITISH COLUMBIA PROPERTY


 


1.                                       PARCEL IDENTIFIER:  024-741-141


LOT 1 SECTIONS 2 AND 3 BLOCK 5 NORTH RANGE 2
WEST


NEW WESTMINSTER DISTRICT PLAN LMP45450 EXCEPT
PLAN EPP522


 


A-4














 


SASKATCHEWAN
PROPERTY


 


1.                                       Surface Parcel #104515815:  Reference Land Description:  Blk/Par GPlan No 68MJ04421 Extension 0


As described on Certificate of Title 91MJ12616.


 


2.                                       Surface Parcel #105321709:  Reference Land Description:  Blk/Par MPlan No 87MJ17148 Extension 0

As described on Certificate of Title 91MJ12616A.


 


3.                                       Mineral Parcel #105321710:  Reference Land Description:  Blk/Par MPlan No 87MJ17148 Extension 3


As described on Certificate of Title
91MJ12616A, description 3.


 


4.                                       Surface Parcel #105197452:  Reference Land Description:  Blk/Par XPlan No 63MJ03696 Extension 0


As described on Certificate of Title
91MJ12616B.


 


5.                                       Mineral Parcel #105197463:  Reference Land Description:  Blk/Par XPlan No 63MJ03693 Extension 1


As described on Certificate of Title
91MJ12616B, description 1.


 


6.                                       Mineral Parcel #105197474:  Reference Land Description:  Blk/Par XPlan No 63MJ03693 Extension 2


As described on Certificate of Title
91MJ12616B, description 2.


 


7.                                       Surface Parcel #104515332:  Reference Land Description:  Blk/Par YPlan No 63MJ03697 Extension 0


As described on Certificate of Title
91MJ12616C.


 


8.                                       Mineral Parcel #105140955:  Reference Land Description:  Blk/Par YPlan No 63MJ03697 Extension 0


As described on Certificate of Title
91MJ12616C.


 


9.                                       Surface Parcel #105140966:  Reference Land Description:  Blk/Par ZPlan No 63MJ03698 Extension 0


As described on Certificate of Title
91MJ12616D.


 


10.                                 Mineral Parcel #105140977:  Reference Land Description:  Blk/Par ZPlan No 63MJ03698 Extension 0


As described on Certificate of Title
91MJ12616D.


 


A-5

















 


SCHEDULE “B”


FORM OF
ADDITIONAL SECURED CREDITOR JOINDER


 


[Name
of Additional Secured Creditor]


 


[Address
of Additional Secured Creditor]


 


[Date]


 


The
undersigned is the [trustee/agent]
(the “Representative”) for Persons
wishing to become “Additional Secured Creditors” (the “New Secured Creditors”) under the Demand
Debenture dated as of
                    
(as heretofore amended and/or supplemented, the “Demand Debenture” (terms used without definition herein have
the meanings assigned thereto in the Demand Debenture)) among
                    
and                   ,
as collateral agent (the “Collateral Agent”).


 


In
consideration of the foregoing, the undersigned hereby:


 


(i)                                     represents that
the Representative has been authorized by the New Secured Creditors to become a
party to the Demand Debenture and the other Security Documents on behalf of the
New Secured Creditors under that [DESCRIBE
OPERATIVE AGREEMENT] (the “New
Secured Obligation”) and to act as the Authorized Representative for
the New Secured Creditors;


 


(ii)                                  acknowledges
that the New Secured Creditors have received a copy of the Demand Debenture and
the other Security Documents;


 


(iii)                               appoints and
authorizes the Collateral Agent to take such action as agent on its behalf and
on behalf of all other Secured Creditors and to exercise such powers under the
Demand Debenture as are delegated to the Collateral Agent by the terms thereof,
together with all such powers as are reasonably incidental thereto;


 


(iv)                              accepts,
acknowledges and agrees to be bound by the terms of the Demand Debenture and
the other Security Documents applicable to it as an Authorized Representative
on behalf of the New Secured Creditors, and agrees to serve as Authorized
Representative for the New Secured Creditors with respect to the New Secured
Obligations, with all the rights and obligations of an Authorized
Representative thereunder and be bound by all the provisions thereof as fully
as if it had been an Authorized Representative on the effective date of the
Demand Debenture and the other Security Documents; and


 


(v)                                 agrees on its
own behalf and on behalf of the New Secured Creditors to be bound by the terms
of the Demand Debenture and the other Security Documents applicable to holders
of Additional Secured Obligations, with all the rights and obligations of an
Additional Secured Creditor thereunder and be bound by all the provisions
thereof as fully as if it had been an Additional Secured Creditor on the
effective date of the Demand Debenture and the other Security Documents.


 


B-1

















 


The
Collateral Agent, by acknowledging and agreeing to this Additional Secured
Creditor Consent, accepts the appointment set forth in clause (iii) above.


 


The
name and address of the representative for purposes of Section 5.2 of the
Demand Debenture are as follows:


 


[name and address of Authorized Representative]


 


THIS
ADDITIONAL SECURED CREDITOR JOINDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF ALBERTA.


 


IN
WITNESS WHEREOF, the undersigned has caused this Additional Secured Creditor
Joinder to be duly executed by its authorized officer as of the
       day of 20    .


 


 


	
   

  	
  [NAME OF AUTHORIZED REPRESENTATIVE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


Acknowledged
and Agreed


 


	
  [BNY Trust Company of Canada],

  as Collateral Agent

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  [Name of entity] a [Insert jurisdiction of incorporation],  

   

  as Obligor

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


B-2