Document 2535696

TABLE OF CONTENTS
1.
INTRODUCTION..................................................................................................................................... 1
2.
U.S. CHAPTER 15 PROCEEDINGS ........................................................................................................2
3.
BACKGROUND........................................................................................................................................3
4.
OPERATIONAL UPDATE .......................................................................................................................3
5.
CRITICAL SUPPLIERS............................................................................................................................3
6.
NOTICES TO DISCLAIM CONTRACTS .................................................................................................4
7.
INTERIM FINANCING AGREEMENT ..................................................................................................5
8.
COMPANY’S SALE AND INVESTMENT SOLICITATION PROCESS .................................................5
9.
MONITOR’S VIEW ON THE SALE PROCESS ......................................................................................7
10. PROPOSED SALES ................................................................................................................................. 8
11.
DISTRIBUTION OF PROCEEDS .......................................................................................................... 8
12.
RECOMMENDATIONS ...........................................................................................................................9
APPENDICES
A.
List of Petitioners
B.
List of Critical Suppliers
C.
Notices to Disclaim Contracts
D.
April 11, 2016 Letter to DLA Piper
E.
Interim Financing Agreement – Fully Executed Copy
SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
1.
INTRODUCTION
1.1
On April 4, 2016, on the application of Sanjel Corporation and the petitioners listed in Appendix
“A” (collectively referred to as “Sanjel” or the “Company” or the “Applicants”) the Court of
Queen's Bench of Alberta (the "Court") issued an order (the "Initial Order") granting Sanjel
protection from its creditors pursuant to the Companies' Creditors Arrangement Act (“CCAA”).
Under the Initial Order, PricewaterhouseCoopers Inc. (“PwC”) was appointed monitor of the
Company (the “Monitor”).
1.2
Pursuant to the Initial Order, among other things, all creditors were stayed from commencing or
continuing any proceedings against the Company until, and including, May 4, 2016, or such date
as the Court may by subsequent order direct.
1.3
The Proposed Monitor was engaged by the Company on January 15, 2016. On April 4, 2016, the
Proposed Monitor provided its Proposed Monitor’s Pre-filing report (the “Proposed Monitor’s
Report”) on the Company’s:
1.3.1
Cash Flow Statement pursuant to paragraph 23(1)(b) of the CCAA;
1.3.2
request for a charge in favour of the Monitor, the Monitor's legal counsel, the
Syndicate’s advisor, the Syndicate’s legal counsel, the CRO and the Company's legal
counsel;
1.3.3
request for Court approval of interim financing and a charge in favour of its interim
lenders;
1.3.4
request for Court approval of a charge in favour of The Bank of Nova Scotia (“BNS”)to
secure its obligations with respect to its BNS credit cards;
1.3.5
request for a charge in favour of its directors and officers;
1.3.6
request for Court approval of the key employee retention plan and creation of a charge
in favour of the KERP's beneficiaries;
1.3.7
request for a charge in favour of critical suppliers;
1.3.8
request for a charge in favour of its financial advisors; and
1.3.9
request for the approval of the appointment of Paul Crilly as the Chief Restructuring
Officer (“CRO”).
1.4
A copy of the filed Proposed Monitor’s Report is available on the Monitor’s website
www.pwc.com/ca/sanjel. All non-confidential prescribed materials filed by Sanjel and the
Monitor relating to this CCAA proceeding are available to creditors and other interested parties in
electronic format on the Monitor’s website. The Monitor will make regular updates to its website
to ensure creditors and interested parties are kept current and to add prescribed materials as
required. In addition, the Monitor’s website contains a direct link to the website for the
Company’s U.S. Chapter 15 proceedings.
1.5
The purpose of this report is to provide the Court with an update on the CCAA and U.S.
proceedings and:
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
2.
1.5.1
the background of the Company and a summary of the causes of financial difficulty and
insolvency;
1.5.2
an update on the Company's operations;
1.5.3
an update on the Company’s designation of certain vendors as Critical Suppliers;
1.5.4
an update on certain notices to disclaim contracts issued under the Enhanced Powers of
the Monitor;
1.5.5
an update on the Company’s borrowings under the Interim Financing Agreement;
1.5.6
the Monitor’s view on the Company’s sale and investment solicitation process; and
1.5.7
the Monitor’s recommendations with respect to the Company’s application for the
approval of two transactions for the sale of the majority of its Canadian and U.S. assets.
1.6
Unless otherwise stated, all monetary amounts noted herein are expressed in Canadian dollars.
Capitalized terms not otherwise defined herein are as defined in the Company’s application
materials, the Initial Order and the Proposed Monitor’s Report.
1.7
Certain information contained in this report is based on information obtained from the
Applicants’ books and records and discussions with management and staff. The Monitor has not
independently verified the accuracy or completeness of such information; accordingly the
Monitor does not express an opinion thereon.
U.S. CHAPTER 15 PROCEEDINGS
2.1
Because of the cross-border nature of the Company’s operations described in the affidavit of Paul
Crilly filed on April 4, 2016 (the “First Crilly Affidavit”), Sanjel (USA) Inc., Sanjel Capital
(USA) Inc., Sanjel Corporation, Suretech Group Ltd., Suretech Completions (USA) Inc., Terracor
Group Ltd., Terracor (USA) Inc., Terracor Resources (USA) Inc., Terracor Logistics (USA) Inc.
and Sanjel Energy Services (USA) Inc. (together, the “Chapter 15 Debtors”) filed voluntary
petitions for relief under Chapter 15 of the United States Bankruptcy Code.
2.2
Counsel for the Monitor and the Chapter 15 Debtors appeared before the Honourable Craig A.
Gargotta in the United States Bankruptcy Court for the Western District of Texas (the “U.S.
Court”) on April 5, 2016 and obtained certain relief including:
2.3
2.2.1
An Order granting the Monitor’s Emergency Ex Parte Application for Temporary
Restraining Order (“TRO”) and Relief pursuant to sections 105(A), 1519, 1521 and other
sections of the Bankruptcy Code; and
2.2.2
An Interim Order (i) Recognizing Court Order authorizing Debtors to Borrow Under a
Post-Petition Credit Facility, (ii) Approving Liens on Assets Located in the Territorial
Jurisdiction of the United States and (iii) Granting Adequate Protection to Prepetition
Secured Parties.
Service of the U.S. motion materials and orders were served on a broad list of parties including
current and past creditors and employees of the Chapter 15 Debtors.
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
3.
4.
2.4
On April 11, 2016 Sanjel Canada Ltd. filed a voluntary petition for relief under Chapter 15 of the
United States Bankruptcy Code. On April 13, 2016 the U.S. Court will hear the motions for joint
administration, limited service and TRO matters.
2.5
The Monitor’s U.S. Counsel anticipates appearing before the U.S. Court on April 26, 2016 seeking
an order recognizing the CCAA proceedings as foreign main proceedings pursuant to the United
States Bankruptcy Code.
2.6
If the relief sought by the Company in the CCAA proceedings for sale approval, vesting and
distribution orders is granted by the Court, a further appearance is anticipated in the U.S. Court
on or after May 18, 2016 seeking sale approval or recognition from the U.S. Court of such orders.
BACKGROUND
3.1
The Company’s business affairs, financial performance, as well as the causes of its insolvency, are
detailed in the First Crilly Affidavit, a copy of which is posted on the Monitor’s website.
Accordingly, the comments contained herein represent only a summary of the background to the
proceedings. The Monitor has reviewed the First Crilly Affidavit and discussed the business and
affairs of the Company and the causes of its insolvency with senior management of the Company
and is of the view that the First Crilly Affidavit provides a fair summary thereof.
3.2
The Monitor understands that the primary cause of Sanjel’s financial difficulty and insolvency
was a result of sustained and severely depressed crude oil and natural gas prices which have
caused oil and gas exploration companies to significantly reduce their capital expenditure budgets
over the past 18 months. This capital expenditure reduction has directly and negatively impacted
the revenues and profitability of energy service companies like Sanjel and its competitors.
OPERATIONAL UPDATE
4.1
5.
Since the granting of the Initial Order, the Company’s Canadian and U.S. operations have
continued with no material changes.
CRITICAL SUPPLIERS
5.1
Pursuant to paragraph 7(c) of the Initial Order, a Critical Supplier Charge was created to protect
obligations of suppliers designated as critical within the meaning of section 11.4 of the CCAA
owed by the Company after the date of the Initial Order.
5.2
The Initial Order did not include a list of Critical Suppliers, however, after consultation with the
Syndicate and with the consent of the Monitor, the Company has thus far and in accordance with
paragraph 7(c) of the Initial Order, identified 11 of its vendors as Critical Suppliers. In addition to
the 11 vendors identified, a number of suppliers have contacted either the Company or the
Monitor to request the ‘critical supplier’ designation. However, after reviewing the criteria for
such designation listed below, the Monitor has advised these other suppliers that they do not
qualify as ‘critical suppliers’.
5.3
The criteria used by the Monitor to confirm the identification of the 11 vendors as critical to
Sanjel’s continuing operations included an evaluation of:
5.3.1
The unique and critical nature of goods/services supplied, and the ability to substitute
supply;
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
6.
5.3.2
The volume of goods or services supplied, and the ability to substitute that volume; and
5.3.3
The impact of the loss of supply on operations and the cash flow forecast (and therefore
the ability of the Company to restructure).
5.4
The Critical Suppliers, along with the Company’s rationale for identifying each of them as Critical
Suppliers, is attached to this report as Appendix “B”.
5.5
All of the Critical Suppliers have agreed to continue to cooperate with the Company and to
provide their services and/or products to ensure continued uninterrupted operations.
5.6
None of the Critical Suppliers have been provided with a deposit or pre-payment and all have
agreed to work with the Company on commercial terms and conditions either consistent with the
past practices of the parties or, where past practices included agreement to lengthy payment
terms, generally on a net 30 day basis.
5.7
The Monitor is working with the Company to ensure that at any point in time the aggregate post
filing obligations owed to all Critical Suppliers do not exceed $20 million, the amount of the
Critical Suppliers’ Charge.
5.8
Many of the Critical Suppliers (and a number of suppliers that are not considered to be critical)
have requested to be, and have been added to the service list for the CCAA proceedings.
NOTICES TO DISCLAIM CONTRACTS
6.1
The Enhanced Powers of the Monitor are set out in paragraph 38 of the Initial Order. They
include the ability, where appropriate, to disclaim or resiliate agreements to which the Company
is party, pursuant to section 32 of the CCAA. As at the date of this report, the Monitor has sent
out notices to disclaim 16 real property leases and three equipment leases under Section 32(5) of
the CCAA. A list of the disclaimer notices along with copies of the notices is attached to this
report as Appendix “C”.
6.2
Subsequent to issuing the disclaimer notices respecting the equipment leases, the Monitor was
advised by the Company on April 12, 2016 that GE Canada Leasing Services Company had
assigned its interests under the three equipment leases to third party leasing companies. The
Monitor is currently attempting to determine whether the Company had any notice of these
assignments.
6.3
Each of the disclaimers were issued in accordance with paragraph 38 of the Initial Order, on one
days’ written notice to the Syndicate, the CRO and the Company. In certain cases, the Syndicate,
the CRO and the Company waived the one day notice period in writing and where that occurred,
the disclaimers were issued immediately.
6.4
The Company’s rationale for disclaiming the real property leases is that the properties, which
were previously used as operations facilities or for worker accommodation, had been vacated at
various dates throughout 2015 and 2016 and were no longer in use by the Company. The
deterioration in activity levels in the oil and gas service industry and its negative effect on Sanjel’s
revenue and profitability necessitated the closure/discontinuance of operations of these facilities.
The Monitor also noted that the real property leases were not required by either of the proposed
purchasers to close the signed purchase and sale agreements currently before this Court for
approval. As a result, there is no justification for the continued use of these leased facilities.
Maintaining these facilities is uneconomic and not supported by the Company’s activities.
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
6.5
The Company’s rationale for disclaiming the equipment leases is that these leases and the
associated 30 items of equipment are no longer used by the Company given the reduced levels of
operations.
6.6
In assessing which lease contracts should be disclaimed, the Monitor followed the following
process:
6.7
7.
8.
6.6.1
The Company provided recommendations and rationale for each contract to be
disclaimed;
6.6.2
The Company’s recommendations were approved by the CRO;
6.6.3
The Monitor reviewed the recommendations and rationale expressed by the Company
and the CRO and compared the contracts to those referred to in the proposed purchase
and sale agreements;
6.6.4
The Monitor provided one day’s written notice to the Syndicate, the CRO and the
Company of its intention to execute the enhanced powers in accordance with the Initial
Order; and
6.6.5
Upon expiry of the one day’s written notice or its waiver by all of the Syndicate, the
CRO and the Company, the Monitor issued the notices.
On April 6, 2016, legal counsel for MacBain Properties Ltd. (“MacBain”) issued a letter to the
CRO requesting that the Company provide MacBain with a written response, by April 11, 2016,
setting out the reasons for the proposed disclaimers. On April 11, 2016, the Monitor, working
with the Company and its legal counsel, issued the requested letter to MacBain’s legal counsel, a
copy of which is attached to this report as Appendix “D”.
INTERIM FINANCING AGREEMENT
7.1
On the date of the Initial Order, the Interim Financing Agreement was fully executed by the
members of the Syndicate, a copy of which is attached to this report as Appendix “E”.
7.2
As at April 12, 2016, the Company had drawn $7 million of the $50 million available under the
Interim Financing Agreement.
COMPANY’S SALE AND INVESTMENT SOLICITATION PROCESS (“SISP”)
8.1
In the fall of 2015, the Company engaged Bank of America Merrill Lynch (“BAML”) as its
financial advisor, to identify strategic partners and raise additional capital. The Company has
advised the Monitor that although there was considerable interest, the BAML process did not
result in a transaction.
8.2
While the BAML process was ongoing, the Company continued pursuing other initiatives and in
September 2015 engaged Wells Fargo Securities Canada, Ltd. (“Wells Fargo Securities”) to
market the Suretech and Terracor divisions.
8.3
In addition, in September 2015 the Company engaged Credit Suisse Securities (CANADA), Inc.
(“CS”) as another financial advisor, to pursue alternative debt financing options. The CS
engagement was subsequently expanded to a broader restructuring mandate.
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
8.4
Neither the CS process nor the Wells Fargo Securities process resulted in a transaction.
8.5
In December 2015, the Company engaged PJT Partners LP (“PJT”) as another financial advisor,
for the primary purpose of assisting the Company with its restructuring efforts.
8.6
As further described in the Monitor’s Pre-filing report, PJT and CS have complimentary expertise
in the M&A and restructuring spaces and have been working collectively and cooperatively during
the SISP to assist in identifying and examining strategic and financial alternatives available to the
Company.
8.7
PJT and CS have advised the Monitor that during the SISP, 20 strategic buyers and 65 financial
sponsors (total of 85 parties) were contacted and of the 85 interested parties:
8.7.1
37 executed NDAs;
8.7.2
25 conducted due diligence in the VDR or otherwise;
8.7.3
17 met with the Applicants' Management Team; and
8.7.4
9 submitted non-binding indications of interest for all or portions of the Sanjel Group's
business (“Proposals”).
8.8
The Company, in consultation with PJT, CS and the Proposed Monitor, reviewed and evaluated
the Proposals received in the SISP. In the second stage of the SISP there were three competitive
bids which resulted in significant bidding tension and improved Proposals. The two Proposals
ultimately selected by the Company were chosen because, in the opinion of the Company and its
advisors, they were the best Proposals generated by the SISP.
8.9
Simultaneously with the SISP, the Company solicited restructuring proposals from an ad hoc
group of unsecured bondholders. The bondholders presented a proposal to the Company, which
the Company concluded was less favorable than the Proposals generated by SISP.
8.10
The quantum of the bids which were received in the SISP was less than the total amount owed to
the Syndicate and accordingly made the Syndicate the fulcrum creditors. As a result, the
Company, PJT, CS and the Proposed Monitor consulted with Syndicate and their financial and
legal advisors in respect of the acceptability of the Proposals. The Syndicate reviewed the
Proposals and was supportive of the Company’s decisions to move forward with such Proposals.
8.11
On April 3, 2016 the Company entered into:
8.12
8.11.1
An Asset Purchase Agreement (“APA”), as subsequently amended on April 12, 2016 to
include an Amending Agreement and an Assignment and Assumption Agreement, with
STEP Energy Services Ltd. (“STEP”) for the sale of substantially all of the Company’s
Canadian assets; and
8.11.2
An APA with Liberty Oilfield Services Holdings LLC (“Liberty”) for the sale of
substantially all of the Company’s U.S. assets.
The Suretech and Terracor business, as well as the Company’s joint venture in Saudi Arabia, are
excluded from both the STEP and Liberty APAs. The Company and its Financial Advisors
continue their marketing efforts with respect to these remaining assets.
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
9.
8.13
As further described in the second affidavit of Paul Crilly sworn in these proceedings on April 12,
2016, the Company is anticipating that the Syndicate’s total recovery from the APAs, receivables
collection, other assets and operations is likely to be in the range between $325 and $375 million.
Taking into account the anticipated net proceeds from the sales generated out of the SISP, the
nature of the unsold assets and the ongoing operations of the Company, the Monitor is of the view
that this range of recovery is reasonable in the circumstances. More information with respect to
the Monitor’s views of the reasonableness of the range of recoveries will be contained in the
Monitor’s Confidential Supplement to this report (the “First Confidential Supplemental
Report”) to be provided to this Court.
8.14
The Monitor anticipates that both the STEP and Liberty transaction will close in May 2016
following approval of this Honourable Court and recognition and approval by the U.S. Bankruptcy
Court within the Chapter 15 proceedings.
8.15
Additional information with respect to the SISP and the Proposals obtained will be outlined in the
First Confidential Supplement Report.
8.16
The Monitor understands that there have been a number of requests from unsecured creditors,
including the bondholders that previously made a proposal to the Company, to see un-redacted
versions of the bids received. The Monitor is of the view that disclosing this information to
parties who were or might in the future be competing bidders or transaction proponents would be
harmful to the process because it could negatively impact any further marketing process in the
event the proposed sales do not close. Such disclosures may also result in compromising the
fairness and integrity of the SISP. The Monitor is seeking permission from this Court and the
U.S. Court to file the relevant purchase agreements under seal.
8.17
The Monitor understands that the company is working with the purchasers to allow the company
to disclose this information to non-bidder creditors in circumstances where the recipient has
executed a confidentiality agreement wherein the recipient agrees, among other things, to
maintain the information confidential and undertake that it will not participate in any bid or sales
process for the Company or the assets in the future.
MONITOR’S VIEWS ON THE SALE PROCESS
9.1.
PJT and CS have advised the Monitor that given the size and complexity of the Company’s
operations and the time frames involved that all strategic and financial sponsors known to PJT
and CS capable of a transaction of this magnitude and complexity were contacted during the SISP.
9.2.
Additionally, PJT and CS have advised the Monitor that it is unlikely that extending the SISP time
frames in the current market would have resulted in offers being received that would be
materially better than the offers received during the above-mentioned SISP.
9.3.
Based on the foregoing and the observations of the Monitor since its involvement in mid-January
2016, it is the opinion of the Monitor that it is highly improbable that another post-filing sales
process would yield offers for the Company’s Canadian and U.S. operations materially in excess of
the values contained in the current STEP and Liberty APAs. The Monitor’s conclusion in this
regard is informed by, among other things, the advice of CS and PJT, the nature of the Company’s
operations and assets, the market conditions over the past year, the proposals received in the
context of the SISP and from bondholders, the current ongoing depressed condition of the
market, and the underlying value of the Company’s assets.
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
10.
PROPOSED SALES
10.1.
The Company is seeking approval of this Court for the STEP and Liberty APAs.
10.2.
Monitor’s Opinion on the STEP APA:
10.2.1. The proposed STEP APA is a result of the SISP process described above. The purchase
price for the transaction is fair and reasonable and the closing date for a transaction of
this size is relatively quick which is important given the cash burn of the Company over
the period. In addition, there is minimal conditionality, the representations and
warranties are typical for sales in these circumstances and the sale is on an “as is where
is” basis. The First Confidential Supplemental Report to be provided to this Court
includes additional supporting information.
10.2.2. The Monitor is of the opinion that the STEP APA is reasonable and would be more
beneficial to the Company’s creditors than a disposition under a bankruptcy for reasons
more particularly outlined in the First Confidential Supplemental Report.
10.2.3. The Monitor received the deposit, as defined in the STEP APA, on April 5, 2016 which will
be held in trust pending the completion of the sale.
10.3.
Monitor’s Opinion on the Liberty APA:
10.3.1. The proposed Liberty APA is a result of the SISP process described above. The purchase
price for the transaction is fair and reasonable and the closing date for a transaction of
this size is relatively quick which is important given the cash burn of the Company over
the period. In addition, there is minimal conditionality, the representations and
warranties are typical for sales in these circumstances and the sale is on an “as is where
is” basis. The First Confidential Supplemental Report to be provided to this Court
includes additional supporting information.
10.3.2. The Monitor is of the opinion that the Liberty APA is reasonable and would be more
beneficial to the Company’s creditors than a disposition under a bankruptcy for reasons
more particularly outlined in the First Confidential Supplemental Report.
10.3.3. The Monitor received the deposit, as defined in the APA, on April 5, 2016 which will be
held in trust pending the completion of the sale.
11.
DISTRIBUTION OF PROCEEDS
11.1.
The Monitor anticipates that following the closing of the of the STEP and Liberty APAs and the
Monitor providing confirmation with respect to the validity, enforceability and relative priority of
the Syndicate’s security and collateral that the net proceeds (or the most of it) will be distributed
to the Syndicate, if this Court so orders. The Monitor intends to file a supplemental report prior
to the distribution application detailing any issues with validity or priority of security interests on
assets which are subject to prior ranking security held by parties other than the Syndicate. To the
extent there are assets which are subject to security held by non-Syndicate parties, the Monitor
will recommend a hold back from the distribution while those assets can be valued.
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SANJEL CORPORATION ET AL
MONITOR'S FIRST REPORT TO COURT
April 12, 2016
RECOMMENDATIONS
12.1
The Company's application materials indicate it is seeking an order approving both the STEP and
Liberty APAs and the distribution of the net proceeds of these transactions (subject to the
Monitor's confirmation of the validity and enforceability of the Syndicate's security and collateral)
to the Syndicate.
12,2
The Monitor is of the opinion that the requests are fair and reasonable and recommends that
Honourable Court grant an order approving:
12.2.1
The STEP APA;
12.2.2
The Liberty APA;
12.2.3
Distribution of the net proceeds of the Liberty and STEP transactions (subject to the
Monitor's confirmation of the validity, enforceability and relative priority of the
Syndicate's security and collateral) to the Syndicate; and
12.2.4
The activities of the Monitor to date.
This report is respectfully submitted this l2 day of April, 2016.
PricewaterhouseCoopers Inc.
Court Appointed Monitor of
Sanjel CorpoatimT{ al
/
Darby
Senior Vice President
Rick Osuna
Vice President
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
APPENDIX A
List of Petitioners
Sanjel Corporation(“Sanjel Corp.”)
Sanjel Canada Ltd. (“Sanjel Canada”)
Terracor Group Ltd. (“Terracor Group”)
Suretech Group Ltd. (“Suretech”)
Suretech Completions Canada Ltd. (“Suretech Canada”)
Sanjel Energy Services (USA) Inc. (“Sanjel Energy USA”)
Sanjel (USA) Inc. (“SUSA”)
Suretech Completions (USA) Inc. (“Suretech USA”)
Sanjel Capital (USA) Inc. (“Sanjel Capital USA”)
Terracor (USA) Inc. (“Terracor USA”)
Terracor Resources (USA) Inc. (“Terracor Resources USA”)
Terracor Logistics (USA) Inc. (“Terracor Logistics USA”)
Sanjel Middle East Ltd. (“Sanjel Middle East”)
Sanjel Latin America Limited (“Sanjel LA”)
Sanjel Energy Services (“Sanjel DMCC”)
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
APPENDIX B
Critical Suppliers Identified by the Company
Engenium Chemicals Corp.
- Supplies specialty chemicals specifically manufactured/blended to Sanjel's specifications.
- Required for fracking and cement jobs.
- Switching suppliers would require significant lead time given Sanjel's unique blend.
- Sanjel inventory of product is small.
- Supplies both Canada and U.S. operations.
GCC
- Sole Canadian supplier of plaster for cementing work.
- Product shipped by rail from the East coast.
Hi Crush Proppants LLC
- Supplier of white sand for use in operation, currently supplying for ongoing jobs.
- Hi Crush currently offers the best market pricing.
- Other suppliers are available, but switching could cause significant disruption to
operations due to the time required to arrange for alternate supply and requisite volumes.
Lehigh Inland Cement Ltd.
- One of only two suppliers in Canada (Lafarge is the other).
- If Lehigh refuses to supply, Sanjel does not have the option of alternative sourcing as
Lafarge is not able to supply sufficient volumes to meet Sanjel’s requirements.
- Supplies both Canadian and U.S. operations.
Sil Industrial Minerals Inc.
- Only supplier of silica flour in Canada.
- There are U.S.-based suppliers but it is cost prohibitive to transport to Canada.
- Cessation of supply will shut down cementing division.
SPM Flow Control (Weir Group)
- Performs iron testing, which is a critical safety requirement for all jobs.
- Only supplier in the U.S. that can meet Sanjel's requirements in the immediate term.
- Currently being used in active jobs.
- There are other suppliers but a switch to a different supplier would take some time and
be very disruptive to operations.
Star Bulk (PX Transportation Inc.)
- Trucking and transport which is currently being used on active jobs.
- Sanjel is unable to replace without disrupting current jobs.
Suncor Energy Inc. (Petro Pass)
- Provides PetroCan fuel cards, which the company fleet requires to continue working.
- Disruption in service and the time required to implement alternative arrangements
would halt large portions of Canadian operations.
TR Transport Inc.
- Trucking and transport which is currently being used on active jobs.
- Sanjel is unable to replace without disrupting current jobs.
UFA Co-operative Ltd.
- Fuel supplier which delivers to the wellsite.
- Currently holding loaded trucks for ongoing jobs.
- Disruption in service and the time required to find alternate suppliers would halt certain
ongoing Canadian operations.
- Only supplier that is able to deliver to certain of Sanjel's Canadian job locations.
Univar Canada Ltd. & U.S.
- Commodity chemical supplier and sole supplier of certain chemicals used by Sanjel.
- Univar has distribution facilities in areas where Sanjel is currently doing work.
- The time required to find alternative suppliers and maintain efficiencies with respect to
local distribution facilities would be disruptive to operations.
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SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
APPENDIX C
Real Property Leases
Number
Lessor
Type
Location
Date of
Monitor's Notice
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd.
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
MacBain Properties Ltd
Sanjel Canada Ltd
MacBain Properties Ltd
MacBain Properties Ltd
Housing
Housing
Parking
Storage
Office
Shop/Office
Land
Shop/Office
Mancamp
Mancamp
Shop/Office
Shop/Office
Shop/Office
Shop/Office
Shop/Office
Shop/Office
602, 683 - 10th Ave SW, Calgary
2512, 618 - 5th Ave SW, Calgary
622-5th Ave, Calgary
622-5th Ave, Calgary
622-5th Ave, Calgary
Brooks, AB
Ft. Nelson, BC
High Level, AB
Lac La Biche Mancamp, AB
Lac La Biche Mancamp, AB
Medicine Hat, AB
4390-106th Ave SE, Calgary
4390-106th Ave SE, Calgary
4390-106th Ave SE, Calgary
10602-79 Ave, Clairmont, AB (Bay 1)
10602-79 Ave, Clairmont, AB (Bay 2)
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
6-Apr-2016
6-Apr-2016
6-Apr-2016
4-Apr-2016
4-Apr-2016
12
SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
Equipment Leases
Number
Lessor
Lease Reference
VIN
Location
Date of
Monitor's Notice
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
3
3
3
3
3
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
GE Canada Leasing Services Company
9710254001-A
9710254001-A
9710254001-A
9710254001-A
9710254001-A
9710254001-A
9710254001-A
9710254001-A
9710484001-A
9710484001-A
9710484001-A
9710484001-A
9710484001-A
9710484001-A
9710484001-A
9710484001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
9710485001-A
5KJJAEDR9CPBM9645
53UC04432CPG15424
5KJJAEDR7DPBZ7291
2PLC04939DBH16470
2ATC12127CU305247
2ATD02201DU305296
2ATD02203DU305297
2PLC0442XDBM16688
5KJJAEDRXCPBK8996
53UC04539CPG15421
5KJJAEDR7CPBM9644
53UC04530CPG15422
5KJJAEDR7CPBM9658
53UC04430CPG15423
5KJJAEBG1CPBM9642
4J8B05139CT004203
5KJJAEDR1CPBK9308
1PMB13120D2041936
1PMB13637D2041935
5KJJAEDR1DPBZ7285
4J8B03926DT004001
5KJJAEDR3DPBZ7286
4J8B03928DT004002
5KJJAEDR7DPBZ7288
4J8B03839DT004102
5KJRALBG0CPBK9003
2PLC04431CBJ15427
651026
5KJJAEDR8CPBK8995
53UC04430CLF15412
Medicine Hat
Medicine Hat
Medicine Hat
Medicine Hat
Red Deer
Red Deer
Red Deer
Other
Medicine Hat
Medicine Hat
Medicine Hat
Medicine Hat
Medicine Hat
Medicine Hat
Red Deer
Red Deer
Edmonton
Edmonton
Edmonton
Red Deer
Red Deer
Peace River
Peace River
Swift Current
Swift Current
Red Deer
Red Deer
Other
Medicine Hat
Medicine Hat
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
4-Apr-2016
13
SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
APPENDIX D
April 11, 2016 Letter to DLA Piper
14
SANJEL CORPORATION ET AL
MONITOR’S FIRST REPORT TO COURT
April 12, 2016
APPENDIX E
Interim Financing Agreement – Fully Executed Copy
15
Execution Version
SENIOR SECURED SUPERPRIORITY INTERIM FINANCING
CREDIT AGREEMENT
BETWEEN:
SANJEL CORPORATION
(as Borrower)
- and –
ALBERTA TREASURY BRANCHES
AND THE OTHER FINANCIAL INSTITUTIONS
NAMED HEREIN OR IN ASSIGNMENT AND ASSUMPTION AGREEMENTS,
IN THEIR CAPACITIES AS LENDERS
(as Lenders)
- and –
ALBERTA TREASURY BRANCHES
(as Administrative Agent and Lead Arranger)
Dated as of April 4, 2016
22883504.11
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION ................................................................................................................ 1
1.1
Definitions.................................................................................................................................... 1
1.2
Headings and Table of Contents ................................................................................................ 23
1.3
References .................................................................................................................................. 23
1.4
Rules of Interpretation ............................................................................................................... 23
1.5
Generally Accepted Accounting Principles ............................................................................... 23
1.6
Changes in Generally Accepted Accounting Principles ............................................................ 24
1.7
Time ........................................................................................................................................... 25
1.8
Payment for Value ..................................................................................................................... 25
ARTICLE 2 REPRESENTATIONS AND WARRANTIES ...................................................................... 25
2.1
Representations and Warranties ................................................................................................. 25
2.2
Deemed Representation and Warranty ...................................................................................... 29
ARTICLE 3 THE CREDIT FACILITY ..................................................................................................... 29
3.1
Obligations of Each Lender ....................................................................................................... 29
3.2
Purposes of Credit Facility......................................................................................................... 29
3.3
Borrowing Not to Exceed Commitments ................................................................................... 29
3.4
Borrowings ................................................................................................................................. 29
3.5
[reserved] ................................................................................................................................... 30
3.6
[reserved] ................................................................................................................................... 30
3.7
[reserved] ................................................................................................................................... 30
3.8
[reserved] ................................................................................................................................... 30
3.9
[reserved] ................................................................................................................................... 30
3.10
[reserved] ................................................................................................................................... 30
3.11
[reserved] ................................................................................................................................... 30
3.12
Notice of Repayment ................................................................................................................. 30
3.13
Pro-Rata Treatment of Borrowings ............................................................................................ 30
3.14
[reserved] ................................................................................................................................... 31
3.15
[reserved] ................................................................................................................................... 31
3.16
Notices Irrevocable .................................................................................................................... 31
3.17
[reserved] ................................................................................................................................... 31
3.18
[reserved] ................................................................................................................................... 31
3.19
Defaulting Lenders..................................................................................................................... 31
ARTICLE 4 REPAYMENT AND PREPAYMENT .................................................................................. 33
4.1
Reductions and Prepayments of Credit Facility ......................................................................... 33
4.2
Repayment of Borrowings In Excess of Commitments ............................................................. 33
4.3
Allocation of Proceeds of Collateral .......................................................................................... 33
4.4
[reserved] ................................................................................................................................... 33
4.5
Cancellation of Commitment and Prepayment .......................................................................... 33
4.6
[reserved] ................................................................................................................................... 34
4.7
Evidence of Indebtedness........................................................................................................... 34
4.8
Mandatory Prepayments ............................................................................................................ 34
ARTICLE 5 PAYMENT OF INTEREST AND FEES............................................................................... 35
5.1
Interest on Cdn. Prime Loans ..................................................................................................... 35
5.2
Interest on U.S. Base Rate Loans ............................................................................................... 35
5.3
[reserved] ................................................................................................................................... 35
22883504.11
2
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
[reserved] ................................................................................................................................... 35
[reserved] ................................................................................................................................... 35
[reserved] ................................................................................................................................... 35
Interest on Overdue Amounts .................................................................................................... 35
Standby Fees .............................................................................................................................. 36
Agent's Fees ............................................................................................................................... 36
[reserved] ................................................................................................................................... 36
Nominal Rates ............................................................................................................................ 36
Maximum Rate Permitted by Law ............................................................................................. 37
Waiver ........................................................................................................................................ 37
ARTICLE 6 PAYMENT AND TAXES ..................................................................................................... 37
6.1
Time, Place and Currency of Payment....................................................................................... 37
6.2
Application of Payments Prior to an Event of Default .............................................................. 37
6.3
Taxes .......................................................................................................................................... 37
6.4
Account Debit Authorization ..................................................................................................... 39
ARTICLE 7 SECURITY ............................................................................................................................ 39
7.1
Security ...................................................................................................................................... 39
7.2
[reserved] ................................................................................................................................... 40
7.3
Form of Security ........................................................................................................................ 40
7.4
[reserved] ................................................................................................................................... 40
7.5
[reserved] ................................................................................................................................... 40
7.6
No Merger .................................................................................................................................. 40
7.7
[reserved] ................................................................................................................................... 40
7.8
Release of Security .................................................................................................................... 40
7.9
Permitted Encumbrances and Permitted Indebtedness .............................................................. 40
7.10
Further Assurances – Security ................................................................................................... 41
ARTICLE 8 CONDITIONS PRECEDENT ............................................................................................... 41
8.1
Conditions Precedent ................................................................................................................. 41
8.2
Continuing Conditions Precedent .............................................................................................. 42
8.3
Waiver of a Condition Precedent ............................................................................................... 43
ARTICLE 9 COVENANTS OF THE BORROWER ................................................................................. 43
9.1
Positive Covenants of the Borrower .......................................................................................... 43
9.2
Negative Covenants of the Borrower ......................................................................................... 50
ARTICLE 10 EVENTS OF DEFAULT ..................................................................................................... 53
10.1
Events of Default ....................................................................................................................... 53
10.2
Acceleration and Demand .......................................................................................................... 55
10.3
Waiver of Default ...................................................................................................................... 56
10.4
Application of Payments Following Demand and Acceleration ................................................ 56
10.5
Remedies .................................................................................................................................... 57
10.6
Set-Off........................................................................................................................................ 57
10.7
Sharing of Payments by Lenders ............................................................................................... 58
10.8
[reserved] ................................................................................................................................... 59
10.9
Lenders May Perform Covenants .............................................................................................. 59
ARTICLE 11 EXPENSES AND INDEMNITIES ...................................................................................... 59
11.1
Reimbursement of Expenses and Indemnity .............................................................................. 59
11.2
Increased Cost ............................................................................................................................ 59
11.3
Illegality ..................................................................................................................................... 60
11.4
[reserved] ................................................................................................................................... 61
22883504.11
3
11.5
11.6
11.7
General Indemnity and Release ................................................................................................. 61
Replacement Lender .................................................................................................................. 62
Waiver of Consequential Damages, Etc. ................................................................................... 62
ARTICLE 12 THE AGENT AND THE LENDERS .................................................................................. 63
12.1
Authorization of Agent .............................................................................................................. 63
12.2
Responsibility of Agent ............................................................................................................. 63
12.3
Acknowledgment of Lenders ..................................................................................................... 63
12.4
Rights and Obligations of Each Lender ..................................................................................... 64
12.5
Determinations by Lenders ........................................................................................................ 64
12.6
Notices between the Lenders, the Agent and the Borrower ....................................................... 64
12.7
Agent's Duty to Deliver Documents Obtained from the Borrower ............................................ 64
12.8
Arrangements for Borrowings ................................................................................................... 65
12.9
Arrangements for Repayment of Borrowings ............................................................................ 65
12.10 Repayment by Lenders to Agent ................................................................................................ 65
12.11 Adjustments Among Lenders..................................................................................................... 66
12.12 Lenders' Consents to Waivers, Amendments, etc. ..................................................................... 66
12.13 Reliance by Agent on Notices, etc. ............................................................................................ 67
12.14 Relations with the Borrower ...................................................................................................... 67
12.15 Sharing of Information ............................................................................................................... 68
12.16 Successor Agent ......................................................................................................................... 68
12.17 Amendment of this Article 12 .................................................................................................... 68
12.18 Dealing with Agent .................................................................................................................... 69
12.19 Indemnity of Agent .................................................................................................................... 69
12.20 The Agent and Defaulting Lenders ............................................................................................ 69
ARTICLE 13 SUCCESSORS AND ASSIGNS ......................................................................................... 70
13.1
Successors and Assigns.............................................................................................................. 70
13.2
Exchange and Confidentiality of Information............................................................................ 71
ARTICLE 14 MISCELLANEOUS ............................................................................................................ 72
14.1
Severability ................................................................................................................................ 72
14.2
Survival of Undertakings ........................................................................................................... 72
14.3
Failure to Act ............................................................................................................................. 72
14.4
Amendments .............................................................................................................................. 72
14.5
Notice ......................................................................................................................................... 72
14.6
Further Assurances..................................................................................................................... 74
14.7
Governing Law .......................................................................................................................... 74
14.8
Whole Agreement ...................................................................................................................... 74
14.9
Term of Agreement .................................................................................................................... 74
14.10 Time of Essence ......................................................................................................................... 74
14.11 Jurisdiction ................................................................................................................................. 74
14.12 Conflicts ..................................................................................................................................... 75
14.13 Anti-Money Laundering Legislation ......................................................................................... 75
14.14 [reserved] ................................................................................................................................... 75
14.15 Counterpart Execution ............................................................................................................... 75
22883504.11
4
Schedules
Schedule "A"
Schedule "B"
Schedule "C"
Schedule "D"
Schedule "E"
Schedule "F"
Schedule "G"
Schedule "H"
Schedule “I”
Schedule "J"
Schedule “K”
Schedule “L”
Schedule “M”
Schedule “N”
Schedule “O”
22883504.11
Commitments
Drawdown Notice
Notice of Repayment
Compliance Certificate
Assignment and Assumption Agreement
[reserved]
[reserved]
[reserved]
Information re: Borrower and its Subsidiaries
[reserved]
Agreed Budget
Initial Order
Form of Chapter 15 Recognition Order
Form of Interim U.S. DIP Order
Form of U.S. TRO Order
THIS SENIOR SECURED SUPERPRIORITY INTERIM FINANCING CREDIT AGREEMENT
is dated as of April 4, 2016
BETWEEN:
SANJEL CORPORATION, a corporation governed by the laws of the
Province of Alberta, having an office in Calgary, Alberta, as Borrower
AND
ALBERTA TREASURY BRANCHES and the other financial
institutions named herein or in Assignment and Assumption Agreements,
in their capacities as Lenders
AND
ALBERTA TREASURY BRANCHES, a body corporate established
pursuant to the Alberta Treasury Branches Act, C.A. 37.9, S.A. 1997,
having an office in Calgary, Alberta, in its capacity as Agent
WHEREAS the Borrower has requested that the Lenders provide financing to fund
certain of the Loan Parties' obligations during the pendency of the CCAA Proceedings and the U.S.
Proceedings, in accordance with the terms and conditions set out herein;
AND WHEREAS the Lenders have agreed to establish an interim credit facility in order
to fund certain obligations of the Loan Parties in the context of the Loan Parties' CCAA Proceedings and
U.S. Proceedings on the terms and conditions set forth herein and ATB has agreed to act as Agent for the
Lenders under such credit facility;
NOW THEREFORE, in consideration of the premises, the covenants herein contained
and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each of the parties hereto, the parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1
Definitions
In this Agreement and the Schedules hereto and in all notices pursuant to this Agreement,
unless something in the subject matter or context is inconsistent therewith, the following words and
phrases shall have the following meanings:
“Acceleration Event” has the meaning given to it in Section 10.2;
“Acceleration Notice” has the meaning given to it in Section 10.2;
“Accommodations” means the advance of Loans by the Lenders in Canadian and U.S. dollars, all subject
to the terms and conditions provided for herein;
“Accounting Change” has the meaning given to it in Section 1.6;
“Accounting Change Notice” has the meaning given to it in Section 1.6;
22883504.11
2
“Accounts” means the accounts and records established by the Agent to record the Borrower's liability to
the Agent and each of the Lenders in respect of the Borrowings and other amounts outstanding by the
Borrower hereunder;
“Additional Compensation” has the meaning given to it in Section 11.2;
“adjusted rate” has the meaning given to it in Section 5.12;
“Administration Charge” means an administration charge in an aggregate amount not to exceed Cdn.
