Document:

exv4w1

 

Exhibit 4.1

AMENDED AND RESTATED

CREDIT AGREEMENT

Dated as of August 15, 2002

 

among

 

ZEMEX CORPORATION

and

ZEMEX U.S. CORPORATION,

 

as Borrowers

 

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

 

BANK OF AMERICA, N.A., acting through its Canadian Branch

as Canadian Payment Agent,

 

and

 

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I

DEFINITIONS
	1.01	 	 Certain Defined Terms	 	  1
	1.02	 	Other Interpretive Provisions	 	22
	1.03	 	Accounting Terms	 	23
	1.04	 	Amendment and Restatement	 	23
	ARTICLE II
THE CREDIT
	2.01	 	Amounts and Terms of Commitments	 	24
	2.02	 	Loan Accounts	 	25
	2.03	 	Procedure for Borrowing by Company	 	25
	2.04	 	Procedure for Borrowing by US Borrower	 	26
	2.05	 	Conversion and Continuation Elections	 	27
	2.06	 	Optional Prepayments	 	28
	2.07	 	Repayment and Termination Date	 	29
	2.08	 	Extension Date	 	29
	2.09	 	Interest	 	29
	2.10	 	Fees	 	30
	2.11	 	Computation of Fees and Interest	 	31
	2.12	 	Payments by a Borrower	 	31
	2.13	 	Payments by the Banks to the Administrative Agents	 	32
	2.14	 	Sharing of Payments, Etc.	 	33
	2.15	 	Security and Guarantee	 	33
	2.16	 	Mandatory Prepayment	 	33
	2.17	 	Risk Participations in Canadian Loans	 	34
	ARTICLE III
THE LETTERS OF CREDIT
	3.01	 	Letters of Credit	 	35
	3.02	 	Issuance and Amendment of Letters of Credit	 	37
	3.03	 	Funding of Participations, Drawings and Reimbursements	 	38
	3.04	 	Repayment of Participations	 	39
	3.05	 	Obligations Absolute	 	40
	3.06	 	Cash Collateral Pledge	 	41
	3.07	 	Role of Issuing Bank	 	41
	3.08	 	Applicability of ISP98 and UCP	 	42
	3.09	 	Letter of Credit Fees	 	42
	3.10	 	Issuance Fee and Documentary and Processing Charges Payable to Issuing Bank	 	43
	3.11	 	Conflict with L/C Application or L/C Amendment Application	 	43

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	ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY

	4.01	 	Taxes	 	43
	4.02	 	Illegality	 	44
	4.03	 	Increased Costs and Reduction of Return	 	45
	4.04	 	Funding Losses	 	46
	4.05	 	Inability to Determine Rates	 	46
	4.06	 	Certificates of Banks	 	47
	4.07	 	Survival	 	47
	ARTICLE V
CONDITIONS PRECEDENT
	5.01	 	Conditions of Initial Loans	 	47
	5.02	 	Conditions to All Borrowings	 	50
	ARTICLE VI
REPRESENTATIONS AND WARRANTIES
	6.01	 	Corporate Existence and Power	 	51
	6.02	 	Corporate Authorization; No Contravention	 	51
	6.03	 	Governmental Authorization	 	51
	6.04	 	Binding Effect	 	52
	6.05	 	Litigation	 	52
	6.06	 	No Default	 	52
	6.07	 	ERISA Compliance	 	52
	6.08	 	Use of Proceeds; Margin Regulations	 	53
	6.09	 	Title to Properties	 	53
	6.10	 	Taxes	 	53
	6.11	 	Financial Condition	 	54
	6.12	 	Environmental Matters	 	54
	6.13	 	Collateral Documents	 	55
	6.14	 	Regulated Entities	 	55
	6.15	 	No Burdensome Restrictions	 	55
	6.16	 	Copyrights, Patents, Trademarks and Licenses, etc.	 	55
	6.17	 	Subsidiaries	 	56
	6.18	 	Insurance	 	56
	6.19	 	Solvency	 	56
	6.20	 	Full Disclosure	 	56
	ARTICLE VII
AFFIRMATIVE COVENANTS
	7.01	 	Financial Statements	 	56
	7.02	 	Certificates; Other Information	 	57
	7.03	 	Notices	 	58

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	7.04	 	Preservation of Corporate Existence, Etc.	 	59
	7.05	 	Maintenance of Property	 	60
	7.06	 	Insurance	 	60
	7.07	 	Payment of Obligations	 	60
	7.08	 	Compliance with Laws	 	61
	7.09	 	Compliance with ERISA	 	61
	7.10	 	Inspection of Property and Books and Records	 	61
	7.11	 	Environmental Laws	 	62
	7.12	 	Use of Proceeds	 	62
	7.12	 	New Subsidiaries, Acquisitions	 	62
	7.13	 	Further Assurances	 	62
	ARTICLE VIII
NEGATIVE COVENANTS
	8.01	 	Limitation on Liens	 	63
	8.02	 	Disposition of Assets	 	64
	8.03	 	Consolidations and Mergers	 	65
	8.04	 	Permitted Loans	 	65
	8.05	 	Limitation on Indebtedness	 	65
	8.06	 	Transactions with Affiliates	 	66
	8.07	 	Prohibited Use of Proceeds	 	66
	8.08	 	Operating Lease Obligations	 	66
	8.09	 	Sale Leaseback Transactions	 	66
	8.10	 	Restricted Payments	 	66
	8.11	 	Change in Business	 	67
	8.12	 	Accounting Changes	 	67
	8.13	 	Asset Acquisition	 	67
	8.14	 	Capital Expenditures	 	67
	8.15	 	Permitted Investments	 	67
	8.16	 	Prohibited Investments	 	67
	8.17	 	Minimum Net Worth	 	67
	8.18	 	Leverage Ratios	 	67
	8.19	 	Interest Coverage Ratio	 	68
	8.20	 	Debt — Capitalization	 	68
	8.21	 	Material Documents	 	68
	8.22	 	Excluded Subsidiaries	 	68
	8.23	 	Maximum Acquisitions	 	68
	ARTICLE IX
EVENTS OF DEFAULT
	9.01	 	Event of Default	 	68
	9.02	 	Remedies	 	71
	9.03	 	Rights Not Exclusive	 	71

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	ARTICLE IX
THE AGENTS
	10.01	 	Appointment and Authorization; Agents	 	71
	10.02	 	Delegation of Duties	 	72
	10.03	 	Liability of Agents	 	72
	10.04	 	Reliance by Agent	 	73
	10.05	 	Notice of Default	 	73
	10.06	 	Credit Decision	 	73
	10.07	 	Indemnification of Agents	 	74
	10.08	 	Agents in Individual Capacity	 	74
	10.09	 	Successor Agent	 	75
	10.10	 	Withholding Tax	 	75
	10.11	 	Agents May File Proofs of Claim	 	76
	10.12	 	Collateral Matters	 	77
	ARTICLE XI
MISCELLANEOUS
	11.01	 	Amendments and Waivers	 	77
	11.02	 	Notices	 	78
	11.03	 	No Waiver; Cumulative Remedies	 	80
	11.04	 	Costs and Expenses	 	80
	11.05	 	Borrower Indemnification	 	81
	11.06	 	Marshaling; Payments Set Aside	 	82
	11.07	 	Successors and Assigns	 	82
	11.08	 	Assignments, Participations, etc.	 	83
	11.09	 	Confidentiality	 	85
	11.10	 	Set-off	 	86
	11.11	 	Notification of Addresses, Lending Offices, Etc.	 	86
	11.12	 	Counterparts	 	86
	11.13	 	Survival of Representations and Warranties	 	86
	11.14	 	Severability	 	86
	11.15	 	Tax Forms	 	87
	11.16	 	No Third Parties Benefited	 	89
	11.17	 	Governing Law and Jurisdiction	 	89
	11.18	 	Waiver of Jury Trial	 	89
	11.19	 	Entire Agreement	 	90

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	SCHEDULES

	 
	Schedule 1	 	Guarantors
	Schedule 2	 	Inter-Company Notes
	Schedule 2.01	 	Commitments
	Schedule 2.18	 	Canadian Risk Participants
	Schedule 6.05	 	Litigation
	Schedule 6.07	 	ERISA
	Schedule 6.11	 	Permitted Liabilities
	Schedule 6.12	 	Environmental Matters
	Schedule 6.17	 	Subsidiaries and Minority Interests
	Schedule 8.01	 	Permitted Liens
	Schedule 8.05	 	Permitted Indebtedness and Contingent Obligations
	Schedule 11.02	 	Lending Offices; Addresses for Notices
	 
	EXHIBITS

	 
	Exhibit A	 	Form of Notice of Borrowing/Conversion or Continuation
	Exhibit B	 	Form of Compliance Certificate
	Exhibit C	 	Form of Assignment and Assumption

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AMENDED AND RESTATED

CREDIT AGREEMENT

     This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of August
15, 2002, among ZEMEX CORPORATION, a corporation established under the federal
laws of Canada (the “Company”) and ZEMEX U.S. CORPORATION, a corporation
established under the laws of Delaware (the “US Borrower”) (the Company and US
Borrower called the “Borrowers”), the several financial institutions from time
to time party to this Agreement (collectively, the “Banks”; individually, a
“Bank”), Bank of America, N.A. acting through its Canadian Branch, as Canadian
payment agent for the Canadian Banks and Bank of America, N.A., as
administrative agent for the Banks.

     WHEREAS the parties entered into a credit agreement dated as of May 21,
1999 (the “Original Credit Agreement”) whereby the Banks provided certain
credit facilities to the Company and the US Borrower for working capital, short
term liquidity and general corporate purposes, including permitted
Acquisitions;

     AND WHEREAS the parties entered into a first amendment to the Credit
Agreement dated as of September 24, 1999, a second amendment agreement dated as
of March 7, 2000, a third amendment agreement dated as of May 18, 2001 and a
fourth amendment agreement dated as of December 10, 2001;

     AND WHEREAS the parties have agreed to make additional amendments to the
Original Credit Agreement and to amend and restate the Original Credit
Agreement accordingly;

     NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.01   Certain Defined Terms. The following terms have the following meanings:

     “Acquisition” means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Company or the Subsidiary is the
surviving entity.

     “Acquisition of an Excluded Subsidiary” means any transaction or series of
related transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of in excess of 50% of the capital stock, partnership
interests, membership interests or equity of any Person, or otherwise causing any Person
to become an Excluded Subsidiary, or (b) a merger or

 

 

consolidation or any other combination with another Person
(other than a Person that is a Subsidiary) provided that the Excluded
Subsidiary is the surviving entity.

     “Administrative Agent” means Bank of America, N.A. in its capacity as
administrative agent for the Banks hereunder, as well as any successor agent
arising under Section 10.09.

     “Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person for the
purposes of this definition if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, membership interests, by contract, or otherwise. In the case of a
Borrower, “Affiliate” shall be deemed to include any Excluded Subsidiaries.

     “Agent”
or “Agents” means either or both the Administrative Agent and/or
the Canadian Payment Agent, as the context requires.

     “Agent Related Persons” means Bank of America or the Canadian Payment
Agent, as the case may be, together with their respective Affiliates and the
officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.

     “Agent’s Payment Office” means (a) in respect of payments made by the
Company, the address for payments set forth on Schedule 11.02 — Part I or such
other address as the Canadian Payment Agent may from time to time specify, and
(b) in respect of payments made by the US Borrower, the address for payments set
forth on Schedule 11.02 — Part II or such other address as the Administrative
Agent may from time to time specify.

     “Agreement” means this Credit Agreement and all Schedules attached hereto.

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     “Applicable Margin” for Loans and L/C Fee calculation means

	 	 	 	 	 	 	 	 	 
	Leverage	 	 	 	 	 	Prime and Base
	Ratio	 	LIBO Rate Loans and L/C Fees	 	Rate Loans
	
	 	
	 	

	Less than or equal
to 2.25:1.00
	 	 	1.250%	 	 	 	250%	 
	Greater than 2.25:1.00
but less than or equal to
2.50:1.00
	 	 	1.375%	 	 	 	375%	 
	Greater than 2.50:1.00
but less than or equal to
3.00:1.00
	 	 	1.500%	 	 	 	500%	 
	Greater than 3.00:1.00
but less than or equal to
3.25:1.00
	 	 	1.625%	 	 	 	625%	 
	Greater than 3.25:1.00
	 	 	1.750%	 	 	 	750%	 

     “Approved Fund” means any Fund that is administered or managed by (a) a
Bank, (b) an Affiliate of a Bank or (c) an entity or an Affiliate of an entity
that administers or manages a Bank.

     “Assignment and Assumption” means each and any assignment and assumption
agreement executed and delivered in the form of Exhibit C hereof.

     “Assignment and Postponement Agreement” means each assignment and
postponement agreement delivered by each of the holders of an Inter-Company
Note (as listed on Schedule 2 hereto) in favour of the Administrative Agent for
and on behalf of the Banks.

     “Attorney Costs” means and includes all reasonable fees and disbursements
of any law firm or other external counsel.

     “Attributable Indebtedness” means, on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear
on a balance sheet of such Person prepared as of such date in accordance with
GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a capital lease.

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     “Bank of America” means Bank of America, N.A. and its successors.

     “Bank” means the institutions specified in the introductory clause hereto.

     “Base Rate” means for any day a fluctuating rate per annum equal to the
higher of: (i) 0.50% above the latest Federal Funds Rate; and (ii) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its “prime rate.” (The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in such rate announced by Bank of America
shall take effect at the opening of business on the day specified in the public
announcement of such change.

     “Base Rate Loan” means a Loan or an L/C Loan that bears interest at the
Base Rate plus the Applicable Margin.

     “Borrower” means either the Company or the US Borrower, as the case may
be.

     “Borrowing” means and includes the making of all Loans hereunder.

     “Borrowing Date” means any date on which a Borrowing occurs under Section
2.03 or 2.05.

     “Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in
fact closed in, New York and Toronto and, if such day relates to any LIBO Rate
Loan, means any such day on which dealings in Dollar deposits are conducted by
and between banks in the London interbank eurodollar market.

     “Cdn.$” or “Canadian Dollar” each mean lawful money of Canada.

     “Canadian Banks” means those Schedule I or Schedule II Banks to which the
Bank Act (Canada) applies and those Banks that are mentioned in Schedule III of
the Bank Act (Canada) that are not subject to the restrictions and requirements
referred to in subsection 524(2) of the Bank Act (Canada) and that are resident
in Canada for the purpose of Part XIII of the Income Tax Act (Canada) in
respect of any amount paid to it under this Agreement, and which agree to make
Loans to the Company.

     “Canadian Loan” means a Loan in Canadian Dollars hereunder to the Company
by the Canadian Banks, including those Loans referenced in Section 2.01(a).

     “Canadian Loan Percentage Share” means the percentage specified in respect
of Canadian Loans on Schedule 2.17.

     “Canadian Payment Agent” means Bank of America, N.A. acting through its
Canadian branch and its successors as Canadian payment agent pursuant to
Section 10.09.

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     “Canadian Reference Bank” means the Canadian Payment Agent or its
successor which is a Canadian Bank.

     “Canadian Risk Participant” means any Bank listed on Schedule 2.17 under
the heading “Canadian Risk Participants”.

     “Canadian Risk Participation Funding Notice” means a written notice from
the Majority Banks to the Canadian Payment Agent stating that an Event of
Default has occurred and is continuing and directing the Canadian Payment Agent
to notify all Canadian Risk Participants to fund their participations in the
Canadian Loans as provided in Section 2.17.

     “Capital Adequacy Regulation” means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.

     “Capital Expenditures” means, for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries,
the acquisition or leasing of fixed or capital assets or additions to equipment
(including replacements, capitalized repairs and improvements during such
period) which are required to be capitalized under GAAP on a consolidated
balance sheet of such a Person and its Subsidiaries.

     “Capitalization” means the resultant amount of the Net Worth of the
Company (excluding any calculation or allowance for Excluded Subsidiaries) plus
the Company’s Indebtedness on a consolidated basis (excluding any Indebtedness
of Excluded Subsidiaries).

     “Cash Collateralize” shall have the meaning set forth in Section 3.06
hereof.

     “Change of Control” means

	 	(a)	 	with respect to the Company, a successful takeover bid made for the
Company, as that term is used in the Ontario Securities Act,
resulting in ownership by any one Person of over 50% of the
Company’s issued and outstanding shares,
	 
	 	(b)	 	with respect to the US Borrower, the Company ceasing to
beneficially own all of the capital stock of the US Borrower; and,
	 
	 	(c)	 	with respect to a Guarantor, the US Borrower ceasing, directly or
indirectly to beneficially own all of the capital stock of such
Guarantor.

     “Closing Date” means August 15, 2002 or such other date as the parties
hereto may agree.

     “Code” means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.

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     “Collateral” means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Company, the US Borrower, or any
Guarantor and their respective Subsidiaries in or upon which a Lien now or
hereafter exists in favour of the Banks, or an Agent on behalf of the Banks,
whether under this Agreement or under any of the Collateral Documents executed
by any such Person and delivered to the Administrative Agent or the Banks.

     “Collateral Documents” means, collectively, (a) the Security Agreements, the
Pledge Agreements, the Guarantees, the Assignment and Postponement Agreements,
environmental indemnities and all other security agreements, mortgages, deeds
of trust, patent and trademark assignments, lease assignments, guarantees and
other similar agreements between a Borrower or any Subsidiary or any Guarantor
and the Banks or the Administrative Agent for the benefit of the Banks now or
hereafter delivered to the Banks or the Administrative Agent pursuant to or in
connection with the transactions contemplated hereby, and all financing
statements (or comparable documents now or hereafter filed in accordance with
the PPSA, UCC or comparable law) against a Borrower or any Subsidiary or any
Guarantor as debtor in favour of the Banks or the Administrative Agent for the
benefit of the Banks as secured party, and (b) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.

     “Commitment” means, as to each Bank, its obligation to (a) make Loans to
the Borrowers pursuant to Section 2.01, and (b) purchase participation in L/C
Obligations, in an aggregate principal amount at any one time outstanding not
to exceed the amount set forth opposite such Bank’s name on Schedule 2.01 or in
the Assignment and Assumption pursuant to which such Bank becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with the Agreement.

