Exhibit 10.1

 

EXECUTION COPY

 

 

REVOLVING CREDIT AGREEMENT

 

between

 

BRASCAN (US) CORPORATION
as Lender

 

and

 

CRYSTAL RIVER CAPITAL, INC.,
as Borrower

 

dated as of August 9, 2007

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

I.

DEFINITIONS

1

 

 

 

 

1.1

Accounting Terms

1

 

 

 

 

 

1.2

General Terms

1

 

 

 

 

 

1.3

Certain Matters of Construction

9

 

 

 

 

II.

ADVANCES, PAYMENTS

9

 

 

 

 

 

2.1

Amount of Advances

9

 

 

 

 

 

2.2

Procedure for Advances Borrowing

9

 

 

 

 

 

2.3

Disbursement of Advance Proceeds

10

 

 

 

 

 

2.4

Maximum Advances

11

 

 

 

 

 

2.5

Manner of Borrowing and Repayment of Advances

11

 

 

 

 

 

2.6

Repayment of Excess Advances

11

 

 

 

 

 

2.7

Statement of Account

11

 

 

 

 

 

2.8

Additional Payments

11

 

 

 

 

 

2.9

Use of Proceeds

11

 

 

 

 

III.

INTEREST AND FEES

12

 

 

 

 

 

3.1

Interest

12

 

 

 

 

 

3.2

Computation of Interest

12

 

 

 

 

 

3.3

Maximum Charges

12

 

 

 

 

 

3.4

Increased Costs

12

 

 

 

 

 

3.5

Basis For Determining Interest Rate Inadequate or Unfair

13

 

 

 

 

IV.

REPRESENTATIONS AND WARRANTIES

13

 

 

 

 

 

4.1

Authority

13

 

 

 

 

 

4.2

Formation and Qualification

14

 

 

 

 

 

4.3

Survival of Representations and Warranties

14

 

 

 

 

 

4.4

Tax Returns

14

 

 

 

 

 

4.5

Financial Statements

14

 

 

 

 

 

4.6

Entity Name

15

 

 

 

 

 

4.7

O.S.H.A. and Environmental Compliance

15

 

 

 

 

 

4.8

Solvency; No Litigation, Violation, Indebtedness or Default

15

 

 

 

 

 

4.9

Licenses and Permits

16

 

i

--------------------------------------------------------------------------------

 

 

 

Page

 

 

 

 

4.10

Default of Indebtedness

16

 

 

 

 

 

4.11

No Default

17

 

 

 

 

 

4.12

No Burdensome Restrictions

17

 

 

 

 

 

4.13

Margin Regulations

17

 

 

 

 

 

4.14

Investment Company Act

17

 

 

 

 

 

4.15

Disclosure

17

 

 

 

 

 

4.16

Conflicting Agreements

17

 

 

 

 

 

4.17

Application of Certain Laws and Regulations

17

 

 

 

 

 

4.18

Business and Property of Borrower

17

 

 

 

 

 

4.19

Anti-Terrorism Laws

18

 

 

 

 

 

4.20

Trading with the Enemy

18

 

 

 

 

V.

AFFIRMATIVE COVENANTS

18

 

 

 

 

 

5.1

Reserved

18

 

 

 

 

 

5.2

Conduct of Business and Maintenance of Existence and Assets

19

 

 

 

 

 

5.3

Violations

19

 

 

 

 

 

5.4

Financial Covenants

19

 

 

 

 

 

5.5

Execution of Supplemental Instruments

19

 

 

 

 

 

5.6

Payment of Indebtedness

19

 

 

 

 

 

5.7

Standards of Financial Statements

20

 

 

 

 

VI.

NEGATIVE COVENANTS

20

 

 

 

 

 

6.1

Prohibition on Fundamental Changes

20

 

 

 

 

 

6.2

Guarantees

20

 

 

 

 

 

6.3

Dividends

21

 

 

 

 

 

6.4

Indebtedness

21

 

 

 

 

 

6.5

Nature of Business

21

 

 

 

 

 

6.6

Transactions with Affiliates

21

 

 

 

 

 

6.7

Fiscal Year and Accounting Changes

21

 

 

 

 

 

6.8

Amendment of Articles of Incorporation, By-Laws

21

 

 

 

 

 

6.9

Compliance with ERISA

22

 

 

 

 

 

6.10

Anti-Terrorism Laws

22

 

ii

--------------------------------------------------------------------------------

 

 

Page

 

 

 

 

6.11

Trading with the Enemy Act

22

 

 

 

VII.

CONDITIONS PRECEDENT

22

 

 

 

 

 

7.1

Conditions to Initial Advances

22

 

 

 

 

 

7.2

Conditions to Each Advance

24

 

 

 

 

VIII.

INFORMATION AS TO BORROWER

24

 

 

 

 

 

8.1

Environmental Reports

25

 

 

 

 

 

8.2

Litigation

25

 

 

 

 

 

8.3

Material Occurrences

25

 

 

 

 

 

8.4

Annual Financial Statements

25

 

 

 

 

 

8.5

Quarterly Financial Statements

25

 

 

 

 

 

8.6

Other Reports

25

 

 

 

 

 

8.7

Additional Information

26

 

 

 

 

 

8.8

Notice of Suits, Adverse Events

26

 

 

 

 

 

8.9

ERISA Notices and Requests

26

 

 

 

 

 

8.10

Pay Down Amounts

27

 

 

 

 

 

8.11

Additional Documents

27

 

 

 

 

IX.

EVENTS OF DEFAULT

27

 

 

 

 

 

9.1

Nonpayment

27

 

 

 

 

 

9.2

Breach of Representation

27

 

 

 

 

 

9.3

Financial Information

27

 

 

 

 

 

9.4

Judicial Actions

27

 

 

 

 

 

9.5

Noncompliance

27

 

 

 

 

 

9.6

Judgments

28

 

 

 

 

 

9.7

Bankruptcy of Borrower

28

 

 

 

 

 

9.8

Inability to Pay

28

 

 

 

 

 

9.9

Material Adverse Effect

28

 

 

 

 

 

9.10

Cross Default

28

 

 

 

 

 

9.11

Change of Control

28

 

 

 

 

 

9.12

Invalidity

28

 

 

 

 

 

9.13

Licenses

28

 

iii

--------------------------------------------------------------------------------

 

 

Page

 

 

 

 

9.14

Pension Plans

29

 

 

 

 

 

9.15

Borrowing and Pay Down Amounts

29

 

 

 

 

X.

BRASCAN’S RIGHTS AND REMEDIES AFTER DEFAULT

29

 

 

 

 

 

10.1

Rights and Remedies

29

 

 

 

 

 

10.2

Brascan’s Discretion

29

 

 

 

 

 

10.3

Rights and Remedies not Exclusive

29

 

 

 

 

 

10.4

Allocation of Payments After Event of Default

29

 

 

 

 

XI.

WAIVERS AND JUDICIAL PROCEEDINGS

30

 

 

 

 

 

11.1

Waiver of Notice

30

 

 

 

 

 

11.2

Delay

30

 

 

 

 

 

11.3

Jury Waiver

30

 

 

 

 

XII.

EFFECTIVE DATE AND TERMINATION

31

 

 

 

 

 

12.1

Term

31

 

 

 

 

 

12.2

Termination

31

 

 

 

 

XIII.

MISCELLANEOUS

31

 

 

 

 

 

13.1

Governing Law

31

 

 

 

 

 

13.2

Entire Understanding

32

 

 

 

 

 

13.3

Successors and Assigns; Participations

32

 

 

 

 

 

13.4

Application of Payments

32

 

 

 

 

 

13.5

Indemnity

33

 

 

 

 

 

13.6

Notice

33

 

 

 

 

 

13.7

Survival

34

 

 

 

 

 

13.8

Severability

35

 

 

 

 

 

13.9

Expenses

35

 

 

 

 

 

13.10

Injunctive Relief

35

 

 

 

 

 

13.11

Damages

35

 

 

 

 

 

13.12

Captions

35

 

 

 

 

 

13.13

Counterparts; Facsimile Brascans

35

 

 

 

 

 

13.14

Construction

35

 

 

 

 

 

13.15

Sharing Information

35

 

iv

--------------------------------------------------------------------------------

 

 

 

Page

 

 

 

 

13.16

Publicity

36

 

 

 

 

 

13.17

Certifications From Banks and Participants; US PATRIOT Act

36

 

 

 

 

 

List of Exhibits and Schedules

 

 

Exhibits

 

 

 

 

 

Exhibit 2.1

Revolving Credit Note

 

Exhibit 14.3

Commitment Transfer Supplement

 

 

 

 

Schedules

 

 

 

 

 

Schedule 1.2

Permitted Encumbrances

 

Schedule 4.1

Consents

 

Schedule 4.2(a)

States of Qualification and Good Standing

 

Schedule 4.2(b)

Subsidiaries

 

Schedule 4.4

Federal Tax Identification Number

 

Schedule 4.8(b)

Litigation

 

Schedule 4.8(d)

Plans

 

Schedule 4.9

Licenses and Permits

 

Schedule 6.3

Guarantees

 

Schedule 6.6

Indebtedness

 

 

v

--------------------------------------------------------------------------------

 

REVOLVING CREDIT AGREEMENT

 

Revolving Credit Agreement dated as of August 9th, 2007, by and among CRYSTAL
RIVER CAPITAL, INC., a corporation organized under the laws of the State of
Maryland (“Borrower”) and BRASCAN (US) CORPORATION (“Brascan”), as Lender.

 

IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrower and Brascan hereby agree as follows:

 

I.              DEFINITIONS.

 

1.1           ACCOUNTING TERMS. WHERE EXPLICITLY INDICATED, AS USED IN THIS
AGREEMENT, THE OTHER DOCUMENTS OR ANY CERTIFICATE, REPORT OR OTHER DOCUMENT MADE
OR DELIVERED PURSUANT TO THIS AGREEMENT, ACCOUNTING TERMS NOT DEFINED IN SECTION
1.2 OR ELSEWHERE IN THIS AGREEMENT AND ACCOUNTING TERMS PARTLY DEFINED IN
SECTION 1.2 TO THE EXTENT NOT DEFINED, SHALL HAVE THE RESPECTIVE MEANINGS GIVEN
TO THEM UNDER GAAP; PROVIDED, HOWEVER, WHENEVER SUCH ACCOUNTING TERMS ARE USED
FOR THE PURPOSES OF DETERMINING COMPLIANCE WITH FINANCIAL COVENANTS IN THIS
AGREEMENT, SUCH ACCOUNTING TERMS SHALL BE DEFINED IN ACCORDANCE WITH GAAP AS
APPLIED IN PREPARATION OF THE AUDITED FINANCIAL STATEMENTS OF BORROWER FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2006.

 

1.2           GENERAL TERMS. FOR PURPOSES OF THIS AGREEMENT THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:

 

“Adjusted Net Portfolio Value” shall mean, at any time of determination, the
fair value, as set forth in Borrower’s balance sheet most recently delivered
pursuant to Section 8.4 or 8.5 hereof, of Borrower’s portfolio of
mortgage-backed securities, adjusted for a hypothetical 2.0% per annum increase
in interest rates.

 

“Advances” shall mean the advances made pursuant to Section 2.1 hereof.

 

“Affiliate” of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director, managing member, general
partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (x) to
vote more than 25% of the Equity Interests having ordinary voting power for the
election of directors of such Person or other Persons performing similar
functions for any such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by ownership of

 

“Agreement” shall mean this Revolving Credit Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

“Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or
money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the
Applicable Laws comprising or implementing the Bank Secrecy Act, and the
Applicable Laws administered by the United States Treasury Department’s Office
of Foreign Asset Control (as any of the foregoing Applicable Laws may from time
to time be amended, renewed, extended, or replaced).

 

--------------------------------------------------------------------------------

 

“Applicable Law” shall mean all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant, Other Document or contract in question,
including all applicable common law and equitable principles; all provisions of
all applicable state, Federal and foreign constitutions, statutes, rules,
regulations and orders of any Governmental Body, and all orders, judgments and
decrees of all courts and arbitrators.

 

“Blocked Person”  shall have the meaning set forth in Section 4.19(b) hereof.

 

“Borrower” shall have the meaning set forth in the preamble to this Agreement
and shall extend to all permitted successors and assigns of such Person.

 

“Borrower’s Account” shall have the meaning set forth in Section 2.7 hereof.

 

“Borrowing Date” shall have the meaning set forth in Section 2.2(a) hereof.

 

“Brascan” shall have the meaning ascribed to such term in the preamble to this
Agreement and shall include each Person which becomes a transferee, successor or
assign of Brascan.

 

“Business Day” shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required by law to be closed
for business in New York, New York and, if the applicable Business Day relates
to any Eurodollar Rate Loans, such day must also be a day on which dealings are
carried on in the London interbank market.

 

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

 

“Change of Control” shall mean the occurrence of any event which results in
Hyperion Crystal River Capital Advisors, LLC, a wholly-owned subsidiary of
Hyperion Brookfield Asset Management, Inc., or another wholly-owned subsidiary
of Hyperion Brookfield Asset Management, Inc. not acting as manager and advisor
of Borrower.

 

“Closing Date” shall mean August 9, 2007.

 

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended
or supplemented from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in effect.

 

“Compliance Certificate” shall mean a compliance certificate to be signed by the
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
Controller or Treasurer of Borrower, which shall state that, based on an
examination sufficient to permit such officer to make an informed statement, no
Default or Event of Default exists, or if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Borrower’s compliance with the requirements or restrictions imposed by Sections
5.4, 6.5, 6.6 and 6.9.

 

2

--------------------------------------------------------------------------------

 

“Consents” shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on Borrower’s
business or necessary (including to avoid a conflict or breach under any
agreement, instrument, other document, license, permit or other authorization)
for the execution, delivery or performance of this Agreement, the Other
Documents, including any Consents required under all applicable Federal, state
or other Applicable Law.

 

“Controlled Group” shall mean, at any time, Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
Borrower, are treated as a single employer under Section 414 of the Code.

 

“Default” shall mean an event, circumstance or condition which, with the giving
of notice or passage of time or both, would constitute an Event of Default.

 

“Default Rate” shall have the meaning set forth in Section 3.1 hereof.

 

“Dollar” and the sign “$” shall mean lawful money of the United States of
America.

 

“Equity Interests” of any Person shall mean any and all shares, rights to
purchase, options, warrants, general, limited or limited liability partnership
interests, member interests, participation or other equivalents of or interest
in (regardless of how designated) equity of such Person, whether voting or
nonvoting, including common stock, preferred stock, convertible securities or
any other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations promulgated thereunder.

 

“Eurodollar Rate” shall mean, for any Eurodollar Rate Loan for the then current
Interest Period relating thereto, the interest rate per annum determined by
Brascan by dividing (the resulting quotient rounded upwards, if necessary, to
the nearest 1/100th of 1% per annum) (i) the rate of interest equal to the
average of the London interbank offered rates for U.S. Dollars quoted by the
British Bankers’ Association as set forth on Moneyline Telerate (or appropriate
successor or, if British Banker’s Association or its successor ceases to provide
such quotes, a comparable replacement determined by Brascan) display page 3750
as of 11:00 a.m. (London Time) (or such other display page on the Moneyline
Telerate system as may replace display page 3750) two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such
Eurodollar Rate Loan and having a borrowing date and a maturity comparable to
such Interest Period divided by (ii) a number equal to 1.00 minus the Reserve
Percentage. The Eurodollar Rate shall be adjusted with respect to any Eurodollar
Rate Loan that is outstanding on the effective date of any change in the Reserve
Percentage as of such effective date. Brascan shall give prompt notice to
Borrower of the Eurodollar Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest error.

 

3

--------------------------------------------------------------------------------

 

“Eurodollar Rate Loan” shall mean an Advance at any time that bears interest
based on the Eurodollar Rate.

 

“Event of Default” shall have the meaning set forth in Article IX hereof.

 

“Exchange Act” shall have the mean the Securities Exchange Act of 1934, as
amended.

 

“Executive Order No. 13224” shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.

 

“Existing Credit Agreement” means the credit agreement dated March 1, 2006
amongst the Borrower, Bank Hapoalim B.M. and Signature Bank, as amended from
time to time.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time.

 

“Governmental Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the legislative, judicial, regulatory or administrative
functions of or pertaining to a government.

 

“Hazardous Substance” shall mean, without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable environmental law and in
the regulations adopted pursuant thereto.

 

“Hazardous Wastes” shall mean all waste materials subject to regulation under
CERCLA, RCRA or applicable state law, and any other applicable Federal and state
laws now in force or hereafter enacted relating to hazardous waste disposal.

 

“Indebtedness” of a Person at a particular date shall mean all obligations of
such Person which in accordance with GAAP would be classified upon a balance
sheet as liabilities (except capital stock and surplus earned or otherwise) and
in any event, without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary obligations of such Person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such indebtedness, and all indebtedness secured by a Lien on assets
owned by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person. Any indebtedness of such Person
resulting from the acquisition by such Person of any assets subject to any Lien
shall be deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.

 

4

--------------------------------------------------------------------------------

 

“Interest Period” shall mean, with respect to a Eurodollar Rate Loan, the period
commencing on the Borrowing Date of such Eurodollar Rate Loan and ending on the
Repayment Date for such Eurodollar Rate Loan.

 

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including any conditional sale or other title retention
agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
condition (financial or otherwise), results of operations, assets, business,
properties or prospects of Borrower, (b) Borrower’s ability to duly and
punctually pay or perform the Obligations in accordance with the terms thereof,
or (c) the practical realization of the benefits of Brascan’s and Brascan’s
rights and remedies under this Agreement and the Other Documents.

 

“Maximum Advance Amount” shall mean $100,000,000.

 

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections
3(37) and 4001(a)(3) of ERISA.

 

“Multiple Employer Plan” shall mean a Plan which has two or more contributing
sponsors (including Borrower or any member of the Controlled Group) at least two
of whom are not under common control, as such a plan is described in Section
4064 of ERISA.

 

“Net Income” shall mean fiscal year-to-date after-tax net income from continuing
operations, including extraordinary losses and extraordinary gains, all as
determined in accordance with GAAP, provided, however, that there shall be
specifically excluded therefrom (i) unrealized gains (or losses) on derivatives;
and (ii) realized and unrealized gains (or losses, including non-cash impairment
losses) on securities available for sale.

 

“Net Worth” at a particular date, shall mean (a) the aggregate amount of all
assets of Borrower as may properly be classified as such in accordance with GAAP
consistently applied and such other assets as are properly classified as
“intangible assets”, less (b) the aggregate amount of all Indebtedness of
Borrower.

 

“Notice of Borrowing” shall have the meaning set forth in Section 2.2(a) hereof.

 

“Obligations” shall mean and include any and all loans, advances, debts,
liabilities, obligations, covenants and duties owing by Borrower to Brascan of
any kind or nature, present or future (including any interest accruing thereon
after maturity, or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether or not evidenced by any note, guaranty or
other

 

5

--------------------------------------------------------------------------------

 

instrument, arising under this Agreement and the Other Documents, including but
not limited to reasonable attorneys’ fees and expenses and all obligations of
Borrower to Brascan to perform acts or refrain from taking any action.

 

“Ordinary Course of Business” shall mean, generally, the ordinary course of
Borrower’s business as conducted on the Closing Date.

 

“Other Documents” shall mean the Revolving Credit Note and any and all other
agreements, instruments and documents, now or hereafter executed by Borrower
and/or delivered to Brascan in respect of the transactions contemplated by this
Agreement.

 

“Parent” of any Person shall mean a corporation or other entity owning, directly
or indirectly at least 50% of the shares of stock or other ownership interests
having ordinary voting power to elect a majority of the directors of the Person,
or other Persons performing similar functions for any such Person.

