Exhibit 10.9

 

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CANADIAN PLEDGE AGREEMENT

THIS CANADIAN PLEDGE AGREEMENT is entered into effective as of June 30, 2015, by
and between NewStar Business Credit, LLC, a Delaware limited liability company,
as Administrative Agent (the “Secured Party”) for the Lenders (as defined below)
under the Loan Agreement (as defined below), and Mad Catz Interactive, Inc., a
corporation organized under the Canada Business Corporations Act (the
“Pledgor”).

WHEREAS, Mad Catz, Inc. (together with its successors and assigns, the
“Borrower”), 1328158 Ontario Inc., Parent, Pledgor, Secured Party and the
lenders from time to time party thereto (the “Lenders”) have entered into that
certain Loan and Security Agreement, dated of even date herewith (as amended,
restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”), pursuant to which the Lenders have agreed to make available a
revolving line of credit to the Borrower, all in accordance with and subject to
the terms and conditions set forth in the Loan Agreement;

WHEREAS, the Pledgor owns 100% of the Equity Interests in the Borrower;

WHEREAS, it is a condition precedent to the Lenders’ obligations to make the
Loans and advances under the Loan Agreement, that the Pledgor, among other
things, shall (a) execute and deliver a Canadian Guaranty Agreement of even date
herewith in favour of Secured Party, for the benefit of Lender Parties,
guarantying all obligations of the Borrower under the Loan Agreement and the
other Loan Documents and (b) execute and deliver this Agreement and pledge to
Secured Party, for the benefit of the Lender Parties, the Pledged Collateral (as
hereinafter defined) as security for the Pledgor’s Secured Obligations (as
hereinafter defined);

WHEREAS, Pledgor acknowledges and confirms that, (a) it will directly or
indirectly benefit from the Loans from Lenders to the Borrower, (b) the Loans
constitute valuable consideration to Pledgor, (c) this Agreement is intended to
be an inducement to Lenders to execute, deliver and perform the Loan Agreement
and the other Loan Documents and for Lenders to extend the Loans to the
Borrower, and (d) each Lender is relying upon this Agreement in making and
advancing the Loans to the Borrower;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement for Secured Party and each Lender to
enter into the Loan Agreement and other Loan Documents, the parties hereto,
intending to be legally bound hereby, do agree as follows:

 

1.

DEFINITIONS AND REFERENCES

 

  1.1.

Defined Terms

As used in this Agreement (including the recitals hereof), the following terms
shall have the meanings specified in this Section 1.1:

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“Agreement” means this Canadian Pledge Agreement, as amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.

“Company Rights” means, collectively, all LLC Rights, all Partnership Rights and
all Pledged Shares.

“Company Rights to Payments” means, collectively, all LLC Rights to Payments,
all Partnership Rights to Payments and all rights in respect of Pledged Shares
described in item (iii) of the definition thereof.

“Domestic Subsidiary” means any subsidiary of Pledgor that is organized under
the laws of the United States of America, any state thereof, the District of
Columbia, Canada or any province or territory of Canada.

“Equity Interest” means, with respect to any Person, shares of capital stock,
partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in a Person,
and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such interest.

“Issuer” means each of MCI, MCC and each other Domestic Subsidiary of Pledgor.

“Lender Parties” means, collectively, Secured Party and Lenders.

“LLC Agreements” means, collectively, any and all articles or certificates
forming any Issuer that is a limited liability company now owned or hereafter
acquired by the Pledgor and any operating agreement, limited liability company
agreement or other agreement governing any such Issuer or the relations among
the members and/or managers of any such Issuer.

“LLC Rights” means, collectively, all LLC Units, all LLC Rights to Payments, all
LLC Agreements and all other interests and rights of Pledgor in any limited
liability company Issuer now owned or hereafter acquired by Pledgor, including
without limitation any right to cause the dissolution of any such Issuer or to
appoint or nominate a successor to Pledgor as a member of any such Issuer and
all Proceeds of the foregoing.

“LLC Rights to Payments” means, collectively, all proceeds, interest, profits,
and other payments or rights to payment attributable to Pledgor’s interests in
any limited liability company Issuer now owned or hereafter acquired by Pledgor,
and all distributions, cash, instruments and other property now or hereafter
received, receivable or otherwise made with respect to or in exchange for any
interest of Pledgor in any such Issuer, including interim distributions, returns
of capital, loan repayments, and payments made in liquidation of any such
Issuer, and whether or not the same arise or are payable under any LLC
Agreements.

“LLC Units” means, collectively, (i) all membership or limited liability company
ownership interests or other ownership interests of Pledgor in any limited
liability company Issuer, whether now owned or hereafter acquired by Pledgor,
including without limitation, the limited liability companies listed on Schedule
1.1 and, (ii) all certificates representing any such units, all options and
other rights, contractual or otherwise, at any time existing with respect to
such units, and all dividends, cash, instruments and other property now or

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hereafter received, receivable or otherwise distributed in respect of or in
exchange for any or all of such units.

“Obligor” means the Pledgor, the Borrower and any other Person who may now or
may at any time hereafter be primarily or secondarily liable for any of the
Secured Obligations or who may now or may at any time hereafter have granted to
Secured Party a lien upon any property as security for the Secured Obligations.

“Partnership” means any general partnership, limited liability partnership or
limited partnership Issuer and any successor of any such partnership.

“Partnership Agreements” means, collectively, any articles or certificate
forming any Partnership now owned or hereafter acquired by the Pledgor or any
partnership agreement or any other agreement governing any such Partnership or
the relations among the partners in any such Partnership.

“Partnership Rights” means, collectively, the Partnership Rights to Payments,
the Partnership Agreements and all other interests and rights of the Pledgor in
any Partnership now owned or hereafter acquired by the Pledgor, including
without limitation any right to cause the dissolution of such Partnership or to
appoint or nominate a successor to the Pledgor as a partner in such Partnership
and all Proceeds of the foregoing.

“Partnership Rights to Payments” means, collectively, (i) all proceeds,
interest, profits, and other payments or rights to payment attributable to the
Pledgor’s interests in any Partnership now owned or hereafter acquired by the
Pledgor, including without limitation, the Partnerships listed on Schedule 1.1,
and (ii) all distributions, cash, instruments and other property now or
hereafter received, receivable or otherwise made with respect to or in exchange
for any interest of the Pledgor in any such Partnership, including interim
distributions, returns of capital, loan repayments, and payments made in
liquidation of any such Partnership, and whether or not the same arise or are
payable under any Partnership Agreements.

“Partnership Units” means, collectively, (i) all partnership, limited
partnership or limited liability partnership interests of Pledgor in any Issuer
that is a limited partnership or a limited liability partnership and, (ii) all
certificates representing any such units, all options and other rights,
contractual or otherwise, at any time existing with respect to such units, and
all dividends, cash instruments and other property now or hereafter received,
receivable, or otherwise distributed in respect of or in exchange for any or all
of such units.

“Pledged Collateral” means, collectively and each individually, (i) the Company
Rights, (ii) the Company Rights to Payments and (iii) any and all replacements,
products and cash and non-cash proceeds of, and dividends, distributions in
property, returns of capital or other distributions made on or with respect to,
any of the foregoing Equity Interests and ownership interests.

“Pledged Shares” means, collectively, (i) all of the issued and outstanding
shares of stock or other Equity Interests or securities of the Pledgor in any
Issuer owned or held of record or beneficially by the Pledgor on the date
hereof, including but not limited to such shares of stock and equity securities
described in Schedule 1.1; (ii) all other shares of stock or other equity
securities now owned or hereafter acquired by the Pledgor in an Issuer, whether
of the Issuers listed on Schedule 1.1 or any other Person; (iii) all
certificates representing any such shares and equity securities, all options,
and other rights, contractual or otherwise, at any time

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existing with respect to such shares, and all distributions, dividends, cash,
instruments and other property now or hereafter received, receivable or
otherwise distributed in respect of or in exchange for any interest of Pledgor
in any corporate Issuer, including interim distributions, returns of capital
loan repayments and payments made in liquidation of any such Issuer, and whether
or not the same arise or are payable under any articles or certificate of
incorporation or the bylaws of such Issuer; and (iv) any articles of certificate
of incorporation forming any corporate Issuer now owned or hereafter acquired by
the Pledgor or any bylaws or other agreement governing any such Issuer or the
relations among the shareholders of any such Issuer and all rights thereunder.