     “Company” means Zemex Corporation, a company continued under the federal
laws of Canada.

     “Compliance Certificate” means a certificate substantially in the form of
Exhibit B.

     “Consolidated Funded Debt” means at any time in respect of the Company on
a consolidated basis (excluding any calculation or allowance for Excluded
Subsidiaries) the sum of (i) all indebtedness for borrowed money; (ii) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses; (iii) all obligations with respect to capital
leases; (iv) all indebtedness referred to in clauses (i) through (iii) above
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such indebtedness;
and (v) any Redeemable Preferred Shares.

     “Consolidated Interest Expense” means, for any period, gross consolidated
interest expense for the period (including all commissions, discounts, fees and
other charges in connection with stand-by letters of credit and similar
instruments) for the Company on a

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consolidated basis (excluding any calculation or allowance for Excluded
Subsidiaries), as determined in accordance with GAAP.

     “Consolidated Tangible Net Worth” means the consolidated shareholders’
equity of the Company and its Subsidiaries (excluding any calculation or
allowance for Excluded Subsidiaries) as shown on the consolidated balance sheet
of the Company in accordance with GAAP, less the aggregate of (a) any amount
attributable to goodwill, trademarks, copyrights, deferred assets and other
similar intangible assets of the Company and Subsidiaries, all in accordance
with GAAP; and (b) any Redeemable Preferred Shares.

     “Contingent Obligation” means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the “primary obligations”) of another Person (the “primary
obligor”), including any obligation of that Person (i) to purchase, repurchase or
otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a “Guarantee Obligation”); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; or (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered.

     “Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement
to which such Person is a party or by which it or any of its property is bound.

     “Conversion/Continuation Date” means any date on which, under Section 2.05
the US Borrower (a) converts Loans of one Type to another Type, or (b) continues
Loans having Interest Periods expiring on such date as Loans of the same Type,
but with a new Interest Period.

     “Credit” means the revolving credit facility of up to $30 million
established by the Banks in favour of the Borrowers, being made up of Facility
A, Facility B and Facility C.

     “Default” means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.

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     “Disposition” or “Dispose” means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any
property by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith.

     “Dollars”, “dollars” and “$” each mean lawful money of the United States.

     “EBITDA” means, for any period, the Net Income of the Company and its
Subsidiaries on a consolidated basis, taking into account, without duplication,
any Acquisition (excluding any calculation or allowance for Excluded
Subsidiaries), determined in accordance with GAAP; plus, to the extent
deducted in the computation of Net Income for such period, (a) Consolidated
Interest Expense; (b) income or franchise taxes paid or accrued; and
(c) amortization, depreciation, depletion and other non-cash expenses of the
Company and the Subsidiaries; provided however that Net Income shall be
computed for these purposes without giving effect to any non-cash,
non-recurring extraordinary losses or special charges or extraordinary or
special gains, plus for the four fiscal quarters preceding the date of any
Acquisition, the historical pro forma financial information reflecting such
Acquisition.

     “Eligible Assignee” means (a) a bank, financial institution, finance
company or commercial lender referred to in Schedule I or II of the Bank Act
(Canada), or in Schedule III of the Bank Act (Canada) that is not subject to
the requirements and restrictions of Section 524(2) of such Act and that, with
respect to Loans to the Company, is resident in Canada for the purposes of Part
XII of the Income Tax Act (Canada) in respect of any amount paid to it under
this Agreement; (b) a Bank signatory to this Agreement on the Closing Date or
immediately before the date of any Assignment or Assumption; (c) an Affiliate
of a Bank; (d) an Approved Fund; and (e) any other Person (other than a natural
person) approved by (i) the Administrative Agent and the L/C Issuer, and (ii)
unless an Event of Default has occurred and is continuing, the Borrowers (each
such approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include a Borrower
or any of the Borrowers’ Affiliates or Subsidiaries.

     “Environmental Claims” means all claims, however asserted, against a
Borrower, a Guarantor or Excluded Subsidiary by any Governmental Authority or
other Person alleging potential liability or responsibility for violation of
any Environmental Law, or for release or injury to the environment or threat to
public health, personal injury (including sickness, disease or death), property
damage, natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup, removal, remedial
or response costs, restitution, civil or criminal penalties, injunctive relief,
or other type of relief, resulting from or based upon the presence, placement,
discharge, emission or release (including intentional and unintentional,
negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental, placement, spills, leaks, discharges, emissions or releases) of
any Hazardous Material at, in, or from property of the Borrower, the Guarantors
or the Excluded Subsidiary, whether or not owned by the Borrowers, the Excluded
Subsidiary or the Guarantors.

8

 

     “Environmental Laws” means all federal, state, provincial, local, and
foreign statutes, laws, regulations, common law duties, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the
environment, including those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

     “Equivalent Amount” means, on any date, the amount of Canadian Dollars or
US Dollars, as the case may be, which can be purchased with the specified
amount of US Dollars or Canadian Dollars, as the case may be, at the applicable
Exchange Rate on that date.

     “ERISA” means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.

     “ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with the US Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the US Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the US Borrower or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multi-employer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the US Borrower or any ERISA Affiliate.

     “Estimated Remediation Costs” means all costs associated with performing
work to remedy contamination of (i) real property or groundwater, including
engineering and other professional fees and expenses, costs to remove,
transport and dispose of contaminated soil, costs to “cap” or otherwise contain
contaminated soil, and costs to pump and treat water and monitor water quality;
and (ii) air or air emissions.

     “Event of Default” means any of the events or circumstances specified in
Section 9.01.

     “Event of Loss” means, with respect to any property, any of the following:
(a) any loss, destruction or damage of such property; (b) any pending or threatened
institution of any proceedings for the condemnation or seizure of such property
or for the exercise of any right of

9

 

eminent domain; or (c) any actual condemnation, seizure or taking, by
exercise of the power of eminent domain or otherwise, of such property, or
confiscation of such property or the requisition of the use of such property.

     “Exchange Act” means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.

     “Exchange Rate” means on any date, for any conversion of Dollars into
Canadian Dollars, or vice versa, the applicable spot buying rate of Canadian
Dollars or Dollars, as the case may be, reported by the Bank of Canada at its
daily official noon (Toronto time) spot rate of exchange on such date if it is
a Business Day or on the immediately preceding Business Day if such day is not
a Business Day.

     “Excluded Subsidiary” means any corporation, association, partnership,
limited liability company, joint venture or other business entity (an “Entity”)
owned or controlled directly or indirectly by a Borrower or any Subsidiary
wherein recourse to any obligations of the Entity are limited solely to the
property of such Entity and not otherwise to the Borrower, any Subsidiary or
any Collateral, notice of which is given to the Administrative Agent and the
Banks pursuant to section 7.03(g). Subject to consent from the Administrative
Agent and the Banks, and subject to notice being given to the Administrative
Agent and the Banks pursuant to Section 7.03(h), a Borrower may convert an
Excluded Subsidiary to a Subsidiary.

     “Extension Date” has the meaning specified in Section 2.08 of this
Agreement.

     “Facility A” means a revolving credit facility made available to the US
Borrower in an amount not exceeding $9,900,000 which includes a $5 million
sublimit for L/Cs.

     “Facility B” means a Canadian Dollar revolving credit facility made
available to the Company in Canadian Dollars in an amount not exceeding the
Equivalent Amount of $100,000.

     “Facility C” means a revolving credit facility made available to the US
Borrower in an amount not exceeding $20 million.

     “FDIC” means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.

     “Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of

10

 

1%) charged to Bank of America on such day on such transactions as
determined by the Administrative Agent.

     “Fee Letters” has the meaning specified in subsection 2.10(a).

     “FRB” means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.

     “Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

     “Further Taxes” means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 4.01.

     “GAAP” means generally accepted accounting principles which are in effect
from time to time in Canada, as published in the handbook of the Canadian
Institute of Chartered Accountants.

     “Governmental Authority” means any nation or government, any provincial,
state, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

     “Guarantee” means each guarantee delivered by each Guarantor to the
Administrative Agent for and on behalf of the Banks, guaranteeing the
Obligations.

     “Guarantor” means each of the Company, the US Borrower, the companies
listed on Schedule 1 hereto and such other Subsidiaries of the Borrower that
delivers a Guarantee from time to time.

     “Guaranteed Obligation” has the meaning specified in the definition of
“Contingent Obligation.”

     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Laws.

     “Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

11

 

	 	(a)     all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or
other similar instruments;
	 
	 	(b)     all direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;
	 
	 	(c)     net obligations of such Person under any Swap Contract;
	 
	 	(d)     all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary
course of business);
	 
	 	(e)     indebtedness (excluding prepaid interest thereon) secured by a Lien
on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by
such Person or is limited in recourse;
	 
	 	(f)     capital leases and Synthetic Lease Obligations; and
	 
	 	(g)     all guarantees of such Person in respect of any of the foregoing.

     For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

     “Indemnified Liabilities” has the meaning specified in Section 11.05.

     “Indemnified Person” has the meaning specified in Section 11.05.

     “Independent Auditor” has the meaning specified in subsection 7.01(a).

     “Initial Term” has the meaning specified in Section 2.08 of this
Agreement.

     “Insolvency Proceeding” means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or
(b) any general assignment for the benefit of creditors, composition, marshaling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under the
Canadian provincial or federal laws, or under US federal, state or foreign law.

12

 

     “Insolvent” means, when used in reference to any Borrower or Subsidiary,
that such Person shall suffer, or there shall have occurred with respect to
such Person, one or more of the following events:

	 	(a)	 	such Person shall generally not pay its debts as they become due;
or
	 
	 	(b)	 	such Person shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or
	 
	 	(c)	 	a receiver shall be appointed for such Person or any substantial
part of its property; or
	 
	 	(d)	 	any proceeding shall be instituted by or against such Person
seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding-up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking the entry of an order for relief by the
appointment of a receiver, trustee, custodian or other similar
official for it or any substantial part of its property, where any
such proceeding has not been stayed or dismissed within 45 days of
a receiver, trustee, custodian or other similar official being
appointed for it or any substantial part of its property; or
	 
	 	(e)	 	such Person takes any corporate action to authorize any of the
actions described in clauses (a) to (d).

     “Inter-Company Notes” means those notes or evidence of indebtedness issued
by the Company, the US Borrower or any of their respective Subsidiaries in
favour of the Company, the US Borrower or a Subsidiary as the case may be, as
listed on Schedule 2 hereto.

     “Interest Coverage Ratio” means, at any date, the ratio of (a) EBITDA for the
immediately preceding four quarters to (b) Consolidated Interest Expense for the
immediately preceding four consecutive fiscal quarters for which the Banks and
the Administrative Agent have received financial statements in compliance with
Section 7.01.

     “Interest Payment Date” means, (a) as to any LIBO Rate Loan, the earlier of
(i) 90 days from the Borrowing Date or previous Interest Payment Date, and (ii) the
last day of each Interest Period applicable to such LIBO Rate Loan and, (b) as to
any Base Rate Loan or Prime Rate Loan, the last Business Day of each calendar
quarter and, in each case, on the Termination Date.

     “Interest Period” means, as to any LIBO Rate Loan, the LIBOR Period
specified in a Notice of Borrowing or Notice of Conversion/Continuation,
provided that:

	 	(i)	 	if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be
to carry such Interest Period into another

13

 

	 	 	 	calendar month, in which event such Interest Period shall end on
the preceding Business Day;
	 
	 	(ii)	 	any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
	 
	 	(iii)	 	no Interest Period shall extend beyond the Termination Date.

     “IRS” means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.

     “Issue” means with respect to any L/C, to issue, to amend or to extend the
expiry of, or to renew or increase the amount of, such L/C and the terms
“Issued”, “Issuing” and “Issuance” have corresponding meanings.

     “Issuing Bank” means Bank of America, or any other US Bank that may agree
to become an Issuing Bank hereunder, in its capacity as issuer of one or more
L/Cs denominated in US$, or any other Bank from time to time that may be a
party to this Agreement and agrees to be an Issuing Bank.

     “L/C” or “Letter of Credit” means a commercial letter of credit or
stand-by letter of credit in a form satisfactory to an Issuing Bank issued by
an Issuing Bank at the request of the US Borrower in favour of a third party to
secure the payment or performance of an obligation of the US Borrower to the
third party, and shall include any outstanding L/C Issued pursuant to the
Original Credit Agreement, as amended or amended and restated from time to
time.

     “L/C Advance” means each Bank’s Pro Rata Share in any L/C Loan.

     “L/C Amendment Application” means an application form for amendment or
renewal of outstanding stand-by or documentary letters of credit and shall at
any time be in use by an Issuing Bank as such Issuing Bank shall request.

     “L/C Application” means an application form for issuance of Letters of
Credit as shall at any time be in use by an Issuing Bank, as such Issuing Bank
shall request.

     “L/C Fee” means the Applicable Margin payable in accordance with Section
3.09 and calculated based on the face amount of each L/C issued by the
applicable Issuing Bank.

     “L/C Issuance Fee” means an issuance fee in the amount of .125% per annum
payable to an Issuing Bank upon the Issuance or renewal of each L/C calculated
based on the face amount of each L/C issued by such Issuing Bank.

14

 

     “L/C Loan” means an extension of credit resulting from a Borrowing under
any L/C which shall not have been reimbursed on the date when made or converted
into another Borrowing.

     “L/C Obligations” means at any time the sum of (a) the aggregate undrawn
amount of all L/Cs then outstanding plus (b) the amount of all unreimbursed
drawings under all L/Cs, including all outstanding L/C Loans.

     “L/C Sublimit” means an amount equal to $5 million. The L/C sublimit is
part of Facility A.

     “Laws” means, collectively, all international, foreign, federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case having the force of law.

     “Lending Office” means, as to any Bank, the office or offices of such Bank
specified as its “Lending Office” or “Domestic Lending Office” as the case may
be, on Schedule 11.02, or such other office or offices as the Bank may from
time to time notify the Company, the US Borrower, Canadian Payment Agent and
the Administrative Agent.

     “Leverage Ratio” means at any date, the ratio of (a) Consolidated Funded Debt
to (b) the sum of EBITDA for the immediately preceding four consecutive full
fiscal quarters then ending and for which the Banks and the Administrative
Agent have received financial statements in compliance with Section 7.01.

     “LIBO Rate” means, for any LIBOR Period the sum of:

	 	 	 
	(a)	 	
either

	 	(i)	 	the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the page
of the Telerate screen (or any successor thereto) that displays an
average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of such LIBOR
Period) with a term equivalent to such LIBOR Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such LIBOR Period, or
	 
	 	(ii)	 	if the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or
other service that displays an average British Bankers Association

15

 

	 	 	 	Interest Settlement Rate for deposits in Dollars (for delivery on
the first day of such LIBOR Period) with a term equivalent to such
LIBOR Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such LIBOR
Period, or
	 
	 	(iii)	 	if the rates referenced in the preceding clauses (i) and
(ii) are not available, the rate per annum determined by the
Administrative Agent as the rate of interest at which deposits in
Dollars for delivery on the first day of such LIBOR Period in same
day funds in the approximate amount of the LIBO Rate Loan being
made, continued or converted by Bank of America and with a term
equivalent to such LIBOR Period would be offered by Bank of
America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 4:00 p.m.
(London time) two Business Days prior to the first day of such LIBOR
Period; and

	 	 	 
	(b)	 	
the Applicable Margin.

     “LIBO Rate Loan” means an advance in US Dollars bearing interest based on
the LIBO Rate.

     “LIBOR Period” means the 1, 2, 3 or 6 month period selected by a Borrower
for a LIBO Rate Loan.

     “Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or other arrangement of any kind or nature whatsoever in
respect of any property that in substance secures payment or performance of any
obligation (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a lessor
under a capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as debtor,
under the PPSA or UCC or any comparable law) but not including the interest of
a lessor under an operating lease.

     “Loan” means an extension of credit by a Bank to a Borrower under Article
II or III, and may be a Base Rate Loan, Prime Rate Loan, LIBO Rate Loan, L/C
Loan or Issuance of L/Cs (each, a “Type” of Loan).

     “Loan Documents” means this Agreement, the Collateral Documents, the Fee
Letters, and all other documents delivered to the Administrative Agent or any
Bank in connection with the transactions contemplated by this Agreement.

     “Majority Banks” means at any time Banks then holding at least 70% of the
then aggregate unpaid principal amount of the Loans, or, if no such principal
amount is then outstanding, at least two Banks then having at least 70% of the
Commitments.

16

 

     “Margin Stock” means “margin stock” as such term is defined in Regulation
G, T, U or X of the FRB.

     “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company or the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of the
Company and the Subsidiaries taken as a whole to perform under the Loan
Documents, or (c) a material adverse effect upon (i) the legality, validity, binding
effect or enforceability against the Company or any Subsidiary of any Loan
Document, or (ii) the perfection or priority of any Lien granted under any of the
Collateral Documents.

     “Material Documents” means this Agreement and the Collateral Documents.

     “Mortgage” means any deed of trust, mortgage, leasehold mortgage,
assignment of rents or other document creating a Lien on real property or any
interest in real property.

     “Mortgaged Property” means all property of the Borrower or of the
Guarantors which is subject to a Lien pursuant to a Mortgage.

     “Multi-employer Plan” means a “multi-employer plan”, within the meaning of
Section 4001(a)(3) of ERISA, to which the US Borrower or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.

     “Net Income” shall mean for any period, the net income (or loss) of the
Company on a consolidated basis (excluding any calculation or allowance for
Excluded Subsidiaries) for such period taken as a single accounting period
determined in conformity with GAAP, provided that there shall be excluded (i) the
income (or loss) of any entity accrued prior to the date it becomes a
Subsidiary or is merged into or consolidated with the Company or any Subsidiary
or on which its assets are required by the Company or any Subsidiary, (ii) the net
income (loss) of any Person which is not a Subsidiary except to the extent of
the amount of cash dividends or distributions paid to the Company or to a
Subsidiary; and (iii) the income of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by the Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
government regulation applicable to the Subsidiary.

