Exhibit 10.3


 


EXECUTION COPY


 




 





 


CANADIAN GUARANTEE AND COLLATERAL AGREEMENT


 


dated as of


 


November 15, 2007


 


among


 


NOVAMERICAN STEEL INC.


 


THE SUBSIDIARIES OF NOVAMERICAN STEEL INC.


IDENTIFIED HEREIN


 


and


 


JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,


 


as Canadian Agent


 




 





 

















 


TABLE OF CONTENTS


 


	
  ARTICLE I Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01. Credit
  Agreement

  	
   

  	
  1

  
	
  SECTION 1.02. Other
  Defined Terms

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II Guarantee

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01. Guarantee

  	
   

  	
  5

  
	
  SECTION 2.02. Guarantee
  of Payment

  	
   

  	
  5

  
	
  SECTION 2.03. No
  Limitations

  	
   

  	
  5

  
	
  SECTION 2.04.
  Reinstatement

  	
   

  	
  6

  
	
  SECTION 2.05. Agreement
  To Pay; Subrogation

  	
   

  	
  6

  
	
  SECTION 2.06.
  Information

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE III Security Interests
  in Personal Property

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01. Security
  Interest

  	
   

  	
  7

  
	
  SECTION 3.02.
  Representations and Warranties

  	
   

  	
  8

  
	
  SECTION 3.03. Covenants

  	
   

  	
  8

  
	
  SECTION 3.04. Other
  Actions

  	
   

  	
  10

  
	
  SECTION 3.05. Cash
  Management System

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV Remedies

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01. Remedies
  Upon Default

  	
   

  	
  12

  
	
  SECTION 4.02.
  Application of Proceeds

  	
   

  	
  14

  
	
  SECTION 4.03. Grant of
  License to Use Intellectual Property

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE V Indemnity, Subrogation
  and Subordination

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01. Indemnity
  and Subrogation

  	
   

  	
  15

  
	
  SECTION 5.02.
  Contribution and Subrogation

  	
   

  	
  15

  
	
  SECTION 5.03.
  Subordination

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Miscellaneous

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01. Notices

  	
   

  	
  16

  
	
  SECTION 6.02. Waivers;
  Amendment

  	
   

  	
  16

  
	
  SECTION 6.03. Canadian
  Agent’s Fees and Expenses; Indemnification

  	
   

  	
  17

  
	
  SECTION 6.04.
  Successors and Assigns

  	
   

  	
  17

  
	
  SECTION 6.05. Survival
  of Agreement

  	
   

  	
  17

  
	
  SECTION 6.06. Counterparts;
  Effectiveness; Several Agreement

  	
   

  	
  18

  
	
  SECTION 6.07.
  Severability

  	
   

  	
  18

  
	
  SECTION 6.08. Right of
  Set-Off

  	
   

  	
  18

  



 

















 


	
  SECTION 6.09. Governing
  Law; Jurisdiction; Consent to Service of Process

  	
   

  	
  18

  
	
  SECTION 6.10. Judgment Currency

  	
   

  	
  19

  
	
  SECTION 6.11. WAIVER OF
  JURY TRIAL

  	
   

  	
  20

  
	
  SECTION 6.12. Headings

  	
   

  	
  20

  
	
  SECTION 6.13. Security
  Interest Absolute

  	
   

  	
  20

  
	
  SECTION 6.14.
  Termination or Release

  	
   

  	
  21

  
	
  SECTION 6.15.
  Additional Subsidiaries

  	
   

  	
  21

  
	
  SECTION 6.16. Canadian
  Agent Appointed Attorney-in-Fact

  	
   

  	
  21

  
	
  SECTION 6.17. Counterparts

  	
   

  	
  22

  



 

















 


	
  Schedules

  	
   

  
	
  Schedule I

  	
  Subsidiary Parties

  
	
   

  	
   

  
	
  Exhibits

  	
   

  
	
  Exhibit I

  	
  Form of Supplement

  



 

















 


CANADIAN GUARANTEE AND COLLATERAL AGREEMENT
dated as of November 15, 2007, among NOVAMERICAN STEEL INC., the Subsidiaries
of NOVAMERICAN STEEL INC. identified herein and JPMORGAN CHASE BANK, N.A., an
authorized foreign bank under the Bank Act
(Canada) acting through its TORONTO BRANCH, as Canadian Agent.


 


Reference is
made to the Credit Agreement dated as of November 15, 2007 (as amended, supplemented
or otherwise modified from time to time, the “Credit
Agreement”), among Symmetry Holdings Inc. (“Symmetry”), Novamerican Steel Finco Inc.
(the “US Borrower”),
632421 N.B Ltd. (predecessor to Novamerican Steel Inc., formed by amalgamation effective
as of the date hereof, the “Canadian Borrower”
and, together with the US Borrower, the “Borrowers”),
 the Lenders party thereto and JPMorgan
Chase Bank, N.A., as Administrative Agent. The Lenders have agreed to extend
credit to the Borrowers on the terms and subject to the conditions set forth in
the Credit Agreement. The obligations of the Lenders to extend such credit are
conditioned on, among other things, the execution and delivery of this
Agreement. The Subsidiary Parties are affiliates of the Canadian Borrower, will
derive substantial benefits from the extension of credit to the Canadian
Borrower pursuant to the Credit Agreement and are willing to execute and
deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly,
the parties hereto agree as follows:


 


ARTICLE I



Definitions


 


SECTION 1.01.  Credit
Agreement.


 


(a)  Capitalized terms used in
this Agreement and not otherwise defined herein have the meanings specified in
the Credit Agreement.


 


(b)  The rules of construction specified
in Section 1.03 of the Credit Agreement also apply to this Agreement.


 


SECTION 1.02. Other Defined Terms.  All terms defined in the PPSA (as defined below)
and not defined in this Agreement have the meanings specified therein,
including, without limitation, “Accessions”, “Accounts”, “Chattel Paper”, “Document
of Title”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Money”,
“financing statement”, “financing change statement” and “Proceeds”. As used in
this Agreement, the following terms have the meanings specified below:


 


“ABL Collateral”  means any and all of the
following:  (a) all Accounts Receivable and related records;
(b) all Chattel Paper; (c) all Deposit Accounts (other than the
Intercompany Note Collateral Account); (d) all cash, cheques and other
negotiable instruments, funds and other evidences of payment (excluding any
cash or other assets held in the Intercompany Note Collateral Account in
accordance with the Indenture, as in effect on the date hereof); (e) all
Inventory; (f) to the extent evidencing, governing, securing or otherwise
related to the items referred to in the preceding clauses (a), (b), (c), (d)
and (e), all Documents of Title,


 

















 


Intangibles,
Instruments and Investment Property; (g) all books and records related to
the foregoing; (h) all collateral security and guarantees given by any
Person with respect to any of the foregoing; and (i) all Proceeds, including
insurance Proceeds, of any and all of the foregoing.


 


“Account Debtor”
means any Person who is or who may become obligated to any Grantor under, with
respect to or on account of an Account.


