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Exhibit 10.28  

 
 

Guaranty Agreement  
    

GUARANTEE
AGREEMENT (this "Agreement") dated as of May 19, 2005 between SR TELECOM INC., a company duly organized and validly existing
under the laws of Canada; (the "Guarantor"); EXPORT DEVELOPMENT CANADA, a corporation established by an act of the Parliament of Canada
("EDC"), and INTER-AMERICAN DEVELOPMENT BANK, an international organization established by the Articles of Agreement among its member countries
("IDB", and collectively with EDC the "Senior Lenders"). 

W
I T N E S S E T H 

WHEREAS,
Comunicación y Telefonía Rural, S.A. (the "Borrower"), which is the indirectly, wholly-owned
Subsidiary of the Guarantor, has undertaken to design, construct, install and operate a rural telecommunications network in nine primary zones of Chile
(the "Project"). 

WHEREAS,
in order to finance the development and construction of the Project, the Borrower and EDC entered into an Amended and Restated Loan Agreement dated as of December 22, 1999
(as amended, supplemented or otherwise modified as of the date hereof, the "EDC Senior Loan Agreement") providing, subject to the terms and
conditions thereof, for a loan to be made by EDC to the Borrower in the amount of U.S.$25,000,000, and the Borrower and IDB entered into a Loan Agreement dated as of December 22, 1999
(as amended, supplemented or otherwise modified as of the date hereof, the "IDB Senior Loan Agreement" and, together with the EDC Loan Agreement,
the "Senior Loan Agreements") providing, subject to the terms and conditions thereof, for a loan to be made by IDB to the Borrower in the amount of
U.S.$25,000,000. The Borrower and the Senior Lenders entered into a Common Agreement dated as of December 22, 1999 (as amended, supplemented or otherwise modified as of the date hereof,
the "Common Agreement"). 

WHEREAS,
the Guarantor and the Senior Lenders entered into an Amended and Restated Performance Undertaking dated as of December 22, 1999 (as amended, supplemented or otherwise modified
as of the date hereof, the "Performance Undertaking"), an Amended and Restated Project Funds Agreement dated as of December 22, 1999
(as amended, supplemented or otherwise modified as of the date hereof, the "Project Funds Agreement") and an amended and restated Direct
Agreement dated as of December 22, 1999 (as amended, supplemented or otherwise modified as of the date hereof, the "Direct Agreement"). 

WHEREAS,
the Borrower and the Guarantor have approached the Senior Lenders on a number of occasions since December 22, 1999 to request amendments and waivers to the Transaction Documents
(as defined in the Common Agreement) and the Senior Lenders, the Borrower and the Guarantor have agreed to eight amendments and waivers to the Transaction Documents, including by means of the
Eighth Amendment and Limited Term Waiver Agreement (as modified, supplemented or amended as of the date hereof, the "Eighth Amendment"). 

WHEREAS,
the Eighth Amendment included waivers of certain defaults of the Guarantor's obligations under the Performance Undertaking and the Project Funds Agreement, as further described in
Section 19 of the Eighth Amendment. 

WHEREAS,
the Eighth Amendment will, if not terminated earlier in accordance with its terms, terminate on May 16, 2005, and the Guarantor and the Borrower have requested that the Senior Lenders
agree to enter into (a) the Ninth Amendment and Limited Term Waiver Agreement between the Borrower, the Guarantor and the Senior Lenders dated the date hereof
(the "Ninth Amendment") and (b) the Restructuring Term Sheet attached hereto as Schedule A
(the "Term Sheet"). 

WHEREAS,
to induce the Senior Lenders to enter into the Ninth Amendment and the Term Sheet, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Guarantor has agreed to execute and deliver this Agreement. 

NOW,
THEREFORE, the parties hereto agree as follows: 

SECTION 1.    Definitions.    Terms defined in the Common Agreement are used herein
as defined therein. In addition, the term "CTR Loan Documents" means, collectively, the Senior Loan Agreements, the Senior Notes and each other
agreement or instrument referred to in or contemplated by the Senior Loan Agreements. 

 

SECTION 2.    The Guarantee. 

2.01    The Guarantee.    The Guarantor hereby unconditionally guarantees to the Senior Lenders the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Senior Loans and the Senior Notes and all other amounts whatsoever now or hereafter payable or
becoming payable by the Borrower under the CTR Loan Documents, in each case strictly in accordance with the terms thereof (the obligations guaranteed hereby being herein collectively called the
"Guaranteed Obligations") provided, however that the aggregate amount for which the Guarantor is liable
hereunder to pay to the Senior Lenders after the date hereof pursuant to this Agreement shall not exceed the lesser of (a) U.S.$12,000,000, and (b) U.S.$12,000,000 less (i) any
amounts paid after the date hereof by the Guarantor (as opposed to the Borrower) to the Senior Lenders (or either of them) as contemplated in paragraphs 16(b)(ii), 18(i) or
18(l) of the Term Sheet and (ii) any cash amounts provided by the Guarantor to the Borrower after the date hereof and are paid directly to the Senior Lenders (other than any cash amounts
required to be paid by the Guarantor to the Borrower in accordance with the Support Agreement (as defined in the Term Sheet)), in each case to the extent such amounts would be (and the
Senior Lenders hereby acknowledge that such amounts will be) applied in accordance with Schedule B to the Term Sheet to the payment of principal amounts outstanding under the CTR Loan
Documents (such lesser amount from time to time being the "CTR Guarantee Maximum"). Any reduction in the CTR Guarantee Maximum pursuant to the foregoing
sentence shall be a permanent reduction thereof. The Guarantor hereby further agrees that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise)
any of the Guaranteed Obligations, the Guarantor will promptly pay the same up to the CTR Guarantee Maximum upon receipt of written demand for payment thereof, without any other demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such extension or renewal. This Agreement is a continuing guaranty and is a guaranty of payment and is not merely a guaranty of collection. 

2.02    Acknowledgments, Waivers and Consents.    The Guarantor agrees that the obligations of the Guarantor under
Section 2.01 hereof shall, to the fullest extent permitted by applicable law, be primary, absolute, irrevocable and unconditional under any and all circumstances. Without limiting the
foregoing, the Guarantor agrees that, to the fullest extent permitted by applicable law: 

	(a)
	The
occurrence of any one or more of the following shall not affect the enforceability or effectiveness of this Agreement in accordance with its terms or affect, limit, reduce,
discharge or terminate the liability of the Guarantor, or the rights, remedies, powers and privileges of the Senior Lenders under this Agreement:

	(i)
	any
modification or amendment (including without limitation by way of amendment, extension, renewal or waiver), or any acceleration or other change in the time for
payment or performance of the terms of all or any part of the Guaranteed Obligations or any Loan Document, or any other agreement or instrument whatsoever relating thereto  provided that the obligations
of the Guarantor hereunder shall not be increased by reason of any modification or amendment after the date hereof of the
terms of the Obligations if the effect of such modification or amendment is to increase (other than by means of acceleration) the amount of the Obligations then due and payable to the Senior Lenders
and provided, further that in the event that the Obligations are increased in the manner described in the foregoing clause, the Senior Lenders shall not
make a claim against the Guarantor under this Agreement for the amount by which such Obligations have been increased;

	(ii)
	any
release, termination, waiver, abandonment, lapse or expiration, subordination or enforcement of the liability of the Guarantor under this Agreement;

	(iii)
	any
release of any other Person (including without limitation any other guarantor with respect to all or any part of the Guaranteed Obligations) from any personal
liability with respect to all or any part of the Guaranteed Obligations;

	(iv)
	any
settlement, compromise, release, liquidation or enforcement, upon such terms and in such manner as the Senior Lenders may determine or as applicable law may
dictate, of all or any part of the 

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Guaranteed
Obligations or any other guarantee of (including without limitation any letter of credit issued with respect to) all or any part of the Guaranteed Obligations; 

	(v)
	the
giving of any consent to the merger or consolidation of, the sale of substantial assets by, or other restructuring or termination of the corporate existence of the
Borrower or any other Person or any disposition of any shares of the Guarantor;

	(vi)
	any
proceeding against the Borrower or the exercise of any rights, remedies, powers and privileges of the Senior Lenders under the CTR Loan Documents or otherwise in
such order and such manner as the Senior Lenders may determine, regardless of whether the Senior Lenders shall have proceeded against or exhausted any collateral, right, remedy, power or privilege
before proceeding to call upon or otherwise enforce this Agreement;

	(vii)
	the
entering into such other transactions or business dealings with the Borrower, any Subsidiary or Affiliate of the Borrower as the Senior Lenders may desire;

	(viii)
	any
lien or security interest granted to, or in favor of, the Senior Lenders as security for any of the Guaranteed Obligations shall be released or shall fail to be
perfected; or

	(ix)
	all
or any combination of any of the actions set forth in this Section 2.02(a).

