Document:

Exhibit 10.4

 

Execution Version

 

THIRD AMENDMENT TO CREDIT
AGREEMENT

 

AMONG:              GIBSON ENERGY ULC, as borrower (the “Borrower”)

 

AND:                     MOOSE JAW REFINERY ULC, CANWEST PROPANE ULC, MP ENERGY ULC,
GEP ULC, GIBSON ENERGY ULC, 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. and BRIDGE CREEK TRUCKING LTD. as
guarantors (the “Guarantors”)

 

AND:                     ROYAL BANK OF CANADA, as administrative agent (the “Agent”)

 

AND:                     ROYAL BANK OF CANADA, UBS LOAN FINANCE LLC, BANK OF MONTREAL,
MORGAN STANLEY BANK, N.A. and the other financial institutions named herein, as
lenders (the “Lenders”)

 

WHEREAS
the Borrower, the
Guarantors, the Agent, the Lenders, Royal Bank of Canada, as collateral
agent, Royal Bank of Canada, as syndication agent, UBS Securities LLC, as
documentation agent, and RBC Capital Markets and UBS Securities LLC, as lead
arrangers, are party to a credit agreement dated as of December 12, 2008,
as amended by the First Amendment to Credit Agreement dated as of May 26,
2009 and by the Second Amendment to Credit Agreement dated as of October 2,
2009, as the same may be amended, restated, supplemented, revised or replaced
from time to time (the “Credit Agreement”);

 

AND
WHEREAS the Lenders have agreed to provide certain consents
and to amend certain provisions of the Credit Agreement, to, among other
things, increase the amount of the Total Facility to U.S.$150,000,000, but only to the extent and subject to
the limitations set forth herein (the “Agreement”);

 

NOW
THEREFORE for good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereby
agree as follows:

 

ARTICLE I — INTERPRETATION

 

1.1           All capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement.

 

ARTICLE II — AMENDMENTS

 

2.1           Annex A to the Credit Agreement is hereby amended as
follows:

 

2.1.1        By adding the
following definitions in the proper alphabetical order:

 

““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).”; and

 

““Unsecured Note Facility” means the notes of the Borrower issued
during the first six months of 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.”;

 

2.1.2        The definition of
“Consolidated Net Income” is hereby amended by adding “(including the foreign
exchange gain resulting from the refinancing of the Bridge Facility on the Permitted
Bridge Refinancing Date)” immediately after the word “gain” in the second line
of paragraph (k) thereof;

 

2.1.3        The definition of
Eligible Assignee is hereby deleted and the following substituted therefore:

 

““Eligible Assignee” means (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$1,000,000,000 and for which the consent of the Borrower has been received
(provided, that (x) no consent of the Borrower shall be unreasonably
withheld or delayed and (y) no consent of the Borrower shall be required
if a Default or Event of Default has occurred and is continuing); (b) any
Lender; (c) any Affiliate of any Lender provided, that such Eligible
Assignee shall in all cases (when no Event of Default is continuing) be a
financial institution that (i), is a Canadian Qualified Lender; or (ii) is
not a trade competitor of any Loan Party; and (d) if an Event of Default
has occurred and is continuing, any Person reasonably acceptable to the Agent.”;

 

2.1.4        The definition of
“Letter of Credit Subfacility” is hereby amended by deleting the reference to “U.S.$50,000,000”
and substituting “U.S.$75,000,000” therefor.; and

 

2.1.5        The definition of
“Maximum Revolver Amount” is hereby amended by deleting the reference to “U.S.$95,000,000”
and substituting “U.S.$150,000,000”
therefor.

 

2.2           Schedule 1.2 of
the Credit Agreement is hereby deleted and Schedule 1.2 attached hereto is
substituted therefor.

 

2.3           Section 1.1
of the Credit Agreement is hereby amended by deleting the reference to “U.S.$95,000,000”
and substituting “U.S.$150,000,000”
therefor.

 

2.4           Section 5.2
of the Credit Agreement is hereby amended by adding the following to the end
thereof:

 

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

 

2

 

any executed amendment, supplement, waiver or other modification with
respect to the Unsecured Note Facility.”.

 

2.5           Section 7.10
of the Credit Agreement is hereby amended as follows:

 

(a)            adding “or the Unsecured Note Facility” after the word “Facility” in the heading thereto; and

 

(b)           adding the
following to the end thereof:

 

“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 the
Collateral to secure the Unsecured Note Facility, or (iii) increasing the
principal amount thereof in excess of U.S.$200,000,000.”.

 

2.6           Section 7.14
of the Credit Agreement is hereby amended as follows:

 

(a)            deleting the word
“and” from the end of subsection (e);

 

(b)           deleting the
period “.” at the end of subsection (f) and substituting “; and” therefor;
and

 

(c)            adding the
following new subsection to the end thereof:

 

“(g) unsecured Guarantees in favour of the noteholders under the
Unsecured Note Facility”.

 

2.7           Section 7.15
of the Credit Agreement is hereby amended as follows:

 

(a)            deleting the word
“and” from the end of subsection (u);

 

(b)           deleting the
period “.” from the end of subsection (v) and substituting “; and”
therefor; and

 

(c)            adding the
following new subsection to the end thereof “(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.

 

2.8           Section 7.29
of the Credit Agreement is hereby amended by adding the following new
subsection to the end thereof “(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.”

 

3

 

ARTICLE III — CONSENT AND AGREEMENT

 

3.1           The Lenders
hereby agree that the proceeds realized under the Unsecured Note Facility shall
be considered proceeds of equity or debt for purposes of Permitted Acquisitions
(specifically, as such equity or debt is referenced in paragraph (A) of
the definition of Permitted Acquisitions).

 

ARTICLE IV — CONDITIONS TO EFFECTIVENESS

 

4.1           This Agreement
shall become effective upon:

 

(a)           Agent receiving three (3) fully executed
original copies of this Agreement;

 

(b)           Agent receiving
certified copies of resolutions, in form and substance satisfactory to the
Agent, of the board of directors of each of the Loan Parties authorizing the
execution, delivery and performance of this Agreement;

 

(c)           The Agent and
Lenders shall be reasonably satisfied with the terms and conditions of the
Unsecured Note Facility and related documents of the Loan Parties thereunder,
it being understood that the Agent and Lenders are reasonably satisfied with
the terms and conditions set forth in the draft description of notes in respect
of the Unsecured Note Facility distributed to it on January 12, 2010;

 

(d)           Morgan Stanley Bank,
N.A. being satisfied with the Borrower’s assistance with its continuing
anti-money laundering and other “know your customer” diligence;

 

(e)           The Agent shall
be reasonably satisfied with the capitalization of the Loan Parties after
giving effect to the consummation of the Unsecured Note Facility; and

 

(f)            Lenders receiving
the following fees:

 

(i)             Royal Bank of
Canada — Commitment fee of U.S.$150,000 and an amendment fee of U.S.$50,000;

 

(ii)            UBS Loan Finance
LLC — Commitment fee of U.S.$150,000 and an amendment fee of U.S.$50,000;

 

(iii)           Morgan Stanley
Bank, N.A. — Commitment fee of U.S.$800,000, and

 

(iv)          Bank of Montreal —
amendment fee of U.S.$50,000.

