EX-10.1 2 a17-15457_1ex10d1.htm EX-10.1

Exhibit 10.1

 

Execution Version

 

CREDIT AGREEMENT

 

between

 

KINDER MORGAN COCHIN ULC
as Principal Borrower

 

and

 

TRANS MOUNTAIN PIPELINE ULC
as NEB Reserve Borrower

 

and

 

THE PERSONS PARTY HERETO
FROM TIME TO TIME IN THEIR CAPACITIES AS LENDERS

 

and

 

ROYAL BANK OF CANADA
as Administrative Agent

 

and with

 

RBC CAPITAL MARKETS, CANADIAN IMPERIAL BANK OF COMMERCE, THE BANK OF NOVA SCOTIA AND TD SECURITIES
as Co-Lead Arrangers and Joint Bookrunners

 

MADE AS OF
June 16, 2017

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1 INTERPRETATION

1

 

 

 

1.1

Definitions

1

1.2

Headings; Articles and Sections

55

1.3

Number; persons; including; successors; in writing

55

1.4

Accounting Principles

56

1.5

Changes in Generally Accepted Accounting Principles

56

1.6

References to Documents and Applicable Law

58

1.7

Per Annum and Currency Calculations

58

1.8

Letter of Credit Amounts

58

1.9

Schedules

58

 

 

 

ARTICLE 2 CREDIT FACILITIES

59

 

 

 

2.1

Construction Facility

59

2.2

Contingent Facility

61

2.3

Working Capital Facility

63

2.4

Availments

65

2.5

Drawdowns — Notices and Limitations

65

2.6

Rollovers and Conversions - Notices and Limitations

66

2.7

Optional Reduction of Commitments

68

2.8

Several Obligations of Lenders

69

2.9

Loans - General

69

2.10

Loans:  Inter-Lender Arrangements

70

2.11

Hedging With Lenders

70

 

 

 

ARTICLE 3 CONDITIONS PRECEDENT

70

 

 

 

3.1

Conditions for Initial Drawdown

70

3.2

Conditions for All Drawdowns

75

3.3

Additional Conditions for Drawdowns under the Construction Facility

76

3.4

Additional Conditions for Drawdowns under the Contingent Facility

77

3.5

Additional Conditions for NEB Reserve Drawdowns

78

3.6

Waiver

79

 

 

 

ARTICLE 4 PAYMENTS OF INTEREST AND FEES

79

 

 

 

4.1

Interest on Prime Loans

79

4.2

Interest on USBR Loans

79

4.3

Interest on LIBO Rate Loans

79

4.4

Acceptance Fees

80

4.5

LC and Related Fees

80

4.6

Standby Fees

81

4.7

Default Interest

81

4.8

Agent’s Fees

81

4.9

General Interest Provisions

82

 

i



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

4.10

Defaulting Lender Fees

83

 

 

 

ARTICLE 5 BANKERS’ ACCEPTANCES

83

 

 

 

5.1

Form and Execution of Bankers’ Acceptances

83

5.2

Power of Attorney; Provision of Bankers’ Acceptances to Lenders

84

5.3

Mechanics of Issuance

87

5.4

Rollover, Conversion or Payment on Maturity

89

5.5

Restriction on Rollovers and Conversions

89

5.6

Rollovers

89

5.7

Conversion into Bankers’ Acceptances

90

5.8

Conversion from Bankers’ Acceptances

90

5.9

BA Equivalent Advances

90

5.10

Termination of Bankers’ Acceptances

91

5.11

Borrower Acknowledgements

91

 

 

 

ARTICLE 6 LETTERS OF CREDIT

91

 

 

 

6.1

Letter of Credit Commitment

91

6.2

Procedures for Issuance, Conversion and Amendment of Letters of Credit; Auto-Renewal Letters of Credit

93

6.3

Drawings and Reimbursements; Funding of Participations

94

6.4

Repayment of Participations

96

6.5

Obligations Absolute

97

6.6

Role of Fronting Lenders

98

6.7

Applicability of ISP98 and UCP

98

6.8

Applicant Under Letter of Credit

99

6.9

Conflict with LC Application

99

 

 

 

ARTICLE 7 PAYMENTS

99

 

 

 

7.1

Mandatory Repayments

99

7.2

Optional Repayment

101

7.3

Currency Excess

101

7.4

Additional Repayment Terms

102

7.5

Payments — General

103

7.6

Application of Payments after Default

104

7.7

Margin Changes; Adjustments for Margin Changes

105

 

 

 

ARTICLE 8 REPRESENTATIONS AND WARRANTIES

106

 

 

 

8.1

Representations and Warranties

106

8.2

Deemed Repetition

116

8.3

Other Loan Documents

116

8.4

Effective Time of Repetition

116

8.5

Nature of Representations and Warranties

117

 

ii



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

ARTICLE 9 GENERAL COVENANTS

117

 

 

 

9.1

Positive Covenants

117

9.2

Negative Covenants

123

9.3

Financial Covenants

127

9.4

Reporting Requirements

127

9.5

Agent May Perform Covenants

130

9.6

Most Favoured Lender Provisions re: Permitted Incremental Debt

130

 

 

 

ARTICLE 10 GUARANTEES AND SECURITY

131

 

 

 

10.1

Obligor and Pledgor Guarantees

131

10.2

Security

131

10.3

Registration and Perfection

132

10.4

Continuing Security

132

10.5

Dealing with Security

133

10.6

Release and Discharge of Security

133

10.7

Acknowledgement in Respect of Security

133

10.8

Transfer of Security

133

10.9

Effectiveness

134

10.10

Hedging Affiliates

134

10.11

Security for Hedging with Former Lenders

134

10.12

Security Disclaimer

135

 

 

 

ARTICLE 11 DESIGNATION OF RESTRICTED SUBSIDIARIES

135

 

 

 

11.1

Designation of Restricted Subsidiaries

135

11.2

Obligor Guarantee and Security

135

 

 

 

ARTICLE 12 EVENTS OF DEFAULT AND REMEDIES

137

 

 

 

12.1

Events of Default

137

12.2

Enforcement

142

12.3

Suspension of Lenders’ Outstandings

142

12.4

Cash Collateral Accounts

143

12.5

Right of Set Off

143

12.6

Sharing of Payments by Lenders

143

12.7

Remedies Cumulative and Waivers

144

 

 

 

ARTICLE 13 YIELD PROTECTION / TAXES / REPLACEMENT OF LENDERS

145

 

 

 

13.1

Increased Costs

145

13.2

Taxes

146

13.3

Mitigation Obligations: Replacement of Lenders

149

13.4

Illegality

151

13.5

Market Disruption Respecting Bankers’ Acceptances

152

 

iii



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

13.6

Market Disruption Respecting LIBO Rate Loans

153

13.7

Takeovers

154

 

 

 

ARTICLE 14 EXPENSES, INDEMNIFICATION AND JUDGMENT CURRENCY

155

 

 

 

14.1

Expenses; Indemnity; Damage Waiver

155

14.2

Judgment Currency

157

 

 

 

ARTICLE 15 AGENCY

158

 

 

 

15.1

Appointment and Authority

158

15.2

Rights as a Lender

158

15.3

Exculpatory Provisions

159

15.4

Reliance by Agent

160

15.5

Indemnification of Agent

160

15.6

Delegation of Duties

160

15.7

Replacement of Agent

161

15.8

Non-Reliance on Agent and Other Lenders

162

15.9

Collective Action of the Lenders

162

15.10

Lender Decisions

162

15.11

Procedure for Funding Loans

163

15.12

Remittance of Payments

163

15.13

Agent’s Clawback

163

15.14

Adjustments Among Lenders

164

15.15

Agent and Defaulting Lenders

165

15.16

Debt Sharing Confirmation Under Collateral Agency and Intercreditor Agreement

166

 

 

 

ARTICLE 16 GENERAL

166

 

 

 

16.1

Notices: Effectiveness; Electronic Communication

166

16.2

Assigns

168

16.3

Governing Law; Jurisdiction; Etc.

172

16.4

Waiver of Jury Trial

172

16.5

Counterparts; Integration; Effectiveness; Electronic Execution

172

16.6

Treatment of Certain Information: Confidentiality

173

16.7

Nature of Obligation under this Agreement

174

16.8

Benefit of the Agreement

175

16.9

Severability

175

16.10

Amendments and Waivers

175

16.11

Defaulting Lenders

176

16.12

Further Assurances

178

16.13

Time of the Essence

179

16.14

Anti-Money Laundering Legislation

179

16.15

Platform

180

 

iv



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

16.16

No Fiduciary Duty

180

16.17

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

181

16.18

Credit Agreement Governs

182

16.19

Whole Agreement

182

 

v



 

CREDIT AGREEMENT

 

THIS AGREEMENT is made as of June 16, 2017,

 

AMONG:

 

KINDER MORGAN COCHIN ULC, as Principal Borrower

 

– and –

 

TRANS MOUNTAIN PIPELINE ULC, as NEB Reserve Borrower

 

– and –

 

THE FINANCIAL INSTITUTIONS SIGNATORY HERETO, in their capacities as Lenders

 

– and –

 

ROYAL BANK OF CANADA, a Canadian chartered bank, as Agent

 

WHEREAS the Borrowers have requested that the Lenders provide the Credit Facilities to the Borrowers in order to, among other things, partially fund the development and construction of the Project and to provide funding and letters of credit for working capital and other general corporate purposes;

 

AND WHEREAS the Lenders and the Fronting Lenders have agreed to make the Credit Facilities available to the Borrowers upon the terms and subject to the conditions set forth herein;

 

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

 

ARTICLE 1
INTERPRETATION

 

1.1                               Definitions

 

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

 

Acquisition” means any purchase or other acquisition made by any Obligor of Equity Securities of another Person (but excluding Equity Securities of an Obligor) or assets of another Person (but excluding assets of an Obligor) which constitutes a purchase or other acquisition of

 



 

all or substantially all of the assets or business of such Person, or of assets constituting a business unit, a line of business or division of such Person, or of all or substantially all of the Equity Securities in a Person.

 

Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Agent.

 

Advance” means the extension (or deemed extension) of credit under a Credit Facility by the Lenders to the applicable Borrower by way of the advance of a loan in the manner contemplated herein, the acceptance of Bankers’ Acceptances or the issuance of a Letter of Credit, but shall exclude each Rollover or Conversion thereof.

 

Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

Agent” means RBC in its capacity as administrative agent for the Lenders hereunder or any successor agent appointed pursuant to Section 15.7.

 

Agent Parties” has the meaning attributed thereto in Section 16.15(b).

 

Agent’s Accounts” means the accounts maintained by the Agent at the Agent’s Branch, to which payments and transfers under this Agreement are to be effected, as the Agent may from time to time advise the Borrowers and the Lenders in writing.

 

Agent’s Branch” means the branch of the Agent at Toronto, Ontario, or such other branch in Canada as the Agent may from time to time designate by notice to the Borrowers and the Lenders.

 

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

 

AML Legislation” has the meaning attributed thereto in Section 16.14.

 

Anti-Corruption Laws” means all laws and regulations of any Sanctions Authority that apply to KMI, the Pledgors, the Obligors and their respective Subsidiaries from time to time concerning or relating to bribery of government officials or public corruption, in each case, to the extent such laws and regulations would not violate Applicable Law in Canada.

 

Applicable Laws” or “Applicable Law” means:

 

(a)                                 any domestic or foreign statute, law (including common and civil law), treaty, code, ordinance, rule, regulation, restriction or by-law (zoning or otherwise);

 

(b)                                 any judgment, order, writ, injunction, decision, ruling, decree or award;

 

(c)                                  any regulatory policy, practice, guideline or directive; or

 

2



 

(d)                                 any Governmental Authorization,

 

binding on or affecting the Person referred to in the context in which the term is used or binding on or affecting the Property of such Person, in each case having the force of law; provided that, for certainty, Applicable Law or Applicable Laws shall not include any of the foregoing which have been determined by a court of competent jurisdiction to no longer be applicable to the Project or the other subject matter thereof from and after the date of such determination, but for greater certainty only until an appellate court of competent jurisdiction determines it to again be applicable thereto (including, without limitation, as a result of a provincial, municipal or local order, directive, judgment, decision or the like being in conflict with an order, directive, judgment, decision or the like of the Government of Canada or another federal Canadian Governmental Authority).

 

Applicable Lenders” means, in respect of:

 

(a)                                 the Construction Facility, the Lenders having Construction Facility Commitments;

 

(b)                                 the Working Capital Facility, the Lenders having Working Capital Facility Commitments; and

 

(c)                                  the Contingent Facility, the Lenders having Contingent Facility Commitments.

 

Applicable Margin”, as regards any Loan or the standby fees payable under Section 4.6, means, when and for so long as the Debt Rating is one of the following or no Debt Rating has been assigned (as the case may be), the applicable rate per annum set forth opposite the applicable Debt Rating assigned by the  Debt Rating Agencies in the row and column applicable to the type of Loan in question or such standby fee:

 

Debt Rating by
S&P/Moody’s/
DBRS

 

BA/LIBO
Rate/LC

 

Prime/US Base Rate

 

Standby Fee

BBB/Baa2/BBB or higher

 

150bps

 

50bps

 

30bps

BBB-/Baa3/BBB (low)

 

175bps

 

75bps

 

35bps

BB+/Ba1/BB (high)

 

200bps

 

100bps

 

50bps

BB/Ba2/BB or lower or if none of the Debt Rating Agencies provide a Rating

 

250bps

 

150bps

 

62.5bps

 

provided that:

 

(a)                                 changes in Applicable Margin shall be effective and adjusted in accordance with Section 7.7;

 

3



 

(b)                                 for the purposes of determining the Debt Rating the following rules will apply: (i) if the Debt Rating Agencies with the two lowest Debt Ratings assign an equivalent Debt Rating, then the Applicable Margin will be the rate per annum set forth opposite such Debt Rating; (ii) if the Debt Ratings assigned by the Debt Rating Agencies with the two lowest Debt Ratings differ by only one rating subcategory, then the Applicable Margin will be the rate per annum set forth opposite the higher Debt Rating; (iii) if the Debt Ratings assigned by the Debt Rating Agencies with the two lowest Debt Ratings differ by more than one rating subcategory, then the Applicable Margin will be the average of such rates per annum; and (iv) if there is only one Debt Rating Agency providing a Debt Rating, then the Applicable Margin will be the rate per annum set forth opposite the Debt Rating set by such Debt Rating Agency;

 

(c)                                  issuance fees for Letters of Credit which are not “direct credit substitutes” (as determined by the applicable Fronting Lender, acting reasonably) within the meaning of the Capital Adequacy Requirements shall be 662/3% of the rate specified above; and

 

(d)                                 each Applicable Margin set forth in the table above (other than in relation to standby fees) shall increase by 25 basis points upon the fourth anniversary of the Closing Date.

 

Applicable Percentage” means, with respect to each Lender from time to time:

 

(a)                                 with respect to the Credit Facilities, the percentage of the Total Commitment represented by such Lender’s Commitment; provided that if the Commitments have terminated or expired, the Applicable Percentage for each Lender shall be (i) for the purposes of Section 15.14(a), the percentage of the Total Commitment represented by such Lender’s Commitment immediately prior to such termination or expiration (subject to any subsequent assignment by such Lender pursuant to Section 16.2) and (ii) for all other purposes, the percentage of the Equivalent Amount in Canadian Dollars of the Outstanding Principal represented by such Lender’s outstanding Loans under the Credit Facilities;

 

(b)                                 with respect to the Construction Facility, the percentage of the Total Construction Facility Commitment represented by such Lender’s Construction Facility Commitment; provided that if the Construction Facility Commitments have terminated or expired, the Applicable Percentage for each Lender with respect to the Construction Facility shall be (i) for the purposes of Section 15.14(a), the percentage of the Total Construction Facility Commitment represented by such Lender’s Construction Facility Commitment immediately prior to such termination or expiration (subject to any subsequent assignment by such Lender pursuant to Section 16.2) and (ii) for all other purposes, the percentage of the Equivalent Amount in Canadian Dollars of the Outstanding Principal represented by such Lender’s outstanding Loans under the Construction Facility;

 

4



 

(c)                                  with respect to the Working Capital Facility, the percentage of the Total Working Capital Facility Commitment represented by such Lender’s Working Capital Facility Commitment; provided that if the Working Capital Facility Commitments have terminated or expired, the Applicable Percentage for each Lender with respect to the Working Capital Facility shall be (i) for the purposes of Section 15.14(a), the percentage of the Total Working Capital Facility Commitment represented by such Lender’s Working Capital Facility Commitment immediately prior to such termination or expiration (subject to any subsequent assignment by such Lender pursuant to Section 16.2) and (ii) for all other purposes, the percentage of the Equivalent Amount in Canadian Dollars of the Outstanding Principal represented by such Lender’s outstanding Loans under the Working Capital Facility; and

 

(d)                                 with respect to the Contingent Facility, the percentage of the Total Contingent Facility Commitment represented by such Lender’s Contingent Facility Commitment; provided that if the Contingent Facility Commitments have terminated or expired, the Applicable Percentage for each Lender with respect to the Contingent Facility shall be (i) for the purposes of Section 15.14(a), the percentage of the Total Contingent Facility Commitment represented by such Lender’s Contingent Facility Commitment immediately prior to such termination or expiration (subject to any subsequent assignment by such Lender pursuant to Section 16.2) and (ii) for all other purposes, the percentage of the Equivalent Amount in Canadian Dollars of the Outstanding Principal represented by such Lender’s outstanding Loans under the Contingent Facility.

 

Approved Fund” means any Fund that is administered or managed by:

 

(a)                                 a Lender,

 

(b)                                 an Affiliate of a Lender, or

 

(c)                                  an entity or an Affiliate of an entity that administers or manages a Lender.

 

Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee and accepted by the Agent, in substantially the form of Schedule B or any other form approved by the Agent.

 

Authorized Officer” means, with respect to any Person, any individual holding the position of chairman of the board (if an officer), the Chief Executive Officer, President, the Chief Financial Officer, the Treasurer, the Controller, the Vice President Finance, the Vice President, TMEP,  any other Vice President, the Secretary, the Assistant Secretary or any other senior officer or agent with express authority to act on behalf of such Person designated as such by the board of directors or other managing authority of such Person.

 

Auto-Renewal Letter of Credit” has the meaning attributed thereto in Section 6.2(c).

 

BA Discount Rate” means:

 

5



 

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

 

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

 

(i)                                     the Discount Rate then applicable to bankers’ acceptances having identical issue and comparable maturity dates as such Bankers’ Acceptance, accepted by such Schedule II Lender or Schedule III Lender; and

 

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

 

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

 

(c)                                  in relation to a BA Equivalent Advance:

 

(i)                                     made by a Schedule I Lender, Alberta Treasury Branches or Export Development Canada, the CDOR Rate;

 

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

 

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

 

BA Discount Proceeds” means, in respect of any Bankers’ Acceptance, the amount obtained by multiplying the face amount of such Bankers’ Acceptance by the amount (rounded up or down to the fifth decimal place with .000005 being rounded up) determined by dividing one by the sum of one plus the product of:

 

(a)                                 the BA Discount Rate (expressed as a decimal on the Drawdown Date, Conversion Date or Rollover Date, as the case may be), and

 

(b)                                 a fraction, the numerator of which is the number of days in the Interest Period of such Bankers’ Acceptance and the denominator of which is 365.

 

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

 

BA Suspension Notice” has the meaning assigned to such term in Section 13.5(b).

 

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the

 

6



 

European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Bankers’ Acceptance” means a non-interest bearing draft drawn by the Principal Borrower in Cdn. Dollars, accepted by an Applicable Lender under a Credit Facility and issued for value pursuant to this Agreement and includes a depository bill under the DBNA and a bill of exchange under the Bills of Exchange Act (Canada).

 

Banking Day” means a day, other than a Saturday, Sunday or statutory holiday, on which banks are open for business in Calgary (Alberta), Toronto (Ontario), Montreal (Quebec) and, for transactions involving US Dollars, New York (New York); provided that in respect of the determination of the LIBO Rate, such day must also be a day on which the principal office of the Agent in London, England is open for business.

 

Basel III” means the agreements on capital requirements, leverage ratios and liquidity standards contained in “Basel III:  A global regulatory framework for more resilient banks and banking systems”, “Basel III:  International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, modified, supplemented, reissued or replaced from time to time.

 

bps” or “basis points” means one one-hundredth of one percent (0.01%).

 

Borrowers” means, collectively, the Principal Borrower and the NEB Reserve Borrower, and “Borrower” means either of them.

 

Borrowers’ Accounts” means the accounts of the Borrowers maintained at the Agent’s Branch or such other branch or office in Canada as the Borrowers may from time to time designate with the concurrence of the Agent.

 

Borrowers’ Counsel” means Blake, Cassels & Graydon LLP and any other firm of barristers and solicitors or other lawyers in an appropriate jurisdiction retained by the Obligors and acceptable to the Agent, acting reasonably.

 

Canadian Dollars”, “Cdn. Dollars” “Cdn.$” and “$”  mean lawful money of Canada for the payment of public and private debts.

 

Capital Adequacy Requirements” means the Guideline dated January 2017, entitled “Capital Adequacy Requirements (CAR)” issued by OSFI and all other guidelines or requirements relating to capital adequacy issued by OSFI or any other Governmental Authority regulating or having jurisdiction with respect to any Lender, as amended, modified, supplemented, reissued or replaced from time to time.

 

Capital Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including in all events all amounts expended or capitalized under Capital Leases) by the Obligors during such period that, in conformity with GAAP, are, or are required to be, included as additions during such period to property, plant, or equipment reflected in the consolidated balance sheet of KMCL.

 

7



 

Capital Lease” means, as applied to any Person, any lease of, or other arrangement providing for the right of the lessee thereunder to use, any Property by that Person that, in conformity with GAAP as in effect on December 31, 2016, was, or would have been required to be, accounted for as a capital lease on the balance sheet of that Person, if or as if such lease or other arrangement was in existence at such time; for certainty, any leases or other arrangements (whether entered into before or after December 31, 2016) that would have been characterized as operating leases under GAAP as in effect on December 31, 2016 shall be deemed to be operating leases and shall be excluded from this definition and any other financial commitments and commercial arrangements that would not have been characterized as capital or financing leases under GAAP as in effect on December 31, 2016 shall also be excluded from this definition and, for certainty, from the definition of Funded Debt.

 

Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capital Lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP as in effect on December 31, 2016.

 

Cash Collateral Account” means a blocked deposit account at the Agent (or another commercial bank reasonably acceptable to the Agent) in the name of the Agent and under the sole dominion and control of the Agent, and otherwise established in a manner reasonably satisfactory to the Agent and governed in accordance with the terms of this Agreement.

 

Cash Collateralize” means to pledge and deposit with or deliver to the Agent for deposit into a Cash Collateral Account, for the benefit of the Agent, the applicable Fronting Lender, the Working Capital Facility Lenders or the Lenders, as applicable, as collateral for LC Obligations or Outstandings in respect of Bankers’ Acceptances, as applicable, cash or deposit account balances or, if the Person(s) benefitting from such collateral shall agree in its or their sole discretion, other credit support, in each case subject to Section 7.4(b) or 7.4(c) if applicable and pursuant to documentation in form and substance satisfactory to such Person(s) and “Cash Collateralized” has a similar meaning. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

Cash Equivalents” means:

 

(a)                                 any readily-marketable securities or other investment property (i) issued by or directly, unconditionally and fully guaranteed or insured by the Canadian or United States federal governments or (ii) issued by any agency or instrumentality of the Canadian or United States federal governments the obligations of which are fully backed by the full faith and credit of the Canadian or United States federal governments, as the case may be;

 

(b)                                 any readily-marketable direct obligations issued by any agency or instrumentality of the Canadian or United States federal government, any state of the United States or any political subdivision of any such state or any public instrumentality thereof, or any province or territory of Canada or any public instrumentality thereof, in each case having a rating of at least “A-1” from S&P, at least “P-1” from Moody’s or “R-1” from DBRS;

 

8



 

(c)                                  any commercial paper rated at least “A-1” by S&P, “P-1” by Moody’s or R-1 by DBRS and issued by any Person organized under the laws of any state of the United States or Canada;

 

(d)                                 any US Dollar or Cdn. Dollar denominated time deposit, demand deposits, insured certificate of deposit, overnight bank deposit, guaranteed investment certificate, bearer deposit note or bankers’ acceptance issued or accepted by (i) any Lender or (ii) any financial institution that is (A) organized under the laws of the United States, any state thereof, the District of Columbia, Canada or any province of Canada, (B) “adequately capitalized” (as defined in the regulations of its primary federal banking regulators) and (C) has Tier 1 capital (as defined in such regulations) in excess of US$500,000,000 or the Equivalent Amount in Cdn. Dollars;

 

(e)                                  repurchase obligations with a term of not more than seven days for underlying securities of the types described in subparagraphs (a), (b) and (d) above entered into with any financial institution meeting the qualifications specified in subparagraph (c) above; and

 

(f)                                   shares of any United States or Canadian money market fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in subparagraph (a), (b), (c), (d) or (e) above with maturities as set forth in the proviso below, (ii) has net assets in excess of US$500,000,000 or the Equivalent Amount in Cdn. Dollars and (iii) has obtained from either S&P, Moody’s or DBRS the highest rating obtainable for money market funds in Canada or the United States, as the case may be,

 

provided, however, that the maturities of all obligations specified in any of subparagraphs (a), (b), (c), (d) and (e) above shall not exceed 365 days.

 

Cash Management Documents” means, collectively, all agreements, instruments and other documents which evidence, establish, govern or relate to any or all of the Cash Management Obligations.

 

Cash Management Obligations” means, at any time and from time to time, all of the obligations, indebtedness and liabilities (present or future, absolute or contingent, matured or not) of any of the Obligors to the Cash Manager under, pursuant or relating to the Cash Management Services and whether the same are from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again and including all principal, interest, fees, legal and other costs, charges and expenses, and other amounts payable by any of the Obligors under the Cash Management Documents.

 

Cash Management Services” means (a) treasury, depository, overdraft, purchase, credit or debit card services, including non-card e-payables services, (b) wire transfer, electronic funds transfer, controlled disbursement and automated clearing house fund transfer services, (c) the operation of centralized operating accounts, (d) account pooling arrangements (whether notional or physical), (e) credit in connection with spot foreign currency exchange settlement and (f) any

 

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other cash management services entered into by any of the Obligors in the ordinary course of business.

 

Cash Manager” means each Lender and their Affiliates, which is from time to time providing any Cash Management Services to any of the Obligors and which includes RBC on the date hereof.

 

CDOR Rate” means, on any day when Bankers’ Acceptances are to be issued pursuant hereto, the per annum rate of interest which is the rate determined as being the arithmetic average of the annual yield rates applicable to Canadian Dollar bankers’ acceptances having identical issue and comparable maturity dates as the Bankers’ Acceptances proposed to be issued by the Borrower displayed and identified as such on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuters Limited (or any successor thereto or Affiliate thereof) as at approximately 10:00 a.m. (Toronto time) on such day, or if such day is not a Banking Day, then on the immediately preceding Banking Day (as adjusted by the Agent in good faith after 10:00 a.m. (Toronto time) to reflect any error in a posted rate or in the posted average annual rate); provided that: (a) if such a rate does not appear on such CDOR Page, then the CDOR Rate, on any day, shall be the Discount Rate quoted by the Agent (determined as of 10:00 a.m. (Toronto time) on such day) which would be applicable in respect of an issue of bankers’ acceptances in a comparable amount and with comparable maturity dates to the Bankers’ Acceptances proposed to be issued by the Borrower on such day, or if such day is not a Banking Day, then on the immediately preceding Banking Day; and (b) if the rate determined as aforesaid shall ever be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

 

Change in Law” means the occurrence, after the date of this Agreement, of any of the following:

 

(a)                                 the adoption or taking effect of any Applicable Law;

 

(b)                                 any change in any Applicable Law or in the administration, interpretation or application thereof by any Governmental Authority; or

 

(c)                                  the making or issuance of any Applicable Law by any Governmental Authority;

 

provided that (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act (United States) including all regulations, requests, rules, guidelines or directives thereunder and (ii) all requests, 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 ((i) and (ii) being, collectively, the “New Rules”) shall be deemed to constitute a Change in Law regardless of the actual date or dates that such Act or regulations are or were enacted or promulgated, in each case (A) to the extent that such New Rules are applicable to the Lender claiming that a Change in Law has occurred, (B) to the extent that such New Rules are materially different from Applicable Laws which are in full force and effect on the date hereof and (C) to the extent that such New Rules are not limited to specific financial institutions only but instead

 

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have general application to substantially all banks or their Affiliates which are subject to the New Rules in question.

 

Change of Control” means and shall be deemed to have occurred if, prior to the Project Completion Date, KMI ceases to own, directly or indirectly, greater than 50% of the Equity Interests of each of the Principal Borrower and the Parent; provided that, for certainty, a change in the ownership or control of KMI shall not constitute a Change of Control.

 

Closing Date” means the date hereof provided that all of the conditions in Section 3.1 have been satisfied or waived in accordance with Section 3.6 (whether before, on or after such date).

 

Closing Date Business” means all assets, property and undertakings used in connection with the business of the Obligors on the Closing Date as more particularly described in the IPO Prospectus, including the Project, the Cochin and Jet Fuel pipelines and the North Forty, Alberta and Edmonton rails and Vancouver Wharves terminal businesses.

 

Code” means the United States Internal Revenue Code of 1986.

 

Collateral” means all Property and proceeds thereof now owned or hereafter acquired by any Obligor or Pledgor in or upon which a Lien is granted or purported to be granted pursuant to any Security Document to secure any Lender Secured Obligations.

 

Collateral Agency and Intercreditor Agreement” means the Collateral Agency and Intercreditor Agreement dated as of the Closing Date initially between the Collateral Agent, the Agent, the Obligors and the Pledgors.

 

Collateral Agent” means Computershare Trust Company of Canada in its capacity as collateral agent under the Collateral Agency and Intercreditor Agreement.

 

Commitment” means, in respect of a Lender and in relation to:

 

(a)                                 the Construction Facility, such Lender’s Construction Facility Commitment;

 

(b)                                 the Working Capital Facility, such Lender’s Working Capital Facility Commitment;

 

(c)                                  the Contingent Facility, such Lender’s Contingent Facility Commitment; and

 

(d)                                 the Credit Facilities collectively, the aggregate of such Lender’s Construction Facility Commitment, Working Capital Facility Commitment and Contingent Facility Commitment.

 

Commodity Exchange Act” means the United States Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

Commodity Hedging Agreement” means any agreement for the making or taking of delivery of any commodity, any commodity swap agreement, floor, cap or collar agreement or commodity future or option or other similar agreement or arrangement, or any combination

 

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thereof, entered into by the applicable Person, primarily for the purpose of mitigating or eliminating exposure to fluctuations in commodity prices.

 

Communications” has the meaning attributed thereto in Section 16.15(b).