	(b)
	The
enforceability and effectiveness of this Agreement and the liability of the Guarantor, and the rights, remedies, powers and privileges of the Senior Lenders under this Agreement
shall not be affected, limited, reduced, discharged or terminated, and the Guarantor hereby expressly waives to the fullest extent permitted by law any defense now or in the future arising, by reason
of:

	(i)
	the
illegality, invalidity or unenforceability of all or any part of the Guaranteed Obligations, any CTR Loan Document or any other agreement or instrument whatsoever
relating to all or any part of the Guaranteed Obligations;

	(ii)
	any
disability or other defense with respect to all or any part of the Guaranteed Obligations (other than, subject to Section 2.03 hereof, by reason of the full
and final payment of all Guaranteed Obligations), including the effect of any statute of limitations that may bar the enforcement of all or any part of the Guaranteed Obligations;

	(iii)
	the
illegality, invalidity or unenforceability of any security for all or any part of the Guaranteed Obligations or the lack of perfection or continuing perfection or
failure of the priority of any Lien on any collateral for all or any part of the Guaranteed Obligations;

	(iv)
	the
cessation, for any cause whatsoever, of the liability of the Borrower or any other guarantor with respect to all or any part of the Guaranteed Obligations (other
than, subject to Section 2.03 hereof, by reason of the full and final payment of all Guaranteed Obligations);

	(v)
	any
failure of the Senior Lenders to marshal assets in favor of the Borrower or any other Person, to exhaust any collateral for all or any part of the Guaranteed
Obligations, to pursue or exhaust any right, remedy, power or privilege they may have against the Borrower or any other guarantor of all or any part of the Guaranteed Obligations (including any issuer
of any letter of credit) or any other Person or to take any action whatsoever to mitigate or reduce such or any other Person's liability under this Agreement, the Senior Lenders being under no
obligation to take any such action notwithstanding the fact that all or any part of the Guaranteed Obligations may be due and payable and that the Borrower may be in default of its obligations under
any Financing Document;

	(vi)
	any
counterclaim, set-off or other claim which the Borrower or any other guarantor of all or any part of the Guaranteed Obligations has or claims with
respect to all or any part of the Guaranteed Obligations (other than, subject to Section 2.03 hereof, by reason of the full and final payment of all Guaranteed Obligations);

	(vii)
	any
failure of the Senior Lenders or any other Person to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; 

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	(viii)
	any
bankruptcy, insolvency, reorganization, winding-up or adjustment of debts, or appointment of a custodian, liquidator, trustee or the like of it, or
similar proceedings commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any part of the Guaranteed Obligations (or any interest on all or
any part of the Guaranteed Obligations) in or as a result of any such proceeding;

	(ix)
	any
action taken by the Senior Lenders that is authorized by this Section 2.02 or otherwise in this Agreement or by any other provision of any Loan
Document or any omission to take any such action; or

	(x)
	any
other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor (other than, subject to
Section 2.03 hereof, by reason of the full and final payment of all Guaranteed Obligations).

	(c)
	To
the fullest extent permitted by law, the Guarantor expressly waives, for the benefit of the Senior Lenders, all set-offs and counterclaims and all diligence,
presentment, demand for payment or performance, notices of nonpayment or nonperformance, protest, notices of protest, notices of dishonor and all other notices or demands of any kind or nature
whatsoever (other than the written demand for payment pursuant to Section 2.01 hereof), and any requirement that the Senior Lenders exhaust any right, power or remedy or proceed against
the Borrower under the Financing Documents or other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations, and all notices of acceptance of this Agreement or of the existence, creation, incurring or assumption of new or additional Guaranteed Obligations  provided that the waiver of
set-off set out in this clause (c) shall apply, only with respect to the Senior Lenders' rights
and remedies under this Agreement, up to the maximum amount of recovery of the CTR Guarantee Maximum. The Guarantor further expressly waives the benefit of any and all statutes of limitation, to the
fullest extent permitted by applicable law.

	(d)
	The
Guarantor further waives, to the fullest extent permitted by law, any right to which it may be entitled, including, without limitation:

	(i)
	that
the assets of the Borrower first be used, depleted and/or applied in satisfaction of the Borrower's obligations under the CTR Loan Documents prior to any amounts
being claimed from or paid by the Guarantor; and

	(ii)
	to
require that the Borrower be sued and all claims against the Borrower be completed prior to an action or proceeding being initiated against the Guarantor. 

2.03    Reinstatement.    The obligations of the Guarantor under this Section 2 shall be automatically reinstated if and to
the extent that for any reason any payment by or on behalf of the Borrower in respect of the Guaranteed Obligations is rescinded or must otherwise be restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will indemnify the Senior Lenders on demand for all reasonable costs
and expenses (including, without limitation, reasonable fees of counsel) incurred by them in connection with such rescission or restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference, fraudulent transfer or the like under any bankruptcy, insolvency or similar law. 

2.04    Subrogation.    The Guarantor hereby agrees that, until the final payment in full of all Obligations it shall not have the
right to, and shall not, exercise any right or remedy arising by reason of any performance by it under this Agreement, whether by subrogation, reimbursement, contribution or otherwise, against the
Borrower or any security for any of the Guaranteed Obligations. 

2.05    Remedies. 

	(a)
	Subject
to Section 2.05(b), the Guarantor agrees that, as between the Guarantor and the Senior Lenders, the obligations of the Borrower under the CTR Loan Documents may
be declared to be forthwith due and payable as provided in Section 9 of the Common Agreement (and shall be deemed to have become automatically due and payable in the circumstances
provided in said Section 9) for purposes of Section 2.01 hereof, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such 

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obligations
from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due
and payable), such obligations (whether or not due and payable by the Borrower) shall to the fullest extent permitted by applicable law forthwith become due and payable by the Guarantor for purposes
of said Section 2.01. 

	(b)
	Notwithstanding
any other term of this Guarantee Agreement, neither this Guarantee Agreement (including, without limitation, Section 2.01) nor any of the rights created
hereby shall be enforceable or enforced by the Senior Lenders against the Guarantor until the earliest of:

	(i)
	three
years from the implementation of the restructuring referred to in the Term Sheet or such later date as may be agreed by the Senior Lenders in their sole
discretion;

	(ii)
	the
earliest to occur of (1) the date an initial order is made under Section 11 of Companies Creditors' Arrangement Act (Canada) with respect to the
Guarantor and (2) the date on which the Guarantor initiates proceedings under Part III of the Bankruptcy and Insolvency Act (Canada); and

	(iii)
	the
date upon which acceleration occurs or enforcement proceedings are initiated under the Emergency Credit Facility or the New Convertible Bonds, as such terms
are defined in the Term Sheet. 

2.06    Payments.    All payments by the Guarantor under this Agreement shall be made in Dollars, without deduction,
set-off or counterclaim at the place specified in the CTR Loan Documents and free and clear of any and all present and future Covered Taxes. In the event that the Guarantor, any Person
making a payment hereunder on behalf of the Guarantor or the Senior Lenders shall be required by applicable law, decree or regulation to deduct or withhold Covered Taxes from any amounts payable on,
under or in respect of this Agreement, the sum payable shall be increased as necessary so that after making all required deductions and withholdings the recipient of such payment receives an amount
equal to the sum it would have received had no such deduction or withholding been made, except to the extent that the Borrower would not have been required to make such payments under
Section 5.05 of the IDB Loan Agreement or Section 5.05 of the EDC Loan Agreement, as applicable. 

SECTION 3.    Representations and Warranties.    The Guarantor represents and
warrants to the Senior Lenders that: 

3.01    Organization; Power and Authority.    The Guarantor (a) is a corporation duly organized and validly existing under
the laws of Canada, (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted and (c) is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify could reasonably be expected to (either individually or in the aggregate) have a Borrower Material Adverse Effect or an SRT Material Adverse Effect. 

3.02    Authorization; Enforceability.    The Guarantor has all necessary corporate power, authority and legal right to execute,
deliver and perform its obligations under this Agreement; the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on its part (including,
without limitation, any required shareholder approvals); and this Agreement has been duly and validly executed and delivered by the Guarantor and constitutes, its legal, valid and binding obligation,
enforceable against the Guarantor in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law). 

3.03    Approvals.    No Governmental Approvals are necessary for the execution, delivery or performance by the Guarantor of this
Agreement or for the legality, validity or enforceability hereof or thereof 

3.04    Legal Effect.    This Agreement has been duly executed and delivered by the Guarantor and is the legal, valid and binding
obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms except (i) as may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) as rights of acceleration, indemnification, contribution and the availability of equitable remedies may be limited by equitable principles of general applicability. 

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3.05    Ranking.    The payment obligations of the Guarantor hereunder are secured obligations of the Guarantor and, subject to the
terms of the Term Sheet and the Intercreditor Agreement contemplated therein, rank and will at all times rank pari passu in priority of payment with the
rights of the New Convertible Bondholders (as defined in the Term Sheet) The only obligations of the Guarantor ranking ahead of the Guarantor's payment obligations hereunder is, and at
all times will be, the ECF Debt (as defined in Schedule A to the Term Sheet). 

SECTION 4.    Miscellaneous. 

4.01    Waiver.    No failure on the part of the Senior Lenders to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or
the any of the Transaction Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. Neither this Agreement nor any action or inaction on the part of the Senior Lenders shall be construed to constitute or represent an intention by the Senior
Lenders to waive, modify or forbear from exercising any of their rights, powers, privileges or remedies under the Transaction Documents or under any other document or agreement, at law, in equity or
otherwise (including with respect to any Default or Event of Default (other than with respect to the Ninth Amendment Specified Defaults to the extent provided in the Ninth Amendment)), and the
Guarantor acknowledges, agrees and confirms that no such waiver, modification or forbearance has been offered, granted, extended or agreed to by the Senior Lenders, either in their capacities under
the CTR Loan Documents or in any other capacity (including with respect to any Default or Event of Default (other than with respect to the Ninth Amendment Specified Defaults to the extent provided in
the Ninth Amendment)). Nothing set forth in this Agreement (a) shall be construed so as to require the Senior Lenders, either in their capacities under the Transaction Documents or in any other
capacity, to agree to the terms of any modification proposed by the Borrower or the Guarantor to the Transaction Documents or any other document or agreement to which either of the Senior Lenders is a
party or (b) shall be construed as constituting an amendment, replacement, novation or substitution of any provision of any Transaction Document. 