$2,000,000 granted by the Canadian Court pursuant to the Initial Order and recognized and given effect to
by the U.S. Court, in each case, over all present and future assets and property of the Loan Parties, real
and personal, tangible or intangible, and whether now owned or which are hereafter acquired or otherwise
become the property of a Loan Party;
“Affected Lender” has the meaning given to it in Section 11.6;
“Affidavit” means the Affidavit of Paul Crilly sworn on April 4, 2016 in connection with the CCAA
Proceedings;
“Affiliate” of a person (the “subject person”) means:
(a)
any person which, directly or indirectly, controls, is controlled by or is under common control
with the subject person; and for the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” or “under common control with”) means the
power to direct or cause the direction of the management and policies of any person, whether
through the ownership of Voting Shares or by contract or otherwise;
(b)
any person who beneficially owns or holds 10% or more of any class of shares of the subject
person; or
(c)
any person, 10% or more of any class of shares (or in the case of a person that is not a
corporation, 10% or more of the units or partnership, participation or equity interest) of which is
beneficially owned or held by the subject person;
“Agent” means ATB when acting in its capacity as administrative agent hereunder and includes any
successor administrative agent appointed pursuant to Section 12.16;
“Agent's Account for Payments” means:
(a)
for all payments in Canadian Dollars, the following account maintained by the Agent to which
payments and transfers are to be effected as follows:
Alberta Treasury Branches
239 - 8th Avenue S.W.
Calgary, Alberta T2P 1B9
Swift Code: ATBRCA6EXXX
Beneficiary/for account of: CAD Syndication Agency Suspense
Bank Code and Transit No.: 021907609
Beneficiary Account No.: 00127091500
Attention: Manager of Loan Syndications
22883504.11
3
Reference: CFS for Sanjel Corporation
(b)
for all payments in U.S. Dollars, the following account maintained by the Agent to which
payments and transfers are to be effected as follows:
Bank of America - New York
100 W 33rd Street,
New York, New York, USA 10001
Swift Code/ABA No.: BOFAUS3NXXX, ABA 026009593
Alberta Treasury Branches A/C #12332-35276
For further credit to: Alberta Treasury Branches
239 - 8th Avenue S.W., Calgary, Alberta T2P 1B9
Beneficiary/For Account of: USD Syndication Agency Suspense
Bank Code and Transit No.: 012907609
Beneficiary Account No.: 00127092300
Attention: Manager of Loan Syndications
Reference: CFS for Sanjel Corporation
or, in each case, such other places or accounts as may be agreed upon by the Agent and the Borrower
from time to time and notified in writing to the Lenders;
“Agent's Branch of Account” means the principal office of the Agent in Calgary, Alberta or such other
office or branch of the Agent in Alberta as the Agent and the Borrower, each acting reasonably, may
agree upon from time to time and as advised to the Borrower and the Lenders in writing;
“Agreed Budget” means the weekly line item budget covering the period of at least 13 calendar weeks
following the Effective Date attached hereto as Schedule “K”, together with all amendments thereto
approved by the Agent in writing in its sole and absolute discretion (for certainty, each Updated Budget
contemplated to be delivered by the Borrower hereby shall not constitute an amendment of the Agreed
Budget unless approved by the Agent in writing in its sole and absolute discretion);
“Agreement” means this agreement, all Schedules attached hereto and any future amendments, variations
or supplements thereto and all replacements and restatements thereof;
“Alternative Restructuring Option” means any transaction that is satisfactory to the Agent and the
Lenders involving the refinancing or recapitalization of a Loan Party or any other restructuring of the
Loan Parties' businesses and operations to be implemented pursuant to a Plan;
“AML Legislation” has the meaning given to it in Section 14.13;
“Anti-Corruption Laws” means, for any Person, any anti-bribery and anti-corruption laws of those
jurisdictions in which such Person does business;
“Anti-Money Laundering and Anti-Terrorism Laws” means, for any Person, any laws relating to
terrorism or money laundering, including, without limitation, (a) any AML Legislation, (b) the U.S.
Money Laundering Control Act of 1986, (c) the U.S. Bank Secrecy Act, (d) the USA PATRIOT Act, (e) the
laws, regulations and executive orders administered by OFAC, (f) any law prohibiting or directed against
terrorist activities or the financing of terrorist activities, or (g) any similar laws enacted in the United
States, Canada or any other jurisdictions in which such Person operates, including, in each case, any
22883504.11
4
regulations issued thereunder, and as any of the foregoing laws may from time to time be amended or
replaced;
“APA” has the meaning ascribed thereto in the definition of “Maturity Date”;
“APA Closing” has the meaning ascribed thereto in the definition of “Maturity Date”;
“Applicable Pricing Margin” means, (a) in respect of any Accommodation 6.0% per annum, and (b) any
standby fees payable under Section 5.8, 1.35% per annum, provided that (i) the above rates per annum are
expressed on the basis of a year of 365 days; (ii) the standby fee will accrue on the daily undrawn portion
of the Credit Facility and will be payable in arrears in accordance with Section 5.8; and (iii) upon the
occurrence and during the continuance of any Default or Event of Default, the Applicable Pricing Margin
specified in clause (a) of this definition will increase by 6% per annum;
“Approved Sale” means the sale of all or substantially all of the assets of the Borrower and its
Subsidiaries pursuant to one or more sales approved by the Canadian Court and the U.S. Court and
consented to by the Agent and the Lenders;
"Approved Securities" means obligations maturing within one year from their date of purchase or other
acquisition by a Borrower or a Subsidiary and which are, directly or indirectly (including through a
money market fund administered by the Agent):
(a)
issued by the Government of Canada or the U.S., or an instrumentality or agency thereof and
guaranteed fully as to principal, premium, if any, and interest by the Government of Canada or
the U.S.;
(b)
issued by a province of Canada or a state of the U.S., or an instrumentality or agency thereof,
which has a long term debt rating of at least A by Standard & Poor's Rating Group (a division of
The McGraw Hill Companies, Inc.) ("S&P"), A2 by Moody's Investors Services, Inc.
("Moody's"), or A by DBRS Limited; or
(c)
term deposits, guaranteed investment certificates, certificates of deposit, bankers' acceptances or
bearer deposit notes, in each case, of any Canadian chartered bank or other Canadian financial
institution or any bank or other financial institution incorporated under the laws of the U.S., or
any state thereof which has a long term debt rating of at least A+ by S&P, A1 by Moody's, or A
(high) by DBRS Limited;
“Assignment and Assumption Agreement” means an agreement executed by a Lender, substantially in
the form of Schedule "E" with the blanks completed;
“Attributable Debt” means, in respect of any operating lease (determined in accordance with GAAP as
at December 31, 2010) entered into by a person or a Subsidiary thereof as lessee, the net present value
(discounted at the rate of interest equal to the then current CDOR Rate for one-month bankers'
acceptances plus 5%) of the lease payments of the lessee, including all rent and payments to be made by
the lessee in connection with the return of the leased property, during the remaining term of the lease
(including any period for which such lease has been extended or may, at the option of the lessor, be
extended) but excluding for certainty, (a) amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labour costs and similar charges and (b) amounts payable by a lessee in
connection with the exercise of any end of term purchase option, early buy out option or any similar
amounts payable at the election of the lessee;
22883504.11
5
“ATB” means Alberta Treasury Branches;
“AVO” has the meaning given to it in the definition of “Milestones”;
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”;
“BIA” means the Bankruptcy and Insolvency Act (Canada);
“Blocked Person” means any Person:
(a)
that (i) is identified on the list of “Specially Designated Nationals and Blocked Persons”
published by OFAC; (ii) resides, or is organized or chartered, in a country or territory that is the
subject of an OFAC Sanctions Program; or (iii) a United States person is prohibited from dealing
with or engaging in a transaction with under any of the Anti-Money Laundering and AntiTerrorism Laws; or
(b)
that is owned or controlled by, or that owns or controls, or that is acting for or on behalf of, any
Person described in subsection (a) above;
“Borrower” means Sanjel Corporation;
“Borrowings” means, at any given time during the term of the Agreement, the principal amounts
outstanding by way of Loans made or continued by the Lenders;
“basis point” means one one-hundredth of one percent;
“Branch of Account” means, with respect to each Lender, the branch or office of such Lender at the
address set out opposite such Lender's name on the signature pages of this Agreement or in the
Assignment and Assumption Agreement or such other branch or office in Canada as such Lender may
from time to time advise the Borrower and the other Lenders in writing; but, for purposes of delivery of
any notice required to be delivered by the Agent to a Lender pursuant to Section 12.8 and for the purposes
of effecting any payments to a Lender in connection with this Agreement, a Lender may specify by notice
in writing to the Borrower any other branch or office of such Lender in Alberta and such branch or office
shall thereafter be the Branch of Account of such Lender for such purpose;
“Budget Variance Report” has the meaning ascribed thereto in Section 9.1(oo);
“Business Day” means a day on which banks are open for business, other than Saturday, Sunday or any
other day on which commercial banks are required to be closed, in Calgary, Alberta, Canada, Toronto,
Ontario, Canada or Montreal, Quebec, Canada and, in the context of a Borrowing denominated in U.S.
Dollars, New York, New York;
“Canadian Court” means the Alberta Court of Queen's Bench;
“Canadian Dollars”, “Cdn. Dollars” and the symbol “Cdn. $” each means lawful money of Canada;
“Canadian Employee” means any current or former employee of a Loan Party or a Subsidiary of a Loan
Party organized under the laws of Canada (or any province or territory thereof);
“Canadian Employee Benefits Legislation” means the Canada Pension Plan (Canada), the Pension
Benefits Standards Act (Canada), and any similar Canadian federal, provincial or local laws that may
22883504.11
6
apply to any Canadian Employee or any Canadian Employee Plan and the Income Tax Act (Canada), in
each case, as such legislation may be amended from time to time, and the regulations thereunder;
“Canadian Employee Plan” means any employee benefit, health, welfare, supplemental unemployment
benefit, bonus, pension (other than a Canadian Pension Plan), supplemental pension, profit sharing,
retiring allowance, severance, deferred compensation, stock compensation, stock purchase, retirement,
life, hospitalization insurance, medical, dental, disability or other employee group or similar benefit or
employment plans or supplemental arrangements maintained by or contributed to by a Loan Party for the
benefit of its Canadian Employees, other than statutory plans maintained by a governmental authority;
“Canadian Pension Plan” means any “pension plan” required to be registered under the Income Tax Act
(Canada) and contributed to by a Loan Party for its Canadian Employees, within the meaning of the
Canadian Employee Benefits Legislation, but does not include the Canada Pension Plan maintained by
the Government of Canada or, if applicable, the Quebec Pension Plan maintained by the Government of
Quebec;
“Canadian Sanctions Designated Person” has the meaning given to it in Section 2.1(y);
“Capital Lease” means, with respect to any person, any lease of property, real or personal, which would,
in accordance with Generally Accepted Accounting Principles, be required to be classified and accounted
for as a capital lease on a balance sheet of a lessee, where the lessee is such person, but for certainty,
excluding any operating leases (determined in accordance with GAAP as at December 31, 2010) and any
leases with respect to mineral leases;
“CCAA” means the Companies' Creditors Arrangement Act (Canada);
“CCAA Proceedings” means the proceedings to be commenced in Canada by the Loan Parties before the
Canadian Court pursuant to the CCAA;
“Cdn. Prime Loans” means the advances made available by the Lenders to the Borrower in Canadian
Dollars having a floating rate of interest based on the Cdn. Prime Rate plus the Applicable Pricing
Margin;
“Cdn. Prime Rate” means, with respect to Cdn. Prime Loans on any day, the greater of:
(a)
the annual rate of interest announced from time to time by the Agent as being its reference rate
then in effect for determining interest rates on Canadian Dollar denominated commercial loans
made by the Agent in Canada; and
(b)
the average rate for one month bankers' acceptances shown on the display referred to as the
Reuters Screen Page CDOR (or any display substituted therefor) of Reuter Monitor Money Rates
Service at 8:00 a.m. (Calgary time) on such day plus 1.00%;
provided that if for any reason the rate in (b) immediately above does not appear or is otherwise
unavailable, then the “Cdn. Prime Rate” shall be the rate specified in (a) immediately above;
“Chapter 15” means Chapter 15 of the Bankruptcy Code;
“Chapter 15 Recognition Order” means the issuance by the U.S. Court of a final order pursuant to
Chapter 15 to have the CCAA Proceedings finally recognized by the U.S. Court, which order shall be
satisfactory to the Agent and substantially in the form attached hereto as Schedule “M”;
22883504.11
7
“Code” has the meaning given to it in Section 6.3(d);
“Collateral” has the meaning specified in the definition of “Lender Charge” in this Agreement;
“Commitment” means in relation to a Lender, the maximum principal amount such Lender has agreed to
make available to the Borrower under the Credit Facility as set forth opposite such Lender's name in
Schedule “A” hereto or in the Assignment and Assumption Agreement of such Lender as such Lender's
Credit Commitment, as hereafter increased, decreased, cancelled or terminated from time to time pursuant
to this Agreement;
“Communications” means, collectively, any notice, demand, communication, information, document or
other material that the Borrower, any other Loan Party or any of their respective Affiliates or advisors
provides to the Agent pursuant to any Loan Document or the transactions contemplated therein which is
distributed to the Agent or any Lender by means of electronic communications pursuant to this
Agreement, including through the Platform;
“Compliance Certificate” means a compliance certificate substantially in the form attached hereto as
Schedule "D" executed on behalf of the Borrower by any of the president, chief financial officer or vice
president finance of the Borrower;
“Credit Card Charge” means a charge granted by the Canadian Court pursuant to the Initial Order and
recognized and given effect to by the U.S. Court, in each case, over all present and future assets and
property of the Loan Parties, real and personal, tangible or intangible, and whether now owned or which
are hereafter acquired or otherwise become the property of a Loan Party in favour of The Bank of Nova
Scotia in respect of its credit card facilities, provided that such Credit Card Charge shall (y) not exceed an
aggregate amount of Cdn. $250,000, and (z) be subordinate to the Lender Charge and other Permitted
Priority Liens;
“Credit Facility” means the interim credit facility to be made available by the Lenders to the Borrower
under this Agreement and subject to the terms hereof;
“Credit Facility Indebtedness” means all Indebtedness, liabilities and obligations of the Borrower to the
Lenders and the Agent with respect to the Credit Facility arising under this Agreement and any other
Loan Documents, including without limitation, all Borrowings and all interest, fees, costs, expenses and
other amounts of any nature or kind payable by the Borrower;
“Critical Suppliers” has the meaning specified in the definition of “Critical Supplier Charge” in this
Agreement;
“Critical Supplier Charge” means a charge granted by the Canadian Court pursuant to the Initial Order
and recognized and given effect to by the U.S. Court, in each case, over all present and future assets and
property of the Loan Parties, real and personal, tangible or intangible, and whether now owned or which
are hereafter acquired or otherwise become the property of a Loan Party in favour of any supplier of any
Loan Party declared to be a critical supplier within the meaning of Section 11.4 of the CCAA
(collectively, the “Critical Suppliers”) in an amount equal to the value of the goods and services
supplied by such suppliers after the commencement of the CCAA Proceedings, provided that such
Critical Supplier Charge shall (y) not exceed an aggregate amount of Cdn. $20,000,000, and (z) be
subordinate to the Lender Charge and other Permitted Priority Liens;
“Debtor Relief Laws” means the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors
Arrangement Act (Canada), and all other liquidation, conservatorship, bankruptcy, assignment for the
22883504.11
8
benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of Canada, the U.S. or other applicable jurisdictions from time to time in effect;
“Default” means any event or circumstance which, with the giving of notice or lapse of time or
otherwise, would constitute an Event of Default;
“Defaulting Lender” means, subject to Section 3.19(b), any Lender that:
(a)
has failed to (i) fund all or any portion of its Borrowings within two Business Days of the date
such Borrowings were required to be funded hereunder unless such Lender notifies the Agent and
the Borrower in writing that such failure is the result of such Lender's determination that one or
more conditions precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii)
pay to the Agent or any other Lender any other amount required to be paid by it hereunder within
two Business Days of the date when due;
(b)
has notified the Borrower or the Agent in writing that it does not intend to comply with its
funding obligations hereunder, or has made a public statement to that effect (unless such writing
or public statement relates to such Lender's obligation to fund a Borrowing hereunder and states
that such position is based on such Lender's determination that a condition precedent to funding
(which condition precedent, together with any applicable default, shall be specifically identified
in such writing or public statement) cannot be satisfied);
(c)
has failed, within three Business Days after written request by the Agent or the Borrower, to
confirm in writing to the Agent and the Borrower that it will comply with its prospective funding
obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant
to this clause (c) upon receipt of such written confirmation by the Agent and the Borrower); or
(d)
has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding
under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator,
trustee, administrator, assignee for the benefit of creditors or similar person charged with
reorganization or liquidation of its business or assets,
provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of
any equity interest in that Lender or any direct or indirect parent company thereof by a governmental
authority so long as such ownership interest does not result in or provide such Lender with immunity
from the jurisdiction of courts within Canada or the U.S. or other applicable jurisdictions or from the
enforcement of judgments or writs of attachment on its assets or permit such Lender (or such
governmental authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender. Any determination by the Agent that a Lender is a Defaulting Lender under clauses (a)
through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed
to be a Defaulting Lender (subject to Section 3.19(b)) upon delivery of written notice of such
determination to the Borrower and each Lender;
“Directors' Charge” means a charge granted by the Canadian Court pursuant to the Initial Order and
recognized and given effect to by the U.S. Court, in each case, over all present and future assets and
property of the Loan Parties, real and personal, tangible or intangible, and whether now owned or which
are hereafter acquired or otherwise become the property of a Loan Party in favour of any former current
or future directors or officers of the Loan Parties or the Administrator, provided that such Directors’
Charge shall (y) not exceed an aggregate amount of Cdn. $5,000,000, and (z) be subordinate to the
Lender Charge and other Permitted Priority Liens;
22883504.11
9
“Distribution” means, in respect of a Loan Party,
(a)
any declaration, order or payment by it of dividends or other capital distributions;
(b)
any redemption, retraction, purchase or other acquisition by it of its shares or partnership units, as
the case may be, directly or indirectly;
(c)
any payment by it of principal or other amounts in respect of Indebtedness owed to any of its
shareholders or partners or any Affiliate of any such shareholders or partners;
(d)
any transfer by it of its property for consideration less than fair market value to any of its
shareholders or partners or any Affiliate of any such shareholders or partners;
(e)
any loan, advance, or other payment of any kind by it to any of its shareholders or partners or any
Affiliate of any such shareholders or partners; or
(f)
all amounts deducted in the calculation of net income in respect of discretionary management
bonuses declared and payable to the shareholders of the Borrower,
other than in any case if payable solely in common equity of the Borrower;
“Distribution Order” has the meaning given to it in the definition of “Milestones”;
“Drawdown” means a borrowing of funds;
“Drawdown Date” means a Business Day specified in a Drawdown Notice as the date on which a
Drawdown shall occur;
“Drawdown Notice” means a notice substantially in the form attached hereto as Schedule “B”.
“Effective Date” has the meaning given to it in Section 8.1;
“Employee Plan” means an employee pension benefit plan as defined in Section 3(2) of ERISA (other
than a Multiemployer Plan) and subject to Title IV of ERISA and maintained for employees of any Loan
Party or any of its ERISA Affiliates;
“Environmental Laws” means any and all federal, provincial, local, state and foreign statutes, laws,
regulations, ordinances, rules, decrees or other governmental restrictions relating to the environment, to
the release of any materials into the environment or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals, industrial
substances, toxic substances, hazardous substances or wastes but only to the extent such Environmental
Laws are legally applicable to any Loan Party or any of its Subsidiaries;
“Equivalent Amount” in one currency (the “First Currency”) of an amount in another currency (the
“Other Currency”) means, as of the date of determination, the amount of the First Currency which
would be required to purchase such amount of the Other Currency at the Bank of Canada noon (Toronto
time) mid-point spot rate for such currencies on such date of determination (as quoted or published from
time to time by the Bank of Canada) or, if such date of determination is not a Business Day, on the
Business Day immediately preceding such date of determination, or at such other rate as may have been
agreed to by the Borrower and the Agent;
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended;
22883504.11
10
“ERISA Affiliate” means, with respect to any Person, any trade or business (whether or not incorporated)
which is a member of a group of which such Person is a member and which would be deemed to be a
“controlled group” within the meaning of Sections 414(b), (c), (m) and (o) of the U.S. Internal Revenue
Code;
“Event of Default” means any of the events or circumstances specified in Section 10.1;
“Excess Negative Cash Flow Variance” means, in respect of any period of four consecutive weeks
ending on Friday of the prior week (provided that notwithstanding the foregoing, for calculations in
respect to the first three weeks of the Agreed Budget such calculation shall be based on one, two and three
consecutive weeks, respectively):
(a)
where there is Positive Projected Cash Flow for such period, that:
(i)
the difference between (A) the Loan Parties' actual aggregate cash receipts in such period
minus (B) the Loan Parties' actual aggregate cash expenditures and outflows in such period
(excluding any expenditures or outflows as set out in the Agreed Budget attributable to the
payment of prefiling amounts to prevent the filing of liens or release filed liens),
is less than
(ii)
the difference between (X) the Positive Projected Cash Flow for such period minus (Y)
Cdn.$5,000,000; or
(b)
where there is Negative Projected Cash Flow for such period, that:
(i)
the difference between (A) the Loan Parties' actual aggregate cash expenditures and
outflows in such period (excluding any expenditures or outflows as set out in the Agreed Budget
attributable to the payment of prefiling amounts to prevent the filing of liens or release filed
liens), minus (B) the Loan Parties' actual aggregate cash receipts in such period
is more than
(ii)
the sum of (X) the Negative Projected Cash Flow for such period plus (Y)
Cdn.$5,000,000;
“FATCA” means sections 1471 through 1474 of the Code, as of the date of this Agreement (or any
amended or successor version that is substantively comparable and not materially more onerous to
comply with), any current or future regulations or official interpretations thereof and any agreements
entered into pursuant to Section 1471(b)(1) of the Code;
“Federal Funds Rate” means, for any day, the rate of interest per annum equal to (a) the weighted
average (rounded upwards, if necessary, to the next 1/100th of one percent per annum) of the annual rates
of interest on overnight Federal funds transactions with members of the Federal Reserve Board of the
U.S. (or any successor thereof) arranged by Federal funds brokers on such day, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York (or any successor thereto) or, (b) if
such day is not a Business Day, such weighted average for the immediately preceding Business Day for
which the same is published or, (c) if such rate is not so published for any day that is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100th of one percent per annum) of the quotations
for such day on such transactions received by the Agent from three Federal funds brokers of recognized
standing selected by the Agent;
22883504.11
11
“Final U.S. DIP Order” means a final order of the U.S. Court presiding over U.S. Proceedings (i)
approving liens in favor of the Lenders on assets located in the territorial jurisdiction of the United States
and (ii) granting adequate protection to Pre-Filing Secured Creditors under the Pre-Filing Secured Credit
Agreement, which order shall be satisfactory to the Agent and substantially consistent in form and
substance (except with regard to finality) with the Interim U.S. DIP Order.
“Financial Advisors' Charge” means a charge granted by the Canadian Court pursuant to the Initial
Order and recognized and given effect to by the U.S. Court, in each case, over all present and future
assets and property of the Loan Parties, real and personal, tangible or intangible, and whether now owned
or which are hereafter acquired or otherwise become the property of a Loan Party in favour of the
financial advisors to the Borrower, the Guarantors, and/or the Agent and the Lenders, provided that such
Financial Advisors' Charge shall (y) not exceed an aggregate amount of U.S. $6,600,000, and (z) be
subordinate to the Lender Charge and other Permitted Priority Liens;
“Financial Assistance” means, with respect to any person and without duplication, any loan, Guarantee,
indemnity, assurance, acceptance, extension of credit, loan purchase, share purchase, equity or capital
contribution, investment or other form of direct or indirect financial assistance or support of any other
person or any obligation (contingent or otherwise) and includes any Guarantee of or indemnity in respect
of the Indebtedness of the other person and any absolute or contingent obligation to (directly or
indirectly):
(a)
advance or supply funds for the payment or purchase of any Indebtedness of any other person;
(b)
purchase, sell or lease (as lessee or lessor) any property, assets, goods, services, materials or
supplies primarily for the purpose of enabling any person to make payment of Indebtedness or to
assure the holder thereof against loss;
(c)
Guarantee, indemnify, hold harmless or otherwise become liable to any creditor of any other
person from or against any losses, liabilities or damages in respect of Indebtedness;
(d)
make a payment to another for goods, property or services regardless of the non-delivery or nonfurnishing thereof to the Borrower or any Subsidiary (as applicable); or
(e)
make an advance, loan or other extension of credit to or to make any subscription for equity,
equity or capital contribution, or investment in or to maintain the capital, working capital,
solvency or general financial condition of another person.
The amount of any Financial Assistance is the amount of any loan or direct or indirect financial assistance
or support, without duplication, given, or all Indebtedness of the obligor to which the Financial
Assistance relates, unless the Financial Assistance is limited to a determinable amount, in which case the
amount of the Financial Assistance is the determinable amount, provided that notwithstanding the
foregoing, if any Financial Assistance is subsequently forgiven or otherwise written off, the amount of
such Financial Assistance shall thereafter be deemed to be zero;
“Fiscal Quarter” means the three month period commencing on the first day of each Fiscal Year and
each successive three month period thereafter during such Fiscal Year;
“Fiscal Year” means the one year period commencing on May 1 of each year and ending on April 30 of
the subsequent year, or such other period as may be agreed to by the Borrower and the Agent;
22883504.11
12
“Fixed Assets” means, as of the date of determination, all property, plant and equipment of the Loan
Parties, classified as such on a balance sheet in accordance with GAAP;
“Generally Accepted Accounting Principles” or “GAAP” means generally accepted accounting
standards for private enterprises which are in effect from time to time in Canada;
“Guarantee” means any undertaking to assume, guarantee, endorse (other than the routine endorsement
of cheques in the ordinary course of business), contingently agree to purchase or to provide funds for the
payment of, or otherwise become liable in respect of, any obligation of any person;
“Guarantors” means, collectively, Sanjel Corporation, Sanjel Canada Ltd., Terracor Group Ltd.,
Suretech Group Ltd., Suretech Completions Canada Ltd., Sanjel Energy Services (USA) Inc., Sanjel
(USA) Inc., Suretech Completions (USA) Inc., Sanjel Capital (USA) Inc., Terracor (USA) Inc., Terracor
Resources (USA) Inc., Terracor Logistics (USA) Inc., Sanjel Middle East Ltd., Sanjel Latin America
Limited and Sanjel Energy Services DMCC, each of which has executed and delivered the Loan Party
Guarantee.
“Hazardous Materials” means any substance, product, liquid, waste, pollutant, chemical, contaminant,
insecticide, pesticide, gaseous or solid matter, organic or inorganic matter, fuel, micro-organism, ray,
odour, radiation, energy, vector, plasma, constituent, material or any combination thereof which (a) is
regulated or prohibited under any Environmental Law, or (b) is hazardous, hazardous waste, toxic, a
pollutant, a deleterious substance, a contaminant or a source of pollution or contamination under any
Environmental Law, including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law;
“Indebtedness” means, with respect to any person (“X”), all obligations, liabilities and indebtedness of X
which would, in accordance with Generally Accepted Accounting Principles, be classified upon a
consolidated balance sheet of X as indebtedness for borrowed money of X and its Subsidiaries and,
whether or not so classified, shall include (without duplication):
(a)
indebtedness for borrowed money;
(b)
obligations for the repayment of (i) letters of credit and letters of guarantee supporting obligations
which would otherwise constitute Indebtedness within the meaning of this definition or
indemnities issued in connection therewith or (ii) bankers' acceptances (including payment and
reimbursement obligations in respect thereof);
(c)
obligations with respect to the reimbursement of drawings under all other letters of credit and
letters of guarantee;
(d)
obligations under Guarantees, indemnities, assurances, legally binding comfort letters or other
contingent obligations for the repayment of indebtedness or other obligations of any other person
which would otherwise constitute Indebtedness within the meaning of this definition and all other
obligations incurred for the purpose of or having the effect of providing Financial Assistance to
another person for the repayment of such indebtedness or such other Indebtedness, including,
without limitation, endorsements of bills of exchange (other than for collection or deposit in the
ordinary course of business);
(e)
(i)
22883504.11
all indebtedness or obligations representing the deferred purchase price of any property
(including obligations secured by any Purchase-Money Security Interests) to the extent
13
that such indebtedness or obligations is or remains unpaid after the expiry of the
customary time period for payment (excluding current accounts payable to trade creditors
in the ordinary course of business, so long as the same are not outstanding longer than is
customary in X's or the applicable Subsidiary's business), provided however that such
time period shall in no event exceed 90 days;
(ii)
all obligations created or arising under any conditional sales agreement or other title
retention agreement; and
(iii)
all obligations created or arising under any Capital Lease;
(f)
all obligations (whether or not with respect to the borrowing of money) that are evidenced by
bonds, debentures, notes or other similar instruments, whether or not any such instruments are
convertible into capital but including without limitation, any indebtedness or liabilities of such
person that may be satisfied by the delivery of shares of such person to the holder thereof or to
another person on behalf of the holder, or that are not so evidenced but that would be considered
by GAAP to be indebtedness for borrowed money;
(g)
all obligations of such person for or in respect of the purchase price from such person of any of its
property, assets or undertaking, the purchase price in respect of which has been prepaid by the
purchaser;
(h)
all Attributable Debt other than in respect of premises leases;
(i)
all other long term obligations (including the current portion thereof) upon which interest charges
are customarily paid prior to default; and
(j)
all indebtedness of other persons secured by a Security Interest on any asset, whether or not such
indebtedness is assumed thereby, provided that the amount of such indebtedness shall be the
lesser of (i) the fair market value of such asset at such date of determination, and (ii) the amount
of such indebtedness shall only be Indebtedness to the extent recorded as a liability in accordance
with Generally Accepted Accounting Principles,
but shall exclude each of the following, determined (as required) in accordance with Generally Accepted
Accounting Principles:
(i)
mark to market amounts under hedging instruments;
(ii)
accounts payable to trade creditors and accrued liabilities incurred in the ordinary course
of business;
(iii)
current taxes payable and future taxes;
(iv)
dividends or other equity distributions payable; and
(v)
accrued interest not yet due and payable;
“Information” has the meaning ascribed thereto in Section 13.2;
“Initial Order” means the initial order of the Canadian Court dated April 4, 2016 substantially in the
form attached hereto as Schedule “L” and otherwise in form and substance satisfactory to the Agent that,
22883504.11
14
among other things, (i) grants protection to the Loan Parties pursuant to the provisions of the CCAA, (ii)
approves the Credit Agreement, (iii) grants the Lender Charge (subject only to Permitted Priority Liens )
(iv) appoints the Monitor, as monitor; and (v) authorizes the Monitor to act as foreign representative
pursuant to Chapter 15 (as such order may be amended, modified, varied or restated with the consent of
the Agent);
“Intellectual Property” means, collectively, patents, patents pending, copyrights, proprietary processes
or programs, industrial designs, trademarks, trademark applications, trade names and other intellectual
property of every nature and kind;
“Interest Date” means the last Business Day of each month;
“Interim U.S. DIP Order” means an interim order of the U.S. Court presiding over U.S. Proceedings (i)
approving liens on assets located in the territorial jurisdiction of the United States and (ii) granting
adequate protection to Pre-Filing Secured Creditors under the Pre-Filing Secured Credit Agreement,
which order shall be satisfactory to the Agent and substantially in the form attached hereto as Schedule
“N”;
“KERP/KEIP” means, collectively, (a) the key employee retention plan and (b) the key employee
incentive plan, in each case, as more particularly described in the Affidavit and the Confidential
Supplement attached as an exhibit to the Affidavit;
“KERP/KEIP Charge” means a charge granted by the Canadian Court pursuant to the Initial Order and
recognized and given effect to by the U.S. Court, in each case, over all present and future assets and
property of the Loan Parties, real and personal, tangible or intangible, and whether now owned or which
are hereafter acquired or otherwise become the property of a Loan Party in respect of the KERP/KEIP,
provided that such KERP/KEIP Charge shall (y) not exceed an aggregate amount of Cdn. $2,850,000, and
(z) be subordinate to the Lender Charge and other Permitted Priority Liens;
“Lender Charge” means, collectively, the super- priority charge granted by the Canadian Court pursuant
to the Initial Order and recognized and given effect to by the U.S. Court, in each case, over all present and
future assets and property of the Loan Parties, real and personal, tangible or intangible, and whether now
owned or which are hereafter acquired or otherwise become the property of a Loan Party in favour of the
Agent and the Lenders (collectively, the “Collateral”);
“Lenders’ Financial Advisor” means Ernst & Young LLP, in its capacity as financial advisor to the
Lenders;
“Lender's Proportion” means, in relation to the Credit Facility, in respect of each Lender, the proportion
that such Lender's Commitment bears to the aggregate of the Commitments of all Lenders;
“Lenders” means each of the financial institutions named on the signature pages hereto as Lenders and
any other person or persons which become party to this Agreement as Lenders pursuant to Article 13 and
their respective successors and permitted assigns, and “Lender” means any one of them;
“LIBOR” means, with respect to any period applicable, a per annum rate of interest, based on a three
hundred and sixty (360) day year, equal to the applicable LIBOR Screen Rate, provided that if the period
is for a period for which a LIBOR Screen Rate is not available, then LIBOR shall be equal to the Agent's
cost of funds in the LIBOR market as advised by the Agent acting reasonably and in a manner consistent
with comparable Borrower and transactions, in each case at 11:00 a.m. (London, England time), two (2)
22883504.11
15
Business Days before the first day of the applicable period in an amount substantially equal to the
applicable amount and for a period equal to such period;
“Loans” means Cdn. Prime Loans and U.S. Base Rate Loans;
“Loan Documents” means this Agreement, the Security, arrangement/syndication fee agreements,
agency agreements, and all other agreements, certificates, instruments and documents delivered by or on
behalf of any Loan Party in connection herewith or therewith from time to time and all future renewals,
extensions, or restatements of, or amendments, modifications or supplements to, all or any part of the
foregoing;
“Loan Parties” means collectively, the Borrower and the Guarantors, and “Loan Party” means any one
of them;
“Loan Party Guarantee” means, collectively, the unlimited guarantee and indemnity (including any
addition agreements executed in connection therewith) governed by the laws of the Province of Alberta,
in form satisfactory to the Agent, executed by each Loan Party in favour of the Agent in respect of the
Secured Obligations of each other Loan Party, and each other guarantee executed by a Loan Party
governed by the laws of any other jurisdiction, if requested by the Agent, acting reasonably;
“MacBain” means MacBain Properties Ltd., a corporation governed by the laws of the Province of
Alberta;
“Majority Lenders” means:
(a)
where there are fewer than three (3) Lenders, all the Lenders; and
(b)
where there are three (3) or more Lenders, any Lender or group of Lenders having Lender's
Proportions in aggregate, of 66.67%;
provided that any Defaulting Lender (in the case of subsection (a) above) or the Commitment of any
Defaulting Lender (in the case of subsection (b) above) shall be disregarded in determining Majority
Lenders at any time;
“Material Adverse Change” means a material adverse change in:
(a)
the business, financial condition, operations, assets, management, properties or financial
prospects of the Loan Parties on a combined basis;
(b)
the validity or enforceability of this Agreement or any other Loan Document or the validity or
enforceability of any of the Lender Charge or the ranking of any of the Security Interests granted thereby
or the material rights or remedies intended or purported to be granted to the Agent and the Lenders under
or pursuant to such Lender Charge; or
(c)
the ability of any Loan Party to perform any material obligation under this Agreement, any other
Loan Document or any Restructuring Court Order, or the ability of any Loan Party to carry out an
Approved Sale or Alternative Restructuring Option;
22883504.11
16
“Material Adverse Effect” means a material adverse effect upon:
(a)
the business, financial condition, operations, assets, management, properties or financial
prospects of the Loan Parties on a combined basis;
(b)
the validity or enforceability of this Agreement or any other Loan Document or the validity or
enforceability of any of the Lender Charge or the ranking of any of the Security Interests granted
thereby or the material rights or remedies intended or purported to be granted to the Agent and
the Lenders under or pursuant to such Lender Charge; or
(c)
the ability of any Loan Party to perform any material obligation under this Agreement, any other
Loan Document or any Restructuring Court Order, or the ability of any Loan Party to carry out a
an Approved Sale or Alternative Restructuring Option;
“Material Subsidiary” means each of the Subsidiaries of the Borrower specified in Section 2.1(s), each
of which is also a Guarantor.
“Maturity Date” means, the earlier to occur of: (a) May 30, 2016; (b) the effective date of a Plan; (c) the
closing (the “APA Closing”) of a sale of all or substantially all of the assets of the Loan Parties pursuant
to agreement(s) of purchase and sale satisfactory to the Agent and Lenders (each an “APA”); and (d) the
date of delivery of an Acceleration Notice or the occurrence of an Acceleration Event.
“Milestones” means, unless otherwise agreed to by the Agent and the Majority Lenders, each of the
following events:
(a)
reasonable best efforts shall be made by the Borrower to have the U.S. Court enter the U.S. TRO
Order on or prior to one (1) Business Day after the date of the Initial Order, and in any case on or
prior to two (2) Business Days after the date of the Initial Order, the U.S. Court shall have entered
the U.S. TRO Order;
(b)
reasonable best efforts shall be made by the Borrower to have the U.S. Court enter the Interim
U.S. DIP Order on or prior to three (3) Business Days after the date of the Initial Order, and in
any case on or prior to four (4) Business Days after the date of the Initial Order, the U.S. Court
shall have entered the Interim U.S. DIP Order;
(c)
unless the Loan Parties have identified an Alternate Restructuring Option satisfactory to the
Agent and the Lenders on or prior to April 11, 2016 to be implemented through a Plan, by April
11, 2016, the Loan Parties shall have filed a motion seeking (i) an order or orders (each
an “AVO”) approving one or more APAs and vesting the assets of the Loan Parties in the
purchaser(s) on an APA Closing; and (ii) an order (the “Distribution Order”) authorizing the
distribution of the proceeds of sale from the APA(s) to first repay the Secured Obligations,
subject only to a holdback in an amount necessary to satisfy Permitted Priority Liens and accrued
but unpaid post-filing payables and second, the obligations owing by the Loan Parties to the PreFiling Secured Creditors under the Pre-Filing Secured Credit Agreement and related documents,
subject only to a holdback in an amount necessary to satisfy obligations secured by Security
Interests ranking in priority to the Pre-Filing Security, in each case, with the holdback to be as
determined by the Monitor with the consent of the Loan Parties and the Agent or in such amount
otherwise ordered by the Canadian Court;
22883504.11
17
(d)
provided that no Alternative Restructuring Option has been identified by the requisite time, on or
prior to April 12, 2016, the Loan Paries shall have filed with the U.S. Court a motion seeking an
order recognizing the AVO and Distribution Order.
(e)
provided that no Alternative Restructuring Option has been identified by the requisite time,
reasonable best efforts shall be made by the Borrwer to have the Canadian Court issue the AVO
and Distribution Order by April 25, 2016, and in any case prior to April 29, 2016, the Canadian
Court shall have issued the AVO and the Distribution Order;
(f)
subject only to availability of the U.S. Court, on or prior to twenty-one (21) days after the date the
U.S. Court enters the Interim U.S. DIP Order, the U.S. Court shall have entered the Final U.S.
DIP Order (if the U.S. Court does not have the requisite availability, this Milestone is to be
discharged on the U.S. Court’s next available date);
(g)
on or prior to April 29, 2016, the U.S. Court shall have entered the Chapter 15 Recognition
Order;
(h)
provided that no Alternative Restructuring Option has been identified by the requisite time, the
reasonable best efforts shall be made by the Borrowerto have the U.S. Court enter an order
recognizing the AVO and the Distribution Order on or prior to May 9, 2016 and in any case prior
to May 12, 2016; and
(i)
provided that no Alternative Restructuring Option has been identified by the requisite time, by
May 16, 2016, the final APA Closing shall have occurred.
