Exhibit 10.2


 




 





CDN. $100,000,000 REVOLVING
CREDIT FACILITY




 





 


CREDIT AGREEMENT


 


BETWEEN


 


RPC ACQUISITION COMPANY

as Borrower


 


AND


 


ROYAL BANK OF CANADA,

BANK OF AMERICA, N.A. CANADA BRANCH,

BANK OF MONTREAL,

THE BANK OF NOVA SCOTIA,

BNP PARIBAS (CANADA),

CONGRESS FINANCIAL CORPORATION (CANADA) and

UNION BANK OF CALIFORNIA, N.A., CANADA BRANCH

and such other persons as become parties hereto as lenders,

as Lenders


 


AND


 


ROYAL BANK OF CANADA 

as Agent of the Lenders


 


MADE AS OF MAY 11, 2004


 




 





RBC Capital Markets

as Lead Arranger and Book Manager


 


Royal Bank of Canada 

as Administrative Agent


 


Bank of America, N.A., Canada
Branch

as Syndication Agent




 





 

















 


TABLE OF CONTENTS


 


CREDIT AGREEMENT


 


	
  ARTICLE 1 - INTERPRETATION

  	
   

  
	
  1.1

  	
  Definitions

  	
   

  
	
  1.2

  	
  Headings; Articles and
  Sections

  	
   

  
	
  1.3

  	
  Number; persons; including

  	
   

  
	
  1.4

  	
  Accounting Principles

  	
   

  
	
  1.5

  	
  References to
  Agreements and Enactments

  	
   

  
	
  1.6

  	
  References to
  “Subsidiaries” and “Wholly-Owned Subsidiaries”

  	
   

  
	
  1.7

  	
  Per Annum Calculations

  	
   

  
	
  1.8

  	
  No Guarantee
  by Pacific Energy Partners, L.P. and its U.S. Affiliates

  	
   

  
	
  1.9

  	
  Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 - THE
  CREDIT FACILITY

  	
   

  
	
  2.1

  	
  The
  Credit Facility

  	
   

  
	
  2.2

  	
  Types of Availments

  	
   

  
	
  2.3

  	
  Purpose

  	
   

  
	
  2.4

  	
  Availability
  and Nature of the Credit Facility

  	
   

  
	
  2.5

  	
  Minimum Drawdowns

  	
   

  
	
  2.6

  	
  Libor Loan Availability

  	
   

  
	
  2.7

  	
  Notice Periods
  for Drawdowns, Conversions and Rollovers

  	
   

  
	
  2.8

  	
  Conversion Option

  	
   

  
	
  2.9

  	
  Libor Loan
  Rollovers; Selection of Libor Interest Periods

  	
   

  
	
  2.10

  	
  Rollovers and
  Conversions not Repayments

  	
   

  
	
  2.11

  	
  Agent’s
  Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans
  and Libor Loans

  	
   

  
	
  2.12

  	
  Lenders’ and
  Agent’s Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate
  Loans and Libor Loans

  	
   

  
	
  2.13

  	
  Irrevocability

  	
   

  
	
  2.14

  	
  Optional
  Cancellation or Reduction of Credit Facility

  	
   

  
	
  2.15

  	
  Optional
  Repayment of Credit Facility

  	
   

  
	
  2.16

  	
  Mandatory
  Repayment of Credit Facility

  	
   

  
	
  2.17

  	
  Additional Repayment Terms

  	
   

  
	
  2.18

  	
  Currency Excess

  	
   

  
	
  2.19

  	
  Hedging with
  Lenders and Hedging Affiliates

  	
   

  
	
  2.20

  	
  Hostile Acquisitions

  	
   

  
	
  2.21

  	
  Overdraft / Swingline Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 - CONDITIONS PRECEDENT TO DRAWDOWNS

  	
   

  
	
  3.1

  	
  Conditions for Drawdowns

  	
   

  
	
  3.2

  	
  Additional
  Conditions for First Drawdown

  	
   

  
	
  3.3

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 -
  EVIDENCE OF DRAWDOWNS

  	
   

  
	
  4.1

  	
  Account of Record

  	
   

  



 

















 


	
  ARTICLE
  5 - PAYMENTS OF INTEREST AND FEES

  	
   

  
	
  5.1

  	
  Interest on
  Canadian Prime Rate Loans

  	
   

  
	
  5.2

  	
  Interest on U.S. Base
  Rate Loans

  	
   

  
	
  5.3

  	
  Interest on Libor Loans

  	
   

  
	
  5.4

  	
  Interest
  Act (Canada)

  	
   

  
	
  5.5

  	
  Nominal Rates; No
  Deemed Reinvestment

  	
   

  
	
  5.6

  	
  Standby Fees

  	
   

  
	
  5.7

  	
  Agent’s Fees

  	
   

  
	
  5.8

  	
  Interest on Overdue Amounts

  	
   

  
	
  5.9

  	
  Waiver

  	
   

  
	
  5.10

  	
  Maximum Rate Permitted by
  Law

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 -
  BANKERS’ ACCEPTANCES

  	
   

  
	
  6.1

  	
  Bankers’ Acceptances

  	
   

  
	
  6.2

  	
  Fees

  	
   

  
	
  6.3

  	
  Form and
  Execution of Bankers’ Acceptances

  	
   

  
	
  6.4

  	
  Power
  of Attorney; Provision of Bankers’ Acceptances to Lenders

  	
   

  
	
  6.5

  	
  Mechanics of Issuance

  	
   

  
	
  6.6

  	
  Rollover,
  Conversion or Payment on Maturity

  	
   

  
	
  6.7

  	
  Restriction on
  Rollovers and Conversions

  	
   

  
	
  6.8

  	
  Rollovers

  	
   

  
	
  6.9

  	
  Conversion into
  Bankers’ Acceptances

  	
   

  
	
  6.10

  	
  Conversion from
  Bankers’ Acceptances

  	
   

  
	
  6.11

  	
  BA Equivalent Advances

  	
   

  
	
  6.12

  	
  Termination of
  Bankers’ Acceptances

  	
   

  
	
  6.13

  	
  Borrower Acknowledgements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 - LETTERS OF
  CREDIT

  	
   

  
	
  7.1

  	
  Availability

  	
   

  
	
  7.2

  	
  Currency,
  Type, Form and Expiry

  	
   

  
	
  7.3

  	
  No Conversion

  	
   

  
	
  7.4

  	
  POA LC Provisions

  	
   

  
	
  7.5

  	
  Fronted LC Provisions

  	
   

  
	
  7.6

  	
  Records

  	
   

  
	
  7.7

  	
  Reimbursement
  or Conversion on Presentation

  	
   

  
	
  7.8

  	
  Fronting Lender Indemnity

  	
   

  
	
  7.9

  	
  Fees and Expenses

  	
   

  
	
  7.10

  	
  Additional Provisions

  	
   

  
	
  7.11

  	
  Certain
  Notices to the Agent with Respect to Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8
  - PLACE AND APPLICATION OF PAYMENTS

  	
   

  
	
  8.1

  	
  Place of Payment of Principal,
  Interest and Fees; Payments to Agent

  	
   

  
	
  8.2

  	
  Designated Accounts of the
  Lenders

  	
   

  
	
  8.3

  	
  Funds

  	
   

  
	
  8.4

  	
  Application of Payments

  	
   

  
	
  8.5

  	
  Payments Clear of Taxes

  	
   

  
	
  8.6

  	
  Set
  Off

  	
   

  



 


ii

















 


	
  8.7

  	
  Margin Changes; Adjustments
  for Margin Changes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 -
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  9.1

  	
  Representations and
  Warranties

  	
   

  
	
  9.2

  	
  Deemed Repetition

  	
   

  
	
  9.3

  	
  Other Documents

  	
   

  
	
  9.4

  	
  Effective Time of
  Repetition

  	
   

  
	
  9.5

  	
  Nature of
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 - GENERAL
  COVENANTS

  	
   

  
	
  10.1

  	
  Affirmative
  Covenants of the Borrower

  	
   

  
	
  10.2

  	
  Negative Covenants
  of the Borrower

  	
   

  
	
  10.3

  	
  Financial Covenants

  	
   

  
	
  10.4

  	
  Agent May Perform Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 - SECURITY

  	
   

  
	
  11.1

  	
  Security on all Assets

  	
   

  
	
  11.2

  	
  Designation of
  Material Subsidiaries

  	
   

  
	
  11.3

  	
  Registration

  	
   

  
	
  11.4

  	
  Forms

  	
   

  
	
  11.5

  	
  Continuing Security

  	
   

  
	
  11.6

  	
  Dealing with Security

  	
   

  
	
  11.7

  	
  Effectiveness

  	
   

  
	
  11.8

  	
  Release and Discharge
  of Security

  	
   

  
	
  11.9

  	
  Transfer of Security

  	
   

  
	
  11.10

  	
  Hedging Affiliates

  	
   

  
	
  11.11

  	
  Security for
  Hedging with Former Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12 - EVENTS OF DEFAULT AND ACCELERATION

  	
   

  
	
  12.1

  	
  Events of Default

  	
   

  
	
  12.2

  	
  Acceleration

  	
   

  
	
  12.3

  	
  Conversion on Default

  	
   

  
	
  12.4

  	
  Remedies
  Cumulative and Waivers

  	
   

  
	
  12.5

  	
  Termination of
  Lenders’ Obligations

  	
   

  
	
  12.6

  	
  Acceleration of
  All Lender Obligations

  	
   

  
	
  12.7

  	
  Application
  and Sharing of Payments Following Acceleration

  	
   

  
	
  12.8

  	
  Calculations as
  at the Adjustment Time

  	
   

  
	
  12.9

  	
  Sharing Repayments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 -
  CHANGE OF CIRCUMSTANCES

  	
   

  
	
  13.1

  	
  Market
  Disruption Respecting Libor Loans

  	
   

  
	
  13.2

  	
  Market
  Disruption Respecting Bankers’ Acceptances

  	
   

  
	
  13.3

  	
  Change in Law

  	
   

  
	
  13.4

  	
  Prepayment of Portion

  	
   

  
	
  13.5

  	
  Illegality

  	
   

  



 


iii

















 


	
  ARTICLE
  14 - COSTS, EXPENSES AND INDEMNIFICATION

  	
   

  
	
  14.1

  	
  Costs and Expenses

  	
   

  
	
  14.2

  	
  General Indemnity

  	
   

  
	
  14.3

  	
  Environmental Indemnity

  	
   

  
	
  14.4

  	
  Judgment Currency

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15 - THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITY

  	
   

  
	
  15.1

  	
  Authorization and Action

  	
   

  
	
  15.2

  	
  Procedure for Making Loans

  	
   

  
	
  15.3

  	
  Remittance of Payments

  	
   

  
	
  15.4

  	
  Redistribution of Payment

  	
   

  
	
  15.5

  	
  Duties and Obligations

  	
   

  
	
  15.6

  	
  Prompt Notice to the
  Lenders

  	
   

  
	
  15.7

  	
  Agent’s and Lenders’
  Authorities

  	
   

  
	
  15.8

  	
  Lender Credit Decision

  	
   

  
	
  15.9

  	
  Indemnification of Agent

  	
   

  
	
  15.10

  	
  Successor Agent

  	
   

  
	
  15.11

  	
  Taking and
  Enforcement of Remedies

  	
   

  
	
  15.12

  	
  Reliance Upon Agent

  	
   

  
	
  15.13

  	
  No Liability of Agent

  	
   

  
	
  15.14

  	
  Article for
  Benefit of Agent and Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16 - GENERAL

  	
   

  
	
  16.1

  	
  Exchange
  and Confidentiality of Information

  	
   

  
	
  16.2

  	
  Nature of
  Obligation under this Agreement

  	
   

  
	
  16.3

  	
  Notices

  	
   

  
	
  16.4

  	
  Governing Law

  	
   

  
	
  16.5

  	
  Benefit of the Agreement

  	
   

  
	
  16.6

  	
  Assignment

  	
   

  
	
  16.7

  	
  Participations

  	
   

  
	
  16.8

  	
  Severability

  	
   

  
	
  16.9

  	
  Whole Agreement

  	
   

  
	
  16.10

  	
  Amendments and Waivers

  	
   

  
	
  16.11

  	
  Further Assurances

  	
   

  
	
  16.12

  	
  Attornment

  	
   

  
	
  16.13

  	
  Time of the Essence

  	
   

  
	
  16.14

  	
  Credit Agreement Governs

  	
   

  
	
  16.15

  	
  Counterparts

  	
   

  



 


iv

















 


CREDIT
AGREEMENT


 


THIS AGREEMENT is
made as of May 11, 2004


 


B E T W E E N:


 


RPC ACQUISITION COMPANY, an unlimited liability company under
the laws of the Province of Nova Scotia (hereinafter sometimes referred to as
the “Borrower”),


 


OF THE FIRST PART,


 


- and -


 


ROYAL BANK OF CANADA, BANK OF
AMERICA, N.A. CANADA BRANCH, BANK OF MONTREAL, THE BANK OF NOVA SCOTIA, BNP
PARIBAS (CANADA), CONGRESS FINANCIAL CORPORATION (CANADA) and UNION BANK OF
CALIFORNIA, N.A., CANADA BRANCH, together with such other persons as become
parties hereto as lenders, (hereinafter sometimes collectively referred to as
the “Lenders”
and sometimes individually referred to as a “Lender”),


 


OF THE SECOND PART,


 


- and -


 


ROYAL BANK OF CANADA, a Canadian chartered bank, as
agent of the Lenders hereunder (hereinafter referred to as the “Agent”),


 


OF THE THIRD PART.


 


WHEREAS the
Borrower and the Other Acquisition Companies have entered into the Purchase
Agreements and, pursuant thereto, have agreed to make the Acquisitions;


 


AND WHEREAS the
Borrower has requested the Lenders to provide the Credit Facility to finance a
portion of the Acquisitions and for its general corporate purposes;


 


AND WHEREAS the
Lenders have agreed to provide the Credit Facility to the Borrower on the terms
and conditions herein set forth;


 


AND WHEREAS the
Lenders wish the Agent to act on their behalf with regard to certain matters
associated with the Credit Facility;


 


NOW THEREFORE THIS
AGREEMENT WITNESSES that in consideration of the covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby conclusively acknowledged by each of the parties
hereto, the parties hereto covenant and agree as follows:


 

















 


ARTICLE 1 - INTERPRETATION


 


1.1                                                                               Definitions


 


(1)           In this Agreement, unless something
in the subject matter or context is inconsistent therewith:


 


“Acceleration Notice” means a written notice delivered by
the Agent to the Borrower pursuant to Section 12.2 declaring all Obligations of
the Borrower outstanding hereunder to be due and payable.


 


“Acquisitions” means, collectively, the MAPL Acquisition and
the Rangeland Acquisition and “Acquisition” means either one of such
acquisitions individually.


 


“Additional Compensation” has the meaning set out in Section
13.3(1).


 


“Adjustment Time” means the time of occurrence of the last event
necessary (being either the delivery of a Demand for Payment or the occurrence
of a Termination Event) to ensure that all Obligations and the Financial
Instrument Obligations under any Lender Financial Instruments are thereafter
due and payable.


 


“Advance” means an advance of funds made by the Lenders
or by any one or more of them to the Borrower (including by way of overdraft
under the Credit Facility), but does not include any Conversion or Rollover.


 


“Affected Loan” has the meaning set out in Section 13.4.


 


“Affiliate” means any person which, directly or indirectly,
controls, is controlled by or is under common control with another person; and,
for the purposes of this definition, “control” (including, with correlative
meanings, the terms “controlled by” or “under common control with”) means the
power to direct or cause the direction of the management and policies of any
person, whether through the ownership of shares or by contract or otherwise.


 


“Agent’s Branch” means the branch of the Agent at 200 Bay
Street, 12th Floor, South Tower Toronto, Ontario, M5J 2W7 or such other branch
in Canada as the Agent may from time to time designate by notice to the
Borrower and the Lenders.


 


“Agency Fee Agreement” means the Agency Fee Agreement
dated as of even date herewith between the Borrower and the Agent respecting
the payment of certain fees and other amounts to the Agent for its own account.


 


“Agreement” means this credit agreement, as the same may
be amended, modified, supplemented or restated from time to time in accordance
with the provisions hereof.


 


“Allowable Open Position”
means any Open Position which (a) is less than 300,000 barrels or (b) has
continued for less than 5 Banking Days.


 


“Applicable Laws” or “applicable law” means, in relation to any
person, transaction or event:


 


6

















 


(a)                                  all applicable provisions of laws, statutes,
rules and regulations from time to time in effect of any Governmental
Authority; and


 


(b)                                 all Governmental Authorizations to which the
person is a party or by which it or its property is bound or having application
to the transaction or event.


 


“Applicable Pricing Rate”, as regards any Loan, means the
percentage rate per annum set forth in the table below opposite the applicable
Senior Debt to EBITDA Ratio (as at the Quarter End for the most recently
completed calendar quarter) in the column applicable to the type of Loan in
question:


 


	
  Senior Debt to

  EBITDA Ratio

  	
   

  	
  Margin on Canadian Prime Rate

  Loans and U.S. Base Rate Loans

  	
   

  	
  Margin on Libor Loans,

  Acceptance Fees for Bankers’

  Acceptances and Issuance Fees

  for Letters of Credit

  
	
  greater than or equal to 4.0:1.0

  	
   

  	
  1.625% per annum

  	
   

  	
  2.625% per annum

  
	
  greater than or equal to 3.0:1.0 and less than 4.0:1.0

  	
   

  	
  1.25% per annum

  	
   

  	
  2.25% per annum

  
	
  less than 3.0:1.0

  	
   

  	
  1.00% per annum

  	
   

  	
  2.00% per annum

  



 


provided that:


 


(a)                                  the above rates per annum applicable to Libor
Loans are expressed on the basis of a year of 360 days;


 


(b)                                 the above rates per annum applicable to
Bankers’ Acceptances are expressed on the basis of a year of 365 days;


 


(c)                                  issuance fees for Letters of Credit which are
not “direct credit substitutes” (as determined by the Agent, acting reasonably)
within the meaning of the Capital Adequacy Requirements shall be 66?% of the
rate specified above;


 


(d)                                 the determination of and changes in Applicable
Pricing Rate shall be made and effective in accordance with Section 8.7; and


 


(e)                                  until the Quarter End at the end of the first
full fiscal quarter immediately following completion of the MAPL Acquisition,
the Senior Debt to EBITDA Ratio shall be deemed to be greater than or equal to
4.0:1.0 for the purposes of determining the Applicable Pricing Rate.


 


“Applicable Standby Fee Rate”, as regards the standby fees
payable in accordance with Section 5.6, means, when the Utilization (calculated
as at the date of determination of the standby fees in accordance with Section
5.6) is one of the following, the rate per annum equal to the percentage of the
Applicable Pricing Rate then applicable to the acceptance fees for Bankers’
Acceptances set forth opposite such Utilization:


 


7

















 


	
  Utilization

  	
   

  	
  Applicable Standby Fee Rate

  (as a percentage of the Applicable Pricing Rate)

  
	
  less than or equal to 331/3%

  	
   

  	
  35.0%

  
	
  greater  than 331/3%
  and less than or equal to 662/3%

  	
   

  	
  30.0%

  
	
  greater than 662/3%

  	
   

  	
  25.0%

  



 


“Approved Securities” means obligations maturing within
one year from their date of purchase or other acquisition by the Borrower or
Subsidiary and which are:


 


(a)                                  issued by the Government of Canada or an
instrumentality or agency thereof and guaranteed fully as to principal,
premium, if any, and interest by the Government of Canada;


 


(b)                                 issued by a province of Canada, or an
instrumentality or agency thereof, which has a long-term debt rating of at
least A by S&P, A2 by Moodys, or A by DBRS; or


 


(c)                                  term deposits, guaranteed investment
certificates, certificates of deposit, bankers’ acceptances or bearer deposit
notes, in each case, of any Canadian chartered bank or other Canadian financial
institution which has a long-term debt rating of at least A+ by S&P, A1 by
Moodys, or A (high) by DBRS.


 


“Assignment Agreement” means an assignment agreement
substantially in the form of Schedule B annexed hereto, with such modifications
thereto as may be required from time to time by the Agent, acting reasonably.


 


“Attributable Debt” means, in respect of any Capital Lease or
Operating Lease entered into by a person or a Subsidiary thereof as lessee, the
present value (discounted at the rate of interest implicit in such transaction,
determined in accordance with GAAP) of the lease payments of the lessee,
including all rent and payments to be made by the lessee in connection with the
return of the leased property, during the remaining term of the lease
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended) but excluding for certainty, amounts
required to be paid on account of insurance, taxes, assessments, utility,
operating and labour costs and similar charges.


 


“BA Discount Rate” means:


 


(a)                                  in relation to a Bankers’ Acceptance accepted
by a Schedule I Lender, the CDOR Rate;


 


(b)                                 in relation to a Bankers’ Acceptance accepted
by a Schedule II Lender or Schedule III Lender, the lesser of:


 


(i)                                     the Discount Rate then applicable to bankers’
acceptances accepted by such Schedule II Lender or Schedule III Lender; and


 


(ii)                                  the CDOR Rate plus 0.10% per annum,


 


8

















 


provided that if
both such rates are equal, then the “BA Discount Rate” applicable thereto shall
be the rate specified in (i) above; and


 


(c)                                  in relation to a BA Equivalent Advance:


 


(i)                                     made by a Schedule I Lender, the CDOR Rate;


 


(ii)                                  made by a Schedule II Lender or Schedule III
Lender, the rate determined in accordance with subparagraph (b) of this
definition; and


 


(iii)                               made by any other Lender, the CDOR Rate plus
0.10% per annum.


 


“BA Equivalent Advance” means, in relation to a Drawdown
of, Conversion into or Rollover of Bankers’ Acceptances, an advance in Canadian
Dollars made by a Non-Acceptance Lender as part of such Loan.


 


“Bankers’ Acceptance” means a draft in Canadian Dollars
drawn by the Borrower, accepted by a Lender and issued for value pursuant to
this Agreement.


 


“Banking Day” means, in respect of a Libor Loan, a day on
which banks are open for business in Calgary, Alberta, Toronto, Ontario, New
York, New York and London, England, and, for all other purposes, shall mean a
day on which banks are open for business in Calgary, Alberta, Toronto, Ontario
and New York, New York, but does not in any event include a Saturday or a
Sunday.


 


“Canadian Dollars” and “Cdn. $” mean the lawful money of Canada.


 


“Canadian Prime Rate” means, for any day, the greater of:


 


(a)                                  the rate of interest per annum established from
time to time by the Agent as the reference rate of interest for the
determination of interest rates that the Agent will charge to customers in
Canada for Canadian Dollar demand loans in Canada; and


 


(b)                                 the rate of interest per annum equal to the
average annual yield rate for one month Canadian Dollar bankers’ acceptances
(expressed for such purpose as a yearly rate per annum in accordance with
Section 5.4) which rate is shown on the display referred to as the “CDOR Page”
(or any display substituted therefor) of Reuter Monitor Money Rates Service at
10:00 a.m. (Toronto time) on such day or, if such day is not a Banking Day, on
the immediately preceding Banking Day, plus 1.00% per annum,


 


provided that if both such
rates are equal or if such one month bankers’ acceptance rate is unavailable
for any reason on any date of determination, then the “Canadian Prime Rate”
shall be the rate specified in (a) above.


 


“Canadian Prime Rate Loan” means an Advance in, or Conversion
into, Canadian Dollars made by the Lenders to the Borrower with respect to
which the Borrower has specified or a provision hereof requires that interest
is to be calculated by reference to the Canadian Prime Rate.


 


9

















 


“Capital Adequacy Requirements” means Guideline A, Part I, dated
January 2001, entitled “Capital Adequacy Requirements” and Guideline A, Part
II, dated November 1997, entitled “Capital Adequacy Requirements – Market Risk”
each issued by the Office of the Superintendent of Financial Institutions
Canada (which encompass the guidelines contained in the report dated July 1988
and entitled “International Convergence of Capital Measurement and Capital
Standards” released by the Basel Committee on Banking Regulations and
Supervisory Practices of the Bank for International Settlements) and all other
guidelines or requirements relating to capital adequacy issued by the Office of
the Superintendent of Financial Institutions Canada or any other Governmental
Authority regulating or having jurisdiction with respect to any Lender, as
amended, modified, supplemented, reissued or replaced from time to time.


 


“Capital Lease” means a lease which is characterized as a
capital lease under GAAP.


 


“Cash Collateral” has the meaning set out in Section 2.17.


 


“Cash Collateral Account” has the meaning set out in Section
2.17.


 


“CDOR Rate” means, on any date which Bankers’ Acceptances
are to be issued pursuant hereto, the per annum rate of interest which is the
rate determined as being the arithmetic average of the annual yield rates
applicable to Canadian Dollar bankers’ acceptances having identical issue and
comparable maturity dates as the Bankers’ Acceptances proposed to be issued by
the Borrower 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 Banking Day, then on the immediately preceding Banking Day (as
adjusted by the Agent in good faith after 10:00 a.m. (Toronto time) to reflect
any error in a posted rate or in the posted average annual rate); provided,
however, if such a rate does not appear on such CDOR Page, then the CDOR Rate,
on any day, shall be the Discount Rate quoted by the Agent (determined as of
10:00 a.m. (Toronto time) on such day) which would be applicable in respect of
an issue of bankers’ acceptances in a comparable amount and with comparable
maturity dates to the Bankers’ Acceptances proposed to be issued by the
Borrower on such day, or if such day is not a Banking Day, then on the
immediately preceding Banking Day.


 


“Change of Control” means the occurrence of any one or more of the
following:


 


(a)                                  except for a Qualifying Purchase, if the
majority of the issued and outstanding shares in the capital (including the
majority of the shares having attached thereto the votes sufficient to elect a
majority of the board of directors) of the Borrower or either Other Acquisition
Company shall cease to be legally and beneficially held, directly or indirectly,
by Pacific Energy Partners, L.P. and its Affiliates;


 


(b)                                 if a majority of the issued and outstanding
limited partnership units in Pacific Energy Partners, L.P. shall be held,
directly or indirectly, by any person or persons acting jointly or in concert
and The Anschutz Corporation and its Affiliates legally and beneficially hold,
directly or indirectly, less than 33.4% of such units in Pacific Energy
Partners, L.P.;


 


(c)                                  (i) if less than 33.4% of the issued and
outstanding shares in the capital (including the shares having attached thereto
a like percentage of the votes eligible to be cast in any


 


10

















 


election of the
board of directors) of the Pacific GP cease to be legally and beneficially
held, directly or indirectly, by The Anschutz Corporation and its Affiliates or
(ii) if The Anschutz Corporation and its Affiliates (taken as a whole) shall
cease to be the largest legal and beneficial holder, directly or indirectly, of
such shares in the capital of the Pacific GP;


 


(d)                                 other than in the case of an Excluded
Replacement of Directors, if (i) the majority of the issued and outstanding
shares in the capital (including the majority of the shares having attached
thereto the votes sufficient to elect a majority of the board of directors) of
the Pacific GP are not legally and beneficially held, directly or indirectly,
by The Anschutz Corporation and its Affiliates and (ii) individuals who were
elected as members of the board of directors of the Pacific GP at the most
recent meeting of shareholders of the Pacific GP involving a contest for or an
item of business relating to the election of directors shall no longer
constitute a majority of the board of directors of the Pacific GP at any time
prior to the next following meeting of shareholders of the Pacific GP involving
the same; or


 


(e)                                  other than in the case of an Excluded
Replacement of Directors, if (i) the majority of the issued and outstanding
shares in the capital (including the majority of the shares having attached
thereto the votes sufficient to elect a majority of the board of directors) of
the Pacific GP are not legally and beneficially held, directly or indirectly,
by The Anschutz Corporation and its Affiliates and (ii) individuals who were
members of the board of directors of the Pacific GP immediately prior to a
meeting of the shareholders of the Pacific GP involving a contest for or an
item of business relating to the election of directors shall not constitute a
majority of the board of directors of the Pacific GP following such election.


 


“clearing house” has the meaning set out in Section 6.4.


 


“Collateral Investment” has the meaning set out in Section
2.17.


 


“combined basis” or similar
expressions mean, in respect of the Borrower, the Other Acquisition Companies
and their respective Subsidiaries, the accounting results and financial
position of the Borrower, the Other Acquisition Companies and their respective
Subsidiaries on a consolidated basis calculated on the basis of, and as if, the
Borrower, the Other Acquisition Companies and their respective Subsidiaries
were one single legal entity resident in Canada and reporting in accordance
with GAAP.


 


“Commitment” means the commitment by each Lender under the
Credit Facility to provide the amount of Canadian Dollars (or the Equivalent
Amount thereof) set forth opposite its name in Schedule A annexed hereto,
subject to any reduction in accordance with the provisions hereof.


 


“Commodity Agreement” means any agreement for the making
or taking of delivery of any commodity (including, without limitation,
Petroleum Substances), any commodity swap agreement, floor, cap or collar
agreement or commodity future or option or other similar agreements or
arrangements, or any combination thereof, entered into by the Borrower or a
Subsidiary where the subject matter of the same is any commodity or the price,
value or amount payable thereunder is


 


11

















 


dependent or based upon the
price of any commodity or fluctuations in the price of any commodity, but shall
not include any agreement for the physical purchase, sale or exchange of
Petroleum Substances by the Borrower or a Subsidiary entered into in the
ordinary course of business unless either (i) such agreement is with a bank,
investment bank, securities dealer, insurance company, trust company, pension
fund, institutional investor or any other financial institution or any
Affiliate of any of the foregoing, or (ii) such agreement is entered into for
hedging purposes or otherwise for the purpose of eliminating or reducing the
financial risk or exposure of the Borrower or a Subsidiary to fluctuations in
the prices of Petroleum Substances (and, for certainty, any such agreement
referred to in (i) or (ii) of this definition shall constitute a “Commodity
Agreement” for all purposes hereof).


 


“Compliance Certificate” means a certificate of the Borrower
signed on its behalf by the president, chief financial officer, vice
president-finance or treasurer of the Borrower, substantially in the form
annexed hereto as Schedule C, to be given to the Agent and the Lenders by the
Borrower pursuant hereto.


 


“Conversion” means a conversion or deemed conversion of a
Loan into another type of Loan under the Credit Facility pursuant to the
provisions hereof, provided that, subject to Section 2.8 and to Article 6 with
respect to Bankers’ Acceptances, the conversion of a Loan denominated in one
currency to a Loan denominated in another currency shall be effected by
repayment of the Loan or portion thereof being converted in the currency in
which it was denominated and readvance to the Borrower of the Loan into which
such conversion was made.


 


“Conversion Date” means the date specified by the Borrower as
being the date on which the Borrower has elected to convert, or this Agreement
requires the conversion of, one type of Loan into another type of Loan and
which shall be a Banking Day.


 


“Conversion Notice” means a notice substantially in the form
annexed hereto as Schedule D to be given to the Agent by the Borrower pursuant
hereto.


 


“Credit Facility” means the credit facility in the maximum
principal amount of Cdn.$100,000,000 or the Equivalent Amount in United States
Dollars to be made available to the Borrower by the Lenders in accordance with
the provisions hereof, subject to any reduction in accordance with the
provisions hereof.


 


“Currency Excess” has the meaning set out in Section 2.18.


 


“Currency Excess Deficiency” has the meaning set out in Section
2.18.


 


“Currency Hedging Agreement” means any currency swap agreement,
cross-currency agreement, forward agreement, floor, cap or collar agreement,
futures or options, insurance or other similar agreement or arrangement, or any
combination thereof, entered into by the Borrower or a Subsidiary where the subject
matter of the same is currency exchange rates, or the price, value or amount
payable thereunder is dependent or based upon currency exchange rates or
fluctuations in currency exchange rates as in effect from time to time.


 


“Current Assets” and “Current Liabilities” mean the current
assets and current liabilities, respectively, of the Borrower and its
Subsidiaries determined on a combined basis in accordance with GAAP as the same
would be set forth or reflected on a combined balance sheet of the Borrower


 


12

















 


and its Subsidiaries; provided
that, for the purpose of determining whether Positive Working Capital exists,
the unutilized amount of the Credit Facility (as at any date of determination)
shall be added to the amount of Current Assets.


 


“DBNA” has the meaning set out in Section 6.4.


 


“DBRS” means Dominion Bond Rating Service Limited and
any successors thereto.


 


“Debt” means, with respect to any person at any time,
the sum of the following (without duplication):


 


(a)                                  the amount of all indebtedness for borrowed
moneys of such person;


 


(b)                                 the amount of all obligations of such person
evidenced by notes payable, drafts accepted representing extensions of credit,
bonds, debentures or other similar instruments, to the extent such obligations
would be considered indebtedness for borrowed moneys in accordance with GAAP;


 


(c)                                  all obligations of such person, whether or not
contingent, with respect to or under any bankers’ acceptance facility or any
letter of credit facility or similar facility, including any liability arising
under any indemnity obligation pertaining thereto;


 


(d)                                 the amount of the deferred purchase price of
property or services to the extent that it is recorded as a liability in
accordance with GAAP, other than trade payables incurred in the ordinary course
of business;


 


(e)                                  all Purchase Money Obligations;


 


(f)                                    all Attributable Debt under all Capital Leases;


 


(g)                                 all other long-term obligations (including the
current portion thereof) upon which interest charges are customarily paid by
such person;


 


(h)                                 all indebtedness of other persons secured by a
Security Interest on any asset of such person, whether or not such indebtedness
is assumed by such person; provided that the amount of such indebtedness shall
be the lesser of (i) the fair market value of such asset at such date of
determination, and (ii) the amount of such indebtedness shall only be Debt to
the extent recorded as a liability in accordance with GAAP; and


 


(i)                                     any guarantee, indemnity or Financial
Assistance by such person in any manner of any part or all of an obligation of
another person included in clauses (a) to (h) above.


 


The amount of Debt of any
person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency
giving rise to the obligation to the extent that it is recorded as a liability
in accordance with GAAP; provided that (i) the amount at any time of
indebtedness issued with original issue discount shall be the accreted amount
thereof determined in accordance with GAAP, provided that, in any event, the
amount of any Debt in respect of bankers’


 


13

















 


acceptances or other
short-term indebtedness for borrowed money shall be the face amount payable
upon the maturity thereof, and (ii) Debt shall not include any liability for
unpaid Taxes not yet due.


 


“Declining Lender” has the meaning set out in Section 2.20.


 


“Default” means any event or condition which, with the
giving of notice, lapse of time or upon a declaration or determination being
made (or any combination thereof), would constitute an Event of Default.


 


“Demand for Payment” means an Acceleration Notice or a Financial
Instrument Demand for Payment.


 


“Departing Agent” has the meaning set out in Section 11.9.


 


“Designated Material Subsidiary”
means a Subsidiary which is designated as a Material Subsidiary pursuant to
Section 11.2 and which would not otherwise fall within part (a), (b) or (c) of
the definition of “Material Subsidiary”.


 


“Discount Proceeds” means the net cash proceeds to the Borrower
from the sale of a Bankers’ Acceptance pursuant hereto or, in the case of BA
Equivalent Advances, the amount of a BA Equivalent Advance at the BA Discount
Rate, in any case, before deduction or payment of the fees to be paid to the
Lenders under Section 6.2.


 


“Discount Rate” means, with respect to the issuance of a
bankers’ acceptance, the rate of interest per annum, calculated on the basis of
a year of 365 days, (rounded upwards, if necessary, to the nearest whole
multiple of 1/100th of one percent) which is equal to the discount exacted by a
purchaser taking initial delivery of such bankers’ acceptance, calculated as a
rate per annum and as if the issuer thereof received the discount proceeds in
respect of such bankers’ acceptance on its date of issuance and had repaid the
respective face amount of such bankers’ acceptance on the maturity date
thereof.


 


“Distributable Cash” means,
for any fiscal period and as determined on a combined basis, Operating Cash plus
(without duplication) the aggregate of:


 


(a)                                  interest and other investment income in each
case to the extent earned by the Borrower, the Other Acquisition Companies and
their respective Subsidiaries; 


 


(b)                                 cash proceeds from capital transactions, such
as issuances of equity and permitted sales of assets, but in all cases
excluding the proceeds of any borrowings or the incurring of any Debt; and


 


(c)                                  any tax refunds received, which relate to Taxes
previously deducted in the computation of Distributable Cash,


 


minus the aggregate (without duplication)
of


 


14

















 


(d)                                 general and administrative costs incurred by
the Borrower, the Other Acquisition Companies and their respective Subsidiaries
(to the extent not already deducted in determining Operating Cash);


 


(e)                                  debt service costs, including interest,
principal, fees and discounts with respect to Debt of or incurred by the
Borrower, the Other Acquisition Companies and their respective Subsidiaries
(but excluding one-time fees paid to the Lenders in connection with the
establishment of the Credit Facility);


 


(f)                                    current income, capital, withholding and other
Taxes accruing which are reasonably related to amounts included in computing
Distributable Cash;


 


(g)                                 any maintenance capital expenditures incurred
by the Borrower, the Other Acquisition Companies and their respective
Subsidiaries;


 


(h)                                 any amounts paid or due and payable in respect
of (i) any Environmental Claims or (ii) any actions, suits or proceedings
against the Borrower or any of its Subsidiaries, their property or any of their
undertakings and assets, including any proceedings before any arbitrator or by
any Governmental Authority, and (in each case) whether paid or due and payable
in respect of a final judgment, decree or order or in settlement of any pending
or threatened action, suit or proceeding; and


 


(i)                                     Related Party Payments (to the extent the same
have not been deducted in the calculation of Operating Cash).


 


“Distribution” means:


 


(a)                                  the declaration, payment or setting aside for
payment of any dividend or other distribution on or in respect of any shares,
partnership interests or other equity of the Borrower, either Other Acquisition
Company or any Subsidiary which is not a Wholly-Owned Subsidiary (including any
return of capital), other than to the Borrower, an Other Acquisition Company or
a Wholly-Owned Subsidiary;


 


(b)                                 the redemption, retraction, purchase,
retirement or other acquisition, in whole or in part, of any shares,
partnership interests or other equity of the Borrower, either Other Acquisition
Company or any Subsidiary which is not a Wholly-Owned Subsidiary or any securities,
instruments or contractual rights capable of being converted into, exchanged or
exercised for shares, partnership interests or other equity thereof (including,
without limitation, options, warrants, conversion or exchange privileges and
similar rights), other than from the Borrower, an Other Acquisition Company or
a Wholly-Owned Subsidiary;


 


(c)                                  the making of any loan or advance or any other
provision of credit or Financial Assistance by the Borrower, either Other
Acquisition Company or any Subsidiary to any Related Party other than to the
Borrower, an Other Acquisition Company or a Wholly-Owned Subsidiary;


 


15

















 


(d)                                 the payment of any principal, interest, fees or
other amounts on or in respect of any loans, advances or other Debt (including
the Subordinated Debt) owing at any time by the Borrower, either Other
Acquisition Company or any Subsidiary which is not a Wholly-Owned Subsidiary to
any Related Party, other than to the Borrower, an Other Acquisition Company or
a Wholly-Owned Subsidiary;


 


(e)                                  Related Party Payments by the Borrower, the
Other Acquisition Companies and their Subsidiaries, or


 


(f)                                    any payment of or in respect of any
Reimbursement Obligations,


 


and whether any of the
foregoing is made, paid or satisfied in or for cash, property or any
combination thereof.