4.02    Notices.    All notices, requests and other communications provided for herein (including, without limitation, any
modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telex or telecopy) delivered to the intended recipient at
the "Address for Notices" specified below its name on the signature pages hereof or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except
as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telex (and the appropriate answerback is received) or personally
delivered or, in the case of a telecopy or mailed notice, upon receipt, in each case given or addressed as aforesaid. 

4.03    Expenses, Etc.    The Guarantor agrees to pay or reimburse the Senior Lenders for all of their reasonable and documented
out-of-pocket costs and expenses (including, without limitation, the reasonable and documented fees and expenses of legal counsel) in connection with the enforcement of any
provision of this Agreement and the collection of any amount due hereunder. 

4.04    Amendments, Etc.    Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be
modified or supplemented only by an instrument in writing signed by the Guarantor and the Senior Lenders. Any such amendment or waiver shall be binding upon the Senior Lenders, each holder of any of
the Guaranteed Obligations and the Guarantor. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof. 

4.05    Successors and Assigns.    This Agreement shall be binding upon and inure to the benefit of the parties hereto and each
holder of any of the Guaranteed Obligations and their respective successors and assigns, provided, that, the Guarantor may not assign any of its rights or obligations
under this Agreement without the prior written consent of the Senior Lenders. 

4.06    Captions.    The captions and section headings appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement. 

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

4.08    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK.

4.09    Jurisdiction, Service of Process and Venue. 

	(a)
	The
Guarantor agrees that any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby or any judgment entered by any court in respect thereof
may be brought in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, County of New York, and in the
courts of its own corporate domicile, in respect of actions brought against it as a defendant, and irrevocably submits to the jurisdiction of each such court for the purpose of any such suit, action,
proceeding or judgment.

	(b)
	The
Guarantor hereby irrevocably appoints CT Corporation System in New York, New York (the "Process Agent"), with
an office on the date hereof at 111 Eighth Avenue, 13th Floor, New York, NY 10011, as its agent and true and lawful attorney-in-fact in its name,
place and stead to accept on behalf of the Guarantor and its Property, service of copies of the summons and complaint and any other process which may be served in any such suit, action or proceeding
brought in the State of New York. Such appointment shall be irrevocable as long as the Loans are outstanding, except that if for any reason the Process Agent appointed hereby ceases to act as
such, the Guarantor will, by an instrument reasonably satisfactory to the Senior Lenders, appoint another Person in the Borough of Manhattan as such Process Agent subject to the approval (which
approval shall not be unreasonably withheld) of the Senior Lenders. The Guarantor hereby further irrevocably consents to the service of process in any suit, action or proceeding in said courts by the
mailing thereof by the Senior Lenders by registered or certified mail, postage prepaid, at its address set forth beneath its signature hereto. The Guarantor covenants and agrees that it shall take any
and all reasonable action, including the execution and filing of any and all documents, that may be necessary to continue the designation of a Process Agent pursuant to this Section in full force and
effect and to cause the Process Agent to act as such.

	(c)
	Nothing
herein shall in any way be deemed to limit the ability of the Senior Lenders to serve any such process or summonses in any other manner permitted by applicable law.

	(d)
	The
Guarantor hereby irrevocably waives, to the extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in the United States District Court for the Southern District of New York or any New York State Court sitting in
the Borough of Manhattan, New York and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum
and any right to which it may be entitled on account of place of residence or domicile. A final judgment (in respect of which time for all appeals has elapsed) in any such suit, action or
proceeding shall be conclusive and may be enforced in any court to the jurisdiction of which any party hereto is or may be subject, by suit upon judgment. 

4.10    Waiver of Jury Trial.    THE GUARANTOR AND EACH OF THE SENIOR LENDERS HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

4.11    Waiver of Immunity.    To the extent that the Guarantor may be or become entitled to claim for itself or its Property any
immunity on the ground of sovereignty or the like from suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment or execution of a judgment, and to the
extent that in any such jurisdiction there may be attributed such an immunity (whether or not claimed), the Guarantor hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity
with respect to its obligations under this Agreement. 

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4.12    Judgment Currency.    This is a guaranty of an international loan transaction in which the specification of Dollars and
payment in New York City is of the essence, and the obligations of the Guarantor under this Agreement to make payment in Dollars shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any other currency or in another place except to the extent that on the Business Day following receipt of any sum adjudged to be so due in the
judgment currency the recipient may in accordance with normal banking procedures purchase Dollars in the amount originally due to such recipient with the judgment currency. If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder in Dollars into another currency (in this Section 5.12 called the "judgment
currency"), the rate of exchange that shall be applied shall be that at which in accordance with normal banking procedures the Senior Lenders could purchase such Dollars at
New York, New York with the judgment currency on the Business Day next preceding the day on which such judgment is rendered. The obligation of the Guarantor in respect of any such sum
due from it to either Senior Lender hereunder (in this Section 5.12 called an "Entitled Person") shall, notwithstanding the rate of
exchange actually applied in rendering such judgment, be discharged only to the extent that on the Business Day following receipt by such Entitled Person of any sum adjudged to be due hereunder in the
judgment currency such Entitled Person may in accordance with normal banking procedures purchase and transfer Dollars to New York City with the amount of the judgment currency so adjudged to be
due; and the Guarantor hereby, as a separate obligation and notwithstanding any such judgment, agrees to indemnify such Entitled Person against, and to pay such Entitled Person on demand, in Dollars,
the amount (if any) by which the sum originally due to such Entitled Person in Dollars hereunder exceeds the amount of the Dollars so purchased
and transferred. If the amount of Dollars so purchased exceeds the sum originally due to the Entitled Person, such Entitled Person shall remit such excess to the Borrower. 

4.13    Use of English Language.    The parties acknowledge that they have required that this Agreement and all related documents be
drawn up in English. Les parties reconnaissent avoir exigé que la présente convention et tous les documents connexes soient rédigés en
anglais. All certificates, reports, notices and other documents and communications given or delivered pursuant to this Agreement (including, without limitation, any modifications or supplements
hereto) shall be in the English language, or accompanied by a certified English translation thereof. In the case of any document originally issued in a language other than English, the English
language version of any such document shall for purposes of this Agreement, and absent manifest error, control the meaning of the matters set forth therein. 

4.15    Severability.    In case any provision in this Agreement shall be held to be invalid, illegal or unenforceable, such
provision shall be severable from the rest of this Agreement, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

[Remainder of this page intentionally left blank]

8

 

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

	 	 	Guarantor
	

 	
 	

SR TELECOM INC.
	

 	
 	

By:	

/s/  PIERRE ST-ARNAUD      

	 	 	 	Name: Pierre St-Arnaud

Title: President and CEO
	

 	
 	

By:	

/s/  DAVID L. ADAMS      

	 	 	 	Name: David L. Adams

Title: Sr. VP Finance and CFO
	
 	
 	

Address for Notices:

9

 

	 	 	INTER-AMERICAN DEVELOPMENT BANK
	

 	
 	

By:	

/s/  HIROSHI TOYODA      

	 	 	 	Name: Hiroshi Toyoda

Title: Manager, PRI

10

 

	 	 	EXPORT DEVELOPMENT CANADA
	

 	
 	

By:	

/s/  SEAN MITCHELL      

	 	 	 	Name: Sean Mitchell

Title: Manager, Special Risks
	

 	
 	

By:	

/s/  ROBERT HODGES      

	 	 	 	Name: Robert Hodges

Title: Special Risks

11

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Exhibit 10.29  

SECURITY AGREEMENT

Dated
as of May 19, 2005 

Between 

SR TELECOM INC.

as
Borrower 

and

BNY TRUST COMPANY OF CANADA

as
Collateral Agent 

  

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	Page

	 SECTION 1 — DEFINED TERMS	 	1
	 	1.1	 	Terms Defined in PPSA	 	1
	 	1.2	 	Other Defined Terms	 	1
	
 SECTION 2 — SECURITY INTEREST	
 	

1
	 	2.1	 	Grant of Security Interest	 	1
	 	2.2	 	Set-Off	 	2
	 	2.3	 	Exception to Last Day and Contractual Rights	 	2
	 	2.4	 	Liability for Deficiency	 	2
	
 SECTION 3 — COLLATERAL AGENT'S RIGHTS; LIMITATIONS ON COLLATERAL AGENT'S OBLIGATIONS	
 	

3
	 	3.1	 	Continued Liability of Borrower under Licences, etc	 	3
	 	3.2	 	Notice to Account Debtors	 	3
	 	3.3	 	Verification of Accounts/Inventory	 	3
	
 SECTION 4 — REPRESENTATIONS AND WARRANTIES OF BORROWER	
 	

4
	 	4.1	 	Representations and Warranties	 	4
	
 SECTION 5 — COVENANTS OF BORROWER	
 	

5
	 	5.1	 	Covenants	 	5
	
 SECTION 6 — COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT	
 	

7
	
 SECTION 7 — REMEDIES	
 	

7
	 	7.1	 	Appointment of Receiver	 	7
	 	7.2	 	Exercise of Rights by Collateral Agent	 	8
	 	7.3	 	Taking Possession of Collateral	 	8
	 	7.4	 	Rights and Remedies under PPSA	 	8
	 	7.5	 	Cooperation of Borrower with respect to Taking Possession	 	8
	 	7.6	 	Costs	 	8
	 	7.7	 	Notice of Sale	 	9
	 	7.8	 	Intellectual Property Licence	 	9
	
