Document:

<PAGE>

                                                                Exhibit 10(c)(x)

                              EMPLOYMENT AGREEMENT

This Agreement is made as of May 30, 2001 by and between American Science &
Engineering, Inc. (the "Company"), a Massachusetts corporation having its
principal place of business in Billerica, Massachusetts, and Andrew R. Morrison,
(the "Executive").

The Company desires to retain the services of the Executive, and the Executive
is willing to render such services, in accordance with the terms hereinafter set
forth.

Accordingly, the Company and the Executive agree as follows:

1. The Company agrees to employ the Executive as, and the Executive agrees to
perform the duties of Vice President, Chief Financial Officer of the Company.

2. (a) The Executive's weekly salary shall be $3,846.15 ("Base Salary") payable
not less frequently than on a monthly basis in accordance with standard company
policy for executives. At the end of six (6) months of employment, the
Executive's weekly Base Salary will increase to $4,038.46. The Executive shall
also be eligible for an annual bonus in an amount of up to fifty (50%) percent
of Base Salary (annualized) based on Executive's performance, as determined by
the Company's CEO, of specific goals to be determined by the CEO.

   (b) The Company will include the Executive in all life insurance,
disability insurance, medical and all other benefit plans maintained by the
Company for the benefit of its Executives.

3. (a) The Company shall pay to the Executive the "Severance Payment" in the
event that the Executive is terminated by the Company within sixty (60) days
prior to or twelve (12) months after the occurrence of a "Change of Control," as
defined below. The Severance Payment shall be made at the time of such
termination.

   (b) The "Severance Payment" shall be a one-time payment equal to the
higher of: (i) the Executive's base salary for one year at the annual rate in
effect one month prior to the occurrence of the Change of Control, or (ii) the
Executive's base salary for one year at the annual rate in effect at the time of
such termination. The Severance Payment shall also include the continuation of
all benefits received by the Executive prior to termination for a period equal
to the lesser of one year or the start of new employment by the Executive in
which he receives substantially similar benefits.

   (c) A "Change of Control" shall be deemed to have occurred if:

                  (i) any person (as defined in Section 13 (d) or 14 (d)(2) of
         the Securities Exchange Act of 1934) shall have become the beneficial
         owner of 50 percent or more of the combined voting power of the
         Company's voting securities;

<PAGE>

                  (ii) the Continuing Directors shall have ceased for any reason
         to constitute a majority of the Board of Directors of the Company. For
         this purpose, a "Continuing Director" shall include members of the
         Board of Directors of the Company as of the date of this Agreement and
         any person nominated for election to the Board of Directors of the
         Company by a vote of the majority of the then Continuing Directors;

                  (iii) the stockholders approve the complete liquidation or
         dissolution of the Company, or

                  (iv) the stockholders approve by the requisite vote any of the
         following transactions:

                           (a) a merger or consolidation of the Company (except
                  for a merger in respect of which no vote of the stockholders
                  of the Company is required);

                           (b) a sale, lease, exchange, mortgage, pledge,
                  transfer or other disposition (in one transaction or a series
                  of transactions), whether as part of a dissolution or
                  otherwise, of assets of the Company or of any direct or
                  indirect majority-owned subsidiary or the Company (other than
                  to any direct or indirect wholly-owned subsidiary or to the
                  Company) having an aggregate market value equal to 50% or more
                  of either the aggregate market value of all of the assets of
                  the Company determined on a consolidated basis or the
                  aggregate market value of all the outstanding stock of the
                  Company immediately prior to the transaction; or

                           (c) a tender or exchange offer for 50% or more of the
                  outstanding voting stock of the Company.

4. (a) If the Executive is terminated for any reason other than (i) "Cause" (as
defined below); or (ii) pursuant to a Change of Control as defined in Paragraph
3 (such reasons other than (i) or (ii) are hereinafter referred to as
"Termination for Convenience") the Executive shall receive an amount equal to
the greater of the amount that would be due under the Company's then-current
severance policy, if any, or six months of his then-current Base Salary,
payable, at the Company's option, on the last date of his employment or in
weekly installments. In case of Termination for Convenience, the Executive shall
be entitled to a continuation of all benefits being received by him at the time
of termination for the lesser of six (6) months from the date of termination, or
until the date in which the Executive begins new employment in which he receives
substantially similar benefits. If the Executive is Terminated for Convenience
within twelve (12) months after a change in the Company's President/CEO, the
Executive shall be entitled to receive the Severance Payment described in
Paragraph 2(b) in place of the benefits described in this Paragraph 3.

    (b) For the purposes of this Agreement, "Cause" shall mean: (i) the
determination by the President of the Company that the Executive has failed to
perform his duties in the course of his employment under this Agreement
consistent with those of a Vice President, Chief Financial Officer, or has
failed to follow the reasonable instructions of, or to meet the goals set by,
the President of the Company; or (ii) the final conviction of the Executive for,
or his plea of nolo contendere to, a felony or any other crime that involves
fraud, dishonesty or moral turpitude.

<PAGE>

5. The Company may not assign all or any part of its obligations under this
Agreement, except to a successor as provided for in this paragraph. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company expressly to assume and agree to perform this Agreement to
the same extent that the Company would be required to perform it if no
succession had taken place. As used in this Agreement, unless the context
requires otherwise, the "Company" shall mean the Company as defined above or any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law, or otherwise. This Agreement shall
inure to the benefit of and be enforceable by and binding upon (i) any such
successor and (ii) the Executive's personal or legal representatives, executors,
administrators and designated beneficiaries.

6. This Agreement contains the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior oral and written
agreements, understandings and commitments between the parties relating to this
Agreement. Notwithstanding the foregoing, the Executive shall at all times
remain subject to all policies and procedures of the Company that relate to
employees of the Company, except to the extent that this Agreement contains
terms or provisions that are contrary to or provides greater benefits than such
policies and procedures, in which case this Agreement shall control. No
amendment to this Agreement shall be made except by a written instrument signed
by both parties.

7. The Executive agrees that, during the term of employment by the Company and
during an additional period of (1) year which shall commence at the date of
termination of Executive's employment, he will not:

    (a) directly or indirectly work for, consult with, be affiliated with or
otherwise provide services for any competitor of the Company, including without
limitation any entity that designs, manufactures or sells x-ray inspection
equipment;

    (b) Hire, solicit, or attempt to induce any employee of the Company to
leave its employ and to work directly or indirectly for or with Executive or any
employer or contractor of Executive; or

    (c) Directly or indirectly, individually or for or with any other
party, provide any type of service(s) to any person or entity which was, during
the last 12 months of Executive's employment, a customer or account of the
Company, as would permit, enable or assist such customer in providing, for
itself or others, products or services like or similar to those products or
services which had been provided to such customer by the Company during the 12
month period preceding the termination of his employment.

8. If any agreement or covenant made by the Executive herein shall, to any
extent, be determined by any court having jurisdiction as being too broad in
area, time, or both, or otherwise to any extent held invalid, then the part or
parts which are determined to be invalid or unenforceable shall be severed and
the remaining parts of this Agreement shall continue in full force and effect.

9. Executive acknowledges that a breach or threatened breach of any commitment
made by Executive in this Agreement could cause irreparable injury to the
Company; that damages would not adequately compensate the Company for such
breach or threatened

<PAGE>

breach and that such damages would be difficult to determine. Therefore,
Executive agrees that the Company shall be entitled to such equitable and
injunctive relief as may be available to restrain or prevent a breach or
contemplated breach of any of the obligations of the Executive in this
Agreement. The Company shall have this right in addition to damages and any
other remedy available at law or in equity.

10. The Appendix A AS&E Proprietary Information Procedure is attached hereto and
incorporated into this Agreement.

11. This Agreement shall be construed and enforced under and be governed in all
respects by the law of the Commonwealth of Massachusetts, without regard to the
conflict of law principles thereof.

12. This Agreement supercedes all prior agreements.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed on its
behalf by a duly authorized officer and the Executive has executed this
instrument, all as of the date set forth above.

                                      AMERICAN SCIENCE & ENGINEERING, INC.

                                      By: /s/ Ralph S. Sheridan
                                          ------------------------------------
                                          Ralph S. Sheridan, CEO and President

                                          /s/ Andrew R. Morrison
                                          ------------------------------------
                                          Andrew R. Morrison<PAGE>

                                                                    Exhibit 10.4

                   THIRD AMENDED AND RESTATED CREDIT AGREEMENT

                            DATED AS OF JUNE 21, 2001

                            FIRSTSERVICE CORPORATION

                              AS CANADIAN BORROWER

                                       AND

                          FIRSTSERVICE (USA), INC. AND

                            FIRSTSERVICE DELAWARE, LP

                                AS U.S. BORROWERS

                                       AND

                          THE WHOLLY-OWNED SUBSIDIARIES

                       NAMED ON THE EXECUTION PAGES HEREOF

                             AS UNLIMITED GUARANTORS

                                       AND

                  THE BANKS NAMED ON THE EXECUTION PAGES HEREOF

                                   AS LENDERS

                                  BANK ONE, NA

                              AS SYNDICATION AGENT

                                       AND

                            THE TORONTO-DOMINION BANK

                               AS COLLATERAL AGENT

                                       AND

                            THE TORONTO-DOMINION BANK

                        AS CANADIAN ADMINISTRATION AGENT

                                       AND

                          TORONTO DOMINION (TEXAS) INC.

<PAGE>

                          AS U.S. ADMINISTRATION AGENT

MEIGHEN DEMERS LLP                                         FOGLER  RUBINOFF LLP

LENDERS'  COUNSEL                                   BORROWERS' CANADIAN COUNSEL

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>      <C>                                                                         <C>
ARTICLE I
DEFINITIONS............................................................................2
         1.1      Definitions..........................................................2
         1.2      References..........................................................19
         1.3      Interpretation......................................................20
         1.4      Headings and Table of Contents......................................20
         1.5      Accounting Terms....................................................20
         1.6      Recitals............................................................21
         1.7      Precedence..........................................................21
ARTICLE II
FACILITIES        ....................................................................21
         2.1      The Credit Facilities...............................................21
         2.2      Notice and Revolving Nature of Borrowings...........................21
         2.3      Conversion..........................................................25
         2.4      Making Borrowings...................................................25
         2.5      Participation of Each Lender........................................26
         2.6      Bankers' Acceptances................................................26
         2.7      Acceptance Date Procedure...........................................28
         2.8      Purchase of Bankers' Acceptances....................................29
         2.9      Payment of Bankers' Acceptances.....................................29
         2.10     Set-Off and Netting.................................................30
         2.11     Letters of Credit...................................................30
ARTICLE III
REPAYMENT AND ACCOUNTS................................................................32
         3.1      Repayment...........................................................32
         3.2      Accounts kept by the Canadian Agent.................................32
         3.3      Accounts kept by the Canadian Swingline Lender......................32
         3.4      Accounts kept by the U.S. Swingline Lender..........................33
         3.5      Accounts kept by the U.S. Agent.....................................33
         3.6      Accounts kept by each Canadian Lender...............................33
         3.7      Accounts kept by U.S. Lenders.......................................34
         3.8      Promissory Notes....................................................34
         3.9      Excess Resulting from Exchange Rate Change..........................34
         3.10     Currency............................................................35
         3.11     Extension of Final Maturity Date....................................35
ARTICLE IV
INTEREST, ACCEPTANCE FEE, LETTER OF CREDIT FEE AND COMMITMENT FEES....................36
         4.1      Interest on Libor Loans.............................................36
         4.2      Interest on U.S. Base Rate Loans....................................37
         4.3      Interest on Prime Rate Loans........................................38
         4.4      Interest on U.S. Prime Rate Loans...................................38
</TABLE>

                                      -i-

<PAGE>
<TABLE>
<CAPTION>

<S>      <C>                                                                         <C>
         4.5      Libor Interest Periods..............................................39
         4.6      Interest on Overdue Amounts.........................................39
         4.7      Acceptance Fee......................................................40
         4.8      Commitment Fees.....................................................40
         4.9      Letter of Credit Fronting Fee.......................................40
         4.10     Effective Date for Changes in Applicable Margins....................41
ARTICLE V
CONDITIONS PRECEDENT..................................................................41
         5.1      Conditions Precedent................................................41
         5.2      Conditions Precedent to Borrowings to make Acquisitions.............43
         5.3      Waiver..............................................................44
         5.4      Hostile Takeover....................................................44
ARTICLE VI
PREPAYMENT, CANCELLATION, MANDATORY APPLICATION OF CASH PROCEEDS......................44
         6.1      Prepayment and Cancellation.........................................44
         6.2      Notice..............................................................45
         6.3      Status of Lender....................................................45
         6.4      Fees................................................................46
         6.5      Mandatory Application of Cash Proceeds..............................46
ARTICLE VII
SPECIAL LIBOR AND INCREASED COST PROVISIONS...........................................46
         7.1      Substitute Rate of Borrowing........................................46
         7.2      Increased Cost......................................................47
         7.3      Illegality..........................................................48
         7.4      Indemnity...........................................................48
         7.5      Other Increased Costs or Reductions in Return.......................48
         7.6      Additional Cost in Respect of Tax...................................51
         7.7      Claims under Section 7.6............................................51
         7.8      Tax Receipts........................................................51
         7.9      Internal Revenue Service Forms......................................52
ARTICLE VIII
REPRESENTATIONS, WARRANTIES & COVENANTS...............................................53
         8.1      Representations and Warranties......................................53
         8.2      Covenants...........................................................56
ARTICLE IX
EVENTS OF DEFAULT.....................................................................66
         9.1      Events of Default...................................................66
         9.2      Security............................................................69
         9.3      Remedies Not Exclusive..............................................69
         9.4      Set-Off.............................................................69
ARTICLE X
PAYMENTS..............................................................................70
</TABLE>

                                      -ii-

<PAGE>
<TABLE>
<CAPTION>

<S>      <C>                                                                         <C>
         10.1     Payments to Agents/Swingline Lenders................................70
         10.2     Payments by Lenders to Agents.......................................71
         10.3     Payments by Agents to Borrowers.....................................71
         10.4     Distribution to Lenders and Application of Payments.................71
         10.5     No Set-Off or Counterclaim..........................................71
         10.6     Non-Receipt By Agents...............................................72
         10.7     When Due Date Not Specified.........................................72
         10.8     Agents' Authority to Debit..........................................72
ARTICLE XI
EXPENSES..............................................................................72
         11.1     Payment of Expenses.................................................72
         11.2     Survival............................................................73
         11.3     Environmental Indemnity.............................................73
ARTICLE XII
FEES..................................................................................75
         12.1     Agency Fee..........................................................75
         12.2     Miscellaneous.......................................................75
ARTICLE XIII
THE AGENTS............................................................................75
         13.1     Agents..............................................................75
         13.2     Agents' Responsibility..............................................76
         13.3     Agents' Duties......................................................77
         13.4     Protection of Agents................................................77
         13.5     Indemnification of Agents...........................................78
         13.6     Termination or Resignation of Agent.................................79
         13.7     Rights of an Agent as Lender........................................79
         13.8     Authorized Waivers, Variations and Omissions........................79
         13.9     Financial Information Concerning the Borrowers or Guarantors........80
         13.10    Knowledge of Financial Situation of Borrowers.......................80
         13.11    Legal Proceedings...................................................80
         13.12    Capacity as Agent...................................................80
         13.13    Deposits or Loans Respecting the Borrowers..........................81
ARTICLE XIV
ASSIGNMENTS AND TRANSFERS.............................................................81
         14.1     Benefit of Agreement................................................81
         14.2     Assignments and Transfers by a Borrower or an Unlimited Guarantor...81
         14.3     Assignments and Transfers by a Lender...............................81
         14.4     Transfer Certificate................................................82
         14.5     Notice..............................................................83
         14.6     Sub-Participations..................................................83
         14.7     Disclosure..........................................................84
         14.8     Assignment to Federal Reserve Bank..................................84
ARTICLE XV
GOVERNING LAW, COURTS AND JUDGMENT CURRENCY...........................................84
</TABLE>

                                     -iii-

<PAGE>
<TABLE>
<CAPTION>

<S>      <C>                                                                         <C>
         15.1     Governing Law.......................................................84
         15.2     Courts..............................................................84
         15.3     Judgment Currency...................................................85
ARTICLE XVI
GUARANTORS' OBLIGATIONS...............................................................85
         16.1     Guarantee...........................................................85
ARTICLE XVII
MISCELLANEOUS.........................................................................87
         17.1     Equal Ranking of Lenders............................................87
         17.2     Sharing of Information..............................................87
         17.3     Severability........................................................88
         17.4     Remedies and Waivers................................................88
         17.5     Direct Obligation...................................................88
         17.6     Notices.............................................................88
         17.7     Counterparts........................................................89
         17.8     Limit on Rate of Interest...........................................89
         17.9     No Merger or Novation...............................................90
</TABLE>

                                      -iv-

<PAGE>

                                    SCHEDULES

         "A"      Call Price Formulae

         "B"      Net Proceeds of Bankers' Acceptances

         "C"      Security

         "D"      Shareholders' Agreements

         "E"      Form of Transfer Certificate

         "F"      Form of Undertaking

         "G"      Form of Conversion Notice

         "H"      Form of Drawdown Notice

         "I"      Details of Issue

         "J"      Form of Compliance Certificate

         "K"      Intentionally Deleted

         "L"      Commitments

         "M"      Intentionally Deleted

         "N"      Form of Officer's Certificate Re: Acquisition Facility

         "O"      Intentionally Deleted

         "P"      Permitted Encumbrances

         "Q"      Form of Promissory Note

<PAGE>

                   THIRD AMENDED AND RESTATED CREDIT AGREEMENT
                            DATED AS OF JUNE 21, 2001

AMONG:

                  FIRSTSERVICE  CORPORATION,  a corporation duly organized and
                  existing under the laws of Ontario,

AND:

                  FIRSTSERVICE  (USA),  INC., a corporation  duly  organized and
                  existing   under  the  laws  of  the  State  of  Delaware  and
                  FIRSTSERVICE   DELAWARE,   LP,  a  limited   partnership  duly
                  organized  and  existing  under  the  laws  of  the  State  of
                  Delaware,

AND:

                  THE WHOLLY-OWNED SUBSIDIARIES NAMED ON THE EXECUTION PAGES
                  HEREOF

AND:

                  THE BANKS NAMED ON THE EXECUTION PAGES HEREOF, as lenders

AND:

                  BANK ONE, NA, as syndication agent

AND:

                  THE TORONTO-DOMINION BANK, as collateral agent,

AND:

                  THE TORONTO-DOMINION BANK, as Canadian administration agent

AND:

                  TORONTO DOMINION (TEXAS) INC. as U.S. administration agent

         WHEREAS, the Canadian Borrower, the Unlimited Guarantors, Dresdner Bank
Canada,  The  Toronto-Dominion  Bank, First Chicago NBD Bank Canada and Dresdner
Bank Canada as Agent  entered into a Credit  Agreement  dated as of December 16,
1996 (the "Original Credit Agreement");

<PAGE>

                                      -2-

         AND WHEREAS,  the Original Credit Agreement was amended as of August 7,
1997, September 30, 1997, January 8, 1998, January 12, 1998 and May 13, 1998;

         AND WHEREAS the  Original  Credit  Agreement so amended was amended and
restated by way of an amended and restated credit  agreement dated as of June 1,
1998 (the "First Amended and Restated Credit Agreement");

         AND WHEREAS the First Amended and Restated Credit Agreement was amended
and restated by way of a second amended and restated  credit  agreement dated as
of April 1, 1999 (the "Second Amended and Restated Credit Agreement");

         AND WHEREAS,  the parties  hereto desire to amend and restate the terms
of the Second Amended and Restated Credit Agreement;

         AND WHEREAS the Borrowers have requested that:

         (a)      the Canadian  Lenders make available to the Canadian  Borrower
                  the  Canadian  Revolving  Facility  to  finance  acquisitions,
                  working capital needs,  capital  expenditures  and for general
                  corporate   purposes  of  the   Canadian   Borrower   and  its
                  Subsidiaries; and

         (b)      the U.S. Lenders make available to the U.S. Borrowers the U.S.
                  Revolving  Facility to finance  acquisitions,  working capital
                  needs, capital expenditures and for general corporate purposes
                  of Subsidiaries of the Canadian Borrower located in the United
                  States.

         AND WHEREAS,  the Canadian  Borrower  has requested  that the Canadian
Swingline Lender make the Canadian Swingline Facility available to the Canadian
Borrower and the U.S. Borrowers  have requested that the  U.S. Swingline Lender
make the U.S. Swingline Facility available to the U.S. Borrowers;

         AND WHEREAS the Lenders are willing to grant the  Facilities  upon and
subject to the following  terms and conditions;

         NOW  THEREFORE  in  consideration  of the  respective  covenants of the
parties contained herein and other good and valuable  consideration (the receipt
and sufficiency of which is hereby  acknowledged)  the parties amend and restate
with effect as and from the Effective  Date the terms of the Second  Amended and
Restated Credit Agreement and the parties agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

1.1      DEFINITIONS

<PAGE>

                                      -3-

         In this Agreement,  unless the context  otherwise  requires,  the terms
defined in the  introduction  of the parties  and the  recitals  shall have,  as
herein used, the same meanings and:

"ACCEPTANCE DATE" means any Business Day on which a Bankers' Acceptance is or is
requested to be issued hereunder.

"ACCEPTANCE FEE" means in respect of any Bankers' Acceptance  outstanding at any
time on or  after  the  Effective  Date the  Acceptance  Fees  described  in the
definition of Applicable Margin.

"ACCOMMODATION" has the meaning attributed thereto in Section 7.5 (a).

"ACCOUNTS" means the accounts kept by the Canadian Agent, the Canadian Swingline
Lender,  the  U.S.  Agent  or the  U.S.  Swingline  Lender,  as the case may be,
pursuant to Section 3.2, 3.3, 3.4 and 3.5 to record the  Borrowers'  liabilities
to the Agents and each Lender under this Agreement.

"ACQUISITION  ENTITY"  means  an  Eligible  Business  acquired  by the  Canadian
Borrower or a Subsidiary thereof as permitted under this Agreement.

"ADDITIONAL COMPENSATION" has the meaning attributed thereto in Section 7.2.

"ADDITIONAL OTHER COMPENSATION"  has the  meaning  attributed thereto in Section
7.5.

"ADVANCE" means an advance of money under the Facilities.

"AFFECTED SUBSIDIARY" means any Subsidiary other than the Wholly-Owned
Subsidiaries.

"AFFILIATE"  means,  in respect of any Person (the "first  Person"),  any Person
which,  directly or indirectly,  controls or is controlled by or is under common
control with the first Person; and for the purpose of this definition, "control"
(including,  with  correlative  meanings,  the terms  "controlled by" and "under
common  control with") means the power to direct,  or cause to be directed,  the
management  and  policies of a Person  whether  through the  ownership of voting
shares or by contract or otherwise.

"AGENTS" means  collectively  the Canadian Agent,  the Collateral  Agent and the
U.S. Agent and "Agent" means any one of the Canadian Agent, the Collateral Agent
or the U.S. Agent.

"AGREEMENT"  means this Third Amended and Restated Credit  Agreement dated as of
June 21, 2001 and any future amendments or supplements to it.

"AMOUNT" has the meaning attributed thereto in Section 9.1(n)(ii)(B).

<PAGE>

                                      -4-

"APPLICABLE MARGIN" means the following fees, rates and margins per annum:

<TABLE>
<CAPTION>

                                      Total Debt/Consolidated      Total Debt/Consolidated      Total Debt/Consolidated
                                              EBITDA                       EBITDA                        EBITDA
                                         Ratio of < 2.5:1       Ratio of > =2.5:1 but < 3.0:1       Ratio of > =3.0:1
<S>                                            <C>                          <C>                          <C>
Acceptance Fee                                 1.50%                        2.25%                        3.00%
U.S. Base Rate Margin                          0.50%                        1.25%                        2.00%
Letter of Credit Fee                           1.50%                        2.25%                        3.00%
Libor Margin                                   1.50%                        2.25%                        3.00%
Prime Rate Margin                              .50%                         1.25%                        2.00%
Commitment Fee                                 .375%                        .50%                          .75%
</TABLE>

Changes in the  Applicable Margins  become effective in accordance with  Section
4.10.

"AUTHORIZED  SIGNATORY"  in relation to a Borrower and any  communication  to be
made or document to be executed or  certified  by it, means at any time a Person
who is at  such  time  duly  appointed  as such by  such  Borrower  in a  manner
acceptable to the Canadian Agent or the U.S.  Agent,  as the case may be, acting
reasonably.

"AVAILABLE PROCEEDS" has the meaning ascribed to it in Section 2.7 (b) (iv).

"B/A  MATURITY  DATE",  in respect of a Bankers'  Acceptance,  means the date on
which such Bankers' Acceptance matures.

"BA DISCOUNT RATE" means,  in relation to any Bankers'  Acceptance,  the average
rate (calculated on the basis of 365 days and rounded upwards to the nearest one
hundredth  of one  percent  (0.01%),  if such  average  is not a  multiple)  for
Canadian  Dollar bankers'  acceptances  having a comparable term that appears on
the Reuters  Screen CDOR Page (or such other page as is a  replacement  page for
such bankers'  acceptances) at 10:00 a.m.  (Toronto,  Ontario time) for bankers'
acceptances to be accepted by Schedule I Canadian Banks (the "CDOR Rate") and in
the case of Bankers  Acceptances  to be accepted by Canadian  Lenders  which are
Schedule II Canadian  Banks the lesser of (a) the bid rate quoted by such Lender
for its own  bankers'  acceptances  of a like term with effect as at or about 10
a.m. on the applicable  Drawdown Date or Conversion  Date; and (b) the CDOR Rate
plus 10 basis points.  If the CDOR Rate is not available at such time,  the rate
otherwise determined by the Canadian Agent at or about 10:00 a.m. on the date of
acceptance of such Bankers'  Acceptance as the discount rate (rounded upwards to
the nearest one-one hundredth of one percent (0.01%) based on a year of 365 days
applicable  to bankers'  acceptances  with terms  equivalent to the term of such
Bankers' Acceptances;

<PAGE>

                                      -5-

"BANKERS'  ACCEPTANCE"  means a bill of  exchange  or a  depository  note,  duly
completed  and  accepted  by a  Canadian  Lender  under the  Canadian  Revolving
Facility pursuant to this Agreement.

"BORROWERS"  means the Canadian  Borrower and the U.S.  Borrowers and "Borrower"
means either the Canadian Borrower or either of the U.S. Borrowers.

"BORROWERS'  CANADIAN  COUNSEL"  means  Fogler,  Rubinoff  or any other  firm of
solicitors  selected by the  Borrowers  and  acceptable  to the Canadian  Agent,
acting reasonably.

"BORROWERS' U.S.  COUNSEL" means Shearman & Sterling or Ferrante & Associates or
any one or more firms of attorneys  selected by the Borrowers and  acceptable to
the U.S. Agent, acting reasonably.

"BORROWING"  means a utilization of a Facility by way of Loans,  by the issue of
Bankers' Acceptances or by the issue of Letters of Credit.

"BUSINESS DAY" means

(a)      in respect of Borrowings  available to a Borrower by way of Libor Loans
         and payments in  connection  therewith,  a day (other than  Saturday or
         Sunday) which is a day for trading by and between banks in U.S.  Dollar
         deposits in the London  interbank  market  which is also a day on which
         banks are generally open for business in New York City and Toronto;

(b)      in respect of  Borrowings  available to a Borrower by way of U.S.  Base
         Rate Loans or Letters of Credit denominated in U.S.$, a day (other than
         Saturday or Sunday) on which banks are  generally  open for business in
         New York City and Toronto; and

(c)      for all other purposes of this Agreement, a day (other than Saturday or
         Sunday) on which banks are generally open for business in Toronto.

"CALL OPTION TRIGGERING EVENT" means, in respect of any Affected Subsidiary:

(a)      the 61st day following the  commencement  of any actions or proceedings
         against such  Subsidiary or against any of the property  thereof before
         any court,  governmental  agency or  arbitrator  which,  if  determined
         adversely,  may  have  a  material  adverse  effect  on  the  financial
         condition or operations of such Subsidiary unless the Canadian Borrower
         shall have satisfied the Majority  Lenders that such  Subsidiary  shall
         not be materially  and adversely  affected by such action or proceeding
         or the consequences arising therefrom; or

(b)      the 31st day following the receipt by such  Subsidiary of any Violation
         Notice which, if same were enforced, may have a material adverse effect
         on the financial condition or operations of such Subsidiary, unless the
         Canadian  Borrower shall have satisfied

<PAGE>

                                      -6-

         the Majority  Lenders  that such  Subsidiary  shall not be  materially
         and  adversely  affected  by such Violation Notice or the consequences
         arising therefrom; or

(c)      the EBITDA of such Subsidiary for any period of 4 consecutive  Quarters
         ended (the "Relevant 4 Quarter  Period") is at least 50% less than such
         Subsidiary's  EBITDA for the period of 4  consecutive  Quarters  ending
         immediately  prior to the commencement of the Relevant 4 Quarter Period
         (an "Earnings Call Option Triggering Event").

"CALL OPTION  TRIGGERING  EVENT NOTICE" means a written notice from the Canadian
Agent,  if the  Canadian  Agent is so directed by the Majority  Lenders,  to the
Canadian  Borrower   requiring  the  Canadian  Borrower  to  cause  an  Affected
Subsidiary  in  respect  of which a Call  Option  Triggering  Event  shall  have
occurred to become a Direct Guarantor; provided that, Majority Lenders shall not
be entitled to direct the Canadian Agent to issue a Call Option Triggering Event
Notice  following the  occurrence of an Earnings  Call Option  Triggering  Event
unless the Canadian Borrower has a Total Debt to Consolidated EBITDA Ratio equal
to or greater than 3.25 to 1.

"CALL PRICE FORMULAE" means the call price formulae described on Schedule "A".

"CANADIAN AGENT" means The Toronto-Dominion  Bank and its successors and assigns
duly appointed in accordance with Section 13.6.

"CANADIAN ASSIGNEE" has the meaning ascribed to it in Section 14.3(a).

"CANADIAN BORROWER" means FirstService Corporation.

"CANADIAN  DOLLARS"  means  the  lawful  money  of  Canada  and  "CDN  $"  has a
corresponding meaning.

"CANADIAN FACILITIES"  means the  Canadian  Revolving Facility  and the Canadian
Swingline.

"CANADIAN  LENDERS"  means the Lenders  identified  as  Canadian  Lenders on the
execution pages hereof having a Commitment to lend or when such Commitment shall
have terminated,  having  Borrowings  outstanding to the Canadian Borrower under
the Canadian Facilities.

"CANADIAN  REVOLVING  FACILITY" means the Commitments of the Canadian Lenders to
make  Advances to the Canadian  Borrower in accordance  with Section  2.2(a) and
such Advances so made.

"CANADIAN  REVOLVING FACILITY  COMMITMENT" means the Commitments of the Canadian
Lenders to make  Advances to the  Canadian  Borrower up to the Cdn.$  Equivalent
Amount of  US$36,000,000;  provided  that the aggregate  outstanding  Borrowings
under the Canadian Facilities shall not exceed the Total Canadian Commitments at
any time.

"CANADIAN  SWINGLINE  FACILITY"  means the Commitment of the Canadian  Swingline
Lender to make  Advances to the  Canadian  Borrower in  accordance  with Section
2.2(b) and such Advances so made.

<PAGE>

                                      -7-

"CANADIAN  SWINGLINE  COMMITMENT" means the Commitment of the Canadian Swingline
Lender to make  Advances to the Canadian  Borrower of up to the Cdn$  Equivalent
Amount of US$4,000,000 which Commitment constitutes a subcommitment of the Total
Canadian Commitments of The  Toronto-Dominion  Bank; provided that the aggregate
outstanding  Borrowings under the Canadian Facilities shall not exceed the Total
Canadian Commitments at any time.

"CANADIAN SWINGLINE LENDER"  means The Toronto-Dominion Bank and  its successors
and assigns.

