Exhibit 10.1


 


Execution Version




 





 


CREDIT AGREEMENT


 


Dated as of December 12, 2008


 


Among


 


GIBSON ACQUISITION ULC


 


as Borrower,


 


and


 


GIBSON ENERGY HOLDINGS INC.,

MOOSE JAW REFINERY ULC,

CANWEST PROPANE ULC,

MP ENERGY ULC,

GEP ULC,

GIBSON ENERGY LTD.,

1370307 ALBERTA LTD.,

GIBSON GCC INC.,

MOOSE JAW REFINERY PARTNERSHIP,

CANWEST PROPANE PARTNERSHIP,

MP ENERGY PARTNERSHIP,

GIBSON ENERGY PARTNERSHIP,

CHIEF HAULING CONTRACTORS INC.,

LINK PETROLEUM SERVICES LTD.,

LINK PETROLEUM, INC.,

GIBSON ENERGY (U.S.) INC.,

GEP MIDSTREAM FINANCE CORP.


 


as Guarantors,


 


and


 


THE FINANCIAL INSTITUTIONS NAMED HEREIN


 


as Lenders,


 


and


 


ROYAL BANK OF CANADA


 


as Administrative Agent and Collateral Agent,


 


and


 


ROYAL BANK OF
CANADA


 


as Syndication Agent,


 


and


 


UBS SECURITIES LLC


 


as Documentation Agent,


 


and


 


RBC CAPITAL MARKETS(1) and UBS SECURITIES LLC


 


as Lead Arrangers




 





 






(1) RBC Capital Markets is a brand name for the
investment banking activities of Royal Bank of Canada and its affiliates.


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1 —  LOANS AND LETTERS OF CREDIT

  	
  2

  
	
  1.1

  	
  Total Facility

  	
  2

  
	
  1.2

  	
  Revolving Loans

  	
  2

  
	
  1.3

  	
  Letters of Credit

  	
  6

  
	
  1.4

  	
  Bank Products and Hedge
  Agreements

  	
  12

  
	
  1.5

  	
  Request for Increase of Revolving
  Credit Commitments

  	
  13

  
	
  ARTICLE 2 —  INTEREST AND FEES

  	
  14

  
	
  2.1

  	
  Interest

  	
  14

  
	
  2.2

  	
  Continuation and Conversion
  Elections

  	
  15

  
	
  2.3

  	
  Maximum Interest Rate

  	
  17

  
	
  2.4

  	
  Certain Fees

  	
  17

  
	
  2.5

  	
  Commitment Fee

  	
  17

  
	
  2.6

  	
  Letter of Credit Fee

  	
  18

  
	
  2.7

  	
  Interest Act (Canada)

  	
  18

  
	
  ARTICLE 3 —  PAYMENTS AND PREPAYMENTS

  	
  18

  
	
  3.1

  	
  Revolving Loans

  	
  18

  
	
  3.2

  	
  Termination of Facility

  	
  19

  
	
  3.3

  	
  Mandatory Prepayments of the
  Revolving Loans

  	
  19

  
	
  3.4

  	
  LIBOR Revolving Loan and BA
  Equivalent Revolving Loan Prepayments

  	
  19

  
	
  3.5

  	
  Payments by the Borrower

  	
  20

  
	
  3.6

  	
  Payments as Revolving Loans

  	
  20

  
	
  3.7

  	
  Apportionment, Application and
  Reversal of Payments

  	
  20

  
	
  3.8

  	
  Indemnity for Returned Payments

  	
  22

  
	
  3.9

  	
  Agent’s and Lenders’ Books and
  Records; Monthly Statements

  	
  23

  
	
  3.10

  	
  Currency

  	
  23

  
	
  3.11

  	
  Excess Resulting From Exchange
  Rate Change

  	
  23

  
	
  ARTICLE 4 —  TAXES, YIELD PROTECTION AND ILLEGALITY

  	
  24

  
	
  4.1

  	
  Taxes

  	
  24

  
	
  4.2

  	
  Illegality

  	
  26

  
	
  4.3

  	
  Increased Costs and Reduction of
  Return

  	
  27

  
	
  4.4

  	
  Funding Losses

  	
  28

  
	
  4.5

  	
  Inability to Determine Rates

  	
  29

  
	
  4.6

  	
  Certificates of Agent

  	
  29

  
	
  4.7

  	
  Survival

  	
  29

  
	
  ARTICLE 5 —  BOOKS AND RECORDS; FINANCIAL INFORMATION;
  NOTICES

  	
  29

  
	
  5.1

  	
  Books and Records

  	
  29

  
	
  5.2

  	
  Financial Information

  	
  30

  
	
  5.3

  	
  Notices to the Agent

  	
  33

  
	
  5.4

  	
  Collateral Reporting

  	
  34

  
	
  ARTICLE 6 —  GENERAL WARRANTIES AND REPRESENTATIONS

  	
  35

  
	
  6.1

  	
  Authorization, Validity, and
  Enforceability of this Agreement and the Loan Documents

  	
  35

  
	
  6.2

  	
  Validity and Priority of Security
  Interest

  	
  36

  
	
  6.3

  	
  Organization and Qualification

  	
  36

  



 

















 


	
  6.4

  	
  Corporate Name; Prior
  Transactions

  	
  36

  
	
  6.5

  	
  Subsidiaries

  	
  36

  
	
  6.6

  	
  Financial Statements and
  Projections

  	
  37

  
	
  6.7

  	
  Capitalization

  	
  37

  
	
  6.8

  	
  Solvency

  	
  37

  
	
  6.9

  	
  Real Property; Leases

  	
  37

  
	
  6.10

  	
  Brokers

  	
  38

  
	
  6.11

  	
  Governmental Authorization

  	
  38

  
	
  6.12

  	
  Proprietary Rights

  	
  38

  
	
  6.13

  	
  Bank Accounts

  	
  38

  
	
  6.14

  	
  Litigation

  	
  38

  
	
  6.15

  	
  Labour Disputes

  	
  39

  
	
  6.16

  	
  Environmental Laws

  	
  39

  
	
  6.17

  	
  No Violation of Law

  	
  39

  
	
  6.18

  	
  No Default

  	
  39

  
	
  6.19

  	
  Plans

  	
  39

  
	
  6.20

  	
  Taxes

  	
  40

  
	
  6.21

  	
  Regulated Entities; Margin
  Regulations

  	
  40

  
	
  6.22

  	
  Hedging Arrangements

  	
  40

  
	
  6.23

  	
  No Material Adverse Effect

  	
  41

  
	
  6.24

  	
  Full Disclosure

  	
  41

  
	
  6.25

  	
  Material Agreements

  	
  41

  
	
  6.26

  	
  U.S. Loan Parties

  	
  41

  
	
  ARTICLE 7 —  AFFIRMATIVE AND NEGATIVE COVENANTS

  	
  41

  
	
  7.1

  	
  Taxes

  	
  42

  
	
  7.2

  	
  Legal Existence and Good Standing

  	
  42

  
	
  7.3

  	
  Compliance with Law and
  Agreements; Maintenance of Licenses

  	
  42

  
	
  7.4

  	
  Maintenance of Property;
  Inspection of Property

  	
  42

  
	
  7.5

  	
  Insurance

  	
  43

  
	
  7.6

  	
  Insurance Proceeds

  	
  43

  
	
  7.7

  	
  Environmental Laws

  	
  44

  
	
  7.8

  	
  Compliance with
  EPPA/ERISA/Pension Legislation

  	
  44

  
	
  7.9

  	
  Bank Accounts

  	
  45

  
	
  7.10

  	
  Amendments to Bridge Facility

  	
  45

  
	
  7.11

  	
  Mergers, Consolidations or Sales

  	
  45

  
	
  7.12

  	
  Distributions; Capital Change;
  Restricted Investments

  	
  47

  
	
  7.13

  	
  Intentionally Deleted

  	
  49

  
	
  7.14

  	
  Guarantees

  	
  49

  
	
  7.15

  	
  Debt

  	
  49

  
	
  7.16

  	
  Prepayment; Repurchase and
  Redemption of Debt

  	
  52

  
	
  7.17

  	
  Transactions with Affiliates

  	
  52

  
	
  7.18

  	
  Use of Proceeds

  	
  53

  
	
  7.19

  	
  Business Conducted

  	
  53

  
	
  7.20

  	
  Liens

  	
  53

  
	
  7.21

  	
  Sale and Leaseback Transactions

  	
  53

  
	
  7.22

  	
  New Subsidiaries

  	
  53

  
	
  7.23

  	
  Fiscal Year

  	
  54

  



 


ii

















 


	
  7.24

  	
  Bank Accounts; Cash Management

  	
  54

  
	
  7.25

  	
  Intentionally Deleted

  	
  55

  
	
  7.26

  	
  Fixed Charge Coverage Ratio

  	
  55

  
	
  7.27

  	
  Corporate Documents

  	
  55

  
	
  7.28

  	
  Intentionally Deleted

  	
  55

  
	
  7.29

  	
  Restrictive Agreements

  	
  55

  
	
  7.30

  	
  Intentionally Deleted

  	
  56

  
	
  7.31

  	
  Hedging Arrangements

  	
  56

  
	
  7.32

  	
  Special Provisions Regarding
  Accounts, Inventory and Other Collateral

  	
  56

  
	
  7.33

  	
  Risk Management Compliance;
  Certain Permitted Financial Instruments; and Certain NYMEX 

  	
   

  
	
  Transactions

  	
  60

  
	
  7.34

  	
  Specified Contracts

  	
  60

  
	
  7.35

  	
  Further Assurances

  	
  60

  
	
  7.36

  	
  References to “Borrower”

  	
  61

  
	
  7.37

  	
  Closing Date Transactions

  	
  61

  
	
  7.38

  	
  U.S. Loan Parties

  	
  61

  
	
  7.39

  	
  Parent Company

  	
  61

  
	
  ARTICLE 8 —  CONDITIONS OF LENDING

  	
  61

  
	
  8.1

  	
  Conditions to Effectiveness on
  the Closing Date

  	
  61

  
	
  8.2

  	
  Conditions Precedent to Making of
  the Revolving Loans and the Issuing of Letters of Credit (up to

  	
   

  
	
  Initial Funding Date Amount) on the Initial Funding Date

  	
  66

  
	
  8.3

  	
  Conditions Precedent to Each
  Revolving Loan and Letter of Credit after the Initial Funding Date

  	
  67

  
	
  8.4

  	
  Obligations Incurred Prior to
  Initial Funding Date

  	
  68

  
	
  ARTICLE 9 —  DEFAULT; REMEDIES

  	
  68

  
	
  9.1

  	
  Events of Default

  	
  68

  
	
  9.2

  	
  Remedies

  	
  72

  
	
  ARTICLE 10 —  TERM AND TERMINATION 

  	
  74

  
	
  10.1

  	
  Term and Termination

  	
  74

  
	
  ARTICLE 11 —  AMENDMENTS; WAIVERS; PARTICIPATIONS;
  ASSIGNMENTS; SUCCESSORS

  	
  74

  
	
  11.1

  	
  Amendments and Waivers

  	
  74

  
	
  11.2

  	
  Assignments; Participations

  	
  76

  
	
  11.3

  	
  Replacement of Lenders

  	
  78

  
	
  ARTICLE 12 —  THE AGENT, ETC.

  	
  79

  
	
  12.1

  	
  Appointment and Authorization

  	
  79

  
	
  12.2

  	
  Delegation of Duties

  	
  80

  
	
  12.3

  	
  Liability of Agent

  	
  80

  
	
  12.4

  	
  Reliance by Agent

  	
  80

  
	
  12.5

  	
  Notice of Default

  	
  80

  
	
  12.6

  	
  Credit Decision

  	
  81

  
	
  12.7

  	
  Indemnification

  	
  81

  
	
  12.8

  	
  Agent in Individual Capacity

  	
  82

  
	
  12.9

  	
  Successor Agent

  	
  82

  
	
  12.10

  	
  Withholding Tax

  	
  83

  
	
  12.11

  	
  Collateral Matters

  	
  83

  



 


iii

















 


	
  12.12

  	
  Restrictions on Actions by
  Lenders; Sharing of Payments

  	
  84

  
	
  12.13

  	
  Agency for Perfection

  	
  85

  
	
  12.14

  	
  Payments by Agent to Lenders

  	
  85

  
	
  12.15

  	
  Settlement of Revolving Loans

  	
  86

  
	
  12.16

  	
  Letters of Credit; Bank Products;
  Intra Lender Issues

  	
  90

  
	
  12.17

  	
  Concerning the Collateral and the
  Related Loan Documents

  	
  92

  
	
  12.18

  	
  Field Audit and Examination
  Reports; Disclaimer by Lenders

  	
  92

  
	
  12.19

  	
  Relation Among Lenders

  	
  93

  
	
  12.20

  	
  Arranger and Other Agent

  	
  93

  
	
  ARTICLE 13 —  GUARANTEES

  	
  93

  
	
  13.1

  	
  The Guarantees

  	
  93

  
	
  13.2

  	
  Guarantee Absolute

  	
  94

  
	
  13.3

  	
  Consents, Waivers and Renewals

  	
  94

  
	
  13.4

  	
  Subrogation

  	
  95

  
	
  13.5

  	
  Protection Clause

  	
  95

  
	
  13.6

  	
  Limitation on Guarantee of
  Obligations

  	
  95

  
	
  13.7

  	
  Guarantee of Payment

  	
  96

  
	
  ARTICLE 14 —  MISCELLANEOUS

  	
  96

  
	
  14.1

  	
  No Waivers; Cumulative Remedies

  	
  96

  
	
  14.2

  	
  Severability

  	
  97

  
	
  14.3

  	
  Governing Law; Choice of Forum;
  Service of Process

  	
  97

  
	
  14.4

  	
  WAIVER OF JURY TRIAL

  	
  98

  
	
  14.5

  	
  Survival of Representations and
  Warranties

  	
  98

  
	
  14.6

  	
  Other Security and Guarantees

  	
  98

  
	
  14.7

  	
  Fees and Expenses

  	
  99

  
	
  14.8

  	
  Judgment Interest Act

  	
  100

  
	
  14.9

  	
  Notices

  	
  100

  
	
  14.10

  	
  Waiver of Notices

  	
  101

  
	
  14.11

  	
  Binding Effect

  	
  101

  
	
  14.12

  	
  Indemnity of the Agent and the
  Secured Parties by the Loan Parties

  	
  101

  
	
  14.13

  	
  Limitation of Liability

  	
  102

  
	
  14.14

  	
  Final Agreement

  	
  102

  
	
  14.15

  	
  Counterparts

  	
  102

  
	
  14.16

  	
  Captions

  	
  103

  
	
  14.17

  	
  Right of Setoff

  	
  103

  
	
  14.18

  	
  Confidentiality

  	
  103

  
	
  14.19

  	
  Conflicts with Other Loan
  Documents

  	
  104

  
	
  14.20

  	
  Judgment Currency

  	
  104

  
	
  14.21

  	
  Appointment of Loan Party
  Representative; Reliance Upon Authority

  	
  105

  
	
  14.22

  	
  Patriot Act Notice

  	
  105

  
	
  14.23

  	
  Intercreditor Agreement

  	
  105

  
	
  14.24

  	
  Accounting Changes

  	
  106

  
	
  14.25

  	
  Effect of Certain Errors or
  Omissions

  	
  106

  
	
  14.26

  	
  Business Corporations Act
  (Alberta)

  	
  106

  



 


iv

















 


ANNEXES, EXHIBITS AND SCHEDULES


 


	
  ANNEX A

  	
   

  	
  DEFINED TERMS

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
   

  	
  FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

  
	
  EXHIBIT B

  	
   

  	
  FORM OF BORROWING BASE CERTIFICATE

  
	
  EXHIBIT C

  	
   

  	
  FINANCIAL STATEMENTS

  
	
  EXHIBIT D

  	
   

  	
  FORM OF NOTICE OF BORROWING

  
	
  EXHIBIT E

  	
   

  	
  FORM OF NOTICE OF CONTINUATION / CONVERSION

  
	
  EXHIBIT F

  	
   

  	
  FORM OF DESIGNATION OF DESIGNATED ACCOUNT

  
	
  EXHIBIT G

  	
   

  	
  FORM OF RESPONSIBLE OFFICERS’ CERTIFICATE

  
	
  EXHIBIT H

  	
   

  	
  FORM OF GUARANTOR ADHESION AGREEMENT

  
	
  EXHIBIT I

  	
   

  	
  FORM OF LETTER OF CREDIT

  
	
  SCHEDULE 1.2

  	
   

  	
  LENDERS’ COMMITMENTS

  
	
  SCHEDULE 6.3

  	
   

  	
  ORGANIZATION AND QUALIFICATIONS

  
	
  SCHEDULE 6.4

  	
   

  	
  CORPORATE NAMES; PRIOR TRANSACTIONS

  
	
  SCHEDULE 6.5

  	
   

  	
  SUBSIDIARIES AND AFFILIATES

  
	
  SCHEDULE 6.7

  	
   

  	
  CAPITALIZATION

  
	
  SCHEDULE 6.9

  	
   

  	
  REAL ESTATE; LEASES; LOCATIONS; CHIEF EXECUTIVE
  OFFICE

  
	
  SCHEDULE 6.10

  	
   

  	
  BROKER’S FEES

  
	
  SCHEDULE 6.11

  	
   

  	
  GOVERNMENTAL AUTHORIZATION

  
	
  SCHEDULE 6.12

  	
   

  	
  PROPRIETARY RIGHTS

  
	
  SCHEDULE 6.13

  	
   

  	
  BANK ACCOUNTS

  
	
  SCHEDULE 6.14

  	
   

  	
  LITIGATION

  
	
  SCHEDULE 6.15

  	
   

  	
  LABOUR DISPUTES

  
	
  SCHEDULE 6.16

  	
   

  	
  ENVIRONMENTAL MATTERS

  
	
  SCHEDULE 6.19

  	
   

  	
  PENSION COMPLIANCE

  
	
  SCHEDULE 6.20

  	
   

  	
  TAXES

  
	
  SCHEDULE 6.25

  	
   

  	
  MATERIAL AGREEMENTS

  
	
  SCHEDULE 7.11

  	
   

  	
  PERMITTED SALES

  
	
  SCHEDULE 7.15

  	
   

  	
  DEBT AND LIENS

  
	
  SCHEDULE 7.17

  	
   

  	
  TRANSACTIONS WITH AFFILIATES

  
	
  SCHEDULE A

  	
   

  	
  INTERCREDITOR AGREEMENT

  
	
  SCHEDULE B

  	
   

  	
  INELIGIBLE RENTS

  



 














 


CREDIT
AGREEMENT


 


This Credit Agreement, dated as of December 12,
2008 (this “Agreement”), among the financial institutions from time to time
parties hereto (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a “Lender”
and collectively as the “Lenders”), Royal Bank of Canada, as administrative
agent and collateral agent for the Lenders (in its capacity as administrative
agent and collateral agent, together with any successor administrative agent or
collateral agent, (the “Agent”)), Royal Bank of Canada, as syndication agent
(in such capacity, the “Syndication Agent”), Royal Bank of Canada and UBS
Securities LLC as lead arrangers (in such capacities, the “Arrangers”), UBS
Securities LLC, as documentation agent (in such capacity, the “Documentation
Agent”), Gibson Acquisition ULC, an unlimited liability company incorporated
under the laws of the Province of Alberta, as the borrower (the “Borrower”),
and the Subsidiaries of the Borrower identified on the title page and
signature pages hereto as guarantors (the “Guarantors”) and each
Subsidiary of the Borrower that pursuant to the provisions hereof becomes a
Guarantor hereunder after the Closing Date.


 


W I T N E S S E T H:


 


WHEREAS Borrower desires
to purchase all of the issued and outstanding shares of Gibson Energy Holdings
Inc. (“Target”) pursuant to the Acquisition Agreement and the Transaction (as
such terms are hereinafter defined);


 


AND WHEREAS within 30 days
following the completion of the Transaction, the Target and Gibson Energy Ltd.
(a Guarantor hereunder) will amalgamate and the Borrower proposes to amalgamate
with the continuing entity resulting therefrom pursuant to the Permitted
Reorganization (as hereinafter defined) to form an amalgamated corporation
continuing as Gibson Energy ULC (the “Amalgamated Borrower”);


 


AND WHEREAS the Borrower has
requested that the Lenders provide to the Borrower a revolving credit facility
available by way of loans and letters of credit in an amount not exceeding
U.S.$65,000,000 as of the date hereof to fund the ongoing working capital and
other requirements of the Borrower (together with permitted uses);


 


AND WHEREAS, capitalized
terms used in this Agreement and not otherwise defined herein shall have the
meanings ascribed thereto in Annex A which is attached hereto and incorporated
herein; the rules of construction contained therein shall govern the
interpretation of this Agreement, and all Annexes, Exhibits and Schedules
attached hereto are incorporated herein by reference;


 


NOW, THEREFORE, in
consideration of the mutual conditions and agreements set forth in this
Agreement, and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows.


 

















 


ARTICLE 1 — LOANS AND LETTERS OF CREDIT


 


1.1                               Total
Facility.


 


Subject to all of the terms and conditions of this
Agreement, the Lenders agree to make available a total credit facility of up to
U.S.$65,000,000 (or the Equivalent Amount thereof in CDN Dollars) to the
Borrower from time to time during the term of this Agreement, as such amount
may be increased pursuant to Section 1.5 (the “Total Facility”).  The Total Facility shall be composed of a
revolving line of credit consisting of Revolving Loans and Letters of Credit.


 


1.2                               Revolving
Loans.


 


(a)                                  Amounts.  Subject to the satisfaction of the conditions
precedent set forth in Article 8, each Lender severally, but not jointly,
agrees, upon the Borrower’s request from time to time on any Business Day
during the period from the Initial Funding Date to the Termination Date, to
make revolving loans in Dollars and in U.S. Dollars (the “Revolving Loans”) to
the Borrower in amounts not to exceed such Lender’s Pro Rata Share of
Availability.  If any Borrowing by the
Borrower would exceed Availability, the Lenders may refuse to make or may
otherwise restrict the making of Revolving Loans as the Lenders determine until
such excess has been eliminated, subject to the Agent’s authority, in its sole
discretion, to make Agent Advances pursuant to the terms of Section 1.2(j).


 


(b)                                 Procedure
for Borrowing.


 


(i)                                     Each
Borrowing by the Borrower shall be made upon the Borrower’s irrevocable written
notice delivered to the Agent in the form of a notice of borrowing (“Notice of
Borrowing”) in the form of Exhibit D attached hereto and made a part
hereof, which must be received by the Agent prior to (i) 2:00 p.m.
(Toronto time) two (2) Business Days prior to the requested Funding Date
(or such shorter notice time of which the Agent has notified the Borrower), in
the case of BA Equivalent Revolving Loans, (ii) (x) 1:00 p.m.
(Toronto time) one (1) Business Day prior to the requested Funding Date,
or (y) 11:00 a.m. (Toronto time) on the requested Funding Date if the
request for all Borrowings on such date is in an aggregate amount of less than
$10,000,000, in the case of Prime Rate Revolving Loans, (iii) 2:00 p.m.
(Toronto time) three (3) Business Days prior to the requested Funding Date
(or such shorter notice time of which the Agent has notified the Borrower), in
the case of LIBOR Revolving Loans and (iv) (x) 1:00 p.m.
(Toronto time) one (1) Business Day prior to the requested Funding Date,
or (y) 11:00 a.m. (Toronto time) on the requested Funding Date if the
request for all Borrowings on such date is in an aggregate amount of less than
$10,000,000, in the case of ABR Revolving Loans, specifying:


 


(A)                              the
amount of the Borrowing, which (i) in the case of either a BA Equivalent
Revolving Loan or a Prime Rate Revolving Loans, each must equal or exceed
$1,000,000 and increments of $100,000 in excess of such amount and (ii) in
the case of either a LIBOR 


 


2

















 


Revolving Loan or
an ABR Revolving Loan, each must equal or exceed U.S.$1,000,000 (and increments
of U.S.$100,000 in excess of such amount);


 


(B)                                the
requested Funding Date, which must be a Business Day;


 


(C)                                whether
the Revolving Loans requested are to be Prime Rate Revolving Loans, BA
Equivalent Revolving Loans, LIBOR Revolving Loans or ABR Revolving Loans (and
if not specified, it shall be deemed a request for a Prime Rate Revolving
Loan); and


 


(D)                               (i) the
duration of the BA Equivalent Interest Period for BA Equivalent Revolving Loans
(and if not specified, it shall be deemed a request for a BA Equivalent
Interest Period of one month) and (ii) the duration of the LIBOR Interest
Period for LIBOR Revolving Loans (and if not specified, it shall be deemed a
request for a LIBOR Interest Period of one month);


 


(ii)                                  After
giving effect to any Borrowing, there may not be more than ten (10) different
BA Equivalent Interest Periods in effect.


 


(iii)                               After
giving effect to any Borrowing, there may not be more than ten (10) different
LIBOR Interest Periods in effect.


 


(iv)                              The
Borrower may give the Agent telephonic or electronic notice of such request for
advances to the applicable Designated Account on or before the deadline set
forth above, such notice shall be confirmed in writing on the same day by
delivery to Agent of a Notice of Borrowing confirming same The Agent at all
times shall be entitled to rely on telephonic or electronic notice in making
such Revolving Loans, regardless of whether any written confirmation is
received.


 


(v)                                 Without
the consent of the Required Lenders, the Borrower shall have no right to
request a BA Equivalent Revolving Loan or a LIBOR Revolving Loan while a
Default or Event of Default has occurred and is continuing.


 


(c)                                  Reliance
upon Authority. 
Prior to the Closing Date, the Borrower shall deliver to the Agent a
notice setting forth two (2) accounts of the Borrower (each a “Designated
Account”) to which the Agent is authorized to transfer the proceeds of the
Revolving Loans requested hereunder by the Borrower (one Designated Account to
be for transfers of proceeds of BA Equivalent Revolving Loans and Prime Rate
Revolving Loans and the other Designated Account to be for transfers of
proceeds of LIBOR Revolving Loans and ABR Revolving Loans).  The Borrower may designate a replacement
account for either Designated Account from time to time by written notice to
the Agent in the form set out in Exhibit F duly executed by an officer of
the Borrower.  Each Designated Account
must be reasonably satisfactory to the Agent. 
The Agent is entitled to rely conclusively on any person’s request for
Revolving Loans on behalf of the Borrower, so long as the proceeds thereof are
to be transferred to a Designated Account. 
The Agent 


 


3

















 


has no duty to
verify the identity of any individual representing himself or herself as a
person authorized by the Borrower to make such requests on its behalf.


 


(d)                                 No
Liability.  The Agent
shall not incur any liability to the Borrower as a result of acting upon any
notice referred to in Sections 1.2(b) and 1.2(c) which the Agent
believes in good faith to have been given by an officer or other person duly
authorized by the Borrower to request Revolving Loans on its behalf.  The crediting of Revolving Loans to a
Designated Account conclusively establishes, absent manifest error (which must
be communicated to Agent within ninety (90) days of such crediting), the
obligation of the Borrower to repay such Revolving Loans as provided herein.


 


(e)                                  Notice
Irrevocable.  Any
Notice of Borrowing (or telephonic or electronic notice in lieu thereof) made
pursuant to Section 1.2(b) shall be irrevocable.  The Borrower shall be bound to borrow the
funds requested therein in accordance therewith.


 


(f)                                    Intentionally Deleted


 


(g)                                 Making
of Revolving Loans.  Promptly after receipt of a Notice of
Borrowing or telephonic or electronic notice in lieu thereof, the Agent shall
notify the Lenders by telecopy, telephone or e-mail of the requested Borrowing.
Each Lender shall transfer its Pro Rata Share of the requested Borrowing to the
Agent in immediately available funds (in Cdn. Dollars if the requested
Borrowing is a Prime Rate Revolving Loan or a BA Equivalent Revolving Loan and
in U.S. Dollars if the requested Borrowing is an ABR Revolving Loan or a LIBOR
Revolving Loan), to the account from time to time designated by the Agent, not
later than 1:00 p.m. (Toronto time) on the applicable Funding Date.  The Agent shall make the proceeds of such
Revolving Loans received by it available to the Borrower on the applicable
Funding Date by transferring same day funds to the Designated Account
designated by the Borrower; provided, however, that the amount of Revolving
Loans so made on any date to the Borrower shall not exceed Availability on such
date.


 


(h)                                 Bank
Product Loans. 
Notwithstanding anything to the contrary herein, to the extent that, on
any Oil Settlement Date or, in the BP Provider’s discretion, on any other date,
a positive net Bank Product amount is outstanding (including after the netting
by the BP Provider of any cash in any bank accounts of the applicable Loan
Party maintained at the BP Provider in respect of the Bank Products described
in clause (d) of the definition thereof), a Notice of Borrowing shall be
deemed to have been made by the Borrower for a Borrowing of a Prime Rate
Revolving Loan in the amount of such net Bank Product shortfall (or the maximum
amount permitted for a Borrowing at such time), and to the extent such maximum
amount is exceeded, additional Borrowing Notices in the amount of such excess
shall be deemed to have been made on each succeeding Business Day until such
Bank Product amount is repaid with Revolving Loans.  Revolving Loans shall be advanced in
accordance with the terms hereof to repay net Bank Products amount, except that
when made, the amount of the Revolving Loan shall 


 


4

















 


be treated for
the purposes of interest payments hereunder as outstanding by Royal Bank on the
Oil Settlement Date, and, as between the Lenders, by all Lenders from the date
settled in accordance with the terms hereof. 
In no event shall any Lender be required to extend Revolving Loans or
any other advances pursuant to this Section 1.2(h) unless such Lender
would be required to fund Revolving Loans or other advances pursuant to Section 1.2(a).


 


(i)                                     Intentionally Deleted


 


(j)                                     Agent
Advances.


 


(i)                                     Subject
to the limitations set forth below and provided same are not to be utilized to
repay Bank Products, the Agent is authorized by the Borrower and the Lenders,
from time to time in the Agent’s sole discretion, while an Event of Default has
occurred and is continuing, to make Prime Rate Revolving Loans to the Borrower
on behalf of the Lenders in an aggregate amount outstanding at any time not to
exceed U.S.$5,000,000 (or the Equivalent Amount thereof in CDN Dollars), less
the aggregate amount outstanding at such time of Overdraft Accommodations, but
not in excess of the Maximum Revolver Amount, which the Agent, in its
reasonable business judgment, deems necessary (1) to maintain, preserve or
protect the Collateral, or any portion thereof, or the Lenders’ rights under
any of the Loan Documents, or (2) to enhance the likelihood of, or
maximize the amount of, repayment of the Revolving Loans and other Obligations,
or (3) to pay any other amount then due and owing from and/or chargeable
to the Borrower pursuant to the terms of this Agreement, including costs, fees
and expenses as described in Section 14.7 (any of such advances are herein
referred to as “Agent Advances”); provided, that (A) if there are three
Lenders, any two of them may at any time revoke the authorization of the Agent
to make Agent Advances and (B) if there are four or more Lenders, the
Required Lenders may at any time revoke the authorization of the Agent to make
Agent Advances.  Any such revocation must
be in writing and shall become effective prospectively upon the Agent’s receipt
thereof.


 


(ii)                                  The
Agent Advances shall be secured by the Agent’s Liens in and to the Collateral
and shall constitute Prime Rate Revolving Loans and Obligations hereunder.


 


(k)                                  Overdraft
Accommodation.


 


(i)                                     Subject
to the limitations set forth below, Royal Bank is authorized by the Borrower
and all Lenders, from time to time, to make Prime Rate Revolving Loans or ABR
Revolving Loans to the Borrower by permitting overdrafts to be created in
favour of any Loan Parties, in an aggregate amount outstanding at any time not
to exceed the Overdraft Accommodation Maximum Amount, less the aggregate amount
outstanding at such time of Agent Advances, but not in excess of the Maximum
Revolver Amount (any of such advances are herein referred to 


 


5

















 


as “Overdraft
Accommodations”).  If at any time the
Borrower has outstanding any such Overdraft Accommodations, the Royal Bank in
its discretion has the right to require settlement from the Lenders in
accordance with their Pro Rata Shares, in which case Royal Bank shall notify
the Agent and the Borrower of same whereupon the existence of such Overdraft
Accommodations shall be deemed to be a Notice of Borrowing (in the amount of
Overdraft Accommodations outstanding) and the provisions of Section 1.2(g) apply
whether or not any conditions of Borrowing (except that neither the Maximum
Revolver Amount nor any Lender’s Commitment may be exceeded) have been met.


 


(ii)                                  The
Overdraft Accommodations shall be secured by the Agent’s Liens in and to the
Collateral and shall constitute Prime Rate Revolving Loans or ABR Revolving
Loans, as applicable, and Obligations hereunder.


 


1.3                               Letters
of Credit.


 


(a)                                  Agreement
to Issue; Intra-Lender Provisions; Power of Attorney; etc.  Subject to the terms and conditions of this
Agreement, the Agent agrees to issue on behalf of the Lenders (each as to its
Pro Rata Share) for the account of the Borrower, by way of direct application
to Agent by Borrower (the “LC Accommodation”), one or more standby letters of
credit issued by the Lenders (each as to its Pro Rata Share) (each of the
foregoing, a “Letter of Credit”) from time to time during the term of this
Agreement.


 


(b)                                 Letter
of Credit Provisions.


 


(i)                                     Each
Letter of Credit shall be issued by all Lenders as a single multi-Lender letter
of credit, but the obligation of each Lender thereunder shall be several, and
not joint, based upon its Pro Rata Share in effect on the date of issuance of
such Letter of Credit.  Each Letter of
Credit shall be substantially in the form attached as Exhibit I.  Without the prior written consent of each
Lender, no Letter of Credit shall be issued which varies the several and not
joint nature of the liability of each Lender thereunder.


 


(ii)                                  Each
Letter of Credit shall be executed and delivered by the Agent in the name and
on behalf of, and as attorney-in-fact for, each Lender. The Agent shall act
under each Letter of Credit as the agent of each Lender to:


 


(A)                              receive
drafts, demands and other documents presented by the beneficiary under such
Letter of Credit;


 


(B)                                determine
whether such drafts, demands and other documents are in compliance with the
terms and conditions of such Letter of Credit; and


 


(C)                                notify
such Lender and the Borrower that a valid drawing has been made and the date
that the related payment under such Letter of Credit is to be made; provided
that the Agent (in such capacity) 


 


6

















 


shall have no
obligation or liability for any payment to be made under any Letter of Credit,
and each Letter of Credit shall expressly so provide.


 


Each Lender hereby irrevocably appoints and
designates the Agent as its attorney-in-fact, acting through any duly
authorized officer of the Agent, to execute and deliver in the name and on
behalf of such Lender each Letter of Credit to be issued by such Lender
hereunder. Promptly upon the request of the Agent, each Lender will furnish to
the Agent such powers of attorney or other evidence as any beneficiary of any
Letter of Credit may reasonably request in order to demonstrate that the Agent
has the power to act as attorney-in-fact for such Lender to execute and deliver
such Letter of Credit. The Borrower and the Lenders agree that each Letter of
Credit shall provide that all drafts, demands and other documents presented
thereunder shall be delivered to the Agent and that all payments thereunder
shall be made by the Lenders obligated thereon through the Agent. Each Lender
shall be severally liable under each Letter of Credit in proportion to its Pro
Rata Share on the date of issuance of such Letter of Credit and each Letter of
Credit shall specify each Lender’s share of the amount payable thereunder.


 


(iii)                               The
Borrower and each Lender hereby authorize the Agent to review on behalf of each
Lender each draft, demand and other document presented under each Letter of
Credit. The determination of the Agent as to the conformity of any documents
presented under a Letter of Credit to the requirements of such Letter of Credit
shall be conclusive and binding on the Borrower and each Lender. The Agent
shall, within a reasonable time following its receipt thereof, examine all
documents purporting to represent a demand for payment under any Letter of
Credit. The Agent shall promptly after such examination:


 


(A)                              notify
each of the Lenders obligated under such Letter of Credit and the Borrower by
telephone (confirmed in writing) of such demand for payment and of each Lender’s
share of such payment;


 


(B)                                deliver
to each such Lender a copy of each document purporting to represent a demand
for payment under such Letter of Credit; and


 


(C)                                notify
each Lender and the Borrower whether said demand for payment was properly made
under such Letter of Credit.


 


(iv)                              With
respect to any drawing determined by the Agent to have been properly made under
a Letter of Credit, each Lender will make a payment under such Letter of Credit
in accordance with its liability under such Letter of Credit and this
Agreement, such payment to be made to the Agent. The Agent will make any such
payment available to the beneficiary of such Letter of Credit by promptly
crediting the amounts so received, in like funds, to the account identified by
such beneficiary in connection with such demand for payment. Promptly following
any payment by any Lender in respect of any Letter of Credit, the Agent will
notify the Borrower of such payment; provided that any failure to give or delay
in giving such notice shall not relieve the Borrower of its obligation to 


 


7

















 


reimburse the
Lenders with respect to any such payment. The responsibility of the Agent and
the Lenders in connection with any draft or demand presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft or demand) delivered under such Letter of Credit
in connection with such presentment are in conformity with such Letter of
Credit. The Agent shall not be required to make any payment under a Letter of
Credit in excess of the amount received by it from the Lenders for such
payment.


 


(c)                                  Amounts;
Outside Expiration Date.  The Agent and Lenders shall not have any
obligation to issue any Letter of Credit at any time if (i) the maximum
available amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (ii) the maximum available
amount of the requested Letter of Credit and all commissions, fees, and charges
due from the requesting Borrower in connection with the opening thereof (to the
extent such commissions, fees and charges are not paid in cash prior to or at
the time of the opening thereof) would exceed Availability at such time; or (iii) such
Letter of Credit has an expiration date (inclusive of any acceptance period) on
or after the third Business Day prior to the Stated Termination Date or more
than 12 months from the date of issuance; for the avoidance of doubt, this
provision does not apply to any “evergreen” or automatic renewal provision;
provided, however, no such automatic renewal shall extend beyond the Stated
Termination Date.  With respect to any
Letter of Credit which contains any “evergreen” or automatic renewal provision,
Lenders shall be deemed to have consented to any such extension or renewal
unless any such Lender shall have provided to the Agent written notice that it
declines to consent to any such extension or renewal at least thirty (30) days
prior to the date on which the Agent on behalf of the Lenders (each as to its
Pro Rata Share) is entitled to decline to extend or renew such Letter of
Credit.  If all of the requirements of
this Section 1.3 are met and no Default or Event of Default has occurred
and is continuing, no applicable Lender shall decline to consent to any such
extension or renewal.


 


(d)                                 Other
Conditions.  In
addition to conditions precedent contained in Article 8, the obligation of
the Agent on behalf of the Lenders (each as to its Pro Rata Share) to issue any
Letter of Credit is subject to the following conditions precedent having been
satisfied in a manner reasonably satisfactory to the Agent:


 


(i)                                     The
Borrower shall have delivered to the Agent, at such times and in such manner as
the Agent may prescribe, an application in form and substance reasonably
satisfactory to the Agent for the issuance of the Letter of Credit and such
other documents as may be reasonably required pursuant to the terms thereof in
connection with such issuance, and the form and terms of the proposed Letter of
Credit (to the extent not otherwise set forth or permitted herein) shall be
reasonably satisfactory to the Agent; and


 


(ii)                                  As
of the date of issuance, no order of any court, arbitrator or Governmental
Authority shall purport by its terms to enjoin or restrain


 


8














 


money center
banks generally from issuing letters of credit of the type and in the amount of
the proposed Letter of Credit, and no law, rule or regulation applicable
to money center banks generally and no request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
money center banks generally shall prohibit, or request that the Lenders
refrain from, the issuance of letters of credit generally or the issuance of
such Letters of Credit.


 


(e)                                  Issuance
of Letters of Credit.


 


(i)                                     Request
for Issuance.  When
requesting the issuance of a Letter of Credit pursuant to the LC Accommodation,
the Borrower for whose account the Letter of Credit is to be issued must notify
the Agent of such requested Letter of Credit prior to 1:00 p.m. (Toronto
time) at least two (2) Business Days prior to the proposed issuance date
(or such later date as the Agent may agree). 
Such notice shall be irrevocable and must specify the original face
amount of the Letter of Credit requested, the Business Day of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the Business Day on which the requested Letter of
Credit is to expire, the purpose for which such Letter of Credit is to be
issued, the name of the Loan Party for which such Letter of Credit shall be
issued (if applicable) and the beneficiary of the requested Letter of
Credit.  The Borrower shall attach to
such notice the proposed form of the Letter of Credit.  With respect to each such notice for a Letter
of Credit, the Agent is hereby authorized to complete the application with the
amount of the several liability of each Lender under the applicable Letter of
Credit. Upon receipt of such notice and application, the Agent shall notify
each Lender of the receipt thereof and shall promptly deliver a copy of the
completed application to the Borrower and each Lender and advise each of them
of each Lender’s Pro Rata Share of the applicable Letter of Credit.


 


(ii)                                  Responsibilities
of the Agent; Issuance.  As of the Business Day immediately preceding
the issuance date of the Letter of Credit, the Agent shall determine the amount
of the applicable Unused Letter of Credit Subfacility and Availability as of
such date.  If (A) the face amount
of the requested Letter of Credit is less than the Unused Letter of Credit
Subfacility, and (B) the amount of such requested Letter of Credit and all
commissions, fees, and charges due from the Borrower in connection with the
opening thereof (to the extent such commissions, fees and charges are not paid
in cash prior to or at the time of the opening thereof) would not exceed
applicable Availability, the Agent shall cause the issuance of the requested
Letter of Credit on the requested issuance date so long as the other conditions
hereof are met.


 


(iii)                               No
Extensions or Amendment.  The Lenders shall not be obligated to extend
or amend any Letter of Credit issued pursuant hereto unless the 


 


9

















 


requirements of
this Section 1.3 are met as though a new Letter of Credit were being
requested and issued.


 


(f)                                    Payments
Pursuant to Letters of Credit.  Borrower agrees to reimburse immediately the
Agent or Lenders for any draw under any Letter of Credit issued under this
Agreement, and to pay the Agent the amount of all other charges and fees
payable to the Agent in connection with such Letter of Credit promptly when
due, irrespective of any claim, setoff, defence or other right which Borrower
may have at any time against the Agent or any other Person.  Borrower hereby irrevocably authorizes the
Agent, to debit the Designated Account or any other bank account (including any
deposit, disbursement or operating account, other than any Receipt Account) of
the Borrower for the purpose of paying all amounts due by the Borrower from
time to time for each drawing under any Letter of Credit, including all charges
and fees pursuant to such issuance or amendment. Furthermore, Borrower hereby
irrevocably authorizes the Agent, at its option, to (i) debit Designated
Account or any other bank account (including any deposit, disbursement or
operating account, other than any Receipt Account) of the Borrower, or (ii) charge
the Loan Account for the purpose of paying all amounts due by the Borrower from
time to time to Lenders and Agent for each drawing under any Letter of Credit,
including all charges and fees pursuant to such issuance or amendment of
Letters of Credit.  Each drawing under
any Letter of Credit shall constitute a request by the Borrower to the Agent
for a Borrowing of a Prime Rate Revolving Loan in the amount of such
drawing.  In each case, the Funding Date
with respect to such Borrowing shall be the date of such drawing.


 


(g)                                 Indemnification;
Exoneration; Power of Attorney.


 


(i)                                     Indemnification.  In addition to amounts payable as elsewhere
provided in this Section 1.3, Borrower agrees to protect, indemnify, pay
and hold harmless the Lenders and the Agent from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys’ fees) which any such indemnified Person may
incur or be subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit for the account of Borrower in connection therewith,
except to the extent they are found by a final decision of a court of competent
jurisdiction to have resulted from such indemnified Person’s gross negligence,
wilful misconduct or material breach of any Loan Document.  The Borrower’s obligations under this Section shall
survive payment of all other Obligations.


 


(ii)                                  Assumption
of Risk by the Borrower.  As among the Borrower, the Lenders and the
Agent, Borrower assumes all risks of the acts and omissions of, or misuse of
any of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit.  In furtherance and not in
limitation of the foregoing, the Lenders and the Agent shall not be responsible
for:  (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any officer or authorized signatory of Borrower in connection with the
application for and issuance of and 


 


10

















 


presentation by a
beneficiary of drafts with respect to any drawing of any of the Letters of
Credit believed in good faith by the Agent to be a valid, sufficient and
correct document, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, believed in good faith by the Agent to be a valid,
sufficient and correct document which may prove to be invalid or ineffective
for any reason; (C) the failure of the beneficiary of any Letter of Credit
to comply strictly with conditions required in order to draw upon such Letter
of Credit; (D) errors, omissions, interruptions, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any Letter of Credit or
of the proceeds thereof; (G) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any
consequences arising from causes beyond the control of the applicable Lenders
or the Agent, including any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto Governmental Authority or (I) the
Agent’s honour of a draw for which the draw or any certificate fails to comply,
in any respect, strictly with the terms of the Letter of Credit.  None of the foregoing shall affect, impair or
prevent the vesting of any rights or powers of the Agent or any Lender under
this Section 1.3(g).


 


(iii)                               Exoneration.  Without limiting the foregoing, no action or
omission whatsoever by the Agent or any Lender shall result in any liability of
the Agent or any Lender to Borrower, or relieve Borrower of any of its
obligations hereunder to any such Person, under or with respect to any Letter
of Credit issued or provided for the account of Borrower, except to the extent
such liability is found by a court of competent jurisdiction to have resulted
from such indemnified Person’s gross negligence, wilful misconduct or material
breach of any Loan Document.


 


(iv)                              Account
Party.  Borrower
hereby authorizes and directs the Agent to name Borrower, or any other Loan
Party designated by the Borrower, as the “Account Party” on each Letter of
Credit and accepts and relies upon the Agent’s instructions and agreements with
respect to all matters arising in connection with such Letter of Credit or the
application therefor.  Notwithstanding
any other term to the contrary,
the Borrower shall, at all times, be the “Applicant” under all Letters of
Credit and be responsible to pay all obligations owing under any Letter of
Credit.


 


(h)                                 Supporting
Letter of Credit; Cash Collateral.  If, notwithstanding the provisions of Section 1.3(c) and
Section 10.1, any Letter of Credit is outstanding upon the termination of
this Agreement, then upon such termination Borrower shall deposit 


 


11

















 


with each Lender,
with respect to each Letter of Credit issued for the account of Borrower then
outstanding, either in cash or standby letters of credit (“Supporting Letters
of Credit”) in form and substance reasonably satisfactory to each Lender,
issued by an issuer reasonably satisfactory to the Agent, in an amount equal to
102% of each Lender’s Pro Rata Share of the greatest amount for which such
Letter of Credit may be drawn plus any fees and expenses associated with such
Letter of Credit, under which Supporting Letters of Credit such Lender and
Agent is entitled to draw amounts necessary to reimburse the Agent and the applicable
Lenders for payments to be made by the Agent and such Lenders under such Letter
of Credit and any fees and expenses associated with such Letter of Credit.  Such Supporting Letters of Credit shall be
held by each Lender and Agent, as security for, and to provide for the payment
of, the aggregate undrawn amount of such Letters of Credit remaining
outstanding.


 


(i)                                     Paramountcy.  In the event that any provisions of any
Letter of Credit application or ancillary document under such applications
contradict, are inconsistent with and are otherwise incapable of being
construed in conjunction with the provisions of this Agreement, the provisions
of this Agreement, as applicable, shall take precedence over those contained in
such application and ancillary documentation.


 


1.4                               Bank
Products and Hedge Agreements.


 


Borrower may request and the Agent may, in its sole
and absolute discretion, arrange for Borrower to obtain Bank Products,
including Overadvances, from the BP Provider (for as long as Agent is the BP Provider,
and at all times when the BP Provider is not the Agent, such successor Agent)
(the “BP Provider”) or the BP Provider’s Affiliates and/or to obtain Hedge
Agreements from Lenders or their Affiliates although the Borrower is not
required to do so.  If Bank Products are
provided by the BP Provider or an Affiliate of the BP Provider and/or Hedge
Agreements are provided by Lenders or their Affiliates to Borrower, Borrower
agrees to indemnify and hold the Agent, the BP Provider and the other Lenders
harmless from any and all costs and obligations now or hereafter incurred by
the Agent, the BP Provider or any other Lender which arise from any indemnity
given by the Agent, the BP Provider or such other Lender, as the case may be,
to its Affiliates related to such Bank Products; provided, however, (i) the
foregoing indemnity shall not extend to any costs or obligations with respect
to a Bank Product or Hedge Agreement provided by an Affiliate of the BP
Provider or an Affiliate of such Lender for which Borrower would not be liable
(without giving effect to the benefit of any setoff, defence or counterclaim
available to Borrower) and (ii) nothing contained herein is intended to
limit Borrower’s rights, with respect to the BP Provider, Lenders or their
Affiliates or their respective Affiliates, if any, which arise as a result of
the execution of documents by and between Borrower and the BP Provider, Lenders
or their Affiliates, as applicable, which relate to Bank Products.  The agreements contained in this Section shall
survive termination of this Agreement as to Bank Products and other Hedge
Agreements by Lenders outstanding on the date of such termination; provided,
however, that it is the intention of the BP Provider and the Lenders that
unless otherwise agreed by the Agent in its sole discretion, no Bank Product or
other Hedge Agreements may have a term that exceeds the Stated Termination
Date.  Borrower acknowledges and agrees
that the obtaining of Bank Products from the BP Provider, or any of its
Affiliates, or Hedge Agreements from the Lenders, or any of their respective
Affiliates (a) is in the sole and absolute discretion of the BP Provider,
the Lenders or the applicable Affiliate of the BP Provider 


 


12

















 


or the Lenders, as the case may be, and (b) is
subject to all rules and regulations of the BP Provider, the Lenders or
the applicable Affiliate of the BP Provider or the Lenders, as the case may be.


 


1.5                               Request
for Increase of Revolving Credit Commitments.


 


The Agent and the Lenders agree that Borrower may,
on any single Business Day after the Closing Date and so long as (i) no
Default or Event of Default has occurred and is continuing, and (ii) Borrower
is in compliance with the Fixed Charge Coverage Ratio testing parameters in Section 7.26,
on a pro forma basis after giving effect to the following increase (and after
giving effect to any Permitted Acquisition consummated simultaneously
therewith) deliver a written notice to Agent and each Lender (an “Increase Notice”)
requesting an increase in the Maximum Revolver Amount, in an aggregate amount
of up to U.S.$135,000,000 (the “Requested Increase”).  If Borrower delivers an Increase Notice, the
Required Lenders in their discretion may agree to the request within thirty
(30) days of receipt thereof; provided that the approval of the Required
Lenders shall not be necessary in the instance where the Requested Increase
seeks to increase the aggregate Revolving Credit Commitments to an amount equal
to or less than U.S.$100,000,000.  If the
Required Lenders do not agree within such thirty (30) day period, the Requested
Increase shall be deemed rejected.  If
the Required Lenders agree to the Requested Increase within such thirty (30)
day period, each Lender shall have the option to participate in the Requested
Increase to the extent of its Pro Rata Share thereof by delivering a written
notice to the Agent within ten (10) Business Days of such Lender’s receipt
of the Increase Notice (it being agreed and understood that such Lender shall
be deemed to have elected not to participate in the Requested Increase if it
does not respond to the Increase Notice within ten (10) Business Days of
its receipt thereof).  If one or more of
the Lenders elect not to participate in the Requested Increase, then the
Lenders participating in the Requested Increase may, at their option, elect to
participate in such remaining portion of the Requested Increase (with such
remaining portion to be allocated ratably among such participating Lenders based
on their respective Pro Rata Share or as otherwise may be agreed by such
participating Lenders).  If there is less
than full participation by existing Lenders in the Requested Increase after the
foregoing procedures are completed, then one or more new Lenders reasonably
acceptable to the Agent may be added as parties to this Agreement for purposes
of participating in such remaining portion; provided, however, that any such “right
of first refusal” in favour of the Lenders hereunder shall not be excercisable
if such Requested Increase is to accommodate the addition of new Lenders to the
syndicate of Lenders hereunder.  After
giving effect to the procedures described in this Section 1.5, each Lender
participating in the Requested Increase shall have its Revolving Credit
Commitment, increased to the extent of its participation.  Borrower agrees to execute such amendments
and supplements to the Security Documents as the Agent reasonably deems
necessary in connection with a Requested Increase.  No increase in the Maximum Revolver Amount
shall be permitted unless (a) the Increase Notice is given; and (b) the
amount of the Requested Increase is at least U.S.$15,000,000.  Notwithstanding the foregoing, the Requested
Increase shall be calculated without giving effect to any replacement
Commitments obtained hereunder as a replacement for any non-Pro Rata Share
Commitment reductions pursuant to Section 11.3 or Section 12.15(e);
provided that the restrictions in the proviso of the definition of “Maximum
Revolver Amount” shall continue to apply. 
Except with regard to (i) any obligations, fees and all other
amounts and indemnities owing to, and provisions in favour of, the Agent in its
capacity as Agent hereunder and (ii) any obligations, fees and all other
amounts and indemnities owing to, and provisions in favour of, Royal Bank in
connection with 


 


13

















 


its provision of Overdraft Accommodations and Bank
Products (as BP Provider), no Loan Party shall pay any fee to a lender for becoming
a lender pursuant to this Section 1.5 hereunder which is more favourable
to such lender than the fee paid to the existing Lenders under this Agreement
or any Loan Document (except Hedge Agreements).


 


ARTICLE 2 — INTEREST AND FEES


 


2.1                               Interest.


 


(a)                                  Interest
Rates.  All
outstanding Obligations of the Borrower (other than Obligations with respect to
Bank Products, which shall be governed by the documents relating thereto) shall
bear interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made or
incurred until paid in full in cash at a rate determined by reference to the
Prime Rate, the BA Rate, the ABR or the LIBOR Rate plus the Applicable Margins
as set forth in Annex A to this Agreement, but not to exceed the Maximum
Rate.  If at any time Revolving Loans are
outstanding with respect to which the Borrower has not delivered to the Agent a
notice specifying the basis for determining the interest rate applicable thereto
in accordance herewith, those Revolving Loans shall bear interest at a rate
determined by reference to the Prime Rate if such Revolving Loans are
denominated in Dollars and by reference to the ABR if such Revolving Loans are
denominated in U.S. Dollars, in each instance, until notice to the contrary has
been given to the Agent in accordance with this Agreement and such notice has
become effective.  Except as otherwise
provided herein, the outstanding Obligations (other than Obligations with
respect to Bank Products, which shall be governed by the documents relating
thereto) shall bear interest as follows:


 


(i)                                     For
all Prime Rate Revolving Loans and other Obligations of the Borrower (other
than LIBOR Revolving Loans, BA Equivalent Revolving Loans and ABR Revolving
Loans) at a fluctuating per annum rate equal to the Prime Rate plus the
Applicable Margin;


 


(ii)                                  For
all ABR Revolving Loans at a fluctuating per annum rate equal to the ABR plus
the Applicable Margin;


 


(iii)                               For
all LIBOR Revolving Loans at a per annum rate equal to the LIBOR Rate plus the
Applicable Margin; and


 


(iv)                              For
all BA Equivalent Revolving Loans at a per annum rate equal to the BA Rate plus
the Applicable Margin.