 

Compliance Certificate” means a certificate of the Principal Borrower signed by any Authorized Officer of the Principal Borrower, substantially in the form of Schedule C, to be given to the Agent and the Lenders by the Principal Borrower pursuant hereto.

 

Consent and Acknowledgement” means a Consent and Acknowledgment (EPC) or a Consent and Acknowledgment (Shipper) as the context requires.

 

Consent and Acknowledgment (EPC)” means a consent and acknowledgement between the Collateral Agent (on behalf of the Secured Parties), the applicable Obligors and the counterparties to the applicable Material EPC Agreement, in form and substance satisfactory to the Agent, acting reasonably, which agreement will provide for step-in rights, default notices, cure periods and other customary provisions for agreements of such nature, with such modifications and insertions as may be agreed to by the Agent, acting reasonably.

 

Consent and Acknowledgment (Shipper)” means a consent and acknowledgement substantially in the form of Schedule G, with such modifications and insertions as may be agreed to by the Agent, acting reasonably.

 

Consolidated Capitalization” means Consolidated Total Funded Debt, plus shareholders’ equity of KMCL and Permitted Subordinated Loans.

 

Consolidated EBITDA” means, for any fiscal period and as determined in accordance with GAAP, on a consolidated basis in respect of KMCL, all Consolidated Net Income for such period as shown in the Financial Statements, plus, in each case to the extent deducted in the calculation of such Consolidated Net Income:

 

(a)                                 Consolidated Interest Expense; plus

 

(b)                                 all income taxes of KMCL and its Subsidiaries paid or accrued for such period; plus

 

(c)                                  all depreciation, depletion and amortization (including amortization of goodwill) of KMCL and its Subsidiaries; plus

 

(d)                                 other non-cash charges or losses (including asset impairments, write-downs or write-offs); plus

 

(e)                                  amortization, write-off or write-down of debt discount, capitalized interest and debt issuance costs and commissions, discounts and other fees, charges and expenses associated with any letters of credit or indebtedness, including in connection with the repurchase or repayment thereof, including any premium and acceleration of fees or discounts and other expenses;

 

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less (on a consolidated basis, without duplication and to the extent added in the calculation of such Consolidated Net Income):

 

(f)                                   all non-cash items of income or gain of KMCL and its Subsidiaries which were included in determining such Consolidated Net Income for such period; and

 

(g)                                  any cash payments made during such period in respect of items described in subparagraph (d) above subsequent to the Fiscal Quarter in which the relevant non-cash charges or losses were reflected as a charge in determining Consolidated Net Income;

 

provided that for the purposes of this definition, (i) if any Material Acquisition is made by any of the Obligors (whether by amalgamation, asset or share acquisition or otherwise) at any time during the relevant period of calculation, such Material Acquisition shall be deemed to have been made on and as of the first day of such calculation period; and (ii) if any Material Disposition is made by any Obligors at any time during the relevant period of calculation, or the assets cease to be owned by the Obligors, such Material Disposition shall be deemed to have been made on and as of the first day of such calculation period.

 

Consolidated Interest Expense” means, for any fiscal period, without duplication, interest expense of KMCL determined on a consolidated basis in accordance with GAAP, as the same would be set forth or reflected in a consolidated statement of operations of the Parent, and in any event shall include:

 

(a)                                 all interest accrued or payable in respect of such period, including capitalized interest and imputed interest with respect to lease obligations included as Consolidated Total Funded Debt;

 

(b)                                 all fees (including standby and commitment fees, acceptance fees in respect of bankers’ acceptances and fees payable in respect of letters of credit, letters of guarantee and similar instruments but excluding one-time commitment and agency fees in respect of the Credit Facilities and other permitted credit facilities from time to time) accrued or payable in respect of such period, prorated (as required) over such period;

 

(c)                                  any difference between the face amount and the discount proceeds of any bankers’ acceptances, commercial paper and other obligations issued at a discount, prorated (as required) over such period;

 

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

 

(e)                                  all net amounts charged (a positive number) or credited (a negative number) to interest expense under any Interest Hedging Agreements in respect of such period;

 

but shall exclude interest accrued or payable in respect of Permitted Subordinated Loans.

 

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Consolidated Net Income” means, for any fiscal period, the net income of the KMCL determined on a consolidated basis in accordance with GAAP, as set forth in the consolidated Financial Statements of the KMCL for such period, provided that there shall be excluded, without duplication, from such net income (to the extent otherwise included therein):

 

(a)                                 net extraordinary gains and losses (other than, in the case of losses, losses resulting from charges against net income to establish or increase reserves for potential environmental liabilities and reserves for exposure of KMCL and its Subsidiaries under rate cases);

 

(b)                                 net gains or losses in respect of dispositions of assets other than in the ordinary course of business;

 

(c)                                  any gains or losses attributable to write-ups or write-downs of assets; and

 

(d)                                 proceeds of any key man insurance, or any insurance on property, plant or equipment.

 

Consolidated Total Assets” means, as at any date of determination, an amount equal to the total assets as shown on the consolidated balance sheet in the Financial Statements of KMCL most recently provided to the Agent pursuant to Section 9.4(a).

 

Consolidated Total Funded Debt” means, collectively and on a consolidated basis, the principal amount of all indebtedness under the Credit Facilities, Permitted Refinancing Debt, Permitted Incremental Debt and the principal amount of any other consolidated Funded Debt of KMCL.

 

Construction Facility” has the meaning attributed thereto in Section 2.1(a).

 

Construction Facility Commitment” means, as to each Lender, its obligation hereunder to make Construction Facility Loans to the Principal Borrower pursuant to Section 2.1(a), in an aggregate principal amount at any one time outstanding not to exceed the amount set forth and opposite such Lender’s name on Schedule A under the caption “Construction Facility”, or in any Assignment and Assumption, as such amount may hereafter be increased, decreased, cancelled or terminated from time to time pursuant to this Agreement.

 

Construction Facility Funding Conditions” has the meaning attributed thereto in Section 2.1(b).

 

Construction Facility Lender” means, at any time, any Lender that has a Construction Facility Commitment or Construction Facility Loan at such time.

 

Construction Facility Loan” means a Loan under the Construction Facility.

 

Contingent Facility Commitment” means, as to each Lender, its obligation hereunder to make Contingent Facility Loans to the applicable Borrower pursuant to Section 2.2(a), in an aggregate principal amount at any one time outstanding not to exceed the amount set forth and opposite such Lender’s name on Schedule A under the caption “Contingent Facility”, or in any

 

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Assignment and Assumption, as such amount may hereafter be increased, decreased, cancelled or terminated from time to time pursuant to this Agreement.

 

Contingent Facility” has the meaning attributed thereto in Section 2.2(a).

 

Contingent Facility Funding Conditions” has the meaning attributed thereto in Section 2.2(b).

 

Contingent Facility Lender” means, at any time, any Lender that has a Contingent Facility Commitment or Contingent Facility Loan at such time.

 

Contingent Facility Loan” means a Loan under the Contingent Facility.

 

Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Securities, by contract or otherwise. “Controlling” and “Controlled” have corresponding meanings.

 

Control Agreement” means, with respect to any deposit account, any securities account, commodity account, securities entitlement, or commodity contract, an agreement, in form and substance satisfactory to the Agent acting reasonably, among the Collateral Agent, the financial institution or other Person at which such account is maintained or with which such entitlement or contract is carried, and such Obligor maintaining such account, effective to grant “control” (as defined under the applicable PPSA) over such account to the Collateral Agent, providing, among other things, that upon notice that an Event of Default has occurred and while it is continuing, such notice having been given by the Agent to such financial institution or other Person at which such account is maintained or with which such entitlement or contract is carried, such financial institution or such other Person shall comply with orders and directions only from the Agent with respect to such deposit account, securities account, commodity account, securities entitlement, or commodity contract.

 

Conversion” means a conversion or deemed conversion of a Loan (except a Letter of Credit) into another type of Loan (except a Letter of Credit) pursuant to the provisions hereof, and “Convert” has a corresponding meaning; provided that, subject to Section 2.6 and to Article 5 with respect to Bankers’ Acceptances, the conversion of a Loan denominated in one currency to a Loan denominated in another currency shall be effected by repayment of the Loan or portion thereof being converted in the currency in which it was denominated and readvance to the Principal Borrower of the Loan into which such conversion was made.

 

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

 

Conversion/Rollover/Repayment Notice” means a notice substantially in the form of Schedule D to be given to the Agent by a Borrower pursuant hereto.

 

Credit Facilities” means collectively the Construction Facility, the Working Capital Facility and the Contingent Facility, and “Credit Facility” means any of them.

 

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

 

DBNA” means the Depository Bills and Notes Act (Canada).

 

DBRS” means DBRS Limited and its successors.

 

Debt Rating” means the debt rating that has been most recently announced by the Debt Rating Agencies (which, in the case of DBRS, may include a provisional rating that has been assigned as at the date hereof and has been disclosed to the Agent and the Lenders), or any of them, for the Credit Facilities or, if the Credit Facilities are not rated, the corporate credit rating or issuer rating (which, in the case of DBRS, may include a provisional rating that has been assigned as at the date hereof and has been disclosed to the Agent and the Lenders) by the Debt Rating Agencies, or any of them, for the Principal Borrower or KMCL.

 

Debt Rating Agencies” means, collectively, S&P, Moody’s, and DBRS and “Debt Rating Agency” means any one of them.

 

Debt Representative” has the meaning given to such term in the Collateral Agency and Intercreditor Agreement.

 

Default” means any event or condition that would constitute an Event of Default except for satisfaction of any condition subsequent required to make the event or condition an Event of Default, including giving of any notice, passage of time, or both.

 

Default Rate” means, in respect of any Outstanding Principal, the interest rate, issuance fees or acceptance fees applicable thereto (after giving effect to the Applicable Margin applicable thereto), plus 2.00% per annum.

 

Defaulting Lender” means any Lender:

 

(a)                                 that has failed to fund any payment or its portion of any Advance required to be made by it hereunder or to purchase any participation required to be purchased by it hereunder and under the other Loan Documents, in either case, within one Banking Day of the date such required Advance or purchase;

 

(b)                                 that has notified the Principal Borrower, the Agent or any Lender (verbally or in writing) that it does not intend to or is unable to comply with any of its funding obligations under this Agreement or has made a public statement to that effect or to the effect that it does not intend to or is unable to fund advances generally under credit arrangements to which it is a party;

 

(c)                                  that has failed, within 3 Banking Days after written request by the Agent or the Borrower, to confirm in writing to the Agent and the Borrower that it will comply

 

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with the terms of this Agreement relating to its obligations to fund prospective Advances (for certainty, unless and until such Lender has provided such written confirmation);

 

(d)                                 that has otherwise failed to pay over to the Agent, a Fronting Lender or any other Lender any other amount required to be paid by it hereunder within 3 Banking Days of the date when due, unless the subject of a good faith dispute;

 

(e)                                  in respect of which a Lender Insolvency Event or a Lender Distress Event has occurred in respect of such Lender or its Lender Parent;

 

(f)                                   that has, or that has a Lender Parent that has, become the subject of a Bail-In Action; or

 

(g)                                  that is generally in default of its obligations under other existing credit or loan documentation under which it has commitments to extend credit.

 

Defined Benefits Plan” means a pension plan which contains a “defined benefit provision”, as that term is defined in subsection 147.1(1) of the Tax Act.

 

Departing Agent” has the meaning attributed thereto in Section 10.8.

 

Discount Note” means a non-interest bearing promissory note of the Principal Borrower, denominated in Cdn. Dollars, issued by the Principal Borrower to a Non-Acceptance Lender as part of a BA Equivalent Advance substantially in the form attached as Schedule E or such other form as may be agreed to by the Agent, the Principal Borrower and such Non-Acceptance Lender.

 

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

 

Disqualified Lendermeans any Person which is either: (a) a competitor of any Obligor, Pledgor or any of their respective Affiliates in relation to the business actively carried on by such Persons; or (b) not a financial institution (which, for certainty and for the purpose of this definition, any private equity or debt fund shall not be considered a financial institution except during the continuance of an Event of Default).

 

Disposition” means any sale, lease, Sale Leaseback, assignment, conveyance, transfer or other disposition of any Property of an Obligor, including as a result of expropriation.

 

Distributable Cash” means the total revenue of KMCL and its Subsidiaries (as shown on the consolidated financial statements of KMCL), minus (without duplication), in the case of subparagraphs (a) through (f) below, actual cash expenditures, and, in the case of

 

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subparagraph (g) below, on an accrual basis, for and in respect of the following (excluding any of the following that are Project Costs):

 

(a)                                 operating expenses;

 

(b)                                 insurance premiums for required insurance;

 

(c)                                  maintenance and sustaining Capital Expenditures;

 

(d)                                 general and administrative expenses;

 

(e)                                  interest expense and other borrowing costs;

 

(f)                                   Taxes and Other Taxes other than deferred taxes; and

 

(g)                                  any required reserves.

 

Distribution” means, in respect of any Obligor:

 

(a)                                 dividends or other distributions or payments on its Equity Securities (except dividends or other distributions (i) consisting of Equity Securities or (ii) payable solely to an Obligor);

 

(b)                                 the redemption or acquisition of its Equity Securities or Equity Securities Equivalents (except when (i) solely in exchange for such Equity Securities or Equity Securities Equivalents or (ii) payable solely to an Obligor); and

 

(c)                                  the payment in cash of principal or interest on any Permitted Subordinated Loans.

 

Drawdown” means any Advance which results in an increase in the Outstanding Principal.

 

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

 

Drawdown Notice” means a notice substantially in the applicable form annexed hereto as Schedule F-1, in the case of a Drawdown under the Construction Facility or the Contingent Facility, or Schedule F-2, in the case of a Drawdown under the Working Capital Facility to be given to the Agent by the applicable Borrower with respect to the applicable Credit Facility pursuant hereto.

 

EEA Financial Institution” means:

 

(a)                                 any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority;

 

(b)                                 any entity established in an EEA Member Country which is a parent of an institution described in subparagraph (a) of this definition; or

 

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(c)                                  any financial institution established in an EEA Member Country which is a subsidiary of an institution described in subparagraph (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Eligible Assignee” means any Person (other than a natural person, any Defaulting Lender, any Obligor or any Affiliate of an Obligor), in respect of which any consent that is required by Section 16.2(b) has been obtained.

 

Environment and Social Consultant” means ERM Consultants Canada Ltd., and any other firm of environment and social consultants as may be selected from time to time by the Required Lenders in consultation with and with the approval of the Principal Borrower, acting reasonably, in replacement thereof.

 

Environmental Claims” means any and all administrative, regulatory or judicial actions, suits, demands, claims, liens, notices of non-compliance or violation, investigations, inspections,  inquiries or proceedings relating in any way to any Environmental Laws or any Environmental Permits including:

 

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

 

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

 

Environmental Laws” means all Applicable Laws with respect to the environment or environmental or public health and safety matters, including the transportation storage and handling of Hazardous Materials.

 

Environmental Orders” means all applicable Governmental Authorizations and applicable orders, directives, judgments, decisions or the like rendered by any court of competent jurisdiction pursuant to Environmental Laws or Environmental Permits.

 

Environmental Permits” includes all permits, certificates, approvals, registrations, licenses or other instruments issued by any Governmental Authority and relating to or required for the Obligors or their respective Subsidiaries to carry on their businesses, activities and operations in compliance with all Environmental Laws and Environmental Orders; provided that, for certainty, Environmental Permits shall not include any permits, certificates, approvals, registrations,

 

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licenses or other instruments issued by any Governmental Authority which have been determined by a court of competent jurisdiction to no longer be required or applicable to the Project  or the subject matter thereof or any of the other matters referred to in subparagraphs (a) through (d), inclusive, of the definition of Required Permits from and after the date of such determination, but for greater certainty only until an appellate court of competent jurisdiction determines it to again be applicable thereto (including, without limitation, as a result of a provincial, municipal or local permit, certificate, approval, registration, license or other instrument being in conflict with a permit, certificate, approval, registration, license or other instrument issued by of the Government of Canada or another federal Canadian Governmental Authority).

 

Equity Nomination and Support Agreement” means an equity nomination and support agreement dated as of the Closing Date by and between the Principal Borrower, the Agent, the Collateral Agent and KMI.

 

Equity Securities” means, with respect to any Person, any shares, partnership units or other ownership interests in such Person, whether voting or non-voting; provided that, for certainty, an undivided ownership interest in the Property of a Person shall not constitute an “Equity Security”.

 

Equity Securities Equivalents” means all Securities convertible into or exchangeable for Equity Securities or any other Equity Securities Equivalent and all warrants, options, or other rights to purchase, subscribe for, or otherwise acquire any Equity Securities or any other Equity Securities Equivalent, whether or not presently convertible, exchangeable or exercisable.

 

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 Spot Rate for such currencies on such date of determination or, if such date of determination is not a Banking Day, on the Banking Day immediately preceding such date of determination.

 

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

 

Event of Default” has the meaning attributed thereto in Section 12.1.

 

Excluded Deposits/Amounts” means cash or Cash Equivalents:

 

(a)                                 held in escrow pursuant to an offering of subscription receipts (or similar equity offering) by an Obligor which have not yet been released from escrow in accordance with the terms of such offering;

 

(b)                                 held by arm’s length third parties representing deposits made by an Obligor and which are referred to in subparagraph (e) of the definition of Permitted Liens;

 

(c)                                  held by arm’s length third parties representing deposits, trust funds or other amounts payable by one or more arm’s length third parties to any Obligor, in each case, which are not then releasable to such Obligor and which cannot be paid or transferred on the direction of an Obligor;

 

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(d)                                 deposited in accordance with the defeasance or cash collateralization and repayment provisions of the indentures, credit agreements, agreements or other instruments evidencing or relating to Permitted Debt in connection with the defeasance of such Permitted Debt and a repayment, redemption, purchase or cancellation thereof which would then be permitted hereunder; and

 

(e)                                  which the Agent (acting reasonably) has previously agreed in writing shall constitute Excluded Deposits/Amounts for all purposes hereof.

 

Excluded Securities Accounts” means securities accounts maintained by any Obligor which do not hold any property other than Equity Securities or Equity Securities Equivalents (and cash and other property on deposit in such securities accounts from the proceeds of disposition from, or the payment of dividends or other distributions on or in respect of, such Equity Securities or Equity Securities Equivalents held in such accounts); provided the holding of such Equity Securities or Equity Securities Equivalents is otherwise permitted under this Agreement (including that, for certainty, such securities are Permitted Investments).

 

Excluded Swap Obligations” means, with respect to any Person providing an Obligor Guarantee or Pledgor Guarantee, any Swap Obligation if, and to the extent that, all or a portion of the Obligor Guarantee or Pledgor Guarantee, as the case may be, of such Person of, or the grant by such Person of a Lien to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Person’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Person or the grant of such Lien becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or Lien is or becomes illegal.

 

Excluded Taxes” means, with respect to the Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of an Obligor hereunder:

 

(a)                                 Taxes imposed on or measured by its overall net income, gains, capital, receipts, net profits, or branch profits (however denominated), and franchise (and similar) Taxes imposed on it (in lieu of net income Taxes), in each case by a jurisdiction (including any political subdivision thereof) as a result of such recipient being organized in, having its principal office in, or in the case of any Lender, having its applicable lending office in, such jurisdiction, or as a result of any other present or former connection with such jurisdiction (other than any such connection arising solely from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document);

 

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(b)                                 any United States federal or Canadian federal withholding Tax imposed on any payment by or on account of any obligation of any Obligor hereunder or under any Loan Document that is required to be imposed on amounts payable to or for the account of a Lender at the time such Lender acquires an interest in any Loan Document (or designates a new lending office), other than (i) a Lender that is an assignee pursuant to a request by a Borrower under Section 13.3(b) (or that designates a new lending office pursuant to a request by such Borrower), (ii) a Lender that is an assignee pursuant to an Assignment and Assumption made when an Event of Default has occurred and is continuing or (iii) any other Lender that is an assignee to the extent that the Borrowers have expressly agreed that any withholding tax shall be an Indemnified Tax, except in all cases to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from an Obligor with respect to such withholding tax pursuant to Section 13.2(a);

 

(c)                                  any withholding Taxes attributable to a Lender’s failure to comply with Section 13.2(e);

 

(d)                                 any withholding Tax imposed under or in relation to FATCA; and

 

(e)                                  except to the extent that the Borrowers have expressly agreed pursuant to clause (iii) of subparagraph (b) of this definition that any withholding Taxes shall be an Indemnified Tax in respect of an assignee Lender, any withholding Taxes imposed on a payment or deemed payment by reason of the recipient being a “specified shareholder” of a Borrower (within the meaning of subsection 18(5) of the Tax Act) at the time of payment or deemed payment, or by reason of such recipient not dealing at arm’s length for the purposes of the Tax Act with a Borrower or a “specified shareholder” of a Borrower at the time of payment or deemed payment (other than where the non-arm’s length relationship arises, or where the recipient is a “specified shareholder” or does not deal at arm’s length with a “specified shareholder”, in connection with or as a result of the recipient having become a party to, received or perfected a security interest under or received or enforced any rights under, a Loan Document).

 

Existing Affiliate Agreements” means any agreement, instrument or other document between one or more of the Obligors, on the one hand, and one or more of KMI and its Affiliates, on the other hand, in each case, as have been previously entered into, and have been disclosed in the IPO Prospectus (but only to the extent material to KMCL), and which are in force on the date hereof.

 

Existing Project Related Proceedings” means each of the litigation proceedings related to the Project described in Schedule K.

 

Fair Market Value” means, with respect to any asset or group of assets on any date of determination, the value of the consideration obtainable in a sale of such asset or group of assets at such date of determination assuming a sale by a willing seller to a willing purchaser dealing at arm’s length.

 

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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, any agreements entered into pursuant to Section 1471(b)(1) of the Code as of the date of this Agreement (or any amended or successor version described above), and any intergovernmental agreements (or related legislation or official administrative rules or practices) entered into in connection with such sections of the Code and any law, regulation or rule implementing any such intergovernmental agreement.

 

Federal Funds Rate” means, for any day, the rate calculated by the Federal Reserve Bank of New York, based on such day’s federal funds transactions by depositary institutions, as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time and as published on the next succeeding Banking Day by the Federal Reserve Bank of New York as the federal funds effective rate, or, if such day is not a Banking Day, such rate for the immediately preceding Banking Day, for which the same is published or, if such rate is not so published for any day that is a Banking Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) 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, acting reasonably; provided that if the Federal Funds Rate as determined above is less than zero, then the Federal Funds Rate shall be deemed to be zero.

 

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

 

Financial Covenant” has the meaning attributed thereto in Section 9.3.

 

Financial Statements” means the financial statements (including the notes thereto) of KMCL, which shall be on a consolidated basis unless expressly provided otherwise and shall include a balance sheet, a statement of income and a statement of cash flows, together with comparative figures in each case (where a comparative period on an earlier statement exists), all prepared, maintained and stated in accordance with GAAP applied consistently.

 

Fiscal Quarter” means the 3 month period commencing on the first day of each Fiscal Year, and each successive 3 month period thereafter during such Fiscal Year.

 

Fiscal Year” means the fiscal year of KMCL which presently commences on January 1 of each calendar year and ends on December 31 of each calendar year.

 

Force Majeure” means any act, circumstance or occurrence beyond the reasonable control of the Principal Borrower or other Obligor which such Obligor was unable to prevent or provide against by the exercise of reasonable diligence at a reasonable cost and was not a result of an Obligor’s sole negligence, and includes:

 

(a)                                 a storm, extreme freezing temperatures, flood, tornado, earthquake, lightning strike or other act of God;

 

(b)                                 an act of war, revolution, insurrection, riot, blockade or other unlawful act against public order or authority;

 

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(c)                                  a strike, lock-out, shortage of labour or other labour disturbance;

 

(d)                                 a fire, explosion, mechanical failure or other accident or act of sabotage; and

 

(e)                                  governmental restraint, action, delay or inaction,

 

but, for certainty, shall not include any circumstance relating to the financial condition of any Obligor, KMI or any Affiliate thereof or insufficiency of funds or financing of any of them.

 

Forward Funding Test” has the meaning attributed thereto in Section 2.1(b)(iv).

 

Fronting Exposure” means, at any time there is a Defaulting Lender under the Working Capital Facility, such Defaulting Lender’s Applicable Percentage of the outstanding LC Obligations owing to the Fronting Lenders other than LC Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Working Capital Facility Lenders or Cash Collateralized.

 

Fronting Fee” means the fee charged by a Fronting Lender for issuing a Letter of Credit at a rate per annum as is agreed in writing between the Principal Borrower and the applicable Fronting Lender from time to time.

 

Fronting Lenders” means, initially, RBC and The Toronto-Dominion Bank, each in such capacity or such other Working Capital Facility Lenders as may be selected by the Agent and the Principal Borrower and which agrees with the Principal Borrower in writing to issue Letters of Credit hereunder, and provided further that, with respect to particular usage herein and if the context requires, “Fronting Lender” shall mean the Working Capital Facility Lender which has issued the Letter of Credit in question.

 

Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

Funded Debt” means, with respect to any Person and at any time, all indebtedness for borrowed money of such Person at such time and, in any event, includes (without duplication):

 

(a)                                 obligations of such Person (including a reimbursement obligation) with respect to bankers’ acceptances and indebtedness of such Person arising pursuant to note purchase facilities and commercial paper programs;

 

(b)                                 indebtedness of such Person for borrowed money evidenced by and owed under a bond, note, debenture or similar instrument;

 

(c)                                  Purchase Money Obligations;

 

(d)                                 Capital Lease Obligations;

 

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(e)                                  indebtedness of such Person arising pursuant to letters of credit or letters of guarantee securing or supporting any indebtedness or obligations referred to in the other subparagraphs of this definition; and

 

(f)                                   (i) obligations of such Person under Guarantees, and indemnities or other contingent obligations in respect of or securing or supporting any indebtedness or other obligations of any other Person referred to in the foregoing subparagraphs of this definition, and (ii) all other obligations of such Person incurred for the purpose of or having the effect of providing financial assistance to another Person to secure or support any indebtedness or other obligations of any other Person referred to in the foregoing subparagraphs of this definition (whether or not such indebtedness or other obligations are assumed by such Person), including endorsements with recourse of bills of exchange constituting or evidencing any such indebtedness or obligations (other than for collection or deposit in the ordinary course of business).

 

GAAP” means, subject to Section 1.4, generally accepted accounting principles which are in effect from time to time in the United States.

 

General Partner” means Kinder Morgan Canada GP Inc.

 

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

 

Governmental Authorization” means an authorization, order, permit, approval, grant, license, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree or demand or the like issued or granted by law or by rule or regulation of any Governmental Authority; provided that, for certainty, Government Authorizations shall not include any authorizations, orders, permits, approvals, grants, licenses, consents, rights, franchises, privileges, certificates, judgments, writs, injunctions, awards, determinations, directions, decrees or demands issued by any Governmental Authority which has been determined by a court of competent jurisdiction to no longer be required or applicable to the Project or the subject matter thereof or any of the other matters referred to in subparagraphs (a) through (d), inclusive, of the definition of Required Permits from and after the date of such determination, but for greater certainty only until an appellate court of competent jurisdiction determines it to again be applicable thereto (including, without limitation, as a result of a provincial, municipal or local authorization, order, permit, approval, grant, license, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree or demand being in conflict with an authorization, order, permit, approval, grant, license, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree or demand issued by of the Government of Canada or another federal Canadian Governmental Authority).

 

Guarantee” means, in respect of any Person, any guarantee, undertaking to assume, endorse, contingently agree to purchase or pay, or to provide funds for the purchase or payment of, or

 

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otherwise become liable in respect of, any obligation of any other Person; provided that the amount of each Guarantee shall be deemed to be the amount of the obligation guaranteed thereby, unless the Guarantee is limited to a determinable amount in which case the amount of such Guarantee shall be deemed to be the lesser of such determinable amount or the amount of such obligation.

 

Hazardous Materials” means any substance or mixture of substances defined as or determined to be a pollutant, contaminant, waste, hazardous waste, hazardous chemical, hazardous substance, toxic substance or dangerous good under any Environmental Law.

 

Hedge Agreement” means any Interest Hedging Agreement, Currency Hedging Agreement, Commodity Hedging Agreement or any other derivative agreement or similar agreement or arrangements.

 

Hedge Agreement Demand for Payment” means a demand made by a Swap Lender pursuant to a Lender Hedge Agreement demanding payment of the Lender Swap Obligations which are then due and payable relating thereto and shall include any notice provided by a Swap Lender under any agreement evidencing a Lender Hedge Agreement which, when delivered, would require an early termination thereof and a payment by one of the parties thereto in settlement of obligations thereunder as a result of such early termination.

 

Honor Date” has the meaning attributed thereto in Section 6.3(a).

 

Incremental Pricing” has the meaning attributed thereto in Section 9.6.

 

Indemnified Taxes” means Taxes other than Excluded Taxes.

 

Indemnitee” has the meaning attributed thereto in Section 14.1(b).

 

Independent Engineer” means Leidos Engineering LLC or, in the event Leidos Engineering LLC does not (on a repeated basis) provide timely service in respect of its obligations relating to ongoing funding requirements and reporting to the Lenders as contemplated hereby, such other firm of independent engineers or consultants as may be selected from time to time by the Required Lenders in consultation with and with the approval of the Principal Borrower, acting reasonably, in replacement thereof.

 

Independent Engineer Certificate” means a certificate of the Independent Engineer signed by an officer thereof, substantially in the form of Schedule O-1 or Schedule O-2, as applicable, to be provided to the Agent and the Lenders pursuant hereto.

 

Information” has the meaning attributed thereto in Section 16.6(b).

 

Initial Financial Model” means the final financial model in respect of the Project and the Closing Date Business delivered by the Principal Borrower to the Lenders and the Independent Engineer on or prior to the Closing Date.

 

Initial Independent Engineer Opinion” means the Independent Engineer’s report for the Project dated as of April 21, 2017.

 

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Insurance Consultant” means Moore-McNeil LLC.

 

Intellectual Property” means Canadian, U.S. and foreign intellectual property, including all (a) (i) patents, inventions, processes, developments, technology, and know-how; (ii) copyrights and works of authorship in any media, including graphics, advertising materials, labels, package designs, and photographs; (iii) trademarks, service marks, trade names, brand names, corporate names, domain names, logos, trade dress, and other source indicators, and the goodwill of any business symbolized thereby; and (iv) trade secrets, confidential, proprietary, or non-public information and (b) all registrations, issuances, applications, renewals, extensions, substitutions, continuations, continuations-in-part, divisions, re-issues, re-examinations, foreign counterparts, or similar legal protections related to the foregoing.

 

Interest Hedging Agreement” means any interest swap agreement, forward rate agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or arrangement, or any combination thereof, entered into by the applicable Person where the subject matter of the same is interest rates or the price, value or amount payable thereunder is dependent or based upon the interest rates or fluctuations in interest rates in effect from time to time (but, for certainty, shall exclude conventional floating rate debt).