 

ARTICLE V — REPRESENTATIONS AND WARRANTIES

 

5.1           In order to
induce the Agent and the Lenders to enter into this Agreement in the manner
provided herein, the Loan Parties represent and warrant to the Agent and the
Lenders, that the following statements are true and correct:

 

(a)           Authorization,
Validity, and Enforceability of this Agreement.  Each of the Loan Parties have the corporate
power and authority to execute and deliver this

 

4

 

Agreement and to perform the Credit Agreement.  Each of the Loan Parties have taken all
necessary corporate action or any other organizational action (including,
without limitation, obtaining approval of their shareholders or other
equityholders if necessary) to authorize their execution and delivery of this
Agreement and the performance of the Credit Agreement.  This Agreement has been duly executed and
delivered by the each of the Loan Parties and this Agreement and the Credit
Agreement constitute the legal, valid and binding obligations of each of
the  Loan Parties, enforceable against them
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).  The Loan Parties’ execution and delivery of
this Agreement and the performance by each of the Loan Parties of the Credit
Agreement do not and will not conflict with, or constitute a violation or
breach of, or result in the creation or imposition of any Lien upon the
property of each of the Loan Parties (other than Liens granted by such Loan
Party under any of the Loan Documents and the Transaction Documents (as
permitted under the Credit Agreement and under the Intercreditor Agreement)) by
reason of the terms of (a) any contract, mortgage, lease, agreement,
indenture or instrument to which such Loan Party is a party or which is binding
upon it to the extent such breach or violation would not have a Material
Adverse Effect, (b) any Requirement of Law applicable to such Loan Party
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.

 

(b)           Governmental
Authorization.  No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any governmental authority or other person is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against each of the Loan Parties or any Subsidiaries of this
Agreement or the Credit Agreement except those the failure of which to obtain
or take would not have a Material Adverse Effect.

 

(c)           Incorporation of
Representations and Warranties From Credit Agreement.  The representations and warranties contained
in Article 6 of the Credit Agreement are true and correct in all material
respects on and as of the date of this Agreement to the same extent as though
made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.

 

(d)           Solvent.  the Loan Parties are, when taken as a whole, Solvent after the incurrence of
the Unsecured Note Facility.

 

5

 

(e)           Absence of
Default.  No event has
occurred and is continuing or will result from the execution of this Agreement
that would constitute a Default or an Event of Default.

 

ARTICLE VI — GUARANTOR
ACKNOWLEDGMENT

 

6.1           Each Guarantor (i) consents
to and approves the execution and delivery of this Agreement by the parties
hereto, (ii) agrees that this Agreement does not and shall not limit or
diminish in any manner the obligations of such Guarantors under its guarantee
delivered in favour of the Agent and the Lenders under the Credit Agreement
(the “Guarantee”) and that such obligations would not be limited or diminished
in any manner even if the undersigned had not executed this Agreement, (iii) agrees
that this Agreement shall not be construed as requiring the consent of such
Guarantors in any other circumstance, (iv) reaffirms its obligations under
the Guarantee, and (v) agrees that the Guarantee remains in full force and
effect and is hereby ratified and confirmed.

 

ARTICLE VII — LENDERS

 

7.1           Each Lender party
hereto agrees to be bound by the terms of the Credit Agreement and to perform
all of the obligations of a Lender thereunder and under all other Loan
Documents.

 

7.2           Each Lender party
hereto represents that it is a Canadian Qualified Lender.

 

ARTICLE VIII — MISCELLANEOUS

 

8.1           The execution,
delivery and performance of this Agreement shall not, except as expressly
provided for herein, constitute a waiver of any provision of, or operate as a
waiver of any right, power or remedy of the Agent and/or the Lenders under the
Credit Agreement or any other document.

 

8.2           This Agreement
shall be interpreted and the rights and liabilities of the parties hereto shall
be determined in accordance with the laws of the Province of Alberta and the
federal laws of Canada applicable therein.

 

8.3           Save as expressly
amended by this Agreement, all other terms and conditions of the Credit
Agreement remain in full force and effect. 
All other documents remain in full force and effect.

 

8.4           This Agreement
may be executed in any number of counterparts (and by different parties hereto
in different counterparts), each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and
the same agreement. Delivery of an executed counterpart of a signature page of
this Agreement by telecopier or other electronic means shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

6

 

 

DATED
as of the 13th day of January, 2010

 

 

	
   

  	
  “BORROWER”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GIBSON ENERGY ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
  Name:

  	
  Don A. Fowlis

  
	
   

  	
  Title:

  	
  Senior Vice
  President, Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “GUARANTORS”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MOOSE JAW REFINERY ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A. Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CANWEST PROPANE ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MP ENERGY ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  

 

 

	
   

  	
  GEP ULC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON ENERGY ULC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON GCC INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MOOSE JAW REFINERY PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  

 

 

	
   

  	
  CANWEST PROPANE PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MP ENERGY PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON ENERGY PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CHIEF HAULING CONTRACTORS ULC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LINK PETROLEUM SERVICES LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  

 

 

	
   

  	
  LINK PETROLEUM, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIBSON ENERGY (U.S.) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEP MIDSTREAM FINANCE CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BATTLE RIVER TERMINAL LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ T. Murray
  Carey

  
	
   

  	
   

  	
  Name:  T. Murray Carey

  
	
   

  	
   

  	
  Title:  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BATTLE RIVER TERMINAL GP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ T. Murray
  Carey

  
	
   

  	
   

  	
  Name:  T. Murray Carey

  
	
   

  	
   

  	
  Title:  Secretary

  

 

 

	
   

  	
  BRIDGE CREEK TRUCKING LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Don A.
  Fowlis

  
	
   

  	
   

  	
  Name:  Don A. Fowlis

  
	
   

  	
   

  	
  Title:  Senior Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “AGENT”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Renuka
  Gnanaswaran

  
	
   

  	
   

  	
  Name:  Renuka Gnanaswaran

  
	
   

  	
   

  	
  Title:  Manager, Agency

  

 

 

	
   

  	
  “LENDERS”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Michael
  Peterson

  
	
   

  	
   

  	
  Name:  Michael Peterson

  
	
   

  	
   

  	
  Title:  Attorney in Fact

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Andrew Steuter

  
	
   

  	
   

  	
  Name:  Andrew Steuter

  
	
   

  	
   

  	
  Title:  Attorney in Fact

  

 

