Document:

Exhibit

Exhibit 10.2

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”) is entered into as of April 6, 2016 among Schnitzer Steel Industries, Inc. (the “US Borrower”), the other parties identified as “Grantors” on the signature pages hereto and such other parties that may become Grantors hereunder after the date hereof (together with the US Borrower, each individually a “Grantor”, and collectively, the “Grantors”) and Bank of America, N.A., in its capacity as administrative agent (the “Administrative Agent”) for the holders of the Obligations.

RECITALS

WHEREAS, pursuant to that certain Third Amended and Restated Credit Agreement, dated as of the date hereof (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”), among the US Borrower, the Canadian Borrowers, the US Lenders, the Canadian Lender, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, the US Lenders have agreed to make Committed Loans, the Swing Line Lender has agreed to make Swing Line Loans, the L/C Issuers have agreed to issue Letters of Credit, and the Canadian Lender has agreed to make Canadian Loans and issue Canadian Letters of Credit upon the terms and subject to the conditions set forth therein; and

WHEREAS, this Agreement is required by the terms of the Credit Agreement.

NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.    Definitions.

(a)    Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.  

(b)    The rules of construction specified in Section 1.02 of the Credit Agreement are incorporated herein mutatis mutandis.

(c)    The following terms shall have the meanings set forth in the UCC (as defined in the Credit Agreement): Account, Account Debtor, Equipment, Inventory, and Proceeds.

(d)    In addition, the following term shall have the meaning set forth below:

“Collateral” has the meaning provided in Section 2 hereof.

2.    Grant of Security Interest in the Collateral.  To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Obligations, each Grantor hereby grants to the Administrative Agent, for the benefit of the holders of the Obligations, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Grantor in and to all of the following, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the “Collateral”):  (a) all Accounts; (b) all Equipment; (c) all Inventory; and (d) all Proceeds of any and all of the foregoing.  

Notwithstanding anything to the contrary contained herein, the security interests granted under this Agreement shall not extend to, and the Collateral shall not include, Excluded Property.

The Grantors and the Administrative Agent, on behalf of the holders of the Obligations, hereby acknowledge and agree that the security interest created hereby in the Collateral constitutes continuing collateral security for all of the Obligations, whether now existing or hereafter arising.

Notwithstanding anything in this Agreement to the contrary, (i) neither creation or perfection of pledges of or security interests in, nor the obtaining of legal opinions or other deliverables with respect to, particular assets of any Grantor shall be required, if, and for so long as and to the extent that the Administrative Agent and the US Borrower agree in writing that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such legal opinions or other deliverables in respect of such assets, shall be excessive in view of the benefits to be obtained by the holders of the Obligations therefrom, (ii) Liens required to be granted from time to time shall be subject to exceptions and limitations set forth in the Collateral Documents as in effect on the Third Restatement Date, (iii) no perfection actions shall be required with respect to motor vehicles and other assets subject to certificates of title and (iv) in no event shall notices be required to be sent to contractual third parties prior to an enforcement event following the occurrence and continuation of an Event of Default.  The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets by any Grantor where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Collateral Documents.  For the avoidance of doubt, no perfection actions shall be required other than the filing of UCC financing statements or PPSA financing statements. 

3.    Representations and Warranties.  Each Grantor hereby represents and warrants to the Administrative Agent, for the benefit of the holders of the Obligations, that:

(a)    Ownership.  Each Grantor is the legal and beneficial owner of its Collateral and has the right to pledge, sell, assign or transfer the same.  

(b)    Security Interest/Priority.  This Agreement creates a valid security interest in favor of the Administrative Agent, for the benefit of the holders of the Obligations, in the Collateral of such Grantor and, when properly perfected by filing, shall constitute a valid and perfected, first priority security interest in such Collateral, to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Liens permitted pursuant to Section 7.01 of the Credit Agreement.

(c)    Accounts. (i) Each Account of the Grantors and the papers and documents relating thereto are genuine and in all material respects what they purport to be, (ii) each Account arises out of (A) a bona fide sale of goods sold and delivered by such Grantor (or is in the process of being delivered) or (B) services theretofore actually rendered by such Grantor to, the Account Debtor named therein, (iii) no surety bond was required or given in connection with any Account of a Grantor or the contracts or purchase orders out of which they arose and (iv) the right to receive payment under each Account is assignable.

(d)    Equipment and Inventory.  With respect to any Equipment and/or Inventory of a Grantor with a value in excess of $500,000, each such Grantor has exclusive possession and control of such Equipment and Inventory of such Grantor except for (i) Equipment leased by such Grantor as a lessee, (ii) Equipment or Inventory in transit, (iii) Equipment consisting of rolling stock, bins, trailers, barges, processing equipment or similar like equipment or (iv) Equipment and/or Inventory in the possession or control of a warehouseman, bailee or any agent or processor of such Grantor to 

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the extent such Grantor has complied with Section 4(c).  Except as otherwise previously disclosed to the Administrative Agent, no Inventory of a Grantor is held by a Person other than a Grantor pursuant to consignment, sale or return, sale on approval or similar arrangement.  None of such Inventory is subject to any licensing, patent, trademark, trade name or copyright with any Person that restricts any Grantor’s ability to use, manufacture, lease, sell or otherwise dispose of such Inventory.  The completion of the manufacturing process of such Inventory by a Person other than the applicable Grantor would be permitted under any contract to which such Grantor is a party or to which the Inventory is subject.  None of the Inventory is subject to a lease agreement.

(e)    Contracts; Agreements; Licenses.  No Grantor has any material contracts, material agreements or material licenses with respect to the Collateral which are non-assignable by their terms, or as a matter of law, or which prevent the granting of a security interest therein, other than material contracts, agreements or licenses with government entities.

(f)    Consents; Etc.  No approval, consent, exemption, authorization or other action by, notice to, or filing with, any Governmental Authority or any other Person (including, without limitation, any stockholder, member or creditor of such Grantor), is necessary or required for (i) the grant by such Grantor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection of such security interest (to the extent such security interest can be perfected by filing under the UCC) or (iii) the exercise by the Administrative Agent or the holders of the Obligations of the rights and remedies provided for in this Agreement, except for (A) the filing or recording of UCC financing statements, and (B) consents, authorizations, filings or other actions which have been obtained or made.

4.    Covenants. Each Grantor covenants that until such time as the Obligations arising under the Loan Documents have been paid in full and the Commitments have expired or been terminated, such Grantor shall:

(a)    Maintenance of Perfected Security Interest; Further Information.

(i)    Maintain the security interest created by this Agreement as a first priority perfected security interest (subject only to Liens permitted pursuant to Section 7.01 of the Credit Agreement) and defend such security interest against the claims and demands of all Persons whomsoever (other than the holders of Liens permitted pursuant to Section 7.01 of the Credit Agreement).

(ii)    From time to time furnish to the Administrative Agent upon the Administrative Agent’s reasonable request, statements and schedules further identifying and describing the Collateral of such Grantor and such other reports in connection therewith as the Administrative Agent may reasonably request, all in reasonable detail.

(b)    Filing of Financing Statements, Notices, etc.  Each Grantor shall execute and deliver to the Administrative Agent and/or file such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and restatements of existing documents, as the Administrative Agent may reasonably request) and do all such other things as the Administrative Agent may reasonably deem necessary or appropriate (i) to assure to the Administrative Agent its security interests hereunder, including such instruments as the Administrative Agent may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, including, without limitation, financing statements (including 

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continuation statements), (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Administrative Agent of its rights and interests hereunder.  Furthermore, each Grantor also hereby irrevocably makes, constitutes and appoints the Administrative Agent, its nominee or any other person whom the Administrative Agent may designate, as such Grantor’s attorney in fact with full power and for the limited purpose to prepare and file in the name of such Grantor any financing statements, or amendments and supplements to financing statements, or renewal financing statements which in the Administrative Agent’s reasonable discretion would be necessary or appropriate in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable until such time as the Obligations arising under the Loan Documents have been paid in full and the Commitments have expired or been terminated.  Each Grantor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Administrative Agent without notice thereof to such Grantor wherever the Administrative Agent may in its sole discretion desire to file the same.  

