Document:

exv10w3

 

Exhibit 10.3

EXECUTION COPY

CDN GUARANTEE AND COLLATERAL AGREEMENT

made by

STANDARD AERO
LIMITED
NOT FM CANADA INC.

3091781 NOVA SCOTIA COMPANY

3091782 NOVA SCOTIA COMPANY

3091783 NOVA SCOTIA COMPANY

and

6269044 CANADA INC.

in favor of

JPMORGAN CHASE BANK,

as Administrative Agent

Dated as of August __, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 1.
	 	DEFINED TERMS 	 	 	1	 
	1.1
	 	Definitions 	 	 	1	 
	1.2
	 	Other Definitional Provisions 	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 2.
	 	GUARANTEE 	 	 	6	 
	2.1
	 	Guarantee 	 	 	6	 
	2.2
	 	Right of Contribution 	 	 	7	 
	2.3
	 	No Subrogation 	 	 	7	 
	2.4
	 	Amendments, etc. with respect to the Borrower Obligations 	 	 	7	 
	2.5
	 	Guarantee Absolute and Unconditional 	 	 	8	 
	2.6
	 	Reinstatement 	 	 	8	 
	2.7
	 	Payments 	 	 	9	 
	2.8
	 	Taxes 	 	 	9	 
	 
	 	 	 	 	 	 
	SECTION 3.
	 	GRANT OF SECURITY INTEREST 	 	 	10	 
	3.1
	 	Grant of Security Interest 	 	 	10	 
	3.2
	 	Attachment of Security Interest 	 	 	11	 
	 
	 	 	 	 	 	 
	SECTION 4.
	 	REPRESENTATIONS AND WARRANTIES 	 	 	11	 
	4.1
	 	Representations in Credit Agreement 	 	 	11	 
	4.2
	 	Title; No Other Liens 	 	 	11	 
	4.3
	 	Jurisdiction of Organization; Chief Executive Office 	 	 	12	 
	4.4
	 	Inventory and Equipment 	 	 	12	 
	4.5
	 	Farm Products 	 	 	12	 
	4.6
	 	Pledged Stock 	 	 	12	 
	4.7
	 	Intellectual Property 	 	 	12	 
	 
	 	 	 	 	 	 
	SECTION 5.
	 	COVENANTS 	 	 	13	 
	5.1
	 	Covenants in Credit Agreement 	 	 	13	 
	5.2
	 	Pledged Securities 	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.
	 	REMEDIAL PROVISIONS 	 	 	13	 
	6.1
	 	Certain Matters Relating to Receivables 	 	 	13	 
	6.2
	 	Communications with Obligors; Guarantors Remain Liable 	 	 	13	 
	6.3
	 	Pledged Stock 	 	 	14	 
	6.4
	 	Proceeds to be Turned Over To Administrative Agent 	 	 	15	 
	6.5
	 	Application of Proceeds 	 	 	15	 
	6.6
	 	PPSA and Other Remedies 	 	 	15	 
	6.7
	 	Private Sales 	 	 	16	 
	6.8
	 	Deficiency 	 	 	16	 
	6.9
	 	Appointment of Receiver 	 	 	17	 
	 
	 	 	 	 	 	 
	SECTION 7.
	 	THE ADMINISTRATIVE AGENT 	 	 	17	 
	7.1
	 	Administrative Agent’s Appointment as Attorney-in-Fact, etc 	 	 	17	 
	7.2
	 	Duty of Administrative Agent 	 	 	18	 
	7.3
	 	Execution of Financing Statements 	 	 	19	 
	7.4
	 	Authority of Administrative Agent 	 	 	19	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 8.
	 	MISCELLANEOUS 	 	 	19	 
	8.1
	 	Amendments in Writing 	 	 	19	 
	8.2
	 	Notices 	 	 	19	 
	8.3
	 	No Waiver by Course of Conduct; Cumulative Remedies 	 	 	19	 
	8.4
	 	Enforcement Expenses; Indemnification 	 	 	20	 
	8.5
	 	Judgment Currency 	 	 	20	 
	8.6
	 	Successors and Assigns 	 	 	20	 
	8.7
	 	Set-Off 	 	 	21	 
	8.8
	 	Counterparts 	 	 	21	 
	8.9
	 	Severability 	 	 	21	 
	8.10
	 	Section Headings 	 	 	21	 
	8.11
	 	Integration 	 	 	21	 
	8.12
	 	GOVERNING LAW 	 	 	21	 
	8.13
	 	Submission To Jurisdiction; Waivers 	 	 	21	 
	8.14
	 	Acknowledgements 	 	 	22	 
	8.15
	 	Additional Guarantors 	 	 	22	 
	8.16
	 	Releases 	 	 	22	 
	8.17
	 	WAIVER OF JURY TRIAL 	 	 	23	 

SCHEDULES

	 	 	 
	Schedule 1

	 	Notice Addresses
	Schedule 2

	 	Pledged Securities
	Schedule 3

	 	Perfection Matters
	Schedule 4

	 	Jurisdictions of Organization and Chief Executive Offices
	Schedule 5

	 	Inventory and Equipment Locations
	Schedule 6

	 	Intellectual Property
	Schedule 7

	 	Excluded Notes

Annexes

	 	 	 
	Annex I

	 	Assumption Agreement
	Annex II

	 	Acknowledgment and Consent

ii

 

CDN GUARANTEE AND COLLATERAL AGREEMENT

          CDN GUARANTEE AND COLLATERAL AGREEMENT, dated as of August 24, 2004, made by each of the
signatories hereto (together with any other entity that may become a party hereto as provided
herein, the “Guarantors”), in favor of JPMorgan Chase Bank, as Administrative Agent (in such
capacity, the “Administrative Agent”) for the banks and other financial institutions or entities
(the “Lenders”) from time to time parties to the Credit Agreement, dated as of August 24, 2004 (as
amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among
Standard Aero Holdings, Inc. (the “Borrower”), the Lenders, Lehman Commercial Paper Inc. and Credit
Suisse First Boston, as co-syndication agents and the Administrative Agent.

WITNESSETH:

          WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make
extensions of credit to the Borrower upon the terms and subject to the conditions set forth
therein;

          WHEREAS, the Borrower is a member of an affiliated group of companies that includes each
Guarantor;

          WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in
part to enable the Borrower to make valuable transfers to one or more of the Guarantors in
connection with the operation of their respective businesses;

          WHEREAS, the Borrower and the Guarantors are engaged in related businesses, and each Guarantor
will derive substantial direct and indirect benefit from the making of the extensions of credit
under the Credit Agreement; and

          WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Credit Agreement that the Guarantors shall have
executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the
Lenders;

          NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and
the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, each Guarantor hereby agrees with the
Administrative Agent, for the ratable benefit of the Lenders, as follows:

SECTION 1. DEFINED TERMS

     1.1 Definitions

     (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement, and the following terms are used
herein as defined in the PPSA (as defined below): “chattel paper”, “consumer goods”, “documents of
title”, “equipment”, “goods”, “instruments”, “intangibles”, “inventory”, “proceeds”, “financing
statement” and “financing change statement”.

     (b) The following terms shall have the following meanings:

 

 

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          “Account”: all accounts and book debts and generally all debts, due, claims, choses in action,
and demands of every kind and nature howsoever arising or secured, including under letters of
credit and advices of credit, which are now due, owing, or accruing, or growing due to, or owned
by, any Guarantor.

          “Agreement”: this CDN Guarantee and Collateral Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.

          “Borrower Cash Management Obligations”: the collective reference to all obligations
and liabilities of the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Specified Cash Management Arrangement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to any Lender or any affiliate of any Lender (or any Lender or any
affiliate thereof at the time such Specified Cash Management Arrangement was entered into), whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Specified Cash Management
Arrangement or any other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the
relevant Lender or affiliate thereof that are required to be paid by the Borrower pursuant to the
terms of any Specified Cash Management Arrangement).

          “Borrower Credit Agreement Obligations”: the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and all other obligations and
liabilities of the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in the Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) to the Administrative Agent or any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement,
this Agreement, the other Loan Documents, any Letter of Credit, or any other document made,
delivered or given in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of any of the foregoing
agreements).

          “Borrower Hedge Agreement Obligations”: the collective reference to all obligations
and liabilities of the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in any Specified Hedge Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such
proceeding) to any Lender or any affiliate of any Lender (or any Lender or any affiliate thereof at
the time such Specified Hedge Agreement was entered into), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, any Specified Hedge Agreement or any other document made, delivered or
given in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the relevant Lender or affiliate thereof that
are required to be paid by the Borrower pursuant to the terms of any Specified Hedge Agreement).

 

 

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          “Borrower Obligations”: the collective reference to (i) the Borrower Credit Agreement
Obligations, (ii) the Borrower Hedge Agreement Obligations, but only to the extent that, and only
so long as, the Borrower Credit Agreement Obligations are secured and guaranteed pursuant hereto,
and (iii) the Borrower Cash Management Obligations, but only to the extent that, and only so long
as, the Borrower Credit Agreement Obligations are secured and guaranteed pursuant hereto.

          “Chattel Paper”: all chattel paper in which any Guarantor now or hereafter has an
interest, and any part of such interest.

          “Collateral”: as defined in Section 3.

          “Collateral Account”: any collateral account established by the Administrative Agent as
provided in Section 6.1 or 6.4.

          “Contracts”: any contracts, agreements, indentures, policies of insurance, licenses,
commitments, entitlements, engagements or other arrangements, whether written or unwritten, to
which any Guarantor is now or hereafter a party or has a benefit, right, or in which any Guarantor
now or hereafter has an interest, other than the Forward Subscription Agreements.

          “Copyright Licenses”: all written agreements naming any Guarantor as licensor or licensee
(including, without limitation, those listed in Schedule 6), granting any right under any
Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit
and sell materials derived from any Copyright.