 

	
   

  	
  “LENDERS (continued)”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Irja R.
  Otsa

  
	
   

  	
   

  	
  Name:  Irja R. Otsa

  
	
   

  	
   

  	
  Title:  Associate Director

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Marie Haddad

  
	
   

  	
   

  	
  Name:  Marie Haddad

  
	
   

  	
   

  	
  Title:  Associate Director

  

 

 

	
   

  	
  “LENDERS (continued)”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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

  

 

 

	
   

  	
  “LENDERS (continued)”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MORGAN STANLEY BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ William
  Graham

  
	
   

  	
   

  	
  Name:  William Graham

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  

 

 

SCHEDULE 1.2

 

LENDERS COMMITMENTS

 

	
  Lender

  	
   

  	
  Revolver Commitment

  	
   

  	
  Pro Rata Percentage

  	
   

  
	
  Royal Bank of Canada

  	
   

  	
  U.S.$

  	
  40,000,000

  	
   

  	
  26.6666

  	
  %

  
	
  UBS Loan Finance LLC

  	
   

  	
  U.S.$

  	
  40,000,000

  	
   

  	
  26.6666

  	
  %

  
	
  Morgan Stanley Bank, N.A.

  	
   

  	
  U.S.$

  	
  40,000,000

  	
   

  	
  26.6666

  	
  %

  
	
  Bank of Montreal

  	
   

  	
  U.S.$

  	
  30,000,000

  	
   

  	
  20.00

  	
  %Exhibit 10.5

 

APPENDIX
A TO STOCK OPTION AGREEMENT

 

ARTICLE
I.

GRANT OF OPTION

 

Section 1.1                                      Grant of Option. 
The Company hereby grants to the Optionee an Option to purchase any part
or all of an aggregate of the Common Shares set forth in the Grant Notice
pursuant to which this Appendix is attached, upon the terms and conditions set
forth in the Plan and this Agreement. 
The Optionee hereby agrees that except as required by law, he or she
will not disclose the individual terms of this Agreement and the grant of the
Option to any Person other than the Optionee’s spouse and/or tax, legal or
financial advisor (if any) without the prior approval of the Administrator, and
the Optionee agrees that, in the discretion of the Administrator, the Option
shall terminate and any unexercised portion of such Option (whether or not
then-exercisable) shall be forfeited if the Optionee violates the
non-disclosure provisions of this Section 1.1; provided, however, that the
general disclosure of the existence of the Plan by any member of management of
the Company and its Subsidiaries to employees of the Company and its
Subsidiaries shall not be a violation of this Section 1.1.

 

Section 1.2                                      Option Subject to Plan. 
The Option granted hereunder is subject to the terms and provisions of
the Plan, including without limitation, Article V and Article VIII
thereof.  In the event of a conflict
between the terms and conditions of the Plan and this Agreement, the terms and
conditions of the Plan shall prevail.

 

Section 1.3                                      Exercise Price.  The Exercise Price of the Common Shares
covered by the Option shall be the Exercise Price per Common Share as set forth
in the Grant Notice (without commission or other charge).

 

ARTICLE
II.

VESTING SCHEDULE; EXERCISABILITY

 

Section 2.1                                      Vesting of Option. 
Except as provided below, this Option shall vest during its term as
follows:

 

(a)                                  Vesting of Time
Options.

 

(i)                                     Vesting.  The Time
Options shall become vested, provided that Optionee does not incur a
Termination of Service as a Service Provider prior to each applicable date set
forth below and subject to Section 2.2, as follows:

 

(A)                              20% of the Time Options shall become
vested on December 31, 2009;

 

(B)                                20% of the Time Options shall become
vested on December 31, 2010;

 

(C)                                20% of the Time Options shall become
vested on December 31, 2011;

 

(D)                               20% of the Time Options shall become
vested on December 31, 2012; and

 

(E)                                 20% of the Time Options shall become
vested on December 31, 2013.

 

1

 

(ii)                                  Liquidity Event Vesting.  Notwithstanding the foregoing, all
Time Options, to the extent not then vested or previously forfeited or
cancelled, shall become fully vested immediately prior to the effective date of
the Liquidity Event.

 

(b)                                 Vesting of Performance
Options.

 

(i)                                     Performance Based Vesting.  Provided that the Optionee does not incur a
Termination of Service as a Service Provider prior to each applicable date set
forth below and subject to Section 2.2, the Performance Options shall vest
as follows:

 

(A)                              20% of the Performance Options shall
become vested on December 31, 2009 if the Administrator determines that
the EBITDA for the 2009 Fiscal Year equals or exceeds the EBITDA Target for
such Fiscal Year; provided, that if such EBITDA is less than 100% but greater
than or equal to 95% of such EBITDA Target, then 15% of the Performance Options
shall become vested on December 31, 2009; and, provided, further, that if
such EBITDA is less than 95% but greater than or equal to 88% of such EBITDA
Target, then 10% of the Performance Options shall become vested on December 31,
2009;

 

(B)                                20% of the Performance Options shall
become vested on December 31, 2010 if the Administrator determines that
the EBITDA for the 2010 Fiscal Year equals or exceeds the EBITDA Target for
such Fiscal Year; provided, that if such EBITDA is less than 100% but greater
than or equal to 95% of such EBITDA Target, then 15% of the Performance Options
shall become vested on December 31, 2010; and, provided, further, that if
such EBITDA is less than 95% but greater than or equal to 88% of such EBITDA
Target, then 10% of the Performance Options shall become vested on December 31,
2010;

 

(C)                                20% of the Performance Options shall
become vested on December 31, 2011 if the Administrator determines that
the EBITDA for the 2011 Fiscal Year equals or exceeds the EBITDA Target for
such Fiscal Year; provided, that if such EBITDA is less than 100% but greater
than or equal to 95% of such EBITDA Target, then 15% of the Performance Options
shall become vested on December 31, 2011; and, provided, further, that if
such EBITDA is less than 95% but greater than or equal to 88% of such EBITDA
Target, then 10% of the Performance Options shall become vested on December 31,
2011;

 

(D)                               20% of the Performance Options shall
become vested on December 31, 2012 if the Administrator determines that
the EBITDA for the 2012 Fiscal Year equals or exceeds the EBITDA Target for
such Fiscal Year; provided, that if such EBITDA is less than 100% but greater
than or equal to 95% of such EBITDA Target, then 15% of the Performance Options
shall become vested on December 31, 2012; and, provided, further, that if
such EBITDA is less than 95% but greater than or equal to 88% of such EBITDA
Target, then 10% of the Performance Options shall become vested on December 31,
2012; and

 

(E)                                 20% of the Performance Options shall
become vested on December 31, 2013 if the Administrator determines that
the EBITDA for the 2013 Fiscal Year equals or exceeds the EBITDA Target for
such Fiscal Year; provided, that if such EBITDA is less than 100% but greater
than or equal to 95% of such EBITDA Target, then 15% of the Performance Options
shall become vested on December 31, 2013; and, provided, further, that if
such EBITDA is less than 95% but greater than or equal to 88% of such EBITDA
Target, then 10% of the Performance Options shall become vested on December 31,
2013.

