exv10w37






EXECUTION COPY




IMAX CORPORATION

EXHIBIT 10.37




SECOND AMENDED AND RESTATED CREDIT AGREEMENT



by and between



IMAX CORPORATION



as Borrower



- and -



WELLS FARGO CAPITAL FINANCE CORPORATION CANADA



as Agent, Lender, Sole Lead Arranger and Sole Bookrunner



- and -



EXPORT DEVELOPMENT CANADA



as Lender



Dated: June 2, 2011



 









 





TABLE OF CONTENTS




	 	 	 	 	 

	ARTICLE 1 DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	1.1    “Accounts”
	 	 	2	 
	1.2    “Adjusted Euro Dollar Rate”
	 	 	2	 
	1.3    “Affiliate” or “affiliate”
	 	 	3	 
	1.4    “Agreed Currency”
	 	 	3	 
	1.5    “Application”
	 	 	3	 
	1.6    “Appraisal”
	 	 	3	 
	1.7    “Appraiser”
	 	 	3	 
	1.8    “Arranger”
	 	 	3	 
	1.9    “Assignment Agreement”
	 	 	4	 
	1.10   “Assignment of Capital Leases and Operating Leases”
	 	 	4	 
	1.11   “Assignment of Contracts on Backlog and Long Term Receivables Contracts”
	 	 	4	 
	1.12   “Availability Reserves”
	 	 	4	 
	1.13   “BIA”
	 	 	4	 
	1.14   “Blocked Account Agreement”
	 	 	4	 
	1.15  “Blocked Accounts”
	 	 	5	 
	1.16  “BMO”
	 	 	5	 
	1.17  “BMO FEFC Term Sheet”
	 	 	5	 
	1.18  “BMO Term Sheet”
	 	 	5	 
	1.19  “Borrowing Base Certificate”
	 	 	5	 
	1.20  “Business Day”
	 	 	5	 
	1.21  “Capital Lease Obligations”
	 	 	5	 
	1.22  “Capital Leases”
	 	 	6	 
	1.23  “Capital Leases Lending Formula”
	 	 	6	 
	1.24  “Cash and Excess Availability”
	 	 	6	 
	1.25  “Cash Dominion Event”
	 	 	6	 
	1.26  “CCAA”
	 	 	6	 
	1.27  “CCAA Plan”
	 	 	6	 
	1.28  “Client”
	 	 	6	 
	1.29  “Code”
	 	 	6	 
	1.30  “Collateral”
	 	 	6	 
	1.31  “Commitments”
	 	 	7	 
	1.32  “Compliance Certificate”
	 	 	7	 
	1.33  “Contracts and Leases”
	 	 	7	 
	1.34  “Contracts in Backlog”
	 	 	7	 
	1.35  “Default”
	 	 	7	 
	1.36  “DMR Fees”
	 	 	7	 
	1.37  “EBITDA”
	 	 	8	 
	1.38  “EDC”
	 	 	8	 
	1.39  “EDC Indemnity Agreement”
	 	 	8	 
	1.40  “Eligible Accounts”
	 	 	8	 
	1.41  “Eligible Capital Leases”
	 	 	10	 
	1.42  “Eligible Contracts in Backlog”
	 	 	11	 






 









 






	 	 	 	 	 

	1.43  “Eligible Contracts, Leases and Inventory”
	 	 	13	 
	1.44  “Eligible Finished Goods Inventory”
	 	 	13	 
	1.45  “Eligible Long Term Receivables Contracts”
	 	 	13	 
	1.46  “Eligible Operating Leases”
	 	 	14	 
	1.47  “Eligible Transferee”
	 	 	15	 
	1.48  “Environmental Laws”
	 	 	16	 
	1.49  “Equipment”
	 	 	16	 
	1.50  “Equivalent Amount”
	 	 	16	 
	1.51  “ERISA”
	 	 	16	 
	1.52  “ERISA Affliliate”
	 	 	16	 
	1.53  “ERISA Event”
	 	 	17	 
	1.54  “Euro Dollar Rate”
	 	 	17	 
	1.55  “Euro Dollar Rate Loans”
	 	 	18	 
	1.56  “Event of Default”
	 	 	18	 
	1.57  “Excess Availability”
	 	 	18	 
	1.58  “Excluded Accounts”
	 	 	18	 
	1.59  “Fair Market Value”
	 	 	18	 
	1.60  “Financing Agreements”
	 	 	19	 
	1.61  “Finished Goods Inventory”
	 	 	19	 
	1.62  “Finished Goods Inventory Lending Formula”
	 	 	19	 
	1.63  “Fiscal Quarter”
	 	 	19	 
	1.64  “Fixed Charge Coverage Ratio”
	 	 	19	 
	1.65  “Funded Debt”
	 	 	20	 
	1.66  “Funding Bank”
	 	 	20	 
	1.67  “Future Permitted Transaction”
	 	 	21	 
	1.68  “FX Guarantee”
	 	 	21	 
	1.69  “GAAP”
	 	 	21	 
	1.70  “General Security Agreement”
	 	 	21	 
	1.71  “Governmental Authority”
	 	 	21	 
	1.72  “Hazardous Materials”
	 	 	21	 
	1.73  “Hedging Agreement”
	 	 	22	 
	1.74  “Information Certificate”
	 	 	22	 
	1.75  “Interest Period”
	 	 	22	 
	1.76  “Interest Rate”
	 	 	22	 
	1.77  “Inventory”
	 	 	23	 
	1.78  “IP Collateral”
	 	 	23	 
	1.79  “IP Collateral License Agreement”
	 	 	23	 
	1.80  “IP Grace Period”
	 	 	23	 
	1.81  “Lenders”
	 	 	23	 
	1.82  “Lending Formulas”
	 	 	23	 
	1.83  “Letter of Credit Accommodations”
	 	 	23	 
	1.84  “License Agreements”
	 	 	24	 
	1.85  “Lien”
	 	 	24	 
	1.86  “Liquidation Expenses”
	 	 	24	 
	1.87  “Loans”
	 	 	24	 
	1.88  “Long Term Receivable Contracts Lending Formula”
	 	 	24	 






- ii -









 






	 	 	 	 	 

	1.89    “Long Term Receivables Contracts”
	 	 	24	 
	1.90    “Mark to Market Exposure”
	 	 	24	 
	1.91    “Maturity Date”
	 	 	25	 
	1.92    “Maximum Credit”
	 	 	25	 
	1.93    “Maximum Revolving Credit”
	 	 	25	 
	1.94    “Maximum Revolving Term Credit”
	 	 	25	 
	1.95    “Measurement Date”
	 	 	25	 
	1.96    “Multiemployer Plan”
	 	 	25	 
	1.97    “Net Amount of Eligible Accounts”
	 	 	25	 
	1.98    “Non-Funding Lender”
	 	 	25	 
	1.99    “Notice”
	 	 	25	 
	1.100  “Obligations”
	 	 	26	 
	1.101  “Obligor”
	 	 	26	 
	1.102  “OFAC”
	 	 	26	 
	1.103  “Operating Leases”
	 	 	26	 
	1.104  “Operating Leases Lending Formula”
	 	 	26	 
	1.105  “Other Currency”
	 	 	26	 
	1.106  “Other Lender”
	 	 	27	 
	1.107  “Patriot Act”
	 	 	27	 
	1.108  “Payment Account”
	 	 	27	 
	1.109  “Pension Plans”
	 	 	27	 
	1.110  “Permitted Liens”
	 	 	27	 
	1.111  “Person” or   “person”
	 	 	27	 
	1.112  “Plan”
	 	 	27	 
	1.113  “PPSA”
	 	 	27	 
	1.114  “Priority Payables Reserve”
	 	 	28	 
	1.115  “Pro Rata Share”
	 	 	28	 
	1.116  “Real Property”
	 	 	28	 
	1.117  “Real Property Lending Formula”
	 	 	28	 
	1.118  “Receiver”
	 	 	28	 
	1.119  “Records”
	 	 	28	 
	1.120  “Report”
	 	 	29	 
	1.121  “Required Lenders”
	 	 	29	 
	1.122  “Revolving Loans”
	 	 	29	 
	1.123  “Revolving Term Loan”
	 	 	29	 
	1.124  “Revolving Term Loan Term Conversion Date”
	 	 	29	 
	1.125  “Sanctioned Entity”
	 	 	29	 
	1.126  “Sanctioned Person”
	 	 	29	 
	1.127  “Secured Hedging Agreement”
	 	 	30	 
	1.128  “Secured Parties”
	 	 	30	 
	1.129  “Settlement Date”
	 	 	30	 
	1.130  “Spot Rate”
	 	 	30	 
	1.131  “Studios”
	 	 	30	 
	1.132  “Subsidiary”
	 	 	30	 
	1.133  “Trailing Cash Collections”
	 	 	31	 
	1.134  “Unfunded Capital Expenditures”
	 	 	31	 






- iii -









 






	 	 	 	 	 

	1.135  “UCC”
	 	 	31	 
	1.136  “US Dollar Amount”
	 	 	31	 
	1.137  “USERP”
	 	 	31	 
	1.138  “US First Rate”
	 	 	31	 
	1.139  “US Pension Plan”
	 	 	31	 
	1.140  “US Prime Rate”
	 	 	31	 
	1.141  “US Prime Rate Loans”
	 	 	32	 
	1.142  “US Reference Bank”
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 2 CREDIT FACILITIES
	 	 	32	 
	 
	 	 	 	 
	2.1 Revolving Loans
	 	 	32	 
	2.2  Letter of Credit Accommodations
	 	 	34	 
	2.3  Revolving Term Loan
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 3 INTEREST AND FEES
	 	 	38	 
	 
	 	 	 	 
	3.1  Interest
	 	 	38	 
	3.2   Increased Costs and Changes in Law
	 	 	40	 
	3.3  Servicing Fee
	 	 	44	 
	3.4  Unused Line Fee
	 	 	44	 
	3.5  Closing Fee
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 4 CONDITIONS PRECEDENT
	 	 	45	 
	 
	 	 	 	 
	4.1   Conditions Precedent to the Availability of Loans and Letter of Credit Accommodations
	 	 	45	 
	4.2   Conditions Precedent to the Availability of All Loans and Letter of Credit
Accommodations
	 	 	45	 
	 
	 	 	 	 
	ARTICLE 5 INTENTIONALLY DELETED
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 6 COLLECTION AND ADMINISTRATION
	 	 	46	 
	 
	 	 	 	 
	6.1   Borrower’s Loan Account
	 	 	46	 
	6.2   Statements
	 	 	46	 
	6.3   Collection of Accounts
	 	 	46	 
	6.4   Payments
	 	 	48	 
	6.5   Authorization to Make Loans and Letter of Credit Accommodations
	 	 	49	 
	6.6   Use of Proceeds
	 	 	49	 
	6.7   Pro Rata Treatment
	 	 	49	 
	6.8   Obligations Several; Independent Nature of Lenders’ Rights
	 	 	50	 
	 
	 	 	 	 
	ARTICLE 7 COLLATERAL REPORTING AND COVENANTS
	 	 	50	 
	 
	 	 	 	 
	7.1   Collateral Reporting
	 	 	50	 
	7.2   Accounts Covenants
	 	 	51	 
	7.3   Inventory Covenants
	 	 	53	 
	7.4   Equipment Covenants
	 	 	53	 
	7.5   IP Collateral Covenants
	 	 	54	 
	7.6   Real Property Covenants
	 	 	56	 
	7.7   Power of Attorney
	 	 	56	 
	7.8   Right to Cure
	 	 	57	 






 - iv -









 






	 	 	 	 	 

	7.9   Access to Premises
	 	 	57	 
	 
	 	 	 	 
	ARTICLE 8 REPRESENTATIONS AND WARRANTIES
	 	 	58	 
	 
	 	 	 	 
	8.1    Corporate Existence, Power and Authority; Subsidiaries; Solvency
	 	 	58	 
	8.2    Financial Statements; No Material Adverse Change
	 	 	59	 
	8.3    Chief Executive Office; Collateral Locations
	 	 	59	 
	8.4    Priority of Liens; Title to Properties
	 	 	59	 
	8.5    Tax Returns
	 	 	59	 
	8.6    Litigation
	 	 	60	 
	8.7    Compliance with Other Agreements and Applicable Laws
	 	 	60	 
	8.8    Bank Accounts
	 	 	60	 
	8.9    Accuracy and Completeness of Information
	 	 	60	 
	8.10   Status of Pension Plans
	 	 	61	 
	8.11   Environmental Compliance
	 	 	62	 
	8.12   Inter-Creditor and Subordination Agreements
	 	 	63	 
	8.13   Survival of Warranties; Cumulative
	 	 	63	 
	8.14   U.S. Legislation
	 	 	63	 
	8.15   Material Operating Subsidiaries
	 	 	64	 
	 
	 	 	 	 
	ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS
	 	 	65	 
	 
	 	 	 	 
	9.1    Maintenance of Existence
	 	 	65	 
	9.2    New Collateral Locations
	 	 	65	 
	9.3    Compliance with Laws, Regulations, Etc.
	 	 	65	 
	9.4    Payment of Taxes and Claims
	 	 	66	 
	9.5    Insurance
	 	 	67	 
	9.6    Financial Statements and Other Information
	 	 	68	 
	9.7    Sale of Assets, Consolidation, Amalgamation, Dissolution, Etc.
	 	 	70	 
	9.8    Liens
	 	 	71	 
	9.9    Indebtedness
	 	 	72	 
	9.10  Loans, Investments, Guarantees, Etc.
	 	 	73	 
	9.11  Dividends and Redemptions
	 	 	75	 
	9.12  Transactions with Affiliates
	 	 	75	 
	9.13  Fixed Charge Coverage Ratio
	 	 	75	 
	9.14  Excess Availability
	 	 	76	 
	9.15  Intentionally Deleted
	 	 	76	 
	9.16  Intellectual Property
	 	 	76	 
	9.17  Additional Bank Accounts
	 	 	76	 
	9.18  Applications under the Companies’ Creditors Arrangement Act
	 	 	76	 
	9.19  Supplemental Executive Retirement Plan
	 	 	76	 
	9.20  Operation of Pension Plans
	 	 	77	 
	9.21  Costs and Expenses
	 	 	78	 
	9.22  Further Assurances
	 	 	78	 
	9.23  Cash and Excess Availability Covenant
	 	 	79	 
	9.24  Funded Debt
	 	 	79	 
	9.25  No Material Changes
	 	 	79	 
	9.26  Hedging Transactions
	 	 	79	 






- v -









 






	 	 	 	 	 

	ARTICLE 10 EVENTS OF DEFAULT AND REMEDIES
	 	 	80	 
	 
	 	 	 	 
	10.1   Events of Default
	 	 	80	 
	10.2   Remedies
	 	 	83	 
	 
	 	 	 	 
	ARTICLE 11 ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
	 	 	87	 
	 
	 	 	 	 
	11.1   Assignment and Participations
	 	 	87	 
	11.2   Appointment of Agent
	 	 	89	 
	11.3   Agent’s Reliance, Etc.
	 	 	90	 
	11.4   Agent and Affiliates
	 	 	90	 
	11.5   Lender Credit Decision
	 	 	91	 
	11.6   Indemnification
	 	 	91	 
	11.7   Failure to Act
	 	 	91	 
	11.8   Concerning the Collateral and the Related Financing Agreements
	 	 	92	 
	11.9   Field Audit, Examination Reports and other Information; Disclaimer by Lenders
	 	 	92	 
	11.10  Collateral Matters
	 	 	92	 
	11.11  Successor Agent
	 	 	93	 
	11.12  Setoff and Sharing of Payments
	 	 	94	 
	11.13  Advances; Payments; Non-Funding Lenders; Information; Actions in Concert
	 	 	94	 
	11.14  Meetings of Lenders
	 	 	97	 
	11.15  Approval of Lenders and Agent
	 	 	97	 
	 
	 	 	 	 
	ARTICLE 12 JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
	 	 	98	 
	 
	 	 	 	 
	12.1   Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver
	 	 	98	 
	12.2   Waiver of Notices
	 	 	100	 
	12.3   Amendments and Waivers
	 	 	100	 
	12.4   Waiver of Counterclaim
	 	 	100	 
	12.5   Indemnification
	 	 	100	 
	 
	 	 	 	 
	ARTICLE 13 TERM OF AGREEMENT; MISCELLANEOUS
	 	 	101	 
	 
	 	 	 	 
	13.1   Term
	 	 	101	 
	13.2   Notice
	 	 	103	 
	13.3   Partial Invalidity
	 	 	103	 
	13.4   Successors
	 	 	103	 
	13.5   Entire Agreement
	 	 	103	 
	13.6   Headings
	 	 	103	 
	13.7   Judgment Currency
	 	 	104	 
	13.8   Counterparts and Facsimile
	 	 	104	 
	13.9   Patriot Act Notice
	 	 	104	 
	 
	 	 	 	 
	ARTICLE 14 ACKNOWLEDGMENT AND RESTATEMENT
	 	 	104	 
	 
	 	 	 	 
	14.1   Existing Obligations
	 	 	104	 
	14.2   Acknowledgment of Security Interests
	 	 	105	 
	14.3   Existing Loan Agreement
	 	 	105	 
	14.4   Restatement
	 	 	105	 






- vi -









 





INDEX TO

EXHIBITS AND SCHEDULES




	 	 	 

	Exhibit A

	 	Information Certificate
	Schedule 1.19

	 	Borrowing Base Certificate
	Schedule 1.22

	 	Capital Leases
	Schedule 1.32

	 	Compliance Certificate
	Schedule 1.34

	 	Contracts in Backlog
	Schedule 1.58

	 	Excluded Accounts
	Schedule 1.61

	 	Finished Goods Inventory
	Schedule 1.89

	 	Long Term Receivables Contracts
	Schedule 1.103

	 	Operating Leases
	Schedule 4.1(a)

	 	Closing Agenda
	Schedule 7.1(a)(iv)(B)

	 	Weekly Trailing Cash Collections
	Schedule 7.1(a)(iv)(C)

	 	Trailing Cash Collections
	Schedule 8.1

	 	Corporate Structure Chart
	Schedule 8.4

	 	Existing Liens
	Schedule 8.8

	 	Bank Accounts
	Schedule 8.9

	 	Restrictions on Assignability in Contracts and Leases
	Schedule 9.9

	 	Existing Indebtedness
	Schedule 9.10A

	 	Guarantees
	Schedule 9.10B

	 	Existing Loans, Advances and Guarantees
	Schedule 11.1(a)(iv)

	 	Assignment Agreement








 - vii -









 








SECOND AMENDED AND RESTATED CREDIT AGREEMENT




This Second Amended and Restated Credit Agreement dated June 2, 2011 is entered into by and between
IMAX Corporation, a corporation incorporated pursuant to the laws of Canada (  “Borrower”), Wells
Fargo Capital Finance Corporation Canada (formerly known as Wachovia Capital Finance Corporation
(Canada)), an Ontario corporation, as agent for and on behalf of the Secured Parties (in such
capacity,   “Agent”) and as a Lender, and Export Development Canada, as a Lender.




W I T N E S S E T H:




WHEREAS Borrower and Congress Financial Corporation (Canada) (“Original Lender”) entered into a
loan agreement dated February 6, 2004 which was amended pursuant to:





	 	(a)	 	a first amendment to the Loan Agreement dated June 30, 2005;
	 
	 	(b)	 	a second amendment to the Loan Agreement dated May 16, 2006;
	 
	 	(c)	 	a second amendment to the Loan Agreement dated May 16, 2006 (which amended,
restated and replaced in its entirety the second amendment to the Loan Agreement
referred to in subparagraph (b) above);
	 
	 	(d)	 	a third amendment to the Loan Agreement dated September 30, 2007;
	 
	 	(e)	 	a fourth amendment to the Loan Agreement dated December 5, 2007; and
	 
	 	(f)	 	a fifth amendment to the Loan Agreement dated May 5, 2008,





(collectively, the   “Original Loan Agreement”);




WHEREAS Lenders, Agent and Borrower amended and restated the Original Loan Agreement pursuant to an
amended and restated loan agreement dated November 16, 2009 as amended by a first amendment to the
amended and restated credit agreement dated January 21, 2011 (as amended, modified, supplemented,
extended, renewed, restated or replaced from time to time, the   “Existing Loan Agreement”);




WHEREAS Lenders, Agent and Borrower desire to amend and restate the Existing Loan Agreement as set
forth herein; and




WHEREAS each Lender is willing to (severally and not jointly) make loans and provide such financial
accommodations to Borrower on a pro rata basis according to their Commitment to Borrower on the
terms and conditions set forth herein and Agent is willing to act as agent for Lenders on the terms
and conditions set forth herein and the other Financing Agreements;




NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:




 









 








ARTICLE 1

DEFINITIONS




All terms used herein which are defined in the PPSA shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context otherwise requires. All
references to Borrower, Lenders and Agent pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors and assigns. The
words   “hereof”,   “herein”,   “hereunder”,   “this Agreement” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any particular provision of this
Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. The word   “including” when used in this Agreement shall
mean   “including, without limitation”. References herein to any statute or any provision thereof
include such statute or provision as amended, revised, re-enacted, and/or consolidated from time to
time and any successor statute thereto. An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 12.3 or,
without derogating from the cure rights, if any, provided to Borrower in Article 10 hereof,
is cured in a manner satisfactory to Agent, if such Event of Default is capable of being cured as
determined by Agent. Any accounting term used herein unless otherwise defined in this Agreement
shall have the meanings customarily given to such term in accordance with GAAP. If, after the date
hereof, there shall be any change in the application of the accounting principles used in
preparation of Borrower’s financial statements as a result of any changes in GAAP including
International Financial Reporting Standards becoming applicable to Borrower, which changes (a)
result in a change in the method of calculation of, or (b) impact on, financial covenants or other
covenants applicable to Borrower found in this Agreement or the other Financing Agreements,
Borrower and Agent shall promptly enter into negotiations in good faith in order to amend such
financial covenants or other covenants so as to reflect equitably such changes with the desired
result that the evaluations of Borrower’s financial condition shall be the same after such changes
as if such changes had not been made. Canadian Dollars and the sign   “CDN$” mean lawful money of
Canada.   “US Dollars” and the sign   “$” mean lawful money of the United States of America. All
monetary amounts referred to in this Agreement are in US Dollars unless otherwise stated. For
purposes of this Agreement, the following terms shall have the respective meanings given to them
below:





	1.1	 	  “Accounts”





“Accounts” shall mean all present and future rights of Borrower to payment for goods sold or leased
or for services rendered, including the right of Borrower to payments made pursuant to the
Contracts and Leases, which are not evidenced by instruments or chattel paper, and whether or not
earned by performance, excluding Excluded Accounts.





	1.2	 	  “Adjusted Euro Dollar Rate”





“Adjusted Euro Dollar Rate” shall mean, with respect to each Interest Period for any Euro Dollar
Rate Loan, the rate per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of
one percent (1%)) determined by dividing:




 - 2 - 









 






	(a)	 	the Euro Dollar Rate for such Interest Period by:
	 
	(b)	 	a percentage equal to:






	 	(i)	 	one (1) minus
	 
	 	(ii)	 	the Reserve Percentage.





For purposes hereof,   “Reserve Percentage” shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for determining the reserve
requirement which is or would be applicable to deposits of US Dollars in a non-United States or an
international banking office of the US Reference Bank, used to fund a Euro Dollar Rate Loan or any
Euro Dollar Rate Loan made with the proceeds of such deposit, whether or not the US Reference Bank,
actually holds or has made any such deposits or loans. The Adjusted Euro Dollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.





	1.3	 	  “Affiliate” or   “affiliate”





“Affiliate” or   “affiliate” shall have the meaning ascribed thereto in the Business Corporations Act
(Canada).





	1.4	 	  “Agreed Currency”





“Agreed Currency” shall have the meaning set forth in Section 13.7 hereof.





	1.5	 	  “Application”





“Application” shall mean the Application, Indemnity and Consent Foreign Exchange Facility Guarantee
between Borrower and BMO.





	1.6	 	  “Appraisal”





“Appraisal” shall mean an appraisal conducted by the Appraiser at the cost of Borrower, such
appraisal to be in form, scope, methodology and with assumptions acceptable to Agent and addressed
to Agent and Lenders and upon which Agent and Lenders are permitted to rely.





	1.7	 	  “Appraiser”





“Appraiser” means Hilco Appraisal Services, LLC, Great American Group or any other appraiser
mutually acceptable to Agent and Borrower.





	1.8	 	  “Arranger”





“Arranger” shall mean Wells Fargo Capital Finance Corporation Canada (formerly known as Wachovia
Capital Finance Corporation (Canada)) in its role hereunder as sole lead arranger and bookrunner.




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	1.9	 	  “Assignment Agreement”





“Assignment Agreement” shall have the meaning set forth in Section 11.1(a)(iv) hereof.





	1.10	 	  “Assignment of Capital Leases and Operating Leases”





“Assignment of Capital Leases and Operating Leases” shall mean the amended and restated Assignment
of Capital Leases and Operating Leases dated the date hereof between Borrower, as assignor, and
Agent, as assignee, as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.





	1.11	 	  “Assignment of Contracts on Backlog and Long Term Receivables Contracts”





“Assignment of Contracts on Backlog and Long Term Receivables Contracts” shall mean the amended and
restated Assignment of Contracts in Backlog and Long Term Receivables Contracts dated the date
hereof between Borrower, as assignor, and Agent, as assignee, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.





	1.12	 	  “Availability Reserves”





“Availability Reserves” shall mean, as of any date of determination, such amounts as Agent may from
time to time establish and revise reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrower under the Lending Formulas: (a) to
reflect events, conditions, contingencies or risks which, as determined by Agent, do or may
reasonably be expected to affect either: (i) the Collateral or any other property which is security
for the Obligations or its value; (ii) the assets or business of Borrower or any Obligor; or (iii)
the security interests and other rights of Agent in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect Agent’s good faith belief that any collateral
report or financial information furnished by or on behalf of Borrower or any Obligor to Agent is or
may have been incomplete, inaccurate or misleading in any material respect; or (c) to reflect
Agent’s good faith estimate of the amount of any Priority Payables Reserve; or (d) in respect of
any state of facts which Agent determines, in good faith, constitutes an Event of Default or
Default; or (e) to reflect Agent’s good faith estimate of the Mark to Market Exposure. The amount
of any Availability Reserve established by Agent shall have a reasonable relationship to the event,
condition or circumstance which is the basis for such Availability Reserve as determined by Agent
in good faith.





	1.13	 	“BIA”





“BIA” shall mean the Bankruptcy and Insolvency Act (Canada).





	1.14	 	  “Blocked Account Agreement”





“Blocked Account Agreement” shall mean the amended and restated blocked account agreement dated on
or about the date hereof among Borrower, Agent and the Bank of Montreal, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.




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	1.15	 	  “Blocked Accounts”





“Blocked Accounts” shall have the meaning set forth in Section 6.3(a) hereof.





	1.16	 	  “BMO”





“BMO” shall mean Bank of Montreal.





	1.17	 	  “BMO FEFC Term Sheet”





“BMO FEFC Term Sheet” shall mean the term sheet dated November 27, 2008 between Borrower and BMO
with respect to a $5,000,000 Foreign Exchange Forward Contract Facility by BMO in favour of
Borrower.





	1.18	 	  “BMO Term Sheet”





“BMO Term Sheet” shall mean the term sheet dated July 21, 2010, between Borrower and BMO with
respect to the issuance of:





	 	(a)	 	a $10,000,000 Demand, Revolving Letter of Credit Facility by BMO in favour of
Borrower (the   “BMO LC Facility”);
	 
	 	(b)	 	a CDN$35,000 Mastercard Businesscard Facility by BMO in favour of Borrower (the
  “Mastercard Facility”); and
	 
	 	(c)	 	a $3,000,000 Directline for Business — Foreign Exchange Settlement Facility by
BMO in favour of Borrower (the   “F/X Facility”).






	1.19	 	  “Borrowing Base Certificate”





“Borrowing Base Certificate” shall mean the borrowing base certificate, together with the completed
exhibits thereto, to be delivered by Borrower pursuant to, inter alia, Section 7.1, the
form of which is attached herewith as Schedule 1.19.





	1.20	 	  “Business Day”





“Business Day” shall mean a day (other than a Saturday, Sunday or statutory holiday in Ontario,
Illinois or New York) on which Agent’s Toronto office and banks in Chicago and New York City are
open for business in the normal course.





	1.21	 	  “Capital Lease Obligations”





“Capital Lease Obligations” shall mean all monetary obligations of Borrower and its Subsidiaries
under a capital lease and, for the purposes of this Agreement, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP.




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	1.22	 	  “Capital Leases”





“Capital Leases” shall mean, collectively, all of the leases listed on Schedule 1.22, as
may be amended, updated and/or restated from time to time in accordance with the reporting
requirements set out in Section 7.1(a) hereof, each of which are theatre system leases that
transfer substantially all of the benefits and risks of ownership to Clients and meet the criteria
established by the FASB Statement of Financial Accounting Standards No. 13.





	1.23	 	  “Capital Leases Lending Formula”





“Capital Leases Lending Formula” shall have the meaning set forth in Section 2.1(a)(iii)
hereof.





	1.24	 	  “Cash and Excess Availability”





“Cash and Excess Availability” shall mean the US Dollar Amount as determined by Agent, equal to the
sum of (a) Excess Availability, (b) cash, and (c) in Agent’s discretion, highly liquid securities
with a known market value.





	1.25	 	  “Cash Dominion Event”





“Cash Dominion Event” shall mean the occurrence and continuance of the earlier of: (i) an Event of
Default; or (ii) the Excess Availability falling below $5,000,000.





	1.26	 	  “CCAA”





“CCAA” shall mean the Companies’ Creditors Arrangement Act (Canada).





	1.27	 	  “CCAA Plan”





“CCAA Plan” shall have the meaning set forth in Section 9.18 hereof.





	1.28	 	  “Client”





“Client” shall mean any Person, other than Borrower, who is now or hereafter becomes a party to a
Capital Lease, an Operating Lease, Contract in Backlog and/or a Long Term Receivables Contract, as
applicable, and   “Clients” means all such Persons.





	1.29	 	  “Code”





“Code” shall mean the United States Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.





	1.30	 	  “Collateral”





“Collateral” shall mean, collectively, (a) the Real Property and Collateral (as such term is
defined in the General Security Agreement) and (b) all of the undertaking, property and assets,
real or personal, tangible or intangible, now existing or hereafter acquired by Borrower or any
Obligor that may at any time be or become subject to a Lien in favour of Agent to secure any or




 - 6 - 









 








all of the Obligations; provided that, for greater certainty, any and all assets of IMAX China
(Hong Kong), Limited and of one or more of the Borrower’s Subsidiaries to be organized by the
Borrower under the laws of the People’s Republic of China shall be excluded from, and not form part
of, the Collateral.





	1.31	 	  “Commitments”





“Commitments” shall mean (a) as to any Lender with respect to Revolving Loans, the aggregate of
such Lender’s Revolving Loan Commitment as set forth below such Lender’s name on the signature page
of this Agreement or, if such Lender’s name does not appear on the signature page of this
Agreement, in the most recent Assignment Agreement executed by such Lender; (b) as to any Lender
with respect to Revolving Term Loans, the aggregate amount of such Lender’s Revolving Term Loan
Commitment as set forth below such Lender’s name on the signature page of this Agreement or, if
such Lender’s name does not appear on the signature page of this Agreement, in the most recent
Assignment Agreement executed by such Lender; and (c) as to all Lenders, the aggregate of all
Lenders’ Revolving Loan Commitments and Revolving Term Loan Commitments to Borrower, which
aggregate commitment is One Hundred Ten Million US Dollars ($110,000,000).