 


Each change in the Prime Rate shall be reflected in
the interest rate applicable to Prime Rate Revolving Loans and other
Obligations bearing interest based on the Prime Rate as of the effective date
of such change and each change in the ABR shall be reflected in the interest
rate applicable to ABR Revolving Loans as of the effective date of such
change.  All interest charges on Prime
Rate Loans, ABR Revolving Loans and BA Equivalent Loans shall be computed on
the basis of a year of 365 or 366 days, as applicable, and actual days elapsed.  All other interest charges shall be computed
on the basis of a year of 360 days and actual days elapsed.  Borrower 


 


14

















 


shall pay to the Agent, for the ratable benefit of
the Lenders, (i) interest on all LIBOR Revolving Loans made to Borrower in
arrears on the first day of each month and on each LIBOR Interest Payment Date,
(ii) interest on all BA Equivalent Revolving Loans made to the Borrower in
arrears on the first day of each month and on each BA Equivalent Interest
Payment Date, and (iii) interest on all Prime Rate Revolving Loans and all
ABR Revolving Loans made to the Borrower in arrears on the first day of each
month and on the Termination Date.


 


(b)                                 Default
Rate.  If any
Event of Default listed in Subsections 9.1(a), 9.1(c)(i) (as regards a
default in connection with Section 7.26), 9.1(e), 9.1(f), 9.1(g), 9.1(h) or
9.1(i) occurs and is continuing and the Agent or the Required Lenders in
their discretion so elect, then, while any such Event of Default is continuing,
and, after notification of the Borrower, all of the outstanding Revolving Loans
and Letters of Credit shall bear interest at the Default Rate applicable
thereto; provided that no amount paid by Borrower pursuant to this Section 2.1(b) shall
be made available by Agent to a Defaulting Lender so long as such Lender shall
be a Defaulting Lender; provided that if such Defaulting Lender is a Defaulting
Lender at the time it is removed or replaced pursuant to the terms of Section 11.3
and/or Section 12.15(e), any such amount previously paid to the Agent, at
the time such lender is a Defaulting Lender, but not made available to such
Defaulting Lender shall promptly be returned to the Borrower.


 


2.2                               Continuation
and Conversion Elections.


 


(a)                                  Revolving
Loans.


 


(i)                                     The
Borrower may:


 


(A)                              elect,
as of any Business Day, in the case of Prime Rate Revolving Loans made to the
Borrower to convert any such Prime Rate Revolving Loans (or any part thereof in
an amount not less than $1,000,000 or that is in an integral multiple of
$100,000 in excess thereof) into BA Equivalent Revolving Loans;


 


(B)                                elect,
as of the last day of the applicable BA Equivalent Interest Period, to continue
any BA Equivalent Revolving Loans made to the Borrower having BA Equivalent
Interest Periods expiring on such day (or any part thereof in an amount not
less than $1,000,000 or that is in an integral multiple of $100,000 in excess
thereof );


 


(C)                                elect,
as of any Business Day, in the case of ABR Revolving Loans made to the Borrower
to convert any such ABR Revolving Loans (or any part thereof in an amount not
less than U.S.$1,000,000 or that is in an integral multiple of U.S.$100,000 in
excess thereof) into LIBOR Revolving Loans; or


 


(D)                               elect,
as of the last day of the applicable LIBOR Interest Period, to continue any
LIBOR Revolving Loans made to the Borrower having LIBOR Interest Periods
expiring on such day (or any part 


 


15

















 


thereof in an
amount not less than U.S.$1,000,000 or that is in an integral multiple of
U.S.$100,000 in excess thereof);


 


provided, that if at any time the aggregate amount
of BA Equivalent Revolving Loans or LIBOR Revolving Loans in respect of any
Borrowing made to the Borrower is reduced, by payment or prepayment of part
thereof, to be less than Cdn. or U.S., as applicable, $1,000,000, such BA
Equivalent Revolving Loans shall automatically convert into Prime Rate
Revolving Loans and such LIBOR Revolving Loans shall automatically convert into
ABR Revolving Loans; provided further that if the notice shall fail to specify
the duration of the BA Equivalent Interest Period or the LIBOR Interest Period,
such BA Equivalent Interest Period or LIBOR Interest Period shall be one month.


 


(ii)                                  The
Borrower shall deliver a notice of continuation/conversion (“Notice of Continuation/Conversion”)
in the form of Exhibit E attached hereto and made a part hereof to the Agent
not later than 2:00 p.m. (Toronto time) at least two (2) Business Days in
advance of the Continuation/Conversion Date (or such shorter notice time of
which the Agent has notified the Borrower), if the Revolving Loans of the
Borrower are to be converted into or continued as BA Equivalent Revolving
Loans, and at least three (3) Business Days in advance of the
Continuation/Conversion Date (or such shorter notice time of which the Agent
has notified the Borrower), if the Revolving Loans of the Borrower are to be
converted into or continued as LIBOR Revolving Loans, and specifying:


 


(A)                              the
proposed Continuation/Conversion Date;


 


(B)                                the
aggregate amount and type of Revolving Loans of the Borrower to be converted or
renewed;


 


(C)                                the
type of Revolving Loans resulting from the proposed conversion or continuation;
and


 


(D)                               the
duration of the requested BA Equivalent Interest Period or LIBOR Interest
Period, provided, however, the Borrower may not select a BA Equivalent Interest
Period or LIBOR Interest Period that ends after the Stated Termination Date.


 


(iii)                               If
upon the expiration of any BA Equivalent Interest Period applicable to a BA
Equivalent Revolving Loan of the Borrower, the Borrower has failed to select
timely a new BA Equivalent Interest Period to be applicable to such BA
Equivalent Revolving Loan or if any Default or Event of Default then exists and
is continuing, the Borrower shall be deemed to have elected to convert such BA
Equivalent Revolving Loan into a Prime Rate Revolving Loan effective as of the
expiration date of such BA Equivalent Interest Period.


 


(iv)                              If
upon the expiration of any LIBOR Interest Period applicable to a LIBOR
Revolving Loan of the Borrower, the Borrower has failed to select timely a new
LIBOR Interest Period to be applicable to such LIBOR 


 


16

















 


Revolving Loan or
if any Default or Event of Default then exists and is continuing, the Borrower
shall be deemed to have elected to convert such LIBOR Revolving Loan into an
ABR Revolving Loan effective as of the expiration date of such LIBOR Interest
Period.


 


(v)                                 The
Agent will promptly notify each Lender of its receipt of a Notice of Continuation/Conversion.  All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Revolving Loans with respect to which the notice was given held by each Lender.


 


(vi)                              There
may not be more than ten (10) different BA Equivalent Interest Periods in
effect hereunder at any time.


 


(vii)                           There
may not be more than ten (10) different LIBOR Interest Periods in effect
hereunder at any time.


 


2.3                               Maximum
Interest Rate.


 


(a)                                  In
no event shall any interest rate provided for hereunder exceed the maximum rate
legally chargeable by any Lender under applicable law for such Lender with
respect to loans of the type provided for hereunder by such Lender (the “Maximum
Rate”).  If, in any month, any interest
rate for any Obligations, absent such limitation, would have exceeded the
Maximum Rate for such Obligations, then the interest rate for such Obligations
for that month shall be the Maximum Rate.


 


(b)                                 If
the Agent or any Lender shall receive interest in an amount that exceeds the
Maximum Rate, the excess interest shall be applied to the principal of the
Revolving Loans or, if it exceeds such unpaid principal, refunded to the
Borrower.  In determining whether the
interest contracted for, charged, or received by the Agent or a Lender exceeds
the Maximum Rate, such Person may, to the extent permitted by applicable law, (i) characterize
any payment that is not principal as an expense, fee, or premium rather than
interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder.


 


2.4                               Certain
Fees.


 


The Borrower agrees to pay the Agent when due the
fees set forth in the fee letter dated December 12, 2008 among the
Arrangers and the Borrower (the “Fee Letter”).


 


2.5                               Commitment
Fee.


 


On the first day of each month and on the
Termination Date, the Borrower agrees to pay to the Agent, for the account of
the Lenders, in accordance with their respective Pro Rata Shares, a commitment
fee (the “Commitment Fee”) at a per annum rate equal to the Applicable Margin
in effect from time to time, times the amount by which the Maximum Revolver
Amount exceeded 


 


17

















 


the sum of (a) the average daily outstanding
amount of Revolving Loans other than Overdraft Accommodations plus (b) the
average utilization (in the
period) of the Overdraft Accommodations and the average daily undrawn amount of
outstanding Letters of Credit during the immediately preceding month or shorter
period if calculated for the first month hereafter or on the Termination
Date.  The Commitment Fee shall be
computed on the basis of a 365 or 366 day year, as applicable, for the actual
number of days elapsed and shall accrue daily. 
Notwithstanding the foregoing, no Commitment Fee shall accrue on any of
the Commitments of a Defaulting Lender from and when, and so long as, such Lender
shall be a Defaulting Lender.


 


2.6                               Letter
of Credit Fee.


 


The Borrower agrees to pay (x) to the Agent,
for the account of the Lenders, in accordance with their respective Pro Rata
Shares, for each Letter of Credit issued for the account of the Borrower, a fee
(the “Letter of Credit Fee”) at a per annum rate equal to the Applicable Margin
in effect from time to time (with respect to LIBOR Revolving Loans) on the
undrawn amount of such Letter of Credit from time to time, and (y) to
Agent and each Lender, all out of pocket costs, fees and expenses incurred or
charged by Agent and each Lender in connection with the application for,
processing of, issuance or extension of, drawing under, or amendment to, any
Letter of Credit.  The Letter of Credit
Fee with respect to a Letter of Credit shall be payable quarterly in arrears on
the first day of each fiscal quarter of the Borrower following the fiscal
quarter in which such Letter of Credit is issued and on the Termination
Date.  The Letter of Credit Fee shall be computed
on the basis of a 365 day year for the actual number of days elapsed. The fees
and costs itemized in (y) above with respect to a Letter of Credit shall
be payable upon the issuance, extension, drawing or amendment, as applicable,
of such Letter of Credit.


 


2.7                               Interest
Act (Canada).


 


For purposes of the Interest Act
(Canada), whenever any interest or fee payable by the Borrower under
this Agreement is calculated using a rate based on a year of 360 days, such
rate used pursuant to such calculation, when expressed as an annual rate, is
equivalent to (x) the applicable rate based on a year of 360 days, (y) multiplied
by the actual number of days in the calendar year in which the period for which
such interest or fee is payable (or compounded) ends, and (z) divided by
360.  The principle of deemed
reinvestment of interest does not apply to any interest calculation under this
Agreement with respect to the Borrower, and the rates of interest stipulated in
this Agreement payable by the Borrower are intended to be nominal rates and not
effective rates or yields.


 


ARTICLE 3 — PAYMENTS AND PREPAYMENTS


 


3.1                               Revolving
Loans.


 


(a)                                  The
Borrower shall repay the outstanding principal balance of the Revolving Loans,
plus all accrued but unpaid interest thereon, on the Termination Date.  The Borrower may prepay Revolving Loans made
to it at any time, and reborrow subject to the terms of this Agreement.  Subject to Section 3.11, in addition,
and without limiting the generality of the foregoing, upon demand the Borrower
shall pay to the Agent within five (5) Business Days of such demand, for
the account of the Lenders, the amount, without duplication, by which the
Aggregate Revolver Outstandings (excluding amounts for unpaid reimbursement
obligations under


 


18














 


Letters of Credit that have
been cash collateralized or supported by a back to back Letter of Credit (all
on terms acceptable to the Agent)) exceeds the lesser of (x) the Borrowing
Base and (y) the Maximum Revolver Amount.


 


(b)                                 The
Borrower may from time to time reduce the amount of the Revolving Credit
Commitments in whole or in part, in a minimum amount of not less than
$10,000,000 or an integral multiple of $100,000 in excess thereof.


 


3.2                               Termination
of Facility.


 


The Borrower may
terminate this Agreement or reduce the Commitments hereunder (in accordance
with the terms of this Agreement) upon at least thirty (30) days’ notice to the
Agent and the Lenders (or such shorter period as the Agent and the Borrower may
reasonably agree), upon (a) the payment in full of all outstanding
Revolving Loans, together with accrued interest thereon, and the cancellation
and return of all outstanding Letters of Credit (or, to the extent not so
cancelled and returned, the deposit with the Agent and/or the Lenders of cash or
Supporting Letters of Credit for such outstanding Letters of Credit in
accordance with and as required by Section 1.3(h)), (b) the payment
in full in cash of all reimbursable expenses and other Obligations (other than
Contingent Obligations), and (c) with respect to any LIBOR Revolving Loans
and BA Equivalent Revolving Loans prepaid, payment of the amounts due under Section 4.4,
if any.  In connection with any such
permitted termination by the Borrower, the Agent shall provide a customary form
of payoff letter setting forth all amounts due to the Agent and the Lenders
hereunder, which payoff letter shall include (i) Agent’s termination of
Agent’s Liens, the Security Documents and the Intercreditor Agreement and
release of all Collateral, (ii) its agreement to execute and deliver, at
Borrower’s sole expense, such release documents as may be reasonably necessary
to reflect such termination, release and repayment, and (iii) the express
statement that certain indemnities that survive termination of this Agreement
pursuant to this Agreement continue.


 


3.3                               Mandatory
Prepayments of the Revolving Loans.


 


Promptly upon
receipt by any of the Loan Parties or the Agent of cash proceeds from business
interruption insurance or proceeds of insurance in respect of any theft, loss,
damage or destruction of any Collateral, and an Event of Default then exists
and is continuing, the Borrower shall remit such proceeds to the Agent to, or
if the Agent is in possession thereof it shall, prepay the Revolving Loans in
an amount equal to all such cash proceeds, in the manner set forth in Section 3.7.


 


3.4                               LIBOR
Revolving Loan and BA Equivalent Revolving Loan Prepayments.


 


(a)                                  In
connection with any prepayment, if any LIBOR Revolving Loan is prepaid prior to
the expiration date of the LIBOR Interest Period applicable thereto, the
Borrower shall pay to the applicable Lenders the amounts described in Section 4.4(a).


 


(b)                                 In
connection with any prepayment, if any BA Equivalent Revolving Loan is prepaid
prior to the expiration date of the BA Equivalent Interest Period applicable
thereto, the Borrower shall pay to the Lenders the amounts described in Section 4.4(a).


 


19

















 


3.5                               Payments
by the Borrower.


 


(a)                                  All
payments to be made by the Borrower shall be made without set off, recoupment
or counterclaim.  Except as otherwise
expressly provided herein, all payments by the Borrower shall be made to the
Agent for the account of the Lenders at the account designated by the Agent
acting and shall be made in Dollars or U.S. Dollars, as applicable, and in
immediately available funds, no later than 2:00 p.m. (Toronto  time) in the case of payments required to be made in
Dollars or noon (Toronto  time) in the
case of payments required to be made in U.S. Dollars, in each case on the date
specified herein.  Any payment received
by the Agent after such time shall be deemed (for purposes of calculating
interest only) to have been received on the following Business Day and any
applicable interest shall continue to accrue.


 


(b)                                 Subject
to the provisions set forth in the definition of “LIBOR Interest Period” and “BA
Equivalent Interest Period”, whenever any payment is due on a day other than a
Business Day, such payment shall be due on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.


 


3.6                               Payments
as Revolving Loans.


 


At the election
of the Agent, all payments of principal of Revolving Loans, interest on
Revolving Loans, reimbursement obligations in connection with Letters of Credit
for Letters of Credit, fees, premiums, reimbursable expenses and other sums
payable hereunder or under any other Loan Document by the Borrower may be paid
from the proceeds of Revolving Loans made hereunder.  The Borrower hereby irrevocably authorizes
the Agent, at its option, to (i) debit any Designated Account or any other
bank account (including any deposit, disbursement or operating account, other
than any Receipt Account) of the Borrower maintained at Royal Bank for the
purpose of paying all amounts from time to time due by the Borrower hereunder
or due under any other Loan Document, or (ii) charge the Loan Account of
the Borrower for the purpose of paying all amounts from time to time due by the
Borrower hereunder or under any other Loan Document and agrees that all such
amounts charged shall constitute Revolving Loans (including Agent Advances and
Overdraft Accommodations).


 


3.7                               Apportionment,
Application and Reversal of Payments.


 


(a)                                  Principal
and interest payments in respect of Revolving Loans shall be apportioned
ratably among the Lenders (according to the unpaid principal balance of the
Revolving Loans to which such payments relate held by each Lender) and payments
of the fees shall, as applicable, be apportioned ratably among the Lenders,
except for fees payable by the Borrower solely to the Agent, the BP Provider,
Royal Bank or each Lender (in respect of Letters of Credit).  All payments by the Borrower in respect of
Obligations (other than Obligations under Bank Products, which shall be
remitted directly to the BP Provider and Obligations under Hedge Agreements,
which shall be remitted directly to the Lender who is a counterparty to such
Hedge Agreement with the Borrower) shall be remitted to the Agent (except as
expressly provided herein otherwise) and all such payments (to the extent not
relating to principal or interest of specific 


 


20

















 


Revolving Loans, or not
constituting payment of specific fees or expenses) and all proceeds of Accounts
or other Collateral of the Borrower received by the Agent, shall be applied,
ratably, subject to the provisions of this Agreement:


 


(i)                                     So
long as no Event of Default has occurred and is continuing:  first, to pay any fees, indemnities or
expense reimbursements (other than any amounts relating to Bank Products), then
due to the Agent or any of its Affiliates from the Borrower; second, to pay any
fees or expense reimbursements (other than any amounts relating to Bank
Products that are Hedge Agreements) then due to the BP Provider (including its
Affiliates) and Lenders from the Borrower; third, the payment of any
obligations or amounts relating to Bank Products (that are not Hedge
Agreements) then due to the BP Provider or any of its Affiliates; fourth, to
pay interest due in respect of all Revolving Loans, including Agent Advances
and Overdraft Accommodations; fifth, to pay or prepay principal of the Agent
Advances; sixth, to pay or prepay principal of the Revolving Loans (other than
Agent Advances and Overdraft Accommodations) and unpaid reimbursement
obligations in respect of Letters of Credit; seventh, (i) to pay or prepay
principal of the Overdraft Accommodations, and (ii) to pay an amount to
the Agent equal to all outstanding Obligations (contingent or otherwise) with
respect to Letters of Credit to be held as cash collateral for such Obligations
(but only to the extent such cash collateralization is necessary to comply with
the requirements of the third sentence of Section 3.1(a) without
giving effect to any demand requirement thereunder); eighth, to the payment
(for greater certainty, ratably amongst the Lenders and their affiliates
providing Hedge Agreements; and for greater certainty, whether or not such
Hedge Agreements are also defined as Bank Products) of any Obligations relating
to Hedge Agreements then due to any Lender or any of their Affiliates by the
Borrower; ninth, to the payment of any other Obligations then due by the
Borrower; and tenth, to the Borrower.


 


(ii)                                  Upon
the occurrence and during the continuance of an Event of Default:  first, to pay any fees, indemnities or
expense reimbursements (other than any amounts relating to Bank Products) then
due to the Agent from the Borrower; second, to pay any fees, indemnities or
expense reimbursements (other than amounts relating to Bank Products that are
Hedge Agreements) then due to the BP Provider (including its Affiliates) and
Lenders from the Borrower; third, to pay interest due in respect of all
Revolving Loans, including Agent Advances and Overdraft Accommodations
(together with any amounts payable under Section 4.1 with respect to such
interest); fourth, to pay or prepay principal of the Agent Advances, Overdraft
Accommodations and amounts relating to Bank Products that are not Hedge
Agreements; fifth, to pay or prepay principal of the Revolving Loans (other
than Agent Advances, Overdraft Accommodations and Bank Products that are not
Hedge Agreements) and unpaid reimbursement obligations in respect of Letters of
Credit; sixth, to pay an amount to the Agent equal to all outstanding
Obligations (contingent or otherwise) with respect to Letters of Credit to be
held as 


 


21

















 


cash collateral for such
Obligations; seventh, to the payment of any other Obligations of the Borrower
then due, including Obligations relating to Hedge Agreements (for greater
certainty, ratably amongst the Lenders and their affiliates providing Hedge
Agreements; and for greater certainty, whether or not such Hedge Agreements are
also defined as Bank Products) then due to any Lender or any of their
respective Affiliates by the Borrower; and eighth, to the Borrower or as a
court of competent jurisdiction may otherwise direct.


 


Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the
Borrower, or unless an Event of Default has occurred and is continuing, neither
the Agent nor any Lender, (i) shall apply any payments which it receives
to Obligations unless such payments received are in the same currency in which
such Obligations are denominated, provided that the Borrowings shall not exceed
Availability as a consequence thereof, and provided further that the Agent may,
in its sole discretion, nevertheless apply the Equivalent Amount of payments
received in one currency to Obligations denominated in another currency, and (ii) shall
apply any payments which it receives to any BA Equivalent Revolving Loan or
LIBOR Revolving Loan of the Borrower, except (a) on the expiration date of
the BA Equivalent Interest Period applicable to any such BA Equivalent
Revolving Loan or the LIBOR Interest Period applicable to any such LIBOR
Revolving Loan, or (b) in the event, and only to the extent, that there
are no outstanding Prime Rate Revolving Loans owing by the Borrower (in the
case of BA Equivalent Revolving Loans) or ABR Revolving Loans (in the case of
LIBOR Revolving Loans) owing by the Borrower and, in any event, the Borrower
shall pay BA Equivalent and LIBOR Rate breakage losses in accordance with Section 4.4(a).  The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply, in each
instance in accordance with this Section 3.7, any and all such proceeds
and payments to any portion of the Obligations. 
Amounts distributed with respect to any Hedge Agreements shall be the
Hedging Amount last reported to Agent. 
Agent shall have no obligation to calculate the amount to be distributed
with respect to any Hedging Agreements, but may rely upon written notice of the
amount (setting forth a reasonably detailed calculation) from the Lender (or
its Affiliates).  In the absence of such
notice, Agent may assume the amount to be distributed is the Hedging Amount
last reported to it.


 


3.8                               Indemnity
for Returned Payments.


 


If after receipt
of any payment which is applied to the payment of all or any part of the
Obligations, the Agent, any Lender, Royal Bank, the BP Provider or any
Affiliate of the Lenders Royal Bank or BP Provider is compelled by any
Requirement of Law to surrender such payment or proceeds to any Person because
such payment or application of proceeds is invalidated, declared fraudulent,
set aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent, such Lender, Royal Bank, the BP Provider or such
Affiliate of the Lenders, Royal Bank or BP Provider, as the case may be, and
the Borrower shall be liable to pay to the Agent, the applicable Lenders, Royal
Bank, BP Provider and any Affiliate of the Lenders, Royal Bank or BP Provider,
and hereby does indemnify the Agent, the applicable Lenders, Royal Bank, BP
Provider and any Affiliate of the Lenders, Royal Bank, or the BP Provider and
hold the Agent, the applicable Lenders, Royal Bank, BP Provider and any
Affiliate of the Lenders or Royal Bank, the BP Provider harmless for 


 


22

















 


the amount of
such actual payment or proceeds surrendered. 
The provisions of this Section 3.8 shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent, any
applicable Lender, Royal Bank, BP Provider and any Affiliate of the Lender,
Royal Bank, or the BP Provider in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent’s, the applicable Lenders’, the Lender’s, Royal Bank’s, the BP
Provider’s and their Affiliates’ rights under this Agreement and shall be
deemed to have been conditioned upon such payment or application of proceeds
having become final and irrevocable.  The
provisions of this Section 3.8 shall survive the termination of this
Agreement.


 


3.9                               Agent’s
and Lenders’ Books and Records; Monthly Statements.


 


The Agent shall
record the principal amount of the Revolving Loans owing to each Lender, the
undrawn amount of all outstanding Letters of Credit and the aggregate amount of
unpaid reimbursement obligations outstanding with respect to the Letters of
Credit from time to time on its books. 
In addition, each Lender may note the date and amount of each payment or
prepayment of principal of such Lender’s Revolving Loans in its books and
records.  Failure by the Agent or any
Lender to make such notation or any error therein shall not affect the obligations
of Borrower with respect to the Revolving Loans or the Letters of Credit.  Borrower agrees that the Agent’s and each
Lender’s books and records showing the Obligations and the transactions
pursuant to this Agreement and the other Loan Documents shall be admissible in
any action or proceeding arising therefrom, and shall constitute rebuttably
presumptive proof thereof, irrespective of whether any Obligation is also
evidenced by a promissory note or other instrument.  The Agent will provide to the Borrower a
monthly interest and fee invoice which will also reflect the balances of all
outstanding Revolving Loans, payments and other transactions pursuant to this
Agreement.  Such statement shall be
deemed correct, accurate, and binding on the Borrower and an account stated
(except for reversals and reapplications of payments made as provided in Section 3.7
and corrections of errors discovered by the Agent), unless the Borrower
notifies the Agent in writing to the contrary within ninety (90) days after
such statement is rendered.  In the event
a timely written notice of objections is given by Borrower, only the items to
which exception is expressly made will be considered to be disputed by
Borrower.


 


3.10                        Currency.


 


All Obligations
of each Loan Party shall be payable by such Loan Party to the Agent and the
applicable Lenders in the currency in which such Obligations are denominated.


 


3.11                        Excess
Resulting From Exchange Rate Change.


 


(a)                                  If
at any time following one or more fluctuations in the exchange rate of the
Dollar against the U.S. Dollar, (a) the aggregate outstanding principal
balance of Revolving Loans and Letters of Credit of the Borrower exceeds the
limit of the Borrowing Base or any other limitations hereunder based on U.S.
Dollars for a period of five (5) Business Days or (b) the aggregate
outstanding principal balance of Revolving Loans and/or Letters of Credit
exceeds any other limit based on U.S. Dollars set forth herein for such
Obligations for a period of five (5) Business Days, the Borrower shall,
within five (5) Business Days of notice from the Agent (or, if an Event of
Default has occurred and is continuing, within one 


 


23

















 


(1) Business Day of
such notice), (i) make the necessary payments or repayments to reduce such
Obligations to an amount necessary to eliminate such excess or (ii) maintain
or cause to be maintained with the Agent deposits as continuing collateral
security for the Obligations of the Borrower in an amount equal to or greater
than the amount of such excess, such deposits to be maintained in such form and
upon such terms as are acceptable to the Agent in its reasonable commercial
judgment.  Without in any way limiting
the foregoing provisions, the Agent shall, weekly or more frequently in the
sole discretion of the Agent, make the necessary exchange rate calculations to
determine whether any such excess exists on such date and advise the Borrower
if such excess exists.


 


ARTICLE 4 — TAXES, YIELD PROTECTION
AND ILLEGALITY


 


4.1                               Taxes.


 


(a)                                  Any
and all payments by each Loan Party to each applicable BP Provider, Lender,
Royal Bank or the Agent under this Agreement and any other Loan Document shall
be made free and clear of, and without deduction or withholding for any
Indemnified Taxes, except as required by law. 
In addition, Loan Parties shall promptly pay any and all Other Taxes.


 


(b)                                 If a
Loan Party shall be required by law to deduct or withhold any Indemnified Taxes
or Other Taxes from or in respect of any sum payable hereunder or under any
other Loan Document to any BP Provider, other Lender, Royal Bank or the Agent,
then:


 


(i)                                     the
sum payable by such Loan Party shall be increased as necessary (with such
increase being paid, inter alia, as
additional interest to the extent such increase relates to a payment of
interest) so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section) such Lender, BP Provider, Royal Bank or the Agent, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made; provided, however, that no amounts
shall be payable by any Loan Party pursuant to this provision to the extent
that the applicable deductions or withholdings resulted from the BP Provider’s,
other Lender’s, or the Agent’s, as appropriate, failure to comply with Section 12.10
hereof.


 


(ii)                                  such
Loan Party shall make such deductions and withholdings as are legally required;
and


 


(iii)                               such
Loan Party shall pay the full amount deducted or withheld to the relevant
taxing authority or other authority in accordance with applicable law.


 


(c)                                  The
Loan Parties agree, jointly and severally, to indemnify and hold harmless each
BP Provider, other Lender and the Agent for the full amount of Indemnified
Taxes or Other Taxes (including any Indemnified Taxes or Other Taxes imposed 


 


24

















 


by any jurisdiction on
amounts payable under this Section) paid by any BP Provider, other Lender or
the Agent in connection with any Loan Document or any transaction contemplated
thereunder and any liability (including penalties, interest, additions to tax
and reasonable expenses) arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally asserted,
provided, however, that no amounts shall be payable by any Loan Party pursuant
to this provision to the extent that such Indemnified Taxes or Other Taxes
resulted from the Agent’s or any Lender’s, as appropriate, failure to comply
with Section 12.10 hereof.


 


(d)                                 Payment
under the indemnification provided in Section 4.1(c) shall be made
within 30 days after the date the applicable BP Provider, other Lender or Agent
makes written demand therefor.  Such
written demand shall show in reasonable detail the amount payable and the
calculations used to determine such amount and shall include reasonable
supporting documentation authenticating the claim.


 


(e)                                  Each
of the BP Provider, other Lenders, Royal Bank and the Agent agrees that, to the
extent that such Person is entitled to claim an exemption in respect of all or
a portion of any Indemnified Taxes or Other Taxes or reduction in the rate
thereof which are otherwise required to be paid or deducted or withheld
pursuant to this Section 4.1 in respect of any payments under this
Agreement, such BP Provider, other Lender, Royal Bank or Agent, as the case may
be, shall take all commercially reasonable actions necessary to obtain the
benefits of such exemption or reduction, but only so long as doing so is not
materially disadvantageous to such BP Provider, other Lender or Agent (as
determined by such Person) and only at the sole cost and expense of the Loan
Parties.  If requested by a Loan Party
the Agent or the Lenders, shall deliver such documentation, identification or
certification prescribed by applicable law or as reasonably requested by such
Loan Party as will enable such Loan Party to determine, establish or evidence
whether or not the Agent or such Lender is subject to any exemption from or
reduction of withholding tax with respect to payments hereunder or under any
other Loan Documents, or subject to other withholding or information reporting
requirements.


 


(f)                                    At
the Agent’s written request, within 30 days after the date of any payment by a
Loan Party of Indemnified Taxes or Other Taxes, such Loan Party shall furnish
the Agent the original or a certified copy of a receipt evidencing payment
thereof or other evidence of payment reasonably satisfactory to the Agent.


 


(g)                                 If
the Agent or any Lender receives a refund, which in the good faith judgment of
the Agent or such Lender is allocable to Indemnified Taxes or Other Taxes paid
by any Loan Party hereunder, it shall promptly pay such allocated amount of
such refund to such Loan Party, net of all reasonable out of pocket expenses of
the Agent or such Lender, as the case may be, incurred in obtaining such
refund, provided, however, that such Loan Party agrees to promptly return such
refund (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Agent or the applicable Lender, as applicable,
if it receives notice from the Agent or applicable Lender that the Agent or
Lender is


 


25

















 


required to repay such
refund.  In addition, the Agent or the
applicable Lender shall take such steps as a Loan Party shall reasonably
request to recover or assist such Loan Party in recovering any Indemnified
Taxes or Other Taxes paid by such Loan Party to or in respect of the Agent or
such Lender pursuant this Section 4.1, all at the sole cost and expense of
such Loan Party.  This paragraph shall
not be construed to require the Agent or any Lender to make available any of
its tax returns (or any other information relating to its taxes which it deems
confidential) to any Loan Party or any other Person.


 


(h)                                 If a
Loan Party is required to pay additional amounts to the Agent or any Lender
pursuant to this Section 4.1, then the Agent or such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its lending office so as to eliminate any such
additional payment by such Loan Party which may thereafter accrue, if such change
in the sole judgment of such Lender is not otherwise disadvantageous to the
Agent or such Lender.


 


(i)                                     Notwithstanding
any provision contained in this Agreement, any indemnity with respect to any
portion of any claim by BP Provider, a Lender or Agent that consists of Taxes
shall be governed solely by this Section 4.1.


 


4.2                               Illegality.


 


(a)                                  If
any Lender reasonably determines that, due to changes in Requirements of Law,
or in the interpretation or administration of any Requirement of Law by any
Governmental Authority, in any case after the Closing Date, it is unlawful, or
that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable lending office to make LIBOR
Revolving Loans or BA Equivalent Revolving Loans, then, on prompt notice
thereof by that Lender to the Borrower through the Agent, any obligation of
that Lender to make LIBOR Revolving Loans or BA Equivalent Revolving Loans
shall be suspended until that Lender notifies the Agent and the Borrower that
the circumstances giving rise to such determination no longer exist (which such
Lender agrees to do promptly).  If any
Lender has determined to provide a notice under this Section 4.2(a), then
such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate the need for such notice by such Loan Party which may thereafter
accrue, if such change in the good faith judgment of such Lender is not
otherwise materially disadvantageous to such Lender.


 


(b)                                 If a
Lender reasonably determines that, due to changes in Requirements of Law or in
the interpretation or administration of any Requirement of Law by a
Governmental Authority, in any case after the Closing Date, it is unlawful to
maintain any LIBOR Revolving Loan or BA Equivalent Loan such LIBOR Revolving
Loan or BA Equivalent Loan shall automatically convert to an ABR Revolving Loan
or Prime Rate Revolving Loan, as applicable, and Borrower shall pay the interest
thereon and amounts required under Section 4.4, either on the last day of
the LIBOR Interest Period or BA Equivalent Interest Period, as applicable,
thereof, if that Lender may lawfully continue to maintain such LIBOR Revolving 


 


26

















 


Loans or BA Equivalent
Revolving Loans to such day, or promptly, if that Lender may not lawfully
continue to maintain such LIBOR Revolving Loans.


 


4.3                               Increased
Costs and Reduction of Return.


 


(a)                                  If
any Lender reasonably determines that as a result of the introduction of or any
change in the interpretation of any law or regulation implemented by a
Governmental Authority, or such Lender’s compliance therewith, in each case
after the Closing Date, there shall be an actual increase in the cost
(excluding in each case for purposes of this Section 4.3(a), any such
increased costs resulting from Taxes, as to which Section 4.1 shall
govern) to such Lender of agreeing to make or making, funding or maintaining
any LIBOR Revolving Loans or BA Equivalent Loans, then promptly upon receipt of
a written notice from such Lender (with a copy of such notice to be sent to the
Agent), the Borrower shall pay to the Agent for the account of such Lender,
such additional amounts as are sufficient to compensate such Lender for such
increased costs.  Payment required under Section 4.3(a) shall
be made following a written demand that shows in reasonable detail the amount
payable and the calculations used to determine such amount and shall include
reasonable supporting documentation authenticating the claim, which written
demand must be made within one hundred eighty (180) days of the date the
Lender, or the Agent, as applicable, first became aware of such increased
costs; provided, however, to the extent any such increase has retroactive
effect beyond such one hundred eighty (180) days, Borrower shall pay increased
costs arising therefrom.


 


(b)                                 If
any Lender shall have reasonably determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv) compliance
by such Lender or any corporation or other entity controlling such Lender with
any Capital Adequacy Regulation required by such introduction or change, in
each case after the Closing Date (including, for greater certainty, any such
introduction or change having consequences of retroactive affect; provided,
however, that a Loan Party shall not be responsible for any compensatory
amounts under this Section 4.3(b) for any period prior to the Closing
Date), affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation or other entity controlling such
Lender and (taking into consideration such Lender’s or such corporation’s or
other entity’s policies with respect to capital adequacy and such Lender’s
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Revolving Credit Commitment, loans, credits
or obligations under this Agreement, then, from time to time, promptly upon
receipt of a written notice from such Lender to the Borrower through the Agent,
the Borrower shall pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender for such
increase, in each case, except to the extent that such increased capital
requirements have already been taken into account in the interest rates
applicable under this Agreement.  Payment
required 


 


27

















 


under this Section 4.3(b) shall
be made following a written demand that shows in reasonable detail the amount
payable and the calculations used to determine such amount and shall include
reasonable supporting documentation authenticating the claim.


 


(c)                                  In
connection with any notice from the Lender to the Borrower to pay an additional
amount as contemplated in clauses (a) and (b) above:


 


(i)                                     the
Lender shall not make a claim for any amounts under clauses (a) or (b) above
from the Borrower unless the Lender is making claims of its customers in
similar circumstances to the Borrower generally; and


 


(ii)                                  any
determination or allocation made pursuant to clauses (a) or (b) above
shall be made on a reasonable basis and in the case of any allocation amongst
the various borrowers of the Lender, such allocation shall be made in a fair
and equitable manner.


 


4.4                               Funding
Losses.


 


The Borrower
shall reimburse each Lender, promptly upon such Lender’s written request (which
request shall set forth the basis for requesting such amounts) for any loss or
expense (including a customary breakage fee charged by the Agent) which such
Lender sustains or incurs as a consequence of:


 


(a)                                  the
failure of the Borrower to make on a timely basis any payment of principal of (x) any
LIBOR Revolving Loan made to the Borrower or (y) any BA Equivalent
Revolving Loan;


 


(b)                                 the
failure of the Borrower (for a reason other than the failure of such Lender to
make a Revolving Loan, in breach of its obligations under this Agreement), to
prepay, borrow, continue or convert a Revolving Loan requested by or made to
the Borrower after the Borrower has given a Notice of Borrowing or a Notice of
Continuation/Conversion; or


 


(c)                                  the
prepayment or other payment (including after acceleration thereof) of (x) any
LIBOR Revolving Loan made to the Borrower on a day that is not the last day of
the relevant LIBOR Interest Period or (y) any BA Equivalent Revolving Loan
made to the Borrower on a day that is not the last day of the relevant BA
Equivalent Interest Period;


 


including any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain its LIBOR Revolving Loans or BA Equivalent Revolving Loans
requested by or made to the Borrower or from fees payable to terminate the
deposits from which such funds were obtained. 
The Borrower shall also pay any reasonable and customary administrative
fees charged by any Lender in connection with the foregoing.


 


28














 


4.5                               Inability
to Determine Rates.


 


(a)                                  If
the Agent reasonably determines that (i) for any reason adequate and
reasonable means do not exist for determining the LIBOR Rate any proposed LIBOR
Revolving Loan, or that the LIBOR Rate for any requested proposed LIBOR
Revolving Loan does not adequately and fairly reflect the cost to the
applicable Lenders of funding such LIBOR Rate Revolving Loan, the Agent will
promptly so notify the Borrower and each applicable Lender.  Thereafter, the obligation of the applicable
Lenders to make or maintain LIBOR Revolving Loans hereunder shall be suspended
until the Agent revokes such notice in writing (which it shall do when the
relevant circumstance no longer exists). Upon receipt of such notice, Borrower
may revoke any Notice of Borrowing or Notice of Continuation/Conversion then
submitted by it with respect to a LIBOR Revolving Loan.  If Borrower does not revoke such Notice, the
applicable Lenders shall make, convert or continue the Revolving Loans, as
proposed by Borrower, in the amount specified in the applicable notice
submitted by Borrower, but such Revolving Loans shall be made, converted or
continued as ABR Revolving Loans instead of LIBOR Revolving Loans.


 


(b)                                 If,
by reason of circumstances affecting the money market in Canada generally,
there is no market for bankers’ acceptances, (i) the right of the Borrower
to request a BA Equivalent Revolving Loan shall be suspended until the
circumstances causing a suspension no longer exist, and (ii) any Notice of
Borrowing or Notice of Continuation/Conversion requesting a BA Equivalent
Revolving Loan which is outstanding shall be deemed to be a request for a Prime
Rate Revolving Loan.  The Agent shall
promptly notify the Borrower of the suspension of the Borrower’s right to request
a BA Equivalent Revolving Loan and of the termination of any suspension.


 


4.6                               Certificates
of Agent.


 


If any Lender or the Agent claims reimbursement or
compensation under this Article 4 (excluding claims relating covered by Section 4.1,
which shall be governed by such Section), the Agent shall determine the amount
thereof and shall deliver to the Borrower (with a copy to the affected Lender,
if applicable) a certificate setting forth in reasonable detail the amount
payable to the affected Lender or the Agent, as the case may be, and such
certificate shall be conclusive and binding on the Borrower in the absence of
manifest error.


 


4.7                               Survival.


 


The agreements and obligations of the Borrower and
other Loan Parties in Sections 4.1, 4.3 and 4.4 shall survive the payment of
all other Obligations.


 


ARTICLE 5 — BOOKS AND RECORDS; FINANCIAL INFORMATION;
NOTICES


 


5.1                               Books
and Records.


 


Each Loan Party shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions in accordance with, to the 


 


29

















 


extent GAAP is applicable, GAAP applied consistently
with the audited Financial Statements required to be delivered pursuant to Section 5.2(a).  Each Loan Party shall, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP.  Each Loan Party shall maintain at
all times books and records pertaining to the Collateral in which it has an
interest in such detail, form and scope as the Agent shall reasonably require.


 


5.2                               Financial
Information.


 


The Borrower shall promptly furnish (or cause to be
furnished) to the Agent, in such detail as the Agent shall reasonably request,
for delivery to the Lenders, the following:


 


(a)                                  As
soon as available, but in any event not later than one hundred and twenty (120)
days after the close of each Fiscal Year, consolidated audited and
consolidating unaudited balance sheets, and income statements, cash flow
statements and changes in stockholders’ equity for the Borrower and its
Subsidiaries for such Fiscal Year, and the accompanying notes thereto, and,
beginning with the Fiscal Year ending on December 31, 2010, setting forth
in each case in comparative form figures for the previous Fiscal Year, all in
reasonable detail, fairly presenting the financial position and the results of
operations of the Borrower and its Subsidiaries as at the date thereof and for
the Fiscal Year then ended, and prepared in accordance with GAAP.  Such statements shall be examined in
accordance with generally accepted auditing standards by and, in the case of
such statements performed on a consolidated basis, accompanied by a report
thereon unqualified as to scope by PricewaterhouseCoopers LLP or another
nationally recognized independent chartered accountant.  Upon an Event of Default or Default that is
continuing, upon the request of the Agent, each Loan Party agrees to request
and hereby authorizes its chartered accountants, and at reasonable times and
upon reasonable prior notice, and with Borrower present (who shall reasonably
make itself available), to communicate directly with the Agent and, by this
provision, authorizes those accountants to disclose to the Agent (with a copy
to such Loan Party), any and all financial statements and other supporting
financial documents and schedules relating to such Loan Party and to discuss
directly with the Agent, the finances and affairs of such Loan Party; provided
that the Borrower shall be given an opportunity to be present at any such
discussion.  For greater certainty, no
separate financial statements are required for Loan Parties on a stand alone
basis.


 


(b)                                 As
soon as available, but in any event not later than forty-five (45) days (or
such earlier period as Agent and Borrower may agree) after the end of each
fiscal month (beginning with fiscal month ended January 31, 2009),
consolidated unaudited balance sheets of the Borrower and its Subsidiaries as
at the end of such month and consolidated unaudited income statements and cash
flow statements for the Borrower and its Subsidiaries for such month and for
the period from the beginning of the Fiscal Year to the end of such month, all
in reasonable detail, fairly presenting the financial position and results of
operations of the Borrower and its Subsidiaries as at the date thereof and for
such periods and prepared in 


 


30

















 


accordance with
GAAP applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 5.2(a) subject to normal year-end
adjustments and the absence of footnotes and, beginning with the Fiscal Year
ending on after December 31, 2010, setting forth in comparative form
figures for the previous Fiscal Year. 
The Borrower shall certify by a certificate signed by a Responsible
Officer of the Borrower to the best of his knowledge that all such statements
have been prepared in accordance with GAAP and present fairly the Borrower’s
and each of its consolidated Subsidiaries’ financial position as at the dates
thereof and its results of operations for the periods then ended, subject to
normal year end adjustments and the absence of notes.  If the Borrower prepares, at any point in
time, quarterly financial reports, it shall provide the Agent a copy of each
such report within a reasonable period of completion thereof.  For greater certainty, no separate financial
statements are required for Loan Parties on a stand alone basis.


 


(c)                                  With
each of the audited Financial Statements delivered pursuant to Section 5.2(a),
a certificate of the independent chartered accountants that examined such
statements that, in examining such Financial Statements, they did not become
aware of any fact or condition that the Borrower failed to comply with the
financial covenant insofar as it relates to accounting matters, except for
those issues, if any, described in reasonable detail in such certificate.


 


(d)                                 With
each of the Financial Statements and reviews delivered pursuant to Section 5.2(a) and
Section 5.2(b) above, a certificate of the Responsible Officer of the
Borrower in the form attached hereto as Exhibit G.


 


(e)                                  Together
with any Financial Statements delivered pursuant Section 5.2(a) above,
copies of any actuarial report for any Pension Plan.


 


(f)                                    Not
less than ninety (90) days following the beginning of Fiscal Year 2009 of the
Borrower (being January 1, 2009) and not less than thirty (30) days
following the beginning of each Fiscal Year of the Borrower thereafter, an
annual business plan (to include forecasted consolidated balance sheets, income
statements, cash flow statements and Capital Expenditures) for the Borrower on
a consolidated basis as at the end of and for each month of such Fiscal Year
including in reasonable detail, the material assumptions used in determining
such forecasts.


 


(g)                                 Upon
written request by the Agent, a copy of each annual report or other filing
filed with the PBGC, the Canada Revenue Agency or other Governmental Authority
with respect to each Plan of any Loan Party.


 


(h)                                 Promptly
upon the filing thereof, copies of all reports, if any, to or other documents
filed by the Borrower or any other Loan Party with the Ontario Securities
Commission, the Securities and Exchange Commission under the Exchange Act,
and/or with any other similar securities regulators or commissions of other
jurisdictions.


 


(i)                                     Promptly
after the receipt thereof by the Borrower or any other Loan Party, a copy of
all management reports and management letters prepared for the 


 


31

















 


Borrower or any
other Loan Party by any independent chartered accountants or independent
certified public accountants of the Borrower or any other Loan Party.


 


(j)                                     At
anytime after the Capital Stock of the Borrower or any Parent Company is traded
on a nationally recognized exchange, promptly after becoming available, copies
of any and all proxy statements, financial statements and reports which the
Borrower or any other Loan Party generally makes available to its public
shareholders (if any), other than the Sponsor.


 


(k)                                  On
the 12th day and 23rd day (or, if the Oil Settlement Date is earlier
or later than the 25th day of the month, two Business Days before the
Oil Settlement Date) of each calendar month (with the information thereon to be
as of such date for the period then ending (or the next succeeding Business Day
if such day is not a Business Day)), a Borrowing Base Certificate for the
Borrower; provided, that if (i) an Event of Default is in existence and is
continuing or (ii) when Availability (exclusive of any Oil Settlement Date
Reserve) on any date is less than an amount that is equal to (x), until the
aggregate Revolving Credit Commitments are increased to a minimum of
U.S.$100,000,000 (in accordance with Section 1.5 hereof), 10% of the
aggregate Commitments, and (y), at all times thereafter, 15% of the
Commitments, Borrower shall, at the request of Agent, deliver a Borrowing Base
Certificate weekly until such time as Availability (exclusive of any Oil
Settlement Date Reserve) is equal to or greater than an amount that is equal to
15% of the aggregate Commitments, for thirty (30) consecutive days and no Event
of Default is in existence for thirty (30) consecutive days; provided, further,
that if Borrower is delivering Borrowing Base Certificates and supporting
information to the Agent on a weekly basis, the same shall be delivered not
later than the third Business Day after the last Business Day of the previous
week with the information thereon to be as of the last Business Day of such
previous week; provided, that, Borrower shall have the
option at all times to deliver weekly Borrowing Base Certificates with respect
to Eligible Accounts (in accordance with the delivery requirements set forth
above in respect of the weekly Borrowing Base Certificates).


 


(l)                                     Prior
to the effectiveness thereof, copies of substantially final drafts of any
proposed amendment, supplement, waiver or other modification with respect to
the Bridge Facility and promptly after the execution thereof, copies of any
executed amendment, supplement, waiver or other modification with respect to
the Bridge Facility.


 


(m)                               On
each Friday (or the next succeeding Business Day if such day is not a Business
Day) of each calendar week, a report as of the immediately preceding Business
Day of all Loan Parties’ Positions (including, as applicable, details of the
Mark-to-Market Positions of all such assets and contracts for the period) in
form and detail satisfactory to Agent and certifying that such Positions are in
compliance with the Risk Management Policy, or such other report on such other
day as Agent and Borrower may agree, acting reasonably.


 


32

















 


(n)                                 Such
additional information as the Agent and/or any Lender may from time to time
reasonably request regarding the financial and business affairs of the Borrower
or any other Loan Party.


 


5.3                               Notices
to the Agent.


 


The Borrower shall notify the Agent in writing (and
the Agent will distribute such information to the Lenders) of the following
matters at the following times:


 


(a)                                  Promptly
(but in no event later than two (2) Business Days) after a Responsible
Officer of the Borrower has actual knowledge, or has actual knowledge of facts
that a reasonable Person would conclude, that a Default or Event of Default has
occurred;


 


(b)                                 Promptly
(but in no event later than three (3) Business Days) after a Responsible
Officer of the Borrower has actual knowledge, or has actual knowledge of facts
that a reasonable Person would conclude, that an event or circumstance has
occurred which would reasonably be expected to have a Material Adverse Effect;


 


(c)                                  Promptly
(but in no event later than five (5) Business Days) after receipt by a
Responsible Officer of the Borrower of any written notice of any violation by
the Borrower or any other Loan Party of or any liability under any Environmental
Law, or that any Governmental Authority has asserted in writing that the
Borrower or any other Loan Party thereof is not in compliance with any
Environmental Law or is investigating the Borrower’s or such Loan Party’s
compliance therewith which, in either case, would reasonably be expected to
have a Material Adverse Effect;


 


(d)                                 Promptly
(but in no event later than five (5) Business Days) after receipt by a
Responsible Officer of the Borrower of any written notice that the Borrower or
any other Loan Party is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that the Borrower or any
other Loan Party thereof is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to the
Release or threatened Release of any Contaminant which, in either case, would
reasonably be expected to have a Material Adverse Effect;


 


(e)                                  Promptly
(but in no event later than five (5) Business Days) upon any change in (i) a
Loan Party’s name as it appears in the province, state or other jurisdiction of
its incorporation or (ii) a Loan Party’s jurisdiction of organization,
province, state or other jurisdiction of incorporation or organization, (iii) a
Loan Party’s type of entity, (iv) a Loan Party’s organizational
identification number, (v) the location of Eligible Inventory included in
the most recent Borrowing Base with a value in excess of $250,000 from a
location of any Loan Party to another location of such Loan Party (other than
any Eligible Inventory relocated to a location listed on Schedule 6.9 of this
Agreement or a Collateral location listed on a prior written notice delivered
by the Borrower or such Guarantor to the Agent under this clause ((e)) or (vi) a
Loan Party’s location of chief executive office; provided, however, 


 


33

















 


that if any of
the foregoing changes are not permitted under this Agreement, the foregoing is
not to be construed as permissive of same;


 


(f)                                    Promptly
after a Responsible Officer of the Borrower knows or has reason to know (i) that
a Reportable Event or Termination Event has occurred, and, when known, any
action taken or threatened by the CRA, IRS, the Alberta Superintendent of
Pensions, the DOL, the PBGC or any other Governmental Authority with respect
thereto, or (ii) that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred, in either case with respect to
clauses (i) and (ii) that would be reasonably likely to have a
Material Adverse Effect; and


 


(g)                                 Promptly
after the occurrence thereof:  (i) any
failure by any Loan Party or any ERISA Affiliate to make a required instalment
or any other required payment under Section 412 of the Code or as required
by the EPPA or other applicable laws on or before the due date for such
instalment or payment, if such failure would reasonably be expected to have a
Material Adverse Effect; (ii) a Multiemployer Plan or Pension Plan has
been or will be terminated and such termination would be reasonably likely to
have a Material Adverse Effect; (iii) the administrator or plan sponsor of
a Multiemployer Plan or Pension Plan initiates the termination of a
Multiemployer Plan or Pension Plan as applicable, and such termination would be
reasonably likely to have a Material Adverse Effect; (iv) the PBGC, the
Alberta Superintendent of Pensions or other Governmental Authority has
instituted proceedings to terminate a Multiemployer Plan or Pension Plan and
such termination thereof would be reasonably likely to have a Material Adverse
Effect.


 


5.4                               Collateral
Reporting.


 


The Borrower on behalf of the Loan Parties shall
provide the Agent with the following documents at the following times in form
reasonably satisfactory to the Agent:


 


(a)                                  together
with the delivery of each Borrowing Base Certificate (i) an aging report
of such Loan Party’s Accounts, (ii) Inventory and Position reports in a
level of detail reasonably acceptable to the Agent, (iii) a copy of the
accounts payable sub ledger and (v) a report of the accrued accounts
receivable in a level of detail reasonably acceptable to the Agent;


 


(b)                                 together
with the financial statements delivered under Section 5.2(b), (i) a
trial balance report, (ii) a reconciliation of the aging of accounts receivable
in the general ledger to such financial statements, (iii) a reconciliation
of the aging of accounts payable in the general ledger to such financial
statements and (iv) a reconciliation of the listings of Inventory in the
general ledger to such financial statements; and


 


(c)                                  promptly
upon the reasonable request of the Agent, (i) a detailed calculation of
the Eligible Accounts and Eligible Inventory of such Loan Party, (ii) copies
of invoices in connection with such Loan Party’s Accounts, customer statements,
credit memos, remittance advices and reports, deposit slips, shipping and
delivery 


 


34

















 


documents in
connection with such Loan Party’s Accounts and for Inventory acquired by such
Loan Party, purchase orders and invoices, (iii) a statement of the balance
of any intercompany accounts, and (iv) such other reports as to the
Collateral of such Loan Party as the Agent shall reasonably request from time
to time.


 


If any of a Loan Party’s records or reports of any
of the Collateral are prepared by an accounting service or other agent, such
Loan Party hereby authorizes such service or agent to deliver such records,
reports, and related documents to the Agent for distribution to the Lenders.


 


ARTICLE 6 — GENERAL WARRANTIES AND REPRESENTATIONS


 


Each Loan Party warrants and represents to the Agent
and the Lenders that, except as hereafter disclosed to and accepted by the
Agent, and the Required Lenders in writing:


 


6.1                               Authorization,
Validity, and Enforceability of this Agreement and the Loan Documents.


 


(a)                                  Such
Loan Party has the power and authority to execute, deliver and perform this
Agreement and the other Loan Documents to which it is a party, to incur and/or
guaranty, as applicable, the Obligations, and to grant to the Agent Liens upon
and security interests in the Collateral in which it has an interest.


 


(b)                                 Such
Loan Party has taken all necessary corporate action or other organizational
action (including obtaining approval of its stockholders or other equityholders
if necessary) to authorize its execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party.


 


(c)                                  This
Agreement and the other Loan Documents to which it is a party have been duly
executed and delivered by such Loan Party, and constitute the legal, valid and
binding obligations of such Loan Party, enforceable against it in accordance
with their respective terms (except as such enforceability may be subject to
bankruptcy, insolvency, moratorium, reorganization, arrangement, voidable
preference, fraudulent conveyance and other similar laws relating to or
affecting the rights of creditors generally and except as the same may be
subject to the effect of general principles of equity).


 


(d)                                 Such
Loan Party’s execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party and the Acquisition Agreement do
not and will not conflict with, or constitute a violation or breach of, or
result in the imposition of any Lien upon the property of such Loan Party
(other than Liens granted by such Loan Party under any of the Loan Documents
and the Transaction Documents (as permitted hereunder and under the
Intercreditor Agreement)) by reason of the terms of (a) any contract,
mortgage, lease, agreement, indenture or instrument to which such Loan Party is
a party or which is binding upon it to the extent such breach or violation
would not have a Material Adverse Effect, (b) any Requirement of Law
applicable to such Loan Party (other than those which are customarily satisfied
after closing by filings or registrations 


 


35

















 


made in
connection with the Gibson Acquisition) or (c) the certificate or articles
of incorporation, by laws or the limited liability company or limited
partnership agreement or partnership agreement or other organizational
documents of such Loan Party, except, in the case of the foregoing clause (a),
to the extent such breach or violation would not have a Material Adverse Effect.


 


6.2                               Validity
and Priority of Security Interest.


 


(a)                                  The
provisions of this Agreement and the Security Documents to which such Loan
Party is a party create legal and valid Liens on all Collateral in which it has
an interest in favour of the Agent, for the ratable benefit of the Agent, the
BP Provider and the other Lenders.