(c)    Collateral Held by Warehouseman, Bailee, etc.  

(i)    Upon the reasonable request of the Administrative Agent, with respect to any Collateral that is at any time in the possession or control of a warehouseman, bailee or any agent or processor of such Grantor, (A) notify such Person in writing of the Administrative Agent’s security interest for the benefit of the holders of the Obligations in such Collateral, (B) instruct such Person to hold all such Collateral for the Administrative Agent’s account and subject to the Administrative Agent’s instructions and (C) use reasonable efforts to obtain (1) a written acknowledgment from such Person that it is holding such Collateral for the benefit of the Administrative Agent and (2) such other documentation required by the Administrative Agent (including, without limitation, subordination and access agreements).

(ii)    Upon the reasonable request of the Administrative Agent, perfect and protect such Grantor’s ownership interests in all Inventory stored with a consignee against creditors of the consignee by filing and maintaining financing statements against the consignee reflecting the consignment arrangement filed in all appropriate filing offices, providing any written notices required by the UCC to notify any prior creditors of the consignee of the consignment arrangement, and taking such other actions as may be appropriate to perfect and protect such Grantor’s interests in such inventory under Section 2-326, Section 9-103, Section 9-324 and Section 9-505 of the UCC or otherwise, which such financing statements filed pursuant to this Section shall be assigned to the Administrative Agent, for the benefit of the holders of the Obligations.

(d)    Inventory.  With respect to the Inventory of each Grantor:

(i)    At all times maintain inventory records reasonably satisfactory to the Administrative Agent, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory and such Grantor’s cost therefore and daily withdrawals therefrom and additions thereto.

(ii)    Produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable Laws.

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(iii)    Such Grantor shall not, at any time, permit any Inventory to be subject to a lease agreement.

(e)    Treatment of Accounts.  None of the Grantors will, without the Administrative Agent’s prior written consent, grant or extend the time for payment of any Account, or compromise or settle any Account for less than the full amount thereof, or release any person or property, in whole or in part, from payment thereof, or allow any credit or discount thereon, other than as (i) normal and customary in the ordinary course of a Grantor’s business and (ii) as permitted under the Credit Agreement.

(f)    Books and Records.  Mark its books and records to reflect the security interest granted pursuant to this Agreement.  

(g)    Nature of Collateral.  At all times maintain the Collateral as personal property and not affix any of the Collateral to any real property in a manner which would change its nature from personal property to real property.

5.    Authorization to File Financing Statements.  Each Grantor hereby authorizes the Administrative Agent to prepare and file such financing statements (including continuation statements) or amendments thereof or supplements thereto or other instruments as the Administrative Agent may from time to time deem necessary or appropriate in order to perfect and maintain the security interests granted hereunder in accordance with the UCC (including authorization to describe the Collateral).

6.    Advances.  On failure of any Grantor to perform any of the covenants and agreements contained herein or in any other Loan Document, the Administrative Agent may, at its sole option and in its sole discretion, after ten (10) business days prior written notice to each applicable Grantor and opportunity to cure, perform the same and in so doing may expend such sums as the Administrative Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which the Administrative Agent may make for the protection of the security hereof or which may be compelled to make by operation of Law.  All such sums and amounts so expended shall be repayable by the Grantors on a joint and several basis promptly upon timely notice thereof and demand therefor, shall constitute additional Obligations and shall bear interest from the date said amounts are expended at the Default Rate.  No such performance of any covenant or agreement by the Administrative Agent on behalf of any Grantor, and no such advance or expenditure therefor, shall relieve the Grantors of any Default or Event of Default.  The Administrative Agent may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by a Grantor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

7.    Remedies.

(a)    General Remedies.  Upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent, on behalf of the holders of the Obligations, shall have, in addition to the rights and remedies provided herein, in the Loan Documents, in any other documents relating to the Obligations, or by any applicable Law (including, but not limited to, levy 

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of attachment, garnishment and the rights and remedies set forth in the UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights and remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further, the Administrative Agent may, with or without judicial process or the aid and assistance of others, (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Grantors, take possession of the Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Grantors to assemble and make available to the Administrative Agent at the expense of the Grantors any Collateral at any place and time designated by the Administrative Agent which is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Grantors hereby waives to the fullest extent permitted by Law, at any place and time or times, 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 any or all Collateral held by or for it at public or private sale, at any exchange or broker’s board or elsewhere, by one or more contracts, in one or more parcels, for money, upon credit or otherwise, at such prices and upon such terms as the Administrative Agent deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner.  Neither the Administrative Agent’s compliance with applicable Law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect the commercial reasonableness of any sale.  To the extent the rights of notice cannot be legally waived hereunder, each Grantor agrees that any requirement of reasonable notice shall be met if such notice, specifying the place of any public sale or the time after which any private sale is to be made, is personally served on or mailed, postage prepaid, to the US Borrower in accordance with the notice provisions of Section 10.02 of the Credit Agreement at least ten (10) days before the time of sale or other event giving rise to the requirement of such notice.  The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  The Administrative Agent shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given.  To the extent permitted by applicable Law, any holder of the Obligations may be a purchaser at any such sale.  To the extent permitted by applicable Law, each of the Grantors hereby waives all of its rights of redemption with respect to any such sale.  Subject to the provisions of applicable Law, the Administrative Agent may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by Law, be made at the time and place to which the sale was postponed, or the Administrative Agent may further postpone such sale by announcement made at such time and place. 

(b)    Remedies Relating to Accounts.  

(i)    Upon the occurrence of an Event of Default and during the continuation thereof, whether or not the Administrative Agent has exercised any or all of its rights and remedies hereunder, (A) promptly upon the reasonable request of the Administrative Agent, each Grantor shall instruct all Account Debtors to remit all payments in respect of Accounts to a mailing location selected by the Administrative Agent and (B) the Administrative Agent 

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shall have the right to enforce any Grantor’s rights against its customers and Account Debtors, and the Administrative Agent or its designee may notify any Grantor’s customers and Account Debtors that the Accounts of such Grantor have been assigned to the Administrative Agent or of the Administrative Agent’s security interest therein, and may (either in its own name or in the name of a Grantor or both) demand, collect (including without limitation by way of a lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due on any Account, and, in the Administrative Agent’s discretion, file any claim or take any other action or proceeding to protect and realize upon the security interest of the holders of the Obligations in the Accounts.  

(ii)    Upon the occurrence of an Event of Default and during the continuation thereof, each Grantor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Administrative Agent in accordance with the provisions hereof shall be solely for the Administrative Agent’s own convenience and that such Grantor shall not have any right, title or interest in such Accounts or in any such other amounts except as expressly provided herein.  Neither the Administrative Agent nor the holders of the Obligations shall have any liability or responsibility to any Grantor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance.  

(iii)    Upon the occurrence of an Event of Default and during the continuation thereof, (A) the Administrative Agent shall have the right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and the Grantors shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications, (B) upon the Administrative Agent’s request and at the expense of the Grantors, the Grantors 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 Accounts and (C) the Administrative Agent in its own name or in the name of others may communicate with Account Debtors on the Accounts to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Accounts.

(c)    Access.  In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent shall have the right to enter and remain upon the various premises of the Grantors without cost or charge to the Administrative Agent, and use the same, together with materials, supplies, books and records of the Grantors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise.  In addition, the Administrative Agent may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral.