 

“Payment Office” shall mean initially Brascan’s office at
                                ; thereafter, such other office of Brascan, if
any, which it may designate by notice to Borrower and to Brascan to be the
Payment Office.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.

 

“Pension Benefit Plan” shall mean at any time any employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Code and either (i) is maintained by any member of the
Controlled Group for employees of any member of the Controlled Group; or (ii)
has at any time within the preceding five years been maintained by any entity
which was at such time a member of the Controlled Group for employees of any
entity which was at such time a member of the Controlled Group.

 

“Permitted Encumbrances” shall mean (a) Liens for taxes, assessments or other
governmental charges not delinquent or being Properly Contested; (b) Liens
disclosed in the financial statements referred to in Section 4.5, the existence
of which Brascan is deemed to have consented to in writing; (c) deposits or
pledges to secure obligations under worker’s compensation, social security or
similar laws, or under unemployment insurance; (d) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the Ordinary Course of Business; (e) Liens arising by
virtue of the rendition, entry or issuance against Borrower or any Subsidiary,
or any property of Borrower or any Subsidiary, of any judgment, writ, order, or
decree which has either been stayed or bonded, or which does not constitute or
result in an Event of Default under Section 9.6; (f) common carriers’,
mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary
Course of Business with respect to obligations which are not due or which are
being contested in good faith by Borrower; (g) Liens placed upon fixed assets
hereafter acquired to secure a portion of the purchase price thereof, provided
that any such lien shall not encumber any other property of Borrower; (h) Liens

 

6

--------------------------------------------------------------------------------

 

disclosed on Schedule 1.2; and (j) Liens in favor of counterparties to
repurchase agreements entered into in the Ordinary Course of Business.

 

“Person” shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, limited liability
partnership, institution, public benefit corporation, joint venture, entity or
Governmental Body (whether Federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).

 

“Plan” shall mean any employee benefit plan within the meaning of Section 3(3)
of ERISA (including a Pension Benefit Plan), maintained for employees of
Borrower or any member of the Controlled Group or any such Plan to which
Borrower or any member of the Controlled Group is required to contribute on
behalf of any of its employees.

 

“Properly Contested” shall mean, in the case of any Indebtedness of any Person
(including any taxes) that is not paid as and when due or payable by reason of
such Person’s bona fide dispute concerning its liability to pay same or
concerning the amount thereof, (i) such Indebtedness is being properly contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted; (ii) such Person has established appropriate reserves as shall be
required in conformity with GAAP; (iii) the non-payment of such Indebtedness
shall not have a Material Adverse Effect and shall not result in the forfeiture
of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s
assets with respect to such Indebtedness (except only with respect to property
taxes that have priority as a matter of applicable state law) and enforcement of
such Lien is stayed during the period prior to the final resolution or
disposition of such dispute; (v) if such Indebtedness results from, or is
determined by the entry, rendition or issuance against a Person or any of its
assets of a judgment, writ, order or decree, enforcement of such judgment, writ,
order or decree is stayed pending a timely appeal or other judicial review; and
(vi) if such contest is abandoned, settled or determined adversely (in whole or
in part) to such Person, such Person forthwith pays such Indebtedness and all
penalties, interest and other amounts due in connection therewith.

 

“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et seq., as same may be amended from time to time.

 

“Regulations” shall have the meaning set forth in Section 3.11 hereof.

 

“Repayment Date” shall have the meaning set forth in Section 2.2(a) hereof.

 

“Reportable Event” shall mean a reportable event described in Section 4043(c) of
ERISA or the regulations promulgated thereunder.

 

“Reserve Percentage” shall mean as of any day the maximum percentage in effect
on such day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

 

7

--------------------------------------------------------------------------------

 

“Revolving Credit Note” shall mean the promissory notes referred to in Section
2.1 hereof.

 

“Revolving Interest Rate” shall mean an interest rate per annum equal to the sum
of the Eurodollar Rate plus 4.00% per annum with respect to Eurodollar Rate
Loans.

 

“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.

 

“Subsidiary” of any Person shall mean a corporation or other entity of whose
Equity Interests having ordinary voting power (other than Equity Interests
having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other Persons performing
similar functions for such entity, are owned, directly or indirectly, by such
Person.

 

“Term” shall have the meaning set forth in Section 12.1 hereof.

 

“Termination Event” shall mean (i) a Reportable Event with respect to any Plan
or Multiemployer Plan; (ii) the withdrawal of Borrower or any member of the
Controlled Group from a Plan or Multiemployer Plan during a plan year in which
such entity was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the institution by the
PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or
any member of the Controlled Group from a Multiemployer Plan.

 

“Toxic Substance” shall mean and include any material present on the real
property or the leasehold interests which has been shown to have significant
adverse effect on human health or which is subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law,
or any other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances. “Toxic Substance” includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

 

“Trading with the Enemy Act” shall mean the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) and any enabling legislation or executive order relating thereto.

 

“Transactions” shall mean the consummation of the transactions contemplated
under this Agreement and the Other Documents.

 

“USA Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

 

8

--------------------------------------------------------------------------------

 

1.3           CERTAIN MATTERS OF CONSTRUCTION. THE TERMS “HEREIN”, “HEREOF” AND
“HEREUNDER” AND OTHER WORDS OF SIMILAR IMPORT REFER TO THIS AGREEMENT AS A WHOLE
AND NOT TO ANY PARTICULAR SECTION, PARAGRAPH OR SUBDIVISION. ALL REFERENCES
HEREIN TO ARTICLES, SECTIONS, EXHIBITS AND SCHEDULES SHALL BE CONSTRUED TO REFER
TO ARTICLES AND SECTIONS OF, AND EXHIBITS AND SCHEDULES TO, THIS AGREEMENT. ANY
PRONOUN USED SHALL BE DEEMED TO COVER ALL GENDERS. WHEREVER APPROPRIATE IN THE
CONTEXT, TERMS USED HEREIN IN THE SINGULAR ALSO INCLUDE THE PLURAL AND VICE
VERSA. ALL REFERENCES TO STATUTES AND RELATED REGULATIONS SHALL INCLUDE ANY
AMENDMENTS OF SAME AND ANY SUCCESSOR STATUTES AND REGULATIONS. UNLESS OTHERWISE
PROVIDED, ALL REFERENCES TO ANY INSTRUMENTS OR AGREEMENTS TO WHICH BRASCAN IS A
PARTY, INCLUDING REFERENCES TO ANY OF THE OTHER DOCUMENTS, SHALL INCLUDE ANY AND
ALL MODIFICATIONS OR AMENDMENTS THERETO AND ANY AND ALL EXTENSIONS OR RENEWALS
THEREOF TO THE EXTENT SUCH MODIFICATIONS, AMENDMENTS, EXTENSIONS OR RENEWALS ARE
PERMITTED BY THE TERMS HEREOF. ALL REFERENCES HEREIN TO THE TIME OF DAY SHALL
MEAN THE TIME IN NEW YORK, NEW YORK. WHENEVER THE WORDS “INCLUDING” OR “INCLUDE”
SHALL BE USED, SUCH WORDS SHALL BE UNDERSTOOD TO MEAN “INCLUDING, WITHOUT
LIMITATION” OR “INCLUDE, WITHOUT LIMITATION”. A DEFAULT OR EVENT OF DEFAULT
SHALL BE DEEMED TO EXIST AT ALL TIMES DURING THE PERIOD COMMENCING ON THE DATE
THAT SUCH DEFAULT OR EVENT OF DEFAULT OCCURS TO THE DATE ON WHICH SUCH DEFAULT
OR EVENT OF DEFAULT IS WAIVED IN WRITING PURSUANT TO THIS AGREEMENT OR, IS CURED
WITHIN ANY PERIOD OF CURE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT; AND AN EVENT
OF DEFAULT SHALL “CONTINUE” OR BE “CONTINUING” UNTIL SUCH EVENT OF DEFAULT HAS
BEEN WAIVED IN WRITING BY BRASCAN. ANY AGREEMENT ENTERED INTO BY BRASCAN
PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS, ANY PAYMENT MADE BY OR
TO OR FUNDS RECEIVED BY BRASCAN PURSUANT TO OR AS CONTEMPLATED BY THIS AGREEMENT
OR ANY OF THE OTHER DOCUMENTS, OR ANY ACT TAKEN OR OMITTED TO BE TAKEN BY
BRASCAN, SHALL, UNLESS OTHERWISE EXPRESSLY PROVIDED, BE ENTERED INTO, MADE OR
RECEIVED, OR TAKEN OR OMITTED, FOR THE BENEFIT OR ACCOUNT OF BRASCAN. ALL
COVENANTS HEREUNDER SHALL BE GIVEN INDEPENDENT EFFECT SO THAT IF A PARTICULAR
ACTION OR CONDITION IS NOT PERMITTED BY ANY OF SUCH COVENANTS, THE FACT THAT IT
WOULD BE PERMITTED BY AN EXCEPTION TO, OR OTHERWISE WITHIN THE LIMITATIONS OF,
ANOTHER COVENANT SHALL NOT AVOID THE OCCURRENCE OF A DEFAULT IF SUCH ACTION IS
TAKEN OR CONDITION EXISTS. IN ADDITION, ALL REPRESENTATIONS AND WARRANTIES
HEREUNDER SHALL BE GIVEN INDEPENDENT EFFECT SO THAT IF A PARTICULAR
REPRESENTATION OR WARRANTY PROVES TO BE INCORRECT OR IS BREACHED, THE FACT THAT
ANOTHER REPRESENTATION OR WARRANTY CONCERNING THE SAME OR SIMILAR SUBJECT MATTER
IS CORRECT OR IS NOT BREACHED SHALL NOT AFFECT THE INCORRECTNESS OF A BREACH OF
A REPRESENTATION OR WARRANTY HEREUNDER.

 

II.            ADVANCES, PAYMENTS.

 

2.1           AMOUNT OF ADVANCES. SUBJECT TO THE TERMS AND CONDITIONS SET FORTH
IN THIS AGREEMENT, BRASCAN SHALL MAKE ADVANCES OF EURODOLLAR RATE LOANS TO
BORROWER, UPON THE REQUEST OF BORROWER IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 2.2 HEREOF, IN AGGREGATE AMOUNTS OUTSTANDING AT ANY TIME UP TO THE
MAXIMUM ADVANCE AMOUNT. THE ADVANCES SHALL BE EVIDENCED BY ONE OR MORE SECURED
PROMISSORY NOTES (COLLECTIVELY, THE “REVOLVING CREDIT NOTE”) SUBSTANTIALLY IN
THE FORM ATTACHED HERETO AS EXHIBIT 2.1.

 

2.2           PROCEDURE FOR ADVANCES BORROWING.

 

(A)           BORROWER SHALL PROVIDE TO BRASCAN A WRITTEN REQUEST TO INCUR AN
ADVANCE HEREUNDER (EACH, A “NOTICE OF BORROWING”) NO LATER THAN 12:00 P.M., ON
ANY BUSINESS DAY, WHICH NOTICE OF BORROWING SHALL SPECIFY: (I) THE DATE OF THE
PROPOSED BORROWING (THE “BORROWING DATE”), WHICH SHALL BE AT LEAST ONE (1)
BUSINESS DAY AFTER BRASCAN’S RECEIPT OF SUCH NOTICE OF

 

9

--------------------------------------------------------------------------------

 

BORROWING;  (II) THE AMOUNT OF SUCH ADVANCE TO BE MADE IN EURODOLLAR RATE LOANS
AND (III) THE DATE SUCH ADVANCE SHALL BE REPAID (THE “REPAYMENT DATE”).

 

(B)           EURODOLLAR RATE LOANS SHALL NOT BE MADE AVAILABLE TO BORROWER
DURING THE CONTINUANCE OF A DEFAULT OR AN EVENT OF DEFAULT.

 

(C)           BORROWER SHALL INDEMNIFY BRASCAN AND HOLD BRASCAN HARMLESS FROM
AND AGAINST ANY AND ALL LOSSES OR EXPENSES THAT BRASCAN MAY SUSTAIN OR INCUR AS
A CONSEQUENCE OF ANY DEFAULT BY BORROWER IN THE PAYMENT OF THE PRINCIPAL OF OR
INTEREST ON ANY EURODOLLAR RATE LOAN OR FAILURE BY BORROWER TO COMPLETE A
BORROWING OF A EURODOLLAR RATE LOAN AFTER NOTICE THEREOF HAS BEEN GIVEN.

 

(D)           NOTWITHSTANDING ANY OTHER PROVISION HEREOF, IF ANY APPLICABLE LAW,
TREATY, REGULATION OR DIRECTIVE, OR ANY CHANGE THEREIN OR IN THE INTERPRETATION
OR APPLICATION THEREOF, SHALL MAKE IT UNLAWFUL FOR BRASCAN (FOR PURPOSES OF THIS
SUBSECTION (D), THE TERM “LENDER” SHALL INCLUDE BRASCAN AND THE OFFICE OR BRANCH
WHERE BRASCAN OR ANY CORPORATION OR BANK CONTROLLING SUCH LENDER MAKES OR
MAINTAINS ANY EURODOLLAR RATE LOANS) TO MAKE OR MAINTAIN ITS EURODOLLAR RATE
LOANS, THE OBLIGATION OF LENDER TO MAKE EURODOLLAR RATE LOANS HEREUNDER SHALL
FORTHWITH BE CANCELLED AND BORROWER SHALL, IF ANY EURODOLLAR RATE LOANS ARE THEN
OUTSTANDING, PROMPTLY UPON REQUEST FROM LENDER,  EITHER PAY ALL SUCH EURODOLLAR
RATE LOANS OR CONVERT SUCH EURODOLLAR RATE LOANS INTO LOANS PRICED ACCORDING TO
BRASCAN’S COST OF FUNDS FOR MAKING SUCH LOANS PLUS 4.00%. IF ANY SUCH PAYMENT OR
CONVERSION OF ANY EURODOLLAR RATE LOAN IS MADE ON A DAY THAT IS NOT THE LAST DAY
OF THE INTEREST PERIOD APPLICABLE TO SUCH EURODOLLAR RATE LOAN, BORROWER SHALL
PAY BRASCAN, UPON BRASCAN’S REQUEST, SUCH AMOUNT OR AMOUNTS AS MAY BE NECESSARY
TO COMPENSATE BRASCAN FOR ANY LOSS OR EXPENSE SUSTAINED OR INCURRED BY BRASCAN
IN RESPECT OF SUCH EURODOLLAR RATE LOAN AS A RESULT OF SUCH PAYMENT OR
CONVERSION, INCLUDING (BUT NOT LIMITED TO) ANY INTEREST OR OTHER AMOUNTS PAYABLE
BY BRASCAN TO BRASCAN OF FUNDS OBTAINED BY BRASCAN IN ORDER TO MAKE OR MAINTAIN
SUCH EURODOLLAR RATE LOAN. A CERTIFICATE AS TO ANY ADDITIONAL AMOUNTS PAYABLE
PURSUANT TO THE FOREGOING SENTENCE SUBMITTED BY BRASCAN TO BORROWER SHALL BE
CONCLUSIVE ABSENT MANIFEST ERROR.

 

2.3           DISBURSEMENT OF ADVANCE PROCEEDS. ALL ADVANCES SHALL BE DISBURSED
FROM WHICHEVER OFFICE OR OTHER PLACE BRASCAN MAY DESIGNATE FROM TIME TO TIME
AND, TOGETHER WITH ANY AND ALL OTHER OBLIGATIONS OF BORROWER TO BRASCAN, SHALL
BE CHARGED TO BORROWER’S ACCOUNT ON BRASCAN’S BOOKS. DURING THE TERM, BORROWER
MAY USE THE ADVANCES BY BORROWING AND REBORROWING, ALL IN ACCORDANCE WITH THE
TERMS AND CONDITIONS HEREOF. THE PROCEEDS OF EACH ADVANCE REQUESTED BY BORROWER
UNDER SECTION 2.2(A) HEREOF SHALL, WITH RESPECT TO REQUESTED ADVANCES TO THE
EXTENT BRASCAN MAKE SUCH ADVANCES, BE MADE AVAILABLE TO BORROWER ON THE
APPLICABLE BORROWING DATE BY WAY OF CREDIT TO BORROWER’S OPERATING ACCOUNT AT
BRASCAN, OR SUCH OTHER BANK AS BORROWER MAY DESIGNATE FOLLOWING NOTIFICATION TO
BRASCAN, IN IMMEDIATELY AVAILABLE FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE
FUNDS OR BE DISBURSED TO BRASCAN TO BE APPLIED TO THE OUTSTANDING OBLIGATIONS
GIVING RISE TO SUCH DEEMED REQUEST.

 

2.4           MAXIMUM ADVANCES.

 

The aggregate balance of Advances outstanding at any time shall not exceed the
Maximum Advance Amount.

 

10

--------------------------------------------------------------------------------

 

2.5           MANNER OF BORROWING AND REPAYMENT OF ADVANCES.

 

(A)           EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH PAYMENT BY BORROWER ON
ACCOUNT OF PRINCIPAL AND INTEREST ON AN ADVANCE, AND ANY OTHER AMOUNTS PAYABLE
HEREUNDER, OR UNDER ANY OF THE OTHER DOCUMENTS, SHALL BE MADE WITHOUT ANY
DEDUCTION WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, ANY DEDUCTION FOR ANY
SETOFF OR COUNTERCLAIM, AND SHALL BE MADE TO BRASCAN AT THE PAYMENT OFFICE, NOT
LATER THAN 1:00 P.M., ON THE REPAYMENT DATE WITH RESPECT TO SUCH ADVANCE, IN
DOLLARS AND IN IMMEDIATELY AVAILABLE FUNDS.

 

(B)           SUBJECT TO THE TERMS HEREOF, THE BORROWER SHALL REPAY ALL
OBLIGATIONS INCLUDING THE OUTSTANDING PRINCIPAL AMOUNT OF ALL ADVANCES HEREUNDER
TOGETHER WITH ALL ACCRUED INTEREST, FEES AND OTHER AMOUNTS THEN UNPAID BY IT
WITH RESPECT TO SUCH ADVANCES IN FULL ON THE FIRST ANNIVERSARY DATE OF THE
CLOSING DATE AND THE COMMITMENTS OF BRASCAN HEREON SHALL BE AUTOMATICALLY
TERMINATED ON SUCH DATE.

 

2.6           REPAYMENT OF EXCESS ADVANCES. THE AGGREGATE BALANCE OF ADVANCES
OUTSTANDING AT ANY TIME IN EXCESS OF THE MAXIMUM AMOUNT OF ADVANCES PERMITTED
HEREUNDER SHALL BE IMMEDIATELY DUE AND PAYABLE WITHOUT THE NECESSITY OF ANY
DEMAND, AT THE PAYMENT OFFICE, WHETHER OR NOT A DEFAULT OR EVENT OF DEFAULT HAS
OCCURRED.