“PPSA” means the Personal Property Security Act , RSO 1990, c P.10 as in effect
in the Province of Ontario from time to time or, when the laws of any other
jurisdiction govern the perfection, priority or enforcement of any Lien, the
Personal Property Security Act or such other applicable legislation in effect
from time to time in such other jurisdiction

“Secured Obligations” has the meaning given to such term in Section 2(a) hereof.

“STA” means the Securities Transfer Act 2006, SO 2006, c. 8.

“STA Issuer” means an “issuer” as defined in the STA.

“ULC” means an issuer that is an unlimited company or unlimited liability
company.

“ULC Laws” means the Companies Act (Nova Scotia), the Business Corporations Act
(Alberta), the Business Corporations Act (British Columbia), and any other
present or future laws governing ULCs.

“ULC Shares” means shares or other equity interests in the capital stock of a
ULC.

 

  1.2.

Accounting Terms

Unless otherwise specified, as used in this Agreement or in any certificate,
report, instrument or other document made or delivered pursuant to this
Agreement, all accounting terms not defined in this Agreement or in the Loan
Agreement shall have the meanings given to such terms in and shall be
interpreted in accordance with GAAP (as defined in the Loan Agreement).

 

  1.3.

Other Definitional Provisions

All capitalized terms in this Agreement (including the recitals hereof) and not
defined herein shall have the defined meanings provided in the Loan Agreement.
Whenever the context so requires, each reference to gender includes the
masculine and feminine, the singular number includes the plural and vice versa.
The words “hereof” “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and references to section, article,
annex, schedule, exhibit and like references are references to this Agreement
unless otherwise specified. A Default or Event of Default shall “continue” or be
“continuing” until such Default or Event of Default has been cured or waived by
Secured Party in writing. References in this Agreement to any Person shall
include such Person and its successors and permitted assigns.

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2.

PLEDGE OF COLLATERAL

(a) Pledgor hereby (i) pledges and assigns to Secured Party, for the benefit of
the Lender Parties, all of its right, title and interest in and to the Pledged
Collateral, whether now or hereafter existing and (ii) grants to Secured Party,
for the benefit of the Lender Parties, a continuing first priority security
interest in, assignment of and lien upon the Pledged Collateral, whether now or
hereafter existing and the proceeds thereof, as continuing collateral security
for the due and punctual payment and performance for (1) the payment by Pledgor,
when due and payable, of all amounts from time to time owing by Pledgor under or
in respect of the Canadian Guaranty Agreement or any other Loan Document, and
the due performance by Pledgor of all of its other respective obligations under
or in respect of the Canadian Guaranty Agreement or any other Loan Document, in
each case whether now existing or hereafter incurred or arising, (2) all other
sums payable by the Pledgor under the other Loan Documents, whether for
principal, interest, fees or otherwise, whether now existing or hereafter
incurred or arising, and (3) all renewals, extensions, amendments,
modifications, supplements, or restatements of or substitutions for any of the
foregoing described in subsections (a)(1) through (a)(2) (all such obligations,
indebtedness and liabilities described in (a)(1) through (a)(3) collectively,
the “Secured Obligations”).

As used herein, the term “Secured Obligations” refers to all present and future
indebtedness, obligations and liabilities of whatever type which are described
above in this section, including any interest which accrues after the
commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of Pledgor or any Issuer.
Notwithstanding anything in this Agreement to the contrary, the Secured
Obligations shall be limited to a maximum aggregate amount equal to the largest
amount that would render this Agreement and/or the security interest granted
hereunder subject to avoidance as a fraudulent transfer or conveyance under
Applicable Law.

(b) The Pledgor shall (i) deliver to Secured Party all certificates or
instruments evidencing or representing the Pledged Collateral, and (ii) deliver
to Secured Party all certificates or instruments evidencing or representing any
additional Pledged Collateral within five (5) Business Days after the Pledgor’s
acquisition of such Pledged Collateral. Until such time as Pledgor has delivered
all certificates or instruments evidencing or representing the Pledged
Collateral to Secured Party, the Pledgor shall hold such certificates and/or
instruments as bailee and agent for the Secured Party. Each such certificate and
instrument shall be registered in the name of the Pledgor, duly endorsed in
blank or accompanied by an equity power duly executed by the Pledgor in blank,
in form and substance reasonably satisfactory to Secured Party, with any and all
documentary tax stamps and other documents necessary to cause Secured Party to
have a good, valid and perfected continuing first priority pledge of, Lien on
and security interest in the Pledged Collateral, free and clear of any other
mortgage, pledge, Lien, security interest, hypothecation, assignment, charge,
right, encumbrance or transfer or other restriction (individually, an
“Encumbrance” and collectively, “Encumbrances”), including, without limitation,
any necessary notations in the record books of the Pledgor or the entity in
which such equity or ownership interests evidence an ownership stake. At any
time following the occurrence and during the continuation of an Event of
Default, any or all of the Pledged Collateral, at the option of Secured Party
exercised in accordance with Section 3(d) hereof, may be registered in the name
of Secured Party or of its nominee, and the Pledgor hereby covenants that, upon
demand therefor by Secured Party, the Pledgor shall, or shall cause the Issuer
in which such equity or ownership interests evidence an ownership stake to,
effect such registration.

(c) Secured Party shall have the right, but not the obligation, to pay any taxes
or levies on or relating to the Pledged Collateral and any costs to preserve the
Pledged Collateral, which payments shall be made for the account of the Pledgor
and shall constitute a part of the Obligations.

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(d) Within five (5) Business Days of any request by the Secured Party, the
Pledgor, at Pledgor’s own cost and expense, will duly execute and deliver to
Secured Party such financing statements, continuation statements, assignments,
certificates and/or such other agreements, assignments, instructions or
documents as Secured Party may reasonably request relating to the Pledged
Collateral or otherwise to enable Secured Party to create, maintain and perfect
or from time to time renew the security interests granted hereby or to create,
maintain and perfect a security interest in any additional Pledged Collateral
hereafter acquired by Pledgor or in any and all additions to and/or
replacements, products and proceeds of any of the foregoing, all in form and
substance reasonably satisfactory to Secured Party. Pledgor will pay all
reasonable fees, costs and expenses associated therewith, including without
limitation, the cost of filing any of the foregoing in all public offices or
other locations wherever Secured Party deems filing to be necessary or
desirable. Pledgor irrevocably grants Secured Party the right, at Secured
Party’s option, to file any or all of the foregoing pursuant to the PPSA or STA
and otherwise without Pledgor’s signature, and Pledgor irrevocably appoints
Secured Party as Pledgor’s attorney in fact to execute any of the foregoing in
Pledgor’s name and to perform all other acts that Secured Party deems
appropriate to perfect and continue the security interests conferred by this
Agreement or otherwise to effect fully the purposes, terms and conditions of
this Agreement, the Loan Agreement and the other Loan Documents.

(e) No injury to, or loss or destruction of, the Pledged Collateral or any
Material Adverse Effect shall relieve Pledgor of any of the Secured Obligations.

 

3.

VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS

(a) So long as no Event of Default shall have occurred and be continuing or
would result from or be caused by any of the following:

(i) Pledgor shall be entitled to exercise any and all voting and/or consensual
rights and powers relating or pertaining to the Pledged Collateral or any part
thereof, subject to the terms hereof;

(ii) Pledgor shall be entitled to receive and retain any and all Company Rights
to Payments paid in cash in respect of the Pledged Collateral; provided,
however, that, any and all Company Rights to Payments (other than with respect
to ULC Shares) paid or payable other than in cash (including, without
limitation, stock and liquidating dividends) in respect of, and instruments and
other property received, receivable or otherwise distributed in respect of or in
exchange for, any Pledged Collateral whether resulting from a subdivision,
combination or reclassification of the outstanding Equity Interests or other
ownership interests of any Issuer or any other Person or received in exchange
for the Pledged Collateral or any part thereof or as a result of any merger,
amalgamation, consolidation, acquisition, transfer, sale or disposition of any
Issuer or the Pledged Collateral or other exchange of assets to which Pledgor or
any Issuer may be a party or otherwise, and any and all cash and other property
received in exchange for or redemption of any of the Pledged Collateral, shall
be, and shall promptly, and in any event within two (2) Business Days of receipt
thereof, be delivered to Secured Party to hold as, Pledged Collateral and shall,
if received by Pledgor, be received in trust for the benefit of Secured Party,
be segregated from the other property or funds of Pledgor and be forthwith
delivered to Secured Party in the exact form received with any necessary
endorsement or appropriate stock powers duly executed in blank, to be held by
Secured Party as Pledged Collateral;

