Document:

Exhibit 10.2

 

MORTGAGE, COLLATERAL REAL ESTATE MORTGAGE, DEED OF
TRUST,

ASSIGNMENT OF AS-EXTRACTED COLLATERAL, SECURITY
AGREEMENT, 

FIXTURE FILING AND FINANCING STATEMENT

 

FROM

 

VOYAGER OIL AND GAS, INC.

 

TO

 

BONNIE TURPIN

 

as Administrative Agent

 

and the Other Secured Persons

 

A CARBON, PHOTOGRAPHIC, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS 

SUFFICIENT AS A FINANCING STATEMENT.

 

 

A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT.  IN CERTAIN STATES, A POWER OF SALE MAY ALLOW
THE TRUSTEE OR THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT
GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS
INSTRUMENT.

 

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

 

THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

 

THIS INSTRUMENT COVERS PROCEEDS OF MORTGAGED PROPERTY.

 

THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE
WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL
AND GAS) AND THE ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE
WELLHEADS OF THE WELL OR WELLS LOCATED ON THE PROPERTIES DESCRIBED IN THE EXHIBIT HERETO.  THIS FINANCING STATEMENT IS TO BE FILED OR
FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR
SIMILAR RECORDS OF THE RECORDERS OF THE COUNTIES LISTED ON THE EXHIBIT HERETO
AND WITH A CLERK OF COURT.  THE MORTGAGOR
HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED,
WHICH INTEREST IS DESCRIBED IN THE EXHIBIT ATTACHED HERETO.

 

PORTIONS OF THE MORTGAGED PROPERTY ARE GOODS WHICH ARE OR ARE
TO BECOME AFFIXED TO OR FIXTURES ON THE LAND DESCRIBED IN OR REFERRED TO IN THE
EXHIBIT HERETO.  THIS FINANCING
STATEMENT IS TO BE FILED FOR RECORD OR RECORDED, AMONG OTHER PLACES, IN
THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF EACH COUNTY IN WHICH SAID LAND OR
ANY PORTION THEREOF IS LOCATED AND WITH A CLERK OF COURT.  THE MORTGAGOR IS THE OWNER OF RECORD INTEREST
IN THE REAL ESTATE CONCERNED.  THIS INSTRUMENT
IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS OR THE UCC RECORDS.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  DEFINITIONS

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Terms Defined Above

  	
  3

  
	
  Section 1.02

  	
  UCC and Other Defined Terms

  	
  3

  
	
  Section 1.03

  	
  Definitions

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  GRANT OF LIEN AND SECURED OBLIGATIONS

  
	
   

  	
   

  
	
  Section 2.01

  	
  Grant of Liens

  	
  6

  
	
  Section 2.02

  	
  Grant of Security Interest

  	
  7

  
	
  Section 2.03

  	
  Secured Obligations

  	
  8

  
	
  Section 2.04

  	
  Fixture Filing, Etc.

  	
  8

  
	
  Section 2.05

  	
  Pro Rata Benefit

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  ASSIGNMENT OF AS-EXTRACTED COLLATERAL

  
	
   

  	
   

  
	
  Section 3.01

  	
  Assignment

  	
  9

  
	
  Section 3.02

  	
  No Modification of Payment Obligations

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  REPRESENTATIONS, WARRANTIES AND COVENANTS

  
	
   

  	
   

  
	
  Section 4.01

  	
  Title

  	
  10

  
	
  Section 4.02

  	
  Perfected Liens; Defend Title

  	
  10

  
	
  Section 4.03

  	
  Not a Foreign Person

  	
  11

  
	
  Section 4.04

  	
  Power to Create Lien and Security

  	
  11

  
	
  Section 4.05

  	
  Revenue and Cost Bearing Interest

  	
  11

  
	
  Section 4.06

  	
  Rentals Paid; Leases in Effect

  	
  11

  
	
  Section 4.07

  	
  Operation By Third Parties

  	
  12

  
	
  Section 4.08

  	
  Abandon, Sales

  	
  12

  
	
  Section 4.09

  	
  Failure to Perform

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
  RIGHTS AND REMEDIES

  
	
   

  	
   

  
	
  Section 5.01

  	
  Event of Default

  	
  12

  
	
  Section 5.02

  	
  Foreclosure and Sale

  	
  12

  
	
  Section 5.03

  	
  Substitute Trustees and Agents

  	
  14

  
	
  Section 5.04

  	
  Judicial Foreclosure; Receivership

  	
  14

  
	
  Section 5.05

  	
  Separate Sales

  	
  14

  
	
  Section 5.06

  	
  Possession of Mortgaged Property

  	
  14

  
	
  Section 5.07

  	
  Occupancy After Foreclosure

  	
  15

  
	
  Section 5.08

  	
  Remedies Cumulative, Concurrent and Nonexclusive

  	
  15

  

 

 

	
  Section 5.09

  	
  No Release of Obligations

  	
  15

  
	
  Section 5.10

  	
  Release of and Resort to Collateral

  	
  16

  
	
  Section 5.11

  	
  Waiver of Redemption, Notice and Marshalling of Assets, Etc.

  	
  16

  
	
  Section 5.12

  	
  Discontinuance of Proceedings

  	
  16

  
	
  Section 5.13

  	
  Application of Proceeds

  	
  16

  
	
  Section 5.14

  	
  Resignation of Operator

  	
  17

  
	
  Section 5.15

  	
  Indemnity

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  THE TRUSTEE

  
	
   

  	
   

  
	
  Section 6.01

  	
  Duties, Rights, and Powers of Trustee

  	
  17

  
	
  Section 6.02

  	
  Successor Trustee

  	
  18

  
	
  Section 6.03

  	
  Retention of Moneys

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  MISCELLANEOUS

  
	
   

  	
   

  
	
  Section 7.01

  	
  Instrument Construed as Mortgage, Etc.

  	
  18

  
	
  Section 7.02

  	
  Releases

  	
  19

  
	
  Section 7.03

  	
  Severability

  	
  19

  
	
  Section 7.04

  	
  Successors and Assigns

  	
  19

  
	
  Section 7.05

  	
  Satisfaction of Prior Encumbrance

  	
  20

  
	
  Section 7.06

  	
  Application of Payments to Certain Obligations

  	
  19

  
	
  Section 7.07

  	
  Nature of Covenants

  	
  19

  
	
  Section 7.08

  	
  Notices

  	
  20

  
	
  Section 7.09

  	
  Counterparts

  	
  20

  
	
  Section 7.10

  	
  Governing Law

  	
  20

  
	
  Section 7.11

  	
  Financing Statement; Fixture Filing

  	
  20

  
	
  Section 7.12

  	
  Execution of Financing Statements

  	
  20

  
	
  Section 7.13

  	
  Exculpation Provisions

  	
  21

  
	
  Section 7.14

  	
  References

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  STATE
  SPECIFIC PROVISIONS

  
	
   

  	
   

  
	
  Section 8.01

  	
  Special North Dakota Provisions

  	
  22

  
	
   

  	
   

  	
   

  
	
  Exhibit A — Oil and Gas Property

  	
   

  

 

 

THIS MORTGAGE, COLLATERAL REAL ESTATE MORTGAGE, DEED OF TRUST,
ASSIGNMENT OF AS-EXTRACTED COLLATERAL, SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT (this “Mortgage”) is entered into as of September     ,
2010 (the “Effective Date”) by VOYAGER OIL & GAS, INC., a
Delaware corporation (the “Mortgagor”), in favor of (i) BONNIE
TURPIN, as Administrative Agent (the “Mortgagee”), and the Other Secured
Persons with respect to all Mortgaged Properties located in the Deed of Trust
State and (ii) the Mortgagee for its benefit and the benefit of the Other
Secured Parties with respect to all Mortgaged Properties located in the
Mortgage State and with respect to all UCC Collateral.

 

R E C I T A L S

 

A.            On the even
date herewith, Mortgagor, as borrower, the Lenders, the Mortgagee, as
administrative agent for the Lenders and others, executed a Promissory Note
(such agreement, as may from time to time be amended or supplemented, the “Promissory
Note”) pursuant to such, upon the terms and conditions stated therein, the
Lenders agreed to make loans and other to the Mortgagor.

 

B.            On the even date herewith,
the Mortgagor, each of the signatories thereto and the Mortgagee executed a
Security Agreement (such agreement, as may from time to time be amended or
supplemented, the “Security Agreement”) pursuant to which, upon the
terms and conditions stated therein, the Mortgagor has agreed to grant a
security interest to the Mortgagee in all of its assets as specified therein
(the Promissory Note and the Security Agreement collectively being the “Secured
Transaction Documents”).

 

C.            The Mortgagee and the Other
Secured Persons have conditioned their obligations under the Secured
Transaction Documents upon the execution and delivery by the Mortgagor of this
Mortgage, and the Mortgagor has agreed to enter into this Mortgage to secure
all obligations owing to the Mortgagee and the Other Secured Persons under the
Secured Transaction Documents.

 

D.            Therefore, in order to
comply with the terms and conditions of the Secured Transaction Documents and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Mortgagor hereby agrees as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01          Terms Defined
Above.  As used in this Mortgage, each
term defined above has the meaning indicated above.

 

Section 1.02          UCC and Other
Defined Terms.  Unless
otherwise defined in the Applicable UCC, each capitalized term used in this
Mortgage and not defined in this Mortgage shall have the meaning ascribed to
such term in the Promissory Note.  Any
capitalized term not defined in either this Mortgage or the Promissory Note
shall have the meaning ascribed to such term in the Applicable UCC.

 

 

Section 1.03          Definitions.

 

“Applicable
UCC” means the provisions of the Uniform Commercial Code presently in
effect in the jurisdiction in which the relevant Collateral is situated.

 

“Collateral”
means collectively all the Mortgaged Property and all the UCC Collateral.

 

“Deed
of Trust State” has the meaning ascribed such term in Section 2.01.

 

“Event
of Default” has the meaning ascribed to such term in Section 5.01.

 

“Hydrocarbon
Interests” means all rights, titles, interests and estates and the lands
and premises covered or affected thereby now or hereafter acquired by the
Mortgagor in and to oil and gas leases, oil, gas and mineral leases, or other
liquid or gaseous hydrocarbon leases, fee interests, surface interests, mineral
fee interests, overriding royalty and royalty interests, net profit interests
and production payment interests, including any reserved or residual interests
of whatever nature, in each case, which are described on Exhibit A;
provided that, it is the intent of the Mortgagor all of its interests be
subject to the Lien of this Mortgage even if (i) its interests on Exhibit A
shall be incorrectly described or a description of a part or all of such
property or the Mortgagor’s interests therein be omitted limited to particular
lands, specified depths or particular types of property interests or (ii) such
properties or interests may be hereafter acquired.

 

“Hydrocarbons”
means all oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom and all other minerals which may be
produced and saved from or attributable to the Oil and Gas Properties of the
Mortgagor, including all oil in tanks, and all rents, issues, profits,
proceeds, products, revenues and other incomes from or attributable to the
Hydrocarbon Interests of the Mortgagor or other properties constituting Oil and
Gas Properties of the Mortgagor.

 

“Indemnified
Parties” means the Trustee, the Mortgagee, each Other Secured Person and their
officers, directors, employees, representatives, agents, attorneys, accountants
and experts.

 

“Lien”
means any interest in property securing an obligation owed to, or a claim by, a
Person other than the owner of the property, whether such interest is based on
the common law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (b) production payments and the like
payable out of Oil and Gas Properties..

 

“Mortgaged
Property” means the Oil and Gas Properties and other properties and assets
described in Section 2.01(a) through Section 2.01(e).

 

“Mortgage
State” has the meaning ascribed such term in Section 2.01.

 

“Oil
and Gas Properties” means (a) Hydrocarbon Interests; (b) the
properties of the Mortgagor now or hereafter pooled or unitized with Hydrocarbon
Interests; (c) all presently existing or future unitization,
communitization, pooling agreements and declarations of pooled 

 

 

units
and the units created thereby (including without limitation all units created
under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; (d) all
operating agreements, production sales or other contracts, farmout agreements,
farm-in agreements, area of mutual interest agreements, equipment leases and
other agreements which relate to any of the Hydrocarbon Interests or any
interests therein or to the production, sale, purchase, exchange, processing,
handling, storage, transporting or marketing of the Hydrocarbons from or
attributable to such Oil and Gas Properties of the Mortgagor; (e) all
Hydrocarbons; (f) all tenements, hereditaments, appurtenances and
properties in any manner appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests, including all compressor sites, settling ponds and
equipment or pipe yards; and (g) all properties, rights, titles, interests
and estates described or referred to above whether now owned or hereinafter
acquired, including any and all property, real or personal, immoveable or
moveable, situated upon, used, held for use or useful in connection with the
operating, working or development of any of such Hydrocarbon Interests or
property of the Mortgagor (excluding drilling rigs, automotive equipment,
rental equipment or other personal property which may be on such premises for
the purpose of drilling a well or for other similar temporary uses) and
including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, pipelines, sales and flow lines, gathering
systems, field gathering systems, salt water disposal facilities, tanks and
tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, steam generation facilities, meters, apparatus, equipment, appliances,
tools, implements, cables, wires, towers, casing, tubing and rods, surface
leases, rights-of-way, easements, servitudes licenses and other surface and
subsurface rights, together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.

 

“Other
Secured Persons” means each Lender under the Promissory Note and any legal
owner, holder, assignee or pledgee of any of the Secured Obligations.

 

“Paid
In Full In Cash” means the irrevocable and indefeasible payment in full in
cash of all principal, interest (including interest accruing during the
pendency of an insolvency or liquidation proceeding, regardless of whether
allowed or allowable in such insolvency or liquidation proceeding) and premium,
if any, on all Loans outstanding under the Promissory Note.

 

“Post
Default Rate” means the post default rate per annum set forth in the
Promissory Note applicable to past due payments.

 

“Secured
Obligations” has the meaning assigned to such term in Section 2.03.

 

“Trustee”
means Bonnie Turpin, whose address for notice hereunder is 130 Cheshire Lane,
#101, Minnetonka, Minnesota 55305, and any successors and substitutes in trust
hereunder.

 

“UCC
Collateral” means the property and other assets described in Section 2.02.

 

 

ARTICLE II

GRANT OF LIEN AND SECURED OBLIGATIONS

 

Section 2.01          Grant of Liens.  To secure payment of the Secured Obligations,
the Mortgagor does by these presents hereby and subject to the terms hereof:

 

(i)            GRANT, BARGAIN,
SELL, ASSIGN, MORTGAGE, TRANSFER and CONVEY to the Trustee, for the use and
benefit of the Mortgagee and the Other Secured Persons, all the following
properties, rights and interests which are located in (or cover or relate to
such Oil and Gas Properties located in) the State of Montana (the “Deed of
Trust State”), TO HAVE AND TO HOLD unto the Trustee forever to secure the
Secured Obligations; and

 

(ii)           GRANT, BARGAIN,
SELL, WARRANT, MORTGAGE, ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE and CONVEY AND,
to the extent permitted by applicable law, GRANT A POWER OF SALE to the
Mortgagee, for its benefit and the benefit of the Other Secured Persons, with
mortgage covenants, and upon the statutory mortgage condition for the breach of
which this Mortgage may be subject to foreclosure as provided by applicable
law, all the following properties, rights and interests which are located in
(or cover or relate to properties located in) the State of North Dakota (the “Mortgage
State”):

 

(a)           All rights,
titles, interests and estates now owned or hereafter acquired by the Mortgagor
in and to the Oil and Gas Properties described on Exhibit A.

 

(b)           All rights,
titles, interests and estates now owned or hereafter acquired by the Mortgagor
in and to all geological, geophysical, engineering, accounting, title, legal and
other technical or business data concerning the Oil and Gas Properties, the
Hydrocarbons or any other item of property which are in the possession of the
Mortgagor, and all books, files, records, magnetic media, computer records and
other forms of recording or obtaining access to such data.

 

(c)           All rights,
titles, interests and estates now owned or hereafter acquired by the Mortgagor
in and to all Hydrocarbons.

 

(d)           Any property
that may from time to time hereafter, by delivery or by writing of any kind, be
subjected to the Liens hereof by the Mortgagor or by anyone on the Mortgagor’s
behalf; and the Trustee and/or the Mortgagee are hereby authorized to receive
the same at any time as additional security hereunder.

 

(e)           All of the
rights, titles and interests of every nature whatsoever now owned or hereafter
acquired by the Mortgagor in and to the Oil and Gas Properties described in Exhibit A
and all other rights, titles, interests and estates and every part and parcel
thereof, including, without limitation, any rights, titles, interests and
estates as the same may be enlarged by the discharge of any payments out of
production or by the removal of any charges or Permitted Encumbrances to which
any of such Oil and Gas Properties or other rights, titles, interests or
estates are subject or otherwise; all rights of the Mortgagor to Liens securing
payment of proceeds from the sale of production from any of such Oil and Gas
Properties, together with any and all renewals and extensions of any of such
related rights, titles, interests or estates; all contracts and agreements
supplemental to or amendatory of or in substitution for the contracts and
agreements described or mentioned above; and any and all additional interests
of 

 

 

any kind hereafter acquired by the Mortgagor in and
to the such related rights, titles, interests or estates.

 

Any
fractions or percentages specified on Exhibit A in referring to the
Mortgagor’s interests are solely for purposes of the warranties made by the
Mortgagor pursuant to Section 4.01 and Section 4.05 and shall in no
manner limit the quantum of interest affected by this Section 2.01 with
respect to any Oil and Gas Property or with respect to any unit or well
identified on Exhibit A.

 

Section 2.02          Grant of
Security Interest.  To further
secure the Secured Obligations, the Mortgagor hereby grants to the Mortgagee,
for its benefit and the benefit of the Other Secured Persons, a security
interest in and to all of the following (whether now or hereafter acquired by
operation of law or otherwise):

 

(a)           all Accounts;

 

(b)           all Deposit
Accounts (other than payroll, withholding tax and other fiduciary Deposit
Accounts), all Commodities Accounts and all Securities Accounts;

 

(c)           all Documents;

 

(d)           all General
Intangibles (including, without limitation, rights in and under any Payment
Intangible, Swap Agreement or any Commodity Contract) and all rights under
insurance contracts and rights to insurance proceeds;

 

(e)           all
Instruments;

 

(f)            all Goods
(including, without limitation, all Inventory, all Equipment and all Fixtures
whether or not relating to the Mortgaged Property);

 

(g)           all
Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a
writing);

 

(h)           all
As-Extracted Collateral from or attributable to the Oil and Gas Properties;

 

(i)            all books and
records pertaining to the Oil and Gas Properties;

 

(j)            all Fixtures;

 

(k)           all
Hydrocarbons;

 

(l)            to the extent
not otherwise included, any other property insofar as the it consists of
personal property of any kind or character defined in and subject to the
Applicable UCC; and

 

 

(m)          to the extent
not otherwise included, all Proceeds and products of any and all of the
foregoing and all collateral security, guarantees and other Supporting
Obligations given with respect to any of the foregoing.

 

Notwithstanding
the foregoing, this Section 2.02 does not grant a security interest in any
(i) Auction-Rate Securities or (ii) personal property of the
Mortgagor that would otherwise be UCC Collateral, to the extent that such grant
is prohibited under any agreement relating to such property and the violation
of such prohibition would cause the Mortgagor to lose its interest in or rights
with respect to such property, except to the extent that Part 4 of Article 9
of the Applicable UCC would render such prohibition ineffective.

 

Section 2.03          Secured
Obligations.  This
Mortgage is executed and delivered by the Mortgagor to secure and enforce the
following (the “Secured Obligations”):

 

(a)           Payment of and
performance of any and all indebtedness, fees, interest, indemnities,
reimbursements, obligations and liabilities of the Mortgagor (including
interest accruing during the pendency of an insolvency or liquidation
proceeding, regardless of whether allowed or allowable in such insolvency or
liquidation proceeding) Loan Documents.

 

(b)           Any sums which
may be advanced or paid by the Trustee or the Mortgagee or any Other Secured
Person under the terms hereof or of the Loan Documents on account of the
failure of the Mortgagor to comply with the covenants of the Mortgagor
contained herein, in the Loan Documents; and all other obligations, liabilities
and indebtedness of the Mortgagor arising pursuant to the provisions of this
Mortgage or the Loan Documents.

 

(c)           Any and all
renewals, modifications, substitutions, rearrangements or extensions of any of
the foregoing, whether in whole or in part.

 

Section 2.04          Fixture Filing, Etc.  Without in any manner limiting the generality
of any of the other provisions of this Mortgage: (i) some portions of the
goods described or to which reference is made herein are or are to become
Fixtures on the land described or to which reference is made herein or on Exhibit A;
(ii) the security interests created hereby under applicable provisions of
the Applicable UCC will attach to all As-Extracted Collateral (all minerals
including oil and gas and the Accounts resulting from the sale thereof at the
wellhead or minehead located on the Oil and Gas Properties described or to
which reference is made herein or on Exhibit A) and all other
Hydrocarbons; (iii) this Mortgage is to be filed of record in the real
estate records or other appropriate records as a financing statement; and (iv) the
Mortgagor is the record owner of the real estate or interests in the real
estate or immoveable property comprised of the Mortgaged Property.

 

Section 2.05          Pro Rata
Benefit.  This Mortgage is executed and
granted for the pro rata benefit and security of the Mortgagee and the Other
Secured Persons to secure the Secured Obligations for so long as same remains
unpaid and thereafter until the Secured Obligations have been Paid In Full In
Cash.

 

 

ARTICLE III

ASSIGNMENT OF AS-EXTRACTED COLLATERAL

 

Section 3.01          Assignment.

 

(a)           The Mortgagor
has absolutely and unconditionally assigned, transferred, conveyed and granted
a security interest, and does hereby absolutely and unconditionally assign,
transfer, convey and grant a security interest unto the Mortgagee, its
successors and assigns, in and to:

 

(i)            all of its
As-Extracted Collateral located in or relating to the Mortgaged Properties
located in the county where this Mortgage is filed, including without
limitation, all As-Extracted Collateral relating to the Hydrocarbon Interests,
the Hydrocarbons and all products obtained or processed therefrom;

 

(ii)           the revenues
and proceeds now and hereafter attributable to such Mortgaged Properties,
including the Hydrocarbons, and said products and all payments in lieu, such as
“take or pay” payments or settlements; and

 

(iii)          all amounts and
proceeds hereafter payable to or to become payable to the Mortgagor or now or
hereafter relating to any part of such Mortgaged Properties and all amounts,
sums, monies, revenues and income which become payable to the Mortgagor from,
or with respect to, any of the Mortgaged Properties, present or future, now or
hereafter constituting a part of the Hydrocarbon Interests.

 

(b)           The
Hydrocarbons and products are to be delivered into pipe lines connected with
the Mortgaged Property, or to the purchaser thereof, to the credit of the
Mortgagee, for its benefit and the benefit of the Other Secured Persons, free
and clear of all taxes, charges, costs and expenses; and all such revenues and
proceeds shall be paid directly to the Mortgagee, with no duty or obligation of
any party paying the same to inquire into the rights of the Mortgagee to
receive the same, what application is made thereof, or as to any other matter.

 

(c)           The Mortgagor
agrees to perform all such acts, and to execute all such further assignments,
transfers and division orders and other instruments as may be required or
desired by the Mortgagee or any party in order to have said proceeds and
revenues so paid to the Mortgagee.  In
addition to any and all rights of a secured party under Sections 9-607 and
9-609 of the Applicable UCC, the Mortgagee is fully authorized to receive and
receipt for said revenues and proceeds; to endorse and cash any and all checks
and drafts payable to the order of the Mortgagor or the Mortgagee for the
account of the Mortgagor received from or in connection with said revenues or
proceeds and to hold the proceeds thereof in a Deposit Account with a Lender or
other acceptable commercial bank as additional collateral securing the Secured
Obligations; and to execute transfer and division orders in the name of the Mortgagor,
or otherwise, with warranties binding the Mortgagor.  All proceeds received by the Mortgagee
pursuant to this grant and assignment shall be applied as provided in Section 5.13.

 

(d)           The Mortgagee
shall not be liable for any delay, neglect or failure to effect collection of
any proceeds or to take any other action in connection therewith or hereunder;
but 

 

 

the Mortgagee shall have the right, at its election,
in the name of the Mortgagor or otherwise, to prosecute and defend any and all
actions or legal proceedings deemed advisable by the Mortgagee in order to
collect such funds and to protect the interests of the Mortgagee and/or the
Mortgagor, with all costs, expenses and attorneys’ fees incurred in connection
therewith being paid by the Mortgagor.

 

(e)           The Mortgagor
hereby appoints the Mortgagee as its attorney-in-fact to pursue any and all
rights of the Mortgagor to Liens in the Hydrocarbons securing payment of
proceeds of runs attributable to the Hydrocarbons.  In addition to the Liens granted to the
Trustee and/or the Mortgagee in Section 2.01(e), the Mortgagor hereby
further transfers and assigns to the Mortgagee any and all such Liens, security
interests, financing statements or similar interests of the Mortgagor
attributable to its interest in the As-Extracted Collateral, any other
Hydrocarbons and proceeds of runs therefrom arising under or created by said
statutory provision, judicial decision or otherwise.  The power of attorney granted to the Mortgagee
in this Section 3.01, being coupled with an interest, shall be irrevocable
until the Secured Obligations have been Paid In Full In Cash, at which time
such power of attorney shall automatically terminate without any further action
by the Mortgagor.

 

Section 3.02          No Modification
of Payment Obligations. 
Nothing herein contained shall modify or otherwise alter the obligation
of the Mortgagor to make prompt payment of all amounts constituting Secured
Obligations when and as the same become due regardless of whether the proceeds
of the As-Extracted Collateral and Hydrocarbons are sufficient to pay the same
and the rights provided in accordance with the foregoing assignment provision
shall be cumulative of all other security of any and every character now or
hereafter existing to secure payment of the Secured Obligations.  Nothing in this Article III is intended
to be an acceptance of collateral in satisfaction of the Secured Obligations.

 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The
Mortgagor hereby represents, warrants and covenants as follows:

 

Section 4.01          Title.  To the extent of the undivided interests
specified on Exhibit A, the Mortgagor has good and defensible title to and
is possessed of the Hydrocarbon Interests and has good title to the UCC
Collateral.  The Collateral is free of
any and all Liens except Permitted Encumbrances.

 

Section 4.02          Perfected
Liens; Defend Title.

 

(a)           This Mortgage
is, and always will be kept, a subsisting first Lien upon the Mortgaged
Property; and a valid, absolute assignment of the Mortgaged Property
constituting as-extracted collateral.  No
intention to subordinate the first priority Lien granted in favor of the
Mortgagee is to be hereby implied or expressed by the permitted existence of
any Excepted Liens.

 

(b)           The Liens
granted in the UCC Collateral pursuant to this Mortgage upon the filing of
financing statements in the appropriate offices in the appropriate
jurisdictions (which filings have been delivered to the Mortgagee in completed
form) will constitute valid 

 

 

perfected, first priority Liens in all of the UCC
Collateral in favor of the Mortgagee, for the ratable benefit of the Lenders,
as collateral security for the Secured Obligations, enforceable in accordance
with the terms hereof against all creditors of the Mortgagor and any Persons purporting
to purchase any UCC Collateral from the Mortgagor and are prior to all other
Liens on the UCC Collateral in existence on the date hereof except for (i) Liens
that have priority claim on the UCC Collateral by operation of law and (ii) those
financing statements filed of record in connection with joint operating
agreements prior to the date hereof.

 

(c)           The Mortgagor
will warrant and defend the title to the Collateral against the claims and
demands of all other Persons whomsoever and will maintain and preserve the Lien
created hereby (and its priority) until the Secured Obligations shall be Paid
In Full In Cash.  If (i) an adverse
claim be made against or a cloud develop upon the title to any part of the
Collateral other than a Permitted Encumbrance or (ii) any Person,
including the holder of a Permitted Encumbrance, shall challenge the priority
or validity of the Liens created by this Mortgage, then the Mortgagor agrees to
immediately defend against such adverse claim, take appropriate action to remove
such cloud or subordinate such Permitted Encumbrance, in each case, at the
Mortgagor’s sole cost and expense.  The
Mortgagor further agrees that the Trustee and/or the Mortgagee may take such
other action as they deem advisable to protect and preserve their interests in
the Collateral, and in such event the Mortgagor will indemnify the Trustee and
the Mortgagee against any and all cost, attorneys’ fees and other expenses
which they may incur in defending against any such adverse claim or taking
action to remove any such cloud.

 

Section 4.03          Not a Foreign
Person.  The Mortgagor is not a “foreign
person” within the meaning of the Code, Sections 1445 and 7701 (i.e. the
Mortgagor is not a non-resident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are defined in the
Code and any regulations promulgated thereunder).

 

Section 4.04          Power to Create
Lien and Security.  The
Mortgagor has full power and lawful authority to grant, bargain, sell, assign,
transfer, mortgage and convey a security interest in all of the Collateral in
the manner and form herein provided.  No
authorization, approval, consent or waiver of any lessor, sublessor,
Governmental Authority or other party or parties whomsoever is required in
connection with the execution and delivery by the Mortgagor of this Mortgage.

 

Section 4.05          Revenue and
Cost Bearing Interest.  The
Mortgagor’s ownership of the Hydrocarbon Interests and the undivided interests
therein as specified on Exhibit A will, after giving full effect to all
Permitted Encumbrances, afford the Mortgagor not less than those net interests
(expressed as a fraction, percentage or decimal) in the production from or
which is allocated to such Hydrocarbon Interest specified as Net Revenue
Interest on attached Exhibit A and will cause the Mortgagor to bear not
more than that portion (expressed as a fraction, percentage or decimal),
specified as Working Interest on Exhibit A, of the costs of drilling,
developing and operating the wells identified on Exhibit A except to the
extent of any proportionate corresponding increase in the Net Revenue Interest.

 

Section 4.06          Rentals Paid;
Leases in Effect.  All rentals
and royalties due and payable in accordance with the terms of any leases or
subleases comprising a part of the Mortgaged 

 

 

Property have been duly paid or provided for, and
all leases or subleases comprising a part of the Oil and Gas Property are in
full force and effect.

 

Section 4.07          Operation By
Third Parties.  If any
portion of the Mortgaged Property is comprised of interests which are not
working interests or which are not operated by the Mortgagor or one of its
Affiliates, then with respect to such interests and properties, the Mortgagor’s
covenants as expressed in this Article III are modified to require that
the Mortgagor use reasonable commercial efforts to obtain compliance with such
covenants by the working interest owners or the operator or operators of such
Mortgaged Properties.

 

Section 4.08          Failure to
Perform.  The Mortgagor agrees that if
it fails to perform any act or to take any action which it is required to
perform or take hereunder or pay any money which the Mortgagor is required to
pay hereunder, each of the Mortgagee and the Trustee, in the Mortgagor’s name
or its or their own name, may, but shall not be obligated to, perform or cause
to perform such act or take such action or pay such money, and any expenses so
incurred by either of them and any money so paid by either of them shall be a
demand obligation owing by the Mortgagor to the Mortgagee or the Trustee, as
the case may be, and each of the Mortgagee and the Trustee, upon making such
payment, shall be subrogated to all of the rights of the Person receiving such
payment.  Each amount due and owing by
the Mortgagor to each of the Mortgagee and the Trustee pursuant to this
Mortgage shall bear interest from the date of such expenditure or payment to
such Person until paid at the Post Default Rate.

 

ARTICLE V

RIGHTS AND REMEDIES

 

Section 5.01          Event of
Default.  An Event of Default under any
of the Secured Transaction Documents shall be an “Event of Default”
under this Mortgage.

 

Section 5.02          Foreclosure and
Sale.

 

(a)           If an Event of
Default shall occur and be continuing, to the extent provided by applicable
law, the Mortgagee shall have the right and option to proceed with foreclosure
by: (i) with respect to that portion of the Mortgaged Property located in
any Deed of Trust State directing the Trustee to proceed, and (ii) with
respect to that portion of the Mortgaged Property located in any Mortgage State
proceeding, with foreclosure and to sell all or any portion of such Mortgaged
Property at one or more sales, as an entirety or in parcels, at such place or
places in otherwise such manner and upon such notice as may be required by law,
or, in the absence of any such requirement, as the Mortgagee may reasonably
deem appropriate, and to make conveyance to the purchaser or purchasers.  Where the Mortgaged Property is situated in
more than one jurisdiction, notice as above provided shall be posted and filed
in all such jurisdictions (if such notices are required by law), and all such
Mortgaged Property may be sold in any such jurisdiction and any such notice
shall designate the jurisdiction where such Mortgaged Property is to be sold.  Nothing contained in this Section 5.02
shall be construed so as to limit in any way any rights to sell the Mortgaged
Property or any portion thereof by private sale if and to the extent that such
private sale is permitted under the laws of the applicable jurisdiction or by
public or private sale after entry of a judgment by any court of competent
jurisdiction so ordering.  The Mortgagor
hereby irrevocably appoints the Trustee and the 

 

 

Mortgagee,
with full power of substitution, to be the attorneys-in-fact of the Mortgagor
and in the name and on behalf of the Mortgagor to execute and deliver any
deeds, transfers, conveyances, assignments, assurances and notices which the
Mortgagor ought to execute and deliver and do and perform any and all such acts
and things which the Mortgagor ought to do and perform under the covenants
herein contained and generally, to use the name of the Mortgagor in the
exercise of all or any of the powers hereby conferred on the Trustee and/or the
Mortgagee; provided, however, that such power of attorney shall automatically
terminate without any further action by the Mortgagor at such time as the
Secured Obligations have been Paid In Full In Cash.  At any such sale: (i) whether made under
the power herein contained or any other legal enactment, or by virtue of any
judicial proceedings or any other legal right, remedy or recourse, it shall not
be necessary for the Trustee or the Mortgagee, as appropriate, to have
physically present, or to have constructive possession of, the Mortgaged
Property (the Mortgagor hereby covenanting and agreeing to deliver any portion
of the Mortgaged Property not actually or constructively possessed by the
Trustee or the Mortgagee immediately upon his or its demand) and the title to
and right of possession of any such property shall pass to the purchaser
thereof as completely as if the same had been actually present and delivered to
purchaser at such sale, (ii) each instrument of conveyance executed by the
Trustee or the Mortgagee shall contain a general warranty of title, binding
upon the Mortgagor and its successors and assigns, (iii) each and every
recital contained in any instrument of conveyance made by the Trustee or the
Mortgagee shall conclusively establish the truth and accuracy of the matters
recited therein, including, without limitation, nonpayment of the Secured
Obligations, advertisement and conduct of such sale in the manner provided
herein and otherwise by law and appointment of any successor trustee hereunder,
(iv) any and all prerequisites to the validity thereof shall be
conclusively presumed to have been performed, (v) the receipt of the
Trustee, the Mortgagee or of such other party or officer making the sale shall
be a sufficient discharge to the purchaser or purchasers for its purchase money
and no such purchaser or purchasers, or its assigns or personal
representatives, shall thereafter be obligated to see to the application of
such purchase money, or be in any way answerable for any loss, misapplication
or nonapplication thereof, (vi) to the fullest extent permitted by law,
the Mortgagor shall be completely and irrevocably divested of all of its right,
title, interest, claim and demand whatsoever, either at law or in equity, in
and to the property sold and such sale shall be a perpetual bar both at law and
in equity against the Mortgagor, and against any and all other Persons claiming
or to claim the property sold or any part thereof, by, through or under the
Mortgagor, and (vii) to the extent and under such circumstances as are
permitted by law, the Mortgagee may be a purchaser at any such public sale, and
shall have the right, after paying or accounting for all costs of said sale or
sales, to credit the amount of the bid upon the amount of the Secured
Obligations (in the order of priority set forth in Section 5.13) in lieu
of cash payment.

 

(b)           If an Event of
Default shall occur and be continuing, then (i) the Mortgagee shall be
entitled to all of the rights, powers and remedies afforded a secured party by
the Applicable UCC with reference to the UCC Collateral or (ii) the
Trustee or the Mortgagee may proceed as to any Collateral in accordance with
the rights and remedies granted under this Mortgage or applicable law in
respect of the Collateral.  Such rights,
powers and remedies shall be cumulative and in addition to those granted to the
Trustee or the Mortgagee under any other provision of this Mortgage or under
any other Loan Document.  Written notice
mailed to the Mortgagor as provided herein at least ten (10) days prior to
the date of public sale of any part of the Collateral which is personal
property subject to the provisions of the Applicable UCC, or 

 

 

prior to the date after which private sale of any
such part of the Collateral will be made, shall constitute reasonable notice.

 

Section 5.03          Substitute
Trustees and Agents.  Each of the
Trustee and the Mortgagee or its successor or substitute may appoint or
delegate any one or more Persons as agent to perform any act or acts necessary
or incident to any sale held by the Trustee or the Mortgagee, including,
without limitation, the posting of notices and the conduct of sale, but in the
name and on behalf of the Trustee or the Mortgagee or its successor or
substitute, as applicable.  If the
Trustee or the Mortgagee or its successor or substitute shall have given notice
of sale hereunder, any successor or substitute to such Person thereafter
appointed may complete the sale and the conveyance of the property pursuant
thereto as if such notice had been given by the successor or substitute trustee
conducting the sale.

 

Section 5.04          Judicial
Foreclosure; Receivership.  If
any of the Secured Obligations shall become due and payable and shall not be
promptly paid, the Trustee or the Mortgagee shall have the right and power to
proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Collateral under the judgment or decree of any court or courts
of competent jurisdiction, or for the appointment of a receiver pending any
foreclosure hereunder or the sale of the Collateral under the order of a court
or courts of competent jurisdiction or under executory or other legal process,
or for the enforcement of any other appropriate legal or equitable remedy.  Any money advanced by the Trustee and/or the
Mortgagee in connection with any such receivership shall be a demand obligation
(which obligation the Mortgagor hereby expressly promises to pay) owing by the
Mortgagor to the Trustee and/or the Mortgagee and shall bear interest from the
date of making such advance by the Trustee and/or the Mortgagee until paid at
the Post Default Rate.

 

Section 5.05          Separate Sales.  The Collateral may be sold in one or more
parcels and to the extent permitted by applicable law in such manner and order
as the Mortgagee, in its sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

 

Section 5.06          Possession of
Mortgaged Property.  If an Event
of Default shall have occurred and be continuing, then, to the extent permitted
by applicable law, the Trustee or the Mortgagee shall have the right and power
to enter into and upon and take possession of all or any part of the Collateral
in the possession of the Mortgagor, its successors or assigns, or its or their
agents or servants, and may exclude the Mortgagor, its successors or assigns, and
all Persons claiming under the Mortgagor, and its or their agents or servants
wholly or partly therefrom; and, holding the same, the Mortgagee may use,
administer, manage, operate and control the Collateral and conduct the business
thereof to the same extent as the Mortgagor, its successors or assigns, might
at the time do and may exercise all rights and powers of the Mortgagor, in the
name, place and stead of the Mortgagor, or otherwise as the Mortgagee shall
deem best.  All costs, expenses and
liabilities of every character incurred by the Trustee and/or the Mortgagee in
administering, managing, operating, and controlling the Mortgaged Property
shall constitute a demand obligation (which obligation the Mortgagor hereby
expressly promises to pay) owing by the Mortgagor to the Trustee and/or the
Mortgagee and shall bear interest from date of expenditure 

 

 

until paid at the Post Default Rate, all of which
shall constitute a portion of the Secured Obligations.

 

Section 5.07          Occupancy After
Foreclosure.  In the
event there is a foreclosure sale hereunder and at the time of such sale the
Mortgagor or the Mortgagor’s heirs, devisees, representatives, successors or
assigns or any other Person claiming any interest in the Collateral by, through
or under the Mortgagor, are occupying or using the Mortgaged Property or any
part thereof, each and all shall immediately become the tenant of the purchaser
at such sale, which tenancy shall be a tenancy from day to day, terminable at
the will of either the landlord or tenant, or at a reasonable rental per day
based upon the value of the property occupied, such rental to be due daily to
the purchaser; to the extent permitted by applicable law, the purchaser at such
sale shall, notwithstanding any language herein apparently to the contrary,
have the sole option to demand immediate possession following the sale or to
permit the occupants to remain as tenants at will.  In the event the tenant fails to surrender
possession of said property upon demand, the purchaser shall be entitled to
institute and maintain a summary action for possession of the Mortgaged
Property (such as an action for forcible entry and detainer) in any court
having jurisdiction.

 

Section 5.08          Remedies
Cumulative, Concurrent and Nonexclusive.  Every right, power, privilege and remedy
herein given to the Trustee or the Mortgagee shall be cumulative and in
addition to every other right, power and remedy herein specifically given or
now or hereafter existing in equity, at law or by statute (including specifically
those granted by the Applicable UCC in effect and applicable to the Collateral
or any portion thereof).  Each and every
right, power, privilege and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and so often and in such
order as may be deemed expedient by the Trustee or the Mortgagee, and the
exercise, or the beginning of the exercise, or the abandonment, of any such
right, power, privilege or remedy shall not be deemed a waiver of the right to
exercise, at the same time or thereafter any other right, power, privilege or
remedy.  No delay or omission by the
Trustee or the Mortgagee or any Other Secured Person in the exercise of any
right, power or remedy shall impair any such right, power, privilege or remedy
or operate as a waiver thereof or of any other right, power, privilege or
remedy then or thereafter existing.

 

Section 5.09          No Release of
Obligations.  Neither the
Mortgagor nor any other Person hereafter obligated for payment of all or any
part of the Secured Obligations shall be relieved of such obligation by reason
of (a) the failure of the Trustee to comply with any request of the
Mortgagor or any other Person so obligated to foreclose the Lien of this
Mortgage or to enforce any provision hereunder or under the Promissory Note; (b) the
release, regardless of consideration, of the Mortgaged Property or any portion
thereof or interest therein or the addition of any other property to the
Mortgaged Property; (c) any agreement or stipulation between any subsequent
owner of the Mortgaged Property and the Mortgagee extending, renewing,
rearranging or in any other way modifying the terms of this Mortgage without
first having obtained the consent of, given notice to or paid any consideration
to the Mortgagor or such other Person , and in such event the Mortgagor and all
such other Persons shall continue to be liable to make payment according to the
terms of any such extension or modification agreement unless expressly released
and discharged in writing by the Mortgagee; or (d) by any other act or
occurrence save and except the complete payment of the Secured Obligations and
the complete fulfillment of all obligations hereunder or under the Promissory
Note.

 

 

 

Section 5.10          Release of and
Resort to Collateral.  The
Mortgagee may release, regardless of consideration, any part of the Collateral
without, as to the remainder, in any way impairing, affecting, subordinating or
releasing the Lien created in or evidenced by this Mortgage or its stature as a
first and prior Lien in and to the Collateral, and without in any way releasing
or diminishing the liability of any Person or entity liable for the repayment
of the Secured Obligations.  For payment
of the Secured Obligations, the Mortgagee may resort to any other security
therefor held by the Mortgagee or the Trustee in such order and manner as the
Mortgagee may elect.

 

Section 5.11          Waiver of
Redemption, Notice and Marshalling of Assets, Etc.  To the fullest extent permitted by law, the
Mortgagor hereby irrevocably and unconditionally waives and releases (a) all
benefits that might accrue to the Mortgagor by virtue of any present or future
moratorium law or other law exempting the Collateral from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption or extension of time for
payment; (b) all notices of any Event of Default or of the Mortgagee’s
intention to accelerate maturity of the Secured Obligations or of any election
to exercise or any actual exercise of any right, remedy or recourse provided
for hereunder or under any Loan Document or available at law; and (c) any
right to a marshalling of assets or a sale in inverse order of alienation.  If any law referred to in this Mortgage and
now in force, of which the Mortgagor or its successor or successors might take
advantage despite the provisions hereof, shall hereafter be repealed or cease
to be in force, such law shall thereafter be deemed not to constitute any part
of the contract herein contained or to preclude the operation or application of
the provisions hereof.  If the laws of
any state which provides for a redemption period do not permit the redemption
period to be waived, the redemption period is specifically reduced to the
minimum amount of time allowable by statute.

 

Section 5.12          Discontinuance
of Proceedings.  If the
Trustee or the Mortgagee shall have proceeded to invoke any right, remedy or
recourse permitted hereunder or under any Loan Document or available at law and
shall thereafter elect to discontinue or abandon same for any reason, then it
shall have the unqualified right so to do and, in such an event, the parties
shall be restored to their former positions with respect to the Secured
Obligations, this Mortgage, the Promissory Note, the Collateral and otherwise,
and the rights, remedies, recourses and powers of the Trustee and the
Mortgagee, as applicable, shall continue as if same had never been invoked.

 

Section 5.13          Application of
Proceeds.  The
proceeds of any sale of the Mortgaged Property or any part thereof and all
other monies received in any proceedings for the enforcement hereof or
otherwise, whose application has not elsewhere herein been specifically provided
for, shall be applied to the payment of all reasonable expenses incurred by the
Trustee or the Mortgagee incident to the enforcement of this Mortgage, the
Promissory Note to collect any portion of the Secured Obligations (including,
without limiting the generality of the foregoing, expenses of any entry or
taking of possession, of any sale, of advertisement thereof, and of
conveyances, and court costs, compensation of agents and employees, legal fees
and a reasonable commission to the Trustee acting, if applicable), and to the
payment of all other reasonable charges, expenses, liabilities and advances
incurred or made by the Trustee or the Mortgagee under this Mortgage or in
executing any trust or power hereunder.