 


(b)                                 Upon
the filing by the Agent of PPSA and Uniform Commercial Code financing
statements, upon possession by the Agent of Collateral which can be perfected
by possession only and upon “control” by the Agent of any deposit accounts
located in the United States of America or other securities or securities
accounts, in each case, to the extent, the Liens referred to in Section 6.2(a) shall
then (to the extent the applicable foregoing required action has been taken
with respect to such Liens in the relevant Collateral) constitute perfected and
continuing Liens on all such Collateral in which a security interest or
hypothec can be created and perfected under the applicable Uniform Commercial
Code, PPSA and the Securities Transfer Act (Alberta)
having priority over all other Liens on such Collateral, except for Permitted
Liens, securing all the Obligations of such Loan Party and enforceable against
such Loan Party.


 


6.3                               Organization
and Qualification.


 


Such Loan Party (a) is duly formed, organized,
incorporated or amalgamated, as the case may be, and validly existing in good
standing under the laws of the province or state of its organization,
incorporation or amalgamation, as the case may be, (b) is qualified to do
business and is in good standing in the jurisdictions set forth in Schedule
6.3, which are the only jurisdictions in which qualification is necessary as of
the Closing Date in order for it to own or lease its property and conduct its
business except to the extent failure to be so qualified could not reasonably
be expected to result in a Material Adverse Effect and (c) has all
requisite power and authority to conduct its business and to own its property.


 


6.4                               Corporate
Name; Prior Transactions.


 


Except as otherwise disclosed on Schedule 6.4, as of
the Closing Date, such Loan Party has not, during the past five (5) years,
been known by or used any other corporate or registered name, or been a party
to any merger, consolidation or amalgamation, or acquired all or substantially
all of the assets of any Person, or, to the best of its knowledge, acquired any
of its property outside of the ordinary course of business.


 


6.5                               Subsidiaries.


 


Schedule 6.5 is a correct and complete list, as of
the Closing Date, of the name and relationship to such Loan Party of each and
all of such Loan Party’s Subsidiaries.


 


36

















 


6.6                               Financial
Statements and Projections.


 


(a)                                  On
the Closing Date, the Loan Parties have delivered to the Agent and the Lenders
the audited consolidated balance sheet and related statements of income,
retained earnings and cash flows for Target for its fiscal year ending on December 31,
2007 accompanied by the report thereon of Target’s chartered accountants,
PricewaterhouseCoopers.  The Loan Parties
have also delivered to the Agent and the Lenders the unaudited consolidated
balance sheet and related statements of income and cash flows for Target as of and
for the fiscal quarters of Target’s current fiscal year ending on June 30,
2008 and September 30, 2008.  Such
financial statements are attached hereto as Exhibit C.  All such financial statements have been
prepared in accordance with GAAP (with a reconciliation to generally accepted
accounting principles in the U.S. with respect to the last two fiscal years
ending more than 90 days prior to the Closing Date) and present accurately and
fairly in all material respects the consolidated financial position of Target
as at the dates thereof and their results of operations for the periods then
ended, subject, in the case of the interim financial statements, to normal year
end adjustments.


 


(b)                                 The
pro forma consolidated balance sheet and related statements of income and
pro-forma levels of EBITDA of the Borrower and its Subsidiaries as at September 30,
2008 and for the 12 month period then ended, attached hereto as Exhibit C,
have been and will be prepared in good faith based upon assumptions believed to
be reasonable at the time made after giving effect to and as if the
transactions contemplated by the Transaction had occurred on September 30,
2008 and the Closing Date had been such date. 
The foregoing shall be prepared on a basis consistent with pro forma
financial statements set forth in a registration statement filed with the
Securities and Exchange Commission, including such additional adjustments as
previously agreed to by Bridge Agents and/or their affiliates in connection
with the Bridge Facility.


 


6.7                               Capitalization.


 


On the Closing Date, after giving effect to the
Transaction, the authorized Capital Stock or other equity or partnership
interests of each Loan Party are set forth on Schedule 6.7, and all such issued
shares or other equity or partnership interests are validly issued and outstanding
and are owned beneficially and of record by the Persons listed on Schedule 6.7.


 


6.8                               Solvency.


 


The Loan Parties are, when taken as a whole, Solvent
after giving effect to the Transaction, the incurrence of the Bridge Facility,
the Borrowings to be made on the Initial Funding Date and the issuance of the
Letters of Credit to be issued on the Initial Funding Date.


 


6.9                               Real
Property; Leases.


 


As of the Closing Date and updated reasonably
promptly upon any changes to the information set forth therein, Schedule 6.9
hereto is a correct and complete list of: (a) the jurisdiction of the
chief executive office of each Loan Party, (b) all Real Estate owned by
each Loan Party, (c) all 


 


37

















 


material leases and subleases of Real Estate by any
Loan Party, as lessee or sublessee, (d) all material leases and subleases
of Real Estate by any Loan Party, as lessor or sublessor and (e) all
locations (other than those referred to in clauses (b), (c) and (d) above)
of Inventory of each Loan Party (other than in-transit Inventory) having a
value in excess of $250,000.


 


6.10                        Brokers.


 


As of the Closing Date, except as set forth on
Schedule 6.10, there are no brokerage commissions, finders fees or investment
banking fees payable in connection with any of the Loan Documents.


 


6.11                        Governmental
Authorization.


 


No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any Governmental Authority is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, such Loan Party of this Agreement, or any other
Loan Document or the Acquisition Agreement, except for (i) those which
have been obtained and are in full force and effect (all as set forth on Schedule
6.11), (ii) filings and recordings with respect to Collateral to be made,
or otherwise delivered to the Agent for filing and/or recordation as of the
Closing Date or as otherwise permitted herein and (iii) those relating to
the Acquisition Agreement the failure of which to take or obtain would not have
a Material Adverse Effect.  No approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Person other than a Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, such Loan Party of this Agreement, any other Loan Document except
those the failure of which to obtain or take would not have a Material Adverse
Effect.


 


6.12                        Proprietary
Rights.


 


Schedule 6.12, sets forth, a complete list as of the
Closing Date of all the registered, and in process unregistered, Proprietary
Rights owned by a Loan Party.  To the
knowledge of the Borrower, except as set forth on Schedule 6.12, as of the
Closing Date, the Loan Parties own, or possess the right to use all Proprietary
Rights that are reasonably necessary for the operation of their respective
businesses.


 


6.13                        Bank
Accounts.


 


Schedule 6.13 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by such Loan Party
with any bank or other financial institution. 
All deposit accounts maintained by any Loan Party with any bank or other
financial institution shall be subject to a Blocked Account Agreement, required
to be in place to the extent set forth in Section 7.24 herein.


 


6.14                        Litigation.


 


Except as set forth on Schedule 6.14, as of the
Closing Date, there is no pending, or to the best of such Loan Party’s
knowledge threatened, action, suit, proceeding or counterclaim by any Person,
or to the best of such Loan Party’s knowledge, investigation by any
Governmental Authority, or


 


38














 


any basis for any
of the foregoing, which, in each case, would reasonably be expected to have a
Material Adverse Effect.


 


6.15                        Labour
Disputes.


 


Except as set
forth on Schedule 6.15, as of the Closing Date (a) there is no collective
bargaining agreement covering employees of such Loan Party, (b) no such
collective bargaining agreement is scheduled to expire during the term of this
Agreement, (c) to the best of such Loan Party’s knowledge, no union or
other agent of a labour organization is seeking to organize, or to be
recognized as, a collective bargaining unit of employees of such Loan Party or
for any similar purpose, and (d) there is no pending or (to the best of
such Loan Party’s knowledge) threatened, strike, work stoppage, material unfair
labour practice claim, or other material labour dispute against or affecting
such Loan Party or its employees, which, in the case of the matters specified
above, would reasonably be expected to have a Material Adverse Effect.


 


6.16                        Environmental
Laws.


 


Except as otherwise
disclosed in Schedule 6.16, the Loan Parties and their Subsidiaries have
complied in all material respects with all Environmental Laws and no Loan Party
and no Subsidiary of a Loan Party nor any of its or their presently owned Real
Estate or immovable or real property presently in its charge, management or
control or presently conducted operations, is subject to any material
enforcement order or Environmental Lien which would reasonably be expected to
have a Material Adverse Effect.  There
are no Environmental Liens affecting the Real Estate or the Collateral of any
of the Loan Parties and their Subsidiaries that would reasonably be expected to
have a Material Adverse Effect.


 


6.17                        No
Violation of Law.


 


Such Loan Party
is not in violation of any law, statute, regulation, ordinance, judgment, order
or decree applicable to it, which violation would reasonably be expected to
have a Material Adverse Effect.


 


6.18                        No
Default.


 


Such Loan Party
is not in default with respect to any note, indenture, loan agreement,
mortgage, lease, deed, or other agreement to which such Loan Party is a party
or by which it is bound, which default would reasonably be expected to have a
Material Adverse Effect.


 


6.19                        Plans.


 


As of the Closing
Date, except as specifically disclosed in Schedule 6.19:


 


(a)                                  Each
Plan which is subject to or governed by ERISA or the Code is in compliance with
the applicable provisions of ERISA, the Code and other federal or state
law.  Each Plan in Canada is in
compliance with the applicable provisions of the EPPA and other federal or
provincial law in all material respects. 
Each Plan which is intended to qualify under Section 401(a) of
the Code has received a favourable determination letter from the IRS and to the
knowledge of such Loan Party, nothing has occurred which would cause the loss
of such qualification.  The 


 


39

















 


Borrower and each Loan
Party, to the extent applicable, has made all required contributions to any
Plan when due, and no application for a funding waiver or an extension of any
amortization period has been made with respect to any Plan.


 


(b)                                 There
are no pending or, to the knowledge of such Loan Party, threatened claims,
actions or lawsuits or action by any Governmental Authority with respect to any
Plan save routine claims for benefits. 
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan.


 


(c)                                  (i) No Termination Event or ERISA Event has
occurred or is reasonably expected to occur; (ii) no
Pension Plan has any material Unfunded Pension Liability; (iii) none of
the Loan Parties has incurred, or reasonably expects to incur, any liability
under the Income Tax Act (Canada) or the
applicable federal, provincial or state laws with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv) 
none of the Loan Parties has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 or 4243 of
ERISA with respect to a Multi employer Plan; (v)  none of the Loan Parties
has engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA; and (vi) no Lien (other than Permitted Liens) has arisen in respect
of any Loan Party or its property in connection with any Plan (save for
contribution amounts not yet due).


 


6.20                        Taxes.


 


Except as set
forth on Schedule 6.20, such Loan
Party has (a) filed or caused to be filed all federal (both Canada and the
United States of America), provincial, state and other material Tax returns
required to be filed (or extensions permitted under applicable law have been
timely obtained with respect thereto), and (b) has paid or caused to be
paid all federal (both Canada and the United States of America), state,
provincial and other material Taxes (including material foreign Taxes),
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except for
non-payment of any such Taxes, assessments, fees and other governmental charges
permitted by Section 7.1.


 


6.21                        Regulated
Entities; Margin Regulations.


 


(i)                                     None
of the Loan Parties is an “Investment Company” within the meaning of the Investment Company Act of 1940.


 


(ii)                                  None
of the Loan Parties is engaged or will engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.


 


6.22                        Hedging
Arrangements.


 


Such Loan Parties
have not entered into any hedging arrangements with any Person which would
qualify such hedging arrangement to be considered a “security”, “securities” or
“securities account” or otherwise, for purposes of, or under, the Securities
Transfer Act (Alberta) without


 


40

















 


notifying the
Agent of the same and promptly taking all actions reasonably requested by the
Agent under Section 7.35 in order to perfect that Agent’s Lien in respect
thereof.


 


6.23                        No
Material Adverse Effect.


 


No Material
Adverse Effect has occurred since December 31, 2007.


 


6.24                        Full
Disclosure.


 


(a)                                  None
of the representations or warranties made by such Loan Party in any of the Loan
Documents (except Hedge Agreements) as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of such
Loan Party in connection with any of the Loan Documents (except Hedge
Agreements) contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.


 


(b)                                 All
written factual information (other than projections and general economic or specific
industry information) that has been made available to the Agent by the Borrower
or any of its representatives prior to the Closing Date in connection herewith,
when taken as a whole, does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made (including
customary bank syndication practices).


 


6.25                        Material
Agreements.


 


Schedule 6.25
hereto sets forth as at the Closing Date and updated reasonably promptly upon
entering into (with Borrower making a determination that same is or is not as
of such date) all Material Agreements to which such Loan Party is a party or is
bound.  The Borrower has not received any
notice of termination under any such agreements, except as otherwise notified
to Agent.


 


6.26                        U.S.
Loan Parties.


 


As of the Closing
Date, the Loan Parties, whose jurisdiction of incorporation is in the United
States, collectively, do not have any material levels of Inventory or Accounts
or any material operations.


 


ARTICLE 7 — AFFIRMATIVE AND NEGATIVE
COVENANTS


 


Each Loan Party
covenants to the Agent and each Lender that so long as any of the Obligations
remain outstanding (other than Contingent Obligations) or this Agreement is in
effect:


 


41

















 


7.1                               Taxes.


 


Such Loan Party
shall pay and discharge as the same shall become due and payable (a) all material.   Taxes imposed upon
it or its properties or assets unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by such Loan Party; and (b) all lawful tax claims which,
if unpaid would by law become a Lien (other than a Permitted Lien) upon the
Collateral.


 


7.2                               Legal
Existence and Good Standing.


 


Except as
otherwise permitted under Section 7.11, such Loan Party shall maintain its
legal existence and its qualification and good standing in all jurisdictions in
which the failure to maintain such existence and qualification or good standing
would reasonably be expected to have a Material Adverse Effect.


 


7.3                               Compliance
with Law and Agreements; Maintenance of Licenses.


 


Such Loan Party
shall comply with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labour
Standards Act and Anti-Terrorism Laws), except where the failure to do so
(other than Anti-Terrorism Laws) could not reasonably be expected to have a
Material Adverse Effect.  Such Loan Party
shall obtain and maintain all licenses, permits, franchises and governmental
authorizations necessary to own its property and to conduct its business as conducted
on the Closing Date, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.


 


7.4                               Maintenance
of Property; Inspection of Property.


 


(a)                                  Such
Loan Party shall maintain all of its material property necessary and useful in
the conduct of its business, in good operating condition and repair, ordinary
wear and tear excepted and except to the extent obsolete, no longer usable by
such Loan Party in its business or no longer necessary for the conduct or
operation of such Loan Party’s business.


 


(b)                                 Such
Loan Party shall permit representatives and independent contractors of the
Agent (which representatives may be accompanied by representatives of any
Lender) to visit and inspect any of its properties and the Collateral located
on such properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom and to discuss its affairs,
finances and accounts with its directors, officers and independent chartered
accountants (for which discussions the officers of the Borrower shall be
provided with an opportunity to participate), at such reasonable times during
normal business hours and as soon as may be reasonably desired, upon reasonable
advance notice to such Loan Party; provided, that only one such visit shall be
required in any 12-month period and, at Agent’s discretion, a second such visit
in any year may be required unless an Event of Default has occurred and is
continuing, in which case the Agent may do any of the foregoing at any time and
as many times in any year during normal business hours and without advance
notice.  The Loan Parties shall be
responsible for the costs and expenses of all such visits.  A written report of the


 


42

















 


results of such examination(s) shall
be furnished by the Agent to the Borrower and the Lenders.


 


7.5                               Insurance.


 


(a)                                  The
Borrower shall maintain on behalf of itself and all Loan Parties, with
financially sound and reputable insurance companies not Affiliates of any Loan
Party, insurance with respect to its properties and business against loss,
damage and hazards of the kinds customarily insured against by Persons engaged
in the same or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons or otherwise
reasonably acceptable to the Agent and the Required Lenders.  The Agent and the Required Lenders
acknowledge that the Loan Parties’ insurance in place on the Closing Date, is
acceptable to the Agent and the Required Lenders.


 


(b)                                 Such
Loan Party shall cause the Agent, for the ratable benefit of the Agent and the
Lenders, to be named as secured party and lender’s first loss payee (as its or
their interests may appear) and first mortgagee with respect to insurance
covering the Collateral, or additional insured as to liability, umbrella and
automobile liability insurance, in a manner reasonably acceptable to the
Agent.  Each such policy of insurance
shall contain a clause or endorsement requiring the insurer to give not less
than thirty (30) days’ prior written notice to the Agent in the event of
cancellation of the policy for any reason whatsoever (other than for nonpayment
of premiums, in which case not less than ten (10) days’ prior written
notice is sufficient).  All premiums for
such insurance shall be paid by such Loan Party when due, certificates of
insurance if requested by the Agent or any Lender, and photocopies of the
policies shall be delivered to the Agent, in each case in sufficient quantity
for distribution by the Agent to each of the Lenders.


 


(c)                                  Unless
the Borrower provide the Agent with evidence of the insurance coverage required
by Section 7.5(a), the Agent may purchase casualty insurance, with prompt
notice to the Borrower at the Loan Parties’ expense.  This insurance may, but need not, protect the
interests of the Loan Parties.  The
coverage that the Agent purchases may not pay any claim that any Loan Party
makes or any claim that is made any Loan Party in connection with said
coverage.  The Borrower may later cancel
any insurance purchased by the Agent, but only after providing the Agent with
evidence that the Loan Parties have obtained insurance as required by Section 7.5(a).  If the Agent purchases such insurance, the
Loan Parties will be responsible for the costs of that insurance, until the
effective date of the cancellation or expiration of the insurance.  The costs of the insurance shall be added to
the Obligations.  The costs of the
insurance may be more than the cost of insurance that the Loan Parties may be
able to obtain on their own.


 


7.6                               Insurance
Proceeds.


 


Such Loan Party
shall promptly notify the Agent and the Lenders of any loss, damage or
destruction to Collateral having a value in excess of $2,000,000 per casualty,
whether or not covered by insurance.  The
Agent is hereby authorized to collect all insurance and condemnation proceeds
in respect of Collateral of such Loan Party. 
At all times when an Event of Default is in 


 


43

















 


existence and is
continuing, Agent shall apply them to the Obligations in a manner that is
consistent with Section 3.7 and in the order set forth in Section 3.7,
provided, however, that if no Event of Default has occurred and is continuing,
Agent shall promptly deliver such proceeds to the Loan Party.


 


7.7                               Environmental
Laws.


 


Except where the
failure to do so could not have a Material Adverse Effect, such Loan Party
shall conduct, and shall cause each of its Subsidiaries that are Loan Parties
to conduct, its business in compliance in all material respects with all
Environmental Laws applicable to it or them, including, without limitation,
those relating to the Loan Parties’ or such Subsidiary’s generation, handling,
use, storage and disposal of Contaminants. 
Except where the failure to do so could not have a Material Adverse
Effect, the Loan Parties shall take, and shall cause their Subsidiaries which
are Loan Parties to take, prompt and appropriate action to respond to any non-compliance
or alleged non-compliance with Environmental Laws.


 


7.8                               Compliance
with EPPA/ERISA/Pension Legislation.


 


Such Loan Party
shall and shall cause its ERISA Affiliates to:


 


(a)                                  maintain
each Plan which is subject to or governed by ERISA, the Code, the Income Tax Act (Canada), the EPPA or other federal,
provincial or state law in compliance in all material respects with the
applicable provisions of ERISA, the Code, the Income Tax
Act (Canada), the EPPA, and other federal, provincial or state law,
except where noncompliance would not be reasonably likely to have a Material
Adverse Effect;


 


(b)                                 have
no unfunded, solvency, or deficiency on windup liability and no accumulated
funding deficiency (whether or not waived) as defined in Section 302 of
ERISA or Section 412 of the Code or any amount of unfunded benefit
liabilities (including as defined in Section 4001(a)(18) of ERISA) in
respect of any Pension Plan, including any Pension Plan to be established and
administered by it or them, except as would not be reasonably likely to have a
Material Adverse Effect;


 


(c)                                  pay
when due, all amounts required to be paid by it or them except, in respect of
ERISA Affiliates only, where the failure to do so would not be reasonably
likely to have a Material Adverse Effect;


 


(d)                                 not
cause or permit to arise or exist any liability upon it or them or Lien on any
of its or their property in respect of any Plan except, in respect of ERISA
Affiliates only, as would not be reasonably likely to have a Material Adverse
Effect;


 


(e)                                  cause
each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification, except where the failure to do so would not be
reasonably likely to have a Material Adverse Effect;


 


44

















 


(f)                                    make
all required contributions to any Plan when due except, in respect of ERISA
Affiliates, only where the failure to do so would not be reasonably likely to
have a Material Adverse Effect;


 


(g)                                 not
engage in a prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan that could reasonably be expected to result
in material liability; and


 


(h)                                 not
engage in a transaction that could be reasonably expected to result in
liability under Section 4069 or 4212(c) of ERISA, except as would not
be reasonably likely to have a Material Adverse Effect.


 


7.9                               Bank
Accounts.


 


Each Loan Party
shall at all times maintain its principal depository banking relationship,
including operating, administrative, cash management, collection and other
principal depository accounts, with the Royal Bank; provided, however, that the
foregoing requirement shall not prohibit each such Loan Party from maintaining
other non-principal bank accounts with other financial institutions to the
extent otherwise permitted hereunder.


 


7.10                        Amendments
to Bridge Facility.


 


Such Loan Party
shall not, directly or indirectly, amend, modify, supplement, waive compliance
with or consent to any departure from any provision of the Bridge Facility
Documents if such amendment, modification, supplement, waiver or consent would
have the effect of (i) advancing the maturity date of any such Bridge
Facility to a date that is earlier than the Stated Termination Date, or (ii) granting
any Lien on the Collateral (other than Shared Collateral (as defined in and
subject to the Intercreditor Agreement)) to secure the Bridge Facility.


 


7.11                        Mergers,
Consolidations or Sales.


 


(a)                                  Such
Loan Party shall not consummate any transaction of merger, amalgamation,
reorganization or consolidation, or transfer, sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of related transactions)
all or substantially all of the Collateral (whether now owned or hereafter
acquired), or issue or otherwise sell or transfer (whether in one transaction
or in a series of related transactions) all or substantially all of its equity
interests in such Loan Party, or wind up, liquidate or dissolve, except:


 


(i)                                     the
merger, amalgamation, reorganization, consolidation, transfer, or sale of any
Loan Party into another Loan Party that is domiciled in, has its jurisdiction
of incorporation in, and is resident of, the same country (provided that in the
case of any merger, amalgamation or consolidation, a Loan Party shall
continue);


 


(ii)                                  the merger,
amalgamation, reorganization, consolidation, transfer, or sale of any Loan
Party (that is domiciled in, has its jurisdiction of incorporation in, and is
resident of, the same country) into, with or to the Borrower, with Borrower
continuing as Borrower;


 


45

















 


(iii)                               the
Transaction and the Permitted Reorganization may be consummated; and


 


(iv)                              Transfers
permitted under Section 7.11(b) may be consummated.


 


(b)                                 Such
Loan Party shall not transfer, sell, assign, lease or otherwise dispose of
(each, a “Transfer”) all or any part of its property, except for:


 


(i)                                     sales
of Inventory in the ordinary course of its business and leases of Fixed Assets;


 


(ii)                                  sales
or other dispositions of property listed on Schedule 7.11;


 


(iii)                               sales
or other dispositions of assets (other than Accounts and Inventory) by any Loan
Party in the ordinary course of business that are (a) obsolete, (b) no
longer useable by such Loan Party in its business or (c) no longer
necessary for the conduct or operation of such Loan Party’s business;


 


(iv)                              Transfer
of assets (other than Accounts and Inventory) to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such disposition are promptly
applied to the purchase price of such replacement property;


 


(v)                                 Transfer
of assets, other than Collateral (exclusive of any permitted use of cash in
connection with such transfer under the definition of Permitted Investments)
into a corporation, association, limited liability company, limited partnership
or a joint venture in each case, that are Permitted Investments, in return for
an equity interest in that entity;


 


(vi)                              the
sale or discount, in each case without recourse and in the ordinary course of
business, of overdue accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof
consistent with customary industry practice (and not as part of any bulk sale or
financing of receivables);


 


(vii)                           licenses
of intellectual property (which shall be subject to Agent’s licence thereof,
acknowledged by licensee);


 


(viii)                        sale
and leasebacks permitted under this Agreement;


 


(ix)                                Transfers
relating to or in connection with easements, rights-of-way, servitudes,
statutory exceptions to title, restrictions and other similar charges,
restrictions or encumbrances as to the use of real property or immaterial
imperfections of title;


 


(x)                                   any
settlement of or payment in respect of (provided no Event of Default has
occurred and is continuing and otherwise subject to Sections 7.6 and 3.3
hereof) any property or casualty insurance claim or any condemnation proceeding
relating to any property of any Loan Party;


 


46

















 


(xi)                                Transfers
permitted by Section 7.11(a), Distributions permitted by Section 7.12
or payments permitted by Section 7.16;


 


(xii)                             a
disposition made as a part of a Permitted Investment;


 


(xiii)                          the
Transaction and the Permitted Reorganization may be consummated;


 


(xiv)                         the
Transfer of any property not constituting Collateral unless the Transfer of
such property not constituting Collateral would have a Material Adverse Effect
on the fair market value of the Collateral on the date of such Transfer;


 


(xv)                            the
cross-licensing or licensing of intellectual property, in the ordinary course
of business (which shall be subject to Agent’s licence thereof, acknowledged by
licensee);


 


(xvi)                         the
Transfer of any Excluded Subsidiary (or all or any portion of the assets of
such Excluded Subsidiary) that is not a Loan Party;


 


(xvii)                      the
transfer of property by any Loan Party to any other Loan Party; and


 


(xviii)                   Transfer of
assets not otherwise permitted under this Section 7.11, provided that (a) any
such transfer or disposition is not in connection with any (i) securitization
plan or structure or (ii) any financing, (b) at the time of such
Transfer, no Default or Event of Default shall exist and be continuing or would
result from such Transfer, (c) the aggregate book value of all property
disposed of pursuant to this clause shall not exceed $1,000,000 in any Fiscal
Year or $2,000,000 in the aggregate after the Closing Date, (d) such
transfer shall be for no less than the fair market value of such property at
the time of such disposition and, (e) (1) in the case of Transfers of
Accounts and Inventory solely for cash consideration, and (2) in the case
of Transfers of any other assets, at least 75% of the consideration is payable
in cash at the time of consummation of the transaction; provided, further, that
if the Aggregate Revolver Outstandings exceed the lesser of (x) the
Borrowing Base and (y) the Maximum Revolver Amount, as a result of such
Transfer(s) (i) Borrower shall immediately pay to the Agent, for the
account of the Lenders an amount equal to such difference, and (ii) the
Agent shall have the unilateral right to re-determine the Borrowing Base
eligibility calculations in accordance with the terms of this Agreement; and


 


(c)                                  Any
Loan Party may engage in Permitted Acquisitions.


 


7.12                        Distributions;
Capital Change; Restricted Investments.


 


(a)                                  Such
Loan Party shall not directly or indirectly declare or make, or incur any
liability to make, any Distribution, except,


 


(i)                                     Distributions
among the Loan Parties;


 


47

















 


(ii)                                  Distributions
by the Borrower in the form of the Tax Dividend, provided that (x) the
Lenders or the Agent have not declared any or all of the Obligations due and
payable, (y) the Lenders have not terminated this Agreement or the
Commitments and (z) there is sufficient Availability if the Tax Dividend
is financed by the Revolving Loans;


 


(iii)                               Distributions
by the Borrower relating to the repayment of the Sponsor Investment (from the
proceeds of Revolving Loans) in connection with a successful Requested Increase
in the Revolver Credit Commitments (completed in accordance with Section 1.5);
provided, however, that, (i) the Revolving Credit Commitments, pursuant to
such successful Request Increase, are in an aggregate amount of not less than
U.S.$100,000,000, (ii) the Permitted Bridge Facility Refinancing Date has
occurred, and (iii) no Default or Event of Default exists and is
continuing.


 


(iv)                              Distributions
in an amount equal to the Available Amount;


 


(v)                                 Distributions
during each Fiscal Year in an aggregate amount not to exceed U.S.$2,000,000
during such Fiscal Year in order to reimburse any Parent Company for all
administrative costs and expenses actually incurred by such Parent Company during
such Fiscal Year, including organizational fees and expenses, legal fees and
expenses and accounting fees and expenses;


 


(vi)                              Distributions
in connection with the payment of Sponsor Fees;


 


(vii)                           Distributions
in connection with the redemption or repurchase of the Capital Stock of any
Loan Party held by officers, directors, consultants or employees or former
officers, directors, consultants or employees of any Loan Party (or their
transferees, estates or beneficiaries under their estates); provided that the
aggregate cash consideration paid for all such redemptions or repurchases shall
not exceed (x) U.S.$1,500,000 during any calendar year (with unused
amounts being available to be used in the following calendar year, but not in
any succeeding calendar year) plus (y) the net cash proceeds of any “key-man”
life insurance policies that have not been applied to the payment of
Distributions pursuant to this clause (vii);


 


(viii)                        Distributions
to any Parent Company not in excess of $1,500,000 in the aggregate to permit
such Parent Company to pay reasonable fees and expenses incurred in connection
with any unsuccessful debt or equity offering by such Parent Company to the
extent that the proceeds thereof were intended to be used for the benefit of
the Borrower and its Subsidiaries;


 


(ix)                                The
Borrower may make Distributions in the form of Capital Stock of the Borrower;
and


 


48














 


(x)                                   Noncash
repurchases of Capital Stock deemed to occur upon exercise of stock options or
similar equity incentive awards if such Capital Stock represent a portion of
the exercise price of, or tax liability due with respect to, such options or
similar equity incentive awards;


 


(xi)                                Distributions
not in excess of $2,000,000 in the aggregate to allow any Parent Company to
make payments in cash, in lieu of the issuance of fractional shares, upon the
exercise of warrants or upon the conversion or exchange of Capital Stock of any
public entity that is a Loan Party or a Parent Company; and


 


(b)                                 Such
Loan Party shall not make any investment, other than Permitted Investments; and


 


(c)                                  Such
Loan Party shall not make any change in its capital structure which would reasonably
be expected to have a Material Adverse Effect.


 


7.13                        Intentionally
Deleted.


 


7.14                        Guarantees.


 


Such Loan Party
shall not make, issue or become liable on any Guarantee, except:


 


(a)                                  Guarantees
of the Obligations in favour of the Agent;


 


(b)                                 Guarantees
in favour of the lenders and/or noteholders under the Bridge Facility;


 


(c)                                  endorsements
of instruments for deposit in the ordinary course of business;


 


(d)                                 unsecured
Guarantees by the Borrower or any Subsidiary of other obligations that do not
constitute Debt (including those relating to operating leases, performance
obligations and trade payables), in each case entered into in the ordinary
course of business;


 


(e)                                  Guarantees
permitted under the definition of Permitted Investments; and


 


(f)                                    Guarantees
(subordinated on terms acceptable to the Agent) of any Loan Party of Debt for
borrowed money of any joint ventures that are not Loan Parties, to the extent
such Guarantees are Permitted Investments under clauses (t), (u), (v) or (w) of
the definition thereof.


 


7.15                        Debt.


 


Such Loan Party
shall not incur or maintain any Debt, other than:


 


(a)                                  the
Obligations;


 


(b)                                 Debt
described on Schedule 7.15;


 


49

















 


(c)                                  Debt
evidencing a refunding, renewal or extension of the Debt described on Schedule
7.15; provided that (i) the principal amount thereof is not increased, (ii) the
Liens, if any, securing such refunded, renewed or extended Debt do not attach
to any assets in addition to those assets, if any, securing the Debt to be
refunded, renewed or extended, (iii) no Person that is not a Loan Party or
guarantor of such Debt immediately prior to such refinancing shall become a
Loan Party or guarantor thereof, and (iv) the terms of such refunding,
renewal or extension are no less favourable to such Loan Party, the Agent or
the Lenders than the original Debt;


 


(d)                                 Capital
Leases of Fixed Assets and purchase money secured Debt incurred to purchase
Fixed Assets provided that (i) Liens securing the same attach only to the
Fixed Assets acquired by the incurrence of such Debt (and proceeds thereof) and
(ii) the aggregate principal amount of such Debt (including Capital Leases
and any such Debt described on Schedule 7.15) of all Loan Parties outstanding
does not exceed the greater of (A) 2.0% of Consolidated Net Tangible
Assets and (B) U.S.$15,000,000 at any time;


 


(e)                                  (i) intercompany
Debt permitted under the definition of Permitted Investments, and (ii) Debt
of any Loan Party to any Parent Company (provided that same is Subordinated
Debt), to the Borrower or to any other Loan Party;


 


(f)                                    Subordinated
Debt;


 


(g)                                 Debt
in respect of the Bridge Facility, in the original principal amount of
U.S.$570,000,000 plus any accrued pay-in-kind interest, capitalized interest,
accrued interest, fees, discounts, premiums and expenses, in each case, in
respect thereof;


 


(h)                                 Guarantees
permitted by Section 7.14;


 


(i)                                     Debt
under, or reimbursement obligations in respect of, letters of credit and
bankers acceptances issued for performance, surety, appeal or indemnity bonds
or with respect to workers’ compensation claims or other statutory obligations;


 


(j)                                     Debt
arising from netting services, overdraft protection, cash management services
and otherwise in connection with deposit, securities and commodities accounts
in the ordinary course of business;


 


(k)                                  Debt
that is unsecured (other than by a Lien qualifying as a Permitted Lien) in
respect of workers’ compensation claims, bank guarantees, warehouse receipts or
similar facilities, property casualty or liability insurance, take-or-pay
obligations in supply arrangements, self-insurance obligations, performance,
bid and surety bonds and completion guaranties, in each case in the ordinary
course of business;


 


(l)                                     Debt
arising from agreements providing for indemnification related to sales of goods
or adjustment of purchase price or similar obligations in any case incurred in
connection with the acquisition or permitted disposition of any business,
assets or Subsidiary;


 


50

















 


(m)                               Subordinated
Debt issued in lieu of cash payments of Distributions permitted by Section 7.12;


 


(n)                                 Debt
constituting a Permitted Investment (including obligations (contingent or
otherwise) of any Loan Party existing or arising under any Hedge Agreement or
other unsecured hedge arrangements, provided that such obligations are (or
were) entered into by such Loan Party in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, currency translation or property held or
reasonably anticipated to be held by such Loan Party, or changes in the value
of securities issued by such Person, and not for purposes of speculation and as
otherwise permitted by Section 7.31;


 


(o)                                 Debt
owing to any insurance company in connection with the financing of any
insurance premiums permitted by such insurance company in the ordinary course
of business;


 


(p)                                 Subordinated
Debt of any Person that becomes a Loan Party after the Closing Date as part of
an acquisition, merger or consolidation or amalgamation or other Investment not
prohibited hereunder, which Subordinated Debt exists at the time of such
acquisition, merger or consolidation or amalgamation or other Investment;
provided that (a) such Subordinated Debt exists at the time such Person
becomes a Loan Party and is not created in contemplation of or in connection
with such Person becoming a Loan Party (except to the extent such Indebtedness
refinanced other Indebtedness to facilitate such Person becoming a Loan Party),
(b) the aggregate principal amount of Subordinated Debt permitted by this
clause (p) and Section 7.15(q) shall not at any one time
outstanding exceed the greater of (i) 2.0% of Consolidated Net Tangible
Assets and (ii) U.S.$15,000,000  at any time
and (c) such Debt is not guaranteed in any respect by any Loan Party;


 


(q)                                 Subordinated
Debt incurred to finance any acquisition or other Permitted Investment in an
aggregate amount for all such Subordinated Debt together with the aggregate
principal amount of Indebtedness permitted by Section 7.15(p) not to
exceed the greater of (i) 2.0% of Consolidated Net Tangible Assets and (ii) U.S.$15,000,000
at any time;


 


(r)                                    (i) Debt
representing deferred compensation or post retirement obligations to current or
former officers, directors, consultants or employees (or their transferees,
estates, or beneficiaries under their estates) of any Loan Party incurred in
the ordinary course of business and (ii) Debt consisting of obligations of
any Loan Party under deferred compensation or other similar arrangements
incurred in connection with the Transactions and any Permitted Investment;


 


(s)                                  Debt
that is unsecured and undertaken in connection with cash management and related
activities with respect to any joint venture in the ordinary course of
business, and (ii) Debt of any joint venture (regardless of the form of
legal entity) that is not a Subsidiary arising in the ordinary course of
business in connection with the cash management operations (including in
respect of intercompany arrangements) of the Loan Parties.


 


51

















 


(t)                                    Following
the Permitted Bridge Refinancing Date, additional Debt of any Loan Party in an
aggregate principal amount not to exceed the greater of (i) U.S.$15,000,000
at any one time outstanding, and (ii) 2.0% of Consolidated Net Tangible
Assets;


 


(u)                                 Debt
in respect of Taxes being contested
in good faith and in accordance with laws
or to the extent not constituting amounts due and owing but which are required
to be accrued as liabilities on the Financial Statements in accordance with
GAAP; and


 


(v)                                 Debt associated with and asset retirement and
remediation liabilities to the extent not constituting amounts due and owing
but which are required to be accrued as liabilities on the Financial Statements
in accordance with GAAP.


 


7.16                        Prepayment;
Repurchase and Redemption of Debt.


 


Such Loan Party
shall not prepay, redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof, or make any payment in violation of any
subordination terms of any Debt, except (i) the prepayment of the
Obligations in accordance with the terms of this Agreement, (ii) the
prepayment, redemption, purchase or defeasance of any Debt payable to any Loan
Party, (iii) the payment of any obligations in respect of any Subordinated
Debt in accordance with the terms of the subordination agreement (acceptable to
Agent) applicable thereto, (v) any prepayment, redemption, purchase or
defeasance of any of any Debt permitted under Section 7.15 in connection
with any refinancing or replacement thereof, (vi) any prepayment of any
Debt permitted under Section 7.15 required as a result of any sale, lease,
transfer or other disposition of any property securing such Debt to the extent
that such security is permitted under this Agreement, (vii) any
prepayment, redemption, purchase or defeasance of any Debt permitted under Section 7.15
to the extent financed with the proceeds of other Debt permitted to be incurred
under Section 7.15 (other than Revolving Loans), (viii) the
prepayment, redemption, purchase or defeasance of Debt permitted under Section 7.15
with the proceeds of Revolving Loans or with cash from operations so long as
Availability immediately after giving effect to any such prepayment,
redemption, purchase or defeasance is equal to or greater than 50% of the
Commitments and (ix) the prepayment, redemption, purchase or defeasance of
Debt permitted under Section 7.15 made with the Available Amount.  For the avoidance of doubt, nothing in this Section 7.16
shall prohibit scheduled repayments or redemptions of Debt permitted by Section 7.15
or scheduled payments of interest, premiums or fees in respect of such Debt.


 


7.17                        Transactions
with Affiliates.


 


Such Loan Party
shall not enter into, or be a party to, any transaction with any Affiliate of
such Loan Party which is not also a Loan Party, including without limitation
any management, consulting or similar arrangement, except (a) as set forth
on Schedule 7.17, (b) transactions specifically permitted pursuant to the other
provisions of this Agreement, including without limitation Permitted
Investments, (c) the Transactions, the Permitted Reorganization, any
repayment or the Sponsor Investment and any Tax Dividend, (d) transactions
upon fair and reasonable terms no less favourable to the Loan Party than it
would obtain in a comparable arm’s length transaction with a Person that is not
an Affiliate and (e) payment of permitted Sponsor Fees to Sponsor.  For the avoidance of doubt, this Section 7.17
shall not apply to permitted 


 


52

















 


employment,
bonus, incentive retention and severance arrangements with, and payments of
compensation or benefits to or for the benefit of, current or former employees,
consultants, officers or directors of any Loan Party.


 


7.18                        Use
of Proceeds.


 


(a)                                  The
proceeds of the Revolving Loans made and Letters of Credit issued after the
Initial Funding Date are to be used (i) to repay the Sponsor Investment (provided,
however, that (x) the aggregate Revolving Loan Commitments have been
increased to a minimum of U.S.$100,000,000 (in accordance with Section 1.5),
and (y) the Permitted Bridge Facility Refinancing Date has occurred); (ii) to
replace or backstop existing letters of credit of any Loan Party, (iii) to
finance payments in respect of Debt to the extent such payments are permitted
by Section 7.16 and (iv) for working capital, capital expenditures,
credit assurances and general corporate purposes of the Loan Parties not
prohibited hereunder, including direct drawings to purchase Petroleum
Inventory, to fund Contango Loans and to fund Permitted Investments (including
Permitted Acquisitions, where such use of Revolving Loans are permitted
thereunder); and


 


(b)                                 If
doing so would violate Regulation T, U or X, such Loan Party shall not use any
portion of the Revolving Loan proceeds, directly or indirectly, (i) to
purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of a Loan Party or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock.


 


7.19                        Business
Conducted.


 


Such Loan Party
shall not engage, directly or indirectly, in any material line of business substantially
different from the Present Line of Business and reasonable extensions,
developments and expansions thereof and any others ancillary or reasonably
related thereto.


 


7.20                        Liens.


 


Such Loan Party
shall not create, incur, assume or permit to exist any Lien on any Collateral
now owned or hereafter acquired by any of them, except Permitted Liens.


 


7.21                        Sale
and Leaseback Transactions.


 


Such Loan Party
shall not, directly or indirectly, enter into any arrangement with any Person
providing for any Loan Parties or any Subsidiary of a Loan Party to lease or
rent Collateral that the Loan Parties or any Subsidiary of the Loan Parties has
or will sell or otherwise transfer to such Person.


 


7.22                        New
Subsidiaries.


 


Such Loan Party
may not, directly or indirectly, organize, create, acquire or permit to exist
any Subsidiary other than any direct or indirect Subsidiary existing on the
Closing Date or any Subsidiary created in connection with the Permitted
Reorganization.  Notwithstanding the
foregoing, a Loan Party may organize, create or acquire a Subsidiary if (A) such
Subsidiary is an 


 


53

















 


Excluded
Subsidiary or (B) such Subsidiary promptly becomes a Guarantor hereunder
and executed and delivered a Guarantor Adhesion Agreement (in the form attached
as Exhibit H) and a Security Agreement and any other applicable Security
Document or Loan Document and conducted and registered applicable UCC/PPSA
registrations, and (C) if requested by the Agent, such Loan Party and such
Subsidiary shall have delivered or caused to be delivered to the Agent legal
opinions and other documents relating to matters described in this clause (B) above,
which opinions and other documents shall be in form and substance, and (in the
case of legal opinions) from counsel, reasonably satisfactory to the Agent.


 


7.23                        Fiscal
Year.


 


Such Loan Party
shall not change its Fiscal Year, other than in connection with the Permitted
Reorganization or unless the Agent shall otherwise reasonably agree.


 


7.24                        Bank
Accounts; Cash Management.


 


(a)                                  Each
Loan Party shall establish on or before the Initial Funding Date (or such later
date as the Agent shall agree in its reasonable judgement), and shall
thereafter maintain, Receipt Accounts for collections of Accounts at Royal
Bank, or such other banking institution reasonably acceptable to the Agent with
whom a Receipt Account has been established, in each case subject to a Blocked
Account Agreement, to which all Account Debtors, if directly depositing, shall
be instructed to make payments on Accounts and where Loan Parties shall make
all their deposits.  Each Loan Party may
also maintain lock-box accounts and other lock-box arrangements with Royal
Bank, or such other banking institution reasonably acceptable to the Agent to
which Account Debtors are instructed to make payments on Accounts.  All funds in lock-box accounts shall be
transferred on each Business Day to a Receipt Account established for the
account of such Loan Party at Royal Bank, or such other banking institution
reasonably acceptable to the Agent with whom a Receipt Account has been
established, in each case subject to a Blocked Account Agreement.  Each Loan Party shall make collection of all
of its Accounts and other payments in connection with any Collateral and other
Collateral for the Agent, shall receive all payments as the Agent’s trustee and
mandatory, and shall immediately deliver all payments into a Receipt Account
established for the account of the Loan Party at Royal Bank, or such other
banking institution reasonably acceptable to the Agent with whom a Receipt
Account has been established, in each case subject to a Blocked Account
Agreement. All such Blocked Account Agreements shall stipulate that upon
written notice from the Agent (the “Activation Notice”), the only permitted use
of balances on deposit in the applicable Receipt Account shall be the transfer
of such balance to the Agent or such other banking institution reasonably
acceptable to the Agent with whom a Receipt Account has been established, and
such institution shall be irrevocably and unconditionally authorised to
transfer, on each Business Day (or such longer intervals as the Agent may
agree), all balances on deposit in such Receipt Accounts to such account or
accounts as the Agent may from time to time designate for such purpose for
application to the outstanding Obligations in accordance with the provisions of
Section 3.7.  The Agent may only
provide the Activation Notice when (i) an Event of Default described in 


 


54

















 


subsection (a), (e), (f),
(g), (h) or (i) of Section 9.1 of the Credit Agreement is in
existence and is continuing; (ii) any other Event of Default described in Section 9.1
of the Credit Agreement is in existence and is continuing and has not been
cured or waived by the Lenders within five (5) Business Days after written
notice from the Agent, or (iii) Availability (exclusive of any Oil
Settlement Date Reserve) on any date is less than an amount that is equal to
15% of the Commitments.


 


(b)                                 If
sales of Inventory of a Loan Party are made or services are rendered for cash,
the Loan Party shall promptly deliver to the Agent or deposit into a Receipt
Account the cash which the Loan Party receives.


 


(c)                                  All
payments in respect of the Obligations, including immediately available funds
received by the Agent at a bank account designated by it, will be held by the
Agent as the sole property and for the benefit of the Secured Parties and will
be credited to the Loan Account of the Loan Party (conditional upon final
collection) after allowing one (1) Business Day for collection.


 


7.25                        Intentionally
Deleted.


 


7.26                        Fixed
Charge Coverage Ratio.


 


The Borrower will
maintain in any period when Availability (exclusive of any Oil Settlement Date
Reserve) is less than an amount equal to (x), until the aggregate Revolving
Credit Commitments are increased to a minimum of U.S.$100,000,000 (in
accordance with Section 1.5 hereof), 10% of the Commitments, and (y), at
all times thereafter, 15% of the Commitments, (in each case tested at the end
of each month) a Fixed Charge Coverage Ratio for each period of twelve
consecutive historical months beginning with the twelve months ending December 31, 2008, and continuing as the end
of each month thereafter during the term of this Agreement of not less than
1.10:1.


 


7.27                        Corporate
Documents.


 


Except as
contemplated in the Permitted Reorganization, such Loan Party shall not amend
or permit to be amended in any manner that would reasonably be expected to be
materially adverse to the Agent or the Lenders, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability
agreement, operating agreement, members agreement, memorandum of association,
shareholders agreement, partnership agreement, certificate of partnership,
certificate of formation, voting trust agreement, or similar agreement or
instrument governing the formation or operation of such Loan Party.


 


7.28                        Intentionally
Deleted.


 


7.29                        Restrictive
Agreements.


 


Such Loan Party
shall not become a party to any agreement that conditions or restricts the
right of such Loan Party to incur or repay the Obligations, to grant Liens on
the Collateral (other than Permitted Liens) or to declare or make Distributions
or to repay intercompany Debt, except:


 


55

















 


(a)                                  the
Loan Documents;


 


(b)                                 the
Bridge Facility Documents;


 


(c)                                  such
an agreement related to secured Debt permitted hereunder, if such restrictions
apply only to the collateral for such Debt;


 


(d)                                 customary
provisions in leases and other contracts restricting assignment thereof;


 


(e)                                  provisions
contained in joint venture agreements and other similar agreements applicable
to joint venture assets entered into in the ordinary course of business,
including restrictions in connection with the joint venture assets relating to
the Battle River facility;


 


(f)                                    customary
restrictions and conditions contained in any agreement relating to any
disposition of property permitted hereunder;


 


(g)                                 any
agreement in effect at the time any Person becomes a Subsidiary that Borrower
will designate as an Excluded Subsidiary, so long as such agreement was not
entered into in contemplation of such Person becoming a Subsidiary;


 


(h)                                 restrictions
imposed by any Subordinated Debt that are consistent with the definition
thereof and acceptable to Agent; and


 


7.30                        Intentionally
Deleted.


 


7.31                        Hedging
Arrangements.


 


Such Loan Party
shall not be a party to or in any manner be liable on any Hedge Agreement or
unsecured hedge agreement other than those entered into in accordance with the
Risk Management Policy or otherwise in the ordinary course of business in
accordance with past practice.


 


7.32                        Special
Provisions Regarding Accounts, Inventory and Other Collateral.


 


(a)                                  Each
Loan Party hereby represents and warrants, with respect to such Loan Party’s
Accounts, that: (i) each existing Account represents, and each future
Account will represent, a bona fide sale or lease and delivery of goods by such
Loan Party, or rendition of services by such Loan Party, in the ordinary course
of such Loan Party’s business; (ii) each existing Account is, and each
future Account will be, for a liquidated amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor or in the schedule
thereof delivered to the Agent, without any material offset, deduction, defence
or counterclaim except those known to such Loan Party and disclosed to the
Agent and the Lenders in respect of offsets, deductions, defences or counterclaims
involving an amount not greater than (x) if such Account is an Eligible
Account, $1,000,000 or (y) if such Account is not an Eligible Account,
$5,000,000; (iii) no payment will be received with respect to any Account
of such Loan Party, and no credit, discount or extension or agreement therefor
will be granted on any Account of such Loan 


 


56

















 


Party, except as reported in
Borrowing Base Certificates delivered hereunder or otherwise reported by such
Loan Party to the Agent pursuant to the terms hereof; (iv) each copy of an
invoice delivered to the Agent by such Loan Party will be a genuine copy of the
original invoice sent to the Account Debtor named therein; and (v) all
goods described in any invoice representing a sale of goods will have been
delivered to the Account Debtor and all services of such Loan Party described
in each invoice will have been performed, unless otherwise notified to the
Agent.


 


(b)                                 No
Loan Party shall re-date any invoice or sale or make sales on extended dating
by more than ninety (90) days past the invoice date beyond that is customary in
such Loan Party’s business, or extend or modify any Account (other than
extensions and modifications made in the ordinary course of business or otherwise
in excess of $1,000,000 in the aggregate for Eligible Accounts or $5,000,000 in
the aggregate for Accounts when same not Eligible Accounts). If, at any time
that Borrowing Base Certificates are required to be delivered on a more
frequent than a bi-monthly basis hereunder, a Loan Party becomes aware of any
matter adversely affecting the collectibility in any material respect of any of
its Accounts or the Account Debtor therefor involving an amount greater than (i) $1,000,000
if such Account is an Eligible Account or (ii) $5,000,000 if such Account
is not an Eligible Account, including a dispute or claim, or information
regarding the Account Debtor’s creditworthiness, such Loan Party will promptly
advise the Agent of the same.


 


(c)                                  No
Loan Party shall accept any note or other instrument (except a cheque or other
instrument for the immediate payment of money) with respect to any of its
Eligible Accounts in excess of $1,000,000 in the aggregate for Eligible
Accounts or $5,000,000 in the aggregate for Accounts when same not Eligible
Accounts at any time outstanding, without the Agent’s prior written
consent.  If the Agent consents to the
acceptance of any such instrument, it shall be considered as evidence of the
applicable Account and not payment thereof and the Loan Party will promptly
deliver such instrument to the Agent, endorsed by such Loan Party to the Agent
in a manner reasonably satisfactory in form and substance to the Agent.


 


(d)                                 No
discount, credit or allowance shall be granted to any Account Debtor without
the Agent’s prior written consent, except for discounts, credits and allowances
made or given in the ordinary course of the applicable Loan Party’s business
which shall not be in excess of $1,000,000 in the aggregate for Eligible
Accounts or $5,000,000 in the aggregate for Accounts when same not Eligible
Accounts when no Event of Default exists and is continuing.  Each Loan Party shall send the Agent a copy
of each credit memorandum in excess of (x) $1,000,000, at any time that
Borrowing Base Certificates are required to be delivered on a more frequent
than bi-monthly basis hereunder or (y) $2,000,000, at any other time, when
issued, and such Loan Party shall promptly report such credit on Borrowing Base
Certificates submitted by it.


 


57

















 


(e)                                  Each
Loan Party shall promptly report to the Agent any return of previously sold (i) Eligible
Inventory involving an amount in excess of (x) $1,000,000 or (ii) Inventory
that is not Eligible Inventory involving an amount in excess of
$5,000,000.  Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory.  In the event any
Account Debtor returns Inventory to a Loan Party when an Event of Default
exists and is continuing, such Loan Party, upon the written request of the
Agent, shall: (i) hold all returned Inventory in trust for the Agent; (ii) dispose
of the returned Inventory solely according to the Agent’s written instructions;
and (iii) not issue any credits or allowances with respect thereto without
the Agent’s prior written consent.  All
returned Inventory shall be subject to the Agent’s Liens thereon.  Whenever any Inventory is returned, the
related Account shall be deemed ineligible to the extent of the amount owing by
the Account Debtor with respect to such returned Inventory.


 


(f)                                    Each
Loan Party represents and warrants to the Agent and the Lenders and agrees with
the Agent and the Lenders that all of the Inventory owned by such Loan Party is
and will be held for sale, or to be furnished in connection with the rendition
of services, or to be utilized in the production of other Inventory, in the
ordinary course of such Loan Party’s business, and is and will be at the time
of sale fit for such purposes. Each Loan Party will keep its Inventory in good
and marketable condition, except for damaged or defective goods arising in the
ordinary course of such Loan Party’s business. Each Loan Party will not,
without the prior written consent of the Agent, acquire or accept any Inventory
on consignment or approval other than in the ordinary course of business in a
manner consistent with past practices and, upon the reasonable request of the
Agent, such Loan Party will provide the Agent with the details of any such arrangements.  Each Loan Party will maintain an inventory
reporting system consistent with past practice or otherwise reasonably
satisfactory to the Agent.  Each Loan
Party will not, without the Agent’s written consent, sell any of its Inventory
on a bill-and-hold, guaranteed sale, sale and return, sale on approval,
consignment or other repurchase or return basis other than in the ordinary
course of business in a manner consistent with past practices and, upon the
reasonable request of the Agent, such Loan Party will provide the Agent with
the details of any such arrangements.


 


(g)                                 In
connection with all Inventory of a Loan Party financed by Letters of Credit,
such Loan Party will, at the Agent’s request made after the occurrence and
during the continuance of an Event of Default, instruct all suppliers,
carriers, forwarders, customs brokers, warehouses or others receiving or
holding cash, cheques, Inventory, documents of title or Instruments of such
Loan Party in which the Agent holds a security interest to deliver them to the
Agent and/or subject to the Agent’s order, and if they shall come into such
Loan Party’s possession, to deliver them, upon request, to the Agent in their
original form.  Each Loan Party shall
also, at the Agent’s request made after the occurrence and during the
continuance of an Event of Default, designate the Agent as the consignee on all
bills of lading and other negotiable and non-negotiable documents of such Loan
Party.


 


58














 


(h)                                 The
Agent may, in its sole discretion, and shall, at the direction of the Required
Lenders, pay any amount or do any act required of any Loan Party hereunder or
requested by the Agent and/or Lenders to preserve, protect, maintain or, upon
the occurrence of an Event of Default and exercise by the Agent and Lenders of
their rights under Section 9.2 hereof, enforce the Obligations, the
Collateral or the Agent’s Liens, and which the Loan Party fails to pay or do,
including, without limitation, payment of any judgment against the Loan Party
any insurance premium, any warehouse charge, any finishing or processing
charge, any landlord’s or processor’s claim, and any other Lien upon or with
respect to the Collateral.  All payments
that the makes under this Section and all reasonable out-of-pocket costs
and expenses that the Agent pay or incur in connection with any action taken
hereunder shall be charged to the Borrower’s Loan Account as a Revolving
Loan.  Any payment made or other action
taken by the Agent and/or Lenders under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.