 


“Accounts Receivable”
means all Accounts and other rights to payment, in each case for the sale of
Inventory or the performance of services, existing on the date of this
Agreement or hereafter arising, whether or not earned by performance.


 


“Canadian Obligations”
means all Obligations of the Canadian Borrower or any Subsidiary other than the
US Borrower or a US Subsidiary.


 


“Cash Dominion Period” means (a) any period commencing on the
date the Administrative Agent or the Required Lenders shall deliver to the
Borrowers a notice stating that an Event of Default has occurred and is
continuing and a Cash Dominion Period has commenced and ending on the date on
which the Borrowers shall certify in a notice delivered to the Administrative
Agent that no Event of Default is continuing and the Administrative Agent or
the Required Lenders shall deliver to the Borrowers a notice stating that the
Cash Dominion Period has terminated or (b) any period commencing on the date
the Administrative Agent or the Required Lenders shall deliver to the Borrowers
a notice stating that Excess Availability has been less than US$20,000,000 for
at least five consecutive Business Days and a Cash Dominion Period has
commenced and ending on the date on which the Administrative Agent shall
determine that Excess Availability has been greater than US$20,000,000 for at
least 30 consecutive days and the Administrative Agent or the Required Lenders
shall deliver to the Borrowers a notice stating that the Cash Dominion Period
has terminated.


 


“Cash Management Services” means treasury management services
(including controlled disbursements, zero balance arrangements, cash sweeps,
automated clearinghouse transactions, return items, overdrafts, temporary
advances, interest and fees and interstate depository network services)
provided to Symmetry, a Borrower or any other Subsidiary.


 


“Cash Management Services Obligations” of the Loan Parties
means any and all obligations of the Loan Parties, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor) in connection with Cash Management Services.


 


“Collateral”
means all ABL Collateral in which a security interest has been granted
hereunder.


 


“Collateral Access Agreement” means any landlord waiver or
other agreement, in form and substance satisfactory to the Canadian Agent,
between the Canadian Agent and any third party (including any bailee,
consignee, customs broker, or other similar Person) in possession of any
Collateral or any landlord of any Loan Party for any real property where any
Collateral is located, as such landlord waiver or other agreement may be
amended, restated, or otherwise modified from time to time.


 


2

















 


“Credit Agreement”
has the meaning assigned to such term in the preliminary statement of this
Agreement.


 


“Deposit Account” means a deposit account of a Grantor
maintained with a bank or other financial institution.


 


“Deposit Account Control Agreement” means an agreement in
form and substance satisfactory to the Canadian Agent, among any Grantor, a
bank or other financial institution holding such Grantor’s funds, and the Canadian
Agent with respect to collection and control of all deposits and balances held
in a Deposit Account maintained by such Grantor with such bank or other
financial institution.


 


“Grantors”
means the Canadian Borrower and the Subsidiary Parties.


 


“Guarantors”
means the Subsidiary Parties.


 


“Intangibles” has the meaning assigned to it
in the PPSA, and includes, whether now owned or hereafter acquired by any
Grantor, corporate or other business records, indemnification claims, contract
rights (including rights under leases, whether entered into as lessor or
lessee, Hedging Agreements and other agreements), Intellectual Property,
goodwill, registrations, franchises, tax refund claims and any letter of
credit, guarantee, claim, security interest or other security held by or
granted to any Grantor to secure payment by an Account Debtor of any of the
Accounts.


 


“Intellectual
Property” means all intellectual and similar property
of every kind and nature now owned or hereafter acquired by any Grantor, including
inventions, designs, patents, copyrights, licenses, trademarks, trade secrets,
confidential or proprietary technical and business information, know-how, show-how
or other data or information, software and databases and all embodiments or
fixations thereof and related documentation, registrations and franchises, and
all additions, improvements and accessions to, and books and records describing
or used in connection with, any of the foregoing.


 


“Intercompany Note Collateral Account”
has the meaning assigned to such term in the Indenture, as in effect on the
date hereof.


 


 “Intercreditor Agreement” means the Lien
Subordination and Intercreditor Agreement dated as of the date hereof among
Symmetry, the Borrowers, the Administrative Agent and The Bank of New York, as
collateral agent, as amended, supplemented or otherwise modified from time to
time.


 


“Loan Documents Obligations”
means the obligations of the Borrowers under the Credit Agreement and of the
Borrowers and the other Loan Parties under the other Loan Documents, including,
without limitation, (a) the due and punctual payment by the Borrowers of (i)
the principal of and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans (including
Swingline Loans and Protective Advances), when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise, (ii)
each payment required to be made under the Credit Agreement in


 


3

















 


respect of any
BA, when and as due, (iii) each payment required to be made under the Credit
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon, and
any obligation to provide cash collateral and (iv) all other monetary
obligations of the Borrowers under the Credit Agreement or any other Loan
Document, including in respect of fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
any monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or similar proceeding, regardless of whether allowed
or allowable in such proceeding), (b) the due and punctual performance of all
other obligations of the Borrowers under or pursuant to the Credit Agreement
and each other Loan Document, and (c) the due and punctual payment and
performance of all of the obligations of each other Loan Party under or
pursuant to each of the other Loan Documents.


 


“Obligations”
means (a) Loan Documents Obligations, (b) the due and punctual
payment and performance of all obligations of each Loan Party under each Hedging
Agreement that (i) is in effect on the Effective Date with a counterparty that
is a Lender or an Affiliate of a Lender as of the Effective Date or (ii) is
entered into after the Effective Date with any counterparty that is a Lender or
an Affiliate of a Lender at the time such Hedging Agreement is entered into and
(c) the due and punctual payment and performance of all Cash Management
Services Obligations of each Loan Party (i) owed on the Effective Date to a
Person that is a Lender or an Affiliate of a Lender as of the Effective Date or
(ii) owed to a Person that is a Lender or an Affiliate of a Lender at the time
such Cash Management Services Obligations are incurred.


 


“PPSA”
means the Personal Property Security Act
(Ontario), including the regulations thereto, provided that, if perfection or
the effect of perfection or non-perfection or the priority of any Lien created
hereunder on the Collateral is governed by the personal property security as in
effect in a jurisdiction other than Ontario, “PPSA” means the Personal Property Security Act or such other applicable
legislation as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of perfection
or non-perfection or priority.


 


 “Secured Parties” means (a) the Lenders,
(b) the Administrative Agent, (c) the Canadian Agent, (d) each
Issuing Bank, (e) each counterparty to any Hedging Agreement with a Loan
Party the obligations under which constitute Canadian Obligations, (f) each
Person to whom any Cash Management Services Obligations that constitute
Canadian Obligations are owed, (g) the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Loan Document and (h) the
successors and assigns of each of the foregoing.


 


“Security Interest”
means, the security interest created under paragraph (a) of Section 3.01.


 


“Subsidiary Parties”
means (a) the Subsidiaries identified on Schedule I and (b) each other
Subsidiary that becomes a party to this Agreement as a Subsidiary Party after
the Effective Date.