(d)    Nonexclusive Nature of Remedies.  Failure by the Administrative Agent or the holders of the Obligations to exercise any right, remedy or option under this Agreement, any other Loan Document, any other document relating to the Obligations, or as provided by Law, or any delay by the Administrative Agent or the holders of the Obligations in exercising the same, shall not operate as a waiver of any such right, remedy or option.  No waiver hereunder shall be effective unless it is 

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in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Administrative Agent or the holders of the Obligations shall only be granted as provided herein.  To the extent permitted by Law, neither the Administrative Agent, the holders of the Obligations, nor any party acting as attorney for the Administrative Agent or the holders of the Obligations, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder as determined by a final non-appealable judgment of a court of competent jurisdiction.  The rights and remedies of the Administrative Agent and the holders of the Obligations under this Agreement shall be cumulative and not exclusive of any other right or remedy which the Administrative Agent or the holders of the Obligations may have.

(e)    Retention of Collateral.  In addition to the rights and remedies hereunder, the Administrative Agent may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable Law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Obligations.  Unless and until the Administrative Agent shall have provided such notices, however, the Administrative Agent shall not be deemed to have retained any Collateral in satisfaction of any Obligations for any reason.

(f)    Waiver; Deficiency.  Each Grantor hereby waives, to the extent permitted by applicable Laws, all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable Laws in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof.  In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Administrative Agent or the holders of the Obligations are legally entitled, the Grantors shall be jointly and severally liable for the deficiency, together with interest thereon at the Default Rate, together with the costs of collection and the fees, charges and disbursements of counsel.  Any surplus remaining after the full payment and satisfaction of the Obligations shall be returned to the Grantors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.

8.    Rights of the Administrative Agent.

(a)    Power of Attorney.  In addition to other powers of attorney contained herein, each Grantor hereby designates and appoints the Administrative Agent, on behalf of the holders of the Obligations, and each of its designees or agents, as attorney-in-fact of such Grantor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence of an Event of Default and during the continuation thereof:

(i)    to demand, collect, settle, compromise, adjust, give discharges and releases, all as the Administrative Agent may reasonably determine in respect of or arising out of the Collateral;

(ii)    to commence and prosecute any actions at any court for the purposes of collecting any Collateral and enforcing any other right in respect thereof;

(iii)    to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the Administrative Agent may deem reasonably appropriate in respect of or arising out of the Collateral;

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(iv)    to receive, open and dispose of mail addressed to a Grantor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral of such Grantor on behalf of and in the name of such Grantor, or securing, or relating to such Collateral;

(v)    to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services which have given rise thereto, as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes;

(vi)    to adjust and settle claims under any insurance policy relating thereto;

(vii)    to execute and deliver all assignments, conveyances, statements, financing statements, continuation financing statements, security agreements, affidavits, notices and other agreements, instruments and documents that the Administrative Agent may determine necessary in order to perfect and maintain the security interests and liens granted in this Agreement and in order to fully consummate all of the transactions contemplated herein in respect of or arising out of the Collateral;

(viii)    to institute any foreclosure proceedings that the Administrative Agent may deem appropriate in respect of or arising out of the Collateral; 

(ix)    to sign and endorse any drafts, assignments, proxies, verifications, notices and other documents relating to the Collateral;

(x)    to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

(xi)    to direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct;

(xii)    to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Collateral; and

(xiii)    to do and perform all such other acts and things as the Administrative Agent may reasonably deem to be necessary, proper or convenient in connection with the Collateral.

This power of attorney is a power coupled with an interest and shall be irrevocable until such time as the Obligations arising under the Loan Documents have been paid in full and the Commitments have expired or been terminated.  The Administrative Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Administrative Agent in this Agreement, and shall not be liable for any failure to do so or any delay in doing so.  The Administrative Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.  This power 

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of attorney is conferred on the Administrative Agent solely to protect, preserve and realize upon its security interest in the Collateral and shall not impose any duty upon the Administrative Agent or any other holder of the Obligations to exercise any such powers.

(b)    Assignment by the Administrative Agent. The Administrative Agent may from time to time assign the Obligations to a successor Administrative Agent appointed in accordance with the Credit Agreement, and such successor shall be entitled to all of the rights and remedies of the Administrative Agent under this Agreement in relation thereto.

(c)    The Administrative Agent’s Duty of Care.  Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Administrative Agent hereunder, the Administrative Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Grantors shall be responsible for preservation of all rights in the Collateral, and the Administrative Agent shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Grantors.  The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Administrative Agent shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral.  In the event of a public or private sale of Collateral pursuant to Section 7 hereof, the Administrative Agent shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (ii) taking any steps to clean, repair or otherwise prepare the Collateral for sale.

(d)    Liability with Respect to Accounts.  Anything herein to the contrary notwithstanding, each of the Grantors shall remain liable under each of the Accounts 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 to each such Account.  Neither the Administrative Agent nor any holder of the Obligations shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any holder of the Obligations of any payment relating to such Account pursuant hereto, nor shall the Administrative Agent or any holder of the Obligations be obligated in any manner to perform any of the obligations of a Grantor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), 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.

(e)    Releases of Collateral.  If any 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 promptly execute and deliver to such Grantor all releases and other documents, and take such other action, reasonably necessary for the release of the Liens created hereby or by any other Collateral Document on such Collateral.  

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9.    Application of Proceeds.  Upon the acceleration of the Obligations pursuant to Section 8.02 of the Credit Agreement, any payments in respect of the Obligations and any proceeds of the Collateral, when received by the Administrative Agent or any holder of the Obligations in cash or cash equivalents will be applied in reduction of the Obligations in the order set forth in Section 8.03 of the Credit Agreement.
    
10.    Continuing Agreement.

(a)    This Agreement shall remain in full force and effect until such time as the Obligations arising under the Loan Documents have been paid in full and the Commitments have expired or been terminated, at which time this Agreement shall be automatically terminated (other than obligations under this Agreement which expressly survive such termination) and the Administrative Agent shall, upon the request and at the expense of the Grantors, forthwith release all of its liens and security interests hereunder and shall execute and deliver all UCC termination statements and/or other documents reasonably requested by the Grantors evidencing such termination.

(b)    This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any holder of the Obligations as a preference, fraudulent conveyance or otherwise under any Debtor Relief Law, all as though such payment had not been made; provided that in the event payment of all or any part of the Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including without limitation any reasonable legal fees and disbursements) incurred by the Administrative Agent or any holder of the Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Obligations.

11.    Amendments; Waivers; Modifications, etc.  This Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 10.01 of the Credit Agreement.

12.    Successors in Interest.  This Agreement shall be binding upon each Grantor, its successors and assigns and shall inure, together with the rights and remedies of the Administrative Agent and the holders of the Obligations hereunder, to the benefit of the Administrative Agent and the holders of the Obligations and their successors and permitted assigns.

13.    Notices.  All notices required or permitted to be given under this Agreement shall be in conformance with Section 10.02 of the Credit Agreement.

14.    Counterparts.  This Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.  Delivery of an executed counterpart of a signature page of this Agreement by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement. 

15.    Headings.  The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

16.    Governing Law; Submission to Jurisdiction; Waiver of Venue; Waiver of Jury Trial.  The terms of Sections 10.14 and 10.15 of the Credit Agreement with respect to governing law, submission to 

11

jurisdiction, waiver of venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

17.    Severability.  If any provision of this Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

18.    Entirety.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the L/C Issuers constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

19.    Other Security.  To the extent that any of the Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real property and securities owned by a Grantor), or by a guarantee, endorsement or property of any other Person, then the Administrative Agent shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence of any Event of Default and during the continuation thereof, and the Administrative Agent shall have the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies the Administrative Agent shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Obligations or any of the rights of the Administrative Agent or the holders of the Obligations under this Agreement, under any other of the Loan Documents or under any other document relating to the Obligations.

20.    Joinder.  At any time after the date of this Agreement, one or more additional Persons may become party hereto by executing and delivering to the Administrative Agent a Joinder Agreement.  Immediately upon such execution and delivery of such Joinder Agreement (and without any further action), each such additional Person will become a party to this Agreement as a “Grantor” and have all of the rights and obligations of a Grantor hereunder and this Agreement shall be deemed amended by such Joinder Agreement.