(iii) Secured Party shall execute and deliver (or cause to be executed and
delivered) to Pledgor all such proxies, powers of attorney, dividend orders,
interest orders and other instruments (other than with respect to ULC Shares) as
Pledgor may request for the purpose

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of enabling Pledgor to exercise the voting and/or consensual rights and powers
that Pledgor is entitled to exercise pursuant to Section 3(a) and/or to receive
the Company Rights to Payments that Pledgor is authorized to receive and retain
pursuant to Section 3(a); and Pledgor shall execute and deliver to Secured Party
all proxies, powers of attorney, dividend orders, interest orders and other
instruments and documents (other than with respect to ULC Shares) as may be
required or may be requested by Secured Party to enable Secured Party to receive
and retain the Company Rights to Payments in property, returns of capital and
other distributions it is authorized to receive and retain pursuant to
Section 3(b); and

(b) Upon the occurrence and during the continuation of an Event of Default:

(i) all rights of the Pledgor to receive the Company Rights to Payments (other
than with respect to ULC Shares) that Pledgor is authorized to receive and
retain pursuant to Section 3(a)(ii) shall cease immediately, without any notice
to Pledgor or action by or on behalf of Secured Party or any other Person, and
all such rights thereupon shall become vested in Secured Party automatically
without any action by any Person, and Secured Party shall have the sole and
exclusive right and authority to receive and retain such Company Rights to
Payments. Upon notice by the Secured Party to the Pledgor, the Secured Party may
elect to terminate the Pledgor’s rights to exercise the voting and/or consensual
rights and powers that Pledgor is entitled to exercise pursuant to
Section 3(a)(i) and upon the delivery of such notice, the Secured Party shall
have the sole and exclusive right and authority to exercise such voting and/or
consensual rights and powers. In such case, Pledgor shall execute and deliver
such proxies, powers of attorney, dividend orders, interest orders and other
instruments and documents as Secured Party may request to enable Secured Party
to exercise such rights and receive such Company Rights to Payments. In
addition, Secured Party is hereby appointed the attorney-in-fact of Pledgor,
with full power of substitution, which appointment as attorney-in-fact is
irrevocable and coupled with an interest, to take all such actions after the
occurrence and continuation of an Event of Default, whether in the name of
Secured Party or Pledgor, as Secured Party may consider necessary or desirable
for the purpose of exercising such rights and receiving such Company Rights to
Payments. Any and all money and other property paid over to or received by
Secured Party pursuant to the provisions of this Section 3(b)(i) shall be
retained by Secured Party as part of the Pledged Collateral and shall be applied
in accordance with the provisions hereof and the Loan Agreement;

(ii) without limiting the generality of the foregoing, Secured Party may at its
option (other than with respect to ULC Shares) exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Collateral (other than, except as otherwise
expressly allowed hereunder, voting rights pertaining to the Pledged Collateral
or any part thereof), as if it were the absolute owner thereof, including,
without limitation, the right to exchange, in its discretion, any and all of the
Pledged Collateral upon the merger, amalgamation, consolidation, reorganization,
recapitalization or other adjustment of any Issuer, or upon the exercise by any
Issuer of any right, privilege or option pertaining to any Pledged Collateral,
and, in connection therewith, to deposit and deliver any and all of the Pledged
Collateral with any committee, depository, transfer agent, registrar or other
designated agent upon such terms and conditions as it may determine and any and
all rights to dissolve any Issuer or to compel distribution of any Issuer’s
assets; and

(iii) all Company Rights to Payments of any kind in respect of Pledged
Collateral (other than with respect to ULC Shares) which are received by Pledgor
contrary to the provisions of subsection (b)(i) and (b)(ii) of this section
shall be received in trust for the benefit of Secured Party, shall be segregated
from other funds of Pledgor, and shall be forthwith paid

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over to Secured Party as Pledged Collateral in the exact form received, to be
held by Secured Party as Pledged Collateral.

 

4.

REMEDIES ON DEFAULT

(a) Notwithstanding and without limiting any other provision of this Agreement,
the Loan Agreement or any of the Loan Documents, if at any time an Event of
Default shall have occurred and be continuing, then, Secured Party may from time
to time in its discretion, without limitation and without notice except as
expressly provided below or by law:

(i) exercise in respect of the Pledged Collateral, in addition to any other
rights or remedies provided for herein, under the other Loan Documents or
otherwise available to it, all the rights and remedies of a secured party upon
default under the PPSA or STA (whether or not the PPSA or STA applies to the
affected Pledged Collateral); and

(ii) to the extent permitted by applicable law, without being required to give
any notice to Pledgor or to take or do any action (except as provided below or
by law):

(A) apply any cash held by it hereunder in the manner provided in Section 4(l);
and

(B) collect, receive, appropriate and realize upon the Pledged Collateral or any
part thereof, and/or sell, assign, transfer, contract to sell or otherwise
dispose of and deliver the Pledged Collateral or any part thereof, in its
entirety or in portions, at public or private sale or at any broker’s board, on
any securities exchange or at any of Secured Party’s places of business or
elsewhere, for cash, upon credit or for future delivery, and at such price or
prices as Secured Party may deem best, and Secured Party may (except as
otherwise provided by law) be the purchaser of any or all of the Pledged
Collateral so sold and thereafter may hold the same, absolutely, free from any
right or claim of whatsoever kind.

(b) In the event of a sale as aforesaid, Secured Party may, at any such sale, if
it deems it advisable to do so, restrict the number of prospective bidders or
purchasers and/or further restrict such prospective bidders or purchasers to
Persons who will represent and agree that they are purchasing for their own
account, for investment and not with a view to the distribution or resale of the
Pledged Collateral, and may otherwise require that such sale be conducted
subject to restrictions as to such other matters as Secured Party may deem
necessary in order that such sale may be effected in such manner as to comply
with all applicable state and federal securities and other laws. Upon any such
sale, Secured Party shall have the right to deliver, assign and transfer the
Pledged Collateral so sold to the purchaser thereof.

(c) Pledgor hereby acknowledges that, notwithstanding that a higher price might
be obtained for the Pledged Collateral at a public sale than at a private sale
or sales, the making of a public sale of the Pledged Collateral may be subject
to registration requirements under applicable securities laws and other legal
restrictions, compliance with which would require such actions on the part of
Pledgor, would entail such expenses and would subject Secured Party, any
underwriter through whom the Pledged Collateral may be sold or any controlling
person of any of the foregoing to such liabilities, as would make a public sale
of the Pledged Collateral impractical. Accordingly, Pledgor hereby agrees that
private sales made by Secured Party in good faith in accordance with the
provisions of this Article 4, may be at prices and on other terms less
favourable to the Pledgor than if the Pledged Collateral were sold at a public
sale, and that Secured Party shall not have any obligation to take any

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steps in order to permit the Pledged Collateral to be sold at a public sale,
such a private sale being considered or deemed to be a sale in a commercially
reasonable manner and that Secured Party shall have no obligation to delay the
sale of any Pledged Collateral for the period of time necessary to permit their
registration or other qualification under applicable securities legislation.
Pledgor further acknowledges and agrees that any offer to sell any Pledged
Collateral which has been (i) publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation in the financial community
of Toronto, Ontario (to the extent that such an offer may be so advertised
without prior registration under applicable law, or (ii) made privately in the
manner described above to not less than fifteen (15) bona fide offerees shall be
deemed to involve a public sale, and that Secured Party or one or more of the
Lender Parties may, in such event, bid for the purchase of such Pledged
Collateral.

(d) Pledgor also hereby acknowledges that any private sale of the Pledged
Collateral may be subject to compliance with federal, provincial and territorial
securities and/or other laws.

(e) Each purchaser at any such sale shall hold the property sold, absolutely
free from any claim or right whatsoever, including any equity or right of
redemption of Pledgor, and Pledgor hereby specifically waives all rights of
redemption, stay or appraisal and other rights that Pledgor has or may have
under any law, regulation or statute now existing or hereafter adopted or
otherwise. Secured Party shall give Pledgor not less than ten (10) calendar days
written notice of its intention to make any such public or private sale. In the
case of a public sale, such notice shall state the time and place fixed for such
sale, and, in case of a sale at broker’s board, on a securities exchange, at one
or more of Secured Party’s places of business or elsewhere, shall state the
board, exchange or other location at which such sale is to be made and the day
on which the Pledged Collateral, or that portion thereof so being sold, will
first be offered for sale at such location. In the case of a private sale, such
notice shall state only the date on or after which such sale may be made. Any
such notice given as aforesaid shall be deemed to be reasonable notification.