 


“Documents” means this Agreement, the Security, the
Subordination Agreement, the Agency Fee Agreement and all certificates,
notices, instruments and other documents delivered or to be delivered to the
Agent or the Lenders, or both, in relation to the Credit Facility pursuant
hereto or thereto and, when used in relation to any person, the term
“Documents” shall mean and refer to the Documents executed and delivered by
such person.


 


“Drafts” means drafts, bills of exchange, receipts,
acceptances, demands and other requests for payment drawn or issued under a
Letter of Credit.


 


“Drawdown” means:


 


(a)                                  an Advance of a Canadian Prime Rate Loan, U.S.
Base Rate Loan or Libor Loan;


 


(b)                                 the issue of Bankers’ Acceptances (or the
making of a BA Equivalent Advance in lieu thereof) other than as a result of
Conversions or Rollovers; or


 


(c)                                  the issue of Letters of Credit.


 


“Drawdown Date” means the date on which a Drawdown is made by
the Borrower pursuant to the provisions hereof and which shall be a Banking
Day.


 


“Drawdown Notice” means a notice substantially in the form
annexed hereto as Schedule E to be given to the Agent by the Borrower pursuant
hereto.


 


“E & Y Report” has the meaning set out in Section 3.2.


 


“EBITDA” means the total of the Borrower’s and Other
Acquisition Companies’ net income determined on a combined basis (excluding
therefrom any amounts included therein in respect of Subsidiaries that have not
provided a guarantee, except to the extent distributed to the Borrower or a
Guarantor in cash free and clear of any recourse, Security Interest or adverse
claim) in accordance with GAAP for the four most recently completed fiscal
quarters excluding in the calculation of net income all extraordinary and all
other non-recurring items (including foreign exchange losses or gains and
losses or gains on the repurchase or redemption of any securities) plus,
to the extent deducted in calculating such net income, interest expense and
other financing costs, depreciation,


 


16

















 


amortization and other non-cash items, and income or capital Taxes
(whether or not deferred), but less earnings attributable to minority
interests and cash payments in respect of non-cash items added back in
determining EBITDA in any prior period; provided that for the purpose of
determining EBITDA (a) for the first full fiscal quarter of the Borrower and
the Other Acquisition Companies after the completion of an Acquisition, EBITDA will
be determined with respect to the acquired Rangeland Business Unit Assets or
MAPL Assets (as the case may be) based upon the EBITDA attributable to such
assets (including the business and operations conducted therewith) for such
fiscal quarter times four, (b) for the second full fiscal quarter of the
Borrower and the Other Acquisition Companies after the completion of an
Acquisition, EBITDA will be determined with respect to the acquired Rangeland
Business Unit Assets or MAPL Assets (as the case may be) based upon the
aggregate of the EBITDA attributable to such assets (including the business and
operations conducted therewith) for such quarter and the preceding fiscal
quarter times two and (c) for the third full fiscal quarter of the Borrower and
the Other Acquisition Companies after the completion of an Acquisition, EBITDA
will be determined with respect to the acquired Rangeland Business Unit Assets
or MAPL Assets (as the case may be) based on the aggregate of the EBITDA
attributable to such assets (including the business and operations conducted
therewith) for such quarter and the two preceding fiscal quarters times 4/3.


 


“Environmental Claims” means any and all administrative,
regulatory or judicial actions, suits, demands, claims, liens, notices of non-compliance
or violation, investigations, inspections, inquiries or proceedings relating in
any way to any Environmental Laws or to any permit issued under any such
Environmental Laws including, without limitation:


 


(a)                                  any claim by a Governmental Authority for
enforcement, clean-up, removal, response, remedial or other actions or damages
pursuant to any Environmental Laws; and


 


(b)                                 any claim by a person seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive or
other relief resulting from or relating to Hazardous Materials, including any
Release thereof, or arising from alleged injury or threat of injury to human
health or safety (arising from environmental matters) or the environment.


 


“Environmental Laws” means all Applicable Laws with respect to the
environment or environmental or public health and safety matters contained in
statutes, regulations, rules, ordinances, orders, judgments, approvals,
notices, permits or policies, guidelines or directives having the force of law.


 


“Equivalent Amount” means, on any date, the equivalent amount in
Canadian Dollars or United States Dollars, as the case may be, after giving
effect to a conversion of a specified amount of United States Dollars to
Canadian Dollars or of Canadian Dollars to United States Dollars, as the case
may be, at the noon rate of exchange for Canadian interbank transactions
established by the Bank of Canada for the day in question, or, if such rate is
for any reason unavailable, at the spot rate quoted for wholesale transactions
by the Agent at approximately noon (Toronto time) on that date in accordance
with its normal practice.


 


“Event of Default” has the meaning set out in Section 12.1.


 


17

















 


“Excluded Replacement of Directors” means (a) the replacement of those
directors who have died or become disabled (so as not to be capable of
fulfilling the role of a director) or have been found to be of unsound mind by
a court of competent jurisdiction or (b) a replacement of directors approved in
writing by the Majority of the Lenders, acting reasonably.


 


“Federal Funds Rate” means, for any day, the rate of interest per
annum set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board (including
any such successor, the “H.15(519)”) for such day opposite the caption “Federal
Funds (Effective)”.  If on any relevant
day such rate is not yet published in H.15(519), the rate for such day will be
the rate of interest per annum set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for U.S. Government
Securities, or any successor publication, published by the Federal Reserve Bank
of New York (including any successor, the “Composite 3:30 p.m. Quotations”) for
such day under the caption “Federal Funds Effective  Rate”.  If on any relevant day the appropriate rate
per annum for such day is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic
mean of the rates per annum for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York time) on that day by each of three major
brokers of Federal funds transactions in New York City, selected by the Agent
in its sole discretion, acting reasonably.


 


“Federal Reserve Board” or “Federal” means the Board of
Governors of the Federal Reserve System of the United States of America or any
successor thereof.


 


“Financial Assistance” means,
with respect to any person and without duplication, any loan, guarantee,
indemnity, assurance, acceptance, extension of credit, loan purchase, share
purchase, equity or capital contribution, investment or other form of direct or
indirect financial assistance or support of any other person or any obligation
(contingent or otherwise) intended to enable or having the effect of enabling
another person to incur or pay any Debt or to comply with agreements relating
thereto or otherwise to assure or protect creditors of the other person against
loss in respect of Debt of the other person and includes any guarantee of or
indemnity in respect of the Debt of the other person and any absolute or
contingent obligation to (directly or indirectly):


 


(a)                                  advance or supply funds for the payment or
purchase of any Debt of any other person;


 


(b)                                 purchase, sell or lease (as lessee or lessor)
any property, assets, goods, services, materials or supplies primarily for the
purpose of enabling any person to make payment of Debt or to assure the holder
thereof against loss;


 


(c)                                  guarantee, indemnify, hold harmless or
otherwise become liable any creditor of any other person from or against any
losses, liabilities or damages in respect of Debt;


 


(d)                                 make a payment to another for goods, property or
services regardless of the non-delivery or non-furnishing thereof; or


 


(e)                                  make an advance, loan or other extension of
credit to or to make any subscription for equity, equity or capital
contribution, or investment in or to maintain the capital, working capital,
solvency or general financial condition of another person.


 


18

















 


The amount of any Financial
Assistance is the amount of any loan or direct or indirect financial assistance
or support, without duplication, given, or all Debt of the obligor to which the
Financial Assistance relates, unless the Financial Assistance is limited to a
determinable amount, in which case the amount of the Financial Assistance is
the determinable amount.


 


“Financial Instrument” means any Interest Hedging
Agreement, Currency Hedging Agreement or Commodity Agreement.


 


“Financial Instrument Demand for Payment” means a demand made by a Lender
pursuant to a Lender Financial Instrument demanding payment of the Financial
Instrument Obligations which are then due and payable relating thereto and
shall include, without limitation, any notice under any agreement evidencing a
Lender Financial Instrument which, when delivered, would require an early
termination thereof and a payment by the Borrower or a Subsidiary in settlement
of obligations thereunder as a result of such early termination.


 


“Financial Instrument Obligations” means obligations arising under
Financial Instruments entered into by the Borrower or a Subsidiary to the
extent of the net amount due or accruing due by the Borrower or Subsidiary
thereunder (determined, where relevant, by marking-to-market the same in
accordance with their terms).


 


“Financing Lender” has the meaning set out in Section 2.20.


 


“fiscal quarter” and “fiscal year”, unless the context otherwise
requires, means a fiscal quarter or fiscal year, as the case may be, of the
Borrower.


 


“Former Lender” has the meaning set out in Section 11.11.


 


“Fronted LC” means a Letter of Credit issued by the Fronting
Lender for the account of the Lenders.


 


“Fronting Lender” means Royal Bank of Canada or such other Lender
as is selected by the Agent and the Borrower, which assumes in writing with the
Borrower, the Lenders and the Agent, the obligation of issuing Letters of Credit
for the account of the Lenders under the Credit Facility.


 


“GAAP” has the meaning set out in Section 1.4.


 


“Governmental Authority” means any federal, provincial,
state, regional, municipal or local government or any department, agency,
board, tribunal or authority thereof or other political subdivision thereof and
any entity or person exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, government or the operation
thereof.


 


“Governmental Authorization” means an authorization, order,
permit, approval, grant, license, consent, right, franchise, privilege,
certificate, judgment, writ, injunction, award, determination, direction,
decree or demand or the like issued or granted by law or by rule or regulation
of any Governmental Authority.


 


“Guarantors” means, collectively, the Other Acquisition
Companies and each of the other Material Subsidiaries which have executed and
delivered Security to the Agent.


 


19

















 


“Hazardous Materials” means any substance or mixture of
substances which, if released into the environment, would likely cause,
immediately or at some future time, harm or degradation to the environment or
to human health or safety and includes any substance defined as or determined
to be a pollutant, contaminant, waste, hazardous waste, hazardous chemical,
hazardous substance, toxic substance or dangerous good under any Environmental
Law.


 


“Hedging Affiliate” means any Affiliate of a Lender which enters
into Financial Instrument.


 


“Indemnified Parties” means, collectively, the Agent and
the Lenders, including a receiver, receiver-manager or similar person appointed
under applicable law, and their respective shareholders, Affiliates, officers,
directors, employees and agents.


 


“Indemnified Third Party” has the meaning set out in Section
14.3.


 


“Information” has the meaning set out in Section 16.1.


 


“Interest Expense” means, for any period, without duplication,
interest expense of the Borrower, the Other Acquisition Companies and their
Subsidiaries determined on a combined basis in accordance with GAAP as the same
would be set forth or reflected in a combined statement of income of the
Borrower, the Other Acquisition Companies and their Subsidiaries and, in any event
and without limitation, shall include:


 


(a)                                  all interest of the Borrower, the Other
Acquisition Companies and their Subsidiaries accrued or payable in respect of
such period, including capitalized interest and imputed interest with respect
to Capital Lease obligations;


 


(b)                                 all fees of the Borrower, the Other Acquisition
Companies and their Subsidiaries, including standby and commitment fees
(excluding, but only excluding, the upfront fees payable by the Borrower on the
date hereof in relation to the establishment of the Credit Facility),
acceptance and stamping fees in respect of bankers’ acceptances and fees
payable in respect of letters of credit, letters of guarantee and similar
instruments, accrued or payable in respect of such period, prorated (as
required by GAAP) over such period;


 


(c)                                  any difference between the face amount and the
discount proceeds of any bankers’ acceptances, commercial paper and other
obligations of the Borrower, the Other Acquisition Companies or any Subsidiary
issued at a discount, prorated (as required by GAAP) over such period;


 


(d)                                 the aggregate of all purchase discounts
relating to the sale of accounts receivable or other financial assets in
connection with any securitization program; and


 


(e)                                  all net amounts charged or credited to interest
expense under any Interest Hedging Agreement in respect of such period.


 


“Interest Hedging Agreement” means any interest swap agreement,
forward rate agreement, floor, cap or collar agreement, futures or options,
insurance or other similar agreement or arrangement, or any combination
thereof, entered into by the Borrower or a Subsidiary where the subject matter
of


 


20

















 


the same is interest rates, or
the price, value or amount payable thereunder is dependent or based upon the
interest rates or fluctuations in interest rates in effect from time to time
(but, for certainty, shall exclude conventional floating rate debt).


 


“Interest Payment Date” means:


 


(a)                                  with respect to each Canadian Prime Rate Loan
and U.S. Base Rate Loan, the first Banking Day of each calendar month; and


 


(b)                                 with respect to each Libor Loan, the last day
of each applicable Interest Period and, if any Interest Period is longer than 3
months, the last Banking Day of each 3 month period during such Interest
Period,


 


provided that, in any case,
the Maturity Date or, if applicable, any earlier date on which the Credit
Facility is fully cancelled or permanently reduced in full, shall be an
Interest Payment Date with respect to all Loans then outstanding under the
Credit Facility.


 


“Interest Period” means:


 


(a)                                  with respect to each Canadian Prime Rate Loan
and U.S. Base Rate Loan, the period commencing on the applicable Drawdown Date
or Conversion Date, as the case may be, and terminating on the date selected by
the Borrower hereunder for the Conversion of such Loan into another type of
Loan or for the repayment of such Loan;


 


(b)                                 with respect to each Bankers’ Acceptance, the
period selected by the Borrower hereunder and being of 1, 2, 3 or 6 months’
duration, subject to market availability, (or, subject to the agreement of the
Lenders, a longer or shorter period) commencing on the Drawdown Date, Rollover
Date or Conversion Date of such Loan;


 


(c)                                  with respect to each Libor Loan, the period
selected by the Borrower and being of 1, 2, 3 or 6 months’ duration (or,
subject to the agreement of the Lenders, a longer or shorter period) commencing
on the applicable Drawdown Date, Rollover Date or Conversion Date, as the case
may be; and


 


(d)                                 with respect to each Letter of Credit, the
period commencing on the date of issuance of such Letter of Credit and
terminating on the last day the Letter of Credit is outstanding,


 


provided that in any case: (i)
the last day of each Interest Period shall be also the first day of the next
Interest Period whether with respect to the same or another Loan; (ii) the last
day of each Interest Period shall be a Banking Day and if the last day of an
Interest Period selected by the Borrower is not a Banking Day the Borrower
shall be deemed to have selected an Interest Period the last day of which is
the Banking Day next following the last day of the Interest Period selected
unless such next following Banking Day falls in the next calendar month in
which event the Borrower shall be deemed to have selected an Interest Period
the last day of which is the Banking Day next preceding the last day of the
Interest Period selected by the Borrower; and (iii) the last day of all
Interest Periods for Loans outstanding under the Credit Facility shall expire
on or prior to the Maturity Date.


 


21

















 


“Investment” means any direct or indirect advance, loan or
other extension of credit or any subscription for equity or capital
contribution to (by means of transfers of property to others, or payments for
property or services for the account or use of others, or otherwise) or
purchase or other acquisition of any shares, membership interests, bonds, notes
or other securities of, any person, including acquisitions by amalgamation or
other forms of merger, consolidation or reorganization.


 


“Judgment Conversion Date” has the meaning set out in Section
14.4.


 


“Judgment Currency” has the meaning set out in Section 14.4.


 


“Lead Arranger” means Royal Bank of Canada carrying on
business under the trade name “RBC Capital Markets”.


 


“Lender Financial Instrument” means a Financial Instrument
entered into between a Lender or a Hedging Affiliate and the Borrower or a
Subsidiary.


 


“Lender Financial Instrument Obligations” means, collectively, all of the
obligations, indebtedness and liabilities (present or future, absolute or
contingent, mature or not) of the Borrower and its Subsidiaries under, pursuant
or relating to any and all Lender Financial Instruments.


 


“Lenders’ Counsel” means the firm of McCarthy Tétrault LLP or
such other firm of legal counsel as the Agent may from time to time designate.


 


“Letter of Credit” or “LC” means a letter of credit in form
satisfactory to and issued by the Fronting Lender for the account of Lenders or
by the Agent as attorney-in-fact on behalf of each of the Lenders, in each case
acting at the request of and in accordance with the instructions of the
Borrower, to make payment in accordance with the terms and conditions thereof
of an amount to or to the order of a third party.


 


“Libor Loan” means an Advance in, or Conversion into,
United States Dollars made by the Lenders to the Borrower with respect to which
the Borrower has specified that interest is to be calculated by reference to
the Libor Rate, and each Rollover in respect thereof.


 


“Libor Rate” means, for each Interest Period applicable to
a Libor Loan, the rate of interest per annum, expressed on the basis of a year
of 360 days (as determined by the Agent):


 


(a)                                  appearing on the display referred to as
“Telerate Page 3750” (or any display substituted therefor) of Telerate-The
Financial Information Network published by Telerate-Systems, Inc. (or its
successors) as of 11:00 a.m. (London, England time) on the second Banking Day
prior to the first day of such Interest Period; or


 


(b)                                 if such rate does not appear on such Telerate
display, or if such display or rate is not available for any reason, the rate
per annum at which United States Dollars are offered by the principal lending
office in London, England of the Agent (or of its affiliates if it does not
maintain such an office) in the London interbank market at approximately 11:00
a.m. (London, England time) on the second Banking Day prior to the first day of
such Interest Period,


 


22

















 


in each case in an amount
similar to such Libor Loan and for a period comparable to such Interest Period.


 


“Loan” means a Canadian Prime Rate Loan, U.S. Base
Rate Loan, Libor Loan, Bankers’ Acceptance or BA Equivalent Advance or Letter
of Credit outstanding hereunder.


 


“Majority of the Lenders” means:


 


(a)                                  during the continuance of a Default or an Event
of Default, two or more Lenders the Rateable Portions of all Outstanding
Principal of which are, in the aggregate, at least 65% of all Outstanding
Principal; and


 


(b)                                 at any other time, two or more Lenders the
Commitments of which are, in the aggregate, at least 65% of the Commitments of
all Lenders hereunder.


 


“MAPL Acquisition” means the acquisition by the Borrower or a
Wholly-Owned Subsidiary of the MAPL Assets pursuant to the MAPL Purchase
Agreement.


 


“MAPL Assets” means, collectively, the Mid-Alberta Pipeline
and all of the other properties, assets, rights, interests and undertakings
which are the subject of and are to be acquired by the Borrower or a
Wholly-Owned Subsidiary from Imperial Oil, a partnership of McColl-Frontenac
Petroleum Inc. and Imperial Oil Limited, pursuant to the MAPL Purchase
Agreement.


 


“MAPL Letter of Intent” means the letter of intent dated
February 23, 2004 between Imperial Oil Resources and Pacific Energy Group LLC,
an Affiliate of the Borrower.


 


“MAPL Purchase Agreement” means the agreement of purchase and
sale contemplated by the MAPL Letter of Intent which is to be entered into
between Imperial Oil, a partnership of McColl-Frontenac Petroleum Inc. and
Imperial Oil Limited, and the Borrower or a Wholly-Owned Subsidiary in
relation to the purchase thereby of the MAPL Assets from Imperial Oil, a partnership of McColl-Frontenac
Petroleum Inc. and Imperial Oil Limited.


 


“Material Adverse Effect” means a material adverse effect on:


 


(a)                                  the assets, properties, operations or
condition, financial or otherwise, of the Borrower, the Other Acquisition
Companies and their Subsidiaries, taken as a whole (including, without
limitation, the assets, properties and operations acquired or to be acquired
(directly or indirectly) in connection with the completion of the Acquisition);


 


(b)                                 the ability (financial or otherwise) of the
Borrower or any of its Subsidiaries to observe or perform its obligations under
the Documents to which it is a party or the validity or enforceability of such
Documents or any material provision thereof; or


 


(c)                                  the rights or remedies of the Agent and the
Lenders under the Security,


 


provided that, for greater
certainty, in no event shall the incurrence of the liabilities and expenditures
(including expenditures for environmental remediation) in the amounts set forth
in the financial


 


23

















 


model provided by the Borrower
to the Lenders on Interlinks on March 11, 2004 (as amended on March 23, 2004)
be considered in any determination of Material Adverse Effect.


 


“Material Contracts” means, collectively:


 


(a)                                  all partnership agreements, unanimous
shareholder agreements, voting trust agreements, declarations of trust and
other indentures, agreements or instruments which (in whole or in part)
establish, create or govern the affairs of, or relate to the governance,
management, administration, existence or dissolution of, the Borrower or any of
its Subsidiaries; and


 


(b)                                 any indenture, agreement or instrument to which
the Borrower or a Subsidiary is a party, or to which an operator, agent,
trustee or other representative is a party on behalf of the Borrower or a
Subsidiary, which, if the same was terminated or ceased to be in force (without
replacement) or if the same was not fully or substantially observed or
performed in accordance with the terms thereof, would have or would reasonably
be expected to have a Material Adverse Effect; provided that, for certainty,
the foregoing shall not include any indenture, agreement, instrument or
arrangement which may be unilaterally terminated by the counterparty thereto by
giving 30 days or less prior written notice to the Borrower or Subsidiary (as
applicable).


 


“Material Subsidiary” means any Subsidiary of the
Borrower which:


 


(a)                                  has consolidated assets equal to or greater
than 5.0% of the combined assets of the Borrower, the Other Acquisition
Companies and their respective Subsidiaries;


 


(b)                                 has consolidated net income equal to or greater
than 5.0% of combined net income of the Borrower, the Other Acquisition
Companies and their respective Subsidiaries;


 


(c)                                  owns or holds, directly or indirectly (whether
through the ownership of or investments in other Subsidiaries or otherwise) any
ownership interest in any pipeline assets or interests in land related thereto
(but excluding therefrom any immaterial, inactive or obsolete  gathering
systems or related interests); or


 


(d)                                 is designated as a Designated Material
Subsidiary pursuant to Section 11.2,


 


provided that, in any event,
each Other Acquisition Company shall be deemed to be a “Material Subsidiary”
for all purposes hereof.


 


“Maturity Date” means May 11, 2007.


 


“Moody’s” means Moody’s Investors Services, Inc. and any
successors thereto.


 


“Non-Acceptance Lender” means (a) a Lender which ceases to
accept bankers’ acceptances in the ordinary course of its business or (b) in
respect of Lenders other than Schedule I Lenders, a Lender who, by notice in
writing to the Agent and the Borrower, elects thereafter to make BA Equivalent
Advances in lieu of accepting Bankers’ Acceptances.


 


24

















 


“Obligations” means, at any time and from time to time, all
of the obligations, indebtedness and liabilities (present or future, absolute
or contingent, matured or not) of the Borrower and its Subsidiaries to the
Lenders or the Agent under, pursuant or relating to the Documents or the Credit
Facility and whether the same are from time to time reduced and thereafter
increased or entirely extinguished and thereafter incurred again and including,
without limitation, all principal, interest, fees, legal and other costs,
charges and expenses, and other amounts payable by the Borrower under this
Agreement.


 


“Officer’s Certificate” means a certificate or notice
(other than a Compliance Certificate) signed by any one of the president, chief
financial officer, a vice-president, treasurer, assistant treasurer,
controller, corporate secretary or assistant secretary of the Borrower or
Subsidiary, as the case may be, (including, in the case of a partnership a
certificate or notice signed by such an officer of a general partner of such
partnership); provided, however, that Drawdown Notices, Conversion Notices,
Rollover Notices and Repayment Notices shall be executed on behalf of the
Borrower by any one of the foregoing persons or such other persons as may from
time to time be designated by written notice from the Borrower to the Agent.


 


“Open Position” means, as at
any date of determination with respect to the physical inventories of Petroleum
Substances of the Borrower and its Subsidiaries and the physical purchase, sale
or exchange of Petroleum Substances by the Borrower and its Subsidiaries, the
amount (determined on a combined basis for the Borrower and its Subsidiaries
taken as a whole) by which:


 


(a)                                  (i) the aggregate quantity of Petroleum
Substances then (A) purchased at an Open Position Price (including any amount
of Petroleum Substances which is the subject of a valid purchase agreement) by
the Borrower and its Subsidiaries or (B) comprising inventory (and which is not
the subject of a valid sale agreement) of the Borrower and its Subsidiaries
exceeds (ii) the aggregate quantity of Petroleum Substances which have then
been sold at an Open Position Price by the Borrower and its Subsidiaries
(including any amount of Petroleum Substances which is the subject of a valid
sale agreement); or


 


(b)                                 (i) the aggregate quantity of Petroleum
Substances which have then been sold at an Open Position Price by the Borrower
and its Subsidiaries (including any amount of Petroleum Substances which is the
subject of a valid sale agreement) exceeds (ii) the aggregate quantity of
Petroleum Substances then (A) purchased at an Open Position Price (including
any amount of Petroleum Substances which is the subject of a valid purchase
agreement) by the Borrower and its Subsidiaries or (B) comprising inventory
(and which is not the subject of a valid sale agreement) of the Borrower and
its Subsidiaries,


 


as the case may be; provided
that, in each case, (A) operating inventory, tank bottoms and pipeline linefill
shall be excluded in the determination of any such excess and (B) a Commodity
Agreement entered into to reduce the exposure of the Borrower and its
Subsidiaries in respect of such an excess shall reduce the amount of such
excess by the amount of the like commodity which is the subject of such
Commodity Agreement.


 


25

















 


“Open Position Price” means,
with respect to the price of Petroleum Substances purchased or sold (as
applicable) by the Borrower and its Subsidiaries, either:


 


(a)                                  a fixed price; or


 


(b)                                 a price at which the Borrower and its
Subsidiaries could not reasonably be expected to make an off-setting purchase
or sale (as the case may be) at a substantially similar price.


 


“Operating Cash” means, for any fiscal period and as determined
on a combined basis:


 


(a)                                  the aggregate of revenues earned with respect
to operations of the Borrower, the Other Acquisition Companies and their
Subsidiaries;


 


minus the aggregate (without
duplication) of:


 


(b)                                 the operating costs incurred by the Borrower,
the Other Acquisition Companies and their Subsidiaries in connection with the
sources of revenue referred to in subparagraph (a) above or incurred in
maintaining the assets or defending title thereto;


 


(c)                                  the general and administrative costs incurred
by the Borrower, the Other Acquisition Companies and their Subsidiaries in
connection with the sources of revenue referred to in subparagraph (a) above;
and


 


(d)                                 other costs, not included in subparagraphs (b)
or (c) above, incurred by the Borrower, the Other Acquisition Companies and
their Subsidiaries in earning the revenues from sources referred to in
subparagraph (a) above.


 


“Operating Lease” means a lease which is characterized as an
operating lease under GAAP; provided that, for the purposes hereof, “Operating
Lease” shall not include any operating lease under GAAP which is entered into
in the ordinary course of business in respect of the lease of real property,
including, for certainty, surface leases.


 


“Order” has the meaning set out in Section 7.10.


 


“Other Acquisition Companies” means, collectively, RMC
Acquisition Company and Rangeland Northern Pipeline Company  and “Other Acquisition Company”
means either one of such companies individually.


 


“Outstanding BAs Collateral” has the meaning set out in Section
2.17.


 


“Outstanding Principal” means, at any time, the aggregate
of (i) the principal amount of all outstanding Canadian Prime Rate Loans, (ii)
the Equivalent Amount in Canadian Dollars of the principal of all outstanding
U.S. Base Rate Loans and Libor Loans, (iii) the amounts payable at maturity of
all outstanding Bankers’ Acceptances and BA Equivalent Advances, (iv) the
maximum amount available to be drawn under all outstanding Letters of Credit
denominated in Canadian


 


26

















 


Dollars, and (v) the
Equivalent Amount in Canadian Dollars of the maximum amount available to be
drawn under all outstanding Letters of Credit denominated in United States
Dollars.


 


“Overdraft/Swingline Lender” means Royal Bank of Canada or such
other Lender which becomes the Successor Agent and which has agreed in writing
with the Borrower to act as Overdraft/Swingline Lender hereunder and to provide
Overdraft/Swingline Loans in accordance herewith.


 


“Overdraft/Swingline Loans” has the meaning set out in Section
2.21.


 


“Pacific GP” means the general partner of Pacific Energy
Partners, L.P., which is Pacific Energy GP, Inc. on the date hereof.


 


“Permitted Contest” means action taken by or on behalf of the
Borrower or Subsidiary in good faith by appropriate proceedings diligently
pursued to contest a Tax, claim or Security Interest, provided that:


 


(a)                                  the person to which the Tax, claim or Security
Interest being contested is relevant (and, in the case of a Subsidiary, the
Borrower on a combined basis) has established reasonable reserves therefor if
and to the extent required by GAAP;


 


(b)                                 proceeding with such contest does not have, and
would not reasonably be expected to have, a Material Adverse Effect; and


 


(c)                                  proceeding with such contest will not create a
material risk of sale, forfeiture or loss of, or interference with the use or
operation of, a material part of the property, assets and undertakings of the
Borrower and its Subsidiaries.


 


“Permitted Debt” means the following:


 


(a)                                  the Obligations;


 


(b)                                 Replacement Senior Debt;


 


(c)                                  Subordinated Debt;


 


(d)                                 Financial Instrument Obligations under and
pursuant to Permitted Hedging;


 


(e)                                  any Debt owing by a Subsidiary to the Borrower,
by a Subsidiary to a Material Subsidiary which is a Wholly-Owned Subsidiary and
by the Borrower to a Material Subsidiary which is a Wholly-Owned Subsidiary;


 


(f)                                    the Attributable Debt under Capital Leases of
the Borrower and its Subsidiaries; provided that the aggregate amount of such
Attributable Debt together with all Attributable Debt in respect of Operating
Leases of the Borrower and its Subsidiaries do not, in the aggregate at any
time, exceed Cdn. $3,500,000 (or the Equivalent Amount thereof in United States
Dollars or the equivalent thereof in any other currency);


 


27

















 


(g)                                 the deferred portion of the purchase price for
the MAPL Assets payable under and pursuant to the MAPL Purchase Agreement; and


 


(h)                                 Debt (including Purchase Money Obligations)
which is not otherwise Permitted Debt; provided that the principal amount of
such obligations do not, in the aggregate at any time, exceed Cdn. $5,000,000  (or
the Equivalent Amount thereof in United States Dollars or the equivalent
thereof in any other currency).


 


“Permitted Disposition” means, in respect of the Borrower
or any of its Subsidiaries, any of the following:


 


(a)                                  a sale or disposition by the Borrower or such
Subsidiary in the ordinary course of business and in accordance with sound
industry practice of tangible personal property that is obsolete, no longer
useful for its intended purpose or being replaced in the ordinary course of
business;


 


(b)                                 a sale or disposition of assets (including
shares or ownership interests) by a Subsidiary to the Borrower, by a Subsidiary
to a Material Subsidiary which is a Wholly-Owned Subsidiary and by the Borrower
to a Material Subsidiary which is a Wholly-Owned Subsidiary;


 


(c)                                  a sale or disposition by the Borrower or any
Subsidiary of its interest in machinery, equipment or other tangible personal
property for which Purchase Money Obligations were incurred and which
obligations are fully repaid concurrently with such sale or disposition;


 


(d)                                 a sale or disposition by the Borrower or any
Subsidiary of Petroleum Substances that were purchased by the Borrower or any
Subsidiary with a view to being transported on the pipeline systems of the
Borrower and its Subsidiaries, provided that such sale or disposition is made
in the ordinary course of business;


 


(e)                                  any other sale or disposition of assets of the
Borrower or such Subsidiary, provided that such sale or disposition: (i) does
not include any pipeline assets or interests in land related thereto (but
excluding therefrom any immaterial, inactive or obsolete gathering systems or
related interests) and (ii) is made in the ordinary course of business at fair
market value, subject to the express provisions of this Agreement.


 


“Permitted Encumbrances” means as at any particular time any
of the following encumbrances on the property or any part of the property of
the Borrower or any Subsidiary:


 


(a)                                  liens for taxes, assessments or governmental
charges not at the time due or delinquent or, if due or delinquent, the
validity of which is being contested at the time by a Permitted Contest;


 


(b)                                 liens under or pursuant to any judgment
rendered, or claim filed, against the Borrower or Subsidiary, which the
Borrower or Subsidiary (as applicable) shall be contesting at the time by a
Permitted Contest;


 


28

















 


(c)                                  undetermined or inchoate liens and charges
incidental to construction or current operations which have not at such time
been filed pursuant to law against the Borrower or Subsidiary or which relate
to obligations not due or delinquent or, if due or delinquent, the validity of
which is being contested at the time by a Permitted Contest;


 


(d)                                 easements, rights-of-way, servitudes or other
similar rights in land (including, without in any way limiting the generality
of the foregoing, rights-of-way and servitudes for railways, sewers, drains,
gas and oil and other pipelines, gas and water mains, electric light and power
and telecommunication, telephone or telegraph or cable television conduits,
poles, wires and cables) granted to or reserved or taken by other persons which
individually or in the aggregate do not materially detract from the value of
the land concerned or materially impair its use in the operation of the
business of the Borrower and its Subsidiaries, taken as a whole;


 


(e)                                  security given by the Borrower or Subsidiary to
a public utility or any municipality or governmental or other public authority
when required by such utility or municipality or other authority in connection
with the operations of the Borrower or Subsidiary (as applicable), all in the
ordinary course of its business which individually or in the aggregate do not
materially detract from the value of the asset concerned or materially impair
its use in the operation of the business of the Borrower and its Subsidiaries,
taken as a whole;


 


(f)                                    any title defect or other encumbrance relating
to property which (i) does not secure any Debt or obligations in respect
thereof and (ii) is of a minor nature and which, individually or in the
aggregate with other such defects and encumbrances, does not materially detract
from the value of the assets, or materially impair the operation of the
business, of the Borrower and its Subsidiaries, in each case taken as a whole;


 


(g)                                 pledges or deposits of cash, marketable
securities or other financial assets which do not secure Debt, which are
provided to secure the performance of bids, trade contracts, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, and (in each case) which are provided or incurred in the
ordinary course of business, including deposits paid or payable under the
Rangeland Purchase Agreement and the MAPL Purchase Agreement;


 


(h)                                 any option or other right of Imperial Oil, a
partnership of McColl-Frontenac Petroleum Inc. and Imperial Oil Limited,
contemplated by the MAPL Purchase Agreement and related agreements to reacquire
part of the MAPL Assets consisting of approximately eight acres of fee simple
real property in the event such real property is no longer used in connection
with the operation of a pipeline, which option is in the nature of a forfeiture
and is exercisable for nominal consideration;


 


(i)                                     the reservation in any original grants from the
Crown of any land or interests therein and statutory exceptions to title;


 


29

















 


(j)                                     any Capital Lease or Operating Lease (including
Sale–Leasebacks) of the Borrower and its Subsidiaries; provided that the
aggregate Attributable Debt in respect of such leases does not, in the
aggregate at any time, exceed Cdn. $3,500,000 (or the Equivalent Amount thereof
in United States Dollars or the equivalent thereof in any other currency);


 


(k)                                  Security Interests in favour of the Lenders or
the Agent on behalf of the Lenders;


 


(l)                                     the Security;


 


(m)                               Security Interests which are not otherwise
Permitted Encumbrances (including any Security Interests created, incurred or
assumed to secure any Purchase Money Obligations); provided that (i) the
aggregate principal amount of obligations secured thereby does not at any time
exceed Cdn. $5,000,000 (or the Equivalent Amount thereof in United States
Dollars or the equivalent thereof in any other currency) and (ii) such Security
Interests do not attach generally to all or substantially all of the
undertaking, assets and property of the Borrower or any Subsidiary (such as a
Security Interest in the nature of a floating charge on all or substantially
all of the undertaking, assets and property of a person); and


 


(n)                                 any extension, renewal or replacement (or
successive extensions, renewals or replacements), as a whole or in part, of any
Security Interest referred to in the preceding subparagraphs (a) to (m)
inclusive of this definition, so long as any such extension, renewal or
replacement of such Security Interest is limited to all or any part of the same
property that secured the Security Interest extended, renewed or replaced (plus
improvements on such property) and the indebtedness or obligation secured
thereby is not increased,


 


provided that nothing in this
definition shall in and of itself cause the Obligations hereunder to be
subordinated in priority of payment to any such Permitted Encumbrance or cause
any Security Interests in favour of the Lenders or the Agent on behalf of the
Lenders to rank subordinate to any such Permitted Encumbrance.


 


“Permitted Hedging” means Financial Instruments:


 


(a)                                  which are entered into in the ordinary course
of business and for hedging purposes and not for speculative purposes
(determined, where relevant, by reference to GAAP); for certainty, Interest
Hedging Agreements having as a subject matter principal amounts (either
individually or in the aggregate, but determined on a net basis taking into
account transactions or agreements entered into to reverse the position or
limit the exposure under an existing Interest Hedging Agreement) greater than
the aggregate liability of the Borrower and its Subsidiaries for borrowed money
shall be deemed to be for speculative purposes; and


 


(b)                                 which have a term of (i) for any Financial
Instrument relating to Petroleum Substances, 1 year or less and (ii) for all
other Financial Instruments, 3 years or less (for certainty, for all purposes
relating hereto and to the other Documents, (A) the term of any Financial
Instrument shall commence on the date that the Financial


 


30

















 


Instrument in
question is entered into notwithstanding the fact that the effective date of
such Financial Instrument, or other date from which payments or deliveries are
to be made or determined thereunder, is subsequent to the date such Financial
Instrument is entered into and (B) without limiting the foregoing, and in
addition thereto, the term of a swap transaction or other transaction entered
into pursuant to or governed by a Master Agreement published by the International
Swaps and Derivatives Association, Inc. (including by International Swap
Dealers Association, Inc.) or any successor thereto shall commence on the trade
date thereof);


 


provided that, with respect to
Commodity Agreements, a Commodity Agreement shall not be Permitted Hedging if
the aggregate quantity of Petroleum Substances which is the subject matter
thereof, when taken together with the aggregate quantity of Petroleum
Substances which are the subject of all other Commodity Agreements then outstanding,
exceeds 500,000 barrels.


 


“Petroleum Substances” means any one or more of crude oil,
crude bitumen, synthetic crude oil, petroleum, natural gas, natural gas
liquids, related hydrocarbons and any and all other substances, whether liquid,
solid or gaseous, whether hydrocarbons or not, produced or producible in
association with any of the foregoing, including hydrogen sulphide and sulphur.


 


“POA LC” means a Letter of Credit issued by the
Lenders (each as to their Rateable Portion thereof) under the Credit Facility
and executed by the Agent in the name and on behalf of, as attorney-in-fact
for, the Lenders, with each such Letter of Credit to include the provisions and
to be substantially in the form annexed hereto as Schedule J.


 


“Positive Working Capital” means, as at any date of
determination, that Current Assets exceeds Current Liabilities.


 


“Power of Attorney” means a power of attorney provided by the
Borrower to a Lender with respect to Bankers’ Acceptances in accordance with
and pursuant to Section 6.4 hereof.


 


“Purchase Agreements” means, collectively, the MAPL
Purchase Agreement and the Rangeland Purchase Agreement, and “Purchase
Agreement” means either of such agreements individually.


 


“Purchase Money Obligation” means any monetary obligation created
or assumed as part of the purchase price of real or tangible personal property,
whether or not secured, any extensions, renewals or refundings of any such
obligation, provided that the principal amount of such obligation outstanding
on the date of such extension, renewal or refunding is not increased and
further provided that any security given in respect of such obligation shall
not extend to any property other than the property acquired in connection with
which such obligation was created or assumed and fixed improvements, if any,
erected or constructed thereon and the proceeds thereof.