“Monitor” means Pricewaterhouse Coopers Inc., in its capacity as court appointed monitor of the Loan
Parties;
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA and
subject to Title IV of ERISA to which any Loan Party or any of its ERISA Affiliates is obligated to
contribute;
“Negative Projected Cash Flow” means, in respect of any period of four consecutive weeks ending on
Friday of the prior week, the amount by which the projected total cash inflows of the Loan Parties for
such period is less than the projected total cash outflows for such period (excluding any outflows as set
out in the Agreed Budget attributable to the payment of prefiling amounts to prevent the filing of liens or
release filed liens), in each case, as shown in the Agreed Budget, provided that notwithstanding the
foregoing, for calculations in respect to the first three weeks of the Agreed Budget such calculation shall
be based on one, two and three consecutive weeks, respectively;
“New Rules” has the meaning given to it in Section 11.2;
“Non-Core Asset Sales” means the sale of redundant or non-material assets which the Loan Parties are
permitted to undertake pursuant to the terms of the Initial Order;
“OFAC” means the United States Department of the Treasury's Office of Foreign Assets Control;
“OFAC Sanctions Programs” means (a) the Requirements of Law and Executive Orders administered
by OFAC, including, without limitation, Executive Order No. 13224 on Terrorist Financing, and (b) the
list of Specially Designated Nationals and Blocked Persons administered by OFAC, in each case, as
renewed, extended, amended, or replaced;
22883504.11
18
“Outstandings” means, at any time, the aggregate under the Credit Facility of the Equivalent Amount in
Canadian Dollars of the principal amount of outstanding Loans and all overdue and unpaid interest
outstanding in respect thereof;
“Outside Date” means April 4, 2016;
“Permitted Contest” means action taken by or on behalf of a Loan Party or a Subsidiary in good faith by
appropriate proceedings diligently pursued to contest a Tax, claim or Security Interest, provided that such
Loan Party or such Subsidiary (and, in the case of a Subsidiary, the Borrower on a consolidated basis) has
established reasonable reserves therefor if and to the extent required by GAAP;
“Permitted Dispositions” means, in respect of a Loan Party, any sale, exchange, lease, transfer or other
disposition of inventory in the ordinary course of business;
“Permitted Encumbrances” means, in respect of a Loan Party, any of the following:
(a)
the Lender Charge;
(b)
the Administration Charge and the other Permitted Priority Liens;
(c)
the Critical Supplier Charge, the Directors’ Charge, the KERP/KEIP Charge, the Credit Card
Charge and the Financial Advisors' Charge;
(d)
valid and perfected Security Interests existing prior to the Effective Date and to the extent such
Security Interests were Permitted Encumbrances (under and as defined in the Pre-Filing Secured
Credit Agreement);
(e)
inchoate statutory Security Interests arising after the Effective Date in respect of any accounts
payable arising after the Outside Date in the ordinary course of business, provided that all such
amounts are paid by the applicable Loan Party as and when due;
(f)
Security Interests for taxes, assessments or governmental charges which are not due or
delinquent, or the validity of which such Loan Party shall be contesting by a Permitted Contest;
(g)
deemed liens and trusts arising by operation of law or pledges of deposits in connection with
workers' compensation, employment insurance and other social security legislation, in each case,
which secure obligations not at the time due or delinquent or, if due or delinquent, the validity of
which is being contested at the time by a Permitted Contest;
(h)
undetermined or inchoate Security Interests incidental to operations of such Loan Party arising in
the ordinary course of business which relate to obligations not due or delinquent and which have
not at such time been filed pursuant to law;
(i)
Security Interests imposed or permitted by law such as carriers' liens, builders' liens,
materialmens' liens and other liens, privileges or other charges of a similar nature which relate to
obligations not due or delinquent or if due or delinquent, any lien, privilege or charge which such
Loan Party shall be contesting by a Permitted Contest;
(j)
easements, rights-of-way, servitudes, zoning or other similar rights or restrictions in respect of
land held by such Loan Party (including, without limitation, rights-of-way and servitudes for
railways, sewers, drains, pipe lines, gas and water mains, electric light and power and telephone
22883504.11
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or telegraph or cable television conduits, poles, wires and cables) which, either alone or in the
aggregate, do not materially detract from the value of such land or materially impair its use in the
operation of the business of the Loan Parties taken as a whole; and
(k)
Security Interests resulting from the deposit of cash or Approved Securities or Security Interests
on other assets as security when a Loan Party is required to provide such deposits or security by a
governmental authority or by normal business practice in connection with contracts, licenses or
tenders or similar matters in the ordinary course of business and for the purpose of carrying on
the same, or to secure workers' compensation, surety or appeal bonds or to secure costs of
litigation when required by applicable law,
provided that nothing in this definition shall, in and of itself, constitute or be deemed to constitute an
agreement or acknowledgment by the Agent or any Lender that the indebtedness or obligation subject to
or secured by any such Permitted Encumbrance ranks in priority to the security or indebtedness of any
Loan Party hereunder or under any other Loan Document;
“Permitted Financial Assistance” means any Financial Assistance provided by the Loan Parties on or
prior to date hereof and which was Permitted Financial Assistance (under and as defined in the Pre-Filing
Secured Credit Agreement) and any Financial Assistance provided to a Loan Party in accordance with the
Agreed Budget;
“Permitted Indebtedness” means, without duplication:
(a)
all Indebtedness of a Loan Party to the Agent or a Lender under this Agreement or under
or secured by any Loan Document;
(b)
all Indebtedness of a Loan Party to another Loan Party in accordance with the Agreed
Budget;
(c)
all Indebtedness of the Loan Parties which has been issued, created, incurred, assumed or
existed on or prior to the Effective Date and to the extent such Debt was Permitted
Indebtedness (under and as defined in the Pre-Filing Secured Credit Agreement);
(d)
Indebtedness incurred in the ordinary course of business by a Loan Party after the
Effective Date with respect to trade payables;
(e)
all Indebtedness secured by a Permitted Encumbrance; and
(f)
such other Indebtedness of a Loan Party which the Majority Lenders have consented to in
writing;
“Permitted Priority Liens” means:
(a)
the Administration Charge;
(b)
statutory security interests that by operation of law cannot be subordinated or primed by
the Lender Charge; and
(c)
such other Security Interests as may be agreed to in writing by the Agent and the
Lenders,
22883504.11
20
provided that, for greater certainty, except as expressly set forth herein, Security Interests arising from the
construction, repair, maintenance and/or improvement of real or personal property, shall not be
“Permitted Priority Liens”;
“Person” or “person” includes any individual, firm, partnership, joint venture, company, corporation,
government, governmental body, agency or instrumentality, unincorporated body of persons or
association;
“Plan” means a plan of compromise or arrangement within the CCAA Proceedings or the U.S.
Proceedings that is in form and substance satisfactory to the Agent and the Lenders;
“Platform” has the meaning given to it in Section 14.5(c);
“Positive Projected Cash Flow” means, in respect of any period of four consecutive weeks ending on
Friday of the prior week, the amount by which the projected total cash inflows of the Loan Parties for
such period exceeds the projected total cash outflows for such period (excluding any outflows as set out
in the Agreed Budget attributable to the payment of prefiling amounts to prevent the filing of liens or
release filed liens), in each case, as shown in the Agreed Budget, provided that notwithstanding the
foregoing, for calculations in respect to the first three weeks of the Agreed Budget such calculation shall
be based on one, two and three consecutive weeks, respectively;
“Pre-Filing Agent” means ATB, in its capacity as administrative agent for the lenders under the PreFiling Secured Credit Agreement;
“Pre-Filing Secured Creditors” means, collectively, each of the lenders under the Pre-Filing Secured
Credit Agreement, and the Pre-Filing Agent;
“Pre-Filing Secured Credit Agreement” means the amended and restated credit agreement dated as of
April 21, 2015 among Sanjel Corporation, as Canadian borrower, Sanjel (USA) Inc., as U.S. borrower,
the financial institutions party thereto as lender and ATB, as administrative agent and lead arranger (as
amended prior to the date hereof);
“Pre-Filing Security” means the Security Interests granted to the Pre-Filing Agent and the Pre-Filing
Secured Creditors by the Loan Parties;
“Purchase-Money Security Interests” means, in respect of a person, purchase money Security Interests
upon or in any real or personal property acquired by such person in the ordinary course of business to
secure the purchase price of such property or to secure indebtedness incurred solely for the purpose of
financing the acquisition of such property, including any Security Interests existing on such property at
the time of its acquisition;
“Receiver” means any receiver, interim receiver, manager, or receiver and manager of the Collateral or
any part thereof or the business and undertaking of any Loan Party, or any part thereof, whether appointed
by the Agent under a Loan Document or by a court pursuant to Applicable Law and any nominee of the
Agent or any other person that is appointed by the Agent to exercise all or any of the powers, rights,
benefits and discretion of the Agent under such Loan Document;
“Release” means any release, spill, emission, leak, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the environment including, without limitation, the movement of
Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or sub surface
strata;
22883504.11
21
“Released Parties” has the meaning ascribed thereto in Section 11.5;
“Releasing Parties” has the meaning ascribed thereto in Section 11.5;
“Remaining Lenders” has the meaning ascribed thereto in Section 12.16;
“Reorganizational Transaction” has the meaning ascribed thereto in Section 9.2(c);
“Restructuring Court Orders” means, collectively, the court orders made in the CCAA Proceedings and
the U.S. Proceedings applicable to a Loan Party, and “Restructuring Court Order” means any one of
such orders;
“Sanjel Canada” means Sanjel Canada Ltd., a corporation governed by the laws of the Province of
Alberta;
“Secured Obligations” has the meaning given to it in Section 7.1;
“Security” has the meaning given to it in Section 7.1 (together with any other security, Guarantees,
intercreditor agreements, subordination agreements and other agreements now or hereafter provided by
the Borrower or any other Loan Party to the Agent for the benefit of the Agent and the Lenders hereunder
in accordance with or pursuant to this Agreement);
“Security Interest” means mortgages, charges, pledges, hypothecs, assignments by way of security,
conditional sales or other title retentions, security created under the Bank Act (Canada), liens,
encumbrances, security interests or other interests in property, howsoever created or arising, whether
fixed or floating, perfected or not, which secure payment or performance of an obligation and, including,
in any event:
(a)
deposits or transfers of cash, marketable securities or other financial assets under any agreement
or arrangement whereby such cash, securities or assets may be withdrawn, returned or transferred
only upon fulfilment of any condition as to the discharge of any other indebtedness or other
obligation to any creditor;
(b)
(i) rights of set-off or (ii) any other right of or arrangement of any kind with any creditor, which
in any case are made, created or entered into, as the case may be, for the purpose of or having the
effect (directly or indirectly) of (A) securing Indebtedness, (B) preferring some holders of
Indebtedness over other holders of Indebtedness or (C) having the claims of any creditor be
satisfied prior to the claims of other creditors with or from the proceeds of any properties, assets
or revenues of any kind now owned or later acquired (other than, with respect to (C) only, rights
of set-off granted or arising in the ordinary course of business);
(c)
the rights of lessors under Capital Leases and any other lease financing, including operating
leases but excluding, for greater certainty, premises leases; and
(d)
absolute assignments of accounts receivable;
“Special Purpose Entities” means special purpose entities (whether they are corporations, limited
liability companies, joint ventures, partnerships or other forms of business organizations but excluding
any entity which is a Loan Party), owned directly or indirectly (either wholly or partially) by a Loan
Party, established for the primary purpose of financing, designing, building, operating and/or maintaining
a contract or project or operating in a particular jurisdiction, provided that any such entity shall not be
22883504.11
22
considered to be a Special Purpose Entity until such time as the Borrower has complied with the
provisions of Section 9.1(p) in connection therewith;
“Subsidiary” means, in respect of any person:
(a)
a person of which such person alone or in conjunction with its other Subsidiaries owns an
aggregate number of Voting Shares sufficient to enable the election of a majority of the directors
(or other persons performing similar functions) regardless of the manner in which other Voting
Shares are voted;
(b)
a person of which such person alone or in conjunction with its other Subsidiaries has, through the
operation of any agreement or otherwise, the ability to elect or cause the election of a majority of
the directors (or other persons performing similar functions) or otherwise exercise control over
the management and policies of such person; and
(c)
any partnership or joint venture of which such person:
(i)
is the general or managing partner; or
(ii)
directly or indirectly, owns more than 50% of the equity or beneficial interest thereof,
and shall include any person in like relation to a Subsidiary, and references herein to a Subsidiary, unless
otherwise specifically indicated herein, shall be references to a Subsidiary of the Borrower;
“Swaps” means any transaction which is a rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction, currency option, forward
sale, exchange traded futures contract or any other similar transaction (including any option with respect
to any of these transactions or any combination of these transactions);
“Taxes” means all present and future taxes, levies, imposts, stamp taxes, deductions, charges or
withholdings, and all liabilities with respect thereto, and any interest, additions to tax and penalties
imposed with respect thereto, excluding, with respect to a Lender, taxes imposed on its income or capital
and franchise taxes imposed on it by any taxation authority;
“Updated Budget” has the meaning ascribed thereto in Section 9.1(qq);
“Unsecured Notes” means the unsecured 5 year bonds in the original principal amount of U.S.
$300,000,000 issued by the Borrower under the bond agreement dated as of June 19, 2014 (the “2014
Bond Agreement”) between the Borrower, as issuer, and Nordic Trustee ASA as trustee on behalf of the
bondholders thereunder;
“U.S.” means the United States of America;
“U.S. Base Rate” means, with respect to U.S. Base Rate Loans on any day, the greatest of:
(a)
the annual rate of interest announced from time to time by the Agent as being its reference rate
then in effect for determining interest rates on U.S. Dollar denominated commercial loans made
by the Agent in Canada;
22883504.11
23
(b)
the Federal Funds Rate plus 1.00%; and
(c)
LIBOR in effect on such day for one (1) month LIBOR Loans plus 1.00%;
provided that if for any reason the rate in (b) or (c) immediately above does not appear or is otherwise
unavailable, then the “U.S. Base Rate” shall be the rate specified in (a) immediately above;
“U.S. Base Rate Loan” means the advances made available by the Lenders to the Borrower in U.S.
Dollars having a floating rate of interest based on the U.S. Base Rate plus the Applicable Pricing Margin;
“U.S. Court” means the United States Bankruptcy Court – Western District of Texas;
“U.S. Dollars” and the symbol “U.S. $” each mean lawful money of the U.S.;
“U.S. Proceedings” means the proceedings to be commenced in the United States by the Borrower and
the other Loan Parties before the U.S. Court pursuant to Chapter 15;
“U.S. TRO Order” means a temporary restraining order of the U.S. Court providing relief consistent
with the Initial Order and preliminary relief pursuant to Chapter 15, including a stay pursuant to section
362 of the Bankruptcy Code, and which shall be satisfactory to the Agent and substantially in the form
attached hereto as Schedule “O”;
“Variance Testing Date” means the second Wednesday occurring after the Outside Date and each
Wednesday thereafter;
“Voting Shares” means capital stock of any class of any corporation, partnership units of any type in any
partnership or other securities of any other person which carries voting rights to elect the board of
directors (or other persons performing similar functions) under any circumstances.
1.2
Headings and Table of Contents
The headings, the table of contents and the Article and Section titles are inserted for
convenience of reference only and shall not affect the construction or interpretation of this Agreement.
1.3
References
Unless something in the subject matter or context is inconsistent therewith, all references
to Sections, Articles and Schedules are to Sections, Articles and Schedules to this Agreement. The words
“hereto”, “herein”, “hereof”, “hereunder” and similar expressions mean and refer to this Agreement.
1.4
Rules of Interpretation
In this Agreement, unless otherwise specifically provided, the singular includes the plural
and vice versa, “month” means calendar month, and “in writing” or “written” includes printing,
typewriting, or any electronic means of communication capable of being visibly reproduced at the point
of reception, including telecopier.
1.5
Generally Accepted Accounting Principles
All financial statements required to be furnished by the Borrower to the Agent or Lenders
hereunder shall be prepared in accordance with Generally Accepted Accounting Principles consistently
applied. Each accounting term used in this Agreement, unless otherwise defined herein, has the meaning
22883504.11
24
assigned to it under Generally Accepted Accounting Principles consistently applied and reference to any
balance sheet item, statement of income and retained earnings item or statement of cash flows or changes
in cash position item means such item as computed from the applicable financial statement prepared in
accordance with Generally Accepted Accounting Principles consistently applied for the payment of public
and private debts.
1.6
Changes in Generally Accepted Accounting Principles
If there occurs a material change in generally accepted accounting principles, including
as a result of a conversion to International Financial Reporting Standards or a change in Accounting
Standards for Private Enterprises, and such change would require disclosure under GAAP in the financial
statements of the Borrower and would cause an amount required to be determined for the purposes of a
financial covenant or other covenants set forth herein to be materially different than the amount that
would be determined without giving effect to such change, the Borrower shall notify the Agent of such
change (an “Accounting Change”). Such notice (an “Accounting Change Notice”) shall describe the
nature of the Accounting Change, its effect on the current and immediately prior year's financial
statements in accordance with GAAP and state whether the Borrower desires to revise the method of
calculating one or more of the financial covenants or other covenants (including the revision of any of the
defined terms used in the determination of such financial covenant or other covenants) in order that
amounts determined after giving effect to such Accounting Change and the revised method of calculating
such financial covenant or other covenants will approximate the amount that would be determined
without giving effect to such Accounting Change and without giving effect to the revised method of
calculating such financial covenant or other covenants. The Accounting Change Notice shall be delivered
to the Agent within sixty (60) days of the end of the Fiscal Quarter in which the Accounting Change is
implemented or, if such Accounting Change is implemented in the fourth Fiscal Quarter or in respect of
an entire Fiscal Year, within ninety (90) days of the end of such period. Promptly after receipt from the
Borrower of an Accounting Change Notice, the Agent shall deliver to each Lender a copy of such notice.
If, pursuant to the Accounting Change Notice, the Borrower does not indicate that it
desires to revise the method of calculating one or more of the financial covenants or other covenants, the
Majority Lenders may within thirty (30) days of its receipt of the Accounting Change Notice notify the
Borrower that it wishes to revise the method of calculating one or more of the financial covenants or other
covenants in the manner described above. If the Majority Lenders so notify the Agent, the Agent shall
promptly notify the Borrower.
If either the Borrower or the Majority Lenders so indicate that they wish to revise the
method of calculating one or more of the financial covenants or other covenants, the Borrower, the Agent
and the Majority Lenders shall in good faith attempt to agree on a revised method of calculating the
financial covenants or other covenants. If, however, within sixty (60) days of the foregoing notice by the
Borrower or the Agent of the desire to revise the method of calculating one or more of the financial
covenants or other covenants, the Borrower and the Majority Lenders have not reached agreement in
writing on such revised method of calculation, such method of calculation shall not be revised and all
amounts to be determined thereunder shall be determined without giving effect to the Accounting
Change. For greater certainty, if no notice of a desire to revise the method of calculating the financial
covenants or other covenants in respect of an Accounting Change is given by either the Borrower or the
Majority Lenders within the applicable time period described above, the method of calculating the
financial covenants or other covenants shall not be revised in response to such Accounting Change and all
amounts to be determined pursuant to the financial covenants or other covenants shall be determined after
giving effect to such Accounting Change.
22883504.11
25
If a Compliance Certificate is delivered in respect of a Fiscal Quarter or Fiscal Year in
which an Accounting Change is implemented without giving effect to any revised method of calculating
any of the financial covenants or other covenants, and subsequently, as provided above, the method of
calculating one or more of the financial covenants or other covenants is revised in response to such
Accounting Change, or the amounts to be determined pursuant to any of the financial covenants or other
covenants are to be determined without giving effect to such Accounting Change, the Borrower shall
deliver a revised Compliance Certificate. Any Event of Default arising as a result of the Accounting
Change and which is cured by this Section 1.6 shall be deemed to be of no effect ab initio.
1.7
Time
Unless otherwise provided herein, all references to a time in this Agreement shall mean
local time in Calgary, Alberta.
1.8
Payment for Value
All payments required to be made hereunder shall be made for value on the required day
in same day immediately available funds.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1
Representations and Warranties
The Borrower represents and warrants to each of the Lenders, all of which
representations and warranties shall survive the execution and delivery of this Agreement, that:
(a)
Existence and Power: each Loan Party is a corporation validly existing and in good standing
under the laws of its jurisdiction of organization or is a limited liability company, limited
partnership, partnership or trust validly existing under the laws of its jurisdiction of organization;
each is duly registered in all other jurisdictions where the nature of its property or character of its
business requires registration, except for jurisdictions where the failure to be so registered or
qualified would not have a Material Adverse Effect, and each has all necessary power and
authority to own its properties and carry on its business as presently carried on or as contemplated
by the Loan Documents;
(b)
Power to Enter into Loan Documents: subject to the issuance of the Initial Order, each Loan
Party has full power, legal right and authority to enter into the Loan Documents to which it is a
party and do all such acts and things as are required by such Loan Documents to be done,
observed or performed, in accordance with the terms thereof;
(c)
Authority: the execution, delivery and performance by each Loan Party of each of the Loan
Documents to which it is a party:
(i)
have been duly authorized by all necessary corporate, partnership, trust and other action,
as applicable;
(ii)
are within its corporate, partnership or trust power and capacity, as applicable;
(iii)
do not violate any provision of law or of its articles of incorporation or by-laws,
partnership agreement or other constating or organizational documents, as applicable;
22883504.11
26
(iv)
do not result in the breach of or constitute a default or require any consent under, or result
in the creation of any Security Interest upon any of its property or assets pursuant to, any
indenture or other agreement or instrument to which it is a party or by which it or its
property may be bound or affected, other than under the Security; and
(v)
subject to the issuance of the Initial Order, do not require any license, consent or approval
of or advance notice to or advance filing with any governmental agency or regulatory
authority except those which have already been made or obtained and which are in full
force and effect;
(d)
Execution and Delivery of Loan Documents: each Loan Document to which a Loan Party is a
party has been duly executed and delivered by such Loan Party;
(e)
Enforceability: subject to the issuance of the Initial Order, each Loan Document to which a
Loan Party is a party is a legal, valid and binding obligation of such Loan Party, enforceable
against it in accordance with its terms except as enforceability may be limited by general
principles of equity and bankruptcy, insolvency, reorganization or laws affecting creditors' rights
generally and by moratorium laws from time to time in effect;
(f)
Financial Condition: the annual audited consolidated financial statements of the Borrower for
the Fiscal Year most recently ended and the unaudited consolidated financial statements of the
Borrower for the Fiscal Quarter most recently ended:
(i)
fairly present in all material respects the consolidated financial condition of the Borrower
as at the date thereof and the results of its operations for the period covered thereby; and
(ii)
have been prepared in accordance with Generally Accepted Accounting Principles
consistently applied;
(g)
Compliance with Judgments, Orders, etc.: no Loan Party is in default with respect to any
judgment, order, writ, injunction, decree, award, rule or regulation of any court, tribunal,
governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign or any arbitrator of any kind which, in the aggregate, would reasonably be expected to
result in the occurrence of a Material Adverse Change;
(h)
Compliance with Laws and Contracts: each Loan Party is in compliance with all federal,
provincial, state and local laws, rules, regulations and orders of governmental authorities,
including, without limitation, Environmental Laws, and with all contracts, agreements and
employee benefit plans to which it is a party or to which it is subject, except in each case to the
extent failure to so comply would not reasonably be expected to have a Material Adverse Effect
or is otherwise contemplated by the Initial Order;
(i)
Permits: each Loan Party has obtained all permits, licenses and other authorizations which are
required under all applicable federal, provincial, state and local laws, rules, regulations and orders
of governmental authorities, including, without limitation, Environmental Laws, except to the
extent failure to have any such permit, license or authorization would not reasonably be expected
to have a Material Adverse Effect; and each Loan Party is in compliance with all terms and
conditions of all such permits, licenses and authorizations, except to the extent failure to comply
would not reasonably be expected to have a Material Adverse Effect;
22883504.11
27
(j)
Environmental Notices: no Loan Party has received written notice of non-compliance with, and
except as previously disclosed to the Agent in writing, no Loan Party has knowledge after due
inquiry of any facts which would reasonably be expected to give rise to any notice of noncompliance with, any Environmental Laws, which non-compliance would reasonably be expected
to have a Material Adverse Effect, and no Loan Party has received any notice that it is a
potentially responsible party for a federal, provincial, state, regional, municipal or local clean up
or corrective action in connection with its assets and properties where such clean up or corrective
action would reasonably be expected to have a Material Adverse Effect;
(k)
Intellectual Property: each Loan Party has, or has the legal right to use, all Intellectual Property
necessary for the operation and conduct of its business, affairs, operations and processes, except
to the extent that the failure to have the same would not reasonably be expected to have a
Material Adverse Effect and, to the best of its knowledge and belief, no person has asserted any
claim or taken any step or proceeding to prohibit or limit its use of such Intellectual Property in
respect of which claim, step or proceeding there is a reasonable likelihood of an adverse
determination and which, if determined adversely, would reasonably be expected to have a
Material Adverse Effect;
(l)
Events of Default: no Default or Event of Default has occurred which is continuing;
(m)
Title to Assets: subject to Permitted Encumbrances, each Loan Party has good, valid and
marketable title to all of its assets and properties, and none of such assets or properties are subject
to a Security Interest other than a Permitted Encumbrance;
(n)
Indebtedness:
Indebtedness;
(o)
Taxes: each Loan Party has filed all income tax returns which were required to be filed by it, has
paid or made provision for payment of all Taxes (including interest and penalties) which are due
and payable by it, or has provided adequate reserves for the payment of any Tax in accordance
with GAAP, the payment of which is being contested by a Permitted Contest;
(p)
Insurance: each Loan Party has in full force and effect such policies of insurance in such
amounts issued by insurers of recognized standing covering its assets and operations as are
customarily maintained by persons engaged in the same or similar business of similar size or
holding the same or similar assets in the localities where such assets or operations are located;
(q)
Information: all information and data provided by a Loan Party or any of its Subsidiaries to the
Agent or the Lenders with respect to the assets, liabilities, operations, financial condition and
expectations, structure, ownership and any other matter respecting the Loan Parties and their
Subsidiaries are substantially accurate and fairly reflect the matters described therein;
(r)
Ownership: as of the Effective Date, the Borrower is the legal and beneficial owner, directly or
indirectly, of all of the issued and outstanding shares (including Voting Shares) and other
ownership interests in the capital of each Material Subsidiary;
(s)
Material Subsidiaries: as of the Effective Date, the only Material Subsidiaries are Sanjel
Canada Ltd., Terracor Group Ltd., Suretech Group Ltd., Suretech Completions Canada Ltd.,
Sanjel Energy Services (USA) Inc., Sanjel (USA) Inc., Suretech Completions (USA) Inc., Sanjel
Capital (USA) Inc., Terracor (USA) Inc., Terracor Resources (USA) Inc., Terracor Logistics
22883504.11
no Loan Party has any Indebtedness outstanding other than Permitted
28
(USA) Inc., Sanjel Middle East Ltd., Sanjel Latin America Limited and Sanjel Energy Services
DMCC;
(t)
Special Purpose Entities: as of the Effective Date, the only Special Purpose Entities are Sanjel
International Saudi Arabia Ltd. and Servicios Integrales Sanjel, S. de R.L. de C.V.;
(u)
Subsidiaries: as of the Effective Date hereof, Schedule “I” contains a description of the
Borrower and all of its Subsidiaries and Special Purpose Entities and all of its non-Subsidiary
investments, their jurisdiction of formation and the ownership thereof and the location of their
respective businesses and material assets;
(v)
[reserved]
(w)
[reserved]
(x)
Use of Borrowings: the Borrower's use of the proceeds of Borrowings obtained by it (and the
request of Accommodations therefor) complies with the requirements of Section 3.2 hereof;
(y)
Canadian Sanctions: neither the Borrower nor any Affiliate thereof (i) is a person described or
designated under the provisions of the Special Economic Measures Act (Canada), the United
Nations Act (Canada) or the Freezing Assets of Corrupt Officials Act (Canada) or any associated
regulations (each a “Canadian Sanctions Designated Person”), or (ii) engages in any dealings
or transactions with any Canadian Sanctions Designated Person;
(z)
Anti-Money Laundering and Anti-Terrorism: no Loan Party nor any Subsidiary thereof has
violated or is in violation of the Anti-Money Laundering and Anti-Terrorism Laws;
(aa)
U.S. Sanctions: no Loan Party nor any Subsidiary thereof (i) is a Blocked Person or conducts
any business with or for the benefit of a Blocked Person, or (ii) deals in any property blocked or
subject to blocking pursuant to any OFAC Sanctions Programs;
(bb)
Anti-Corruption Laws: the Loan Parties are in compliance with all Anti-Corruption Laws.
(cc)
Agreed Budget and Updated Budgets: the Agreed Budget and each Updated Budget (when the
same is delivered) are reasonable and have been prepared in good faith;
(dd)
Payroll Obligations: no Loan Party has defaulted in respect of its obligations for payroll and
source deductions or is in arrears in respect of the payment of any such obligations;
(ee)
Material Adverse Change: no material adverse change in the financial condition of any Loan
Party or any matter that has had, or would reasonably be expected to result in the occurrence of a
Material Adverse Change has occurred since the date hereof; and
(ff)
Compliance with Pension Laws:
(i)
22883504.11
no event (other than routine claims for benefits) has occurred, or is reasonably expected
to occur, with respect to any “employee benefit plan” (as defined in section 3(3) of
ERISA) of the Borrower, any ERISA Subsidiary, or any ERISA Affiliate which
individually or in the aggregate could result in the occurrence of a Material Adverse
Change;
29
(ii)
neither the Borrower, any ERISA Subsidiary nor any ERISA Affiliate sponsors,
maintains, or contributes to an “employee welfare benefit plan” (as defined in section
3(1) of ERISA), which provides benefits (other than in accordance with Section 4980B of
the Code) to former employees of such entities and may not be terminated by the
Borrower, such ERISA Subsidiary or such ERISA Affiliate in its sole discretion at any
time without resulting in the occurrence of a Material Adverse Change; and
(iii)
neither the Borrower, any ERISA Subsidiary nor any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the six-year period preceding the date
hereof sponsored, maintained or contributed to, any Pension Plan;
2.2
Deemed Representation and Warranty
Each request by the Borrower for a Drawdown shall be deemed to be a representation and
warranty by the Borrower to the Lenders that the representations and warranties referred to in Section 2.1
are, as of the date of such request, and will be, as of the applicable Drawdown Date true and correct as of
each such date and that as of such date no Default or Event of Default has occurred and is continuing.
ARTICLE 3
THE CREDIT FACILITY
3.1
Obligations of Each Lender
Relying on each of the representations and warranties set out in Article 2 and subject to
the terms and conditions of this Agreement each Lender agrees to make Accommodations available under
the Credit Facility to the Borrower up to the amount of its Commitment for the purposes set forth in
Section 3.2, provided that aggregate Borrowings under the Credit Facility shall not exceed the aggregate
of such Lenders’ Commitment.
3.2
Purposes of Credit Facility
The Borrower shall use the proceeds of the Credit Facility solely for the purposes
permitted pursuant to Section 9.1(tt).
3.3
Borrowing Not to Exceed Commitments
No Lender shall have any obligation at any time to make any Loans if, after giving effect
thereto, Borrowings from such Lender would exceed the Commitment of such Lender. No Lender shall be
responsible for the Commitments of any other Lender. The failure of a Lender to make available its
Lender's Proportion of any Accommodation in accordance with this Agreement shall not release any other
Lender from its obligations hereunder. The obligation of each Lender to make its Commitment available
to the Borrower is a separate obligation between that Lender and the Borrower and such obligation is not
the joint or the joint and several obligation of any other Lender.
3.4
Borrowings
Subject to the provisions of this Agreement, the Borrower may borrow by way of
Accommodations from each Lender, each in accordance with such Lender's Proportion of the Credit
Facility, up to such Lender's Commitment as follows:
22883504.11
30
(a)
Cdn. Prime Loans: by way of Cdn. Prime Loans from the Lenders, in minimum aggregate
amounts of Cdn. $1,000,000 and in integral multiples of Cdn. $100,000 thereafter, upon one (1)
Business Day prior written notice; and
(b)
U.S. Base Rate Loans: by way of U.S. Base Rate Loans from the Lenders, in minimum
aggregate amounts of U.S. $1,000,000 and in integral multiples of U.S. $100,000 thereafter, upon
at least one (1) Business Day prior written notice.
A Drawdown Notice shall be given to the Agent at the Agent's Branch of Account by 10:00 a.m. (Calgary
time) on Friday of each calendar week (or as otherwise required with the approval of the Monitor, the
Agent and the Lenders’ Financial Advisor) substantially in the form of Schedule "B". Upon receipt by the
Agent of each applicable Lender’s share of Accommodations pursuant to Section 12.8(a), and subject to
the satisfaction of the conditions precedent specified in this Agreement, the Agent shall make such
amounts available to the Borrower by depositing such amounts in the Borrower’s account with the Agent.
Notwithstanding anything to the contrary herein, the Borrower may from time to time deliver a
Drawdown Notice to the Agent whereby the proceeds of the Loan requested thereunder will be used for
one or more of the purposes permitted pursuant to Section 9.1(tt) but not contemplated by the Agreed
Budget (or the most recent Updated Budget), and the Lenders hereby acknowledge and agree that the
Agent may make the requested amount under such Drawdown Notice available to the Borrower with the
approval of the Monitor, the Agent and the Lenders’ Financial Advisor.
3.5
[reserved]
3.6
[reserved]
3.7
[reserved]
3.8
[reserved]
3.9
[reserved]
3.10
[reserved]
3.11
[reserved]
3.12
Notice of Repayment
The Borrower shall give the Agent, at the Agent's Branch of Account, prior written notice
of each repayment of its Borrowings under the Credit Facility in accordance with the same period of
notice required pursuant to Sections 3.4 for the initial drawdown of the basis of Borrowing being repaid,
such notice to be substantially in the form of Schedule "C".
3.13
(a)
Pro-Rata Treatment of Borrowings
Pro-Rata Borrowings: Subject to Section 3.13(b), each Accommodation and each basis of
Borrowing under the Credit Facility shall be made available by each Lender thereunder and all
repayments and reductions in respect thereof shall be made and applied in a manner so that the
proportion of Borrowings outstanding to each such Lender under the Credit Facility will, to the
extent possible, thereafter be in the same proportion as the Lender's Proportion of such Lender.
The Agent is authorized by the Borrower and each Lender to determine, in its sole and unfettered
discretion, the amount of Borrowings and each basis of Borrowing to be made available by each
22883504.11
31
Lender under the Credit Facility and the application of repayments and reductions of Borrowings
to give effect to the provisions of this Section 3.13(a) and 6.2; provided that no Lender shall, as a
result of any such determination, have Borrowings outstanding under the Credit Facility in an
amount which is in excess of the amount of such Lender's Commitment under the Credit Facility.
(b)
Agent's Discretion on Allocation: In the event it is not practicable to allocate each basis of
Borrowing in accordance with Section 3.13(a) by reason of the occurrence of circumstances
described in Section 11.2 or Section 11.3, the Agent is authorized by the Borrower and each
Lender to make such allocation as the Agent determines in its sole and unfettered discretion may
be equitable in the circumstances but no Lender shall, as a result of any such allocation, have
Borrowings under the Credit Facility in an amount which is in excess of the amount of such
Lender's Commitment under the Credit Facility.
(c)
Further Assurances: To the extent reasonably possible, the Borrower and each Lender agrees to
be bound by and to do all things necessary or appropriate to give effect to the provisions of this
Section 3.13.
3.14
[reserved]
3.15
[reserved]
3.16
Notices Irrevocable
All notices delivered by the Borrower hereunder shall be irrevocable and shall oblige the
Borrower to take the action contemplated on the date specified therein.
3.17
[reserved]
3.18
[reserved]
3.19
Defaulting Lenders
(a)
Defaulting Lender Adjustments: Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is
no longer a Defaulting Lender, to the extent permitted by applicable law:
(i)
Waivers and Amendments: such Defaulting Lender's right to approve or disapprove
any amendment, waiver or consent with respect to this Agreement shall be restricted as
set forth in the definition of Majority Lenders;
(ii)
Defaulting Lender Waterfall: any payment of principal, interest, fees or other amounts
received by the Agent for the account of such Defaulting Lender (whether voluntary or
mandatory, at maturity, pursuant to Article 10 or otherwise) or received by the Agent
from a Defaulting Lender pursuant to Section 10.6 shall be applied at such time or times
as may be determined by the Agent as follows:
22883504.11
(A)
first, to the payment of any amounts owing by such Defaulting Lender to the
Agent hereunder;
(B)
second, as the Borrower may request (so long as no Default or Event of Default
exists), to the funding of any Accommodation in respect of which such
32
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Agent;
(C)
third, if so determined by the Agent and the Borrower, to be held in a deposit
account and released pro rata in order to satisfy such Defaulting Lender's
potential future funding obligations with respect to Accommodations under this
Agreement;
(D)
fourth, to the payment of any amounts owing to the Lenders as a result of any
judgment of a court of competent jurisdiction obtained by any Lender against
such Defaulting Lender as a result of such Defaulting Lender's breach of its
obligations under this Agreement;
(E)
fifth, so long as no Default or Event of Default exists, to the payment of any
amounts owing to the Borrower as a result of any judgment of a court of
competent jurisdiction obtained by the Borrower against such Defaulting Lender
as a result of such Defaulting Lender's breach of its obligations under this
Agreement; and
(F)
sixth, to such Defaulting Lender or as otherwise directed by a court of competent
jurisdiction;
provided that if such payment is a payment of the principal amount of any Borrowing in
respect of which such Defaulting Lender has not fully funded its appropriate share, and
such Borrowings were advanced at a time when the conditions set forth in Section 8.2
were satisfied or waived, such payment shall be applied solely to pay the Borrowings
owed to all non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Borrowings owed to such Defaulting Lender until such time as all are
held by the Lenders pro rata in accordance with the Commitments under the Credit
Facility. Any payments, prepayments or other amounts paid or payable to a Defaulting
Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant
to this Section 3.19(a)(ii) shall be deemed paid to and redirected by such Defaulting
Lender, and each Lender irrevocably consents hereto; and
(iii)
(b)
Certain Fees:
(A)
no Defaulting Lender shall be entitled to receive standby fees under Section 5.8
hereof for any period during which that Lender is a Defaulting Lender (and the
Borrower shall not be required to pay any such fees that otherwise would have
been required to have been paid to that Defaulting Lender); and
(B)
with respect to the amount of any standby fee not required to be paid to any
Defaulting Lender pursuant to clause (A) above, the Borrower shall not be
required to pay such amount to the Agent or any other Lender;
Defaulting Lender Cure: If the Borrower and the Agent agree in writing that a Lender is no
longer a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth therein (which may
include arrangements with respect to any cash collateral), that Lender will, to the extent
applicable, purchase at par that portion of outstanding Borrowings of the other Lenders or take
such other actions as the Agent may determine to be necessary to cause the Borrowings to be held
22883504.11
33
pro rata by the Lenders in accordance with the Commitment under the Credit Facility,
whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will
be made retroactively with respect to fees accrued or payments made by or on behalf of the
Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the
extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising
from that Lender's having been a Defaulting Lender.
ARTICLE 4
REPAYMENT AND PREPAYMENT
4.1
Reductions and Prepayments of Credit Facility
On the Maturity Date, the Commitment of each Lender shall be permanently cancelled
and the Borrower shall repay all Borrowings and other Credit Facility Indebtedness outstanding under the
Credit Facility to such Lender in full.
4.2
Repayment of Borrowings In Excess of Commitments
If Outstandings to a Lender under the Credit Facility (determined in Cdn. Dollars with all
Borrowings denominated in U.S. Dollars under the Credit Facility being converted to the Equivalent
Amount of Cdn. Dollars) is on any day in excess of such Lender’s Commitment, the Borrower shall
within five (5) Business Days thereafter repay or otherwise reduce a portion of such Borrowings under the
Credit Facility to the extent of the amount of such excess.
4.3
Allocation of Proceeds of Collateral
The Agent may, in its sole and absolute discretion, elect the sequence in which proceeds
of realization (whether before or after an Event of Default) from Collateral (or any class thereof) is
applied to satisfy the Secured Obligations. The Agent may apply or not apply marshalling in its sole and
absolute discretion.
4.4
[reserved]
4.5
Cancellation of Commitment and Prepayment
Provided that the Monitor is satisfied that there are sufficient cash reserves in the Loan
Parties' bank accounts to satisfy amounts secured by the Permitted Priority Liens, the Borrower may,
without penalty or premium, at any time during the term of this Agreement upon five (5) Business Days
prior written notice substantially in the form of Schedule "C", cancel all of the Commitment or any
portion thereof in minimum amounts of Cdn. $1,000,000 and whole multiples of Cdn. $1,000,000
thereafter if, on or prior to the last day of such notice period, the Borrower has:
(a)
prepaid or otherwise reduced the applicable Borrowings outstanding to each Lender in an amount
equal to the amount by which the Borrowings outstanding to such Lender would otherwise be in
excess of each Lender's Commitment immediately after the reduction of the Commitment
provided for in such notice; and
(b)
paid all accrued interest and other charges and fees in respect of the applicable Borrowings being
repaid or reduced as aforesaid.
22883504.11
34
Any such notice of cancellation is irrevocable and the amount of the Commitment so cancelled and
reduced may not be reinstated hereunder.
4.6
[reserved]
4.7
Evidence of Indebtedness
The Agent shall open and maintain on its books at its offices where the Agent's Account
for Payments are from time to time maintained, accounts and records evidencing the Borrowings and
other amounts owing by the Borrower to the Agent and each Lender under this Agreement. The Agent
shall debit therein the amount of such Borrowings, and shall enter therein each payment of principal of
and interest on such Borrowings and fees and other amounts payable pursuant to this Agreement and all
other amounts becoming due to the Agent and each such Lender under this Agreement. The Accounts
constitute, in the absence of manifest error, prima facie evidence of the indebtedness of the Borrower to
the Agent and each Lender pursuant to this Agreement, the date each Lender made each Borrowing
available to the Borrower and the amounts the Borrower has paid from time to time on account of the
principal of and interest on the Borrowings, fees payable pursuant to this Agreement and other amounts
owing by it hereunder.
4.8
Mandatory Prepayments
Unless otherwise consented to in writing by the Lenders, and provided the Monitor is
satisfied that there are sufficient cash reserves in the Loan Parties' bank accounts to satisfy (x) amounts
secured by the Permitted Priority Liens, and (y) amounts anticipated on the date of the mandatory
repayment under the Agreed Budget in respect of which Loans were made that have not yet been incurred
or paid (including, for greater certainty, anticipated legal or advisory fees in the CCAA Proceedings or
U.S. Proceedings):
(a)
upon receipt by a Loan Party of a refund or payment on account of taxes from
any Governmental Authority, excluding refunds or payments on account of sales taxes;
(b)
upon receipt by a Loan Party of the proceeds of any sale, assignment, transfer,
conveyance, surrender, exchange, lease, sub-lease or other disposition of property other than Permitted
Dispositions and Non-Core Asset Sales, the proceeds from which shall be applied as directed by the
Initial Order;
(c)
upon receipt by a Loan Party of the proceeds of arising from the issuance of any
equity or debt securities of such Loan Party; and
(d)
on each Variance Testing Date following the entry of the Initial Order, the
Borrower shall or shall cause Borrowings in an amount equal to all cash and cash equivalents held by or
otherwise available to the Loan Parties on such date (net of any funds which are being held in escrow) in
excess of the amount of cash which the Borrower and the Loan Parties are permitted to hold pursuant to
the Agreed Budget to be immediately repaid.
The Borrower hereby authorizes and directs the Agent to debit the Borrower’s or any
other Loan Party’s accounts with the Agent to effect any of the foregoing. For greater certainty, amounts
prepaid pursuant to this Section 4.8 shall not reduce the Commitment and may be reborrowed.