 SECTION 8 — REINSTATEMENT	
 	

9
	
 SECTION 9 — MISCELLANEOUS	
 	

9
	 	9.1	 	Performance by Collateral Agent	 	9
	 	9.2	 	Extensions, etc	 	9
	 	9.3	 	No Waiver	 	9
	 	9.4	 	Waiver of Protest	 	9
	 	9.5	 	Assignment and Enurement	 	10
	 	9.6	 	Amendment	 	10
	 	9.7	 	Notices	 	10
	 	9.8	 	Remedies Cumulative	 	10
	 	9.9	 	Headings	 	10
	 	9.10	 	Number and Gender	 	10
	 	9.11	 	Severability	 	10
	 	9.12	 	Extensions	 	10
	 	9.13	 	Attachment	 	10
	 	9.14	 	Amalgamation	 	10
	 	9.15	 	Governing Law; Consent to Jurisdiction	 	11
	 	9.16	 	Judgment Currency	 	11
	 	9.17	 	Counterparts	 	12
	 	 	 	 	 

1

 

	 	9.18	 	No Strict Construction	 	12
	 	9.19	 	Advice of Counsel	 	12
	 	9.20	 	Limitation on Collateral Agent's Duty in Respect of Collateral	 	12
	 	9.21	 	Paramountcy	 	12
	 	9.22	 	Termination	 	12
	 	9.23	 	Copy	 	12

SCHEDULES  

Schedule 4.1(5) — Offices
and Locations of Collateral and Records Concerning Collateral 

Schedule 4.1(8) — Intellectual
Property 

EXHIBITS  

Exhibit A — Power
of Attorney 

2

  

 
  SECURITY AGREEMENT    
    

This
Security Agreement is dated as of May 19, 2005, between 

SR TELECOM INC., a Canadian corporation ("Borrower")

and

BNY TRUST COMPANY OF CANADA as Collateral Agent on behalf of Secured Parties 

RECITALS  

A.            Pursuant
to that certain credit agreement dated as of May 19, 2005 (as the same may be amended, restated, modified or supplemented from time to time, the
"Credit Agreement") between Borrower, BNY Trust Company of Canada as Administrative Agent and Collateral Agent, on behalf of Secured Parties, and
Lenders, Lenders have agreed to make the Loans to Borrower, subject to the terms and conditions contained therein. 

B.            As
a condition precedent to the receipt by Borrower of the Loans and other financial accommodations under the Credit Agreement and the other Loan Documents, Agents and Lenders require
that Borrower, and Borrower desires to, enter into this Agreement as security for all of its Obligations. 

NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 

SECTION 1 — DEFINED TERMS  

1.1           Terms Defined in PPSA.    The terms "Accounts",
"Goods", "Chattel Paper", "Document of Title",
"Equipment", "Instrument", "Intangible",
"Inventory", "Security", "Proceeds",
"Accession", "Money", "financing statement" and
"financing change statement" whenever used herein shall be interpreted in accordance with their respective meanings when used in the  Personal Property Security Act (Ontario), as amended from time to time, which Act, including amendments thereto and any Act substituted therefor and
amendments thereto is herein referred to as the "PPSA". The term "Goods" when used herein shall not
include "consumer goods" of Borrower as that term is defined in the PPSA. Any reference herein to
"Collateral" shall, unless the context otherwise requires, be deemed a reference to "Collateral or any part
thereof". The term "Proceeds" whenever used herein and interpreted as above shall by way of example include
trade-ins, Equipment, cash, bank accounts, notes, Chattel Paper, Goods, Contract rights, Accounts and any other personal property or obligation received when Collateral or Proceeds are
sold, exchanged, collected or otherwise disposed of. 

1.2           Other Defined Terms.    Subject to Section 1.1, all capitalized terms used but not
otherwise defined herein have the meanings given to them in the Credit Agreement or in Annex A thereto except that "Security
Agreement" means this security agreement and all schedules and exhibits attached hereto, as the same may be amended, restated, modified or supplemented from time to time;
"Secured Parties" means all Persons named as Agents and Lenders in the Credit Agreement; and "Contracts"
means all material agreements or contracts of Borrower entered into from time to time. All uses of the words "hereto", "herein", "hereof, "hereby" and "hereunder" and similar expressions refer to this
Security Agreement and not to any particular section or portion of it. All references to Persons herein shall include their respective successors and assigns. 

SECTION 2 — SECURITY INTEREST  

2.1           Grant of Security Interest.    As continuing collateral security for the due payment and performance by Borrower of
all of
the Obligations, Borrower hereby grants to Collateral Agent, on behalf of Secured Parties, a continuing security interest in, a lien upon, and a right of set-off against, and hereby
assigns, conveys, mortgages, pledges and transfers to Collateral Agent, on behalf of Secured Parties, as security (collectively, the "Security
Interest") the undertaking of Borrower and all of Borrower's present and after acquired real and personal property and assets of whatever kind and wherever situate including,
without limitation, in all Goods (including all parts, accessories, attachments, special tools, additions, substitutions, replacements for and accessions thereto), Chattel Paper, Documents of Title
(whether negotiable or not), Instruments, Intangibles, Money and Securities now owned or hereafter owned or acquired by or on behalf of Borrower (including such as may be 

1

 

returned
to or repossessed by Borrower and including under any trade names, styles or derivations thereof) and in all Proceeds and renewals thereof, accretions thereto and substitutions therefor, and
including, without limitation, all of the following now or hereafter owned or consigned by or to, or leased from or to, or otherwise acquired by or on behalf of Borrower: 

	(1)
	all
Inventory of whatever kind and wherever situate;

	(2)
	all
Equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of
whatsoever nature or kind;

	(3)
	all
Accounts, including book debts and generally all debts, dues, claims, choses in action and demands of every nature and kind howsoever arising or secured including letters of
credit and advances of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Borrower
("Debts");

	(4)
	all
deeds, documents, writings, papers, books of account and other books and records relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are
or may hereafter be secured, evidenced, acknowledged or made payable;

	(5)
	all
Money, cash or cash equivalents;

	(6)
	all
contractual rights and insurance claims and Contracts;

	(7)
	all
Borrower Accounts, and all other deposit and other bank accounts and all deposits therein;

	(8)
	all
Intellectual Property (provided that, notwithstanding any provision to the contrary herein, the grant of security hereunder on all Trademarks of Borrower shall be only the grant
of a security interest therein and shall not be an assignment, conveyance, mortgage, pledge or transfer thereof); and

	(9)
	all
Proceeds of any of the foregoing. 

The
foregoing undertaking and property, other than the property excluded under Section 2.3 are collectively referred to as the
"Collateral". 

2.2           Set-Off.    In addition, to secure the prompt and complete payment, performance and observance of the
Obligations and in order to induce Agents and Lenders as aforesaid, Borrower hereby grants to Collateral Agent, on behalf of Secured Parties, a right of set-off against the property and
assets of Borrower held by Collateral Agent, consisting of property and assets described above in Section 2.1 now or hereafter in the possession or custody of or in
transit to Collateral Agent, for any purpose, including safekeeping, collection or pledge, for the account of Borrower, or as to which Borrower may have any right or power. 

2.3           Exception to Last Day and Contractual Rights.    The Security Interest granted hereby shall not extend or apply to,
and
Collateral shall not include, the last day of the term of any lease of real property or agreement therefor but upon the enforcement of the Security Interest Borrower shall stand possessed of such last
day in trust to assign the same to any Person acquiring such term. The Security Interest granted hereby does not, and shall not extend to, and Collateral shall not include, any agreement, right,
franchise, license or permit to which Borrower is a party or of which Borrower has the benefit (the "contractual rights"), to the extent that the
creation of the Security Interest therein would constitute a breach of the terms of or permit any Person to terminate the contractual rights or otherwise would be in contravention of applicable laws
and regulations, but shall (unless and to the extent such contractual rights contain an enforceable prohibition against the creation of a security interest in Accounts or the creation of a security
interest in Accounts is otherwise prohibited by applicable law and regulations), include all Accounts arising thereunder or related thereto and shall, in any event, extend to the proceeds thereof. To
the extent that the Security Interest does not extend to any contractual rights or any Account arising thereunder or related thereto, Borrower shall hold its interest therein in trust for the benefit
of, and shall assign such contractual rights to, Collateral Agent, on behalf of Secured Parties, forthwith upon obtaining the consent (using its commercially reasonable efforts) of the other party
thereto. 

2.4           Liability for Deficiency.    If the Collateral is realized upon and the Security Interest in the Collateral is not
sufficient to satisfy all Obligations, Borrower acknowledges and agrees that, subject to the provisions of the 

2

 

PPSA,
Borrower shall continue to be liable for any Obligations remaining outstanding and Collateral Agent shall be entitled to pursue full payment thereof. 

SECTION 3 — COLLATERAL AGENT'S RIGHTS; LIMITATIONS ON COLLATERAL AGENT'S OBLIGATIONS  

3.1           Continued Liability of Borrower under Licences, etc.    It is expressly agreed by Borrower that, anything herein to
the
contrary notwithstanding, Borrower shall remain liable under each of its Contracts and each of its Licences to observe and perform all the conditions and obligations to be observed and performed by it
thereunder. Collateral Agent shall not have any obligation or liability under any Contract or Licence by reason of or arising out of this Security Agreement or the granting herein of a Security
Interest therein or the receipt by Collateral Agent of any payment relating to any Contract or Licence pursuant hereto. Collateral Agent shall not be required or obligated in any manner to perform or
fulfill any of the obligations of Borrower under or pursuant to any Contract or Licence, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by
it or the sufficiency of any performance by any party under any Contract or Licence, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any time or times. 