 

 

Section 5.14          Resignation of
Operator.  In addition
to all rights and remedies under this Mortgage at law and in equity, if any
Event of Default shall occur and the Trustee or the Mortgagee shall exercise
any remedies under this Mortgage with respect to any portion of the Mortgaged
Property (or the Mortgagor shall transfer any Mortgaged Property “in lieu of”
foreclosure) whereupon the Mortgagor is divested of its title to any of the
Collateral, the Mortgagee shall have the right to request that any operator of
any Mortgaged Property which is either the Mortgagor to resign as operator
under the joint operating agreement applicable thereto, and no later than 60
days after receipt by the Mortgagor of any such request, the Mortgagor shall
resign (or cause such other party to resign) as operator of such Collateral.

 

Section 5.15          Indemnity.  THE INDEMNIFIED PARTIES SHALL NOT BE LIABLE, IN
CONNECTION WITH ANY ACTION TAKEN, FOR ANY LOSS SUSTAINED BY THE MORTGAGOR
RESULTING FROM AN ASSERTION THAT THE MORTGAGEE HAS RECEIVED FUNDS FROM THE
PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS OR ANY ACT OR OMISSION OF
ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE
MORTGAGED PROPERTY INCLUDING SUCH LOSS WHICH MAY RESULT
FROM THE ORDINARY NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH
LOSS IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED
PARTY SEEKING INDEMNITY.  NO INDEMNIFIED
PARTY SHALL BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR
LIABILITY OF THE MORTGAGOR.  THE
MORTGAGOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY EACH INDEMNIFIED PARTY FOR,
AND TO HOLD EACH INDEMNIFIED PARTY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS
OR DAMAGE WHICH MAY OR MIGHT BE INCURRED BY ANY INDEMNIFIED PARTY BY
REASON OF THIS MORTGAGE OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER.  IF ANY INDEMNIFIED PARTY SHALL MAKE ANY
EXPENDITURE ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT
THEREOF, INCLUDING COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL
BE A DEMAND OBLIGATION (WHICH OBLIGATION THE MORTGAGOR HEREBY EXPRESSLY
PROMISES TO PAY) OWING BY THE MORTGAGOR TO SUCH INDEMNIFIED PARTY AND SHALL
BEAR INTEREST FROM THE DATE EXPENDED UNTIL PAID AT THE POST DEFAULT RATE, SHALL
BE A PART OF THE SECURED OBLIGATIONS AND SHALL BE SECURED BY THIS MORTGAGE
AND ANY OTHER LOAN DOCUMENT.  THE
MORTGAGOR HEREBY ASSENTS TO, RATIFIES AND CONFIRMS ANY AND ALL ACTIONS OF EACH
INDEMNIFIED PARTY WITH RESPECT TO THE MORTGAGED PROPERTY TAKEN UNDER AND IN
COMPLIANCE WITH THE TERMS OF THIS MORTGAGE. 
THE LIABILITIES OF THE MORTGAGOR AS SET FORTH IN THIS SECTION 5.15
SHALL SURVIVE THE TERMINATION OF THIS MORTGAGE.

 

ARTICLE VI

THE TRUSTEE

 

Section 6.01          Duties, Rights,
and Powers of Trustee.  The
Trustee shall have no duty to see to any recording, filing or registration of
this Mortgage or any other instrument in addition or supplemental thereto, or
to give any notice thereof, or to see to the payment of or be under any duty in
respect of any tax or assessment or other governmental charge which may be
levied or assessed on the Mortgaged Property, or any part thereof, or against
the Mortgagor, or to see to the performance or observance by the Mortgagor of
any of the covenants and agreements contained herein.  The Trustee shall not be responsible for the
execution, acknowledgment or validity of this Mortgage or of any instrument in
addition or supplemental hereto or for the sufficiency of the security
purported to be created hereby, and makes no representation in respect 

 

 

thereof or in respect of the rights of the
Mortgagee.  The Trustee shall have the
right to advise with counsel upon any matters arising hereunder and shall be
fully protected in relying as to legal matters on the advice of counsel.  The Trustee shall not incur any personal
liability hereunder except for the Trustee’s own gross negligence and willful
misconduct; and the Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to
be taken by him hereunder, believed by him in good faith to be genuine.

 

Section 6.02          Successor
Trustee.  The Trustee may resign by
written notice addressed to the Mortgagee or be removed at any time with or
without cause by an instrument in writing duly executed on behalf of the
Mortgagee.  In case of the death, resignation
or removal of the Trustee, a successor trustee may be appointed by the
Mortgagee by instrument of substitution complying with any applicable
Governmental Requirements, or, in the absence of any such requirement, without
other formality than appointment and designation in writing.  Written notice of such appointment and
designation shall be given by the Mortgagee to the Mortgagor, but the validity
of any such appointment shall not be impaired or affected by failure to give
such notice or by any defect therein. 
Such appointment and designation shall be full evidence of the right and
authority to make the same and of all the facts therein recited, and, upon the
making of any such appointment and designation, this Mortgage shall vest in the
successor trustee all the estate and title in and to all of the Mortgaged
Property, and the successor trustee shall thereupon succeed to all of the
rights, powers, privileges, immunities and duties hereby conferred upon the
Trustee named herein, and one such appointment and designation shall not
exhaust the right to appoint and designate a successor trustee hereunder but
such right may be exercised repeatedly as long as any Secured Obligations
remains unpaid hereunder.  To facilitate
the administration of the duties hereunder, the Mortgagee may appoint multiple
trustees to serve in such capacity or in such jurisdictions as the Mortgagee
may designate.

 

Section 6.03          Retention of
Moneys.  All moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by law) and the
Trustee shall be under no liability for interest on any moneys received by him
hereunder.

 

ARTICLE VII

MISCELLANEOUS

 

Section 7.01          Instrument
Construed as Mortgage, Etc.  With respect to any portions of the Mortgaged
Property located in any state or other jurisdiction the laws of which do not
provide for the use or enforcement of a deed of trust or the office, rights and
authority of the Trustee as herein provided, the general language of conveyance
hereof to the Trustee is intended and the same shall be construed as words of
mortgage unto and in favor of the Mortgagee and the rights and authority
granted to the Trustee herein may be enforced and asserted by the Mortgagee in
accordance with the laws of the jurisdiction in which such portion of the
Mortgaged Property is located and the same may be foreclosed at the option of
the Mortgagee as to any or all such portions of the Mortgaged Property in any
manner permitted by the laws of the jurisdiction in which such portions of the
Mortgaged Property is situated.  This
Mortgage may be construed as a mortgage, deed of trust, chattel mortgage,
conveyance, assignment, Security Agreement, pledge, 

 

 

financing statement, hypothecation or contract, or
any one or more of them, in order fully to effectuate the Lien hereof and the
purposes and agreements herein set forth.

 

Section 7.02          Releases.

 

(a)           Full Release.  If all Secured Obligations shall be Paid In
Full In Cash, the Mortgagee shall forthwith cause satisfaction and discharge of
this Mortgage to be entered upon the record at the expense of the Mortgagor and
shall execute and deliver or cause to be executed and delivered such
instruments of satisfaction and reassignment as may be appropriate.  Otherwise, this Mortgage shall remain and
continue in full force and effect.

 

(b)           Partial Release.  If any of the Mortgaged Property shall be
sold, transferred or otherwise disposed of by the Mortgagor in a transaction
permitted by the Loan Documents, then the Mortgagee, at the request and sole
expense of the Mortgagor, shall promptly execute and deliver to the Mortgagor
all releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on the Mortgaged Property.

 

(c)           Possession of
Notes.  The Mortgagor acknowledges and
agrees that possession of any note (or any replacements of any said note or
other instrument evidencing any part of the Secured Obligations) at any time by
the Borrower, the Mortgagor or any other guarantor shall not in any manner
extinguish the Secured Obligations or this Mortgage, and the Mortgagor shall
have the right to issue and reissue any of the notes from time to time as its
interest or as convenience may require, without in any manner extinguishing or
affecting the Secured Obligations or the Lien of this Mortgage.

 

Section 7.03          Severability.  If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction and the remaining provisions hereof
shall be liberally construed in favor of the Trustee, the Mortgagee and the
Other Secured Persons in order to effectuate the provisions hereof.  The invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of any such provision in any other jurisdiction.

 

Section 7.04          Successors and
Assigns.  The terms used to designate
any party or group of Persons shall be deemed to include the respective heirs,
legal representatives, successors and assigns of such parties or Persons.

 

Section 7.05          Application of
Payments to Certain Obligations.  If any part of the Secured Obligations cannot
be lawfully secured by this Mortgage or if any part of the Mortgaged Property
cannot be lawfully subject to the Lien hereof to the full extent of the Secured
Obligations, then all payments made shall be applied on said Secured Obligations
first in discharge of that portion thereof which is not secured by this
Mortgage.

 

Section 7.06          Nature of
Covenants.  The
covenants and agreements herein contained shall constitute covenants running
with the land and interests covered or affected hereby and shall be binding
upon the heirs, legal representatives, successors and assigns of the parties
hereto.

 

 

Section 7.07          Notices.  All notices, requests, consents, demands and
other communications required or permitted hereunder shall be in writing and
shall be deemed sufficiently given or furnished if delivered by registered or
certified United States mail, postage prepaid, or by personal service
(including express or courier service) at the addresses specified in Section 7.11
(unless changed by similar notice in writing given by the particular party
whose address is to be changed). Any such notice or communication shall be
deemed to have been given either at the time of personal delivery or, in the
case of delivery at the address and in the manner provided herein, upon
receipt; provided that, service of notice as required by the laws of any state
in which portions of the Mortgaged Property may be situated shall for all
purposes be deemed appropriate and sufficient with the giving of such notice.

 

Section 7.08          Counterparts.  This Mortgage is being executed in several
counterparts, all of which are identical, except that to facilitate
recordation, if the Mortgaged Property is situated in more than one county or
parish, descriptions of only those portions of the Mortgaged Property located
in the county or parish in which a particular counterpart is recorded shall be
attached as Exhibit A to such counterpart. 
Each of such counterparts shall for all purposes be deemed to be an
original and all such counterparts shall together constitute but one and the
same instrument.  Complete copies of this
Mortgage containing the entire Exhibit A have been retained by the
Mortgagee.

 

Section 7.09          Governing Law.  Insofar as permitted by otherwise applicable
law, this Mortgage shall be construed under and governed by the laws of the
State of Montana; provided, however, that, with respect to any portion of the
Mortgaged Property located outside of the State of Montana, the laws of the
place in which such property is located in, or offshore adjacent to (and State
law made applicable as a matter of Federal law), shall apply to the extent of
procedural and substantive matters relating only to the creation, perfection,
foreclosure of Liens and enforcement of rights and remedies against the
Mortgaged Property.

 

Section 7.10          Financing
Statement; Fixture Filing.  This
Mortgage shall be effective as a financing statement filed as a fixture filing
with respect to all fixtures included within the Mortgaged Property and is to
be filed or filed for record in the real estate records, mortgage records or
other appropriate records of each jurisdiction where any part of the Mortgaged
Property (including said fixtures) are situated.  This Mortgage shall also be effective as a
financing statement covering minerals or the like (including oil and gas and
all other substances of value which may be extracted from the ground) and
accounts financed at the wellhead or minehead of wells or mines (As-Extracted
Collateral) located on the properties subject to the Applicable UCC and is to
be filed for record in the real estate records, UCC records or other
appropriate records of each jurisdiction where any part of the Mortgaged
Property is situated.  In addition, the
Mortgagor shall execute and deliver to the Mortgagee, upon the Mortgagee’s
request, any financing statements or amendments thereof or continuation
statements thereto that the Mortgagee may require to perfect a security
interest in said items or types of property. 
The Mortgagor shall pay all costs of filing such instruments.

 

Section 7.11          Execution of
Financing Statements.  Pursuant to
the Applicable UCC, the Mortgagor authorizes the Mortgagee, its counsel or its
representative, at any time and from time to time, to file or record financing
statements, continuation statements, amendments thereto and other filing or
recording documents or instruments with respect to the Mortgaged Property 

 

 

without the signature of the Mortgagee in such form
and in such offices as the Mortgagee reasonably determines appropriate to
perfect the security interests of the Mortgagee under this Agreement.  The Mortgagor also authorizes the Mortgagee,
its counsel or its representative, at any time and from time to time, to file
or record such financing statements that describe the collateral covered
thereby as “all assets of the Mortgagee”, “all personal property of the
Mortgagee” or words of similar effect.

 

In
that regard, the following information is provided:

 

	
  Name
  of Debtor:

  	
  Voyager
  Oil & Gas, Inc.

  
	
  Address
  of Debtor

  	
  2812 1st Avenue North, Suite 506

  
	
   

  	
  Billings, MT 59101

  
	
   

  	
  Attention: Chief Financial Officer

  
	
  State
  of Formation/Location

  	
  Delaware

  
	
  Facsimile:

  	
  (406)
  245-4914

  
	
  Telephone:

  	
  (406)
  245-4901

  
	
   

  	
   

  
	
  Principal
  Place of

  	
   

  
	
  Business
  of Debtor:

  	
  2812 1st Avenue North, Suite 506

  
	
   

  	
  Billings, MT 59101

  
	
   

  	
   

  
	
  Name
  of Secured Party:

  	
  Bonnie
  Turpin

  
	
   

  	
  as
  Administrative Agent

  
	
  Address
  of Secured Party:

  	
  130
  Cheshire Lane, #101

  
	
   

  	
  Minnetonka,
  MN 55305

  
	
   

  	
   

  
	
  Owner
  of Record of

  	
   

  
	
  Real
  Property:

  	
  Voyager
  Oil & Gas, Inc.

  

 

Section 7.12          Exculpation
Provisions.  EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO
READ THIS MORTGAGE; AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF
THE TERMS OF THIS MORTGAGE; THAT IT HAS IN FACT READ THIS MORTGAGE AND IS FULLY
INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS
OF THIS MORTGAGE; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF
ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS
MORTGAGE; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS
MORTGAGE; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS MORTGAGE
RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE
TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY.  EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS MORTGAGE ON THE BASIS THAT THE PARTY HAD NO
NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

 

Section 7.13          References.  The words “herein,” “hereof,” “hereunder” and
other words of similar import when used in this Mortgage refer to this Mortgage
as a whole, and not to any 

 

 

particular article, section or subsection.  Any reference herein to a Section shall
be deemed to refer to the applicable Section of this Mortgage unless
otherwise stated herein.  Any reference
herein to an exhibit or schedule shall be deemed to refer to the applicable
exhibit or schedule attached hereto unless otherwise stated herein.

 

ARTICLE VIII

STATE SPECIFIC PROVISIONS

 

Section 8.01          Special North
Dakota Provisions.

 

(a)           Future
Obligations.  Future
obligations are secured by this Mortgage even though all or part may not yet be
matured. Nothing in this Mortgage, however, shall constitute a commitment to
enter into any additional or future transaction.  Any such commitment would require a separate
writing.

 

(b)           Collateral Real
Estate Mortgage.  THE PARTIES
AGREE THAT THIS MORTGAGE CONSTITUTES A COLLATERAL REAL ESTATE MORTGAGE.

 

[SIGNATURES BEGIN NEXT PAGE]

 

 

EXECUTED
this 22nd day of September, 2010, to be effective as of the 22nd day of September, 2010.

 

	
   

  	
  VOYAGER
  OIL AND GAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  James R. Reger

  
	
   

  	
  By
  James R. Reger

  
	
   

  	
  Its
  Chief Executive Officer

  

 

23Exhibit 10.1

 

 

 

AMENDED AND RESTATED CREDIT
AGREEMENT

 

Dated as of September 17,
2010

 

Among

 

GIBSON ENERGY ULC

 

as Canadian Borrower,

 

and

 

TPG TRANSPORT, LLC,

TPG LEASING, LLC,

TAYLOR TRANSFER SERVICES, LLC,

TAYLOR GAS LIQUIDS, LLC,

TAYLOR COMPANIES, LLC,

LINK PETROLEUM INC.,

GIBSON ENERGY (U.S.) INC.,

GIBSON (U.S.) HOLDCO CORP.,

GIBSON (U.S.) ACQUISITIONCO CORP.,

GIBSON (U.S.) FINCO CORP.

 

as U.S. Borrowers,

 

and

 

GIBSON ENERGY HOLDING ULC,

MOOSE JAW REFINERY ULC,

CANWEST PROPANE ULC,

MP ENERGY ULC,

GEP ULC,

GIBSON ENERGY ULC,

GIBSON FINANCE LTD.,

GIBSON GCC INC.,

MOOSE JAW REFINERY PARTNERSHIP,

CANWEST PROPANE PARTNERSHIP,

MP ENERGY PARTNERSHIP,

GIBSON ENERGY PARTNERSHIP,

CHIEF HAULING CONTRACTORS ULC,

LINK PETROLEUM SERVICES LTD.,

LINK PETROLEUM INC.,

GIBSON ENERGY (U.S.) INC.,

GEP MIDSTREAM FINANCE CORP.,

BATTLE RIVER TERMINAL LP,

BATTLE RIVER TERMINAL GP INC.,

BRIDGE CREEK TRUCKING LTD.,

 

JOHNSTONE TANK TRUCKING
LTD.,

GIBSON (U.S.) HOLDCO CORP.,

GIBSON (U.S.) ACQUISITIONCO CORP.,

GIBSON (U.S.) FINCO CORP.,

TAYLOR COMPANIES, LLC,

TPG TRANSPORT, LLC,

TPG LEASING, LLC,

TAYLOR TRANSFER SERVICES, LLC,

TAYLOR GAS LIQUIDS, LLC,

AARCAM PROPANE & CONSTRUCTION HEAT LTD.

 

as Guarantors,

 

and

 

THE FINANCIAL INSTITUTIONS
NAMED HEREIN

 

as Lenders,

 

and

 

ROYAL BANK OF CANADA

 

as Administrative Agent and
Collateral Agent,

 

and

 

ROYAL BANK OF CANADA

 

as Syndication Agent,

 

and

 

UBS SECURITIES LLC

 

as Documentation Agent,

 

and

 

RBC CAPITAL MARKETS(1) and UBS SECURITIES LLC

 

as Lead Arrangers

 

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

 

 

TABLE OF CONTENTS

 

	
  Article 1 — 
  LOANS AND LETTERS OF CREDIT

  	
  2

  
	
  1.1

  	
  Total Facility

  	
  2

  
	
  1.2

  	
  Canadian Revolving Loans

  	
  2

  
	
  1.3

  	
  U.S. Revolving Loans

  	
  6

  
	
  1.4

  	
  Letters of Credit

  	
  9

  
	
  1.5

  	
  Bank Products and Hedge
  Agreements

  	
  22

  
	
  1.6

  	
  Adjustment of Revolver
  Commitments

  	
  24

  
	
  Article 2 — 
  INTEREST AND FEES

  	
  25

  
	
  2.1

  	
  Interest

  	
  25

  
	
  2.2

  	
  Continuation and Conversion
  Elections

  	
  27

  
	
  2.3

  	
  Maximum Interest Rate

  	
  30

  
	
  2.4

  	
  Certain Fees

  	
  31

  
	
  2.5

  	
  Commitment Fees

  	
  31

  
	
  2.6

  	
  Letter of Credit Fees

  	
  31

  
	
  2.7

  	
  Interest Act (Canada)

  	
  33

  
	
  Article 3 — 
  PAYMENTS AND PREPAYMENTS

  	
  33

  
	
  3.1

  	
  Revolving Loans

  	
  33

  
	
  3.2

  	
  Termination of Facility

  	
  34

  
	
  3.3

  	
  Mandatory Prepayments of the
  Revolving Loans

  	
  34

  
	
  3.4

  	
  LIBOR Revolving Loan and BA
  Equivalent Revolving Loan Prepayments

  	
  34

  
	
  3.5

  	
  Payments by the Borrowers

  	
  35

  
	
  3.6

  	
  Payments as Revolving Loans

  	
  35

  
	
  3.7

  	
  Apportionment, Application
  and Reversal of Payments

  	
  36

  
	
  3.8

  	
  Indemnity for Returned
  Payments

  	
  41

  
	
  3.9

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

  	
  41

  
	
  3.10

  	
  Currency

  	
  42

  
	
  3.11

  	
  Excess Resulting From
  Exchange Rate Change

  	
  42

  
	
  Article 4 — 
  TAXES, YIELD PROTECTION AND ILLEGALITY

  	
  43

  
	
  4.1

  	
  Taxes

  	
  43

  
	
  4.2

  	
  Illegality

  	
  45

  
	
  4.3

  	
  Increased Costs and
  Reduction of Return

  	
  46

  
	
  4.4

  	
  Funding Losses

  	
  47

  
	
  4.5

  	
  Inability to Determine Rates

  	
  48

  
	
  4.6

  	
  Certificates of Agent

  	
  49

  
	
  4.7

  	
  Survival

  	
  49

  
	
  Article 5 — 
  BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

  	
  49

  
	
  5.1

  	
  Books and Records

  	
  49

  
	
  5.2

  	
  Financial Information

  	
  49

  
	
  5.3

  	
  Notices to the Agent

  	
  53

  
	
  5.4

  	
  Collateral Reporting

  	
  54

  
	
  Article 6 — 
  GENERAL WARRANTIES AND REPRESENTATIONS

  	
  55

  
	
  6.1

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

  	
  55

  
	
  6.2

  	
  Validity and Priority of
  Security Interest

  	
  56

  
	
  6.3

  	
  Organization and
  Qualification

  	
  56

  
	
  6.4

  	
  Corporate Name; Prior
  Transactions

  	
  56

  

 

i

 

	
  6.5

  	
  Subsidiaries

  	
  56

  
	
  6.6

  	
  Financial Statements

  	
  57

  
	
  6.7

  	
  Capitalization

  	
  57

  
	
  6.8

  	
  Solvency

  	
  57

  
	
  6.9

  	
  Real Property; Leases

  	
  57

  
	
  6.10

  	
  Brokers

  	
  57

  
	
  6.11

  	
  Governmental Authorization

  	
  57

  
	
  6.12

  	
  Proprietary Rights

  	
  58

  
	
  6.13

  	
  Bank Accounts

  	
  58

  
	
  6.14

  	
  Litigation

  	
  58

  
	
  6.15

  	
  Labour Disputes

  	
  58

  
	
  6.16

  	
  Environmental Laws

  	
  59

  
	
  6.17

  	
  No Violation of Law

  	
  59

  
	
  6.18

  	
  No Default

  	
  59

  
	
  6.19

  	
  Plans

  	
  59

  
	
  6.20

  	
  Taxes

  	
  60

  
	
  6.21

  	
  Regulated Entities; Margin
  Regulations

  	
  60

  
	
  6.22

  	
  Hedging Arrangements

  	
  60

  
	
  6.23

  	
  No Material Adverse Effect

  	
  60

  
	
  6.24

  	
  Full Disclosure

  	
  60

  
	
  6.25

  	
  Material Agreements

  	
  61

  
	
  6.26

  	
  Excluded Subsidiaries

  	
  61

  
	
  Article 7 — 
  AFFIRMATIVE AND NEGATIVE COVENANTS

  	
  61

  
	
  7.1

  	
  Taxes

  	
  61

  
	
  7.2

  	
  Legal Existence and Good
  Standing

  	
  61

  
	
  7.3

  	
  Compliance with Law and
  Agreements; Maintenance of Licenses

  	
  61

  
	
  7.4

  	
  Maintenance of Property;
  Inspection of Property

  	
  62

  
	
  7.5

  	
  Insurance

  	
  62

  
	
  7.6

  	
  Insurance Proceeds

  	
  63

  
	
  7.7

  	
  Environmental Laws

  	
  63

  
	
  7.8

  	
  Compliance with
  EPPA/ERISA/Pension Legislation

  	
  63

  
	
  7.9

  	
  Bank Accounts

  	
  64

  
	
  7.10

  	
  Amendments to Secured Note
  Facility or the Unsecured Note Facility

  	
  65

  
	
  7.11

  	
  Mergers, Consolidations or
  Sales

  	
  65

  
	
  7.12

  	
  Distributions; Capital
  Change; Restricted Investments

  	
  67

  
	
  7.13

  	
  Intentionally Deleted

  	
  69

  
	
  7.14

  	
  Guarantees

  	
  69

  
	
  7.15

  	
  Debt

  	
  69

  
	
  7.16

  	
  Prepayment; Repurchase and
  Redemption of Debt

  	
  72

  
	
  7.17

  	
  Transactions with Affiliates

  	
  72

  
	
  7.18

  	
  Use of Proceeds

  	
  73

  
	
  7.19

  	
  Business Conducted

  	
  73

  
	
  7.20

  	
  Liens

  	
  73

  
	
  7.21

  	
  Sale and Leaseback
  Transactions

  	
  73

  
	
  7.22

  	
  New Subsidiaries

  	
  73

  
	
  7.23

  	
  Fiscal Year

  	
  74

  
	
  7.24

  	
  Bank Accounts; Cash
  Management

  	
  74

  
	
  7.25

  	
  Intentionally Deleted

  	
  75

  

 

ii

 

	
  7.26

  	
  Fixed Charge Coverage Ratio

  	
  75

  
	
  7.27

  	
  Corporate Documents

  	
  75

  
	
  7.28

  	
  Intentionally Deleted

  	
  75

  
	
  7.29

  	
  Restrictive Agreements

  	
  75

  
	
  7.30

  	
  Intentionally Deleted

  	
  76

  
	
  7.31

  	
  Hedging Arrangements

  	
  76

  
	
  7.32

  	
  Special Provisions Regarding
  Accounts, Inventory and Other Collateral

  	
  76

  
	
  7.33

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

  	
  80

  
	
  7.34

  	
  Specified Contracts

  	
  80

  
	
  7.35

  	
  Further Assurances

  	
  80

  
	
  7.36

  	
  Parent Company

  	
  81

  
	
  7.37

  	
  Excluded Subsidiaries

  	
  81

  
	
  Article 8 — 
  CONDITIONS OF LENDING

  	
  81

  
	
  8.1

  	
  Conditions to Effectiveness
  on the Effective Date

  	
  81

  
	
  8.2

  	
  Conditions Precedent to Each
  Revolving Loan and Letter of Credit

  	
  85

  
	
  Article 9 — 
  DEFAULT; REMEDIES

  	
  85

  
	
  9.1

  	
  Events of Default

  	
  85

  
	
  9.2

  	
  Remedies

  	
  89

  
	
  Article 10 — 
  TERM AND TERMINATION

  	
  91

  
	
  10.1

  	
  Term and Termination

  	
  91

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

  	
  92

  
	
  11.1

  	
  Amendments and Waivers

  	
  92

  
	
  11.2

  	
  Assignments; Participations

  	
  93

  
	
  11.3

  	
  Replacement of Lenders

  	
  97

  
	
  Article 12 — 
  THE AGENT, ETC.

  	
  97

  
	
  12.1

  	
  Appointment and
  Authorization

  	
  97

  
	
  12.2

  	
  Delegation of Duties

  	
  98

  
	
  12.3

  	
  Liability of Agent

  	
  98

  
	
  12.4

  	
  Reliance by Agent

  	
  99

  
	
  12.5

  	
  Notice of Default

  	
  99

  
	
  12.6

  	
  Credit Decision

  	
  99

  
	
  12.7

  	
  Indemnification

  	
  100

  
	
  12.8

  	
  Agent in Individual Capacity

  	
  100

  
	
  12.9

  	
  Successor Agent

  	
  100

  
	
  12.10

  	
  Withholding Tax

  	
  101

  
	
  12.11

  	
  Collateral Matters

  	
  102

  
	
  12.12

  	
  Restrictions on Actions by
  Lenders; Sharing of Payments

  	
  104

  
	
  12.13

  	
  Agency for Perfection

  	
  105

  
	
  12.14

  	
  Payments by Agent to Lenders

  	
  105

  
	
  12.15

  	
   

  	
  105

  
	
  12.16

  	
  Letters of Credit; Bank
  Products; Intra Lender Issues

  	
  115

  
	
  12.17

  	
  Concerning the Collateral
  and the Related Loan Documents

  	
  118

  
	
  12.18

  	
  Field Audit and Examination
  Reports; Disclaimer by Lenders

  	
  119

  
	
  12.19

  	
  Relation Among Lenders

  	
  119

  
	
  12.20

  	
  Arranger and Other Agent

  	
  119

  

 

iii

 

	
  Article 13 — 
  GUARANTEES

  	
  120

  
	
  13.1

  	
  The Guarantees

  	
  120

  
	
  13.2

  	
  Guarantee Absolute

  	
  120

  
	
  13.3

  	
  Consents, Waivers and
  Renewals

  	
  121

  
	
  13.4

  	
  Subrogation

  	
  121

  
	
  13.5

  	
  Protection Clause

  	
  121

  
	
  13.6

  	
  Limitation on Guarantee of
  Obligations

  	
  121

  
	
  13.7

  	
  Guarantee of Payment

  	
  123

  
	
  Article 14 — 
  MISCELLANEOUS

  	
  123

  
	
  14.1

  	
  No Waivers; Cumulative
  Remedies

  	
  123

  
	
  14.2

  	
  Severability

  	
  123

  
	
  14.3

  	
  Governing Law; Choice of
  Forum; Service of Process

  	
  123

  
	
  14.4

  	
  WAIVER OF JURY TRIAL

  	
  124

  
	
  14.5

  	
  Survival of Representations
  and Warranties

  	
  125

  
	
  14.6

  	
  Other Security and
  Guarantees

  	
  125

  
	
  14.7

  	
  Fees and Expenses

  	
  125

  
	
  14.8

  	
  Judgment Interest Act

  	
  126

  
	
  14.9

  	
  Notices

  	
  126

  
	
  14.10

  	
  Waiver of Notices

  	
  127

  
	
  14.11

  	
  Binding Effect

  	
  128

  
	
  14.12

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

  	
  128

  
	
  14.13

  	
  Limitation of Liability

  	
  128

  
	
  14.14

  	
  Final Agreement

  	
  129

  
	
  14.15

  	
  Counterparts

  	
  129

  
	
  14.16

  	
  Captions

  	
  129

  
	
  14.17

  	
  Right of Setoff

  	
  129

  
	
  14.18

  	
  Confidentiality

  	
  130

  
	
  14.19

  	
  Conflicts with Other Loan
  Documents

  	
  131

  
	
  14.20

  	
  Judgment Currency

  	
  131

  
	
  14.21

  	
  Appointment of Loan Party
  Representative; Reliance Upon Authority

  	
  131

  
	
  14.22

  	
  Patriot Act Notice

  	
  132

  
	
  14.23

  	
  Intercreditor Agreement

  	
  132

  
	
  14.24

  	
  Accounting Changes

  	
  132

  
	
  14.25

  	
  Effect of Certain Errors or
  Omissions

  	
  132

  
	
  14.26

  	
  Business Corporations Act
  (Alberta)

  	
  133

  
	
  14.27

  	
  Existing Credit Agreement
  Amended and Restated

  	
  133

  

 

iv

 

ANNEXES, EXHIBITS AND
SCHEDULES

 

	
  ANNEX A

  	
  DEFINED TERMS

  
	
   

  	
   

  
	
  EXHIBIT A

  	
  FORM OF ASSIGNMENT AND ACCEPTANCE
  AGREEMENT

  
	
  EXHIBIT B

  	
  FORM OF BORROWING BASE CERTIFICATE

  
	
  EXHIBIT C

  	
  FINANCIAL STATEMENTS

  
	
  EXHIBIT D-1

  	
  FORM OF CANADIAN NOTICE OF BORROWING

  
	
  EXHIBIT D-2

  	
  FORM OF U.S. NOTICE OF BORROWING

  
	
  EXHIBIT E-1

  	
  FORM OF CANADIAN NOTICE OF
  CONTINUATION/CONVERSION

  
	
  EXHIBIT E-2

  	
  FORM OF U.S. NOTICE OF
  CONTINUATION/CONVERSION

  
	
  EXHIBIT F-1

  	
  FORM OF DESIGNATION OF CANADIAN
  DESIGNATED ACCOUNT

  
	
  EXHIBIT F-2

  	
  FORM OF DESIGNATION OF U.S. DESIGNATED ACCOUNT

  
	
  EXHIBIT G

  	
  FORM OF RESPONSIBLE OFFICERS’
  CERTIFICATE

  
	
  EXHIBIT H

  	
  FORM OF GUARANTOR ADHESION AGREEMENT

  
	
  EXHIBIT I

  	
  FORM OF PRO RATA CANADIAN LETTER OF
  CREDIT

  
	
  SCHEDULE 1.2

  	
  LENDERS’ COMMITMENTS

  
	
  SCHEDULE 6.3

  	
  ORGANIZATION AND QUALIFICATIONS

  
	
  SCHEDULE 6.4

  	
  CORPORATE NAMES; PRIOR TRANSACTIONS

  
	
  SCHEDULE 6.5

  	
  SUBSIDIARIES AND AFFILIATES

  
	
  SCHEDULE 6.7

  	
  CAPITALIZATION

  
	
  SCHEDULE 6.9

  	
  REAL ESTATE; LEASES; LOCATIONS; CHIEF
  EXECUTIVE OFFICE

  
	
  SCHEDULE 6.10

  	
  BROKER’S FEES

  
	
  SCHEDULE 6.11

  	
  GOVERNMENTAL AUTHORIZATION

  
	
  SCHEDULE 6.12

  	
  PROPRIETARY RIGHTS

  
	
  SCHEDULE 6.13

  	
  BANK ACCOUNTS

  
	
  SCHEDULE 6.14

  	
  LITIGATION

  
	
  SCHEDULE 6.15

  	
  LABOUR DISPUTES

  
	
  SCHEDULE 6.16

  	
  ENVIRONMENTAL MATTERS

  
	
  SCHEDULE 6.19

  	
  PENSION/ERISA COMPLIANCE

  
	
  SCHEDULE 6.20

  	
  TAXES

  
	
  SCHEDULE 6.25

  	
  MATERIAL AGREEMENTS

  
	
  SCHEDULE 7.11

  	
  PERMITTED SALES

  
	
  SCHEDULE 7.15

  	
  DEBT AND LIENS

  
	
  SCHEDULE 7.17

  	
  TRANSACTIONS WITH AFFILIATES

  
	
  SCHEDULE A

  	
  INTERCREDITOR AGREEMENT

  
	
  SCHEDULE B

  	
  INELIGIBLE RENTS

  

 

 

AMENDED AND RESTATED CREDIT
AGREEMENT

 

This Amended and Restated Credit Agreement,
dated as of September 17, 2010 (this “Agreement”), among the financial
institutions from time to time parties hereto (such financial institutions,
together with their respective successors and assigns, are referred to
hereinafter each individually as a “Lender” and collectively as the “Lenders”),
Royal Bank of Canada, as administrative agent and collateral agent for the
Lenders (in its capacity as administrative agent and collateral agent, together
with any successor administrative agent or collateral agent, (the “Agent”)),
Royal Bank of Canada, as syndication agent (in such capacity, the “Syndication
Agent”), Royal Bank of Canada and UBS Securities LLC as lead arrangers (in such
capacities, the “Arrangers”), UBS Securities LLC, as documentation agent (in
such capacity, the “Documentation Agent”), Gibson Energy ULC, an unlimited
liability company incorporated under the laws of the Province of Alberta, as
the Canadian borrower (the “Canadian Borrower”), Taylor Companies, LLC, TPG
Transport, LLC, TPG Leasing, LLC, each a Delaware LLC, Taylor Transfer
Services, LLC and Taylor Gas Liquids, LLC, each a Texas LLC, Link Petroleum
Inc., a Washington corporation, Gibson Energy (U.S.) Inc., Gibson (U.S.)
Acquisition Corp., Gibson (U.S.) Finco Corp. and Gibson (U.S.) Holdco Corp.,
each a Delaware corporation and each as a U.S. borrower (individually, a “U.S.
Borrower” collectively, the “U.S. Borrowers”) (Canadian Borrower and U.S.
Borrowers, each a “Borrower” and collectively, the “Borrowers”), the Borrowers,
each of their Subsidiaries and each other party identified on the title
page and signature pages hereto as guarantors (the “Guarantors”) and
each Subsidiary of the Canadian Borrower that pursuant to the provisions hereof
becomes a Guarantor hereunder after the Effective Date.

 

W I T N E S S E T H:

 

WHEREAS, amongst others, the Canadian Borrower, the
Guarantors party thereto, the Lenders party thereto, and Royal Bank of Canada,
as Agent for the Lenders, are party to that certain Credit Agreement dated as
of December 12, 2008 (in effect and as amended pursuant to a First
Amendment to Credit Agreement dated as of May 26, 2009, a Second Amendment
to Credit Agreement dated as of October 2, 2009 and a Third Amendment to
Credit Agreement dated as of January 13, 2010, the “Existing Credit
Agreement”);

 

AND WHEREAS, the Commitments of certain Persons who are Lenders
under the Existing Credit Agreement and are continuing as Lenders under this
Agreement are being modified as provided herein;

 

AND WHEREAS, the Borrowers, the Guarantors, the Agent, the
Lenders hereunder and the other parties hereto desire to amend and restate the
Existing Credit Agreement as provided herein;

 

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

 

NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable
consideration, the receipt of which is hereby

 

 

acknowledged, the Lenders, the Agent, the
Guarantors, the Borrowers and the other parties hereto, hereby agree that the
Existing Credit Agreement shall be amended and restated, without novation, in
its entirety to read as follows:

 

ARTICLE 1 — LOANS
AND LETTERS OF CREDIT

 

1.1          Total
Facility.

 

Subject to all of the terms and conditions of
this Agreement, the Lenders agree to make available a total credit facility of
up to U.S.$200,000,000 (or the Equivalent Amount thereof in CDN Dollars) to the
Borrowers from time to time during the term of this Agreement (the “Total
Facility”).  The Total Facility shall be
composed of a revolving line of credit consisting of Revolving Loans and
Letters of Credit.

 

1.2          Canadian
Revolving Loans.

 

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

 

(b)           Procedure
for Borrowing.

 

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

 

2

 

amount of less than
U.S.$10,000,000, in the case of ABR Revolving Loans, specifying:

 

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

 

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

 

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

 

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

 

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

 

(iii)          After giving effect to any Borrowing, any
continuation, or any conversion, there may not be more than ten
(10) different LIBOR Interest Periods in effect (including those related
to U.S. Revolving Loans).

 

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

 

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

 

3

 

(c)           Reliance
upon Authority.  Prior to the Effective Date, the Canadian
Borrower delivered to the Agent a notice setting forth two (2) accounts in
Canada of the Canadian Borrower (each a “Canadian Designated Account”) to which
the Agent is authorized to transfer the proceeds of the Canadian Revolving
Loans requested hereunder by the Canadian Borrower (one Canadian Designated
Account to be for transfers of proceeds of BA Equivalent Revolving Loans and
Canadian Prime Rate Revolving Loans and the other Canadian Designated Account
to be for transfers of proceeds of LIBOR Revolving Loans and ABR Revolving
Loans).  The Canadian Borrower may
designate a replacement account for either Canadian Designated Account from
time to time by written notice to the Agent in the form set out in
Exhibit F-1 duly executed by an officer of the Canadian Borrower.  Each Canadian Designated Account must be
reasonably satisfactory to the Agent. 
The Agent is entitled to rely conclusively on any person’s request for
Canadian Revolving Loans on behalf of the Canadian Borrower, so long as the
proceeds thereof are to be transferred to a Canadian Designated Account.  The Agent has no duty to verify the identity
of any individual representing himself or herself as a person authorized by the
Canadian Borrower to make such requests on its behalf.

 

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

 

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

 

(f)            Intentionally
Deleted

 

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

 

4

 

that
the amount of Canadian Revolving Loans so made on any date to the Canadian
Borrower shall not exceed Canadian Availability on such date.

 

(h)           Bank
Product Loans - Canada.  Notwithstanding anything to the contrary
herein, to the extent that, on any Oil Settlement Date or, in the BP Provider’s
discretion, on any other date, a positive net Bank Product amount is
outstanding (including after the netting by the BP Provider of any cash in any
bank accounts of the applicable Canadian Loan Party maintained at the BP
Provider in respect of the Bank Products described in clause (d) of the
definition thereof), a Notice of Borrowing shall be deemed to have been made by
the Canadian  Borrower for a Borrowing of a
Canadian  Prime Rate Revolving Loan in the amount
of such net Bank Product shortfall (or the maximum amount permitted for a
Borrowing of such Canadian Prime Rate Revolving Loans at such time), and to the
extent such maximum amount is exceeded, additional Notices of Borrowing in the
amount of such excess shall be deemed to have been made on each succeeding
Business Day until such Bank Product amount is repaid with Revolving
Loans.  Canadian Revolving Loans shall be
advanced in accordance with the terms hereof to repay net Bank Products amount,
except that when made, the amount of the Canadian Revolving Loan shall be
treated for the purposes of interest payments hereunder as outstanding by Royal
Bank on the Oil Settlement Date, and, as between the Canadian Lenders, by all
Canadian Lenders from the date settled in accordance with the terms
hereof.  In no event shall any Canadian
Lender be required to extend Canadian Revolving Loans or any other advances
pursuant to this Section 1.2(h) unless such Canadian Lender would be
required to fund Canadian Revolving Loans or other advances pursuant to
Section 1.2(a).

 

(i)            Canadian
Agent Advances.

 

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

 

5

 

and (B) if there are
four or more Lenders, the Required Lenders may at any time revoke the
authorization of the Agent to make Canadian Agent Advances.  Any such revocation must be in writing and
shall become effective prospectively upon the Agent’s and Royal Bank’s receipt
thereof.

 

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

 

(j)            Overdraft
Accommodation - Canada.

 

(i)            Subject to the limitations set forth below, Royal Bank
is authorized by the Canadian Borrower and all Canadian Lenders, from time to
time, to make Canadian Prime Rate Revolving Loans or ABR Revolving Loans to the
Canadian Borrower by permitting overdrafts to be created in favour of any
Canadian Loan Parties, in an aggregate amount outstanding at any time not to
exceed the Overdraft Accommodation Maximum Amount, less the aggregate amount
outstanding at such time of Canadian Agent Advances, but not in excess of the
Maximum Canadian Revolver Amount (any of such advances are herein referred to
as “Overdraft Accommodations”).  If at
any time the Canadian Borrower has outstanding any such Overdraft
Accommodations, the Royal Bank in its discretion has the right to require
settlement from the Canadian Lenders in accordance with their Pro Rata Shares,
in which case Royal Bank shall notify the Agent and the Canadian Borrower of
same whereupon the existence of such Overdraft Accommodations shall be deemed
to be a Notice of Borrowing (in the amount of Overdraft Accommodations
outstanding) and the provisions of Section 1.2(g) apply whether or
not any conditions of Borrowing (except that neither the Maximum Canadian
Revolver Amount nor any Canadian Lender’s Commitment may be exceeded) have been
met.

 

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

 

1.3          U.S.
Revolving Loans.

 

(a)           Amounts.  Subject to
the satisfaction of the conditions precedent set forth in Article 8, each
U.S. Lender severally, but not jointly, agrees, upon a U.S. Borrower’s request
from time to time on any Business Day during the period from the Effective Date
to the Termination Date, to make revolving loans in U.S. Dollars to U.S.
Borrowers (the “U.S. Revolving Loans”) in amounts not to exceed such U.S.
Lender’s Pro Rata Share of U.S. Availability. 
If any Borrowing by a U.S. Borrower would cause the aggregate amount of
Borrowings by the U.S. Borrowers to exceed U.S. Availability, the U.S. Lenders
may refuse to make or may otherwise restrict the making of U.S. Revolving Loans
to such U.S. Borrower as the U.S. Lenders determine until such excess has been
eliminated, subject to the Agent’s authority, in its sole discretion, to make
U.S. Agent Advances pursuant to the terms of Section 1.3(h).

 

6

 

(b)           Procedure
for Borrowing.

 

(i)            Each Borrowing by U.S. Borrowers shall be made upon
Loan Party Representative’s irrevocable written notice delivered to the Agent
in the form of a notice of borrowing (“U.S. Notice of Borrowing”) in the form
of Exhibit D-2 attached hereto and made a part hereof, which must be
received by the Agent prior to (i) 2:00 p.m. (Toronto time) three
(3) Business Days prior to the requested Funding Date (or such shorter
notice time of which the Agent has notified the Loan Party Representative), in
the case of LIBOR Revolving Loans and (ii) 1:00 p.m. (Toronto time)
one (1) Business Day prior to the requested Funding Date, in the case of
U.S. Prime Rate Revolving Loans, specifying:

 

(A)          the amount of the Borrowing, which in the case of
either a LIBOR Revolving Loan or a U.S. Prime Rate Revolving Loan, each must
equal or exceed U.S.$1,000,000 (and increments of U.S.$100,000 in excess of
such amount);

 

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

 

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

 

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

 

(ii)           After giving effect to any Borrowing, any
continuation, or any conversion, and subject to Section 1.2(b)(iii), there
may not be more than five (5) different LIBOR Interest Periods in effect
for LIBOR Revolving Loans to the U.S. Borrowers.

 

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

 

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

 

(c)           Reliance
upon Authority.  Prior to the Effective Date, Loan Party
Representative shall deliver to the Agent a notice setting forth the accounts
for each U.S.