 


4

















 


ARTICLE II



Guarantee


 


SECTION 2.01.  Guarantee.  Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, the due and punctual payment and performance of the Canadian
Obligations. Each of the Guarantors further agrees that the Canadian Obligations
may be extended or renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any of the Canadian Obligations. Each
of the Guarantors waives presentment to, demand of payment from and protest to
the Canadian Borrower or any other Loan Party of any of the Canadian Obligations,
and also waives notice of acceptance of its guarantee and notice of protest for
nonpayment.


 


SECTION 2.02.  Guarantee
of Payment.  Each of the
Guarantors further agrees that its guarantee hereunder constitutes a guarantee
of payment when due and not of collection, and waives any right to require that
any resort be had by the Canadian Agent or any other Secured Party to any
security held for the payment of the Canadian Obligations or to any balance of
any deposit account or credit on the books of the Canadian Agent or any other
Secured Party in favor of the Canadian Borrower or any other Person.


 


SECTION 2.03.  No
Limitations.


 


(a)  Except for termination and
release of a Guarantor’s obligations hereunder as expressly provided in Section
6.14, the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the Canadian
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by (i) the failure of the Administrative Agent, the Canadian
Agent or any other Secured Party to assert any claim or demand or to enforce
any right or remedy under the provisions of any Loan Document or otherwise;
(ii) any rescission, waiver, amendment or modification of, or any release
from any of the terms or provisions of, any Loan Document or any other
agreement, including with respect to any other Guarantor under this Agreement;
(iii) the release of any security held by the Administrative Agent, the Canadian
Agent or any other Secured Party for the Canadian Obligations or any of them;
(iv) any default, failure or delay, wilful or otherwise, in the
performance of the Canadian Obligations; or (v) any other act or omission
that may or might in any manner or to any extent vary the risk of any Guarantor
or otherwise operate as a discharge of any Guarantor as a matter of law or
equity (other than the indefeasible payment in full in cash of all the Canadian
Obligations). Each Guarantor expressly authorizes the Secured Parties to take
and hold security for the payment and performance of the Canadian Obligations,
to exchange, waive or release any or all such security (with or without
consideration), to enforce or apply such security and direct the order and
manner of any sale thereof in their sole discretion or to release or substitute
any one or more other guarantors or obligors upon or in respect of the Canadian
Obligations, all without affecting the obligations of any Guarantor hereunder.


 


5

















 


(b)  To the fullest extent
permitted by applicable law, each Guarantor waives any defense based on or
arising out of any defense of the Canadian Borrower or any other Loan Party or
the unenforceability of the Canadian Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Canadian
Borrower or any other Loan Party, other than the indefeasible payment in full
in cash of all the Canadian Obligations. The Canadian Agent and the other
Secured Parties may, at their election, foreclose on any security held by one
or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Canadian Obligations, make any other accommodation with the
Canadian Borrower or any other Loan Party or exercise any other right or remedy
available to them against the Canadian Borrower or any other Loan Party,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Canadian Obligations have been fully and
indefeasibly paid in full in cash or the guarantee of such Guarantor has been
terminated and released pursuant to Section 6.14 To the fullest extent
permitted by applicable law, each Guarantor waives any defense arising out of
any such election even though such election operates, pursuant to applicable
law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against the Canadian Borrower or any
other Loan Party, as the case may be, or any security.


 


SECTION 2.04.  Reinstatement.  Each of the Guarantors agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Canadian
Obligation guaranteed by it is rescinded or must otherwise be restored by the Canadian
Agent or any other Secured Party upon the bankruptcy or reorganization of the
Canadian Borrower, any other Loan Party or otherwise.


 


SECTION 2.05.  Agreement
To Pay; Subrogation.  In
furtherance of the foregoing and not in limitation of any other right that the Canadian
Agent or any other Secured Party has at law or in equity against any Guarantor
by virtue hereof, upon the failure of the Canadian Borrower or any other Loan
Party to pay any Canadian Obligation when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
each Guarantor hereby promises to and will forthwith pay, or cause to be paid,
to the Canadian Agent for distribution to the applicable Secured Parties in
cash the amount of such unpaid Canadian Obligation. Upon payment by any
Guarantor of any sums to the Canadian Agent as provided above, all rights of
such Guarantor against the Canadian Borrower or any other Loan Party arising as
a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subject to Article V.


 


6

















 


SECTION 2.06.  Information.  Each Guarantor assumes all responsibility for
being and keeping itself informed of the Canadian Borrower’s and each other
Loan Party’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Canadian Obligations and the nature,
scope and extent of the risks that such Guarantor assumes and incurs hereunder,
and agrees that none of the Administrative Agent, the Canadian Agent or the
other Secured Parties will have any duty to advise such Guarantor of
information known to it or any of them regarding such circumstances or risks.


 


ARTICLE III



Security Interests in Personal Property


 


SECTION 3.01.  Security
Interest.


 


(a)  As security for the payment
or performance, as the case may be, in full of the Canadian Obligations, each Grantor
hereby assigns and pledges to the Canadian Agent, its successors and assigns,
for the benefit of the Secured Parties, and hereby grants to the Canadian Agent,
its successors and assigns, for the benefit of the Secured Parties, a security
interest in, all right, title and interest in, to or under any and all of the ABL
Collateral now owned or at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future may acquire any right,
title or interest.


 


(b)  Each Grantor hereby
irrevocably authorizes the Canadian Agent at any time and from time to time to
file in any relevant jurisdiction any financing statements with respect to the
ABL Collateral in which a security interest is created by such Grantor
hereunder or any part thereof and amendments thereto that (i) identify the
applicable Collateral, and (ii) contain the information required by applicable
law of each applicable jurisdiction for the filing of any financing statement
or amendment. Each Grantor agrees to provide such information to the Canadian
Agent promptly upon request.


 


Each Grantor
also ratifies its authorization for the Canadian Agent to file in any relevant
jurisdiction any financing statements or financing change statements if filed
prior to the date hereof.


 


(c)  The Security Interest is
granted as security only and shall not subject the Canadian Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the ABL Collateral.


 


(d)  Notwithstanding anything
herein to the contrary, in no event shall the security interest granted
hereunder attach to any contract or agreement to which any Grantor is a party
or any of its rights or interests thereunder if and for so long as the grant of
such security interest shall constitute or result in (i) the unenforceability
of any right of such Grantor thereunder or (ii) a breach or termination under
the terms of, or a default under, any such contract or agreement (other than to
the extent that any such term would be rendered ineffective pursuant to
applicable law or principles of equity), provided, that
such security interest shall attach immediately at such time as the condition
causing such unenforceability, breach or termination shall be remedied or shall
otherwise cease to exist and, to the extent


 


7

















 


severable,
shall attach immediately to any portion of such contract or agreement that does
not result in any of the consequences specified in this paragraph, including
any Proceeds of such contract or agreement.


 


SECTION 3.02.  Representations
and Warranties.