3.2           Notice to Account Debtors.    If a Default or an Event of Default shall have occurred and be continuing, Collateral
Agent
may (upon the instructions of Requisite Lenders) at any time without prior notice to Borrower, notify any Account Debtors (including, without limitation, Borrower's Subsidiaries) obligated under any
Account of Borrower, parties to any Contracts of Borrower and obligors in respect of Instruments and Chattel Paper, that such Accounts and the right, title and interest of Borrower in and under such
Contracts, Instruments and Chattel Paper have been assigned to Collateral Agent, on behalf of Secured Parties, and may notify any such Account Debtors, such parties to any Contracts of Borrower and
such obligors that payments shall be made directly to Collateral Agent. Upon such notification, Borrower shall cause each such Person notified to agree that it shall, immediately make all payments
with respect to such Accounts or obligations directly to Collateral Agent. If a Default or an Event of Default shall have occurred and be continuing, upon the request of Collateral Agent (acting on
the instructions of Requisite Lenders), Borrower shall so notify such Account Debtors, parties to Contracts and obligors in respect of Instruments and Chattel Paper. Borrower acknowledges that any
payments on or other proceeds of Collateral received by Borrower from such Account Debtors, parties to Contracts or obligors, whether before or after notification of the Security Interest to such
Account Debtors, parties to Contracts or obligors and whether before or after a Default or an Event of Default, shall be received and held by Borrower in trust for Collateral Agent, on behalf of
Secured Parties, and shall be deposited into a Borrower Account pursuant to the terms of Annex B to the Credit Agreement. 

3.3           Verification of Accounts/Inventory.    After the occurrence of an Event of Default and at any time while it is
continuing,
Collateral Agent may in Collateral Agent's own name or in the name of Borrower communicate with Account Debtors, parties to Contracts, obligors in respect of Instruments and obligors in respect of
Chattel Paper to verify with such Persons, to Collateral Agent's satisfaction, the existence, amount and terms of any such Accounts, Contracts, Instruments or Chattel Paper. If an Event of Default
shall have occurred and be continuing, Borrower, at its own expense, shall cause the independent chartered accountants then engaged by Borrower to prepare and deliver to Collateral Agent at any time
and from time to time promptly upon Collateral Agent's request (acting on the instructions of Requisite Lenders) the following reports with respect to Borrower: (1) a reconciliation of all
Accounts; (2) an aging of all Accounts; (3) trial balances; and (4) a test verification of such Accounts as Collateral Agent may request (acting on the instructions of Requisite
Lenders). Borrower, at its own expense, shall deliver to Collateral Agent the results of each physical verification, if any, which Borrower may in its discretion have made, or caused any other Person
to have made on its behalf, of all or any portion of its Inventory. 

3

 

SECTION 4 — REPRESENTATIONS AND WARRANTIES OF BORROWER  

4.1           Representations and Warranties.    Borrower represents and warrants to Collateral Agent that: 

	(1)
	Borrower
is the sole beneficial or leasehold owner of each item of Collateral owned or leased by it in which it purports to grant the Security Interest hereunder, and has good and
marketable title thereto free and clear of any and all Liens other than Permitted Encumbrances;

	(2)
	no
effective security agreement, financing statement, financing change statement, equivalent security or Lien instrument covering all or any part of the Collateral is on file or of
record in any public office, except such as may have been filed (a) in favour of Collateral Agent pursuant to this Security Agreement or the other Loan Documents, and (b) in connection
with any other Permitted Encumbrances;

	(3)
	this
Security Agreement is effective to create a valid and continuing Security Interest in, and upon the filing of the appropriate financing statements, a perfected Security Interest
in favour of Collateral Agent, on behalf of Secured Parties in, the Collateral. Such Security Interest is prior to all other Liens except Permitted Encumbrances, and is enforceable as such as against
any and all creditors of and purchasers from Borrower (other than purchasers of Goods in the ordinary course of business). All action by Borrower necessary or desirable to protect and perfect the
Security Interest on each item of the Collateral has been duly taken;

	(4)
	all
Collateral consisting of Intellectual Property applications and registrations is valid and in good standing and Borrower is the owner or the authorized licencee, as the case may
be, of the applications and registrations;

	(5)
	Schedule 4.1(5) hereto sets
out Borrower's chief executive office, principal place of business, domicile (for purposes of the
Quebec Civil Code), corporate offices, all warehouses and premises where Collateral is stored or located (excluding Collateral in transit, with repairers or with customers), and the locations of all
of its books and records concerning the Collateral;

	(6)
	with
respect to the Accounts, except as specifically disclosed on the most recent reports delivered to Agents pursuant to the terms of the Credit Agreement (a) they represent  bona fide sales of Goods or
rendering of services to Account Debtors in the ordinary course of Borrower's business and are not evidenced by a judgment,
Instrument or Chattel Paper; (b) there are no set-offs, claims or disputes existing or asserted with respect thereto, other than those which have been provided for in Borrower's
reports delivered to Agents pursuant to the terms of the Credit Agreement or which arise in the ordinary course of its business, and Borrower has not made any agreement with any Account Debtor for any
extension of time for the payment thereof, any compromise or settlement for less than the full amount thereof, any release of any Account Debtor from liability therefor, or any deduction therefrom
except a discount or allowance allowed by Borrower in the ordinary course of its business for prompt payment and disclosed to Agents; (c) to Borrower's knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforceability thereof or could reasonably be expected to reduce the amount payable thereunder as shown on Borrower's books and records and any
invoices, statements and reports delivered to Agents with respect thereto, other than matters disclosed to Agents which are customary allowances for doubtful accounts; (d) Borrower has not
received any notice of proceedings or actions which are threatened or pending against any Account Debtor which might result in any adverse change in such Account Debtor's financial condition;
(e) Borrower does not have Accounts or other amounts owing to it exceeding $100,000 in aggregate from Account Debtors located in any jurisdiction other than Quebec, except as may be disclosed
in writing by Borrower to Agents after the date of this Agreement (and Borrower shall promptly provide such written disclosure to Agents); and (f) Borrower has no knowledge that any
Account Debtor owing more than $100,000 in the aggregate to Borrower is unable generally to pay its debts as they become due, except as disclosed to Agents. Further, with respect to the Accounts
(i) the amounts shown on such records and all invoices, statements and reports which may be delivered to Agents with respect thereto are actually and absolutely owing to Borrower as indicated
thereon and are not in any way contingent; (ii) no payments have been or shall be made thereon except payments immediately delivered to the Borrower 

4

 

Accounts
as required pursuant to the terms of Annex B to the Credit Agreement; and (iii) to Borrower's knowledge, all Account Debtors have the capacity to contract; 

	(7)
	with
respect to any Inventory scheduled or listed on the most recent reports delivered to Agents pursuant to the terms of this Security Agreement or the Credit Agreement or any other
Loan Document, (a) such Inventory (excluding Inventory in transit, with repairers or with customers) is located at one of Borrower's locations set forth on
Schedule 4.1(5) hereto, (b) no Inventory having a value in excess of $100,000 in the
aggregate is now, or shall at any time or times hereafter be stored at any other location without Collateral Agent's prior consent, and if Collateral Agent gives such consent (acting on the
instructions of Requisite Lenders), Borrower will concurrently therewith obtain, to the extent required by the Credit Agreement, bailee, landlord and mortgagee agreements, (c) Borrower has
good, indefeasible and marketable title to such Inventory and such Inventory is not subject to any security interest or other Lien whatsoever except for the Security Interest granted to Collateral
Agent, on behalf of Secured Parties, and except for Permitted Encumbrances, (d) except as specifically disclosed in the most recent reports delivered to Agents pursuant to the terms of the
Credit Agreement, such Inventory is Eligible Inventory of good and merchantable quality, free from all defects and is not excess, obsolete, unsaleable, shopworn, seconds, damaged or unfit for sale;
(e) such property and all other Collateral are not subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties which would require any
consent of any third party upon sale or disposition of that Collateral, except as disclosed to Agents and, then, in respect of which Borrower has delivered to Collateral Agent consents in form and
substance satisfactory to Requisite Lenders duly executed by such third parties, or the payment of any monies to any third party as a precondition of such sale or other disposition, except as
disclosed to Agents in writing and, then, in respect of which Borrower has delivered to Collateral Agent waivers in form and substance satisfactory to Requisite Lenders duly executed by such third
parties, and (f) the completion of manufacture, sale or other disposition of such property by Collateral Agent following an Event of Default shall not require the consent of any Person and
shall not constitute a breach or default under any Contract or to which such property is subject; and

	(8)
	Borrower
does not have any interest in, or title to, any Patent, Trademark, Copyright or License except as set forth in
Schedule 4.1(8) hereto. To the extent permitted by applicable law, this Security Agreement is effective to create a valid and continuing security interest in
and, upon filing of this Security Agreement with the appropriate governmental offices, perfected security interests in favour of Collateral Agent, on behalf of Secured Parties, in Borrower's Patents,
Trademarks, Copyrights and Licenses and such perfected security interests are enforceable as such as against any and all creditors of and purchasers from Borrower. Upon filing of the Security
Agreement with the appropriate governmental offices and the filing of appropriate financing statements, all action necessary or desirable to protect and perfect Collateral Agent's security interest in
Borrower's Patents, Trademarks, Copyrights and Licenses shall have been duly taken. 