 

7

 

Borrower
(each, a “U.S. Designated Account”) to which the Agent is authorized to
transfer the proceeds of the U.S. Revolving Loans requested hereunder by U.S.
Borrowers.  Loan Party Representative may
designate a replacement account from time to time by written notice to the
Agent in the form set out in Exhibit F-2 duly executed by an officer of
the Loan Party Representative.  All such
U.S. Designated Accounts must be reasonably satisfactory to the Agent.  The Agent is entitled to rely conclusively on
any person’s request for U.S. Revolving Loans on behalf of U.S. Borrowers, so
long as the proceeds thereof are to be transferred to a U.S. Designated
Account.  The Agent has no duty to verify
the identity of any individual representing himself or herself as a person
authorized by Loan Party Representative or a U.S. Borrower to make such
requests on its behalf.

 

(d)           No
Liability.  The Agent shall not incur any liability to
Loan Party Representative or U.S. Borrowers as a result of acting upon any
notice referred to in Sections 1.3(b) and 1.3(c), which the Agent believes
in good faith to have been given by an officer or other person duly authorized
by Loan Party Representative or a U.S. Borrower to request U.S. Revolving Loans
on its behalf.  The crediting of U.S.
Revolving Loans to a U.S. Designated Account conclusively establishes the
obligation of such U.S. Borrower to repay such U.S. Revolving Loans as provided
herein.

 

(e)           Notice
Irrevocable.  Any U.S. Notice of Borrowing (or telephonic
or electronic notice in lieu thereof) made pursuant to Section 1.3(b) shall
be irrevocable.  The U.S. Borrowers shall
be bound to borrow the funds requested therein in accordance therewith.

 

(f)            Intentionally
Deleted

 

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

 

(h)           U.S.
Agent Advances.

 

(i)            Subject to the limitations set forth below, the Agent,
acting through the Bank, is authorized by the U.S. Borrowers and the U.S.
Lenders, from time to time in the Agent’s sole discretion, while an Event of
Default has occurred and is continuing, to make U.S. Prime Rate Revolving Loans
to the U.S. Borrowers on behalf of the U.S. Lenders in an aggregate amount
outstanding at any time not to exceed U.S.$2,500,000, but not in excess of the
Maximum U.S. Revolver Amount, which the Agent, in its reasonable

 

8

 

business judgment, deems
necessary (1) to maintain, preserve or protect the Collateral, or any
portion thereof, or the U.S. Lenders’ rights under any of the Loan Documents,
(2) to enhance the likelihood of, or maximize the amount of, repayment of
the U.S. Revolving Loans and other Obligations, or (3) to pay any other
amount chargeable to the U.S. Borrowers pursuant to the terms of this
Agreement, including costs, fees and expenses as described in Section 14.7
(any of such advances are herein referred to as “U.S. Agent Advances”);
provided, that (A) if there are three Lenders, any two of them may at any
time revoke the authorization of the Agent to make U.S. Agent Advances and
(B) if there are four or more Lenders, the Required Lenders may at any
time revoke the authorization of the Agent to make U.S. Agent Advances.  Any such revocation must be in writing and
shall become effective prospectively upon the Agent’s and Bank’s receipt
thereof.

 

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

 

1.4          Letters
of Credit.

 

I.              Pro Rata Canadian LC
Accommodation

 

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

 

(b)           Pro
Rata Canadian Letter of Credit Provisions.

 

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

 

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

 

9

 

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

 

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

 

(C)           notify such Canadian Lender and the Canadian Borrower
that a valid drawing has been made and the date that the related payment under
such Pro Rata Canadian Letter of Credit 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 Pro Rata Canadian Letter of Credit, and each Pro Rata Canadian
Letter of Credit shall expressly so provide.

 

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

 

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

 

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

 

10

 

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

 

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

 

(iv)          With respect to any drawing determined by the Agent to
have been properly made under a Pro Rata Canadian Letter of Credit, each
Canadian Lender will make a payment under such Pro Rata Canadian Letter of
Credit in accordance with its liability under such Pro Rata Canadian Letter of
Credit and this Agreement, such payment to be made to the Agent. The Agent will
make any such payment available to the beneficiary of such Pro Rata Canadian
Letter of Credit by promptly crediting the amounts so received, in like funds,
to the account identified by such beneficiary in connection with such demand
for payment. Promptly following any payment by any Canadian Lender in respect
of any Pro Rata Canadian Letter of Credit, the Agent will notify the Canadian
Borrower of such payment; provided that any failure to give or delay in giving
such notice shall not relieve the Canadian Borrower of its obligation to
reimburse the Canadian Lenders with respect to any such payment. The
responsibility of the Agent and the Canadian Lenders in connection with any
draft or demand presented for payment under any Pro Rata Canadian Letter of
Credit shall, in addition to any payment obligation expressly provided for in
such Pro Rata Canadian Letter of Credit, be limited to determining that the
documents (including each draft or demand) delivered under such Pro Rata
Canadian Letter of Credit in connection with such presentment are in conformity
with such Pro Rata Canadian Letter of Credit. The Agent shall not be required
to make any payment under a Pro Rata Canadian Letter of Credit in excess of the
amount received by it from the Canadian Lenders for such payment.

 

(c)           Amounts;
Outside Expiration Date.  The Agent and Canadian Lenders shall not have
any obligation to issue any Pro Rata Canadian Letter of Credit at any time if (i) the
maximum available amount of the requested Pro Rata Canadian Letter of Credit is
greater than the Unused Letter of Credit Subfacility at such time; (ii) the
maximum available amount of the requested Pro Rata Canadian Letter of Credit
and all commissions, fees, and charges due from the requesting Canadian
Borrower in connection with the opening thereof (to the extent such
commissions, fees and charges are not paid in cash prior to or at the time of
the opening thereof) would exceed Canadian Availability at such time; or (iii) such
Pro Rata Canadian Letter of Credit has an expiration date (inclusive of any
acceptance period) on or after the third Business Day prior to the Stated
Termination Date or more than 12 months from the date of issuance; for the
avoidance of doubt, this provision does not apply to any “evergreen” or
automatic renewal provision; provided, however, no such automatic renewal shall
extend beyond the Stated Termination Date. 
With respect to any Pro Rata Canadian Letter of Credit which contains
any 

 

11

 

“evergreen”
or automatic renewal provision, Canadian Lenders shall be deemed to have consented
to any such extension or renewal unless any such Canadian Lender shall have
provided to the Agent written notice that it declines to consent to any such
extension or renewal at least thirty (30) days prior to the date on which the
Agent on behalf of the Canadian Lenders (each as to its Pro Rata Share) is
entitled to decline to extend or renew such Pro Rata Canadian Letter of
Credit.  If all of the requirements of
this Section 1.4.I are met and no Default or Event of Default has occurred
and is continuing, no applicable Canadian Lender shall decline to consent to
any such extension or renewal.

 

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

 

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

 

(ii)           As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Pro Rata Canadian Letter of Credit, and
no law, rule or regulation applicable to money center banks generally and
no request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally
shall prohibit, or request that the Canadian Lenders refrain from, the issuance
of letters of credit generally or the issuance of such Letters of Credit.

 

(e)           Issuance
of Pro Rata Canadian Letters of Credit.

 

(i)            Request for Issuance.  When requesting the issuance of
a Pro Rata Canadian Letter of Credit pursuant to the Pro Rata Canadian LC
Accommodation, the Canadian Borrower must notify the Agent of such requested
Pro Rata Canadian Letter of Credit prior to 1:00 p.m. (Toronto time) at
least two (2) Business Days prior to the proposed issuance date (or such
later date as the Agent may agree).  Such
notice shall be irrevocable and must specify the original face amount of the
Pro Rata Canadian Letter of Credit requested, the Business Day of issuance of
such requested Pro Rata Canadian Letter of Credit, whether such Pro Rata
Canadian Letter of Credit may be drawn in a single or in partial draws, the 

 

12

 

Business Day on which the
requested Pro Rata Canadian Letter of Credit is to expire, the purpose for
which such Pro Rata Canadian Letter of Credit is to be issued, the name of the
Loan Party for which such Pro Rata Canadian Letter of Credit shall be issued
(if applicable) and the beneficiary of the requested Pro Rata Canadian Letter
of Credit.  The Canadian Borrower shall
attach to such notice the proposed form of the Pro Rata Canadian Letter of
Credit.  With respect to each such notice
for a Pro Rata Canadian Letter of Credit, the Agent is hereby authorized to
complete the application with the amount of the several liability of each
Canadian Lender under the applicable Pro Rata Canadian Letter of Credit. Upon
receipt of such notice and application, the Agent shall notify each Canadian
Lender of the receipt thereof and shall promptly deliver a copy of the
completed application to the Canadian Borrower and each Canadian Lender and
advise each of them of each Canadian Lender’s Pro Rata Share of the applicable
Pro Rata Canadian Letter of Credit.

 

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

 

(iii)          No Extensions or Amendment.  The Canadian
Lenders shall not be obligated to extend or amend any Pro Rata Canadian Letter
of Credit issued pursuant hereto unless the requirements of this Section 1.4.I
are met as though a new Pro Rata Canadian Letter of Credit were being requested
and issued.

 

(f)            Payments
Pursuant to Pro Rata Canadian Letters of Credit.  Canadian Borrower agrees to
reimburse immediately the Agent or Canadian Lenders for any draw under any Pro
Rata Canadian Letter of Credit issued under this Agreement, and to pay the
Agent the amount of all other charges and fees payable to the Agent in
connection with such Pro Rata Canadian Letter of Credit promptly when due,
irrespective of any claim, setoff, defence or other right which Canadian
Borrower may have at any time against the Agent or any other Person.  Canadian Borrower hereby irrevocably
authorizes the Agent, to debit the Canadian Designated Account or any other
bank account (including any deposit, disbursement or operating account, other
than any Receipt Account) of the Canadian Borrower for the purpose of paying
all amounts due by the Canadian Borrower from time to 

 

13

 

time
for each drawing under any Pro Rata Canadian Letter of Credit, including all
charges and fees pursuant to such issuance or amendment. Furthermore, Canadian
Borrower hereby irrevocably authorizes the Agent, at its option, to (i) debit
Canadian Designated Account or any other bank account (including any deposit,
disbursement or operating account, other than any Receipt Account) of the
Canadian Borrower, or (ii) charge the Loan Account of the Canadian
Borrower for the purpose of paying all amounts due by the Canadian Borrower
from time to time to Canadian Lenders and Agent for each drawing under any Pro
Rata Canadian Letter of Credit, including all charges and fees pursuant to such
issuance or amendment of Pro Rata Canadian Letters of Credit.  Each drawing under any Pro Rata Canadian
Letter of Credit shall constitute a request by the Canadian Borrower to the
Agent for a Borrowing of a Canadian Prime Rate Revolving Loan in the amount of
such drawing.  In each case, the Funding
Date with respect to such Borrowing shall be the date of such drawing.

 

(g)           Indemnification;
Exoneration; Power of Attorney.

 

(i)            Indemnification.  In addition to amounts payable
as elsewhere provided in this Section 1.4.I, Canadian Borrower agrees to
protect, indemnify, pay and hold harmless the Canadian Lenders and the Agent
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys’ fees) which any
such indemnified Person may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Pro Rata Canadian Letter of Credit for the
account of Canadian Borrower in connection therewith, except to the extent they
are found by a final decision of a court of competent jurisdiction to have
resulted from such indemnified Person’s gross negligence, wilful misconduct or
material breach of any Loan Document. 
The Canadian Borrower’s obligations under this Section shall
survive payment of all other Obligations.

 

(ii)           Assumption of Risk by the Canadian Borrower.  As among the
Canadian Borrower, the Canadian Lenders and the Agent, Canadian Borrower
assumes all risks of the acts and omissions of, or misuse of any of the Pro
Rata Canadian Letters of Credit by, the respective beneficiaries of such Pro
Rata Canadian Letters of Credit.  In
furtherance and not in limitation of the foregoing, the Canadian Lenders and
the Agent shall not be responsible for:  (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any officer or authorized signatory of Canadian Borrower
in connection with the application for and issuance of and presentation by a
beneficiary of drafts with respect to any drawing of any of the Pro Rata
Canadian Letters of Credit believed in good faith by the Agent to be a valid,
sufficient and correct document, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Pro Rata Canadian Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
believed in good faith by the Agent 

 

14

 

to be a valid, sufficient
and correct document which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Pro Rata Canadian Letter
of Credit to comply strictly with conditions required in order to draw upon
such Pro Rata Canadian Letter of Credit; (D) errors, omissions,
interruptions, or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors
in interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Pro Rata Canadian Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Pro Rata Canadian Letter of Credit of
the proceeds of any drawing under such Pro Rata Canadian Letter of Credit; (H) any
consequences arising from causes beyond the control of the applicable Canadian
Lenders or the Agent, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Authority
or (I) the Agent’s honour of a draw for which the draw or any certificate
fails to comply, in any respect, strictly with the terms of the Pro Rata Canadian
Letter of Credit.  None of the foregoing
shall affect, impair or prevent the vesting of any rights or powers of the
Agent or any Canadian Lender under this Section 1.4.I(g).

 

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

 

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

 

(h)           Supporting
Letter of Credit; Cash Collateral.  If, notwithstanding the
provisions of Section 1.4.I(c) and Section 10.1, any Pro Rata
Canadian Letter of Credit is outstanding upon the termination of this
Agreement, then upon such termination Canadian Borrower shall deposit with each
Canadian Lender, with respect to each Pro Rata Canadian Letter of Credit issued
for the account of Canadian Borrower then outstanding, either in cash or
standby letters of credit (“Section 1.4.I 

 

15

 

Supporting
Letters of Credit”) in form and substance reasonably satisfactory to each
Canadian Lender, issued by an issuer reasonably satisfactory to the Agent, in
an amount equal to 102% of each Canadian Lender’s Pro Rata Share of the
greatest amount for which such Pro Rata Canadian Letter of Credit may be drawn
plus any fees and expenses associated with such Pro Rata Canadian Letter of
Credit, under which Section 1.4.I Supporting Letters of Credit such
Canadian Lender and Agent is entitled to draw amounts necessary to reimburse
the Agent and the applicable Canadian Lenders for payments to be made by the
Agent and such Canadian Lenders under such Pro Rata Canadian Letter of Credit
and any fees and expenses associated with such Pro Rata Canadian Letter of
Credit.  Such Section 1.4.I Supporting
Letters of Credit shall be held by each Canadian Lender and Agent, as security
for, and to provide for the payment of, the aggregate undrawn amount of such
Pro Rata Canadian Letters of Credit remaining outstanding.

 

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

 

II.            Canadian and U.S. LC
Accommodations

 

(a)           Agreement
to Issue or Cause to Issue.

 

(i)            Subject to the terms and conditions of this Agreement,
the Agent agrees to (A) cause the Canadian Letter of Credit Issuer to (and
the Canadian Letter of Credit Issuer shall) issue for the account of the
Canadian Borrower by way of direct application to Agent by Canadian Borrower
(the “Canadian LC Accommodation”), one or more standby letters of credit or
letters (each of the foregoing, a “Canadian Letter of Credit”) and/or (B) provide
credit support or other enhancement to a Canadian Letter of Credit Issuer
reasonably acceptable to the Agent which issues a Canadian Letter of Credit for
the account of the Canadian Borrower (any such credit support or enhancement
being herein referred to as a “Canadian Credit Support”) from time to time
during the term of this Agreement.

 

(ii)           Subject to the terms and conditions of this Agreement,
the Agent agrees (A) to cause the U.S. Letter of Credit Issuer to (and the
U.S. Letter of Credit Issuer shall) issue for the account of U.S. Borrowers by
way of direct application to Agent by a U.S. Borrower (the “U.S. LC
Accommodation”) one or more standby letters of credit (each of the foregoing, a
“U.S. Letter of Credit”) and/or (B) to provide credit support or other
enhancement to a U.S. Letter of Credit Issuer acceptable to the Agent which
issues a U.S. Letter of Credit for the account of U.S. Borrower (any such
credit support or enhancement being herein referred 

 

16

 

to as a “U.S. Credit Support”) from time to
time during the term of this Agreement.

 

(b)           Amounts;
Outside Expiration Date.  The Agent shall not have any obligation to
issue or cause to be issued any Letter of Credit or to provide Credit Support
for any Canadian or U.S. Letter of Credit at any time if:  (i) (x) in the case of a Canadian
Letter of Credit, the maximum available amount of the requested Canadian Letter
of Credit is greater than, the Unused Letter of Credit Subfacility at such
time; and (y) in the case of a U.S. Letter of Credit, the maximum
available amount of the requested U.S. Letter of Credit is greater than the
Unused Letter of Credit Subfacility at such time; (ii) (x) in the
case of a Canadian Letter of Credit, the maximum available amount of the
requested Canadian Letter of Credit, when aggregated with (a) the
aggregate undrawn amount of all outstanding Canadian Letters of Credit issued
under the Canadian LC Accommodation plus, without duplication, (b) the
aggregated unpaid reimbursement obligations with respect to all Canadian
Letters of Credit issued under the Canadian LC Accommodation, is greater than
U.S.$50,000,000; and (y) in the case of a U.S. Letter of Credit, the
maximum available amount of the requested U.S. Letter of Credit, when
aggregated with (a) the aggregate undrawn amount of all outstanding U.S.
Letters of Credit plus, without duplication, (b) the aggregate unpaid
reimbursement obligations with respect to all U.S. Letters of Credit, is
greater than U.S.$30,000,000; (iii) the maximum available amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
requesting Borrower in connection with the opening thereof (to the extent such
commissions, fees and charges are not paid in cash prior to or at the time of
the opening thereof) would exceed U.S. Availability or Canadian Availability,
as applicable, at such time; or (iv) such Letter of Credit has an
expiration date (inclusive of any acceptance period) on or after the third
Business Day prior to the Stated Termination Date or more than 12 months from
the date of issuance; for the avoidance of doubt, this provision does not apply
to any “evergreen” or automatic renewal provision; provided, however, no such
automatic renewal shall extend beyond the Stated Termination Date.  With respect to any Canadian or U.S. Letter
of Credit which contains any “evergreen” or automatic renewal provision, each
applicable Lender shall be deemed to have consented to any such extension or
renewal unless any such Lender shall have provided to the Agent and Letter of
Credit Issuer written notice that it declines to consent to any such extension
or renewal at least thirty (30) days prior to the date on which the applicable
Letter of Credit Issuer is entitled to decline to extend or renew such Letter
of Credit.  If all of the requirements of
this Section 1.4.II are met and no Default or Event of Default has
occurred and is continuing, no applicable Lender shall decline to consent to
any such extension or renewal.

 

(c)           Other Conditions.  In addition to conditions
precedent contained in Article 8, the obligation of the Agent to issue or
to cause to be issued any Canadian Letter of Credit or U.S. Letter of Credit or
to provide Canadian Credit Support or U.S. Credit Support for any such Letter
of Credit is subject to the following conditions precedent having been
satisfied in a manner reasonably satisfactory to the Agent:

 

17

 

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

 

(ii)           As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Canadian or U.S. Letter of Credit, and
no law, rule or regulation applicable to money center banks generally and
no request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally
shall prohibit, or request that the proposed Letter of Credit Issuer refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit.

 

(d)           Issuance
of Canadian Letters of Credit and U.S. Letters of Credit.

 

(i)            Request for Issuance.  When requesting the issuance of
a Canadian Letter of Credit or the issuance of a U.S. Letter of Credit pursuant
to the Canadian LC Accommodation or U.S. LC Accommodation, the Borrower for
whose account the Letter of Credit is to be issued must notify the Agent of
such requested Letter of Credit prior to 1:00 p.m. (Toronto time) at least
two (2) Business Days prior to the proposed issuance date (or such later
date as the Agent may agree).  Such
notice shall be irrevocable and must specify the original face amount of the
Letter of Credit requested, the Business Day of issuance of such requested
Letter of Credit, whether such Letter of Credit may be drawn in a single or in
partial draws, the Business Day on which the requested Letter of Credit is to
expire, the purpose for which such Letter of Credit is to be issued, the name
of the Loan Party for which such Letter of Credit shall be issued (if
applicable) and the beneficiary of the requested Letter of Credit.  The applicable Borrower shall attach to such
notice the proposed form of the Letter of Credit.

 

(ii)           Responsibilities
of the Agent; Issuance.  As of the Business Day immediately preceding
the issuance date of the Canadian Letter of Credit or U.S. Letter of Credit, as
applicable, the Agent shall determine the amount of the applicable Unused
Letter of Credit Subfacility and Canadian Availability or U.S. Availability, as
applicable, as of such date.  If (A) the
face amount of the requested Letter of Credit is less than the Unused Letter of
Credit Subfacility, and (B) (x) in the case of a Canadian Letter of
Credit, the maximum available amount of the requested 

 

18

 

Canadian Letter of Credit,
when aggregated with (a) the aggregate undrawn amount of all outstanding
Canadian Letters of Credit issued under the Canadian LC Accommodation plus,
without duplication, (b) the aggregated unpaid reimbursement obligations
with respect to all Canadian Letters of Credit issued under the Canadian LC
Accommodation, does not exceed U.S.$50,000,000; and (y) in the case of a
U.S. Letter of Credit, the maximum available amount of the requested U.S.
Letter of Credit, when aggregated with (a) the aggregate undrawn amount of
all outstanding U.S. Letters of Credit plus, without duplication, (b) the
aggregate unpaid reimbursement obligations with respect to all U.S. Letters of
Credit, does not exceed U.S.$30,000,000, and (C) the amount of such
requested Letter of Credit and all commissions, fees, and charges due from the
requesting Borrower in connection with the opening thereof (to the extent such
commissions, fees and charges are not paid in cash prior to or at the time of
the opening thereof) would not exceed applicable Canadian Availability or U.S.
Availability, the Agent shall cause the applicable Letter of Credit Issuer to
issue the requested Letter of Credit on the requested issuance date so long as
the other conditions hereof are met.

 

(iii)          No Extensions or Amendment.  The Agent
shall not be obligated to cause the applicable Letter of Credit Issuer to
extend or amend any Letter of Credit issued pursuant hereto unless the
requirements of this Section 1.4.II are met as though a new Canadian or
U.S. Letter of Credit were being requested and issued.

 

(e)           Payments Pursuant to Canadian Letters of Credit and
U.S. Letters of Credit .  Each Borrower agrees to reimburse immediately
the applicable Letter of Credit Issuer for any draw under any Letter of Credit
issued (under this Section 1.4.II) for the account of such Borrower and
the Agent for the account of the applicable Lenders upon any payment pursuant
to any Credit Support related to such Letter of Credit and to pay the
applicable Letter of Credit Issuer the amount of all other charges and fees
payable to such Letter of Credit Issuer in connection with such Letter of
Credit promptly when due, irrespective of any claim, setoff, defence or other
right which such Borrower may have at any time against such Letter of Credit
Issuer or any other Person.  Each Borrower
hereby irrevocably authorizes the Agent, to debit the Designated Account or any
other bank account (including any deposit, disbursement or operating account,
other than any Receipt Account) of such Borrower for the purpose of paying all
amounts due by such Borrower from time to time for each drawing under any
Canadian or U.S. Letter of Credit, including all charges and fees pursuant to
such issuance or amendment. Furthermore, applicable Borrower hereby irrevocably
authorizes the Agent, at its option, to (i) debit Designated Account or
any other bank account (including any deposit, disbursement or operating
account, other than any Receipt Account) of such Borrower, or (ii) charge
the applicable Loan Account for the purpose of paying all amounts due by the
applicable Borrower from time to time to Lenders and Agent for each drawing
under any Canadian or U.S. Letter of Credit, including all charges and fees
pursuant to such issuance or amendment of Canadian or U.S. Letters of Credit.  Each drawing under any Canadian Letter of 

 

19

 

Credit shall
constitute a request by the Canadian Borrower to the Agent for a Borrowing of a
Canadian Prime Rate Revolving Loan in the amount of such drawing.  Each drawing under any U.S. Letter of Credit
shall constitute a request by the U.S. Borrowers for whose account such U.S.
Letter of Credit was issued to the Agent for a Borrowing of a U.S. Prime Rate
Revolving Loan in the amount of such drawing. 
In each case, the Funding Date with respect to such Borrowing shall be
the date of such drawing

 

(f)           Indemnification; Exoneration; Power of Attorney.

 

(i)            Indemnification.  In addition to amounts payable
as elsewhere provided in this Section 1.4.II, each Borrower agrees to
protect, indemnify, pay and hold harmless each Letter of Credit Issuer, the
Lenders and the Agent from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys’ fees) which any such indemnified Person may incur or be subject to
as a consequence, direct or indirect, of the issuance of any Canadian or U.S.
Letter of Credit for the account of such Borrower or the provision of any
Credit Support or enhancement in connection therewith, except to the extent
they are found by a final decision of a court of competent jurisdiction to have
resulted from such indemnified Person’s, as the case may be, gross negligence,
wilful misconduct or material breach of any Loan Document.  The Borrowers’ obligations under this Section shall
survive payment of all other Obligations.

 

(ii)           Assumption of Risk by the Borrowers.  As among the
Borrowers, each Letter of Credit Issuer, the Lenders and the Agent, each
Borrower assumes all risks of the acts and omissions of, or misuse of any of
the Letters of Credit by, the respective beneficiaries of such Letters of
Credit.  In furtherance and not in
limitation of the foregoing, the Letter of Credit Issuer, the Lenders and the
Agent shall not be responsible for: (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any officer
or authorized signatory of any Borrower in connection with the application for
and issuance of and presentation by a beneficiary of drafts with respect to any
drawing of any of the Canadian or U.S. Letters of Credit believed in good faith
by the applicable Letter of Credit Issuer and Agent to be a valid, sufficient
and correct document, even if it should prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Canadian or U.S. Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, believed in good
faith by the Agent and the applicable Letter of Credit Issuer to be a valid,
sufficient and correct document which may prove to be invalid or ineffective
for any reason; (C) the failure of the beneficiary of any Canadian or U.S.
Letter of Credit to comply strictly with conditions required in order to draw
upon such Canadian or U.S. Letter of Credit; (D) errors, omissions,
interruptions, or delays in transmission or delivery of

 

20

 

any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Canadian or U.S. Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Canadian or U.S. Letter of Credit of
the proceeds of any drawing under such Canadian or U.S. Letter of Credit; (H) any
consequences arising from causes beyond the control of the applicable Lenders
or the Agent, including any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto Governmental Authority or (I) the
applicable Letter of Credit Issuer’s honour of a draw for which the draw or any
certificate fails to comply, in any respect, strictly with the terms of the
Canadian or U.S. Letter of Credit.  None
of the foregoing shall affect, impair or prevent the vesting of any rights or
powers of any Letter of Credit Issuer, the Agent or any Lender under this Section 1.4.II(f).

 

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

 

(iv)                              Intentionally deleted.

 

(v)                                 Account Party.  Each Borrower hereby authorizes
and directs each applicable Letter of Credit Issuer to name such Borrower as
the “Account Party” on each Canadian or U.S. Letter of Credit and to deliver to
the Agent all instruments, documents and other writings and property received
by such Letter of Credit Issuer pursuant to such Letter of Credit issued or to
be issued for the account of such Borrower and to accept and rely upon the
Agent’s instructions and agreements with respect to all matters arising in connection
with such Letter of Credit or the application therefor.  Notwithstanding any other term to the contrary, the Borrowers shall, at all times, be the “Applicant”
under all Letters of Credit and be responsible to pay all obligations owing
under any Letter of Credit.

 

(g)                                 Supporting Letter of Credit; Cash Collateral.  If,
notwithstanding the provisions of Section 1.4.II(b) and Section 10.1,
any Canadian Letter of Credit or U.S. Letter of Credit or Credit Support is
outstanding upon the termination of this Agreement, then upon such termination
each applicable Borrower shall deposit with the Agent, for the ratable benefit
of the Agent and the applicable Lenders, with respect to each Letter of Credit
issued for the account of such Borrower or related Credit Support then
outstanding, either in cash or standby letters of credit 

 

21

 

(“Section 1.4.II Supporting Letters of Credit”) in form and
substance reasonably satisfactory to the Agent, issued by an issuer reasonably
satisfactory to the Agent, in an amount equal to 102% of the greatest amount
for which such Canadian or U.S. Letter of Credit or Credit Support may be drawn
plus any fees and expenses associated with such Letter of Credit or Credit
Support, under which Section 1.4.II Supporting Letters of Credit Agent is
entitled to draw amounts necessary to reimburse the Agent and the applicable
Lenders for payments to be made by the Agent and such Lenders under such Letter
of Credit or Credit Support and any fees and expenses associated with such
Letter of Credit or Credit Support.  Such
Section 1.4.II Supporting Letters of Credit shall be held by the Agent,
for the ratable benefit of the Agent and the applicable Lenders, as security
for, and to provide for the payment of, the aggregate undrawn amount of such
Letters of Credit or such Credit Support remaining outstanding.

 

(h)                                 Non-Qualifying Lender Cash Collateral.  The Agent may require that a
Borrower deposit with the Agent, for the ratable benefit of the Agent and the
applicable Lenders, in cash, an amount equal to 100% of any Lender’s Pro Rata
Share of the greatest amount that may be drawn under each Canadian and U.S.
Letter of Credit (issued for the account of such Borrower or related Credit
Support then outstanding), all in form and substance reasonably satisfactory to
Agent/applicable Letter of Credit Issuer. Agent shall be entitled to withdraw
(from such cash collateral deposit(s)) an amount necessary to cover any drawn
amounts under such Letters of Credit that have not been correspondingly funded,
in accordance with the terms of this Agreement, by a Lender.

 

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

 

1.5                               Bank Products and Hedge
Agreements.

 

Borrower may request and the Agent may, in its
sole and absolute discretion, (x) arrange for Canadian Borrower and other
Canadian Loan Parties (for the account of the Canadian Borrower) to obtain Bank
Products, including Overadvances (which shall be for the Canadian Borrower
only), from the BP Provider (for as long as Agent is the BP Provider, and at
all times when the BP Provider is not the Agent, such successor Agent) (the “BP
Provider”) or the BP Provider’s Affiliates and/or (y) arrange for U.S.
Loan Parties to obtain Bank Products that are cash management products
(inclusive of the U.S. Overadvance) from the U.S. Cash Management Provider (PNC
Bank, N.A., as of the Effective Date (provided it is a Lender hereunder) and at
all times when PNC Bank, N.A. is not the U.S. Cash Management Provider, a U.S.
Lender hereunder) (the “U.S. Cash Management Provider”) and/or (z) arrange
for Loan Parties to obtain Hedge Agreements from Lenders or their Affiliates
although the Loan Parties are not required to do so.  If Bank Products are provided by the BP
Provider or an Affiliate of the BP Provider to Canadian Borrower or any
Canadian Loan Party and/or Bank Products that are cash management products are
provided by the U.S. Cash Management Provider to any U.S. Loan Party and/or 

 

22

 

Hedge Agreements are provided by Lenders or
their Affiliates to any Loan Party, Loan Parties agree to indemnify and hold
the Agent, the BP Provider, U.S. Cash Management Provider and the other Lenders
harmless from any and all costs and obligations now or hereafter incurred by
the Agent, the BP Provider, U.S. Cash Management Provider or any other Lender
which arise from any indemnity given by the Agent, the BP Provider, U.S. Cash
Management Provider or such other Lender, as the case may be, to its Affiliates
related to such Bank Products; provided, however, (i) the foregoing
indemnity shall not extend to any costs or obligations with respect to a Bank
Product or Hedge Agreement provided by an Affiliate of the BP Provider or an
Affiliate of such Lender for which any Loan Party would not be liable (without
giving effect to the benefit of any setoff, defence or counterclaim available
to any Loan Party) and (ii) nothing contained herein is intended to limit
any Loan Party’s rights, with respect to the BP Provider, Lenders or their
Affiliates or their respective Affiliates, if any, which arise as a result of
the execution of documents by and between any Loan Party and the BP Provider,
Lenders or their Affiliates, as applicable, which relate to Bank Products.  The agreements contained in this Section shall
survive termination of this Agreement as to Bank Products and other Hedge
Agreements by Lenders outstanding on the date of such termination; provided,
however, that it is the intention of the BP Provider and the Lenders that
unless otherwise agreed by the Agent in its sole discretion, no Bank Product or
other Hedge Agreements may have a term that exceeds the Stated Termination
Date.  Loan Parties acknowledge and agree
that Canadian Borrower and any other Canadian Loan Party obtaining of Bank
Products from the BP Provider, or any of its Affiliates, or Loan Parties
obtaining Hedge Agreements from the Lenders, or any of their respective
Affiliates, or U.S. Loan Parties obtaining Bank Products that are cash
management products (inclusive of the U.S. Overadvance) from the U.S. Cash
Management Provider, (a) is in the sole and absolute discretion of the BP
Provider, U.S. Cash Management Provider, the Lenders or the applicable
Affiliate of the BP Provider or the Lenders, as the case may be, (b) is
subject to all rules and regulations of the BP Provider, U.S. Cash
Management Provider, the Lenders or the applicable Affiliate of the BP Provider
or the Lenders, as the case may be, and (c) shall be for the account of
the Canadian Borrower and any other Loan Party for whom such Bank Product may
be provided (it being agreed that the Canadian Borrower and such other Loan
Party shall be jointly and severally liable for same).

 

Notwithstanding any other terms hereof:

 

(a)                                  The Borrower (in consultation with the particular Lender) may request
that the Agent, and the Agent shall from time to time, allocate portions of the
Hedging Sublimit between the Lenders (and their respective Affiliates) (each an
“Allocated Amount”); provided that (y) the aggregate of all Allocated
Amounts does not exceed the Hedging Sublimit, and (z) the Allocated Amount
of a Lender (and its Affiliates) may not be reduced below such Lender’s (and
its Affiliates) Hedging Amount last reported to the Agent in writing; and

 

(b)                                 No distribution under Section 3.7 (or otherwise) shall be made in
respect of any Hedging Amount or other amounts owing under Hedging Agreements
due to any Lender in excess of the lesser of (i) the Hedging Amount
previously advised to the Agent in writing and (ii) the Allocated Amount
of such Lender, until all other Obligations (other than all such excesses) due
to the Agent and Lenders have first been paid.

 

23

 

1.6                               Adjustment of Revolver
Commitments.

 

(a)                                  The Loan Party Representative may, by written notice to the Agent,
request that the Agent and the Lenders increase or decrease the Maximum
Canadian Revolver Amount (a “Canadian Revolver Commitment Adjustment”), which
request shall be granted provided that each of the following conditions are
satisfied:  (i) only two Canadian
Revolver Commitment Adjustments may be made in any Fiscal Year (such adjustment
to be made within 30 days of the delivery of the Responsible Officer’s
Certificate contemplated by Section 5.2(d) (with respect to delivery
under Section 5.2(b)) and a Borrowing Base Certificate contemplated by Section 5.2(k),
in each case, for the most recently ended month, (ii) the written request
for a Canadian Revolver Commitment Adjustment must be received by the Agent at
least three (3) Business Days prior to the requested date (which shall be
a Business Day) of the effectiveness of such Canadian Revolver Commitment
Adjustment (such date of effectiveness, the “Adjustment Date”), (iii) no
Default or Event of Default shall have occurred and be continuing as of the
date of such request or both immediately before and after giving effect thereto
as of the Adjustment Date, (iv) any increase in the Maximum Canadian
Revolver Amount shall result in a Dollar-for-Dollar decrease in the Maximum
U.S. Revolver Amount, and vice-versa for any decrease in the Maximum Canadian
Revolving Amount pursuant to this Section, (v) in no event shall the
Canadian Revolving Credit Commitment plus the U.S. Revolving Credit Commitment
exceed the Maximum Revolver Amount, (vi) the Maximum U.S. Revolver Amount
shall at no time exceed U.S.$30,000,000, (vii) no Canadian Revolver
Commitment Adjustment shall be permitted if, after giving effect thereto, an
Overadvance or U.S. Overadvance would exist, and (viii) the Agent shall
have received a certificate of the Loan Party Representative dated as of the
Adjustment Date certifying the satisfaction of all such conditions (including
calculations thereof in reasonable detail) and otherwise in form and substance
reasonably satisfactory to the Agent. 
Any such Canadian Revolver Commitment Adjustment shall be in an amount
equal to U.S.$5,000,000 or a multiple of U.S$500,000 in excess thereof and
shall concurrently increase or reduce, as applicable, (1) the aggregate
U.S. Revolving Credit Commitments then in effect pro rata among the U.S.
Lenders and (2) the aggregate Canadian Revolving Credit Commitments then
in effect pro rata among the Canadian Lenders. 
After giving effect to any Canadian Revolver Commitment Adjustment, the
Canadian Revolving Credit Commitment of each Canadian Lender shall be equal to
such Canadian Lender’s Pro Rata Share of the amount of the Maximum Canadian
Revolver Amount.

 

(b)                                 The Agent shall promptly inform the Lenders of any request for a
Canadian Revolver Commitment Adjustment made by the Loan Party
Representatives.  If the conditions set
forth in clause (a) above are not satisfied on the applicable Adjustment
Date (or, to the extent such conditions relate to an earlier date, such earlier
date), the Agent shall notify the Loan Party Representative in writing that the
requested Canadian Revolver Commitment Adjustment will not be effectuated;
provided, however, that the Agent shall in all cases be entitled to rely
(without liability) on the certificate delivered by the Loan Party
Representative pursuant to clause (a) (ix) immediately above in
making its determination as to 

 

24

 

the
satisfaction of such conditions.  On each
Adjustment Date, the Agent shall notify the Lenders and the Loan Party
Representative, on or before 3:00 p.m. (Toronto time), by telecopier, e-mail
or telex, of the occurrence of the Canadian Revolver Commitment Adjustment to
be effected on such Adjustment Date, the amount of Revolving Loans held by each
Lender as a result thereof, the amount of the U.S. Revolving Credit Commitment
of each U.S. Lender and the amount of the Canadian Revolving Credit Commitment
of each Canadian Lender as a result thereof.

 

ARTICLE 2 — INTEREST
AND FEES

 

2.1                               Interest.

 

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

 

25

 

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

 

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

 

(iii)                               For all U.S. Prime Rate Revolving Loans and other
Obligations of the U.S. Borrowers (other than LIBOR Revolving Loans) at a
fluctuating per annum rate equal to the U.S. Prime Rate plus the Applicable
Margin;

 

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

 

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

 

Each change in the U.S. Prime Rate shall be
reflected in the interest rate applicable to U.S. Prime Rate Revolving Loans
and other Obligations bearing interest based on the U.S. Prime Rate as of the
effective date of such change and each change in the Canadian Prime Rate shall
be reflected in the interest rate applicable to Canadian Prime Rate Revolving
Loans and other Obligations bearing interest based in the Canadian Prime Rate
as of the effective date of such change and each change in the ABR shall be
reflected in the interest rate applicable to ABR Revolving Loans and other
Obligations bearing interest on the ABR as of the effective date of such
change.  All interest charges on Canadian
Prime Rate Loans, U.S. Prime Rate Loans, ABR Revolving Loans and BA Equivalent
Loans shall be computed on the basis of a year of 365 or 366 days, as
applicable, and actual days elapsed.  All
other interest charges shall be computed on the basis of a year of 360 days and
actual days elapsed.  Each U.S. Borrower
shall pay to the Agent, for the ratable benefit of the U.S. Lenders, interest
accrued on all U.S. Prime Rate Revolving Loans made to such U.S. Borrower in
arrears on the first day of each month and on the Termination Date.  Each Borrower shall pay to the Agent, for the
ratable benefit of the U.S. Lenders or the Canadian Lenders, as applicable,
interest on all LIBOR Revolving Loans made to such Borrower in arrears on the
last day of each LIBOR Interest Payment Date; provided, however, that if any
LIBOR Interest Period exceeds three months, the respective dates that fall
every three months after the beginning of such LIBOR Interest Period shall also
be LIBOR Interest Payment Dates.  The
Canadian Borrower shall pay to the Agent, for the ratable benefit of the
Canadian Lenders, (i) interest accrued on all Canadian Prime Rate
Revolving Loans and all ABR Revolving Loans in arrears on the first day of each
month and on the Termination Date and (ii) interest on all BA Equivalent
Revolving Loans in arrears on each BA Equivalent Interest Payment Date.

 

(b)                                 Default Rate.  If any Event of Default listed in Subsections
9.1(a), 9.1(c)(i) (as regards a default in connection with Section 7.26),
9.1(e), 9.1(f), 9.1(g), 9.1(h) or 9.1(i) occurs and is continuing and
the Agent or the Required Lenders in their discretion so elect, then, while any
such Event of Default is continuing, and, after notification of the Canadian
Borrower and/or the U.S. Borrowers, all of the outstanding Revolving Loans and
Letters of Credit shall bear interest at the Default Rate applicable thereto;
provided that no amount paid by Borrowers pursuant to this Section 2.1(b) shall
be made available by Agent to a Defaulting 

 

26

 

Lender
so long as such Lender shall be a Defaulting Lender; provided that if such
Defaulting Lender is a Defaulting Lender at the time it is removed or replaced
pursuant to the terms of Section 11.3 and/or Section 12.15(e), any
such amount previously paid to the Agent, at the time such lender is a
Defaulting Lender, but not made available to such Defaulting Lender shall
promptly be returned to the applicable Borrower.

 

2.2                               Continuation and Conversion
Elections.

 

(a)                                  Canadian Revolving Loans.

 

(i)                                     The Canadian Borrower may:

 

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

 

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

 

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

 

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

 

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

 

27

 

(ii)                                  The Canadian Borrower shall deliver a notice of
continuation/conversion (“Canadian Notice of Continuation/Conversion”) in the
form of Exhibit E-1 attached hereto and made a part hereof to the Agent
not later than 2:00 p.m. (Toronto time) at least two (2) Business
Days in advance of the Canadian Continuation/Conversion Date (or such shorter
notice time of which the Agent has notified the Canadian Borrower), if the
Canadian Revolving Loans of the Canadian Borrower are to be converted into or
continued as BA Equivalent Revolving Loans, and at least three (3) Business
Days in advance of the Canadian Continuation/Conversion Date (or such shorter
notice time of which the Agent has notified the Canadian Borrower), if the
Canadian Revolving Loans of the Canadian Borrower are to be converted into or
continued as LIBOR Revolving Loans, and specifying:

 

(A)                              the proposed Canadian Continuation/Conversion Date;

 

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

 

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

 

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

 

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

 

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

 

(v)                                 The Agent will promptly notify each Canadian Lender of
its receipt of a Canadian Notice of Continuation/Conversion.  All conversions and continuations shall be
made ratably according to the respective 

 

28

 

outstanding principal
amounts of the Canadian Revolving Loans with respect to which the notice was
given held by each Canadian Lender.

 

(vi)                              As set forth in Section 1.2(b)(ii), there may not
be more than ten (10) different BA Equivalent Interest Periods in effect
hereunder at any time.

 

(vii)                           As set forth in Section 1.2(b)(iii), there may
not be more than ten (10) different LIBOR Interest Periods in effect hereunder
at any time (including those related to U.S. Revolving Loans).

 

(b)                                 U.S. Revolving Loans.

 

(i)                                     U.S. Borrowers may:

 

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

 

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

 

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

 

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

 

(A)                              the proposed U.S. Continuation/Conversion Date;

 

(B)                                the aggregate amount of U.S. Revolving Loans of such
U.S. Borrower to be converted or renewed;

 

29

 

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

 

(D)                               the duration of the requested LIBOR Interest Period,
provided, however, U.S. Borrowers may not select a LIBOR Interest Period that
ends after the Stated Termination Date.

 

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

 

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

 

(v)                                 As set forth in Section 1.3(b)(ii), there may not
be more than five (5) different LIBOR Interest Periods in effect
hereunder, for LIBOR Revolving Loans to the U.S. Borrowers (collectively), at
any time.

 

2.3                               Maximum Interest Rate.

 

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

 

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

 

30

 

2.4                               Certain Fees.

 

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

 

2.5                               Commitment Fees.

 

(a)                                  Canadian Commitment Fee.  On the first day of each month and on the
Termination Date, the Canadian Borrower agrees to pay to the Agent, for the
account of the Canadian Lenders, in accordance with their respective Pro Rata
Shares, a commitment fee (the “Canadian Commitment Fee”) at a per annum rate
equal to the Applicable Margin in effect from time to time, times the amount by
which the Maximum Canadian Revolver Amount exceeded the sum of (a) the
average daily outstanding amount of Canadian Revolving Loans other than Overdraft
Accommodations plus (b) the average utilization (in the period) of the Overdraft Accommodations and
the average daily undrawn amount of outstanding Canadian Letters of Credit and
Pro Rata Canadian Letters of Credit during the immediately preceding month or
shorter period if calculated for the first month hereafter or on the
Termination Date.  The Canadian
Commitment Fee shall be computed on the basis of a 365 or 366 day year, as
applicable, for the actual number of days elapsed and shall accrue daily.

 

(b)                                 U.S. Commitment Fee.  On the first day of each month and on the
Termination Date, the U.S. Borrowers agree, on a joint and several basis, to
pay to the Agent, for the account of the U.S. Lenders, in accordance with their
respective Pro Rata Shares, a commitment fee (the “U.S. Commitment Fee”) at a
per annum rate equal to the Applicable Margin in effect from time to time,
times the amount by which the Maximum U.S. Revolver Amount exceeded the sum of (a) the
average daily outstanding amount of U.S. Revolving Loans plus (b) the
average daily undrawn amount of outstanding U.S. Letters of Credit during the
immediately preceding month or shorter period if calculated for the first month
hereafter or on the Termination Date. 
The U.S. Commitment Fee shall be computed on the basis of a 360 day
year, for the actual number of days elapsed and shall accrue daily.