 


The Grantors
jointly and severally represent and warrant to the Canadian Agent and the
Secured Parties that:


 


(a)  Each Grantor has good and
valid rights in and title to the ABL Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Canadian Agent the Security Interest in such ABL
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other Person (other than any consent or approval that has been obtained).


 


(b)  The Perfection Certificate
has been duly prepared, completed and executed and the information set forth
therein, including the exact legal name of each Grantor, is correct and
complete as of the Effective Date.


 


SECTION 3.03.  Covenants.


 


(a)  Each Grantor agrees to
maintain, at its own cost and expense, complete and accurate records with
respect to the ABL Collateral owned by it and in which it has granted a
security interest hereunder, in accordance with GAAP and applicable law, and,
at such time or times as the Canadian Agent may reasonably request, promptly to
prepare and deliver to the Canadian Agent a duly certified schedule or
schedules in form and detail satisfactory to the Canadian Agent showing the
identity, amount and location of any and all such ABL Collateral.


 


(b)  Each Grantor shall, at its
own expense, take any and all actions necessary to defend title to the ABL
Collateral in which it has granted a security interest hereunder against all
Persons and to defend the Security Interest of the Canadian Agent in such ABL
Collateral and the priority thereof against any Lien not expressly permitted
pursuant to Section 6.02 of the Credit Agreement. Notwithstanding anything to the contrary
contained herein (including any provision for, reference to, or acknowledgement
of, any Lien or Permitted Encumbrance), nothing herein and no approval by the
Canadian Agent or Secured Parties of any Lien or Permitted Encumbrance (whether
such approval is oral or in writing) shall be construed as or deemed to
constitute a subordination by the Canadian Agent or the Secured Parties of any
security interest or other right, interest or Lien in or to the ABL Collateral
or any part thereof in favour of any Lien or Permitted Encumbrance or any
holder of any Lien or Permitted Encumbrance.


 


(c)  Each Grantor agrees, at its
own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the Canadian
Agent may from time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of


 


8

















 


this
Agreement, the granting of the Security Interest and the filing of any
financing statements or other documents in connection herewith or therewith.


 


(d)  The Canadian Agent and such
Persons as the Canadian Agent may reasonably designate shall have the right, at
the Grantors’ own cost and expense, to inspect the ABL Collateral subject to
the Security Interest, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of such ABL
Collateral is located, to discuss the Grantors’ affairs with the officers of
the Grantors and their independent accountants and to verify under reasonable
procedures, in accordance with Section 5.09 of the Credit Agreement, the
validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the ABL Collateral subject to the Security Interest,
including, in the case of Accounts or ABL Collateral in the possession of any
third person, by contacting Account Debtors or the third person possessing such
ABL Collateral for the purpose of making such a verification. The Canadian
Agent shall have the absolute right to share any information it gains from such
inspection or verification with any Secured Party.


 


(e)  At its option, the Canadian
Agent may discharge past due taxes, assessments, charges, fees or Liens at any
time levied or placed on the ABL Collateral and not permitted pursuant to
Section 6.02 of the Credit Agreement, and may pay for the maintenance and
preservation of the ABL Collateral subject to the Security Interest to the
extent any Grantor fails to do so as required by the Credit Agreement or this
Agreement, and each Grantor jointly and severally agrees to reimburse the Canadian
Agent on demand for any payment made or any expense incurred by the Canadian
Agent pursuant to the foregoing authorization; provided
that nothing in this paragraph shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Canadian Agent or
any other Secured Party to cure or perform, any covenants or other promises of
any Grantor with respect to taxes, assessments, charges, fees or Liens and
maintenance of properties as set forth herein or in the other Loan Documents.


 


(f)  If at any time any Grantor
shall take a security interest in any property of an Account Debtor or any
other Person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Canadian Agent, for the
benefit of the Secured Parties. Such assignment need not be filed of public
record unless necessary to continue the perfected status of the security
interest against creditors of and transferees from the Account Debtor or other
Person granting the security interest.


 


(g)  Each Grantor shall remain
liable to observe and perform all the conditions and obligations to be observed
and performed by it under each contract, agreement or instrument relating to
the ABL Collateral subject to the Security Interest, all in accordance with the
terms and conditions thereof, and each Grantor jointly and severally agrees to
indemnify and hold harmless the Canadian Agent and the other Secured Parties
from and against any and all liability for such performance.


 


(h)  None of the Grantors shall
make or permit to be made an assignment, pledge or hypothecation of the ABL
Collateral subject to the Security Interest or shall grant any other Lien in
respect of such ABL Collateral, except as permitted by the Credit Agreement. None
of the Grantors shall make or permit to be made any transfer of such ABL


 


9

















 


Collateral and
each Grantor shall remain at all times in possession of such ABL Collateral
owned by it, except that unless and until the Canadian Agent shall notify the
Grantors that an Event of Default shall have occurred and be continuing and
that during the continuance thereof the Grantors shall not sell, convey, lease,
assign, transfer or otherwise dispose of any such ABL Collateral (which notice
may be given by telephone if promptly confirmed in writing), the Grantors may
use and dispose of such ABL Collateral in any lawful manner not inconsistent
with the provisions of this Agreement, the Credit Agreement or any other Loan
Document.


 


(i)  None of the Grantors will,
without the Canadian Agent’s prior written consent, grant any extension of the
time of payment of any Accounts included in the ABL Collateral, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any Person liable for the payment thereof or allow any credit
or discount whatsoever thereon, other than extensions, compromises,
settlements, releases, credits or discounts granted or made in the ordinary
course of business and consistent with its current practices and in accordance
with such prudent and standard practice used in industries that are the same as
or similar to those in which such Grantor is engaged.


 


(j)  The Grantors, at their own
expense, shall maintain or cause to be maintained insurance covering physical
loss or damage to the Inventory subject to the Security Interest in accordance
with the requirements set forth in Section 5.07 of the Credit Agreement. Each
Grantor irrevocably makes, constitutes and appoints the Canadian Agent (and all
officers, employees or agents designated by the Canadian Agent) as such Grantor’s
true and lawful agent (and attorney-in-fact) for the purpose, during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of ABL Collateral subject to the Security Interest under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument
or other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Canadian Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay
such premium and take any other actions with respect thereto as the Canadian
Agent deems advisable. All sums disbursed by the Canadian Agent in connection
with this paragraph, including reasonable attorneys’ fees, court costs,
expenses and other charges relating thereto, shall be payable, upon demand, by
the Grantors to the Canadian Agent and shall be additional Canadian Obligations
secured hereby.


 


(k)  Each Grantor shall maintain,
in form and manner reasonably satisfactory to the Canadian Agent, records of
its Chattel Paper and its books, records and documents evidencing or pertaining
thereto.