          “Copyrights”: (i) all copyrights arising under the laws of Canada, whether registered or
unregistered and whether published or unpublished (including, without limitation, those listed in
Schedule 6), all registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and applications in the
Canadian Intellectual Property Office, and (ii) the right to obtain all renewals thereof.

          “Deposit Account”: any demand, time, savings, passbook or like account maintained with a
depository institution.

          “Documents of Title”: all documents of title, whether negotiable or non-negotiable, including,
without limitation, all warehouse receipts and bills of lading, in which any Guarantor now or
hereafter has an interest, and any part thereof.

          “Equipment”: all goods in which any Guarantor now or hereafter has an interest other than
Inventory or consumer goods and any part thereof, including, without limitation, all tools,
apparatus, fixtures, plant, machinery and furniture.

          “Excluded Notes”: all of the hybrid notes and intercompany notes listed on
Schedule 7.

          “Forward Subscription Agreements”: means, collectively, (a) the Common Share Forward
Subscription Agreement dated as of August 24, 2004, between Standard Aero Canada, Inc. and 3091782
Nova Scotia Company and (b) the Common Share Forward Subscription Agreement dated as of August 24,
2004, between 3091782 Nova Scotia Company and 6269044 Canada Inc.

          “Guarantor Obligations”: with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this Agreement
(including, without

 

 

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limitation, Section 2) or any other Loan Document to which such Guarantor is a party, in each
case whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent, any Receiver or the Lenders that are
required to be paid by such Guarantor pursuant to the terms of this Agreement or any other
Loan Document).

          “Holdings”: Standard Aero Acquisition Holdings, Inc.

          “Instruments”: all letters of credit, advices of and all other instruments in which any
Guarantor now or hereafter has an interest, and any part thereof.

          “Intangibles”: all intangible property of whatever kind in which any Guarantor now or
hereafter has an interest, including, without limitation, any Guarantor’s rights under Contracts,
Intellectual Property, Technical Information, permits and quotas.

          “Intellectual Property”: the collective reference to all rights, priorities and privileges
relating to intellectual property, whether arising under Canadian, multinational or foreign laws or
otherwise, now existing or hereafter adopted or acquired, including, without limitation, the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, brands, trade dress, business names, uniform resource locators (“URL”), domain
names, tag lines, designs, graphics, logos and other commercial symbols and indicia of origin,
goodwill, inventions, industrial designs, other intellectual property rights, and all rights to sue
at law or in equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

          “Intercompany Note”: any promissory note, other than Excluded Notes, evidencing loans made by
any Guarantor to Holdings or any of its Subsidiaries.

          “Inventory”: all inventory of whatever kind and wherever situate in which any Guarantor now or
hereafter has an interest, including, without limitation, all goods, merchandise, raw materials,
goods in process, finished goods and other tangible personal property held for sale, lease, resale
or exchange or furnished or to be furnished under contracts for service or that are used or
consumed in the business of any Guarantor, and any part thereof.

          “Issuers”: the collective reference to each issuer of a Pledged Stock.

          “Money”:
all money in which any Guarantor now or hereafter has an interest,
and any part thereof.

          “Obligations”: (i) in the case of the Borrower, the Borrower Obligations, and (ii) in
the case of each Guarantor, its Guarantor Obligations.

          “Patent License”: all written agreements providing for the grant by or to any Guarantor of any
right to manufacture, use, import, export, distribute or sell any invention covered in whole or in
part by a Patent, including, without limitation, any of the foregoing referred to in Schedule
6.

          “Patents”: (i) all letters patent of Canada, all reissues and extensions thereof, and all
goodwill associated therewith, including, without limitation, any of the foregoing referred to in
Schedule 6, (ii) all applications for letters patent of Canada, the United States, any
other country or any political subdivision thereof, continuations and continuations in part
thereof, including, without limitation, any of

 

 

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the foregoing referred to in Schedule 6, and (iii) all rights to obtain any
reissues or extensions of the foregoing.

          “Pledged
Notes”: all promissory notes listed on Schedule 2, all Intercompany Notes at
any time issued to any Guarantor in excess of $ 1,000,000 (or Intercompany Notes which, in the
aggregate, are in excess of $5,000,000) and all other promissory notes issued to or held by any
Guarantor in excess of $1,000,000 (other than promissory notes issued in connection with extensions
of trade credit by any Guarantor in the ordinary course of business); provided however that
the Pledged Notes shall not include the Excluded Notes.

          “Pledged Securities”: the collective reference to the Pledged Notes and the Pledged
Stock.

          “Pledged Stock”: the collective reference to the shares of Capital Stock listed in
Schedule 2, together with any other shares of Capital Stock or any other Securities of any
Person in which any Guarantor now or hereafter has an interest while this Agreement is in effect.

          “PPSA”: 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 legislation
or other applicable legislation with respect to 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.

          “Proceeds”: all “proceeds” as such term is defined in the PPSA and, in any event, shall
include, without limitation, all dividends or other income from the Pledged Securities, collections
thereon or distributions or payments with respect thereto.

          “Receivable”: any right to payment for goods sold or leased or for services rendered, whether
or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been
earned by performance (including, without limitation, any Account).

          “Securities”: all shares, limited partnership units, trust units, stock, warrants, bonds,
debentures, debenture stock and “securities” as such term is defined in the PPSA, and any part
thereof.

          “Securities Act”: the Securities Act (Ontario), as amended and the securities laws of any
other applicable jurisdiction.

          “Specified Cash Management Arrangement”: any cash management arrangement (a) entered
into by (i) the Borrower or any of its Subsidiaries and (ii) any Lender or any affiliate thereof at
the time such cash management arrangement was entered into, as counterparty, and (b) which has been
designated by such Lender and the Borrower, by notice to the Administrative Agent not later than 90
days after the execution and delivery by the Borrower or its Subsidiary thereof, as a Specified
Cash Management Arrangement. The designation of any cash management arrangement as a Specified Cash
Management Arrangement shall not create in favor of the Lender or affiliate thereof that is a party
thereto any rights in connection with the management or release of any Collateral or any Guarantor
Obligations.

          “Technical Information”: all know-how and information owned by or licensed to any
Guarantor, confidential or otherwise, including, without limitation, any information of a
scientific, technical, financial or business nature regardless of its form.

 

 

6

          “Trademark License”: all written agreements providing for the grant by or to any Guarantor of
any right to use any Trademark, including, without limitation, any of the foregoing referred to in
Schedule 6.

          “Trademarks”: (i) all trademarks, service marks, trade names, corporate names, company names,
business names, domain names, fictitious business names, trade styles, service marks, logos and
other source or business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the Canadian Intellectual Property Office or in any similar office
or agency or otherwise, and all common-law rights related thereto, including, without limitation,
any of the foregoing referred to in Schedule 6, and (ii) the right to obtain all renewals
thereof.

          “Vehicles”: all cars, trucks, trailers, construction and earth moving equipment and all other
motor vehicles, as such term is defined in the PPSA.

     1.2 Other Definitional Provisions

     (a) The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision
of this Agreement, and Section and Schedule references are to this Agreement unless otherwise
specified.

     (b) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

     (c) Where the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Guarantor, shall refer to such Guarantor’s Collateral or the relevant part
thereof.

SECTION 2. GUARANTEE

     2.1 Guarantee

     (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees to the Administrative Agent, for the ratable benefit of the Lenders and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment and performance by
the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations.

     (b) The guarantee contained in this Section 2 shall remain in full force and effect until all
the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in
this Section 2 shall have been satisfied by payment in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free from any Borrower Obligations.

     (c) No payment (other than payment in full) made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Administrative Agent or any
Lender from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue
of any action or proceeding or any set-off or appropriation or application at any time or from time
to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment

 

 

7

(other than any payment made by such Guarantor in respect of the Borrower Obligations or any
payment received or collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until
the Borrower Obligations shall have been paid in full, no Letter of Credit shall be outstanding and
the Commitments shall have terminated.

     2.2 Right of Contribution

          Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more
than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to
seek and receive contribution from and against any other Guarantor hereunder which has not paid its
proportionate share of such payment. Each Guarantor’s right of contribution shall be subject to the
terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit
the obligations and liabilities of any Guarantor to the Administrative Agent and the Lenders, and
each Guarantor shall remain liable to the Administrative Agent and the Lenders for the full amount
guaranteed by such Guarantor hereunder.

     2.3 No Subrogation

          Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of
funds of any Guarantor by the Administrative Agent or any Lender, no Guarantor shall be entitled to
be subrogated to any of the rights of the Administrative Agent or any Lender against the Borrower
or any other Guarantor or any collateral security or guarantee or right of offset held by the
Administrative Agent or any Lender for the payment of the Borrower Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to
the Administrative Agent and the Lenders by the Borrower on account of the Borrower Obligations
shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall
have terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights
at any time when all of the Borrower Obligations shall not have been paid in full, such amount
shall be held by such Guarantor in trust for the Administrative Agent and the Lenders, segregated
from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned
over to the Administrative Agent in the exact form received by such Guarantor (duly endorsed by
such Guarantor to the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine.

     2.4
Amendments, etc. with respect to the Borrower Obligations

          Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any Guarantor, any
demand for payment of any of the Borrower Obligations made by the Administrative Agent or any
Lender may be rescinded by the Administrative Agent or such Lender and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or
for any part thereof, or any collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed, increased, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative
Agent or any Lender, and the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or all
Lenders, as the case may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or any Lender for the
payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or

 

 

8

released. Neither the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations
or for the guarantee contained in this Section 2 or any property subject thereto.