21.    Joint and Several Obligations of Grantors.

(a)    Each of the Grantors is accepting joint and several liability hereunder in consideration of the financial accommodations to be provided by the Lenders under the Credit Agreement, for the mutual benefit, directly and indirectly, of each of the Grantors and in consideration of the undertakings of each of the Grantors to accept joint and several liability for the obligations of each of them.

(b)    Each of the Grantors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a primary obligor, joint and several liability with the other Grantors with respect to the payment and performance of all of the Obligations, it being the intention of the parties hereto that (i) all the Obligations shall be the joint and several obligations of each of the Grantors without preferences or distinction among them and (ii) a separate action may be brought against each Grantor to enforce this Agreement whether or not any Borrower, any other Grantor or any other person or entity is joined as a party.

(c)    Notwithstanding any provision to the contrary contained herein, in any other of the Loan Documents, to the extent the obligations of a Grantor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal 

12

law relating to fraudulent conveyances or transfers) then the obligations of such Grantor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, Debtor Relief Laws).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

13

Each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

GRANTORS:                SCHNITZER STEEL INDUSTRIES, INC.,
an Oregon corporation
By:/s/Peter B. Saba                
Name:    Peter B. Saba
Title:    Senior Vice President

AUTO PARTS GROUP SOUTHWEST, LLC,
a Delaware limited liability company
By:/s/Steven Heiskell            
Name:    Steven Heiskell
Title:    President

CASCADE STEEL ROLLING MILLS, INC.,
an Oregon corporation
By:/s/Richard D. Peach                
Name:    Richard D. Peach
Title:    Treasurer

EDMAN CORP.,
an Oregon corporation
By:/s/Richard D. Peach                
Name:    Richard D. Peach
Title:    Treasurer

GENERAL METALS OF TACOMA, INC.,
a Washington corporation
By:/s/Richard D. Peach                
Name:    Richard D. Peach
Title:    Treasurer

JOINT VENTURE OPERATIONS, INC.,
a Delaware corporation
By:/s/W. Brandon Peele            
Name:    W. Brandon Peele
Title:    Treasurer

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENT

MANUFACTURING MANAGEMENT, INC.,
an Oregon corporation
By:/s/Richard D. Peach                
Name:    Richard D. Peach
Title:    Treasurer

METALS RECYCLING L.L.C.,
a Rhode Island limited liability company
By: Joint Venture Operations, Inc.
Its: Sole Member

By:/s/W. Brandon Peele                
Name:    W. Brandon Peele
Title:    Treasurer

NORPROP, INC.,
an Oregon corporation
By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK A PART, INC.,
a Washington corporation
By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK AND PULL AUTO DISMANTLING, INC.,
a California corporation
By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENT

PICK-N-PULL AUTO DISMANTLERS, A CALIFORNIA GENERAL PARTNERSHIP,
a California general partnership
By: Norprop, Inc.
Its: General Partner

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK-N-PULL AUTO DISMANTLERS, COLUMBUS, LLC,
a Delaware limited liability company
By: Norprop, Inc.
Its: Sole Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK-N-PULL AUTO DISMANTLERS, KANSAS CITY, LLC,
a Delaware limited liability company
By: Norprop, Inc.
Its: Sole Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK-N-PULL AUTO DISMANTLERS, LLC,
a California limited liability company
By: Norprop, Inc.
Its: Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENT

PICK-N-PULL AUTO DISMANTLERS, NEVADA, LLC,
a Nevada limited liability company
By: Norprop, Inc.
Its: Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK-N-PULL AUTO DISMANTLERS, ST. LOUIS, LLC,
a Delaware limited liability company
By: Norprop, Inc.
Its: Sole Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK-N-PULL AUTO DISMANTLERS, STOCKTON, LLC,
a California limited liability company
By: Norprop, Inc.
Its: Sole Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PICK-N-PULL AUTO DISMANTLERS, VIRGINIA BEACH, LLC,
a Delaware limited liability company
By: Norprop, Inc.
Its: Sole Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENT

PICK-N-PULL NORTHWEST, LLC,
an Oregon limited liability company
By: Norprop, Inc.
Its: Member

By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

PROLERIDE TRANSPORT SYSTEMS, INC.,
a Delaware corporation
By:/s/Michael R. Henderson            
Name:    Michael R. Henderson
Title:    President

PROLERIZED NEW ENGLAND COMPANY LLC,
a Delaware limited liability company
By: Proleride Transport Systems, Inc.
Its: Managing Member

By:/s/Michael R. Henderson            
Name:    Michael R. Henderson
Title:    President

ROW52, LLC,
a Delaware limited liability company
By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

SCHNITZER FRESNO, INC.,
an Oregon corporation
By:/s/Richard D. Peach                
Name:    Richard D. Peach
Title:    Treasurer

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENT

SCHNITZER SOUTHEAST, LLC,
a Georgia limited liability company
By: Schnitzer Steel Industries, Inc.
Its: Manager

By:/s/ Peter B. Saba                
Name:    Peter B. Saba
Title:    Senior Vice President

SCHNITZER STEEL HAWAII CORP.,
a Delaware corporation
By:/s/Richard D. Peach                
Name:    Richard D. Peach
Title:    Treasurer

SSI BIG SKY LLC,
an Oregon limited liability company
By: Schnitzer Steel Industries, Inc.
Its: Sole Member

By:/s/ Peter B. Saba                
Name:    Peter B. Saba
Title:    Senior Vice President

SSI BURBANK LLC,
a Washington limited liability company
By: Schnitzer Steel Industries, Inc.
Its: Sole Member

By:/s/ Peter B. Saba                
Name:    Peter B. Saba
Title:    Senior Vice President

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENT

SSI NEVADA LLC,
a Nevada limited liability company
By: Schnitzer Steel Industries, Inc.
Its: Sole Member

By:/s/Peter B. Saba                
Name:    Peter B. Saba
Title:    Senior Vice President

U-PULL-IT, INC.,
a California corporation
By:/s/Steven Heiskell                
Name:    Steven Heiskell
Title:    President

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENT

Accepted and agreed to as of the date first above written.

BANK OF AMERICA, N.A., 
as Administrative Agent

By:/s/Anthea Del Bianco            
Name:    Anthea Del Bianco
Title:    Vice President

SCHNITZER STEEL INDUSTRIES, INC.
SECURITY AGREEMENTExhibit

Exhibit 10.3

GENERAL SECURITY AGREEMENT
SCHNITZER STEEL CANADA LTD.

	
		
	TO:
	Bank of America, N.A. in its capacity as collateral agent (the "Agent") for and on behalf of and for the benefit of the Secured Parties (as defined below)

	DATE:
	April 6, 2016

RECITALS: 
		
	A.
	The Obligor (as defined below) and others are party to the Credit Agreement (as  defined below); and

		
	B.
	As security for the Obligations (as defined below), the Obligor has agreed to enter into this Agreement.

FOR VALUE RECEIVED and intending to be legally bound by this general security agreement (this "Agreement"), the undersigned (the "Obligor") agrees as follows:
		
	1.
	INTERPRETATION

		
	1.1
	Capitalized Terms  In this Agreement, except where the context otherwise requires, capitalized terms that are used and not otherwise defined have the meanings defined in the Credit Agreement (as defined below), and:  

		
	(a)
	“Account” has the meaning ascribed thereto in Section 1.1(c)(iii).

		
	(b)
	“Account Debtor” means a person obligated on an Account.