 


SECTION 3.04.  Other
Actions.  In order to further ensure
the attachment, perfection and priority of, and the ability of the Canadian
Agent to enforce, the Security Interest, each Grantor agrees, in each case at
such Grantor’s own expense, to take the following actions with respect to the
following ABL Collateral owned by it and subject to the Security Interest:


 


10

















 


(a)  Instruments.
If any Grantor shall at any time hold or acquire any Instruments subject to the
Security Interest, such Grantor shall forthwith endorse, assign and deliver the
same to the Canadian Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Canadian Agent may from time to time
reasonably request.


 


(b)  Letter-of-Credit
Rights. If any Grantor is at any time a beneficiary under a letter
of credit now or hereafter issued in favor of such Grantor, the rights under
which are subject to the Security Interest, such Grantor shall promptly notify
the Canadian Agent thereof and, at the request and option of the Canadian
Agent, such Grantor shall, pursuant to an agreement in form and substance
reasonably satisfactory to the Canadian Agent, either (i) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment
to the Canadian Agent of the proceeds of any drawing under the letter of credit
or (ii) arrange for the Canadian Agent to become the transferee
beneficiary of the letter of credit, with the Canadian Agent agreeing, in each
case, that the proceeds of any drawing under the letter of credit are to be
paid to the applicable Grantor unless an Event of Default has occurred or is
continuing.


 


(c)  Collateral
Access Agreements. Each Grantor shall use commercially reasonable
efforts to obtain a Collateral Access Agreement from the lessor of each leased
property, mortgagee of owned property or bailee or consignee with respect to
any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall provide access
rights and contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee, bailee or consignee may assert against the Collateral at
that location, and shall otherwise be reasonably satisfactory in form and
substance to the Canadian Agent. If the Canadian Agent shall not have received
a Collateral Access Agreement as to any such location, the Eligible Inventory
at that location shall be subject to such Reserves as may be established by the
Canadian Agent. After the Effective Date, no real property or warehouse space
shall be leased by any Grantor and no Inventory shall be shipped to a processor
or converter under arrangements established after the Effective Date unless and
until a satisfactory Collateral Access Agreement shall have been obtained with
respect to such location, and if it has not been obtained, the Eligible
Inventory at that location shall be subject to the establishment of Reserves
acceptable to the Canadian Agent. Each Grantor shall timely and fully pay and
perform its obligations under all leases and other agreements with respect to
each leased location or third party warehouse where any Collateral is or may be
located.


 


SECTION 3.05.  Cash
Management System.


 


(a)  Deposit
Accounts. Each Grantor shall as promptly as practicable, and in any
event within the period referred to in Section 4.01(s) of the Credit Agreement,
for each Deposit Account that such Grantor at any time opens or maintains
(other than payroll and petty cash accounts, the aggregate amount on deposit in
all of which accounts does not exceed US$1,000,000 at any time), cause the
depository bank to execute and deliver to the Canadian Agent a Deposit Account
Control Agreement with respect to the Deposit Account. Each Grantor
acknowledges and agrees that (i) the funds on deposit in each Deposit Account
of such Grantor shall continue to be collateral security for the Canadian
Obligations secured


 


11

















 


thereby, (ii)
upon the occurrence and during the continuance of a Cash Dominion Period, at
the Canadian Agent’s election, the funds on deposit in each such Deposit
Account may be applied as provided in Section 2.11(f) of the Credit Agreement
and (iii) upon the occurrence and during the continuance of an Event of
Default, at the Canadian Agent’s election, the funds on deposit in each such
Deposit Account may be applied as provided in Section 4.02.


 


(b)  Payment
Collection. Each Grantor agrees promptly to deposit all payments
received by it on account of Accounts and Inventory, whether in the form of
cash, cheques, notes, drafts, bills of exchange, money orders or otherwise, in
precisely the form in which they are received (but with any endorsements of
such Grantor necessary for deposit or collection), into a Deposit Account with
respect to which the depositary bank shall have entered into a Deposit Account
Control Agreement with the Canadian Agent, and until they are so deposited to
hold such payments in trust for and as the property of the Canadian Agent.


 


ARTICLE IV



Remedies


 


SECTION 4.01.  Remedies
Upon Default.  Upon the occurrence
and during the continuance of an Event of Default, each Grantor agrees to
deliver each item of Collateral to the Canadian Agent on demand, and it is
agreed that the Canadian Agent shall have the right, with or without legal
process and with or without prior notice or demand for performance, to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and
all rights afforded to a secured party under the PPSA or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the Canadian
Agent shall have the right, subject to the mandatory requirements of applicable
law, to sell or otherwise dispose of all or any part of the Collateral at a
public or private sale or at any broker’s board or on any securities exchange,
for cash, upon credit or for future delivery as the Canadian Agent shall deem
appropriate. The Canadian Agent shall be authorized at any such sale of
securities (if it deems it advisable to do so) to restrict the prospective
bidders or purchasers to Persons who will represent and agree that they are
purchasing the Collateral for their own account for investment and not with a
view to the distribution or sale thereof, and upon consummation of any such
sale the Canadian Agent shall have the right to assign, transfer and deliver to
the purchaser or purchasers thereof the Collateral so sold. Each such purchaser
at any sale of Collateral shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.


 


The Canadian
Agent shall give the applicable Grantors 15 days’ written notice (which
each Grantor agrees is reasonable notice) of the Canadian Agent’s intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker’s
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the


 


12

















 


Canadian Agent
may fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Canadian Agent may (in its sole and
absolute discretion) determine. The Canadian Agent shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The Canadian
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time
and place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. In case any sale of all
or any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Canadian Agent until the sale price
is paid by the purchaser or purchasers thereof, but the Canadian Agent shall
not incur any liability in case any such purchaser or purchasers shall fail to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may be sold again upon like notice. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Agreement, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of any
Grantor (all said rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and may
make payment on account thereof by using any claim then due and payable to such
Secured Party from any Grantor as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to any Grantor therefor.
For purposes hereof, a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale thereof; the Canadian Agent shall be
free to carry out such sale pursuant to such agreement and no Grantor shall be
entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Canadian Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Canadian Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Canadian Agent may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court
or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.


 


The Canadian
Agent may, in addition to any other rights it may have, appoint by instrument
in writing a receiver or receiver and manager (both of which are herein called
a “Receiver”) of all or any part of the Collateral or may institute proceedings
in any court of competent jurisdiction for the appointment of such a Receiver. Any
such Receiver is hereby given and shall have the same powers and rights and
exclusions and limitations of liability as the Canadian Agent has under this
Agreement, at law or in equity. In exercising any such powers, any such
Receiver shall, to the extent permitted by law, act as and for all purposes
shall be deemed to be the agent of the Grantor and the Canadian Agent shall not
be responsible for any act or default of any such Receiver. The Canadian Agent
may appoint one or more Receivers hereunder and may remove any such Receiver or
Receivers and appoint another or others in his or their stead from time to time.
Any Receiver so appointed may be an officer or employee of the Canadian Agent. A
court need not appoint, ratify the appointment by the Canadian Agent of or
otherwise supervise in any manner the actions of any Receiver. Upon any Grantor
receiving notice from the Canadian Agent of the taking of possession of the
Collateral or the appointment of a Receiver, all powers, functions, rights and
privileges of each of the directors and officers of


 


13

















 


such Grantor
with respect to the Collateral shall, to the extent permitted by applicable
law, cease, unless specifically continued by the written consent of the Canadian
Agent.