 


“Qualifying Purchase” means the purchase of up to and
including 50% of the issued and outstanding shares in the capital of the
Borrower or an Other Acquisition Company by a Qualifying Purchaser, provided
that not less than 50% of the issued and outstanding shares in the capital of
the Borrower and each Other Acquisition Company (including not less than 50% of
the shares having attached thereto the votes sufficient to elect a majority of
the board of directors) shall be legally and beneficially held, directly or
indirectly, by Pacific Energy Partners, L.P.


 


31



















“Qualifying Purchaser” means:


 


	
  (a)

  	
   

  	
  an income fund having (i) a Canadian Income Fund
  Stability Rating of SR-2 (or the then equivalent rating of S&P) or higher
  from S&P or (ii) the then equivalent rating from another nationally
  recognized debt rating agency;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  any other person having (i) a long-term debt
  rating of BBB- (or the then equivalent rating of S&P), with a stable
  outlook, or higher from S&P or (ii) the then equivalent rating from
  another nationally recognized debt rating agency; or

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  any other person which is a wholly-owned
  Subsidiary of a person referred to in subparagraph (a) or (b) of this
  definition,

  



 


and, in each
case, the principal business of such person and its Subsidiaries shall be the
ownership and operation of oil and gas pipelines or properties and related
assets located in North America; provided that, notwithstanding the foregoing,
any income fund previously approved in writing by each Lender and each of the
wholly-owned Subsidiaries of such income fund shall each be a “Qualifying
Purchaser” for all purposes hereof so long as such income fund has a Canadian
Income Fund Stability Rating of SR-3 (or the then equivalent rating of S&P)
or higher from S&P.


 


“Quarter End” means March 31,
June 30, September 30 and December 31 in each year.


 


“Rangeland Acquisition” means the acquisition by the
Borrower and RMC Acquisition Company of all of the issued and outstanding
shares in the capital of each of Aurora Pipeline Company Ltd., Rangeland
Pipeline Company and Rangeland Marketing Company pursuant to the Rangeland
Purchase Agreement.


 


“Rangeland Business Unit Assets” has the meaning ascribed thereto
in the Rangeland Purchase Agreement.


 


“Rangeland Purchase Agreement” means the share purchase and sale
agreement dated as of February 23, 2004 between BP Canada Energy Company
and the Borrower and RMC Acquisition Company relating to the purchase by the Borrower and RMC Acquisition
Company
of all of the issued
and outstanding shares in the capital of each of Aurora Pipeline Company Ltd.,
Rangeland Pipeline Company and Rangeland Marketing Company from BP Canada
Energy Company.


 


“Rangeland Reimbursement Agreement” means the reimbursement agreement dated as of May 11, 2004 by and
between Pacific Energy Partners, L.P., the Borrower, RMC Acquisition Company,
Rangeland Marketing Company, Rangeland Pipeline Company and Aurora Pipeline
Company Ltd., as in effect on the date hereof.


 


“Rateable”
and “Rateably”
means the proportion that the Equivalent Amount in Canadian Dollars of the
amount of the Obligations and Financial Instrument Obligations under Lender
Financial Instruments of any Lender (as the case may be) bears to the aggregate
of the Equivalent Amount in Canadian Dollars of the Obligations and Financial
Instrument Obligations under Lender Financial Instruments of all Lenders, as
determined at the Adjustment Time.


 


32

















 


“Rateable Portion”, as regards any Lender, with
regard to any amount of money, means (subject to Section 6.5 in respect of
the rounding of allocations of Bankers’ Acceptances) in respect of the Credit
Facility and Drawdowns, Conversion, Rollovers and Loans and other amounts
payable thereunder, the product obtained by multiplying that amount by the
quotient obtained by dividing (i) that Lender’s Commitment by
(ii) the aggregate of all of the Lenders’ Commitments;


 


“Realization Proceeds” has the meaning set out in
Section 12.7.


 


“Rebalancing Notice” has the meaning set out in
Section 2.21.


 


“Reimbursement Obligations” means, collectively:


 


	
  (a)

  	
   

  	
  any and all obligations of the Borrower and its
  Subsidiaries under or pursuant to the Rangeland Reimbursement Agreement;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  any and all obligations of the Borrower and its
  Subsidiaries under or pursuant to any reimbursement agreement entered into
  with Pacific Energy Partners, L.P. on substantially the same terms (with
  conforming changes) as the Rangeland Reimbursement Agreement in respect of
  the guarantee of the obligations of the purchasers under the MAPL Purchase
  Agreement provided by Pacific Energy Partners, L.P. to the vendors under the
  MAPL Purchase Agreement; and

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  any and all obligations of the Borrower and its
  Subsidiaries to or in favour of Pacific Energy Partners, L.P. which may arise
  by subrogation in respect of payments made by Pacific Energy Partners, L.P.
  under or pursuant to the guarantees provided by Pacific Energy Partners, L.P.
  to the vendors under the Purchase Agreements.

  



 


“Related Party” means any person which is any one
or more of the following:


 


	
  (a)

  	
   

  	
  an Affiliate of the Borrower, an Other Acquisition
  Company or any Subsidiary thereof;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  a shareholder or partner of the Borrower, an Other
  Acquisition Company or any Subsidiary or an Affiliate of any such shareholder
  or partner;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Pacific Energy Partners, L.P. and its Affiliates,
  including, for certainty, the Pacific GP and its Affiliates; and

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  a person which is not at arm’s length from the
  Borrower, the Other Acquisition Companies and their Subsidiaries.

  



 


“Related Party Payment” means the payment of any
administration fee, management fee, incentive fee or other fee or other similar
amount to any Related Party by the Borrower, an Other Acquisition Company or
any Subsidiary, other than payments to the Borrower, an Other Acquisition
Company or a Wholly-Owned Subsidiary.


 


“Release” means any release, spill,
emission, leak, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the environment including, without limitation, the
movement of


 


33

















 


Hazardous
Materials through ambient air, soil, surface water, ground water, wetlands,
land or sub-surface strata.


 


“Reorganization” means the amalgamations and other
transactions described in Schedule K annexed hereto.


 


“Repayment Notice” means a notice substantially in
the form annexed hereto as Schedule F to be given to the Agent by the
Borrower pursuant hereto.


 


“Replacement Senior Debt” means Senior Debt issued by the
Borrower or a Guarantor on terms and conditions acceptable to the Lenders
(acting reasonably) where the net proceeds of such issuance are used to
permanently repay and reduce the amount of the Credit Facility.


 


“Required Permits” means all Governmental
Authorizations which are necessary at any given time for the Borrower and each
of its Material Subsidiaries to own and operate its property, assets, rights
and interests or to carry on its business and affairs.


 


“Rollover” means:


 


	
  (a)

  	
   

  	
  with respect to any Libor Loan, the continuation
  of all or a portion of such Loan (subject to the provisions hereof) for an
  additional Interest Period subsequent to the initial or any subsequent
  Interest Period applicable thereto;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  with respect to Bankers’ Acceptances, the issuance
  of new Bankers’ Acceptances or the making of new BA Equivalent Advances
  (subject to the provisions hereof) in respect of all or any portion of
  Bankers’ Acceptances (or BA Equivalent Advances made in lieu thereof)
  maturing at the end of the Interest Period applicable thereto, all in
  accordance with Article 6 hereof; and

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  with respect to Letters of Credit, the extension
  or replacement of an existing Letter of Credit, provided the beneficiary
  thereof (including any successors or permitted assigns thereof) remains the
  same, the maximum amount available to be drawn thereunder is not increased,
  the currency in which the same is denominated remains the same and the terms
  upon which the same may be drawn remain the same.

  



 


“Rollover Date” means the date of commencement of
a new Interest Period applicable to a Loan and which shall be a Banking Day.


 


“Rollover Notice” means a notice substantially in
the form annexed hereto as Schedule G to be given to the Agent by the
Borrower pursuant hereto.


 


“S&P” means the Standard & Poor’s
Rating Group (a division of The McGraw-Hill Companies, Inc.) and any successors
thereto.


 


“Sale-Leaseback”
means an arrangement, transaction or series of arrangements or transactions
under which title to any real property, tangible personal property or fixture
is transferred by the Borrower or a Subsidiary (a “transferor”) to another
person which leases or otherwise grants the right to use such property to the
transferor (or nominee of the transferor) and, whether or not in


 


34

















 


connection
therewith, the transferor also acquires a right or is subject to an obligation
to acquire such property or a material portion thereof, and regardless of the
accounting treatment of such arrangement, transaction or series of arrangements
or transactions.


 


“Schedule I Lender” means a Lender which is a
Canadian chartered bank listed on Schedule I to the Bank Act (Canada).


 


“Schedule II Lender” means a Lender which is a
Canadian chartered bank listed on Schedule II to the Bank Act (Canada).


 


“Schedule III Lender” means a Lender which is an
authorized foreign bank listed on Schedule III to the Bank Act (Canada).


 


“Security” means, collectively, the
guarantees, debentures, debenture pledge agreements, pledge agreements,
assignments and other security agreements executed and delivered, or required
to be executed and delivered, by the Borrower and its Subsidiaries under and
pursuant to this Agreement and shall include, in respect of the Borrower, the
floating charge demand debenture, the debenture pledge agreement and the
general security agreement substantially in the forms of Schedules H-1, H-2 and
H-3, respectively, annexed hereto with such modifications and insertions as may
be required by the Agent, acting reasonably, and, in respect of each Material
Subsidiary, a guarantee, a floating charge demand debenture, a debenture pledge
agreement and a general security agreement substantially in the forms of
Schedules H-4, H-5, H-6 and H-7, respectively, annexed hereto with such
modifications and insertions as may be required by the Administrative Agent,
acting reasonably; provided that, for certainty, the definition of “Security”
does not include the Subordination Agreement.


 


“Security Interest” means mortgages, charges,
pledges, hypothecs, assignments by way of security, conditional sales or other
title retentions, security created under the Bank Act (Canada), liens,
encumbrances, security interests or other interests in property, howsoever
created or arising, whether fixed or floating, perfected or not, which secure
payment or performance of an obligation and, including, in any event:


 


	
  (a)

  	
   

  	
  deposits or transfers of cash, marketable
  securities or other financial assets under any agreement or arrangement
  whereby such cash, securities or assets may be withdrawn, returned or
  transferred only upon fulfilment of any condition as to the discharge of any
  other indebtedness or other obligation to any creditor;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  (i) rights of set-off or (ii) any other right of
  or arrangement of any kind with any creditor, which in any case are made,
  created or entered into, as the case may be, for the purpose of or having the
  effect (directly or indirectly) of (A) securing Debt, (B) preferring some
  holders of Debt over other holders of Debt or (C) having the claims of any
  creditor be satisfied prior to the claims of other creditors with or from the
  proceeds of any properties, assets or revenues of any kind now owned or later
  acquired (other than, with respect to (C) only, rights of set-off granted or
  arising in the ordinary course of business);

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  the rights of lessors under Capital Leases,
  Operating Leases and any other lease financing; and

  



 


35

















 


	
  (d)

  	
   

  	
  absolute assignments of accounts receivable,
  except for absolute assignments of accounts receivable made in conjunction
  with a sale of property and assets which is permitted by the provisions
  hereof.

  



 


“Senior Debt”
means all Debt of the Borrower, the Other Acquisition Companies and their
Subsidiaries other than Subordinated Debt; provided that, for the purpose of
and only for the purpose of determining the Senior Debt to EBITDA Ratio
hereunder (and, for certainty and without limiting the foregoing, not for the
purpose of determining Senior Interest Expense) the undrawn amounts of any
outstanding Letters of Credit shall not be included in Senior Debt so long as
the aggregate Outstanding Principal thereof does not exceed Cdn.$40,000,000
(and any amount in excess thereof shall be included in the determination of
Senior Debt).


 


“Senior Debt to EBITDA Ratio” means, as at a Quarter End, the
ratio of (a) Senior Debt as at such Quarter End to (b) EBITDA for the 12 months
(or other relevant period where EBITDA is annualized in accordance with the
definition thereof) ending at such Quarter End.


 


“Senior Interest Expense” means all Interest Expense on or
in respect of Senior Debt; provided that for the purpose of determining Senior
Interest Expense attributable to the Senior Debt incurred in connection with an
Acquisition (a) for the first full fiscal quarter of the Borrower and the Other
Acquisition Companies after the completion of an Acquisition, the Senior
Interest Expense in such fiscal quarter attributable to the Senior Debt
incurred in connection with such Acquisition shall be multiplied by four, (b)
for the second full fiscal quarter of the Borrower and the Other Acquisition
Companies after the completion of an Acquisition, the Senior Interest Expense
in such fiscal quarter and in the preceding fiscal quarter attributable to the
Senior Debt incurred in connection with such Acquisition shall be multiplied by
two and (c) for the third full fiscal quarter of the Borrower and the Other
Acquisition Companies after the completion of an Acquisition, , the Senior
Interest Expense in such fiscal quarter and in the two preceding fiscal
quarters attributable to the Senior Debt incurred in connection with such
Acquisition shall be multiplied by 4/3; and further provided that for the
purpose of the foregoing determination of Senior Interest Expense, Interest
Expense in respect of that portion of the Outstanding Principal which exceeds
Cdn.$45,000,000 shall be deemed to be attributable to Senior Debt incurred in
connection with the MAPL Acquisition and Interest Expense in respect of that
portion of the Outstanding Principal which is equal to or less than
Cdn.$45,000,000 shall be deemed to be attributable to Senior Debt incurred in
connection with the Rangeland Acquisition.


 


“Subordinated Debt” means all unsecured Debt
of the Borrower and its Subsidiaries owing to a Related Party which is not a
Wholly-Owned Subsidiary, if and for so long as such Debt shall be subordinated
to the Obligations and Lender Financial Instrument Obligations in accordance
with and upon the terms and conditions set forth in the Subordination
Agreement.


 


“Subordination Agreement” means the subordination agreement
among the Borrower, the Subsidiaries party thereto, the Related Parties party
thereto and the Agent substantially in the form of Schedule I annexed
hereto.


 


“Subsidiary” means, with respect to any person
(“X”):


 


36

















 


(a)                                  any corporation of which at least
a majority of the outstanding shares having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time shares of any other class or classes of
such corporation might have voting power by reason of the happening of any
contingency, unless the contingency has occurred and then only for as long as
it continues) is at the time directly, indirectly or beneficially owned or
controlled by X or one or more of its Subsidiaries, or X and one or more of its
Subsidiaries;


 


(b)                                 any partnership of which, at the
time, X, or one or more of its Subsidiaries, or X and one or more of its
Subsidiaries: (i) directly, indirectly or beneficially own or control more
than 50% of the income, capital, beneficial or ownership interests (however
designated) thereof; and (ii) is a general partner, in the case of limited
partnerships, or is a partner or has authority to bind the partnership, in all
other cases; or


 


(c)                                  any other person of which at least
a majority of the income, capital, beneficial or ownership interests (however
designated) are at the time directly, indirectly or beneficially owned or
controlled by X, or one or more of its Subsidiaries, or X and one or more of
its Subsidiaries,


 


provided that,
unless otherwise expressly provided or the context otherwise requires,
references herein to “Subsidiary” or “Subsidiaries” shall be and shall be
deemed to be references  to Subsidiaries
of the Borrower, and further provided that, unless otherwise expressly provided
or the context otherwise requires:


 


(i)                                     each Other Acquisition
Company;


 


(ii)                                  each Subsidiary of an Other
Acquisition Company; and


 


(iii)                               each person that would be a
Subsidiary of the Borrower and the Other Acquisition Companies if (and assuming
that) the Borrower and the Other Acquisition Companies were then one single
legal entity;


 


shall be deemed to be a Subsidiary of the
Borrower.


 


“Successor Agent” has the meaning set out in
Section 15.10.


 


“Syndicated Drawdown” means a Drawdown under the Credit
Facility other than by way of Overdraft/Swingline Loan.


 


“Syndicated Loans” means a Loan under the Credit
Facility other than an Overdraft/Swingline Loan.


 


“Takeover” has the meaning set out in
Section 2.20.


 


“Target” has the meaning set out in
Section 2.20.


 


“Taxes” means all taxes, levies, imposts,
stamp taxes, duties, fees, deductions, withholdings, charges, compulsory loans
or restrictions or conditions resulting in a charge which are imposed,


 


37

















 


levied,
collected, withheld or assessed by any country or political subdivision or
taxing authority thereof now or at any time in the future, together with
interest thereon and penalties, charges or other amounts with respect thereto,
if any, and “Tax” and “Taxation” shall be construed accordingly.


 


“Termination Event” means an automatic early
termination of obligations relating to a Lender Financial Instrument under any
agreement relating thereto without any notice being required from a Lender.


 


“Transportation Rates” means any one or more of the
following:


 


	
  (a)

  	
   

  	
  the
  location differentials from time to time between the prices at which
  Petroleum Substances are and will be purchased and sold by the Borrower and
  its Subsidiaries; or

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  any
  tariff, toll, fee or other amount paid or payable from time to time for the
  shipping, transportation or storage of Petroleum Substances on, through or in
  the pipeline systems of the Borrower and its Subsidiaries.

  



 


“Uniform Customs” has the meaning set out in
Section 7.10.


 


“U.S. Base Rate” means, for any day, the greater
of:


 


	
  (a)

  	
   

  	
  the rate of interest per annum established from
  time to time by the Agent as the reference rate of interest for the
  determination of interest rates that the Agent will charge to customers in
  Canada for United States Dollar demand loans in Canada; and

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  the rate of interest per annum for such day or, if
  such day is not a Banking Day, on the immediately preceding Banking Day,
  equal to the sum of the Federal Funds Rate (expressed for such purpose as a
  yearly rate per annum in accordance with Section 5.4), plus 1.00% per
  annum,

  



 


provided that if
both such rates are equal or if such Federal Funds Rate is unavailable for any
reason on the date of determination, then the “U.S. Base Rate” shall be the
rate specified in (a) above.


 


“U.S. Base Rate Loan” means an Advance in, or
Conversion into, United States Dollars made by the Lenders to the Borrower with
respect to which the Borrower has specified or a provision hereof requires that
interest is to be calculated by reference to the U.S. Base Rate.


 


“United States Dollars” and “U.S. $” means the
lawful money of the United States of America.


 


“Utilization” means, for any period in respect
of which the standby fees payable pursuant to Section 5.6 are being
determined, the proportion (expressed as a percentage) that the average amount
of Outstanding Principal (excluding, for the purposes of determining such
standby fees, any Overdraft/Swingline Loans) during such periods bears to the
maximum principal amount of the Credit Facility during such period.


 


38

















 


“Wholly-Owned Subsidiary” means:


 


(a)                                  an Other Acquisition Company;


 


(b)                                 a corporation, all of the issued
and outstanding shares in the capital of which are beneficially held by:


 


	
  (i)

  	
   

  	
  one or more of the
  Borrower and the Other Acquisition Companies;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  one or more of the
  Borrower and the Other Acquisition Companies and one or more corporations,
  all of the issued and outstanding shares in the capital of which are held by
  one or more of the Borrower and the Other Acquisition Companies; or

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  two or more corporations,
  all of the issued and outstanding shares in the capital of which are held by
  one or more of the Borrower and the Other Acquisition Companies;

  



 


(c)                                  a corporation which is a
Wholly-Owned Subsidiary of a corporation that is a Wholly-Owned Subsidiary; or


 


(d)                                 a partnership, all of the partners
of which are the Borrower and/or Wholly-Owned Subsidiaries.


 


1.2                                                                               Headings;
Articles and Sections


 


The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof”,
“hereunder” and similar expressions refer to this Agreement and not to any
particular Article, Section or other portion hereof and include any
agreement supplemental hereto.  Unless
something in the subject matter or context is inconsistent therewith,
references herein to Articles and Sections are to Articles and Sections of this
Agreement.


 


1.3                                                                               Number;
persons; including


 


Words importing the singular number only shall include the plural and
vice versa, words importing the masculine gender shall include the feminine and
neuter genders and vice versa, words importing persons shall include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations and other bodies corporate and vice versa and words and terms
denoting inclusiveness (such as “include” or “includes” or “including”),
whether or not so stated, are not limited by their context or by the words or
phrases which precede or succeed them.


 


1.4                                                                               Accounting
Principles


 


Wherever in this Agreement reference is made to generally accepted
accounting principles (“GAAP”), such reference shall be deemed to
be to the recommendations at the relevant time of the Canadian Institute of
Chartered Accountants, or any successor institute, applicable on a consolidated
basis or combined basis, as applicable, (unless otherwise specifically provided
or contemplated herein to be applicable on an unconsolidated or uncombined  basis)
as at the date on which such calculation is made or required to be made in
accordance with GAAP.  Where the


 


39

















 


character or amount of any asset or liability or item of revenue or
expense or amount of equity is required to be determined, or any consolidation,
combination or other accounting computation is required to be made for the purpose of this Agreement or any other Document, such
determination or calculation shall, to the extent applicable and except as
otherwise specified herein or as otherwise agreed in writing by the parties, be
made in accordance with GAAP applied on a consistent basis.


 


1.5                                                                               References
to Agreements and Enactments


 


Reference herein to any agreement, instrument, licence or other
document shall be deemed to include reference to such agreement, instrument,
licence or other document as the same may from time to time be amended,
modified, supplemented or restated in accordance with the provisions of this
Agreement if and to the extent such provisions are applicable; and reference
herein to any enactment shall be deemed to include reference to such enactment
as re-enacted, amended or extended from time to time and to any successor
enactment.


 


1.6                                                                               References
to “Subsidiaries” and “Wholly-Owned Subsidiaries”


 


For certainty, and in addition to and without limiting the effect of
the definition of “Subsidiary” contained in Section 1.1, references herein
to “Subsidiaries of the Borrower” or similar expressions shall, unless the
context otherwise requires, include each Other Acquisition Company and each
Subsidiary thereof.  In addition, for
certainty, and in addition to and without limiting the effect of the definition
of “Wholly-Owned Subsidiary” contained in Section 1.1, references herein
to “Wholly-Owned Subsidiaries” or similar expressions shall, unless the context
otherwise requires, include each Other Acquisition Company.


 


1.7                                                                               Per Annum
Calculations


 


Unless otherwise stated, wherever in this Agreement reference is made
to a rate “per annum” or a similar expression is used, such rate shall be
calculated on the basis of calendar year of 365 days or 366 days, as
the case may be.


 


1.8                                                                               No
Guarantee by Pacific Energy Partners, L.P. and its U.S. Affiliates 


 


For certainty, the Obligations shall only be guaranteed by the
Guarantors and shall not be guaranteed by, nor (except for its respective
obligations under the Documents to which it is a party) shall there be recourse
for the Obligations to, Pacific Energy Partners, L.P. or any Affiliate thereof
which is not a Guarantor.


 


1.9                                                                               Schedules


 


The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:


 


	
  Schedule A

  	
   

  	
  -

  	
   

  	
  Lenders and Commitments

  
	
  Schedule B

  	
   

  	
  -

  	
   

  	
  Assignment Agreement

  
	
  Schedule C

  	
   

  	
  -

  	
   

  	
  Compliance Certificate

  
	
  Schedule D

  	
   

  	
  -

  	
   

  	
  Conversion Notice

  
	
  Schedule E

  	
   

  	
  -

  	
   

  	
  Drawdown Notice

  



 


40

















 


	
  Schedule F

  	
   

  	
  -

  	
   

  	
  Repayment Notice

  
	
  Schedule G

  	
   

  	
  -

  	
   

  	
  Rollover Notice

  
	
  Schedule H-1

  	
   

  	
  -

  	
   

  	
  Borrower Debenture

  
	
  Schedule H-2

  	
   

  	
  -

  	
   

  	
  Borrower Debenture Pledge Agreement

  
	
  Schedule H-3

  	
   

  	
  -

  	
   

  	
  Borrower General Security Agreement

  
	
  Schedule H-4

  	
   

  	
  -

  	
   

  	
  Material Subsidiary Guarantee

  
	
  Schedule H-5

  	
   

  	
  -

  	
   

  	
  Material Subsidiary Debenture

  
	
  Schedule H-6

  	
   

  	
  -

  	
   

  	
  Material Subsidiary Debenture Pledge Agreement

  
	
  Schedule H-7

  	
   

  	
  -

  	
   

  	
  Material Subsidiary General Security Agreement

  
	
  Schedule I

  	
   

  	
  -

  	
   

  	
  Subordination Agreement

  
	
  Schedule J

  	
   

  	
  -

  	
   

  	
  POA LC

  
	
  Schedule K

  	
   

  	
  -

  	
   

  	
  Description of Reorganization.

  



 


ARTICLE 2 -
THE CREDIT FACILITY


 


2.1                                                                               The Credit Facility


 


Subject to the terms and conditions hereof, each of the Lenders shall
make available to the Borrower such Lender’s Rateable Portion of the Credit
Facility.  Subject to Section 2.18,
the Outstanding Principal under the Credit Facility shall not exceed the
maximum principal amount of the Credit Facility.


 


2.2                                                                               Types of
Availments


 


The Borrower may, in Canadian Dollars, make Drawdowns, Conversions and
Rollovers under the Credit Facility of Canadian Prime Rate Loans and Bankers’
Acceptances and may, in United States Dollars, make Drawdowns, Conversions and
Rollovers under the Credit Facility of U.S. Base Rate Loans and Libor
Loans.  In addition, the Borrower may
make Drawdowns and Rollovers under the Credit Facility of Letters of Credit
denominated in Canadian Dollars or United States Dollars; provided that, the
Outstanding Principal of all Fronted LCs outstanding under the Credit Facility
shall not exceed Cdn. $20,000,000.  The
Borrower shall have the option, subject to the terms and conditions hereof, to
determine which types of Loans shall be drawn down and in which combinations or
proportions.


 


2.3                                                                               Purpose


 


The Credit
Facility is being made available for the general corporate purposes of the
Borrower and its Subsidiaries, including for the purposes of financing a
portion of, firstly, the Rangeland Acquisition and, subsequent thereto, the
MAPL Acquisition and (in each case) related fees and expenses; provided that,
the Credit Facility may not be used to fund Distributions, except to the extent
of Distributions permitted hereby from time to time.


 


2.4                                                                               Availability
and Nature of the Credit Facility


 


(1)                                  Subject to the terms and
conditions hereof, the Borrower may make Drawdowns under the Credit Facility
prior to the Maturity Date.


 


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(2)                                  The Credit Facility shall be a
revolving credit facility: that is, the Borrower may increase or decrease Loans
under the Credit Facility by making Drawdowns, repayments and further
Drawdowns.


 


(3)                                  Notwithstanding any other
provision hereof to the contrary, the availability of the Credit Facility shall
be limited to, and the Borrower shall not be entitled to have Loans with an
Outstanding Principal in excess of, Cdn.$75,000,000 until the Agent has
received the financial statements and Compliance Certificate required to be
delivered pursuant to Section 10.1(e) for the Quarter End at the end of
the first full fiscal quarter immediately following completion of the MAPL
Acquisition.


 


(4)                                  Notwithstanding any other
provision hereof to the contrary, the availability of the Credit Facility shall
be limited to, and the Borrower shall not be entitled to have Loans with an
Outstanding Principal in excess of, Cdn.$45,000,000 until the following
conditions shall be satisfied:


 


(a)                                  the MAPL Purchase Agreement shall have been executed and delivered
in a form and on terms and conditions acceptable to all of the Lenders (each
acting reasonably);


 


(b)                                 the Borrower shall have delivered to the Agent true, correct and
complete copies of the MAPL Purchase Agreement and all other material
documentation effecting the completion of the MAPL Acquisition, together with
an Officer’s Certificate certifying the same to the Agent and the Lenders;


 


(c)                                  one or more of the Borrower, the Other Acquisition Companies and
their other Subsidiaries shall have completed the MAPL Acquisition on or before
December 15, 2004 in accordance with the MAPL Purchase Agreement and
without any material amendment thereto or waiver of a material condition by the
Borrower, the Other Acquisition Companies or their other Subsidiaries and one
or more of the Borrower, the Other Acquisition Companies and their Subsidiaries
shall be the legal and beneficial owners of all of the MAPL Assets, and the
Agent shall have received evidence thereof satisfactory to the Agent and Lenders’
Counsel (each acting reasonably);


 


(d)                                 all material Governmental Authorizations and third party consents
and approvals necessary for the completion of the MAPL Acquisition and the
ownership and operation of the MAPL Assets by the Borrower and its Subsidiaries
have been unconditionally obtained and are in full force and effect (including
any consents and approvals required under the Material Contracts, except, in
the case of third party consents and approvals (as opposed to Governmental
Authorizations) only, to the extent that the failure to obtain such third party
consents and approvals would not have or reasonably be expected to have a
Material Adverse Effect), and the Agent shall have received evidence thereof
satisfactory to the Agent and Lenders’ Counsel (each acting reasonably); and


 


(e)                                  each Subsidiary which is a legal or beneficial owner of any of the
MAPL Assets shall, to the extent that such Subsidiary has not previously
provided the same


 


42

















 


pursuant hereto, have executed and delivered to the Agent the Security
contemplated hereby, together with (for certainty, to the extent not previously
provided) a certified copy of its constating documents and legal opinions from
each of its counsel and Lenders’ Counsel in form and substance as may be
required by the Agent, acting reasonably, and all registrations, filings and
recordings (for certainty, to the extent not previously made) necessary or
desirable (as determined by the Lenders’ Counsel, acting reasonably) in
connection with such Security shall have been made and completed.


 


The foregoing conditions are inserted for
the sole benefit of the Lenders and the Agent and may be waived by the Lenders,
in whole or in part (with or without terms or conditions).


 


2.5                                                                               Minimum
Drawdowns


 


(1)                                  Each Drawdown under the Credit
Facility of the following types of Loans shall be in the following amounts
indicated:


 


(a)                                  Bankers’ Acceptances in minimum
aggregate amounts of Cdn. $3,000,000 at maturity and Drawdowns in excess thereof
in integral multiples of Cdn. $100,000; and


 


(b)                                 Libor Loans in minimum principal
amounts of U.S. $3,000,000 and Drawdowns in excess thereof in integral
multiples of U.S. $100,000.


 


(2)                                  In addition, each Drawdown under
the Credit Facility of the following types of Loans shall be in the following
amounts indicated:


 


(a)                                  Canadian Prime Rate Loans in
minimum principal amounts of Cdn. $1,000,000 and Drawdowns in excess
thereof in integral multiples of Cdn. $100,000; and


 


(b)                                 U.S. Base Rate Loans in minimum
principal amounts of U.S. $1,000,000 and Drawdowns in excess thereof in
integral multiples of U.S. $100,000.


 


2.6                                                                               Libor Loan
Availability


 


The availability of Drawdowns of, Conversions into and Rollovers of
requested Libor Loans is subject to Section 13.1 and, in particular, that
the Agent has not made a determination in respect of any requested Libor Loan
that any of the matters specified in Section 13.1(a), (b) or (c) are
applicable.


 


2.7                                                                               Notice
Periods for Drawdowns, Conversions and Rollovers


 


Subject to the provisions hereof, the Borrower may
make a Drawdown, Conversion or Rollover under the Credit Facility by delivering
a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be
(executed in accordance with the definition of Officer’s Certificate), with
respect to a specified type of Loan to the Agent not later than:


 


43

















 


(a)                                  10:00 a.m. (Calgary time)
three Banking Days prior to the proposed Drawdown Date, Conversion Date or
Rollover Date, as the case may be, for the Drawdown of, Conversion into or the
Rollover of Libor Loans;


 


(b)                                 10:00 a.m. (Calgary time) two
Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover
Date, as the case may be, for the Drawdown of, Conversion into or Rollover of
Bankers’ Acceptances;


 


(c)                                  10:00 a.m. (Calgary time) one
Banking Day prior to the proposed Drawdown Date or Conversion Date, as the case
may be, for Drawdowns of or Conversions into Canadian Prime Rate Loans and/or
U.S. Base Rate Loans; and


 


(d)                                 10:00 a.m. (Calgary time) two
Banking Days prior to the proposed Drawdown Date or Rollover Date, as the case
may be, for the Drawdown or Rollover of Letters of Credit.


 


2.8                                                                               Conversion
Option


 


Subject to the provisions of this Agreement and except for Letters of
Credit, the Borrower may convert the whole or any part of any type of Loan
under the Credit Facility into any other type of permitted Loan under the
Credit Facility by giving the Agent a Conversion Notice in accordance herewith;
provided that:


 


(a)                                  Conversions of Libor Loans and
Bankers’ Acceptances may only be made on the last day of the Interest Period
applicable thereto;


 


(b)                                 the Borrower may not convert a
portion only or the whole of an outstanding Loan unless both the unconverted
portion and converted portion of such Loan are equal to or exceed, in the
relevant currency of each such portion, the minimum amounts required for
Drawdowns of Loans of the same type as that portion (as set forth in
Section 2.5);


 


(c)                                  in respect of Conversions of a
Loan denominated in one currency to a Loan denominated in another currency, the
Borrower shall at the time of the Conversion repay the Loan or portion thereof
being converted in the currency in which it was denominated; and


 


(d)                                 a Conversion shall not result in
an increase in Outstanding Principal; increases in Outstanding Principal may
only be effected by Drawdowns.


 


2.9                                                                               Libor
Loan Rollovers; Selection of Libor Interest Periods


 


At or before 10:00 a.m. (Calgary time) three Banking Days prior to
the expiration of each Interest Period of each Libor Loan, the Borrower shall,
unless it has delivered a Conversion Notice pursuant to Section 2.8 and/or
a Repayment Notice pursuant to Section 2.15 (together with a Rollover
Notice if a portion only is to be converted or repaid; provided that a portion
of a Libor Loan may be continued only if the portion which is to remain
outstanding is equal to or exceeds the minimum amount required hereunder for
Drawdowns of Libor Loans) with respect to the aggregate


 


44

















 


amount of such Loan, deliver a Rollover Notice to the Agent selecting
the next Interest Period applicable to the Libor Loan, which new Interest
Period shall commence on and include the last day of such prior Interest
Period.  If the Borrower fails to
deliver a Rollover Notice to the Agent as provided in this Section, the
Borrower shall be deemed to have given a Conversion Notice to the Agent
electing to convert the entire amount of the maturing Libor Loan into a U.S.
Base Rate Loan.


 


2.10                                                                        Rollovers
and Conversions not Repayments


 


Any amount converted shall be a Loan of the type converted to upon such
Conversion taking place, and any amount rolled over shall continue to be the
same type of Loan under the Credit Facility as before the Rollover, but such
Conversion or Rollover (to the extent of the amount converted or rolled over)
shall not of itself constitute a repayment or a fresh utilization of any part
of the amount available under the Credit Facility.


 


2.11                                                                        Agent’s
Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans and
Libor Loans


 


Upon receipt of a Drawdown Notice, Rollover Notice or Conversion Notice
with respect to a Canadian Prime Rate Loan, U.S. Base Rate Loan or Libor Loan,
the Agent shall forthwith notify the relevant Lenders of the requested type of
Loan, the proposed Drawdown Date, Rollover Date or Conversion Date, each
Lender’s Rateable Portion of such Loan and, if applicable, the account of the
Agent to which each Lender’s Rateable Portion is to be credited.


 


2.12                                                                        Lenders’
and Agent’s Obligations with Respect to Canadian Prime Rate Loans, U.S. Base
Rate Loans and Libor Loans


 


Each Lender shall, for same day value on the Drawdown Date specified by
the Borrower in a Drawdown Notice with respect to a Canadian Prime Rate Loan, a
U.S. Base Rate Loan or a Libor Loan, credit the Agent’s account specified in
the Agent’s notice given under Section 2.11 with such Lender’s Rateable
Portion of each such requested Loan and for same day value on the same date the
Agent shall pay to the Borrower the full amount of the amounts so credited in
accordance with any payment instructions set forth in the applicable Drawdown
Notice.


 


2.13                                                                        Irrevocability


 


A Drawdown Notice, Rollover Notice, Conversion Notice or Repayment
Notice given by the Borrower hereunder shall be irrevocable and, subject to any
options the Lenders may have hereunder in regard thereto and the Borrower’s
rights hereunder in regard thereto, shall oblige the Borrower to take the action
contemplated on the date specified therein.


 


2.14                                                                        Optional
Cancellation or Reduction of Credit Facility


 


The Borrower may, at any time, upon giving at least 3 Banking Days
prior written notice to the Agent, cancel in full or, from time to time,
permanently reduce in part the unutilized portion of the Credit Facility;
provided, however, that any such reduction shall be in a minimum amount of  Cdn. $1,000,000  and
reductions in excess thereof shall be in integral multiples of Cdn. $1,000,000.  If the Credit Facility is so reduced, the
Commitments of each of the Lenders under the Credit Facility shall be reduced
pro rata in the same proportion that the amount of the reduction


 


45

















 


in the Credit Facility bears to the amount of the Credit Facility in
effect immediately prior to such reduction.


 


2.15                                                                        Optional
Repayment of Credit Facility


 


The Borrower may at any time and from time to time repay, without
penalty, to the Agent for the account of the Lenders or, in the case of Letters
of Credit return the same to the Agent for cancellation or provide for the
funding of, the whole or any part of any Loan owing by it together with accrued
interest thereon to the date of such repayment provided that:


 


(a)                                  the Borrower shall give a
Repayment Notice (executed in accordance with the definition of Officer’s
Certificate) to the Agent not later than:


 


	
  (i)

  	
   

  	
  10:00 a.m. (Calgary
  time) three Banking days prior to the date of the proposed repayment, for
  Libor Loans;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  10:00 a.m. (Calgary
  time) two Banking days prior to the date of the proposed repayment, for
  Letters of Credit and Banker’s Acceptances; and

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  10:00 a.m. (Calgary
  time) one Banking Day prior to the date of the proposed repayment, for
  Canadian Prime Rate Loans and U.S. Base Rate Loans;

  



 


(b)                                 repayments pursuant to this
Section may only be made on a Banking Day;


 


(c)                                  subject to the following
provisions and Section 2.17, each such repayment may only be made on the
last day of the applicable Interest Period with regard to a Libor Loan that is
being repaid;


 


(d)                                 a Bankers’ Acceptance may only be
repaid on its maturity unless collateralized in accordance with
Section 2.17(3);


 


(e)                                  unexpired Letters of Credit may
only be prepaid by the return thereof to the Agent for cancellation or
providing funding therefor in accordance with Section 2.17;


 


(f)                                    except in the case of Letters of
Credit, each such repayment shall be in a minimum amount of the lesser of:
(i) the minimum amount required pursuant to Section 2.5 for Drawdowns
of the type of Loan proposed to be repaid and (ii) the Outstanding
Principal of all Loans outstanding under the Credit Facility immediately prior
to such repayment; any repayment in excess of such amount shall be in integral
multiples of the amounts required pursuant to Section 2.5 for multiples in
excess of the minimum amounts for Drawdowns; and


 


(g)                                 except in the case of Letters of
Credit, the Borrower may not repay a portion only of an outstanding Loan unless
the unpaid portion is equal to or exceeds, in the relevant currency, the
minimum amount required pursuant to Section 2.5 for Drawdowns of the type
of Loan proposed to be repaid.


 


46

















 


2.16                                                                        Mandatory
Repayment of Credit Facility


 


(1)                                  Subject to Section 12.2 and
Article 7, the Borrower shall repay or pay, as the case may be, to the
Agent, on behalf of the Lenders, all Loans and other Obligations outstanding
under the Credit Facility on or before the Maturity Date.