22883504.11
35
ARTICLE 5
PAYMENT OF INTEREST AND FEES
5.1
Interest on Cdn. Prime Loans
The Borrower shall pay interest in Canadian Dollars to the Agent on behalf of each
Lender on each Cdn. Prime Loan made by such Lender to the Borrower at the Agent’s Account for
Payments, in each case, at a rate per three hundred and sixty-five (365) day period equal to the Cdn.
Prime Rate plus the Applicable Pricing Margin for Cdn. Prime Loans in effect from time to time. A
change in the Cdn. Prime Rate will simultaneously cause a corresponding change in the interest payable
on each Cdn. Prime Loan. Such interest shall accrue daily and is payable monthly in arrears on each
Interest Date for the period commencing on and including the immediately prior Interest Date up to but
not including the Interest Date and shall be calculated on a daily basis and on the basis of the actual
number of days elapsed in a year of three hundred and sixty-five (365) days. The annual rates of interest
to which the rates determined in accordance with the foregoing provisions of this Section 5.1 are
equivalent, are the rates so determined multiplied by the actual number of days in a period of one (1) year
commencing on the first day of the period for which such interest is payable and divided by three hundred
and sixty-five (365).
5.2
Interest on U.S. Base Rate Loans
The Borrower shall pay interest in U.S. Dollars to the Agent on behalf of each Lender on
each U.S. Base Rate Loan made by such Lender to the Borrower at the Agent's Account for Payments, in
each case at a rate per three hundred and sixty-five (365) day period equal to the U.S. Base Rate plus the
Applicable Pricing Margin for U.S. Base Rate Loans in effect from time to time. A change in the U.S.
Base Rate will simultaneously cause a corresponding change in the interest payable on each U.S. Base
Rate Loan. Such interest shall accrue daily and is payable monthly in arrears on each Interest Date for the
period commencing on and including the immediately prior Interest Date up to but not including the
Interest Date and shall be calculated on a daily basis and on the basis of the actual number of days elapsed
in a year of three hundred and sixty-five (365) days. The annual rates of interest to which the rates
determined in accordance with the foregoing provisions of this Section 5.2 are equivalent, are the rates so
determined multiplied by the actual number of days in a period of one (1) year commencing on the first
day of the period for which such interest is payable and divided by three hundred and sixty-five (365).
5.3
[reserved]
5.4
[reserved]
5.5
[reserved]
5.6
[reserved]
5.7
Interest on Overdue Amounts
Notwithstanding any other provision hereof, in the event that any amount due by the
Borrower hereunder (including, without limitation, any interest payment) is not paid when due (whether
by acceleration or otherwise), the Borrower shall and hereby agrees to pay to the Agent or the applicable
Lenders, as applicable, interest on such unpaid amount (including, without limitation, interest on interest),
if and to the fullest extent permitted by applicable law, from the date that such amount is due until the
date that such amount is paid in full (but excluding the date of such payment if the payment is made
before 11:00 a.m. Calgary time), and such interest shall accrue daily, be calculated and compounded on
22883504.11
36
the last Business Day of each calendar month and be payable in the applicable currency on demand, as
well after as before maturity, default and judgment, at a rate per annum that is equal to:
(a)
if such amount is payable in Canadian Dollars, the interest rate applicable to Cdn. Prime Loans
outstanding from time to time hereunder whether or not any Cdn. Prime Loans are then
outstanding plus the Applicable Pricing Margin plus 6% per annum; and
(b)
if such amount is payable in U.S. Dollars, the interest applicable to U.S. Base Rate Loans
outstanding from time to time hereunder whether or not any U.S. Base Rate Loans are then
outstanding plus the Applicable Pricing Margin plus 6% per annum.
The Borrower hereby waives, to the fullest extent it may do so under applicable law, any provisions of
applicable law, including specifically the Interest Act (Canada) or the Judgment Interest Act (Alberta),
which may be inconsistent with this Agreement.
5.8
Standby Fees
The Borrower shall pay standby fees to the Agent on behalf of each Lender, calculated
monthly in arrears to and including the last day of each calendar month, and payable on the third Business
Day following each such calendar month. Each payment of standby fees shall be calculated for the period
commencing on and including the Effective Date or the last date on which such standby fees were
payable hereunder, as the case may be, up to and including the last day of the calendar month for which
such standby fees are to be paid and shall be payable in an amount calculated at the Applicable Pricing
Margin for standby fees on the amount, if any, of the difference obtained by subtracting the Borrowings
outstanding from such Lender under the Credit Facility during such period from the amount of such
Lender's Commitment under the Credit Facility in effect during such period. Such standby fees shall be
calculated on a daily basis and on the basis of the actual number of days elapsed in a year of three
hundred and sixty-five (365) days. For purposes of calculating standby fees payable pursuant to this
Section 5.8, the amount of Borrowings outstanding from time to time in U.S. Dollars on each day during
the period for which such standby fees are payable shall for the purposes of determining an Equivalent
Amount on such day be notionally converted to the Equivalent Amount in Canadian Dollars using the
Bank of Canada noon spot rate for converting U.S. Dollars to Canadian Dollars on the first Business Day
of each calendar month for any calculation with respect to each month in the calculation period.
5.9
Agent's Fees
On the Effective Date, the Borrower shall pay to the Agent, for its own account, a nonrefundable agency fee of Cdn.$90,000.
5.10
[reserved]
5.11
Nominal Rates
The theory of deemed reinvestment shall not apply to the calculation of interest or
payment of fees or other amounts hereunder, notwithstanding anything contained in this Agreement, in
any note or other evidence of indebtedness or in any Loan Document now or hereafter taken by the Agent
or any Lender for the obligations of the Borrower under this Agreement, or any other instrument referred
to herein, and all other interest and fees payable by the Borrower to the Agent or a Lender, shall accrue
from day to day, computed as described herein in accordance with the “nominal rate” method of interest
calculation.
22883504.11
37
5.12
Maximum Rate Permitted by Law
Under no circumstances shall the Agent or a Lender be entitled to receive nor shall it in
fact receive a payment or partial payment of interest, fees or other amounts under this Agreement at a rate
that is prohibited by applicable law. Accordingly, notwithstanding anything herein or elsewhere
contained, if and to the extent that under any circumstances, the effective annual rate of “interest” (as
defined in Section 347 of the Criminal Code of Canada) received or to be received by the Agent or a
Lender (determined in accordance with such section) on any amount of “credit advanced” (as defined in
that section) pursuant to these presents or any agreement or arrangement collateral hereto entered into in
consequence or implementation hereof would, but for this Section 5.12, be a rate that is prohibited by
applicable law, then the effective annual rate of interest, as so determined, received or to be received by
the Agent or such Lender on such amount of credit advanced shall be and be deemed to be adjusted to a
rate that is one whole percentage point less than the lowest effective annual rate of interest that is so
prohibited (the “adjusted rate”); and, if the Agent or such Lender has received a payment or partial
payment which would, but for this Section 5.12, be so prohibited then any amount or amounts so received
by the Agent or such Lender in excess of the adjusted rate shall and shall be deemed to have comprised a
credit to be applied to subsequent payments on account of interest, fees or other amounts due to the Agent
or such Lender at the adjusted rate.
5.13
Waiver
To the extent permitted by applicable law, any provision of the Judgment Interest Act
(Alberta) and the Interest Act (Canada) which restricts the rate of interest on any judgment debt shall be
inapplicable to this Agreement and is hereby waived by the Borrower.
ARTICLE 6
PAYMENT AND TAXES
6.1
Time, Place and Currency of Payment
Payments of principal, interest, fees and all other amounts payable by the Borrower
pursuant to this Agreement shall be paid in the currency in which it is denominated for value at or before
10:00 a.m. (Calgary time) on the day such amount is due. If any such day is not a Business Day, such
amount shall be deemed for all purposes of this Agreement to be due on the Business Day next following
such day and such extension of time shall in such case be included in the computation of the payment of
any interest or fees payable under this Agreement. All payments in respect of the Credit Facility shall be
made at the Agent’s Account for Payments. Receipt by the Agent from the Borrower of funds pursuant to
this Agreement, as principal, interest, fees or otherwise, shall be deemed to be receipt of such funds by the
Agent or Lenders, as the case may be.
6.2
Application of Payments Prior to an Event of Default
Prior to the occurrence of an Event of Default, all payments made by or on behalf of the
Borrower pursuant to this Agreement shall be applied in accordance with Section 10.4.
6.3
(a)
Taxes
Payments Free and Clear of Taxes: Any and all payments by the Borrower to the Agent or the
Lenders hereunder shall be made free and clear of, and without deduction or withholding for or
on account of, any and all present or future Taxes and all liabilities with respect thereto imposed,
levied, collected, withheld or assessed by any governmental authority or under the laws of any
22883504.11
38
international tax authority imposed on the Agent or the Lenders, or by or on behalf of the
foregoing; provided that, nothing in this Section 6.3(a) shall make the Borrower liable for or
require it to pay an additional amount in respect of any taxes imposed on or measured by the
recipient's overall net income or capital or franchise taxes. In addition, the Borrower agrees to
pay any present or future stamp, transfer, registration, excise, issues, documentary or other taxes,
charges or similar levies which arise from any payment made under this Agreement or the
Accommodations or in respect of the execution, delivery or registration or the compliance with
this Agreement or the other Loan Documents contemplated hereunder other than taxes imposed
on or measured by the recipient's overall net income or capital or franchise taxes. The Borrower
shall indemnify and hold harmless the Agent and the Lenders for the full amount of all of the
foregoing Taxes or other amounts paid or payable by the Agents or the Lenders and any liability
(including penalties, interest, additions to tax and reasonable properly documented out-of-pocket
expenses) resulting therefrom or with respect thereto which arise from any payment made under
or pursuant to this Agreement or the Accommodation or in respect of the execution, delivery or
registration of, or compliance with, this Agreement or the other Loan Documents other than taxes
imposed on or measured by the recipient's overall net income or capital or franchise taxes.
(b)
Amounts Increased: If the Borrower shall be required by law to deduct or withhold any amount
from any payment or other amount required to be paid to the Agent or the Lenders hereunder, or
if any liability therefor shall be imposed or shall arise from or in respect of any sum payable
hereunder, then the sum payable to the Agent or the Lenders hereunder shall be increased as may
be necessary so that after making all required deductions, withholdings, and additional income
tax payments attributable thereto (including deductions, withholdings or income tax payable for
additional sums payable under this provision) the Agent or the Lenders, as the case may be,
receive an amount equal to the amount they would have received had no such deductions or
withholdings been made or if such additional taxes had not been imposed; in addition, the
Borrower shall pay the full amount deducted or withheld for such liabilities to the relevant
taxation authority or other authority in accordance with applicable law, such payment to be made
(if the liability is imposed on the Borrower) for its own account or (if the liability is imposed on
the Agent or the Lenders) on behalf of and in the name of the Agent or the Lenders, as the case
may be; provided that, nothing in this Section 6.3(b) shall make the Borrower liable for or require
it to pay any additional amount in respect of taxes imposed on or measured by the recipient's
overall net income or capital or franchise taxes. If the liability is imposed on the Agent or the
Lenders, the Borrower shall deliver to the Agent or the Lenders evidence satisfactory to the Agent
or the Lenders, acting reasonably, of the payment to the relevant taxation authority or other
authority of the full amount deducted or withheld.
(c)
Tax Refunds: Each Lender shall use reasonable efforts to contest (to the extent contestation is
reasonable) such imposition or assertion of such Taxes and shall reimburse to the Borrower the
amount of any reduction of Taxes, to the extent of amounts that have been paid by the Borrower
in respect of such Taxes in accordance with this Agreement, as a result of such contestation and
each Lender shall use reasonable efforts to obtain tax refunds, exemptions and/or credits in
respect of any such Taxes in respect of which the Borrower is required to pay any additional
amounts and shall reimburse the Borrower in respect of the amounts paid by it with such amount
of the refund, credit, relief or exemption as will leave the Lender (after such reimbursement) in no
more and no less favourable position than it would have been in had there been no such
withholding taxes, provided that, no Lender shall have any obligation to expend its own funds,
suffer any economic hardship or take any action detrimental to its interests (as determined by the
relevant Lender in its sole discretion, acting reasonably) in connection therewith unless it shall
have received from the Borrower payment therefor or an indemnity with respect thereto,
satisfactory to it.
22883504.11
39
(d)
FATCA: If a payment made by the Borrower to a Lender under any Loan Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the United States Internal Revenue Code of 1986, as amended from
time to time (the “Code”), as applicable), such Lender shall deliver to the Borrower and the
Agent at the time or times prescribed by applicable law and at such time or times reasonably
requested by the Borrower or the Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrower or the Agent as may be necessary for the
Borrower and the Agent to comply with their obligations under FATCA and to determine that
such Lender has complied with such Lender's obligations under FATCA or to determine the
amount to deduct and withhold from such payment. Each Lender agrees that if any form or
certification it previously delivered expires or becomes obsolete or inaccurate in any request, it
shall update such form or certification or promptly notify the Borrower and the Agent in writing
of its legal inability to do so. Solely for purposes of this Subsection (d), “FATCA” shall include
any amendments made to FATCA after the date of this Agreement.
6.4
Account Debit Authorization
The Borrower authorizes and directs the Agent, in its discretion acting reasonably, to
automatically debit, by mechanical, electronic or manual means, the bank accounts of the Borrower
maintained with the Agent for all amounts due and payable by it under this Agreement, including, but not
limited to, the repayment of principal and the payment of interest, fees, costs and all charges for the
keeping of such bank accounts.
ARTICLE 7
SECURITY
7.1
Security
To secure the payment and performance of all amounts from time to time owing by the
Loan Parties to the Agent and the Lenders (including without limitation, all Borrowings, interest thereon
and all fees and expenses) and all obligations owing by the Loan Parties to the Agent and the Lenders, in
each case, under or pursuant to the Loan Documents and which may arise pursuant to the CCAA
Proceedings and the U.S. Proceedings (collectively, the “Secured Obligations”), the Borrower shall, or
shall cause:
(a)
the Lender Charge to be granted to and in favour of the Agent and the Lenders;
(b)
each Guarantor to execute and deliver to the Agent a Loan Party Guarantee; and
(c)
each Loan Party to execute and deliver to the Agent such other security
documents, agreements and instruments as the Agent may, acting reasonably, require,
(collectively, the “Security”). In addition to and without in any way derogating from the
foregoing, the Agent’s Account for Payments shall be subject to a priority Security Interest in favour of
the Agent, for and on behalf of the Lenders, subordinate only to the Permitted Priority Liens set forth in
paragraphs (a) and (b) of the definition thereof.
22883504.11
40
7.2
[reserved]
7.3
Form of Security
The Security will be in such form or forms as will be required by the Agent, acting
reasonably. Should the Agent determine at any time and from time to time that the form and nature of the
then existing Security is deficient in any way or does not fully provide the Lenders with the Guarantees
and Security Interests and priority to which each is entitled hereunder, the Borrower will forthwith
execute and deliver or cause the Loan Parties to execute and deliver to the Agent, at the Borrower’s
expense, such amendments to the Security or provide such new Guarantees or security as the Agent may
reasonably request, in a form satisfactory to the Agent, acting reasonably.
7.4
[reserved]
7.5
[reserved]
7.6
No Merger
The taking of any Security as provided under this Agreement shall not operate by way of
merger of any of the obligations of any Loan Party under this Agreement or any other agreement
evidencing Secured Obligations, or of any Security Interest, Guarantee, contract, promissory note, bill of
exchange or security in any other form, whether or not similar to the foregoing, and no judgment
recovered by the Agent on behalf of the Lenders shall operate by way of merger or in any way affect the
obligations provided for in this Agreement or any other agreement evidencing Secured Obligations. For
greater certainty, no judgment recovered by the Agent or any other Lender shall operate by way of merger
or in any way affect the obligation of the Borrower to pay interest at the rates, times and manner as
provided in this Agreement or any other agreement evidencing Secured Obligations.
7.7
[reserved]
7.8
Release of Security
In the event of a Permitted Disposition (if the disposition is to a person other than a Loan
Party), the Agent is instructed by the Lenders (i) to release and discharge the Security with respect to the
Collateral included in the Permitted Disposition and (ii) if all the capital stock of a Material Subsidiary is
included in such Permitted Disposition, to release and discharge such Material Subsidiary from its
obligations under the Loan Party Guarantee and the other Security.
7.9
Permitted Encumbrances and Permitted Indebtedness
None of:
(a)
the fact that any person is permitted to create or suffer to exist any Permitted Encumbrance or
Permitted Indebtedness;
(b)
the fact that any representation, warranty or covenant herein may make an exception for the
existence of Permitted Encumbrances or Permitted Indebtedness; or
(c)
the fact that the Security Interests created pursuant to the Security are stated to be subject to, or
are not required to rank in priority to, Permitted Encumbrances;
22883504.11
41
shall in any manner, nor in any cause or proceeding, directly or indirectly, be taken to constitute a
subordination of any Security Interest created pursuant to the Security to any Permitted Encumbrance or
to any other Security Interest or other obligation whatsoever, or that the Secured Obligations are in any
way subordinate or junior in right of payment to any Permitted Indebtedness, it being the intention of the
parties that all Security Interests created pursuant to the Security shall at all times, to the maximum extent
permitted by applicable law and subject to Permitted Priority Liens, rank as first priority Security Interests
in priority to Permitted Encumbrances and all other Security Interests or other obligations whatsoever and
that the Secured Obligations will rank in right of payment at all times at least equally with such Permitted
Indebtedness.
7.10
Further Assurances – Security
The Borrower shall, forthwith and from time to time on the reasonable request of the
Agent, grant and cause each other Loan Party to grant to the Agent all such further rights and Security
Interests necessary or of advantage to the Agent to permit it to operate the assets and business of the Loan
Parties in a liquidation of assets or as a going concern following the occurrence of an Event of Default. In
addition, the Borrower shall and shall cause each other Loan Party to forthwith and from time to time on
the reasonable request of the Agent execute and do or cause to be executed and done all assurances and
things which in the opinion of the Agent may be necessary or of advantage to give the Agent the Security
Interests and the priority intended hereunder to be created by the Security.
ARTICLE 8
CONDITIONS PRECEDENT
8.1
Conditions Precedent
This Agreement shall become effective on the date (the “Effective Date”) each of the
following conditions precedent are satisfied or waived by the Lenders hereunder:
(a)
Repayments. prior to the issuance of the Initial Order, not less than Cdn. $634,400.61 and US.
$12,925,000 shall have been repaid by the Borrower by way of set-off or otherwise in respect of
the principal amount of the obligations outstanding under the Pre-Filing Secured Credit
Agreement;
(b)
Initial Order. the Canadian Court shall have issued and entered the Initial Order by the Outside
Date, satisfactory to the Agent and substantially in the form attached hereto as Schedule “L”, and
the Initial Order shall not have been stayed, vacated or otherwise caused to be ineffective or
amended, restated or modified in a way that adversely impacts the rights and interests of the
Agent and the Lenders, as determined by the Lenders (acting reasonably), without the consent of
all of the Lenders;
(c)
U.S. Filings: motions of the foreign representative of the Loan Parties shall have been filed in
the U.S. Court seeking (i) the Interim U.S. DIP Order, (ii) the U.S. TRO Order and (iii) the
Chapter 15 Recognition Order, and, in each case shall have been served on all appropriate parties;
(d)
No Event of Default: as of such time, there exists no Default or Event of Default, and the Agent
has received a certificate from the Borrower certifying the same;
(e)
Representations and Warranties True: the representations and warranties contained in Article
2 are true and correct as of such time, and the Agent has received a certificate from the Borrower
certifying the same;
22883504.11
42
(f)
Receipt of Documentation: the Agent has received, in form and substance satisfactory to the
Lenders, the following: (i) a duly executed original of this Agreement; (ii) duly executed copies
of the Security as required pursuant to Section 7.1; (iii) a certificate of status, certificate of good
standing or similar document in respect of the Borrower and each other Loan Party issued under
the laws of each jurisdiction where such Loan Party is organized or formed; (iv) an officer's
certificate provided by or on behalf of each Loan Party attaching thereto its constating documents
and bylaws and other governing documents, any authorizing resolutions, and an incumbency
certificate of the officer's executing the Loan Documents; (v) a true and complete copy of the
Initial Order and the Agreed Budget; (vi) an officer's certificate of the Borrower certifying as to
the matters set forth in Sections 8.1(d), 8.1(e) and 8.1(g); (vii) a certificate of insurance in respect
of the Borrower; (viii) any applicable “know your client” or anti-money laundering information
which a Lender may require; and (ix) such other documents as are required under this Agreement
or which the Agent and the Lenders may reasonably request;
(g)
Material Adverse Change: no Material Adverse Change shall have occurred since the date of
the issuance of the Initial Order and the Agent and the Lenders shall have received a certificate of
the Borrower certifying the same;
(h)
Lender Charge: there are no Security Interests ranking in priority to the Lender Charge, other
than Permitted Priority Liens;
(i)
Upfront Fee: the Borrower has paid to the Agent, for and on behalf of the Lenders, an upfront
fee in an amount equal to 35 basis points of the aggregate amount of the Commitments (being
Cdn.$175,000); and
(j)
Agent Fees and Other Fees and Expenses: the Borrower has paid to the Agent the fee specified
in Section 5.9 and shall have paid all other fees and expenses of the Agent and the Lenders then
due and payable (including all accrued and unpaid the fees and expenses of counsel to the Agent).
8.2
Continuing Conditions Precedent
The obligation of each Lender to make available any Borrowings pursuant to this
Agreement is subject to and conditional upon:
(a)
on each Drawdown Date there exists no Default or Event of Default and no Default or Event of
Default will occur as a result of the Loan requested on each such Drawdown Date;
(b)
on each Drawdown Date the representations and warranties referred to in Section 2.2, other than
those stated to be made as at a specific date, are true and correct in all material respects with the
same effect as if made as of such date;
(c)
on each Drawdown Date: (i) the Lenders shall be satisfied that no Material Adverse Change shall
have occurred since the date of the issuance of the Initial Order; (ii) no Security Interests shall
rank in priority to the Lender Charge, other than Permitted Priority Liens; (iii) the Initial Order
shall not have been stayed, vacated or otherwise caused to be ineffective or amended, restated or
modified in a manner that materially adversely impacts the rights and interests of the Lenders (as
determined by the Lenders acting reasonably) without the consent of the Lenders; (iv) the
Borrower and the other Loan Parties shall be in compliance with all Restructuring Court Orders;
and (v) any Restructuring Court Orders shall be in full force and effect and shall not have been
reversed, modified, stayed or amended in a manner that materially adversely impacts the rights
22883504.11
43
and interests of the Lenders (as determined by the Lenders acting reasonably) without the consent
of the Lenders;
(d)
on each Drawdown Date all required Drawdown Notices shall have been delivered;
(e)
on each Drawdown Date the Loan requested on each such Drawdown Date shall not (i) cause the
aggregate amount of Borrowings to exceed the total Commitment, or (ii) subject to the last
sentence of Section 3.4, be greater than the amount of such Loan contemplated by the Agreed
Budget; and
(f)
on each Drawdown Date the Borrower shall have paid to the Agent, or will pay to the Agent from
the proceeds of the Loan requested on each such Drawdown Date, all fees and expenses for which
invoices have been provided to the Borrower prior to each such Drawdown Date.
8.3
Waiver of a Condition Precedent
The terms and conditions of Sections 8.1 and 8.2 are inserted for the sole benefit of the
Agent and the Lenders and may be waived by the Agent by or with the prior consent of all Lenders with
or without terms or conditions, in respect of all or any portion of the Borrowings, without affecting the
right of the Agent and Lenders to assert such terms and conditions in whole or in part in respect of any
other Borrowing.
ARTICLE 9
COVENANTS OF THE BORROWER
9.1
Positive Covenants of the Borrower
During the term of this Agreement, the Borrower covenants with each of the Lenders and
the Agent that, unless the prior written consent or waiver of the Lenders has been obtained:
(a)
Payment and Performance: the Borrower shall duly and punctually pay all sums of money due
by it hereunder and the Borrower shall and shall cause each other Loan Party to perform all other
obligations on its part to be performed under the terms of the Loan Documents at the times and
places and in the manner provided for therein;
(b)
Existence of Borrower: the Borrower shall maintain its corporate existence in good standing
under the laws of the Province of Alberta and shall register and qualify and remain registered and
qualified under the laws of each other jurisdiction in which the nature of any business conducted
by it or the character of any properties and assets owned or leased by it requires such registration
and qualification except to the extent any failure to be so registered and qualified would not
reasonably be expected to have a Material Adverse Effect;
(c)
Existence of other Loan Parties: the Borrower shall cause each other Loan Party to maintain its
corporate, partnership, trust or other existence in good standing as a corporation, limited
partnership, partnership, trust or limited liability company (as the case may be) under the laws of
its applicable jurisdiction of organization (except as permitted by Section 9.2(c)), and shall cause
each such Loan Party to duly register and qualify and remain duly registered and qualified under
the laws of each jurisdiction in which the nature of any business transacted by it or the character
of any properties and assets owned or leased by it requires such registration and qualification
except to the extent any failure to be so registered and qualified would not reasonably be expected
to have a Material Adverse Effect;
22883504.11
44
(d)
Maintenance of Assets and Operation of Businesses: the Borrower shall and shall cause each
other Loan Party to maintain and operate all of its properties and assets and carry on and
continuously conduct its businesses as conducted by it on the Effective Date in a good and
workmanlike manner and in accordance with prudent industry practice, except where the failure
to so maintain, operate, carry on and conduct would not reasonably be expected to have a
Material Adverse Effect;
(e)
Insurance: the Borrower shall and shall cause each other Loan Party to maintain in full force
and effect such policies of insurance in such amounts issued by insurers of recognized standing
covering its properties, assets and operations as is customarily maintained by persons engaged in
the same or similar business of similar size or holding the same or similar properties, assets or
operations in the localities where such properties, assets or operations are located, with the Agent
named as first loss payee or additional insured, as applicable, under such policies;
(f)
Obtain Permits, Compliance With Laws and Regulations: the Borrower shall and shall cause
each other Loan Party to:
(i)
obtain and maintain all permits, licenses and other authorizations which are required
under all federal, provincial, state and local laws, rules, regulations and orders of
governmental authorities, including, without limitation, Environmental Laws;
(ii)
comply in all respects with all applicable federal, provincial, state and local laws, rules,
regulations, orders of governmental authorities, permits, licences and authorizations,
including, without limitation, Environmental Laws, any Anti-Corruption Laws, ERISA
and any Canadian Employee Benefits Legislation;
(iii)
comply in all respects with all of its internal policies and procedures with respect to
operating practises in international jurisdictions, including, without limitation, fraudulent
and anti-corruption practises;
(iv)
observe and conform in all respects to all valid requirements of any governmental or
municipal authority relative to any of its assets; and
(v)
store, treat, transport or otherwise handle and dispose of all Hazardous Materials and
waste owned, managed or controlled by the applicable Loan Party in compliance with all
Environmental Laws;
except in each case to the extent failure to so obtain, maintain, comply, observe and conform
would not reasonably be expected to have a Material Adverse Effect;
(g)
Additional Environmental Information: the Borrower shall, upon the request of the Agent
(acting reasonably), provide such environmental information as the Agent may request and make
available for discussion with the Lenders upon reasonable notice and at all reasonable times the
senior officers of the Loan Parties and any of their Subsidiaries primarily responsible for the
environmental activities and affairs of the Loan Parties and their Subsidiaries, provided that if any
Loan Party shall:
(i)
22883504.11
receive or give any notice that a violation of any Environmental Law has or may have
been committed or is about to be committed by the same, and if such violation has or
would reasonably be expected to have a Material Adverse Effect;
45
(ii)
receive any notice that a complaint, proceeding or order has been filed or is about to be
filed against the same alleging a violation of any Environmental Law, and if such
violation would reasonably be expected to have a Material Adverse Effect;
(iii)
have knowledge of the discovery of any contaminant or of any spill, discharge, deposit,
escape or Release of a contaminant into the environment from or upon the land or
property of a Loan Party or any of its Subsidiaries which would reasonably be expected
to have a Material Adverse Effect; or
(iv)
receive any notice requiring a Loan Party to take any action in connection with the
release of Hazardous Materials into the environment or alleging that such Loan Party
may be liable or responsible for costs associated with a response to or to clean up a
Release of Hazardous Materials into the environment or any damages caused thereby in
excess of $1,000,000 (in aggregate at any point in time), or if such action or liability has
or would reasonably be expected to have a Material Adverse Effect,
the Borrower shall promptly provide the Agent with a copy of such notice and shall, or shall
cause such other Loan Party to, furnish to the Agent from time to time all reasonable information
requested by the Agent relating to the same;
(h)
Compliance with Contracts and Employee Benefits Plans: except as otherwise contemplated
by the Restructuring Court Orders, the Borrower shall and shall cause each other Loan Party to
observe and comply in all respects with all covenants, terms and conditions of all contracts and
agreements and all employee benefit plans to which it is a party or to which it is subject, except to
the extent failure to so observe and comply would not reasonably be expected to have a Material
Adverse Effect;
(i)
Payment of Taxes and other Obligations: the Borrower shall and shall cause each other Loan
Party to file all Tax returns which are required to be filed and to pay or cause to be paid all rents,
Taxes, rates, levies, royalties and assessments, ordinary or extraordinary, government fees, dues
and other obligations to pay money validly levied, assessed or imposed upon it or upon its
properties or any part thereof as and when the same become due and payable, except to the extent
and for so long as the Borrower or such other Loan Party shall contest its obligation to do so by a
Permitted Contest, and the Borrower shall and shall cause each other Loan Party to exhibit to the
Lenders, when requested, the receipts and vouchers establishing such payment;
(j)
Payment of Preferred Claims: the Borrower shall and shall cause each other Loan Party to pay
when due all amounts related to wages, workers' compensation obligations, government royalties
or pension fund obligations and any other amount which may result in a lien, charge, Security
Interest or similar encumbrance against the assets of the Borrower or such other Loan Party
arising under statute or regulation, except when and so long as the validity of any such amounts
or other obligations is being contested by the Borrower or such other Loan Party by a Permitted
Contest or the failure to pay the same would not reasonably be expected to have a Material
Adverse Effect;
(k)
Notice of Default under Agreements: the Borrower shall provide prompt written notice to the
Agent of any default by any Loan Party under any agreement or contract to which it is a party or
by which it is bound and which would reasonably be expected to have a Material Adverse Effect;
22883504.11
46
(l)
Notice of Material Adverse Change: the Borrower shall provide prompt written notice to the
Agent of any matter of which it is aware which has or would reasonably be expected to have a
Material Adverse Change;
(m)
Notice of Litigation: the Borrower shall provide the Agent with prompt written notice of any
motion, action, suit, litigation, arbitration or other proceeding which is commenced or threatened
against the Borrower or any other Loan Party and which involves a claim in excess of
Cdn. $1,000,000 or the Equivalent Amount thereof in any other currency or which would
reasonably be expected to have a Material Adverse Effect (whether or not brought in violation of
any stay of proceeding);
(n)
Notice of Insurance Claims: the Borrower shall provide the Agent with prompt written notice
of any damage to or destruction of any property or assets of a Loan Party which might give rise to
a claim for insurance monies in excess of Cdn. $1,000,000 or the Equivalent Amount thereof in
any other currency;
(o)
Notice of Defaults: the Borrower shall provide prompt written notice to the Agent of any
Default or Event of Default, with details of the steps, if any, being taken to cure or remedy the
same;
(p)
[reserved]
(q)
[reserved]
(r)
[reserved]
(s)
[reserved]
(t)
Maintenance of Books and Records: the Borrower shall and shall cause each other Loan Party
to keep proper and adequate records and books of account in which true and complete entries, in
all material respects, will be made in a manner sufficient to enable the preparation of financial
statements in accordance with Generally Accepted Accounting Principles and, upon the request
of the Agent, make the same available for confidential inspection by the Agent and the Lenders
and their respective employees upon reasonable notice and at all reasonable times;
(u)
Year End Financial Statements of the Borrower: for periods after the date of this Agreement,
the Borrower shall furnish to the Agent as soon as available and in any event within ninety
(90) days after the end of each Fiscal Year, a balance sheet, statement of income and retained
earnings and statement of changes in cash position of the Borrower for such Fiscal Year, prepared
on a consolidated basis in accordance with GAAP, accompanied by an internally prepared
management discussion and analysis report, and setting forth in comparative form the
corresponding figures of the preceding Fiscal Year together with an auditor's report, containing:
(i)
such auditor's confirmation that their examinations of such financial statements were
made in accordance with generally accepted auditing standards and accordingly included
such tests and other procedures as they considered necessary in the circumstances; and
(ii)
such auditor's opinion that such financial statements present fairly the consolidated
financial position of the Borrower as of the close of such Fiscal Year and the results of its
operations and the changes in its financial position for the Fiscal Year then ended in
accordance with Generally Accepted Accounting Principles consistently applied;
22883504.11
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(v)
[reserved]
(w)
[reserved]
(x)
Quarterly Financial Statements of Borrower: for periods after the date of this Agreement, the
Borrower shall furnish to the Agent as soon as available and in any event within sixty (60) days
after the end of each of the first three Fiscal Quarters of each Fiscal Year, a balance sheet,
statement of income and retained earnings and statement of changes in cash position of the
Borrower for such Fiscal Quarter, prepared on a consolidated basis in accordance with GAAP,
accompanied by an internally prepared management discussion and analysis report;
(y)
[reserved]
(z)
Compliance Certificate: the Borrower shall furnish to the Agent, concurrently with the delivery
of the financial statements required to be delivered pursuant to Section 9.1(u) and 9.1(w), a duly
executed and completed Compliance Certificate;
(aa)
Additional Information: the Borrower shall furnish to the Agent any additional information
regarding the business, affairs, operations, properties, assets and financial condition of the
Borrower and the other Loan Parties as the Agent may reasonably request from time to time;
(bb)
Accuracy of Information: the Borrower shall ensure that information provided by it or any
other Loan Party or any of their Subsidiaries to the Agent or the Lenders with respect to the
business affairs, operations, properties, assets and financial condition of the Borrower, any other
Loan Party or any of their Subsidiaries is: (i) in the case of all such information, other than
forecasts and any projections, substantially accurate and does not contain or omit to set forth any
information which would render such information materially misleading; and (ii) in the case of
information including forecasts and projections, prepared in good faith based upon assumptions
believed to be reasonable at the time made;
(cc)
Inspection of Property and Discussions: the Borrower shall and shall cause each other Loan
Party to permit representatives of the Agent from time to time, at the Borrower's expense after a
Default or Event of Default has occurred and is continuing, to visit and inspect any of its property
at any reasonable time during normal business hours and upon reasonable request and notice, and
subject to the Borrower's or such other Loan Party's health and safety requirements and any
applicable third party's health and safety requirements in respect of such property, and to discuss
its business, property, condition (financial or otherwise) and prospects with its senior officers and
(in the presence of such representatives, if any, as it may designate) with its independent
chartered accountants;
(dd)
Change of Business: the Borrower shall ensure that notwithstanding any additions to, deletions
from or other changes to the nature of its and the other Loan Parties' businesses, operations or
properties, the principal businesses and operations of the Borrower and the other Loan Parties
taken as a whole shall be servicing to the global oil and gas exploration and production industry
including, without limitation, hydraulic fracturing stimulation; primary and remedial cementing,
acid; chemical and solvent stimulation; coiled tubing, intervention and stimulation; nitrogen and
CO2 pumping; coalbed methane stimulation; and owning and operating sand mines;
(ee)
[reserved]
(ff)
[reserved]
22883504.11
48
(gg)
[reserved]
(hh)
[reserved]
(ii)
[reserved]
(jj)
[reserved]
(kk)
[reserved]
(ll)
Further Assurances: the Borrower shall and shall cause each other Loan Party to, as soon as
reasonably practicable after notice thereof from the Agent, do all such further acts and things and
execute and deliver all such further documents as shall be reasonably required by the Agent in
order to ensure the terms and provisions of the Loan Documents are fully performed and carried
out and to ensure that each material provision of each Loan Document is and continues to be a
valid and binding obligation of the Loan Party which is a party thereto enforceable against such
Loan Party in accordance with its terms (except as enforceability may be limited by general
principles of equity and bankruptcy, insolvency, reorganization or laws affecting creditors' rights
generally and by moratorium laws from time to time in effect);
(mm)
Milestones: the Borrower shall, and shall cause each other Loan Party to, do all such further acts
and things reasonable practicable to achieve all the Milestones, including complying with the
reasonable best efforts undertakings set out in any Milestone.
(nn)
Monthly Working Capital Reports: the Borrower shall furnish to the Agent as soon as
available and in any event within seven (7) days after the end of each calendar month a written
report setting forth the Loan Parties' working capital position (including a summary of priority
payables), in each case, as at the end of such month, such report and statement to include all
supporting ledgers, analysis and other information, each such report to be in a form and with such
level of detail as shall be satisfactory to the Lenders, acting reasonably;
(oo)
Budget Variance: on Thursday of each week by 5:00 p.m. (Calgary time), commencing on the
Thursday of the calendar week following the date of this Agreement, the Borrower shall deliver
to the Agent for distribution to the Lenders a report showing actual cash receipts and actual
expenditures for each line item in the Agreed Budget covering the previous week and comparing
the foregoing amounts with the budgeted cash receipts and budgeted expenditures, respectively,
set forth in the Agreed Budget for such line item during such one week period and providing
qualitative analysis of variances between actual to budget (a “Budget Variance Report”);
(pp)
Compliance with Agreed Budget: the Borrower shall and shall cause each other Loan Party to
manage and operate their respective properties and assets and conduct their respective businesses
and activities, in each case, in a manner which is consistent with the Agreed Budget;
(qq)
Updated Budgets: to the extent there are any material updates or changes to the Agreed Budget,
the Borrower shall prepare an update to the Agreed Budget (each a “Updated Budget”), for the
period commencing from the end of the previous week through and including the end of the
period set forth in the Agreed Budget, which shall reflect the Borrower 's good faith projections
and be in form and detail consistent with the initial Agreed Budget and subject to the approval of
the Agent (for certainty, the Updated Budget shall not constitute an amendment of the Agreed
Budget unless consented to by the Agent in its sole and absolute discretion);
22883504.11
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(rr)
Conference Calls: the Borrower shall, and shall use commercially reasonable efforts, if
requested by the Agent, to cause (i) its non-legal advisors to, participate on weekly conference
calls with the Agent and the Lenders, and their respective non-legal advisors, to discuss the
Agreed Budget and any Updated Budgets, the Borrower's current and projected operational
performance, and any related financial matters; and (ii) its financial advisors, PJT Partners Inc.
and Credit Suisse, to provide regular updates to the Agent and the Lenders and their advisors with
respect to the sale and recapitalization process being undertaken by such advisors on behalf of the
Loan Parties, including updates in a timely manner with respect to prospective bidders identified
by the Borrower or such advisors, communications with such prospective bidders and the identity
of any bidders and details of bids received; further, the Borrower shall provide and shall cause
their financial advisors to provide the Lenders and their advisors with draft copies of all materials
prepared for distribution to potential bidders prior to such distribution, including any invitation or
“teaser” letter, confidential information memorandum or management presentation;
(ss)
Notices, Filings and other Information: the Borrower shall, on a timely basis, furnish to the
Agent (in sufficient copies for each of the Lenders): (i) as soon as practically possible upon the
entering of the same, a true and complete copy of the Interim U.S. DIP Order, Final U.S. DIP
Order, U.S. TRO Order and the Chapter 15 Recognition Order; (ii) notice of all material
developments with respect to the business and affairs of the Loan Parties, including (without
limitation) the development of a Plan or an Alternative Restructuring Option; (iii) within a
reasonable period of time prior to filing with the Canadian Court or U.S. Court, which, in any
event, shall be: (A) in the event of any filing or proposed filing by, or on behalf of, a Loan Party
which is in response to materials filed or proposed to be filed by any Person who is not a Loan
Party or the Monitor, as soon as practicable, but in any event, in advance of such filing, and (B) in
all other circumstances, at least 5 Business Days prior to any such filing or proposed filing by, or
on behalf of, a Loan Party, copies of all pleadings, motions, applications, proposed orders or
financial information and other documents proposed to be filed by, or on behalf of, any Loan
Party with the Canadian Court or U.S. Court; (iv) regular (which, in any event shall be at least
once weekly) updates regarding the status of the CCAA Proceedings and U.S. Proceedings
including, without limitation, reports on the progress of any Plan, Alternative Restructuring
Option or Approved Sale and any information which may otherwise be confidential; (v) copies of
any financial reporting provided to the Monitor and any reports or commentary received from the
Monitor regarding the financial position of the Loan Parties; and (vi) written notice of any step or
action to call a meeting of the holders of Unsecured Notes pursuant to the 2014 Bond Agreement
forthwith upon becoming aware of such step or action. In addition to the foregoing and without in
any way derogating therefrom, the Borrower shall provide to the Agent copies of all such other
information relating to the business, affairs, operations and financial condition of any Loan Party
as the Agent or any Lender may reasonably request;
(tt)
Use of Credit Facility: unless otherwise agreed to in writing by the Lenders, the Borrower shall
use the Credit Facility and the proceeds thereof solely: (i) (A) to finance operating expenses and
restructuring costs in the CCAA Proceedings and U.S. Proceedings, (B) to pay professional fees
(including fees of the Monitor and the fees of Canadian and U.S. legal counsel to the Loan
Parties, the Monitor and the Agent and Lenders and the fees of the financial advisor to the Agent
and the Lenders) and (C) for general corporate purposes of the Borrower and the Loan Parties, all
in accordance with the Agreed Budget (except as may be permitted pursuant to the last sentence
of Section 3.4); and (ii) to pay fees and expenses related to the Credit Facility, the CCAA
Proceedings and the U.S. Proceedings in each case, as contemplated in the Initial Order, provided
that, no proceeds of any Loan will be used: (x) for any purpose which violates, or would be
inconsistent with, Regulation T, Regulation U or Regulation X each as issued by the US Federal
Reserve, (y) by the Loan Parties to investigate, object to or challenge in any way any claims of
22883504.11
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the Agent or any of the Lenders against any of the Loan Parties in respect of the Credit Facility or
of the Pre-Filing Secured Creditors under the Pre-Filing Secured Credit Agreement; or (z) to
investigate, object to or challenge in any way the validity, perfection or enforceability of the
Security Interests created pursuant to the Lender Charge or any Security Interests granted
pursuant to the U.S. Proceedings;
(uu)
Compliance with CCAA Proceedings and U.S. Proceedings: the Borrower shall and shall
cause each other Loan Party to comply with the provisions of each Restructuring Court Order;
and
(vv)
Notice of Excess Negative Cash Flow Variance: without limiting any other obligation of the
Borrower under the Loan Documents, the Borrower shall forthwith advise the Agent in writing if,
as at the end of any period ending on Friday of the prior week, an Excess Negative Cash Flow
Variance exists.