 


SECTION 4.02.  Application
of Proceeds.  Subject to
applicable law, the Canadian Agent shall apply the proceeds of any collection
or sale of any Collateral, and any Collateral consisting of cash, as follows:


 


FIRST,
to the payment of all costs and expenses incurred by the Canadian Agent in
connection with such collection or sale or otherwise in connection with this
Agreement, any other Loan Document or any of the Canadian Obligations,
including all court costs and the fees and expenses of its agents and legal
counsel, the repayment of all advances (other than Protective Advances) made by
the Canadian Agent hereunder or under any other Loan Document on behalf of any
Grantor and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan Document;


 


SECOND,
to the payment in full of the Protective Advances secured by such Collateral
and interest accrued thereon;


 


THIRD,
to the payment in full of the other Canadian Obligations (other than the
obligations referred to in clause FOURTH below) secured by such Collateral (the
amounts so applied to be distributed among the applicable Secured Parties pro
rata in accordance with the amounts of such Canadian Obligations owed to them
on the date of any such distribution);


 


FOURTH, to
the payment in full of the Canadian Obligations of the type referred to in
clause (c) of the definition of Obligations (the amounts so applied to be
distributed among the applicable Secured Parties pro rata in accordance with
the amounts of such Canadian Obligations owed to them on the date of any such
distribution); and


 


FIFTH, to
the Grantors, their successors or assigns, or as a court of competent
jurisdiction may otherwise direct.


 


The Canadian
Agent shall have absolute discretion as to the time of application of any such
proceeds, moneys or balances in accordance with this Agreement. Upon any sale
of Collateral by the Canadian Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the Canadian
Agent or of the officer making the sale shall be a sufficient discharge to the
purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Canadian Agent or such officer or be answerable
in any way for the misapplication thereof.


 


SECTION 4.03.  Grant of
License to Use Intellectual Property.


 


For the
purpose of enabling the Canadian Agent to exercise rights and remedies under
this Agreement at such time as the Canadian Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Canadian
Agent an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use,


 


14

















 


license or
sublicense any of the Intellectual Property now owned or hereafter acquired by
such Grantor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may
be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The rights conferred by such license may be
exercised, at the option of the Canadian Agent, upon the occurrence and during
the continuation of an Event of Default; provided that
any license, sublicense or other transaction entered into by the Canadian Agent
in accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.


 


ARTICLE V



Indemnity, Subrogation and Subordination


 


SECTION 5.01.  Indemnity
and Subrogation.  In addition
to all such rights of indemnity and subrogation as the Guarantors may have
under applicable law (but subject to Section 5.03), the Canadian Borrower agrees
that (a) in the event a payment of an obligation of the Canadian Borrower
shall be made by any Guarantor under this Agreement, the Canadian Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the Person to whom such payment shall have
been made to the extent of such payment and (b) in the event any assets of
any Grantor shall be sold pursuant to this Agreement or any other Security
Document to satisfy in whole or in part an obligation of the Canadian Borrower
owed to any Secured Party, the Canadian Borrower shall indemnify such Grantor
in an amount equal to the greater of the book value or the fair market value of
the assets so sold.


 


SECTION 5.02.  Contribution
and Subrogation.  Each Subsidiary
Party (a “Contributing Party”)
agrees (subject to Section 5.03) that, in the event a payment shall be made by
any other Subsidiary Party hereunder in respect of any Canadian Obligation
guaranteed by the Contributing Party or assets of any other Subsidiary Party
shall be sold pursuant to any Security Document to satisfy any Canadian
Obligation guaranteed by the Contributing Party and such other Subsidiary Party
(the “Claiming Party”) shall not
have been fully indemnified as provided in Section 5.01, the Contributing Party
shall indemnify the Claiming Party in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which the
numerator shall be the net worth of the Contributing Party on the date hereof
and the denominator shall be the aggregate net worth of all the Subsidiary
Parties that have guaranteed the Canadian Obligation on the date hereof (or, in
the case of any Subsidiary Party becoming a party hereto pursuant to Section 6.15,
the date of the supplement hereto executed and delivered by such Subsidiary
Party). Any Contributing Party making any payment to a Claiming Party pursuant
to this Section shall be subrogated to the rights of such Claiming Party under Section
5.01 to the extent of such payment.


 


SECTION 5.03.  Subordination.


 


Notwithstanding any provision of this
Agreement to the contrary, all rights of the Subsidiary Parties under Section 5.01
and Section 5.02 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible


 


15

















 


payment in full in cash of the Canadian
Obligations. No failure on the part of the Canadian Borrower or any Subsidiary
Party to make the payments required by Section 5.01 and Section 5.02 (or any
other payments required under applicable law or otherwise) shall in any respect
limit the obligations and liabilities of the Canadian Borrower or any
Subsidiary Party with respect to its obligations hereunder, and each such
Person shall remain liable for the full amount of its obligations hereunder.


 


ARTICLE VI



Miscellaneous


 


SECTION 6.01.  Notices.  All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder
to any Subsidiary Party shall be given to it in care of Symmetry as provided in
Section 9.01 of the Credit Agreement.


 


SECTION 6.02.  Waivers;
Amendment.


 


(a)  No failure or delay by the Canadian
Agent, the Administrative Agent, any Issuing Bank or any Lender in exercising
any right or power hereunder or under any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Canadian Agent, the
Administrative Agent, the Issuing Banks and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan, acceptance of a BA or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Canadian Agent, the Administrative Agent, any
Lender or any Issuing Bank may have had notice or knowledge of such Default at
the time. No notice or demand on any Loan Party in any case shall entitle any
Loan Party to any other or further notice or demand in similar or other
circumstances.


 


(b)  Neither this Agreement nor
any provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Canadian Agent and the
Loan Party or Loan Parties with respect to which such waiver, amendment or
modification is to apply, subject to any consent required in accordance with
Section 9.02 of the Credit Agreement.


 


16

















 


SECTION 6.03.  Canadian
Agent’s Fees and Expenses; Indemnification.


 


(a)  The parties hereto agree
that the Canadian Agent shall be entitled to reimbursement of its expenses
incurred hereunder as provided in Section 9.03 of the Credit Agreement.


 


(b)  Without limitation of its
indemnification obligations under the other Loan Documents, each Grantor and
each Guarantor jointly and severally agrees to indemnify the Canadian Agent and
the other Indemnitees (as defined in Section 9.03 of the Credit Agreement)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of,
the execution, delivery or performance of this Agreement or any claim,
litigation, investigation or proceeding relating to any of the foregoing, or
any agreement or instrument contemplated hereby, or to the Collateral, whether
or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
such Indemnitee or any of its Related Parties.