     “Net Proceeds” means after any Disposition, proceeds in cash, cheques or
other cash equivalent financial instruments as and when received by either
Borrower or a Subsidiary, net of:

	 	(a)	 	the direct costs relating to such Disposition, excluding amounts
payable to a Borrower or any Affiliate of such Borrower;
	 
	 	(b)	 	any income, sale, use or other transaction, taxes paid or payable
by the Borrower or Subsidiary as a direct result thereof.

17

 

     “Net Worth” means shareholders’ equity as determined in accordance with
GAAP.

     “Notice of Borrowing” means a notice in substantially the form of Exhibit
A.

     “Notice of Conversion/Continuation” means a notice in substantially the
form of Exhibit A.

     “Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of the Company and/or the US Borrower arising under any
Loan Document with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any the Company and/or
the US Borrower or any Affiliate thereof of any Insolvency Proceeding naming
such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding.

     “Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-Canadian
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement
filed in connection with its formation or organization with the applicable
Governmental Authority in the jurisdiction of its formation or organization;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement
of formation or organization and any agreement, instrument, filing or notice
with respect thereto filed in connection with its formation or organization
with the applicable Governmental Authority in the jurisdiction of its formation
or organization and, if applicable, any certificate or articles of formation or
organization of such entity.

     “OSC” means the Ontario Securities Commission, or any Governmental
Authority succeeding to any of its prescribed functions.

     “Other Taxes” means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.

     “Participant” has the meaning specified in subsection 11.08(c).

     “PBGC” means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.

     “PPSA” means the Personal Property Security Act (Ontario).

     “Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the US Borrower sponsors, maintains, or to
which it makes, is making,

18

 

or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five (5) plan years.

     “Permitted Liens” has the meaning specified in Section 8.01.

     “Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.

     “Plan” means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the US Borrower or a Subsidiary sponsors or maintains or to which
the US Borrower or a Subsidiary makes, is making, or is obligated to make
contributions and includes any Pension Plan.

     “Pledge Agreements” means collectively (a) the agreement between the
Administrative Agent on behalf of the Banks and the Company pledging all of the
shares of its directly-owned Subsidiaries, including the US Borrower; (b) the
agreements between the Administrative Agent on behalf of the Banks and
Guarantors (x) pledging all of the shares of such Guarantors’ directly owned
US Subsidiaries and (y) pledging 65% of the shares of such Guarantors’ directly
owned non-US Subsidiaries, all as may be amended, supplemented or otherwise
modified from time to time.

     “Pledged Collateral” has the meaning specified in the relevant Pledge
Agreement.

     “Prime Rate” means, on any day, the greater of: (a) the annual rate of
interest expressed as a percentage per annum announced by the Canadian
Reference Bank on that day as its reference rate for commercial loans made by
it in Canada in Canadian Dollars; and (b) the average rate for 30-day Canadian
Dollar Banker’s Acceptances that appear on the Reuter Screen CDOR Page at 10:00
a.m. Toronto time on that day, plus 3/4% per annum.

     “Prime Rate Loan” means a Loan in Canadian Dollars bearing interest at
Prime Rate plus the Applicable Margin.

     “Pro Rata Share” means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank’s Commitment divided by the combined Commitments of all
Banks.

     “Redeemable Preferred Shares” means any capital stock of the Company or a
Subsidiary which is redeemable, payable or required to be purchased or
otherwise retired or extinguished, or convertible into any Indebtedness at the
option of the holder of such capital stock, whether or not it pays dividends at
a specified or non-specified rate, and whether or not such capital stock has
preference over common stock in any respect.

     “Reference Bank” means Bank of America.

19

 

     “Reportable Event” means, any of the events set forth in Section 4043(c)
of ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.

     “Requirement of Law” means, as to any Person, any Laws applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.

     “Responsible Officer” means the chief executive officer or the president
of the Company, the US Borrower or the Guarantors, as applicable, or any other
officer having substantially the same authority and responsibility; or, with
respect to compliance with financial covenants, the chief financial officer or
the treasurer of the Company or the US Borrower, as applicable, or any other
officer having substantially the same authority and responsibility.

     “SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

     “Security Agreements” means, collectively, the general security agreements
executed by each of the Borrowers and each Guarantor in favour of the
Administrative Agent, for and on behalf of the Banks, granting such Agent a
security interest over the Collateral specified therein.

     “Subsidiary” of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests
(in the case of Persons other than corporations), is owned or controlled
directly or indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof, except that “Subsidiary” shall not include an
Excluded Subsidiary. Unless the context otherwise clearly requires, references
herein to a “Subsidiary” refer to a Subsidiary of the Company.

     “Surety Instruments” means all letters of credit (including standby and
commercial), banker’s acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.

     “Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules,

20

 

a “Master Agreement”), including any such obligations or liabilities under
any Master Agreement.

     “Swap Termination Value” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Bank or any
Affiliate of a Bank).

     “Synthetic Lease Obligation” means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations
that do not appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

     “Taxes” means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Administrative Agent, respectively, taxes imposed on or measured by its net
income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Bank or the Administrative Agent, as the case may be, is
organized or maintains a lending office or imposed by reason of the Bank being
connected with Canada or the United States or any other relevant jurisdiction
otherwise than merely by lending money under this Agreement.

     “Termination Date” has the meaning specified in Section 2.07 of this
Agreement.

     “Total Commitment” means, collectively, the Total Canadian Commitment and
the Total US Commitment.

     “Total Canadian Commitment” means the sum of the Commitments as available
to the Company from time to time.

     “Total US Commitment” means the sum of the Commitments as available to the
US Borrower from time to time.

     “Type” has the meaning specified in the definition of “Loan.”

     “UCC” means the Uniform Commercial Code as in effect in the State of New
York.

     “US Banks” means those Banks other than the Canadian Banks.

     “US Borrower” means Zemex U.S. Corporation.

21

 

     “US Loan” means a Loan hereunder in Dollars by the US Borrower from the US
Banks, including those loans referenced in Section 2.01(b).

     “Unfunded Pension Liability” means the excess of a Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.

     “United States” and “US” each means the United States of America.

     “Wholly-Owned Subsidiary” means any corporation in which (other than
directors’ qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every
other class, in each case, at the time as of which any determination is being
made, is owned, beneficially and of record, by the Company, or by one or more
of the other Wholly-Owned Subsidiaries, or both, but shall not include Excluded
Subsidiaries.

1.02   Other Interpretive Provisions.

	 	 	 
	(a)	 	The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.
	 

	(b)	 	The words “hereof”, “herein”, “hereunder” and similar words refer to this
Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
	 

	(c)	 	(i)	 	The term “documents” includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
	 
	 	 	(ii)	 	The term “including” is not limiting and means “including
without limitation”.
	 
	 	 	(iii)	 	In the computation of periods of time from a specified date
to a later specified date, the word “from” means “from and
including”; the words “to” and “until” each mean “to but excluding”,
and the word “through” means “to and including”.
	 
	 	 	(iv)	 	The term “property” includes any kind of property or asset,
real, personal or mixed, tangible or intangible.

	 	 	 
	(d)	 	
Unless otherwise expressly provided herein, (i) references to agreements
(including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications
are not prohibited by the terms of any Loan Document, and (ii) references to
any statute or regulation are to be construed as including all statutory
and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.

22

 

	 	 	 
	(e)	 	
The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
	 
	(f)	 	This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Administrative
Agent or the Banks by way of consent, approval or waiver shall be deemed
modified by the phrase “in its/their sole discretion.”
	 
	(g)	 	This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Company and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Banks or
the Administrative Agent merely because of the Administrative Agent’s or
Banks’ involvement in their preparation.

1.03   Accounting Terms.

	 	 	 
	(a)	 	All accounting terms not specifically or completely defined herein shall
be construed in conformity with, and all financial data required to be
submitted pursuant to this Agreement or used in the calculation of
financial ratios and other financial calculations shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from
time to time, applied in a manner consistent with that used in preparing
the Company’s audited consolidated financial statements at December 31,
2001, except as otherwise specifically prescribed herein.
	 
	(b)	 	If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either
the Borrowers or the Majority Banks shall so request, the Administrative
Agent, the Banks and the Borrowers shall negotiate in good faith to amend
such ratio or requirement to preserve the original intent thereof in light
of such change in GAAP (subject to the approval of the Majority Banks);
provided that, until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrowers shall provide to the Administrative Agent
and the Banks financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

1.04   Amendment and Restatement.

     This Agreement is and shall for all purposes be deemed to be an amendment
and restatement of the provisions of the Original Credit Agreement. This
Agreement shall supersede the Original Credit Agreement insofar as it
constitutes the entire agreement between the parties concerning the subject
matter of this Agreement, but does not constitute a novation of the Original
Credit Agreement. All Loans pursuant to the Original Credit Agreement shall be

23

 

deemed to be Loans under this Agreement, and all Obligations (as defined
in the Original Credit Agreement) shall be deemed to be Obligations under this
Agreement.

     Without in any way limiting the terms of the Original Credit Agreement or
the other Loan Documents, the Borrowers and Guarantors confirm that the
existing Collateral Documents (other than the Guarantee of Suzorite Mica
Products Inc. dated May 21, 1999 in respect of the obligations of the US
Borrower which has been terminated and the Guarantee of Suzorite Mica Products
Inc. dated May 21, 1999 in respect of the obligations of the Company secures
only the Obligations of the Company under this Agreement) shall continue to
secure all of the Obligations, including but not limited to those arising as a
result of this Agreement. In particular, but without limitation, the parties
agree that (a) in guarantees they have delivered in favour of the Agents for
the benefit of the Banks, any references to the “Credit Agreement” shall be
interpreted as referring to this Agreement as further amended, modified,
supplemented, restated and replaced from time to time and (b) such guarantees
remain in full force and effect, and are ratified and confirmed (other than the
Guarantee of Suzorite Mica Products Inc. dated May 21, 1999 in respect of the
obligations of the US Borrower which has been terminated and the Guarantee of
Suzorite Mica Products Inc. dated May 21, 1999 in respect of the obligations of
the Company secures only the Obligations of the Company under this Agreement).

ARTICLE II

THE CREDIT

2.01   Amounts and Terms of Commitments.

	 	 	 
	(a)	 	Each Canadian Bank severally agrees, on the terms and conditions set
forth herein, to make Prime Rate Loans to the Company from time to time on
any Business Day during the period from the Closing Date to the
Termination Date, in an aggregate amount not to exceed at any time
outstanding the Equivalent Amount in Cdn.$ of the amount set forth on
Schedule 2.01 next to its name (such amount as the same may be reduced
under Section 2.06 or as a result of one or more assignments under Section
11.08, a Canadian Bank’s “Commitment”). Within the limits of each
Canadian Bank’s Commitment, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.01(a), prepay under
Section 2.06, prepay under Section 2.16, and reborrow under this Section
2.01(a), provided that no borrowing or reborrowing may be made after the
end of the Initial Term or, if the Initial Term is extended in accordance
with Section 2.08, the applicable Extension Date
	 
	(b)	 	Each US Bank severally agrees, on the terms and conditions set forth
herein, to make Base Rate Loans, LIBO Rate Loans and L/C Advances to the
US Borrower from time to time on any Business Day during the period from
the Closing Date to the Termination Date, in an aggregate amount not to
exceed at any time outstanding the amount set forth on Schedule 2.01 next
to its name (such amount as the same may be reduced under Section 2.06 or as
a result of one or more assignments under Section 11.08, a US Bank’s
“Commitment”). Within the limits of each US Bank’s Commitment, and
subject to the

24

 

	 	 	 
	 	 	other terms and conditions hereof, the US
Borrower may borrow under this Section 2.01(b), prepay under Section
2.06, prepay under Section 2.16, and reborrow under this Section 2.01(b)
or convert or continue such Loans under section 2.05, provided that no
borrowing, reborrowing, conversion or continuation of Loans may be made
after the end of the Initial Term or, if the Initial Term is extended in
accordance with Section 2.08, the applicable Extension Date.

	 	 	 
	(c)	 	
The Canadian Banks shall make Canadian Loans to the Company and the US
Banks shall make US Loans to the US Borrower.

2.02   Loan Accounts.

The Loans made by each Bank and the L/Cs issued by an Issuing Bank shall be
evidenced by one or more loan accounts or records maintained by the applicable
Agent and such Bank, or Issuing Bank, as the case may be in the ordinary course
of business. The loan accounts or records maintained by the applicable Agent,
the Issuing Bank and each Bank shall be of the amount of the Loans made by the
Banks to the applicable Borrower and the interest and payments thereon. In the
event of any conflict, the loan accounts of the applicable Agent shall govern.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company or the US Borrower hereunder to
pay any amount owing with respect to the Loans or any L/C.

2.03   Procedure for Borrowing by Company.

	 	 	 
	(a)	 	
Each Canadian Loan to the Company shall be made upon the Company’s
irrevocable written notice delivered to the Canadian Payment Agent (with a
copy to the Administrative Agent) in the form of a Notice of Borrowing
(which notice must be received by the Canadian Payment Agent prior to
11:00 a.m. (Toronto time) two Business Days prior to the requested
Borrowing Date specifying:

	 	 	 	 
	 	(A)	 	the amount of the Canadian Loan, which shall be
in an aggregate minimum amount of Cdn.$25,000 or multiples of
Cdn.$25,000 in excess thereof.
	 
	 	(B)	 	the requested Borrowing Date, which shall be a
Business Day; and
	 
	 	(C)	 	the Borrowing is to be made from Facility B.

	 	 	 
	(b)	 	The Canadian Payment Agent will promptly notify each Canadian Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank’s Pro
Rata Share of that Borrowing.
	 
	(c)	 	Each Canadian Bank will make the amount of its Pro Rata Share of each
Canadian Loan available to the Canadian Payment Agent for the account of
the Company at the Canadian Payment Agent’s Payment Office by 11:00 a.m.
(Toronto time) on the Borrowing Date

25

 

	 	 	 
	 	 	requested by the Company in funds
immediately available to the Canadian Payment Agent. The proceeds of all
such Loans will then be made available to the Company by the Canadian
Payment Agent at such office by crediting the account of the Company on
the books of Bank of America, N.A. acting through its Canadian branch with
the aggregate of the amounts made available to the Canadian Payment Agent
by the Banks and in like funds as received by the Canadian Payment
Agent.

2.04   Procedure for Borrowing by US Borrower.

	 	 	 
	(a)	 	
Each US Loan to the US Borrower (other than an L/C Loan) shall be made
upon the US Borrower’s irrevocable written notice delivered to the
Administrative Agent in the form of a Notice of Borrowing (which notice
must be received by the Administrative Agent prior to 11:00 a.m. (San
Francisco time) (i) three Business Days prior to the requested Borrowing
Date, in the case of LIBO Rate Loans; (ii) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans, specifying:

	 	 	 	 
	 	(A)	 	the amount of the US Loan, which shall be in an
aggregate minimum amount of (i) in the case of LIBO Rate
Loans, $1,000,000 or any multiple of $250,000 in excess
thereof and (ii) in the case of Base Rate Loans, $200,000 or
any multiple of $50,000 in excess thereof;
	 
	 	(B)	 	the requested Borrowing Date, which shall be a
Business Day;
	 
	 	(C)	 	the Type of Loans comprising the US Loan;
	 
	 	(D)	 	whether the Borrowing is to be made from Facility
A or Facility C; and
	 
	 	(E)	 	the duration of the LIBOR Period applicable to
such LIBO Rate Loans included in such notice. If the Notice
of Borrowing fails to specify the duration of the LIBOR
Period, such LIBOR Period shall be one month.

	 	 	 
	(b)	 	The Administrative Agent will promptly notify each US Bank of its receipt
of any Notice of Borrowing and of the amount of such US Bank’s Pro Rata
Share of that US Loan.
	 
	(c)	 	Each US Bank will make the amount of its Pro Rata Share of each US Loan
available to the Administrative Agent for the account of the US Borrower
at the Administrative Agent’s Payment Office by 11:00 a.m. (San Francisco
time) on the Borrowing Date requested by the US Borrower in funds
immediately available to the Administrative Agent. The proceeds of all
such Loans will then be made available to the US Borrower by the
Administrative Agent at such office by crediting the account of the US
Borrower on the books of Bank of America with the aggregate of the amounts
made available to the
Administrative Agent by the US Banks and in like funds as received by the
Administrative Agent.

26

 

	 	 	 
	(d)	 	
After giving effect to any US Loan, unless the Administrative Agent shall
otherwise consent, there may not be more than six different LIBOR Periods
in effect in aggregate between Facility A and Facility C.

2.05   Conversion and Continuation Elections.

	 	 	 
	(a)	 	
The US Borrower may, upon irrevocable written notice to the
Administrative Agent in accordance with subsection 2.05(b):

	 	 	 	 
	 	(i)	 	elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in
the case of LIBO Rate Loans, to convert any such US Loans (or any
part thereof in an amount not less than $1,000,000, or that is in an
integral multiple of $250,000 in excess thereof) into US Loans of
any other Type; or
	 
	 	(ii)	 	elect, as of the last day of the applicable Interest Period,
to continue any US Loans having Interest Periods expiring on such
day (or any part thereof in an amount not less than $1,000,000, or
that is in an integral multiple of $250,000 in excess thereof);
	 
	 	provided, that if at any time the aggregate amount of LIBO Rate Loans in
respect of any US Loan is reduced, by payment, prepayment, or conversion
of part thereof to be less than $1,000,000, such LIBO Rate Loans shall
automatically convert into Base Rate Loans.

	 	 	 
	(b)	 	
The US Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Administrative Agent not later than 11:00 a.m. (San
Francisco time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the US Loans are to be converted into or
continued as LIBO Rate Loans; (ii) one Business Day in advance of the
Conversion/Continuation Date, if the US Loans are to be converted into
Base Rate Loans, specifying:

	 	 	 	 
	 	(A)	 	the proposed Conversion/Continuation Date;
	 
	 	(B)	 	the aggregate amount of US Loans to be converted
or continued;
	 
	 	(C)	 	the Type of US Loans resulting from the proposed
conversion or continuation; and
	 
	 	(D)	 	the duration of the requested LIBOR Period. If
the Notice of Conversion/ Continuation fails to specify the
duration of the LIBOR Period, such LIBOR Period shall be one
month.