     2.5 Guarantee Absolute and Unconditional

          Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent or any
Lender upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in
this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, increased, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and
any of the Guarantors, on the one hand, with respect to the Loan Documents and the Administrative
Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had
or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon
the Borrower or any of the Guarantors with respect to the Borrower Obligations. Each Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the Borrower Obligations
or any other collateral security therefor or guarantee or right of offset with respect thereto at
any time or from time to time held by the Administrative Agent or any Lender, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrower or any other Person against the Administrative Agent or
any Lender, or (c) any other circumstance whatsoever (other than a defense of payment or
performance) (with or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower
for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2,
in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its
rights and remedies hereunder against any Guarantor, the Administrative Agent or any Lender may,
but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against the Borrower, any other Guarantor or any other Person or against
any collateral security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other
Person or any such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the Administrative Agent or
any Lender against any Guarantor. For the purposes hereof “demand” shall include the commencement
and continuance of any legal proceedings.

     2.6 Reinstatement

          The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as
the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent or any Lender upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator,
interim-receiver, receiver manager, receiver and manager, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such
payments had not been made.

 

 

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     2.7 Payments

          Each Guarantor hereby agrees that payments hereunder will be paid to the Administrative Agent
without set-off or counterclaim in Dollars in immediately available funds at the Funding Office.

     2.8 Taxes

     (a) Except as required by applicable law, all payments made by the Guarantors under this
Agreement shall be made free and clear of, and without deduction or withholding for or on account
of, any present or future income taxes, levies, imposts, duties, charges, fees, deductions,
withholdings or Other Taxes, now or hereafter imposed, levied, collected, withheld or assessed by
any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net
income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be
withheld from any amounts payable by the relevant Guarantor to the Administrative Agent or such
Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in the Credit Agreement; provided,
however, that the relevant Guarantor shall not be required to increase any such amounts payable
to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s
failure to comply with the requirements of paragraph (d) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes
a party to the Credit Agreement, except to the extent that such Lender’s assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the relevant Guarantor with
respect to such Non-Excluded Taxes pursuant to this paragraph.

     (b) In addition, the relevant Guarantor shall pay any Non-Excluded Taxes and Other Taxes to
the relevant Governmental Authority in accordance with applicable law.

     (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by any Guarantor, as promptly
as possible thereafter, the relevant Guarantor shall send to the Administrative Agent for the
account of the Administrative Agent or Lender, as the case may be, a certified copy of an original
official receipt received by the relevant Guarantor showing payment thereof if such receipt is
obtainable, or, if not, such other evidence of payment as may reasonably be required by the
Administrative Agent or such Lender. If any Guarantor fails to pay any Non-Excluded Taxes or Other
Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent or
any Lender, as the case may be, the required receipts or other required documentary evidence, such
Guarantor shall indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that become payable by the Administrative Agent or any Lender as a result of
any such failure.

     (d) Each Lender (or Transferee) that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) (a “Non-US Lender”) shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Borrower and to the Lender from
which the related participation shall have been purchased) (i) two accurate and complete copies of
IRS Form W-8ECI or W-8BEN, or, (ii) in the case of a Non-U.S. Lender claiming exemption from United
States federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments
of “portfolio

 

 

10

interest” a statement substantially in the form of Exhibit G to the Credit Agreement and two
accurate and complete copies of IRS Form W-8BEN, or any subsequent versions or successors to such
forms, in each case properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, United States federal withholding tax on all payments by each
Guarantor under this Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to the Credit Agreement (or, in the case
of any Participant, on or before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower in respect of a Guarantor (or any
other form of certification adopted by the United States taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to
deliver.

     (e) The agreements in this Section shall survive the termination of this Agreement and
the payment of the Obligations.

SECTION 3. GRANT OF SECURITY INTEREST

     3.1 Grant of Security Interest

          Each Guarantor hereby grants to the Administrative Agent, for the ratable benefit of the
Lenders (and any affiliates of any Lender to which Borrower Hedge Agreement Obligations or Borrower
Cash Management Obligations are owing), a security interest in, all of the following property now
owned or at any time hereafter acquired by such Guarantor or in which such Guarantor now has or at
any time in the future may acquire any right, title or interest
(collectively, the “Collateral”),
as collateral security for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of such Guarantor’s Obligations:

	 	(a)  	all Accounts;
	 
	 	(b)  	all Chattel Paper;
	 
	 	(c)  	all Documents of Title;
	 
	 	(d)  	all Equipment;
	 
	 	(e)  	all Intangibles;
	 
	 	(f)  	all Instruments;
	 
	 	(g)  	all Intellectual Property;
	 
	 	(h)  	all Inventory;
	 
	 	(i)  	all Pledged Securities;
	 
	 	(j)  	all other personal property not otherwise described above;
	 
	 	(k)  	all books and records pertaining to the Collateral; and

 

 

11

     (1) to the extent not otherwise included, all Proceeds and products of any and all
of the foregoing and all collateral security and guarantees given by any Person with respect
to any of the foregoing;

          provided, however, that notwithstanding any of the other provisions set forth in this
Section 3, this Agreement shall not constitute a grant of a security interest in (i) any leasehold
interest in real property, (ii) any Intellectual Property if the grant of such security interest
shall constitute or result in the abandonment, invalidation or rendering unenforceable any rights,
title or interest of any Guarantor therein, (iii) any of the Excluded Notes or any Guarantor’s
rights under the Forward Subscription Agreements, (iv) any Vehicles, Deposit Accounts or Money
(other than any Deposit Accounts or Money which are Proceeds of the Collateral) and all Proceeds
thereof and (v) any property to the extent that such grant of a security interest is prohibited by
any Requirements of Law of a Governmental Authority, requires a consent not obtained of any
Governmental Authority pursuant to such Requirement of Law or is prohibited by, or constitutes a
breach or default under or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Pledged Securities, any applicable shareholder or similar
agreement, except to the extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document or shareholder or similar agreement providing for such
prohibition, breach, default or termination or requiring such consent is ineffective under
applicable law.

     3.2 Attachment of Security Interest

          Each Guarantor and the Administrative Agent hereby acknowledge that (a) value has been given,
(b) such Guarantor has rights in the Collateral in which it has granted a security interest and (c)
this Agreement constitutes a security agreement as that term is defined in the PPSA.

SECTION 4. REPRESENTATIONS AND WARRANTIES

          To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each
Guarantor hereby represents and warrants to the Administrative Agent and each Lender that:

     4.1 Representations in Credit Agreement

          In the case of each Guarantor, the representations and warranties set forth in Section 4 of
the Credit Agreement as they relate to such Guarantor or to the Loan Documents to which such
Guarantor is a party, each of which is hereby incorporated herein by reference, are true and
correct, and the Administrative Agent and each Lender shall be entitled to rely on each of them as
if they were fully set forth herein, provided, that each reference in each such
representation and warranty to the Borrower’s knowledge shall, for the purposes of this Section
4.1, be deemed to be a reference to such Guarantor’s knowledge.

     4.2 Title; No Other Liens

          Except for the security interest granted to the Administrative Agent for the ratable
benefit of the Lenders pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Guarantor owns each item of the Collateral free and clear
of any and all Liens. No financing statement or other public notice with respect to all or any part
of the Collateral is on file or on record in any public office, except (i) such as have been filed
in favor of the Administrative Agent, for the ratable benefit of the Lenders, pursuant to this
Agreement or such other filings as are permitted by the Credit Agreement, (ii) financing statements
to be released on the Closing Date and (iii) financing

 

 

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statements that have been filed without the consent of any Guarantor (for greater certainty,
financing statements that have been filed in connection with a Lien granted by a Guarantor pursuant
to a security agreement executed by such Guarantor shall be deemed to have been filed with the
consent of such Guarantor). For the avoidance of doubt, it is understood and agreed that any
Guarantor may, as part of its business, grant licenses to third parties to use Intellectual
Property owned or developed by a Guarantor. For purposes of this Agreement and the other Loan
Documents, such licensing activity shall not constitute a “Lien” on such Intellectual Property.
Each of the Administrative Agent and each Lender understands that any such licenses may be
exclusive to the applicable licensees, and such exclusivity provisions may limit the ability of the
Administrative Agent to utilize, sell, lease or transfer the related Intellectual Property or
otherwise realize value from such Intellectual Property pursuant hereto.

     4.3
Jurisdiction of Organization; Chief Executive Office

          On the date hereof, such Guarantor’s exact legal name (as indicated on the articles of
incorporation or similar document of such Guarantor), jurisdiction of organization, organizational
identification number, if any, and the location of such Guarantor’s chief executive office or
domicile (for purposes of the Quebec Civil Code), as the case may be, are specified on Schedule
4.

     4.4 Inventory and Equipment

          On the date hereof, the Inventory and the Equipment (other than mobile goods) in excess of
$750,000 are kept at the locations listed on Schedule 5.

     4.5 Farm Products

          On the date hereof, none of the Collateral constitutes, or is the Proceeds of, growing
crops, the unborn young of animals, timber to be cut or minerals or hydrocarbons to be
extracted.

     4.6 Pledged Stock.

          On the date hereof, the shares of Pledged Stock in Subsidiaries pledged by such
Guarantor hereunder:

     (a) have been duly authorized, validly issued and are fully paid and (other than
the shares of any Nova Scotia unlimited liability company) non-assessable; and

     (b) constitute all the issued and outstanding shares of all classes of the
Capital Stock of each Issuer owned by such Guarantor.

     4.7 Intellectual Property

     (a) Schedule 6 lists all material Intellectual Property owned by such Guarantor in its
own name on the date hereof.

     (b) Except
as set forth in Schedule 6, on the date hereof, none of the Intellectual
Property is the subject of any licensing or franchise agreement pursuant to which such Guarantor is
the licensor or franchisor.

 

 

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SECTION 5. COVENANTS

          Each Guarantor covenants and agrees with the Administrative Agent and the Lenders that, from
and after the date of this Agreement until the Obligations shall have been paid in full, no Letter
of Credit shall be outstanding and the Commitments shall have terminated:

     5.1 Covenants in Credit Agreement

          In the case of each Guarantor, such Guarantor shall take, or shall refrain from taking, as the
case may be, each action that is necessary to be taken or not taken, as the case may be, so that no
Default or Event of Default is caused by the failure to take such action or to refrain from taking
such action by such Guarantor or any of its Subsidiaries.