"CAPITAL  EXPENDITURES" means capital  expenditures of the Canadian Borrower and
its  Subsidiaries   (other  than  in  respect  of  acquisitions  of  Acquisition
Entities), determined in accordance with GAAP on a consolidated basis.

"CASH AMOUNT" means,  for the purposes of Schedule "O" referred to in Subsection
5.2(i)(D) hereof,  that portion of the consideration  payable in cash in respect
of any  purchase  of shares by the  Canadian  Borrower  or a  Subsidiary  in the
capital  stock of any  Subsidiary  pursuant  to the  exercise of any call option
right in favour of the  Canadian  Borrower  or  Subsidiary,  as the case may be,
under the terms of any Shareholders Agreement in respect of such Subsidiary.

"CODE"  means  the  Internal  Revenue Code  (U.S.) of  1986,  as amended  or any
successor statute.

"COLLATERAL  AGENT"  means  The  Toronto-Dominion  Bank and its  successors  and
assigns  acting in the capacity of  collateral  agent for the Lenders  hereunder
with respect to the Security.

"COMMITMENT" means, except as otherwise provided herein, the amount set opposite
each  Lender's  name on  Schedule  "L" hereof as its  Commitment  to each of the
Facilities.

"CONSOLIDATED  DEPRECIATION  AND  AMORTIZATION  EXPENSE"  means,  for any period
depreciation,  amortization and depletion charged to the income statement of the
Canadian Borrower and its Subsidiaries for such period, determined in accordance
with GAAP on a consolidated basis.

"CONSOLIDATED  EARNINGS"  means, for any period,  Consolidated  Net Income,  but
excluding in each case for such period:  (i) any gain or loss recorded in income
arising from the sale of capital assets,  as determined in accordance with GAAP;
(ii) any gain or loss recorded in income arising from any write-up or write-down
of  assets,  as  determined  in  accordance  with  GAAP;  (iii) any gain or loss
recorded  in  income  arising  from the  acquisition  of any  securities  of the
Canadian Borrower or any of its  Subsidiaries,  as determined in accordance with
GAAP;  (iv) any  non-cash  gain or loss  recorded  in income  from  discontinued
operations from and after the date of sale or discontinuance of such operations,
as determined in  accordance  with GAAP; or (v) any other  non-cash gain or loss
arising  from  items  that  do  or  do  not  have  all  the  characteristics  of
extraordinary  items but which result from  transactions  or events that

<PAGE>

                                      -8-

are not expected to occur  frequently over several years or do not typify normal
business activities of the Canadian Borrower and its Subsidiaries, as determined
in  accordance  with  GAAP,  to the  extent  that any such gain or loss has been
recorded in income and has been disclosed separately in the income statement for
the Canadian Borrower and its Subsidiaries or the notes thereto.

"CONSOLIDATED EBITDA" means for any period, Consolidated Earnings,  increased by
the sum of: (i) Consolidated  Interest  Charges;  (ii)  Consolidated  Income Tax
Expense; (iii) Consolidated  Depreciation and Amortization Expense and (iii) the
minority  interest  share of  Earnings as stated on the  consolidated  financial
statements of the Canadian Borrower, in each case for such period.

"CONSOLIDATED  INCOME TAX EXPENSE" means,  for any period,  the aggregate of all
Taxes  (including  deferred Taxes) based on the income of the Canadian  Borrower
and its  Subsidiaries  for such period,  determined in accordance with GAAP on a
consolidated basis.

"CONSOLIDATED  INTEREST  CHARGES" means, for any period,  the total of all items
properly  classified  as interest  expense  for the  Canadian  Borrower  and its
Subsidiaries  for  such  period,   determined  in  accordance  with  GAAP  on  a
consolidated basis.

"CONSOLIDATED  NET INCOME"  means,  for any period,  the Net Income (loss) after
taxes of the Canadian Borrower and its Subsidiaries for such period,  determined
in accordance with GAAP on a consolidated basis.

"CONSOLIDATED  TOTAL  ASSETS"  means,  for any period,  the Total  Assets of the
Canadian Borrower and its Subsidiaries for such period, determined in accordance
with GAAP.

"CONVERSION"  means the  conversion  of a Borrowing  or any  portion  thereof in
accordance with Section 2.3.

"CONVERSION  DATE" means the date a Borrower has notified the Canadian  Agent or
the U.S.  Agent,  as the case may be, to be the date on which it has  elected to
convert a Borrowing or a portion thereof pursuant to Section 2.3.

"DEFAULT"  means an event with which notice or lapse of time or both will become
an Event of Default.

"DEPRECIATION  AND AMORTIZATION  EXPENSE" means,  for any period,  depreciation,
amortization and depletion  charged to the income statement of a Person for such
Person, determined in accordance with GAAP.

"DIRECT GUARANTOR" means each Subsidiary of the Canadian Borrower,  of which the
Canadian  Borrower shall at any time directly or indirectly own and control 100%
of the issued and outstanding shares,  equity or other ownership interests which
shall have executed and delivered to the Collateral Agent the Direct Security.

<PAGE>

                                      -9-

"DIRECT SECURITY" means the Security designated as Direct Security in Schedule
"C".

"DISPOSITION" has the meaning attributed to it in Section 8.2(c)(ii).

"DRAWDOWN" means a drawdown of a Borrowing by a Borrower.

"DRAWDOWN  DATE" means any  Business  Day when a Borrower  makes a Drawdown or a
Conversion Date with respect to any Borrowing or portion thereof.

"EARNINGS" means, for any Person for any period, Net Income for such Person, but
excluding  in each case for such  Person for such  period:  (i) any gain or loss
recorded in income  arising from the sale of capital  assets,  as  determined in
accordance  with GAAP; (ii) any gain or loss recorded in income arising from any
write-up or write-down of assets,  as determined in accordance with GAAP;  (iii)
any  gain or  loss  recorded  in  income  arising  for  the  acquisition  of any
securities of such Person,  as  determined in accordance  with GAAP; or (iv) any
non-cash gain or loss recorded in income from  discontinued  operations from and
after the date of sale or  discontinuance  of such operations,  as determined in
accordance  with GAAP; or (v) any other non-cash gain or loss arising from items
that do or do not have all the  characteristics of extraordinary items but which
results from  transactions  or events that are not expected to occur  frequently
over several years or do not typify normal  business  activities of such Person,
as determined in accordance  with GAAP, to the extent that any such gain or loss
has been  recorded  in income and has been  disclosed  separately  in the income
statement for such Person or the notes thereto.

"EARNINGS  CALL  OPTION  TRIGGERING  EVENT" has the  meaning  ascribed  to it in
paragraph (c) in the definition of "Call Option Triggering Event".

"EBITDA"  means,  for  any  Person  for any  period,  Earnings  of such  Person,
increased by the sum of: (i)  Interest  Charges;  (ii) Income Tax  Expense;  and
(iii)  Depreciation  and Amortization  Expenses and, (iv) the minority  interest
share of Earnings as stated on any consolidated financial statements of any such
Person, in each case for such Person for such period.

"EFFECTIVE DATE" means June 29, 2001.

"ELIGIBLE  BUSINESS"  means,  in respect of any  business  to be acquired by the
Canadian Borrower or its Subsidiaries, a business which:

(a)      is substantially  similar to the "core" businesses  currently conducted
         by the Canadian Borrower and its Subsidiaries, taken as a whole, in the
         reasonable opinion of the Canadian Borrower; which "core" businesses of
         the Canadian Borrower and its Subsidiaries are as follows:

         (i)      the security business,

         (ii)     the property management business,

<PAGE>

                                      -10-

         (iii)    the property maintenance business,

         (iv)     the service franchise business,

         (v)      landscape, lawn-care and lawn maintenance business,

         (vi)     the interior or exterior pest control businesses,

         (vii)    business out-sourcing,

         (viii)   residential and commercial cleaning and/or maintenance
                  business; and

         (ix)     customer support and fulfillment.

(b)      does not include (i) manufacturing, fabrication or similar processes or
         (ii) retail business;

(c)      does not include any business  that  carries on a material  part of its
         business outside of Canada or the United States of America; and

(d)      as the result of completion of the  acquisition  of such  business,  no
         Default  or  Event  of  Default  will  occur;   including  for  greater
         certainty,  the  Canadian  Borrower  will  not  be in  default  of  its
         covenants contained in Section 8.2(o).

"ENVIRONMENTAL  LAWS"  means  all laws,  statutes,  codes,  ordinances,  orders,
decrees, rules, regulations,  guidelines, standards, judgements, or instruments,
in each case  having  the force of law,  of any  authority  having  jurisdiction
relating in whole or in part to the environment or its protection.

"EQUIVALENT  AMOUNT"  means on any date,  as the case may be, the amount of Cdn.
Dollars  into which an amount of U.S.  Dollars may be converted or the amount of
U.S.  Dollars  into  which an amount of Cdn.  Dollars  may be  converted  at the
Canadian Agent's spot buying rate in Toronto as at approximately  12:00 noon, on
such date.

"ERISA" has the meaning ascribed to it in Section 8.1(n).

"EVENT" has the meaning attributed thereto in Section 7.5(b).

"EVENT OF DEFAULT" has the meaning ascribed to it in Section 9.1.

"EXTENSION DATE" has the meaning ascribed to it in Section 3.11(a).

"EXTENSION REQUEST" has the meaning ascribed to it in Section 3.11(a).

"FACILITIES"  means,  collectively, the Revolving  Facilities and  the Swingline
Facilities.

"FEDERAL  FUNDS RATE" means,  for any period,  a  fluctuating  interest rate per
annum equal for each day during such period to (a) the  weighted  average of the
rates on  overnight  federal

<PAGE>

                                      -11-

funds  transactions  with  members of the  Federal  Reserve  System  arranged by
federal  funds  brokers,  as  published  for such day (or,  if such day is not a
Business Day, for the next preceding  Business Day) by the Federal  Reserve Bank
of New  York,  or (b) if such  rate is not so  published  for any day which is a
Business Day, the average of the  quotations  for such day on such  transactions
received by the  applicable  U.S.  Base Rate  Reference  Bank from three federal
funds brokers of recognized standing selected by it.

"FINAL MATURITY DATE" means June 25, 2004 unless extended in accordance with the
terms hereof.

"FINANCIAL  CONTRACT  OBLIGATIONS"  means all  obligations,  present and future,
direct  or  indirect,   contingent  or  absolute,   of  a  Borrower  and/or  its
Subsidiaries  in  respect  of, in each case  determined  on a "marked to market"
basis on the date of determining the amount of such obligations,:

(a)      a currency or interest rate swap agreement;

(b)      a swap, future, forward or other foreign exchange agreement;

(c)      a forward rate agreement;

(d)      any  derivative,  combination  or option in  respect  of, or  agreement
         similar to, an agreement or contract  referred to in paragraphs  (a) to
         (c);

(e)      any master agreement in respect of any agreement or contract referred
         to in paragraphs (a) to (c); or

(f)      a guarantee of the liabilities under an agreement or contract referred
         to in paragraphs (a) to (c).

"FIRST AMENDED AND RESTATED CREDIT AGREEMENT" has the meaning attributed thereto
in the recitals.

"FISCAL YEAR" means a fiscal year of the Canadian Borrower; currently the Fiscal
Year ends on March 31.

"FIXED  CHARGE  COVERAGE  RATIO" means,  in respect of any period,  the quotient
obtained by dividing:

(a)      Consolidated  EBITDA less  Capital  Expenditures and  less income taxes
         paid in cash for such period; by

(b)      the sum (as denominator) of (i) Consolidated  Interest Charges for such
         period, (ii) scheduled principal repayments and capital lease principal
         payments  for  such  period,   and  (iii)  payments  of  any  dividends
         determined in accordance with GAAP on a consolidated basis.

<PAGE>

                                      -12-

"FS (USA)" means FirstService (USA), Inc.

"FSLLC" means FirstService Delaware, LLC.

"FSLP" means FirstService Delaware, LP.

"GAAP"  means generally  accepted accounting  principles  applied  in the United
States.

"GUARANTOR"  means any Person,  including  an Unlimited  Guarantor  and a Direct
Guarantor,  which shall have  provided a guarantee of a  Borrower's  obligations
hereunder in favour of the Collateral Agent and/or the Lenders.

"GUARANTEED  OBLIGATIONS" means the Canadian Borrower's Guaranteed  Obligations,
(as such term is defined in Section  16.1(a))  and/or the Unlimited  Guarantor's
Guaranteed Obligations (as such term is defined in Section 16.1(b)).

"HAZARDOUS  MATERIAL"  means any substance,  waste,  solid,  liquid,  or gaseous
matter,  petroleum  or  petroleum  derived  substance,  micro-organism,   sound,
vibration,  ray,  heat,  odour,  radiation,  energy vector,  plasma,  organic or
inorganic matter, whether animate or inanimate,  transient reaction intermediate
or any combination of the foregoing deemed  hazardous,  hazardous  waste,  solid
waste,  or  pollutant,  a  deleterious  substance,  or a  contaminant  under any
Environmental Law.

"INCOME  TAX  EXPENSE"  means,  for  any  period,  the  aggregate  of all  Taxes
(including  deferred  Taxes)  based on the income of a Person  for such  period,
determined in accordance with GAAP.

"INITIAL ADVANCE" means, in respect of a Facility, the Borrowing,  or where more
than one Borrowing may be made thereunder, the first Borrowing,  contemplated to
be made thereunder pursuant to this Agreement.

"INTERCREDITOR  AGREEMENT" means an  intercreditor  agreement among the Lenders,
the Collateral Agent, the lenders under the Private Placement and the collateral
agent  to the  lenders  under  the  Private  Placement,  in form  and  substance
satisfactory to the Lenders and Lenders' Counsel

"INTEREST  CHARGES"  means  for any  period,  the  total of all  items  properly
classified  as interest  expense  for a Person for such  period,  determined  in
accordance with GAAP.

"INTEREST COVERAGE RATIO" means, in respect of any period, the quotient obtained
by dividing (a) the amount (as numerator)  obtained by  subtracting  (i) capital
expenditures  (other than  acquisition  expenditures)  for such period from (ii)
Consolidated  EBITDA  for such  period by (b) the sum of  Consolidated  Interest
Charges for such period.

"INTEREST  PAYMENT DATE" means (a) in respect of a Prime Loan, a U.S. Prime Rate
Loan or an U.S.  Base Rate Loan and Article  XII,  the 1st  Business Day of each
Quarter and (b) in respect of a Libor Loan, the last day of the applicable Libor
Interest Period and, where any

<PAGE>

                                      -13-

Libor Interest  Period is longer than 90 days, the 90th day or the last Business
Day of such Libor Interest Period.

"ISSUING BANK" means, in the case of Letters of Credit issued under the Canadian
Revolving  Facility,  a Canadian Lender which issues Letters of Credit hereunder
and, in the case of Letters of Credit issued under the U.S. Revolving  Facility,
a U.S.  Lender which issues  Letters of Credit  hereunder.  As of the  Effective
Date, the Issuing Bank for Letters of Credit issued under the Canadian Revolving
Facility is The Toronto-Dominion Bank and the Issuing Bank for Letters of Credit
issued  under the U.S.  Revolving  Facility is Bank One, NA or Toronto  Dominion
(Texas) Inc.

"LENDERS" means the Canadian  Lenders and the U.S. Lenders and their  respective
successors  and assigns.  "Lender"  means any Canadian Lender or U.S. Lender, as
the case may be.

"LENDERS'  COUNSEL"  means  Meighen  Demers LLP or any other firm of  solicitors
selected by the Majority Lenders.

"LETTER OF CREDIT" means a Standby  Letter of Credit or a Trade Letter of Credit
issued by an  Issuing  Bank at the  request  of a  Borrower  in an amount not to
exceed the unused portion of the applicable Revolving Facility.

"LETTER OF CREDIT  FEE" means a monthly fee based on the  Applicable  Margin for
Letter  of  Credit  Fees and  equivalent  to  annual  returns  on each  Lender's
Participation  in the  average  daily  balance of the face  amount of Letters of
Credit  outstanding  on or after  the  Effective  Date  and as set  forth in the
definition of Applicable Margin.

"LIBOR" means, with respect to any Libor Interest Period,  the interest rate per
annum  appearing on Telerate  Page 3750,  or if such  Telerate Page shall not be
available,  any successor or similar services as may be selected by the Canadian
Agent) for a period equal to the number of days in the applicable Libor Interest
Period for  deposits  in U.S.  Dollars of amounts  comparable  to the  principal
amount of such Libor Loan to be outstanding  during such Libor Interest  Period,
at or about  11:00  a.m.  (London,  England  time) on the date  which is two (2)
Business Days prior to the first day of the proposed Libor Interest  Period.  If
neither the Telerate  Page nor any  successor or similar  service is  available,
"Libor"  shall  mean,  with  respect  to any  Libor  Interest  Period,  the rate
determined by the Canadian  Agent or the U.S.  Agent as  applicable,  based on a
360-day year,  rounded upwards,  if necessary,  to the nearest whole multiple of
one-sixteenth  of one  percent  (0.0625%),  at  which  the  Canadian  Agent,  in
accordance with its normal practice, would be prepared to offer to leading banks
in the London  inter-bank market for delivery by the Canadian Agent on the first
day of the applicable  Libor Interest Period for a period equal to the number of
days in  such  Libor  Interest  Period,  deposits  in U.S.  Dollars  of  amounts
comparable to the principal amount of such Libor Loans to be outstanding  during
such Libor Interest Period, at or about 11:00 a.m. (London, England time) on the
date which is two (2) Business Days prior to the first day of the proposed Libor
Interest Period for such Libor Loan.

<PAGE>

                                      -14-

"LIBOR  DETERMINATION  DATE" means any date on which the  Canadian  Agent or the
U.S. Agent, as the case may be, determines LIBOR for a Libor Interest Period.

"LIBOR  INTEREST  PERIOD"  means with respect to any Borrowing by way of a Libor
Loan, the period of 30, 60, 90 or 180 days (as selected by the Canadian Borrower
and notified to the Canadian  Agent or selected by a U.S.  Borrower and notified
to the U.S.  Agent,  as the case may be,  pursuant to Section 4.5 and subject to
availability) commencing with the applicable Drawdown Date.

"LIBOR LOAN" means a Loan made available by the U.S. Lenders to a U.S.  Borrower
or by the  Canadian  Lenders  to the  Canadian  Borrower,  as the  case  may be,
outstanding  from  time to time and  denominated  in U.S.  Dollars  and on which
interest is to be paid in accordance with Section 4.1.

"LIBOR MARGIN" means in respect of a Libor Loan or portion  thereof  outstanding
on or after the Effective  Date, the Libor Margin as set forth in the definition
of Applicable Margin.

"LIEN" means with  respect to the property or assets of any Person,  a mortgage,
pledge,  hypothecation,  encumbrance, lien (statutory or other), charge or other
security  interest  of any kind in or with  respect to such  property  or assets
(including,  without  limitation,  any conditional sale or other title retention
agreement,  and any  financing  lease under  which such Person is lessee  having
substantially the same economic effect as any of the foregoing).

"LOANS" means collectively,  that portion of any Borrowing outstanding from time
to time by way of Libor Loans, Bankers' Acceptances, Prime Rate Loans, U.S. Base
Rate Loans,  U.S.  Prime Rate Loans or, as the context  may  require,  all Loans
outstanding at any time.  "Loan" means, at any time, any Libor Loan, Prime Loan,
U.S. Base Rate Loan or U.S. Prime Rate Loan, as the case may be.

"MAJORITY   LENDERS"  means  Lenders  having  at  least  66-2/3%  of  the  Total
Commitments  or,  if  the  Commitments  have  terminated,  of  total  Borrowings
outstanding at such time.

"MATERIAL  CONTINGENT  OBLIGATION" means, in respect of the Canadian Borrower or
its Subsidiaries, a contingent obligation or liability of U.S.$5,000,000 (or the
Equivalent Amount thereof in Cdn.$) or more or which is otherwise required to be
disclosed to securities regulators or exchanges or the public.

"NET INCOME" means,  for any Person for any period,  the Net Income (loss) after
tax of such Person for such period, determined in accordance with GAAP.

"NET PROCEEDS", in respect of any Bankers' Acceptance, means the amount obtained
by  applying  the BA  Discount  Rate to the  Principal  Amount of such  Bankers'
Acceptance in accordance with the formula set out in Schedule "B".

"NON-CONSENTING LENDER" has the meaning ascribed to it in Section 3.11(e).

<PAGE>

                                      -15-

"NON-EXTENDING  LENDERS  CONVERSION  DATE"  has  the meaning  ascribed to it  in
Section 3.11(e).

"NON-EXTENSION  CONVERSION  DATE"  has the  meaning ascribed  to it  in  Section
3.11(d).

"NORMALIZING  ADJUSTMENTS" has the meaning attributed to it in the definition of
"Total Debt Consolidated EBITDA Ratio".

"NOTE PURCHASE  AGREEMENT"  means the Note and Guarantee  Agreement  dated as of
June 21, 2001 of the Canadian  Borrower and FSLP with respect to  US$100,000,000
of 8.06% Guaranteed Senior Secured Notes due 2011.

"NSULC" means FirstService Nova Scotia Corp.

"ORIGINAL CREDIT AGREEMENT" has the meaning attributed thereto in the recitals.

"PARTICIPATION"  of  a  Lender  means  that  Lender's  pro  rata  share  of  the
Commitments as indicated on Schedule "L".

"PERMITTED ENCUMBRANCES" has the meaning ascribed to it in Section 8.2(m).

"PERMITTED LOANS" has the meaning ascribed to it in Section 8.2(j)(ii).

"PERMITTED VTBS" has the meaning ascribed to it in Section 8.2(m).

"PERSON"  means  any  individual,  firm,  company,  corporation,  entity,  joint
venture, joint-stock company, trust, unincorporated organization,  government or
state entity or any association or a partnership (whether or not having separate
legal personality) of two or more of the foregoing.

"PREPAID BANKERS'  ACCEPTANCES"  has the meaning  attributed thereto in  Section
7.5 (c).

"PRIME RATE" means,  at any time, the greater of (a) the floating annual rate of
interest  calculated  from time to time by the Canadian  Agent as the base rate,
calculated on the basis of a year of 365 days,  which the Canadian Agent uses to
determine  rates of interest on Canadian Dollar loans to customers in Canada and
designates as its prime rate and (b) the rate expressed as an annual  percentage
equal to the sum of (x) 1% per annum and (y) the BA Discount Rate.

"PRIME RATE LOANS" means the Loans,  or portion of them,  made  available by the
Canadian  Lenders to the Canadian  Borrower  outstanding from time to time which
are drawn down in Canadian  Dollars and in respect of which  interest is payable
in accordance with Section 4.3.

"PRIME  RATE  MARGIN"  means in respect of a Prime Rate Loan or portion  thereof
outstanding  on or after the Effective  Date, the Prime Rate Margin set forth in
the definition of Applicable Margin.

<PAGE>

                                      -16-

"PRINCIPAL  AMOUNT"  means (a) for a Bankers'  Acceptance or a Letter of Credit,
the face amount thereof and (b) for a Loan, the principal amount thereof.

"PRIVATE  PLACEMENT"  means the private  placement of  U.S.$100,000,000  of debt
described  in the Note  Purchase  Agreement  and to be on terms  and  conditions
acceptable to the Lenders.

"QUARTER" means a fiscal quarter of any Fiscal Year.

"REPAYMENT  DATE" means a day,  other than the Final  Maturity  Date, on which a
Borrower repays all or part of a Loan pursuant to Section 2.2.

"REVOLVING FACILITIES" means, collectively,  the Canadian Revolving Facility and
the U.S. Revolving Facility.

"SECURED  HEDGING  AGREEMENTS"  means one or more interest rate and/or  currency
hedge  agreements  entered  into  between the  Canadian  Borrower and a Canadian
Lender  from  time  to  time  to  a  maximum   aggregate   notional   amount  of
U.S.$40,000,000  for all Canadian Lenders and between a U.S. Borrower and a U.S.
Lender  from  time  to  time  to  a  maximum   aggregate   notional   amount  of
U.S.$100,000,000 for all U.S. Lenders.

"SECOND  AMENDED AND  RESTATED  CREDIT  AGREEMENT"  has the  meaning  attributed
thereto in the recitals.

"SECURITY" means the security described in Schedule "C".

"SHAREHOLDERS'  AGREEMENTS"  means the  shareholders'  agreements  described  in
Schedule "D".

"SHAREHOLDERS' EQUITY" has the meaning attributed thereto under GAAP.

"STANDBY  LETTER  OF  CREDIT"  means a standby  letter  of credit  issued by any
Issuing  Bank  pursuant to Section  2.11 or a letter of  guarantee  issued by an
Issuing Bank which is a Canadian Lender.

"SUBSIDIARY"  of any  Person  means  any  corporation  or other  entity of which
securities or other ownership  interests having ordinary voting power to elect a
majority of the board of directors or of others performing similar functions are
directly or indirectly owned or controlled by such Person.

"SWINGLINE FACILITIES" means, collectively, the Canadian Swingline Facility and
the U.S. Swingline.

"TAX"  includes  all present and future  taxes,  levies,  imposts,  stamp taxes,
duties,  withholdings  and all  penalty,  interest  and other  payments on or in
respect thereof.

<PAGE>

                                      -17-

"TOTAL CANADIAN  COMMITMENTS" means the Cdn.$ Equivalent Amount of US$40,000,000
and  includes  the  Canadian  Revolving  Facility  Commitment  and the  Canadian
Swingline Commitment.

"TOTAL  COMMITMENTS" means the aggregate for all Facilities from time to time of
the  Lenders'  Commitments  from time to time to a maximum  aggregate  amount of
U.S.$140,000,000.

"TOTAL U.S.  COMMITMENTS"  means  US$100,000,000 and includes the U.S. Revolving
Facility Commitment and the U.S. Swingline Commitment.

"TOTAL DEBT" shall include the obligations under this Agreement,  obligations in
respect of the Private  Placement,  Financial Contract  Obligations,  guaranteed
obligations,  capital leases, vendor-take-back financing,  subordinated debt and
any  other  interest  bearing  obligations  of the  Canadian  Borrower  and  its
Subsidiaries  on a consolidated  basis  determined in accordance with GAAP after
deduction of cash-on-hand plus the aggregate of all Cash Amounts.

"TOTAL DEBT/CONSOLIDATED EBITDA RATIO" means, at any time, the quotient obtained
by  dividing  (a) Total  Debt (as  numerator)  by (b)  Consolidated  EBITDA  (as
denominator),  for the  purpose of this  ratio,  calculated  on the basis of the
immediately  preceding  four  consecutive  Quarters so as to include all Persons
that have become  Subsidiaries during the relevant periods in a manner permitted
by the terms of this  Agreement,  with  EBITDA from  Acquisition  Entities to be
included  in the  calculations  by using the  trailing  12 month  EBITDA for the
Acquisition  Entity or  entities  and so as to  exclude  the  EBITDA of a former
Subsidiary that ceased being a Subsidiary during the previous four Quarters;  In
addition,  the Consolidated EBITDA may be adjusted to include a full year impact
of the cost savings in respect of any such Acquisition  Entity which are readily
identifiable and can be immediately implemented, such as elimination of salaries
for redundant  employees and  elimination  of various  administrative  functions
which  will,  in  the  reasonable  opinion  of  the  Canadian  Borrower,  become
unnecessary  or otherwise  performed  more cost  effectively  (such cost savings
being collectively  "Normalizing  Adjustments");  provided that such adjustments
shall only be made if (i) the  Canadian  Borrower  has  provided to the Canadian
Agent details of such  Normalizing  Adjustments  following the completion of the
acquisition  of such  Acquisition  Entity,  and (ii) the Canadian  Agent has not
provided written notice to the Canadian  Borrower within 15 Business Days of the
receipt by the Canadian  Agent of such details that the Majority  Lenders do not
so consent to the Normalizing Adjustments.

"TRADE  LETTER OF CREDIT"  means a trade letter of credit or letter of guarantee
acceptable to the Majority Lenders, acting reasonably, issued by an Issuing Bank
pursuant to Section 2.11.

"TRANSFER CERTIFICATE" means a certificate  substantially in the form set out in
Schedule "E" signed by a Lender and a Transferee.

"TRANSFEREE" means a Canadian Assignee,  a U.S. Assignee or any other transferee
to which a Lender  seeks to  assign  or  transfer  all or part of such  Lender's
rights and obligations hereunder in accordance with Article XIV.

<PAGE>

                                      -18-

"TYPE"  means,  with respect to any Loan, a Prime Rate Loan,  an U.S.  Base Rate
Loan, a U.S. Prime Rate Loan or a LIBOR Loan and otherwise , with respect to any
Borrowing or portion thereof, Bankers' Acceptances or Letters of Credit.

"U.S.  AGENT"  means  Toronto-Dominion  (Texas),  Inc. and  its  successors  and
assigns duly appointed in accordance with Section 13.6.

"U.S. ASSIGNEE" has the meaning ascribed to it in Section 14.3(a).

"U.S. BASE RATE" means for any day and with respect to all U.S. Base Rate Loans,
a fluctuating interest rate per annum equal to the greater of the base rate most
recently  announced by the Canadian Agent as its base rate for U.S. Dollar loans
in Canada.

"U.S. BASE RATE LOANS" mean Loans, or any portion thereof, made available by the
Canadian  Lenders to the Canadian  Borrower  outstanding from time to time which
are  drawdown  in U.S.  Dollars  and in respect of which  interest is payable in
accordance with Section 4.2.

"U.S.  BASE RATE MARGIN" means, in respect of an U.S. Base Rate Loan, or portion
thereof  outstanding  on or after the Effective  Date, the U.S. Base Rate Margin
described in the definition of Applicable Margin.

"U.S.  BORROWERS" means,  collectively,  FS (USA) and FSLP and each of such U.S.
Borrowers being a "U.S. Borrower".

"U.S.  DOLLARS" means the lawful money of the United States of America and "U.S.
$" has a corresponding meaning.

"U.S.  FACILITIES"  means the U.S.  Revolving  Facility  and the U.S.  Swingline
Facility.

"U.S.  LENDERS"  means the Lenders  identified as U.S.  Lenders on the execution
pages hereof  having a  Commitment  to lend or when such  Commitment  shall have
terminated,  having  Borrowings  outstanding to the U.S. Borrower under the U.S.
Facilities.

"U.S.  PRIME  RATE"  means the  floating  rate of  interest  per annum  publicly
announced  from time to time by the U.S.  Agent as its prime lending rate.  This
rate of interest is determined from time to time by the U.S. Agent as a means of
pricing U.S. Dollar loans to customers in the U.S.

"U.S.  PRIME RATE LOAN" means Loans, or any portion  thereof,  made available by
the U.S. Lenders to the U.S.  Borrowers  outstanding from time to time which are
drawndown  in U.S.  Dollars  and in  respect  of which  interest  is  payable in
accordance with Section 4.4.

"U.S.  PRIME RATE MARGIN" means in respect of a U.S. Prime Rate Loan, or portion
thereof  outstanding on or after the effective  date, the U.S. Prime Rate Margin
described in the definition of Applicable Margin.

<PAGE>

                                      -19-

"U.S. REVOLVING FACILITY" means Commitments of the U.S. Lenders to make Advances
to the U.S.  Borrowers in  accordance  with Section  2.2(c) and such Advances so
made.

"U.S.  REVOLVING  FACILITY  COMMITMENT" means Commitments of the U.S. Lenders to
make  Advances to the U.S.  Borrowers  up to  US$96,000,000;  provided  that the
aggregate outstanding  Borrowings under the U.S. Facilities shall not exceed the
Total U.S. Commitments at any time.

"U.S. SWINGLINE COMMITMENT" means the Commitment of the U.S. Swingline Lender to
make  Advances  to  the  U.S.  Borrowers  up to  US$4,000,000  which  Commitment
constitutes  a  subcommitment  of the Total U.S.  Commitments  of Bank One,  NA;
provided that the aggregate  outstanding  Borrowings  under the U.S.  Facilities
shall not exceed the Total U.S. Commitments at any time.