 

Interest Payment Date” means:

 

(a)                                 with respect to each Prime Loan and USBR Loan, the first Banking Day of each calendar month for the immediately preceding month or, after notice to the Borrowers, on such other Banking Day of each calendar month as is customary for the Agent having regard to its then existing practice; and

 

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

 

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

 

Interest Period” means:

 

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

 

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

 

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

 

provided that in any case: (i) the last day of each Interest Period shall be also the first day of the next Interest Period whether with respect to the same or another Loan; (ii) the last day of each Interest Period shall be a Banking Day and if the last day of an Interest Period selected by the Principal Borrower is not a Banking Day the Principal Borrower shall be deemed to have selected an Interest Period the last day of which is the Banking Day next following the last day of the Interest Period selected unless such next following Banking Day falls in the next calendar month in which event the Principal Borrower shall be deemed to have selected an Interest Period the last day of which is the Banking Day next preceding the last day of the Interest Period selected by the Principal Borrower; and (iii) the last day of all Interest Periods for Loans outstanding under each Credit Facility shall expire on or prior to the Maturity Date applicable thereto, subject, however, in the case of Letters of Credit issued under the Working Capital Facility to the provisions of Section 6.1.

 

Investments” means, with respect to any Obligor, any one or more of the following by such Obligor: (a) any loan to any Person, including Guarantees (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business); (b) any capital contributions to any Person; (c) any purchase or acquisition of Equity Securities; and (d) any purchase or acquisition of assets for consideration of Funded Debt, Equity Securities or other Securities. “Investments” shall exclude extensions of trade credit in the ordinary course of business in accordance with normal trade practices of such Person. If any Obligor sells or otherwise disposes of any Equity Securities of any direct or indirect Restricted Subsidiary such that, after giving effect to any such Disposition, such Person is no longer a Restricted Subsidiary, the Obligor which made such Disposition will be deemed to have made an Investment on the date of any such Disposition equal to the Fair Market Value of such Obligor’s Investments in such Restricted Subsidiary that were not sold or disposed of. The acquisition by any Obligor of a Person that holds an Investment in a third Person that is not a Related Party of an Obligor will be deemed to be an Investment by such Obligor in such third Person in an amount equal to the Fair Market Value of the Investment held by the acquired Person in such third Person.

 

Investment Grade Rating” means in respect of the Debt Rating, a rating of at least two of the following: (a) BBB- or better from S&P; (b) Baa3 or better from Moody’s; and (c) BBB (low) or better from DBRS.

 

IPO” means the initial public offering of KMCL.

 

IPO Date” means May 30, 2017.

 

IPO Prospectus” means the long form prospectus of KMCL dated May 25, 2017 qualifying the distribution of 102,942,000 restricted voting shares of KMCL in each of the provinces and territories of Canada.

 

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ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

 

KMCL” means Kinder Morgan Canada Limited, and its successors.

 

KMI” means Kinder Morgan, Inc., and its successors.

 

Knowledge” means, in respect of the Principal Borrower or any other Obligor, as the context requires, the actual knowledge of any director or senior officer of such Obligor who has current knowledge of the relevant facts or circumstances.

 

LC Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by a Fronting Lender, together with a request for a LC Issuance, in the form provided to the Principal Borrower by the Fronting Lender.

 

LC Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed by the Principal Borrower on the date when made or refinanced into another type of Loan on the date when made.

 

LC Fee” has the meaning attributed thereto in Section 4.5(a).

 

LC Issuance” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.

 

LC Issuer Documents” means with respect to any Letter of Credit, the LC Application, and any other document, agreement and instrument entered into by the applicable Fronting Lender and the Principal Borrower (or any applicable Obligor) or in favour of the applicable Fronting Lender and relating to such Letter of Credit and “LC Issuer Document” means any one of them.

 

LC Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all LC Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.8. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

Lead Arrangers” means RBC Capital Markets, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia and TD Securities.

 

Lenders” means, collectively, the Construction Facility Lenders, the Working Capital Facility Lenders and the Contingent Facility Lenders, and “Lender” means any one of them.

 

Lender Distress Event” means, in respect of a given Lender, such Lender or its Lender Parent (a) is subject to a forced liquidation, merger, sale or other change of control supported in whole

 

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or in part by guarantees or other support (including the nationalization or assumption of ownership or operating control by the Government of the United States, Canada or any other Governmental Authority) or (b) is otherwise adjudicated as, or determined to be, insolvent or bankrupt, in each case, by any Governmental Authority having regulatory authority over such Lender or Lender Parent or their respective assets; provided that, for certainty, a Lender Distress Event shall not have occurred solely by virtue of the ownership or acquisition of any equity interest in such Lender or its Lender Parent by any 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 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.

 

Lender Hedge Agreement” means a Hedge Agreement entered into between a Swap Lender and an Obligor which creates Lender Swap Obligations.

 

Lender Insolvency Event” means, in respect of a given Lender, such Lender or its Lender Parent:

 

(a)                                 is dissolved (other than pursuant to a consolidation, amalgamation or merger);

 

(b)                                 becomes insolvent, is deemed insolvent by applicable law or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

 

(c)                                  makes a general assignment, arrangement or composition with or for the benefit of its creditors;

 

(d)                                 (i) institutes, or has instituted against it by a regulator, supervisor or any similar Governmental Authority with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organization or the jurisdiction of its head or home office, (A) a proceeding pursuant to which such Governmental Authority takes control of such Lender’s or Lender Parent’s assets, (B) a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy, insolvency or winding-up law or other similar law affecting creditors’ rights, or (C) a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar Governmental Authority; or (ii) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy, insolvency or winding-up law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in clause (i) above and either (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof;

 

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(e)                                  has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

 

(f)                                   seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or a substantial portion of all of its assets;

 

(g)                                  has a secured party take possession of all or a substantial portion of all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case, within 15 days thereafter;

 

(h)                                 causes or is subject to any event with respect to it which, under the applicable law of any jurisdiction, has an analogous effect to any of the events specified in subparagraphs (a) to (g) above, inclusive; or

 

(i)                                     takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing.

 

Lender Parent” means any Person that directly or indirectly controls a Lender and, for the purposes of this definition, “control” shall have the same meaning as set forth in the definition of “Affiliate” contained herein.

 

Lender Secured Obligations” means, collectively, all amounts, obligations and liabilities owing by any Obligor to any or all of the Lender Secured Parties, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether or not evidenced by any instrument or for the payment of money, and arising under, in connection with, or otherwise related to this Agreement or any other Loan Document, Lender Hedge Agreements or Cash Management Documents and including, without duplication, (a) all Outstandings owed or guaranteed by any Obligor, (b) all Lender Swap Obligations (other than Excluded Swap Obligations) owed or guaranteed by any Obligor, (c) all Cash Management Obligations owed or guaranteed by any Obligor and (d) all other fees, expenses (including fees, charges, and disbursement of counsel), interest, commissions, charges, costs, disbursements, indemnities, and reimbursement of amounts paid and other sums chargeable to any Obligor under any Loan Document.

 

Lender Secured Parties” means (a) the Agent and the Lenders under the Loan Documents, (b) the Swap Lenders under the Lender Hedge Agreements and (c) the Cash Managers under the Cash Management Documents.

 

Lender Swap Obligations” means all indebtedness, obligations and liabilities of any Obligor under any Lender Hedge Agreement entered into at any time on or after the Closing Date (regardless of whether such Lender or its Affiliate ceases to be a Lender after such Lender Hedge Agreement is entered into), but excluding, for certainty, any Lender Hedge Agreement entered into by any Obligor with any Swap Lender after such Lender’s or its Affiliate’s Commitment has

 

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been fully cancelled in accordance with the terms hereof or after such Lender or its Affiliate has assigned all of its rights to the Credit Facilities in accordance with Section 16.2.

 

Lenders’ Counsel” means Torys LLP and such other firm(s) of legal counsel as the Agent may from time to time designate.

 

Letter of Credit” or “LC” means a standby or documentary letter of credit or letter of guarantee in Cdn. Dollars or US Dollars issued by a Fronting Lender at the request of the Principal Borrower pursuant to this Agreement.

 

Levy” has the meaning attributed thereto in Section 9.1(f).

 

LIBO Rate” means, for any Interest Period with respect to a LIBO Rate Loan, the rate of interest per annum, expressed on the basis of a year of 360 days, determined by the Agent at approximately 11:00 a.m. (London, England time), on the date that is 2 Banking Days prior to the commencement of such Interest Period by reference to the rate set by ICE Benchmark Administration (or any display substituted therefor or any successor thereto) for deposits in US Dollars (as set forth by any service selected by the Agent that has been nominated by ICE Benchmark Administration (or any display substituted therefor or any successor thereto) as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided, however, that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum determined by the Agent to be the average of the rates per annum at which deposits in US Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Agent (or an Affiliate thereof, if the Agent does not offer such deposits) at approximately 11:00 a.m. (London, England time) on the date that is 2 Banking Days prior to the beginning of such Interest Period; provided, however that in no event shall the LIBO Rate be less than zero (0).

 

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

 

LIBO Suspension Notice” has the meaning assigned to such term in Section 13.6(c).

 

Liens” 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) rights of set-off created for the purpose of securing (directly or indirectly) any Funded Debt, and (b) the rights of lessors under Capital Leases and any other lease financing included as Funded Debt.

 

Loan” means a Prime Loan, a USBR Loan, a LIBO Rate Loan, a BA Equivalent Advance, or an Advance by way of the issuance of Bankers’ Acceptances or a Letter of Credit.

 

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Loan Documents” means this Agreement, the LC Issuer Documents, the Obligor Guarantees, the Security Documents, Equity Nomination and Support Agreement, the Collateral Agency and Intercreditor Agreement, any letter agreements reflecting agency fee arrangements agreed to between the Agent and the Borrowers, any letter agreements reflecting the Fronting Fee arrangements agreed to between a Fronting Lender and the Principal Borrower and all other agreements, certificates, notices, instruments and other documents delivered or to be delivered to the Agent, the Lenders or any of them, in relation to the Credit Facilities pursuant hereto or thereto and, when used in relation to any Person, the term “Loan Documents” shall mean and refer to the Loan Documents executed and delivered by such Person.

 

Market Consultant” means Muse, Stancil & Co.

 

Material Acquisition” means an Acquisition by an Obligor (but excluding an Acquisition from an Obligor), the cost of which, together with the cost of all such Acquisitions previously completed in such Fiscal Year which were not included in any previous Material Acquisition, exceed the Threshold Amount.

 

Material Adverse Effect” means a material adverse effect on:

 

(a)                                 the business, financial condition, operations or properties of the Principal Borrower and its Subsidiaries on a consolidated basis and taken as a whole; or

 

(b)                                 the ability of the Pledgors and the Obligors to observe or perform their respective material obligations under the Loan Documents and the Material Project Agreements to which any of them is a party or the validity or enforceability of the Loan Documents or the Material Project Agreements or any material provision thereof.

 

Material Disposition” means a Disposition by any Obligor of Equity Securities or other assets (but excluding a Disposition to an Obligor), the net proceeds of which, together with all such Dispositions previously completed in such Fiscal Year which were not included in any previous Material Disposition, exceed the Threshold Amount.

 

Material EPC Agreements” means, collectively:

 

(a)                                 the agreement to be entered into between the Principal Borrower (or an Affiliate thereof) and ** to carry out the engineering, procurement, construction and commissioning of  the ** component of the Project, as the same may be amended, modified, supplemented or restated from time to time **; and

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in places marked “**” and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.

 

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(b)                                 the agreement to be entered into between the Principal Borrower (or an Affiliate thereof) and ** to carry out the construction of Spread **, as the same may be amended, modified, supplemented or restated from time to time,

 

and any other contract or agreement entered into in replacement thereof.

 

Material Project Agreements” means, collectively, (a) the Material Transportation Services Agreements and (b) the Material EPC Agreements.

 

Material Transportation Services Agreementmeans, collectively, the transportation services agreements in respect of the Project (together with the facility support agreement corresponding thereto while it remains in existence in accordance with its terms) with the following shippers, together with any other transportation services agreements in respect of the Project with the shippers who have provided a Consent and Acknowledgement as required pursuant to Section 3.3(d)(ii) (provided that, to the extent after having made commercially reasonable efforts to deliver a Consent and Acknowledgement with the following shippers, the Principal Borrower may replace the following and designate additional such agreements so long as it remains in compliance with Section 3.3(d)(ii)):

 

(a)                                 BP Products North America Inc.;

 

(b)                                 Brion Energy Corporation;

 

(c)                                  Canadian Natural Resources;

 

(d)                                 Cenovus Energy Inc.;

 

(e)                                  Suncor Energy Marketing Inc.;

 

(f)                                   Tesoro Canada Supply & Distribution Ltd.; and

 

(g)                                  Total E&P Canada Ltd.

 

Maturity Date” means the fifth anniversary of the Closing Date or, if such day is not a Banking Day, the immediately preceding Banking Day.

 

Moody’s” means Moody’s Investors Service, Inc. and its successors.

 

NEB” means the National Energy Board of Canada.

 

NEB Financial Resources Requirement” means the requirement under NEB Order FRO-002-2107 for the NEB Reserve Borrower (as the same may be amended, restated or replaced from

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in places marked “**” and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.

 

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time to time by the NEB) or any other similar requirement on any Obligor imposed on it by the NEB to obtain and maintain minimum financial resources in the forms of available lines of credit from its Affiliates or unrelated third parties and available insurance policies.

 

NEB Reserve Availability” means up to Cdn.$500,000,000 of the undrawn availability under the Contingent Facility to satisfy the line of credit requirements under the NEB Financial Resources Requirement.

 

NEB Reserve Borrower” means Trans Mountain Pipeline ULC.

 

Net Disposition Proceeds” means the net cash proceeds received by an Obligor after the Closing Date from any Disposition (other than Permitted Dispositions) and, including any cash payment received in respect of promissory notes or other non-cash consideration delivered to an Obligor in respect thereof, less, for certainty, but without limitation, the sum of each of the following:

 

(a)                                 all reasonable and customary legal, investment banking, brokerage and accounting fees and expenses incurred in connection with such Disposition;

 

(b)                                 all Taxes actually paid, or estimated to be payable by, the Obligors in cash in connection with such Disposition; and

 

(c)                                  reasonable reserves in connection with the Disposition established in accordance with GAAP against any liabilities associated with the assets being Disposed of.

 

Net Forecasted Retained Cash Flow” means, as at any date of determination, the forecasted Distributable Cash for the 6 month period following such date of determination, net of all forecasted dividends and distributions to be made by KMCL and the Parent during such period (to the extent applicable, based upon the then prevailing policies and resolutions of the board of directors of KMCL).

 

Net Insurance Proceeds” means the Equivalent Amount in Canadian Dollars of the net amount of property insurance proceeds (and excluding, for certainty, business interruption and delay in start-up insurance) received by an Obligor after the Closing Date in excess of Cdn.$25,000,000 in aggregate between all of the Obligors over the course of a Fiscal Year, less, for certainty, but without limitation, the sum of each of the following:

 

(a)                                 amounts applied to a Permitted Use;

 

(b)                                 any proceeds or awards required to be paid to a creditor (other than the Lender Secured Parties) which holds a Permitted Lien on the Property which is the subject of a casualty event and which ranks in priority to the Liens arising under the Security Documents; and

 

(c)                                  all Taxes actually paid, or estimated to be payable, by the Obligors in cash in connection with such proceeds or awards.

 

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Net Permitted Refinancing Debt Proceeds” means, with respect to the incurrence by an Obligor of Permitted Refinancing Debt after the Closing Date, the net cash proceeds received by such Obligor from such incurrence, less, for certainty, but without limitation, the sum of each of the following:

 

(a)                                 all reasonable and customary legal, investment banking, brokerage and accounting fees and expenses incurred and other professional fees, underwriting discounts and commissions in connection with such incurrence; and

 

(b)                                 all Taxes actually paid, or estimated to be payable, by the Obligors in cash in connection with such incurrence;

 

provided that, no proceeds of any Permitted Refinancing Debt shall be used to satisfy any reserves required pursuant to the terms of any Permitted Refinancing Debt.

 

New Rules” has the meaning attributed thereto in the definition of “Change in Law”.

 

Non-Acceptance Lender” means (a) a Lender which does not accept bankers’ acceptances in the ordinary course of its business or (b) in respect of Lenders which are not chartered banks or Schedule III Lenders, a Lender who, by notice in writing to the Agent and the Borrower, elects thereafter to make BA Equivalent Advances in lieu of accepting Bankers’ Acceptances.

 

Nonrenewal Notice Date” has the meaning attributed thereto in Seciton 6.2(c).

 

Obligor Debenture” means a debenture given by each Obligor pursuant to Section 10.2. substantially in the form attached as a schedule to the Collateral Agency and Intercreditor Agreement

 

Obligor Guarantee” means a Guarantee made by each Obligor substantially in the form attached as Schedule H-1 from time to time in favour of the Agent for the benefit of the Lender Secured Parties with such modifications and insertions as may be agreed to by the Agent, acting reasonably.

 

Obligors” means, collectively, the Borrowers, the Parent, the General Partner, KMCL, and the Restricted Subsidiaries and “Obligor” means any of them.

 

On-Hand Fundingmeans an amount equal to, without duplication, of the following:

 

(a)                                 the sum of:

 

(i)                                                             cash then held by Obligors in deposit accounts maintained with the Agent or any other Lender and which is not subject to (i) any Liens other than Liens constituted by the Security Documents or (ii) any restrictions on payment or withdrawal other than pursuant to the Loan Documents; plus

 

(ii)                                                          the Fair Market Value of Cash Equivalents then held by the Obligors and registered in the name of an Obligor or a Subsidiary in accounts of the Agent and/or one or more Lenders, in each case, which are not subject to

 

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(i) any Liens other than Liens constituted by the Security Documents or (ii) any restrictions on transfer or Disposition other than pursuant to the Loan Documents; minus

 

(b)                                 any outstanding payables relating to current Project Costs incurred but unpaid as at the date of determination, but, for the purpose of determining the amount of such payables, excluding the total incremental Project Costs requested to be funded on such date in the applicable Drawdown Notice.

 

For certainty, (i) any proceeds of any Permitted Debt other than Permitted Subordinated Loans shall not be used in calculating the amounts set out in item (a) above, and (ii) On-Hand Funding shall at no time be less than $0.

 

OSFI” means the Office of the Superintendent of Financial Institutions Canada (or any successor thereto).

 

Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

Outside Date” means June 30, 2021.

 

Outstanding Principal” means the aggregate, at any time, of:

 

(a)                                 the aggregate outstanding principal amount of all Prime Loans, USBR Loans, BA Equivalent Advances, and LIBO Rate Loans;

 

(b)                                 the aggregate face amount of all outstanding Bankers’ Acceptances which have not been Cash Collateralized; and

 

(c)                                  the aggregate undrawn amount of all outstanding Letters of Credit (as determined in accordance with Section 1.8) which have not been Cash Collateralized.

 

Outstandings” means, at any time and from time to time, all of the obligations, indebtedness and liabilities (present or future, absolute or contingent, matured or not) of any Obligors to the Lenders or the Agent under, pursuant or relating to the Loan Documents or the Credit Facilities and whether the same are from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again and including all principal, interest, fees, legal and other costs, charges and expenses and other amounts payable by any Obligors under the Loan Documents.

 

Parent” means Kinder Morgan Canada Limited Partnership, and its successors.

 

Participant” has the meaning assigned to such term in Section 16.2(d).

 

Permitted Contest” means action taken by an Obligor in good faith by appropriate proceedings diligently pursued to contest any Taxes, Other Taxes, claims or Liens, provided that:

 

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(a)                                 such Obligor has established reasonable reserves therefor if required in accordance with GAAP; and

 

(b)                                 proceeding with such contest will not create a material risk of sale, forfeiture or loss, or interference with the use of any material Property of such Obligor and would not reasonably be expected to have a Material Adverse Effect.

 

Permitted Debt” means, in respect of an Obligor, any Funded Debt which meets any one of the following conditions: (and any Guarantee of any Funded Debt which constitutes Permitted Debt shall also constitute Permitted Debt):

 

(a)                                 the Lender Secured Obligations;

 

(b)                                 any Funded Debt owing by an Obligor to another Obligor;

 

(c)                                  Permitted Refinancing Debt;

 

(d)                                 Permitted Incremental Debt;

 

(e)                                  Permitted Subordinated Loans;

 

(f)                                   (i) Capital Lease Obligations; (ii) Purchase Money Obligations; and (iii) other Funded Debt to the extent not otherwise referred to in this definition; provided that, the aggregate outstanding principal amount of such Capital Lease Obligations, Purchase Money Obligations and other Funded Debt shall not exceed the Threshold Amount (or the Equivalent Amount in any other currency, as determined at the time of incurrence); and

 

(g)                                  other Funded Debt, provided that: (i) both the Construction Facility and Contingent Facility have been indefeasibly repaid in full and the entirety of the Commitments under each such Credit Facility have been cancelled; and (ii) the Principal Borrower shall have an Investment Grade Rating both immediately prior to, and immediately after, the incurrence of such Funded Debt,

 

in each case, subject to compliance with the Financial Covenant.

 

Permitted Dispositions” means, with respect to an Obligor, any one or more of the following:

 

(a)                                 a Disposition by such Obligor in the ordinary course of business and in accordance with prudent industry practice of property that is obsolete, no longer useful for its intended purpose or no longer required for the operation of the Project or the Closing Date Business or being replaced in the ordinary course of business;

 

(b)                                 a Disposition by such Obligor in the ordinary course of business that would not reasonably be expected to have a Material Adverse Effect (it being acknowledged and agreed that any Disposition of a major component of the Trans Mountain Pipeline System existing mainline, any Disposition of an entire business unit

 

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comprising part of the Closing Date Business or any Disposition of a major component of the Project shall not be in the ordinary course of business);

 

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

 

(d)                                 a Disposition of assets (including shares or ownership interests) by a Restricted Subsidiary to the Borrower, by a Restricted Subsidiary to a wholly-owned Subsidiary and by the Borrower to a wholly-owned Subsidiary, subject to compliance with Section 9.1(l);

 

(e)                                  transfers, leases, subleases, easements, licenses, sublicenses and grants of rights of way, rights of access and similar rights transferred or made in the ordinary course of business and that are not otherwise required for the development, construction and operation of the Project;

 

(f)                                   except for those leases, subleases, easements, licenses, sublicenses and grants of rights-of-way, rights of access and similar rights dealt with and referred to in subparagraph (e) above, leases, subleases, easements, licenses, sublicenses or grants of rights of way in the ordinary course of business and which do not (singularly or in the aggregate) interfere with the business or operations of such Obligor in any material respect;

 

(g)                                  Dispositions relating to or in connection with easements, rights-of-way, servitudes, statutory exceptions to title, restrictions and other similar charges, restrictions or encumbrances as to the use of real property or immaterial imperfections of title which do not (singularly or in the aggregate) interfere with the business or operations of the Principal Borrower or such Subsidiary in any material respect;

 

(h)                                 a grant of a Lien which constitutes a Permitted Lien;

 

(i)                                     Dispositions permitted by Sections 9.2(d), 9.2(f), 9.2(k) or 9.2(l);

 

(j)                                    transfers of Property subject to casualty events upon receipt of the Net Insurance Proceeds of such casualty event or as part of an insurance settlement;

 

(k)                                 transfers of expropriated or condemned Property as a result of expropriation or other similar rights to the respective Governmental Authority that has expropriated or condemned the same; and

 

(l)                                     any other Disposition of assets of such Obligors; provided that the aggregate net proceeds of Disposition of the assets sold or otherwise disposed of by such Obligor, together with all other Obligors pursuant to this subparagraph (l), do not, in the aggregate, exceed (i) prior to the “in-service” date of the Project in accordance with the applicable Government Authorizations therefor, the

 

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Threshold Amount, and (ii) after such “in-service date”, Cdn.$100,000,000 (or the Equivalent Amount thereof in any other currency) in any Fiscal Year.

 

Permitted Incremental Debt” means Funded Debt, provided that:

 

(a)                                 pro forma compliance with the Financial Covenant on the date such Funded Debt is incurred;

 

(b)                                 no Default or Event of Default shall have occurred and be continuing on the date such Funded Debt is incurred;

 

(c)                                  such Funded Debt shall have a maturity date at least 6 months later than the Maturity Date;

 

(d)                                 such Funded Debt may be unsecured or if secured, the Liens granted in respect thereof shall rank no better than pari passu with the Lender Secured Obligations (and shall be subject to the Collateral Agency and Intercreditor Agreement);

 

(e)                                  the aggregate principal amount of such Funded Debt shall not exceed Cdn.$250,000,000, (or the Equivalent Amount thereof in any other currency) minus the amount of any increase to the Working Capital Facility effected pursuant to Section 2.3(c), if any; and

 

(f)                                   the proceeds of such Funded Debt will be for general corporate purposes (other than Project Costs).

 

Permitted Investments” means, without duplication:

 

(a)                                 any Investment in an Obligor;

 

(b)                                 any Investment in cash or Cash Equivalents;

 

(c)                                  Investments expressly required pursuant to any Material Project Agreement;

 

(d)                                 any Investment by an Obligor in a Person if as a result of such Investment:

 

(i)                                     such Person becomes an Obligor; or

 

(ii)                                  such Person is amalgamated, merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, an Obligor;

 

(e)                                  any Investments received in compromise of obligations of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer;

 

(f)                                   Acquisitions;

 

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(g)                                  any Investment which would constitute Permitted Debt and any Guarantees of Permitted Debt;

 

(h)                                 Guarantees of performance or other obligations (other than Funded Debt) arising in the ordinary course of the business of the Obligors and their respective Subsidiaries or as contemplated by the Material Project Agreements and/or the constitutional documents of the Obligors and their respective Subsidiaries, including obligations under joint operating and related agreements and licenses or concessions related to such business; and

 

(i)                                     any other Investment; provided that the Fair Market Value of such Investment, together with the aggregate Fair Market Value of all other Investments of the Obligors pursuant to this subparagraph (i), do not exceed the Threshold Amount, in each case, the Fair Market Value being determined as of the date each such Investment was made,

 

provided that at the time of any such Investments described in subparagraphs (f) and (i) above, no Event of Default exists or would reasonably be expected to result therefrom.

 

Permitted Liens” means, as at any particular time, any of the following on the Property or any part of the Property of an Obligor:

 

(a)                                 Liens for Taxes, Other Taxes, assessments, customs duties or governmental charges which are not due and delinquent or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest;

 

(b)                                 Liens under or pursuant to any judgment rendered, or claim filed, against such Obligor, which such Obligor shall be contesting at the time by a Permitted Contest or which is adequately covered by insurance;

 

(c)                                  Liens imposed or permitted by law, such as undetermined, inchoate or statutory liens and deemed trusts, carriers’ liens, garagekeepers’ liens, builders’ liens, warehousemen’s liens, mechanics’ liens, materialmen’s liens, repairmen’s liens and other liens, privileges or other charges of a similar nature which relate to obligations which are not due and delinquent or, if due and delinquent, the validity of which is being contested at the time by a Permitted Contest;

 

(d)                                 Liens in favour of a public utility or any municipality or governmental or other public authority when required by such utility, municipality or authority in connection with the operations of such Obligor, all in the ordinary course of its business which individually or in the aggregate do not materially detract from the value of the asset concerned or materially impair its use in the operation of the business of the Obligors, taken as a whole;

 

(e)                                  Liens securing the performance of bids, tenders, leases, contracts (other than for the repayment of Funded Debt), statutory obligations, appeal bonds and performance bonds and other obligations of like nature, incurred as incidental to and in the ordinary course of business of such Obligor; provided, however, that all

 

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such Liens only secure sums not at the time overdue or, if overdue, the validity of which is being contested at the time by a Permitted Contest;

 

(f)                                   the Lien or any right of distress reserved in or exercisable under any real property lease for rent or otherwise to effect compliance with the terms of such lease, in respect of which the rent or other obligations are not at the time overdue, or if overdue, the validity of which is being contested at the time by a Permitted Contest;

 

(g)                                  easements, rights-of-way, permits, restrictive covenants, encroachments, protrusions, servitudes, leases, licenses, subleases, sublicenses, zoning, caveats registered in respect of any of the foregoing or other similar rights or interests in land held by such Obligor (including, without in any way limiting the generality of the foregoing, rights-of-way and servitudes for railways, roadways, sewers, drains, pipe lines, gas and water mains, electric light and power and telecommunication, telephone or telegraph or cable television conduits, poles, wires, cables, meter stations and sub stations) granted to or reserved or taken by other Persons which individually 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 Obligors, taken as a whole;

 

(h)                                 Purchase Money Security Interests and Capital Leases; provided that those Liens are limited to all or any part of the Property purchased or leased and that such obligations do not exceed the Threshold Amount, in each case as determined in the aggregate for the Obligors;

 

(i)                                     Liens created under any of the Security Documents;

 

(j)                                    Liens consented to in writing by the Required Lenders;

 

(k)                                 Liens in favour of an Obligor;

 

(l)                                     Liens in favour of one or more of the other parties under any of the Material Project Agreements;

 

(m)                             Liens resulting from the deposit of cash or obligations as security when an Obligor is required to do so 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;

 

(n)                                 bankers’ liens, rights of set-off and other similar liens existing solely with respect to cash, term deposits, guaranteed investment certificates, certificates of deposit, bankers’ acceptances and other debt instruments, in each case, in one or more accounts maintained by an Obligor, in each case, granted in the ordinary course of business in favour of any Lender with which such accounts are maintained, securing amounts owing to such Lender with respect to cash management and

 

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operating account arrangements, including those involving pooled accounts and netting arrangements;

 

(o)                                 any lease or sublease granted by an Obligor in the ordinary course of business, provided that, any such lease or sublease does not materially adversely affect the enjoyment by an Obligor of the assets of such Obligor in the conduct of the business of the Obligors, taken as a whole;

 

(p)                                 title defects or irregularities which are of a minor nature which, in the aggregate, do not materially affect or impair the use of any material Property of such Obligor for the purposes for which it is held by or on behalf of such Obligor;

 

(q)                                 any Lien whether arising under statute or under contracts for the transportation, transmission, storage, processing, distribution, gathering, terminalling, trimming, handling, injection, repressuring or recycling of petroleum substances, hydrogen or other gases or other products, by products, waste products, consumables, inventory or water in favour of pipeline owners, other transporters and carriers and other providers of goods and services, provided that in the case of Liens arising under contracts, such Lien is limited to the assets that are the subject of the relevant contract and that the indebtedness and obligations of the applicable Obligor thereunder do not constitute Funded Debt;

 

(r)                                    Liens incurred in the ordinary course of business (not securing any Funded Debt) in respect of the rights of any shipper or supplier of inventory or petroleum substances (including the rights of such shipper or supplier to any inventory or petroleum substances owned by such shipper or supplier or owned by an Obligor but not yet paid for or overdue but that are located on or within any property or assets of such Obligor);

 

(s)                                   to the extent required by Applicable Law, any Lien (including, for certainty, any reclamation trust or similar arrangement in connection with any present or future reclamation, clean-up, abandonment or operational obligations to the extent any such trust or similar arrangement may constitute a Lien) relating to the present or future reclamation, clean-up, abandonment or operation of any properties, facilities and interests and surrounding lands whether or not owned by an Obligor and the decommissioning or removal of structures or facilities located on such properties or facilities;

 

(t)                                    Liens securing Permitted Refinancing Debt and Permitted Incremental Debt, in each case, which rank no greater than pari passu with the Liens in favour of the Lender Secured Parties and which are subject to the Collateral Agency and Intercreditor Agreement;

 

(u)                                 any operating lease (as characterized under GAAP as in effect on December 31, 2016) entered into in the ordinary course of business (which, for certainty, shall not include any leases entered into in connection with any Sale Leaseback);

 

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(v)                                 (i) zoning, building, entitlement and other land use regulations by Governmental Authorities with which the normal operation of the business of such Obligor complies, and (ii) any zoning, ordinance or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of such Obligor;

 

(w)                               any right reserved to, or vested in, any applicable Governmental Authority by the terms of:

 

(i)                                     any Applicable Law;

 

(ii)                                  any applicable Governmental Authorization; or

 

(iii)                               any property interest, easement, right-of-way, or servitude issued or granted by Applicable Law or by any applicable Governmental Authorization,

 

to terminate any such Governmental Authorization, easement, right-of-way or servitude or to purchase, expropriate, appropriate or recapture, or designate a purchaser of any property;

 

(x)                                 any obligation or duty affecting property to any Governmental Authority with respect to any Governmental Authorization and any defect in title to structures or other facilities arising solely from the fact that such structures or other facilities are constructed or installed on real property held under such Governmental Authorization, which obligations and duties and defects in the aggregate do not materially impair the use or enjoyment of such property, structures and facilities for the purposes for which they are held;

 

(y)                                 any Liens granted in respect of:

 

(i)                                     cash or Cash Equivalents in respect of Excluded Deposits/Amounts; or

 

(ii)                                  any Equity Securities or Equity Securities Equivalents (and cash and other property on deposit in any Excluded Securities Accounts), in either case, held in or on deposit in any Excluded Securities Accounts;

 

(z)                                  any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Lien referred to in the preceding subparagraphs (a) to (y) inclusive of this definition, so long as any such extension, renewal or replacement of such Lien is limited to all or any part of the same Property that secured the Lien extended, renewed or replaced (plus improvements on such Property) and the Funded Debt or obligation secured thereby is not increased; and

 

(aa)                          other Liens that are not permitted under any of the foregoing subparagraphs of this definition and which secure obligations that are not otherwise prohibited

 

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under this Agreement, provided that the aggregate of the obligations secured by all such Liens does not at any time exceed the Threshold Amount;

 

provided that nothing in this definition shall in and of itself cause the Lender Secured Obligations to be subordinated in priority of payment of the obligations secured by any such Permitted Lien.

