Document:

Exhibit 4.16

 

NOTATION OF GUARANTEE

 

For value received, each U.S. Guarantor (which term
includes any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in and subject to the
provisions in the Indenture dated as of January 19, 2010 (the “Indenture”) among Gibson Energy ULC, an Alberta unlimited
liability corporation (the “Company”), GEP Midstream Finance Corp., an Alberta
corporation (“Finance Corp.” and, together with
the Company, the “Issuers”), and the Bank of New
York Mellon, as trustee (the “Trustee”), (a) the
due and punctual payment of the principal of, premium and Additional Interest,
if any, and interest on, the Notes, whether at maturity, by acceleration,
redemption or otherwise, the due and punctual payment of interest on overdue
principal of and interest on the Notes, if any, if lawful, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee all in accordance with the terms of the Indenture and (b) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. 
The obligations of the U.S. Guarantors to the Holders of Notes and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee.

 

Capitalized terms used but not defined herein have
the meanings given to them in the Indenture.

 

	
   

  	
   

  	
  GIBSON
  ENERGY (U.S.) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Stewart Hanlon

  
	
   

  	
   

  	
  Name:  A. Stewart Hanlon

  
	
   

  	
   

  	
  Title:  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LINK
  PETROLEUM, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Stewart Hanlon

  
	
   

  	
   

  	
  Name:  A. Stewart Hanlon

  
	
   

  	
   

  	
  Title:  PresidentExhibit 4.17

 

GIBSON ENERGY ULC AND GEP MIDSTREAM FINANCE CORP.

as Guarantors

 

 

and

 

THE BANK OF NEW YORK
MELLON

as Trustee

 

 

and

 

THE NOTEHOLDERS

as other Creditors

 

 

 

 

GUARANTEE – ISSUERS

 

January 19, 2010

 

 

 

STIKEMAN ELLIOTT LLP

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  INTERPRETATION

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Defined Terms

  	
  1

  
	
  Section 1.2

  	
  Interpretation

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  GUARANTEE

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Guarantee

  	
  4

  
	
  Section 2.2

  	
  Primary Note Obligation

  	
  4

  
	
  Section 2.3

  	
  Absolute Liability

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  ENFORCEMENT

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Remedies

  	
  6

  
	
  Section 3.2

  	
  Amount of Note Obligations

  	
  7

  
	
  Section 3.3

  	
  Payment on Demand

  	
  7

  
	
  Section 3.4

  	
  Suspension of Guarantor Rights

  	
  7

  
	
  Section 3.5

  	
  No Prejudice to Creditors or Trustee

  	
  7

  
	
  Section 3.6

  	
  Rights of Subrogation

  	
  8

  
	
  Section 3.7

  	
  No Set-off

  	
  8

  
	
  Section 3.8

  	
  Successors of the Issuers

  	
  8

  
	
  Section 3.9

  	
  Continuing Guarantee and Continuing Note Obligations

  	
  9

  
	
  Section 3.10

  	
  Supplemental Security

  	
  9

  
	
  Section 3.11

  	
  Interest Act (Canada)

  	
  9

  
	
  Section 3.12

  	
  Taxes

  	
  9

  
	
  Section 3.13

  	
  Judgment Currency

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  GENERAL

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Notices, etc.

  	
  12

  
	
  Section 4.2

  	
  No Merger, Survival of Representations and Warranties

  	
  12

  
	
  Section 4.3

  	
  Further Assurances

  	
  12

  
	
  Section 4.4

  	
  Successors and Assigns

  	
  12

  
	
  Section 4.5

  	
  Amendment

  	
  12

  
	
  Section 4.6

  	
  Waivers, etc.

  	
  13

  
	
  Section 4.7

  	
  Severability

  	
  13

  
	
  Section 4.8

  	
  Enforcement

  	
  13

  
	
  Section 4.9

  	
  Application of Proceeds

  	
  13

  
	
  Section 4.10

  	
  Governing Law

  	
  13

  
	
  Section 4.11

  	
  General Limitation on Guarantee Obligations

  	
  14

  
	
  Section 4.12

  	
  Release of Guarantors

  	
  14

  
	
  Section 4.13

  	
  Right of Contribution

  	
  14

  
	
  Section 4.14

  	
  Business Corporations Act

  	
  14

  

 

i

 

GUARANTEE – SUBSIDIARY GUARANTORS

 

Guarantee dated as of January 19, 2010 made
by Gibson Energy ULC and GEP Midstream
Finance Corp. to and in favour of The Bank of New York
Mellon, as Trustee, and the other Creditors.