 

2.7           STATEMENT OF ACCOUNT. BRASCAN SHALL MAINTAIN, IN ACCORDANCE WITH
ITS CUSTOMARY PROCEDURES, A LOAN ACCOUNT (“BORROWER’S ACCOUNT”) IN THE NAME OF
BORROWER IN WHICH SHALL BE RECORDED THE DATE AND AMOUNT OF EACH ADVANCE MADE BY
BRASCAN AND THE DATE AND AMOUNT OF EACH PAYMENT IN RESPECT THEREOF; PROVIDED,
HOWEVER, THE FAILURE BY BRASCAN TO RECORD THE DATE AND AMOUNT OF ANY ADVANCE OR
PAYMENT SHALL NOT ADVERSELY AFFECT BRASCAN OR BORROWER. EACH MONTH, BRASCAN
SHALL SEND TO BORROWER A STATEMENT SHOWING THE ACCOUNTING FOR THE ADVANCES MADE
AND PAYMENTS MADE OR CREDITED IN RESPECT THEREOF. THE MONTHLY STATEMENTS SHALL
BE DEEMED CORRECT AND BINDING UPON BORROWER IN THE ABSENCE OF MANIFEST ERROR AND
SHALL CONSTITUTE AN ACCOUNT STATED BETWEEN BRASCAN AND BORROWER UNLESS BRASCAN
RECEIVES A STATEMENT IN WRITING, BY FACSIMILE, OR BY EMAIL OF BORROWER’S
SPECIFIC EXCEPTIONS THERETO WITHIN THIRTY (30) DAYS AFTER SUCH STATEMENT IS
RECEIVED BY BORROWER. THE RECORDS OF BRASCAN WITH RESPECT TO THE LOAN ACCOUNT
SHALL BE CONCLUSIVE EVIDENCE ABSENT MANIFEST ERROR OF THE AMOUNTS OF ADVANCES
AND OTHER CHARGES THERETO AND OF PAYMENTS APPLICABLE THERETO.

 

2.8           ADDITIONAL PAYMENTS. ANY SUMS EXPENDED BY BRASCAN DUE TO
BORROWER’S FAILURE TO PERFORM OR COMPLY WITH ITS OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OTHER DOCUMENT, MAY BE CHARGED TO BORROWER’S ACCOUNT AS AN
ADVANCE AND ADDED TO THE OBLIGATIONS.

 

2.9           USE OF PROCEEDS.

 

(A)           BORROWER SHALL USE THE PROCEEDS OF ADVANCES FOR GENERAL WORKING
CAPITAL PURPOSES.

 

(B)           WITHOUT LIMITING THE GENERALITY OF SECTION 2.9(A) ABOVE, NEITHER
BORROWER NOR ANY OTHER PERSON WHICH MAY IN THE FUTURE BECOME A PARTY TO THIS
AGREEMENT OR THE OTHER DOCUMENTS AS BORROWER, INTENDS TO USE NOR SHALL THEY USE
ANY PORTION OF THE PROCEEDS OF THE ADVANCES, DIRECTLY OR INDIRECTLY, FOR ANY
PURPOSE IN VIOLATION OF THE TRADING WITH THE ENEMY ACT.

 

11

--------------------------------------------------------------------------------

 

III.           INTEREST AND FEES.

 

3.1           INTEREST. INTEREST ON EACH ADVANCE SHALL BE PAYABLE IN ARREARS ON
THE REPAYMENT DATE WITH RESPECT TO SUCH ADVANCE. INTEREST CHARGES SHALL BE
COMPUTED ON THE ACTUAL PRINCIPAL AMOUNT OF ADVANCES OUTSTANDING AT A RATE PER
ANNUM EQUAL TO THE REVOLVING INTEREST RATE. THE EURODOLLAR RATE SHALL BE
ADJUSTED WITH RESPECT TO EURODOLLAR RATE LOANS WITHOUT NOTICE OR DEMAND OF ANY
KIND ON THE EFFECTIVE DATE OF ANY CHANGE IN THE RESERVE PERCENTAGE AS OF SUCH
EFFECTIVE DATE. UPON AND AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, AND DURING
THE CONTINUATION THEREOF, EURODOLLAR RATE LOANS SHALL BEAR INTEREST AT THE
REVOLVING INTEREST RATE FOR EURODOLLAR RATE LOANS PLUS 3.75% PER ANNUM (AS
APPLICABLE, THE “DEFAULT RATE”).

 

3.2           COMPUTATION OF INTEREST INTEREST HEREUNDER SHALL BE COMPUTED ON
THE BASIS OF A YEAR OF 360 DAYS AND FOR THE ACTUAL NUMBER OF DAYS ELAPSED. IF
ANY PAYMENT TO BE MADE HEREUNDER BECOMES DUE AND PAYABLE ON A DAY OTHER THAN A
BUSINESS DAY, THE DUE DATE THEREOF SHALL BE EXTENDED TO THE NEXT SUCCEEDING
BUSINESS DAY AND INTEREST THEREON SHALL BE PAYABLE AT THE REVOLVING INTEREST
RATE DURING SUCH EXTENSION.

 

3.3           MAXIMUM CHARGES. IN NO EVENT WHATSOEVER SHALL INTEREST AND OTHER
CHARGES CHARGED HEREUNDER EXCEED THE HIGHEST RATE PERMISSIBLE UNDER LAW. IN THE
EVENT INTEREST AND OTHER CHARGES AS COMPUTED HEREUNDER WOULD OTHERWISE EXCEED
THE HIGHEST RATE PERMITTED UNDER LAW, SUCH EXCESS AMOUNT SHALL BE FIRST APPLIED
TO ANY UNPAID PRINCIPAL BALANCE OWED BY BORROWER, AND IF THE THEN REMAINING
EXCESS AMOUNT IS GREATER THAN THE PREVIOUSLY UNPAID PRINCIPAL BALANCE, BRASCAN
SHALL PROMPTLY REFUND SUCH EXCESS AMOUNT TO BORROWER AND THE PROVISIONS HEREOF
SHALL BE DEEMED AMENDED TO PROVIDE FOR SUCH PERMISSIBLE RATE.

 

3.4           INCREASED COSTS. IN THE EVENT THAT ANY APPLICABLE LAW, TREATY OR
GOVERNMENTAL REGULATION, OR ANY CHANGE THEREIN OR IN THE INTERPRETATION OR
APPLICATION THEREOF, OR COMPLIANCE BY BRASCAN\ AND THE OFFICE OR BRANCH WHERE
BRASCAN MAKES OR MAINTAINS ANY EURODOLLAR RATE LOANS WITH ANY REQUEST OR
DIRECTIVE (WHETHER OR NOT HAVING THE FORCE OF LAW) FROM ANY CENTRAL BANK OR
OTHER FINANCIAL, MONETARY OR OTHER AUTHORITY, SHALL:

 

(A)           SUBJECT BRASCAN TO ANY TAX OF ANY KIND WHATSOEVER WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER DOCUMENT OR CHANGE THE BASIS OF TAXATION OF PAYMENTS
TO BRASCAN OF PRINCIPAL, FEES, INTEREST OR ANY OTHER AMOUNT PAYABLE HEREUNDER OR
UNDER ANY OTHER DOCUMENTS (EXCEPT FOR CHANGES IN THE RATE OF TAX ON THE OVERALL
NET INCOME OF BRASCAN BY THE JURISDICTION IN WHICH IT MAINTAINS ITS PRINCIPAL
OFFICE);

 

(B)           IMPOSE, MODIFY OR HOLD APPLICABLE ANY RESERVE, SPECIAL DEPOSIT,
ASSESSMENT OR SIMILAR REQUIREMENT AGAINST ASSETS HELD BY, OR DEPOSITS IN OR FOR
THE ACCOUNT OF, ADVANCES OR LOANS BY, OR OTHER CREDIT EXTENDED BY, ANY OFFICE OF
BRASCAN, INCLUDING PURSUANT TO REGULATION D OF THE BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM; OR

 

(C)           IMPOSE ON BRASCAN OR THE LONDON INTERBANK EURODOLLAR MARKET ANY
OTHER CONDITION WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT;

 

and the result of any of the foregoing is to increase the cost to Brascan of
making, renewing or maintaining its Advances hereunder by an amount that Brascan
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the

 

12

--------------------------------------------------------------------------------

 

Advances by an amount that Brascan deems to be material, then, in any case
Borrower shall promptly pay Brascan, upon its demand, such additional amount as
shall compensate Brascan for such additional cost or such reduction, as the case
may be, provided that the foregoing shall not apply to increased costs which are
reflected in the Eurodollar Rate. Brascan shall certify the amount of such
additional cost or reduced amount to Borrower, and such certification shall be
conclusive absent manifest error.

 

3.5           BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. IN THE
EVENT THAT BRASCAN SHALL HAVE DETERMINED THAT:

 

(A)           REASONABLE MEANS DO NOT EXIST FOR ASCERTAINING THE EURODOLLAR RATE
APPLICABLE PURSUANT TO SECTION 2.2 HEREOF FOR ANY ADVANCE; OR

 

(B)           DOLLAR DEPOSITS IN THE RELEVANT AMOUNT AND FOR THE RELEVANT
MATURITY ARE NOT AVAILABLE IN THE LONDON INTERBANK EURODOLLAR MARKET, WITH
RESPECT TO AN OUTSTANDING EURODOLLAR RATE LOAN OR A PROPOSED EURODOLLAR RATE
LOAN,

 

(C)           THEN BRASCAN SHALL GIVE BORROWER PROMPT WRITTEN, TELEPHONIC OR
TELEGRAPHIC NOTICE OF SUCH DETERMINATION EITHER ON THE DATE BRASCAN RECEIVES THE
NOTICE OF BORROWING OR ON THE DATE OF THE PROPOSED BORROWING. IF SUCH NOTICE IS
GIVEN, (I) ANY SUCH REQUESTED EURODOLLAR RATE LOAN SHALL BE MADE ACCORDING TO
BRASCAN’S COST OF FUNDS FOR SUCH ADVANCES PLUS 4.00%. UNTIL SUCH NOTICE HAS BEEN
WITHDRAWN, BRASCAN SHALL HAVE NO OBLIGATION TO MAKE EURODOLLAR RATE LOANS OR
MAINTAIN OUTSTANDING EURODOLLAR RATE LOANS.

 

IV.           REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants as follows:

 

4.1           AUTHORITY. BORROWER HAS FULL POWER, AUTHORITY AND LEGAL RIGHT TO
ENTER INTO THIS AGREEMENT AND THE OTHER DOCUMENTS AND TO PERFORM ALL ITS
RESPECTIVE OBLIGATIONS HEREUNDER AND THEREUNDER. THIS AGREEMENT AND THE OTHER
DOCUMENTS HAVE BEEN DULY EXECUTED AND DELIVERED BY BORROWER, AND THIS AGREEMENT
AND THE OTHER DOCUMENTS CONSTITUTE THE LEGAL, VALID AND BINDING OBLIGATION OF
BORROWER ENFORCEABLE IN ACCORDANCE WITH THEIR TERMS, EXCEPT AS SUCH
ENFORCEABILITY MAY BE LIMITED BY ANY APPLICABLE BANKRUPTCY, INSOLVENCY,
MORATORIUM OR SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY. THE EXECUTION,
DELIVERY AND PERFORMANCE OF THIS AGREEMENT AND OF THE OTHER DOCUMENTS (A) ARE
WITHIN BORROWER’S CORPORATE POWERS, HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
CORPORATE ACTION, ARE NOT IN CONTRAVENTION OF LAW OR THE TERMS OF BORROWER’S
BY-LAWS, CERTIFICATE OF INCORPORATION OR OTHER APPLICABLE DOCUMENTS RELATING TO
BORROWER’S FORMATION OR TO THE CONDUCT OF BORROWER’S BUSINESS OR OF ANY MATERIAL
AGREEMENT OR UNDERTAKING TO WHICH BORROWER IS A PARTY OR BY WHICH BORROWER IS
BOUND, (B) SHALL NOT CONFLICT WITH OR VIOLATE ANY LAW OR REGULATION, OR ANY
JUDGMENT, ORDER OR DECREE OF ANY GOVERNMENTAL BODY APPLICABLE TO BORROWER OR ANY
AGREEMENT BY WHICH IT IS BOUND, (C) SHALL NOT REQUIRE THE CONSENT OF ANY
GOVERNMENTAL BODY OR ANY OTHER PERSON, EXCEPT THOSE CONSENTS SET FORTH ON
SCHEDULE 4.1 HERETO, ALL OF WHICH SHALL HAVE BEEN DULY OBTAINED, MADE OR
COMPILED PRIOR TO THE CLOSING DATE AND WHICH ARE IN FULL FORCE AND EFFECT AND
(D) SHALL NOT CONFLICT WITH, NOR RESULT IN ANY BREACH IN ANY OF THE PROVISIONS
OF OR CONSTITUTE A DEFAULT UNDER OR RESULT IN THE CREATION OF ANY LIEN EXCEPT
PERMITTED ENCUMBRANCES UPON ANY ASSET OF BORROWER UNDER THE PROVISIONS OF ANY

 

13

--------------------------------------------------------------------------------

 

AGREEMENT, CHARTER DOCUMENT, INSTRUMENT, BY-LAW OR OTHER INSTRUMENT TO WHICH
BORROWER IS A PARTY OR BY WHICH IT OR ITS PROPERTY IS A PARTY OR BY WHICH IT MAY
BE BOUND.

 

4.2           FORMATION AND QUALIFICATION.

 

(A)           BORROWER IS DULY INCORPORATED AND IN GOOD STANDING UNDER THE LAWS
OF THE STATE LISTED ON SCHEDULE 4.2(A) AND IS QUALIFIED TO DO BUSINESS AND IS IN
GOOD STANDING IN THE STATES LISTED ON SCHEDULE 4.2(A) WHICH CONSTITUTE ALL
STATES IN WHICH QUALIFICATION AND GOOD STANDING ARE NECESSARY FOR BORROWER TO
CONDUCT ITS BUSINESS AND OWN ITS PROPERTY AND WHERE THE FAILURE TO SO QUALIFY
COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT. BORROWER HAS
DELIVERED TO BRASCAN TRUE AND COMPLETE COPIES OF ITS CERTIFICATE OF
INCORPORATION AND BY-LAWS AND SHALL PROMPTLY NOTIFY BRASCAN OF ANY AMENDMENT OR
MATERIAL CHANGES THERETO.

 

(B)           THE ONLY SUBSIDIARIES OF BORROWER ARE LISTED ON SCHEDULE 4.2(B).

 

4.3           SURVIVAL OF REPRESENTATIONS AND WARRANTIES. ALL REPRESENTATIONS
AND WARRANTIES OF BORROWER CONTAINED IN THIS AGREEMENT AND THE OTHER DOCUMENTS
SHALL BE TRUE AT THE TIME OF BORROWER’S EXECUTION OF THIS AGREEMENT AND THE
OTHER DOCUMENTS, AND SHALL SURVIVE THE EXECUTION, DELIVERY AND ACCEPTANCE
THEREOF BY THE PARTIES THERETO AND THE CLOSING OF THE TRANSACTIONS DESCRIBED
THEREIN OR RELATED THERETO.

 

4.4           TAX RETURNS. BORROWER’S FEDERAL TAX IDENTIFICATION NUMBER IS SET
FORTH ON SCHEDULE 4.4. BORROWER HAS FILED ALL FEDERAL, STATE AND LOCAL TAX
RETURNS AND OTHER REPORTS IT IS REQUIRED BY LAW TO FILE AND HAS PAID ALL TAXES,
ASSESSMENTS, FEES AND OTHER GOVERNMENTAL CHARGES THAT ARE DUE AND PAYABLE EXCEPT
THOSE THAT ARE BEING CONTESTED BY BORROWER IN GOOD FAITH AND WITH RESPECT TO
WHICH RESERVES IN ACCORDANCE WITH GAAP HAVE BEEN PROVIDED ON THE BOOKS OF
BORROWER. FEDERAL, STATE AND LOCAL INCOME TAX RETURNS OF BORROWER HAVE BEEN
EXAMINED AND REPORTED UPON BY THE APPROPRIATE TAXING AUTHORITY OR CLOSED BY
APPLICABLE STATUTE AND SATISFIED FOR ALL FISCAL YEARS PRIOR TO AND INCLUDING THE
FISCAL YEAR ENDING DECEMBER 31, 2006. THE PROVISION FOR TAXES ON THE BOOKS OF
BORROWER IS ADEQUATE FOR ALL YEARS NOT CLOSED BY APPLICABLE STATUTES, AND FOR
ITS CURRENT FISCAL YEAR, AND BORROWER HAS NO KNOWLEDGE OF ANY DEFICIENCY OR
ADDITIONAL ASSESSMENT IN CONNECTION THEREWITH NOT PROVIDED FOR ON ITS BOOKS.

 

4.5           FINANCIAL STATEMENTS. THE CONSOLIDATED AND CONSOLIDATING BALANCE
SHEETS OF BORROWER, ITS SUBSIDIARIES AND SUCH OTHER PERSONS DESCRIBED THEREIN
(INCLUDING THE ACCOUNTS OF ALL SUBSIDIARIES FOR THE RESPECTIVE PERIODS DURING
WHICH A SUBSIDIARY RELATIONSHIP EXISTED) AS OF JUNE 30, 2007, AND THE RELATED
STATEMENTS OF INCOME, CHANGES IN STOCKHOLDER’S EQUITY, AND CHANGES IN CASH FLOW
FOR THE PERIOD ENDED ON SUCH DATE, COPIES OF WHICH HAVE BEEN DELIVERED TO
BRASCAN, HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED
(SUBJECT TO NORMAL YEAR-END ADJUSTMENTS AND THE ABSENCE OF FOOTNOTE DISCLOSURES)
AND PRESENT FAIRLY THE FINANCIAL POSITION OF BORROWER AND ITS SUBSIDIARIES AT
SUCH DATE AND THE RESULTS OF THEIR OPERATIONS FOR SUCH PERIOD. SINCE JUNE 30,
2007 THERE HAS BEEN NO CHANGE IN THE CONDITION, FINANCIAL OR OTHERWISE, OF
BORROWER OR ITS SUBSIDIARIES AS SHOWN ON THE CONSOLIDATED BALANCE SHEET AS OF
SUCH DATE, EXCEPT CHANGES IN THE ORDINARY COURSE OF BUSINESS, NONE OF WHICH
INDIVIDUALLY OR IN THE AGGREGATE HAS BEEN MATERIALLY ADVERSE.

 

14

--------------------------------------------------------------------------------

 

4.6           ENTITY NAME. BORROWER HAS NOT BEEN KNOWN BY ANY OTHER CORPORATE
NAME IN THE PAST FIVE YEARS NOR HAS BORROWER BEEN THE SURVIVING CORPORATION OF A
MERGER OR CONSOLIDATION OR ACQUIRED ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
ANY PERSON DURING THE PRECEDING FIVE (5) YEARS.

 

4.7           O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.

 

(A)           TO THE EXTENT APPLICABLE TO BORROWER, BORROWER HAS DULY COMPLIED
WITH, AND ITS FACILITIES, BUSINESS, ASSETS, PROPERTY, LEASEHOLDS, REAL PROPERTY
AND EQUIPMENT ARE IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH, THE PROVISIONS OF
THE FEDERAL OCCUPATIONAL SAFETY AND HEALTH ACT, THE ENVIRONMENTAL PROTECTION
ACT, RCRA AND ALL OTHER ENVIRONMENTAL LAWS; THERE HAVE BEEN NO OUTSTANDING
CITATIONS, NOTICES OR ORDERS OF NON-COMPLIANCE ISSUED TO BORROWER OR RELATING TO
ITS BUSINESS, ASSETS, PROPERTY, LEASEHOLDS OR EQUIPMENT UNDER ANY SUCH LAWS,
RULES OR REGULATIONS.

 

(B)           BORROWER HAS BEEN ISSUED ALL REQUIRED FEDERAL, STATE AND LOCAL
LICENSES, CERTIFICATES OR PERMITS RELATING TO ALL APPLICABLE ENVIRONMENTAL LAWS
NECESSARY TO THE OPERATIONS OF THE BUSINESS OF BORROWER.