 

Permitted Refinancing Debt” means Funded Debt of the Principal Borrower, subject to:

 

(a)                                 pro forma compliance with the Financial Covenant;

 

(b)                                 no Default or Event of Default shall have occurred and be continuing on the date such Funded Debt is incurred;

 

(c)                                  such Funded Debt shall have a maturity date at least 6 months later than the Maturity Date;

 

(d)                                 such Funded Debt may be unsecured or if secured, the liens granted in respect thereof shall rank no better than pari passu with the Lender Secured Obligations (and shall be subject to the Collateral Agency and Intercreditor Agreement); and

 

(e)                                  the proceeds thereof must be used to prepay the Credit Facilities as required by Section 7.1.

 

Permitted Subordinated Loans” means unsecured Funded Debt of the Principal Borrower owing to KMI or other Related Parties provided:

 

(a)                                 such Funded Debt is on terms and conditions satisfactory to the Agent, acting reasonably (including that there shall be no financial test or any restriction on debt incurrence nor any cross-default or cross-acceleration to any other Funded Debt); and

 

(b)                                 such Funded Debt is fully subordinated to the Lender Secured Obligations pursuant to, and which is then subject to, a subordination agreement, in form and substance satisfactory to the Agent, acting reasonably (and which, among other things, shall provide: (i) for a perpetual standstill and (ii) that payments on or in respect of such Funded Debt shall be subject to the limitations prescribed by Section 9.2(i).

 

Permitted Use” means repair or replacement of Property in respect of which the related insurance claim was made (or a binding commitment to do the same) within 365 days of receipt by the applicable Obligor of the proceeds of such a claim (or such longer period as may be acceptable to the Agent, acting reasonably given the nature of the Property to be repaired or replaced).

 

Person” means any natural person, corporation, limited liability company, unlimited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

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Platform” has the meaning attributed thereto in Section 16.15(a).

 

Pledges” means, collectively, each limited recourse securities pledge given by each Pledgor in favour of the Collateral Agent for the benefit of the Secured Parties pursuant to Section 10.2(b).

 

Pledgors” means, collectively, KM Canada Terminals ULC and Kinder Morgan Canada Company and any other Person that from time to time is a direct owner of Equity Securities or Equity Securities Equivalents of the Parent, and “Pledgor” means any of them.

 

Pledgor Guarantee” means a limited recourse Guarantee made by each Pledgor from time to time in favour of the Agent for the benefit of the Lender Secured Parties, the recourse under such limited recourse Guarantee being limited to the Pledgor’s interests in the Equity Securities or Equity Securities Equivalents of the Parent under and pursuant to the Pledge to which it is a party.

 

PPSA” means the Personal Property Security Act (Alberta) and all regulations thereto, as the same may from time to time be in effect and the personal property security legislation of any other province or territory of Canada to the extent it may be required to apply to any item or items of Collateral.

 

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

 

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

 

(a)                                 the rate of interest per annum established from time to time by the Agent as the reference rate of interest in effect at its principal office in Toronto for the determination of interest rates that the Agent will charge for commercial loans in Canadian Dollars made in Canada; and

 

(b)                                 the rate of interest per annum equal to the average annual yield rate for one month Canadian Dollar bankers’ acceptances (expressed for such purpose as a yearly rate per annum in accordance with Section 5.3) which rate is shown on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuters Monitor Money Rates Service at 10:00 a.m. (Toronto time) on such day or, if such day is not a Banking Day, on the immediately preceding Banking Day, plus 1.00% per annum.

 

Principal Borrower” means Kinder Morgan Cochin ULC and its successors.

 

Project” means the development, construction, completion, testing and commissioning by the Principal Borrower and/or any Affiliate (current or to be formed) thereof (including the NEB Reserve Borrower) of the proposed project to expand the Trans Mountain pipeline system in respect of which the NEB issued its Certificate of Public Convenience and Necessity on December 1, 2016.

 

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Project Budget” means the “Project Budget” in respect of the Project, attached hereto as Schedule M.

 

Project Completion” means that:

 

(a)                                 the Project has been granted all leave to open(s) as required by the NEB;

 

(b)                                 the “Commencement Date” shall have occurred under each of the Project’s facility support agreements;

 

(c)                                  all Project Costs then due and payable and which were necessary to achieve Project Completion have been paid, except with respect to required statutory holdbacks;

 

(d)                                 any performance related completion tests under the Material EPC Agreements and other material construction agreements in respect of the Project have been satisfied; and

 

(e)                                  berth 3 of the Westridge Marine Terminal has been completed.

 

Project Completion Date” means the date on which Project Completion occurs, as certified in writing by the Independent Engineer.

 

Project Costs”  means the costs for the design, development, construction, completion, testing and commissioning of the Project necessary to achieve Project Completion, including, without limitation, interest costs during construction (other than interest accruing after the “Commencement Date” (as defined in each Transportation Service Agreements), to the extent not capitalized in accordance with GAAP), all fees and expenses relating to the establishment of the Construction Facility and the Contingent Facility, the acquisition of insurance for the Project and, for certainty, Punch List Items and further including all legal costs and expenses relating to any of the foregoing.

 

Project Permit Conditions” means: (a) the conditions attached to the Certificate of Public Convenience and Necessity issued by the NEB on December 1, 2016; and (b) the conditions attached to the Environmental Assessment Certificate from the British Columbia Environmental Assessment Office issued by the Minister of Environment, on behalf of the British Columbia Cabinet on January 10, 2017, in each case, as in effect on the Closing Date.

 

Projected Project Completion Date” means, as of any date, the then reasonably anticipated date of Project Completion, which, as at the Closing Date, is April 30, 2020.

 

Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

 

Punch List Items” means the final definitive list of items of work remaining to be performed or corrected in relation to the completion of the construction of the Project, which list shall be declared in writing to the Agent by the Principal Borrower prior to the last Drawdown Date

 

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under the Construction Facility or the Contingent Facility, as applicable, and which list shall be approved by the Agent, in consultation with the IE, each acting reasonably.

 

Purchase Money Obligation” means any monetary obligation created or assumed as part of the purchase price of Property, whether or not secured, provided that any Purchase Money Security Interest incurred in respect of such obligation shall not extend to any Property other than the Property acquired in connection with which such obligation was created or assumed and fixed improvements, if any, erected or constructed thereon and the proceeds thereof.

 

Purchase Money Security Interest” means:

 

(a)                                 a Lien taken or reserved in Property to secure payment of all or part of its purchase price or the cost of construction of any improvement thereon; or

 

(b)                                 a Lien taken in Property by a Person who gives value for the purpose of enabling the relevant Obligor to acquire rights in such Property, to the extent that the value is applied to acquire those rights;

 

but does not include a Capital Lease or an operating lease.

 

RBC” means Royal Bank of Canada.

 

Register” has the meaning attributed thereto in Section 16.2(c).

 

Related Parties” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents and trustees of such Person and of such Person’s Affiliates.

 

Release” means any release, spill, emission, leak, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment including the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or sub-surface strata.

 

Required Lenders” means (a) if no Event of Default has occurred and is continuing, Lenders holding more than 662/3% of the Total Commitment and (b) if an Event of Default has occurred and is continuing, Lenders holding more than 662/3% of the Equivalent Amount in Canadian Dollars of the Outstanding Principal under the Credit Facilities.

 

Required Permits” means all Governmental Authorizations which are necessary at any given time:

 

(a)                                 in connection with the construction (to the current state of construction), development, operation, business or ownership of the Project;

 

(b)                                 in connection with the operation, business or ownership of the Closing Date Business;

 

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(c)                                  for the Principal Borrower and each of its Restricted Subsidiaries to own and operate its property, assets, rights and interests or to carry on its business and affairs; or

 

(d)                                 for the Principal Borrower’s observance and performance of its obligations under the Material Project Agreements,

 

provided that, for certainty, Required Permits shall not include any Governmental Authorization which has been determined by a court of competent jurisdiction to no longer be required or applicable to the Project or the subject matter thereof or any of the foregoing from and after the date of such determination, but for greater certainty only until an appellate court of competent jurisdiction determines it to again be applicable thereto (including, without limitation, as a result of a provincial, municipal or local Governmental Authorization being in conflict with a Governmental Authorization of the Government of Canada or another federal Canadian Governmental Authority).

 

Required Working Capital Facility Lenders” means (a) if no Event of Default has occurred and is continuing, Working Capital Facility Lenders holding more than 662/3% of the Total Working Capital Facility Commitment and (b) if an Event of Default has occurred and is continuing, Working Capital Facility Lenders holding more than 662/3% of the Outstanding Principal under the Working Capital Facility.

 

Restricted Subsidiary” means any Subsidiary of KMCL or the Principal Borrower that:

 

(a)                                 directly owns any Equity Securities in any other Obligor;

 

(b)                                 is the general partner of a limited partnership or general partnership that is an Obligor;

 

(c)                                  that owns any material assets that are required to perform any Obligor’s obligations under a transportation services agreement or other services agreements in connection with the Project or the Closing Date Business; or

 

(d)                                 has been designated by the Principal Borrower as a Restricted Subsidiary pursuant to Section 11.1.

 

As of the Closing Date, the Restricted Subsidiaries are Trans Mountain Pipeline ULC, KM Canada Terminals GP ULC, KM Canada Rail Holdings GP Limited, Trans Mountain (Jet Fuel) Inc., Kinder Morgan Canada Inc., Trans Mountain Pipeline L.P., KM Canada Marine Terminal Limited Partnership, KM Canada North 40 Limited Partnership, Base Line Terminal East Limited Partnership, KM Canada Edmonton South Rail Terminal Limited Partnership, KM Canada Edmonton North Rail Terminal Limited Partnership and Trans Mountain Pipeline (Puget Sound) LLC.

 

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Rollover” means:

 

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

 

(b)                                 with respect to Bankers’ Acceptances, the issuance of new Bankers’ Acceptances or the making of new BA Equivalent Advances (subject to the provisions hereof) in respect of all or any portion of Bankers’ Acceptances (or BA Equivalent Advances made in lieu thereof) maturing at the end of the Interest Period applicable thereto, all in accordance with Article 5; and

 

(c)                                  with respect to a Letter of Credit, the extension or replacement of such Letter of Credit, provided that (i) the beneficiary remains the same, (ii) the undrawn face amount is not increased and (iii) the other principal terms thereof (other than the expiry date) remain the same.

 

Rollover Date” means:

 

(a)                                 with respect to any LIBO Rate Loan or Bankers’ Acceptances, the date of commencement of a new Interest Period applicable to such Loan and which shall be a Banking Day; and

 

(b)                                 with respect to any Letter of Credit, the date of any extension or replacement thereof which constitutes a Rollover.

 

S&P” means S&P Global Ratings, a division of S&P Global Inc., its Affiliates and their respective successors.

 

Sale Leaseback” means any arrangement with any Person providing for the leasing by any Obligor of any Property, which Property has been or is to be sold or transferred by such Obligor to such Person in contemplation of such leasing.

 

Sanctioned Country” means, at any time, a country, region or territory which is the subject or target of any Sanctions.

 

Sanctioned Person” means, at any time, any Person listed in any Sanctions-related list of designated Persons maintained by any Sanctions Authority, in all cases, to the extent such list and the maintenance thereof would not violate Applicable Law in Canada (or in the case of Obligors who are incorporated or formed, or otherwise carry on business, in the United States, Applicable Law in the United States).

 

Sanctions” means, solely in respect of the business activities of each of the Obligors or its respective Subsidiaries, economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by a Sanctions Authority that are applicable to each Obligor or its respective Subsidiaries; provided however that, with respect to economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by any Sanctions Authority outside of Canada (or in the case of Obligors who are resident, or

 

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otherwise carry on business, in the United States, the United States), only to the extent such sanctions or trade embargoes would not violate Applicable Law in Canada (or in the case of Obligors who are incorporated or formed, or otherwise carry on business, in the United States, Applicable Law in the United States).

 

Sanctions Authority” means any of: (i) the Canadian government; (ii) the United States government; (iii) the United Nations Security Council (to the extent it would not violate Applicable Law in Canada); (iv) the European Union; (v) the United Kingdom; or (vi) the respective governmental institutions, departments and agencies of any of the foregoing, and “Sanctions Authorities” means all of the foregoing, collectively.

 

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

 

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

 

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

 

Secured Obligations” has the meaning given to such term in the Collateral Agency and Intercreditor Agreement.

 

Secured Parties” has the meaning given to such term in the Collateral Agency and Intercreditor Agreement.

 

Securities” means collectively, all Equity Securities, Equity Securities Equivalents, voting trust certificates, bonds, debentures, instruments and other evidence of Funded Debt, whether or not secured, convertible or subordinated, all certificates of interest, share or participation in, all certificates for the acquisition of, and all warrants, options, and other rights to acquire, any such securities.

 

Security Documents” means, collectively, the guarantees, mortgages, debentures, debenture pledge agreements, pledge agreements, negative pledge agreements, general security agreements, assignments and other security agreements executed and delivered, or required to be executed and delivered to the Collateral Agent or the Agent, by each of the Obligors and the Pledgors under and pursuant to this Agreement to secure the Lender Secured Obligations, including each Consent and Acknowledgement.

 

Series of Secured Debt” has the meaning given to such term in the Collateral Agency and Intercreditor Agreement.

 

Similar Business” means the Project and the Closing Date Business, or any business that is reasonably similar, related, synergistic, incidental, or ancillary thereto.

 

Solvent” means, with respect to any Person as of any date, that, as of such date, such Person: (a) is able to meet its obligations as they generally become due, (b) has not ceased paying its current obligations in the ordinary course of business as they generally become due or (c)

 

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otherwise has not incurred, and does not intend to incur, or believe that it will incur indebtedness (including current obligations) beyond its ability to pay principal and interest on such indebtedness as it becomes due (whether at maturity or otherwise).

 

Spot Rate” means, in relation to the conversion of one currency into another currency, the spot rate of exchange for such conversion as quoted by the Bank of Canada at the close of business on the Banking Day that such conversion is to be made (or, if such conversion is to be made before close of business on such Banking Day, then at the close of business on the immediately preceding Banking Day), and, in either case, if no such rate is quoted, the spot rate of exchange quoted for wholesale transactions by the Agent on the Banking Day such conversion is to be made in accordance with its normal practice.

 

Subsidiary” means, with respect to a Person:

 

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

 

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

 

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

 

Unless otherwise specified herein, “Subsidiary” refers to a Subsidiary of the Borrower.

 

Successor” has the meaning attributed thereto in Section 9.2(d).

 

Successor Transaction” has the meaning attributed thereto in Section 9.2(d).

 

Swap Lender” means any Lender or its Affiliate that enters into a Lender Hedge Agreement (regardless of whether such Lender ceases to be a Lender after such Lender Hedge Agreement is entered into), but excluding, for certainty, any Lender Hedge Agreement entered into by an Obligor with any Lender after such Lender’s Commitment has been fully cancelled in accordance with the terms hereof or after such Lender has assigned all of its rights to the Credit Facilities in accordance with Section 16.2.

 

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Swap Obligation” means, with respect to any Obligor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

Takeover” means an offer to acquire (which shall include an offer to purchase securities, solicitation of an offer to sell securities, an acceptance of an offer to sell securities, whether or not the offer to sell was solicited, or any combination of the foregoing) outstanding Equity Securities of any Person (the “Target”) other than (a) a corporation or limited partnership whose Equity Securities are directly or indirectly held by one Person, or (b) a Person that is a private issuer or not a reporting issuer under applicable securities legislation and the “take-over bid” is exempt from the requirements of such legislation) and which constitutes a “take-over bid” pursuant to applicable securities legislation, including the Canada Business Corporations Act if the Target is governed thereby.

 

Target” has the meaning attributed thereto in the definition of Takeover.

 

Tax Act” means the Income Tax Act (Canada).

 

Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholdings), assessments, fees or other charges imposed by any Governmental Authority, and any interest, fines, penalties or additions to taxes with respect to any of the foregoing.

 

Term Conversion Date” means the last day of the second month following the month in which Projection Completion occurs.

 

Third Party Proceeds” has the meaning attributed thereto in Section 7.1(b)(iii).

 

Threshold Amount” means Cdn.$50,000,000 (or the Equivalent Amount thereof in any other currency).

 

Total Borrower Equity Financing” means, as at any date of determination, the aggregate (without duplication) of the following:

 

(a)                               On-Hand Funding;

 

(b)                               Net Forecasted Retained Cash Flow; and

 

(c)                                the Nominated Equity Amount (as defined in the Equity Nomination and Support Agreement), being the amount of capital that KMI has committed to contribute to the Principal Borrower or other Obligor in the form of a subscription for Equity Securities of the Principal Borrower or other Obligor or by way of Permitted Subordinated Loans to the Principal Borrower.

 

Total Commitment” means the aggregate of the Total Construction Facility Commitment, the Total Working Capital Facility Commitment and the Total Contingent Facility Commitment.

 

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Total Contingent Facility Commitment” means the aggregate of the Contingent Facility Commitments of each of the Contingent Facility Lenders, as increased, decreased, cancelled or terminated from time to time pursuant to this Agreement, and which as of the Closing Date is Cdn.$1,000,000,000.

 

Total Construction Facility Commitment” means the aggregate of the Construction Facility Commitments of each of the Construction Facility Lenders, as increased, decreased, cancelled or terminated from time to time pursuant to this Agreement, and which as of the Closing Date is Cdn.$4,000,000,000.

 

Total Working Capital Facility Commitment” means the aggregate of the Working Capital Facility Commitments of each of the Working Capital Facility Lenders, as increased, decreased, cancelled or terminated from time to time pursuant to this Agreement, which as of the Closing Date is Cdn.$500,000,000.

 

United States” and “U.S.” mean the United States of America.

 

United States Dollars”, “US Dollars” and “US$” means the lawful money of the United States.

 

Unreimbursed Amount” has the meaning attributed thereto in Section 6.3(a).

 

Unrestricted Subsidiary” means any other Subsidiary of KMCL or the Principal Borrower that is not a Restricted Subsidiary.

 

US Base Rate” means, on any day, the greatest of:

 

(a)                                 the rate of interest per annum established from time to time by the Agent as the reference rate of interest in effect at its principal office in Toronto for the determination of interest rates that the Agent will charge for commercial loans in United States Dollars made in Canada;

 

(b)                                 the rate of interest per annum for such day or, if such day is not a Banking Day, on the immediately preceding Banking Day, equal to the sum of the Federal Funds Rate (expressed for such purpose as a yearly rate per annum in accordance with Section 4.9), plus 0.50% per annum; and

 

(c)                                  the LIBO Rate on such day for one month LIBO Rate Loans plus 1.00%.

 

USBR Loan” means an Advance in, or Conversion into, United States Dollars made by the Applicable Lenders under a Credit Facility to a Borrower with respect to which the applicable Borrower has specified or a provision hereof requires that interest is to be calculated by reference to the US Base Rate.

 

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Voting Securities” means:

 

(a)                                 shares of any class of any corporation or other Equity Securities of any other Person which carries voting rights to elect the board of directors (or other persons performing similar functions) under any circumstances; and

 

(b)                                 an interest in a general partnership, limited partnership, trust, limited liability company, joint venture or similar Person which entitles the holder of such interest to receive a share of the profits, or on dissolution or partition, of the assets, of such Person.

 

Working Capital Facility” has the meaning attributed thereto in Section 2.3(a).

 

Working Capital Facility Commitment” means the aggregate of the Working Capital Facility Commitments of each of the Working Capital Facility Lenders, as increased, decreased, cancelled or terminated from time to time pursuant to this Agreement, which as of the Closing Date is Cdn.$500,000,000.

 

Working Capital Facility Lender” means, at any time, any Lender that has a Working Capital Commitment or Working Capital Loan at such time.

 

Working Capital Facility Loan” means a Loan under the Working Capital Facility.

 

Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

1.2                               Headings; Articles and Sections

 

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

 

1.3                               Number; persons; including; successors; in writing

 

Words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine and neuter genders and vice versa, words importing persons shall include individuals, partnerships, associations, trusts, unincorporated organizations and corporations and vice versa and words and terms denoting inclusiveness (such as “include” or “includes” or “including”), whether or not so stated, are not limited by their context or by the words or phrases which precede or succeed them.  References herein to any Person shall, unless the context otherwise requires, include such Person’s successors and assigns permitted under the Loan Documents.  References herein to “in writing”

 

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or “written” includes printing, typewriting or any electronic means of communication capable of being visibly reproduced at the point of reception, including facsimile.

 

1.4                               Accounting Principles

 

Wherever in this Agreement reference is made to “generally accepted accounting principles” or “GAAP”, such reference shall be deemed to be to the recommendations at the relevant time of the Financial Accounting Standards Board, or any successor organization, applicable on a consolidated basis (unless otherwise specifically provided or contemplated herein to be applicable on an unconsolidated basis) as at the date on which such calculation is made or required to be made in accordance with such principles. Where the character or amount of any asset or liability or item of revenue or expense or amount of equity or unitholder equity is required to be determined, or any consolidation or other accounting computation is required to be made for the purpose of this Agreement or any other Loan Document, such determination or calculation shall, to the extent applicable and except as otherwise specified herein or as otherwise agreed in writing by the parties, be made in accordance with generally accepted accounting principles applied on a consistent basis.

 

1.5                               Changes in Generally Accepted Accounting Principles

 

(a)                                 If the Principal Borrower, the Agent or the Required Lenders determine at any time that any financial calculation or other amount calculated based on references to amounts in financial statements required to be determined hereunder would be materially different if such amount were determined in accordance with:

 

(i)                                   GAAP intended to be applied by the Principal Borrower, KMCL or the Parent in respect of its Financial Statements on the Closing Date (“Old GAAP”), instead of

 

(ii)                                GAAP subsequently in effect and applied by the Principal Borrower, KMCL or the Parent in respect of its Financial Statements and utilized for purposes of determining such amount,

 

then written notice of such determination shall be delivered by the Principal Borrower to the Agent, in the case of a determination by the Principal Borrower, KMCL or the Parent, or by the Agent to the Principal Borrower, in the case of a determination by the Agent or the Required Lenders.

 

(b)                                 If the Principal Borrower, KMCL or the Parent adopts a change in an accounting policy in the preparation of its Financial Statements in order to conform to accounting recommendations, guidelines, or similar pronouncements, or legislative requirements, and such change would require disclosure thereof under Old GAAP, or would reasonably be expected to materially and adversely affect (i) the rights of, or the protections afforded to, the Agent or the Required Lenders hereunder or (ii) the position either of the Principal Borrower or of the Agent or the Required Lenders hereunder, the Principal Borrower shall so notify the Agent, describing the nature of the change and its effect on the current and immediately prior year’s Financial Statements in accordance with Old GAAP and in detail

 

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sufficient for the Agent and the Required Lenders to make the determination required of them in the following sentence. If any of the Principal Borrower, the Agent or the Required Lenders determine at any time that such change in accounting policy results in a material adverse change either (i) in the rights of, or protections afforded to, the Agent or the Required Lenders intended to be derived, or provided for, hereunder or (ii) in the position either of the Principal Borrower or of the Agent and the Required Lenders hereunder, written notice of such determination shall be delivered by the Principal Borrower to the Agent, in the case of a determination by the Principal Borrower, or by the Agent to the Principal Borrower, in the case of a determination by the Agent or the Required Lenders.

 

(c)                                  Upon the delivery of a written notice pursuant to Section 1.5(a) or Section 1.5(b) the Principal Borrower and the Agent on behalf of the Required Lenders shall meet to consider the impact of such change in Old GAAP or such change in accounting policy (in each case, an “Accounting Change”), as the case may be, on the rights of, or protections afforded to, the Agent and the Required Lenders or on the position of the Principal Borrower or of the Agent and the Required Lenders and shall in good faith negotiate to execute and deliver an amendment or amendments to this Agreement in order to preserve and protect the intended rights of, or protections afforded to, the Principal Borrower or the Agent and the Required Lenders (as the case may be) on the date hereof or the position of the Principal Borrower or the Agent and the Required Lenders (as the case may be); provided that, until this Agreement has been amended in accordance with the foregoing, then for all purposes hereof, the applicable changes from Old GAAP or in accounting policy (as the case may be) shall be disregarded hereunder and any amount required to be determined hereunder shall, nevertheless, continue to be determined under Old GAAP and the Principal Borrower’s, KMCL’s or the Parent’s as the case may be, prior accounting policy. If the Principal Borrower and the Agent on behalf of the Required Lenders do not (for any reason whatsoever) mutually agree (in their respective sole discretions, without any obligation to so agree) on such amendment or amendments to this Agreement within 60 days following the date of delivery of such written notice, the Principal Borrower, KMCL or the Parent as the case may be, shall either continue to provide financial statements in accordance with Old GAAP or provide all such financial information as is reasonably required (or requested by the Agent acting reasonably) in order for any amount required to be determined hereunder to be determined in accordance with Old GAAP and/or such prior accounting policy and, for all purposes hereof, the applicable changes from Old GAAP or in accounting policy (as the case may be) shall be disregarded hereunder and any amount required to be determined hereunder shall, nevertheless, continue to be determined under Old GAAP and/or such prior accounting policy.

 

(d)                                 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 financial calculation hereunder, and subsequently, as provided above, the method of calculating such financial

 

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calculation is revised in response to such Accounting Change, or the amount to be determined pursuant to such financial calculation is to be determined without giving effect to such Accounting Change, the Principal Borrower shall deliver a revised Compliance Certificate. Any Event of Default which arises as a result of the Accounting Change and which is cured by this Section 1.5 shall be deemed never to have occurred.

 

1.6                               References to Documents and Applicable Law

 

Unless otherwise expressly provided herein, (a) references to organizational documents, agreements (including the Loan Documents and the Material Project Agreements) and instruments, licences or other documents shall be deemed to include all subsequent amendments, restatements, amendment, and restatements, extensions, supplements, modifications, replacements, refinancings, renewals, or increases thereof, but only to the extent that such amendments, restatements, amendment, and restatements, extensions, supplements, modifications, replacements, refinancings, renewals, or increases are not prohibited by the Loan Documents and (b) references to any Applicable Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting such Applicable Laws.

 

1.7                               Per Annum and Currency Calculations

 

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

 

(b)                                 Unless otherwise specified herein, all references to currency shall be deemed to refer to Cdn. Dollars and, for the purposes of all monetary thresholds in Article 7, Article 8, Article 9, Article 10, Article 11 and Article 12 (including the definitions used therein), all references to an amount in Cdn. Dollars shall be deemed to include the Equivalent Amount in US Dollars or any other applicable currency.

 

1.8                               Letter of Credit Amounts

 

Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated undrawn amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any ancillary document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

 

1.9                               Schedules

 

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

 

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Schedule A

Lenders and Commitments

 

 

 

Schedule B

Form of Assignment and Assumption

 

 

 

Schedule C

Form of Compliance Certificate

 

 

 

Schedule D

Form of Conversion/Rollover/Repayment Notice

 

 

 

Schedule E

Form of Discount Note

 

 

 

Schedule F-1

Form of Drawdown Notice for Working Capital Facility

 

 

 

Schedule F-2

Form of Drawdown Notice for Construction Facility and Contingent Facility

 

 

 

Schedule G

Form of Consent and Acknowledgement (Shipper)

 

 

 

Schedule H-1

Form of Obligor Guarantee

 

 

 

Schedule H-2

Form of Pledgor Guarantee

 

 

 

Schedule I

Organization Chart

 

 

 

Schedule J

Relevant Jurisdictions

 

 

 

Schedule K

Existing Project Related Proceedings

 

 

 

Schedule L

Required Permits

 

 

 

Schedule M

Project Budget

 

 

 

Schedule N

Project Real Property Rights

 

 

 

Schedule O-1

Form of Independent Engineer Certificate for Drawdown

 

 

 

Schedule O-2

Form of Independent Engineer Certificate for Restricted Payments

 

 

 

Schedule P

Form of Principal Borrower’s Certificate for Restricted Payments

 

 

Each reference to a Schedule herein shall be deemed to refer to such schedule as it is updated from time to time as required hereunder.