	1.32	 	  “Compliance Certificate”





“Compliance Certificate” shall mean the compliance certificate substantially in the form attached
hereto as Schedule 1.32.





	1.33	 	  “Contracts and Leases”





“Contracts and Leases” shall mean, collectively, any one or all of the Capital Leases, the
Operating Leases, the Contracts in Backlog and the Long Term Receivable Contracts.





	1.34	 	  “Contracts in Backlog”





“Contracts in Backlog” shall mean, collectively, contracts designated by Borrower internally as
  “contracts in backlog” as listed on Schedule 1.34, as may be amended, updated and/or
restated from time to time in accordance with requirements set out in Section 7.1(a)
hereof.





	1.35	 	  “Default”





“Default” shall mean an event, circumstance or omission which, with any of the giving of notice or
a lapse of time or both would constitute an Event of Default.





	1.36	 	  “DMR Fees”





“DMR Fees” shall mean fees paid to Borrower by film studios in respect of the exhibition of
commercial films in the IMAX theatre network.




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	1.37	 	  “EBITDA”





“EBITDA” shall mean, for any period with respect to Borrower, an amount equal to the consolidated
net income or net loss before interest, taxes, depreciation, amortization and any other non-cash
and non-operating charges or other impairments as approved by Agent. For purposes of calculating
compliance with the financial covenants in Sections 9.13 and 9.24 hereof, EBITDA
shall be calculated without taking into account any contribution to consolidated net income or net
loss with respect to (i) any Future Permitted Transaction and (ii) non-cash equity income or loss
from joint ventures.





	1.38	 	  “EDC”





“EDC” shall mean Export Development Canada.





	1.39	 	  “EDC Indemnity Agreement”





“EDC Indemnity Agreement” shall mean the indemnity agreement dated April 24, 2008 given by Borrower
and certain Obligors in favour of EDC.





	1.40	 	  “Eligible Accounts”





“Eligible Accounts” shall mean Accounts created by Borrower which are and continue to be acceptable
to Agent based on the criteria set forth below.




In general, Accounts shall be Eligible Accounts if:





	 	(a)	 	such Accounts arise from the actual and bona fide sale and delivery of goods by
Borrower or rendition of services by Borrower in the ordinary course of its business
which transactions are completed in accordance with the terms and provisions contained
in any documents related thereto;
	 
	 	(b)	 	such Accounts are not unpaid more than sixty (60) days after the original due
date for same;
	 
	 	(c)	 	such Accounts are not unpaid more than ninety (90) days after the date of the
original invoice for them;
	 
	 	(d)	 	such Accounts comply with the terms and conditions contained in Section
7.2(b) hereof;
	 
	 	(e)	 	such Accounts are not contra accounts, do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which payment
by the account debtor may be conditional or contingent;
	 
	 	(f)	 	the chief executive office of the account debtor with respect to such Accounts
is located in Canada or in the United States of America or, if the chief executive
office of the account debtor is not located in Canada or in the United States of
America, the Account is payable in Canadian Dollars or US Dollars and, at




 - 8 - 









 






	 	 	 	Agent’s option, if either: (i) the account debtor has delivered to Borrower an
irrevocable letter of credit issued or confirmed by a bank satisfactory to Agent and
payable only in Canada in the currency in which the Account is denominated,
sufficient to cover such Account, in form and substance satisfactory to Agent and,
if required by Agent, the original of such letter of credit has been delivered to
Agent or Agent’s agent and the issuer thereof has been notified of the assignment of
the proceeds of such letter of credit to Agent; or (ii) such Account is fully
insured under credit insurance payable to Agent issued by an insurer and on terms
and in an amount acceptable to Agent; or (iii) such Account is otherwise acceptable
in all respects to Agent (subject to such lending formula with respect thereto as
Agent may determine);
	 
	 	(g)	 	such Accounts do not consist of progress billings (other than those in respect
of billings to film studios in respect of DMR Fees), bill and hold invoices or
retainage invoices, except as to bill and hold invoices, if Agent shall have received
an agreement in writing from the account debtor, in form and substance satisfactory to
Agent, confirming the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
	 
	 	(h)	 	the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in transactions
which may give rise to, any right of set-off against such Accounts (but the portion of
the Accounts of such account debtor in excess of the amount at any time and from time
to time owed by Borrower to such account debtor or claimed owed by such account debtor
may be deemed Eligible Accounts);
	 
	 	(i)	 	there are no facts, events or occurrences which would impair the validity,
enforceability or collectability of such Accounts or reduce the amount payable or delay
payment thereunder;
	 
	 	(j)	 	such Accounts are subject to the first priority, valid and perfected Lien of
Agent and are not subject to any prior ranking Lien or other Lien except Permitted
Liens and any goods giving rise thereto are not, and were not at the time of the sale
thereof, subject to any Liens except Permitted Liens;
	 
	 	(k)	 	neither the account debtor nor any officer or employee of the account debtor
with respect to such Accounts is an Affiliate of Borrower;
	 
	 	(l)	 	the account debtors with respect to such Accounts are not any foreign
government, the federal government of Canada, any Province, political subdivision,
department, agency or instrumentality thereof unless, upon Agent’s request, the
Financial Administration Act (Canada) or any similar provincial or local law, if
applicable, has been complied with in a manner satisfactory to Agent;
	 
	 	(m)	 	there are no proceedings or actions which are threatened or pending against the
account debtors with respect to such Accounts which might result in any material
adverse change in any such account debtor’s financial condition;




 - 9 - 









 






	 	(n)	 	[Intentionally Deleted];
	 
	 	(o)	 	such Accounts are not owed by an account debtor who has Accounts unpaid more
than sixty (60) days after the date of the original due date for them which constitute
more than fifty percent (50%) of the total Accounts of such account debtor;
	 
	 	(p)	 	such Accounts are not owed by an account debtor who has Accounts unpaid more
than ninety (90) days after the date of the original invoice for them which constitute
more than fifty percent (50%) of the total Accounts of such account debtor;
	 
	 	(q)	 	such Accounts are not subject to any rebates to the account debtors (but the
portion of the Accounts remaining unimpaired after reserving for all potentially
applicable rebates may be deemed Eligible Accounts);
	 
	 	(r)	 	such Accounts are not subject to any price protection or other terms, statutory
or otherwise, under which payment by the account debtor may be reduced;
	 
	 	(s)	 	such Accounts do not arise under lease or long term receivables or payments due
from joint venturers or under any Contract or Lease and are not given credit under any
other Lending Formula;
	 
	 	(t)	 	such Accounts are owed by account debtors whose total indebtedness to Borrower
does not exceed the credit limit with respect to such account debtors as determined by
Agent from time to time (but the portion of the Accounts not in excess of such credit
limit may be deemed Eligible Accounts); and
	 
	 	(u)	 	such Accounts are owed by account debtors deemed credit-worthy at all times by
Agent, as determined by Agent.





General criteria for Eligible Accounts may be established and revised from time to time by Agent.
Any Accounts which are not Eligible Accounts shall nevertheless be part of the Collateral.





	1.41	 	  “Eligible Capital Leases”





“Eligible Capital Leases” shall mean those leases, from time to time, which are and continue to be
acceptable to Agent based on the general criteria set forth below which Agent, in good faith, may
revise from time to time. In general, a Capital Lease shall be an Eligible Capital Lease if:





	 	(a)	 	it is with a Client deemed creditworthy at all times by Agent, as determined by
Agent in good faith;
	 
	 	(b)	 	it is with a Client that has not asserted a bona fide counterclaim, defence or
dispute (other than as to a de minimus amount) under the applicable Capital Lease and
if so, the value of such Capital Lease shall be reduced by the amount of such
counterclaim, defense or dispute;




 - 10 - 









 






	 	(c)	 	it is with a Client that does not have, and does not engage in transactions
which may give rise to, any right of set-off against the Capital Lease;
provided that the existence of any such right of set-off shall not by
itself cause such Capital Lease to cease to continue to be an Eligible Capital Lease
but its appraised value, for purposes of Section 2.1(a)(iii)(B) hereof, will be
reduced by Agent by an amount determined by Agent in good faith;
	 
	 	(d)	 	there are no facts, events or occurrences which would impair the validity,
enforceability or collectability of the Capital Lease or materially reduce the amount
payable or delay payment thereunder, including any event of default or event which
would, with notice or the passage of time, constitute an event of default under the
Capital Lease;
	 
	 	(e)	 	it is subject to the first priority, valid and perfected Lien of Agent and is
not subject to any prior ranking Liens or other Liens except Permitted Liens;
	 
	 	(f)	 	it is with a Client which is not itself, nor any officer or employee thereof,
an officer, employee or agent of or affiliated with Borrower, directly or indirectly,
by virtue of family membership, ownership, control, management or otherwise;
	 
	 	(g)	 	there are no proceedings or actions which are threatened or pending against the
Client which could reasonably be expected to result in any material adverse change in
such Client’s financial condition;
	 
	 	(h)	 	[Intentionally Deleted];
	 
	 	(i)	 	Borrower and/or any Obligor is the lessor under the applicable Capital Lease;
	 
	 	(j)	 	Borrower and/or any Obligor, as applicable, has not transferred title to the
equipment leased to the Client pursuant to the applicable Capital Lease;
provided however that Capital Leases pursuant to which title has been
transferred to the Client but which are required to be defined as Capital Leases under
GAAP shall be deemed to be Capital Leases; and
	 
	 	(k)	 	notwithstanding that there are any restrictions on assignability in respect of
such Capital Lease.





Any Capital Lease, which is not considered to be an Eligible Capital Lease in accordance with the
foregoing requirements, is nevertheless considered to form part of the Collateral.





	1.42	 	  “Eligible Contracts in Backlog”





“Eligible Contracts in Backlog” shall mean Contracts in Backlog, from time to time, which are and
continue to be acceptable to Agent based on the general criteria set forth below which Agent, in
good faith, may revise from time to time. In general, a Contract in Backlog shall be an Eligible
Contract in Backlog if:




 - 11 - 









 









	 	(a)	 	it is with a Client deemed creditworthy at all times by Agent, as determined by
Agent in good faith;
	 
	 	(b)	 	it is with a Client that has not asserted a bona fide counterclaim, defence or
dispute (other than as to a de minimus amount) under the applicable Contract in Backlog
and if so, the value of the relevant Eligible Finished Goods Inventory shall be reduced
by the amount of such counterclaim, defense or dispute;
	 
	 	(c)	 	it is with a Client that does not have, and does not engage in transactions
which may give rise to, any right of set-off against the Eligible Finished Goods
Inventory; provided that the existence of any such right of set-off shall not by itself
cause such Eligible Finished Goods Inventory to cease to continue to be Eligible
Finished Goods Inventory but its appraised value, for purposes of Section
2.1(a)(iv)(B) hereof, will be reduced by Agent by an amount determined by Agent in
good faith;
	 
	 	(d)	 	there are no facts, events or occurrences which would impair the validity,
enforceability or collectability of the Contract in Backlog or materially reduce the
amount payable or delay payment thereunder, including any event of default or event
which would, with notice or the passage of time, constitute an event of default under
the Contract in Backlog;
	 
	 	(e)	 	it is subject to the first priority, valid and perfected Lien of Agent and is
not subject to any prior ranking Lien or other Lien except Permitted Liens;
	 
	 	(f)	 	it is with a Client which is not itself, nor any officer or employee thereof,
an officer, employee or agent of or affiliated with Borrower, directly or indirectly,
by virtue of family membership, ownership, control, management or otherwise;
	 
	 	(g)	 	there are no proceedings or actions which are threatened or pending against the
Client which could reasonably be expected to result in any material adverse change in
such Client’s financial condition;
	 
	 	(h)	 	[Intentionally Deleted];
	 
	 	(i)	 	notwithstanding that there are restrictions on assignability in respect of such
Contracts in Backlog; and
	 
	 	(j)	 	it is with a Client formed under a joint venture arrangement by Borrower on
terms acceptable to Agent.





Any Finished Goods Inventory which is not considered to be Eligible Finished Goods Inventory in
accordance with the foregoing requirements, is nevertheless considered to form part of the
Collateral.




 - 12 - 









 









	1.43	 	  “Eligible Contracts, Leases and Inventory”





“Eligible Contracts, Leases and Inventory” shall mean, collectively, any one of or all of the
Eligible Capital Leases, Eligible Operating Leases, Eligible Finished Goods Inventory and Eligible
Long Term Receivables Contracts.





	1.44	 	  “Eligible Finished Goods Inventory”





“Eligible Finished Goods Inventory” means Finished Goods Inventory that has been assigned by
Borrower to Eligible Contracts in Backlog.





	1.45	 	  “Eligible Long Term Receivables Contracts”





“Eligible Long Term Receivables Contracts” shall mean those contracts of Borrower, from time to
time, which are and continue to be acceptable to Agent based on the general criteria set forth
below which Agent, in good faith, may revise from time to time. In general, a Long Term
Receivables Contract shall be an Eligible Long Term Receivable Contract if:





	 	(a)	 	it is with a Client deemed creditworthy at all times by Agent, as determined by
Agent in good faith;
	 
	 	(b)	 	it is with a Client that has not asserted a bona fide counterclaim, defence or
dispute (other than as to a de minimus amount) under the applicable Long Term
Receivables Contract; provided that the existence of such counterclaim,
defence or dispute shall not by itself cause such Long Term Receivables Contract to
cease to continue to be Eligible Long Term Receivables Contract but its appraised
value, for purposes of Section 2.1(a)(v)(B) hereof, will be reduced by Agent by
an amount determined by Agent in good faith;
	 
	 	(c)	 	it is with a Client that does not have, and does not engage in transactions
which may give rise to, any right of set-off against the Long Term Receivables
Contract; provided that the existence of any such right of set-off shall not by itself
cause such Long Term Receivables Contract to cease to continue to be Eligible Long Term
Receivables Contract but its appraised value, for purposes of Section
2.1(a)(v)(B) hereof, will be reduced by Agent by an amount determined by Agent in
good faith;
	 
	 	(d)	 	there are no facts, events or occurrences which would impair the validity,
enforceability or collectability of the Long Term Receivables Contract or materially
reduce the amount payable or delay payment thereunder, including any event of default
or event which would, with notice or the passage of time, constitute an event of
default under the Long Term Receivable Contract;
	 
	 	(e)	 	it is subject to the first priority, valid and perfected Lien of Agent and is
not subject to any prior ranking Lien or other Lien except Permitted Liens;




 - 13 - 









 






	 	(f)	 	it is with a Client which is not itself, nor any officer or employee thereof,
an officer, employee or agent of or affiliated with Borrower, directly or indirectly,
by virtue of family membership, ownership, control, management or otherwise;
	 
	 	(g)	 	there are no proceedings or actions which are threatened or pending against the
Client which could reasonably be expected to result in any material adverse change in
such Client’s financial condition;
	 
	 	(h)	 	[Intentionally Deleted]; and
	 
	 	(i)	 	notwithstanding that there are restrictions on assignability in respect of such
Long Term Receivables Contracts.





Any Long Term Receivables Contract, which is not considered to be an Eligible Long Term Receivables
Contract in accordance with the foregoing requirements, is nevertheless considered to form part of
the Collateral.





	1.46	 	  “Eligible Operating Leases”





“Eligible Operating Leases” shall mean those leases, from time to time, which are and continue to
be acceptable to Agent based on the general criteria set forth below which Agent, in good faith,
may revise from time to time. In general, an Operating Lease shall be an Eligible Operating Lease
if:





	 	(a)	 	it is with a Client deemed creditworthy at all times by Agent, as determined by
Agent in good faith;
	 
	 	(b)	 	it is with a Client that has not asserted a bona fide counterclaim, defence or
dispute (other than as to a de minimus amount) under the applicable Operating Lease and
if so, the value of such Operating Lease shall be reduced by the amount of such
counterclaim, defense or dispute;
	 
	 	(c)	 	it is with a Client that does not have, and does not engage in transactions
which may give rise to, any right of set-off against the Operating Lease;
provided that the existence of any such right of set-off shall not by
itself cause such Operating Lease to cease to continue to be an Eligible Operating
Lease but its appraised value, for purposes of Section 2.1(a)(ii) hereof, will
be reduced by Agent by an amount determined by Lender in good faith;
	 
	 	(d)	 	there are no facts, events or occurrences which would impair the validity,
enforceability or collectability of the Operating Lease or materially reduce the amount
payable or delay payment thereunder, including any event of default or event which
would, with notice or the passage of time, constitute an event of default under the
Operating Lease;
	 
	 	(e)	 	it is subject to the first priority, valid and perfected Lien of Agent and is
not subject to any prior ranking Lien or other Lien except Permitted Liens;




 - 14 - 









 






	 	(f)	 	it is with a Client which is not itself, nor any officer or employee thereof,
an officer, employee or agent of or affiliated with Borrower, directly or indirectly,
by virtue of family membership, ownership, control, management or otherwise;
	 
	 	(g)	 	there are no proceedings or actions which are threatened or pending against the
Client which could reasonably be expected to result in any material adverse change in
such Client’s financial condition;
	 
	 	(h)	 	[Intentionally Deleted];
	 
	 	(i)	 	Borrower and/or any Obligor is the lessor under the applicable Operating Lease;
	 
	 	(j)	 	Borrower and/or any Obligor, as applicable, has not transferred title to the
equipment leased to the Client pursuant to the applicable Operating Lease; and
	 
	 	(k)	 	notwithstanding that there are any restrictions on assignability in respect of
such Operating Lease.





Any Operating Lease, which is not considered to be an Eligible Operating Lease in accordance with
the foregoing requirements, is nevertheless considered to form part of the Collateral.





	1.47	 	  “Eligible Transferee”





“Eligible Transferee” shall mean





	 	(a)	 	any Lender;
	 
	 	(b)	 	the parent company of any Lender and/or any Affiliate of such Lender;
	 
	 	(c)	 	any Person that is engaged in the business of making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or with
respect to any Lender that is a fund which invests in commercial loans and similar
extensions of credit, any other fund that invests in commercial loans and similar
extensions of credit and is managed by the same investment advisor as such Lender or by
an Affiliate of such investment advisor; and
	 
	 	(d)	 	any other commercial bank, financial institution or   “accredited investor” (as
defined under Ontario Securities Commission Rule 45-106) approved by Agent and, unless
an Event of Default has occurred and is continuing, Borrower (each such approval not to
be unreasonably withheld or delayed),





provided, however, that,





	 	(i)	 	neither Borrower nor any Affiliate of Borrower;
	 
	 	(ii)	 	nor any Person to whom any indebtedness (other than the
Obligations) is owed by Borrower or any Obligor;




 - 15 - 









 






	 	(iii)	 	nor any natural person;
	 
	 	(iv)	 	nor any Person that is a competitor of Borrower,





in each case of the foregoing clauses (i), (ii) and (iii), and
(iv), shall qualify as an Eligible Transferee (each, a   “Prohibited Transferee”).





	1.48	 	  “Environmental Laws”





“Environmental Laws” shall mean with respect to any Person all federal (United States of America
and Canada), state, provincial, district, local, municipal and foreign laws, statutes, rules,
regulations, ordinances, orders, directives, permits, licenses and consent decrees relating to
health, safety, hazardous, dangerous or toxic substances, waste or material, pollution and
environmental matters, as now or at any time hereafter in effect, applicable to such Person and/or
its business and facilities (whether or not owned by it), including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous,
toxic or dangerous substances, materials or wastes into the environment (including, ambient air,
surface water, ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals, or hazardous, toxic or dangerous substances,
materials or wastes.





	1.49	 	  “Equipment”





“Equipment” shall mean all of Borrower’s now owned and hereafter acquired equipment, machinery,
computers and computer hardware and software (whether owned or licensed), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof, wherever located.





	1.50	 	  “Equivalent Amount”





“Equivalent Amount” in one currency on any day means the amount of that currency into which a
specified amount of another currency can be converted at the Spot Rate (or if such rate is not
available, such other rate as Agent may determine).





	1.51	 	  “ERISA”





“ERISA” shall mean the Employee Retirement Income Security Act of 1974, together with all rules,
regulations and interpretations thereunder or related thereto.





	1.52	 	  “ERISA Affliliate”





“ERISA Affiliate” shall mean any person required to be aggregated with Borrower or any of its
Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the
Code.




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	1.53	 	  “ERISA Event”





“ERISA Event” shall mean





	 	(a)	 	any   “reportable event” as defined in Section 4043(c) of ERISA or the
regulations issued thereunder, with respect to a US Pension Plan, other than events as
to which the requirement of notice has been waived in regulations by the Pension
Benefit Guaranty Corporation;
	 
	 	(b)	 	the adoption of any amendment to a US Pension Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA;
	 
	 	(c)	 	a complete or partial withdrawal by Borrower or any ERISA Affiliate from a
Multiemployer Plan or a cessation of operations which is treated as such a withdrawal
or notification that a Multiemployer Plan is in reorganization;
	 
	 	(d)	 	the filing of a notice of intent to terminate a US Pension Plan under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the Pension Benefit Guaranty Corporation to terminate a US Pension Plan;
	 
	 	(e)	 	an event or condition which would reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan;
	 
	 	(f)	 	the imposition of any liability under Title IV of ERISA, other than the
Pension Benefit Guaranty Corporation premiums due but not delinquent under Section
4007 of ERISA, upon Borrower or any ERISA Affiliate in excess of $500,000; and
	 
	 	(g)	 	any other event or condition with respect to any US Pension Plan subject to
Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that
could reasonably be expected to result in liability of Borrower in excess of $500,000.






	1.54	 	  “Euro Dollar Rate”





“Euro Dollar Rate” shall mean the rate of interest, based on a 360 day year, appearing on Reuters
Screen LIBOR01 Page (or on any successor or substitute page of such service or any successor to or
substitute for such service as determined by Agent) as the London interbank offered rate for
deposits in US Dollars for a term comparable to the applicable Interest Period as selected by
Borrower (but if more than one rate is specified on such page, the rate will be an arithmetic
average of all such rates rounded upwards, in Agent’s discretion, to the nearest 1/100th
of one percent (1%)) on or about 9:00 a.m. New York time three (3) Business Days prior to the
commencement of such Interest Period.





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1.55 “Euro Dollar Rate Loans”



“Euro Dollar Rate Loans” shall mean any Loans or portion thereof on which interest is payable based
on the Adjusted Euro Dollar Rate in accordance with the terms hereof.




1.56 “Event of Default”



“Event of Default” shall have the meaning set forth in Section 10.1 hereof.




1.57 “Excess Availability”



“Excess Availability” shall mean the US Dollar Amount, calculated at any time and as determined by
Agent, equal to:





	 	(a)	 	the lesser of, subject to the sub-limit in respect of Letter of Credit
Accommodations:






	 	(i)	 	the amount of the Revolving Loans and Letter of Credit
Accommodations available to Borrower as of such time based on the Lending
Formulas, as determined by Agent less the Availability Reserves from time to
time established by Agent; or
	 
	 	(ii)	 	the Maximum Revolving Credit plus $5,000,000; less






	 	(b)	 	the sum of:






	 	(i)	 	the amount of all then outstanding and unpaid Obligations (not
including the then outstanding and unpaid amount of the Revolving Term Loan);
and
	 
	 	(ii)	 	the aggregate amount of: (A) all due but unpaid tax
obligations; and (B) past due trade payables which remain unpaid for more than
ninety (90) days past the original invoice for same, of Borrower as of such
time.





1.58 “Excluded Accounts”



“Excluded Accounts” means all present and future rights, revenues and bank accounts of Borrower or
its Subsidiaries in respect of, and which are used to make or receive payments in relation to: (i)
third party film productions; (ii) third party joint ventures; and (iii) owned and operated
theatres, each of which is excluded from the Trailing Cash Collections. As of the date hereof, the
Excluded Accounts are as set out in Schedule 1.58 hereto.




1.59 “Fair Market Value”



“Fair Market Value” shall mean an estimated amount, determined as of the effective date of the
applicable Appraisal, expressed in US Dollars, that may be reasonably realized from an orderly
liquidation of the applicable Collateral net of the amount of deductions for all commissions, taxes
and other Liquidation Expenses by the Appraiser and set out in the applicable Appraisal.






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1.60 “Financing Agreements”



“Financing Agreements” shall mean, collectively, this Agreement, the Original Loan Agreement, the
Existing Loan Agreement, the General Security Agreement, the Assignment of Capital Leases and
Operating Leases, the Assignment of Contracts in Backlog and Long Term Receivables Contracts, the
Blocked Account Agreement, the IP Collateral License Agreement and all notes, guarantees, security
agreements and other agreements, documents and instruments previously, now or at any time hereafter
executed and/or delivered by Borrower or any Obligor in connection with this Agreement, the
Original Loan Agreement and the Existing Loan Agreement, in each case, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, but
excluding any Secured Hedging Agreement.




1.61 “Finished Goods Inventory”



“Finished Goods Inventory” means the finished goods Inventory of Borrower, as listed on
Schedule 1.61 as amended, updated and/or restated from time to time in accordance with the
reporting requirements set out in Section 7.1(a) hereof, that has been designated by
Borrower as a Contract in Backlog.




1.62 “Finished Goods Inventory Lending Formula”



“Finished Goods Inventory Lending Formula” shall have the meaning set forth in Section
2.1(a)(iv) hereof.




1.63 “Fiscal Quarter”



“Fiscal Quarter” shall mean each of the following three (3) month periods in any fiscal year of
Borrower: January 1 to March 31, April 1 to June 30, July 1 to September 30 and October 1 to
December 31.




1.64 “Fixed Charge Coverage Ratio”



“Fixed Charge Coverage Ratio” shall mean, with respect to Borrower and its Subsidiaries on a
consolidated basis for any applicable period, determined in accordance with GAAP, the quotient of,
for each applicable period:





	 	(a)	 	EBITDA minus Unfunded Capital Expenditures minus the sum of
taxes paid in the period for which the test relates and taxes due in the period for
which the test relates but which have not been paid at the time of the test (less tax
refunds in cash received by Borrower and its Subsidiaries in the period for which the
test relates) minus the sum of payments made pursuant to Sections
9.10(j) and 9.11(b) (but excluding any such payments to the extent funded
through the incurrence of additional indebtedness permitted under Section
9.9(h) or to the extent funded through equity issuances); divided
by:
	 
	 	(b)	 	interest paid and interest due within the period that the test is being done
but which has not been paid at the time of the test plus any principal due,
excluding




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	 	 	 	any early principal prepayments of the Revolving Term Loan after the Revolving Term
Loan Term Conversion Date permitted hereunder, but including, for the avoidance of
doubt, any scheduled interest and principal payments with respect to indebtedness
permitted under Section 9.9(h). For the avoidance of doubt, any
computations under this clause (b) shall not include any principal payments
or repayments in respect of Loans (as defined in the Existing Loan Agreement) under
the Existing Loan Agreement made by Agent to give effect to the terms of this
Agreement.




For the avoidance of doubt, Agent and Borrower agree that the Compliance Certificate attached
hereto as Schedule 1.32 accurately details the method for calculating the Fixed Charge
Coverage Ratio.




1.65 “Funded Debt”



“Funded Debt” shall mean, at any time:





	 	(a)	 	all obligations for the deferred purchase price of property or services (other
than current trade payables incurred in the ordinary course of business);
	 
	 	(b)	 	all obligations evidence by notes, bonds, debentures or similar instruments;
	 
	 	(c)	 	Capital Lease Obligations;
	 
	 	(d)	 	the aggregate outstanding amount of all Obligations (other than the Mark to
Market Exposure of all Hedging Agreements of Borrower and its Subsidiaries and undrawn
amounts under the Letter of Credit Accommodations);
	 
	 	(e)	 	the Mark to Market Exposure of all Hedging Agreements of Borrower and its
Subsidiaries to the extent not reserved by Agent as an Availability Reserve;
	 
	 	(f)	 	the principal amount of all indebtedness with respect to purchase money
security interests;
	 
	 	(g)	 	the principal amount of any other indebtedness for borrowed money; and
	 
	 	(h)	 	guarantees of items referenced in subsections (a) through (g)
of this definition in each case, of Borrower and its Subsidiaries at such time on a
consolidated basis (without duplication).





1.66 “Funding Bank”



“Funding Bank” shall have the meaning set forth in Section 3.2(a) hereof.






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1.67 “Future Permitted Transaction”



“Future Permitted Transaction” shall mean any infrequent or unusual transaction requested by
Borrower to be designated as such to the extent any such transaction has been pre-approved in
writing by Agent and Required Lenders.




1.68 “FX Guarantee”



“FX Guarantee” shall mean the Foreign Exchange Facility Guarantee dated November 27, 2008 given by
EDC to BMO.




1.69 “GAAP”



“GAAP” shall mean generally accepted accounting principles in the United States of America as in
effect from time to time as set forth in the opinions and pronouncements of the relevant U.S.
public and private accounting boards and institutes which are applicable to the circumstances as of
the date of determination consistently applied.




1.70 “General Security Agreement”



“General Security Agreement” shall mean the amended and restated general security agreement dated
the date hereof given by Borrower in favour of Agent as security for payment and performance of the
Obligations, as the same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.




1.71 “Governmental Authority”



“Governmental Authority” shall mean any government, parliament, legislature, municipal or local
government, or any regulatory authority, agency, commission or board of any government, parliament
or legislature, or any court or (without limitation to the foregoing) any other law, regulation or
rule-making entity (including any central bank, fiscal or monetary authority regulating banks),
having or purporting to have jurisdiction in the relevant circumstances, or any Person acting or
purporting to act under the authority of any of the foregoing (including any arbitrator).




1.72 “Hazardous Materials”



“Hazardous Materials” shall mean any hazardous, toxic or dangerous substances, materials and
wastes, including hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or
type of pollutants or contaminants (including materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes
and including any other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or toxic under any
Environmental Law).






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1.73 “Hedging Agreement”



“Hedging Agreement” shall mean any swap agreement (as defined in 11 U.S.C. §101), foreign exchange
agreement, interest rate swap, cap or collar agreement, interest rate future or option contract,
currency swap agreement, currency future or option contract and other similar hedge or swap
agreement.




1.74 “Information Certificate”



“Information Certificate” shall mean the Information Certificate of Borrower constituting
Exhibit A hereto containing material information with respect to Borrower, its business and
assets provided by or on behalf of Borrower to Agent in connection with the preparation of the
Financing Agreements and the financing arrangements provided for herein.




1.75 “Interest Period”



“Interest Period” means, with respect to each Euro Dollar Rate Loan, a period of one (1) month, two
(2) months or three (3) months duration as Borrower may elect, the exact duration to be determined
in accordance with customary practice in the applicable Euro Dollar Rate market or customary
practice of Agent; provided that Borrower may not elect an Interest Period which
will end after the Maturity Date.




1.76 “Interest Rate”



“Interest Rate” shall mean:





	 	(a)	 	as to Revolving Loans, the Adjusted Euro Dollar Rate plus 2.00% per annum or
the US Prime Rate plus 0.50% per annum, as applicable; or
	 
	 	(b)	 	as to the Revolving Term Loan, the Adjusted Euro Dollar Rate plus 2.00% per
annum or the US Prime Rate plus 0.50% per annum, as applicable; or
	 
	 	(c)	 	notwithstanding the rates described in subparagraphs (a) and
(b) above, without notice and at Agent’s option, the rate of three percent (3%)
per annum in excess of the applicable Interest Rate described above shall apply in
respect of the Obligations described below upon the occurrence and continuance of the
events described below, without duplication:






	 	(i)	 	on non-contingent Obligations: (A) for the period on and after
the date of maturity or termination hereof until such time as Agent has
received full and final payment of all such Obligations; and (B) for the period
from and after the date of the occurrence of an Event of Default so long as
such Event of Default is continuing as determined by Agent (notwithstanding
entry of any judgment against Borrower); and
	 
	 	(ii)	 	on the amount of Revolving Loans and Letter of Credit
Accommodations at any time outstanding that is in excess of the amounts
available to Borrower under Article 2 hereof (whether or not such
excess(es) arise or




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	 	 	 	are made with or without Agent’s or any Lender’s knowledge or consent and
whether made before or after an Event of Default).