	 	 	 
	(c)	 	
If upon the expiration of any Interest Period applicable to LIBO Rate
Loans, the US Borrower has failed to select timely a new LIBOR Period to
be applicable to such LIBO Rate Loans, or if any Default or Event of
Default then exists, the US Borrower shall be

27

 

	 	 	 
	 	 	deemed to have elected to
convert such LIBO Rate Loans into Base Rate Loans effective as of the
expiration date of such LIBOR Period.

	 	 	 
	(d)	 	The Administrative Agent will promptly notify each US Bank of its receipt
of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the US Borrower, the Administrative Agent will promptly notify
each US Bank of the details of any automatic conversion. All conversions
and continuations shall be made ratably according to the respective
outstanding principal amounts of the US Loans held by each US Bank with
respect to which the notice was given.
	 
	(e)	 	Unless the Majority Banks otherwise consent, during the existence of a
Default or Event of Default, the US Borrower may not elect to have a US
Loan converted into or continued as a LIBO Rate Loan.
	 
	(f)	 	After giving effect to any conversion or continuation of US Loans, unless
the Administrative Agent shall otherwise consent, there may not be more
than six different Interest Periods in effect in aggregate between
Facility A and Facility C.

2.06   Optional Prepayments.

	 	 	 
	(a)	 	
Subject to Section 4.04, the Company may, at any time or from time to
time, without penalty, upon not less than one Business Days’ irrevocable
notice to the Canadian Payment Agent, ratably prepay Canadian Loans in
whole or in part, in minimum amounts of Cdn. $25,000 (or the Equivalent
Amount). The Canadian Payment Agent will promptly notify each Canadian
Bank of its receipt of any such notice, and of such Bank’s Pro Rata Share
of such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 4.04.
	 
	(b)	 	
Subject to Section 4.04, the US Borrower may, at any time or from time to
time, without penalty, upon not less than (i) one Business Day’s
irrevocable notice to the Administrative Agent in the case of Base Rate
Loans and (ii) three Business Days irrevocable notice to the
Administrative Agent in the case of LIBO Rate Loans, ratably prepay US
Loans in whole or in part, in minimum amounts of $200,000 or any multiple
of $100,000 in excess thereof. Such notice of prepayment shall specify
the date and amount of such prepayment and the Type(s) of Loans to be
prepaid. The Administrative Agent will promptly notify each US Bank of
its receipt of any such notice, and of such Bank’s Pro Rata Share of such
prepayment. If such notice is given by the US Borrower, the US Borrower
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.04.

28

 

2.07   Repayment and Termination Date.

     The Company shall repay to the Canadian Banks the aggregate principal
amount of Canadian Loans outstanding, and the US Borrower shall repay to the US
Banks the aggregate amount of US Loans outstanding, on the day which is the
earlier of (the “Termination Date”):

	 	 	 
	A.	 	in the case of Loans made from Facility A or B,
	 
	(a)	 	the date on which the Commitments terminate in accordance with the
provisions of this Agreement; and
	 
	(b)	 	the date which is the later of:

	 	 	 	 
	 	(i)	 	364 days from the date of this Agreement (the “Initial
Term”); and
	 
	 	(ii)	 	the Extension Date.

	 	 	 
	B.	 	in the case of Loans made from Facility C,
	 
	(a)	 	the date on which the Commitments terminate in accordance with the
provisions of this Agreement; and
	 
	(b)	 	the second anniversary date of this Agreement, i.e. August 15, 2004.

2.08   Extension Date.

     “Extension Date” shall mean the date to which the Facility A and Facility
B is extended with the unanimous consent of the Banks, any such extensions to
be made only for 364 days at a time. The Company may annually request an
extension of the expiry of the Facility A and Facility B for an additional 364
days period by delivering a request to the Administrative Agent for extension
no later than 90 days prior to the expiry of the Initial Term or any subsequent
extended term. The Administrative Agent shall notify the Company no later than
30 days following the receipt of a request for extension as to whether or not
the extension has been granted.

2.09   Interest.

	 	 	 
	(a)	 	Each Loan (other than a Letter of Credit) shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at
the rate per annum applicable thereto.
	 
	(b)	 	Interest on each Prime Rate Loan, Base Rate Loan and LIBO Rate Loan shall
be paid in arrears on each Interest Payment Date. Failure to pay interest
on the last day of a LIBOR Period shall be subject to the provisions of
Section 4.04. Interest shall also be paid on the date of any prepayment
of Loans, including any payment under Section 2.06 and Section 2.16, for
the portion of the Loans so prepaid and upon payment (including

29

 

	 	 	 
	 	 	prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the applicable Agent at the
request or with the consent of the Majority Banks.

	 	 	 
	(c)	 	Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration, the applicable Borrower shall pay
interest (after as well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all outstanding Obligations,
at a rate per annum which is determined by adding 3% per annum to the
interest rate then in effect for such Loans; provided,
however, that, on
and after the expiration of any Interest Period applicable to any LIBO
Rate Loan outstanding on the date of occurrence of such Event of Default
or acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest
at a rate per annum equal to the Base Rate plus 3% plus the Applicable
Margin.
	 
	(d)	 	Anything herein to the contrary notwithstanding, the obligations of each
Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which
interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be
contrary to the provisions of any law applicable to such Bank limiting the
highest rate of interest that may be lawfully contracted for, charged or
received by such Bank, and in such event the applicable Borrower shall pay
such Bank interest at the highest rate permitted by applicable law.

2.10   Fees.

	 	 	 
	(a)	 	Arrangement, Agency Fees. The Borrowers shall pay such fees, which shall
include arrangement and agency fees, to the Administrative Agent, the
Canadian Payment Agent and/or the Banks as required by separate letter
agreements (“Fee Letters”). Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever. The Borrowers have
paid all such fees outstanding pursuant to the fees letters dated on or
before May 31, 2002.
	 
	(b)	 	Facility Fees. The US Borrower shall pay on its own behalf and on behalf
of the Company (in respect of the Total Canadian Commitment) to the
Administrative Agent for the account of each applicable Bank a facility
fee of 0.375% per annum of the actual daily amount of the Total
Commitment, regardless of usage. Such facility fee shall accrue from the
Closing Date to the Termination Date (and thereafter so long as any Loan
is outstanding) and shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter commencing on the last Business
Day of the quarter in which the Closing Date occurs and through the
Termination Date (and, if applicable, thereafter on demand).

30

 

2.11   Computation of Fees and Interest.

	 	 	 
	(a)	 	All computations of interest for Prime Rate Loans and Base Rate Loans
shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis
of a 365 day year). Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof
to the last day thereof.
	 
	(b)	 	Each determination of an interest rate by the Administrative Agent or
Canadian Payment Agent shall be conclusive and binding on the Borrowers
and the Banks in the absence of manifest error. The applicable Agent will,
at the request of a Borrower or any Bank, deliver to such Borrower or the
Bank, as the case may be, a statement showing the quotations used by such
Agent in determining any interest rate and the resulting interest
rate.
	 
	(c)	 	Each rate of interest which is calculated with reference to a period (the
“deemed interest period”) that is less than the actual number of days in
the calendar year of calculation is, for the purposes of the Interest Act
(Canada), equivalent to a rate based on a calendar year calculated by
multiplying such rate of interest by the actual number of days in the
calendar year of calculation and dividing by the number of days in the
deemed interest period.

2.12   Payments by a Borrower.

	 	 	 
	(a)	 	All payments to be made by a Borrower shall be made without set off,
recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Company shall be made to the Canadian Payment
Agent and all payments by the US Borrower shall be made to the
Administrative Agent for the account of the applicable Banks at the
applicable Agent’s Payment Office, and shall be made in Cdn. Dollars or
Dollars, as applicable, and in immediately available funds, no later than
11:00 a.m. Toronto time on the date specified herein for payments to the
Canadian Payment Agent, and no later than 11:00 a.m. San Francisco time
for payments to the Administrative Agent. The applicable Agent will
promptly distribute to each applicable Bank its Pro Rata Share (or other
applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the applicable Agent later
than the times specified above shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall
continue to accrue.
	 
	(b)	 	Subject to the provisions set forth in the definition of “Interest
Period” herein, whenever any payment is due on a day other than a Business
Day, such payment shall be made on
the following Business Day, and such extension of time shall in such case
be included in the computation of interest or fees, as the case may
be.

31

 

	 	 	 
	(c)	 	
Unless the Administrative Agent or Canadian Payment Agent, as the case
may be, receives notice from the applicable Borrower one Business Day
prior to the date on which any payment is due to the Banks that the
applicable Borrower will not make such payment in full as and when
required, the Administrative Agent or Canadian Payment Agent, as
applicable, may assume that the applicable Borrower has made such payment
in full to the said Agent on such date in immediately available funds and
the said Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent the applicable
Borrower has not made such payment in full to the said Agent, each Bank
shall repay to the said Agent on demand such amount distributed to such
Bank, together with interest thereon at the Federal Funds Rate for each
day from the date such amount is distributed to such Bank until the date
repaid.

2.13   Payments by the Banks to the Administrative Agent.

	 	 	 
	(a)	 	Unless the Administrative Agent or the Canadian Payment Agent, as
applicable, receives notice from a Bank on or prior to the Closing Date
or, with respect to any Borrowing after the Closing Date, prompt notice
that such Bank will not make available as and when required hereunder to
the applicable Agent for the account of the applicable Borrower the amount
of that Bank’s Pro Rata Share of the Borrowing, such Agent may assume that
each Bank has made such amount available to the applicable Agent in
immediately available funds on the Borrowing Date and such Agent may (but
shall not be so required), in reliance upon such assumption, make
available to the applicable Borrower on such date a corresponding amount.
If and to the extent any Bank shall not have made its full amount
available to the applicable Agent in immediately available funds and the
applicable Agent in such circumstances has made available to the
applicable Borrower such amount, that Bank shall on the Business Day
following such Borrowing Date make such amount available to such Agent,
together with interest at the Federal Funds Rate for each day during such
period. A notice of the applicable Agent submitted to any Bank with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made by the Administrative Agent,
such payment to the applicable Agent shall constitute such Bank’s Loan on
the date of Borrowing for all purposes of this Agreement. If such amount
is not made available to the applicable Agent on the Business Day
following the Borrowing Date, the applicable Agent will notify the
applicable Borrower of such failure to fund and, upon demand by the
Administrative Agent, the applicable Borrower shall pay such amount to the
applicable Agent for the Administrative Agent’s account, together with
interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the
Loans comprising such Borrowing.
	 
	(b)	 	The failure of any Bank to make any Loan on any Borrowing Date shall not
relieve any other Bank of any obligation hereunder to make a Loan on such
Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing
Date.

32

 

2.14   Sharing of Payments, Etc. If, other than as expressly provided elsewhere
herein, any Bank shall obtain on account of the Loans made by it any payment
(whether voluntary, involuntary, through the exercise of any right of set off,
or otherwise) in excess of its Pro Rata Share (or other share contemplated
hereunder), such Bank shall immediately (a) notify the Administrative Agent or the
Canadian Payment Agent, as applicable, of such fact, and (b) purchase from the
other Canadian Banks, in the case of Canadian Loans and US Banks, in the case
of US Loans, such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall
to that extent be rescinded and each other Bank shall repay to the purchasing
Bank the purchase price paid therefor, together with an amount equal to such
paying Bank’s Pro Rata Share (according to the proportion of (i) the amount of
such paying Bank’s required repayment to (ii) the total amount so recovered from
the purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. Each Borrower
agrees that any Bank so purchasing a participation from another Bank may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set off, but subject to Section 11.10) with respect to
such participation as fully as if such Bank were the direct creditor of the
Borrower in the amount of such participation. The applicable Agent will keep
records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section and will in each case
notify the Banks following any such purchases or repayments.

2.15   Security and Guarantee.

	 	 	 
	(a)	 	All obligations of each Borrower and the Guarantors under this Agreement
and all other Loan Documents shall be secured in accordance with the
Collateral Documents.
	 
	(b)	 	All obligations of each Borrower under this Agreement, and all other Loan
Documents shall be unconditionally guaranteed by each Guarantor pursuant
to the Guarantees, except that Suzorite Mica Products Inc. and any other
non-US Subsidiary of the US Borrower will guarantee the obligations of the
Company under this Agreement only.

2.16   Mandatory Prepayment.

	 	 	 
	(a)	 	
If the Company or the US Borrower or any Subsidiary shall at any time or
from time to time propose to make a Disposition other than a Disposition
under Section 8.02(a) to (c), then

	 	 	 	 
	 	(i)	 	the Company or the US Borrower, as the case may be, shall
promptly notify the Administrative Agent or the Canadian Payment
Agent, as applicable, of such proposed Disposition (including the
amount of Estimated Net Proceeds to be received by the Company,
US Borrower or Subsidiary in respect thereof); and
	 
	 	(ii)	 	
promptly upon receipt by the Company, US Borrower or
Subsidiary of the Net Proceeds of such Disposition, the Company or
the US Borrower, as the case may

33

 

	 	 	 	 
	 	 	 	
be, shall repay loans (excluding LC
Loans) in an aggregate amount equal to 100% of the amount of such
Net Proceeds. In no event shall the date for the payment of the Net
Proceeds by the Company or the US Borrower to the applicable agent
(the “Net Proceeds Payment Date”) be later than two business days
following receipt by the Company, US Borrower or Subsidiary, as the
case may be, of the Net Proceeds of such Disposition. At least two
business days prior to the Net Proceeds Payment Date, the Company or
the US Borrower, as the case may be, shall provide the applicable
Agent with an irrevocable notice of prepayment, identifying the Net
Proceeds Payment Date and a detailed calculation of Net Proceeds
from the subject Disposition. Once such notice is given by the
Company or the US Borrower, the Company or the US Borrower, as the
case may be, shall make such prepayment on the Net Proceeds Payment
Date, together with accrued interest to date on the amount prepaid.

	 	 	 
	(b)	 	The Company or the US Borrower, as the case may be, shall also pay to the
Banks any amounts payable pursuant to Section 4.04 as a result of
prepayment pursuant to this Section 2.16.
	 
	(c)	 	Upon receipt by an Agent or Agents of a Notice of Prepayment pursuant to
Section 2.16(a) above, the applicable Agent shall calculate the total
outstanding amount of each Canadian Loan, US Loans (excluding LC Loans).
The total amount of such Canadian Loans and US Loans are called the
“Revolving Loans”. The Administrative Agent shall apply the Net Proceeds
from a Disposition rateably among the Revolving Loans. Specifically,
application of the Net Proceeds shall be determined or calculated in
proportion to which the Revolving Loans each bear to the total amount of
all Loans outstanding (excluding LC Loans). Disbursement of payments by
the applicable Agent to each applicable Bank shall be made on the Net
Proceeds Payment Date (or otherwise in accordance with Section 2.12) in
amounts equal to each Bank’s Pro Rata Share, but applied in the following
priorities: In the case of Revolving Loans FIRST to Prime Loans and Base
Rate Loans and SECOND to LIBO Rate Loans.

2.17   Risk Participations in Canadian Loans.

	 	 	 
	(a)	 	Each Canadian Risk Participant agrees that it shall at all times have a
participation in, and acknowledges that it is irrevocably and
unconditionally obligated, upon receipt of notice from the Canadian
Payment Agent that the Canadian Payment Agent has received a Canadian Risk
Participation Funding Notice, to fund (or to cause an Affiliate to fund)
its participation in, each outstanding Canadian Loan in an amount equal to
its Canadian Loan Percentage Share of the amount of such Canadian
Loan.
	 
	(b)	 	The Canadian Payment Agent shall promptly notify each Canadian Bank and
each Canadian Risk Participant of its receipt of a Canadian Risk
Participation Funding Notice. Promptly upon receipt of such Notice, each
Canadian Risk Participant shall (or shall cause an Affiliate to) make
available to the Canadian Payment Agent for the account of the Canadian
Banks an amount in Cdn. Dollars (or Equivalent Amount) equal to its

34

 

	 	 	 
	 	 	Canadian Loan Percentage Share of all outstanding Canadian Loans. If any
Canadian Risk Participant fails to make available to the Canadian Payment
Agent for the account of the Canadian Banks the full amount of such
Canadian Risk Participant’s participation in all Canadian Loans by no
later than 2:00 p.m. (Toronto time) on the date of its receipt of such
notice from the Canadian Payment Agent (or on the Business Day following
such receipt of such Notice if such Notice is received after 10:00 a.m.
(Toronto time) on any Business Day), then interest shall accrue on such
Canadian Risk Participant’s obligation to fund such participation, from
the date such obligation became due to the date such Canadian Risk
Participant pays such obligation in full, at a rate per annum equal to the
Federal Funds Rate in effect from time to time during such period. The
Canadian Payment Agent shall promptly distribute to each Canadian Bank an
amount equal to its pro rata share of the amount received from any
Canadian Risk Participant to fund its participation in the Canadian Loans
of such Canadian Bank, in the same funds as those received by the Canadian
Payment Agent, based on such Canadian Bank’s Commitment divided by the
Total Canadian Commitments.

	 	 	 
	(c)	 	From and after the date on which the Canadian Payment Agent has received
a Canadian Risk Participation Funding Notice, all funds received by the
Canadian Payment Agent in payment of the Canadian Loans, interest thereon
and other amounts payable thereon, shall be distributed by the Canadian
Payment Agent, in the same funds as those received by the Canadian Payment
Agent, to all Canadian Risk Participants in accordance with their Canadian
Loan Percentage Shares (giving effect to the funding of participations
pursuant to this Section 2.17), except that the Canadian Loan Percentage
Share of such funds of any Canadian Risk Participant that has not funded
its participations as provided herein shall be distributed rateably to the
Canadian Banks.
	 