 

RECITALS:

 

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

 

(b)           The Initial
Purchasers have agreed pursuant to the Note Purchase Agreement to purchase the
Notes issued by the Issuers in the aggregate principal amount of US$200,000,000
on the terms and conditions contained in the Note Purchase Agreement;

 

(c)           Each Guarantor
will receive substantial benefits from the issuance of the Notes under the
Indenture and the other Indenture Documents and each Guarantor is, therefore,
willing to enter into this Guarantee; and

 

(d)           It is a condition
precedent to the issuance of the Notes that each Guarantor unconditionally guarantee
the obligations of the Issuers under the Indenture, the Notes and the other
Indenture Documents, on the terms and conditions contained in this Guarantee;

 

In consideration of the foregoing and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, each of the
Guarantors agrees as follows.

 

ARTICLE 1

INTERPRETATION

 

Section 1.1                Defined Terms.

 

As used in this Guarantee the following terms have the following
meanings:

 

“Credit Parties” means, collectively,
the Issuers and each Guarantor (as defined in the Indenture) and “Credit Party” means any one of them.

 

“Creditors”
means the Trustee and the Noteholders at any time and from time to time.

 

“GEP Midstream” means GEP Midstream
Finance Corp., a corporation incorporated and existing under the laws of
Alberta, and its successors and permitted assigns.

 

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

 

“Governmental Entity” means (i) any international, multinational,
national, federal, provincial, state, municipal, local or other governmental or
public department, central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) any

 

 

subdivision or authority of any of the above, (iii) any
stock exchange and (iv) any quasi-governmental or private body exercising
any regulatory, expropriation or taxing authority under or for the account of
any of the above.

 

“Guarantee”
means this guarantee.

 

“Guarantors”
means, collectively, Gibson Energy and
GEP Midstream and “Guarantor” means any one of them.

 

“Indenture”
means the indenture dated as of January 19,
2010 among the Issuers, the Trustee, the Parent, the Subsidiary Guarantors and
the U.S.
Guarantors (as defined therein) party thereto, as the same may
be amended, modified, extended, renewed, replaced, restated, supplemented or
refinanced from time to time and includes any agreement extending the maturity
of, refinancing or restructuring all or any portion of, the indebtedness under
such agreement or any successor agreements, whether or not with the same
Trustee or Noteholders.

 

“Indenture
Documents” means, collectively, the Indenture, the Notes, this
Guarantee, the guarantee dated the date hereof among the Subsidiary Guarantors,
the Trustee and the other Creditors, the guarantee dated the date hereof among
the Parent, the Trustee and the other Creditors and the Registration Rights
Agreement.

 

“Initial Purchasers” means UBS Securities
LLC, Morgan Stanley & Co. Incorporated and RBC Capital Markets
Corporation and their respective successors and permitted assigns.

 

“Issuers” means (i) collectively,
Gibson Energy and GEP Midstream; or (ii) in the context of the guarantee
of Note Obligations hereunder by Gibson Energy, GEP Midstream, and in the
context of the guarantee of Note Obligations hereunder by GEP Midstream, Gibson
Energy.

 

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

 

2

 

“Note Purchase Agreement” means the
purchase agreement dated as of January 13, 2010 among
the Issuers, Parent, the Guarantors and the Initial Purchasers.

 

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

 

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

 

“Obligation” means any principal,
interest (including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable state, federal or foreign law),
penalties, fees, indemnifications, reimbursements (including reimbursement obligations
with respect to letters of credit and banker’s acceptances), damages and other
liabilities, and guarantees of payment of such principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities, payable
under the documentation governing any Indebtedness.

 

“Original Currency” has the meaning
ascribed to it in Section 3.13.

 

“Other Currency” has the meaning
ascribed to it in Section 3.13.

 

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

 

“Partnership Obligor” means, collectively,
each of Moose Jaw Refinery Partnership, CanWest Propane Partnership, MP Energy
Partnership, Gibson Energy Partnership, Battle River Terminal LP and each other
partnership which at any time and from time to time becomes a Credit Party and “Partnership Obligor” means any one of them.

 

“Registration Rights Agreement” means
the registration rights agreement dated as of January 19, 2010 by
and among Gibson Energy, GEP Midstream, each of the Guarantors (as defined
therein) and the Initial Purchasers.

