Document:

Exhibit 10.3

 

EXECUTION VERSION

 

 

 

CANADIAN GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

THOMPSON CREEK METALS COMPANY INC.

 

and certain of its Subsidiaries

 

in favor of

 

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

 

Dated as of December 10, 2010

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  DEFINED TERMS

  	
  4

  
	
  1.1

  	
  Definitions

  	
  4

  
	
  1.2

  	
  Other Definitional Provisions

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  GUARANTEE

  	
  9

  
	
  2.1

  	
  Guarantee

  	
  9

  
	
  2.2

  	
  Right of Contribution

  	
  9

  
	
  2.3

  	
  No Subrogation

  	
  10

  
	
  2.4

  	
  Amendments, etc. with respect to the Borrower
  Obligations

  	
  10

  
	
  2.5

  	
  Guarantee Absolute and Unconditional

  	
  10

  
	
  2.6

  	
  Reinstatement

  	
  11

  
	
  2.7

  	
  Payments

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  GRANT OF SECURITY INTEREST

  	
  11

  
	
  3.1

  	
  Grant of Security

  	
  11

  
	
  3.2

  	
  Exception Respecting Trade-marks

  	
  13

  
	
  3.3

  	
  Attachment of Security Interest

  	
  13

  
	
  3.4

  	
  Liability for Deficiency

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  13

  
	
  4.1

  	
  Title; No Other Liens

  	
  13

  
	
  4.2

  	
  Perfection Certificate

  	
  13

  
	
  4.3

  	
  Perfected First Priority Liens

  	
  14

  
	
  4.4

  	
  Jurisdiction of Organization; Chief Executive Office

  	
  14

  
	
  4.5

  	
  Inventory and Equipment

  	
  14

  
	
  4.6

  	
  Pledged Collateral

  	
  14

  
	
  4.7

  	
  Receivables

  	
  15

  
	
  4.8

  	
  Contracts

  	
  15

  
	
  4.9

  	
  Intellectual Property

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  COVENANTS

  	
  16

  
	
  5.1

  	
  Delivery of Instruments, Certificated Securities, Chattel
  Paper and Documents of Title

  	
  17

  
	
  5.2

  	
  Pledged Collateral: Certificated Securities

  	
  17

  
	
  5.3

  	
  Pledged Collateral: Uncertificated Securities and Security
  Entitlements

  	
  17

  
	
  5.4

  	
  Pledged Collateral: General

  	
  17

  
	
  5.5

  	
  Maintenance of Insurance

  	
  19

  
	
  5.6

  	
  Maintenance of Perfected Security Interest; Further
  Documentation

  	
  19

  
	
  5.7

  	
  Changes in Name, etc.

  	
  20

  
	
  5.8

  	
  Notices

  	
  20

  
	
  5.9

  	
  Receivables

  	
  20

  
	
  5.10

  	
  Contracts

  	
  21

  
	
  5.11

  	
  Intellectual Property

  	
  21

  
	
  5.12

  	
  Intercompany Notes

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  REMEDIAL PROVISIONS

  	
  22

  
	
  6.1

  	
  Certain Matters Relating to Receivables

  	
  22

  

 

i

 

	
  6.2

  	
  Communications with Obligors; Grantors Remain Liable

  	
  23

  
	
  6.3

  	
  Pledged Collateral

  	
  23

  
	
  6.4

  	
  Proceeds to be Turned Over To Administrative Agent

  	
  24

  
	
  6.5

  	
  Application of Proceeds

  	
  24

  
	
  6.6

  	
  PPSA and Other Remedies

  	
  25

  
	
  6.7

  	
  Registration Rights

  	
  25

  
	
  6.8

  	
  Appointment of Receiver

  	
  26

  
	
  6.9

  	
  Subordination

  	
  27

  
	
  6.10

  	
  Deficiency

  	
  27

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  THE ADMINISTRATIVE AGENT

  	
  27

  
	
  7.1

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

  	
  27

  
	
  7.2

  	
  Duty of Administrative Agent

  	
  29

  
	
  7.3

  	
  Execution of Financing Statements

  	
  29

  
	
  7.4

  	
  Authority of Administrative Agent

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  MISCELLANEOUS

  	
  29

  
	
  8.1

  	
  Amendments in Writing

  	
  29

  
	
  8.2

  	
  Notices

  	
  29

  
	
  8.3

  	
  No Waiver by Course of Conduct; Cumulative Remedies

  	
  30

  
	
  8.4

  	
  Enforcement Expenses; Indemnification

  	
  30

  
	
  8.5

  	
  Successors and Assigns

  	
  30

  
	
  8.6

  	
  Set-Off

  	
  30

  
	
  8.7

  	
  Counterparts

  	
  31

  
	
  8.8

  	
  Severability

  	
  31

  
	
  8.9

  	
  Section Headings

  	
  31

  
	
  8.10

  	
  Integration

  	
  31

  
	
  8.11

  	
  GOVERNING LAW

  	
  31

  
	
  8.12

  	
  Submission To Jurisdiction; Waivers

  	
  31

  
	
  8.13

  	
  Acknowledgements

  	
  31

  
	
  8.14

  	
  Additional Grantors

  	
  32

  
	
  8.15

  	
  Releases

  	
  32

  
	
  8.16

  	
  WAIVER OF JURY TRIAL

  	
  32

  

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit I

  	
  Form of
  Perfection Certificate

  	
   

  
	
  Exhibit II

  	
  Form of
  Copyright Security Agreement

  	
   

  
	
  Exhibit III

  	
  Form of
  Patent Security Agreement

  	
   

  
	
  Exhibit IV

  	
  Form of
  Trade-mark Security Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule
  1

  	
  Notice
  Addresses

  	
   

  
	
  Schedule
  2

  	
  Investment
  Property

  	
   

  
	
  Schedule
  3

  	
  Perfection
  Matters

  	
   

  
	
  Schedule
  4

  	
  Jurisdictions
  of Organization and Chief Executive Offices

  	
   

  
	
  Schedule
  5

  	
  Inventory
  and Equipment Locations

  	
   

  
	
  Schedule
  6

  	
  Intellectual
  Property

  	
   

  

 

ii

 

	
  Schedule
  7

  	
  Material
  Contracts

  	
   

  
	
  Schedule
  8

  	
  Material
  Vehicles

  	
   

  

 

iii

 

CANADIAN GUARANTEE AND COLLATERAL AGREEMENT

 

CANADIAN
GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 10, 2010, made by
each of the signatories hereto (other than the Borrower (as defined below) and,
together with any other entity that may become a party hereto as provided
herein, the “Grantors”), in favor of JPMorgan Chase Bank, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”) for
the banks and other financial institutions or entities (the “Lenders”)
from time to time parties to the Credit Agreement, dated as of December 10,
2010 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Thompson Creek Metals Company Inc.(the “Borrower”),
the Lenders and the Administrative Agent.

 

W  I  T  N  E  S  S
E  T  H:

 

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

 

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

 

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

 

WHEREAS,
the Borrower and the other Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of
the Extensions of Credit under the Credit Agreement; and

 

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

 

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

 

SECTION 1.           DEFINED TERMS

 

1.1           Definitions.  (a)   Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement, and the following terms are
used herein as defined in the PPSA: 
Accession, Account, Chattel Paper, Document of Title, Equipment, Goods, Intangible, Instrument, Inventory, Investment
Property, Money, financing statement and financing change statement.  In this Agreement, the following terms have
the meanings given to them in the STA: “Certificated Security”, “Entitlement
Holder”, “Entitlement Order”, “Financial Asset”, “Issuer”, “Security”, “Securities
Account”, “Securities Intermediary”, “Security Entitlement” and “Uncertificated
Security”.

 

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

 

4

 

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

 

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

 

“Collateral”:  as defined in Section 3.

 

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

 

“Contracts”:  with respect to any Grantor, any contracts or
other written agreements of such Grantor, as the same may be amended,
supplemented or otherwise modified from time to time, including, without
limitation, (i) all rights of any Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights of
any Grantor to damages arising thereunder and (iii) all rights of any
Grantor to perform and to exercise all remedies thereunder.

 

“Control”
means, with respect to a specified form of Investment Property, “control” as
defined in Sections 23 through 26  of the STA as
applicable to such form of Investment Property.

 

“Copyrights”:  means, with respect to any Grantor, all of
such Grantor’s right, title and interest, now or hereinafter acquired, in and
to the following (i) all copyrights, copyright registrations and copyright
applications, in each case arising under the laws of Canada, any other country
or any political subdivision thereof, whether registered or unregistered and
whether published or unpublished (including, without limitation, those listed
in Schedule 6), (ii) the right to obtain all renewals thereof, and (iii) all
rights corresponding to any of the foregoing throughout the world.

 

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

 

“Designs”
means, with respect to any Person, all of such Person’s right, title and
interest in and to the following: (i) all industrial designs and
intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith,

 

5

 

including
all registrations, recordings and applications in the Canadian Industrial
Design Office or in any similar office or agency in any other country or any
political subdivision thereof, and (ii) all reissues, extensions or
renewals thereof.

 

Equity Interests” means shares of capital stock, partnership,
joint venture, member or limited liability or unlimited liability company
interests, beneficial interests in a trust or other equity ownership interests
in a Person of whatever nature and rights, warrants or options to acquire any
of the foregoing.

 

“Guarantor
Obligations”:  with respect to any
Guarantor, all obligations and liabilities of such Guarantor to the
Administrative Agent or any Lender (or, in the case of any Specified Swap
Agreement or Specified Cash Management Agreement, any (i) Affiliate of any
Lender or (ii) Person who was a Lender at the time such Person entered
into such Specified Swap Agreement or Specified Cash Management Agreement (but
only with respect to obligations and liabilities arising under any Specified
Swap Agreement or any Specified Cash Management Agreement that is in effect as
of the date on which such Person ceased to be a Lender) which may arise under
or in connection with this Agreement (including, without limitation, Section 2)
or any other Loan Document, any Specified Swap Agreement or any Specified Cash
Management Agreement to which such Guarantor is a party, in each case whether
on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel to the Administrative Agent or to
the Lenders that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).