		
	(c)
	"Collateral" means all present and after-acquired interest and benefit of the Obligor in all property of the following kinds:

		
	(i)
	goods excluding crops and the unborn young of animals which (A) are leased by a person as lessor, (B) are held by a person for sale or lease or to be furnished under a contract of service, (C) are furnished by a person under a contract of service, or (D) consist of raw materials, work in process, or materials used or consumed in a business (collectively, “Inventory”);

		
	(ii)
	goods other than inventory, fixtures, crops and the unborn young of animals (collectively, “Equipment”);

		
	(iii)
	rights to payment of monetary obligations, whether or not earned by performance, (A) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (B) for services rendered or to be 

VAN01: 4294282: v2

Exhibit 10.3

rendered, (C) for a policy of insurance issued or to be issued, (D) for a secondary obligation incurred or to be incurred, (E) for energy provided or to be provided, (F) for the use or hire of a vessel under a charter or other contract, (G) arising out of the use of a credit or charge card or information contained on or for use with the card, or (H) as winnings in a lottery or other game of chance operated or sponsored by a State, Province, or other governmental body, or person licensed or authorized to operate the game by a State, Province or other governmental body including health-care-insurance receivables, but excluding (1) rights to payment evidenced by chattel paper or an instrument, (2) tort claims, (3) deposit accounts maintained with a financial institution, (4) investment property, (5) letter-of-credit rights or letters of credit, or (6) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card (collectively, “Accounts”); and
		
	(iv)
	Proceeds of any and all of the foregoing;

but excluding (A) any consumer goods, (B) the last day of the term of any lease of Equipment by the Obligor as lessee or any agreement of the Obligor to lease Equipment as lessee held by the Obligor now or in the future as more fully described in Section 2.2 of this Agreement and (C) any Restricted Property as more fully described in Section 2.3 of this Agreement.  Any reference to "the Collateral" in this Agreement shall be interpreted as referring to "the Collateral or any of it."  Notwithstanding anything to the contrary contained herein, the Liens granted under this Agreement shall not extend to, and the Collateral shall not include, Excluded Property.
		
	(d)
	"Credit Agreement" means the third amended and restated credit agreement dated April 6, 2016 among Schnitzer Steel Industries, Inc., as US borrower, the Obligor together with certain subsidiaries of the US borrower party thereto, as Canadian borrowers, the lenders from time to time party thereto, Bank of Montreal, as Canadian lender, and the Agent, as administrative agent, swing line lender and an L/C issuer, as amended, supplemented, restated and replaced from time to time.

		
	(e)
	“Equipment” has the meaning ascribed thereto in Section 1.1(c)(ii).

		
	(f)
	"Event of Default" means the occurrence of an Event of Default as defined in the Credit Agreement.

		
	(g)
	“Inventory” has the meaning ascribed thereto in Section 1.1(c)(i).

VAN01: 4294282: v2

Exhibit 10.3

		
	(h)
	"Lien" has the meaning ascribed thereto in the Credit Agreement. 

		
	(i)
	"Loan Documents" means the Credit Agreement and each other Loan Document (as defined in the Credit Agreement) executed by a Canadian Loan Party. 

		
	(j)
	"Obligations" has the meaning ascribed to Canadian Obligations in the Credit Agreement.

		
	(k)
	"PPSA" means the Personal Property Security Act (British Columbia).

		
	(l)
	“Proceeds” means:

		
	(i)
	identifiable or traceable personal property (A) derived directly or indirectly from any dealing with original collateral or the Proceeds of original collateral; and (B) in which the Obligor acquires an interest;

		
	(ii)
	a right to an insurance payment or any other payment as indemnity or compensation for loss of, or damage to, original collateral or Proceeds of original collateral; and

		
	(iii)
	a payment made in total or partial discharge or redemption of an Account.

		
	(m)
	"Secured Parties" means the holders of the Obligations.  Any reference to the "Secured Parties" shall be interpreted as referring to "the Secured Parties or any of them."  

		
	1.2
	No Contra Proferentum  This Agreement has been negotiated by the Obligor and the Agent with the benefit of legal representation, and any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply to the construction or interpretation of this Agreement.

		
	1.3
	Conflict With Credit Agreement  If there is any conflict or inconsistency between the terms of the Credit Agreement and the terms of this Agreement, the provisions of the Credit Agreement shall govern to the extent necessary to remove the conflict or inconsistency.

		
	1.4
	Other Interpretation Rules  In this Agreement:

		
	(a)
	Any rights or benefits stated to accrue to the benefit of the Agent shall accrue to the benefit of the Agent for and on behalf of and for the benefit of the Secured Parties and any decision, determination or other action required or permitted to be made or taken by the Agent shall be interpreted to mean that decision, determination or other action made or taken in accordance with the provisions of the Credit Agreement.

VAN01: 4294282: v2

Exhibit 10.3

		
	(b)
	The division into Sections and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement.

		
	(c)
	Unless otherwise specified or the context otherwise requires, (i) "including" or "includes" means "including (or includes) but is not limited to" and shall not be construed to limit any general statement preceding it to the specific or similar items or matters immediately following it, (ii) a reference to any legislation, statutory instrument or regulation or a section of it is a reference to the legislation, statutory instrument, regulation or section as amended, restated and re-enacted from time to time, and (iii) words in the singular include the plural and vice-versa and words in one gender include all genders.

		
	(d)
	Unless otherwise specified or the context otherwise requires, any reference in this Agreement to payment of the Obligations includes performance of the Obligations.

		
	2.
	GRANT OF SECURITY, ETC.

		
	2.1
	Grant of Security  As security for payment and performance of the Obligations, the Obligor mortgages, charges, assigns, transfers and pledges the Collateral to the Agent as a fixed and specific mortgage and charge, and grants the Agent a security interest in the Collateral.  Without limiting the preceding part of this Section, a security interest is taken in all of the Obligor's present and after acquired Collateral, excluding (A) any consumer goods, (B) the last day of the term of any lease of Equipment by the Obligor as lessee or any agreement by the Obligor to lease Equipment as lessee held by the Obligor now or in the future as more fully described in Section 2.2 of this Agreement and (C) any Restricted Property as more fully described in Section 2.3 of this Agreement.  Notwithstanding anything to the contrary contained herein, the Liens granted under this Agreement shall not extend to, and the Collateral shall not include, Excluded Property.

		
	2.2
	Last Day of Lease  As the Collateral does not include the last day of the term of any lease of Equipment by the Obligor as lessee or any agreement of the Obligor to lease Equipment as lessee held by the Obligor now or in the future, should the Liens created by this Agreement become enforceable the Obligor shall hold the last day in trust for the Secured Parties and shall assign it to any person acquiring that term or the part of the term that is mortgaged and charged in the course of any enforcement of the Liens or any realization of the Collateral.  Alternately, the Agent may assign the last day as attorney of the Obligor or may appoint any person acquiring the term or any other person or persons as a new trustee or trustees of the last day, free of any obligation regarding the last day.

		
	2.3
	Restricted Property  The Collateral shall not include any lease, agreement, contractual right, franchise, licence or approval, other than an Account (collectively, "Restricted Property") 

VAN01: 4294282: v2

Exhibit 10.3

held by the Obligor now or in the future if the Liens created by this Agreement would otherwise result in a breach, forfeiture or termination of the Restricted Property unless any necessary consent or waiver is obtained.  The Obligor shall, on request by the Agent, promptly use all commercially reasonable efforts to seek any necessary consent or waiver to have the Restricted Property form part of the Collateral and to any disposition of the Restricted Property upon enforcement of this Agreement.  If a consent or waiver is obtained, the applicable Restricted Property shall form part of the Collateral without any further action.  If any consent or waiver is not obtained, and if the Liens created by this Agreement become enforceable, the Obligor shall hold any Restricted Property for which a consent or waiver has not been obtained and its benefits in trust for the Agent, and shall perform its obligations and exercise and enforce its rights under that Restricted Property, including rights of disposition, at the direction of the Agent.  
		