 

4.8           SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.

 

(A)           AFTER GIVING EFFECT TO THE TRANSACTIONS, BORROWER SHALL BE
SOLVENT, ABLE TO PAY ITS DEBTS AS THEY MATURE, SHALL HAVE CAPITAL SUFFICIENT TO
CARRY ON ITS BUSINESS AND ALL BUSINESSES IN WHICH IT IS ABOUT TO ENGAGE, AND (I)
AS OF THE CLOSING DATE, THE FAIR PRESENT SALEABLE VALUE OF ITS ASSETS,
CALCULATED ON A GOING CONCERN BASIS, IS IN EXCESS OF THE AMOUNT OF ITS
LIABILITIES AND (II) SUBSEQUENT TO THE CLOSING DATE, THE FAIR SALEABLE VALUE OF
ITS ASSETS (CALCULATED ON A GOING CONCERN BASIS) SHALL BE IN EXCESS OF THE
AMOUNT OF ITS LIABILITIES.

 

(B)           EXCEPT AS DISCLOSED IN SCHEDULE 4.8(B), BORROWER HAS NO (I)
PENDING OR THREATENED LITIGATION, ARBITRATION, ACTIONS OR PROCEEDINGS WHICH
COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, AND (II)
LIABILITIES OR INDEBTEDNESS FOR BORROWED MONEY OTHER THAN THE OBLIGATIONS.

 

(C)           BORROWER IS NOT IN VIOLATION OF ANY APPLICABLE STATUTE, LAW, RULE,
REGULATION OR ORDINANCE IN ANY RESPECT WHICH COULD REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT, NOR IS BORROWER IN VIOLATION OF ANY ORDER
APPLICABLE TO BORROWER, OF ANY COURT, GOVERNMENTAL BODY OR ARBITRATION BOARD OR
TRIBUNAL.

 

(D)           NEITHER BORROWER NOR ANY MEMBER OF THE CONTROLLED GROUP MAINTAINS
OR CONTRIBUTES TO ANY PLAN OTHER THAN THOSE LISTED ON SCHEDULE 4.8(D) HERETO.
(I) NO PLAN HAS INCURRED ANY “ACCUMULATED FUNDING DEFICIENCY,” AS DEFINED IN
SECTION 302(A)(2) OF ERISA AND SECTION 412(A) OF THE CODE, WHETHER OR NOT
WAIVED, AND BORROWER AND EACH MEMBER OF THE CONTROLLED GROUP HAS MET ALL
APPLICABLE MINIMUM FUNDING REQUIREMENTS UNDER SECTION 302 OF ERISA IN RESPECT OF
EACH PLAN; (II) EACH PLAN WHICH IS INTENDED TO BE A QUALIFIED PLAN UNDER SECTION
401(A) OF THE CODE AS CURRENTLY IN EFFECT HAS BEEN DETERMINED BY THE INTERNAL
REVENUE SERVICE TO BE QUALIFIED UNDER SECTION 401(A) OF THE CODE AND THE TRUST
RELATED THERETO IS EXEMPT FROM FEDERAL INCOME TAX UNDER SECTION 501(A) OF THE
CODE; (III) NEITHER BORROWER NOR ANY MEMBER OF THE CONTROLLED GROUP HAS INCURRED
ANY LIABILITY TO THE PBGC OTHER THAN FOR THE PAYMENT OF PREMIUMS, AND THERE ARE
NO PREMIUM PAYMENTS WHICH HAVE BECOME DUE WHICH ARE

 

15

--------------------------------------------------------------------------------

 

UNPAID; (IV) NO PLAN HAS BEEN TERMINATED BY THE PLAN ADMINISTRATOR THEREOF NOR
BY THE PBGC, AND THERE IS NO OCCURRENCE WHICH WOULD CAUSE THE PBGC TO INSTITUTE
PROCEEDINGS UNDER TITLE IV OF ERISA TO TERMINATE ANY PLAN; (V) AT THIS TIME, THE
CURRENT VALUE OF THE ASSETS OF EACH PLAN EXCEEDS THE PRESENT VALUE OF THE
ACCRUED BENEFITS AND OTHER LIABILITIES OF SUCH PLAN AND NEITHER BORROWER NOR ANY
MEMBER OF THE CONTROLLED GROUP KNOWS OF ANY FACTS OR CIRCUMSTANCES WHICH WOULD
MATERIALLY CHANGE THE VALUE OF SUCH ASSETS AND ACCRUED BENEFITS AND OTHER
LIABILITIES; (VI) NEITHER BORROWER NOR ANY MEMBER OF THE CONTROLLED GROUP HAS
BREACHED ANY OF THE RESPONSIBILITIES, OBLIGATIONS OR DUTIES IMPOSED ON IT BY
ERISA WITH RESPECT TO ANY PLAN; (VII) NEITHER BORROWER NOR ANY MEMBER OF A
CONTROLLED GROUP HAS INCURRED ANY LIABILITY FOR ANY EXCISE TAX ARISING UNDER
SECTION 4972 OR 4980B OF THE CODE, AND NO FACT EXISTS WHICH COULD GIVE RISE TO
ANY SUCH LIABILITY; (VIII) NEITHER BORROWER NOR ANY MEMBER OF THE CONTROLLED
GROUP NOR ANY FIDUCIARY OF, NOR ANY TRUSTEE TO, ANY PLAN, HAS ENGAGED IN A
“PROHIBITED TRANSACTION” DESCRIBED IN SECTION 406 OF THE ERISA OR SECTION 4975
OF THE CODE NOR TAKEN ANY ACTION WHICH WOULD CONSTITUTE OR RESULT IN A
TERMINATION EVENT WITH RESPECT TO ANY SUCH PLAN WHICH IS SUBJECT TO ERISA; (IX)
BORROWER AND EACH MEMBER OF THE CONTROLLED GROUP HAS MADE ALL CONTRIBUTIONS DUE
AND PAYABLE WITH RESPECT TO EACH PLAN; (X) THERE EXISTS NO EVENT DESCRIBED IN
SECTION 4043(B) OF ERISA, FOR WHICH THE THIRTY (30) DAY NOTICE PERIOD HAS NOT
BEEN WAIVED; (XI) NEITHER BORROWER NOR ANY MEMBER OF THE CONTROLLED GROUP HAS
ANY FIDUCIARY RESPONSIBILITY FOR INVESTMENTS WITH RESPECT TO ANY PLAN EXISTING
FOR THE BENEFIT OF PERSONS OTHER THAN EMPLOYEES OR FORMER EMPLOYEES OF BORROWER
AND ANY MEMBER OF THE CONTROLLED GROUP; (XII) NEITHER BORROWER NOR ANY MEMBER OF
THE CONTROLLED GROUP MAINTAINS OR CONTRIBUTES TO ANY PLAN WHICH PROVIDES HEALTH,
ACCIDENT OR LIFE INSURANCE BENEFITS TO FORMER EMPLOYEES, THEIR SPOUSES OR
DEPENDENTS, OTHER THAN IN ACCORDANCE WITH SECTION 4980B OF THE CODE; (XIII)
NEITHER BORROWER NOR ANY MEMBER OF THE CONTROLLED GROUP HAS WITHDRAWN,
COMPLETELY OR PARTIALLY, FROM ANY MULTIEMPLOYER PLAN SO AS TO INCUR LIABILITY
UNDER THE MULTIEMPLOYER PENSION PLAN AMENDMENTS ACT OF 1980 AND THERE EXISTS NO
FACT WHICH WOULD REASONABLY BE EXPECTED TO RESULT IN ANY SUCH LIABILITY; AND
(XIV) NO PLAN FIDUCIARY (AS DEFINED IN SECTION 3(21) OF ERISA) HAS ANY LIABILITY
FOR BREACH OF FIDUCIARY DUTY OR FOR ANY FAILURE IN CONNECTION WITH THE
ADMINISTRATION OR INVESTMENT OF THE ASSETS OF A PLAN.

 

4.9           LICENSES AND PERMITS. EXCEPT AS SET FORTH IN SCHEDULE 4.9,
BORROWER (A) IS IN COMPLIANCE WITH AND (B) HAS PROCURED AND IS NOW IN POSSESSION
OF, ALL MATERIAL LICENSES OR PERMITS REQUIRED BY ANY APPLICABLE FEDERAL, STATE
OR LOCAL LAW, RULE OR REGULATION FOR THE OPERATION OF ITS BUSINESS IN EACH
JURISDICTION WHEREIN IT IS NOW CONDUCTING OR PROPOSES TO CONDUCT BUSINESS AND
WHERE THE FAILURE TO PROCURE SUCH LICENSES OR PERMITS COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

4.10         DEFAULT OF INDEBTEDNESS. BORROWER IS NOT IN DEFAULT IN THE PAYMENT
OF THE PRINCIPAL OF OR INTEREST ON ANY INDEBTEDNESS OR UNDER ANY INSTRUMENT OR
AGREEMENT UNDER OR SUBJECT TO WHICH ANY INDEBTEDNESS HAS BEEN ISSUED AND NO
EVENT HAS OCCURRED UNDER THE PROVISIONS OF ANY SUCH INSTRUMENT OR AGREEMENT
WHICH WITH OR WITHOUT THE LAPSE OF TIME OR THE GIVING OF NOTICE, OR BOTH,
CONSTITUTES OR WOULD CONSTITUTE AN EVENT OF DEFAULT THEREUNDER.

 

4.11         NO DEFAULT. BORROWER IS NOT IN DEFAULT IN THE PAYMENT OR
PERFORMANCE OF ANY OF ITS CONTRACTUAL OBLIGATIONS AND NO DEFAULT HAS OCCURRED
THAT COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

16

--------------------------------------------------------------------------------

 

4.12         NO BURDENSOME RESTRICTIONS. BORROWER IS NOT PARTY TO ANY CONTRACT
OR AGREEMENT THE PERFORMANCE OF WHICH COULD HAVE A MATERIAL ADVERSE EFFECT.
BORROWER HAS HERETOFORE DELIVERED TO BRASCAN TRUE AND COMPLETE COPIES OF ALL
MATERIAL CONTRACTS REQUESTED BY BRASCAN TO WHICH IT IS A PARTY OR TO WHICH IT OR
ANY OF ITS PROPERTIES IS SUBJECT. BORROWER HAS NOT AGREED OR CONSENTED TO CAUSE
OR PERMIT IN THE FUTURE (UPON THE HAPPENING OF A CONTINGENCY OR OTHERWISE) ANY
OF ITS PROPERTY, WHETHER NOW OWNED OR HEREAFTER ACQUIRED, TO BE SUBJECT TO A
LIEN WHICH IS NOT A PERMITTED ENCUMBRANCE AND WHICH COULD REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT.

 

4.13         MARGIN REGULATIONS. BORROWER IS NOT ENGAGED, NOR SHALL IT ENGAGE,
PRINCIPALLY OR AS ONE OF ITS IMPORTANT ACTIVITIES, IN THE BUSINESS OF EXTENDING
CREDIT FOR THE PURPOSE OF “PURCHASING” OR “CARRYING” ANY “MARGIN STOCK” WITHIN
THE RESPECTIVE MEANINGS OF EACH OF THE QUOTED TERMS UNDER REGULATION U OF THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM AS NOW AND FROM TIME TO TIME
HEREAFTER IN EFFECT. NO PART OF THE PROCEEDS OF ANY ADVANCE SHALL BE USED FOR
“PURCHASING” OR “CARRYING” “MARGIN STOCK” AS DEFINED IN REGULATION U OF SUCH
BOARD OF GOVERNORS.

 

4.14         INVESTMENT COMPANY ACT. BORROWER IS NOT AN “INVESTMENT COMPANY”
REGISTERED OR REQUIRED TO BE REGISTERED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED, NOR IS IT CONTROLLED BY SUCH A COMPANY.

 

4.15         DISCLOSURE. NO REPRESENTATION OR WARRANTY MADE BY BORROWER IN THIS
AGREEMENT OR IN ANY FINANCIAL STATEMENT, REPORT, CERTIFICATE OR ANY OTHER
DOCUMENT FURNISHED IN CONNECTION HEREWITH OR THEREWITH CONTAINS ANY UNTRUE
STATEMENT OF FACT OR OMITS TO STATE ANY FACT NECESSARY TO MAKE THE STATEMENTS
HEREIN OR THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE,
 NOT MISLEADING. THERE IS NO FACT KNOWN TO BORROWER OR WHICH REASONABLY SHOULD
BE KNOWN TO BORROWER WHICH BORROWER HAS NOT DISCLOSED TO BRASCAN IN WRITING WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT WHICH COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

4.16         CONFLICTING AGREEMENTS. NO PROVISION OF ANY MORTGAGE, INDENTURE,
CONTRACT, AGREEMENT, JUDGMENT, DECREE OR ORDER BINDING ON BORROWER CONFLICTS
WITH, OR REQUIRES ANY CONSENT WHICH HAS NOT ALREADY BEEN OBTAINED TO, OR WOULD
IN ANY WAY PREVENT THE EXECUTION, DELIVERY OR PERFORMANCE OF, THE TERMS OF THIS
AGREEMENT OR THE OTHER DOCUMENTS.

 

4.17         APPLICATION OF CERTAIN LAWS AND REGULATIONS. THERE IS NO LAW,
STATUTE, RULE OR REGULATION APPLICABLE TO BORROWER, WHICH REGULATES THE
INCURRENCE OF ANY INDEBTEDNESS.

 

4.18         BUSINESS AND PROPERTY OF BORROWER. BORROWER DOES NOT PROPOSE TO
ENGAGE IN ANY BUSINESS OTHER THAN THE BUSINESS ENGAGED IN ON THE CLOSING DATE.

 

4.19         ANTI-TERRORISM LAWS.

 

(A)           GENERAL. NEITHER BORROWER NOR ANY AFFILIATE OF BORROWER IS IN
VIOLATION OF ANY ANTI-TERRORISM LAW OR ENGAGES IN OR CONSPIRES TO ENGAGE IN ANY
TRANSACTION THAT EVADES OR AVOIDS, OR HAS THE PURPOSE OF EVADING OR AVOIDING, OR
ATTEMPTS TO VIOLATE, ANY OF THE PROHIBITIONS SET FORTH IN ANY ANTI-TERRORISM
LAW.

 

17

--------------------------------------------------------------------------------

 

(B)           EXECUTIVE ORDER NO. 13224. NEITHER BORROWER NOR ANY AFFILIATE OF
BORROWER ACTING OR BENEFITING IN ANY CAPACITY IN CONNECTION WITH THE ADVANCES OR
OTHER TRANSACTIONS HEREUNDER, IS ANY OF THE FOLLOWING (EACH A “BLOCKED PERSON”):

 

(I)            A PERSON THAT IS LISTED IN THE ANNEX TO, OR IS OTHERWISE SUBJECT
TO THE PROVISIONS OF, THE EXECUTIVE ORDER NO. 13224;

 

(II)           A PERSON OWNED OR CONTROLLED BY, OR ACTING FOR OR ON BEHALF OF, 
ANY PERSON THAT IS LISTED IN THE ANNEX TO, OR IS OTHERWISE SUBJECT TO THE
PROVISIONS OF, THE EXECUTIVE ORDER NO. 13224;

 

(III)          A PERSON OR ENTITY WITH WHICH BRASCAN IS PROHIBITED FROM DEALING
OR OTHERWISE ENGAGING IN ANY TRANSACTION BY ANY ANTI-TERRORISM LAW;

 

(IV)          A PERSON OR ENTITY THAT COMMITS, THREATENS OR CONSPIRES TO COMMIT
OR SUPPORTS “TERRORISM” AS DEFINED IN THE EXECUTIVE ORDER NO. 13224;

 

(V)           A PERSON OR ENTITY THAT IS NAMED AS A “SPECIALLY DESIGNATED
NATIONAL” ON THE MOST CURRENT LIST PUBLISHED BY THE U.S. TREASURY DEPARTMENT
OFFICE OF FOREIGN ASSET CONTROL AT ITS OFFICIAL WEBSITE OR ANY REPLACEMENT
WEBSITE OR OTHER REPLACEMENT OFFICIAL PUBLICATION OF SUCH LIST, OR

 

(VI)          A PERSON OR ENTITY WHO IS AFFILIATED OR ASSOCIATED WITH A PERSON
OR ENTITY LISTED ABOVE.

 

(C)           NEITHER BORROWER OR, TO THE KNOWLEDGE OF BORROWER, ANY OF ITS
AFFILIATES ACTING IN ANY CAPACITY IN CONNECTION WITH THE ADVANCES OR OTHER
TRANSACTIONS HEREUNDER (I) CONDUCTS ANY BUSINESS OR ENGAGES IN MAKING OR
RECEIVING ANY CONTRIBUTION OF FUNDS, GOODS OR SERVICES TO OR FOR THE BENEFIT OF
ANY BLOCKED PERSON, OR (II) DEALS IN, OR OTHERWISE ENGAGES IN ANY TRANSACTION
RELATING TO, ANY PROPERTY OR INTERESTS IN PROPERTY BLOCKED PURSUANT TO THE
EXECUTIVE ORDER NO. 13224.

 

4.20         TRADING WITH THE ENEMY. BORROWER HAS NOT ENGAGED, NOR DOES IT
INTEND TO ENGAGE, IN ANY BUSINESS OR ACTIVITY PROHIBITED BY THE TRADING WITH THE
ENEMY ACT.

 

V.            AFFIRMATIVE COVENANTS.

 

Borrower shall, until payment in full of the Obligations and termination of this
Agreement:

 

5.1           RESERVED.

 

5.2           CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (A)
CONDUCT CONTINUOUSLY AND OPERATE ACTIVELY ITS BUSINESS ACCORDING TO GOOD
BUSINESS PRACTICES AND MAINTAIN ALL OF ITS PROPERTIES USEFUL OR NECESSARY IN ITS
BUSINESS IN GOOD WORKING ORDER AND CONDITION (REASONABLE WEAR AND TEAR EXCEPTED
AND EXCEPT AS MAY BE DISPOSED OF IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT); (B) KEEP IN FULL FORCE AND EFFECT ITS EXISTENCE AND COMPLY IN ALL
MATERIAL RESPECTS WITH THE LAWS AND REGULATIONS GOVERNING THE CONDUCT OF ITS
BUSINESS WHERE THE FAILURE TO

 

18

--------------------------------------------------------------------------------

 

DO SO COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; AND (C)
MAKE ALL SUCH REPORTS AND PAY ALL SUCH FRANCHISE AND OTHER TAXES AND LICENSE
FEES AND DO ALL SUCH OTHER ACTS AND THINGS AS MAY BE LAWFULLY REQUIRED TO
MAINTAIN ITS RIGHTS, LICENSES, LEASES, POWERS AND FRANCHISES UNDER THE LAWS OF
THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF.

 

5.3           VIOLATIONS. PROMPTLY NOTIFY BRASCAN IN WRITING OF ANY VIOLATION OF
ANY LAW, STATUTE, REGULATION OR ORDINANCE OF ANY GOVERNMENTAL BODY, OR OF ANY
AGENCY THEREOF, APPLICABLE TO BORROWER WHICH COULD REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT.

 

5.4           FINANCIAL COVENANTS. BEGINNING WITH THE FISCAL QUARTER ENDED
SEPTEMBER 30, 2007:

 

(A)           NET WORTH. FOR EACH FISCAL QUARTER OF BORROWER, MAINTAIN NET WORTH
IN AN AMOUNT EQUAL TO NOT LESS THAN $300,000,000.

 

(B)           QUARTERLY NET INCOME. FOR EACH FISCAL QUARTER OF BORROWER, EARN
NET INCOME OF NOT LESS THAN $4,000,000.

 

(C)           ROLLING FOUR QUARTER INCOME. FOR THE MOST RECENTLY ENDED FISCAL
QUARTER OF BORROWER AND THE THREE PRECEDING FISCAL QUARTERS OF BORROWER, EARN
NET INCOME OF NOT LESS THAN $20,000,000.