(f) Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as Secured Party may fix in the
notice of such sale. At any sale the Pledged Collateral may be sold in one lot
as an entirety or in parts, as Secured Party may determine. Secured Party shall
not be obligated to make any sale pursuant to any such notice. Secured Party
may, without notice or publication, adjourn any sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Pledged Collateral on
credit or for future delivery, the Pledged Collateral so sold may be retained by
Secured Party until the selling price is paid by the purchaser thereof, but
Secured Party shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Pledged Collateral so sold and, in case of
any such failure, such Pledged Collateral may again be sold upon like notice.

(g) Secured Party, instead of exercising the power of sale herein conferred upon
it, may proceed by a suit or suits at law or in equity to foreclose its lien or
security interest arising from this Agreement and sell the Pledged Collateral,
or any portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction.

(h) On any sale of any part of the Pledged Collateral, Secured Party is hereby
authorized to comply with any limitation or restriction in connection with such
sale that may be necessary in order to avoid any violation of applicable law or
in order to obtain any required approval of the purchaser(s) by any Governmental
Authority.

(i) Pledgor hereby acknowledges, understands and agrees that Secured Party
(i) may exercise its rights under the Loan Agreement and the other Loan
Documents, whether or not they

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provide security for any of the Secured Obligations, without exercising its
rights hereunder or affecting the security provided hereunder, and (ii) may
proceed against all or any portion of the Pledged Collateral and all other
collateral securing any of the Secured Obligations in such order and at such
time as determined by Secured Party in its sole discretion. Pledgor hereby
expressly waives any rights under the doctrine of marshalling of assets.

(j) Pledgor hereby acknowledges, understands and agrees that compliance with the
foregoing procedures shall satisfy any applicable requirements that such sale or
disposition be made in a commercially reasonable manner, and shall result in
such sale or disposition being considered and deemed to have been made in a
commercially reasonable manner.

(k) Each of the rights, powers and remedies provided herein, or in the Loan
Agreement or any Loan Document, or now or hereafter existing at law, in equity,
by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power or remedy provided for herein or therein or
now or hereafter existing at law, in equity, by statute or otherwise. The
exercise of any such right, power or remedy shall not preclude the simultaneous
or later exercise of any or all other such rights, powers or remedies. No notice
to or demand on Pledgor in any case shall entitle Pledgor to any other notice or
demand in similar or other circumstances.

(l) The proceeds of any collection, recovery, receipt, appropriation,
realization, transfer, exchange, disposition or sale as aforesaid shall be
applied by Secured Party as provided in the Loan Agreement.

 

5.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR

(a) Pledgor represents and warrants to Secured Party as of the date hereof and
as of the date of each request for Revolving Loan (which representations and
warranties shall survive the execution and delivery of this Agreement and the
making of Loans and advances under the Loan Agreement) as follows:

(i) it has full legal capacity and all requisite power, right and authority to
(A) own the Pledged Collateral, (B) execute, deliver and perform this Agreement,
(C) pledge the Pledged Collateral, and (D) grant the security interests and
Liens in the Pledged Collateral pursuant to this Agreement and otherwise
consummate the transactions contemplated under this Agreement and the other Loan
Documents to which it is a party, and Pledgor is under no legal restriction,
limitation or disability that would prevent it from doing any of the foregoing;

(ii) this Agreement has been duly executed and delivered by Pledgor and
constitutes the legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other similar
law affecting the enforceability of creditors’ rights generally and to the
effect of general principles of equity which may limit the availability of
equitable remedies (whether in a proceeding at law or in equity);

(iii) Pledgor is the direct record and beneficial owner of each security and
other interest that comprises the Pledged Collateral, and Pledgor has and will
have good, valid and marketable title thereto, free and clear of all
Encumbrances other than the security interests created by this Agreement and
other Permitted Liens;

(iv) all of the Pledged Collateral has been duly authorized and validly issued,
are fully paid and (other than with respect to limited liability company and
partnership interests)

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non-assessable and none of the Pledged Collateral was issued in violation of the
preemptive rights of any Person or of any agreement by which Pledgor or any
Issuer is bound;

(v) the Pledged Collateral described on Schedule 1.1 attached hereto constitute
100% of (1) the issued and outstanding partnership interests of each Partnership
if any, (2) the issued and outstanding LLC Units of each limited liability
company Issuer, if any, (3) the issued and outstanding ULC Shares of each
unlimited liability company Issuer, if any, and (4) the issued and outstanding
Pledged Shares of each corporate Issuer, in each case that is owned by Pledgor
as of the date hereof;

(vi) the Pledged Collateral is and will be duly and validly pledged to Secured
Party in accordance with applicable law, and Secured Party has a good, valid and
perfected first priority Lien on and security interest in the Pledged Collateral
and the proceeds thereof subject to no Liens in favour of any other Person
(other than Permitted Liens), and no filing or other action will be necessary to
perfect or protect such lien or security interest other than the filing of any
financing statement under the PPSA in the jurisdiction where the Pledgor is
located (as determined in accordance with the PPSA) naming Pledgor, as debtor,
and Secured Party, as secured party, and describing the Pledged Collateral and
delivery to Secured Party of any certificates evidencing the Pledged Collateral
(properly endorsed for transfer to Secured Party or in blank);

(vii) the execution, delivery and performance by Pledgor of this Agreement and
the consummation of the transactions and the creation and granting of the
security interests and liens contemplated thereby do not and will not
(A) conflict with or violate the certificate of formation, articles of
formation, articles of incorporation, bylaws, LLC Agreements, Partnership
Agreements or similar documents of any Issuer or any agreement by and between
Pledgor or any such Issuer and its respective equity owners or among any such
equity owners; (B) conflict with, result in a breach of, constitute a default of
or an event of default under, or constitute any event, fact, condition or
circumstance which, with notice or passage of time or both, would constitute or
result in a conflict, breach, default or event of default under, require any
consent not obtained under, or result in or require the acceleration of any
indebtedness pursuant to, any agreement, indenture or other instrument to which
any Issuer is a party or by which any Issuer or any of its or their respective
properties or assets are bound or subject, in each case, the effect of which
would reasonably be expected to have or result in a Material Adverse Effect;
(C) conflict with or violate any provision of any applicable law, statute, rule,
regulation, ordinance, license or tariff or any judgment, decree or order of any
court or other Governmental Authority binding on or applicable to any Issuer or
any of its or their respective properties or assets or any of the Pledged
Collateral, the effect of which would reasonably be expected to have or result
in a Material Adverse Effect; or (D) result in the creation or imposition of any
Lien of any nature whatsoever upon any of the properties or assets of any Issuer
except those contemplated hereunder;

(viii) no restrictions or conditions exist with respect to the transfer, voting
or capital of any Pledged Collateral and no approval, consent or authorization
of, filing, registration or qualification with, or other action by, any Issuer,
any Governmental Authority or any other Person is or will be necessary to permit
the valid execution, delivery or performance of this Agreement by Pledgor or
consummation of the transactions or creation or granting of the Liens and
security interests contemplated hereby and all documentary stamp and other taxes
and fees owing in connection with the issuance transfer or pledge of the Pledged
Collateral (or rights in respect thereof) have been paid;

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(ix) there is no action, claim, suit, proceeding or investigation pending or, to
the knowledge of Pledgor, currently threatened against or affecting the Pledged
Collateral, any Issuer, the Pledgor, or this Agreement or the transactions
contemplated hereby, before or by any court, arbitrator or Governmental
Authority (A) that questions or could prevent the validity of this Agreement or
the right or ability of Pledgor to enter into this Agreement or to consummate
the transactions or create or grant the Liens and security interests
contemplated hereby, (B) that would reasonably be expected to have or result in,
either individually or in the aggregate, any Material Adverse Effect, or
(C) that would reasonably be expected to result in any change in the current
equity ownership of any Issuer, nor is Pledgor aware that there is any basis for
any of the foregoing;