 

“Subsidiary Guarantors”  means, collectively, Moose Jaw Refinery Partnership, Moose
Jaw Refinery ULC, CanWest Propane Partnership, CanWest Propane ULC, MP Energy
Partnership, MP Energy ULC, Gibson Energy Partnership, GEP ULC, Link Petroleum
Services Ltd., Chief Hauling Contractors ULC, Gibson GCC Inc., Battle River
Terminal GP Inc., Battle River Terminal LP and Bridge Creek Trucking Ltd.

 

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

 

3

 

Section 1.2                Interpretation.

 

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

 

(2)           In this Guarantee
the words “including”, “includes”
and “include” mean “including
(or includes or include) without limitation”.  The phrase “the
aggregate of”, “the total of”,
“the sum of”, or a phrase of similar
meaning means “the aggregate (or total or sum), without
duplication, of”.  The
expression “Article”, “Section”
or other subdivision followed by a number mean and refer to the specified
Article, Section or other subdivision of this Guarantee.

 

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

 

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

 

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

 

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

 

(7)           All references in
this Guarantee to dollars, unless otherwise specifically indicated, are
expressed in currency of the United States of America.

 

ARTICLE 2

GUARANTEE

 

Section 2.1                Guarantee.

 

Each of the Guarantors irrevocably and unconditionally, jointly and
severally, guarantees to each of the Creditors the due and punctual payment,
and the due performance, whether at stated maturity, by acceleration or
otherwise, of the Note Obligations.  Each
of the Guarantors agrees that the Note Obligations will be paid to the Trustee
and the other Creditors strictly in accordance with their terms and
conditions.  The Trustee may enforce this
Guarantee against any Guarantor for the benefit of the Trustee and the other
Creditors up to the full amount of the Note Obligations without proceeding
against any other Guarantor or any Issuer.

 

Section 2.2                Primary Note Obligation

 

If any or all of the Note Obligations are not duly performed by any
Issuer and are not performed by any Guarantor under Section 2.1 for any
reason whatsoever, such Note

 

4

 

Obligations will, as a separate and distinct obligation, be performed
by such Guarantor as primary obligor.

 

Section 2.3                Absolute Liability.

 

Each of the Guarantors agrees that the liability of the Guarantors
under Section 2.1 and Section 2.2, is absolute and unconditional
irrespective of:

 

(a)           the lack of
validity or enforceability of any terms of any of the Indenture Documents;

 

(b)           any contest by
any Issuer or any other Person as to the amount of the Note Obligations, the
validity or enforceability of any terms of the Indenture Documents or the
perfection or priority of any security granted to the Trustee or the other
Creditors;

 

(c)           any defence,
counter claim or right of set-off available to any Issuer (other than payment
in full of the Note Obligations);

 

(d)           any release,
compounding or other variance of the liability of any Issuer or any other
Person liable in any manner under or in respect of the Note Obligations or the
extinguishment of all or any part of the Note Obligations by operation of law
(other than payment in full of the Note Obligations);

 

(e)           any change in the
time or times for, or place or manner or terms of payment or performance of the
Note Obligations or any consent, waiver, renewal, alteration, extension,
compromise, arrangement, concession, release, discharge or other indulgences
which any Creditors or the Trustee on behalf of the Creditors may grant to any
Issuer or any other Person;

 

(f)            any amendment or
supplement to, or alteration or renewal of, or restatement, replacement,
refinancing or modification or variation of (including any additional Note
issuances thereunder or the inclusion of an additional Issuer thereunder), or
other action or inaction under, the Indenture, the other Indenture Documents or
any other related document or instrument, or the Note Obligations;

 

(g)           any
discontinuance, termination, reduction, renewal, increase, abstention from
renewing or other variation of any credit or credit facilities to, or the terms
or conditions of any transaction with, any Issuer or any other Person;

 

(h)           any change in the
ownership, control, name, objects, businesses, assets, capital structure or
constitution of any Issuer, any Guarantor or any other Credit Party or any
reorganization (whether by way of reconstruction, consolidation, amalgamation,
merger, transfer, sale, lease or otherwise) of any Issuer, any Guarantor or any
other Credit Party or their respective businesses;

 

5

 

(i)            any dealings with
any security which any Creditor or the Trustee on behalf of the Creditors holds
or may hold pursuant to the terms and conditions of the Indenture Documents,
including the taking, giving up or exchange of securities, their variation or
realization, the accepting of compositions and the granting of releases and
discharges;

 