	2.4
	Attachment  The Obligor agrees that the Secured Parties have given value and that the Liens created by this Agreement are intended to attach (a) with respect to Collateral that is now in existence, upon execution of this Agreement, and (b) with respect to Collateral that comes into existence in the future, upon the Obligor acquiring rights in the Collateral or the power to transfer rights in the Collateral to the Agent.  In each case, the parties do not intend to postpone the attachment of any Lien created by this Agreement.

		
	2.5
	Continuing Agreement  The Liens created by this Agreement are continuing, to secure a current or running account, and will extend to the ultimate balance of the Obligations, regardless of any intermediate payment or discharge of the Obligations in whole or in part.  Without limiting the foregoing, the Obligations may include advances and re-advances under revolving credit facilities, which permit borrowing, repayment of all or part of the amount borrowed and re-borrowing of amounts previously paid.

		
	2.6
	In Addition to Other Rights; No Marshalling  This Agreement is in addition to and is not in any way prejudiced by or merged with any other Lien now or subsequently held by the Secured Parties in respect of any Obligations.  The Secured Parties shall be under no obligation to marshal in favour of the Obligor any other Lien or any money or other property that the Secured Parties may be entitled to receive or may have a claim upon.

		
	2.7
	Liabilities Unconditional  The liabilities of the Obligor under this Agreement are absolute and unconditional, and will not be affected by any act, omission, matter or thing that, but for this Section, would reduce, release or prejudice any of its liabilities under this Agreement, or that might constitute a legal or equitable defence to or a discharge, limitation or reduction of the Obligor's liabilities under this Agreement, whether or not known to it or the Secured Parties or consented to by it or the Secured Parties.

VAN01: 4294282: v2

Exhibit 10.3

		
	2.8
	Merger of Obligor  If the Obligor amalgamates or merges with one or more other entities, the Obligations and the Liens created by this Agreement shall continue as to the Obligations and the undertaking, property and assets of the Obligor at the time of amalgamation or merger, and shall extend to the Obligations and the present and future undertaking, property and assets of the amalgamated or merged entity, and the term Obligor shall extend to the amalgamated or merged entity, all as if the amalgamated or merged entity had executed this Agreement as the Obligor.

		
	2.9
	Limitation Periods  To the extent that any limitation period applies to any claim for payment of the Obligations or remedy for enforcement of the Obligations, the Obligor agrees that:

		
	(a)
	any limitation period is expressly excluded and waived entirely if permitted by applicable law;

		
	(b)
	if a complete exclusion and waiver of any limitation period is not permitted by applicable law, any limitation period is extended to the maximum length permitted by applicable law;

		
	(c)
	any applicable limitation period shall not begin before an express demand for payment of the Obligations is made in writing by the Agent to the Obligor; 

		
	(d)
	any applicable limitation period shall begin afresh upon any payment or other acknowledgment of the Obligations by the Obligor; and

		
	(e)
	this Agreement is a "business agreement" as defined in the Limitations Act, 2002 (Ontario) if that Act applies.

		
	3.
	RIGHTS AND OBLIGATIONS OF THE OBLIGOR

		
	3.1
	Restrictions on Liens and Dispositions  The Obligor shall not create, assume, incur or permit the existence of any Lien on the Collateral except Liens permitted by Section 7.01 of the Credit Agreement, nor shall the Obligor sell, lease or otherwise dispose of the Collateral, or permit such a disposition to occur, in each case except as expressly permitted in the Credit Agreement.  

		
	3.2
	Other Assurances;  Power of Attorney  On request by the Agent, the Obligor shall (a) mark or take other steps to identify the Collateral as being subject to the Liens created by this Agreement, and (b) execute, acknowledge and deliver all financing statements, certificates, further assignments, documents, transfers, instruments, security documents, acknowledgments and assurances and do all further acts and things as the Agent may consider necessary or desirable to give effect to the intent of, or for the collection, disposition, realization or enforcement of the Collateral or the Liens created by this Agreement.  Notwithstanding anything in this Agreement to the contrary, (i) neither creation or perfection 

VAN01: 4294282: v2

Exhibit 10.3

of pledges of or security interests in, nor the obtaining of legal opinions or other deliverables with respect to, particular assets of the Obligor shall be required, if, and for so long as and to the extent that the Agent and the Obligor agree in writing that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such legal opinions or other deliverables in respect of such assets, shall be excessive in view of the benefits to be obtained by the holders of the Obligations therefrom, (ii) Liens required to be granted from time to time shall be subject to exceptions and limitations set forth in the Collateral Documents as in effect on the Third Restatement Date, (iii) no perfection actions shall be required with respect to motor vehicles other assets categorized as “serial numbered goods” under the PPSA Regulation (at present, manufactured homes, boats, outboard motors, trailers and aircraft) and other assets subject to certificates of title and (iv) in no event shall notices be required to be sent to contractual third parties prior to an enforcement event following the occurrence and continuation of an Event of Default.  The Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets by the Obligor where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Collateral Documents.  For the avoidance of doubt, no perfection actions shall be required other than the filing of PPSA financing statements.  The Obligor constitutes and appoints the Agent its true and lawful attorney, with full power of substitution, to do any of the foregoing or any other things that the Obligor has agreed to do in this Agreement, whenever and wherever the Agent may consider it to be necessary or desirable, and to use the Obligor's name in the exercise of the Agent's rights under this Agreement.  This power of attorney is coupled with an interest and is irrevocable by the Obligor.  
		
	3.3
	Composite Agreement  This Agreement is a composite mortgage and security agreement covering Collateral located in various provinces and territories of Canada and in other jurisdictions and, as to any Collateral located in a particular jurisdiction, this Agreement shall be a separate mortgage and security agreement enforceable against the Obligor without regard to the application of this Agreement to Collateral located in other jurisdictions.  All provisions of this Agreement shall apply separately to the Collateral located in each separate jurisdiction with the same effect as if a separate mortgage and security agreement with respect to that Collateral had been executed and delivered by the Obligor.  If requested by the Agent, subject to the perfection exceptions set forth in the Loan Documents, the Obligor shall execute, deliver and register, at its expense, a separate mortgage and security agreement covering the Collateral located in any particular jurisdiction or jurisdictions.  The separate mortgage and security agreement shall be in the form of this Agreement except for modifications required by the fact that it relates only to the Collateral located in the particular 

VAN01: 4294282: v2

Exhibit 10.3

jurisdiction or jurisdictions and other modifications that the Agent considers necessary or desirable in the circumstances.
		
	3.4
	Restriction on Change of Name  The Obligor shall not change its name without providing the Agent with advance written notice and promptly taking other steps, if any, as the Agent requests to ensure that the position of the Secured Parties is not adversely affected by the change in name.  

		
	3.5
	Secured Parties Not Liable for Obligor's Agreements  Nothing in this Agreement shall make any Secured Party liable to observe or perform any term of any agreement to which the Obligor is a party or by which it or the Collateral is bound, or make any Secured Party a mortgagee in possession.  The Obligor shall indemnify the Secured Parties and save them harmless from any claim arising from any such agreement.

		
	3.6
	Release of Liens  If any Collateral shall be sold , transferred or otherwise disposed of by the Obligor in a transaction permitted by the Credit Agreement, without impairing the application of Section 28(1)(a) of the PPSA, then the Agent, at the request and sole expense of the Obligor, shall promptly execute and deliver to the Obligor all releases and other documents, and take such other action, reasonably necessary for the release of the Liens created by this Agreement or by any other Collateral Document on such Collateral.  If the Obligor has indefeasibly paid the Obligations in full in cash and otherwise performed all of the terms of the Loan Documents, and if all obligations of the Secured Parties to extend credit under any Loan Document have been cancelled, then the Agent shall, at the request and expense of the Obligor, release the Liens created by this Agreement and execute and deliver whatever documents are reasonably required to do so.