1.77 “Inventory”



“Inventory” shall mean all of Borrower’s now owned and hereafter existing or acquired raw
materials, work in process, finished goods and all other inventory of whatsoever kind or nature,
wherever located.




1.78 “IP Collateral”



“IP Collateral” shall mean all of the Intellectual Property as such term is defined in the General
Security Agreement.




1.79 “IP Collateral License Agreement”



“IP Collateral License Agreement” shall mean the amended and restated intellectual property license
agreement dated the date hereof granting Agent and its successors, transferees and assignees, a
non-exclusive, royalty free perpetual license to the IP Collateral, but effective only upon the
occurrence and continuance of an IP Grace Period, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.




1.80 “IP Grace Period”



“IP Grace Period” shall mean the period commencing the date upon which Agent exercises its remedies
pursuant to Sections 10.2(a) and/or Section 10.2(b) hereof and ending one hundred
and twenty (120) days thereafter.




1.81 “Lenders”



“Lenders” shall mean Wells Fargo Capital Finance Corporation Canada (formerly known as Wachovia
Capital Finance Corporation (Canada)), EDC, their respective successors and assigns and any other
Person party hereto from time to time as a lender.




1.82 “Lending Formulas”



“Lending Formulas” shall mean, collectively, the Eligible Accounts Lending Formula, the Operating
Leases Lending Formula, the Capital Leases Lending Formula, the Finished Goods Inventory Lending
Formula, the Long Term Receivables Contract Lending Formula and the Real Property Lending Formula.




1.83 “Letter of Credit Accommodations”



“Letter of Credit Accommodations” shall mean the letters of credit, merchandise purchase or other
guarantees denominated in US Dollars which are from time to time either (a) issued or opened by
Agent for the account of Borrower or any Obligor or (b) with respect to which Lenders have agreed
to indemnify the issuer or guaranteed to the issuer the performance by Borrower or any Obligor of
its obligations to such issuer, and shall include the existing letters of





- 23 -









 







credit, merchandise purchase and other guarantees issued and currently outstanding under the
Original Loan Agreement.




1.84 “License Agreements”



“License Agreements” shall have the meaning set forth in the General Security Agreement.




1.85 “Lien”



“Lien” shall mean any security interest, mortgage, pledge, hypothec, lien, charge or other lien of
any nature whatsoever (including those created by statute).




1.86 “Liquidation Expenses”



“Liquidation Expenses” shall mean all costs, fees, expenses and all other charges including
operating fees, administration fees, trustee’s fees, receiver fees and court mandated costs
directly incurred by Agent in connection with the disposition of the Collateral.




1.87 “Loans”



“Loans” shall mean collectively the Revolving Loans and the Revolving Term Loan.




1.88 “Long Term Receivable Contracts Lending Formula”



“Long Term Receivable Contracts Lending Formula” shall have the meaning set forth in Section
2.1(a)(v) hereof.




1.89 “Long Term Receivables Contracts”



“Long Term Receivables Contracts” shall mean, collectively, all of the contracts listed on
Schedule 1.89, as may be amended, updated and/or restated from time to time in accordance
with the requirements set out in Section 7.1(a) hereof, each of which are contracts that
relate to the sale of theatre equipment by Borrower.




1.90 “Mark to Market Exposure”



“Mark to Market Exposure” in connection with Borrower’s liability under any of its Hedging
Agreements means, as at the Measurement Date, the “Early Termination Amount” that would be payable
by Borrower under such Hedging Agreement as though such day was an “Early Termination Date” and the
“Transaction” was a “Terminated Transaction” in accordance with the payment measures provided for
in Section 6(e)(i) of the 2002 ISDA Master Agreement as published by ISDA as amended or
replaced from time to time. For the purposes of this Agreement, such liability shall be expressed
in the US Dollar Amount as at the end of any such month. Furthermore, the amount of such liability
shall be established by Lender, Agent or their respective Affiliates party to the Hedging
Agreements (or Agent with respect to any Hedging Agreement to which neither Agent, a Lender nor
their respective Affiliates are a party) in good faith (after consultation with the relevant
counterparties who themselves shall determine same in accordance with the aforementioned payment
measures, as applicable).






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1.91 “Maturity Date”



“Maturity Date” shall mean the earlier of:





	 	(a)	 	demand for payment under Section 10.2; and
	 
	 	(b)	 	October 31, 2015.





1.92 “Maximum Credit”



“Maximum Credit” shall mean the amount of $110,000,000.




1.93 “Maximum Revolving Credit”



“Maximum Revolving Credit” shall mean the amount of $50,000,000.




1.94 “Maximum Revolving Term Credit”



“Maximum Revolving Term Credit” shall mean the amount of $60,000,000.




1.95 “Measurement Date”



“Measurement Date” shall mean, as of any date, the last Business Day of the prior calendar month or
such other date as the Agent may determine upon providing written notice to Borrower.




1.96 “Multiemployer Plan”



“Multiemployer Plan” shall mean a “multi-employer plan” as defined in Section 4001(a)(3) of
ERISA which is or was at any time during the current year or the immediately preceding six (6)
years contributed to by Borrower or any ERISA Affiliate or with respect to which Borrower or any
ERISA Affiliate may incur any liability.




1.97 “Net Amount of Eligible Accounts”



“Net Amount of Eligible Accounts” shall mean the gross US Dollar Amount of Eligible Accounts less:
(a) sales, excise or similar taxes included in the amount thereof; and (b) returns, charge backs,
discounts, claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed with respect to such Eligible Accounts; provided,
that, the amounts deducted under clause (a) shall not duplicate items for which
Availability Reserves have been established by Agent.




1.98 “Non-Funding Lender”



“Non-Funding Lender” shall have the meaning set forth in Section 11.13(a)(iii) hereof.




1.99 “Notice”



“Notice” shall have the meaning set forth in Section 13.2 hereof.






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1.100 “Obligations”



“Obligations” shall mean any and all Loans, Letter of Credit Accommodations and all other
obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower
to Agent, Lenders and their respective Affiliates including principal, interest, charges,
indemnifications for Letter of Credit Accommodations or otherwise, fees, costs and expenses,
however evidenced, whether as principal or otherwise, arising under or in connection with the
Financing Agreements and Secured Hedging Agreements, as amended, supplemented, restated or
superseded, in whole or in part, from time to time and/or applicable laws, whether now existing or
hereafter arising, whether arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any proceeding with respect to Borrower or any Obligor under
the BIA, the CCAA, or any similar statute in any jurisdiction (including the payment of interest
and other amounts which would accrue and become due but for the commencement of such proceeding,
whether or not such amounts are allowed or allowable in whole or in part in such proceeding),
whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured. For greater certainty, the
obligations, liabilities and indebtedness owing under or in connection with the BMO FEFC Term Sheet
and the BMO Term Sheet are not included in “Obligations”.




1.101 “Obligor”



“Obligor” shall mean, other than Borrower, any guarantor, endorser, acceptor, surety or other
person liable on or with respect to the Obligations or who is the owner of any property which is
security for the Obligations, including IMAX U.S.A. Inc., a corporation incorporated pursuant to
the laws of Delaware, 1329507 Ontario Inc., a corporation incorporated pursuant to the laws of
Ontario, IMAX II U.S.A. Inc., a corporation incorporated pursuant to the laws of Delaware, and
David Keighley Productions 70 MM Inc., a corporation incorporated pursuant to the laws of Delaware.




1.102 “OFAC”



“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.




1.103 “Operating Leases”



“Operating Leases” shall mean, collectively, all of the leases listed on Schedule 1.103, as
may be amended, updated and/or restated from time to time in accordance with the reporting
requirements set out in Section 7.1(a) hereof, each of which are theatre system leases that
do not transfer substantially all of the benefits and risks of ownership to Clients.




1.104 “Operating Leases Lending Formula”



“Operating Leases Lending Formula” shall have the meaning set forth in Section 2.1(a)(ii)
hereof.




1.105 “Other Currency”



“Other Currency” shall have the meaning set forth in Section 13.7 hereof.






- 26 -









 








1.106 “Other Lender”



“Other Lender” shall have the meaning set forth in Section 11.13(d) hereof.




1.107 “Patriot Act”



“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.




1.108 “Payment Account”



“Payment Account” shall have the meaning set forth in Section 6.3(a) hereof.




1.109 “Pension Plans”



“Pension Plans” shall mean each of the pension plans, if any, that are registered in accordance
with the Income Tax Act (Canada) which Borrower sponsors or administers or into which Borrower
makes contributions.




1.110 “Permitted Liens”



“Permitted Liens” shall have the meaning set forth in Section 9.8 hereof.




1.111 “Person” or “person”



“Person” or “person” shall mean any individual, sole proprietorship, partnership, limited
partnership, corporation, limited liability company, business trust, unincorporated association,
joint stock corporation, trust, joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.




1.112 “Plan”



“Plan” shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which
Borrower sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions or, in the case of a Multiemployer Plan, has made contributions at any time during
the immediately preceding six (6) plan years or with respect to which Borrower may incur liability.
For greater certainty, “Plan” does not include a Pension Plan that is not a US Pension Plan.




1.113 “PPSA”



“PPSA” shall mean the Personal Property Security Act (Ontario), provided that, if the attachment,
perfection or priority of Agent’s security in respect of any Collateral is governed by the laws of
any jurisdiction other than Ontario, PPSA shall mean those other laws for the purposes hereof
relating to attachment, perfection or priority.






- 27 -









 








1.114 “Priority Payables Reserve”



“Priority Payables Reserve” shall mean, at any time, the full amount of the liabilities at such
time which have a trust (including a statutory trust) imposed to provide for payment or Lien
ranking or capable of ranking senior to or pari passu with the Liens securing the Obligations on
any of the Collateral under federal, provincial, state, county, municipal, or local law including,
but not limited to claims for unremitted and accelerated rents, taxes, wages, vacation pay,
workers’ compensation, obligations, government royalties or pension fund obligations excluding the
obligations of Borrower pursuant to the USERP together with the aggregate value, determined in
accordance with GAAP of all Eligible Finished Goods Inventory which Agent considers or may be or
may become subject to a right of a supplier to recover possession thereof under any federal or
provincial law, where such supplier’s right may have priority over the Liens securing the
Obligations (including Eligible Finished Goods Inventory subject to a right of a supplier to
repossess goods pursuant to Section 81.1 of the BIA).




1.115 “Pro Rata Share”



“Pro Rata Share” shall mean with respect to a Lender (a) with respect to all Revolving Loans, the
percentage obtained by dividing (i) the aggregate Revolving Loan Commitments of such Lender by (ii)
the aggregate Revolving Loan Commitments of all Lenders; (b) with respect to all Revolving Term
Loans, the percentage obtained by dividing (i) the aggregate Revolving Term Loan Commitments of
such Lender by (ii) the aggregate Revolving Term Loan Commitments of all Lenders; and (c) with
respect to all Loans on and after the Maturity Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Loans held by such Lender by (ii) the outstanding
principal balance of the Loans held by all Lenders.




1.116 “Real Property”



“Real Property” means the property known as 2525 Speakman Drive, Mississauga, Ontario L5K 1B1
legally owned by 1329507 Ontario Inc. and beneficially owned by Borrower.




1.117 “Real Property Lending Formula”



“Real Property Lending Formula” shall have the meaning set forth in Section 2.1(a)(vi)
hereof.




1.118 “Receiver”



“Receiver” shall have the meaning set forth in Section 10.2(g) hereof.




1.119 “Records”



“Records” shall mean all of Borrower’s present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to the Collateral or
any account debtor, including the Clients, together with the tapes, disks, diskettes and other data
and software storage media and devices, file cabinets or containers in or on which





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the foregoing are stored (including any rights of Borrower with respect to the foregoing maintained
with or by any other person).




1.120 “Report”



“Report” shall have the meaning set forth in Section 11.9(a) hereof.




1.121 “Required Lenders”



“Required Lenders” shall mean Lenders holding at least a 66 2/3 % of the Commitments.




1.122 “Revolving Loans”



“Revolving Loans” shall mean US Prime Rate Loans and/or Euro Dollar Rate Loans, as the case may be,
now or hereafter made by Lenders to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and re-advances) as set forth in Section 2.1 hereof.




1.123 “Revolving Term Loan”



“Revolving Term Loan” shall mean US Prime Rate Loans and/or Euro Dollar Rate Loans, as the case may
be, now or hereafter made by Lenders to Borrower on a revolving basis (involving advances,
repayments and re-advances) up to the Revolving Term Loan Term Conversion Date and thereafter on a
term basis as set forth in Section 2.3 hereof.




1.124 “Revolving Term Loan Term Conversion Date”



“Revolving Term Loan Term Conversion Date” shall mean the earlier of (a) the date falling
twenty-four (24) months after the date hereof, or (b) Agent receives written notice from Borrower
designating the date (such date to be (i) no later than ten (10) Business Days from the date of
such notice and (ii) reasonably acceptable to Agent) in a written notice to Agent upon which the
undrawn portion of the Revolving Term Loan Commitments are to be cancelled and the “Revolving Term
Loan Term Conversion Date” will be deemed to occur for purposes of this Agreement.




1.125 “Sanctioned Entity”



“Sanctioned Entity” shall mean (a) an agency of the government of, (b) an organization directly or
indirectly controlled by, or (c) a person resident in, in each case, a country that is subject to a
sanctions program identified on the list maintained and published by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/programs, or as otherwise published from time to time
as such program may be applicable to such agency, organization or person.




1.126 “Sanctioned Person”



“Sanctioned Person” shall mean a person named on the list of Specially Designated Nationals or
Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/enforcement/
ofac/sdn/index.html, or as otherwise published from time to time.






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1.127 “Secured Hedging Agreement”



“Secured Hedging Agreement” shall mean any Hedging Agreement between (a) Borrower and (b) Agent or
a Lender (or an Affiliate of Agent or a Lender).




1.128 “Secured Parties”



“Secured Parties” shall collectively mean Agent, Lenders, or their respective Affiliates,
(including under any Secured Hedging Agreement) and any other person to which Obligations are owed
or who is the beneficiary of or under a guarantee of the Obligations (and, for greater certainty,
if such person ceases to be an Agent or a Lender then for any hedge transaction entered into under
a Secured Hedging Agreement with that Agent or Lender or any of its Affiliates prior to the date
that person ceases to be an Agent or Lender, that person or any of its Affiliates shall continue to
be Secured Party hereunder with respect to Borrower’s obligations relating to any such hedge
transaction).




1.129 “Settlement Date”



“Settlement Date” shall have the meaning set forth in Section 11.13(a)(iii) hereof.




1.130 “Spot Rate”



“Spot Rate” shall mean, with respect to a currency, the rate quoted by US Reference Bank as the
spot rate for the purchase by US Reference Bank of such currency with another currency at
approximately 10:00 a.m. (EST) on the date two (2) Business Days prior to the date as of which the
foreign exchange computation is made.




1.131 “Studios”



“Studios” shall collectively mean Twentieth Century Film Corporation, Sony Pictures Entertainment,
Warner Bros. Distributing Inc., Paramount Pictures Corporation, Walt Disney Studios Motion
Pictures, Summit Entertainment LLC, Dreamworks Animation LLC and Universal Pictures and their
respective Affiliates and Subsidiaries.




1.132 “Subsidiary”



“Subsidiary” shall mean, with respect to any Person, any corporation, partnership or other entity
of which at least a majority of the securities or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person and one or more Subsidiaries of such Person.






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1.133 “Trailing Cash Collections”



“Trailing Cash Collections” shall mean the aggregate amount of cash collections made by Borrower in
the preceding twenty-six (26) week period, measured as at the last day of the applicable week.




1.134 “Unfunded Capital Expenditures”



“Unfunded Capital Expenditures” shall mean capital expenditures that are not financed or funded by
an arm’s length third party.




1.135 “UCC”



“UCC” shall mean the Uniform Commercial Code.




1.136 “US Dollar Amount”



“US Dollar Amount” shall mean, at any time, (a) as to any amount denominated in US Dollars, the
amount thereof at such time, and (b) as to any amount denominated in any other currency, the
equivalent amount in US Dollars as determined by Agent at such time on the basis of the Spot Rate
for the purchase of US Dollars with such currency.




1.137 “USERP”



“USERP” shall mean the unregistered supplemental executive retirement plan dated July 12, 2000, as
amended and restated as of January 1, 2006, made by Borrower in favour of its former Co-Chief
Executive Officer and current Chairman of the Board, Bradley J. Wechsler, and its current Chief
Executive Officer, Richard L. Gelfond.




1.138 “US First Rate”



“US First Rate” shall have the meaning set forth in Section 3.1(c) hereof.




1.139 “US Pension Plan”



“US Pension Plan” shall mean a pension plan (as defined in Section 3(2) of ERISA) subject
to Title IV of ERISA which Borrower sponsors, maintains, or to which Borrower or any ERISA
Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.




1.140 “US Prime Rate”



“US Prime Rate” shall mean the rate announced publicly by US Reference Bank from time to time as
its prime rate in effect for US Dollar denominated commercial loans, whether or not such announced
rate is the best rate available at such bank.






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1.141 “US Prime Rate Loans”



“US Prime Rate Loans” shall mean any Loans or portions thereof denominated in US Dollars and on
which interest is payable based on the US Prime Rate in accordance with the terms hereof.




1.142 “US Reference Bank”



“US Reference Bank” shall mean Wells Fargo Bank, National Association, or any successor thereto, or
such other major bank in the United States as Agent may from time to time designate, in its
discretion, after consultation with Borrower




ARTICLE 2

CREDIT FACILITIES




2.1 Revolving Loans





	 	(a)	 	Subject to, and upon the terms and conditions contained herein, each Lender
severally (and not jointly) agrees to make its Pro Rata Share of Revolving Loans by way
of Euro Dollar Rate Loan and US Prime Rate Loans to Borrower from time to time in
amounts requested by Borrower up to the amount equal to the sum, net of any
Availability Reserves, of:






	 	(i)	 	eighty-five percent (85%) of the Net Amount of Eligible
Accounts (the “Eligible Accounts Lending Formula”); plus
	 
	 	(ii)	 	eighty-five percent (85%) of the appraised value of Eligible
Operating Leases, net of estimated Liquidation Expenses, with Appraisals
conducted on a Fair Market Value basis at the expense of Borrower by the
Appraiser (the “Operating Leases Lending Formula”); plus
	 
	 	(iii)	 	the lesser of (the “Capital Leases Lending Formula”):






	 	(A)	 	forty-nine percent (49%) of the aggregate net
book value of Eligible Capital Leases; or
	 
	 	(B)	 	eighty-five percent (85%) of the appraised
value of such Eligible Capital Leases expressed as a percentage of net
book value, net of estimated Liquidation Expenses, with Appraisals
conducted on a Fair Market Value basis at the expense of Borrower by
the Appraiser; plus






	 	(iv)	 	the lesser of (the “Finished Goods Inventory Lending Formula”):






	 	(A)	 	thirty-one percent (31%) of the aggregate net
book value of Eligible Finished Goods Inventory; provided
however that, for the purposes of this subparagraph
(A), the amount of all Eligible Finished Goods Inventory
attributable to joint venture




- 32 -









 






	 	 	 	arrangements in accordance with the definition of Eligible Contracts
in Backlog in Article 1 herein after applying the foregoing
formula shall not exceed $3,000,000; or
	 
	 	(B)	 	eighty-five percent (85%) of the appraised
value of Eligible Contracts in Backlog expressed as a percentage of net
book value, net of estimated Liquidation Expenses, with Appraisals
conducted on a Fair Market Value basis at the expense of Borrower by
the Appraiser; provided however that, for the
purposes of this subparagraph (B), the amount of all Eligible
Finished Goods Inventory attributable to joint venture arrangements in
accordance with the definition of Eligible Contracts in Backlog in
Article 1 herein after applying the foregoing formula shall not
exceed $3,000,000; plus






	 	(v)	 	the lesser of (the “Long Term Receivables Contract Lending
Formula”):






	 	(A)	 	forty percent (40%) of the aggregate net book
value of Eligible Long Term Receivables Contracts; or
	 
	 	(B)	 	eighty-five percent (85%) of the appraised
value of such Eligible Long Term Receivables Contracts expressed as a
percentage of net book value, net of estimated Liquidation Expenses,
with Appraisals conducted on a Fair Market Value basis at the expense
of Borrower by the Appraiser; plus






	 	(vi)	 	the lesser of (the “Real Property Lending Formula”):






	 	(A)	 	$10,000,000; or
	 
	 	(B)	 	Y — [(Y÷ 120) x N]






	 	 	 	For purposes of this Section 2.1(a)(vi), “Y” means FMV multiplied by 65% and
“N” means the number of months (or any part thereof) elapsed since the most recent
of (i) the date hereof; and (ii) the date of the most recent Appraisal and “FMV”
means the Fair Market Value of the Real Property as indicated in the most recent of
(X) the Appraisal of Cushman & Wakefield Limited dated October 28, 2009; and (Y) the
most recent Appraisal.
	 
	 	 	 	An Appraisal of the Real Property will be conducted prior to the date hereof and
annually thereafter unless otherwise agreed by Agent, each at the expense of
Borrower.
	 
	 	(b)	 	Agent may, in its discretion, from time to time reduce or otherwise revise the
Lending Formulas to the extent that Agent, in good faith, determines that: (i) the
general creditworthiness of the Clients has declined; or (ii) the liquidation value of
any of the Eligible Contracts, Leases and Inventory or Real Property, or any




- 33 -









 






	 	 	 	category thereof, has decreased; (iii) the nature and quality of the Eligible
Contracts, Leases and Inventory, the Real Property, and/or Eligible Accounts has
deteriorated; or (iv) the FMV of the Real Property has decreased. In determining
whether to reduce or otherwise revise the Lending Formulas, Agent may consider
events, conditions, contingencies or risks which are also considered in determining
Eligible Contracts, Leases and Inventory, Real Property, and/or Eligible Accounts or
in establishing Availability Reserves.
	 
	 	(c)	 	Except in Lenders’ discretion but subject to the terms hereof, the aggregate
amount of the Revolving Loans and the Letter of Credit Accommodations outstanding at
any time shall not exceed the lesser of:






	 	(i)	 	the Maximum Revolving Credit; and
	 
	 	(ii)	 	the amount available under the Lending Formulas as determined
by Agent less the Availability Reserves from time to time established by Agent






	 	(d)	 	In the event that the outstanding amount of the Revolving Loans, or the
aggregate amount of the outstanding Revolving Loans and Letter of Credit
Accommodations, exceed the amounts available under the Lending Formulas, the sub-limit
for Letter of Credit Accommodations set forth in Section 2.2(d), the Maximum
Revolving Credit, as applicable, or the aggregate amount of the outstanding Revolving
Loans, Letter of Credit Accommodation and the Revolving Term Loan exceed the Maximum
Credit or the aggregate amount of the outstanding Revolving Term Loans exceeds the
Maximum Revolving Term Credit, such event shall not limit, waive or otherwise affect
any rights of Agent or Lenders in that circumstance or on any future occasions and
Borrower shall, upon demand by Agent or Lenders, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such excess(es) for
which payment is demanded.





2.2 Letter of Credit Accommodations





	 	(a)	 	Subject to, and upon the terms and conditions contained herein, at the request
of Borrower, Agent agrees to provide or arrange for Letter of Credit Accommodations for
the account of Borrower in US Dollars containing terms and conditions reasonably
acceptable to Agent and the issuer thereof. Any payments made by Agent or Lenders to
any issuer thereof and/or related parties in connection with the Letter of Credit
Accommodations shall constitute additional Revolving Loans to Borrower pursuant to this
Article 2. Each Lender agrees to purchase an irrevocable and unconditional
participation in Letter of Credit Accommodations issued hereunder based on its Pro Rata
Share.
	 
	 	(b)	 	In addition to any charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations, Borrower shall pay to Agent, for
the account of Lenders based on their respective Pro Rata Shares, a letter of credit
fee at a rate equal to one and one half percent (1.5%) per annum on




- 34 -









 






	 	 	 	the daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the first
day of each succeeding month, except that Borrower shall pay to Agent, for the
account of Lenders based on their respective Pro Rata Shares, such letter of credit
fee, at Agent’s option, without notice, at a rate equal to four and one half percent
(4.5%) per annum on such daily outstanding balance for: (i) the period from and
after the date of maturity or termination hereof until Lenders have received full
and final payment of all Revolving Loans, and cash collateral has been posted in the
full amount of any then outstanding Letter of Credit Accommodations (notwithstanding
entry of a judgment against Borrower) and (ii) the period from and after the date of
the occurrence of an Event of Default for so long as such Event of Default is
continuing as determined by Agent. Such letter of credit fee shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed and the
obligation of Borrower to pay such fee shall survive the maturity or termination of
this Agreement.
	 
	 	(c)	 	Letter of Credit Accommodations are not available unless, on the date of the
proposed issuance thereof, the Revolving Loans available to Borrower (subject to
Section 2.1(c) are equal to, or greater than one hundred (100%) percent of the
face amount of the Letter of Credit Accommodation together with all other commitments
and obligations made or incurred by Lenders and Agent with respect thereto, including
bank fees and the Revolving Loans otherwise available shall be reduced accordingly.
	 
	 	(d)	 	Except in Agent’s discretion, the amount of all outstanding Letter of Credit
Accommodations and all other commitments and obligations made or incurred by Agent or
Lenders in connection therewith, including bank fees, shall not at any time exceed
$20,000,000. At any time an Event of Default exists or has occurred and is continuing,
upon Agent’s request, Borrower will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Agent for the Letter of Credit
Accommodations, and in either case, the Revolving Loans otherwise available to Borrower
shall not be reduced as provided in Section 2.2(c) to the extent of such cash
collateral.
	 
	 	(e)	 	Borrower shall indemnify and hold Agent and each Lender harmless from and
against any and all losses, claims, damages, liabilities, costs and expenses which
Agent and each Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto, including,
but not limited to, any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of Credit
Accommodation. Borrower assumes all risks with respect to the acts or omissions of the
drawer under or beneficiary of any Letter of Credit Accommodation and for such purposes
the drawer or beneficiary shall be deemed Borrower’s agent. Borrower assumes all risks
for, and agrees to pay, all foreign, federal, provincial and local taxes, duties and
levies relating to any goods subject to any Letter of Credit Accommodations or any
documents, drafts or acceptances




- 35 -









 






	 		 	thereunder. Borrower hereby releases and holds Agent and each Lender harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, by any issuer or correspondent or otherwise, other than acts, waivers,
errors, delays or omissions caused by the gross negligence or wilful misconduct of
Agent or a Lender, with respect to or relating to any Letter of Credit
Accommodation. The provisions of this Section 2.2(e) shall survive the
payment of the Obligations and the termination of this Agreement.
	 
	 	(f)	 	Nothing contained herein shall be deemed or construed to grant Borrower any
right or authority to pledge the credit of Agent or a Lender in any manner. None of
Agent or Lenders shall have any liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer unless Agent or a Lender has duly executed
and delivered to such issuer the application or a guarantee or indemnification in
writing with respect to such Letter of Credit Accommodation. Except as a result of
Agent’s or a Lender’s own gross negligence or wilful misconduct, Borrower shall be
bound by any interpretation made by Agent or a Lender, or any other issuer or
correspondent under or in connection with any Letter of Credit Accommodation or any
documents, drafts or acceptances thereunder, notwithstanding that such interpretation
may be inconsistent with any instructions of Borrower. At any time an Event of Default
exists or has occurred and is continuing, Agent, in its own name or in Borrower’s name,
shall have the sole and exclusive right and authority to, and Borrower shall not: (i)
approve or resolve any questions of non-compliance of documents, (ii) give any
instructions as to acceptance or rejection of any documents or goods, or (iii) execute
any and all applications for steamship or airway guaranties, indemnities or delivery
orders. At all times other than when an Event of Default exists or has occurred and is
continuing, Borrower shall be permitted, with the prior written consent of Agent to:
(i) grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, and (ii) to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit Accommodations, or
documents, drafts or acceptances thereunder or any letters of credit included in the
Collateral.
	 
	 	(g)	 	Any rights, remedies, duties or obligations granted or undertaken by Borrower
to any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement in favour of any issuer or correspondent relating
to any Letter of Credit Accommodation, shall be deemed to have been granted or
undertaken by Borrower to Agent and Lenders. Any duties or obligations undertaken by
Agent or any Lender to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement by Agent or any Lender in favour of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed
to have been undertaken by Agent and Lenders to Borrower.




- 36 -









 











2.3 Revolving Term Loan





	 	(a)	 	Subject to, and upon the terms and conditions contained herein, each Lender
severally (and not jointly) agrees to make its Pro Rata Share of Revolving Term Loans
by way of Euro Dollar Rate Loans and US Prime Rate Loans to Borrower from time to time
prior to the Revolving Term Loan Term Conversion Date in amounts requested by Borrower
up to the Maximum Revolving Term Credit.
	 
	 	(b)	 	On the Revolving Term Loan Term Conversion Date, (i) the outstanding amount of
the Revolving Term Loan not repaid by Borrower on such date shall convert to a term
loan to be repaid, together with interest and other amounts, in accordance with this
Agreement, (ii) Borrower may not request further advances under the Revolving Term Loan
notwithstanding any other terms of this Agreement, and (iii) the undrawn Revolving Term
Loan Commitments shall be cancelled.
	 
	 	(c)	 	On the Maturity Date, the outstanding balance of the Revolving Term Loan
(including principal, accrued and unpaid interest and other amounts due and payable
with respect thereto) shall be due and be payable.
	 
	 	(d)	 	On and after the Revolving Term Loan Term Conversion Date, the Revolving Term
Loan may be prepaid in whole or in part at any time without notice or penalty provided
that the funds used for any such prepayment (i) are generated from operations of
Borrower, (ii) are proceeds of an equity issue by Borrower or (iii) are proceeds of a
Revolving Loan. Prepayments of the Revolving Term Loan on and after the Revolving Term
Loan Term Conversion Date from any other source will be subject to the early prepayment
fees as follows (with such early prepayment fees being deemed included in the
Obligations):





	 	 	 
	Amount	 	Period of Prepayment
	1.5% of Revolving Term Loan being prepaid

	 	From the date hereof to and
including the 1st anniversary of
the date hereof
	 
	 	 
	1.0% of Revolving Term Loan being prepaid

	 	After the 1st anniversary of the
date hereof to and including the
2nd anniversary of the date
hereof
	 
	 	 
	0.5% of Revolving Term Loan being prepaid

	 	After the 2nd anniversary of the
date hereof to and including the
Maturity Date






- 37 -









 






ARTICLE 3

INTEREST AND FEES




3.1 Interest





	 	(a)	 	Borrower shall pay to Agent, for the account of Lenders based on their
respective Pro Rata Shares, interest on the outstanding principal amount of the
non-contingent Obligations at the applicable Interest Rate. Subject to Sections
2.1, 2.3, 3.1 and 3.2 hereof, Borrower may borrow, repay and
reborrow funds under the Loans by way of Euro Dollar Rate Loans and US Prime Rate
Loans.
	 