     5.2 Pledged Securities

          In the case of each Guarantor which is an Issuer, such Issuer agrees that (a) it will be
bound by the terms of this Agreement relating to the Pledged Stock issued by it and will
comply with such terms insofar as such terms are applicable to it and (b) the terms of
Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it pursuant to Section 6.3(c) and 6.7 with respect to the
Pledged Stock issued by it.

SECTION 6. REMEDIAL PROVISIONS

     6.1 Certain Matters Relating to Receivables

     (a) At any time during the continuance of an Event of Default, upon the Administrative Agent’s
reasonable request at the expense of the relevant Guarantor, such Guarantor shall cause independent
public accountants or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test verifications of, and trial
balances for, the Receivables.

     (b) If required by the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default under Section 8(a) or 8(f) of the Credit Agreement, any payments
of Receivables, when collected by any Guarantor, (i) shall be forthwith (and, in any event, within
two Business Days) deposited by such Guarantor in the exact form received, duly endorsed by such
Guarantor to the Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative
Agent for the account of the Lenders only as provided in Section 6.5, and (ii) until so turned
over, shall be held by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor. Each such deposit of Proceeds of Receivables shall
be accompanied by a report identifying in reasonable detail the nature and source of the payments
included in the deposit.

     (c) If an Event of Default has occurred and is continuing and at the Administrative Agent’s
request, each Guarantor shall deliver to the Administrative Agent all documents evidencing, and
relating to, the agreements and transactions which gave rise to the Receivables, including, without
limitation, all orders, invoices and shipping receipts.

     6.2 Communications with Obligors; Guarantors Remain Liable

     (a) Upon the request of the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default under Section 8(a) or 8(f) of the Credit Agreement,
each

 

 

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Guarantor shall notify obligors on the Receivables that the Receivables have been assigned
to the Administrative Agent for the ratable benefit of the Lenders and that payments in respect
thereof shall be made directly to the Administrative Agent.

     (b) Anything herein to the contrary notwithstanding, each Guarantor shall remain liable
under the Receivables to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto.
Neither the Administrative Agent nor any Lender shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or
the receipt by the Administrative Agent or any Lender of any payment relating thereto, nor shall
the Administrative Agent or any Lender be obligated in any manner to perform any of the obligations
of any Guarantor under or pursuant to any Receivable (or any agreement giving rise thereto), to
make any payment, to make any inquiry as to the nature or the sufficiency of any payment received
by it or as to the sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or times.

     6.3 Pledged Stock

     (a) Unless an Event of Default shall have occurred and be continuing and the Administrative
Agent shall have given notice to the relevant Guarantor of the Administrative Agent’s intent to
exercise its corresponding rights pursuant to Section 6.3(b), each Guarantor shall be permitted to
receive all payments made in respect of the Pledged Notes and all cash dividends paid in respect of
the Pledged Stock unless otherwise prohibited by the Credit Agreement, shall remain the legal and
beneficial owner of the Pledged Stock pledged by such Guarantor and shall retain all of the
incidents of such ownership, including the right to exercise all voting and corporate rights with
respect to such Pledged Stock.

     (b) If an Event of Default has occurred and is continuing and the Administrative Agent has
given notice of its intent to exercise its rights pursuant to this Section to the relevant
Guarantor or Guarantors, (i) unless otherwise provided in the Credit Agreement, the Administrative
Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid
in respect of the Pledged Stock and make application thereof to the Obligations in the order set
forth in Section 6.5, and (ii) any or all of the Pledged Stock shall, at the sole discretion of the
Administrative Agent, be registered in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other
rights pertaining to such Pledged Stock at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to such Pledged Stock as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its discretion any and all
of the Pledged Stock upon the merger, amalgamation, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any
Guarantor or the Administrative Agent of any right, privilege or option pertaining to such Pledged
Stock, and in connection therewith, the right to deposit and deliver any and all of the Pledged
Stock with any committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all without liability except
to account for property actually received by it, but the Administrative Agent shall have no duty to
any Guarantor to exercise any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing unless the Administrative Agent has given notice of its
intent to exercise as set forth above. For greater certainty, nothing in this Agreement shall be
construed to subject the Administrative Agent or any Lender to liability as a member or owner of
any Issuer nor shall the Administrative Agent or any Lender be deemed to have assumed any
obligations under any operating agreement, subscription agreement,

 

 

15

keep-well agreement, shareholder agreement, partnership or similar agreement relating to the
Pledged Stock or otherwise.

     (c) Each Guarantor hereby authorizes and instructs each Issuer of any Pledged Stock
pledged by such Guarantor hereunder to comply with any instruction received by it from the
Administrative Agent in writing that (x) states that an Event of Default has occurred and is
continuing, (y) states that the Administrative Agent has given notice of its intent to exercise its
rights pursuant to Section 6.3(b) and (z) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from such Guarantor, and each Guarantor agrees
that each Issuer shall be fully protected in so complying.

     6.4 Proceeds to be Turned Over To Administrative Agent

          In addition to the rights of the Administrative Agent and the Lenders specified in Section 6.1
with respect to payments of Receivables, if an Event of Default shall occur and be continuing and
the Loans shall have been accelerated pursuant to Section 8 of the Credit Agreement, all Proceeds
received by any Guarantor consisting of cash, cheques and other near-cash items shall be held by
such Guarantor in trust for the Administrative Agent and the Lenders, segregated from other funds
of such Guarantor, and shall, promptly upon receipt by such Guarantor, be turned over to the
Administrative Agent in the exact form received by such Guarantor (duly endorsed by such Guarantor
to the Administrative Agent, if required). All Proceeds received by the Administrative Agent
hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral
Account (or by such Guarantor in trust for the Administrative Agent and the Lenders) shall continue
to be held as collateral security for all the Obligations and shall not constitute payment thereof
until applied as provided in Section 6.5.

     6.5 Application of Proceeds

          If an Event of Default shall have occurred and be continuing, at any time at the
Administrative Agent’s election, the Administrative Agent may apply all or any part of
Proceeds constituting Collateral of any Guarantor and any proceeds of the guarantee set forth
in Section 2, in payment of the Guarantor’s Obligations in the following order:

     First, to pay incurred and unpaid reasonable, out-of-pocket fees and
expenses of the Administrative Agent or any Receiver under the Loan Documents;

     Second, to the Administrative Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Obligations, pro rata among the Lenders according to the amounts of the Obligations then due and owing and
remaining unpaid to the Lenders; and

     Third, any balance of such Proceeds remaining after the Guarantor’s
Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the
Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may
be lawfully entitled to receive the same.

     6.6 PPSA and Other Remedies

          Subject to Section 6.3, if an Event of Default shall occur and be continuing, the
Administrative Agent and/or any Receiver, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured
party under the PPSA or its

 

 

16

rights or any other applicable law or in equity. Subject to Section 6.3, without limiting the
generality of the foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any notice required by
law referred to below or notices otherwise provided in the Loan Documents) to or upon any Guarantor
or any other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived unless otherwise provided in the Loan Documents), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange, broker’s board or office of the
Administrative Agent, any Lender or any Receiver or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent, any Lender or any
Receiver shall have the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in any Guarantor, which right or equity is hereby
waived and released. Each Guarantor further agrees, at the Administrative Agent’s request, to
assemble the Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Guarantor’s premises or elsewhere.
The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 6.6, after deducting all reasonable costs and expenses of every kind actually incurred in
connection therewith or incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Administrative Agent, the Lenders and any
Receiver hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as the Administrative Agent may
elect, and only after such application and after the payment by the Administrative Agent of any
other amount required by any provision of law, need the Administrative Agent account for the
surplus, if any, to any Guarantor. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.

     6.7 Private Sales

          Each Guarantor recognizes that the Administrative Agent and/or any Receiver may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained
in the Securities Act and other applicable provincial securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group of purchasers which
will be obliged to agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each Guarantor acknowledges
and agrees that any such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner. The Administrative
Agent and/or any Receiver shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such securities for
public sale under the Securities Act, or under applicable provincial securities laws, even if such
Issuer would agree to do so.

     6.8 Deficiency

          Each Guarantor shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay its Obligations and the fees and
disbursements of any legal counsel employed by the Administrative Agent and/or any Receiver to
collect such deficiency.

 

 

17

     6.9 Appointment of Receiver.

          If an Event of Default shall occur and be continuing, the Administrative Agent may appoint or
reappoint any person, persons, or entity, whether officer(s), employee(s) or agent(s) of the
Administrative Agent, to be a receiver, receiver-manager or receiver and manager (each, a
“Receiver”) of all or any part of the Collateral and may remove any Receiver so appointed and
appoint another in its stead. Any Receiver shall, to the extent permitted by applicable law, so far
as concerns responsibility for its acts, be deemed to be the agent of the Guarantors and not an
agent of the Administrative Agent or any Lender. Neither the Administrative Agent nor any Lender
shall be in any way responsible for any misconduct, negligence or nonfeasance on the part of such
Receiver or its servants, agents or employees. Subject to the provisions of the instrument
appointing it, any Receiver shall have all of the powers and rights as have been granted to the
Administrative Agent under this Section 6 or as otherwise provided by law. To facilitate the
foregoing powers, any such Receiver may, to the exclusion of all others, enter upon, use and occupy
all premises owned or occupied by any Guarantors wherein Collateral may be situate, maintain
Collateral upon such premises, borrow money on a secured or an unsecured basis and use Collateral
directly in carrying on any Guarantor’s business or otherwise as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by the Administrative Agent, all money
received from time to time by such Receiver in carrying out its appointment shall be received in
trust for and be paid over to the Administrative Agent.