 

(D)           MAXIMUM POST SHOCK TEST. CAUSE AT ALL TIMES THE RESULT OF THE FAIR
VALUE, AS SET FORTH IN THE BORROWER’S BALANCE SHEET MOST RECENTLY DELIVERED
PURSUANT TO SECTION 8.4 AND 8.5 HEREOF, OF BORROWER’S PORTFOLIO OF
MORTGAGE-BACKED SECURITIES MINUS ADJUSTED NET PORTFOLIO VALUE OF SUCH
MORTGAGE-BACKED SECURITIES TO BE LESS THAN TWENTY-FIVE PERCENT (25%) OF NET
WORTH AS SET FORTH IN SUCH BALANCE SHEET.

 

(E)           MAXIMUM INDEBTEDNESS TO TOTAL NET WORTH RATIO. MAINTAIN AS OF THE
END OF EACH FISCAL QUARTER OF BORROWER, A RATIO OF INDEBTEDNESS TO NET WORTH OF
NOT MORE THAN 9.0 TO 1.0.

 

5.5           EXECUTION OF SUPPLEMENTAL INSTRUMENTS. EXECUTE AND DELIVER TO
BRASCAN FROM TIME TO TIME, UPON DEMAND, AND SUCH OTHER INSTRUMENTS AS BRASCAN
MAY REASONABLY REQUEST, IN ORDER THAT THE FULL INTENT OF THIS AGREEMENT MAY BE
CARRIED INTO EFFECT.

 

5.6           PAYMENT OF INDEBTEDNESS. PAY, DISCHARGE OR OTHERWISE SATISFY AT OR
BEFORE MATURITY (SUBJECT, WHERE APPLICABLE, TO SPECIFIED GRACE PERIODS AND, IN
THE CASE OF THE TRADE PAYABLES, TO NORMAL PAYMENT PRACTICES) ALL ITS OBLIGATIONS
AND LIABILITIES OF WHATEVER NATURE, EXCEPT WHEN THE FAILURE TO DO SO COULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR WHEN THE AMOUNT OR
VALIDITY THEREOF IS CURRENTLY BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS AND BORROWER SHALL HAVE PROVIDED FOR SUCH RESERVES AS BRASCAN MAY
REASONABLY DEEM PROPER AND NECESSARY.

 

19

--------------------------------------------------------------------------------

 

5.7           STANDARDS OF FINANCIAL STATEMENTS. CAUSE ALL FINANCIAL STATEMENTS
REFERRED TO IN SECTIONS 8.4, 8.5, 8.6, 8.7 AND 8.8 AS TO WHICH GAAP IS
APPLICABLE TO BE COMPLETE AND CORRECT IN ALL MATERIAL RESPECTS (SUBJECT, IN THE
CASE OF INTERIM FINANCIAL STATEMENTS, TO NORMAL YEAR-END AUDIT ADJUSTMENTS) AND
TO BE PREPARED IN REASONABLE DETAIL AND IN ACCORDANCE WITH GAAP APPLIED
CONSISTENTLY THROUGHOUT THE PERIODS REFLECTED THEREIN (EXCEPT AS CONCURRED IN BY
SUCH REPORTING ACCOUNTANTS OR OFFICER, AS THE CASE MAY BE, AND DISCLOSED
THEREIN).

 

VI.           NEGATIVE COVENANTS.

 

Borrower shall not, until satisfaction in full of the Obligations and
termination of this Agreement:

 

6.1           PROHIBITION ON FUNDAMENTAL CHANGES. ENTER INTO ANY TRANSACTION OF
MERGER OR CONSOLIDATION OR AMALGAMATION, OR LIQUIDATE, WIND UP OR DISSOLVE
ITSELF (OR SUFFER ANY LIQUIDATION, WINDING UP OR DISSOLUTION) OR SELL ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS OR ACQUIRE OR FORM ANY SUBSIDIARIES (OTHER THAN
ANY FINANCE SUBSIDIARIES, ANY SUBSIDIARY FORMED FOR REGULATORY OR STRUCTURING
PURPOSES TO FACILITATE ANY INVESTMENT OR ANY SPECIAL PURPOSE SUBSIDIARY FORMED
TO OWN AND/OR FINANCE REAL PROPERTY ASSETS); PROVIDED, HOWEVER, THAT BORROWER
MAY MERGE OR CONSOLIDATE WITH (X) ANY WHOLLY OWNED SUBSIDIARY, OR (Y) ANY OTHER
PERSON IF BORROWER IS THE SURVIVING CORPORATION; AND PROVIDED, FURTHER, THAT, IF
AFTER GIVING EFFECT THERETO, NO EVENT OF DEFAULT WOULD EXIST HEREUNDER. BORROWER
SHALL NOT CHANGE ITS FISCAL YEAR OR METHOD OF ACCOUNTING WITHOUT THE CONSENT OF
BRASCAN, AND BORROWER SHALL GIVE BRASCAN AT LEAST FIFTEEN (15) DAYS PRIOR
WRITTEN NOTICE OF ANY SUCH REQUESTED CHANGE, WHICH NOTICE SHALL INCLUDE A
DETAILED EXPLANATION OF THE CHANGES INTENDED TO BE MADE AND PRO FORMA FINANCIAL
STATEMENTS DEMONSTRATING THE IMPACT THEREOF.

 

6.2           GUARANTEES. BECOME LIABLE UPON THE OBLIGATIONS OR LIABILITIES OF
ANY PERSON BY ASSUMPTION, ENDORSEMENT OR GUARANTY THEREOF OR OTHERWISE (OTHER
THAN TO BRASCAN OR EXISTING UNDER THE EXISTING CREDIT AGREEMENT) EXCEPT (A) AS
DISCLOSED ON SCHEDULE 6.3; (B) THE ENDORSEMENT OF CHECKS IN THE ORDINARY COURSE
OF BUSINESS; AND (C) GUARANTEES OF OBLIGATIONS OF WHOLLY-OWNED TAXABLE REIT
SUBSIDIARIES OF BORROWER UNDER REPURCHASE AGREEMENTS AND UNDER AGREEMENTS
CONSISTING OF A “MASTER AGREEMENT” IN A FORM PUBLISHED BY THE INTERNATIONAL
SWAPS AND DERIVATIVES ASSOCIATION, INC., TOGETHER WITH A “SCHEDULE” AND/OR
“ANNEX” THERETO AND EACH “CONFIRMATION” THEREUNDER CONFIRMING THE SPECIFIC TERMS
OF A TRANSACTION, PROVIDED THAT (I) SUCH GUARANTEES ARE ENTERED INTO IN THE
ORDINARY COURSE OF BUSINESS, (II) IN THE CASE OF A “MASTER AGREEMENT”,
“SCHEDULE”, “ANNEX” AND “CONFIRMATION”, THE OBLIGATIONS OF ANY SUCH SUBSIDIARY
THEREUNDER AND THE OBLIGATIONS OF BORROWER UNDER THE RELATED GUARANTEE ARE NOT
SECURED BY ANY ASSETS OF SUCH SUBSIDIARY OR BORROWER, AS THE CASE MAY BE, AND
(III) ANY TRANSACTION ENTERED INTO BY SUCH SUBSIDIARY UNDER ANY SUCH REPURCHASE
AGREEMENT OR “MASTER AGREEMENT”, “SCHEDULE”, “ANNEX” AND “CONFIRMATION” IS
ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS OF SUCH SUBSIDIARY AND IS IN
COMPLIANCE WITH THE INVESTMENT GUIDELINES OF BORROWER.

 

6.3           DIVIDENDS. DECLARE, PAY OR MAKE ANY DIVIDEND OR DISTRIBUTION ON OR
IN RESPECT OF ANY EQUITY INTERESTS OF BORROWER (OTHER THAN DIVIDENDS OR
DISTRIBUTIONS PAYABLE IN ITS STOCK, OR SPLIT-UPS OR RECLASSIFICATIONS OF ITS
STOCK) OR APPLY ANY OF ITS FUNDS, PROPERTY OR ASSETS TO THE PURCHASE, REDEMPTION
OR OTHER RETIREMENT OF ANY EQUITY INTERESTS OF BORROWER IF A DEFAULT OR EVENT OF
DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, PROVIDED, HOWEVER, THAT AFTER THE

 

20

--------------------------------------------------------------------------------

 

OCCURRENCE AND DURING THE CONTINUATION OF A DEFAULT OR EVENT OF DEFAULT,
BORROWER SHALL BE PERMITTED TO MAKE SUCH DECLARATION OR PAYMENT NECESSARY TO
MAINTAIN ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER SECTIONS 856-860 OF
THE CODE.

 

6.4           INDEBTEDNESS. CREATE, INCUR, ASSUME OR SUFFER TO EXIST ANY
INDEBTEDNESS (EXCLUSIVE OF TRADE DEBT) EXCEPT IN RESPECT OF (I) INDEBTEDNESS TO
BRASCAN UNDER THIS AGREEMENT; (II) INDEBTEDNESS DISCLOSED ON SCHEDULE 6.4;
(III)  INDEBTEDNESS INCURRED TO EXTEND, RENEW OR REFINANCE ANY INDEBTEDNESS
DESCRIBED IN CLAUSE (II) ABOVE, PROVIDED THAT SUCH INDEBTEDNESS IS IN AN
AGGREGATE PRINCIPAL AMOUNT NOT GREATER THAN THE AGGREGATE PRINCIPAL AMOUNT OF
THE INDEBTEDNESS BEING EXTENDED, RENEWED OR REFINANCED; (IV) INDEBTEDNESS UNDER
REPURCHASE AGREEMENTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS; (V)
INDEBTEDNESS TO SUBSIDIARIES; AND (VI) INDEBTEDNESS UNDER THE EXISTING CREDIT
AGREEMENT.

 

6.5           NATURE OF BUSINESS. SUBSTANTIALLY CHANGE THE NATURE OF THE
BUSINESS IN WHICH IT IS PRESENTLY ENGAGED, NOR EXCEPT AS SPECIFICALLY PERMITTED
HEREBY PURCHASE OR INVEST, DIRECTLY OR INDIRECTLY, IN ANY ASSETS OR PROPERTY
OTHER THAN IN THE ORDINARY COURSE OF BUSINESS FOR ASSETS OR PROPERTY WHICH ARE
USEFUL IN, NECESSARY FOR AND ARE TO BE USED IN ITS BUSINESS AS PRESENTLY
CONDUCTED.

 

6.6           TRANSACTIONS WITH AFFILIATES. DIRECTLY OR INDIRECTLY, PURCHASE,
ACQUIRE OR LEASE ANY PROPERTY FROM, OR SELL, TRANSFER OR LEASE ANY PROPERTY TO,
OR OTHERWISE ENTER INTO ANY TRANSACTION OR DEAL WITH, ANY AFFILIATE, EXCEPT TO
THE EXTENT ANY OF THE FOREGOING ARE IN THE ORDINARY COURSE OF BUSINESS AND ON AN
ARM’S-LENGTH BASIS ON TERMS AND CONDITIONS NO LESS FAVORABLE THAN TERMS AND
CONDITIONS WHICH WOULD HAVE BEEN OBTAINABLE FROM A PERSON OTHER THAN AN
AFFILIATE.

 

6.7           FISCAL YEAR AND ACCOUNTING CHANGES. CHANGE ITS FISCAL YEAR FROM A
YEAR ENDING ON DECEMBER 31, OR MAKE ANY CHANGE (I) IN ACCOUNTING TREATMENT AND
REPORTING PRACTICES EXCEPT AS REQUIRED BY GAAP OR BY LAW, OR, WITH BRASCAN’S
PRIOR WRITTEN CONSENT, AS PERMITTED BY GAAP OR (II) IN TAX REPORTING TREATMENT
EXCEPT AS REQUIRED BY LAW, OR, WITH BRASCAN’S PRIOR WRITTEN CONSENT, AS
PERMITTED BY LAW.

 

6.8           AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS. AMEND, MODIFY OR
WAIVE IN ANY MANNER THAT WOULD BE REASONABLY LIKELY TO ADVERSELY AFFECT THE
BORROWER OR ANY MATERIAL TERM OR MATERIAL PROVISION OF ITS ARTICLES OF
INCORPORATION, BY-LAWS OR ANY OTHER ORGANIZATIONAL DOCUMENT, UNLESS REQUIRED BY
LAW.

 

6.9           COMPLIANCE WITH ERISA. (I) (X) MAINTAIN, OR PERMIT ANY MEMBER OF
THE CONTROLLED GROUP TO MAINTAIN, OR (Y) BECOME OBLIGATED TO CONTRIBUTE, OR
PERMIT ANY MEMBER OF THE CONTROLLED GROUP TO BECOME OBLIGATED TO CONTRIBUTE, TO
ANY PLAN, OTHER THAN THOSE PLANS DISCLOSED ON SCHEDULE 4.8(D), (II) ENGAGE, OR
PERMIT ANY MEMBER OF THE CONTROLLED GROUP TO ENGAGE, IN ANY NON-EXEMPT
“PROHIBITED TRANSACTION”, AS THAT TERM IS DEFINED IN SECTION 406 OF ERISA AND
SECTION 4975 OF THE CODE, (III) INCUR, OR PERMIT ANY MEMBER OF THE CONTROLLED
GROUP TO INCUR, ANY “ACCUMULATED FUNDING DEFICIENCY”, AS THAT TERM IS DEFINED IN
SECTION 302 OF ERISA OR SECTION 412 OF THE CODE, (IV) TERMINATE, OR PERMIT ANY
MEMBER OF THE CONTROLLED GROUP TO TERMINATE, ANY PLAN WHERE SUCH EVENT COULD
RESULT IN ANY LIABILITY OF BORROWER OR ANY MEMBER OF THE CONTROLLED GROUP OR THE
IMPOSITION OF A LIEN ON THE PROPERTY OF BORROWER OR ANY MEMBER OF THE CONTROLLED
GROUP PURSUANT TO SECTION 4068 OF ERISA, (V) ASSUME, OR PERMIT ANY MEMBER OF

 

21

--------------------------------------------------------------------------------

 

THE CONTROLLED GROUP TO ASSUME, ANY OBLIGATION TO CONTRIBUTE TO ANY
MULTIEMPLOYER PLAN NOT DISCLOSED ON SCHEDULE 4.8(D), (VI) INCUR, OR PERMIT ANY
MEMBER OF THE CONTROLLED GROUP TO INCUR, ANY WITHDRAWAL LIABILITY TO ANY
MULTIEMPLOYER PLAN; (VII) FAIL PROMPTLY TO NOTIFY BRASCAN OF THE OCCURRENCE OF
ANY TERMINATION EVENT, (VIII) FAIL TO COMPLY, OR PERMIT A MEMBER OF THE
CONTROLLED GROUP TO FAIL TO COMPLY, WITH THE REQUIREMENTS OF ERISA OR THE CODE
OR OTHER APPLICABLE LAWS IN RESPECT OF ANY PLAN, (IX) FAIL TO MEET, OR PERMIT
ANY MEMBER OF THE CONTROLLED GROUP TO FAIL TO MEET, ALL MINIMUM FUNDING
REQUIREMENTS UNDER ERISA OR THE CODE OR POSTPONE OR DELAY OR ALLOW ANY MEMBER OF
THE CONTROLLED GROUP TO POSTPONE OR DELAY ANY FUNDING REQUIREMENT WITH RESPECT
OF ANY PLAN.

 

6.10         ANTI-TERRORISM LAWS. FOR ITSELF AND ANY AFFILIATE OR BRASCAN:

 

(A)           CONDUCT ANY BUSINESS OR ENGAGE IN ANY TRANSACTION OR DEALING WITH
ANY BLOCKED PERSON, INCLUDING THE MAKING OR RECEIVING ANY CONTRIBUTION OF FUNDS,
GOODS OR SERVICES TO OR FOR THE BENEFIT OF ANY BLOCKED PERSON.

 

(B)           DEAL IN, OR OTHERWISE ENGAGE IN ANY TRANSACTION RELATING TO, ANY
PROPERTY OR INTERESTS IN PROPERTY BLOCKED PURSUANT TO THE EXECUTIVE ORDER NO.
13224.

 

(C)           ENGAGE IN OR CONSPIRE TO ENGAGE IN ANY TRANSACTION THAT EVADES OR
AVOIDS, OR HAS THE PURPOSE OF EVADING OR AVOIDING, OR ATTEMPTS TO VIOLATE, ANY
OF THE PROHIBITIONS SET FORTH IN THE EXECUTIVE ORDER NO. 13224, THE USA PATRIOT
ACT OR ANY OTHER ANTI-TERRORISM LAW. BORROWER SHALL DELIVER TO BRASCAN ANY
CERTIFICATION OR OTHER EVIDENCE REQUESTED FROM TIME TO TIME BY BRASCAN IN ITS
SOLE DISCRETION, CONFIRMING BORROWER’S COMPLIANCE WITH THIS SECTION.

 

6.11         TRADING WITH THE ENEMY ACT. ENGAGE IN ANY BUSINESS OR ACTIVITY IN
VIOLATION OF THE TRADING WITH THE ENEMY ACT.