"U.S. SWINGLINE FACILITY" means Commitments of the U.S. Swingline Lender to make
Advances  to the U.S.  Borrowers  in  accordance  with  Section  2.2(d) and such
Advances so made.

"U.S. SWINGLINE LENDER" means Bank One, NA and its successors and assigns.
"UNDERTAKING  TO SECURE" means the Undertaking to be provided by Subsidiaries of
the  Canadian   Borrower,   other  than   Subsidiaries   that  are  Wholly-Owned
Subsidiaries as of the date of this Agreement, substantially in the form set out
in Schedule "F".

"UNLIMITED  GUARANTOR"  means  each  Wholly-Owned  Subsidiary  which is  legally
entitled to give an unlimited guarantee of the obligations of the Borrowers.

"VIOLATION  NOTICE"  means  any  notice  received  by a  Borrower  or any of its
Subsidiaries  from any  governmental  or  regulatory  body or  agency  under any
Environmental  Law  that  such  Borrower  or  any  of  its  Subsidiaries  is  in
non-compliance with the requirements of any Environmental Law.

"WHOLLY-OWNED SUBSIDIARY" means any corporation or other entity of which 100% of
the securities or other ownership  interests are owned directly or indirectly by
a Borrower.

1.2      REFERENCES

         Any reference made in this Agreement to:

(a)      Any of the "Canadian Agent", the "U.S. Agent", the "Collateral  Agent",
         the "Lenders" or a "Lender"  shall so be construed as to include its or
         their respective successors and permitted assigns.

(b)      A time of day is, unless otherwise stated, a reference to Toronto time.

(c)      Sections,  Articles or Schedules is,  unless  otherwise  indicated,  to
         Sections  and  Articles  of this  Agreement  and to  Schedules  to this
         Agreement,  as the case may be. The

<PAGE>

                                      -20-

         provisions of each Schedule  shall constitute  provisions of this
         Agreement as though  repeated at length herein.

(d)      A "month" is a reference to a period  starting on one day in a calendar
         month to but excluding the  numerically  corresponding  day in the next
         calendar month except that,  where any such period would  otherwise end
         on a day other than a Business  Day, it shall end on the next  Business
         Day,  unless that day falls in the calendar  month  succeeding  that in
         which it would  otherwise have ended, in which case it shall end on the
         next  preceding  Business  Day in a  calendar  month  or if there is no
         numerically  corresponding  day in the month in which that period ends,
         that period shall end on the last Business Day in that later month (and
         references  to  "months"  (other  than  "calendar   months")  shall  be
         construed accordingly).

1.3      INTERPRETATION

         In this Agreement:

(a)      the singular includes the plural and vice-versa;

(b)      "in  writing"  or  "written"  includes  printing,  typewriting,  or any
         electronic means of communication  capable of being visibly  reproduced
         at the point of reception, including telex, telecopy and telegraph and,
         as between an Agent and the  Lenders  (but only when so  directed by an
         Agent), Reuters screen or equivalent means of communication;

(c)      a document, notice, note, bill of exchange or other instrument shall be
         considered  to have been  validly  signed or  executed,  if it has been
         signed by either an  original  signature  or a facsimile  signature  or
         stamp affixed by an Authorized Signatory, provided that this Agreement,
         all collateral  documents  contemplated  hereby,  any promissory  notes
         required by a Lender and the bills of exchange or  depository  notes to
         be deposited  pursuant to Section 2.6 shall be considered to be validly
         signed  or  executed  only if  signed by an  original  signature  of an
         Authorized Signatory; and

(d)      all calculations of interest under this Agreement are to be made on the
         basis of the  stated  rates set out  herein and not on the basis of the
         effective  yearly rates  determined  on any basis which gives effect to
         the principle of deemed reinvestment.

1.4      HEADINGS AND TABLE OF CONTENTS

         The headings,  the table of contents, the Articles and the Sections are
inserted  for  convenience  only  and  are  to be  ignored  in  construing  this
Agreement.

1.5      ACCOUNTING TERMS

         All accounting terms not defined in this Agreement shall be interpreted
in accordance with GAAP unless otherwise expressly  indicated.  Unless otherwise
indicated,  references to

<PAGE>

                                      -21-

accounting terms,  ratios or financial tests applicable to the Canadian Borrower
hereunder  shall be references to such terms,  ratios or tests,  calculated  and
determined on a consolidated basis.

1.6      RECITALS

         The recitals to this Agreement form part hereof.

1.7      PRECEDENCE

         In the event that any  provisions  of the  Security  contradict  or are
otherwise  incapable of being  construed in  conjunction  with the provisions of
this  Agreement,  the provisions of this Agreement  shall take  precedence  over
those contained in the Security and, in particular,  if any act of a Borrower or
a Guarantor is expressly  permitted under this Agreement but is prohibited under
the Security,  any such act shall be permitted under this Agreement and shall be
deemed to be permitted under the Security.

                                   ARTICLE II
                                   FACILITIES

2.1      THE CREDIT FACILITIES

(a)      Subject to the terms of this Agreement,  (i) the Canadian Lenders shall
         extend credit to the Canadian Borrower by way of the Canadian Revolving
         Facility; (ii) the Canadian Swingline Lender shall extend credit to the
         Canadian  Borrower  by way of the  Canadian  Swingline,  (iii) the U.S.
         Lenders  shall extend  credit to the U.S.  Borrowers by way of the U.S.
         Revolving  Facility;  and (iv) the U.S.  Swingline  Lender shall extend
         credit to the U.S. Borrower by way of the U.S. Swingline.

(b)      The  proceeds  of  Borrowings  shall be used by the  Borrowers  for the
         purposes  set out in the  recitals  to this  Agreement,  subject to the
         terms and conditions of this Agreement.

2.2      NOTICE AND REVOLVING NATURE OF BORROWINGS

(a)      The Canadian Borrower may, subject to the terms of this Agreement, upon
         giving the Canadian Agent prior written notice:

         (i)      by not later than 10:00 a.m. on the 3rd  Business Day prior to
                  the  Drawdown  Date for each Advance  which is a Libor Loan;

         (ii)     by not later than 10:00 a.m. on the 2nd  Business Day prior to
                  the Drawdown Date or Repayment Date or Acceptance Date, as the
                  case  may be,  for  any  Borrowing  or  Conversion  under  the
                  Canadian Revolving Facility (other than a Libor Loan);

<PAGE>

                                      -22-

borrow,  repay and/or  reborrow or convert in accordance  with Section 2.3 under
the Canadian Revolving  Facility,  (A) in respect of Prime Rate Loans in minimum
tranches of Cdn. $300,000,  and thereafter in multiples of Cdn. $100,000 and (B)
in respect  of U.S.  Base Rate Loans in minimum  tranches  of  U.S.$300,000  and
thereafter in multiples of U.S.$100,000,  (C) in respect of Bankers' Acceptances
in minimum  amounts of Cdn.  $1,000,000  and  thereafter  in  multiples  of Cdn.
$100,000,  (D) in respect of Libor Loans in minimum  amounts of U.S.  $1,000,000
and thereafter in multiples of U.S.  $100,000;  provided that repayment of Libor
Loans shall be made on the last day of the applicable  Libor Interest Period and
the Canadian  Borrower  will not be entitled to have more than an aggregate of 8
Loans outstanding by way of Bankers' Acceptances and Libor Loans at any time.

         Notwithstanding  the  provisions of this Section  2.2(a),  the Canadian
Agent  shall use its best  efforts to make  Advances  by way of Prime Rate Loans
under the Canadian  Revolving Facility available to the Canadian Borrower on the
Business Day  following the receipt by the Canadian  Agent of a Drawdown  Notice
for a Prime Loan.

(b)

         (i)      In order to facilitate the Canadian Borrower's cash management
                  requirements, the Canadian Swingline Lender in its capacity as
                  a Lender agrees to make available to the Canadian Borrower the
                  Canadian  Swingline.  The Canadian Swingline Facility shall be
                  used by the  Canadian  Borrower  to fund  amounts  which would
                  otherwise  be drawn down by the  Canadian  Borrower  by way of
                  Prime Rate Loans or U.S.  Base Rate Loans  under the  Canadian
                  Revolving  Facility  pursuant  to Section  2.2(a) but for such
                  amounts  not  being,  in the case of Prime  Rate  Loans,  in a
                  minimum  principal  amount of  Cdn.$300,000  and  multiples of
                  Cdn.$100,000  thereafter  and in the  case of U.S.  Base  Rate
                  Loans  in a  minimum  principal  amount  of  U.S.$300,000  and
                  multiples  of  U.S.$100,000  thereafter.  Notwithstanding  any
                  other provision hereof, drawdowns under the Canadian Swingline
                  Facility are not subject to any minimum amount. Any Borrowings
                  under the Canadian Swingline Facility may be drawn down by the
                  Canadian  Borrower  without  notice to the Canadian  Swingline
                  Lender by way of presentment to the Canadian  Swingline Lender
                  of cheques and other bills of exchange  issued by the Canadian
                  Borrower.

         (ii)     At any  time  and  from  time to time in its  discretion,  the
                  Canadian  Swingline  Lender  may notify  each of the  Canadian
                  Lenders to provide its Participation in the Canadian Revolving
                  Facility for Advances made under the Canadian  Swingline,  and
                  each Canadian Lender shall  thereupon  provide to the Canadian
                  Agent, for the account of the Canadian Swingline Lender,  such
                  Canadian Lender's  Participation  under the Canadian Revolving
                  Facility;  PROVIDED HOWEVER no such Participation  shall cause
                  any such  Canadian  Lender to exceed  its  Commitment  for the
                  Total  Canadian  Commitments.  The  amounts so provided by the
                  Canadian Lenders in respect of the Canadian Swingline Facility
                  shall be deemed to be Prime Rate Loans or U.S. Base Rate Loans

<PAGE>

                                      -23-

                  denominated  in Cdn$ or U.S.$,  as the case may be,  under the
                  Canadian  Revolving Facility in accordance with the provisions
                  of this Agreement (and for such purposes any notice provisions
                  or minimum amounts of such Loans otherwise required under this
                  Agreement shall be disregarded  except for the proviso of this
                  Section  2.2(ii)).  The  aggregate  of the amounts paid by the
                  Canadian  Lenders  to the  Canadian  Agent in  respect  of the
                  Canadian  Swingline  Facility shall be applied by the Canadian
                  Swingline  Lender to reduce the then  outstanding  Loans under
                  the Canadian Swingline.

         (iii)    Notwithstanding  the  foregoing  (A)  the  Canadian  Swingline
                  Lender may, at its sole option,  put all outstanding  Advances
                  under  the  Canadian   Swingline   Facility  to  the  Canadian
                  Revolving  Facility  Lenders,  (B) in such case,  the Canadian
                  Swingline  Lender  will not make  further  Advances  under the
                  Canadian   Swingline   Facility  and  the  Canadian  Swingline
                  Commitment  shall be  transferred  to the  Canadian  Revolving
                  Facility  Commitment,  and (C) the Canadian  Agent will adjust
                  amounts  outstanding under the Canadian Revolving Facility pro
                  rata to the Total Canadian Commitments.

         (iv)

                  (A)      The Canadian  Borrower shall pay interest  payable on
                           Advances made under the Canadian  Swingline  Facility
                           directly to the Canadian Swingline Lender; and

                  (B)      The Canadian  Swingline  Lender shall  determine  the
                           Prime Rate or the U.S. Base Rate, as the case may be,
                           for Advances made under the Canadian Swingline.

(c)      The U.S.  Borrowers may,  subject to the terms of this Agreement,  upon
         giving the U.S. Agent prior written notice:

         (i)      by not later than 10:00 a.m. on the 3rd  Business Day prior to
                  the Drawdown Date for each Advance which is a Libor Loan;

         (ii)     by not later than 10:00 a.m. on the 2nd  Business Day prior to
                  the Drawdown  Date or Repayment  Date, as the case may be, for
                  any Borrowing or Conversion under the U.S.  Revolving Facility
                  (other than a Libor Loan);

borrow,  repay and/or  reborrow or convert in accordance with Section 2.3, under
the U.S. Revolving Facility,  (A) in respect of U.S. Prime Rate Loans in minimum
tranches of U.S.  $300,000 and thereafter in multiples of U.S.  $100,000 and (B)
in respect of Libor Loans in minimum tranches of U.S.  $1,000,000 and thereafter
in multiples of U.S.  $100,000;  provided that repayment of Libor Loans shall be
made on the  last  day of the  applicable  Libor  Interest  Period  and the U.S.
Borrowers  shall not be entitled to have more than an aggregate of 8 Libor Loans
outstanding at any time.

<PAGE>

                                      -24-

(d)

         (i)      In order to facilitate  each U.S.  Borrower's  cash management
                  requirements,  the U.S.  Swingline Lender in its capacity as a
                  U.S. Lender agrees to make available to the U.S. Borrowers the
                  U.S.  Swingline.  The U.S. Swingline Facility shall be used by
                  the U.S.  Borrowers to fund amounts  which would  otherwise be
                  drawn  down by the U.S.  Borrowers  under  the U.S.  Revolving
                  Facility  pursuant to Section  2.2(c) but for such amounts not
                  being,  in a  minimum  principal  amount of  U.S.$300,000  and
                  multiples of U.S.  $100,000  thereafter.  Notwithstanding  any
                  other provision  hereof,  Drawdowns  under the U.S.  Swingline
                  Facility are not subject to any minimum amount. Any Borrowings
                  under the U.S.  Swingline Facility may be drawn down by way of
                  U.S.  Prime  Rate  Loans by the U.S.  Borrowers  by  providing
                  notice to the U.S.  Swingline  Lender  before 3:00 p.m. on the
                  date of the request for drawdown.

         (ii)     At any time and from time to time in its discretion,  the U.S.
                  Swingline  Lender  may  notify  the U.S.  Agent  that the U.S.
                  Swingline  Lender  wishes each of the U.S.  Lenders to provide
                  its Participation in the U.S.  Revolving Facility for Advances
                  made under the U.S.  Swingline,  in which case the U.S.  Agent
                  shall  forthwith  notify  each  of the  U.S.  Lenders  of such
                  Participation  and each U.S. Lender shall thereupon provide to
                  the U.S. Agent, for the account of the U.S.  Swingline Lender,
                  such U.S.  Lender's  Participation  under  the U.S.  Revolving
                  Facility;  PROVIDED HOWEVER, no such Participation shall cause
                  any such U.S. Lender to exceed its Total U.S. Commitment.  The
                  amounts so provided by the U.S. Lenders in respect of the U.S.
                  Swingline  shall  be  deemed  to  be  U.S.  Prime  Rate  Loans
                  denominated  in U.S.$  under the U.S.  Revolving  Facility  in
                  accordance with the provisions of this Agreement (and for such
                  purposes  any notice  provisions  or  minimum  amounts of such
                  Loans  otherwise   required  under  this  Agreement  shall  be
                  disregarded   except   for  the   proviso   to  this   Section
                  2.2(d)(ii)).  The  aggregate  of the amounts  paid by the U.S.
                  Lenders to the U.S.  Agent in  respect  of the U.S.  Swingline
                  Facility shall be paid by the U.S. Agent to the U.S. Swingline
                  Lender and applied by the U.S.  Swingline Lender to reduce the
                  then outstanding Loans under the U.S. Swingline.

         (iii)    Notwithstanding  the foregoing (A) the U.S.  Swingline  Lender
                  may, at its sole option,  put all  outstanding  Advances under
                  the U.S.  Swingline  Facility to the U.S.  Revolving  Facility
                  Lenders,  (B) in such case, the U.S. Swingline Lender will not
                  make further  Advances under the U.S.  Swingline  Facility and
                  the U.S. Swingline Commitment shall be transferred to the U.S.
                  Revolving  Facility  Commitment,  and (C) the U.S.  Agent will
                  adjust amounts  outstanding under the U.S.  Revolving Facility
                  pro rata to the Total U.S. Commitment.

         (iv)     The U.S.  Borrowers  shall pay interest on Advances made under
                  the U.S.  Swingline  Facility  directly to the U.S.  Swingline
                  Lender;  provided,  however,  that  to  the  extent  any  such
                  interest is due to U.S. Prime Rate Loans of U.S.

<PAGE>

                                      -25-

                  Lenders made in  accordance  with clause (ii)  preceding,  the
                  U.S.  Swingline  Lender shall  immediately  upon receipt remit
                  such funds to the U.S.  Agent  which shall  promptly  pay such
                  interest  to such U.S.  Lenders in  accordance  with the terms
                  hereof for payments on U.S. Prime Rate Loans herein.; and

         (v)      The U.S.  Swingline Lender shall determine the U.S. Prime Rate
                  for Advances made under the U.S. Swingline.

2.3      CONVERSION

         A Borrower may, upon giving prior written  notice to the Canadian Agent
and/or the U.S.  Agent, as the case may be, in accordance with Section 2.2(a) or
(c), as the case may be,  containing  the  information  set out in Schedule  "G"
effective  on  any   Business   Day  during  the  term  of  this   Agreement  (a
"Conversion"), convert on the Conversion Date Advances outstanding from one Type
to another Type to the extent such Type is available hereunder, provided that:

(a)      a Libor Loan may be  converted  to another Type only on the last day of
         the Libor Interest Period applicable to that Libor Loan;

(b)      Borrowings or any portion thereof comprising  Bankers'  Acceptances may
         be converted to another Type only on the  applicable B/A Maturity Date;
         and

(c)      the conditions precedent set out in Section 5.1 have been fulfilled.

The Conversion of any Advances shall not reduce any amount  available  under the
Total Commitments.

2.4      MAKING BORROWINGS

(a)      If the Canadian  Borrower gives prior written  notice,  in the form set
         out in Schedule  "H", to the  Canadian  Agent of its  intention to draw
         down a  Borrowing  under the  Canadian  Revolving  Facility,  including
         Bankers' Acceptances, a Prime Rate Loan, a U.S. Base Rate Loan or Libor
         Loan or a Conversion  in  accordance  with  Section  2.2(a) or 2.3, the
         Canadian Agent shall on the same day it receives the notice notify each
         Canadian  Lender by  telephone or in writing of the amount of the Prime
         Loan, U.S. Base Rate Loan,  Libor Loan or Bankers'  Acceptance and such
         Canadian Lender's portion thereof, and

         (i)      each Canadian Lender shall,  not later than 12:00 noon. on the
                  Drawdown Date, make, or procure to be made, its  Participation
                  in such Bankers'  Acceptances,  Prime Loan, Libor Loan or U.S.
                  Base Rate Loan, as the case may be,  available to the Canadian
                  Agent in accordance with Article X; and

<PAGE>

                                      -26-

         (ii)     the  Canadian  Agent  shall on the  Drawdown  Date,  make such
                  Bankers' Acceptances, Prime Loan, Libor Loan or U.S. Base Rate
                  Loan, as the case may be, available to the Canadian  Borrower,
                  in accordance with Article X.

(b)      If a U.S.  Borrower gives prior written notice,  in the form set out in
         Schedule  "H",  to the  U.S.  Agent  of its  intention  to draw  down a
         Borrowing  under the U.S.  Revolving  Facility,  including a U.S. Prime
         Rate Loan or a Libor Loan, or a  Conversion  of a U.S.  Prime Rate Loan
         or a Libor Loan in  accordance  with  Section  2.2(b) or 2.3,  the U.S.
         Agent  shall on the same day it  receives  the notice  notify each U.S.
         Lender by  telephone  or in writing of the amount of the Libor Loan and
         such U.S. Lender's portion thereof, and

         (i)      each U.S.  Lender  shall,  not later than 12:00  noon.  on the
                  Drawdown Date, make, or procure to be made, its  Participation
                  in the U.S. Prime Rate Loan or Libor Loan, as the case may be,
                  available to the U.S. Agent in accordance with Article X; and

         (ii)     the U.S.  Agent shall,  on the Drawdown  Date,  make such U.S.
                  Prime Rate Loan or Libor Loan,  as the case may be,  available
                  to the U.S. Borrower, in accordance with Article X.

2.5      PARTICIPATION OF EACH LENDER

(a)      The Canadian  Agent is  authorized  by the  Canadian  Borrower and each
         Canadian Lender to allocate  amongst the Canadian  Lenders the Bankers'
         Acceptances  to be issued and  purchased  in such manner and amounts as
         the Canadian Agent may, in its sole and unfettered  discretion consider
         necessary and  equitable,  rounding up or down, so as to ensure that no
         Canadian   Lender  is  required  to  accept  and  purchase  a  Bankers'
         Acceptance  for a  fraction  of Cdn.  $100,000;  provided  however  the
         Canadian Agent shall seek to allocate such Bankers' Acceptances in such
         amounts  and  for  such   terms,   over  time,   as  to  maintain   the
         Participations  of all  such  Canadian  Lenders  in  substantially  the
         relative  amounts  and  percentages  set out on  Schedule  "L".  To the
         extent,  if any,  necessary to maintain each such  Participation as the
         result of the foregoing,  the Canadian Agent shall allocate a lesser or
         greater amount of other Advances to each Canadian Lender.

(b)      At the time of making any Loan, the Canadian  Agent or the U.S.  Agent,
         as the case may be, shall,  if  appropriate,  re-allocate  amounts made
         available to the Borrowers under any of the Loans to give effect to the
         Participation  of each  Lender,  determined  immediately  prior  to the
         making of a Loan.

2.6      BANKERS' ACCEPTANCES

(a)      Each  Banker's   Acceptance  tendered  by  the  Canadian  Borrower  for
         acceptance by a Canadian Lender under the Canadian  Revolving  Facility
         shall be denominated in Canadian Dollars and be payable in Canada.  The
         Canadian  Borrower  acknowledges

<PAGE>

                                      -27-

         that the Canadian  Lenders may require the delivery of drafts which are
         in conformity  with the rules and  procedures  of a clearing  house (as
         that term in defined in the  DEPOSITORY  BILLS AND NOTES ACT  (Canada))
         used by the Canadian Lenders for the delivery,  transfer and collection
         of bankers' acceptances and depository bills.

(b)      The Borrower  shall provide for each accepted  draft at its maturity to
         the  Canadian  Agent  either by  payment of the full  principal  amount
         thereof or through  utilization of the Canadian  Revolving  Facility in
         accordance  with this Agreement or through a combination  thereof.  The
         Canadian  Borrower  may  not at any  time  request  that  any  Bankers'
         Acceptance  be issued if the face  amount  of such  requested  Bankers'
         Acceptance  together with the aggregate of the other  outstanding Loans
         under  the  Canadian  Revolving  Facility,   would  exceed  the  amount
         available to be drawdown under the Canadian  Revolving Facility at such
         time.  Any  amount  owing by the  Canadian  Borrower  in respect of any
         Bankers'  Acceptance  which is not paid or provided  for in  accordance
         with the foregoing shall be deemed to be a Prime Rate Loan owing by the
         Canadian  Borrower to the Canadian  Lenders and shall be subject to all
         of the provisions of this Agreement  applicable to a  Prime Rate  Loan.
         The Canadian  Borrower hereby  authorizes the Canadian Lenders to debit
         its account by the amount  required  to pay any such  drafts made by it
         and accepted as a Bankers' Acceptance hereunder  which is not otherwise
         paid.

(c)      If an Event of Default shall have occurred and shall then be continuing
         unremedied  not waived by the Lenders  (whether or not demand is made),
         the Canadian  Borrower  shall  forthwith  pay to the Canadian  Agent an
         amount equal to the Canadian Lender's maximum potential liability under
         all such outstanding Bankers' Acceptances. Such amount shall be held by
         the  Canadian  Agent as general  and  continuing  cash  collateral  for
         payment of the indebtedness  and liability of the Canadian  Borrower to
         the Canadian  Lenders in respect of such Bankers'  Acceptances  and any
         other obligations to the Canadian Lenders.

(d)      To facilitate the  acceptance of Bankers'  Acceptances  hereunder,  the
         Canadian   Borrower   hereby   authorizes  the  Canadian   Lenders  and
         irrevocably appoints the Canadian Lenders as its attorney:

         (i)      to complete and sign on the Canadian Borrower's behalf, either
                  manually or by facsimile or mechanical  signature,  the drafts
                  to create the  Bankers'  Acceptances  (with,  in the  Canadian
                  Lender's  discretion,  the  inscription  "This is a depository
                  bill subject to the DEPOSITORY BILLS AND NOTES ACT (Canada));

         (ii)     after  the  acceptance  thereof  by  the  applicable  Canadian
                  Lender, to endorse on the Canadian  Borrower's behalf,  either
                  manually  or  by  facsimile  or  mechanical  signature,   such
                  Bankers'  Acceptances in favour of the applicable purchaser or
                  endorsee   thereof   including,   in  the  Canadian   Lender's
                  discretion,  the  Canadian  Lender  or a  clearing  house  (as
                  defined by the DEPOSITORY BILLS AND NOTES ACT (Canada));

<PAGE>

                                      -28-

         (iii)    to deliver such Bankers'  Acceptances  to such purchaser or to
                  deposit such Bankers'  Acceptances  with such clearing  house;
                  and

         (iv)     to comply with the  procedures  and  requirements  established
                  from time to time by the  Canadian  Lenders  or such  clearing
                  house in respect of the delivery,  transfer and  collection of
                  bankers' acceptances and depository bills.

All Bankers' Acceptances so completed,  signed, endorsed, delivered or deposited
by a Canadian  Lender on behalf of the Canadian  Borrower  shall be binding upon
the Canadian Borrower as if completed,  signed, endorsed, delivered or deposited
by it. The records of the Canadian Lenders and such clearing house shall, in the
absence of manifest error, be conclusively binding on the Canadian Borrower. The
Lenders  shall not be  liable  for any  claim  arising  by reason of any loss or
improper use of such drafts or Bankers'  Acceptances except for damages suffered
by  the  Canadian  Borrower  caused  by  the  intentional  misconduct  or  gross
negligence of a Canadian Lender.

(e)      The  Borrowers  shall not claim  any days of grace for the  payment  at
         maturity of any drafts  presented and accepted as Bankers'  Acceptances
         hereunder.

(f)      When  the  Canadian  Borrower  wishes  to  make a  Borrowing  by way of
         Bankers'  Acceptances  it shall  give the  Canadian  Agent  the  notice
         required pursuant to Section 2.2. Bankers' Acceptances shall have terms
         of at least 1 month and not more than 6 months  excluding days of grace
         (and which shall,  in no event,  end on a date after the Final Maturity
         Date).

(g)      On the same day it  receives  such  notice,  the  Canadian  Agent shall
         notify by  telephone  or in  writing  all the  Canadian  Lenders of the
         details of the proposed issue, specifying, for each Canadian Lender:

         (i)      the  Principal  Amount  of  the  Bankers'  Acceptances  to  be
                  accepted and purchased by such Canadian Lender; and

         (ii)     the term of such Bankers' Acceptances.

2.7      ACCEPTANCE DATE PROCEDURE

         On the Acceptance Date, the following provisions shall apply:

(a)      At or about 10:00 a.m.  on the  Acceptance  Date,  the  Canadian  Agent
         shall  promptly  determine  the BA Discount Rate.

(b)      Forthwith  that same day,  the Canadian  Agent shall  advise each
         Canadian Lender of:

         (i)      the BA Discount Rate;

         (ii)     the amount of the  Acceptance Fee applicable to those Bankers'
                  Acceptances  to be  accepted by such  Canadian  Lender on such
                  Acceptance  Date, such

<PAGE>

                                      -29-

                  Canadian Lender being  authorized by the Canadian  Borrower to
                  collect such  Acceptance  Fee out of the Net Proceeds of those
                  Bankers' Acceptances mentioned in subsection (iii);

         (iii)    the Net Proceeds of those Bankers'  Acceptances to be accepted
                  and purchased by such Canadian Lender on such Acceptance Date;
                  and

         (iv)     the amount obtained (the "Available  Proceeds") by subtracting
                  the Acceptance  Fee mentioned in subsection  (ii) from the Net
                  Proceeds mentioned in subsection (iii).

(c)      Not later than 12:00 noon that same day,  each  Canadian  Lender  shall
         make available to the Canadian Agent its Available Proceeds.

(d)      That same day, the  Canadian  Agent shall  transfer all such  Available
         Proceeds so made available to it to the Canadian Borrower in accordance
         with Section  10.3 and shall  notify the Canadian  Borrower on such day
         either by telex or telephone (to be confirmed  subsequently  by letter)
         of the  details  of the  issue,  substantially  in the  form set out in
         Schedule "I".

2.8      PURCHASE OF BANKERS' ACCEPTANCES

         Before  giving value to the  Canadian  Borrower,  the Canadian  Lenders
shall, on the Acceptance Date, accept the Bankers' Acceptances, by inserting the
appropriate  Principal  Amount,  Acceptance  Date and  maturity  date thereof in
accordance with the Canadian  Borrower's  notice  relating  thereto and affixing
their acceptance  stamps thereto,  and shall purchase same. The Principal Amount
so accepted  and  purchased  by any such  Canadian  Lender shall not exceed such
Canadian Lender's unutilized Commitment.

2.9      PAYMENT OF BANKERS' ACCEPTANCES

         The  Bankers'  Acceptances  shall be  payable  in  accordance  with the
following provisions:

(a)      The Canadian  Borrower  shall pay to the Canadian Agent for the account
         of the Canadian  Lenders an amount equal to the Principal Amount of the
         Bankers' Acceptances on their respective B/A Maturity Dates.

(b)     In the event the Canadian  Borrower fails to notify the Canadian  Agent,
        in writing,  not later than 10:00 a.m.  (such notice,  if verbal,  to be
        confirmed to the Canadian  Agent in writing  later the same day, but not
        necessarily  by 10:00 a.m.),  2 Business  Days prior to any B/A Maturity
        Dates of a Bankers'  Acceptance,  that the Canadian  Borrower intends to
        pay with its own funds the Principal Amount of the Bankers'  Acceptances
        due on such B/A Maturity Dates,  the Canadian  Borrower shall be deemed,
        for all purposes, to have given the Canadian Agent notice to convert the
        Principal  Amount  of

<PAGE>

                                      -30-

        such Bankers' Acceptances into a Prime Loan denominated in Cdn.$ and the
        provisions of Section 2.3 shall apply mutatis mutandis save that:

         (i)      such B/A Maturity Date shall be considered to be the Drawdown
                  Date of such Prime Loan;

         (ii)     the  proceeds  of such  Prime  Loan  shall  be used to pay the
                  Principal  Amount of the Bankers'  Acceptances due on such B/A
                  Maturity Date; and

         (iii)    on such B/A Maturity Date,  each Canadian  Lender,  instead of
                  making its  Participation  in such Prime Loan available to the
                  Canadian Agent,  shall first directly apply its  Participation
                  in such  Prime Loan in  payment  of its  Participation  in the
                  Principal  Amount  of  the  Bankers'   Acceptances   accepted,
                  purchased and issued by such  Canadian  Lender and due on such
                  B/A Maturity Date.

2.10     SET-OFF AND NETTING

         On any Acceptance  Date,  Drawdown Date or Repayment Date, the Canadian
Agent or the U.S.  Agent,  as the case may be,  shall be entitled to set-off and
net amounts payable on such date by the Canadian Agent or the U.S. Agent, as the
case may be, to a Lender for the account of any Borrower against amounts payable
on such date by such Lender to the Canadian Agent or the U.S. Agent, as the case
may  be,  in  connection  with  transactions  conducted  in the  same  basis  of
borrowing, for the account of such Borrower.  Similarly, on any Acceptance Date,
Drawdown Date or Repayment Date, each Lender shall be entitled to set-off and to
net amounts payable on such date by such Lender to a Borrower (by payment to the
Canadian Agent or the U.S. Agent,  as the case may be),  against amounts payable
on such date by such Borrower to such Lender,  in  accordance  with the Canadian
Agent's or the U.S. Agent's, as the case may be, calculations.