SECTION 7. THE ADMINISTRATIVE AGENT

     7.1
Administrative Agent’s Appointment as Attorney-in-Fact, etc.

     (a) Each Guarantor hereby irrevocably constitutes and appoints the Administrative
Agent, any Receiver and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of
such Guarantor and in the name of such Guarantor or in its own name, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each Guarantor hereby gives the
Administrative Agent the power and right, on behalf of such Guarantor, without notice to or assent
by such Guarantor, to do any or all of the following (provided, that anything in this Section 7.1
(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any
rights under the power of attorney provided for in this Section 7.1 (a) unless an Event of Default
shall have occurred and be continuing) in the name of such Guarantor or its own name, or otherwise:

   (i) take possession of and endorse and collect any cheques, drafts, notes,
acceptances or other instruments for the payment of moneys due under any Receivable or with
respect to any other Collateral and file any claim or take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the
purpose of collecting any and all such moneys due under any Receivable or with respect to any
other Collateral whenever payable;

   (ii) in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the Administrative Agent
may request to evidence the Administrative Agent’s and the Lenders’ security interest in such
Intellectual Property and the goodwill and intangibles of such Guarantor relating thereto or
represented thereby;

   (iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this Agreement and
pay all or any part of the premiums therefor and the costs thereof;

 

 

18

   (iv) execute, in connection with any sale provided for in Section 6.6 or
6.7, any endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral; and

   (v) (1) direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the Administrative
Agent or as the Administrative Agent shall direct; (2) ask or demand for, collect, and receive
payment of and receipt for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (3) sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding
brought against such Guarantor with respect to any Collateral; (6) settle, compromise or adjust
any such suit, action or proceeding and, in connection therewith, give such discharges or
releases as the Administrative Agent may deem appropriate; (7) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), throughout the world for such term or terms, on such conditions, and in
such manner, as the Administrative Agent shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such
Guarantor’s expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent’s and the Lenders’ Liens therein and to effect the intent of this
Agreement, all as fully and effectively as such Guarantor might do.

     (b) If any Guarantor fails to perform or comply with any of its agreements contained herein,
the Administrative Agent, at its option, but without any obligation so to do, may give such
Guarantor written notice of such failure to perform or comply and if such Guarantor fails to
perform or comply within three (3) Business Days of receiving such notice (or if the Administrative
Agent reasonably determines that irreparable harm to the Collateral or to the security interest of
the Administrative Agent hereunder could result prior to the end of such three-Business Day
period), then the Administrative Agent may perform or comply, or otherwise cause performance or
compliance, with such agreement.

     (c) Each Guarantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated and the Liens
created hereby are released.

     7.2 Duty of Administrative Agent

          To the extent permitted by law, the Administrative Agent’s sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its possession, under the PPSA
or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. None of the Administrative Agent, any Lender, any Receiver or
any of their respective officers, directors, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the request of any
Guarantor or any other Person or to take any other action whatsoever with regard to the Collateral
or any part thereof. The powers conferred on the Administrative Agent, the Lenders and/or any
Receiver hereunder are solely to protect the Administrative

 

 

19

Agent’s and the Lenders’ interests in the Collateral and shall not impose any duty upon the
Administrative Agent, any Lender and/or any Receiver to exercise any such powers. The
Administrative Agent, the Lenders and/or any Receiver shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Guarantor for any act or
failure to act hereunder, except for their own gross negligence or willful misconduct or that of
their directors, officers, employees or agents.

     7.3 Execution of Financing Statements

          Pursuant to any applicable law, each Guarantor authorizes the Administrative Agent to file or
record financing statements or financing change statements, and amendments thereto, and other
filing or recording documents or instruments with respect to the Collateral of such Guarantor in
such form and in such offices as the Administrative Agent reasonably determines appropriate to
perfect or maintain the perfection of the security interests of the Administrative Agent under this
Agreement. Each Guarantor authorizes the Administrative Agent to use the collateral description
“all personal property” in any such financing statements.

     7.4
Authority of Administrative Agent Each Guarantor acknowledges that the rights and
responsibilities of the Administrative Agent under this Agreement with respect to any action taken
by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other right or remedy provided for herein or resulting
or arising out of this Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Administrative Agent and the Guarantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Guarantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.

SECTION 8. MISCELLANEOUS

     8.1 Amendments in Writing

          None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 10.1 of the Credit Agreement.

     8.2 Notices

          All notices, requests and demands to or upon the Administrative Agent or any Guarantor
hereunder shall be effected in the manner provided for in Section 10.2 of the Credit Agreement;
provided, that any such notice, request or demand to or upon any Guarantor shall be
addressed to such Guarantor at its notice address set forth on Schedule 1.

     8.3 No Waiver by Course of Conduct: Cumulative Remedies

          Neither the Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or

 

 

20

remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.

     8.4 Enforcement Expenses: Indemnification

          Each Guarantor agrees to pay, and to save the Administrative Agent and the Lenders harmless
from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 10.5 of the Credit Agreement. The agreements in this
Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the
Credit Agreement and the other Loan Documents.

     8.5 Judgment Currency

     (a) If, for the purpose of obtaining or enforcing judgment against a Guarantor in any court in
any jurisdiction, it becomes necessary to convert into any other currency (the “Judgment Currency”)
an amount due under this Agreement or any other Loan Document in any currency (the “Obligation
Currency”) other than the Judgment Currency, the conversion shall be made at the rate of
exchange prevailing on the Business Day immediately preceding the date of actual payment of the
amount due, in the case of any proceeding in the courts of the State of New York, the Province of
Manitoba, the Province of Ontario or in the courts of any other jurisdiction that will give effect
to such conversion being made on such date, or the date on which the judgment is given, in the case
of any proceeding in the courts of any other jurisdiction (the applicable date as of which such
conversion is made being referred to as the “Judgment Conversion Date”).

     (b) If, in the case of any proceeding in the court of any jurisdiction referred to in Section
8.5(a), there is a change in the rate of exchange prevailing between the Judgment Conversion Date
and the date of actual receipt of the amount due in immediately available funds, the applicable
Guarantor shall pay such additional amount (if any, but in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency, when converted at
the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation
Currency which could have been purchased with the amount of the Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any
amount due from a Guarantor under this Section 8.5 shall be due as a separate debt and shall not be
affected by judgment being obtained for any other amounts due under or in respect of this
Agreement. The term “rate of exchange” in this Section means the rate of exchange at which the
Administrative Agent, on the relevant date at or about 12:00 noon (New York time), would be
prepared to sell, in accordance with its normal course foreign currency exchange practices, the
Obligation Currency against the Judgment Currency.

     8.6 Successors and Assigns

          This Agreement shall be binding upon the successors and assigns of each Guarantor and shall
enure to the benefit of the Administrative Agent and the Lenders and their successors and assigns;
provided, that no Guarantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the Administrative Agent (it
being understood that Dispositions permitted under the Credit Agreement shall not be subject to
this proviso).

 

 

21

     8.7 Set-Off

          Each Guarantor hereby irrevocably authorizes the Administrative Agent and each Lender at any
time and from time to time while an Event of Default shall have occurred and be continuing, without
notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each
Guarantor, to the extent permitted by applicable law, upon any amount becoming due and payable by
each Guarantor (whether at the stated maturity, by acceleration or otherwise after the expiration
of any applicable grace periods) to set-off and appropriate and apply against such amount any and
all deposits (general or special, time or demand, provisional or final but excluding trust
accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the account of such
Guarantor. The Administrative Agent and each Lender shall notify such Guarantor promptly of any
such set-off and the application made by the Administrative Agent or such Lender of the proceeds
thereof, provided that the failure to give such notice shall not affect the validity of such
set-off and application.

     8.8 Counterparts

          This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts (including by telecopy), and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.

     8.9 Severability

          Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

     8.10 Section Headings

          The Section headings used in this Agreement are for convenience of reference only and are not
to affect the construction hereof or be taken into consideration in the interpretation hereof.

     8.11 Integration

          This Agreement and the other Loan Documents represent the agreement of the Guarantors,
the Administrative Agent and the Lenders with respect to the subject matter hereof and
thereof.

     8.12 GOVERNING LAW

          THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE PROVINCE OF ONTARIO AND THE LAWS OF CANADA APPLICABLE THEREIN.

     8.13 Submission To Jurisdiction: Waivers

Each Guarantor hereby irrevocably and unconditionally:

 

 

22

     (a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the Southern District of New
York, the courts of the Province of Manitoba, the courts of the Province of Ontario and appellate
courts from any thereof;

     (b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

     (c) agrees that service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to such Guarantor at its address referred to in Section 8.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;

     (d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.

     8.14 Acknowledgements

Each Guarantor hereby acknowledges that:

     (a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents to which it is a party;

     (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or
duty to any Guarantor arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Guarantors, on the one hand, and the Administrative
Agent and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor
and creditor; and

     (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Lenders or among the Guarantors and the
Lenders.

     8.15 Additional Guarantors

          Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant
to Section 6.10 of the Credit Agreement shall become a Guarantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1
hereto.

     8.16 Releases

     (a) At such time as the Loans, the Reimbursement Obligations and the other
Obligations (other than Borrower Hedge Agreement Obligations and Borrower Cash Management
Obligations) shall

 

 

23

have been paid in full, the Commitments shall have terminated and no Letters of Credit shall be
outstanding, the Collateral shall be released from the Liens created hereby, and this Agreement and
all obligations (other than those expressly stated to survive such termination) of the
Administrative Agent and each Guarantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the Collateral shall revert to
the Guarantors. At the request and sole expense of any Guarantor following any such termination,
the Administrative Agent shall deliver to such Guarantor any Collateral held by the Administrative
Agent hereunder, and execute and deliver to such Guarantor such documents as such Guarantor shall
reasonably request to evidence such termination.