 

2

 

Subject to the terms and
conditions of this Agreement, if the EBITDA for any Fiscal Year is less than
88% of the applicable EBITDA Target for such Fiscal Year, the Performance
Options with respect to such Fiscal Year will not vest pursuant to this Section 2.1(b)(i).

 

(ii)                                  Catch-up Vesting.  Notwithstanding the foregoing, the Performance Options
which fail to become vested in accordance with Section 2.1(b)(i) shall
otherwise be eligible to become vested in accordance with this Section 2.1(b)(ii) as
follows:

 

(A)                              If the EBITDA for a Fiscal Year exceeds
100% of the applicable EBITDA Target for such Fiscal Year (an “Excess Fiscal Year”), such excess
amount (the “Excess Amount”)
shall be available to be added to the EBITDA of any Fiscal Year prior to such
Excess Fiscal Year in which EBITDA did not equal or exceed 100% of the
applicable EBITDA Target (an “Eligible
Fiscal Year”).  The
application of the Excess Amount (together with any Excess Amounts from any
prior Excess Fiscal Years) shall commence with the first Eligible Fiscal Year
until the EBITDA for such Eligible Fiscal Year equals 100% of the applicable
EBITDA Target.  Once the EBITDA for the
first Eligible Fiscal Year equals 100% of the applicable EBITDA Target, any
remaining Excess Amount (together with any remaining Excess Amounts from any
prior Excess Fiscal Years) may then be applied to the next Eligible Fiscal Year
in the same manner, and so on with respect to subsequent Eligible Fiscal Years,
but in each case only for any Eligible Fiscal Year prior to the Excess Fiscal
Year to which the Excess Amount relates. 
To the extent the application of such Excess Amounts causes an Eligible
Fiscal Year to meet or exceed 88% of the applicable EBITDA Target, the portion
of the Performance Options that would have vested with respect to such Eligible
Fiscal Year shall vest as of the date on which the current tranche of Performance
Options for the Excess Fiscal Year vest in accordance with Section 2.1(b)(i).  Notwithstanding the foregoing, for the
avoidance of doubt, in no event shall any Excess Amount with respect to any
Excess Fiscal Year be applied to any Fiscal Year subsequent to such Excess
Fiscal Year.

 

(B)                                Notwithstanding anything to the contrary
in this Section 2.1(b)(ii), in no event shall more than 20% of the
Performance Options vest with respect to any Fiscal Year as a result of this Section 2.1(b)(ii).

 

(iii)                               Liquidity Event Vesting. 
Notwithstanding the foregoing, if at the time of a Liquidity Event (x) Investment
Proceeds are equal to or greater than 3.0 times the Invested Capital, and (y) Investment
Proceeds result in an Internal Rate of Return of at least 25%, to the extent
not then vested or previously forfeited or cancelled, the Performance Options
shall become fully vested immediately prior to the effective date of such
Liquidity Event.

 

(c)                                  Determination of
Targets.  The Administrator shall make the determination
as to whether the respective EBITDA Targets have been met, and shall determine
the extent, if any, to which the Option has become vested, on any such date as
the Administrator in its sole discretion shall determine.

 

(d)                                 Adjustments in EBITDA. 
In the event that, after the approval by the Administrator of an EBITDA
Target for a Fiscal Year, the Administrator determines, in its sole discretion,
that any acquisition or disposition of any business by the Company, any
dividend or other distribution (whether in the form of cash, Common Shares,
other securities, or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, amalgamation, arrangement
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Shares or other securities of the Company, issuance of warrants or other
rights to purchase Common Shares or other securities of the Company, any
unusual or nonrecurring transactions or events affecting the Company, or the
financial statements of the Company, or change, after such date, in applicable
laws or regulations, or changes in accounting principles generally accepted in
Canada applicable to, or the accounting policies used by, the Company occurs
such that an adjustment is determined by the Administrator to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available with respect to the Option, then the

 

3

 

Administrator shall, in
good faith and in such manner as it may deem equitable, adjust the EBITDA
Target to reflect the actual or projected effect of such transaction(s) or
event(s) on the EBITDA Target.

 

Section 2.2                                      No Vesting of Options. 
Notwithstanding anything to the contrary in this Agreement, any portion
of the Option that has not become vested pursuant to Section 2.1 on or
prior to the date of the Optionee’s Termination of Service as a Service
Provider shall be forfeited and shall not thereafter become vested or
exercisable; provided, however, that in the event of the Optionee’s Retirement
or Termination of Service as a Service Provider without Just Cause, due to
death or due to Disability prior to the last day of the 2013 Fiscal Year, a pro
rata portion of the Option with respect to the Fiscal Year in which the
Retirement or Termination of Service as a Service Provider without Just Cause,
due to death or due to Disability occurs shall vest on the date such portion
would have vested in accordance with the terms of Sections 2.1(a) and
2.1(b), as applicable, had the Optionee remained employed with the Company
through the last day of such Fiscal Year, calculated by multiplying the number
of Options that would have vested with respect to such Fiscal Year in accordance
with Sections 2.1(a) and 2.1(b), by a fraction, the numerator of which is
the number of days between the first day of such Fiscal Year and the effective
date of Retirement or such termination of service, and the denominator of which
is 365; provided, further, that any portion of the Option that was scheduled to
vest under Section 2.1(b)(i) or may vest under a catch-up vesting
provision under Section 2.1(b)(ii), in either case, with respect to any
Fiscal Year completed prior to the Optionee’s Date of Termination (each such
tranche of Options, the “Final Performance
Options”) shall remain outstanding, if the Administrator has not
determined, on or prior to such Date of Termination, whether the performance
goals have been achieved for the Fiscal Year in question, unless the Optionee
is terminated for Just Cause, until the date that the Administrator determines
whether such performance goals have been achieved for the Fiscal Year in
question; provided, further, that the Final Performance Options shall in no event
become vested and exercisable unless it is determined by the Administrator that
such performance goals were actually achieved for the Fiscal Year in question
(a “Final Performance Goal Determination”).  The Final Performance Options that do not
become vested on the date of the Final Performance Goal Determination shall be
forfeited on the date of the Final Performance Goal Determination and the Final
Performance Options that become vested on the date of the Final Performance
Goal Determination shall become exercisable as provided in Sections 2.3 and
2.4.