2.11     LETTERS OF CREDIT

(a)     Subject to the notice  provisions  of Sections  2.2 and 2.3 and upon the
        terms and subject to the conditions  hereof, the applicable Issuing Bank
        shall,  at  the  request  of a  Borrower,  issue  under  the  applicable
        Revolving  Facility  one or more  irrevocable  Letters of Credit in such
        Issuing Bank's usual form (or such other form as may be required by such
        Borrower  and is  acceptable  to the Issuing  Bank  acting  reasonably),
        expiring no later than,  in the case of Standby  Letters of Credit,  365
        days from the date of  issuance  and,  in the case of Trade  Letters  of
        Credit,  270 days from the date of issuance  and in no case later than 3
        Business Days before the Final Maturity Date,  provided that the maximum
        amount  payable  under all  Letters of Credit  shall not, at the time of
        issue of each Letter of Credit, exceed U.S.$10,000,000 or the Equivalent
        Amount thereof in Canadian Dollars.

(b)     In the event that an Issuing  Bank is called  upon by a  beneficiary  to
        honour a Letter of Credit issued by such Issuing Bank, such Issuing Bank
        shall forthwith give notice

<PAGE>

                                      -31-

        thereof to the applicable Borrower.  Unless such Borrower has made other
        arrangements  with the  Issuing  Bank with  respect  to  payment  to the
        Issuing  Bank of an amount  sufficient  to permit  the  Issuing  Bank to
        discharge  its  obligations  under the Letter of Credit plus that amount
        equal to any and all charges and expenses which the Issuing Bank may pay
        or incur relative to such Letter of Credit,  any such payment so payable
        in Canadian  Dollars  with respect to the  Canadian  Revolving  Facility
        shall be deemed to be a Drawdown of a Prime Rate Loan under the Canadian
        Revolving  Facility  and any  amount so  payable  in U.S.  Dollars  with
        respect to a Letter of Credit issued on behalf of the Canadian  Borrower
        shall be deemed to be a Drawdown by way of an U.S.  Base Rate Loan under
        the  Canadian  Revolving  Facility,  and any such amount so payable with
        respect to a Letter of Credit issued on behalf of a U.S.  Borrower shall
        be deemed to be a Drawdown  by way of an U.S.  Prime Rate Loan under the
        U.S.  Revolving  Facility  provided  that the  provisions of Section 2.2
        regarding notices shall not apply to such Loans.

(c)     Any Issuing Bank shall notify the Canadian Agent or the U.S.  Agent,  as
        the case may be, of each  issuance or  amendment of any Letter of Credit
        on the day upon which such issuance or amendment  occurs and the Issuing
        Bank shall provide the Canadian Agent or the U.S. Agent, as the case may
        be,  with  monthly  reports  setting  out the face  amount of Letters of
        Credit  outstanding  on each  day of the  preceding  month.  Each of the
        Lenders,  other than an Issuing Bank,  shall be deemed to have purchased
        from such  Issuing  Bank its  Participation  of the face  amount of each
        Letter  of Credit  issued by such  Issuing  Bank.  Each of the  Canadian
        Lenders  agrees to indemnify the Issuing Bank issuing  Letters of Credit
        under the Canadian  Facilities  and each of the U.S.  Lenders  agrees to
        indemnify  the Issuing  Bank  issuing  Letters of Credit  under the U.S.
        Facilities, in each case as to such Lender's Participation of any amount
        paid by the  Issuing  Bank under any Letter of Credit  plus that  amount
        equal to any and all payments, losses, costs, charges and expenses which
        such  Issuing  Bank may pay or incur  relative to such Letter of Credit,
        except to the extent due to the gross negligence or wilful misconduct of
        such  Issuing  Bank in the  issuance  or  performance  of such Letter of
        Credit.

(d)      The  Borrowers  shall  indemnify  the Issuing Banks against any and all
         actions, proceedings, costs, damages, expenses, taxes (other than taxes
         on overall net income, assets or capital), claims and demands which the
         Issuing  Banks may incur or  sustain by reason of or arising in any way
         whatsoever in connection  with the opening,  establishing  or paying of
         the amounts  payable under Letters of Credit issued at the request of a
         Borrower  or  arising in  connection  with any  amounts  payable by any
         Issuing Bank or any Lender thereunder.

(e)      Each  Borrower  for  which a Letter of  Credit  has been  issued on its
         behalf shall pay to the Canadian Agent or U.S.  Agent,  as the case may
         be, for the account of the Canadian Lenders or the U.S. Lenders, as the
         case may be, each month that Letters of Credit issued on behalf of such
         Borrower are outstanding,  the applicable  Letter of

<PAGE>

                                      -32-

        Credit Fee and the applicable Agent shall promptly pay such fees to such
        Lenders in accordance with the terms hereof.

(f)      Each  Borrower  for  which a Letter of  Credit  has been  issued on its
         behalf shall pay to the  applicable  Issuing Bank,  sundry  charges and
         out-of-pocket  expenses  payable in respect of Letters of Credit  which
         the Issuing Bank issues pursuant to a request of such Borrower.

                                  ARTICLE III
                             REPAYMENT AND ACCOUNTS

3.1      REPAYMENT

         The Principal  Amount of all  Borrowings  outstanding  under all of the
Facilities  shall be repaid in full by the Borrowers on the Final  Maturity Date
and the Commitments in respect of such Facilities shall terminate on such date.

3.2      ACCOUNTS KEPT BY THE CANADIAN AGENT

         The Canadian  Agent shall keep in its books Accounts for the Letters of
Credit,  the Prime Rate Loans,  U.S.  Base Rate  Loans,  Libor  Loans,  Bankers'
Acceptances  and  other  amounts  payable  by the  Canadian  Borrower  under the
Canadian  Revolving Facility  (including for greater  certainty,  any Loans made
under the  Canadian  Swingline  Facility  which  become Loans under the Canadian
Revolving Facility).  The Canadian Agent shall make appropriate entries showing,
as debits, the amount of the indebtedness of the Canadian Borrower in respect of
the Letters of Credit,  the Prime Rate Loans, U.S. Base Rate Loans, Libor Loans,
and  Bankers'  Acceptances,  as the  case  may be,  the  amount  of all  accrued
interest,  and any  other  amount  due to the  Canadian  Lenders  or the  Agents
pursuant hereto, according to the respective Participation of each Lender in the
Canadian Revolving Facility,  and showing, as credits, each payment or repayment
of principal and interest made in respect of such  indebtedness,  as well as any
other  amount  paid to the  Canadian  Lenders  or the  Agents  pursuant  hereto,
according  to  the  respective   Participation  of  each.  Such  Accounts  shall
constitute  (in the absence of  manifest  error)  prima facie  evidence of their
content  against the Canadian  Borrower and the Canadian  Lenders.  The Canadian
Agent shall supply any Canadian Lender and the Canadian Borrower,  upon request,
with statements of such Accounts.

3.3      ACCOUNTS KEPT BY THE CANADIAN SWINGLINE LENDER

         The Canadian  Swingline Lender shall keep in its books Accounts for the
Prime  Rate  Loans and U.S.  Base Rate  Loans and other  amounts  payable by the
Canadian Borrower under the Canadian  Swingline.  The Canadian  Swingline Lender
shall make appropriate entries, showing as debits, the amount of indebtedness of
the  Canadian  Borrower  in respect  of the Prime Rate Loans and U.S.  Base Rate
Loans,  as the case may be, the  amount of all  accrued  interest  and any other
amount due to the Canadian Swingline Lender and showing as

<PAGE>

                                      -33-

credits,  each payment or repayment of principal and interest made in respect of
such  indebtedness.  Such Accounts shall  constitute (in the absence of manifest
error) prima facie evidence of their content against the Canadian Borrower.  The
Canadian  Swingline  Lender  shall  supply any  Canadian  Lender or the Canadian
Borrower, upon request, with statements of such Accounts.

3.4      ACCOUNTS KEPT BY THE U.S. SWINGLINE LENDER

         The U.S.  Swingline  Lender  shall keep in its books  Accounts for U.S.
Prime Rate Loans and other amounts  payable by the U.S.  Borrower under the U.S.
Swingline.  The U.S. Swingline Lender shall make appropriate entries, showing as
debits,  the amount of indebtedness of the U.S.  Borrower in respect of the U.S.
Prime Rate Loans, the amount of all accrued interest and any other amount due to
the U.S.  Swingline Lender and showing as credits,  each payment or repayment of
principal and interest made in respect of such indebtedness. Such Accounts shall
constitute  (in the absence of  manifest  error)  prima facie  evidence of their
content against the U.S.  Borrower.  The U.S.  Swingline Lender shall supply any
U.S. Lender or U.S. Borrower, upon request, with statements of such Accounts.

3.5      ACCOUNTS KEPT BY THE U.S. AGENT

         The U.S.  Agent  shall keep in its books  Accounts  for the  Letters of
Credit,  the U.S. Prime Rate Loans and Libor Loans and other amounts  payable by
the U.S.  Borrowers  under the U.S.  Revolving  Facility  (including for greater
certainty,  any Loans made under the U.S.  Swingline  Facility which have become
Loans under the U.S. Revolving Facility).  The U.S. Agent shall make appropriate
entries showing, as debits, the amount of the indebtedness of the U.S. Borrowers
in respect of the U.S. Prime Rate Loans and Libor Loans, as the case may be, the
amount of all accrued interest,  and any other amount due to the U.S. Lenders or
the Agents pursuant  hereto,  according to the respective  Participation of each
Lender,  and showing,  as credits,  each  payment or repayment of principal  and
interest made in respect of such indebtedness,  as well as any other amount paid
to the U.S. Lenders or the Agents pursuant  hereto,  according to the respective
Participation  of each.  Such  Accounts  shall  constitute  (in the  absence  of
manifest error) prima facie evidence of their content against the U.S. Borrowers
and the U.S.  Lenders.  The U.S.  Agent shall supply any U.S.  Lender and either
U.S. Borrower, upon request, with statements of such Accounts.

3.6      ACCOUNTS KEPT BY EACH CANADIAN LENDER

         Each  Canadian  Lender  shall  keep in its  books,  in  respect  of its
Participation,  accounts for the Letters of Credit,  the Prime Rate Loans,  U.S.
Base Rate Loans, Libor Loans,  Bankers' Acceptances and other amounts payable by
the Canadian  Borrower  under this  Agreement.  Each Canadian  Lender shall make
appropriate  entries showing,  as debits,  the amount of the indebtedness of the
Canadian Borrower towards it in respect of the Letters of Credit, the Prime Rate
Loans, U.S. Base Rate Loans, Libor Loans, and Bankers' Acceptances,  as the case
may be,  the amount of all  accrued  interest  and any other  amount due to such
Lender pursuant  hereto and, as credits,  each payment or repayment of principal
and interest  made in respect of such  indebtedness  as well as any other amount
paid to such Lender  pursuant

<PAGE>

                                      -34-

hereto.  These accounts shall constitute (in the absence of manifest error or of
contradictory  entries in the  Accounts),  prima facie evidence of their content
against the Canadian Borrower.

3.7      ACCOUNTS KEPT BY U.S. LENDERS

         Each  U.S.   Lender  shall  keep  in  its  books,  in  respect  of  its
Participation,  accounts for the Letters of Credit, U.S. Prime Rate Loans, Libor
Loans,  and other amounts  payable by the U.S.  Borrowers  under this Agreement.
Each U.S. Lender shall make appropriate  entries showing,  as debits, the amount
of the indebtedness of the U.S. Borrower towards it in respect of the Letters of
Credit,  U.S. Prime Rate Loans,  Libor Loans,  as the case may be, the amount of
all accrued  interest  and any other amount due to such Lender  pursuant  hereto
and, as credits,  each payment or repayment  of principal  and interest  made in
respect of such  indebtedness  as well as any other  amount  paid to such Lender
pursuant  hereto.  These accounts  shall  constitute (in the absence of manifest
error or of  contradictory  entries in the  Accounts),  prima facie  evidence of
their content against the U.S. Borrowers.

3.8      PROMISSORY NOTES

         At the  request  of any  Lender,  each  Borrower  under the  Facilities
applicable  to such Lender shall execute and deliver to such Lender a promissory
note substantially in the form attached hereto as Schedule "Q".

3.9      EXCESS RESULTING FROM EXCHANGE RATE CHANGE

         Any time that,  following one or more fluctuations in the exchange rate
of the Cdn. Dollar against the U.S. Dollar, the sum of:

(a)      the Borrowings in Cdn. Dollars under the Canadian Facilities; and

(b)      the  Equivalent  Amount  in  Canadian  Dollars  of the  Borrowings  in
         U.S.  Dollars  under  the  Canadian Facilities;

         exceeds the Total  Commitments  under the Canadian  Facilities  then in
         effect, the Canadian Borrower shall, within 10 days thereafter, either:

(c)      make the  necessary  payments or  repayments  to the Canadian  Agent or
         Canadian Swingline Lender, as the case may be, to reduce such sum to an
         amount equal to or less than the Total  Commitments  under the Canadian
         Facilities in effect on the date of such payment or repayment; or

(d)     maintain or cause to be maintained  with the Canadian  Agent deposits of
        U.S.  Dollars in an amount  equal to or greater than the amount by which
        such sum exceeds the Total Commitments under the Canadian  Facilities in
        effect on the date such  deposits are  provided to the  Canadian  Agent,
        such  deposits to be  maintained in such form and upon such terms as are
        acceptable to the Canadian  Agent.  Until such time as such

<PAGE>

                                      -35-

        sum shall no longer  exceed  the Total  Commitments  under the  Canadian
        Facilities, the Canadian Agent shall invest the deposits, in such manner
        and form of investment  as shall be mutually  acceptable to the Canadian
        Borrower and the Canadian  Agent,  and income  earned  thereon  shall be
        received by the Canadian Agent for the Canadian  Borrower's  account and
        paid to the Canadian Borrower. Without in any way limiting the foregoing
        provisions,  the Canadian Agent shall, on each Acceptance Date, Drawdown
        Date,  Interest  Payment Date and B/A Maturity  Date make the  necessary
        exchange rate  calculations to determine  whether any such excess exists
        on such date and, if there is an excess, it shall so notify the Canadian
        Borrower.

3.10     CURRENCY

         Borrowings and payments in respect  thereof are payable in the currency
in which they are denominated.

3.11     EXTENSION OF FINAL MATURITY DATE

(a)      June 28, 2002 or, if the Facility is extended as a 364 day facility for
         a further 364 days such subsequent  extension date,  shall in each case
         be an "Extension  Date".  Subject to the terms of this  Agreement,  not
         earlier  than 90 days  but not  later  than 60 days  prior  to the next
         pending  Extension  Date, the Borrowers  collectively  may request,  in
         writing to the Canadian Agent and the U.S.  Agent,  an extension of the
         Final  Maturity Date for all but not less than all Facilities to a date
         which is one year  after the  Final  Maturity  Date then in effect  (an
         "Extension Request").

(b)      Upon receipt of an Extension  Request,  the Canadian Agent shall advise
         the Canadian  Lenders and the U.S. Agent shall advise the U.S.  Lenders
         of such Extension Request and each Lender shall advise their respective
         Agent within 30 days of receipt thereof whether such Lender consents to
         the Extension Request.

(c)      Unless the Majority  Lenders agree to any Extension  Request  extending
         the facility as a 364 day revolving  facility,  the Final Maturity Date
         shall not be extended by any Lender.

(d)      In the event that  either the  Majority  Lenders  have not agreed to an
         Extension  Request or the  Borrowers do not provide the Canadian  Agent
         and the U.S.  Agent with an  Extension  Request as  provided in Section
         3.11(a),  the next pending Extension Date shall become a "Non-Extension
         Conversion Date" and the Lenders' Commitments under the Facilities will
         convert to  two-year  reducing  non-revolving  term  facilities  in the
         principal  amounts of the  Advances  outstanding  on the  Non-Extension
         Conversion Date and the Facilities  shall be reduced and/or repaid,  as
         follows:

         (i)      on or  before  the  first  anniversary  of  the  Non-Extension
                  Conversion  Date in an amount  at least  equal to 10% of Total
                  Commitments on the Non-Extension Conversion Date; and

<PAGE>

                                      -36-

         (ii)     on or  before  the  second  anniversary  of the  Non-Extension
                  Conversion  Date,  the amount  necessary  to fully and finally
                  repay all amounts  outstanding to the Lenders and the Lenders'
                  Commitments with respect to the Facilities shall be cancelled.

(e)     If the Majority  Lenders have consented to an Extension  Request but one
        or more Lenders (each a  "Non-Consenting  Lender") do not consent to the
        Extension  Request,  the  Canadian  Agent  shall so advise the  Canadian
        Borrower  with  respect to a  Non-Consenting  Lender which is a Canadian
        Lender,  or the U.S.  Borrowers with respect to a Non-Consenting  Lender
        which is a U.S. Lender,  as the case may be, and the Lenders  consenting
        to the  Extension  Request  may (i)  elect  to have  one or more of such
        consenting Lenders assume all or a ratable portion of the Commitments of
        such  Non-Consenting  Lender,  or (ii) prepay the portion of  Facilities
        outstanding to Non-Consenting Lenders and accordingly the Commitments of
        such  Non-Consenting  Lenders  shall be cancelled or (iii) the Extension
        Date shall become a  "Non-Extending  Lenders  Conversion  Date", and the
        Non-Extending Lenders' Commitments under the Facilities shall convert to
        two-year reducing  non-revolving term facilities in the principal amount
        of  the  Advances  outstanding  to  the  Non-Extending  Lenders  on  the
        Non-Extending  Lenders  Conversion Date and the  Non-Extending  Lenders'
        Commitments shall be reduced and/or repaid as follows:

         (i)      on or  before  the  first  anniversary  of  the  Non-Extending
                  Lenders  Conversion  Date,  the amount  necessary  to repay at
                  least 10% of the Non-Extending  Lender's pro rata share of the
                  principal amount outstanding on the Extension Date; and

         (ii)     on or  before  the  second  anniversary  of the  Non-Extending
                  Lenders  Conversion  Date, the amount necessary to fully repay
                  all amounts  outstanding to the Non-Extending  Lenders and the
                  Non-Extending   Lenders   Commitments   with  respect  to  the
                  Facilities shall be cancelled.

                                   ARTICLE IV
                            INTEREST, ACCEPTANCE FEE,
                    LETTER OF CREDIT FEE AND COMMITMENT FEES

4.1      INTEREST ON LIBOR LOANS

(a)     The U.S. Borrowers shall pay, on each applicable  Interest Payment Date,
        to the U.S. Agent for the account of the U.S.  Lenders  interest on each
        Libor Loan in U.S.  Dollars  drawn down by the U.S.  Borrowers  for each
        Libor  Interest  Period at that rate per  annum  determined  by the U.S.
        Agent to be equal to the sum of the applicable  Libor Margin plus LIBOR.
        Each determination by the U.S. Agent of the rate of interest  applicable
        to a Libor Interest  Period shall,  in the absence of manifest error, be
        final,  conclusive  and  binding  upon the U.S.  Borrowers  and the U.S.
        Lenders.  Upon  determination of the rate of interest  applicable on the
        Libor Determination Date, the

<PAGE>

                                      -37-

        U.S. Agent shall notify the U.S.  Borrowers and the U.S. Lenders of such
        rate. Such interest shall be calculated daily on the basis of the actual
        number of days elapsed divided by 360.

(b)     The Canadian  Borrowers shall pay, on each applicable  Interest  Payment
        Date,  to the  Canadian  Agent for the account of the  Canadian  Lenders
        interest on each Libor Loan in U.S.  Dollars  drawn down by the Canadian
        Borrowers  for  each  Libor  Interest  Period  at that  rate  per  annum
        determined  by  the  Canadian  Agent  to be  equal  to  the  sum  of the
        applicable Libor Margin plus LIBOR.  Each  determination by the Canadian
        Agent of the rate of  interest  applicable  to a Libor  Interest  Period
        shall,  in the  absence of  manifest  error,  be final,  conclusive  and
        binding  upon the Canadian  Borrowers  and the  Canadian  Lenders.  Upon
        determination   of  the  rate  of  interest   applicable  on  the  Libor
        Determination  Date,  the  Canadian  Agent  shall  notify  the  Canadian
        Borrowers and the Canadian  Lenders of such rate. Such interest shall be
        calculated  daily on the  basis of the  actual  number  of days  elapsed
        divided by 360.

(c)      The yearly rate of interest to which the rate  determined in accordance
         with the foregoing provisions of this Section 4.1 is equivalent, is the
         rate so determined multiplied by the actual number of days in that year
         and divided by 360.

4.2      INTEREST ON U.S. BASE RATE LOANS

(a)      The Canadian  Borrower  shall pay to the Canadian Agent for the account
         of the Canadian  Lenders in U.S.  Dollars,  interest on each U.S.  Base
         Rate Loan made under the  Canadian  Revolving  Facility as evidenced by
         the Accounts of the Canadian Agent at a rate per annum equal to the sum
         of:

         (i)      the U.S. Base Rate Margin; and

         (ii)     the U.S. Base Rate.

(b)      The Canadian  Borrower  shall pay to the Canadian  Swingline  Lender in
         U.S.  Dollars,  interest  on each U.S.  Base  Rate Loan made  under the
         Canadian  Swingline  Facility  as  evidenced  by  the  Accounts  of the
         Canadian Swingline Lender at a rate per annum equal to the sum of:

         (i)      the U.S. Base Rate Margin; and

         (ii)     the U.S. Base Rate.

(c)      Each change in the  fluctuating  rate for U.S. Base Rate Loan will take
         place simultaneously with a corresponding change in the U.S. Base Rate.

(d)      The yearly rate of interest to which the rate  determined in accordance
         with the foregoing provisions of this Section 4.2 is equivalent, is the
         rate so determined multiplied by the actual number of days in that year
         and divided by 360.

<PAGE>

                                      -38-

(e)      This interest is payable  quarterly in arrears on each Interest Payment
         Date for the period up to and  including  the last day of the  previous
         Quarter  and shall be  calculated  daily on the basis of the  number of
         days elapsed divided by 360.

4.3      INTEREST ON PRIME RATE LOANS

(a)      The Canadian  Borrower  shall pay the Canadian Agent for the account of
         the Canadian  Lenders in Canadian  Dollars  interest on each Prime Loan
         made under the Canadian Revolving Facility as evidenced by the Accounts
         at a rate per annum equal to the sum of:

         (i)      the Prime Rate Margin; and

         (ii)     the Prime Rate.

(b)      The Canadian  Borrower  shall pay to the Canadian  Swingline  Lender in
         Canadian  Dollars,  interest on each Prime Loan made under the Canadian
         Swingline  Facility  as  evidenced  by the  Accounts  of  the  Canadian
         Swingline Lender at a rate per annum equal to the sum of:

         (i)      the Prime Rate Margin; and

         (ii)     the Prime Rate.

(c)      Each change in the fluctuating interest rate for a Prime Rate Loan will
         take place  simultaneously  with the corresponding  change in the Prime
         Rate.

(d)      This interest is payable  quarterly in arrears on each Interest Payment
         Date for the period up to and  including  the last day of the  previous
         Quarter and shall be calculated daily on the basis of the actual number
         of days elapsed in a year of 365 or 366 days, as the case may be.

4.4      INTEREST ON U.S. PRIME RATE LOANS

(a)      The U.S.  Borrowers  shall pay to the U.S. Agent for the account of the
         U.S. Lenders in U.S. Dollars,  interest on each U.S. Prime Rate Loan as
         evidenced by the Accounts at a rate per annum equal to the sum of:

         (i)      the U.S. Prime Rate Margin; and

         (ii)     the U.S. Prime Rate.

(b)      The U.S.  Borrowers  shall  pay to the U.S.  Swingline  Lender  in U.S.
         Dollars  interest  on each U.S.  Prime  Rate Loan as  evidenced  by the
         Accounts of the U.S.  Swingline Lender at a rate per annum equal to the
         sum of:

         (i)      the U.S. Prime Rate Margin; and

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                                      -39-

         (ii)     the U.S. Prime Rate.

(c)      Each  change in the  fluctuating  rate for a U.S.  Prime Rate Loan will
         take place simultaneously with a corresponding change in the U.S. Prime
         Rate.

(d)      The yearly rate of interest to which the rate  determined in accordance
         with the foregoing provisions of this Section 4.4 is equivalent, is the
         rate so determined multiplied by the actual number of days in that year
         and divided by 360.

(e)      This interest is payable  quarterly in arrears on each Interest Payment
         Date for the period up to and  including  the last day of the  previous
         Quarter  and shall be  calculated  daily on the basis of the  number of
         days elapsed divided by 360.

4.5      LIBOR INTEREST PERIODS

         If a U.S.  Borrower or the  Canadian  Borrower is borrowing by way of a
Libor Loan or if a U.S. Borrower or the Canadian Borrower elects to convert into
a Libor Loan pursuant to Section 2.3, the applicable  Borrower  shall,  prior to
the  expiration or beginning of each Libor  Interest  Period , select and notify
the  Canadian  Agent  and/or  the U.S.  Agent,  as the  case may be,  at least 3
Business Days prior to:

(a)      the last day of the current Libor Interest Period for such Libor Loan;

(b)      the  Conversion  Date,  as the case may be, of the next or new,  as the
         case may be, Libor Interest Period applicable to such Libor Loan, which
         new Libor Interest Period, as applicable, shall commence on and include
         the day following the expiration of the prior Libor Interest Period. If
         a Borrower fails to select and to notify the Canadian Agent or the U.S.
         Agent, as the case may be, of the Libor Interest Period applicable to a
         Libor  Loan,  such  Borrower  shall be deemed to have  selected a Libor
         Interest Period, of one month or 30 days, as the case may be.

In any event,  no Libor  Interest  Period shall end on a date falling  after the
Final Maturity Date. The Borrowers shall ensure, when selecting a Libor Interest
Period,  that no Libor  Loan  shall be  required  to be prepaid in order for the
Borrowers to perform their obligations under Section 3.1.

4.6      INTEREST ON OVERDUE AMOUNTS

         The Canadian  Borrower  shall pay to the Canadian Agent for the account
of the Canadian  Lenders and the U.S.  Borrowers shall pay to the U.S. Agent for
the account of the U.S. Lenders, on demand,  interest on all overdue payments in
connection  with this  Agreement,  at a rate per annum  which is equal to 2% per
annum in excess of (a) the  applicable  rates of  interest  (inclusive  of Libor
Margin)  payable  under  Section  4.1 in the case of payments  of  principal  or
interest on Libor Loans or (b) the  applicable  rates of interest  (inclusive of
Prime Rate Margin,  U.S.  Base Rate Margin or U.S.  Prime Rate  Margin)  payable

<PAGE>

                                      -40-

under  Sections  4.2,  4.3 or 4.4 in the case of any other  payments in Cdn.$ or
U.S.$, as applicable.

4.7      ACCEPTANCE FEE

         An Acceptance Fee shall be:

(a)      payable by the Canadian Borrower to the Canadian Agent for distribution
         to the  Canadian  Lenders  on the  Acceptance  Date for  each  Bankers'
         Acceptance issued; and

(b)      calculated on the Principal Amount of each Bankers'  Acceptance for the
         number of days in the term of such Bankers'  Acceptance  and based on a
         year of 365 days.

4.8      COMMITMENT FEES

(a)      From and including the date hereof to and including the Final Maturity
         Date,

         (i)      the Canadian Borrower shall pay to the Canadian Agent, for the
                  account of the Canadian Lenders to be allocated among and paid
                  to such  Lenders  pro rata in  accordance  with such  Lenders'
                  respective  Commitments,  the commitment fees described in the
                  definition   of   Applicable   Margin  on  the  daily  average
                  unutilized  portion  of  the  Commitments  in  respect  of the
                  Canadian Revolving Facility for each Quarter;

         (ii)     the  U.S.  Borrowers  shall  pay to the  U.S.  Agent,  for the
                  account of the U.S.  Lenders to be allocated among and paid to
                  such  Lenders  pro  rata  in  accordance  with  such  Lenders'
                  respective  Commitments,  the commitment fees described in the
                  definition   of   Applicable   Margin  on  the  daily  average
                  unutilized  portion of the  Commitments in respect of the U.S.
                  Revolving Facility for each Quarter;

         (iii)    the  Canadian  Borrower  shall pay to the  Canadian  Swingline
                  Lender,  the  commitment  fees  described in the definition of
                  Applicable  Margin on the daily average  unused portion of the
                  Commitments in respect of the Canadian  Swingline Facility for
                  each Quarter; and

         (iv)     the U.S. Borrowers shall pay to the U.S. Swingline Lender, the
                  commitment  fees  described in the  definition  of  Applicable
                  Margin  or  the  daily  average   unutilized  portion  of  the
                  commitments in respect of the U.S. Swingline Facility for each
                  Quarter.

4.9      LETTER OF CREDIT FRONTING FEE

         The Canadian Borrower or a U.S. Borrower,  as the case may be shall pay
to the Issuing Bank for its own account  issuing a Letter of Credit on behalf of
such Borrower,  a letter of credit fronting fee of .125% of the Principal Amount
of such Letter of Credit.

<PAGE>

                                      -41-

4.10     EFFECTIVE DATE FOR CHANGES IN APPLICABLE MARGINS

(a)      Applicable  Margins  will be adjusted  effective as of the first day of
         the month following the date that the Canadian  Borrower is required to
         deliver financial statements in accordance with Section 8.2(i).

(b)      In  the  event  that  the  Borrower  fails  to  deliver  its  financial
         statements when required in accordance with Section 8.2(i),  Applicable
         Margins shall be adjusted to highest margins applicable until the first
         day of the month following the delivery of financial  statements of the
         Canadian  Borrower   providing  the  information   confirming  that  an
         adjustment  to the  Applicable  Margins has come into effect or that no
         adjustment to the Applicable  Margins has come into effect, as the case
         may be.

(c)      Notwithstanding  any other  provision of this  Agreement,  in the event
         that the Borrowers  are entitled to a downward  adjustment to the rates
         applicable   to  any   Borrowings   outstanding   by  way  of  Bankers'
         Acceptances, Letters of Credit, and/or LIBOR Loans such rates shall not
         be adjusted downward prior to:

         (i)      in the case of Bankers' Acceptances, the applicable B/A
                  Maturity Date;

         (ii)     in the case of Letters of Credit, the applicable expiry date;
                  and

         (iii)    in the case of  Libor  Loans,  the end of the  applicable
                  Libor  Interest Period.