	(d)	 	If the Canadian Payment Agent or any Canadian Bank is required at any
time to return to the Company, or to any trustee, receiver, liquidator or
custodian, or any official in any insolvency proceeding, any portion of
any payment made by the Company in respect of any Canadian Loan or
interest or fee thereon, each Canadian Risk Participant shall, on the
demand of the Canadian Payment Agent, forthwith return to the Canadian
Payment Agent for the account of the applicable Canadian Bank the amount
of its Canadian Loan Percentage Share of the amounts so returned to the
Canadian Payment Agent or Canadian Bank plus interest thereon from the
date such demand is made to the date such amount is returned by the
Canadian Risk Participant to the Canadian Payment Agent, at a rate per
annum equal to the Federal Funds Rate from time to time in effect.

ARTICLE III

THE LETTERS OF CREDIT

3.01   Letters of Credit.

	 	 	 
	(a)	 	
On the terms and conditions set forth herein (i) an Issuing Bank agrees,
(A) from time to time on any Business Day during the period from the Closing
Date to the day which is

35

 

	 	 	 
	 	 	
five days prior to the Termination Date to issue
Letters of Credit for the account of the US Borrower, and to amend or
renew Letters of Credit previously issued by it, in accordance with
Sections 3.02(b) and (c), and (B) to honour drafts under the Letters of
Credit; and (ii) the US Banks severally agree to participate in Letters of
Credit issued for the account of the US Borrower; provided, that the
Issuing Bank shall not be obligated to Issue, and no Bank shall be
obligated to participate in, any Letter of Credit if as of the date of
Issuance of such Letter of Credit (the “Issuance Date”) (1) the L/C
Obligations plus the Equivalent Amount of all Loans (excluding the
issuance of such L/Cs) exceeds the combined Commitments, or, (2) the
participation of any Bank in all L/C Obligations plus the Equivalent
Amount of all outstanding Loans exceeds such Bank’s Commitment or, (3) the
L/C Obligation would exceed the L/C Sublimit. Within the foregoing
limits, and subject to the other terms and conditions hereof, the US
Borrower’s ability to obtain Letters of Credit shall be fully revolving,
and, accordingly, the US Borrower may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit which have expired or which
have been drawn upon and reimbursed. All Letters of Credits issued and
outstanding as at the date of this Agreement shall be deemed to have been
issued pursuant hereto, and from and after the Closing Date shall be
subject to, and governed by the terms and conditions hereof.

	 	 	 
	(b)	 	
An Issuing Bank shall be under no obligation to Issue any Letter of
Credit if:

	 	(A)     any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from issuing such Letter of Credit, or any Law
applicable to the Issuing Bank or any request or directive (whether
or not having the force of law) from any Governmental Authority
with jurisdiction over the Issuing Bank shall prohibit, or request
that the Issuing Bank refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall
impose upon the Issuing Bank with respect to such Letter of Credit
any restriction, reserve or capital requirement (for which the
Issuing Bank is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which the Issuing Bank in good faith deems
material to it;
	 
	 	(B)     the expiry date of such requested Letter of Credit would occur
more than twelve months after the date of issuance or last renewal,
unless the Majority Banks have approved such expiry date;
	 
	 	(C)     the expiry date of such requested Letter of Credit would occur
after the Termination Date, unless all the Banks have approved such
expiry date;
	 
	 	(D)     the issuance of such Letter of Credit would violate one or more
policies of the Issuing Bank; or

36

 

	 	(E)     such Letter of Credit is in an initial amount less than
$100,000, or is to be used for a purpose other than that which is
customary for the business carried on by the US Borrower, or
denominated in a currency other than Dollars.

	 	 	 
	(c)	 	
An Issuing Bank shall be under no obligation to amend any Letter of
Credit if (A) the Issuing Bank would have no obligation at such time to
issue such Letter of Credit in its amended form under the terms hereof, or
(B) the beneficiary of such Letter of Credit does not accept the proposed
amendment to such Letter of Credit.

3.02   Issuance and Amendment of
Letters of Credit.

	 	 	 
	(a)	 	Each Letter of Credit shall be issued or amended as the case may be, upon
the irrevocable written request of the US Borrower received by the Issuing
Bank (with a copy to the Administrative Agent) in the form of an L/C
Application (or L/C Amendment Application, as applicable) appropriately
completed and signed by a Responsible officer of the US Borrower. Such
L/C Application or L/C Amendment Application must be received by the
Issuing Bank and the Administrative Agent not later than 11:00 a.m. (San
Francisco time) at least three Business Days (or such later date and time
as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed Issuance date or date of amendment, as
the case may be. In the case of a request for an initial issuance of a
Letter of Credit, such L/C Application shall specify in form and detail
satisfactory to the Issuing Bank (i) the proposed date of issuance of the
Letter of Credit (which shall be a Business Day); (ii) the face amount of the
Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and
address of the beneficiary thereof; (v) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the beneficiary in
case of any drawing thereunder; and (vii) such other matters as an Issuing Bank
may require. In the case of a requested amendment of any outstanding
Letter of Credit, such L/C Amendment Application shall specify in form and
detail satisfactory to the Issuing Bank: (viii) the Letter of Credit to be
amended; (ix) the proposed date of amendment of the Letter of Credit (which
shall be a Business Day); (x) the nature of the proposed amendment; and (xi) such
other matters as the Issuing Bank may require. The Issuing Bank shall be
under no obligation to amend any Letter of Credit if the Issuing Bank
would have no obligation at such time to issue such Letter of Credit in
its amended form under the terms of this Agreement.
	 
	(b)	 	Promptly after receipt of any L/C Application or L/C Amendment
Application, the Issuing Bank will confirm with the Administrative Agent
(by telephone or in writing) that
the Administrative Agent has received a copy of such L/C Application or
L/C Amendment Application from the US Borrower and, if not, the Issuing
Bank shall provide a copy to the Administrative Agent. Upon receipt by
the Issuing Bank or confirmation from the Administrative Agent that the
requested issuance or amendment is permitted in accordance with the terms
hereof, then, subject to the terms hereof, the Issuing Bank shall, on the
requested date, issue a Letter of Credit for the account of the US
Borrower or enter into the applicable amendment, as the case may be, in
each case in

37

 

	 	 	 
	 	 	accordance with the Issuing Bank’s usual and customary
business practices. Immediately upon the issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a risk
participation in such Letter of Credit in an amount equal to the product
of such Bank’s Pro Rata share times the amount of such
Letter of Credit.

	 	 	 
	(c)	 	
Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the
beneficiary thereof, the Issuing Bank will also deliver to the US Borrower
and the Administrative Agent a true and complete copy of such Letter of
Credit or amendment.

3.03   Funding of Participations,
Drawings and Reimbursements.

	 	 	 
	(a)	 	Upon receipt from the beneficiary of any Letter of Credit of any notice
of a drawing under such Letter of Credit, the Issuing Bank will promptly
notify the US Borrower and the Administrative Agent. The US Borrower
shall reimburse the Issuing Bank through the Administrative Agent (by an
L/C Loan or otherwise) prior to 11:00 a.m. (San Francisco time) on each
date that any amount is paid by the Issuing Bank under any such Letter of
Credit (each such date, an “Honour Date”), in an amount equal to the
amount such drawing. In the event that the US Borrower fails to so
reimburse the Administrative Agent for the full amount of such drawing the
Administrative Agent will promptly notify each Bank of the Honour Date,
the amount of unreimbursed drawing (the “Unreimbursed Amount”), and the
amount of such Bank’s Pro Rata Share thereof. In such event, the US
Borrower shall be deemed to have requested that Base Rate Loans in an
aggregate amount equal to the Unreimbursed Amount made by the Banks to be
disbursed on the Honour Date, without regard to the minimum and multiples
specified in Section 2.04 for the principal amount of Base Rate Loans, but
subject to the amount of the unutilized portion of the Total Commitment
and the conditions in Section 5.02 (other than delivery of Notice or
Borrowing). Any notice given by the Administrative Agent or the Issuing
Bank pursuant to this Section 3.03(a) may be by telephone if immediately
confirmed in writing (including by facsimile); provided, that the lack of
such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
	 
	(b)	 	Each Bank (including the Bank acting as Issuing Bank) shall upon any
notice pursuant to Section 3.03(a) make available to the Administrative
Agent for the account of the Issuing Bank an amount in immediately
available funds equal to its Pro Rata Share of the
Unreimbursed Amount, not later than 1:00 p.m. (San Francisco time) on the
Business Day specified in such notice by the Administrative Agent,
whereupon, subject to the provision of 3.03(c), each Bank that so makes
funds available shall be deemed to have made a Base Rate Loan to the US
Borrower in such amount. The Administrative Agent shall remit the funds
so received to the Issuing Bank.
	 
	(c)	 	With respect to any Unreimbursed Amount that is not fully refinanced by
Base Rate Loans because the conditions in Section 5.02 cannot be satisfied
or for any other reason,

38

 

	 	 	 
	 	 	the US Borrower shall be deemed to have incurred
from the Issuing Bank an L/C Loan in the amount of the Unreimbursed Amount
that is not refinanced, which L/C Loan shall be due and payable on demand
(together with interest) and shall bear interest at the Base Rate plus 3%.
In such event, each Bank’s payment to the Administrative Agent for the
account of the Issuing Bank pursuant to Section 3.03(b) shall be deemed
payment in respect of its participation in such L/C Loan and shall
constitute an L/C Advance from such Bank in satisfaction of participation
obligations under Article III hereof.

	 	 	 
	(d)	 	Each Bank’s obligation in accordance with this Agreement to make the
Loans or L/C Advances, as contemplated by this Section 3.03, as a result
of a drawing under a Letter of Credit, shall be absolute and unconditional
and without recourse to the applicable Issuing Bank and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defence or other right which such Bank may have against the
Issuing Bank, the US Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default, an Event of
Default or a Material Adverse Effect; or (iii) any other occurrence,
circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided, however, that each Bank’s obligations to make
Loans pursuant to this Section 3.03 are subject to the conditions in
Section 5.02 (other than delivery of a Notice of Borrowing by the US
Borrower). No such making of an L/C Advance shall relieve or otherwise
impair the obligation of the US Borrower to reimburse to Issuing Bank for
the amount of any payment made by the Issuing Bank under any Letter of
Credit, together with interest as provided herein.
	 
	(e)	 	If any Bank fails to make available to the Administrative Agent for the
account of the Issuing Bank any amount required to be paid by such Bank
pursuant to this Section 3.03 by the time specified in Section 3.03(b),
the Issuing Bank shall be entitled to recover from such Bank (acting
through the Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to the date
on which such payment is immediately available to the Issuing Bank at a
rate per annum equal to the Federal Funds Rate from time to time in
effect. A certificate of an Issuing Bank submitted to any Bank (through
the Administrative Agent) with respect to any amounts owing under this
Section 3.03(e) shall be conclusive absent manifest error.

3.04   Repayment of
Participations.

	 	 	 
	(a)	 	
At any time after the Issuing Bank has made payment under a Letter of
Credit and has received from any Bank such Bank’s L/C Advance in respect
of such payment in
accordance with 3.03, upon (and only upon) receipt by the Administrative
Agent for the account of the Issuing Bank of immediately available funds
from the US Borrower in respect of the related Unreimbursed Amount or
interest thereon (whether directly from the US Borrower or otherwise,
including proceeds of Cash Collateral) the Administrative Agent will
distribute to each Bank in the same funds as those received by the
Administrative Agent, the amount of such Bank’s Pro Rata Share of such
funds, and the Issuing Bank shall receive the amount of the Pro Rata
Share of such funds of any Bank that did not so pay.

39

 

	 	 	 
	(b)	 	
If the Administrative Agent or the Issuing Bank is required at any time
to return to the Company or the US Borrower or any Guarantors, or to a
trustee, receiver, liquidator, custodian, or any official in any
Insolvency Proceeding, any portion of the payments made by the Company or
US Borrower or Guarantors to the Issuing Bank pursuant to Section 3.04(a)
in reimbursement of a payment made under a Letter of Credit or interest or
fee thereon, each Bank shall, on demand of the Administrative Agent,
forthwith return to the Administrative Agent for the account of the
Issuing Bank, the amount of its Pro Rata Share of any amounts so returned
by Administrative Agent or the Issuing Bank plus interest thereon from the
date such demand is made to the date such amounts are returned by such
Bank to the Administrative Agent or the Issuing Bank, at a rate per annum
equal to the Federal Funds Rate in effect from time to time.

3.05   Obligations Absolute. The obligations of the US Borrower under this
Agreement and any L/C-related document to reimburse the Administrative Agent
for the account of an Issuing Bank for a drawing under a Letter of Credit, and
to repay any L/C Loan and any drawing under a Letter of Credit converted into
Base Rate Loans, shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement and each such
other L/C-related document under all circumstances, including the following:

	 	 	 
	(a)	 	any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;
	 
	(b)	 	the existence of any claim, counterclaim, set-off, defense or other right
that the US Borrower or any Guarantor may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for
whom such beneficiary or any such transferee may acting), the Issuing Bank
or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by such Letter of Credit or any
agreement or instrument relating thereto, or any unrelated transactions;
	 
	(c)	 	any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under such Letter of Credit;
	 
	(d)	 	any payment by the Issuing Bank under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit; or any payment made by the Issuing
Bank under such Letter of Credit to any person purporting to a trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver or other representatives of or successor to any
beneficiary or any transferee of such Letter of Credit, including any
arising in connection with any Insolvency Proceeding; or

40

 

	 	 	 
	(e)	 	any circumstance or happening whatsoever, whether or not similar to any
of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the US Borrower or
any Guarantor.
	 
	 	 	The US Borrower shall promptly examine a copy of each Letter of Credit
and each amendment thereto that is delivered to it and, in the event of
any claim of non compliance with the US Borrower’s instructions or other
irregularity, the US Borrower will immediately notify the Issuing Bank.
The US Borrower shall be conclusively deemed to have waived any such
claim against the Issuing Bank and its correspondents unless such notice
is given as aforesaid.

3.06   Cash Collateral Pledge. Upon the request of the Administrative Agent, (i)
if an Issuing Bank has honoured any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Advance, or (ii) if,
as of the Termination Date, any Letter of Credit may for any reason remain
outstanding and partially or wholly undrawn, the US Borrower shall immediately
Cash Collateralize the then outstanding amount of all L/C Obligations (in an
amount equal to such outstanding amount determined as of the date of such L/C
Advance or the Termination Date, as the case may be). For purposes hereof,
“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Issuing Bank and the Banks, as
collateral for the L/C Obligations, cash or deposit account balances pursuant
to documentation in form and substance satisfactory to the Administrative Agent
and the Issuing Bank (which documents are hereby consented to by the Banks).
Derivatives of such term have corresponding meanings. Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at Bank of
America.

3.07   Role of Issuing Bank.

	 	 	 
	 	 	Each Bank and the US Borrower agree that, in paying any drawing under a
Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft, certificates and
documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None
of the Issuing Bank, any Agent-Related Person nor any of their respective
correspondents, participants or assignees of the Issuing Bank shall be
liable to any Bank for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Banks or the Majority
Banks, as applicable; (ii) any action taken or omitted in the absence of
gross negligence or wilful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument
related to any Letter of Credit or L/C Application or L/C Amendment
Application. The US Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter Credit; provided, however, that this assumption is not intended
to, and shall not, preclude the US Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law
under any other agreement. None of the Issuing Bank, any Agent-Related
Person, nor any of their respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of
the matters

41

 

	 	 	 
	 	 	described in Section 3.05; provided, however, that anything
in such clauses to the contrary notwithstanding, the US Borrower may have
a claim against the Issuing Bank, and the Issuing Bank may be liable to
the US Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the US
Borrower which the US Borrower proves were caused by the Issuing Bank’s
wilful misconduct or gross negligence or the Issuing Bank’s wilful
failure to pay under any Letter of Credit after presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. In furtherance and not
in limitation of the foregoing, the Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the
contrary, and the Issuing Bank shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason.

3.08   Applicability of ISP98 and UCP.

	 	 	 
	 	 	Unless otherwise expressly agreed by the Issuing Bank and the US Borrower
when a Letter of Credit is issued (including any agreement applicable to
an existing Letter of Credit), (i) the rules of the “International
Standby Practices 1998” published by Institute of International Banking
Law and Practice (or such later version thereof as may be in effect at
the time of Issuance) shall apply to each Letter of Credit, and (ii) the
rules of the Uniform Customs and Practice for Documentary Credits, as
most recently published by the International Chamber of Commerce (the
“ICC”) at the time of Issuance (including the ICC decision published by
the Commission on Banking Technique and Practice on April 6, 1998
regarding the European single currency (euro)) shall apply to each Letter
of Credit.

3.09   Letter of Credit Fees.

	 	 	 
	 	 	The US Borrower shall pay to the Administrative Agent for the account of
each Bank in accordance with its Pro Rata Share the L/C Fee for each
Letter of Credit equal to the Applicable Rate times the daily maximum
amount available to be drawn under such Letter of Credit (whether or not
such maximum amount is in effect under such Letter of Credit). The L/C
Fee shall be computed on a quarterly basis in arrears. The L/C Fee
shall be due and payable on the first Business Day at the end of each
quarter, commencing with the last date of the first quarter in which the
Issuance of such Letter of Credit occurs through to the Termination Date
and thereafter on demand. If there is any change in the Applicable
Margin during any quarter, the daily maximum amount of each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in
effect.

42

 

3.10   Issuance Fee and Documentary and Processing Charges Payable to Issuing
Bank.

	 	 	 
	 	 	The US Borrower shall pay directly to the Issuing Bank for its own
account an L/C Issuance Fee with respect to each Letter of Credit. In
addition, the US Borrower shall pay directly to the Issuing Bank for its
own account that customary issuance, presentation, amendment and other
processing fees and other standard costs and charges, of the Issuing Bank
relating to Letters of Credit as from time to time in effect. Such
customary fees and standard cost and charges are due and payable on
demand and are non refundable.

3.11   Conflict with L/C Application or L/C Amendment Application.

	 	 	 
	 	 	In the event of any conflict between the terms hereof and the terms of
any L/C Application or L/C Amendment Application, the terms hereof shall
govern.