 

Section 2.3                                      Exercisability of the Option.  
Notwithstanding anything to the contrary in this Agreement, the Optionee
shall not have the right to exercise the Option until the later of (i) the
date the applicable portion of the Option becomes vested pursuant to Sections
2.1 or 2.2 or (ii) the effective date of a Liquidity Event.  The date that the applicable portion of the
Option becomes exercisable is referred to herein as the “Exercise Commencement Date.”  Subject to Section 8.1 of the Plan,
following the Exercise Commencement Date, the applicable portion of the Option
shall remain exercisable until it becomes unexercisable under Section 2.4.  Once the Option becomes unexercisable, it
shall be forfeited immediately.

 

Section 2.4                                      Expiration of Option; Value of Option
After Date of Termination.

 

(a)                                  Subject to the terms of the Plan, in the
event a Liquidity Event has not occurred prior to the Optionee’s Date of
Termination, the Option may be exercised until the later of (i) ninety
(90) days after a Liquidity Event and (ii) the first to occur of the
events set forth in Section 2.4(b).

 

(b)                                 Subject to the terms of the Plan, in the
event a Liquidity Event has occurred prior to the Optionee’s Date of
Termination, the Option may not be exercised to any extent by anyone after the
first to occur of the following events:

 

(i)                                     The Final Expiration Date;

 

(ii)                                  Except for such longer period of time as
the Administrator may otherwise approve, in the event of a termination of the
Optionee’s service as a Service Provider for any reason other than Just

 

4

 

Cause, death or
Disability, the later of (i) thirty (30) days following the date of the
Optionee’s termination of service as a Service Provider for any reason other
than Just Cause, death or Disability, or (ii) with respect to any Final
Performance Options, thirty (30) days following the Final Performance Goal
Determination;

 

(iii)                               Except as the Administrator may otherwise
approve, the date of the Optionee’s Termination of Service as a Service
Provider for Just Cause; or

 

(iv)                              Except for such longer period of time as
the Administrator may otherwise approve, twelve (12) months following the
Optionee’s Termination of Service as a Service Provider by reason of the
Optionee’s death or Disability.

 

(c)                                  For the purposes of the Plan and this
Agreement, the date of the Optionee’s Termination of Service as a Service
Provider (the “Date of Termination”)
shall be the last day that the Optionee provided service as a Service Provider,
as determined by the Administrator, whether such day is selected by agreement
with the Optionee or unilaterally by the Company or its Subsidiaries and
whether with or without advance notice. 
For the avoidance of doubt, no period of notice that is given or that
ought to have been given to the Optionee under applicable law in respect of
such Termination of Service as a Service Provider will be utilized in
determining entitlement under the Plan or this Agreement.  Any action by the Company or its Subsidiaries
taken in accordance with the terms of the Plan and this Agreement as set out
aforesaid shall be deemed to fully and completely satisfy any liability or
obligation of the Company or its Subsidiaries to the Optionee in respect of the
Plan or this Agreement arising from or in connection with the Optionee’s
Termination of Service as a Service Provider, including in respect of any
period of notice given or that ought to have been given under applicable law in
respect of such Termination of Service as a Service Provider.

 

(d)                                 Notwithstanding anything to the contrary
in this Agreement, in the event the Optionee’s Date of Termination occurs prior
to a Liquidity Event  and the Fair
Market Value of a Common Share on the Date of Termination is less than the Fair
Market Value of a Common Share on the applicable Exercise Date, then the
portion of the Option being Exercised on the applicable Exercise Date shall
automatically be adjusted immediately prior to the applicable Exercise Date as
follows:

 

·                  The portion of the Option being Exercised will become
Exercisable for that number of Common Shares equal to the product of the number
of Common Shares then subject to the portion of the Option being Exercised
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
Common Shares, and

 

·                  The Exercise Price will be equal to the quotient
determined by dividing the Exercise Price by the Exchange Ratio, rounded up to
the nearest whole cent.

 

Section 2.5                                      Partial Exercise. 
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable.

 

Section 2.6                                      Exercise of Option. 
The exercise of the Option shall be governed by the terms of this
Agreement and the terms of the Plan, including, without limitation, the
provisions of Article V of the Plan.

 

Section 2.7                                      Manner of Exercise; Tax Withholding.

 

(a)                                  Unless determined otherwise by the
Administrator, as a condition to the exercise of the Option, the Optionee shall
notify the Company at least fifteen (15) days prior to exercise and no earlier
than ninety (90) days prior to exercise that the Optionee intends to exercise.

 

5

 

(b)                                 To the extent permitted by law or the
applicable listing rules, if any, the Optionee may pay for the Common Shares
with respect to which such Option or portion of such Option is exercised
through (i) payment in cash; (ii) with the consent of the
Administrator, the delivery of Common Shares which are owned by the Optionee,
duly endorsed for transfer to the Company with a Fair Market Value on the date
of delivery equal to the aggregate Exercise Price of the exercised portion of
the Option; (iii) with the consent of the Administrator, through the
surrender of Common Shares then issuable upon exercise of the Option having a
Fair Market Value on the date of the exercise of the Option equal to the
aggregate Exercise Price of the exercised portion of the Option; or (iv) with
the consent of the Administrator, delivery of a notice that the Optionee has
placed a market sell order with a broker with respect to Common Shares then
issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the aggregate Exercise Price; provided,
that payment of such proceeds is then made to the Company upon settlement of
such sale.  In lieu of exercising vested
Options in accordance with the terms of this Section 2.7(b), the Optionee
may exercise his or her cash surrender right in accordance with Section 5.7
of the Plan.

 

(c)                                  The Optionee shall make appropriate
arrangements for the payment to the Company (or any of its Subsidiaries, as
applicable) of all amounts which the Company (or any of its Subsidiaries, as
applicable) is required to withhold under applicable law in connection with the
exercise of the Option.  The Company may,
in its discretion, withhold from the Common Shares otherwise issuable to the
Optionee upon the exercise of the Option (or any portion thereof) a number of
whole Common Shares having a Fair Market Value, determined as of the date of
exercise, not in excess of the minimum of tax required to be withheld by law
(or such lower amount as may be necessary to avoid adverse accounting).  Any adverse consequences to the Optionee
arising in connection with the Common Share withholding procedure set forth in
the preceding sentence shall be the sole responsibility of the Optionee.

 

ARTICLE III.