 


(2)                                  In addition to and without limiting
or otherwise affecting the provisions of Section 2.16(1), if the MAPL
Acquisition has not been completed and the conditions set forth in
Section 2.4(4) have not been satisfied by December 15, 2004, then
(notwithstanding any other provision hereof to the contrary): (a) the Borrower
shall repay or pay, as the case may be, to the Agent, on behalf of the Lenders,
all Loans and other Obligations outstanding under the Credit Facility on or
before December 15, 2004, (b) no further Drawdowns may be made under the
Credit Facility, and (c) the Credit Facility shall be cancelled.


 


2.17                                                                        Additional
Repayment Terms


 


(1)                                  If any Libor Loan is repaid on
other than the last day of the applicable Interest Period, the Borrower shall,
within three Banking Days after notice is given by the Agent, pay to the Agent
for the account of the Lenders all costs, losses, premiums and expenses
incurred by the Lenders by reason of the liquidation or re-deployment of
deposits or other funds, or for any other reason whatsoever, resulting in each
case from the repayment of such Loan or any part thereof on other than the last
day of the applicable Interest Period. 
Any Lender, upon becoming entitled to be paid such costs, losses,
premiums and expenses, shall deliver to the Borrower and the Agent a
certificate of the Lender certifying as to such amounts and, in the absence of
manifest error, such certificate shall be conclusive and binding for all
purposes.


 


(2)                                  With respect to the funding of any
repayment of unexpired Letters of Credit pursuant to Section 2.15(e) or
otherwise hereunder, it is agreed that the Borrower shall provide for the
funding in full of the repayment of unexpired Letters of Credit by paying to
and depositing with the Agent cash collateral for each such unexpired Letter of
Credit equal to the maximum amount thereof, in each case, in the respective
currency which the relevant Letter of Credit is denominated; such cash
collateral deposited by the Borrower shall be held by the Agent in an interest
bearing cash collateral account with interest to be credited to the Borrower at
rates prevailing at the time of deposit for similar accounts with the
Agent.  Such cash collateral accounts
shall be assigned to the Agent as security for the obligations of the Borrower
in relation to such Letters of Credit and the Security Interest of the Agent
thereby created in such cash collateral shall rank in priority to all other
Security Interests and adverse claims against such cash collateral.  Such cash collateral shall be applied to
satisfy the obligations of the Borrower for such Letters of Credit  as
payments are made thereunder and the Agent is hereby irrevocably directed by
the Borrower to so apply any such cash collateral.  Amounts held in such cash collateral accounts may not be
withdrawn by the Borrower without the consent of the Lenders; however, interest
on such deposited amounts shall be for the account of the Borrower and may be
withdrawn by the Borrower so long as no Default or Event of Default is then
continuing.  If after expiry of the
Letters of Credit for which such funds are held and application by the Agent of
the amounts in such cash collateral accounts to satisfy the obligations of the
Borrower hereunder with respect to the Letters of Credit being repaid, any
excess remains, such excess shall be promptly paid by the Agent to the Borrower
so long as no Default or Event of Default is then continuing.


 


47

















 


In lieu of providing cash collateral as aforesaid, the Borrower may
provide to the Agent irrevocable standby letter or letters of credit in an
aggregate amount equal to the aggregate maximum amount of all unexpired Letters
of Credit being repaid and for a term which expires not sooner than
10 Banking Days after the expiry of the Letters of Credit  in
respect of which such letter(s) of credit are provided; such letters of credit
shall be denominated and payable in the currency of the relevant unexpired
Letters of Credit  and shall be issued by a financial institution and on terms
and conditions acceptable to each of the Agent and the Fronting Lender, each in
its sole discretion.  The Agent is
hereby irrevocably authorized and directed to draw upon such letters of credit
and apply the proceeds of the same to satisfy the obligations of the Borrower
for such unexpired Letters of Credit  as payments are made by the Agent, the
Fronting Lender and the Lenders thereunder.


 


(3)                                  With respect to any repayment of
unmatured Bankers’ Acceptances pursuant to Section 2.15(d) or otherwise
hereunder, it is agreed that the Borrower shall provide for the funding in full
of the unmatured Bankers’ Acceptances to be repaid by paying to and depositing
with the Agent cash collateral (the “Cash Collateral”) for each such unmatured
Bankers’ Acceptances equal to the face amount payable at maturity thereof; such
Cash Collateral deposited by the Borrower shall be invested by the Agent in
Approved Securities as may be directed in writing by the Borrower from time to
time (the “Collateral
Investments”), provided that the Borrower shall direct said
investments so that they mature in amounts sufficient to permit payment of the
Obligations for maturing Bankers’ Acceptances on the maturity dates thereof,
with interest thereon to be credited to the Borrower.  In the event that the Agent is not provided with instructions
from the Borrower to make Collateral Investments as provided herein, the Agent
shall hold such Cash Collateral in an interest bearing cash collateral account
(the “Cash
Collateral Account”) at rates prevailing at the time of deposit for
similar accounts with the Agent.  The
(a) Cash Collateral, (b) Cash Collateral Accounts,
(c) Collateral Investments, (d) any accounts receivable, claims,
instruments or securities evidencing or relating to the foregoing, and
(e) any proceeds of any of the foregoing (collectively the “Outstanding
BAs Collateral”) shall be assigned to the Agent as security for the
obligations of the Borrower in relation to such Bankers’ Acceptances and the
Security Interest of the Agent thereby created in such Outstanding BAs
Collateral shall rank in priority to all other Security Interests and adverse
claims against such Outstanding BAs Collateral.  Such Outstanding BAs Collateral shall be applied to satisfy the
obligations of the Borrower for such Bankers’ Acceptances as they mature and
the Agent is hereby irrevocably directed by the Borrower to apply any such
Outstanding BAs Collateral to such maturing Bankers’ Acceptances.  The Outstanding BAs Collateral created
herein shall not be released to the Borrower without the consent of the
Lenders; however, interest on such deposited amounts shall be for the account
of the Borrower and may be withdrawn by the Borrower so long as no Default or
Event of Default is then continuing. 
If, after maturity of the Bankers’ Acceptances for which such
Outstanding BAs Collateral is held and application by the Agent of the
Outstanding BAs Collateral to satisfy the obligations of the Borrower hereunder
with respect to the Bankers’ Acceptances being repaid, any interest or other
proceeds of the Outstanding BAs Collateral remains, such interest or other
proceeds shall be promptly paid and transferred by the Agent to the Borrower so
long as no Default or Event of Default is then continuing.


 


2.18                                                                        Currency Excess


 


(1)                                  If the Agent shall determine that
the aggregate Outstanding Principal of the outstanding Loans under the Credit
Facility exceeds the maximum amount of the Credit Facility (the


 


48

















 


amount of such excess is herein called the “Currency
Excess”), then, upon written request by the Agent (which request
shall detail the applicable Currency Excess), the Borrower shall repay an
amount of Canadian Prime Rate Loans or U.S. Base Rate Loans under such Credit
Facility within (i) if the Currency Excess exceeds Cdn.$1,000,000,
5 Banking Days, and (ii) in all other cases, 20 Banking Days after
receipt of such request, such that, except as otherwise contemplated in
Section 2.18(2), the Equivalent Amount in Canadian Dollars of such repayments
is, in the aggregate, at least equal to the Currency Excess.


 


(2)                                  If, in respect of any Currency
Excess, the repayments made by the Borrower have not completely removed such
Currency Excess (the remainder thereof being herein called the “Currency Excess
Deficiency”), the Borrower shall within the aforementioned 5 or 20
Banking Days, as the case may be, after receipt of the aforementioned request
of the Agent, place an amount equal to the Currency Excess Deficiency on
deposit with the Agent in an interest-bearing account with interest at rates
prevailing at the time of deposit for the account of the Borrower, to be
assigned to the Agent on behalf of the Lenders by instrument satisfactory to
the Agent and to be applied to maturing Bankers’ Acceptances or Libor Loans
(converted if necessary at the exchange rate for determining the Equivalent
Amount on the date of such application) or held to provide for the funding of
unexpired Letters of Credit in accordance with Section 2.17(2) which shall
apply, mutatis
mutandis.  The Agent is
hereby irrevocably directed by the Borrower to apply any such sums on deposit
to maturing Loans or to satisfy obligations of the Borrower for such Letters of
Credit as payments are made thereunder, as the case may be, as provided in the
preceding sentence.  In lieu of
providing funds for the Currency Excess Deficiency, as provided in the
preceding provisions of this Section, the Borrower may within the said period
of 5 or 20 Banking Days, as the case may be, provide to the Agent an
irrevocable standby letter of credit in an amount equal to the Currency Excess
Deficiency and for a term which expires not sooner than 10 Banking Days after
the date of maturity or expiry, as the case may be, of the relevant Bankers’
Acceptances, Libor Loans or Letters of Credit, as the case may be; such letter
of credit shall be issued by a financial institution, and shall be on terms and
conditions, acceptable to the Agent in its sole discretion.  The Agent is hereby authorized and directed
to draw upon such letter of credit and apply the proceeds of the same to
Bankers’ Acceptances or Libor Loans as they mature or to satisfy obligations of
the Borrower for Letters of Credit as payments are made thereunder.  Upon the Currency Excess being eliminated as
aforesaid or by virtue of subsequent changes in the exchange rate for
determining the Equivalent Amount, then, provided no Default or Event of
Default is then continuing, such funds on deposit, together with interest
thereon, or such letters of credit shall be returned to the Borrower, in the
case of funds on deposit, or shall be cancelled or reduced in amount, in the
case of letters of credit.


 


2.19                                                                        Hedging
with Lenders and Hedging Affiliates


 


If a Lender or Hedging Affiliate enters into a Financial Instrument
with the Borrower or a Subsidiary which such Lender or Hedging Affiliate (as
the case may be) believes, acting reasonably, in good faith and without any
actual notice or knowledge to the contrary, is Permitted Hedging, then each
such Lender Financial Instrument and the Lender Financial Instrument
Obligations under such Financial Instrument shall be secured by the Security
equally and rateably with the Obligations, regardless of whether the Borrower
has complied herewith (but, for certainty, without in any manner lessening or
relieving the Borrower from its obligation to comply therewith).


 


49

















 


2.20                                                                        Hostile
Acquisitions


 


(1)                                  In the event the Borrower wishes
to utilize proceeds of one or more Loans under the Credit Facility to, or to
provide funds to any Subsidiary, Affiliate or other person to, finance an offer
to acquire (which shall include an offer to purchase securities, solicitation
of an offer to sell securities, an acceptance of an offer to sell securities,
whether or not the offer to sell was solicited, or any combination of the
foregoing) outstanding securities of any person (the “Target”) which constitutes a
“take-over bid” pursuant to applicable corporate or securities legislation (in
any case, a “Takeover”), then either:


 


(a)                                  prior to or concurrently with
delivery to the Agent of any Drawdown Notice pursuant to Section 2.7
requesting one or more Loans under the Credit Facility, the proceeds of which
are to be used to finance such Takeover, the Borrower shall provide to the
Agent evidence satisfactory to the Agent (acting reasonably) that the board of
directors or like body of the Target, or the holders of all of the securities
of the Target, has or have approved, accepted, or recommended to security
holders acceptance of, the Takeover; or


 


(b)                                 the following steps shall be
followed:


 


(i)                                     at
least five (5) Banking Days prior to the delivery to the Agent of any Drawdown
Notice pursuant to Section 2.7 requesting one or more Loans intended to be
used to finance such Takeover, the Borrower shall advise the Agent, who shall
promptly advise an appropriate officer of each Lender of the particulars of
such Takeover;


 


(ii)                                  within
three (3) Banking Days of being so advised, each Lender shall notify the Agent
of such Lender’s determination as to whether it is willing to finance such
Takeover; provided that, in the event such Lender does not so notify the Agent
within such three (3) Banking Day period, such Lender shall be deemed to have
notified the Agent that it is not willing to finance such Takeover; and


 


(iii)                               the
Agent shall promptly notify the Borrower of each such Lender’s determination,


 


and in the event
that any Lender has notified or is deemed to have notified the Agent that it is
not willing to finance such Takeover (each, a “Declining Lender”), then the
Declining Lenders shall have no obligation to provide Loans to finance such
Takeover, notwithstanding any other provision of this Agreement to the
contrary; provided, however, that each other Lender (each, a “Financing
Lender”) which has advised the Agent it is willing to finance such
Takeover shall have an obligation, up to the amount of its Commitment under the
Credit Facility, to provide Loans to finance such Takeover, and the Loans to
finance such Takeover shall be provided by each Financing Lender in accordance
with the ratio, determined prior to the provision of any Loans to finance such
Takeover, that the Commitment of such Financing Lender under the Credit
Facility bears to the aggregate the Commitments of all the Financing Lenders
under the Credit Facility.


 


50

















 


(2)                                  If Loans are used to finance a
Takeover and there are Declining Lenders, subsequent Loans under the Credit
Facility shall be funded firstly by Declining Lenders having Commitments under
the Credit Facility, and subsequent repayments under the Credit Facility shall
be applied firstly to Financing Lenders, in each case, until such time as the
proportion that the amount of each Lender’s Outstanding Principal under the
Credit Facility bears to the total Outstanding Principal under the Credit
Facility is equal to such proportion which would have been in effect but for
the application of this Section 2.20.


 


2.21                                                                        Overdraft
/ Swingline Loans  


 


(1)                                  Subject to the following
provisions of this Section, overdrafts arising from clearance of cheques or
drafts drawn on the Canadian Dollar accounts and United States Dollar accounts
of the Borrower maintained with the Overdraft/Swingline Lender, and designated
by the Overdraft/Swingline Lender for such purpose, shall be deemed to be
outstanding as Canadian Prime Rate Loans and U.S. Base Rate Loans,
respectively, under the Credit Facility (each, an “Overdraft/Swingline Loan”)
provided solely by the Overdraft/Swingline Lender notwithstanding the
definition of Canadian Prime Rate Loan or U.S. Base Rate Loan.  For certainty, notwithstanding
Section 2.7 or 2.15, no Drawdown Notice or Repayment Notice need be
delivered by the Borrower in respect of Overdraft/Swingline Loans nor shall the
requirements of Section 2.5 and 2.15 with respect to the amounts of
Drawdowns or repayments apply thereto.


 


(2)                                  Except as otherwise specifically
provided herein, all references to Canadian Prime Rate Loans and U.S. Base Rate
Loans shall include Overdraft/Swingline Loans of the same currency.


 


(3)                                  Overdraft/Swingline Loans shall be
made by the Overdraft/Swingline Lender alone, without assignment to or
participation by the other Lenders (except as provided in this Section).  All interest payments and principal
repayments of or in respect of Overdraft/Swingline Loans shall be solely for
the account of the Overdraft/Swingline Lender and shall be paid by the Borrower
directly to the Overdraft/Swingline Lender notwithstanding anything herein to
the contrary.  Subject to
Section 2.21(7), and to Article 13 and Section 14.1, all costs
and expenses relating to the Overdraft/Swingline Loans shall be solely for the
account of the Overdraft/Swingline Lender.


 


(4)                                  The maximum aggregate Outstanding
Principal of the Overdraft/Swingline Loans shall be the lesser of:


 


(a)                                  Cdn.$2,500,000; and


 


(b)                                 the Overdraft/Swingline Lender’s
Commitment less the Overdraft/Swingline Lender’s Rateable Portion of all
outstanding Syndicated Loans.


 


(5)                                  If the Borrower shall request a
Syndicated Drawdown and the Overdraft/Swingline Lender’s Rateable Portion of
such Drawdown would cause the Overdraft/Swingline Lender’s Rateable Portion of
all Syndicated Loans together with the Overdraft/Swingline Loans then
outstanding to exceed the Overdraft/Swingline Lender’s Commitment, then the
Borrower shall be deemed to have given a Drawdown Notice in respect of the
requested Syndicated Drawdown irrevocably directing the Agent to apply the
proceeds of such Syndicated Drawdown to the repayment of Overdraft/Swingline
Loans to the extent of such excess and the Agent shall make such


 


51

















 


repayments to the Overdraft/Swingline Lender on
behalf of the Borrower on the requested date of such Syndicated Drawdown.


 


(6)                                  The Borrower may make repayments
of Overdraft/Swingline Loans (together with accrued interest thereon which, if
such repayment is not made on the Interest Payment Date, shall be paid on the
next Interest Payment Date applicable to Canadian Prime Rate Loans and U.S.
Base Rate Loans) from time to time without penalty.


 


(7)                                  Notwithstanding anything to the
contrary herein contained or to the contrary provisions of Applicable Laws, (a)
if an Event of Default occurs or (b) if the Overdraft/Swingline Lender so
requires, and there are then outstanding any Overdraft/Swingline Loans, then,
effective on the day of notice (each, a “Rebalancing Notice”)  to that effect to the Agent
and the other Lenders from the Overdraft/Swingline Lender, the Borrower shall
be deemed to have requested, and hereby requests, a Drawdown of an amount of
Syndicated Loans, by way of Canadian Prime Rate Loans and U.S. Base Rate Loans
(as applicable), sufficient to repay the Overdraft/Swingline Loans and accrued
and unpaid interest in respect thereof, and on the Banking Day immediately
following receipt of such notice, the other Lenders shall disburse to the
Agent, who shall remit to the Overdraft/Swingline Lender, their Rateable
Portions of such amounts and such amounts shall thereupon be deemed to have
been advanced by the Lenders to the Borrower and to constitute Syndicated Loans
by way of Canadian Prime Rate Loans or U.S. Base Rate Loans, as the case may
be.  Such Syndicated Loans shall be
deemed to be comprised of principal and accrued and unpaid interest in the same
proportions as the corresponding Overdraft/Swingline Loans.  If a Lender does not disburse to the Agent
for the account of the Overdraft/Swingline Lender its Rateable Portion of any
amount under this Section then: (i) such Lender shall purchase
participations from the Overdraft/Swingline Lender in such Syndicated Loans
(without recourse to the Overdraft/Swingline Lender) for an amount or otherwise
effect transactions to achieve the financial results contemplated by this
Section, and (ii) for the purpose only of any distributions or payments to the
Lenders (and not, for greater certainty, for the purposes of any obligations of
the Lenders), including any distribution or payment with respect to the
Borrower in the event of any enforcement or realization proceedings or any
bankruptcy, winding-up, liquidation, arrangement, compromise or composition,
the Commitment of such Lender shall be deemed to be nil and the Commitment of
the Overdraft/Swingline Lender shall be increased by the Commitment of such
Lender until the amounts owed by the Borrower are outstanding to each Lender in
accordance with its Rateable Portion determined without regard to this
sentence.  If any amount disbursed by a
Lender under this Section and deemed to have been advanced to the Borrower
must be repaid by the Overdraft/Swingline Lender or by the relevant Lender to
the Borrower then no reduction of the Overdraft/Swingline Loans as contemplated
above shall be deemed to have occurred, but the Lenders shall purchase
participations in the Overdraft/Swingline Loans (without recourse to the
Overdraft/Swingline Lender) for an amount or otherwise effect transactions to
achieve the financial results contemplated by this Section.  The Overdraft/Swingline Lender hereby
covenants with the other Lenders that it shall give a Rebalancing Notice to the
Agent and the other Lenders on the first Banking Day of each week if the
aggregate Outstanding Principal of the Overdraft/Swingline Loans exceeds
Cdn.$500,000 as at the close of business on the immediately preceding Banking
Day.


 


(8)                                  For certainty, it is hereby
acknowledged and agreed that the Lenders shall be obligated to advance their
Rateable Portion of the Drawdown contemplated by Section 2.21(7), to


 


52

















 


disburse their Rateable Portion of the Syndicated
Loans referenced therein and to purchase participations contemplated by such
Section irrespective of:


 


(a)                                  whether a Default or Event of
Default is then continuing or whether any other condition in Article 3 is
met; and


 


(b)                                 whether or not the Borrower has,
in fact, actually requested such Drawdown (by delivery of a Drawdown Notice or
otherwise).


 


ARTICLE 3 - CONDITIONS PRECEDENT TO DRAWDOWNS


 


3.1                                                                               Conditions
for Drawdowns


 


On or before each Drawdown hereunder the following conditions shall be
satisfied:


 


(a)                                  the Agent shall have received a
proper and timely Drawdown Notice from the Borrower requesting the Drawdown;


 


(b)                                 the representations and warranties
set forth in Section 9.1 shall be true and accurate in all respects on and
as of the date of the requested Drawdown;


 


(c)                                  no Default or Event of Default
shall have occurred and be continuing nor shall the Drawdown result in the
occurrence of a Default or Event of Default; and


 


(d)                                 after giving effect to the
proposed Drawdown, the Outstanding Principal of all Loans outstanding under the
Credit Facility shall not exceed the maximum amount of the  Credit Facility.


 


3.2                                                                               Additional
Conditions for First Drawdown


 


In addition to the conditions set forth in
Section 3.1, on or before the first Drawdown hereunder the following
further conditions shall be satisfied:


 


(a)                                  all fees and expenses previously
agreed in writing between the Borrower and each of the Lenders shall be paid by
the Borrower to the Lenders;


 


(b)                                 all fees previously agreed in
writing between the Borrower and the Lead Arranger shall be paid by the
Borrower to the Lead Arranger;


 


(c)                                  the Agent and the Borrower shall
have executed and delivered the Agency Fee Agreement and all fees which are
then due and payable thereunder to the Agent for its own account shall have
been paid to the Agent by the Borrower;


 


(d)                                 the Borrower and each corporate
Subsidiary which is executing and delivering Documents shall have delivered to
the Agent a current certificate of status, compliance or good standing, as the
case may be, in respect of its jurisdiction of incorporation and certified
copies of its constating documents, by-laws and the resolutions authorizing the
Documents to which it is a party and transactions


 


53

















 


hereunder and an Officer’s Certificate as to
the incumbency of the officers of the Borrower or the Subsidiary, as the case
may be, signing the Documents to which it is a party;


 


(e)                                  each Subsidiary which is not a
corporation and which is executing and delivering Documents shall have
delivered, or caused to be delivered, to the Agent certificates as to the
matters set forth in Section 3.2(d) with respect to the general partner thereof
or other separate legal person executing and delivering the Documents on its
behalf, and, in addition, shall have delivered to the Agent certified copies of
the partnership agreement, declaration of trust or other agreements or
instruments creating or governing the same;


 


(f)                                    the Borrower shall have delivered
to the Agent an Officer’s Certificate detailing the legal structure and
ownership of the Borrower and its Subsidiaries, which certificate shall be in
form and substance satisfactory to the Agent and Lenders’ Counsel (each acting
reasonably);


 


(g)                                 the Documents shall have been
fully executed and delivered, each in form and substance satisfactory to the
Lenders (acting reasonably), and all registrations, filings and recordings
necessary or desirable (as determined by the Lenders’ Counsel, acting
reasonably) in connection with the Security shall have been made and completed;


 


(h)                                 the Agent and the Lenders shall
have received (i) a legal opinion from legal counsel to the Borrower and its
Subsidiaries and (ii) a legal opinion from Lenders’ Counsel, each in form and
substance as may be required by the Lenders (acting reasonably);


 


(i)                                     the Agent shall have received
current certificates of insurance evidencing the insurance required to be
maintained by the Borrower and its Subsidiaries pursuant hereto;


 


(j)                                     the Borrower shall have delivered
to the Agent true, correct and complete copies of all of the Material
Contracts, together with an Officer’s Certificate certifying the same (or, if
there are no Material Contracts on the date of the first Drawdown, certifying
the same) to the Agent and the Lenders;


 


(k)                                  the Borrower shall have delivered
to the Agent true, correct and complete copies of the Rangeland Purchase
Agreement and all other material documentation effecting the completion of the
Rangeland Acquisition, together with an Officer’s Certificate certifying the
same to the Agent and the Lenders;


 


(l)                                     one or more of the Borrower, the
Other Acquisition Companies and their other Subsidiaries shall have completed
the Rangeland Acquisition on or before October 31, 2004 in accordance with
the Rangeland Purchase Agreement and without any material amendment thereto or
waiver of a material condition by the Borrower, the Other Acquisition Companies
and their Subsidiaries and one or more of the Borrower, the Other Acquisition
Companies and their Subsidiaries shall be the legal and beneficial owners of
all of the Rangeland Business Unit Assets, and the Agent 


 


54

















 


shall have received evidence thereof
satisfactory to the Agent and Lenders’ Counsel (each acting reasonably);


 


(m)                               all material Governmental
Authorizations and third party consents and approvals  necessary for the completion of the Rangeland Acquisition and the
ownership and operation of the Rangeland Business Unit Assets by the Borrower
and its Subsidiaries have been unconditionally obtained and are in full force
and effect (including any consents and approvals required under the Material
Contracts, except, in the case of third party consents and approvals (as
opposed to Governmental Authorizations) only, to the extent that the failure to
obtain such third party consents and approvals would not have or reasonably be
expected to have Material Adverse Effect), and the Agent shall have received
evidence thereof satisfactory to the Agent and Lenders’ Counsel (each acting
reasonably);


 


(n)                                 the Agent and the Lenders shall
have received from the Borrower and completed their review of each of the
following:


 


	
  (i)

  	
   

  	
  three year financial
  projections respecting the Borrower and its Subsidiaries on a combined basis
  (after giving effect to the completion of the Acquisitions), such projections
  to include pro forma balance sheets, income statements and cash flow
  statements for the Borrower and its Subsidiaries on a combined basis;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  an opening balance sheet
  for the Borrower and its Subsidiaries on a combined basis (after giving
  effect to the completion of the Acquisitions and the financing of the same);
  and

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  the terms and conditions
  of the Subordinated Debt to be incurred in connection with the completion of
  the Acquisitions,

  



 


in each case, with the results of such review being satisfactory to the
Agent and the Lenders (each acting reasonably); and


 


(o)                                 no event, circumstance, condition,
occurrence or change shall have occurred with respect to the Borrower and its
Subsidiaries which would have or reasonably be expected to have a Material
Adverse Effect, including with respect to the Rangeland Business Unit Assets since
the “Report for the Rangeland Business Unit for BP” dated June 3, 2003, as
updated through September 30, 2003, and prepared by Ernst & Young LLP
(the “E&Y
Report”).


 


3.3                                                                               Waiver


 


The conditions set forth in Sections 3.1 and 3.2 are inserted for
the sole benefit of the Lenders and the Agent and may be waived by the Lenders,
in whole or in part (with or without terms or conditions) without prejudicing
the right of the Lenders or Agent at any time to assert such waived conditions
in respect of any subsequent Drawdown.


 


55

















 


ARTICLE 4 -
EVIDENCE OF DRAWDOWNS


 


4.1                                                                               Account of
Record


 


The Agent shall open and maintain books of account evidencing all Loans
and all other amounts owing by the Borrower to the Lenders hereunder.  The Agent shall enter in the foregoing
accounts details of all amounts from time to time owing, paid or repaid by the
Borrower hereunder.  The information
entered in the foregoing accounts shall, absent manifest error, constitute prima facie
evidence of the obligations of the Borrower to the Lenders hereunder with
respect to all Loans and all other amounts owing by the Borrower to the Lenders
hereunder.  After a request by the
Borrower, the Agent shall promptly advise the Borrower of such entries made in
the Agent’s books of account.


 


ARTICLE 5 - PAYMENTS OF INTEREST AND FEES


 


5.1                                                                               Interest
on Canadian Prime Rate Loans


 


The Borrower shall pay interest on each Canadian Prime Rate Loan owing
by it during each Interest Period applicable thereto in Canadian Dollars at a
rate per annum equal to the Canadian Prime Rate in effect from time to time
during such Interest Period plus the Applicable Pricing Rate.  Each determination by the Agent of the
Canadian Prime Rate applicable from time to time during an Interest Period
shall, in the absence of manifest error, be prima facie evidence thereof.  Such interest shall accrue daily and shall
be payable in arrears on each Interest Payment Date for such Loan for the
period from and including the Drawdown Date or the preceding Conversion Date or
Interest Payment Date, as the case may be, for such Loan to and including the
day preceding such Interest Payment Date and shall be calculated on the
principal amount of the Canadian Prime Rate Loan outstanding during such period
and on the basis of the actual number of days elapsed in a year of
365 days or 366 days, as the case may be.  Changes in the Canadian Prime Rate shall cause an immediate
adjustment of the interest rate applicable to such Loans without the necessity
of any notice to the Borrower.


 


5.2                                                                               Interest
on U.S. Base Rate Loans


 


The Borrower shall pay interest on each U.S. Base Rate Loan owing by it
during each Interest Period applicable thereto in United States Dollars at a
rate per annum equal to the U.S. Base Rate in effect from time to time during
such Interest Period plus the Applicable Pricing Rate.  Each determination by the Agent of the U.S.
Base Rate applicable from time to time during an Interest Period shall, in the
absence of manifest error, be prima facie evidence thereof.  Such interest shall be payable in arrears on
each Interest Payment Date for such Loan for the period from and including the
Drawdown Date or the preceding Conversion Date or Interest Payment Date, as the
case may be, for such Loan to and including the day preceding such Interest
Payment Date and shall be calculated on the principal amount of the U.S. Base
Rate Loan outstanding during such period and on the basis of the actual number
of days elapsed in a year of 365 days or 366 days, as the case may
be.  Changes in the U.S. Base Rate shall
cause an immediate adjustment of the interest rate applicable to such Loans
without the necessity of any notice to the Borrower.


 


56

















 


5.3                                                                               Interest on Libor
Loans


 


The Borrower shall pay interest on each Libor Loan owing by it during
each Interest Period applicable thereto in United States Dollars at a rate per
annum, calculated on the basis of a 360 day year, equal to the Libor Rate
with respect to such Interest Period plus the Applicable Pricing Rate.  Each determination by the Agent of the Libor
Rate applicable to an Interest Period shall, in the absence of manifest error,
be prima
facie evidence thereof.  Such
interest shall accrue daily and shall be payable in arrears on each Interest
Payment Date for such Loan for the period from and including the Drawdown Date
or the preceding Rollover Date, Conversion Date or Interest Payment Date, as
the case may be, for such Loan to and including the day preceding such Interest
Payment Date and shall be calculated on the principal amount of the Libor Loan
outstanding during such period and on the basis of the actual number of days
elapsed divided by 360.


 


5.4                                                                               Interest Act
(Canada)


 


Whenever a rate of interest hereunder is calculated on the basis of a
year (the “deemed year”) which contains fewer days than the actual number of
days in the calendar year of calculation, such rate of interest shall be
expressed as a yearly rate for purposes of the Interest Act (Canada) by
multiplying such rate of interest by the actual number of days in the calendar
year of calculation and dividing it by the number of days in the deemed year.


 


5.5                                                                               Nominal
Rates; No Deemed Reinvestment


 


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


 


5.6                                                                               Standby Fees


 


(1)                                  The Borrower shall pay to the
Agent for the account of the relevant Lenders a standby fee in Canadian Dollars
in respect of the Credit Facility calculated at a rate per annum equal to the
Applicable Standby Fee Rate on the amount, if any, by which the amount of the Outstanding
Principal under the Credit Facility (excluding, for the purposes of determining
such standby fees, any Overdraft/Swingline Loans) for each day in the period of
determination is less than the aggregate Commitments of all Lenders for each
such day.  Fees determined in accordance
with this Section shall accrue daily from and after the date hereof and be
payable by the Borrower quarterly in arrears and on cancellation in full of the
Credit Facility and on the Maturity Date.


 


(2)                                  As of: (i) the first day of
January, April, July and October in each year, (ii) the date of
the cancellation in full of the Credit Facility, and (iii) the Maturity
Date, the Agent shall determine the standby fees under this Section in
respect of the Credit Facility for the period from and including the date
hereof or the date of the immediately preceding determination, as the case may
be, to but excluding that date of determination and shall deliver to the
Borrower a written request for payment of the standby fees so determined, as
detailed therein.  The Borrower shall
pay to the Agent for the


 


57

















 


account of the Lenders the standby fees referred to
above within 2 Banking Days after receipt of each such written request.


 


5.7                                                                               Agent’s Fees


 


From and after the date hereof, the Borrower shall pay to the Agent,
for its own account, on such date and on the anniversary thereof in each
subsequent calendar year until the Credit Facility has been fully cancelled and
all Obligations hereunder have been paid in full, a non-refundable annual
agency fee in the amount specified in the Agency Fee Agreement.


 


5.8                                                                               Interest on
Overdue Amounts


 


Notwithstanding any other provision hereof, in the event that any
amount due hereunder (including, without limitation, any interest payment) is
not paid when due (whether by acceleration or otherwise), the Borrower shall
pay interest on such unpaid amount (including, without limitation, interest on
interest), if and to the fullest extent permitted by applicable law, from the
date that such amount is due until the date that such amount is paid in full
(but excluding the date of such payment if the payment is received for value at
the required place of payment on the date of such payment), and such interest
shall accrue daily, be calculated and compounded monthly and be payable on
demand, after as well as before maturity, default and judgment, at a rate per
annum that is equal to (i) in respect of amounts due in Canadian Dollars,
the rate of interest then payable on Canadian Prime Rate Loans plus 2.0% per
annum or (ii) in respect of amounts due in United States Dollars, the rate
of interest then payable on U.S. Base Rate Loans plus 2.0% per annum.


 


5.9                                                                               Waiver


 


To the extent permitted by applicable law, the covenant of the Borrower
to pay interest at the rates provided herein shall not merge in any judgment
relating to any obligation of the Borrower to the Lenders or the Agent and any
provision of the Interest Act (Canada) or Judgment Interest Act (Alberta) which
restricts any rate of interest set forth herein shall be inapplicable to this
Agreement and is hereby waived by the Borrower.


 


5.10                                                                        Maximum
Rate Permitted by Law


 


No interest or fee to be paid hereunder shall be paid at a rate
exceeding the maximum rate permitted by applicable law.  In the event that such interest or fee
exceeds such maximum rate, such interest or fees shall be reduced or refunded,
as the case may be, so as to be payable at the highest rate recoverable under
applicable law.


 


ARTICLE 6 -
BANKERS’ ACCEPTANCES


 


6.1                                                                               Bankers’
Acceptances


 


The Borrower may give the Agent notice that Bankers’ Acceptances will
be required under the Credit Facility pursuant to a Drawdown, Rollover or
Conversion.


 


58

















 


6.2                                                                               Fees


 


Upon the acceptance by a Lender of a Bankers’ Acceptance, the Borrower
shall pay to the Agent for the account of such Lender a fee in Canadian Dollars
equal to the Applicable Pricing Rate calculated on the principal amount at
maturity of such Bankers’ Acceptance and for the period of time from and
including the date of acceptance to but excluding the maturity date of such
Bankers’ Acceptance and calculated on the basis of the number of days elapsed
in a year of 365 days.


 


6.3                                                                               Form
and Execution of Bankers’ Acceptances


 


The following provisions shall apply to each Bankers’ Acceptance
hereunder:


 


(a)                                  the face amount at maturity of
each draft drawn by the Borrower to be accepted as a Bankers’ Acceptance shall
be Cdn. $100,000 and integral multiples thereof;


 


(b)                                 the term to maturity of each draft
drawn by the Borrower to be accepted as a Bankers’ Acceptance shall, subject to
market availability as determined by the Lenders, be 1, 2, 3 or 6 months
(or such other longer or shorter term as agreed by the Lenders), as selected by
the Borrower in the relevant Drawdown, Rollover or Conversion Notice, and each
Bankers’ Acceptance shall be payable and mature on the last day of the Interest
Period selected by the Borrower for such Bankers’ Acceptance (which, for certainty,
pursuant to the definition of “Interest Period” shall be on or prior to the
Maturity Date);


 


(c)                                  each draft drawn by the Borrower
and presented for acceptance by a Lender shall be drawn on the standard form of
such Lender in effect at the time; provided, however, that the Agent may
require the Lenders to use a generic form of Bankers’ Acceptance, in a form
satisfactory to each Lender, acting reasonably, provided by the Agent for such
purpose in place of the Lenders’ own forms;


 


(d)                                 subject to Section 6.3(e)
below, Bankers’ Acceptances shall be signed by duly authorized officers of the
Borrower or, in the alternative, the signatures of such officers may be
mechanically reproduced in facsimile thereon and Bankers’ Acceptances bearing
such facsimile signatures shall be binding on the Borrower as if they had been
manually executed and delivered by such officers on behalf of the Borrower;
notwithstanding that any person whose manual or facsimile signature appears on
any Bankers’ Acceptance may no longer be an authorized signatory for the
Borrower on the date of issuance of a Bankers’ Acceptance, such signature shall
nevertheless be valid and sufficient for all purposes as if such authority had
remained in force at the time of such issuance and any such Bankers’ Acceptance
shall be binding on the Borrower; and


 


(e)                                  in lieu of signing Bankers’
Acceptances in accordance with Section 6.3(d) above, the Borrower may
provide a Power of Attorney to a Lender; for so long as a Power of Attorney is
in force with respect to a given Lender, such Lender shall execute and deliver
Bankers’ Acceptances on behalf of the Borrower in accordance with the
provisions thereof and, for certainty, all references herein to drafts drawn by
the


 


59

















 


Borrower, Bankers’ Acceptances executed by
the Borrower or similar expressions shall be deemed to include Bankers’
Acceptances executed in accordance with a Power of Attorney, unless the context
otherwise requires.


 


6.4                                                                               Power
of Attorney; Provision of Bankers’ Acceptances to Lenders


 


(1)                                  Unless revoked with respect to a
given Lender in accordance herewith, the Borrower hereby appoints each Lender,
acting by any authorized signatory of the Lender in question, the attorney of
the Borrower:


 


(a)                                  to sign for and on behalf and in
the name of the Borrower as drawer, drafts in such Lender’s standard form which
are depository bills as defined in the Depository Bills and Notes Act (Canada)
(the “DBNA”),
payable to a “clearing house” (as defined in the DBNA) including, without
limitation, The Canadian Depository For Securities Limited or its nominee, CDS
& Co. (the “clearing house”);


 


(b)                                 for drafts which are not
depository bills, to sign for and on behalf and in the name of the Borrower as
drawer and to endorse on its behalf, Bankers’ Acceptances drawn on the Lender
payable to the order of the Borrower or payable to the order of such Lender;


 


(c)                                  to fill in the amount, date and
maturity date of such Bankers’ Acceptances; and


 


(d)                                 to deposit and/or deliver such Bankers’
Acceptances which have been accepted by such Lender,


 


provided that
such acts in each case are to be undertaken by the Lender in question strictly
in accordance with instructions given to such Lender by the Borrower as
provided in this Section.  For
certainty, signatures of any authorized signatory of a Lender may be
mechanically reproduced in facsimile on Bankers’ Acceptances in accordance
herewith and such facsimile signatures shall be binding and effective as if
they had been manually executed by such authorized signatory of such Lender.


 


Instructions from the Borrower to a Lender relating to the execution,
completion, endorsement, deposit and/or delivery by that Lender on behalf of
the Borrower of Bankers’ Acceptances which the Borrower wishes to submit to the
Lender for acceptance by the Lender shall be communicated by the Borrower in
writing to the Agent by delivery to the Agent of Drawdown Notices, Conversion
Notices and Rollover Notices, as the case may be, in accordance with this
Agreement which, in turn, shall be communicated by the Agent, on behalf of the
Borrower, to the Lender.


 


The communication in writing by the Borrower, or on behalf of the
Borrower by the Agent, to the Lender of the instructions set out in the
Drawdown Notices, Conversion Notices and Rollover Notices referred to above
shall constitute (a) the authorization and instruction of the Borrower to
the Lender to sign for and on behalf and in the name of the Borrower as drawer
the requested Bankers’ Acceptances and to complete and/or endorse Bankers’
Acceptances in accordance with such information as set out above and
(b) the request of the Borrower to the Lender to accept such Bankers’
Acceptances and deposit the same with the clearing house or deliver the


 


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same, as the case may be, in each case in accordance with this
Agreement and such instructions.  The
Borrower acknowledges that a Lender shall not be obligated to accept any such
Bankers’ Acceptances except in accordance with the provisions of this
Agreement.