     (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any
Guarantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the
request and sole expense of such Guarantor, shall execute and deliver to such Guarantor all
releases or other documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Borrower, a Guarantor shall be
released from its obligations hereunder in the event that all the Capital Stock of such Guarantor
shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written request for release
identifying the relevant Guarantor and the terms of the sale or other disposition in reasonable
detail, including the price thereof and any expenses in connection therewith, together with a
certification by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.

     8.17 WAIVER OF JURY TRIAL

          EACH GRANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE ADMINISTRATIVE AGENT AND
EACH LENDER, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

 

EXECUTION COPY

          IN WITNESS WHEREOF, each of the undersigned has caused this CDN Guarantee and Collateral
Agreement to be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	 	STANDARD AERO LIMITED
	 
	 	 	 	 
	

	 	By:
	 	/s/  Edward Richmond
	

	 	 	 	 
	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	NOT FM CANADA INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/  Edward Richmond
	

	 	 	 	 
	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	3091781 NOVA SCOTIA COMPANY
	 
	 	 	 	 
	

	 	By:
	 	/s/  Edward Richmond
	

	 	 	 	 
	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	3091782 NOVA SCOTIA
COMPANY
	 
	 	 	 	 
	

	 	By:
	 	/s/  Edward Richmond
	

	 	 	 	 
	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	3091783 NOVA SCOTIA COMPANY
	 
	 	 	 	 
	

	 	By:
	 	/s/  Edward Richmond
	

	 	 	 	 
	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	6269044 CANADA INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/  Edward Richmond
	

	 	 	 	 
	

	 	 	 	Name:
	

	 	 	 	Title:exv10w5

 

Exhibit 10.5

DATED 1 October, 1998               

STANDARD AERO LIMITED                (1)

- and
-               

DAVID W SHAW                (2)

	 
	

	SERVICE AGREEMENT

	 

	as President

	

Lovell White Durrant

65 Holborn Viaduct

London

EC1A 2DY

A5/AMS/AMJ

 

 

	 	 	 	 	 
	Clause	 	Page No	 
	 
	1. Interpretation
	 	 	1	 
	 
	 	 	 	 
	2. Appointment
	 	 	2	 
	 
	 	 	 	 
	3. Term
	 	 	2	 
	 
	 	 	 	 
	4. Duties
	 	 	3	 
	 
	 	 	 	 
	5. Remuneration
	 	 	4	 
	 
	 	 	 	 
	6. Pension and insurance benefits
	 	 	4	 
	 
	 	 	 	 
	7. Expenses
	 	 	4	 
	 
	 	 	 	 
	8. Motor car
	 	 	4	 
	 
	 	 	 	 
	9. Holidays and holiday pay
	 	 	5	 
	 
	 	 	 	 
	10. Sickness/incapacity
	 	 	5	 
	 
	 	 	 	 
	11. Confidential information
	 	 	5	 
	 
	 	 	 	 
	12. Inventions
	 	 	6	 
	 
	 	 	 	 
	13. Copyright and designs
	 	 	6	 
	 
	 	 	 	 
	14. Gratuities and codes of conduct
	 	 	7	 
	 
	 	 	 	 
	15. Restrictive covenants
	 	 	7	 
	 
	 	 	 	 
	16. Termination by reconstruction or amalgamation
	 	 	8	 
	 
	 	 	 	 
	17. Termination of directorship
	 	 	8	 
	 
	 	 	 	 
	18. Termination on the happening of certain events
	 	 	9	 
	 
	 	 	 	 
	19. Obligations upon termination of employment
	 	 	10	 
	 
	 	 	 	 
	20. Effect of termination of this Agreement
	 	 	10	 
	 
	 	 	 	 
	21. Other Terms and Conditions
	 	 	10	 
	 
	 	 	 	 
	22. Notices
	 	 	11	 
	 
	 	 	 	 
	23. Previous agreements
	 	 	11	 
	 
	 	 	 	 
	24. Applicable law
	 	 	11	 

 

 

SERVICE AGREEMENT

THIS AGREEMENT is made the 1st day of October 1998

BETWEEN:

	(1)  	Standard Aero Limited a company incorporated in Canada with number 102545-7 whose registered
office is at 30th Floor, 360 main Street, Winnipeg, Manitoba R3C 4 G1 (the “Company”); and
	 
	(2)  	David W Shaw of 55 Shoreline Drive, Winnipeg, Manitoba Canada R3P 2J7 (the “Executive”).

WHEREAS:

The Executive has agreed to be employed by the Company to serve the Company and its
Associated Companies as President on the terms and conditions set out in this Agreement in
substitution for any previous agreement or arrangement.

IT IS AGREED:

	1.  	Interpretation
	 
	1.1  	In this Agreement the following words and expressions have the meanings set opposite them:

	 	 	 	 	 
	

	 	“Articles of Incorporation”
	 	the Articles of Incorporation of the Company current at
the
date of this Agreement and as amended from time to time;
	 
	 	 	 	 
	

	 	“Associated Company”
	 	any company which from time to time is:
	 
	 	 	 	 
	

	 	 	 	(a) a holding company of the Company; or
	 
	 	 	 	 
	

	 	 	 	(b) any subsidiary
undertaking of any such holding company or of the
Company; or
	 
	 	 	 	 
	

	 	 	 	(c) a company over
which the Company has control within the meaning of

     the Canadian Business Corporation Act (the “CBCA”);
	 
	 	 	 	 
	

	 	“Board”
	 	the board of directors of Dunlop Standard Aerospace Group
Limited from time to time;
	 
	 	 	 	 
	

	 	“Chief Executive Officer”
	 	the person holding office as chief executive officer of the
Company from time to time.
	 
	 	 	 	 
	

	 	“Completion”
	 	completion of the acquisition of the companies comprising the
BTR Aerospace Group pursuant to the acquisition
agreements between Austrac Investments Limited, Dunlop
International AG, BTR (European Holdings) B.V., Hawker
Siddeley Management Limited, Hawkseley Holdings Limited, BTR
Industries Limited, Standard Aero (Australia) Pty Limited,
BTR Inc., H.S. Investments Inc., and Stewart Warner
Corporation and Dunlop Standard Aerospace Group Limited and
others;

 

 

- 2 -

	 	 	 	 	 
	

	 	“Completion Date”
	 	the date on which Completion occurs;
	 
	 	 	 	 
	

	 	“Investment Agreement”
	 	the investment agreement dated 31
July 1998 and made
between, amongst others, Dunlop Standard Aerospace Group
Limited and the Executive, as that agreement may be amended
from time to time;
	 
	 	 	 	 
	

	 	“New Canadian

Pension Plan”
	 	the new pension plan to be established at Completion in
relation to the Canadian target companies pursuant to the terms
of the share and business sale and purchase agreement
between Austrac Investments Limited, Dunlop Standard
Aerospace (UK) Limited and others.

	1.2  	In this Agreement references to any statutory provision shall include such provision as from
time to time amended, whether before, on or (in the case of re-enactment or consolidation
only) after the date hereof, and shall be deemed to include provisions of earlier legislation
(as from time to time amended) which have been re-enacted (with or without modification) or
replaced (directly or indirectly) by such provision and shall further include all statutory
instruments or orders from time to time made pursuant thereto.

	1.3  	Words and phrases defined in the CBCA, as amended, shall have the same meanings in this
Agreement unless they are otherwise defined in this Agreement or unless the context or
subject-matter otherwise requires.

	2.  	Appointment

	2.1  	The Company shall employ with effect from the Completion Date the Executive and the
Executive shall serve the Company as President or in such other capacity as the Board may
reasonably require.

	2.2  	The Executive warrants to the Company that by entering into this Agreement and performing his
duties hereunder he shall not be in breach of any contract or other obligation binding on him.

	2.3  	This Agreement in conditional upon Completion taking place by no later than 31 November
1998

	3.  	Term

	3.1  	The Executive shall be employed for a period of two years from the date hereof (the
“Commencement Date”) and thereafter until the expiry of not less than twelve calendar months’
written notice of termination given by either party to the other so as to expire at the end of
the said period or any time thereafter. The Company reserves the right to terminate the
Executive’s employment by payment in lieu of notice.

	3.2  	Notwithstanding the provisions of clause 3.1 the Executive’s employment shall terminate
automatically when the Executive reaches the age of 65 years.

 

 

- 3 -

	4.  	Duties

	4.1  	During his employment hereunder the Executive shall:

	 	(a)  	perform the duties and exercise the powers and functions which from time to
time may reasonably be assigned to or vested in him by the Board in relation to the
Company and any Associated Company;
	 
	 	(b)  	devote the whole of his time, attention and ability to his duties hereunder at
Winnipeg, Canada or at such place or places as the Board shall agree with the Executive
subject always to reasonable value of any permanent relocation;
	 
	 	(c)  	comply with all reasonable requests, instructions and regulations given or made
by the Board (or by any one authorised by it) and promptly provide such explanations,
information and assistance as to his activities or the business of the Company as the
Board may reasonably require;
	 
	 	(d)  	faithfully and loyally serve the Company to the best of his ability and use his
utmost endeavours to promote its interests in all respects;
	 
	 	(e)  	not engage in any activities which would detract from the proper performance of
his duties hereunder, nor without the prior written consent of the Board in any
capacity including as director, shareholder, principal, consultant, agent, partner or
employee of any other company, firm or person (save as the holder for investment of
securities which do not exceed three per cent (3%) in nominal value of the share
capital or stock of any class of any company quoted on a recognised stock exchange)
engage or be concerned or interested directly or indirectly in any other trade,
business or occupation whatsoever;
	 
	 	(f)  	not (and shall use every reasonable endeavour to procure that his wife, infant
children and persons related to him within the meaning of the Income Tax Act (Canada)
shall not) deal or become or cease to be interested in any securities of the Company or
any Associated Company.