		
	3.7
	Advances.  On failure of the Obligor to perform any of the covenants and agreements contained herein or in any other Loan Document, the Agent may, at its sole option and in its sole discretion, after ten (10) business days prior written notice to the Obligor and opportunity to cure, perform the same and in so doing may expend such sums as the Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which the Agent may make for the protection of the security hereof or which may be compelled to make by operation of Law.  All such sums and amounts so expended shall be repayable by the Obligor promptly upon timely notice thereof and demand therefor, shall constitute additional Obligations and shall bear interest from the date said amounts are expended at the Default Rate.  No such performance of any covenant or agreement by the Agent on behalf of the Obligor, and no such advance or expenditure therefor, shall relieve the Obligor of any Default or Event of Default.  The Agent may make any payment hereby authorized in accordance with any bill, statement or estimate procured 

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Exhibit 10.3

from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by the Obligor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.
		
	4.
	RIGHTS AND OBLIGATIONS ON DEFAULT

		
	4.1
	Application of Article  The provisions of this Article 4 apply only on the occurrence of an Event of Default that is continuing.

		
	4.2
	Remedies  Upon the Obligations becoming due and payable, the Agent may enforce payment of the Obligations and the Agent shall have the rights and remedies of a secured party under the PPSA and other applicable law together with those rights and remedies provided by the Credit Agreement, this Agreement or otherwise provided by applicable law.

		
	4.3
	Rights of Agent  The Agent may (a) require the Obligor to assemble the Collateral and deliver or make the Collateral available to the Agent at a reasonably convenient place designated by the Agent, (b) enter on any premises of the Obligor or any other place where Collateral may be located, (c) take possession of the Collateral by any method permitted by law, (d) render any equipment unusable without removing it from the Obligor's premises, (e) use the Collateral in the manner and to the extent that the Agent may consider appropriate and (f) hold, insure, repair, process, maintain, protect and preserve the Collateral and prepare it for disposition.  The Agent is not, however, required to insure the Collateral, and the risk of any loss of or damage to the Collateral shall be borne by the Obligor.

		
	4.4
	Appointment of Monitor  The Agent may from time to time appoint any person (the "Monitor") to investigate any or all of the Collateral, the Obligor and the Obligor's business and affairs and report to the Secured Parties.  The Obligor shall co-operate fully with the Monitor and give the Monitor full access to its facilities, property, records, creditors, customers, contractors, officers, directors, employees, auditors, legal counsel and agents.  The Monitor shall not participate in the management of the Obligor's business or affairs and shall have no responsibility, nor shall it incur any liability, in respect of the Collateral, the Obligor or the Obligor's business or affairs.  The Monitor shall act solely on behalf of the Secured Parties and shall have no contractual relationship with the Obligor as a consultant or otherwise, nor shall the Obligor be entitled to receive any report by the Monitor.  The appointment of the Monitor shall not be regarded as an act of enforcement of the Liens created by this Agreement.  All costs incurred in connection with the appointment of the Monitor and the performance by the Monitor of its activities as such, including legal fees on a full indemnity (sometimes called solicitor and own client) basis shall be payable by the Obligor to the Agent immediately on demand, shall bear interest from the date they are 

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Exhibit 10.3

incurred until paid at the highest rate of interest applicable to the Obligations and shall be included in the Obligations.
		
	4.5
	Proceeds  The Agent may take charge of all proceeds of the Collateral and may hold them as additional security for the Obligations.  The Agent may give notice to any or all account debtors of the Obligor and to any or all persons liable to the Obligor under an instrument to direct all payments or other proceeds relating to the Collateral to the Agent and any payments or other proceeds of the Collateral received by the Obligor from account debtors or from any persons liable to the Obligor under an instrument, after notice is given by the Agent, shall be held by the Obligor in trust for the Agent and immediately paid over to the Agent.  The Agent shall not, however, be required to collect any proceeds of the Collateral.  The Agent may also enforce any rights of the Obligor in respect of the Collateral by any manner permitted by law.

		
	4.6
	Notice of Disposition  If required to do so by applicable law, the Agent shall give the Obligor written notice of any intended disposition of the Collateral in accordance with the Credit Agreement or by any other method required or permitted by applicable law.  The Obligor waives giving of notice to the maximum extent permitted by applicable law.

		
	4.7
	Statutory Waivers  To the maximum extent permitted by law, the Obligor waives all of the rights, benefits and protections given by any present or future statute that imposes limits on the rights, remedies or powers of a Secured Party or on the methods of realization of security, including any seize or sue or anti-deficiency statute or any similar provisions of any other statute.  In particular, the Obligor waives all rights, benefits and protections given by sections 47 and 50 of the Law of Property Act (Alberta) insofar as they extend to or relate to any Collateral. 

		
	4.8
	Disposition and Other Rights of Agent  The Agent may (a) carry on all or any part of the business of the Obligor, (b) make payments on account of, to discharge, or to obtain an assignment of any Lien on the Collateral, whether or not ranking in priority to the Liens created by this Agreement, (c) borrow money required for the seizure, retaking, repossession, holding, insuring, repairing, processing, maintaining, protecting, preserving, preparing for disposition or disposition of the Collateral or for any other enforcement of this Agreement or for carrying on the business of the Obligor on the security of the Collateral in priority to the Liens created by this Agreement, (d) file proofs of claim and other documents to establish the claims of the Secured Parties in any proceeding relating to the Obligor, and (e) sell, lease or otherwise dispose of all or any part of the Collateral at public auction, by public tender or by private sale, lease or other disposition, either for cash or on credit, at such time and on such terms and conditions as the Agent may determine.  If any disposition involves deferred payment, the Secured Parties will not be accountable for and the Obligor will not be entitled to be credited with the proceeds of disposition until payment is actually received 

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Exhibit 10.3

in cash.  On any disposition, the Agent or any other Secured Party shall have the right to acquire all or any part of the Collateral that is offered for disposition and the rights of the Obligor in that Collateral shall be extinguished.  The Agent may also accept the Collateral in satisfaction of the Obligations or may from time to time designate any part of the Obligations to be satisfied by the acceptance of particular Collateral that the Agent reasonably determines to have a net realizable value equal to the amount of the designated part of the Obligations, in which case only the designated part of the Obligations shall be satisfied by the acceptance of the particular Collateral. 
		
	4.9
	Commercially Reasonable Actions and Omissions  The Obligor agrees that it is commercially reasonable for the Secured Parties (a) not to incur expenses that they reasonably consider significant to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (b) not to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, not to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) not to exercise collection remedies against account debtors or other persons obligated on Collateral or to remove Liens on or adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Obligor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers or other persons, including employees of the Obligor, brokers, investment bankers, consultants and other professionals to assist in the collection or disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to vary or rescind any contract for the disposition of any Collateral, or (l) to purchase insurance or credit enhancements or take other steps to insure the Secured Parties against risks of loss, collection or disposition of Collateral or to provide the Secured Parties a guaranteed return from the collection or disposition of Collateral.  The Obligor acknowledges that the purpose of this Section is to provide selected examples of actions and omissions that would be commercially reasonable in the Secured Parties' exercise of remedies against the Collateral and that other actions and omissions shall not be considered commercially unreasonable solely on account of not being mentioned in this Section, nor shall the Secured Parties be liable or accountable for any discount attributable to the specified actions and omissions.  Nothing in this Section shall 

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Exhibit 10.3

be construed to grant any rights to the Obligor or to impose any duties on the Secured Parties that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.  In exercising its rights and obligations under this Agreement, neither the Agent nor any other Secured Party shall be responsible or liable to the Obligor or any other person for any loss or damage from the realization or disposal of any Collateral or the enforcement of this Agreement, or any failure to do so, or for any act or omission on their respective parts or on the part of any of their directors, officers, employees, agents or advisors in that connection, except that a Secured Party may be responsible or liable for loss or damage arising from its wilful misconduct or gross negligence.
		