 

“Guarantors”:  the collective reference to (i) each
Grantor (other than the Borrower) and (ii) the Borrower (only with respect
to all obligations and liabilities of the other Loan Parties which may arise
under or in connection with any Specified Swap Agreement or any Specified Cash
Management Agreement, in each case, to the extent constituting Obligations).

 

“Intellectual
Property”:  the collective reference
to all rights, priorities and privileges relating to intellectual property,
whether arising under Canadian, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Patents, the Trade-marks,
the Designs, the Licenses, trade secrets and customer lists and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.

 

“Intercompany
Note”:  any promissory note evidencing
loans made by any Grantor to the Borrower or any of its Subsidiaries.

 

“Investment
Property Control Agreement” means (i) with respect to any
Uncertificated Securities included in the Collateral, an agreement between the
issuer of such Uncertificated Securities and another Person whereby such issuer
agrees to comply with instructions that are originated by such Person in
respect of such Uncertificated Securities, without the further consent of the
Grantor; and (ii) with respect to any Security Entitlements in respect of
Financial Assets included in the Collateral, an agreement between the
Securities Intermediary in respect of such Security Entitlements and another
Person pursuant to which such Securities Intermediary agrees to comply with any
Entitlement Orders with respect to such Security Entitlements that are
originated by such Person, without the further consent of the Grantor.

 

“Issuers”:  the collective reference to each issuer of
any Investment Property.

 

“Licenses”
means, with respect to any Person, all of such Person’s right, title, and
interest now or hereafter acquired in and to (a) any and all licensing
agreements or similar arrangements in and to

 

6

 

its
Patents, Designs, Copyrights, or Trade-marks, (b) all income, royalties,
damages, claims, and payments now or hereafter due or payable under and with
respect thereto, including, without limitation, damages and payments for past
and future breaches thereof, and (c) all rights to sue for past, present,
and future breaches thereof.

 

Material Contracts”: with respect to any
Grantor, any contract or other written agreement listed in Schedule 7.

 

“Material
Vehicles”: each Vehicle with an individual book value in excess of
$100,000.

 

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

 

“Patents”:  means, with respect to any Person, all of
such Person’s right, title and interest now owned or hereafter acquired in and
to (i) any and all issued patents and patent applications, (ii) all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to in Schedule 6, and (iii) all
rights corresponding to any of the foregoing throughout the world.

 

“Perfection
Certificate”: a certificate substantially in the form of Exhibit I
hereto, completed and supplemented with the schedules and attachments contemplated
thereby, and duly executed by a Responsible Officer of the Borrower.

 

“Pledged
Collateral” means the Pledged Notes and the Pledged Stock.

 

“Pledged
Notes”:  all promissory notes listed
on Schedule 2 and all other promissory notes issued to or held by any
Grantor (other than promissory notes having an original principal balance of
less than $1,000,000, promissory notes issued in connection with extensions of
trade credit by any Grantor in the ordinary course of business and Intercompany
Notes).

 

“Pledged
Stock”:  means, with respect to any
Grantor (i) the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options, interests or
rights of any nature whatsoever, including, without limitation any Equity Interests
in respect of the Capital Stock of any Person that may be issued or granted to,
or held by, any Grantor while this Agreement is in effect; (ii) any other
Equity Interests now owned or obtained in the future by such Grantor and (iii) the
certificates representing all such Equity Interests.

 

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

 

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

 

7

 

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

 

“Secured
Parties”:  the collective reference
to the Administrative Agent, the Lenders and any affiliate of any Lender to
which Borrower Obligations or Guarantor Obligations, as applicable, are owed.

 

“Securities
Act” means the Securities Act
(British Columbia), including the regulations thereto or equivalent legislation
of any other relevant jurisdiction.

 

“Securities
Intermediary’s Jurisdiction” means, with respect to any Securities
Intermediary holding any Securities Account included in or relating to any
Pledged Collateral, its jurisdiction as determined under Section 45(2) of
the STA.

 

“Serial
Numbered Goods” has the meaning given to it in the Personal Property
Security Regulation made under the PPSA, including without limitation the Goods
listed on Schedule 8.

 

“STA”
means the Securities Transfer Act (British
Columbia), including the regulations thereto, provided that, to the extent that
perfection or the effect of perfection or non-perfection or the priority of any
Lien created hereunder on Collateral that is Investment Property is governed by
the laws in effect in any province or territory of Canada other than British
Columbia in which there is in force legislation substantially the same as the Securities Transfer Act, 2007 (British Columbia) (an “Other
STA Province”), then “STA” shall mean such other legislation as in effect from
time to time in such Other STA Province for purposes of the provisions hereof
referring to or incorporating by reference provisions of the STA; and to the
extent that such perfection or the effect of perfection or non-perfection or
the priority of any Lien created hereunder on the Collateral is governed by the
laws of a jurisdiction other than British Columbia or an Other STA Province,
then references herein to the STA shall be disregarded except for the terms “Certificated
Security” and “Uncertificated Security”, which shall have the meanings herein
as defined in the Securities Transfer Act, 2007
(British Columbia) regardless of whether the STA is in force in the applicable
jurisdiction.

 

“Trade-marks”:  means, with respect to any Person, all of
such Person’s right, title and interest, now owned or hereafter acquired, in
and to the following: (i) all trade-marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith,  and all common-law rights
related thereto, including, without limitation, any of the foregoing referred
to in Schedule 6, (ii) the right to obtain all renewals thereof,
and (iii) all rights corresponding to any of the foregoing throughout the
world.

 

“Vehicles”:  all cars, trucks, trailers, construction and
earth moving equipment and other vehicles covered by a certificate of title
under the law of any province or territory and, in any event including, without
limitation, the Material Vehicles listed on Schedule 8 and all tires and
other appurtenances to any of the foregoing.

 

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

 

8

 

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

 

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

 

SECTION 2.           GUARANTEE

 

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

 

(b)           Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under
the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal, provincial and
territorial laws relating to the insolvency of debtors (after giving effect to
the right of contribution established in Section 2.2).

 

(c)           Each Guarantor agrees that the Borrower Obligations (other than such
obligations under Sections 2.17, 2.18, 2.19 and 10.5 of the Credit Agreement
that are not then due and payable and demanded) may at any time and from time
to time exceed the amount of the liability of such Guarantor hereunder without
impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of the Administrative Agent or any Lender hereunder.

 

(d)           The guarantee contained in this Section 2 shall remain in full force
and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding (unless
the outstanding amount of the L/C Obligations related thereto has been cash
collateralized in an amount and manner satisfactory to the relevant Issuing
Lender) and the Commitments shall be terminated, notwithstanding that from time
to time during the term of the Credit Agreement the Borrower may be free from
any Borrower Obligations.

 

(e)           No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid
in full (other than such obligations under Sections 2.17, 2.18, 2.19 and 10.5
of the Credit Agreement that are not then due and payable and demanded), no
Letter of Credit shall be outstanding (unless the outstanding amount of the L/C
Obligations related thereto has been cash collateralized in an amount and
manner satisfactory to the relevant Issuing Lender) and the Commitments are
terminated.

 

2.2           Right of Contribution.  Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has
not

 

9

 

paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall
be subject to the terms and conditions of Section 2.3.  The provisions of this Section 2.2 shall
in no respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent and the Lenders, and each Guarantor shall remain liable to
the Administrative Agent and the Lenders for the full amount guaranteed by such
Guarantor hereunder.

 

2.3           No
Subrogation. 
Notwithstanding any payment made by any Guarantor hereunder or any
set-off or application of funds of any Guarantor by the Administrative Agent or
any Lender, no Guarantor shall be entitled to be subrogated to any of the
rights of the Administrative Agent or any Lender against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by
the Administrative Agent or any Lender for the payment of the Borrower
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing
to the Administrative Agent and the Lenders by the Borrower on account of the
Borrower Obligations are paid in full (other than such obligations under
Sections 2.17, 2.18, 2.19 and 10.5 of the Credit Agreement that are not then
due and payable and demanded), no Letter of Credit shall be outstanding (unless
the outstanding amount of the L/C Obligations related thereto has been cash
collateralized in an amount and manner satisfactory to the relevant Issuing
Lender) and the Commitments are terminated. 
If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Borrower Obligations shall not
have been paid in full (other than such obligations under Sections 2.17, 2.18,
2.19 and 10.5 of the Credit Agreement that are not then due and payable and
demanded), such amount shall be held by such Guarantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.

 

2.4           Amendments, etc.
with respect to the Borrower Obligations.  Each Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand
for payment of any of the Borrower Obligations made by the Administrative Agent
or any Lender may be rescinded by the Administrative Agent or such Lender and
any of the Borrower Obligations continued, and the Borrower Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by the
Administrative Agent or any Lender, and the Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, in accordance with their respective terms, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or
any Lender for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released.  Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or
any property subject thereto.

 

2.5           Guarantee
Absolute and Unconditional.  Each Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Borrower Obligations
and notice of or proof of reliance by the Administrative Agent or any Lender
upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the
Borrower and any of the Guarantors, on the one hand, and the Administrative
Agent and the Lenders, on the other 

 

10

 

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

 

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

 

2.7           Payments.  Each Guarantor hereby guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the Funding Office.

 

SECTION 3.           GRANT OF SECURITY INTEREST

 

3.1           Grant
of Security.

 

Each
Grantor hereby assigns and transfers to the Administrative Agent, and hereby
grants to the Administrative Agent, for the ratable benefit of the Secured
Parties, a security interest in all of its right, title and interest in and to
all of its present and after acquired personal property, including, without
limitation, all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the “Collateral”),
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of such
Grantor’s Obligations:

 

11

 

(a)           all Accounts;

 

(b)           all Chattel Paper;

 

(c)           all Contracts;

 

(d)           all Deposit Accounts;

 

(e)           all Documents of Title (other than
title documents with respect to Vehicles);

 

(f)            all Equipment;

 

(g)           all fixtures;

 

(h)           all Goods

 

(i)            all Intangibles;

 

(j)            all Instruments;

 

(k)           all Intellectual Property;

 

(l)            all Inventory;

 

(m)          all Investment Property;

 

(n)           all Money;

 

(o)           all Receivables;

 

(p)           all Pledged Collateral

 

(q)           all other property not otherwise
described above (except for any property specifically excluded from any clause
in this section above, and any property specifically excluded from any defined
term used in any clause of this section above);

 

(r)            all books and records pertaining to
the Collateral; and

 

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

 

provided, however, that notwithstanding any of the other
provisions set forth in this Section 3, this Agreement shall not
constitute a grant of a security interest in any property to the extent that
such grant of a security interest (i) is prohibited by any Requirements of
Law of a Governmental Authority, (ii) requires a consent not obtained of
any Governmental Authority pursuant to such Requirement of Law, (iii) is
prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Stock or
Pledged Note, any applicable shareholder or similar agreement, except to the
extent that the term in such contract, license, agreement, instrument, or other
document or shareholder or similar agreement providing for such prohibition,
breach, default or termination or requiring such consent is 

 

12

 

ineffective
under applicable law, (iv) relates to Equipment owned by any Grantor that
is subject to a purchase money security interest or a capital lease which is
permitted by the Credit Agreement if the contract or other agreement in which
such security interest is granted (or in the documentation providing for such
capital lease) prohibits or requires the consent of any Person as a condition
to the creation of any other Lien on such Equipment, or (v) is in proceeds
and products of any and all of the assets described in clauses (i) through
(iv) above only to the extent that such proceeds and products would
constitute property or assets of the type described in clauses (i) through
(iv).