9.2
Negative Covenants of the Borrower
During the term of this Agreement, the Borrower covenants with each of the Lenders and
the Agent that, unless the prior written consent or waiver of the Lenders has been obtained:
(a)
Negative Pledge: except for Permitted Encumbrances, no Loan Party shall create, incur, assume
or permit to exist any Security Interest upon or with respect to any of its assets or properties,
whether now owned or hereafter acquired;
(b)
Restriction on Dispositions: except for Permitted Dispositions, no Loan Party shall, directly or
indirectly, make or permit any sale, exchange, lease, transfer or other disposition of any of its
assets or properties, whether now owned or hereafter acquired;
(c)
Restriction on Amalgamation etc.: the Borrower shall not, and shall not permit any Loan Party
to, enter into or become party to any transaction (each a “Reorganization Transaction”) or
merger, amalgamation, consolidation, winding-up, plan of arrangement, reorganization or
restructuring with any Person or enter into any transaction by way of transfer, liquidation, sale,
lease, disposition or otherwise whereby all or substantially all of its undertaking, property or
assets would become the property of any other Person, or take any corporate, limited liability
company, partnership or trust action in pursuance of any of the foregoing; provided that any Loan
Party may undertake a Reorganization Transaction if such Reorganization Transaction is
undertaken pursuant to an Approved Sale or an Alternative Restructuring Option;
(d)
Restriction on Indebtedness: except for Permitted Indebtedness, no Loan Party shall incur,
assume, create or be liable for, directly or indirectly, any Indebtedness;
(e)
Restriction on Financial Assistance: except for Permitted Financial Assistance, no Loan Party
shall provide any form of Financial Assistance to any person;
(f)
Restriction on Distributions: no Loan Party shall make any Distribution other than (i) a
Distribution that is permitted by a Restructuring Court Order, provided that any such Distribution
does not cause a Default or Event of Default; (ii) Distributions that are provided for in the Agreed
Budget; and (iii) Distributions to another Loan Party in accordance with the Agreed Budget;
(g)
Transactions With Affiliates and Other Persons: no Loan Party shall engage in any
transaction with any of its Affiliates (other than a Loan Party) or with any other person on terms
22883504.11
51
which are less favourable to such Loan Party than would be obtainable or reasonably expected to
be obtainable at the time in an arms'-length transaction;
(h)
Swaps: no Loan Party shall enter into or become subject to any Swap after the Effective Date;
(i)
Movement of Fixed Assets: no Loan Party will move any Fixed Assets into, or acquire any
Fixed Assets in, any jurisdiction other than Alberta, Saskatchewan, British Columbia, Manitoba,
Northwest Territories, Montana, Wyoming, North Dakota, South Dakota, Colorado, Texas and
New Mexico (or any other jurisdiction) if a Default or Event of Default has occurred and is
continuing or would reasonably be expected to occur as a result thereof;
(j)
Ownership of Loan Parties: other than pursuant to an Approved Sale or an Alternative
Restructuring Option consented to by the Lenders, no Loan Party shall transfer any ownership
interests in another Loan Party if the transferee is not a Loan Party that has provided effective
security in favour of the Agent on behalf of the Lenders over such ownership interests and all of
its other material assets (as determined by the Agent, acting reasonably) and for greater certainty,
no person shall be a shareholder or partner of a Loan Party (other than the Borrower) if such
person is not a Loan Party that has provided effective security in favour of the Agent on behalf of
the Lenders over the shares it may hold in any other Loan Party as well as over all of its other
material assets (as determined by the Agent, acting reasonably);
(k)
Sanctions, Anti-Money Laundering and Anti-Terrorism Laws:
(i)
no Loan Party shall violate or permit any of their Subsidiaries to violate any Anti-Money
Laundering and Anti-Terrorism Law;
(ii)
no Loan Party shall conduct or permit any of their Subsidiaries to conduct any business
with or for the benefit of a Blocked Person or a Canadian Sanctions Designated Person;
and
(iii)
no Loan Party shall become or permit any of their Subsidiaries to become a Blocked
Person or a Canadian Sanctions Designated Person;
(l)
Anti-Corruption Laws: no Loan Party shall act or attempt to act in any manner which would
subject any of the Loan Parties to liability under any Anti-Corruption Law;
(m)
[reserved]
(n)
ERISA/Canadian Pension Plan: no Loan Party shall:
(i)
establish, sponsor, maintain, become a party or contribute to or become obligated to
sponsor, maintain or contribute to any Multiemployer Plan or any Employee Plan (or
permit any of its ERISA Affiliates to do any of the foregoing); or
(ii)
(A) contribute to or assume an obligation to contribute to any defined benefit Canadian
Pension Plan, (B) acquire an interest in any Person if such Person sponsors, maintains or
contributes to, or at any time in the five-year period preceding such acquisition has
sponsored, maintained, or contributed to a defined benefit Canadian Pension Plan, or (C)
wind-up any defined benefit Canadian Pension Plan, in whole or in part, unless it has
obtained written advice from the actuary for such plan that the plan (or part thereof in the
22883504.11
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case of a partial windup) is fully funded or has no unfunded liability at the effective date
of the windup;
(o)
[reserved]
(p)
Cash Management System: subject to the Agreed Budget and other limitations set forth herein,
the Borrower shall not request or apply any Loan except through the Borrower's cash
management system in the form existing immediately prior to the Outside Date or otherwise as
agreed to with the Lenders, acting reasonably;
(q)
Distribution of Funds Only to Loan Parties: except as set out in the Agreed Budget, no Loan
Party shall permit to occur, any payment or distribution of funds (whether from proceeds of any
Loan under the Credit Facility or otherwise) from a Loan Party to any Subsidiary or Affiliate that
is not a Loan Party;
(r)
Payments Consistent with Agreed Budget: the Borrower shall not make or permit any Loan
Party to make any payment or distribution which is not consistent with the Agreed Budget;
(s)
Approved Sale Restriction: without the prior written consent of all of the Lenders, the
Borrower shall not, and shall not permit any Loan Party to, seek any authorization, approval or
other order of the Canadian Court or the U.S. Court which will result in, or would reasonably be
expected to result in, the authorization, approval or other order of such Canadian Court or U.S.
Court of a sale of its assets, business and undertaking other than pursuant to an Approved Sale;
(t)
Payments under Employment Benefit Plans: the Borrower shall not, and shall not permit any
other Loan Party to, make any payment or distribution in respect of post-employment benefit
payments (excluding the KERP/KEIP);
(u)
New Subsidiaries: the Borrower shall not, and shall not permit any other Loan Party to, acquire,
create or cause to exist any Subsidiary which does not already exist on and as of the date hereof;
and
(v)
Payments to MacBain: no Loan Party shall make any payment or transfer of property to
MacBain or any Subsidiary thereof other than the required monthly payments under real property
leases and workforce housing and property management contracts (with MacBain or any
Subsidiary thereof, as the landlord or property manager, and such Loan Party, as the tenant or
counterparty) as those leases and contracts were in effect on December 7, 2015; provided that,
however: (i) in no event shall a Loan Party make, or be entitled to make, any payment to
MacBain or any Subsidiary thereof of prepaid rent, liquidated damages, early lease termination
payments or any other payment whatsoever other than the ordinary monthly payments referred to
as aforesaid (including, for certainty, payments in respect of operating expenses, flow-through of
third party rent and reimbursable costs, property taxes and GST); (ii) in no event shall such
monthly payments (referred to as aforesaid) by the Loan Parties exceed Cdn.$4,250,000,
exclusive of GST, (or the equivalent thereof in any other currency) in any calendar month; and
(iii) the Loan Parties shall be entitled to make such ordinary monthly payments notwithstanding
anything in Section 2.7(b) hereof or section 9.2(f) of the Credit Agreement to the contrary.
22883504.11
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ARTICLE 10
EVENTS OF DEFAULT
10.1
Events of Default
The occurrence of any one or more of the following events or circumstances constitutes
an Event of Default under this Agreement:
(a)
Failure to Pay Principal: the failure of the Borrower to make any payment of any Borrowings
when due hereunder;
(b)
Failure to Pay Interest, Fees or Other Amounts: the failure of the Borrower to make any
payment of any interest or fees or other amounts under this Agreement or any other Loan
Document, or any portion thereof, when due and such default shall remain unremedied for a
period of two (2) Business Days after written notice from the Agent to the Borrower that such
amount is overdue;
(c)
Negative Covenants: if there is a breach or failure of due performance or observance by any
Loan Party of any covenant set forth in Section 9.2 of this Agreement or any negative covenant
set forth in any other Loan Document;
(d)
General Covenants: if there is a breach or failure of due performance or observance by any
Loan Party of any covenant or provision of this Agreement or any of the other Loan Documents
(other than those otherwise dealt with in this Section 10.1), unless such breach or failure is cured
to the satisfaction of the Majority Lenders, acting reasonably, within three (3) Business Days after
such breach or failure;
(e)
Misrepresentations: if any representation or warranty made or deemed to be made by or on
behalf of the Borrower or any other Loan Party in any Loan Document shall prove to have been
incorrect in any material respect when made or deemed to be made or repeated hereunder or
thereunder; provided that if the matter, defect or deficiency which is the subject matter of the
misrepresentation is capable of correction or remedy (and not merely by changing the
representation made), then if it is not corrected or remedied to the satisfaction of the Majority
Lenders, acting reasonably, within five (5) days after written notice thereof by the Agent to the
Borrower;
(f)
Disposition of Assets: if any Loan Party shall pass an effective resolution or initiate steps or
proceedings (including applications to the Canadian Court and the U.S. Court) without the prior
written consent of the Lenders for the purpose of authorizing the disposition of all or substantially
all of its property, assets and undertakings (except for a disposition in accordance with and as
permitted by Section 9.2(b));
(g)
Invalid Loan Documents: if any material provision of any Loan Document continues to be
invalid or unenforceable in whole or in a material part, or any of the Security Interests in and to
any material Collateral constituted by the Security fails to attach thereto or to have the priority
intended thereby;
(h)
Adverse Proceedings: (i) if any proceeding, motion or application is commenced or filed by any
of the Loan Parties, or, if commenced by another party, supported or otherwise consented to by
any Loan Party, seeking the invalidation, subordination or other challenging of the terms of the
Credit Facility, the Lender Charge, this Agreement, any other Loan Document or the Initial
22883504.11
54
Order; (ii) the filing of any Plan or application to the Canadian Court or the U.S. Court for
approval of an Alternative Restructuring Option or sale of all or substantially all of the assets of
the Loan Parties which does not have the prior written consent of the Majority Lenders; or (iii) if
any Loan Party commences an action or takes any other proceeding to obtain any form of relief
against the Agent, the Lenders, or the Pre-Filing Secured Creditors or any Affiliate thereof,
including, without limitation, a proceeding to recover damages or to obtain payment of any
amounts purported to be owing by the Agent, the Lenders, or the Pre-Filing Secured Creditors or
any Affiliate thereof to any Loan Party or any Affiliate thereof if the Agent, any Lender, any PreFiling Secured Creditor or such Affiliate disputes any of the same;
(i)
Restructuring Court Orders: if: (i) any Restructuring Court Order contravenes this Agreement
or any other Loan Document so as to materially adversely impact the rights or interests of the
Agent or the Lenders, as determined by the Lenders, acting reasonably; or (ii) any Loan Party
breaches or otherwise violates in any way any Restructuring Court Order;
(j)
Court Order: the issuance of an order of the Canadian Court or the U.S. Court (including any
Restructuring Court Order) or any other court of competent jurisdiction: (i) dismissing the CCAA
Proceedings or U.S. Proceedings, or lifting the stay in the CCAA Proceedings or U.S.
Proceedings to permit (A) the enforcement of any Security Interest against a Loan Party, or a
material portion of their respective property, assets or undertaking, or (B) the appointment of a
Receiver or the making of a bankruptcy order against a Loan Party; (ii) granting any Security
Interest which is senior to or pari passu with the Lender Charge, other than the Administration
Charge; (iii) staying, reversing, vacating or otherwise modifying the Loan Documents or any
Restructuring Court Order in a manner materially adverse to the interests of the Lenders, as
determined by the Lenders acting reasonably; (iv) materially adversely impacting the rights and
interests of the Agent or the Lenders, as determined by the Agent or the Lenders acting
reasonably, without the prior written consent of the Agent or the Lenders, as applicable; or (v)
directing any Loan Party to pay any post-employment benefits (excluding the KERP/KEIP);
(k)
Prohibited Filings: the filing of any pleading by any Loan Party seeking any of the matters set
forth in Section 10.1(j) or failure of any Loan Party to diligently oppose any Person that brings an
application or motion for the relief set out in Section 10.1(j);
(l)
Updated Budget Default: if any information in the Updated Budget or Budget Variance Report:
(i) contemplates or forecasts an adverse change or changes from the then existing Agreed Budget
and such change or changes constitute a Material Adverse Change; or (ii) forecasts that
Borrowings under the Credit Facility will exceed the total Commitment at any time (unless and
until the Lenders consent to increase the total Commitment, which shall be in the Lenders' sole
and absolute discretion);
(m)
Cash Flow Test: if, after the date of this Agreement, as at the applicable calculation date, an
Excess Negative Cash Flow Variance exists, other than variance solely due to changes in
currency exchange rates;
(n)
Material Adverse Change: if there occurs any Material Adverse Change;
(o)
Total Commitment: if at any time the Borrowings exceed the total Commitment, provided that if
such excess is a result of exchange rate fluctuations, if such excess is not repaid in accordance
with Section 4.2;
22883504.11
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(p)
Plans and Alternative Restructuring Options: if any Plan is sanctioned or any Alternative
Restructuring Option is consummated by any of the Loan Parties that is not consistent with or
contravenes any provision of this Agreement or any other Loan Document;
(q)
Prohibited Payments: if: (i) except as set out in the Agreed Budget, or as otherwise agreed to in
writing by the Agent, any Loan Party is required by any Governmental Authority to make
expenditures or pay damages, fines, claims, costs or expenses to remediate, in respect of any
Environmental Liabilities, and such requirement is not stayed by a Restructuring Court Order; or
(ii) any Loan Party pays or agrees to pay any of the legal, consulting or other professional fees
and/or disbursements not otherwise included in the Agreed Budget without the prior written
consent of the Agent;
(r)
Permitted Priority Liens: create, permit to exist or seek or support a motion by another party to
provide to any third party a Security Interest on the Collateral which is senior to or pari passu
with the Lender Charge, other than the Permitted Priority Liens;
(s)
Change in Name or Location: change its name, trade name or locations of business from those
set forth in Schedule “E” without giving the Agent 15 days prior notice thereof;
(t)
Amend or Terminate Material Contracts: disclaim, reject, modify, alter, amend, replace,
knowingly waive strict and timely performance of any compliance with (including, without
limitation waive any default under) any material contract or terminate, cancel or suspend or
assign any material contract (except in accordance with its terms) or any material term,
agreement, provision, item, obligation or covenant contained in any material contract, in each
case, in any material respects without the consent of the Agent;
(u)
Insurance Proceeds: make any application or use of any insurance proceeds (other than
proceeds in respect of business interruption insurance) received by it in respect of any single
claim or event which are not used to repair or replace any property which are the subject of such
insurance claim until such application has been approved by the Majority Lenders in writing;
(v)
Milestones: the failure to achieve any one or more of the Milestones at the prescribed times
including, for greater certainty, an Event of Default shall occur for the failure by the Borrower to
use reasonable best efforts as prescribed by any particular Milestone; or
(w)
Bankruptcy, Receivership or Insolvency Proceedings: any of the Loan Parties become subject
to any receivership proceedings or bankruptcy proceedings under the BIA or to any proceeding
under chapter 7 or chapter 11 of the Bankruptcy Code. or in any United States Bankruptcy Court
other than the U.S. Court, or to any other bankruptcy, receivership or insolvency proceedings in
any jurisdiction other than Canada, the United States or any State thereof.
10.2
Acceleration and Demand
Upon the occurrence of any Event of Default which has not been remedied or waived
notwithstanding any other term or provision hereof, the Agent may on behalf of the Lenders and shall, if
so required by the Majority Lenders in respect of any Event of Default, by written notice to the Borrower
(an “Acceleration Notice”):
(a)
Terminate Commitment: declare the total Commitment and each Lender's Commitment and
the right of the Borrower to apply for further Accommodations to be terminated; and
22883504.11
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(b)
Declare Outstandings Due: declare all Outstandings and other indebtedness and liabilities
(whether matured or unmatured) of the Borrower outstanding to the Lenders hereunder to be
immediately due and payable (or to be due and payable at such later time as may be stated in such
notice) without further demand, presentation, protest or other notice of any kind, all of which are
expressly waived by the Borrower,
provided that upon the occurrence of an Event of Default specified in Section 10.1(j)(i) (an “Acceleration
Event”) the Commitment of all Lenders shall automatically terminate and all Borrowings and other
indebtedness and liabilities hereunder and under the other Loan Documents shall automatically become
due and payable, in each case without any requirement that notice be given to the Borrower. Immediately
upon the occurrence of an Event of Default specified in Section 10.1(j)(i) or at the time stated in an
Acceleration Notice, the Borrower shall pay to the Agent on behalf of the Lenders all amounts owing or
payable in respect of all Borrowings and other indebtedness and liabilities hereunder and under the other
Loan Documents, failing which all rights and remedies of the Agent and the Lenders under the Loan
Documents shall thereupon become enforceable.
10.3
Waiver of Default
Any single or partial exercise by any Lender, the Agent or by the Agent on behalf of any
Lender of any right or remedy for a default or breach of any term, covenant, condition or agreement
contained in the Loan Documents shall not be deemed to be a waiver of or to alter, affect or prejudice any
other right or remedy to which the Agent or such Lender may be lawfully entitled for the same default or
breach, and any waiver by any Lender, the Agent or by the Agent on behalf of any Lender of the strict
observance, performance or compliance with any term, covenant, condition or agreement contained in the
Loan Documents, and any indulgence granted thereby, shall be deemed not to be a waiver of any
subsequent default. To the extent permitted by applicable law, the Borrower hereby waives any rights
now or hereafter conferred by statute or otherwise which may limit or modify any of the Agent's or
Lenders' rights or remedies under the Loan Documents.
10.4
Application of Payments Following Demand and Acceleration
Except as otherwise agreed to by all the Lenders in their sole discretion, any sum
received by the Agent at any time after delivery of an Acceleration Notice or the occurrence of an
Acceleration Event which the Agent is obliged to apply in or towards satisfaction of sums due from the
Borrower hereunder shall be applied by the Agent among the Lenders and the Agent in accordance with
amounts owed to the Lenders and the Agent in respect of each category of amounts set forth below, each
such application to be made in the following order with the balance remaining after application in respect
of each category to be applied to the next succeeding category:
(a)
firstly, in or towards payment of any fees or expenses then due and payable to the Agent
hereunder;
(b)
secondly, rateably among the Lenders in respect of amounts due and payable to the Lenders as
and by way of recoverable expenses hereunder;
(c)
thirdly, rateably among the Lenders in respect of amounts due and payable to the Lenders by way
of interest and overdue interest;
(d)
fourthly, rateably among the Lenders in accordance with the proportionate amount of the
Borrowings owed to each of them, respectively, in or towards repayment to the Lenders of the
Borrowings then outstanding hereunder; and
22883504.11
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(e)
fifthly, rateably among the Lenders in respect of any other amount not hereinbefore referred to in
this Section 10.4 which are then due and payable by the Borrower hereunder.
10.5
Remedies
After an Event of Default:
(a) Lenders Instructions: if the Majority Lenders provide directions or instructions to the
Agent, the Agent, on behalf of all Lenders, shall take such actions and commence such
proceedings as the Majority Lenders in their sole discretion may determine and may enforce or
otherwise realize upon any Security, all without any obligation to marshal any Security Interests
and without additional notice, presentation, demand or protest, all of which the Borrower hereby
expressly waives (to the extent such rights may be waived under Applicable Law);
(b)
General Remedies: the rights and remedies of the Agent and each Lender under the
Loan Documents are cumulative and are in addition to and not in substitution for any rights or
remedies provided by law. The Agent may, on behalf of all Lenders, and shall, if so required by
the Majority Lenders, to the extent permitted by applicable law, bring suit at law, in equity or
otherwise for any available relief or purpose including but not limited to:
(i)
Specific Performance: the specific performance of any covenant or agreement
contained in the Loan Documents;
(ii)
Injunction: enjoining a violation of any of the terms of the Loan Documents;
(iii)
law;
Assistance: aiding in the exercise of any power granted by the Loan Documents or by
(iv)
Judgment: obtaining and recovering judgment for any and all amounts due in respect of
the Borrowings or amounts otherwise due hereunder or under the Loan Documents;
(v)
Receiver: seeking, by way of an application to the Canadian Court the appointment of a
Receiver or similar official and such related proceedings in the U.S. Court as may be required;
(vi)
BIA/Chapter 7: seeking to adjudicate the Loan Parties bankrupt or convert the CCAA
Proceedings and the Chapter 15 Proceedings to proceedings under the BIA and/or proceedings
under chapter 7 of the Bankruptcy Code;
(vii)
Monitor: seeking to expand the powers of the Monitor, pursuant to the terms of an order
of the Canadian Court satisfactory to the Monitor, to allow the Monitor to realize on the
Collateral and such ancillary and related relief before the U.S. Court as may be required; or
(vii)
Remedies at Law: exercising the powers and rights of a secured party under the
Personal Property Security Act (Alberta), the Uniform Commercial Code (United States) or any
legislation of similar effect and all such other rights and remedies under the Loan Documents, the
Restructuring Court Orders and applicable law.
10.6
Set-Off
If an Event of Default shall have occurred and be continuing, each Lender and each of
their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent
22883504.11
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permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency)
at any time owing, by such Lender or any such Affiliate, to or for the credit or the account of the
Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan
Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or their
respective Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand
under this Agreement or any other Loan Document and although such obligations of the Borrower or such
Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender
different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness;
provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (i) all
amounts so set off shall be paid over immediately to the Agent for further application in accordance with
the provisions of Section 12.20 and, pending such payment, shall be segregated by such Defaulting
Lender from its other funds and deemed held in trust for the benefit of the Agent and the Lenders, and (ii)
such Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail
the Outstandings owing to such Defaulting Lender as to which it exercised such right of setoff. The rights
of each Lender and their respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each
Lender agrees to notify the Borrower and the Agent promptly after any such setoff and application;
provided that the failure to give such notice shall not affect the validity of such setoff and application.
10.7
Sharing of Payments by Lenders
If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain
payment in respect of any Borrowings or other obligations hereunder resulting in such Lender receiving
payment of a proportion of the aggregate amount of its Borrowings or such other obligations greater than
its Lender's Proportion thereof as provided herein, then the Lender receiving such greater proportion shall
notify the Agent of such fact and purchase (for cash at face value) participations in the Borrowings and
such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that
the benefit of all such payments shall be shared by the Lenders rateably in accordance with the aggregate
amount of Borrowings and other amounts owing them; provided that:
(a)
if any such participations are purchased and all or any portion of the payment giving rise thereto
is recovered, such participations shall be rescinded and the purchase price restored to the extent of
such recovery, without interest; and
(b)
the provisions of this paragraph shall not be construed to apply to:
(i)
any payment made by the Borrower pursuant to and in accordance with the express terms
of this Agreement (including the application of funds arising from the existence of a
Defaulting Lender), or
(ii)
any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Borrowings to any assignee or participant, other than to the
Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall
apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of the Borrower in the amount of such participation.
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10.8
[reserved]
10.9
Lenders May Perform Covenants
After the occurrence of, and during continuance of, an Event of Default, if the Borrower
shall fail to perform any covenant on its part herein contained, the Agent may on behalf of the Lenders
and with the approval of the Majority Lenders, upon five (5) Business Days prior notice to the Borrower,
perform any of the said covenants capable of being performed by it and, if any such covenant requires the
payment or expenditure of money, it may make such payment or expenditure with its own funds on behalf
of the Lenders and shall be entitled to reimbursement of any such expenditure from the Lenders based
upon each Lender's Proportion. All amounts so paid by the Agent hereunder shall be repaid by the
Borrower on demand therefor, and shall bear interest at the rate set forth in Section 5.7 from the date paid
by the Agent hereunder to and including the date such amounts are repaid in full by the Borrower.
ARTICLE 11
EXPENSES AND INDEMNITIES
11.1
Reimbursement of Expenses and Indemnity
All statements, reports, certificates, opinions and other documents or information
required to be furnished to the Agent or the Lenders by the Borrower under this Agreement shall be
supplied by the Borrower without cost to the Agent or the Lenders. In addition, the Borrower hereby
agrees to pay promptly to the Agent on demand all reasonable legal fees and all other reasonable out of
pocket expenses which are incurred from time to time by the Agent in respect of the documentation,
preparation, negotiation, execution, and administration of the Loan Documents (including stamp taxes or
other Taxes payable in connection with the execution, delivery or enforcement of the Loan Documents)
and all expenses which are incurred from time to time by the Agent or the Lenders in respect of the
enforcement of this Agreement and any other Loan Documents.
11.2
Increased Cost
If, subsequent to the date of this Agreement, the introduction of, any change in or the
implementation of any applicable law, regulation, treaty or official directive or regulatory requirement of
general application now or hereafter in effect (whether or not having the force of law) or any change in
the interpretation or application thereof by any court or by any judicial or governmental authority charged
with the interpretation or administration thereof, or if compliance by any Lender with any request from
any central bank or other fiscal, monetary or other authority (whether or not having the force of law):
(a)
subjects a Lender to any Tax, or changes the basis of taxation of payments due to such Lender or
increases any existing Tax, on payments of principal, interest or other amounts payable by the
Borrower to such Lender under this Agreement;
(b)
imposes, modifies or deems applicable any reserve, special deposit, capital adequacy, regulatory
or similar requirement against assets or liabilities held by, or deposits in or for the account of, or
loans by, or any other acquisition of funds for loans or commitments to fund loans or obligations
in respect of bankers' acceptances accepted by a Lender; or
(c)
imposes on a Lender any other condition with respect to this Agreement;
(each a “circumstance”)
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and the result of (a), (b), or (c) is, in the sole determination of such Lender acting reasonably and in good
faith, to increase the cost to such Lender or to reduce the income or return which is receivable by such
Lender in respect of a Borrowing or standby fees payable pursuant to Section 5.8, such Lender shall
promptly notify the Agent. Notwithstanding anything herein to the contrary, (a) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all regulations, requests, rules, guidelines or directives
thereunder or issued in connection therewith, and (b) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or
any successor or similar authority) or the United States, Canadian or other regulatory authorities, in each
case pursuant to Basel III ((a) and (b) being, the “New Rules”), shall in each case be deemed to be a
“change in law” for the purposes of this Section 11.2, regardless of the date enacted, adopted or issued, in
each case to the extent that such New Rules are materially different from those applicable laws,
regulations, treaties or official directives or regulatory requirements (or the interpretation or application
thereof) which are in full force and effect on the Effective Date. The Agent shall promptly notify the
Borrower and the Borrower shall pay to the Agent for the benefit of such Lender that amount which
compensates such Lender for such additional cost or reduction in income (“Additional Compensation”)
on the next date on which standby fees are payable under Section 5.8 in the case of standby fees and on
the next Interest Date in any other case (and each such successive date, if applicable (unless the Lender
knew on the date of such Lender becoming a lender hereunder, of such circumstance and the likely result
thereof and provided that such Lender is treating similar Borrower in a similar manner in respect of such
circumstance). The Borrower shall not be obligated to pay any portion of such Additional Compensation
accruing under this Section 11.2 for any period prior to the date which is six (6) months prior to the date
on which the Agent, on behalf of the Lender, gives notice to the Borrower that such Additional
Compensation is so accruing. A certificate by a duly authorized officer of such Lender prepared in good
faith setting forth the amount of the Additional Compensation and the basis for it must be submitted by
the Agent to the Borrower and is conclusive evidence, in the absence of manifest error, of the amount of
the Additional Compensation. If the Agent notifies the Borrower that Additional Compensation is owed,
the Borrower shall pay such Additional Compensation to the Agent for the account of such Lender and
the Borrower shall have the right, upon written irrevocable prior notice of at least three (3) Business Days
to the Agent at the Agent's Branch of Account, to make payment in full to the Agent for the account of
such Lender in respect of the applicable Borrowing on the date specified in such notice together with
accrued interest in respect of such Borrowing or to convert such Borrowing into another basis of
Borrowing available under this Agreement.
11.3
Illegality
If the introduction of or any change in applicable law, regulation, treaty or official
directive, or regulatory requirement (whether or not having the force of law) or in the interpretation or
application thereof by any court or by any governmental authority charged with the administration
thereof, makes it unlawful, or prohibited for a Lender (in its sole opinion) to make, to fund or to maintain
the Borrowings or a portion of the Borrowings or to perform its obligations under this Agreement, the
Lender may, by written notice to the Borrower through the Agent terminate its obligations under this
Agreement to make such Borrowings or perform such obligations and the Borrower shall prepay such
Borrowings forthwith (or at the end of such period as the Lender in its discretion agrees acting in good
faith) together with all accrued but unpaid interest and fees as may be applicable to the date of payment or
convert by notice to the Agent such Borrowings forthwith into another basis of Borrowing available under
this Agreement. If any Lender determines, acting reasonably, that any applicable law has made it
unlawful, or that any governmental authority has asserted that it is unlawful, for such Lender to hold or
benefit from a Security Interest over real property pursuant to any law of the U.S. or any state thereof,
such Lender may notify the Agent and disclaim any benefit of such Security Interest to the extent of such
illegality; provided, that such determination or disclaimer shall not invalidate or render unenforceable
such Security Interest for the benefit of any other Lender.
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11.4
[reserved]
11.5
General Indemnity and Release
The Borrower hereby covenants with the Agent and each Lender that it shall at all times
hereafter keep the Agent and such Lender indemnified and held harmless from and against all suits
(whether founded or unfounded), actions, proceedings, judgments, demands or claims instituted or made
against the Agent or such Lender, and all liabilities, obligations, losses, damages, penalties, costs,
expenses and disbursements of any kind or nature whatsoever (including all legal fees on a solicitor and
his own client basis) which may be imposed on, incurred by or asserted against the Agent or such Lender
in any way relating to, arising out of, or incidental to any Environmental Laws or relating to or arising out
of this Agreement or the other Loan Documents or relating to or arising as a result of any default by the
Borrower or any other Loan Party under any provision of any of the Loan Documents, except in each case
to the extent such losses result from the gross negligence or wilful misconduct of the Agent or such
Lender. If and for so long as no Default or Event of Default has occurred and is continuing, the Borrower,
at its option, shall be entitled to conduct the defence of such suit, action or proceeding with the
participation of and taking into account the best interests of the Agent or such Lender. If the Agent or
such Lender shall determine in good faith that the defence of any such suit, action or proceeding is not
being conducted in the best interests of the Agent or such Lender, the Agent or such Lender shall on
notice to the Borrower (and for the account of the Borrower) be entitled to take over the sole conduct of
the defence of such suit, action or proceeding. This indemnity shall extend to the officers, directors,
employees, agents, shareholders and assignees of the Agent and each Lender.
The Loan Parties hereby acknowledge effective upon the issuance and entry of the Initial
Order, that the Loan Parties have no defense, counterclaim, offset, recoupment, cross-complaint, claim or
demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all or any part of the
Loan Parties’ liability to prepay or repay the Agent or any Lender as provided in this Agreement or other
Loan Documents, the Pre-Filing Agent or any Pre-Filing Secured Creditor as provided in the Pre-Filing
Secured Credit Agreement or other Loan Documents (as such term is defined in the Pre-Filing Secured
Credit Agreement) or to seek affirmative relief or damages of any kind or nature from the Agent or any
Lender or the Pre-Filing Agent or any Pre-Filing Secured Creditor. The Loan Parties on behalf of all their
successors, assigns, Subsidiaries and any Affiliates and any Person acting for and on behalf of, or
claiming through them, (collectively, the “Releasing Parties”), hereby fully, finally and forever release
and discharge the Agent, Lenders, the Pre-Filing Agent and each Pre-Filing Secured Creditor and all of
Agents’, Lenders’, the Pre-Filing Agent’s and each Pre-Filing Secured Creditor’s past and present
officers, directors, agents, attorneys, assigns, heirs, parents, subsidiaries, and each person acting for or on
behalf of any of them (collectively, the “Released Parties”) of and from any and all past and present
actions, causes of action, demands, suits, claims, liabilities, liens, lawsuits, adverse consequences,
amounts paid in settlement, costs, damages, debts, deficiencies, diminution in value, disbursements,
expenses, losses and other obligations of any kind or nature whatsoever, whether in law, equity or
otherwise, whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or
unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which
may heretofore accrue against any of the Released Parties, whether held in a personal or representative
capacity, and which are based on any act, fact, event or omission or other matter, cause or thing occurring
at or from any time prior to and including the date hereof in any way, directly or indirectly arising out of,
connected with or relating to this Agreement, the other Loan Documents, the Pre-Filing Secured Credit
Agreement and other Loan Documents (as such term is defined in the Pre-Filing Secured Credit
Agreement), the Restructuring Orders and the transactions contemplated hereby, and all other agreements,
certificates, instruments and other documents and statements (whether written or oral) related to any of
the foregoing; provided, that nothing herein shall be deemed to be a release of the Agent or any Lender
from its obligations under the under this Agreement.
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11.6
Replacement Lender
If:
(a)
a Lender exercises its rights under Section 11.2 or Section 11.3;
(b)
the Borrower is required under Section 6.3 to increase the amount of any payments in respect of
withholding Taxes or required deductions for amounts owing to any Lender;
(c)
any Lender withholds its consent to any amendment, consent or determination requested by the
Borrower which requires the approval of the Lenders and as a consequence thereof such
amendment, consent or determination cannot be obtained; or
(d)
a Lender becomes a Defaulting Lender;
the Borrower may, treating each affected Lender rateably and in the same manner as other Lenders
subject to similar circumstances (all such Lenders being the “Affected Lenders”), replace all Affected
Lenders by reaching satisfactory arrangements with one or more existing Lenders or new Lenders that are
acceptable to the Agent, acting reasonably, for the purchase of all of such Affected Lenders'
Commitments as long as:
(e)
if the amendment, consent or determination required the consent of the Majority Lenders and the
same was not obtained, the consent of all Lenders approving such amendment, consent or
determination is obtained to the replacement of the Affected Lenders;
(f)
such purchasing Lender(s) unconditionally offers in writing (with copy to the Agent) to purchase
all of the rights and obligations of the Affected Lender(s) including all outstanding Borrowings
owed to such Affected Lender(s) for a purchase price equal to the aggregate Borrowings owed to
the Affected Lender(s) (payable in immediately available funds);
(g)
the obligations of the Borrower owing pursuant to Section 6.3, Section 11.1 and if applicable,
Section 11.2, to the Affected Lender(s) are paid in full to the Affected Lender(s) concurrently
with such replacement; and
(h)
all requirements set forth in Section 13.1 with respect to such assignment are complied with,
including entering into of an Assignment and Assumption Agreement and the payment by the
purchasing Lender to the Agent (for the Agent's own account) of the assignment fee contemplated
in Section 13.1.
11.7
Waiver of Consequential Damages, Etc.
To the fullest extent permitted by applicable law, the Borrower shall not assert, and the
Borrower hereby waives, any claim against the Agent and the Lenders, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out
of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby, any Borrowing, or the
use of the proceeds thereof. Neither the Agent nor any Lender shall be liable for any damages arising
from the use by unintended recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
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ARTICLE 12
THE AGENT AND THE LENDERS
12.1
Authorization of Agent
Each Lender irrevocably appoints and authorizes the Agent to exercise such powers,
perform such duties, take such actions, make such decisions and determinations and give such consents
under the Loan Documents as are required to be exercised, performed, taken, made, given or otherwise
carried out by the Agent hereunder or under any other agreement between the Lenders, together with all
powers reasonably incidental thereto. As to any matters not expressly required by this Agreement or by
any other agreement between the Lenders to be carried out by the Agent, the Agent is not required to
exercise any discretion or take or to refrain from taking any action except upon the written instructions of
the Majority Lenders. Notwithstanding anything to the contrary in this Agreement, the Agent shall not be
required to exercise any discretion or to take or to refrain from taking any action in any manner which is
contrary to the Loan Documents, to any other agreement between the Lenders or to applicable law.
12.2
Responsibility of Agent
The Agent makes no representation or warranty and accepts no responsibility with
respect to the due execution, legality, validity, sufficiency, enforceability or priority of any of the Loan
Documents nor with respect to the due execution, legality, validity, sufficiency, enforceability, accuracy
or authenticity of any documents, papers, materials or other information furnished by the Borrower (or
any other person, including the Agent) in connection with the Loan Documents, whether provided before
or after the date of this Agreement. The Agent shall incur no liability to the Lenders under or in respect
of the Loan Documents with respect to anything which it may do or refrain from doing in the reasonable
exercise of its judgment or which may seem to it to be necessary or desirable in the circumstances, except
for its gross negligence or wilful misconduct. The Agent assumes no responsibility for the payment of
any of the Borrowings or other amounts outstanding hereunder by the Borrower.
12.3
Acknowledgment of Lenders
Each Lender acknowledges to the Agent that it has been, and will continue to be, solely
responsible for making its own independent appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of the Borrower and accordingly each Lender confirms to the
Agent that it has not relied, and will not hereafter rely on the Agent:
(a)
Information: to check or inquire on its behalf into the adequacy, accuracy or completeness of
any information provided by the Borrower or any other Loan Party or in connection with the
Loan Documents (whether or not such information has been or is hereafter circulated to such
Lender by the Agent);
(b)
Performance: to inquire as to the performance by the Borrower or any other Loan Party of its
obligations under the Loan Documents; or
(c)
Credit Review: to assess or keep under review on its behalf the financial condition,
creditworthiness, affairs, status or nature of the Borrower or any other Loan Party.
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12.4
Rights and Obligations of Each Lender
The rights and obligations of each Lender under this Agreement are several and no
Lender shall be obligated to make Borrowings available to the Borrower in excess of its Commitment.
The failure of a Lender to perform its obligations under this Agreement shall neither:
(a)
result in any other Lender incurring any liability whatsoever; nor
(b)
relieve the Borrower, any other Loan Party or any other Lender from their respective obligations
under any Loan Document.
Nothing contained herein or in any other Loan Document nor any action taken pursuant hereto or thereto
shall be deemed to constitute the Lenders a partnership, joint venture or any other similar entity.
12.5
Determinations by Lenders
(a)
Lenders' Determinations: Where the provisions of this Agreement provide that any waiver of
or any amendment to any provision of the Loan Documents may be made or any action, consent
or other determination in connection with the Loan Documents may be taken or given, with the
consent or agreement of the Majority Lenders or “the Lenders” and not “all the Lenders”, then
any such waiver, amendment, action, consent or determination so made, so taken or so given with
the consent or agreement of the Majority Lenders shall be binding on all of the Lenders and all of
the Lenders shall cooperate in all ways necessary or desirable to implement and effect such
waiver, amendment, action, consent or determination.
(b)
Deemed Non-Consent: If the Agent delivers a written notice to a Lender requesting advice from
such Lender as to whether it consents or objects to any matter in connection with the Loan
Documents, then, except as otherwise expressly provided herein, if such Lender does not deliver
to the Agent its written consent or objection to such matter within fifteen (15) Business Days of
the delivery of such written notice by the Agent to such Lender, such Lender shall be deemed not
to have consented thereto upon the expiry of such fifteen (15) Business Day period.
12.6
Notices between the Lenders, the Agent and the Borrower
All notices by the Lenders to the Agent shall be through the Agent's Branch of Account
and all notices by the Agent to a Lender shall be through such Lender's Branch of Account. All notices or
communications between the Borrower and the Lenders which are required or contemplated pursuant to
the Loan Documents shall be given or made through the Agent at the Agent's Branch of Account.
12.7
Agent's Duty to Deliver Documents Obtained from the Borrower
Without limiting the Borrower's obligations under this Agreement, the Agent shall within
five (5) Business Days, deliver to each Lender, at its Branch of Account, such documents, papers,
materials, notices and other information as are furnished by the Borrower to the Agent on behalf of such
Lender pursuant to this Agreement, and the Borrower shall provide the Agent with sufficient copies of all
such information for such purpose. The Agent, on behalf of a Lender, shall, and any Lender shall be
entitled to, make requests of the Borrower pursuant to Section 9.1(aa) from time to time for such
information as such Lender may from time to time reasonably request.
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12.8
Arrangements for Borrowings
The Agent shall promptly give written notice to each applicable Lender at its Branch of
Account upon receipt by the Agent of any Drawdown Notice given pursuant hereto. The Agent shall
advise each Lender of the amount, date and details of each applicable Accommodation and of such
Lender's participation in each such Borrowing. At or before 11:00 a.m. (Calgary time) on the Drawdown
Date, each applicable Lender will make its share of Accommodations by way of Loans available to the
Borrower at the Agent's Account for Payments by forwarding to the Agent the amount of Loans required
to be made available by such Lender.