(j)            any limitation of
status or power, disability, incapacity or other circumstance relating to any
Issuer, any Guarantor, any other Credit Party or any other Person, including
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation, winding-up or other like proceeding involving or
affecting any Issuer, any Guarantor, any other Credit Party or any other Person
or any action taken with respect to this Guarantee by any trustee or receiver,
or by any court, in any such proceeding, whether or not any such Guarantor
shall have notice or knowledge of any of the foregoing;

 

(k)           the assignment by
any Creditor of all or any part of the benefits of this Guarantee;

 

(l)            any
impossibility, impracticability, frustration of purpose, force majeure or
illegality of any Indenture Document, or the occurrence of any change in the
laws, rules, regulations or ordinances of any jurisdiction or by any present or
future action of (i) any Governmental Entity that amends, varies, reduces
or otherwise affects, or purports to amend, vary, reduce or otherwise affect,
any of the Note Obligations or the obligations of any such Guarantor under this
Guarantee, or (ii) any court order that amends, varies, reduces or
otherwise affects any of the Note Obligations;

 

(m)          any taking or
failure to take security, any loss of, or loss of value of, any security, or
any invalidity, non-perfection or unenforceability of any security held by any
Creditors or the Trustee on behalf of the Creditors, or any exercise or
enforcement of, or failure to exercise or enforce, security, or irregularity or
defect in the manner or procedure by which the Trustee or any other Creditor
realizes on such security;

 

(n)           any application
of any sums received to the Note Obligations (other than payment in full of the
Note Obligations), or any part thereof, and any change in such application; and

 

(o)           any other
circumstances which might otherwise constitute a defence available to, or a
discharge of, any Guarantor, any Issuer or any other Person in respect of the
Note Obligations or this Guarantee.

 

ARTICLE 3

ENFORCEMENT

 

Section 3.1                Remedies.

 

None of the Creditors nor the Trustee on behalf of the Creditors is bound
to exhaust its recourse against any Issuer or any other Person or realize on
any security it may hold in

 

6

 

respect of the Note Obligations before being entitled to (i) enforce
payment and performance under this Guarantee or (ii) pursue any other
remedy against each of the Guarantors, and each of the Guarantors renounces all
benefits of discussion and division.

 

Section 3.2                Amount of Note Obligations.

 

Any account settled or stated by or between the Trustee and the
Issuers, or if any such account has not been settled or stated immediately
before demand for payment under this Guarantee, any account stated by the
Trustee shall, in the absence of manifest mathematical error, be accepted by
the Guarantors as presumptively correct evidence of the amount of the Note
Obligations which is due by the Issuers to the Creditors or remains unpaid by
the Issuers to the Creditors.

 

Section 3.3                Payment on Demand.

 

Each of the Guarantors will pay and perform the Note Obligations and
pay all other amounts payable by it to the Creditors or the Trustee on behalf
of the Creditors under this Guarantee, and the obligation to do so arises,
immediately after demand for such payment or performance is made in writing to
it.  The liability of each of the
Guarantors bears interest from the date of such demand at the rate or rates of
interest then applicable to the Note Obligations under and calculated in the
manner provided in the Indenture Documents (including any adjustment to give effect
to the provisions of the Interest Act (Canada)).

 

Section 3.4                Suspension of Guarantor
Rights.

 

So long as there are any Note Obligations, no Guarantor will exercise
any rights which it may at any time have by reason of the performance of any of
its obligations under this Guarantee (i) to be indemnified by any Issuer, (ii) to
claim contribution from any other guarantor of the debts, liabilities or
obligations of any Issuer, or (iii) subject to Section 3.6, to take
the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Creditors or the Trustee under any of the
Indenture Documents.

 

Section 3.5                No Prejudice to Creditors or
Trustee.

 

None of the Creditors nor the Trustee on behalf of the Creditors are
prejudiced in any way in the right to enforce any provision of this Guarantee
by any act or failure to act on the part of the Issuers, the Creditors or the
Trustee on behalf of the Creditors.  The
Trustee and the other Creditors may, at any time and from time to time, in such
manner as any of them may determine is expedient, without any consent of, or
notice to, any of the Guarantors and without impairing or releasing the
obligations of any of the Guarantors (i) change the manner, place, time or
terms of payment or performance of the Note Obligations, (ii) renew or
alter the Note Obligations, (iii) amend, vary, modify, supplement or
replace any Indenture Document or any other related document or instrument, (iv) discontinue,
reduce, renew, increase, abstain from renewing or otherwise vary any credit or
credit facilities to, any transaction with, any Issuer or any other Person, (v) release,
compound or vary the liability of any Issuer or any other Person liable in any
manner under or in respect of the Note Obligations, (vi) take or abstain
from taking securities or collateral from any other Person, or from perfecting
securities or collateral of any other Person, (vii) exercise or enforce or
refrain from exercising or enforcing any right or security against any Issuer,
any Guarantor or any other Person, (viii) accept compromises or
arrangement from