                                   ARTICLE V
                              CONDITIONS PRECEDENT

5.1      CONDITIONS PRECEDENT

         The Lenders'  and Issuing  Banks'  obligations  to make  available  any
Borrowings  under the Facilities on any Drawdown Date or Acceptance  Date (other
than in respect of a Conversion  pursuant to Section 2.3) or date of issuance of
a Letter of Credit is subject to and conditional  upon the  satisfaction of each
of the following conditions:

(a)      On each Drawdown  Date,  Acceptance  Date or date of issuance of a
         Letter of Credit:

         (i)      the  Canadian  Agent and the U.S.  Agent,  as the case may be,
                  shall have  received a notice of the  requested  Borrowing  or
                  Conversion  in   accordance   with  Section  2.2  or  2.3,  as
                  applicable, and with respect to Letters of Credit, the Issuing
                  Bank shall have received an application therefor and any other
                  documents   it  may  require,   all  in  form  and   substance
                  satisfactory to such Issuing Bank;

         (ii)     there shall exist no Event of Default and no condition,  event
                  or act which,  with the giving of notice or lapse of time,  or
                  both, would constitute an Event of Default; and

<PAGE>

                                      -42-

         (iii)    the  representations  and  warranties  set out in Section  8.1
                  would,  if made on such  date,  be true  and  accurate  in all
                  material  respects on each such  Drawdown  Date or  Acceptance
                  Date or date of issuance of a Letter of Credit;

(b)      on or before the  Initial  Drawdown  Date,  Acceptance  Date or date of
         issuance of a Letter of Credit,  the Canadian  Agent has  received,  in
         sufficient  quantities  to provide 1 copy to each  Lender,  in form and
         substance satisfactory to the Collateral Agent and Lenders' Counsel and
         in the case of clause (iv) of this paragraph (b), in form and substance
         satisfactory to the U.S. Lender referred to therein:

         (i)      this Agreement  duly executed by the Borrowers,  the Unlimited
                  Guarantors,  the Lenders,  the Canadian Agent,  the U.S. Agent
                  and the Collateral Agent;

         (ii)     certified   copies  of  the   articles  and   certificate   of
                  incorporation  of each  of the  Borrowers  and  the  Unlimited
                  Guarantors,  their respective  borrowing by-laws,  if any, and
                  resolutions   of  their   respective   boards   of   directors
                  authorizing  the execution,  delivery and  performance of this
                  Agreement and the Security by them respectively;

         (iii)    the certificate (without personal liability) of the president,
                  the  chief  financial  officer  or  treasurer  of  each of the
                  Borrowers  and  the  Unlimited  Guarantor  confirming,  in all
                  material  respects,  the veracity of the  representations  and
                  warranties set out in Section 8.1, substantially as set out in
                  Schedule "J" supplemented by all such certificates as Lenders'
                  Counsel may require;

         (iv)     promissory note(s) requested by a U.S. Lender;

         (v)      incumbency  certificates  setting  forth  the  signatures  and
                  titles of Authorized Signatories for each Borrower, certifying
                  their  authority  to sign  this  Agreement  and any  documents
                  contemplated hereby or provided in connection herewith;

         (vi)     the  Canadian  Agent shall have  received the opinions in form
                  and substance  satisfactory to the Canadian Agent, the Lenders
                  and  the  Lenders'  Counsel  of each  of  Borrowers'  Canadian
                  Counsel,  Borrowers'  U.S.  Counsel,  each  addressed  to  the
                  Canadian Agent,  the U.S.  Agent,  the Collateral  Agent,  the
                  Lenders and Lenders' Counsel;

         (vii)    the Canadian  Agent shall have  received  opinions of Lenders'
                  Counsel  addressed to the Canadian Agent,  the U.S. Agent, the
                  Collateral   Agent   and   Lenders   in  form  and   substance
                  satisfactory to the Collateral Agent, the Lenders and Lenders'
                  Counsel;

         (viii)   all  registrations and filings and amendments to registrations
                  and filings in respect of the Security shall have been made to
                  the satisfaction of Lenders'

<PAGE>

                                      -43-

                  Counsel  in  such  jurisdictions  as  Lenders'  Counsel  shall
                  determine to be necessary or appropriate;

         (ix)     there shall not have  occurred  any event,  act or thing which
                  would  have  a  material   adverse  effect  on  the  business,
                  operations  or properties of the Borrowers or any Guarantor or
                  the rights and  Security  of the  Lenders or on the ability of
                  any Borrower or any  Guarantor to perform all its  obligations
                  under this Agreement or any Security;

         (x)      the Canadian  Agent shall have received and be satisfied  with
                  the insurance policies of the Borrowers and the Guarantors and
                  the terms and extent of coverage  thereunder (such policies to
                  include, without limitation, the standard mortgagee clause);

         (xi)     the Lenders shall have  received and be satisfied  with a list
                  disclosing  all of the  Canadian  Borrowers'  Subsidiaries  in
                  existence on the initial  Acceptance  Date or Drawdown Date or
                  date of  issuance  of a  Letter  of  Credit,  and  shall  have
                  completed  and be  satisfied  with the  results  of their  due
                  diligence  review of the  Borrowers,  Guarantors and the other
                  Subsidiaries,   including  review  of  audited  and  unaudited
                  intercompany debt arrangements,  the Shareholders' Agreements,
                  call options,  non-competition  agreements with key management
                  personnel,  compliance with environmental regulations,  leases
                  and outstanding material litigation;

         (xii)    the Collateral Agent, the Lenders, the Borrowers,  the lenders
                  under the Private  Placement and the  collateral  agent to the
                  lenders under the Private  Placement shall have entered in the
                  Intercreditor Agreement;

         (xiii)   the  Agents,  the  Lenders  and  Lenders'  Counsel  will  have
                  reviewed  and  shall be  satisfied  with the terms of the Note
                  Purchase  Agreement and all other material  agreements related
                  to the Private Placement;

         (xiv)    the Collateral  Agent, the Canadian Agent, the U.S. Agent, the
                  Lenders and Lenders'  Counsel shall have  received  payment of
                  all fees or other  amounts  then  due and  payable  to them in
                  connection with this Agreement; and

         (xv)     the Canadian Agent shall have received a list  disclosing,  in
                  sufficient detail, all Material Contingent  Obligations of the
                  Borrowers and any of their Subsidiaries.

5.2      CONDITIONS PRECEDENT TO BORROWINGS TO MAKE ACQUISITIONS

         The  Lenders'   obligations   to  make  available  any  Borrowings  for
acquisitions  on any  Drawdown  Date  or  Acceptance  Date  are  subject  to and
conditional  upon  the  satisfaction  of each of the  following  conditions  (in
addition to the conditions set out in Section 5.1):

<PAGE>

                                      -44-

(a)      at least 5 Business Days prior to such Drawdown Date or Acceptance Date
         the Canadian  Agent or the U.S.  Agent,  as the case may be, shall have
         received:

         (i)      a certificate from the Canadian  Borrower's  president,  chief
                  financial  officer or treasurer,  substantially as in Schedule
                  "N", to the following effect:

                  (A)      the  proposed  Borrowing  shall  be used to  assist a
                           Borrower in financing the  acquisition of an Eligible
                           Business;

                  (B)      in the opinion of the Canadian Borrower or, where the
                           Canadian  Borrower has  identified  the  existence of
                           potentially   Hazardous  Materials,   a  third  party
                           environmental  consultant  engaged  by  the  Canadian
                           Borrower  of  experience  and  reputation  reasonably
                           satisfactory  to  such  Agent  certifying  that  such
                           Eligible  Business  has been and can  continue  to be
                           conducted   in   compliance   with   any   applicable
                           Environmental  Laws  and  that  no  material  adverse
                           change in the earnings of the applicable  Acquisition
                           Entity  or  the   Canadian   Borrower   shall  result
                           therefrom; and

                  (C)      that no Event of Default or event  which with  notice
                           or the  passage of time or both will  become an Event
                           of  Default or will  occur as a  consequence  of such
                           acquisition.

5.3      WAIVER

         The terms and  conditions  of Sections 5.1 and 5.2 are inserted for the
sole benefit of the Lenders.  The terms and  conditions of Section 5.1 or 5.2 in
whole or in part may be  waived  only with the prior  written  agreement  of all
Lenders and with or without  terms or  conditions  in respect of any  Borrowing,
without  prejudicing  the Lenders'  rights to assert them in whole or in part in
respect of any other Borrowing.

5.4      HOSTILE TAKEOVER

         Notwithstanding  any other provision of this Agreement,  if any portion
of the  Facilities  are to be used to fund a hostile  takeover,  any  Lender may
refuse to fund its  Participation  with respect to such hostile  takeover if the
Lender reasonably  determines,  by providing such funding, that it may be placed
in a conflict of interest.

                                   ARTICLE VI
                       PREPAYMENT, CANCELLATION, MANDATORY
                          APPLICATION OF CASH PROCEEDS

6.1      PREPAYMENT AND CANCELLATION

(a)     The  Borrowers may at any time prepay,  in whole or in part,  Borrowings
        outstanding  under the Facilities  and thereby reduce or cancel,  as the
        case may be, corresponding

<PAGE>

                                      -45-

        Commitments  by the amount of such  prepayment  upon giving the Canadian
        Agent  and/or  the U.S.  Agent,  as the case may be, at least 3 Business
        Days' prior written notice, in the case of the Canadian  Facilities,  in
        minimum  amounts of  Cdn.$10,000,000  and  multiples of Cdn.  $1,000,000
        thereafter (or the  Equivalent  Amount thereof in U.S.$) and in the case
        of the U.S.  Facilities,  in  minimum  amounts of U.S.  $10,000,000  and
        multiples  of  U.S.  $1,000,000  thereafter.   Any  such  prepayment  of
        Borrowings  outstanding  under the Facilities  shall be applied  against
        reductions of Commitments and related repayment  instalments required to
        be made under Section 3.11 in inverse order of maturity

For greater certainty  repayments made under a Revolving Facility or a Swingline
Facility  pursuant  to  Section  2.2 do not  constitute  prepayments  under this
Section 6.1.

(b)      The Borrowers may, at any time,  reduce or cancel any unused portion of
         the  Commitments,  provided that to the extent any such reduction shall
         cause any Borrowings  outstanding to exceed the  Commitments so reduced
         or cancelled such Borrowers  shall prepay any such excess in accordance
         with paragraph (a) above.

(c)      Any  prepayment  and  reduction  or  cancellation  relating to Bankers'
         Acceptances,  or Libor  Loans shall be made  subject to the  Borrowers'
         obligations under Section 7.4.

(d)      Any such  prepayment and reduction  shall reduce the Commitments of the
         Lenders pro rata according to their respective Participations.

6.2      NOTICE

         Each notice of prepayment and reduction or cancellation  given pursuant
to this Article shall be irrevocable, and shall specify the date upon which such
prepayment  and  reduction  or  cancellation  is to be made.  A Borrower may not
thereafter  give a notice of prepayment  and reduction or  cancellation  of such
part of the  Facilities  for a date  other  than  the date so  specified  in any
previous such notice.

6.3      STATUS OF LENDER

         If, at any time:

(a)      the Commitment of any Lender is, in accordance  with the terms of this
         Agreement,  permanently  reduced to zero;

(b)      all indebtedness  owed to such Lender by the Borrowers  hereunder or in
         connection  herewith  has been  finally and  indefeasibly  satisfied in
         full; and

(c)      such Lender is under no further actual or contingent obligation
         hereunder;

then such Lender  shall cease to be a party hereto and a Lender for the purposes
hereof;  provided  however that all indemnities and provisions of this Agreement
for the benefit of such Lender shall survive termination for the benefit of such
Lender.

<PAGE>

                                      -46-

6.4      FEES

         Upon cancellation of the Facilities in accordance with this Article VI,
all accrued and unpaid fees for the Facilities as provided shall be paid in full
on and to such cancellation date.

6.5      MANDATORY APPLICATION OF CASH PROCEEDS

         Each  Borrower  shall  apply  100% of the net cash  proceeds  which are
derived from the sale or disposition of assets by it or any of its Subsidiaries,
other  than  in the  ordinary  course  of  business,  towards  repayment  of the
Principal  Amount  of  Borrowings  outstanding  from  time  to  time  under  the
Facilities,  except to the extent that such net proceeds are reinvested within 6
months of receipt  thereof  (unless such time period is extended  with the prior
written consent of the Majority Lenders), in the businesses of the Borrowers and
their Subsidiaries and except to the extent that such net proceeds are less than
Cdn.$5,000,000  in the  aggregate.  Any such  prepayment  shall not constitute a
reduction of availability under the Facilities until such time as the Facilities
have been converted to non-revolving  term facilities in accordance with Section
3.11 in which case any prepayments shall constitute a permanent reduction of the
Facilities.

                                  ARTICLE VII
                   SPECIAL LIBOR AND INCREASED COST PROVISIONS

7.1      SUBSTITUTE RATE OF BORROWING

         If, on any Libor  Determination Date during the term of this Agreement,
any Lender reasonably  determines (which determination is final,  conclusive and
binding upon the  Borrowers  and the Lenders) and advises the Canadian  Agent or
the U.S. Agent, as the case may be, that:

(a)      adequate and fair means do not exist for ascertaining the rate of
         interest on a Libor Loan,

(b)      the making or the continuing of a loan bearing  interest  substantially
         similar to a Libor Loan by such  Lender  has  become  impracticable  by
         reason of circumstances  which materially and adversely  affect, in the
         case of a Libor Loan, the London interbank market, or

(c)      deposits in U.S. Dollars are not available to such Lender,  in the case
         of a Libor Loan, in the London interbank market, in sufficient  amounts
         in the ordinary  course of business for the  applicable  Libor Interest
         Period to make, fund or maintain a loan bearing interest  substantially
         similar to a Libor Loan during such Libor Interest Period,

then, the Canadian Agent or the U.S.  Agent,  as the case may be, shall promptly
notify  the  applicable  Borrower  in  writing  and such  Borrower  shall (if so
notified), promptly and, in any

<PAGE>

                                      -47-

event,  no  later  than  by  close  of  business  on the  day it  receives  such
notification,  advise such Agent of the Type into which the  Borrower  wishes to
convert  such Libor  Loan.  Should a Borrower  fail to advise  such  Agent,  the
Borrower shall be deemed to have given such Agent notice to convert (a) any such
Libor Loan to the Canadian Borrower denominated in U.S.$, into an U.S. Base Rate
Loan,  and any such Libor  Loan will be deemed to be an U.S.  Base Rate Loan for
all  purposes  under  this  Agreement,  and (b) any  such  Libor  Loan to a U.S.
Borrower,  into an U.S.  Prime Rate Loan, and any such Libor Loan will be deemed
to be an U.S. Prime Rate Loan for all purposes under this Agreement.

         With a view to returning to the normal operation of the Facilities, the
Canadian  Agent or the U.S.  Agent,  as the case  may be,  shall,  after  having
consulted with the applicable  Borrowers and the Lenders,  examine the situation
at least weekly to determine if the circumstances  described in Section 7.1 (a),
(b) or (c) still prevail.

7.2      INCREASED COST

         If the introduction of, or any change in,  applicable law,  regulation,
treaty or official  directive  or  regulatory  requirement  now or  hereafter in
effect  (whether  or not  having the force of law) or in the  interpretation  or
application  thereof by any court or by any judicial or  governmental  authority
charged with the interpretation or administration thereof, or if compliance by a
Lender with any request from any central bank or other fiscal, monetary or other
regulatory  authority  (other  than a change in the  relative  credit  rating or
borrowing ability of a Lender) (whether or not having the force of law):

(a)      subjects  any Lender to any Tax,  or changes  the basis of  taxation of
         payments due to such Lender or increases  any existing Tax, on payments
         of principal,  interest or other amounts  payable by a Borrower to such
         Lender under this Agreement (in each case,  except for Taxes on the net
         income or capital of such Lender),

(b)      imposes,  modifies or deems  applicable any reserve,  special  deposit,
         regulatory,  capital or similar  requirement  against assets held by or
         deposits in or for the account of, or loans bearing  interest at a rate
         fixed on the  basis of the  London  interbank  market  rates by, or any
         other  acquisition of funds for loans bearing  interest at a rate fixed
         on the basis of the London interbank market rates or any commitments or
         authorizations  in  respect  thereof  by any Lender or an office of any
         Lender, or

(c)      imposes  on any  Lender  any  other  condition  with  respect  to  this
         Agreement  (except  for  Taxes on the net  income  or  capital  of such
         Lender),

and the result of Sections  7.2 (a),  (b) or (c) is to increase  the cost to any
Lender or to reduce the income  receivable  by such Lender in respect of a Libor
Loan by any amount,  the applicable  Borrower shall pay to the Canadian Agent or
the U.S.  Agent,  as the case may be, for the account of any such  Lender,  that
amount which  compensates  such Lender for such  additional cost or reduction in
income  ("Additional  Compensation")  arising and  calculated as and from a date
which shall not be earlier than the 30th day preceding  the date the  applicable
Borrower  receives the notice  referred to in the following  sentence.  Upon any
Lender  having

<PAGE>

                                      -48-

determined  that it is entitled to Additional  Compensation,  it shall  promptly
notify the Canadian Agent or the U.S.  Agent, as the case may be, and such Agent
shall promptly notify the applicable  Borrower.  A certificate by any manager of
such Lender  setting  forth the amount of the  Additional  Compensation  and the
basis for it shall be  submitted  by such Lender to such Agent and  forwarded by
such Agent, to the applicable  Borrower and,  absent  manifest  error,  shall be
prima  facie  evidence  of the  amount of the  Additional  Compensation  and the
applicable  Agent shall debit,  from the  applicable  Borrower's  accounts,  the
amount  stipulated as Additional  Compensation in such certificate in accordance
with Section 10.8.

         If an Agent  notifies a Borrower  pursuant to this  Section  7.2,  such
Borrower shall have the right,  upon written  irrevocable  notice to that effect
delivered to such Agent at least 10 Business Days prior to the end of such Libor
Interest  Period,  to repay or convert such Lender's  Participation  in any such
Libor Loan in full, together with payment of accrued interest and the Additional
Compensation to the date of payment, to U.S. Base Rate Loans which do not suffer
the same defect or U.S.  Prime Rate Loans,  as the case may be,  denominated  in
U.S.$.

7.3      ILLEGALITY

         If the introduction of, or any change in,  applicable law,  regulation,
treaty or official directive,  or regulatory  requirement (whether or not having
the force of law) or in the  interpretation or application  thereof by any court
or by any governmental authority charged with the administration  thereof, makes
it unlawful,  or prohibited for any Lender to make, to fund or to maintain Libor
Loans,  such  Lender may, by written  notice to the  Canadian  Agent or the U.S.
Agent,  which  notice  shall  be  promptly  communicated  by such  Agent  to the
applicable  Borrower  terminate its  obligations to make, to fund or to maintain
Libor Loans and the  applicable  Borrower  shall prepay or convert such Lender's
Participation  in the Libor  Loans  forthwith  (or at the end of any  applicable
Libor  Interest  Period as such Lender in its discretion  agrees)  together with
payment of all  additional  amounts as may be applicable to the date of payment,
to U.S.  Base Rate Loans which do not suffer the same defect or U.S.  Prime Rate
Loans, as the case may be, denominated in U.S.$.

7.4      INDEMNITY

         If a Borrower  prepays or  converts,  whether  pursuant to Section 6.1,
7.2, 7.3 or 7.5 or otherwise  repays  pursuant to Section 6.5, a Libor Loan on a
day other than the last day of an Libor  Interest  Period,  such Borrower  shall
indemnify the Lenders for any loss,  cost or expense (except that in the case of
prepayment  or conversion  pursuant to Section 7.3,  such loss,  cost or expense
shall be  restricted  to actual  costs  incurred  by the  Lenders)  incurred  in
maintaining or redeploying  deposits  obtained by the Lenders to fund such Libor
Loan.  The  provisions of Section  11.1(d)  shall apply to such  indemnification
mutatis mutandis.

7.5      OTHER INCREASED COSTS OR REDUCTIONS IN RETURN

(a)     If, with respect to any  accommodation of any kind or nature provided by
        the Lenders under this Agreement, whether by way of Bankers' Acceptances
        or otherwise (each

<PAGE>

                                      -49-

        accommodation   being   in  this   Section   7.5   referred   to  as  an
        "Accommodation") and as a result of the introduction of or any change in
        any  law,  regulation,  rule  or  order  or  in  its  interpretation  or
        administration  or by  reason  of any  compliance  with  any  guideline,
        request or  requirement  from any fiscal,  monetary  or other  authority
        (other than a change in the relative credit rating or borrowing  ability
        of a Lender with respect to such  Accommodation)  (whether or not having
        the  force of law)  which it is  customary  for a bank or other  lending
        institutions to comply with in respect of all its loans or facilities of
        similar  type in Canada or the U.S.  as the case may be, in  relation to
        Facilities made available to the Borrowers:

         (i)      any Lender  incurs a cost (which it would not  otherwise  have
                  incurred) or becomes liable to make a payment (calculated with
                  reference   to   the   Borrowings    outstanding    under   an
                  Accommodation)  with  respect  to  continuing  to  provide  or
                  maintain an Accommodation (other than Taxes imposed on the net
                  income or capital of such Lender);

         (ii)     any reserve, special deposit or similar requirement is imposed
                  or increased with respect to an  Accommodation  increasing the
                  cost thereof to any Lender; or

         (iii)    any Lender suffers a reduction in its effective  return on the
                  date  hereof,  on the  transactions  contemplated  under  this
                  Agreement  (as  determined  by such Lender  after  taking into
                  account any  reduction  in the rate of return  (before Tax) on
                  its overall  capital  arising as a  consequence  of compliance
                  with any such guideline, request or requirement as aforesaid);

                  then the Borrowers shall,  subject to the terms and conditions
                  hereof,  pay to such Lender such amount (the "Additional Other
                  Compensation")  as will  compensate  the  Lender  for and will
                  indemnify  the  Lender  against  such  increase  in  costs  or
                  reduction  of rate of return  with  respect to the  Facilities
                  (arising and  calculated as and from a date which shall not be
                  earlier  than  the  30th day  preceding  the  date a  Borrower
                  receives notice  from the Canadian Agent or the U.S. Agent, as
                  the case may be, pursuant to Section 7.5 (b) below).

(b)     The  Lender  shall,  forthwith,  after  incurring  a cost  as set out in
        Section 7.5 (a)(i),  suffering an increase in cost as set out in Section
        7.5 (a) (ii) or suffering a reduction in its effective return as set out
        in Section 7.5 (a) (iii) (each being in this  Section  referred to as an
        "Event")  entitling  the  Lender  to the  payment  of  Additional  Other
        Compensation  and the Lender  determining to claim such Additional Other
        Compensation, shall give notice to the Canadian Agent or the U.S. Agent,
        as the case may be, of the Additional  Other  Compensation  claimed with
        details of the Event  giving rise  thereto and the Agent shall  promptly
        provide a copy of such notice to the  applicable  Borrower.  Such Lender
        shall at that time or within 20 days thereafter  provide to such Agent a
        certificate  setting  out in  reasonable  detail  a  compilation  of the

<PAGE>

                                      -50-

        Additional  Other  Compensation   claimed  (and  where  appropriate  the
        Lender's  reasonable  allocation  to  a  Facility  of  Additional  Other
        Compensation  with respect to the  aggregate of such similar  facilities
        granted by the Lender  affected by such Event) or, if the Lender is then
        unable to determine the Additional  Other  Compensation or the method of
        compilation  thereof,  an estimate of such Additional Other Compensation
        and/or  the  method  or the  basis on which  the  Lender  estimates  the
        calculation will be made which estimate will be confirmed or adjusted by
        the aforesaid  certificate.  The Agent shall promptly  provide a copy of
        such  certificate to the  applicable  Borrower.  The  certificate of the
        Lender with respect to the Additional Other  Compensation shall,  absent
        manifest error,  constitute  prima facie evidence of the amount payable.
        The  Borrower  shall,  within 60 days of receipt of such notice from the
        Lender, pay to such Agent, for the account of the Lender, the Additional
        Other  Compensation  (or the estimated  Additional  Other  Compensation)
        claimed but if the  Additional  Other  Compensation  claimed and paid is
        greater or lesser  than the  Additional  Other  Compensation  as finally
        determined, the Lender or the Borrower, as the case may be, shall pay to
        the other the amount  required to adjust the  payment to the  Additional
        Other  Compensation  required  to be paid.  The  obligation  to pay such
        Additional  Other  Compensation  for  subsequent  periods will continue,
        subject as herein provided,  until the earlier of the termination of the
        Accommodation  affected by the Event  referred to in the notice given by
        the Lender to the Agent or the lapse or  cessation  of the Event  giving
        rise to the Additional Other Compensation.

(c)     Within 120 days of receipt of the above-mentioned notice from the Agent,
        the Borrower may notify such Agent that it elects to repay or cancel, as
        the case may be, an Accommodation with respect to which Additional Other
        Compensation is claimed, or such Lender's Participation therein, and, if
        such  election to repay or cancel is made,  the  Borrower  shall 45 days
        after the  giving of the notice of  election  to repay or cancel to such
        Agent (for  distribution  to the Lenders or to such Lender,  as the case
        may be) such Accommodation or Participation,  as the case may be, pay or
        cancel the same, together with payment of accrued interest,  if any, and
        the Additional  Other  Compensation  (or the estimated  Additional Other
        Compensation)   applicable  thereto  calculated  to  the  date  of  such
        repayment  or  cancellation.   If  any  such  repayment   constitutes  a
        prepayment of Bankers' Acceptances,  the Canadian Borrower shall deposit
        with  the  Canadian  Agent  (for the  benefit  of the  Canadian  Lenders
        involved) an amount equal to the face amount of all Bankers' Acceptances
        then  outstanding  which  are  to  be  prepaid  (the  "Prepaid  Bankers'
        Acceptances").  The Canadian  Agent shall,  upon maturity of the Prepaid
        Bankers' Acceptances,  apply the sum so deposited against payment of the
        Prepaid  Bankers'  Acceptances  and remit to the  Canadian  Borrower the
        interest earned on the sum deposited.

(d)      For greater  certainty,  the costs  referred to in Section 7.5(a) which
         may be  included in  Additional  Other  Compensation  shall not include
         costs (i) which have already  been  factored  into the Prime Rate,  the
         U.S. Base Rate or the U.S. Prime Rate, as the case may be or (ii) which
         are  attributable  to  staff  time  and  related  administrative  costs
         incurred in the preparation and submission of compliance reports.

<PAGE>

                                      -51-

7.6      ADDITIONAL COST IN RESPECT OF TAX

(a)     Each  payment  to  be  made  by a  Borrower  or an  Unlimited  Guarantor
        hereunder or in  connection  herewith to any other party hereto shall be
        made free and clear of and  without  deduction  for or on account of Tax
        (except  for  Taxes on the net  income or  capital  of a Lender or Taxes
        resulting  from such Lender  changing its  residency  for tax  purposes)
        unless a Borrower or such Unlimited Guarantor is required to make such a
        payment  subject to the deduction or  withholding  of Tax, in which case
        the sum payable by such Borrower or such Unlimited  Guarantor in respect
        of which such  deduction or  withholding is required to be made shall be
        increased to the extent  necessary  to ensure that,  after the making of
        such  deduction or  withholding,  such other party  hereto  receives and
        retains  (free from any  liability  in respect of any such  deduction or
        withholding) a net sum equal to the sum which it would have received and
        so retained had no such deduction or  withholding  been made or required
        to be made.

(b)     If any  Lender or any  Agent,  on  behalf  of such  Lender or on its own
        behalf, is required by law to make any payment on account of Tax (except
        for Taxes on the  overall  net income or capital of such Lender or Agent
        or Taxes  resulting from such Lender or Agent changing its residency for
        tax  purposes)  on or in  relation  to any sum  received  or  receivable
        hereunder by such Lender or such Agent,  or any  liability in respect of
        any such payment is asserted,  imposed,  levied or assessed against such
        Lender  or  such  Agent,  the  applicable  Borrower  and  the  Unlimited
        Guarantors,  as  applicable  will,  upon demand of such Lender or Agent,
        promptly  indemnify  such  Lender or Agent (as the case may be)  against
        such payment or liability,  together  with any  interest,  penalties and
        expenses  payable or incurred in  connection  therewith.  If a Lender or
        Agent has paid over on account of Tax (other than Taxes excepted  above)
        an amount  paid to such  Lender or Agent by a Borrower  or an  Unlimited
        Guarantor  pursuant to the foregoing  indemnification  and the amount so
        paid over is subsequently  refunded to such Lender or Agent, in whole or
        in part,  such Lender shall promptly remit such amount  refunded to such
        Borrower or Unlimited Guarantor, as the case may be.

7.7      CLAIMS UNDER SECTION 7.6

         A Lender or Agent  intending  to make a claim  pursuant  to Section 7.6
shall  deliver  to the  Canadian  Agent or the U.S.  Agent,  as the case may be,
reasonably promptly after becoming aware of the circumstances giving rise to the
claim, a certificate  to that effect  specifying the event by reason of which it
is entitled to make such claim and  setting out in  reasonable  detail the basis
and  computation  of such  claim.  Such  Agent  shall  promptly  deliver  to the
applicable Borrower a copy of such certificate.

7.8      TAX RECEIPTS

         If at any time a Borrower is required by law to make any  deduction  or
withholding  from any sum payable by it hereunder or in connection  herewith (or
if  thereafter  there is any

<PAGE>

                                      -52-

change  in the  rates  at which  or the  manner  in  which  such  deductions  or
withholdings  are  calculated)  such Borrower shall promptly notify the Canadian
Agent or the U.S. Agent, as the case may be, thereof.

         If a Borrower makes any payment hereunder or in connection  herewith in
respect of which it is required by law to make any deduction or  withholding  it
shall pay the full amount to be deducted or withheld to the relevant taxation or
other  authority  within the time allowed for such payment under  applicable law
and shall deliver to such Agent within 30 days after it has made such payment to
the applicable authority:

(a)      a receipt issued by such authority; or

(b)      other evidence  reasonably  satisfactory  to such Agent  evidencing the
         payment to such  authority of all amounts so required to be deducted or
         withheld from such payment.

7.9      INTERNAL REVENUE SERVICE FORMS

(a)     Each U.S.  Lender and each of their  respective  successors and assigns,
        shall  provide  each of the  U.S.  Borrowers  (with  copies  to the U.S.
        Agent),  with (x) Internal  Revenue Service Forms W8ECI or W8BEN or Form
        W-9, as appropriate,  or any successor Forms  prescribed by the Internal
        Revenue  Service,  certifying  that such  Lender is entitled to benefits
        under an income tax treaty to which the United  States is a party  which
        exempts such Lender from United  States  withholding  tax or  certifying
        that  the  income  receivable  by  it  pursuant  to  this  Agreement  is
        effectively  connected  with the  conduct of a trade or  business in the
        United States or certifying that such Lender is a U.S. Person as defined
        by  Section  7701(a)(30)  of the Code or (y)  solely  if such  Lender is
        claiming  exemption  from United  States  withholding  tax under Section
        871(h) or 881(c) of the Code with  respect  to  payments  of  "portfolio
        interest",  a Form W-8, or any successor form prescribed by the Internal
        Revenue Service, and a certificate  representing that such Lender is not
        a bank for purposes of Section  881(c) of the Code,  is not a 10-percent
        shareholder (within the meaning of Section  871(h)(3)(B) of the Code) of
        the U.S. Borrower and is not a controlled foreign corporation related to
        a U.S. Borrower (within the meaning of Section 864(d)(4) of the Code).

(b)     For any period with respect to which a U.S. Lender has failed to provide
        the U.S.  Borrower or the U.S. Agent with the appropriate  form referred
        to in Section  7.9(a) (unless such failure is due to a change in treaty,
        law or regulation occurring after the date on which such form originally
        was  required  to be  provided),  such  Lender  shall not be entitled to
        indemnification  under  Section 7.6 with respect to Taxes imposed by the
        United States;  provided that if a Lender, that is otherwise exempt from
        or subject to a reduced  rate of  withholding  tax,  becomes  subject to
        Taxes because of its failure to deliver a form required  hereunder,  the
        applicable   Borrower  shall  take  such  steps  as  such  Lender  shall
        reasonably request to assist such Lender to recover such Taxes.

<PAGE>

                                      -53-

(c)      If a  Borrower  is  required  to pay  additional  amounts to or for the
         account of any Lender  pursuant to this Section as a result of a change
         in law or treaty  occurring  after such Lender  first became a party to
         this  Agreement,  then such Lender  will,  at the  Borrower's  request,
         change the  jurisdiction  of its  applicable  lending office if, in the
         judgment of such Lender,  such change (i) will  eliminate or reduce any
         such  additional  payment which may  thereafter  accrue and (ii) is not
         otherwise disadvantageous to such Lender.