(x) no Issuer is a party or subject to any judgment, order or decree or any
agreement, document or instrument or subject to any restriction, any of which do
or would adversely affect or prevent Pledgor’s ability to execute or deliver,
perform under, consummate the transactions contemplated by, or to observe the
covenants and agreements contained in this Agreement;

(xi) the obligations of Pledgor under this Agreement are not subordinated in any
way to any other obligation of Pledgor or to the rights of any other Person; and
neither Pledgor nor any entity whose security constitutes part of the Pledged
Collateral is a party to or has entered into any agreement, document or
instrument that conflicts with this Agreement or that otherwise relates to the
Pledged Collateral which would reasonably be expected to have a Material Adverse
Effect;

(xii) the foregoing representations and warranties are made with the knowledge
and intention that Secured Party is relying and will rely thereon, and such
representations and warranties shall survive the execution and delivery of this
Agreement and the making of Loans and advances under the Loan Agreement;

(xiii) Pledgor has delivered to Secured Party all certificates and instruments
evidencing Pledged Collateral and all such certificates and instruments are
valid and genuine and have not been altered;

(xiv) no Issuer has any outstanding stock rights, rights to subscribe, options,
warrants or convertible securities outstanding or any other rights outstanding
whereby any Person would be entitled to have issued to it units of ownership
interest, stock or partnership or membership interests in any Issuer; and

(b) Until all Obligations (other than contingent indemnification obligations, to
the extent no claim giving rise thereto has been asserted) have been satisfied
in full and indefeasibly paid in full in cash and the Loan Agreement has been
terminated, Pledgor hereby covenants that:

(i) Pledgor shall: (A) at the request of Secured Party, execute, obtain,
deliver, file, register and/or record any and all financing statements,
continuation statements, instruments and other documents, or cause the
execution, filing, registration, recording or delivery of any and all of the
foregoing, that are necessary or required under law or otherwise reasonably
requested by Secured Party to be executed, filed, registered, obtained,
delivered or recorded to create, perfect, preserve, validate or otherwise
protect the pledge of the Pledged Collateral to Secured Party and Secured
Party’s perfected security interest in and lien on the Pledged Collateral;
(B) maintain, or cause to be maintained, at all times, the pledge of the Pledged
Collateral to Secured Party and Secured Party’s perfected first priority lien on
and

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security interest in the Pledged Collateral; (C) use commercially reasonable
efforts to defend the Pledged Collateral and Secured Party’s security interest
therein and perfected first priority lien thereon against all claims and demands
(other than Permitted Liens) of all Persons at any time claiming the same or any
interest therein adverse to Secured Party, and pay all reasonable costs, fees
and expenses (including, without limitation, in-house documentation and
diligence fees and legal expenses and reasonable attorneys’ fees and expenses)
in connection with such defense, which may at Secured Party’s discretion be
charged to Pledgor’s account and added to the Obligations, and (D) if Secured
Party so demands in writing in accordance with this Agreement to the extent
entitled thereto pursuant to this Agreement or otherwise at any time during the
continuance of an Event of Default, deliver all replacements, products and
proceeds of, and dividends, distributions in property, returns of capital or
other distributions made on or with respect to, the Pledged Collateral to
Secured Party promptly upon receipt in a form and manner reasonably satisfactory
to Secured Party;

(ii) Pledgor shall, and shall cause each Issuer to, keep true, complete and
accurate books of record with respect to the Pledged Collateral in accordance
with commercially reasonable business practices;

(iii) Pledgor shall, and shall cause each Issuer to, take all necessary and
appropriate commercially reasonable actions to ensure that (A) this Agreement
and the security interests and Liens created hereby are and remain perfected and
enforceable against Pledgor in accordance with its and their terms, and
(B) Pledgor complies with each of its covenants, agreements and obligations
under this Agreement;

(iv) Pledgor shall not take or permit to be taken, or permit or cause any Issuer
to take or permit to be taken, any action in connection with the Pledged
Collateral or otherwise which would reasonably be expected to impair the value
of the Pledged Collateral or any portion thereof or the value of the interests
or rights of Pledgor or Secured Party therein or with respect thereto,
including, without limitation, any amendment to or modification of the
certificate of formation (or similar charter documents) or bylaws or limited
liability company agreement (or similar documents) of such Person which would
reasonably be expected to result in or cause any of the foregoing;

(v) Pledgor shall not, and shall not permit any Issuer to, cause or permit to be
done, or enter into or make or become a party to any agreement (oral or
written), arrangement or commitment to do or cause to be done, any of the things
prohibited by this Agreement or that would breach this Agreement, any of the
other Loan Documents or any other instrument, agreement, arrangement, commitment
or document to which Pledgor or any Issuer is a party or by which Pledgor or any
of its properties or assets is or may be bound or subject; and

(vi) Except for the Pledged Shares, the Pledged Collateral is not and shall not
at any time be evidenced by any certificates. The certificates evidencing the
Pledged Collateral shall at all times be valid and shall not be altered. The
Pledged Collateral at all times shall be duly authorized, validly issued, fully
paid and (other than with respect to partnership and limited liability company
interests) non-assessable, and shall not be issued in violation of the
pre-emptive rights of any Person or of any agreement by which Pledgor or any
Issuer is bound and shall not be subject to any restrictions with respect to
transfer, voting or capital of such Pledged Collateral.

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6.

RIGHTS OF SECURED PARTY UPON OCCURRENCE AND CONTINUATION OF EVENT OF DEFAULT

In addition to the provisions set forth in this Agreement, the Loan Agreement
and in the other Loan Documents, upon the occurrence and continuation of an
Event of Default, Secured Party shall have the right to exercise any and all
other rights, options and remedies provided for herein, in the Loan Agreement or
any other Loan Document, under the PPSA or STA, or at law or in equity generally
or otherwise, including, without limitation, the right (i) to foreclose the
security interests and Liens created hereunder, (ii) to realize upon or to take
possession of or sell any of the Pledged Collateral with or without judicial
process, and (iii) to exercise such rights and powers with respect to the
Pledged Collateral as Pledgor might exercise.

 

7.

MISCELLANEOUS PROVISIONS

 

  7.1.

Additional Actions and Documents

Pledgor hereby agrees to take or cause to be taken such further commercially
reasonable actions (including, without limitation, the delivery to Secured Party
of certificates representing the Pledged Collateral now or hereafter acquired or
owned by Pledgor), to obtain such consents and approvals and to duly execute,
deliver and file or cause to be executed, delivered and filed such further
agreements, assignments, instructions, documents and instruments as may be
necessary or as may be reasonably requested by Secured Party in order to fully
effectuate the purposes, terms and conditions of this Agreement and the
consummation of the transactions contemplated hereby, whether before, at or
after the performance and/or consummation of the transactions contemplated
hereby or the occurrence of a Default or Event of Default hereunder.

 

  7.2.

Expenses

Notwithstanding and without limiting or being limited by any other provision of
this Agreement or the Loan Documents, Pledgor shall pay all reasonable costs,
fees and expenses incurred by Secured Party or any of its Affiliates, including,
without limitation, documentation and diligence fees and expenses, all search,
audit, appraisal, recording, professional and filing fees and expenses and all
other out-of-pocket charges and expenses (including, without limitation, PPSA
and judgment and tax lien searches and PPSA filings and fees for post-closing
PPSA and judgment and tax lien searches) and, reasonable attorneys’ fees and
expenses, (a) in any effort to enforce this Agreement, the Loan Agreement, any
other Loan Document and/or any related agreement, document or instrument, or to
effect collection hereunder or thereunder, (b) in connection with entering into,
negotiating, preparing, reviewing and executing this Agreement, the Loan
Agreement and the other Loan Documents and all related agreements, documents and
instruments, (c) arising in any way out of administration of the Obligations or
the security interests or liens created hereunder, including without limitation,
any wire transfer fees or audit expenses or filing or recordation fees, (d) in
connection with instituting, maintaining, preserving, perfecting and enforcing
Secured Party’s rights hereunder and enforcing and/or foreclosing on the
security interests and/or Liens in any of the Pledged Collateral, through
judicial process or otherwise, (e) in defending or prosecuting any actions,
claims or proceedings arising out of or relating to this Agreement and/or any
related agreement, document or instrument, (f) in seeking or receiving any
advice with respect to its rights and obligations under this Agreement, the Loan
Agreement, any other Loan Documents and/or all related agreements, documents and
instruments, and/or (g) in connection with any modification, supplement,
amendment, waiver or extension of this Agreement, the Loan Agreement, any other
Loan Document or any related agreement, document or instrument, and all of the
same may be charged to Pledgor’s account and shall be part of the Obligations.
If Secured Party or any of its Affiliates uses in-house counsel for any of the
purposes set forth above or any other purposes under this Agreement for which
Pledgor is

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

responsible to pay or indemnify, Pledgor expressly agrees that the Obligations
include reasonable charges for such work commensurate with the fees that would
otherwise be charged by outside legal counsel selected by Secured Party or such
Affiliate in its sole discretion for the work performed. In addition and without
limiting the foregoing, Pledgor shall pay all taxes (other than taxes based upon
or measured by Secured Party’s income or revenues or any personal property tax),
if any, in connection with the making of the Loans and the recording of the
security documents and financing statements therefor and pursuant to the Loan
Documents.