 

7

 

any Person, (ix) apply any sums from time to time received to the
Note Obligations, or any part thereof, and change any such application in whole
or in part from time to time, (x) otherwise deal with, or waive or modify
their right to deal with any Person and security, in each case, in accordance
with the Indenture Documents, if applicable. 
In their dealings with the Issuers, the Trustee and the other Creditors
need not enquire into the authority or power of any Person purporting to act
for or on behalf of the Issuers.

 

Section 3.6                Rights of Subrogation.

 

Any rights of subrogation acquired by any Guarantor by reason of
payment under this Guarantee shall not be exercised until the Note Obligations
(other than contingent indemnity obligations)  have
been paid or repaid in full and such rights of subrogation shall be no greater
than the rights held by the Trustee and the other Creditors.  In the event (i) of the liquidation,
winding up or bankruptcy of any Credit Party (whether voluntary or compulsory),
(ii) that any Credit Party makes a bulk sale of any of its assets within
the provisions of any bulk sales legislation, or (iii) that any Credit
Party makes any composition with creditors or enters into any scheme of
arrangement, the Trustee and the other Creditors have the right to rank in
priority to each of the Guarantors for their full claims in respect of the Note
Obligations and receive all dividends and other payments until their claims
have been paid in full.  Each of the
Guarantors will continue to be liable, less any payments made by it, for any
balance which may be owing to the Creditors by the Issuers.  No valuation or retention of their security
by the Creditors or the Trustee on behalf of the Creditors shall, as between
any Credit Party, the Trustee and the other Creditors and the Guarantors, be
considered as a purchase of such security or as payment or satisfaction or
reduction of all or any part of the Note Obligations.  If any amount is paid to any Guarantor in
violation of this Section at any time when all the Note Obligations (other
than contingent indemnity obligations) have not been paid in full, the amount
will be held in trust for the benefit of the Trustee on behalf of the Creditors
and immediately paid to the Trustee to be credited and applied to the Note
Obligations, whether matured or unmatured. 
No Guarantor has any recourse against any Creditor for any invalidity,
non perfection or unenforceability of any security held by the Creditors or the
Trustee on behalf of the Creditors or any irregularity or defect in the manner
or procedure by which the Creditors or the Trustee realize on such security.

 

Section 3.7                No Set-off.

 

To the fullest extent permitted by law, each of the Guarantors makes
all payments under this Guarantee without regard to any defence, counter-claim
or right of set-off available to it.

 

Section 3.8                Successors of the Issuers.

 

This Guarantee will not be revoked by any change in the constitution of
any Credit Party.

 

8

 

Section 3.9                Continuing Guarantee and
Continuing Note Obligations.

 

The obligation of each of the Guarantors under Section 2.1 is a
continuing guarantee, and the obligation of each of the Guarantors under Section 2.2
is a continuing obligation.  Each of Section 2.1
and Section 2.2 extends to all present and future Note Obligations,
applies to and secures the ultimate balance of the Note Obligations due or
remaining due to the Trustee and the other Creditors (other than contingent
indemnity obligations)  and is binding
as a continuing obligation of each Guarantor until the Trustee on behalf of the
Creditors releases such Guarantor, or until payment in full of the Note
Obligations (other than contingent indemnity obligations).  This Guarantee will continue to be effective
or be reinstated, as the case may be, if at any time any payment of any of the
Note Obligations is rescinded or must otherwise be returned by any Creditors
upon the insolvency, bankruptcy or reorganization of any Issuer or otherwise,
all as though the payment had not been made.

 

Section 3.10             Supplemental Security.

 

(1)           This Guarantee is in addition
and without prejudice to and supplemental to all other guarantees, indemnities,
obligations and security now held or which may hereafter be held by any
Creditor or the Trustee on behalf of the Creditors.

 

(2)           Each of the Guarantors
acknowledges that this Guarantee is intended to secure payment and performance
of the Note Obligations.

 

Section 3.11             Interest Act (Canada).

 

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

 

Section 3.12             Taxes.