 

ARTICLE 2
CREDIT FACILITIES

 

2.1                               Construction Facility

 

(a)                                 Establishment of Construction Facility.  Subject to this Agreement, the Construction Facility Lenders hereby agree to establish in favour of the Principal Borrower a senior secured revolving construction credit facility (such facility, the “Construction Facility”) to be made available in accordance with this Agreement, provided that:

 

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(i)                                   the obligation of each Construction Facility Lender to make Advances under the Construction Facility shall be several and shall be limited to each such Construction Facility Lender’s Construction Facility Commitment, and

 

(ii)                                subject to Section 7.3, at no time shall the Equivalent Amount in Cdn. Dollars of the Outstanding Principal under the Construction Facility exceed the Total Construction Facility Commitment.

 

(b)                                 Availability and Purpose. The Construction Facility shall, subject to this Agreement, be available by way of multiple Drawdowns on and after the Closing Date on a revolving basis prior to the Term Conversion Date, and the Principal Borrower may borrow, repay and reborrow Cdn. Dollars or US Dollars, may issue, repay and re-issue Bankers’ Acceptances or BA Equivalent Advances, provided that (collectively, the “Construction Facility Funding Conditions”):

 

(i)                                   no more than one Drawdown under the Construction Facility may be requested in any calendar month;

 

(ii)                                each Drawdown under the Construction Facility shall only be used to fund, in whole or in part, Project Costs that are due (including the reimbursement to any Affiliate of the Principal Borrower who has advanced loans to an Obligor between the IPO Date and the Closing Date to fund Project-related Capital Expenditures of the Obligors during such period) as well as projected Project Costs for up to the next 60 day period and the maximum amount of each requested Drawdown shall not exceed the amount of such due and projected Project Costs;

 

(iii)                             Consolidated Total Funded Debt (excluding the Equivalent Amount in Canadian Dollars of the Outstanding Principal under the Working Capital Facility and Permitted Incremental Debt) shall not exceed 60% of the total pro forma Project Costs incurred and to be incurred over the period noted in clause (ii) above as set out in the applicable Drawdown Notice and for certainty including the total incremental Project Costs requested to be funded as set out in such Drawdown Notice; and

 

(iv)                            the Total Borrower Equity Financing, together with projected undrawn availability under the Construction Facility and the Contingent Facility over the next following 6 month period (and subject to the limitations on the permitted amount of Consolidated Total Funded Debt set out in clause (iii) above), is no less than the projected Project Costs for the next following 6 month period (the “Forward Funding Test”).

 

(c)                                  Drawdowns following Project Completion.  Each Drawdown under the Construction Facility requested by the Principal Borrower following the Project Completion Date shall only be used to fund, in whole or in part, Punch List Items, provided that, the maximum aggregate the Equivalent Amount in Canadian

 

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Dollars of the Outstanding Principal of all Drawdowns requested under the Construction Facility in respect of Punch List Items, together with all Drawdowns requested under the Contingent Facility in respect of Punch List Items, shall not exceed Cdn.$200,000,000 (or the Equivalent Amount in US Dollars) unless otherwise agreed by the Agent, acting reasonably and in consultation with the Independent Engineer.

 

(d)                                 Conversion to Term Loan.  The undrawn portion of the Construction Facility will be automatically cancelled at 5:01 p.m. (Toronto time) on the Term Conversion Date.  Effective at such time, the Construction Facility will cease to be a revolving type facility and the Outstanding Principal thereunder will become a non-revolving term loan in an equivalent principal amount.

 

2.2                               Contingent Facility

 

(a)                                 Establishment of Contingent Facility.  Subject to this Agreement, the Contingent Facility Lenders hereby agree to establish in favour of the Borrowers a senior secured revolving construction credit facility (such facility, the “Contingent Facility”) to be made available in accordance with this Agreement, provided that:

 

(i)                                   the obligation of each Contingent Facility Lender to make Advances under the Contingent Facility shall be several and shall be limited to each such Contingent Facility Lender’s Contingent Facility Commitment;

 

(ii)                                subject to Section 7.3, at no time shall the Equivalent Amount in Cdn. Dollars of the Outstanding Principal under the Contingent Facility exceed the Total Contingent Facility Commitment; and

 

(iii)                             the NEB Reserve Borrower shall only be permitted to request an Advance under the Contingent Facility for the purpose prescribed in Section 2.2(b)(i).

 

(b)                                 Availability and Purpose.  The Contingent Facility shall, subject to this Agreement, be available by way of multiple Drawdowns on and after the Closing Date on a revolving basis prior to the Term Conversion Date, and the Borrowers may borrow, repay and reborrow Cdn. Dollars or US Dollars, may issue, repay and re-issue Bankers’ Acceptances or BA Equivalent Advances, provided that (collectively, the “Contingent Facility Funding Conditions”):

 

(i)                                   except as provided in clause (ii) below, Drawdowns under the Contingent Facility shall only be requested by the NEB Reserve Borrower and used to satisfy the NEB Financial Resources Requirement in an aggregate principal amount of up to Cdn.$500,000,000 (in each case, a “NEB Reserve Drawdown”); and

 

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(ii)                                  Drawdowns under the Contingent Facility may also be used to fund Project Costs if the Construction Facility has been fully drawn at the time of a Drawdown under the Contingent Facility and, in such case:

 

(A)                             no more than one Drawdown under the Contingent Facility may be requested in any calendar month and not in the same calendar month in which a Drawdown has been made under the Construction Facility;

 

(B)                             each Drawdown under the Contingent Facility shall only be used to fund, in whole or in part, Project Costs that are due as well as projected Project Costs for up to the next 60 day period and the maximum amount of each requested Drawdown shall not exceed the amount of such due and projected Project Costs;

 

(C)                             Consolidated Total Funded Debt (excluding the Equivalent Amount in Canadian Dollars of the Outstanding Principal under the Working Capital Facility and Permitted Incremental Debt) shall not exceed 60% of the total pro forma Project Costs incurred and to be incurred over the period noted in clause (B) above as set out in the applicable Drawdown Notice and for certainty including the total incremental Project Costs requested to be funded as set out in such Drawdown Notice; and

 

(D)                             the Forward Funding Test has been satisfied.

 

(c)                                  NEB Reserve Drawdowns and Cancellation.  Immediately upon any Advance being made by the Contingent Facility Lenders pursuant to Section 2.2(b)(ii), the NEB Reserve Borrower shall not be permitted to request any additional NEB Reserve Drawdowns pursuant to Section 2.2(b)(i) and the NEB Reserve Availability shall thereafter be immediately and permanently cancelled; provided however that the Total Contingent Facility Commitment shall not be reduced solely as a result thereof.

 

(d)                                 Drawdowns following Project Completion.  Each Drawdown under the Contingent Facility requested by the Principal Borrower following Project Completion shall only be used to fund, in whole or in part, Punch List Items, provided that, the maximum aggregate Equivalent Amount in Canadian Dollars of the Outstanding Principal of all Drawdowns requested under the Contingent Facility in respect of Punch List Items, together with all Drawdowns requested under the Construction Facility in respect of Punch List Items, shall not exceed Cdn.$200,000,000 (or the Equivalent Amount in US Dollars) unless otherwise agreed by the Agent, acting reasonably and in consultation with the Independent Engineer.

 

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2.3                               Working Capital Facility

 

(a)                                 Establishment of Working Capital Facility. Subject to this Agreement, the Working Capital Facility Lenders hereby agree to establish in favour of the Principal Borrower a revolving credit facility (such facility, the “Working Capital Facility”) to be made available in accordance with this Agreement until the Maturity Date, provided that:

 

(i)                                   the obligation of each Working Capital Facility Lender to make Advances under the Working Capital Facility shall be several and shall be limited to each such Working Capital Facility Lender’s Working Capital Facility Commitment, and

 

(ii)                                subject to Section 7.3, at no time shall the Equivalent Amount in Cdn. Dollars of the Outstanding Principal under the Working Capital Facility exceed the Total Working Capital Facility Commitment.

 

(b)                                 Availability and Purpose.  The Working Capital Facility shall, subject to this Agreement, be available by way of multiple Drawdowns on and after the Closing Date on a revolving basis prior to the Maturity Date, and the Principal Borrower may borrow, repay and reborrow Cdn. Dollars or US Dollars, may issue, repay and re-issue Bankers’ Acceptances or BA Equivalent Advances and may obtain, cancel and re-obtain Letters of Credit thereunder, provided that:

 

(i)                                   each Drawdown shall be used for working capital requirements and other general corporate purposes of the Obligors, including Capital Expenditures, unrelated to the Project;

 

(ii)                                to pay fees and expenses incurred in connection with the Project (but not in any event for Capital Expenditures related to the Project prior to the Term Conversion Date); and

 

(iii)                             to make repayments of NEB Reserve Drawdowns in accordance with Section 7.1(e).

 

(c)                                  Increase in Working Capital Facility Commitments.  The Principal Borrower may at any time and from time to time add additional financial institutions hereunder as Working Capital Facility Lenders or, with the consent of the applicable Working Capital Facility Lender, increase the Working Capital Facility Commitment of such Working Capital Facility Lender, and, in each case, thereby increase the Total Working Capital Facility Commitment provided that at the time of any such addition:

 

(i)                                   no Default or Event of Default has occurred and is continuing or would reasonably be expected to result therefrom;

 

(ii)                                the Total Working Capital Facility Commitment, as a result of the application of this Section 2.3(c) or otherwise, shall not at any time exceed

 

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Cdn.$750,000,000 minus the then Canadian Dollar Equivalent of the outstanding principal amount of Permitted Incremental Debt;

 

(iii)                             the Agent and each Fronting Lender has consented to such financial institution becoming a Working Capital Facility Lender or, in the case of an existing Working Capital Facility Lender, increasing its Working Capital Facility Commitment, such consent not to be unreasonably withheld;

 

(iv)                            the Working Capital Facility Commitment of a new financial institution being added as a Working Capital Facility Lender pursuant to this Section 2.3(c) shall be no less than Cdn.$10,000,000;

 

(v)                               concurrently with the addition of a financial institution as an additional Working Capital Facility Lender or the increase of a Working Capital Facility Lender’s Working Capital Facility Commitment, such financial institution or Working Capital Facility Lender, as the case may be, shall purchase from each other Working Capital Facility Lender, such portion of the Outstandings under the Working Capital Facility owed to each Working Capital Facility Lender as is necessary to ensure that the Outstandings under the Working Capital Facility owed to all Working Capital Facility Lenders and including therein such additional financial institution and the increased Working Capital Facility Commitment of any Working Capital Facility Lender, are in accordance with the Applicable Percentage of all such Working Capital Facility Lenders (including any new financial institution and the increased Working Capital Facility Commitment of any Working Capital Facility Lender) and such financial institution shall execute such documentation as is required by the Agent, acting reasonably, to novate such financial institution as a Working Capital Facility Lender hereunder; provided that with respect to any portion of such Outstandings which are outstanding by way of Bankers’ Acceptance or LIBO Rate Loans, the new financial institution or such Working Capital Facility Lender shall provide an indemnity to the other Working Capital Facility Lenders (provided that no such indemnity may exceed two months in duration unless agreed to by all of the affected Working Capital Facility Lenders) in order to ensure such Bankers’ Acceptances and LIBO Rate Loans are outstanding in accordance with the new Applicable Percentages of all Working Capital Facility Lenders; and

 

(vi)                            the Principal Borrower has provided to the Agent a certified copy of a directors’ resolution of the Principal Borrower and each other Obligor authorizing any such increase in the Total Working Capital Facility Commitment (which may be the original directors’ resolutions authorizing the Credit Facilities hereunder) together with a legal opinion from Borrowers’ Counsel with respect thereto in substantially the same form, mutatis mutandis, as the opinion delivered on the Closing Date.

 

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2.4                               Availments.

 

Advances under each Credit Facility (except as indicated otherwise below) shall be made by way of:

 

(a)                                 Prime Loans;

 

(b)                                 USBR Loans;

 

(c)                                  Bankers’ Acceptances (and BA Equivalent Advances in accordance with Section 5.9);

 

(d)                                 LIBO Rate Loans; and

 

(e)                                  Letters of Credit (under the Working Capital Facility only),

 

provided that, subject to Section 7.3, at no time shall the Equivalent Amount in Cdn. Dollars of the Outstanding Principal under the Credit Facilities exceed the Total Commitment.

 

2.5                               Drawdowns — Notices and Limitations

 

A Borrower may request Drawdowns upon the following terms and conditions:

 

(a)                                 a Borrower may request a Drawdown as follows:

 

(i)                                   in the case of a Prime Loan or a USBR Loan, by delivering a Drawdown Notice to the Agent before 12:00 noon (Toronto time) at least 1 Banking Day prior to the requested Drawdown Date;

 

(ii)                                in the case of a Bankers’ Acceptance or BA Equivalent Advance, by delivering a Drawdown Notice to the Agent before 12:00 noon (Toronto time) at least 2 Banking Days prior to the requested Drawdown Date;

 

(iii)                             in the case of a LIBO Rate Loan, by delivering a Drawdown Notice to the Agent before 12:00 noon (Toronto time) at least 3 Banking Days prior to the requested Drawdown Date; and

 

(iv)                            in the case of a Letter of Credit, by complying with Section 6.2,

 

and provided that notwithstanding the foregoing, for any Drawdown in excess of Cdn.$650,000,000 (or the Equivalent Amount thereof in US Dollars), the Drawdown Notice must be delivered at least 3 Banking Days prior to the requested Drawdown Date;

 

(b)                                 each Drawdown by the Principal Borrower under the Working Capital Facility shall be requested and made available in minimum amounts of not less than:

 

(i)                                   in the case of a Prime Loan or USBR Loan, Cdn.$ or US$1,000,000;

 

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(ii)                                in the case of a LIBO Rate Loan, US$1,000,000;

 

(iii)                             in the case of Bankers’ Acceptances or BA Equivalent Advances, Cdn.$1,000,000 and in multiples of Cdn.$100,000 thereafter; and

 

(iv)                            in the case of a Letter of Credit, no minimum amount applies;

 

(c)                                  each NEB Reserve Drawdown shall be made by way of a Prime Loan or USBR Loan; and

 

(d)                                 Drawdowns will only be made available if all applicable conditions precedent in Article 3 are or will be satisfied on or before the requested Drawdown Date.

 

2.6                               Rollovers and Conversions - Notices and Limitations

 

(a)                                 General Provisions. A Borrower may request Rollovers and Conversions upon the following terms and conditions:

 

(i)                                   a Borrower may request a Rollover or Conversion by delivering a Conversion/Rollover/Repayment Notice with the same prior notice period that would apply if it were obtaining a Drawdown of the relevant type of Loan resulting from such Rollover or Conversion;

 

(ii)                                a Borrower may request a Rollover or Conversion of part only of a Loan, provided that:

 

(A)                             each Loan resulting from such Rollover or Conversion is not less than the relevant Drawdown minimum specified in Section 2.5(b);

 

(B)                             any portion of an existing LIBO Rate Loan or Bankers’ Acceptances which is not rolled over or converted shall be repaid in accordance with the provisions hereof; and

 

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

 

(iii)                             in respect of Conversions of a Loan denominated in one currency to a Loan denominated in another currency, the Principal Borrower shall at the time of the Conversion repay the Loan or portion thereof being converted in the currency in which it was denominated and each Lender may make a further Advance to the Principal Borrower in the other currency;

 

(iv)                            a Rollover/Conversion shall not result in an increase in Outstanding Principal as increases in Outstanding Principal may only be effected by Drawdowns;

 

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(v)                               a Rollover or Conversion of a LIBO Rate Loan may occur only on the last day of the relevant Interest Period for such LIBO Rate Loan (unless the Principal Borrower pays the breakage costs to the Lenders in accordance with Section 7.4(a));

 

(vi)                            no Rollover of or Conversion into a LIBO Rate Loan, Bankers’ Acceptance or Letter of Credit may occur if a Default or Event of Default is then in existence; and

 

(vii)                         a Rollover or Conversion of a Bankers Acceptance may occur only on the maturity date for such Bankers’ Acceptance.

 

(b)                                 LIBO Rate Loans. In anticipation of the expiry of each Interest Period for each LIBO Rate Loan the Principal Borrower shall do one or a combination of the following:

 

(i)                                   request a Rollover of all or part of such LIBO Rate Loan in accordance with Section 2.6(a);

 

(ii)                                request a Conversion of all or part of such LIBO Rate Loan in accordance with Section 2.6(a); or

 

(iii)                             repay all or part of such LIBO Rate Loan before 12:00 noon (Toronto time) on the last day of such Interest Period with notice in accordance with Section 7.1(c).

 

If and to the extent that the Principal Borrower fails to so notify the Agent, or to so pay the relevant LIBO Rate Loan in accordance with the foregoing, the Principal Borrower, in the case of a LIBO Rate Loan, shall be deemed to have requested a Conversion into a USBR Loan, in each case in an amount equal to that portion of the LIBO Rate Loan which is not rolled over, converted or repaid.

 

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

 

(i)                                   (A) request a Rollover of the maturing Bankers’ Acceptances in accordance with Section 2.6(a), and (B) on the maturity date of the maturing Bankers’ Acceptances, pay to the Agent for the account of the Lenders any amount that the Principal Borrower is required to pay under Section 5.6;

 

(ii)                                (A) request a Conversion of the maturing Bankers’ Acceptances to another type of Loan in accordance with Section 2.6(a), and (B) on the maturity date of the maturing Bankers’ Acceptances pay to the Agent for the account of the Lenders an amount equal to the aggregate face amount of such Bankers’ Acceptances; or

 

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(iii)                             on the maturity date of the maturing Banker’s’ Acceptances, pay to the Agent for the account of the Lenders an amount equal to the aggregate face amount of such Bankers’ Acceptances with notice in accordance with Section 7.1(c).

 

If and to the extent that the Principal Borrower fails to notify the Agent or pay the relevant Bankers’ Acceptances in accordance with the foregoing, the Principal Borrower shall be deemed to have requested a Conversion into a Prime Loan in an amount equal to that portion of the Bankers’ Acceptances which is not rolled over, converted or repaid.

 

2.7                               Optional Reduction of Commitments

 

(a)                                 Reduction of Commitments Prior to Project Completion. Prior to the Project Completion Date, the Principal Borrower may, at its option, permanently reduce the Commitments under any Credit Facility by cancelling all or any part of the undrawn portion of such Credit Facility, provided that:

 

(i)                                     in the case of any cancellation and permanent reduction under either the Construction Facility or the Contingent Facility, the Principal Borrower shall be able to demonstrate to the satisfaction of the Agent in consultation with the Independent Engineer, each acting reasonably, that:

 

(A)                             the Total Borrower Equity Financing plus the remaining undrawn Commitments under the Construction Facility and the Contingent Facility (subject to Sections 2.1(b)(iii) and 2.2(b)(ii)(C)) are sufficient to pay any then remaining Project Costs necessary to achieve Project Completion; and

 

(B)                             the Projected Project Completion Date, as confirmed by the Independent Engineer, is anticipated to be attained within 3 months after the proposed date of cancellation (and, for certainty, prior to the Outside Date);

 

(ii)                                  the Principal Borrower shall provide the Agent with at least 10 Banking Days’ prior written notice of any such cancellation (or such shorter period as the Agent may agree);

 

(iii)                               each such cancellation shall be a minimum of Cdn.$5,000,000 and in whole multiples of Cdn.$1,000,000 thereafter;

 

(iv)                              any such cancellation shall be allocated among the Lenders based on their respective Applicable Percentages under the applicable Credit Facility at the time of cancellation; and

 

(v)                                 any cancellation notice shall be irrevocable.

 

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(b)                                 Reduction of Commitments Following Project Completion Date. At any time, and from time to time, following the Project Completion Date, the Principal Borrower may, at its option, permanently reduce the Commitments under any Credit Facility by cancelling all or any part of the undrawn portion of such Credit Facility, provided that:

 

(i)                                   the Principal Borrower shall provide the Agent with at least 3 Banking Days’ prior written notice of any such cancellation (or such shorter period as the Agent may agree);

 

(ii)                                each such cancellation shall be a minimum of Cdn.$5,000,000 and in whole multiples of Cdn.$1,000,000 thereafter;

 

(iii)                             any such cancellation shall be allocated among the Lenders based on their respective Applicable Percentages under the applicable Credit Facility at the time of cancellation; and

 

(iv)                            any cancellation notice shall be irrevocable.

 

2.8                               Several Obligations of Lenders

 

No Lender shall be responsible for the Commitments of any other Lenders. The failure of a Lender to make available its share of any Advance in accordance with this Agreement shall not release any other Lender from its obligations hereunder. Notwithstanding anything to the contrary in this Agreement, no Lender shall be obligated to make Advances under any Credit Facility (based on the Equivalent Amount thereof in Cdn. Dollars) in excess of its applicable Commitment thereunder. The obligation of each Lender to make its Commitment available to the Borrowers under a Credit Facility is a separate obligation between that Lender and the Borrowers and such obligation is not the joint or the joint and several obligation of any other Lender.

 

2.9                               Loans - General

 

(a)                                 Making of Loans. Loans shall be made in such currency and at the time and in the manner requested by the applicable Borrower, subject to this Agreement and upon fulfilment of all conditions precedent to the making of such Loans.

 

(b)                                 Banking Day. No Loans shall be made except on a Banking Day.

 

(c)                                  Time of Advances. All Advances by the Lenders hereunder shall be made to the Agent at the Agent’s Branch in immediately available freely transferable funds in the applicable currency by no later than 3:00 p.m. (Toronto time) on the relevant Drawdown Date. All payments by a Borrower hereunder shall be made to the Agent at the Agent’s Branch in immediately freely transferable funds by no later than 12:00 noon (Toronto time) on the relevant Drawdown Date. Each Borrower shall open and maintain the Borrower’s Accounts for the purpose of receiving Advances and making payments, repayments and prepayments under this Agreement.

 

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(d)                                 Books of Account. The Agent shall open and maintain books of account evidencing all Advances and all other amounts owing by the Borrowers to the Lenders hereunder. The Agent shall enter in the foregoing books of account details of all applicable amounts from time to time owing, paid or repaid by the Borrowers hereunder. The information entered in the foregoing books of account shall constitute prima facie evidence of the Outstandings owing from time to time by the Borrowers to the Agent and the Lenders hereunder, absent manifest error.

 

2.10                        Loans:  Inter-Lender Arrangements

 

(a)                                 Agent Notification. Upon receipt by the Agent of a Drawdown Notice or Conversion/Rollover/Repayment Notice from a Borrower, the Agent shall promptly advise each Lender of the date, amount and other particulars with respect to such Drawdown, Conversion or Rollover and the amount of each Lender’s Applicable Percentage thereof.

 

(b)                                 Payment of Funds. Subject to prior satisfaction of the applicable conditions precedent set forth in Article 3, each Lender shall remit its Applicable Percentage of each requested Advance to the Agent’s Accounts on the relevant Drawdown Date, Rollover Date or Conversion Date for same day value. Subject to Section 15.11, the Agent shall make such funds available to the applicable Borrower by crediting the applicable Borrowers’ Accounts for same day value on the relevant Drawdown Date, Rollover Date or Conversion Date.

 

2.11                        Hedging With Lenders

 

Subject to the hedging restrictions in Section 9.2(g), each Swap Lender may elect to enter into Hedge Agreements with any of the Obligors, and all Lender Swap Obligations shall at all times rank pari passu with the Outstandings; provided that any Lender that enters into a Hedge Agreement in good faith and without actual knowledge of a contravention of the hedging restrictions in Section 9.2(g) shall be entitled to the benefit of any Obligor Guarantee and Security Documents regardless of any contravention of such negative covenant.

 

ARTICLE 3
CONDITIONS PRECEDENT

 

3.1                               Conditions for Initial Drawdown

 

As conditions precedent to the initial Drawdown, the following conditions shall be satisfied:

 

(a)                                 Loan Documents.  The Agent (or its counsel) shall have received (as applicable):

 

(i)                                     this Agreement, duly executed and delivered by an Authorized Officer of each of the Borrowers;

 

(ii)                                  the Collateral Agency and Intercreditor Agreement, duly executed and delivered by each party thereto;

 

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(iii)                             the Obligor Guarantee, duly executed and delivered by each Obligor;

 

(iv)                            the Obligor Debenture, duly executed and delivered by each Obligor;

 

(v)                               the Pledgor Guarantee, duly executed by each Pledgor;

 

(vi)                            the Pledge, duly executed and delivered by each Pledgor; and

 

(vii)                         the Equity Nomination and Support Agreement, duly executed and delivered by each party thereto.

 

(b)                                 Additional Matters.

 

(i)                                   The IPO has been completed and the final investment decision in respect of the Project shall have been declared by KMI, as certified in an officer’s certificate from an Authorized Officer of the Principal Borrower.

 

(ii)                                The Debt Rating shall be an Investment Grade Rating.

 

(iii)                             The minimum financial resources requirements of the NEB in respect of the Obligors (including the NEB Financial Resources Requirement) have been satisfied (either through the NEB Reserve Availability or otherwise), and the Agent shall have received: (A) a copy of, to the extent any are provided by the NEB, any related approvals from the NEB related thereto; and (B) an officer’s certificate from an Authorized Officer of the Principal Borrower certifying the matters set forth in this clause (ii).

 

(c)                                  Consultant Reports. The Agent shall have received:

 

(i)                                   the Initial Independent Engineer Opinion, in form and substance satisfactory to the Lenders, acting reasonably;

 

(ii)                                an environmental assessment by the Environmental and Social Consultant, satisfactory to the Lenders, acting reasonably, together with a report of the Environmental and Social Consultant confirming satisfaction of all reasonable recommendations of the Environmental and Social Consultant with respect to environmental and social matters relating to the Project;

 

(iii)                             a written confirmation and report by the Insurance Consultant of the adequacy of the Obligors insurance coverage and receipt of required certificates of insurance satisfying the requirements of Section 9.1(e), with results satisfactory to the Lenders, acting reasonably; and

 

(iv)                            a written report by the Market Consultant in form and substance satisfactory to the Lenders, acting reasonably.

 

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(d)                                 Financial Information. The Agent shall have received:

 

(i)                                   the Initial Financial Model, in form and substance satisfactory to the Lenders and the Independent Engineer, acting reasonably; and

 

(ii)                                the most recent audited annual and unaudited quarterly combined consolidated financial statements of the Canadian business of KMI (for periods prior to the IPO Date).

 

(e)                                  Approvals and Permitting.

 

(i)                                   All approvals and Governmental Authorizations specified in the Material Project Agreements have been obtained (other than those that are to be obtained in normal course after the Closing Date and are not then required for the current state of the Project), save and except such approvals which are reasonably expected to be obtained in the normal course or which the failure to so obtain and have the same would not be reasonably be expected to have a Material Adverse Effect or materially delay Project Completion, and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower certifying the same.

 

(ii)                                All Required Permits material on the Closing Date for the continuing construction and future operation of the Project have been obtained and are in full force and effect and the Obligors are in compliance in all material respects thereunder (and all conditions thereto that are required to be filed with or approved by the applicable Governmental Authority by such time have been so filed or approved, including the Project Permit Conditions), save and except for such Required Permits which are reasonably expected to be obtained in the normal course and are not then required to have been obtained for the current state of the Project or which the failure to so obtain such Required Permits would not reasonably be expected to have a Material Adverse Effect or materially delay Project Completion, and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower certifying the same.

 

(f)                                   Material Project Agreements. All Material Project Agreements (other than those that are to be entered into in the normal course after the Closing Date and are not then required for the current state of the Project, including the Material EPC Agreements) shall have been duly executed and delivered by the parties thereto and shall be in full force and effect without default, in substantially the forms approved by the Lenders prior to the Closing Date, subject in each case only to such modifications, additions or other amendments that are not materially prejudicial to the interests of the Lenders and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower attaching true, complete and fully executed copies of the Material Project Agreements then in effect, including, for certainty, with all exhibits and schedules thereto, then in effect.

 

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(g)                                  Real Estate Matters. The Obligors:

 

(i)                                   own, have leased or otherwise have access to (by way of  right of way, easement, option to purchase or other suitable arrangement) at least 65% of the parcels of privately owned land required to facilitate the entire construction of the Project, and the transportation, storage and delivery of petroleum substances to the counterparties under the Material Project Agreements, and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower certifying the same; and

 

(ii)                                have a presented plan that is, satisfactory to the Lenders, acting reasonably, to obtain any outstanding, requisite real property rights in connection with the Project, including the right to seek a right of entry order under section 104 of the National Energy Board Act (Canada) and the issuance and service of all required notices to land owners in connection therewith in a timely manner to meet expected construction timelines to achieve Project Completion by the Projected Project Completion Date.

 

(h)                                 Litigation Matters.  As at the Closing Date, no material litigation proceedings have been commenced (other than the Existing Project Related Proceedings) that have a material likelihood of success and that if successful would reasonably be expected to have a Material Adverse Effect, and no events have arisen since May 10, 2017, with respect to the Existing Project Related Proceedings that would reasonably be expected to have a Material Adverse Effect, and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower certifying the same.

 

(i)                                     Pledged Equity Securities.  The Collateral Agent shall have received the share or unit certificates representing all of the Equity Securities of the Obligors (other than KMCL) pledged to the Agent pursuant to the Security Documents, together with any applicable transfers or powers of attorney for each such certificate executed in blank by an Authorized Officer of the applicable pledgor thereof.

 

(j)                                    Security Registrations.  The Agent (or its counsel) shall have received copies of proper financing statements, filed or duly prepared for filing under the PPSA, in all jurisdictions that the Agent or Lender’s Counsel, each acting reasonably, may deem reasonably necessary in order to perfect and protect the Liens created under the Security Documents, covering the Collateral described in the Security Documents.

 

(k)                                 Lien Searches. The Agent (or its counsel) shall have received results of a recent lien search in each of the jurisdictions where the Obligors and Pledgors are organized and assets of the Obligors are located, and such search shall reveal no Liens on any of the assets of the Obligors except for Permitted Liens or, active Liens released and discharged on or prior to the Closing Date pursuant to documentation satisfactory to the Agent, acting reasonably.

 

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(l)                                     AML and KYC.  The Agent shall have received, at least 5 Banking Days prior to the Closing Date or such shorter period as the Agent may agree, all documentation and other information about the Obligors as shall have been reasonably requested in writing by the Agent at least 10 Banking Days prior to the Closing Date and as is mutually agreed to be required by U.S. and Canadian regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including AML Legislation.