 


(i)                                     Each
Loan Party hereby constitutes the Agent, or any person or agent the Agent may
designate, as its attorney-in-fact, at the Borrower’s cost and expense to, upon
the occurrence of an Event of Default which is continuing, exercise all of the
following powers, which being coupled with an interest, shall be irrevocable
until the earlier of (x) the cure or waiver of such Event of Default or (y) the
date on which all Obligations to the Agent and the Lenders have been
indefeasibly paid in full:


 


(i)                                     to
receive, take, endorse, sign, assign and deliver, all in the name of the Agent
or any Loan Party, as the case may be, any and all cheques, notes, drafts, and
other documents or instruments relating to the Collateral;


 


(ii)                                  to,
notwithstanding the foregoing, at all times (including prior to an Event of
Default) at the Agent’s discretion, request from customers indebted on Accounts
at any time, in the name of any Loan Party or in the name of the Agent’s
designee, information concerning the amounts owing on the Accounts;


 


(iii)                               to
transmit to customers indebted on Accounts notice of the Agent’s interest
therein and to notify customers indebted on Accounts to make payment directly
to the Agent for the requisite Loan Party’s account;


 


(iv)                              to
take or bring, in the name of the Agent or any Loan Party, as the case may be,
all steps, actions, suits or proceedings deemed by the Agent necessary or
desirable to enforce or effect collection of the Accounts; and


 


(v)                                 to
receive, open and dispose of all mail addressed to a Loan Party and to notify
the postal authority of any change of address for delivery thereof to such address
as Agent may designate.


 


(j)                                     Such
Loan Party assumes all responsibility and liability arising from or relating to
the use, sale or other disposition of the Collateral.  The Obligations shall not be affected by any
failure of the Agent or any Lender to take any steps to perfect the 


 


59

















 


Agent’s Liens or to collect
or realize upon the Collateral, nor shall loss of or damage to the Collateral
release any Loan Party from any of the Obligations.  Following the occurrence and during the
continuance of an Event of Default, the Agent may (but shall not be required
to), and at the direction of the Required Lenders shall, without notice to or
consent from any Loan Party, sue upon or otherwise collect, extend the time for
payment of, modify or amend the terms of, compromise or settle for cash,
credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action
with respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of any Loan Party for the Obligations or
under this Agreement or any other agreement now or hereafter existing between
the Agent and/or any Lender and any Loan Party.


 


7.33                        Risk
Management Compliance; Certain Permitted Financial Instruments; and Certain
NYMEX Transactions.


 


(a)                                  Risk
Management Compliance.  Such Loan Party shall not enter into any
transaction or permit to exist any material Position that is in violation of
the Risk Management Policy, except transactions or Positions entered into in
with a good faith belief that no such violation exists and where such violation
is remedied as promptly as possible. 
Such Loan Party shall not materially amend or change the risk management
policies set forth in the Risk Management Policy in any material manner without
the consent of the Agent.


 


(b)                                 Certain
Permitted Financial Instruments.  Such Loan Party shall not write (i.e. sell)
or otherwise participate in any swap, collar or similar agreement relating to
Petroleum Inventory, or write (i.e. sell) any option, unless, with respect
thereto, the counter-party (or guarantor to the obligations of such
counter-party) at the time such financial instrument is made (i) has one
or more long term unsecured and unenhanced debt obligations with an Investment
Grade Rating, respectively, by either Moody’s or S&P, or (ii) is a
Lender or an Affiliate of a Lender.


 


7.34                        Specified
Contracts.


 


Such Loan Party
shall not enter into any Specified Contracts (as defined in the Intercreditor
Agreement) without the prior written consent of the Agent, unless the entering
into of such Specified Contracts are permitted by the terms of the
Intercreditor Agreement.


 


7.35                        Further
Assurances.


 


Such Loan Party
shall execute and deliver or cause to be executed and delivered to the Agent
and/or the Lenders such documents and agreements, and shall take or cause to be
taken such actions, as the Agent may, from time to time, reasonably request to
carry out the terms and conditions of this Agreement and the other Loan
Documents.


 


60

















 


7.36                        References
to “Borrower”.


 


In light of the
Lenders’ requirement for disclosure of matters relating to not just the
Borrower but also Target, all references to “the Borrower” in this Agreement
shall be deemed to include Target prior to the Transaction and the Permitted
Reorganization as if the transactions contemplated by the Gibson Acquisition
had been completed in accordance with their terms.


 


7.37                        Closing
Date Transactions.


 


As soon as
practicable after establishment of the Total Facility and completion of the
Transaction on the Closing Date, the Borrower and the other respective Loan
Parties shall effect the Permitted Reorganization and otherwise complete the
Loan Documents in accordance with their respective terms.  The Amalgamated Borrower, the new
Subsidiaries that will be formed under the Permitted Reorganization and the
amalgamating Loan Parties under the Permitted Reorganization shall promptly
deliver the requisite Guarantor Adhesion Agreements, Security Agreements,
UCC/PPSA registrations and any other Loan Document and undertake any other
action required by the Agent. 
Amalgamating Loan Parties shall also deliver an executed confirmation
and acknowledgement agreement in form and substance satisfactory to the Agent
dated the date hereof (the “Confirmation and Acknowledgement”) regarding, inter alia, confirmation that all security documents and all
Loan Documents apply to the Amalgamated Borrower, and all other such
amalgamating Loan Parties, together with such ancillary certificates,
acknowledgements and legal opinions as may be reasonably required by the Agent
in connection with any of the foregoing, all on terms and conditions
satisfactory to the Agent, acting reasonably.


 


7.38                        U.S.
Loan Parties.


 


Unless otherwise
agreed to by the Agent, the Loan Parties, whose jurisdiction of incorporation
is in the United States of America, shall not have any material levels of
Inventory, Accounts or any material operations unless and until the conditions
set forth in Section 8, as complied with by the Loan Parties whose
jurisdictions of incorporation are in Canada, have been met.


 


7.39                        Parent
Company.


 


Borrower shall
cause its Parent Company to not, unless otherwise agreed to by the Agent
(acting in its sole discretion), carry on any active business.  For the avoidance of doubt, the foregoing
covenant shall not prohibit such Parent Company from (i) owning Capital
Stock, cash, and Cash Equivalents, hedges or other securities (ii) the
issuance of and performance of its obligations in respect of Capital Stock and
Debt, (iii) the making of Distributions and the Transfer of property, (iv) hedging
activities and financing activities, (v) actions required by law to maintain
its existence and activities incidental to its maintenance and continuance and
to any of the foregoing activities.


 


ARTICLE 8 — CONDITIONS OF LENDING


 


8.1                               Conditions
to Effectiveness on the Closing Date.


 


The obligation of
the Lenders to confirm that the Loan Documents are effective on the Closing
Date, without any obligation on any Lender to make Revolving Loans available
(prior to the 


 


61

















 


Conditions to
Initial Funding being satisfied) and without any obligation on Agent and
Lenders to issue any Letter of Credit on the Closing Date (prior to the
Conditions to Initial Funding being satisfied), is subject to the following
conditions precedent (the “Conditions to Effectiveness”) having been satisfied
in a manner satisfactory to the Agent and each Lender or waived:


 


(a)                                  This
Agreement and the other Loan Documents shall have been executed by each party
thereto (other than, in the case of this Agreement, the Arrangers) and each
Loan Party shall have performed and complied with all covenants, agreements and
conditions contained herein and in the other Loan Documents which are required
to be performed or complied with by such Loan Party before or on such Closing
Date.


 


(b)                                 After
giving effect to the consummation of the Transactions, the issuance of any
Letters of Credit on the Initial Funding Date and with all obligations of each
Loan Party current, the Borrower shall have (at its selection) (i) a
Funded Debt to EBITDA Ratio of less than or equal to 4.5:1.0, calculating
EBITDA for the trailing 12 month period at testing and including up to
$40,000,000 (of cash on hand at the Borrower) in the calculation of Funded
Debt, or (ii) a Funded Debt to EBITDA Ratio of less than or equal to
4.65:1.0, calculating EBITDA for the trailing 12 month period.


 


(c)                                  All
representations and warranties (i) made by or on behalf of the Loan
Parties in the Acquisition Agreement (as are material to the interests of the
Lenders (acting in their discretion) but only to the extent that the Borrower
has the right to terminate its obligations under the Acquisition Agreement as a
result of a breach of such representations in the Acquisition Agreement) are
true and correct, and (ii) the representation and warranties set forth in
this Agreement are  true and
correct.


 


(d)                                 The
Agent and the Lenders shall have received such opinions of counsel for the Loan
Parties as the Agent or any Lender shall request, each such opinion to be in a
form, scope, and substance reasonably satisfactory to the Agent, and its
counsel.


 


(e)                                  The
Agent shall have received:


 


(i)                                     Any
PPSA or UCC financing statement required by the Security Documents or any other
Loan Document or reasonably requested by the Agent to be filed, registered or
recorded in order to create in favour of the Agent, for the benefit of the
Agent and the Lenders, a perfected Lien on the Collateral, prior and superior
in right to any other Person (other than Permitted Liens), and in proper form
for filing, registration or recordation;


 


(ii)                                  Estoppel
documentation and PPSA, UCC 3 or Civil Code (Quebec) termination statements
(and similar termination statements or releases under other applicable laws)
authorized for filing by the appropriate Person and such other instruments, in
form and substance reasonably satisfactory to the Agent, as shall be necessary
to terminate and satisfy all Liens on the Collateral of the Loan Parties and
their respective Subsidiaries except Permitted Liens; and


 


62

















 


(iii)                               the
results of a search of tax and other Liens, and judgments and of the PPSA
filings, UCC filings, and filings made pursuant to other applicable laws or
statutes to perfect a security interest in Collateral of a Loan Party made with
respect to each of the Loan Parties in the jurisdictions in which each Loan
Party is organized and/or in which any Collateral is located and in which PPSA
filings, UCC filings or filings made pursuant to other applicable laws or
statutes to perfect a security interest in Collateral of a Loan Party have been
made against any Loan Party in (i) hereinabove.


 


(f)                                    The
Agent shall be reasonably satisfied with the terms and conditions of all
material Debt (including, without limitation, the Bridge Facility and all
Subordinated Debt) and related documents of the Loan Parties to remain
outstanding after the Closing Date.


 


(g)                                 The Agent shall have received evidence reasonably
satisfactory to the Agent that all requisite
governmental and third party consents and approvals to (i) the
Transaction, (ii) the Bridge Facility and (iii) the transactions
contemplated by this Agreement and the other Loan Documents, have been obtained
and remain in full force and effect; all applicable waiting periods shall have
expired without any action being taken by any competent authority; and no law
or regulation shall be applicable in the reasonable judgment of the Agent and
the Lenders that restrains, prevents or imposes materially adverse conditions
upon any of the Loan Documents, the Transaction Documents or the Bridge
Facility Documents.


 


(h)                                 There
shall exist no action, suit, investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator or governmental
instrumentality that, in the reasonable judgment of the Agent, would reasonably
be expected to (i) have a Material Adverse Effect or (ii) materially
and adversely affect this Agreement or any of the other Loan Documents or any
of the transactions contemplated hereby or thereby or otherwise referred to in
clause (g) above.


 


(i)                                     Each
Loan Party shall have used its reasonable commercial efforts to obtain and
deliver to the Agent landlord waivers and bailee letters from landlords of each
of the premises leased by such Loan Party on the Closing Date at which (for any
such premises) Collateral is located on the Closing Date and from the public
warehousemen at whose warehouses any Collateral pledged by such Loan Party is
located on the Closing Date, in each case in form and substance reasonably
satisfactory to the Agent, duly executed by, as appropriate, such landlords and
warehousemen; provided, however, that the delivery of such agreements are not
conditions to closing hereunder, but for each such location for which such an
agreement is not delivered, the Agent may establish a reserve against the
Borrowing Base, equal to the lesser of (i) the amount of applicable
Availability from Eligible Inventory at the applicable location; or (ii) up
to three (3) months’ rental and other charges for the applicable location.


 


(j)                                     The
Loan Parties shall have paid (i) all fees and expenses of the Lenders,
Arrangers and Agent incurred in connection with any of the Loan Documents and 


 


63

















 


the transactions
contemplated thereby, (ii) the Attorney Costs, and (iii) all fees and
expenses as set forth in the Fee Letter.


 


(k)                                  The
Agent shall have received evidence, in form, scope, and substance, reasonably
satisfactory to the Agent, of all insurance coverage as required by this
Agreement (including, without limitation, the certificates of insurance and
other documents required by Section 7.5).


 


(l)                                     The
Agent and the Lenders shall have had an opportunity, if they so choose, to
examine the books of account and other records and files of each Loan Party and
to conduct a pre closing field audit which shall include, without limitation,
verification of Inventory, Accounts, the Borrowing Base, the assets purchased
in connection with the Gibson Acquisition and the results of such examination
and audit shall have been satisfactory to the Agent and the Lenders in all
respects.


 


(m)                               The
Transaction shall have been, or contemporaneously herewith be, duly consummated
in accordance with the terms of the Acquisition Agreement without waiver or
amendment thereof (other than any such waivers or amendments (including,
without limitation, with respect to any representations and warranties in the
Acquisition Agreement) as are not materially adverse to the Arrangers unless
consented to by the Arrangers or on such other terms and conditions as are
reasonably satisfactory to the Lead Arrangers on the Closing Date) and in
compliance with all material applicable Requirements of Law, on terms
reasonably acceptable to the Agent.  The
Agent shall have received (x) copies of each of the Acquisition Agreement,
including all amendments and schedules thereto, each certified as true and
correct by an officer of the Borrower.


 


(n)                                 The
Agent shall have received a certificate of an Officer of each of the Loan
Parties, dated the Closing Date and certifying (A) that attached thereto
is a true and complete copy of the certificate or articles of incorporation or
other constitutive or organizational documents, in each case amended to date,
of such Loan Party, (B) that attached thereto is a true and complete copy
of such Loan Party’s by-laws or limited liability company agreement, as the
case may be, as in effect on the date of such certificate and at all times
since a date prior to the date of the resolution described in item (C) below,
(C) that attached thereto is a true and complete copy of a resolution
adopted by such Loan Party’s Board of Directors (or in the case of a Loan Party
that is not a corporation, the equivalent governing body) authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, and that such resolution has not been
modified, rescinded or amended and is in full force and effect, (D) that
such Loan Party’s certificate or articles of incorporation or other
constitutive documents have not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished
hereinabove, and (E) as to the incumbency and specimen signature of each
of such Loan Party’s officers executing this Agreement or any other Loan
Document delivered in connection herewith or therewith, as applicable; and a
certificate of another of such Loan Party’s officers as to the incumbency and
signature of its Secretary or Assistant Secretary, as the case may be.


 


64

















 


(o)                                 The
Agent shall have received certificates of status, certificates of good
standing, existence or its equivalent with respect to each Loan Party and
Target certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation or organization
of such Loan Party and Target and in each other jurisdiction in which
qualification is necessary in order for such Loan Party and Target to own or
lease its property and conduct its business.


 


(p)                                 The
Agent shall be reasonably satisfied with the corporate and legal structure and
capitalization of the Loan Parties after giving effect to the consummation of
the Transaction, the Loan Documents and the Bridge Facility.


 


(q)                                 The
Agent shall have received and been reasonably satisfied with the annual
financial statements and interim financial statements referenced in Section 6.6(a),
and the pro forma balance sheets of the Loan Parties referenced in Section 6.6(b).


 


(r)                                    The
Bridge Facility shall have been, or shall contemporaneously herewith be closed
in accordance with the Bridge Facility Documents (on terms substantially
consistent with those set forth in the term sheet in respect thereof dated as
of August 4, 2008, or on terms otherwise reasonably satisfactory to the
Arrangers).


 


(s)                                  The
Borrower shall have received on the Closing Date the Sponsor Equity
Contribution in cash, and on terms satisfactory to the Arrangers, to pay a
portion of the purchase price under the Transaction Documents.


 


(t)                                    The
Borrower shall have received the Sponsor Investment in cash or on such other
form as is reasonably acceptable to the Lead Arrangers.


 


(u)                                 Lenders
shall have received from the Loan Parties the requisite information under the “know
your customer” and Anti-Terrorism Laws.


 


(v)                                 Required
Lenders and Arrangers shall have received the Risk Management Policy.


 


(w)                               Agent
shall have received a fully executed copy of the Intercreditor Agreement.


 


(x)                                   Lenders
shall have received a reasonably satisfactory solvency certificate of the
Borrower and its Subsidiaries on a consolidated basis after giving effect to
the Transactions.


 


(y)                                 Agent
shall have received a fully executed copy of the Sponsor Management Agreement.


 


(z)                                   Target
and Borrower shall have repaid all amounts outstanding under its existing
credit lines, and all such existing credit lines shall have been cancelled
permanently.


 


(aa)                            The
Borrower shall obtain an assignment of the Acquisition Agreement in favour of
the Agent, which shall include a seller acknowledgement regarding the right of 


 


65

















 


Agent, inter alia,
to enforce the provisions and indemnities thereof, on terms and in substance
satisfactory to the Agent.


 


(bb)                          The
Agent and Lenders shall have completed all due diligence which they consider
necessary or appropriate in their discretion in regard to the Loan Parties and
the Target and their and its properties, assets, books and records, operations,
prospects and condition (financial and otherwise).


 


Execution and
delivery to the Agent by a Lender of a counterpart of this Agreement shall be
deemed confirmation by such Lender that the decision of such Lender to execute
and deliver to the Agent an executed counterpart of this Agreement was made by
such Lender independently and without reliance on the Agent or any other Lender
as to the satisfaction of any condition precedent set forth in this Section 8.1
and Section 8.2.


 


8.2                               Conditions
Precedent to Making of the Revolving Loans and the Issuing of Letters of Credit
(up to Initial Funding Date Amount) on the Initial Funding Date.


 


The obligation of
any Lender to make a Revolving Loan (subject to a maximum amount equal to the
Initial Funding Date Amount) on the Initial Funding Date, and the obligation of
the Agent and Lenders to issue any Letter of Credit (subject to a maximum
amount equal to the Initial Funding Date Amount) on the Initial Funding Date
shall be subject to the Conditions to Effectiveness being satisfied and
continuing to be satisfied on the Initial Funding Date (provided that to the
extent such Conditions to Effectiveness relate to an earlier date, such
Conditions to Effectiveness shall be true and correct as of such earlier date)
and shall be subject to the following further conditions precedent (the “Conditions
to Initial Funding”) that on and as of the date of such extension of credit:


 


(a)                                  The
representations and warranties contained in this Agreement and the other Loan
Documents are true and correct in all material respects on and as of the date
of such extension of credit as though made on and as of such date, other than
any such representation or warranty which relates to a specified prior date
(which shall be correct as of such specified prior date) and except to the
extent the Agent has been notified in writing by the Borrower that any
representation or warranty is not correct and the Required Lenders have
explicitly waived in writing compliance with such representation or warranty.


 


(b)                                 No
event has occurred and is continuing, or would result from such extension of
credit, which constitutes an Event of Default.


 


(c)                                  No
such Borrowing shall exceed the applicable Availability or the applicable
Borrowing Base, provided, however, that the foregoing conditions precedent in
this Section 8.2 are not conditions to each Lender participating in or
reimbursing Royal Bank or the Agent for such Lender’s Pro Rata Share of any
Agent Advance or Overdraft Accommodation made in accordance with the provisions
of Sections 1.2(j) and 1.2(k) or unreimbursed drawings under a Letter
of Credit.


 


(d)                                 Agent
shall have received and be reasonably satisfied with (i) the delivery of
the Borrowing Base Certificate for the period and delivery of the requisite
Notice of Borrowing (ii) if required by the Agent the interim unaudited
consolidated 


 


66

















 


financial statements of the Borrower
for the period from the Closing Date to the Initial Funding Date, and (iii), if
the Initial Funding Date is ninety (90) or more days past the Closing Date, and
if required by Agent, an updated take over commercial finance exam by an
appraiser acceptable to the Agent, which exam shall be reasonable satisfactory
to the Agent having regard to matters revealed by the commercial finance exam
delivered to the Arrangers prior to the Closing Date.


 


(e)                                  To
the extent not previously delivered, all Collateral, Guarantees, Security
Documents and other collateral documentation or Loan Documents, and all
conditions under Section 8.1(e), shall have been, as applicable,
delivered, met and satisfied.


 


8.3                               Conditions
Precedent to Each Revolving Loan and Letter of Credit after the Initial Funding
Date.


 


The obligation of
any Lender to make a Revolving Loan, after the Initial Funding Date, and the
obligation of the Agent and Lenders to issue any Letter of Credit after the
Initial Funding Date shall, in each instance, be subject to the further
conditions precedent that on and as of the date of any such extension of
credit:


 


(a)                                  The
following statements shall be true, and the acceptance by Borrower of any
extension of credit shall be deemed to be a statement to the effect set forth
in clauses (i) and (ii) with the same effect as the delivery to the
Agent and the applicable Lenders of a certificate signed by a Responsible
Officer of Borrower, dated the date of such extension of credit, stating that:


 


(i)                                     The
representations and warranties contained in this Agreement and the other Loan
Documents (except Hedge Agreements) are true and correct in all material
respects on and as of the date of such extension of credit as though made on
and as of such date, other than any such representation or warranty which
relates to a specified prior date (which shall be correct as of such specified
prior date) and except to the extent the Agent has been notified in writing by
the Borrower that any representation or warranty is not correct and the
Required Lenders have explicitly waived in writing compliance with such
representation or warranty; and


 


(ii)                                  No
event has occurred and is continuing, or would result from such extension of
credit, which constitutes an Event of Default.


 


(b)                                 No
such Borrowing shall exceed the applicable Availability or the applicable
Borrowing Base, provided, however, that the foregoing conditions precedent in
this Section 8.3 are not conditions to Lender participating in or
reimbursing Royal Bank or the Agent for such Lender’s Pro Rata Share of any
Agent Advance or Overdraft Accommodation made in accordance with the provisions
of Sections 1.2(j) and 1.2(k) or unreimbursed drawings under a Letter
of Credit.


 


67

















 


8.4                               Obligations
Incurred Prior to Initial Funding Date.


 


Notwithstanding
any terms or conditions to the contrary herein or in any of the Loan Documents,
(a) this Agreement and the other Loan Documents and all obligations of the
Loan Parties thereunder shall be effective and binding upon the Borrower and
the other Loan Parties on and effective as of the Closing Date, and (b) if
in its or their sole discretion the Agent and Lenders, or Royal Bank as the BP
Provider, make or extend to the Borrower any Bank Products or loans prior to
the Initial Funding Date, same shall constitute Obligations and shall be
evidenced and secured by the Loan Documents but shall not constitute any waiver
or amendment of any of the conditions specified in Section 8.2 and 8.3
hereof.


 


ARTICLE 9 — DEFAULT; REMEDIES


 


9.1                               Events
of Default.


 


It shall
constitute an event of default (“Event of Default”) if any one or more of the
following shall occur for any reason:


 


(a)                                  any
failure by the Borrower to pay (i) principal of any Revolving Loan or any
drawing under any Letter of Credit owing hereunder when due, whether upon
demand or otherwise, or (ii) interest or premium on any Revolving Loan or
Letter of Credit within three (3) Business Days after the due date
therefore, whether upon demand or otherwise or (iii) any fee, expense,
interest, premium or other Obligation owing hereunder or under any other Loan
Document (except Hedge Agreements) within five (5) Business Days after the
due date therefore, whether upon demand or otherwise;


 


(b)                                 any
representation or warranty made or deemed made by any Loan Party in this
Agreement or in any of the other Loan Documents (except Hedge Agreements), any
Financial Statement or any certificate furnished by any Loan Party at any time
to the Agent or any Lender shall prove to be untrue in any material respect as
of the date on which made, deemed made or furnished;


 


(c)                                  (i) any
default shall occur in the observance or performance of any of the covenants or
agreements contained in any of Sections 5.2(a)-(d), 5.3, 7.5, 7.9 through 7.12,
7.14 through 7.20, 7.22, 7.24 or 7.26 of this Agreement; (ii) any default
shall occur in the observance or performance of any of the covenants or
agreements contained in Section 5.4 and such default shall continue for
five (5) Business Days or more; (iii) any default shall occur in the
observance or performance of any of the covenants or agreements contained in
any of, 7.2, 7.13, 7.18, 7.23, 7.27, 7.29, 7.32 or 7.33, and such default shall
continue for ten (10) Business Days or more after the earlier of (A) the
date on which such failure shall first became known to any Responsible Officer
of any Loan Party or (B) notice thereof is provided to the Borrower by the
Agent; or (iv) any default shall occur in the observance or performance of
any of the other covenants or agreements contained in any other Section of
this Agreement or any other Loan Document (except Hedge Agreements) and such
default shall continue for thirty (30) days or more after the earlier of (A) the
date on which such failure shall first become known to any Responsible Officer
of any Loan Party or (B) notice thereof is


 


68














 


provided to the Borrower by
the Agent or (v) any default shall occur in the observance or performance
of any of the other covenants or agreements contained in any Hedge Agreement(s) or
in any other material agreement(s) relating to Bank Products entered into
at any time to which any Loan Party and the BP Provider, Agent or any Lender or
any of their Affiliates are party and such default shall continue for more than
the period of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is the exercise
by the BP provider, the Agent or such Lender or any of their Affiliates party
to such Hedge Agreement(s) or such material agreement(s), as applicable,
of its remedies thereunder (excluding rights of set off and rights exercised
under Section 3.6) for an amount in excess of $5,000,000 in the aggregate
for all such Hedge Agreements or such material agreements;


 


(d)                                 any
default shall occur with respect to any Debt for borrowed money (other than the
Obligations) of one or more of the Loan Parties in an outstanding principal
amount which, individually or in the aggregate, exceeds $15,000,000  in the case of the Loan Parties, or under any agreement or
instrument under or pursuant to which any such Debt for borrowed money may have
been incurred by such Loan Party, and such default shall continue for more than
the period of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt to accelerate, the
maturity of any such Debt; or any such Debt shall be declared due and payable
or be required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; provided that this paragraph (d) shall
not apply to (i) secured Debt that becomes due as a result of the sale,
transfer, destruction or other disposition of the Property or assets securing
such Debt if such sale, transfer, destruction or other disposition is permitted
hereunder and under the documents providing for such Debt, or (ii) any
Guarantees permitted hereunder except to the extent such Guarantees shall
become due and payable by any Loan Party and remain unpaid after any applicable
grace period or period permitted following demand for the payment;


 


(e)                                  any
Loan Party (other than an Immaterial Subsidiary) shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
file any proposal or notice of intent to file a proposal or otherwise commence
any action or proceeding seeking reorganization, arrangement or readjustment of
its debts or for any other relief under the federal Bankruptcy Code, as
amended, the BIA, the CCAA or under any other bankruptcy or insolvency,
liquidation, winding-up or similar act or law, state, provincial, federal or
foreign, now or hereafter existing, or consent to, approve of or acquiesce in,
any such petition, proposal, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, administrator, trustee or similar officer for it or for all
or any material part of its property; (iii) make an assignment for the
benefit of creditors; or (iv) be unable generally to pay its debts as they
become due or shall admit in writing its inability to pay its debts generally
as they become due;


 


69

















 


(f)                                    an
involuntary petition shall be filed or an action or proceeding otherwise
commenced seeking reorganization, arrangement, consolidation or readjustment of
the debts of any Loan Party (other than an Immaterial Subsidiary) or for any
other relief under the federal Bankruptcy Code, as amended, BIA, the CCAA or
under any other bankruptcy or insolvency, liquidation, winding-up or similar
act or law, state, provincial, federal or foreign, now or hereafter existing
and such petition or proceeding shall not be dismissed within sixty (60) days
after the filing or commencement thereof or an order of relief shall be entered
with respect thereto;


 


(g)                                 a
receiver, assignee, liquidator, sequestrator, custodian, monitor,
administrator, trustee or similar officer for any Loan Party (other than an
Immaterial Subsidiary) or for all or any material part of its property, or any
material part of the Collateral, shall be appointed or a warrant of attachment,
execution or similar process shall be issued against all or any material part
of the property of any Loan Party, or any material part of the Collateral, or
any distress or analogous process is levied against all or any material part of
the property of any Loan Party, or any material part of the Collateral;


 


(h)                                 except
as expressly permitted hereunder, any Loan Party (other than an Immaterial
Subsidiary) shall file a certificate of dissolution or like process under
applicable state, provincial or federal law or shall be liquidated, dissolved
or wound-up or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up or liquidation or shall take any
corporate action in furtherance thereof or the Borrower, any material Loan
Party or the other Loan Parties (taken as a whole) shall cease to carry on
business;


 


(i)                                     all
or any material part of the Collateral or all or a material part of the
property of any Loan Party shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or of
any Loan Party shall be assumed by any Governmental Authority or any court of
competent jurisdiction at the instance of any Governmental Authority, except
where contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;


 


(j)                                     any
Loan Document (except Hedge Agreements) shall be terminated (other than in
accordance with its terms), revoked or declared void or invalid or
unenforceable or a complaint or other legal proceeding seeking such relief
shall be filed by any Loan Party;


 


(k)                                  one
or more judgments, orders, decrees or arbitration awards is entered against one
or more Loan Parties (other than any Immaterial Subsidiary) involving in the
aggregate liability (to the extent not covered by independent third-party
insurance) or an effective indemnity from a credit worthy third party Person
acceptable to Agent of U.S. $15,000,000 or more (or the equivalent amount in
another currency), individually or in the aggregate, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of thirty (30)
days after the entry thereof;


 


70

















 


(l)                                     there
is filed against any Loan Party any action, suit or proceeding under any
federal, state or provincial racketeering or similar statute (including the
Proceeds of Crime Act and any criminal action under the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit or proceeding (i) is
not dismissed within one hundred twenty (120) days, and (ii) would
reasonably be expected to result in the confiscation or forfeiture of any
material portion of the Collateral;


 


(m)                               for
any reason other than (i) the failure of the Agent to take any action
available to it to maintain perfection of the Agent’s Liens or (ii) by
reason of the express release (by Agent) of Agent’s Liens permitted pursuant to
the terms hereof, pursuant to the Loan Documents (except Hedge Agreements), any
Loan Document (except Hedge Agreements) ceases to be in full force and effect
or any Loan Document (except Hedge Agreements) is challenged by any Loan Party
or any Lien with respect to any material portion of the Collateral intended to
be secured thereby ceases to be, or is not, valid, perfected and prior to all
other Liens (other than Permitted Liens) or is terminated (except in accordance
with its terms), revoked or declared void;


 


(n)                                 (i) (A) an
ERISA Event shall occur with respect to a Pension Plan or Multiemployer Plan
which has resulted or would reasonably be expected to result in liability of
any Loan Party under Title IV of ERISA or under the PBA to the Pension Plan,
Multi-employer Plan, the PBGC or other applicable Governmental Authority; (B) any
Loan Party or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any instalment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount for all Multiemployer Plans (or the
equivalent amount thereof in another currency); or (C) any Lien arises
with respect to such Plan (save for contribution amounts not yet due); or (ii) a
Termination Event shall occur which, in Agent’s reasonable determination,
constitutes grounds for the termination under any applicable law, of any Plan
or for the appointment by the appropriate Governmental Authority of a trustee
for any Plan, or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or if Borrower is in default with respect to payments
to a Multiemployer Plan or Plan resulting from their complete or partial
withdrawal from such Plan and, in the cause of clauses (i) and (ii), such
event or condition would reasonably be expected to result in a direct
obligation of either Borrower or any other Loan Party to pay money that could
have a Material Adverse Effect; or


 


(o)                                 any
exercise of any Lien or any remedy of seizure, seizure and sale, garnishment, ‘notice
to pay’ or similar remedy, under any statute, law or analogous process, in
respect of Collateral in the aggregate value of $3,000,000;


 


(p)                                 any
failure to repay any positive net Bank Products amount relating to Bank
Products of the type described in clause (d) of the definition thereof
within 3 Business Days of the Oil Settlement Date (or such other date) giving
rise to such amount (through Revolving Loans in accordance with Section 1.2(h) or
otherwise); or


 


71

















 


(q)                                 there
occurs a Change of Control.


 


9.2                               Remedies.


 


(a)                                  If
an Event of Default exists and is continuing, the Agent may, in its discretion,
and shall, at the direction of the Required Lenders, do one or more of the
following at any time or times and in any order, without notice to or demand on
the Loan Parties, except such notices and demands as are required under the
terms of the Loan Documents:  (i) reduce
the Maximum Revolver Amount or the advance rates against Eligible Accounts,
Eligible Inventory and/or any other components used in computing the Borrowing
Base or reduce one or more of the other elements used in computing the
Borrowing Base (provided (x) if any such advance rate or other element is
so reduced while a Default (and not an Event of Default) exists, such reduction
may not be made to the extent such reduction would, at the time such reduction
is made, require Borrower to repay any Obligations under the third sentence of Section 3.1(a) and
(y) that if after any such advance rate or other element is so reduced,
all Defaults and Events of Default have been cured or waived in accordance with
the terms hereof, the applicable advance rate and/or other elements that were
so reduced shall be reinstated to the rate or amount in effect immediately
prior to such reduction); (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to provide Letters of
Credit.  If an Event of Default exists and
is continuing, the Agent shall, at the direction of the Required Lenders, do
one or more of the following, in addition to the actions described in the
preceding sentence, at any time or times and in any order, without notice to or
demand on any Loan Party:  (A) terminate
the Commitments; (B) declare any or all Obligations to be immediately due
and payable; provided, however, that upon the occurrence of any Event of
Default described in Sections 9.1(e), 9.1(f), 9.1(g) or 9.1(h) as to
a Loan Party or its property, the Commitments shall automatically and
immediately expire and all Obligations shall automatically become immediately
due and payable without notice or demand of any kind; (C) require each of
the Borrower to cash collateralize all outstanding Obligations (contingent or
otherwise) with respect to Letters of Credit issued for the account of
Borrower; and (D) pursue its other rights and remedies under the Loan
Documents and applicable law.


 


(b)                                 If
an Event of Default has occurred and is continuing:  (i) the Agent shall have for the benefit
of the Agent and the Lenders, in addition to all other rights of the Agent and
the Lenders, the rights and remedies of a secured party under the Loan
Documents and the UCC, the PPSA, the Civil Code of Quebec and other applicable
laws; (ii) the Agent may, at any time, take possession of the Collateral
and keep it on any Loan Party’s premises, at no cost to the Agent or any
Lender, or remove any part of it to such other place or places as the Agent may
desire, or the Loan Parties shall, upon the Agent’s demand, at the Loan Parties’
cost, assemble the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (iii) the Agent may sell and
deliver any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems advisable, in
its sole discretion, and may, if the 


 


72

















 


Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale.  Without in any way
requiring notice to be given in the following manner, each Loan Party agrees
that any notice by the Agent of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the UCC, the PPSA, the
Civil Code of Quebec or otherwise, shall constitute reasonable notice to such
Loan Party if such notice is mailed by registered or certified mail, return
receipt requested, postage prepaid, or is delivered personally against receipt,
at least ten (10) days prior to such action to such Loan Party’s address
specified in or pursuant to Section 14.8. 
If any Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations until the Agent
or the Lenders receive payment, and if the buyer defaults in payment, the Agent
may resell the Collateral without further notice to the Loan Parties.  In the event the Agent seeks to take
possession of all or any portion of the Collateral by judicial process, each
Loan Party irrevocably waives:  (A) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (B) any demand for possession prior to the
commencement of any suit or action to recover the Collateral; and (C) any
requirement that the Agent retain possession and not dispose of any Collateral
until after trial or final judgment. 
Each Loan Party agrees that the Agent has no obligation to preserve
rights to the Collateral or marshal any Collateral for the benefit of any
Person.  The Agent is hereby granted a
license or other right to use, without charge, upon the occurrence and during
the continuance of an Event of Default each Loan Party’s labels, patents,
copyrights, name, trade secrets, trade names, trademarks, and advertising
matter or any similar property, necessary to the production of, advertising or
selling any Collateral (subject in the case of trademarks and any property of
similar nature, to sufficient rights to quality control and inspection in
favour of the relevant Loan Party required under applicable law to avoid risk
of invalidation of said trademarks and property of similar nature), and each
Loan Party’s rights under all licenses and all franchise agreements shall inure
to the Agent’s benefit for such purpose to the extent permitted therein.  The proceeds of sale shall be applied first
to all expenses of sale, including attorneys’ fees, and then to the
Obligations.  The Agent will return any
excess to the applicable Loan Party and the applicable Loan Parties (jointly
and severally in the case of the Borrower and the Guarantors with respect to
Obligations owing by any of the Loan Parties, shall remain liable for any
deficiency.


 


(c)                                  If
an Event of Default occurs and is continuing, each Loan Party hereby waives all
rights to notice and hearing prior to the exercise by the Agent of the Agent’s
rights to repossess the Collateral without judicial process or to reply, attach
or levy upon the Collateral without notice or hearing.


 


73

















 


ARTICLE 10 — TERM AND TERMINATION


 


10.1                        Term
and Termination.


 


(a)                                  The
term of this Agreement shall end on the Stated Termination Date unless sooner
terminated in accordance with the terms hereof. 
The Agent, upon direction from the Required Lenders, may terminate
Commitments (including any obligation to issue Letters of Credit, any
obligation to provide Bank Products or Overdraft Accommodation and any
obligation to make any other loans or credit extentions hereunder) without
notice (other than as specifically required under this Agreement or any other
Loan Documents) upon the occurrence of an Event of Default.  Upon the effective date of termination of such
Commitments for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest) shall become immediately due and
payable and the Borrower for whose account Letters of Credit were issued or
Bank Products entered into shall immediately arrange for the cancellation and
return, cash collateralization or backstop, of all Letters of Credit and
cancellation or termination of all Bank Products, as applicable, then
outstanding.


 


(b)                                 Upon
the termination of this Agreement and the Loan Documents in accordance with the
terms of this Agreement, upon the request of the Borrower, the Agent shall take
such actions as may be required under Section 18(f) of the Security
Agreement, with respect to providing documentary evidence of such release and
termination.


 


ARTICLE 11 — AMENDMENTS; WAIVERS;
PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS


 


11.1                        Amendments
and Waivers.


 


(a)                                  Subject
to Section 14.25, no amendment or waiver of any provision of this Agreement
or any other Loan Document (except Hedge Agreements), and no consent with
respect to any departure by any Loan Party therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by the
Agent at the written request of the Required Lenders) and the Loan Parties
which are parties to such Loan Document and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment or consent
shall, unless in writing and signed by each Lender who is directly and
adversely affected thereby and the Loan Parties which are parties to such Loan
Document and acknowledged by the Agent, do any of the following:


 


(i)                                     increase
(except in accordance with Section 1.5) or extend the Revolving Credit
Commitment of any Lender or the Revolving Credit Commitment of any Lender;


 


(ii)                                  postpone
or delay any date fixed by this Agreement or any other Loan Document (except
Hedge Agreements) for any payment of principal, interest, fees or other amounts
due to the Lenders (or any of them)


 


74

















 


hereunder or under any other
Loan Document (except Hedge Agreements);


 


(iii)                               reduce
the principal of, or the rate of interest specified herein (other than
invocation and/or waiver of the Default Rate) on, any Revolving Loan or any
fees or other amounts payable hereunder or under any other Loan Document
(except Hedge Agreements);


 


(iv)                              change
the percentage of the Revolving Credit Commitments or the Commitments or of the
aggregate unpaid principal amount of the Revolving Loans, Revolving Loans, in
each instance, which is required for the Lenders or any of them to take any
action hereunder;


 


(v)                                 increases
in the advance rates under the Borrowing Base above those set forth in the
Agreement on the Closing Date;


 


(vi)                              change
the provisions of Section 3.7;


 


(vii)                           amend
this Section or any provision of this Agreement providing for the consent
of all Lenders;


 


(viii)                        release
of all or substantially all of the Guarantees of the Obligations or release all
or substantially all of the Collateral (other than as permitted by Section 12.11);


 


(ix)                                change
the definitions of “Required Lenders”, “Aggregate Revolver Outstandings” or “Stated
Maturity Date” or “Change of Control”; or


 


(x)                                   increase
(A) the Maximum Revolver Amount (other than in accordance with Section 1.5),
(B) the Letter of Credit Subfacility, or (C) the Overdraft
Accommodation Maximum Amount;


 


provided,
however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clause (ix) above and any other terms of this
Agreement, make Agent Advances in accordance with Section 1.2(j) and
Overdraft Accommodations in accordance with Section 1.2(k); and, provided
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and provided further, that Schedule 1.2
hereto (Lenders’ Commitments) may be amended from time to time by the Agent
alone to reflect assignments of Commitments in accordance herewith and changes
in Commitments in accordance with Section 1.5.


 


(b)                                 If,
in connection with any proposed amendment, waiver or consent requiring the
consent of all Lenders, the consent of the Required Lenders is obtained, but
the consent of other Lenders is not obtained (any such Lender whose consent is
not obtained being referred to herein as a “Non-Consenting Lender”), then, at
the Borrower’s request, the Agent (so long as the Agent is not a Non-Consenting
Lender or an Eligible Assignee shall have the right (but not the obligation)
with the Agent’s approval (so long as the Agent is not a Non-Consenting
Lender), to purchase from the Non-Consenting Lenders, and the Non-Consenting
Lenders 


 


75

















 


agree that they shall sell,
all the Non-Consenting Lenders’ Commitments and Revolving Loans in accordance
with the procedures set forth in Section 11.2.


 


11.2                        Assignments;
Participations.


 


(a)                                  Any
Lender may, with the written consent of the Agent (which consents shall not be
unreasonably withheld or delayed) and so long as no Event of Default has
occurred and is continuing, with the written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed); provided, that the
Borrower may not withhold its consent to an Eligible Assignee or to an
assignment solely on the basis that the Eligible Assignee may have a claim
under Section 4.1 if that claim is also available to the same extent to
the Assigning Lender), assign and delegate to one or more Eligible Assignees
(provided that no consent of the Agent or Borrower shall be required in
connection with any assignment and delegation, by a Lender to an Affiliate of
such Lender that is an Eligible Assignee (each an “Assignee”) all, or any
ratable part of all, of the Revolving Loans, the Revolving Credit Commitment
and the other rights and obligations of such Lender hereunder, in a minimum
amount of U.S.$5,000,000 (and increments of U.S.$1,000,000 in excess of such
amount) (or the Equivalent Amount thereof in CDN Dollars) (provided that,
unless an assignor Lender has assigned and delegated all of its Revolving Loans
and Revolving Credit Commitment, no such assignment and/or delegation shall be
permitted unless, after giving effect thereto, such assignor Lender retains a
Revolving Credit Commitment in a minimum amount of U.S.$5,000,000 (or the
Equivalent Amount thereof in U.S. Dollars); provided, however, that the
Borrower and the Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Borrower and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrower and the Agent an
Assignment and Acceptance in substantially the form of Exhibit A (“Assignment
and Acceptance”) and (iii) except for any replacement of a Non-Consenting
Lender by the Borrower, in as such case the Borrower shall pay, the assignor
Lender or Assignee has paid to the Agent a processing fee in the amount of
$3,500.


 


(b)                                 From
and after the date that the Agent notifies the assignor Lender that it has
received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations have been assigned
to it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto).


 


76

















 


(c)                                  By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows:  (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished pursuant hereto or the attachment, perfection or
priority of any Lien granted by a Loan Party to the Agent or any Lender in the
Collateral of such Loan Party; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Loan Parties or the performance or observance by the
Loan Parties of any of their obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (iii) such Assignee confirms that it
has received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee
will, independently and without reliance upon the Agent, Agent or such
assigning Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed
by it as a Lender.


 


(d)                                 Immediately
upon satisfaction of the requirements of Section 11.2(a), this Agreement
shall be deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom.  The
Revolving Credit Commitment allocated to each Assignee shall reduce the
Revolving Credit Commitment of the assigning Lender pro tanto.


 


(e)                                  Any
Lender (the “originating Lender”) may at any time sell to one or more
commercial banks, financial institutions or other Persons not Affiliates of any
of Loan Parties or competitors of the Borrower (a “Participant”) participating
interests in any Revolving Loans, the Commitment of that Lender and the other
interests of that Lender hereunder and under the other Loan Documents;
provided, however, that (i) the originating Lender’s obligations under
this Agreement and the other Loan Documents shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of such
obligations, (iii) the Loan Parties and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any
participating interest under which the


 


77

















 


Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document (except to the extent that such amendment,
waiver or consent both directly affects the Participant and would (a) increase
or extend the Commitment of the originating Lender participated to such Participant,
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due to
the originating Lender hereunder or under any other Loan Document, (c) reduce
the principal of, or the rate of interest specified herein (other than the
invocation or waiver of the Default Rate) on, any Revolving Loan owing to the
originating Lender or any fees or other amounts payable to the originating
Lender hereunder or under any other Loan Document, (d) change the
definition of “Stated Termination Date” or “Required Lenders”, (e) release
all or substantially all of the Guarantees or Liens on all or substantially all
of the Collateral, or (f) effect similar matters set forth in Sections
11.1(a)(iv) and 11.1(a)(v), and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of set off
in respect of its participating interest in amounts owing under this Agreement
to the same extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.  A Participant shall not be
entitled to receive any greater payment under Section 4.1 than the
applicable Lender would have been entitled to receive with respect to the participation
sold to such Participant unless the sale of the participation to such
Participant is made with Borrower’s prior written consent (which consent shall
not be unreasonably withheld or delayed).


 


(f)                                    Notwithstanding
any other provision in this Agreement, any Lender may at any time assign as
security, create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favour of any FRB in accordance
with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR §203.14 or any
other funding source of such Lender, and such FRB or funding source may enforce
such pledge or security interest in any manner permitted under applicable law;
provided, however, that such Lender shall remain a “Lender” under this Agreement
and shall continue to be bound by all the terms and conditions set forth in
this Agreement and the other Loan Documents.


 


11.3                        Replacement
of Lenders.


 


If any Lender (i) is
a Defaulting Lender or (ii) does not make a LIBOR Revolving Loan pursuant
to Section 4.2 or fails to designate an alternate lending office pursuant
to Section 4.1 or (iii) seeks indemnification for increased costs
pursuant to Section 4.3 or (iv) is owed additional amounts pursuant
to Section 4.1, which increased costs or additional amounts are not being
incurred generally by the other Lenders, then the Borrower shall have the
right, but not the obligation so long as no Event of Default is continuing, to (i) replace
such Lender together, with other banks or financial institutions (the “Replacement
Lender(s)”) reasonably acceptable to the Agent and with the Agent’s consent,
which consent shall not be unreasonably withheld or


 


78














 


delayed or (ii) prepay
the Revolving Loans and/or permanently reduce the Commitments, in each case,
without premium or penalty, of such Lender (which prepayments or reductions (i) shall
be accompanied by accrued and unpaid interest on the principal amount so
prepaid up to the date of such prepayment and (ii) shall not be subject to
the Pro Rata Sharing provisions of the Agreement).  The Replacement Lender(s) shall execute
Assignment(s) and Acceptance(s) pursuant to which it and they shall
become a party hereto as provided in Section 11.2 and such assignment
shall be effectuated in accordance with Section 11.2.  Upon compliance with the provisions for
assignment provided in Section 11.2 (but provided that if the Defaulting
Lender refuses or otherwise fails to execute the applicable Assignment and
Acceptance within two (2) Business Days of a request to do so, it shall be
deemed to have executed the Assignment and Acceptance by mere insertion of its
name as “Assignor”), and the payment of amounts referred to in clause (a), the
Replacement Lender(s) shall constitute “Lender(s)” hereunder and the
Lender(s) being so replaced shall no longer constitute “Lender(s)”
hereunder.  Any such replacement shall be
effected within one hundred eighty (180) days after delivery of the Agent’s
certificate under Section 4.1 or Section 4.6, as applicable, or the
date the Lender became a Defaulting Lender, as applicable.


 


ARTICLE 12 — THE AGENT, ETC.


 


12.1                        Appointment and
Authorization.


 


Each Lender
hereby irrevocably designates and appoints the Royal Bank as its Agent under
this Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  Agent
agrees to act as such on the express conditions contained in this Article 12.  Except for Section 12.9 and Section 12.10,
the last sentence of 12.11(a), the second to last sentence in 12.15(c) and
Sections 12.15(d) and (e), the provisions of this Article 12 are solely
for the benefit of Agent and the Lenders and the Loan Parties shall have no
rights as third party beneficiaries of any of the provisions contained
herein.  Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.  Without limiting the generality of the
foregoing sentence, the use of the term “agent” in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting
parties.  Except as expressly otherwise
provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the
other Loan Documents, including (a) the determination of the applicability
of ineligibility criteria with respect to the calculation of the Borrowing Base,
as applicable, (b) the making of Agent Advances, or Overdraft
Accommodation the exercise of remedies pursuant to Section 9.2, and any
action so taken or not taken shall be deemed consented to by the Lenders.


 


79

















 


12.2                        Delegation of Duties.


 


The Agent may
execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys in fact (including for greater
certainty, any branch or affiliate of the Agent) and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the
negligence or misconduct of the Agent or attorney in fact that it selects as
long as such selection was made without gross negligence or wilful misconduct.


 


12.3                        Liability of Agent.


 


Notwithstanding
any terms herein to the contrary, none of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or wilful misconduct)
or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of any Loan Party or any officer thereof contained in
this Agreement or in any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of any Loan Party
or any other party to any Loan Document to perform its obligations hereunder or
thereunder or (iii) be liable or responsible for any actions or inactions
of a Defaulting Lender.  No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect any of
the properties, books or records of any Loan Party or any of the Subsidiaries
or Affiliates of any Loan Party.


 


12.4                        Reliance by Agent.


 


The Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Loan Party), independent accountants
and other experts selected by the Agent. 
The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.  The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders or, if so required, (or all Lenders if so required by Section 11.1)
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders.


 


12.5                        Notice of Default.


 


The Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, unless the Agent shall have received written notice from a
Lender or a Loan


 


80

















 


Party referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default.”  The
Agent will notify the Lenders of its receipt of any such notice.  The Agent shall take such action with respect
to such Default or Event of Default as may be requested by the Required Lenders
in accordance with Section 9.2; provided, however, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.


 


12.6                        Credit Decision.


 


Each Lender
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by the Agent hereinafter taken, including
any review of the affairs of a Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by the Agent-Related Person
to any Lender.  Each Lender represents to
the Agent that it has, independently and without reliance upon the
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their Affiliates, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Borrower.  Each Lender also represents
that it will, independently and without reliance upon the Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Loan Parties. 
Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Agent, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any Loan Party which may come into
the possession of any of the Agent Related Persons.


 


12.7                        Indemnification.


 


Whether or not
the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent Related Persons (to the extent not reimbursed
by or on behalf of the Borrower and without limiting the obligation of the
Borrower to do so), in accordance with their Pro Rata Shares, from and against
any and all Indemnified Liabilities as such term is defined in Section 14.12;
provided, however, that no Lender shall be liable for the payment to the Agent
Related Persons of any portion of such Indemnified Liabilities to the extent
resulting from such Person’s gross negligence or wilful misconduct as
determined in a final non-appealable judgment of a court of competent
jurisdiction.  Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand for its Pro Rata
Share of any costs or out of pocket expenses (including fees and expenses of
counsel) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed


 


81

















 


for such expenses
by or on behalf of the Borrower.  The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.


 


12.8                        Agent in Individual
Capacity.


 


Royal Bank and
its Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Borrower or any of its Subsidiaries or Affiliates as though Royal Bank were
not the Agent hereunder and without notice to or consent of the Lenders.  Royal Bank or its Affiliates may receive
information regarding the Borrower, its Subsidiaries, its Affiliates and
Account Debtors (including information that may be subject to confidentiality
obligations in favour of the Borrower or such Subsidiary or Affiliate) and the
Lenders acknowledge that the Agent and Royal Bank shall be under no obligation
to provide such information to them. 
With respect to its Revolving Loans, Royal Bank and its Affiliates shall
have the same rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not the Agent, and the terms “Lender”
and “Lenders” include each of Royal Bank in its individual capacity.


 


12.9                        Successor Agent.


 


The Agent may
resign as Agent, upon at least 30 days’ prior written notice to the Lenders and
the Borrower, such resignation to be effective upon the earlier of (a) the
acceptance of a successor agent to its appointment as Agent, which successor
agent, so long as an Event of Default is not continuing, shall have been
consented to by the Borrower (which consent shall not be unreasonably withheld
or delayed) and (b) the expiration of such 30 day period if no successor
Agent accepts an appointment as Agent within 30 days after such initial notice
period (60 days in total).  In the event
that Royal Bank sells all of its respective Commitments and Revolving Loans
including, as part of a sale, transfer or other disposition by Royal Bank of
substantially all of its loan portfolio, Royal Bank shall resign as Agent, as
applicable and such purchaser or transferee shall become the successor Agent,
as applicable hereunder, which successor agent, so long as an Event of Default
is not continuing, shall have been consented to by the Loan Parties (which
consent shall not be unreasonably withheld). 
Subject to the foregoing, if the Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent, so long as an Event of Default is not
continuing, shall have been consented to by the Borrower (which consent shall
not be unreasonably withheld).  Without
limitation to the Agent’s right to resign if no successor agent has been
consented to by the Borrower or if no successor agent has accepted to act as
such within the 30 days’ notice period, if no successor agent is appointed in
accordance with the terms set forth above, the Agent may appoint, after
consulting with the Lenders and the Borrower, a successor agent from among the
Lenders.  Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term “Agent” or
“Agent” as applicable shall mean such successor agent and the retiring Agent’s
appointment, powers and duties as Agent or Collateral shall be terminated.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Article 12 shall continue to
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.


 


82

















 


12.10                 Withholding Tax.


 


If the IRS or any
other Governmental Authority of the United States of America, the Canada
Revenue Agency or any other Governmental Authority of Canada or other
jurisdiction asserts a claim that the Agent and/or Borrower, as applicable, did
not properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent and/or Borrower (or the Borrower
on behalf of Borrower), as applicable, of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify the Agent and/or Borrower, as
applicable, fully for all amounts paid, directly or indirectly, by the Agent
and/or Borrower, as applicable, as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent and/or Borrower, as applicable, under this Section,
together with all reasonable costs and expenses (including Attorney
Costs).  The obligation of the Lenders
under this subsection shall survive the payment of all Obligations and the
resignation or replacement of the Agent.


 


12.11                 Collateral
Matters.


 


(a)                                  The
Lenders hereby irrevocably authorize the Agent to release and take such actions
as may be necessary to release any of the Agent’s Liens upon any Collateral (i) upon
the termination of the Commitments and payment and satisfaction in full by the
Borrower of all Revolving Loans, reimbursement obligations in respect of
Letters of Credit and all other Obligations (whether or not any of such
obligations are due other than Contingent Obligations), and the termination of
all outstanding Letters of Credit (or the deposit with the Agent of Supporting
Letters of Credit in accordance with and as required by Section 1.3(h)); (ii)
constituting property being sold or disposed of (other than to another Loan
Party) if the applicable Loan Party certifies to the Agent that the sale or
disposition is made in compliance with Section 7.11 (and the Agent may
rely conclusively on any such certificate, without further inquiry); (iii) constituting
property in which each of the Borrower certifies to the Agent that no Loan
Party owned an interest at the time the Lien was granted or at any time
thereafter (and the Agent may rely conclusively on any such certificate,
without further inquiry); (iv) constituting property leased to a Loan
Party under a lease which has expired or been terminated in a transaction
permitted under this Agreement; or (v) as contemplated by the last
sentence of this Section 12.11(a). 
Except as provided above, the Agent will not release any of the Agent’s
Liens without the prior written authorization of the Required Lenders; provided
that the Agent may, in its discretion, release the Agent’s Liens on Collateral
valued in the aggregate not in excess of $5,000,000 during each Fiscal Year
without the prior written authorization of the Required Lenders.  Upon request by the Agent or Borrower at any
time, the Lenders will confirm in writing the Agent’s authority to release any
of the Agent’s Liens upon particular types or items of Collateral pursuant to
this Section 12.11.  The Agent
hereby agrees that, so long as no Default or Event of Default has occurred and
is continuing, it shall return promptly to the Borrower all cash collateral
held by the Agent from time to time in connection with any Letter of Credit
issued hereunder for the account of Borrower upon the later of (x)


 


83

















 


the satisfaction in full of
all of the Obligations of Borrower with respect to such Letter of Credit and (y) the
return and cancellation of such Letter of Credit (or, in the case of any cash
collateral held by the Agent under clause sixth of either Section 3.7(a)(ii) with
respect to a Letter of Credit, upon the cure or waiver in accordance with the
terms hereof of the relevant Event of Default requiring such cash
collateralization).