                                  ARTICLE VIII
                     REPRESENTATIONS, WARRANTIES & COVENANTS

8.1      REPRESENTATIONS AND WARRANTIES

         Each Borrower and each Unlimited  Guarantor  represents and warrants to
each of the Agents and each of the Lenders as of the date of this Agreement, all
of which representations and warranties shall survive the execution and delivery
of this Agreement, that:

(a)     each of the Borrowers and the Guarantors  which is a corporation is duly
        incorporated,  validly  existing  and in good  standing in all  material
        respects  as a  corporation  under  the  laws  of  its  jurisdiction  of
        incorporation  and has full corporate  power,  authority and capacity to
        own its  properties  and conduct its business and each of the  Borrowers
        and the Guarantors  which are corporations has the full corporate power,
        authority and capacity to execute,  deliver and perform its  obligations
        to be performed  under,  in the case of each Borrower and each Unlimited
        Guarantor which are corporations,  this Agreement and under the Security
        provided  or to be provided by it, and, in the case of each of the other
        Guarantors, its guarantee and the Security to be provided by it;

(b)      FSLP is a limited  partnership,  duly  organized and existing under the
         laws of the  State  of  Delaware  and has  full  power,  authority  and
         capacity  to  execute,  deliver  and  perform  its  obligations  to  be
         performed under this Agreement and under the Security provided or to be
         provided by it;

(c)      all acts,  conditions  and things  required to be done and performed by
         each Borrower, or to have occurred prior to the execution, delivery and
         performance,  in the case of each Borrower and each Unlimited Guarantor
         of this  Agreement  and the  Security  provided or to be provided by it
         and, in the case of each of the other Guarantors, its guarantee and the
         Security  provided or to be provided by it to  constitute  it a binding
         obligation of such party enforceable  against it in accordance with its
         terms,  have  been  done  and  performed,  and  have  occurred  in  due
         compliance with all applicable laws;

(d)      the  execution,  delivery and  performance,  in the case of each of the
         Borrowers and each Unlimited Guarantor of this Agreement, any transfer,
         assignment  or  assignment  and  assumption  agreement and the Security
         provided  or to be provided by it and, in the case of each of the other
         Guarantors,  its guarantee, any transfer,  assignment or

<PAGE>

                                      -54-

        assignment and assumption  agreement and the Security  provided or to be
        provided by it has been duly  authorized by all necessary  corporate and
        other action and does not:

         (i)      violate any  provision of law or any  provision of the
                  articles of  incorporation  or other  instrument of formation
                  of such party, or

         (ii)     result in a breach of, a default under, or the creation of any
                  Lien  (other  than  those  in  favour  of the  Agents  and the
                  Lenders)  on the  properties  and  assets of any  Borrower  or
                  Guarantor, as the case may be, under any material agreement or
                  instrument  to which it is a party or by which its  properties
                  and assets may be bound or affected;

(e)      this   Agreement  and  any  transfer,   assignment  or  assignment  and
         assumption  agreement in the case of the Borrowers  and each  Unlimited
         Guarantor and the Security provided or to be provided by it and, in the
         case of each of the other  Guarantors,  its  guarantee,  any  transfer,
         assignment  or  assignment  and  assumption  agreement and the Security
         provided  or to  be  provided  by it  constitutes,  when  executed  and
         delivered,  binding,  direct obligations of such party,  enforceable in
         accordance with its terms, subject to:

         (i)      applicable bankruptcy, insolvency, moratorium,  reorganization
                  and other similar laws affecting  creditors'  rights generally
                  and  statutes  limiting   creditors'  rights,   including  the
                  Personal Property Security Act (Ontario);

         (ii)     the  equitable   and   statutory   powers  of  the  courts  of
                  appropriate  jurisdiction to stay proceedings  before them, to
                  stay the execution of judgments and to award costs;

         (iii)    the  discretion  of  such  courts  as to the  granting  of the
                  remedies of specific performance and injunction; and

         (iv)     the restriction  that Canadian courts can only render
                  judgments in Canadian currency;

(f)      other than as disclosed to the Agents and the Lenders in writing  prior
         to the  date  hereof  there is no  litigation  and  there  are no legal
         proceedings  pending,  or to  the  best  of its  knowledge,  threatened
         against any of the  Borrowers or any  Guarantor  or any  Affiliate of a
         Borrower or any Guarantor before any court or administrative  agency of
         any jurisdiction which is likely to affect materially and adversely the
         financial  condition,  assets  or  operations  of  a  Borrower  or  any
         Guarantor;

(g)      no event has occurred which  constitutes  or which,  with the giving of
         notice,  the lapse of time or both, would constitute a default under or
         in respect of any material  agreement,  undertaking  or  instrument  to
         which any of the  Borrowers or any Guarantor is a party or to which any
         of their respective properties or assets may be

<PAGE>

                                      -55-

        subject  which  is  likely  to  affect  materially  and  adversely,  the
        financial  conditions,  assets  or  operations  of  a  Borrower  or  any
        Guarantor;

(h)      other than as disclosed to the Agents and the Lenders in writing  prior
         to the date hereof each of the Borrowers  and the  Guarantors is not in
         violation  in any  material  respect  of any term of  their  respective
         incorporating  instruments  or  by-laws,  and,  to  the  best  of  each
         Borrower's  and  each  Unlimited  Guarantor's  knowledge,  none  of the
         Borrowers and the Guarantors is in violation of any material  mortgage,
         franchise,   license,   judgment,   decree,  order,  statute,  rule  or
         regulation  which is likely  to affect  materially  and  adversely  the
         financial  condition,  assets  or  operations  of  a  Borrower  or  any
         Guarantor;

(i)      each  Borrower and each  Guarantor has filed all tax returns which were
         required to be filed, paid all Taxes (including interest and penalties)
         which  are due and  payable  by such  Borrower  or such  Guarantor  and
         provided  adequate reserves for payment of any Tax the payment of which
         is being contested;

(j)      each of the  Direct  Guarantors  is a  Wholly-Owned  Subsidiary  of the
         Canadian  Borrower,  FS  (USA)  is a  Wholly-Owned  Subsidiary  of  the
         Canadian  Borrower and each of the other  Guarantors is a Subsidiary of
         the Canadian Borrower or a shareholder of a Subsidiary thereof;

(k)      Jay Hennick  owns,  directly or  indirectly,  more voting shares of the
         Canadian  Borrower  than any other  shareholder  or group of related or
         affiliated shareholders of the Canadian Borrower.

(l)      there exists no Default or Event of Default;

(m)      other than as provided under the applicable  incorporating or formation
         statute of any Borrower or any Guarantor, none of the Borrowers nor any
         Guarantor is subject to  regulation  under the Public  Utility  Holding
         Company Act of 1935, the Federal Power Act, the Interstate Commerce Act
         or the  Investment  Company  Act of 1940  or to any  U.S.  or  Canadian
         federal, state or provincial statute or regulation limiting its ability
         to incur indebtedness for money borrowed;

(n)      none of the  Borrowers  nor any  Guarantor  is by itself,  nor is it by
         virtue of its being under "common control" with any other Person within
         the meaning of Section 414 (b) or (c) of the  Internal  Revenue Code of
         1986 (the "Code"), an "employer" within the meaning of Section 3 (5) of
         the  Employee  Retirement  Income  Security  Act of 1974 of the  United
         States of America,  as amended from time to time ("ERISA"),  in respect
         of any  employee  pension  benefit plan covered by Title IV of ERISA or
         subject to the minimum funding standards under the Code;

(o)      no part of the proceeds of the Borrowings  will be used for any purpose
         that  violates the  provisions  of any of  Regulation  T, U or X of the
         Board  of  Governors  of  the  Federal  Reserve  System  or  any  other
         regulation  of such Board of  Governors;  none of

<PAGE>

                                      -56-

        the  Borrowers nor any Guarantor is engaged in the business of extending
        credit for the purpose of purchasing or carrying margin stock within the
        meaning of Regulation U of the Board of Governors of the Federal Reserve
        System;  none of the Borrowers  nor any Guarantor  owns any such "margin
        stock";

(p)      since January 31, 2001, to the best of its knowledge, there has been no
         material  adverse  change  in  the  business,  operations,  properties,
         prospects  or  condition  (financial  or  otherwise)  of  the  Canadian
         Borrower or its Subsidiaries;

(q)      none of the Borrowers nor any Guarantor has received any notice, or has
         any  knowledge,  that the operations of a Borrower or any Guarantor are
         not  in  compliance  in  all  material  respects  with  all  applicable
         Environmental Laws;

(r)      each  Borrower  and all its  Subsidiaries  have  valid  title  to their
         respective  assets  and,  without  limitation,  own or  possess  or are
         licensed  or  otherwise  have the right to use all  material  licenses,
         permits and other governmental  approvals and authorizations,  patents,
         trademarks,   service  marks,  trade  names,  copyrights,   franchises,
         authorizations  and other rights that are reasonably  necessary for the
         operations of their respective businesses,  without, to the best of the
         knowledge of the Borrowers and the Unlimited Guarantors,  conflict with
         the rights of any other Person with respect thereto; and

(s)      there has not been a Call Option Triggering Event.

8.2      COVENANTS

         Each  Borrower  covenants  with each of the Agents and with each of the
Lenders  that so  long  as  there  shall  remain  any  Borrowings  or any  other
obligations of or affecting any party to this Agreement:

(a)      it will pay duly and  punctually all sums of money due by it under this
         Agreement at the times and places and in the manner provided for herein
         and will cause each Guarantor to do likewise under its Guarantee;

(b)      subject to Section 8.2(p), it will maintain,  and cause each Subsidiary
         to maintain, its existence, corporate and otherwise, in good standing;

(c)      it will not, without the Majority Lenders' prior written consent (which
         consent  shall  not  be  unreasonably  withheld),   sell,  transfer  or
         otherwise  dispose of its control,  direct or  indirect,  of any of its
         Subsidiaries   and  it  will  not,  nor  will  it  permit  any  of  its
         Subsidiaries  to, without the Majority  Lenders' prior written consent,
         sell, lease,  assign,  transfer,  convey or otherwise dispose of any of
         its  properties  or  assets  whether  now owned or  hereafter  acquired
         (including,  without limitation,  receivables and leasehold  interests,
         patents   and   intellectual   property   rights)   (in  each   case  a
         "Disposition") BUT EXCLUDING:

         (i)      inventory disposed of in the ordinary course of business;

<PAGE>

                                      -57-

         (ii)     dispositions of assets among the Borrowers and their
                  Subsidiaries;

         (iii)    proposed  Dispositions  which  would  not  after  giving
                  effect  to such Disposition:

                  (A)      result in a Default or Event of Default occurring and
                           continuing; and

                  (B)      result in the aggregate book value of all assets that
                           have been the  subject  of a  Disposition  during the
                           period  commencing on the date of the Initial Advance
                           hereunder  and  ending  on the  date of the  proposed
                           Disposition,  exceeding  10%  of  Consolidated  Total
                           Assets  as of the  end of the  immediately  preceding
                           Fiscal Year of the Canadian Borrower, and

         (iv)     property which is,  substantially  contemporaneously  with the
                  disposition  thereof,  replaced by property (of  substantially
                  the same kind or nature) of at least equivalent value.

(d)     it will carry on  diligently  and conduct  its  business in a proper and
        efficient  manner so as to preserve and protect its  properties,  assets
        and income in a prudent manner  consistent with usual industry  practice
        and the  preservation of its business and assets,  and it will cause its
        Subsidiaries  to do the same in respect of their  respective  businesses
        and assets and, in particular,  without limiting the foregoing,  it will
        not alter its  business  plan so as to change  materially  the nature or
        scope of business,  operations or activities  currently carried on by it
        or its  Subsidiaries or to shift or transfer same from a Borrower or any
        such  Subsidiaries to other of its  Subsidiaries,  without obtaining the
        prior written  consent of the Majority  Lenders (which consent shall not
        be unreasonably withheld);

(e)     it will  maintain  or  cause  to be  maintained,  with  responsible  and
        reputable insurers, insurance with respect to its properties, assets and
        business and the  respective  properties,  assets and  businesses of its
        Subsidiaries against such casualties and contingencies (including public
        liability)  and in  such  types  and  in  such  amounts  and  with  such
        deductibles and other provisions as are customarily maintained or caused
        to be maintained by persons engaged in the same or similar businesses in
        the same territories under similar  conditions;  it will ensure that the
        Collateral Agent is an additional named loss payee under all policies of
        insurance,  as its interest may appear,  and that such  policies are not
        cancellable  without at least 30 days' prior written  notice being given
        by the insurers to the Collateral Agent;

(f)      it will  do,  execute,  acknowledge  and  deliver  or cause to be done,
         executed,  acknowledged  or delivered all such other acts,  agreements,
         instruments  and  assurances  in law as the Agents or Lenders'  Counsel
         shall reasonably require for the better  accomplishing and effectuating
         of the intentions and provisions of this Agreement and the Security;

<PAGE>

                                      -58-

(g)     it will  do,  observe  and  perform  all  material  matters  and  things
        necessary or expedient to be done,  observed or performed  under any law
        of Canada,  the  United  States of  America,  any  province  or state or
        municipality  thereof or of any other  jurisdiction  for the  purpose of
        carrying on and  conducting  its business and owning and  possessing its
        properties and assets and, without  limitation,  it will maintain at all
        times in full  force and  effect  all  material  certificates,  permits,
        licenses  and other  approvals  required to operate its  business and it
        will  cause  its  Subsidiaries  to do  the  same  in  respect  of  their
        respective businesses,  properties and assets; for greater certainty and
        without in any way limiting the generality of the foregoing:

         (i)      each  Borrower  and each  Guarantor  shall be at all  times in
                  compliance  in  all  material  respects  with  all  applicable
                  Environmental Laws; and

         (ii)     each Borrower shall ensure that each of the real properties or
                  premises  owned,  leased  or  occupied  by it or  any  of  its
                  Subsidiaries  is  free  from   contamination   by  a  release,
                  discharge or emission of any Hazardous Material;

(h)      it will promptly pay or cause to be paid all Taxes levied,  assessed or
         imposed  upon it and/or its  Subsidiaries,  and/or its  properties  and
         assets or those of its Subsidiaries or any part thereof and/or upon its
         income and  profits or that of its  Subsidiaries,  as and when the same
         shall  become due and  payable  save when and so long as any such Taxes
         are in good faith  contested by it or those of its  Subsidiaries as may
         be affected thereby;

(i)      it will furnish to the Canadian  Agent in sufficient  quantities to
         provide 1 copy to each Lender and each Agent:

         (i)      as soon as available and in any event within 45 days after the
                  end of each  Quarter  of  each  Fiscal  Year  of the  Canadian
                  Borrower the unaudited  consolidated  financial  statements of
                  the  Canadian  Borrower  as of the end of such  Quarter  to be
                  prepared   in   accordance   with  GAAP,   accompanied   by  a
                  certificate,  in the form  set out in  Schedule  "J"  attached
                  (without  personal  liability)  from the president,  the chief
                  financial officer or treasurer of the Canadian Borrower:

                  (A)      confirming  that such financial  statements  have not
                           been  prepared  in a manner  and do not  contain  any
                           statement which is inconsistent with GAAP, subject to
                           audit and year-end adjustment,

                  (B)      containing  sufficient  information  to  permit  each
                           Lender to determine  whether the financial  covenants
                           contained  in Section  8.2(o)  are being  maintained,
                           including any adjustments to  Consolidated  EBITDA as
                           the result of Normalizing Adjustments,

<PAGE>

                                      -59-

                  (C)      certifying  that, as of the last day of such Quarter,
                           and, to the best knowledge of such officer, as of the
                           date of such  certificate,  no  Default  or  Event of
                           Default has occurred and is continuing,

                  (D)      certifying that no Call Option  Triggering  Event has
                           occurred  during  such  Quarter  or if a Call  Option
                           Triggering  Event  has  occurred,  the  name  of  the
                           Subsidiary so affected and the amount of  outstanding
                           intercompany debt of such Subsidiary;  provided that,
                           if  the  Canadian   Borrower  has  a  Total  Debt  to
                           Consolidated  EBITDA  Ratio equal to or greater  than
                           3.25 to 1, the Canadian  Borrower  shall  provide the
                           Canadian  Agent with the EBITDA  calculation  for the
                           Canadian Borrower and all of its Subsidiaries and the
                           amount  of  outstanding  inter-company  debt  of each
                           Subsidiary;

                  (E)      providing a report on sales or dispositions of assets
                           in excess of an  aggregate of  Cdn.$5,000,000  during
                           such period; and

                  (F)      providing a report on outstanding  hedging  contracts
                           entered  into  by  the  Canadian   Borrower  and  its
                           Subsidiaries  and the amounts  secured  under Secured
                           Hedging Agreements.

         (ii)     as soon as  practicable  and in any event within 90 days after
                  the end of each Fiscal Year of the Canadian  Borrower,  a copy
                  of the  consolidated  financial  statements  of  the  Canadian
                  Borrower as of the end of such  Fiscal  Year,  such  financial
                  statements  of  the  Canadian   Borrower  to  be  prepared  in
                  accordance with GAAP, such consolidated  financial  statements
                  of the Canadian Borrower to be accompanied by a report thereon
                  by  independent  auditors of recognized  standing  confirming,
                  without  qualification,  that such financial statements of the
                  Canadian  Borrower have been prepared in accordance  with GAAP
                  and,  copies  of  such  auditors'  recommendations,   if  any,
                  together with a  certificate,  in the form set out in Schedule
                  "J" attached  (without  personal  liability) of the president,
                  chief financial officer or treasurer of the Canadian Borrower:

                  (A)      containing  sufficient  information  to  permit  each
                           Lender to determine  whether the financial  covenants
                           contained  in Section  8.2(o)  are being  maintained,
                           including  details of any adjustments to Consolidated
                           EBITDA as the result of Normalizing Adjustments,

                  (B)      containing the  information  required to determine
                           amounts to be paid under Section 6.5,

                  (C)      certifying  that as of the  last  day of such  Fiscal
                           Year,  and  to the  best  of the  knowledge  of  such
                           officer,  as of the  date  of  such  certificate,  no
                           Default  or  Event of  Default  has  occurred  and is
                           continuing, and

<PAGE>

                                      -60-

                  (D)      certifying that no Call Option  Triggering  Event has
                           occurred,   or  in  the  event  that  a  Call  Option
                           Triggering  Event  has  occurred,  the  name  of  the
                           Subsidiary so affected and the amount of intercompany
                           debt of  such  Subsidiary;  provided   that,  if  the
                           Canadian  Borrower  has a Total Debt to  Consolidated
                           EBITDA  Ratio equal to or greater than 3.25 to 1, the
                           Canadian  Borrower  shall provide the Canadian  Agent
                           with the EBITDA calculation for the Canadian Borrower
                           and  all  of  its  Subsidiaries  and  the  amount  of
                           outstanding inter-company debt of each Subsidiary;

         (iii)    as soon as possible and in any event  within 10 Business  Days
                  after any  Borrower or any of its  Subsidiaries  receives  (A)
                  notice of the commencement  thereof,  notice of any actions or
                  proceedings against it or any of its Affiliates or against any
                  of the  property  of a  Borrower  or  any of its  Subsidiaries
                  before any court, governmental agency or arbitrator, which, if
                  determined adversely,  would have a material adverse effect on
                  the  financial  condition or operations of any Borrower or its
                  Subsidiaries, taken as a whole and (B) a copy of any Violation
                  Notice received by a Borrower or any of its Subsidiaries;

         (iv)     within 90 days of the  beginning  of each  Fiscal  Year of the
                  Canadian  Borrower,  the Canadian  Borrower's  annual business
                  plan and financial  projections (for each Quarter),  including
                  profit  and loss  statements,  cash-flow  statements,  balance
                  sheets and projected capital  expenditures for the Fiscal Year
                  then begun;  such business plan and financial  projections not
                  to be prepared in a manner nor contain any statement  which is
                  inconsistent with GAAP;

         (v)      promptly upon request,  such other information  concerning the
                  financial  affairs or operations of any Borrower or any of its
                  Subsidiaries  as the Canadian Agent or the U.S.  Agent, as the
                  case  may  be,  may  reasonably  request  from  time  to  time
                  including for greater  certainty  financial  statements of the
                  U.S. Borrowers,  NSULC, FSLLC and FSLP and if requested by the
                  Canadian Agent, the EBITDA of each Subsidiary;

(j)      it will not, nor will it permit any Subsidiary to, without the Majority
         Lenders' prior written consent, make any advances to or for the benefit
         of, or guarantee  (other than under Permitted VTBS) the indebtedness or
         liabilities  of, or  otherwise  become  liable  for,  any Person or any
         business or project of any Person save and except:

         (i)      the  endorsement  of cheques  and other negotiable instruments
                  for deposit in the ordinary course of business;

         (ii)     advances  and  accounts  between one or more of a Borrower and
                  any  of  its  Subsidiaries  which  shall  be  on  commercially
                  reasonable terms; provided that such advances and accounts are
                  secured by means of security  agreements in form and substance
                  satisfactory  to the  Collateral  Agent,  are  assigned to the

<PAGE>

                                      -61-

                  Collateral  Agent and form part of the  Security  (hereinafter
                  referred to as "Permitted Loans"); and

         (iii)    liabilities,   indebtedness   and   obligations   which  would
                  otherwise constitute Permitted  Encumbrances hereunder but for
                  the lack of a lien to secure  such  liabilities,  indebtedness
                  and obligations.

(k)      it will  permit  from time to time to the  Canadian  Agent and the U.S.
         Agent or their  representatives  or  advisers  access to its  premises,
         assets,  records and meetings of directors and/or of shareholders  upon
         reasonable  (both as to timing  and  advance  notice)  request  of such
         Agent;

(l)      it will give to the Canadian  Agent or the U.S.  Agent prompt notice of
         any Event of Default or any event,  of which it is aware,  which,  with
         the giving of notice and/or the lapse of time or both, would constitute
         an Event of Default;

(m)      it will not, and it will not permit any of its Subsidiaries to, without
         the Majority Lenders' prior written consent,  incur, create,  assume or
         permit  to  exist  any  Lien on any of its or any of its  Subsidiaries'
         property  or  assets,  whether  owned at the date  hereof or  hereafter
         acquired,  except that the following shall be permitted (the "Permitted
         Encumbrances"):

         (i)      Liens  incurred  and pledges and deposits  made in  connection
                  with workers' compensation,  unemployment  insurance,  old-age
                  pensions and similar legislation (other than ERISA);

         (ii)     Liens  securing  the  performance  of bids,  tenders,  leases,
                  contracts  (other than for the  repayment of borrowed  money),
                  and  statutory  obligations  of like  nature,  incurred  as an
                  incident to and in the ordinary course of business;

         (iii)    statutory  Liens of landlords,  undetermined or inchoate Liens
                  and  other   Liens   imposed  by  law,   such  as   carriers',
                  warehousemens',  mechanics',  construction  and  materialmen's
                  Liens,  incurred  in good  faith  in the  ordinary  course  of
                  business  provided that the aggregate amount of any carriers',
                  warehousemens',   mechanics',  construction  or  materialmens'
                  Liens  shall  at  no  time  exceed  an  aggregate   amount  of
                  U.S.$1,000,000  or the Equivalent  Amount thereof in Cdn.$ and
                  the amount thereof shall be paid when same shall become due;

         (iv)     Liens   securing  the  payment  of  Taxes,   assessments   and
                  governmental  charges or levies,  either (A) not delinquent or
                  (B) being contested in good faith by appropriate proceedings;

         (v)      permits,   right-of-way,   zoning   restrictions,   easements,
                  licenses,  reservations,  restrictions  on  the  use  of  real
                  property  or  minor  irregularities  or  minor  title  defects
                  incidental  thereto which do not in the  aggregate  materially
                  detract from the value of the property or assets of a Borrower
                  or any of its Subsidiaries or

<PAGE>

                                      -62-

                  materially  impair the operation of the business of a Borrower
                  or any of its Subsidiaries;

         (vi)     Liens arising out of the leasing of personal property by it or
                  any of its  Subsidiaries in the ordinary course of business up
                  to an amount not  exceeding in the  aggregate  U.S.$15,000,000
                  for all Borrowers  and their  Subsidiaries  or the  Equivalent
                  Amount thereof in Cdn.$;

         (vii)    Liens,  subordinate in priority to the Liens created under the
                  Security,  incurred in the ordinary course of business for the
                  purposes of securing the payment of any purchase price balance
                  or the  refinancing of any purchase price balances not greater
                  than in the aggregate U.S.$25,000,000 or the Equivalent Amount
                  in Cdn.$ of any assets (other than current assets) acquired by
                  a Borrower or any of its  Subsidiaries  provided that any such
                  Liens are  restricted  to the assets so  acquired  ("Permitted
                  VTBS");

         (viii)   reservations, conditions, limitations and exceptions contained
                  in or implied by statute in the original  disposition from the
                  Crown and grants made by the Crown of interests so reserved or
                  accepted;

         (ix)     security  given  in  the  ordinary  course  of  business  by a
                  Borrower,  or any of its  Subsidiaries  to a public utility or
                  any  municipality  or  governmental  or  public  authority  in
                  connection  with  operations  of a  Borrower,  or  any  of its
                  Subsidiaries,  (other than in connection  with borrowed money)
                  securing   not  more  than  an   aggregate   amount  equal  to
                  U.S.$1,000,000 for all Borrowers and their Subsidiaries or the
                  Equivalent Amount thereof in Cdn.$;

         (x)      liens in respect of Permitted Loans;

         (xi)     liens to secure the  obligations  under the Private  Placement
                  provided that and for so long as the  Intercreditor  Agreement
                  is in full force and effect;

         (xii)    the Security and any additional or further security granted to
                  the  Collateral  Agent  and/or the  Lenders by a  Borrower,  a
                  Guarantor or any future Subsidiary of a Borrower;

         (xiii)   purchase money security  interests placed upon fixed assets to
                  secure a portion of the purchase price thereof;  provided that
                  any such lien shall not  encumber any property of the Canadian
                  Borrower and/or its  Subsidiaries  except the purchased asset;
                  and

         (xiv)    the encumbrances described on Schedule "P".

(n)      it will not:

<PAGE>

                                      -63-

         (i)      if an Event of Default has occurred and is  continuing  or an
                  Event of Default will occur as a consequence thereof,

                  (A)      declare dividends, whether in cash or in specie, or
                           make payments thereof ; or

                  (B)      make  or  permit  any  distributions  or  returns  of
                           capital    (whether   by   retirement,    redemption,
                           repurchase, cancellation or otherwise);

         (ii)     without the prior  written  consent of the  Majority  Lenders,
                  make or permit any  withdrawals or any other payments of money
                  or  equivalents   thereof   whatsoever   (including,   without
                  limitation,  royalties,  management fees,  etc.)(which are not
                  otherwise  expressly permitted by the terms of this Agreement)
                  by or to  the  shareholders  of  the  Canadian  Borrower,  its
                  Affiliates or any creditors other than the Lenders and it will
                  cause its Subsidiaries to do likewise save and except for:

                  (A)      payments  in respect of  Permitted  Encumbrances  and
                           payments  of  trade  debt  incurred  in the  ordinary
                           course of business;

                  (B)      interest  dividend  payments,   distributions  and/or
                           returns of capital  made,  directly or  indirectly to
                           any Borrower;

                  (C)      normal course  distributions to other shareholders of
                           such  Subsidiaries  as  contemplated  in the Canadian
                           Borrower's  annual  business  plan and within  limits
                           approved by the Majority Lenders annually;

                  (D)      normal course issuer bids of the Canadian Borrower;

                  (E)      payments  upon  exercise  of  the  put  options
                           under  the   Shareholders' Agreements;

                  (F)      payments  upon  exercise  of  the  call  options
                           under  the  Shareholders' Agreements;

                  (G)      payments  on  account  of  retirement,  termination,
                           death or  disability, redemptions;

                  (H)      payments on account of Permitted VTBS;

                  (I)      payments required to be made in accordance with the
                           terms of the Note Purchase Agreement; and

                  (J)      scheduled  payments  of  interest  and  principal  on
                           account of the Private Placement or prepayments which
                           a Borrower  is  entitled  to make to holders of notes
                           under the Note  Purchase  Agreement  as the result of

<PAGE>

                                      -64-

                           such  noteholder  being  subjected to tax obligations
                           and such Borrower  being  obligated to reimburse such
                           noteholder for such tax obligations;

(o)      the Canadian Borrower will, at all times, maintain :

         (i)      a Total Debt/Consolidated EBITDA Ratio of not more than 3.5
                  to 1;

         (ii)     on a consolidated and rolling 4 Quarters basis, a Fixed Charge
                  Coverage Ratio of at least 1.25 to 1;

         (iii)    on a consolidated and rolling 4 Quarters basis, an Interest
                  Coverage Ratio of at least 2.5 to 1; and

         (iv)     Shareholder's Equity of :

                  (A)      95% of the Shareholders Equity of the Canadian
                           Borrower on March 31, 2001, being US$75,000,000; plus

                  (B)      fifty  percent  (50%) of the  Canadian  Borrower's
                           consolidated  cumulative positive annual net income;
                           plus

                  (C)      one  hundred  percent  (100%)  of  the   consolidated
                           cumulative  proceeds  from (i) any  equity  offerings
                           including, without limitation,  securities offerings,
                           and (ii) any form of equity injection.

(p)      (i)      it will not,  without the Majority  Lenders' prior written
                  consent (which shall not be unreasonably  withheld) enter into
                  a  merger  or  consolidation  or  amalgamation  or  liquidate,
                  wind-up or  dissolve  itself (or  suffer  any  liquidation  or
                  dissolution)  except mergers,  consolidations or amalgamations
                  between the Canadian Borrower and its Subsidiaries;

         (ii)     it will not permit any of its  Subsidiaries  to,  without  the
                  Majority  Lenders'  prior written  consent (which shall not be
                  unreasonably  withheld),  enter into a merger or consolidation
                  or amalgamation,  or liquidate, wind up or dissolve itself (or
                  suffer any liquidation or dissolution) unless as the result of
                  such   merger,   consolidation,   amalgamation,   liquidation,
                  winding-up or dissolution,

                  (A)      no Event of Default has occurred and is continuing or
                           will occur as a consequence thereof; and

                  (B)      the  surviving or  resulting  entity continues to  be
                           bound   by  the obligations   of  such   predecessor
                           entity  or   entities   under   this Agreement  and
                           under  any  Security delivered by such predecessor
                           entity or entities,

<PAGE>

                                      -65-

         or, except as permitted  under Section  8.2(c),  convey,  sell,  lease,
         transfer or  otherwise  dispose of, in one  transaction  or a series of
         transactions,  all or a  substantial  part of its or such  Subsidiary's
         business, properties or assets;

(q)      it will not, nor will it permit any of its  Subsidiaries  to, incur any
         other indebtedness  (including senior and subordinated  debt), loans or
         financing  of any kind or  nature  whatsoever  (whether  in the form of
         capital leases or  sale-leaseback  transactions  or otherwise) or incur
         any contingent  obligations or liabilities (including guarantees) other
         than trade  payables  incurred in the  ordinary  course of business and
         indebtedness  or  contingent  obligations  or  liabilities  secured  by
         Permitted  Encumbrances  without obtaining the prior written consent of
         the Majority Lenders;

(r)      it will not,  nor will it permit any of its  Subsidiaries  to,  without
         obtaining the prior written consent of the Majority Lenders, other than
         in the ordinary course of business:

         (i)      make any acquisition of any business other than the
                  acquisition of an Eligible Business, or

         (ii)     make any investment in, properties, assets, businesses, shares
                  or Persons; or

         (iii)    establish, incorporate,  otherwise form, charter or create any
                  new Subsidiary  other than in connection  with the acquisition
                  of an Eligible Business;

(s)      it will  ensure  that all  Security  granted to the  Collateral  Agent,
         and/or the Lenders  continues  to be  perfected  and preserve the first
         priority thereof (subject to Permitted Encumbrances);

(t)      it will not make,  or permit the making of, any change or  modification
         to the call option provisions in the Shareholders' Agreements,  without
         the prior written consent of the Majority Lenders; and

(u)     it will cause any entity  which  after the date  hereof  shall  become a
        Subsidiary of a Borrower (such entity,  a "New  Subsidiary")  to execute
        and deliver in favour of the Collateral Agent and the Lenders either (i)
        the Direct  Security or (ii) an  Undertaking  to Secure,  together  with
        favourable  supporting  legal  opinions,  in  either  case,  as  soon as
        reasonably practicable after becoming a Subsidiary and no later than (A)
        in the case of an  Acquisition  Entity  where the  acquisition  has been
        financed,  wholly or partially, by way of Borrowings under the Facility,
        on the date of completion of the  acquisition,  or (B) in any other case
        within  10  Business  Days  following  the  date  of  completion  of the
        acquisition or creation of the New Subsidiary, as the case may be.

         For greater certainty,  with respect to the covenants contained in this
Section 8.2, the ordinary courses of business of:

(a)      FSLP is limited to holding the shares of NSULC;

<PAGE>

                                      -66-

(b)      NSULC is limited to holding the units of FSLLC;

(c)      FSLLC is  limited  to  making  loans to  Subsidiaries  of the  Canadian
         Borrower and taking security for such loans; and

(d)      FS USA is  limited  to making  loans to  Subsidiaries  of the  Canadian
         Borrower and taking security for such loans.