	 	(b)	 	Interest shall be payable by Borrower to Agent, for the account of Lenders
based on their respective Pro Rata Shares, monthly in arrears not later than the first
Business Day of each calendar month and shall be calculated on the basis of a three
hundred and sixty (360) day year and actual days elapsed. The interest rate applicable
to US Prime Rate Loans shall increase or decrease by an amount equal to each increase
or decrease in the US Prime Rate after any change in such rate is announced. All
interest accruing hereunder on and after an Event of Default or maturity or termination
hereof shall be payable on demand. In no event shall charges constituting interest
payable by Borrower to Agent, for the account of Lenders based on their respective Pro
Rata Shares, exceed the maximum amount or the rate permitted under any applicable law
or regulation, and if any part or provision of this Agreement is in contravention of
any such law or regulation, such part or provision shall be deemed amended to conform
thereto.
	 
	 	(c)	 	For purposes of disclosure under the Interest Act (Canada), where interest is
calculated pursuant hereto at a rate based upon a three hundred and sixty (360) day
year (the “US First Rate”), it is hereby agreed that the rate or percentage of interest
on a yearly basis is equivalent to such US First Rate multiplied by the actual number
of days in the year divided by 360.
	 
	 	(d)	 	Notwithstanding the provisions of this Article 3 or any other provision
of this Agreement, in no event shall the aggregate “interest” (as that term is defined
in Section 347 of the Criminal Code (Canada)) exceed the effective annual rate
of interest on the “credit advanced” (as defined therein) lawfully permitted under
Section 347 of the Criminal Code (Canada). The effective annual rate of
interest shall be determined in accordance with generally accepted actuarial practices
and principles over the term of the Loans, and in the event of a dispute, a certificate
of a Fellow of the Canadian Institute of Actuaries appointed by Agent will be
conclusive for the purposes of such determination.
	 
	 	(e)	 	A certificate of an authorized signing officer of Agent as to each amount
and/or each rate of interest payable hereunder from time to time shall be conclusive
evidence of such amount and of such rate, absent manifest error.
	 
	 	(f)	 	For greater certainty, whenever any amount is payable under any Financing
Agreement by Borrower as interest or as a fee which requires the calculation of an




- 38 -









 






	 	 	 	amount using a percentage per annum, each party to this Agreement acknowledges and
agrees that such amount shall be calculated as of the date payment is due without
application of the “deemed reinvestment principle” or the “effective yield method”.
As an example, when interest is calculated and payable monthly, the rate of interest
payable per month is 1/12 of the stated rate of interest per annum.
	 
	 	(g)	 	Any Euro Dollar Rate Loan shall automatically, at Agent’s option, either (i)
convert to US Prime Rate Loans upon the last day of the applicable Interest Period or
(ii) be rolled over for a further one (1) month Interest Period, unless Agent has
received and approved a request to continue such Euro Dollar Rate Loan for an Interest
Period chosen by Borrower at least three (3) Business Days prior to such last day in
accordance with the terms hereof. Any Euro Dollar Rate Loan shall, at Agent’s option,
upon notice by Agent to Borrower, be subsequently converted to US Prime Rate Loans upon
the occurrence of any Default or Event of Default which is continuing and otherwise
upon the Maturity Date. Borrower shall pay to Agent, upon demand by Agent (or Agent
may, at its option, charge any loan account of Borrower), any amounts required to
compensate Agent and Lenders for any loss, costs or expense incurred by Agent and
Lenders as a result of the conversion of Euro Dollar Rate Loans to US Prime Rate Loans
pursuant to any of the foregoing. Upon the occurrence of a Default or an Event of
Default that is continuing, or if Borrower repays or prepays a Euro Dollar Rate Loan on
a day other than the last day of the applicable Interest Period, Borrower shall
indemnify Agent and Lenders for any loss or expense suffered or incurred by Agent or
Lenders including any loss of profit or expenses Agent or Lenders incur by reason of
the liquidation or redeployment of deposits or other funds acquired by it to effect or
maintain any and all Euro Dollar Rate Loans or any interest or other charges payable to
lenders of funds borrowed by Agent and Lenders in order to maintain such Euro Dollar
Rate Loans together with any other charges, costs or expenses incurred by Agent and
Lenders relative thereto.
	 
	 	(h)	 	So long as no Default or Event of Default shall have occurred and be continuing
and the circumstances in Section 3.2(b) and 3.2(c) do not exist,
Borrower may from time to time request in writing Euro Dollar Rate Loans or may request
in writing that US Prime Rate Loans be converted to Euro Dollar Rate Loans or that any
existing Euro Dollar Rate Loans continue for an additional Interest Period. Such
request from Borrower shall specify the amount of the Euro Dollar Rate Loans or the
amount of the US Prime Rate Loans to be converted to Euro Dollar Rate Loans or the
amount of the Euro Dollar Rate Loans to be continued (subject to the limits set forth
below) and the Interest Period to be applicable to such Euro Dollar Rate Loans.
Subject to the terms and conditions contained herein, three (3) Business Days after
receipt by Agent of such a written request from Borrower, such Euro Dollar Rate Loans
shall be made or US Prime Rate Loans shall be converted to Euro Dollar Rate Loans or
such Euro Dollar Rate Loans shall continue, as applicable; provided,
that:




- 39 -









 












	 	(i)	 	no Default or Event of Default shall exist or have occurred and
be continuing;
	 
	 	(ii)	 	no party hereto shall have sent any notice of termination of
this Agreement;
	 
	 	(iii)	 	Borrower shall have complied with such customary procedures as
are generally established by Agent and Lenders for all customers and specified
by Agent and Lenders to Borrower from time to time for requests by Borrower for
Euro Dollar Rate Loans;
	 
	 	(iv)	 	no more than six (6) Interest Periods (for all outstanding Euro
Dollar Rate Loans) may be in effect at any one time;
	 
	 	(v)	 	the aggregate amount of the Euro Dollar Rate Loans must be in
an amount not less than Five Million US Dollars ($5,000,000) or an integral
multiple of One Million US Dollars ($1,000,000) in excess thereof; and
	 
	 	(vi)	 	Agent and Lenders shall have determined that the Interest
Period or Adjusted Euro Dollar Rate is available to Agent and Lenders and can
be readily determined as of the date of the request for such Euro Dollar Rate
Loan by Borrower.




Subject to the terms and conditions contained herein, any request by Borrower to Agent for Euro
Dollar Rate Loans or to convert US Prime Rate Loans to Euro Dollar Rate Loans or to continue any
existing Euro Dollar Rate Loans shall be in writing and shall be irrevocable. Notwithstanding
anything to the contrary contained herein, Agent and Lenders shall not be required to purchase US
Dollar deposits in the London interbank market to fund any Euro Dollar Rate Loans, but the
provisions hereof shall be deemed to apply as if Agent or Lenders had purchased such deposits to
fund the Euro Dollar Rate Loans. Subject to the terms and conditions contained herein, any request
by Borrower to Agent for a US Prime Rate Loan shall be in writing, shall be irrevocable and shall
be given to Agent no later than 11:00 a.m. on the Business Day upon which Borrower requires such US
Prime Rate Loan to be advanced to Borrower and if such request is provided after 11:00 a.m. on a
Business Day then such US Prime Rate Loan shall be advanced on the next following Business Day.




3.2 Increased Costs and Changes in Law





	 	(a)	 	If after the date hereof, either:






	 	(i)	 	any change in (other than any change by way of imposition or
increase of reserve requirements included in the Reserve Percentage), or in the
interpretation of, any law or regulation is introduced, including with respect
to reserve requirements, applicable to a Lender or any banking or financial
institution from whom a Lender borrows funds or obtains credit (a “Funding
Bank”); or




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	 	(ii)	 	a Funding Bank or a Lender complies with any future guideline
or request from any central bank or other Governmental Authority; or
	 
	 	(iii)	 	a Funding Bank or a Lender determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or a Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law where
customarily complied with by responsible financial institutions) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or
would have the direct or indirect effect of reducing the rate of return on a
Lender’s capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank’s or Lender’s policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material,




and the result of any of the foregoing events described in clauses (i), (ii) or
(iii) is or results in an increase in the cost to a Lender of funding or maintaining the
Loans, or its Commitment, then Borrower shall from time to time upon demand by Agent pay to Agent
additional amounts sufficient to indemnify Lenders against such increased cost on an after-tax
basis (after taking into account applicable deductions and credits in respect of the amount
indemnified); provided that a Lender claiming additional amounts under this
Section 3.2(a) agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different applicable lending office if the making
of such a designation would avoid the need for, or reduce the amount of, such increased cost that
may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate as to the amount of such increased cost shall be
submitted to Borrower by Agent and shall be conclusive, absent manifest error.





	 	(b)	 	If prior to the first day of any Interest Period:






	 	(i)	 	Agent shall have determined (which determination shall be
conclusive and binding upon Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Adjusted Euro Dollar Rate for such Interest Period;
	 
	 	(ii)	 	Agent has received notice from a Lender that that Adjusted Euro
Dollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lender of making or maintaining
Euro Dollar Rate Loans during such Interest Period; or




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	 	(iii)	 	US Dollar deposits in the principal amounts of the Euro Dollar
Rate Loans to which such Interest Period is to be applicable are not generally
available in the London interbank market,




Agent shall give notice thereof to Borrower as soon as practicable thereafter (which notice shall
be withdrawn whenever such circumstances no longer exist). If such notice is given (A) any Euro
Dollar Rate Loans requested to be made on the first day of such Interest Period shall be made as a
US Prime Rate Loan, (B) any Loans that were to have been converted on the first day of such
Interest Period to or continue as Euro Dollar Rate Loans shall be converted to or continued as US
Prime Rate Loans and (C) each outstanding Euro Dollar Rate Loan shall be converted, on the last day
of the then-current Interest Period thereof, to US Prime Rate Loans. Until such notice has been
withdrawn by Agent, no further Euro Dollar Rate Loans shall be made or continued as such, nor shall
Borrower have the right to convert U.S. Prime Rate Loans to Euro Dollar Rate Loans.





	 	(c)	 	Notwithstanding any other provision herein, if the adoption of or any change in
any law, treaty, rule or regulation or final, non-appealable determination of an
arbitrator or a court or other Governmental Authority or in the interpretation or
application thereof occurring after the date hereof shall make it unlawful for Agent or
any Lender to make or maintain Euro Dollar Rate Loans as contemplated by this
Agreement:






	 	(i)	 	Agent shall promptly give written notice of such circumstances
to Borrower (which notice shall be withdrawn whenever such circumstances no
longer exist); provided, however, that, before making
any such demand, such Lender agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to designate a
different Euro Dollar lending office if the making of such a designation would
allow such Lender or its Euro dollar lending office to continue to perform its
obligations to make Euro Dollar Rate Loans or to continue to fund or maintain
Euro Dollar Rate Loans and would not, in the judgment of such Lender, be
otherwise disadvantageous to such Lender;
	 
	 	(ii)	 	the commitment of each Lender hereunder to make Euro Dollar
Rate Loans, continue Euro Dollar Rate Loans as such and convert US Prime Rate
Loans to Euro Dollar Rate Loans shall forthwith be cancelled and, until such
time as it shall no longer be unlawful for such Lender to make or maintain Euro
Dollar Rate Loans, such Lender shall then have a commitment only to make a US
Prime Rate Loan when a Euro Dollar Rate Loan is requested; and
	 
	 	(iii)	 	such Lender’s Loans then outstanding as Euro Dollar Rate
Loans, if any, shall be converted automatically to US Prime Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Euro Dollar Rate Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, Borrower shall pay to




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	 	 	 	such Lender such amounts, if any, as may be required pursuant to Section
3.2(d) below.






	 	(d)	 	Borrower shall indemnify Agent and each Lender and shall hold Agent and each
Lender harmless from any loss or expense which Agent or such Lender may sustain or
incur as a consequence of:






	 	(i)	 	default by Borrower in making a borrowing of, conversion into
or extension of an Euro Dollar Rate Loan after Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement; and
	 
	 	(ii)	 	the making of a prepayment of Euro Dollar Rate Loans on a day
which is not the last day of an Interest Period with respect thereto.




With respect to Euro Dollar Rate Loans, such indemnification may include an amount equal to the
greater of (i) the excess, if any, of (1) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of the applicable
Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period
that would have commenced on the date of such failure) in each case at the applicable rate of
interest for such Euro Dollar Rate Loans provided for herein over (2) the amount of
interest (as determined by such Agent or such Lender) which would have accrued to Agent or such
Lender on such amount by placing such amount on deposit for a comparable period with leading banks
in the interbank Euro Dollar market; and (ii) an amount equal to the interest that would have been
payable if the Euro Dollar Rate Loan had been a US Prime Rate Loan. This covenant shall survive
the termination or non-renewal of this Agreement and the payment of the Obligations.





	 	(e)	 	In the event that Borrower has hedged a Euro Dollar Rate Loan with an interest
rate swap with Agent, a Lender or any of its Affiliates under which Borrower is to make
its payments based on a fixed rate and Agent, such Lender or any of its Affiliates is
to make its payments based on a rate equal to the Adjusted Euro Dollar Rate, then the
fallback rate (being the US Prime Rate in the circumstances described in this
Section 3.2) on any given day while the swap with Agent, such Lender or any of
its Affiliates is in effect will be the sum of (i) the fallback floating rate payable
by Agent, such Lender or any of its Affiliates that is in effect under the interest
rate swap for that day (without regard to any interest rate spread added thereto under
the terms of the interest rate swap) plus (ii) the percentage spread in the definition
of Interest Rate applicable to Euro Dollar Rate Loans.
	 
	 	(f)	 	In the event any Lender demands payment of costs or additional amounts pursuant
to this Section 3.2 or Section 9.4 or asserts, pursuant to Section
3.2(c), that it is unlawful for such Lender to make Euro Dollar Rate Loans or
becomes a Non-Funding Lender then (subject to such Lender’s right to rescind such
demand or assertion within ten (10) Business Days after the notice from the Borrower
referred to below) Borrower may, upon twenty (20) Business Days’ prior written notice
to such Lender and Agent, elect to cause such Lender to assign its Loans






- 43 -











 






	 	 	 	and Commitments in full to one or more Persons selected by Borrower so long as (i)
each such Person satisfies the criteria of an Eligible Transferee and is
satisfactory to Agent, (ii) such Lender receives payment in full in cash of the
outstanding principal amount of all Loans made by it and all accrued and unpaid
interest thereon and all other amounts due and payable to such Lender as of the date
of such assignment and (iii) each such assignee agrees to accept such assignment and
to assume all obligations of such Lender hereunder in accordance with Section
11.1.





3.3 Servicing Fee



Borrower shall pay to Agent monthly a servicing fee in an amount equal to $5,000 in respect of
Agent’s services for each month (or part thereof) while this Agreement remains in effect and for so
long thereafter as any of the non-contingent Obligations (other than Letter of Credit
Accommodations) are outstanding, which fee shall be fully earned as of and payable in advance on
the date hereof and on the first day of each month hereafter.




3.4 Unused Line Fee





	 	(a)	 	Borrower shall pay to Agent, for the account of Lenders based on their
respective Pro Rata Shares, monthly an unused line fee at a rate equal to one quarter
of one percent (0.25%) per annum calculated upon the amount by which the then
applicable Maximum Revolving Credit exceeds the average daily principal balance of the
outstanding Revolving Loans and Letter of Credit Accommodations during the immediately
preceding month (or part thereof) while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be payable on the
first day of each month in arrears. For further clarity, no Obligations will be
outstanding once this Agreement has been terminated and all Obligations have been fully
and indefeasibly satisfied and cash collateral has been posted in the full amount then
outstanding of any Letter of Credit Accommodations, if any.
	 
	 	(b)	 	Borrower shall pay to Agent, for the account of Lenders based on their
respective Pro Rata Shares, monthly an unused line fee at a rate equal to one quarter
of one percent (0.25%) per annum calculated upon the amount by which the then
applicable Maximum Revolving Term Credit exceeds the average of the daily principal
balance of the outstanding Revolving Term Loans during the immediately preceding month
(or part thereof) while this Agreement is in effect and up to and including the
Revolving Term Loan Term Conversion Date, which fee shall be payable on the first day
of each month in arrears with the final payment thereof due on the Revolving Term Loan
Term Conversion Date.





3.5 Closing Fee



Borrower shall pay to Agent, for the account of Lenders based on their respective Pro Rata Shares,
a closing fee in the amount of $200,000, which closing fee shall be fully earned by each Lender and
paid by Borrower on the date of the execution of this Agreement.




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ARTICLE 4

CONDITIONS PRECEDENT




4.1 Conditions Precedent to the Availability of Loans and Letter of Credit Accommodations



Each of the following is a condition precedent to Lenders making available the Loans and making
available the Letter of Credit Accommodations hereunder on the date hereof:





	 	(a)	 	Agent and Lenders shall have received the Financing Agreements, agreements,
instruments and documents listed on the Closing Agenda attached hereto as Schedule
4.1(a) , all in form and substance satisfactory to Agent and Lenders;
	 
	 	(b)	 	no event or circumstance shall have occurred which has had or could be
reasonably expected to have a material adverse change in the assets or business of
Borrower and Obligors since the date of the most recent audited financial statements of
Borrower and Obligors received by Agent and no change or event shall have occurred
which would impair the ability of Borrower or any Obligor to perform its obligations
under any of the Financing Agreements to which it is a party or of Agent to enforce the
Obligations or realize upon the Collateral;
	 
	 	(c)	 	other than what Borrower and Obligors have disclosed in the Information
Certificate, and the information certificates executed and delivered by such Obligors,
there shall exist no material pending or threatened litigation, proceeding, bankruptcy
or insolvency, injunction, order or claims with respect to Borrower and Obligors or
this Agreement and no defaults or events of default under or with respect to any other
indebtedness or material contract of Borrower and Obligors;
	 
	 	(d)	 	Agent and Lenders and their respective counsel shall have completed their
business (including field examinations) and legal due diligence with results
satisfactory to Agent and Lenders; and
	 
	 	(e)	 	Agent shall have received evidence, in form and substance reasonably
satisfactory to Agent, or be satisfied that there exists no material misstatements in
or omissions from the financial and other materials furnished to Agent by Borrower and
Obligors.





4.2 Conditions Precedent to the Availability of All Loans and Letter of Credit Accommodations



Each of the following is an additional condition precedent to Lenders making available the Loans
and/or making available Letter of Credit Accommodations to Borrower, including the initial Loans
and Letter of Credit Accommodations and any future Revolving Loans and Letter of Credit
Accommodations:




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	 	(a)	 	all steps required with respect to notice and request for the making available
of the Loans and/or making available Letter of Credit Accommodations to Borrower set
out or contemplated herein have been completed;
	 
	 	(b)	 	all representations and warranties contained in the Financing Agreements shall
be true and correct in all material respects (except where qualified by materiality,
then in all respects) with the same effect as though such representations and
warranties had been made on and as of the date of the making of each such Loan or
providing each such Letter of Credit Accommodation and after giving effect thereto; and
	 
	 	(c)	 	no Event of Default or Default shall exist or have occurred and be continuing
on and as of the date of the making of such Loan or providing, amending or extending
each such Letter of Credit Accommodation and after giving effect thereto.





ARTICLE 5

INTENTIONALLY DELETED




ARTICLE 6

COLLECTION AND ADMINISTRATION



6.1 Borrower’s Loan Account



Agent shall maintain one or more loan account(s) on its books in which shall be recorded: (a) all
Loans, Letter of Credit Accommodations and other Obligations and the Collateral; (b) all payments
made by or on behalf of Borrower; and (c) all other appropriate debits and credits as provided in
this Agreement, including fees, charges, costs, expenses and interest. All entries in the loan
account(s) shall be made in accordance with Agent’s customary practices as in effect from time to
time.




6.2 Statements



Agent shall render to Borrower each month a statement setting forth the balance in Borrower’s loan
account(s) maintained by Agent for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent
adjustment by Agent but shall, absent manifest errors or omissions, be considered correct and
deemed accepted by Borrower and conclusively binding upon Borrower as an account stated except to
the extent that Agent receives a written notice from Borrower of any specific exceptions of
Borrower thereto within thirty (30) days after the date such statement has been mailed by Agent.
Until such time as Agent shall have rendered to Borrower a written statement as provided above, the
balance in Borrower’s loan account(s) shall be presumptive evidence of the amounts due and owing to
Agent and Lenders by Borrower.




6.3 Collection of Accounts





	 	(a)	 	Borrower shall establish and maintain, at its expense, blocked accounts (the
“Blocked Accounts”), as Agent may specify, and Agent may establish and




 - 46 - 









 






	 	 	 	maintain bank accounts of Agent (“Payment Accounts”) in each case with such banks as
are acceptable to Agent into which Borrower shall, in accordance with Agent’s
instructions, promptly deposit and direct its account debtors that remit payments by
electronic funds transfers to directly remit, all payments on Accounts and all
payments constituting proceeds of Inventory or other Collateral, with the exception
of payments received in connection with Excluded Accounts, in the identical form in
which such payments are made, whether by cash, cheque or other manner. The banks at
which the Blocked Accounts are established shall enter into an agreement, in form
and substance satisfactory to Agent, providing that all items received or deposited
in the Blocked Accounts are subject to the first priority Lien of Agent, that the
depository bank has no Lien upon, or right to set-off against the Blocked Accounts,
the items received for deposit therein, or the funds from time to time on deposit
therein and that upon receipt of Agent’s notice that a Cash Dominion Event has
occurred and is continuing, the depository bank will, without further inquiry, wire,
or otherwise transfer, in immediately available funds, on a daily basis, all funds
received or deposited into the Blocked Accounts to the Payment Accounts or such
other bank account of Agent as Agent may from time to time designate for such
purpose. Borrower agrees that all payments made to such Blocked Accounts shall be
subject to the first priority security interest of Agent for the benefit of Secured
Parties and that all payments made, in accordance with this Section, to such Payment
Accounts or other funds received and collected by Agent, whether on the Accounts or
as proceeds of Inventory or other Collateral or otherwise shall be the property of
Agent on behalf of Secured Parties to the extent of any outstanding Obligations.






	 	(b)	 	Such payments made to the Payment Account (conditional upon final collection
which may be subject to fees, expenses and charges resulting from things such as the
dishonour of cheques), will be applied, for all purposes, including for purposes of
calculating the amount of the Revolving Loans available to Borrower and of calculating
interest on the Loans, to the Loans on the same Business Day of receipt by Agent of
immediately available funds in the Payment Account provided such payments and notice
thereof are received in accordance with Agent’s usual and customary practices as in
effect from time to time and within sufficient time to credit Borrower’s loan account
on such day, and if not, then on the next Business Day. If Agent receives funds in a
Payment Account at any time at which no Loans are outstanding or in excess of then
outstanding Loans, Agent shall hold such funds in trust for Borrower and shall, if no
Default or Event of Default has occurred and is continuing, by no later than the
Business Day following receipt by Agent of: (i) immediately available funds in the
Payment Account, provided such payments and notice thereof are received in accordance
with Agent’s usual and customary practices as in effect from time to time; and (ii) a
direction from Borrower to advance such funds, advance such excess funds to the Blocked
Account. Agent shall no later than the Business Day following the day on which there
ceases to be a Cash Dominion Event, deliver to the bank at which the Blocked Account is
maintained an executed “Unblocked Notice” in the form attached to the Blocked Account
Agreement.




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	 	(c)	 	Borrower and all of its affiliates, Subsidiaries, shareholders, directors,
employees or agents shall receive, subject to the first priority security interest of
Agent, for the benefit of Secured Parties, any monies, cheques, notes, drafts or any
other payment relating to and/or proceeds of Accounts or other Collateral, with the
exception of Excluded Accounts, which come into their possession or under their control
and immediately upon receipt thereof, shall deposit or cause the same to be deposited
in the Blocked Accounts, or remit the same or cause the same to be remitted, in kind,
to Agent. Borrower agrees to reimburse Agent on demand for any amounts owed or paid by
Agent to any bank at which a Blocked Account or Payment Account is established or any
other bank or person involved in the transfer of funds to or from the Blocked Accounts
or the Payment Accounts arising out of Agent’s required payments to or indemnification
of such bank or person. The obligation of Borrower to reimburse Agent for such amounts
pursuant to this Section 6.3 shall survive the termination of this Agreement.





6.4 Payments





	 	(a)	 	All Obligations (other than obligations, liabilities and indebtedness in
connection with any Secured Hedging Agreement (which shall be paid in accordance with
the terms thereof)) shall be payable to the Payment Account as provided in Section
6.3 or such other place in Canada as Agent may designate from time to time. Agent
shall apply payments received or collected from Borrower or for the account of Borrower
(including the monetary proceeds of collections or of realization upon any Collateral)
as follows:






	 	(i)	 	first, to pay any fees, indemnities or expenses
reimbursements then due to Agent or Lenders from Borrower;
	 
	 	(ii)	 	second, to pay interest then due in respect of any
Loans;
	 
	 	(iii)	 	third, to pay principal then due in respect of the
Loans and outstanding obligations due under Secured Hedging Agreements;
	 
	 	(iv)	 	fourth, to pay the outstanding Loans, and after the
occurrence of and during the continuance of an Event of Default, to pay or
pre-pay such of the Obligations, whether or not then due, in such order and
manner as Agent determines.






	 	(b)	 	Payments and collections received in any currency other than Canadian Dollars
or US Dollars will be accepted and/or applied at the sole discretion of Agent. At
Agent’s option, all principal, interest, fees, costs, expenses and other charges
provided for in the Financing Agreements or the Secured Hedging Agreements may be
charged directly to the loan account(s) of Borrower. Borrower shall make all payments
to Agent on the Obligations free and clear of, and without deduction or withholding for
or on account of, any set-off, counterclaim, defence, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to




 - 48 - 









 






	 	 	 	the payment of, any of the Obligations, Agent is required to surrender or return
such payment or proceeds to any Person for any reason, then the Obligations intended
to be satisfied by such payment or proceeds shall be reinstated and continue and
this Agreement shall continue in full force and effect as if such payment or
proceeds had not been received by Agent. Borrower shall be liable to pay to Agent,
and does hereby indemnify and hold Agent harmless for the amount of any payments or
proceeds surrendered or returned. Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Agent in reliance upon
such payment or proceeds. The indemnification in the second preceding sentence
shall survive the payment of the Obligations and the termination of this Agreement.





6.5 Authorization to Make Loans and Letter of Credit Accommodations



Each Lender is authorized to make the Loans and provide the Letter of Credit Accommodations based
upon written instructions received by Agent from the persons authorized by Borrower as notified in
writing by Borrower to Agent from time to time or, at the discretion of Lenders, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or Letter of Credit Accommodations
hereunder shall specify the date on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the amount of the requested
Loan. Requests received after 11:00 a.m. Toronto time on any day shall be deemed to have been made
as of the opening of business on the immediately following Business Day. All Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed to have been made to, and
at the request of and for the benefit of, Borrower when deposited to the credit of Borrower or
otherwise disbursed or established in accordance with the instructions of Borrower or in accordance
with the terms and conditions of this Agreement.




6.6 Use of Proceeds



Borrower shall use the proceeds of the Loans provided by Lenders to Borrower hereunder for (a)
costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of
the Financing Agreements and (b) any remaining proceeds and all other Loans made or Letter of
Credit Accommodations provided by Lenders to Borrower pursuant to the provisions hereof shall be
used by Borrower only for general operating, working capital and other proper corporate purposes of
Borrower and its Subsidiaries not otherwise prohibited by the terms hereof




6.7 Pro Rata Treatment



Except to the extent otherwise provided in this Agreement, (a) the making and conversion of Loans
shall be made by Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of Lenders or their
respective Affiliates in respect of any Obligations due on a particular day shall be allocated
among the Lenders and their respective Affiliates, as applicable, entitled to such payments based
on their respective Pro Rata Shares or Obligations, as the case may be, and shall be distributed
accordingly.




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6.8 Obligations Several; Independent Nature of Lenders’ Rights



The obligations of each Lender hereunder are several, and no Lender shall be responsible for the
obligations or commitment of any other Lender hereunder. Nothing contained in this Agreement or
any of the other Financing Agreements and no action taken by the Lenders pursuant hereto or thereto
shall be deemed to constitute the Lenders to be a partnership, as association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and subject to Section 11.13(f) hereof, each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any proceeding for such
purpose.




ARTICLE 7

COLLATERAL REPORTING AND COVENANTS




7.1 Collateral Reporting





	 	(a)	 	Borrower shall provide Agent with the following documents in a form
satisfactory to Agent:






	 	(i)	 	on a periodic basis as required by Lender, a schedule of
Accounts, sales made, credits issued and cash received;
	 
	 	(ii)	 	on a monthly basis within twenty (20) days after each month end
or more frequently as Agent may request:






	 	(A)	 	agings of accounts payable; and
	 
	 	(B)	 	copies of bank statements and trial balances;






	 	(iii)	 	within twenty (20) days after each month end or more
frequently as Agent may request, a duly completed and executed Borrowing Base
Certificate together with any information which Agent reasonably requests in
connection therewith which Borrowing Base Certificate shall, in no event, be
deemed to limit, impair or otherwise affect Agent and Lenders and their
respective rights contained in this Agreement and in the event of any conflict
or inconsistency between the calculations made in the Borrowing Base
Certificate and those made by Agent, those made by Agent shall be binding and
conclusive on Borrower absent manifest error;
	 
	 	(iv)	 	on a weekly basis, on the Monday of each week, and if such
Monday does not fall on a Business Day then on the next Business Day:






	 	(A)	 	details of cash receipts;
	 
	 	(B)	 	a schedule, in the form attached herewith as
Schedule 7.1(a)(iv)(B), of the aggregate amount of cash
collections made by Borrower in the preceding week together with
evidence, in form




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	 	 	 	and substance satisfactory to Agent, of the deposit of such
collections into the Blocked Accounts;
	 
	 	(C)	 	a schedule, in the form attached herewith as
Schedule 7.1(a)(iv)(C), of the Trailing Cash Collections; and
	 
	 	(D)	 	such other reports as to the Collateral as
Agent shall request from time to time;






	 	(v)	 	upon Agent’s request:






	 	(A)	 	copies of customer statements and credit memos,
remittance advices and reports, and copies of deposit slips and bank
statements;
	 
	 	(B)	 	copies of shipping and delivery documents;
	 
	 	(C)	 	copies of purchase orders, invoices and
delivery documents for Inventory and Equipment acquired by Borrower;
	 
	 	(D)	 	agings of accounts receivable on a monthly
basis within twenty (20) days after the end of each month or more
frequently as Agent may request; and
	 
	 	(E)	 	such other reports as to the Collateral as
Agent shall request from time to time.




If any of Borrower’s records or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, Borrower hereby irrevocably authorizes, at
any time that an Event of Default exists or has occurred and is continuing, such service,
contractor, shipper or agent to deliver such records, reports, and related documents to Agent and
to follow Agent’s instructions with respect to further services.





	 	(b)	 	Borrower shall, at its expense, once in any twelve (12) month period, but at
any time or times as Agent may request on or after an Event of Default that is
continuing, deliver or cause to be delivered to Agent written Appraisals as to all of
the Collateral.





7.2 Accounts Covenants





	 	(a)	 	Borrower shall promptly upon becoming aware thereof, notify Agent of: (i) any
material delay in Borrower’s performance of any of its obligations to any Account
debtor or the assertion of any claims, offsets, defences or counterclaims by any
Account debtor, or any material disputes with Account debtors, or any material
settlement, adjustment or compromise thereof; and (ii) all material adverse information
relating to the financial condition of any Account debtor; and (iii) any event or
circumstance which, to Borrower’s knowledge, would cause Agent to consider any then
existing Accounts as no longer constituting Eligible Accounts.





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	 	 	 	No credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without Agent’s consent, except in the
ordinary course of Borrower’s business in accordance with good commercial practice.
So long as no Event of Default exists or has occurred and is continuing, Borrower
shall settle, adjust or compromise any claim, offset, counterclaim or dispute with
any account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account debtors
or grant any credits, discounts or allowances.
	 