SECTION 5 — COVENANTS OF BORROWER  

5.1           Covenants.    Borrower covenants and agrees with Collateral Agent that from and after the date of this Security
Agreement
and until the Termination Date: 

	(1)
	Further Assurances; Pledge of Instruments.    At any time and from time to time, upon the written request of Collateral
Agent (acting on the instructions of Requisite Lenders) and at the sole expense of Borrower, Borrower shall promptly and duly execute and deliver any and all such further instruments and documents and
take such further actions as Collateral Agent may deem desirable to obtain the full benefits of this Security Agreement and of the rights and powers herein granted, including: (a) delivering
copies of all statements of accounts, bills, invoices and books of account relating to Accounts and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other
writings relating to the Collateral for the purpose of inspecting, auditing or copying the same; (b) using commercially reasonable efforts to secure all consents and approvals necessary or
appropriate for the assignment to or for the benefit of Collateral Agent, on behalf of Secured Parties, of any Licence or Contract held by Borrower or in which Borrower has any rights not heretofore
assigned; 

5

 

(c) filing
any financing statements and financing change statements under the PPSA (or other applicable personal property security laws) with respect to the Security Interest granted
hereunder or under any other Loan Document; (d) transferring Collateral to Collateral Agent's possession if such Collateral consists of Chattel Paper, Instruments or Securities in any case
having a value in excess of $50,000 or if a Security Interest in such Collateral can be perfected only by possession, or if requested by Collateral Agent (acting on the instructions of Requisite
Lenders); and (e) obtaining, or using commercially reasonable efforts to obtain, waivers of Liens, if any exist, from landlords, warehousemen and mortgagees in accordance with the Credit
Agreement. Borrower also hereby authorizes Collateral Agent to file any such financing or financing change statements without the signature of Borrower to the extent permitted by applicable law. If
any amount payable under or in connection with any of the Collateral is or shall become evidenced by any Instrument, at the request of Requisite Lenders, such Instrument, other than cheques and notes
received in the ordinary course of business, shall be duly endorsed in a manner satisfactory to Collateral Agent immediately upon Borrower's receipt thereof. 

	(2)
	Maintenance of Records.    Borrower shall keep and maintain, at its own cost and expense, satisfactory and complete records
of the Collateral, including a record of any and all payments received and any and all credits granted with respect to the Collateral and all other dealings with the Collateral. All Chattel Paper
shall be marked with the following legend: "This writing and the obligations evidenced or secured hereby are subject to the security interest of BNY Trust Company of Canada, as agent."

	(3)
	Covenants Regarding Patent, Trademark and Copyright Collateral.

	(a)
	Borrower
shall notify Collateral Agent immediately if it knows or has reason to know that any application or registration relating to any Patent, Trademark or Copyright
(now or hereafter existing) material to the operation of its business or to Collateral Agent exercising any of its rights and remedies in respect of the Collateral may become abandoned, or of
any adverse determination or development regarding Borrower's ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same to the extent same is
material to Borrower's business or to Collateral Agent exercising any of its rights and remedies in respect of the Collateral.

	(b)
	In
no event shall Borrower, either directly or through any agent, employee, licencee or designee, file an application for the registration of any Patent, Trademark or Copyright in
respect of the operation of its business with any office or agency without giving Collateral Agent prior written notice thereof, and, upon request of Collateral Agent, Borrower shall execute and
deliver any and all security agreements, as Collateral Agent may request (acting on the instructions of Requisite Lenders) to evidence Collateral Agent's security interest, on behalf of Secured
Parties, in such Patent, Trademark or Copyright, and the Intangibles of Borrower relating thereto or represented thereby.

	(c)
	Borrower
shall take all actions necessary or requested by Collateral Agent (acting on the instructions of Requisite Lenders) to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the Patents, Trademarks and Copyrights (now or hereafter existing) which are material to the operation of its business or to
Collateral Agent exercising any of its rights and remedies in respect of the Collateral, including all filings.

	(d)
	In
the event that any of the Patent, Trademark or Copyright Collateral, which is material to the operation of Borrower's business or to Collateral Agent exercising any of its rights
and remedies in respect of the Collateral is infringed upon, or misappropriated or diluted by a third party, Borrower shall notify Collateral Agent promptly after Borrower learns thereof. Borrower
shall, unless it shall reasonably determine that such Patent, Trademark or Copyright Collateral is in no way material to the conduct of its business or operations, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as Collateral Agent (acting on the instructions
of Requisite Lenders) shall deem appropriate under the circumstances to protect such Patent, Trademark or Copyright Collateral. 

6

 

	(4)
	Indemnification.    In any suit, proceeding or action brought by Collateral Agent (acting on the instructions of Requisite
Lenders) relating to any Account, Chattel Paper, Contract, Document of Title, Intangible or Instrument for any sum owing thereunder or to enforce any provision of any Account, Chattel Paper, Contract,
Document of Title, Intangible or Instrument, Borrower will save, indemnify and keep Collateral Agent harmless from and against all expense (including reasonable legal fees and other legal expenses),
loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever of the obligor thereunder, arising out of a breach by Borrower of
any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favour of, such obligor or its successors from Borrower, except in the case of
Collateral Agent, to the extent such expense, loss, or damage is attributable solely to the gross negligence or willful misconduct of Collateral Agent as finally determined by a court of competent
jurisdiction. All such obligations of Borrower shall be and remain enforceable against and only against Borrower and shall not be enforceable against Collateral Agent.

	(5)
	Compliance with Terms of Accounts, etc.    In all material respects, Borrower will perform and comply with all obligations
in respect of its Accounts, Chattel Paper, Contracts and Licences and all other agreements to which it is a party or by which it is bound relating to the Collateral.

	(6)
	Limitation on Liens on Collateral.    Borrower will not create, permit or suffer to exist, and Borrower will defend the
Collateral against, and take such other action as is necessary to remove, any Lien on the Collateral except Permitted Encumbrances, and will defend the right, title and interest of Collateral Agent,
on behalf of Secured Parties, in and to any of Borrower's rights under the Collateral against the claims and demands of all Persons whomsoever.

	(7)
	Limitations on Disposition.    Borrower will not sell, lease, transfer or otherwise dispose of any of the Collateral, or
attempt to contract to do so except as permitted by the Credit Agreement.

	(8)
	Further Identification of Collateral.    Borrower will, if so requested by Collateral Agent (acting on the instructions of
Requisite Lenders), furnish to Collateral Agent, as often as Collateral Agent requests statements and schedules further identifying and describing the Collateral and such other reports in connection
with the Collateral as Collateral Agent may reasonably request (acting on the instructions of Requisite Lenders), all in such detail as Collateral Agent may specify. 

SECTION 6 — COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT  

                On the Closing Date, Borrower shall execute and deliver to Collateral Agent a power of attorney (the "Power of
Attorney") substantially in the form attached hereto as Exhibit A. The power of attorney granted pursuant to the Power of Attorney is a power coupled with an interest
and shall be irrevocable until the Termination Date. The powers conferred on Collateral Agent under the Power of Attorney are solely to protect Collateral Agent's interests, on behalf of Secured
Parties, in the Collateral and shall not impose any duty upon Collateral Agent to exercise any such powers. Collateral Agent agrees that (a) it shall not exercise, any power or authority
granted under the Power of Attorney unless an Event of Default has occurred and is continuing, and (b) Collateral Agent shall account for any money received by Collateral Agent in respect of
any foreclosure on or disposition of Collateral pursuant to the Power of Attorney provided that Collateral Agent shall not have any duty as to any Collateral, and Collateral Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such powers. NEITHER COLLATERAL AGENT NOR ANY OF ITS RELATED PARTIES SHALL BE RESPONSIBLE TO BORROWER FOR ANY ACT OR FAILURE
TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES. 

SECTION 7 — REMEDIES  

7.1           Appointment of Receiver.    In addition to all other rights and remedies granted to it under this Security Agreement,
the
Credit Agreement, the other Loan Documents and under any other instrument or agreement securing, evidencing or relating to any of the Obligations, if any Event of Default shall have occurred and be 

7

 

continuing,
Collateral Agent may appoint or reappoint by instrument in writing, any Person or Persons, whether an officer or officers or an employee or employees of Collateral Agent or not, to be a
receiver or receivers (hereinafter called a "Receiver", which term when used herein shall include a receiver and manager) of Collateral (including any
interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in its stead. Any such Receiver shall, so far as concerns responsibility for its acts, be deemed the
agent of Borrower and not of Collateral Agent, and Collateral Agent shall not be in any way responsible for any misconduct, negligence or non-feasance on the part of any such Receiver, its
servants, agents or employees. Subject to the provisions of the instrument appointing it, any such Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to
carry on or concur in carrying on all or any part of the business of Borrower and to sell, lease, license or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of
Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including Borrower, enter upon, use and occupy all premises owned or occupied by Borrower wherein
Collateral may be situated, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral directly in carrying on Borrower's business or as security for loans
or advances to enable the Receiver to carry on Borrower's business or otherwise, as such Receiver shall, in its discretion, determine. Except as may be otherwise directed by Collateral Agent (acting
on the instructions of Requisite Lenders), all Money received from time to time by such Receiver in carrying out its appointment shall be received in trust for and paid over to Collateral Agent for
application in accordance with the Credit Agreement. Every such Receiver may, in the discretion of Collateral Agent, be vested with all or any of the rights and powers of Collateral Agent. 

7.2           Exercise of Rights by Collateral Agent.    Upon and during the continuance of an Event of Default, Collateral Agent
may,
either directly or through its agents or nominees, exercise any or all of the powers and rights given to a Receiver by virtue of Section 7.1. 

7.3           Taking Possession of Collateral.    Upon and during the continuance of an Event of Default, Collateral Agent may take
possession of, collect, demand, sue on, enforce, recover and receive Collateral and give valid and binding receipts and discharges therefor and in respect thereof and Collateral Agent may sell,
licence, lease or otherwise dispose of Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to Collateral Agent may seem
reasonable (acting on the instructions of Requisite Lenders). Collateral Agent shall use reasonable care with respect to the Collateral in its possession or under its control. Collateral Agent shall
not have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of Collateral Agent, or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto except solely to the extent Collateral Agent has thereto agreed under Section 9.20. 