 


(c)  Any such amounts payable as
provided hereunder shall be additional Canadian Obligations secured hereby and
by the other Security Documents. The provisions of this Section shall remain
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Canadian Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the Canadian
Agent or any other Secured Party. All amounts due under this Section shall be
payable on written demand therefor.


 


SECTION 6.04.  Successors
and Assigns.  Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Guarantor or Grantor
or the Canadian Agent that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns.


 


SECTION 6.05.  Survival of
Agreement.  All covenants,
agreements, representations and warranties made by the Loan Parties in the Loan
Documents and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans, the
acceptance of any BAs and the issuance of any Letters of Credit, regardless of
any investigation made by any Lender or on its behalf and notwithstanding that
the Canadian Agent, the Administrative Agent, any Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended under the Credit Agreement, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under


 


17

















 


any Loan Document is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated.


 


SECTION 6.06.  Counterparts;
Effectiveness; Several Agreement. 
This Agreement may be executed in counterparts, each of which shall
constitute an original but all of which when taken together shall constitute a single
contract. Delivery of an executed signature page to this Agreement by facsimile
or electronic transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement. This Agreement shall become effective as
to any Loan Party when a counterpart hereof executed on behalf of such Loan
Party shall have been delivered to the Canadian Agent and a counterpart hereof
shall have been executed on behalf of the Canadian Agent, and thereafter shall
be binding upon such Loan Party and the Canadian Agent and their respective
permitted successors and assigns, and shall inure to the benefit of such Loan
Party, the Canadian Agent and the other Secured Parties and their respective
successors and assigns, except that no Loan Party shall have the right to
assign or transfer its rights or obligations hereunder or any interest herein
or in the Collateral (and any such assignment or transfer shall be void) except
as expressly provided in this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Loan Party and
may be amended, modified, supplemented, waived or released with respect to any
Loan Party without the approval of any other Loan Party and without affecting
the obligations of any other Loan Party hereunder.


 


SECTION 6.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.


 


SECTION 6.08.  Right of
Set-Off.  If an Event of
Default shall have occurred and be continuing, each Lender and each of its
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of any Guarantor or Grantor against any of and all the
obligations of such Guarantor or Grantor then due now or hereafter existing
under this Agreement owed to such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of set-off) which such Lender may have.


 


SECTION 6.09.  Governing
Law; Jurisdiction; Consent to Service of Process.


 


(a)  This Agreement shall be
construed in accordance with and governed by the law of the province of
Ontario, and the laws of Canada applicable therein.


 


18

















 


(b)  Each party to this Agreement
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of the courts of the Province of Ontario or the
Province of Quebec, and any appellate court from thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Loan
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such Provinces.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the Canadian
Agent, any Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against any
Grantor or Guarantor, or its properties in the courts of any jurisdiction.


 


(c)  Each party to this Agreement
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.


 


(d)  Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 6.01. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.


 


SECTION 6.10.  Judgment Currency.


 


(a)  The obligations of any party
to this Agreement hereunder and under the other Loan Documents to make payments
in Canadian Dollars or in US Dollars, as the case may be (for the purposes of
this Section 6.10, the “Canadian Obligation Currency”), shall not be discharged
or satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Canadian Obligation Currency, except
to the extent that such tender or recovery results in the effective receipt by
the Canadian Agent or a Secured Party of the full amount of the Canadian
Obligation Currency expressed to be payable to the Canadian Agent or a Secured
Party under this Agreement or the other Loan Documents. If, for the purpose of
obtaining or enforcing judgment against any party to this Agreement in any
court or in any jurisdiction, it becomes necessary to convert into or from any
currency other than the Canadian Obligation Currency (for the purposes of this Section
6.10, such other currency being hereinafter referred to as the “Judgment
Currency”) an amount due in the Canadian Obligation Currency, the conversion
shall be made, at the rate of exchange prevailing, in each case, as of the date
immediately preceding the day on which the judgment is given (for the purposes
of this Section 6.10, such Business Day being hereinafter referred to as the “Judgment
Currency Conversion Date”).


 


19

















 


(b)           If there is a change in the rate of
exchange prevailing between the Judgment Currency Conversion Date and the date
of actual payment of the amount due, each party to this Agreement covenants and
agrees to pay, or cause to be paid, such additional amounts, if any (but in any
event not a lesser amount), as may be necessary to ensure that the amount paid
in the Judgment Currency, when converted at the rate of exchange prevailing on
the date of payment, will produce the amount of the Canadian Obligation
Currency which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing
on the Judgment Currency Conversion Date.


 


(c)           For purposes of determining the
prevailing rate of exchange, such amounts shall include any premium and costs
payable in connection with the purchase of the Canadian Obligation Currency.


 


SECTION 6.11.  WAIVER OF JURY TRIAL.EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


SECTION 6.12.  Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.


 


SECTION 6.13.  Security
Interest Absolute.  All rights
of the Canadian Agent hereunder, the Security Interest and all obligations of
each Grantor and Guarantor hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the Canadian
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Canadian Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the Canadian
Obligations, or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Grantor or Guarantor in respect
of the Canadian Obligations or this Agreement.


 


20

















 


SECTION 6.14.  Termination
or Release.


 


(a)  This Agreement, the
Guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate when all the Loan Documents Obligations have
been indefeasibly paid in full and the Lenders have no further commitment to
lend under the Credit Agreement, the LC Exposure has been reduced to zero and
the Issuing Banks have no further obligations to issue Letters of Credit under
the Credit Agreement.


 


(b)  Except as provided in
paragraph (a) of this Section, releases of any Subsidiary Parties from their
obligations hereunder, and releases of Collateral from the Liens created
hereby, shall be governed by Section 9.14 of the Credit Agreement.


 


SECTION 6.15.  Additional
Subsidiaries.  Pursuant to
Section 5.12 of the Credit Agreement, each Subsidiary Party that is a Subsidiary
of the Canadian Borrower and that was not in existence or not a Subsidiary
Party on the date of the Credit Agreement is required to become a party to this
Agreement as a Guarantor and Grantor. Upon the execution and delivery by the Canadian
Agent and a Subsidiary Party of an instrument in the form of Exhibit I hereto,
such Subsidiary Party shall become a Guarantor and a Grantor hereunder, with
the same force and effect as if originally named as such herein. The execution
and delivery of any such instrument shall not require the consent of any other Loan
Party hereunder. The rights and obligations of each Loan Party hereunder shall
remain in full force and effect notwithstanding the addition of any new Loan Party
as a party to this Agreement.