	4.10
	Costs of Realization  All costs incurred in connection with realizing the security constituted by this Agreement or exercising any of the Agent's rights under this Agreement, including costs incurred in connection with repossessing, holding, insuring, repairing, processing, preparing for disposition, and disposing of any Collateral and legal fees on a full indemnity (sometimes called solicitor and own client) basis (in this Section, "realization costs") shall be payable by the Obligor to the Agent immediately on demand.  Realization costs shall bear interest from the date they are incurred until paid at the highest rate of interest applicable to the Obligations.  Realization costs and interest shall be included in the Obligations under this Agreement.

		
	4.11
	Other Security;  Application of Money  The Secured Parties may (a) refrain from enforcing any other security or rights held by or on behalf of the Secured Parties in respect of the Obligations, or enforce any other security or rights in any manner and order as they see fit, and (b) apply any money received from or in respect of the Collateral in any manner and order as they see fit and change any application of money received in whole or in part from time to time, or refrain from applying any money and hold it in a suspense account.

		
	4.12
	Third Parties  No person dealing with the Agent or other Secured Parties is required to determine (a) whether the Liens created by this Agreement or the powers purporting to be exercised have become enforceable, (b) whether any Obligations remain owing, (c) the propriety of any aspect of the disposition of Collateral or (d) how any payment to the Agent or other Secured Parties has been or will be applied.  Any person who acquires Collateral from the Agent in good faith shall acquire it free from any interest of the Obligor.

		
	4.13
	Appointment of Receiver  The Agent may take proceedings in any court of competent jurisdiction for the appointment of a receiver (which term includes a receiver and manager) of the Collateral or may by appointment in writing appoint any person to be a receiver of the Collateral.  The Agent may remove any receiver appointed by the Agent and appoint another in its place, and may determine the remuneration of any receiver, which may be paid from the proceeds of the Collateral in priority to other Obligations.  Any receiver appointed by the Agent shall, to the extent permitted by applicable law, have all of the rights, 

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Exhibit 10.3

benefits and powers of the Agent and the Secured Parties under this Agreement, the PPSA or otherwise.  Any receiver shall be deemed the agent of the Obligor and the Secured Parties shall not be in any way responsible for any misconduct or negligence of any receiver.
		
	4.14
	Rights Cumulative  No failure on the part of the Secured Parties to exercise, nor any delay in exercising, any right or remedy under any Loan Document or this Agreement shall operate as a waiver or impose any liability on the Secured Parties, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy.  The rights and remedies provided in this Agreement are cumulative and do not exclude any rights and remedies provided by applicable law.  If the Secured Parties have enforced any right or remedy under this Agreement and the enforcement proceeding has been discontinued, abandoned or determined adversely to the Secured Parties for any reason, then the Obligor and the Secured Parties shall, without any further action, be restored to their previous positions to the maximum extent permitted by law and subject to any determination in the enforcement proceeding or express agreement between the Obligor and the Secured Parties, and thereafter all rights and remedies of the Secured Parties shall continue as if no enforcement proceeding had been taken.

		
	4.15
	Obligor Liable for Deficiency  If the proceeds arising from the disposition of the Collateral fail to satisfy the Obligations, the Obligor shall pay any deficiency to the Agent on demand.  Neither the taking of any judicial or extra-judicial proceeding nor the exercise of any power of seizure or disposition or other remedy shall extinguish the liability of the Obligor to pay and perform the Obligations, nor shall the acceptance of any payment or alternate security create any novation.  No covenant, representation or warranty of the Obligor in this Agreement shall merge in any judgment. 

		
	4.16
	Release by Obligor  The Obligor hereby releases and discharges the Secured Parties and any receiver from all claims of any kind, whether sounding in damages or not, that may arise or be caused to the Obligor or any person claiming through or under the Obligor as a result of any act or omission of the Secured Parties or any receiver except that a Secured Party or receiver may be responsible or liable for loss or damage arising from its wilful misconduct or gross negligence.

		
	5.
	NOTICES

		
	5.1
	Notices.  All notices to be delivered hereunder shall be delivered pursuant to the terms of the Credit Agreement.

		
	6.
	ENTIRE AGREEMENT; SEVERABILITY

		
	6.1
	Entire Agreement  No party shall be bound by any representation or promise made by any person relating to this Agreement that is not embodied in it.  Any waiver of, or consent to 

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Exhibit 10.3

departure from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the Agent, and only in the specific instance and for the specific purpose for which it has been given.
		
	6.2
	Severability  If, in any jurisdiction, any provision of this Agreement or its application to any circumstance is restricted, prohibited or unenforceable, that provision shall, as to that jurisdiction, be ineffective only to the extent of that restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement, without affecting the validity or enforceability of that provision in any other jurisdiction and, if applicable, without affecting its application to other circumstances.

		
	7.
	DELIVERY OF AGREEMENT

		
	7.1
	Counterparts  This Agreement may be executed in any number of counterparts and all counterparts taken together shall be deemed to constitute one agreement.  

		
	7.2
	Delivery  To evidence the fact that it has executed this Agreement, the Obligor may send a signed copy of this Agreement or its signature to this Agreement by facsimile transmission or e-mail and the signature sent in that way shall be deemed to be its original signature for all purposes.

		
	7.3
	Receipt and Waiver  The Obligor acknowledges receipt of a copy of this Agreement.  The Obligor waives any notice of acceptance of this Agreement by the Secured Parties.  The Obligor also waives the right to receive a copy of any financing statement or financing change statement that may be registered in connection with this Agreement or any verification statement issued with respect to a registration, if waiver is not otherwise prohibited by law.  The Obligor agrees that the Agent may from time to time provide information regarding this Agreement, the Collateral and the Obligations to persons that the Agent believes in good faith are entitled to the information under applicable law.

		
	8.
	GOVERNING LAW

		
	8.1
	Governing Law  This Agreement and any dispute arising from or in relation to this Agreement shall be governed by, and interpreted and enforced in accordance with, the law of the province of British Columbia and the laws of Canada applicable in that province, excluding the conflict of law rules of that province.

		
	8.2
	Obligor's Exclusive Dispute Resolution Jurisdiction  The Obligor agrees that the courts of the province of British Columbia have non-exclusive jurisdiction over any dispute arising from or in relation to this Agreement and the Obligor irrevocably and unconditionally attorns to the non-exclusive jurisdiction of that province.  The Obligor agrees that the courts of that 

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Exhibit 10.3

province are the most appropriate and convenient forum to settle disputes and agrees not to argue to the contrary.
		
	8.3
	Secured Parties Entitled to Concurrent Jurisdiction  Despite Section 8.2, the Secured Parties are permitted to take proceedings in relation to any dispute arising from or in relation to this Agreement in any court of another province or another state with jurisdiction and to the extent allowed by law may take concurrent proceedings in any number of jurisdictions.

		
	9.
	SUCCESSORS AND ASSIGNS

		
	9.1
	Successors and Assigns  The Obligor may not assign or transfer all or any part of its liabilities under this Agreement.  All rights of the Secured Parties under this Agreement shall be assignable in accordance with the Credit Agreement and the Loss Sharing Agreement dated as of the date hereof among the Lenders, the L/C Issuers, the Swing Line Lender and the Administrative Agent, as may be amended, replaced, modified or restated from time to time, and the Obligor shall not assert against any assignee any claim or defence that the Obligor now has or may in the future have against any Secured Party.  This Agreement shall enure to the benefit of the Secured Parties and their respective successors and assigns and be binding on the Obligor and its successors and any permitted assigns.  

IN WITNESS OF WHICH, the Obligor has duly executed this Agreement.
	
			
	SCHNITZER STEEL CANADA LTD.

	 
	 

	 
	 

	By:
	/s/Richard D. Peach
	 

	Name:
	Richard D. Peach

	Title:
	President

	 
	 

[signature page for General Security Agreement by Schnitzer Steel Canada Ltd.]

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