 


(b)                                 Upon
receipt by the Agent of any authorization required pursuant to Section 12.11(a) from
the Lenders of the Agent’s authority to release the Agent’s Liens upon
particular types or items of Collateral, and upon at least three (3) Business
Days prior written request by Borrower (or such shorter period as the Agent may
agree), the Agent shall (and is hereby irrevocably authorized by the Lenders
to) execute such documents as may be necessary to evidence the release of the
Agent’s Liens upon such Collateral; provided, however, that (i) the Agent
shall not be required to execute any such document on terms which, in the Agent’s
reasonable opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of the Loan Parties in
respect of) all interests retained by the Loan Parties, including the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.


 


(c)                                  The
Agent shall have no obligation whatsoever to any of the Lenders to assure that
the Collateral exists or is owned by Borrower or other Loan Party or is cared
for, protected or insured or has been encumbered or that the Agent’s Liens have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or
in any particular manner or under any duty of care, disclosure or fidelity, or
to continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral or any act, omission or
event related thereto, the Agent may act in any manner it may deem reasonably
appropriate, in its sole discretion given the Agent’s own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.


 


12.12                 Restrictions on
Actions by Lenders; Sharing of Payments.


 


(a)                                  Each
of the Lenders agrees that it shall not, without the express consent of the
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of the Agent, set off against the Obligations, any amounts owing by
such Lender to any of the Loan Parties or any accounts of any of the Loan
Parties now or hereafter maintained with such Lender; provided, however, that,
for greater certainty, the foregoing shall not apply to the Royal Bank in its
capacity as a BP Provider who shall, subject to Section 12.12(b)(1), have
the right of set off in respect of any Bank Product obligations. 
Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by the Agent, take or cause to be


 


84

















 


taken any action to enforce
its rights under this Agreement or any other Loan Document against any of the
Loan Parties, including the commencement of any legal or equitable proceedings,
to foreclose any Lien on, or otherwise enforce any security interest in, any of
the Collateral.


 


(b)                                 If
at any time or times any Lender shall receive (i) by payment, foreclosure,
setoff or otherwise, any proceeds of Collateral or any payments with respect to
the Obligations of a Loan Party to such Lender arising under or relating to,
this Agreement or the other Loan Documents, except for any such proceeds or
payments received by such Lender from the Agent pursuant to the terms of this Agreement
or (ii) payments hereunder in excess of such Lender’s ratable portion of
all such distributions hereunder with respect to the applicable Obligations,
such Lender shall promptly (1) turn the same over to the Agent, in kind,
and with such endorsements as may be required to negotiate the same to the
Agent or in same day funds, as applicable, for the account of all of the
applicable Lenders and for application to the applicable Obligations in
accordance with Section 3.7 and thereafter all applicable provisions of
this Agreement or (2) excluding in all cases the BP Provider, purchase,
without recourse or warranty, an undivided interest and participation in the
applicable Obligations owed to the other applicable Lenders so that such excess
payment received shall be applied ratably as among the applicable Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part
of such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest
except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.


 


12.13                 Agency for
Perfection.


 


Each Lender
hereby appoints each other Lender as agent for the purpose of perfecting the
Lenders’ security interest in assets which, in accordance with the PPSA, the
Civil Code of Quebec, the UCC or any other applicable law can be perfected only
by possession.  Should any Lender (other
than the Agent) obtain possession of any such Collateral, such Lender shall
notify the Agent thereof, and, promptly upon the Agent’s request therefor shall
deliver such Collateral to the Agent or in accordance with the Agent’s
instructions.


 


12.14                 Payments by Agent
to Lenders.


 


All payments to
be made by the Agent to the Lenders shall be made by external wire transfer or
internal transfer of immediately available funds to each Lender pursuant to
wire transfer instructions delivered in writing to the Agent on or prior to the
Closing Date (or if such Lender is an Assignee, on the applicable Assignment
and Acceptance) or pursuant to such other wire transfer instructions as each
party may designate for itself by written notice to the Agent.  Concurrently with each such payment, the
Agent shall identify whether such payment (or any portion thereof) represents
principal, fees or interest on the Revolving Loans or otherwise.  Unless the Agent receives notice from
Borrower prior to the date on which any payment is due to the applicable
Lenders from Borrower that Borrower will not make such payment in full as and


 


85

















 


when required,
the Agent may assume that Borrower has made such payment in full to the Agent
on such date in immediately available funds and the Agent may (but shall not be
so required), in reliance upon such assumption, distribute to each applicable
Lender on such due date an amount equal to the amount then due such Lender from
Borrower.  If and to the extent Borrower
has not made such payment in full to the Agent, each Lender shall repay to the Agent
on demand such amount distributed to such Lender, together with interest
thereon at the Federal Funds Rate for each day from the date such amount is
distributed to such Lender until the date repaid.


 


12.15                 Settlement of
Revolving Loans.


 


(a)                                  Revolving
Loans.  Each Lender’s
funded portion of the Revolving Loans is intended by the Lenders to be equal at
all times to such Lender’s Pro Rata Share of the outstanding Revolving
Loans.  Notwithstanding such agreement,
the Agent and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by the Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Revolving Loans, the Agent Advances and the Overdraft
Accommodations shall take place on a periodic basis in accordance with the
following provisions:


 


(i)                                     The
Agent shall request settlement (“Revolving Loan Settlement”) with the Lenders
on at least a weekly basis or on a more frequent basis at the Agent’s election,
(A) for itself, with respect to the Agent Advance and for Royal Bank, with
respect to the Overdraft Accommodation, and (B) with respect to
collections received, in each case, by notifying the Lenders of such requested
Revolving Loan Settlement by telecopy, telephone or other similar form of
transmission, of such requested Revolving Loan Settlement, no later than 12:00
noon (Toronto  time) on the date of such
requested Revolving Loan Settlement (the “Revolving Loan Settlement Date”).  Each Lender (other than the Agent in the case
of Agent Advances and the Royal Bank in the case of Overdraft Accommodations)
shall transfer the amount of such Lender’s Pro Rata Share of the outstanding
principal amount of the Agent Advances and Overdraft Accommodations with
respect to each Revolving Loan Settlement to the Agent, to the Agent’s account,
not later than 2:00 p.m. (Toronto  time), on the
Revolving Loan Settlement Date applicable thereto (such transfer to be made in
the same currency as the currency of the applicable Agent Advances and
Overdraft Accommodations).  Revolving
Loan Settlements may occur during the continuation of a Default or an Event of
Default and whether or not the applicable conditions precedent set forth in Article 8
have then been satisfied.  Such amounts
made available to the Agent or Royal Bank shall be applied against the amounts
of the applicable Agent Advance or Overdraft Accommodation and, together with
the portion of such Agent Advance or Overdraft Accommodation representing Royal
Bank’s Pro Rata Share thereof, shall constitute Revolving Loans of such
Lenders.  If any such amount is not
transferred to the Agent by any Lender on the Revolving Loan Settlement Date
applicable thereto, the Agent shall be entitled to recover such amount on demand
from such Lender together with interest thereon (in the same respective
currency or currencies as the


 


86

















 


applicable amount or amounts
to be recovered) at the Prime Rate or ABR as applicable for the first three (3) days
from and after the Revolving Loan Settlement Date and thereafter at the
Interest Rate then applicable to Prime Rate Revolving Loans or ABR Revolving
Loans, for itself, with respect to the Agent Advance and the Royal Bank with
respect to the Overdraft Accommodation.


 


(ii)                                  Notwithstanding
the foregoing, not more than one (1) Business Day after demand is made by
the Agent (whether before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a Revolving Loan
Settlement with respect to an Agent Advance or Overdraft Accommodation), each
other Lender (A) shall irrevocably and unconditionally purchase and
receive from Royal Bank or the Agent, as applicable, without recourse or
warranty, an undivided interest and participation in such Agent Advance or
Overdraft Accommodation equal to such Lender’s Pro Rata Share of such Agent
Advance or Overdraft Accommodation and (B) if Revolving Loan Settlement
has not previously occurred with respect to such Agent Advances or Overdraft
Accommodations, upon demand by Royal Bank or Agent, as applicable, shall pay to
Royal Bank or Agent, as applicable, as the purchase price of such participation
an amount equal to one hundred percent (100%) of such Lender’s Pro Rata Share
of such Agent Advances or Overdraft Accommodations.  If such amount is not in fact made available
to the Agent by any Lender, the Agent shall be entitled to recover such amount
on demand from such Lender together with interest thereon (in the same
respective currency or currencies as the relevant Agent Advances or Overdraft
Accommodations, as the case may be) at the Prime Rate or ABR, as applicable for
the first three (3) days from and after such demand and thereafter at the
Interest Rate then applicable to Prime Rate Revolving Loans or ABR Revolving
Loans.


 


(iii)                               From
and after the date, if any, on which any Lender purchases an undivided interest
and participation in any Agent Advance or Overdraft Accommodation pursuant to
clause (ii) above, the Agent shall promptly distribute to such Lender,
such Lender’s Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such Agent Advance
or Overdraft Accommodation.


 


(iv)                              Between
Revolving Loan Settlement Dates, the Agent, to the extent no Agent Advances or
Overdraft Accommodations are outstanding, may pay over to Royal Bank any
payments received by the Agent, which in accordance with the terms of this
Agreement would be applied to the reduction of the Revolving Loans, for application
to Royal Bank’s Revolving Loans.  If, as
of any Revolving Loan Settlement Date, collections received since then
immediately preceding Revolving Loan Settlement Date have been applied to Royal
Bank’s Revolving Loans (other than to Agent Advances or Overdraft
Accommodations in which such Lender has not yet funded its purchase of a
participation pursuant to


 


87

















 


clause (ii) above), as
provided for in the previous sentence, Royal Bank shall pay to the Agent for
the accounts of the Lenders, to be applied to the outstanding Revolving Loans
of such Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Revolving Loan Settlement Date, its Pro Rata Share of
the Revolving Loans.  During the period
between Revolving Loan Settlement Dates, Agent with respect to Agent Advances
or Royal Bank with respect to Overdraft Accommodations, and each Lender with
respect to the Revolving Loans other than Agent Advances or Overdraft
Accommodations, shall be entitled to interest at the applicable rate or rates
payable under this Agreement on the actual average daily amount of funds
employed by Royal Bank, the Agent and the other Lenders but subject to Sections
12.15(c) and (d) with respect to a Defaulting Lender.


 


(v)                                 Unless
the Agent has received written notice from a Lender to the contrary, the Agent
may assume that the applicable conditions precedent set forth in Article 8
have been satisfied and the requested Borrowing will not exceed Availability on
any Funding Date for a Revolving Loan.


 


(b)                                 Lenders’
Failure to Perform.  All Revolving Loans (other than Agent
Advances and Overdraft Accommodations) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares.  It is understood that (i) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, nor shall any Revolving
Credit Commitment of any Lender be increased or decreased as a result of any failure
by any other Lender to perform its obligation to make any Revolving Loans
hereunder, (ii) no failure by any Lender to perform its obligation to make
any Revolving Loans hereunder shall excuse any other Lender from its obligation
to make any Revolving Loans hereunder, and (iii) the obligations of each
Lender hereunder shall be several, not joint and several.


 


(c)                                  Defaulting
Lenders.  Unless the
Agent receives notice from a Lender on or prior to the Closing Date or, with
respect to any Borrowing after the Closing Date, at least one Business Day
prior to the date of such Borrowing, that such Lender will not make available
as and when required hereunder to the Agent that Lender’s Pro Rata Share of a
Borrowing, the Agent may assume that each Lender has made such amount available
to the Agent in immediately available funds on the Funding Date.  Furthermore, the Agent may, in reliance upon
such assumption, make available to the Borrower on such date a corresponding
amount.  If any Lender has not
transferred its full Pro Rata Share to the Agent in immediately available funds
and the Agent has transferred a corresponding amount to the Borrower on the
Business Day following such Funding Date that Lender shall make such amount
available to the Agent, together with interest (in the same currency as the
related Borrowing) at the Prime Rate for that day.  A notice by the Agent submitted to any Lender
with respect to amounts owing shall be conclusive, absent manifest error.  If each Lender’s full Pro Rata Share is transferred
to the Agent as required, the amount transferred to the Agent shall constitute
that Lender’s Revolving Loan for all purposes of this Agreement.  If


 


88














 


that amount is not
transferred to the Agent on the Business Day following the Funding Date, the
Agent will notify the Borrower of such failure to fund and, within one (1) Business
Day after demand by the Agent, the Borrower shall pay such amount to the Agent
for the Agent’s account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the Interest
Rate applicable at the time to the Revolving Loans comprising that particular
Borrowing.  The failure of any Lender to
make any Revolving Loan on any Funding Date shall not relieve any other Lender
of its obligation hereunder to make a Revolving Loan on that Funding Date.  No Lender shall be responsible for any other
Lender’s failure to advance such other Lenders’ Pro Rata Share of any
Borrowing.


 


(d)                                 Retention
of Defaulting Lender’s Payments.  The Agent shall not be obligated to transfer
to a Defaulting Lender any payments made by the Borrower to the Agent for the
Defaulting Lender’s benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. 
Amounts payable to a Defaulting Lender shall instead be paid to or
retained by the Agent and any such payments shall in the discretion of the
Agent be held in a non-interest bearing account or otherwise invested as Agent
shall see fit; provided that the amount of any such payments shall be returned
to the Borrower, if Borrower is entitled to same under the terms of this
Agreement, promptly following the removal of the Defaulting Lender pursuant to Section 12.15(e).  Notwithstanding any other terms hereof, the
Defaulting Lender shall not be entitled to interest in any amounts returned by
Agent.  In its discretion, to the extent
the Borrower has not reduced the Commitments by repaying the outstanding
borrowed Commitments of the Defaulting Lenders, the Agent may loan the Borrower
the amount of all such payments received or retained by it for the account of
such Defaulting Lender.  Any amounts so
loaned to the Borrower shall bear interest at the rate applicable to Prime Rate
Revolving Loans and for all other purposes of this Agreement shall be treated
as if they were Revolving Loans to Borrower, provided, however, that for
purposes of voting or consenting to matters with respect to the Loan Documents
and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to
be a “Lender” or “Lender”. 
Notwithstanding any other terms hereof, until a Defaulting Lender cures
its failure to fund its Pro Rata Share of any Borrowing such Defaulting Lender
shall not be entitled to any portion of the Commitment Fee as set forth above
and the amount of any such Commitment Fee previously paid to the Agent shall be
returned to the Borrower promptly following the removal of the Defaulting
Lender pursuant to Section 12.15(e). if (i) the Agent received such
Commitment Fee at a time when the Lender was a Defaulting Lender, (ii) the
Agent has not paid over such amount
to Defaulting Lender, and (iii) to the extent requested by Borrower. This Section shall
remain effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement.  The terms of this Section shall
not be construed to increase or otherwise affect the Revolving Credit
Commitment of any Lender or relieve or otherwise excuse the performance by the
Borrower of its duties and other obligations hereunder.


 


89

















 


(e)                                  Removal
of Defaulting Lender.  At the Borrower’s or Agent’s request, the
Agent or an Eligible Assignee reasonably acceptable to the Agent and the
Borrower shall have the right (but not the obligation) to purchase from any
Defaulting Lender, and each Defaulting Lender shall, upon such request, sell
and assign to the Agent or such Eligible Assignee, all of the Defaulting Lender’s
outstanding Commitments hereunder.  Such
sale shall be consummated promptly after the Agent has arranged for a purchase
by the Agent or an Eligible Assignee pursuant to an Assignment and Acceptance,
and at an aggregate price equal to the outstanding principal balance of the
Defaulting Lender’s and its related Revolving Loans, plus accrued interest and
fees, without premium or discount, and plus all other amounts owing to such
Defaulting Lender hereunder.  In the
event that a Defaulting Lender refuses or otherwise fails to execute an
acceptable Assignment and Acceptance within two (2) Business Days of a
request to do so, it shall be deemed to have executed the applicable Assignment
and Acceptance by mere insertion of its name as “Assignor”.


 


(f)                                    No
Defaulting Lender Credit Extensions.  Notwithstanding any other terms or conditions
hereof, at any time when there is a Defaulting Lender, neither the Agent nor
any Lender shall be required to make any Loans, issue any Letters of Credit,
make available any Bank Products or otherwise extend any form of credit to the
Borrower (“Defaulting Lender Credit Extensions”) to the extent any such Loan,
Letter of Credit, Bank Product or other extension of credit hereunder would
require the Agent or any such Lender to obtain settlement with or payment or
repayment or reimbursement from such Defaulting Lender, all of which Defaulting
Lender Credit Extensions being in the sole discretion of the Agent and Lenders
exercised in good faith.


 


12.16                 Letters of
Credit; Bank Products; Intra Lender Issues.


 


(a)                                  Sharing
of Reimbursement Obligation Payments.


 


Whenever the Agent receives a payment from the
Borrower on account of reimbursement obligations in respect of a Letter of
Credit owed to a Lender, the Agent shall promptly pay to such Lender such
Lender’s Pro Rata Share of such payment from Borrower.  Each such payment shall be made by the Agent
on the next Revolving Loan Settlement Date.


 


(b)                                 Documentation.


 


Upon the request of any Lender, the Agent shall
furnish to such Lender copies of any Letter of Credit and such other
documentation as may reasonably be requested by such Lender.


 


(c)                                  Obligations
Irrevocable.  The
obligations of each applicable Lender to make payments to the Agent with
respect to any Letter of Credit or with respect to the Revolving Loans, as
applicable, made as a result of a drawing under a Letter of Credit and the
obligations of the Borrower for whose account the Letter of Credit was issued
to make payments to the Agent, for the account of the applicable


 


90

















 


Lenders, shall be
irrevocable and shall not be subject to any qualification or exception
whatsoever, including any of the following circumstances:


 


(I)                                    any
lack of validity or enforceability of this Agreement or any of the other Loan
Documents;


 


(II)                                the
existence of any claim, setoff, defence or other right which Borrower or other
Loan Party may have at any time against a beneficiary named in a Letter of
Credit or any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), any Lender, the Agent, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including any
underlying transactions between Borrower or other Loan Party or any other
Person and the beneficiary named in any Letter of Credit);


 


(III)                            any
draft, certificate or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;


 


(IV)                            the
surrender or impairment of any security for the performance or observance of
any of the terms of any of the Loan Documents;


 


(V)                                the
occurrence of any Default or Event of Default; or


 


(VI)                            the
failure of the Borrower to satisfy the applicable conditions precedent set
forth in Article 8.


 


(d)                                 Recovery
or Avoidance of Payments; Refund of Payments In Error.  In the event any payment by or on behalf of
the Borrower received by the Agent with respect to any Letter of Credit, and
distributed by the Agent to the applicable Lenders on account of their
respective obligations therein, is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the applicable Lenders shall, upon demand by the Agent, pay to the
Agent their respective Pro Rata Shares of such amount set aside, avoided or
recovered, together with interest at the rate and in the currency required to
be paid by the Agent upon the amount required to be repaid by it.  Unless the Agent receives notice from
Borrower prior to the date on which any payment is due to the applicable
Lenders that Borrower will not make such payment in full as and when required,
the Agent may assume that Borrower has made such payment in full to the Agent
on such date in immediately available funds and the Agent may (but shall not be
so required), in reliance upon such assumption, distribute to each applicable
Lender on such due date an amount equal to the amount then due such Lender from
Borrower.  If and to the extent Borrower
has not made such payment in full to the Agent, each Lender shall


 


91

















 


repay to the Agent on demand
such amount distributed to such Lender, together with interest thereon at the
Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.


 


(e)                                  Indemnification
by Lenders.  To
the extent not reimbursed by the Borrower and without limiting the obligations
of the Borrower hereunder, the Lenders agree to indemnify the Agent ratably in
accordance with their respective Pro Rata Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys’ fees) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of any Letter of Credit or any action taken
or omitted by the Agent under any Letter of Credit issued by the Agent and
Lenders except to the extent they are found, by a final decision of a court of
competent jurisdiction, to have resulted from Agent’s gross negligence or
wilful misconduct.  Without limitation of
the foregoing, each Lender agrees to reimburse the Agent promptly upon demand
for its Pro Rata Share of any costs or expenses payable by the Borrower to the
Agent is not promptly reimbursed for such costs and expenses by the
Borrower.  The agreement contained in
this Section shall survive payment in full of all other Obligations.


 


12.17                 Concerning the
Collateral and the Related Loan Documents.


 


Each Lender authorizes
and directs the Agent to enter into, execute and deliver the other Loan
Documents, for the ratable benefit of the Agent and the Lenders.  Each Lender agrees that any action taken by
the Agent, or the Required Lenders, as applicable, in accordance with the terms
of this Agreement or the other Loan Documents, and the exercise by the Agent,
or the Required Lenders, as applicable, of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.  The Lenders acknowledge that the Revolving
Loans, Agent Advances, Overdraft Accommodations and Hedge Agreements between
the Borrower, the Royal Bank (or any of its Affiliates) or any other Lender (or
an Affiliate thereof), Bank Products obtained by the Borrower from the BP
Provider (or any of its Affiliates) and all interest, fees and expenses
hereunder in respect of Obligations of the Borrower constitute one Debt,
secured pari passu by all of the Collateral of the Loan Parties, directly and
indirectly as primary Loan Parties and guarantors.  For greater certainty all the Revolving Loans
and the Obligations of each Loan Party are cross-guaranteed and
cross-collateralized.


 


12.18                 Field Audit and
Examination Reports; Disclaimer by Lenders.


 


By signing this
Agreement, each Lender:


 


(a)                                  is
deemed to have requested that the Agent furnish such Lender, promptly after it
becomes available, a copy of each field audit or examination report (each a “Report”
and collectively, “Reports”) prepared by or on behalf of the Agent;


 


(b)                                 expressly
agrees and acknowledges that the Agent does not (i) make any
representation or warranty as to the accuracy of any Report or (ii) shall
not be liable for any information contained in any Report;


 


92

















 


(c)                                  expressly
agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that the Agent or other party performing any audit or examination
will inspect only specific information regarding the relevant Loan Party and
will rely significantly upon the relevant Loan Party’s books and records, as
well as on representations of the relevant Loan Party’s personnel;


 


(d)                                 agrees
to keep all Reports confidential and strictly for its internal use, and not to
distribute except to its participants or use any Report in any other manner;
and


 


(e)                                  without
limiting the generality of any other indemnification provision contained in
this Agreement, agrees:  (i) to hold
the Agent and any such other Lender preparing a Report harmless from any action
the indemnifying Lender may take or conclusion the indemnifying Lender may
reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to Borrower or
the indemnifying Lender’s participation in or the indemnifying Lender’s
purchase of, a loan or loans of Borrower; and (ii) to pay and protect, and
indemnify, defend and hold the Agent and any such other Lender preparing a Report
harmless from and against, the claims, actions, proceedings, damages, costs,
expenses and other amounts (including Attorney Costs) incurred by the Agent and
any such other Lender preparing a Report as the direct or indirect result of
any third parties who might obtain all or part of any Report through the
indemnifying Lender.


 


12.19                 Relation Among
Lenders.


 


The Lenders are
not partners or co-venturers, and no Lender shall be liable for the acts or
omissions of or (except as otherwise set forth herein in case of the Agent)
authorized to act for, any other Lender.


 


12.20                 Arranger and
Other Agent.


 


None of the
Arrangers nor any Lender or Affiliate thereof now or hereafter identified as a
documentation agent or syndication agent hereunder solely in their respective
capacities as such shall have any right, power, obligation, liability,
responsibility or duty under this Agreement.


 


ARTICLE 13 — GUARANTEES


 


13.1                        The Guarantees.


 


Each Guarantor,
as primary obligor and not merely as a surety, hereby unconditionally and
irrevocably, jointly and severally (solidarily), guarantees to the Agent and
each of the Secured Parties the punctual payment when due in accordance with
the terms hereof of all Obligations, of whatever kind and description, of the
Borrower to the Agent and each of the Secured Parties now or hereafter
existing, whether direct or indirect, absolute or contingent, matured or
unmatured, secured or unsecured pursuant to or arising out of or under this
Agreement (including all interest that accrues after the commencement of any
case or proceeding by or against the Borrower under any federal or state
bankruptcy, insolvency, receivership or similar law, whether or not allowed in
such case or proceeding), including, without limitation, all Obligations (all such
obligations so guaranteed are referred to herein as the “Guaranteed Obligations”).


 


93

















 


13.2                        Guarantee Absolute.


 


Each Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with their terms regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent and/or Secured Parties with respect thereto.  The liability of each Guarantor hereunder shall
be solidary (joint and several) and absolute and unconditional irrespective of:


 


(a)                                  Any
lack of validity or enforceability of the Obligations or the Guaranteed
Obligations or any agreement or instrument relating thereto;


 


(b)                                 Any
change in the time, manner or place of the payment of, or in any other term of,
all or any of the Obligations or the Guaranteed Obligations, or any amendment
or modification of or any consent to departure from this Agreement or any other
Loan Document;


 


(c)                                  Any
exchange, release, unopposability or nonperfection of any Collateral or any
release or amendment to, waiver of, or consent to departure from, or any
Guarantee for, all or any part of the Obligations or the Guaranteed
Obligations;


 


(d)                                 Any
whole or partial termination of this Guarantee as to any other Guarantor; or


 


(e)                                  Any
other circumstance which might otherwise constitute a defence available to, or
a discharge of, the Borrower in respect of the Obligations or the Guaranteed
Obligations or a Guarantor in respect of this Guarantee or the Guaranteed
Obligations.


 


This Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Obligations or the Guaranteed Obligations are
rescinded or must otherwise be returned by the Agent and/or Secured Parties
upon the bankruptcy or reorganization of any Guarantor or otherwise under
applicable law, all as though such payment had not been made.


 


13.3                        Consents, Waivers and
Renewals.


 


Each Guarantor
hereby renounces to the benefits of division and discussion.  Each Guarantor hereby waives promptness,
diligence, notice of the acceptance hereof, notice of intent to accelerate and
notice of acceleration and any other notice with respect to any of the
Obligations or the Guaranteed Obligations and this Agreement and any
requirement that the Agent and/or Secured Parties protect, secure, perfect,
render opposable or insure the Agent’s Lien or Lien on any Property subject
thereto or exhaust any right or take any action against the Borrower any
Guarantor or any other Person or any Collateral before proceeding
hereunder.  Each Guarantor agrees that
the Agent and/or Secured Parties may at any time and from time to time, either
before or after the maturity thereof, without notice to or further consent of
the Borrower or the Guarantor extend the time of payment of, exchange or
surrender any Collateral for, or renew any of the Obligations or the Guaranteed
Obligations, and may also make any agreements with the Borrower, any Guarantor
or with any other party to or Person liable on any of the Obligations, or
interested therein, for the extension, renewal, payment, compromise, discharge,
or release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement


 


94

















 


between the Agent
and/or any Secured Parties and the Borrower or any such other party or Person,
without in any way impairing or affecting this Guarantee.  Each Guarantor agrees to make payment to the
Agent, for the rateable benefit of the Secured Parties, of any of the
Obligations and the Guaranteed Obligations whether or not the Agent and/or any
Lenders shall have resorted to any collateral security, or shall have proceeded
against any other Loan Party principally or secondarily obligated with respect
to any of the Obligations or the Guaranteed Obligations.  The Agent and/or Secured Parties shall be
free to deal with the Borrower and each of the Guarantors as it sees fit.


 


13.4                        Subrogation.


 


No Guarantor
shall exercise any rights which it may acquire by way of subrogation under this
Agreement, by any payment made hereunder or otherwise, until all the
Obligations and the Guaranteed Obligations shall have been paid in full.  If any amount shall be paid to the Borrower on
account of such subrogation rights in violation of the foregoing restriction,
such amount shall be held in trust for the benefit of the Agent (for itself and
the other Secured Parties) and shall forthwith be paid to the Agent (for itself
and the other Secured Parties) to be credited and applied to the Obligations,
whether matured or unmatured, in accordance with the terms of this Agreement.


 


13.5                        Protection Clause.


 


Whenever herein a
representation or warranty is expressed by a Guarantor or, subject to Section 13.1
above, any agreement to do any act or thing is made by a Guarantor, same shall
be deemed to be a representation or warranty as to that Guarantor only and not
a representation or warranty of any matter or circumstance of any other
Guarantor and an agreement as to its conduct and not the conduct of any other
Guarantor.  Subject to Section 13.1
above, no Guarantor shall be liable for any obligation of any other Guarantor’s
Guaranteed Obligations.


 


13.6                        Limitation on Guarantee of
Obligations.


 


(a)                                  In
any action or proceeding with respect to any Guarantor involving any state or
provincial corporate law, or any state or provincial or federal bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of such Guarantor under Section 13.1 hereof
would otherwise be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under said Section 13.1, then, notwithstanding any other
provision hereof to the contrary, the amount of such liability shall, without
any further action by such Guarantor, any Lender, the Agent or any other
Person, be automatically limited and reduced to the highest amount which is
valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.


 


(b)                                 To
the extent that any U.S. Guarantor shall make a payment under this Agreement of
all or any of the Guaranteed Obligations (a “U.S. Guarantor Payment”) which,
taking into account all other U.S. Guarantor Payments then previously or
concurrently made by the U.S. Guarantor, exceeds the amount which the U.S.
Guarantor would otherwise have paid if the U.S. Guarantor had paid the
aggregate Obligations satisfied by such U.S. Guarantor Payment in the same
proportion that


 


95

















 


such U.S. Guarantor’s “Allocable
Amount” (as defined below) (in effect immediately prior to such U.S. Guarantor
Payment) bore to the aggregate Allocable Amounts of the U.S. Guarantor in
effect immediately prior to the making of such U.S. Guarantor Payment, then,
following payment in full in cash (or in a form otherwise acceptable to the
Lenders) of the Obligations and termination of the Revolving Credit
Commitments, such U.S. Guarantor shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, the U.S. Guarantors for
the amount of such excess, pro rata based upon their respective Allocable Amounts
in effect immediately prior to such U.S. Guarantor Payment.


 


(i)                                     As
of any date of determination, the “Allocable Amount” of any U.S. Guarantor
shall be equal to the maximum amount of the claim which could then be recovered
from such U.S. Guarantor under this Agreement without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.


 


(ii)                                  This
subsection (b) is intended only to define the relative rights of U.S.
Guarantors and nothing set forth in this subsection (b) is intended to or
shall impair the obligations of U.S. Guarantors, jointly and severally, to pay
any amounts as and when the same shall become due and payable in accordance
with the terms of this Agreement.


 


(iii)                               The
rights of the parties under this subsection (b) shall be exercisable upon
the full and indefeasible payment of the Obligations and the termination of
this Agreement and the other Loan Documents.


 


(iv)                              The
parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of any U.S. Guarantor to which such
contribution and indemnification is owing.


 


13.7                        Guarantee of Payment.


 


Each Guarantor
further agrees that this Guarantee constitutes a guaranty of payment when due
and not of collection, and waives any right to require that any resort be had
by the Agent or any Secured Party to any of the Collateral or other security
held for payment of the Guaranteed Obligations or to any balance of any deposit
account or credit on the books of the Agent or any Secured Party in favour of
any other Guarantor or any other Person or to any other guarantor of all or
part of the Guaranteed Obligations.


 


ARTICLE 14 — MISCELLANEOUS


 


14.1                        No Waivers; Cumulative
Remedies.


 


No failure by the
Agent or any Lender to exercise any right, remedy or option under this
Agreement or any present or future supplement thereto or in any other agreement
between or among any Loan Party and the Agent and/or any Lender or delay by the
Agent or any Lender in


 


96

















 


exercising the
same, will operate as a waiver thereof. 
No waiver by the Agent or any Secured Party will be effective unless it
is in writing, and then only to the extent specifically stated.  No waiver by the Agent or the Secured Parties
on any occasion shall affect or diminish the Agent’s and each Secured Party’s
rights thereafter to require strict performance by the Loan Parties of any
provision of this Agreement.  The Agent
and the Secured Parties may proceed directly to collect the Obligations without
any prior recourse to the Collateral. 
The Agent’s and each Secured Party’s rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.


 


14.2                        Severability.


 


The illegality or
unenforceability of any provision of this Agreement or any other Loan Document
or any instrument or agreement required hereunder shall not in any way affect
or impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.


 


14.3                        Governing Law; Choice of
Forum; Service of Process.


 


(a)                                  THIS
AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF ALBERTA AND
THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN; PROVIDED, THAT IF THE LAWS OF
ANY JURISDICTION OTHER THAN ALBERTA SHALL GOVERN IN REGARD TO THE VALIDITY,
PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN REGARD TO PROCEDURAL
MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH
OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT; PROVIDED, FURTHER,
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.


 


(b)                                 ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE PROVINCE OF ALBERTA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE AGENT
AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON
EXCLUSIVE JURISDICTION OF THOSE COURTS. 
EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. 
NOTWITHSTANDING THE FOREGOING:  (1) THE
AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST ANY LOAN PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
THE AGENT OR THE LENDERS


 


97

















 


DEEM NECESSARY OR
APPROPRIATE AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY
APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.


 


(c)                                  EACH
LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL
(RETURN RECEIPT REQUESTED) DIRECTED TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH
IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE CANADA POST OR U.S. MAILS,
AS APPLICABLE, POSTAGE PREPAID.  NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.


 


14.4                        WAIVER OF JURY TRIAL.


 


EACH OF THE LOAN
PARTIES, THE SECURED PARTIES AND THE AGENT IRREVOCABLY WAIVES ITS RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR THE AGENT-RELATED
PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE.  EACH OF THE LOAN
PARTIES, THE LENDERS AND THE AGENT AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF.  THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.


 


14.5                        Survival of Representations
and Warranties.


 


All of each Loan
Party’s representations and warranties contained in this Agreement shall
survive the execution, delivery and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.


 


14.6                        Other Security and
Guarantees.


 


The Agent may,
without notice or demand and without affecting the Loan Parties’ obligations
hereunder, from time to time:  (a) take
from any Person and hold collateral (other than the


 


98














 


Collateral) for the payment of all or any part of the Obligations and
exchange, enforce or release such collateral or any part thereof; and (b) accept
and hold any endorsement or guarantee of payment of all or any part of the
Obligations and release or substitute any such endorser or guarantor or any
Person who has given any Lien in any other collateral as security for the
payment of all or any part of the Obligations or any other Person in any way
obligated to pay all or any part of the Obligations.


 


14.7                        Fees
and Expenses.


 


Borrower agrees to pay to the Agent, for its benefit, on demand (upon
receipt of a reasonably detailed written invoice therefor), all reasonable
incurred costs and expenses (other than any Indemnified Taxes, which are
governed by Section 4.1, and any costs or losses governed by Section 4.3
or Section 4.4) that the Agent pays or incurs in connection with the
negotiation, preparation, syndication, consummation, administration,
enforcement and termination of this Agreement or any of the other Loan
Documents, including:  (a) Attorney
Costs; (b) costs and expenses (including Attorney Costs) for any
amendment, supplement, waiver, consent or subsequent closing in connection with
the Loan Documents and the transactions contemplated thereby; (c) costs
and expenses of lien and title searches and title insurance; (d) taxes,
fees and other charges for recording the filing financing statements and
continuations, and other actions to perfect, protect, and continue the Agent’s
Liens (including costs and expenses paid or incurred by the Agent in connection
with the consummation of this Agreement); (e) sums paid or incurred to pay
any amount or take any action required of any Loan Party under the Loan
Documents that such Loan Party fails to pay or take; (f) costs of
appraisals, inspections and verifications of the Collateral and other due
diligence with respect to the Collateral and the Loan Parties, including
travel, lodging, and meals for inspections of the Collateral and any Loan Party’s
operations by the Agent plus a U.S.$1,000 per Person per day charge for field
examinations and audits and the preparation of reports thereof; and (g) costs
and expenses of forwarding loan proceeds, collecting cheques and other items of
payment, and establishing and maintaining Receipt Accounts and lock boxes, and
costs and expenses of preserving and protecting the Collateral.  In addition, Borrower agrees to pay
reasonable costs and expenses incurred by the Agent (including Attorney Costs)
to the Agent, for its benefit, on demand, and to the other Lenders for their
benefit, on demand, and to pay to the Lenders’ all reasonable fees, expenses
and disbursements incurred by such other Lenders for one law firm retained by
such other Lenders, in each case, paid or incurred to obtain payment of the
Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents or to
defend any claims made or threatened against the Agent or any Lender arising
out of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). 
The Borrower shall be obligated for the foregoing amounts, including any
such amounts owing on the Closing Date, whether or not the credit facilities
contemplated hereunder are consummated and the foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and
expenses to be paid by Borrower.  All of
the foregoing costs and expenses shall be, at Agent’s option, (i) debited
from any Designated Account, as applicable, or any other bank account of the
Borrower maintained with Royal Bank, or (ii) charged to the Borrower’s
Loan Account as Revolving Loans, all as described and further permitted
pursuant to Section 3.6.


 


99

















 


14.8                        Judgment
Interest Act.


 


To the extent permitted by Law, the provisions of the Judgment Interest Act (Alberta) shall not apply to the Total
Facility and the other Loan Documents and are hereby expressly waived by the
Borrower.


 


14.9                        Notices.


 


Except as otherwise provided herein, all notices, demands and requests
that any party is required or elects to give to any other shall be in writing
or by a telecommunications device capable of creating a written record, and any
such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service, (b) four
(4) days after it shall have been mailed by Canada Post or United States
mail, first class, certified or registered, with postage prepaid or (c) in
the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:


 


If to the Agent:


 


Royal Bank of Canada

200 Bay Street

12th Floor

Royal Bank Plaza, South Tower

Toronto, Ontario M5J 2W7


 


Attention:  Agency
Services Group

Telecopy No.:  (416) 842-4023


 


with copies to:


 


Ogilvy Renault LLP

200 Bay Street, Suite 3800

Royal Bank Plaza, South Tower

Toronto, Ontario M5J 2Z4


 


Attention:  Kevin J. Morley/David
M.A. Amato

Telecopy No.:  (416) 216-1900/(416)
216-1971


 


If to Royal Bank:


 


Royal Bank of Canada

200 Bay Street

30th Floor

Royal Bank Plaza

South Tower

Toronto, Ontario M5J 1J5


 


Attention:  Robert S. Kizell

Telecopy No.:  (416) 842-5844


 


100

















 


If to a Loan Party:


 


Gibson Acquisition ULC

1700, 440 2nd Avenue S.W.

Calgary, Alberta T2P 5E9


 


Attention:  Executive Vice
President Finance and Chief Financial Officer

Telecopy No.:  (403) 206-4011


 


with copies to:


 


Riverstone Holdings LLC

712 Fifth Avenue 

51st Floor

New York, NY 10019


 


Attention:  Robert Tichio

Telecopy No.:  (212) 993-0077


 


or to such other address as each party may designate for itself by like
notice.  Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall not
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.


 


14.10                 Waiver of
Notices.


 


Unless otherwise expressly provided herein, each Loan Party waives
presentment, protest and notice of demand or dishonour and protest as to any
instrument, notice of intent to accelerate any or all of the Obligations and
notice of acceleration of any or all of the Obligations, as well as any and all
other notices to which it might otherwise be entitled.  No notice to or demand on any Loan Party
which the Agent or any Lender may elect to give shall entitle such Loan Party
to any or further notice or demand in the same, similar or other circumstances.


 


14.11                 Binding Effect.


 


The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective representatives, successors, and permitted assigns of
the parties hereto; provided, however, that no interest herein may be assigned
by any Loan Party without prior written consent of the Agent and each
Lender.  The rights and benefits of the
Agent and the Lenders hereunder shall, if such Persons so agree, inure to any
party acquiring any interest in the Obligations or any part thereof.


 


14.12                 Indemnity of the
Agent and the Secured Parties by the Loan Parties.


 


Each Loan Party agrees, jointly and severally, to defend, indemnify and
hold the Agent Related Persons, and each Secured Party and each of its
respective officers, directors, employees, counsel, advisors, representatives,
agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any


 


101

















 


kind or nature whatsoever which may at any time (including at any time
following repayment of the Revolving Loans and the termination, resignation or
replacement of the Agent or replacement of any Lender) be imposed on, incurred
by or asserted against any such Indemnified Person in any way relating to or
arising out of any litigation, investigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) relating to or arising out of
this Agreement, any other Loan Document or the Revolving Loans or the use of
the proceeds thereof, the Transaction or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by any such Indemnified Person under or
in connection with any of the foregoing, whether or not any Indemnified Person
is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided, that the Loan Parties shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities to
the extent they are found by a court of competent jurisdiction to have resulted
from a material breach of this Agreement by an Indemnified Person, or the
wilful misconduct, bad faith or gross negligence of such Indemnified Person.  The agreements in this Section shall
survive payment of all other Obligations.


 


14.13                 Limitation of
Liability.


 


NO CLAIM MAY BE MADE BY ANY LOAN PARTY, ANY SECURED PARTY OR OTHER
PERSON AGAINST THE AGENT, ANY LENDER OR THE AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR ATTORNEYS IN FACT OF ANY OF THEM
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY
CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
EACH LOAN PARTY AND EACH SECURED PARTY HEREBY WAIVES, RELEASES AND AGREES NOT
TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR
NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOUR.


 


14.14                 Final Agreement.


 


This Agreement and the other Loan Documents are intended by each Loan
Party, the Agent, the Lenders and the other Secured Parties to be the final,
complete and exclusive expression of the agreement between them.  This Agreement and the other Loan Documents
(including in any event the syndication provisions of the above mentioned
commitment letter and provisions of the Fee Letter (which is considered a Loan
Document)) supersede any and all prior oral or written agreements relating to
the subject matter hereof.  No
modification, rescission, waiver, release or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written
agreement signed by the Loan Parties party thereto and a duly authorized
officer of each of the Agent and the requisite Lenders.


 


14.15                 Counterparts.


 


This Agreement may be executed in any number of counterparts, and by
the Agent, each Lender and each Loan Party in separate counterparts, each of
which shall be an original, but all of which shall together constitute one and
the same agreement; signature pages may be detached from


 


102

















 


multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.


 


14.16                 Captions.


 


The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to
modify, enlarge or restrict any provision.


 


14.17                 Right of Setoff.


 


In addition to any rights and remedies of the Lenders provided by law,
if an Event of Default exists and is continuing or any or all of the Revolving
Loans have been accelerated, each Lender is authorized at any time and from
time to time, without prior notice to any Loan Party, any such notice being
waived by each of the Loan Parties to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Lender or any Affiliate of such Lender to or for the credit or
the account of any Loan Party against any and all Obligations owing to such
Lender, now or hereafter existing, irrespective of whether or not the Agent or
such Lender shall have made demand under this Agreement or any other Loan
Document (except Hedge Agreements) and although such Obligations may be
contingent or unmatured.  Each Lender
agrees promptly to notify the Borrower and the Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give or
the delay in giving such notice shall not affect the validity of such set-off
and application.  NOTWITHSTANDING THE
FOREGOING, PAYMENTS SHALL BE APPLIED IN ACCORDANCE WITH SECTION 3.7 AND NO
LENDER SHALL EXERCISE ANY RIGHT OF SET OFF, BANKER’S LIEN OR THE LIKE AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH
LENDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE AGENT.


 


14.18                 Confidentiality.


 


(a)                                  Each
Loan Party hereby consents that the Agent and each Lender may issue and
disseminate to the public general information describing the credit
accommodation entered into pursuant to this Agreement, including the name and
address of any Loan Party and a general description of any Loan Party’s
business and may use any Loan Party’s name in advertising and other promotional
material.


 


(b)                                 Each
Lender severally agrees to take normal and reasonable precautions and exercise
due care to maintain the confidentiality of all information provided to the
Agent or such Lender by or on behalf of the Loan Parties, under this Agreement
or any other Loan Document, except to the extent that such information (i) was
or becomes generally available to the public other than as a result of
disclosure by the Agent or such Lender or (ii) was or becomes available on
a nonconfidential basis from a source other than a Loan Party, provided that
such source is not bound by a confidentiality agreement or is not acting in a
fiduciary or trust position or capacity with a Loan Party known to the Agent or
such Lender; provided, however, that the Agent and any Lender may disclose such
information (1) at the request or pursuant to any requirement of any
Governmental Authority


 


103

















 


to which the Agent or such
Lender is subject or in connection with an examination of the Agent or such
Lender by any such Governmental Authority; (2) pursuant to subpoena or
other court process (and the Agent or such Lender, as the case may be, shall
endeavour to provide the Borrower with prior notice of such disclosure to the
extent practicable and shall, at the sole cost and expense of the Loan Parties,
cooperate, to the extent practicable and not in a manner adverse to the Agent
or such Lender, with the Borrower if the Borrower seeks a protective order with
respect to the relevant information); (3) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (4) to
the extent reasonably required in connection with any litigation or proceeding
(including, but not limited to, any bankruptcy proceeding) to which the Agent,
any Lender or any of their respective Affiliates may be party (and the Agent or
such Lender, as the case may be, shall endeavour to provide the Borrower with
prior notice of such disclosure to the extent practicable and shall, at the
sole cost and expense of the Loan Parties, cooperate, to the extent practicable
and not in a manner adverse to the Agent or such Lender, with the Borrower if
the Borrower seeks a protective order with respect to the relevant
information); (5) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Loan Document; (6) to
the Agent’s or such Lender’s independent auditors, accountants, attorneys and
other professional advisors (and the Agent or such Lender, as the case may be,
shall advise such auditors, accountants, attorneys or other professional
advisors of the confidential nature of such information); (7) to any
prospective Participant or Assignee under any Assignment and Acceptance, actual
or potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the Lenders
hereunder; (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which a Loan Party is party
or is deemed party with the Agent or such Lender, and (9) to its
Affiliates who are informed of and who agree to maintain the confidentiality of
the information.


 


14.19                 Conflicts with
Other Loan Documents.


 


Unless otherwise expressly provided in this Agreement (or in another
Loan Document by specific reference to the applicable provision contained in
this Agreement), if any provision contained in this Agreement conflicts with
any provision of any other Loan Document, the provision contained in this
Agreement shall govern and control.


 


14.20                 Judgment
Currency.


 


If for the purpose of obtaining judgment in any court it is necessary
to convert an amount due hereunder in the currency in which it is due (the “Original
Currency”) into another currency (the “Second Currency”), the rate of exchange
applied shall be that at which, in accordance with normal banking procedures,
the Agent or the relevant Lender, as the case may be, could purchase in the
Toronto foreign exchange market, the Original Currency with the Second Currency
on the date two (2) Business Days preceding that on which judgment is
given.  Each Loan Party agrees that its
obligation in respect of any Original Currency due from it hereunder shall,
notwithstanding any judgment or payment in such other currency, be discharged
only to the extent that, on the Business Day following the date the Agent or
relevant Lender, as the case may


 


104

















 


be, receives payment of any sum so adjudged to be due hereunder in the
Second Currency, the Agent or such Lender may, in accordance with normal
banking procedures, purchase, in the Toronto foreign exchange market, the
Original Currency with the amount of the Second Currency so paid; and if the
amount of the Original Currency so purchased or could have been so purchased is
less than the amount originally due in the Original Currency, each Loan Party
agrees as a separate obligation and notwithstanding any such payment or
judgment to indemnify the Agent or such Lender, as the case may be, against
such loss.  The term “rate of exchange”
in this Section 14.20 means the spot rate at which the Agent or relevant
Lender, in accordance with normal practices, is able on the relevant date to
purchase the Original Currency with the Second Currency, and includes any premium
and costs of exchange payable in connection with such purchase.


 


14.21                 Appointment of
Loan Party Representative; Reliance Upon Authority.


 


Each Loan Party hereby designates the Borrower as its representative
and agent on its behalf (the “Loan Party Representative”) for the purposes of
giving and receiving on such Loan Party’s behalf all other notices, directions,
instructions, requests, other communications and consents hereunder or under
any of the other Loan Documents and taking all other actions (including in
respect of compliance with covenants and consenting or agreeing to any
amendment or waiver of compliance with any provision of any Loan Document) on
behalf of such Loan Party under the Loan Documents.  The Loan Party Representative hereby accepts
such appointment.  The Agent and each
Lender may regard any notice, direction, instruction, request or other
communication pursuant to any Loan Document from the Loan Party Representative
as a notice, direction, instruction, request or communication, as the case may
be, from the applicable Loan Party or Loan Parties, and may give any notice or
other communication required or permitted to be given to any Loan Party or Loan
Parties hereunder to the Loan Party Representative on behalf of such Loan Party
or Loan Parties.  Each Loan Party agrees
that each notice, election, direction, instruction, request, other
communication, representation and warranty, consent, covenant, agreement and
undertaking or other action made or taken on its behalf by the Loan Party
Representative shall be deemed for all purposes to have been made or taken by
such Loan Party and shall be binding upon and enforceable against such Loan
Party to the same extent as if the same had been made or taken directly by such
Loan Party.


 


14.22                 Patriot Act
Notice.


 


The Agent and the Lenders hereby notify the Borrower that pursuant to
the requirements of the Patriot Act (including all applicable “Know Your
Customer” rules, regulations and procedures applicable to Lenders in Canada),
the Agent and the Lenders are required to obtain, verify and record information
that identifies Borrower, including its legal name, address, tax ID number and
other information that will allow the Agent and the Lenders to identify it in
accordance with the Patriot Act.  The
Agent and the Lenders will also require information regarding the Borrower’s
management and owners, such as legal name, address and date of birth.


 


14.23                 Intercreditor
Agreement.


 


Nothing contained in the Intercreditor Agreement shall be deemed to
modify any of the provisions of this Agreement and the other Loan Documents,
which, as among the Loan Parties, the Agent, the Lenders and the other Secured
Parties shall remain in full force and effect.


 


105

















 


14.24                 Accounting
Changes.


 


In the event that any Accounting Change (as defined below) shall occur
and such change results in a change in the method of calculation of financial
ratios, standards or terms in this Agreement, then, at the request of the
Borrower or the Required Lenders, the Borrower and the Agent agree to enter
into negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower’s financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been
made.  Until such time as such an
amendment shall have been executed and delivered by the Borrower, the Agent and
the Required Lenders, all financial ratios, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred.  “Accounting
Changes” refers to changes in accounting principles required by GAAP.


 


14.25                 Effect of Certain
Errors or Omissions.


 


Notwithstanding anything to the contrary contained herein (including Section 11.1),
if following the Closing Date, the Agent and the Borrower shall have jointly
identified an obvious error or any error or omission of a technical or immaterial
nature, in each case, in any provision of this Agreement or any other Loan
Document, then the Agent and the Borrower shall be permitted to amend such
provision and such amendment shall become effective without any further action
or consent of any other party to this Agreement or any other Loan Document if
the same is not objected to in writing by the Required Lenders within five (5) Business
Days following receipt of notice thereof; it being understood that posting such
amendment electronically on IntraLinks/IntraAgency or another relevant website
with notice of such posting by the Agent to the Required Lenders shall be
deemed adequate receipt of notice of such amendment.


 


14.26                 Business
Corporations Act (Alberta).


 


To the extent required pursuant to Section 45 of the Business Corporation Act (Alberta), each of the Loan Parties
hereby consents to the entering into of the transactions contemplated in this
Agreement (including the giving of guarantees and the granting of security) by
each of the other Loan Parties.


 


[the remainder of this page is
intentionally left blank]

[signature pages follow]


 


106

















 


IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.


 


“BORROWER”


 


 


	
   

  	
  GIBSON ACQUISITION ULC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Robert M. Tichio

  
	
   

  	
   

  	
  Name:  Robert M. Tichio

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  



 


- Credit Agreement -


 

















 


“GUARANTORS”


 


 


	
   

  	
  GIBSON ENERGY HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name:

  	
  Richard G. Taylor

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance and Chief Financial Officer

  



 


 


	
   

  	
  MOOSE JAW REFINERY ULC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name:

  	
  Richard G. Taylor

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance and Chief Financial Officer

  



 


- Credit Agreement -


 














 


	
   

  	
  CANWEST PROPANE ULC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Terry W. Gomke

  
	
   

  	
   

  	
  Name:  Terry W. Gomke

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  



 


 


	
   

  	
  MP ENERGY ULC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Terry W. Gomke

  
	
   

  	
   

  	
  Name:  Terry W. Gomke

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  



 


 


	
   

  	
  GEP ULC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Terry W. Gomke

  
	
   

  	
   

  	
  Name:  Terry W. Gomke

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  



 


- Credit Agreement -


 

















 


	
   

  	
  GIBSON ENERGY LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Terry W. Gomke

  
	
   

  	
   

  	
  Name:  Terry W. Gomke

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  



 


 


	
   

  	
  1370307 ALBERTA LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Terry W. Gomke

  
	
   

  	
   

  	
  Name:  Terry W. Gomke

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  



 


 


	
   

  	
  GIBSON GCC INC.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Terry W. Gomke

  
	
   

  	
   

  	
  Name:  Terry W. Gomke

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  



 


- Credit Agreement -


 

















 


	
   

  	
  MOOSE JAW REFINERY PARTNERSHIP

  BY ITS MANAGING PARTNER, GIBSON ENERGY LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ T. Murray Carey

  
	
   

  	
   

  	
  Name:  T. Murray Carey

  
	
   

  	
   

  	
  Title:  Secretary

  



 


 


	
   

  	
  CANWEST PROPANE PARTNERSHIP 

  BY ITS MANAGING PARTNER, GIBSON ENERGY LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ T. Murray Carey

  
	
   

  	
   

  	
  Name:  T. Murray Carey

  
	
   

  	
   

  	
  Title:  Secretary

  



 


 


	
   

  	
  MP ENERGY PARTNERSHIP 

  BY ITS MANAGING PARTNER, GIBSON ENERGY LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ T. Murray Carey

  
	
   

  	
   

  	
  Name:  T. Murray Carey

  
	
   

  	
   

  	
  Title:  Secretary

  



 


- Credit Agreement -


 

















 


	
   

  	
  GIBSON ENERGY PARTNERSHIP

  BY ITS MANAGING PARTNER, 

  GIBSON ENERGY LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name:

  	
  Richard G. Taylor

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance and Chief Financial Officer

  



 


 


	
   

  	
  CHIEF HAULING CONTRACTORS INC.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name:

  	
  Richard G. Taylor

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance and Chief Financial Officer

  



 


 


	
   

  	
  LINK PETROLEUM SERVICES LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name:

  	
  Richard G. Taylor

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance and Chief Financial Officer

  



 


- Credit Agreement -


 

















 


	
   

  	
  LINK PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ T. Murray Carey

  
	
   

  	
   

  	
  Name:  T. Murray Carey

  
	
   

  	
   

  	
  Title:  Secretary

  



 


 


	
   

  	
  GIBSON ENERGY (U.S.) INC.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ T. Murray Carey

  
	
   

  	
   

  	
  Name:  T. Murray Carey

  
	
   

  	
   

  	
  Title:  Secretary

  



 


- Credit Agreement -


 

















 


	
   

  	
  GEP MIDSTREAM FINANCE CORP.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Robert M. Tichio

  
	
   

  	
   

  	
  Name:  Robert M. Tichio

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  



 


- Credit Agreement -


 

















 


“AGENT”


 


 


	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Ann Hurley

  
	
   

  	
   

  	
  Name:  Ann Hurley

  
	
   

  	
   

  	
  Title:  Manager, Agency

  



 


- Credit Agreement -


 

















 


“LENDERS”


 


 


	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Robert S. Kizell

  
	
   

  	
   

  	
  Name:

  	
  Robert S. Kizell

  
	
   

  	
   

  	
  Title:

  	
  Attorney in Fact

  



 


 


	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Irja R. Otsa

  
	
   

  	
   

  	
  Name:  Irja R. Otsa

  
	
   

  	
   

  	
  Title:  Associate Director

  
	
   

  	
  Per:

  	
  /s/ Mary E. Evans

  
	
   

  	
   

  	
  Name:  Mary E. Evans

  
	
   

  	
   

  	
  Title:  Associate Director

  



 


- Credit Agreement -


 

















 


“ARRANGERS”


 


 


	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Robert S. Kizell

  
	
   

  	
   

  	
  Name:

  	
  Robert S. Kizell

  
	
   

  	
   

  	
  Title:

  	
  Attorney in Fact

  



 


 


	
   

  	
  UBS SECURITIES LLC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Irja R. Otsa

  
	
   

  	
   

  	
  Name:  Irja R. Otsa

  
	
   

  	
   

  	
  Title:  Associate Director

  
	
   

  	
  Per:

  	
  /s/ Richard L. Tavrow

  
	
   

  	
   

  	
  Name:  Richard L. Tavrow

  
	
   

  	
   

  	
  Title:  Director

  



 


- Credit Agreement -


 

















 


“DOCUMENTATION AGENT”


 


 


	
   

  	
  UBS SECURITIES LLC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Irja R. Otsa

  
	
   

  	
   

  	
  Name:  Irja R. Otsa

  
	
   

  	
   

  	
  Title:  Associate Director

  
	
   

  	
  Per:

  	
  /s/ Richard L. Tavrow

  
	
   

  	
   

  	
  Name:  Richard L. Tavrow

  
	
   

  	
   

  	
  Title:  Director

  



 


- Credit Agreement -


 














 


ANNEX A


to


Credit Agreement


 


Definitions


 


Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the Agreement:


 


“ABR” means, at any time, the rate of interest per annum equal to the
greater of (i) the rate which the principal office of Royal Bank in
Toronto, Ontario announces from time to time as the reference rate of interest
for loans in U.S. Dollars to its Canadian borrowers; and (ii) the Federal
Funds Rate (expressed as a 365 day rate) plus 0.50%, adjusted automatically
with each change in such rates all without the necessity of any notice to the
Borrower or any other Person.