 

3.2           Exception
Respecting Trade-marks. Notwithstanding anything in Section 3.1
to the contrary, any Grantors’ grant of security in Trade-marks (as defined in
the Trade-marks Act (Canada)) under this Agreement shall be limited to a grant
by such Grantor of a security interest in all of the Grantors’ right, title and
interest in such Trade-marks.

 

3.3           Attachment
of Security Interest. The Grantors and the Secured Parties hereby
acknowledge that (a) value has been given; (b) each Grantor has
rights in the Collateral in which it has granted a security interest; (c) this
Agreement constitutes a security agreement as that term is defined in the PPSA;
and (d) the security interest attaches upon the execution of this
Agreement (or in the case of any after-acquired property, at the time of
acquisition thereof).

 

3.4           Liability
for Deficiency. If the Collateral is realized upon and such
Collateral or the proceeds of such Collateral is not sufficient to satisfy all
the Grantor’s Obligations, the Grantors acknowledge and agree that, subject to
the provisions of the PPSA and the provisions of the Credit Agreement, the
Grantors shall continue to be liable for any of the Grantor’s Obligations
remaining outstanding and the Administrative Agent shall be entitled to pursue
full payment thereof.

 

SECTION 4.           REPRESENTATIONS AND WARRANTIES

 

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

 

4.1           Title;
No Other Liens.  Except for
the security interest granted to the Administrative Agent for the ratable
benefit of the Secured Parties pursuant to this Agreement and the other Liens
permitted to exist on the Collateral by the Credit Agreement, such Grantor owns
each item of the Collateral free and clear of any and all Liens or claims of
others.  No financing statement,
financing change statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except
such as have been filed in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, pursuant to this Agreement or as are permitted
by the Credit Agreement.  For the
avoidance of doubt, it is understood and agreed that any Grantor may, as part
of its business, grant licenses to third parties to use Intellectual Property
owned or developed by a Grantor.  For
purposes of this Agreement and the other Loan Documents, such licensing
activity shall not constitute a “Lien” on such Intellectual Property.  Each of the Administrative Agent and each
Lender understands that any such licenses may be exclusive to the applicable
licensees, and such exclusivity provisions may limit the ability of the
Administrative Agent to utilize, sell, lease or transfer the related
Intellectual Property or otherwise realize value from such Intellectual
Property pursuant hereto.

 

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

 

13

 

4.3           Perfected
First Priority Liens.  The
security interests granted pursuant to this Agreement (a) constitute valid perfected security interests in all of the
Collateral in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, as collateral security for such Grantor’s Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor
subject, for the following Collateral, to the occurrence of the following:  (i) in the case of all Collateral in
which a security interest may be perfected by filing a financing statement
under the PPSA or the Person Property Security
Act (Yukon), as applicable, the completion of the filings and other
actions specified on Schedule 3, (ii) in the case of all Copyrights,
Trade-marks and Patents for which PPSA filings are insufficient, all
appropriate filings having been made with the Canadian Intellectual Property
Office, (iii) in the case of letter-of-credit rights that are not
supporting obligations of Collateral, the execution of a contractual obligation
granting control to Administrative Agent over such letter-of-credit rights, and
(iv) in the case of electronic chattel paper, the completion of all steps
necessary to grant control to Administrative Agent over such electronic chattel
paper.

 

4.4           Jurisdiction
of Organization; Chief Executive Office.  On the date hereof, such Grantor’s
jurisdiction of organization, incorporation or amalgamation and its
organizational or identification number from the jurisdiction of organization
(if any), and the location of such Grantor’s chief executive office or sole
place of business or principal residence, as the case may be, are specified on
Schedule 4.  Such Grantor has furnished
to the Administrative Agent a certified copy of the certificate or articles of
incorporation or organization or other organization document and certificate of
compliance/status/good standing (as applicable) as of a date which is recent to
the date hereof from its jurisdiction of organization.

 

4.5           Inventory
and Equipment.  On the date
hereof, the Collateral (other than mobile goods) (and all records concerning
Collateral) are kept at the locations listed on Schedule 5.

 

4.6           Pledged
Collateral.

 

(a)           As of the date hereof, or, with
respect to any Additional Grantor, such other date such Grantor becomes a party
hereto, Schedule 2 sets forth a complete and accurate list of all
Pledged Collateral owned by such Grantor. 
As of the date hereof, such Grantor is the direct, sole beneficial owner
and sole holder of record of the Pledged Collateral listed in Schedule 2
as being owned by it, free and clear of any Liens, except for Permitted
Liens.  Such Grantor further represents
and warrants that (i) all Pledged Collateral constituting an Equity
Interest has been (to the extent such concepts are relevant with respect to
such Pledged Collateral) duly authorized, validly issued, are fully paid and
non-assessable; (ii) all Pledged Collateral credited to a Securities
Account maintained with a Securities Intermediary of such Grantor (if any) is
subject to an Investment Property Control Agreement (if so reasonably requested
by the Administrative Agent) between the Securities Intermediary and the
Administrative Agent as the result of which the Administrative Agent has
Control over such Pledged Collateral; (iii) as of the date hereof and to
the knowledge of such Grantor, all Pledged Collateral which represents
Indebtedness owed to such Grantor has been duly authorized, authenticated or
issued and delivered by the issuer of such Indebtedness, is the legal, valid
and binding obligation of such issuer and such issuer is not in default
thereunder; and (iv) none of the Pledged Collateral that is an interest in
a partnership or a limited liability company and is subject to the STA: (A) is
dealt in or traded on any securities exchange or in any securities market; (B) expressly
provides by its terms that it is a “security” for the purposes of the STA or
any other similar provincial legislation; or (C) is held in a Securities
Account.

 

(b)           Such Grantor has not consented to any
Person other than the Administrative Agent entering into, nor has become a
party to, an Investment Property Control Agreement in respect of any 

 

14

 

Investment Property or
Securities Account included in the Collateral, and no such Investment Property
Control Agreement is outstanding and in force.

 

(c)           In addition, (i) to such Grantor’s
knowledge without any independent obligation to verify same and the relevant
issuer’s knowledge, if such issuer is a Subsidiary of the Borrower, none of the
Pledged Collateral owned by it has been issued or transferred in violation of
the securities registration, securities disclosure or similar laws of any
jurisdiction to which such issuance or transfer may be subject, (ii) to
such Grantor’s knowledge without any independent obligation to verify same and
the relevant issuer’s knowledge, if such issuer is a Subsidiary of the
Borrower, there are existing no options, warrants, calls or commitments of any
character whatsoever relating to such Pledged Stock or which obligate the
issuer of any Equity Interest included in the Pledged Collateral to issue
additional Equity Interests, and (iii) no consent, approval,
authorization, or other action by, and no giving of notice to or filing with,
any Governmental Authority or any other Person is required for the pledge by
such Grantor of such Pledged Collateral pursuant to this Agreement, or for the
exercise by the Administrative Agent of the voting or other rights with respect
to such Pledged Collateral provided for in this Agreement or for the remedies
in respect of the Pledged Collateral pursuant to this Agreement, except as may
be required in connection with such disposition by laws affecting the offering
and sale of securities generally or as may be required with respect to the
pledge of Equity Interests of issuers organized under the laws of a
jurisdiction outside Canada or the United States.

 

(d)           As of the date hereof, or, with
respect to any Additional Grantor, such other date such Grantor becomes a party
hereto, except as set forth in Schedule 2, such Grantor owns 100% of the
issued and outstanding Equity Interests of each issuer of Pledged Stock owned
by it and none of the Pledged Collateral which represents Indebtedness owed to
such Grantor (except for Indebtedness owed by any other Grantor or its
Subsidiaries where subordination is required pursuant to the terms of the
Credit Agreement) is subordinated in right of payment to other Indebtedness or
subject to the terms of an indenture.

 

4.7           Receivables.  (a)  No amount payable to such Grantor
under or in connection with any Receivable is evidenced by any Instrument or
Chattel Paper in excess of $1,000,000 which has not been delivered to the
Administrative Agent.

 

(b)           None of the obligors on any
Receivables with an invoice amount in excess of $5,000,000 is a Governmental
Authority.

 

(c)           The amounts represented by such
Grantor to the Lenders from time to time as owing to such Grantor in respect of
the Receivables will at such times be accurate in all material respects as of
the date presented.

 

4.8           Contracts.  (a)  Except as provided in Schedule
7, no consent of any party (other than such Grantor) to any Material Contract
is required, or purports to be required on the date hereof, in connection with
the execution, delivery and performance of this Agreement, except as has been
obtained.

 

(b)           Each Material Contract is in full
force and effect and constitutes a valid and legally enforceable obligation of
the parties thereto, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.

 

(c)           No consent or authorization of,
filing with or other act by or in respect of any Governmental Authority is
required in connection with the execution, delivery, performance, validity or 

 

15

 

enforceability of any of
the Material Contracts by any party thereto other than those which have been
duly obtained, made or performed, are in full force and effect and do not
subject the scope of any such Material Contract to any material adverse limitation,
either specific or general in nature.