7.4           Rights and Remedies under PPSA.    In addition to those rights granted herein and in any other agreement now or
hereafter in
effect between Borrower and Agents and Lenders and in addition to any other rights Collateral Agent may have at law or in equity, Collateral Agent shall have, both before and after an Event of
Default, all rights and remedies of a secured party under the PPSA. However, Collateral Agent shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect,
enforce, realize, sell, lease, licence or otherwise dispose of Collateral or to institute any proceedings for such purposes. Furthermore, Collateral Agent shall have no obligation to take any steps to
preserve rights against prior parties to any Instrument or Chattel Paper whether Collateral or Proceeds and whether or not in Collateral Agent's possession and shall not be liable or accountable for
failure to do so. 

7.5           Cooperation of Borrower with respect to Taking Possession.    After and during continuance of an Event of Default,
Borrower
acknowledges that Collateral Agent or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and Borrower agrees upon request from
Collateral Agent or any such Receiver (each acting on the instructions of Requisite Lenders) to assemble and deliver possession of Collateral at such place or places as directed. 

7.6           Costs.    Borrower agrees to be liable for and to pay all costs, charges and expenses incurred by Collateral Agent or
any
Receiver appointed by it, whether directly or for services rendered (including reasonable legal and auditors' costs and other legal expenses and Receiver remuneration), in operating Borrower's
accounts, in preparing or enforcing this Security Agreement, taking and maintaining custody of, preserving, repairing, processing, preparing for disposition and disposing of Collateral and in
enforcing or collecting 

8

 

indebtedness
and all such costs, charges and expenses, together with any amounts owing as a result of any borrowing by Collateral Agent or any Receiver appointed by it, as permitted hereby, shall be a
first priority security interest on the proceeds of realization, collection or disposition of Collateral and shall be secured hereby. 

7.7           Notice of Sale.    Collateral Agent will give Borrower such notice, if any, of the date, time and place of any public
sale
or of the date after which any private disposition of Collateral is to be made as may be required by the PPSA. 

7.8           Intellectual Property Licence.    For the purpose of enabling Collateral Agent to exercise rights and remedies under
Section 7 hereof, Borrower hereby grants to Collateral Agent an irrevocable, non-exclusive licence (exercisable without payment of royalty or other
compensation to Borrower) to use, license or sublicense any Intellectual Property now owned or hereafter acquired by Borrower, and wherever the same may be located, and including in such licence
access to all media in which any of the licenced items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. 

SECTION 8 — REINSTATEMENT  

                This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any
Borrower
for liquidation or reorganization, should Borrower become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any
significant part of any Borrower's property or assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a "voidable preference", "fraudulent
conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 

SECTION 9 — MISCELLANEOUS  

9.1           Performance by Collateral Agent.    Upon Borrower's failure to perform any of its duties hereunder, Collateral Agent
may,
but shall not be obligated to, perform any or all of such duties. 

9.2           Extensions, etc.    Collateral Agent may (acting on the instructions of Requisite Lenders) grant extensions of time
and
other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges and otherwise deal with Borrower, debtors of Borrower (subject to
Sections 3.2 and 3.3) and with Collateral and other security as Collateral Agent may see fit without prejudice to the liability
of Borrower or Collateral Agent's right to hold and realize the Security Interest. Furthermore, Collateral Agent may (acting on the instructions of Requisite Lenders), upon the occurrence of an Event
of Default and for so long as it is continuing, demand, collect and sue on Collateral in Borrower's name and may endorse Borrower's name on any and all cheques, commercial paper, and any other
Instruments and any Securities pertaining to or constituting Collateral. 

9.3           No Waiver.    No delay or omission by Collateral Agent in exercising any right or remedy hereunder or with respect to
any of
the Obligations shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any
other right or remedy. Furthermore, Collateral Agent may (acting on the instructions of Requisite Lenders) remedy any default by Borrower hereunder or with respect to any Obligations in any manner
without waiving the default remedied and without waiving any other prior or subsequent default by Borrower. All rights and remedies of Collateral Agent granted or recognized herein are cumulative and
may be exercised at any time and from time to time independently or in combination. 

9.4           Waiver of Protest.    Borrower waives protest of any Instrument constituting Collateral at any time held by Collateral
Agent
on which Borrower is in any way liable and, subject to Section 7.7 hereof, notice of any other action taken by Collateral Agent. 

9

 

9.5           Assignment and Enurement.    To the extent permitted by the Credit Agreement, this Security Agreement shall enure to
the
benefit of and be binding upon the parties hereto and their respective successors and assigns. In any action brought by an assignee of this Security Agreement and the Security Interest or any part
thereof to enforce any rights hereunder, Borrower shall not assert against the assignee any claim or defence which Borrower now has or hereafter may have against Collateral Agent. No sales of
participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or any portion thereof or interest therein shall in any
manner affect the Security Interest granted to Collateral Agent, on behalf of Secured Parties, hereunder. Borrower may not assign, sell, hypothecate or otherwise transfer any interest in or obligation
under this Security Agreement. 

9.6           Amendment.    No modification, variation or amendment of any provision of this Security Agreement shall be made except
by a
written agreement, executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing. 

9.7           Notices.    Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request,
consent,
approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give and serve upon any other
party any communication with respect to this Security Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be given in the
manner, and deemed received, as provided for in the Credit Agreement. 

9.8           Remedies Cumulative.    This Security Agreement and the security afforded hereby is in addition to and not in
substitution
for any other security now or hereafter held by Collateral Agent and is intended to be a continuing security agreement and shall remain in full force and effect until all Obligations and any
extensions or renewals thereof together with interest accruing thereon shall be paid in full. No single or partial exercise by Collateral Agent of any right or remedy precludes or otherwise affects
the exercise of any other right or remedy to which it may be entitled. 

9.9           Headings.    The headings used in this Security Agreement are for convenience only and are not to be considered a part
of
this Security Agreement and do not in any way limit or amplify the terms and provisions of this Security Agreement. 

9.10         Number and Gender.    When the context so requires, the singular number shall be read as if the plural were expressed and
the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation. 

9.11         Severability.    Wherever possible, each provision of this Security Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Security Agreement. This Security Agreement is to be read, construed and applied
together with the Credit Agreement and the other Loan Documents which, taken together, set forth the complete understanding and agreement of Collateral Agent and Borrower with respect to the matters
referred to herein and therein. 

9.12         Extensions.    Nothing herein contained shall in any way obligate Collateral Agent to grant, continue, renew, extend time
for payment of or accept anything which constitutes or would constitute Obligations. 

9.13         Attachment.    The Security Interest created hereby is intended to attach when this Security Agreement is signed by Borrower
and delivered to Collateral Agent. 

9.14         Amalgamation.    Borrower acknowledges and agrees that in the event it amalgamates with any other corporation or
corporations it is the intention of the parties hereto that the term "Borrower" when used herein shall apply to the amalgamated corporation, such that the Security Interest granted hereby: 

	(1)
	shall
extend to "Collateral" (as that term is herein defined) owned by each of the amalgamating corporations and the amalgamated corporation at the time of amalgamation and to
any "Collateral" thereafter owned or acquired by the amalgamated corporation, and 

10

 
	(2)
	shall
secure the Obligations of each of the amalgamating corporations and the amalgamated corporation to Agents and Lenders at the time of amalgamation and all Obligations of the
amalgamated corporation to Agents and Lenders thereafter arising. The Security Interest shall attach to "Collateral" owned by each corporation amalgamating with Borrower, and by the amalgamated
corporation, at the time of the amalgamation, and shall attach to any "Collateral" thereafter owned or acquired by the amalgamated corporation when such becomes owned or is acquired. 

9.15         Governing Law; Consent to Jurisdiction.    EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE PROVINCE OF ONTARIO APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT PROVINCE AND ANY LAWS APPLICABLE
THEREIN. BORROWER HEREBY CONSENTS AND AGREES THAT THE COURTS OF THE PROVINCE OF ONTARIO SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER,
ANY AGENT OR LENDER PERTAINING TO THIS SECURITY AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT. NOTHING IN THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE ANY AGENT OR LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT ITS ADDRESS SET FORTH IN ANNEX H OF THE CREDIT AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT WITH CANADA POST, PROPER POSTAGE PREPAID. 

9.16         Judgment Currency.

	(1)
	If,
for the purpose of obtaining or enforcing judgment against Borrower in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency
being hereinafter in this Section 9.16 referred to as the "Judgment Currency") an amount due in Canadian Dollars,
the conversion shall be made at the rate of exchange specified by Collateral Agent as being the rate available to Collateral Agent in Toronto, Ontario on the Business Day immediately preceding
(a) the date of actual payment of the amount due, in the case of any proceeding in the courts of 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 (b) 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 pursuant to this Section 9.16(1) being hereinafter in this Section 9.16 referred to as the
"Judgment Conversion Date").

	(2)
	If,
in the case of any proceeding in the court of any jurisdiction referred to in Section 9.16(1), there is a change in the rate of
exchange available to Collateral Agent between the Judgment Conversion Date and the date of actual receipt for value of the amount due, Borrower 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 for value in the Judgment Currency, when converted at the rate of exchange specified by Collateral Agent
as being the rate available to Collateral Agent on the date of payment, will produce the amount of Canadian Dollars which could have been purchased with the amount of the Judgment 

11

 

Currency
stipulated in the judgment or judicial order at the rate of exchange on the Judgment Conversion Date. 

9.17         Counterparts.    This Security Agreement may be executed in any number of separate original or facsimile counterparts each
of which shall collectively and separately constitute one and the same agreement. 

9.18         No Strict Construction.    The parties hereto have participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or interpretation arises, this Security Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden
of proof shall arise favouring or disfavouring any party by virtue of the authorship of any provisions of this Security Agreement. 

9.19         Advice of Counsel.    Each of the parties represents to each other party hereto that it has discussed this Security
Agreement and, specifically, the provisions of Section 9.15, with its counsel. 