 

(m)                             Closing Certificates.  The Agent (or its counsel) shall have received, in form and substance satisfactory to the Agent, acting reasonably, a certificate of each Obligor, the Pledgor and KMI, certified by an Authorized Officer of such Obligor, Pledgor or KMI (or in the case of a Obligor that is a partnership, certified on behalf of such Obligor by an Authorized Officer of a general partner of such partnership), dated as of the Closing Date, including:

 

(i)                                   the certificate and articles of formation, organization, incorporation, or amalgamation (or similar) as applicable, of such Obligor, Pledgor and KMI (together with all amendments thereto);

 

(ii)                                the by-laws (or similar) for each Obligor, Pledgor and KMI as in effect on the date on which the resolutions referred to below were adopted;

 

(iii)                             in the case of a Obligor that is a partnership, the partnership agreement providing for the organization of such partnership;

 

(iv)                            other than KMI, each unanimous shareholders’ agreement or declaration of sole shareholder binding upon such Obligor, if any;

 

(v)                               resolutions of the governing body of each Obligor (or in the case of a partnership, of its general partner), Pledgor and KMI approving the execution, delivery and performance of each Loan Document to which it is a party, and of all documents evidencing other necessary corporate action; and

 

(vi)                            a certification that the names and signatures of the officers of each Obligor (or in the case of a partnership, of its general partner), Pledgor and KMI authorized to sign each Loan Document to which it is or is to be a party and other documents to be delivered hereunder and thereunder are true and correct.

 

(n)                                 Good Standing Certificates.  The Agent (or its counsel) shall have received a certificate of status or good standing certificate (or equivalent) for each Obligor, Pledgor and KMI from its jurisdiction of organization.

 

(o)                                 Legal Opinions.  The Agent shall have received legal opinions from Borrowers’ Counsel and Lenders’ Counsel each in form and substance satisfactory to the Agent, acting reasonably.

 

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(p)                                 Representations and Warranties.  The representations and warranties in Article 8 and in any other Loan Documents shall be true, complete and correct in all material respects as of the Closing Date (provided that any such representations and warranties which are already qualified by materiality, material adverse effect or similar language shall be true and correct in all respects), and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower certifying same.

 

(q)                                 No Material Adverse Effect.  Since December 31, 2016, no Material Adverse Effect shall have occurred and be continuing in respect of the Closing Date Business, and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower certifying same.

 

(r)                                    No Default or Event of Default.  No Default or Event of Default shall have occurred and be continuing, and the Agent shall have received an officer’s certificate from an Authorized Officer of the Principal Borrower certifying same.

 

(s)                                   Fees and Expenses.  All fees required to be paid on the Closing Date and reasonable out-of-pocket expenses required to be paid on the Closing Date, to the extent such expenses are invoiced at least 2 Banking Days prior to the Closing Date (or such shorter period as is otherwise reasonably agreed by the Principal Borrower) shall have been paid (which amounts may, at the option of the Principal Borrower, be offset against the proceeds of the Credit Facilities).

 

(t)                                    Ancillary Agreements.  The Agent shall have received satisfactory evidence that (i) the agency fee arrangements have been agreed to between the Agent and the Borrowers and (ii) the Fronting Fee arrangements have been agreed to between each of the Fronting Lenders and the Principal Borrower.

 

3.2                               Conditions for All Drawdowns

 

On each Drawdown Date hereunder (other than in respect of any NEB Reserve Drawdown), the following conditions shall be satisfied:

 

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

 

(b)                               the representations and warranties set forth in Article 8 (excluding those representations and warranties which are expressly made as of a specific date only) shall be true and accurate in all material respects (provided that any such representations and warranties which are already qualified by materiality, material adverse effect or similar language shall be true and correct in all respects) on and as of the date of the requested Drawdown; and

 

(c)                                no Default or Event of Default shall have occurred and be continuing nor shall the Drawdown result in the occurrence of any such event.

 

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3.3                               Additional Conditions for Drawdowns under the Construction Facility

 

In addition to the conditions set out in Sections 3.1 and 3.2, on each Drawdown Date for any Drawdown under the Construction Facility, the following conditions shall be satisfied:

 

(a)                               the Term Conversion Date has not occurred;

 

(b)                               the Construction Facility Funding Conditions shall have been satisfied; provided that, the Principal Borrower shall be entitled to satisfy Section 2.1(b)(iii) if it then has sufficient Total Borrower Equity Financing to ensure that, after giving effect to such Drawdown and the application of the proceeds thereof, the condition prescribed by Section 2.1(b)(iii) shall continue to be satisfied and shall have so applied the requisite proceeds of such Total Borrower Equity Financing to the payment of Project Costs;

 

(c)                                the Principal Borrower has delivered to the Agent and the Independent Engineer the applicable Drawdown Notice in respect of the requested Drawdown:

 

(i)                                   certifying, inter alia, the current stage of development and construction of the Project, the accrued and unpaid Project Costs to be paid from such Drawdown, together with the Project Costs for the next following 60 day period in respect of which the proceeds of requested Drawdown are to be used and the current Projected Project Completion Date, which shall not be later than the Outside Date;

 

(ii)                                certifying that all Required Permits material at that time for the continuing construction and future operation of the Project have been obtained and are in full force and effect and that the Obligors are in compliance in all material respects thereunder, (and all conditions thereto that are required to be filed with or approved by the applicable Governmental Authority by such time have been so filed or approved, including the Project Permit Conditions), save and except for such Required Permits which are reasonably expected to be obtained in the normal course and are not then required to have been obtained for the current state of the Project or which the failure to so obtain the same would not be reasonably be expected to have a Material Adverse Effect or materially delay Project Completion;

 

(iii)                             certifying that the Forward Funding Test is then satisfied; and

 

(iv)                            detailing therein the particulars of Total Borrower Equity Financing and applicable projections of debt availability,

 

and the Independent Engineer will have provided the Independent Engineer Certificate confirming the reasonableness of (i) and (ii) above and, with respect to (iii) above, the reasonableness of the Net Forecasted Retained Cash Flow in such Drawdown Notice to the Agent and the Lenders; and

 

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(d)                               for any Drawdown under the Construction Facility on or after September 30, 2017, or which result in the Canadian Dollar Equivalent of the Outstanding Principal thereunder exceeding Cdn.$500,000,000, the following documents shall have been delivered by the Agent and the Lenders:

 

(i)                                   the Material EPC Agreements, the form and substance of which and the counterparties to which, shall, in each case, be satisfactory to the Required Lenders, acting reasonably; and

 

(ii)                                the applicable Consent and Acknowledgment from counterparties to (A) the Material EPC Agreements, and (B) the Material Transportation Services Agreements representing a minimum of 65% of the committed shipping volumes of the Project.

 

3.4                               Additional Conditions for Drawdowns under the Contingent Facility

 

In addition to the conditions set out in Sections 3.1 and 3.2, on each Drawdown Date any Drawdown under the Contingent Facility (other than in respect of any NEB Reserve Drawdown), the following conditions shall be satisfied:

 

(a)                               the Term Conversion Date has not occurred;

 

(b)                               the Contingent Facility Funding Conditions shall have been satisfied; provided that, the Principal Borrower shall be entitled to satisfy Section 2.2(b)(ii)(C) if it then has sufficient Total Borrower Equity Financing to ensure that, after giving effect to such drawdown and the application of the proceeds thereof, the condition prescribed by Section 2.2(b)(ii)(C) shall continue to be satisfied and shall have so applied the requisite proceeds of such Total Borrower Equity Financing to the payment of Project Costs; and

 

(c)                                the Principal Borrower has delivered to the Agent and the Independent Engineer the applicable Drawdown Notice in respect of the requested Drawdown:

 

(i)                                   certifying, inter alia, the current stage of development and construction of the Project, the accrued and unpaid Project Costs to be paid from such Drawdown, together with the Project Costs for the next following 60 day period in respect of which the proceeds of requested drawdown is to be used and the current Projected Project Completion Date, which shall not be later than the Outside Date; and

 

(ii)                                certifying that all Required Permits material at that time for the continuing construction and future operation of the Project have been obtained and are in full force and effect and that the Obligors are in compliance in all material respects thereunder (and all conditions thereto that are required to be filed with or approved by the applicable Governmental Authority by such time have been so filed or approved, including the Project Permit Conditions) save and except for such Required Permits which are reasonably expected to be obtained in the normal course and are not then

 

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required to have been obtained for the current state of the Project or which the failure to so obtain the same would not be reasonably be expected to have a Material Adverse Effect or materially delay Project Completion;

 

(iii)                             certifying that the Forward Funding Test is then satisfied; and

 

(iv)                            detailing therein the particulars of Total Borrower Equity Financing and applicable projections of debt availability,

 

and the Independent Engineer will have provided the Independent Engineer Certificate confirming the reasonableness of (i) and (ii) above and, with respect to (iii) above, the reasonableness of the Net Forecasted Retained Cash Flow in such Drawdown Notice to the Agent and the Lenders.

 

3.5                               Additional Conditions for NEB Reserve Drawdowns

 

In addition to the conditions set out in Sections 3.1, on each Drawdown Date in respect of any NEB Reserve Drawdown, the following conditions shall be satisfied:

 

(a)                               the Agent shall have received a proper and timely Drawdown Notice from the NEB Reserve Borrower requesting the applicable Drawdown and certifying the matters set forth in subparagraphs (b), (c) and (d) below;

 

(b)                               The Agent shall have received a copy of the consent or other authorization of the NEB approving the use of the NEB Reserve Availability for purposes of NEB Order FRO-002-2017 issued pursuant to subsection 48.13(2) of the National Energy Board Act (Canada);

 

(c)                                the representations and warranties (other than those which would not be true as a direct or indirect result of the event, circumstance or occurrence giving rise to the requirement to make a NEB Reserve Drawdown) set forth in Article 8 (excluding those representations and warranties which are expressly made as of a specific date only) shall be true and accurate in all material respects (provided that any such representations and warranties which are already qualified by materiality, material adverse effect or similar language shall be true and correct in all respects) on and as of the date of the requested Drawdown;

 

(d)                               no Default (other than those which are a direct or indirect result of the event, circumstance or occurrence giving rise to the requirement to make a NEB Reserve Drawdown) shall have occurred and be continuing nor shall the Drawdown result in the occurrence of any Default; and

 

(e)                                no Event of Default (other than those which are a direct or indirect result of the event, circumstance or occurrence giving rise to the requirement to make a NEB Reserve Drawdown) shall have occurred and be continuing nor shall the Drawdown result in the occurrence of an Event of Default.

 

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3.6                               Waiver

 

The conditions set forth in Sections 3.1, 3.2, 3.3, 3.4 and 3.5 are inserted for the sole benefit of the Lenders and the Agent and may be waived by all of the Lenders (provided that, in the case of the Working Capital Facility, a waiver of the foregoing conditions shall only be required to be made by the Working Capital Facility Lenders), in whole or in part (with or without terms or conditions) without prejudicing the right of the Lenders or Agent at any time to assert such waived conditions in respect of any subsequent Drawdown.  For certainty, upon the initial Drawdown hereunder, the conditions set forth in Section 3.1 shall be deemed to have satisfied as of the date of such Drawdown, unless expressly conditioned by the Agent in writing.

 

ARTICLE 4
PAYMENTS OF INTEREST AND FEES

 

4.1                               Interest on Prime Loans

 

The applicable Borrower shall pay interest to the Agent on behalf of each Lender on each Prime Loan outstanding from time to time at a rate per annum equal to the Prime Rate in effect from time to time plus the Applicable Margin. Such interest shall accrue daily and shall be payable monthly in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the Prime Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days. Changes in the Prime Rate shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Borrowers.

 

4.2                               Interest on USBR Loans

 

The applicable Borrower shall pay interest in US Dollars on each USBR Loan to the Agent on behalf of each Lender outstanding from time to time at a rate per annum equal to the US Base Rate in effect from time to time plus the Applicable Margin. Such interest shall accrue daily and shall be payable monthly in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the USBR Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days. Changes in the US Base Rate shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Borrowers.

 

4.3                               Interest on LIBO Rate Loans

 

The applicable Borrower shall pay interest to the Agent on behalf of each Lender on each LIBO Rate Loan outstanding during each Interest Period applicable thereto at a rate per annum, calculated on the basis of a 360 day year, equal to the LIBO Rate with respect to such Interest Period plus the Applicable Margin. Such interest shall accrue daily and shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Rollover Date, Conversion Date or Interest Payment Date, as

 

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the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the LIBO Rate Loan outstanding during such period and on the basis of the actual number of days elapsed divided by 360.

 

4.4                               Acceptance Fees

 

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

 

4.5                               LC and Related Fees

 

(a)                                 LC Fee. The Principal Borrower shall pay to the Agent for the account of the Working Capital Facility Lenders, pro rata in accordance with the amount of each Working Capital Facility Lender’s Working Capital Commitment, a Letter of Credit issuance fee (the “LC Fee”) for each Letter of Credit issued at the request of the Principal Borrower calculated at a rate per 365 or 366 day period, as applicable, equal to the Applicable Margin multiplied by the daily maximum amount then available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit if such maximum amount increases periodically pursuant to the terms of such Letter of Credit); provided, however, that any LC Fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the applicable Fronting Lender pursuant to Section 16.11(d) shall be payable, to the maximum extent permitted by Applicable Law, to the other Working Capital Facility Lenders in accordance with the upward adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant to Section 16.11(d), with the balance of such fee, if any, payable to the applicable Fronting Lender for its own account. The LC Fee shall be payable quarterly in arrears on the fifth Banking Day of each Fiscal Quarter following the issuance of the relevant Letter of Credit and upon termination or cancellation of the Total Working Capital Facility Commitment and following receipt of a written notice from the Agent setting out the amount of such fee.

 

(b)                                 Fronting Fee. In addition to the above fees, the Principal Borrower shall pay directly to the applicable Fronting Lender for its own account a Fronting Fee calculated at a rate per 365 or 366 day period, as applicable, equal to the rate to be agreed upon in writing by the Principal Borrower and the applicable Fronting Lender on or before each anniversary of the Closing Date, which shall be computed on the daily amount available to be drawn under such Letter of Credit and paid on a quarterly basis in arrears. Such Fronting Fee shall be due and payable on the third Banking Day of each April, July, October and January in respect of the immediately preceding Fiscal Quarter (or portion thereof, in the

 

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case of the first payment) and following receipt of a written notice from the Agent setting out the amount of such fee, commencing with the first such date to occur after the issuance of such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.8.

 

 

(c)                                  Other Fees. In addition to the above fees, the Principal Borrower shall pay directly to the applicable Fronting Lender for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the applicable Fronting Lender relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable within 3 Banking Days of demand and are non-refundable, except as otherwise agreed by the applicable Fronting Lender.

 

4.6                               Standby Fees

 

The Principal Borrower shall pay to the Agent for the account of each Applicable Lender a standby fee in Cdn. Dollars calculated at a rate per annum equal to the Applicable Margin (based on a year of 365 or 366 days, as applicable) on the amount, if any, for each day by which the amount of the Outstanding Principal owing to such Applicable Lender under the applicable Credit Facility, as the case may be, is less than the Total Construction Facility Commitment, Contingent Facility Commitment or Total Working Capital Facility Commitment of such Applicable Lender, as applicable. Fees determined in accordance with this Section 4.6 with respect to any Credit Facility shall accrue daily from the first day of each Fiscal Quarter until the last day of each Fiscal Quarter and be payable quarterly in arrears on the third Banking Day of each Fiscal Quarter and following receipt of a written notice from the Agent setting out the amount of such fee, until the earlier of (i) cancellation in full of the undrawn portion of such Credit Facility and (ii) in the case of the Working Capital Facility, the Maturity Date, or, in the case of the Construction Facility and the Contingent Facility, the Term Conversion Date. In order to calculate the daily Outstanding Principal under this Section 4.6 for any day in a Fiscal Quarter, the Agent shall convert any outstanding Loans denominated in US Dollars into the Equivalent Amount thereof in Canadian Dollars.

 

4.7                               Default Interest

 

Notwithstanding any other provision hereof, if at any time an Event of Default has occurred and is continuing, the Principal Borrower shall pay interest on the principal amount of all Outstandings hereunder (including but not limited to Letters of Credit) at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent not prohibited by Applicable Law. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

4.8                               Agent’s Fees

 

The Principal Borrower shall pay to the Agent, for its own account, all agency fees payable from time to time pursuant to the separate written agreement between such parties. Any unpaid agency fees shall be deemed to form part of the Outstandings.

 

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4.9                               General Interest Provisions

 

(a)                               Rates. Each determination by the Agent of the Prime Rate, US Base Rate, CDOR Rate or LIBO Rate in effect at any time shall be prima facie evidence thereof for all purposes of this Agreement, absent manifest error.

 

(b)                               Accuracy of Rates. Each determination by the Agent of the amount of interest, fees or other amounts due from the Borrowers hereunder shall be prima facie evidence of the accuracy of such determination, absent manifest error.

 

(c)                                Accrual. All interest, fees and other amounts payable by any Borrower hereunder shall accrue daily, be computed as described herein, and be payable both before and after demand, maturity, default and judgment.

 

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

 

(e)                                Maximum Rate. No interest or fee to be paid hereunder shall be paid at a rate exceeding the maximum rate permitted by Applicable Law. In the event that such interest or fee exceeds such maximum rate, such interest or fees shall be reduced or refunded, as the case may be, so as to be payable at the highest rate recoverable under Applicable Law.

 

(f)                                   Interest Act (Canada).

 

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

 

(ii)                                Whenever a rate of interest or other rate per annum hereunder is expressed or calculated on the basis of a year of 360 days, such rate of interest or other rate shall be expressed as a rate per annum, calculated on the basis of a 365 day year, by multiplying such rate of interest or other rate by 365 and dividing it by 360.

 

(g)                                No Deemed Reinvestment. The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; all interest payments to be made hereunder shall be paid without allowance or deduction for deemed reinvestment or otherwise, before and after maturity, default and judgment. The rates of interest specified in this Agreement are intended to be

 

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nominal rates and not effective rates. Interest calculated hereunder shall be calculated using the nominal rate method and not the effective rate method of calculation.

 

4.10                        Defaulting Lender Fees

 

Each Defaulting Lender shall be entitled to receive any fees payable under this Article 4 for any period during which such Lender is a Defaulting Lender only to the extent allocable to the Loans funded by it. With respect to any fees not required to be paid to any Defaulting Lender pursuant to the preceding sentence, the applicable Borrower shall pay to each Lender that is not a Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in the Loans that has been reallocated to the other Lenders as provided for in Section 16.11(b) or Section 16.11(d).

 

ARTICLE 5
BANKERS’ ACCEPTANCES

 

5.1                               Form and Execution of Bankers’ Acceptances

 

The following provisions shall apply to each Bankers’ Acceptance under any Credit Facility:

 

(a)                               the face amount at maturity of each draft drawn by the Principal Borrower to be accepted as a Bankers’ Acceptance shall be at least in the amounts set out in Section 2.5(b)(iii);

 

(b)                               the term to maturity of each draft drawn by the Principal Borrower to be accepted as a Bankers’ Acceptance shall, subject to market availability as determined by the Applicable Lenders, be 1, 2, 3 or 6 months (or such other longer or shorter term as agreed by all of the Applicable Lenders), as selected by the Principal Borrower in the relevant Drawdown Notice or Conversion/Rollover/Repayment Notice, and each Bankers’ Acceptance shall be payable and mature on the last day of the Interest Period selected by the Principal Borrower for such Bankers’ Acceptance;

 

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

 

(d)                               subject to Section 5.1(e), Bankers’ Acceptances shall be signed by Authorized Officers of the Principal Borrower or, in the alternative, the signatures of such officers may be mechanically reproduced in facsimile thereon and Bankers’ Acceptances bearing such facsimile signatures shall be binding on the Principal Borrower as if they had been manually executed and delivered by such officers on behalf of the Principal Borrower; notwithstanding that any person whose manual

 

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or facsimile signature appears on any Bankers’ Acceptance may no longer be an authorized signatory for the Principal Borrower on the date of issuance of a Bankers’ Acceptance, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such Bankers’ Acceptance shall be binding on the Principal Borrower; and

 

(e)                                in lieu of the Principal Borrower signing Bankers’ Acceptances in accordance with Section 5.1(d) and, for so long as the power of attorney in Section 5.2(a) is in force with respect to a given Lender, such Lender shall execute and deliver Bankers’ Acceptances on behalf of the Principal Borrower in accordance with the provisions thereof and, for certainty, all references herein to drafts drawn by the Principal Borrower, Bankers’ Acceptances executed by the Principal Borrower or similar expressions shall be deemed to include Bankers’ Acceptances executed in accordance with such power of attorney, unless the context otherwise requires.

 

If and for so long as the power of attorney referred to in Section 5.2(a) is in force with respect to each of the Lenders, it is intended that pursuant to the DBNA, all Bankers’ Acceptances accepted by the Lenders under this Agreement will be issued in the form of a “depository bill” (as defined in the DBNA), deposited with a “clearing house” (as defined in the DBNA including The Canadian Depository for Securities Ltd. or its nominee CDS & Co.). In order to give effect to the foregoing, the Agent will, subject to the approval of the Principal Borrower and the Applicable Lenders, establish and notify the Principal Borrower and the Applicable Lenders of any additional procedures, consistent with the terms of this Agreement and the DBNA, as are reasonably necessary to accomplish such intention, including:

 

(a)                               any instrument held by the Agent for the purposes of Bankers’ Acceptances will have marked prominently and legibly on its face and within its text, at or before the time of issue, the words “This is a depository bill subject to the Depository Bills and Notes Act (Canada)”;

 

(b)                               any reference to the authentication of the Bankers’ Acceptance will be removed; and

 

(c)                                any reference to the “bearer” will be removed and such Bankers’ Acceptances will not be marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it.

 

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

 

(a)                               Power of Attorney. As a condition precedent to each Applicable Lender’s obligation to accept Bankers’ Acceptances hereunder, the Principal Borrower hereby appoints each Lender, acting by any authorized signatory of the Lender in question, the attorney of the Principal Borrower:

 

(i)                                     to sign for and on behalf and in the name of the Principal Borrower as drawer, drafts in such Lender’s standard form which are depository bills as defined in the DBNA, payable to a “clearing house” (as defined in the

 

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DBNA) including The Canadian Depository For Securities Limited or its nominee, CDS & Co. (the “clearing house”);

 

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

 

(iii)                               for Discount Notes, to sign for and on behalf and in the name of the Principal Borrower as drawer and to endorse on its behalf Discount Notes payable to the order of such Lender;

 

(iv)                              to fill in the amount, date and maturity date of such Bankers’ Acceptances (or Discount Notes as applicable); and

 

(v)                                 to deposit and/or deliver such Bankers’ Acceptances which have been accepted by such Lender or such Discount Notes which are payable to the order of such Lender,

 

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

 

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

 

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

 

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

 

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

 

This power of attorney may be revoked by the Principal Borrower with respect to any particular Lender at any time upon not less than 3 Banking Days’ prior written notice served upon the Lender in question and the Agent, provided that no such revocation shall reduce, limit or otherwise affect the obligations of the Principal Borrower in respect of any Bankers’ Acceptance (or Discount Note as applicable) executed, completed, endorsed, deposited and/or delivered in accordance herewith prior to the time at which such revocation becomes effective.

 

(b)                                 Blank Drafts. If the power of attorney in Section 5.2(a) is revoked with respect to any Lender, the Principal Borrower shall, from time to time as required by the Applicable Lenders, provide to the Agent for delivery to each such Lender drafts drawn in blank by the Principal Borrower (pre-endorsed and otherwise in fully negotiable form, if applicable) in quantities sufficient for each such Lender to fulfil its obligations hereunder. Any such pre-signed drafts which are delivered by the Principal Borrower to the Agent or a Lender shall be held in safekeeping by the Agent or such Lender, as the case may be, with the same degree of care as if they were the Agent’s or such Lender’s property, and shall only be dealt with by the Lenders and the Agent in accordance herewith. No Lender shall be responsible or liable for its failure to make its share of any Drawdown, Rollover or Conversion of Bankers’ Acceptances required hereunder if the cause of such failure is, in whole or in part, due to the failure of the Principal Borrower to provide such pre-signed drafts to the Agent (for delivery to such Lender) on a timely basis.

 

(c)                                  Execution of Drafts. By 10:00 a.m. (Toronto time) on the applicable Drawdown Date, Conversion Date or Rollover Date, the Principal Borrower shall (i) either deliver to each Applicable Lender, or, if previously delivered, be deemed to have authorized each Applicable Lender to complete and accept, or (ii) where the power of attorney in Section 5.2(a) is in force with respect to an Applicable

 

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Lender, be deemed to have authorized each such Lender to sign on behalf of the Principal Borrower, complete and accept, drafts drawn by the Principal Borrower on such Lender in a principal amount at maturity equal to such Lender’s share of the Bankers’ Acceptances specified by the Principal Borrower in the relevant Drawdown Notice or Conversion/Rollover/Repayment, as the case may be, as notified to the Lenders by the Agent.

 

5.3                               Mechanics of Issuance

 

(a)                               Terms of Bankers’ Acceptance. Upon receipt by the Agent of a Drawdown Notice or Conversion/Rollover/Repayment Notice from the Principal Borrower requesting the issuance of Bankers’ Acceptances under a Credit Facility, the Agent shall promptly notify the Applicable Lenders thereof and advise each Applicable Lender of the aggregate face amount of Bankers’ Acceptances to be accepted by such Lender, the date of issue, the Interest Period for such Loan and, whether such Bankers’ Acceptances are to be self-marketed by the Principal Borrower or purchased by such Applicable Lender for its own account; the apportionment among such Applicable Lenders of the face amounts of Bankers’ Acceptances to be accepted by each Applicable Lender shall be determined by the Agent by reference and in proportion to the respective applicable Commitments under the applicable Credit Facility of each Applicable Lender; provided that, when such apportionment cannot be evenly made, the Agent shall round allocations amongst such Lenders consistent with the Agent’s normal money market practices.

 

(b)                               Marketing by Borrower. Unless the Principal Borrower has elected pursuant to Section 5.3(c) to have each Lender purchase for its own account the Bankers’ Acceptances to be accepted by it in respect of any Drawdown, Rollover or Conversion under a Credit Facility, on each Drawdown Date, Rollover Date or Conversion Date involving the issuance of Bankers’ Acceptances:

 

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

 

(ii)                                by no later than 10:00 a.m. (Toronto time) on such date, the Principal Borrower shall provide the Agent with details regarding the sale of the Bankers’ Acceptances described in (i) above whereupon the Agent shall promptly notify the Applicable Lenders of the identity of the purchasers of such Bankers’ Acceptances, the amounts being purchased by such purchasers, the BA Discount Proceeds and the acceptance fees applicable to such issue of Bankers’ Acceptances pursuant to Section 4.4 (including each Applicable Lender’s share thereof);

 

(iii)                             each Applicable Lender shall complete and accept in accordance with the Drawdown Notice or Conversion/Rollover/Repayment Notice delivered by the Principal Borrower and, if applicable, advised by the Agent in

 

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connection with such issue, its share of the Bankers’ Acceptances to be issued on such date; and

 

(iv)                            in the case of a Drawdown, each Applicable Lender shall, on receipt of the BA Discount Proceeds, remit the BA Discount Proceeds (net of the acceptance fee payable to such Lender pursuant to Section 4.4) to the Agent for the account of the Borrower; the Agent shall make such funds available to the Principal Borrower for same day value on such date.

 

(c)                                Purchase by Schedule I Lenders. The Principal Borrower may, with respect to the issuance of Bankers’ Acceptances under a Credit Facility, elect in the Drawdown Notice or Conversion/Rollover/Repayment Notice, as the case may be, delivered in respect of such issuance to have the Applicable Lenders purchase such Bankers’ Acceptances for their own account.  On each such Drawdown Date, Rollover Date or Conversion Date involving the issuance of Bankers’ Acceptances being so purchased by the Applicable Lenders:

 

(i)                                   on or about 10:00 a.m. (Toronto time) on such date, the Agent shall determine the CDOR Rate and shall obtain quotations from each Schedule II Lender or Schedule III Lender of the Discount Rate then applicable to bankers’ acceptances accepted by such Schedule II Lender or Schedule III Lender in respect of an issue of bankers’ acceptances in a comparable amount and with comparable maturity to the Bankers’ Acceptances proposed to be issued on such date;

 

(ii)                                on or about 10:00 a.m. (Toronto time) on such date, the Agent shall determine the BA Discount Rate applicable to each Applicable Lender and shall advise each Applicable Lender of the BA Discount Rate applicable to it;

 

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

 

(iv)                            in the case of a Drawdown, each Applicable Lender shall, for same day value on the Drawdown Date, remit the BA Discount Proceeds or advance the BA Equivalent Advance, as the case may be, payable by such Lender (net of the acceptance fee payable to such Lender pursuant to Section 4.4) to the Agent for the account of the Principal Borrower; the Agent shall make such funds available to the Principal Borrower for same day value on such date.

 

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

 

5.4                               Rollover, Conversion or Payment on Maturity

 

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

 

(a)                                 (i) deliver to the Agent a Conversion/Rollover/Repayment Notice that the Borrower intends to draw and present for acceptance on the maturity date new Bankers’ Acceptances (issued under the same Credit Facility as the maturing Bankers’ Acceptances) in an aggregate face amount up to the aggregate amount of the maturing Bankers’ Acceptances and (ii) make the payments required under Section 5.6;

 

(b)                                 (i) deliver to the Agent a Conversion/Rollover/Repayment Notice requesting a Conversion of the maturing Bankers’ Acceptances to another type of Loan under the same Credit Facility as the maturing Bankers’ Acceptances and (ii) make the payments required under Section 5.7; or

 

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

 

If the Principal Borrower fails to so notify the Agent or make such payments on maturity, the Agent shall effect a Conversion into a Prime Loan under the same Credit Facility as the maturing Bankers’ Acceptances of the entire amount of such maturing Bankers’ Acceptances as if a Conversion/Rollover/Repayment Notice had been given by the Borrower to the Agent to that effect.

 

5.5                               Restriction on Rollovers and Conversions

 

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

 

5.6                               Rollovers

 

In order to satisfy the continuing liability of the Principal Borrower to a Lender for the face amount of maturing Bankers’ Acceptances accepted by such Lender, such Lender shall receive and retain for its own account the BA Discount Proceeds of new Bankers’ Acceptances issued on a Rollover, and the Principal Borrower shall on the maturity date of the Bankers’ Acceptances being rolled over pay to the Agent for the account of the Lenders an amount equal to the difference between the face amount of the maturing Bankers’ Acceptances and the BA Discount Proceeds from the new Bankers’ Acceptances, together with the acceptance fees to which the relevant Lenders are entitled pursuant to Section 4.4.

 

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5.7                               Conversion into Bankers’ Acceptances

 

In respect of Conversions into Bankers’ Acceptances, in order to satisfy the continuing liability of the Principal Borrower to the Lenders for the amount of the converted Loan, each Lender shall receive and retain for its own account the BA Discount Proceeds of the Bankers’ Acceptances issued upon such Conversion, and the Principal Borrower shall on the Conversion Date pay to the Agent for the account of the Lenders an amount equal to the difference between the principal amount of the converted Loan and the aggregate BA Discount Proceeds from the Bankers’ Acceptances issued on such Conversion, together with the acceptance fees to which the relevant Lenders are entitled pursuant to Section 4.4.