 


“ABR Revolving Loan” means a Revolving Loan during any period in which
it bears interest based on the ABR.


 


“Account” or “Accounts” shall mean (exclusive of any debts or
liabilities owing by any directors, officers or employees of the Loan Parties)
any and all of any Loan Party’s now existing and future: (a) accounts (as
defined in the PPSA or the UCC, as applicable), and any and all other
receivables (whether or not specifically listed on schedules furnished to the
Agent), including, without limitation, all accounts created by, or arising
from, any Loan Party’s sales, leases, rentals of goods or renditions of
services to its customers, including, but not limited to, those accounts
arising under any Loan Party’s trade names or styles, or through any Loan Party’s
divisions; (b) any and all instruments, documents, chattel paper
(including electronic chattel paper); (c) indemnification rights and tax
refunds; (d) the proceeds or royalties of any and all licensing agreements
or arrangements between any Loan Party and any licensee of any of such Loan
Party’s General Intangibles; (e) reserves and credit balances arising in
connection with or pursuant hereto; (f) guarantees, supporting
obligations, payment intangibles and letter of credit rights given to any Loan
Party on behalf of a customer of such Loan Party in support of any “Accounts”; (g) insurance
policies or rights relating to any of the foregoing; (h) General
Intangibles pertaining to any and all of the foregoing (including, without
limitation, all rights to payment, including, without limitation, those arising
in connection with bank and non-bank credit cards) and including, without
limitation, books and records and any electronic media and software thereto; (i) notes,
deposits or property of Account Debtors securing the obligations of any such
account debtors to any Loan Party; (j) cash and non-cash proceeds (as
defined in the PPSA or the UCC, as applicable) of any and all of the foregoing;
and (k) all monies and claims for monies now or hereafter due and payable
in connection with any and all of the foregoing or otherwise.


 


“Account Debtor” means each Person obligated in any way on or in
connection with an Account, General Intangibles connected to Accounts or
Chattel Paper.


 


“Accounting Changes” had the meaning specified in Section 14.24.


 


“Acquisition” means any acquisition after the Closing Date by any Loan
Party, by any means, of all or substantially all of the assets or capital
stock, or of an operating division or a


 

















 


business unit, of any Person; provided that for the avoidance of doubt,
this definition shall not include the Gibson Acquisition.


 


“Acquisition Agreement” has the meaning specified in the definition of
Transaction.


 


“Activation Notice” has the meaning specified in Section 7.24(a).


 


“Affiliate” shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person.  A
Person shall be deemed to control a corporation if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.


 


“Agent” means Royal Bank, solely in its capacities as administrative
agent and as collateral agent for the Lenders, and any successor agent.


 


“Agent Advances” has the meaning specified in Section 1.2(j).


 


“Agent-Related Persons” means the Agent together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents and
attorneys in fact of the Agent and such Affiliates.


 


“Agent’s Liens” means the Liens in the Collateral granted to the Agent,
for the benefit of the Secured Parties, pursuant to this Agreement and the
other Loan Documents.


 


“Aggregate Revolver Outstandings” means, at any date of determination,
without duplication:  the sum of (a) the
aggregate unpaid principal balance of all Revolving Loans, (b) the
aggregate amount of Pending Revolving Loans requested by the Borrower, (c) one
hundred percent (100%) of the aggregate undrawn amount of all outstanding
Letters of Credit issued under the LC Accommodation and (d) the aggregate
amount of any unpaid reimbursement obligations in respect of all Letters of
Credit issued under the LC Accommodation.


 


“Agreement” means the Credit Agreement to which this Annex A is
attached, as from time to time amended, modified or restated.


 


“Allocable Amount” has the meaning specified in Section 13.6.


 


“Amalgamated Borrower” has the meaning specified in the Recitals.


 


“Anti-Terrorism Laws” means any applicable laws specifically relating
to terrorism or money laundering, including the Proceeds of Crime Act and the
Patriot Act.


 


“Applicable Margin” means, for purposes of calculating the applicable
interest rate for any day for any Revolving Loan or other Obligations, as
applicable, and the applicable rate of the Letter of Credit Fees and the
Commitment Fees for any day under Sections 2.5 and 2.6, as applicable, the
percentage corresponding to the Average Excess Availability for the Applicable
Margin Test Period ending on the last day of the most recent fiscal quarter for
which Responsible Officer’s Certificates have been delivered to the Agent
pursuant to Section 5.2(d) (subject to the immediately succeeding
sentence):


 


2

















 


	
   

  	
   

  	
   

  	
   

  	
  Applicable Margin

  	
   

  
	
  Pricing

  Level

  	
   

  	
  Average Excess Availability

  	
   

  	
  Prime Rate

  Revolving

  Loans and

  ABR

  Revolving

  Loans

  	
   

  	
  BA

  Equivalent

  Revolving

  Loans,

  LIBOR

  Revolving

  Loans and

  Letter of

  Credit Fees

  	
   

  	
  Commitment Fee

  (at all times when

  the sum of

  Aggregate

  Revolver

  Outstandings is

  less than 50% of

  the Maximum

  Revolver Amount)

  	
   

  	
  Commitment Fee

  (at all times when

  the sum of

  Aggregate

  Revolver

  Outstandings is

  greater than or

  equal to 50% of the

  Maximum

  Revolver Amount)

  	
   

  
	
  I

  	
   

  	
  Greater than or equal to an amount that (x), if the Commitments are
  less than U.S.$100,000,000, is equal to 75% of the Commitments, or (y), if
  the Commitments are greater than U.S.$100,000,000, U.S.$75,000,000 plus an amount that is equal to 50% of the U.S. Dollar
  amount derived from subtracting U.S.$100,000,000 from such Commitments.

  	
   

  	
  1.25%

  	
   

  	
  2.75%

  	
   

  	
  0.75

  	
   

  	
  0.50%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Less than an amount that (x) (i), if the Commitments are less
  than U.S.$100,000,000, is equal to 75% of the Commitments, or (ii), if the
  Commitments are greater than U.S.$100,000,000, U.S.$75,000,000 and greater
  than or equal to an amount that (y) (i), if the Commitments are less
  than U.S.$100,000,000, is equal to 50% of the Commitments, or (ii), if the
  Commitments are greater than U.S.$100,000,000, U.S.$50,000,000 plus an amount
  that is equal to 50% of the U.S. Dollar amount derived from subtracting
  U.S.$100,000,000 from such Commitments.

  	
   

  	
  1.50%

  	
   

  	
  3.00%

  	
   

  	
  0.75

  	
   

  	
  0.50%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Less than an amount that (x) (i), if the Commitments are less
  than U.S.$100,000,000, is equal to 50% of the Commitments, or (ii), if the
  Commitments are greater than U.S.$100,000,000, U.S.$50,000,000 and greater
  than or equal to an amount that (y) (i), if the Commitments are less
  than U.S.$100,000,000, is equal to 25% of the Commitments, or (ii), if the
  Commitments are greater than U.S.$100,000,000, U.S.$25,000,000 plus an amount
  that is equal to 50% of the U.S. Dollar amount derived from subtracting
  U.S.$100,000,000 from such Commitments.

  	
   

  	
  1.75%

  	
   

  	
  3.25%

  	
   

  	
  0.75

  	
   

  	
  0.50%

  	
   

  



 


3

















 


	
  IV

  	
   

  	
  Less than an amount that (x), if the Commitments are less than
  U.S.$100,000,000, is equal to 25% of the Commitments, or (y), if the
  Commitments are greater than U.S.$100,000,000, U.S.$25,000,000 plus an amount
  that is equal to 50% of the U.S. Dollar amount derived from subtracting
  U.S.$100,000,000 from such Commitments.

  	
   

  	
  2.00%

  	
   

  	
  3.50%

  	
   

  	
  0.75%

  	
   

  	
  0.50%

  	
   

  



 


The Applicable Margins shall be adjusted (up or down) prospectively,
determined by reference to the pricing grid set forth above, on a quarterly
basis on the date (each a “Calculation Date”) that is the first day of the
first calendar month following the calendar month in which Responsible Officers’
Certificates are delivered to the Agent pursuant to Section 5.2(d) as
at and for the fiscal quarter just ended, as the case may be, based upon
Average Excess Availability for the Applicable Margin Test Period ending on the
last day of such fiscal quarter; provided, however, that the initial Applicable
Margins shall be based on Pricing Level III (as shown above); all such initial
Applicable Margins shall remain at such levels until the Calculation Date based
upon the delivery of the Borrowing Base Certificates and Responsible Officers’
Certificate pursuant to Section 5.2(d) and 5.2(k) respectively,
for the fiscal month ending on January 31, 2009.  If an Event of Default has occurred and is
continuing the Applicable Margins shall, whether or not any default rates also
apply, upon notice of such Event of Default by the Agent, revert to Pricing
Level III and during the continuance of any Default or Event of Default no
reduction may occur until the first day of the first calendar month following
the date on which such Default or Event of Default is waived or cured by the
Required Lenders.  Notwithstanding the
foregoing, Pending Revolving Loans shall not be taken into account for purposes
of calculating the Applicable Margin.


 


“Applicable Margin Test Period” means a period of one fiscal quarter.


 


“Approved” means such matters, as reflected in the most recent notice
given by the Agent to the Borrower as being approved by the Agent.  Each such written notice will supersede and
revoke each prior notice that pertains to the same subject matter.


 


“Arrangers” has the meaning specified in the preamble hereto.


 


“Asphalt Products” means asphalt cement, asphalt cement binders,
cutback asphalt, flux, asphalt emulsions, polymer modified asphalt cement,
polymer modified asphalt emulsions, micro-surfacing emulsions, chemically
modified asphalt, crack sealant products and related high performance products,
excluding, for the avoidance of doubt, wellsite fluids, tops and distillate.


 


“Assignee” has the meaning specified in Section 11.2(a).


 


“Assignment and Acceptance” has the meaning specified in Section 11.2(a).


 


“Attorney Costs” means and includes all fees, out-of-pocket expenses
and disbursements of any law firm or other counsel engaged by the Agent in
connection with this Agreement.


 


4

















 


“Attributable Debt” when used with respect to any sale and leaseback
transaction, means, as at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in any such sale and leaseback transaction, including any
period for which such lease has been extended or may, at the option of the
lessor, be extended.  Such present value
shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP; provided,
however, that if such sale and leaseback transaction results in an obligation
in respect to a capitalized lease, the amount of Debt represented thereby shall
be equal to the amount of the obligation of such Person to pay rent or other
amounts with respect to the capitalized lease, determined in accordance with
GAAP.


 


“Available Amount” means as at any date, the sum of, without
duplication:


 


(a)                                  the
aggregate cumulative amount, not less than zero, equal to 50% of; (i), without
duplication of amounts already disbursed hereunder, Consolidated Net Income of
the Borrower (for the trailing twelve months as at such period); provided,
however, that Consolidated Net Income of the Borrower for the purposes hereof
shall not be tested on a trailing twelve month basis for the first three fiscal
quarters of Fiscal Year 2009.  For Fiscal
Year 2009, Borrower’s Consolidate Net Income shall be initially calculated for
the six month period ending June 30, 2009, and subsequently, for the nine
month period ending September 30, 2009 and for the twelve month period
ending December 31, 2009, minus, (ii) cash Capital
Expenditures made during such period, minus, (iii) scheduled
principal payments of Debt for borrowed money made during such period not
financed by the Available Amount other than amounts in this paragraph (a);


 


(b)                                 the
proceeds received after the Closing Date and on or prior to such date from any
equity issuance by or capital contribution to the Borrower or any Loan Party;


 


(c)                                  the
aggregate principal amount of any Debt of any Loan Party issued after the
Closing Date (other than Debt issued to a Subsidiary), which has been converted
into or exchanged for Capital Stock in the Borrower or any Parent Company;


 


(d)                                 the
aggregate amount actually received in cash or Cash Equivalents by any Loan
Party in connection with the sale, transfer or other disposition of its
ownership interest in any existing joint venture that is not a Subsidiary, to
the extent of the investment in such joint venture.


 


in each case, that has not been previously applied pursuant to Section 7.12(a)(iv),
Section 7.16(ix), clause (a) of the definition of Permitted
Acquisitions and clause (v) of the definition of Permitted Investment.


 


“Availability” means the lesser of (a)(i) the Maximum Revolver
Amount, minus (ii) Reserves, minus (iii) the Aggregate Revolver
Outstandings (excluding the aggregate unpaid principal balance of all Overdraft
Accommodations) at such time relating to extensions of credit made (or, in the
case of Pending Revolving Loans, to be made to or for the account of the
Borrower), minus the Overdraft Accommodation Maximum Amount. and (b)(i) the
Borrowing Base, minus (ii) the Aggregate Revolver Outstandings (excluding
the aggregate unpaid principal balance of all Overdraft Accommodations) at such
time relating to extensions of credit made (or, 


 


5

















 


in the case of Pending Revolving Loans, to be made to or for the
account of the Borrower), minus (iii) the Overdraft Accommodation Maximum
Amount.


 


“Average Excess Availability” means, for any period of determination,
average Availability for such period, as calculated by the Agent.


 


“BA Equivalent Interest Payment Date” means, with respect to a BA
Equivalent Revolving Loan, the earlier of (i) the last day of each BA
Equivalent Interest Period applicable to such BA Equivalent Revolving Loan, and
(ii) the Termination Date.


 


“BA Equivalent Interest Period” means, with respect to each BA
Equivalent Revolving Loan, the period selected by the Borrower hereunder and
being of one, two, three or six (and if available to all Lenders, nine or
twelve) months’ duration, in each case commencing on the Funding Date of such
BA Equivalent Revolving Loan or on the Continuation/Conversion Date on which
the Revolving Loan is converted into or continued as a BA Equivalent Revolving
Loan; provided that in any case the last day of each BA Equivalent Interest
Period shall also be the first day of the next BA Equivalent Interest Period
and further provided that the last day of each BA Equivalent Interest Period
shall be a Business Day and if the last day of a BA Equivalent Interest Period
selected by the Borrower is not a Business Day, the Borrower shall be deemed to
have selected a BA Equivalent Interest Period the last day of which is the
Business Day next following the last day of the BA Equivalent Interest Period
otherwise selected, unless such next following Business Day falls in the next
calendar month in which event the Borrower shall be deemed to have selected a
BA Equivalent Interest Period the last day of which is the Business Day next
preceding the last day of the BA Equivalent Interest Period otherwise selected
and further provided that the last BA Equivalent Interest Period hereunder
shall expire on or prior to the Stated Termination Date.


 


“BA Equivalent Revolving Loan” means a Revolving Loan during any period
in which it bears interest based on the BA Rate.


 


“BA Rate” means, for the BA Equivalent Interest Period of each BA
Equivalent Revolving Loan, the rate of interest per annum equal to the average
annual rate applicable to Canadian dollar bankers’ acceptances having an
identical or comparable term as the proposed BA Equivalent Revolving Loan
displayed and identified as such on the display referred to as the “CDOR Page”
(or any display substituted therefor) of Reuter Monitor Money Rates Service as
at approximately 10:00 A.M. (Toronto time) on such day (or, if such day is
not a Business Day, as of 10:00 A.M. (Toronto time) on the immediately
preceding Business Day), provided that if such rate does not appear on the CDOR
Page at such time on such date, the BA Rate will be the annual discount
rate (rounded upward to the nearest whole multiple of 1/100 of 1%) as of 10:00 A.M.
(Toronto time) on such day at which Royal Bank is then offering to purchase
Canadian dollar bankers’ acceptances accepted by it having such specified term
(or a term as closely as possible comparable to such specified term).


 


“Bank Product Reserve” means the greater of (i) U.S.$10,000,000,
and (ii) all reserves (excluding the Hedging Reserve) which the Agent from
time to time establishes in its reasonable credit judgment for the Bank
Products then provided or outstanding (provided that any such reserves shall (a) bear
a reasonable relationship to the issue giving rise to the implementation of
such reserves for Bank Products, and (b) not be duplicative of other
reserves then in effect).


 


6

















 


“Bank Products” means any of the following products, services or
facilities extended to Borrower by the BP Provider or any of its Affiliates or,
in the case of (b), Lenders or any of their Affiliates: (a) cash
management or related services including any Overadvances (excluding for the
avoidance of doubt overadvances described in clause (d) below); (b) products
under Hedge Agreements not to exceed the Hedging Sublimit; (c) commercial
credit card and merchant card services; (d) any obligation of the BP
Provider or any of its Affiliates in connection with wires, funds, transfers,
or otherwise, on any Oil Settlement Date or any other date until repaid or
refinanced as a Loan, collection or repayment hereunder; and (e) other
banking products or services as may be requested by Borrower, including in an
aggregate face amount not to exceed U.S.$2,000,000 at any time of letters of
credit; provided, however, that any obligation of the BP Provider under any
Bank Products described above, shall not exceed, in the aggregate, the amount
available at the time of the making of such Bank Products (collectively with
all other outstanding Bank Products) under clause (b) of the definition of
Availability.  For any of the foregoing
Hedging Agreements to be included as an “Obligation” for purposes of a
distribution under Section 3.7, the applicable Lender (or its Affiliates)
and Loan Party must have previously provided written notice to Agent of (i) the
existence of such Hedge Agreement, (ii) the maximum dollar amount of
Hedging Exposure and obligations of Loan Parties arising thereunder (the “Hedging
Amount”), and (iii) the methodology to be used by such parties in
determining the Hedging Exposure and amounts owing from time to time to such
Lender or BP Provider by Loan Party.  The
Hedging Amount may be changed from time to time upon written notice to Agent by
the applicable Lender or BP Provider and Loan Party.  No Hedging Amount may be established or
increased at any time that an Event of Default exists, or if a reserve in such
amount would cause an overadvance in excess of the amount available (at the
time of establishing such Hedging Amount) under clause (b) of the
definition of Availability.


 


“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §
101 et seq.) (or any successor statute), as amended from time to time.


 


“BIA” means The Bankruptcy and
Insolvency Act (Canada) (or any successor statute), as amended from
time to time, and includes all regulations thereunder.


 


“Billed Eligible Accounts” means, at the time of any determination
thereof, each portion of the Eligible Account of an Account Debtor that is
evidenced by an invoice rendered to the Account Debtor.


 


“Blocked Account Agreement” means an agreement among a Loan Party, the
Agent and the relevant banking institution, in form and substance reasonably
satisfactory to the Agent, concerning the collection of payments which
represent the proceeds of Accounts or of any other Collateral of a Loan Party
in an account and, to the extent relating to a U.S. deposit account, the
establishment of “control” (as defined in the UCC) of the Agent with respect to
such U.S. deposit account.


 


“Borrower” has the meaning specified in the preamble hereto.


 


“Borrowing” means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to the Borrower or by the Agent in the case
of a Borrowing to Borrower consisting of an Agent Advance or the issuance of a
Letter of Credit hereunder.


 


7

















 


“Borrowing Base” means, at any time, an amount determined based upon
the most recent Borrowing Base Certificate (reduced by the value of Eligible
Accounts (determined in accordance with this Agreement) collected on any Oil
Settlement Date) equal to:


 


(a)                                  the
sum of up to the following (as of the date of determination):


 


(i)            100%
of Eligible Cash Equivalents; plus


 


(ii)           90% of the Eligible Accounts
that are (x) Approved Investment Grade Eligible Accounts, or (y) Eligible
Accounts insured on terms, and by insurance providers, satisfactory to the
Agent in its discretion (which are not Approved Investment Grade Eligible
Accounts) (the “Insured Accounts”); plus


 


(iii)          85% of the Eligible Accounts
that are Other Approved Eligible Accounts; plus


 


(iv)          the lesser of (A) (1) 85%
of the Eligible Accounts that are Other Billed Eligible Accounts, plus (2) 80%
of Eligible Accounts that are Other Unbilled Eligible Accounts or (B) one-third
of the sum of the amounts of clauses (ii) plus (iii) above; plus


 


(v)           80% of the sum of the value
of Hedged Eligible Inventory plus 60% of the sum of the Other Eligible
Inventory Value; plus


 


(vi)          60% of the Issued but Unused
Letter of Credit Value;


 


MINUS


 


(b)                                 the
following (as of the date of determination):


 


(i)            Reserves; plus


 


(ii)           the Bank Product Reserve;
plus


 


(iii)          the Hedging Reserve.


 


“Borrowing Base Certificate” means a certificate by a Responsible
Officer of the Borrower, substantially in the form of Exhibit B (or
another form acceptable to the Agent) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, all in such
detail as shall be reasonably satisfactory to the Agent.  All calculations of the Borrowing Base in
connection with the preparation of any Borrowing Base Certificate shall be
certified to the Agent; provided, that the Agent shall have the right to review
and adjust, in the exercise of its reasonable credit judgment, any such
calculation (1) to reflect its reasonable estimate of declines in value of
any of the Collateral described therein, and (2) to the extent that such
calculation is not in accordance with this Agreement.


 


“BP Provider” means the Agent and any successor Agent.


 


8

















 


“Bridge Agents” means, collectively, the First Lien Bridge Agent and the
Second Lien Bridge Agent and any successor agents or trustees on conversion or
refinancing of the Bridge Facility.


 


“Bridge Facility” means, collectively, the Senior First Lien Bridge
Facility and the Senior Second Lien Bridge Facility and any conversion,
replacement, takeout financing, exchange or refinancing of such facilities or
any other debt or other offering (by issuance of notes or otherwise) in
exchange, replacement or conversion thereof (in whole or in part).


 


“Bridge Facility Debt” means the Debt in the original aggregate
principal amount of U.S.$545,000,000 pursuant to the Bridge Facility Documents.


 


“Bridge Facility Documents” means, collectively, the Senior First Lien
Bridge Facility Loan Agreement, the Senior Second Lien Bridge Facility Loan
Agreement and all agreements, instruments and documents relating thereto and
evidencing the Bridge Facility Debt and the Bridge Facility, as amended,
notified, restated, supplemented, replaced or otherwise modified from time to
time to the extent permitted by the Intercreditor Agreement.


 


“Business Day” means (a) for all purposes other than as covered by
clause (b) any day that is not a Saturday, Sunday, or a day on which banks
in Toronto, Ontario, New York, New York or Calgary, Alberta are required or permitted
to be closed and (b) with respect to all notices, determinations, fundings
and payments in connection with the LIBOR Rate or LIBOR Rate Revolving Loans,
any day that is a Business Day pursuant to clause (a) above and that is
also a day on which trading in U.S. Dollars is carried on by and between banks
in the London interbank market.


 


“Canadian Dollars” or “CDN Dollars” or “CDN$” or “$” or “Dollars” means
lawful money of Canada.  Unless otherwise
specified, all payments under this Agreement shall be made in Dollars.


 


“Canadian Guarantor” means a Guarantor that is a Canadian Subsidiary.


 


“Canadian Subsidiary” means any direct or indirect Subsidiary of the
Borrower which is organized or amalgamated under the laws of Canada or any
province thereof.


 


“Capital Adequacy Regulation” means any guideline, request or directive
of any central bank or other Governmental Authority or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.


 


“Capital Expenditures” means, for any Person, any cash expenditures
made by such Person for the acquisition, maintenance or repair of fixed or
capital assets (which are required to be capitalized on the balance sheet of
such Person in accordance with GAAP), provided that in any event the term “Capital
Expenditures” shall exclude: (i) any expenditures to the extent financed
with the proceeds received in connection with any asset disposition permitted
hereunder and (ii) expenditures to the extent they are made (or
refinanced) with the proceeds of equity contributions made to the Borrower
after the Closing Date.


 


9

















 


“Capital Lease” means any lease of property which, in accordance with
GAAP, should be reflected as a capital lease on the balance sheet of a Person.


 


“Capital Stock” of any Person shall mean any and all shares, interests,
rights to purchase, warrants, options, contingent share issuances,
participations or other equivalents of or interests in (however designated)
equity (including partnership and unlimited liability company interests) of
such Person, including any Preferred Stock, but excluding any debt securities
convertible into or exchangeable for such equity.


 


“Cash Equivalents” means:


 


(a)                                  direct
obligations of Canada or the United States of America or any agency thereof or
obligations guaranteed by Canada or the United States of America, provided that
such obligations mature within one year from the date of acquisition thereof;


 


(b)                                 certificates
of deposit maturing within one year from the date of acquisition, bankers’
acceptances, Eurodollar bank deposits or overnight bank deposits, in each case
issued by, created by or with any Lender or any bank or trust company organized
under the laws of Canada or the United States of America or any state thereof
having capital and surplus aggregating at least $1,000,000,000;


 


(c)                                  acquisitions
of commercial paper given a rating of “A-1” or better by Standard &
Poor’s Corporation or “P-1” or better by Moody’s Investors Service, Inc.
and maturing not more than 90 days from the date of creation thereof; and


 


(d)                                 shares
of money market mutual or similar funds which invest at least 95% of their
assets in assets satisfying the requirements of clauses (a) through (c) of
this definition.


 


“CCAA” means Companies’ Creditors
Arrangement Act (Canada), (or any successor statute), as amended
from time to time, and includes all regulations thereunder.


 


“Change of Control” means, (a)(i) if any Parent Company’s Capital
Stock is not traded on a nationally-recognized stock exchange, the Permitted
Investors ceases to own, directly or indirectly, more than 50% of the Voting
Stock of the Borrower; or (ii) if any Parent Company’s Capital Stock is
traded on a nationally-recognized stock exchange, the Permitted Investors shall
cease to own, directly or indirectly, at least 35% of the Voting Stock of the
Borrower, (b) a change in the majority of directors of Borrower, unless
approved by the then majority of directors; (c) all or substantially all
of Borrower’s consolidated assets are sold or transferred; or (d) any “change
of control” (or comparable term) in any document pertaining to the Bridge
Facility.


 


“Chattel Paper” means, with respect to a Loan Party, all of such Loan
Party’s now owned or hereafter acquired chattel paper, as defined in the PPSA
and Article 9 of the UCC (as applicable), including electronic chattel
paper.


 


“Clearing Bank” means Royal Bank or any other banking institution,
acceptable to Agent, with whom a Receipt Account has been established pursuant
to a Blocked Account Agreement.


 


“Closing Date” means the date of this Agreement.


 


10














 


“Closing Date Liquidity Amount” means an amount up to U.S.$100,000,000
of cash equity (on terms, conditions and documentation satisfactory to the
Agent) funded to the Borrower, on the Closing Date, by the Sponsor or any
Parent Company.


 


“Code” means the Internal Revenue Code of 1986, as amended.


 


“Collateral” means the Liquidity Collateral and the Shared Collateral
as such terms are defined in the Intercreditor Agreement.


 


“Commitment” means, at any time with respect to a Lender, the Revolving
Credit Commitment of such Lender, as applicable, and “Commitments” means, at
any time, the sum of the aggregate Revolving Credit Commitments of all Lenders
at such time.


 


“Commitment Fee” has the meaning specified in Section 2.5.


 


“Conditions to Effectiveness” has the meaning specified in Section 8.1.


 


“Conditions to Initial Funding” has the meaning specified in Section 8.2.


 


“Contaminant” means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum derived substance
or waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”)
or any constituent of any such substance or waste.


 


“Consolidated Amortization Expense” for any period means the
amortization expense of the Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.


 


“Consolidated Depreciation Expense” for any period means the
depreciation expense of the Borrower and the Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.


 


“Consolidated Income Tax Expense” for any period means the provision
for taxes of the Borrower and the Subsidiaries, determined on a consolidated
basis in accordance with GAAP.


 


“Consolidated Interest Expense” for any period means the sum, without
duplication, of the total interest expense of the Borrower and the Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP and including, without duplication,


 


(a)                                  imputed
interest on Capitalized Leases obligations and Attributable Debt,


 


(b)                                 commissions,
discounts and other fees and charges owed with respect to letters of credit
securing financial obligations, bankers’ acceptance financing and receivables
financings,


 


(c)                                  the
net costs associated with Hedge Agreements related to interest rates,


 


(d)                                 the
interest portion of any deferred payment obligations,


 


(e)                                  all
other non-cash interest expense,


 


11

















 


(f)                                    capitalized
interest,


 


(g)                                 the
product of (a) all dividend payments on any series of Preferred Stock of
the Company or any Preferred Stock of any Subsidiary (other than any Preferred
Stock held by the Borrower or a Wholly Owned Subsidiary or to the extent paid
in Capital Stock), multiplied by (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of the Borrower and the
Subsidiaries, expressed as a decimal, and


 


(h)                                 all
interest payable with respect to discontinued operations,


 


(i)                                     all
interest payable on any Debt described in clause (b) or (d) of Debt,


 


but shall not include the amortization or accretion of debt issuance
costs and other financing or commitment fees and expenses.


 


“Consolidated Net Income” for any period means the net income (or loss)
of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from such net income (to the extent otherwise included therein),
without duplication:


 


(a)                                  the
net income (or loss) of any Person that is not a Subsidiary, except to the
extent that cash in an amount equal to any such income has actually been
received by the Borrower or, subject to clause (c) below, any Subsidiary
during such period;


 


(b)                                 the
net income of any Subsidiary during such period to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
of that income is not permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary during such period,
except to the extent such prohibition has been waived;


 


(c)                                  other
than for purposes of calculating the Available Amount, any gain (or loss),
together with any related provisions for taxes on any such gain (or the tax
effect of any such loss), realized during such period by the Borrower or any
Subsidiary upon (a) the acquisition of any securities, or the extinguishment
of any Debt, of the Borrower or any Subsidiary or (b) any Transfer by the
Borrower or any Subsidiary;


 


(d)                                 gains
and losses due solely to fluctuations in currency values and the related tax
effects according to GAAP;


 


(e)                                  non-cash
gains and losses attributable to movement in the Mark-to-Market valuation of
Hedge Agreements;


 


(f)                                    any
impairment charge or asset write-off or write-down;


 


(g)                                 any
after-tax effect of income or loss from the early extinguishment of Debt;


 


(h)                                 any
non-cash compensation charge or expense recorded from grants of stock
appreciation or similar rights, stock options, restricted stock or other
rights;


 


12

















 


(i)                                     any
non-cash pension charge or expense;


 


(j)                                     the
cumulative effect of any change in accounting principles during such period;


 


(k)                                  other
than for purposes of calculating the Available Amount, any extraordinary or
nonrecurring gain (or extraordinary or nonrecurring loss), together with any
related provision for taxes on any such extraordinary or nonrecurring gain (or
the tax effect of any such extraordinary or nonrecurring loss), realized by the
Borrower or any Subsidiary during such period;


 


(l)                                     the
amount of any Tax Dividends;


 


(m)                               the
amount of proceeds received from business interruption insurance and
reimbursements of any expenses and charges that are covered by indemnification
or other reimbursement provisions in connection with any Permitted Investment
or any sale, conveyance, transfer or other disposition of assets permitted
under the indenture.


 


For purposes of this definition of “Consolidated Net Income,” “nonrecurring”
means any gain or loss as of any date that is not reasonably likely to recur
within the two years following such date; provided that if there was a gain or
loss similar to such gain or loss within the two years preceding such date,
such gain or loss shall not be deemed nonrecurring.


 


“Consolidated Net Tangible Assets” shall mean the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any
indebtedness for money borrowed having a maturity of less than 12 months from
the date of the most recent consolidated balance sheet of the Borrower but
which by its terms is renewable or extendable beyond 12 months from such date
at the option of the Borrower) and (b) all goodwill, trade names, patents,
unamortized debt discount and expense and any other like intangibles, all as
set forth on the most recent consolidated balance sheet of the Borrower and
computed in accordance with GAAP.


 


“Contango Loan” means any Loan hereunder requested for the purpose of
financing the purchase for storage and future deliveries of Hedged Eligible
Inventory described in clause (a)(2) of the definition thereof under a
strategy relating to a market that is in “contango” with respect to Petroleum
Inventory Approved by Required Lenders.


 


“Contingent Obligations” means any indemnity or other contingent
Obligations not yet due and owing (but excluding, for the avoidance of doubt,
outstanding obligations (whether matured or contingent) in respect of Hedge
Agreements, Letters of Credit and Bank Products).


 


“Continuation/Conversion Date” means the date on which a Revolving Loan
is converted into or continued as a BA Equivalent Revolving Loan or a LIBOR
Revolving Loan.


 


“CRA” means the Canadian Revenue Agency and any Governmental Authority
succeeding to any of its principal functions.


 


“Credit Judgment” means, as applicable, Agent’s reasonable judgment
exercised in a manner consistent with its customary practices or otherwise in
good faith, based upon its consideration of any factor that it reasonably
believes (a) could adversely affect the quantity, quality, mix or value of
the Collateral (including any applicable law that may inhibit collection 


 


13

















 


of an Account), the enforceability or priority of the Agent’s Liens, or
the amount that Agent and Lenders could receive in liquidation of any
Collateral (after taking into consideration any claims or liabilities that will
need to be satisfied in connection with the realization upon the Collateral
included in the Borrowing Base); (b) provides evidence that any collateral
report or financial information delivered by any Loan Party is inaccurate or
misleading in any material respect; (c) materially increases the
likelihood of any insolvency proceeding involving a Loan Party; or (d) creates
a Default or an Event of Default.  In
exercising such judgment, Agent may consider factors already included in the
definitions of Eligible Accounts or Eligible Inventory, changes in collection
history and dilution of accounts, changes in any material respect in the mix,
demand for and pricing of inventory, changes in any material respect
concentration risks, and any factors that could materially increase the credit
risk of lending to the Borrower on the security of the Collateral.


 


“Debt” means, without duplication, all liabilities, obligations and
indebtedness of any Loan Party to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, in each case consisting of indebtedness for borrowed money
or the deferred purchase price of property, excluding trade payables, but
including in any event (a) all Obligations; (b) all obligations and
liabilities of any Person secured by any Lien on the property of any Loan
Party; (c) all obligations or liabilities created or arising under any
Capital Lease or conditional sale or other title retention agreement with
respect to property used or acquired by any Loan Party, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such property; provided, however, that all such obligations and liabilities
which are limited in recourse to such property shall be included in Debt only
to the extent of the book value of such property as would be shown on a balance
sheet of such Loan Party, as the case may be, prepared in accordance with GAAP;
(d) all obligations and liabilities under Guarantees; and (e) the
present value of lease payments due under any synthetic leases under which any
Loan Party is treated as the owner of the property leased for tax purposes but
which is treated as an operating lease under GAAP.


 


“Default” means any event or circumstance which, with the giving of
notice, the lapse of time or both, would (if not cured, waived or otherwise
remedied during such time) constitute an Event of Default.


 


“Default Rate” means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percentage points per annum.  Each
Default Rate shall be adjusted simultaneously with any change in the applicable
Interest Rate.  In addition, the Default
Rate shall result in an increase in the Letter of Credit Fee by two percentage
points per annum.


 


“Defaulting Lender” means any Lender that (a), prior to the cure of
such failure, has failed to fund any portion of the Revolving Loans required to
be funded by it hereunder, (b), prior to the cure of such failure, has
otherwise failed to pay over to the Agent or any other Lender any other amount
required to be paid by it hereunder when due, unless the subject of a good
faith dispute, or (c) has notified the Borrower or the Agent that it does
not intend to comply with its obligations under this Agreement.


 


“Defaulting Lender Credit Extensions” has the meaning specified in Section 12.15(f).


 


14

















 


“Designated Account” has the meaning specified in Section 1.2(c).


 


“Distribution” means, in respect of any Person:  (a) the payment or making of any
dividend or other distribution of property in respect of Capital Stock of such
Person, other than distributions in Capital Stock of the same class or through
accretion or accumulation of such dividend or distribution on such Capital
Stock; or (b) the redemption or other acquisition by such Person or any of
its Subsidiaries of any Capital Stock of such Person.


 


“DOL” means the United States Department of Labor or any successor
department or agency.


 


“EBITDA” means, for any Person and any period means, without
duplication, the Consolidated Net Income of such Person for such period plus
the following:


 


(a)                                  in
each case only to the extent (and in the same proportion) deducted in
determining Consolidated Net Income and with respect to the portion of
Consolidated Net Income attributable to any Subsidiary only if a corresponding
amount would be permitted at the date of determination to be distributed to the
Borrower by such Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Subsidiary or its stockholders, Consolidated
Income Tax Expense and Tax Dividends, Consolidated Amortization Expense,
Consolidated Depreciation Expense, and Consolidated Interest Expense, in each
case to the extent reducing Consolidated Net Income, in each case determined on
a consolidated basis) in accordance with GAAP; plus


 


(b)                                 in
each case only to the extent (and in the same proportion) deducted in
determining Consolidated Net Income and with respect to the portion of
Consolidated Net Income attributable to any Subsidiary only if a corresponding
amount would be permitted at the date of determination to be distributed to the
Borrower by such Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Subsidiary or its stockholders, the aggregate
amount of all other non-cash charges, expenses or losses that reduce such
Consolidated Net Income (including any impairment charges and the impact of
purchase accounting, including, but not limited to, the amortization of
inventory step-up), in each case determined on a consolidated basis in
accordance with GAAP; plus


 


(c)                                  any
reasonable expenses or charges incurred in connection with any equity offering
(but if such equity offering is a sale of Capital Stock in any part of the
Borrower, only to the extent that proceeds of such equity offering are received
by or contributed to the equity of the Borrower), Permitted Investment,
acquisition, recapitalization or Debt permitted to be incurred hereunder or the
Bridge Facility Debt (in each case whether or not consummated) or pursuant to
the Transactions (including, without limitation, the fees payable pursuant to
the Management Agreement in connection with the Transactions), in each case
determined on a consolidated basis in accordance with GAAP; plus


 


(d)                                 the
amount of management, monitoring, consulting, advisory fees, termination
payments and related expenses paid to the Sponsor (or any accruals relating to
such fees and related expenses) during such period pursuant to the Management
Agreement or any amendment thereto (so long as such amendment is not less
advantageous to the holders of the notes in any 


 


15

















 


material respect than the Management Agreement), in each case
determined on a consolidated basis in accordance with GAAP; plus


 


(e)                                  operating
expense reductions and other operating improvements, synergies or costs savings
that have been realized or are reasonably anticipated to be realizable within
twelve (12) months of any investment, acquisition, disposition, merger,
consolidation, discontinued operation or action being given pro forma effect
(including, to the extent applicable, from the Transactions); plus


 


(f)                                    all
adjustments of the nature described in Schedule A; plus


 


(g)                                 any
net after-tax gains or losses on disposal of discontinued operations
deter-mined on a consolidated basis in accordance with GAAP; minus


 


(h)                                 the
aggregate amount of all non-cash items, determined on a consolidated basis, to
the extent such items increased Consolidated Net Income for such period.


 


For purposes of determining EBITDA under this Agreement, EBITDA for the
last twelve months ended September 30, 2008 shall be deemed to be
$138,900,000.


 


“Eligible Accounts” means all Accounts arising in the ordinary course
of Borrower’s or a Canadian Guarantor’s business, but excluding interest, late
charges, penalties, collection costs and other similar sums due or payable in
respect thereof, upon which the Agent’s Liens constitutes a first-ranking, duly
registered, published and perfected Lien ranking in priority to all other Liens
(except (i) Permitted Liens in respect of First Purchase Crude Payables, (ii) Permitted
Liens which do not have priority over the Agent’s Liens, and (iii) unregistered
Permitted Liens for which amounts are not yet due and payable) and that are not
ineligible as the basis for Revolving Loans and/or Letters of Credit, based on
the Agent’s satisfactory field examinations and audits and the following
criteria set forth below..  Eligible
Accounts of a Borrower or Canadian Guarantor shall not include, without
duplication, any Account of Borrower or such Canadian Guarantor:


 


(a)                                  which
(i) in the case of Accounts arising from the sale or delivery of crude
oil, natural gas, natural gas liquids or condensate, is due and payable more
than thirty (30) days following the last day of the calendar month in which the
Petroleum Inventory delivery occurred and is more than ten (10) days past
due, (ii) in the case of all other Accounts, which has been outstanding
for more than ninety (90) days past the invoice date or with respect to which
more than sixty (60) days have elapsed since the due date;


 


(b)                                 with
respect to which any of the representations, warranties, covenants, or
agreements contained in this Agreement are incorrect or have been breached in
any material respect;


 


(c)                                  with
respect to which Account, in whole or in part, a cheque, promissory note,
draft, trade acceptance, Chattel Paper or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason;


 


(d)                                 which
represents a progress billing (as hereinafter defined) or as to which such Loan
Party has extended the time for payment without the consent of the Agent; for
the purposes 


 


16

















 


hereof, “progress billing” means any invoice for goods sold or leased
or services rendered under a contract or agreement pursuant to which the
Account Debtor’s obligation to pay such invoice is conditioned upon such Loan
Party’s completion of any further performance under the contract or agreement;


 


(e)                                  as
to which any one or more of the following events has occurred with respect to
the Account Debtor on such Account: death or judicial declaration of
incompetence of an Account Debtor who is an individual; the filing by or
against the Account Debtor of a request, proposal, notice of intent to file a
proposal, proceeding, action or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or
other relief under the bankruptcy, insolvency, restructuring, liquidation,
winding up, corporate or similar laws of Canada or the United States of
America, any province, state or territory thereof, or any foreign jurisdiction,
now or hereafter in effect; the making of any general assignment by the Account
Debtor for the benefit of creditors; the appointment of a receiver, trustee,
monitor, custodian, liquidator, administrator, interim receiver, monitor or
trustee or other official for the Account Debtor or for any of the assets of
the Account Debtor, including, without limitation, the appointment of or taking
possession by a “custodian” as defined in the Bankruptcy Code of the United
States or a “trustee” under the BIA; the institution by or against the Account
Debtor of any other type of insolvency, liquidation, bankruptcy, winding up or
reorganization proceeding (under the laws of Canada, the United States of
America or otherwise, including applicable corporate statutes, the BIA and the
CCAA or of any formal or informal proceeding for the dissolution or liquidation
of, settlement of claims against or winding up of affairs of, the Account
Debtor; the sale, assignment, or transfer of all or any material part of the
assets of the Account Debtor for the benefit of creditors; the non-payment
generally by the Account Debtor of its debts as they become due; or the
cessation of the business of the Account Debtor as a going concern;


 


(f)                                    owed
by an Account Debtor if twenty-five percent (25%) or more of the aggregate
Dollar amount (with any Account payable in a foreign currency being converted
to Dollars for this purpose) of outstanding Accounts owed at such time by such
Account Debtor thereon is classified as ineligible under clause (a) above;


 


(g)                                 owed
by an Account Debtor if such Account Debtor: (i) does not maintain its
chief executive office or registered office in Canada or the United States of
America or its territories or protectorates; or (ii) is not organized
under the laws of Canada or any Province thereof or the United States of
America or any state thereof (except in respect of Accounts in the case of
clauses (i) and (ii) which are credit insured pursuant to insurance
policies maintained by a Loan Party with export insurers acceptable to the
Agent and all terms thereof, including risks and amounts of coverage, and all
such policies and any Proceeds payable thereunder have been validly assigned to
the Agent on terms acceptable to the Agent); or (iii) is the government of
any country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, except to the extent that the
Agent otherwise determines in its discretion the Account to be eligible on an
account-by-account basis based on, among other things, compliance with all
applicable laws in order to obtain a valid and enforceable assignment (in the
case of clause (iii));


 


(h)                                 owed
by an Account Debtor which is an employee of a Loan Party, or by a subsidiary
of a Loan Party, or by an Affiliate of a Loan Party (unless dealings with such
Affiliate 


 


17

















 


are (i) in the ordinary course of business, (ii) on terms
consistent with past practices, and (iii) on arm’s length terms) or which
is an Intercompany Account;


 


(i)                                     which
is owed by an Account Debtor to the extent to which the Account Debtor has made
or asserted, or a Loan Party has otherwise reported, any right of set off,
compensation, counterclaim, offset, discount (including accruals related
thereto), allowance, charge-back, rebate payable, contra claim or any other
dilutive factors by the Account Debtor, unless the Account Debtor has entered
into an agreement acceptable to the Agent to waive all such rights; or if the
Account Debtor thereunder has disputed liability or made any claim with respect
to any other Account due from such Account Debtor (whether such Account is
owing to such Loan Party or any other Loan Party); but in each such case only
to the extent of such indebtedness, setoff, charge-back, counterclaim, offset,
compensation, discount, allowance, rebate, dispute, claim or any other dilutive
factors; or any Accounts to the extent of any unapplied credits or credits in
prior;


 


(j)                                     which
represents a cash sale or cash on delivery sale;


 


(k)                                  which
represents a re-billed or a redated Account (unless the previous account has
been cancelled and replaced and the new bill is dated the date of the replaced
Account for aging purposes);


 


(l)                                     owed
by the government of the United States of America or Canada or any department,
agency, public or Crown corporation or other instrumentality thereof, unless,
in the case of an Account owed to (i) a Loan Party by the government of
Canada or any department agency, public or Crown corporation or other
instrumentality thereof, the Financial Administration
Act (Canada), and (ii) a Loan Party by the government of the
United States of America or any department, agency, public corporation or other
instrumentality thereof, the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. § 3727 et seq.), and any other steps necessary to perfect
the Agent’s Liens therein, have been complied with to the Agent’s satisfaction
with respect to such Account;


 


(m)                               which
represents, in whole or in part, a sale on a bill-and-hold, guaranteed sale,
contractual sale and return, sale on approval, consignment, or other repurchase
or return basis;


 


(n)                                 in
respect of which one or more Loan Parties is not the sole payee and remittance
party, with sole lawful and absolute title thereto free and clear of any Lien
(other than a Lien in favour of the Agent or a Permitted Lien in respect of
First Purchase Crude Payables (as opposed to being voluntarily granted), (ii) a
Permitted Lien which does not have priority over the Agent’s Liens and (iii) Liens
which are unregistered and not yet due and payable));


 


(o)                                 which
is payable in a currency other than Canadian Dollars and U.S. Dollars;


 


(p)                                 which
is owed by a customer, or affiliated group of customers, which is obligated to
the Loan Parties respecting Accounts, the aggregate unpaid balance of which
exceeds fifty percent (50%) of the aggregate unpaid balance of all otherwise
Eligible Accounts owed to the Loan Parties at such time by such customers, but
only to the extent of such excess;


 


(q)                                 for
goods not shipped and delivered or otherwise not representing a final sale or
otherwise representing a pre-billed Account or Accounts for unshipped or
incomplete goods or 


 


18

















 


services or otherwise with respect to which the goods giving rise to
such Account have not been shipped and, if required to create a valid Account,
delivered to the Account Debtor or the services giving rise to such Account
have not been performed by the Loan Party and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods or
services or such Account otherwise arises from a incomplete sale or service;


 


(r)                                    if
the sale giving rise thereto was not made in compliance in all respects with
all applicable laws;


 


(s)                                  which
is owed by a customer, or affiliated group of customers, which is obligated to
the Loan Parties respecting Accounts, the aggregate unpaid balance of which
exceeds the credit limit set forth (to Agent by Loan Party) for such customers
in excess of $1,000,000  when
aggregated with all otherwise Eligible Accounts owed to the Loan Parties at
such time by such customers, but only to the extent of such excess;


 


(t)                                    which
arises out of an enforceable contract or order which, by its terms, forbids,
restricts or makes void or unenforceable the granting of a Lien by the Borrower
or a Canadian Guarantor to the Agent with respect to such Account;


 


(u)                                 which
represents any unapplied cash or credits;


 


(v)                                 if
the Agent believes, in the exercise of its good faith credit discretion, that
the prospect of collection of such Account is impaired, or that the Account is
uncollectible or otherwise doubtful or that the Account may not be paid by
reason of the Account Debtor’s financial inability to pay;


 


(w)                               with
respect to which the Account Debtor is located in any state of the United
States of America or province of Canada which requires the filing of a Notice
of Business Activities Report or registration or licensing to carry on business
or similar report, registration or licensing in order to permit such Loan Party
to seek judicial enforcement in such state of the United States of America or
province of Canada of payment of such Account, unless such Loan Party has
qualified to do business in such state or province or has filed a Notice of
Business Activities Report or registration or licensing to carry on business or
equivalent report, registration or licensing for the then current year;


 


(x)                                   which represents
rents and similar payments
to the Borrower or a Canadian Guarantor in connection with, without limitation,
ground leases or other leases of real property or other Bridge Collateral (as
defined in the Intercreditor Agreement).


 


(y)                                 which
arises out of a sale not made in the ordinary course of such Loan Party’s
business; or


 


(z)                                   which
the Agent in the exercise of its good faith credit discretion determines to be
ineligible for any other reasons deemed necessary by Agent in its reasonable
business judgment, including, without limitation, those which are customary in
the commercial lending industry.


 


“Eligible Assignee” means (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$1,000,000,000 and for which the consent of the Borrower has been received
(provided, that (x) no consent of the Borrower shall be 


 


19

















 


unreasonably withheld or delayed and (y) no consent of the
Borrower shall be required if a Default or Event of Default has occurred and is
continuing); (b) any Lender; (c) any Affiliate of any Lender
provided, that such Eligible Assignee shall in all cases (when no Event of
Default is continuing) be a financial institution that (i), if such financial
institution is not resident in Canada and is not deemed to be resident in
Canada for purposes of the Income Tax Act (Canada),
it deals at arm’s length with each Loan Party for purposes of the Income Tax Act (Canada); or (iii) is not a trade
competitor of any Loan Party; and (d) if an Event of Default has occurred
and is continuing, any Person reasonably acceptable to the Agent.


 


“Eligible Cash Equivalents” means, with respect to the Borrower or a
Canadian Guarantor, the Cash Equivalents of such Loan Party which the Agent, in
the exercise of its reasonable credit judgment, determines to be Eligible Cash
Equivalents.  Without limiting the
exercise of the Agent’s reasonable credit judgment, the following eligibility
criteria must be satisfied in determining Eligible Cash Equivalents:


 


(a)                                  Cash
Equivalents in which a Loan Party has lawful and absolute title;


 


(b)                                 Cash
Equivalents which are free from any express or implied at law Lien, trust or
other beneficial interest (other than (i) a Lien in favour of Agent, for
the benefit of Lenders, (ii) a non-consensual Lien arising by operation of
law notified to the Agent for which a reserve has been established against the
Borrowing Base, and (iii) inchoate Liens for which amounts are not yet due
and payable); and


 


(c)                                  Cash
Equivalents in which Agent holds a fully perfected first-priority security
interest prior to the rights of, and enforceable as such against, any other
Persons pursuant to an account/control agreement satisfactory to Agent and any
other legal requirement necessary for perfecting a security interest in such
assets with such priority.


 


“Eligible Inventory” means inventories of Petroleum Inventory in which
the Borrower or a Canadian Guarantor has lawful and absolute title, which are
not subject to any Lien in favour of any Person (other than (i) Permitted
Inventory Liens, (ii) Permitted Liens which do not have priority over the
Agent’s Liens, (iii) unregistered Permitted Liens for which amounts are
not yet due and payable or (iv) the Agent’s Liens), which are subject to a
fully perfected first priority security interest (subject only to (i) Permitted
Inventory  Liens, (ii) Permitted Liens which
do not have priority over the Agent’s Liens, and (iii) unregistered
Permitted Liens for which amounts are not yet due and payable) in favour of
Agent pursuant to the Loan Documents prior to the rights of, and enforceable as
such against, any other Person, and which, at all times continues to be
acceptable to the Agent in light of the criteria set forth below in the
exercise of its reasonable business judgment. 
Eligible Inventory shall specifically exclude:


 


(i)                                     Petroleum
Inventory consisting of tank bottoms or pipeline linefill, in either case
located in facilities owned by or pipelines owned by a Loan Party which, at any
time, is properly classified as a long-term asset under GAAP.


 


(ii)                                  unmerchantible/unsaleable
or obsolete Inventory;


 


(iii)                               Inventory not
located at locations owned or leased by such Loan Party (including Inventory in
third party pipelines) or Inventory located at any other location of such Loan
Party, in each case, unless not subject to a third party lien waiver in form
and substance satisfactory to


 


20














 


the Agent in its reasonable business judgment
or in respect of which Agent has agreed to appropriate reserves;


 


(iv)                              Inventory
returned or rejected by such Loan Party’s customers (other than goods that are
undamaged and resalable in the normal course of business in the Agent’s
reasonable business judgment), including, without limitation, goods to be
returned to such Loan Party’s suppliers;


 


(v)                                 Inventory in
transit to or from third parties; for greater certainty, Inventory in third
party pipelines or storage facilities is not considered to be in transit
Inventory;


 


(vi)                              Inventory located
outside of Canada, (unless otherwise Approved by the Agent, provided that such
Inventory is not otherwise ineligible
hereunder);


 


(vii)                           Inventory in the
possession of a warehouseman, bailee, Affiliate or Subsidiary of any such Loan
Party (that is not a Loan Party), unless such warehousemen, bailee or third
party have executed a waiver and notice of security interest agreement in
favour of the Agent (in form and substance satisfactory to the Agent) and/or
the Agent shall otherwise be satisfied that Agent has a first entitlement, lien
and priority perfected security interest in such Inventory, subject to
Permitted Inventory Liens;


 


(viii)                        consignment Inventory;


 


(ix)                                that is not in
good condition, is unmerchantable or does not meet all applicable material
standards imposed by any Governmental Authority, having regulatory authority
over such goods, their use or sale;


 


(x)                                   that is not
currently either usable or salable, at prices approximating at least cost, in
the normal course of such Loan Party’s business or that is slow moving,
defective or stale; and


 


(xi)                                Inventory (other
than Petroleum Inventory that is eligible to be traded on NYMEX) not acceptable
to the Agent for any other reasons deemed necessary by the Agent in its
reasonable business judgment, including, without limitation, those which are
customary either in the commercial finance industry or in the lending practices
of the Agent.