 

(c)                                  Notwithstanding the foregoing, no Commitment Fee shall accrue on any of
the Commitments of a Defaulting Lender from and when, and so long as, such Lender
shall be a Defaulting Lender.

 

2.6                               Letter of Credit Fees.

 

(a)                                  The Canadian Borrower agrees to pay (x) to the Agent, for the
account of the Canadian Lenders, in accordance with their respective Pro Rata
Shares, for each Pro Rata Canadian Letter of Credit issued for the account of
the Canadian Borrower, a fee (the “Pro Rata Canadian Letter of Credit Fee”) at
a per annum rate equal to the Applicable Margin in effect from time to time
(with respect to LIBOR Revolving Loans) on the undrawn amount of such Pro Rata
Canadian Letter of Credit from time to time, and (y) to Agent and each
Canadian Lender, all out of pocket costs, fees and expenses incurred or charged
by Agent and each 

 

31

 

Lender
in connection with the application for, processing of, issuance or extension
of, drawing under, or amendment to, any Pro Rata Canadian Letter of
Credit.  The Pro Rata Canadian Letter of
Credit Fee with respect to a Pro Rata Canadian Letter of Credit shall be
payable monthly in arrears on the first day of each month following the month
in which such Pro Rata Canadian Letter of Credit is issued and on the
Termination Date.  The Pro Rata Canadian
Letter of Credit Fee shall be computed on the basis of a 365 day year for the
actual number of days elapsed. The fees and costs itemized in (y) above
with respect to a Pro Rata Canadian Letter of Credit shall be payable upon the
issuance, extension, drawing or amendment, as applicable, of such Letter of
Credit.

 

(b)                                 The Canadian Borrower agrees to pay (x) to the Agent, for the
account of the Canadian Lenders, in accordance with their respective Pro Rata
Shares, for each Canadian Letter of Credit issued for the account of the
Canadian Borrower, a fee (the “Canadian Letter of Credit Fee”) at a per annum
rate equal to the Applicable Margin in effect from time to time (with respect
to LIBOR Revolving Loans) on the undrawn amount of such Canadian Letter of
Credit from time to time, (y) to the Canadian Letter of Credit Issuer, for
its own account, for each Canadian Letter of Credit issued for the account of
the Canadian Borrower, a fee (the “Canadian Fronting Fee”) at a per annum rate
equal to the greater of (i) 25 basis points on the undrawn amount of such
Canadian Letter of Credit from time to time, and (ii) U.S. $500, and (z) to
Canadian Letter of Credit Issuer, all out of pocket costs, fees and expenses
incurred or charged by Canadian Letter of Credit Issuer in connection with the
application for, processing of, issuance or extension of, drawing under, or
amendment to, any Canadian Letter of Credit. 
The Canadian Letter of Credit Fee and Canadian Fronting Fee with respect
to a Canadian Letter of Credit shall be payable monthly in arrears on the first
day of each month following the month in which such Canadian Letter of Credit
is issued and on the Termination Date. 
The Canadian Letter of Credit Fee and Canadian Fronting Fee shall be
computed on the basis of a 365 day year for the actual number of days elapsed.
The fees and costs itemized in (z) above with respect to a Canadian Letter
of Credit shall be payable upon the issuance, extension, drawing or amendment,
as applicable, of such Canadian Letter of Credit.

 

(c)                                  U.S. Borrowers agree to pay (x) to the Agent, for the account of
the Lenders, in accordance with their respective Pro Rata Shares, for each U.S.
Letter of Credit issued for the account of the U.S. Borrowers, a fee (the “U.S.
Letter of Credit Fee”) at a per annum rate equal to the Applicable Margin in
effect from time to time (with respect to LIBOR Revolving Loans) on the undrawn
amount of such U.S. Letter of Credit from time to time, (y) to the U.S.
Letter of Credit Issuer, for its own account, for each U.S. Letter of Credit
issued for the account of the U.S. Borrowers, a fee (the “U.S. Fronting Fee”)
at a per annum rate equal to the greater of (i) 25 basis points on the
undrawn amount of such U.S. Letter of Credit from time to time, and (ii) U.S.
$500, and (z) to U.S. Letter of Credit Issuer, all out of pocket costs,
fees and expenses incurred or charged by U.S. Letter of Credit Issuer in
connection with the application for, processing of, issuance or extension of,
drawing under, or amendment to, any U.S. Letter of Credit.  The U.S. Letter of Credit Fee and U.S.
Fronting Fee with respect to a U.S. Letter of Credit shall be 

 

32

 

payable
monthly in arrears on the first day of each month following the month in which
such U.S. Letter of Credit is issued and on the Termination Date.  The U.S. Letter of Credit Fee and U.S.
Fronting Fee shall be computed on the basis of a 360 day year for the actual
number of days elapsed. The fees and costs itemized in (z) above with
respect to a U.S. Letter of Credit shall be payable upon the issuance, extension,
drawing or amendment, as applicable, of such Letter of Credit.

 

2.7                               Interest Act (Canada).

 

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

 

ARTICLE 3 — PAYMENTS
AND PREPAYMENTS

 

3.1                               Revolving Loans.

 

(a)                                  The Canadian Borrower shall repay the outstanding principal balance of
the Canadian Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date.  The Canadian
Borrower may prepay Canadian Revolving Loans made to it at any time, and reborrow
subject to the terms of this Agreement. 
Subject to Section 3.11, in addition, and without limiting the
generality of the foregoing, upon demand the Canadian Borrower shall pay to the
Agent within five (5) Business Days of such demand, for the account of the
Canadian Lenders, the amount, without duplication, by which the Aggregate
Canadian Revolver Outstandings (excluding amounts for unpaid reimbursement
obligations under Letters of Credit issued to Canadian Borrower that have been
cash collateralized or supported by a back to back Letter of Credit (all on
terms acceptable to the Agent)) exceeds the lesser of (x) the Canadian
Borrowing Base, and (y) the Maximum Canadian Revolver Amount.

 

(b)                                 U.S. Borrowers shall repay the outstanding principal balance of the U.S.
Revolving Loans made to them, plus all accrued but unpaid interest thereon, on
the Termination Date.  U.S. Borrowers may
prepay U.S. Revolving Loans made to them at any time, and reborrow subject to
the terms of this Agreement.  Subject to Section 3.11,
in addition, and without limiting the generality of the foregoing, upon demand
the U.S. Borrower, shall pay to the Agent within five (5) Business Days,
for the account of the U.S. Lenders, the amount, without duplication, by which
the Aggregate U.S. Revolver Outstandings (excluding amounts for unpaid
reimbursement obligations under Letters of Credit issued to U.S. Borrowers that
have been cash collateralized or supported by a back to back Letter of Credit
(all 

 

33

 

on
terms acceptable to the Agent)) exceeds the lesser of (x) the U.S.
Borrowing Base, and (y) the Maximum U.S. Revolver Amount.

 

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

 

3.2                               Termination of Facility.

 

The Canadian Borrower may terminate this
Agreement or reduce the Commitments hereunder (in accordance with the terms of
this Agreement) upon at least thirty (30) days’ notice to the Agent and the
Lenders (or such shorter period as the Agent and the Canadian Borrower may
reasonably agree), upon (a) the payment in full of all outstanding
Revolving Loans, together with accrued interest thereon, and the cancellation
and return of all outstanding Letters of Credit (or, to the extent not so
cancelled and returned, the deposit with the Agent and/or the Lenders of cash
or Supporting Letters of Credit for such outstanding Letters of Credit (or related
Credit Support) in accordance with and as required by Section 1.4.I(h) and
1.4.II(g)), (b) the payment in full in cash of all reimbursable expenses
and other Obligations (other than Contingent Obligations), and (c) with
respect to any LIBOR Revolving Loans and BA Equivalent Revolving Loans prepaid,
payment of the amounts due under Section 4.4, if any.  In connection with any such permitted
termination by the Canadian Borrower, the Agent shall provide a customary form
of payoff letter setting forth all amounts due to the Agent and the Lenders
hereunder, which payoff letter shall include (i) Agent’s termination of
Agent’s Liens, the Security Documents and the Intercreditor Agreement and
release of all Collateral, (ii) its agreement to execute and deliver, at
Borrowers’ sole expense, such release documents as may be reasonably necessary
to reflect such termination, release and repayment, and (iii) the express
statement that certain indemnities that survive termination of this Agreement
pursuant to this Agreement continue.

 

3.3                               Mandatory Prepayments of the
Revolving Loans.

 

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

 

3.4                               LIBOR Revolving Loan and BA
Equivalent Revolving Loan Prepayments.

 

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

 

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

 

34

 

3.5                               Payments by the Borrowers.

 

(a)

 

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

 

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

 

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

 

3.6                               Payments as Revolving Loans.

 

(a)                                  At the election of the Agent, all payments of principal of Canadian
Revolving Loans, interest on Canadian Revolving Loans, reimbursement
obligations in connection with Pro Rata Canadian Letters of Credit, Canadian
Letters of Credit and Canadian Credit Support for Canadian Letters of Credit,
fees, premiums, reimbursable expenses and other sums payable hereunder or under
any other Loan Document by the Canadian Borrower may be paid from the proceeds
of Canadian Revolving Loans made hereunder. 
The Canadian Borrower hereby irrevocably authorizes the Agent, at its
option, to (i) debit any Designated Account or any other bank account
(including any deposit, disbursement or operating account, other than any
Receipt Account) of the Canadian Borrower maintained at Royal Bank for the
purpose of paying all amounts from time to time due by the Canadian Borrower
hereunder or due under any other Loan Document, or (ii) subject to Section 1.2(a) and
Section 8.2 hereof, charge the
Loan Account of the 

 

35

 

Canadian
Borrower for the purpose of paying all amounts from time to time due by the
Canadian Borrower hereunder or under any other Loan Document and agrees that
all such amounts charged shall constitute Canadian Revolving Loans (including
Canadian Agent Advances and Overdraft Accommodations).

 

(b)                                 At the election of the Agent, all payments of principal of U.S.
Revolving Loans, interest on U.S. Revolving Loans, reimbursement obligations in
connection with U.S. Letters of Credit and U.S. Credit Support for U.S. Letters
of Credit, fees, premiums, reimbursable expenses and other sums payable
hereunder or under any other Loan Document by U.S. Borrowers may be paid from
the proceeds of U.S. Revolving Loans made hereunder.  U.S. Borrowers hereby irrevocably authorize
the Agent at its option, to (i) debit any Designated Account or any other
bank account (including any deposit, disbursement or operating account, other
than any Receipt Account) of the U.S. Borrowers maintained at the U.S. Cash
Management Provider for the purpose of paying all amounts from time to time due
by the U.S. Borrowers hereunder or due under any other Loan Document, or (ii) subject
to Section 1.2(a) and Section 8.2 hereof, charge the Loan
Account of U.S. Borrowers for the purpose of paying all amounts from time to
time due by U.S. Borrowers hereunder or under any other Loan Document and
agrees that all such amounts charged shall constitute U.S. Revolving Loans
(including U.S. Agent Advances).

 

3.7                               Apportionment, Application and
Reversal of Payments.

 

(a)                                  Principal and interest payments in respect of Canadian Revolving Loans
shall be apportioned ratably among the Canadian Lenders (according to the
unpaid principal balance of the Canadian Revolving Loans to which such payments
relate held by each Canadian Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Canadian Lenders, except for fees
payable by the Canadian Borrower solely to the Agent, the BP Provider, Royal
Bank, each Lender (in respect of Pro Rata Canadian Letters of Credit) or the
Canadian Letter of Credit Issuer.  All
payments by the Canadian Borrower in respect of Obligations (other than
Obligations under Bank Products, which shall be remitted directly to the BP
Provider and Obligations under Hedge Agreements, which shall be remitted
directly to the Lender who is a counterparty to such Hedge Agreement with the
Canadian Borrower or any other Canadian Loan Party) shall be remitted to the
Agent (except as expressly provided herein otherwise) and all such payments (to
the extent not relating to principal or interest of specific Canadian Revolving
Loans, or not constituting payment of specific fees or expenses) and all
proceeds of Accounts or other Collateral of the Canadian Loan Parties received
by the Agent, shall be applied, ratably, subject to the provisions of this
Agreement (including, in the case of Bank Products, the definition thereof and Section 1.5):

 

(i)                                     So long as no Event of Default has occurred and is
continuing:  first, to pay any fees,
indemnities or expense reimbursements (other than any amounts relating to Bank
Products), then due to the Agent or any of its Affiliates from the Canadian
Borrower; second, to pay any fees or expense reimbursements (other than any
amounts relating to Bank Products that are 

 

36

 

Hedge Agreements) then due
to the BP Provider (including its Affiliates) and Canadian Lenders from the
Canadian Borrower or any other Canadian Loan Party; third, to pay any
obligations or amounts relating to Bank Products (that are not Hedge
Agreements) then due to the BP Provider or any of its Affiliates; fourth, to pay
interest due in respect of all Canadian Revolving Loans, including Canadian
Agent Advances and Overdraft Accommodations; fifth, to pay or prepay principal
of the Agent Advances; sixth, to pay or prepay principal of the Canadian
Revolving Loans (other than Canadian Agent Advances and Overdraft
Accommodations) and unpaid reimbursement obligations in respect of Pro Rata
Canadian Letters of Credit and Canadian Letters of Credit; seventh, (i) to
pay or prepay principal of the Overdraft Accommodations, and (ii) to pay
an amount to the Agent equal to all outstanding Obligations (contingent or
otherwise) with respect to Pro Rata Canadian Letters of Credit and Canadian
Letters of Credit to be held as cash collateral for such Obligations (but only
to the extent such cash collateralization is necessary to comply with the
requirements of the third sentence of Section 3.1(a) without giving
effect to any demand requirement thereunder); eighth, to the payment (for
greater certainty, ratably amongst the Canadian Lenders and their affiliates
providing Hedge Agreements to Canadian Loan Parties) of any Obligations
relating to Hedge Agreements then due to any Lender or any of their Affiliates
by the Canadian Borrower or any other Canadian Loan Party in a maximum amount
to each such Lender that is the lesser of (i) the Hedging Amount
previously advised to the Agent in writing and (ii) the Allocated Amount
of such Lender; ninth, to the payment of any other Obligations (other than
Hedge Agreements) then due by the Canadian Borrower or other Canadian Loan
Party; tenth, to the payment (for greater certainty, ratably amongst the
Canadian Lenders and their affiliates providing Hedge Agreements to Canadian
Loan Parties) of any Obligations relating to Hedging Agreements then due to any
such Lender or any of their Affiliates by the Canadian Borrower or any other
Canadian Loan Party which Obligations did not qualify under 3.7(a)(i) eighth;
and eleventh, to the Canadian Borrower.

 

(ii)                                  Upon the occurrence and during the continuance of an
Event of Default:  first, to pay any
fees, indemnities or expense reimbursements (other than any amounts relating to
Bank Products) then due to the Agent from the Canadian Borrower; second, to pay
any fees, indemnities or expense reimbursements (other than amounts relating to
Bank Products that are Hedge Agreements) then due to the BP Provider (including
its Affiliates) and Canadian Lenders from the Canadian Borrower or any other
Canadian Loan Party; third, to pay interest due in respect of all Canadian Revolving
Loans, including Canadian Agent Advances and Overdraft Accommodations (together
with any amounts payable under Section 4.1 with respect to such interest);
fourth, to pay or prepay principal of the Canadian Agent Advances, Overdraft
Accommodations and amounts relating to Bank Products that are not Hedge
Agreements; fifth, to pay or prepay principal of the Canadian Revolving Loans
(other than Canadian 

 

37

 

Agent Advances, Overdraft
Accommodations and Bank Products that are not Hedge Agreements) and unpaid
reimbursement obligations in respect of Pro Rata Canadian Letters of Credit and
Canadian Letters of Credit; sixth, to pay an amount to the Agent equal to all
outstanding Obligations (contingent or otherwise) with respect to Pro Rata
Canadian Letters of Credit and Canadian Letters of Credit to be held as cash
collateral for such Obligations; seventh, to the payment (for greater
certainty, ratably amongst the Canadian Lenders and their affiliates providing Hedge
Agreements to Canadian Loan Parties) of any Obligations relating to Hedge
Agreements then due to any Lender or any of their Affiliates by the Canadian
Borrower or any other Canadian Loan Party in a maximum amount to each such
Lender that is the lesser of (i) the Hedging Amount previously advised to
the Agent in writing and (ii) the Allocated Amount of such Lender; eighth,
to the payment of any other Obligations (other than Hedge Agreements) of the
Canadian Borrower and other Canadian Loan Parties then due; ninth, to the
payment (for greater certainty, ratably amongst the Canadian Lenders and their
Affiliates providing Hedge Agreements to Canadian Loan Parties) of any
Obligations relating to Hedging Agreements then due to any such Lender or any
of their Affiliates by the Canadian Borrower or any other Canadian Loan Party
which Obligations did not qualify under 3.7(a)(ii) seventh; tenth, to the
payment of Obligations of the U.S. Borrowers in order of priority set forth in
3.7(b)(ii) (other than clause twelfth); eleventh, to the payment (for
greater certainty, ratably amongst former Canadian Lenders and their Affiliates
who provided Hedge Agreements to Canadian Loan Parties during such former
Canadian Lender’s tenure as a Canadian Lender hereunder) of any Obligations
relating to Hedging Agreements (provided during such tenure) then due to any
such former Lender or any of their Affiliates by the Canadian Borrower or any
other Canadian Loan Party; and twelfth, to the Canadian Borrower or as a court
of competent jurisdiction may otherwise direct.

 

Notwithstanding anything to the contrary
contained in this Agreement, unless so directed by the Canadian Borrower, or
unless an Event of Default has occurred and is continuing, neither the Agent
nor any Canadian Lender, (i) shall apply any payments which it receives to
applicable Obligations unless such payments received are in the same currency
in which such applicable Obligations are denominated, provided that the
Borrowings shall not exceed applicable Availability as a consequence thereof,
and provided further that the Agent may, in its sole discretion, nevertheless
apply the Equivalent Amount of payments received in one currency to applicable
Obligations denominated in another currency, and (ii) shall apply any
payments which it receives to any BA Equivalent Revolving Loan or LIBOR
Revolving Loan of the Canadian Borrower, except (a) on the expiration date
of the BA Equivalent Interest Period applicable to any such BA Equivalent
Revolving Loan or the LIBOR Interest Period applicable to any such LIBOR
Revolving Loan, or (b) in the event, and only to the extent, that there
are no outstanding Canadian Prime Rate Revolving Loans owing by the Canadian
Borrower (in the case of BA Equivalent Revolving Loans) or ABR Revolving Loans
(in the case of LIBOR Revolving Loans) owing by the Canadian Borrower and, in
any event, the Canadian Borrower shall pay BA Equivalent and LIBOR Rate
breakage losses in accordance with Section 4.4(a).  The Agent and 

 

38

 

the Lenders shall have the continuing and
exclusive right to apply and reverse and reapply, in each instance in
accordance with this Section 3.7, any and all such proceeds and payments
to any portion of the Obligations.  Agent
shall have no obligation to calculate the amount to be distributed with respect
to any Hedging Agreements, but may rely upon written notice of the amount
(setting forth a reasonably detailed calculation) from the Lender (or its
Affiliates).  In the absence of such notice,
Agent may assume the amount to be distributed is the Hedging Amount last
reported to it.

 

(b)                                 Principal and interest payments in respect of U.S. Revolving Loans shall
be apportioned ratably among the U.S. Lenders (according to the unpaid
principal balance of the U.S. Revolving Loans to which such payments relate
held by each U.S. Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the U.S. Lenders, except for (i) fees payable by
U.S. Borrowers solely to the Agent, the Bank, U.S. Cash Management Provider or
the U.S. Letter of Credit Issuer, and (ii) expense reimbursements and
indemnification payments owed to any U.S. Lender.  All payments by U.S. Borrowers in respect of
Obligations (other than Obligations under Hedge Agreements which shall be remitted directly to Lender that is a counterparty to such Hedge Agreement with U.S. Borrowers or U.S.
Loan Parties) shall be remitted to the Agent (except as expressly provided
herein otherwise) and all such payments (to the extent not relating to
principal or interest of specific U.S. Revolving Loans, or not constituting
payment of specific fees or expenses) and all proceeds of Accounts or other
Collateral of U.S. Borrowers and U.S. Loan Parties received by the Agent, shall
be applied, ratably, subject to the provisions of this Agreement:

 

(i)                                     So long as no Event of Default has occurred and is
continuing, first, to pay any fees, indemnities or expense reimbursements, then
due to the Agent, the Bank or any of their Affiliates from the U.S. Borrowers;
second, to pay any fees, indemnities or expense reimbursements (other than any
amounts related to Bank Products) then due to the U.S. Lenders from the U.S.
Borrowers; third, to pay interest due in respect of all U.S. Revolving Loans,
including U.S. Agent Advances, made to the U.S. Borrowers; fourth, to pay or
prepay principal of the U.S. Agent Advances; fifth, to pay an amount to the
U.S. Cash Management Provider equal to all outstanding Obligations with respect
to any outstanding U.S. Overadvance; sixth, to pay or prepay principal of the
U.S. Revolving Loans (other than U.S. Agent Advances) and unpaid reimbursement
obligations in respect of U.S. Letters of Credit; seventh, to pay an amount to
the Agent equal to all outstanding Obligations (contingent or otherwise) with
respect to U.S. Letters of Credit to be held as cash collateral for such
Obligations (but only to the extent such cash collateralization is necessary to
comply with the requirements of the third sentence of Section 3.1(b) without
giving effect to any demand requirement thereunder); eighth, to the payment
(for greater certainty, ratably amongst the U.S. Lenders and their Affiliates
providing Hedge Agreements to U.S. Loan Parties) of any Obligations relating to
Hedge Agreements then due to any such Lender or any of their Affiliates by the
U.S. Borrowers or any other U.S. Loan Party in a maximum amount to each such
Lender that is the lesser of (i) the Hedging 

 

39

 

Amount previously advised to
the Agent in writing and (ii) the Allocated Amount of such Lender; ninth,
to the payment of any other Obligations (other than under Hedge Agreements)
then due by U.S. Borrowers and U.S. Loan Parties; and tenth, to the payment
(for greater certainty, ratably amongst the U.S. Lenders and their Affiliates
providing Hedge Agreements to U.S. Loan Parties) of any Obligations relating to
Hedging Agreements then due to any such Lender or any of their Affiliates by
the U.S. Borrowers or any other U.S. Loan Party which Obligations did not
qualify under 3.7(b)(i) eighth.

 

(ii)                                  Upon the occurrence and during the continuance of an
Event of Default:  first, to pay any
fees, indemnities or expense reimbursements then due to the Agent, the Bank or
any of their Affiliates from the U.S. Borrowers; second, to pay any fees,
indemnities or expense reimbursements (other than any amounts related to Bank
Products) then due to the U.S. Lenders from the U.S. Borrowers; third, to pay
interest due in respect of all U.S. Revolving Loans, including U.S. Agent
Advances, made to the U.S. Borrowers; fourth, to pay or prepay principal of the
U.S. Agent Advances; fifth, to pay an amount to the U.S. Cash Management
Provider equal to all outstanding Obligations with respect to any outstanding
U.S. Overadvance; sixth, to pay or prepay all principal of the U.S. Revolving
Loans (other than U.S. Agent Advances) and unpaid reimbursement obligations in
respect of U.S. Letters of Credit; seventh, to pay an amount to the Agent equal
to all outstanding Obligations (contingent or otherwise) with respect to U.S.
Letters of Credit to be held as cash collateral for such Obligations; eighth,
to the payment (for greater certainty, ratably amongst the U.S. Lenders and
their affiliates providing Hedge Agreements to U.S. Loan Parties) of any
Obligations relating to Hedge Agreements then due to any such Lender or any of
their Affiliates by the U.S. Borrowers or any other U.S. Loan Party in a
maximum amount to each such Lender that is the lesser of (i) the Hedging
Amount previously advised to the Agent in writing and (ii) the Allocated
Amount of such Lender; ninth, to the payment of any other Obligations (other
than Hedge Agreements) of U.S. Borrowers then due; tenth, to the payment (for
greater certainty, ratably amongst the U.S. Lenders and their Affiliates
providing Hedge Agreements to U.S. Loan Parties) of any Obligations relating to
Hedging Agreements then due to any such Lender or any of their Affiliates by
the U.S. Borrowers or any other U.S. Loan Party which Obligations did not
qualify under 3.7(b)(ii) eighth; eleventh, to the payment of Obligations
of the Canadian Borrower in the order of priority set forth in Section 3.7(a)(ii) (other
than clause twelfth); twelfth, to the payment (for greater certainty, ratably
amongst former U.S. Lenders and their Affiliates who provided Hedge Agreements
to U.S. Loan Parties during such former U.S. Lender’s tenure as a U.S. Lender
hereunder) of any Obligations relating to Hedging Agreements (provided during
such tenure) then due to any such former Lender or any of their Affiliates by
the U.S. Borrowers or any other U.S. Loan Party; and thirteenth, to the U.S.
Borrowers or as a court of competent jurisdiction may otherwise direct.

 

40

 

Notwithstanding anything to the contrary
contained in this Agreement, unless so directed by the U.S. Borrowers, or
unless an Event of Default has occurred and is continuing, neither the Agent
nor any U.S. Lender shall apply any payments which it receives to any LIBOR
Revolving Loan of any U.S. Borrower, except (a) on the expiration date of
the LIBOR Interest Period applicable to any such LIBOR Revolving Loan, (b) in
the event, and only to the extent, that there are no outstanding U.S. Prime
Rate Revolving Loans owing by the U.S. Borrowers and, in any event, the U.S.
Borrowers shall pay LIBOR breakage losses in accordance with Section 4.4(b),
or (c) the Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply, in each instance in accordance with
this Section 3.7, any and all such proceeds and payments to any portion of
the Obligations.  Agent shall have no
obligation to calculate the amount to be distributed with respect to any
Hedging Agreements, but may rely upon written notice of the amount (setting
forth a reasonably detailed calculation) from the Lender (or its
Affiliates).  In the absence of such
notice, Agent may assume the amount to be distributed is the Hedging Amount last
reported to it.

 

3.8          Indemnity
for Returned Payments.

 

If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the Agent, any
Lender, Royal Bank, the Bank, the BP Provider or any Affiliate of the Lenders,
Bank or Royal Bank or BP Provider is compelled by any Requirement of Law to
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent, such Lender, the Bank, Royal Bank, the BP Provider
or such Affiliate of the Lenders, Bank, Royal Bank or BP Provider, as the case
may be, and the applicable Borrower or Borrowers shall be liable to pay to the
Agent, the applicable Lenders, the Bank, Royal Bank, BP Provider and any
Affiliate of the Lenders, Bank, Royal Bank or BP Provider, and hereby does
indemnify the Agent, the applicable Lenders, Bank, Royal Bank, BP Provider and
any Affiliate of the Lenders, the Bank, Royal Bank, or the BP Provider and hold
the Agent, the applicable Lenders, the Bank, Royal Bank, BP Provider and any
Affiliate of the Lenders, Bank or Royal Bank, the BP Provider harmless for the
amount of such actual payment or proceeds surrendered.  The provisions of this Section 3.8 shall
be and remain effective notwithstanding any contrary action which may have been
taken by the Agent, any applicable Lender, the Bank, Royal Bank, BP Provider
and any Affiliate of the Lender, Bank, Royal Bank, or the BP Provider in
reliance upon such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agent’s, the applicable
Lenders’, the Lender’s, Bank’s, Royal Bank’s, the BP Provider’s and their
Affiliates’ rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final
and irrevocable.  The provisions of this Section 3.8
shall survive the termination of this Agreement.

 

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

 

The Agent shall record the principal amount of
the Revolving Loans owing to each Lender, the undrawn amount of all outstanding
Letters of Credit and the aggregate amount of unpaid reimbursement obligations
outstanding with respect to the Letters of Credit from time to time on its
books.  In addition, each Lender may note
the date and amount of each payment or 

 

41

 

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

 

3.10        Currency.

 

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

 

3.11        Excess
Resulting From Exchange Rate Change.

 

If at any time following one or more
fluctuations in the exchange rate of the Dollar against the U.S. Dollar, (a) the
aggregate outstanding principal balance of Canadian Revolving Loans, Pro Rata
Canadian Letters of Credit and Canadian Letters of Credit of the Canadian
Borrower exceeds the limit of the Canadian Borrowing Base or any other
limitations hereunder based on U.S. Dollars for a period of five (5) Business
Days or (b) the aggregate outstanding principal balance of Canadian
Revolving Loans and/or Canadian Letters of Credit exceeds any other limit based
on U.S. Dollars set forth herein for such Obligations for a period of five (5) Business
Days, the Canadian Borrower shall, within five (5) Business Days of notice
from the Agent (or, if an Event of Default has occurred and is continuing,
within one (1) Business Day of such notice), (i) make the necessary
payments or repayments to reduce such Obligations to an amount necessary to
eliminate such excess or (ii) maintain or cause to be maintained with the
Agent deposits as continuing collateral security for the Obligations of the
Canadian Borrower in an amount equal to or greater than the amount of such
excess, such deposits to be maintained in such form and upon such terms as are
acceptable to the Agent in its reasonable commercial judgment.  Without in any way limiting the foregoing
provisions, the Agent shall, weekly or more frequently in the sole discretion
of the Agent, make the necessary exchange rate calculations to determine
whether any such excess exists on such date and advise the Canadian Borrower if
such excess exists.

 

42

 

ARTICLE 4 — TAXES,
YIELD PROTECTION AND ILLEGALITY

 

4.1          Taxes.

 

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

 

(b)           If a
Loan Party shall be required by law or administrative practice to deduct or
withhold any Indemnified Taxes or Other Taxes from or in respect of any sum
payable hereunder or under any other Loan Document to any Secured Party, then:

 

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

 

(ii)           such Loan Party shall make such deductions and
withholdings as are required by law or administrative practice; and

 

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

 

(c)           The
Loan Parties agree, jointly and severally, to indemnify and hold harmless each
Secured Party for the full amount of Indemnified Taxes or Other Taxes
(including any Indemnified Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by any Secured Party in connection
with any Loan Document or any transaction contemplated thereunder and any
liability (including penalties, interest, additions to tax and reasonable
expenses) arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally asserted, provided,
however, that no amounts shall be payable by any Loan Party pursuant to this
provision to the extent that such Indemnified Taxes or Other Taxes resulted
from the Agent’s or any Lender’s, as appropriate, failure to comply with Section 12.10
hereof.

 

(d)           Payment
under the indemnification provided in Section 4.1(c) shall be made
within 30 days after the date the applicable Secured Party makes written demand
therefor.  Such written demand shall show
in reasonable detail the amount 

 

43

 

payable
and the calculations used to determine such amount and shall include reasonable
supporting documentation authenticating the claim.

 

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

 

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

 

(g)           If a
Secured Party receives a refund, which in the good faith judgment of the
Secured Party is allocable to Indemnified Taxes or Other Taxes paid by any Loan
Party hereunder, or under any other Loan Document, it shall promptly pay such
allocated amount of such refund to such Loan Party, net of all reasonable out
of pocket expenses of the Secured Party, incurred in obtaining such refund,
provided, however, that such Loan Party agrees to promptly return such refund
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Secured Party, if it receives notice from the
Secured Party that the Secured Party is required to repay such refund.  In addition, the Secured Party shall take
such steps as a Loan Party shall reasonably request to recover or assist such
Loan Party in recovering any Indemnified Taxes or Other Taxes paid by such Loan
Party to or in respect of the Secured Party pursuant this Section 4.1, all
at the sole cost and expense of such Loan Party.  This paragraph shall not be construed to
require any Secured Party to make available any of its tax returns (or any
other information relating to its taxes which it deems confidential) to any
Loan Party or any other Person.

 

(h)           If a
Loan Party is required to pay additional amounts to the Agent or any Lender
pursuant to this Section 4.1, then the Agent or such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its lending office so as to eliminate any such
additional payment by such Loan 

 

44

 

Party
which may thereafter accrue, if such change in the sole judgment of such Agent
or Lender is not otherwise disadvantageous to the Agent or such Lender.

 

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

 

(j)            If a
Loan Party shall be required by law or administrative practice to deduct or
withhold any Excluded Taxes from or in respect of any sum payable hereunder or
under any other Loan Document to any Secured Party, then (i) such Loan
Party shall make such deductions and withholdings as are required by law or
administrative practice; (ii) such Loan Party shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law or administrative practice; and (iii) such
amounts deducted and withheld shall be treated as having been paid by such Loan
Party to the Secured Party.

 

4.2          Illegality.

 

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

 

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

 

45

 

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

 

4.3          Increased
Costs and Reduction of Return.

 

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

 

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

 

46

 

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

 

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

 

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

 

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

 

4.4          Funding
Losses.

 

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

 

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

 

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

 

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

 

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

 

47

 

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

 

(i)            the failure of U.S. Borrowers to make on a timely
basis any payment of principal of any LIBOR Revolving Loan made to any U.S.
Borrower;

 

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

 

(iii)          the prepayment or other payment (including after
acceleration thereof) of any LIBOR Revolving Loan made to U.S. Borrowers on a
day that is not the last day of the relevant LIBOR Interest Period;

 

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

 

4.5          Inability
to Determine Rates.

 

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

 

48

 

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

 

4.6          Certificates
of Agent.

 

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

 

4.7          Survival.

 

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

 

ARTICLE 5 — BOOKS
AND RECORDS; FINANCIAL INFORMATION; NOTICES

 

5.1          Books
and Records.

 

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

 

5.2          Financial
Information.

 

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

 

(a)           As
soon as available, but in any event not later than one hundred and twenty (120)
days after the close of each Fiscal Year, (i) consolidated audited and
consolidating unaudited balance sheets, income statements, cash flow statements
and changes in stockholders’ equity for the Canadian Borrower (and its
Subsidiaries), and (ii) unaudited balance sheets, income statements, cash
flow statements and changes in 

 

49

 

stockholders’
equity for (x), on a consolidated basis, for Taylor Companies, LLC (and its
Subsidiaries), and (y) on an individual basis, for Gibson Energy (U.S.)
Inc. and Link Petroleum Inc., for such Fiscal Year, and the accompanying notes
thereto (where applicable), and, beginning with the Fiscal Year ending on December 31,
2010 (December 31, 2011 for Taylor Companies, LLC (and its Subsidiaries)
only), setting forth in each case in comparative form figures for the previous
Fiscal Year, all in reasonable detail, fairly presenting the financial position
and the results of operations of the Canadian Borrower (and its Subsidiaries),
Gibson Energy (U.S.) Inc., Link Petroleum Inc. and Taylor Companies, LLC (and
its Subsidiaries) as at the date thereof and for the Fiscal Year then ended,
and prepared in accordance with GAAP.  In
case such statements are prepared on an audited consolidated basis, such
statements shall be accompanied by a report thereon unqualified as to scope by
PricewaterhouseCoopers LLP or another nationally recognized independent
chartered accountant or independent certified public accountant, as
applicable.  Upon an Event of Default or
Default that is continuing, upon the request of the Agent, each Loan Party
agrees to request and hereby authorizes its chartered accountants or certified
public accountants, as applicable, and at reasonable times and upon reasonable
prior notice, and with Canadian Borrower present (who shall reasonably make
itself available), to communicate directly with the Agent and, by this
provision, authorizes those accountants to disclose to the Agent (with a copy
to such Loan Party), any and all financial statements and other supporting
financial documents and schedules relating to such Loan Party and to discuss
directly with the Agent, the finances and affairs of such Loan Party; provided
that the Canadian Borrower shall be given an opportunity to be present at any
such discussion.

 

(b)           As
soon as available, but in any event not later than forty-five (45) days (or
such earlier period as Agent and Canadian Borrower may agree) after the end of
each fiscal month, (i) consolidated unaudited balance sheets of the
Canadian Borrower (and its Subsidiaries), (ii) consolidated unaudited
balance sheets of Taylor Companies, LLC (and its Subsidiaries), and (iii) unaudited
balance sheets of Gibson Energy (U.S.) Inc. and Link Petroleum Inc., as at the
end of such month and consolidated (as applicable) unaudited income statements
and cash flow statements for the Canadian Borrower (and its Subsidiaries) and
the U.S. Borrowers for such month and for the period from the beginning of the
Fiscal Year to the end of such month, all in reasonable detail, fairly
presenting the financial position and results of operations of the Canadian
Borrower (and its Subsidiaries), Gibson Energy (U.S.) Inc., Link Petroleum Inc.
and Taylor Companies, LLC (and its Subsidiaries) as at the date thereof and for
such periods and prepared in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to Section 5.2(a) subject
to normal year-end adjustments and the absence of footnotes and, beginning with
the Fiscal Year ending on after December 31, 2010 (December 31, 2011
for Taylor Companies, LLC (and its Subsidiaries) only), setting forth in
comparative form figures for the previous Fiscal Year.  The Canadian Borrower shall certify by a
certificate signed by a Responsible Officer of the Canadian Borrower to the
best of his knowledge that all such statements have been prepared in accordance
with 

 

50

 

GAAP
and present fairly the Canadian Borrower’s, each of its consolidated
Subsidiaries’ and the U.S. Borrowers’ financial position as at the dates
thereof and its results of operations for the periods then ended, subject to
normal year end adjustments and the absence of notes.  If the Canadian Borrower or any U.S. Borrower
prepares, at any point in time, quarterly financial reports, it shall provide
the Agent a copy of each such report within a reasonable period of completion
thereof.

 

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

 

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

 

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

 

(f)            Not
later than thirty (30) days following the beginning of each Fiscal Year of the
Canadian Borrower thereafter, an annual business plan (i) (to include
forecasted consolidated balance sheets, income statements, cash flow statements
and Capital Expenditures) for Canadian Borrower (on a consolidated basis) and, (ii) (to
include forecasted income statements) for Taylor Companies, LLC (and its
Subsidiaries), as at the end of and for each month of such Fiscal Year
including in reasonable detail, the material assumptions used in determining
such forecasts.

 

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

 

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

 

(i)            Promptly
after the receipt thereof by the Canadian Borrower or any other Loan Party, a
copy of all management reports and management letters prepared for the Canadian
Borrower or any other Loan Party by any independent chartered accountants or
independent certified public accountants of the Canadian Borrower or any other
Loan Party.

 

(j)            At
anytime after the Capital Stock of any Borrower or any Parent Company is traded
on a nationally recognized exchange, promptly after becoming available,

 

51

 

copies
of any and all proxy statements, financial statements and reports which the
Canadian Borrower or any other Loan Party generally makes available to its
public shareholders (if any), other than the Sponsor.

 

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

 

(l)            (i) not
later than the third Business Day after the last Business Day of the previous
week, with the information thereon to be as of the last Business Day of such
previous week, a weekly Borrowing Base Certificate and supporting information
for Taylor Companies LLC (and its Subsidiaries), and (ii) following
completion of the applicable field audit, bi-weekly, consolidated with the
delivery, and forming part, of the applicable Borrowing Base Certificates
delivered pursuant to Section 5.2(l)(i) (with the information thereon
to be as of such date for the period then ending (or the next succeeding
Business Day if such day is not a Business Day), a combined Borrowing Base
Certificate and supporting information for Gibson Energy (U.S.) Inc. and Link
Petroleum Inc.

 

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

 

(n)           On
each Friday (or the next succeeding Business Day if such day is not a Business
Day) of each calendar week, a report as of the immediately preceding Business
Day of all Loan Parties’ Positions (including, as applicable, details of the
Mark-to-Market Positions of all such assets and contracts for the period) in
form and detail satisfactory to Agent and certifying that such Positions are in

 

52

 

compliance
with the Risk Management Policy, or such other report on such other day as
Agent and Canadian Borrower may agree, acting reasonably.

 

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

 

5.3          Notices
to the Agent.

 

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

 

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

 

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

 

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

 

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

 

(e)           Promptly
(but in no event later than five (5) Business Days) upon any change in (i) a
Loan Party’s name as it appears in the province, state or other jurisdiction of
its incorporation or (ii) a Loan Party’s jurisdiction of organization,
province, state or other jurisdiction of incorporation or organization, (iii) a
Loan Party’s type of entity, (iv) a Loan Party’s organizational
identification number, (v) the location of Eligible Inventory included in
the most recent Borrowing Base with a value in excess of $1,000,000 from a
location of any Loan Party to another location of such Loan Party (other than
any Eligible Inventory relocated to a location (within the same country of
domicile) listed on Schedule 6.9 of this Agreement or a 

 

53

 

Collateral
location (within the same country of domicile) listed on a prior written notice
delivered by such Borrower or such Guarantor to the Agent under this clause
((e)) or (vi) a Loan Party’s location of chief executive office; provided,
however, that if any of the foregoing changes are not permitted under this
Agreement, the foregoing is not to be construed as permissive of same;

 

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

 

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

 

5.4          Collateral
Reporting.

 

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

 

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

 

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

 

54

 

(c)           promptly
upon the reasonable request of the Agent, (i) a detailed calculation of
the Eligible Accounts and Eligible Inventory of such Loan Party, (ii) copies
of invoices in connection with such Loan Party’s Accounts, customer statements,
credit memos, remittance advices and reports, deposit slips, shipping and
delivery documents in connection with such Loan Party’s Accounts and for Inventory
acquired by such Loan Party, purchase orders and invoices, (iii) a
statement of the balance of any intercompany accounts, and (iv) such other
reports as to the Collateral of such Loan Party as the Agent shall reasonably
request from time to time.

 

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

 

ARTICLE 6 — GENERAL
WARRANTIES AND REPRESENTATIONS

 

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

 

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

 

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

 

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

 

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

 

(d)           Such
Loan Party’s execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party do not and will not conflict with,
or constitute a violation or breach of, or result in the imposition of any Lien
upon the property of such Loan Party (other than Liens granted by such Loan
Party under any of the Loan Documents (as permitted hereunder and under the
Intercreditor Agreement)) by reason of the terms of (a) any contract,
mortgage, lease, agreement, indenture or instrument to which such Loan Party is
a party or which 

 

55

 

is
binding upon it to the extent such breach or violation would not have a
Material Adverse Effect, (b) any Requirement of Law applicable to such
Loan Party or (c) the certificate or articles of incorporation, by laws or
the limited liability company or limited partnership agreement or partnership
agreement or other organizational documents of such Loan Party, except, in the
case of the foregoing clause (a), to the extent such breach or violation would
not have a Material Adverse Effect.

 

6.2          Validity
and Priority of Security Interest.

 

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

 

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

 

6.3          Organization
and Qualification.

 

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

 

6.4          Corporate
Name; Prior Transactions.

 

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

 

6.5          Subsidiaries.

 

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

 

56

 

6.6          Financial
Statements.

 

On the Effective Date, the Loan Parties have
delivered to the Agent and the Lenders the audited consolidated balance sheet
and related statements of income, retained earnings and cash flows for Canadian
Borrower and its consolidated Subsidiaries fiscal year ending on December 31,
2009 accompanied by the report thereon of the Canadian Borrower’s chartered
accountants, PricewaterhouseCoopers.  The
Loan Parties have also delivered to the Agent and the Lenders the unaudited
consolidated balance sheet and related statements of income and cash flows for
the Canadian Borrower and its consolidated Subsidiaries as of and for the
fiscal quarters ending on June 30, 2010. 
Such financial statements are attached hereto as Exhibit C.  All such financial statements have been
prepared in accordance with GAAP and present accurately and fairly in all
material respects the consolidated financial position of the Canadian Borrower
and its consolidated Subsidiaries as at the dates thereof and their results of
operations for the periods then ended, subject, in the case of the interim
financial statements, to normal year end adjustments.

 

6.7          Capitalization.

 

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

 

6.8          Solvency.

 

The Loan Parties are, when taken as a whole,
Solvent after giving effect to the existing Borrowings and the Borrowings to be
made on the Effective Date and the existing Letters of Credit and the issuance
of the Letters of Credit to be issued on the Effective Date.

 

6.9          Real
Property; Leases.

 

As of the Effective Date and updated reasonably
promptly upon any changes to the information set forth  therein, Schedule 6.9 hereto is a correct and
complete list of: (a) the jurisdiction of the chief executive office of
each Loan Party, (b) all Real Estate owned by each Loan Party, (c) all
material leases and subleases of Real Estate by any Loan Party, as lessee or
sublessee, (d) all material leases and subleases of Real Estate by any
Loan Party, as lessor or sublessor and (e) all locations (other than those
referred to in clauses (b), (c) and (d) above) of Inventory of each
Loan Party (other than in-transit Inventory) having a value in excess of
$1,000,000.

 

6.10        Brokers.

 

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

 

6.11        Governmental
Authorization.

 

No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority is
necessary or required in connection with the execution, delivery 

 

57

 

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

 

6.12        Proprietary
Rights.

 

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

 

6.13        Bank
Accounts.

 

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

 

6.14        Litigation.

 

Except as set forth on Schedule 6.14, as of the
Effective Date, there is no pending, or to the best of such Loan Party’s knowledge
threatened, action, suit, proceeding or counterclaim by any Person, or to the
best of such Loan Party’s knowledge, investigation by any Governmental
Authority, or any basis for any of the foregoing, which, in each case, would
reasonably be expected to have a Material Adverse Effect.