 

(1)           All payments made
by the Guarantors under this Guarantee will be made free and clear of and
without withholding or deduction for or on account of any present or future
Taxes imposed or levied by or on behalf of any Taxing Authority in the Relevant
Taxing Jurisdiction, unless a Guarantor is required to withhold or deduct Taxes
by law or by the interpretation or administration thereof.  If a Guarantor is required to withhold or
deduct any amount for or on account of Taxes imposed by a Relevant Taxing
Jurisdiction, from any payment made under or with respect to this Guarantee,
such Guarantor will pay as additional interest the Additional Amounts as may be
necessary so that the net amount received by each Noteholder (including
Additional Amounts) after such withholding or deduction will equal the amount
the Noteholder would have received if such Taxes had not been withheld or
deducted; provided, however, that no Additional Amounts will be payable with
respect to any Tax that would not have been imposed, payable or due:

 

9

 

(a)           but for the
Noteholder or beneficial owner of Notes not dealing at arm’s length with the
Guarantors (for purposes of the Income Tax Act
(Canada)) at the time of the making of such payment;

 

(b)           but for the
existence of any present or former connection between the Noteholder (or the
beneficial owner of, or person ultimately entitled to obtain an interest in,
such Notes, including a fiduciary, settler, beneficiary, member, partner,
shareholder or other equity interest owner of, or possessor of power over, such
Noteholder or beneficial owner, if such Noteholder or beneficial owner is an
estate, trust, partnership, limited liability company, corporation or other
entity) and the Relevant Taxing Jurisdiction (including being a citizen or
resident or national of, or carrying on a business or maintaining a permanent
establishment in, or being physically present in, the Relevant Taxing
Jurisdiction) other than the mere holding of the Notes or enforcement of rights
thereunder or the receipt of payments in respect thereof; or

 

(c)           but for the
failure by the Noteholder to satisfy any certification, identification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or connection with the Relevant Taxing
Jurisdiction or arm’s-length relationship with the Guarantors of the Holder or
beneficial owner or otherwise establishing the right to the benefit of an
exemption from, or reduction in the rate of, withholding or deduction, if (a) such
compliance is required by law, regulation, administrative practice or an
applicable treaty of the Relevant Taxing Jurisdiction as a precondition to
exemption from, or a reduction in the rate of deduction of withholding of, such
Taxes and (b) the Guarantors have provided the Trustee with thirty (30)
days’ prior written notice of such requirement.

 

(2)           Additional Amounts
will not be payable if the beneficial owner of, or person ultimately entitled
to obtain an interest in, such Notes is not the sole beneficial owner of such
payments, or is a fiduciary or partnership (including any entity or arrangement
treated as a partnership by the Relevant Taxing Jurisdiction), to the extent
that any beneficial owner, beneficiary or settler with respect to such
fiduciary or any partner or member of such partnership would not have been
entitled to such Additional Amounts with respect to such payments had such
beneficial owner, beneficiary, settler, partner or member received directly its
beneficial or distributive shares of such payments.  In addition, Additional Amounts will not be
payable with respect to (i) any Tax which is payable otherwise than by
withholding from payments of, or in respect of principal of, or any interest
on, the Notes or this Guarantee, (ii) any withholding or deduction that
relates to any estate, inheritance, gift or similar tax, duty, assessment or
governmental charge, (iii) any withholding or deduction imposed on a
payment to an individual and required to be made pursuant to European Union
Directive on the taxation of savings income which was adopted by the ECOFIN
Council (the Council of EU Finance and Economic Ministers), or any law
implementing or complying with, or introduced to conform to, such directive, or
pursuant to related measures entered into on a reciprocal basis 

 

10

 

between member states of the European Union and certain non-European Union
countries and dependent or associated territories, and (iv) any Tax
imposed or levied by, or on behalf of, the United States of America or any
State or other political subdivision thereof.

 

(3)           Whenever in this
Guarantee there is mentioned, in any context, the payment of Note Obligations
or other amounts based upon the principal amount of the Notes or of principal,
interest or of any other amount payable under or with respect to any of the
Notes, such mention shall be deemed to include mention of the payment of
Additional Amounts to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof.

 

(4)           Upon request, the
Guarantors will provide the Trustee with documentation satisfactory to the
Trustee evidencing the payment of Additional Amounts.

 

(5)           The Guarantors
will pay any present or future stamp, court or documentary taxes, or any other
excise or property taxes, charges or similar levies which arise in a Relevant
Taxing Jurisdiction from the execution, delivery or registration of the Notes
or this Guarantee and any such taxes, charges or similar levies imposed by any
jurisdiction resulting from, or required to be paid in connection with the
enforcement of the Notes or this Guarantee or any other such document or
instrument following the occurrence of any Event of Default with respect to the
Notes.