 


“Environmental Laws” means all federal, provincial,
state, municipal, local or foreign laws, statutes, common law duties, rules,
regulations, ordinances and codes, together with all administrative orders,
directives, decisions, policies, guidelines, directed duties, licenses,
authorizations, decrees, orders and permits of, and agreements with, any
Governmental Authority, in each case relating to environmental, health and
safety matters.


 


“Environmental Lien” means a Lien in favour of any
Governmental Authority or any other Person for (a) any liability under
Environmental Laws or (b) damages arising from, or costs incurred by such
Governmental Authority or other Person in response to, a Release or threatened
Release of a Contaminant into the environment.


 


“EPPA” means the Employment Pension Plans (Alberta)
and all regulations thereunder as amended from time to time and any successor
legislation.


 


21

















 


“Equipment” means, with respect to a Loan Party, all
of such Loan Party’s now owned and hereafter acquired machinery, equipment,
furniture, furnishings, fixtures and other tangible personal property (except
Inventory), including embedded software, motor vehicles, aircraft, dies, tools,
jigs, molds and office equipment, as well as all of such types of property
leased by such Loan Party and all of such Loan Party’s rights and interests
with respect thereto under such leases (including, without limitation, options
to purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located and includes “equipment”
as defined in the PPSA.


 


“Equivalent Amount” means, on any date, the amount
of Dollars into which an amount of U.S. Dollars may be converted or the amount
of U.S. Dollars into which an amount of Dollars may be converted, in either
case, at the Agent’s spot buying rate in Toronto, Canada as at approximately
12:00 noon (Toronto time) on such date.


 


“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, and regulations promulgated thereunder.


 


“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common control with any Loan Party within
the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to Section 412
of the Code).


 


“ERISA Event” means (a) a Reportable Event with
respect to a Pension Plan, (b) a withdrawal by any Loan Party or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multiemployer Plan or other Pension Plan regulated or governed
by other applicable legislation or notification that a Multiemployer Plan or
Pension Plan regulated or governed by or other applicable legislation is in
reorganization, (d) the filing of a notice of intent to terminate a
Pension Plan, the treatment of a Pension Plan amendment as a termination under Section 4041
or 4041A of ERISA or other law, or the commencement of proceedings by the PBGC
pursuant to Section 4042 of ERISA or other similar applicable Governmental
Authority to terminate a Pension Plan or to appoint a trustee to administer any
Pension Plan or Multiemployer Plan, or (e) the imposition of any liability
under Title IV of ERISA or other similar applicable legislation (other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA or other
similar legislation) upon any Loan Party.


 


“Event of Default” has the meaning specified in Section 9.1.


 


“Exchange Act” means the Securities Exchange Act of
1934, and regulations promulgated thereunder.


 


“Exchange Rate” means, as of any date in respect of
the conversion of an amount on such date denominated in a particular currency
(the “specified currency”) into an amount specified in another currency (the “alternative
currency”) or in respect of the calculation on such date of the amount of the
alternative currency which is equivalent to an amount of the specified
currency, 


 


22

















 


the spot exchange rate prevailing on the
Toronto foreign exchange market on such date for the exchange of the specified
currency for the alternative currency, as determined by the Bank.


 


“Excluded Subsidiary” means each Subsidiary which is
(a) an Immaterial Subsidiary and each future Subsidiary which is an
Immaterial Subsidiary, in each case, for so long as such Subsidiary remains an
Immaterial Subsidiary or (b) is a joint venture.


 


“Excluded Taxes” means, in relation to any Lender, (a) Taxes
imposed or levied by any jurisdiction on or measured by the overall net income
of such Lender or any of its applicable lending offices, and (b) other
Taxes including franchise Taxes, Taxes on doing business or Taxes measured by
capital or net worth imposed or levied by any jurisdiction on such Lender or
any of its applicable lending offices as a result of such Lender (i) carrying
on a trade or business therein or having a permanent establishment therein, (ii) being
organized under the laws of such jurisdiction or any political subdivision
thereof, (iii) being or being deemed to be resident in such jurisdiction
for income tax purposes, or (iv) having any other present or former
connection with such jurisdiction (other than a connection arising solely from
such Lender or its applicable lending office having executed, delivered or
performed its obligations under the Loan Documents or received a payment under
a Loan Document or enforced its rights under a Loan Document), or which would
not have been imposed had such Lender satisfied a relevant authority that such
Lender was not a person mentioned in clause (i), (ii), (iii) or (iv) above.


 


“Federal Funds Rate” means, for any day, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Bank on such day on such transactions as determined
by the Agent.


 


“Federal Reserve Board” means the Board of Governors
of the Federal Reserve System or any successor thereto.


 


“Fee Letter” has the meaning specified in Section 2.4.


 


“Financial Statements” means the consolidated and
consolidating financial statements of the Borrower and its Subsidiaries,
prepared in accordance with GAAP, and any other financial statements required
to be given to the Agent and Lenders pursuant to this Agreement.  Any such financial statements which this
Agreement requires be audited, shall be so audited by independent chartered
accountants of nationally recognized standing or such other auditors as
approved by the Agent (Agent acknowledging that Ernst and Young LLP and PriceWaterhouseCoopers
LLP are approved auditing firms).


 


“First Purchase Crude Payables” means the unpaid
amount of any payable obligation related to the purchase of Petroleum Inventory
by any Loan Party which Agent determines will be secured by a statutory Lien,
to the extent such payable obligation is not at the time in question covered by
a Letter of Credit.


 


23

















 


“Fiscal Year” means each of the Loan Party’s fiscal
year for financial accounting purposes. 
As of the date hereof, the current Fiscal Year of the Borrower will end
on December 31, 2008.


 


“Fixed Assets” means, with respect to the Borrower
or any of its Subsidiaries, the Equipment and Real Estate of such Borrower or
such Subsidiary.


 


“Fixed Charge Coverage Ratio” means, with respect to
any fiscal period of the Borrower on a consolidated basis the ratio of (i) EBITDA
for such fiscal period, minus, cash income taxes paid by Loan Parties
during such fiscal period, minus, unfinanced maintenance Capital Expenditures
(exclusive of Capital Expenditures funded or refinanced by equity contributions
into the Borrower) of the Loan Parties paid in cash during such fiscal period, minus,
cash dividend Distributions paid (including any payment in connection with the
Tax Dividend but excluding any payment in connection with (x) the Sponsor
Investment, and (y) dividends between the Borrower and any of its
Subsidiaries) to (ii) Fixed Charges for such fiscal period.


 


“Fixed Charges” means, with respect to any fiscal
period of Borrower on a consolidated basis, without duplication, the sum of (A) all
scheduled cash payments of principal on Funded Debt of the Loan Parties made
during such fiscal period, (B) all payments of scheduled cash interest on
Funded Debt of the Loan Parties made during such fiscal period, and (C) all
cash payments of Letter of Credit Fees  made by the
Loan Parties during such fiscal period.


 


“Funding Date” means, with respect to a Borrowing,
the date on which such Borrowing occurs after the Initial Funding Date.


 


“Funded Debt” means the sum, without duplication, of
(a) the aggregate amount of funded Debt (including the Obligations) of the
Loan Parties consisting of or relating to (i) the borrowing of money or
the obtaining of credit (other than trade payables incurred in the ordinary
course of business), or (ii) Capital Leases, plus (b) Debt of the
type referred to in clause (a) of another Person guaranteed by a Loan
Party (but only to the extent such guarantee shall become due and payable by
such Loan Party and remain unpaid after any applicable grace period or period
permitted following demand for the payment), in each case on a consolidated
basis for the Loan Parties.


 


“Funded Debt to EBITDA Ratio” means, at any time,
the quotient obtained by dividing (a) Funded Debt (as numerator) by (b) EBITDA
(as denominator) for any fiscal period.


 


“GAAP” means at any particular time with respect to
any Loan Party, generally accepted accounting principles as in effect at such
time in Canada, consistently applied; provided, however, that, if employment of
more than one principle shall be permissible at such time in respect of a
particular accounting matter, “GAAP” shall refer to the principle which is then
employed by the applicable Loan Party with the concurrence of its independent
public or chartered accountants, who are acceptable to the Agent provided
further that, subject to Section 14.24, for the purposes of determining
compliance with the financial covenants herein, “GAAP” means GAAP as in effect
from time to time.


 


“General Intangibles” as defined in the UCC,
including “Intangibles” as defined in the PPSA, and including choses in action,
causes of action, company or other business records, inventions, blueprints,
designs, patents, patent applications, trademarks, trademark applications, 


 


24

















 


trade names, trade secrets, service marks,
goodwill, brand names, copyrights, registrations, licenses, franchises,
customer lists, permits, tax refund claims, computer programs, operational
manuals, internet addresses and domain names, insurance refunds and premium
rebates, all rights to indemnification, and all other intangible and
incorporeal Property of any kind.


 


“Gibson Acquisition” has the meaning specified in
the definition of Transaction.


 


“Governmental Authority” means any nation or
government, any state, province, municipality or other political subdivision
thereof, any central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing and any department, agency, board, commission,
tribunal, committee or instrumentality of any of the foregoing.


 


“Guarantee” or “Guaranty” means, with respect to any
Person, all obligations of such Person which in any manner directly or
indirectly guarantee or assure, or in effect guarantee or assure, the payment
or performance of any Debt of any other Person (the “guaranteed obligations”),
or assure or in effect assure the holder of the guaranteed obligations against
loss in respect thereof, including any such obligations incurred through an
agreement, contingent or otherwise:  (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of
the guaranteed obligations or to maintain a working capital or other balance
sheet condition; or (c) to lease property or to purchase any debt or
equity securities or other property or services.  The amount of any Guarantee of any
guaranteeing Person shall be deemed to be such guaranteeing person’s maximum
reasonably anticipated liability in respect thereof (i) as set forth in
such Guarantee, or (ii) if not so
set forth, as determined by such Person in good faith,


 


“Guaranteed Obligations” has the meaning specified
in Section 13.1.


 


“Guarantor Payment” has the meaning specified in Section 13.6.


 


“Guarantors” has the meaning specified in the
preamble.


 


“Hedge Agreement” means any and all transactions
(whether under an ISDA or otherwise), agreements or documents (including ISDAs)
entered into with any Lender or any Affiliate of a Lender (or any Person that
was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was
entered into), which provides for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, derivative,
currency swap, cross currency rate swap, currency option, or any combination
of, or option with respect to, these or similar transactions, for the purpose
of hedging Borrower’s or a Canadian Guarantor’s exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.


 


“Hedge Positions in Brokers Accounts” means all
commodities futures accounts of the Loan Parties in which the Agent for the
benefit of Lenders has been granted an exclusive security interest in a manner
satisfactory to the Agent, with such interest being subject only to the rights
of the broker under such account, in excess of the amounts required to be
maintained pursuant to the applicable margin requirements.


 


25

















 


“Hedged Eligible Inventory” means Eligible Inventory
(other than Asphalt Products) with respect to which the price risk has been:


 


(a)                                  hedged for
delivery, by either:


 


(i)                                     a contract on the
NYMEX, having delivery within the next twelve (12) months with respect to
Petroleum Inventory, arranged through brokers approved by Agent and with whom a
three-party agreement among, as applicable, Borrower or a Canadian Guarantor,
Agent and such broker has been entered in form and substance satisfactory to
Agent; or


 


(ii)                                  a contract for a
specified price for physical delivery of such inventory, having delivery within
the next twelve (12) months with respect to Petroleum Inventory, to a
counterparty whose Account would qualify as an Approved Billed Eligible Account
or an Approved Unbilled Eligible Account; provided, however, that such
inventory is a commodity that is also eligible for contract hedging on the
NYMEX; or


 


(iii)                               a contract for a
specified price for physical delivery of such inventory, having delivery within
the next twelve (12) months with respect to Petroleum Inventory, to a
counterparty whose Account would qualify as an Investment Grade Eligible
Account, provided, however, that such inventory is a commodity that is not
eligible for contract hedging in the NYMEX; or


 


(b)                                 hedged for a term
of no more than six (6) months with respect to Petroleum Inventory other
than natural gas and natural gas liquids, pursuant to an over-the-counter put
option with a floor price and with a counterparty whose Account would qualify
as an Approved Billed Eligible Account or an Approved Unbilled Eligible
Account,; or


 


(c)                                  otherwise hedged
in a manner satisfactory to Agent.


 


“Hedging Amounts” has the meaning specified in the
definition of Bank Products.


 


“Hedging Exposure” means, at any time and subject to
the Hedging Sublimit, the sum of the amount determined by the Agent (in its
sole discretion with consideration given to any determinations provided to the
Agent by the BP Provider and the Lenders (and their Affiliates) providing Hedge
Agreements) to be the credit risk associated with all outstanding Hedge
Agreements.  The total of all such
Hedging Exposures of all Lenders (and their Affiliates) not to exceed the
Hedging Sublimit.  Any Hedging Exposure
denominated in U.S. Dollars shall be the CDN Dollar equivalent thereof.


 


“Hedging Reserve” means all reserves which the Agent
from time to time establishes in its reasonable credit judgment for Hedging
Agreements then provided or outstanding which shall, at all times, be at least
an amount that is equal to all Hedging Exposure in respect to such Hedging
Agreements outstanding.


 


“Hedging Sublimit” means the maximum aggregate
amount of $50,000,000 of Hedging Exposure.


 


26

















 


“Immaterial Subsidiary” means, on any date for which
a consolidated balance sheet of the Borrower is prepared, any Subsidiary of the
Borrower that has less than 1.0% of the Borrower’s Consolidated Net Tangible
Assets or annual consolidated revenues; provided that at no time shall all
Immaterial Subsidiaries have in the aggregate consolidated net tangible assets
or annual consolidated revenues as of such date in excess of 3.0% of
Consolidated Net Tangible Assets or annual consolidated revenues, respectively,
of the Borrower.


 


“Increase Notice” has the meaning specified in Section 1.5.


 


“Indemnified Liabilities” has the meaning specified
in Section 14.12.


 


“Indemnified Person” has the meaning specified in Section 14.12.


 


“Indemnified Taxes” means Taxes other than Excluded
Taxes and Other Taxes.


 


“Initial Funding Date” means the date on which the
Conditions to Initial Funding have been satisfied and on which the first
Borrowing occurs.


 


“Initial Funding Date Amount” means the issuance of
Letters of Credit hereunder not in excess of the lesser of (i) up to
U.S.$15,000,000 (or the Equivalent Amount in CDN Dollars), and (ii) Availability.


 


“Instruments” means, with respect to a Loan Party,
all instruments as such term is defined in the UCC and in the PPSA (as
applicable), now owned or hereafter acquired by such Loan Party.


 


“Intercompany Accounts” means all assets and
liabilities, however arising, which are due to any Loan Party or its
Subsidiaries from, which are due from any Loan Party or its Subsidiaries to, or
which otherwise arise from any transaction by any Loan Party or its
Subsidiaries with, any Affiliate.


 


“Intercreditor Agreement” means that certain
Intercreditor Agreement (substantially in the form attached hereto as Schedule
A) dated as of the date hereof among the Agent, the Bridge Agents and the
Borrower, as the same may be amended, supplemented or otherwise modified from
time to time.


 


“Interest Rate” means each or any of the interest
rates, including the Default Rate, set forth in Section 2.1.


 


“Inventory” means, with respect to a Loan Party, all
of such Loan Party’s now owned and hereafter acquired “inventory” (as defined
in the PPSA or Article 9 of the UCC, as applicable), including, without
limitation, goods and merchandise, wherever located, whether without or after
further processing, to be furnished under any contract of supply or service or
held for sale or lease, all returned goods, raw materials, work in process,
finished goods (including embedded software), other materials and supplies of
any kind, nature or description which are used or consumed in such Loan Party’s
business or used in connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods, merchandise and all documents
of title or other documents representing them.


 


27

















 


“Investment Grade Eligible Accounts” means Billed
Eligible Accounts that are owing by an Account Debtor who has an Investment
Grade Rating.


 


“Investment Grade Rating” means a credit rating of “BBB-”
or better by Standard Poor’s Corporation or “Baa3” or better by Moody’s
Investor Services.


 


“IRS” means the Internal Revenue Service and any
Governmental Authority succeeding to any of its principal functions under the Code.


 


“Issued but Unused Letter of Credit Value” means, on
any day, the lesser of the (a) cost or (b) current market value of
Petroleum Inventory purchased by Borrower and Canadian Guarantors under Letters
of Credit but which has not been physically delivered to such Loan Party;
provided, that if such Letters of Credit are not specific to Petroleum
Inventory then the “Issued but Unused Letter of Credit Value” in respect of
such Letters of Credit shall be reduced by any forward Mark-to-Market losses
and/or any net exchange payable to the same counterparty.  “Issued but Unused Letter of Credit Value”
cannot simultaneously be included in an Eligible Exchange Account or in
Unbilled Eligible Accounts.


 


“Judgment Interest Act (Alberta)” means the Judgment Interest Act (Alberta), including the regulations
made and, from time to time, in force under that Act.


 


“LC Accommodation” has the meaning specified in Section 1.3(a).


 


“Lender” and “Lenders” have the meanings specified
in the preamble hereto and shall include the Agent to the extent of the Agent
Advance outstanding; provided that no such Agent Advance shall be taken into
account in determining any Lender’s Pro Rata Share.  The foregoing includes each such Lender that
has a Revolving Credit Commitment or is the holder of a Revolving Loan or is a
participant in a Letter of Credit.


 


“Letter of Credit” has the meaning specified in Section 1.3(a).


 


“Letter of Credit Fee” has the meaning specified in Section 2.6.


 


“Letter of Credit Subfacility” means, in respect of
the LC Accommodation, U.S.$25,000,000 (or the Equivalent Amount in CDN
Dollars).


 


“LIBOR Continuation/Conversion Date” means the date
on which a Revolving Loan is converted into or continued as a LIBOR Revolving
Loan.


 


“LIBOR Interest Payment Date” means, with respect to
a LIBOR Revolving Loan, (i) the last day of each LIBOR Interest Period
applicable to such LIBOR Revolving Loan and (ii) the Termination Date.


 


“LIBOR Interest Period” means, as to any LIBOR
Revolving Loan, the period commencing on the Funding Date of such LIBOR
Revolving Loan or on the LIBOR Continuation/Conversion Date on which the
Revolving Loan is converted into or continued as a LIBOR Revolving Loan, and
ending on the date one, two, three or six (, and if available to all Lenders,
nine or twelve) months thereafter as selected by (x) the Borrower in its
Notice of 


 


28

















 


Borrowing, in the form attached hereto as Exhibit D,
or Notice of Continuation/Conversion, in the form attached hereto as Exhibit E,
provided that:


 


(a)                                  if any LIBOR
Interest Period would otherwise end on a day that is not a Business Day, that
LIBOR Interest Period shall be extended to the following Business Day unless
the result of such extension would be to carry such LIBOR Interest Period into
another calendar month, in which event such LIBOR Interest Period shall end on
the preceding Business Day;


 


(b)                                 any LIBOR
Interest Period pertaining to a LIBOR Revolving Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Interest
Period) shall end on the last Business Day of the calendar month at the end of
such LIBOR Interest Period; and


 


(c)                                  no LIBOR Interest
Period shall extend beyond the Stated Termination Date.


 


“LIBOR Rate” means, for any LIBOR Interest Period
with respect to any LIBOR Revolving Loan, the rate per annum equal to the rate
determined by the Agent to be the offered rate that appears on the page of
the Reuters LIBOR 01 screen (or any successor thereto) that displays an average
British Bankers Association Interest Settlement Rate for deposits in U.S.
Dollars (for delivery on the first day of such LIBOR Interest Period) with a
term equivalent to such LIBOR Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
LIBOR Interest Period, or (ii) if the rates referenced in the preceding
subsection (i) are not available, the rate per annum determined by the
Agent as the rate of interest (rounded upward to the next 1/100th of 1%) at
which deposits in U.S. Dollars for delivery on the first day of such LIBOR
Interest Period in same day funds in the approximate amount of the LIBOR
Revolving Loan being made, continued or converted by the Agent and with a term
equivalent to such LIBOR Interest Period would be offered by the Agent’s London
branch to major banks in the offshore U.S. Dollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such LIBOR Interest Period.


 


“LIBOR Revolving Loan” means a Revolving Loan during
any period in which it bears interest based on the LIBOR Rate.


 


“Lien” means: 
(a) any interest in property securing an obligation owed to, or a
claim by, a Person, whether such interest is based on the common law, statute
or contract, and including without limitation, a security interest, hypothec,
prior claim, charge, claim or lien arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes; (b) to the extent not included under
clause (a), (i) any rights of repossession or similar rights of unpaid
suppliers, (ii) any reservation, exception, encroachment, easement,
servitude, right of way, lease or other title exception or encumbrance
affecting property and (iii) any other lien, charge, secured claim, title
retention, garnishment right, deemed trust, encumbrance or other right
affecting property, choate or inchoate, whether or not crystallized or fixed,
whether or not for amounts due or accruing due, arising by any statute, act of
law of any jurisdiction at common law or in equity or by agreement; and (c) any
contingent or other agreement to provide any of the foregoing.


 


“Loan Account” means, with respect to Borrower, the
loan account of Borrower, which account shall be maintained by the Agent.


 


29

















 


“Loan Documents” means this Agreement, the Security
Documents, the Blocked Account Agreements, the Fee Letter, the Intercreditor
Agreement, the Hedge Agreements and any other agreements, instruments, and
documents heretofore, now or hereafter among the Loan Parties, the Agent and/or
the Lenders evidencing, securing, guaranteeing or otherwise relating to any or
all of the Obligations or the Collateral.


 


“Loan Parties” means a collective reference to the
Borrower and the Guarantors, and “Loan Party” means any one of them.


 


“Loan Party Representative” has the meaning
specified in Section 14.21.


 


“Margin Stock” means “margin stock” as such term is
defined in Regulation T, U or X of the Federal Reserve Board.


 


“Market Price” means on any day, a spot price for
the inventory of Petroleum Inventory being valued, determined in a manner
consistent with past practices of the Loan Parties or another methodology
approved by Agent from time to time.


 


“Mark-to-Market” means, on any date of determination,
the process of revaluing for trading purposes commodity contracts held by any
Person, whether in respect of physical inventory, futures, forward exchanges,
swaps or other derivatives, in each case relating to Petroleum Inventory, and
which contracts may have a fixed price, a floating price and fixed
differential, or other pricing basis, to the current market prices for such
contracts, and determining the gain or loss on such contracts, on an aggregate
net trading basis for all such contracts of such Person, by comparing the
original prices of such contracts to the market prices on the date of
determination.


 


“Material Adverse Effect” means (a) a material
adverse effect upon the operations, business, assets, or financial condition of
the Loan Parties taken as a whole; (b) a material impairment of the
ability of any Loan Party (other than an Immaterial Subsidiary) to perform
under any Loan Document (other than a Hedge Agreement) to which it is a party;
or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Loan Party (other than an Immaterial
Subsidiary) of any Loan Document (other than a Hedge Agreement) to which it is
a party.


 


“Material Agreement” means any agreement to which
any Loan Party is party that is essential to a Loan Party’s ability to carry on
business as currently conducted and the termination of which would reasonably
be likely to have a Material Adverse Effect.


 


“Maximum Rate” has the meaning specified in Section 2.3.


 


“Maximum Revolver Amount” means U.S.$65,000,000 (or
the Equivalent Amount thereof in CDN Dollars), as such amount may be increased
from time to time in accordance with Section 1.5 or decreased from time to
time in accordance with Section 3.1(b); provided, however, that the
Maximum Revolver Amount shall not at any time exceed U.S.$200,000,000 (or the
Equivalent Amount thereof in CDN Dollars).


 


30














 


“Multiemployer Plan” means a “multiemployer
plan” as defined in Section 4001(a)(3) of ERISA which is or was at
any time during the current year or the immediately preceding six (6) years
contributed to by any Loan Party or any ERISA Affiliate.


 


“Non-Consenting Lender” has the meaning
specified in Section 11.1(b).


 


“Notice of Borrowing” has the meaning
specified in Section 1.2(b)(i).


 


“Notice of Continuation/Conversion” has the
meaning specified in Section 2.2(a)(ii).


 


“NYMEX” means the New York Mercantile Exchange.


 


“Obligations” means all present and future
loans, advances, liabilities, obligations, covenants, duties and debts owing by
the Loan Parties to the Agent and/or any Lender, arising under or pursuant to
this Agreement or any of the other Loan Documents, whether or not evidenced by
any note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty, guarantee,
indemnification or otherwise, whether direct or indirect, absolute, matured or
contingent, due or to become due, now existing or hereafter arising, created or
incurred, primary or secondary, as principal or guarantor and including without
limitation all principal, interest, (including all interest that accrues after the
commencement of any case or proceeding by or against a Loan Party under any
federal, provincial or state bankruptcy, insolvency, receivership or similar
law, whether or not allowed in such case proceeding), charges, expenses, fees,
attorneys’ fees, filing fees and any other sums chargeable to any of the Loan
Parties hereunder or under any of the other Loan Documents.  “Obligations” includes, without limitation
and in any event, (a) all debts, liabilities and obligations now or
hereafter arising from or in connection with Letters of Credit, (b) all
debts, liabilities and obligations now or hereafter arising from or in
connection with Bank Products, (c) the Guaranteed Obligations and (d) any
Overadvances.


 


“Oil Settlement Date” means the 25th of every month; provided,
however, that in the circumstance when the 25th of a month is not a Business Day, the Oil
Settlement Date shall be the Business Day before or after such date as
determined by the BP Provider and the Borrower, collectively.


 


“Oil Settlement Date Reserve” means Bank
Product Reserves in respect of Oil Settlement Date Bank Products.


 


“Other Approved Eligible Accounts” means any
Approved Billed Eligible Account and Approved Unbilled Eligible Account which
is not an Approved Investment Grade Eligible Account or an Insured Account.


 


“Other Billed Eligible Account” means any
Billed Eligible Account which is not an Other Approved Eligible Account, an
Approved Investment Grade Eligible Account or an Insured Account.


 


“Other Eligible Inventory Value” (A) the
value of Eligible Inventory, other than Hedged Eligible Inventory, determined
as follows: the product of the volume of such Petroleum Inventory times the
Market Price minus all storage, transportation and other applicable costs; and (B) the
value of Eligible Inventory consisting of Asphalt Products, valued at the lower
of cost or 


 


31

















 


market value, with market value
based on the most recent price quoted in such publication as has then most
recently been specified by Agent.


 


“Other Taxes” means any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any other
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Documents.


 


“Other Unbilled Eligible Account” means any
Unbilled Eligible Account which is not an Other Approved Eligible Account, an
Approved Investment Grade Eligible Account or an Insured Account.


 


“Overadvances” means the amounts, if any, by
which any individual bank account maintained by the Borrower with Royal Bank is
overdrawn or otherwise has a negative cash balance, whether in consequence of
any electronic transfer or otherwise, but excludes any Overdraft
Accommodations.


 


“Overdraft Accommodation” has the meaning
specified in Section 1.2(k).


 


“Overdraft
Accommodation Maximum Amount” means U.S.$5,000,000 (or the Equivalent Amount in
CDN Dollars).


 


“Parent Company”
means any direct and indirect parent company of the Borrower.


 


“Participant” means any Person who shall have
been granted the right by any Lender to participate in the financing provided
by such Lender under this Agreement, in accordance with Section 11.2, and
who shall have entered into a participation agreement in form and substance
satisfactory to such Lender and in compliance with the requirements and
limitations set forth in Section 11.2.


 


“Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).


 


“PBGC” means the Pension Benefit Guaranty
Corporation or any Governmental Authority succeeding to the functions thereof.


 


“Pending Revolving Loans” means, at any time,
the aggregate principal amount of all Revolving Loans requested in any Notice
of Borrowing received by the Agent which have not yet been advanced.


 


“Pension Plan” means a defined benefit
pension plan registered under the PBA, or covered by other Canadian or
provincial pension legislation including the Income Tax
Act (Canada), or a pension plan (as defined in Section 3(2) of
ERISA) that is subject to Title IV of ERISA or pension plan maintained in any
non Canadian or U.S. jurisdiction and which any Loan Party or Target sponsors,
maintains or to which it makes, is making or is obligated to make
contributions, or has made contributions at any time during the immediately
preceding five (5) plan years.


 


32

















 


“Permitted Acquisition” means any Acquisition
after the Closing Date of any Person, so long as the Agent shall have received
evidence prior to the closing date of such Acquisition that each of the
following conditions has been satisfied:


 


(a)                                  Notwithstanding anything to the contrary in this Agreement, until such time as the
Permitted Bridge Facility Refinancing Date shall have occurred, only the
Available Amount may be used
in respect of any Permitted Acquisitions;


 


(b)                                 no Default or Event of Default is in existence at the time of such
Acquisition or would be caused thereby after giving effect thereto;


 


(c)                                  all representations and warranties shall be true and correct as if
restated immediately following the consummation of such acquisition, except to
the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date;


 


(d)                                 substantially all of such business, assets and operations so acquired,
or of the Person so acquired, consists of a Present Line of Business;


 


(e)                                  the Fixed Charge Coverage Ratio of the Borrower and its
Subsidiaries, calculated as of the last day of the most recently completed
month of the Borrower for which Financial Statements have been delivered
pursuant to Section 5.2(b), calculated on a pro forma basis after giving
effect to such Acquisition and all transactions related thereto and any Fixed
Charges incurred or assumed in connection therewith, would be in compliance
with the testing parameters in Section 7.26;


 


(f)                                    the Agent has received at least ten (10) days’ prior written
notice of such acquisition (or such shorter period as the Agent may agree) and,
as soon as available and in any event at least three (3) Business Days (or
such shorter period as the Agent may agree) prior to the consummation of such
acquisition, copies of substantially final drafts of all agreements delivered
in connection therewith, and prior to the actual closing, marked copies of
changed pages to such agreements; provided, that in the case of an
acquisition for which the total consideration is less than $5,000,000, the
notices required under this clause (e) may be given at the same time as
the consummation of such acquisition;


 


(g)                                 Agent has received a certificate from the Parent’s chief financial
officer or other financial officer (in such Person’s capacity as such)
certifying that all of the applicable conditions contained herein to treating
such acquisition as a Permitted Acquisition have been satisfied; and


 


(h)                                 such acquisition is consummated in compliance with all material
Requirements of Law.  In addition to all
other eligibility criteria provided for under the Agreement, it is agreed and
understood that in no event shall any Accounts or Inventory acquired in
connection with a Permitted Acquisition be deemed eligible for advance
hereunder unless and until there has been compliance with Section 7.22 of
the Agreement with respect to such Person or New Subsidiary and the Agent has
completed (at the Loan Parties’ expense) a collateral audit and appraisal of
any such property so acquired; provided that, in the case of an Acquisition for
which the total consideration is less than $1,000,000, the Borrower may choose to exclude the
entities being acquired from becoming Loan Party’s hereunder.


 


33

















 


“Permitted Bridge Facility Refinancing Date”
means the date on which (A) all of the Bridge Facility Debt has been
exchanged, converted or refinanced with any other debt or other offering by the
issuance of notes or otherwise (such refinancing debt, the “Takeout Debt”) and (B) the
aggregate amount of the Takeout Debt then held by the Lenders (party to this
Agreement) as of the date hereof and RBS Securities Corporation d/b/a RBS
Greenwich Capital (or its affiliates) is equal to or less than 50% of the
aggregate amount of all such Bridge Facility Debt including such Takeout Debt
as of the date of such exchange, conversion or refinancing.


 


“Permitted Inventory Liens” means any Lien,
and the amount of any indebtedness, liability or obligation secured thereby, on
Petroleum Inventory which would be a permitted lien under paragraphs (a) (so
long as such Lien is inchoate), (c) and (d) of the definition of
Permitted Liens.


 


“Permitted Investments” means:


 


(a)                                  acquisitions of Fixed Assets to be used in the business of the
Borrower or any Subsidiary; provided that if the acquisition costs thereof
constitute Capital Expenditures, they are not prohibited hereunder;


 


(b)                                 (i) acquisitions of Inventory, supplies, materials, equipment,
contract rights, licenses or leases of intellectual property, other current
assets and expenditures or investments in the ordinary course of business that
would be accounted for as expenses and not required to be capitalized under
GAAP and (ii) acquisitions of equipment, contract rights, licenses or
leases of intellectual property in the ordinary course of business;


 


(c)                                  investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and supplies, in each case in the ordinary course of business;


 


(d)                                 extensions of trade credit in the ordinary course of business;


 


(e)                                  investments made as a result of the receipt of non-cash consideration
from a Disposition made in compliance with Section 7.11;


 


(f)                                    investments made by any Person that becomes a Subsidiary after the
date hereof; provided that such Investment exists at the time such Person
becomes a Subsidiary and are not made in contemplation of or in connection with
such Person becoming a Subsidiary;


 


(g)                                 loans and advances made in the ordinary course of business to their
respective employees, directors and officers so long as the aggregate principal
amount thereof at any time outstanding (excluding employee credit cards for
expenses relating to the business of the Loan Parties, temporary advances for
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and which are made in the ordinary course of business) shall not
exceed $1,000,000;


 


(h)                                 investments existing on the date hereof and identified on Schedule
7.12;


 


(i)                                     investments in and/or otherwise constituting Permitted Acquisitions;


 


34

















 


(j)                                     investments consisting of intercompany loans among the Loan Parties
or equity or other investments by one Loan Party in another Loan Party;


 


(k)                                  Hedge Agreements entered into in the ordinary course of business for
bona fide hedging purposes and not for the purpose of speculation;


 


(l)                                     investments in cash and Cash Equivalents;


 


(m)                               Hedge Positions in Brokers Accounts;


 


(n)                                 investments in unsecured hedging arrangements or hedging arrangements
secured by property not otherwise constituting Collateral, in each case,
entered into in the ordinary course of business for bona fide hedging purposes
and not for the purpose of speculation;


 


(n)                                 investments received as part of the consideration received in
connection with any Disposition not prohibited under Section 7.11;


 


(o)                                 any Person to the extent such Investments consist of prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers’ compensation, performance and other similar deposits, in each case
made in the ordinary course of business by any Loan Party;


 


(p)                                 lease, utility and other similar deposits in respect of Real Estate
interests in the ordinary course of business;


 


(q)                                 investments (in any Present Line of Business) made for consideration
consisting only of Capital Stock of the Borrower or any Subsidiary;


 


(r)                                    investments made in connection with the Transactions, the Gibson
Acquisition and the Permitted Reorganization, all as permitted hereunder, and
subject to the restrictions hereof (including Affiliate transactions in Section 7.17);


 


(s)                                  investments consisting of Subordinated Debt loans by the Borrower to
any Parent Company in lieu of cash payments of Distributions permitted by Section 7.12
(it being understood that any such Investment shall be treated as a
Distribution for purposes of determining any limitation in Section 7.12); and


 


(t)                                    (i) Investments in connection with Permitted Joint Venture
Payments and (ii) subject to the restrictions hereof (including Affiliate
transactions in Section 7.17), investments, in any Present Line of
Business, by any Loan Party in any joint venture (or any Excluded Subsidiary),
so long as (A) the aggregate amount thereof outstanding at no time exceeds
the sum of (i) the greater of (x) U.S.$.20,000,000 and (y) 2% of
Consolidated Net Tangible Assets, and (B) after the making of such
investments, Borrower shall have Availability in excess of  an amount equal to 25% of the aggregate Commitments.


 


(u)                                 investments arising in connection with the incurrence of Debt
permitted by Section 7.15 to the extent arising as a result of Debt among
the Parent Company, the Borrower, or any Subsidiary and Guarantees permitted by
Section 7.14 and payments made in respect of such Guarantees and (ii) the
forgiveness or conversion to equity of any Debt permitted by Section 7.15; and


 


35

















 


(v)                                 investments made with the Available Amount;


 


(w)                               additional investments so long as (A) the aggregate amount
thereof outstanding at no time exceeds the greater of (a) $20,000,000 or (b) 2.0%
of Consolidated Net Tangible Assets, at any one time outstanding (with each
investment being valued as of the date made and without regard to subsequent
changes in value), and (B) after the making of such investments, Borrower
shall have Availability in excess of an amount equal to 25% of the aggregate
Commitments.


 


It is further understood and
agreed that for purposes of determining the value of any Permitted Investment
outstanding for purposes hereof, such amount shall deemed to be the amount of
such Investment when made, purchased or acquired less any returns on such
Investment (net of any applicable Taxes in respect of such returns and not to
exceed the original amount invested).


 


“Permitted Investors” means the collective
reference to the Sponsor and the members of management of any Parent Company,
the Borrower and its Subsidiaries (for so long as such members of management
hold less than the Sponsor).


 


“Permitted Joint Venture Payments” means
payments related to:


 


(a)                                  any payments relating to the project commonly known as Battle River
Terminal, including (i) any payments by the Borrower or any Subsidiary
made to or on behalf of Battle River Terminal ULC as contemplated in the
Shareholders Agreement dated June 18, 2008 (the “BRT Shareholders Agreement”)
among Merrill Lynch Commodities Luxembourg S.A.R.L., 1370307 Alberta Ltd. and
Battle River Terminal ULC (including any amounts referred to therein as being
made as shareholder loans or contributions to Battle River Terminal ULC); (ii) any
payments by the Borrower or any Subsidiary in connection with its obligations
as project manager under the BRT Shareholders Agreement; and (iii) any
payments made by Gibson Energy Partnership in its capacity as Operator under
the Operating Agreement dated June 18, 2008 between Gibson Energy
Partnership, Gibson Energy Ltd. and Battle River Terminal ULC; and


 


(b)                                 any payments relating to the project descibed in the September 8,
2008 Binding Letter of Intent between Suncor Energy Inc. and Gibson Energy Ltd.
re “Terminal Project at Hardisty”, including any payments by the Borrower or
any Subsidiary made pursuant to the “Definitive Agreements” as defined therein.


 


“Permitted Liens” means:


 


(a)                                  Liens for taxes, assessments, charges or other governmental levies
not delinquent or statutory Liens for taxes, assessments, charges or other
governmental levies not delinquent; provided that the payment of such taxes,
assessments, charges or other governmental levies under this clause (a) which
are due and payable are being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves have
been established on the applicable Loan Party’s books and records and a stay of
enforcement of any such Lien is in effect;


 


(b)                                 the Agent’s Liens and any other Lien otherwise arising in connection
with the Loan Documents;


 


36

















 


(c)                                  Liens consisting of deposits made in the ordinary course of business
in connection with, or to secure payment of, obligations under worker’s
compensation, unemployment insurance, social security and other similar laws,
or to secure the performance of bids, tenders or contracts (other than
contracts which constitute Debt) or to secure indemnity, performance or other
similar bonds for the performance of bids, tenders or contracts (other than
contracts which constitute Debt) or to secure statutory obligations (other than
liens arising under ERISA or Canadian federal or provincial statutes in
relation to pension plans or any other applicable employee benefit plan law) or
surety or appeal bonds, or to secure indemnity, performance or other similar
bonds;


 


(d)                                 Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords, repairmen, possessors, operators or
construction Liens or other similar Liens and other like Persons incurred in
the ordinary course of business and not delinquent;


 


(e)                                  Liens (i) constituting encumbrances in the nature of
reservations, exceptions, zoning restrictions, encroachments, easements, rights
of way, covenants running with the land and other similar title exceptions or
encumbrances affecting any Real Estate and (ii) arising in connection with
interest or title of a lessor under any lease on assets other than Collateral
entered into by the Borrower or any Subsidiary in the ordinary course of its
business and covering only the assets so leased;


 


(f)                                    Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder;


 


(g)                                 Liens in effect as of the Closing Date described in Schedule 7.15
securing Debt described in Schedule 7.15;


 


(h)                                 Liens on Fixed Assets securing Capital Leases and purchase money
Debt, in each instance, permitted in Section 7.15;


 


(i)                                     Liens in respect of the Bridge Facility (subject to the
Intercreditor Agreement);


 


(j)                                     the extension or renewal of any Lien permitted by clauses (g), (h), (i) and
(k) of this definition; provided, that (i) such Lien (as regards clauses (i) (other
than Shared Collateral, as defined in the Intercreditor Agreement) and (k))
shall at no time be extended or renewed to cover any Collateral, (ii) such
Lien (as regards clause (g)) shall at no time be extended or renewed to cover
any assets or property other than such assets or property existing on the
Closing Date that are subject to the Lien being extended or renewed, (iii) such
Lien (as regards clause (h)) shall at no time be extended or renewed to cover
any assets or property other than such assets or property existing immediately
prior to such renewal that are subject to the Lien being extended or renewed,
and (iv) the Debt secured by such Lien is permitted under this Agreement;


 


(k)                                  Liens existing on property or assets prior to the acquisition
thereof by any Loan Party in a Permitted Acquisition if such Lien was not
incurred in contemplation of the acquisition of such asset and does not extend
to any other assets or property of such Loan Party and liens on funds on
deposit or escrow in connection with a Permitted Acquisition;


 


37

















 


(l)                                     Liens on amounts deposited in connection with obtaining worker’s
compensation or casualty or liability or other unemployment insurance or to
secure obligations to a utility when required by such utility in connection
with the operations of Borrower or its Subsidiaries;


 


(m)                               Liens on amounts deposited in connection with the making or entering
into of bids, tenders, or leases in the ordinary course of business;


 


(n)                                 Liens arising as of a matter of law, such as bankers and other
similar statutory liens and other rights of offset, in connection with deposit,
securities, or commodities accounts in the ordinary course of business;


 


(o)                                 Statutory Liens in favour of pipeline owners and other transporters
and carriers of Petroleum Inventory;


 


(p)                                 Liens consisting of reclamation rights and similar statutory rights
arising as a matter of applicable law in favour of the seller of goods to the
Borrower or any Subsidiary so long as such Liens secure only the purchase price
of and apply only to the goods or other property sold;


 


(q)                                 Liens on amounts deposited as security for surety or appeal bonds in
connection with obtaining such bonds in the ordinary course of business; and


 


(r)                                    Liens on property not constituting Collateral;


 


(s)                                  progress payments and advances received from customers in the
ordinary course of business and reported to the Agent to the extent same
creates a Lien on the related Inventory and proceeds thereof and which do not
exceed $7,500,000;


 


(t)                                    Liens on Capital Stock in joint ventures securing obligations in
respect of such joint venture;


 


(u)                                 Liens incurred in the ordinary course of business (not securing any
Debt)  in favour of any public utility when
required by such public utility in connection with the operations of any
property or assets of any Loan Party; and;


 


(v)                                 Liens incurred in the ordinary course of business (not securing any
Debt) in respect of the rights of any shipper or supplier of inventory
(including the rights of such shipper or supplier to any petroleum substances
owned by such shipper or supplier or owned by a Loan Party but not yet paid for
or overdue but that are located on or within any property or assets of the any
Loan Party); and


 


(w)                               other Liens with respect to obligations (other than Debt) that do
not exceed U.S.$2,000,000 at any one time outstanding.


 


“Permitted Reorganization” means the series
of transactions described in that certain memorandum prepared by Bennett Jones
LLP for the purpose of summarizing the steps proposed for the pre-closing
restructuring, acquisition and post-closing restructuring of the Target, dated
as of December 12, 2008, as amended, supplemented or otherwise modified
from time to time, 


 


38

















 


provided that, any such
amendments, supplements or modifications, shall be reasonably acceptable to the
Agent.


 


“Person” means any individual, sole
proprietorship, partnership, limited partnership, limited liability company,
unlimited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority or any other entity.


 


“Petroleum Inventory” means crude oil,
bitumen, blended bitumen, condensate,
methanol, natural gas, natural gas liquids, natural gasoline, refined petroleum
products, liquefied petroleum gases, propane, diesel, diluent, butane, wellsite
fluids, tops, distillate,  any blend thereof
and Asphalt Products.


 


“Plan” means an employee benefit plan (or
employee pension benefit plan) which any Loan Party or Target sponsors or
maintains or to which any Loan Party makes, is making or is obligated to make
contributions and includes any Pension Plan.


 


“Position”  means
(a) any exchange or over-the-counter put, call, swap or other options or
any forward or futures contract, and (b) any type of Hedge Agreement.


 


“PPSA” means the Personal
Property Security Act (Alberta) (or any successor statute) or
similar legislation of any other jurisdiction the laws of which are required by
such legislation to be applied in connection with the issue, perfection,
enforcement, validity or effect of security interests.


 


“Present Line of Business” means, with respect
to any Loan Party, (a) the Petroleum Inventory gathering, treating,
processing, terminalling, refining, storage, transporting and marketing
operations and other Petroleum Inventory gathering, treating, processing,
terminalling, storage, transporting and marketing operations of substantially
similar scope and methods of operation and (b) businesses that are reasonably
related, ancillary or complementary thereto or reasonable extensions thereof.


 


“Preferred Stock”, as applied to the Capital
Stock of any corporation, shall mean Capital Stock of any class or classes
(however designated) which is preferred as to the payment of dividends or as to
the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.


 


“Prime Rate” means, at any time, the rate of
interest per annum equal to the greater of (i) the rate which the
principal office of Royal Bank in Toronto, Ontario quotes, publishes and refers
to as its “prime rate” and which is its reference rate of interest for loans in
Canadian Dollars to its Borrower; and (ii) the sum of (y) the average
rate for Canadian Dollar bankers’ acceptances having a term of 1 month that
appears on the Reuters Screen CDOR Page (or any replacement of such page)
as of 10:00 a.m. (Toronto time) on the date of determination, as reported
by Royal Bank, and (z) 1.0%, adjusted automatically with each quoted or
published change in such rate, all without the necessity of any notice to the
Borrower or any other Person.


 


“Prime Rate Revolving Loan” means a Revolving
Loan during any period in which it bears interest based on the Prime Rate.


 


39

















 


“Priority Payables” means any amounts due and
not paid for wages, vacation pay, severance pay, amounts due and not paid under
any legislation relating to workers’ compensation or to employment insurance,
all amounts deducted or withheld and not paid and remitted when due under the Income Tax Act (Canada), sales tax, excise tax, tax payable
pursuant to Part IX of the Excise Tax Act (Canada)
(net of GST input credits) or similar applicable provincial legislation,
government royalties, amounts currently or past due and not paid for realty,
municipal or similar taxes (to the extent impacting personal or movable
property) and all amounts currently or past due and not contributed, remitted
or paid to any Plan or under the EPPA, or any similar statutory or other claims
that would have or would reasonably be expected to have priority over any Liens
granted to the Agent in the future.


 


“Proceeds of Crime Act” means Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)
(or any successor statute), as amended from time to time, and includes all
regulations thereunder.


 


“Proprietary Rights” means, with respect to a
Loan Party, all of such Loan Party’s now owned and hereafter arising or
acquired: patents, patent rights, copyrights, works which are the subject
matter of copyrights, trademarks, service marks, trade names, trade styles,
patent, trademark and service mark applications, and all licenses (to the
extent sublicenseable) and rights related to any of the foregoing, including
those patents, trademarks, service marks, trade names and copyrights set forth
on Schedule 6.12 hereto, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and continuations in
part of any of the foregoing.


 


“Pro Rata Share” means with respect to a
Lender at any time, a fraction (expressed as a percentage), the numerator of
which is the amount of such Lender’s Revolving Credit Commitment at such time
and the denominator of which is the sum of the amounts of all of the Lenders’
Revolving Credit Commitments at such time, or if no Revolving Credit
Commitments are outstanding at such time, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations (other than
any Obligations under Bank Products) owed to such Lender at such time with respect
to the revolving line of credit provided hereunder to the Borrower and the
denominator of which is the aggregate amount of the Obligations (other than any
Obligations under Bank Products) owed to all Lenders at such time with respect
to the revolving line of credit provided hereunder to the Borrower.


 


“Real Estate” means all of each Loan Party’s
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of each
Loan Party’s now or hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto and the easements appurtenant thereto.


 


“Receipt Account” means each bank account
subject to a Blocked Account Agreement, to which the proceeds of Accounts and
other Collateral are deposited or credited and which is maintained in the name
of the Agent or the applicable Loan Party, as the Agent may determine, on terms
acceptable to the Agent.


 


“Release” means a release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Contaminant into the indoor or outdoor environment or into or
out of any Real Estate or other property, including the movement of


 


40






 










 


Contaminants through or in the
air, soil, surface water, groundwater or Real Estate or other property.


 


“Replacement Lender” shall have the meaning
specified in Section 11.3.


 


“Report” shall have the meaning specified in Section 12.18.


 


“Reportable Event” means any of the events
set forth in Section 4043(c) of ERISA or the regulations thereunder,
other than any such event for which the 30 day notice requirement under ERISA
has been waived in regulations issued by the PBGC.


 


“Requested Increase” shall have the meaning
specified in Section 1.5.


 


“Required Lenders” means at any time Lenders
whose Pro Rata Shares in respect of the Total Facility aggregate more than 50%;
provided, that so long as there are no more than two Lenders, “Required Lenders”
means all of such Lenders.


 


“Requirement of Law” means, as to any Person,
any law (statutory or common), treaty, rule or regulation or determination
of an arbitrator, court of law or of a Governmental Authority, in each case
applicable to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.


 


“Reserves” means reserves that limit the
availability of credit hereunder, consisting of reserves against the Borrowing
Base and Availability, in each instance, established by the Agent from time to
time in the Agent’s Credit Judgment which Reserves shall not be duplicative of
ineligibilized Accounts and Inventory (or the Hedging Reserve); provided,
however, that any Reserve shall bear a reasonable relationship to the issue giving
rise to the implementation of such Reserve. 
Without limiting the generality of the foregoing, the following reserves
shall be deemed to be a reasonable exercise of the Agent’s Credit Judgment: (a) a
reserve for accrued, unpaid interest then due on the Obligations, (b) reserves
for rent at a leased, warehouse or bailment location for which the Agent has
not received a collateral access or similar agreement, which reserve shall be
in an amount equal to the lesser of (i) 3 months’ rent or (ii) applicable
Availability provided by the Eligible Inventory at such location, and reserves
for other statutory liens (including, without limitation, for liens arising
from the nonpayment of claims or demands when due permitted in clause (c) of
the defined term Permitted Liens), (c) reserves for taxes, assessments,
charges and other governmental levies which are delinquent, (d) any claim or
Lien, against any part of the Collateral which may be in priority to the Agent,
(e) of any indemnity granted by the Agent or the Lenders to any Person in
connection with the depository and blocked account arrangements contemplated by
the Loan Documents, (f) $2,000 per employee, and (g) additionally,
reserves established by the Agent for amounts payable by the Borrower and
secured by any Liens, choate or inchoate, which rank or which would reasonably
be expected to rank in priority to the Agent’s and/or Lenders’ Liens and/or for
amounts which represent costs relating to the enforcement of the Agent’s Liens
including, without limitation, in connection with Priority Payables and First
Purchase Crude Payables.


 


“Responsible Officer” means the chief
executive officer, chairman of the board, president, chief financial officer,
chief operating officer, manager of treasury, treasurer, assistant treasurer or
a vice president of finance of a Loan Party or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants 


 


41

















 


and the preparation of the
Borrowing Base Certificate of Borrower, the chief financial officer, the
treasurer, assistant treasurer or a vice president of finance of Borrower or
any other officer having substantially the same authority and responsibility.


 


“Revolving Credit Commitment” means, as to
any Lender, the obligation of such Lender, if any, to make Revolving Loans and
participate in Letters of Credit in an aggregate principal and/or face amount
not to exceed the amount set forth under the heading “Revolving Credit
Commitment” opposite such Lender’s name on Schedule 1.2 or in the Assignment
and Acceptance pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof.


 


“Revolving Loans” has the meaning specified
in Section 1.2 and includes each Agent Advance and each Overdraft
Accommodation.


 


“Revolving Loan Settlement” has the meaning
specified in Section 12.15.


 


“Revolving Loan Settlement Date” has the
meaning specified in Section 12.15.


 


“Risk Management Policy” means the Commodity
Trading Risk Management Policy and Procedures of the Loan Parties dated February
20, 2003, as the same has been amended prior to the date hereof and as may be
amended, supplemented or otherwise modified from time to time to the extent
such amendments, supplements or modifications are consented to by the Agent.


 


“Royal Bank” means Royal Bank of Canada.


 


“Secured Parties” or “Secured Party” means,
collectively, the Agent, each Lender, the BP Provider, Royal Bank (in its roles
under this facility) and each Letter of Credit Issuer.


 


“Security Agreement” means the general
security agreements of even date herewith among the Borrower, the Guarantors
and the Agent for the benefit of the Agent and the Lenders.


 


“Security Documents” means the Security
Agreement and any other present or future agreements executed by one or more of
the Loan Parties pursuant to which the Agent has been granted a Lien to secure
any and all of the Obligations of (i) the Borrower, and (ii) the Guarantors.


 


“Senior First Lien Bridge Facility” means the
bridge loan facilities established pursuant to the Bridge Facility Loan
Agreement in an original principal amount not to exceed U.S.$230,000,000, as
amended, notified, restated or supplemented from time to time to the extent
permitted by the Intercreditor Agreement.


 


“Senior First Lien Bridge Facility Loan
Agreement” means that certain Loan Agreement dated as of December 12, 2008
among the Borrower, as borrower, the guarantors, UBS AG, Stamford Branch, as
administrative agent, the lenders party thereto from time to time (the “First
Lien Bridge Lenders”) and Royal Bank of Canada, as Canadian administrative
agent and collateral agent for the First Lien Bridge Lenders (the “First Lien
Bridge Agent”).


 


“Senior Second Lien Bridge Facility” means
the bridge loan facilities established pursuant to the Senior Second Lien
Bridge Facility Loan Agreement in an original principal 


 


42

















 


amount of U.S.$315,000,000, as
amended, restated or supplemented from time to time to the extent permitted by
the Intercreditor Agreement.


 


“Senior Second Lien Bridge Facility Loan
Agreement” means that certain Loan Agreement dated as of December 12, 2008
among Borrower, as borrower, the guarantors, UBS AG, Stamford Branch, as
administrative agent, the lenders party thereto from time to time (the “Second
Lien Bridge Lenders”) and Royal Bank of Canada, as Canadian administrative
agent and collateral agent for the Second Lien Bridge Lenders (the “Second Lien
Bridge Agent”).


 


“Solvent” means, when used with respect to
any Person, that at the time of determination:


 


(a)           the
assets of such Person, at a fair valuation, are in excess of the total amount
of its debts (including contingent liabilities); and


 


(b)           the
present fair saleable value of its assets is greater than its probable
liability on its existing debts as such debts become absolute and matured; and


 


(c)           it
is then able and expects to be able to pay its debts (including contingent
debts and other commitments) as they mature; and


 


(d)           it
has capital sufficient to carry on its business as conducted and as proposed to
be conducted.


 


For purposes of determining whether a Person
is Solvent, the amount of any contingent liability shall be computed as the
amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.


 


“Specified Contracts” has the meaning
specified in the Interecreditor Agreement.


 


“Sponsor” means Riverstone Holdings LLC or
any of its Affiliates.


 


“Sponsor Equity Contribution” means the
equity contribution in an aggregate amount of cash of not less than
U.S.$450,000,000 from the Sponsor, directly or indirectly, to the Borrower.