ARTICLE IV

TAXES, YIELD PROTECTION AND ILLEGALITY

4.01   Taxes.

	 	 	 
	(a)	 	
Subject to Section 4.01(b), any and all payments by the Company or the US
Borrower to each Bank, the Administrative Agent or the Canadian Payment
Agent, as applicable, under this Agreement and any other Loan Document
shall be made free and clear of, and without deduction or withholding for,
any Taxes, Other Taxes and Further Taxes. In addition, the Company or the
US Borrower, as the case may be, shall pay all Other Taxes.
	 
	(b)	 	
If the Company or the US Borrower shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any
sum payable hereunder to any Bank or either Agent, then:

	 	 	 	 
	 	(i)	 	
Subject to Section 4.01(f), the sum payable shall be
increased as necessary so that, after making all required deductions
and withholdings (including deductions and withholdings applicable
to additional sums payable under this Section), such
Bank or the Administrative Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and
retained had no such deductions or withholdings been made;
	 
	 	(ii)	 	
the Company or the US Borrower, as the case may be, shall
make such deductions and withholdings;
	 
	 	(iii)	 	
the Company or the US Borrower, as the case may be, shall
pay the full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable law; and

43

 

	 	 	 	 
	 	(iv)	 	
subject to Section 4.01(f), the Company or the US Borrower,
as the case may be, shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time
interest is paid, Further Taxes in the amount that the respective
Bank specifies as necessary to preserve the after-tax yield the Bank
would have received if such Taxes, Other Taxes or Further Taxes had
not been imposed.

	 	 	 
	(c)	 	
Subject to Section 4.01(f),the Company agrees to indemnify and hold
harmless each Bank and the Administrative Agent for the full amount of (i)
Taxes, (ii) Other Taxes, and (iii) Further Taxes paid by Banks and the
Agents in the amount that the respective Bank or Agents specifies as
necessary to preserve the after-tax yield the Bank or Agent would have
received if such Taxes, Other Taxes or Further Taxes had not been imposed,
and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after the
date the Bank or the applicable Agent makes written demand therefor.
	 
	(d)	 	
Under this Section within 30 days after the date of any payment by the
Company or the US Borrower of Taxes, Other Taxes or Further Taxes, under
Section 4.01(b) the Company or the US Borrower, as the case may be, shall
furnish to each Bank and the Agents the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment
satisfactory to such Bank or the Agents.
	 
	(e)	 	
If the Company or the US Borrower, as the case may be, is required to pay
any amount to any Bank or the Administrative Agent pursuant to subsection
(b) or (c) of this Section, then such Bank shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company or the US Borrower which may thereafter accrue, if
such change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
	 
	(f)	 	
Neither Borrower shall be required to (x) increase under Section
4.01(b)(i) amounts otherwise payable hereunder, (y) pay Further Taxes
under Section 4.01(b)(iv) or (z) indemnify any Bank or Administrative
Agent under Section 4.01(c), in respect of any amounts withheld or
deducted on account of payments made by the Company to any Person
other than Canadian Banks in respect of interest on Loans made under
Facility B.

4.02   Illegality.

	 	 	 
	(a)	 	
If any Bank determines that the introduction of any Requirement of Law,
or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that
any central bank or other Governmental Authority has asserted that it is
unlawful, for any Bank or its applicable Lending Office to make LIBO Rate
Loans, then, on notice thereof by the Bank to the Borrowers through the
Administrative Agent, any obligation of that Bank to make LIBO Rate Loans
shall be

44

 

	 	 	 
	 	 	
suspended until the Bank notifies the Administrative Agent and
the Borrowers that the circumstances giving rise to such determination no
longer exist.

	 	 	 
	(b)	 	
If a Bank determines that it is unlawful to maintain any LIBO Rate Loan,
each Borrower shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the applicable Agent), prepay in full such
LIBO Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either on the
last day of the Interest Period thereof, if the Bank may lawfully continue
to maintain such LIBO Rate Loans to such day, or immediately, if the Bank
may not lawfully continue to maintain such LIBO Rate Loan. If any
Borrower is required to so prepay any LIBOR then concurrently with such
prepayment, the Borrower shall borrow from the affected Bank, in the
amount of such repayment, a Base Rate Loan.
	 
	(c)	 	
If the obligation of any Bank to make or maintain LIBO Rate Loans has
been so terminated or suspended, the Borrower may elect, by giving notice
to the Bank through the Administrative Agent that all Loans which would
otherwise be made by the Bank as LIBO Rate Loans shall be instead a Base
Rate Loan.
	 
	(d)	 	
Before giving any notice to the Administrative Agent under this Section,
the affected Bank shall designate a different Lending Office with respect
to its LIBO Rate Loans if such designation will avoid the need for giving
such notice or making such demand and will not, in the judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.

4.03   Increased Costs and Reduction of Return.

	 	 	 
	(a)	 	
If any Bank determines that, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii) the
compliance by that Bank with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Bank of agreeing to
make or making, funding or maintaining any LIBO Rate Loans or
participating in L/Cs, then the Company or the US Borrower shall be liable
for, and shall from time to time, upon demand (with a copy of such demand
to be sent to the
Administrative Agent), pay to the applicable Agent for the account of
such Bank, additional amounts as are sufficient to compensate such Bank
for such increased costs.
	 
	(b)	 	
If any Bank shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any
change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged
with the interpretation or administration thereof, or (iv) compliance by the
Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such
Bank’s or such corporation’s policies with respect to capital adequacy and
such Bank’s desired return on capital)

45

 

	 	 	 
	 	 	
determines that the amount of such
capital is increased as a consequence of its Commitments, loans, credits
or obligations under this Agreement, then, upon demand of such Bank to any
Borrower through the Administrative Agent, such Borrower shall pay to the
Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.

4.04   Funding Losses. Each Borrower shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:

	 	 	 
	(a)	 	
the failure of such Borrower to make on a timely basis any payment of
principal or interest of any LIBO Rate Loan;
	 
	(b)	 	
the failure of such Borrower to borrow, continue or convert a Loan after
the Borrower has given (or is deemed to have given) a Notice of Borrowing
or Notice of Conversion/Continuation;
	 
	(c)	 	
the failure of such Borrower to make any prepayment in accordance with
any notice delivered under Section 2.06;
	 
	(d)	 	
the prepayment (including pursuant to Section 2.06 or Section 2.16) or
other payment (including after acceleration thereof) of a LIBO Rate Loan
on a day that is not the last day of the relevant Interest Period; or
	 
	(e)	 	
the automatic conversion of a LIBO Rate Loan under Section 2.05 on a day
that is not the last day of a relevant Interest Period,

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBO Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.

4.05   Inability to Determine Rates. If the Administrative Agent determines that
for any reason adequate and reasonable means do not
exist for determining the LIBO Rate for any requested LIBOR Period with respect
to a proposed LIBO Rate Loan, or that the LIBO Rate applicable does not
adequately and fairly reflect the cost to the applicable Banks of funding such
Loan, the Administrative Agent will promptly so notify the applicable Borrower
and each applicable Bank. Thereafter, the obligation of such Banks to make or
maintain LIBO Rate Loans, as the case may be, hereunder shall be suspended
until the applicable Agent revokes such notice in writing. Upon receipt of
such notice, the applicable Borrower may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the applicable
Borrower does not revoke such Notice, the applicable Banks shall make, convert
or continue the Loans, as proposed by the US Borrower in the amount specified
in the applicable notice submitted by the US Borrower, but such Loans shall be
made, converted or continued as Base Rate Loans instead of LIBO Rate Loans.

46

 

4.06   Certificates of Banks. Any Bank claiming reimbursement or compensation
under this Article IV shall deliver to the applicable Borrower (with a copy to
applicable the Administrative Agent and the Canadian Payment Agent) a
certificate setting forth in reasonable detail the amount payable to the Bank
hereunder and such certificate shall be conclusive and binding on the
applicable Borrower in the absence of manifest error.

4.07   Survival. The agreements and obligations of the Borrowers in this Article
IV shall survive the payment of all other Obligations.

ARTICLE V

CONDITIONS PRECEDENT

5.01   Conditions of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the condition that the Administrative
Agent shall have received on or before the Closing Date all of the following,
in form and substance satisfactory to the Administrative Agent and each Bank,
and in sufficient copies for each Bank:

	 	 	 
	(a)	 	
Credit Agreement. This Agreement executed by each party thereto;
	 
	(b)	 	
Borrower Guarantees, Subsidiary Guarantees and Security. Each Guarantor
shall have authorized, executed and delivered a Guarantee (in the case of
Alumitech of West Virginia, Inc.) or reaffirmation of Guarantees
previously delivered to the Banks, in form satisfactory to the
Administrative Agent, as well as such security documentation as the
Administrative Agent may request, which shall include Security Agreements,
or reaffirmation of Security Agreements previously delivered, from each
Guarantor;
	 
	(c)	 	
Resolutions; Incumbency.

	 	 	 	 
	 	(i)	 	
Copies of the resolutions of the board of directors of each
Borrower authorizing the transactions contemplated hereby, certified
as of the Closing Date by the Secretary of each Borrower;
	 
	 	(ii)	 	
A certificate of the Secretary of each Borrower certifying
the names and true signatures of the officers of each Borrower
authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents to be delivered by it
hereunder;
	 
	 	(iii)	 	
Copies of the resolutions of the board of directors of each
Guarantor authorizing the Guarantee or reaffirmation of Guarantee,
as applicable and contemplated hereby, certified as of the Closing
Date by the Secretary of each Guarantor; and
	 
	 	(iv)	 	
A certificate of the Secretary of each Guarantor certifying
the names and true signatures of the officers of each Guarantor
authorized to execute, deliver and perform, as applicable, the
Guarantees, and all other Loan Documents to be delivered by it
hereunder;

47

 

	 	 	 
	(d)	 	
Organization Documents; Good Standing. Each of the following documents:

	 	 	 	 
	 	(i)	 	
the Organization Documents of each Borrower as in effect on
the Closing Date, certified by the Secretary of each Borrower as of
the Closing Date, or a certification that no amendments to the
Organization Documents have been made since May 21, 1999; and
	 
	 	(ii)	 	
a good standing certificate (or the equivalent) for each
Borrower;
	 
	 	(iii)	 	
the Organization Document of each Guarantor as in effect on
the Closing Date, certified by the Secretary of each Guarantor as of
the Closing Date, or a certification that no amendments to the
Organization Documents have been made since May 21, 1999; and
	 
	 	(iv)	 	
a good standing certificate (or the equivalent) for each
Guarantor;

	 	 	 
	(e)	 	Legal Opinions.

	 	 	 	 
	 	(i)	 	
an opinion of Stikeman, Elliott, counsel to the Company and
addressed to the Administrative Agent and the Banks, in form
satisfactory to the Administrative Agent, the Banks and their
counsel;
	 
	 	(ii)	 	
an opinion of Altheimer & Grey, counsel to the US Borrower
and addressed to the Administrative Agent and the Banks, in form
satisfactory to the Administrative Agent, the Banks and their
counsel.

	 	 	 
	(f)	 	
Payment of Fees. Evidence of payment by the Company on drawdown under
the initial Loan of all accrued and unpaid fees, costs and expenses to the
extent then due and
payable on the Closing Date, together with Attorney Costs of Bank of
America to the extent invoiced prior to or on the Closing Date, including
any such costs, fees and expenses arising under or referenced in Sections
2.10 and 11.04;
	 
	(g)	 	
Collateral Documents. The Collateral Documents, executed by the Company,
the Guarantors, the Pledgors and the US Borrower as applicable, in
appropriate form for recording, where necessary, together with

	 	 	 	 
	 	(i)	 	
acknowledgment copies of all UCC or PPSA financing statements
filed, registered or recorded to perfect the security interests of
the Administrative Agent for the benefit of the Banks, or other
evidence satisfactory to the Administrative Agent that there has
been filed, registered or recorded all financing statements and
other filings, registrations and recordings necessary and advisable
to perfect the Liens of the Administrative Agent for the benefit of
the Banks in accordance with applicable law;
	 
	 	(ii)	 	
written advice of Borrowers’ counsel relating to such Lien
and judgment searches as the Administrative Agent shall have
requested, and such termination statements

48

 

	 	 	 	 
	 	 	 	or other documents as may
be necessary to confirm that the Collateral is subject to no other
Liens in favor of any Persons (other than Permitted Liens);

	 	 	 	 
	 	(iii)	 	
to the extent not previously delivered to the Administrative
Agent or the Banks, all certificates and instruments representing
the Pledged Collateral, all original Inter-Company Notes, stock
transfer powers executed in blank with signatures guaranteed as the
Administrative Agent or the Banks may specify;
	 
	 	(iv)	 	
evidence that all other actions necessary or, in the opinion
of the Administrative Agent or the Banks, desirable to perfect and
protect the first priority security interest created by the
Collateral Documents have been taken;
	 
	 	(v)	 	
where appropriate, flood insurance and earthquake insurance
on terms satisfactory to the Administrative Agent and the Banks;
	 
	 	(vi)	 	
evidence that all other actions necessary or, in the opinion
of the Administrative Agent or the Banks, desirable to perfect and
protect the first priority Lien created by the Collateral Documents,
and to enhance the Administrative Agent’s ability to preserve and
protect its interests in and access to the Collateral, have been
taken;

	 	 	 
	(h)	 	
Insurance Policies. Standard lenders’ payable endorsements with respect
to the insurance policies or other instruments or documents evidencing
insurance coverage on the assets of the Company and the US Borrower in
accordance with Section 7.06;
	 
	(i)	 	
Certificate. A certificate signed by a Responsible Officer of each
Borrower, dated as of the Closing Date, stating that:

	 	 	 	 
	 	(i)	 	
the representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and
as of such date;
	 
	 	(ii)	 	
no Default or Event of Default exists or would result from
the initial Borrowing; and
	 
	 	(iii)	 	
there has occurred since December 31, 2001, no event or
circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect.

	 	 	 
	(j)	 	
Litigation. Except as disclosed in Schedule 6.05, the absence of any
action, suit, investigation or proceeding pending or threatened in any
court or before any arbitrator or Governmental Authority that, if
determined adversely to the Company or any Subsidiary, could reasonably be
expected to have a Material Adverse Effect;
	 
	(k)	 	
Due Diligence. Receipt and review, with results satisfactory to the
Administrative Agent, the Banks and their counsel, of information
regarding various matters relating to the Company and its Subsidiaries,
including litigation, tax, accounting, labour, insurance, pension
liabilities (actual or contingent), real estate leases, material
contracts, debt

49

 

	 	 	 
	 	 	
agreements, property ownership, environmental matters,
contingent liabilities and management;

	 	 	 
	(l)	 	
Other Documents. Such other approvals, opinions, documents or materials
as the Administrative Agent or any Bank may request, including evidence
that all existing capital loans, term loans and revolving loans of the
Company and the US Borrower have been repaid in full.

5.02   Conditions to All Borrowings. The obligation of each Bank to make any
Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under Section 2.05, or any Issuing Bank to Issue Letters of Credit, as
the case may be, is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date or Conversion/Continuation Date or
Issuance Date:

	 	 	 
	(a)	 	
Notice of Borrowing or Conversion/Continuation. The Administrative Agent
or the Canadian Payment Agent, as applicable shall have received (with, in
the case of the initial Loan only, a copy for each Bank) a Notice of
Borrowing, a Notice of Conversion/Continuation or L/C Application, as
applicable;
	 
	(b)	 	
Continuation of Representations and Warranties. The representations and
warranties in Article VI shall be true and correct on and as of such
Borrowing Date or Conversion/Continuation Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date, in
which case they shall be true and correct as of such earlier date);
	 
	(c)	 	
No Existing Default. No Default or Event of Default shall exist or shall
result from such Borrowing or continuation or conversion; and
	 
	(d)	 	
No Future Advance Notice. Neither the Administrative Agent nor any Bank
shall have received from a Borrower any notice that any Collateral
Document will no longer secure on a first priority basis future advances
or future Loans to be made or extended under this Agreement.

Each Notice of Borrowing or Notice of Conversion/Confirmation or L/C
Application submitted by a Borrower hereunder shall constitute a representation
and warranty by such Borrower hereunder, as of the date of each such notice and
as of each Borrowing Date, Conversion/Continuation Date or Issuance Date or
that the conditions in this Section 5.02 are satisfied.

50

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

     The Company and the US Borrower each represents and warrants to the
Administrative Agent and each Bank that:

6.01   Corporate Existence and Power. Each Borrower and each of its
Subsidiaries:

	 	 	 
	(a)	 	
is a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation;
	 
	(b)	 	
has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its
business and to execute, deliver, and perform its obligations under the
Loan Documents;
	 
	(c)	 	
is licensed and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification or license; and
	 
	(d)	 	
is in compliance with all Requirements of Law, except for those, the
non-compliance with which would not have a Material Adverse Effect on the
Borrower or its Subsidiaries or Affiliates;

6.02   Corporate Authorization; No Contravention. The execution, delivery and
performance by each Borrower and each of its Subsidiaries of this Agreement and
each other Loan Document to which such Borrower or Subsidiary is party, have
been duly authorized by all necessary corporate action, and do not and will
not:

	 	 	 
	(a)	 	
contravene the terms of any of that Borrower’s or Subsidiary’s
Organization Documents;
	 
	(b)	 	
conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual
Obligation to which such Borrower or Subsidiary is a party or any order,
injunction, writ or decree of any Governmental Authority to which such
Borrower or its property is subject other than under the Collateral
Documents; or
	 
	(c)	 	
violate any Requirement of Law, except for those, the non-compliance with
which would not have a Material Adverse Effect on the Borrower, the
Subsidiary or its Subsidiaries or Affiliates.

6.03   Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Administrative Agent under the Collateral Documents) is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, either Borrower of the Agreement or any other Loan
Document or by any of its Subsidiaries of any Loan Document to which it is a
party.

51

 

6.04   Binding Effect. This Agreement and each other Loan Document to which a
Borrower or any of its Subsidiaries is a party constitute the legal, valid and
binding obligations of such Borrower and such Subsidiary enforceable against
such Borrower and such Subsidiary in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles relating to enforceability.