 

5.8                               Conversion from Bankers’ Acceptances

 

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

 

5.9                               BA Equivalent Advances

 

Notwithstanding the foregoing provisions of this Article 5, a Non-Acceptance Lender shall, in lieu of accepting Bankers’ Acceptances, make a BA Equivalent Advance. The amount of each BA Equivalent Advance shall be equal to the BA Discount Proceeds which would be realized from a hypothetical sale of those Bankers’ Acceptances which, but for this Section 5.9, such Lender would otherwise be required to accept as part of such a Drawdown, Conversion or Rollover of Bankers’ Acceptances. To determine the amount of such BA Discount Proceeds, the hypothetical sale shall be deemed to take place at the BA Discount Rate for such Loan. Any BA Equivalent Advance shall be made on the relevant Drawdown Date, Rollover Date or Conversion Date as the case may be and shall remain outstanding for the term of the relevant Bankers’ Acceptances. Concurrent with the making of a BA Equivalent Advance, a Non-Acceptance Lender shall be entitled to deduct therefrom an amount equal to the acceptance fee which, but for this Section 5.9, such Lender would otherwise be entitled to receive as part of such Loan. Subject to Section 5.4, upon the maturity date for such Bankers’ Acceptances, the Principal Borrower shall pay to each Non-Acceptance Lender an amount equal to the face amount at maturity of the Bankers’ Acceptances which, but for this Section, such Lender would otherwise be required to accept as part of such a Drawdown, Conversion or Rollover of Bankers’ Acceptances as repayment of the amount of its BA Equivalent Advance; for all purposes of this Agreement, the principal amount of each Loan made by way of BA Equivalent Advance shall be deemed to be such face amount.  All BA Equivalent Advances made by a Non-Acceptance Lender shall, if requested by such Lender, be evidenced by a Discount Note.

 

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

 

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5.10                        Termination of Bankers’ Acceptances

 

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

 

5.11                        Borrower Acknowledgements

 

In the event that the Principal Borrower is marketing its own Bankers’ Acceptances in accordance with Section 5.3(b), the Principal Borrower hereby agrees that it shall make its own arrangements for the marketing and sale of such Bankers’ Acceptances to be issued hereunder and that neither the Agent nor the Lenders shall have any obligation nor be responsible in that regard.  The Principal Borrower further acknowledges and agrees that the availability of purchasers for such Bankers’ Acceptances requested to be issued hereunder, as well as all risks relating to the purchasers thereof, are its own risk.

 

ARTICLE 6
LETTERS OF CREDIT

 

6.1                               Letter of Credit Commitment

 

(a)                                 Fronted Letters of Credit. Subject to the terms and conditions set forth herein, each Fronting Lender agrees, in reliance upon the agreements of the other Working Capital Facility Lenders set forth in this Section 6.1, to issue Letters of Credit denominated in US Dollars or in Canadian Dollars under the Working Capital Facility for the account of the Principal Borrower; provided that the Working Capital Facility Lenders severally agree to participate in Letters of Credit issued for the account of such Obligor; and further provided that the amount of Letters of Credit outstanding at any one time, as calculated in accordance with Section 1.8, shall not exceed Cdn.$200,000,000.

 

(b)                                 Restrictions on Issuance. No Fronting Lender shall be under any obligation to issue any Letter of Credit if:

 

(i)                                   any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the applicable Fronting Lender from issuing such Letter of Credit, or any Applicable Law applicable to the applicable Fronting Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the applicable Fronting Lender shall prohibit, or request that the applicable Fronting Lender refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the applicable Fronting Lender with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the applicable Fronting Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the applicable Fronting Lender any unreimbursed loss, cost or expense which was not

 

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applicable on the Closing Date and which, in each case, the applicable Fronting Lender in good faith deems material to it;

 

(ii)                                subject to Section 6.2(c), the expiry date of such requested Letter of Credit would occur more than 12 months (or 364 days in the case of trade Letters of Credit) after the date of issuance or last renewal, unless the applicable Fronting Lender has approved such expiry date;

 

(iii)                             the expiry date of such requested Letter of Credit would occur after the Maturity Date, unless such Letter of Credit is Cash Collateralized pursuant to arrangements reasonably acceptable to the applicable Fronting Lender;

 

(iv)                            the issuance of such Letter of Credit would violate one or more policies of the applicable Fronting Lender in place at the time of such request; or

 

(v)                               any Working Capital Facility Lender is at that time a Defaulting Lender, unless the applicable Fronting Lender has entered into arrangements, including reallocation of the Defaulting Lender’s Applicable Percentage share of the outstanding LC Obligations applicable pursuant to Section 16.11(d) or the delivery of Cash Collateral, satisfactory to the applicable Fronting Lender (in its sole discretion), with the Principal Borrower or such Defaulting Lender to eliminate the applicable Fronting Lender’s actual or potential Fronting Exposure (after giving effect to Section 16.11(d)) with respect to such Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other LC Obligations as to which the applicable Fronting Lender has actual or potential Fronting Exposure, as it may elect in its sole discretion.

 

(c)                                  Amendments. No Fronting Lender shall be under any obligation to amend any Letter of Credit if (i) the applicable Fronting Lender would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof or (ii) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

 

(d)                                 Indemnities. The applicable Fronting Lender shall act on behalf of the Working Capital Facility Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the applicable Fronting Lender shall have all of the benefits and immunities (i) provided to the Agent in Article 15 with respect to any acts taken or omissions suffered by the applicable Fronting Lender in connection with Letters of Credit issued by it or proposed to be issued by it and LC Issuer Documents pertaining to such Letters of Credit as fully as if the term “Agent” as used in Article 15 included the applicable Fronting Lender with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the applicable Fronting Lender.

 

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(e)                                  Commercial Letter of Credit. It is agreed that, in the case of a commercial Letter of Credit, such commercial Letter of Credit shall in no event provide for time drafts or bankers’ acceptances.

 

6.2                               Procedures for Issuance, Conversion and Amendment of Letters of Credit; Auto-Renewal Letters of Credit

 

(a)                                 LC Application. Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Principal Borrower delivered to the applicable Fronting Lender (with a copy to the Agent) in the form of a LC Application, appropriately completed and signed by the Principal Borrower. Such LC Application must be received by the applicable Fronting Lender and the Agent not later than 12:00 noon (Toronto time) at least 3 Banking Days (or such shorter period as the applicable Fronting Lender and the Agent may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such LC Application shall specify in form and detail reasonably satisfactory to the applicable Fronting Lender: (i) the proposed issuance date of the requested Letter of Credit (which shall be a Banking Day); (ii) the amount thereof (including the specification of currency); (iii) the expiry date thereof; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by such beneficiary in case of any drawing thereunder; (vi) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (viii) such other matters as the applicable Fronting Lender may reasonably request. In the case of a request for an amendment of any outstanding Letter of Credit, such LC Application shall specify in form and detail reasonably satisfactory to the applicable Fronting Lender (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Banking Day); (3) the nature of the proposed amendment; and (4) such other matters as the applicable Fronting Lender may reasonably request.

 

(b)                                 Issuance. Promptly after receipt of any LC Application, the applicable Fronting Lender will confirm with the Agent that the Agent has received a copy of such LC Application from the Principal Borrower and, if not, the applicable Fronting Lender will provide the Agent with a copy thereof. Upon receipt by the applicable Fronting Lender of confirmation from the Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the applicable Fronting Lender shall, on the requested date, issue a Letter of Credit for the account of the Principal Borrower or enter into the applicable amendment, as the case may be. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Fronting Lender a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.

 

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(c)                                  Auto-Renewal. If the Principal Borrower so requests in any LC Application, the applicable Fronting Lender may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an “Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of Credit must permit the applicable Fronting Lender to prevent any such renewal at least once in each twelve-month period (or, in the case of trade Letters of Credit, at least once in each 364-day period) (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Nonrenewal Notice Date”) in each such twelve-month period (or 364-day period, as applicable) to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable Fronting Lender, the Principal Borrower shall not be required to make a specific request to the applicable Fronting Lender for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable Fronting Lender to permit the renewal of such Letter of Credit; provided that, for avoidance of doubt, the Principal Borrower shall ensure that any Letter of Credit with an expiry date after the Maturity Date complies with Section 6.1(b)(iii).

 

(d)                                 Copies of Letter of Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable Fronting Lender will also deliver to the Principal Borrower and the Agent a true and complete copy of such Letter of Credit or amendment, and (in the case of a Letter of Credit) the Agent shall notify each Working Capital Facility Lender of such issuance or amendment and the amount of such Working Capital Facility Lender’s Applicable Percentage share thereof and, upon a specific request by any Working Capital Facility Lender, furnish to such Lender a copy of such Letter of Credit or amendment.

 

6.3                               Drawings and Reimbursements; Funding of Participations

 

(a)                                 Drawing under Letter of Credit. Upon receipt from the beneficiary of any Letter of Credit of any demand for payment under such Letter of Credit, the applicable Fronting Lender shall promptly notify the Principal Borrower and the Agent thereof. If the applicable Fronting Lender notifies the Principal Borrower of such payment prior to 12:00 noon (Toronto time) on the date of any payment by the applicable Fronting Lender under a Letter of Credit (each such date, an “Honor Date”), the Principal Borrower shall reimburse the applicable Fronting Lender through the Agent in an amount equal to the amount of such drawing by no later than the next succeeding Banking Day and such extension of time shall be reflected in computing fees in respect of any such Letter of Credit. If the Principal Borrower fails to so reimburse the applicable Fronting Lender by such time, the Principal Borrower shall be deemed to have effected a Conversion of such Letter of Credit to Prime Loans (in the case of a Letter of Credit denominated in Canadian Dollars) or USBR Loans (in the case of a Letter of Credit denominated in US Dollars), to be disbursed on the Honor Date in an amount equal to unreimbursed drawing (the “Unreimbursed Amount”), without regard to the

 

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minimum and multiples specified in Section 2.5 or whether there is compliance with any of the conditions set forth in Section 3.2. Such deemed Conversion shall be to a Working Capital Loan. The Agent shall promptly notify each Working Capital Facility Lender of the Honor Date, the Unreimbursed Amount, and the amount of such Working Capital Facility Lender’s pro rata share thereof. Any notice given by a Fronting Lender or the Agent pursuant to this Section 6.3(a) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

 

(b)                                 Reimbursement by Lenders. Each Working Capital Facility Lender (including the Working Capital Facility Lender acting as a Fronting Lender) shall upon any notice pursuant to Section 6.3(a) make funds available (and the Agent may apply Cash Collateral provided for this purpose) for the account of the applicable Fronting Lender at the Agent’s Branch in an amount equal to its pro rata share of the Unreimbursed Amount not later than 3:00 p.m. (Toronto time) on the Banking Day specified in such notice by the Agent, whereupon each Working Capital Facility Lender that so makes funds available shall be deemed to have made a USBR Loan (in the case of a Letter of Credit denominated in US Dollars) or a Prime Loan (in the case of a Letter of Credit denominated in Canadian Dollars), to the Principal Borrower in such amount. The Agent shall remit the funds so received to the applicable Fronting Lender.

 

(c)                                  Interest. Until each Working Capital Facility Lender funds its Applicable Percentage share of any Working Capital Loan pursuant to this Section 6.3 to reimburse the applicable Fronting Lender for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the applicable Fronting Lender.

 

(d)                                 Additional Reimbursement Provisions. Each Working Capital Facility Lender’s obligation to make Working Capital Loans to reimburse a Fronting Lender for amounts drawn under Letters of Credit, as contemplated by this Section 6.3, shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the applicable Fronting Lender, the Principal Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or Event of Default, (iii) non-compliance with any of the conditions set forth in Article 3 or (iv) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of a Working Capital Loan shall relieve or otherwise impair the obligation of the Principal Borrower to reimburse the applicable Fronting Lender for the amount of any payment made by the applicable Fronting Lender under any Letter of Credit, together with interest as provided herein.

 

(e)                                  Failure of Lender to Reimburse. If any Working Capital Facility Lender fails to make available to the Agent for the account of the applicable Fronting Lender any amount required to be paid by such Working Capital Facility Lender pursuant to

 

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the foregoing provisions of this Section 6.3 by the time specified in Section 6.3(b), then, without limiting the other provisions of this Agreement, the applicable Fronting Lender shall be entitled to recover from such Working Capital Facility Lender (acting through the Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the applicable Fronting Lender at a rate per annum reasonably determined by the applicable Fronting Lender in accordance with banking industry rules on interbank compensation, plus any reasonable administrative, processing or similar fees customarily charged by the applicable Fronting Lender in connection with the foregoing. If such Working Capital Facility Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Working Capital Facility Lender’s Loan included in the relevant Borrowing in respect of the relevant  LC Borrowing, as the case may be. A certificate of the applicable Fronting Lender submitted to any Working Capital Facility Lender (through the Agent) with respect to any amounts owing under this Section 6.3(e) shall be conclusive absent manifest error.

 

6.4                               Repayment of Participations

 

(a)                                 Reimbursement by Principal Borrower. If, at any time after a Fronting Lender has made a payment under any Letter of Credit issued by it and has received from any Working Capital Facility Lender such Lender’s Applicable Percentage share of any Working Capital Loan in respect of such payment in accordance with Section 6.3, if the Agent receives for the account of the applicable Fronting Lender any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Principal Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Agent), the Agent will distribute to such Working Capital Facility Lender its Applicable Percentage share of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Working Capital Facility Lender’s Working Capital Loan was outstanding) in the same funds as those received by the Agent.

 

(b)                                 Claw-Back of Reimbursement Amounts. If any payment received by the Agent for the account of a Fronting Lender pursuant to Section 6.3(a) is required to be returned by Applicable Law (including pursuant to any settlement entered into by the applicable Fronting Lender in its discretion), each Working Capital Facility Lender shall pay to the Agent for the account of the applicable Fronting Lender its Applicable Percentage share thereof on demand of the Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Working Capital Facility Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Working Capital Facility Lenders under this subparagraph shall survive the repayment of the Outstandings under the Working Capital Facility in full and the cancellation of the Working Capital Facility.

 

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6.5                               Obligations Absolute

 

The obligation of the Principal Borrower to reimburse the applicable Fronting Lender for each drawing under each Letter of Credit and to repay each LC Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

 

(a)                                 any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;

 

(b)                                 the existence of any claim, counterclaim, setoff, defense or other right that the Principal Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the applicable Fronting Lender or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

 

(c)                                  any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

 

(d)                                 any payment by the applicable Fronting Lender under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the applicable Fronting Lender under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, in each case in the absence of its bad faith, gross negligence or willful misconduct on the part of the applicable Fronting Lender as determined by a final non-appealable judgment of a court of competent jurisdiction;

 

(e)                                  any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any Obligor Guarantee or any Security Document, for all or any of the Outstandings of the Principal Borrower in respect of such Letter of Credit; or

 

(f)                                   any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Principal Borrower, in each case in the absence of its bad faith, gross negligence or willful misconduct on the part of the applicable Fronting Lender as determined by a final non-appealable judgment of a court of competent jurisdiction.

 

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6.6                               Role of Fronting Lenders

 

Each of the Principal Borrower and the Working Capital Facility Lenders agrees that, in paying any drawing under a Letter of Credit, a Fronting Lender shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the Fronting Lenders, any Related Party of any Fronting Lender nor any of the respective correspondents, participants or assignees of any Fronting Lender shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Working Capital Facility Lenders or the Required Working Capital Facility Lenders, as applicable; (ii) any action taken or omitted by it in the absence of its bad faith, gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or LC Application. The Principal Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Principal Borrower from pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Fronting Lenders, any Related Party of any Fronting Lender, nor any of the respective correspondents, participants or assignees of any Fronting Lender, shall be liable or responsible for any of the matters described in subparagraphs (a) through (e) of Section 6.5; provided, however, that anything in such subparagraphs to the contrary notwithstanding, the Principal Borrower may have a claim against a Fronting Lender, and a Fronting Lender may be liable to the Principal Borrower, to the extent, but only to the extent, of any direct, as opposed to indirect, special, punitive, consequential or exemplary, damages suffered by the Principal Borrower which a court of competent jurisdiction determines in a final non-appealable judgment were caused by a Fronting Lender’s bad faith, willful misconduct or gross negligence or a Fronting Lender’s bad faith, willful or grossly negligent failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, each Fronting Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no Fronting Lender shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

 

6.7                               Applicability of ISP98 and UCP

 

Unless otherwise expressly agreed by a Fronting Lender and the Principal Borrower when a Letter of Credit is issued, (a) the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit, and (b) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each commercial Letter of Credit.

 

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6.8                               Applicant Under Letter of Credit

 

If the Principal Borrower so requests in any applicable LC Application, any other Obligor may be named as the applicant in the applicable Letter of Credit; provided that the Principal Borrower shall remain fully liable for all fees and reimbursement obligations in respect of such Letter of Credit.

 

6.9                               Conflict with LC Application

 

In the event of any conflict between the terms hereof and the terms of any LC Application, the terms hereof shall control.

 

ARTICLE 7
PAYMENTS

 

7.1                               Mandatory Repayments

 

(a)                                 Maturity Date. The Principal Borrower shall repay all Outstandings on the Maturity Date.

 

(b)                                 Mandatory Prepayments (Proceeds of Certain Debt, Dispositions and Damages).  Promptly, and in any event within 5 Banking Days after receipt by any Obligor of any of the proceeds referred to below, the Borrowers shall apply such proceeds toward the prepayment of Outstanding Principal as prescribed by Section 7.1(d):

 

(i)                                   100% of Net Permitted Refinancing Debt Proceeds;

 

(ii)                                100% of the Net Disposition Proceeds; and

 

(iii)                             100% of expropriation or similar payments from any Governmental Authority and liquidated damage payments made to an Obligor by counterparties under any Material Project Agreement or counterparties under any construction, engineering or procurement contract related to the Project, in each case, received by the Obligors in an aggregate amount in excess of Cdn.$25,000,000 (or the Equivalent Amount thereof in any other currency) (the “Third Party Proceeds”).

 

The Borrower shall provide the Agent with at least 2 Banking Days’ prior written notice of each such prepayment.

 

(c)                                  Mandatory Prepayments (Proceeds of Insurance).

 

(i)                                   Subject to Section 7.1(c)(ii), on the earlier of (i) 365 days after receipt by any Obligor of Net Insurance Proceeds and (ii) 5 Banking Days after the Obligors have determined that such Net Insurance Proceeds shall not be applied to a Permitted Use, the Borrowers shall apply 100% of such Net

 

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Insurance Proceeds toward the prepayment of Outstanding Principal as prescribed by Section 7.1(d).

 

(ii)                                Notwithstanding Section 7.1(c)(i), if KMI or one of its Affiliates has:

 

(A)                               advanced funds to an Obligor which funds were used to repay in full an Advance in respect of a NEB Reserve Drawdown; or

 

(B)                               advanced funds to an Obligor that have, instead of the applicable Net Insurance Proceeds, been applied to a Permitted Use;

 

then, any Net Insurance Proceeds shall first be paid to KMI, or the applicable Affiliate thereof, in order to repay in full the amounts described in clauses (A) and (B) above and any remaining Net Insurance Proceeds thereafter shall be repaid in accordance with Section 7.1(d).

 

(d)                                 Application of Prepayments and Reduction of Credit Facilities.

 

(i)                                   All prepayments made under Sections 7.1(b) and 7.1(c) shall be applied toward the prepayment of, firstly, Outstanding Principal under the Contingent Facility and, secondly, Outstanding Principal under the Construction Facility.

 

(ii)                                The Total Commitment shall be permanently reduced, in the case of the Net Disposition Proceeds, the Third Party Proceeds and the Net Insurance Proceeds, by the amount thereof, in each such case, with such permanent reduction to be applied, firstly, against the Total Contingent Facility Commitment and, secondly, against the Total Construction Facility Commitment (notwithstanding that the Outstanding Principal under any such Credit Facility may be less than the amounts by which the commitments thereunder are to be reduced as required hereby).

 

(iii)                             The Total Commitment shall be reduced, in the case of Net Permitted Refinancing Debt Proceeds, by the amount thereof with such reduction to be applied, firstly, against the Total Construction Facility Commitment and, secondly, against the Total Contingent Facility Commitment (notwithstanding that the Outstanding Principal under any such Credit Facility may be less than the amounts by which the commitments thereunder are to be reduced as required hereby).

 

(iv)                            Each reduction of the commitment amount under a Credit Facility pursuant to Sections 7.1(d)(ii) and (iii) above shall apply to the Commitment of each applicable Lender under such Credit Facility based on its Applicable Percentage thereunder.

 

(e)                                  Repayments of NEB Reserve Drawdowns. The NEB Reserve Borrower shall repay all Outstandings in respect of a NEB Reserve Drawdown within 30 days of the applicable Drawdown Date of such NEB Reserve Drawdown.

 

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7.2                               Optional Repayment

 

The Borrowers may, without premium or penalty and at any time and from time to time, repay to the Agent for the account of the Lenders the whole or any part of any Loan under any Credit Facility (as directed by the applicable Borrower) together with accrued interest thereon to the date of such repayment; provided that:

 

(a)                                 in anticipation of any repayment of any Loan, the applicable Borrower shall give a Conversion/Rollover/Repayment Notice to the Agent at least (i) 3 Banking Days prior to any such repayment in the case of LIBO Rate Loan, and (ii) 1 Banking Day prior to any such repayment, in the case of any other Loan;

 

(b)                                 each repayment of any Loan shall be in a minimum amount equal to the lesser of:

 

(i)                                     the applicable amounts set forth in Section 2.5(b); and

 

(ii)                                  the Outstanding Principal of all Loans outstanding immediately prior to such repayment;

 

(c)                                  repayments pursuant to this Section 7.2 may only be made on a Banking Day;

 

(d)                                 unless the Principal Borrower pays breakage costs pursuant to Section 7.4(a), each such repayment may only be made on the last day of the applicable Interest Period with regard to a LIBO Rate Loan that is being repaid;

 

(e)                                  a Bankers’ Acceptance (including a BA Equivalent Advance) may only be repaid on its maturity, but may be Cash Collateralized; and

 

(f)                                   a Letter of Credit may only be repaid if it is returned for cancellation, but may be Cash Collateralized.

 

7.3                               Currency Excess

 

(a)                                 Requirement to Repay. If the Agent determines that the Equivalent Amount in Cdn. Dollars of the Outstanding Principal under a Credit Facility exceeds the aggregate amount of all Lender Commitments under such Credit Facility (the amount of such excess is herein called the “Currency Excess”), then, upon written request by the Agent (which request shall detail the applicable Currency Excess), the Principal Borrower shall either repay sufficient Outstanding Principal under the applicable Credit Facility to remove the Currency Excess or collateralize the Currency Excess in accordance with Section 7.3(b) within (i) if the Currency Excess exceeds 3% of the aggregate amount of all Lender Commitments under the applicable Credit Facility, 5 Banking Days, or (ii) if the Currency Excess is less than 3% of the aggregate amount of all Lender Commitments under the applicable Credit Facility, 20 Banking Days.

 

(b)                                 Failure to Repay. If and to the extent that the Principal Borrower fails to make sufficient repayments to eliminate such Currency Excess (the remainder thereof

 

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being herein called the “Currency Excess Deficiency”), the Principal Borrower shall place an amount equal to the Currency Excess Deficiency on deposit with the Agent in an interest-bearing account with interest at rates prevailing at the time of deposit for the account of the Principal Borrower, to be held and applied to maturing Bankers’ Acceptances or LIBO Rate Loans, as the case may be (converted if necessary at the exchange rate for determining the Equivalent Amount on the date of such application). The Agent is hereby irrevocably directed by the Principal Borrower to apply any such sums on deposit to maturing Loans under the applicable Credit Facility as provided in the preceding sentence. Upon the Currency Excess being eliminated as aforesaid or by virtue of subsequent changes in the exchange rate for determining the Equivalent Amount, then, provided no Default or Event of Default is then continuing, such funds on deposit, together with interest thereon, shall be returned to the Principal Borrower.

 

7.4                               Additional Repayment Terms

 

(a)                                 Breakage Costs. If any LIBO Rate Loan is repaid or converted on other than the last day of the applicable Interest Period, the Principal Borrower shall, within 3 Banking Days after notice is given by the Agent, pay to the Agent for the account of the Lenders all costs, losses, premiums and expenses incurred by such Lenders by reason of the liquidation or re-deployment of deposits or other funds or for any other reason whatsoever resulting from the repayment of such Loan or any part thereof on other than the last day of the applicable Interest Period. Any Lender, upon becoming entitled to be paid such costs, losses, premiums and expenses, shall deliver to the Principal Borrower and the Agent, a certificate of such Lender, prepared in good faith, certifying as to such amounts and, in the absence of manifest error, such certificate shall be conclusive and binding for all purposes.

 

(b)                                 Cash Collateral — Bankers’ Acceptances. With respect to the prepayment or Cash Collateralization of unmatured Bankers’ Acceptances required as a result of Section 7.2(e) or 12.4, the Principal Borrower shall provide for the funding in full of such unmatured Bankers’ Acceptances by paying to and depositing with the Agent Cash Collateral for each such unmatured Bankers’ Acceptances equal to the face amount payable at maturity thereof; such Cash Collateral deposited by the Principal Borrower shall be held by the Agent in an interest-bearing Cash Collateral Account with interest to be credited to the Principal Borrower at rates prevailing at the time of deposit for similar accounts with the Agent. Such Cash Collateral Account shall be assigned to the Agent as security for the obligations of the Principal Borrower in relation to such Bankers’ Acceptances and the security of the Agent thereby created shall rank in priority to all other Liens and adverse claims against such Cash Collateral. Such Cash Collateral shall be applied to satisfy the obligations of the Principal Borrower for such Bankers’ Acceptances as they mature and the Agent is hereby irrevocably directed by the Principal Borrower to apply any such Cash Collateral to such maturing Bankers’ Acceptances. Amounts held in such Cash Collateral Accounts may not be withdrawn by the Principal Borrower without the consent of the Lenders;

 

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however, interest on such deposited amounts shall be for the account of the Principal Borrower and may be withdrawn by the Principal Borrower so long as no Default or Event of Default is then continuing. If after maturity of the Bankers’ Acceptances for which such funds are held and application by the Agent of the amounts in such Cash Collateral Accounts to satisfy the obligations of the Principal Borrower hereunder with respect to the Bankers’ Acceptances being repaid, any excess remains, such excess shall be promptly paid by the Agent to the Principal Borrower so long as no Default or Event of Default is then continuing.

 

(c)                                  Cash Collateral — Letters of Credit. With respect to the prepayment or Cash Collateralization of undrawn Letters of Credit required as a result of Section 7.2(f) or 12.4, the Principal Borrower shall provide for the funding in full of such undrawn Letters of Credit by paying to and depositing with the Agent Cash Collateral for each such undrawn Letter of Credit equal to the maximum then undrawn amount payable at the maturity thereof; such Cash Collateral deposited by the Principal Borrower shall be held by the Agent in an interest-bearing Cash Collateral Account with interest to be credited to the Principal Borrower at rates prevailing at the time of deposit for similar accounts with the Agent. Such Cash Collateral Account shall be assigned to the Agent as security for the LC Obligations in relation to such Letters of Credit and the security of the Agent thereby created shall rank in priority to all other Liens and adverse claims against such Cash Collateral. Such Cash Collateral shall be applied to satisfy the LC Obligations for such Letters of Credit if they are drawn and the Agent is hereby irrevocably directed by the Principal Borrower to apply any such Cash Collateral to pay the applicable LC Obligations. Amounts held in such Cash Collateral Accounts may not be withdrawn by the Principal Borrower without the consent of the Working Capital Facility Lenders; however, interest on such deposited amounts shall be for the account of the Principal Borrower and may be withdrawn by the applicable Borrower so long as no Default or Event of Default is then continuing. If after the expiration or cancellation of the Letters of Credit for which such funds are held and application by the Agent of the amounts in such Cash Collateral Accounts to satisfy the applicable LC Obligations with respect to such Letters of Credit, any excess remains, such excess shall be promptly paid by the Agent to the Principal Borrower so long as no Default or Event of Default is then continuing.

 

7.5                               Payments — General

 

(a)                                 Unconditional Payments. All payments of principal, interest, fees and other amounts to be made by the Borrowers pursuant to this Agreement shall be made unconditionally and without set-off, defence, counterclaim or other reduction of any type, in the currency in which the Loan is outstanding for value on the day such amount is due, and if such day is not a Banking Day on the Banking Day next following, by deposit or transfer thereof to the Agent’s Accounts or at such other place as the applicable Borrower and the Agent may from time to time agree. Notwithstanding anything to the contrary expressed or implied in this

 

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Agreement, the receipt by the Agent in accordance with this Agreement of any payment made by a Borrower for the account of any of the Lenders shall, insofar as the Borrowers’ obligations to the relevant Lenders are concerned, be deemed also to be receipt by such Lenders and the Borrowers shall have no liability in respect of any failure or delay on the part of the Agent in disbursing and/or accounting to the relevant Lenders in regard thereto.

 

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

 

(c)                                  Non-Banking Days. Unless otherwise specifically provided for herein, if any payment required hereunder shall become due and payable on a day which is not a Banking Day, such payment shall be made on the next following Banking Day and any extension of time shall in such case be included in computing interest payable hereunder relating to such payment.

 

7.6                               Application of Payments after Default

 

(a)                                 Rateable Payments. Except as otherwise agreed in writing by all of the Lenders and subject to the terms of the Collateral Agency and Intercreditor Agreement, all monies and property received by the Lenders for application in respect of the Lender Secured Obligations after delivery of a notice pursuant to Section 12.2(a) or the occurrence of an Event of Default set out in Section 12.1(f) or Section 12.1(g) and all monies received as a result of a realization upon the Security Documents shall be applied and distributed to the Lenders and the Agent in the following order:

 

(i)                                     Rateably to the Lenders and the Agent in accordance with amounts owing to each Lender and the Agent on account of the costs and expenses of enforcement and realization upon the Security Documents; and

 

(ii)                                  Rateably to the Lender Secured Parties on account of the Lender Secured Obligations;

 

with the balance (if any) to be paid to the Principal Borrower or otherwise as may be required by Applicable Law.  Amounts and other distributions due to the Agent and the Lenders in respect of the Outstandings pursuant to paragraph (ii) above shall be applied in accordance with Section 7.6(b). For the foregoing purposes, “Rateably” means, at any date of determination, the proportion that the Equivalent Amount in Canadian Dollars of the amount of Lender Secured

 

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Obligations due to any Lender bears to the aggregate of the Equivalent Amount in Canadian Dollars of the Lender Secured Obligations of all Lenders.