 

VII.          CONDITIONS PRECEDENT.

 

7.1           CONDITIONS TO INITIAL ADVANCES. THE AGREEMENT OF BRASCAN TO MAKE
THE INITIAL ADVANCES REQUESTED TO BE MADE IS SUBJECT TO THE SATISFACTION, OR
WAIVER BY BRASCAN, IMMEDIATELY PRIOR TO OR CONCURRENTLY WITH THE MAKING OF SUCH
ADVANCES, OF THE FOLLOWING CONDITIONS PRECEDENT:

 

(A)           EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. BRASCAN SHALL HAVE
RECEIVED EACH OF THIS AGREEMENT, THE REVOLVING CREDIT NOTE, AND EACH OTHER
DOCUMENT TO WHICH BORROWER IS A PARTY, DULY EXECUTED AND DELIVERED BY AN
AUTHORIZED OFFICER OF BORROWER;

 

(B)           CORPORATE PROCEEDINGS OF BORROWER. BRASCAN SHALL HAVE RECEIVED A
COPY OF THE RESOLUTIONS IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
BRASCAN, OF THE BOARD OF DIRECTORS OF BORROWER AUTHORIZING (I) THE EXECUTION,
DELIVERY AND PERFORMANCE OF THIS AGREEMENT, THE REVOLVING CREDIT NOTE AND ANY
RELATED AGREEMENTS, CERTIFIED BY THE SECRETARY OR AN ASSISTANT SECRETARY OF
BORROWER AS OF THE CLOSING DATE; AND, SUCH CERTIFICATE SHALL STATE THAT THE
RESOLUTIONS THEREBY CERTIFIED HAVE NOT BEEN AMENDED, MODIFIED, REVOKED OR
RESCINDED AS OF THE DATE OF SUCH CERTIFICATE;

 

22

--------------------------------------------------------------------------------

 

(C)           INCUMBENCY CERTIFICATES OF BORROWER. BRASCAN SHALL HAVE RECEIVED A
CERTIFICATE OF THE SECRETARY OR AN ASSISTANT SECRETARY OF BORROWER, DATED THE
CLOSING DATE, AS TO THE INCUMBENCY AND BRASCAN OF THE OFFICERS OF BORROWER
EXECUTING THIS AGREEMENT, THE OTHER DOCUMENTS, ANY CERTIFICATE OR OTHER
DOCUMENTS TO BE DELIVERED BY IT PURSUANT HERETO, TOGETHER WITH EVIDENCE OF THE
INCUMBENCY OF SUCH SECRETARY OR ASSISTANT SECRETARY;

 

(D)           CERTIFICATES. BRASCAN SHALL HAVE RECEIVED A COPY OF THE ARTICLES
OR CERTIFICATE OF INCORPORATION OF BORROWER AND ALL AMENDMENTS THERETO,
CERTIFIED BY THE SECRETARY OF STATE OR OTHER APPROPRIATE OFFICIAL OF ITS
JURISDICTION OF INCORPORATION, TOGETHER WITH COPIES OF THE BY-LAWS OF BORROWER
AND ALL AGREEMENTS OF BORROWER’S SHAREHOLDERS, CERTIFIED AS ACCURATE AND
COMPLETE BY THE SECRETARY OF BORROWER;

 

(E)           GOOD STANDING CERTIFICATES. BRASCAN SHALL HAVE RECEIVED GOOD
STANDING CERTIFICATES FOR BORROWER DATED NOT MORE THAN TWENTY (20) DAYS PRIOR TO
THE CLOSING DATE, ISSUED BY THE SECRETARY OF STATE OR OTHER APPROPRIATE OFFICIAL
OF BORROWER’S JURISDICTION OF INCORPORATION AND EACH JURISDICTION WHERE THE
CONDUCT OF BORROWER’S BUSINESS ACTIVITIES OR THE OWNERSHIP OF ITS PROPERTIES
NECESSITATES QUALIFICATION;

 

(F)            NO LITIGATION. (I) NO LITIGATION, INVESTIGATION OR PROCEEDING
BEFORE OR BY ANY ARBITRATOR OR GOVERNMENTAL BODY SHALL BE CONTINUING OR
THREATENED AGAINST BORROWER OR AGAINST THE OFFICERS OR DIRECTORS OF BORROWER (A)
IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT NOTE, THE OTHER
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY AND WHICH, IN THE
REASONABLE OPINION OF BRASCAN, IS DEEMED MATERIAL OR (B) WHICH COULD, IN THE
REASONABLE OPINION OF BRASCAN, HAVE A MATERIAL ADVERSE EFFECT; AND (II) NO
INJUNCTION, WRIT, RESTRAINING ORDER OR OTHER ORDER OF ANY NATURE MATERIALLY
ADVERSE TO BORROWER OR THE CONDUCT OF ITS BUSINESS OR INCONSISTENT WITH THE DUE
CONSUMMATION OF THE TRANSACTIONS SHALL HAVE BEEN ISSUED BY ANY GOVERNMENTAL
BODY;

 

(G)           NO ADVERSE MATERIAL CHANGE. (I) SINCE JUNE 30, 2007, THERE SHALL
NOT HAVE OCCURRED ANY EVENT, CONDITION OR STATE OF FACTS WHICH COULD REASONABLY
BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT AND (II) NO REPRESENTATIONS MADE
OR INFORMATION SUPPLIED TO BRASCAN SHALL HAVE BEEN PROVEN TO BE INACCURATE OR
MISLEADING IN ANY MATERIAL RESPECT;

 

(H)           OTHER DOCUMENTS. BRASCAN SHALL HAVE RECEIVED THE EXECUTED OTHER
DOCUMENTS, ALL IN FORM AND SUBSTANCE SATISFACTORY TO BRASCAN;

 

(I)            CLOSING CERTIFICATE. BRASCAN SHALL HAVE RECEIVED A CLOSING
CERTIFICATE SIGNED BY THE CHIEF FINANCIAL OFFICER OF BORROWER DATED AS OF THE
DATE HEREOF, STATING THAT (I) ALL REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS AGREEMENT AND THE OTHER DOCUMENTS ARE TRUE AND CORRECT ON AND AS OF SUCH
DATE, (II) BORROWER IS ON SUCH DATE IN COMPLIANCE WITH ALL THE TERMS AND
PROVISIONS SET FORTH IN THIS AGREEMENT AND THE OTHER DOCUMENTS AND (III) ON SUCH
DATE NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED OR IS CONTINUING;

 

(J)            COMPLIANCE WITH APPLICABLE LAWS. BRASCAN SHALL BE REASONABLY
SATISFIED THAT BORROWER IS IN COMPLIANCE WITH ALL PERTINENT FEDERAL, STATE,
LOCAL OR TERRITORIAL REGULATIONS APPLICABLE TO BORROWER, INCLUDING THOSE WITH
RESPECT TO THE FEDERAL OCCUPATIONAL SAFETY AND HEALTH ACT, THE ENVIRONMENTAL
PROTECTION ACT, ERISA AND THE TRADING WITH THE ENEMY ACT; AND

 

23

--------------------------------------------------------------------------------

 

(K)           OTHER. ALL CORPORATE AND OTHER PROCEEDINGS, AND ALL DOCUMENTS,
INSTRUMENTS AND OTHER LEGAL MATTERS IN CONNECTION WITH THE TRANSACTIONS SHALL BE
SATISFACTORY IN FORM AND SUBSTANCE TO BRASCAN AND ITS COUNSEL.

 

7.2           CONDITIONS TO EACH ADVANCE. THE AGREEMENT OF BRASCAN TO MAKE ANY
ADVANCE REQUESTED TO BE MADE ON ANY BORROWING DATE, IS SUBJECT TO THE
SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT AS OF THE DATE SUCH ADVANCE
IS MADE:

 

(A)           REPRESENTATIONS AND WARRANTIES. EACH OF THE REPRESENTATIONS AND
WARRANTIES MADE BY BORROWER IN OR PURSUANT TO THIS AGREEMENT, THE OTHER
DOCUMENTS AND ANY RELATED AGREEMENTS TO WHICH IT IS A PARTY, AND EACH OF THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN ANY CERTIFICATE, DOCUMENT OR
FINANCIAL OR OTHER STATEMENT FURNISHED AT ANY TIME UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE OTHER DOCUMENTS OR ANY RELATED AGREEMENT SHALL BE TRUE AND
CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF SUCH DATE AS IF MADE ON AND AS OF
SUCH DATE;

 

(B)           NO DEFAULT. NO EVENT OF DEFAULT OR DEFAULT SHALL HAVE OCCURRED AND
BE CONTINUING ON SUCH DATE, OR WOULD EXIST AFTER GIVING EFFECT TO THE ADVANCE
REQUESTED TO BE MADE, ON SUCH DATE; PROVIDED, HOWEVER THAT BRASCAN, IN ITS SOLE
DISCRETION, MAY CONTINUE TO MAKE ADVANCES NOTWITHSTANDING THE EXISTENCE OF AN
EVENT OF DEFAULT OR DEFAULT AND THAT ANY ADVANCE SO MADE SHALL NOT BE DEEMED A
WAIVER OF ANY SUCH EVENT OF DEFAULT OR DEFAULT; AND

 

(C)           MAXIMUM ADVANCES. IN THE CASE OF ANY ADVANCE REQUESTED TO BE MADE,
AFTER GIVING EFFECT THERETO, THE AGGREGATE AMOUNT OF SUCH ADVANCE SHALL NOT
EXCEED THE MAXIMUM ADVANCE AMOUNT.

 

(D)           NET WORTH. THERE HAS NOT HAVE OCCURRED SINCE THE END OF THE MOST
RECENTLY COMPLETED FISCAL QUARTER OF BORROWER A MATERIAL REDUCTION IN THE NET
WORTH OF BORROWER.

 

Each request for an Advance by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.

 

VIII.        INFORMATION AS TO BORROWER.

 

Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:

 

8.1           ENVIRONMENTAL REPORTS. UPON THE WRITTEN REQUEST OF BRASCAN,
FURNISH BRASCAN WITH A CERTIFICATE SIGNED BY THE PRESIDENT OF BORROWER STATING,
TO THE BEST OF HIS KNOWLEDGE, THAT BORROWER IS IN COMPLIANCE IN ALL MATERIAL
RESPECTS WITH ALL FEDERAL, STATE AND LOCAL ENVIRONMENTAL LAWS. TO THE EXTENT
BORROWER IS NOT IN COMPLIANCE WITH THE FOREGOING LAWS, THE CERTIFICATE SHALL SET
FORTH WITH SPECIFICITY ALL AREAS OF NON-COMPLIANCE AND THE PROPOSED ACTION
BORROWER SHALL IMPLEMENT IN ORDER TO ACHIEVE FULL COMPLIANCE.

 

8.2           LITIGATION. PROMPTLY NOTIFY BRASCAN IN WRITING, BY FACSIMILE, OR
BY EMAIL OF ANY CLAIM, LITIGATION, SUIT OR ADMINISTRATIVE PROCEEDING AFFECTING
BORROWER, WHETHER OR NOT THE CLAIM IS COVERED BY INSURANCE, AND OF ANY
LITIGATION, SUIT OR ADMINISTRATIVE PROCEEDING, WHICH COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

24

--------------------------------------------------------------------------------

 

8.3           MATERIAL OCCURRENCES. PROMPTLY NOTIFY BRASCAN IN WRITING UPON THE
OCCURRENCE OF (A) ANY EVENT OF DEFAULT OR DEFAULT; (B) ANY EVENT, DEVELOPMENT OR
CIRCUMSTANCE WHEREBY ANY FINANCIAL STATEMENTS OR OTHER REPORTS FURNISHED TO
BRASCAN FAIL IN ANY MATERIAL RESPECT TO PRESENT FAIRLY, IN ACCORDANCE WITH GAAP
CONSISTENTLY APPLIED, THE FINANCIAL CONDITION OR OPERATING RESULTS OF BORROWER
AS OF THE DATE OF SUCH STATEMENTS; (C) ANY ACCUMULATED RETIREMENT PLAN FUNDING
DEFICIENCY WHICH, IF SUCH DEFICIENCY CONTINUED FOR TWO PLAN YEARS AND WAS NOT
CORRECTED AS PROVIDED IN SECTION 4971 OF THE CODE, COULD SUBJECT BORROWER TO A
TAX IMPOSED BY SECTION 4971 OF THE CODE; (D) EACH AND EVERY DEFAULT BY BORROWER
WHICH PERMITS THE HOLDERS OF ANY INDEBTEDNESS OF BORROWER THE OUTSTANDING
PRINCIPAL AMOUNT OF WHICH EXCEEDS $500,000, TO ACCELERATE MATURITY OF SUCH
INDEBTEDNESS, INCLUDING THE NAMES AND ADDRESSES OF THE HOLDERS OF SUCH
INDEBTEDNESS, AND THE AMOUNT OF SUCH INDEBTEDNESS; AND (E) ANY OTHER DEVELOPMENT
IN THE BUSINESS OR AFFAIRS OF BORROWER, WHICH COULD REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT; IN EACH CASE DESCRIBING THE NATURE THEREOF AND
THE ACTION BORROWER PROPOSES TO TAKE WITH RESPECT THERETO.

 

8.4           ANNUAL FINANCIAL STATEMENTS. FURNISH BRASCAN WITHIN NINETY (90)
DAYS AFTER THE END OF EACH FISCAL YEAR OF BORROWER, FINANCIAL STATEMENTS OF
BORROWER, INCLUDING, BUT NOT LIMITED TO, STATEMENTS OF INCOME AND STOCKHOLDERS’
EQUITY AND CASH FLOW FROM THE BEGINNING OF THE CURRENT FISCAL YEAR TO THE END OF
SUCH FISCAL YEAR AND THE BALANCE SHEET AS AT THE END OF SUCH FISCAL YEAR, ALL
PREPARED IN ACCORDANCE WITH GAAP APPLIED ON A BASIS CONSISTENT WITH PRIOR
PRACTICES, AND IN REASONABLE DETAIL AND REPORTED UPON WITHOUT QUALIFICATION BY
AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM SELECTED BY BORROWER AND
SATISFACTORY TO BRASCAN. IN ADDITION, THE REPORTS SHALL BE ACCOMPANIED BY A
COMPLIANCE CERTIFICATE.

 

8.5           QUARTERLY FINANCIAL STATEMENTS. FURNISH BRASCAN WITHIN FORTY-FIVE
(45) DAYS AFTER THE END OF EACH FISCAL QUARTER, AN UNAUDITED BALANCE SHEET OF
BORROWER AND UNAUDITED STATEMENTS OF INCOME AND STOCKHOLDERS’ EQUITY AND CASH
FLOW OF BORROWER REFLECTING RESULTS OF OPERATIONS FROM THE BEGINNING OF THE
FISCAL YEAR TO THE END OF SUCH QUARTER AND FOR SUCH QUARTER, PREPARED ON A BASIS
CONSISTENT WITH PRIOR PRACTICES AND COMPLETE AND CORRECT IN ALL MATERIAL
RESPECTS, SUBJECT TO NORMAL AND RECURRING YEAR END ADJUSTMENTS THAT INDIVIDUALLY
AND IN THE AGGREGATE ARE NOT MATERIAL TO BORROWER’S BUSINESS. THE REPORTS SHALL
BE ACCOMPANIED BY A COMPLIANCE CERTIFICATE.

 

8.6           OTHER REPORTS. FURNISH BRASCAN AS SOON AS AVAILABLE, BUT IN ANY
EVENT WITHIN TEN (10) DAYS AFTER THE ISSUANCE THEREOF, WITH COPIES OF SUCH
FINANCIAL STATEMENTS, REPORTS AND RETURNS AS BORROWER SHALL SEND TO ITS
STOCKHOLDERS OR FILE WITH THE SEC.

 

8.7           ADDITIONAL INFORMATION. FURNISH BRASCAN WITH SUCH ADDITIONAL
INFORMATION AS BRASCAN SHALL REASONABLY REQUEST IN ORDER TO ENABLE BRASCAN TO
DETERMINE WHETHER THE TERMS, COVENANTS, PROVISIONS AND CONDITIONS OF THIS
AGREEMENT AND THE REVOLVING CREDIT NOTE HAVE BEEN COMPLIED WITH BY BORROWER
INCLUDING, WITHOUT THE NECESSITY OF ANY REQUEST BY BRASCAN, (A) COPIES OF ALL
ENVIRONMENTAL AUDITS AND REVIEWS, (B) AT LEAST THIRTY (30) DAYS PRIOR THERETO,
NOTICE OF BORROWER’S OPENING OF ANY NEW OFFICE OR PLACE OF BUSINESS OR
BORROWER’S CLOSING OF ANY EXISTING OFFICE OR PLACE OF BUSINESS, AND (C) PROMPTLY
UPON BORROWER’S LEARNING THEREOF, NOTICE OF ANY LABOR DISPUTE TO WHICH BORROWER
MAY BECOME A PARTY, ANY STRIKES OR WALKOUTS RELATING TO ANY OF ITS PLANTS OR
OTHER FACILITIES, AND THE EXPIRATION OF ANY LABOR CONTRACT TO WHICH BORROWER IS
A PARTY OR BY WHICH BORROWER IS BOUND.

 

25

--------------------------------------------------------------------------------

 

8.8           NOTICE OF SUITS, ADVERSE EVENTS. FURNISH BRASCAN WITH PROMPT
WRITTEN NOTICE OF (I) ANY LAPSE OR OTHER TERMINATION OF ANY CONSENT ISSUED TO
BORROWER BY ANY GOVERNMENTAL BODY OR ANY OTHER PERSON THAT IS MATERIAL TO THE
OPERATION OF BORROWER’S BUSINESS, (II) ANY REFUSAL BY ANY GOVERNMENTAL BODY OR
ANY OTHER PERSON TO RENEW OR EXTEND ANY SUCH CONSENT; AND (III) COPIES OF ANY
PERIODIC OR SPECIAL REPORTS FILED BY BORROWER WITH ANY GOVERNMENTAL BODY OR
PERSON, IF SUCH REPORTS INDICATE ANY MATERIAL CHANGE IN THE BUSINESS,
OPERATIONS, AFFAIRS OR CONDITION OF BORROWER, OR IF COPIES THEREOF ARE REQUESTED
BY BRASCAN, AND (IV) COPIES OF ANY MATERIAL NOTICES AND OTHER COMMUNICATIONS
FROM ANY GOVERNMENTAL BODY OR PERSON WHICH SPECIFICALLY RELATE TO BORROWER.

 

8.9           ERISA NOTICES AND REQUESTS. FURNISH BRASCAN WITH PROMPT WRITTEN
NOTICE IN THE EVENT THAT (I) BORROWER OR ANY MEMBER OF THE CONTROLLED GROUP
KNOWS OR HAS REASON TO KNOW THAT A TERMINATION EVENT HAS OCCURRED, TOGETHER WITH
A WRITTEN STATEMENT DESCRIBING SUCH TERMINATION EVENT AND THE ACTION, IF ANY,
WHICH BORROWER OR ANY MEMBER OF THE CONTROLLED GROUP HAS TAKEN, IS TAKING, OR
PROPOSES TO TAKE WITH RESPECT THERETO AND, WHEN KNOWN, ANY ACTION TAKEN OR
THREATENED BY THE INTERNAL REVENUE SERVICE, DEPARTMENT OF LABOR OR PBGC WITH
RESPECT THERETO, (II) BORROWER OR ANY MEMBER OF THE CONTROLLED GROUP KNOWS OR
HAS REASON TO KNOW THAT A PROHIBITED TRANSACTION (AS DEFINED IN SECTIONS 406 OF
ERISA AND 4975 OF THE CODE) HAS OCCURRED TOGETHER WITH A WRITTEN STATEMENT
DESCRIBING SUCH TRANSACTION AND THE ACTION WHICH BORROWER OR ANY MEMBER OF THE
CONTROLLED GROUP HAS TAKEN, IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO,
(III) A FUNDING WAIVER REQUEST HAS BEEN FILED WITH RESPECT TO ANY PLAN TOGETHER
WITH ALL COMMUNICATIONS RECEIVED BY BORROWER OR ANY MEMBER OF THE CONTROLLED
GROUP WITH RESPECT TO SUCH REQUEST, (IV) ANY INCREASE IN THE BENEFITS OF ANY
EXISTING PLAN OR THE ESTABLISHMENT OF ANY NEW PLAN OR THE COMMENCEMENT OF
CONTRIBUTIONS TO ANY PLAN TO WHICH BORROWER OR ANY MEMBER OF THE CONTROLLED
GROUP WAS NOT PREVIOUSLY CONTRIBUTING SHALL OCCUR, (V) BORROWER OR ANY MEMBER OF
THE CONTROLLED GROUP SHALL RECEIVE FROM THE PBGC A NOTICE OF INTENTION TO
TERMINATE A PLAN OR TO HAVE A TRUSTEE APPOINTED TO ADMINISTER A PLAN, TOGETHER
WITH COPIES OF EACH SUCH NOTICE, (VI) BORROWER OR ANY MEMBER OF THE CONTROLLED
GROUP SHALL RECEIVE ANY FAVORABLE OR UNFAVORABLE DETERMINATION LETTER FROM THE
INTERNAL REVENUE SERVICE REGARDING THE QUALIFICATION OF A PLAN UNDER SECTION
401(A) OF THE CODE, TOGETHER WITH COPIES OF EACH SUCH LETTER; (VII) BORROWER OR
ANY MEMBER OF THE CONTROLLED GROUP SHALL RECEIVE A NOTICE REGARDING THE
IMPOSITION OF WITHDRAWAL LIABILITY, TOGETHER WITH COPIES OF EACH SUCH NOTICE;
(VIII) BORROWER OR ANY MEMBER OF THE CONTROLLED GROUP SHALL FAIL TO MAKE A
REQUIRED INSTALLMENT OR ANY OTHER REQUIRED PAYMENT UNDER SECTION 412 OF THE CODE
ON OR BEFORE THE DUE DATE FOR SUCH INSTALLMENT OR PAYMENT; (IX) BORROWER OR ANY
MEMBER OF THE CONTROLLED GROUP KNOWS THAT (A) A MULTIEMPLOYER PLAN HAS BEEN
TERMINATED, (B) THE ADMINISTRATOR OR PLAN SPONSOR OF A MULTIEMPLOYER PLAN
INTENDS TO TERMINATE A MULTIEMPLOYER PLAN, OR (C) THE PBGC HAS INSTITUTED OR
SHALL INSTITUTE PROCEEDINGS UNDER SECTION 4042 OF ERISA TO TERMINATE A
MULTIEMPLOYER PLAN.