 


A Lender shall be and it is hereby authorized to act on behalf of the
Borrower upon and in compliance with instructions communicated to that Lender
as provided herein if the Lender reasonably believes such instructions to be
genuine.  If a Lender accepts Bankers’
Acceptances pursuant to any such instructions, that Lender shall confirm
particulars of such instructions and advise the Agent that it has complied
therewith by notice in writing addressed to the Agent and served personally or
sent by telecopier in accordance with the provisions hereof.  A Lender’s actions in compliance with such
instructions, confirmed and advised to the Agent by such notice, shall be
conclusively deemed to have been in accordance with the instructions of the
Borrower.


 


This power of attorney may be revoked by the Borrower with respect to
any particular Lender at any time upon not less than 5 Banking Days’ prior
written notice served upon the Lender in question and the Agent, provided that
no such revocation shall reduce, limit or otherwise affect the obligations of
the Borrower in respect of any Bankers’ Acceptance executed, completed,
endorsed, deposited and/or delivered in accordance herewith prior to the time
at which such revocation becomes effective.


 


(2)                                  Unless the Borrower has provided
Powers of Attorney to the Lenders, to facilitate Drawdowns, Rollovers or
Conversions of Bankers’ Acceptances, the Borrower shall, upon execution of this
Agreement and thereafter from time to time as required by the Lenders, provide
to the Agent for delivery to each Lender drafts drawn in blank by the Borrower
(pre-endorsed and otherwise in fully negotiable form, if applicable) in
quantities sufficient for each Lender to fulfil its obligations hereunder.  Any such pre-signed drafts which are
delivered by the Borrower to the Agent or a Lender shall be held in safekeeping
by the Agent or such Lender, as the case may be, with the same degree of care
as if they were the Agent’s or such Lender’s property, and shall only be dealt
with by the Lenders and the Agent in accordance herewith.  No Lender shall be responsible or liable for
its failure to make its share of any Drawdown, Rollover or Conversion of
Bankers’ Acceptances required hereunder if the cause of such failure is, in
whole or in part, due to the failure of the Borrower to provide such pre-signed
drafts to the Agent (for delivery to such Lender) on a timely basis.


 


(3)                                  By 10:00 a.m. (Calgary time)
on the applicable Drawdown Date, Conversion Date or Rollover Date, the Borrower
shall (a) either deliver to each Lender in Toronto, or, if previously
delivered, be deemed to have authorized each Lender to complete and accept, or
(b) where the Borrower has previously executed and delivered a Power of
Attorney to the Lender, be deemed to have authorized each such Lender to sign
on behalf of the Borrower, complete and accept, drafts drawn by the Borrower on
such Lender in a principal amount at maturity equal to such Lender’s share of
the Bankers’ Acceptances specified by the Borrower in the relevant Drawdown
Notice, Conversion Notice or Rollover Notice, as the case may be, as notified
to the Lenders by the Agent.


 


6.5                                                                               Mechanics of
Issuance


 


(1)                                  Upon receipt by the Agent of a
Drawdown Notice, Conversion Notice or Rollover Notice from the Borrower
requesting the issuance of Bankers’ Acceptances, the Agent shall


 


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promptly notify the Lenders thereof and advise each
Lender of the aggregate face amount of Bankers’ Acceptances to be accepted by
such Lender, the date of issue, the Interest Period for such Loan and, whether
such Bankers’ Acceptances are to be self-marketed by the Borrower or purchased
by such Lender for its own account; the apportionment among the Lenders of the face
amounts of Bankers’ Acceptances to be accepted by each Lender shall be
determined by the Agent by reference and in proportion to the respective
Commitments of each Lender, provided that, when such apportionment cannot be
evenly made, the Agent shall round allocations amongst such Lenders consistent
with the Agent’s normal money market practices.


 


(2)                                  Unless the Borrower has elected
pursuant to Section 6.5(3) to have each Lender purchase for its own
account the Bankers’ Acceptances to be accepted by it in respect of any
Drawdown, Rollover or Conversion, on each Drawdown Date, Rollover Date or
Conversion Date involving the issuance of Bankers’ Acceptances:


 


(a)                                  the Borrower shall obtain
quotations from prospective purchasers regarding the sale of the Bankers’
Acceptances and shall accept such offers in its sole discretion;


 


(b)                                 by no later than 9:00 a.m.
(Calgary time) on such date, the Borrower shall provide the Agent with details
regarding the sale of the Bankers’ Acceptances described in (a) above whereupon
the Agent shall promptly notify the Lenders of the identity of the purchasers
of such Bankers’ Acceptances, the amounts being purchased by such purchasers,
the Discount Proceeds and the acceptance fees applicable to such issue of
Bankers’ Acceptances (including each Lender’s share thereof);


 


(c)                                  each Lender shall complete and
accept in accordance with the Drawdown Notice, Conversion Notice or Rollover
Notice delivered by the Borrower and advised by the Agent in connection with
such issue, its share of the Bankers’ Acceptances to be issued on such date;
and


 


(d)                                 in the case of a Drawdown, each
Lender shall, on receipt of the Discount Proceeds, remit the Discount Proceeds
(net of the acceptance fee payable to such Lender pursuant to Section 6.2)
to the Agent for the account of the Borrower; the Agent shall make such funds
available to the Borrower for same day value on such date.


 


(3)                                  The Borrower may, with respect to
the issuance of Bankers’ Acceptances hereunder from time to time, elect in the
Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be,
delivered in respect of such issuance to have the Lenders purchase such
Bankers’ Acceptances for their own account. 
On each such Drawdown Date, Rollover Date or Conversion Date involving
the issuance of Bankers’ Acceptances being so purchased by the Lenders:


 


(a)                                  before 9:00 a.m. (Calgary
time) on such date, the Agent shall determine the CDOR Rate and shall obtain
quotations from each Schedule II Lender or Schedule III Lender of the
Discount Rate then applicable to bankers’ acceptances accepted by such
Schedule II Lender or Schedule III Lender in respect of an issue of
bankers’ acceptances in a comparable amount and with comparable maturity to the
Bankers’ Acceptances proposed to be issued on such date;


 


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(b)                                 on or about 9:00 a.m. (Calgary time) on such
date, the Agent shall determine the BA Discount Rate applicable to each Lender
and shall advise each Lender of the BA Discount Rate applicable to it;


 


(c)                                  each Lender shall complete and accept, in
accordance with the Drawdown Notice, Conversion Notice or Rollover Notice
delivered by the Borrower and advised by the Agent in connection with such
issue, its share of the Bankers’ Acceptances to be issued on such date and
shall purchase such Bankers’ Acceptances for its own account at a purchase
price which reflects the BA Discount Rate applicable to such issue; and


 


(d)                                 in the case of a Drawdown, each Lender shall,
for same day value on the Drawdown Date, remit the Discount Proceeds or advance
the BA Equivalent Advance, as the case may be, payable by such Lender (net of
the acceptance fee payable to such Lender pursuant to Section 6.2) to the Agent
for the account of the Borrower; the Agent shall make such funds available to
the Borrower for same day value on such date.


 


(4)           Each Lender may at any time and from
time to time hold, sell, rediscount or otherwise dispose of any or all Bankers’
Acceptances accepted and purchased by it for its own account.


 


6.6                                                                               Rollover, Conversion or Payment on Maturity


 


In anticipation of
the maturity of Bankers’ Acceptances, the Borrower shall, subject to and in
accordance with the requirements hereof, do one or a combination of the
following with respect to the aggregate face amount at maturity of all such
Bankers’ Acceptances:


 


(a)                                  (i) deliver to the Agent a Rollover Notice that
the Borrower intends to draw and present for acceptance on the maturity date
new Bankers’ Acceptances in an aggregate face amount up to the aggregate amount
of the maturing Bankers’ Acceptances and (ii) on the maturity date pay to the
Agent for the account of the Lenders an additional amount equal to the
difference between the aggregate face amount of the maturing Bankers’
Acceptances and the Discount Proceeds of such new Bankers’ Acceptances;


 


(b)                                 (i) deliver to the Agent a Conversion Notice
requesting a Conversion of the maturing Bankers’ Acceptances to another type of
Loan under the Credit Facility and (ii) on the maturity date pay to the Agent
for the account of the Lenders an amount equal to the difference, if any,
between the aggregate face amount of the maturing Bankers’ Acceptances and the
amount of the Loans into which Conversion is requested; or


 


(c)                                  on the maturity date of the maturing Bankers’
Acceptances, pay to the Agent for the account of the Lenders an amount equal to
the aggregate face amount of such Bankers’ Acceptances.


 


If the Borrower
fails to so notify the Agent or make such payments on maturity, the Agent shall
effect a Conversion into a Canadian Prime Rate Loan of the entire amount of
such


 


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maturing Bankers’ Acceptances as if a Conversion Notice had been given
by the Borrower to the Agent to that effect.


 


6.7                                                                               Restriction on
Rollovers and Conversions


 


Subject to the
other provisions hereof, Conversions and Rollovers of Bankers’ Acceptances may
only occur on the maturity date thereof.


 


6.8                                                                               Rollovers


 


In order to satisfy
the continuing liability of the Borrower to a Lender for the face amount of
maturing Bankers’ Acceptances accepted by such Lender, the Lender shall receive
and retain for its own account the Discount Proceeds of new Bankers’
Acceptances issued on a Rollover, and the Borrower shall on the maturity date
of the Bankers’ Acceptances being rolled over pay to the Agent for the account
of the Lenders an amount equal to the difference between the face amount of the
maturing Bankers’ Acceptances and the Discount Proceeds from the new Bankers’
Acceptances, together with the acceptance fees to which the Lenders are
entitled pursuant to Section 6.2.


 


6.9                                                                               Conversion into
Bankers’ Acceptances


 


In respect of
Conversions into Bankers’ Acceptances, in order to satisfy the continuing
liability of the Borrower to the Lenders for the amount of the converted Loan,
each Lender shall receive and retain for its own account the Discount Proceeds
of the Bankers’ Acceptances issued upon such Conversion, and the Borrower shall
on the Conversion Date pay to the Agent for the account of the Lenders an
amount equal to the difference between the principal amount of the converted
Loan and the aggregate Discount Proceeds from the Bankers’ Acceptances issued
on such Conversion, together with the acceptance fees to which the Lenders are
entitled pursuant to Section 6.2.


 


6.10                                                                        Conversion from
Bankers’ Acceptances


 


In order to satisfy
the continuing liability of the Borrower to the Lenders for an amount equal to
the aggregate face amount of the maturing Bankers’ Acceptances converted to
another type of Loan, the Agent shall record the obligation of the Borrower to the
Lenders as a Loan of the type into which such continuing liability has been
converted.


 


6.11                                                                        BA Equivalent
Advances


 


Notwithstanding the
foregoing provisions of this Article, a Non-Acceptance Lender shall, in lieu of
accepting Bankers’ Acceptances, make a BA Equivalent Advance.  The amount of each BA Equivalent Advance
shall be equal to the Discount Proceeds which would be realized from a
hypothetical sale of those Bankers’ Acceptances which, but for this Section,
such Lender would otherwise be required to accept as part of such a Drawdown,
Conversion or Rollover of Bankers’ Acceptances.  To determine the amount of such Discount Proceeds, the
hypothetical sale shall be deemed to take place at the BA Discount Rate for
such Loan.  Any BA Equivalent Advance shall
be made on the relevant Drawdown Date, Rollover Date or Conversion Date as the
case may be and shall remain outstanding for the term of the relevant Bankers’
Acceptances.  Concurrent with the making
of a BA Equivalent Advance, a Non-Acceptance Lender shall be entitled to deduct
therefrom


 


64

















 


an amount equal to the acceptance fee which, but for this Section, such
Lender would otherwise be entitled to receive as part of such Loan.  Subject to Section 6.6, upon the maturity
date for such Bankers’ Acceptances, the Borrower shall pay to each
Non-Acceptance Lender an amount equal to the face amount at maturity of the
Bankers’ Acceptances which, but for this Section, such Lender would otherwise
be required to accept as part of such a Drawdown, Conversion or Rollover of
Bankers’ Acceptances as repayment of the amount of its BA Equivalent Advance
plus payment of the interest accrued and payable thereon to such maturity date.


 


All references
herein to “Loans” and “Bankers’ Acceptances” shall, unless otherwise expressly
provided herein or unless the context otherwise requires, be deemed to include
BA Equivalent Advances made by a Non-Acceptance Lender as part of a Drawdown,
Conversion or Rollover of Bankers’ Acceptances.


 


6.12                                                                        Termination of
Bankers’ Acceptances


 


If at any time a
Lender ceases to accept bankers’ acceptances in the ordinary course of its
business, such Lender shall be deemed to be a Non-Acceptance Lender and shall
make BA Equivalent Advances in lieu of accepting Bankers’ Acceptances under
this Agreement.


 


6.13                                                                        Borrower
Acknowledgements


 


In the event that
the Borrower is marketing its own Bankers’ Acceptances in accordance with
Section 6.5(2), the Borrower hereby agrees that it shall make its own arrangements
for the marketing and sale of the Bankers’ Acceptances to be issued hereunder
and that the Lenders shall have no obligation nor be responsible in that
regard.  The Borrower further
acknowledges and agrees that the availability of purchasers for Bankers’
Acceptances requested to be issued hereunder, as well as all risks relating to
the purchasers thereof, are its own risk.


 


ARTICLE 7 - LETTERS OF CREDIT


 


7.1                                                                               Availability


 


Subject to the
provisions hereof, the Borrower may require that Letters of Credit be issued
under the Credit Facility in accordance with the Drawdown Notices and Rollover
Notices of the Borrower; provided that the aggregate Outstanding Principal
(determined in accordance with (iv) and (v) of such definition) of all Fronted
LCs shall not exceed Cdn.$20,000,000. 
The issuance of Letters of Credit shall constitute Drawdowns or
Rollovers (as applicable) hereunder and shall reduce the availability of the
Credit Facility by such aggregate Outstanding Principal of Letters of Credit
outstanding under the Credit Facility.


 


7.2                                                                               Currency, Type, Form and Expiry


 


Letters of Credit
issued pursuant hereto shall be denominated in Canadian Dollars or United
States Dollars and amounts payable thereunder shall be paid in the currency in
which the Letter of Credit is denominated. 
A Letter of Credit issued hereunder shall, at the option of the Borrower
(as specified in the relevant Drawdown Notice or Rollover Notice), be issued
(a) by the Fronting Lender as a Fronted LC or (b) by the Agent on behalf of the
Lenders (each as to their Rateable Portion thereof) as a POA LC.  Letters of Credit shall be in a form
satisfactory to the


 


65

















 


Fronting Lender or Agent (as applicable), acting reasonably, and shall
have an expiration date not in excess of one year from the date of issue and,
in any event, not later than the Maturity Date.


 


7.3                                                                               No Conversion


 


Except as provided
in Section 7.7, the Borrower may not effect a Conversion of a Letter of Credit.


 


7.4                                                                               POA LC Provisions


 


(1)           Each POA LC 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 Rateable
Portion in effect on the date of issuance of such POA LC.  Each POA LC shall include the provisions
contained in and shall be substantially in the form of Schedule J annexed
hereto; provided that, without the prior written consent of each Lender, no POA
LC shall be issued which varies the several and not joint nature of the
liability of each Lender thereunder.


 


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


 


(a)                                  receive Drafts and other documents presented by
the beneficiary under such POA LC;


 


(b)                                 determine whether such Drafts and documents are
in compliance with the terms and conditions of such POA LC; and


 


(c)                                  notify such Lender and the Borrower that a
valid drawing has been made and the date that the related payment under such
POA LC is to be made; provided that the Agent (in such capacity) shall have no
obligation or liability for any payment to be made under any POA LC, and each
POA LC 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 POA LC 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 POA LC 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 POA LC. 
The Borrower and the Lenders agree that each POA LC shall provide that
all Drafts 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 at the Agent’s Branch.  Each Lender shall be severally liable under each POA LC in
proportion to its Rateable Portion on the date of issuance of such POA LC and
each POA LC shall specify each Lender’s share of the amount payable thereunder.


 


(3)           The Borrower and each Lender hereby
authorize the Agent to review on behalf of each Lender each Draft and other
document presented under each POA LC. 
The determination of the Agent as to the conformity of any documents
presented under a POA LC to the requirements of


 


66

















 


such POA LC shall, in the absence of the Agent’s gross negligence or
willful misconduct, 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 POA LC.  The Agent shall promptly after such examination:


 


(a)                                  notify each of the Lenders obligated under such
POA LC 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 POA LC; and


 


(c)                                  notify each Lender and the Borrower whether
said demand for payment was properly made under such POA LC.


 


With respect to any
drawing determined by the Agent to have been properly made under a POA LC, each
Lender will make a payment under such POA LC in accordance with its liability
under such POA LC and this Agreement, such payment to be made to the Agent’s
Branch or such other account of the Agent as shall have been most recently
designated by it for such purpose by notice to the Lenders.  The Agent will make any such payment
available to the beneficiary of such POA LC 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 POA LC,
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 reimburse the Lenders with respect to any such payment.  The responsibility of the Agent and the
Lenders in connection with any Draft presented for payment under any POA LC
shall, in addition to any payment obligation expressly provided for in such POA
LC, be limited to determining that the documents (including each Draft)
delivered under such Letter of Credit in connection with such presentment are
in conformity with such POA LC.  The
Agent shall not be required to make any payment under a POA LC in excess of the
amount received by it from the Lenders for such payment.


 


7.5                                                                               Fronted LC
Provisions


 


(1)           The Fronting Lender will exercise and
give the same care and attention to each Fronted LC issued by it hereunder as
it gives to its other letters of credit and similar obligations, and the
Fronting Lender’s sole liability to each Lender shall be to promptly return to
the Agent for the account of the Lenders, each Lender’s Rateable Portion of any
payments made to the Fronting Lender by the Borrower hereunder (other than the
fees and amounts payable to the Fronting Lender for its own account) if the
Borrower has made a payment to the Fronting Lender hereunder.  Each Lender agrees that, in paying any
drawing under a Fronted LC, the Fronting Lender shall not have any
responsibility to obtain any document (other than as expressly required by such
Fronted LC) or to ascertain or inquire as to the validity or accuracy of any
such document or the authority of any person delivering any such document.  Neither the Fronting Lender nor any of its
representatives, officers, employees or agents shall be liable to any Lender
for:


 


67

















 


(a)                                  any action taken or omitted to be taken in
connection herewith at the request or with the approval of the Lenders;


 


(b)                                 any action taken or omitted to be taken in
connection with any Fronted LC in the absence of gross negligence or willful
misconduct; or


 


(c)                                  the execution, effectiveness, genuineness,
validity, or enforceability of any Fronted LC, or any other document
contemplated thereby.


 


The Fronting Lender
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
person or persons.


 


(2)           The Borrower and each Lender hereby
authorize the Fronting Lender to review on behalf of each Lender each draft and
other document presented under each Fronted LC.  The determination of the Fronting Lender as to the conformity of
any documents presented under a Fronted LC to the requirements of such Fronted
LC shall, in the absence of such Fronting Lender’s gross negligence or wilful
misconduct, be conclusive and binding on the Borrower and each Lender.  The Fronting Lender shall, within a
reasonable time following its receipt thereof, examine all documents purporting
to represent a demand for payment under any Fronted LC.  The Fronting Lender shall promptly after
such examination:


 


(a)                                  notify the Agent and the Borrower by telephone
(confirmed in writing) of such demand for payment;


 


(b)                                 deliver to the Agent a copy of each document
purporting to represent a demand for payment under such Fronted LC; and


 


(c)                                  notify the Agent and the Borrower whether said
demand for payment was properly made under such Fronted LC.


 


7.6                                                                               Records


 


The Agent and, if
applicable, the Fronting Lender in the case of a Fronted LC, shall maintain
records showing the undrawn and unexpired amount of each Letter of Credit
outstanding hereunder and each Lender’s share of such amount and showing for
each Letter of Credit issued hereunder:


 


(a)                                  the dates of issuance and expiration thereof;


 


(b)                                 the amount thereof; and


 


(c)                                  the date and amount of all payments made
thereunder.


 


The Agent and, if
applicable, the Fronting Lender, shall make copies of such records available to
the Borrower or any Lender upon its request.


 


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7.7                                                                               Reimbursement or
Conversion on Presentation


 


On presentation of
a Letter of Credit and payment thereunder by the Lenders, in the case of a POA
LC, or by the Fronting Lender, in the case of a Fronted LC, the Borrower shall
(at its option) either forthwith pay to and reimburse the Agent for the account
of the Lenders or the Fronting Lender (as applicable) for all amounts paid
pursuant to such Letter of Credit or, failing such payment, the Borrower shall
be deemed to have effected a Conversion of such Letter of Credit into:  (a) a Canadian Prime Rate Loan, in the case
of a Letter of Credit denominated in Canadian Dollars, and (b) a U.S. Base Rate
Loan, in the case of a Letter of Credit denominated in United States Dollars,
in each case, to the extent of the payment by the Lenders or the Fronting
Lender (as applicable) thereunder.


 


7.8                                                                               Fronting Lender
Indemnity


 


(1)           If the Fronting Lender makes payment
under any Fronted LC and the Borrower does not fully reimburse the Fronting
Lender on or before the date of payment, then Section 7.7 shall apply to deem a
Loan to be outstanding to the Borrower under this Agreement in the manner
herein set out.  Each Lender shall, on
request by the Fronting Lender, immediately pay to the Fronting Lender an
amount equal to such Lender’s Rateable Portion of the amount paid by the
Fronting Lender such that each Lender is participating in the deemed Loan in
accordance with its Rateable Portion and, for certainty, regardless of whether
any Default or Event of Default is then outstanding or whether any other
condition to the making of a Loan has been satisfied or not.


 


(2)           Each Lender shall immediately on
demand indemnify the Fronting Lender to the extent of such Lender’s Rateable
Portion of any amount paid or liability incurred by the Fronting Lender under
each Fronted LC issued by it to the extent that the Borrower does not fully
reimburse the Fronting Lender therefor.


 


(3)           For certainty, the obligations in
this Section 7.8 shall continue as obligations of those Lenders who were
Lenders at the time when each such Letter of Credit was issued notwithstanding
that such Lender may assign its rights and obligations hereunder, unless the
Fronting Lender specifically releases such Lender from such obligations in
writing.


 


7.9                                                                               Fees and Expenses


 


(1)           The Borrower shall pay to the Agent,
for the account of all Lenders in respect of Letters of Credit issued
hereunder, an issuance fee, payable quarterly in arrears on the first Banking
Day of each calendar quarter and payable on the Maturity Date or (if
applicable) any earlier date on which the Credit Facility is fully cancelled,
calculated at a rate per annum equal to the Applicable Pricing Rate and on the
average daily amount of each such Letter of Credit for the number of days such
Letter of Credit was outstanding for the period from and including the date of
issuance or the date of the immediately preceding determination of issuance
fees (as the case may be) to but excluding that date of determination, in each
case, in a year of 365 or 366 days, as the case may be; provided that the
minimum issuance fee for each such Letter of Credit shall be Cdn. $350  for
Letter of Credit denominated in Canadian Dollars and U.S. $350 for Letter of
Credit denominated in United States Dollars.


 


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(2)           The Borrower shall pay to the Agent
for the account of the Fronting Lender, as a condition precedent to the
issuance of any Fronted LC, a fee in advance on the date each Fronted LC is
issued calculated at a rate of 0.125% per annum on the amount of each such
Fronted LC for the number of days which such Fronted LC will be outstanding in
the year of 365 or 366 days, as the case may be, in which the Fronted LC is
issued.


 


(3)           In addition, with respect to all
Letters of Credit, the Borrower shall from time to time pay to the Agent or the
Fronting Lender, as the case may be, its usual and customary fees and charges
(at the then prevailing rates) for the amendment, delivery and administration
of letters of credit such as the Letters of Credit and shall pay and reimburse
the Agent, the Fronting Lender and the Lenders for any reasonable out-of-pocket
costs and expenses incurred in connection with any Letter of Credit, including
in connection with any payment thereunder.


 


7.10                                                                        Additional
Provisions


 


(1)           Indemnity and No Lender Liability


 


The Borrower shall
indemnify and save harmless the Lenders, the Fronting Lender and the Agent
against all claims, losses, costs, expenses or damages to the Lenders, the
Fronting Lender and the Agent arising out of or in connection with any Letter
of Credit, the issuance thereof, any payment thereunder or any action taken by
the Lenders, the Fronting Lender or the Agent or any other person in connection
therewith, including all costs relating to any legal process or proceeding
instituted by any party restraining or seeking to restrain the issuer of a
Letter of Credit or the Agent from accepting or paying any Draft or any amount
under any such Letter of Credit, except as a result of the Agent’s, Lenders’ or
Fronting Lender’s (as applicable) gross negligence or wilful misconduct.  The Borrower also agrees that the Lenders,
the Fronting Lender and the Agent shall have no liability to it for any reason
in respect of or in connection with any Letter of Credit, the issuance thereof,
any payment thereunder or any other action taken by the Lenders, the Fronting
Lender or the Agent or any other person in connection therewith, except as a
result of the Agent’s, Lenders’ or Fronting Lender’s (as applicable) gross
negligence or wilful misconduct.


 


(2)           No Obligation to Inquire


 


The Borrower hereby
acknowledges and confirms to each of the Fronting Lender, the Agent and the
Lenders that the Fronting Lender, the Agent and the Lenders shall not be
obliged to make any inquiry or investigation as to the right of any beneficiary
to make any claim or Draft or request any payment under a Letter of Credit and
payment pursuant to a Letter of Credit shall not be withheld by reason of any
matters in dispute between the beneficiary thereof and the Borrower.  The sole obligation of the Fronting Lender
and the Agent and the Lenders with respect to Letters of Credit is to cause to
be paid a Draft drawn or purporting to be drawn in accordance with the terms of
the applicable Letter of Credit and for such purpose the Fronting Lender or
Agent, as the case may be, is only obliged to determine that the Draft purports
to comply with the terms and conditions of the relevant Letter of Credit.


 


The Fronting
Lender, the Agent and the Lenders shall not have any responsibility or
liability for or any duty to inquire into the form, sufficiency (other than to
the extent provided in the last sentence of the immediately preceding paragraph
and except with respect to their gross


 


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negligence or wilful misconduct or payment under a Letter of Credit
other than in substantial compliance herewith), authorization, execution,
signature, endorsement, correctness (other than to the extent provided in the
last sentence of the immediately preceding paragraph and except with respect to
their gross negligence or wilful misconduct or payment under a Letter of Credit
other than in substantial compliance herewith), genuineness or legal effect of
any Draft, certificate or other document presented to it pursuant to a Letter
of Credit and the Borrower unconditionally assumes all risks with respect to
the same.  The Borrower agrees that it
assumes all risks of the acts or omissions of the beneficiary of any Letter of
Credit with respect to the use by such beneficiary of the relevant Letter of
Credit.  The Borrower further agrees
(other than to the extent provided in the last sentence of the immediately
preceding paragraph and except with respect to their gross negligence or wilful
misconduct or payment under a Letter of Credit other than in substantial
compliance herewith) that neither the Agent nor any Lender, including the
Fronting Lender, nor any of their respective officers, directors or
correspondents will assume liability for, or be responsible for:


 


(a)                                  the validity, correctness, genuineness or legal
effect of any document or instrument relating to any Letter of Credit, even if
such document or instrument should in fact prove to be in any respect invalid,
insufficient, inaccurate, fraudulent or forged;


 


(b)                                 the failure of any document or instrument to
bear any reference or adequate reference to any Letter of Credit;


 


(c)                                  any failure to note the amount of any Draft on
any Letter of Credit or on any related document or instrument; any failure of
the beneficiary of any Letter of Credit to meet the obligations of such
beneficiary to the Borrower or any other person;


 


(d)                                 any errors, inaccuracies, omissions,
interruptions or delays in transmission or delivery of any messages, directions
or correspondence by mail, facsimile or otherwise, whether or not they are in
cipher;


 


(e)                                  any inaccuracies in the translation of any
messages, directions or correspondence or for errors in the interpretation of
any technical terms; or


 


(f)                                    any failure by the Agent or any Lender,
including the Fronting Lender, to make payment under any Letter of Credit as a
result of any law, control or restriction rightfully or wrongfully exercised or
imposed by any domestic or foreign court or government or Governmental
Authority or as a result of any other cause beyond the control of the Agent or
any Lender, including the Fronting Lender, or their respective officers,
directors or correspondents.


 


(3)           Obligations Unconditional


 


The obligations of
the Borrower hereunder with respect to all Letters of Credit shall be absolute,
unconditional and irrevocable and shall not be reduced by any event,
circumstance or occurrence, including any lack of validity or enforceability of
a Letter of Credit, or any Draft paid or acted upon by the Fronting Lender, the
Agent, the Lenders or any of their respective correspondents being fraudulent,
forged, invalid or insufficient in any respect (except with respect to their
gross negligence or wilful misconduct or payment under a Letter of Credit other
than in substantial compliance herewith), or any set-off, defenses, rights or
claims which the Borrower may have


 


71

















 


against any beneficiary or transferee of any Letter of Credit.  The obligations of the Borrower hereunder
shall remain in full force and effect and shall apply to any alteration to or
extension of the expiration date of any Letter of Credit or any Letter of
Credit issued to replace, extend or alter any Letter of Credit.


 


(4)           Other Actions


 


Any action,
inaction or omission taken or suffered by the Fronting Lender, the Agent or any
Lender or by any of their respective correspondents under or in connection with
a Letter of Credit or any Draft made thereunder, if in good faith and in
conformity with foreign or domestic laws, regulation or customs applicable
thereto shall be binding upon the Borrower and shall not place the Fronting
Lender, the Agent, any Lender or any of their respective correspondents under
any resulting liability to the Borrower. 
Without limiting the generality of the foregoing, the Fronting Lender,
the Agent, any Lender and their respective correspondents may receive, accept
or pay as complying with the terms of a Letter of Credit, any Draft thereunder,
otherwise in order which may be signed by, or issued to, the administrator or
any executor of, or the trustee in bankruptcy of, or the receiver for any
property of, or any person or entity acting as a representative or in the place
of, such beneficiary or its successors and assigns.  The Borrower covenants that it will not take any steps, issue any
instructions to the Fronting Lender, the Agent, any Lender or any of their
respective correspondents or institute any proceedings intended to derogate
from the right or ability of the Fronting Lender, the Agent, any Lender or
their respective correspondents to honour and pay any Letter of Credit or any
Drafts.


 


(5)           Payment of Contingent Liabilities


 


The Borrower shall
pay to the Agent an amount equal to the maximum amount available to be drawn
under any unexpired Letter of Credit which becomes the subject of any order,
judgment, injunction or other such determination (an “Order”), or any petition,
proceeding or other application for any Order by the Borrower or any other
party, restricting payment under and in accordance with such Letter of Credit
or extending the Fronting Lender’s or Lenders’ liability, as the case may be,
under such Letter of Credit beyond the expiration date stated therein; payment
in respect of each such Letter of Credit shall be due forthwith upon demand in
the currency in which such Letter of Credit is denominated.


 


Any amount paid to
the Agent pursuant to the preceding paragraph shall be held by the Agent in
interest bearing cash collateral accounts (with interest payable for the
account of the Borrower at the rates and in accordance with the then prevailing
practices of the Agent for accounts of such type) as continuing security for
the Obligations and shall, prior to an Event of Default be applied by the Agent
against the Obligations for, or (at the option of the Agent) be applied in
payment of, such Letter of Credit if payment is required thereunder; after an
Event of Default the Agent may apply such amounts, firstly, against any
Obligations in respect of the relevant Letter of Credit, and, after
satisfaction of such Obligations or expiry of such Letter of Credit, against
any other Obligations as it sees fit or as is directed by the Lenders.


 


The Agent shall
release to the Borrower any amount remaining in the cash collateral accounts
after applying the amounts necessary to discharge the Obligations relating to
such Letter of Credit, upon the later of:


 


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(a)                                  the date on which any final and non appealable
order, judgment or other determination has been rendered or issued either
terminating any applicable Order or permanently enjoining the Fronting Lender
or Lenders, as the case may be, from paying under such Letter of Credit;


 


(b)                                 the earlier of:


 


(i)                                     the date on which either the original
counterpart of such Letter of Credit is returned to the Fronting Lender or
Agent, as the case may be, for cancellation or the Fronting Lender or Lenders,
as the case may be, is or are released by the beneficiary thereof from any
other obligation in respect of such Letter of Credit; and


 


(ii)                                  the expiry of such Letter of Credit; and


 


(c)                                  if an Event of Default has occurred, the
payment and satisfaction of all Obligations and the cancellation or termination
of the Credit Facility.


 


(6)           No Consequential Damages


 


Notwithstanding any other provision
of the Documents to the contrary, the Fronting Lender, the Agent and the
Lenders shall not be liable to the Borrower for any consequential, indirect,
punitive or exemplary damages with respect to action taken or omitted to be
taken by any of them under or in respect of any Letter of Credit.


 


(7)           Uniform Customs and Practice


 


The Uniform Customs
and Practice for Documentary Credits as most recently published by the
International Chamber of Commerce (the “Uniform Customs”) shall in all respects
apply to each Letter of Credit unless expressly provided to the contrary
therein and shall be deemed for such purpose to be a part of this Agreement as
if fully incorporated herein.  In the
event of any conflict or inconsistency between the Uniform Customs and the
governing law of this Agreement, the Uniform Customs shall, to the extent
permitted by applicable law, prevail to the extent necessary to remove the
conflict or inconsistency.


 


7.11                                                                        Certain Notices to
the Agent with Respect to Letters of
Credit


 


(1)           The Fronting Lender (if other than
the Agent) shall forthwith advise the Agent of any payment under, or
cancellation of (whether full or partial), any Letter of Credit issued by such
Fronting Lender pursuant hereto.


 


(2)           For certainty, all Rollover Notices
requesting a Rollover of a Letter of Credit shall be delivered to the Agent
(rather than directly to the Fronting Lender) and, in addition to the other
provisions hereof applicable to such a Rollover, no Rollover of a Letter of
Credit shall be made unless a Rollover Notice is given to the Agent in
accordance with Section 2.7(d).


 


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ARTICLE 8 -
PLACE AND APPLICATION OF PAYMENTS


 


8.1                                                                               Place of Payment of
Principal, Interest and Fees;
Payments to Agent


 


All payments of
principal, interest, fees and other amounts to be made by the Borrower to the
Agent and the Lenders pursuant to this Agreement shall be made to the Agent
(for, as applicable, the account of the Lenders or its own account) in the
currency in which the Loan is outstanding for value on the day such amount is
due, and if such day is not a Banking Day on the Banking Day next following, by
deposit or transfer thereof to the accounts of the Agent maintained at the
Agent’s Branch and designated by the Agent for such purpose or at such other
place as the Borrower and the Agent may from time to time agree.  Notwithstanding anything to the contrary
expressed or implied in this Agreement, the receipt by the Agent in accordance
with this Agreement of any payment made by the Borrower for the account of any
of the Lenders shall, insofar as the Borrower’s obligations to the relevant
Lenders are concerned, be deemed also to be receipt by such Lenders and the
Borrower shall have no liability in respect of any failure or delay on the part
of the Agent in disbursing and/or accounting to the relevant Lenders in regard
thereto.


 


8.2                                                                               Designated Accounts
of the Lenders


 


All payments of
principal, interest, fees or other amounts to be made by the Agent to the
Lenders pursuant to this Agreement shall be made for value on the day required
hereunder, provided the Agent receives funds from the Borrower for value on
such day, and if such funds are not so received from the Borrower or if such
day is not a Banking Day, on the Banking Day next following, by deposit or
transfer thereof at the time specified herein to the account of each Lender
designated by such Lender to the Agent for such purpose or to such other place
or account as the Lenders may from time to time notify the Agent.


 


8.3                                                                               Funds


 


Each amount
advanced, disbursed or paid hereunder shall be advanced, disbursed or paid, as
the case may be, in such form of funds as may from time to time be customarily
used in Calgary, Alberta and Toronto, Ontario in the settlement of banking transactions
similar to the banking transactions required to give effect to the provisions
of this Agreement on the day such advance, disbursement or payment is to be
made.


 


8.4                                                                               Application of
Payments


 


Except as otherwise
agreed in writing by the Lenders, if any Event of Default shall occur and be
continuing, all payments made by the Borrower to the Agent and the Lenders
shall be applied in the following order:


 


(a)                                  to amounts due hereunder as fees other than
acceptance fees for Bankers’ Acceptances;


 


(b)                                 to amounts due hereunder as costs and expenses;


 


(c)                                  to amounts due hereunder as default interest;


 


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(d)                                 to amounts due hereunder as interest or
acceptance fees for Bankers’ Acceptances; and


 


(e)                                  to amounts due hereunder as principal
(including reimbursement obligations in respect of Bankers’ Acceptances and
Letters of Credit).


 


8.5                                                                               Payments Clear of
Taxes


 


(1)           Any and all payments by the Borrower
to the Agent or the Lenders hereunder shall be made free and clear of, and
without deduction or withholding for or on account of, any and all present or
future Taxes  and all liabilities with respect thereto imposed, levied,
collected, withheld or assessed by any Governmental Authority or under the laws
of any international tax authority imposed on the Agent or the Lenders, or by
or on behalf of the foregoing.  In
addition, the Borrower agrees to pay any present or future stamp, transfer,
registration, excise, issues, documentary or other or similar charges or levies
which arise from any payment made under this Agreement or the Loans or in
respect of the execution, delivery or registration or the compliance with this
Agreement or the other Documents contemplated hereunder.  The Borrower shall indemnify and hold harmless
the Agent and the Lenders for the full amount of all of the foregoing Taxes or
other amounts paid or payable by the Agents or the Lenders and any liability
(including penalties, interest, additions to tax and reasonable out-of-pocket
expenses) resulting therefrom or with respect thereto.


 


(2)           If the Borrower shall be required by
law to deduct or withhold any amount from any payment or other amount required
to be paid to the Agent or the Lenders hereunder or if any liability in respect
of any such withholding or deduction shall be imposed or shall arise from or in
respect of any sum payable to the Agent or the Lenders hereunder, then the sum
payable to the Agent or the Lenders hereunder shall be increased as may be
necessary so that after making all required deductions, withholdings, and
additional income tax payments attributable thereto (including deductions,
withholdings or income tax payable for additional sums payable under this
provision) the Agent or the Lenders, as the case may be, receive an amount
equal to the amount they would have received had no such deductions or
withholdings been made or if such additional taxes had not been imposed; in
addition, the Borrower shall pay the full amount deducted or withheld for such
liabilities to the relevant taxation authority or other authority in accordance
with applicable law, such payment to be made (if the liability is imposed on
the Borrower) for its own account or (if the liability is imposed on the Agent
or the Lenders) on behalf of and in the name of the Agent or the Lenders, as
the case may be.  If the liability is
imposed on the Agent or the Lenders, the Borrower shall deliver to the Agent or
the Lenders evidence satisfactory to the Agent or the Lenders, acting
reasonably, of the payment to the relevant taxation authority or other
authority of the full amount deducted or withheld.