 

(b)                                 Lender Secured Obligations. Except as otherwise agreed in writing by all of the Lenders and subject to the terms of the Collateral Agency and Intercreditor Agreement, all payments and other distributions required to be made to the Agent and the Lenders pursuant to Section 7.6(a)(ii) in respect of the Outstandings shall be applied in the following order:

 

(i)                                     to the payment of all reasonable and documented costs and expenses incurred by the Agent, including all court costs and the reasonable fees and expenses of its agents and legal counsel (on a full indemnity basis);

 

(ii)                                  to amounts due hereunder as fees other than acceptance fees for Bankers’ Acceptances, LC Fees, standby fees and Fronting Fees;

 

(iii)                               to amounts due hereunder as costs and expenses (not otherwise contemplated in (a) above);

 

(iv)                              to amounts due hereunder as default interest;

 

(v)                                 to amounts due hereunder as interest, LC fees, acceptance fees for Bankers’ Acceptances, Fronting Fees and standby fees;

 

(vi)                              to amounts due as Outstanding Principal, Lender Swap Obligations and Cash Management Obligations, on a pro rata basis; and

 

(vii)                           to all other Outstandings.

 

Notwithstanding the foregoing, amounts received from any Restricted Subsidiary that is not an “Eligible Contract Participant” (as defined in the Commodity Exchange Act) shall not be applied to Lender Swap Obligations that are Excluded Swap Obligations.

 

7.7                               Margin Changes; Adjustments for Margin Changes

 

(a)                                 Effectiveness. Changes in Applicable Pricing Rates shall be effective:

 

(i)                                     on the Banking Day immediately following any change in the relevant Debt Rating (or when the Principal Borrower ceases to have a Debt Rating, if applicable) which results in a change in the Applicable Margin in accordance with the definition thereof; and

 

(ii)                                  without the necessity of notice to the Borrowers.

 

(b)                                 Loans. For any Loans outstanding as of the effective date of a change in an Applicable Margin:

 

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

 

(ii)                                  in the case of decreases in such rates per annum, the applicable Borrower shall receive a credit against subsequent interest payable on Loans or fees payable pursuant to Article 4, as the case may be, to the extent necessary to give effect to the relevant decreases in the interest or fees payable on or in respect of such Loans from and as of the effective date of the relevant decrease in rates.

 

(c)                                  Payments. The additional payments required by Section 7.7(b)(i) shall be made on the last Banking Day of the calendar month immediately following the calendar month in which the changes in Applicable Margins are effective. The adjustments required by Section 7.7(b)(ii) shall be accounted for in successive interest and fee payments by the applicable Borrower until the amount of the credit therein contemplated has been fully applied; provided that, upon satisfaction in full of all Outstandings and cancellation of the Credit Facilities in accordance herewith, the Lenders shall pay to the applicable Borrower an amount equal to any such credit which remains outstanding.

 

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

 

8.1                               Representations and Warranties

 

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

 

(a)                                 Status.  Each Obligor has been duly incorporated, amalgamated or formed, as applicable, and is validly existing under the law of its jurisdiction of incorporation, amalgamation or formation, as applicable. Each of the Obligors is duly licensed, registered or qualified in all jurisdictions where the character of its Property owned or leased or the nature of the activities conducted by it makes such licensing, registration or qualification necessary or desirable, except to the extent failure to be so licensed, registered or qualified would not reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Power and Capacity.  Each of the Obligors has full corporate, partnership or other (as applicable) capacity, power and authority:

 

(i)                                     to own, lease and operate its respective properties and assets and carry on its respective business as presently carried on and, if applicable, as

 

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contemplated to be carried on under the Material Project Agreements to which it is a party; and

 

(ii)                                  to enter into each of the Loan Documents to which it is a party and to do all acts and execute and deliver all other documents as are required hereunder or thereunder to be done, observed or performed by it or them in accordance with their respective terms and, in the case of the Borrowers, to obtain extensions of credit hereunder.

 

(c)                                  Authorization; Execution and Delivery.  Each of the Obligors has taken all necessary corporate, partnership and other action (as applicable) to authorize the creation, execution and delivery of, and performance of its respective obligations under, each of the Loan Documents and Material Project Agreements to which it is then a party in accordance with the respective terms thereof, and each such Loan Document and Material Project Agreements has been, or when signed and delivered will have been, duly executed and delivered in accordance with such corporate, partnership or other action (as applicable).

 

(d)                                 Validity and Enforceability.  This Agreement constitutes and each other Loan Document constitutes or, when executed and delivered, will constitute, valid and legally binding obligations of each of the Obligors that is a party thereto, enforceable against each of them in accordance with its terms, subject only to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors’ rights, and to general principles of equity.

 

(e)                                  No Violation, Breach, Conflict etc.  Neither the execution and delivery of this Agreement, any other Loan Document or any Material Project Agreement, nor compliance with the terms and conditions of any of them:

 

(i)                                     has resulted, or will result, in a violation of the articles, by-laws, partnership agreement, unanimous shareholders’ agreement or other constating or governing documents of any Obligor party thereto or any resolutions passed by the directors, shareholders or partners (as applicable) of such Obligor;

 

(ii)                                  has resulted, or will result, in a violation of any Applicable Law or any Required Permit that has then been issued or which is then required to have been obtained for the current state of the Project, except to the extent such violation would not reasonably be expected to have a Material Adverse Effect;

 

(iii)                               has resulted, or will result, in a breach of, or constitute a default under, any loan agreement, indenture, trust deed or any other agreement or instrument to which any Obligor is a party or by which it or any of its Property is bound, or requires any consent thereunder other than such as has already been received (including the Material Project Agreements then in effect),

 

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except to the extent that such breach, default or failure would not reasonably be expected to have a Material Adverse Effect; or

 

(iv)                              has resulted or will result, in the creation of, or the obligation to create, any Lien on, against or in respect of any of the Property of any Obligor except for Permitted Liens or except as expressly permitted or contemplated hereby or thereby or by any other Loan Document.

 

(f)                                   Authorizations.

 

(i)                                     All material Governmental Authorizations (including all Required Permits and material Environmental Permits) required (A) for the execution and delivery by each Obligor of each of the Loan Documents and the Material Project Agreements to which it is a party or (B) for the development, construction, ownership or operation of the Project or any portion thereof, have been obtained and are in full force and effect, except for those Governmental Authorizations (x) not required to have been obtained or issued as of the date this representation is made or is deemed to be made hereunder are reasonably expected to be obtained in the normal course of the construction of the Project after the date this representation is made or is deemed to be made hereunder and for which no fact or circumstance exists, to the Principal Borrower’s Knowledge, which makes it likely that such Governmental Authorizations shall not be timely issued or obtained without unnecessary delay or cost or (y) which the failure to so obtain would not reasonably be expected to have a Material Adverse Effect or materially delay Project Completion.

 

(ii)                                  The material Required Permits required for the development and construction of the Project as of the Closing Date are as set out in Schedule L.

 

(g)                                  Organization and Location.  Schedule I (as at the date hereof and as it may be required to be updated from time to time by the Principal Borrower in accordance with this Agreement) lists the names, jurisdictions of incorporation, continuance, amalgamation or formation of and the details of ownership of the outstanding Equity Securities and Equity Securities Equivalents of each Obligor and their respective Subsidiaries, in each case existing on the Closing Date. Schedule J (as at the date hereof and as it may be required to be updated from time to time by the Principal Borrower in accordance with this Agreement) lists the jurisdiction of organization of each Obligor, the jurisdiction in which the chief executive office of each Obligor is located and each jurisdiction in which each Obligor holds any material tangible Property.

 

(h)                                 Ownership of Assets.  Each Obligor:

 

(i)                                     has good and marketable title to all of the material Property that it owns, subject only to Permitted Liens and defects in title which in the aggregate

 

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do not materially detract from the value of such Property or any significant part thereof or materially impair the use of any thereof in the operation of the businesses of the Obligors, taken as a whole and, to the Knowledge of the Principal Borrower, no Person has any agreement or right to acquire any of any Obligor’s respective interest in any material Property necessary for the conduct of the Closing Date Business or for the Project; and

 

(ii)                                  owns, leases or has the lawful right to use all of the material Property and undertaking necessary for the conduct of the businesses of such Obligor.

 

Such material Property is not subject to any Liens, except for Permitted Liens.

 

(i)                                     Funded Debt.  No Obligor has any Funded Debt other than Permitted Debt.

 

(j)                                    Intellectual Property.  Each of the Obligors owns or has the right to use all Intellectual Property that is used in or otherwise necessary for the operation of their respective businesses as currently conducted (and as contemplated to be conducted under the Material Project Agreements), except where the failure of the foregoing would not reasonably be expected to have a Material Adverse Effect. To the Knowledge of the Principal Borrower, the operation of their respective businesses by each of the Obligors does not infringe upon, misappropriate, violate or otherwise conflict with the Intellectual Property of any third party, except as would not reasonably be expected to have a Material Adverse Effect.

 

(k)                                 No Default.  No Default or Event of Default has occurred and is continuing.

 

(l)                                     Combined Consolidated Financial Statements. The combined consolidated Financial Statements provided to the Lenders prior to the Closing Date as set out in the IPO Prospectus have been prepared in good faith, based on assumptions believed by the Principal Borrower to be reasonable as of the date of delivery thereof, and present fairly in all material respect on a combined consolidated basis the estimated financial position of the Closing Date Business as at their estimated results of operations on such date.

 

(m)                             Certain Information and Projections.  All written factual information,  heretofore or contemporaneously furnished by or on behalf of any Obligor to the Agent or the Lenders in connection with the Obligors, the Credit Facilities, or the Project was:

 

(i)                                     in the case of projections, prepared in good faith based upon reasonable assumptions at the date of preparation, and, in all other cases, true, complete and correct in all material respects as of the respective dates thereof; and

 

(ii)                                  to the extent prepared by persons other than the Obligors or any of their Subsidiaries and provided to the Agent by or on behalf of an Obligor or any of their respective Subsidiaries, or as required by the terms of the Credit Agreement, to the Knowledge of the Principal Borrower:

 

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(A)                               in the case of projections, prepared in good faith based upon reasonable assumptions at the date of preparation; and

 

(B)                               in all other cases, true, complete and correct in all material respects as of the respective dates thereof.

 

(n)                                 Financial Condition.  The most recent audited and unaudited consolidated Financial Statements of KMCL delivered to the Agent hereunder present fairly, in all material respects, the consolidated financial condition of KMCL as at the date or dates thereof and the results of the consolidated operations thereof for the Fiscal Quarter or Fiscal Year then ending, as applicable, all in accordance with GAAP consistently applied and, since the date of the most recent Financial Statements delivered to the Agent hereunder, no event or circumstance has occurred and is continuing which would reasonably be expected to have a Material Adverse Effect (provided that, in the case of a representation being deemed to be made hereunder solely in respect of a Drawdown under the Working Capital Facility, or the NEB Reserve Drawdown, except as has been disclosed by written notice from the Principal Borrower to the Agent).

 

(o)                                 Books and Records.  All books and records of the Obligors have been fully, properly and accurately kept in accordance with GAAP and completed in all material respects and there are no material inaccuracies or discrepancies of any kind contained or reflected therein.

 

(p)                                 Material Project Agreements.  Each Obligor is in compliance with each Material Project Agreement to which it is a party and in existence on the date this representation is made or deemed to be made, except for any non-compliance with respect to which the counterparty or counterparties to such Material Project Agreements do not have a right to terminate such Material Project Agreements or a right for such counterparty or counterparties to cease performing its material obligations thereunder.  All consents and approvals required under any Material Project Agreements in connection with the Loan Documents, the other Material Project Agreements and the development, construction, ownership and operation of the Project have been obtained (other than those that are not then required for the current state of the Project), save and except such consents which are reasonably expected to be obtained in the normal course or which the failure to so obtain and have the same would not be reasonably be expected to have a Material Adverse Effect or materially delay Project Completion.

 

(q)                                 Litigation.  Except with respect to the Existing Project Related Proceedings, there are no actions, suits, proceedings or Environmental Claims pending or, to the Knowledge of the Principal Borrower, threatened against or affecting any Obligor (including any claims against their Property, at law, in equity or before any arbitrator or before or by any Governmental Authority) in respect of which there is a reasonable likelihood of a determination adverse to any Obligor and which, if determined adversely to such Obligor, would have a Material Adverse Effect and since the Closing Date, there have been no material and adverse developments

 

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with respect to the Existing Project Related Proceedings that would reasonably be expected to have a Material Adverse Effect (provided that, in the case of a representation being deemed to be made hereunder solely in respect of a Drawdown under the Working Capital Facility, or the NEB Reserve Drawdown, except as has been disclosed by written notice from the Principal Borrower to the Agent).

 

(r)                                    Compliance with Laws, etc.  Each Obligor and its businesses and operations are in compliance with: all Applicable Laws (including all applicable Environmental Laws); all applicable directives, judgments, decrees, injunctions and orders rendered by any Governmental Authority or any court of competent jurisdiction; its and their constating or governing documents (including partnership agreements and unanimous shareholders’ agreements) and by-laws; all material agreements or instruments to which it is a party or by which any of its Property are bound (including the Material Project Agreements then in effect); except to the extent that non-compliance with any of the foregoing would not reasonably be expected to have a Material Adverse Effect.

 

(s)                                   Taxes.  Each Obligor has duly filed on a timely basis all material tax returns required to be filed and have paid all material Taxes which are then due and payable, and have paid all material assessments and reassessments and all material Other Taxes, governmental charges, governmental royalties, other required payments to Governmental Authorities, penalties, interest and fines claimed against them, other than those which, in each case, are subject to a Permitted Contest or the failure to file or pay the same would not otherwise reasonably be expected to have a Material Adverse Effect. Each Obligor has made adequate provision for, and all required instalment payments have been made in respect of, Taxes and Other Taxes in all material amounts payable for the current period for which returns are not yet required to be filed.  There are no actions or proceedings being taken by any Governmental Authority to enforce the payment of any material Taxes or Other Taxes by them, other than those which are subject to a Permitted Contest. All of the material remittances and source deductions required to be made by an Obligor to any Governmental Authority (including in respect of Taxes and Other Taxes) have been made and are currently up to date, and there are no outstanding material arrears other than those which are subject to a Permitted Contest.

 

(t)                                    Insurance.  All insurance policies required to be maintained by (or on behalf of) each Obligor pursuant to Section 9.1(e) have been obtained and are in full force and effect, and such insurance policies comply in all material respects with the requirements of Section 9.1(e).

 

(u)                                 Environmental Matters.

 

(i)                                     Each Obligor and its Property comply in all respects, and the businesses, activities and operations of each Obligor and the use of its Property comply in all respects, with all Environmental Laws, Environmental

 

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Permits and Environmental Orders except to the extent failure to comply would not reasonably be expected to have a Material Adverse Effect; further, the Principal Borrower does not have Knowledge of any facts which result in, or constitute, or are likely to give rise to, non-compliance with any Environmental Laws, Environmental Permits or Environmental Orders, which facts or non-compliance would reasonably be expected to result in a Material Adverse Effect.

 

(ii)                                  Each Obligor has obtained all Environmental Permits which are then required in relation to its Property or in respect of their respective businesses, activities, and operations except to the extent failure to do so would not reasonably be expected to have a Material Adverse Effect; all such Environmental Permits are valid and in full force and effect, and no violations thereof have occurred which are continuing and which would reasonably be expected to have a Material Adverse Effect; no proceedings are pending and, to the Knowledge of the Principal Borrower, no proceedings are being taken by any Governmental Authority to remove or invalidate any of the Environmental Permits, the removal or invalidation of which would reasonably be expected to have a Material Adverse Effect; and there is no reasonable reason to believe that any Environmental Permits required to be obtained after the date hereof will not be issued pursuant to applications made for such Environmental Permits if the failure to have such Environmental Permit would reasonably be expected to have a Material Adverse Effect.

 

(iii)                               The businesses, activities and operations of each Obligor which have generated, manufactured, refined, treated, transported, stored, handled, disposed, transferred, produced or processed Hazardous Materials have done so in compliance in all respects with all Environmental Laws, Environmental Permits and Environmental Orders, except to the extent such failure to so comply would not reasonably be expected to have a Material Adverse Effect.

 

(iv)                              All contaminants and other Hazardous Materials owned or controlled by an Obligor and disposed of, treated or stored on or in relation to their Property have been or are in the process of being disposed of, treated and stored in compliance in all respects with all Environmental Laws, Environmental Permits and Environmental Orders, except to the extent such failure to so comply would not reasonably be expected to have a Material Adverse Effect.

 

(v)                                 No Obligor has received written notice of any material non-compliance under any Environmental Laws, Environmental Permits or Environmental Orders, nor has Knowledge of any facts which could give rise to any notice of non-compliance with any Environmental Laws, Environmental Permits and Environmental Orders, which facts or non-compliance would have a Material Adverse Effect, or except as previously disclosed to the

 

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Agent in writing, any notice that an Obligor is a potentially responsible party for a federal, provincial, regional, municipal or local clean-up or corrective action in connection with their Property which, if not complied with, would reasonably be expected to have a Material Adverse Effect.

 

(vi)                              To the Knowledge of the Principal Borrower, each Obligor has maintained all environmental and operating documents and records in the manner and for the time periods required to comply in all respects with all Environmental Laws, Environmental Permits and Environmental Orders, except where failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

(vii)                           Each Obligor has in effect a management structure and policies and procedures that will permit such Obligor to effectively manage environmental risk and respond in a timely manner in compliance with the Environmental Laws, Environmental Orders and Environmental Permits in the event of Release of Hazardous Materials in, on or under Property of such Obligor.

 

(viii)                        Each Obligor is in compliance in all material respects with the NEB’s Reasons for Decision MH-001-2013 dealing with the Obligors’ requirement to establish and maintain pipeline abandonment trust funds.

 

(v)                                 Labour Matters. Prior to the Project Completion Date, as at the date of any Drawdown requested under the Construction Facility of the Contingent Facility, there are no strikes or other labour or work stoppage or union disputes against the Principal Borrower or any other Obligor pending or, to the Knowledge of the Principal Borrower, threatened that would reasonably be expected to have a Material Adverse Effect or delay Project Completion beyond the Outside Date.

 

(w)                               No Defined Benefits Plan.  As of the date hereof, none of the Obligors have established or contributed to any Defined Benefits Plan, and have not incurred any liability in respect of any Defined Benefits Plan, other than Kinder Morgan Canada Inc. and the liabilities thereof under its Defined Benefits Plan.

 

(x)                                 Anti-Corruption Laws and Sanctions.

 

(i)                                     The Obligors will have implemented within the 90 day period referred to in Section 9.1(k), and thereafter will maintain in effect, procedures, policies or codes of conduct intended to ensure compliance in all material respects by its directors, officers and employees with, in each case, Anti-Corruption Laws and Sanctions applicable to such Persons.

 

(ii)                                  None of the Obligors or their Subsidiaries or, to the Knowledge of the Principal Borrower, any of their respective directors, officers and employees is a Sanctioned Person.

 

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(iii)                               No part of the proceeds of the Loans will be used intentionally by a Borrower (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation in any material respect of any Anti-Corruption Laws, (B) for the purpose of funding (including payments made to) or financing any activities, investments, business or transaction of or with any Person actually known to the Obligors to be a Sanctioned Person, or in any country actually known to the Obligors to be a Sanctioned Country where such Sanctions relate to the business activities of the Obligors, or (C) in any manner that would result in the violation in any material respect of any Sanctions applicable to the Obligors.

 

(y)                                 Collateral Representations.

 

(i)                                     Valid and Perfected Security Interests.  Each Security Document delivered pursuant to this Agreement will, upon execution and delivery thereof, be effective to create in favour of the Collateral Agent for the benefit of, inter alios, the Lender Secured Parties, a legal, valid and enforceable Lien in the Collateral described therein to the extent intended to be created thereby and required to be perfected therein under the Loan Documents. In the case of the Pledged Equity Securities described in the Security Documents, when certificates representing such Pledged Equity Securities are delivered to the Collateral Agent, and in the case of the other Collateral described in the Security Documents, when financing statements and other filings in appropriate form are filed in the offices of the appropriate Governmental Authority in the jurisdictions specified in Schedule J, the Liens created by the Security Documents shall constitute fully perfected first priority Liens on, and security interests in (to the extent intended to be created thereby and required to be perfected under the Loan Documents and subject only to Permitted Liens which under Applicable Law rank in priority thereto)) all rights, title and interest of the Obligors and the Pledgors in such Collateral, as security for, inter alios, the Lender Secured Obligations, in each case free and clear of any Liens other than Permitted Liens.

 

(ii)                                  Filings and Registrations.  Except as have been obtained and are in full force and effect, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for:

 

(A)                               the grant by each Obligor and Pledgor of the Liens granted pursuant to the Security Documents; or

 

(B)                               the perfection of such security interest (other than as described in paragraph (i) above) and such other filings and recordings (and renewals thereof) as may be required to perfect the Liens created by the Security Documents.

 

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(iii)                               Accounts.  Except for any Excluded Securities Accounts and except for accounts maintained with any financial institution or other Person to hold Excluded Deposits/Amounts, the Obligors maintain all of their deposit accounts and securities accounts with the Agent and one or more Lenders in Canada. No deposit account or securities account of any Obligor is subject to any Control Agreement (except such agreements as may exist with the Collateral Agent, the Agent or any Lender or which may exist in respect of Excluded Securities Accounts or in respect of accounts which hold Excluded Deposits/Amounts).

 

(z)                                  Solvency.  Each Obligor is, and after giving effect to the incurrence of all Funded Debt and obligations incurred in connection herewith will be, Solvent.

 

(aa)                          Pari Passu Ranking. The Lender Secured Obligations rank at least pari passu in right of payment with all of their other senior secured Funded Debt of the Obligors, including all Permitted Refinancing Debt and Permitted Incremental Debt.

 

(bb)                          Residency for Tax Purposes. The Principal Borrower is not a non-resident of Canada as defined in, and for the purposes of, the Tax Act.

 

(cc)                            Use of Credit Facilities. Each Borrower acknowledges that the Credit Facilities are for use by the Obligors and will be used for the Obligors’ and their Subsidiaries’ lawful business purposes only, as permitted by Section 2.1, 2.2 and 2.3.

 

(dd)                          Operation of Project and Closing Date Business. The facilities, plants, and equipment in respect of the Project and/or the Closing Date Business have all been operated and maintained in a good and workmanlike manner, and such business has been conducted, in accordance with prudent industry practice and in accordance with all Applicable Laws, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

(ee)                            Real Estate Matters. All material easements, rights of way and other real property rights (including consents of the Crown) necessary to operate the Closing Date Business and to develop, construct and operate the Project have been acquired and are in full force and effect (and all such material rights related to the Project are identified in Schedule N) and all Governmental Authorizations necessary to use such easements, rights of way and other real property rights have been acquired by the Obligors and are in full force and effect, other than:

 

(i)                                     any such rights related to the Project, the failure of which to have been obtained by the Obligors at such time would not reasonably be expected to materially adversely affect the construction schedule in effect at such time to achieve Project Completion prior to the Outside Date for, or the operation of, the Project; and

 

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(ii)                                  any such rights related to the Project that can be obtained, and the Principal Borrower reasonably expects to obtain, in the normal course of construction of the Project.

 

(ff)                              Consultant Reports. As of the Closing Date, the Principal Borrower has, and has caused each other Obligor to, take all commercially reasonable action necessary to satisfy the material recommendations contained in each of the reports delivered pursuant to Section 3.1(c) of each of the Independent Engineer, the Environmental and Social Consultant, the Insurance Consultant and the Market Consultant, as the case may be.

 

8.2                               Deemed Repetition

 

On the date of any Drawdown made by the applicable Borrower pursuant hereto:

 

(a)                                 each of the representations and warranties contained in Section 8.1 shall be true and correct in all material respects as if made on such date of such Drawdown (excluding those representations and warranties which are expressly made as of a specific date only and, in the case of any NEB Reserve Drawdown, excluding those representations and warranties which would not be true as a direct or indirect result of the event, circumstance or occurrence giving rise to the requirement to make a NEB Reserve Drawdown); and

 

(b)                                 the applicable Borrower shall be deemed to have represented to the Agent and the Lenders that, except as has otherwise been notified to the Agent in writing and has been waived in accordance herewith, no Default or Event of Default has occurred and is continuing (other than, in the case of any NEB Reserve Drawdown, those which are a direct or indirect result of the event, circumstance or occurrence giving rise to the requirement to make a NEB Reserve Drawdown) nor will any such event occur as a result of the aforementioned Drawdown.

 

8.3                               Other Loan Documents

 

All representations and warranties of any Obligor contained elsewhere in this Agreement or in any other Loan Document delivered pursuant hereto or thereto shall be deemed to constitute representations and warranties made by the Principal Borrower to the Agent and the Lenders under Section 8.1 of this Agreement as of the date made under such Loan Document.

 

8.4                               Effective Time of Repetition

 

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

 

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8.5                               Nature of Representations and Warranties

 

The representations and warranties set out in this Agreement or deemed to be made pursuant hereto shall survive the execution and delivery of this Agreement and the making of each Drawdown, notwithstanding any investigations or examinations which may be made by the Agent, the Lenders or Lenders’ Counsel, until the repayment of the Outstandings and the cancellation of the Credit Facilities.

 

ARTICLE 9
GENERAL COVENANTS

 

9.1                               Positive Covenants

 

So long as any Outstandings exist or any Credit Facility is available hereunder, the Principal Borrower covenants and agrees with each of the Lenders and the Agent that without the prior written consent of the Lenders:

 

(a)                                 Payment and Performance.  Each Borrower shall duly and punctually pay the principal of all Loans, all interest thereon and all fees and other amounts required to be paid by it hereunder at the times and in the manner specified hereunder and the Principal Borrower shall, and shall cause each of the other Obligors to, perform and observe all of their respective obligations under this Agreement and under any other Loan Document to which it or any other Obligor is a party.

 

(b)                                 Existence and Conduct of Business.  The Principal Borrower shall, and shall cause each of the other Obligors to:

 

(i)                                     except as permitted by Section 9.2(d), maintain their respective corporate or partnership existences in good standing;

 

(ii)                                  register and qualify and remain duly registered and qualified as a corporation or partnership authorized to carry on business under the laws of each jurisdiction in which the nature of any business transacted by it or the character of any Property owned or leased by it requires such registration and qualification except where failure to obtain and maintain such registration or qualification would not reasonably be expected to have a Material Adverse Effect;

 

(iii)                               subject to Sections 9.1(h)(iv) and 9.1(h)(v) in respect of the Project, preserve and keep in full force and effect all Governmental Authorization, Required Permits and other franchises, licenses, rights, privileges and permits necessary to enable the each of the Obligors to operate and conduct their respective businesses in accordance with good industry practice, except to the extent such failure to comply or to preserve or keep in full force and effect would not reasonably be expected to have a Material Adverse Effect;

 

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(iv)                              keep and maintain all of its Property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its material Property, including all equipment, machinery and facilities, except to the extent the failure to do so would not reasonably be expected to have a Material Adverse Effect; and

 

(v)                                 maintain, protect and defend title to all Property held by any Obligor and take all such acts and steps as are necessary or advisable at any time and from time to time to maintain such Property in good standing, except to the extent the failure to so maintain, protect and defend or to take any such acts or steps would not reasonably be expected to have a Material Adverse Effect.

 

(c)                                  Compliance with Applicable Laws.  The Principal Borrower shall, and shall cause each of the other Obligors to:

 

(i)                                     carry on and conduct its business, and keep, maintain and operate its Property, in accordance with all Applicable Laws and prudent industry practice in the pipeline industry and the other businesses conducted by the Obligors;

 

(ii)                                  comply in all respects with Applicable Law; and

 

(iii)                               observe and conform to all requirements of any Governmental Authorization and Required Permit relative to any of its Property and all covenants, terms and conditions of all agreements upon or under which any of such Property is held,

 

in any case, except to the extent the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

(d)                                 Books and Records/Inspection.  The Principal Borrower will, and will cause each other Obligor to, maintain books and records in accordance with GAAP and all Applicable Law in respect of all its material dealings and transactions (including the Project and any portion thereof).  At any reasonable time and from time to time upon reasonable prior notice, and during usual business hours, the Principal Borrower shall permit the Agent or any representative thereof (which may include a Lender) (at the expense of the Borrowers) to examine and make copies of and abstracts from the records and books of account of any Obligor (subject to the Obligors’ reasonable safety requirements and standards) and to visit and inspect the premises and properties of any Obligor and to discuss the affairs, finances and accounts of any Obligor with any of the officers or auditors and other professional advisors of any Obligor, subject to any contractual restrictions regarding confidentiality provided that, excluding any such visits and inspections during the continuation of an Event of Default, the Lenders shall not

 

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exercise such rights more than once in any calendar year, which such permitted visits will be at the Borrower’s reasonable expense.

 

(e)                                  Insurance.  The Principal Borrower shall maintain, or cause to be maintained, all risks property insurance during construction and operations in connection with the Property and businesses of the Obligors and other types of insurance, including liability insurance with respect to claims for personal injury, death or property damage, with respect to the construction and operation of such businesses, all in accordance with prudent industry standards and consistent with the requirements of the Material Project Agreements and the reports delivered to the Lender under Section 3.1(c)(iii) and to the extent available on commercially reasonable terms and with creditworthy and reputable insurance companies in such amounts and with such deductibles as are in accordance with prudent industry standards, except to the extent failure to do so would not reasonably be expected to have a Material Adverse Effect and in any event in accordance with the requirements of any Required Permits which are then required the current state of the Project (including NEB Financial Resources Requirement) and the Material Project Agreements. The insurance policies shall name the Collateral Agent and the Secured Parties as additional insureds (except in the case of automobile policies) and the Collateral Agent, on behalf of the Secured Parties, as loss payee (as its interests may appear). The Principal Borrower shall, from time to time at the request of the Agent acting reasonably, promptly deliver to the Agent evidence of the insurance required to be maintained pursuant to this Section 9.1(e) in the form of a certificate of insurance. The Obligors will use any proceeds from (i) business interruption insurance for the purposes of the Obligors’ business and (ii) delay in start-up insurance for the purposes of paying Project Costs. The Principal Borrower shall require its insurers to, or to the extent not commercially available, the Principal Borrower shall provide 30 days’ notice of cancellation (10 days for nonpayment of premium) to the Collateral Agent in the event any policy is cancelled.

 

(f)                                   Payment of Taxes and Other Amounts.  The Principal Borrower shall, and shall cause each of the other Obligors to, from time to time, file all material tax returns which are required to be filed and pay or cause to be paid all material Taxes, Other Taxes, levies, assessments (ordinary or extraordinary), governmental fees and dues, other required payments to Governmental Authorities, wages, workers’ compensation arrangements, government royalties, pension fund obligations and any other amounts, in each case, which may result in a Lien on their Property arising under statute or regulation (any of which being a “Levy”) and to make and remit other payments and all withholdings lawfully levied, assessed or imposed upon an Obligor or any of the assets of an Obligor, as and when the same become due and payable, except when and for so long as the validity of such Levy, payment or withholding is subject to a Permitted Contest or would not otherwise reasonably be expected to have a Material Adverse Effect.

 

(g)                                  Environmental Matters. Without limiting the generality of Section 9.1(c), the Principal Borrower shall, and shall cause each of the other Obligors to (i) conduct

 

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