 

(d)           Neither such Grantor nor (to such
Grantor’s knowledge) any of the other parties to the Material Contracts is in
default in the performance or observance of any of the terms thereof in any
manner that, in the aggregate, could reasonably be expected to have a Material
Adverse Effect.

 

(e)           The right, title and interest of such
Grantor in, to and under the Material Contracts are not subject to any
defenses, offsets, counterclaims or claims that, in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

(f)            Such Grantor has delivered to the
Administrative Agent a complete and correct copy of each Material Contract,
including all amendments, supplements and other modifications thereto.

 

(g)           No amount payable to such Grantor
under or in connection with any Material Contract is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Administrative
Agent.

 

(h)           None of the parties to any Contract
involving an amount in excess of $5,000,000 is a Governmental Authority.

 

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

 

(b)           On the date hereof, all material
Intellectual Property is valid, subsisting, unexpired and enforceable and has
not been abandoned and, to the knowledge of such Grantor, its material
Intellectual Property does not infringe the intellectual property rights of any
other Person.

 

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

 

(d)           No holding, decision or judgment has
been rendered by any Governmental Authority which would limit, cancel or
question the validity of, or such Grantor’s rights in, any material
Intellectual Property in any respect that could reasonably be expected to have
a Material Adverse Effect.

 

(e)           No action or proceeding is pending,
or, to the knowledge of such Grantor, threatened, on the date hereof (i) seeking
to limit, cancel or question the validity of any material Intellectual Property
or such Grantor’s ownership interest therein, or (ii) which, if adversely
determined, would have a material adverse effect on the value of any material
Intellectual Property.

 

SECTION 5.           COVENANTS

 

Each
Grantor covenants and agrees with the Administrative Agent and the Lenders
that, from and after the date of this Agreement until the Obligations shall
have been paid in full (other than such obligations under Sections 2.17, 2.18,
2.19 and 10.5 of the Credit Agreement that are not then due and payable and
demanded), no Letter of Credit shall be outstanding (unless the outstanding
amount of the L/C Obligations related thereto has been cash collateralized in
an amount and manner satisfactory to the relevant Issuing Lender) and the
Commitments shall have terminated:

 

16

 

5.1           Delivery
of Instruments, Certificated Securities, Chattel Paper and Documents of Title.  If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any Instrument,
Documents of Title, security certificates evidencing Certificated Securities or
Chattel Paper, such Instrument, Documents of Title, security certificates
evidencing Certificated Securities or Chattel Paper shall be delivered to the
Administrative Agent within 4 Business Days by such Grantor, duly endorsed in a
manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement.

 

5.2           Pledged
Collateral: Certificated Securities.  For greater certainty, any security
certificates evidencing Certificated Securities delivered to the Administrative
Agent pursuant to Section 5.1 shall be duly endorsed to the Administrative
Agent or its nominee or in blank by an effective endorsement or accompanied by
a duly executed instrument of transfer in favour of the Administrative Agent or
its nominee or in blank.

 

5.3           Pledged
Collateral: Uncertificated Securities and Security Entitlements.

 

(a)           In respect of any Uncertificated
Securities included in the Pledged Collateral:

 

(i)            on request by the Administrative
Agent, each Grantor shall cause the appropriate issuers of such Uncertificated
Securities either to register the Administrative Agent or its nominee as the
registered owner of such Uncertificated Securities or mark their books and
records with the numbers and face amounts of all such Uncertificated Securities
and all rollovers and replacements therefore to reflect the Lien of the
Administrative Agent granted pursuant to this Agreement; and

 

(ii)           each Grantor shall on request by the
Administrative Agent consent to the Administrative Agent entering into an
Investment Property Control Agreement with the issuer of any such
Uncertificated Securities such that the Administrative Agent shall have Control
thereof.

 

(b)           In respect of any Security
Entitlements or Securities Accounts included in the Pledged Collateral,

 

(i)            upon the occurrence and during the
continuance of an Event of Default, each Grantor shall upon request by the
Administrative Agent and direct the Securities Intermediary in respect of such
Security Entitlements to transfer the Financial Assets to which such Security
Entitlements relate to a Securities Account designated by the Administrative
Agent such that the Administrative Agent shall become the Entitlement Holder in
respect of such Financial Asset; and

 

(ii)           each Grantor shall on request by the
Administrative Agent and consent to the Administrative Agent entering into an
Investment Property Control Agreement, reasonably satisfactory to the
Administrative Agent, with the Securities Intermediary in respect of any such
Security Entitlements and Uncertificated Securities such that the
Administrative Agent shall have Control thereof.

 

5.4           Pledged
Collateral: General.

 

(a)           Registration of Pledged
Collateral.  Following the occurrence
and during the continuance of an Event of Default, such Grantor will permit any
Pledged Collateral in registered form to be registered in the name of the
Administrative Agent or its nominee at any time at the option of the
Administrative Agent.

 

17

 

(b)           Investment Property Control
Agreements. Such Grantor shall not consent to:

 

(i)            the entering into by any issuer of
any Uncertificated Securities included in or relating to the Pledged Collateral
of an Investment Property Control Agreement in respect of such Uncertificated
Securities with any Person other than the Administrative Agent or its nominee;
or

 

(ii)           the entering into by any Securities
Intermediary for any Security Entitlements included in or relating to the
Pledged Collateral of an Investment Property Control Agreement in respect of
such Security Entitlements with any Person other than the Administrative Agent
or its nominee.

 

(c)           Securities Intermediary’s
Jurisdiction.  Such Grantor shall not
enter into any agreement with any Securities Intermediary that governs any
Securities Account included in or relating to any Pledged Collateral that
either (i) specifies any such Securities Intermediary’s jurisdiction to be
a jurisdiction other than the Province of British Columbia for the purposes of
the STA, (ii) specifies the laws of a jurisdiction other than the Province
of British Columbia as applicable to the acquisition of a Security Entitlement
from such Securities Intermediary, or (iii) which is governed by the laws
of a jurisdiction other than the Province of British Columbia or consent to any
amendment to any such agreement that would change (x) such Securities
Intermediary’s jurisdiction to a jurisdiction other than the Province of
British Columbia for the purposes of the STA, (y) the applicable law to
the acquisition of a Security Entitlement from such Securities Intermediary to
be the laws of a jurisdiction other than the Province of British Columbia, or (z) its
governing law to a jurisdiction other than the Province of British Columbia.

 

(d)           Other Securities.  If the representation and warranty set out in
Section 4.6(a)(iv) is not or ceases to be true in respect of any
Pledged Collateral that is an interest in a partnership or a limited liability
company, such Pledged Collateral shall thereupon be subject to the provisions
of Sections 5.1, 5.2, 5.3, 5.4(b), 5.4(c) and 5.4(d) to the extent
applicable thereto.

 

(e)           Exercise of Rights in Pledged
Collateral.

 

(i)            For all purposes not inconsistent
with this Agreement, the Credit Agreement or any other Loan Document, such
Grantor shall have the right to exercise all voting rights or other rights
relating to the Pledged Collateral owned by it; provided however, that no vote
or other right shall be exercised or action taken which would have the effect
of materially impairing the rights of the Administrative Agent in respect of
such Pledged Collateral unless otherwise permitted under the Credit Agreement.

 

(ii)           Such Grantor will permit the
Administrative Agent or its nominee at any time after the occurrence and during
the continuance of an Event of Default, upon 10 Business Days’ prior notice, to
exercise all voting rights or other rights relating to the Pledged Collateral
owned by it, including, without limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any Equity Interest or Investment
Property constituting such Pledged Collateral as if it were the absolute owner
thereof.

 

(iii)          Such Grantor shall be entitled to
collect and receive for its own use all cash dividends and interest paid in
respect of the Pledged Collateral owned by it to the extent not in violation of
the Credit Agreement; provided  however, that until actually paid,
all rights to such distributions, shall remain subject to the Lien created by
this Agreement;

 

18

 

(iv)          All dividends and interest paid or
payable other than in cash in respect of such Pledged Collateral, and
instruments and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral and all other
distributions in respect of any of the Pledged Collateral owned by such
Grantor, whenever paid or made, shall be delivered to the Administrative Agent
to hold as Pledged Collateral and shall, if received by such Grantor, be
received in trust for the benefit of the Administrative Agent, be segregated
from the other property or funds of such Grantor, and be promptly delivered to
the Administrative Agent as Pledged Collateral in the same form as so received
(with any necessary endorsement); and

 

(v)           Such Grantor hereby authorizes and
instructs each issuer of any Investment Property pledged by such Grantor
hereunder to, and each Grantor that is an issuer of Investment Property pledged
by another Grantor agrees and consents to, after the occurrence and during the
continuance of an Event of Default (i) comply with any instruction
received by it from the Administrative Agent in writing (and any other issuer
from time to time hereby agrees to comply with such instruction) that (x) states
that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each
issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Investment Property directly to the Administrative Agent.

 

5.5           Maintenance
of Insurance.  (a) 
Such Grantor will maintain, with financially sound and reputable companies,
insurance policies (i) insuring the Inventory and Equipment and Vehicles
against loss by fire, explosion, theft and such other casualties as are usually
insured against in the same general area by companies engaged in the same or a
similar business and owning similar properties, or as may otherwise be
reasonably satisfactory to the Administrative Agent and (ii) to the extent
requested by the Administrative Agent, insuring such Grantor, the
Administrative Agent and the Lenders against liability for personal injury and
property damage relating to such Inventory and Equipment and Vehicles, such
policies to be in such form and amounts and having such coverage as may be
usual and customary for companies in the same general area engaged in the same
or a similar business and owning similar properties, or as may otherwise be
reasonably satisfactory to the Administrative Agent.

 

(b)           All such insurance shall (i) provide
that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof, (ii) name the
Administrative Agent as insured party or loss payee and (iii) if
reasonably requested by the Administrative Agent, include a breach of warranty
clause.

 

(c)           The Borrower shall deliver to the
Administrative Agent a report of a reputable insurance broker with respect to
such insurance substantially concurrently with each delivery of the Borrower’s
audited annual financial statements and such supplemental reports with respect
thereto as the Administrative Agent may from time to time reasonably request.

 

5.6           Maintenance
of Perfected Security Interest; Further Documentation.  (a)  Such Grantor shall maintain the
security interest created by this Agreement as a perfected security interest
having at least the priority described herein and shall defend such security
interest against the claims and demands of all Persons whomsoever (except as
otherwise permitted under the Loan Documents).