12.9
Arrangements for Repayment of Borrowings
(a)
Prior to Acceleration: Prior to the delivery of an Acceleration Notice or the occurrence of an
Acceleration Event, upon receipt by the Agent of payments from the Borrower on account of
principal, interest, fees or other amounts made to the Agent on behalf of the Lenders, the Agent
shall pay over to each Lender at its Branch of Account the amount to which it is entitled under
this Agreement and shall use its best efforts to make such payment to such Lender on the same
Business Day on which such payment is received by the Agent.
(b)
Subsequent to Demand and Acceleration: Following the delivery of an Acceleration Notice or
the occurrence of an Acceleration Event, the Lenders shall share any payments subsequently
received in accordance with Section 10.4 of this Agreement.
12.10
Repayment by Lenders to Agent
(a)
Where the Borrower Fails to Pay: Unless the Agent has been notified in writing by the
Borrower at least one (1) Business Day prior to the date on which any payment to be made by the
Borrower hereunder is due that the Borrower does not intend to remit such payment, the Agent
may, in its discretion, assume that the Borrower has remitted such payment when so due and the
Agent may, in its discretion and in reliance upon such assumption, make available to each Lender
on such payment date an amount equal to the amount of such payment which is due by the
Borrower to such Lender pursuant to this Agreement. If the Borrower does not in fact remit such
payment to the Agent, the Agent shall promptly notify each Lender and each such Lender shall
forthwith on demand repay to the Agent the amount of such assumed payment made available to
such Lender, together with interest thereon until the date of repayment thereof at a rate
determined by the Agent (such rate to be conclusive and binding on such Lender) in accordance
with the Agent's usual banking practice for similar advances to financial institutions of like
standing to such Lender.
(b)
Where a Lender Fails to Pay: Unless the Agent has been notified in writing by a Lender at
least one (1) Business Day prior to a Drawdown Date that such Lender does not intend to make
available the amount required to be made available by such Lender pursuant to this Agreement on
such Drawdown Date, the Agent may, in its discretion, assume that such Lender has remitted
funds to the Agent in an amount equal to the amount required to be made available by such
Lender pursuant to this Agreement and the Agent may, in its discretion and in reliance upon such
assumption, make available to the Borrower on such Drawdown Date an amount equal to the
amount required to be made available by such Lender to the Borrower pursuant to this
Agreement. If a Lender does not in fact remit such funds to the Agent, the Agent shall promptly
notify such Lender and such Lender shall forthwith remit such funds to the Agent, failing which
the Borrower shall forthwith on demand repay to the Agent (without prejudice to the Borrower's
rights against such Lender) the amount made available by the Agent on behalf of such Lender, in
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each case together with interest thereon until the date of repayment thereof at a rate determined
by the Agent (such rate to be conclusive and binding on such Lender or the Borrower, as the case
may be) in accordance with the Agent's usual banking practice for similar advances to financial
institutions of like standing to such Lender.
12.11
Adjustments Among Lenders
(a)
Adjustments to Outstanding Borrowings: Each Lender agrees that, after the delivery of an
Acceleration Notice or the occurrence of an Acceleration Event, it will at any time and from time
to time upon the request of the Agent as required by any Lender purchase portions of the
Borrowings made available by the other Lenders, which, in any case, remain outstanding and
make any other adjustments which may be necessary or appropriate, in order that the amount of
Borrowings made available by each Lender which remain outstanding, as adjusted pursuant to
this Section 12.11, will be in the same proportion as the Lender's Proportion.
(b)
Application of Payments: The Lenders agree that, after the delivery of an Acceleration Notice
or the occurrence of an Acceleration Event, the amount of any repayment made by the Borrower
in respect of Borrowings under this Agreement, and the amount of any proceeds from the exercise
of any rights or remedies of the Lenders under the Loan Documents, which are to be applied
against amounts owing hereunder, will be applied pursuant to Section 10.4 of this Agreement.
(c)
Receipt of Payments other than Borrowings: Notwithstanding anything contained in this
Section 12.11, there shall not be taken into account for the purposes of computing any amount
payable to any Lender pursuant to this Section 12.11, any amount which a Lender receives as a
result of any payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of any monies owing by the Borrower to such Lender other than
on account of liabilities arising under the Loan Documents; provided that, if at any time a Lender
receives any payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of monies owing or payable to it by the Borrower in respect of
liabilities of the Borrower arising under the Loan Documents, but subject to the provisions of
Section 10.6, such Lender shall purchase portions of the Borrowings made available by the other
Lenders which remain outstanding to the extent required pursuant to Section 12.11(a), whether
before or after an Acceleration Notice or Acceleration Event.
(d)
Further Assurances: The Borrower agrees to be bound by and, at the request of the Agent, to do
all things necessary or appropriate to give effect to any and all purchases and other adjustments
made by and between the Lenders pursuant to this Section 12.11 but shall incur no increased
liabilities, in aggregate, by reason thereof.
12.12
(a)
Lenders' Consents to Waivers, Amendments, etc.
Unanimous Consent: Any waiver of or any amendment to a provision of the Loan Documents
which relates to:
(i)
a change in the types of Accommodations or interest periods relating thereto other than as
provided for herein;
(ii)
an increase or decrease in the Commitment of any Lender other than as provided for
herein;
(iii)
a decrease in the Applicable Pricing Margin or any other interest or standby fees;
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(iv)
any change in the Maturity Date of a Lender other than as provided for herein;
(v)
a change in the definition of Majority Lenders or any other definition to the extent
relevant to any of the provisions of this Section 12.12(a) or payment of any material
amount and the timing and terms thereof;
(vi)
any matter which, pursuant to the Loan Documents, specifically requires the consent or
agreement of all of the Lenders;
(vii)
the provisions of Section 12.11 and this Section 12.12(a);
(viii)
Section 9.2(s) or any Event of Default;
(ix)
Section 10.4; or
(x)
the release or discharge of or any material amendment to any Security, except as
provided by Section 7.8 and except for modifications which are mechanical and
administrative in nature;
shall bind the Lenders only if such waiver or amendment is agreed to in writing by all of the
Lenders.
(b)
Majority Consent: Subject to Section 12.12(a) and except as otherwise provided in the Loan
Documents, any waiver of or any amendment to any provision of the Loan Documents and any
action, consent or other determination in connection with the Loan Documents shall bind all of
the Lenders if such waiver, amendment, action, consent or other determination is agreed to in
writing by the Majority Lenders.
(c)
Agent's Consent: Any waiver of or any amendment to any provision of the Loan Documents
which relates to the rights or obligations of the Agent shall require the agreement of the Agent
thereto.
12.13
Reliance by Agent on Notices, etc.
The Agent shall be entitled:
(a)
Reliance on Written Documents: to rely upon any writing, letter, notice, certificate, telex,
facsimile copy, cable, statement, order or other document believed by the Agent to be genuine
and correct and to have been signed, sent or made by the proper person or persons; and
(b)
Reliance on Legal Advice: with respect to legal matters, to act upon advice of legal advisors
selected by the Agent concerning all matters pertaining to the Loan Documents and the Agent's
duties thereunder;
and the Agent shall assume no responsibility and shall incur no liability to the Borrower or any Lender by
reason of relying on any such document or acting on any such advice.
12.14
Relations with the Borrower
Except for the transactions provided for in this Agreement, each Lender may deal with
the Borrower in all transactions and generally do any banking business with or provide any financial
services to the Borrower without having any liability to account to the other Lenders therefor. With
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respect to the Agent's Commitment and Lender's Proportion, the Agent shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as though it were not the
Agent.
12.15
Sharing of Information
Subject to Section 13.2, the Borrower authorizes the Agent and each Lender to share
among each other and with any successor, assignee, or any potential assignee, any information possessed
by it regarding itself, any other Loan Party or the Loan Documents. The Agent and each Lender agrees to
keep all information provided by the Borrower or any other Loan Party confidential and shall not disclose
such information to any person whatsoever (other than as provided for herein and other than to employees
and professional advisors in the necessary course of business). Without limiting the foregoing or anything
else in this Agreement, the Borrower, the Agent and the Lenders hereby acknowledge and agree that the
Monitor shall be authorized to have direct discussions with the Agent and Lenders, and the Agent and the
Lenders shall be entitled to receive information from the Monitor as may be requested by the Lenders
from time to time.
12.16
Successor Agent
Subject to the appointment and acceptance of a successor agent as provided in this
Section 12.16, the Agent may resign at any time by giving written notice thereof to each Lender and the
Borrower, and the Agent may be removed at any time for cause by the Lenders other than the Agent in its
capacity as a Lender (the “Remaining Lenders”) provided that Remaining Lenders holding aggregate
Commitments of seventy five percent (75%) or more of the aggregate Commitments of all the Remaining
Lenders consent to such removal. Upon any such resignation or removal, the Remaining Lenders shall
have the right to appoint a successor agent with the written approval of the Borrower (such approval not
to be unreasonably withheld). Any successor agent appointed under this Section 12.16 shall be a Lender
which has offices in Calgary, Alberta. If no successor agent shall have been appointed by the Remaining
Lenders and shall have accepted such appointment within thirty (30) days after the retiring agent's giving
of notice of resignation or the Remaining Lenders' removal of the retiring agent, then the retiring agent
may, on behalf of the Lenders and with the written approval of the Borrower (such approval not to be
unreasonably withheld), appoint a successor agent. Upon the acceptance of any appointment as Agent by
a successor agent such successor agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring agent as Agent, and the retiring agent shall be discharged
from its duties and obligations under this Agreement as Agent. After any retiring agent's resignation or
removal hereunder as the Agent, the provisions of this Agreement shall continue in effect for its benefit
and for the benefit of the Lenders in respect of any actions taken or omitted to be taken by the retiring
agent while it was acting as the Agent.
12.17
Amendment of this Article 12
Save and except for the provisions of Section 12.12 and Section 12.16, the provisions of
this Article 12 may be amended or added to, from time to time, without the agreement of the Borrower
provided such amendment or addition does not adversely affect the rights of the Borrower hereunder or
increase, in aggregate, the liabilities of the Borrower hereunder. If such amendment or addition is made
prior to the occurrence of an Event of Default, a copy of the instrument evidencing such amendment or
addition shall be forwarded by the Agent to the Borrower as soon as practicable following the execution
thereof.
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12.18
Dealing with Agent
In the absence of notice or any actual knowledge of a lack of authority of the Agent to act
for and on behalf of the Lenders in respect of any matter hereunder or under the Loan Documents, the
Borrower shall be entitled to conclusively assume that any certificate, directive or other writing of the
Agent for and on behalf of the Lenders in connection with such matter has been duly authorized by the
Lenders in accordance with this Agreement.
12.19
Indemnity of Agent
Each Lender hereby agrees to indemnify the Agent (to the extent not reimbursed by the
Borrower), as to its Lender's Proportion from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or the other Loan Documents or any action taken or omitted by the Agent
under or in respect of this Agreement or the other Loan Documents provided that the Lenders shall not be
liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or wilful misconduct.
Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its Lender's Proportion of any out-of-pocket expenses (including counsel fees) incurred
by the Agent in connection with the preservation of any rights of the Agent or the Lenders under, or the
enforcement of, or legal advice in respect of rights or responsibilities under, this Agreement and the other
Loan Documents, to the extent that the Agent is not reimbursed for such expenses by the Borrower.
12.20
The Agent and Defaulting Lenders
(a)
Cash Collateral: Each Defaulting Lender shall to the extent permitted by applicable law be
required to provide to the Agent on request cash in an amount, as shall be determined from time
to time by the Agent in its discretion, equal to all obligations of such Defaulting Lender to the
Agent that are owing or may become owing pursuant to this Agreement, including such
Defaulting Lender's obligation to pay, in accordance with its Lender's Proportion, any
indemnification or expense reimbursement amounts not paid by the Borrower, provided that, for
greater certainty, such obligations do not include any unadvanced portion of a Defaulting
Lender's Commitment. Such cash shall be held by the Agent in a cash collateral account. The
Agent shall be entitled to apply the foregoing cash in accordance with Section 12.19.
(b)
Indemnity: In addition to the indemnity and reimbursement obligations in Section 12.19, each
Lender agrees to indemnify the Agent for and hold it harmless against (to the extent not
reimbursed by the Borrower or reimbursed as a result of a realization on the Security), in
accordance with its Lender's Proportion (and in calculating the Lender's Proportion of a Lender,
ignoring the Commitments of Defaulting Lenders), any amount that a Defaulting Lender fails to
pay the Agent and which is due and owing to the Agent pursuant to Section 12.19 and which was
required to be paid or reimbursed by the Borrower. Each Defaulting Lender agrees to indemnify
each other Lender for any amounts paid by such Lender and which would otherwise be payable
by the Defaulting Lender.
(c)
Set Off and Deposit: The Agent shall be entitled to set off any Defaulting Lender's Lender's
Proportion of all payments received from the Borrower against such Defaulting Lender's
obligations to make payments and fund Accommodations required to be made by it.
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(d)
No Liability: For greater certainty and in addition to the foregoing, neither the Agent nor any of
its Affiliates nor any of their respective shareholders, officers, directors, employees, agents or
representatives shall be liable to any Lender (including, without limitation, a Defaulting Lender)
for any action taken or omitted to be taken by it in connection with amounts payable by the
Borrower to a Defaulting Lender and received and deposited by the Agent in a cash collateral
account and applied in accordance with the provisions of this Agreement, save and except for the
gross negligence or wilful misconduct of the Agent.
(e)
Accommodations: If the Agent has actual knowledge that a Lender is a Defaulting Lender at the
time that the Agent receives a Drawdown Notice, then each other Lender shall fund its Lender's
Proportion of such affected Accommodation (and, in calculating such Lender's Proportion, the
Agent shall ignore the Commitments of each such Defaulting Lender); provided that, for
certainty, no Lender shall be obligated by this Section 12.20(e) to make or provide
Accommodations in excess of its Commitment. If the Agent acquires actual knowledge that a
Lender is a Defaulting Lender at any time after the Agent received a Drawdown Notice, then the
Agent shall promptly notify the Borrower that such Lender is a Defaulting Lender (and such
Lender shall be deemed to have consented to such disclosure). Each Defaulting Lender agrees to
indemnify each other Lender for any amounts funded or paid by such Lender under this Section
12.20(e) and which would otherwise have been funded or paid by the Defaulting Lender if its
Commitment had been included in determining the Lender's Proportion of such affected
Accommodations.
ARTICLE 13
SUCCESSORS AND ASSIGNS
13.1
Successors and Assigns
The Borrower may not assign its rights or obligations hereunder without the prior written
consent of all of the Lenders. If an Event of Default has occurred and is continuing, a Lender may, at the
Borrower's cost and expense, with the prior consent of the Agent (such consent not to be unreasonably
withheld) and upon payment by the applicable Lender to the Agent of Cdn. $3,500, but without the
Borrower's consent, assign in whole or in part its rights and obligations under this Agreement and the
other Loan Documents. If no Event of Default has occurred, a Lender may, at its sole cost and expense,
with the prior consent of the Agent and the Borrower (such consents not to be unreasonably withheld) and
upon payment to the Agent of Cdn. $3,500 (or such lesser amount as may be acceptable to the Agent),
assign in whole or in part its rights and obligations under this Agreement and the other Loan Documents
where such Lender assigns minimum amounts of its Commitment of at least Cdn. $1,000,000 and, to the
extent it is not an assignment of the whole of its Commitment, such Lender would thereafter retain for its
own account a Commitment of at least Cdn. $1,000,000. Notwithstanding the foregoing and without the
consent of the Borrower or the Agent, a Lender may, at any time, assign all or any part of its Commitment
to an Affiliate of such Lender. Upon any assignment by a Lender to an assignee permitted by this
Section 13.1 (a “Permitted Assignee”) in accordance with the provisions of this Section, (a) such Lender
shall cause such Permitted Assignee to execute an Assignment and Assumption Agreement and to be
substituted for such Lender in respect of the whole or any part of its rights and obligations under the Loan
Documents which are so assigned and such Lender shall, as of the effective date thereof, be released from
its obligations to the Borrower hereunder arising subsequent to such date to the extent thereof, and (b) the
Borrower shall cause its legal counsel to provide any required reliance letters (or new opinions) so as to
ensure that such Permitted Assignee can rely upon the opinions previously provided in favour of the
Lenders in connection with the Loan Documents. Any such assignment shall not increase, in aggregate,
the liabilities of the Borrower hereunder, other than the requirement to pay the costs of any required
reliance letters (or new opinions) from its counsel and to pay any costs and expenses associated with an
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assignment by the Borrower or by a Lender if an Event of Default has occurred and is continuing.
Nothing in this Section 13.1 shall restrict a Lender from the sale of participations in all or any part of the
Borrowings made or to be made by it; provided that any increased costs to the Borrower as a result of any
such participation shall be for the account of such Lender and that the selling Lender shall continue to be
obligated as a Lender hereunder notwithstanding any such participation. A person who acquires a
participation in Borrowings hereunder shall have no standing as a Lender under the Loan Documents and
shall not acquire as a result thereof any rights or benefits under any of the Loan Documents in relation to
the Borrower and the other Loan Parties.
13.2
Exchange and Confidentiality of Information
Each of the Lenders and the Agent acknowledges the confidential nature of the financial,
operational and other information, reports and data provided and to be provided to them by the Borrower
and the other Loan Parties pursuant to this Agreement including, without limitation, any confidential
information obtained pursuant to Section 9.1(aa) (collectively, the “Information”) and agrees to hold the
Information in confidence and shall not discuss or disclose or allow access to, or transfer or transmit the
Information to any person, provided however that:
(a)
each of the Lenders and the Agent may disclose all or any part of the Information if such
disclosure is required by any applicable law or regulation, or by applicable order, policy or
directive having the force of law, to the extent of such requirement, or is required in connection
with any actual or threatened judicial, administrative or governmental proceeding, including,
without limitation, proceedings initiated under or in respect of this Agreement, provided that in
any such circumstance the Lenders and the Agent, as soon as reasonably practicable, shall advise
the Borrower of their obligation to disclose such Information in order to enable the Borrower, if it
so chooses, to attempt to ensure that any such disclosure is made on a confidential basis;
(b)
each of the Lenders and the Agent may disclose Information to each other and to any Permitted
Assignees or participants and to their respective counsel, agents, employees and advisors who
have a need to know; provided that in the case of a participant, the participant has provided the
Agent or the applicable Lender with the written agreement referred to in Section 13.2(c) and, in
the case of any such agents and advisors, the Agent or the applicable Lender shall advise such
person of the confidential nature of the Information;
(c)
each of the Lenders and the Agent may disclose and discuss the Information with credit officers
of any potential Permitted Assignees for the purposes of assignment pursuant to Section 13.1 or
any participant for the purposes of a participation; provided that such potential Permitted
Assignee or participant shall have, for the benefit of the Borrower, previously provided to the
Agent or such Lender, as the case may be, its written agreement to hold the Information under the
same obligations of confidentiality as set forth in this Section 13.2 at all times prior to and, if
applicable, after becoming a Permitted Assignee or participant;
(d)
each of the Lenders and the Agent may disclose all or any part of the Information so as to enable
such Lender or the Agent to initiate any lawsuit against the Borrower or any other Loan Party or
to defend any lawsuit commenced by the Borrower or any other Loan Party with respect to or
arising from the Loan Documents, the issues of which are directly or indirectly related to the
Information, but only to the extent such disclosure is necessary or desirable to the initiation or
defense of such lawsuit; and
(e)
each of the Lenders and the Agent may disclose Information to any person with the prior written
consent of the Borrower.
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Notwithstanding the foregoing, “Information” shall not include any such information:
(f)
which is or becomes readily available to the public (other than by a breach hereof or by a breach
of an obligation of confidentiality imposed on a Permitted Assignee or participant or other person
referred to in this Section 13.2) or which has been made readily available to the public by the
Borrower;
(g)
which the Agent or any Lender can show was, prior to receipt thereof from the Borrower,
lawfully in the Agent's or the Lender's possession and not then subject to any obligation on its
part to or for the benefit of the Borrower to maintain confidentiality; or
(h)
which the Agent or any Lender received from a third party, prior to receipt thereof from the
Borrower, which was not, to the knowledge of the Agent or such Lender after due enquiry,
subject to a duty of confidentiality to or for the benefit of the Borrower at the time the
Information was so received.
ARTICLE 14
MISCELLANEOUS
14.1
Severability
Any provision of this Agreement which is or becomes prohibited or unenforceable in any
jurisdiction does not invalidate, affect or impair the remaining provisions hereof in such jurisdiction and
any such prohibition or unenforceability in any jurisdiction does not invalidate or render unenforceable
such provision in any other jurisdiction.
14.2
Survival of Undertakings
All covenants, undertakings, agreements, representations and warranties made pursuant
to this Agreement survive the execution and delivery of this Agreement and continue in full force and
effect until the full payment and satisfaction of all obligations of the Borrower incurred pursuant to the
Loan Documents and the termination of this Agreement.
14.3
Failure to Act
No failure, omission or delay on the part of the Agent or any Lender in exercising any
right, power or privilege hereunder shall impair such right, power or privilege or operate as a waiver
thereof nor shall any single or partial exercise of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or privilege.
14.4
Amendments
No amendment, waiver, discharge or termination of any provision of the Loan
Documents shall in any event be effective unless it is in conformity with Section 12.12 and then such
amendment, waiver, discharge or termination will be effective only in the specific instance, for the
specific purpose and for the specific length of time for which it is given.
14.5
(a)
Notice
Notices Generally: Except as otherwise expressly provided herein, all notices, advices, requests
and demands hereunder shall be in writing (including facsimile transmissions) or, if telephonic,
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immediately confirmed in writing, and shall be given to or made upon the respective parties
hereto at the address set forth opposite their names on the signature pages hereto or at such other
address as any party shall designate for itself. Except as provided by Section 14.5(b) below, all
notices shall be effective upon actual receipt. In the event of any discrepancy between any
telephonic notice, advice, request or demand and the written confirmation thereof, the telephonic
version shall govern with respect to actions taken by the recipient thereof notwithstanding
subsequent written notice to the contrary but the person receiving such contrary subsequent
written notice shall, as soon as practicable, use its reasonable best efforts to act in accordance
with the written notice. The Borrower shall indemnify the Agent and each Lender for, and hold
them harmless from, any and all loss, damage, claim or expense (including reasonable legal fees
on a solicitor and client basis), however arising, which the Agent or any Lender may suffer or
incur, based on or arising out of any action taken by the Agent or such Lender pursuant to the
telephonic notice, advice, request or demand and which did not result from the Agent's or such
Lender's gross negligence or wilful misconduct.
(b)
Electronic Communications: Notices and other communications to the Lenders hereunder may
be delivered or furnished by electronic communication (including e mail and Internet or intranet
websites) pursuant to procedures approved by the Agent, provided that the foregoing shall not
apply to notices to any Lender pursuant to Article 3 if such Lender has notified the Agent that it is
incapable of receiving notices under such Article by electronic communication. The Agent and
the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications. Unless the
Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall
be deemed received upon the sender's receipt of an acknowledgement from the intended recipient
(such as by the “return receipt requested” function, as available, return e-mail or other written
acknowledgement), and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address
as described in the foregoing clause (i), of notification that such notice or communication is
available and identifying the website address therefor; provided that, for both clauses (i) and (ii)
above, if such notice, email or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent at the opening
of business on the next business day for the recipient.
(c)
Platform: The Borrower agrees that the Agent may, but shall not be obligated to, make the
Communications available to the Lenders by posting the Communications on Debt Domain,
Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).
The Platform is provided “as is” and “as available.” The Agent does not warrant the adequacy of
the Platform and expressly disclaim liability for errors or omissions in the Communications. No
warranty of any kind, express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third-party rights or
freedom from viruses or other code defects, is made by the Agent in connection with the
Communications or the Platform. In no event shall the Agent have any liability to the Borrower
or the other Loan Parties, any Lender or any other person for damages of any kind, including,
without limitation, direct or indirect, special, incidental or consequential damages, losses or
expenses (whether in tort, contract or otherwise) arising out of the Borrower's or the Agent's
transmission of communications through the Platform.
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14.6
Further Assurances
The Borrower, the Agent and each Lender shall do all such further acts and things and
execute and deliver all such further documents as shall be reasonably required in order to fully perform
and carry out the terms of the Loan Documents.
14.7
Governing Law
The parties agree that this Agreement is conclusively deemed to be made under, and for
all purposes to be governed by and construed in accordance with, the laws of the Province of Alberta and
of Canada applicable therein.
14.8
Whole Agreement
Except as otherwise expressly agreed to between the Borrower and the Agent, this
Agreement together with the other Loan Documents constitutes the whole and entire agreement between
the parties and cancels and supersedes any prior agreements, undertakings, declarations and
representations, written or verbal, in respect of the subject matter of this Agreement and the other Loan
Documents.
14.9
Term of Agreement
The term of this Agreement is until the termination of the Commitment of each Lender
and payment in full of all obligations of the Borrower incurred pursuant to this Agreement.
14.10
Time of Essence
Time shall be of the essence of this Agreement.
14.11
Jurisdiction
(a)
Submission: For the benefit of each Lender and the Agent, the Borrower agrees that the courts
of the Province of Alberta have jurisdiction to settle any disputes in connection with the Loan
Documents and accordingly submits to the non-exclusive jurisdiction of the courts of the
Province of Alberta.
(b)
Forum Convenience and Enforcement Abroad: The Borrower:
(c)
(i)
waives objection to the courts of the Province of Alberta on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a Loan Document; and
(ii)
agrees that a judgment or order of a court of the Province of Alberta in connection with a
Loan Document is conclusive and binding on it (subject to any rights of appeal in respect
thereof) and may be enforced against it in the courts of any other jurisdiction.
Non-exclusivity: Nothing in this Section 14.11 limits the right of a Lender or the Agent to bring
proceedings against the Borrower in connection with any Loan Document:
(i)
in any other court of competent jurisdiction; or
(ii)
concurrently in more than one jurisdiction.
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14.12
Conflicts
In the event of a conflict or in consistency between the terms of this Agreement and any
other Loan Documents, the terms of this Agreement shall govern.
14.13
Anti-Money Laundering Legislation
(a)
AML Legislation: The Borrower acknowledges that, pursuant to the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada) and other applicable anti-money laundering,
anti-terrorist financing, government sanction and “know your client” applicable laws, whether
within Canada or elsewhere (collectively, including any guidelines or orders thereunder, “AML
Legislation”), the Lenders and the Agent may be required to obtain, verify and record
information regarding the Borrower, its directors, authorized signing officers, direct or indirect
shareholders or other persons in control of the Borrower, and the transactions contemplated
hereby. The Borrower shall promptly: (i) provide all such information, including supporting
documentation and other evidence, as may be reasonably requested by any Lender or the Agent,
or any prospective assignee of a Lender or the Agent, in order to comply with any applicable
AML Legislation, whether now or hereafter in existence; and (ii) notify the recipient of any such
information of any changes thereto.
(b)
Ascertainment of Identity: If, upon the written request of any Lender, the Agent has
ascertained the identity of the Borrower or any other Loan Party or any authorized signatories of
the Borrower or any other Loan Party for the purposes of applicable AML Legislation on such
Lender's behalf, then the Agent;
(i)
shall be deemed to have done so as an agent for such Lender, and this Agreement shall
constitute a “written agreement” in such regard between such Lender and the Agent
within the meaning of applicable AML Legislation; and
(ii)
shall provide to such Lender copies of all information obtained in such regard without
any representation or warranty as to its accuracy or completeness.
Notwithstanding the preceding sentence, each of the Lenders agrees that the Agent has no
obligation to ascertain the identity of the Borrower or any other Loan Party or any authorized
signatories of the Borrower or any other Loan Party, on behalf of any Lender, or to confirm the
completeness or accuracy of any information it obtains from the Borrower or any other Loan
Party or any such authorized signatory in doing so.
14.14
[reserved]
14.15
Counterpart Execution
This Agreement may be executed in any number of counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument. The words “execution”, “signed”,
“signature”, “executed” and words of like import herein or in any Assignment and Assumption
Agreement shall be deemed to include electronic signatures, which shall be of the same legal effect,
validity and enforceability as a manually executed signature to the extent and as provided for in any
applicable law.
[Remainder of Page Intentionally Left Blank]
22883504.11
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
ADDRESS FOR NOTICES:
Borrower:
SANJEL CO
200, 505 — 2"d Street S.W.
Calgary, Alberta T2P 1N8
Per:
ION
Name: Paul Cr'lly
Title: Chief F. lancial Officer
Attention: Chief Financial Officer
Telecopier: (403) 716-4024
[Signature page to Credit Agreement]
Schedule "A" to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
COMMITMENTS
Lender
Credit Facility
Commitment
Alberta Treasury Branches
Cdn. $8,673,000
HSBC Bank Canada
Cdn. $5,706,000
The Bank of Nova Scotia
Cdn. $5,706,000
Export Development Canada
Cdn. $5,706,000
Bank of Montreal
Cdn. $4,013,000
Royal Bank of Canada
Cdn. $2,229,000
Wells Fargo Bank, N.A., Canadian Branch
Cdn. $5,706,000
National Bank of Canada
Cdn. $4,013,000
Bank of America, N.A., Canada Branch
Cdn. $4,013,000
Comerica Bank
Cdn. $1,783,000
ICICI Bank Canada
Cdn. $1,115,000
Bank of China (Canada)
Cdn. $1,337,000
TOTAL
22883504.11
Cdn. $50,000,000
Schedule "B" to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative Agent
DRAWDOWN NOTICE
Date:
Alberta Treasury Branches
Suite 600, 585 – 8 Avenue S.W.
Calgary, Alberta, T2P 1G1
Attention:
Manager
Dear Sirs:
We refer to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative Agent
(the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit
Agreement.
DATE:
_____________________, 20___
2.
The Drawdown Date is _____________, 20___.
3.
Pursuant to Section 3.4 of the Credit Agreement, the undersigned (the “Borrower”) hereby
irrevocably requests that the following Accommodations be made available under the Credit Facility:
TYPE OF ADVANCE
PRINCIPAL AMOUNT AND
CURRENCY
TERM
Cdn. Prime Loan
N/A
U.S. Base Rate Loan
N/A
4.
The undersigned hereby certifies that:
(a)
the Loan requested by this Drawdown Notice is consistent with the Agreed Budget and shall
not increase the Borrowings to an amount which exceeds the total Commitment;
(b)
the Borrower and the other Loan Parties are in compliance with all Restructuring Court
Orders;
(c)
the Initial Order has not been stayed, vacated or otherwise caused to be ineffective;
(d)
all orders granted by the U.S. Court are in full force and effect and have not been reversed,
modified, stayed or amended;
22883504.11
2
(e)
all of the representations and warranties of the Borrower deemed to be made by the
Borrower pursuant to Section 2.2 of the Credit Agreement are true and correct in all material respects
on the date hereof;
(f)
there exists no Default or Event of Default on the date hereof and no Default or Event of
Default will occur as a result of the Loan requested by this Drawdown Notice;
(g)
and
no Material Adverse Change has occurred since the date of the issuance of the Initial Order;
(h)
no Security Interest ranks in priority to the Lender Charge, other than Permitted Priority
Liens.
5.
Capitalized terms used herein and not otherwise defined herein have the meanings given to them by
the Credit Agreement.
Yours truly,
SANJEL CORPORATION
Per:
Name:
Title:
22883504.11
Schedule "C" to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
NOTICE OF REPAYMENT
Date:
Alberta Treasury Branches
Suite 600, 585 – 8 Avenue S.W.
Calgary, Alberta, T2P 1G1
Attention:
Manager
Dear Sirs:
We refer to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent (the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit
Agreement.
Capitalized terms used herein and not otherwise defined herein have the meanings given to them by the
Credit Agreement.
1.
Pursuant to Section 3.12 (Repayment), the undersigned hereby irrevocably notifies the Agent that
it will be:
(a)
Repaying part or all of the Accommodation described as:
Type of Accommodation:
*Principal Amount:
Date of Maturity or Repayment:
2.
This Notice is irrevocable.
DATED at Calgary, Alberta effective the date and year first above written.
Yours truly,
SANJEL CORPORATION
Per:
Name:
Title:
22883504.11
Schedule "D" to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
COMPLIANCE CERTIFICATE
PART A
I, __________________________________, of the City of Calgary, in the Province of
Alberta, hereby certify as at the date of this Certificate as follows:
1.
I am the [president, chief financial officer or vice president finance] of Sanjel Corporation (the
“Borrower”);
2.
This Certificate applies to the Fiscal Quarter/Year ending _______________, 20___;
3.
I am familiar with and have examined the provisions of the Credit Agreement (the “Credit
Agreement”) dated as of April 4, 2016 between SANJEL CORPORATION, as Borrower and a
syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative Agent and I
have made such reasonable investigations of corporate records and inquiries of other officers and
senior personnel of the Borrower and each other Loan Party as I have deemed necessary for
purposes of this Certificate;
4.
No Default or Event of Default has occurred and is continuing;
5.
The following persons constitute the only Loan Parties:
______________________________
______________________________
______________________________
The following are the only Special Purpose Entities:
______________________________
______________________________
______________________________
The following persons are the only Subsidiaries of the Borrower which are not Loan Parties:
______________________________
______________________________
______________________________
6.
Attached hereto is an updated organizational chart of the Borrower, which shows all of its
Subsidiaries and Special Purpose Entities, as well as an updated Schedule “I”;
7.
Except where the context otherwise requires, all capitalized terms used herein have the same
meaning as in the Credit Agreement; and
8.
This Certificate is given by the undersigned officer in his capacity as an officer of the Borrower
without any personal liability on the part of such officer.
22883504.11
2
Executed at the City of Calgary, in the Province of Alberta this ______ day of
___________, 20___.
SANJEL CORPORATION
Per:
Name:
Title:
22883504.11
Schedule "E" to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent t
ASSIGNMENT AND ASSUMPTION AGREEMENT
TO:
Alberta Treasury Branches, as Administrative Agent (the “Agent”)
AND TO:
Sanjel Corporation (the “Borrower”)
RE:
Credit Agreement (“Credit Agreement”) dated as of April 4, 2016 between SANJEL
CORPORATION, as Borrower and a syndicate of Lenders with ALBERTA TREASURY
BRANCHES, as Administrative Agent
Capitalized terms in this Assignment and Assumption Agreement shall have the meanings set out in the
Credit Agreement.
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date
set forth below and is entered into by and between • (the “Assignor”) and • (the “Assignee”). The
Assignee hereby acknowledges receipt of a copy of the Credit Agreement. The Standard Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference
and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the
Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with
the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below:
(a)
all of the Assignor's rights and obligations in its capacity as a Lender to the Borrower
under the Credit Agreement and any other documents or instruments delivered pursuant
thereto to the extent related to the amount and percentage interest identified below of all
of such outstanding rights and obligations of the Assignor under the respective facilities
identified below (including without limitation any letters of credit, Guarantees, and
swingline loans included in such facilities), and
(b)
to the extent permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of the Assignor (in its capacity as a Lender) against any person,
whether known or unknown, arising under or in connection with the Credit Agreement,
any other documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing, including, but
not limited to, contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity related to the rights and obligations sold and assigned
pursuant to clause (a) above,
(the rights and obligations sold and assigned by the Assignor to the Assignee pursuant to clauses (a) and
(b) being referred to herein collectively as the “Assigned Interest”).
Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in
this Assignment and Assumption, without representation or warranty by the Assignor.
22883504.11
2
1.
Assignor:
________________________________
The Assignor [is] [is not] a Defaulting Lender
2.
Assignee:
______________________________
[The Assignee is an Affiliate of [identify Lender]]
3.
Borrower:
4.
Agent: ______________________, as the agent under the Credit Agreement
5.
Assigned Interest:
Assignor
6.
Assignee
Effective Date:
______________________________
Facility
Assigned
Aggregate Amount of
Commitment for all
Lenders
Amount of
Commitment
Assigned
Percentage
Assigned of
Commitment
$
$
%
$
$
%
$
$
%
______________
DATED this _____ day of ___________________, 20___.
[Name of Assignor]
Per:
[Name of Assignee]
Per:
ALBERTA TREASURY BRANCHES
Per:
SANJEL CORPORATION
Per:
22883504.11
3
ANNEX 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties.
(a)
(b)
The Assignor:
(i)
represents and warrants that (A) it is the legal and beneficial owner of the
Assigned Interest, (B) the Assigned Interest is free and clear of any lien,
encumbrance or other adverse claim, (C) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and (D) it
is [not] a Defaulting Lender; and
(ii)
assumes no responsibility with respect to (A) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (B) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (C) the
financial condition of the Borrower, any of its Subsidiaries or Affiliates or any
other person obligated in respect of any Loan Document, or (D) the performance
or observance by the Borrower, any of its Subsidiaries or Affiliates or any other
person of any of their respective obligations under any Loan Document.
The Assignee:
(i)
22883504.11
represents and warrants that (A) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (B) it meets all the requirements to be an assignee under
Section 13.1 of the Credit Agreement (subject to such consents, if any, as may be
required under the Credit Agreement), (C) from and after the Effective Date, it
shall be bound by the provisions of the Credit Agreement as a Lender thereunder
and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (D) it is sophisticated with respect to decisions to acquire assets of
the type represented by the Assigned Interest and either it, or the person
exercising discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (E) it has received a copy of the
Credit Agreement, and has received or has been accorded the opportunity to
receive copies of the most recent financial statements delivered pursuant to the
Credit Agreement, as applicable, and such other documents and information as it
deems appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest, and (F) it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest; and
4
(ii)
agrees that (A) it will, independently and without reliance on the Agent, the
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (B) it will perform in
accordance with their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender.
2.
Payments. From and after the Effective Date, the Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee
for amounts which have accrued from and after the Effective Date. Notwithstanding the
foregoing, the Agent shall make all payments of interest, fees or other amounts paid or payable in
kind from and after the Effective Date to the Assignee.
3.
General Provisions. This Assignment and Assumption shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. This Assignment and
Assumption may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be governed by, and
construed in accordance with, the law of the Province of Alberta and the federal laws of Canada
applicable therein.
22883504.11
Schedule "F" [reserved]
22883504.11
Schedule "G" [reserved]
22883504.11
Schedule "H" [reserved]
22883504.11
Schedule "I" to the Senior Secured Superpriority Interim Financing Credit Agreement dated as of April 4,
2016 between SANJEL CORPORATION, as Borrower and a syndicate of Lenders with ALBERTA
TREASURY BRANCHES, as Administrative Agent
INFORMATION RE BORROWER, SUBSIDIARIES AND NON-SUBSIDIARY INVESTMENTS,
INCLUDING SPECIAL PURPOSE ENTITIES
Jurisdiction of
Formation
Jurisdiction in Which
Carries on Business
Percentage of
Ownership
Designation
Name of Party
Sanjel Corporation
Alberta
Alberta
Borrower
Sanjel Canada Ltd.
Alberta
Sanjel (USA) Inc.
Montana
Sanjel Capital (USA) Inc.
Delaware
Terracor Resources (USA) Inc.
Delaware
Terracor (USA) Inc.
Delaware
Alberta, British
Columbia, Manitoba,
Northwest Territories,
Saskatchewan
Colorado, Idaho,
Kansas, Minnesota,
Mississippi, Montana,
Nebraska, Nevada,
New Mexico, North
Dakota, Oregon,
Oklahoma, South
Dakota, Texas, Utah,
Washington,
Wyoming
Colorado, Delaware,
Montana, North
Dakota, Texas,
Wyoming
Delaware, Texas,
Wisconsin
Delaware, Texas
100% beneficially
owned by MacDonald
Family
100% owned by
Sanjel Corporation
Terracor Logistics (USA) Inc.
Delaware
Sanjel Middle East Operations
Limited
Barbados
Colorado, Delaware,
Montana, Texas,
Wisconsin
Barbados
Sanjel Middle East Ltd.
Barbados
Barbados
Sanjel North Iraq Limited
Barbados
Barbados
Sanjel International Saudi Arabia
Ltd.
Saudi Arabia
Saudi Arabia
Sanjel Energy Services DMCC
UAE
UAE
22883504.11
Material
Subsidiary
100% owned by
Sanjel Energy
Services (USA) Inc.
Material
Subsidiary
100% owned by
Sanjel (USA) Inc.
Material
Subsidiary
100% owned by
Terracor (USA) Inc.
100% owned by
Terracor Group Ltd.
100% owned by
Terracor (USA) Inc.
Material
Subsidiary
Material
Subsidiary
Material
Subsidiary
100% owned by
Sanjel Middle East
Ltd.
100% owned by
Sanjel Corporation
100% owned by
Sanjel Middle East
Ltd.
49% owned by Sanjel
Middle East
Operations Limited
and 51% owned by
TAQA
100% owned by
Sanjel Middle East
Ltd.
Subsidiary
Material
Subsidiary
Subsidiary
Special Purpose
Entity
Material
Subsidiary
2
Jurisdiction of
Formation
Mexico
Jurisdiction in Which
Carries on Business
Mexico
1507781 Alberta Ltd.
Alberta
Alberta
Suretech Group Ltd.
Alberta
Alberta
Suretech Completions (USA) Inc.
Delaware
Suretech Completions Canada
Ltd.
Alberta
Delaware, California,
Colorado, Montana,
New Mexico, North
Dakota, Ohio,
Oklahoma,
Pennsylvania, South
Dakota, Texas, West
Virginia, Wyoming
Alberta
Corporacion De Asentamientos
Estructurales, S.A. de C.V.
Mexico
Mexico
Sanjel Latin America Limited
Barbados
Barbados
Terracor Group Ltd.
Alberta
Alberta
Riverbend Technology Holdings
Ltd.
Alberta
Alberta
Sanjel Energy Services S.A. de
C.V.
Mexico
Mexico
Sanjel Technical Services Mexico
S.A. de C.V.
Mexico
Mexico
Sanjel Oilfield Services Mexico
S.A. de C.V.
Mexico
Mexico
Sanjel Energy Services (USA)
Inc.
Delaware
Delaware
Name of Party
Servicios Integrales Sanjel, S. de
R.L. de C.V.
22883504.11
Percentage of
Ownership
50% owned by
Desarrollo Servicio
Petrolero, S.A. de
C.V. and 50% owned
by Sanjel Canada Ltd.