 

  7.3.

Notices

Any notice or request hereunder shall be given to Pledgor or to Secured Party in
accordance with the provisions as set forth in the Loan Agreement.

 

  7.4.

Delay

No course of action or dealing, renewal or extension of this Agreement, any
security interests or liens created hereunder or rights or obligations
hereunder, release of Pledgor or any of the foregoing or delay, failure or
omission on Secured Party’s part in enforcing this Agreement, the Loan Agreement
or any other Loan Document or in exercising any right, remedy, option or power
hereunder or thereunder shall affect the liability of Pledgor or operate as a
waiver of such or of any other right, remedy, power or option or of any default,
nor shall any single or partial exercise of any right, remedy, option or power
hereunder or under any other Loan Document affect the liability of Pledgor or
preclude any other or further exercise of such or any other right, remedy, power
or option. No waiver by any party to this Agreement of any one or more defaults
by the other party in the performance of any of the provisions of this Agreement
shall operate or be construed as a waiver of any future default or defaults,
whether of a like or different nature. Notwithstanding any other provision of
this Agreement, the Loan Agreement or any other Loan Document, by completing the
closing or by making Loans or advances, Secured Party does not waive a breach of
any representation or warranty of Pledgor under this Agreement, the Loan
Agreement or any other Loan Document, and all of Secured Party’s claims and
rights resulting from any breach or misrepresentation by Pledgor are
specifically reserved by Secured Party.

 

  7.5.

Governmental Approvals

Upon the exercise by Secured Party or any of its Affiliates of any right or
remedy under this Agreement, the Loan Agreement or any other Loan Document that
requires any consent, approval or registration with, or consent, qualification
or authorization by, any Governmental Authority, Pledgor will execute and
deliver, or will cause the execution and delivery of, all applications,
certificates, instruments and other documents that Secured Party may be required
to obtain for such governmental consent, approval, registration, qualification
or authorization.

 

  7.6.

Release of Pledged Collateral

Promptly following full performance and satisfaction and indefeasible payment in
full in cash of the Secured Obligations (other than contingent indemnification
obligations, to the extent no claim giving rise thereto has been asserted) and
the termination of the Loan Agreement, the security interests and Liens created
hereby shall terminate and Secured Party shall promptly execute and deliver such
documents, at Pledgor’s expense, as are necessary to release Secured Party’s
security interests and Liens in the Pledged Collateral and shall promptly return
the Pledged Collateral to Pledgor at the address of Pledgor set forth herein or
at such other address as Pledgor may direct in writing. Secured Party shall not
be deemed to have made any representation or warranty with respect to any
Pledged Collateral so

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

delivered, except that such Pledged Collateral is free and clear, on the date of
such delivery, of any and all Liens, charges and encumbrances arising from
Secured Party’s own acts.

 

  7.7.

Successors and Assigns; Participations; New Secured Parties

(a) This Agreement shall inure to the benefit of Secured Party, all future
holders of the Loans and the Obligations, or any of the Secured Obligations or
any of the Pledged Collateral and all Transferees (as defined below), and each
of their respective successors and permitted assigns. Pledgor may not assign,
delegate or transfer this Agreement or any of its rights or obligations under
this Agreement, the Loan Agreement or any other Loan Document without the prior
written consent of Secured Party and Required Lenders. No rights are intended to
be created under this Agreement or under any other Loan Document for the benefit
of any third party donee, creditor or incidental beneficiary of Pledgor. Nothing
contained in this Agreement or any other Loan Document shall be construed as a
delegation to Secured Party of Pledgor’s duty of performance, including, without
limitation, any duties under any account or contract in which Secured Party has
a security interest or Lien. This Agreement shall be binding upon Pledgor and
its respective heirs and assigns.

(b) PLEDGOR ACKNOWLEDGES THAT SECURED PARTY AND THE OTHER LENDER PARTIES AT ANY
TIME AND FROM TIME TO TIME MAY SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN
OR TRANSFER ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER, THIS AGREEMENT
TO ONE OR MORE OTHER PERSONS, AS SET FORTH IN THE LOAN AGREEMENT (EACH SUCH
TRANSFEREE, ASSIGNEE OR PURCHASER, A “TRANSFEREE”). In such case, the Transferee
shall have all of the rights and benefits with respect to the portion of such
Obligations, the Pledged Collateral, this Agreement, the Loan Agreement and the
other Loan Documents held by it as fully as if such Transferee were the original
holder thereof (including without limitation rights of set-off and recoupment),
and shall become vested with all of the powers and rights given to Secured Party
and/or any other Lender Party, as applicable, hereunder with respect thereto,
and shall be deemed to be a “Secured Party” for all purposes hereunder, the
predecessor Secured Party or other Lender Party shall thereafter be forever
released and fully discharged from any liability or responsibility hereunder
with respect to the rights and interests so assigned. Pledgor hereby grants to
any Transferee or any assignee or other transferee of Secured Party a continuing
security interest and Lien in the Pledged Collateral and any deposits, accounts,
instruments, moneys or other property actually or constructively held by such
Transferee, assignee or transferee as security for such Person’s interest in the
Obligations, the Pledged Collateral, the Loan Agreement and/or this Agreement
and/or the other Loan Documents.

(c) Notwithstanding any other provision of this Agreement, the Loan Agreement or
any other Loan Document, Secured Party may disclose to any Transferee, all
information, and may furnish to such Transferee copies of reports, financial
statements, certificates, and documents obtained under any provision of this
Agreement or any Loan Document.

 

  7.8.

Severability

If any term or provision of this Agreement is adjudicated to be invalid under
applicable laws or regulations, such provision shall be inapplicable to the
extent of such invalidity or unenforceability without affecting the validity or
enforceability of, the remainder of this Agreement which shall be given effect
so far as possible.

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  7.9.

Survival

It is the express intention and agreement of the parties hereto that all
obligations, covenants, agreements, representations, warranties, waivers and
indemnities made by Pledgor herein shall survive the execution, delivery and
termination of this Agreement and the making of Loans and advances and the
termination of this Agreement until all Obligations (other than contingent
indemnification obligations, to the extent no claim giving rise thereto has been
asserted) are performed in full and indefeasibly paid in full in cash and the
Loan Agreement is terminated.

 

  7.10.

Rights and Remedies not Exclusive

(a) Secured Party shall have the right in its sole discretion to determine which
rights, powers, Liens, security interests or remedies Secured Party may at any
time pursue, relinquish, subordinate or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any
of Secured Party’s rights, powers, Liens, security interests or remedies
hereunder, under the Loan Agreement or any of the Loan Documents, or under
applicable law or at equity.

(b) The enumeration of the rights and remedies herein is not intended to be
exhaustive. The rights and remedies of Secured Party described herein are
cumulative and are not alternative to or exclusive of any other rights or
remedies which Secured Party otherwise may have by contract or at law or in
equity, and the partial or complete exercise of any right or remedy shall not
preclude any other further exercise of such or any other right or remedy.

 

  7.11.

Effectiveness and Termination

This Agreement shall be effective on the date hereof and shall continue in full
force and effect until full performance and satisfaction and indefeasible
payment in full in cash of all Obligations (other than contingent
indemnification obligations, to the extent no claim giving rise thereto has been
asserted) and termination of the Loan Agreement, all in accordance with the Loan
Agreement, and the rights and powers and security interests and Liens granted to
Secured Party hereunder and the financing statements filed pursuant hereto shall
continue in full force and effect notwithstanding the termination of this
Agreement or the fact that Borrower’s borrowings under the Loan Agreement may
from time to time be temporarily in a zero or credit position, until all of the
Obligations (other than contingent indemnification obligations, to the extent no
claim giving rise thereto has been asserted) have been indefeasibly paid in full
in cash and performed and satisfied in full. Unless and until this Agreement
shall have been terminated in accordance with its terms and all Secured
Obligations (other than contingent indemnification obligations, to the extent no
claim giving rise thereto has been asserted) shall have been paid in full in
cash and performed and satisfied in full, Pledgor waives any rights which it may
have under the PPSA or STA or otherwise to demand the filing of termination
statements with respect to the Pledged Collateral, and Secured Party shall not
be required to send such termination statements to Pledgor, or to file them with
any filing office except as required by Applicable Law.