 

(b)           Such Grantor will, if reasonably
requested by the Administrative Agent, furnish to the Administrative Agent from
time to time statements and schedules further identifying and describing the

 

19

 

assets and property of
such Grantor and such other reports in connection therewith as the
Administrative Agent may reasonably request, all in reasonable detail.

 

(c)           At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, filing any financing statements or financing
change statements under the PPSA (or other similar documents under similar laws
in effect in any other applicable jurisdiction) with respect to the security
interests created hereby.

 

5.7           Changes in Name, etc.  Such Grantor will not, except upon 15 days’
prior written notice to the Administrative Agent and delivery to the Administrative
Agent of all additional authorized financing statements, financing change
statements and other documents reasonably requested by the Administrative Agent
to maintain the validity, perfection and priority of the security interests
provided for herein, (i) change its jurisdiction of incorporation or
organization or the location of its chief executive office or sole place of
business or principal residence from that referred to in Section 4.4, (ii) change
the location of its Collateral or any records concerning the Collateral (other
than mobile goods) from the locations referenced in Section 4.5 to a
location in any jurisdiction which would necessitate additional filings or
documents in order to maintain the validity, perfection and priority of the
security interests with respect to such Collateral provided for herein, (iii) change
its name; or (iv)  to any agreement governing any Securities Account
included in or relating to any Pledged Collateral (each, a “Securities
Account Agreement”) to the extent that such change would result in a change
in the applicable Securities Intermediary’s Jurisdiction from the jurisdiction,
specified therein or otherwise, notified to the Administrative Agent.  In each case, pursuant to the following
sentence, each Grantor further agrees to notify the Administrative Agent upon
entering into any Securities Account Agreement with a Securities Intermediary,
and such notice shall be accompanied by a copy of such Securities Account
Agreement or shall contain a representation and warranty as to the Securities
Intermediary’s Jurisdiction as specified in or determined by reference to such
Securities Account Agreement.  Each
Grantor agrees to promptly provide the Administrative Agent with organizational
documents, to the extent applicable, reflecting any of the changes described in
the first sentence of this paragraph. 
Each Grantor agrees not to effect or permit any change referred to in
the preceding sentence unless all filings have been made or will be made under
the PPSA, and take such other actions, that are required in order for the
Administrative Agent to continue at all times following such change to have a
perfected first priority security interest in all the Collateral in which a
security interest may be perfected by a filing under the PPSA.

 

5.8           Notices.  Such Grantor will advise the Administrative
Agent promptly, in reasonable detail, of:

 

(a)           any Lien (other than security interests created hereby or Liens permitted
under the Credit Agreement) on any of the Collateral which would adversely
affect the ability of the Administrative Agent to exercise any of its remedies
hereunder; and

 

(b)           of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or
on the security interests created hereby.

 

5.9           Receivables.  (a)  Other than in the ordinary course
of business or otherwise pursuant to sound business judgment, such Grantor will
not (i) grant any extension of the time of payment of any Receivable, (ii) compromise
or settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable, (iv) allow
any credit or discount 

 

20

 

whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that could adversely affect
the value thereof.

 

(b)           Such Grantor will deliver to the Administrative Agent a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity or enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables.

 

5.10         Contracts. Other than in the ordinary
course of business or otherwise pursuant to sound business judgment that is
consistent with actions of companies engaged in businesses similar to those
engaged in by the Borrower and its Subsidiaries, such Grantor:

 

(a) 
will perform and comply in all material respects with all its obligations under
the Material Contracts.

 

(b)           will not amend, modify, terminate or waive any provision of any Material
Contract in any manner which could reasonably be expected to materially
adversely affect the value of such Material Contract as Collateral.

 

(c)           will exercise promptly and diligently each and every material right which
it may have under each Material Contract (other than any right of termination).

 

(d)           will deliver to the Administrative Agent a copy of each material demand,
notice or document received by it relating in any way to any Material Contract
that questions the validity or enforceability of such Material Contract.

 

5.11         Intellectual Property.  (a)  Such Grantor (either itself or
through licensees) will (i) continue to use each material Trade-mark in
order to maintain such Trade-mark in full force free from any claim of
abandonment for non-use, (ii) maintain the quality of products and
services offered under such Trade-mark at least in a manner substantially
consistent with past business practices, (iii) use such Trade-mark with
the appropriate notice of registration and all other notices and legends
required by applicable Requirements of Law, (iv) not adopt or use any mark
which is confusingly similar or a colorable imitation of such Trade-mark unless
the Administrative Agent, for the ratable benefit of the Secured Parties, shall
obtain a perfected security interest in such mark pursuant to this Agreement,
and (v) not (and not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby such Trade-mark may become
invalidated or impaired in any way.

 

(b)           Such Grantor (either itself or through licensees) will not do any act, or
omit to do any act, whereby any material Patent may become forfeited, abandoned
or dedicated to the public.

 

(c)           Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired.  Such Grantor will
not (either itself or through
licensees) do any act whereby any material portion of the Copyrights may fall
into the public domain.

 

(d)           Such Grantor (either itself or through licensees) will not do any act
that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.

 

(e)           Whenever such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property with the Canadian Intellectual Property Office or any
similar office or agency in any other country or any political 

 

21

 

subdivision thereof, such
Grantor shall report such filing to the Administrative Agent within five
Business Days after the last day of the fiscal quarter in which such filing
occurs.  Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may reasonably request to evidence the Administrative
Agent’s and the Lenders’ security interest in any Copyright, Patent or
Trade-mark and the goodwill and intangibles of such Grantor relating thereto or
represented thereby.

 

(f)            Such Grantor will take all reasonable (taking into account the economic
value) and necessary steps, including, without limitation, in any proceeding
before the Canadian Intellectual Property Office or any other similar office or
agency in any other country or political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

 

(g)           In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take
such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and, to the extent it determines
it to be reasonable to do so, sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and
all damages for such infringement, misappropriation or dilution.

 

5.12         Intercompany Notes.

 

(a)           At any time after the occurrence and during the continuance of a Default
or Event of Default, the Borrower shall deliver to the Administrative Agent
each Intercompany Note.

 

(b)           No Grantor shall transfer, deliver or otherwise provide any Intercompany
Note to any Person other than a Grantor or the Administrative Agent.

 

SECTION 6.           REMEDIAL PROVISIONS

 

6.1           Certain Matters Relating to Receivables.  (a)  The Administrative Agent shall have
the right, no more than one time in any 12 month period but at any time or
times as Administrative Agent deems reasonably necessary after the occurrence
and during the continuance of a Default or an Event of Default, to make test
verifications of the Receivables in any manner and through any medium that it
reasonably considers advisable, and each Grantor shall furnish all such
assistance and information as the Administrative Agent may reasonably require
in connection with such test verifications. 
No more than one time in any 12 month period but more frequently as the
Administrative Agent may reasonably required after the occurrence and during
the continuance of a Default or an Event of Default, upon the Administrative
Agent’s reasonable request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to
the Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Receivables.

 

(b)           The Administrative Agent hereby authorizes each Grantor to collect such
Grantor’s Receivables, provided that the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default.  If
required by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Receivables,
when collected by any Grantor, (i) shall be forthwith (and, in any event,
within three Business Days) deposited by such Grantor in the form received,
duly endorsed by such Grantor to the 

 

22

 

Administrative Agent if
required, in a Collateral Account maintained under the sole dominion and
control of the Administrative Agent, subject to withdrawal by the
Administrative Agent for the account of the Lenders only as provided in Section 6.5,
and (ii) until so turned over, shall be held by such Grantor in trust for
the Administrative Agent and the Lenders, segregated from other funds of such
Grantor.  Each such deposit of Proceeds
of Receivables shall be accompanied by a report identifying in reasonable
detail the nature and source of the payments included in the deposit.

 

(c)           At the Administrative Agent’s request at any time after the occurrence
and during the continuance of a Default or Event of Default, each Grantor shall
deliver to the Administrative Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave rise to
the Receivables, including, without limitation, all original orders, invoices
and shipping receipts.

 

6.2           Communications with Obligors; Grantors Remain
Liable.  (a)  The Administrative
Agent in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Event of Default communicate with
obligors under the Receivables and parties to the Contracts to verify with them
to the Administrative Agent’s satisfaction the existence, amount and terms of
any Receivables or Contracts.

 

(b)           Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Administrative Agent
for the ratable benefit of the Secured Parties and that payments in respect
thereof shall be made directly to the Administrative Agent.

 

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

 

6.3           Pledged Collateral.  (a)  Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Grantor of the Administrative Agent’s intent to exercise
its corresponding rights pursuant to Section 6.3(b), each Grantor shall be
permitted to receive all cash dividends paid in respect of the Pledged Stock
and all payments made in respect of the Pledged Notes, in each case paid in the
normal course of business of the relevant Issuer and consistent with past
practice, to the extent not prohibited in the Credit Agreement, and to exercise
all voting and corporate or other organizational rights with respect to the
Investment Property; provided, however, that no vote shall be cast or corporate
or other organizational right exercised or other action taken which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document.

 

(b)           If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have
the right to receive any and all cash dividends, payments or other Proceeds
paid in 

 

23

 

respect of the Investment
Property and make application thereof to the Obligations in the order set forth
in Section 6.5, and (ii) any or all of the Investment Property shall
be registered in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (x) all
voting, corporate and other rights pertaining to such Investment Property at
any meeting of shareholders of the relevant Issuer or Issuers or otherwise and
(y) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to such Investment Property as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all of the Investment Property upon the
merger, consolidation, amalgamation, reorganization, recapitalization or other
fundamental change in the corporate or other organizational structure of any
Issuer, or upon the exercise by any Grantor or the Administrative Agent of any
right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of the
Investment Property with any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.

 

(c)           Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Administrative Agent in writing that (x) states
that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Investment Property directly to the Administrative Agent.