 

6.15        Labour
Disputes.

 

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

 

58

 

6.16        Environmental
Laws.

 

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

 

6.17        No
Violation of Law.

 

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

 

6.18        No
Default.

 

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

 

6.19        Plans.

 

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

 

(a)           Each
Plan which is subject to or governed by ERISA or the Code is in compliance with
the applicable provisions of ERISA, the Code and other federal or state
law.  Each Plan in Canada is in
compliance with the applicable provisions of the EPPA and other federal or
provincial law in all material respects. 
Each Plan which is intended to qualify under Section 401(a) of
the Code has received a favourable determination letter from the IRS and to the
knowledge of such Loan Party, nothing has occurred which would cause the loss
of such qualification.  The Canadian
Borrower and each Loan Party, to the extent applicable, has made all required
contributions to any Plan when due, and no application for a funding waiver or
an extension of any amortization period has been made with respect to any Plan.

 

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

 

(c)           (i) No
Termination Event or ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any material Unfunded Pension Liability; (iii) none
of the Loan Parties has incurred, or reasonably expects to incur, any liability
under the Income Tax Act (Canada) or the
applicable federal, provincial or state laws with respect to any Pension Plan
(other than premiums due and not 

 

59

 

delinquent
under Section 4007 of ERISA); (iv)  none of the Loan Parties has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multi employer Plan; (v)  none of the Loan Parties has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA; and (vi) no Lien (other than Permitted Liens) has arisen in respect
of any Loan Party or its property in connection with any Plan (save for
contribution amounts not yet due).

 

6.20        Taxes.

 

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

 

6.21        Regulated
Entities; Margin Regulations.

 

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

 

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

 

6.22        Hedging
Arrangements.

 

Such Loan Parties have not entered into any
hedging arrangements with any Person which would qualify such hedging
arrangement to be considered a “security”, “securities” or “securities account”
or otherwise, for purposes of, or under, the Securities Transfer Act (Alberta)
without notifying the Agent of the same and promptly taking all actions
reasonably requested by the Agent under Section 7.35 in order to perfect
that Agent’s Lien in respect thereof.

 

6.23        No
Material Adverse Effect.

 

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

 

6.24        Full
Disclosure.

 

None of the representations or warranties made
by such Loan Party in any of the Loan Documents (except Hedge Agreements) as of
the date such representations and warranties are made or deemed made, and none
of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of such Loan Party in connection with any of the Loan
Documents (except Hedge Agreements) contains any untrue statement of a material
fact or omits 

 

60

 

any material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.

 

6.25        Material
Agreements.

 

Schedule 6.25 hereto sets forth as at the
Effective Date and updated reasonably promptly upon entering into (with
Borrower making a determination that same is or is not as of such date) all
Material Agreements to which such Loan Party is a party or is bound.  No Borrower has received any notice of termination
under any such agreements, except as otherwise notified to Agent.

 

6.26        Excluded
Subsidiaries.

 

As
of the Effective Date, (a) Taylor Land Holdings, LLC (i) does not
have any material levels of Inventory or Accounts or any material operations, (ii) is
a real estate investment and holdings company whose sole assets are 3 parcels
of land with an aggregate value of less than U.S.$200,000, (iii) except
for Permitted Liens, has not granted a Lien to any Person and no Person
otherwise has a Lien against it or its personal and movable property and
assets, and (iv) is an Immaterial Subsidiary, and (b) (i) Battle
River Terminal ULC does not have any material Inventory, and (ii) except
for Permitted Liens, has not granted a Lien to any Person and no Person
otherwise has a Lien against it or its personal and movable property and
assets.

 

ARTICLE 7 — AFFIRMATIVE
AND NEGATIVE COVENANTS

 

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

 

7.1          Taxes.

 

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

 

7.2          Legal
Existence and Good Standing.

 

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

 

7.3          Compliance
with Law and Agreements; Maintenance of Licenses.

 

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

 

61

 

property and to conduct its business as
conducted on the Effective Date, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

7.4          Maintenance
of Property; Inspection of Property.

 

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

 

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

 

7.5          Insurance.

 

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

 

(b)           Such
Loan Party shall cause the Agent, for the ratable benefit of the Agent and the
Lenders, to be named as secured party and lender’s first loss payee (as its or
their interests may appear) and first mortgagee with respect to insurance
covering the Collateral, or additional insured as to liability, umbrella and
automobile liability insurance, in a manner reasonably acceptable to the
Agent.  Each such policy of insurance
shall contain a clause or endorsement requiring the insurer to give not less
than thirty (30) days’ prior written notice to the Agent in the event of
cancellation of the policy for any reason whatsoever (other than for nonpayment

 

62

 

of
premiums, in which case not less than ten (10) days’ prior written notice
is sufficient).  All premiums for such
insurance shall be paid by such Loan Party when due, certificates of insurance
if requested by the Agent or any Lender, and photocopies of the policies shall
be delivered to the Agent, in each case in sufficient quantity for distribution
by the Agent to each of the Lenders.

 

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

 

7.6          Insurance
Proceeds.

 

Such Loan Party shall promptly notify the Agent
and the Lenders of any loss, damage or destruction to Collateral having a value
in excess of $2,000,000 per casualty, whether or not covered by insurance.  The Agent is hereby authorized to collect all
insurance and condemnation proceeds in respect of Collateral of such Loan
Party.  At all times when an Event of
Default is in existence and is continuing, Agent shall apply them to the
Obligations in a manner that is consistent with Section 3.7 and in the
order set forth in Section 3.7, provided, however, that if no Event of
Default has occurred and is continuing, Agent shall promptly deliver such
proceeds to the Loan Party.

 

7.7          Environmental
Laws.

 

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

 

7.8          Compliance
with EPPA/ERISA/Pension Legislation.

 

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

 

(a)           maintain
each Plan which is subject to or governed by ERISA, the Code, the Income Tax Act (Canada), the EPPA or other federal,
provincial or state law in 

 

63

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.9          Bank
Accounts.

 

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

 

64

 

7.10        Amendments
to Secured Note Facility or the Unsecured Note Facility.

 

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

 

Such Loan Party shall not, directly or
indirectly, amend, modify, supplement, waive compliance with or consent to any
departure from any provision of any document under the Unsecured Note Facility
if such amendment, modification, supplement, waiver or consent would have the
effect of (i) advancing the maturity date of the Unsecured Note Facility
to a date that is earlier than 91 days after the Stated Termination Date, or
(ii) granting any Lien on any property or assets of the Loan Parties to
secure the Unsecured Note Facility, or (iii) increasing the principal
amount thereof in excess of U.S.$200,000,000.

 

7.11        Mergers,
Consolidations or Sales.

 

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

 

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

 

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

 

(iii)          the merger, amalgamation, reorganization, consolidation,
transfer, or sale of Battle River Terminal ULC into a Canadian Loan Party on or
before January 1, 2011 (provided that the continuing entity is a Canadian
Loan Party and all conditions in Section 8 have been met with respect to
such Canadian Loan Party); and

 

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

 

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

 

65

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(viii)        sale and leasebacks permitted under this Agreement;

 

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

 

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

 

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

 

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

 

(xiii)        the Transfer of any property not constituting
Collateral unless the Transfer of such property not constituting Collateral
would have a Material 

 

66

 

Adverse Effect on the fair
market value of the Collateral on the date of such Transfer;

 

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

 

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

 

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

 

(xvii)       the transfer of property pursuant to buy/sell
arrangements in the ordinary course of business consistent with past practices;
and

 

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

 

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

 

7.12        Distributions;
Capital Change; Restricted Investments.

 

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

 

(i)            Distributions among the Loan Parties;

 

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

 

67

 

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

 

(iv)          Distributions during each Fiscal Year in an aggregate
amount not to exceed U.S.$4,000,000 during such Fiscal Year in order to
reimburse any Parent Company for all administrative costs and expenses actually
incurred by such Parent Company during such Fiscal Year, including
organizational fees and expenses, legal fees and expenses and accounting fees
and expenses;

 

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

 

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

 

(vii)         Distributions to any Parent Company not in excess of
$4,500,000 in the aggregate to permit such Parent Company to pay reasonable
fees and expenses incurred in connection with any unsuccessful debt or equity
offering by such Parent Company to the extent that the proceeds thereof were
intended to be used for the benefit of the Canadian Borrower and its
Subsidiaries;

 

(viii)        The Canadian Borrower may make Distributions in the
form of Capital Stock of the Canadian Borrower;

 

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

 

(x)            Distributions not in excess of $4,000,000 in the
aggregate to allow any Parent Company to make payments in cash, in lieu of the
issuance of fractional shares, upon the exercise of warrants or upon the
conversion or exchange of Capital Stock of any public entity that is a Loan
Party or a Parent Company.

 

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

 

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

 

68

 

(d)           Notwithstanding
anything to the contrary herein, the aggregate amount of Distributions that may
be made to any Parent Company under 7.12(a)(iv), (vii) and (x) shall
not exceed U.S.$5,500,000 per annum or U.S.$7,500,000 in the aggregate during
the term of this Agreement.

 

7.13        Intentionally
Deleted.

 

7.14        Guarantees.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)           unsecured
Guarantees in favour of the noteholders under the Unsecured Note Facility; and

 

(h)           subject
to compliance with Section 7.12(b), Guarantees in respect of Debt of
another Loan Party permitted by Section 7.15 (provided that the terms of
such Guarantee shall be no more favourable than the terms of the primary
obligation as permitted under Section 7.15 (eg. if the Debt guaranteed
constitutes Subordinated Debt, then such Guarantee shall be subordinated to the
applicable obligations to at least the same extent as the Debt so guaranteed)).

 

7.15        Debt.

 

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

 

(a)           the
Obligations;

 

(b)           Debt
described on Schedule 7.15;

 

(c)           Debt
evidencing a refunding, renewal or extension of the Debt described on Schedule
7.15; provided that (i) the principal amount thereof is not increased,
(ii) 

 

69

 

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

 

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

 

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

 

(f)            Subordinated
Debt not constituting Debt under paragraphs (p) or (q) hereof;

 

(g)           Debt
in respect of the Secured Note Facility, in an aggregate maximum principal
amount not to exceed US$560,000,000 at any time outstanding, plus any accrued
pay-in-kind interest, capitalized interest, accrued interest, fees, discounts,
premiums and expenses, in each case, in respect thereof;

 

(h)           Guarantees
permitted by Section 7.14;

 

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

 

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

 

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

 

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

 

70

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

71

 

 

(t)            Provided
same does not constitute Debt as part of or incurred to finance any
acquisition, merger or consolidation or amalgamation or other investment (which
Debt must be permitted under paragraph (p) or (q), additional Debt of any Loan
Party in an aggregate principal amount not to exceed the greater of (i)
U.S.$15,000,000 at any one time outstanding, and (ii) 2.0% of Consolidated Net
Tangible Assets;

 

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

 

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

 

(w)          Debt
in respect of the Unsecured Note Facility, in the original principal amount of
up to U.S.$200,000,000 plus any accrued pay-in-kind interest, capitalized
interest, accrued interest, fees, discounts, premiums and expenses, in each
case, in respect thereof.

 

7.16        Prepayment;
Repurchase and Redemption of Debt.

 

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

 

7.17        Transactions
with Affiliates.

 

Such Loan Party shall not enter into, or be a
party to, any transaction with any Affiliate of such Loan Party which is not
also a Loan Party, including without limitation any management, consulting or
similar arrangement, except (a) as set forth on Schedule 7.17, (b) transactions

 

72

 

specifically permitted pursuant to the other
provisions of this Agreement, including without limitation Permitted
Investments, (c) any repayment of the Sponsor Investment, (d) any Tax Dividend,
(e) transactions upon fair and reasonable terms no less favourable to the Loan
Party than it would obtain in a comparable arm’s length transaction with a
Person that is not an Affiliate and (f) payment of permitted Sponsor Fees to
Sponsor.  For the avoidance of doubt,
this Section 7.17 shall not apply to permitted employment, bonus, incentive
retention and severance arrangements with, and payments of compensation or benefits
to or for the benefit of, current or former employees, consultants, officers or
directors of any Loan Party.

 

7.18        Use
of Proceeds.

 

(a)           The
proceeds of the Revolving Loans made and Letters of Credit issued after the
Effective Date are to be used (i) to finance payments in respect of Debt to the
extent such payments are permitted by Section 7.16 and (ii) for working
capital, capital expenditures, credit assurances and general corporate purposes
of the Loan Parties not prohibited hereunder, including direct drawings to
purchase Petroleum Inventory, to fund Contango Loans and to fund Permitted
Investments (including Permitted Acquisitions, where such use of Revolving
Loans are permitted thereunder); and

 

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

 

7.19        Business
Conducted.

 

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

 

7.20        Liens.

 

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

 

7.21        Sale
and Leaseback Transactions.

 

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

 

7.22        New
Subsidiaries.

 

Such Loan Party may not, directly or
indirectly, organize, create, acquire or permit to exist any Subsidiary other
than any direct or indirect Subsidiary existing on the Effective Date.  Notwithstanding the foregoing, a Loan Party
may organize, create or acquire a Subsidiary if (A) 

 

73

 

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

 

7.23        Fiscal
Year.

 

Such Loan Party shall not change its Fiscal
Year or unless the Agent shall otherwise reasonably agree.

 

7.24        Bank
Accounts; Cash Management.

 

(a)           Each
Loan Party shall have or shall establish on the Effective Date and shall
thereafter maintain, Receipt Accounts for collections of Accounts at Royal Bank
or such other banking institution reasonably acceptable to the Agent with whom
a Receipt Account has been established, in each case subject to a Blocked
Account Agreement, to which all Account Debtors, if directly depositing, shall
be instructed to make payments on Accounts and where Loan Parties shall make
all their deposits.  Each Loan Party may
also maintain lock-box accounts and other lock-box arrangements with Royal Bank
or such other banking institution reasonably acceptable to the Agent to which
Account Debtors are instructed to make payments on Accounts.  All funds in lock-box accounts shall be
transferred on each Business Day to a Receipt Account established for the
account of such Loan Party at Royal Bank or such other banking institution
reasonably acceptable to the Agent with whom a Receipt Account has been
established, in each case subject to a Blocked Account Agreement.  Each Loan Party shall make collection of all
of its Accounts and other payments in connection with any Collateral and other
Collateral for the Agent, shall receive all payments as the Agent’s trustee and
mandatory, and shall immediately deliver all payments into a Receipt Account
established for the account of the Loan Party at Royal Bank or such other
banking institution reasonably acceptable to the Agent with whom a Receipt
Account has been established, in each case subject to a Blocked Account
Agreement. All such Blocked Account Agreements shall stipulate that upon
written notice from the Agent (the “Activation Notice”), the only permitted use
of balances on deposit in the applicable Receipt Account shall be the transfer
of such balance to the Agent or such other banking institution reasonably
acceptable to the Agent with whom a Receipt Account has been established, and
such institution shall be irrevocably and unconditionally authorised to
transfer, on each Business Day (or such longer intervals as the Agent may
agree), all balances on deposit in such Receipt Accounts to such account or
accounts as the Agent may from time to time designate for such purpose for
application to the outstanding Obligations in accordance with the provisions of
Section 3.7.  The Agent may only provide
the Activation Notice when (i) an Event of Default described in subsection (a),
(e), (f), (g), (h) or (i) of Section 9.1 of the Credit Agreement is in 

 

74

 

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

 

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

 

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

 

7.25        Intentionally
Deleted.

 

7.26        Fixed
Charge Coverage Ratio.

 

The Canadian Borrower will maintain, when
Availability for a period of 3 consecutive days (exclusive of any Oil
Settlement Date Reserve) is less than an amount equal to 15% of the
Commitments, and at all times thereafter, a Fixed Charge Coverage Ratio for
each period of twelve consecutive historical months beginning with the twelve
months ending September 30, 2010, and continuing as the end of each month
thereafter during the term of this Agreement of not less than 1.10:1.

 

7.27        Corporate
Documents.

 

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

 

7.28        Intentionally
Deleted.

 

7.29        Restrictive
Agreements.

 

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

 

(a)           the
Loan Documents;

 

(b)           the
Secured Note Facility Documents;

 

75

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)            restrictions
under the Unsecured Note Facility, provided that such restrictions do not
include restricting the right of the Loan Parties to incur or repay the
Obligations.

 

7.30        Intentionally
Deleted.

 

7.31        Hedging
Arrangements.

 

Such Loan Party shall not be a party to or in
any manner be liable on any Hedge Agreement or unsecured hedge agreement other
than those entered into in accordance with the Risk Management Policy or
otherwise in the ordinary course of business in accordance with past practice
(except that interest rate swaps related to the Secured Note Facility and the Unsecured Note Facility are
permitted up to an amount covering 50% of the principal amounts thereunder).

 

7.32        Special
Provisions Regarding Accounts, Inventory and Other Collateral.

 

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

 

76

 

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

 

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

 

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

 

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

 

77

 

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

 

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

 

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

 

78

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)            Such
Loan Party assumes all responsibility and liability arising from or relating to
the use, sale or other disposition of the Collateral.  The Obligations shall not be 

 

79

 

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

 

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

 

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

 

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

 

7.34        Specified
Contracts.

 

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

 

7.35        Further
Assurances.

 

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

 

80

 

7.36        Parent
Company.

 

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

 

7.37        Excluded
Subsidiaries

 

Unless
otherwise agreed to by the Agent, (i) Taylor Land Holdings, LLC shall not
have any material levels of Inventory, Accounts or any material operations and
shall remain an Immaterial Subsidiary unless and until the conditions set forth
in Section 8, as complied with by all other Loan Parties, have been met, (ii) except
for Permitted Liens, neither Taylor Land Holdings, LLC or Battle River Terminal
ULC shall grant a Lien to any Person (at all times that is not a Loan Party),
and (iii) Battle River Terminal ULC shall merge, amalgamate, reorganize,
consolidate or be transferred or sold into another Canadian Loan Party no later
than January 1, 2011.

 

ARTICLE 8 — CONDITIONS
OF LENDING

 

8.1          Conditions
to Effectiveness on the Effective Date.

 

The effectiveness of this Agreement is subject
to the following conditions precedent having been satisfied in a manner
satisfactory to the Agent and each Lender or waived:

 

(a)           This
Agreement and the other Loan Documents (not delivered under the Existing Credit
Agreement) shall have been executed by each party thereto (other than, in the
case of this Agreement, the Arrangers) and each Loan Party shall have performed
and complied with all covenants, agreements and conditions contained herein and
in the other Loan Documents which are required to be performed or complied with
by such Loan Party before or on the Effective Date.

 

(b)           All
representations and warranties made hereunder and in the other Loan Documents
shall be true and correct in all material respects as if made on such date.

 

(c)           No
Default or Event of Default shall have occurred and be continuing.

 

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

 

(e)           The
Agent shall have received:

 

(i)            Any PPSA or UCC financing statement required by the
Security Documents or any other Loan Document or reasonably requested by the 

 

81

 

Agent to be filed,
registered or recorded in order to create in favour of the Agent, for the
benefit of the Agent and the Lenders, a perfected Lien on the Collateral, prior
and superior in right to any other Person (other than Permitted Liens), and in
proper form for filing, registration or recordation;

 

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

 

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

 

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

 

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

 

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

 

(i)            Each
Loan Party shall have used its reasonable commercial efforts to obtain and
deliver to the Agent landlord waivers and bailee letters (not delivered under
the Existing Credit Agreement) from landlords of each of the premises leased by
such Loan Party on the Effective Date at which (for any such premises)
Collateral is located on the Effective Date and from the public warehousemen at
whose 

 

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warehouses
any Collateral pledged by such Loan Party is located on the Effective Date, in
each case in form and substance reasonably satisfactory to the Agent, duly
executed by, as appropriate, such landlords and warehousemen; provided,
however, that the delivery of such agreements are not conditions to closing
hereunder, but for each such location for which such an agreement is not
delivered, the Agent may establish a reserve against the U.S. Borrowing Base or
the Canadian Borrowing Base, as applicable, equal to the lesser of (i) the
amount of applicable Availability from Eligible Inventory at the applicable
location; or (ii) up to three (3) months’ rental and other charges
for the applicable location.

 

(j)            The
Loan Parties shall have paid (i) all fees and expenses of the Lenders,
Arrangers and Agent incurred in connection with any of the Loan Documents and
the transactions contemplated thereby, (ii) the Attorney Costs, and (iii) all
fees and expenses as set forth herein and in the Fee Letter.

 

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

 

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

 

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

 

83

 

another
of such Loan Party’s officers as to the incumbency and signature of its
Secretary or Assistant Secretary, as the case may be.

 

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

 

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

 

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

 

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

 

(r)            Lenders
shall have received a reasonably satisfactory solvency certificate of the
Canadian Borrower and its Subsidiaries on a consolidated basis.

 

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

 

(t)            Agent
shall have received the following closing fees to be distributed to the
applicable Lenders noted:

 

(i)            U.S.$500,000 to PNC Bank, N.A.; and

 

(ii)           U.S.$125,000 to Bank of Montreal.

 

The acceptance by any of the Borrowers of any
Revolving Loans made or any Letters of Credit issued on the Effective Date
shall be deemed to be a representation and warranty made by each Borrower to
the effect that all of the conditions precedent to the making of such Revolving
Loans or the issuance of such Letters of Credit have been satisfied, with the
same effect as delivery to the Agent and the Lenders of a certificate signed by
a Responsible Officer of such Borrower, dated the Effective Date, to such
effect, except to the extent waived or postponed in writing by the Agent.

 

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

 

84

 

8.2          Conditions
Precedent to Each Revolving Loan and Letter of Credit.

 

The obligation of any Lender to make a
Revolving Loan after the Effective Date, and the obligation of the Lenders (in
the case of a Pro Rata Canadian Letter of Credit) or the applicable Letter of
Credit Issuer (in the case of any other Letter of Credit) to issue any Letter
of Credit after the Effective Date shall, in each instance, be subject to the
further conditions precedent that on and as of the date of any such extension
of credit:

 

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

 

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

 

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

 

(b)           No
such Borrowing shall exceed (i) U.S. Availability or Canadian
Availability, as applicable, or (ii) the U.S. Borrowing Base or the
Canadian Borrowing Base, as applicable, provided, however, that the foregoing
conditions precedent in this Section 8.2 are not conditions to (x) each
U.S. Lender participating in or reimbursing the Bank or the Agent for such U.S.
Lender’s Pro Rata Share of any U.S. Agent Advance or unreimbursed drawings
under a U.S. Letter of Credit made in accordance with the provisions of Section 1.3(h) or
1.4.II or (y) each Canadian Lender participating in or reimbursing Royal
Bank or the Agent for such Canadian Lender’s Pro Rata Share of any Canadian
Agent Advance or Overdraft Accommodation made in accordance with the provisions
of Sections 1.2(i) and 1.2(j) or unreimbursed drawings under a
Canadian Letter of Credit made in accordance with Section 1.4.I.

 

ARTICLE 9 — DEFAULT;
REMEDIES

 

9.1          Events
of Default.

 

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

 

85

 

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

 

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

 

(c)           (i) any
default shall occur in the observance or performance of any of the covenants or
agreements contained in any of Sections 5.2(a)-(d), 5.3, 7.5, 7.9 through 7.12,
7.14 through 7.20, 7.22, 7.24 or 7.26 of this Agreement; (ii) any default
shall occur in the observance or performance of any of the covenants or
agreements contained in Section 5.4 and such default shall continue for
five (5) Business Days or more; (iii) any default shall occur in the
observance or performance of any of the covenants or agreements contained in
any of, 7.2, 7.13, 7.18, 7.23, 7.27, 7.29, 7.32 or 7.33, and such default shall
continue for ten (10) Business Days or more after the earlier of (A) the
date on which such failure shall first became known to any Responsible Officer
of any Loan Party or (B) notice thereof is provided to the Loan Party
Representative by the Agent; or (iv) any default shall occur in the
observance or performance of any of the other covenants or agreements contained
in any other Section of this Agreement or any other Loan Document (except
Hedge Agreements) and such default shall continue for thirty (30) days or more
after the earlier of (A) the date on which such failure shall first become
known to any Responsible Officer of any Loan Party or (B) notice thereof
is provided to the Canadian Borrower by the Agent or (v) any default shall
occur in the observance or performance of any of the other covenants or
agreements contained in any Hedge Agreement(s) or in any other material
agreement(s) relating to Bank Products entered into at any time to which
any Loan Party and the BP Provider, U.S. Cash Management Provider, Agent or any
Lender or any of their Affiliates are party and such default shall continue for
more than the period of grace, if any, therein specified, if the effect thereof
(with or without the giving of notice or further lapse of time or both) is the
exercise by the BP provider, U.S. Cash Management Provider, the Agent or such
Lender or any of their Affiliates party to such Hedge Agreement(s) or such
material agreement(s), as applicable, of its remedies thereunder (excluding
rights of set off and rights exercised under Section 3.6) for an amount in
excess of $5,000,000 in the aggregate for all such Hedge Agreements or such
material agreements;

 

(d)           any
default shall occur with respect to any Debt for borrowed money (other than the
Obligations) of one or more of the Loan Parties in an outstanding principal
amount which, individually or in the aggregate, exceeds U.S.$15,000,000  in the 

 

86

 

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

 

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

 

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

 

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

 

87

 

against
all or any material part of the property of any Loan Party, or any material
part of the Collateral;

 

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

 

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

 

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

 

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

 

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

 

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

 

88

 

(other
than Permitted Liens) or is terminated (except in accordance with its terms),
revoked or declared void;

 

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

 

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

 

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

 

(q)           there
occurs a Change of Control.

 

9.2          Remedies.

 

(a)           If
an Event of Default exists and is continuing, the Agent may, in its discretion,
and shall, at the direction of the Required Lenders, do one or more of the
following at any time or times and in any order, without notice to or demand on
the Loan Parties, except such notices and demands as are required under the
terms of the Loan Documents: (i) reduce the Maximum U.S. Revolver Amount,
the Maximum Canadian Revolver Amount and/or the Maximum Revolver Amount or the
advance rates against Eligible Accounts, Eligible Inventory and/or any other
components used in computing the U.S. Borrowing Base or the Canadian Borrowing
Base or reduce one or more of the other elements used in computing the U.S.
Borrowing Base or the Canadian Borrowing Base (provided (x) if any such
advance rate or other element is so reduced while a Default (and not an 

 

89

 

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

 

(b)           If
an Event of Default has occurred and is continuing:  (i) the Agent shall have for the benefit
of the Agent and the Lenders, in addition to all other rights of the Agent and
the Lenders, the rights and remedies of a secured party under the Loan
Documents and the UCC, the PPSA, the Civil Code of Quebec and other applicable
laws; (ii) the Agent may, at any time, take possession of the Collateral
and keep it on any Loan Party’s premises, at no cost to the Agent or any
Lender, or remove any part of it to such other place or places as the Agent may
desire, or the Loan Parties shall, upon the Agent’s demand, at the Loan Parties’
cost, assemble the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (iii) the Agent may sell and
deliver any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems advisable, in
its sole discretion, and may, if the Agent deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and place of
sale or of such postponed or adjourned sale without giving a new notice of
sale.  Without in any way requiring
notice to be given in the following manner, each Loan Party agrees that any
notice by the Agent of sale, disposition or other intended action hereunder or
in connection herewith, whether required by the UCC, the PPSA, the Civil Code
of Quebec or otherwise, shall constitute reasonable notice to such Loan Party
if such notice is mailed by registered or certified mail, return receipt
requested, postage prepaid, or is delivered personally against receipt, at
least ten (10) days prior to such action to such Loan Party’s address
specified in or pursuant to Section 14.8. 
If any Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations until the Agent
or the Lenders receive payment, and if the buyer defaults in payment, the Agent
may resell the Collateral 

 

90

 

without
further notice to the Loan Parties.  In
the event the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, each Loan Party irrevocably waives:  (A) the posting of any bond, surety or
security with respect thereto which might otherwise be required; (B) any
demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (C) any requirement that the Agent retain
possession and not dispose of any Collateral until after trial or final
judgment.  Each Loan Party agrees that
the Agent has no obligation to preserve rights to the Collateral or marshal any
Collateral for the benefit of any Person. 
The Agent is hereby granted a license or other right to use, without
charge, upon the occurrence and during the continuance of an Event of Default
each Loan Party’s labels, patents, copyrights, name, trade secrets, trade
names, trademarks, and advertising matter or any similar property, necessary to
the production of, advertising or selling any Collateral (subject in the case of
trademarks and any property of similar nature, to sufficient rights to quality
control and inspection in favour of the relevant Loan Party required under
applicable law to avoid risk of invalidation of said trademarks and property of
similar nature), and each Loan Party’s rights under all licenses and all
franchise agreements shall inure to the Agent’s benefit for such purpose to the
extent permitted therein.  The proceeds
of sale shall be applied first to all expenses of sale, including attorneys’
fees, and then to the Obligations in accordance with Section 3.7.  The Agent will return any excess to the
applicable Loan Party and the applicable Loan Parties (jointly and severally in
the case of the Borrowers and the Guarantors with respect to Obligations owing
by any of the Loan Parties, shall remain liable for any deficiency.

 

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

 

ARTICLE 10 — TERM
AND TERMINATION

 

10.1        Term
and Termination.

 

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

 

91

 

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

 

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

 

11.1        Amendments
and Waivers.

 

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

 

(i)            increase or extend the Canadian Revolving Credit
Commitment of any Canadian Lender or the U.S. Revolving Credit Commitment of
any U.S. Lender;

 

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

 

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

 

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

 

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

 

(vi)          change the provisions of Section 3.7;

 

92

 

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

 

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

 

(ix)           change the definitions of “Required Lenders”, “Aggregate
Canadian Revolver Outstandings” or “Aggregate U.S. Revolver Outstandings” or “Stated
Termination Date” or “Change of Control”; or

 

(x)            increase (A) the Maximum U.S. Revolver Amount, (B) the
Maximum Canadian Revolver Amount, (C) the Maximum Revolver Amount, (D) the
Letter of Credit Subfacility, or (E) the Overdraft Accommodation Maximum
Amount;

 

provided, however, the Agent may, in its sole
discretion and notwithstanding the limitations contained in clause (ix) above
and any other terms of this Agreement, make U.S. Agent Advances in accordance
with Section 1.3(h), Canadian Agent Advances in accordance with Section 1.2(i) and
Overdraft Accommodations in accordance with Section 1.2(j); and, provided
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and provided further, that Schedule 1.2
hereto (Lenders’ Commitments) may be amended from time to time by the Agent
alone to reflect assignments of Commitments in accordance herewith.

 

(b)           If,
in connection with any proposed amendment, waiver or consent requiring the
consent of all Lenders, the consent of the Required Lenders is obtained, but
the consent of other Lenders is not obtained (any such Lender whose consent is
not obtained being referred to herein as a “Non-Consenting Lender”), then, at
the Canadian Borrower’s request, the Agent (so long as the Agent is not a
Non-Consenting Lender or an Eligible Assignee shall have the right (but not the
obligation) with the Agent’s approval (so long as the Agent is not a
Non-Consenting Lender), to purchase from the Non-Consenting Lenders, and the
Non-Consenting Lenders agree that they shall sell, all the Non-Consenting
Lenders’ Commitments and Revolving Loans in accordance with the procedures set
forth in Section 11.2.

 

11.2        Assignments;
Participations.

 

(a)           Any
Lender may, with the written consent of the Agent (which consents shall not be
unreasonably withheld or delayed) and so long as no Event of Default has
occurred and is continuing, with the written consent of the Canadian Borrower
(which consent shall not be unreasonably withheld or delayed); provided, that
the Canadian Borrower may not withhold its consent to an Eligible Assignee or
to an assignment solely on the basis that the Eligible Assignee may have a
claim under Section 4.1 if that claim is also available to the same extent
to the Assigning Lender), assign and delegate to one or more Eligible Assignees
(provided that no consent of the Agent or Canadian Borrower shall be required
in connection with any assignment and delegation, by a Lender to an Affiliate
of such Lender that is 

 

93

 

an
Eligible Assignee (each an “Assignee”) all, or any ratable part of all, of the
Revolving Loans, the Revolving Credit Commitment and the other rights and
obligations of such Lender hereunder, in a minimum amount of U.S.$5,000,000
(and increments of U.S.$1,000,000 in excess of such amount) (or the Equivalent
Amount thereof in CDN Dollars) (provided that, unless an assignor Lender has
assigned and delegated all of its Revolving Loans and Revolving Credit
Commitment, no such assignment and/or delegation shall be permitted unless,
after giving effect thereto, such assignor Lender retains a Revolving Credit
Commitment in a minimum amount of U.S.$5,000,000 (or the Equivalent Amount
thereof in U.S. Dollars); provided, however, that the Borrowers and the Agent
may continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Canadian
Borrower and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Canadian Borrower and the Agent an
Assignment and Acceptance in substantially the form of Exhibit A (“Assignment
and Acceptance”) and (iii) except for any replacement of a Non-Consenting
Lender by the Canadian Borrower, in as such case the Canadian Borrower shall
pay, the assignor Lender or Assignee has paid to the Agent a processing fee in
the amount of U.S.$3,500.  No Lender may
assign or delegate any or all of its Revolving Loans, Revolving Credit
Commitment or other rights and obligations of such Lender hereunder except in
connection with an assignment or delegation of the Revolving Loans and
Revolving Credit Commitment of such Lender’s related U.S. Lender or Canadian
Lender, as applicable in accordance with the terms of this Section 11.2.

 

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

 

(c)           By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows:  (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished 

 

94

 

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

 

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

 

(e)           Any
Lender (the “originating Lender”) may at any time sell to one or more
commercial banks, financial institutions or other Persons not Affiliates of any
of Loan Parties or competitors of the Canadian Borrower (a “Participant”)
participating interests in any Revolving Loans, the Commitment of that Lender
and the other interests of that Lender hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender’s
obligations under this Agreement and the other Loan Documents shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for
the performance of such obligations, (iii) the Loan Parties and the Agent
shall continue to deal solely and directly with the originating Lender in
connection with the originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall transfer
or grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document (except to the extent that such amendment,
waiver or consent both directly affects the Participant and would (a) increase
or extend the Commitment of the originating Lender participated to such
Participant, (b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the originating Lender hereunder or under any other Loan
Document, (c) reduce the principal of, or the rate of interest specified
herein 

 

95

 

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

 

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

 

(g)           Assignments
of Revolving Credit Commitments and Revolving Loans shall be effectuated as
follows:

 

(i)            where the assignor is a Canadian Lender, (A) the
Eligible Assignee Canadian Lender shall purchase from the assignor Canadian
Lender a pro rata portion of its Canadian Revolving Loans and Canadian
Revolving Credit Commitment, and (B) the Eligible Assignee U.S. Affiliate
of the assignee Canadian Lender shall purchase from the assignor Canadian
Lender’s related U.S. Lender the same pro rata portion of its U.S. Revolving
Loans and its U.S. Revolving Credit Commitment; and

 

(ii)           where the assignor is a U.S. Lender, (A) the
Eligible Assignee U.S. Lender shall purchase from the assignor U.S. Lender a
pro rata portion of its U.S. Revolving Loans and U.S. Revolving Credit
Commitment, and (B) the Eligible Assignee Canadian Affiliate of the
assignee U.S. Lender shall purchase from the assignor U.S. Lender’s related Canadian
Lender 

 

96

 

the same pro rata portion of
its Canadian Revolving Loans and its Canadian. Revolving Credit Commitment.

 

11.3        Replacement
of Lenders.

 

If any Lender (i) is a Defaulting U.S.
Lender or a Defaulting Canadian Lender or (ii) does not make a LIBOR
Revolving Loan pursuant to Section 4.2 or fails to designate an alternate
lending office pursuant to Section 4.1 or (iii) seeks indemnification
for increased costs pursuant to Section 4.3 or (iv) is owed
additional amounts pursuant to Section 4.1, which increased costs or
additional amounts are not being incurred generally by the other Lenders, then
the Canadian Borrower shall have the right, but not the obligation so long as
no Event of Default is continuing, to (i) replace such Lender together
with its related U.S. Lender or Canadian Lender, as applicable, with other
banks or financial institutions (the “Replacement Lender(s)”) reasonably
acceptable to the Agent and with the Agent’s consent, which consent shall not
be unreasonably withheld or delayed or (ii) prepay the Revolving Loans
and/or permanently reduce the Commitments, in each case, without premium or
penalty, of such Lender (which prepayments or reductions (i) shall be
accompanied by accrued and unpaid interest on the principal amount so prepaid
up to the date of such prepayment and (ii) shall not be subject to the Pro
Rata Sharing provisions of the Agreement). 
The Replacement Lender(s) shall execute Assignment(s) and
Acceptance(s) pursuant to which it and they shall become a party hereto as
provided in Section 11.2 and such assignment shall be effectuated in
accordance with Section 11.2.  Upon
compliance with the provisions for assignment provided in Section 11.2
(but provided that if the Defaulting Lender refuses or otherwise fails to
execute the applicable Assignment and Acceptance within two (2) Business
Days of a request to do so, it shall be deemed to have executed the Assignment
and Acceptance by mere insertion of its name as “Assignor”), and the payment of
amounts referred to in clause (a), the Replacement Lender(s) shall
constitute “Lender(s)” hereunder and the Lender(s) being so replaced shall
no longer constitute “Lender(s)” hereunder. 
Any such replacement shall be effected within one hundred eighty (180)
days after delivery of the Agent’s certificate under Section 4.1 or Section 4.6,
as applicable, or the date the Lender became a Defaulting U.S. Lender or a
Defaulting Canadian Lender, as applicable.

 

ARTICLE 12 — THE
AGENT, ETC.

 

12.1        Appointment
and Authorization.

 

Each Lender hereby irrevocably designates and
appoints the Royal Bank as its Agent under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.  Agent agrees to act as such on the express
conditions contained in this Article 12. 
Except for Section 12.9 and Section 12.10, the last sentence
of 12.11(a), the second to last sentence in 12.15(c) and Sections 12.15(d) and
(e), the provisions of this Article 12 are solely for the benefit of Agent
and the Lenders and the Loan Parties shall have no rights as third party
beneficiaries of any of the provisions contained herein.  Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any 

 

97

 

Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.  Without limiting the generality of the
foregoing sentence, the use of the term “agent” in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting
parties.  Except as expressly otherwise
provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the
other Loan Documents, including (a) the determination of the applicability
of ineligibility criteria with respect to the calculation of the U.S. Borrowing
Base or the Canadian Borrowing Base, as applicable, (b) the making of U.S.
Agent Advances, or Canadian Agent Advances or Overdraft Accommodation the
exercise of remedies pursuant to Section 9.2, and any action so taken or
not taken shall be deemed consented to by the Lenders.  The Agent agrees that the Agent’s Liens are
granted in favour of and held by the Agent for and on behalf of the Lenders in
accordance with the terms hereof.  Section 12.11(c) shall
govern all actions of the Agent in regard to the perfection and maintenance of
perfection of the Agent’s Lien.

 

12.2        Delegation
of Duties.

 

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

 

12.3        Liability
of Agent.

 

Notwithstanding any terms herein to the
contrary, none of the Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or wilful misconduct) or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by any Loan Party or any Subsidiary or
Affiliate of any Loan Party or any officer thereof contained in this Agreement
or in any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Loan Party or any other
party to any Loan Document to perform its obligations hereunder or thereunder
or (iii) be liable or responsible for any actions or inactions of a
Defaulting Lender.  No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect any of
the properties, books or records of any Loan Party or any of the Subsidiaries
or Affiliates of any Loan Party.  Agent
is not liable or responsible for any actions or inactions of a Defaulting
Lender.

 

98

 

12.4        Reliance
by Agent.

 

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

 

12.5        Notice
of Default.

 

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

 

12.6        Credit
Decision.

 

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

 

99

 

provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any Loan Party which may come into
the possession of any of the Agent Related Persons.

 

12.7        Indemnification.

 

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

 

12.8        Agent
in Individual Capacity.

 

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

 

12.9        Successor
Agent.

 

The Agent may resign as Agent, upon at least 30
days’ prior written notice to the Lenders and the Loan Party Representative,
such resignation to be effective upon the earlier of (a) the acceptance of
a successor agent to its appointment as Agent, which successor agent, so long
as an Event of Default is not continuing, shall have been consented to by the
Canadian Borrower (which consent shall not be unreasonably withheld or delayed)
and (b) the expiration of such 30 day period if no successor Agent accepts
an appointment as Agent within 30 days after such initial notice period (60
days in total).  In the event that Royal
Bank sells all of its respective Commitments and Revolving Loans including, as
part of a sale, transfer or other disposition by 

 

100

 

Royal Bank of substantially all of its loan
portfolio, Royal Bank shall resign as Agent, as applicable and such purchaser
or transferee shall become the successor Agent, as applicable hereunder, which
successor agent, so long as an Event of Default is not continuing, shall have
been consented to by the Loan Parties (which consent shall not be unreasonably
withheld).  Subject to the foregoing, if
the Agent resigns under this Agreement, the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which successor agent, so
long as an Event of Default is not continuing, shall have been consented to by
the Borrowers (which consent shall not be unreasonably withheld).  Without limitation to the Agent’s right to
resign if no successor agent has been consented to by the Borrowers or if no
successor agent has accepted to act as such within the 30 days’ notice period,
if no successor agent is appointed in accordance with the terms set forth
above, the Agent may appoint, after consulting with the Lenders and the
Canadian Borrower, a successor agent from among the Canadian Lenders.  Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term “Agent” or “Agent”
as applicable shall mean such successor agent and the retiring Agent’s
appointment, powers and duties as Agent or Collateral shall be terminated.  After any retiring Agent’s resignation
hereunder as Agent,  the provisions of
this Article 12 shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

 

12.10      Withholding
Tax.

 

(a)           Each
Foreign Lender shall deliver to the Agent and the Canadian Borrower (or in the
case of a Participant, to the Lender from which the related participation shall
have been purchased) on behalf of the U.S. Borrowers two properly completed and
executed copies of IRS Form W-8BEN, W-8IMY (with the necessary
attachments) W-8EXP, W-8ECI or any subsequent version thereof or successors
thereto and any other documentation necessary to establish a complete exemption
from United States of America withholding tax with respect to all interest
payments hereunder prior to the date on which such Foreign Lender becomes a
party to this Agreement or any other Loan Document and from time to time as
necessary to retain any such exemption (including upon the expiration, obsolescence
or invalidity of such form, upon the designation of a new lending office and at
such other times as may be necessary in the reasonable determination of the
Agent).  Such Foreign Lender agrees to
promptly notify the Agent and the Canadian Borrower on behalf of the U.S.
Borrowers of any change in circumstances which would modify or render invalid
any claimed exemption or reduction.  Each
Foreign Lender having sold a Participation shall collect from the Participant
the forms described in this Section, as applicable, and provide such forms to
the Agent.

 

(b)           Each
Foreign Lender on or prior to the date on which such Foreign Lender becomes a
party to this Agreement or any other Loan Document and from time to time
thereafter either upon the request of the Agent or its respective agents or
upon the expiration or obsolescence of any previously delivered documentation
shall furnish to the Agent any documentation that is required under the Code or
applicable Treasury regulations (including any documentation that is required
as a result of a change in law occurring after the date hereof) to enable the
Borrowers

 

101

 

or
the Agent to comply with its obligations under FATCA including but not limited
to any Taxes it may be required to withhold in respect of FATCA.

 

(c)                                  If any U.S. Lender is a “United States person” within the meaning of Section 7701(a)(30)
of the Code, such U.S. Lender shall deliver to the Agent and the Canadian
Borrower (or in the case of a Participant, to the Lender from which the related
participation shall have been purchased) on behalf of the U.S. Borrowers prior
to or upon the date on which such U.S. Lender becomes a party to this Agreement
or any other Loan Document (and from time to time as requested by the Agent or
Canadian Borrower or as required by law) two properly completed and executed
copies of IRS Form W-9 (or any successor forms) certifying that such
United States person is not subject to backup withholding.  Each U.S. Lender having sold a Participation
shall collect from the Participant the forms described in this Section, as
applicable, and provide such forms to the Agent.

 

(d)                                 If any Lender is entitled to a reduction in the applicable withholding
Tax, the Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction.  If the forms or other documentation
required by clause (a) of this Section are not delivered to the Agent
(or otherwise), then the Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount equivalent to
the applicable withholding Tax without reduction.  None of the Loan Parties shall have any
liability under Section 4.1 or otherwise with respect to such amounts
withheld by the Agent pursuant to this subsection (d).