                                   ARTICLE IX
                                EVENTS OF DEFAULT

9.1      EVENTS OF DEFAULT

         Upon the  occurrence  of any one or more of the  following  events  (an
"Event of Default"):

(a)      the  non-payment  by a Borrower when due,  whether by  acceleration  or
         otherwise,  of any payment of principal  due under the  Facilities,  or
         otherwise hereunder;

(b)      the  non-payment  by a Borrower  when due (or  within 3  Business  Days
         thereafter) whether by acceleration or otherwise, of any payment (other
         than a payment of  principal)  due under the  Facilities  or  otherwise
         hereunder;

(c)      the commencement of proceedings by or against a Borrower, any Guarantor
         or any of their Subsidiaries for the dissolution, merger, amalgamation,
         liquidation  or winding-up of any of a Borrower or any Guarantor or any
         of their Subsidiaries or for the suspension of the operations of any of
         a Borrower or any Guarantor or any of their  Subsidiaries,  unless,  in
         the case of  proceedings  against a Borrower,  any  Guarantor or any of
         their Subsidiaries,  such proceedings are being actively and diligently
         contested by the Borrower, or Guarantor or such Subsidiary, as the case
         may be, in good faith to the satisfaction of the Majority Lenders;

(d)     a Borrower or any Guarantor or any of their  Subsidiaries is adjudged or
        declared bankrupt or insolvent or makes an assignment for the benefit of
        creditors,  or petitions or applies to any tribunal for the  appointment
        of a receiver, custodian or trustee for a Borrower, any Guarantor or any
        such  Subsidiary  or  for  any  substantial  part  of its  property,  or
        commences  any  proceedings  relating  to it under  any  reorganization,
        arrangement,  readjustment  of debt,  dissolution or liquidation  law or
        statute of any jurisdiction  whether now or hereafter in effect relating
        to or governing  debtors or such  proceedings  are commenced  against it
        (unless,  in  the  case  of  proceedings   commenced  against  it,  such
        proceedings  are  being  actively  and  diligently   contested  by  such
        Borrower,  such  Guarantor  or  such  Subsidiary  in good  faith  to the
        satisfaction  of the  Majority  Lenders),  or by any act  indicates  its
        consent to, approval of, or  acquiescence  in, any such proceeding for a
        Borrower,  any Guarantor or any such  Subsidiary or for any  substantial
        part of its  property,  or  suffers  the  appointment  of any  receiver,
        custodian or trustee and any such appointment continues undischarged and
        in effect

<PAGE>

                                      -67-

        for a period of 30 days;  provided  that  during such 30 day period such
        appointment is being actively and diligently  contested by such Borrower
        or  Guarantor or  Subsidiary  in good faith to the  satisfaction  of the
        Majority Lenders and in the case of a Borrower such receiver,  custodian
        or trustee shall not have taken possession of or otherwise  enforced its
        rights over the property in respect of which it has been appointed;

(e)     any material  representation  or warranty made in this  Agreement or any
        Security  by a  Borrower,  the  Unlimited  Guarantor,  or any  of  their
        Subsidiaries  or any  information  furnished  in  writing to an Agent or
        Lender by a Borrower,  any  Guarantor or any such  Subsidiary  proves to
        have been incorrect in any material  respect when made or furnished save
        that if any such  materially  incorrect  representation  or  warranty is
        capable of being  corrected  and none of the Agents and the  Lenders has
        been prejudiced by such materially incorrect representation or warranty,
        then the Borrowers  shall have 30 days after written  notice to do so by
        the Collateral Agent to take such action to make the  representation  or
        warranty   true  and   correct  at  such   time,   in  which  case  such
        representation or warranty shall be deemed to have been true and correct
        when originally made or furnished;

(f)     a writ,  execution or attachment or similar  process is issued or levied
        against all or a substantial portion of the property of a Borrower,  any
        Guarantor or any of their  Subsidiaries  in connection with any judgment
        against a Borrower,  any Guarantor or any of their  Subsidiaries  in any
        amount which materially affects the assets of a Borrower,  any Guarantor
        or its  Subsidiaries,  and such writ,  execution,  attachment or similar
        process  is not  released,  bonded,  satisfied,  discharged,  vacated or
        stayed within 30 days after its entry,  commencement  or levy;  provided
        that  during  such 30 day  period  such  process if being  actively  and
        diligently contested by such Borrower or Guarantor or Subsidiary in good
        faith to the satisfaction of the Majority Lenders;

(g)     the breach or failure by the  Borrowers,  a Guarantor or any  Subsidiary
        to perform or  observe  the  covenants  contained  in  Sections  8.2(c),
        8.2(n), 8.2(o), 8.2(p) and 8.2(r)(i).

(h)     the  breach or failure of due performance by a Borrower or any Guarantor
        of  any  covenant  or  provision  of this  Agreement,  other  than those
        heretofore  dealt with  in this  Section  9.1,  which is not remedied by
        such  Borrower,  or  Guarantor  within 10 Business  Days,  after written
        notice to do so  by the  Collateral  Agent or any Lender;  provided that
        such breach or  failure is capable of being  remedied and during such 10
        Business Day  period the Borrower or  Guarantor is  proceeding  actively
        and  diligently  in good  faith to remedy  such breach or failure to the
        satisfaction of the Majority Lenders;

(i)     demand by any Person (including, without limitation, any Lender) is made
        on a Borrower,  any Guarantor or any of their Subsidiaries in respect of
        indebtedness,  in an aggregate amount of US$5,000,000 (or the Equivalent
        Amount  thereof  in Cdn$)  payable  on  demand  by such  Borrower,  such
        Guarantor or such  Subsidiary and such Borrower,  such Guarantor or such
        Subsidiary has not, when due and payable,  made

<PAGE>

                                      -68-

        payment of the amount so  demanded  or  contested  the  validity of such
        demand  in good  faith  or a  Borrower,  any  Guarantor  or any of their
        Subsidiaries is in default under any term or provision of any agreement,
        deed,  indenture or instrument (other than this Agreement)  between such
        Borrower,  such Guarantor or such Subsidiary as the case may be, and any
        Person   (including,   without   limitation,   any  Lender)  shall  have
        accelerated  or shall  have the  right to  accelerate  any  indebtedness
        (including  Financial  Contract  Obligations) in the aggregate amount of
        US$5,000,000 (or the Equivalent  Amount thereof in Cdn.$) of a Borrower,
        such Guarantor or such Subsidiary, as the case may be;

(j)      an Event of Default (as defined in the Note Purchase  Agreement)  shall
         have occurred and be continuing under the Note Purchase Agreement;

(k)      Intentionally Deleted;

(l)      a  Borrower,  any  Guarantor  or any of their  Subsidiaries  ceases  or
         threatens  to  cease  to  carry  on all or a  substantial  part  of the
         business currently carried on by such Borrower,  such Guarantor or such
         Subsidiary;

(m)      there is any change in  ownership  of shares of the  Canadian  Borrower
         which results in Jay Hennick,  his spouse,  descendants  and ascendants
         and any entities controlled by any of them or trusts established by, or
         for  the  benefit  of,  any  of  them,  ceasing  to  own,  directly  or
         indirectly,  more voting shares of the Canadian Borrower than any other
         shareholder or group of related or affiliated  shareholders without the
         prior written consent of the Majority Lenders; or

(n)      a  Borrower  shall have  failed  within 30 days of the giving of a Call
         Option Triggering Event Notice to have caused an Affected Subsidiary to
         become a Direct Guarantor;

the Collateral Agent shall, if so instructed by the Majority Lenders, by written
notice to the  Borrowers  declare the  Borrowings,  including  accrued  interest
thereon,  and all other  indebtedness  of the  Borrowers  to any of the  Lenders
and/or the  Agents in  connection  with this  Agreement  to be due and  payable,
whereupon:

         (i)      any right of the  Borrowers  to any further  utilization  of
                  the  Facilities  and any  obligations  of the Lenders under
                  the Commitments terminates; and

         (ii)     all Borrowings and other  indebtedness of the Borrowers to any
                  of the Lenders  and/or to the Agents in  connection  with this
                  Agreement are,  notwithstanding  anything in this Agreement to
                  the  contrary,  immediately  due and payable  without  further
                  demand or other notice of any kind, all of which are expressly
                  waived by the  Borrowers  and  Guarantors,  and the  Borrowers
                  shall immediately:

<PAGE>

                                      -69-

                  (A)      pay to the Canadian Agent and/or the U.S.  Agent,  as
                           the case may be, the amount so declared to be due and
                           payable  (except  for  the  Principal  Amount  of the
                           Bankers' Acceptances then issued and outstanding);

                  (B)      pay to the Canadian  Agent,  a sum of money in Cdn. $
                           equal to such amount which the  Canadian  Agent shall
                           establish  as being the amount  which if  invested in
                           certificates  of  deposit  or  similar  money  market
                           instruments   issued  by  the  Canadian  Agent  will,
                           together with the yield derived from such investments
                           (the sum of such amount and such yield the "Amount"),
                           equal   the   Principal   Amount   of  all   Bankers'
                           Acceptances then issued and outstanding. The Canadian
                           Agent  shall,  promptly  upon  receipt  of the Amount
                           distribute  among  the  Lenders  the  Amount  or  the
                           applicable   portion   thereof   for  such   Bankers'
                           Acceptances; and

                  (C)      if so  requested  by the  Canadian  Agent or the U.S.
                           Agent,  as the  case  may be,  pay to such  Agent  an
                           amount in  immediately  available  funds (which funds
                           shall be held as collateral  pursuant to arrangements
                           satisfactory  to such Agent)  equal to the  aggregate
                           amount  available  for  drawing  under all Letters of
                           Credit then outstanding.

9.2      SECURITY

(a)      Upon the  occurrence  of an Event of Default,  the Security held by the
         Collateral Agent and/or any Lender shall become immediately enforceable
         and the Majority  Lenders may, in their absolute  discretion,  instruct
         the Collateral  Agent or, in respect of any Security held by any Lender
         directly,  such  Lender,  to take any and all steps in order to enforce
         and realize upon the Security, in whole or in part.

(b)      The Borrowers'  obligations and liabilities under this Agreement are in
         no way affected or diminished in the event of any such  enforcement  of
         or realization  upon any Security by the  Collateral  Agent or any such
         Lender.

9.3      REMEDIES NOT EXCLUSIVE

         The Borrowers and the  Guarantors  expressly  agree that the rights and
remedies of the Agents and the Lenders under this Agreement and the Security are
cumulative  and in  addition  to,  and not in  substitution  for,  any rights or
remedies  provided  by law;  any single or partial  exercise  by an Agent or any
Lender  of any right or remedy  for a default  or breach of any term,  covenant,
condition or agreement in this Agreement does not affect its or their rights and
does not waive,  alter,  affect, or prejudice any other right or remedy to which
an Agent or the Lenders may be lawfully entitled for the same default or breach.
Any  waiver  by an Agent or any of the  Lenders  of the  strict  observance  of,
performance of or compliance with any term, covenant,  condition or agreement of
this  Agreement,  and any indulgence by any Agent or any of the Lenders is not a
waiver of that or any subsequent default.

9.4      SET-OFF

<PAGE>

                                      -70-

         In addition to any rights now or hereafter granted under applicable law
and  not by way of  limitation  of any  such  rights,  each  of the  Lenders  is
authorized during an Event of Default which is continuing, without notice to the
Borrowers, any Guarantor or to any other Person, any such notice being expressly
waived by the Borrowers and each Guarantor, to set-off and to appropriate and to
apply any and all  deposits,  matured or  unmatured,  general or special and any
other indebtedness at any time held by or owing by each of the Lenders to or for
the credit of or the account of any of the  Borrowers or any  Guarantor  against
and on account of the  obligations  and  liabilities  of the  Borrowers  and the
Guarantors  due and  payable  to  each  of the  Lenders  under  this  Agreement,
including without  limitation,  all claims of any nature or description  arising
out of or connected with this Agreement.

                                   ARTICLE X
                                    PAYMENTS

10.1     PAYMENTS TO AGENTS/SWINGLINE LENDERS

(a)     All payments to be made by the Canadian Borrower in connection with this
        Agreement  shall be made in funds  having same day value to the Canadian
        Agent,  for its own account or for the account of the Canadian  Lenders,
        at the Toronto-Dominion Bank, International Centre Toronto, For account:
        Asset Sales & Loan  Syndications,  CAN$ Account  Number  0360-01-2268079
        (Ref:  FirstService Corp) for Cdn.$ and Bank of America National Trust &
        Savings Association,  SWIFT BOFAUS3N,  ABA#026 009 593, in favour of: TD
        Bank  Toronto,   Account  #6550-8-26336,   For  further  credit:  Agency
        Administration,  US$ Account  #0360-01-2268176 (Ref:  FirstService Corp)
        for US$ or at any other  office or account  designated  by the  Canadian
        Agent.  Any  such  payment  shall be made on the date  upon  which  such
        payment is due, in accordance with the terms hereof, no later than 10:00
        a.m. Any such payment shall be a good discharge to the Canadian Borrower
        for such  payment  and,  if any such  payment is for the  account of the
        Lenders, the Canadian Agent shall hold the amount so paid "in trust" for
        the Lenders until distributed to them in accordance with this Agreement.

(b)     All payments to be made by the U.S.  Borrowers in  connection  with this
        Agreement  shall be made in  funds  having  same  day  value to the U.S.
        Agent, for the account of the U.S. Lenders,  at Bank of America NT & SA,
        ABA#026009595,  Toronto  Dominion  (Texas) Inc.  Acct#6550-6-52270  Ref:
        FirstService  (USA),  Attention:  Lynn Chasin or at any other  office or
        account  designated by the U.S. Agent. Any such payment shall be made on
        the date upon which such  payment is due, in  accordance  with the terms
        hereof,  no later  than  10:00  a.m.  Any such  payment  shall be a good
        discharge  to the U.S.  Borrowers  for  such  payment  and,  if any such
        payment is for the  account of the U.S.  Lenders,  the U.S.  Agent shall
        hold  the  amount  so  paid  "in  trust"  for  the  U.S.  Lenders  until
        distributed to them in accordance with this Agreement.

<PAGE>

                                      -71-

(c)      Payments to the Canadian  Swingline  Lenders  shall be made directly to
         the Canadian  Swingline  Lender as directed by the  Canadian  Swingline
         Lender to the Canadian  Borrower  from time to time and payments to the
         U.S.  Swingline  Lender  shall be made  directly to the U.S.  Swingline
         Lender  as  directed  by the  Canadian  Swingline  Lender  to the  U.S.
         Borrowers from time to time.

(d)      Whenever a payment is due on a day which is not a Business Day, the day
         for payment is the following Business Day.

10.2     PAYMENTS BY LENDERS TO AGENTS

         All  payments to be made by any Lender to an Agent in  connection  with
Borrowings  shall be made in funds having same day value to such Agent,  for the
applicable  Borrower's  applicable  Cdn. $ or U.S. $ account  (unless  otherwise
specified),  at the branch,  office or account  mentioned in or designated under
Section 10.1 (a) or (b) and by the time designated therein.

10.3     PAYMENTS BY AGENTS TO BORROWERS

         Any payment received by an Agent for the account of a Borrower shall be
paid in funds  having same day value to such  Borrower by such Agent on the date
of receipt or, if such date is not a Business  Day, on the next Business Day, to
the Canadian  Borrower's  Operating Accounts or each U.S.  Borrower's  Operating
Account,  as the case may be, at the same branch, or to such other accounts as a
Borrower may designate.

10.4     DISTRIBUTION TO LENDERS AND APPLICATION OF PAYMENTS

(a)      Except as otherwise  indicated  herein,  all payments made to an Agent,
         Swingline  Lender or Issuing  Bank by a Borrower for the account of the
         Lenders in connection  herewith  shall be  distributed  the same day by
         such  Person in funds  having  same day value  among the Lenders to the
         accounts last designated in writing by such Lenders respectively to the
         Agents pro rata, in  accordance  with their  respective  Participations
         with respect to the Loans, Bankers' Acceptances or Letters of Credit in
         respect of which any such payment is made.

(b)      Any amounts so distributed  shall be applied by the Lenders in the
         following order:

         (i)      to amounts due pursuant to Articles VII or XI;

         (ii)     to amounts due pursuant to Articles XII;

         (iii)    to amounts due pursuant to Article IV; and

         (iv) to any other amounts due pursuant to this Agreement.

10.5     NO SET-OFF OR COUNTERCLAIM

<PAGE>

                                      -72-

         All  payments  by a Borrower  or any  Guarantor  shall be made free and
clear  of and  without  any  deduction  for or on  account  of  any  set-off  or
counterclaim.

10.6     NON-RECEIPT BY AGENTS

         Where a sum is to be paid  hereunder  to an Agent  for the  account  of
another party hereto, such Agent shall not be obliged to make the same available
to that  other  party  hereto  until it has been able to  establish  that it has
actually received such sum, but if it does pay out a sum and it proves to be the
case  that it had not  actually  received  the sum it paid  out,  then the party
hereto to whom such sum was so made  available  shall on request ensure that the
amount so made available is refunded to such Agent and shall on demand indemnify
such Agent  against any cost or loss it may have  suffered or incurred by reason
of its having paid out such sum prior to its having received such sum.

10.7     WHEN DUE DATE NOT SPECIFIED

         Whenever this Agreement does not provide a date when any amount payable
hereunder  shall be due and payable  such amount shall be due and payable on the
5th Business Day following  written  notice or demand for payment  thereof by an
Agent or any Lender save that  nothing  hereinbefore  provided  shall in any way
affect or alter the rights and  remedies  available to the Agents and any Lender
under Article IX.

10.8     AGENTS' AUTHORITY TO DEBIT

         In respect of all amounts  payable by a Borrower under this  Agreement,
the Borrowers and each  Unlimited  Guarantor  hereby  authorize and instruct the
Agents, as applicable, to debit, from time to time when such amounts are due and
payable,  the account or accounts  designated  pursuant to Section  10.3 and all
other accounts of the applicable Borrower or Unlimited  Guarantor,  whether such
accounts  are  maintained  with  an  Agent  or  otherwise,  for the  purpose  of
satisfying payment thereof.

                                   ARTICLE XI
                                    EXPENSES

11.1     PAYMENT OF EXPENSES

         Whether or not an Event of Default exists, the Borrowers shall, jointly
and severally:

(a)      pay (i) all  reasonable  out-of-pocket  expenses  of the Agents and the
         Lenders  incurred  in  the  preparation,   negotiation,  execution  and
         delivery  of this  Agreement,  the  Security  and all  other  documents
         relating  hereto  including,   without   limitation,   legal  fees  and
         out-of-pocket  expenses of Lenders'  Counsel and their  agents (but not
         including  separate legal counsel engaged by any particular Lender) and
         (ii) all other reasonable out-of-pocket expenses of the Agents incurred
         in connection with the  establishment and maintenance of the Facilities
         including,  without  limitation,  environmental and other  consultants'
         fees and expenses;

<PAGE>

                                      -73-

(b)      pay all reasonable out-of-pocket expenses of the Agents incurred in the
         amendment or  modification  of this  Agreement or documents  (including
         waivers or consents)  relating thereto at a Borrower's request (whether
         or not any such  amendment  or  modification  is actually  consummated)
         including without limitation,  legal fees and out-of-pocket expenses of
         Lenders' Counsel and their agents;

(c)      pay all reasonable out-of-pocket expenses of the Agents and the Lenders
         incurred in the  enforcement  and  preservation  of any of their rights
         under this Agreement or any Security,  including,  without  limitation,
         legal fees and  out-of-pocket  expenses  of  Lenders'  Counsel or other
         counsel and their agents; and

(d)     indemnify  the Agents and the Lenders from all losses,  costs,  damages,
        out-of-pocket  expenses  and  liabilities  which any Agent or any Lender
        sustains or incurs (including, without limitation, any loss of profit or
        expenses any Lender incurs by reason of the  liquidation or redeployment
        of  deposits  or  other  funds  acquired  by  such  Lender  to  maintain
        Borrowings  or any interest or other  charges  payable by such Lender to
        other lenders of funds borrowed in order to make, to fund or to maintain
        the Loans or to maintain any amount in default) as a consequence  of (I)
        any prepayment (it being understood that the mandatory  repayments to be
        made pursuant to Section 3.1 do not  constitute  prepayments),  (II) any
        acceleration  of the  payment of  Borrowings  pursuant to Section 9.1 or
        17.8 or (III) any default by a Borrower  under any of the  provisions of
        this Agreement including,  without limitation,  a failure to borrow on a
        Drawdown Date or to issue Bankers'  Acceptances on an Acceptance Date, a
        failure to pay interest  on, or  principal  amounts of, the Loans on the
        dates due,  the failure to make a payment on the  specified  date or the
        failure  to make a payment  in  accordance  with this  Agreement  or any
        misrepresentation  by a Borrower contained in or delivered in writing in
        connection with this Agreement. The certificate of an officer or manager
        of any Agent or any such  Lender  setting  forth the  amount of any such
        losses,  damages,  expenses and  liabilities  shall  constitute,  absent
        manifest  error,  prima facie  evidence of any such amount and any Agent
        shall debit, from any Borrower's accounts,  the amount stipulated in the
        certificate  in  accordance  with Section  10.8.  The affected  Agent or
        Lender shall also provide to the affected  Borrower a statement  setting
        out the basis for the calculation of such amount.

11.2     SURVIVAL

         Without prejudice to the survival or termination of any other agreement
of the Borrowers  under this  Agreement,  the obligations of the Borrowers under
Section 11.1 survive the repayment of all the Borrowings and the  termination of
the Commitments.

11.3     ENVIRONMENTAL INDEMNITY

(a)     Subject to the  limitations in this Section 11.3, the Borrowers agree to
        and do hereby,  jointly and  severally,  indemnify and save harmless the
        Agents and the Lenders and their officers, directors,  employees, agents
        and shareholders in such capacities (the "Indemnified Parties") from and
        against any and all losses, damages, costs and

<PAGE>

                                      -74-

        expenses of any and every nature and kind  whatsoever  which at any time
        or from  time  to time  may be  paid  by or  incurred  by them  (without
        duplication and net of Tax Recoveries by any of the Indemnified Parties)
        for, with respect to, or as a direct or indirect result of the disposal,
        refining,  generation,   manufacture,   production,  storage,  handling,
        presence, treatment,  transfer, release, processing or transportation of
        any Hazardous Material in, on or under any property of whatsoever nature
        or kind of a Borrower,  or any  Subsidiary  thereof,  or the  discharge,
        emission,  spill or disposal  from such  property into or upon any land,
        the  atmosphere  or any  watercourse,  body of water or  wetland  of any
        Hazardous  Material  where it has been  proven  that the  source  of the
        Hazardous  Material is the said property to the extent that such losses,
        damages,  costs and expenses arise out of the  relationship  between the
        Indemnified  Parties and a Borrower reflected herein including,  without
        limitation:

         (i)      the cost of defending and/or  counterclaiming or claiming over
                  against  third  parties  in  respect  of any  action or matter
                  referred to above;

         (ii)     any cost, liability or damage arising out of any settlement of
                  any action referred to above to which any Indemnified Party is
                  a party; and

         (iii)    costs of any cleanup in connection with any matter referred
                  to above.

(b)      In the  event  that  any  claim,  action,  order,  suit or  proceeding,
         including,  without  limiting  the  generality  of the  foregoing,  any
         inquiry or  investigation  (whether  formal or  informal) is brought or
         instituted  against any Indemnified  Party, the Indemnified Party shall
         promptly  notify the Borrowers and the Borrowers  shall promptly retain
         counsel who shall be reasonably satisfactory to the Indemnified Parties
         to represent the Indemnified Parties in such claim, action, order, suit
         or proceeding and the Borrowers  shall pay all of the  reasonable  fees
         and  disbursements  of such  counsel  relating to such  claim,  action,
         order, suit or proceeding.

(c)      In any such claim, action,  order, suit or proceeding,  the Indemnified
         Parties shall have the rights to retain  other  counsel to act on their
         behalf, provided that the fees and  disbursements of such other counsel
         shall be paid by the Indemnified Parties unless:  (i) the Borrowers and
         the  Indemnified Parties shall have mutually agreed to the retention of
         such other  counsel;  or  (ii)  the named  parties to  any such  claim,
         action, order,  suit  or   proceeding  (including  any added,  third or
         impleaded parties) include  the Borrowers  and the  Indemnified Parties
         and representation of all such  parties by the  same counsel  would  be
         inappropriate  due to actual or potential  differing interests  between
         them (such as the availability of different defences).

(d)      Notwithstanding  anything  contained in this Section 11.3,  none of the
         Indemnified  Parties  shall agree to any  settlement of any such claim,
         action,  order,  suit or  proceeding  unless the  Borrowers  shall have
         consented in writing thereto, and the Borrowers shall not be liable for
         any  settlement of any such claim,  action,  order,  suit or proceeding
         unless they have consented in writing  thereto.  The Borrowers shall be

<PAGE>

                                      -75-

         entitled to settle any such claim, action, order, suit or proceeding on
         any terms it deems appropriate.

(e)      The  provisions of this Section 11.3 shall  survive the Final  Maturity
         Date and the repayment of all Borrowings hereunder and the satisfaction
         by the Borrowers of all other obligations hereunder.

(f)      For the purposes of this Section 11.3,  "Tax  Recoveries" of any Person
         in respect of a payment or outlay made or incurred by such Person means
         the Taxes  that  would be saved or  recovered  by such  Person  and the
         creation or increase of a loss or credit for Tax purposes  which may be
         used to reduce Taxes payable by such Person.

                                  ARTICLE XII
                                      FEES

12.1     AGENCY FEE

         The  Borrowers  shall pay to the Agents,  the agency fees for acting in
the  capacity of  Administration  Agents  hereunder  contained  in an agency fee
agreement between the Borrowers and the Agents.

12.2     MISCELLANEOUS

         Fees payable by the Canadian Borrower hereunder shall be debited by the
Canadian  Agent from the Canadian  Borrower's  Cdn. $ account  designated  under
Section  10.3 on the first  Business Day of each Quarter and fees payable by the
U.S.  Borrowers  to the U.S.  Agent shall be sent by the U.S.  Borrowers by wire
transfer to the U.S.  Agent's  account  designated  under Section 10.1(b) on the
first Business Day of each Quarter.

                                  ARTICLE XIII
                                   THE AGENTS

13.1     AGENTS

         Each  Lender  hereby  appoints  each  Agent  to act as  its  agent,  as
specified   hereunder,   in  connection  with  this  Agreement  and  any  matter
contemplated hereunder and authorizes irrevocably each Agent for the duration of
such  appointment  to  exercise  such  rights,  powers  and  discretions  as are
delegated to such Agent  pursuant to this  Agreement  and the Security  together
with all such  rights,  powers  and  discretions  as are  incidental  hereto  or
thereto. Each Agent shall have only those duties and responsibilities  which are
expressly specified in this Agreement and the Security,  and it may perform such
duties by or through its agents or  employees.  This  Agreement and the Security
shall not place any Agent under any  fiduciary  duties in respect of any Lender.
Each  Agent  and any  other  Person  to whom an Agent  may  delegate  duties  or
responsibilities  as  permitted  under  Section  13.2 (h)  shall  enjoy the same

<PAGE>

                                      -76-

benefits,  rights and  protections  as those  provided to the Agents  under this
Article "mutatis mutandis".

13.2     AGENTS' RESPONSIBILITY

         Each Agent may:

(a)      assume,  until it is  notified  in writing  or has actual  notice or
         actual knowledge to the contrary, that:

         (i)      any   representation   made  by  a  Borrower  or  any  of  its
                  Subsidiaries  in or in connection  with any of this Agreement,
                  any notice or other  document,  instrument or  certificate  is
                  true;

         (ii)     no Event of Default has occurred; and

         (iii)    each  Borrower or a Subsidiary  of a Borrower is not in breach
                  of or in  default  under,  its  obligations  under any of this
                  Agreement or the Security;

and each Agent may also:

(b)      unless  such  Agent  has  actual  knowledge  or  actual  notice  to the
         contrary, assume that each Lender's address is that identified with its
         signature  below  until  it has  received  from  such  Lender  a notice
         designating  some other  office of such  Lender as its  address and act
         upon any such notice  until the same is  superseded  by a further  such
         notice;

(c)      engage and pay for the advice or services of any  lawyers,  accountants
         or other  experts  whose advice or services  may to it seem  necessary,
         expedient or desirable and rely upon any advice so obtained;

(d)      unless  such  Agent  has  actual  knowledge  or  actual  notice  to the
         contrary, rely as to matters of fact which might reasonably be expected
         to be  within  the  knowledge  of a  Borrower  or any  Subsidiary  of a
         Borrower  upon a statement  signed by or on behalf of a Borrower or any
         Subsidiary of a Borrower;

(e)      unless  such  Agent  has  actual  knowledge  or  actual  notice  to the
         contrary,  rely upon any communication or document believed by it to be
         genuine;

(f)      refrain from  exercising  any right,  power or discretion  vested in it
         under this Agreement or any Security unless and until instructed by the
         Majority  Lenders as to whether or not such right,  power or discretion
         is to be exercised  and, if it is to be exercised,  as to the manner in
         which it should be exercised;

(g)      refrain from  exercising  any right,  power or discretion  vested in it
         which  would or  might in its  opinion  be  contrary  to any law of any
         jurisdiction  or any  directive  or

<PAGE>

                                      -77-

         otherwise  render it liable to any Person, and may do anything which is
         in its opinion necessary to comply with any such law or directive;

(h)      retain for its own benefit,  and without  liability to account for, any
         fee or other sum receivable by it for its own account;

(i)      accept  deposits  from,  lend money to,  provide any  advisory or other
         services to or engage in any kind of banking or other business with any
         party (including any Affiliate thereof) to this Agreement; and

(j)      refrain from acting in accordance with any instructions of the Majority
         Lenders to begin any legal  action or  proceeding  arising out of or in
         connection  with any of this Agreement or any Bankers'  Acceptance,  or
         take any steps to enforce or realize upon any Security,  until it shall
         have  received  such  security  as it may  require  (whether  by way of
         payment in advance or otherwise)  against all costs,  claims,  expenses
         (including  legal fees) and liabilities  which it will or may expend or
         incur in complying with such instruction.

13.3     AGENTS' DUTIES

         Each Agent shall:

(a)      promptly  upon receipt  thereof,  inform each Lender of the contents of
         any notice,  document,  request or other information  received by it in
         its capacity as an Agent hereunder from a Borrower or any Subsidiary of
         a Borrower;

(b)      promptly  notify each Lender of the  occurrence of any Event of Default
         or any Default by a Borrower or a Guarantor in the due  performance  of
         its  obligations  under this  Agreement,  any  Security or any document
         incidental  thereto to which it is expressed to be a party and of which
         the Agent has actual knowledge or actual notice;

(c)      each time the  Borrowers  request  the  prior  written  consent  of the
         Majority Lenders, use its best efforts to obtain and communicate to the
         Borrowers  the  response of the Majority  Lenders in a  reasonable  and
         timely manner having due regard to the nature and  circumstances of the
         request;

(d)      subject  to the  foregoing  provisions  of this  Section  13.3,  act in
         accordance with any  instructions  given to it by the Majority  Lenders
         and, in particular, only take steps to enforce or realize upon Security
         in  accordance  with the  instructions  or  delegated  authority of the
         Majority Lenders; and

(e)      if so instructed by the Majority  Lenders,  refrain from exercising any
         right,  power or  discretion  vested in it under  this  Agreement,  the
         Security or any document incidental thereto.