 

8.10         ADDITIONAL DOCUMENTS. EXECUTE AND DELIVER TO BRASCAN, UPON REQUEST,
SUCH DOCUMENTS AND AGREEMENTS AS BRASCAN MAY, FROM TIME TO TIME, REASONABLY
REQUEST IN WRITING TO CARRY OUT THE PURPOSES, TERMS OR CONDITIONS OF THIS
AGREEMENT.

 

IX.           EVENTS OF DEFAULT.

 

The occurrence of any one or more of the following events shall constitute an
“Event of Default”:

 

26

--------------------------------------------------------------------------------

 

9.1           NONPAYMENT. FAILURE BY BORROWER TO PAY ANY PRINCIPAL OR, SUBJECT
TO A THREE (3) DAY GRACE PERIOD,  INTEREST ON THE OBLIGATIONS WHEN DUE, WHETHER
AT MATURITY OR BY REASON OF ACCELERATION PURSUANT TO THE TERMS OF THIS AGREEMENT
OR BY NOTICE OF INTENTION TO PREPAY, OR BY REQUIRED PREPAYMENT OR FAILURE TO PAY
ANY OTHER LIABILITIES OR, SUBJECT TO A THREE (3) DAY GRACE PERIOD,  MAKE ANY
OTHER PAYMENT, FEE OR CHARGE PROVIDED FOR HEREIN WHEN DUE OR IN ANY OTHER
DOCUMENT IN ACCORDANCE WITH ITS TERMS.

 

9.2           BREACH OF REPRESENTATION. ANY REPRESENTATION OR WARRANTY MADE OR
DEEMED MADE BY BORROWER IN THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY RELATED
AGREEMENT OR IN ANY CERTIFICATE, DOCUMENT OR FINANCIAL OR OTHER STATEMENT
FURNISHED AT ANY TIME IN CONNECTION HEREWITH OR THEREWITH SHALL PROVE TO HAVE
BEEN MISLEADING IN ANY MATERIAL RESPECT ON THE DATE WHEN MADE OR DEEMED TO HAVE
BEEN MADE;

 

9.3           FINANCIAL INFORMATION. FAILURE BY BORROWER TO (I) FURNISH
FINANCIAL INFORMATION WHEN DUE OR WHEN REQUESTED IN ACCORDANCE HEREWITH, OR (II)
PERMIT THE INSPECTION OF ITS BOOKS OR RECORDS TO THE EXTENT REQUIRED HEREUNDER;

 

9.4           JUDICIAL ACTIONS. EXCEPT WITH RESPECT TO PERMITTED ENCUMBRANCES,
THE ISSUANCE OF A NOTICE OF LIEN, LEVY, ASSESSMENT, INJUNCTION OR ATTACHMENT
AGAINST A MATERIAL PORTION OF BORROWER’S PROPERTY WHICH IS NOT STAYED OR LIFTED
WITHIN THIRTY (30) DAYS;

 

9.5           NONCOMPLIANCE. FAILURE OR NEGLECT OF BORROWER TO (I) EXCEPT AS
PROVIDED IN (II) BELOW, PERFORM, KEEP OR OBSERVE ANY TERM, PROVISION, CONDITION,
COVENANT HEREIN CONTAINED, OR CONTAINED IN THIS AGREEMENT OR ANY OTHER DOCUMENT
(II) PERFORM, KEEP OR OBSERVE ANY TERM, PROVISION, CONDITION OR COVENANT,
CONTAINED IN SECTIONS 5.3 OR 8.2 HEREOF, IN EACH CASE, WHICH FAILURE OR NEGLECT
IS NOT CURED WITHIN TEN (10) DAYS FROM THE EARLIER OF (X) BORROWER’S KNOWLEDGE
OF SUCH FAILURE OR NEGLECT; AND (Y) RECEIPT BY BORROWER OF WRITTEN NOTICE
THEREOF FROM BRASCAN; PROVIDED, HOWEVER, THAT BORROWER’S FAILURE TO COMPLY WITH
SECTION 5.4(B) SHALL NOT CONSTITUTE AN EVENT OF DEFAULT UNLESS SUCH FAILURE
SHALL HAVE OCCURRED FOR TWO CONSECUTIVE FISCAL QUARTERS OF BORROWER.

 

9.6           JUDGMENTS. ANY JUDGMENT OR JUDGMENTS ARE RENDERED OR JUDGMENT
LIENS FILED AGAINST BORROWER, SINGLY, OR IN AN AGGREGATE AMOUNT, IN EXCESS OF
$500,000, EXCEPT TO THE EXTENT THAT EITHER (I) WITHIN THIRTY (30) DAYS OF SUCH
RENDERING OR FILING, EACH SUCH JUDGMENT IS EITHER SATISFIED, STAYED, BONDED OR
DISCHARGED OF RECORD OR (II) BORROWER IS CONTESTING EACH SUCH JUDGMENT IN GOOD
FAITH AND ESTABLISHES RESERVES SATISFACTORY TO BRASCAN AND ENFORCEMENT OF EACH
SUCH JUDGMENT OR LIENS ARE CONTINUOUSLY STAYED;

 

9.7           BANKRUPTCY OF BORROWER. BORROWER SHALL (I) APPLY FOR, CONSENT TO
OR SUFFER THE APPOINTMENT OF, OR THE TAKING OF POSSESSION BY, A RECEIVER,
CUSTODIAN, TRUSTEE, LIQUIDATOR OR SIMILAR FIDUCIARY OF ITSELF OR OF ALL OR A
SUBSTANTIAL PART OF ITS PROPERTY, (II) MAKE A GENERAL ASSIGNMENT FOR THE BENEFIT
OF CREDITORS, (III) COMMENCE A VOLUNTARY CASE UNDER ANY STATE OR FEDERAL
BANKRUPTCY LAWS (AS NOW OR HEREAFTER IN EFFECT), (IV) BE ADJUDICATED A BANKRUPT
OR INSOLVENT, (V) FILE A PETITION SEEKING TO TAKE ADVANTAGE OF ANY OTHER LAW
PROVIDING FOR THE RELIEF OF DEBTORS, (VI) ACQUIESCE TO, OR FAIL TO HAVE
DISMISSED, WITHIN THIRTY (30) DAYS, ANY PETITION FILED AGAINST IT IN ANY
INVOLUNTARY CASE UNDER SUCH BANKRUPTCY LAWS, OR (VII) TAKE ANY ACTION FOR THE
PURPOSE OF EFFECTING ANY OF THE FOREGOING;

 

27

--------------------------------------------------------------------------------

 

9.8           INABILITY TO PAY. BORROWER SHALL ADMIT IN WRITING ITS INABILITY,
OR BE GENERALLY UNABLE, TO PAY ITS DEBTS AS THEY BECOME DUE OR CEASE OPERATIONS
OF ITS PRESENT BUSINESS;

 

9.9           MATERIAL ADVERSE EFFECT. ANY CHANGE IN BORROWER’S RESULTS OF
OPERATIONS OR CONDITION (FINANCIAL OR OTHERWISE) WHICH IN BRASCAN’S REASONABLE
JUDGMENT HAS MATERIAL ADVERSE EFFECT;

 

9.10         CROSS DEFAULT. A DEFAULT OF THE OBLIGATIONS OF BORROWER UNDER ANY
OTHER AGREEMENT TO WHICH IT IS A PARTY SHALL OCCUR AND SUCH DEFAULT IS NOT CURED
WITHIN ANY APPLICABLE GRACE PERIOD AND COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT;

 

9.11         CHANGE OF CONTROL. ANY CHANGE OF CONTROL SHALL OCCUR;

 

9.12         INVALIDITY. ANY MATERIAL PROVISION OF THIS AGREEMENT OR ANY OTHER
DOCUMENT SHALL, FOR ANY REASON, CEASE TO BE VALID AND BINDING ON BORROWER, OR
BORROWER SHALL SO CLAIM IN WRITING TO BRASCAN;

 

9.13         LICENSES. (I) ANY GOVERNMENTAL BODY SHALL (A) REVOKE, TERMINATE,
SUSPEND OR ADVERSELY MODIFY ANY LICENSE OR PERMIT OF BORROWER, THE CONTINUATION
OF WHICH IS MATERIAL TO THE CONTINUATION OF BORROWER’S BUSINESS, OR (B) COMMENCE
PROCEEDINGS TO SUSPEND, REVOKE, TERMINATE OR ADVERSELY MODIFY ANY SUCH LICENSE
OR PERMIT AND SUCH PROCEEDINGS SHALL NOT BE DISMISSED OR DISCHARGED WITHIN SIXTY
(60) DAYS, OR (C) SCHEDULE OR CONDUCT A HEARING ON THE RENEWAL OF ANY LICENSE OR
PERMIT NECESSARY FOR THE CONTINUATION OF BORROWER’S BUSINESS AND THE STAFF OF
SUCH GOVERNMENTAL BODY ISSUES A REPORT RECOMMENDING THE TERMINATION, REVOCATION,
SUSPENSION OR MATERIAL, ADVERSE MODIFICATION OF SUCH LICENSE OR PERMIT; (II) ANY
AGREEMENT WHICH IS NECESSARY OR MATERIAL TO THE OPERATION OF BORROWER’S BUSINESS
SHALL BE REVOKED OR TERMINATED AND NOT REPLACED BY A SUBSTITUTE ACCEPTABLE TO
BRASCAN WITHIN THIRTY (30) DAYS AFTER THE DATE OF SUCH REVOCATION OR
TERMINATION, AND SUCH REVOCATION OR TERMINATION AND NON-REPLACEMENT WOULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;

 

9.14         PENSION PLANS. AN EVENT OR CONDITION SPECIFIED IN SECTIONS 6.11 OR
8.9 HEREOF SHALL OCCUR OR EXIST WITH RESPECT TO ANY PLAN AND, AS A RESULT OF
SUCH EVENT OR CONDITION, TOGETHER WITH ALL OTHER SUCH EVENTS OR CONDITIONS,
BORROWER OR ANY MEMBER OF THE CONTROLLED GROUP SHALL INCUR, OR IN THE OPINION OF
BRASCAN BE REASONABLY LIKELY TO INCUR, A LIABILITY TO A PLAN OR THE PBGC (OR
BOTH) WHICH, IN THE REASONABLE JUDGMENT OF BRASCAN, WOULD HAVE A MATERIAL
ADVERSE EFFECT.

 

X.            BRASCAN’S RIGHTS AND REMEDIES AFTER DEFAULT.

 

10.1         RIGHTS AND REMEDIES. UPON THE OCCURRENCE OF (I) AN EVENT OF DEFAULT
PURSUANT TO SECTION 9.7 ALL OBLIGATIONS SHALL BE IMMEDIATELY DUE AND PAYABLE AND
THIS AGREEMENT AND THE OBLIGATION OF BRASCAN TO MAKE ADVANCES SHALL BE DEEMED
TERMINATED (OTHER THAN AS MAY BE REQUIRED BY AN APPROPRIATE ORDER OF THE
BANKRUPTCY COURT HAVING JURISDICTION OVER BORROWER); AND (II) ANY OF THE OTHER
EVENTS OF DEFAULT AND AT ANY TIME THEREAFTER (SUCH DEFAULT NOT HAVING PREVIOUSLY
BEEN CURED), AT THE OPTION OF BRASCAN ALL OBLIGATIONS SHALL BE IMMEDIATELY DUE
AND PAYABLE AND BRASCAN SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AND TO
TERMINATE THE OBLIGATION OF BRASCAN TO MAKE ADVANCES. UPON THE OCCURRENCE OF ANY
EVENT OF DEFAULT, BRASCAN SHALL HAVE THE RIGHT TO EXERCISE ANY AND ALL RIGHTS
AND REMEDIES PROVIDED FOR HEREIN, UNDER THE OTHER DOCUMENTS AND AT LAW OR EQUITY
GENERALLY.

 

28

--------------------------------------------------------------------------------

 

10.2         BRASCAN’S DISCRETION. BRASCAN SHALL HAVE THE RIGHT IN ITS SOLE
DISCRETION TO DETERMINE WHICH RIGHTS OR REMEDIES BRASCAN MAY AT ANY TIME PURSUE,
RELINQUISH, SUBORDINATE, OR MODIFY OR TO TAKE ANY OTHER ACTION WITH RESPECT
THERETO AND SUCH DETERMINATION SHALL NOT IN ANY WAY MODIFY OR AFFECT ANY OF
BRASCAN’S OR BRASCAN’ RIGHTS HEREUNDER.

 

10.3         RIGHTS AND REMEDIES NOT EXCLUSIVE. THE FOREGOING RIGHTS AND
REMEDIES ARE NOT INTENDED TO BE EXHAUSTIVE AND THE EXERCISE OF ANY RIGHTS OR
REMEDY SHALL NOT PRECLUDE THE EXERCISE OF ANY OTHER RIGHT OR REMEDIES PROVIDED
FOR HEREIN OR OTHERWISE PROVIDED BY LAW, ALL OF WHICH SHALL BE CUMULATIVE AND
NOT ALTERNATIVE.

 

10.4         ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT. NOTWITHSTANDING ANY
OTHER PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, AFTER THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ALL AMOUNTS COLLECTED OR RECEIVED
BY BRASCAN ON ACCOUNT OF THE OBLIGATIONS OR ANY OTHER AMOUNTS OUTSTANDING UNDER
ANY OF THE OTHER DOCUMENTS MAY, AT BRASCAN’S DISCRETION, BE PAID OVER OR
DELIVERED AS FOLLOWS:

 

FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees) of Brascan in connection with enforcing
its rights and the rights of Brascan under this Agreement and the Other
Documents;

 

SECOND, to the payment of any fees owed to Brascan under this Agreement or any
Other Document;

 

THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees) of Brascan in connection with enforcing
its rights under this Agreement and the Other Documents or otherwise with
respect to the Obligations owing to Brascan;

 

FOURTH, to the payment of all of the Obligations consisting of accrued fees and
interest;

 

FIFTH, to the payment of the outstanding principal amount of the Obligations;

 

SIXTH, to all other Obligations and other obligations which shall have become
due and payable under the Other Documents or otherwise and not repaid pursuant
to clauses “FIRST” through “FIFTH” above; and

 

SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.

 

In carrying out the foregoing, amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category.

 

XI.           WAIVERS AND JUDICIAL PROCEEDINGS.

 

11.1         WAIVER OF NOTICE. BORROWER HEREBY WAIVES NOTICE OF DEMAND,
PRESENTMENT, PROTEST AND NOTICE THEREOF WITH RESPECT TO ANY AND ALL INSTRUMENTS,
NOTICE OF ACCEPTANCE HEREOF, NOTICE OF LOANS OR ADVANCES MADE, CREDIT EXTENDED,
OR ANY OTHER ACTION TAKEN IN RELIANCE HEREON,

29

--------------------------------------------------------------------------------

 

AND ALL OTHER DEMANDS AND NOTICES OF ANY DESCRIPTION, EXCEPT SUCH AS ARE
EXPRESSLY PROVIDED FOR HEREIN.

 

11.2         DELAY. NO DELAY OR OMISSION ON BRASCAN’S OR BRASCAN’S PART IN
EXERCISING ANY RIGHT, REMEDY OR OPTION SHALL OPERATE AS A WAIVER OF SUCH OR ANY
OTHER RIGHT, REMEDY OR OPTION OR OF ANY DEFAULT OR EVENT OF DEFAULT.

 

11.3         JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

XII.         EFFECTIVE DATE AND TERMINATION.

 

12.1         TERM. THIS AGREEMENT, WHICH SHALL INURE TO THE BENEFIT OF AND SHALL
BE BINDING UPON THE RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS OF BORROWER,
BRASCAN AND BRASCAN, SHALL BECOME EFFECTIVE ON THE DATE HEREOF AND SHALL
CONTINUE IN FULL FORCE AND EFFECT UNTIL THE FIRST ANNIVERSARY OF THE CLOSING
DATE (THE “TERM”) UNLESS SOONER TERMINATED AS HEREIN PROVIDED.

 

12.2         TERMINATION. THE TERMINATION OF THE AGREEMENT SHALL NOT AFFECT
BORROWER’S, BRASCAN’S RIGHTS, OR ANY OF THE OBLIGATIONS HAVING THEIR INCEPTION
PRIOR TO THE EFFECTIVE DATE OF SUCH TERMINATION, AND THE PROVISIONS HEREOF SHALL
CONTINUE TO BE FULLY OPERATIVE UNTIL ALL TRANSACTIONS ENTERED INTO, RIGHTS OR
INTERESTS CREATED OR OBLIGATIONS HAVE BEEN FULLY AND INDEFEASIBLY PAID, DISPOSED
OF, CONCLUDED OR LIQUIDATED. THE RIGHTS GRANTED TO BRASCAN HEREUNDER SHALL
CONTINUE IN FULL FORCE AND EFFECT, NOTWITHSTANDING THE TERMINATION OF THIS
AGREEMENT OR THE FACT THAT BORROWER’S ACCOUNT MAY FROM TIME TO TIME BE
TEMPORARILY IN A ZERO OR CREDIT POSITION, UNTIL ALL OF THE OBLIGATIONS OF
BORROWER HAVE BEEN INDEFEASIBLY PAID AND PERFORMED IN FULL AFTER THE TERMINATION
OF THIS AGREEMENT OR BORROWER HAS FURNISHED BRASCAN WITH AN INDEMNIFICATION
SATISFACTORY TO BRASCAN WITH RESPECT THERETO. ALL REPRESENTATIONS, WARRANTIES,
COVENANTS, WAIVERS AND AGREEMENTS CONTAINED HEREIN SHALL SURVIVE TERMINATION
HEREOF UNTIL ALL OBLIGATIONS ARE INDEFEASIBLY PAID AND PERFORMED IN FULL.

 

30

--------------------------------------------------------------------------------

 

XIII.        MISCELLANEOUS.

 

13.1         GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE
PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. ANY JUDICIAL PROCEEDING BROUGHT
BY OR AGAINST BORROWER OR BRASCAN WITH RESPECT TO ANY OF THE OBLIGATIONS, THIS
AGREEMENT, THE OTHER DOCUMENTS OR ANY RELATED AGREEMENT MAY BE BROUGHT IN ANY
COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, UNITED STATES OF
AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER OR BRASCAN
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. EACH OF BORROWER AND BRASCAN HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO BORROWER AND
BRASCAN, AS APPLICABLE, AT ITS ADDRESS SET FORTH IN SECTION 13.6 AND SERVICE SO
MADE SHALL BE DEEMED COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE MAILS OF THE UNITED STATES OF AMERICA. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF BORROWER AND BRASCAN TO BRING PROCEEDINGS AGAINST ANY OTHER PARTY
HERETO IN THE COURTS OF ANY OTHER JURISDICTION. EACH OF BORROWER AND BRASCAN
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED
HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR
VENUE OR BASED UPON FORUM NON CONVENIENS. ANY JUDICIAL PROCEEDING BY BORROWER
AGAINST BRASCAN INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY
WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED
AGREEMENT, SHALL BE BROUGHT ONLY IN A FEDERAL OR STATE COURT LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK.