6.05   Litigation. Except as listed on Schedule 6.05, there are no actions,
suits, proceedings, claims or disputes pending, or to the best knowledge of
either Borrower, threatened or contemplated, at law, in equity, in arbitration
or before any Governmental Authority, against such Borrower or its Subsidiaries
or any of their respective properties which:

	 	 	 
	(a)	 	
purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
	 
	(b)	 	
are for amounts of $100,000 or more or which, if determined adversely to
such Borrower or its Subsidiaries, would reasonably be expected to have a
Material Adverse Effect.

No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin
or restrain the execution, delivery or performance of this Agreement or any
other Loan Document, or directing that the transactions provided for herein or
therein not be consummated as herein or therein provided.

6.06   No Default. No Default or Event of Default exists or would result from
the incurring of any Obligations by a Borrower or from the grant or perfection
of the Liens of the Administrative Agent and the Banks on the Collateral. As
of the Closing Date, neither Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation in any respect which, individually
or together with all such defaults, could reasonably be expected to have a
Material Adverse Effect, or that would, if such default had occurred after the
Closing Date, create an Event of Default under subsection 9.01(e).

6.07   ERISA Compliance. Except as specifically disclosed in Schedule 6.07:

	 	 	 
	(a)	 	
Each Plan is, to the best of the US Borrower’s knowledge, in compliance
in all material respects with the applicable provisions of ERISA, the Code
and other federal or state law. Each Plan which is intended to qualify
under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the best knowledge of the US Borrower, nothing
has occurred which would cause the loss of such qualification. The US
Borrower and each ERISA Affiliate has made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
	 
	(b)	 	
To the best of the US Borrower’s knowledge, there are no pending or
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan

52

 

	 	 	 
	 	 	
which has resulted or could reasonably
be expected to result in a Material Adverse Effect. To the best of the US
Borrower’s knowledge, there has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.

	 	 	 
	(c)	 	
(i)   No ERISA Event has occurred or is reasonably expected to occur; (ii)
no Pension Plan has any Unfunded Pension Liability except as disclosed on
Schedule 6.07; (iii) neither the US Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the US Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section
4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v)
neither the US Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

6.08   Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be
used solely for the purposes set forth in and permitted by Section 7.12 and
Section 8.07. Neither Borrower nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.

6.09   Title to Properties. Each Borrower and each Subsidiary have good record
and marketable title in fee simple to, or valid leasehold interests in, all
real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of each Borrower and their Subsidiaries is subject to no Liens, other
than Permitted Liens.

6.10   Taxes. Each Borrower and their Subsidiaries have filed all federal,
provincial and other material tax returns and reports required to be filed, and
have paid all federal, provincial and other material taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against either Borrower or any Subsidiary that would, if made, have
a Material Adverse Effect.

53

 

6.11   Financial Condition.

	 	 	 
	(a)	 	
The audited consolidated financial statements of the Company and its
Subsidiaries dated December 31, 2001, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows
for the fiscal year ended on that date and the unaudited statements of the
Company and its Subsidiaries dated March 31, 2002:

	 	 	 	 
	 	(i)	 	
were prepared in accordance with GAAP consistently applied
throughout the period covered thereby or restated as necessary,
except as otherwise expressly noted therein;
	 
	 	(ii)	 	
fairly present the financial condition of the Company and its
Subsidiaries as of the date thereof and results of operations for
the period covered thereby; and
	 
	 	(iii)	 	
except as specifically disclosed in Schedule 6.11, show all
material indebtedness and other liabilities, direct or contingent,
of the Company and its consolidated Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and
Contingent Obligations.

	 	 	 
	(b)	 	
Since December 31, 2001, there has been no Material Adverse Effect.

6.12   Environmental Matters.

	 	 	 
	(a)	 	
The on-going operations of each Borrower and each of their Subsidiaries
comply in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with applicable
law) result in liability in excess of $100,000 in the aggregate.
	 
	(b)	 	
Each Borrower and each of their Subsidiaries have obtained all licenses,
permits, authorizations and registrations required under any Environmental
Law (“Environmental Permits”) and necessary for their respective ordinary
course operations, all such Environmental Permits are in good standing,
and each Borrower and each of their Subsidiaries are in compliance with
all material terms and conditions of such Environmental Permits.
	 
	(c)	 	
None of the Borrowers, any of their Subsidiaries or any of their
respective present property or operations, is subject to any outstanding
written order from or agreement with any Governmental Authority, nor
subject to any judicial or docketed administrative proceeding, respecting
any Environmental Law, Environmental Claim or Hazardous Material, except
those as set forth in Schedule 6.12.
	 
	(d)	 	
There are no Hazardous Materials or other conditions or circumstances
existing with respect to any property of either Borrower or any
Subsidiary, or arising from operations prior to the Closing Date, of
either Borrower or any of their Subsidiaries that would reasonably be
expected to give rise to Environmental Claims with a potential liability
of a

54

 

	 	 	 
	 	 	
Borrower and their Subsidiaries in excess of $100,000 in the
aggregate for any such condition, circumstance or property, except those
as set forth in Schedule 6.12. In addition, (i) neither Borrower nor any
Subsidiary has any underground storage tanks (x) that are not properly
registered or permitted under applicable Environmental Laws, or (y) that
are leaking or disposing of Hazardous Materials offsite, and (ii) each
Borrower and its Subsidiaries have notified all of their employees of the
existence, if any, of any health hazard arising from the conditions of
their employment and have met all notification requirements under all
Environmental Laws.

6.13   Collateral Documents.

	 	 	 
	(a)	 	
The provisions of the Collateral Documents in aggregate are effective to
create in favour of the Administrative Agent for the benefit of itself,
the Canadian Payment Agent, the Issuing Banks and the Banks, a legal,
valid and enforceable first priority security interest in all right, title
and interest of the Borrowers and their Subsidiaries in the Collateral
described therein subject to Permitted Liens; and financing statements
have been filed in the offices in all of the jurisdictions listed in the
schedules to the Security Agreements.
	 
	(b)	 	
All representations and warranties of each Borrower and any of their
Subsidiaries party thereto contained in the Collateral Documents are true
and correct.

6.14   Regulated Entities. None of the Borrowers, any Person controlling a
Borrower, or any Subsidiary, is an “Investment Company” within the meaning of
the Investment Company Act of 1940. Neither Borrower is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act, any state public utilities code, or any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness.

6.15   No Burdensome Restrictions. Neither Borrower nor any Subsidiary is a
party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which could reasonably
be expected to have a Material Adverse Effect.

6.16   Copyrights, Patents, Trademarks and Licenses, etc. Each Borrower and its
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of each Borrower, no slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by each Borrower or
any Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 6.05, no claim or litigation regarding any
of the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of such Borrower, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.

55

 

6.17   Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
other than those specifically disclosed in part (a) of Schedule 6.17 hereto and
has no equity investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 6.17.

6.18   Insurance. The properties of each Borrower and their Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of such Borrower, in such amounts, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and
owning similar properties in localities where each Borrower or such Subsidiary
operates.

6.19   Solvency. The Company and its Subsidiaries, on a consolidated basis, are
not Insolvent.

6.20   Full Disclosure. None of the representations or warranties made by each
Borrower or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of a Borrower or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of a Borrower to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.

ARTICLE VII

AFFIRMATIVE COVENANTS

     So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

7.01   Financial Statements. The Company shall deliver to each Bank and the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent and the Majority Banks:

	 	 	 
	(a)	 	
as soon as available, but not later than 90 days after the end of each
fiscal year (commencing with the fiscal year ended December 31, 2002), a
copy of the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated
statements of income or operations, shareholders’ equity and cash flows
for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of a
nationally recognized independent public accounting firm (“Independent
Auditor”) which report shall state that such consolidated financial
statements present fairly the financial position for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years.
Such opinion shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material portion of
the Company’s or any Subsidiary’s records;

56

 

	 	 	 
	(b)	 	
as soon as available, but not later than 45 days after the end of each of
the first three fiscal quarters of each fiscal year (commencing with the
fiscal quarter ended June 30, 2002), a copy of the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of such
quarter, and the related consolidated statements of income, shareholders’
equity and cash flows for the period commencing on the first day and
ending on the last day of such quarter, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith adjustments), the financial position and the results
of operations of each Borrower and the Subsidiaries;
	 
	(c)	 	
as soon as available, but not later than 30 days after the end of each
month, income statements and balance sheets of the Company and each of its
Subsidiaries and Excluded Subsidiaries compared to budget for the prior
month in form satisfactory to the Administrative Agent;
	 
	(d)	 	
as soon as available, but not later than 90 days after the end of each
fiscal year (commencing with the fiscal year ended December 31, 2002), a
copy of an unaudited consolidating balance sheet of the Company, its
Subsidiaries and its Excluded Subsidiaries as at the end of such year and
the related consolidating statement of income, shareholders’ equity and
cash flows for such year, and used in connection with the preparation of
the financial statements referred to in subsection 7.01(a);
	 
	(e)	 	
as soon as available, but not later than 30 days after the end of each of
the first three fiscal quarters of each fiscal year (commencing with the
fiscal quarter ended June 30, 2002), a copy of the unaudited consolidating
balance sheets of the Company and its Subsidiaries and its Excluded
Subsidiaries, including historical pro forma financial information
reflecting any Acquisition, and the related consolidating statements of
income, shareholders’ equity and cash flows for such quarter, all
developed and used in connection with the preparation of the financial
statements referred to in subsection 7.01(b);
	 
	(f)	 	
together with the statements required in (a) and (b) above, such other
statements or information required by the Banks and the Administrative
Agent reflecting an exclusion of Excluded Subsidiaries in such financial
statements.

7.02   Certificates; Other Information. The Company shall furnish to each Bank
and the Administrative Agent:

	 	 	 
	(a)	 	
concurrently with the delivery of the financial statements referred to in
subsection 7.01(a), a certificate of the Independent Auditor stating that
in making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such certificate;
	 
	(b)	 	
concurrently with the delivery of the financial statements referred to in
subsections 7.01(a) and 7.01(b), a Compliance Certificate executed by a
Responsible Officer, in the form of Exhibit B;

57

 

	 	 	 
	(c)	 	
promptly, copies of all financial statements and reports that the Company
sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K)
that the Company or any Subsidiary may make to, or file with, the SEC or
the OSC; and
	 
	(d)	 	
promptly, such additional information regarding the business, financial
or corporate affairs of either Borrower or any Subsidiary as the
Administrative Agent, at the request of any Bank, may from time to time
request.

7.03   Notices. Each Borrower shall promptly notify the Administrative Agent and
each Bank:

	 	 	 
	(a)	 	
of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
	 
	(b)	 	
of any breach or non-performance of, or any default under, any
Contractual Obligation of the Borrower or any of its Subsidiaries which
could result in a Material Adverse Effect; and any dispute, litigation,
investigation, proceeding or suspension
which may exist at any time between such Borrower or any of its
Subsidiaries and any Governmental Authority;
	 
	(c)	 	
of the commencement of, or any material development in, any litigation or
proceeding affecting such Borrower or any Subsidiary (i) in which the amount
of damages claimed is $100,000 (or its equivalent in another currency or
currencies) (if such claim is not covered by insurance) or $1,000,000 (if
such claim is not covered by insurance) or more, (ii) in which injunctive or
similar relief is sought and which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect, or (iii) in which the
relief sought is an injunction or other stay of the performance of this
Agreement or any Loan Document;
	 
	(d)	 	
upon, but in no event later than 10 days after, becoming aware of (i) any
and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against such Borrower or any
Subsidiary or any of their respective properties pursuant to any
applicable Environmental Laws, (ii) all other Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining or in
the vicinity of the property of such Borrower or any Subsidiary that could
reasonably be anticipated to cause such property or any part thereof to be
subject to any restrictions on the ownership, occupancy, transferability
or use of such property under any Environmental Laws;
	 
	(e)	 	
of the occurrence of any of the following events affecting the US
Borrower or any ERISA Affiliate (but in no event more than 10 days after
such event), and deliver to the Administrative Agent and each Bank a copy
of any notice with respect to such event that is filed with a Governmental
Authority and any notice delivered by a Governmental Authority to the US
Borrower or any ERISA Affiliate with respect to such event:

58

 

	 	(i)	 	an ERISA Event;
	 
	 	(ii)	 	a material increase in the Unfunded Pension Liability of any
Pension Plan;
	 
	 	(iii)	 	the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the US Borrower or
any ERISA Affiliate; or
	 
	 	(iv)	 	the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability;

	 	 	 
	(f)	 	
of any material change in accounting policies or financial reporting
practices by the Company or any of its consolidated Subsidiaries;
	 
	(g)	 	
of any intention by the Company or a Subsidiary to create or effect an
Acquisition of an Excluded Subsidiary; and
	 
	(h)	 	
of its request that an Excluded Subsidiary be converted to a Subsidiary
and include in such request:

	 	(i)	 	evidence that the assets and shares of such Excluded
Subsidiary are free from Liens, other than Permitted Liens;
	 
	 	(ii)	 	detailed information of all Indebtedness of the Excluded
Subsidiary; and
	 
	 	(iii)	 	such other information as the Administrative Agent and the
Banks may reasonably request.

     Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action the applicable Borrower or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 7.03(a) shall describe with particularity any and all clauses
or provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.

7.04   Preservation of Corporate Existence, Etc. The Company shall, and shall
cause each Subsidiary to:

	 	 	 
	(a)	 	
preserve and maintain in full force and effect its corporate existence
and good standing under the laws of its state or jurisdiction of
incorporation;
	 
	(b)	 	
preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business;

59

 

	 	 	 
	(c)	 	
use reasonable efforts, in the ordinary course of business, to preserve
its business organization and goodwill; and
	 
	(d)	 	
preserve or renew all of its registered patents, trademarks, trade names
and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.

7.05   Maintenance of Property. The Company shall maintain, and shall cause each
Subsidiary to maintain, and preserve all its property which is used or useful
in its business in good working order and condition, ordinary wear and tear
excepted and make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect. The Company and each Subsidiary shall use the
standard of care typical in the industry in the operation and maintenance of
its facilities.

7.06   Insurance.

	 	 	 
	(a)	 	
In addition to insurance requirements set forth in the Collateral
Documents, each Borrower shall maintain, and shall cause each of its
Subsidiaries and Affiliates to maintain, with financially sound and
reputable independent insurers, insurance with respect to its properties
and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types
and in such amounts as are customarily carried under similar circumstances
by such other Persons. All such insurance shall name the Administrative
Agent as loss payee/ mortgagee and as additional insured, for the benefit
of the Banks, as their interests may appear. The Administrative Agent and
the Banks agree that proceeds from insurance for damage or loss to
property shall be applied by the applicable Borrower or Subsidiary as the
case may be to replace or repair such property, provided that prior notice
of any required repairs or sustained damage to property in excess of
$250,000 is given to the Administrative Agent. All casualty and key man
insurance maintained by the Borrowers shall name the Administrative Agent
as loss payee and all liability insurance shall name the Administrative
Agent as additional insured for the benefit of the Banks, as their
interests may appear.
	 
	(b)	 	
The Borrowers shall furnish the Administrative Agent, with sufficient
copies for each Bank, at reasonable intervals (but not more than once per
calendar year) a certificate of a Responsible Officer of the applicable
Borrower (and, if requested by the Administrative Agent, any insurance
broker of the Company) setting forth the nature and extent of all
insurance maintained by the Borrowers and their Subsidiaries and
Affiliates in accordance with this Section or any Collateral Documents
(and which, in the case of a certificate of a broker, were placed through
such broker).

7.07   Payment of Obligations. The Company shall, and shall cause each
Subsidiary and Affiliate to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:

60

 

	 	 	 
	(a)	 	
all Taxes upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves
in accordance with GAAP are being maintained by the Company or such
Subsidiary;
	 
	(b)	 	
all lawful claims which, if unpaid, would by law become a Lien upon its
property; and
	 
	(c)	 	
all indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.

7.08   Compliance with Laws. The Company shall comply, and shall cause each
Subsidiary and Affiliate to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it
or its business including labour and employment statutes except such as may be
contested in good faith or as to which a bona fide dispute may exist.

7.09   Compliance with ERISA. The US Borrower shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the Code
to maintain such qualification; and (c) make all required contributions to any
Plan subject to Section 412 of the Code.

7.10   Inspection of Property and Books and Records. Each Borrower shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Borrower and such Subsidiary. Each
Borrower shall permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Administrative Agent or any
Bank to visit and inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent public
accountants, all at the expense of the Borrowers and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the respective Borrower; provided, however, when
an Event of Default exists the Administrative Agent or any Bank may do any of
the foregoing at the expense of the Borrowers at any time during normal
business hours and without advance notice. The Administrative Agent and/or the
Banks shall make reasonable efforts to ensure any information that is
confidential information of the Company or its Subsidiaries obtained by
independent contractors is kept confidential by such independent contractors.

61

 

7.11   Environmental Laws.

	 	 	 
	(a)	 	
Each Borrower shall, and shall cause each Subsidiary and Affiliate to,
conduct its operations and keep and maintain its property in compliance
with all Environmental Laws.
	 
	(b)	 	
Upon the written request of the Administrative Agent or any Bank, each
Borrower shall submit and cause each of its Subsidiaries to submit, to the
Administrative Agent with sufficient copies for each Bank, at the
Borrower’s sole cost and expense, at reasonable intervals, a report
providing an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified in any notice or report
required pursuant to subsection 7.03(d), that could, individually or in
the aggregate, result in liability in excess of $100,000.
	 
	(c)	 	
The Company shall cause an environmental audit(s) to be made in
connection with any Acquisition that it or any of its Subsidiaries propose
or any Acquisition of an Excluded Subsidiary, and deliver copies of the
same to the Administrative Agent as soon as such audit is available, the
results of which indicate that any Estimated Remediation Costs will have
no Material Adverse Effect.

7.12   Use of Proceeds. The Borrowers shall use the proceeds of the Loans for
working capital, short term liquidity purposes, acquisitions as permitted by
this Agreement (which shall not include hostile acquisitions or Acquisitions of
Excluded Subsidiaries) and other general corporate purposes not in
contravention of any Requirement of Law or of any Loan Document.