13.4     PROTECTION OF AGENTS

<PAGE>

                                      -78-

Notwithstanding  anything to the contrary  expressed or implied herein,  each of
the Agents shall not:

(a)      be bound to enquire as to:

         (i)      whether any representation made by a Borrower,  a Guarantor or
                  any  of  their  Subsidiaries  in or in  connection  with  this
                  Agreement,  the Security or any document incidental thereto is
                  true;

         (ii)     the occurrence or otherwise of any Event of Default;

         (iii)    the  performance  by a Borrower,  a Guarantor  or any of their
                  Subsidiaries of its  obligations  under any of this Agreement,
                  the Security or any document incidental thereto;

         (iv)     any breach of or default by a Borrower,  a Guarantor or any of
                  their  Subsidiaries  of or under its  obligations  under  this
                  Agreement, the Security or any document incidental thereto; or

         (v)      the use or application by a Borrower of any of the proceeds of
                  the Facilities;

(b)      be bound to account to any Lender  for any sum or the  profit  element
         of any sum  received  by it for its own account;

(c)      be bound to  disclose  to any  Person  any  information  relating  to a
         Borrower  or a  Guarantor  if such  disclosure  would  or  might in its
         opinion  constitute a breach of any law or  regulation  or be otherwise
         actionable at the suit of any Person; or

(d)     accept any  responsibility  for the accuracy and/or  completeness of any
        information  supplied  in  connection  herewith  or  for  the  legality,
        validity,  effectiveness,  adequacy or enforceability of this Agreement,
        any Bankers' Acceptance or any document incidental hereto or thereto and
        no Agent  shall be under  any  liability  to any  Lender  as a result of
        taking or omitting to take any action in relation to this Agreement, any
        Bankers'  Acceptance,  the Security or any document incidental hereto or
        thereto save in the case of gross negligence or wilful  misconduct,  and
        each of the  Lenders  agrees  that it will not  assert or seek to assert
        against any director,  officer, employee or agent of any Agent any claim
        it might have against any of them in respect of the matters  referred to
        in this Section 13.4.

13.5     INDEMNIFICATION OF AGENTS

         Each Lender shall, on demand by an Agent, indemnify such Agent pro rata
in  accordance  with  such  Lender's  Participation  at the time of such  demand
against any and all costs,  claims,  reasonable  expenses (including legal fees)
and  liabilities  which such Agent may incur (and which have not been reimbursed
by a Borrower),  otherwise than by reason of its own gross  negligence or wilful
misconduct,  in acting in its  capacity  as an Agent under this

<PAGE>

                                      -79-

Agreement,  any Bankers'  Acceptance,  the  Security or any document  incidental
hereto or thereto.

13.6     TERMINATION OR RESIGNATION OF AGENT

(a)      Notwithstanding  the appointment of an Agent,  the Majority Lenders may
         (with the consent of the Canadian Borrower prior to an Event of Default
         and without  requiring such consent after the occurrence of an Event of
         Default  which  is  continuing;  such  consent  not to be  unreasonably
         withheld or delayed), upon giving an Agent 90 days prior written notice
         to such effect, terminate an Agent's appointment hereunder.

(b)      An Agent may  resign  its  appointment  hereunder  at any time  without
         assigning any reason  therefor by giving  written notice to such effect
         to each of the other parties hereto.

(c)      In the event of any  such  termination  or  resignation,  the  Majority
         Lenders shall  appoint  a  successor  Agent  (with the  consent  of the
         Canadian Borrower  prior to an Event of Default and  without  requiring
         such  consent after  the  occurrence  of an Event of  Default  which is
         continuing, such consent not to be  unreasonably  withheld or delayed).
         The Canadian Agent or the U.S. Agent, as the case may be, (if it is the
         Agent  being replaced)  shall  deliver  copies of the  Accounts to such
         successor and the retiring Agent shall be  discharged  from any further
         obligation  hereunder  but shall remain  entitled to the benefit of the
         provisions  of this Article XIII and the Agent's successor  and each of
         the other  parties  hereto  shall have the same rights and  obligations
         among  themselves as  they would  have had if such successor originally
         had been a party hereto as an Agent.

13.7     RIGHTS OF AN AGENT AS LENDER

         With respect to its Commitment and its  Participation,  and to Bankers'
Acceptances  and  Letters of  Credit,  an Agent  shall have the same  rights and
powers under this  Agreement and any Bankers'  Acceptances  as any other Lender,
and it may exercise such rights and powers as though it were not  performing the
duties  and  functions  delegated  to it as an  Agent  hereunder,  and the  term
"Lender" or any other similar term shall, unless the context otherwise requires,
include any Agent in its capacity as a Lender.

13.8     AUTHORIZED WAIVERS, VARIATIONS AND OMISSIONS

         If so authorized  in writing by the Majority  Lenders,  the  Collateral
Agent may grant  waivers,  consents,  vary the terms of this Agreement and do or
omit to do all acts and things in connection herewith or therewith.  Except with
the prior  written  agreement of all the  Lenders,  nothing in this Section 13.8
shall authorize:

(a)     any  decrease in the  Acceptance  Fee, the Libor  Margin,  the Letter of
        Credit Fee, the Prime Rate Margin,  the U.S. Base Rate Margin,  the U.S.
        Prime Rate Margin or the Commitment Fees;

<PAGE>

                                      -80-

(b)      any extension of the date for, or alteration in the amount, currency or
         mode of  calculation  or  computation  of any payment of  principal  or
         interest or other amount;

(c)      any increase in the Commitment of a Lender or subject any Lender to any
         additional obligations hereunder;

(d)      any amendments to Section 3.11;

(e)      any change in the terms of Article IX;

(f)      any change in the definition of Majority Lenders;

(g)      the release or discharge of a Borrower or a Guarantor; provided however
         and  notwithstanding  the foregoing,  the Collateral Agent may, without
         the consent of the Lenders,  grant partial  releases and  discharges of
         the Security in connection with any sale, lease, transfer,  assignment,
         disposition  or conveyance by the Canadian  Borrower  and/or any of its
         Subsidiaries  of properties or assets  permitted  under Section  8.2(c)
         hereof; or

(h)      any amendments to this Section 13.8.

13.9     FINANCIAL INFORMATION CONCERNING THE BORROWERS OR GUARANTORS

         Subject  to  Section  13.3  (a),  no  Agent  shall  have  any  duty  or
responsibility  either  initially or on a continuing basis to provide any Lender
with any credit or other information with respect to the financial condition and
affairs of the Borrowers or Guarantors.

13.10    KNOWLEDGE OF FINANCIAL SITUATION OF BORROWERS

         Each of the Lenders  represents  and warrants to the Agents that it has
made its own independent investigation of the financial condition and affairs of
the Borrowers and each Guarantor in connection with the making and  continuation
of its  Participation  in this  Agreement  and  that it has  not  relied  on any
information provided to it by any Agent in connection herewith or therewith, and
each  represents  and warrants to the Agents that it shall  continue to make its
own appraisal of the  creditworthiness  of the Borrowers and the Guarantors from
time to time.

13.11    LEGAL PROCEEDINGS

         No Agent shall be  obligated  to take any legal  proceedings  against a
Borrower  or any other  Person  for the  recovery  of any  amount due under this
Agreement  or under any  Bankers'  Acceptances.  No  Lender  shall  bring  legal
proceedings  against a Borrower,  any  Guarantor or  Subsidiary  hereunder or in
connection  herewith,  or exercise any right arising  hereunder or in connection
herewith  over the  property  and assets of a  Borrower,  any  Guarantor  or any
Subsidiary, without the prior written consent of the Majority Lenders.

13.12    CAPACITY AS AGENT

<PAGE>

                                      -81-

         In performing its functions and duties under this Agreement, each Agent
shall act solely as the agent of the Lenders and shall not assume, and shall not
be deemed to have assumed,  any obligation as agent or trustee for a Borrower or
any other Person. No Agent shall be under any liability or responsibility of any
kind to the  Borrowers,  the Lenders or to any other Person arising out of or in
relation  to any  failure  or delay in  performance  or breach by any  Lender or
Lenders or, as the case may be, by the  Borrowers,  any  Guarantor  or any other
Person  (other than such Agent in respect of its own gross  negligence or wilful
misconduct) pursuant to or in any way in connection with this Agreement.

13.13    DEPOSITS OR LOANS RESPECTING THE BORROWERS

         Each Agent and each of the Lenders may accept deposits from, lend money
to and  generally  engage  in any kind of  banking  or other  business  with the
Borrowers  or the  Guarantors  without  liability to account to any Agent or any
Lender.

                                  ARTICLE XIV
                            ASSIGNMENTS AND TRANSFERS

14.1     BENEFIT OF AGREEMENT

         This  Agreement  shall be binding upon and enure to the benefit of each
party hereto and its successors and permitted assigns.

14.2     ASSIGNMENTS AND TRANSFERS BY A BORROWER OR AN UNLIMITED GUARANTOR

         No Borrower nor the Unlimited  Guarantor shall be entitled to assign or
transfer all or any of its rights, benefits and obligations hereunder.

14.3     ASSIGNMENTS AND TRANSFERS BY A LENDER

(a)      Subject to Section 14.4, any Lender may, at its cost, assign or
         transfer:

         (i)      to an affiliate of such Lender at any time; and

         (ii)     with:

                  (A)      the consent of the  Canadian  Agent with respect to a
                           Canadian  Lender and the U.S. Agent with respect to a
                           U.S. Lender (which consents shall not be unreasonably
                           withheld or delayed); and

                  (B)      (unless there exists an Event of Default) the consent
                           of  the  Canadian   Borrower   (which  shall  not  be
                           unreasonably withheld or delayed)

         and upon such terms and conditions as such Lender shall determine,  all
         or any portion of its rights,  benefits and/or obligations hereunder in
         relation  to a portion of such  Lender's  Commitment  of not less than,
         with  respect  to the  Canadian  Facilities,

<PAGE>

                                      -82-

        Cdn.$1,000,000 and with respect to the U.S. Facilities, U.S. $2,500,000,
        to an assignee or a  transferee  which in the case of  assignments  by a
        Canadian  Lender is a resident in Canada (a "Canadian  Assignee") and in
        the case of assignments by a U.S.  Lender,  is a Person which can comply
        with the  provisions  of Section  7.9(a) of this  Agreement and provides
        evidence thereof  satisfactory to the U.S.  Borrowers acting  reasonably
        and is in the  business of making  loans (a "U.S.  Assignee");  provided
        that in the case of an assignment or transfer by a Canadian Lender there
        is a  corresponding  assignment  or transfer by the related U.S.  Lender
        (which may, in certain  circumstances be the same institution) to a U.S.
        Assignee  related  to  the  Canadian  Assignee  (which  may  in  certain
        circumstances be the same institution) of an amount which bears the same
        proportion  to the  related  U.S.  Lender's  Commitment  as  the  amount
        assigned or  transferred  by the  Canadian  Lender bears to the Canadian
        Lender's  Commitment,  and vice  versa in the case of an  assignment  or
        transfer by a U.S. Lender.

(b)     Where  obligations  of any Lender are so  assigned or  transferred,  the
        assignee or transferee shall confirm in writing to the Borrowers and the
        Canadian  Agent and the U.S.  Agent,  as the case may be,  prior to such
        assignment or transfer taking effect, that it shall be bound towards the
        Borrowers  and  the  Agents  by  the  terms  hereof   relating  to  such
        obligations.  On the assignment and transfer being made and such written
        confirmation,  as aforesaid,  being  delivered to the Borrowers and such
        Agent, such Lender shall be relieved of its obligations to the extent of
        such  assignment  or transfer  thereof and such  assignee or  transferee
        shall become a Lender for all purposes of this Agreement and the related
        documents and  transactions  provided herein or contemplated  thereby to
        the extent of such assigned or transferred  interest on the 5th Business
        Day  following  receipt  by the  Canadian  Agent or the U.S.  Agent,  as
        applicable, of the confirmation of assignment.

14.4     TRANSFER CERTIFICATE

         If any Lender  wishes to assign or  transfer  all or any of its rights,
benefits and  obligations  hereunder in accordance  with Section 14.3, then such
assignment  or transfer  shall be effected by the delivery by such Lender to the
Canadian  Agent and the U.S.  Agent and the  Borrowers of a duly  completed  and
executed  Transfer  Certificate  whereupon,  to the extent that in such Transfer
Certificate the Lenders party thereto seeks to assign or transfer its rights and
obligations hereunder:

(a)      the applicable  Borrower(s) and such Lender shall each be released from
         further obligations to the other hereunder, and their respective rights
         against  each other shall be  cancelled  (such  rights and  obligations
         being  referred  to in this  Section  14.4 as  "discharged  rights  and
         obligations");

(b)      the applicable  Borrower(s) and the Transferee party thereto shall each
         assume obligations  towards and acquire rights in respect of each other
         which differ from the discharged rights and obligations only insofar as
         the  obligations so assumed and the

<PAGE>

                                      -83-

        rights so  acquired  by the  Borrowers  are owed to and  constituted  by
        claims  against  such  Transferee  and not  such  Lender,  so  that  the
        Borrowers and the Transferee  shall have the same rights and obligations
        towards  each other which they would have  acquired  had the  Transferee
        been an original party hereto;

(c)      the Agents, the Transferee and the other Lenders shall acquire the same
         rights and assume the same obligations between themselves as they would
         have  acquired and assumed had the  Transferee  been an original  party
         hereto with the obligations  assumed and the rights acquired by it as a
         result of such assignment or transfer.

(d)      the amounts  payable by any  Borrower  under this  Agreement  shall not
         increase,  whether  in respect  of  withholding  on account of taxes or
         otherwise,  as a result of any such  assignment or transfer to a Lender
         which  is,  or is  deemed  to be  (i)  in  the  case  of  the  Canadian
         Facilities,  not  resident in Canada for the purposes of the Income Tax
         Act (Canada)  with respect to any such  Transferee  becoming a Canadian
         Lender or (ii) in the case of the U.S. Facilities, is not a resident of
         the  U.S.  for  the  purpose  of the  Code  with  respect  to any  such
         Transferee becoming a U.S. Lender.

14.5     NOTICE

         The Canadian Agent or the U.S.  Agent, as the case may be, shall notify
promptly  the  appropriate  parties  hereto of the receipt by it of any Transfer
Certificate,  and shall promptly deliver a copy of such Transfer  Certificate to
the Borrowers.

14.6     SUB-PARTICIPATIONS

         Any Lender may, at its own cost,  grant one or more  sub-participations
in all or any portion of its rights,  benefits and/or  obligations  hereunder to
third  parties,  without the consent of the  Borrowers,  and upon such terms and
conditions as such Lender shall determine,  provided that,  notwithstanding  any
such sub-participation, such Lender shall remain, in so far as the other parties
hereto are concerned, entitled to its rights and benefits hereunder and bound by
its  obligations  hereunder and the Borrowers,  the other Lenders and the Agents
shall not be obliged  to  recognize  any such  third  party as having the rights
against  any of them  which it would  have if it had  been a party  hereto,  and
provided further that in the case of any  sub-participation by a Canadian Lender
to  a  Canadian  participant  (a  "Canadian  Participant"),  there  shall  be  a
corresponding sub-participation by the related U.S. Lender (which may in certain
circumstances  be  the  same  institution)  to  a  U.S.   participant  (a  "U.S.
Participant")  related to the  Canadian  Participant  of an amount which has the
same  proportion  to  the  related  U.S.  Lender's   Commitment  as  the  amount
sub-participated by the Canadian Lender has to the Canadian Lender's Commitment,
and vice versa in the case of  sub-participation  by a U.S. Lender.  For greater
certainty,  the  Borrowers  shall not be  obligated  to pay,  in  respect of any
rights,  benefits  and/or  obligations in which a Lender has granted one or more
such  sub-participations,  to such Lender or to any sub-participant  thereof any
amount(s)  pursuant to Article VII of this Agreement which is (are) greater than
the amount(s),  if any, which the Borrowers  would otherwise have been obligated
to pay in respect of such rights,  benefits  and/or  obligations to such Lender,
had such sub-participation(s) not been granted.

<PAGE>

                                      -84-

14.7     DISCLOSURE

         Each Lender is hereby  authorized by the  Borrowers and each  Unlimited
Guarantor to disclose to any proposed  assignee,  Transferee or  sub-participant
information  in such  Lender's  possession  relating to the  Borrowers  and each
Unlimited  Guarantor  provided  that  such  proposed  assignee,   transferee  or
sub-participant  shall have  executed  and  delivered  to such  Lender a written
undertaking  to keep  confidential  any such  information  which is not publicly
available.

14.8     ASSIGNMENT TO FEDERAL RESERVE BANK

         Notwithstanding  anything  to the  contrary  provided  herein,  without
seeking or obtaining the consent of any party,  any U.S.  Lender may at any time
assign and transfer all or any portion of its rights  under this  Agreement  and
any promissory  notes issued to such U.S. Lender  hereunder to a Federal Reserve
Bank in the United States. No such assignment shall release such Lender from its
obligations hereunder.

                                   ARTICLE XV
                   GOVERNING LAW, COURTS AND JUDGMENT CURRENCY

15.1     GOVERNING LAW

         This  Agreement  shall be governed by and construed in accordance  with
the laws of the Province of Ontario and the laws of Canada applicable therein.

15.2     COURTS

         Any legal action or  proceeding  with respect to this  Agreement or any
Security  against a Borrower or the  Unlimited  Guarantor  may be brought in the
courts of the Province of Ontario,  which courts the parties hereto  acknowledge
irrevocably to be a convenient forum for the resolution of any such legal action
or proceeding.  Each Borrower and each Unlimited  Guarantor hereby accepts,  for
itself and in respect of its assets and revenues,  generally and unconditionally
the non-exclusive jurisdiction of the aforesaid courts.

         Each  Unlimited  Guarantor  and  each  of  the  U.S.  Borrowers  hereby
irrevocably  designates and appoints the Canadian Borrower (the "Process Agent")
at its registered office from time to time and of which the Canadian Agent shall
have been notified,  which office is currently  located at 66 Wellington  Street
West, 38th Floor,  Toronto-Dominion Bank Tower, Toronto, Ontario M5K 1A2, as the
authorized agent of each of the U.S. Borrowers and each Unlimited Guarantor upon
which  process  may be served  in any suit or  proceeding  arising  out of or in
connection  with this  Agreement  or any  Security or other  documents  relating
hereto or thereto  which may be instituted in the Province of Ontario and agrees
that service of process on the Process  Agent  together  with written  notice of
such  service to such U.S.  Borrower or such  Unlimited  Guarantor by the Person
serving  the same  shall,  to the extent  permitted  by law,  be deemed in every
respect  to be  effective  service  of  process  on such U.S.  Borrower  or such
Unlimited  Guarantor,  as the case may be.  Notwithstanding the address

<PAGE>

                                      -85-

noted on the execution pages hereof,  process may be served on a Borrower at its
registered office. However,  nothing in this Section 15.2 shall affect the right
of any Agent or Lender to serve legal  process in any other manner  permitted by
law or affect the right of any Agent or Lender to bring any action or proceeding
against a Borrower or the Unlimited  Guarantor or their properties in the courts
of any other jurisdiction including, without limitation the State of New York.

15.3     JUDGMENT CURRENCY

(a)     If for the purpose of obtaining judgment in any court it is necessary to
        convert an amount due  hereunder in the currency in which it is due (the
        "Original Currency") into another currency (the "Second Currency"),  the
        rate of exchange  applied  shall be that at which,  in  accordance  with
        normal  banking  procedures,  a Lender  could  purchase,  in the Toronto
        foreign exchange market,  the Original Currency with the Second Currency
        on the date 2 Business Days  preceding  that on which judgment is given.
        Each Borrower and each Unlimited Guarantor agrees that its obligation in
        respect of any  Original  Currency  due from it to any Lender  hereunder
        shall,  notwithstanding  any judgment or payment in such other currency,
        be discharged only to the extent that, on the Business Day following the
        date such  Lender  receives  payment  of any sum so  adjudged  to be due
        hereunder in the Second  Currency  such Lender may, in  accordance  with
        normal banking  procedures,  purchase,  in the Toronto foreign  exchange
        market the Original  Currency with the amount of the Second  Currency so
        paid;  and if the amount of the Original  Currency so purchased or could
        have been so  purchased  is less than the amount  originally  due in the
        Original Currency,  each Borrower and each Unlimited Guarantor agrees as
        a separate  obligation and  notwithstanding any such payment or judgment
        to indemnify such Lender against such loss.

(b)      The term "rate of exchange" in this Section 15.3 means the spot rate at
         which the Lender in  accordance  with normal  practices  is able on the
         relevant  date to  purchase  the  Original  Currency  with  the  Second
         Currency  and  includes  any premium  and costs of exchange  payable in
         connection with such purchase.

                                  ARTICLE XVI
                             GUARANTORS' OBLIGATIONS

16.1     GUARANTEE

(a)      The Canadian  Borrower,  as primary obligor and not as a surety merely,
         hereby unconditionally and irrevocably guarantees to each of the Agents
         and each of the Lenders the  punctual  payment  when due in  accordance
         with  the  terms  hereof  of all  obligations,  of  whatever  kind  and
         description,  of the U.S.  Borrowers and each of them to the Agents and
         each of the  Lenders  now or  hereafter  existing,  whether  direct  or
         indirect,  absolute or  contingent,  matured or  unmatured,  secured or
         unsecured joint,  several or independent  pursuant to or arising out of
         or under this  Agreement  and the

<PAGE>

                                      -86-

        Security (all such  obligations  so guaranteed are referred to herein as
        the "Canadian Borrower's Guaranteed Obligations").

(b)      Each Unlimited Guarantor hereby:

         (i)      unconditionally and irrevocably guarantees; and

         (ii)     is  jointly  and  severally  liable  and  obligated  with  the
                  Canadian Borrower to each of the Agents and the Lenders for;

                  (A)      the due and punctual payment of amounts of principal,
                           interest or fees in respect of all Borrowings and all
                           other amounts payable to the Agents or the Lenders by
                           the Canadian  Borrower under this  Agreement,  or any
                           portion thereof; and

                  (B)      all other  obligations of the Canadian Borrower to
                           the Agents or the Lenders under this Agreement

(collectively the "Unlimited Guarantors' Guaranteed Obligations").

(c)      Without  in any  way  limiting  the  foregoing,  each  of the  Canadian
         Borrower  and  the  Unlimited  Guarantors  hereby  unconditionally  and
         irrevocably agrees and covenants with the Agents and the Lenders that:

         (i)      the Guaranteed Obligations shall be a guarantee of payment and
                  not merely of collection and shall be a primary  obligation of
                  each of the Canadian Borrower and the Unlimited Guarantor.

         (ii)     it will pay duly and punctually all its  Guaranteed
                  Obligations  under the terms of this Agreement;

         (iii)    its Guaranteed  Obligations  shall not be affected by any act,
                  omission or  circumstances  which but for this provision might
                  operate  to  release  or  otherwise  exonerate  it  from  such
                  Guaranteed  Obligations or limit or reduce or otherwise affect
                  such Guaranteed  Obligations  including without limitation and
                  whether or not known to it or the Lenders or an Agent:

                  (A)      any time or indulgence granted to or composition with
                           any  Borrower or any other Person;

                  (B)      the  variation,  extension,  compromise,  renewal  or
                           release  of, or  refusal  or  neglect  to  perfect or
                           enforce, any terms of this Agreement, the Borrowings,
                           the  Security or any rights or remedies  against,  or
                           security  granted  by,  any  Borrower  or  any  other
                           Person; or

                  (C)      any   irregularity   or   unenforceability   of   any
                           obligations of any Borrower or any other Person under
                           this  Agreement,   the  Borrowings,   any

<PAGE>

                                      -87-

                           Guaranteed  Obligations  or any present or future law
                           or order of any  government or authority  (whether of
                           right or in fact)  purporting  to reduce or otherwise
                           affect any of such  obligations,  it being the intent
                           that its Guaranteed  Obligations under this Agreement
                           shall remain in full force and this  Agreement  shall
                           be  construed  accordingly  as if there  were no such
                           irregularity, unenforceability, law or order;

         (iv)     it waives any right it may have of first  requiring  any Agent
                  or any  Lender,  before  enforcing  its rights  against it, to
                  proceed  against or claim payment from a Borrower or any other
                  Person or enforce any Security; and

         (v)      if any  claim  is made by an Agent or any  Lender  against  it
                  under this Agreement and is not entirely and irrevocably  paid
                  and  discharged,  it shall  not  have  the  right to rank as a
                  creditor  in  competition  with any Agent or any Lender in the
                  bankruptcy, liquidation or dissolution of a Borrower and shall
                  not attempt to do so until payment in full of all indebtedness
                  and  liabilities  which may be owing by such  Borrower  to any
                  Agent or Lender under this Agreement and all Borrowings.

         (vi)     The Guaranteed Obligations shall survive the repayment thereof
                  and  shall  be  reinstated  as to any  Guaranteed  Obligations
                  incurred prior to the termination hereof if any payment of any
                  Guaranteed  Obligation  is  at  any  time  rescinded  or  must
                  otherwise   be  returned  as  a  result  of  the   bankruptcy,
                  insolvency  or  reorganization  of any of the U.S.  Borrowers,
                  Canadian  Borrower  and/or  the  Unlimited  Guarantor,  all as
                  though such payment had not been made.

                                  ARTICLE XVII
                                  MISCELLANEOUS

17.1     EQUAL RANKING OF LENDERS

         The Lenders, and to the extent necessary the Borrowers,  agree that any
indebtedness of a Borrower towards any of the Agents and any of the Lenders:

(a)      hereunder; and

(b)      under  Hedging  Agreements  for so long as such  Lender  remains  a
         Lender hereunder,

shall be  secured  by the  Security  and shall be  recoverable  by the Agents in
accordance  with  the  terms of this  Agreement  and the  Security  and all such
obligations  shall rank  equally  without  preference  or  distinction  with the
indebtedness  of a Borrower  towards any Lender  hereunder  or under any Hedging
Agreements.

17.2     SHARING OF INFORMATION

<PAGE>

                                      -88-

         Each Borrower and the Unlimited Guarantor agree that the Agents and the
Lenders  may share  amongst  themselves  any  information  which any of them may
possess concerning any Borrower or the Unlimited Guarantor,  as the case may be,
in  respect  of  a  Borrower's  or  the  Unlimited   Guarantor's   undertakings,
obligations  or  indebtedness  towards any Lender  pursuant to this Agreement as
well as any payment  received from a Borrower or the Unlimited  Guarantor by any
Lender pursuant to this Agreement.

17.3     SEVERABILITY

         If any of the provisions of this Agreement, any Article, any Section or
any Bankers'  Acceptance shall be unenforceable or invalid in any  jurisdiction,
the validity and  enforceability  of such  provisions in any other  jurisdiction
shall not be impaired thereby nor shall the  enforceability  and validity of any
other  provisions of this  Agreement,  any Article,  any Section or any Bankers'
Acceptance be impaired thereby.

17.4     REMEDIES AND WAIVERS

         No failure to exercise, and no delay in exercising,  on the part of the
Agents  or the  Lenders  or any of them,  any right or  remedy  hereunder  shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
right or remedy prevent any further or other exercise thereof or the exercise of
any  other  right or  remedy.  The  rights  and  remedies  herein  provided  are
cumulative and not exclusive of any rights or remedies provided by law.

17.5     DIRECT OBLIGATION

         Notwithstanding  any other  provision  hereof,  the Borrowers  shall be
obligated  directly towards the Agents and each of the Lenders in respect of the
Participation  of each of the Lenders which are made  available to such Borrower
as well as any other amounts  which may be payable by the Borrowers  pursuant to
or in connection with this Agreement or any Borrowings.  The obligations of each
of the Lenders are independent from one another,  are not joint and several, and
may not be increased,  reduced,  extinguished  or otherwise  affected due to the
default of another Lender  pursuant  hereto.  Any default of any party hereto in
the  performance of its  obligations  shall not release any of the other parties
hereto from the performance of any of its respective obligations.

17.6     NOTICES

         The  following  provisions  shall  govern  in  respect  of  notices  or
communications contemplated hereunder:

(a)      unless otherwise stated, each communication to be made hereunder shall
         be made in writing;

(b)      all communications or notices to be made to:

<PAGE>

                                      -89-

         (i)      any Borrower, shall be made to the Canadian Borrower, as
                  provided in Section 17.6 (c); and

         (ii)     an  Unlimited  Guarantor,  shall  be made  to  such  Unlimited
                  Guarantor with a copy to the Canadian Borrower, as provided in
                  Section 17.6 (c);

(c)     subject  to  Section  17.6 (b) and to an  Agent's  irrevocable  right to
        deliver  communications  or notices to the Canadian  Borrower's  address
        specified in Section 15.2, any written  communication  or document to be
        made or  delivered  by one party to another  pursuant to this  Agreement
        shall  (unless  otherwise  specified  herein or that other  party has by
        notice to the Agent specified  another  address or facsimile  number) be
        made or  delivered  to that other  Person at the  address  or  facsimile
        number  identified  with its  signature  below and shall in any event be
        deemed to have been made or  delivered or (in the case of any other form
        of  written  communication)  when  left at  that  address  or  otherwise
        received  or, as the case may be, 10 days after being  deposited  in the
        post first class postage prepaid in an envelope  addressed to it at that
        address,  provided  that any  communication  or  document  to be made or
        delivered  to any Agent shall be  effective  only when  received by such
        Agent; it is agreed that parties shall not send  communications  by mail
        or postal  service when there is an actual or likely  pending  strike or
        similar disruption of mail or postal services;

(d)     subject to  Section  17.6 (b),  where any  provision  of this  Agreement
        specifically  contemplates telephone  communication,  such communication
        shall  (unless  otherwise  specified  herein or that other  party has by
        written notice to the Agents specified another telephone number) be made
        to  that  other  party  at the  telephone  number  identified  with  its
        signature below; each such telephone communication shall be expressed to
        be for the attention of the officer whose name has been  identified with
        its signature below; and

(e)     each party  hereto  shall  confirm  promptly  by writing  any  telephone
        communication  made by it to another party  pursuant to this  Agreement,
        however the absence of such  confirmation  shall not affect the validity
        of such communication.

17.7     COUNTERPARTS

         This Agreement may be executed in any number of counterparts and all of
such  counterparts  taken together shall be deemed to constitute one and the
same instrument.

17.8     CALCULATION/LIMIT ON RATE OF INTEREST

(a)      for  purposes of this  agreement  whenever  interest is to be paid on a
         basis of a year of less than a calendar year (the "calculation period")
         the yearly rate of interest  to which the rate  determined  pursuant to
         such calculation is equivalent, is the rate so determined multiplied by
         the actual  number of days in the calendar year in which the same is to
         be ascertained and divided by the calculation period.

<PAGE>

                                      -90-

(b)      Notwithstanding  any  provision   contained  in  this  Agreement,   the
         Borrowers  shall not be obliged to make any  payments  of  interest  or
         other amounts payable to a Lender  hereunder in excess of the amount or
         rate which would be prohibited by applicable law or would result in the
         receipt by a Lender of interest  at a criminal  rate (as such terms are
         construed under the Criminal Code (Canada) or other applicable law).

(c)      In the event  that any such  payments  are  limited  or  prohibited  as
         provided  in  Section  17.8 (a),  the  Lenders  shall  have no  further
         obligation to make any  Borrowings  available  hereunder and the entire
         amount of Borrowings then outstanding shall become  immediately due and
         payable.

17.9     NO MERGER OR NOVATION

         All  guarantees  and  Security  provided to an Agent and/or the Lenders
prior to the date hereof in connection with the Original Credit  Agreement,  the
First Amended and Restated  Credit  Agreement,  the Second  Amended and Restated
Credit Agreement or the indebtedness of the Borrowers  thereunder remain in full
force and  effect  with  respect  to this  Third  Amended  and  Restated  Credit
Agreement,  as amended,  modified or supplemented from time to time, there being
no novation or merger hereby of the Original Credit Agreement, the First Amended
and Restated Credit Agreement, the Second Amended and Restated Credit Agreement,
such guarantees or the Security.

17.10    PRECEDENCE

         For so long as the Intercreditor Agreement is in full force and effect,
in the event that the provisions of the  Intercreditor  Agreement  contradict or
are otherwise incapable of being construed in conjunction with the provisions of
this  Agreement,  the  provisions  of the  Intercreditor  Agreement  shall  take
precedence over those provisions contained herein.

         AS  WITNESS  the hands of the duly  authorized  representatives  of the
parties hereto on the execution pages hereof as of the day and year first before
written.

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