	 	(b)	 	With respect to each Account: (i) the amounts shown on any invoice delivered to
Agent or schedule thereof delivered to Agent shall be true and complete; (ii) no
payments shall be made thereon except payments immediately deposited into the Blocked
Accounts pursuant to the terms of this Agreement; (iii) no credit, discount, allowance
or extension or agreement for any of the foregoing shall be granted to any account
debtor except as permitted in this Agreement and except for credits, discounts,
allowances or extensions made or given in the ordinary course of Borrower’s business in
accordance with good commercial practice; (iv) there shall be no set-offs, deductions,
contras, defences, counterclaims or material disputes existing or asserted with respect
thereto except as reported to Agent in accordance with the terms of this Agreement; and
(v) none of the transactions giving rise thereto will violate any applicable federal or
provincial laws or regulations, all documentation relating thereto will be legally
sufficient under such laws and regulations and all such documentation will be legally
enforceable in accordance with its terms.
	 
	 	(c)	 	At any time that an Event of Default exists or has occurred and is continuing,
Agent shall have the right, acting in good faith, in Agent’s name or in the name of a
nominee of Agent, to verify the validity, amount or any other matter relating to any
Account or other Collateral, by mail, telephone, facsimile transmission or otherwise.
	 
	 	(d)	 	Borrower shall deliver or cause to be delivered to Agent, with appropriate
endorsement and assignment, with full recourse to Borrower, all chattel paper and
instruments which Borrower now owns or may at any time acquire promptly upon Borrower’s
receipt thereof, except as Agent may otherwise agree.
	 
	 	(e)	 	Agent may, at any time or times that an Event of Default exists or has occurred
and is continuing: (i) notify any or all account debtors that the Accounts have been
assigned to Agent and that Agent has a security interest therein and Agent may direct
any or all accounts debtors to make payment of Accounts directly to Agent; (ii) extend
the time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all Accounts or
other obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment thereof
without affecting any of the Obligations; (iii) demand, collect or enforce payment of
any Accounts or such other obligations, but without




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	 	 	 	any duty to do so, and Agent shall not be liable for its failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys with
respect thereto; and (iv) take whatever other action Agent may deem necessary or
desirable for the protection of its interests. At any time that an Event of Default
exists or has occurred and is continuing, at Agent’s request, all invoices and
statements sent to any account debtor shall state that the Accounts and such other
obligations have been assigned to Agent and are payable directly and only to Agent
and Borrower shall deliver to Agent such originals of documents evidencing the sale
and delivery of goods or the performance of services giving rise to any Accounts as
Agent may require.





7.3 Inventory Covenants



With respect to the Inventory: (a) Borrower shall at all times maintain inventory records
satisfactory to Agent, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, Borrower’s cost therefor and monthly withdrawals therefrom
and additions thereto; (b) Borrower shall conduct a physical count of the Inventory at least once
each year, but at any time or times as Agent may request on or after an Event of Default that is
continuing, and promptly following such physical inventory shall supply Agent with a report in the
form and with such specificity as may be satisfactory to Agent concerning such physical count; (c)
Borrower shall not, other than as permitted herein, including pursuant to Section 9.7(b),
remove any Inventory from the locations set forth or permitted herein, without the prior written
consent of Agent, except for sales and movement of Inventory in the ordinary course of Borrower’s
business and except to move Inventory directly from one location set forth or permitted herein to
another such location; (d) Borrower shall produce, use, store and maintain the Inventory, with all
reasonable care and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws; (e) Borrower assumes all responsibility and liability arising from
or relating to the production, use, sale or other disposition of the Inventory; (f) Borrower shall
not sell Inventory to any customer on approval, or any other basis which entitles the customer to
return or may obligate Borrower to repurchase such Inventory; (g) Borrower shall keep the Inventory
in good and marketable condition; and (h) Borrower shall not, without prior written notice to
Agent, acquire or accept any Inventory on consignment or approval.




7.4 Equipment Covenants



With respect to the Equipment: (a) Borrower shall keep the Equipment in good order, repair, running
and marketable condition (ordinary wear and tear excepted); (b) Borrower shall use the Equipment
with all reasonable care and caution and in accordance with applicable standards of any insurance
and in conformity with all applicable laws; (c) the Equipment is and shall be used in Borrower’s
business and not for personal, family or household use; (d) Borrower shall not, other than as
permitted herein, including pursuant to Section 9.7(b), remove any Equipment from the
locations set forth or permitted herein, without the prior written consent of Agent, except for
sales (as permitted in Section 9.7(b) hereof) and movement of Equipment in the ordinary
course of Borrower’s business and except to move Equipment directly from one location set forth or
permitted herein to another such location; (e) the Equipment is now and shall remain personal
property and Borrower shall not permit any of the Equipment to be or become a part of or affixed




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to real property; and (f) Borrower assumes all responsibility and liability arising from the use of
the Equipment.




7.5 IP Collateral Covenants



With respect to the IP Collateral:





	 	(a)	 	Borrower shall notify Agent forthwith in writing:






	 	(i)	 	of the failure of any licensee, if any, to pay or perform any
material obligations due to Borrower in respect of the License Agreements;
	 
	 	(ii)	 	of any reason any patent, patent application, patent
registration, trademark, trademark application, trademark registration,
copyright, copyright application, copyright registration, industrial design
application or industrial design registration forming part of the material IP
Collateral or any other application, registration or proceeding relating to any
of the material IP Collateral may become barred, abandoned, refused, rejected,
forfeited, withdrawn, expired, lapsed, cancelled, expunged, opposed or
dedicated or of any adverse determination or development (including the
institution of any proceeding in any Intellectual Property Office or any court
or tribunal) regarding Borrower’s ownership of or rights in any of the material
IP Collateral, its right to register or otherwise protect the same, or to keep
and maintain the exclusive rights in same, or the validity of same; or
	 
	 	(iii)	 	of any action, proceeding, or allegation that the IP
Collateral infringes upon, misappropriates, violates, or otherwise interferes
with the rights of any Person.






	 	(b)	 	Borrower shall do everything commercially necessary or desirable to preserve
and maintain the IP Collateral. Particularly, and without limiting the foregoing,
unless Borrower receives the prior written consent of Agent to the contrary, Borrower
shall do each of the following:






	 	(i)	 	perform all obligations pursuant to the License Agreements;
	 
	 	(ii)	 	commence and prosecute such suits, proceedings or other actions
for infringement, passing off, unfair competition, dilution or other damage as
are in its reasonable business judgment necessary to protect the IP Collateral;
	 
	 	(iii)	 	enforce its rights under any agreements (including the License
Agreements) which enhance the value of and/or protect the IP Collateral;
	 
	 	(iv)	 	make all necessary filings and recordings in the Intellectual
Property Offices and elsewhere necessary to protect its interest in the
Collateral, including protection of any new IP Collateral arising in the
Collateral,




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	 	 	 	including making, maintaining and pursuing (including proceedings before
Intellectual Property Offices) each application and registration with
respect thereto; and
	 
	 	(v)	 	promptly notify Agent in writing when it commences any steps
referred to in SubSections 7.5(b)(ii) and 7.5(b)(iii) hereof
and provide Agent with such information with respect thereto as Agent may
request.






	 	(c)	 	Borrower shall not, other than in the ordinary course of its business prior to
an Event of Default that is continuing, without the prior written consent of Agent,
terminate, amend, enter into or renew any agreement, oral or written, or any indenture,
instrument or undertaking relating to the IP Collateral, including the License
Agreements or any other license agreements and/or sub-license agreements;
provided however that Borrower may, at any time prior to an
Event of Default, terminate, amend, enter into or renew any agreement, oral or written,
or any indenture, instrument, undertaking or license (other than exclusive licenses)
relating to the IP Collateral, in the ordinary course of its business; it being
understood and agreed hereunder that for the purposes of this Section 7.5(c)
the “ordinary course of business” shall be deemed to include the entry into license
arrangements in connection with new business opportunities by Borrower which would not
reasonably be expected to have a material adverse effect on (a) the business, condition
(financial or otherwise), operations, performance, properties or prospects of Borrower,
(b) the rights and remedies of any Agent or any Lender under any Financing Agreement or
(c) the ability of Borrower or any Obligor to perform its obligations under any
Financing Agreement to which it is a party.
	 
	 	(d)	 	Borrower shall at Borrower’s sole cost and expense perform all acts and execute
all documents, including grants of security interests or assignments in forms suitable
for filing with the Intellectual Property Offices in Canada and the United States, as
may be requested by Agent at any time and from time to time to evidence, perfect,
maintain, record and enforce Agent’s interest in the IP Collateral, or otherwise in
furtherance of the provisions of this Agreement.
	 
	 	(e)	 	Borrower shall:






	 	(i)	 	unless Agent consents in writing otherwise, not do any act or
omit to do any act, other than in the ordinary course of its business, whereby
any of the IP Collateral, may lapse, become abandoned or dedicated to the
public, enter the public domain, lose its quality of confidence, become
indistinct, or become unenforceable;
	 
	 	(ii)	 	unless Agent consents in writing otherwise, or unless the
failure to so act would not reasonably be expected to have a material adverse
effect on the business of Borrower, with respect to any Trade-mark forming part
of the Collateral:





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	 	(A)	 	continue the use of any such Trade-marks in
order to maintain all of the Trade-marks in full force free from any
claim of abandonment;
	 
	 	(B)	 	maintain as in the past the character and
quality of the wares and services offered in association with such
Trade-marks, and use its reasonable best efforts to require its
licensees to maintain as in the past the character and quality of the
wares and services offered in association with such Trade-marks; and
	 
	 	(C)	 	require that all use by any Person of any such
Trade-marks shall be pursuant to a license that provides Borrower with
the requisite control and other provisions to maintain the
distinctiveness of such Trade-marks.





7.6 Real Property Covenants



With respect to the Real Property: (a) Borrower shall, at its expense, at any time or times as
Agent may request on or after an Event of Default has occurred and is continuing, deliver or cause
to be delivered to Agent written reports or Appraisals as to the Real Property; (b) Borrower shall
keep the Real Property in good order, repair and marketable condition (ordinary wear and tear
excepted); (c) Borrower shall use the Real Property in accordance with applicable requirements of
any insurance and in conformity with all applicable laws, unless the failure to conform would not
reasonably be expected singly or when aggregated with any other nonconformity to have a materially
adverse effect on its business or undertaking or its ability to fulfil its obligations hereunder;
(d) the Real Property is and shall be used in Borrower’s business and not for personal, family,
household or farming use; (e) Borrower shall defend its title to the Real Property against any
adverse claims unless the failure to defend would not reasonably be expected, singly or when
aggregated with any other failure to defend, to have a materially adverse effect on its business or
undertaking or its ability to fulfil its obligations hereunder; (f) Borrower shall not surrender,
quit claim or grant any easement, right-of-way or other right or servitude benefiting or burdening
the Real Property without the prior consent of Agent, such consent not to be unreasonably withheld;
and (g) Borrower assumes all responsibility and liability arising from the use and occupation of
the Real Property.




7.7 Power of Attorney



Borrower hereby irrevocably designates and appoints Agent (and all persons designated by Agent) as
Borrower’s true and lawful attorney-in-fact, and authorizes Agent, in Borrower’s or Agent’s name,
to: (a) at any time an Event of Default exists or has occurred and is continuing: (i) demand
payment on Accounts or other proceeds of the Contracts and Leases or other Collateral, (ii) enforce
payment of Accounts by legal proceedings or otherwise, (iii) exercise all of Borrower’s rights and
remedies to collect any Account or other Collateral, (iv) sell or assign any Account upon such
terms, for such amount and at such time or times as Agent deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any Account, (vii) prepare, file
and sign Borrower’s name on any proof of claim in bankruptcy or other similar document against an
account debtor, (viii) notify the post office authorities to




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change the address for delivery of Borrower’s mail to an address designated by Agent, and open and
dispose of all mail addressed to Borrower, (ix) do all acts and things which are necessary, in
Agent’s determination, to fulfil Borrower’s obligations under the Financing Agreements, (x) have
access to any lockbox or postal box into which Borrower’s mail is deposited, (xi) endorse
Borrower’s name upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto or any other Collateral, and
(xii) sign Borrower’s name on any verification of Accounts and notices thereof to account debtors,
(b) at any time an Event of Default and/or a Cash Dominion Event exists or has occurred and is
continuing to: (i) endorse Borrower’s name upon any items of payment or proceeds thereof and
deposit the same in Agent’s account for application to the Obligations; and (ii) take control in
any manner of any item of payment or proceeds thereof (to the extent that the Blocked Account
instructions are not otherwise respected); and (c) at any time, to execute in Borrower’s name and
file any PPSA, UCC or other financing statements or amendments thereto in respect of the security
interests granted to Agent pursuant to any of the Financing Agreements if Borrower has not done so
within two (2) days from Agent’s request. Borrower hereby releases Agent and its officers,
employees and designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except as a result of
Agent’s own gross negligence or wilful misconduct as determined pursuant to a final non-appealable
order of a court of competent jurisdiction.




7.8 Right to Cure



Agent may, at any time or times that an Event of Default exists or has occurred and is continuing,
at its option: (a) cure any default by Borrower under any agreement with a third party or pay or
bond on appeal any judgment entered against Borrower; (b) discharge taxes, Liens at any time levied
on or existing with respect to the Collateral; and (c) pay any amount, incur any expense or perform
any act which, in Agent’s good faith judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent with respect thereto. Agent may add any
amounts so expended to the Obligations and charge Borrower’s account therefor, such amounts to be
repayable by Borrower on demand. Agent shall be under no obligation to effect such cure, payment
or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of
Borrower. Any payment made or other action taken by Agent under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.




7.9 Access to Premises





	 	(a)	 	From time to time as requested by Agent, at the cost and expense of Borrower:
(i) Agent or its designee shall have complete access to all of Borrower’s premises
during normal business hours and after reasonable notice to Borrower, or at any time
and without notice to Borrower if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the Collateral and
all of Borrower’s books and records, including the Records; and (ii) Borrower shall
promptly furnish to Agent such copies of such books and records or extracts therefrom
as Agent may request, and (iii) Agent or its designee may use during normal business
hours such of Borrower’s personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an




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	 	 	 	Event of Default exists or has occurred and is continuing for the collection of
Accounts and realization of other Collateral.






	 	(b)	 	Provided that an Event of Default has not occurred and is continuing, Agent
shall use all reasonable efforts to keep confidential, in accordance with its customary
procedures for handling confidential information and safe and sound lending practices,
any non-public information made available by Borrower to Agent pursuant to Section
7.9(a), and all copies thereof, provided that, nothing in this Section
7.9(b) shall limit the disclosure of any such information: (i) to the extent
required by statute, rule, regulation, subpoena or court order; (ii) to bank examiners
and other regulators, auditors and/or accountants; (iii) in connection with any
litigation to which Agent or a Lender is a party; (iv) to any assignee or participant
(or prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant), as applicable, shall have first agreed in writing
to treat such information as confidential in accordance with this Section
7.9(b); and (v) to counsel for Agent or any Lender or any participant or assignee
(or prospective participant or assignee). In no event shall this Section
7.9(b), or any other provision of this Agreement or any applicable law be deemed
to: (i) apply to or restrict disclosure of information that has been or is made public
by Borrower or any third party without breach by Agent of this Section 7.9(b)
or otherwise become generally available to the public other than as a result of a
disclosure in violation hereof; (ii) apply to or restrict disclosure of information
that was or becomes available to Agent on a non-confidential basis from a person other
than Borrower; (iii) require Agent to return any materials furnished by Borrower to
Agent; or (iv) prevent Agent from responding to routine informational requests in
accordance with applicable industry standards relating to the exchange of credit
information.





ARTICLE 8

REPRESENTATIONS AND WARRANTIES



Borrower hereby represents and warrants to Agent and each Lender the following (which shall survive
the execution and delivery of this Agreement), the truth and accuracy of which are a continuing
condition of the making of Revolving Loans and providing Letter of Credit Accommodations by Lenders
to Borrower:




8.1 Corporate Existence, Power and Authority; Subsidiaries; Solvency



Borrower is a corporation duly incorporated, validly existing and duly organized under the laws of
its jurisdiction of incorporation and is duly qualified or registered as a foreign or
extra-provincial corporation in all provinces, states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify would not have a
material adverse effect on Borrower’s financial condition, results of operation or business or the
rights of Agent in or to any of the Collateral. The execution, delivery and performance of the
Financing Agreements and the transactions contemplated thereunder are all within Borrower’s
corporate powers, have been duly authorized and are not in contravention of law or the terms of
Borrower’s




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certificate of incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower is a party or by which Borrower or its property are
bound. The Financing Agreements constitute legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms. Borrower does not have any Subsidiaries
except as set forth on the Information Certificate and on the Borrower’s corporate structure chart
attached as Schedule 8.1 hereto. Borrower is not insolvent.




8.2 Financial Statements; No Material Adverse Change



All financial statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Agent have been prepared in accordance with GAAP and fairly present the financial
condition and the results of operation of Borrower as at the dates and for the periods set forth
therein. Except as disclosed in any interim financial statements furnished by Borrower to Agent
prior to the date of this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Borrower, since the date of the
most recent audited financial statements furnished by Borrower to Agent prior to the date of this
Agreement.




8.3 Chief Executive Office; Collateral Locations



The chief executive office of Borrower and Borrower’s Records concerning Accounts are located only
at the address set forth on the Borrower’s signature page below and its only other places of
business and the only other locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of Borrower to establish new locations in accordance
with Section 9.2 below and to move Inventory and Equipment as permitted in Sections
7.3 and 7.4, respectively. The Information Certificate correctly identifies any of
such locations which are not owned by Borrower and sets forth the owners and/or operators thereof
and to the best of Borrower’s knowledge, the holders of any mortgages on such locations.




8.4 Priority of Liens; Title to Properties



The Liens granted to Agent and Original Lender under the Financing Agreements constitute valid and
perfected first priority Liens in and upon the Collateral subject only to Permitted Liens.
Borrower has good and marketable title to all of its properties and assets subject to no Liens,
except Permitted Liens.




8.5 Tax Returns



Borrower has filed, or caused to be filed, in a timely manner (with extensions) all tax returns,
reports and declarations which are required to be filed by it (except those in respect of taxes the
calculation or payment of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower and except for those returns for those jurisdictions
in which failure to do so would not have a material adverse effect on the financial condition of
Borrower). All information in such tax returns, reports and declarations is complete and accurate
in all material respects. Borrower has paid or caused to be paid all taxes due and payable or
claimed due and payable in any assessment received by it, except taxes the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and available to
Borrower and with respect to which adequate reserves have been set aside on its books.




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Adequate provision has been made for the payment of all accrued and unpaid federal, provincial,
municipal, local, foreign and other taxes whether or not yet due and payable and whether or not
disputed.




8.6 Litigation



Except as set forth on the Information Certificate, there is no present investigation by any
Governmental Authority pending, or to the best of Borrower’s knowledge threatened, against or
affecting Borrower, its assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of Borrower’s knowledge threatened, against Borrower or its assets
or business, or against or affecting any transactions contemplated by this Agreement, which in each
of the foregoing cases, can reasonably be expected to result in any material adverse change in the
assets or business of Borrower or would impair the ability of Borrower to perform its obligations
under any of the Financing Agreements to which it is a party or of Agent to enforce any Obligations
or realize upon any Collateral.




8.7 Compliance with Other Agreements and Applicable Laws



Borrower is not in default in any respect under, or in violation in any respect of any of the terms
of, any agreement, contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound, including the Contracts and Leases, and Borrower is in
compliance in all respects with all applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders of any foreign, federal, provincial or local governmental authority
except for any default or lack of compliance that would not reasonably be expected to have a
material adverse effect on (a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of Borrower, (b) the rights and remedies of any Agent or any
Lender under any Financing Agreement or (c) the ability of Borrower or any Obligor to performs its
obligations under any Financing Agreement to which it is a party.




8.8 Bank Accounts



All of the deposit accounts, investment accounts or other accounts in the name of or used by
Borrower maintained at any bank or other financial institution are set forth on Schedule
8.8 hereto, subject to the right of Borrower to establish new accounts in accordance with
Section 9.17 below.




8.9 Accuracy and Completeness of Information



All information furnished by or on behalf of Borrower in writing to Agent or a Lender in connection
with any of the Financing Agreements or any transaction contemplated hereby or thereby, including
all information on the Information Certificate, is true and correct in all material respects on the
date as of which such information is dated or certified and does not omit any material fact
necessary in order to make such information not misleading, in addition, the Information
Certificate attaches the form(s) of the agreements generally used for the Capital Leases and
Operating Leases, together with a breakdown of which agreements constitute Capital Leases and which
agreements constitute Operating Leases, together with any and all exceptions thereto, and have been
delivered to Agent for review. Borrower represents and warrants that none of the Contracts and
Leases include contractual provisions restricting the assignability




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thereof to any Lender or Agent or to an assignee thereof upon exercise of the Financing Agreements,
with the exception of those restrictive provisions set out on Schedule 8.9 hereof. No
event or circumstance has occurred which has had or could reasonably be expected to have a material
adverse affect on the business or assets of Borrower, which has not been fully and accurately
disclosed to Agent in writing.




8.10 Status of Pension Plans



To the best knowledge of Borrower:





	 	(a)	 	The Pension Plans are duly registered under all applicable provincial pension
benefits legislation and there are no other Canadian pension plans of Borrower other
than the Pension Plans.
	 
	 	(b)	 	All obligations of Borrower (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the Pension
Plans or the funding agreements therefor have been performed in a timely fashion.
There are no outstanding disputes concerning the assets held pursuant to any such
funding agreement.
	 
	 	(c)	 	All contributions or premiums required to be made by Borrower to the Pension
Plans have been made in a timely fashion in accordance with the terms of the Pension
Plans and applicable laws and regulations.
	 
	 	(d)	 	All employee contributions to the Pension Plans required to be made by way of
authorized payroll deduction have been properly withheld by Borrower and fully paid
into the Pension Plans in a timely fashion.
	 
	 	(e)	 	All reports and disclosures relating to the Pension Plans required by any
applicable laws or regulations have been filed or distributed in a timely fashion.
	 
	 	(f)	 	There have been no improper withdrawals, or applications of, the assets of any
of the Pension Plans.
	 
	 	(g)	 	No amount is owing by any of the Pension Plans under the Income Tax Act
(Canada) or any provincial taxation statute.
	 
	 	(h)	 	None of the Pension Plans is a defined benefit registered pension plan or
contains any defined benefit provision.
	 
	 	(i)	 	Borrower, after diligent enquiry, has neither any knowledge, nor any grounds
for believing, that any of the Pension Plans is the subject of an investigation or any
other proceeding, action or claim. There exists no state of facts which after notice
or lapse of time or both could reasonably be expected to give rise to any such
proceeding, action or claim.
	 
	 	(j)	 	Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or State law. Each Plan which is
intended




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	 	 	 	to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best of Borrower’s
knowledge, nothing has occurred which would cause the loss of such qualification
where such loss, when combined with other such occurrences or failures to comply,
has or could reasonably be expected to have a material adverse effect on (i) the
business, condition (financial or otherwise), operations, performance, properties or
prospects of Borrower, (ii) the rights and remedies of any Agent or any Lender under
any Financing Agreement or (iii) the ability of Borrower or any Obligor to perform
its obligation under any Financing Agreements to which it is party. Each Borrower
and its ERISA Affiliates have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver has been
made with respect to any Plan.






	 	(k)	 	Except as set forth in the Information Certificate, there are no pending, or to
the best of Borrower’s knowledge, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan. Except as set forth in the
Information Certificate, there has been no prohibited transaction or violation of the
fiduciary responsibility rules that would reasonably be expected to result in a
material liability to the Plan.
	 
	 	(l)	 	Except as set forth in the Information Certificate, (i) no ERISA Event has
occurred or is reasonably expected to occur that would reasonably be expected to result
in a material liability to the Plan; (ii) Borrower and its ERISA Affiliates have not
incurred and do not reasonably expect to incur, any liability under Title IV of
ERISA with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iii) Borrower and its ERISA Affiliates have not
incurred and do not reasonably expect to incur any liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (iv) Borrower and its ERISA Affiliates have not engaged in a
transaction that would be subject to Section 4069 or 4212(c) of ERISA.





8.11 Environmental Compliance





	 	(a)	 	Borrower has not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates any applicable
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder which may be expected to have a material adverse effect on
Borrower and the operations of Borrower comply in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals and similar
authorizations thereunder.
	 
	 	(b)	 	There is no investigation, proceeding, complaint, order, directive, claim,
citation or notice by any Governmental Authority or any other person nor is any pending
or to the best of Borrower’s knowledge threatened, with respect to any non-




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	 	 	 	compliance with or violation of the requirements of any Environmental Law by
Borrower or the release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials or any other
environmental, health or safety matter, which affects Borrower or its business,
operations or assets or any properties at which Borrower has transported, stored or
disposed of any Hazardous Materials.
	 
	 	(c)	 	Borrower has no material liability (contingent or otherwise) in connection with
a release, spill or discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling, production
or disposal of any Hazardous Materials.
	 
	 	(d)	 	Borrower has all licenses, permits, certificates, approvals or similar
authorizations required to be obtained or filed in connection with the operations of
Borrower under any Environmental Law and all of such licenses, permits, certificates,
approvals or similar authorizations are valid and in full force and effect.
	 
	 	(e)	 	Borrower does not maintain and is not required by applicable law or otherwise
to establish and maintain a system to assure and monitor its continued compliance with
all Environmental Laws in all of its operations. In the event Borrower establishes
such a system it shall include annual reviews of such compliance by employees or agents
of Borrower who are familiar with the requirements of the Environmental Laws and copies
of all environmental surveys, audits, assessments, feasibility studies and results of
remedial investigations shall be promptly furnished, or caused to be furnished, by
Borrower to Agent all at Borrower’s expense.





8.12 Inter-Creditor and Subordination Agreements



There are no intercreditor agreements and/or subordination agreements to which Borrower and/or any
Obligor is a party.




8.13 Survival of Warranties; Cumulative



All representations and warranties contained in any of the Financing Agreements shall survive the
execution and delivery of this Agreement and shall be deemed to have been made again to Agent and
each Lender on the date of each additional borrowing or other credit accommodation hereunder and
shall be conclusively presumed to have been relied on by Agent and each Lender regardless of any
investigation made or information possessed by Agent or any Lender. The representations and
warranties set forth herein shall be cumulative and in addition to any other representations or
warranties which Borrower shall now or hereafter give, or cause to be given, to Agent or any
Lender.




8.14 U.S. Legislation





	 	(a)	 	Neither Borrower nor any of its Subsidiaries or Affiliates is in violation of
any of the country or list based economic and trade sanctions administered and enforced




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	 	 	 	by OFAC. Neither Borrower nor any of its Subsidiaries or Affiliates (i) is a
Sanctioned Person or a Sanctioned Entity, (ii) has any of its assets in Sanctioned
Entities, or (iii) derives any of its operating income from investments in, or
transactions with, Sanctioned Persons or Sanctioned Entities. The proceeds of the
Loans and other financial accommodation hereunder will not be used and have not been
used to fund any operations in, finance any investments or activities in, or make
any payments to, a Sanctioned Person or a Sanctioned Entity.






	 	(b)	 	None of the requesting or borrowing of the Loans or the requesting or issuance,
extension or renewal of any Letter of Credit Accommodations or the use of the proceeds
of any thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as
amended) (the “Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V,
as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or
executive order relating thereto (including, but not limited to, (i) Executive order
13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
“Executive Order”) and (ii) the Patriot Act. Neither Borrower nor any of its
Subsidiaries or Affiliates is or will become a “blocked person” as described in the
Executive Order, the Trading with the Enemy Act or the Foreign Assets Control
Regulations or engages or will engage in any dealings or transactions, or be otherwise
associated, with any such “blocked person”.
	 
	 	(c)	 	No part of the proceeds of the Loans will be used for any purpose that violates
the provisions of any of Regulation T, U or X of the Board of Governors of the Federal
Reserve System of the United States of America or any other regulation of such Board of
Governors, Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System and Borrower does not own any such “margin
stock”.
	 
	 	(d)	 	No part of the proceeds of the Loans or other financial accommodations made or
provided hereunder will be used by Borrower or any of its Subsidiaries or Affiliates,
directly or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office, or
anyone else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States Foreign
Corrupt Practices Act of 1977, as amended.





8.15 Material Operating Subsidiaries



The Obligors are the only material operating subsidiaries of Borrower other than IMAX Japan.




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ARTICLE 9

AFFIRMATIVE AND NEGATIVE COVENANTS




9.1 Maintenance of Existence



Except to the extent otherwise permitted herein, Borrower shall at all times preserve, renew and
keep in full, force and effect its corporate existence and rights and franchises with respect
thereto and maintain in full force and effect all permits, licenses, trademarks, tradenames,
approvals, authorizations, leases and contracts necessary to carry on the business as presently or
proposed to be conducted. Borrower shall give Agent fifteen (15) days prior written notice of any
proposed change in its corporate name, which notice shall set forth the new name and Borrower shall
deliver to Agent a certified copy of the Articles of Amendment of Borrower providing for the name
change immediately following its filing.




9.2 New Collateral Locations



Borrower may open any new location within Canada, the United States of America or any other
jurisdiction provided Borrower: (a) gives Agent thirty (30) days prior written notice of the
intended opening of any such new location; and (b) executes and delivers, or causes to be executed
and delivered, to Agent such agreements, documents, and instruments as Agent may deem necessary or
desirable to protect its interests in the Collateral at such location, including PPSA, UCC and
other financing statements and such other evidence as Agent may require of the perfection of
Agent’s first priority Liens where required by Agent. If any Lender determines, acting reasonably,
that any applicable law has made it unlawful, or that any Governmental Authority has asserted that
it is unlawful, for such Lender to hold or benefit from a Lien over real property pursuant to any
law of the United States or any State thereof, such Lender may notify Agent and disclaim any
benefit of such Lien to the extent of such illegality; provided, that such determination or
disclaimer shall not invalidate or render unenforceable such Lien for the benefit of Agent, any
other Lender or Secured Party.





	9.3	 	Compliance with Laws, Regulations, Etc.






	 	(a)	 	Borrower shall, at all times, comply in all respects with all laws, rules,
regulations, licenses, permits, approvals and orders applicable to it and duly observe
all requirements of any Federal, Provincial or local governmental authority, including
all statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including all of the
Environmental Laws except for any matter (i) that Borrower is contesting in good faith
by appropriate proceedings diligently pursued or (ii) which is not reasonably expected
to have a material adverse effect on Borrower or its property, operations, business,
prospects or conditions (financial or otherwise).
	 
	 	(b)	 	Borrower shall take prompt and appropriate action to respond to any
non-compliance with any of the Environmental Laws and shall regularly report to Agent
on such response.
	 
	 	(c)	 	Borrower shall give both oral and written notice to Agent promptly upon
Borrower’s receipt of any notice of, or Borrower’s otherwise obtaining knowledge




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	 	 	 	of: (i) the occurrence of any event involving the actual release, spill or discharge
of any Hazardous Material that would be in violation of Environmental Laws; or (ii)
any investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower, or (B) the release, spill or discharge, threatened or
actual, of any Hazardous Material, or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials, or (D) any other environmental, health or safety matter, which affects
any Borrower or its business, operations or assets or any properties at which
Borrower transported, stored or disposed of any Hazardous Materials.