 

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

 

6.5           Application of Proceeds.  At such intervals as may be agreed upon by
the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent’s election,
the Administrative Agent may apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account, and any proceeds of
the guarantee set forth in Section 2, in payment of the Obligations in the
following order:

 

First, to pay incurred and unpaid fees and expenses of
the Administrative Agent under the Loan Documents;

 

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

 

24

 

Third, to the Administrative Agent, for application by it
towards prepayment of the Obligations, pro  rata among the Secured
Parties according to the amounts of the Obligations then held by the Secured
Parties; and

 

Fourth, any balance remaining after the Obligations shall
have been paid in full (other than such obligations under Sections 2.17, 2.18,
2.19 and 10.5 of the Credit Agreement that are not then due and payable and
demanded), no Letters of Credit shall be outstanding (unless the outstanding
amount of the L/C Obligations related thereto has been cash collateralized in
an amount and manner satisfactory to the relevant Issuing Lender) and the
Commitments shall have terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same.

 

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

 

6.7           Registration Rights.  (a)  If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 6.6, and if in the opinion of the Administrative Agent
it is necessary or advisable to have the Pledged Stock, or that portion thereof
to be sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and
cause the directors and officers of such Issuer to execute and deliver, all
such instruments 

 

25

 

and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its best efforts to
cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii) make
all amendments thereto and/or to the related prospectus which, in the opinion
of the Administrative Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of
the British Columbia Securities Commission or other relevant securities
commission applicable thereto.  Each
Grantor agrees to cause such Issuer to comply with the provisions of the
securities or “Blue Sky” laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of the Securities Act.

 

(b)           Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all of the Pledged Stock by reason of certain
prohibitions contained in the Securities Act and other applicable securities
laws, but may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers who will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favourable to the
seller than if such sale were a public sale and notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. 
The Administrative Agent shall not be under any obligation to delay a
sale of any of the Pledged Stock for the period of time necessary to permit the
Issuer thereof to register such securities for public sale under the Securities
Act, or under other applicable securities laws, even if such Issuer would agree
to do so.

 

(c)           Each Grantor agrees to use its best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of
Law.  Each Grantor further agrees that a
breach of any of the covenants contained in this Section 6.7 will cause
irreparable injury to the Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section 6.7 shall be specifically enforceable against such Grantor,
and such Grantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Credit Agreement.

 

6.8           Appointment of Receiver. If a Default
Notice has been delivered and has not been rescinded or revoked, the
Administrative Agent may appoint or reappoint by instrument in writing, any
Person or Persons, whether an officer or officers or an employee or employees
of such Grantor or not, to be an interim receiver, receiver or receivers
(hereinafter called a “Receiver”, which term when used herein shall include a
receiver and manager) of the Collateral of such Grantor (including any
interest, income or profits therefrom) and may remove any Receiver so appointed
and appoint another in its stead.  Any
such Receiver shall, to the extent permitted by applicable law, so far as
concerns responsibility for its acts, be deemed the agent of such Grantor and
not of the Administrative Agent, and the Administrative Agent shall not be in
any way responsible for any misconduct, negligence or non-feasance on the part
of any such Receiver or its servants, agents or employees.  Subject to the provisions of the instrument
appointing a Receiver, any such Receiver shall (i) have such powers as
have been granted to the Administrative Agent under this Section 6, and (ii) shall
be entitled to exercise such powers at any time that such powers would
otherwise be exercisable by the Administrative Agent under this Section 6,
which powers shall include the power to take possession of the Collateral, to
preserve the Collateral or its value, 

 

26

 

to carry on or concur in carrying on all or any part
of the business of such Grantor and to sell, lease, license or otherwise
dispose of or concur in selling, leasing, licensing or otherwise disposing of
the Collateral.  To facilitate the
foregoing powers, any such Receiver may, to the exclusion of all others,
including such Grantor, enter upon, use and occupy all premises owned or
occupied by such Grantor wherein the Collateral may be situated, maintain the
Collateral upon such premises, borrow money on a secured or unsecured basis and
use the Collateral directly in carrying on such Grantor’s business or as
security for loans or advances to enable the Receiver to carry on such Grantor’s
business or otherwise, as such Receiver shall, in its reasonable discretion,
determine.  Except as may be otherwise
directed by the Administrative Agent, all money received from time to time by
such Receiver in carrying out its appointment shall be received in trust for
and be paid over to the Administrative Agent, and any surplus shall be applied
in accordance with Requirements of Law.  Every such Receiver may, in the discretion of
the Administrative Agent, be vested with all or any of the rights and powers of
the Administrative Agent.

 

6.9           Subordination.  Each Grantor hereby agrees that, upon the
occurrence and during the continuance of an Event of Default, unless otherwise
agreed by the Administrative Agent, all Indebtedness owing by it to any
Subsidiary of the Borrower shall be fully subordinated to the final payment in
full in cash of such Grantor’s Obligations.

 

6.10         Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to collect such
deficiency.

 

SECTION 7.           THE ADMINISTRATIVE AGENT

 

7.1           Administrative Agent’s Appointment as
Attorney-in-Fact, etc.  (a)  Each Grantor hereby irrevocably
constitutes and appoints the Administrative Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, each Grantor hereby gives
the Administrative Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the following:

 

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

 

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

 

27

 

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

 

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

 

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

 

Anything
in this Section 7.1(a)  to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event
of Default shall have occurred and be continuing.

 

(b)           If any Grantor fails to perform or comply with any of its agreements
contained herein, the Administrative Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.

 

(c)           The reasonable expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1,
together with interest thereon at a rate per annum equal to the highest rate
per annum at which interest would then be payable on any category of past due
ABR Loans (if such expenses are denominated in any currency other than Canadian
dollars) or CDOR Loans (if such expenses are denominated in Canadian
dollars),  under the Credit Agreement,
from the date of payment by the Administrative Agent to the date reimbursed by
the relevant Grantor, shall be payable by such Grantor to the Administrative
Agent on demand.

 

(d)           Each Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof.  All
powers, authorizations and agencies contained in this Agreement are coupled
with 

 

28

 

an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.

 

7.2           Duty of Administrative Agent.  The Administrative Agent’s sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in its
possession, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account.  Neither the Administrative Agent, any Lender
nor any of their respective officers, directors, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or any other Person
or to take any other action whatsoever with regard to the Collateral or any
part thereof.  The powers conferred on
the Administrative Agent and the Lenders hereunder are solely to protect the
Administrative Agent’s and the Lenders’ interests in the Collateral and shall
not impose any duty upon the Administrative Agent or any Lender to exercise any
such powers.  The Administrative Agent
and the Lenders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.

 

7.3           Execution of Financing Statements.  Pursuant to any applicable law, each Grantor
authorizes the Administrative Agent to file, register or record financing
statements, financing change statements and other filings including fixture
filings  or recording documents or instruments
with respect to the Collateral without the signature of such Grantor in such
form and in such offices as the Administrative Agent determines appropriate to
perfect the security interests of the Administrative Agent under this
Agreement.  Each Grantor authorizes the
Administrative Agent to use the collateral description “all present and after
acquired personal property” in any such financing statements or financing
change statements.  Each Grantor hereby
ratifies and authorizes the filing by the Administrative Agent of any financing
statement or financing change statement with respect to the Collateral made
prior to the date hereof.

 

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

 

SECTION 8.           MISCELLANEOUS

 

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

 

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

 

29

 

8.3           No Waiver by Course of Conduct; Cumulative
Remedies.  Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. 
No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof.  No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  A waiver by
the Administrative Agent or any Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise have on any future
occasion.  The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.

 

8.4           Enforcement Expenses; Indemnification.  (a)  Each Guarantor agrees to pay or
reimburse each Lender and the Administrative Agent for all its reasonable out-of-pocket
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 and each Guarantor agrees to pay, or
reimburse Administrative Agent and each Lender for all its reasonable
out-of-pocket costs and expenses incurred in connection with enforcing or
preserving any rights under this Agreement and the other Loan Documents to
which such Guarantor is a party, including, without limitation, the reasonable
fees and disbursements of counsel (including the allocated reasonable fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent.

 

(b)           Each Guarantor agrees to pay, and to save the Administrative Agent and
the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.

 

(c)           Each Guarantor agrees to pay, and to save the Administrative Agent and
the Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to Section 10.5 of the Credit
Agreement.

 

(d)           The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.

 

8.5           Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.

 

8.6           Set-Off.  During the continuance of an Event of
Default, in addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without notice to any Grantor, any such
notice being expressly waived by each Grantor to the extent permitted by
applicable law, upon any Obligations becoming due and payable by any Grantor
(whether at the stated maturity, by acceleration or otherwise), to apply to the
payment of such Obligations, by setoff or otherwise, any and all deposits
(general or special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender, any affiliate thereof or any of their
respective branches or agencies to or for the credit or the account of such
Grantor.  Each Lender agrees promptly to
notify the relevant Grantor and the Administrative Agent after any such
application made by such Lender, provided that the failure to give such
notice shall not affect the validity of such application.

 

30

 

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

 

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

 

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

 

8.10         Integration.  This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Loan Documents.

 

8.11        GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE PROVINCE OF
BRITISH COLUMBIA AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN.

 

8.12         Submission To Jurisdiction; Waivers.  Each Grantor hereby irrevocably and unconditionally:

 

(a)           submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the Province of British
Columbia, and appellate courts from any thereof;

 

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

 

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

 

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

 

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

 

8.13         Acknowledgements.  Each Grantor hereby acknowledges that:

 

31

 

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

 

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

 

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

 

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

 

8.15         Releases.  (a)  At such time as the Loans, the
Reimbursement Obligations and the other Obligations (other than Obligations in
respect of Specified Swap Agreements) shall have been paid in full (other than
such obligations under Sections 2.17, 2.18, 2.19 and 10.5 of the Credit
Agreement that are not then due and payable and demanded), the Commitments have
been terminated and no Letters of Credit shall be outstanding (unless the
outstanding amount of the L/C Obligations related thereto has been cash
collateralized in an amount and manner satisfactory to the relevant Issuing
Lender), the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors.  At the request
and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such
termination.