 

  7.12.

Governing Law; Venue; Construction

(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF
CANADA APPLICABLE THEREIN WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES.

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(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN ANY ONTARIO COURTS SITTING IN TORONTO, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. NOTWITHSTANDING
THE FOREGOING, SECURED PARTY SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY CREDIT PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION AS SECURED PARTY, AS THE CASE MAY BE, DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO EXERCISE REMEDIES WITH RESPECT TO THE COLLATERAL.

(c) EACH PARTY HERETO ACKNOWLEDGES THAT BOTH PARTIES PARTICIPATED IN THE
NEGOTIATION AND DRAFTING OF THIS AGREEMENT AND THAT, ACCORDINGLY, NEITHER PARTY
SHALL MOVE OR PETITION A COURT CONSTRUING THIS AGREEMENT TO CONSTRUE IT MORE
STRINGENTLY AGAINST ONE PARTY THAN AGAINST THE OTHER.

 

  7.13.

Captions

The captions in this Agreement are intended for convenience and reference only
and do not constitute and shall not be interpreted as part of this Agreement,
and shall not affect the meaning or interpretation of this Agreement.

 

  7.14.

Counterparts

This Agreement may be executed in one or more counterparts, all of which taken
together shall constitute but one and the same instrument. This Agreement may be
executed by facsimile transmission, email transmission or other electronic
means, which signatures shall be considered original executed counterparts for
purposes of this Section 7.14, and each party to this Agreement agrees that it
will be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party to this Agreement.

 

  7.15.

Indemnity

(a) NOTWITHSTANDING AND WITHOUT LIMITING ANY OTHER PROVISION OF THIS AGREEMENT,
THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, PLEDGOR SHALL INDEMNIFY SECURED
PARTY, EACH LENDER PARTY AND THEIR AFFILIATES AND THEIR RESPECTIVE MANAGERS,
MEMBERS, OFFICERS, EMPLOYEES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE
“INDEMNIFIED PERSONS”) 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, WITHOUT LIMITATION,
SECURED PARTY’S REASONABLE IN-HOUSE DOCUMENTATION AND DILIGENCE FEES AND
REASONABLE LEGAL EXPENSES AND REASONABLE FEES AND DISBURSEMENTS OF COUNSEL)
WHICH MAY BE IMPOSED

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ON, INCURRED BY OR ASSERTED AGAINST ANY INDEMNIFIED PERSON WITH RESPECT TO OR
ARISING OUT OF, OR IN ANY LITIGATION, PROCEEDING OR INVESTIGATION INSTITUTED OR
CONDUCTED BY ANY GOVERNMENTAL AUTHORITY OR ANY OTHER PERSON WITH RESPECT TO ANY
ASPECT OF, OR ANY TRANSACTION CONTEMPLATED BY OR REFERRED TO IN, OR ANY MATTER
RELATED TO OR ANY ASPECT OF, THIS AGREEMENT, THE OBLIGATIONS, THE PLEDGED
COLLATERAL OR ANY OF THE LOAN DOCUMENTS OR ANY AGREEMENT OR DOCUMENT
CONTEMPLATED HEREBY OR THEREBY (INCLUDING, WITHOUT LIMITATION, RELATING TO OR
ARISING OUT OF ANY OF THE OBLIGATIONS AND/OR TRANSACTIONS CONTEMPLATED UNDER
SECTION 7.15(B) OF THIS AGREEMENT), WHETHER OR NOT SUCH INDEMNIFIED PERSON IS A
PARTY THERETO, EXCEPT TO THE EXTENT THAT ANY OF THE FOREGOING ARISES SOLELY AND
DIRECTLY OUT OF THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON. Secured Party agrees to give Pledgor reasonable notice of
any event of which Secured Party becomes aware for which indemnification may be
required under this Section 7.15, and Secured Party may elect (but is not
obligated) to direct the defense thereof, provided that the selection of counsel
shall be subject to Pledgor’s consent, which consent shall not be unreasonably
withheld or delayed. Secured Party and any other Indemnified Person may, in its
reasonable discretion, take such actions as it deems necessary and appropriate
to investigate, defend or settle any event or take other remedial or corrective
actions with respect thereto as may be necessary for the protection of Secured
Party or any of the other Indemnified Persons, its or their interest or the
Pledged Collateral generally. If any Indemnified Person uses in-house counsel
for any of the purposes set forth above or any other purposes under this
Agreement for which Pledgor is responsible to pay or indemnify, Pledgor
expressly agrees that its indemnification obligations include reasonable charges
for such work commensurate with the fees that would otherwise be charged by
outside legal counsel selected by such Indemnified Person in its sole discretion
for the work performed.

(b) Notwithstanding the foregoing, if any insurer agrees to undertake the
defense of an event (an “Insured Event”), Secured Party agrees not to exercise
its right to select counsel to defend the event if that would cause Pledgor’s
insurer to deny coverage; provided, however, that Secured Party reserves the
right to retain counsel to represent it or any of the other Indemnified Persons
with respect to an Insured Event at its sole cost and expense. To the extent
that Secured Party obtains recovery from a third party other than an Indemnified
Person of any of the amounts that Pledgor has paid to Secured Party pursuant to
the provisions of this Section 7.15, then Secured Party shall promptly pay to
Pledgor the amount of such recovery.

 

  7.16.

Setoff

In addition to any other rights Secured Party may have hereunder, under the Loan
Agreement or any of the Loan Documents, or under applicable law or at equity,
upon the occurrence and continuation of any Event of Default Secured Party shall
have the right to apply any property of Pledgor held by Secured Party to reduce
the Obligations.

 

  7.17.

Waiver of Notice; Waiver of Statute of Limitations

Pledgor hereby waives demand, presentment, protest, notice of dishonor or
non-payment, as well as all defenses with respect to any and all instruments,
notice of acceptance hereof, notice of Loans or advances made, credit extended,
collateral received or delivered, or any other action taken by Secured Party in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein or in the other Loan Documents. The
pleading of any statute of limitations

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as a defense to any demand against Pledgor hereunder and under the Loan
Documents is expressly waived by Pledgor.

 

  7.18.

Waiver of Defenses

Pledgor hereby waives any and all defenses and counterclaims it may have or
could interpose in any action or procedure brought by Secured Party to obtain an
order of court recognizing the assignment of or security interests and liens of
Secured Party in and to the Pledged Collateral.

 

  7.19.

Discharge of Pledgor’s Obligations

In addition to and notwithstanding any other provision of this Agreement, the
Loan Agreement or any other Loan Document, Secured Party, in its sole
discretion, shall have the right, but not the obligation, at any time that
Pledgor fails to do so, without prior notice to Pledgor, to: (i) obtain
insurance covering any of the Pledged Collateral as and to the extent required
under the Loan Agreement; (ii) pay for the performance of any of Pledgor’s
obligations hereunder; (iii) discharge taxes, liens, security interests, or
other encumbrances at any time levied or placed on any of the Pledged Collateral
in violation of this Agreement unless Pledgor is in good faith with due
diligence by appropriate proceedings contesting those items; and (iv) pay for
the maintenance and preservation of any of the Pledged Collateral. Such expenses
and advances shall be added to the Secured Obligations until reimbursed to
Secured Party and shall be secured by the Pledged Collateral. Any such payments
and advances by Secured Party shall not be construed as a waiver by Secured
Party of any Default or Event of Default or any other rights, remedies or powers
of Secured Party hereunder, or under the Loan Agreement or any other Loan
Document or otherwise.

 

  7.20.

Jury Waiver

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY KIND BROUGHT
BY EITHER AGAINST THE OTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT, WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN.

 

  7.21.