	4.2  	Notwithstanding the provisions of clause 4.1 the Company shall:

	 	(a)  	be entitled at any time to appoint another person or persons to act jointly with
the Executive;
	 
	 	(b)  	have the right to require the Executive at any time to carry out such special
projects or functions commensurate with his abilities as the Company shall reasonably
determine; and
	 
	 	(c)  	following the giving of notice by either party to terminate this Agreement, be
under no obligation to assign to or vest in the Executive any powers, duties or
functions or to provide any work for the Executive and may at any time suspend the
Executive from the performance of any duties or exclude him from any premises of the
Company provided that this clause 4.2(c) shall only apply during such time that the
Company is seeking to determine whether any disciplinary action against the Executive
is appropriate and shall terminate immediately upon such determination being made by
the Company.

 

 

- 4 -

	5.  	Remuneration

	5.1  	As remuneration for his services hereunder the Company shall pay to the Executive:

	 	(a)  	a salary at the rate of CAN$ 250,000 per annum (which is deemed to accrue from
day to day) payable in arrears in equal twice monthly instalments on such days in each
month as established from time to time in accordance with the Company’s policy for the
payment of salaries, such salary being inclusive of any fees to which the Executive
may be entitled as a director of the Company or any Associated Company;
	 
	 	(b)  	the said salary shall be reviewed by the Remuneration Committee of the Board
from time to time (but at least annually) and the rate thereof may be increased with
effect from any such review date provided that any increase shall be subject to the
approval of the Special Director under the Investment Agreement (as defined therein);
	 
	 	(c)  	The Executive will be entitled to participate in a management incentive
compensation scheme under which his participation level and maximum achievable amount
will be not less than that currently in place under the existing Management Incentive
Compensation Scheme (MIC) 1998.

	5.2  	The Executive hereby consents to the deduction of any sums owing by him to the Company at any
time from his salary or any other payment due from the Company to the Executive and the
Executive hereby also agrees to make any payment to the Company of any sums owed by him to the
Company upon demand by the Company at any time.

	6.  	Pension and insurance benefits

	6.1  	The Executive shall be entitled to be a member of the New Canadian Pension Plan (the “Plan”),
to be established at Completion, particulars of which may be obtained from the Company
Secretary. The Executive’s membership in the Plan shall be subject to the provisions
thereof as amended from time to time.

	6.2  	The Company shall provide the Executive with medical insurance and permanent health
insurance, particulars of which may be obtained from the Company Secretary.

	7.  	Expenses
	 
	   	The Company shall reimburse to the Executive all travelling, hotel, entertainment and other
expenses properly and reasonably incurred by him in the performance of his duties hereunder
and properly claimed and vouched for in accordance with the Company’s expense reporting
procedure in force from time to time.

	8.  	Motor car
	 
	   	The Company shall provide the Executive with a motor car for his business and personal use
of a type appropriate to the position of the Executive in accordance with the Company’s car
scheme in operation from time to time. The Company shall contribute towards the insurance
premiums, maintenance and repair expenses in connection with the motor car in accordance
with the Company’s car scheme in operation from time to time. The Company shall have the

 

 

	   	right to change its arrangements for or to vary or withdraw any part or parts of the
Company’s car scheme as it sees fit. The Executive shall at all times conform to all
regulations which may from time to time be imposed by the Company with respect to motor
cars provided by the Company for use by its personnel. Upon termination of his employment
for whatever reason or if the Executive ceases for any reason to hold a valid driving
licence the Executive shall forthwith return the motor car to the Company.

	9.  	Holidays and holiday pay

	9.1  	In addition to the normal statutory holidays the Executive shall be entitled to 25 working
days’ paid vacation during each calendar year to be taken at such time or times as may be
agreed with the Chief Executive Officer. The Executive may not without the consent of the
Chief Executive Officer carry forward more than 5 days of any unused part of his vacation
entitlement to a subsequent calendar year.

	9.2  	For the calendar year during which the Executive’s employment hereunder commences or
terminates he shall be entitled to such proportion of his annual vacation entitlement as the
period of his employment in each such year bears to one calendar year. Upon termination of his
employment for whatever reason he shall if appropriate either be entitled to salary in lieu of
any outstanding vacation entitlement or be required to pay to the Company any salary received
in respect of holiday taken in excess of his proportionate vacation entitlement.

	10.  	Sickness/incapacity

	10.1  	The Company reserves the right to require the Executive (at the expense of the Company) to be
examined by a medical adviser nominated by the Company and the Executive consents to the
medical adviser disclosing the results of the examination to the Company and shall provide the
Company with such formal consents as may be necessary for this purpose.

	10.2  	If the Executive shall be prevented by illness, accident or other incapacity from properly
performing his duties hereunder he shall report this fact forthwith to the Company Secretary’s
office and if he is so prevented for seven or more consecutive days he shall if required by
the Company provide an appropriate doctor’s certificate.

	10.3  	If the Executive shall be absent from his duties hereunder owing to illness, accident or
other incapacity duly certified in accordance with the provisions of clause 10.1 he shall be
paid his full remuneration for the first six months of such absence and thereafter such
remuneration as the Board shall in its discretion decide PROVIDED that there shall be deducted
from such remuneration any Statutory Sick Pay or any social security or other benefits payable
to the Executive including any sums recoverable from a third party (other than permanent
health insurance or the arrangements or plans taken out by the Executive) and any sums payable
to the Executive under the permanent health insurance arrangement referred to in clause 6.2
above.

	11.  	Confidential information
	 
	   	The Executive shall not during his employment hereunder (save in the proper course thereof)
or at any time after his termination for any reason whatsoever disclose to any person
whatsoever or otherwise make use of any confidential or secret information of which he has

 

 

- 6 -

or may have in the course of his employment hereunder become possessed relating to the
Company or any Associated Company or any of its or their suppliers, agents, distributors
or customers including without limiting the generality of the foregoing confidential or
secret information relating to the business, technical processes, research or finances of
any of the aforesaid (including customer and/or price lists) or relating to know-how,
designs, inventions or improvements or other matters connected with the products or
services manufactured, marketed, provided or obtained by the Company or any Associated
Company or any of its or their suppliers agents, distributors or customers.

	12.  	Inventions

	12.1  	Any discovery, invention, secret process or improvement made or discovered by the Executive
(either alone or with others) during his employment in connection with or in any way affecting
or relating to the business of the Company or any Associated Company or capable of being used
or adapted for use therein or in connection therewith shall forthwith be disclosed in writing
to the Company and shall belong to and be the absolute property of the Company or such other
body corporate as the Company may designate. For the avoidance of doubt this clause 12.1
shall not derogate from the statutory rights of the Executive in such inventions.

	12.2  	The Executive shall at the request and cost of the Company (and notwithstanding the
termination of his employment) apply or join in applying for patent or other similar
protection in Canada or any other part of the world for any such invention, discovery, process
or improvement as aforesaid and execute all instruments and do all such things necessary for
vesting the said patent or other similar protection when obtained, or the benefit of any
application, and all right, title to and interest in the same in the Company or its nominee
absolutely.

	12.3  	To secure his obligation under this Agreement the Executive irrevocably appoints the Company
to be his attorney in his name and on his behalf to execute such deeds or documents and do all
such acts and things and generally to use his name to give to the Company or its nominee the
full benefit of the provisions of this clause and with respect to any third party a
certificate in writing signed by any Director or the Company Secretary that any instrument or
act falls within the authority hereby conferred shall be conclusive evidence that such is the
case.

	13.  	Copyright and designs

	13.1  	If during his employment hereunder the Executive shall at any time whether during the course
of his normal duties or other duties specifically assigned to him (whether or not during
normal working hours) either alone or in conjunction with any other person originate any
design (whether registrable or not) or other work in which copyright or design rights may
subsist he shall forthwith disclose the same to the Company.

	13.2  	The Executive hereby assigns to the Company all present and future copyright, design rights
and other proprietary rights if any for the full term thereof throughout the world in respect
of all designs or other works described in clause 13.1 except only those designs or other
works written, originated, conceived or made by him wholly outside his normal working
hours hereunder and wholly unconnected with his service hereunder.

 

 

	13.3  	It is agreed that the Company shall be treated as the original proprietor of any
design of which the Executive may be the author in the circumstances described in clause
13.1.

	13.4  	The Executive agrees and undertakes that he will execute such deeds or documents and do
all such acts and things as may be necessary or desirable to substantiate the rights of the
Company in respect of the matters referred to in this clause. To secure his obligation under
this Agreement the Executive irrevocably appoints the Company to be his attorney in his name
and on his behalf to execute such deeds or documents and do all such acts and things as may be
necessary or desirable to substantiate the rights of the Company in respect of the matters
referred to in this clause.

	13.5  	The Executive hereby irrevocably waives all moral rights that he had or may have in any of
the works referred to in clause 13.2.

	14.  	Gratuities and codes of conduct

	14.1  	The Executive shall not without the prior written consent of the Board directly or indirectly
accept any commission, rebate, discount, gratuity or gift, in cash or in kind from any person
who has or is likely to have a business relationship with the Company or any Associated
Company and shall notify the Company upon acceptance by the Executive of any commission,
rebate, discount, gratuity or gift.
	14.2  	The Executive shall comply with all codes of conduct from time to time adopted by the Board.