 


(3)           Each Lender shall use reasonable
efforts to contest (to the extent contestation is reasonable) such imposition
or assertion of such Taxes and shall reimburse to the Borrower the amount of
any reduction of Taxes, to the extent of amounts that have been paid by the
Borrower in respect of such Taxes in accordance with this Agreement, as a
result of such contestation and, provided that, no Lender shall have any
obligation to expend its own funds, suffer any economic hardship or take any
action detrimental to its interests (as determined by the relevant Lender in
its sole discretion) in connection therewith unless it shall have received from
the Borrower payment therefor or an indemnity with respect thereto,
satisfactory to it.


 


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(4)           Each Lender:


 


(a)                                  that is not an authorized foreign bank as
defined in section 2 of the Bank Act (Canada) represents, warrants and
covenants to the Borrower that such Lender is, and shall at all times during
the term of this Agreement remain, a resident of Canada for the purposes of the
Income
Tax Act (Canada);


 


(b)                                 that is an authorized foreign bank as defined
in section 2 of the Bank Act (Canada) represents, warrants and
covenants to the Borrower that, prior to the coming into force of publicly
announced amendments to Regulations 105(2) and 800-805, inclusive, of the Income Tax
Regulations, such Lender will receive all amounts paid or credited
to such Lender under this Agreement in respect of its “Canadian banking
business” for purposes of paragraph 212(13.3)(a) of the Income Tax Act (Canada) and,
accordingly, such Lender is deemed, and shall at all times during the term of
the Agreement remain to be deemed to be, a resident of Canada for purposes of
the Income
Tax Act (Canada),


 


unless, in either the case of
(a) or (b) above, such Lender either: 
(i) became a Lender as a result of a sale, assignment, transfer or grant
made in compliance with Section 16.6 during the continuance of an Event of
Default; or (ii) agrees in writing in favour of the Borrower that such Lender
shall not be entitled to receive any additional amount under Section 8.5 in
respect of, and the Borrower shall be entitled to make withholdings in respect
of, withholding tax pursuant to Part XIII of the Income Tax Act (Canada)
relating to amounts payable by the Borrower to such Lender hereunder.


 


8.6                                                                               Set Off


 


(1)           In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence of an Event of Default which remains unremedied
(whether or not the Loans have been accelerated hereunder), the Agent and each
Lender shall have the right (and are hereby authorized by the Borrower) at any
time and from time to time to combine all or any of the Borrower’s accounts
with the Agent or the Lender, as the case may be, and to set off and to
appropriate and to apply any and all deposits (general or special, term or
demand) including, but not limited to, indebtedness evidenced by certificates
of deposit whether matured or unmatured, and any other indebtedness at any time
held by the Borrower or owing by such Lender or the Agent, as the case may be,
to or for the credit or account of the Borrower against and towards the
satisfaction of any Obligations owing by the Borrower, and may do so
notwithstanding that the balances of such accounts and the liabilities are
expressed in different currencies, and the Agent and each Lender are hereby
authorized to effect any necessary currency conversions at the noon spot rate
of exchange announced by the Bank of Canada on the Banking Day before the day
of conversion.


 


(2)           The Agent or the applicable Lender,
as the case may be, shall notify the Borrower of any such set-off from the
Borrower’s accounts within a reasonable period of time thereafter, although the
Agent or the Lender, as the case may be, shall not be liable to the Borrower
for its failure to so notify.


 


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8.7                                                                               Margin Changes;
Adjustments for Margin Changes


 


(1)           Changes in Applicable Pricing Rate
(and, hence, corresponding changes in the Applicable Standby Fee Rate) shall be
effective:


 


(a)                                  from and as of the day immediately following
the Quarter End in respect of which a change in the Senior Debt to EBITDA Ratio
results in a change in the Applicable Pricing Rate in accordance with the
provisions of such definition; and


 


(b)                                 without the necessity of notice to the
Borrower.


 


(2)           For any additional amounts payable
hereunder or reductions in the amounts payable hereunder (as the case may be)
as a result of a change in Applicable Pricing Rate or Applicable Standby Fee
Rate:


 


(a)                                  in the case of increases in such rates per
annum, the Borrower shall pay to the Agent for the account of the Lenders such
additional interest or fees, as the case may be, as may be required to give
effect to the relevant increases in the interest or fees payable hereunder from
and as of the effective date of the relevant increase in rates; and


 


(b)                                 in the case of decreases in such rates per
annum, the Borrower shall receive a credit against subsequent interest payable
on Loans pursuant to any provision of this Agreement or fees payable pursuant
to Section 5.6, Section 6.2 or Section 7.9, as the case may be, to the extent
necessary to give effect to the relevant decreases in the interest or fees
payable hereunder from and as of the effective date of the relevant decrease in
rates.


 


(3)           The additional payments required by
Section 8.7(2)(a) shall be made on the first Banking Day of the calendar month
immediately following the calendar month in which the Compliance Certificate
detailing the relevant change in the Senior Debt to EBITDA Ratio is received by
the Agent.  The adjustments required by
Section 8.7(2)(b) shall be accounted for in successive interest and fee
payments by the Borrower (commencing in the calendar month immediately
following the calendar month in which the Compliance Certificate detailing the
relevant change in the Senior Debt to EBITDA Ratio is received by the Agent)
until the amount of the credit therein contemplated has been fully applied;
provided that, upon satisfaction in full of all Obligations and cancellation in
full of the Credit Facility in accordance herewith, the Lenders shall pay to
the Borrower an amount equal to any such credit which remains outstanding.


 


ARTICLE 9 -
REPRESENTATIONS AND WARRANTIES


 


9.1                                                                               Representations and
Warranties


 


The Borrower
represents and warrants as follows to the Agent and to each of the Lenders and
acknowledges and confirms that the Agent and each of the Lenders is relying
upon such representations and warranties:


 


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(a)                                  Existence and Good Standing


 


The Borrower and
each Subsidiary is a corporation validly existing and in good standing under
the laws of its jurisdiction of incorporation or is a partnership or trust
validly existing under the laws of the Province of Alberta; each is duly
registered in all other jurisdictions where the nature of its property or
character of its business requires registration, except for jurisdictions where
the failure to be so registered or qualified would not have a Material Adverse
Effect, and has all necessary power and authority to own its properties and
carry on its business as presently carried on or as contemplated by the
Documents.


 


(b)                                 Authority


 


The Borrower and
each Subsidiary has full power, legal right and authority to enter into the
Documents to which it is a party and do all such acts and things as are
required by such Documents to be done, observed or performed, in accordance
with the terms thereof.


 


(c)                                  Valid Authorization and Execution


 


The Borrower and
each Subsidiary has taken all necessary corporate, partnership and other action
(as applicable) of its directors, shareholders, partners, trustees and other
persons (as applicable) to authorize the execution, delivery and performance of
the Documents to which it is a party and to observe and perform the provisions
thereof in accordance with the terms therein contained.


 


(d)                                 Validity of Agreement – Non-Conflict


 


None of the
authorization, execution or delivery of this Agreement or performance of any
obligation pursuant thereto requires or will require, pursuant to applicable
law now in effect, any approval or consent of any Governmental Authority having
jurisdiction (except such as has already been obtained and are in full force
and effect) nor is in conflict with or contravention of (i) the Borrower’s or
any Subsidiary’s articles, by-laws or other constating documents or any
resolutions of directors or shareholders or the provisions of its partnership
agreement or declaration of trust or trust indenture (as applicable) or (ii)
the provisions of any other indenture, instrument, undertaking or other
agreement to which the Borrower or any of its Subsidiaries is a party or by
which they or their properties or assets are bound, the contravention of which
would have or would reasonably be expected to have a Material Adverse Effect.
The Documents when executed and delivered will constitute valid and legally
binding obligations of each of the Borrower and each Subsidiary which is a
party thereto enforceable against each such party in accordance with their
respective terms, subject to applicable bankruptcy, insolvency and other laws
of general application limiting the enforceability of creditors’ rights and to
the fact that equitable remedies are only available in the discretion of the
court.


 


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(e)                                  Ownership of Property


 


Subject to
Permitted Encumbrances, the Borrower and each Subsidiary has good and
marketable title to its property and assets, except to the extent that failure
to have such title would not have or reasonably be expected to have a Material
Adverse Effect.


 


(f)                                    Debt


 


Neither the
Borrower nor any Subsidiary has created, incurred, assumed, suffered to exist,
or entered into any contract, instrument or undertaking pursuant to which, the
Borrower or any Subsidiary is now or may hereafter become liable for any Debt
other than Permitted Debt.


 


(g)                                 Encumbrances


 


Neither the
Borrower nor any Subsidiary has created, incurred, assumed, suffered to exist,
or entered into any contract, instrument or undertaking pursuant to which, any
person may have or be entitled to any Security Interest on or in respect of its
property and assets or any part thereof except for Permitted Encumbrances.


 


(h)                                 No Material Adverse Effect


 


No event,
circumstance or condition has occurred or is continuing which has had or would
reasonably be expected to have a Material Adverse Effect.


 


(i)                                     No Omissions


 


The Borrower has
made available to the Agent all material information necessary to make any
representations, warranties and statements contained in this Agreement not misleading
in any material respect in light of the circumstances in which they are given.


 


(j)                                     Non-Default


 


No Default or Event
of Default has occurred or is continuing.


 


(k)                                  Financial Condition


 


The audited and
unaudited combined financial statements of the Borrower delivered to the
Lenders and the Agent pursuant hereto present fairly, in all material respects,
the combined financial condition of the Borrower and its Subsidiaries as at the
date thereof and the results of the combined operations thereof for the fiscal
year or fiscal quarter (as applicable) then ending, all in accordance with GAAP
consistently applied.


 


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(l)                                     Information Provided


 


All information,
materials and documents, including all cash flow projections, economic models,
capital and operating budgets and other financial information and data:


 


(i)                                     prepared and provided to the Agent by the
Borrower or any Subsidiary in respect of the transactions contemplated by this
Agreement, or as required by the terms of this Agreement, were, in the case of
financial projections, prepared in good faith based upon reasonable assumptions
at the date of preparation, and, in all other cases, true, complete and correct
in all material respects as of the respective dates thereof; and


 


(ii)                                  prepared by persons other than the Borrower or
a Subsidiary and provided to the Agent by or on behalf of the Borrower or any
Subsidiary in respect of the transactions contemplated by this Agreement, or as
required by the terms of this Agreement, were, to the best of the knowledge of
the Borrower after due inquiry, in the case of financial projections, prepared
in good faith based upon reasonable assumptions at the date of preparation,
and, in all other cases, true, complete and correct in all material respects as
of the respective dates thereof.


 


(m)                               Absence of Litigation


 


There are no
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries, their
property or any of their undertakings and assets, at law, in equity or before
any arbitrator or before or by any Governmental Authority having jurisdiction
in the premises in respect of which there is a reasonable likelihood of a
determination adverse to the Borrower or any Subsidiary and which, if
determined adversely, would have or would reasonably be expected to have a
Material Adverse Effect.


 


(n)                                 Compliance with Applicable Laws, Court Orders
and Agreements


 


The Borrower and
each of its Subsidiaries and their respective property, businesses and
operations are in compliance with all Applicable Laws (including, without
limitation, all applicable Environmental Laws), all applicable directives,
judgments, decrees, injunctions and orders rendered by any Governmental
Authority or court of competent jurisdiction, its articles, by-laws and other
constating documents, all agreements or instruments to which it is a party or
by which its property or assets are bound, and any employee benefit plans,
except to the extent that failure to so comply would not have and would not
reasonably be expected to have a Material Adverse Effect.


 


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(o)                                 Required Permits in Effect


 


All Required
Permits are in full force and effect, except to the extent that the failure to
have or maintain the same in full force and effect would not, when taken in the
aggregate, have or reasonably be expected to have a Material Adverse Effect.


 


(p)                                 Remittances Up to Date


 


All of the material
remittances required to be made by the Borrower and its Subsidiaries to
Governmental Authorities have been made, are currently up to date and there are
no outstanding arrears, other than those which are being contested by Permitted
Contest.


 


(q)                                 Environmental


 


(i)                                     To the best of the knowledge and belief of the
Borrower, after due inquiry, the Borrower, its Subsidiaries and their
respective properties, assets and undertakings taken as a whole comply in all
respects and the businesses, activities and operations of same and the use of
such properties, assets and undertakings and the processes and undertakings
performed thereon comply in all respects with all Environmental Laws except to
the extent that failure to so comply would not have and would not reasonably be
expected to have a Material Adverse Effect; further, the Borrower does not
know, and has no reasonable grounds to know, of any facts which result in or
constitute or are likely to give rise to non-compliance with any Environmental
Laws, which facts or non-compliance have or would reasonably be expected to
have a Material Adverse Effect.


 


(ii)                                  The Borrower has not received written notice
and, except as previously disclosed to the Agent in writing, has no knowledge
after due inquiry, of any facts which could give rise to any notice of
non-compliance with any Environmental Laws, which non-compliance has or would
reasonably be expected to have a Material Adverse Effect and has not received
any notice that the Borrower or any of its Subsidiaries is a potentially
responsible party for a federal, provincial, regional, municipal or local
clean-up or corrective action in connection with their respective properties,
assets and undertakings where such clean-up or corrective action has or would
reasonably be expected to have a Material Adverse Effect.


 


(r)                                    Taxes


 


The Borrower and
each of its Subsidiaries has duly filed on a timely basis all tax returns
required to be filed and have paid all material Taxes which are due and
payable, and have paid all material assessments and reassessments, and all
other material Taxes, governmental charges, governmental royalties, penalties,
interest and fines claimed against them, other than those which are being
contested by them by Permitted Contest; they have made adequate provision for,
and all required instalment payments have been made in respect of, Taxes
payable for the current


 


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period for which
returns are not yet required to be filed; there are no agreements, waivers or
other arrangements providing for an extension of time with respect to the
filing of any tax return by them or the payment of any Taxes; there are no
actions or proceedings being taken by any taxation authority in any
jurisdictions where the Borrower or any Subsidiary carries on business to
enforce the payment of any Taxes by them other than those which are being
contested by them by Permitted Contest.


 


(s)                                  Material Subsidiaries


 


The only Material
Subsidiaries of the Borrower are the Other Acquisition Companies and other
Wholly-Owned Subsidiaries of the Borrower (i) which have provided Security for
the Credit Facility in accordance with the Documents or (ii) of which the
Borrower has provided written notice to the Agent pursuant to Section 10.1(j)
and which will provide Security for the Credit Facility in accordance with the
Documents.


 


(t)                                    MAPL Acquisition


 


As at the date
hereof, the Borrower reasonably anticipates that the MAPL Purchase Agreement
will be executed and delivered and the MAPL Acquisition will be completed on or
before December 15, 2004 (in each case after satisfaction of the conditions set
forth in Section 2.4(4)) and, to the best of its knowledge, the Borrower is not
aware of any event, matter or circumstance which would reasonably be
anticipated to preclude or interfere with the completion of such Acquisition or
the satisfaction of such conditions.


 


9.2                                                                               Deemed Repetition


 


On the date of
delivery by the Borrower of a Drawdown Notice to the Agent, and again on the
date of any Drawdown made by the Borrower pursuant thereto:


 


(a)                                  except those representations and warranties
which the Borrower has notified the Agent in writing cannot be repeated for
such Drawdown and in respect of which the Lenders have previously waived in
writing (with or without terms or conditions) the application of the condition
precedent in Section 3.1(b) for such Drawdown, each of the representations and
warranties contained in Section 9.1 shall be deemed to be repeated; and


 


(b)                                 the Borrower shall be deemed to have
represented to the Agent and the Lenders that, except as has otherwise been
notified to the Agent in writing and has been previously waived in writing in
accordance herewith, no event has occurred and remains outstanding which would
constitute a Default or an Event of Default nor will any such event occur as a
result of the aforementioned Drawdown.


 


9.3                                                                               Other Documents


 


All representations
and warranties or certifications of the Borrower or any Subsidiary or Related
Party contained in the Subordination Agreement, any Security, Compliance
Certificate,


 


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Officer’s Certificate or other material Document delivered pursuant
hereto or thereto shall be deemed to constitute representations and warranties
made by the Borrower to the Agent and the Lenders under Section 9.1 of this
Agreement.


 


9.4                                                                               Effective Time of
Repetition


 


All representations
and warranties, when repeated or deemed to be repeated hereunder, shall be
construed with reference to the facts and circumstances existing at the time of
repetition, unless they are stated herein to be made as at the date hereof.


 


9.5                                                                               Nature of
Representations and Warranties


 


The representations
and warranties set out in this Agreement or deemed to be made pursuant hereto
shall survive the execution and delivery of this Agreement and the making of
each Drawdown, notwithstanding any investigations or examinations which may be
made by the Agent, the Lenders or Lenders’ Counsel.  Such representations and warranties shall survive until this
Agreement has been terminated, provided that the representations and warranties
relating to environmental matters shall survive the termination of this
Agreement.


 


ARTICLE 10 - GENERAL COVENANTS


 


10.1                                                                        Affirmative
Covenants of the Borrower


 


So long as any
Obligation is outstanding or the Credit Facility is available hereunder, the
Borrower covenants and agrees with each of the Lenders and the Agent that,
unless (subject to Section 16.10) a Majority of the Lenders otherwise consent
in writing:


 


(a)                                  Punctual Payment and Performance


 


It shall duly and
punctually pay the principal of all Loans, all interest thereon and all fees
and other amounts required to be paid by the Borrower hereunder in the manner
specified hereunder and the Borrower shall perform and observe all of its
obligations under this Agreement and under any other Document to which it is a
party.


 


(b)                                 Books and Records


 


It shall keep
proper books of record and account in which complete and correct entries will
be made of its transactions in accordance with GAAP.


 


(c)                                  Maintenance and Operation


 


It shall do or
cause to be done, and will cause each Subsidiary to do or cause to be done, all
things necessary or required to have all its properties, assets and operations
owned, operated and maintained in accordance with diligent and prudent industry
practice and Applicable Laws except to the extent that the failure to do or
cause to be done the same would not have and would not reasonably be expected
to have a Material Adverse Effect, and at all times cause the same to be owned,
operated, maintained and used in compliance with the terms of any applicable
insurance policy


 


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to the extent
necessary to ensure that coverage under any such policy cannot be denied by the
insurers thereunder,


 


(d)                                 Compliance with Legislation Generally; Required
Permits


 


The Borrower shall
do or cause to be done, and shall cause its Subsidiaries to do or cause to be
done, all acts necessary or desirable to comply with all Applicable Laws, except
where such failure to comply does not and would not reasonably be expected to
have a Material Adverse Effect, and to preserve and keep in full force and
effect all Required Permits and all other franchises, licences, rights,
privileges, permits and Governmental Authorizations necessary to enable the
Borrower and each of its Subsidiaries to operate and conduct their respective
businesses in accordance with prudent industry practice, except to the extent
that the failure to have any of the same does not and would not reasonably be
expected to have a Material Adverse Effect.


 


(e)                                  Budgets, Financial Statements, Engineering
Reports and Other Information


 


The Borrower shall
deliver to the Agent:


 


(i)                                     Annual Budgets – commencing in 2005, as soon as
available and, in any event, within 90 days after the beginning of each of its
fiscal years, a copy of the annual combined budgets of the Borrower and its
Subsidiaries for the current fiscal year.


 


(ii)                                  Annual Financials – commencing in 2005, as soon as available and,
in any event, within 90 days after the end of each of its fiscal years, copies
of the audited annual financial statements of the Borrower and its Subsidiaries
on a combined basis, each consisting of a balance sheet, income statement,
statement of cash flows and statement of shareholders’ equity for each such
year, together with the notes thereto, all prepared in accordance with GAAP
consistently applied, together with a report of the Borrower’s auditors thereon
(which report shall not contain any material qualification);


 


(iii)                               Quarterly Financials - as soon as available and, in any
event within 60 days after the end of each of its first, second and third
fiscal quarters, copies of the unaudited quarterly financial statements of the
Borrower and its Subsidiaries on a combined basis, each consisting of a balance
sheet, income statement, statement of cash flows and statement of shareholders’
equity for each such period, all prepared in accordance with GAAP consistently
applied;


 


(iv)                              Compliance Certificate - concurrently with furnishing the
financial statements pursuant to Sections 10.1(e)(ii) and (iii), a Compliance
Certificate signed by any one of the president, chief financial officer,
vice-president - finance or treasurer of the Borrower and stating that, inter alia,
no Default or Event of Default has occurred and is continuing (or, if
applicable, specifying those defaults or events notified in accordance with
Section 10.1(h) below), together with unaudited combining schedules which shall
include an unaudited consolidated balance sheet and unaudited consolidated
income


 


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statement for the
Borrower and for each Other Acquisition Company and each other Material
Subsidiary; and


 


(v)                                 Other - at the request of the Agent, such other
information respecting the business, affairs, financial condition, property or
assets of the Borrower or the business, affairs, financial condition, property
or assets of any of its Subsidiaries as the Agent may reasonably request.


 


With respect to the
delivery to the Agent of copies of the aforementioned budgets and financial
statements in accordance with Sections 10.1(e)(i), (ii) and (iii) above, the
Borrower shall concurrently with such delivery either: (A) deliver to the Agent
sufficient copies of such budgets or financial statements, as the case may be,
for each of the Lenders for distribution by the Agent to the Lenders; or (B)
send to the Agent complete electronic versions of such budgets or financial
statements, as the case may be, for transmittal by the Agent to the Lenders.


 


(f)                                    Rights of Inspection


 


At any reasonable
time and from time to time upon reasonable prior notice, the Borrower shall
permit the Agent or any representative thereof (at the expense of the Borrower
during the continuance of a Default or Event of Default and, otherwise, at the
expense of the Agent) to (i) examine and make copies of and abstracts from the
records and books of account of the Borrower or any of its Subsidiaries, (ii)
visit and inspect the premises and properties of the Borrower or any of its
Subsidiaries (in each case at the risk of the Borrower, except for the gross
negligence or wilful misconduct of the inspecting party or the failure of any
such inspecting party to comply with the Borrower’s or any such Subsidiary’s
health and safety requirements, as advised to such inspecting party), and (iii)
discuss the affairs, finances and accounts of the Borrower or any of its
Subsidiaries with any of the officers of the Borrower or any of its Subsidiaries.


 


(g)                                 Notice of Material Litigation


 


The Borrower shall
promptly give written notice to the Agent of any litigation, proceeding or
dispute affecting the Borrower or any of its Subsidiaries in respect of a
demand or claim in respect of which there is a reasonable possibility of an
adverse determination and which if adversely determined would reasonably be
expected to result in a liability, obligation or judgment in excess of Cdn.
$5,000,000or to have a Material Adverse Effect, and shall from time to time
furnish to the Agent all reasonable information requested by the Agent
concerning the status of any such litigation, proceeding or dispute.


 


(h)                                 Notice of Default or Event of Default


 


The Borrower shall,
as soon as reasonably practicable, deliver to the Agent, upon becoming aware of
a Default or the occurrence of an Event of Default, an officer’s certificate
describing in detail such Default or such Event of Default and specifying the
steps, if any, being taken to cure or remedy the same.


 


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(i)                                     Notice of Material Adverse Effect


 


The Borrower shall,
as soon as reasonably practicable, notify the Agent of any event, circumstance
or condition that has had or is reasonably likely to have a Material Adverse
Effect.


 


(j)                                     Notice of New Material Subsidiaries


 


The Borrower shall
promptly give written notice to the Agent of the acquisition, creation or
existence of each new Material Subsidiary after the date hereof.


 


(k)                                  Payment of Taxes, Withholdings, etc.


 


The Borrower shall,
and shall cause its Subsidiaries to, from time to time pay or cause to be paid
all material rents, Taxes, rates, levies or assessments, ordinary or
extraordinary, governmental fees or dues, and to make and remit all
withholdings, lawfully levied, assessed or imposed upon the Borrower or its
Subsidiaries or any of the assets of the Borrower or its Subsidiaries, as and
when the same become due and payable, except when and so long as the validity
of any such rents, Taxes, rates, levies, assessments, fees, dues or
withholdings is being contested by the Borrower or its Subsidiaries by a
Permitted Contest.


 


(l)                                     Payment of Preferred Claims


 


The Borrower shall,
and shall cause its Subsidiaries to, from time to time pay when due or cause to
be paid when due all amounts related to wages, workers’ compensation
obligations, pension fund obligations and any other amount which may result in
a lien, charge, Security Interest or similar encumbrance against the assets of
the Borrower or such Subsidiary arising under statute or regulation, except
when and so long as the validity of any such amounts or other obligations is
being contested by the Borrower or its Subsidiaries by a Permitted Contest.


 


(m)                               Environmental Covenants


 


(i)                                     Without limiting the generality of Section
10.1(d) above, the Borrower shall, and shall cause its Subsidiaries and any
other party acting under their direction to, conduct their business and
operations so as to comply at all times with all Environmental Laws if the
consequence of a failure to comply, either alone or in conjunction with any
other such non-compliances, would have or would reasonably be expected to have
a Material Adverse Effect.


 


(ii)                                  If the Borrower or its Subsidiaries shall:


 


(A)                              receive or give any notice of any Environmental
Claim or that a violation of any Environmental Law has or may have been
committed or is about to be committed by the same, and if such Environmental
Claim or violation has or would reasonably be expected to have a Material
Adverse Effect;


 


86

















 


(B)                                receive any notice that a complaint,
proceeding, order or other Environmental Claim has been filed or is about to be
filed against the same alleging a violation of any Environmental Law, if such
violation has or would reasonably be expected to have a Material Adverse
Effect; or


 


(C)                                receive any notice requiring the Borrower or a
Subsidiary, as the case may be, to take any clean-up, removal, response or
other remedial action in connection with the Release of Hazardous Materials
into the environment or alleging that the Borrower or the Subsidiary may be
liable or responsible for costs associated with a response to or to clean-up a
Release of Hazardous Materials into the environment or any damages caused
thereby, and if such action or liability has or would reasonably be expected to
have a Material Adverse Effect,


 


the Borrower shall
promptly provide the Agent with a copy of such notice and shall, or shall cause
its Subsidiary to, furnish to the Agent from time to time all reasonable
information requested by the Agent relating to the same.


 


(n)                                 Use of Loans


 


The Borrower shall
use all Loans and the proceeds thereof solely for the purposes set forth in
Section 2.3 hereof.


 


(o)                                 Required Insurance


 


The Borrower shall,
and shall cause each of its Subsidiaries to, maintain, with financially sound
and reputable insurers, insurance with respect to their respective properties
and business and against such casualties and contingencies and in such types
and amounts and with such deductibles as shall be in accordance with prudent
and customary business practices for corporations of the size and type of
business and operations as the Borrower and its Subsidiaries.


 


(p)                                 Compliance With Material Contracts


 


The Borrower shall,
and shall cause each of its Subsidiaries to: (i) comply in all material
respects with each Material Contract to which it is a party; (ii) take
commercially reasonable steps to cause the counterparty to each Material
Contract to which it is a party to comply with its material obligations
thereunder; and (iii) take commercially reasonable steps to enforce its
material rights and remedies under each Material Contract to which it is a
party.  If a notice of termination or
default in respect of any such Material Contract is given to the Borrower or
any of its Subsidiaries by any other party thereto, the Borrower shall
forthwith provide a copy of such notice to the Agent and shall advise the Agent
as to what steps and actions the Borrower and its Subsidiaries are taking to remedy
the default in question and/or to avoid the termination of such Material
Contract.


 


87

















 


(q)                                 Ownership of Subsidiaries


 


Each Subsidiary of
the Borrower shall be a Wholly-Owned Subsidiary.


 


(r)                                    Minimum Assets of Borrower and
Guarantors


 


The Borrower shall
ensure that, at all times, at least 90% of the combined total assets of the
Borrower and its Subsidiaries (on a combined basis) shall be legally,
beneficially and directly owned by the Borrower and Guarantors; and if at any
time less than 90% of such combined total assets shall be legally, beneficially
and directly owned by the Borrower and Guarantors, the Borrower shall promptly,
and in any event within 10 Banking Days after any such occurrence (unless such
deficiency will be remedied within such period by the provision of Security
from one or more new Material Subsidiaries pursuant to Section 11.1): (i)
designate another Subsidiary or Subsidiaries which are not then Material
Subsidiaries to be Designated Material Subsidiaries pursuant hereto to the
extent required to ensure that after such designation, 90% or more of the
combined total assets of the Borrower and its Subsidiaries (on a combined
basis) shall be legally, beneficially and directly owned by the Borrower and
Guarantors and (ii) shall cause each such Subsidiary to execute and deliver
Security to the Agent (together with a certified copy of its constating
documents and a legal opinion in form and substance satisfactory to the Agent,
acting reasonably).


 


10.2                                                                        Negative Covenants
of the Borrower


 


So long as any
Obligation is outstanding or the Credit Facility is available hereunder, the
Borrower covenants and agrees with each of the Lenders and the Agent that,
unless (subject to Section 16.10) a Majority of the Lenders otherwise consent
in writing:


 


(a)                                  Change of Business


 


The Borrower shall
not, and shall not permit any Subsidiary to, change in any material respect the
nature of its business or operations from the types of businesses and
operations carried on by the Borrower and its Subsidiaries (taken as a whole)
on the date hereof.


 


(b)                                 Negative Pledge


 


The Borrower shall
not, nor shall it permit any of its Subsidiaries to, create, issue, incur,
assume or permit to exist any Security Interests on any of their property,
undertakings or assets other than Permitted Encumbrances.


 


(c)                                  No Dissolution


 


The Borrower shall
not, nor shall it permit any of its Subsidiaries to, liquidate, dissolve or
wind-up or take any steps or proceedings in connection therewith except, in the
case of Subsidiaries, where the successor thereto or transferee thereof is the
Borrower or another Wholly-Owned Subsidiary of the Borrower.


 


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(d)                                 Limit on Sale of Assets


 


Except for Permitted
Dispositions and the transactions contemplated in the Reorganization, the
Borrower shall not, and shall not permit its Subsidiaries to, sell, transfer or
otherwise dispose of any of their respective property or assets (i) during the
continuance of a Default or Event of Default or (ii) in any calendar year,
whether in one or a series of transactions, which, in aggregate, have a fair
market value in excess of Cdn. $3,500,000 (or the Equivalent Amount thereof in
United States Dollars or the equivalent thereof in any other currency) unless
the proceeds thereof shall be paid to the Agent on behalf of the Lenders in
permanent repayment of and reduction of the amount and availability of the
Credit Facility.  Notwithstanding the
foregoing, except for Permitted Dispositions and the transactions contemplated
in the Reorganization, the Borrower and its Subsidiaries shall not be entitled
to sell, transfer or otherwise dispose of any pipeline assets or interests in
land related thereto (but excluding therefrom any immaterial, inactive or
obsolete gathering systems or related interests).


 


(e)                                  Limitation on Debt


 


The Borrower shall
not have or incur, or permit any Subsidiary to have or incur, any Debt other
than Permitted Debt.


 


(f)                                    Limitations on Leasing


 


The Borrower and
its Subsidiaries shall not incur or have outstanding Attributable Debt
(including Attributable Debt in respect of Sale-Leasebacks) in excess, in the
aggregate at any time, of Cdn. $3,500,000 (or the Equivalent Amount thereof in
United States Dollars or the equivalent thereof in any other currency).


 


(g)                                 Limit on Minority Investments


 


The Borrower shall
not, nor shall it permit any Subsidiary to, make Investments other than in, to,
or in favour of the Borrower or another Subsidiary.


 


(h)                                 Limit on Financial Assistance


 


The Borrower and
its Subsidiaries shall not provide any Financial Assistance to or in favour of
any Person except:


 


(i)                                     in favour of the Agent, the Lenders and their
respective Hedging Affiliates for or in respect of the Obligations or Lender
Financial Instrument Obligations;


 


(ii)                                  in connection with Replacement Senior Debt;


 


(iii)                               for the benefit of the Borrower, a Guarantor or
a Wholly-Owned Subsidiary in connection with Permitted Debt other than
Subordinated Debt;


 


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(iv)                              in favour of the Borrower, a Guarantor or a
Wholly-Owned Subsidiary; and


 


(v)                                 to a maximum, in the aggregate at any time, of
Cdn. $3,500,000 (or the Equivalent Amount thereof in United States Dollars or
the equivalent thereof in any other currency).


 


(i)                                     Limits on Distributions


 


The Borrower shall
not make or permit any Subsidiary to make any Distributions:


 


(i)                                     in any fiscal quarter in excess of, prior to
the completion of the MAPL Acquisition and the satisfaction of the conditions
set forth in Section 2.4(4), 90% of Distributable Cash for such quarter and,
thereafter, 115% of Distributable Cash for such quarter, plus the undistributed
amounts of Distributable Cash from prior fiscal quarters; provided that
aggregate Distributions in any fiscal year shall not exceed the aggregate
Distributable Cash for such fiscal year plus undistributed amounts of
Distributable Cash from prior fiscal years; and


 


(ii)                                  unless after making any such Distribution, the
Borrower shall have Positive Working Capital.


 


Notwithstanding the
foregoing or any other provision of the Documents to the contrary and in
addition thereto, the Borrower shall not make or permit any Subsidiary to make
any Distributions:  (A) during the
continuance of a Default or Event of Default or if any Distributions would
result in the same; or (B) which would have or would reasonably be expected to
have a Material Adverse Effect.


 


(j)                                     No Financial Instruments Other Than
Permitted Hedging


 


The Borrower and
its Subsidiaries shall not enter into, transact or have outstanding any
Financial Instruments or Financial Instrument Obligations other than Permitted
Hedging.


 


(k)                                  Non-Arm’s Length Transactions


 


Except in respect
of transactions between or among the Borrower and/or one or more of its
Wholly-Owned Subsidiaries, the Borrower shall not, nor shall it permit any
Subsidiary to, enter into any contract, agreement or transaction whatsoever,
including for the sale, purchase, lease, exchange or other dealing in any
property or the provision of any services, with any Related Party except upon
fair and reasonable terms not less favourable to the Borrower or a Subsidiary
than it would obtain in an arm’s length transaction and, if applicable, for
consideration which equals the fair market value of such property or other than
at a fair market rental as regards leased property.


 


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(l)                                     No Merger, Amalgamation, etc.


 


The Borrower shall
not, nor shall it permit any of its Subsidiaries to, enter into any transaction
whereby all or substantially all of its undertaking, property and assets would
become the property of any other person whether by way of reconstruction,
reorganization, recapitalization, consolidation, amalgamation, merger,
transfer, sale or otherwise except, in the case of Subsidiaries, where the
successor thereto or transferee thereof is the Borrower or another Wholly-Owned
Subsidiary of the Borrower (or the continuing corporation resulting from the
amalgamation of the Borrower or another Wholly-Owned Subsidiary) or except for
any amalgamation or other transaction described in the definition of
Reorganization.


 


(m)                               Restrictions on Modification of Material
Contracts


 


The Borrower and
its Subsidiaries shall not, and shall not take any steps to, terminate,
forfeit, surrender, alter, amend, supplement or modify any of the Material
Contracts (or provide any waiver or consent to like effect) or waive any
failure of any other party to perform its obligations under the Material
Contracts or suffer or permit such other party to terminate, forfeit or
surrender any of the Material Contracts, except to the extent that the same
does not have or would not reasonably be expected to have a Material Adverse
Effect.


 


(n)                                 Restriction on Modification of Transportation
Rates


 


The Borrower and
its Subsidiaries shall not, and shall not take any steps to, alter, amend,
supplement or modify any Transportation Rates of, or applicable to the business
and operations of, the Borrower or any of its Subsidiaries  (or make or provide any
waiver or consent to like effect) if the same would have or would reasonably be
expected to have a Material Adverse Effect.


 


(o)                                 Only Allowable Open Positions


 


The Borrower and
its Subsidiaries shall not have an Open Position other than an Allowable Open
Position.


 


10.3                                                                        Financial Covenants


 


So long as any
Obligation is outstanding or the Credit Facility is available hereunder, the
Borrower covenants and agrees with each of the Lenders and Agent that, unless
(subject to Section 16.10) a Majority of the Lenders otherwise consent in
writing:


 


(a)                                  Maximum Senior Debt to EBITDA Ratio


 


As at each Quarter
End set forth below, the Borrower shall not permit the Senior Debt to EBITDA
Ratio to be greater than the ratio set forth opposite such Quarter End:


 


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  Quarter End

  	
   

  	
  Maximum Senior Debt

  to EBITDA Ratio

  
	
   

  	
   

  	
   

  
	
  each Quarter End at the end
  of each full fiscal quarter until and including the Quarter End at the end of
  the third full fiscal quarter immediately following completion of the MAPL
  Acquisition

  	
   

  	
  5.0:1.0

  
	
   

  	
   

  	
   

  
	
  the Quarter Ends at the end
  of each of the fourth and fifth full fiscal quarters immediately following
  completion of the MAPL Acquisition

  	
   

  	
  4.5:1.0

  
	
   

  	
   

  	
   

  
	
  the Quarter Ends at the end
  of each of the sixth and seventh full fiscal quarters immediately following
  completion of the MAPL Acquisition

  	
   

  	
  4.25:1.0

  
	
   

  	
   

  	
   

  
	
  each Quarter End thereafter

  	
   

  	
  4.0:1.0

  



 


(b)                                 Minimum EBITDA to Senior Interest Expense Ratio


 


As at each Quarter
End, the Borrower shall not permit the ratio of EBITDA to Senior Interest
Expense, for the 12 month period (or other relevant period where EBITDA and
Senior Interest Expense are annualized in accordance with the respective
definitions thereof) ended on such Quarter End, to be less than 3.25:1.0.


 


10.4                                                                        Agent May Perform
Covenants


 


If the Borrower
fails to perform any covenants on its part herein contained, subject to any
consents or notice or cure periods required by Section 12.1, the Agent may give
notice to the Borrower of such failure and if such covenant remains
unperformed, the Agent may, in its discretion but need not, perform any such
covenant capable of being performed by the Agent and if the covenant requires
the payment or expenditure of money, the Agent may, upon having received approval
of all Lenders, make such payments or expenditure and all sums so expended
shall be forthwith payable by the Borrower to the Agent on behalf of the
Lenders and shall bear interest at the applicable interest rate provided in
Section 5.8 for amounts due in Canadian Dollars or United States Dollars, as
the case may be.  No such performance,
payment or expenditure by the Agent shall be deemed to relieve the Borrower of
any default hereunder or under the other Documents.


 


ARTICLE 11 -  SECURITY


 


11.1                                                                        Security on all
Assets


 


(1)           The Obligations and Lender Financial
Instrument Obligations shall be secured, equally and rateably, by first
priority Security Interests on, to and against all present and future property,
assets and undertaking of the Borrower and each of its Material Subsidiaries.


 


(2)           The Borrower shall execute and
deliver Security in the forms of Schedules H-1, H-2 and H-3 annexed hereto and
shall cause each of its Material Subsidiaries to execute and deliver Security
in the forms of Schedules H-4, H-5, H-6 and H-7 annexed hereto, in each case
with such modifications and insertions as may be required by the Agent, acting
reasonably.  For certainty, if the
Borrower or any Guarantor amalgamates, then the Borrower shall execute and
deliver, or cause to be executed and delivered, Security from the relevant
successor thereto notwithstanding that the


 


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Borrower or Guarantor (as the case may be) has previously executed and
delivered Security hereunder and, for the purposes of Section 11.1(3), any such
amalgamation shall be deemed to constitute the acquisition, creation or
existence of a new Material Subsidiary.