OTHER PROVISIONS

 

Section 3.1                                      Optionee Representation; Not a Contract
of Service.  The Optionee hereby represents that the
Optionee’s execution of this Agreement and participation in the Plan is
voluntary and that the Optionee has in no way been induced to enter into this
Agreement in exchange for or as a requirement of the expectation of service
with the Company or any of its Subsidiaries. 
Nothing in this Agreement or in the Plan shall confer upon the Optionee
any right to continue as a Service Provider, or shall interfere with or
restrict in any way the rights of the Company or its Subsidiaries, which are
hereby expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without Just Cause, except as may otherwise be provided
pursuant to an employment or consulting agreement executed by and between the
Company or any of its Subsidiaries and the Optionee.  Optionee hereby agrees that, in consideration
of the grant of the Option, (i) the grant of the Option and the rights
under the Plan provide rights or benefits equal to or greater than the value of
the rights and benefits provided to the Optionee under the stock option plan
maintained by Hunting plc/Gibson Energy, and (ii) any determination of the
existence of Good Reason as set forth in subclauses [3.4(f)(ii) and (iii)] of the Optionee’s employment
agreement with the Company or any of its Subsidiaries will require that any
such change that is claimed to trigger Good Reason must be material such that
the change would result in a material adverse impact to the Optionee’s
compensation and benefits when such compensation and benefits are considered in
the aggregate.

 

Section 3.2                                      Common Shares Subject to Plan; Restrictions
on the Transfer of Options and Common Shares.  The Optionee
acknowledges that this Option and any Common Shares acquired upon exercise of
the Option are subject to the terms of the Plan including, without limitation,
the restrictions set forth in Sections 5.5 and 5.6 of the Plan.

 

6

 

Section 3.3             Construction.  This Agreement shall be administered,
interpreted and enforced under the laws of the Province of Alberta and the
federal laws of Canada applicable therein.

 

Section 3.4             Conformity to Securities Laws.  The Optionee acknowledges that the Plan is
intended to conform to the extent necessary with all applicable securities
laws.  Notwithstanding anything herein to
the contrary, the Plan and this Agreement shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations.  To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and
regulations.

 

Section 3.5             Amendment, Suspension and
Termination.  The Option may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Administrator or the Board, provided  that,
except as provided by Section 8.1 of the Plan, neither the amendment,
modification, suspension nor termination of this Agreement shall, without the
consent of the Optionee, materially alter or impair any rights or obligations
under the Option.

 

Section 3.6             Data Privacy Consent.  As a condition of the Option grant, the
Optionee explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of personal data as described in this
paragraph by and among, as applicable, the Company and its Subsidiaries and
Affiliates for the exclusive purpose of implementing, administering and
managing the Optionee’s participation in the Plan.  The Optionee understands that the Company and
its Subsidiaries and Affiliates hold certain personal information about the
Optionee, including the Optionee’s name, home address and telephone number,
date of birth, social insurance number or other identification number, salary,
nationality, job title, any Common Shares of stock or directorships held in the
Company, details of all restricted stock or any other entitlement to Common
Shares awarded, canceled, exercised, vested, unvested or outstanding in the
Optionee’s favor, for the purpose of implementing, managing and administering
the Plan (the “Data”).  The Optionee further understands that the
Company and its Subsidiaries and Affiliates may transfer the Data amongst
themselves as necessary for the purpose of implementation, administration and
management of the Optionee’s participation in the Plan, and that the Company
and its Subsidiaries and Affiliates may each further transfer the Data to any
third parties assisting the Company in the implementation, administration and
management of the Plan.  The Optionee
understands that these recipients may be located in the Optionee’s country, or
elsewhere, and that the recipient’s country may have different data privacy
laws and protections than the Optionee’s country.  The Optionee understands that he or she may
request a list with the names and addresses of any potential recipients of the
Data by contacting his or her local human resources representative.  The Optionee authorizes such recipients to
receive, possess, use, retain and transfer the Data, in electronic or other
form, for the purposes of implementing, administering and managing the Optionee’s
participation in the Plan, including any requisite transfer of such Data as may
be required to a broker or other third party with whom the Optionee may elect
to deposit any Common Shares.  The
Optionee understands that the Data will be held only as long as is necessary to
implement, administer, and manage the Optionee’s participation in the
Plan.  The Optionee understands that he
or she may, at any time, view the Data, request additional information about
the storage and processing of the Data, require any necessary amendments to the
Data, or refuse or withdraw the consents herein in writing, in any case without
cost, by contacting his or her local human resources representative.  The Optionee understands that refusal or
withdrawal of consent may affect the Optionee’s ability to participate in the
Plan.  For more information on the
consequences of refusal to consent or withdrawal of consent, the Optionee
understands that he or she may contact his or her local human resources representative.

 

7

 

Section 3.7             Non-Competition;
Non-Disparagement.

 

(a)           The Optionee shall not, during the
period beginning on the Grant Date and ending 6 (six) months(1) following the Date of
Termination (the “Non-Compete Period”)
of the Optionee’s status as a Service Provider (i) by the Company with or
without Just Cause, (ii) by the Optionee for Good Reason or (iii) by
the Optionee due to Retirement, directly or indirectly engage in, have any
equity interest in, interview for a potential employment or consulting
relationship with or manage or operate any person, firm, corporation,
partnership or business (whether as a director, officer, employee, agent,
representative, partner, security holder, consultant or otherwise) that engages
in any business which competes with any portion of the Business (as defined
below) in any geographical area in Canada or the United States where the
Company, directly or indirectly, operates or actively is contemplating
operating on or prior to the Date of Termination; provided, that, with respect
to contemplated operations, the Company actually performs or contracts to
perform operations in such geographical area prior to the date six (6) months(1) following
the Date of Termination (the “Restricted
Territories”); provided,
however, that the Optionee shall
be permitted to acquire and/or hold a passive stock interest in such a business
provided that the stock interest acquired and/or held is publicly traded
in Canada and/or the United States and is not more than two percent (2%) of the
outstanding voting securities of such business. 
For the avoidance of doubt, the provisions of this Section 3.7
shall not modify or supersede in any manner any similar provisions set forth in
the Optionee’s employment agreement with the Company.

 

(b)           During the Non-Compete Period, the
Optionee shall not, directly or indirectly, recruit or otherwise solicit or
induce any employee, customer or supplier of the Company (A) to terminate
his, her or its employment or other arrangement with the Company, or (B) to
otherwise change his, her or its relationship with the Company.

 

(c)           In the event the terms of this Section 3.7
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it will be interpreted to extend only over the maximum period of time for which
it may be enforceable, over the maximum geographical area as to which it may be
enforceable, or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.

 

(d)           As used in this Section 3.7,
(A) the term “Company”
shall include the Company and its direct or indirect parents and Subsidiaries,
and (B) the term “Business”
shall mean the provision of integrated transportation, terminalling, refining
and marketing services for the energy industry.

 

(e)           During the Optionee’s service as a
Service Provider and following termination of his/her service with the Company,
the Optionee agrees not to disparage the Company or any of its Affiliates,
including any of its products, technologies or practices, or any of its
directors, officers, agents, representatives or Shareholders, either orally or
in writing, and the Company agrees not to disparage the Optionee; provided, however,  that nothing in the foregoing shall
preclude the Optionee or the Company from making truthful statements that are
required by applicable law, regulation or legal process, and provided further, that, the Company’s
agreement to this non-disparagement clause shall be limited to official
statements issued by the Company as an organization and statements of officers
of the Company and members of the Board in their official capacity as
representatives of the Company.