100% owned by
Sanjel Canada Ltd.
100% owned by
Sanjel Corporation
100% owned by
Sanjel Energy
Services (USA) Inc.
Common shares
100% owned by
Suretech Group Ltd.,
and Preferred Shares
100% owned by
Sanjel Canada Ltd.
50% owned by
Servicio Integral
Ecologico, S.A. de
C.V. and 50% owned
by 1507781 Alberta
Ltd.
100% owned by
Sanjel Corporation
100% owned by
Sanjel Corporation
50% owned by Sanjel
Corporation and 50%
by private investors
99% owned by Sanjel
Latin America
Limited and 1%
owned by Sanjel
Corporation
99% owned by Sanjel
Energy Services S.A.
de C.V. and 1%
owned by Sanjel
Corporation
99% owned by Sanjel
Energy Services S.A.
de C.V. and 1%
owned by Sanjel
Corporation
Class A shares 100%
owned by Sanjel
Corporation, and
Class B shares 100%
owned by Suretech
Group Ltd.
Designation
Special Purpose
Entity
Subsidiary
Material
Subsidiary
Material
Subsidiary
Material
Subsidiary
Joint Venture
Material
Subsidiary
Material
Subsidiary
Joint Venture
Subsidiary
Subsidiary
Subsidiary
Material
Subsidiary
Schedule "J" [reserved]
22883504.11
Schedule “K” to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
AGREED BUDGET
(see attached)
22883504.11
Sanjel Corporation- CCAA
13 Week Consolidated Cash Flow Forecast
April 4 to July 1, 2016
(CAD $000's)
Operating receipts
Accounts receivable collections
Total operating receipts
Operating disbursements
Operating expenses
Salaries and benefits
Property Leases
Equipment Leases
Other outflows
Total operating disbursements
Net change in cash from operations
Capital Expenditures
Restructuring Fees
Total net change in Cash
Opening available cash
Total net change in cash flow
Interim financing fees and interest
Interim financing draws (repayments)
Ending available cash
Cumulative Interim Financing
Week 1
4/08/16
Week 2
4/15/16
Week 3
4/22/16
Week 4
4/29/16
Week 5
5/06/16
For the Weeks Ending:
Week 6
Week 7
Week 8
5/13/16
5/20/16
5/27/16
Week 9
6/03/16
Week 10
6/10/16
Week 11
6/17/16
Week 12
6/24/16
Week 13
7/01/16
Total
2,681
2,681
2,298
2,298
2,298
2,298
11,079
11,079
7,117
7,117
7,117
7,117
15,117
15,117
15,117
15,117
15,117
15,117
11,694
11,694
11,694
11,694
11,694
11,694
11,694
11,694
124,715
124,715
14,843
590
4,115
1,725
674
21,947
4,948
7,322
385
1,194
13,849
4,948
590
799
6,337
4,948
7,322
1,194
13,464
3,619
590
1,965
861
1,104
8,139
3,619
7,322
1,082
12,024
3,619
590
687
4,897
3,619
7,322
1,082
12,024
3,619
590
300
1,287
7,322
1,287
-
1,287
-
1,287
-
1,109
5,618
520
9,130
1,287
645
1,932
1,287
52,932
39,562
6,380
2,970
10,092
111,936
(19,265)
(11,551)
(4,039)
(2,386)
(1,022)
(4,907)
10,220
3,093
9,499
2,564
10,406
9,761
10,406
12,779
139
1,196
139
-
-
1,056
-
5,354
15
-
1,425
2,275
15
-
2,238
12,700
289
10,391
8,705
8,169
(5,275)
14,000
10,391
-111
-10,281
14,000
14,000
8,705
-8,705 14,000
14,000
8,169
-28
1,235
20,906
27,000
(5,275)
(819)
20,906
-
-
149
140
139
2,120
139
140
15
10
3,755
-
2,953
-
(22,367)
(11,691)
(4,192)
(4,515)
(4,916)
(5,047)
10,066
1,897
7,935
27,000
-22,367
-265
9,632
14,000
14,000
-11,691
11,690
14,000
14,000
-4,192
4,193
14,000
14,000
-4,515
-174
4,689
14,000
14,000
-4,916
4,916
14,000
14,000
-5,047
5,047
14,000
14,000
10,066
-10,066
14,000
14,000
1,897
-241
-1,656
14,000
14,000
7,935
-7,935
14,000
9,632
21,322
25,515
30,204
35,120
40,167
30,101
28,445
20,510
14,000
289
-289
14,000
20,221
9,940
1,235
Schedule “L” to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
INITIAL ORDER
(see attached)
22883504.11
CLERK'S STAMP
FORM 49
[RULE 13.19]
COURT FILE NUMBER
1601 –
COURT
COURT OF QUEEN'S BENCH OF ALBERTA
JUDICIAL CENTRE
CALGARY
IN THE MATTER OF THE COMPANIES'
CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C36, as amended
AND IN THE MATTER OF THE COMPROMISE OR
ARRANGEMENT OF SANJEL CORPORATION,
SANJEL CANADA LTD., TERRACOR GROUP LTD.,
SURETECH
GROUP
LTD.,
SURETECH
COMPLETIONS CANADA LTD., SANJEL ENERGY
SANJEL (USA) INC.,
SERVICES (USA) INC.,
SURETECH COMPLETIONS (USA) INC., SANJEL
CAPITAL (USA) INC., TERRACOR (USA) INC.,
TERRACOR RESOURCES (USA) INC., TERRACOR
LOGISTICS (USA) INC., SANJEL MIDDLE EAST
LTD., SANJEL LATIN AMERICA LIMITED and
SANJEL ENERGY SERVICES DMCC
DOCUMENT
CCAA INITIAL ORDER
ADDRESS FOR SERVICE AND
CONTACT INFORMATION OF
PARTY FILING THIS
DOCUMENT
BENNETT JONES LLP
Barristers and Solicitors
4500, 855 – 2nd Street S.W.
Calgary, Alberta T2P 4K7
Attention: Chris Simard
Tel No.: 403-298-4485
Fax No.: 403-265-7219
Client File No. 22681.375
DATE ON WHICH ORDER WAS
PRONOUNCED:
April 4, 2016
LOCATION WHERE ORDER
WAS PRONOUNCED:
Calgary
NAME OF JUDGE
WHO MADE THIS ORDER:
The Honourable Mme. Justice B. E. Romaine
WSLEGAL\022681\00375\13374444v3
-2UPON the application of Sanjel Corporation ("Sanjel Corp"), Sanjel Canada Ltd.
("Sanjel Canada"), Terracor Group Ltd. ("Terracor Group"), Suretech Group Ltd.
("Suretech"), Suretech Completions Canada Ltd. ("Suretech Canada"), Sanjel Energy Services
(USA) Inc. ("Sanjel Energy USA"), Sanjel (USA) Inc. ("SUSA"), Suretech Completions (USA)
Inc. ("Suretech USA"), Sanjel Capital (USA) Inc. ("Sanjel Capital USA"), Terracor (USA) Inc.
("Terracor USA"), Terracor Resources (USA) Inc. ("Terracor Resources USA"), Terracor
Logistics (USA) Inc. ("Terracor Logistics USA"), Sanjel Middle East Ltd. ("Sanjel Middle
East"), Sanjel Latin America Limited ("Sanjel Latin America") and Sanjel Energy Services
DMCC ("Sanjel DMCC") (collectively the “Applicants” or the “Sanjel Group”), AND UPON
having read the Originating Application, the Affidavit of Paul Crilly, sworn on April 3, 2016 (the
"Crilly Affidavit"), the Affidavit of Michael Genereux, sworn on April 4, 2016 (the "Genereux
Affidavit"), the Confidential Affidavit of Paul Crilly, sworn on April 3, 2016 (the "Confidential
Affidavit"), the consent of PricewaterhouseCoopers Inc. to act as Monitor and the Pre-Filing
Report of PricewaterhouseCoopers Inc., all filed; AND UPON hearing counsel for the
Applicants, counsel for the agent (the "Agent") and a syndicate of lenders (the "Syndicate")
under that amended and restated credit agreement dated as of April 21, 2015 (the "Bank Credit
Agreement") and counsel for other interested parties; IT IS HEREBY ORDERED AND
DECLARED THAT:
SERVICE
1.
The need for service of the notice of application for this order is hereby dispensed with
and this application is properly returnable today.
APPLICATION
2.
The Applicants are companies to which the CCAA applies.
PLAN OF ARRANGEMENT
3.
The Applicants shall have the authority to file and may, subject to further order of this
Court, file with this Court a plan of compromise or arrangement (hereinafter referred to
as the "Plan").
WSLEGAL\022681\00375\13374444v3
-3POSSESSION OF PROPERTY AND OPERATIONS
4.
The Applicants shall:
(a)
remain in possession and control of their current and future assets, undertakings
and properties of every nature and kind whatsoever, and wherever situate
including all proceeds thereof (the "Property");
(b)
subject to further order of this Court, continue to carry on business in a manner
consistent with the preservation of their business (the "Business") and Property;
and
(c)
be authorized and empowered to continue to retain and employ the employees,
consultants, agents, experts, accountants, counsel and such other persons
(collectively "Assistants") currently retained or employed by them, with liberty to
retain such further Assistants as they deem reasonably necessary or desirable in
the ordinary course of business or for the carrying out of the terms of this Order;
(d)
shall continue to have access to their cash accounts with U.S. Bank and with the
Syndicate and affiliates of members of the Syndicate, subject to the terms and
conditions of the Interim Credit Agreement (defined below);
(e)
be entitled to continue to utilize the centralized Cash Management System
currently in place as described at para. 34 of the Crilly Affidavit;
(f)
be entitled to continue to utilize the corporate credit cards in place with The Bank
of Nova Scotia (the "Credit Cards") and shall make full repayments of all
amounts outstanding thereunder on a daily basis, including with respect to any
pre-filing charges. The Bank of Nova Scotia is hereby granted a charge (the
"Credit Card Charge") on the Property to secure all obligations owed to it by the
Applicants relating to the Credit Cards, including without limitation principal,
WSLEGAL\022681\00375\13374444v3
-4interest and fees, to a maximum amount of $250,000. The Credit Card Charge
shall have the priority set out in paragraphs 48 and 50 hereof; and
(g)
be authorized to make inter-company transfers and advances to pay costs,
expenses and amounts otherwise authorized in these proceedings.
5.
To the extent permitted by law, the Applicants shall be entitled but not required to pay
the following expenses or make the following advances, incurred prior to or after this
Order:
(a)
all outstanding and future wages, salaries, employee and pension benefits,
vacation pay, bonuses and expenses payable on or after the date of this Order, in
each case incurred in the ordinary course of business and consistent with existing
compensation policies and arrangements; and
(b)
the reasonable fees and disbursements of any Assistants retained or employed by
the Applicants in respect of these proceedings, at their standard rates and charges,
including for periods prior to the date of this Order, but only those Assistants
(including the Financial Advisors, as defined below) the payment of whose fees
are expressly approved in this Order.
6.
The engagement letter entered into between Credit Suisse Securities (CANADA), Inc.
("CS") and Sanjel Corp dated February 16, 2016, the engagement entered into between
PJT Partners LP ("PJT") and Sanjel Corp dated December 21, 2015 and the engagement
letter entered into between Wells Fargo Securities Canada, Ltd. ("Wells Fargo
Securities") and Sanjel Corp. dated September 22, 2015 (collectively, CS, PJT and Wells
Fargo Securities are hereinafter referred to as the "Financial Advisors") (the "Financial
Advisors' Engagement Letters") attached as Exhibits "13", "14" and "15" to the
Crilly Affidavit, are hereby approved and Sanjel Corp is authorized and directed to
continue the engagement of the Financial Advisors as Assistants thereunder and to
comply with all of its obligations thereunder. The Financial Advisors are hereby granted
a single charge in the maximum aggregate amount of US$6.1 million (for the benefit of
WSLEGAL\022681\00375\13374444v3
-5CS and PJT) and US$500,000 (for the benefit of Wells Fargo Securities) (collectively,
the "Financial Advisors' Charge") on the Property to secure all obligations under the
Financial Advisors Engagement Letters. The Financial Advisors' Charge shall have the
priority set out in paragraphs 48 and 50 hereof.
7.
Except as otherwise provided to the contrary herein, the Applicants shall be entitled but
not required to pay all reasonable expenses incurred by the Applicants in carrying on the
Business in the ordinary course after this Order, and in carrying out the provisions of this
Order, which expenses shall include, without limitation:
(a)
all expenses and capital expenditures reasonably necessary for the preservation of
the Property or the Business including, without limitation, payments on account
of insurance (including directors and officers insurance), maintenance and
security services, subject to the terms and conditions of the Interim Credit
Agreement;
(b)
payment for goods or services actually supplied to the Applicants following the
date of this Order;
(c)
payment for goods or services actually supplied to the Applicants following the
date of this Order by those parties identified by the Applicants, after consultation
with the Syndicate and with the consent of the Monitor, as critical suppliers
within the meaning of Section 11.4 of the CCAA (each, a "Critical Supplier").
The Critical Suppliers are hereby granted a charge (the "Critical Suppliers'
Charge") on the Property to secure all obligations owed to them as Critical
Suppliers by the Applicants relating to the provision of goods and services after
the date of this Order, to a maximum amount of $20 million. The Critical
Suppliers' Charge shall have the priority set out in paragraphs 48 and 50 hereof.
Each Critical Supplier shall be obliged to supply the Applicants or any of them
with goods and/or services after the date of this Order, on terms and conditions
that are consistent with existing arrangements and past practices. No Critical
Supplier may require the payment of a pre-payment, deposit or the posting of any
WSLEGAL\022681\00375\13374444v3
-6security in connection with the supply of goods and/or services to the Applicants
after the date of this Order;
(d)
payments in respect of the Credit Cards required by paragraph 4(f) hereof;
(e)
payments required to be made to allow for the collection of the Applicants'
accounts receivable (including for goods and services provided prior to the date of
this Order), after consultation with the Syndicate, and with the approval of the
Monitor; and
(f)
pay certain pre-filing amount or honour cheques issued prior to the date of filing
that, in consultation with the Syndicate and Proposed Monitor, are necessary to
facilitate the Applicants' ongoing operations.
8.
The Applicants shall remit, in accordance with legal requirements, or pay:
(a)
any statutory deemed trust amounts in favour of the Crown in Right of Canada or
of any Province thereof or any other taxation authority which are required to be
deducted from employees' wages, including, without limitation, amounts in
respect of:
(i)
employment insurance;
(ii)
Canada Pension Plan; and
(iii)
income taxes;
but only where such statutory deemed trust amounts arise after the date of this
Order, or are not required to be remitted until after the date of this Order, unless
otherwise ordered by the Court;
(b)
all goods and services or other applicable sales taxes (collectively, "Sales Taxes")
required to be remitted by the Applicants in connection with the sale of goods and
services by the Applicants, but only where such Sales Taxes are accrued or
WSLEGAL\022681\00375\13374444v3
-7collected after the date of this Order, or where such Sales Taxes were accrued or
collected prior to the date of this Order but not required to be remitted until on or
after the date of this Order;
(c)
any amount payable to the Crown in Right of Canada or of any Province thereof
or any political subdivision thereof or any other taxation authority in respect of
municipal realty, municipal business or other taxes, assessments or levies of any
nature or kind which are entitled at law to be paid in priority to claims of secured
creditors and which are attributable to or in respect of the carrying on of the
Business by the Applicants; and
(d)
payments for similar obligations due to governmental entities in jurisdictions
other than Canada in which the Applicants conduct business operations.
9.
Until such time as a real property lease is disclaimed or resiliated in accordance with the
CCAA, the Applicants may pay all amounts constituting rent or payable as rent under
real property leases (including, for greater certainty, common area maintenance charges,
utilities and realty taxes and any other amounts payable as rent to the landlord under the
lease) based on the terms of existing lease arrangements or as otherwise may be
negotiated by the Applicants from time to time for the period commencing from and
including the date of this Order ("Rent"), but shall not pay any rent in arrears.
10.
Except as specifically permitted in this Order, the Applicants are hereby directed, until
further order of this Court:
(a)
to make no payments of principal, interest thereon or otherwise on account of
amounts owing by the Applicants to any of their creditors as of the date of this
Order other than interest-only payments under the Bank Credit Agreement,
subject to the terms and conditions of the Interim Credit Agreement;
(b)
to grant no security interests, trust, liens, charges or encumbrances upon or in
respect of any of their Property; and
WSLEGAL\022681\00375\13374444v3
-8(c)
not to grant credit or incur liabilities except in the ordinary course of the Business.
RESTRUCTURING
11.
The CRO (defined below) shall, subject to such requirements as are imposed by the
CCAA, and after consultation with the Syndicate and the Monitor, have the right to:
(a)
permanently or temporarily cease, downsize or shut down any of their businesses
or operations and to dispose of redundant or non-material assets not exceeding
$1,000,000.00 in any one transaction or $5,000,000.00 in the aggregate, with
proceeds paid to the Agent in permanent reduction of any indebtedness owing to
the Syndicate under the Bank Credit Agreement (or in excess of these amounts,
by order of this Court);
(b)
terminate the employment of such of the Applicants' employees or temporarily lay
off such of their employees as he deems appropriate on such terms as may be
agreed upon between the Applicants and such employee, or failing such
agreement, to deal with the consequences thereof in the Plan;
(c)
repudiate or disclaim such of their arrangements or agreements of any nature
whatsoever, whether oral or written, as the Applicants deem appropriate on such
terms as may be agreed upon between the Applicants and such counter-parties, or
failing such agreement, to deal with the consequences thereof in the Plan; and
(d)
pursue all avenues of refinancing and offers for material parts of their Business or
Property, in whole or part, subject to prior approval of this Court being obtained
before any material refinancing or any sale (except as permitted by subparagraph
(a), above);
all of the foregoing to permit the Applicants to preserve asset value and/or proceed with
an orderly restructuring of the Business.
WSLEGAL\022681\00375\13374444v3
-912.
The Applicants, the CRO or the Monitor shall provide each of the relevant landlords with
notice of the Applicants' intention to remove any fixtures from any leased premises at
least seven (7) days prior to the date of the intended removal. The relevant landlord shall
be entitled to have a representative present in the leased premises to observe such
removal. If the landlord disputes the Applicants' entitlement to remove any such fixture
under the provisions of the lease, such fixture shall remain on the premises and shall be
dealt with as agreed between any applicable secured creditors, such landlord and the
Applicants, the CRO or the Monitor or by further order of this Court upon application by
the Applicants, the CRO or the Monitor on at least two (2) days' notice to such landlord
and any such secured creditors. If the Monitor disclaims or resiliates the lease governing
such leased premises in accordance with Section 32 of the CCAA, the Applicants shall
not be required to pay Rent under such lease pending resolution of any such dispute
(other than Rent payable for the notice period provided for in Section 32(5) of the
CCAA), and the disclaimer or resiliation of the lease shall be without prejudice to the
Applicants' claim to the fixtures in dispute.
13.
If a notice of disclaimer or resiliation is delivered pursuant to Section 32 of the CCAA,
then:
(a)
during the notice period prior to the effective time of the disclaimer or resiliation,
the landlord may show the affected leased premises to prospective tenants during
normal business hours, on giving the Applicants and the Monitor 24 hours' prior
written notice; and
(b)
at the effective time of the disclaimer or resiliation, the relevant landlord shall be
entitled to take possession of any such leased premises without waiver of or
prejudice to any claims or rights such landlord may have against the Applicants in
respect of such lease or leased premises and such landlord shall be entitled to
notify the Applicants of the basis on which it is taking possession and to gain
possession of and re-lease such leased premises to any third party or parties on
such terms as such landlord considers advisable, provided that nothing herein
WSLEGAL\022681\00375\13374444v3
- 10 shall relieve such landlord of its obligation to mitigate any damages claimed in
connection therewith.
NO PROCEEDINGS AGAINST THE APPLICANTS OR THE PROPERTY
14.
Until and including May 4, 2016, or such later date as this Court may order (the "Stay
Period"), no proceeding or enforcement process in any court (each, a "Proceeding")
shall be commenced or continued against or in respect of the Applicants or the Monitor,
or affecting the Business or the Property, except with leave of this Court, and any and all
Proceedings currently under way against or in respect of the Applicants or affecting the
Business or the Property are hereby stayed and suspended pending further order of this
Court.
NO EXERCISE OF RIGHTS OR REMEDIES
15.
During the Stay Period, all rights and remedies of any individual, firm, corporation,
governmental body or agency, or any other entities (all of the foregoing, collectively
being "Persons" and each being a "Person"), whether judicial or extra-judicial, statutory
or non-statutory against or in respect of the Applicants, the CRO or the Monitor, or
affecting the Business or the Property, are hereby stayed and suspended and shall not be
commenced, proceeded with or continued except with leave of this Court, provided that
nothing in this Order shall:
(a)
empower the Applicants to carry on any business which the Applicants are not
lawfully entitled to carry on;
(b)
exempt the Applicants from compliance with statutory or regulatory provisions
relating to health, safety or the environment;
(c)
affect such investigations, actions, suits or proceedings by a regulatory body as
are permitted by Section 11.1 of the CCAA;
(d)
prevent the filing of any registration to preserve or perfect a security interest; or
WSLEGAL\022681\00375\13374444v3
- 11 (e)
16.
prevent the registration of a claim for lien.
Nothing in this Order shall prevent any party from taking an action against the Applicants
where such an action must be taken in order to comply with statutory time limitations in
order to preserve their rights at law, provided that no further steps shall be taken by such
party except in accordance with the other provisions of this Order, and notice in writing
of such action be given to the Monitor at the first available opportunity.
NO INTERFERENCE WITH RIGHTS
17.
During the Stay Period, no person shall accelerate, suspend, discontinue, fail to honour,
alter, interfere with, repudiate, terminate or cease to perform any right, renewal right,
contract, agreement, licence or permit in favour of or held by the Applicants, except with
the written consent of the Applicants and the Monitor, or leave of this Court.
CONTINUATION OF SERVICES
18.
During the Stay Period, all persons having:
(a)
statutory or regulatory mandates for the supply of goods and/or services; or
(b)
oral or written agreements or arrangements with the Applicants, including without
limitation all computer software, communication and other data services,
centralized banking services, payroll services, insurance, transportation, services,
utility or other services to the Business or the Applicants.
are hereby restrained until further Order of this Court from discontinuing, altering,
interfering with, suspending or terminating the supply of such goods or services as may
be required by the Applicants or exercising any other remedy provided under such
agreements or arrangements. The Applicants shall be entitled to the continued use of
their current premises, telephone numbers, facsimile numbers, internet addresses and
domain names, provided in each case that the usual prices or charges for all such goods
or services received after the date of this Order are paid by the Applicants in accordance
WSLEGAL\022681\00375\13374444v3
- 12 with the payment practices of the Applicants, or such other practices as may be agreed
upon by the supplier or service provider and each of the Applicants and the Monitor, or
as may be ordered by this Court. Nothing in this Order has the effect of prohibiting a
person from requiring immediate payment for goods, services, use of leased or licensed
property or other valuable consideration provided after the making of this Order.
NO OBLIGATION TO ADVANCE MONEY OR EXTEND CREDIT
19.
Notwithstanding anything else contained in this Order, no creditor of the Applicants shall
be under any obligation after the making of this Order to advance or re-advance any
monies or otherwise extend any credit to the Applicants.
PROCEEDINGS AGAINST DIRECTORS AND OFFICERS
20.
During the Stay Period, and except as permitted by subsection 11.03(2) of the CCAA and
paragraph 20 of this Order, no Proceeding may be commenced or continued against any
of the former, current or future directors or officers of any of the Applicants with respect
to any claim against the directors or officers that arose before the date hereof and that
relates to any obligations of the Applicants whereby the directors or officers are alleged
under any law to be liable in their capacity as directors or officers for the payment or
performance of such obligations, until a compromise or arrangement in respect of the
Applicants, if one is filed, is sanctioned by this Court or is refused by the creditors of the
Applicants or this Court.
DIRECTORS' AND OFFICERS' INDEMNIFICATION AND CHARGE
21.
The Applicants shall indemnify their directors and officers against obligations and
liabilities that they may incur as directors and/or officers of the Applicants after the
commencement of the within proceedings except to the extent that, with respect to any
officer or director, the obligation was incurred as a result of the director's or officer's
gross negligence or willful misconduct.
WSLEGAL\022681\00375\13374444v3
- 13 22.
The directors and officers of the Applicants shall be entitled to the benefit of and are
hereby granted a charge (the "Directors' Charge") on the Property, which charge shall
not exceed an aggregate amount of $5 million, as security for the indemnity provided in
paragraph 21 of this Order. The Directors' Charge shall have the priority set out in
paragraphs 48 and 50 herein.
23.
Notwithstanding any language in any applicable insurance policy to the contrary:
(a)
no insurer shall be entitled to be subrogated to or claim the benefit of the
Directors' Charge; and
(b)
the Applicants' directors and officers shall only be entitled to the benefit of the
Directors' Charge to the extent that they do not have coverage under any directors'
and officers' insurance policy, or to the extent that such coverage is insufficient to
pay amounts indemnified in accordance with paragraph 21 of this Order.
APPOINTMENT OF CHIEF RESTRUCTURING OFFICER
24.
The appointment of Paul Crilly as Chief Restructuring Officer of the Applicants is hereby
confirmed and the agreement entered into between the Applicants and Paul Crilly (the
"CRO") dated April 1, 2016 (the "CRO Agreement") is hereby approved and the
Applicants are authorized and directed to comply with all of their obligations thereunder.
The CRO is an officer of this Court.
25.
The CRO shall consult with the Monitor and the Syndicate regarding all material issues
relating to the Business.
26.
In addition to the rights and protections afforded the CRO as an officer of this Court, the
CRO shall not be deemed to be a director or trustee of any of the Applicants.
27.
The CRO shall not incur any liability or obligation as a result of his appointment or the
carrying out of his duties as CRO, whether before or after the granting of this Order, save
WSLEGAL\022681\00375\13374444v3
- 14 and except for any gross negligence or willful misconduct; provided that any liability of
the CRO with respect to the carrying out of his duties as CRO shall in no event exceed
the quantum of the fees paid to the CRO.
28.
No action or other proceeding shall be commenced against or in respect of the CRO,
except with the written consent of the CRO or with leave of this Court on notice to the
CRO, the Monitor, and the Applicants.
29.
The Applicants shall indemnify the CRO against obligations and liabilities that he may
incur as CRO of the Applicants, except to the extent that the obligation or liability was
incurred as a result of the CRO's gross negligence or wilful misconduct. All indemnity
obligations of the Applicants to the CRO shall be secured by the D & O Charge.
APPOINTMENT OF MONITOR
30.
PricewaterhouseCoopers Inc. is hereby appointed pursuant to the CCAA as the Monitor,
an officer of this Court, to monitor the Property, Business and financial affairs of the
Applicants with the powers and obligations set out in the CCAA or set forth herein and
that the Applicants and their current and (where applicable) former shareholders, officers,
directors, employees, agents, representatives and Assistants shall advise the Monitor of
all material steps taken by the Applicants pursuant to this Order, and shall co-operate
fully with the Monitor in the exercise of its powers and discharge of its obligations and
provide the Monitor with the assistance that is necessary to enable the Monitor to
adequately carry out the Monitor’s functions.
31.
The Monitor, in addition to its prescribed rights and obligations under the CCAA, is
hereby directed and empowered to:
(a)
monitor the Applicants' receipts and disbursements, Business and dealings with
the Property;
WSLEGAL\022681\00375\13374444v3
- 15 (b)
report to this Court at such times and intervals as the Monitor may deem
appropriate with respect to matters relating to the Property, the Business, its
exercise of the enhanced powers granted in this Order and other matters as may be
relevant to the proceedings herein and immediately report to the Court if in the
opinion of the Monitor there is a material adverse change in the financial
circumstances of the Applicants;
(c)
assist the Applicants, to the extent required by the Applicants, in their
dissemination to the Interim Lenders, Ernst & Young Inc. (“EY”) and their
counsel on a weekly basis of financial and other information as agreed to between
the Applicants and the Interim Lenders which may be used in these proceedings,
including reporting on a basis as reasonably required by the Interim Lenders;
(d)
advise the Applicants in their preparation of the Applicants' cash flow statements
and reporting required by the Syndicate, which information shall be reviewed
with the Monitor and delivered to the Syndicate, EY and the Syndicate’s legal
counsel on a periodic basis, but not less than weekly, or as otherwise agreed to by
the Agent and EY;
(e)
advise the Applicants in their development of the Plan and any amendments to the
Plan;
(f)
advise the Applicants, to the extent required by the Applicants, with the holding
and administering of meetings for voting on the Plan;
(g)
give any consent or approval as is contemplated by this Order or any other order
made in these proceedings;
(h)
have full and complete access to the Property, including the premises, books,
records, data, including data in electronic form and other financial documents of
the Applicants to the extent that is necessary to adequately assess the Applicants'
WSLEGAL\022681\00375\13374444v3
- 16 Property, Business and financial affairs or to perform its duties arising under this
Order;
(i)
be at liberty to engage independent legal counsel in Canada, the United States and
elsewhere, and such other persons as the Monitor deems necessary or advisable
respecting the exercise of its powers and performance of its obligations under this
Order;
(j)
hold funds in trust or in escrow, to the extent required, to facilitate settlements
between the Applicants and any other Person;
(k)
report to and respond to inquiries from the Syndicate and EY with respect to the
CCAA proceedings, with or without the presence or the consent of the Applicants,
however copies of any written reports provided to the Syndicate or EY by the
Monitor shall be provided to the Applicants;
(l)
carry out all the reporting, noticing and supervision tasks referred to in the Interim
Credit Agreement; and
(m)
perform such other duties as are required by this Order or by this Court from time
to time.
32.
The Monitor shall not take possession of the Property and shall take no part whatsoever
in the management or supervision of the management of the Business and shall not, by
fulfilling its obligations hereunder, or by inadvertence in relation to the due exercise of
powers or performance of duties under this Order, be deemed to have taken or maintain
possession or control of the Business or Property, or any part thereof. Nothing in this
Order shall require the Monitor to occupy or to take control, care, charge, possession or
management of any of the Property that might be environmentally contaminated, or
might cause or contribute to a spill, discharge, release or deposit of a substance contrary
to any federal, provincial or other law respecting the protection, conservation,
enhancement, remediation or rehabilitation of the environment or relating to the disposal
WSLEGAL\022681\00375\13374444v3
- 17 or waste or other contamination, provided however that this Order does not exempt the
Monitor from any duty to report or make disclosure imposed by applicable environmental
legislation or regulation.
33.
The Monitor shall provide any creditor of the Applicants with information provided by
the Applicants in response to reasonable requests for information made in writing by such
creditor addressed to the Monitor. The Monitor shall not have any responsibility or
liability with respect to the information disseminated by it pursuant to this paragraph. In
the case of information that the Monitor has been advised by the Applicants is
confidential, the Monitor shall not provide such information to creditors unless otherwise
directed by this Court or on such terms as the Monitor and the Applicants may agree.
34.
In addition to the rights and protections afforded the Monitor under the CCAA or as an
officer of this Court, the Monitor shall incur no liability or obligation as a result of its
appointment or the carrying out of the provisions of this Order, including the enhanced
powers granted to the Monitor by this Order, save and except for any gross negligence or
wilful misconduct on its part. Nothing in this Order shall derogate from the protections
afforded the Monitor by the CCAA or any applicable legislation.
35.
The Monitor, counsel to the Monitor, the CRO, counsel to the Applicants, EY, and
counsel to the Syndicate, shall be paid their reasonable fees and disbursements (including
any pre-filing fees and disbursements), in each case at their standard rates and charges, by
the Applicants as part of the costs of these proceedings. The Applicants are hereby
authorized and directed to pay the accounts of the Monitor, the CRO, counsel for the
Monitor, counsel for the Applicants, EY, and counsel to the Syndicate on a weekly basis
and, in addition, the Applicants are hereby authorized to pay the Monitor, counsel to the
Monitor, and counsel to the Applicants, retainers to be held by them as security for
payment of their respective fees and disbursements outstanding from time to time.
36.
The Monitor and its legal counsel shall pass their accounts from time to time.
WSLEGAL\022681\00375\13374444v3
- 18 37.
The Monitor, counsel to the Monitor, the CRO, the Applicants' counsel, EY, and counsel
to the Syndicate as security for the professional fees and disbursements incurred both
before and after the granting of this Order, shall be entitled to the benefits of and are
hereby granted a charge (the "Administration Charge") on the Property, which charge
shall not exceed an aggregate amount of $2,000,000 as security for their professional fees
and disbursements incurred at the normal rates and charges of the Monitor and such
counsel, both before and after the making of this Order. The Administration Charge shall
have the priority set out in paragraphs 48 and 50 hereof.
ENHANCED POWERS OF THE MONITOR
38.
In addition to and in no way derogating from the powers and duties of the Monitor as
otherwise set out in this Initial Order and in the CCAA, the Monitor is hereby granted the
following enhanced powers, to be exercised in its discretion as and when it deems
appropriate, after giving one day's written notice of such intention to the Syndicate, the
CRO and the Applicants, which notice may be waived in writing by the Syndicate, the
CRO and the Applicants:
(a)
to exercise the restructuring powers set out in paragraph 11(d) of this Order,
including filing a Plan;
(b)
to disclaim or resiliate agreements to which the Applicants are parties, pursuant to
s. 32 of the CCAA without the agreement or consent of the Applicants, including,
without limitation, taking all ancillary and necessary steps in relation to such
disclaimers or resiliations;
(c)
to continue, implement, conduct and complete the SISP (as defined in the Crilly
Affidavit) without the agreement or consent of the Applicants, including without
limitation taking all ancillary and necessary steps in relation to the SISP such as
evaluating offers, negotiating and executing agreements on behalf of the
Applicants and applying for court orders related to the SISP;
WSLEGAL\022681\00375\13374444v3
- 19 (d)
without limiting the authority of the Applicants set out in paragraph 4 of this
Order, take all steps and execute such necessary documents, certificates and
agreements, on behalf of any Applicant, in respect of or reasonably incidental to
the banking, financial or administrative activities of such Applicant, without the
agreement or consent of the Applicants; and
(e)
to perform such other duties or take any steps reasonably incidental to the
exercise of any powers and obligations conferred upon the Monitor by this Order,
or any further order of this Court.
39.
No provision of this Order is intended, or shall be deemed to appoint the Monitor as an
officer, director or employer of any of the Applicants. Additionally, nothing in this Order
shall constitute or be deemed to constitute the Monitor as a receiver, assignee, liquidator
or receiver and manager of any of the Applicants.
INTERIM FINANCING
40.
The Applicants are hereby authorized and empowered to obtain and borrow under a
credit facility from the Syndicate, as interim lenders (the "Interim Lenders") in order to
finance the Applicants' working capital requirements and other general corporate
purposes and capital expenditures, provided that borrowings under such credit facility
shall not exceed $50,000,000 unless permitted by further order of this Court.
41.
Such credit facility shall be on the terms and subject to the conditions set forth in the
Senior Secured Superpriority Interim Credit Agreement (the "Interim Credit
Agreement") entered into between the Applicants and the Interim Lenders effective as of
April 4, 2016, attached as Exhibit "29" to the Crilly Affidavit.
42.
The Applicants are hereby authorized and empowered to execute and deliver such
mortgages, charges, hypothecs and security documents, guarantees and other definitive
documents (collectively, the "Definitive Documents"), as are contemplated by the
Interim Credit Agreement or as may be reasonably required by the Interim Lenders
pursuant to the terms thereof, and the Applicants are hereby authorized and directed to
WSLEGAL\022681\00375\13374444v3
- 20 pay and perform all of their indebtedness, interest, fees, liabilities and obligations to the
Interim Lenders under and pursuant to the Interim Credit Agreement and the Definitive
Documents as and when the same become due and are to be performed, notwithstanding
any other provision of this Order.
43.
The Interim Lenders shall be entitled to the benefits of and are hereby granted a charge
(the "Interim Lenders' Charge") on the Property to secure all obligations under the
Definitive Documents incurred on or after the date of this Order which charge shall not
exceed the aggregate amount advanced on or after the date of this Order and otherwise
owing under the Definitive Documents. The Interim Lender's Charge shall have the
priority set out in paragraphs 48 and 50 hereof.
44.
Notwithstanding any other provision of this Order:
(a)
the Interim Lenders may take such steps from time to time as they may deem
necessary or appropriate to file, register, record or perfect the Interim Lenders'
Charge or any of the Definitive Documents;
(b)
upon the occurrence of an event of default under the Definitive Documents or the
Interim Credit Agreement, the Interim Lenders, upon two days' notice to the
Applicants and the Monitor, may exercise any and all of their rights and remedies
against the Applicants or the Property under or pursuant to the Commitment
Letter, Definitive Documents and the Interim Lenders' Charge, including without
limitation, to cease making advances to the Applicants and set-off and/or
consolidate any amounts owing by the Interim Lenders to the Applicants against
the obligations of the Applicants to the Interim Lenders under the Commitment
Letter, the Definitive Documents or the Interim Lenders' Charge, to make
demand, accelerate payment and give other notices, or to apply to this Court for
the appointment of a receiver, receiver and manager or interim receiver, or for a
bankruptcy order against the Applicants and for the appointment of a trustee in
bankruptcy of the Applicants; and
WSLEGAL\022681\00375\13374444v3
- 21 (c)
the foregoing rights and remedies of the Interim Lenders shall be enforceable
against any trustee in bankruptcy, interim receiver, receiver or receiver and
manager of the Applicants or the Property.
45.
The Interim Lenders shall be treated as unaffected in any plan of arrangement or
compromise filed by the Applicant under the CCAA, or any proposal filed by the
Applicants under the Bankruptcy and Insolvency Act of Canada (the "BIA"), with respect
to any advances made under the Definitive Documents.
KERP AND THE KERP CHARGE
46.
The Key Employee Retention Plan described in the Crilly Affidavit (the "KERP") is
hereby authorized and approved and the Applicants are authorized and directed to make
the payments contemplated in the KERP. Directors and officers of the Applicants shall
have no liability for the payments contemplated in the KERP (and for certainty, any and
all claims under the KERP shall be secured solely by the KERP Charge and shall not be
secured, directly or indirectly, by the Directors' Charge).
47.
The beneficiaries of the KERP are hereby granted a charge (the "KERP Charge") on the
Property to secure all obligations under the KERP, up to the maximum amount of $2.85
million. The KERP Charge shall have the priority set out in paragraphs 48 and 50 hereof.
VALIDITY AND PRIORITY OF CHARGES
48.
The priorities of the Charges (as defined below), as between them, shall be as follows:
First – Administration Charge (to the maximum amount of $2,000,000);
Second – Interim Lenders' Charge;
Third – Credit Card Charge (in the maximum amount of $250,000);
Fourth – Directors' Charge (to the maximum amount of $5 million);
WSLEGAL\022681\00375\13374444v3
- 22 Fifth – KERP Charge (to the maximum amount of $2.85 million);
Sixth – Financial Advisors' Charge (to the maximum amount of USD $6.1 million for the
benefit of CS and PJT and to the additional maximum amount of USD $500,000 for the
benefit of Wells Fargo Securities); and
Seventh – Critical Suppliers' Charge (to the maximum amount of $20,000,000).
(collectively, the "Charges").
49.
The filing, registration or perfection of the Charges shall not be required, and the Charges
shall be valid and enforceable for all purposes, including as against any right, title or
interest filed, registered, recorded or perfected subsequent to the Charges coming into
existence, notwithstanding any such failure to file, register, record or perfect.
50.
The Charges shall constitute a charge on the Property and such Charges shall rank in
priority to all other security interests, trusts, liens, charges and encumbrances, statutory or
otherwise (collectively, "Encumbrances") in favour of any Person, except for
Encumbrances the holders of which did not receive notice of the application for this
order. The Applicants are hereby granted leave to make further application should they
deem it necessary or advisable to have the Charges rank ahead of such Encumbrances, on
notice to the holders thereof.
51.
Except as otherwise expressly provided for herein, or as may be approved by this Court,
the Applicants shall not grant any Encumbrances over any Property that rank in priority
to, or pari passu with the Charges, unless the Applicants also obtain the prior written
consent of the Monitor and the other beneficiaries of the Charges affected thereby, or
further order of this Court.
52.
The Charges shall not be rendered invalid or unenforceable and the rights and remedies
of the chargees entitled to the benefit of the Charges (collectively, the "Chargees")
thereunder shall not otherwise be limited or impaired in any way by:
WSLEGAL\022681\00375\13374444v3
- 23 (a)
the pendency of these proceedings and the declarations of insolvency made in this
Order;
(b)
any application(s) for bankruptcy order(s) issued pursuant to BIA, or any
bankruptcy order made pursuant to such applications;
(c)
the filing of any assignments for the general benefit of creditors made pursuant to
the BIA;
(d)
the provisions of any federal or provincial statutes; or
(e)
any negative covenants, prohibitions or other similar provisions with respect to
borrowings, incurring debt or the creation of Encumbrances, contained in any
existing loan documents, lease, sublease, offer to lease or other agreement
(collectively, an "Agreement") which binds the Applicants, and notwithstanding
any provision to the contrary in any Agreement:
(i)
neither the creation of the Charges nor the execution, delivery, perfection,
registration or performance of any documents in respect thereof, including
the Interim Credit Agreement or the Definitive Documents, shall create or
be deemed to constitute a new breach by the Applicants of any Agreement
to which they are parties;
(ii)
none of the Chargees shall have any liability to any Person whatsoever as
a result of any breach of any Agreement caused by or resulting from the
creation of the Charges or the Applicants entering into the Interim Credit
Agreement, or execution, delivery or performance of the Definitive
Documents; and
(iii)
the payments made by the Applicants pursuant to this order, including the
Interim Credit Agreement or the Definitive Documents, and the granting
of the Charges, do not and will not constitute fraudulent preferences,
fraudulent conveyances, transfers at undervalue, oppressive conduct,
WSLEGAL\022681\00375\13374444v3
- 24 settlements or other challengeable, voidable or reviewable transactions
under any applicable law.