Entire Agreement

This Agreement, the Loan Agreement and the other Loan Documents to which Pledgor
is a party constitute the entire agreement between Pledgor and Secured Party
with respect to the subject matter hereof and thereof, and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof or
thereof, which are hereby terminated, null and void and of no further force or
effect. Any promises, representations, warranties or guarantees not herein
contained and hereinafter made shall have no force and effect unless in writing,
signed by Pledgor and Secured Party. Neither this Agreement nor any portion
hereof may be changed, modified, amended, restated, waived, supplemented,

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canceled or terminated orally or by any course of dealing or in any other manner
other than by an agreement in writing signed by both Secured Party and Pledgor.
Any waiver of this Agreement by Secured Party shall be limited solely to the
express terms and provisions of such waiver. Each party to this Agreement
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement, the Loan Agreement and the other
Loan Documents and is not relying upon oral representations or statements
inconsistent with the terms and/or provisions of this Agreement.

 

  7.22.

Sole Duty of Secured Party

Secured Party shall have no responsibility for or obligation or duty with
respect to all or any part of the Pledged Collateral or any matter or proceeding
arising out of or relating thereto, including without limitation, any obligation
or duty to collect any sums due in respect thereof or to protect or preserve any
rights pertaining thereto.

 

  7.23.

Secured Party Approvals

Unless expressly provided herein or in the Loan Agreement to the contrary, any
approval, consent, waiver or satisfaction of Secured Party with respect to any
matter that is subject of this Agreement, the Loan Agreement or the other Loan
Documents may be granted or withheld by Secured Party in its sole and absolute
discretion (with any necessary consents of Lenders or Required Lenders, as
applicable, under the Loan Agreement).

 

  7.24.

No Unwritten Oral Agreements

THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PLEDGOR, ADMINISTRATIVE
AGENT AND LENDERS RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
PLEDGOR AND ADMINISTRATIVE AGENT. THIS AGREEMENT SUPERSEDES ALL PRIOR (IF ANY)
ORAL AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS RELATING TO THE SUBJECT MATTER
HEREOF.

 

  7.25.

ULC Shares

The Pledgor acknowledges that certain of the Collateral may now or in the future
consist of ULC Shares, and that it is the intention of the Secured Party and the
Pledgor, notwithstanding anything in this Agreement to the contrary, that
neither the Secured Party nor any of the Lenders should under any circumstances
prior to realization thereon be held to be a “member” or a “shareholder”, as
applicable, of a ULC for the purposes of any ULC Laws. Therefore,
notwithstanding any provisions to the contrary contained in this Agreement, the
Loan Agreement or any other Loan Document, where the Pledgor is the registered
owner of ULC Shares which are Pledged Collateral, the Pledgor will remain the
sole registered owner of such ULC Shares until such time as such ULC Shares are
effectively transferred into the name of the Secured Party, any Lender, or any
other Person on the books and records of the applicable ULC. Accordingly, the
Pledgor shall be entitled to receive and retain for its own account any dividend
on or other distribution, if any, in respect of such ULC Shares (except for any
dividend or distribution comprised of Pledged Shares, which shall be delivered
to the Secured Party to hold hereunder) and shall have the right to vote such
ULC Shares and to control the direction, management and policies of the
applicable ULC to the same extent as the Pledgor would if such ULC Shares were
not pledged to the Secured Party pursuant hereto. Nothing in this Agreement, the
Loan Agreement or any other Loan Document is intended to, and nothing in this
Agreement, the Loan Agreement or any other Loan

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Document shall, constitute the Secured Party, any Lender, or any other Person
other than the Pledgor, a member or shareholder of a ULC for the purposes of any
ULC Laws (whether listed or unlisted, registered or beneficial), until such time
as notice is given to the Pledgor and further steps are taken pursuant hereto or
thereto so as to register the Secured Party, any Lender, or such other Person,
as specified in such notice, as the holder of the ULC Shares. To the extent any
provision hereof would have the effect of constituting the Secured Party or any
Lender as a member or a shareholder, as applicable, of any ULC prior to such
time, such provision shall be severed herefrom and shall be ineffective with
respect to ULC Shares which are Pledged Collateral without otherwise
invalidating or rendering unenforceable this Agreement or invalidating or
rendering unenforceable such provision insofar as it relates to Pledged
Collateral which is not ULC Shares. Except upon the exercise of rights of the
Secured Party to sell, transfer or otherwise dispose of ULC Shares in accordance
with this Agreement, no Pledgor shall cause or permit, or enable a STA Issuer
with respect to any Pledged Shares (a “Pledged Issuer”), that is a ULC, to cause
or permit, the Secured Party or any Lender to: (a) be registered as a
shareholder or member of such Pledged Issuer; (b) have any notation entered in
their favour in the share register of such Pledged Issuer; (c) be held out as
shareholders or members of such Pledged Issuer; (d) receive, directly or
indirectly, any dividends, property or other distributions from such Pledged
Issuer by reason of the Secured Party holding the security interest in the ULC
Shares; or (e) act as a shareholder of such Pledged Issuer, or exercise any
rights of a shareholder including the right to attend a meeting of shareholders
of such Pledged Issuer or to vote its ULC Shares. In furtherance of the
foregoing, the Pledgor shall not cause or permit, or enable a Pledged Issuer to
authorize by corporate resolution or consent, as applicable, the transfer(s) of
any such Pledged Shares to the Secured Party or any Lender without the Secured
Party’s express request to do so.

 

  7.26.

Receiver

Upon the occurrence of any Event of Default which is continuing, the Secured
Party, for the benefit of the Lenders, at the direction of the Required Lenders,
may appoint or reappoint by instrument in writing, any Person or Persons,
whether an officer or officers or an employee or employees of the Secured Party
or not, to be an interim receiver, receiver, receivers, receiver and manager,
liquidator, trustee in bankruptcy or similar Person (hereinafter called a
“Receiver,” which term when used herein shall include a receiver and manager) of
Pledged Collateral (including any interest, income or profits therefrom) and may
remove any Receiver so appointed and appoint another in his/her/its stead. Any
such Receiver shall, so far as concerns responsibility for his/her/its acts, be
deemed the agent of the Pledgor and not of the Secured Party or any Lender, and
neither the Secured Party nor any other Lender shall be in any way responsible
for any misconduct, negligence or non-feasance on the part of any such Receiver
or his/her/its servants, agents or employees. Except as may be otherwise
directed by the Secured Party, at the direction of the Required Lenders, all
money or proceeds received from time to time by such Receiver in carrying out
his/her/its appointment shall be received in trust for and be paid over to the
Secured Party. Every such Receiver may be vested with all or any of the rights
and powers of the Secured Party. The identity of the Receiver, its replacement
and its remuneration shall be within the sole and unfettered discretion of the
Required Lenders.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Pledge
Agreement as of the date first written above.

 

PLEDGOR:

MAD CATZ INTERACTIVE, INC.

as the Pledgor

By:

 

 /s/ Darren Richardson

Name:

 

 Darren Richardson

Title:

 

 President & CEO

SECURED PARTY:

NEWSTAR BUSINESS CREDIT, LLC

as the Secured Party

By:

 

 /s/ Greg Gentry

Name:

 

 Greg Gentry

Title:

 

 SVP

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Pledge Agreement

Schedule 1.1

Description of Initial Pledged Shares

 

Name of

Issuer

 

 

    Class or Series of    
Equity Interest

 

 

    Number of    
Shares

 

 

Certificate
    Representing    
Equity Interest

 

 

    Percentage of Equity    
Interest Pledged

 

Mad Catz, Inc.

  Common   12,502   12   100%        

1328158

Ontario Inc.

  Common   10,300,000   Un-numbered   100%        

Description of Initial Partnership Rights

 

Name of

Issuer

 

 

    Class or Series of    
Equity Interest

 

 

    Number of    
Interests/Units

 

 

Certificate
    Representing    
Equity Interest

 

 

    Percentage of Equity    
Interest Pledged

 

N/A

               

Description of Initial LLC Units Pledged

 

Name of

Issuer

 

 

    Class or Series of    
Equity Interest

 

 

 Number of
Units/
  Membership  
Interests

 

 

Certificate
    Representing    
Equity Interest

 

 

    Percentage of Equity    
Interest Pledged

 

N/A

               

Description of Initial ULC Shares Pledged

 

Name of

Issuer

 

 

    Class or Series of    
Equity Interest

 

 

    Number of    
Shares

 

 

Certificate
    Representing    
Equity Interest

 

 

    Percentage of Equity    
Interest Pledged

 

N/A