 

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

 

12.11                 Collateral Matters.

 

(a)                                  The Lenders hereby irrevocably authorize the Agent to release and take
such actions as may be necessary to release any of the Agent’s Liens upon any 

 

102

 

Collateral
(i) upon the termination of the Commitments and payment and satisfaction
in full by the Borrowers of all Revolving Loans, reimbursement obligations in
respect of Letters of Credit and Credit Support and all other Obligations
(whether or not any of such obligations are due other than Contingent
Obligations), and the termination of all outstanding Letters of Credit (or the
deposit with the Agent of Supporting Letters of Credit in accordance with and
as required by Section 1.4.I(h)); (ii) constituting property being
sold or disposed of (other than to another Loan Party) if the applicable Loan
Party certifies to the Agent that the sale or disposition is made in compliance
with Section 7.11 (and the Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in
which each of the Borrowers certifies to the Agent that no Loan Party owned an
interest at the time the Lien was granted or at any time thereafter (and the
Agent may rely conclusively on any such certificate, without further inquiry); (iv) constituting
property leased to a Loan Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement; or (v) as
contemplated by the last sentence of this Section 12.11(a).  Except as provided above, the Agent will not
release any of the Agent’s Liens without the prior written authorization of the
Required Lenders; provided that the Agent may, in its discretion, release the
Agent’s Liens on Collateral valued in the aggregate not in excess of $5,000,000
during each Fiscal Year without the prior written authorization of the Required
Lenders.  Upon request by the Agent or
Borrower at any time, the Lenders will confirm in writing the Agent’s authority
to release any of the Agent’s Liens upon particular types or items of
Collateral pursuant to this Section 12.11. 
The Agent hereby agrees that, so long as no Default or Event of Default
has occurred and is continuing, it shall return promptly to the applicable
Borrower all cash collateral held by the Agent from time to time in connection
with any Letter of Credit issued hereunder for the account of such Borrower
upon the later of (x) the satisfaction in full of all of the Obligations
of such Borrower with respect to such Letter of Credit and, if applicable,
related Credit Support, and (y) the return and cancellation of such Letter
of Credit (or, in the case of any cash collateral held by the Agent under
clause sixth of either Section 3.7(a)(ii) with respect to a Letter of
Credit, upon the cure or waiver in accordance with the terms hereof of the relevant
Event of Default requiring such cash collateralization).

 

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

 

103

 

Parties,
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.

 

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

 

12.12                 Restrictions on Actions by
Lenders; Sharing of Payments.

 

(a)                                  Each of the Lenders agrees that it shall not, without the express
consent of the Agent, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of the Agent, set off against the Obligations, any
amounts owing by such Lender to any of the Loan Parties or any accounts of any
of the Loan Parties now or hereafter maintained with such Lender; provided,
however, that, for greater certainty, the foregoing shall not apply to the
Royal Bank in its capacity as a BP Provider who shall, subject to Section 12.12(b)(1),
have the right of set off in respect of any Bank Product obligations.  Each of the
Lenders further agrees that it shall not, unless specifically requested to do
so by the Agent, take or cause to be taken any action to enforce its rights
under this Agreement or any other Loan Document against any of the Loan
Parties, including the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of
the Collateral.

 

(b)                                 If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of a Loan Party to such Lender arising under or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement or (ii) payments hereunder in excess of such Lender’s
ratable portion of all such distributions hereunder with respect to the
applicable Obligations, such Lender shall promptly (1) turn the same over
to the Agent, in kind, and with such endorsements as may be required to
negotiate the same to the Agent or in same day funds, as applicable, for the
account of all of the applicable Lenders and for application to the applicable
Obligations in accordance with Section 3.7 and thereafter all applicable
provisions of this Agreement or (2) excluding in all cases the BP Provider
and the U.S. Cash Management Provider, purchase, without recourse or warranty,
an undivided interest and participation in the applicable Obligations owed to
the other applicable Lenders so that such excess payment 

 

104

 

received
shall be applied ratably as among the applicable Lenders in accordance with
their Pro Rata Shares; provided, however, that if all or part of such excess
payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to the
extent that such purchasing party is required to pay interest in connection
with the recovery of the excess payment.

 

12.13                 Agency for Perfection.

 

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

 

12.14                 Payments by Agent to Lenders.

 

All payments to be made by the Agent to the
Lenders shall be made by external wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Effective
Date (or if such Lender is an Assignee, on the applicable Assignment and
Acceptance) or pursuant to such other wire transfer instructions as each party
may designate for itself by written notice to the Agent.  Concurrently with each such payment, the
Agent shall identify whether such payment (or any portion thereof) represents
principal, fees or interest on the U.S. Revolving Loans, the Canadian Revolving
Loans or otherwise.  Unless the Agent
receives notice from a Borrower prior to the date on which any payment is due
to the applicable Lenders from such Borrower that such Borrower will not make
such payment in full as and when required, the Agent may assume that such
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each applicable Lender on such due date an
amount equal to the amount then due such Lender from such Borrower.  If and to the extent a Borrower has not made
such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon
at the Federal Funds Rate for each day from the date such amount is distributed
to such Lender until the date repaid.

 

12.15

 

A.                                    Settlement of Canadian Revolving
Loans.

 

(a)                                  Canadian Revolving Loans.  Each Canadian Lender’s funded portion of the
Canadian Revolving Loans is intended by the Canadian Lenders to be equal at all
times to such Canadian Lender’s Pro Rata Share of the outstanding Canadian
Revolving Loans.  Notwithstanding such
agreement, the Agent and the other Canadian Lenders agree (which agreement
shall not be for the benefit of or enforceable by the Canadian Borrower) that
in order to facilitate the administration of this Agreement and the other Loan
Documents, settlement 

 

105

 

among
them as to the Canadian Revolving Loans, the Canadian Agent Advances and the
Overdraft Accommodations shall take place on a periodic basis in accordance
with the following provisions:

 

(i)                                    The Agent shall request settlement (“Canadian
Revolving Loan Settlement”) with the Canadian Lenders on at least a weekly
basis or on a more frequent basis at the Agent’s election, (A) for itself,
with respect to the Agent Advance and for Royal Bank, with respect to the
Overdraft Accommodation, and (B) with respect to collections received, in
each case, by notifying the Canadian Lenders of such requested Canadian
Revolving Loan Settlement by telecopy, telephone or other similar form of
transmission, of such requested Canadian Revolving Loan Settlement, no later
than 12:00 noon (Toronto  time) on the
date of such requested Canadian Revolving Loan Settlement (the “Canadian
Revolving Loan Settlement Date”).  Each
Canadian Lender (other than the Agent in the case of Canadian Agent Advances
and the Royal Bank in the case of Overdraft Accommodations) shall transfer the
amount of such Canadian Lender’s Pro Rata Share of the outstanding principal
amount of the Canadian Agent Advances and Overdraft Accommodations with respect
to each Canadian Revolving Loan Settlement to the Agent, to the Agent’s
account, not later than 2:00 p.m. (Toronto  time),
on the Canadian Revolving Loan Settlement Date applicable thereto (such
transfer to be made in the same currency as the currency of the applicable
Canadian Agent Advances and Overdraft Accommodations).  Canadian Revolving Loan Settlements may occur
during the continuation of a Default or an Event of Default and whether or not
the applicable conditions precedent set forth in Article 8 have then been
satisfied.  Such amounts made available
to the Agent or Royal Bank shall be applied against the amounts of the
applicable Agent Advance or Overdraft Accommodation and, together with the
portion of such Agent Advance or Overdraft Accommodation representing Royal
Bank’s Pro Rata Share thereof, shall constitute Canadian Revolving Loans of
such Canadian Lenders.  If any such
amount is not transferred to the Agent by any Canadian Lender on the Canadian
Revolving Loan Settlement Date applicable thereto, the Agent shall be entitled
to recover such amount on demand from such Canadian Lender together with
interest thereon (in the same respective currency or currencies as the
applicable amount or amounts to be recovered) at the Canadian Prime Rate or ABR
as applicable for the first three (3) days from and after the Canadian
Revolving Loan Settlement Date and thereafter at the Interest Rate then
applicable to Canadian Prime Rate Canadian Revolving Loans or ABR Revolving
Loans, for itself, with respect to the Agent Advance and the Royal Bank with
respect to the Overdraft Accommodation.

 

(ii)                                 Notwithstanding the foregoing, not more than one (1) Business
Day after demand is made by the Agent (whether before or after the occurrence
of a Default or an Event of Default and regardless of whether the Agent has
requested a Canadian Revolving Loan Settlement with respect to an Agent 

 

106

 

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

 

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

 

(iv)                             Between Canadian Revolving Loan Settlement Dates, the
Agent, to the extent no Canadian Agent Advances or Overdraft Accommodations are
outstanding, may pay over to Royal Bank any payments received by the Agent,
which in accordance with the terms of this Agreement would be applied to the reduction
of the Canadian Revolving Loans, for application to Royal Bank’s Revolving
Loans.  If, as of any Canadian Revolving
Loan Settlement Date, collections received since then immediately preceding
Canadian Revolving Loan Settlement Date have been applied to Royal Bank’s
Revolving Loans (other than to Canadian Agent Advances or Overdraft
Accommodations in which such Canadian Lender has not yet funded its purchase of
a participation pursuant to clause (ii) above), as provided for in the
previous sentence, Royal Bank shall pay to the Agent for the accounts of the
Canadian Lenders, to be applied to the outstanding Canadian Revolving Loans of
such Canadian Lenders, an amount such that each Canadian Lender shall, upon
receipt of such amount, have, as of such Canadian Revolving Loan Settlement
Date, its Pro Rata Share of the Canadian Revolving Loans.  During the period between Canadian Revolving
Loan Settlement Dates, Agent with respect to Canadian Agent Advances or Royal
Bank with respect to Overdraft Accommodations, and 

 

107

 

each Canadian Lender with
respect to the Canadian Revolving Loans other than Canadian Agent Advances or
Overdraft Accommodations, shall be entitled to interest at the applicable rate
or rates payable under this Agreement on the actual average daily amount of
funds employed by Royal Bank, the Agent and the other Canadian Lenders but
subject to Sections 12.15(c) and (d) with respect to a Defaulting
Canadian Lender.

 

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

 

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

 

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

 

108

 

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

 

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

 

109

 

Credit
Commitment of any Canadian Lender or relieve or otherwise excuse the
performance by the Canadian Borrower of its duties and other obligations
hereunder.

 

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

 

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

 

B.                                    Settlement of U.S. Revolving
Loans.

 

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

 

(i)                                    The Agent shall request settlement (“U.S. Revolving
Loan Settlement”) with the U.S. Lenders on at least a weekly basis or on a more
frequent basis at the Agent’s election, (A) for itself or Bank, with respect
to the 

 

110

 

U.S. Agent Advance, and (B) with respect
to collections received, in each case, by notifying the U.S. Lenders of such
requested U.S. Revolving Loan Settlement by telecopy, telephone or other similar
form of transmission, of such requested U.S. Revolving Loan Settlement, no
later than 12:00 noon (Toronto time) on the date of such requested U.S.
Revolving Loan Settlement (the “U.S. Revolving Loan Settlement Date”).  Each U.S. Lender (other than the Agent or
Bank in the case of U.S. Agent Advances) shall transfer the amount of such U.S.
Lender’s Pro Rata Share of the outstanding principal amount of the U.S. Agent
Advances with respect to each U.S. Revolving Loan Settlement to the Agent, to
the Agent’s account, not later than 2:00 p.m. (Toronto time), on the U.S.
Revolving Loan Settlement Date applicable thereto (such transfer to be made in
the same currency as the currency of the applicable U.S. Agent Advances).  U.S. Revolving Loan Settlements may occur
during the continuation of a Default or an Event of Default and whether or not
the applicable conditions precedent set forth in Article 8 have then been
satisfied.  Such amounts made available
to the Agent or Bank shall be applied against the amounts of the applicable
Agent Advance and, together with the portion of such Agent Advance representing
the Bank’s or Bank’s Pro Rata Share thereof, shall constitute U.S. Revolving
Loans of such U.S. Lenders.  If any such
amount is not transferred to the Agent by any U.S. Lender on the U.S. Revolving
Loan Settlement Date applicable thereto, the Agent shall be entitled to recover
such amount on demand from such U.S. Lender together with interest thereon (in
the same respective currency or currencies as the applicable amount or amounts
to be recovered) at the U.S. Prime Rate as applicable for the first three (3) days
from and after the U.S. Revolving Loan Settlement Date and thereafter at the
Interest Rate then applicable to U.S. Prime Rate Revolving Loans, for itself or
Bank, with respect to the U.S. Agent Advance.

 

(ii)                                 Notwithstanding the foregoing, not more than one (1) Business
Day after demand is made by the Agent (whether before or after the occurrence
of a Default or an Event of Default and regardless of whether the Agent has
requested a U.S. Revolving Loan Settlement with respect to an Agent Advance),
each other U.S. Lender (A) shall irrevocably and unconditionally purchase
and receive from Royal Bank, Bank or the Agent, as applicable, without recourse
or warranty, an undivided interest and participation in such Agent Advance
equal to such U.S. Lender’s Pro Rata Share of such Agent Advance or and (B) if
U.S. Revolving Loan Settlement has not previously occurred with respect to such
U.S. Agent Advances, upon demand by Royal Bank, Bank or Agent, as applicable,
shall pay to Royal Bank, Bank or Agent, as applicable, as the purchase price of
such participation an amount equal to one hundred percent (100%) of such U.S.
Lender’s Pro Rata Share of such U.S. Agent Advances.  If such amount is not in fact made available
to the Agent by any U.S. Lender, the Agent shall be entitled to recover such
amount on demand from such U.S. Lender together with interest thereon (in the
same

 

111

 

 

respective currency or currencies as the
relevant U.S. Agent Advances, as the case may be) at the U.S. Prime Rate, as
applicable for the first three (3) days from and after such demand and
thereafter at the Interest Rate then applicable to U.S. Prime Rate Revolving
Loans.

 

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

 

(iv)                             Between U.S. Revolving Loan Settlement Dates, the
Agent, to the extent no U.S. Agent Advances are outstanding, may pay over to
Royal Bank or Bank, as applicable, any payments received by the Agent, which in
accordance with the terms of this Agreement would be applied to the reduction
of the U.S. Revolving Loans, for application to Bank’s U.S. Revolving Loans.  If, as of any U.S. Revolving Loan Settlement
Date, collections received since then immediately preceding U.S. Revolving Loan
Settlement Date have been applied to Royal Bank’s or Bank’s Revolving Loans
(other than to U.S. Agent Advances in which such U.S. Lender has not yet funded
its purchase of a participation pursuant to clause (ii) above), as
provided for in the previous sentence, Royal Bank or Bank, as applicable, shall
pay to the Agent for the accounts of the U.S. Lenders, to be applied to the outstanding
U.S. Revolving Loans of such U.S. Lenders, an amount such that each U.S. Lender
shall, upon receipt of such amount, have, as of such U.S. Revolving Loan
Settlement Date, its Pro Rata Share of the U.S. Revolving Loans.  During the period between U.S. Revolving Loan
Settlement Dates, Agent or Bank, as applicable, with respect to U.S. Agent
Advances, and each U.S. Lender with respect to the U.S. Revolving Loans other
than U.S. Agent Advances, shall be entitled to interest at the applicable rate
or rates payable under this Agreement on the actual average daily amount of
funds employed by Royal Bank, Bank, the Agent and the other U.S. Lenders but
subject to Sections 12.15B(c) and (d) with respect to a Defaulting
U.S. Lender.

 

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

 

(b)                                    U.S. Lenders’ Failure to Perform.  All U.S.
Revolving Loans (other than U.S. Agent Advances) shall be made by the U.S.
Lenders simultaneously and in accordance with their Pro Rata Shares.  It is understood that (i) no U.S. Lender
shall be responsible for any failure by any other U.S. Lender to perform its
obligation to make any U.S. Revolving Loans hereunder, nor shall any U.S.
Revolving Credit Commitment of any U.S. Lender be increased or decreased as a 

 

112

 

result of any failure by any other U.S. Lender
to perform its obligation to make any U.S. Revolving Loans hereunder, (ii) no
failure by any U.S. Lender to perform its obligation to make any U.S. Revolving
Loans hereunder shall excuse any other U.S. Lender from its obligation to make
any U.S. Revolving Loans hereunder, and (iii) the obligations of each U.S.
Lender hereunder shall be several, not joint and several.

 

(c)                                     Defaulting U.S. Lenders.  Unless the Agent receives
notice from a U.S. Lender on or prior to the Effective Date or, with respect to
any Borrowing after the Effective Date, at least one Business Day prior to the
date of such Borrowing, that such U.S. Lender will not make available as and
when required hereunder to the Agent that U.S. Lender’s Pro Rata Share of a
Borrowing, the Agent may assume that each U.S. Lender has made such amount
available to the Agent in immediately available funds on the Funding Date.  Furthermore, the Agent may, in reliance upon
such assumption, make available to the U.S. Borrowers on such date a
corresponding amount.  If any U.S. Lender
has not transferred its full Pro Rata Share to the Agent in immediately
available funds and the Agent has transferred a corresponding amount to the
U.S. Borrowers on the Business Day following such Funding Date that U.S. Lender
shall make such amount available to the Agent, together with interest (in the
same currency as the related Borrowing) at the U.S. Prime Rate for that day.  A notice by the Agent submitted to any U.S.
Lender with respect to amounts owing shall be conclusive, absent manifest
error.  If each U.S. Lender’s full Pro
Rata Share is transferred to the Agent as required, the amount transferred to
the Agent shall constitute that U.S. Lender’s U.S. Revolving Loan for all
purposes of this Agreement.  If that
amount is not transferred to the Agent on the Business Day following the
Funding Date, the Agent will notify the U.S. Borrowers of such failure to fund
and, within one (1) Business Day after demand by the Agent, the U.S. Borrowers
shall pay such amount to the Agent for the Agent’s account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the Interest Rate applicable at the time to the U.S.
Revolving Loans comprising that particular Borrowing.  The failure of any U.S. Lender to make any
U.S. Revolving Loan on any Funding Date shall not relieve any other U.S. Lender
of its obligation hereunder to make a U.S. Revolving Loan on that Funding
Date.  No U.S. Lender shall be
responsible for any other U.S. Lender’s failure to advance such other U.S.
Lenders’ Pro Rata Share of any Borrowing.

 

(d)                                    Retention of Defaulting U.S. Lender’s Payments.  The Agent
shall not be obligated to transfer to a Defaulting U.S. Lender any payments
made by the U.S. Borrowers to the Agent for the Defaulting U.S. Lender’s
benefit; nor shall a Defaulting U.S. Lender be entitled to the sharing of any
payments hereunder.  Amounts payable to a
Defaulting U.S. Lender shall instead be paid to or retained by the Agent and
any such payments shall in the discretion of the Agent be held in a
non-interest bearing account or otherwise invested as Agent shall see fit;
provided that the amount of any such payments shall be returned to the U.S.
Borrowers, if U.S. Borrowers are entitled to same under the terms of this
Agreement, promptly following the removal of the Defaulting U.S. Lender
pursuant to Section 12.15B(e). 
Notwithstanding any other terms hereof, the 

 

113

 

Defaulting U.S. Lender shall not be entitled to
interest in any amounts returned by Agent. 
In its discretion, to the extent the U.S. Borrowers have not reduced the
U.S. Revolving Credit Commitments by repaying the outstanding borrowed U.S.
Revolving Commitments of the Defaulting U.S. Lenders, the Agent may loan the
U.S. Borrowers the amount of all such payments received or retained by it for
the account of such Defaulting U.S. Lender. 
Any amounts so loaned to the U.S. Borrowers shall bear interest at the
rate applicable to Prime Rate Revolving Loans and for all other purposes of
this Agreement shall be treated as if they were U.S. Revolving Loans to U.S.
Borrowers, provided, however, that for purposes of voting or consenting to
matters with respect to the Loan Documents and determining Pro Rata Shares,
such Defaulting U.S. Lender shall be deemed not to be a “U.S. Lender” or “Lender”.  Notwithstanding any other terms hereof, until
a Defaulting U.S. Lender cures its failure to fund its Pro Rata Share of any
Borrowing such Defaulting U.S. Lender shall not be entitled to any portion of
the U.S. Commitment Fee as set forth above and the amount of any such U.S.
Commitment Fee previously paid to the Agent shall be returned to the U.S.
Borrowers promptly following the removal of the Defaulting U.S. Lender pursuant
to Section 12.15A(e). if (i) the Agent received such U.S. Commitment
Fee at a time when the U.S. Lender was a Defaulting U.S. Lender, (ii) the
Agent has not paid over such amount to Defaulting U.S. Lender, and (iii) to
the extent requested by U.S. Borrowers. This Section shall remain
effective with respect to such U.S. Lender until such time as the Defaulting
U.S. Lender shall no longer be in default of any of its obligations under this
Agreement.  The terms of this Section shall
not be construed to increase or otherwise affect the U.S. Revolving Credit
Commitment of any U.S. Lender or relieve or otherwise excuse the performance by
the U.S. Borrowers of its duties and other obligations hereunder.

 

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

 

(f)                                       No Defaulting U.S. Lender Credit Extensions.  Notwithstanding
any other terms or conditions hereof, at any time when there is a Defaulting
U.S. Lender, neither the Agent nor any U.S. Lender shall be required to make
any Loans, issue any Letters of Credit or Credit Support, make available any
Bank Products or 

 

114

 

otherwise extend any form of credit to the U.S.
Borrowers (“Defaulting U.S. Lender Credit Extensions”) to the extent any such
Loan, Letter of Credit, Credit Support Bank Product or other extension of credit
hereunder would require the Agent or any such Lender to obtain settlement with
or payment or repayment or reimbursement from such Defaulting U.S. Lender, all
of which Defaulting U.S. Lender Credit Extensions being in the sole discretion
of the Agent and U.S. Lenders exercised in good faith.

 

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

 

(a)                                  Notice of Issuance of Letters of Credit.  On each U.S. Revolving Loan
Settlement Date, the Agent shall notify each U.S. Lender of the issuance of all
U.S. Letters of Credit since the prior U.S. Revolving Loan Settlement
Date.  On each Canadian Revolving Loan
Settlement Date, the Agent shall notify each Canadian Lender of the issuance of
all Canadian Letters of Credit since the prior Canadian Revolving Loan
Settlement Date.

 

(b)                                 Participations in Letters of Credit.

 

(i)                                    Purchase of Participations.  Immediately
upon issuance of any Letter of Credit in accordance with Section 1.4.II,
each applicable Lender (i.e. each U.S. Lender with respect to U.S. Letters of
Credit and related Credit Support and each Canadian Lender with respect to
Canadian Letters of Credit and related Credit Support) shall be deemed to have
irrevocably and unconditionally purchased and received without recourse or
warranty, an undivided interest and participation equal to such Lender’s Pro
Rata Share of the face amount of such Letter of Credit or the Credit Support
provided through the Agent to the applicable Letter of Credit Issuer, if not
the Bank or Royal Bank, in connection with the issuance of such Letter of
Credit (including all obligations of the applicable Borrower with respect
thereto, and any security therefor or guaranty pertaining thereto).

 

(ii)                                 Sharing of Reimbursement Obligation Payments.

 

(A)                              Whenever the Agent receives a payment from the
Canadian Borrower on account of reimbursement obligations in respect of a
Canadian Letter of Credit or Canadian Credit Support as to which the Agent has
previously received for the account of the Canadian Letter of Credit Issuer
thereof payment from a Canadian Lender, the Agent shall promptly pay to such
Canadian Lender such Canadian Lender’s Pro Rata Share of such payment from such
Canadian Borrower.  Each such payment
shall be made by the Agent on the next Canadian Revolving Loan Settlement Date.

 

(B)                                Whenever the Agent receives a payment from a U.S.
Borrower on account of reimbursement obligations in respect of a U.S. Letter of
Credit or U.S. Credit Support as to which the Agent has previously received for
the account of the U.S. Letter of Credit Issuer thereof payment from a U.S.
Lender, the Agent shall promptly pay to such 

 

115

 

U.S. Lender such U.S. Lender’s
Pro Rata Share of such payment from such U.S. Borrower.  Each such payment shall be made by the Agent
on the next U.S. Revolving Loan Settlement Date.

 

(iii)                              Documentation.

 

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

 

(B)                               Upon the request of any U.S. Lender, the Agent shall
furnish to such U.S. Lender copies of any U.S. Letter of Credit, U.S. Credit
Support for any U.S. Letter of Credit and such other documentation as may
reasonably be requested by such U.S. Lender.

 

(iv)                             Obligations Irrevocable.  The obligations of each
applicable Lender to make payments to the Agent with respect to any Letter of
Credit or with respect to their participation therein or with respect to any
Credit Support for any Letter of Credit or with respect to the U.S. Revolving
Loans or Canadian Revolving Loans, as applicable, made as a result of a drawing
under a Letter of Credit and the obligations of the Borrower for whose account
the Letter of Credit or Credit Support was issued to make payments to the
Agent, for the account of the applicable Lenders, shall be irrevocable and
shall not be subject to any qualification or exception whatsoever, including any
of the following circumstances:

 

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

 

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

 

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

 

116

 

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

 

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

 

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

 

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

 

(d)                                 Indemnification by U.S. Lenders.  To the extent not reimbursed by
the U.S. Borrowers and without limiting the obligations of the U.S. Borrowers
hereunder, the U.S. Lenders agree to indemnify the U.S. Letter of Credit Issuer
ratably in accordance with their respective Pro Rata Shares, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys’ fees) or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
the U.S. Letter of Credit Issuer in any way relating to or arising out of any
U.S. Letter of Credit or the transactions contemplated thereby or any action
taken or omitted by the U.S. Letter of Credit Issuer under any U.S. Letter of
Credit issued by the U.S. Letter of Credit Issuer or any Loan Document in
connection therewith; provided, that no U.S. Lender shall be liable for any of
the foregoing to the extent it arises from the gross negligence or wilful
misconduct of the Person to be indemnified as determined in a formal
non-appealable judgment of a court of competent jurisdiction.  Without limitation of the foregoing, each
U.S. Lender agrees to reimburse the U.S. Letter of Credit Issuer promptly upon
demand for its Pro Rata Share of any costs or expenses payable by any of the
U.S. Borrowers to the U.S. 

 

117

 

Letter
of Credit Issuer, to the extent that the U.S. Letter of Credit Issuer is not
promptly reimbursed for such costs and expenses by such U.S. Borrower.  The agreement contained in this Section shall
survive payment in full of all other Obligations.

 

(e)                                  Indemnification by Canadian Lenders.  To the extent not reimbursed by
the Canadian Borrower and without limiting the obligations of the Canadian
Borrower hereunder, the Canadian Lenders agree to indemnify the Canadian Letter
of Credit Issuer ratably in accordance with their respective Pro Rata Shares,
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys’ fees) or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Canadian Letter of Credit Issuer in any way relating to or
arising out of any Canadian Letter of Credit or the transactions contemplated
thereby or any action taken or omitted by the Canadian Letter of Credit Issuer
under any Canadian Letter of Credit issued by the Canadian Letter of Credit
Issuer or any Loan Document in connection therewith; provided that no Canadian
Lender shall be liable for any of the foregoing to the extent it arises from
the gross negligence or wilful misconduct of the Person to be indemnified.  Without limitation of the foregoing, each
Canadian Lender agrees to reimburse the Canadian Letter of Credit Issuer
promptly upon demand for its Pro Rata Share of any costs or expenses payable by
the Canadian Borrower to the Canadian Letter of Credit Issuer, to the extent
that the Canadian Letter of Credit Issuer is not promptly reimbursed for such
costs and expenses by the Canadian Borrower. 
The agreement contained in this Section shall survive payment in
full of all other Obligations.

 

12.17                 Concerning the Collateral and the
Related Loan Documents.

 

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

 

118

 

Revolving Loans and the Obligations of each
Loan Party are cross-guaranteed and cross-collateralized.

 

12.18                 Field Audit and Examination
Reports; Disclaimer by Lenders.

 

By signing this Agreement, each Lender:

 

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

 

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

 

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

 

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

 

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

 

12.19                 Relation Among Lenders.

 

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

 

12.20                 Arranger and Other Agent.

 

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

 

119

 

 

ARTICLE 13 — GUARANTEES

 

13.1                        The Guarantees.

 

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

 

13.2                        Guarantee Absolute.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

120

 

13.3                        Consents, Waivers and Renewals.

 

Each Guarantor hereby renounces to the benefits
of division and discussion.  Each
Guarantor hereby waives promptness, diligence, notice of the acceptance hereof,
notice of intent to accelerate and notice of acceleration and any other notice
with respect to any of the Obligations or the Guaranteed Obligations and this
Agreement and any requirement that the Agent and/or Secured Parties protect,
secure, perfect, render opposable or insure the Agent’s Lien or Lien on any
Property subject thereto or exhaust any right or take any action against any
Borrower, any Guarantor, or any other Person or any Collateral before
proceeding hereunder.  Each Guarantor
agrees that the Agent and/or Secured Parties may at any time and from time to
time, either before or after the maturity thereof, without notice to or further
consent of the Borrowers or the Guarantor extend the time of payment of,
exchange or surrender any Collateral for, or renew any of the Obligations or
the Guaranteed Obligations, and may also make any agreements with any Borrower,
any Guarantor, or any other party to or Person liable on any of the
Obligations, or interested therein, for the extension, renewal, payment, compromise,
discharge, or release thereof, in whole or in part, or for any modification of
the terms thereof or of any agreement between the Agent and/or any Secured
Parties and the Borrowers or any such other party or Person, without in any way
impairing or affecting this Guarantee. 
Each Guarantor agrees to make payment to the Agent, for the rateable
benefit of the Secured Parties, of any of the Obligations and the Guaranteed
Obligations whether or not the Agent and/or any Lenders shall have resorted to
any collateral security, or shall have proceeded against any other Loan Party
principally or secondarily obligated with respect to any of the Obligations or
the Guaranteed Obligations.  The Agent
and/or Secured Parties shall be free to deal with the Borrowers and each of the
Guarantors as it sees fit.

 

13.4                        Subrogation.

 

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

 

13.5                        Protection Clause.

 

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

 

13.6                        Limitation on Guarantee of
Obligations.

 

(a)                                 In any action or proceeding with respect to any Guarantor involving any
state or provincial corporate law, or any state or provincial or federal
bankruptcy, 

 

121

 

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

 

(b)                                To the extent that any U.S. Guarantor shall make a payment under this
Agreement of all or any of the Guaranteed Obligations (a “U.S. Guarantor
Payment”) which, taking into account all other U.S. Guarantor Payments then
previously or concurrently made by the U.S. Guarantor, exceeds the amount which
the U.S. Guarantor would otherwise have paid if the U.S. Guarantor had paid the
aggregate Obligations satisfied by such U.S. Guarantor Payment in the same
proportion that such U.S. Guarantor’s “Allocable Amount” (as defined below) (in
effect immediately prior to such U.S. Guarantor Payment) bore to the aggregate
Allocable Amounts of the U.S. Guarantor in effect immediately prior to the
making of such U.S. Guarantor Payment, then, following payment in full in cash
(or in a form otherwise acceptable to the Lenders) of the Obligations and
termination of the Revolving Credit Commitments, such U.S. Guarantor shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, the Guarantors for the amount of such excess, pro rata based
upon their respective Allocable Amounts in effect immediately prior to such
U.S. Guarantor Payment.

 

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

 

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

 

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

 

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

 

122

 

13.7                        Guarantee of Payment.

 

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

 

ARTICLE 14 — MISCELLANEOUS

 

14.1                        No Waivers; Cumulative Remedies.

 

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

 

14.2                        Severability.

 

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

 

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

 

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

 

(b)                                ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT 

 

123

 

IN
THE COURTS OF THE PROVINCE OF ALBERTA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON EXCLUSIVE JURISDICTION OF
THOSE COURTS.  EACH OF THE LOAN PARTIES,
THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO.  NOTWITHSTANDING THE
FOREGOING:  (1) THE AGENT AND THE
LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN
PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE
LENDERS DEEM NECESSARY OR APPROPRIATE AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.

 

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

 

14.4                        WAIVER OF JURY TRIAL.

 

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

 

124

 

PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.

 

14.5                        Survival of Representations and
Warranties.

 

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

 

14.6                        Other Security and Guarantees.

 

The Agent may, without notice or demand and without
affecting the Loan Parties’ obligations hereunder, from time to time:  (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part of
the Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guarantee of payment
of all or any part of the Obligations and release or substitute any such
endorser or guarantor or any Person who has given any Lien in any other
collateral as security for the payment of all or any part of the Obligations or
any other Person in any way obligated to pay all or any part of the
Obligations.

 

14.7                        Fees and Expenses.

 

Each Borrower agrees, jointly and severally, to
pay to the Agent, for its benefit, on demand (upon receipt of a reasonably
detailed written invoice therefor), all reasonable incurred costs and expenses
(other than any Indemnified Taxes, which are governed by Section 4.1, and any
costs or losses governed by Section 4.3 or Section 4.4) that the
Agent pays or incurs in connection with the negotiation, preparation,
syndication, consummation, administration, enforcement and termination of this
Agreement or any of the other Loan Documents, including:  (a) Attorney Costs; (b) costs and
expenses (including Attorney Costs) for any amendment, supplement, waiver,
consent or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for
recording the filing financing statements and continuations, and other actions
to perfect, protect, and continue the Agent’s Liens (including costs and
expenses paid or incurred by the Agent in connection with the consummation of
this Agreement); (e) sums paid or incurred to pay any amount or take any
action required of any Loan Party under the Loan Documents that such Loan Party
fails to pay or take; (f) costs of appraisals, inspections and
verifications of the Collateral and other due diligence with respect to the
Collateral and the Loan Parties, including travel, lodging, and meals for
inspections of the Collateral and any Loan Party’s operations by the Agent plus
a U.S.$1,000 per Person per day charge for field examinations and audits and the
preparation of reports thereof; and (g) costs and expenses of forwarding
loan proceeds, collecting cheques and other items of payment, and establishing
and maintaining Receipt Accounts and lock boxes, and costs and expenses of
preserving and protecting the Collateral. 
In addition, each Borrower agrees, jointly and severally, to pay
reasonable costs and expenses incurred by the Agent (including Attorney Costs)
to the Agent, for its benefit, on demand, and to the other Lenders for their
benefit, on demand, and to pay to the Lenders’ all reasonable fees, expenses
and disbursements incurred by such 

 

125

 

other Lenders for one law firm retained by such
other Lenders, in each case, paid or incurred to obtain payment of the
Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents or to
defend any claims made or threatened against the Agent or any Lender arising
out of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). 
The Borrowers shall be obligated for the foregoing amounts, including
any such amounts owing on the Effective Date, whether or not the credit facilities
contemplated hereunder are consummated and the foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and
expenses to be paid by any of the Borrowers. 
All of the foregoing costs and expenses shall be, at Agent’s option, (i) debited
from any Designated Account, as applicable, or any other bank account of any
Borrower maintained with Royal Bank or the U.S. Cash Management Provider, or (ii) charged
to the Borrowers’ Loan Accounts as Revolving Loans, all as described and
further permitted pursuant to Section 3.6.

 

14.8                        Judgment Interest Act.

 

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

 

14.9                        Notices.

 

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

 

If to the Agent or the Bank:

 

Royal Bank of Canada

200 Bay Street

12th Floor

Royal Bank Plaza, South Tower

Toronto, Ontario  M5J 2W7

 

Attention:  Agency Services Group

Telecopy No.:  (416) 842-4023

 

with copies to:

 

Ogilvy Renault LLP

200 Bay Street, Suite 3800

Royal Bank Plaza, South Tower

Toronto, Ontario  M5J 2Z4

 

126

 

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

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

 

If to Royal Bank:

 

Royal Bank of Canada

200 Bay Street

30th Floor

Royal Bank Plaza

South Tower

Toronto, Ontario  M5J 1J5

 

Attention: 
Robert S. Kizell

Telecopy No.:  (416) 842-5844

 

If to a Loan Party:

 

Gibson Energy ULC

1700, 440 2nd Avenue S.W.

Calgary, Alberta  T2P 5E9

 

Attention: 
Executive Vice President Finance and Chief Financial Officer

Telecopy No.:  (403) 206-4011

 

with copies to:

 

Riverstone Holdings LLC

712 Fifth Avenue 

51st Floor

New York, NY  10019

 

Attention: 
Robert Tichio

Telecopy No.:  (212) 993-0077

 

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

 

14.10                 Waiver of Notices.

 

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

 

127

 

14.11                 Binding Effect.

 

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

 

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

 

Each Loan Party agrees, jointly and severally,
to defend, indemnify and hold the Agent Related Persons, and each Secured Party
and each of its respective officers, directors, employees, counsel, advisors,
representatives, agents and attorneys-in-fact (each, an “Indemnified Person”)
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time (including at any time following repayment of the Revolving
Loans and the termination, resignation or replacement of the Agent or
replacement of any Lender) be imposed on, incurred by or asserted against any
such Indemnified Person in any way relating to or arising out of any
litigation, investigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) relating to or arising out of this Agreement, any other
Loan Document or the Revolving Loans or the use of the proceeds thereof, the
Transaction or any document contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by any such Indemnified Person under or in connection with any of the foregoing,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the “Indemnified Liabilities”); provided, that the Loan Parties
shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities to the extent they are found by a court of competent
jurisdiction to have resulted from a material breach of this Agreement by an
Indemnified Person, or the wilful misconduct, bad faith or gross negligence of
such Indemnified Person.  The agreements
in this Section shall survive payment of all other Obligations.

 

14.13                 Limitation of Liability.

 

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

 

128

 

14.14                 Final Agreement.

 

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

 

14.15                 Counterparts.

 

This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Loan Party in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the
same document.

 

14.16                 Captions.

 

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

 

14.17                 Right of Setoff.

 

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

 

129

 

 

14.18                 Confidentiality.

 

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

 

(b)                                 Each Lender severally agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to the Agent or such Lender by or on behalf of the Loan Parties, under
this Agreement or any other Loan Document, except to the extent that such
information (i) was or becomes generally available to the public other
than as a result of disclosure by the Agent or such Lender or (ii) was or
becomes available on a nonconfidential basis from a source other than a Loan
Party, provided that such source is not bound by a confidentiality agreement or
is not acting in a fiduciary or trust position or capacity with a Loan Party
known to the Agent or such Lender; provided, however, that the Agent and any
Lender may disclose such information (1) at the request or pursuant to any
requirement of any Governmental Authority to which the Agent or such Lender is
subject or in connection with an examination of the Agent or such Lender by any
such Governmental Authority; (2) pursuant to subpoena or other court
process (and the Agent or such Lender, as the case may be, shall endeavour to
provide the Canadian Borrower with prior notice of such disclosure to the
extent practicable and shall, at the sole cost and expense of the Loan Parties,
cooperate, to the extent practicable and not in a manner adverse to the Agent
or such Lender, with the Canadian Borrower if the Canadian Borrower seeks a
protective order with respect to the relevant information); (3) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (4) to the extent reasonably required in connection
with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or any of their
respective Affiliates may be party (and the Agent or such Lender, as the case
may be, shall endeavour to provide the Canadian Borrower with prior notice of
such disclosure to the extent practicable and shall, at the sole cost and
expense of the Loan Parties, cooperate, to the extent practicable and not in a
manner adverse to the Agent or such Lender, with the Canadian Borrower if the
Canadian Borrower seeks a protective order with respect to the relevant
information); (5) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Loan Document; (6) to
the Agent’s or such Lender’s independent auditors, accountants, attorneys and
other professional advisors (and the Agent or such Lender, as the case may be,
shall advise such auditors, accountants, attorneys or other professional
advisors of the confidential nature of such information); (7) to any
prospective Participant or Assignee under any Assignment and Acceptance, actual
or potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the Lenders
hereunder; (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which a Loan Party is party
or 

 

130

 

is
deemed party with the Agent or such Lender, and (9) to its Affiliates who
are informed of and who agree to maintain the confidentiality of the
information.  The Agent and the Lenders
may share among themselves any information they may have from time to time
concerning the Loan Parties whether or not such information is confidential,
but shall have no obligation to do so (except for any obligations of the Agent
to provide information to the extent required in this Agreement).  The Loan Parties hereby consent to any such
sharing of information among the Agent and the Lenders.

 

14.19                 Conflicts with Other Loan
Documents.

 

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

 

14.20                 Judgment Currency.

 

If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the “Original Currency”) into another currency (the “Second
Currency”), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Agent or the relevant Lender, as the case
may be, could purchase in the Toronto foreign exchange market, the Original
Currency with the Second Currency on the date two (2) Business Days
preceding that on which judgment is given. 
Each Loan Party agrees that its obligation in respect of any Original
Currency due from it hereunder shall, notwithstanding any judgment or payment
in such other currency, be discharged only to the extent that, on the Business
Day following the date the Agent or relevant Lender, as the case may be,
receives payment of any sum so adjudged to be due hereunder in the Second
Currency, the Agent or such Lender may, in accordance with normal banking
procedures, purchase, in the Toronto foreign exchange market, the Original
Currency with the amount of the Second Currency so paid; and if the amount of
the Original Currency so purchased or could have been so purchased is less than
the amount originally due in the Original Currency, each Loan Party agrees as a
separate obligation and notwithstanding any such payment or judgment to
indemnify the Agent or such Lender, as the case may be, against such loss.  The term “rate of exchange” in this Section 14.20
means the spot rate at which the Agent or relevant Lender, in accordance with
normal practices, is able on the relevant date to purchase the Original
Currency with the Second Currency, and includes any premium and costs of
exchange payable in connection with such purchase.

 

14.21                 Appointment of Loan Party
Representative; Reliance Upon Authority.

 

Each Loan Party hereby designates the Canadian
Borrower as its representative and agent on its behalf (the “Loan Party
Representative”) for the purposes of (i) in the case of a Borrower,
issuing on such Borrower’s behalf Notices of Borrowing and Notices of
Continuation/Conversion, giving instructions with respect to the disbursement
of the proceeds of Revolving Loans to be made to such Borrower, selecting
interest rate options for such Borrower and requesting Letters of Credit for
the account of such Borrower and (ii) giving and receiving on such Loan
Party’s behalf all other notices, directions, instructions, requests, other
communications and consents hereunder or under any of the other Loan Documents
and taking all other actions (including in respect of 

 

131

 

compliance with covenants and consenting or
agreeing to any amendment or waiver of compliance with any provision of any
Loan Document) on behalf of such Loan Party under the Loan Documents.  The Loan Party Representative hereby accepts
such appointment.  The Agent and each
Lender may regard any notice, direction, instruction, request or other
communication pursuant to any Loan Document from the Loan Party Representative
as a notice, direction, instruction, request or communication, as the case may
be, from the applicable Loan Party or Loan Parties, and may give any notice or
other communication required or permitted to be given to any Loan Party or Loan
Parties hereunder to the Loan Party Representative on behalf of such Loan Party
or Loan Parties.  Each Loan Party agrees
that each notice, election, direction, instruction, request, other
communication, representation and warranty, consent, covenant, agreement and
undertaking or other action made or taken on its behalf by the Loan Party
Representative shall be deemed for all purposes to have been made or taken by
such Loan Party and shall be binding upon and enforceable against such Loan
Party to the same extent as if the same had been made or taken directly by such
Loan Party.

 

14.22                 Patriot Act Notice.

 

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

 

14.23                 Intercreditor Agreement.

 

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

 

14.24                 Accounting Changes.

 

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

 

14.25                 Effect of Certain Errors or
Omissions.

 

Notwithstanding anything to the contrary
contained herein (including Section 11.1), if following the Effective
Date, the Agent and the Canadian Borrower shall have jointly identified an
obvious 

 

132

 

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

 

14.26                 Business Corporations Act
(Alberta).

 

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

 

14.27                 Existing Credit Agreement Amended
and Restated

 

This Agreement shall amend and restate the
Existing Credit Agreement in its entirety, with the parties hereby agreeing
that there is no novation of the Existing Credit Agreement.  On the Effective Date, the rights and
obligations of the parties under the Existing Credit Agreement shall be
subsumed within and be governed by this Agreement; provided, however, that each
of the “Revolving Loans” (as such term is defined in the Existing Credit
Agreement) outstanding under the Existing Credit Agreement on the Effective
Date shall, for purposes of this Agreement, be included as Revolving Loans
hereunder and each of the “Letters of Credit” (as defined in the Existing
Credit Agreement) outstanding under the Existing Credit Agreement on the
Effective Date shall be Letters of Credit hereunder.