 

(6)           The provisions of
this Section 3.12 survive the termination of this Guarantee.

 

Section 3.13             Judgment Currency.

 

(1)           If for the
purposes of obtaining judgment in any court it is necessary to convert all or
any part of the Note Obligations or any other amount due to a Creditor in
respect of any Guarantor’s obligations under this Guarantee in any currency
(the “Original Currency”) into another
currency (the “Other Currency”), each of the
Guarantors, to the fullest extent that it may effectively do so, agrees that
the rate of exchange used shall be that at which, in accordance with normal
banking procedures, such Creditor could purchase the Original Currency with the
Other Currency on the Business Day preceding that on which final judgment is
paid or satisfied.

 

(2)           The obligations
of any Guarantor in respect of any sum due in the Original Currency from it to
any Creditor shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that on the Business Day following receipt by
such Creditor of any sum adjudged to be so due in such Other Currency such
Creditor may, in accordance with its normal banking procedures, purchase the
Original Currency with such Other Currency. 
If the amount of the Original Currency so purchased is less than the sum
originally due to such Creditor in the Original Currency, each of the Guarantors
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify such Creditor against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to such Creditor in the
Original Currency, such Creditor agrees to remit such excess to the Guarantor.

 

11

 

ARTICLE 4

GENERAL

 

Section 4.1                Notices, etc.

 

Any notices, directions or other communications provided for in this
Guarantee must be in writing and given in accordance with the Indenture.

 

Section 4.2                No Merger, Survival of Representations and Warranties.

 

The covenants of each of the Guarantors in this Guarantee survive the
execution and delivery of this Guarantee and the issuance of Notes under the
Indenture.  Notwithstanding any
investigation made by or on behalf of the Trustee or the other Creditors, the
covenants in this Guarantee continue in full force and effect.

 

Section 4.3                Further Assurances.

 

(1)           Each of the Guarantors will do all acts and
things and execute and deliver, or cause to be executed and delivered, all
documents and instruments that the Trustee may reasonably request to give full
effect to this Guarantee and to perfect and preserve the rights and powers of
the Trustee and the other Creditors under this Guarantee, including any
acknowledgements and confirmations of this Guarantee.

 

(2)           Each of the Guarantors acknowledges and
confirms that the Guarantor itself has established its own adequate means of
obtaining from each Issuer on a continuing basis all information desired by
such Guarantor concerning the financial condition of such Issuer and that such
Guarantor will look to such Issuer and not to the Trustee or the other
Creditors, in order for such Guarantor to keep adequately informed of changes
in such Issuer’s financial condition.

 

Section 4.4                Successors and Assigns.

 

This Guarantee is binding upon each of the Guarantors, their respective
successors and assigns, and enures to the benefit of each of the Creditors and
each of their respective successors permitted transferees and permitted
assigns.  No other Person (including any
other creditor of any Guarantor) shall have any interest herein or any right or
benefit with respect hereto.  Without
limiting the generality of the foregoing, any Creditor may assign or otherwise
transfer any indebtedness held by it secured by this Guarantee to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Creditor, herein or otherwise.  No Guarantor may assign, transfer or delegate
any of its rights or obligations under this Guarantee without the prior written
consent of the Trustee which may be unreasonably withheld, except pursuant to
transactions permitted under the Indenture.

 

Section 4.5                Amendment.

 

This Guarantee may only be amended, supplemented or otherwise modified
by written agreement executed by the Trustee and each of the Guarantors
affected by such amendment, supplement or modification.

 

12

 

Section 4.6                Waivers, etc.

 

(1)           No consent or waiver by the Trustee or the
other Creditors in respect of this Guarantee is binding unless made in writing
and signed by an authorized officer of the Trustee.  Any consent or waiver given under this
Guarantee is effective only in the specific instance and for the specific
purpose for which given.  No waiver of
any of the provisions of this Guarantee constitutes a waiver of any other
provision.

 

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

 

Section 4.7                Severability.

 

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

 

Section 4.8                Enforcement.

 

The Trustee on behalf of the Creditors agrees that the enforcement of
this Guarantee is subject to the terms of the Indenture, including Section 6.06
thereof.

 

Section 4.9                Application of Proceeds.

 

All monies collected by the Trustee or any other Creditor under this
Guarantee will be applied as provided in the Indenture.