 

13.2         ENTIRE UNDERSTANDING. (A)  THIS AGREEMENT AND THE DOCUMENTS
EXECUTED CONCURRENTLY HEREWITH CONTAIN THE ENTIRE UNDERSTANDING BETWEEN BORROWER
AND BRASCAN AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY,
RELATING TO THE SUBJECT MATTER HEREOF. ANY PROMISES, REPRESENTATIONS, WARRANTIES
OR GUARANTEES NOT HEREIN CONTAINED AND HEREINAFTER MADE SHALL HAVE NO FORCE AND
EFFECT UNLESS IN WRITING, SIGNED BY BORROWER’S AND BRASCAN’S RESPECTIVE
OFFICERS. NEITHER THIS AGREEMENT NOR ANY PORTION OR PROVISIONS HEREOF MAY BE
CHANGED, MODIFIED, AMENDED, WAIVED, SUPPLEMENTED, DISCHARGED, CANCELLED OR
TERMINATED ORALLY OR BY ANY COURSE OF DEALING, OR IN ANY MANNER OTHER THAN BY AN
AGREEMENT IN WRITING, SIGNED BY THE PARTY TO BE CHARGED. BORROWER ACKNOWLEDGES
THAT IT HAS BEEN ADVISED BY COUNSEL IN CONNECTION WITH THE EXECUTION OF THIS
AGREEMENT AND OTHER DOCUMENTS AND IS NOT RELYING UPON ORAL REPRESENTATIONS OR
STATEMENTS INCONSISTENT WITH THE TERMS AND PROVISIONS OF THIS AGREEMENT.

 

13.3         SUCCESSORS AND ASSIGNS THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF BORROWER, BRASCAN, ALL FUTURE HOLDERS OF THE OBLIGATIONS
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, EXCEPT THAT BORROWER MAY NOT ASSIGN
OR TRANSFER ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT WITHOUT THE
PRIOR WRITTEN CONSENT OF BRASCAN.

 

13.4         APPLICATION OF PAYMENTS. TO THE EXTENT THAT BORROWER MAKES A
PAYMENT OR BRASCAN RECEIVES ANY PAYMENT FOR BORROWER’S BENEFIT, WHICH ARE
SUBSEQUENTLY INVALIDATED, DECLARED TO BE FRAUDULENT OR PREFERENTIAL, SET ASIDE
OR REQUIRED TO BE REPAID TO A TRUSTEE, DEBTOR IN POSSESSION, RECEIVER, CUSTODIAN
OR ANY OTHER PARTY UNDER ANY BANKRUPTCY LAW, COMMON LAW OR

 

31

--------------------------------------------------------------------------------

 

EQUITABLE CAUSE, THEN, TO SUCH EXTENT, THE OBLIGATIONS OR PART THEREOF INTENDED
TO BE SATISFIED SHALL BE REVIVED AND CONTINUE AS IF SUCH PAYMENT OR PROCEEDS HAD
NOT BEEN RECEIVED BY BRASCAN.

 

13.5         INDEMNITY. BORROWER SHALL INDEMNIFY BRASCAN, AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, AFFILIATES, ATTORNEYS, EMPLOYEES AND BRASCAN’S
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY
KIND OR NATURE WHATSOEVER (INCLUDING FEES AND DISBURSEMENTS OF COUNSEL) WHICH
MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST BRASCAN IN ANY CLAIM,
LITIGATION, PROCEEDING OR INVESTIGATION INSTITUTED OR CONDUCTED BY ANY
GOVERNMENTAL BODY OR INSTRUMENTALITY OR ANY OTHER PERSON WITH RESPECT TO ANY
ASPECT OF, OR ANY TRANSACTION CONTEMPLATED BY, OR REFERRED TO IN, OR ANY MATTER
RELATED TO, THIS AGREEMENT OR THE OTHER DOCUMENTS, WHETHER OR NOT BRASCAN IS A
PARTY THERETO, EXCEPT TO THE EXTENT THAT ANY OF THE FOREGOING ARISES OUT OF THE
WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY BEING INDEMNIFIED (AS
DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL AND NON-APPEALABLE
JUDGMENT). WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THIS INDEMNITY
SHALL EXTEND TO ANY LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER (INCLUDING FEES AND DISBURSEMENTS OF COUNSEL) ASSERTED AGAINST
OR INCURRED BY ANY OF THE INDEMNITEES DESCRIBED ABOVE IN THIS SECTION 13.5 BY
ANY PERSON UNDER ANY ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF BORROWER’S
OR ANY OTHER PERSON’S FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID OR
HAZARDOUS WASTE MATERIALS, INCLUDING HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE,
OR OTHER TOXIC SUBSTANCES. ADDITIONALLY, IF ANY TAXES (EXCLUDING TAXES IMPOSED
UPON OR MEASURED SOLELY BY THE NET INCOME OF BRASCAN, BUT INCLUDING ANY
INTANGIBLES TAXES, STAMP TAX, RECORDING TAX OR FRANCHISE TAX) SHALL BE PAYABLE
BY BRASCAN ON ACCOUNT OF THE EXECUTION OR DELIVERY OF THIS AGREEMENT, OR THE
EXECUTION, DELIVERY, ISSUANCE OR RECORDING OF ANY OF THE OTHER DOCUMENTS, OR THE
CREATION OR REPAYMENT OF ANY OF THE OBLIGATIONS HEREUNDER, BY REASON OF ANY
APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, BORROWER SHALL PAY (OR SHALL PROMPTLY
REIMBURSE BRASCAN FOR PAYMENT OF) TO THE EXTENT NOT OTHERWISE REQUIRED TO BE
PAID PURSUANT TO THE TERMS OF THIS AGREEMENT, ALL SUCH TAXES, INCLUDING INTEREST
AND PENALTIES THEREON, AND SHALL INDEMNIFY AND HOLD THE INDEMNITEES DESCRIBED
ABOVE IN THIS SECTION 13.5 HARMLESS FROM AND AGAINST ALL LIABILITY IN CONNECTION
THEREWITH.

 

13.6         NOTICE. ANY NOTICE OR REQUEST HEREUNDER MAY BE GIVEN TO BORROWER OR
TO BRASCAN AT THEIR RESPECTIVE ADDRESSES SET FORTH BELOW OR AT SUCH OTHER
ADDRESS AS MAY HEREAFTER BE SPECIFIED IN A NOTICE DESIGNATED AS A NOTICE OF
CHANGE OF ADDRESS UNDER THIS SECTION. ANY NOTICE, REQUEST, DEMAND, DIRECTION OR
OTHER COMMUNICATION (FOR PURPOSES OF THIS SECTION 13.6 ONLY, A “NOTICE”) TO BE
GIVEN TO OR MADE UPON ANY PARTY HERETO UNDER ANY PROVISION OF THIS AGREEMENT
SHALL BE GIVEN OR MADE BY TELEPHONE OR IN WRITING (WHICH INCLUDES BY MEANS OF
ELECTRONIC TRANSMISSION (I.E., “E-MAIL”) OR FACSIMILE TRANSMISSION IN ACCORDANCE
WITH THIS SECTION 13.6. ANY SUCH NOTICE MUST BE DELIVERED TO THE APPLICABLE
PARTIES HERETO AT THE ADDRESSES AND NUMBERS SET FORTH UNDER THEIR RESPECTIVE
NAMES ON SECTION 13.6 HEREOF OR IN ACCORDANCE WITH ANY SUBSEQUENT UNREVOKED
NOTICE FROM ANY SUCH PARTY THAT IS GIVEN IN ACCORDANCE WITH THIS SECTION 13.6.
ANY NOTICE SHALL BE EFFECTIVE:

 

(A)           IN THE CASE OF HAND-DELIVERY, WHEN DELIVERED;

 

(B)           IF GIVEN BY MAIL, FOUR DAYS AFTER SUCH NOTICE IS DEPOSITED WITH
THE UNITED STATES POSTAL SERVICE, WITH FIRST-CLASS POSTAGE PREPAID, RETURN
RECEIPT REQUESTED;

 

32

--------------------------------------------------------------------------------

 

(C)           IN THE CASE OF A TELEPHONIC NOTICE, WHEN A PARTY IS CONTACTED BY
TELEPHONE, IF DELIVERY OF SUCH TELEPHONIC NOTICE IS CONFIRMED NO LATER THAN THE
NEXT BUSINESS DAY BY HAND DELIVERY, A FACSIMILE OR ELECTRONIC TRANSMISSION, A
WEBSITE POSTING OR AN OVERNIGHT COURIER DELIVERY OF A CONFIRMATORY NOTICE
(RECEIVED AT OR BEFORE NOON ON SUCH NEXT BUSINESS DAY);

 

(D)           IN THE CASE OF A FACSIMILE TRANSMISSION, WHEN SENT TO THE
APPLICABLE PARTY’S FACSIMILE MACHINE’S TELEPHONE NUMBER, IF THE PARTY SENDING
SUCH NOTICE RECEIVES CONFIRMATION OF THE DELIVERY THEREOF FROM ITS OWN FACSIMILE
MACHINE;

 

(E)           IN THE CASE OF ELECTRONIC TRANSMISSION, WHEN ACTUALLY RECEIVED;
AND

 

(F)            IF GIVEN BY ANY OTHER MEANS (INCLUDING BY OVERNIGHT COURIER),
WHEN ACTUALLY RECEIVED.

 

Brascan giving a Notice to Borrower shall concurrently send a copy thereof to
Brascan, and Brascan shall promptly notify the other Brascan of its receipt of
such Notice.

 

If to Brascan at:

 

Brascan (U.S.) Corp.

 

 

with a copy to:

 

Torys  LLP

79 Wellington Street West

Suite 3000

Toronto, Ontario, M5K 1N2

Attention:  Scott Kraag, Partner

Telephone:  (416) 865.7980

Facsimile:   (416) 865.7380

 

If to Borrower:

 

Crystal River Capital, Inc.

c/o Hyperion Brookfield Asset Management, Inc.

Three World Financial Center

200 Vesey Street, Floor 10

New York, New York 10281-1010

Attention:  General Counsel

Telephone: (212) 549-8400

Facsimile:  (212) 549-8310

 

33

--------------------------------------------------------------------------------

 

13.7         SURVIVAL. THE OBLIGATIONS OF BORROWER UNDER SECTIONS 2.2(C), 3.4,
 13.5 AND 13.7 SHALL SURVIVE TERMINATION OF THIS AGREEMENT AND THE OTHER
DOCUMENTS AND PAYMENT IN FULL OF THE OBLIGATIONS.

 

13.8         SEVERABILITY. IF ANY PART OF THIS AGREEMENT IS CONTRARY TO,
PROHIBITED BY, OR DEEMED INVALID UNDER APPLICABLE LAWS OR REGULATIONS, SUCH
PROVISION SHALL BE INAPPLICABLE AND DEEMED OMITTED TO THE EXTENT SO CONTRARY,
PROHIBITED OR INVALID, BUT THE REMAINDER HEREOF SHALL NOT BE INVALIDATED THEREBY
AND SHALL BE GIVEN EFFECT SO FAR AS POSSIBLE.

 

13.9         EXPENSES. ALL COSTS AND EXPENSES INCLUDING REASONABLE ATTORNEYS’
FEES (INCLUDING THE ALLOCATED COSTS OF IN HOUSE COUNSEL) AND DISBURSEMENTS
INCURRED BY BRASCAN ON ITS BEHALF  (A) IN CONNECTION WITH THE PREPARATION,
NEGOTIATION AND EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER
DOCUMENTS, OR (B) IN ALL EFFORTS MADE TO ENFORCE PAYMENT OF ANY OBLIGATION, OR
(C) IN CONNECTION WITH THE ENTERING INTO, MODIFICATION, AMENDMENT,
ADMINISTRATION AND ENFORCEMENT OF THIS AGREEMENT OR ANY CONSENTS OR WAIVERS
HEREUNDER OR THEREUNDER AND ALL RELATED AGREEMENTS, DOCUMENTS AND INSTRUMENTS,
OR (D) MAINTAINING, PRESERVING OR ENFORCING ANY OF BRASCAN’S OR BRASCAN’S RIGHTS
HEREUNDER AND UNDER ALL RELATED AGREEMENTS, DOCUMENTS AND INSTRUMENTS, WHETHER
THROUGH JUDICIAL PROCEEDINGS OR OTHERWISE, OR (E) IN DEFENDING OR PROSECUTING
ANY ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO BRASCAN’S TRANSACTIONS
WITH BORROWER, OR (F) IN CONNECTION WITH ANY ADVICE GIVEN TO BRASCAN WITH
RESPECT TO ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER
DOCUMENTS, MAY BE CHARGED TO BORROWER’S ACCOUNT AND SHALL BE PART OF THE
OBLIGATIONS.

 

13.10       INJUNCTIVE RELIEF. BORROWER RECOGNIZES THAT, IN THE EVENT BORROWER
FAILS TO PERFORM, OBSERVE OR DISCHARGE ANY OF ITS OBLIGATIONS OR LIABILITIES
UNDER THIS AGREEMENT, OR THREATENS TO FAIL TO PERFORM, OBSERVE OR DISCHARGE SUCH
OBLIGATIONS OR LIABILITIES, ANY REMEDY AT LAW MAY PROVE TO BE INADEQUATE RELIEF
TO BRASCAN; THEREFORE, BRASCAN, IF BRASCAN SO REQUESTS, SHALL BE ENTITLED TO
TEMPORARY AND PERMANENT INJUNCTIVE RELIEF IN ANY SUCH CASE WITHOUT THE NECESSITY
OF PROVING THAT ACTUAL DAMAGES ARE NOT AN ADEQUATE REMEDY.

 

13.11       DAMAGES. NEITHER BORROWER, BRASCAN NOR ANY ATTORNEY FOR IT, SHALL BE
LIABLE TO THE OTHER PARTIES HERETO (OR ANY AFFILIATE OF ANY SUCH PERSON) FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES ARISING FROM ANY BREACH
OF CONTRACT, TORT OR OTHER WRONG RELATING TO THE ESTABLISHMENT, ADMINISTRATION
OR COLLECTION OF THE OBLIGATIONS OR AS A RESULT OF ANY TRANSACTION CONTEMPLATED
UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT.

 

13.12       CAPTIONS. THE CAPTIONS AT VARIOUS PLACES IN THIS AGREEMENT ARE
INTENDED FOR CONVENIENCE ONLY AND DO NOT CONSTITUTE AND SHALL NOT BE INTERPRETED
AS PART OF THIS AGREEMENT.

 

13.13       COUNTERPARTS; FACSIMILE. THIS AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF AND BY DIFFERENT PARTIES HERETO ON SEPARATE COUNTERPARTS, ALL OF
WHICH, WHEN SO EXECUTED, SHALL BE DEEMED AN ORIGINAL, BUT ALL SUCH COUNTERPARTS
SHALL CONSTITUTE ONE AND THE SAME AGREEMENT. ANY COPY DELIVERED BY A PARTY BY
FACSIMILE TRANSMISSION SHALL BE DEEMED TO BE AN ORIGINAL COPY HERETO.

 

13.14       CONSTRUCTION. EACH PARTY AND ITS RESPECTIVE COUNSEL HAVE REVIEWED
THIS AGREEMENT AND THE NORMAL RULE OF CONSTRUCTION TO THE EFFECT THAT ANY
AMBIGUITIES ARE TO BE

 

34

--------------------------------------------------------------------------------

 

RESOLVED AGAINST THE DRAFTING PARTY SHALL NOT BE EMPLOYED IN THE INTERPRETATION
OF THIS AGREEMENT OR ANY AMENDMENTS, SCHEDULES OR EXHIBITS THERETO.

 

13.15       SHARING INFORMATION.

 

(A)           FROM TIME TO TIME FINANCIAL ADVISORY, INVESTMENT BANKING AND OTHER
SERVICES MAY BE OFFERED OR PROVIDED TO BORROWER OR ONE OR MORE OF ITS AFFILIATES
(IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE) BY BRASCAN OR BY ONE OR MORE
SUBSIDIARIES OR AFFILIATES OF BRASCAN.

 

(B)           NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE INFORMATION
SUBJECT TO THIS SECTION 13.15 SHALL NOT INCLUDE, AND BRASCAN AND BRASCAN MAY
DISCLOSE WITHOUT LIMITATION OF ANY KIND, ANY INFORMATION WITH RESPECT TO THE
“TAX TREATMENT” AND “TAX STRUCTURE” (IN EACH CASE, WITHIN THE MEANING OF
TREASURY REGULATION SECTION 1.6011-4) OF THE TRANSACTIONS CONTEMPLATED HEREBY
AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES) THAT
ARE PROVIDED TO BRASCAN RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE;
PROVIDED THAT WITH RESPECT TO ANY DOCUMENT OR SIMILAR ITEM THAT IN EITHER CASE
CONTAINS INFORMATION CONCERNING THE TAX TREATMENT OR TAX STRUCTURE OF THE
TRANSACTION AS WELL AS OTHER INFORMATION, THIS SENTENCE SHALL ONLY APPLY TO SUCH
PORTIONS OF THE DOCUMENT OR SIMILAR ITEM THAT RELATE TO THE TAX TREATMENT OR TAX
STRUCTURE OF THE ADVANCES AND TRANSACTIONS CONTEMPLATED HEREBY.

 

13.16       PUBLICITY. BRASCAN OR ANY OF ITS AFFILIATES IS HEREBY AUTHORIZED TO
MAKE APPROPRIATE ANNOUNCEMENTS OF THE FINANCIAL ARRANGEMENT ENTERED INTO AMONG
BORROWER AND BRASCAN IN SUCH PUBLICATIONS AND TO SUCH SELECTED PARTIES AS
BRASCAN SHALL IN ITS SOLE AND ABSOLUTE DISCRETION DEEM APPROPRIATE.

 

13.17       CERTIFICATIONS FROM BANKS AND PARTICIPANTS; US PATRIOT ACT. BRASCAN
OR ANY ASSIGNEE OF IT THAT IS NOT INCORPORATED UNDER THE LAWS OF THE UNITED
STATES OF AMERICA OR A STATE THEREOF (AND IS NOT EXCEPTED FROM THE CERTIFICATION
REQUIREMENT CONTAINED IN SECTION 313 OF THE USA PATRIOT ACT AND THE APPLICABLE
REGULATIONS BECAUSE IT IS BOTH (I) AN AFFILIATE OF A DEPOSITORY INSTITUTION OR
FOREIGN BANK THAT MAINTAINS A PHYSICAL PRESENCE IN THE UNITED STATES OR FOREIGN
COUNTRY, AND (II) SUBJECT TO SUPERVISION BY A BANKING AUTHORITY REGULATING SUCH
AFFILIATED DEPOSITORY INSTITUTION OR FOREIGN BANK) SHALL DELIVER TO BRASCAN THE
CERTIFICATION, OR, IF APPLICABLE, RECERTIFICATION, CERTIFYING THAT BRASCAN IS
NOT A “SHELL” AND CERTIFYING TO OTHER MATTERS AS REQUIRED BY SECTION 313 OF THE
USA PATRIOT ACT AND THE APPLICABLE REGULATIONS: (1) WITHIN 10 DAYS AFTER THE
CLOSING DATE, AND (2) AS SUCH OTHER TIMES AS ARE REQUIRED UNDER THE USA PATRIOT
ACT.

 

35

--------------------------------------------------------------------------------

 

Each of the parties has signed this Agreement as of the day and year first above
written.

 

 

CRYSTAL RIVER CAPITAL, INC.

 

 

 

By:

/s/ Clifford E. Lai

 

 

Name: Clifford E. Lai

 

Title:  President and CEO

 

 

 

BRASCAN (US) CORPORATION

 

as Lender and as Administrative Agent

 

 

 

 

 

By:

/s/ G. Mark Brown

 

 

Name:

G. Mark Brown

 

 

Title:

President

 

 

--------------------------------------------------------------------------------