ALLOCATION
53.
Any interested Person may apply to this Court on notice to any other party likely to be
affected, for an order to allocate the Charges amongst the various assets comprising the
Property.
STEP ACCESS AGREEMENT
54.
The STEP Access Agreement, as defined in the Crilly Affidavit and attached thereto as
Exhibit "31", is hereby approved and the Applicants are authorized to comply with all of
their obligations thereunder.
SEALING
55.
The Confidential Affidavit and Exhibit "1" to the Genereux Affidavit shall be sealed on
the Court file, notwithstanding Division 4 of Part 6 of the Alberta Rules of Court.
SERVICE AND NOTICE
56.
The Monitor shall, (i) without delay, publish in the Calgary Herald, Daily Oil Bulletin,
San Antonio Express News, Houston Chronicle and the Denver Post a notice containing
the information prescribed under the CCAA; (ii) within five (5) days after the date of this
Order (A) make this Order publicly available in the manner prescribed under the CCAA,
(B) send, in the prescribed manner, a notice to every known creditor who has a claim
against the Applicants of more than $1,000.00, and (C) prepare a list showing the names
and addresses of those creditors and the estimated amounts of those claims, save and
except creditors who are individuals, and make it publicly available in the prescribed
manner, all in accordance with Section 23(1)(a) of the CCAA and the regulations made
thereunder.
WSLEGAL\022681\00375\13374444v3
- 25 57.
The Applicants and the Monitor shall be at liberty to serve this Order, any other materials
and orders in these proceedings, any notices or other correspondence, by forwarding true
copies thereof by prepaid ordinary mail, courier, personal delivery, facsimile
transmission or e-mail to the Applicants' creditors or other interested Persons at their
respective addresses as last shown on the records of the Applicants and that any such
service or notice by courier, personal delivery, facsimile transmission or e-mail shall be
deemed to be received on the next business day following the date of forwarding thereof,
or if sent by ordinary mail, on the third business day after mailing. The Monitor may
post a copy of any or all such materials on its website at www.pwc.ca/sanjel, which shall
be established for informational purposes.
GENERAL
58.
All references to dollar amounts in this Order, unless indicated otherwise, are references
to dollar amounts in Canadian currency.
59.
The Applicants or the Monitor may from time to time apply to this Court for advice and
directions in the discharge of their powers and duties hereunder.
60.
Notwithstanding Rule 6.11 of the Alberta Rules of Court, unless otherwise ordered by
this Court, this Monitor will report to the Court from time-to-time, which reporting is not
required to be in Affidavit form and which reporting shall be considered by this Court as
evidence.
61.
Nothing in this Order shall prevent the Monitor from acting as an interim receiver, a
receiver, a receiver and manager, or a trustee in bankruptcy of any or all of the
Applicants, the Business or the Property.
62.
This Court hereby requests the aid and recognition of any court, tribunal, regulatory or
administrative body having jurisdiction in Canada or in the United States, to give effect
to this Order and to assist the Applicants, the Monitor and their respective agents in
carrying out the terms of this Order. All courts, tribunals, regulatory and administrative
WSLEGAL\022681\00375\13374444v3
- 26 bodies are hereby respectfully requested to make such orders and to provide such
assistance to the Applicants and to the Monitor, as an officer of this Court, as may be
necessary or desirable to give effect to this Order, to grant representative status to the
Monitor in any foreign proceeding, or to assist the Applicants and the Monitor and their
respective agents in carrying out the terms of this Order.
63.
Each of the Applicants and the Monitor be at liberty and is hereby authorized and
empowered to apply to any court, tribunal, regulatory or administrative body, wherever
located, for the recognition of this Order and for assistance in carrying out the terms of
this Order.
64.
The Monitor is hereby appointed as the foreign representative of the Applicants and of
the within proceedings, and is hereby authorized as such to apply for foreign recognition
of these proceedings, as necessary, in any jurisdiction outside of Canada, including in the
United States pursuant to Chapter 15 of the U.S. Bankruptcy Code, and to take such
actions necessary or appropriate in furtherance of the recognition of these proceedings in
any such jurisdiction.
65.
Any interested party (including the Applicants and the Monitor) may apply to this Court
to vary or amend this Order on not less than seven (7) days' notice to any other party or
parties likely to be affected by the order sought or upon such other notice, if any, as this
Court may order.
66.
This Order and all of its provisions are effective as of 12:01 a.m. Mountain Time on the
date of this Order.
____________________________________
J.C.Q.B.A
WSLEGAL\022681\00375\13374444v3
WSLEGAL\022681\00375\13374444v3
Schedule “M” to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
FORM OF CHAPTER 15 RECOGNITION ORDER
(see attached)
22883504.11
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
In re:
SANJEL (USA) INC.,
Debtor in a foreign proceeding.
§
§
§
§
§
In re:
§
SANJEL CORPORATION,
§
Debtor in a foreign proceeding.
§
§
In re:
§
SURETECH GROUP LTD.,
§
Debtor in a foreign proceeding.
§
§
In re:
SANJEL ENERGY SERVICES (USA) §
§
INC.,
§
Debtor in a foreign proceeding.
§
§
In re:
SURETECH
COMPLETIONS
(USA) §
§
INC.,
§
Debtor in a foreign proceeding.
§
§
In re:
§
SANJEL CAPITAL (USA) INC.,
§
Debtor in a foreign proceeding.
§
§
In re:
4822-0345-5535.1113232\000001
04/04/2016 10:05 AM
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
TERRACOR GROUP LTD.,
Debtor in a foreign proceeding.
In re:
TERRACOR (USA) INC.,
Debtor in a foreign proceeding.
In re:
TERRACOR RESOURCES (USA) INC.,
Debtor in a foreign proceeding.
In re:
TERRACOR LOGISTICS (USA) INC.,
Debtor in a foreign proceeding.
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
CASE NO. 16-__________
Chapter 15
CASE NO. 16-__________
Chapter 15
Joint Administration Pending
ORDER GRANTING EXPEDITED PETITION FOR RECOGNITION AS
FOREIGN MAIN PROCEEDING PURSUANT TO SECTIONS 1515 AND 1517
OF THE UNITED STATES BANKRUPTCY CODE AND RELATED RELIEF
On ______________, 2016, PricewaterhouseCoopers, Inc. (“PwC” or the “Monitor”), as
the court-appointed foreign representative for the above-captioned foreign Debtors filed the
Expedited Petition For Recognition As Foreign Main Proceeding Pursuant To Sections 1515 And
1517 Of The United States Bankruptcy Code And Related Relief (“Petition”).
The Court finds that notice was proper and that no party in interest made any response in
opposition to the Petition, or, if so, the relief requested in any such response was denied for the
reasons stated on the record, and further finds that the relief requested in the Petition should be
GRANTED. All terms not otherwise defined herein shall have the meanings provided in the
Petition. In connection therewith and after due deliberations and sufficient cause appearing, this
Court finds and concludes as follows:
A.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a) and
(b) and 1334(a) and (b) and Sections 109 and 1501 of the Bankruptcy Code. This
is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(P).
B.
Venue is proper in this district pursuant to 28 U.S.C. §§ 1410 and 1408.
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C.
The “Chapter 15 Debtors” are the following ten entities: Sanjel (USA) Inc.,
Sanjel Corporation, Suretech Group Ltd., Sanjel Energy Services (USA), Inc.,
Suretech Completions (USA) Inc., Sanjel Capital (USA) Inc., Terracor Group
Ltd., Terracor (USA) Inc., Terracor Resources (USA) Inc. and Terracor Logistics
(USA) Inc.
D.
On ____________, 2016, the Chapter 15 Debtors filed applications for the
commencement of reorganization proceedings (“Canadian Proceedings”) pursuant
to the Companies’ Creditors Arrangement Act (“CCAA”) in the Court of Queen’s
Bench of Alberta, Judicial Centre of Calgary (the “Canadian Court”).
E.
On ____________, 2016, the Canadian Court granted an Initial Order for relief in
the Canadian Proceedings (the “Initial Order”).
F.
Also, on _________, 2016, the Canadian Court appointed (i) PwC as the Monitor
of the Canadian Proceedings and (ii) the foreign representative of the Chapter 15
Debtors.
G.
The Monitor is a person within the meaning of Section 101(41) of the Bankruptcy
Code and is the duly appointed foreign representative of the Chapter 15 Debtors
within the meaning of Section 101(24) of the Bankruptcy Code.
H.
This case was properly commenced pursuant to Sections 1504 and 1515 of the
Bankruptcy Code.
I.
The Canadian Proceedings are foreign proceedings within the meaning of Section
101(23) of the Bankruptcy Code.
J.
The Canadian Proceedings are entitled to recognition by this Court pursuant to
Section 1517 of the Bankruptcy Code.
K.
The Canadian Proceedings are entitled to recognition as a foreign main
proceeding pursuant to Section 1502(4) of the Bankruptcy Code and are entitled
to recognition as a foreign main proceeding pursuant to Section 1517(b)(1) of the
Bankruptcy Code. The Chapter 15 Debtors’ centers of main interests are in
Canada.
L.
The Monitor, as the foreign representative of the Chapter 15 Debtors, and the
Chapter 15 Debtors are entitled to the relief afforded under Section 1520 of the
Bankruptcy Code.
M.
There is a substantial likelihood that with the relief granted herein, the Chapter 15
Debtors, with the Monitor’s assistance will be able to successfully complete
restructuring or sale as a going concern under the provisions of the CCAA in the
Canadian Proceedings.
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N.
Relief is needed to protect the assets of the Chapter 15 Debtors or the interests of
the creditors pursuant to 11 U.S.C. § 1521. Therefore, the Monitor, as the foreign
representative, and the Chapter 15 Debtors are entitled to the additional relief
afforded under Section 1521 of the Bankruptcy Code (the “1521 Relief”).
O.
There is a substantial threat of irreparable injury if the 1521 Relief is not issued.
The Chapter 15 Debtors are attempting to sell their assets or otherwise restructure
in the Canadian Proceedings. If the 1521 Relief is not ordered, the sale or
restructuring could be jeopardized.
P.
Any threatened injury to the Chapter 15 Debtors outweighs any damage the
injunction might cause to the opponents. The 1521 Relief would actually benefit
the Chapter 15 Debtors’ creditors by ensuring an equitable and orderly
distribution of assets and facilitate the Canadian Proceedings and these Chapter
15 cases.
Q.
The 1521 Relief will not disserve the public interest. The 1521 Relief is in the
public interest. It will facilitate a cross-border reorganization that will allow the
Chapter 15 Debtors to maximize the value of their assets. The 1521 Relief is
supported by notions of comity and will allow the Chapter 15 Debtors to craft a
productive solution for their estates.
R.
As a result, the Monitor, in its role as foreign representative of the Chapter 15
Debtors, and the Chapter 15 Debtors, are entitled to the full protections and rights
available pursuant to Section 1521 of the Bankruptcy Code.
S.
The relief granted is necessary and appropriate, in the interest of the public and
international comity, consistent with the United States public policy, and will not
cause any hardship to any party in interest that is not outweighed by the benefits
of granting the requested relief.
T.
Permitting the cash management system to continue under the existing
agreements with the Banks will facilitate the continued operations of the Chapter
15 Debtors during the Canadian Proceedings.
U.
Likewise, permitting the Chapter 15 Debtors to pay prepetition employee wages
as provided by the Initial Order will further facilitate the Chapter 15 Debtors’
continued operations.
V.
The various charges provided for and approved by the Canadian Court in the
Initial Order are reasonable and necessary for the Chapter 15 Debtors to have a
substantial likelihood of services in their restructuring and/or sale efforts in the
Canadian Proceedings.
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NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS
1.
The Canadian Proceedings are hereby recognized as foreign main proceedings
pursuant to Section 1517 of the Bankruptcy Code.
2.
Except with respect to the provisions of the Initial Order relating to the Interim
Financing and Interim Financing Charge1, the terms of the Initial Order are given full force and
effect in the United States.
3.
The Monitor and the Chapter 15 Debtors are granted all of the relief afforded
under Section 1520 of the Bankruptcy Code except for those powers set forth in Section
1520(a)(3), which shall remain with the Chapter 15 Debtors, including the following:
4.
(a.)
Sections 361 and 362 of the Bankruptcy Code apply with respect to the
Chapter 15 Debtors and the property of the Chapter 15 Debtors that is
within the territorial jurisdiction of the United States.
(b.)
Sections 363, 549 and 552 of the Bankruptcy Code apply to a transfer of
an interest of the Chapter 15 Debtors in property that is within the
territorial jurisdiction of the United States to the same extent that the
sections would apply to property of an estate.
(c.)
Section 552 of the Bankruptcy Code applies to property of the Chapter 15
Debtors that is within the territorial jurisdiction of the United States.
Pursuant to Section 1524 of the Bankruptcy Code, the Monitor, as foreign
representative of the Chapter 15 Debtors, may intervene in any proceeding in a State or Federal
court in the United States in which a Chapter 15 Debtor is a party.
5.
Pursuant to Section 1523(a) of the Bankruptcy Code, the Monitor, as foreign
representative of the Chapter 15 Debtors, has standing in a case concerning any of the Chapter
1
The provisions of the Initial Order relating to the Interim Financing and Interim Financing Charge and matters
relating thereto will be addressed in the Court’s rulings on the Motion for an Order (I) Specifically Recognizing
Canadian Court Order Authorizing Debtors to Borrow Under a Post-Petition Credit Facility, (II) Approving Liens
On Assets Located in the Territorial Jurisdiction of the United States and (III) Granting Adequate Protection to
Prepetition Secured Parties (the "Post-Petition Financing Motion”).
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15 Debtors pending under another chapter of this title to initiate actions under sections 522, 544,
545, 547, 548, 550, 553 and 724(a).
6.
The following additional relief is granted pursuant to Section 1521 of the
Bankruptcy Code:
7.
(a.)
The commencement or continuation of any action or proceeding
concerning the assets, rights, obligations or liabilities of the Chapter 15
Debtors, including any action or proceeding against PwC in its capacity as
Monitor of the Chapter 15 Debtors, to the extent not stayed under Section
1520(a) of the Bankruptcy Code, is hereby stayed;
(b.)
Execution against the assets of the Chapter 15 Debtors to the extent not
stayed under Section 1520(a) of the Bankruptcy Code is hereby stayed;
(c.)
The administration or realization of all or part of the assets of the Chapter
15 Debtors within the territorial jurisdiction of the United States is hereby
entrusted to the Chapter 15 Debtors, and the terms of the Initial Order
shall apply to the Chapter 15 Debtors, its creditors, the Monitor, and any
other parties-in-interest;
(d.)
The right of any person or entity, other than the Chapter 15 Debtors or the
Monitor, to transfer or otherwise dispose of any assets of the Chapter 15
Debtors to the extent not suspended under Section 1520(a) of the
Bankruptcy Code is hereby suspended unless authorized in writing by the
Chapter 15 Debtors or by Order of this Court.
(e.)
The Monitor, as foreign representative of the Chapter 15 Debtors, may
undertake the examination of witnesses, the taking of evidence, the
production of documents, or the delivery of information concerning the
assets, affairs, rights, obligations or liabilities of the Chapter 15 Debtors.
(f.)
Nothing in this Order shall be deemed to entrust or otherwise vest the
Chapter 15 Debtors or its assets to the Monitor. The terms of the Initial
Order expressly govern the rights and responsibilities of the Monitor as
foreign representative in this foreign main proceeding.
(g.)
Notwithstanding Rule 7062 of the Bankruptcy Rules, made applicable to
this case by Rule 1018 of the Bankruptcy Rules, the terms and conditions
of this Order shall be immediately effective and enforceable upon its entry
and, upon its entry, shall become final and appealable.
The Chapter 15 Debtors are authorized to maintain their existing consolidated
cash management system, to allow receipt and sending of transfers via the ACH or automatic
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clearing house system and by wire transfer (collectively, the “Cash Management System”), all
subject to the terms and conditions of the Chapter 15 Debtor’s prepetition agreements with its
depository institutions (including the right to pay all pre-petition and post-petition administrative
fees associated with such Bank Accounts and Cash Management System). To facilitate the use
of the current cash management system, the Chapter 15 Debtors are authorized and empowered
to (i) maintain and continue to use, with the same account numbers, all of its existing bank
accounts at depository institutions in the United States (the “Bank Accounts”); (ii) treat the Bank
Accounts for all purposes as debtor-in-possession accounts; (iii) maintain and continue to use its
existing business forms, stationery and checks, all without the appellation “debtor-inpossession”; and (iv) preserve the reporting and accounting mechanisms used by the Chapter 15
Debtors in respect of the Bank Accounts.
8.
The Chapter 15 Debtors are authorized to pay the pre-petition wages of
employees as provided by the Initial Order.
9.
Except for the Interim Finance Charge2, the charges granted against the Chapter
15 Debtors’ assets in the Initial Order are hereby approved as provided in the Initial Order.
10.
Pursuant to 11 U.S.C. § 1521(a)(6), to the extent not superseded by this Order, the
findings and relief granted in that certain Order Granting Monitor’s Emergency Ex Parte
Application for Temporary Restraining Order And, After Notice And a Hearing, Preliminary
Injunctive Relief, Pursuant to Sections 105(a) and 1519 of the Bankruptcy Code will continue in
full force until otherwise ordered by the Court.
11.
This Court shall retain jurisdiction with respect to the enforcement, amendment or
modification of this Order, any request for additional relief or any adversary proceeding brought
2
As noted in Footnote 1, issues related to the Interim Financing and Interim Financing Charge will be addressed in
the Court’s rulings on the Post-Petition Financing Motion.
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in and through these Chapter 15 foreign proceedings, and any request by an entity for relief from
the provisions of this Order, for cause shown, that is properly commenced and within the
jurisdiction of this Court.
The relief provided herein shall survive the termination of the
Canadian Proceedings subject to further order of this Court after notice and hearing.
12.
If the Monitor has not already filed a copy of the Initial Order and all amendments
thereto with this Court, it shall do so within ten days of the entry of this Order.
13.
The security provision provided in Rule 65(c) of the Federal Rules of Civil
Procedure, made applicable through Rule 7065 of the Bankruptcy Rules, is unnecessary in this
case and is therefore waived.
14.
This Order applies to all parties in interest in this Chapter 15 case and all of their
agents, employees, and representatives, and all those who act in concert with them who receive
notice of this Order.
###
-84822-0345-5535.1113232\000001
04/04/2016 10:05 AM
Schedule “N” to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
FORM OF INTERIM U.S. DIP ORDER
(see attached)
22883504.11
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
In re:
SANJEL (USA) INC.,
Debtor in a foreign proceeding.
§
§
§
§
§
In re:
§
SANJEL CORPORATION,
§
Debtor in a foreign proceeding.
§
§
In re:
§
SURETECH GROUP LTD.,
§
Debtor in a foreign proceeding.
§
§
In re:
SANJEL ENERGY SERVICES (USA) §
§
INC.,
§
Debtor in a foreign proceeding.
§
§
In re:
SURETECH
COMPLETIONS
(USA) §
§
INC.,
§
Debtor in a foreign proceeding.
§
§
In re:
§
SANJEL CAPITAL (USA) INC.,
§
Debtor in a foreign proceeding.
§
4832-9101-4191.2113232\000001
04/04/2016 10:05 AM
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
In re:
TERRACOR GROUP LTD.,
Debtor in a foreign proceeding.
In re:
TERRACOR (USA) INC.,
Debtor in a foreign proceeding.
In re:
TERRACOR RESOURCES (USA) INC.,
Debtor in a foreign proceeding.
In re:
TERRACOR LOGISTICS (USA) INC.,
Debtor in a foreign proceeding.
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
CASE NO. 16-__________
Chapter 15
CASE NO. 16-__________
Chapter 15
Joint Administration Pending
INTERIM ORDER GRANTING MOTION FOR AN ORDER (I) SPECIFICALLY
RECOGNIZING CANADIAN COURT ORDER AUTHORIZING DEBTORS TO
BORROW UNDER A POST-PETITION CREDIT FACILITY, (II) APPROVING LIENS
ON ASSETS LOCATED IN THE TERRITORIAL JURISDICTION OF THE UNITED
STATES AND (III) GRANTING ADEQUATE PROTECTION
TO PREPETITION SECURED PARTIES
This matter coming before the Court on the Motion for An Order (I) Specifically
Recognizing Canadian Court Order Authorizing Debtors to Borrow Under a Post-Petition
Credit Facility, and (II) Approving Liens On Assets Located in the Territorial Jurisdiction of the
United States and (III) Granting Adequate Protection to Prepetition Secured Parties (the
“Motion”)1, of PriceWaterhouseCoopers, Inc. as the foreign representative (the “Foreign
Representative”) of the above-captioned debtors (collectively, the “Chapter 15 Debtors”) in
proceedings (the “CCAA Proceedings”) commenced under Canada’s Companies’ Creditors
Arrangement Act, R.S.C. 1985, c. C-36, as amended, and pending before the Court of Queen’s
Bench of Alberta (the “Canadian Court”) and the Chapter 15 Debtors, for entry of an interim and
a final order (i) specifically recognizing and giving full force and effect to those provisions of the
Initial Order Authorizing the Chapter 15 Debtors to obtain and borrow under the Post-Petition
1
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion.
2
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Facility, (ii) approving the granting of first priority, priming liens on the Chapter 15 Debtors’
U.S. Assets as security for the Post-Petition Facility, and (iii) granting adequate protection to the
Pre-Petition Secured Parties including the grant of liens and approving the allowance of a
superpriority administrative claim against the Chapter 15 Debtors’ estates in favor of the
Syndicate, as Pre-Petition Secured Parties; and the Court having reviewed the Motion and the
Court’s files, including the information in the Notice of Filing of Documents in Support of First
Day Filings; and appropriate and timely notice of the filing of the Motion having been given; and
no other further notice being necessary or required; and the Court having determined that the
legal and factual bases set forth in the Motion and all other pleadings and proceedings in this
case establish just cause to grant the relief ordered herein on an interim basis, and after due
deliberation therefor,
THE COURT HEREBY FINDS AND DETERMINES THAT:
A.
The findings and conclusions set forth herein constitute the Court’s
findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to
this proceeding pursuant to Bankruptcy Rule 9014. To the extent any of the following findings
of fact constitute conclusions of law, they are adopted as such. To the extent any of the
following conclusions of law constitute findings of fact, they are adopted as such.
B.
This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.
§§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue for this
proceeding is proper before this Court pursuant to 28 U.S.C. §§ 1410 and 1408.
C.
Due and proper notice of the Motion and the interim hearing on same was
given, which notice is deemed adequate for all purposes and no other further notice is required.
3
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D.
The Chapter 15 Debtors would have been unable to obtain financing
during the CCAA Proceedings on terms as favorable as those set forth in the Post-Petition Credit
Agreement.
E.
The Chapter 15 Debtors’ entry into the Post-Petition Facility is warranted
under the circumstances, is in the best interests of the Debtors, and is a sound exercise of the
Chapter 15 Debtors’ business judgment;
F.
The use of the Chapter 15 Debtors’ assets that are located within the
territorial jurisdiction of the United States as Collateral as set forth in the Post-Petition Facility is
warranted under the circumstances, is in the best interests of the Chapter 15 Debtors, and is a
sound exercise of the Debtors’ business judgment.
G.
The relief requested by the Motion is not contrary to the public policy of
the United States.
NOW, THEREFORE, THE COURT HEREBY ORDERS, ADJUDGES, AND
DECREES AS FOLLOWS:
1.
The Motion is GRANTED on an interim basis as set forth herein.
2.
Those provisions of the Initial Order authorizing the Chapter 15 Debtors
to obtain and borrow under the Post-Petition Facility, through the date of the Final Hearing set
out below, including, but not limited to, paragraphs ______ of the Initial Order, are hereby
granted recognition and are given full force and effect in the United States.
3.
The Chapter 15 Debtors are authorized, pursuant to sections 363, 364 and
1520 of the Bankruptcy Code, to use their assets that are located within the territorial jurisdiction
of the United States as Collateral for the Post-Petition Facility, on the terms stated in the PostPetition Credit Agreement and any ancillary documents and schedules related thereto.
4
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4.
Any and all terms of the Post-Petition Facility that relate to or involve the
Chapter 15 Debtors, or the Chapter 15 Debtors’ assets that are located within the territorial
jurisdiction of the United States, are approved.
5.
The Foreign Representative and the Chapter 15 Debtors are authorized to
take any and all actions they deem necessary or appropriate to effectuate the transactions set
forth in the Post-Petition Credit Agreement, insofar as such transactions relate to or involve the
Chapter 15 Debtors or the assets of the Chapter 15 Debtors that are located within the territorial
jurisdiction of the United States.
6.
In connection with all advances under the Post-Petition Facility and
pursuant to the terms of the Post-Petition Credit Agreement, the Syndicate, through the Agent,
are granted fully perfected and first priority, priming liens and security interests under 11 U.S.C.
§ 364(d) in the Collateral owned by the Chapter 15 Debtors and located in the territorial
jurisdiction of the United States, subject only to the Administrative Charge.
7.
As adequate protection for use of their cash collateral and granting of the
priming liens under the Post-Petition Credit Agreement, the Pre-Petition Secured Parties are
granted adequate protection by:
(a) the granting of valid, binding, enforceable and perfected security interests and
liens (collectively, the “Adequate Protection Liens”) to the Pre-Petition Secured
Parties in the U.S. Assets to secure the amount of their indebtedness equal to any
Diminution in Value, which Adequate Protection Liens shall be junior to the first
ranking charge and liens securing the obligations under the Post-Petition Credit
Agreement and the other Canadian Charges; (b) the granting of an allowed
superpriority administrative expense claim to the Pre-Petition Secured Parties in
5
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an amount equal to any Diminution in Value, subject and subordinate only to the
Canadian Charges and the obligations under the Post-Petition Credit Agreement;
(c) the Chapter 15 Debtors’ payment, at the request of the Agent from time to
time, the reasonable and documented fees and expenses incurred by Wachtell,
Lipton, Rosen & Katz, Blake Cassels & Graydon LLP, Langley & Barrack
Incorporated, and Ernst & Young Inc., as advisors to the Pre-Petition Secured
Parties, whether incurred before or after the Petition Date; and (d) any payments
or repayments of any kind made on the Post-Petition Credit Facility shall be
deemed to be made, first, from the proceeds of any assets or property of the
Chapter 15 Debtors which do not constitute Pre-Petition Collateral, prior to any
payments or repayments being made on the Post-Petition Credit Agreement from
the proceeds of Pre-Petition Collateral (collectively, the provisions in (a) through
(d) above, are referred to as the “Syndicate Adequate Protection”). The foregoing
Syndicate Adequate Protection shall not prejudice, impair, or otherwise affect the
rights of the Pre-Petition Secured Parties to seek any other or supplemental relief
in respect of their adequate protection rights.
8.
As the Post-Petition Credit Agreement was negotiated at arm’s length, in
good faith, and was approved by the Canadian Court as being necessary and appropriate for the
Chapter 15 Debtors, pursuant to 11 U.S.C. § 364(e), if any of the provisions of this Order related
to the secured financing under the Post-Petition Credit Agreement or the Syndicate Adequate
Protection shall subsequently be stayed, modified, amended, reversed or vacated in whole or in
part (collectively, a “Modification”), whether by subsequent order of this Court or an appeal of
this Order, such Modification shall not impair, limit or diminish the protections, rights or
6
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remedies of the Syndicate and Agent under the this Order (as entered prior to the Modification)
or under the Post-Petition Credit Agreement or the Guarantee, including with respect to any
advance made prior to the entry of the Modification.
9.
This Order shall be immediately effective and enforceable upon its entry
to avoid immediate and irreparable harm to the Chapter 15 Debtors.
10.
The Final Hearing on the Motion is set for ______, 2016 at __:__ o’clock
___.m., central time, before the Court. The Chapter 15 Debtors shall file a proposed form of
final order on the Motion on or before four (4) business days prior to such Final Hearing for
consideration by the Court and any objections to entry of such final order or the granting of any
relief under the Motion shall be filed with the Court on or before 4:00 p.m., central time, three
(3) business days before the date of the Final Hearing and served, so as to be received, on or
before such date and time by the counsel for the Monitor, Deborah D. Williamson, Dykema Cox
Smith,
112
E.
Pecan
Street,
Suite
1800,
San
Antonio,
TX
78205,
Email:
[email protected], counsel for the Chapter 15 Debtors, John E. West, Vinson & Elkins,
LLP, 1001 Fannin Street, Suite 2500, Houston, TX 77002-6760, Email: [email protected], and
counsel for the Syndicate, David S. Gragg, Langley & Banack, Inc., 745 E. Mulberry, Suite 900,
San Antonio, TX 78212, Email: [email protected] and Richard G. Mason, Wachtell,
Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019, Email: [email protected].
7
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11.
Recognizing the rapidly evolving circumstances involving the Chapter 15
Debtors and their businesses, nothing in this Interim Order limits the rights of the Monitor or the
Chapter 15 Debtors to seek other and further interim relief in connection with the Motion and the
Chapter 15 Debtors’ need for further interim post-petition financing should the circumstances
warrant such further interim relief.
###
8
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Schedule “O” to the Credit Agreement dated as of April 4, 2016 between SANJEL CORPORATION, as
Borrower and a syndicate of Lenders with ALBERTA TREASURY BRANCHES, as Administrative
Agent
FORM OF U.S. TRO ORDER
(see attached)
22883504.11
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
In re:
SANJEL (USA) INC.,
Debtor in a foreign proceeding.
§
§
§
§
§
In re:
§
SANJEL CORPORATION,
§
Debtor in a foreign proceeding.
§
§
In re:
§
SURETECH GROUP LTD.,
§
Debtor in a foreign proceeding.
§
§
In re:
SANJEL ENERGY SERVICES (USA) §
§
INC.,
§
Debtor in a foreign proceeding.
§
§
In re:
SURETECH
COMPLETIONS
(USA) §
§
INC.,
§
Debtor in a foreign proceeding.
§
§
In re:
§
SANJEL CAPITAL (USA) INC.,
§
Debtor in a foreign proceeding.
§
4814-3157-2527.1113232\000001
04/04/2016 10:05 AM
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
In re:
TERRACOR GROUP LTD.,
Debtor in a foreign proceeding.
In re:
TERRACOR (USA) INC.,
Debtor in a foreign proceeding.
In re:
TERRACOR RESOURCES (USA) INC.,
Debtor in a foreign proceeding.
In re:
TERRACOR LOGISTICS (USA) INC.,
Debtor in a foreign proceeding.
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
Case No. 16-__________
Chapter 15
Case No. 16-__________
Chapter 15
CASE NO. 16-__________
Chapter 15
CASE NO. 16-__________
Chapter 15
Joint Administration Pending
ORDER GRANTING MONITOR’S EMERGENCY EX PARTE
APPLICATION FOR TEMPORARY RESTRAINING ORDER
AND RELIEF PURSUANT TO SECTIONS 105(A), 1519, 1521
AND OTHER SECTIONS OF THE BANKRUPTCY CODE
On __________, 2016, PricewaterhouseCoopers, Inc. (“PwC” or the “Monitor”), as the
court-appointed and authorized foreign representative of the above-captioned Chapter 15
Debtors, filed “Monitor’s Emergency Ex Parte Application For Temporary Restraining Order
And Relief Pursuant To Sections 105(A), 1519, 1521 And Other Sections Of The Bankruptcy
Code (“TRO Application”) in the above styled and numbered chapter 15 cases.
The Court finds that notice was proper (or that to the extent that notice was insufficient,
this Order should be issued without notice to avoid irreparable harm to the Chapter 15 Debtors),
and that no party in interest made any response in opposition to the TRO Application, or, if so,
the relief requested in any such response was denied for the reasons stated on the record, and
further finds that the relief requested in the TRO Application should be granted. All terms not
expressly defined herein shall have the meaning ascribed to them in the TRO Application.
2
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This Court having considered and reviewed: (i) the TRO Application, (ii) Monitor’s
Expedited Petition For Recognition As Foreign Main Proceeding Pursuant To Sections 1515 And
1517 Of The United States Bankruptcy Code And Related Relief (“Petition”) (iii) the exhibits to
such TRO Application and Petition, (iv) the Initial Order entered in the Canadian Proceeding,
(v) all other documents filed in support thereof (collectively, the “Supporting Papers”), and this
Court having heard the parties on April ___, 2016, and based upon the evidence presented and
the representations made on the record at such hearing, this Court finds and concludes as
follows:
A.
The “Chapter 15 Debtors” are the following ten entities: Sanjel (USA) Inc., Sanjel
Corporation, Suretech Group Ltd., Sanjel Energy Services (USA), Suretech
Completions (USA), Sanjel Capital (USA) Inc., Terracor Group Ltd., Terracor
(USA) Inc., Terracor Resources (USA) Inc., and Terracor Logistics (USA) Inc.
B.
On __________, 2016, the Chapter 15 Debtors filed applications for the
commencement of reorganization proceedings (the “Canadian Proceedings”)
pursuant to the Companies’ Creditors Arrangement Act (the “CCAA”) in the
Court of Queen’s Bench of Alberta, Judicial Centre of Calgary (the “Canadian
Court”).
C.
On ___________, 2016, the Canadian Court granted an Initial Order (the “Initial
Order”) for relief in the Canadian Proceedings. Also, on _________, 2016, the
Canadian Court appointed PwC as (i) the Monitor of the Canadian Proceedings
and (ii) the foreign representative of the Chapter 15 Debtors.
D.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a) and
(b) and 1334(a) and (b) and Sections 109 and 1501 of the Bankruptcy Code. This
is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(P).
E.
Venue is proper in this district pursuant to 28 U.S.C. §§ 1410 and 1408.
F.
The Monitor is a person within the meaning of Section 101(41) of the Bankruptcy
Code and is the duly appointed foreign representative of the Chapter 15 Debtors
within the meaning of Section 101(24) of the Bankruptcy Code.
G.
This case was properly commenced pursuant to Sections 1504 and 1515 of the
Bankruptcy Code. The notice of the application was sufficient given the
circumstances of these cases and the potential for irreparable harm to the
Chapter 15 Debtors.
3
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H.
There is a substantial likelihood that the Court, upon final consideration, will find
that the Canadian Proceedings are foreign proceedings within the meaning of
Section 101(23) of the Bankruptcy Code.
I.
There is a substantial likelihood that the Court, upon final consideration, will find
the Canadian Proceedings are entitled to recognition by this Court pursuant to
Section 1517 of the Bankruptcy Code.
J.
There is a substantial likelihood that the Court, upon final consideration, will find
that the Canadian Proceedings will be entitled to recognition as foreign main
proceedings pursuant to Section 1502(4) of the Bankruptcy Code and will be
entitled to recognition as foreign main proceedings pursuant to Section 1517(b)(1)
of the Bankruptcy Code.
K.
Relief is urgently needed to protect the assets of the Chapter 15 Debtors or the
interests of the creditors pursuant to 11 U.S.C. § 1519(a). Therefore, the Monitor
and the Chapter 15 Debtors are entitled to the provisional relief afforded under
Section 1519 of the Bankruptcy Code.
L.
The relief granted is necessary and appropriate, in the interest of the public and
international comity, consistent with the United States public policy, and will not
cause any hardship to any party in interest that is not outweighed by the benefits
of granting the requested relief.
M.
As described above, the Monitor has a substantial likelihood of prevailing on the
merits. Even if the Canadian Proceedings are “foreign nonmain proceedings,”
there is a substantial likelihood that the Monitor will be able to demonstrate that
he is entitled to relief under 11 U.S.C. § 1521(a).
N.
There is a substantial threat of irreparable injury if the injunction is not issued.
The Chapter 15 Debtors are attempting to sell their assets or otherwise restructure
in the Canadian Proceedings. If the injunctive relief is not ordered, the sale or
restructuring could be jeopardized.
O.
Any threatened injury to the Chapter 15 Debtors outweighs any damage the
injunction might cause to the opponents. The injunctive relief would actually
benefit the Chapter 15 Debtors’ creditors by ensuring an equitable and orderly
restructuring in the Canadian Proceedings as well as a restructuring of the Chapter
15 Debtors’ business, assets and undertakings in the United States.
P.
The injunction will not disserve the public interest. The injunctive relief is in the
public interest. It acts to facilitate a cross-border reorganization that will provide a
benefit to the estates of the Chapter 15 Debtors. The injunctive relief is supported
by notions of comity and will allow the Chapter 15 Debtors to craft a productive
solution for their estates.
4
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Q.
The Monitor, in its role as foreign representative of the Chapter 15 Debtors, and
the Chapter 15 Debtors, are entitled to the full protections and rights available
pursuant to Section 1519(a) of the Bankruptcy Code.
R.
Permitting the current cash management system to continue pursuant to existing
agreements between the Chapter 15 Debtors and their existing depository and
disbursement banks (collectively, the “Banks”) will facilitate the continued
operations of the Chapter 15 Debtors as a going concern.
NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:
1.
Except with respect to the provisions regarding the Interim Financing and
the Interim Financing Charge,1 the terms of the Initial Order are hereby given full force
and effect on an interim basis until otherwise ordered by this Court.
2.
The commencement or continuation of any action or proceeding
concerning the assets, rights, obligations or liabilities of the Chapter 15 Debtors,
including any action or proceeding against PwC in its capacity as Monitor and foreign
representative of the Chapter 15 Debtors, is hereby stayed.
3.
Execution against the assets of the Chapter 15 Debtors is hereby stayed.
4.
The administration or realization of all or part of the assets of the Chapter
15 Debtors within the territorial jurisdiction of the United States is hereby entrusted to the
Chapter 15 Debtors, and the terms of the Initial Order shall apply to the Chapter 15
Debtors, their creditors, the Monitor, and any other parties-in-interest.
5.
The right of any person or entity, other than the Chapter 15 Debtors, or the
Monitor, to transfer or otherwise dispose of any assets of the Chapter 15 Debtors is
hereby suspended unless authorized in writing by the Chapter 15 Debtors or by Order of
this Court.
1
The provisions of the Initial Order relating to the Interim Financing and Interim Financing Charge and matters
relating thereto will be addressed in the Court’s rulings on the Motion for an Order (I) Specifically Recognizing
Canadian Court Order Authorizing Debtors to Borrow Under a Post-Petition Credit Facility, (II) Approving Liens
On Assets Located in the Territorial Jurisdiction of the United States and (III) Granting Adequate Protection to
Prepetition Secured Parties (the "Post-Petition Financing Motion”)
5
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6.
As provisional relief in aid of the Initial Order, except for the Interim
Financing Charge, the charges as set forth in the Initial Order are hereby given full force
and effect in accordance with the terms of the Initial Order.
7.
The Chapter 15 Debtors are authorized to continue use of the Cash
Management System with its Banks pursuant to existing agreements, including
continuing to make payments to the Banks for fees for services rendered thereunder.
8.
The Monitor may undertake the examination of witnesses, the taking of
evidence, the production of documents, or the delivery of information concerning the
assets, affairs, rights, obligations or liabilities of the Chapter 15 Debtors.
9.
Nothing in this Order shall be deemed to entrust or otherwise vest the
Chapter 15 Debtors or their assets to the Monitor, with the terms of the Initial Order to
expressly govern the rights and responsibilities as foreign representative in this foreign
main proceeding.
10.
Notwithstanding Rule 7062 of the Bankruptcy Rules, made applicable to
this case by Rule 1018 of the Bankruptcy Rules, the terms and conditions of this Order
shall be immediately effective and enforceable upon its entry and, upon its entry, shall
become final and appealable.
11.
This Court shall retain jurisdiction with respect to the enforcement,
amendment or modification of this Order, any request for additional relief or any
adversary proceeding brought in and through these Chapter 15 foreign proceedings, and
any request by an entity for relief from the provisions of this Order, for cause shown, that
is properly commenced and within the jurisdiction of this Court.
6
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12.
If the Monitor has not already filed a copy of the Initial Order with this
Court, it shall do so within ten days of the entry of this Order.
13.
The security provision provided in Rule 65(c) of the Federal Rules of Civil
Procedure, made applicable through Rule 7065 of the Bankruptcy Rules, is unnecessary
in this case and is therefore waived.
14.
This Order applies to all parties in interest in this Chapter 15 case and all
of their agents, employees, and representatives, and all those who act in concert with
them who receive notice of this Order.
15.
A hearing on a preliminary and permanent injunction is set for
__________, 2016, at _____ __.m. in Courtroom _________. Counsel for the Monitor
must serve this Order on parties in interest in this Chapter 15 case and provide notice of
the hearing.
16.
Any party in interest may make a motion seeking relief from, or
modification of, this Order on not less than two (2) business days’ notice to U.S. Counsel
for the Monitor (the “Monitor’s U.S. Counsel”) and U.S. Counsel for the Chapter 15
Debtors (the “Chapter 15 Debtors’ U.S. Counsel”).
17.
The notice required in paragraph 16 above on objections, if any, submitted
for the purpose of opposing the request for a preliminary and permanent injunction
sought in the TRO Application must be made in writing describing the basis therefore,
filed with the Court and served on the Monitor’s U.S. Counsel and the Chapter 15
Debtors’ U.S. Counsel in a manner whereby such notice or objections are actually
received by such counsel at least two (2) business days prior to (i) any hearing scheduled
on any motion seeking relief from, or modification of this Order, or (ii) the hearing date
7
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scheduled in paragraph 15 above for the hearing on the preliminary and permanent
injunction.
18.
If no objections to the Monitor’s request for a preliminary and permanent
injunction are made as herein provided, the Court may enter an order granting the
preliminary and permanent injunction requested in the TRO Application without holding
a hearing.
19.
This Order shall remain in full force and effect until (i) the earlier of, (a)
the Court rules on the Monitor’s request for a preliminary and permanent injunction, or
(b) the Court rules on the Expedited Petition for Recognition as Foreign Main Proceeding
Pursuant to Sections 1515 and 1517 of the United States Bankruptcy Code and Related
Relief, or (ii) relief from this Order is otherwise obtained as herein provided.
20.
This Court shall retain jurisdiction with respect to any and all matters
relating to the interpretation or implementation of this Order.
###
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