 

[the remainder of this page is
intentionally left blank]

[signature pages follow]

 

133

 

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

 

“CANADIAN BORROWER”

 

 

	
   

  	
  GIBSON ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated
Credit Agreement -

 

 

“U.S. BORROWERS”

 

 

	
   

  	
  TPG TRANSPORT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TPG LEASING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TAYLOR TRANSFER SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TAYLOR GAS LIQUIDS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  

 

- Amended and Restated
Credit Agreement -

 

 

“U.S. BORROWERS”

 

 

	
   

  	
  TAYLOR COMPANIES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LINK PETROLEUM INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON ENERGY (U.S.) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON (U.S.) HOLDCO CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON (U.S.) ACQUISITIONCO CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated
Credit Agreement -

 

 

	
   

  	
  GIBSON (U.S.) FINCO CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated Credit Agreement -

 

 

“GUARANTORS”

 

 

	
   

  	
  GIBSON ENERGY HOLDING ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MOOSE JAW REFINERY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CANWEST PROPANE ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MP ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEP ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  

 

- Amended and Restated
Credit Agreement -

 

 

 

	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance 

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON FINANCE LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON GCC INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

2

 

	
   

  	
  MOOSE JAW REFINERY PARTNERSHIP

  BY ITS MANAGING PARTNER, GIBSON

  ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CANWEST PROPANE PARTNERSHIP

  BY ITS MANAGING PARTNER, GIBSON

  ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MP ENERGY PARTNERSHIP

  BY ITS MANAGING PARTNER, GIBSON

  ENERGY ULC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated Credit Agreement -

 

 

	
   

  	
  GIBSON ENERGY PARTNERSHIP

  BY ITS MANAGING PARTNER,

  GIBSON ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CHIEF HAULING CONTRACTORS ULC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LINK PETROLEUM SERVICES LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated Credit Agreement -

 

 

 

	
   

  	
  LINK PETROLEUM INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON ENERGY (U.S.) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated Credit Agreement -

 

 

	
   

  	
  GEP MIDSTREAM FINANCE CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BATTLE RIVER TERMINAL LP

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BATTLE RIVER TERMINAL GP INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BRIDGE CREEK TRUCKING LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JOHNSTONE TANK TRUCKING LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated
Credit Agreement -

 

 

	
   

  	
  TPG TRANSPORT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TPG LEASING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TAYLOR TRANSFER SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TAYLOR GAS LIQUIDS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON (U.S.) HOLDCO CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated Credit Agreement -

 

 

	
   

  	
  GIBSON (U.S.) ACQUISITIONCO
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON (U.S.) FINCO CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TAYLOR COMPANIES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AARCAM PROPANE &
  CONSTRUCTION

  HEAT LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
  Name: Richard G. Taylor

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance

  and Chief Financial Officer

  

 

- Amended and Restated Credit Agreement -

 

 

“AGENT”

 

 

	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Ann Hudey

  
	
   

  	
   

  	
  Name: Ann Hudey

  
	
   

  	
   

  	
  Title: Manager Agency

  

 

- Amended and Restated Credit Agreement -

 

 

“EFFECTIVE DATE CANADIAN
LETTER OF CREDIT ISSUER”

 

 

	
   

  	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Robert S. Kizell

  
	
   

  	
   

  	
   

  	
  Name: Robert S. Kizell

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-fact

  
	
   

  	
   

  	
  Per:

  	
  /s/ Dan Mascioli

  
	
   

  	
   

  	
   

  	
  Name: Dan Mascioli

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-fact

  

 

- Amended and Restated
Credit Agreement -

 

 

“EFFECTIVE DATE U.S. LETTER
OF CREDIT ISSUER”

 

 

	
   

  	
   

  	
  PNC BANK, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Keith Moellering

  
	
   

  	
   

  	
   

  	
  Name: Keith Moellering

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  

 

- Amended and Restated
Credit Agreement -

 

 

“CANADIAN LENDERS”

 

 

	
   

  	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Robert S. Kizell

  
	
   

  	
   

  	
   

  	
  Name: Robert S. Kizell

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-fact

  
	
   

  	
   

  	
  Per:

  	
  /s/ Dan Mascioli

  
	
   

  	
   

  	
   

  	
  Name: Dan Mascioli

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Irja R. Otsa

  
	
   

  	
   

  	
   

  	
  Name: Irja R. Otsa

  
	
   

  	
   

  	
   

  	
  Title: Associate Director Banking

  Products Services, US

  
	
   

  	
   

  	
  Per:

  	
  /s/ Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Name: Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Title: Associate Director Banking

  Products Services, US

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF MONTREAL

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Christine Roque

  
	
   

  	
   

  	
   

  	
  Name: Christine Roque

  
	
   

  	
   

  	
   

  	
  Title: Sr. Portfolio Manager

  
	
   

  	
   

  	
  Per:

  	
  /s/ Gary B. Still

  
	
   

  	
   

  	
   

  	
  Name: Gary B. Still

  
	
   

  	
   

  	
   

  	
  Title: Senior Manager

  

 

- Amended and Restated
Credit Agreement -

 

 

	
   

  	
   

  	
  MORGAN STANLEY BANK, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Sherrese Clarke

  
	
   

  	
   

  	
   

  	
  Name: Sherrese Clarke

  
	
   

  	
   

  	
   

  	
  Title: Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PNC BANK CANADA BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Geoffrey Hich

  
	
   

  	
   

  	
   

  	
  Name: Geoffrey Hich

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
  Per:

  	
  /s/ Mike Danby

  
	
   

  	
   

  	
   

  	
  Name: Mike Danby

  
	
   

  	
   

  	
   

  	
  Title: Assistant Vice President

  

 

- Amended and Restated Credit Agreement -

 

 

“U.S. LENDERS”

 

 

	
   

  	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Dustin Craven

  
	
   

  	
   

  	
   

  	
  Name: Dustin Craven

  
	
   

  	
   

  	
   

  	
  Title: Attorney-In-Fact

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Irja R. Otsa

  
	
   

  	
   

  	
   

  	
  Name: Irja R. Otsa

  
	
   

  	
   

  	
   

  	
  Title: Associate Director Banking

  Products Services, US

  
	
   

  	
   

  	
  Per:

  	
  /s/ Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Name: Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Title: Associate Director Banking 

  Products Services, US

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BMO CHICAGO BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Larry Allan Swiniarski

  
	
   

  	
   

  	
   

  	
  Name: Larry Allan Swiniarski

  
	
   

  	
   

  	
   

  	
  Title: Vice President, Bank of Montreal

  Chicago Branch

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORGAN STANLEY BANK, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Ryan Vetsch

  
	
   

  	
   

  	
   

  	
  Name: Ryan Vetsch

  
	
   

  	
   

  	
   

  	
  Title: Authorized Signatory

  

 

- Amended and Restated
Credit Agreement -

 

 

	
   

  	
   

  	
  PNC BANK, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Keith Moellering

  
	
   

  	
   

  	
   

  	
  Name: Keith Moellering

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  

 

- Amended and Restated
Credit Agreement -

 

 

“ARRANGERS”

 

 

	
   

  	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Robert S. Kizell

  
	
   

  	
   

  	
   

  	
  Name: Robert S. Kizell

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-fact

  
	
   

  	
   

  	
  Per:

  	
  /s/ Dan Mascioli

  
	
   

  	
   

  	
   

  	
  Name: Dan Mascioli

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UBS SECURITIES LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Name: Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-Fact

  
	
   

  	
   

  	
  Per:

  	
  /s/ April Varner-Nanton

  
	
   

  	
   

  	
   

  	
  Name: April Varner-Nanton

  
	
   

  	
   

  	
   

  	
  Title: Director

  

 

- Amended and Restated Credit Agreement -

 

 

“DOCUMENTATION AGENT”

 

 

	
   

  	
   

  	
  UBS SECURITIES LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Name: Mary E. Evans

  
	
   

  	
   

  	
   

  	
  Title: Attorney-in-Fact

  
	
   

  	
   

  	
  Per:

  	
  /s/ April Varner-Nanton

  
	
   

  	
   

  	
   

  	
  Name: April Varner-Nanton

  
	
   

  	
   

  	
   

  	
  Title: Director

  

 

- Amended and Restated Credit Agreement -

 

 

ANNEX A

to

Credit Agreement

 

Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

“Adjustment Date” has the meaning specified in Section 1.6(a).

 

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

 

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

 

“Agent Advances” means the collective reference
to U.S. Agent Advances and Canadian Agent Advances.

 

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

 

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

 

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

 

“Aggregate Revolver Outstandings” means the
collective reference to the Aggregate Canadian Revolver Outstandings and the
Aggregate U.S. Revolver Outstandings.

 

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

 

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

 

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

 

2

 

“Allocated Amount” has the meaning specified in
Section 1.5.

 

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

 

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

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Applicable Margin

  	
   

  
	
  Pricing

  Level

  	
   

  	
  Average Excess Availability

  	
   

  	
  Canadian

  Prime Rate

  Revolving

  Loans, ABR

  Revolving

  Loans and

  U.S. Prime

  Rate

  Revolving

  Loans

  	
   

  	
  BA

  Equivalent

  Revolving

  Loans,

  LIBOR

  Revolving

  Loans and

  Letter of

  Credit Fees

  	
   

  	
  Commitment Fee

  (at all times when

  the sum of

  Aggregate

  Revolver

  Outstandings is

  less than 50% of

  the Maximum

  Revolver Amount)

  	
   

  	
  Commitment Fee

  (at all times when

  the sum of

  Aggregate

  Revolver

  Outstandings is

  greater than or

  equal to 50% of the

  Maximum

  Revolver Amount)

  	
   

  
	
  I

  	
   

  	
  Greater than or equal to
  U.S.$125,000,000

  	
   

  	
  1.25

  	
  %

  	
  2.75

  	
  %

  	
  0.75

  	
   

  	
  0.50

  	
  %

  
	
  II

  	
   

  	
  Less than U.S.$125,000,000
  and greater than or equal to U.S.$100,000,000

  	
   

  	
  1.50

  	
  %

  	
  3.00

  	
  %

  	
  0.75

  	
   

  	
  0.50

  	
  %

  
	
  III

  	
   

  	
  Less than U.S.$100,000,000
  and greater than or equal to U.S.$75,000,000

  	
   

  	
  1.75

  	
  %

  	
  3.25

  	
  %

  	
  0.75

  	
   

  	
  0.50

  	
  %

  
	
  IV

  	
   

  	
  Less than U.S.$75,000,000

  	
   

  	
  2.00

  	
  %

  	
  3.50

  	
  %

  	
  0.75

  	
  %

  	
  0.50

  	
  %

  

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Availability” means the U.S. Availability plus
the Canadian Availability.

 

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

 

(a)           the aggregate cumulative amount, not less than zero, equal to 50% of; (i) ,
without duplication of amounts already disbursed hereunder, Consolidated Net
Income of the Canadian Borrower (for the trailing twelve months as at such
period); minus, (ii) cash Capital Expenditures made during such
period, minus, (iii) scheduled principal payments of Debt for
borrowed money made during such period not financed by the Available Amount
other than amounts in this paragraph (a);

 

(b)           the proceeds received after the Closing Date from any equity issuance by
or capital contribution to the Canadian Borrower or any Loan Party (from a
Person other than a Loan Party);

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

“Bank” means Royal Bank of Canada, acting
through its branch located at One Liberty Plaza, New York, New York.

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

“Borrower” and “Borrowers” have the meanings
specified in the preamble hereto.

 

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

 

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

 

“BP Provider” has the meaning specified in Section 1.5.

 

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

 

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

 

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

 

7

 

Accommodations)
at such time relating to extensions of credit made (or, in the case of Pending
Revolving Loans, to be made to or for the account of the Canadian Borrower),
minus (iii) the Overdraft Accommodation Maximum Amount.

 

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

 

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

 

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

 

(i)            100% of Eligible Cash Equivalents of the Canadian Loan Parties; plus

 

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

 

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

 

(iv)          the lesser of (A) 80% of Eligible Accounts of the
Canadian Loan Parties that are Other Unbilled Eligible Accounts of the Canadian
Loan Parties or (B) one-third of the sum of the amounts of clauses (ii) plus
(iii) above; plus

 

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

 

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

 

MINUS

 

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

 

(i)            Reserves; plus

 

(ii)           the Bank Product Reserve; plus

 

(iii)          the Hedging Reserve.

 

“Canadian Commitment Fee” has the meaning
specified in Section 2.5(a).

 

8

 

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

 

“Canadian Credit Support” has the meaning specified
in Section 1.4.II(a)(i).

 

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

 

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

 

“Canadian Fronting Fee” has the meaning
specified in Section 2.6(b).

 

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

 

“Canadian LC Accommodation” has the meaning
specified in Section 1.4.II(a)(i).

 

“Canadian Lender” means each Lender that has a
Canadian Revolving Credit Commitment or is the holder of a Canadian Revolving
Loan or is a participant in a Pro Rata Canadian Letter of Credit, Canadian
Letter of Credit or Canadian Credit Support.

 

“Canadian Letter of Credit” has the meaning
specified in Section 1.4.II(a)(i).

 

“Canadian Letter of Credit Fee” has the meaning
specified in Section 2.6(b).

 

“Canadian Letter of Credit Issuer” means Royal
Bank or any affiliate of Royal Bank.

 

“Canadian Notice of Borrowing” has the meaning
specified in Section 1.2(b)(i).

 

“Canadian Notice of Continuation/Conversion”
has the meaning specified in Section 2.2(a)(ii).

 

“Canadian Prime Rate” means, at any time, the
rate of interest per annum equal to the greater of (i) the rate which the
principal office of Royal Bank in Toronto, Ontario quotes, publishes and refers
to as its “prime rate” and which is its reference rate of interest for loans in
Canadian Dollars to its borrowers; and (ii) the sum of (y) the
average rate for Canadian Dollar bankers’ acceptances having a term of 1 month
that appears on the Reuters Screen CDOR Page (or any replacement of such
page) as of 10:00 a.m. (Toronto time) on the date of determination, as
reported by Royal Bank, and (z) 1.0%, adjusted automatically with each
quoted or published change in such rate, all without the necessity of any
notice to the Canadian Borrower or any other Person.

 

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

 

“Canadian Qualified Lender” means a financial
institution that is resident in Canada or a financial institution that is not
resident in Canada and is not deemed to be resident in Canada for purposes of
the Income Tax Act (Canada), provided that
such foreign financial institution deals at arm’s length with each Loan Party
for purposes of the Income Tax Act
(Canada).

 

9

 

 

 

 

“Canadian Revolver Commitment Adjustment” has
the meaning specified in Section 1.6(a).

 

“Canadian Revolving Credit Commitment” means,
as to any Lender, the obligation of such Lender, if any, to make Canadian
Revolving Loans and participate in Pro Rata Canadian Letters of Credit and
Canadian Letters of Credit in an aggregate principal and/or face amount not to
exceed the amount set forth under the heading “Canadian Revolving Credit
Commitment” opposite such Lender’s name on Schedule 1.2 or in the Assignment
and Acceptance pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof.

 

“Canadian Revolving Loan Settlement” has the
meaning specified in Section 12.15A.

 

“Canadian Revolving Loan Settlement Date” has
the meaning specified in Section 12.15A.

 

“Canadian Revolving Loans” has the meaning
specified in Section 1.2 and includes each Canadian Agent Advance and each
Overdraft Accommodation.

 

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

 

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

 

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

 

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

 

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

 

“Cash Equivalents” means:

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Closing Date” means December 12, 2008.

 

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

 

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

 

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

 

“Commitment Fees” means a collective reference
to the Canadian Commitment Fee and the U.S. Commitment Fee.

 

11

 

“Confirmation Agreement” means the
Confirmation, Ratification and Amendment of Loan Documents and Security
Documents Agreement (in form and substance satisfactory to the Agent) dated the
Effective Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)           all
other non-cash interest expense,

 

(f)            capitalized
interest,

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(l)            the
amount of any Tax Dividends;

 

(m)          the
amount of proceeds received from business interruption insurance and reimbursements
of any expenses and charges that are covered by indemnification or other 

 

13

 

reimbursement provisions in connection with any
Permitted Investment or any sale, conveyance, transfer or other disposition of
assets permitted under the indenture.

 

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

 

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

 

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

 

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

 

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

 

“Credit Judgment” means, as applicable, Agent’s
reasonable judgment exercised in a manner consistent with its customary
practices or otherwise in good faith, based upon its consideration of any
factor that it reasonably believes (a) could adversely affect the quantity,
quality, mix or value of the Collateral (including any applicable law that may
inhibit collection of an Account), the enforceability or priority of the Agent’s
Liens, or the amount that Agent and Lenders could receive in liquidation of any
Collateral (after taking into consideration any claims or liabilities that will
need to be satisfied in connection with the realization upon the Collateral
included in the Canadian and U.S. Borrowing Base); (b) provides evidence that
any collateral report or financial information delivered by any Loan Party is
inaccurate or misleading in any material respect; (c) materially increases the
likelihood of any insolvency proceeding involving a Loan Party; or (d) creates
a Default or an Event of Default.  In
exercising such judgment, Agent may consider factors already included in the
definitions of Eligible Accounts or Eligible Inventory, changes in collection
history and dilution of accounts, changes in any material respect in the mix,
demand for and pricing of inventory, changes in any material respect
concentration risks, and any factors that could materially increase the credit
risk of lending to the Borrowers on the security of the Collateral.

 

“Credit Support” means a collective reference
to U.S. Credit Support and Canadian Credit Support.

 

14

 

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

 

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

 

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

 

“Defaulting Canadian Lender” means a Canadian
Lender who is a Defaulting Lender.

 

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

 

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

 

“Defaulting U.S. Lender” means a U.S. Lender
who is a Defaulting Lender.

 

“Defaulting U.S. Lender Credit Extension” has
the meaning specified in Section 12.15B(f).

 

“Designated Account” means, a collective
reference to the Canadian Designated Account and the U.S. Designated Account.

 

“Distribution” means, in respect of any
Person:  (a) the payment or making of any
dividend or other distribution of property in respect of Capital Stock of such
Person, other than 

 

15

 

distributions in Capital Stock of the same
class or through accretion or accumulation of such dividend or distribution on
such Capital Stock; or (b) the redemption or other acquisition by such Person
or any of its Subsidiaries of any Capital Stock of such Person.

 

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

 

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

 

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

 

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

 

(c)           any
reasonable expenses or charges incurred in connection with any equity offering
(but if such equity offering is a sale of Capital Stock in any part of the
Canadian Borrower, only to the extent that proceeds of such equity offering are
received by or contributed to the equity of the Canadian Borrower), Permitted
Investment, acquisition, recapitalization or Debt permitted to be incurred
hereunder or the Secured Note Facility Debt (in each case whether or not
consummated), in each case determined on a consolidated basis in accordance
with GAAP; plus

 

(d)           the
amount of management, monitoring, consulting, advisory fees, termination
payments and related expenses paid to the Sponsor (or any accruals relating to
such fees and related expenses) during such period pursuant to the Management
Agreement or any amendment thereto (so long as such amendment is not less
advantageous to the holders of the notes in any material respect than the
Management Agreement), in each case determined on a consolidated basis in
accordance with GAAP; plus

 

16

 

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

 

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

 

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

 

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

 

“Effective Date” means the date of this
Agreement.

 

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

 

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

 

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

 

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

 

(d)           which
represents a progress billing (as hereinafter defined) or as to which such Loan
Party has extended the time for payment without the consent of the Agent; for
the purposes hereof, “progress billing” means any invoice for goods sold or
leased or services rendered under a contract or agreement pursuant to which the
Account Debtor’s obligation to pay such invoice is conditioned upon such Loan
Party’s completion of any further performance under the contract or agreement;

 

17

 

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

 

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

 

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

 

(h)           owed
by an Account Debtor which is an employee of a Loan Party, or by a subsidiary
of a Loan Party, or by an Affiliate of a Loan Party (unless dealings with such
Affiliate are (i) in the ordinary course of business, (ii) on terms consistent
with past practices, and (iii) on arm’s length terms) or which is an
Intercompany Account;

 

(i)            which
is owed by an Account Debtor to the extent to which the Account Debtor has made
or asserted, or a Loan Party has otherwise reported, any right of set off,
compensation, counterclaim, offset, discount (including accruals related
thereto), allowance, charge-back, rebate 

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(q)           for
goods not shipped and delivered or otherwise not representing a final sale or
otherwise representing a pre-billed Account or Accounts for unshipped or
incomplete goods or services or otherwise with respect to which the goods
giving rise to such Account have not been shipped and, if required to create a
valid Account, delivered to the Account Debtor or the services giving rise to
such Account have not been performed by the Loan Party and, if applicable,
accepted by the Account Debtor, or the Account Debtor revokes its acceptance of
such goods or services or such Account otherwise arises from a incomplete sale
or service;

 

19

 

 

 

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

 

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

 

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

 

(u)           which represents any unapplied cash or credits;

 

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

 

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

 

(x)            which represents rents and similar payments to the Loan Party in connection with,
without limitation, ground leases or other leases of real property or other
Note Collateral (as defined in the Intercreditor Agreement).

 

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

 

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

 

“Eligible Assignee” means (a) a commercial
bank, commercial finance company or other asset based lender, having total
assets in excess of $1,000,000,000 and for which the consent of the Canadian
Borrower has been received (provided, that (x) no consent of the Canadian
Borrower shall be unreasonably withheld or delayed, and (y) no consent of
the Canadian Borrower shall be required if a Default or Event of Default has
occurred and is continuing); (b) any Lender; or (c) any Affiliate of
any Lender; provided, however, that an Eligible Assignee shall in all cases
(when no Event of Default is continuing) be a financial institution that (i),
if such Person is to hold Canadian Obligations, is a Canadian Qualified Lender,
(ii) is an Affiliate of a Canadian Lender and is a Canadian Qualified
Lender, (iii) it, which may include one of its 

 

20

 

Affiliates, shall have both a Canadian
Revolving Credit Commitment and a U.S. Revolving Credit Commitment, and (iv) is
not a trade competitor of any Loan Party. 
Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing, any Person reasonably acceptable to the Agent may be an Eligible
Assignee.

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)           unmerchantible/unsaleable or obsolete Inventory;

 

(iii)          Inventory not located at locations owned or leased by
such Loan Party (including Inventory in third party pipelines) or Inventory
located at any other location of such Loan Party, in each case, unless not
subject to a third party lien waiver in form and substance satisfactory to the
Agent in its reasonable business judgment or in respect of which Agent has
agreed to appropriate reserves;

 

21

 

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

 

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

 

(vi)          Inventory located outside of Canada or the continental
United States;

 

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

 

(viii)        consignment Inventory;

 

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

 

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

 

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

 

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

 

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

 

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

 

“Equipment” means, with respect to a Loan
Party, all of such Loan Party’s now owned and hereafter acquired machinery,
equipment, furniture, furnishings, fixtures and other tangible personal
property (except Inventory), including embedded software, motor vehicles,
aircraft, dies, tools, jigs, molds and office equipment, as well as all of such
types of property leased by 

 

22

 

such Loan Party and all of such Loan Party’s
rights and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future
additions and accessions thereto, replacements therefor, component and
auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located and includes “equipment” as defined in the PPSA or UCC, as
applicable.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

“Excluded Taxes” means, with respect to any
Secured Party or any other recipient of any payment to be made by or on account
of any obligation of the Loan Parties hereunder or under any Loan Document, (a) Taxes
imposed or levied by any jurisdiction on or measured by its (or its applicable
lending office’s) overall net income, capital or net worth (however
denominated), and franchise Taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) under the laws of
which such recipient is organized or in which its principal office or
applicable lending office is located or otherwise as a result of a present or
former connection between the recipient and the jurisdiction imposing such Tax
other than a connection arising solely from such recipient having executed,
received a payment under, or enforced its rights under, this Agreement or any
Loan Document, (b) any branch profits taxes imposed by the United States
or Canada or any similar Tax imposed by any other jurisdiction in which the
recipient is located and (c) in the case of a Foreign Lender (i) (other
than an assignee pursuant to a request by the Canadian Borrower under Section 11.3),
any withholding Tax that is imposed on amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party hereto (or designates a new
lending office), except to the extent that such Foreign Lender (or its
assignor, if applicable) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from the Loan
Party with respect to such withholding tax pursuant to Section 4.1(b) and
(c), or (ii) any withholding Taxes imposed on amounts payable to such
Foreign Lender as a result of such Foreign Lender’s failure to comply with the
requirements of FATCA to establish a complete exemption from withholding
thereunder, and (d) any withholding Taxes attributable to any Secured
Party’s failure or inability (other than as a result of a change in law after
the date on which such Secured Party becomes a party hereto) to comply with
Sections 4.1(e) or 12.10.

 

“Existing Credit Agreement” has the meaning
specified in the recitals to this Agreement.

 

“FATCA” means Sections 1471 through 1474 of the
Code and any regulations promulgated thereunder.

 

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

 

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

 

24

 

“Fee Letter” has the meaning specified in Section 2.4.

 

“Financial Statements” means the consolidated
and consolidating financial statements of the Canadian Borrower and its
Subsidiaries, prepared in accordance with GAAP, and any other financial
statements required to be given to the Agent and Lenders pursuant to this
Agreement.  Any such financial statements
which this Agreement requires be audited, shall be so audited by independent
chartered accountants of nationally recognized standing or such other auditors
as approved by the Agent (Agent acknowledging that Ernst and Young LLP and
PriceWaterhouseCoopers LLP are approved auditing firms).

 

“First Purchase Crude Payables” means the
unpaid amount of any payable obligation related to the purchase of Petroleum
Inventory by any Loan Party which Agent determines will be secured by a
statutory Lien, to the extent such payable obligation is not at the time in
question covered by a Letter of Credit.

 

“Fiscal Year” means each of the Loan Party’s
fiscal year for financial accounting purposes. 
As of the date hereof, the current Fiscal Year of the Canadian Borrower
will end on December 31, 2010.

 

“Fixed Assets” means, with respect to the
Canadian Borrower or any of its Subsidiaries, the Equipment and Real Estate of
such Canadian Borrower or such Subsidiary.

 

“Fixed Charge Coverage Ratio” means, with
respect to any fiscal period of the Canadian Borrower on a consolidated basis
the ratio of (i) EBITDA for such fiscal period, minus, cash income
taxes paid by Loan Parties during such fiscal period, minus, unfinanced
maintenance Capital Expenditures (exclusive of Capital Expenditures funded or
refinanced by equity contributions into the Canadian Borrower) of the Loan
Parties paid in cash during such fiscal period, minus, cash dividend Distributions
paid (including any payment in connection with the Tax Dividend but excluding
any payment in connection with dividends between the Canadian Borrower and any
of its Subsidiaries) to (ii) Fixed Charges for such fiscal period.

 

“Fixed Charges” means, with respect to any
fiscal period of Canadian Borrower on a consolidated basis, without
duplication, the sum of (A) all scheduled cash payments of principal on
Funded Debt of the Loan Parties made during such fiscal period, (B) all
payments of scheduled cash interest on Funded Debt of the Loan Parties made
during such fiscal period, and (C) all cash payments of Letter of Credit
Fees  made by the Loan Parties during such
fiscal period.

 

“Foreign Lender” means any U.S. Lender that is
not a “United States person” within the meaning of Section 7701(a)(30) of
the Code.

 

“Funding Date” means, with respect to a
Borrowing, the date on which such Borrowing occurs.

 

“Funded Debt” means the sum, without
duplication, of (a) the aggregate amount of funded Debt (including the
Obligations) of the Loan Parties consisting of or relating to (i) the
borrowing of money or the obtaining of credit (other than trade payables
incurred in the ordinary course of business), or (ii) Capital Leases, plus
(b) Debt of the type referred to in clause (a) of another Person
guaranteed by a Loan Party (but only to the extent such guarantee shall become 

 

25

 

due and payable by such Loan Party and remain
unpaid after any applicable grace period or period permitted following demand
for the payment), in each case on a consolidated basis for the Loan Parties.

 

“Funded Debt to EBITDA Ratio” means, at any
time, the quotient obtained by dividing (a) Funded Debt (as numerator) by (b) EBITDA
(as denominator) for any fiscal period.

 

“GAAP” means at any particular time with
respect to any Loan Party, generally accepted accounting principles as in
effect at such time in Canada, consistently applied; provided, however, that,
if employment of more than one principle shall be permissible at such time in
respect of a particular accounting matter, “GAAP” shall refer to the principle
which is then employed by the applicable Loan Party with the concurrence of its
independent public or chartered accountants, who are acceptable to the Agent
provided further that, subject to Section 14.24, for the purposes of
determining compliance with the financial covenants herein, “GAAP” means GAAP
as in effect from time to time.

 

“General Intangibles” as defined in the UCC,
including “Intangibles” as defined in the PPSA, and including choses in action,
causes of action, company or other business records, inventions, blueprints,
designs, patents, patent applications, trademarks, trademark applications,
trade names, trade secrets, service marks, goodwill, brand names, copyrights,
registrations, licenses, franchises, customer lists, permits, tax refund
claims, computer programs, operational manuals, internet addresses and domain
names, insurance refunds and premium rebates, all rights to indemnification,
and all other intangible and incorporeal Property of any kind.

 

“Governmental Authority” means any nation or
government, any state, province, municipality or other political subdivision
thereof, any central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, any corporation or
other entity owned or controlled, through stock or capital ownership or otherwise,
by any of the foregoing and any department, agency, board, commission,
tribunal, committee or instrumentality of any of the foregoing.

 

“Guarantee” or “Guaranty” means, with respect
to any Person, all obligations of such Person which in any manner directly or
indirectly guarantee or assure, or in effect guarantee or assure, the payment
or performance of any Debt of any other Person (the “guaranteed obligations”),
or assure or in effect assure the holder of the guaranteed obligations against
loss in respect thereof, including any such obligations incurred through an
agreement, contingent or otherwise:  (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity
securities or other property or services. 
The amount of any Guarantee of any guaranteeing Person shall be deemed
to be such guaranteeing person’s maximum reasonably anticipated liability in
respect thereof (i) as set forth in such Guarantee, or (ii) if not so set forth, as determined by such Person in good
faith,

 

“Guaranteed Obligations” has the meaning specified
in Section 13.1.

 

“Guarantor Payment” has the meaning specified
in Section 13.6.

 

26

 

“Guarantors” has the meaning specified in the
preamble.

 

“Hedge Agreement” means any and all
transactions (whether under an ISDA or otherwise), agreements or documents
(including ISDAs) entered into with any Lender or any Affiliate of a Lender (or
any Person that was a Lender or an Affiliate of a Lender at the time such
Hedging Agreement was entered into), which provides for an interest rate,
credit, commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, derivative, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging a Loan Party’s exposure to fluctuations in interest
or exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.

 

“Hedge Positions in Brokers Accounts” means all
commodities futures accounts of the Loan Parties in which the Agent for the
benefit of Lenders has been granted an exclusive security interest in a manner
satisfactory to the Agent, with such interest being subject only to the rights
of the broker under such account, in excess of the amounts required to be
maintained pursuant to the applicable margin requirements.

 

“Hedged Eligible Inventory” means Eligible
Inventory with respect to which the price risk has been:

 

(a)           hedged for delivery, by either:

 

(i)            a contract on the NYMEX , having delivery within the next twelve (12)
months with respect to Petroleum Inventory, arranged through brokers approved
by Agent and with whom a three-party agreement among, as applicable, a Loan
Party, Agent and such broker has been entered in form and substance
satisfactory to Agent; or

 

(ii)           a contract for a specified price for physical delivery
of such inventory, having delivery within the next twelve (12) months with
respect to Petroleum Inventory, to a counterparty whose Account would qualify
as an Approved Billed Eligible Account or an Approved Unbilled Eligible
Account; provided, however, that such inventory is a commodity that is also
eligible for contract hedging on the NYMEX; or

 

(iii)          a contract for a specified price for physical delivery
of such inventory, having delivery within the next twelve (12) months with
respect to Petroleum Inventory, to a counterparty whose Account would qualify
as an Investment Grade Eligible Account, provided, however, that such inventory
is a commodity that is not eligible for contract hedging in the NYMEX.

 

(b)           hedged for a term of no more than six (6) months with respect to
Petroleum Inventory other than natural gas and natural gas liquids, pursuant to
an over-the-counter put option with a floor price and with a counterparty whose
Account would qualify as an Approved Billed Eligible Account or an Approved
Unbilled Eligible Account,; or

 

(c)           otherwise hedged in a manner satisfactory to Agent.

 

27

 

“Hedging Amounts” has the meaning specified in
the definition of Bank Products.

 

“Hedging Exposure” means, at any time and
subject to the Hedging Sublimit, the sum of the amount determined by the Agent
(in its sole discretion with consideration given to any determinations provided
to the Agent by the BP Provider and the Lenders (and their Affiliates)
providing Hedge Agreements) to be the credit risk associated with all
outstanding Hedge Agreements.  The total
of all such Hedging Exposures of all Lenders (and their Affiliates) not to
exceed the Hedging Sublimit.  Any Hedging
Exposure denominated in U.S. Dollars shall be the CDN Dollar equivalent
thereof.

 

“Hedging Reserve” means all reserves which the
Agent from time to time establishes in its reasonable credit judgment for Hedging
Agreements then provided or outstanding which shall, at all times, be at least
an amount that is equal to all Hedging Exposure in respect to such Hedging
Agreements outstanding.

 

“Hedging Sublimit” means the maximum aggregate
amount of U.S.$50,000,000 of Hedging Exposure.

 

“Immaterial Subsidiary” means, on any date for
which a consolidated balance sheet of the Canadian Borrower is prepared, any
Subsidiary of the Canadian Borrower that has less than 1.0% of the Canadian
Borrower’s Consolidated Net Tangible Assets or annual consolidated revenues;
provided that at no time shall all Immaterial Subsidiaries have in the
aggregate consolidated net tangible assets or annual consolidated revenues as
of such date in excess of 3.0% of Consolidated Net Tangible Assets or annual
consolidated revenues, respectively, of the Canadian Borrower.

 

“Indemnified Liabilities” has the meaning
specified in Section 14.12.

 

“Indemnified Person” has the meaning specified
in Section 14.12.

 

“Indemnified Taxes” means Taxes other than
Excluded Taxes and Other Taxes.

 

“Instruments” means, with respect to a Loan
Party, all instruments as such term is defined in the UCC and in the PPSA (as
applicable), now owned or hereafter acquired by such Loan Party.

 

“Intercompany Accounts” means all assets and
liabilities, however arising, which are due to any Loan Party or its
Subsidiaries from, which are due from any Loan Party or its Subsidiaries to, or
which otherwise arise from any transaction by any Loan Party or its
Subsidiaries with, any Affiliate.

 

“Intercreditor Agreement” means that certain
Intercreditor Agreement (substantially in the form attached hereto as Schedule
A) dated as of May 27, 2009 among the Agent, BNY Trust Company of Canada
and the Canadian Borrower, as the same may be amended, supplemented or
otherwise modified from time to time.

 

“Interest Rate” means each or any of the
interest rates, including the Default Rate, set forth in Section 2.1.

 

28

 

“Inventory” means, with respect to a Loan
Party, all of such Loan Party’s now owned and hereafter acquired “inventory”
(as defined in the PPSA or Article 9 of the UCC, as applicable),
including, without limitation, goods and merchandise, wherever located, whether
without or after further processing, to be furnished under any contract of
supply or service or held for sale or lease, all returned goods, raw materials,
work in process, finished goods (including embedded software), other materials
and supplies of any kind, nature or description which are used or consumed in
such Loan Party’s business or used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods, merchandise and all
documents of title or other documents representing them.

 

“Investment Grade Eligible Accounts” means
Billed Eligible Accounts that are owing by an Account Debtor who has an
Investment Grade Rating.

 

“Investment Grade Rating” means a credit rating
of “BBB-” or better by Standard Poor’s Corporation or “Baa3” or better by Moody’s
Investor Services.

 

“IRS” means the Internal Revenue Service and
any Governmental Authority succeeding to any of its principal functions under
the Code.

 

“Issued but Unused Letter of Credit Value”
means, on any day, the lesser of the (a) cost or (b) current market
value of Petroleum Inventory purchased by Loan Parties under Letters of Credit
but which has not been physically delivered to such Loan Party; provided, that
if such Letters of Credit are not specific to Petroleum Inventory then the “Issued
but Unused Letter of Credit Value” in respect of such Letters of Credit shall
be reduced by any forward Mark-to-Market losses and/or any net exchange payable
to the same counterparty.

 

“Judgment Interest Act (Alberta)” means the Judgment Interest Act (Alberta), including the regulations
made and, from time to time, in force under that Act.

 

“Lender” and “Lenders” have the meanings
specified in the preamble hereto and shall include the Agent to the extent of
any Agent Advance outstanding; provided that no such Agent Advance shall be
taken into account in determining any Lender’s Pro Rata Share.  The foregoing includes each such Lender that
has a Revolving Credit Commitment or is the holder of a Revolving Loan or is a
participant in a Letter of Credit.

 

“Letter of Credit Fees” means, the collective
reference to the U.S. Letter of Credit Fees, the U.S. Fronting Fees, the
Canadian Letter of Credit Fees, the Canadian Fronting Fees and the Pro Rata
Canadian Letter of Credit Fees.

 

“Letter of Credit Issuer” means the Canadian
Letter of Credit Issuer or the U.S. Letter of Credit Issuer, as applicable.

 

“Letter of Credit Subfacility” means, in
respect of the Canadian LC Accommodation, the Pro Rata Canadian LC
Accommodation and the U.S. LC Accommodation, a collective aggregate amount of
U.S.$100,000,000 (or the Equivalent Amount in CDN Dollars).

 

“Letters of Credit” means the collective
reference to Pro Rata Canadian Letters of Credit, the Canadian Letters of
Credit and the U.S. Letters of Credit.

 

29

 

 

 

 

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

 

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

 

“LIBOR Interest Period” means, as to any LIBOR
Revolving Loan, the period commencing on the Funding Date of such LIBOR
Revolving Loan or on the LIBOR Continuation/Conversion Date on which the
Revolving Loan is converted into or continued as a LIBOR Revolving Loan, and
ending on the date one, two, three or six (, and if available to all Lenders,
nine or twelve) months thereafter as selected by (x) the U.S. Borrowers in
their U.S. Notice of Borrowing, in the form attached hereto as Exhibit D-2,
or U.S. Notice of Continuation/Conversion, in the form attached hereto as Exhibit E-2,
or (y) the Canadian Borrower in its Canadian Notice of Borrowing, in the
form attached hereto as Exhibit D-1, or Canadian Notice of
Continuation/Conversion, in the form attached hereto as Exhibit E-1,
provided that:

 

(a)           if any LIBOR Interest Period would otherwise end on a day that is not a
Business Day, that LIBOR Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such LIBOR
Interest Period into another calendar month, in which event such LIBOR Interest
Period shall end on the preceding Business Day;

 

(b)           any LIBOR Interest Period pertaining to a LIBOR Revolving Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such LIBOR Interest Period) shall end on the last Business Day of the calendar
month at the end of such LIBOR Interest Period; and

 

(c)           no LIBOR Interest Period shall extend beyond the Stated Termination
Date.

 

“LIBOR Rate” means, for any LIBOR Interest
Period with respect to any LIBOR Revolving Loan, the rate per annum equal to
the rate determined by the Agent to be the offered rate that appears on the page of
the Reuters LIBOR 01 screen (or any successor thereto) that displays an average
British Bankers Association Interest Settlement Rate for deposits in U.S.
Dollars (for delivery on the first day of such LIBOR Interest Period) with a
term equivalent to such LIBOR Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
LIBOR Interest Period, or (ii) if the rates referenced in the preceding
subsection (i) are not available, the rate per annum determined by the
Agent as the rate of interest (rounded upward to the next 1/100th of 1%) at
which deposits in U.S. Dollars for delivery on the first day of such LIBOR Interest
Period in same day funds in the approximate amount of the LIBOR Revolving Loan
being made, continued or converted by the Agent and with a term equivalent to
such LIBOR Interest Period would be offered by the Agent’s London branch to
major banks in the offshore U.S. Dollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such LIBOR Interest Period.

 

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

 

30

 

“Lien” means: 
(a) any interest in property securing an obligation owed to, or a
claim by, a Person, whether such interest is based on the common law, statute
or contract, and including without limitation, a security interest, hypothec,
prior claim, charge, claim or lien arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes; (b) to the extent not included under
clause (a), (i) any rights of repossession or similar rights of unpaid
suppliers, (ii) any reservation, exception, encroachment, easement,
servitude, right of way, lease or other title exception or encumbrance
affecting property and (iii) any other lien, charge, secured claim, title
retention, garnishment right, deemed trust, encumbrance or other right
affecting property, choate or inchoate, whether or not crystallized or fixed,
whether or not for amounts due or accruing due, arising by any statute, act of
law of any jurisdiction at common law or in equity or by agreement; and (c) any
contingent or other agreement to provide any of the foregoing.

 

“Loan Account” means, with respect to each
Borrower, the loan account of such Borrower, which account shall be maintained
by the Agent.

 

“Loan Documents” means this Agreement, the
Security Documents, the Blocked Account Agreements, the Fee Letter, the
Intercreditor Agreement, the Hedge Agreements, the Confirmation Agreement and
any other agreements, instruments, and documents heretofore, now or hereafter
among the Loan Parties, the Agent and/or the Lenders evidencing, securing,
guaranteeing or otherwise relating to any or all of the Obligations or the
Collateral.

 

“Loan Parties” means a collective reference to
the Borrowers and the Guarantors, and “Loan Party” means any one of them.

 

“Loan Party Representative” has the meaning
specified in Section 14.21.

 

“Margin Stock” means “margin stock” as such
term is defined in Regulation T, U or X of the Federal Reserve Board.

 

“Market Price” means on any day, a spot price
for the inventory of Petroleum Inventory being valued, determined in a manner
consistent with past practices of the Loan Parties or another methodology
approved by Agent from time to time.

 

“Mark-to-Market” means, on any date of
determination, the process of revaluing for trading purposes commodity
contracts held by any Person, whether in respect of physical inventory,
futures, forward exchanges, swaps or other derivatives, in each case relating
to Petroleum Inventory, and which contracts may have a fixed price, a floating
price and fixed differential, or other pricing basis, to the current market
prices for such contracts, and determining the gain or loss on such contracts,
on an aggregate net trading basis for all such contracts of such Person, by
comparing the original prices of such contracts to the market prices on the
date of determination.

 

“Material Adverse Effect” means (a) a
material adverse effect upon the operations, business, assets, or financial
condition of the Loan Parties taken as a whole; (b) a material impairment
of the ability of any Loan Party (other than an Immaterial Subsidiary) to perform
under any Loan Document (other than a Hedge Agreement) to which it is a party;
or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any

 

31

 

Loan Party (other than an Immaterial
Subsidiary) of any Loan Document (other than a Hedge Agreement) to which it is
a party.

 

“Material Agreement” means any agreement to
which any Loan Party is party that is essential to a Loan Party’s ability to
carry on business as currently conducted and the termination of which would
reasonably be likely to have a Material Adverse Effect.

 

“Maximum Canadian Revolver Amount” means
U.S.$170,000,000 (or the Equivalent Amount thereof in CDN Dollars).

 

“Maximum Rate” has the meaning specified in Section 2.3.

 

“Maximum Revolver Amount” means
U.S.$200,000,000 (or the Equivalent Amount thereof in CDN Dollars), as such
amount may be decreased from time to time in accordance with Section 3.1(c).

 

“Maximum U.S. Revolver Amount” means U.S.$30,000,000.

 

“Multiemployer Plan” means a “multiemployer
plan” as defined in Section 4001(a)(3) of ERISA which is or was at
any time during the current year or the immediately preceding six (6) years
contributed to by any Loan Party or any ERISA Affiliate.

 

“Non-Consenting Lender” has the meaning
specified in Section 11.1(b).

 

“Notice of Borrowing” means a Canadian Notice
of Borrowing or a U.S. Notice of Borrowing, as appropriate.

 

“Notice of Continuation/Conversion” means a
Canadian Notice of Continuation/Conversion or a U.S. Notice of
Continuation/Conversion, as appropriate.

 

“NYMEX” means the New York Mercantile Exchange.

 

“Obligations” means all present and future
loans, advances, liabilities, obligations, covenants, duties and debts owing by
the Loan Parties to the Agent and/or any Lender, arising under or pursuant to
this Agreement or any of the other Loan Documents, whether or not evidenced by
any note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty, guarantee,
indemnification or otherwise, whether direct or indirect, absolute, matured or
contingent, due or to become due, now existing or hereafter arising, created or
incurred, primary or secondary, as principal or guarantor and including without
limitation all principal, interest, (including all interest that accrues after
the commencement of any case or proceeding by or against a Loan Party under any
federal, provincial or state bankruptcy, insolvency, receivership or similar
law, whether or not allowed in such case proceeding), charges, expenses, fees,
attorneys’ fees, filing fees and any other sums chargeable to any of the Loan
Parties hereunder or under any of the other Loan Documents.  “Obligations” includes, without limitation
and in any event, (a) all debts, liabilities and obligations now or
hereafter arising from or in connection with Letters of Credit, (b) all
debts, liabilities and obligations now or hereafter arising from or in
connection with Bank Products, (c) the Guaranteed Obligations and (d) any
Overadvances and any U.S. Overadvance.

 

32

 

“Oil Settlement Date” means the 25th of every month;
provided, however, that in the circumstance when the 25th of a month is not a Business Day, the Oil Settlement
Date shall be the Business Day before or after such date as determined by the
BP Provider and the Canadian Borrower, collectively.

 

“Oil Settlement Date Reserve” means Bank
Product Reserves in respect of Oil Settlement Date Bank Products.

 

“Other Approved Eligible Accounts” means any
Approved Billed Eligible Account and Approved Unbilled Eligible Account which
is not an Approved Investment Grade Eligible Account or an Insured Account.

 

“Other Billed Eligible Account” means any
Billed Eligible Account which is not an Other Approved Eligible Account, an
Approved Investment Grade Eligible Account or an Insured Account.

 

“Other Eligible Inventory Value” (A) the
value of Eligible Inventory, other than Hedged Eligible Inventory, determined
as follows: the product of the volume of such Petroleum Inventory times the
Market Price minus all storage, transportation and other applicable costs; and (B) the
value of Eligible Inventory consisting of Asphalt Products, valued at the lower
of cost or market value, with market value based on the most recent price
quoted in such publication as has then most recently been specified by Agent.

 

“Other Taxes” means any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under any other Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.

 

“Other Unbilled Eligible Account” means any
Unbilled Eligible Account which is not an Other Approved Eligible Account, an
Approved Investment Grade Eligible Account or an Insured Account.

 

“Overadvances” means the amounts, if any, by
which any individual bank account maintained by the Canadian Borrower with BP
Provider is overdrawn or otherwise has a negative cash balance, whether in
consequence of any electronic transfer or otherwise, but excludes any Overdraft
Accommodations.

 

“Overdraft Accommodation” has the meaning specified
in Section 1.2(j).

 

“Overdraft Accommodation
Maximum Amount” means U.S.$5,000,000 (or the Equivalent Amount in CDN Dollars).

 

“Parent Company” means any
direct and indirect parent company of the Canadian Borrower.