9.20         Limitation on Collateral Agent's Duty in Respect of Collateral.    Collateral Agent shall use reasonable care with respect
to the Collateral in its possession or under its control. Collateral Agent shall not have any other duty as to any Collateral in its possession or control or in the possession or control of any agent
or nominee of Collateral Agent, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. 

9.21         Paramountcy.    In the event that any provisions of this Security Agreement contradict or are otherwise incapable of being
construed in conjunction with the provisions of the Credit Agreement, the following will apply: 

	(a)
	the
provisions of the Credit Agreement shall take precedence over those contained in this Security Agreement; and

	(b)
	if
any act of Borrower is expressly permitted under the Credit Agreement but is prohibited under this Security Agreement, any such act shall be permitted under the Credit Agreement
and shall be deemed to be permitted hereunder; 

the
whole unless as a result thereof, the security created hereby or any of the remedies of Collateral Agent and/or Secured Parties under the Security Interests created hereby would be in any way
diminished or invalidated, in which case the provisions of this Security Agreement will govern. 

9.22         Termination.    This Security Agreement shall terminate on the Termination Date. 

9.23         Copy.    Borrower hereby acknowledges receipt of a copy of this Security Agreement. 

12

 

The
parties have duly executed this Security Agreement as of the date first written above. 

	 	 	SR TELECOM INC.
	

 	
 	

By:	

/s/  Pierre St-Arnaud      

	 	 	Name:	Pierre St-Arnaud
	 	 	Title:	President and CEO
	

 	
 	

By:	

/s/  David L. Adams      

	 	 	Name:	David L. Adams
	 	 	Title:	Sr. VP, Finance and CFO
	

 	
 	
BNY TRUST COMPANY OF CANADA
	

 	
 	

By:	

/s/  Henry Hamilton      

	 	 	Name:	Henry Hamilton
	 	 	Title:	Authorized Officer
	

 	
 	

By:	

	 	 	Name:	 
	 	 	Title:	 

13

 
 

Schedule 4.1(5) — Offices and Locations of Collateral
  and Records Concerning Collateral    
    

	1.	 	Chief Executive Office:

8150 Trans Canada Highway

Montreal, Quebec

H4S 1M5 Canada
	
 2.	
 	

Locations of Collateral:

8150 Trans Canada Highway

Montreal, Quebec

H4S 1M5 Canada
	
 	
 	

6900 Trans Canada Highway

Pointe-Claire, Quebec

H9R 5C7 Canada

 
 

Schedule 4.1(8) — Intellectual Property    
    

	(A)	 	PATENTS
	
 	
 	

See Attached.

	
(B)	
 	

TRADEMARKS
	
 	
 	

See Attached.

	
(C)	
 	

COPYRIGHTS
	
 	
 	

Nil

(D)  LICENSES

The
following lists the agreements in which Licenses were assigned to or obtained by the Borrower or its Material Subsidiaries, which, if Borrower or its Material Subsidiaries were not the owners
thereof or had no rights to use same, could reasonably be expected to have a Material Adverse Effect: 

Product Line — swing  

	•
	Asset
Purchase Agreement between Lucent Technologies France S.A. and SR Telecom S.A.S. dated September 21, 2001

	•
	Intellectual
Property Agreement between Lucent Technologies France S.A. and Lucent technologies GRL Corporation and SR Telecom S.A.S. dated
September 21, 2001 

Product Line — stride2400  

	•
	Intellectual
Property Assignment Agreement between Nera Wireless Broadband Access A.S. and SR Telecom Inc. dated March 27, 2002

	•
	Contribution
Agreement between Nera Telecom and SRT Acquisition dated March 22, 2002 

Product Lines — airstar and angel  

	•
	Intellectual
Property Agreement between SR Telecom USA, Inc. and SR Telecom Inc. dated as of November 30, 2003

	•
	Agreement
and Plan of Merger between Netro Corporation, SR Telecom Inc. and Norway Acquisition Corporation dated as of March 27, 2003

	•
	Intellectual
Property Agreement between AT&T Wireless Services, Inc. ("AWS") and Netro Corporation dated
February 12, 2002

	•
	Software
Licence Agreement between Aztek Engineering, Inc. and AWS dated July 30, 2001

	•
	Products
Licence Agreement, as amended by Amendment One dated May 11, 2001, Between Rational Software Corporation and AWS

	•
	Chronology
End-User License Agreement (Rev. September 1998)

	•
	Product
Software Source/Object Code Licence Agreement between HotHaus Technologies, Inc. n/k/a Broadcom Corporation and AWS dated July 31, 1998, as amended by
the Amendment to Services Agreement dated July 1, 1999

	•
	Services
Agreement between HotHaus Technologies, Inc. n/k/a Broadcom Corporation and AWS dated July 31, 1998, as amended by the Amendment to Services Agreement
dated June 1, 1999, and as last amended by a letter agreement dated June 6, 2001, and accepted and agreed to June 19, 2001, extending the termination date thereof

	•
	Software
Licence Agreement No. 7224-1 between Integrated Systems, Inc. n/k/a WindRiver Systems, Inc. and AWS dated as of
November 29, 1995

	•
	Software
Licence Agreement No. 7224-2 between Integrated Systems, Inc. n/k/a WindRiver Systems, Inc. and AWS dated as of
November 29, 1995, as last amended by Amendement No.2 thereto dated November 29, 1999 

  

 
 

EXHIBIT A
  
    POWER OF ATTORNEY    
    

        This Power of Attorney is executed and delivered by SR Telecom Inc., a Canadian corporation ("Borrower"),
to BNY Trust Company of Canada (hereinafter referred to as "Attorney") as Collateral Agent for Agents and Lenders under a Credit Agreement and a
Security Agreement, both dated as of May     •    , 2005, and other related documents (as the same may be further amended, restated, modified or
supplemented from time to time, collectively the "Loan Documents"). No person to whom this Power of Attorney is presented, as authority for Attorney to
take any action or actions contemplated hereby, shall be required to inquire into or seek confirmation from Borrower as to the authority of Attorney to take any action described below, or as to the
existence of or fulfilment of any condition to this Power of Attorney, which is intended to grant to Attorney unconditionally the authority to take and perform the actions contemplated herein, and
Borrower irrevocably waives any right to commence any suit or action, in law or equity, against any person or entity which acts in reliance upon or acknowledges the authority granted under this Power
of Attorney. The power of attorney granted hereby is coupled with an interest, and may not be revoked or cancelled by Borrower without Attorney's written consent. 

        Borrower
hereby irrevocably constitutes and appoints Attorney (and all officers, employees or agents designated by Attorney), with full power of substitution, as Borrower's true
and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Borrower and in the name of Borrower or in its own name, from time to time in
Attorney's discretion, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of the
Loan Documents and, without limiting the generality of the foregoing, Borrower hereby grants to Attorney the power and right, on behalf of Borrower, without notice to or assent by Borrower, and at any
time, to do the following: (a) change the mailing address of Borrower, open a post office box on behalf of Borrower, open mail for Borrower, and ask, demand, collect, give acquittances and
receipts for, take possession of, endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, and notices in
connection with any property of Borrower; (b) effect any repairs to any asset of Borrower, or continue or obtain any insurance and pay all or any part of the premiums therefrom and costs
thereof, and make, settle and adjust all claims under such policies of insurance, and make all determinations and decisions with respect to such policies; (c) pay or discharge any taxes, liens,
security interests, or other encumbrances levied or placed on or threatened against Borrower or its property; (d) defend any suit, action or proceeding brought against Borrower if Borrower does
not defend such suit, action or proceeding or if Attorney believes that Borrower is not pursuing such defense in a manner that will maximize the recovery to Attorney, and settle, compromise or adjust
any suit, action, or proceeding described above and, in connection therewith, give such discharges or releases as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any arbitrator, or take any other action otherwise deemed appropriate by Attorney for the purpose of collecting any and all such
money
due to Borrower wherever payable and to enforce any other right in respect of Borrower's property; (f) cause the chartered public accountants then engaged by Borrower to prepare and deliver to
Attorney at any time and from time to time, promptly upon Attorney's request, the following reports: (1) a reconciliation of all accounts, (2) an aging of all accounts, (3) trial
balances, (4) test verifications of such accounts as Attorney may request, and (5) the results of each physical verification of inventory; (g) communicate in its own name with any
party to any Contract or Account with regard to the assignment of the right, title and interest of such Borrower in and under the Contract or Account and other matters relating thereto; and
(h) execute, in connection with any sale provided for in any Loan Document, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral and to
otherwise direct such sale or resale, all as though Attorney were the absolute owner of the property of Borrower for all purposes, and to do, at Attorney's option and Borrower's expense, at any time
or from time to time, all acts and other things that Attorney reasonably deems necessary to perfect, preserve, or realize upon Borrower's property or assets and Attorney's Liens thereon, all as fully
and effectively as Borrower might do. Borrower hereby ratifies, to the extent permitted by law, all that said Attorney shall lawfully do or cause to be done by virtue hereof. 

        All
capitalized terms used but not otherwise defined herein have the meanings given to such terms in the Credit Agreement. 

1

 

        IN
WITNESS WHEREOF, this Power of Attorney is executed by Borrower as of this    •     day of May, 2005. 

	 	 	SR TELECOM INC.
	
 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	
 	
 	

By:	

 
	 	 	 	
 Name:

Title:

2

QuickLinks

TABLE OF CONTENTS

SECURITY AGREEMENT

Schedule 4.1(5) — Offices and Locations of Collateral and Records Concerning Collateral

Schedule 4.1(8) — Intellectual Property

EXHIBIT A POWER OF ATTORNEY

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