	 	(d)	 	Without limiting the generality of the foregoing, whenever Agent determines
that there is non-compliance, or any condition which requires any action by or on
behalf of Borrower in order to avoid any material non-compliance, with any
Environmental Law, Borrower shall, at Agent’s request and Borrower’s expense: (i) cause
an independent environmental engineer acceptable to Agent to conduct such tests of the
site where Borrower’s non-compliance or alleged non-compliance with such Environmental
Laws has occurred as to such non-compliance and prepare and deliver to Agent a report
as to such non-compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate of the
costs thereof; and (ii) provide to Agent a supplemental report of such engineer
whenever the scope of such non-compliance, or Borrower’s response thereto or the
estimated costs thereof, shall change in any material respect.
	 
	 	(e)	 	Borrower shall indemnify and hold harmless Agent and each Lender and their
respective directors, officers, employees, agents, invitees, representatives,
successors and assigns, from and against any and all losses, claims, damages,
liabilities, costs, and expenses (including reasonable legal fees and expenses)
directly or indirectly arising out of or attributable to the use, generation,
manufacture, reproduction, storage, release, threatened release, spill, discharge,
disposal or presence of a Hazardous Material, including the costs of any required or
necessary repair, cleanup or other remedial work with respect to any property of
Borrower and the preparation and implementation of any closure, remedial or other
required plans. All representations, warranties, covenants and indemnifications in
this Section 9.3 shall survive the payment of the Obligations and the
termination of this Agreement.





9.4 Payment of Taxes and Claims



Borrower shall duly pay and discharge all taxes, assessments, contributions and governmental
charges upon or against it or its properties or assets, except for (a) taxes, assessments,
contributions and governmental charges the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and with respect to which
adequate reserves have been set aside on its books or (b) taxes, assessments, contributions and
governmental charges for which the failure to pay (i) is not reasonably expected to have a material
adverse effect on Borrower or its property, operations, business, prospects or conditions




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(financial or otherwise) and (ii) does not, and could not, have a trust (including a statutory
trust) imposed to provide for payment or Lien ranking or capable of ranking senior to or pari passu
with the Liens securing the Obligations on any of the Collateral under federal, provincial, state,
county, municipal or local law. Borrower shall be liable for any tax or penalties imposed on Agent
or a Lender as a result of the financing arrangements provided for herein and Borrower agrees to
indemnify and hold Agent and each Lender harmless with respect to the foregoing, and to repay to
Agent and/or a Lender, as the case may be, on demand the amount thereof, and until paid by Borrower
such amount shall be added and deemed part of the Revolving Loans, provided, that, nothing
contained herein shall be construed to require Borrower to pay any income, capital, financial
institution or franchise taxes attributable to the income of Agent or Lenders from any amounts
charged or paid hereunder to Agent or Lenders, and provided, further that any Lender claiming any
additional amounts hereunder agrees to use reasonable efforts (consistent with the internal policy
and legal and regulatory restrictions) to change its applicable lending office if the making of
such a change would avoid the need for, or reduce the amount of any such additional amount that may
thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement.




9.5 Insurance





	 	(a)	 	Borrower shall, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried by
corporations of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be satisfactory to Agent, acting
in good faith, as to form, amount and insurer. Borrower shall furnish certificates,
policies or endorsements to Agent as Agent shall require as proof of such insurance,
and, if Borrower fails to do so Agent is authorized, but not required, to obtain such
insurance at the expense of Borrower. All policies shall provide for at least thirty
(30) days prior written notice to Agent of any cancellation or reduction of coverage
and that Agent may act as attorney for Borrower in obtaining, and at any time an Event
of Default exists or has occurred and is continuing, adjusting, settling, amending and
cancelling such insurance.
	 
	 	(b)	 	Borrower shall cause Agent to be named as a loss payee and/or an additional
insured, as applicable (but without any liability for any premiums) under such
insurance policies and Borrower shall obtain non-contributory lender’s loss payable
endorsements to all insurance policies (other than third party liability policies) in
form and substance satisfactory to Agent. Such lender’s loss payable endorsements
shall specify that at any time an Event of Default exists or has occurred and is
continuing, the proceeds of such insurance shall all be payable to Agent as its
interests may appear and at all other times in accordance with Section 9.5(c).
	 
	 	(c)	 	Subject to Section 9.5(b) hereof, the proceeds of insurance:





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	 	(i)	 	which are equal to or less than $2,000,000 per occurrence shall
be payable to Borrower;
	 
	 	(ii)	 	which are greater than $2,000,000 and less than $10,000,000 per
occurrence, shall be payable to Borrower and Borrower shall provide Agent with
evidence, satisfactory to Agent in its discretion, that such Collateral can be
repaired and/or replaced within one hundred and eighty (180) days from the date
Borrower receives such proceeds. Borrower shall forthwith apply such proceeds
to the costs of repairing and/or replacing the Collateral within such one
hundred and eighty (180) day period otherwise Borrower shall remit all such
proceeds directly into the Payment Account and to be dealt with in accordance
with Section 6.3 hereof; or
	 
	 	(iii)	 	which are greater than $10,000,000 per occurrence, shall be
payable directly to Agent and in the event that such Collateral can be repaired
and/or replaced within one hundred and eighty (180) days from the date Agent
receives such proceeds, Borrower shall provide evidence, within five (5) days
from the date Agent receives such proceeds, to Agent that such Collateral can
be repaired and/or replaced within such one hundred and eighty (180) days and
if such evidence is satisfactory Agent, in its discretion, Agent shall release
such insurance proceeds to Borrower. Borrower shall forthwith apply such
proceeds to the costs of repairing and/or replacing the Collateral within such
one hundred and eighty (180) days, in the event Borrower does not provide Agent
with the evidence required within five (5) days from the date Agent receives
such proceeds, Agent shall forthwith remit such proceeds to the Payment Account
to be dealt with in accordance with Section 6.3 hereof.






	 	(d)	 	notwithstanding anything to the contrary contained in Section 9.5(c)
hereof, insurance proceeds received in respect of:






	 	(i)	 	Collateral comprised of real property shall be payable directly
into the Payment Account and dealt with in accordance with Section 6.3
hereof;
	 
	 	(ii)	 	proceeds of any keyman insurance policies, or cash surrender
value thereof, assigned to Agent, shall be payable to the Payment Account and
dealt with in accordance with Section 6.3 hereof; and
	 
	 	(iii)	 	proceeds of business interruption insurance assigned to Agent,
shall be payable to the Payment Account and dealt with in accordance with
Section 6.3 hereof.





9.6 Financial Statements and Other Information





	 	(a)	 	Borrower shall keep proper books and records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the Collateral and
the business of Borrower and its Subsidiaries (if any) in accordance with GAAP




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	 	 	 	and Borrower shall furnish or cause to be furnished to Agent, all to be in form,
scope and substance satisfactory to Agent:






	 	(i)	 	within thirty (30) days after the end of each fiscal month,
monthly unaudited consolidated financial statements (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders’ equity with comparisons to projections and same
period in previous fiscal year), all in reasonable detail, fairly presenting
the financial position and the results of the operations of Borrower and its
Subsidiaries as of the end of and through such fiscal month together with a
management discussion of such financial position and results in form acceptable
to Agent;
	 
	 	(ii)	 	within one hundred and twenty (120) days after the end of each
fiscal year, audited consolidated financial statements of Borrower and its
Subsidiaries (including in each case balance sheets, statements of income and
loss, statements of changes in financial position and statements of
shareholders’ equity), and the accompanying notes thereto, including any
consolidating worksheets prepared on a quarterly basis in connection therewith,
all in reasonable detail, fairly presenting the financial position and the
results of the operations of Borrower and its Subsidiaries as of the end of and
for such fiscal year, together with the unqualified opinion of independent
chartered accountants, which accountants shall be an independent accounting
firm selected by Borrower and acceptable to Agent, that such financial
statements have been prepared in accordance with GAAP, and present fairly the
results of operations and financial condition of Borrower and its Subsidiaries
as of the end of and for the fiscal year then ended;
	 
	 	(iii)	 	by February 28 of each fiscal year or earlier if and when
available (including in draft form), projections for such fiscal year; and
	 
	 	(iv)	 	as Agent may from time to time reasonably request, and provided
that Borrower prepares such information in the ordinary course of business,
budgets, management letters, forecasts, business plans, cash flows and other
information respecting the Collateral and the business of Borrower.






	 	(b)	 	Borrower shall promptly notify Agent in writing of the details of (i) any loss,
damage, investigation, action, suit, proceeding or claim relating to the Collateral or
any other property which is security for the Obligations and which would result in any
material adverse change in Borrower’s business, properties, assets, goodwill or
condition, financial or otherwise and (ii) the occurrence of any Event of Default or
Default.
	 
	 	(c)	 	Borrower shall promptly after the sending or filing thereof furnish or cause to
be furnished to Agent copies of all reports which Borrower sends to its shareholders
generally and copies of all reports and registration statements which Borrower files
with any provincial securities commission or securities exchange.






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	 	(d)	 	Agent is hereby authorized to deliver a copy of any financial statement
or any other information relating to the business of Borrower to any court or other
government agency, if legally required to do so, or to any participant or assignee or
prospective participant or assignee. Borrower hereby irrevocably authorizes and
directs, at any time an Event of Default exists or has occurred and is continuing, all
accountants or auditors to deliver to Agent, at Borrower’s expense, copies of the
financial statements of Borrower and any reports or management letters prepared by
such accountants or auditors on behalf of Borrower and to disclose to Agent such
information as they may have regarding the business of Borrower. Any documents,
schedules, invoices or other papers delivered to Agent may be destroyed or otherwise
disposed of by Agent one (1) year after the same are delivered to Agent, except as
otherwise designated by Borrower to Agent in writing.






	 	(e)	 	Borrower shall within ten (10) days after the end of each month provide a
certificate of a senior officer of Borrower, in form and content satisfactory to Agent,
certifying that Borrower has paid or caused to be paid (or the obligors listed in
Schedule 9.10A hereto have paid) in full: (i) all rent and other amounts due
and payable with respect to any premises, with the exception of theatres owned and
operated by Borrower, leased by Borrower or any Obligor (or the obligors listed in
Schedule 9.10A hereto) during such month; and (ii) all payments and other
amounts due and payable from it with respect to any Pension Plan during such month.






	 	(f)	 	Borrower shall within thirty (30) days after the end of each month provide a
Compliance Certificate, in form and content satisfactory to Agent, providing details of
guarantees entered into by Borrower and such other matters relating to Borrower as
Agent may from time to time request.






	9.7	 	Sale of Assets, Consolidation, Amalgamation, Dissolution, Etc.






	 	(a)	 	Borrower shall not, directly or indirectly, without the prior written consent
of Agent which is not to be unreasonably withheld or unless otherwise permitted herein:
(i) amalgamate with any other Person or permit any other Person to amalgamate with it,
or (ii) sell, assign, lease, transfer, abandon or otherwise dispose of any Collateral
to any other Person, or (iii) form or acquire any Subsidiaries, or (d) wind up,
liquidate or dissolve or (iv) agree to do any of the foregoing.






	 	(b)	 	Notwithstanding Section 9.7(a) hereof and provided that an Event of
Default does not then exist, Borrower shall be permitted to: (i) sell Inventory in the
ordinary course of business; (ii) sell Equipment at fair market value in the ordinary
course of business; (iii) dispose of worn-out or obsolete Equipment or Equipment no
longer used in the business of Borrower; (iv) except as permitted in this Section
9.7(b), sell assets at fair market value provided that such assets are not the Real
Property or IP Collateral; (v) sell assets which include intellectual property as an
incidental component of such asset, provided such sale does not materially




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	 	 	 	diminish or impair the IP Collateral to be retained by Borrower hereunder; (vi)
amalgamate with an Affiliate or permit an Affiliate to amalgamate with it provided
that prior to the completion of such amalgamation Agent shall be entitled to obtain
and perfect a Lien from such Affiliate and/or amalgamated entity, in form and
substance substantially similar to that obtained from the Obligors existing as at
the date hereof, or that obtained from Borrower, if applicable; (vii) form or
acquire any Subsidiaries provided that Agent shall be provided with thirty (30) days
prior written notice of same and further provided that Agent shall be entitled to
obtain and perfect a Lien from such Subsidiary, in form and substance substantially
similar to that obtained from Obligors existing as at the date hereof; and (viii)
form or acquire any single purpose Subsidiaries for the purpose of entering into the
joint ventures and the third party productions permitted pursuant to Section
9.10 hereof.






	9.8	 	Liens




Borrower shall not create, incur, assume or suffer to exist any Lien on any of its assets or
properties, including the Collateral, except: (a) liens and security interests of Agent; (b) liens
securing the payment of taxes, either not yet overdue or the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its books; (c) non-consensual statutory
liens (other than liens securing the payment of taxes) arising in the ordinary course of Borrower’s
business to the extent: (i) such liens secure indebtedness which is not overdue or (ii) such liens
secure indebtedness relating to claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower, in each case prior to the
commencement of foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books; (d) zoning restrictions, rights-of-way, easements,
licenses, covenants and other restrictions affecting the use of real property which do not
interfere in any material respect with the use of such real property or ordinary conduct of the
business of Borrower as presently conducted thereon or materially impair the appraised value of the
real property which may be subject thereto and the Liens permitted in the Mortgage/Charge
registered in favour of Agent in respect of the Real Property; (e) purchase money security
interests in Equipment (including capital leases) and purchase money mortgages on real estate not
to exceed, in the case of such purchase money security interests and purchase money mortgages,
$500,000 in the aggregate at any time outstanding so long as such security interests and mortgages
do not apply to any property of Borrower other than the Equipment or real estate so acquired, and
the indebtedness secured thereby does not exceed the cost of the Equipment or real estate so
acquired, as the case may be; (f) Liens set forth on Schedule 8.4 hereto; (g) liens
securing performance of bids, contracts, statutory obligations, surety, performance and appeal
bonds and other like obligations incurred in the ordinary course of business; (h) pledges or
deposits made in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security legislation; (i) liens securing
indebtedness of a person acquired by or amalgamated with Borrower or liens securing indebtedness
incurred in connection with an acquisition, provided in all such cases that such acquisition or
amalgamation, as the case may be, is not prohibited hereunder and provided further that such
liens were in existence prior to the date of such acquisition, and were not





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incurred in anticipation thereof and do not extend to assets other than those acquired; and (j)
liens in favour of EDC over deposits of collateral given by Borrower in favour of EDC pursuant to
the terms of Section 5(l)(2) of the EDC Indemnity Agreement; provided
however that (i) the Liens and interest of EDC in such collateral shall at all
times be subject to and subordinate to any and all interests and Liens of Agent in such collateral
and (ii) Agent shall have provided its prior written consent to Borrower to make such deposit of
collateral with EDC (all of the foregoing being sometimes collectively referred to herein as
“Permitted Liens”).





	9.9	 	Indebtedness




Borrower shall not incur, create, assume, become or be liable in any manner with respect to, or
permit to exist, any obligations, liabilities or indebtedness (including under or in connection
with capital leases), except: (a) the Obligations including obligations, liabilities and
indebtedness under or in connection with Secured Hedging Agreements; (b) trade obligations and
normal accruals in the ordinary course of business not yet due and payable, or with respect to
which Borrower is contesting in good faith the amount or validity thereof by appropriate
proceedings diligently pursued and available to Borrower, and with respect to which adequate
reserves have been set aside on its books; (c) purchase money indebtedness (including capital
leases) to the extent not incurred or secured by Liens (including capital leases) in violation of
any other provision of this Agreement; (d) the indebtedness set forth on Schedule 9.9
hereto; (e) the indebtedness incurred pursuant to the BMO Term Sheet; provided
however that the indebtedness of Borrower under (i) the BMO LC Facility shall not
exceed $10,000,000, (ii) the Mastercard Facility shall not exceed CDN$35,000 and (iii) the FX
Facility shall not exceed $3,000,000; (f) the indebtedness and indemnity obligations incurred
pursuant to the EDC Indemnity Agreement; provided that such indebtedness and
indemnity obligations shall relate solely to CIB Products (as defined in the EDC Indemnity
Agreement) issued by EDC in support of the BMO LC Facility and not to exceed $10,000,000 in the
aggregate; (g) the indebtedness incurred pursuant to the BMO FEFC Term Sheet and the Application;
provided however that: (i) the foreign exchange forward contracts to be
entered into with respect to the BMO FEFC Term Sheet shall be entered into for hedging purposes
only and not for speculative purposes; (ii) the mark to market exposure of all such existing
foreign exchange forward contracts in the aggregate shall not exceed US$10,000,000; (iii) the
notional amount of all such existing foreign exchange forward contracts in the aggregate shall not
exceed US$33,333,333; (iv) if Borrower fails to settle a foreign exchange forward contract entered
into with respect to the BMO FEFC Term Sheet on its settlement date and/or fails to pay any part of
the Guaranteed Amount (as defined in the FX Guarantee) to BMO within ten (10) Business Days of
BMO’s demand to Borrower to pay the Guaranteed Amount (as defined in the FX Guarantee), BMO may
submit a payment request to EDC under the FX Guarantee and BMO is required to demand payment from
Borrower before submitting a payment request under the FX Guarantee to EDC unless BMO is prevented
from making a demand by reason of an Insolvency Event Stay (as defined in the FX Guarantee) or by
reason of an Injunction (as defined in the FX Guarantee); and (v) EDC’s sole recourse against
Borrower with respect to amounts paid by EDC pursuant to the FX Guarantee shall be against Borrower
pursuant to the unsecured indemnity in the Application not to exceed US$5,000,000 in aggregate plus
applicable costs, expenses, and interest as set out therein; and (h) any subordinated indebtedness
in the aggregate principal amount not to exceed $50,000,000; provided that:






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	 	(A)	 	both before and after giving effect to the
incurrence of such indebtedness, Borrower is in compliance with all the
terms of the Financing Agreements including the financial covenants set
forth in Sections 9.13, 9.14, 9.23 and
9.24 hereof and no Default or Event of Default exists and is
continuing or would occur as a result thereof;






	 	(B)	 	prior to the indefeasible payment in full in
cash of the Revolving Term Loan after the Revolving Term Loan Term
Conversion Date, such indebtedness incurred under this Section
9.9(h) must be subject to an intercreditor or subordination
agreement between Agent, Borrower and subordinated lender, in form,
content and substance satisfactory to Agent, in its sole and absolute
discretion; and






	 	(C)	 	after the indefeasible payment in full in cash
of the Revolving Term Loan after the Revolving Term Loan Term
Conversion Date, such indebtedness incurred under this Section
9.9(h) must be subject to an intercreditor or subordination
agreement (which shall contain standard market terms for intercreditor
or subordination agreements between a senior first secured lender and a
subordinate junior lender) between Agent, Borrower and subordinated
lender, in form, content and substance satisfactory to Agent, acting
reasonably.




For greater certainty and without limiting the foregoing Borrower shall not, directly or
indirectly, (a) amend, modify, alter or change the terms of such indebtedness or any agreement,
document or instrument related thereto as in effect on the date hereof or (b) prepay, redeem,
retire, defease, purchase or otherwise acquire such indebtedness, or set aside or otherwise deposit
or invest any sums for such purpose. Borrower shall furnish to Agent all notices or demands in
connection with such indebtedness either received by Borrower or on its behalf, promptly after the
receipt thereof, or sent by Borrower or on its behalf, concurrently with the sending thereof, as
the case may be.





	9.10	 	Loans, Investments, Guarantees, Etc.




Borrower shall not, directly or indirectly, without the prior written consent of Agent which is not
to be unreasonably withheld, make any loans or advance money or property to any person, or invest
in (by capital contribution, dividend or otherwise) or purchase or repurchase the shares or
indebtedness or all or a substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly) the indebtedness,
performance, obligations or dividends of any Person or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the ordinary course of business;
(b) investments in: (i) short-term direct obligations of the Canadian Government and the U.S.
Government, (ii) negotiable certificates of deposit issued by any bank satisfactory to Agent,
payable to the order of Borrower or to bearer and delivered to Agent, (iii) commercial paper rated
A1 or P1, and (iv) term deposits with the Bank of Montreal and The Toronto-Dominion





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Bank existing as of the date hereof provided, that, as to any of the foregoing, unless waived in
writing by Agent, Borrower shall take such actions as are deemed necessary by Agent to perfect the
first-ranking Lien of Agent in such investments; (c) financial guarantees and letters of credit to
support Borrower’s operations in China and other financial guarantees in an aggregate amount not to
exceed $35,000,000; (d) the guarantees by Borrower of the real property lease obligations of the
obligors and in the amounts set forth on Schedule 9.10A hereto (and any renewals or
replacements thereof not to exceed in the aggregate the amounts set forth on Schedule 9.10A
hereto) and the loans, advances and guarantees set forth on Schedule 9.10B hereto;
provided, that, as to such loans, advances and guarantees set forth on Schedule
9.10B hereto, (i) Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such loans, advances or guarantees or any agreement, document or instrument
related thereto, or (B) as to such guarantees, redeem, retire, defease, purchase or otherwise
acquire the obligations arising pursuant to such guarantees, or set aside or otherwise deposit or
invest any sums for such purpose, and (ii) Borrower shall furnish to Agent all notices or demands
in connection with such loans, advances or guarantees or other indebtedness subject to such
guarantees either received by Borrower or on its behalf, promptly after the receipt thereof, or
sent by Borrower or on its behalf, concurrently with the sending thereof, as the case may be; (e)
purchase or repurchase any and all shares, interest, participations or other equivalents in
Borrower’s capital stock or other equity interests at any time outstanding, and any and all rights,
warrants or options exchangeable for or convertible into such capital stock or other interests
(excluding any debt security that is exchangeable for or convertible into such capital stock); (f)
enter into joint ventures, acting as a prudent investor, with strategic partners for the purpose of
advancing Borrower’s business provided that Borrower’s investment in such joint ventures, whether
direct or indirect, shall not, at any time and in the aggregate, exceed $25,000,000 and shall not
result in a derogation of the value of the Collateral or Agent’s, subject to Permitted Liens, first
priority Liens therein; (g) make loans or advance money to Affiliates in the ordinary course of
Borrower’s business with the proceeds of issuance of shares in the capital of Borrower, provided
such proceeds are used in the ordinary course of business and shall not, for further clarity, be
subject to any other restrictions on use contained herein; (h) make payments to employees in
connection with the repurchase of phantom stock (including stock appreciation rights) in the
ordinary course of business; (i) payments to counterparties under or in connection with Hedging
Agreements entered into in accordance with the terms of this Agreement; and (j) loans, investments,
purchases of shares, indebtedness, assets or properties of an arm’s length third party and
guarantees; provided that (i) such loans, investments, purchases and guarantees
shall not exceed an aggregate amount (when combined with the amount of dividend payments made under
Section 9.11(b)) of $35,000,000, (ii) such loans, investments and purchases (and the assets
resulting therefrom) shall be subject to the first priority Liens of Agent, (iii) such loans shall
only be made to Obligors whose assets and properties are subject to the first priority Liens of
Agent, (iv) such guarantees shall not be secured by any Liens on the assets or properties of
Borrower and (v) both before and after giving effect thereto, Borrower is in compliance with all

terms of the Financing Agreements including the financial covenants set forth in Sections
9.13, 9.14, 9.23 and 9.24 hereof and no Default or Event of Default
exists and is continuing or would occur as a result thereof. Borrower shall pay, or shall cause
the obligors listed in Schedule 9.10A hereto to pay, all amounts due and owing under the
leases that Borrower has guaranteed as set out in Schedule 9.10A hereto.






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Any Future Permitted Transaction by Borrower and any investment, license, purchase or other
transaction reasonably related thereto and in furtherance thereof shall be permitted hereunder and
the amount of any such investment, license, purchase or other transaction shall not be included in
(or count against) any of the foregoing basket amounts described in this Section 9.10.





	9.11	 	Dividends and Redemptions




Subject to Section 9.10 hereof, Borrower shall not, directly or indirectly, declare or pay
any dividends on account of any shares of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class (or set aside or otherwise deposit or invest any sums for
such purpose) for any consideration other than common shares or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any such shares or
agree to do any of the foregoing with the exception of (a) redemptions of any securities, shares
and/or options of Borrower which are held by employees and/or insiders thereof and (b) dividends
not to exceed an aggregate amount (when combined with the aggregate amount of loans, investments,
purchases and guarantees made under Section 9.10(j)) of $35,000,000 provided
that (i) the Revolving Term Loan has been indefeasibly repaid in full in cash after the
Revolving Term Loan Term Conversion Date and (ii) both before and after giving effect thereto,
Borrower is in compliance with all terms of the Financing Agreements including the financial
covenants set forth in Sections 9.13, 9.14, 9.23 and 9.24 hereof
and no Default or Event of Default exists and is continuing or would occur as a result thereof.





	9.12	 	Transactions with Affiliates




Borrower shall not, directly or indirectly, (a) purchase, acquire or lease any property from, or
sell, transfer or lease any property to, any officer, director, agent or other person affiliated
with Borrower, except in the ordinary course of and pursuant to the reasonable requirements of
Borrower’s business and upon fair and reasonable terms no less favorable to Borrower than Borrower
would obtain in a comparable arm’s length transaction with an unaffiliated person or (b) make any
payments of management, consulting or other fees for management or similar services, or of any
indebtedness (including under the USERP) owing to any officer, employee, shareholder, director or
other person affiliated with Borrower except (i) reasonable compensation to officers, employees and
directors for services rendered to Borrower in the ordinary course of business and (ii) payments to
Bradley J. Wechsler and Richard L. Gelfond in accordance with the USERP so long as such payments
are set out in Borrower’s budget or forecast and then only in accordance with such budget or
forecast.





	9.13	 	Fixed Charge Coverage Ratio






	 	(a)	 	Borrower shall maintain a Fixed Charge Coverage Ratio of not less than 1.1:1.0
calculated at the end of each Fiscal Quarter on a trailing four (4) Fiscal Quarter
basis.






	 	(b)	 	It is agreed that, notwithstanding anything herein to the contrary, the amounts
expended by Borrower with respect to any Future Permitted Transaction (whether or not
final accounting treatment of same affects EBITDA or the Fixed Charge




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	 	 	 	Coverage Ratio) will not be considered in determining the Fixed Charge Coverage
Ratio.






	9.14	 	Excess Availability




Borrower shall maintain a minimum Excess Availability of $5,000,000 at all times.





	9.15	 	Intentionally Deleted.
	 
	9.16	 	Intellectual Property




In the event Borrower obtains or applies for any material intellectual property rights or obtains
any material licenses with respect thereto, Borrower shall promptly notify Agent thereof and shall
provide to Agent copies of all written materials including, but not limited to, applications and
licenses with respect to such intellectual property rights. At Agent’s request, Borrower shall
promptly execute and deliver to Agent an intellectual property security agreement granting to Agent
a perfected security interest in such intellectual property rights in form and substance
satisfactory to Agent.





	9.17	 	Additional Bank Accounts




Borrower shall not, without the prior consent of Agent, directly or indirectly, open, establish or
maintain any deposit account, investment account or any other account with any bank or other
financial institution, other than the Blocked Accounts and the accounts set forth in Schedule
8.8 hereto, except: (a) as to any new or additional Blocked Accounts and other such new or
additional accounts which contain any Collateral or proceeds thereof, with the prior written
consent of Agent and subject to such conditions thereto as Agent may establish; (b) as to any
accounts used by Borrower to make payments of payroll, taxes or other obligations to third parties,
after prior written notice to Agent; and (c) as to any new Excluded Accounts.





	9.18	 	Applications under the Companies’ Creditors Arrangement Act




Borrower acknowledges that its business and financial relationships with Agent and each Lender are
unique from its relationship with any other of its creditors. Borrower agrees that it shall not
file any plan of arrangement under the CCAA (“CCAA Plan”) which provides for, or would permit
directly or indirectly, Agent or any Lender to be classified with any other creditor of Borrower
for purposes of such CCAA Plan or otherwise.





	9.19	 	Supplemental Executive Retirement Plan




Borrower shall not, directly or indirectly, in respect of the USERP: (i) pay or declare any
payments thereunder other than those required to be paid and due pursuant to the terms thereof;
(ii) commence payment of contributions which Borrower had not previously been contributing; (iii)
amend, modify, alter or otherwise change the terms thereof except for the purpose of reducing the
pension benefit to the applicable Borrower executive; or (iv) register the USERP or otherwise
establish a new similar registered plan.






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	9.20	 	Operation of Pension Plans






	 	(a)	 	Borrower shall administer the Pension Plans in accordance with the requirements
of the applicable pension plan texts, funding agreements, the Income Tax Act (Canada)
and applicable provincial pension benefits legislation.
	 
	 	(b)	 	Borrower shall use commercially reasonable efforts to obtain and to deliver to
Agent, upon Agent’s request, an undertaking of the funding agent for each of the
Pension Plans stating that the funding agent will notify Agent within thirty (30) days
of Borrower’s failure to make any required contribution to the applicable Pension Plan.
	 
	 	(c)	 	Borrower shall not accept payment of any amount from any of the Pension Plans
without the prior written consent of Agent other than payments for forfeitures in
connection with terminated employees to be set-off against future contribution
obligations.
	 
	 	(d)	 	Without the prior written consent of Agent, Borrower shall not terminate, or
cause to be terminated, any of the Pension Plans, if such plan would have a solvency
deficiency on termination.
	 
	 	(e)	 	Borrower shall promptly provide Agent with any documentation relating to any of
the Pension Plans as Agent may request. Borrower shall notify Agent within 30 days of:
(i) a material increase in the liabilities of any of the Pension Plans; (ii) the
establishment of a new registered pension plan; (iii) commencing payment of
contributions to a Pension Plan to which Borrower had not previously been contributing;
and (iv) any failure to make any required contribution to a Pension Plan when due.
	 
	 	(f)	 	Borrower shall, and shall cause each of its ERISA Affiliates to (i) maintain
each Plan in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal and State law, (ii) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification,
(iii) not terminate any US Pension Plan so as to incur any liability to the Pension
Benefit Guaranty Corporation, (iv) not allow or suffer to exist any prohibited
transaction involving any Plan or any trust created thereunder which would subject
Borrower or such ERISA Affiliate to a tax or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA in an aggregate amount in
excess of $500,000, (v) make all required contributions to any Plan which it is
obligated to pay under Section 302 of ERISA, Section 412 of the Code or
the terms of such Plan, (vi) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such US Pension Plan, (vii) not
engage in a transaction that could be subject to Section 4069 or
4212(c) of ERISA, or (viii) not allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a risk of termination
by the Pension Benefit Guaranty Corporation of any Plan that is a single employer plan,




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	 	 	 	which termination could result in any liability to the Pension Benefit Guaranty
Corporation.