 


“Sponsor Investment” means an investment in
the form of an equity contribution, in an aggregate amount of cash of
U.S.$35,000,000, directly or indirectly from the Sponsor to the Borrower made
on the Closing Date in order to meet certain conditions to the funding of the
Bridge Facility Debt.


 


“Sponsor Fees” means amounts payable to the
Sponsor pursuant to the Sponsor Management Agreement.


 


“Sponsor Management Agreement” means the
Management Agreement, by and between Gibson Energy Holdings Inc. and the
Sponsor, as in effect on the Closing Date and as modified from time to time
with the consent of the Agent.


 


“Stated Termination Date” means the fourth
anniversary of the Closing Date.


 


43

















 


“Subordinated Debt” means unsecured Debt
subordinated to the Agent and Lenders on terms and pursuant to agreements
acceptable to the Agent in its discretion.


 


“Subsidiary” of a Person means any
corporation, association, partnership, limited liability company, joint venture
or other business entity of which more than fifty percent (50%) of the Voting
Stock or other voting equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly, by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.  Unless the context otherwise clearly
requires, references herein to a “Subsidiary” refer to a Subsidiary of the
Borrower.


 


“Supporting Letters of Credit” has the
meaning specified in Section 1.3(h).


 


“Target” means, prior to the consummation of
the Acquisition, Gibson Energy Holdings Inc.


 


“Tax Dividends” means distributions made by
the Borrower to any Parent Company in order to allow such Parent Company (and
the equity holders of such Parent Companies) to satisfy their tax liabilities
to the extent such liabilities are attributable to the income of Borrower and
its Subsidiaries.


 


“Taxes” means any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, imposed by a Governmental Authority.


 


“Termination Date” means the earliest to
occur of (i) the Stated Termination Date, (ii) the date the Total
Facility is terminated either by the Borrower pursuant to Section 3.2 or
by the Required Lenders pursuant to Section 9.2, and (iii) the date
this Agreement is otherwise terminated for any reason whatsoever pursuant to
the terms of this Agreement.


 


“Termination Event” means (a) the whole
or partial withdrawal of the Borrower or any Guarantor from a Pension Plan
during a plan year; or (b) the filing of a notice of interest to terminate
in whole or in part a Pension Plan or the treatment of a Pension Plan amendment
as a termination of partial termination; or (c) the institution of
proceedings by any Governmental Authority to terminate in whole or in part or
have a trustee appointed to administer a Pension Plan; or (d) any other
event or condition which might constitute grounds for the termination of,
winding up or partial termination of winding up or the appointment of trustee
to administer, any Pension Plan.


 


“Total Facility” has the meaning specified in
Section 1.1.


 


“Transaction” means, collectively, (a) the
Sponsor Equity Contribution, (b) the Sponsor Investment, (c) the
acquisition by the Borrower of all the Capital Stock of the Target (the “Gibson
Acquisition”), pursuant to a Purchase and Sale Agreement dated as of August 5,
2008 (as the same may be amended, modified or otherwise supplemented, (the “Acquisition
Agreement”)) among the Borrower, Hunting plc and Hunting Energy Holdings
Limited, (c) the funding of the Bridge Facility, (d) the consummation
of any other transactions in connection with the foregoing, and (e) the
payment of fees and expenses incurred in connection with any of the foregoing.


 


44

















 


“Transaction Documents” means the Acquisition
Agreement and all other material documents, instruments and certificates
contemplated by the Acquisition Agreement, all on terms acceptable to the
Arrangers.


 


“Transfer” has the meaning specified in Section 7.11.


 


“UCC” means the Uniform Commercial Code, as
in effect from time to time, of the State of New York or of any other state the
laws of which are required as a result thereof to be applied in connection with
the issue of perfection or nonperfection or priority of security interests,
provided, that to the extent that the UCC is used to define any term herein or
in any other documents and such term is defined differently in different
Articles or Divisions of the UCC, the definition of such term contained in Article or
Division 9 of the applicable UCC shall govern.


 


“Unbilled Eligible Accounts” means, at the
time of any determination thereof, each portion of the Eligible Accounts of an
Account Debtor of the Borrower or a Canadian Guarantor that represents the
uninvoiced amount in respect of volumes of Petroleum Inventory actually
delivered by such Loan Party on or prior to the date of determination in the
current or immediately preceding calendar month, and is governed by an
enforceable purchase and sale agreement, exchange agreement or other written
agreement.


 


“Unfunded Pension Liability” means the excess
of a Plan’s projected benefit obligation, as defined in SFAS No. 87, over
the market value of that Plan’s assets and also includes any unfunded liability
or solvency deficiency as determined for the purposes of the PBA or other
applicable laws.


 


“Unused Letter of Credit Subfacility” means,
at any time, an amount equal to the Letter of Credit Subfacility at such time
minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of
Credit issued under the LC Accommodation plus, without duplication, (b) the
aggregate unpaid reimbursement obligations with respect to all Letters of
Credit issued under the LC Accommodation.


 


“U.S. Dollar” and “U.S.$” mean dollars in the
lawful currency of the United States of America.


 


“U.S. Guarantor” means a Guarantor that is a
U.S. Subsidiary.


 


“U.S. Subsidiary” means any direct or
indirect Subsidiary of the Borrower which is organized or merged under the laws
of the United States of America or any state thereof.


 


“Voting Stock” of a corporation shall mean
all classes of Capital Stock of such corporation then outstanding and normally
entitled to vote in the election of directors.


 


Accounting Terms.  Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations in
this Agreement shall be computed, unless otherwise specifically provided
therein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements.


 


Interpretive Provisions.


 


45

















 


(a)           The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.


 


(b)           The
words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement
as a whole and not to any particular provision of this Agreement; and
Subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.


 


(c)


 


(i)            The
term “documents” includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced.


 


(ii)           The
term “including” is not limiting and means “including without limitation.”


 


(iii)          In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including,” the words “to” and “until”
each mean “to but excluding” and the word “through” means “to and including.”


 


(d)           Any
reference made in this Agreement to “Agent” or “Lender” shall so be construed
as to include its successors and permitted assigns.


 


(e)           Any
reference made in this Agreement to a time of day is, unless otherwise stated,
a reference to Toronto time.


 


(f)            Any
reference made in this Agreement to Sections, Articles, Exhibits or Schedules
is, unless otherwise indicated, a reference to Sections and Articles of this
Agreement and to Exhibits and Schedules to this Agreement, as the case may
be.  The provisions of each Exhibit and
Schedule shall constitute provisions of this Agreement as though repeated at
length herein.


 


(g)           Any
reference made in this Agreement to a “fiscal quarter” means, in relation to a
Loan Party, one of the four (4) consecutive periods in each Fiscal Year each of
three (3) months in duration.


 


(h)           In
this Agreement, (a) the singular includes the plural and vice versa, (b) “in
writing” or “written” includes printing, typewriting, or any electronic means
of communication capable of being visibly reproduced at the point of reception,
including telex, telecopy and telegraph, (c) the headings, the table of
contents, the Articles and the Sections are inserted for convenience only and
are to be ignored in construing this Agreement, (d) a document, notice,
note, bill of exchange or other instrument shall be deemed to have been validly
signed and executed if it has been signed by either an original signature or a
facsimile signature or stamp, and (e) all references to amounts of money
shall, unless otherwise indicated, be references to Canadian Dollars.


 


(i)            All
references to parties herein shall unless otherwise expressly provided, include
each such party’s successors and permitted assigns.


 


46

















 


(j)            For
the purpose of determining compliance with covenant and default limitations set
forth in the Agreement, amounts expressed in Canadian Dollars shall be measured
by aggregating the applicable items denominated in Canadian Dollars with the
Equivalent Amounts expressed in Canadian Dollars of such items denominated in
U.S. Dollars.


 


(k)           Unless
otherwise expressly provided herein, (i) references to agreements
(including this Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of this Agreement, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute
or regulation.


 


(l)            The
captions and headings of this Agreement and other Loan Documents are for
convenience of reference only and shall not affect the interpretation of this
Agreement.


 


(m)          This
Agreement and the other Loan Documents are the result of negotiations among and
have been reviewed by counsel to the Agent, the Loan Parties and the other
parties hereto, and are the products of all parties.  Accordingly, they shall not be construed
against the Lenders or the Agent merely because of the Agent’s or Lenders’
involvement in their preparation.


 


(n)           Unless
otherwise expressly stated herein, wherever in this Agreement reference is made
to a rate of interest or fee “per annum” or a similar expression is used, such
interest or fee will be calculated on the basis of a calendar year of three
hundred and sixty (360) days.  All
payments of interest to be made hereunder will be paid both before and after
maturity and before and after default and/or judgment, if any, until payment
thereof, and interest will accrue on overdue interest, if any.


 


(o)           All
Revolving Loans (other than ABR Revolving Loans and Revolving Loans that are
LIBOR Revolving Loans) shall be made and denominated in Dollars and all ABR
Revolving Loans and Revolving Loans that are LIBOR Revolving Loans shall be
made and denominated in U.S. Dollars. 
Revolving Loans (other than ABR Revolving Loans and Revolving Loans that
are LIBOR Revolving Loans), interest thereon shall all be payable in
Dollars.  ABR Revolving Loans and
Revolving Loans that are LIBOR Revolving Loans, interest thereon shall all be
payable in U.S. Dollars.  However, for
purposes of determining compliance with covenant and default limitations, all
fees and amounts payable hereunder and all calculations hereunder, including, without
limitation, the amount of the Borrowing Base of Borrower the Aggregate Revolver
Outstandings, the Maximum Revolver Amount, the Letter of Credit Subfacility,
Availability and each Lender’s Commitment as of any date shall all be
calculated and stated in U.S. Dollars, and for such purposes any items
denominated in Dollars included in such calculation shall be converted into
U.S. Dollars at the Exchange Rate prevailing on such date, as determined by the
Agent.


 


(p)           For
purposes of any Collateral located in the Province of Quebec or charged by any
deed of hypothec (or any other Loan Document) and for all other purposes
pursuant to which the interpretation or construction of a Loan Document may be
subject to the laws of the Province of Quebec or a court or tribunal exercising
jurisdiction in the Province of Québec, (q) “personal property” shall be
deemed to include “movable property”, (r) “real property” shall be deemed
to include “immovable property”, (s) “tangible property” shall be deemed
to include “corporeal 


 


47

















 


property”, (t) “intangible
property” shall be deemed to include “incorporeal property”, (u) “security
interest” and “mortgage” shall be deemed to include a “hypothec”, (v) all
references to filing, registering or recording under the UCC or the PPSA shall
be deemed to include publication under the Civil Code of Québec, (w) all
references to “perfection” of or “perfected” Liens shall be deemed to include a
reference to the “opposability” of such Liens to third parties, (x) any “right
of offset”, “right of setoff” or similar expression shall be deemed to include
a “right of compensation”, (y) “goods” shall be deemed to include “corporeal
movable property” other than chattel paper, documents of title, instruments,
money and securities, and (z) an “agent” shall be deemed to include a “mandatary”.


 


48

















 


EXHIBIT A


 


[FORM OF] ASSIGNMENT AND ACCEPTANCE
AGREEMENT


 


This ASSIGNMENT AND ACCEPTANCE
AGREEMENT (this “Assignment and Acceptance”) dated as of                       ,
20     is made between [                       (the
“Assignor”)
and                       (the
“Assignee”)].


 


RECITALS


 


WHEREAS, the Assignor  is party to
that certain Credit Agreement, dated as of December 12, 2008 (the “Credit
Agreement”), among the financial institutions from time to time parties thereto
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), Royal Bank of Canada, as administrative agent
and collateral agent for the Lenders (in its capacity as administrative agent
and collateral agent, together with any successor administrative agent or
collateral agent, the “Agent”), Royal Bank of Canada, as syndication agent (in
such capacity, the “Syndication Agent”), Royal Bank of Canada and UBS
Securities LLC as lead arrangers (in such capacities, the “Arrangers”), UBS
Securities LLC, as documentation agent (in such capacities, the “Documentation
Agent”), Gibson Acquisition ULC, an unlimited liability company incorporated
under the laws of the Province of Alberta, as the borrower (the “Borrower”),
Gibson Acquisition ULC and the Subsidiaries of the Borrower identified on the
title page and signature pages thereto as guarantors (the “Guarantors”)
and each Subsidiary of the Borrower that pursuant to the provisions thereto
becomes a Guarantor thereto after the Closing Date.


 


WHEREAS, as provided under the Credit Agreement, the Assignor has a
Revolving Credit Commitment to make Revolving Loans to the Borrower and
participate in Letters of Credit and Credit Support in an aggregate principal
amount at any time outstanding not to exceed U.S.$                                                ;


 


WHEREAS, the Assignor has made Revolving Loans to the Borrower, of which an
aggregate principal amount of U.S.$                         is
currently outstanding on the date hereof;


 


WHEREAS, [the Assignor has acquired a participation in
its pro rata share of the Lenders’ liabilities under Letters of Credit and
Credit Support in an aggregate principal amount of U.S.$                                             (the
“L/C Obligations”)] [no Letters of Credit are outstanding under the Credit
Agreement]; and


 


WHEREAS, the Assignor wishes to assign to the Assignee [part of
the] [all] rights and obligations of the Assignor under the Credit
Agreement in respect of its Revolving Credit Commitment thereunder, together
with a corresponding portion of each of its outstanding Revolving Loans and L/C
Obligations, in an amount equal to U.S.$                                           (the
“Revolver Assigned Amount”) on the terms and subject to the conditions set
forth herein and the Assignee is required under the Credit Agreement to accept
assignment of such rights and to assume such obligations from the Assignor on
such terms and subject to such conditions.


 


NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:


 


49

















 


1.                                       Assignment and Acceptance


 


(a)                                  Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty
(except as provided in this Assignment and Acceptance)                            %
[the “Assignment Percentage”] of (A) the
Revolving Credit Commitment, the Revolving Loans and L/C Obligations of the
Assignor and (B) all related rights, benefits, obligations, liabilities
and indemnities of the Assignor under and in connection with the Credit
Agreement and the other Loan Documents.


 


(b)                                 With effect on and after the Effective Date (as defined in Section 5
hereof),  the Assignee shall be a party to the
Credit Agreement and succeed to all of the rights and be obligated to perform
all of the obligations of a Revolving Lender under the Credit Agreement,
including the requirements concerning confidentiality and the payment of
indemnification, with a Revolving Credit Commitment in an amount equal to the
Revolver Assigned Amount and acquire the rights of the Assignor with respect to
a corresponding portion of each of its outstanding Revolving Loans.  The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.  It is the intent of the parties hereto that the
Revolving Credit Commitment of the Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Revolver Assigned Amount and the Assignor
shall relinquish its rights and be released from its obligations under the
Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish
its rights under Sections [3.1, 3.6] and [14.1] of the Credit Agreement to the extent such rights
relate to the time prior to the Effective Date.


 


(c)                                  After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee’s Revolving Credit Commitment will
be U.S.$                                      .


 


(d)                                 After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor’s Revolving Credit Commitment will
be U.S.$                           .


 


2.                                       Payments


 


(a)                                  As consideration for the sale, assignment and transfer contemplated
in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to U.S.$                             
representing the principal amount of all Revolving Loans assigned hereunder.


 


(b)                                 The Assignee further agrees to pay to the Agent a processing fee in
the amount specified in Section 11.2(a) of the Credit Agreement.


 


50






 










 


3.                                       Reallocation
of Payments


 


Any interest, fees and other
payments accrued to the Effective Date with respect to the interests and
obligations assigned to and assumed by the Assignee hereunder shall be for the
account of the Assignor. Any interest, fees and other payments accrued on and
after the Effective Date with respect to the interests and obligations assigned
to and assumed by the Assignee hereunder shall be for the account of the
Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding two
sentences and pay to the other party any such amounts which it may receive
promptly upon receipt.


 


4.                                       Independent
Credit Decision


 


The Assignee (a) acknowledges that it has
received a copy of the Credit Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements of the Borrowers
and Guarantors, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter
into this Assignment and Acceptance; and (b) agrees that it will, independently
and without reliance upon the Assignor, the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.


 


5.                                       Effective
Date: Notices


 


(a)                                  As
between the parties hereto, the effective date for this Assignment and
Acceptance shall be                 ,
20    (the “Effective Date”); provided that the following
conditions precedent have been satisfied on or before the Effective Date:


 


(i)                 this
Assignment and Acceptance shall be executed and delivered by the Assignor and
the Assignee;


 


(ii)              the
consent of the Agent, and, if required by the Credit Agreement, the Borrower,
required for an effective assignment of the Revolver Assigned Amount as
contemplated hereunder shall have been duly obtained and shall be in full force
and effect as of the Effective Date;


 


(iii)           the
Assignee shall pay to the Assignor all amounts due to the Assignor;


 


(iv)          the
Assignee shall have complied with Section 11.2 of the Credit Agreement (if
applicable); and


 


(v)             the
processing fee referred to in Section 2(b) hereof and in Section 11.2(a) of
the Credit Agreement shall have been paid to the Agent.


 


(b)                                 Promptly
following the execution of this Assignment and Acceptance, the Assignor shall
deliver to the Agent for acknowledgment by the Agent, a Notice of Assignment in
the form attached hereto as Schedule 1.


 


51

















 


6.                                       Agent


 


(a)                                  The Assignee
hereby appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Agent by the Lenders pursuant to the terms of the Credit Agreement.


 


(b)                                  [The Assignee shall assume no duties or obligations held by the Assignor
in its capacity as Agent under the Credit Agreement.]


 


7.                                                                                       Representations
and Warranties


 


(a)                                  The
Assignor represents and warrants that (i) it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to
fulfill its obligations hereunder, (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; and (iv) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligation of it, enforceable against it in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors’ rights and to general equitable principles.


 


(b)                                 The
Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
any other instrument or document furnished pursuant thereto. The Assignor makes
no representation or warranty in connection with, and assumes no responsibility
with respect to, the solvency, financial condition or statements of any of the
Loan Parties, or the performance or observance by any of the Loan Parties, of
any of their respective obligations under the Credit Agreement or other Loan
Documents or any other instrument or document furnished in connection
therewith.


 


(c)                                  The
Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder;;
(ii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and 


 


52

















 


performance of
this Assignment and Acceptance; and apart from any agreements or undertakings
or filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed
and delivered by it and constitutes the legal, valid and binding obligation of
it, enforceable against it in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors’ rights and to
general equitable principles; and (iv) the Assignee is an Eligible
Assignee.


 


8.                                       Further
Assurances


 


Each of the parties hereto hereby agrees to execute
and deliver such other instruments, and take such other action, as any party
hereto may reasonably request in connection with the transactions contemplated
by this Assignment and Acceptance, including the delivery of any notices or
other documents or instruments to the Borrowers or the Agent, which may be
required in connection with the assignment and assumption contemplated hereby.


 


9.                                       Miscellaneous


 


(a)                                  Any
amendment or waiver of any provision of this Assignment and Acceptance shall be
in writing and signed by the parties hereto. No failure or delay by any party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof and any waiver of any breach of the provisions of this
Assignment and Acceptance shall be without prejudice to any rights with respect
to any other or further breach thereof.


 


(b)                                 All
payments made hereunder shall be made without any set-off or counterclaim.


 


(c)                                  Each
of the parties hereto shall pay its own costs and expenses incurred in
connection with the negotiation, preparation, execution and performance of this
Assignment and Acceptance.


 


(d)                                 This
Assignment and Acceptance may be executed in any number of counterparts and all
of such counterparts taken together shall be deemed to constitute one and the
same instrument.


 


(e)                                  THIS
ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE PROVINCE OF ALBERTA. Each party to this Assignment and
Acceptance irrevocably submits to the non-exclusive jurisdiction of any
Provincial or Federal court sitting in Nova Scotia over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such Nova Scotia Provincial or Federal court.  Each party to this Assignment and Acceptance
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding.


 


53

















 


(f)                                    EACH
PARTY TO THIS ASSIGNMENT AND ACCEPTANCE HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).


 


[Signature Page Follows]


 


54

















 


IN WITNESS WHEREOF, the parties to
this Assignment and Acceptance have caused this Assignment and Acceptance to be
executed and delivered by its duly authorized officers or representatives as of
the date first above written.


 


 


	
   

  	
   

  	
  [ASSIGNOR]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [ASSIGNEE]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ROYAL BANK OF CANADA, as
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  



 

















 


SCHEDULE
I

to

ASSIGNMENT AND ACCEPTANCE


 


NOTICE OF ASSIGNMENT AND ACCEPTANCE


 


                         ,
20   


 


Royal Bank of Canada, as Agent

200 Bay Street, 12th Floor

Royal Bank Plaza, South Tower

Toronto, Ontario M5J 2W7

Attention:  Agency Services Group


 


[Gibson Acquisition ULC

Address

Attention:                                              ](1)


 


Re:                               Gibson
Acquisition ULC


 


Ladies and Gentlemen:


 


We refer to the Credit Agreement, dated as of December 12,
2008 (the “Credit Agreement”), among the financial institutions from time to
time parties thereto (such financial institutions, together with their
respective successors and permitted assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), Royal Bank of
Canada, as administrative agent and collateral agent for the Lenders (in its
capacity as administrative agent and collateral agent, together with any
successor administrative agent or collateral agent, the “Agent” ), Royal Bank
of Canada, as syndication agent (in such capacity, the “Syndication Agent”),
Royal Bank of Canada and UBS Securities LLC, as lead arrangers (in such
capacities, the “Arrangers”), UBS Securities LLC, as documentation agent (in
such capacities, the “Documentation Agent”), Gibson Acquisition ULC, an
unlimited liability company incorporated under the laws of the Province of
Alberta, as the borrower (the “Borrower”), and the Subsidiaries of the Borrower
identified on the title page and signature pages thereto as
guarantors (the “Guarantors”) and each Subsidiary of the Borrower that pursuant
to the provisions thereto becomes a Guarantor thereto after the Closing Date.


 






(1) Delete during the
continuance of an Event of Default.


 

















 


1.                                       We
hereby give you notice of, and request the consent of the Agent [and the Borrower](2) to, the assignment pursuant to
the Assignment and Acceptance attached hereto (the “Assignment and Acceptance”)
by                        (the “Assignor”) to                        
(the “Assignee”) of the Commitment Percentage of the right, title
and interest of the Assignor in and to the Credit Agreement (including the
right, title and interest of the Assignor in and to the Revolving Credit
Commitment of the Assignor and each of the outstanding Revolving Loans and L/C
Obligations (as defined in the Assignment and Acceptance) of the Assignor.


 


2.                                       The
Assignee agrees that, upon receiving the consent of the Agent, and if required,
the Borrower, to such assignment, the Assignee will be bound by the terms of
the Credit and to the same extent as if the Assignee were the Lender[s] originally holding such interest[s]
in the Credit Agreement.


 


3.                                       The
following administrative details apply to the Assignee:


 


(a)                                  Notice
Address:


 


	
  [Assignee name:

  
	
  Address:

  
	
   

  
	
  Attention:

  
	
  Telephone: (    )

  
	
  Telecopier. (    )

  
	
  Telex (Answerback):

  	
  ]

  



 


(b)                                 Payment
Instructions:


 


	
  [For Assignee

  
	
  Account No.:

  
	
  At:

  
	
   

  
	
  Reference:

  
	
  Attention:

  	
  ]

  



 


4.                                       You
are entitled to rely upon the representations, warranties and covenants of each
of the Assignor and Assignee contained in the Assignment and Acceptance.


 


[Signature Page Follows]


 






(2) Delete during the
continuance of an Event of Default.


 


2

















 


IN WITNESS WHEREOF, the Assignor
and the Assignee have caused this Notice of Assignment and Acceptance to be
executed by their respective duly authorized officers or representatives as of
the date first above mentioned.


 


 


	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


	
   

  	
  ROYAL BANK OF CANADA, as
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


 


ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO:


 


 


	
  Royal Bank of Canada, as Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gibson Acquisition ULC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 

















 


EXHIBIT
B


 


FORM OF BORROWING BASE CERTIFICATE


 


See attached


 

















 


EXHIBIT B


BORROWING
BASE REPORT


 


	
  FOR THE PERIOD ENDING

  	
   

  	
  [Month/Date], 200

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  



 


Borrower:                                            Gibson Acquisition ULC


 


For                              Credit Agreement dated
December 10, 2008


 


This
Certificate is delivered pursuant to the Credit Agreement (as amended,
restated, extended, supplemented, increased or otherwise modified in writing
from time to time, the “Credit Agreement”) dated as of December 10, 2008, by
and among, amongst others, Gibson Acquisition ULC (“Borrower”), the Borrower’s
subsidiaries as Guarantors, and Royal Bank of Canada, as Agent for the Lenders
and all other Secured Parties (as defined therein) (“Agent”). The capitalized
terms used herin shall have the same meanings as in the Credit Agreement.


 


Each of
the undersigned officers hereby certifies to Administrative Agent that:


 


(a)                                  such officer is the Corporate
Financial Officer of Gibson Acquisition ULC, respectively:


 


(b)                                 no Default or Event of Default
has occurred and is continuing;


 


(c)                                  a review of the activities of
Borrower and all other Borrowing Base Parties during the period ended       [Month/Date], 200   (the “Subject Period”) has been made with a
view to determining the amount of the current Borrowing Base;


 


(d)                                 the accounts receivable of
Borrowing Base Parties included under the caption “A. Borrowing Base Assets” in
the attached pages conform to the requirements and definitions of
“Eligible Receivables,” “Billed Net Eligible Receivables,” “Billed Net Approved
Eligible Receivables,” “Unbilled Net Eligible Receivables,” “Unbilled Net
Approved Eligible Receivables,” “Other Billed Eligible Receivables,” “Other
Unbilled Eligible Receivables” and “Eligible Exchange Receivables,” as provided
for in the Credit Agreement;


 


(e)                                  the representations and
warranties contained in the Credit Agreement and the other Loan Documents are
correct in all material respects as though made on and as of such date, other
than any such respresentations or warranty which relates to a specified prior
date (which shall be correct as of such specified prior date) and except to the
extent the Agent, the Agent and the Lenders have been notified in writing by
the Borrower and any representation or warranty is nor correct and the Required
Lenders have explicity waived in writing compliance with such representation or
warranty;


 


(f)                                    the following information is
true and correct in all material respects as of the last day of the Subject
Period:


 


	
   

  	
   

  	
   

  	
   

  	
  All amounts
  in $CDN converted at: 

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Borrowing Base Assets

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
   

  	
  100% of
  Eligible Cash Equivalents - only applicable as it relates to lender control
  account and only when the lender has cash dominion

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
  $US     (i) Account                   :

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
   

  	
  85% of
  Billed Net Approved Eligible Receivables:

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
   

  	
  Unbilled
  eligible receivables, lesser of: 

  80% of Unbilled Net Approved Eligible Receivables:

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1/3 of Net
  available From A/R (#2)

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)

  	
   

  	
  Total
  available from receivables

  	
  [ 2+ 3]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (5)

  	
   

  	
  80% of
  Hedged Eligible Inventory

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  



 

















 


	
   

  	
   

  	
  (6)

  	
   

  	
  60% of
  Non-Hedged, eligible inventory

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (7)

  	
   

  	
  Total
  Available from Inventory

  	
  [ 5 + 6 ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (8)

  	
   

  	
  Less Mark to
  market position of hedges from any lender (negative is unfavourable to
  client)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (9)

  	
   

  	
  Gross
  available from collateral 

  	
  [ 1 +4 + 5 ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (9)

  	
   

  	
  Gross
  available from collateral

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (10)

  	
   

  	
  Facility
  maximum

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  100,000,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1l)

  	
   

  	
  Available
  from collateral 

  	
  [ lesser of
  9 or 10 ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Borrowing
  Base Deductions (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (12)

  	
   

  	
  100% of
  Other Priority Claims (as more specifically described on the attached
  schedule):

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (13)

  	
   

  	
  Borrowing
  Base Subtotal: 

  	
  [ 11 - 12 ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Net
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (14)

  	
   

  	
  Borrowing
  Base Subtotal 

  	
  [ 13 ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (15)

  	
   

  	
  Less:
  Priority payables 

  	
  - see attached

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (16)

  	
   

  	
  Less:
  outstanding Letters of Credit 

  	
  - see attached

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (17)

  	
   

  	
  Less: Loan
  balance

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (18)

  	
   

  	
  Total Uses 

  	
  [ 15 + 16 + 17 ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (19)

  	
   

  	
  Net Available
  

  	
  [ 14 - 18 ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  



 


The
information reflected above and the information reflected on the schedules
attached hereto are true and correct in all material respects.


 


 


	
   

  	
   

  
	
  Signed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date

  	
   

  



 














 


EXHIBIT
C


 


FINANCIAL STATEMENTS


 


(On file with Company)


 

















 


EXHIBIT
D


 


[FORM OF] NOTICE OF BORROWING


 


Date:                                     ,
20    


 


To:                              Royal
Bank of Canada, as Agent for the Lenders referred to below

200 Bay Street, 12th Floor

Royal Bank Plaza, South Tower

Toronto, Ontario M5J 2W7

Attention:  Agency Services Group


 


Ladies and Gentlemen:


 


Reference is made to the Credit Agreement, dated as of December 12,
2008 (the “Credit Agreement”), among the financial institutions from time to
time parties thereto (such financial institutions, together with their
respective successors and permitted assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), Royal Bank of
Canada, as administrative agent and collateral agent for the Lenders (in its
capacity as administrative agent and collateral agent, together with any
successor administrative agent or collateral agent, the “Agent”), Royal Bank of
Canada, as syndication agent (in such capacity, the “Syndication Agent”), Royal
Bank of Canada and UBS Securities LLC, as lead arrangers (in such capacities,
the “Arrangers”), UBS Securities LLC, as documentation agent (in such
capacities, the “Documentation Agent”), Gibson Acquisition ULC, an unlimited
liability company incorporated under the laws of the Province of Alberta, as
the borrower (the “Borrower”), the Subsidiaries of the Borrower identified on
the title page and signature pages thereto as guarantors (the “Guarantors”)
and each Subsidiary of the Borrower that pursuant to the provisions thereto
becomes a Guarantor thereto after the Closing Date.


 


The Borrower
hereby gives you notice (which notice shall be irrevocable) pursuant to Section 1.2
of the Credit Agreement that it requests a Borrowing as specified below:


 


(1)                                  Aggregate
Amount of proposed Borrowing(1):                                        


 


(2)                                  Requested
Funding
Date:                            (which
is a Business Day)


 


(3)                                  Amount
of [Prime Rate] [BA Equivalent]
[LIBOR] [ABR] Revolving Loans(2):


 


(4)                                  Duration
of [BA Equivalent] [LIBOR] Interest Period
for proposed LIBOR Revolving Loans(3):


 






(1) (a) In the case of
a BA Equivalent Revolving Loan not less than $1,000,000 and in increments of
$100,000, and (b) in the case of a LIBOR Revolving Loan not less than
U.S.$1,000,000 (and increments of U.S.$100,000), but in any event not exceeding
the Availability or the Borrowing Base.


 


(2) If not specified,
it shall be deemed a request for a Prime Rate Revolving Loan.


 

















 


The Borrower hereby
certifies that the following statements are true on and as of the date of the
proposed Borrowing:


 


(a)                                  The
representations and warranties contained in the Credit Agreement and the other
Loan Documents are correct in all material respects as though made on and as of
such date, other than any such representation or warranty which relates to a
specified prior date (which shall be correct as of such specified prior date)
and except to the extent the Agent  and the
Lenders have been notified in writing by the Borrower that any representation
or warranty is not correct and the Required Lenders have explicitly waived in
writing compliance with such representation or warranty;


 


(b)                                 No
Event of Default has occurred and is continuing, or would result from such
proposed Borrowing; and


 


(c)                                  The
proposed Borrowing set forth above will not exceed the most recently calculated
Availability (delivered under the most recently submitted Borrowing Base
Certificate) or the Borrowing Base.


 


 


	
   

  	
  GIBSON ACQUISITION ULC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 






(3) If not specified,
it shall be deemed a request for a LIBOR Interest Period or BA Equivalent
Interest Period of one month.


 


2

















 


EXHIBIT
E


 


[FORM OF] NOTICE OF CONTINUATION/CONVERSION


 


Date:                                          ,
20   


 


To:                              Royal
Bank of Canada, as Agent for the Lenders referred to below

200 Bay Street, 12th Floor

Royal Bank Plaza, South Tower

Toronto, Ontario M5J 2W7

Attention:  Agency Services Group


 


Ladies and Gentlemen:


 


Reference is made to the Credit Agreement, dated as of December 12,
2008 (the “Credit Agreement”), among the financial institutions from time to
time parties thereto (such financial institutions, together with their
respective successors and permitted assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), Royal Bank of
Canada, as administrative agent and collateral agent for the Lenders (in its
capacity as administrative agent and collateral agent, together with any
successor administrative agent or collateral agent, the “Agent”), Royal Bank of
Canada, as syndication agent (in such capacity, the “Syndication Agent”), Royal
Bank of Canada and UBS Securities LLC, as lead arrangers (in such capacities,
the “Arrangers”), UBS Securities LLC, as documentation agent (in such
capacities, the “Documentation Agent”), Gibson Acquisition ULC, an unlimited
liability company incorporated under the laws of the Province of Alberta, as
the borrower (the “Borrower”), the Subsidiaries of the Borrower identified on
the title page and signature pages thereto as guarantors (the “Guarantors”)
and each Subsidiary of the Borrower that pursuant to the provisions thereto
becomes a Guarantor thereto after the Closing Date.


 


Borrower hereby
gives you notice pursuant to Section [2.2] of the
Credit Agreement that it requests a [continuation][conversion]
[repayment]  [reduction
of Commitment] of the Revolving Loans as specified below:


 


(1)                                  Proposed
[Continuance][Conversion]  [repayment]  [reduction of Commitment]
Date:                    


 


(2)                                  Aggregate
amount and type of Revolving Loans to be [converted][continued]
[repaid](1) [reduced](2):                                 


 


(3)                                  Type
of Revolving Loans resulting from the proposed [conversion][continuation]:        


 






(1) Borrower may elect to repay all or a portion of Loans in
accordance with Section 3.1.


 


(2) Borrower may elect to repay all or a portion of Loans in
accordance with Section 3.1.


 

















 


(4)                                  Duration
of requested [BA Equivalent] [LIBOR] Interest
Period(3):


 


 


	
   

  	
  GIBSON ACQUISITION ULC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 






(3) Borrower may not
select a BA Equivalent or LIBOR Interest Period that ends after the Stated
Termination Date.


 


2

















 


EXHIBIT
F


 


[FORM OF] DESIGNATION OF DESIGNATED ACCOUNT


 


Date:                                         ,
20   


 


To:                              Royal
Bank of Canada, as Agent for the Lenders referred to below

200 Bay Street, 12th Floor

Royal Bank Plaza, South Tower

Toronto, Ontario M5J 2W7

Attention:  Agency Services Group


 


Ladies and Gentlemen:


 


Reference is made to the Credit Agreement, dated as of December 12,
2008 (the “Credit Agreement”), among the financial institutions from time to
time parties thereto (such financial institutions, together with their
respective successors and permitted assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), Royal Bank of
Canada, as administrative agent and collateral agent for the Lenders (in its
capacity as administrative agent and collateral agent, together with any
successor administrative agent or collateral agent, the “Agent”), Royal Bank of
Canada, as syndication agent (in such capacity, the “Syndication Agent”), Royal
Bank of Canada and UBS Securities LLC, as lead arrangers (in such capacities,
the “Arrangers”), UBS Securities LLC, as documentation agent (in such
capacities, the “Documentation Agent”), Gibson Acquisition ULC, an unlimited
liability company incorporated under the laws of the Province of Alberta, as
the borrower (the “Borrower”), the Subsidiaries of the Borrower identified on
the title page and signature pages thereto as guarantors (the “Guarantors”)
and each Subsidiary of the Borrower that pursuant to the provisions thereto
becomes a Guarantor thereto after the Closing Date.


 


Borrower hereby
gives you notice pursuant to Section 1.2(c) of the Credit Agreement
that it designates a replacement Designated Account as specified below:


 


Bank Name:


Bank Address:


ABA#:


Account #:


Reference:


 


 


	
   

  	
  GIBSON ACQUISITION ULC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT
G


 


[FORM OF] RESPONSIBLE OFFICERS’ CERTIFICATE


 


TO:                            Royal
Bank of Canada, as Agent


 


The undersigned,
                                        
[TITLE of AUTHORIZED SIGNING OFFICERS],
of Gibson Acquisition ULC (the “Borrower”), pursuant to Section 5.2 of the
Credit Agreement dated as of December 12, 2008, by and among, amongst
others, Royal Bank of Canada, as Agent, and the Borrower (as amended, restated,
supplemented, replaced or otherwise modified from time to time the “Credit
Agreement”), DO HEREBY CERTIFY in their
capacities as authorized signing officers of the Borrowers and not in their
personal capacities that:


 


1.                                       The
financial statements attached hereto fairly and accurately represent the Borrower’s
financial position at the end of the particular accounting period set out in
such financial statements, as well as the Borrowers’ and their Subsidiaries’
operating results during such accounting period, subject to normal year-end
audit adjustments and the absence of footnotes;


 


2.                                       A
review of such financial statements and of the activities of the Borrower and
its Subsidiaries during the period covered by such financial statements has
been made under my supervision has been made with a view to determining whether
the Borrower and the Subsidiaries have fulfilled all of their obligations;


 


3.                                       During
the accounting period set out in such financial statements:


 


(a)                                  the
Borrower and its Subsidiaries have fulfilled each of its respective obligations
under each of the Loan Documents to which it is a party;


 


(b)                                 there
has been no Default or Event of Default under the Credit Agreement,


 


(c)                                  the
representation and warranties contained in the Credit Agreement and the other
Loan Documents are correct in all material respects on and as of the date
hereof as though made on and as of such date (unless otherwise updated pursuant
hereto in the attached Annex 1), other than any such representation or warranty
which relates to a specified prior date and except to the extent that the Agent
has been notified in writing by the Borrower that any representation or
warranty is not correct and the Required Lenders have explicitly waived in
writing compliance with such representation or warranty;


 


(d)                                 the
Borrower has been in compliance with all covenants set out in the Credit
Agreement and, specifically, set out in Section 7.26  (for
the required period in which such covenant must be calculated) of the Credit
Agreement as evidenced by the statements and calculations attached hereto as
Annex A;


 


(e)                                  Annex
B hereto indicates whether any new Subsidiary was formed or acquired since the
end of the previous calendar month;


 

















 


(f)                                    no
change in GAAP or in the application thereof has occurred since the date of the
most recent audited annual financial statements of the Borrower delivered to
the Agent [Note to Draft: - If a change has occurred,
specify the details of the change and its effect on the accompanying financial
statements].


 


[Note
to Draft:  if any of the foregoing is
incorrect, revise wording accordingly to include particulars of any variation.]


 


4.                                       Capitalized
terms used herein and not otherwise defined shall have the meanings given to
such terms in the Credit Agreement.


 


IN
WITNESS WHEREOF, the undersigned has
executed this Responsible Officers’ certificate on behalf of the Borrowers as
of the
              
day of
                                ,
200   .


 


 


	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


2

















 


Exhibit H


 


[FORM OF] GUARANTOR ADHESION AGREEMENT


 


GUARANTOR
ADHESION AGREEMENT


 


(Guarantors)


 


(“[Corporation
name]”)


 


To:                              Royal
Bank of Canada, as Agent for the Lenders referred to below

200 Bay Street, 12th Floor

Royal Bank Plaza, South Tower

Toronto, Ontario M5J 2W7

Attention:  Agency Services Group


 


Ladies and Gentlemen:


 


Reference is made to the Credit Agreement, dated as of December 12,
2008 (the “Credit Agreement”), among the financial institutions from time to
time parties thereto (such financial institutions, together with their
respective successors and permitted assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), Royal Bank of
Canada, as administrative agent and collateral agent for the Lenders (in its
capacity as administrative agent and collateral agent, together with any
successor administrative agent or collateral agent, the “Agent”), Royal Bank of
Canada, as syndication agent (in such capacity, the “Syndication Agent”), Royal
Bank of Canada and UBS Securities LLC, as lead arrangers (in such capacities,
the “Arrangers”), UBS Securities LLC, as documentation agent (in such
capacities, the “Documentation Agent”), Gibson Acquisition ULC, an unlimited
liability company incorporated under the laws of the Province of Alberta, as
the borrower (the “Borrower”), the Subsidiaries of the Borrower identified on
the title page and signature pages thereto as guarantors (the “Guarantors”)
and each Subsidiary of the Borrower that pursuant to the provisions thereto
becomes a Guarantor thereto after the Closing Date.


 


WHEREAS,
the Credit Agreement requires that the Borrower cause each of its direct and
indirect wholly-owned Subsidiaries (individually, a “Guarantor”,
and collectively, the “Guarantors”) to
execute the Credit Agreement whereby the Guarantors guarantee the performance
of the Borrower’s Obligations, as defined in the Credit Agreement, to the
Lenders;


 


AND
WHEREAS, the undersigned is a direct and indirect
wholly-owned Subsidiary of the Borrower acquired or formed by the Borrower
subsequent to the effective date of the Credit Agreement and, pursuant to the
terms and conditions of the Credit Agreement, is required to execute a
counterpart to the Credit Agreement.


 


NOW
THEREFORE, for good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the undersigned agrees as
follows:


 


1.                                       The
undersigned hereby acknowledges that it has recently become a direct or
indirect wholly-owned Subsidiary of the Borrower.


 

















 


2.                                       In
such capacity, the undersigned hereby (i) acknowledges and agrees to be
bound by all the terms of the Credit Agreement applicable to Guarantors, (ii) acknowledges
having read the Credit Agreement, and (iii) affirms the Obligations, as
defined in the Credit Agreement, (including the Guaranteed Obligations, as
defined in the Credit Agreement) imposed on it under the Credit Agreement and
in addition, without limitation, the terms of Section 13 thereof.


 


EXECUTED as of
this            day of
                                      ,
20      .


 


 


	
   

  	
  ·

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
  I have the authority to
  bind the Corporation

  



 


2






 










 


EXHIBIT
I


 


FORM OF
LETTER OF CREDIT


 


[INT’L
TRADE CENTRE ALBERTA

5TH FLOOR,

335 - 8TH AVENUE SW

CALGARY, ALBERTA T2P 1C9

CANADA]


 


	
  DATE OF ISSUE:

  	
  ·

  	
  OUR REFERENCE NUMBER:

  	
  ·

  
	
   

  	
   

  	
   

  	
   

  
	
  DATE OF EXPIRY:

  	
  ·

  	
   

  
	
   

  	
   

  	
   

  
	
  PLACE OF EXPIRY:

  	
  ·

  	
   

  
	
   

  	
   

  	
   

  
	
  BENEFICIARY:

  	
  APPLICANT:

  
	
   

  	
   

  
	
  [NAME]

  	
  [GIBSON ACQUISITION ULC]

  
	
   

  	
   

  
	
  [ADDRESS]

  	
  [ADDRESS]

  
	
   

  	
   

  
	
  ATTENTION:

  	
  ATTENTION:

  



 


AMOUNT: [CAD/US$]  · AND
·
00/100’S [CANADIAN/UNITED STATES] DOLLARS


 


IRREVOCABLE
STANDBY LETTER OF CREDIT NO. ·


 


DEAR SIR/MADAM:


 


AT THE REQUEST OF
THE APPLICANT, THE BANKS AND OTHER FINANCIAL INSTITUTIONS NAMED UNDER THE
HEADING ON THE SIGNATURE PAGES AS “ISSUING LENDERS:” (COLLECTIVELY, THE “ISSUING
LENDERS” AND, INDIVIDUALLY AN “ISSUING LENDER”) HEREBY ESTABLISH IN YOUR FAVOUR
AS BENEFICIARY THIS IRREVOCABLE STANDBY LETTER OF CREDIT NO. · FOR
A SUM NOT EXCEEDING · AND 00/100’S [CANADIAN/UNITED STATES] DOLLARS (CAD/U.S. ·.00).
ROYAL BANK OF CANADA, IN ADDITION TO ACTING IN ITS INDIVIDUAL CAPACITY AS AN
ISSUING LENDER HEREUNDER, IS ACTING AS AGENT FOR THE OTHER ISSUING LENDERS
HEREUNDER (IN SUCH CAPACITY, TOGETHER WITH ITS SUCCESSORS IN SUCH CAPACITY, THE
“AGENT”).


 

















 


THIS LETTER OF
CREDIT IS ISSUED PURSUANT TO THE CREDIT AGREEMENT DATED AS OF DECEMBER 12, 2008
(AS AMENDED, MODIFIED, VARIED OR RESTATED FROM TIME TO TIME, THE “CREDIT
AGREEMENT”) BY AND AMONG, AMONGST OTHERS, GIBSON ACQUISITION ULC, AS BORROWER,
ROYAL BANK OF CANADA AND THOSE FINANCIAL INSTITUTIONS NAMED ON THE SIGNATURE
PAGES THERETO, AS LENDERS, AND ROYAL BANK OF CANADA, AS AGENT.


 


THIS STANDBY
LETTER OF CREDIT SHALL REMAIN IN EFFECT UNTIL ·
(THE “EXPIRY DATE”).


 


[IT IS
A CONDITION OF THIS LETTER OF CREDIT THAT IT WILL BE AUTOMATICALLY EXTENDED,
WITHOUT AMENDMENT, FOR · MONTHS FROM THE PRESENT EXPIRY DATE HEREOF,OR ANY FUTURE EXPIRATION
DATE, UNLESS AT LEAST THIRTY (30) DAYS PRIOR TO ANY SUCH EXPIRY DATE, WE NOTIFY
YOU IN WRITING, BY REGISTERED MAIL OR COURIER, AT YOUR ADDRESS SPECIFIED ABOVE,
OR ANY OTHER YOU HAVE ADVISED TO THIS DEPARTMENT IN WRITING, THAT THIS LETTER
OF CREDIT WILL NOT BE RENEWED FOR ANY SUCH ADDITIONAL PERIOD.]


 


THE BENEFICIARY MAY DEMAND
A PAYMENT BY THE ISSUING LENDERS UNDER THIS LETTER OF CREDIT BY PROVIDING TO
THE AGENT ON OR BEFORE THE EXPIRY DATE AT ITS ADDRESS AT [ADDRESS]
THE FOLLOWING:


 


[A
CERTIFICATE IN THE FORM OF SCHEDULE “A” SIGNED BY THE BENEFICIARY, AND THE
ORIGINAL OF THIS LETTER OF CREDIT.]


 


EACH ISSUING
LENDER HEREBY UNDERTAKES, SEVERALLY ACCORDING TO THE PERCENTAGE SET FORTH NEXT
TO ITS SIGNATURE BELOW (SUCH ISSUING LENDER’S “APPLICABLE PERCENTAGE”) AND NOT
JOINTLY OR JOINTLY AND SEVERALLY WITH ANY OTHER ISSUING LENDER, THAT DRAFTS
DRAWN UNDER AND IN STRICT COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT
WILL BE DULY HONOURED BY PAYING TO THE AGENT SUCH ISSUING LENDER’S SHARE
(ACCORDING TO ITS APPLICABLE PERCENTAGE) OF THE AMOUNT OF SUCH DRAFT. THE AGENT
HEREBY UNDERTAKES THAT ANY AMOUNT SO RECEIVED BY IT WILL BE MADE AVAILABLE TO
YOU BY PROMPTLY REMITTING THE PAYMENT SO RECEIVED, IN LIKE FUNDS, IN ACCORDANCE
WITH YOUR INSTRUCTIONS.


 


THE OBLIGATION OF
EACH ISSUING LENDER UNDER THIS LETTER OF CREDIT IS SEVERAL AND NOT JOINT OR
JOINT AND SEVERAL AND SHALL AT ALL TIMES BE AN AMOUNT EQUAL TO SUCH ISSUING
LENDER’S APPLICABLE PERCENTAGE OF THE AGGREGATE UNDRAWN AMOUNT OF THIS LETTER
OF CREDIT (AND OF EACH DRAWING UNDER THIS LETTER OF CREDIT).


 


THIS LETTER OF
CREDIT HAS BEEN EXECUTED AND DELIVERED BY THE AGENT IN THE NAME AND ON BEHALF
OF, AND AS ATTORNEY-IN-FACT FOR, EACH ISSUING LENDER. THE AGENT ISAUTHORIZED TO
ACT UNDER THIS LETTER OF CREDIT AS THE AGENT OF EACH ISSUING LENDER IN ORDER
TO:


 


2

















 


(A)          RECEIVE DRAFTS, OTHER DEMANDS FOR
PAYMENT AND OTHER DOCUMENTS PRESENTED BY YOU UNDER THIS LETTER OF CREDIT;


 


(B)           DETERMINE WHETHER SUCH DRAFTS,
DEMANDS AND DOCUMENTS ARE IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS
LETTER OF CREDIT; AND


 


(C)           NOTIFY SUCH ISSUING LENDER THAT A
VALID DRAWING HAS BEEN MADE AND THE DATE THAT THE RELATED DISBURSEMENT IS TO BE
MADE.


 


THE AGENT
UNDERTAKES THAT IT WILL PROMPTLY NOTIFY EACH ISSUING LENDER OF ANY VALID
DRAWING UNDER THIS LETTER OF CREDIT.


 


BY YOUR
ACCEPTANCE HEREOF, YOU AGREE THAT THE AGENT SHALL HAVE NO OBLIGATION OR
LIABILITY TO HONOUR ANY DRAWING UNDER THIS LETTER OF CREDIT (SUBJECT TO THE
LIABILITY OF ROYAL BANK OF CANADA IN ITS CAPACITY AS AN ISSUING LENDER AND THE
OBLIGATION OF THE AGENT TO REMIT FUNDS PAID TO THE AGENT FROM AN ISSUING
LENDER,AS SET FORTH ABOVE) AND THAT NEITHER ANY ISSUING LENDER NOR THE AGENT
SHALL BE RESPONSIBLE FOR THE FAILURE OF ANY OTHER ISSUING LENDER TO MAKE A PAYMENT
TO BE MADE BY SUCH OTHER ISSUING LENDER HEREUNDER.


 


FOR THE PURPOSE
OF THIS LETTER OF CREDIT:


 


“BUSINESS DAY”
MEANS A DAY OTHER THAN A SATURDAY, SUNDAY OR STATUTORY HOLIDAY ON WHICH BANKING
INSTITUTIONS ARE OPEN FOR BUSINESS IN THE PROVINCES OF ONTARIO AND ALBERTA.


 


EACH ISSUING
LENDER SHALL PAY TO THE AGENT AT THE ACCOUNT DESIGNATED BY THE AGENT FOR THE
ACCOUNT OF THE BENEFICIARY, THE AMOUNT STATED IN THE CERTIFICATE AS BEING
PAYABLE BY SUCH ISSUING LENDER WITHOUT INQUIRING WHETHER THE BENEFICIARY HAS A
RIGHT TO SUCH AMOUNT AS BETWEEN THE BENEFICIARY AND THE APPLICANT, PROVIDED
THAT SUCH AMOUNT DOES NOT EXCEED SUCH ISSUING LENDER’S APPLICABLE PERCENTAGE OF
THE AMOUNT OF THIS LETTER OF CREDIT. [IF THE BENEFICIARY
PRESENTS THE AGENT WITH THE CERTIFICATE AND THE ORIGINAL OF THIS LETTER OF
CREDIT BEFORE ·
A.M. ([MOUNTAIN] TIME) ON ANY BUSINESS DAY,
PAYMENT WILL BE MADE BY THE ISSUING LENDERS TO THE AGENT FOR THE ACCOUNT OF THE
BENEFICIARY, NO LATER THAN ·  P.M. ([MOUNTAIN] TIME) ON
THE SECOND BUSINESS DAY AFTER SUCH PRESENTMENT. IF THE BENEFICIARY PRESENTS THE
AGENT WITH THE CERTIFICATE AND THE ORIGINAL OF THIS LETTER OF CREDIT AFTER ·  A.M. ([MOUNTAIN] TIME) ON ANY BUSINESS DAY, PAYMENT WILL BE MADE BY THE
ISSUING LENDERS TO THE AGENT FOR THE ACCOUNT OF THE BENEFICIARY, NO LATER THAN ·  P.M. ([MOUNTAIN] TIME) ON THE THIRD BUSINESS DAY AFTER SUCH
PRESENTMENT. THE AGENT SHALL PAY ALL AMOUNTS RECEIVED BY IT FROM THE ISSUING
LENDERS UNDER THIS LETTER OF CREDIT TO THE BENEFICIARY NO LATER THAN THE NEXT
BUSINESS DAY AFTER THE BUSINESS DAY THAT THE AGENT RECEIVES SUCH 


 


3

















 


AMOUNTS
FROM THE ISSUING LENDERS.] THE AGENT SHALL BE UNDER NO
OBLIGATION TO PAY TO THE BENEFICIARY ANY AMOUNTS THAT ARE DEMANDED UNDER THIS
LETTER OF CREDIT, THAT ARE NOT RECEIVED FOR THE ACCOUNT OF THE BENEFICIARY BY
THE AGENT FROM THE ISSUING LENDERS.


 


[PARTIAL
AND MULTIPLE DRAWINGS ARE PERMITTED UNDER THIS LETTER OF CREDIT.]


 


THIS LETTER OF
CREDIT MAY BE CANCELLED AT ANY TIME ON WRITTEN NOTICE SIGNED BY BOTH THE
BENEFICIARY AND THE APPLICANT.


 


EXCEPT AS
OTHERWISE EXPRESSLY STATED, THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS
AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500.


 


AN ISSUING LENDER
MAY, SUBJECT TO THE REPLACEMENT THEREOF WITH A NEW LENDER UNDER THE CREDIT
AGREEMENT, CEASE TO BE A PARTY TO, AND A NEW LENDER MAY BECOME A PARTY TO,
THIS LETTER OF CREDIT AND THE APPLICABLE PERCENTAGE OF AN ISSUING LENDER MAY CHANGE
AS A RESULT THEREOF; PROVIDED THAT NO SUCH EVENT WILL REDUCE THE THEN AVAILABLE
AMOUNT UNDER THIS LETTER OF CREDIT. UPON THE OCCURRENCE OF ANY SUCH EVENT, THE
AGENT WILL PROVIDE PROMPT NOTICE TO YOU OF SUCH EVENT, INCLUDING ANY CHANGE IN
THE IDENTITIES OF THE ISSUING LENDERS SEVERALLY BUT NOT JOINTLY OR JOINTLY AND
SEVERALLY LIABLE IN RESPECT OF THE AGGREGATE UNDRAWN AMOUNT OF THIS LETTER OF
CREDIT (BASED UPON THEIR RESPECTIVE APPLICABLE PERCENTAGES THEREOF) AND ANY
CHANGE IN SUCH APPLICABLE PERCENTAGES.


 


 


	
  ROYAL BANK OF CANADA, AS
  AGENT

  	
   

  
	
   

  	
   

  
	
   

  
	
  Per:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  APPLICABLE PERCENTAGE

  	
  ISSUING LENDERS:

  
	
   

  	
   

  
	
  ·%

  	
  [NAME OF BANK]

  
	
  [BY ROYAL BANK OF CANADA,
  AS ATTORNEY-IN-FACT,]

  	
   

  
	
   

  	
   

  
	
  Per:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


4

















 


	
  ·%

  	
  [NAME OF BANK]

  
	
  [BY ROYAL BANK OF CANADA,
  AS ATTORNEY-IN-FACT,]

  	
   

  
	
   

  	
   

  
	
  Per:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ·%

  	
  [NAME OF BANK]

  
	
  [BY ROYAL BANK OF CANADA,
  AS ATTORNEY-IN-FACT,]

  	
   

  
	
   

  	
   

  
	
  Per:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


5

















 


SCHEDULES


 


(On file with company)