 


(3)           The Borrower (a) shall, as soon as
reasonably practicable, give written notice to the Agent of the acquisition,
creation or existence of each Material Subsidiary created or acquired after the
date hereof, together with such other information as the Agent may reasonably
require, and (b) shall promptly, and in any event within 10 Banking Days of such
acquisition, creation or existence, cause each new Material Subsidiary to
promptly execute and deliver to the Agent the Security contemplated hereby
(together with a certified copy of its constating documents and a legal opinion
in form and substance satisfactory to the Agent, acting reasonably).


 


(4)           In addition to the Security described
in subsections (1) and (2) of this Section 11.1, the Borrower shall execute and
deliver, or shall cause to be executed and delivered, all such guarantees and
mortgages, debentures, pledge agreements, assignments and other security
agreements as may be required by the Majority of the Lenders, acting reasonably
(each in form and substance satisfactory to the Majority of the Lenders) in
order to, or to more effectively, charge in favour of the Agent or grant
Security Interests in favour of the Agent on and against all of the
undertaking, assets and property (real or personal, tangible or intangible,
present or future and of whatsoever nature and kind) of the Borrower and its
Material Subsidiaries including, without limitation, for the purpose of
granting Security Interests in favour of the Agent in and to the rights and
interests of the Borrower or its Subsidiaries under or pursuant to any Material
Contracts executed and delivered after the date hereof, as continuing
collateral security for the payment and performance by the Borrower of all
Obligations and Lender Financial Instrument Obligations.  Notwithstanding the foregoing, and for
greater certainty, the Borrower and its Subsidiaries shall not be obligated by
this Section 11.1(4) to provide fixed charges on or against their property,
assets and undertakings (but this sentence shall not restrict the registration,
recording or filing of any other Security otherwise provided by the Borrower
and its Subsidiaries).


 


11.2                                                                        Designation of
Material Subsidiaries


 


The Borrower shall
from time to time, by notice in writing to the Agent (together with an
Officer’s Certificate (i) certifying compliance with the proviso set forth
below and (ii) including reasonable particulars which demonstrate compliance
with the Section 10.1(r)), be entitled to designate that either:


 


(a)                                  a Subsidiary which is not a Material Subsidiary
shall become a Designated Material Subsidiary; or


 


(b)                                 a Designated Material Subsidiary shall cease to
be a Material Subsidiary,


 


provided that the Borrower shall not be
entitled to designate that a Designated Material Subsidiary shall cease to be a
Material Subsidiary if:


 


(c)                                  a Default or an Event of Default has occurred
and is continuing;


 


(d)                                 a Default or an Event of Default would result
from or exist immediately after such a designation; or


 


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(e)                                  such Designated Material Subsidiary falls
within part (a), (b) or (c) of the definition of “Material Subsidiary”.


 


11.3                                                                        Registration


 


The Borrower shall,
at its expense, register, file or record the Security in all offices where such
registration, filing or recording is necessary or of advantage to the creation,
perfection and preserving of the security applicable to it; provided that,
prior to the occurrence of a Default or Event of Default, the Security shall
not be registered against any specific interest in land at any land registry
offices.  The Borrower shall amend and
renew such registrations, filings and recordings from time to time as and when
required to keep them in full force and effect or to preserve the priority
established by any prior registration, filing or recording thereof.


 


11.4                                                                        Forms


 


The forms of
Security shall have been or be prepared based upon the laws of Canada and
Alberta applicable thereto in effect at the date hereof.  The Agent shall have the right to require
that:


 


(a)                                  any such Security be amended to reflect any
changes in such laws, whether arising as a result of statutory amendments,
court decisions or otherwise, in order to confer upon the Agent the Security
Interests intended to be created thereby, and


 


(b)                                 the Borrower and its Subsidiaries execute and
deliver to the Agent such other and further debentures, mortgages, trust deeds,
assignments and security agreements as may be reasonably required to ensure the
Agent holds, subject to Permitted Encumbrances, first priority Security
Interests (constituting a floating charge in the case of real property) on and
against all of the property and assets of the Borrower and its Guarantors;


 


except that in no event shall
the Agent require that the foregoing be effected if the result thereof would be
to grant the Agent or the Lenders greater rights than is otherwise contemplated
herein or therein.


 


11.5                                                                        Continuing Security


 


Each item or part
of the Security shall for all purposes be treated as a separate and continuing
collateral security and shall be deemed to have been given in addition to and
not in place of any other item or part of the Security or any other security
now held or hereafter acquired by the Agent or the Lenders.  No item or part of the Security shall be
merged or be deemed to have been merged in or by this Agreement or any
documents, instruments or acknowledgements delivered hereunder, or any simple
contract debt or any judgment, and any realization of or steps taken under or
pursuant to any security, instrument or agreement shall be independent of and
not create a merger with any other right available to the Lenders or the Agent
under any security, instruments or agreements held by it or at law or in
equity.


 


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11.6        Dealing with Security


 


The Agent, with the
consent of the Majority of the Lenders or all of the Lenders (as applicable in
accordance with Section 16.10), may grant extensions of time or other
indulgences, take and give up securities (including the Security or any part or
parts thereof), accept compositions, grant releases and discharges and
otherwise deal with the Borrower and other parties and with security (including
without limitation, the Security and each part thereof) as the Agent may see
fit, without prejudice to or in any way limiting the liability of the Borrower
under this Agreement or the other Documents or under any of the Security or any
other collateral security.


 


11.7                                                                        Effectiveness


 


The Security and
the security created by any other Document constituted or required to be
created shall be effective, and the undertakings as to the Security herein or
in any other Document shall be continuing, whether any Loans are then
outstanding or any amounts thereby secured or any part thereof shall be owing
before or after, or at the same time as, the creation of such Security Interests
or before or after or upon the date of execution of any amendments to this
Agreement.


 


11.8                                                                        Release and
Discharge of Security


 


(1)           The Borrower and its Subsidiaries
shall not be discharged from the Security or any part thereof, other than to
the extent that such Security applies to a Permitted Disposition (in which case
the Security shall cease to apply to the subject matter thereof for the benefit
of the Agent and the Lenders) except by a written release and discharge signed
by the Agent with the prior written consent of the Lenders.  If all of the Obligations have been repaid,
paid, satisfied and discharged, as the case may be, in full and the Credit
Facility has been cancelled pursuant to Section 2.14, then the Agent shall
cause it and the Lenders’ interest in the Security to be released and
discharged.


 


(2)           The Lenders hereby authorize the
Agent, upon the written request of the Borrower, to subordinate the Security
Interests created by the Security with respect to any property or assets
subject to a Permitted Encumbrance described in subparagraph (j) or
subparagraph (m) of the definition thereof or release such Security Interests
from any property or assets subject to a Permitted Encumbrance described in
subparagraph (j) or subparagraph (m) of the definition thereof; provided that,
notwithstanding the foregoing, no Security Interests created by the Security
shall be subordinated or released by the Agent on, to or with respect to any
pipeline assets or interests in land related thereto.


 


11.9                                                                        Transfer of Security


 


If Royal Bank of
Canada, in its capacity as Agent, or any successor thereto, in its capacity as
Agent ceases to be the Agent (the “Departing Agent”), the Departing Agent
shall transfer and assign all of its right, title and interest in its capacity
as Agent in and to the Security to the Successor Agent and the provisions of
Section 11.2 shall apply, mutatis mutandis, with respect to such
assignment and transfer.


 


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11.10                                                                 Hedging Affiliates


 


Each Lender hereby
confirms to and agrees with the Agent and the other Lenders as follows:


 


(a)                                  such Lender is, for the purpose of securing the
Lender Financial Instrument Obligations owing to or in favour of its Hedging
Affiliates pursuant to the Security, executing and delivering this Agreement
both on its own behalf and as agent for and on behalf of such Hedging
Affiliates;


 


(b)                                 the Agent shall be and is hereby authorized by
each such Hedging Affiliate (i) to hold the Security on behalf of such Hedging
Affiliate as security for the Lender Financial Instrument Obligations owing to
or in favour of it in accordance with the provisions of the Documents and (ii)
to act in accordance with the provisions of the Documents (including on the
instructions or at the direction of the Majority of the Lenders) in all
respects with respect to the Security; and


 


(c)                                  the Lender Financial Instruments of any such
Hedging Affiliate or the Lender Financial Instrument Obligations owing to or in
favour of any such Hedging Affiliate shall not be included or taken into
account for the purposes of Section 16.10 or (for certainty) in any
determination of the Majority of the Lenders or the Lenders which shall be
determined solely based upon the Commitments of the Lenders hereunder or the
Outstanding Principal owing to the Lenders.


 


11.11                                                                 Security for
Hedging with Former Lenders


 


If a Lender ceases
to be a Lender under this Agreement (a “Former Lender”), all Lender Financial
Instrument Obligations owing to such Former Lender and its Hedging Affiliates
under Lender Financial Instruments entered into while such Former Lender was a
Lender shall remain secured by the Security (equally and rateably) to the
extent that such Lender Financial Instrument Obligations were secured by the
Security prior to such Lender becoming a Former Lender and, subject to the
following provisions of this Section 11.11 and unless the context otherwise
requires, all references herein to “Lender Financial Instrument Obligations”
shall include such obligations to a Former Lender and its Hedging Affiliates
and all references herein to “Lender Financial Instruments” shall include such
Financial Instruments with a Former Lender and its Hedging Affiliates.  For certainty, any Financial Instrument
Obligations under Financial Instruments entered into with a Former Lender or an
Affiliate thereof after the Former Lender has ceased to be a Lender shall not
be secured by the Security. 
Notwithstanding the foregoing, no Former Lender or any Affiliate thereof
shall have any right to cause or require the enforcement of the Security or any
right to participate in any decisions relating to the Security, including any
decisions relating to the enforcement or manner of enforcement of the Security
or decisions relating to any amendment to, waiver under, release of or other
dealing with all or any part of the Security; for certainty, the sole right of
a Former Lender and its Affiliates with respect to the Security is to share, on
a pari
passu basis, in any proceeds of realization and enforcement of the
Security.


 


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ARTICLE 12 - EVENTS OF DEFAULT AND ACCELERATION


 


12.1                                                                        Events of Default


 


The occurrence of
any one or more of the following events (each such event being herein referred
to as an “Event
of Default”) shall constitute a default under this Agreement:


 


(a)                                  Principal Default:  if
the Borrower fails to pay the principal of any Loan hereunder when due and
payable;


 


(b)                                 Other Payment Default:  if the Borrower fails to
pay:


 


(i)                                     any interest (including, if applicable, default
interest) accrued on any Loan;


 


(ii)                                  any acceptance fee with respect to a Bankers’
Acceptance or issuance fee with respect to a Letter of Credit; or


 


(iii)                               any other amount not specifically referred to
in paragraph (a) above or in this paragraph (b) payable by the Borrower
hereunder;


 


in each case when
due and payable, and such default is not remedied within 5 Banking Days after
written notice thereof is given by the Agent to the Borrower specifying such
default and requiring the Borrower to remedy or cure the same;


 


(c)                                  Breach of Other Covenants: if the Borrower or a Subsidiary
fails to observe or perform any covenant or obligation herein or in any other
Document required on its part to be observed or performed (other than a
covenant or condition whose breach or default in performance is specifically
dealt with elsewhere in this Section) and, after notice has been given by the
Agent to the Borrower or Subsidiary specifying such default and requiring the
Borrower or Subsidiary to remedy or cure the same, the Borrower or Subsidiary
shall fail to remedy such default within a period of 20 Banking Days after the
giving of such notice;


 


(d)                                 Incorrect Representations: if any representation or warranty
made by the Borrower or any Subsidiary herein or in any other Document shall
prove to have been incorrect or misleading in any respect on and as of the date
made and the facts or circumstances which make such representation or warranty
incorrect or misleading are not remedied and the representation or warranty in
question remains incorrect or misleading more than 20 Banking Days after the
Agent notifies the Borrower of the same;


 


(e)                                  Involuntary Insolvency: if a decree or order of a court of
competent jurisdiction is entered adjudging the Borrower or a Material
Subsidiary a bankrupt or insolvent under the Companies’ Creditors  Arrangement
Act (Canada), the Bankruptcy and Insolvency Act
(Canada), the Winding-up and Restructuring Act (Canada) or any other
bankruptcy, insolvency or analogous laws or ordering the winding up or
liquidation of its affairs;


 


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(f)                                    Idem:  if any case, proceeding or
other action shall be instituted in any court of competent jurisdiction against
the Borrower or any Material Subsidiary, seeking in respect of it an
adjudication in bankruptcy, reorganization, dissolution, winding-up,
liquidation, a composition, proposal or arrangement with creditors, a
readjustment of debts, the appointment of trustee in bankruptcy, receiver,
receiver and manager, interim receiver, custodian, sequestrator or other person
with similar powers with respect to the Borrower or any Material Subsidiary or
of all or any substantial part of its assets, or any other like relief in
respect of the Borrower or any Material Subsidiary under any bankruptcy or
insolvency law and:


 


(i)                                     such case, proceeding or other action results
in an entry of an order for such relief or any such adjudication or
appointment, or


 


(ii)                                  such case, proceeding or other action shall
continue undismissed, or unstayed and in effect, for any period of 10
consecutive Banking Days;


 


(g)                                 Voluntary Insolvency: if the Borrower or any Material
Subsidiary makes any assignment in bankruptcy or makes any other assignment for
the benefit of creditors, makes any proposal under the Bankruptcy and Insolvency Act
(Canada) or any comparable law, seeks relief under the Companies’ Creditors Arrangement Act
(Canada), the Winding-up and Restructuring Act (Canada) or any other
bankruptcy, insolvency or analogous law, files a petition or proposal to take
advantage of any act of insolvency, consents to or acquiesces in the
appointment of a trustee in bankruptcy, receiver, receiver and manager, interim
receiver, custodian, sequestrator or other person with similar powers of itself
or of all or any substantial portion of its assets, or files a petition or
otherwise commences any proceeding seeking any reorganization, arrangement,
composition, administration or readjustment under any applicable bankruptcy,
insolvency, moratorium, reorganization or other similar law affecting creditors’
rights or consents to, or acquiesces in, the filing of such assignment,
proposal, relief, petition, proposal, appointment or proceeding;


 


(h)                                 Dissolution: 
except as permitted by Sections 10.2(c) or 10.2(l), if proceedings are
commenced for the dissolution, liquidation or winding-up of the Borrower or any
Material Subsidiary unless such proceedings are being actively and diligently
contested in good faith to the satisfaction of the Majority of the Lenders;


 


(i)                                     Security Realization: 
if creditors of the Borrower or any Material Subsidiaries having a
Security Interest against or in respect of the property and assets thereof, or
any part thereof, realize upon or enforce any such security against such
property and assets or any part thereof having an aggregate fair market value
in excess of Cdn. $5,000,000 (or the Equivalent Amount thereof in United States
Dollars or the equivalent thereof in any other currency) and such realization
or enforcement shall continue in effect and not be released, discharged or
stayed within the lesser of 20 Banking Days and the period of time prescribed
under Applicable Laws for the completion of the sale of or realization against
the assets subject to such seizure or attachment;


 


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(j)                                     Seizure:  if
property and assets of the Borrower and its Material Subsidiaries or any part
thereof having an aggregate fair market value in excess of Cdn. $5,000,000 (or
the Equivalent Amount thereof in United States Dollars or the equivalent
thereof in any other currency) are seized or otherwise attached by anyone
pursuant to any legal process or other means, including, without limitation,
distress, execution or any other step or proceeding with similar effect and
such attachment, step or other proceeding shall continue in effect and not be
released, discharged or stayed within the lesser of 20 Banking Days and the
period of time prescribed under Applicable Laws for the completion of the sale
of or realization against the assets subject to such seizure or attachment;


 


(k)                                  Judgment:  if
one or more final judgments, decrees or orders, after available appeals have
been exhausted, shall be awarded against the Borrower or any Material
Subsidiary for an aggregate amount in excess of Cdn. $5,000,000 (or the
Equivalent Amount thereof in United States Dollars or the equivalent thereof in
any other currency) and the Borrower has not satisfied or provided security for
any of such judgments, decrees or orders within 20 Banking Days of such
judgment, decree or order being awarded;


 


(l)                                     Payment Cross-Default: 
if the Borrower or any of its Material Subsidiaries (or any combination
thereof) defaults in the payment when due (whether at maturity, upon
acceleration, or otherwise and, for certainty, after the expiry of all
applicable cure periods) of Debt or Financial Instrument Obligations thereof in
aggregate in excess of Cdn. $5,000,000 (or the Equivalent Amount thereof in
United States Dollars or the equivalent thereof in any other currency) and such
default has not been fully and unconditionally remedied or waived;


 


(m)                               Event Cross Default:  if a
default, event of default or other similar condition or event (however
described) in respect of the Borrower or any of its Material Subsidiaries (or
any combination thereof) occurs or exists under any indentures, credit
agreements, agreements or other instruments evidencing or relating to Debt or
Financial Instrument Obligations thereof (individually or collectively) in an
aggregate amount in excess of Cdn. $5,000,000 (or the Equivalent Amount thereof
in United States Dollars or the equivalent thereof in any other currency) and
such default, event or condition has resulted in such Debt or Financial
Instrument Obligations becoming, or becoming capable at such time of being
declared, due and payable thereunder before it would otherwise have been due
and payable;


 


(n)                                 Cease to Carry on Business: 
if the Borrower or any Material Subsidiary ceases to carry on business,
except in the case of Material Subsidiaries, in compliance with the Documents;


 


(o)                                 Change of Control:  if
there is a Change of Control;


 


(p)                                 Lender Financial Instruments: 
if a Financial Instrument Demand for Payment has been delivered to the
Borrower or any Material Subsidiary and such person fails to


 


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make payment
thereunder within the time required for payment thereunder, or if a Termination
Event occurs;


 


(q)                                 Loss and Priority of Security:  except for Permitted
Encumbrances, if any of the Security shall cease to be a valid first priority
Security Interest against the property, assets and undertaking of the Borrower
or any Material Subsidiary as against third parties (and the same is not
forthwith effectively rectified or replaced by the Borrower upon becoming aware
thereof);


 


(r)                                    Invalidity: if any of this Agreement, any
Security or the Subordination Agreement or any material provision of any of the
foregoing shall at any time for any reason cease to be in full force and
effect, be declared to be void or voidable (and the same is not forthwith
effectively rectified or replaced by the Borrower upon becoming aware thereof)
or shall be repudiated, or the validity or enforceability thereof shall at any
time be contested by the Borrower or any Material Subsidiary, or the Borrower
or any Material Subsidiary shall deny that it has any or any further liability
or obligation thereunder, or at any time it shall be unlawful or impossible for
them to perform any of their respective Obligations; or


 


(s)                                  Default Under Subordinated Debt or
Subordination Agreement:  (i) if a default, event of
default or similar condition or event (however described) shall occur or exist
and be continuing under any indenture, credit agreement, agreement, promissory
note or other instrument evidencing or relating to any Subordinated Debt or
(ii) if any Subordinated Creditor (under and as defined in the Subordination
Agreement ) fails to observe or perform any covenant or obligation under or
pursuant to the Subordination Agreement on its part to be observed or performed
and such failure shall be continuing.


 


12.2                                                                        Acceleration


 


If any Event of
Default shall occur and for so long as it is continuing:


 


(a)                                  the entire principal amount of all Loans then
outstanding from the Borrower and all accrued and unpaid interest thereon,


 


(b)                                 an amount equal to the face amount at maturity
of all Bankers’ Acceptances issued by the Borrower which are unmatured,


 


(c)                                  an amount equal to the maximum amount then
available to be drawn under all unexpired Letters of Credit, and


 


(d)                                 all other Obligations outstanding hereunder,


 


shall, at the option of the
Agent in accordance with Section 15.11 or upon the request of a Majority of the
Lenders, become immediately due and payable upon written notice to that effect
from the Agent to the Borrower, all without any other notice and without
presentment, protest, demand, notice of dishonour or any other demand
whatsoever (all of which are hereby expressly waived by the Borrower).  In such event and if the Borrower does not
immediately pay all such amounts upon


 


100

















 


receipt of such notice, either
the Lenders (in accordance with the proviso in Section 15.11(i)) or the Agent
on their behalf may, in their discretion, exercise any right or recourse and/or
proceed by any action, suit, remedy or proceeding against the Borrower
authorized or permitted by law for the recovery of all the indebtedness and
liabilities of the Borrower to the Lenders and proceed to exercise any and all
rights hereunder and under the other Documents and no such remedy for the
enforcement of the rights of the Lenders shall be exclusive of or dependent on
any other remedy but any one or more of such remedies may from time to time be
exercised independently or in combination.


 


12.3                                                                        Conversion
on Default


 


Upon the occurrence
of an Event of Default in respect of the Borrower, the Agent on behalf of the
Lenders may convert a Libor Loan owing by the Borrower to a U.S. Base Rate
Loan.  Interest shall accrue on each
such U.S. Base Rate Loan at the rate specified in Section 5.2 with interest on
all overdue interest at the same rate, such interest to be calculated daily and
payable on demand.


 


12.4                                                                        Remedies
Cumulative and Waivers


 


For greater
certainty, it is expressly understood and agreed that the rights and remedies
of the Lenders and the Agent hereunder or under any other Document are
cumulative and are in addition to and not in substitution for any rights or
remedies provided by law or by equity; and any single or partial exercise by
the Lenders or by the Agent of any right or remedy for a default or breach of
any term, covenant, condition or agreement contained in this Agreement or other
Document shall not be deemed to be a waiver of or to alter, affect or prejudice
any other right or remedy or other rights or remedies to which any one or more
of the Lenders and the Agent may be lawfully entitled for such default or
breach.  Any waiver by, as applicable,
the Majority of the Lenders, the Lenders or the Agent of the strict observance,
performance or compliance with any term, covenant, condition or other matter
contained herein and any indulgence granted, either expressly or by course of
conduct, by, as applicable, the Majority of the Lenders, the Lenders or the
Agent shall be effective only in the specific instance and for the purpose for
which it was given and shall be deemed not to be a waiver of any rights and
remedies of the Lenders or the Agent under this Agreement or any other Document
as a result of any other default or breach hereunder or thereunder.


 


12.5                                                                        Termination of
Lenders’ Obligations


 


The occurrence of a
Default or Event of Default shall relieve the Lenders of all obligations to
provide any further Drawdowns, Rollovers or Conversions to the Borrower
hereunder; provided that the foregoing shall not prevent the Lenders or the
Agent from disbursing money or effecting any Conversion which, by the terms
hereof, they are entitled to effect, or any Conversion or Rollover requested by
the Borrower and acceptable to the Lenders and the Agent.


 


12.6                                                                        Acceleration of All
Lender Obligations


 


(1)           If a Lender is actually aware of a
Termination Event under Lender Financial Instruments to which it is a party or
if a Lender has delivered a Financial Instrument Demand for Payment to the Borrower
or a Subsidiary, then it shall promptly notify the Administrative Agent and
other Lenders thereof.


 


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(2)           If:


 


(a)                                  a Termination Event has occurred;


 


(b)                                 a Financial Instrument Demand for Payment has
been delivered to the Borrower or a Subsidiary by any Lender and the cure
period (if any) provided in Section 12.1(p) has expired; or


 


(c)                                  an Acceleration Notice has been delivered to
the Borrower,


 


then, to the extent that it is
not already the case, all Obligations and all Financial Instrument Obligations
under Lender Financial Instruments shall be immediately due and payable and
each Lender and the Administrative Agent shall (and shall be entitled to)
promptly, and in any event within 3 Banking Days of receipt of notice of the
foregoing, deliver such other Demands for Payment and notices as may be
necessary to ensure that all Obligations and Financial Instrument Obligations
under Lender Financial Instruments are thereafter due and payable under this Agreement
and the Lender Financial Instruments, as applicable.


 


(3)           Each agreement, indenture, instrument
or other document evidencing or relating to a Lender Financial Instrument
shall, notwithstanding any provision thereof to the contrary, be deemed to be
hereby amended to allow and permit the Lender which is a party thereto to
comply with the provisions of this Section 12.6.


 


12.7                                                                        Application and
Sharing of Payments Following Acceleration


 


Except as otherwise
agreed to by all of the Lenders in their sole discretion, all monies and
property received by the Lenders for application in respect of the Obligations
and the Financial Instrument Obligations under Lender Financial Instruments
subsequent to the Adjustment Time and all monies received as a result of a realization
upon the Security (collectively, the “Realization Proceeds”) shall be applied and
distributed to the Lenders and the Agent in the order and manner set forth
below:


 


(a)                                  firstly, distributed proportionately to the
Lenders and the Administrative Agent in accordance with amounts owing to each
Lender and the Agent on account of the costs and expenses of enforcement and
realization upon the Security; and


 


(b)                                 secondly, distributed Rateably to the Lenders
on account of the Obligations and the Financial Instrument Obligations under
Lender Financial Instruments;


 


and the balance of the
Realization Proceeds (if any) shall be paid to the Borrower or otherwise as may
be required by law.


 


12.8                                                                        Calculations as at
the Adjustment Time


 


For the purposes of
this Agreement, if:


 


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(a)                                  a Financial Instrument Demand for Repayment has
been delivered; or


 


(b)                                 a Termination Event has occurred under any
agreement evidencing a Permitted Lender Financial Instrument;


 


then any amount which is
payable by the Borrower or a Subsidiary under such Lender Financial Instrument
in settlement of obligations arising thereunder as a result of the early
termination of the Lender Financial Instrument shall be deemed to have become
payable at the time of delivery of such Financial Instrument Demand for
Repayment or the time of occurrence of such Termination Event, as the case may
be, notwithstanding that the amount payable by the Borrower or a Subsidiary is
to be subsequently calculated and notice thereof given to the Borrower or such
Subsidiary in accordance with such Lender Financial Instrument.


 


12.9                                                                        Sharing Repayments


 


Each Lender agrees
that, subsequent to the Adjustment Time, it will at any time and from time to
time upon the request of the Agent purchase undivided participations in the
Obligations and Financial Instrument Obligations under Lender Financial
Instruments and make any other adjustments which may be necessary or
appropriate, in order that Obligations and Financial Instrument Obligations
under Lender Financial Instruments which remain outstanding to each Lender are
thereafter outstanding, as adjusted pursuant to this Section, in accordance
with the provisions of Section 12.7. 
The Borrower agrees to do, or cause to be done (whether by it or its
Subsidiaries), all things reasonably necessary or appropriate to give effect to
any and all purchases and other adjustments by and between the Lenders pursuant
to this Section.


 


ARTICLE 13 - CHANGE OF CIRCUMSTANCES


 


13.1                                                                        Market Disruption
Respecting Libor Loans


 


In the event that
at any time subsequent to the giving of a Drawdown Notice, Rollover Notice or
Conversion Notice to the Agent by the Borrower with regard to any requested
Libor Loan, but before the date of the Drawdown, Rollover or Conversion, as the
case may be, the Agent (acting reasonably) makes a determination, which shall
be conclusive and binding upon the Borrower, that:


 


(a)                                  by reason of circumstances affecting the London
interbank market, adequate and fair means do not exist for ascertaining the
rate of interest with respect to, or deposits are not available in sufficient
amounts in the ordinary course of business at the rate determined hereunder to
fund, a requested Libor Loan during the ensuing Interest Period selected;


 


(b)                                 the making or continuing of the requested Libor
Loan by the Lenders has been made impracticable by the occurrence of an event
which materially adversely affects the London interbank market generally; or


 


(c)                                  Libor Rate shall no longer represent the effective
cost to any Lender of United States Dollar deposits in such market for the
relevant Interest Period,


 


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then the Agent shall give
written notice thereof to the Borrower as soon as possible after such
determination and the Borrower shall, within one Banking Day after receipt of
such notice and in replacement of the Drawdown Notice, Rollover Notice or
Conversion Notice, as the case may be, previously given by the Borrower, give
the Agent a Drawdown Notice or a Conversion Notice, as the case may be, which
specifies the Drawdown of any other Loan or the Conversion of the relevant
Libor Loan on the last day of the applicable Interest Period into any other
Loan which would not be affected by the notice from the Agent pursuant to this
Section 13.1.  In the event the Borrower
fails to give, if applicable, a valid replacement Conversion Notice with
respect to the maturing Libor Loans which were the subject of a Rollover
Notice, such maturing Libor Loans shall be converted on the last day of the
applicable Interest Period into U.S. Base Rate Loans as if a Conversion Notice
had been given to the Agent by the Borrower pursuant to the provisions
hereof.  In the event the Borrower fails
to give, if applicable, a valid replacement Drawdown Notice with respect to a
Drawdown originally requested by way of a Libor Loan, then the Borrower shall
be deemed to have requested a Drawdown by way of a U.S. Base Rate Loan in the
amount specified in the original Drawdown Notice and, on the originally
requested Drawdown Date, the Lenders (subject to the other provisions hereof)
shall make available the requested amount by way of a U.S. Base Rate Loan.


 


13.2                                                                        Market Disruption
Respecting Bankers’ Acceptances


 


If the Agent
(acting reasonably) makes a determination, which determination shall be
conclusive and binding upon the Borrower, and notifies the Borrower, that:


 


(a)                                  there no longer exists an active market for
bankers’ acceptances accepted by the Lenders; or


 


(b)                                 the Discount Rate does not accurately reflect
the discount rate which would be applicable to a sale of Bankers’ Acceptances
in the market;


 


then:


 


(c)                                  the right of the Borrower to request Bankers’
Acceptances or BA Equivalent Advances from any Lender shall be suspended until
the Agent determines that the circumstances causing such suspension no longer
exist, and so notifies the Borrower;


 


(d)                                 any outstanding Drawdown Notice requesting a
Loan by way of Bankers’ Acceptances or BA Equivalent Advances shall be deemed
to be a Drawdown Notice requesting a Loan by way of Canadian Prime Rate Loans
in the amount specified in the original Drawdown Notice;


 


(e)                                  any outstanding Conversion Notice requesting a
Conversion of a Borrowing by way of U.S. Base Rate Loans or Libor Loans into a Loan
by way of Bankers’ Acceptances or BA Equivalent Advances shall be deemed to be
a Conversion Notice requesting a Conversion of such Borrowing into a Loan by
way of Canadian Prime Rate Loans; and


 


(f)                                    any outstanding Rollover Notice requesting a
Rollover of a Loan by way of Bankers’ Acceptances or BA Equivalent Advances
shall be deemed to be a Conversion Notice


 


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requesting a
Conversion of such Loans into a Loan by way of Canadian Prime Rate Loans.


 


The Agent shall promptly
notify the Borrower and the Lenders of any suspension of the Borrower’s right
to request the Bankers’ Acceptances or BA Equivalent Advances and of any
termination of any such suspension.


 


13.3                                                                        Change in Law


 


(1)           If the adoption of any applicable
law, regulation, treaty or official directive (whether or not having the force
of law) or any change therein or in the interpretation or application thereof
by any court or by any Governmental Authority or any other entity charged with
the interpretation or administration thereof or compliance by a Lender with any
request or direction (whether or not having the force of law) of any such
authority or entity in each case after the date hereof:


 


(a)                                  subjects such Lender to, or causes the
withdrawal or termination of a previously granted exemption with respect to,
any Taxes (other than Taxes on such Lender’s overall income or overall
capital), or changes the basis of taxation of payments due to such Lender, or
increases any existing Taxes (other than Taxes on such Lender’s overall income
or overall capital) on payments of principal, interest or other amounts payable
by the Borrower to such Lender under this Agreement;


 


(b)                                 imposes, modifies or deems applicable any
reserve, liquidity, special deposit, regulatory or similar requirement against
assets or liabilities held by, or deposits in or for the account of, or loans
by such Lender, or any acquisition of funds for loans or commitments to fund
loans or obligations in respect of undrawn, committed lines of credit or in
respect of Bankers’ Acceptances accepted by such Lender;


 


(c)                                  imposes on such Lender or requires there to be
maintained by such Lender any capital adequacy or additional capital
requirements (including, without limitation, a requirement which affects such
Lender’s allocation of capital resources to its obligations) in respect of any
Loan or obligation of such Lender hereunder, or any other condition with
respect to this Agreement; or


 


(d)                                 directly or indirectly affects the cost to such
Lender of making available, funding or maintaining any Loan or otherwise
imposes on such Lender any other condition or requirement affecting this
Agreement or any Loan or any obligation of such Lender hereunder;


 


and the result of (a), (b),
(c) or (d) above, in the sole determination of such Lender acting in good
faith, is:


 


(e)                                  to increase the cost to such Lender of
performing its obligations hereunder with respect to any Loan;


 


(f)                                    to reduce any amount received or receivable by
such Lender hereunder or its effective return hereunder or on its capital in
respect of any Loan or the Credit Facility; or


 


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(g)                                 to cause such Lender to make any payment with
respect to or to forego any return on or calculated by reference to, any amount
received or receivable by such Lender hereunder with respect to any Loan or the
Credit Facility;


 


such Lender shall determine
that amount of money which shall compensate the Lender for such increase in
cost, payments to be made or reduction in income or return or interest foregone
(herein referred to as “Additional Compensation”).  Upon a Lender having determined that it is
entitled to Additional Compensation in accordance with the provisions of this
Section, the Lender shall promptly so notify the Borrower and the Agent.  The relevant Lender shall provide the
Borrower and the Agent with a photocopy of the relevant law, rule, guideline,
regulation, treaty or official directive (or, if it is impracticable to provide
a photocopy, a written summary of the same) and a certificate of a duly
authorized officer of such Lender setting forth the Additional Compensation and
the basis of calculation therefor, which shall be conclusive evidence of such
Additional Compensation in the absence of manifest error.  The Borrower shall pay to such Lender within
10 Banking Days of the giving of such notice such Lender’s Additional
Compensation.  Each of the Lenders shall
be entitled to be paid such Additional Compensation from time to time to the
extent that the provisions of this Section are then applicable notwithstanding
that any Lender has previously been paid any Additional Compensation.


 


(2)           Each Lender agrees that it will not
claim Additional Compensation from the Borrower under Section 13.3(1) if it is
not generally claiming similar compensation from its other customers in similar
circumstances or in respect of any period greater than 90 days prior to the
delivery of notice in respect thereof by such Lender, unless, in the latter
case, the adoption, change or other event or circumstance giving rise to the
claim for Additional Compensation is retroactive or is retroactive in effect.


 


13.4                                                                        Prepayment of
Portion


 


In addition to the
other rights and options of the Borrower hereunder and notwithstanding any
contrary provisions hereof, if a Lender gives the notice provided for in
Section 13.3 with respect to any Loan (an “Affected Loan”), the Borrower may, upon 2
Banking Days notice to that effect given to such Lender and the Agent (which
notice shall be irrevocable), prepay in full without penalty such Lender’s
Rateable Portion of the Affected Loan outstanding together with accrued and
unpaid interest on the principal amount so prepaid up to the date of such
prepayment, such Additional Compensation as may be applicable to the date of
such payment and all costs, losses and expenses incurred by such Lender by
reason of the liquidation or re-deployment of deposits or other funds or for
any other reason whatsoever resulting from the repayment of such Affected Loan
or any part thereof on other than the last day of the applicable Interest
Period, and upon such payment being made that Lender’s obligations to make such
Affected Loans to the Borrower under this Agreement shall terminate.


 


13.5                                                                        Illegality


 


If a Lender determines,
in good faith, that the adoption of any applicable law, regulation, treaty or
official directive (whether or not having the force of law) or any change
therein or in the interpretation or application thereof by any court or by any
Governmental Authority or any other entity charged with the interpretation or
administration thereof or compliance by a Lender with


 


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any request or direction (whether or not having the force of law) of any
such authority or entity, now or hereafter makes it unlawful or impossible for
any Lender to make, fund or maintain a Loan under the Credit Facility or to
give effect to its obligations in respect of such a Loan, such Lender may, by
written notice thereof to the Borrower and to the Agent declare its obligations
under this Agreement in respect of such Loan to be terminated whereupon the
same shall forthwith terminate, and the Borrower shall, within the time
required by such law (or at the end of such longer period as such Lender at its
discretion has agreed), either effect a Conversion of such Loan in accordance
with the provisions hereof (if such Conversion would resolve the unlawfulness
or impossibility) or prepay the principal of such Loan together with accrued
interest, such Additional Compensation as may be applicable with respect to
such Loan to the date of such payment and all costs, losses and expenses
incurred by the Lenders by reason of the liquidation or re-deployment of
deposits or other funds or for any other reason whatsoever resulting from the
repayment of such Loan or any part thereof on other than the last day of the
applicable Interest Period.  If any such
change shall only affect a portion of such Lender’s obligations under this
Agreement which is, in the opinion of such Lender and the Agent, severable from
the remainder of this Agreement so that the remainder of this Agreement may be
continued in full force and effect without otherwise affecting any of the
obligations of the Agent, the other Lenders or the Borrower hereunder, such
Lender shall only declare its obligations under that portion so terminated.


 


ARTICLE 14 -
COSTS, EXPENSES AND INDEMNIFICATION


 


14.1                                                                        Costs and Expenses


 


The Borrower shall
pay promptly upon notice from the Agent all reasonable out-of-pocket costs and
expenses of the Lenders and the Agent, including reasonable travel expenses of
Royal Bank of Canada, in connection with the Documents and the establishment
and initial syndication of the Credit Facility, including in connection with preparation,
printing, execution and delivery of this Agreement and the other Documents
whether or not any Drawdown has been made hereunder, and also including,
without limitation, the reasonable fees and out-of-pocket costs and expenses of
Lenders’ Counsel with respect thereto and with respect to advising the Agent
and the Lenders as to their rights and responsibilities under this Agreement
and the other Documents.  Except for
ordinary expenses of the Lenders and the Agent relating to the day-to-day
administration of this Agreement, the Borrower further agrees to pay within 30
days of demand by the Agent all reasonable out-of-pocket costs and expenses in
connection with the preparation or review of waivers, consents and amendments
pertaining to this Agreement, and in connection with the establishment of the
validity and enforceability of this Agreement and the preservation or
enforcement of rights of the Lenders and the Agent under this Agreement and
other Documents, including, without limitation, all reasonable out-of-pocket
costs and expenses sustained by the Lenders and the Agent as a result of any
failure by the Borrower to perform or observe any of its obligations hereunder
or in connection with any action, suit or proceeding (whether or not an Indemnified
Party is a party or subject thereto), together with interest thereon from and
after such 30th day if such payment is not made by such time.