 


SECTION 6.16.  Canadian
Agent Appointed Attorney-in-Fact. 
Each Grantor hereby appoints the Canadian Agent the attorney-in-fact of
such Grantor for the purpose of carrying out the provisions of this Agreement
and taking any action and executing any instrument that the Canadian Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Canadian Agent shall have the right, upon the
occurrence and during the continuance of an Event of Default, with full power
of substitution either in the Canadian Agent’s name or in the name of such
Grantor (a) to receive, endorse, assign or deliver any and all notes,
acceptances, cheques, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect,
receive payment of, give receipt for and give discharges and releases of all or
any of the Collateral; (c) to sign the name of any Grantor on any invoice
or bill of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize
on all or any of the Collateral or to enforce any rights in respect of any
Collateral; (f) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral;
(g) to notify, or to require any Grantor to notify, Account Debtors to
make payment directly to the Canadian Agent; and (h) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do all other acts and things necessary to
carry out the purposes of this Agreement, as fully and completely as though the
Canadian Agent were the absolute owner of the Collateral for all purposes; provided that nothing herein contained
shall be construed as requiring or obligating the Canadian Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Canadian Agent, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby. The Canadian


 


21

















 


Agent and the other Secured Parties shall be
accountable only for amounts actually received as a result of the exercise of
the powers granted to them herein, and neither they nor their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for their own gross negligence or wilful
misconduct.


 


SECTION 6.17.  Counterparts


 


This Agreement
may be executed in any number of counterparts, all of which taken together
shall constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart.


 


22

















 


IN WITNESS
WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.


 


 


	
   

  	
  NOVAMERICAN STEEL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Corrado De Gasperis

  
	
   

  	
   

  	
    Name: Corrado De Gasperis

  
	
   

  	
   

  	
    Title: President

  



 

















 


	
   

  	
  632422 N.B. LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Corrado De Gasperis

  
	
   

  	
   

  	
    Name: Corrado De Gasperis

  
	
   

  	
   

  	
    Title: President

  



 


2

















 


	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  TORONTO BRANCH, AS CANADIAN

  
	
   

  	
  AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ M. Hasan

  
	
   

  	
   

  	
    Name: Muhammed Hasan

  
	
   

  	
   

  	
    Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  
	
   

  	
   

  



 


3

















 


Schedule I to


the Canadian Guarantee and


Collateral Agreement


 


SUBSIDIARY PARTIES


 


632422 N.B Ltd.


 

















 


Exhibit I to the


Canadian Guarantee and


Collateral Agreement


 


SUPPLEMENT NO.     dated as of
 [•], to the Canadian
Guarantee and Collateral Agreement dated as of November [•], 2007, among
NOVAMERICAN STEEL INC. (the “Canadian Borrower”),
the other Subsidiaries of NOVAMERICAN STEEL INC. identified therein and
JPMORGAN CHASE BANK, TORONTO BRANCH, as Canadian Agent (the “Canadian Agent”).


 


A. Reference
is made to the Credit Agreement dated as of November [•], 2007 (as
amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Symmetry, Novamerican Steel Finco
Inc., the Canadian Borrower, the lenders from time to time party thereto and JPMorgan
Chase Bank, as Administrative Agent.


 


B. Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in the Credit Agreement and the Canadian Guarantee and Collateral
Agreement referred to therein.


 


C. The Subsidiary
Parties have entered into the Canadian Guarantee and Collateral Agreement in
order to induce the Lenders to make Loans and the Issuing Banks to issue Letters
of Credit. Section 6.15 of the Canadian Guarantee and Collateral Agreement provides
that additional Subsidiaries may become Guarantors and Grantors under the Canadian
Guarantee and Collateral Agreement by execution and delivery of an instrument
in the form of this Supplement. The undersigned Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance
with the requirements of the Credit Agreement to become a Guarantor and a
Grantor under the Canadian Guarantee and Collateral Agreement in order to
induce the Lenders to make additional Loans and the Issuing Banks to issue
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.


 


Accordingly, the Canadian Agent and the New Subsidiary agree as
follows:


 


SECTION 1.  In accordance with Section 6.15 of the
Collateral Agreement, the New Subsidiary by its signature below becomes a
Subsidiary Party (and accordingly, becomes a Guarantor and a Grantor) under the
Canadian Guarantee and Collateral Agreement with the same force and effect as
if originally named therein as a Subsidiary Party and the New Subsidiary hereby
(a) agrees to all the terms and provisions of the Canadian Guarantee and Collateral
Agreement applicable to it as a Subsidiary Party, Guarantor and Grantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor and Grantor thereunder are true and
correct on and as of the date hereof. In furtherance of the foregoing, the New
Subsidiary, as security for the payment and performance in full of the Canadian
Obligations (as defined in the Canadian Guarantee and Collateral Agreement),
does hereby create and grant to the Canadian Agent, its successors and assigns,
for the benefit of the applicable Secured Parties, their successors and
assigns, a security interest in and lien on all of the New Subsidiary’s right,
title and interest in and to the Collateral (as defined in the Canadian
Guarantee and Collateral Agreement) of the New Subsidiary. Each reference to a “Guarantor”
or


 

















 


“Grantor” in
the Collateral Agreement shall be deemed to include the New Subsidiary. The
Collateral Agreement is hereby incorporated herein by reference.


 


SECTION 2.  The New Subsidiary represents and warrants to
the Canadian Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.


 


SECTION 3.  This Supplement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Canadian Agent shall have received a counterpart of this Supplement that bears
the signature of the New Subsidiary and the Canadian Agent has executed a
counterpart hereof. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
signed counterpart of this Supplement.


 


SECTION 4.  The New Subsidiary hereby represents and
warrants that (a) set forth on Schedule I attached hereto is a true and
correct schedule of the location of any and all Collateral of the New
Subsidiary, (b)  set forth under its signature hereto, is the true and
correct legal name of the New Subsidiary, its jurisdiction of formation and the
location of its chief executive office [or domicile, if
applicable].


 


SECTION 5.  Except as expressly supplemented hereby, the Canadian
Guarantee and Collateral Agreement shall remain in full force and effect.


 


SECTION 6.  THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND THE LAWS
OF CANADA APPLICABLE THEREIN.


 


SECTION 7.  In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Canadian Guarantee and Collateral
Agreement shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction). The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.


 


SECTION 8.  All communications and notices hereunder shall
be in writing and given as provided in Section 6.01 of the Canadian Guarantee
and Collateral Agreement.


 


SECTION 9.  The New Subsidiary agrees to reimburse the Canadian
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements of
counsel for the Canadian Agent.


 


2

















 


IN WITNESS WHEREOF, the New Subsidiary and the Canadian Agent have duly
executed this Supplement to the Canadian Guarantee and Collateral Agreement as
of the day and year first above written.


 


	
   

  	
  [NAME OF NEW SUBSIDIARY],

  
	
   

  	
   

  
	
   

  	
  by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Legal Name:

  
	
   

  	
   

  	
    Jurisdiction of Formation:

  
	
   

  	
   

  	
    Location of Chief Executive office:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., TORONTO

  
	
   

  	
  BRANCH, AS CANADIAN AGENT

  
	
   

  	
   

  
	
   

  	
  by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  



 


3

















 


Schedule I 


to the Supplement No     to the


Canadian Guarantee and


Collateral Agreement


 


LOCATION OF COLLATERAL


 


	
  Description

  	
   

  	
  Location