 

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

 

8.16        WAIVER OF JURY TRIAL.  EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

32

 

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

 

	
   

  	
  THOMPSON
  CREEK METALS COMPANY INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Pamela Saxton

  
	
   

  	
   

  	
  Name:
  Pamela Saxton

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THOMPSON
  CREEK MINING LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Pamela Saxton

  
	
   

  	
   

  	
  Name:
  Pamela Saxton

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TERRANE
  METALS CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Pamela Saxton

  
	
   

  	
   

  	
  Name:
  Pamela Saxton

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BERG
  METALS LIMITED PARTNERSHIP, BY ITS GENERAL PARTNER BERG GENERAL PARTNER CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Pamela Saxton

  
	
   

  	
   

  	
  Name:
  Pamela Saxton

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BERG
  GENERAL PARTNER CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Pamela Saxton

  
	
   

  	
   

  	
  Name:
  Pamela Saxton

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BLUE
  PEARL MINING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Pamela Saxton

  
	
   

  	
   

  	
  Name:
  Pamela Saxton

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  

 

33

 

	
   

  	
  THOMPSON
  CREEK SERVICES ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Pamela Saxton

  
	
   

  	
   

  	
  Name:
  Pamela Saxton

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  

 

34

 

	
  JPMORGAN
  CHASE BANK, N.A.,

  	
   

  
	
  as
  Administrative Agent,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By
  

  	
  /s/
  Brian Knapp

  	
   

  
	
   

  	
  Name:
  Brian Knapp

  	
   

  
	
   

  	
  Title:   Vice President

  	
   

  

 

35Exhibit 10.1

 

SEPARATION AGREEMENT AND RELEASE

 

This
Separation Agreement and Release (the “Agreement”) is made and entered into by
and between Summer Infant, Inc. and its subsidiaries, including, without
limitation, Summer Infant (USA), Inc. (collectively, the “Company”) and
Steven Gibree (“Gibree”).

 

RECITALS

 

A.            Gibree has been
employed by the Company as Executive Vice President since March 6, 2007,
and has also served on the Board of Directors since that time.

 

B.            Gibree’s
employment at the Company has been terminated as a result of his voluntary
resignation, effective November 18, 2010, at which time Gibree will be
relieved of all responsibilities as a Company employee.

 

C.            Gibree shall
also voluntarily resigned from his position as a director of the Company and of
all subsidiaries of the Company as of the date of execution hereof.

 

D.            The parties
wish to settle and compromise fully and finally any and all claims Gibree has
or purports to have against the Company and others, including, but not limited
to, those arising out of Gibree’s employment and the termination of his
employment, on the terms and conditions set forth in this Agreement.

 

COVENANTS

 

In
consideration of the mutual promises in this Agreement, the parties agree as
follows:

 

1.             Termination.  Gibree and the Company agree that Gibree’s
employment is terminated as of November 18, 2010 (the “Termination Date”)
and he shall be deemed to have resigned from all offices held in the Company or
any of its subsidiaries on such date. 
Gibree and the Company further agree that Gibree hereby resigns as a
director of the Company and its subsidiaries effective the date of execution
hereof.  The effective date of this
Agreement (the “Effective Date”) is defined in Section 9.  Gibree will be paid all earned wages, accrued
but unpaid benefits relating to vacations, other perquisites, and
reimbursements through the Termination Date on or before the Effective
Date.  In addition, Gibree will receive:

 

For
a period of twelve months following the Termination Date, the Company shall pay
to Gibree his base salary of $255,000 in equal installments on such dates as
his base salary would otherwise be paid by the Company in accordance with its
regular payroll procedures, less applicable deductions and withholdings.

 

(a)           In satisfaction of any bonus
amount which Gibree would have been eligible to receive with respect to 2010
performance, the Company shall pay to Gibree a lump sum of $85,000, less
applicable deductions and withholdings, which payment shall be made concurrent with
the payment to other recipients of 2010 performance bonus payments but in any
event prior to March 15, 2011.  The
parties agree that this lump sum payment represents full satisfaction of any
bonus award for which Gibree may have been eligible under the Company’s 

 

 

existing
incentive compensation policy for 2010 and that Gibree is not entitled to any
other cash incentive payments.

 

(b)           For a period of twelve
months following the Termination Date, the Company agrees to continue any
applicable medical and dental insurance in which Gibree and his dependants, if
any, are enrolled on the Termination Date at the same coverage levels and cost
to Gibree in effect on the Termination Date. 
Gibree will continue to be responsible for the same premiums he currently
pays which will be deducted from the salary continuation payments described in Section 1(a).  If the Company’s insurance company informs
the Company that Gibree cannot continue under the applicable plans after the
Termination Date, the Company will cooperate with Gibree to provide coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as
amended (COBRA).  Notwithstanding the
foregoing, during the twelve months the Company is obligated to continue the
medical and dental benefits under the terms of this Section 1(c), such
benefits shall be discontinued immediately if any required premium is not paid
in full on time, Gibree becomes covered under another group health plan, Gibree
becomes entitled to Medicare benefits (under Part A, Part B, or
both), or the Company ceases to provide any group health plan for its
employees.  Continuation may also be
terminated if for any reason the plan providing such coverage would terminate
coverage of a participant or an eligible dependent.

 

(c)           The Company shall pay for
twelve months following the Termination Date the premiums for Gibree for life
insurance and disability coverage as provided to him as of the Termination
Date under either the current policies, if possible, or comparable standard
policies implemented for Company employees. 
The parties acknowledge and agree that Gibree participated in the
Company’s 401(k) plan, and his rights to benefits under that plan
following the Termination Date will be governed by the terms of that plan.

 

(d)           The following incentive
awards will continue to vest through their respective scheduled vesting date as
follows:  (i) restricted stock grant
awarded January 15, 2009, of which 10,000 shares are scheduled to vest on January 15,
2011(the “Stock Award”) and (ii) incentive stock option grant awarded January 5,
2009, of which 3,312 shares are scheduled to vest on January 5, 2011 (the “Option”).  Promptly after January 15, 2011, the
Company will deliver or cause to be delivered the 10,000 vested shares under
the Stock Award, and the remaining unvested shares under the Stock Award shall
be forfeited and of no further effect. 
As of January 5, 2011, the Option will cease to vest and the Option
will be exercisable until the expiration of the original term of the Option.  All other incentive awards vested as of the
Termination Date held by Gibree may be exercised according to their original
expiration terms, and thereafter shall be deemed null and void.  All other unvested incentive awards as of the
Termination Date held by Gibree will be deemed terminated and of no further
effect.

 

(e)           The Company will provide
Gibree with twelve months of executive-level outplacement services from one or
more firms chosen by the Company.  Gibree
will be permitted to maintain his car allowance as currently provided by the
Company until December 31, 2010.

 

2.     Severance
Consideration.  In
consideration for the execution, delivery, and non-revocation of this Agreement
by Gibree, the Company will accept Gibree’s voluntary resignation, will provide
the consideration set forth in Section 1 of this Agreement, and shall 

 

2

 

agree
to enter into the Release as set forth in Section 4 of this Agreement (the
“Severance Consideration”).

 

3.             No Entitlement.  Gibree understands and agrees that he is
receiving this Severance Consideration in exchange for this Release, and Gibree
is not otherwise entitled to this Severance Consideration.

 

4.             Release.  The Release set forth in this section is
effective as of the Effective Date of this Agreement.

 

(a)           Gibree for himself and, as
applicable, his agents, attorneys, successors, and assigns, hereby knowingly
and voluntarily irrevocably and unconditionally releases the Company, its
predecessors, parent, subsidiaries, affiliated entities, and the past and
present officers, directors, employees, fiduciaries, shareholders, agents,
successors, representatives and assigns of each and all of them, and all
persons acting by, through, under or in concert with them (each a “Releasee”
and collectively referred to as “Releasees”), from any and all claims, charges,
complaints, liabilities, and obligations of any nature whatsoever, which Gibree
may have against the Company or any of the Releasees, whether now known or
unknown, and whether asserted or unasserted, arising from any event or omission
occurring prior to the Effective Date of this Agreement.

 

(b)           Without limiting the
foregoing, this release includes any and all claims arising out of or which
could arise out of the employment relationship between Gibree and the Company
and Gibree’s termination, including but not limited to: (i) any and all
claims under Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, Section 1981 of the Civil Rights Act of 1866, the Age
Discrimination in Employment Act, the Equal Pay Act, the Family and Medical
Leave Act, the Fair Labor Standards Act, the Employee Retirement Income
Security Act (ERISA), COBRA, the Rhode Island Parental and Family Medical Leave
Act, the Rhode Island Fair Employment Practices Act, the Rhode Island Civil
Rights Act of 1990, the National Labor Relations Act, as amended, state and
local civil rights laws, Rhode Island wage payment laws, and any and all
similar laws in other states; (ii) any and all Executive Orders (governing fair
employment practices) which may be applicable to the Company; and (iii) any
other provision or theory of law or equity. 
Gibree understands and acknowledges that Title VII of the Civil Rights
Act of 1964, ERISA, and state and local civil right laws, provide Gibree the
right to bring actions against the Company if, among other things, Gibree
believes he has been discriminated against on the basis of race, ancestry,
color, religion, sex, national origin, medical condition, sexual orientation,
disability, or benefit eligibility.  With
full understanding of the right afforded under these Acts, Gibree agrees that
he will not file any action against the Company or any Releasee based upon any
alleged violation of these Acts or under any other theory of law or statute,
including but not limited to, back pay, front pay, attorney’s fees, damages,
interest, waiting time, penalties, reinstatement, or injunctive relief that
could be assessed by any federal, state or local court, any administrative
agency, or any other forum with competent jurisdiction.  This release may be pled as a complete bar
and defense to any claim brought with respect to the matters released in this
Agreement.

 

(c)           Gibree acknowledges and
agrees that the consideration he is receiving under this Agreement is
sufficient consideration to support the release of all entities and persons 

 

3

 

identified
in Section 4 of this Agreement, and that said consideration is in addition
to anything of value to which Gibree is entitled.

 

(d)           Gibree agrees and represents
that he has not filed, or caused to be filed, any claim or charge with any
adjudicative body, regulatory body, or agency arising out of his employment or
termination of employment.

 

(e)           Gibree specifically
understands and acknowledges that the Age Discrimination in Employment Act of
1967, as amended, provides him the right to bring a claim against the Company
if he believes that he has been discriminated against on the basis of age.
Gibree understands the rights afforded under this Act and agrees that he will
not file any such claim or action against the Company or any Releasee,
including, but not limited to, back pay, front pay, attorney’s fees, damages,
reinstatement, or injunctive relief.