 

“Participant” means any Person who shall have
been granted the right by any Lender to participate in the financing provided
by such Lender under this Agreement, in accordance with Section 11.2, and
who shall have entered into a participation agreement in form and substance

 

33

 

satisfactory to such Lender and in compliance
with the requirements and limitations set forth in Section 11.2.

 

“Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

 

“PBGC” means the Pension Benefit Guaranty
Corporation or any Governmental Authority succeeding to the functions thereof.

 

“Pending Revolving Loans” means, at any time,
the aggregate principal amount of all Revolving Loans requested in any Notice
of Borrowing received by the Agent which have not yet been advanced.

 

“Pension Plan” means a defined benefit pension
plan registered under the PBA, or covered by other Canadian or provincial
pension legislation including the Income Tax Act (Canada),
or a pension plan (as defined in Section 3(2) of ERISA) that is
subject to Title IV of ERISA or pension plan maintained in any non Canadian or
U.S. jurisdiction and which any Loan Party or Target sponsors, maintains or to
which it makes, is making or is obligated to make contributions, or has made
contributions at any time during the immediately preceding five (5) plan
years.

 

“Permitted Acquisition” means any Acquisition
after the Effective Date, so long as the Agent shall have received evidence on
or prior to the closing date of such Acquisition that each of the following
conditions has been satisfied:

 

(a)            (A) the aggregate value of the consideration paid
(including for greater certainty by the assumption of Debt) for any individual
acquisition, consolidation, merger or amalgamation, and in the aggregate for
all acquisitions, consolidations, mergers or amalgamations in any calendar
year, shall not exceed U.S.$65,000,000 exclusive of amounts funded by equity or
debt permitted hereunder, in either case raised to finance such transactions,
without the prior written consent of the Required Lenders acting reasonably provided
however, that subject to all other terms and conditions hereof, if the aggregate
yearly limit of U.S.$65,000,000 is reached, Canadian Borrower shall
nevertheless be permitted to complete up to three additional (including any
individual transaction which would otherwise cause the limit to be exceeded)
transactions each up to an individual amount not exceeding U.S.$5,000,000
without any further consent of the Required Lenders;

 

(B) such
Acquisition shall have been approved by the board of directors of the Person
(or similar governing body if such Person is not a corporation) which is the
subject of such Acquisition and such Person shall not have announced that it
will oppose such Acquisition or shall not have commenced any action which
alleges that such Acquisition will violate Applicable Law; and

 

(C) if the
Acquisition is an Acquisition of Capital Stock, (i) a Loan Party shall
acquire and own, directly or indirectly, a majority of the Capital Stock in the

 

34

 

Person being acquired
or (ii) shall control a majority of any voting interests or otherwise
control the governance of the Person being acquired;

 

(b)           no Default or Event of Default is in existence at the time of such
Acquisition or would be caused thereby after giving effect thereto;

 

(c)           all representations and warranties shall be true and correct as if
restated immediately following the consummation of such acquisition, except to
the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date;

 

(d)           substantially all of such business, assets and operations so acquired,
or of the Person so acquired, consists of a Present Line of Business;

 

(e)           the Fixed Charge Coverage Ratio of the Canadian Borrower and its
Subsidiaries, calculated as of the last day of the most recently completed
month of the Canadian Borrower for which Financial Statements have been
delivered pursuant to Section 5.2(b), calculated on a pro forma basis
after giving effect to such Acquisition and all transactions related thereto
and any Fixed Charges incurred or assumed in connection therewith, would be in
compliance with the testing parameters in Section 7.26;

 

(f)            the Agent has received at least ten (10) days’ prior written notice
of such acquisition (or such shorter period as the Agent may agree) and, as
soon as available and in any event at least three (3) Business Days (or
such shorter period as the Agent may agree) prior to the consummation of such
acquisition, copies of substantially final drafts of all agreements delivered
in connection therewith, and prior to the actual closing, marked copies of
changed pages to such agreements; provided, that in the case of an
acquisition for which the total consideration is less than $5,000,000, the
notices required under this clause (f) may be given at the same time as
the consummation of such acquisition;

 

(g)           Agent has received a certificate from the Canadian Borrower’s chief
financial officer or other financial officer (in such Person’s capacity as
such) certifying that all of the applicable conditions contained herein to
treating such acquisition as a Permitted Acquisition have been satisfied; and

 

(h)           such acquisition is consummated in compliance with all material
Requirements of Law.  In addition to all
other eligibility criteria provided for under the Agreement, it is agreed and
understood that in no event shall any Accounts or Inventory acquired in
connection with a Permitted Acquisition be deemed eligible for advance
hereunder unless and until there has been compliance with Section 7.22 of
the Agreement with respect to such Person or new subsidiary and the Agent has
completed (at the Loan Parties’ expense) a collateral audit and appraisal of
any such property so acquired; provided that, in the case of an Acquisition for
which the total consideration is less than $1,000,000, the Canadian Borrower may choose to exclude the
entities being acquired from becoming Loan Party’s hereunder.

 

“Permitted Inventory Liens” means any Lien, and
the amount of any indebtedness, liability or obligation secured thereby, on
Petroleum Inventory which would be a permitted lien under paragraphs (a) (so
long as such Lien is inchoate), (c) and (d) of the definition of
Permitted Liens.

 

35

 

“Permitted Investments” means:

 

(a)           acquisitions of Fixed Assets to be used in the business of the Canadian
Borrower or any Subsidiary; provided that if the acquisition costs thereof
constitute Capital Expenditures, they are not prohibited hereunder;

 

(b)           (i) acquisitions of Inventory, supplies, materials, equipment,
contract rights, licenses or leases of intellectual property, other current
assets and expenditures or investments in the ordinary course of business that
would be accounted for as expenses and not required to be capitalized under
GAAP and (ii) acquisitions of equipment, contract rights, licenses or
leases of intellectual property in the ordinary course of business;

 

(c)           investments received in connection with the bankruptcy or reorganization
of, or settlement of delinquent accounts and disputes with, customers and
supplies, in each case in the ordinary course of business;

 

(d)           extensions of trade credit in the ordinary course of business;

 

(e)           investments made as a result of the receipt of non-cash consideration
from a Disposition made in compliance with Section 7.11;

 

(f)            investments made by any Person that becomes a Subsidiary after the date
hereof; provided that such Investment exists at the time such Person becomes a
Subsidiary and are not made in contemplation of or in connection with such
Person becoming a Subsidiary;

 

(g)           loans and advances made in the ordinary course of business to their
respective employees, directors and officers so long as the aggregate principal
amount thereof at any time outstanding (excluding employee credit cards for
expenses relating to the business of the Loan Parties, temporary advances for
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and which are made in the ordinary course of business) shall not
exceed $1,000,000;

 

(h)           investments existing on the date hereof and identified on Schedule 7.12;

 

(i)            investments in and/or otherwise constituting Permitted Acquisitions;

 

(j)            investments consisting of intercompany loans (i) among the Loan
Parties or equity or other investments by one Loan Party in another Loan Party,
and (ii) among Battle River Terminal ULC and the Canadian Borrower during
Fiscal Year 2010, in a maximum aggregate amount of $2,000,000; provided,
however, that such loans shall only be permitted if, on or before January 1,
2011, Battle River Terminal ULC merges, amalgamates, reorganizes, consolidates
or is transferred or sold into a Canadian Loan Party;

 

(k)           Hedge Agreements entered into in the ordinary course of business for
bona fide hedging purposes and not for the purpose of speculation;

 

(l)            investments in cash and Cash Equivalents;

 

(m)          Hedge Positions in Brokers Accounts;

 

36

 

(n)           investments in unsecured hedging arrangements or hedging arrangements
secured by property not otherwise constituting Collateral, in each case,
entered into in the ordinary course of business for bona fide hedging purposes
and not for the purpose of speculation;

 

(n)           investments received as part of the consideration received in connection
with any Disposition not prohibited under Section 7.11;

 

(o)           any Person to the extent such Investments consist of prepaid expenses,
negotiable instruments held for collection and lease, utility and workers’
compensation, performance and other similar deposits, in each case made in the
ordinary course of business by any Loan Party;

 

(p)           lease, utility and other similar deposits in respect of Real Estate
interests in the ordinary course of business;

 

(q)           investments (in any Present Line of Business) made for consideration
consisting only of Capital Stock of the Canadian Borrower or any Subsidiary;

 

(r)            investments consisting of Subordinated Debt loans by the Canadian
Borrower to any Parent Company in lieu of cash payments of Distributions
permitted by Section 7.12 (it being understood that any such Investment
shall be treated as a Distribution for purposes of determining any limitation
in Section 7.12);

 

(s)           (i) Investments in connection with Permitted Joint Venture Payments
and (ii) subject to the restrictions hereof (including Affiliate
transactions in Section 7.17), investments, in any Present Line of
Business, by any Loan Party in any joint venture (or any Excluded Subsidiary),
so long as (A) the aggregate amount thereof outstanding at no time exceeds
the sum of (i) the greater of (x) U.S.$20,000,000 and (y) 2% of
Consolidated Net Tangible Assets, and (B) after the making of such
investments, Borrowers shall have Availability in excess of an amount equal to
25% of the aggregate Commitments;

 

(t)            investments arising in connection with the incurrence of Debt permitted
by Section 7.15 to the extent arising as a result of Debt among the Parent
Company, the Canadian Borrower, or any Subsidiary and Guarantees permitted by Section 7.14
and payments made in respect of such Guarantees and (ii) the forgiveness
or conversion to equity of any Debt permitted by Section 7.15;

 

(u)           investments made with the Available Amount; and

 

(v)           additional investments so long as (A) the aggregate amount thereof
outstanding at no time exceeds the greater of (a) U.S.$20,000,000 or (b) 2.0%
of Consolidated Net Tangible Assets, at any one time outstanding (with each
investment being valued as of the date made and without regard to subsequent
changes in value), and (B) after the making of such investments, Borrowers
shall have Availability in excess of an amount equal to 25% of the aggregate
Commitments.

 

It is further understood and agreed that for
purposes of determining the value of any Permitted Investment outstanding for
purposes hereof, such amount shall deemed to be the amount of such Investment
when made, purchased or acquired less any returns on such

 

37

 

Investment (net of any applicable Taxes in
respect of such returns and not to exceed the original amount invested).

 

“Permitted Investors” means the collective
reference to the Sponsor and the members of management of any Parent Company,
the Canadian Borrower and its Subsidiaries (for so long as such members of
management hold less than the Sponsor).

 

“Permitted Joint Venture Payments” means
payments related to:

 

(a)           any payments relating to the project commonly known as Battle River
Terminal, including (i) any payments by the Canadian Borrower or any
Subsidiary made to or on behalf of Battle River Terminal ULC as contemplated in
the Shareholders Agreement dated June 18, 2008 (the “BRT Shareholders
Agreement”) among Merrill Lynch Commodities Luxembourg S.A.R.L., 1370307
Alberta Ltd. and Battle River Terminal ULC (including any amounts referred to
therein as being made as shareholder loans or contributions to Battle River
Terminal ULC); (ii) any payments by the Canadian Borrower or any
Subsidiary in connection with its obligations as project manager under the BRT
Shareholders Agreement; and (iii) any payments made by Gibson Energy
Partnership in its capacity as Operator under the Operating Agreement dated June 18,
2008 between Gibson Energy Partnership, Gibson Energy Ltd. and Battle River
Terminal ULC; and

 

(b)           any payments relating to the project descibed in the September 8,
2008 Binding Letter of Intent between Suncor Energy Inc. and Gibson Energy Ltd.
re “Terminal Project at Hardisty”, including any payments by the Canadian
Borrower or any Subsidiary made pursuant to the “Definitive Agreements” as
defined therein.

 

“Permitted Liens” means:

 

(a)           Liens for taxes, assessments, charges or other governmental levies not
delinquent or statutory Liens for taxes, assessments, charges or other
governmental levies not delinquent; provided that the payment of such taxes,
assessments, charges or other governmental levies under this clause (a) which
are due and payable are being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves have
been established on the applicable Loan Party’s books and records and a stay of
enforcement of any such Lien is in effect;

 

(b)           the Agent’s Liens and any other Lien otherwise arising in connection
with the Loan Documents;

 

(c)           Liens consisting of deposits made in the ordinary course of business in
connection with, or to secure payment of, obligations under worker’s
compensation, unemployment insurance, social security and other similar laws,
or to secure the performance of bids, tenders, hedging and trading arrangements
or contracts (other than contracts which constitute Debt) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than contracts which constitute Debt) or to secure
statutory obligations (other than liens arising under ERISA or Canadian federal
or provincial statutes in relation to pension plans or any other applicable
employee benefit plan law) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;

 

38

 

(d)           Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords, repairmen, possessors, operators or
construction Liens or other similar Liens and other like Persons incurred in
the ordinary course of business and not delinquent;

 

(e)           Liens (i) constituting encumbrances in the nature of reservations,
exceptions, zoning restrictions, encroachments, easements, rights of way,
covenants running with the land and other similar title exceptions or
encumbrances affecting any Real Estate and (ii) arising in connection with
interest or title of a lessor under any lease on assets other than Collateral
entered into by the Canadian Borrower or any Subsidiary in the ordinary course
of its business and covering only the assets so leased;

 

(f)            Liens arising from judgments and attachments in connection with court
proceedings provided that the attachment or enforcement of such Liens would not
result in an Event of Default hereunder;

 

(g)           Liens in effect as of the Effective Date described in Schedule 7.15
securing Debt described in Schedule 7.15;

 

(h)           Liens on Fixed Assets securing Capital Leases and purchase money Debt,
in each instance, permitted in Section 7.15;

 

(i)            Liens in respect of the Secured Note Facility (subject to the
Intercreditor Agreement);

 

(j)            the extension or renewal of any Lien permitted by clauses (g), (h), (i) and
(k) of this definition; provided, that (i) such Lien (as regards
clauses (i) (other than Shared Collateral, as defined in the Intercreditor
Agreement) and (k)) shall at no time be extended or renewed to cover any
Collateral, (ii) such Lien (as regards clause (g)) shall at no time be
extended or renewed to cover any assets or property other than such assets or
property existing on the Effective Date that are subject to the Lien being
extended or renewed, (iii) such Lien (as regards clause (h)) shall at no
time be extended or renewed to cover any assets or property other than such
assets or property existing immediately prior to such renewal that are subject
to the Lien being extended or renewed, and (iv) the Debt secured by such
Lien is permitted under this Agreement;

 

(k)           Liens existing on property or assets prior to the acquisition thereof by
any Loan Party in a Permitted Acquisition if such Lien was not incurred in
contemplation of the acquisition of such asset and does not extend to any other
assets or property of such Loan Party and liens on funds on deposit or escrow
in connection with a Permitted Acquisition;

 

(l)            Liens on amounts deposited in connection with obtaining worker’s
compensation or casualty or liability or other unemployment insurance or to
secure obligations to a utility when required by such utility in connection
with the operations of Borrower or its Subsidiaries;

 

(m)          Liens on amounts deposited in connection with the making or entering
into of bids, tenders, or leases in the ordinary course of business;

 

39

 

(n)           Liens arising as of a matter of law, such as bankers and other similar
statutory liens and other rights of offset, in connection with deposit,
securities, or commodities accounts in the ordinary course of business;

 

(o)           Statutory Liens in favour of pipeline owners and other transporters and
carriers of Petroleum Inventory;

 

(p)           Liens consisting of reclamation rights and similar statutory rights
arising as a matter of applicable law in favour of the seller of goods to the
Canadian Borrower or any Subsidiary so long as such Liens secure only the
purchase price of and apply only to the goods or other property sold;

 

(q)           Liens on amounts deposited as security for surety or appeal bonds in
connection with obtaining such bonds in the ordinary course of business; and

 

(r)            Liens on property not constituting Collateral;

 

(s)           progress payments and advances received from customers in the ordinary
course of business and reported to the Agent to the extent same creates a Lien
on the related Inventory and proceeds thereof and which do not exceed
$7,500,000;

 

(t)            Liens on Capital Stock in joint ventures securing obligations in respect
of such joint venture;

 

(u)           Liens incurred in the ordinary course of business (not
securing any Debt)  in favour of
any public utility when required by such public utility in connection with the
operations of any property or assets of any Loan Party;

 

(v)           Liens incurred in the ordinary course of business (not securing any
Debt) in respect of the rights of any shipper or supplier of inventory
(including the rights of such shipper or supplier to any petroleum substances
owned by such shipper or supplier or owned by a Loan Party but not yet paid for
or overdue but that are located on or within any property or assets of the any
Loan Party);

 

(w)          other Liens with respect to obligations (other than Debt) that do not
exceed U.S.$2,000,000 at any one time outstanding; and

 

(x)            Liens on unearned insurance premiums granted in connection with the
financing of insurance as permitted by subsection 7.15(o).

 

“Person” means any individual, sole
proprietorship, partnership, limited partnership, limited liability company,
unlimited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority or any other entity.

 

“Petroleum Inventory” means crude oil, bitumen,
blended bitumen, condensate, methanol, natural
gas, natural gas liquids, natural gasoline, refined petroleum products,
liquefied petroleum gases, propane, diesel, diluent, butane, wellsite fluids, tops,
distillate,  any blend thereof and Asphalt
Products.

 

40

 

“Plan” means an employee benefit plan (or
employee pension benefit plan) which any Loan Party or Target sponsors or
maintains or to which any Loan Party makes, is making or is obligated to make
contributions and includes any Pension Plan.

 

“Position”  means (a) any
exchange or over-the-counter put, call, swap or other options or any forward or
futures contract, and (b) any type of Hedge Agreement.

 

“PPSA” means the Personal
Property Security Act (Alberta) (or any successor statute) or
similar legislation of any other jurisdiction the laws of which are required by
such legislation to be applied in connection with the issue, perfection,
enforcement, validity or effect of security interests.

 

“Present Line of Business” means, with respect
to any Loan Party, (a) the Petroleum Inventory gathering, treating,
processing, terminalling, refining, storage, transporting and marketing
operations and other Petroleum Inventory gathering, treating, processing,
terminalling, storage, transporting and marketing operations of substantially
similar scope and methods of operation and (b) businesses that are
reasonably related, ancillary or complementary thereto or reasonable extensions
thereof.

 

“Preferred Stock”, as applied to the Capital
Stock of any corporation, shall mean Capital Stock of any class or classes
(however designated) which is preferred as to the payment of dividends or as to
the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.

 

“Priority Payables” means any amounts due and
not paid for wages and vacation pay (including amounts protected by the Wage Earner Protection Program Act (Ontario)), severance
pay, amounts due and not paid under any legislation relating to workers’
compensation or to employment insurance, all amounts deducted or withheld and
not paid and remitted when due under the Income Tax Act (Canada),
sales tax, excise tax, tax payable pursuant to Part IX of the Excise Tax Act (Canada) (net of GST input credits) or
similar applicable provincial legislation, government royalties, amounts
currently or past due and not paid for realty, municipal or similar taxes (to
the extent impacting personal or movable property) and all amounts currently or
past due and not contributed, remitted or paid to any Plan or under the EPPA,
or any similar statutory or other claims that would have or would reasonably be
expected to have priority over any Liens granted to the Agent in the future.

 

“Pro Rata Canadian LC Accommodation” has the
meaning specified in Section 1.4.I(a).

 

“Pro Rata Canadian Letter of Credit” has the
meaning specified in Section 1.4.I(a).

 

“Pro Rata Canadian Letter of Credit Fee” has
the meaning specified in Section 2.6(a).

 

“Pro Rata Share” means (a) in the context
solely of the revolving line of credit provided to the Canadian Borrower,
means, with respect to a Lender at any time, a fraction (expressed as a
percentage), the numerator of which is the amount of such Lender’s Canadian
Revolving Credit Commitment at such time and the denominator of which is the
sum of the amounts of all of the Lenders’ Canadian Revolving Credit Commitments
at such time, or if no Canadian Revolving Credit Commitments are outstanding at
such time, a fraction (expressed as a percentage), the

 

41

 

numerator of which is the amount of Obligations
(other than any Obligations under Bank Products) owed to such Lender at such
time with respect to the revolving line of credit provided hereunder to the
Canadian Borrower and the denominator of which is the aggregate amount of the
Obligations (other than any Obligations under Bank Products) owed to all
Lenders at such time with respect to the revolving line of credit provided
hereunder to the Canadian Borrower, and (b) in the context solely of the
revolving line of credit provided hereunder to the U.S. Borrowers means, with
respect to a Lender at any time, a fraction (expressed as a percentage), the
numerator of which is the amount of such Lender’s U.S. Revolving Credit
Commitment at such time and the denominator of which is the sum of the amounts
of all of the Lenders’ U.S. Revolving Credit Commitments at such time, or if no
U.S. Revolving Credit Commitments are outstanding at such time, a fraction
(expressed as a percentage), the numerator of which is the amount of
Obligations (other than any Obligations under Bank Products) owed to such
Lender at such time with respect to the revolving line of credit provided
hereunder to the U.S. Borrowers and the denominator of which is the aggregate
amount of the Obligations (other than any Obligations under Bank Products) owed
to all Lenders at such time with respect to the revolving line of credit
provided hereunder to the U.S. Borrowers, and (c) in the context of the
Total Facility means, with respect to a Lender at any time, a fraction
(expressed as a percentage), the numerator of which is the sum of such Lender’s
Canadian Revolving Credit Commitment at such time plus its U.S. Revolving
Credit Commitment at such time and the denominator of which is the sum of the
amounts of all of the Lenders’ Commitments at such time, or if no such Canadian
Revolving Credit Commitments or U.S. Revolving Credit Commitments are
outstanding at such time, a fraction (expressed as a percentage), the numerator
of which is the amount of Obligations (other than Obligations under Bank
Products) owed to such Lender at such time, and the denominator of which is the
aggregate amount of the Obligations (other than any Obligations under Bank
Products) owed to all Lenders at such time.

 

“Proceeds of Crime Act” means Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)
(or any successor statute), as amended from time to time, and includes all
regulations thereunder.

 

“Proprietary Rights” means, with respect to a
Loan Party, all of such Loan Party’s now owned and hereafter arising or acquired:  patents, patent rights, copyrights, works
which are the subject matter of copyrights, trademarks, service marks, trade
names, trade styles, patent, trademark and service mark applications, and all
licenses (to the extent sublicenseable) and rights related to any of the
foregoing, including those patents, trademarks, service marks, trade names and
copyrights set forth on Schedule 6.12 hereto, and all other rights under any of
the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations in part of any of the foregoing.

 

“Real Estate” means all of each Loan Party’s
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of
each Loan Party’s now or hereafter owned or leased interests in the
improvements thereon, the fixtures attached thereto and the easements
appurtenant thereto.

 

“Receipt Account” means each Canadian and U.S.
bank account subject to a Blocked Account Agreement, to which the proceeds of
Accounts and other Collateral are deposited or credited and which is maintained
in the name of the Agent or the applicable Loan Party, as the Agent may
determine, on terms acceptable to the Agent.

 

42

 

“Release” means a release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Contaminant into the indoor or outdoor environment or into or
out of any Real Estate or other property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or Real
Estate or other property.

 

“Replacement Lender” shall have the meaning
specified in Section 11.3.

 

“Report” shall have the meaning specified in Section 12.18.

 

“Reportable Event” means any of the events set
forth in Section 4043(c) of ERISA or the regulations thereunder,
other than any such event for which the 30 day notice requirement under ERISA
has been waived in regulations issued by the PBGC.

 

“Required Lenders” means at any time Lenders
whose Pro Rata Shares in respect of the Total Facility aggregate more than 60%;
provided, that so long as there are no more than two Lenders, “Required Lenders”
means all of such Lenders.

 

“Requirement of Law” means, as to any Person,
any law (statutory or common), treaty, rule or regulation or determination
of an arbitrator, court of law or of a Governmental Authority, in each case
applicable to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.

 

“Reserves” means reserves that limit the
availability of credit hereunder, consisting of reserves against the Canadian
Borrowing Base, the U.S. Borrowing Base, Canadian Availability and U.S.
Availability), in each instance, established by the Agent from time to time in
the Agent’s Credit Judgment which Reserves shall not be duplicative of
ineligibilized Accounts and Inventory (or the Hedging Reserve); provided,
however, that any Reserve shall bear a reasonable relationship to the issue
giving rise to the implementation of such Reserve.  Without limiting the generality of the
foregoing, the following reserves shall be deemed to be a reasonable exercise
of the Agent’s Credit Judgment: (a) a reserve for accrued, unpaid interest
then due on the Obligations, (b) reserves for rent at a leased, warehouse
or bailment location for which the Agent has not received a collateral access
or similar agreement, which reserve shall be in an amount equal to the lesser
of (i) 3 months’ rent or (ii) applicable Availability provided by the
Eligible Inventory at such location, and reserves for other statutory liens
(including, without limitation, for liens arising from the nonpayment of claims
or demands when due permitted in clause (c) of the defined term Permitted
Liens), (c) reserves for taxes, assessments, charges and other
governmental levies which are delinquent, (d) any claim or Lien, against
any part of the Collateral which may be in priority to the Agent, (e) of
any indemnity granted by the Agent or the Lenders to any Person in connection
with the depository and blocked account arrangements contemplated by the Loan
Documents, (f) $2,000 per employee, and (g) additionally, reserves
established by the Agent for amounts payable by the Borrowers and secured by
any Liens, choate or inchoate, which rank or which would reasonably be expected
to rank in priority to the Agent’s and/or Lenders’ Liens and/or for amounts
which represent costs relating to the enforcement of the Agent’s Liens including,
without limitation, in connection with Priority Payables and First Purchase
Crude Payables.

 

“Responsible Officer” means the chief executive
officer, chairman of the board, president, chief financial officer, chief
operating officer, manager of treasury, treasurer, assistant

 

43

 

treasurer or a vice president of finance of a
Loan Party or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants and the
preparation of the Borrowing Base Certificate of a Borrower, the chief
financial officer, the treasurer, assistant treasurer or a vice president of
finance of such Borrower or any other officer having substantially the same
authority and responsibility.

 

“Revolving Credit Commitment” means the
collective reference to the Canadian Revolving Credit Commitment and the U.S.
Revolving Credit Commitment.

 

“Revolving Loans” means the collective
reference to the Canadian Revolving Loans and the U.S. Revolving Loans.

 

“Risk Management Policy” means the Commodity
Trading Risk Management Policy and Procedures of the Loan Parties dated May 1,
2010, as the same has been amended prior to the date hereof and as may be
amended, supplemented or otherwise modified from time to time to the extent
such amendments, supplements or modifications are consented to by the Agent if
and as required by Section 7.33.

 

“Royal Bank” means Royal Bank of Canada.

 

“Section 1.4.I Supporting Letter of Credit”
has the meaning specified in Section 1.4.I(h).

 

Section 1.4.II Supporting Letter of Credit”
has the meaning specified in Section 1.4.II(h).

 

“Secured Note Agents” means, collectively, BNY
Trust Company of Canada and The Bank of New York Mellon and any successor or
trustees on conversion or refinancing of the Secured Note Facility.

 

“Secured Note Facility” means the secured note
loan facility established pursuant to the Secured Note Indenture in an original
principal amount not to exceed U.S.$560,000,000, as amended, modified, restated
or supplemented from time to time to the extent permitted by the Intercreditor
Agreement.

 

“Secured Note Facility Debt” means the Debt in
the original aggregate principal amount of U.S.$560,000,000 pursuant to the
Secured Note Facility Documents.

 

“Secured Note Facility Documents: means the
Secured Note Indenture and all agreements, instruments and documents relating
thereto and evidencing the Secured Note Facility Debt and the Secured Note
Facility, as amended, notified, restated, supplemented, replaced or otherwise
modified from time to time to the extent permitted by the Intercreditor
Agreement and under this Agreement.

 

“Secured Note Indenture” means the indenture
dated as of May 27, 2009 among the Canadian Borrower, GEP Midstream Finance
Corp., BNY Trust Company of Canada, and the Bank of New York Mellon.

 

“Secured Parties” or “Secured Party” means,
collectively, the Agent, each Lender and each Affiliate of a Lender who is a
counterparty to a Hedge Agreement, each former Lender and each Affiliate or
such former Lender who is a counterparty to a Hedge Agreement, the BP

 

44

 

Provider, the U.S. Cash Management Provider,
Royal Bank and Bank (in its roles under this facility) and each Letter of Credit
Issuer.

 

“Security Agreement” means the general security
agreements and security agreements of even date herewith among the Borrowers,
the Guarantors and the Agent for the benefit of the Secured Parties.

 

“Security Documents” means the Security Agreement
and any other present or future agreements executed by one or more of the Loan
Parties pursuant to which the Agent has been granted a Lien to secure any and
all of the Obligations of (i) the Borrowers, and (ii) the Guarantors.

 

“Solvent” means, when used with respect to any
Person, that at the time of determination:

 

(a)           the assets of such Person, at a fair valuation, are in excess of the
total amount of its debts (including contingent liabilities); and

 

(b)           the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and

 

(c)           it is then able and expects to be able to pay its debts (including
contingent debts and other commitments) as they mature; and

 

(d)           it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.

 

For purposes of determining whether a Person is
Solvent, the amount of any contingent liability shall be computed as the amount
that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

“Specified Contracts” has the meaning specified
in the Intercreditor Agreement.

 

“Sponsor” means Riverstone Holdings LLC or any
of its Affiliates.

 

“Sponsor Fees” means amounts payable to the
Sponsor pursuant to the Sponsor Management Agreement.

 

“Sponsor Management Agreement” means the
Management Agreement, by and between Gibson Energy Holding Inc. and the
Sponsor, as in effect on the Closing Date and as modified from time to time
with the consent of the Agent.

 

“Stated Termination Date” means the fourth
anniversary of the Closing Date.

 

“Subordinated Debt” means unsecured Debt
subordinated to the Agent and Lenders on terms and pursuant to agreements
acceptable to the Agent in its discretion.

 

“Subsidiary” of a Person means any corporation,
association, partnership, limited liability company, joint venture or other
business entity of which more than fifty percent (50%) of the Voting Stock or
other voting equity interests (in the case of Persons other than corporations),
is

 

45

 

owned or controlled directly or indirectly, by
the Person, or one or more of the Subsidiaries of the Person, or a combination
thereof.  Unless the context otherwise
clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of
the Canadian Borrower.

 

“Supporting Letters of Credit” means, the
collective reference to, the Section 1.4.I Supporting Letters of Credit
and the Section 1.4.II Supporting Letters of Credit.

 

“Tax” or “Taxes” means any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, imposed by a Governmental Authority.

 

“Tax Dividends” means distributions made by the
Canadian Borrower to any Parent Company in order to allow such Parent Company
(and the equity holders of such Parent Companies) to satisfy their Tax
liabilities to the extent such liabilities are attributable to the income of
Borrower and its Subsidiaries.

 

“Termination Date” means the earliest to occur
of (i) the Stated Termination Date, (ii) the date the Total Facility
is terminated either by the Canadian Borrower pursuant to Section 3.2 or
by the Required Lenders pursuant to Section 9.2, and (iii) the date
this Agreement is otherwise terminated for any reason whatsoever pursuant to
the terms of this Agreement.

 

“Termination Event” means (a) the whole or
partial withdrawal of the Canadian Borrower or any Canadian Guarantor from a
Pension Plan during a plan year; or (b) the filing of a notice of interest
to terminate in whole or in part a Pension Plan or the treatment of a Pension
Plan amendment as a termination of partial termination; or (c) the institution
of proceedings by any Governmental Authority to terminate in whole or in part
or have a trustee appointed to administer a Pension Plan; or (d) any other
event or condition which might constitute grounds for the termination of,
winding up or partial termination of winding up or the appointment of trustee
to administer, any Pension Plan.

 

“Total Facility” has the meaning specified in Section 1.1.

 

“Transfer” has the meaning specified in Section 7.11.

 

“UCC” means the Uniform Commercial Code, as in
effect from time to time, of the State of New York or of any other state the
laws of which are required as a result thereof to be applied in connection with
the issue of perfection or nonperfection or priority of security interests,
provided, that to the extent that the UCC is used to define any term herein or
in any other documents and such term is defined differently in different
Articles or Divisions of the UCC, the definition of such term contained in Article or
Division 9 of the applicable UCC shall govern.

 

“Unbilled Eligible Accounts” means, at the time
of any determination thereof, each portion of the Eligible Accounts of an
Account Debtor a Loan Party that represents the uninvoiced amount in respect of
volumes of Petroleum Inventory actually delivered by such Loan Party on or
prior to the date of determination in the current or immediately preceding
calendar month, and is governed by an enforceable purchase and sale agreement,
exchange agreement or other written agreement.

 

46

 

“Unfunded Pension Liability” means the excess
of a Plan’s projected benefit obligation, as defined in SFAS No. 87, over
the market value of that Plan’s assets and also includes any unfunded liability
or solvency deficiency as determined for the purposes of the PBA or other
applicable laws.

 

“Unsecured Note Facility” means the notes of
the Canadian Borrower issued January 19, 2010 which shall (i) not
bear interest at a rate greater than 12% per annum, (ii) not exceed
U.S.$200,000,000, (iii) have a final maturity no earlier than 91 days
after the Stated Termination Date, (iv) be unsecured Debt, and any
conversion, replacement, takeout financing, exchange or refinancing of such
facility or any other debt or other offering (by issuance of notes or
otherwise) in exchange, replacement or conversion thereof.

 

“Unused Letter of Credit Subfacility” means, at
any time, an amount equal to the Letter of Credit Subfacility at such time
minus the sum of (a) the aggregate undrawn amount of all outstanding
Canadian Letters of Credit issued under the Canadian LC Accommodation plus,
without duplication, (b) the aggregate unpaid reimbursement obligations
with respect to all Canadian Letters of Credit issued under the Canadian LC
Accommodation plus, (c) the aggregate undrawn amount of all outstanding
Pro Rata Canadian Letters of Credit issued under the Pro Rata Canadian LC
Accommodation plus, without duplication, (d) the aggregate unpaid
reimbursement obligations with respect to all Pro Rata Canadian Letters of
Credit issued under the Pro Rata Canadian LC Accommodation, plus (e) the
aggregate undrawn amount of all outstanding U.S. Letters of Credit plus,
without duplication, (f) the aggregate unpaid reimbursement obligations
with respect to all U.S. Letters of Credit.

 

“U.S. Accounts” means the Accounts of any U.S.
Borrower.

 

“U.S. Agent Advances” has the meaning specified
in Section 1.3(h).

 

“U.S. Availability” means the lesser of (a)(i) the
Maximum U.S. Revolver Amount, minus (ii) Reserves, minus (iii) the Aggregate
U.S. Revolver Outstandings at such time relating to extensions of credit made
(or, in the case of Pending Revolving Loans, to be made to or for the account
of the U.S. Borrowers), and (b)(i) the U.S. Borrowing Base, minus (ii) the
Aggregate U.S. Revolver Outstandings at such time relating to extensions of
credit made (or, in the case of Pending Revolving Loans, to be made to or for
the account of the U.S. Borrowers).

 

“U.S. Borrowers” has the meaning specified in
the preamble hereto.

 

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

 

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

 

(i)            100% of Eligible Cash Equivalents of the U.S. Borrowers; plus

 

(ii)           90% of the Eligible Accounts of the U.S. Borrowers  that are (x) Approved Investment Grade Eligible Accounts
of the U.S. Borrowers, or (y) Eligible Accounts of the U.S. Borrowers
insured on terms, and by insurance providers,

 

47

 

satisfactory to the Agent in its discretion
(which are not Approved Investment Grade Eligible Accounts of the U.S.
Borrowers) (the “U.S. Insured Accounts”); plus

 

(iii)          85% of the Eligible Accounts of the U.S. Borrowers
that are Other Approved Eligible Accounts of the U.S. Borrowers; plus

 

(iv)          80% of the Eligible Accounts of the U.S. Borrowers
that are Other Unbilled Eligible Accounts of the U.S. Borrowers; plus

 

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

 

(vi)          60% of the Issued but Unused Letter of Credit Value of
the U.S. Borrowers;

 

MINUS

 

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

 

(i)            Reserves; plus

 

(ii)           the Hedging Reserve.

 

“U.S. Cash Management Provider” has the meaning
specified in Section 1.5.

 

“U.S. Commitment Fee” has the meaning specified
in Section 2.5(b).

 

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

 

“U.S. Credit Support” has the meaning specified
in Section 1.4.II(a)(ii).

 

“U.S. Designated Account” has the meaning
specified in Section 1.3(c).

 

“U.S. Dollar” and “U.S.$” mean dollars in the
lawful currency of the United States of America.

 

“U.S. Fronting Fee” has the meaning specified
in Section 2.6(c).

 

“U.S. Guarantor” means a Guarantor that is a
U.S. Subsidiary.

 

“U.S. LC Accommodation” has the meaning
specified in Section 1.4.II(a)(ii).

 

“U.S. Lender” means each Lender that has a U.S.
Revolving Credit Commitment or that holds a U.S. Revolving Loan or is a
participant in a U.S. Letter of Credit or U.S. Credit Support.

 

“U.S. Letter of Credit” has the meaning
specified in Section 1.4.II(a)(ii).

 

48

 

“U.S. Letter of Credit Fee” has the meaning
specified in Section 2.6(c).

 

“U.S. Letter of Credit Issuer” means PNC Bank,
N.A., any affiliate of PNC Bank, N.A. or any other financial institution that
issues any U.S. Letter of Credit pursuant to this Agreement.

 

“U.S. Notice of Borrowing” has the meaning
specified in Section 1.3(b)(i).

 

“U.S. Notice of Continuation/Conversion” has
the meaning specified in Section 2.2(b)(ii).

 

“U.S. Overadvance” means the amounts, if any,
by which all bank accounts maintained by the U.S. Borrowers with the U.S. Cash
Management Provider are overdrawn or otherwise have a negative balance, whether
in consequence of any electronic transfer or otherwise, but excludes any
Overdraft Accommodation.  U.S.
Overadvances shall not exceed U.S.$2,000,000 in the aggregate, at any time.

 

“U.S. Overadvance Reserve” means
U.S.$2,000,000.

 

“U.S. Prime Rate” means, for any day, the rate
of interest per annum equal to the greater of (i) the rate determined by
the Bank from time to time as its prime commercial lending rate for U.S. Dollar
loans in the United States for such day. 
Such rate is not necessarily the lowest rate that the Bank is charging
any corporate customer.  Any change in
the prime rate determined by the Bank shall take effect at the opening of
business on the date of such determination; and (ii) 1⁄2 of 1% per annum
above the Federal Funds Rate.  Each
interest rate based upon the U.S. Prime Rate shall be adjusted simultaneously
with any change in the U.S. Prime Rate.

 

“U.S. Prime Rate Revolving Loan” means a U.S.
Revolving Loan during any period in which it bears interest based on the U.S.
Prime Rate.

 

“U.S. Revolving Credit Commitment” means, as to
any Lender, the obligation of such Lender, if any, to make U.S. Revolving Loans
and participate in U.S. Letters of Credit in an aggregate principal and/or face
amount not to exceed the amount set forth under the heading “U.S. Revolving
Credit Commitment” opposite such Lender’s name on Schedule 1.2 or in the Assignment
and Acceptance pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof.

 

“U.S. Revolving Loan Settlement” has the
meaning specified in Section 12.15B.

 

“U.S. Revolving Loan Settlement Date” has the
meaning specified in Section 12.15B.

 

“U.S. Revolving Loans” has the meaning
specified in Section 1.3 and includes each U.S. Agent Advance.

 

“U.S. Subsidiary” means any direct or indirect
Subsidiary of the Canadian Borrower which is organized or merged under the laws
of the United States of America or any state thereof.

 

“Voting Stock” of a corporation shall mean all
classes of Capital Stock of such corporation then outstanding and normally
entitled to vote in the election of directors.

 

49

 

Accounting Terms.  Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations in
this Agreement shall be computed, unless otherwise specifically provided
therein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements.

 

Interpretive Provisions.

 

(a)           The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

 

(b)           The words “hereof,” “herein,” “hereunder” and similar words refer to
this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.

 

(c)

 

(i)            The term “documents” includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.

 

(ii)           The term “including” is not limiting and means “including
without limitation.”

 

(iii)          In the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and including,” the
words “to” and “until” each mean “to but excluding” and the word “through”
means “to and including.”

 

(d)           Any reference made in this Agreement to “Agent” or “Lender” shall so be
construed as to include its successors and permitted assigns.

 

(e)           Any reference made in this Agreement to a time of day is, unless
otherwise stated, a reference to Toronto time.

 

(f)            Any reference made in this Agreement to Sections, Articles, Exhibits or
Schedules is, unless otherwise indicated, a reference to Sections and Articles
of this Agreement and to Exhibits and Schedules to this Agreement, as the case
may be.  The provisions of each Exhibit and
Schedule shall constitute provisions of this Agreement as though repeated at
length herein.

 

(g)           Any reference made in this Agreement to a “fiscal quarter” means, in
relation to a Loan Party, one of the four (4) consecutive periods in each
Fiscal Year each of three (3) months in duration.

 

(h)           In this Agreement, (a) the singular includes the plural and vice
versa, (b) “in writing” or “written” includes printing, typewriting, or
any electronic means of communication capable of being visibly reproduced at
the point of reception, including telex, telecopy and telegraph, (c) the
headings, the table of contents, the Articles and the Sections are inserted for

 

50

 

convenience only and are to be ignored in
construing this Agreement, (d) a document, notice, note, bill of exchange
or other instrument shall be deemed to have been validly signed and executed if
it has been signed by either an original signature or a facsimile signature or
stamp, and (e) all references to amounts of money shall, unless otherwise
indicated, be references to Canadian Dollars.

 

(i)            All references to parties herein shall unless otherwise expressly
provided, include each such party’s successors and permitted assigns.

 

(j)            For the purpose of determining compliance with covenant and default
limitations set forth in the Agreement, amounts expressed in Canadian Dollars shall
be measured by aggregating the applicable items denominated in Canadian Dollars
with the Equivalent Amounts expressed in Canadian Dollars of such items
denominated in U.S. Dollars.

 

(k)           Unless otherwise expressly provided herein, (i) references to agreements
(including this Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of this Agreement, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute
or regulation.

 

(l)            The captions and headings of this Agreement and other Loan Documents are
for convenience of reference only and shall not affect the interpretation of
this Agreement.

 

(m)          This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Loan
Parties and the other parties hereto, and are the products of all parties.  Accordingly, they shall not be construed
against the Lenders or the Agent merely because of the Agent’s or Lenders’
involvement in their preparation.

 

(n)           Unless otherwise expressly stated herein, wherever in this Agreement
reference is made to a rate of interest or fee “per annum” or a similar
expression is used, such interest or fee will be calculated on the basis of a
calendar year of three hundred and sixty (360) days.  All payments of interest to be made hereunder
will be paid both before and after maturity and before and after default and/or
judgment, if any, until payment thereof, and interest will accrue on overdue
interest, if any.

 

(o)           All Canadian Revolving Loans (other than ABR Revolving Loans and
Canadian Revolving Loans that are LIBOR Revolving Loans) shall be made and
denominated in Dollars and all ABR Revolving Loans and Canadian Revolving Loans
that are LIBOR Revolving Loans shall be made and denominated in U.S.
Dollars.  All U.S. Revolving Loans shall
be made and denominated in U.S. Dollars. 
Canadian Revolving Loans (other than ABR Revolving Loans and Canadian
Revolving Loans that are LIBOR Revolving Loans), interest thereon shall all be
payable in Dollars.  ABR Revolving Loans,
all U.S. Revolving Loans and Canadian Revolving Loans that are LIBOR Revolving
Loans, interest thereon shall all be payable in U.S. Dollars.  However, for purposes of determining
compliance with covenant and default limitations, all fees and amounts payable
hereunder and all calculations hereunder, including, without limitation, the
amount of the Borrowing Base of each Borrower the Aggregate Canadian Revolver
Outstandings, the Maximum Revolver Amount, the Maximum Canadian Revolver
Amount, the

 

51

 

Letter of Credit Subfacility, Availability and
each Lender’s Commitment as of any date shall all be calculated and stated in
U.S. Dollars, and for such purposes any items denominated in Dollars included
in such calculation shall be converted into U.S. Dollars at the Exchange Rate
prevailing on such date, as determined by the Agent.

 

(p)           For purposes of any Collateral located in the Province of Quebec or
charged by any deed of hypothec (or any other Loan Document) and for all other
purposes pursuant to which the interpretation or construction of a Loan
Document may be subject to the laws of the Province of Quebec or a court or
tribunal exercising jurisdiction in the Province of Québec, (q) “personal
property” shall be deemed to include “movable property”, (r) “real
property” shall be deemed to include “immovable property”, (s) “tangible
property” shall be deemed to include “corporeal property”, (t) “intangible
property” shall be deemed to include “incorporeal property”, (u) “security
interest” and “mortgage” shall be deemed to include a “hypothec”, (v) all
references to filing, registering or recording under the UCC or the PPSA shall
be deemed to include publication under the Civil Code of Québec, (w) all
references to “perfection” of or “perfected” Liens shall be deemed to include a
reference to the “opposability” of such Liens to third parties, (x) any “right
of offset”, “right of setoff” or similar expression shall be deemed to include
a “right of compensation”, (y) “goods” shall be deemed to include “corporeal
movable property” other than chattel paper, documents of title, instruments,
money and securities, and (z) an “agent” shall be deemed to include a “mandatary”.

 

52

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