 

Section 4.10             Governing Law.

 

(1)           This Guarantee will be governed by,
interpreted and enforced in accordance with the laws of the Province of Alberta
and the federal laws of Canada applicable therein.

 

(2)           Each Guarantor irrevocably attorns and
submits to the exclusive jurisdiction of any court of competent jurisdiction of
the Province of Alberta sitting in Calgary, Alberta in any action or proceeding
arising out of or relating to this Guarantee and the other Indenture Documents
to which it is a party.  Each Guarantor
irrevocably waives objection to the venue of any action or proceeding in such
court or that such court provides an inconvenient forum.  Nothing in this Section limits the right
of the Trustee to bring proceedings against any Guarantor in the courts of any
other jurisdiction.

 

(3)           Each Guarantor hereby irrevocably
consents to the service of any and all process in any such action or proceeding
by the delivery of copies of such process to such Guarantor at the address set
forth in Section 4.1 hereof.  Nothing in this Section affects the right of
the Trustee to serve process in any manner permitted by law.

 

13

 

Section 4.11             General Limitation on Guarantee Obligations

 

In any action or proceeding involving any state corporate limited
partnership or limited liability company law, or any applicable state, federal
or foreign bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of any Guarantor under Article 2
would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under Article 2, then, notwithstanding any
other provision to the contrary, the amount of such liability shall, without
any further action by such Guarantor, any Credit Party or any other person, be
automatically limited and reduced to the highest amount (after giving effect to
any right of contribution established hereunder) that is valid and enforceable
and not subordinated to the claims of other creditors as determined in such
action or proceeding.

 

Section 4.12             Release of Guarantors.

 

A Guarantor shall be released from its obligations under its Guarantees
and its obligations under the other Indenture Documents:

 

(1)           in the event of a sale or other disposition
of all or substantially all of the assets of such Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the Equity
Interests of such Guarantor then held by Gibson Energy and the Restricted Subsidiaries;

 

(2)           if such Guarantor is designated as an
Unrestricted Subsidiary, otherwise becomes an Excluded Subsidiary or otherwise
ceases to be a Restricted Subsidiary, in each case in accordance with the
provisions of the Indenture, upon effectiveness of such designation or when it
first becomes an Excluded Subsidiary or ceases to be a Restricted Subsidiary,
respectively in each case in accordance with the Indenture; or

 

(3)           upon payment in full of the principal of, and
accrued and unpaid interest and premium, if any, and Additional Interest, if
any, on the Notes and payment in full of all other Note Obligations with respect
to such Notes that are due and payable at or prior to the time such principal,
accrued and unpaid interest and premium are paid.

 

Section 4.13             Right of Contribution

 

Each Guarantor hereby agrees that to the extent that a Guarantor shall
have paid more than its proportionate share of any payment made hereunder or
under the other Indenture Documents, such Guarantor shall be entitled to seek
and receive contribution from and against any other Guarantor hereunder which
has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall
be subject to the terms and conditions of Section 3.6.  The provisions of this Section 4.13
shall in no respect limit the obligations and liabilities of any Guarantor to
the Agent and each Guarantor shall remain liable to the Agent and the Lenders
for the full amount guaranteed by such Guarantor hereunder.

 

Section 4.14             Business Corporations Act

 

To the extent required pursuant to Section 45 of the Business Corporations Act (Alberta), each of the Guarantors
hereby consents to the entering into of the transactions 

 

14

 

contemplated in the Indenture, the Indenture Documents and this
Guarantee (including the giving of guarantees and, if applicable, the granting
of security) by each of the other Credit Parties.

 

[Remainder
of the page is left intentionally blank]

 

15

 

IN
WITNESS WHEREOF each Guarantor has executed this Guarantee.

 

 

	
   

  	
   

  	
  GIBSON ENERGY
  ULC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GEP MIDSTREAM
  FINANCE CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard G. Taylor

  
	
   

  	
   

  	
   

  	
  Authorized Signing Officer

  

 

 

Guarantee -
Issuer

 

 

Accepted and Agreed:

 

	
  THE BANK OF NEW YORK
  MELLON,

  
	
  as Trustee

  
	
   

  
	
  By:

  	
  /s/ Lici Zhu

  	
   

  
	
   

  	
  Name:  Lici Zhu

  
	
   

  	
  Title:  Senior Associate

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Vanessa Mack

  	
   

  
	
   

  	
  Name:  Vanessa Mack

  
	
   

  	
  Title:  Vice President

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