	9.21	 	Costs and Expenses




Upon demand by Agent, Borrower shall pay to Arranger, Agent and Lenders all reasonable costs,
expenses, filing fees and taxes paid or payable in connection with the structuring, arrangement,
syndication, preparation, negotiation, execution, delivery, recording, administration, collection,
liquidation, restructuring, enforcement and defense of the Obligations, Agent and each Lender’s
rights in the Collateral, the Financing Agreements and all other documents related hereto or
thereto, including any amendments, supplements or consents which may hereafter be contemplated
(whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs
and expenses of filing or recording or searching (including PPSA and UCC financing statement and
other similar filing and recording fees and taxes, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all insurance premiums, appraisal fees and
search fees; (c) reasonable costs and expenses of remitting loan proceeds, collecting cheques and
other items of payment, and establishing and maintaining the Blocked Accounts, if any, and the
Payment Accounts, together with Agent’s customary charges and fees with respect thereto; (d)
charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (e) costs and expenses of preserving and protecting the Collateral; (f) reasonable
costs and expenses paid or incurred in connection with obtaining payment of the Obligations,
enforcing the security interests and liens of each Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of the Financing Agreements or defending any
claims made or threatened against Agent and Lenders arising out of the transactions contemplated
hereby and thereby (including preparations for and consultations concerning any such matters); (g)
all reasonable out-of-pocket expenses and costs heretofore and from time to time hereafter incurred
by Agent during the course of periodic field examinations of the Collateral and Borrower’s
operations, plus a per diem charge at the rate of $1,200 per person per day for Agent’s examiners
in the field and office; provided that with respect to such periodic field
examinations: (i) Borrower shall permit same at the request of Agent; and (ii) Borrower shall only
be responsible for paying such expenses, costs and per diem for two (2) such periodic field
examinations in any twelve (12) month period with no such restrictions applicable after the
occurrence and continuation of an Event of Default; (h) all reasonable out-of-pocket expenses
including due diligence, audit and appraisal expenses and legal fees incurred in the structuring,
negotiation, arrangement, syndication, restructuring, administration and amending of this Agreement
and the Original Loan Agreement; and (i) the reasonable fees and disbursements of counsel
(including legal assistants) to Arranger, Agent and Lenders in connection with any of the
foregoing.





	9.22	 	Further Assurances




At the request of Agent at any time and from time to time, Borrower shall, at its expense, duly
execute and deliver, or cause to be duly executed and delivered, such further agreements, documents
and instruments, and do or cause to be done such further acts as may be necessary to evidence,
perfect, maintain and enforce the Liens and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of any of the Financing Agreements. Agent may at any time
and from time to time request a certificate from an officer of Borrower representing





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that all conditions precedent to the making of Revolving Loans and providing Letter of Credit
Accommodations contained herein are satisfied. In the event of such request by Agent, Agent and
each Lender may, at its option, cease to make any further Revolving Loans or provide any further
Letter of Credit Accommodations until Agent has received such certificate and, in addition, Agent
has determined that such conditions are satisfied. Where permitted by law, Borrower hereby
authorizes Agent to execute and file one or more PPSA, UCC or other financing statements or notices
signed only by Agent or Agent’s representative.





	9.23	 	Cash and Excess Availability Covenant




Borrower shall, at all times, maintain minimum Cash and Excess Availability, calculated monthly by
Agent on the first day of each month, of not less than $15,000,000.





	9.24	 	Funded Debt




Borrower shall ensure that the ratio of Funded Debt to trailing twelve (12) month EBITDA shall not
be more than 2.0:1.0 calculated on a consolidated basis at the end of each Fiscal Quarter.





	9.25	 	No Material Changes




Borrower shall not, without the prior written consent of Agent (a) change its Fiscal Quarters or
its fiscal year (currently January 1 to December 31), (b) make any material change to its business
or the conduct thereof from that existing or being conducted as of the date hereof, other than
changes that would not be reasonably expected to have a material adverse effect on (i) the
business, condition (financial or otherwise), operations, performance, properties or prospects of
Borrower and its Subsidiaries, taken as a whole, (ii) the rights and remedies of any Agent or any
Lender under any Financing Agreement or (iii) the ability of Borrower or any Obligor to perform its
obligations under any Financing Agreement to which it is or is to be a party (c) make any material
changes to its accounting policies in effect as of the date hereof, except as required or permitted
by GAAP or (d) make any material amendments to its organizational documents or material contracts
other than amendments that would not be reasonably expected to have a material adverse effect on
(i) the business, condition (financial or otherwise), operations, performance, properties or
prospects of Borrower and its Subsidiaries, taken as a whole, (ii) the rights and remedies of any
Agent or any Lender under any Financing Agreement or (iii) the ability of Borrower or any Obligor
to perform its Obligations under any Financing Agreement to which it is or is to be a party.





	9.26	 	Hedging Transactions






	 	(a)	 	Agent or a Lender (or their respective Affiliates) may offer to make available
Hedging Agreements to Borrower from time to time (it being understood that nothing
contained herein shall be construed to commit any person to enter into any Hedging
Agreement) upon terms mutually acceptable to Agent or such Lender or such Affiliate and
Borrower. Except as otherwise permitted under Section 9.9(e) and (g),
Borrower shall require the prior written consent of Agent and Required Lenders (each
such consent not to be unreasonably withheld) before entering into any Hedging
Agreement.




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	 	(b)	 	Borrower shall provide Agent with written notice forthwith upon entering into a
Hedging Agreement. Such notice shall specify the name of the counterparty and the
other details of the Hedging Agreement and the aggregate Mark to Market Exposure of
outstanding Hedging Agreements immediately prior to entering into such Hedging
Agreement. Borrower shall advise Agent in writing of the aggregate Mark to Market
Exposure of its outstanding Hedging Agreements as at the end of each month by the next
following Business Day, and such other times as Agent shall request. For greater
certainty, Agent and any Lender or their respective Affiliates that makes a Hedging
Agreement available to Borrower covenants and agrees (and shall cause any of its
applicable Affiliates) to provide within five (5) Business Days of a written request
therefor by Borrower, a determination of the Mark to Market Exposure of each Hedging
Agreement that such Agent or Lender (or such Affiliate) has with Borrower.





ARTICLE 10

EVENTS OF DEFAULT AND REMEDIES





	10.1	 	Events of Default




The occurrence or existence of any one or more of the following events are referred to herein
individually as an “Event of Default”, and collectively as “Events of Default”:





	 	(a)	 	Borrower fails to:






	 	(i)	 	pay when due any principal due and payable hereunder, or
subject to Section 10.1(a)(ii) hereof, fails to perform any of the
covenants contained in Sections 9.14 and 9.23 of this Agreement
or fails to perform any of the covenants contained in Sections 9.13,
9.18 and 9.24 of this Agreement;
	 
	 	(ii)	 	perform any of the covenants contained in Sections 9.14
and 9.23 of this Agreement, where such failure to perform is caused
solely by the exercise of discretion on the part of Agent pursuant to
Section 2.1(b) hereof and where such failure to perform is not remedied
to the satisfaction of Agent, in its sole discretion, within three (3) days of
the date on which such term covenant, condition or provision was to be
performed;
	 
	 	(iii)	 	perform any of the covenants contained in Section 6.3
of this Agreement, where such failure to perform is not remedied to the
satisfaction of Agent, in its sole discretion, within one (1) day of the
original date on which such term, covenant, condition or provision was to be
performed;
	 
	 	(iv)	 	pay when due any Obligations (other than principal) under the
Financing Agreements or fails to perform any of the covenants contained in
Sections 6.6, 7.1, 7.2, 9.1, 9.2,
9.3, 9.5, 9.7, 9.8, 9.9, 9.10,
9.12, or 9.19 of this Agreement, where such failure to pay or
perform, as applicable, is not remedied to the satisfaction of Agent, in its
sole discretion, within three (3) days of the original date on which such
term, covenant, condition or provision was to be performed; or




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	 	(v)	 	perform any other terms, covenants, conditions or provisions,
or if any representations and warranties hereunder proves to be false or
inaccurate when made, contained in this Agreement or any of the other Financing
Agreements, where such failure to perform or to revise such representation or
warranty is not remedied to the satisfaction of Agent, in its sole discretion,
within fifteen (15) days from notice by Agent;






	 	(b)	 	any Obligor:






	 	(i)	 	revokes or terminates any of the terms, covenants, conditions
or provisions of any Financing Agreement;
	 
	 	(ii)	 	fails to pay principal required pursuant to the terms,
covenants, conditions or provisions of any Financing Agreement;
	 
	 	(iii)	 	fails to pay Obligations (other than principal) required
pursuant to the terms covenants, conditions or provisions of any Financing
Agreement where such failure to pay is not remedied to the satisfaction of
Agent, in its sole discretion, within three (3) days of the original date on
which such payment was to be made; or
	 
	 	(iv)	 	fails to perform any other terms covenants, conditions or
provisions of any Financing Agreement, where such failure to perform is not
remedied to the satisfaction of Agent, in its sole discretion, within fifteen
(15) days from notice by Agent;






	 	(c)	 	(i) any final non-appealable judgment for the payment of money is rendered
against Borrower or any Obligor in excess of $2,500,000 in any one case or in excess of
$10,000,000 in the aggregate and (A) shall remain undischarged or unvacated for a
period in excess of sixty (60) days or (B) execution shall at any time not be
effectively stayed; provided that no Event of Default shall occur if
the applicable judgment is covered by third-party insurance as to which the insurer has
been notified of such judgment and has confirmed full coverage thereof in writing to
Borrower; or (ii) any final non-appealable judgment other than for the payment of
money, or injunction, attachment, garnishment or execution is rendered against Borrower
or any Obligor or any of their assets that could reasonably be expected to have a
material adverse effect on Borrower or any Obligor or their property, operations,
business, prospects or condition (financial or otherwise) and (A) shall remain
undischarged or unvacated for a period in excess of sixty (60) days or (B) execution
shall at any time not be effectively stayed;
	 
	 	(d)	 	Borrower dissolves, suspends or discontinues doing business, any Obligor (which
is a partnership, limited liability company, limited partnership, limited liability
partnership or a corporation) or any general partner of an Obligor that is a general
partnership dissolves, suspends or discontinues doing business or any Obligor (who is a
natural person) dies;




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	 	(e)	 	Borrower or any Obligor becomes insolvent, makes an assignment for the benefit
of creditors, proposes to make, makes or sends notice of a bulk sale or calls a meeting
of its creditors or principal creditors;
	 
	 	(f)	 	a petition, case or proceeding under the bankruptcy laws of Canada or similar
laws of any foreign jurisdiction now or hereafter in effect or under any insolvency,
arrangement, reorganization, moratorium, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in
effect (whether at law or in equity) is filed or commenced against Borrower or any
Obligor or all or any part of its properties and such petition or application is not
dismissed within thirty (30) days after the date of its filing or Borrower or any
Obligor shall file any answer admitting or not contesting such petition or application
or indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
	 
	 	(g)	 	a petition, case or proceeding under the bankruptcy laws of Canada or similar
laws of any foreign jurisdiction now or hereafter in effect or under any insolvency,
arrangement, reorganization, moratorium, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in
effect (whether at a law or equity) is filed or commenced by Borrower or any Obligor
for all or any part of its property including if Borrower or any Obligor shall:






	 	(i)	 	apply for or consent to the appointment of a receiver, trustee
or liquidator of it or of all or a substantial part of its property and assets;
	 
	 	(ii)	 	be unable, or admit in writing its inability, to pay its debts
as they mature, or commit any other act of bankruptcy;
	 
	 	(iii)	 	make a general assignment for the benefit of creditors;
	 
	 	(iv)	 	file a voluntary petition or assignment in bankruptcy or a
proposal seeking a reorganization, compromise, moratorium or arrangement with
its creditors;
	 
	 	(v)	 	take advantage of any insolvency or other similar law
pertaining to arrangements, moratoriums, compromises or reorganizations, or
admit the material allegations of a petition or application filed in respect of
it in any bankruptcy, reorganization or insolvency proceeding; or
	 
	 	(vi)	 	take any corporate action for the purpose of effecting any of
the foregoing;






	 	(h)	 	any default by Borrower or any Obligor under any agreement, document or
instrument relating to any indebtedness for borrowed money owing to any person other
than Lenders, contingent indebtedness in connection with any guarantee, letter of
credit, indemnity or similar type of instrument in favour of any person other than
Agent or Lenders, in any case in an amount in excess of $2,000,000, which default
continues for more than the applicable cure period, if any, with




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	 	 	 	respect thereto, or any default by Borrower or any Obligor under any material
contract, lease, license or other obligation to any person other than Agent or
Lenders, in any case in an amount in excess of $2,000,000, which default continues
for more than the applicable cure period, if any, with respect thereto;






	 	(i)	 	any acquisition of control or change in the controlling ownership of Borrower,
if any, which may reasonably be expected to have a material adverse effect on
Borrower’s financial condition;
	 
	 	(j)	 	there shall be a change in the business or assets of Borrower or any Obligor
after the date hereof which is reasonably expected to have a material adverse effect on
Borrower or any Obligor;
	 
	 	(k)	 	a requirement from the Minister of National Revenue for payment pursuant to
Section 224 or any successor section of the Income Tax Act (Canada) or
Section 317, or any successor section or any other Person in respect of
Borrower of the Excise Tax Act (Canada) or any comparable provision of similar
legislation shall have been received by Agent or any other Person in respect of
Borrower or otherwise issued in respect of Borrower;
	 
	 	(l)	 	there shall be a default under any Secured Hedging Agreement or other Hedging
Agreement to which Borrower is a party and such default continues for more that the
applicable cure period, if any, with respect thereto;
	 
	 	(m)	 	any material loss, damage or destruction of the collateral purported to be
covered by the Financing Agreements (including the Collateral) that is not covered in
full by insurance proceeds payable to Agent thereunder or under the other Financing
Agreements;
	 
	 	(n)	 	any Lien created by a Financing Agreement shall cease to be a valid and
perfected first priority Lien (except as permitted herein or therein) in any material
amount of the collateral purported to be covered thereby (including the Collateral); or
	 
	 	(o)	 	an ERISA Event shall occur which results in or could reasonably be expected to
result in liability of Borrower in an aggregated amount in excess of $500,000.






	10.2	 	Remedies






	 	(a)	 	At any time an Event of Default exists or has occurred and is continuing, Agent
shall have all rights and remedies provided in the Financing Agreements, the PPSA, UCC
and other applicable law, all of which rights and remedies may be exercised without
notice to or consent by Borrower or any Obligor (and shall be exercised if directed by
Required Lenders), except as such notice or consent is expressly provided for hereunder
or required by applicable law. All rights, remedies and powers granted to Agent and
Lenders, under any of the Financing Agreements, the PPSA, UCC or other applicable law,
are cumulative, not exclusive and enforceable, in Agent’s or Lenders’ discretion,
alternatively, successively, or concurrently on any one or more occasions, and shall
include the




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	 	 	 	right to apply to a court of equity for an injunction to restrain a breach or
threatened breach by Borrower of any of the Financing Agreements. Agent may, (and
shall upon the instruction of Required Lenders) at any time or times, proceed
directly against Borrower or any Obligor to collect the Obligations (except under or
in connection with Secured Hedging Agreements (which shall be collected in
accordance with the terms thereof)) without prior recourse to the Collateral.






	 	(b)	 	Without limiting the foregoing and subject to Section 10.2(c) hereof,
at any time an Event of Default exists or has occurred and is continuing, Agent may
(and shall upon the instruction of Required Lenders), in its discretion: (i) accelerate
the payment of all outstanding Obligations (other than Obligations in connection with
Secured Hedging Agreements which may be terminated in accordance with their own terms)
and demand immediate payment thereof to Agent (provided, that, upon the
occurrence of any Event of Default described in Sections 10.1(f) and
10.1(g), all outstanding Obligations (other than Obligations in connection with
Secured Hedging Agreements which may be terminated in accordance with their own terms)
shall automatically become immediately due and payable); (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in which any
of the Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral and carry
on the business of Borrower; (iii) require Borrower, at Borrower’s expense, to assemble
and make available to Agent any part or all of the Collateral at any place and time
designated by Agent; (iv) collect, foreclose, receive, appropriate, set-off and realize
upon any and all Collateral; (v) remove any or all of the Collateral from any premises
on or in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose; (vi) sell, lease,
transfer, assign, deliver or otherwise dispose of any and all Collateral (including
entering into contracts with respect thereto, public or private sales at any exchange,
broker’s board, at any office of Agent or elsewhere) at such prices or terms as Agent
may deem reasonable, for cash, upon credit or for future delivery, with Agent having
the right to purchase the whole or any part of the Collateral at any such public sale,
all of the foregoing being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby expressly waived and released by
Borrower; (vii) without limiting clause (vi), grant a general, special or other license
in respect of any aspect of the Collateral on an exclusive or non-exclusive basis to
any person throughout the world or any part of it and on such terms and on such
conditions as Agent may consider appropriate; (viii) enforce against any licensee or
other person all rights and remedies of Borrower with respect to all or any part of the
Collateral, and take or refrain from taking any action that Borrower might take with
respect to any of those rights and remedies, and for this purpose Agent shall have the
exclusive right to enforce or refrain from enforcing those rights and remedies, and may
in the name of Borrower and at its expense retain and instruct counsel and initiate any
court or other proceeding that Agent considers necessary or expedient; (ix) take any
step necessary to preserve, maintain or insure the whole or any part of the Collateral
or to realize upon any of it put it in vendable condition, and any amount paid as a
result of any




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	 	 	 	taking any such steps shall be a cost the payment of which is secured by this
Agreement; (x) borrow money and use the Collateral directly or indirectly in
carrying on Borrower’s business or as security for loans or advances for any such
purposes; (xi) require Borrower to immediately begin using commercially reasonable
efforts to obtain all consents and to provide all notices to any Client, as
applicable, which may be required to permit Agent to assign the Eligible Contracts
and Leases; (xii) grant extensions of time and other indulgences, take and give up
security, accept compositions, grant releases and discharges, and otherwise deal
with Borrower, debtors of Borrower, sureties and others as Agent may see fit without
prejudice to the liability of Borrower or Agent’s right to hold and realize the
security interest created under any Financing Agreement; and/or (xiii) terminate
this Agreement. If any of the Collateral is sold or leased by Agent upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Agent. If notice of
disposition of Collateral is required by law, five (5) days prior notice by Agent to
Borrower designating the time and place of any public sale or the time after which
any private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and Borrower waives any other notice. In the
event Agent institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of any bond
which might otherwise be required.






	 	(c)	 	Notwithstanding anything to the contrary contained in this Section
10.2:






	 	(i)	 	for the duration of the IP Grace Period, Agent shall not be
permitted to enforce its security interest against the IP Collateral, or to
exercise its rights under Section 10.2(b)(vii) hereof except as
permitted pursuant to the IP Collateral License Agreement;
	 
	 	(ii)	 	for the duration of the IP Grace Period, Borrower shall be
permitted to use the IMAX name to carry on business;
	 
	 	(iii)	 	upon the commencement of the IP Grace Period, Agent shall
have, pursuant to the IP Collateral License Agreement, a royalty-free, freely
assignable perpetual license to use the IP Collateral required to enable Agent
to perform the obligations of Borrower under the Contracts and Leases;
	 
	 	(iv)	 	upon the commencement of the IP Grace Period, Agent may sell,
transfer, assign and/or otherwise dispose of the Collateral, other than the IP
Collateral, to any transferee or assignee, and
	 
	 	(v)	 	subsequent to the expiry of the IP Grace Period, provided that
an Event of Default is then continuing, Agent may sell, transfer, assign and/or
otherwise dispose of any of the IP Collateral up to a maximum amount equal to
the outstanding Obligations together with all costs, charges and expenses
incurred by Agent as a result of enforcing against the IP




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	 	 	 	Collateral and Borrower hereby irrevocably designates and appoints Agent
(and all persons designated by Agent) as Borrower’s true and lawful
attorney-in-fact and authorizes Agent (and all persons designated by Agent)
to effect the foregoing.






	 	(d)	 	Agent may apply the cash proceeds of Collateral actually received by Agent from
any sale, lease, foreclosure or other disposition of the Collateral to payment of the
Obligations in the order set forth in Section 6.4(a).
	 
	 	(e)	 	Borrower shall remain liable to Agent for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of
enforcement including legal costs and expenses.
	 
	 	(f)	 	Without limiting the foregoing, upon the occurrence of an Event of Default that
is continuing, Agent or Lenders may, at their option, without notice, (i) cease making
Revolving Loans or arranging Letter of Credit Accommodations or reduce the Lending
Formulas or amounts of Revolving Loans and Letter of Credit Accommodations available to
Borrower and/or (ii) terminate any provision of this Agreement providing for any future
Revolving Loans or Letter of Credit Accommodations to be made by Lenders to Borrower.
	 
	 	(g)	 	Agent may appoint, remove and reappoint any person or persons, including an
employee or agent of Agent or a Lender to be a receiver (the “Receiver”) which term
shall include a receiver and manager of, or agent for, all or any part of the
Collateral. Any such Receiver shall, as far as concerns responsibility for his acts,
be deemed to be the agent of Borrower and not of Agent or Lenders, and Agent and
Lenders shall not in any way be responsible for any misconduct, negligence or
non-feasance of such Receiver, his employees or agents. Except as otherwise directed
by Agent, all money received by such Receiver shall be received in trust for and paid
to Agent. Such Receiver shall have all of the powers and rights of Agent described in
this Section 10.2. Agent may, either directly or through its agents or
nominees, exercise any or all powers and rights of a Receiver.
	 
	 	(h)	 	Where Agent realizes upon any of the Collateral, and in particular upon any of
the IP Collateral, Borrower shall provide without charge its know-how and expertise
relating to the use and application of the Collateral, and in particular shall instruct
Agent, and any purchaser of the Collateral designated by Agent, concerning any IP
Collateral including any confidential information or trade secrets of Borrower. For
greater certainty, the parties agree that unless such confidential information or trade
secrets form part of the Collateral being realized upon, such confidential information
or trade secrets shall be provided for use only subject to any agreement regarding the
confidentiality thereof or for the protection thereof as may be reasonably requested by
Borrower.
	 
	 	(i)	 	Borrower shall pay all reasonable costs, charges and expenses incurred by Agent
or Lenders or any Receiver or any nominee or agent of Agent or Lenders, whether
directly or for services rendered (including solicitor’s costs on a solicitor and his




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	 	 	 	own client basis, auditor’s costs, other legal expenses and Receiver remuneration)
in enforcing any Financing Agreement and in enforcing or collecting Obligations and
all such expenses together with any money owing as a result of any borrowing
permitted hereby shall be a charge on the proceeds of realization and shall be
secured hereby.





ARTICLE 11

ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT





	11.1	 	Assignment and Participations






	 	(a)	 	Subject to the terms of this Section 11.1, any Lender may make an
assignment or sale of participations in, at any time or times, the Financing
Agreements, Loans and any Commitment or any portion thereof or interest therein,
including any Lender’s rights, title, interests, remedies, powers or duties thereunder.
Any assignment by a Lender shall:






	 	(i)	 	be in a minimum amount of $5,000,000;
	 
	 	(ii)	 	require the consent of Agent and Borrower provided
that:






	 	(A)	 	such consent is not to be unreasonably
withheld, conditioned or delayed; and
	 
	 	(B)	 	the consent of Borrower shall not be required
if:






	 	(1)	 	an Event of Default or Default
shall have occurred and be continuing; or
	 
	 	(2)	 	such assignment is to an Eligible
Transferee;






	 	(iii)	 	not be to a Prohibited Transferee;
	 
	 	(iv)	 	be effected by the execution of an assignment Agreement (an
“Assignment Agreement”) substantially in the form attached hereto as
Schedule 11.1(a)(iv) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent;
	 
	 	(v)	 	be conditioned on such assignee Lender representing to the
assigning Lender and Agent that it is purchasing the applicable Loans to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; and
	 
	 	(vi)	 	include a payment to Agent of an assignment fee of Three
Thousand Five Hundred US Dollars ($3,500).




In the case of an assignment by a Lender under this Section 11.1, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as all other Lenders





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hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect to its
Commitments or assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of
Borrower to the assignee and that the assignee shall be considered to be a “Lender”. In all
instances, each Lender’s liability to make Loans hereunder shall be several and not joint and shall
be limited to such Lender’s Pro Rata Share of the applicable Commitment. In the event any Lender
assigns or otherwise transfers all or any part of the Obligations, such Lender shall so notify
Borrower and Borrower shall, upon the request of Agent or such Lender, execute new Term Notes in
exchange for the Term Notes, if any, being assigned. Notwithstanding the foregoing provisions of
this Section 11.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender’s rights under this Agreement and the other Financing Agreements to the Bank of Canada or
the Canada Deposit Insurance Corporation; provided, that no such pledge to the Bank
of Canada or the Canada Deposit Insurance Corporation shall release such Lender from such Lender’s
obligations hereunder or under any other Financing Agreement.





	 	(b)	 	Any sale of a participation by a Lender of all or any part of its Commitments
shall be made with the understanding that all amounts payable by Borrower hereunder
shall be determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender to take
or omit to take any action hereunder except actions directly affecting (i) any
reduction in the principal amount of, or interest rate or fees payable with respect to
any Loan in which such holder participates, (ii) any extension of the scheduled
amortization of the principal amount of any Loan in which such holder participates or
the final maturity date thereof, and (iii) any release of all or substantially all of
the Collateral (other than in accordance with the terms of this Agreement or the other
Financing Agreements). Neither Agent nor any Lender (other than a Lender selling a
participation) shall have any duty to any participant and may continue to deal solely
with Lenders selling a participation as if no such sale had occurred. No consent of
Borrower is required with respect to the sale of a participation by a Lender of all or
any part of its Commitment. No sale of a participation by a Lender of all or any part
of its Commitment shall be made to a Prohibited Transferee.
	 
	 	(c)	 	Except as expressly provided in this Section 11.1, no Lender shall, as
between Borrower and that Lender, or Agent and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or negotiation of,
or granting of participation in, all or any part of the Loans, the Term Notes or other
Obligations owed to such Lender.
	 
	 	(d)	 	Borrower shall assist any Lender permitted to sell assignments or
participations under this Section 11.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or participation, including
the execution and delivery of any and all agreements, notes and other documents and
instruments as shall be requested, the preparation of informational materials for, and
the participation of management in meetings with, potential assignees or participants.
Borrower shall certify the correctness, completeness and accuracy of all descriptions
of Borrower and its respective affairs contained in any selling




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	 	 	 	materials provided by it and all other information provided by it and included in
such materials.
	 
	 	(e)	 	A Lender may furnish any information concerning Borrower in the possession of
such Lender from time to time to assignees and participants (including prospective
assignees and participants) provided such Persons agree to maintain the confidentiality
of such information.
	 
	 	(f)	 	Borrower may not assign its rights under the Financing Agreements and any other
document referred to herein or therein without the prior written consent of Agent and
all Lenders.






	11.2	 	Appointment of Agent






	 	(a)	 	Agent is hereby appointed to act on behalf of Lenders as Agent under this
Agreement and the other Financing Agreements. The provisions of this Section
11.2 are solely for the benefit of Agent and Lenders and neither Borrower nor any
other Person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement and the
other Financing Agreements, Agent shall act solely as an agent and mandatory of Lenders
and does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency, mandatory or trust with or for Borrower or any Person other
than Lenders. Agent shall have no duties or responsibilities except for those
expressly set forth in this Agreement and the other Financing Agreements. The duties
of Agent shall be mechanical and administrative in nature and Agent shall not have, or
be deemed to have, by reason of this Agreement, any other Financing Agreement or
otherwise a fiduciary relationship in respect of any Lender. Except as expressly set
forth in this Agreement and the other Financing Agreements, Agent shall not have any
duty to disclose, and shall not be liable for failure to disclose, any information
relating to Borrower, Obligors or any of their respective Subsidiaries or any account
debtor that is communicated to or obtained by Agent or any of its affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any Lender
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement, or in connection herewith or therewith, except for damages caused
by its or their own gross negligence or wilful misconduct as determined by a final and
non-appealable judgment or court order binding on them.
	 
	 	(b)	 	If Agent shall request instructions from all Lenders, all affected Lenders or
Required Lenders, as the case may be, with respect to any act or action (including
failure to act) in connection with this Agreement or any other Financing Agreement,
then Agent shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from all Lenders, all affected Lenders or
Required Lenders, as the case may be, and Agent shall not incur liability to any Person
by reason of so refraining. Agent shall be fully




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	 	 	 	justified in failing or refusing to take any action hereunder or under any other
Financing Agreement (i) if such action would, in the opinion of Agent, be contrary
to law or the terms of this Agreement or any other Financing Agreement; (ii) if such
action would, in the opinion of Agent, expose Agent to liabilities under
Environmental Laws; or (iii) if Agent shall not first be indemnified to its
satisfaction against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as a
result of Agent acting or refraining from acting hereunder or under any other
Financing Agreement in accordance with the instructions of all Lenders, all affected
Lenders or Required Lenders, as the case may be.






	11.3	 	Agent’s Reliance, Etc.




Neither Agent nor any of its Affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Financing Agreements, except for damages caused by its
or their own negligence or wilful misconduct as determined by a final and non-appealable judgment
or court order binding on them. Without limiting the generality of the foregoing, Agent: (i) may
treat the payee of any Term Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form reasonably satisfactory to Agent;
(ii) may consult with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with this Agreement or the other Financing
Agreements; (iv) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the other Financing
Agreements on the part of Borrower or to inspect the Collateral (including the books and records)
of Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other Financing
Agreements or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall
incur no liability under or in respect of this Agreement or the other Financing Agreements by
acting upon any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.





	11.4	 	Agent and Affiliates




With respect to any of its Commitments hereunder, Agent shall have the same rights and powers under
this Agreement and the other Financing Agreements as any other Lender and may exercise the same as
though it were not Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated, include Agent in its individual capacity. Agent and its Affiliates may lend money to,
invest in, and generally engage in any kind of business with Borrower, any of its Affiliates and
any Person who may do business with or own securities of Borrower or any such Affiliate, all as if
Agent were not Agent and without any duty to account therefor to Lenders. Agent and its Affiliates
may accept fees and other consideration from Borrower for





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services in connection with this Agreement or otherwise without having to account for the same to
Lenders. Each Lender acknowledges the potential conflict of interest between Agent as a Lender and
Agent as agent hereunder.





	11.5	 	Lender Credit Decision




Each Lender acknowledges that it has, independently and without reliance upon Agent or any other
Lender and based on the Information Certificate and such other documents and information as it has
deemed appropriate, made its own credit and financial analysis of Borrower and its own decision to
enter into this Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement. Each Lender acknowledges the potential conflict of interest of each
other Lender as a result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.





	11.6	 	Indemnification




Lenders agree to indemnify Agent (to the extent not reimbursed by Borrower and without limiting the
obligations of Borrower hereunder), rateably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising out of this Agreement or
any other Financing Agreement or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent’s gross negligence or wilful misconduct as determined by a final
and non-appealable judgment or court order binding on Agent. Without limiting the foregoing, each
Lender agrees to reimburse Agent promptly upon demand for its rateable share according to its Pro
Rata Share of any out-of-pocket expenses (including reasonable fees of counsel) incurred by Agent
in connection with the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Financing Agreement, to
the extent that Agent is not reimbursed for such expenses by Borrower.





	11.7	 	Failure to Act




Except for action expressly required of Agent hereunder and under the other Financing Agreements,
Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 11.6 hereof against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any such action.





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	11.8	 	Concerning the Collateral and the Related Financing Agreements





Each Lender authorizes and directs Agent to enter into this Agreement and the other Financing
Agreements. Each Lender agrees that any action taken by Agent in accordance with the terms of this
Agreement or the other Financing Agreements and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably incidental thereto, shall be
binding upon Lenders.





	11.9	 	Field Audit, Examination Reports and other Information; Disclaimer by Lenders.





By signing this Agreement, each Lender:





	 	(a)	 	deemed to have requested that Agent furnish such Lender, within a reasonable
time after it becomes available to Agent, a copy of each field audit, examination
report, Compliance Certificate, Borrowing Base Certificate and/or other documentation
(each such audit, report, certificate or documentation being referred to herein as a
“Report” and collectively, “Reports”);
	 
	 	(b)	 	expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, or (ii) shall not be
liable for any information contained in any Report;
	 
	 	(c)	 	expressly agrees and acknowledges that the Reports are not comprehensive audits
or examinations, that Agent or any other party performing any audit or examination will
inspect only specific information regarding Borrower and will rely significantly upon
Borrower’s books and records, as well as on representations of Borrower’s personnel;
and
	 
	 	(d)	 	agrees to keep all Reports confidential and strictly for its internal use and
not to distribute or use any Report in any other manner.