 

(1)
The period for Vice Presidents and General Managers will be four months.

 

8

 

Section 3.8             Nondisclosure of Proprietary
Information.

 

(a)           Except in connection with the
faithful performance of the Optionee’s duties as a Service Provider or pursuant
to Sections 3.8(c) and (d),  the Optionee shall, in
perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his benefit or the
benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets of or relating to the Company and its
Subsidiaries and Affiliates (including, without limitation, business plans,
business strategies and methods, acquisition targets, intellectual property in
the form of patents, trademarks and copyrights and applications therefor,
ideas, inventions, works, discoveries, improvements, information, documents,
formulae, practices, processes, methods, developments, source code,
modifications, technology, techniques, data, programs, other know-how or
materials, owned, developed or possessed by the Company and its Subsidiaries
and Affiliates, whether in tangible or intangible form, information with
respect to the Company’s or any of its Subsidiaries’ or Affiliates’ operations,
processes, products, inventions, business practices, finances, principals,
vendors, suppliers, customers, potential customers, marketing methods, costs,
prices, contractual relationships, regulatory status, prospects and
compensation paid to employees or other terms of employment), or deliver to any
person, firm, corporation or other entity any document, record, notebook,
computer program or similar repository of or containing any such confidential
or proprietary information or trade secrets. 
The parties hereby stipulate and agree that as between them the
foregoing matters are important, material and confidential proprietary
information and trade secrets of the Company, its Subsidiaries and Affiliates
and affect the successful conduct of the business of the Company, its
Subsidiaries and Affiliates (and any successor or assignee of the Company or
any of its Subsidiaries or Affiliates).

 

(b)           Upon termination of the Optionee’s
service as a Service Provider with the Company or any of its Subsidiaries for
any reason, the Optionee will promptly deliver to the Company or any of its
Subsidiaries all correspondence, drawings, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other
documents concerning the Company’s and its Subsidiaries’ customers, business
plans, marketing strategies, products or processes.

 

(c)           The Optionee may respond to a lawful
and valid subpoena or other legal process, but shall give the Company the
earliest possible notice thereof, shall, as much in advance of the return date
as possible, make available to the Company and its counsel the documents and
other information sought and shall assist such counsel at Company’s expense in
resisting or otherwise responding to such process.

 

(d)           Nothing in this Agreement shall
prohibit the Optionee from (i) disclosing information and documents when
required by law, subpoena or court order (subject to the requirements of Section 3.8(c) above),
(ii) disclosing information and documents to his/her attorney or tax
adviser for the purpose of securing legal or tax advice, (iii) disclosing
information regarding this Agreement to his/her spouse; (iv) disclosing
the post-service restrictions in this Agreement in confidence to any potential
new employer, or (v) retaining, at any time, his/her personal
correspondence, his/her personal rolodex and documents related to his/her own
personal benefits, entitlements and obligations.

 

Section 3.9             Inventions.  All rights to discoveries,
inventions, improvements and innovations (including all data and records
pertaining thereto) related to the business of the Company and its Subsidiares,
whether or not patentable, copyrightable, registrable as a trademark, or
reduced to writing, that the Optionee may discover, invent or originate during
the Optionee’s service as a Service Provider or during the twelve (12) month
period following the Date of Termination, either alone or with others, and
whether or not during working hours or by the use of the facilities of the
Company and its Subsidiaries (“Inventions”),
shall be the exclusive property of the Company. 
The Optionee shall promptly disclose all Inventions to the Company, shall
execute at the request of the Company any assignments or other documents the
Company may deem reasonably necessary to protect or perfect its rights therein,
and shall assist the Company, upon reasonable request and at the Company’s
expense, in obtaining, defending and enforcing the Company’s and its 

 

9

 

Subsidiaries’
rights therein.  The Optionee hereby
appoints the Company as his/her attorney-in-fact to execute on his/her behalf
any assignments or other documents reasonably deemed necessary by the Company
to protect or perfect its rights to any Inventions.

 

Section 3.10           Currency.  Unless otherwise indicated, all dollar
amounts in this Agreement are expressed in Canadian dollars.

 

Section 3.11           Lock-Up Period.

 

(a)           The Optionee hereby agrees that he or
she shall not offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any Common Shares (or other securities) of the
Company or enter into any swap, hedging or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
any Common Shares (or other securities) of the Company held by Optionee (other
than those included in the registration) for a period specified by the
representative of the underwriters of Common Shares (or other securities) of
the Company not to exceed one hundred eighty (180) days following the effective
date of any registration statement of the Company filed under the Securities
Act or pursuant to comparable securities registration laws in Canada or
elsewhere.

 

(b)           Optionee agrees to execute and
deliver any such other agreements as may be reasonably requested by the Company
or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. In addition, if requested by the
Company or the representative of the underwriters of Common Shares (or other
securities) of the Company, Optionee shall provide, within ten (10) days
of such request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the
Company’s securities pursuant to a registration statement filed under the
Securities Act or pursuant to comparable securities registration laws in Canada
or elsewhere. The obligations described in this Section 3.11 shall not
apply to a registration relating solely to employee benefit plans on a
registration statement on Form S-1 or Form S-8 or similar forms that
may be promulgated in the future, or a registration relating solely to a United
States Securities and Exchange Commission Rule 145 transaction on a
registration statement on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the Common Shares (or other securities) subject to the
foregoing restriction until the end of said one hundred eighty (180) day
period. Optionee agrees that any transferee of the Option or shares acquired
pursuant to the Option shall be bound by this Section 3.11.

 

ARTICLE IV.

DEFINITIONS

 

Whenever
the following terms are used in this Agreement, they shall have the meaning
specified below unless the context clearly indicates to the contrary.  Capitalized terms used in this Agreement and
not defined below shall have the meaning given such terms in the Plan.  The singular pronoun shall include the plural,
where the context so indicates.

 

Section 4.1             Company.  “Company” shall mean Gibson Holding ULC, an
Alberta unlimited liability corporation formed under the laws of the Province
of Alberta.

 

Section 4.2             EBITDA.  “EBITDA” for a given Fiscal Year shall mean
consolidated earnings before interest, taxes, depreciation, and amortization of
the Company and its consolidated subsidiaries, determined in accordance with
accounting principles generally applied in Canada, including if applicable,
international financial reporting standards, excluding (i) any management
fees paid to the Principal Shareholders, or any of their Affiliates, (ii) any
bonuses or other incentive compensation payable with respect to such Fiscal
Year 

 

10

 

to
the extent not reflected on the Company’s consolidated financial statements for
such Fiscal Year, and (iii) any other extraordinary or non-recurring items
as determined by the Committee.