	15.  	Restrictive covenants

	15.1  	The Executive shall not without the prior written consent of the Board (such consent to be
withheld only so far as may be reasonably necessary to protect the legitimate interests of
the Company or any Associated Company):

	 	(a)  	for a period of 12 months after the termination of his employment hereunder be
engaged or interested (whether as a director, shareholder, principal, consultant,
agent, partner or employee) in any business concern (of whatever kind) which shall in
Canada or in any other part of the world in which the Company or any Associated Company
then carries on any part of its business be in competition with the Company or with any
Associated Company in the provision of services or the manufacture, sale or supply of
goods, being services or goods of a kind with which the Executive was concerned to a
material extent during the period of one year prior to the termination of his
employment with the Company PROVIDED always that nothing in this clause 15.1 (a) shall
restrain the Executive from engaging or being interested as aforesaid in any such
business concern insofar as his duties or work relate principally to services or goods
of a kind with which the Executive was not concerned during the period of one year
prior to the termination of his employment hereunder;
	 
	 	(b)  	for a period of 12 months after the termination of his employment hereunder
either on his own behalf or on behalf of any other person, firm or company in respect
of any services of a kind provided or any goods of a kind sold or supplied by the
Company and/or any Associated Company in respect of the provision or sale or supply of
which the Executive may have been engaged during his employment with the Company or any
Associated Company:

 

 

- 8 -

	 	(i)  	canvass, solicit or approach or cause to be canvassed, solicited or
approached for orders; or
	 
	 	(ii)  	directly or indirectly deal with

	 	   	any person, firm or company who at the date of the termination of this Agreement
or within one year prior to such date is or was a client or customer of the
Company or any Associated Company or was in the habit of dealing under contract
with the Company or any Associated Company;

	 	(c)  	for a period of 12 months after the termination of his employment
hereunder either on his own behalf or on behalf of any other person, firm or company:

	 	(i)  	directly or indirectly solicit or entice or endeavour to
solicit or entice away from the Company or from any Associated Company any
employee of executive or managerial status engaged in its or their business
and with whom the Executive had dealings at any time during the last year of
his employment hereunder; and
	 
	 	(ii)  	interfere or seek to interfere with the continuance of
supplies to the Company and/or any Associated Company (or the terms relating
to such supplies) from any suppliers who have been supplying goods, materials
or services to the Company and/or any Associated Company at any time during
the last year of his employment hereunder.

	15.2  	Whilst each of the restrictions in clauses 15.1(a), 15.1(b) and 15.1(c) are considered by
the parties to be reasonable in all the circumstances as at the date hereof it is hereby
agreed and declared that if any one or more of such restrictions shall be judged to be
void as going beyond what is reasonable in all the circumstances for the protection of the
interests of the Company and/or any Associated Company but would be valid if words were
deleted therefrom the said restrictions shall be deemed to apply with such modifications
as may be necessary to make them valid and effective and any such modification shall not
thereby affect the validity of any other restriction contained herein.

16. Termination by reconstruction or amalgamation

If the employment of the Executive hereunder shall be terminated by reason of the
liquidation of the Company for the purposes of amalgamation or reconstruction or as part of
any arrangement for the amalgamation of the undertaking of the Company not involving
liquidation and the Executive is offered employment with the amalgamated or
reconstructed company on terms generally not less favourable than the terms (including
that the amalgamated or reconstructed company is acceptable to the Executive acting
reasonably in good faith) of this Agreement and not involving any relocation of the
Executive unless agreed with the Executive, the Executive shall have no claim against the
Company in respect of the termination of his employment by the
Company.

 

 

- 9 -

17. Termination of directorship

If the Executive for any reason ceases to be a director of the Company then the Company may
terminate his employment hereunder forthwith, such termination to be without prejudice to
any claim that the Executive may have for any breach of this Agreement.

18. Termination on the happening of certain events

The Company without prejudice to any remedy which it may have against the Executive for the
breach or non-performance of any of the provisions of this Agreement may by notice in
writing to the Executive forthwith terminate this Agreement if the Executive shall:

	 	(a)  	become bankrupt or become the subject of an interim order or make any
arrangement or composition with his creditors; or
	 
	 	(b)  	be convicted of any criminal offence (other than an offence under road traffic
legislation in Canada or elsewhere for which a penalty other than imprisonment is
imposed); or
	 
	 	(c)  	be prevented by illness or otherwise from performing his duties hereunder for a
consecutive period of six calendar months or for an aggregate period of six calendar
months in any period of 12 calendar months; or
	 
	 	(d)  	be guilty of any serious misconduct or dishonesty, any conduct tending to bring
the Company or himself (in the reasonable opinion of the Company) into disrepute, or
any material breach or persistent non-observance of any of the provisions of this
Agreement or shall neglect fail or refuse to carry out duties properly assigned to him
hereunder; or
	 
	 	(e)  	is disqualified from being a director of any company by reason of an order made
by any competent court; or
	 
	 	(f)  	is guilty of any repeated breach or non-observance of any code of conduct or
fails or ceases to be registered (where such registration is, in the reasonable opinion
of the Board, required for the performance of his duties) by any regulatory body in
Canada or elsewhere; or
	 
	 	(g)  	materially breach (whether by one or more acts or omissions) any obligation
contained in the Investment Agreement or if there occurs any breach of any undertaking
given by him in the Investment Agreement and, where the breach is capable of remedy,
fail to remedy the breach within 20 Business Days of being requested to do so in
accordance with the terms thereof; or
	 
	 	(h)  	materially breach (whether by one or more acts or omissions) any of the
provisions of the Company’s Articles of Incorporation and, where the breach is capable
of remedy, fail to remedy the breach within 20 Business Days of being requested to do
so.

 

 

- 10 -

	19.  	Obligations upon termination of employment
	 
	   	Upon the termination of his employment hereunder for whatever reason the Executive shall:

	 	(a)  	forthwith tender his resignation as a Director of the Company and of any
Associated Company without compensation. To secure his obligation under this
Agreement the Executive irrevocably appoints the Company to be his
attorney in his name
and on his behalf to sign any documents and do any things necessary to give effect
thereto, if the Executive shall fail to sign or do the same himself;
	 
	 	(b)  	deliver up to the Company all vehicles, keys, credit cards, correspondence,
documents, specifications, reports, papers and records (including any computer
materials such as discs or tapes) and all copies thereof and any other property
(whether or not similar to the foregoing or any of them) belonging to the Company or
any Associated Company which may be in his possession or under his control, and
(unless prevented by the owner thereof) any such property belonging to others which
may be in his possession or under his control and which relates in any way to the
business or affairs of the Company or any Associated Company or any supplier, agent,
distributor or customer of the Company or any Associated Company, and he shall not
without written consent of the Board retain any copies thereof;
	 
	 	(c)  	if so requested send to the Company Secretary a signed statement confirming
that he has complied with clause 19.(b); and
	 
	 	(d)  	not at any time represent himself still to be connected with the Company or
any Associated Company.

	20.  	Effect of termination of this Agreement
	 
	   	The expiry or termination of this Agreement howsoever arising shall not operate to affect
any of the provisions hereof which are expressed to operate or have effect thereafter and
shall not prejudice the exercise of any right or remedy of either party accrued beforehand.

	21.  	Other Terms and Conditions
	 
	21.1  	The provisions of the Company’s standard terms and conditions of employment from time to
time shall apply to the Executive’s employment hereunder except so far as inconsistent
herewith.

	 	(a)  	The Executive’s continuous employment began on 6 November 1989. Employment of
the Executive with a previous employer that is a group company counts as part of the
Executive’s continuous employment with the Company.
	 
	 	(b)  	The Executive’s hours of work shall be the normal hours of work of the Company
which are from 8.00a.m. - 4.30 p.m. together with such additional hours as may be
necessary for the proper discharge of his duties hereunder to the satisfaction of the
Board.
	 
	 	(c)  	If the Executive is dissatisfied with any disciplinary decision or if he has
any grievance relating to his employment hereunder he should refer such disciplinary

 

 

- 11 -

	 	   	decision or grievance to the Board and the reference will be dealt with by
discussion at and decision of a Board Meeting.
	 
	 	(d)  	The Company is not a party to any collective agreement which affects the
Executive’s employment.
	 
	 	(e)  	Save as otherwise herein provided there are no terms or conditions of
employment relating to hours of work or to normal working hours or to entitlement to
vacation (including public holidays) or vacation pay or to incapacity for work due to
sickness or injury or to pensions or pension schemes or to requirements to work abroad
and no collective agreement has any effect upon the Executive’s employment hereunder.

	22.  	Notices
	 
	   	Any notice to be given hereunder shall be in writing. Notice to the Executive shall be
sufficiently served by being delivered personally to him or by being sent by first class
post addressed to him at his usual or last known place of residence. Notice to the Company
shall be sufficiently served by being delivered to the Company Secretary or by being sent
by first class post to the registered office of the Company. Any notice if so posted shall
be deemed served upon the third day following that on which it was posted.

	23.  	Previous agreements
	 
	   	This Agreement shall take effect in substitution for all previous agreements and
arrangements (whether written, oral or implied) between the Company and the Executive
relating to his employment which shall be deemed to have been terminated by mutual consent
with effect from the commencement of the Agreement.
	 
	24.  	Applicable law
	 
	   	The laws of Manitoba, Canada shall apply to this Agreement and the parties submit to
the jurisdiction of the Courts of the Province of Manitoba, Canada.

IN WITNESS whereof this document has been duly executed and delivered as a deed the day and
year first before written

 

 

- 12 -

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Executed as a deed by

	 	 	)	 	 	 	 	 	 	 	 	 
	Standard Aero Limited

	 	 	)	 	 	 	 	 	 	/s/ Robert Hamaberg
	 	 
	acting by

	 	 	)	 	 	 	 	 	 	/s/ David Unruh	 	 
	 
	 	 	)	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	                                        
	 	 	 	 	 	 	 	 	 	 	 	 
	Director
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	                                        
	 	 	 	 	 	 	 	 	 	 	 	 
	Director/Secretary
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Executed as a deed by

	 	 	 	 	 	 	)	 	 	 	 	 
	David W Shaw
	 	 	 	 	 	 	)	 	 	/s/ David W Shaw	 	 
	David W Shaw
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	)	 	 	 	 	 
	in the presence of:

	 	 	 	 	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	[Illegible]
	 	 	 	 	 	 	 	 	 	 	 	 
	Witness’s name and signature
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	[Illegible]
	 	 	 	 	 	 	 	 	 	 	 	 
	Witness’s address

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