	11.10	 	Collateral Matters






	 	(a)	 	Lenders hereby irrevocably authorize Agent at its option and in its discretion
to release any Lien upon any of the Collateral (i) upon termination of the Commitments
and payment and satisfaction of all of the Obligations and delivery of cash collateral
to the extent required under Section 13.1 below; or (ii) constituting property
being sold or disposed of if Borrower certifies to Agent that the sale or disposition
is made in compliance with Section 9.7 hereof (and Agent may rely conclusively
on any such certificate, without further enquiry); or (iii) constituting property in
which Borrower did not own an interest at the time the Lien was granted or at any time
thereafter; or (iv) if required under the terms of any of the other Financing
Agreements, including any intercreditor agreement; or (v) approved, authorized or
ratified in writing in accordance with Section 11.15 hereof. Except as
provided above, Agent will not release any Lien upon any of the Collateral without the
prior written authorization required in accordance with Section 11.15 hereof.




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	 	(b)	 	Without any manner limiting Agent’s authority to act without any specific or
further authorization or consent by applicable Lenders, each Lender, as applicable,
agrees to confirm in writing, upon request by Agent, the authority to release
Collateral conferred upon Agent under this Section. Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary to
evidence the release of the Liens granted to Agent upon any Collateral to the extent
set forth above; provided, that, (i) Agent shall not be required to
execute any such document on terms which, in Agent’s opinion, would expose Agent to
liability or create any obligations or entail any consequence other than the release of
such Lien without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Lien upon (or obligations of any
Borrower in respect of) the Collateral retained by Borrower.
	 
	 	(c)	 	Agent shall have no obligation whatsoever to any Lender or any other Person to
investigate, confirm or assure that the Collateral exists or is owned by Borrower or is
cared for, protected or insured or has been encumbered, or that any particular items of
Collateral meet the eligibility criteria applicable in respect of the Loans hereunder,
or whether any particular reserves are appropriate, or that the Liens granted to Agent
pursuant hereto or any of the Financing Agreements or otherwise have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are entitled to
any particular priority, or to exercise at all or in any particular manner or under any
duty of care, disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect of
Collateral, or any act, omission or event related thereto, Agent may act in any manner
it may deem appropriate, in its discretion, given Agent’s own interest in the
Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any
other Lender.






	11.11	 	Successor Agent





Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof
to Lenders and Borrower. Upon any such resignation, Required Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by Required Lenders
and shall have accepted such appointment within thirty (30) days after the resigning Agent’s giving
notice of resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor
Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise
shall be a commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution or other entity whose
business includes making commercial loans, in each case, is organized under the laws of Canada or
of any province thereof. If no successor Agent has been appointed pursuant to the foregoing,
within thirty (30) days after the date such notice of resignation was given by the resigning Agent,
such resignation shall become effective and Required Lenders shall thereafter perform all the
duties of Agent hereunder until such time, if any, as Required Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Required Lenders hereunder shall be subject to
the approval of Borrower, such approval not to be unreasonably




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withheld or delayed; provided, that such approval shall not be required if an Event
of Default has occurred and is continuing. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all
the rights, powers, privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the effective date of the
resigning Agent’s resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Financing Agreements, except that any indemnity
rights or other rights in favour of such resigning Agent shall continue. After any resigning
Agent’s resignation hereunder, the provisions of this Article 11 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was acting as Agent under this
Agreement and the other Financing Agreements.





	11.12	 	Setoff and Sharing of Payments





In addition to any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance of any Event of
Default and subject to Section 11.13(f), each Lender is hereby authorized at any time or
from time to time, without notice to Borrower or to any other Person other than Agent, any such
notice being hereby expressly waived, to setoff and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower (regardless of whether such
balances are then due to Borrower) and any other properties or assets at any time held or owing by
that Lender to or for the credit or for the account of Borrower against and on account of any of
the Obligations that are not paid when due; provided, that Lenders exercising such
setoff rights shall give notice thereof to Borrower promptly after exercising such rights. Any
Lender exercising a right of setoff or otherwise receiving any payment on account of the
Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lender
shall sell) such participations in each such other Lender’s Pro Rata Share of the Obligations as
would be necessary to cause such Lender to share the amount so setoff or otherwise received with
the other Lender in accordance with their respective Pro Rata Shares. Borrower agrees, to the
fullest extent permitted by law that (a) any Lender may exercise its right to setoff with respect
to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such
amounts so setoff to the other Lenders; and (b) any Lender so purchasing a participation in a Loan
made or other Obligations held by the other Lenders may exercise all rights of setoff, bankers’
lien, counterclaim or similar rights with respect to such participation as fully as if such Lender
were a direct holder of the Loan and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the setoff amount or payment otherwise
received is thereafter recovered from a Lender that has exercised the right of setoff, the purchase
of participations by that Lender shall be rescinded and the purchase price restored without
interest.





	11.13	 	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert






	 	(a)	 	Advances; Payments






	 	(i)	 	In each funding notice provided by Agent to a Lender hereunder,
Agent shall provide such Lender with written confirmation (by telephone,
telecopy or email (if such Lender has provided email notice coordinates to





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	 	 	 	Agent)) that all conditions precedent hereunder to such funding have been
satisfied or waived in accordance with the terms hereof.
	 
	 	(ii)	 	Each Lender shall make the amount of such Lender’s Pro Rata
Share of such Loan available to Agent in same day funds by wire transfer to
Agent’s account not later than 11:00 a.m. (Toronto time) on the requested
funding date (which must be a Business Day). After receipt of such wire
transfers (or, in Agent’s sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Agent shall make the requested Loan to
Borrower. All payments by each Lender shall be made without setoff,
counterclaim or deduction of any kind.
	 
	 	(iii)	 	On the 2nd Business Day of each calendar month or more
frequently at Agent’s election (each, a “Settlement Date”), Agent shall advise
each Lender by telephone, telecopy or email (if such Lender has provided email
notice coordinates to Agent) of the amount of such Lender’s Pro Rata Share of
principal, interest and fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that each Lender has funded all payments and
Loans required to be made by it and purchased all participations required to be
purchased by it under this Agreement and the other Financing Agreements as of
such Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata
Share of principal, interest and fees paid by Borrower since the previous
Settlement Date for the benefit of such Lender on the portion of the Loans held
by it. To the extent that any Lender (a “Non-Funding Lender”) has failed to
fund all such payments and Loans or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender’s Pro Rata Share of all payments received from
Borrower. Such payments shall be made by wire transfer to such Lender’s
account not later than 2:00 p.m. (Toronto time) on the next Business Day
following each Settlement Date.






	 	(b)	 	Availability of Lender’s Pro Rata Share. Agent may assume that each
Lender will make its Pro Rata Share of each Loan available to Agent on each funding
date (which must be a Business Day). If such Pro Rata Share is not, in fact, paid to
Agent by such Lender when due, Agent will be entitled to recover such amount on demand
from such Lender without setoff, counterclaim or deduction of any kind. If any Lender
fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand, Agent
shall promptly notify Borrower and Borrower shall immediately repay such amount to
Agent. Nothing in this Section 11.13(b) or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfil its Commitment
hereunder or to prejudice any rights that a Borrower may have against any Lender as a
result of any default by such Lender hereunder. To the extent that Agent advances
funds to Borrower on behalf of any Lender and is not reimbursed therefor on the same
Business Day as





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	 	 	 	such Loan is made, Agent shall be entitled to retain for its account all interest
accrued on such advance until reimbursed by the applicable Lender.
	 
	 	(c)	 	Return of Payments.






	 	(i)	 	If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand
without setoff, counterclaim or deduction of any kind.
	 
	 	(ii)	 	If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any bankruptcy or insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other
Financing Agreement, Agent will not be required to distribute any portion
thereof to any Lender. In addition, each Lender will repay to Agent on demand
any portion of such amount that Agent has distributed to such Lender, together
with interest at such rate, if any, as Agent is required to pay to Borrower or
such other Person, without setoff, counterclaim or deduction of any kind.






	 	(d)	 	Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Loan or any payment required by it hereunder on the date specified thereof, shall not
relieve the other Lenders (each such other Lender, an “Other Lender”) of its
obligations to make such Loan or purchase such participation on such date, but neither
any Other Lender nor Agent shall be responsible for the failure of any Non-Funding
Lender to make a Loan, purchase a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a Non-Funding
Lender shall not have any voting or consent rights under or with respect to any
Financing Agreement or constitute a “Lender” for any voting or consent rights under or
with respect to any Financing Agreement. At Borrower’s request, Agent or a Person
acceptable to Agent shall have the right with Agent’s consent and in Agent’s sole
discretion (but shall have no obligation) to purchase from any Non-Funding Lender, and
each Non-Funding Lender agrees that it shall, at Agent’s request, sell and assign to
Agent or such Person, all of the Commitments of that Non-Funding Lender for an amount
equal to the principal balance of all Loans held by such Non-Funding Lender and all
accrued interest and fees with respect thereto through the date of sale, such purchase
and sale to be consummated pursuant to an executed Assignment Agreement.
	 
	 	(e)	 	Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of any Event of Default received by Agent from, or
delivered by Agent to Borrower, with notice of any Event of Default of which Agent has
actually become aware and with notice of any action taken by Agent following any Event
of Default and with any notice received from Borrower pursuant to Section
9.7(b)(vii); provided, that Agent shall not be liable to any





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	 	 	 	Lender for any failure to do so, except to the extent that such failure is
attributable to Agent’s gross negligence or wilful misconduct as determined by a
final and non-appealable judgment or court order binding on Agent.
	 
	 	(f)	 	Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with Agent and each other Lender that no
Lender shall take any action to protect or enforce its rights arising out of this
Agreement or the other Financing Agreements (including exercising any rights of setoff)
without first obtaining the prior written consent of Agent and all other Lenders, it
being the intent of Lenders that any such action to protect or enforce rights under
this Agreement and the other Financing Agreements shall be taken in concert and at the
direction or with the consent of Agent, all Lenders, affected Lenders or Required
Lenders, as the case may be.






	11.14	 	Meetings of Lenders





Any Lender is entitled to call a meeting of all Lenders on not less than ten (10) Business Days
prior written notice to all other Lenders for the purposes of considering any matters relevant to
this Agreement, the other Financing Agreements and/or in respect of the Obligations





	11.15	 	Approval of Lenders and Agent






	 	(a)	 	Notwithstanding any other provision of this Agreement but subject to
Section 11.15(b), no amendment or waiver of any provision of this Agreement,
nor consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders, and then such
amendment, waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given;






	 	(i)	 	provided that no amendment, waiver or consent
shall, unless in writing and signed by all affected Lenders (other than a
Non-Funding Lender) do any of the following at any time:






	 	(A)	 	reduce the rate or amount of any principal,
interest or fees payable by Borrower or alter the currency or mode of
calculation or computation thereof;
	 
	 	(B)	 	extend the time for payments required to be
made by Borrower or the Maturity Date;
	 
	 	(C)	 	increase any Lender’s Commitment;
	 
	 	(D)	 	change the definition of Required Lenders, any
provision of this Section 11.15 or reduce the voting
percentages hereunder, or
	 
	 	(E)	 	change the payment waterfall in Section
6.4(a) hereof,




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	 	(ii)	 	provided further that no amendment,
waiver or consent shall, unless in writing and signed by all Lenders (other
than a Non-Funding Lender) do any of the following at any time:






	 	(A)	 	release all or substantially all of the value
of the collateral under any Financing Agreement or any guarantee of the
Obligations;
	 
	 	(B)	 	permit Borrower or any Obligor to assign its
rights under the Financing Agreements;
	 
	 	(C)	 	amend the Pro Rata sharing provisions
hereunder; or
	 
	 	(D)	 	amend the voting percentages hereunder.






	 	(b)	 	Notwithstanding Section 11.15(a), Agent may, without the consent of
Lenders, make amendments to the Financing Agreements that are for the sole purpose of
curing any immaterial or administrative ambiguity, defect or inconsistency. Agent
shall, within a reasonable time, notify Lenders or any such action. Notwithstanding
Section 11.15(a), no amendment, waiver or consent shall, unless in writing and
signed by Agent in addition to Lenders required above to take such action, affect the
rights or duties of Agent under this Agreement or any of the other Financing
Agreements. Notwithstanding Section 11.15(a), no amendment, waiver or consent
shall, unless in writing and signed by the applicable counterparty (being Agent, a
Lender or their respective Affiliates) to a Secured Hedging Agreement (other than
Borrower), in addition to Lenders required above to take such action, release all or
substantially all of the value of the collateral under any Financing Agreement or any
guarantee of the Obligations or amend Section 6.4(a) or Section
11.15(b).





ARTICLE 12

JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW





	12.1	 	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver






	 	(a)	 	The validity, interpretation and enforcement of the Financing Agreements and
any dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the laws of the Province of
Ontario and the federal laws of Canada applicable therein.
	 
	 	(b)	 	Borrower, Lenders and Agent irrevocably consent and submit to the non-exclusive
jurisdiction of the Superior Court of Justice (Ontario) and waive any objection based
on venue or forum non conveniens with respect to any action instituted therein arising
under any of the Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of any of the Financing
Agreements or the transactions related hereto or thereto, in each case whether now
existing or hereafter arising, and whether in contract, tort, equity or otherwise, and
agree that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Agent





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	 	 	 	and Lenders shall have the right to bring any action or proceeding against Borrower
or its property in the courts of any other jurisdiction which Agent or Lenders deem
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce their respective rights against Borrower or its property).
	 
	 	(c)	 	To the extent permitted by law, Borrower 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 its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five (5)
days after the same shall have been so deposited in the Canadian mails, or, at Agent’s
option, by service upon Borrower in any other manner provided under the rules of any
such courts. Within thirty (30) days after such service, Borrower shall appear in
answer to such process, failing which Borrower shall be deemed in default and judgment
may be entered by Agent or Lenders against Borrower for the amount of the claim and
other relief requested.
	 
	 	(d)	 	TO THE EXTENT PERMITTED BY APPLICABLE LAW BORROWER, LENDERS AND AGENT EACH
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(i) ARISING UNDER ANY OF THE FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF ANY OF THE
FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, LENDERS AND AGENT EACH HEREBY
AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER, AGENT OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
	 
	 	(e)	 	Lenders and Agent shall not have any liability to Borrower (whether in tort,
contract, equity or otherwise) for losses suffered by Borrower in connection with,
arising out of, or in any way related to the transactions or relationships contemplated
by any Financing Agreement, or any act, omission or event occurring in connection
herewith, unless it is determined by a final and non-appealable judgment or court order
binding on Agent or a Lender, that the losses were the result of acts or omissions
constituting gross negligence or wilful misconduct and Borrower hereby waives any
claims for special, punitive, exemplary, indirect or consequential damages in respect
of any breach or alleged breach by Agent or any Lender of any of the terms of this
Agreement or the other Financing Agreements except in the case of gross negligence or
wilful misconduct of Agent or any Lender as determined by a final and non-appealable
judgment or court order binding on Agent or Lender.




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	 	(f)	 	Borrower hereby expressly waives all rights of notice and hearing of any kind
prior to the exercise of rights by Agent from and after the occurrence of an Event of
Default that is continuing to repossess the Collateral with judicial process or to
replevy, attach or levy upon the Collateral or other security for the Obligations.
Borrower waives the posting of any bond otherwise required of Agent in connection with
any judicial process or proceeding to obtain possession of, replevy, attach or levy
upon the Collateral or other security for the Obligations, to enforce any judgment or
other court order entered in favour of Agent, or to enforce by specific performance,
temporary restraining order, preliminary or permanent injunction or any other Financing
Agreement.






	12.2	 	Waiver of Notices





Borrower hereby expressly waives demand, presentment, protest and notice of protest and notice of
dishonour with respect to any and all instruments and commercial paper, included in or evidencing
any of the Obligations or the Collateral, and any and all other demands and notices of any kind or
nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such
as are expressly provided for herein. No notice to or demand on Borrower which Agent may elect to
give shall entitle Borrower to any other or further notice or demand in the same, similar or other
circumstances.





	12.3	 	Amendments and Waivers





Subject to Section 11.15, neither this Agreement nor any provision hereof shall be amended
or waived, nor consent to any departure by Borrower therefrom permitted, orally or by course of
conduct, but only by a written agreement signed by an authorized officer of each Lender and Agent,
and as to amendments, as also signed by an authorized officer of Borrower. Agent shall not, by any
act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its
rights, powers and/or remedies unless such waiver shall be in writing and signed by an authorized
officer of Agent. Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Agent of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which Agent would otherwise
have on any future occasion, whether similar in kind or otherwise.





	12.4	 	Waiver of Counterclaim





Borrower waives all rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other than compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or
thereto.





	12.5	 	Indemnification





Borrower shall indemnify and hold Arranger, Agent and each Lender, and their respective directors,
officers, agents, representatives, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by or asserted against
any of them in connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,




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enforcement, performance or administration of any Financing Agreements, or any undertaking or
proceeding related to any of the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto or the relationship between any of Borrower and Obligor,
on the other hand, and Arranger, Agent, each Lender and their respective directors, officers,
agents, representatives, employees and counsel, on the other hand, including amounts paid in
settlement, court costs, and the fees and expenses of counsel and others incurred in connection
with investigating, preparing to defend or defending any such litigation, investigation, claim or
proceeding. Such indemnification shall not apply to losses, claims, damages, liabilities, costs or
expenses resulting from the bad faith, fraud, gross negligence or wilful misconduct of Arranger,
Agent, any Lender and/or their respective directors, officers, agents, representatives, employees
and counsel as determined pursuant to a final non-appealable order of a court of competent
jurisdiction or to losses, claims, damages, liabilities, costs or expenses to the extent relating
to disputes among such indemnified parties or to a breach of their obligations to Borrower
hereunder as determined pursuant to a final non-appealable order of a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section 12.5 may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion which it is permitted to pay under applicable law to
Arranger, Agent, each Lender and their respective directors, officers, agents, representatives,
employees and counsel in satisfaction of indemnified matters under this Section 12.5. The
foregoing indemnity shall survive the payment of the Obligations and the termination of this
Agreement.




ARTICLE 13

TERM OF AGREEMENT; MISCELLANEOUS





	13.1	 	Term






	 	(a)	 	The Financing Agreements shall continue in full force and effect for a term
ending on the Maturity Date unless sooner terminated pursuant to the terms hereof.
Upon the Maturity Date or effective date of termination of the Financing Agreements,
Borrower shall pay to Agent, in full, all outstanding and unpaid Obligations (except
under or in connection with any Secured Hedging Agreement) and shall furnish cash
collateral to Agent in such amounts as Agent determines are reasonably necessary to
secure Agent, Lenders and Secured Parties from loss, cost, damage or expense, including
legal fees and expenses, issued and outstanding Letter of Credit Accommodations,
outstanding Secured Hedging Agreements and cheques or other payments provisionally
credited to the Obligations and/or as to which Agent and Lenders have not yet received
final and indefeasible payment. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in US Dollars to such bank account of
Agent, as Agent may, in its discretion, designate in writing to Borrower for such
purpose. Interest shall be due until and including the next Business Day, if the
amounts so paid by Borrower to the bank account designated by Agent are received in
such bank account later than 12:00 noon, Toronto time.
	 
	 	(b)	 	No termination of any of the Financing Agreements shall relieve or discharge
Borrower of its respective duties, obligations and covenants under the Financing
Agreements until all Obligations have been fully and finally discharged and paid,





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	 	 	 	and Agent’s continuing security interest in the Collateral and the rights and
remedies of Agent and Lenders, under the Financing Agreements and applicable law,
shall remain in effect until all such Obligations have been fully and finally
discharged and paid.
	 
	 	(c)	 	If this Agreement is terminated by Borrower prior to October 31, 2015 or by
Agent pursuant to its right to terminate pursuant to Section 10.2, in view of
the impracticality and extreme difficulty of ascertaining actual damages and by mutual
agreement of the parties as to a reasonable calculation of Lenders’ lost profits as a
result thereof, Borrower agrees to pay to Agent, for the account of Lenders based on
their respective Pro Rata Share, upon the effective date of such termination, an early
termination fee in the amount set forth below if such termination is effective in the
period indicated:





	 	 	 	 	 
	Amount	 	 	 	Period
	(a)  1.5% of: the Maximum
Revolving Credit and (i) the
Maximum Revolving Term Credit on
or before the Revolving Term Loan
Term Conversion Date or (ii) the
outstanding balance of the
Revolving Term Loan after the
Revolving Term Loan Term
Conversion Date


	 	-
	 	From the date hereof to and
including the 1st anniversary
of the date hereof.
	 
	 	 	 	 
	(b)  1.0% of: the Maximum
Revolving Credit and (i) the
Maximum Revolving Term Credit on
or before the Revolving Term Loan
Term Conversion Date or (ii) the
outstanding balance of the
Revolving Term Loan after the
Revolving Term Loan Term
Conversion Date


	 	-
	 	After the 1st anniversary of
the date hereof to and
including the 2nd anniversary
of the date hereof.
	 
	 	 	 	 
	(c)   0.5% of Maximum Revolving
Credit and outstanding balance of
the Revolving Term Loan


	 	-
	 	After the 2nd anniversary of
the date hereof to and
including the Maturity Date.






Such early termination fee shall be presumed to be the amount of damages sustained by Lenders as a
result of such early termination and Borrower agrees that it is reasonable under the circumstances
currently existing. In addition, Agent, on behalf of Lenders, shall be entitled to such early
termination fee upon the occurrence of any Event of Default described in Sections 10.1(f)
and 10.1(g) hereof, even if Agent does not exercise its right to terminate this Agreement,
or a Lender elects, at its option, to provide financing to Borrower or permit the use




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of cash collateral under any applicable reorganization or insolvency legislation. The early termination
fee provided for in this Section 13.1 shall be deemed included in the Obligations.





	13.2	 	Notice





All notices, requests and demands hereunder shall be in writing and (a) made to Agent and Lenders
at their respective addresses set forth below and to Borrower at its chief executive office set
forth below, or to such other address as any party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if delivered in person,
immediately upon delivery; if by facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service with instructions to
deliver the next Business Day, one (1) Business Day after sending; and if by registered mail,
return receipt requested, five (5) days after mailing.





	13.3	 	Partial Invalidity





If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be
construed as though it did not contain the particular provision held to be invalid or unenforceable
and the rights and obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by applicable law.





	13.4	 	Successors





The Financing Agreements and any other document referred to herein or therein shall be binding upon
and inure to the benefit of and be enforceable by Agent, Lenders and Borrower and their respective
successors and permitted assigns.





	13.5	 	Entire Agreement





The Financing Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the parties hereto, and
supersede all other prior agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written. In the event of any inconsistency between the terms of
this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.





	13.6	 	Headings





The division of this Agreement into sections and the insertion of headings and a table of contents
are for convenience of reference only and shall not affect the construction or interpretation of
this Agreement.




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	13.7	 	Judgment Currency





To the extent permitted by applicable law, the obligations of Borrower in respect of any amount due
under this Agreement shall, notwithstanding any payment in any other currency (the “Other
Currency”) (whether pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the currency in which it is due (the “Agreed Currency”) that Lender may, in accordance
with normal banking procedures, purchase with the sum paid in the Other Currency (after any premium
and costs of exchange) on the Business Day immediately after the day on which Agent receives the
payment. If the amount in the Agreed Currency that may be so purchased for any reason falls short
of the amount originally due, Borrower shall pay all additional amounts, in the Agreed Currency, as
may be necessary to compensate for the shortfall. Any obligation of Borrower not discharged by
that payment shall, to the extent permitted by applicable law, be due as a separate and independent
obligation and, until discharged as provided in this section, continue in full force and effect.





	13.8	 	Counterparts and Facsimile





This Agreement may be executed in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original, and such counterparts together shall constitute one
and the same agreement. The delivery of a facsimile or pdf copy of an executed counterpart of this
Agreement shall be deemed to be valid execution and delivery of this Agreement, but the party
delivering a facsimile or pdf copy shall deliver to the other party an original copy of this
Agreement as soon as possible after delivering the facsimile or pdf copy.





	13.9	 	Patriot Act Notice





Agent and each Lender which is subject to the Patriot Act hereby notifies Borrower that pursuant to
the requirements of the Patriot Act, it is required to obtain, verify and record information that
identifies each person or corporation who opens an account and/or enters into a business
relationship with it, which information includes the name and address of Borrower and its
Subsidiaries and other information that will allow Agent and such Lender to identify such person in
accordance with the Patriot Act and any other applicable law. Borrower is hereby advised that any
Loans or Letter of Credit Accommodations hereunder are subject to satisfactory results of such
verification.




ARTICLE 14

ACKNOWLEDGMENT AND RESTATEMENT





	14.1	 	Existing Obligations





Borrower hereby acknowledges, confirms and agrees that Borrower is indebted to Lenders for
outstanding loans, advances and letter of credit accommodations to Borrower under the Existing Loan
Agreement together with all interest accrued and accruing thereon (to the extent applicable), and
all fees, costs, expenses and other charges relating thereto, all of which are unconditionally
owing by Borrower to Lenders to the extent set forth in the Existing Loan Agreement, without
setoff, defense or counterclaim of any kind, nature or description whatsoever. The Loans and other
financial accommodations provided for in this Agreement are




- 104 - 









 








an extension of the “Loans” and other financial accommodations provided for under the Existing Loan
Agreement and shall continue without novation.





	14.2	 	Acknowledgment of Security Interests






	 	(a)	 	Borrower hereby acknowledges, confirms and agrees that Agent, on behalf of
itself and Secured Parties, shall continue to have a Lien upon the collateral
heretofore granted to Original Lender or Agent pursuant to and in connection with the
Original Loan Agreement or Existing Loan Agreement, as the case may be, to secure the
Obligations, as well as any collateral granted under or in connection with this
Agreement or under any of the other Financing Agreements or otherwise granted to or
held by Agent, any Lender, Original Lender, any Secured Party or any of their
respective Affiliates.
	 
	 	(b)	 	The Liens of Agent, on behalf of itself and Secured Parties, in the Collateral
shall be deemed to be continuously granted and perfected from the earliest date of the
granting and perfection of such Liens to Original Lender or Agent under the Financing
Agreements or any Secured Hedging Agreements.
	 
	 	(c)	 	Notwithstanding any term of any Financing Agreement, Borrower acknowledges,
confirms and agrees that all security granted by it under, or in connection with, the
Original Loan Agreement, the Existing Loan Agreement and the other Financing Agreements
shall be held by Agent, on behalf of itself and Secured Parties (including those under
Secured Hedging Agreements), to secure the Obligations (including those arising under
the Secured Hedging Agreements).






	14.3	 	Existing Loan Agreement





Borrower hereby acknowledges, confirms and agrees that: (a) the Existing Loan Agreement has been
duly executed and delivered by Borrower is in full force and effect as of the date hereof; (b) the
agreements and obligations of Borrower contained in the Existing Loan Agreement constitutes the
legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with
its terms and Borrower has no valid defense to the enforcement of such obligations; and (c) Agent
and Lenders are entitled to all of the rights, remedies and benefits provided for in or arising
pursuant to the Existing Loan Agreement.





	14.4	 	Restatement






	 	(a)	 	Except as otherwise stated in Section 14.2 hereof and this Section
14.4, as of the date hereof, the terms, conditions, agreements, covenants,
representations and warranties set forth in the Existing Loan Agreement are
simultaneously amended and restated in their entirety, and as so amended and restated,
replaced and superseded by the terms, conditions, agreements, covenants,
representations and warranties set forth in this Agreement and the other Financing
Agreements executed and/or delivered on or after the date hereof, except that nothing
herein or in the other Financing Agreements shall impair or adversely affect the
continuation of the liability of Borrower for the Obligations heretofore incurred and
the Liens and other interests in the collateral heretofore granted, pledged





- 105 - 









 





	 	 	 	and/or assigned by Borrower to Agent, Original Lender, any Lender, any Secured Party
or any of their respective Affiliates (whether directly, indirectly or otherwise).
	 
	 	(b)	 	The amendment and restatement contained herein shall not, in any manner, be
construed to constitute payment of, or impair, limit, cancel or extinguish, or
constitute a novation in respect of, the Obligations and other obligations, liabilities
and indebtedness of Borrower evidenced by or arising under the Existing Loan Agreement,
and the Liens of Agent, on behalf of itself and Secured Parties, securing such
Obligations and other obligations, liabilities and indebtedness, which shall not in any
manner be impaired, limited, terminated, waived or released, but shall continue in full
force and effect in favor of Agent, for the benefit of itself and Secured Parties.
	 
	 	(c)	 	All loans, advances and other financial accommodations under the Existing Loan
Agreement and all other obligations, liabilities and indebtedness of Borrower to
Lenders outstanding and unpaid as of the date hereof pursuant to the Existing Loan
Agreement or otherwise shall be deemed Obligations of Borrower pursuant to the terms
hereof. The principal amount of the Loans and the amount of the Letters of Credit
Accommodations outstanding as of the date hereof under the Existing Loan Agreement
shall be allocated to the Loans and Letter of Credit Accommodations hereunder in such
manner and in such amounts as Agent shall determine in accordance with the terms
hereof.





[The remainder of this page is intentionally left blank]






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IN WITNESS WHEREOF, Lenders, Agent and Borrower have caused these presents to be duly executed as
of the day and year first above written.




	 	 	 	 	 	 	 	 	 

	AGENT AND LENDER	 	 	 	LENDER
	 
	 	 	 	 	 	 	 	 
	WELLS FARGO CAPITAL FINANCE CORPORATION CANADA	 	 	 	EXPORT DEVELOPMENT CANADA
	 
	 	 	 	 	 	 	 	 
	By: 

Name: 

Title:

	 	/s/ Sean M. Noonan
 

Sean M. Noonan 

Vice President, Relationship Manager
	 	 	 	By:

Name:

Title:
	 	/s/ Trevor Kuhn 

Trevor Kuhn 

Financing Manager
	 
	 	 	 	 	 	 	 	 
	By:
 

Name: 

Title:

	 	
 
	 	 	 	By:

Name:

Title:
	 	/s/ Stephano Carrera
 

Stephano Carrera

Sr. Financing Manager

	 
	 	 	 	 	 	 	 	 
	Revolving Loan Commitment:	 	 	 	Revolving Loan Commitment:
	$25,000,000	 	 	 	$25,000,000
	 
	 	 	 	 	 	 	 	 
	Revolving Term Loan Commitment:	 	 	 	Revolving Term Loan Commitment:
	$30,000,000	 	 	 	$30,000,000
	 
	 	 	 	 	 	 	 	 
	Address:	 	 	 	Address:
	40 King Street West, Suite 2500	 	 	 	151 O’Connor Street
	Toronto, Ontario, M5H 3Y2	 	 	 	Ottawa, Ontario K1A 1K3
	Attention: Senior Vice President	 	 	 	Attention: Loan Services
	Fax: (416) 775-2991	 	 	 	Fax: (613) 598-2514
	 	 	 	 	 	 	Attention: Asset Management/Covenants Officer
	 	 	 	 	 	 	Fax: (613) 598-3186
	 
	 	 	 	 	 	 	 	 
	BORROWER	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	IMAX CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By: 

Name: 

Title:

	 	/s/ Joseph Sparacio
 

Joseph Sparacio 

Executive Vice President and
Chief Financial Officer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By: 

Name: 

Title:

	 	/s/ Ed MacNeil
 

Ed MacNeil 

Senior Vice President, Finance	 	 	 	 	 	 






Address of Chief Executive Office:

110 East 59th Street

Suite 2100

New York, New York, 10022

Attention: Senior Executive Vice President and General Counsel

Fax: (212) 371-7584