 


14.2                                                                        General Indemnity


 


In addition to any
liability of the Borrower to any Lender or the Agent under any other provision
hereof, the Borrower shall indemnify each Indemnified Party and hold each


 


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Indemnified Party harmless against any losses, claims, costs, damages or
liabilities (including, without limitation, any expense or cost incurred in the
liquidation and re-deployment of funds acquired to fund or maintain any portion
of a Loan and reasonable out-of-pocket expenses and reasonable legal fees on a
solicitor and his own client basis) incurred by the same as a result of or in
connection with the Credit Facility or the Documents, including, without
limitation, as a result of or in connection with:


 


(a)                                  any cost or expense incurred by reason of the
liquidation or re-deployment in whole or in part of deposits or other funds
required by any Lender to fund any Bankers’ Acceptance or to fund or maintain
any Loan as a result of the Borrower’s failure to complete a Drawdown or to
make any payment, repayment or prepayment on the date required hereunder or
specified by it in any notice given hereunder;


 


(b)                                 subject to permitted or deemed Rollovers and
Conversions, the Borrower’s failure to provide for the payment to the Agent for
the account of the Lenders of the full principal amount of each Bankers’
Acceptance on its maturity date;


 


(c)                                  the Borrower’s failure to pay any other amount,
including without limitation any interest or fee, due hereunder on its due date
after the expiration of any applicable grace or notice periods (subject,
however, to the interest obligations of the Borrower hereunder for overdue
amounts);


 


(d)                                 the Borrower’s repayment or prepayment of a
Libor Loan otherwise than on the last day of its Interest Period;


 


(e)                                  the prepayment of any outstanding Bankers’
Acceptance before the maturity date of such Bankers’ Acceptance;


 


(f)                                    the Borrower’s failure to give any notice
required to be given by it to the Agent or the Lenders hereunder;


 


(g)                                 the failure of the Borrower to make any other
payment due hereunder;


 


(h)                                 any inaccuracy or incompleteness of the Borrower’s
representations and warranties contained in Article 9;


 


(i)                                     any failure of the Borrower to observe or
fulfil its obligations under Article 10;


 


(j)                                     any failure of the Borrower to observe or
fulfil any other Obligation not specifically referred to above; or


 


(k)                                  the occurrence of any Default or Event of
Default in respect of the Borrower,


 


provided that this Section
shall not apply to any losses, claims, costs, damages or liabilities that arise
by reason of the gross negligence or wilful misconduct of the Indemnified Party
claiming indemnity hereunder.  The
provisions of this Section shall survive repayment of the Obligations.


 


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14.3                                                                        Environmental
Indemnity


 


The Borrower shall
indemnify and hold harmless the Indemnified Parties forthwith on demand by the
Agent from and against any and all claims, suits, actions, debts, damages,
costs, losses, liabilities, penalties, obligations, judgments, charges,
expenses and disbursements (including without limitation, all reasonable legal
fees and disbursements on a solicitor and his own client basis) of any nature
whatsoever, suffered or incurred by the Indemnified Parties or any of them in
connection with the Credit Facility, whether as beneficiaries under the Documents,
as successors in interest of the Borrower or any of its Subsidiaries, or
voluntary transfer in lieu of foreclosure, or otherwise howsoever, with respect
to any Environmental Claims relating to the property of the Borrower or any of
its Subsidiaries arising under any Environmental Laws as a result of the past,
present or future operations of the Borrower or any of its Subsidiaries (or any
predecessor in interest to the Borrower or its Subsidiaries) relating to the
property of the Borrower or its Subsidiaries, or the past, present or future
condition of any part of the property of the Borrower or its Subsidiaries
owned, operated or leased by the Borrower or its Subsidiaries (or any such
predecessor in interest), including any liabilities arising as a result of any
indemnity covering Environmental Claims given to any person by the Lenders or
the Agent or a receiver, receiver-manager or similar person appointed hereunder
or under applicable law (collectively, the “Indemnified Third Party”); but excluding any
Environmental Claims or liabilities relating thereto to the extent that such
Environmental Claims or liabilities arise by reason of the gross negligence or
wilful misconduct of the Indemnified Party or the Indemnified Third Party
claiming indemnity hereunder.  The
provisions of this Section shall survive the repayment of the Obligations.


 


14.4                                                                        Judgment Currency


 


(1)           If for the purpose of obtaining or
enforcing judgment against the Borrower in any court in any jurisdiction, it
becomes necessary to convert into any other currency (such other currency being
hereinafter in this Section referred to as the “Judgment Currency”) an
amount due in Canadian Dollars or United States Dollars under this Agreement,
the conversion shall be made at the rate of exchange prevailing on the Banking
Day immediately preceding:


 


(a)                                  the date of actual payment of the amount due,
in the case of any proceeding in the courts of any jurisdiction that will give
effect to such conversion being made on such date; or


 


(b)                                 the date on which the judgment is given, in the
case of any proceeding in the courts of any other jurisdiction (the date as of
which such conversion is made pursuant to this Section being hereinafter in
this Section referred to as the “Judgment Conversion Date”).


 


(2)           If, in the case of any proceeding in
the court of any jurisdiction referred to in Section 14.4(1)(b), there is a
change in the rate of exchange prevailing between the Judgment Conversion Date
and the date of actual payment of the amount due, the Borrower shall pay such
additional amount (if any) as may be necessary to ensure that the amount paid
in the Judgment Currency, when converted at the rate of exchange prevailing on
the date of payment, will produce the amount of Canadian Dollars or United
States Dollars, as the case may be, which could have been


 


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purchased with the amount of Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date.


 


(3)           Any amount due from the Borrower
under the provisions of Section 14.4(2) shall be due as a separate debt and
shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Agreement.


 


(4)           The term “rate of exchange” in this
Section 14.4 means the noon rate of exchange for Canadian interbank
transactions in Canadian Dollars or United States Dollars, as the case may be,
in the Judgment Currency published by the Bank of Canada for the day in
question, or if such rate is not so published by the Bank of Canada, such term
shall mean the Equivalent Amount of the Judgment Currency.


 


ARTICLE 15 -
THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITY


 


15.1                                                                        Authorization and
Action


 


(1)           Each Lender hereby irrevocably appoints
and authorizes the Agent to be its agent in its name and on its behalf to
exercise such rights or powers granted to the Agent or the Lenders under this
Agreement to the extent specifically provided herein and on the terms hereof,
together with such powers as are reasonably incidental thereto and the Agent
hereby accepts such appointment and authorization.  As to any matters not expressly provided for by this Agreement,
the Agent shall not be required to exercise any discretion or take any action,
but, subject to Section 16.10, shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority of the Lenders and such instructions
shall be binding upon all Lenders; provided, however, that the Agent shall not
be required to take any action which exposes the Agent to liability in such
capacity or which could result in the Agent’s incurring any costs and expenses,
without provision being made for indemnity of the Agent by the Lenders against
any loss, liability, cost or expense incurred, or to be incurred or which is
contrary to this Agreement or applicable law.


 


(2)           The Lenders agree that all decisions
as to actions to be or not to be taken, as to consents or waivers to be given
or not to be given, as to determinations to be made and otherwise in connection
with this Agreement and the Documents, shall be made upon the decision of the
Majority of the Lenders except in respect of a decision or determination where
it is specifically provided in this Agreement that “all of the Lenders” or “the
Lenders” or words to similar effect, or the Agent alone, is to be responsible
for same.  Each of the Lenders shall be
bound by and agrees to abide by and adopt all decisions made as aforesaid and
covenants in all communications with the Borrower to act in concert and to join
in the action, consent, waiver, determination or other matter decided as
aforesaid.


 


(3)           For certainty, the Agent is
authorized to execute and deliver the Security and the Subordination Agreement.


 


15.2                                                                        Procedure for
Making Loans


 


(1)           The Agent shall make Loans available
to the Borrower as required hereunder by debiting the account of the Agent to
which the Lenders’ Rateable Portions of such Loans have been


 


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credited in accordance with Section 2.12 (or causing such account to be
debited) and, in the absence of other arrangements agreed to by the Agent and
the Borrower in writing, by crediting the account of the Borrower or, at the
expense of the Borrower, transferring (or causing to be transferred) like funds
in accordance with the instructions of the Borrower as set forth in the
Drawdown Notice, Rollover Notice or Conversion Notice, as the case may be, in
respect of each Loan; provided that the obligation of the Agent hereunder to
effect such a transfer shall be limited to taking such steps as are
commercially reasonable to implement such instructions, which steps once taken
shall constitute conclusive and binding evidence that such funds were advanced
hereunder in accordance with the provisions relating thereto and the Agent
shall not be liable for any damages, claims or costs which may be suffered by
the Borrower and occasioned by the failure of such Loan to reach the designated
destination.


 


(2)           Unless the Agent has been notified by
a Lender at least one Banking Day prior to the Drawdown Date, Rollover Date or
Conversion Date, as the case may be, requested by the Borrower that such Lender
will not make available to the Agent its Rateable Portion of such Loan, the
Agent may assume that such Lender has made or will make such portion of the
Loan available to the Agent on the Drawdown Date, Rollover Date or Conversion
Date, as the case may be, in accordance with the provisions hereof and the
Agent may, but shall be in no way obligated to, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount.  If and to the extent such
Lender shall not have so made its Rateable Portion of a Loan available to the
Agent, such Lender agrees to pay to the Agent forthwith on demand such Lender’s
Rateable Portion of the Loan and all reasonable costs and expenses incurred by
the Agent in connection therewith together with interest thereon (at the rate
payable hereunder by the Borrower in respect of such Loan or, in the case of
funds made available in anticipation of a Lender remitting proceeds of a
Bankers’ Acceptance, at the rate of interest per annum applicable to Canadian
Prime Rate Loans) for each day from the date such amount is made available to
the Borrower until the date such amount is paid to the Agent; provided,
however, that notwithstanding such obligation if such Lender fails to so pay,
the Borrower covenants and agrees that, without prejudice to any rights the
Borrower may have against such Lender, it shall repay such amount to the Agent
forthwith after demand therefor by the Agent. 
The amount payable to the Agent pursuant hereto shall be set forth in a
certificate delivered by the Agent to such Lender and the Borrower (which
certificate shall contain reasonable details of how the amount payable is
calculated) and shall be prima facie evidence thereof, in the absence of
manifest error.  If such Lender makes
the payment to the Agent required herein, the amount so paid shall constitute
such Lender’s Rateable Portion of the Loan for purposes of this Agreement.  The failure of any Lender to make its
Rateable Portion of any Loan shall not relieve any other Lender of its
obligation, if any, hereunder to make its Rateable Portion of such Loan on the
Drawdown Date, Rollover Date or Conversion Date, as the case may be, but no
Lender shall be responsible for the failure of any other Lender to make the
Rateable Portion of any Loan to be made by such other Lender on the date of any
Drawdown, Rollover or Conversion, as the case may be.


 


15.3                                                                        Remittance of
Payments


 


Except for amounts
payable to the Agent for its own account, forthwith after receipt of any
repayment pursuant hereto or payment of interest or fees pursuant to Article 5
or payment pursuant to Article 8, the Agent shall remit to each Lender its
Rateable Portion of such payment; provided that, if the Agent, on the
assumption that it will receive on any particular date a payment of principal,
interest or fees hereunder, remits to a Lender its Rateable Portion of such
payment and the


 


111

















 


Borrower fails to make such payment, each of the Lenders on receipt of
such remittance from the Agent agrees to repay to the Agent forthwith on demand
an amount equal to the remittance together with all reasonable costs and
expenses incurred by the Agent in connection therewith and interest thereon at
the rate and calculated in the manner applicable to the Loan in respect of
which such payment is made, or, in the case of a remittance in respect of
Bankers’ Acceptances, at the rate of interest applicable to Canadian Prime Rate
Loans for each day from the date such amount is remitted to the Lenders without
prejudice to any right such Lender may have against the Borrower.  The exact amount of the repayment required
to be made by the Lenders pursuant hereto shall be as set forth in a
certificate delivered by the Agent to each Lender, which certificate shall be
conclusive and binding for all purposes in the absence of manifest error.


 


15.4                                                                        Redistribution of
Payment


 


Each Lender agrees
that:


 


(a)                                  if the Lender exercises any security against or
right of counter-claim, set off or banker’s lien or similar right with respect
to the property of the Borrower or if under any applicable bankruptcy,
insolvency or other similar law it receives a secured claim and collateral for
which it is, or is entitled to exercise any set-off against, a debt owed by it
to the Borrower, the Lender shall apportion the amount thereof proportionately
between:


 


(i)                                     such Lender’s Rateable Portion of all
outstanding Obligations owing by the Borrower (including the face amounts at
maturity of Bankers’ Acceptances accepted by the Lenders), which amounts shall
be applied in accordance with Section 15.4(b); and


 


(ii)                                  amounts otherwise owed to such Lender by the
Borrower,


 


provided that (i)
any cash collateral account held by such Lender as collateral for a letter of
credit or bankers’ acceptance (other than a Bankers’ Acceptance) issued or
accepted by such Lender on behalf of the Borrower may be applied by such Lender
to such amounts owed by the Borrower to such Lender pursuant to such letter of
credit or in respect of any such bankers’ acceptance without apportionment and
(ii) these provisions do not apply to a right or claim which arises or exists
in respect of a loan or other debt in respect of which the relevant Lender
holds a Security Interest which is a Permitted Encumbrance;


 


(b)                                 if, in the aforementioned circumstances, the
Lender, through the exercise of a right, or the receipt of a secured claim
described in Section 15.4(a) above or otherwise, receives payment of a
proportion of the aggregate amount of Obligations due to it hereunder which is
greater than the proportion received by any other Lender in respect of the
aggregate Obligations due to the Lenders (having regard to the respective
Rateable Portions of the Lenders), the Lender receiving such proportionately
greater payment shall purchase, on a non-recourse basis at par, and make
payment for a participation (which shall be deemed to have been done
simultaneously with receipt of such payment) in the outstanding Loans of the
other


 


112

















 


Lender or Lenders so
that their respective receipts shall be pro rata to their respective Rateable
Portions; provided, however, that if all or part of such proportionately
greater payment received by such purchasing Lender shall be recovered by or on
behalf of the Borrower or any trustee, liquidator, receiver or receiver-manager
or person with analogous powers from the purchasing Lender, such purchase shall
be rescinded and the purchase price paid for such participation shall be
returned to the extent of such recovery, but without interest unless the
purchasing Lender is required to pay interest on such amount, in which case
each selling Lender shall reimburse the purchasing Lender pro rata in relation
to the amounts received by it.  Such
Lender shall exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section to share
in the benefits of any recovery on such secured claims; and


 


(c)                                  if the Lender does, or is required to do, any
act or thing permitted by Section 15.4(a) or (b) above, it shall promptly
provide full particulars thereof to the Agent.


 


15.5                                                                        Duties and
Obligations


 


Neither the Agent
nor any of its directors, officers, agents or employees (and, for purposes
hereof, the Agent shall be deemed to be contracting as agent and trustee for
and on behalf of such persons) shall be liable to the Lenders for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement except for its or their own gross negligence or wilful
misconduct.  Without limiting the
generality of the foregoing, the Agent:


 


(a)                                  may assume that there has been no assignment or
transfer by any means by the Lenders of their rights hereunder, unless and
until the Agent receives written notice of the assignment thereof from such
Lender and the Agent receives from the assignee an executed Assignment
Agreement providing, inter alia, that such assignee is bound
hereby as it would have been if it had been an original Lender party hereto;


 


(b)                                 may consult with legal counsel (including
receiving the opinions of Borrower’ counsel and Lenders’ Counsel required
hereunder), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts;


 


(c)                                  shall incur no liability under or in respect of
this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable, telecopier, electronic
mail or other electronic means of communication which may generate a written
record thereof) believed by it to be genuine and signed or sent by the proper
party or parties or by acting upon any representation or warranty of the Borrower
made or deemed to be made hereunder;


 


(d)                                 may assume that no Default or Event of Default
has occurred and is continuing unless it has actual knowledge to the contrary;


 


113

















 


(e)                                  may rely as to any matters of fact which might
reasonably be expected to be within the knowledge of any person upon a
certificate signed by or on behalf of such person;


 


(f)                                    shall not be bound to disclose to any other
person any information relating to the Borrower, any of its Subsidiaries or any
other person if such disclosure would or might in its opinion constitute a
breach of any applicable law, be in default of the provisions hereof or be
otherwise actionable at the suit of any other person; and


 


(g)                                 may refrain from exercising any right, power or
discretion vested in it which would or might in its reasonable opinion be
contrary to any applicable law or any directive or otherwise render it liable
to any person, and may do anything which is in its reasonable opinion necessary
to comply with such applicable law.


 


Further, the Agent (i) does
not make any warranty or representation to any Lender nor shall it be
responsible to any Lender for the accuracy or completeness of the
representations and warranties of the Borrower herein or the data made
available to any of the Lenders in connection with the negotiation of this
Agreement, or for any statements, warranties or representations (whether
written or oral) made in or in connection with this Agreement; (ii) shall not
have any duty to ascertain or to enquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement on the part of the
Borrower or to inspect the property (including the books and records) of the
Borrower or any of its Subsidiaries; and (iii) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any instrument or document furnished
pursuant hereto.


 


15.6                                                                        Prompt Notice to
the Lenders


 


Notwithstanding any
other provision herein, the Agent agrees to provide to the Lenders, with copies
where appropriate, all information, notices and reports required to be given to
the Agent by the Borrower, promptly upon receipt of same, excepting therefrom
information and notices relating solely to the role of Agent hereunder.


 


15.7                                                                        Agent’s and
Lenders’ Authorities


 


With respect to its
Commitments and the Drawdowns, Rollovers, Conversions and Loans made by it as a
Lender, the Agent 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.  Subject to the express
provisions hereof relating to the rights and obligations of the Agent and the Lenders
in such capacities, the Agent and each Lender may accept deposits from, lend
money to, and generally engage in any kind of business with the Borrower and
its Subsidiaries or any corporation or other entity owned or controlled by any
of them and any person which may do business with any of them without any
duties to account therefor to the Agent or the other Lenders and, in the case
of the Agent, all as if it was not the Agent hereunder.


 


15.8                                                                        Lender Credit
Decision


 


It is understood
and agreed by each Lender that it has itself been, and will continue to be,
solely responsible for making its own independent appraisal of and
investigations into the


 


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financial condition, creditworthiness, condition, affairs, status and
nature of the Borrower and its Subsidiaries. 
Each Lender represents to the Agent that it is engaged in the business
of making and evaluating the risks associated with commercial revolving loans
or term loans, or both, to corporations similar to the Borrower, that it can
bear the economic risks related to the transaction contemplated hereby, that it
has had access to all information deemed necessary by it in making such
decision (provided that this representation shall not impair its rights against
the Borrower) and that it is entering into this Agreement in the ordinary
course of its commercial lending business. 
Accordingly, each Lender confirms with the Agent that it has not relied,
and will not hereafter rely, on the Agent (i) to check or enquire on its behalf
into the adequacy, accuracy or completeness of any information provided by the
Borrower or any other person under or in connection with this Agreement or the
transactions herein contemplated (whether or not such information has been or
is hereafter distributed to such Lender by the Agent), or (ii) to assess or
keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Borrower or any of its
Subsidiaries.  Each Lender acknowledges
that a copy of this Agreement has been made available to it for review and each
Lender acknowledges that it is satisfied with the form and substance of this
Agreement.  Each Lender hereby covenants
and agrees that, subject to Section 15.4, it will not make any arrangements
with the Borrower for the satisfaction of any Loans or other Obligations
without the consent of all the other Lenders.


 


15.9                                                                        Indemnification of
Agent


 


The Lenders hereby
agree to indemnify the Agent (to the extent not reimbursed by the Borrower), on
a pro rata basis in accordance with their respective Commitments as a
proportion of the aggregate of all outstanding Commitments, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent
in any way relating to or arising out of this Agreement or any action taken or
omitted by the Agent under or in respect of this Agreement in its capacity as Agent;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs
expenses or disbursements resulting from the Agent’s gross negligence or wilful
misconduct.  If the Borrower
subsequently repays all or a portion of such amounts to the Agent, the Agent
shall reimburse the Lenders their pro rata shares (according to the amounts
paid by them in respect thereof) of the amounts received from the Borrower.  Without limiting the generality of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its portion (determined as above) of any out-of-pocket expenses (including
counsel fees) incurred by the Agent in connection with the preservation of any
rights of the Agent or the Lenders under, or the enforcement of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Agent is not reimbursed for such expenses by the Borrower.


 


15.10                                                                 Successor Agent


 


The Agent may, as
hereinafter provided, resign at any time by giving 45 days’ prior written
notice thereof to the Lenders and the Borrower.  Upon any such resignation, the Lenders shall, after soliciting
the views of the Borrower, have the right to appoint another Lender as a
successor agent (the “Successor Agent”) who shall be acceptable
to the Borrower, acting reasonably.  If
no Successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within 30 days after the retiring Agent’s giving of
notice of resignation,


 


115

















 


then the retiring Agent shall, on behalf of the Lenders, appoint a
Successor Agent who shall be a Lender acceptable to the Borrower, acting
reasonably.  Upon the acceptance of any
appointment as Agent hereunder by a Successor Agent, such Successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall thereupon be discharged
from its further duties and obligations as Agent under this Agreement.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Article shall continue to enure to
its benefit as to any actions taken or omitted to be taken by it as Agent or in
its capacity as Agent while it was Agent hereunder.


 


15.11                                                                 Taking and
Enforcement of Remedies


 


Each of the Lenders
hereby acknowledges that, to the extent permitted by applicable law, the
remedies provided hereunder to the Lenders are for the benefit of the Lenders
collectively and acting together and not severally and further acknowledges
that its rights hereunder are to be exercised not severally, but collectively
by the Agent upon the decision of the Majority of the Lenders regardless of
whether acceleration was made pursuant to Section 12.2.  Notwithstanding any of the provisions
contained herein, each of the Lenders hereby covenants and agrees that it shall
not be entitled to individually take any action with respect to the Credit
Facility, including, without limitation, any acceleration under Section 12.2,
but that any such action shall be taken only by the Agent with the prior
written agreement or instructions of the Majority of the Lenders; provided
that, notwithstanding the foregoing, if (i) the Agent, having been adequately
indemnified against costs and expenses of so doing by the Lenders, shall fail
to carry out any such instructions of a Majority of the Lenders, any Lender may
do so on behalf of all Lenders and shall, in so doing, be entitled to the
benefit of all protections given the Agent hereunder or elsewhere, and (ii) in
the absence of instructions from the Majority of the Lenders and where in the
sole opinion of the Agent the exigencies of the situation warrant such action,
the Agent may without notice to or consent of the Lenders or any of them take
such action on behalf of the Lenders as it deems appropriate or desirable in
the interests of the Lenders.  Each of
the Lenders hereby further covenants and agrees that upon any such written
consent being given by the Majority of the Lenders, or upon a Lender or the
Agent taking action as aforesaid, it shall cooperate fully with the Lender or
the Agent to the extent requested by the Lender or the Agent in the collective
realization including, without limitation, and, if applicable, the appointment
of a receiver, or receiver and manager to act for their collective
benefit.  Each Lender covenants and
agrees to do all acts and things and to make, execute and deliver all agreements
and other instruments, including, without limitation, any instruments necessary
to effect any registrations, so as to fully carry out the intent and purpose of
this Section; and each of the Lenders hereby covenants and agrees that, subject
to Section 5.7, Section 15.4 and Section 10.2(b) it has not heretofore and
shall not seek, take, accept or receive any security for any of the obligations
and liabilities of the Borrower hereunder or under any other document,
instrument, writing or agreement ancillary hereto and shall not enter into any
agreement with any of the parties hereto or thereto relating in any manner
whatsoever to the Credit Facility, unless all of the Lenders shall at the same
time obtain the benefit of any such security or agreement.


 


With respect to any
enforcement, realization or the taking of any rights or remedies to enforce the
rights of the Lenders hereunder, the Agent shall be a trustee for each Lender,
and all monies received from time to time by the Agent in respect of the
foregoing shall be held in trust and shall be trust assets within the meaning
of applicable bankruptcy or insolvency legislation and shall be considered for
the purposes of such legislation to be held separate and apart from the other
assets


 


116

















 


of the Agent, and each Lender shall be entitled to their Rateable
Portion of such monies.  In its capacity
as trustee, the Agent shall be obliged to exercise only the degree of care it
would exercise in the conduct and management of its own business and in
accordance with its usual practice concurrently employed or hereafter
instituted for other substantial commercial loans.


 


15.12                                                                 Reliance Upon Agent


 


The Borrower shall
be entitled to rely upon any certificate, notice or other document or other
advice, statement or instruction provided to it by the Agent pursuant to this
Agreement, and the Borrower shall generally be entitled to deal with the Agent
with respect to matters under this Agreement which the Agent is authorized to deal
with without any obligation whatsoever to satisfy itself as to the authority of
the Agent to act on behalf of the Lenders and without any liability whatsoever
to the Lenders for relying upon any certificate, notice or other document or
other advice, statement or instruction provided to it by the Agent,
notwithstanding any lack of authority of the Agent to provide the same.


 


15.13                                                                 No Liability of
Agent


 


The Agent shall
have no responsibility or liability to the Borrower on account of the failure
of any Lender to perform its obligations hereunder (unless such failure was
caused, in whole or in part, by the Agent’s failure to observe or perform its
obligations hereunder), or to any Lender on account of the failure of the
Borrower or any Lender to perform its obligations hereunder.


 


15.14                                                                 Article for Benefit
of Agent and Lenders


 


The provisions of
this Article 15 which relate to the rights and obligations of the Lenders to
each other or to the rights and obligations between the Agent and the Lenders
shall be for the exclusive benefit of the Agent and the Lenders, and, except to
the extent provided in Sections 15.1, 15.2, 15.6, 15.10, 15.11, 15.12, 15.13
and this Section 15.14, the Borrower shall not have any rights or obligations
thereunder or be entitled to rely for any purpose upon such provisions.  Any Lender may waive in writing any right or
rights which it may have against the Agent or the other Lenders hereunder
without the consent of or notice to the Borrower.


 


ARTICLE 16 - GENERAL


 


16.1                                                                        Exchange and Confidentiality
of Information


 


(1)           The Borrower agrees that the Agent
and each Lender may provide any assignee or participant or any bona fide
prospective assignee or participant pursuant to Sections 16.6 or 16.7 with any
information (but excluding the E&Y Report unless such party has executed
and delivered the same form of release letter previously executed and delivered
by the Lenders to Ernst & Young LLP) concerning the financial condition of
the Borrower and its Subsidiaries provided such party agrees in writing with
the Agent or such Lender for the benefit of the Borrower to be bound by a like
duty of confidentiality to that contained in this Section.


 


(2)           Each of the Agent and the Lenders
acknowledges the confidential nature of the financial, operational and other
information and data provided and to be provided to them by the


 


117

















 


Borrower pursuant hereto (the “Information”) and agrees to use all
reasonable efforts to prevent the disclosure thereof provided, however, that:


 


(a)                                  the Agent and the Lenders may disclose all or
any part of the Information if, in their reasonable opinion, such disclosure is
required in connection with any actual or threatened judicial, administrative
or governmental proceedings including, without limitation, proceedings
initiated under or in respect of this Agreement;


 


(b)                                 the Agent and the Lenders shall incur no
liability in respect of any Information required to be disclosed by any
applicable law or regulation, or by applicable order, policy or directive
having the force of law, to the extent of such requirement;


 


(c)                                  the Agent and the Lenders may provide Lenders’
Counsel and their other agents and professional advisors with any Information;
provided that such persons shall be under a like duty of confidentiality to
that contained in this Section;


 


(d)                                 the Agent and each of the Lenders shall incur
no liability in respect of any Information: 
(i) which is or becomes readily available to the public (other than by a
breach hereof) or which has been made readily available to the public by the
Borrower or its Subsidiaries, (ii) which the Agent or the relevant Lender can
show was, prior to receipt thereof from the Borrower, lawfully in the Agent’s
or Lender’s possession and not then subject to any obligation on its part to
the Borrower to maintain confidentiality, or (iii) which the Agent or the
relevant Lender received from a third party who was not, to the knowledge of
the Agent or such Lender, under a duty of confidentiality to the Borrower at
the time the information was so received;


 


(e)                                  the Agent and the Lenders may disclose the
Information to other financial institutions in connection with the syndication
by the Agent or Lenders of the Credit Facility or the granting by a Lender of a
participation in the Credit Facility where such financial institution agrees to
be under a like duty of confidentiality to that contained in this Section; and


 


(f)                                    the Agent and the Lenders may disclose all or
any part of the Information so as to enable the Agent and the Lenders to
initiate any lawsuit against the Borrower or to defend any lawsuit commenced by
the Borrower the issues of which touch on the Information, but only to the
extent such disclosure is necessary to the initiation or defense of such
lawsuit.


 


16.2                                                                        Nature of
Obligation under this Agreement


 


(1)           The obligations of each Lender and of
the Agent under this Agreement are several. 
The failure of any Lender to carry out its obligations hereunder shall
not relieve the other Lenders, the Agent or the Borrower of any of their
respective obligations hereunder.


 


(2)           Neither the Agent nor any Lender
shall be responsible for the obligations of any other Lender hereunder.


 


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16.3                                                                        Notices


 


Any demand, notice
or communication to be made or given hereunder shall be in writing and may be
made or given by personal delivery or by transmittal by telecopy or other
electronic means of communication addressed to the respective parties as
follows:


 


To the Borrower:


 


RPC Acquisition Company


555 – 4th Avenue S.W.


Suite 810


Calgary, Alberta


T2P 3E7


 


Attention:              Senior Vice
President and Chief Financial Officer


Facsimile:               (562)
728-2823


 


with a copy to:


 


Pacific Energy Partners, L.P.


5900 Cherry Avenue


Long Beach, California


90805-4408


 


Attention:              Senior Vice
President and Chief Financial Officer


Facsimile:               (562)
728-2823


 


and with an additional copy to the attention of the General Counsel of
Pacific Energy Partners, L.P. at the same address and facsimile number


 


To the Agent:


 


Royal Bank of Canada


Agency Services Group


12th Floor, South Tower


Royal Bank Plaza, 200 Bay Street


Toronto, Ontario


M5J 2W7


 


Attention:              Manager,
Agency


Facsimile:               (416)
842-4023


 


119

















 


with a copy, in the case of each demand, notice or communication to the
Agent other than Drawdown Notices, Conversion Notices, Rollover Notices and
Repayment Notices, to:


 


Royal Bank of Canada


Suite 1100, Bankers Hall West


888 – 3rd Street S.W.


Calgary, Alberta


T2P 5C5


 


Attention:              Managing
Director


Facsimile:               (403)
233-8081


 


To each Lender: 
As set forth in Schedule A annexed hereto


 


or to such other address or
telecopy number as any party may from time to time notify the others in
accordance with this Section.  Any
demand, notice or communication made or given by personal delivery or by
telecopier or other electronic means of communication during normal business
hours at the place of receipt on a Banking Day shall be conclusively deemed to
have been made or given at the time of actual delivery or transmittal, as the
case may be, on such Banking Day.  Any
demand, notice or communication made or given by personal delivery or by
telecopier or other electronic means of communication after normal business
hours at the place of receipt or otherwise than on a Banking Day shall be
conclusively deemed to have been made or given at 9:00 a.m. (Calgary time) on
the first Banking Day following actual delivery or transmittal, as the case may
be.


 


16.4                                                                        Governing Law


 


This Agreement shall
be governed by and construed in accordance with the laws of the Province of
Alberta and the laws of Canada applicable therein, without prejudice to or
limitation of any other rights or remedies available under the laws of any
jurisdiction where property or assets of the Borrower may be found.


 


16.5                                                                        Benefit of the
Agreement


 


This Agreement
shall enure to the benefit of and be binding upon the Borrower, the Lenders,
the Agent and their respective successors and permitted assigns.


 


16.6                                                                        Assignment


 


Any Lender may,
without consent during the continuance of an Event of Default and at all other
times with the prior written consent of each of the Borrower, Fronting Lender
and Agent, which consents shall not be unreasonably withheld or delayed (for
certainty, the Borrower shall be entitled to withhold such consent if a Lender
proposes to make a sale, assignment or transfer to a person in respect of which
the Borrower would be required to make any withholding or remittance of
withholding taxes pursuant to Part XIII of the Income Tax Act (Canada)),
sell, assign, transfer or grant an interest in its Commitments, its Rateable
Portion of the Loans and its rights under the Documents; provided that, without
the consent of the Borrower and the Agent, no Lender shall (a) sell, assign,
transfer or grant an interest in any Commitment, Loan or Document if the effect
of the


 


120

















 


same would be to have a Lender with a Commitment of less than Cdn.
$7,500,000 or (b) assign less than Cdn. $3,000,000 of a Commitment, and further
provided that, it shall be a precondition to any such sale, assignment,
transfer or grant that the contemplated assignor Lender shall have paid to the
Agent, for the Agent’s own account, a transfer fee of Cdn. $3,500.00 (which fee
shall be for the account of the assignor Lender and shall not be recoverable
from the Borrower).  Subject to Section
7.8(3), upon any such sale, assignment, transfer or grant , the granting Lender
shall have no further obligation hereunder with respect to such interest except
in case of a grant to an Affiliate of the granting Lender, in which case such
Lender shall remain obligated hereunder with respect to such interest.  Upon any such sale, assignment, transfer or
grant, the granting Lender, the new Lender, the Agent and the Borrower shall
execute and deliver an Assignment Agreement. The Borrower shall not assign its
rights or obligations hereunder without the prior written consent of all of the
Lenders.


 


16.7                                                                        Participations


 


Any Lender may,
without the consent of the Borrower, grant one or more participations in its
Commitments and its Rateable Portion of the Loans to other persons, provided
that the granting of such a participation: (a) shall be at the Lender’s own
cost and (b) shall not affect the obligations of such Lender hereunder nor
shall it increase the costs (including interest, Taxes or fees) to the Borrower
hereunder or under any of the other Documents.


 


16.8                                                                        Severability


 


Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall
not invalidate the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


16.9                                                                        Whole Agreement


 


This Agreement and
the other Documents constitute the whole and entire agreement between the
parties hereto regarding the subject matter hereof and thereof and cancel and
supersede any prior agreements (including, without limitation, any commitment
letters), undertakings, declarations, commitments, representations, written or
oral, in respect thereof.


 


16.10                                                                 Amendments and
Waivers


 


Any provision of
this Agreement may be amended only if the Borrower and the Majority of the
Lenders so agree in writing and, except as otherwise specifically provided
herein, may be waived only if the Majority of the Lenders so agree in writing,
but:


 


(a)                                  an amendment or waiver which changes or relates
to (i) the amount or type of the Loans available hereunder (or decreases in the
periods of notice for Drawdowns, Conversions, Rollovers or voluntary prepayment
of Loans) or any Lender’s Commitment, (ii) decreases in the rates of or
deferral of the dates of payment of interest, Bankers’ Acceptance or Letter of
Credit fees, or mandatory repayments of principal, (iii) decreases in the
amount of or deferral of the dates of payment of fees hereunder (other than
fees payable for the account of Agent), (iv) the definition of “Majority of the
Lenders”, (v) any provision hereof contemplating or requiring


 


121

















 


consent, approval
or agreement of “all Lenders”, “the Lenders” or similar expressions or
permitting waiver of conditions or covenants or agreements by “all Lenders”,
“the Lenders” or similar expressions, (vi) Section 12.1(a) or (b) of the
definition of “Event of Default”, (vii) the release or discharge of, or any
material amendment or waiver of, any Security, (viii) the Subordination
Agreement, (ix) the conditions precedent to Drawdowns or the conditions
precedent to the increase in the availability of the Credit Facility under
Section 2.4(4), (x) the notice requirements for Drawdowns, Rollovers or
Conversions; or (xi) this Section, shall require the agreement or waiver of all
the Lenders and also (in the case of an amendment) of the other parties hereto;
and


 


(b)                                 an amendment or waiver which changes or relates
to the rights and/or obligations of the Agent, Fronting Lender or
Overdraft/Swingline Lender shall also require the agreement of the Agent,
Fronting Lender or Overdraft/Swingline Lender (as applicable) thereto.


 


Any such waiver and any
consent by the Agent, Fronting Lender, Overdraft/Swingline Lender, any Lender,
the Majority of the Lenders or all of the Lenders under any provision of this
Agreement must be in writing and may be given subject to any conditions thought
fit by the person giving that waiver or consent.  Any waiver or consent shall be effective only in the instance and
for the purpose for which it is given.


 


16.11                                                                 Further Assurances


 


The Borrower, the
Lenders and the Agent shall promptly cure any default by it in the execution
and delivery of this Agreement, the other Documents or any of the agreements
provided for hereunder to which it is a party. 
The Borrower, at its expense, shall promptly execute and deliver to the
Agent, upon request by the Agent (acting reasonably), all such other and
further deeds, agreements, opinions, certificates, instruments, affidavits,
registration materials and other documents reasonably necessary for the
Borrower’s compliance with, or accomplishment of the covenants and agreements
of the Borrower hereunder or more fully to state the obligations of the
Borrower as set out herein or to make any registration, recording, file any
notice or obtain any consent, all as may be reasonably necessary or appropriate
in connection therewith.


 


16.12                                                                 Attornment


 


The parties hereto
each hereby attorn and submit to the jurisdiction of the courts of the Province
of Alberta in regard to legal proceedings relating to the Documents.  For the purpose of all such legal
proceedings, this Agreement shall be deemed to have been performed in the
Province of Alberta and the courts of the Province of Alberta shall have
jurisdiction to entertain any action arising under this Agreement.  Notwithstanding the foregoing, nothing in
this Section shall be construed nor operate to limit the right of any party
hereto to commence any action relating hereto in any other jurisdiction, nor to
limit the right of the courts of any other jurisdiction to take jurisdiction
over any action or matter relating hereto.


 


16.13                                                                 Time of the Essence


 


Time shall be of
the essence of this Agreement.


 


122

















 


16.14                                                                 Credit Agreement
Governs


 


In the event of any
conflict or inconsistency between the provisions of this Agreement and the
provisions of the other Documents, the provisions of this Agreement, to the
extent of the conflict or inconsistency, shall govern and prevail.


 


16.15                                                                 Counterparts


 


This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original and all of which taken together shall be deemed to constitute one
and the same instrument, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.


 


123

















 


IN WITNESS WHEREOF the parties hereto have executed
this Agreement.


 


	
   

  	
   

  	
  RPC ACQUISITION COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Gerald A. Tywoniuk

  	
   

  
	
   

  	
   

  	
  Gerald A. Tywoniuk

  
	
   

  	
   

  	
  Senior Vice President, Chief
  Financial

  Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris L. Fong

  	
   

  
	
   

  	
   

  	
  Name: Chris L. Fong

  
	
   

  	
   

  	
  Title:  Attorney-In-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
   

  	
  CANADA BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Medina Sales De Andrade

  	
   

  
	
   

  	
   

  	
  Name:  Medina Sales De Andrade

  
	
   

  	
   

  	
  Title:  Assistant Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF MONTREAL

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  R.P. Heinrichs

  	
   

  
	
   

  	
   

  	
  Name:  R.P. Heinrichs

  
	
   

  	
   

  	
  Title:  Vice Presient

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						



 


124

















 


	
   

  	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matt van Remmen

  	
   

  
	
   

  	
   

  	
  Name:  Matt van Remmen

  
	
   

  	
   

  	
  Title:  Associate Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Richard D. Lee

  	
   

  
	
   

  	
   

  	
  Name: Richard D. Lee

  
	
   

  	
   

  	
  Title:  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BNP PARIBAS (CANADA)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean-Philippe Cadot

  	
   

  
	
   

  	
   

  	
  Name:  Jean-Philippe Cadot

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward Pak

  	
   

  
	
   

  	
   

  	
  Name:  Edward Pak

  
	
   

  	
   

  	
  Title:  Assistant Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONGRESS FINANCIAL

  CORPORATION (CANADA)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ H. Rosenfeld

  	
   

  
	
   

  	
   

  	
  Name:  H. Rosenfeld

  
	
   

  	
   

  	
  Title:  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNION BANK OF CALIFORNIA, N.A.,

  CANADA BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  James G. Chepyha

  	
   

  
	
   

  	
   

  	
  Name:  James G. Chepyha

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						



 


125

















 


	
   

  	
   

  	
  AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ROYAL BANK OF CANADA,

  
	
   

  	
   

  	
  in its capacity as the Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gail Watkin

  	
   

  
	
   

  	
   

  	
  Name:  Gail Watkin

  
	
   

  	
   

  	
  Title:  Manager, Agency

  



 


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