 

Section 4.4             EBITDA Target.  “EBITDA Target” for any given Fiscal Year
shall be the projected EBITDA set forth in the Company’s and its consolidated
subsidiaries’ annual  business plan (or budget), as approved by the
Board, subject to the provisions of Section 2.1(d).

 

Section 4.5             Effective Date.  “Effective Date” shall mean December 12,
2008, the date of the consummation of the transaction contemplated in that
certain Purchase and Sale Agreement between 1413281 Alberta ULC, Hunting Energy
Holdings Limited and Hunting plc, dated as of August 5, 2008.

 

Section 4.6             Exchange Ratio.  “Exchange Ratio” shall mean the quotient
determined by dividing the Fair Market Value of a Common Share on the Date of
Termination by the Fair Market Value of a Common Share on the Exercise Date.

 

Section 4.7             Exercise Date.  “Exercise Date” shall mean the date the
applicable portion of the Option is exercised or terminated pursuant to the
terms of the Plan.

 

Section 4.8             Exercise Price.  “Exercise Price” shall mean the per Common
Share price set forth in the Grant Notice.

 

Section 4.9             Exercised.  “Exercised” shall mean that the Option or a
portion thereof is being exercised or terminated pursuant to the terms of the
Plan.

 

Section 4.10           Fiscal Year.  “Fiscal Year” shall mean the fiscal year of
the Company, as in effect from time to time.

 

Section 4.11           Final Expiration Date.  “Final Expiration Date” shall mean the date
set forth in the Grant Notice.

 

Section 4.12           Good Reason.  “Good Reason” shall have the meaning set
forth in the Optionee’s employment agreement with the Company or any of its Subsidiaries.

 

Section 4.13           Grant Date.  “Grant Date” shall be the date set forth in
the Grant Notice.

 

Section 4.14           Grant Notice.  “Grant Notice” shall mean the Grant Notice
referred to in Section 1.1 of this Agreement, which Grant Notice is for
all purposes a part of the Agreement.

 

Section 4.15           Initial Public Offering.  “Initial Public Offering” shall mean the
first date upon which Common Shares is listed (or approved for listing) upon
notice of issuance on any Canadian or U.S. securities exchange or designated
(or approved for designation) upon notice of issuance as a national market
security on an interdealer quotation system.

 

Section 4.16           Internal Rate of Return.  “Internal Rate of Return” shall mean the
internal rate of return realized by the Shareholders on the Invested Capital as
a result of the Investment Proceeds realized or deemed realized by the
Shareholders, calculated without reduction for any taxes imposed on such
Investment Proceeds and prior to giving effect to the vesting of any Awards that
vest as a result of the Liquidity Event, but after giving effect to any other
vested Awards, as reasonably determined by the Administrator. The Internal Rate
of Return shall be determined in respect of any Liquidity Event or an Initial
Public Offering as if the Shareholders liquidated their entire remaining
Investment in such Liquidity Event or upon such Initial Public Offering for a
price equal to the fair market value of the remaining Investment on the date of
the Liquidity Event or Initial Public Offering, as reasonably determined by the
Administrator.  In determining 

 

11

 

the
Internal Rate of Return as of any date, all Investment Proceeds theretofore
received by the Shareholders in respect of their Investment shall be taken into
account, and no other amounts theretofore received by the Shareholders shall be
taken into account.  The Administrator
shall determine the Internal Rate of Return in good faith.

 

Section 4.17           Invested Capital.  “Invested Capital” shall mean the purchase
price paid by the Shareholders for the Investment, including any fees and
expenses paid by any Shareholder.

 

Section 4.18           Investment.  “Investment” shall mean the Common Shares
acquired by the Shareholders  in
connection with their investment in the Company, whether or not held or
acquired through any direct or indirect Subsidiary.

 

Section 4.19           Investment Proceeds.  “Investment Proceeds” shall mean all cash or
cash equivalents received by the Shareholders in respect of the Investment, net
of any fees and expenses paid or payable to any Shareholder or third
party.  In connection with a Liquidity
Event, the Fair Market Value of any equity securities of the Company held by
the Shareholders (whether held directly or through any direct or indirect
Subsidiary) at the time of the Liquidity Event that are not disposed of in the
Liquidity Event shall be treated as Investment Proceeds.  In connection with an Initial Public
Offering, the Fair Market Value of any Common Shares held by the Shareholders
at the time of the Initial Public Offering that are not disposed of in the
Initial Public Offering shall be treated as Investment Proceeds.

 

Section 4.20           Just Cause.  “Just Cause” shall have the meaning set forth
in the Optionee’s employment agreement with the Company or any of its
Subsidiaries.

 

Section 4.21           Liquidity Event.  “Liquidity Event” shall mean either (a) the
consummation of the sale, transfer, conveyance or other disposition in one or a
series of transactions, of the equity securities of the Company or its
successor held, directly or indirectly, by all of the Principal Shareholders in
exchange for cash, or in the case of any transaction resulting in the exchange
for consideration other than cash (“non-cash consideration”) the receipt of
cash upon the disposition of such non-cash consideration, such that immediately
following such transaction or disposition (or series of related transactions or
dispositions), the total number of all equity securities held, directly or
indirectly, by all of the Principal Shareholders and any Affiliate of any
Principal Shareholder is, in the aggregate, less than 30% of the total number
of equity securities (as such securities may be adjusted for the occurrence of
a corporate event) held, directly or indirectly, by all of the Principal
Shareholders and any Affiliate of any Principal Shareholder as of the
Effective Date; or (b) the consummation of the sale, lease, transfer,
conveyance or other disposition (other than by way of merger, amalgamation,
arrangement, equity purchase or consolidation), in one or a series of
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any “person “ (as such term is defined in Section 13(d)(3) of
the Exchange Act) other than to any Principal Shareholders or an Affiliate of
any Principal Shareholders.

 

Section 4.22           Option.  “Option” shall mean the option to purchase
Common Shares granted under this Agreement.

 

Section 4.23           Optionee.  “Optionee” shall be the Person designated as such
in the Grant Notice.

 

Section 4.24           Performance Options.  “Performance Option(s)” shall mean the
portion of the Option designated as Performance Options in the Grant Notice.

 

Section 4.25           Plan.  “Plan” shall mean the Equity Incentive Plan
of Gibson Holding ULC.

 

Section 4.26           Retirement.  “Retirement” shall have the meaning set forth
in the Optionee’s employment agreement with the Company or any of its
Subsidiaries.

 

12

 

Section 4.27           Securities Act. “Securities
Act” shall mean the United States Securities Act of 1933, as amended.

 

Section 4.28           Shareholders.  “Shareholders” shall mean the Principal
Shareholders and any other Person who purchases Common Shares.

 

Section 4.29           Time Options.  “Time Options” shall mean the portion of the
Option designated as Time Options in the Grant Notice.

 

***

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00168-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00168-of-00352.parquet"}]]