 

(f)            To the fullest extent
permitted by law, at no time subsequent to the execution of this Agreement will
Gibree pursue, or cause or knowingly permit the prosecution, in any state,
federal or foreign court, or before any local, state, federal or administrative
agency, or any other tribunal, any charge, claim or action of any kind, nature
and character whatsoever, known or unknown, which Gibree may now have, has ever
had, or in the future may have against any Releasee, which is based in whole or
in part on any matter covered by this Agreement.

 

5.             Communications; Return of
Property.  From and
after the Termination Date, Gibree shall not (a) represent himself as an
employee, officer, director or representative of the Company or any of its
subsidiaries or attempt to conduct business in the name or on behalf of the
Company or any of its subsidiaries; (b) send e-mails directed to anyone on
the Company’s e-mail system,; or (c) visit the Company’s premises without
consent of the Company.  Upon the Termination
Date, Gibree agrees to promptly return all items of Company property he has or
over which he has control, including but not limited to all keys, records,
designs, patents, business plans, financial statements, manuals, memoranda,
lists, and other property delivered to or compiled by Gibree by or on behalf of
the Company (or its subsidiaries) or its representatives, vendors, or customers
that pertain to the business of the Company (or its subsidiaries), all
equipment belonging to the Company, all code and computer programs and
information of whatever nature, tools, manuals, and any and all other
materials, documents or information, including but not limited to confidential
information in his possession or control, and that he will retain no copies thereof.  Likewise, all correspondence, reports,
records, charts, advertising materials, and other similar data pertaining to
the business, activities or future plans of the Company (or its subsidiaries)
that has been collected by Gibree shall be delivered promptly to the Company
upon the Termination Date.

 

6.             Trade
Secrets/Confidentiality. 
Gibree acknowledges that during the course of his employment, he had
access to various trade secrets, whether in existence or proposed, and
confidential information of the Company. 
Such information includes, but is not limited to, business plans,
schematics, blue prints, product information, software, hardware, financial
information, manuals, training programs, profit margins, marketing plans,
customer information, and the specific terms of the Company’s relationships or
agreements with its respective significant vendors or customers. Gibree agrees
that he shall not disclose such information or use it in any way, at any time
in the future, except to the extent such information becomes publicly available
through lawful and proper means, or to the extent that Gibree is required to
disclose 

 

4

 

such
information pursuant to subpoena.  If
such information is requested pursuant to a subpoena, Gibree must give
immediate and timely notice to the Company, so that the Company has a
reasonable opportunity to seek judicial relief to preclude disclosure, if
necessary.  Without limitation, the
prohibition in this section includes Gibree’s use of such information to
directly or indirectly solicit any manufacturer, manufacturer’s representative,
distributor, or customer of the Company or any of its subsidiaries, and Gibree’s
use of such information to directly or indirectly interfere with the advantageous
business relationship(s) between the Company and any of its customers,
vendors or suppliers.

 

7.     Restrictive Covenants.

 

(a)           Notwithstanding the
restrictions set forth in Section 6 of this Agreement, for a period of
twelve months from the Termination Date:

 

i.              Gibree will
not, and will not permit any person subject to his direction or control to,
directly or indirectly, whether alone or in association with others, as
principal, officer, agent, consultant, employee, director or owner of any corporation,
partnership, association or other entity, or through the investment of capital,
lending of money or property, rendering of services or otherwise, engage in,
influence, control, have an interest in or otherwise become actively involved
with any business that competes with the Company.  Gibree acknowledges that the business of the
Company is national and international in scope, as its current and anticipated
customers and suppliers are located throughout the United States and abroad,
and that it is therefore reasonable that the restrictions set forth in this Section 7(a)(i) not
be limited to any specified geographic area.

 

ii.             Gibree will not directly or indirectly attempt to
encourage, induce or otherwise solicit, directly or indirectly, any employee of
the Company, or any of its affiliates or subsidiaries, to breach his or her
employment agreement or to leave their employment;

 

iii.            Gibree will not directly or indirectly attempt to
encourage, induce or otherwise solicit, directly or indirectly, any business
from, or attempt to sell, license, or provide the same or similar products or
services as provided by the Company or any subsidiary of the Company to any
customer of the Company; and

 

iv.            Gibree will not call upon any prospective
acquisition candidate, on Gibree’s own behalf or on behalf of any person, which
candidate was, to Gibree’s knowledge after due inquiry, either called upon by
the Company, or any of its affiliates or subsidiaries, or for which the Company
made an acquisition analysis, for the purpose of acquiring such candidate.

 

(b)           The parties acknowledge that
covenants and restrictions set forth in Sections 6 and 7 are necessary to
protect the legitimate business interests of the Company.  The parties agree that, if the scope of
enforceability of any or all the restrictive covenants set forth in this
Agreement is in any way disputed at any time, a court may modify and enforce
the covenants to the extent it believes to be reasonable under the
circumstances existing at that time.

 

(c)           Gibree agrees that the
breach by him of Sections 6 and 7 could not reasonably or adequately be
compensated in damages in an action at law, and that the Company 

 

5

 

shall
be entitled to injunctive relief which may include, but shall not be limited
to, restraining Gibree from engaging in any activity that would breach this
Agreement.  However, no remedy conferred
by any of the specific provisions of Sections 6 and 7 (including this
paragraph) is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder, or now or hereafter existing in law or in equity, or by statute or
otherwise.  The election of any one or
more remedies by the Company shall not constitute a waiver of the right to
pursue other available remedies.

 

8.             Sufficient Time to Review.  A copy of this Agreement was delivered to
Gibree on November 18, 2010.  Gibree
acknowledges that he has been afforded a reasonable opportunity to consider
this Agreement and is encouraged to consult with an attorney of his own
choosing in deciding whether to execute this Agreement.  Gibree acknowledges that he has been given a
period of at least 21 days within which to consider this Agreement, and that he
has read and fully understands the Agreement and enters into it freely,
voluntarily, and without coercion, and in the event that he executes this
Agreement in less than 21 days, his election to do so has been knowing and
voluntary.

 

9.             Revocation Period.  Gibree understands that he has a period of
seven days from the date he signs this Agreement to revoke this Agreement, and
that, should he decide to revoke it within said seven-day period, he shall not
be entitled to the consideration recited herein.  Gibree further understands that this
Agreement shall not become effective or enforceable until the expiration of the
seven-day period, and, therefore, that he shall not receive the consideration
set forth herein until the revocation period has expired without Gibree
exercising his right of revocation. Gibree agrees that he must provide written
notice of revocation of this Agreement to Mark Strozik, Vice President, Human
Resources, Summer Infant, Inc., 1275 Park East Drive, Woonsocket, RI 02895,
should he wish to exercise his rights to revoke this Agreement within the
revocation period.  If this Agreement is
not timely revoked, this Agreement will become effective as of the expiration
of the revocation period (“Effective Date”).

 

10.           Termination of Change of
Control Agreement.  The parties
hereby agree that the Change of Control Agreement by and between the Gibree and
Summer Infant (USA), Inc. dated as of February 5, 2010, is terminated
effective as of the Termination Date.

 

11.           Acknowledgement.  Gibree acknowledges, represents and warrants
that he enters into this Agreement knowingly, voluntarily, free of duress or
coercion, and with a full understanding of all terms and conditions contained
herein.

 

12.           Headings.  The headings are for convenience of the
parties, and are not to be construed as terms and conditions of this Agreement.

 

13.           Severability. Should any
provision in this Agreement be declared or determined to be illegal or invalid
(with the exception of Section 4, in whole or in part, subsections
included), the validity of the remaining parts, terms, or provisions shall not
be affected and the illegal or invalid part, term, or provisions shall be
deemed not to be part of this Agreement.

 

14.           Integration.  This Agreement constitutes the entire
agreement between the parties, and supersede all oral negotiations and any
prior and other writings with respect to the subject 

 

6

 

matter
of this Agreement, and is intended by the parties as the final, complete and
exclusive statement of the terms agreed to by them.

 

15.           Choice of Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Rhode Island.

 

16.           Amendment.  This Agreement shall be binding upon the parties
and may not be amended, supplemented, changed, or modified in any manner,
orally or otherwise, except by an instrument in writing of concurrent or
subsequent date signed by the parties.

 

17.           Successors and Assigns.  This Agreement is and shall be binding upon
and inure to the benefit of the heirs, executors, successors and assigns of
each of the parties.

 

18.           Non-Admission.  This Agreement shall not in any way be
construed as an admission by the Company that it has acted wrongfully with
respect to Gibree, and the Company specifically denies the commission of any
wrongful acts against Gibree.

 

19.           Non-Disparagement.  Gibree agrees that he will not make any
written or oral statement or take any action which he knows or reasonably
should know constitutes an untrue, disparaging, or negative comment concerning
the Company.  The Company agrees that it
will not make any written or oral statement or take any action which it knows
or reasonably should know constitutes an untrue, disparaging, or negative
comment concerning Gibree.  If the
Company’s Human Resources Department is contacted by prospective employers of
Gibree, the Company will provide only the starting and ending dates of Gibree’s
employment at the Company and the last position Gibree held at the Company.  The Company also will advise any such
prospective employers that it is the Company’s policy to release only such
information.

 

20.           Reservation of Rights to
Indemnification and Director and Officer Liability Insurance for Actions Taken
or Omitted While a Director or Executive Officer.  Gibree’s right to indemnification to the
fullest extent permitted by Delaware General Corporation Law and the Company’s
Certificate of Incorporation and By-Laws for expenses (including attorney’s
fees and disbursements), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Gibree in connection with any proceeding
arising by reason of acts taken or omissions to act occurring while Employee
was an executive officer or director of the Company or an executive officer or
director of any of the Company’s subsidiaries, shall continue unabridged after
the Termination Date.

 

21.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

7

 

IN
WITNESS WHEREOF, the parties execute this Agreement as of the date indicated
below.

 

 

	
   

  	
   

  	
  Summer
  Infant, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Steven Gibree

  	
   

  	
  By:

  	
  /s/
  Jason P. Macari

  
	
  Steven
  Gibree

  	
   

  	
  Name:

  	
  Jason
  P. Macari

  
	
   

  	
   

  	
  Title:

  	
  President &
  CEO

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  12/10/10

  	
   

  	
  Date:

  	
  12/10/10

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