7.13   New Subsidiaries, Acquisitions. In each instance that the Company or its
Subsidiaries makes an Acquisition or establishes a new Subsidiary, the Company
or its Subsidiaries shall: (i) provide the Administrative Agent and the Banks
with such additional Collateral Documents as required by the Administrative
Agent and/or the Banks; (ii) provide the Administrative Agent and the Banks
with pro forma historical financial information as at the last two fiscal year
ends of the Company and most recent interim fiscal quarter, if applicable,
which reflect such Acquisition, including the effect of such Acquisition in
respect of Sections 8.17, 8.18, 8.19 and 8.20 hereof; and (iii) a Compliance
Certificate executed by a Responsible Officer based on a calculations made on a
historical pro forma basis giving effect to the Acquisition.

7.14   Further Assurances.

	 	 	 
	(a)	 	
Each Borrower shall, and shall cause each Subsidiary to, ensure that all
written information, exhibits and reports furnished to the Administrative
Agent or the Banks do not and will not contain any untrue statement of a
material fact and do not and will not omit to state any material fact or
any fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made, and will promptly disclose to
the Administrative Agent and the Banks and correct any defect or error
that may be discovered therein or in any Loan Document or in the
execution, acknowledgment or recordation thereof.

62

 

	 	 	 
	(b)	 	
Promptly upon request by the Administrative Agent or the Majority Banks,
each Borrower shall (and shall cause any of its Subsidiaries to) do,
execute, acknowledge, deliver, record, rerecord, file, refile, register
and reregister, any and all such further acts, deeds, conveyances,
security agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and other
instruments the Administrative Agent or such Banks, as the case may be,
may reasonably require from time to time in order (i) to carry out more
effectively the purposes of this Agreement or any other Loan Document, (ii) to
subject to the Liens created by any of the Collateral Documents any of the
properties, rights or interests covered by any of the Collateral
Documents, (iii) to perfect and maintain the validity, effectiveness and
priority of any of the Collateral Documents and the Liens intended to be
created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Administrative Agent and Banks the
rights granted or now or hereafter intended to be granted to the Banks
under any Loan Document or under any other document executed in connection
therewith; provided that no financing statements specific only to and in
respect of only of
patents, trademarks, copyrights or fixtures will be filed or registered
prior to a Default or Event of Default.

ARTICLE VIII

NEGATIVE COVENANTS

     So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

8.01   Limitation on Liens. Neither Borrower shall, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following (“Permitted
Liens”):

	 	 	 
	(a)	 	
any Lien (other than a Lien on the Collateral) existing on property of
such Borrower or any Subsidiary on the Closing Date and set forth in
Schedule 8.01 securing Indebtedness outstanding on such date;
	 
	(b)	 	
any Lien created under any Loan Document;
	 
	(c)	 	
Liens for taxes, fees, assessments or other governmental charges which
are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 7.07;
	 
	(d)	 	
carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s or other similar Liens arising in the ordinary course of
business which are not delinquent or remain payable without penalty or
which are being contested in good faith and by

63

 

	 	 	 
	 	 	
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property subject thereto;

	 	 	 
	(e)	 	
Liens (other than any Lien imposed by ERISA and other than on the
Collateral) consisting of pledges or deposits required in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and pension legislation;
	 
	(f)	 	
Liens (other than Liens on the Collateral) on the property of such
Borrower or its Subsidiary securing (i) the non-delinquent performance of
bids, trade contracts (other than for borrowed money), leases, statutory
obligations, (ii) contingent obligations on surety and appeal bonds, and
(iii) other non-delinquent obligations of a like nature; in each case, incurred
in the ordinary course of business;
	 
	(g)	 	
easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are
not substantial in amount, and
which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the
businesses of such Borrower and its Subsidiaries;
	 
	(h)	 	
Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions
against access by US Borrower in excess of those set forth by regulations
promulgated by the FRB, and (ii) such deposit account is not intended by a
Borrower or any Subsidiary to provide collateral to the depository
institution; and
	 
	(i)	 	
Liens (other than those described in (a) to (h) above) where the
aggregate amount subject to or secured by such Lien does not exceed 5% of
Consolidated Tangible Net Worth.

8.02   Disposition of Assets. Neither Borrower shall, and shall not suffer or
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any property (including accounts and notes receivable) or enter into any
agreement to do any of the foregoing, except:

	 	 	 
	(a)	 	
Dispositions of inventory, or used, worn-out or surplus equipment, all in
the ordinary course of business;
	 
	(b)	 	
the sale of equipment to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase
price of such replacement equipment; and
	 
	(c)	 	
Dispositions not otherwise permitted hereunder which are made for fair
market value; provided, that (i) at the time of any Disposition, no Event of
Default shall exist or shall

64

 

	 	 	 
	 	 	
result from such Disposition, (ii) the aggregate
sales price from such Disposition shall be paid in cash, and (iii) the
aggregate value of all assets so sold by the Company and its Subsidiaries,
together, shall not exceed in any fiscal year $2 million.

8.03   Consolidations and Mergers. The Company shall not, and shall not suffer
or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) substantially all of its assets (whether now owned or
hereafter acquired) to or in favour of any Person, except:

	 	 	 
	(a)	 	
any Subsidiary may merge with a Borrower, provided that the Borrower
shall be the continuing or surviving corporation, or with any one or more
other Subsidiaries, provided
that if any transaction shall be between a Subsidiary and a Wholly-Owned
Subsidiary, the Wholly-Owned Subsidiary shall be the continuing or
surviving corporation; and
	 
	(b)	 	
any Subsidiary may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise), to the Borrower or another Wholly
Owned Subsidiary.

8.04   Permitted Loans. Neither Borrower shall, or permit any Subsidiary to,
make or commit to make any advance, loan, extension of credit or capital
contribution to or in, any Person including any Affiliate of the Borrower
(together, “Loans”), except for:

	 	 	 
	(a)	 	
Loans held by a Borrower or Subsidiary in the form of cash equivalents;
	 
	(b)	 	
extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the
ordinary course of business;
	 
	(c)	 	
extensions of credit by the Company to any of its Subsidiaries or by any
of its Subsidiaries to another of its Subsidiaries;
	 
	(d)	 	
extensions of credit or capital contributions by a Borrower in the course
of an Acquisition; or
	 
	(e)	 	
extensions of credit by the Company or US Borrower to any director of
officer of the Company or any of its Subsidiaries, in an aggregate amount
not to exceed $2 million.

8.05   Limitation on Indebtedness. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:

	 	 	 
	(a)	 	
Indebtedness incurred pursuant to this Agreement;
	 
	(b)	 	
Indebtedness (including Contingent Obligations) existing on the Closing
Date and set forth in Schedule 8.05;
	 
	(c)	 	
Indebtedness other than that described in (a) to (b) which in the
aggregate does not exceed 5% of Consolidated Tangible Net Worth.

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8.06   Transactions with Affiliates. Other than in respect of transactions among
and between the Borrowers and the Subsidiaries, neither Borrower shall, and
shall not suffer or permit any Subsidiary to, enter into any transaction with
any Affiliate of either Borrower, except upon fair and reasonable terms no less
favourable to such Borrower, or such Subsidiary than would obtain in a
comparable arm’s length transaction with a Person not an Affiliate of the
applicable Borrower or such Subsidiary.

8.07   Prohibited Use of Proceeds. The Borrowers shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Borrower or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act, (v) to enter into or consummate any
Acquisition except in accordance with this Agreement; or (vi) for the direct or
indirect benefit, financial or otherwise, of an Excluded Subsidiary or for an
Acquisition of an Excluded Subsidiary.

8.08   Operating Lease Obligations. Neither Borrower shall, and shall not suffer
or permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:

	 	 	 
	(a)	 	
leases associated with mineral properties;
	 
	(b)	 	
leases associated with office space entered into on commercially
reasonable terms; and
	 
	(c)	 	
operating leases entered into by the Borrower or any Subsidiary after the
Closing Date in the (excepting mineral lease properties) ordinary course
of business wherein the obligations under such operating lease do not
exceed $1,000,000 per operating lease.

8.09   Sale Leaseback Transactions. Neither Borrower shall, and shall not suffer
or permit any Subsidiary to, enter into any sale leaseback transactions except
for:

	 	 	 
	(a)	 	
sale leaseback transactions made in connection with completion of
construction of an asset or assets acquired after the Closing Date whereby
the value of the property or assets, the subject of such sale leaseback
transactions does not exceed $3 million per annum in aggregate; and,
	 
	(b)	 	
the subject sale leaseback transaction is completed within 270 days of
the acquisition date of the property or assets which are the subject of
such transaction.

8.10   Restricted Payments. The Company shall not declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of its capital stock, now
or hereafter outstanding, except that the Company may declare and make dividend
payments or other distributions payable solely in its common stock.

66

 

8.11   Change in Business. Neither Borrower shall, and shall not suffer or
permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Borrower
and its Subsidiaries on the date hereof.

8.12   Accounting Changes. Neither Borrower shall, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment
or reporting practices, except as required by GAAP, or change the fiscal year
of the Borrower or of any Subsidiary.

8.13   Asset Acquisition. Neither the Company nor any of its Subsidiaries shall
acquire assets or shares of any Person in whole or in part (other than an
Excluded Subsidiary), in excess of $7.5 million per acquisition and the
aggregate cost of all acquisitions in any fiscal year cannot be in excess of
$15 million without the prior approval of the Majority Banks. Such
acquisitions cannot be made without delivery to the Administrative Agent and
the Banks of pro forma historical financial information as at the last two
fiscal years of the Company and the most recent interim fiscal quarter, if
applicable, which reflects such acquisition, including the effect of such
acquisition in respect of Sections 8.17, 8.18, 8.19 and 8.20 hereof.

8.14   Capital Expenditures. Neither the Company nor its Subsidiaries shall make
any capital expenditure in excess of $7 million per year without the prior
written approval of the Administrative Agent and the Majority Banks.

8.15   Permitted Investments. The Company, its Subsidiaries and its Excluded
Subsidiaries shall only make investments in Persons that are primarily involved
in manufacturing or processing either metals, mica, feldspar, talc, ceramic
clays or other industrial mineral or metal waste recycling.

8.16   Prohibited Investments. At no time shall the Company or any of its
Subsidiaries make any Acquisition of any kind (including an Acquisition of an
Excluded Subsidiary) in a Person who carries on business or activities in base
or precious metal mining.

8.17   Minimum Net Worth. The Company shall not permit its Consolidated Tangible
Net Worth at any time to be less than an amount equal to at least (a) $60 million
plus (b) the Company’s Net Income, without any decrease for any fiscal quarter in
which a consolidated net loss occurs plus (c) 50% of any equity issuance at any
time after the effective date of this Agreement.

8.18   Leverage Ratios. The Company shall not, in any fiscal quarter (determined
at the last date of each such fiscal quarter), permit its Leverage Ratio to be
greater than the following:

	 	 	 
	(a)	 	
for the fiscal quarters ending June 30, 2002 and September 30, 2002,
leverage ratios shall not be greater than 3.50:1.00;
	 
	(b)	 	
for the fiscal quarters ending December 31, 2002 and March 31, 2003,
leverage ratios shall not be more than 3.25:1.00; and

67

 

	 	 	 
	(c)	 	
for the fiscal quarters ending June 30, 2003 and thereafter, the leverage
ratio shall not be more than 3.00:1.00.

8.19   Interest Coverage Ratio. The Company shall not permit for any fiscal
quarter (determined as of the last date of such fiscal quarter) ending in any
period its Interest Coverage Ratio to be less than 3.00 to 1.

8.20   Debt — Capitalization. The Company shall not permit its Indebtedness to
be more than 50% of its Capitalization in any fiscal quarter (determined as of
the last date of such fiscal quarter).

8.21   Material Documents. Neither the Company nor the US Borrower shall allow
or cause to be made any amendments to the Material Documents without the
consent of the Administrative Agent and the Banks.

8.22   Excluded Subsidiaries. Neither Borrower shall use or permit to be used
any part of the Credit or any Loan proceeds for the direct or indirect
Acquisition of an Excluded Subsidiary. In addition, neither Borrower nor any
Subsidiary shall give financial assistance of any kind to an Excluded
Subsidiary, whether by way of loan, guarantee or otherwise.

8.23   Maximum Acquisitions. The aggregate cost at any time in the Initial Term
or any extended term of the Credit of (a) all acquisitions of assets or shares of
any Person in whole or in part (including Acquisitions of Excluded
Subsidiaries) by the Company, any of its Subsidiaries or any of its Excluded
Subsidiaries shall not exceed $30 million in the aggregate; and (b) all
Acquisitions of Excluded Subsidiaries by the Company, any of its Subsidiaries
or any of its Excluded Subsidiaries shall not exceed the difference between $30
million and the aggregate cost of all such Acquisitions of Excluded
Subsidiaries undertaken at any prior time (and which have not been converted to
Subsidiaries).

ARTICLE IX

EVENTS OF DEFAULT

9.01   Event of Default. Any of the following shall constitute an “Event of
Default”:

	 	 	 
	(a)	 	
Non-Payment. Either Borrower fails to make, (i) when and as required to be
made herein, payments of any amount of principal of any Loan, or (ii) within 3
days after the same becomes due, payment of any interest, fee or any other
amount payable hereunder or under any other Loan Document; or
	 
	(b)	 	
Representation or Warranty. Any representation or warranty by any
Borrower or made or deemed made herein, in any other Loan Document, or
which is contained in any certificate, document or financial or other
statement by any Borrower, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any

68

 

	 	 	 
	 	 	
other Loan Document is incorrect in any material respect on or as of the
date made or deemed made; or
	 
	(c)	 	
Specific Defaults. Either Borrower fails to perform or observe any term,
covenant or agreement contained in (i) Section 7.03 or in Article VIII
(provided that such Borrower shall be allowed 10 days from the date of
creation of any Lien against its property to discharge or cause to be
discharged such Lien); or (ii) any of Section 7.01, 7.02, or 7.09 and such
failure continues for a period of 10 consecutive days; or (iii) Section
7.06(b) and such failure continues for a period of 10 consecutive days
after receipt by such Borrower of notice from the Administrative Agent; or
	 
	(d)	 	
Other Defaults. Either Borrower or any Subsidiary party thereto fails to
perform or observe any other term or covenant contained in this Agreement
or any other Loan Document and such default continues for a period of 10
consecutive days; or
	 
	(e)	 	
Cross-Default. Either Borrower or any Subsidiary (A) fails to make any
payment in respect of any Indebtedness or Contingent Obligation, in such
case, which is outstanding in an aggregate principle amount of $1,000,000
when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the relevant
document on the date of such failure; or (B) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition
exist, under any agreement or instrument relating to any such Indebtedness
or Contingent Obligation, and such failure continues after the applicable
grace or notice period, if any, specified in the relevant document on the
date of such failure if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Indebtedness (or a trustee or agent
on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness to be declared to be due and payable prior to its
stated maturity, or such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded; or
	 
	(f)	 	
Insolvency; Voluntary Proceedings. Either Borrower, or any Subsidiary
representing five per cent or more of the Consolidated Tangible Net Worth
(i) (a “Material Subsidiary”) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
	 
	(g)	 	
Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against either Borrower or any Material Subsidiary, or
any writ, judgment, warrant of attachment, execution or similar process,
is issued or levied against a substantial part of the Borrower or any
Subsidiary’s properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60
days after

69

 

	 	 	 
	 	 	
commencement, filing or levy; (ii) either Borrower or any
Subsidiary admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under
non-US law) is ordered in any Insolvency Proceeding; or (iii) either Borrower
or any Subsidiary acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of
its property or business; or
	 
	(h)	 	
Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against
either Borrower or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single or related
series of transactions, incidents or conditions, of $1,000,000 or more,
and the same shall remain unvacated and unstayed pending appeal for a
period of 10 days after the entry thereof; or
	 
	(i)	 	
Non-Monetary Judgments. Any non-monetary judgment, order or decree is
entered against either Borrower or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
	 
	(j)	 	
Change of Control. There occurs any Change of Control; or
	 
	(k)	 	
Adverse Change. There occurs a Material Adverse Effect; or
	 
	(l)	 	
Guarantor Defaults. Any Guarantor fails in any material respect to
perform or observe any term, covenant or agreement in the Guarantee; or
the Guarantee is for any reason partially (including with respect to
future advances) or wholly revoked or invalidated, or otherwise ceases to
be in full force and effect, or any Guarantor or any other Person contests
in any manner the validity or enforceability thereof or denies that it
has any further liability or obligation thereunder; or any event
described at subsections (f) or (g) of this Section occurs with respect
to any Guarantor; or
	 
	(m)	 	
Collateral.

	 	(i)	 	any provision of any Collateral Document shall for any reason
cease to be valid and binding on or enforceable against either
Borrower or any Subsidiary party thereto or the Company or any
Subsidiary shall so state in writing or bring an action to limit its
obligations or liabilities thereunder; or
	 
	 	(ii)	 	any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security
interest in the Collateral purported to be covered thereby or such
security interest shall for any reason cease to be a perfected and
first priority security interest subject only to Permitted Liens.

70

 

	 	 	 
	(n)	 	
Dispositions. The Company or the US Borrower fails to submit the Net
Proceeds from any Disposition to the Administrative Agent for the benefit
of the Banks in repayment of the Loans.

9.02   Remedies. If any Event of Default occurs, the Administrative Agent shall,
at the request of, or may, with the consent of, the Majority Banks,

	 	 	 
	(a)	 	
declare the Commitment of each Bank to make Loans to be terminated,
whereupon such Commitments shall be terminated;
	 
	(b)	 	
declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due
and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Company; and
	 
	(c)	 	
exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in
subsection 9.01(f) or 9.01(g) of Section 9.01 (in the case of clause (i)
of subsection 9.01(g) upon the expiration of the time periods mentioned
therein), the obligation of each Bank to make Loans shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Administrative Agent or any Bank.

9.03   Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.

ARTICLE X

THE AGENTS

	 	 	 
	10.01	 	(a)   Appointment
and Authorization; “Agents”. Each (i) Canadian Bank hereby
irrevocably (subject to Section 10.09) appoints, designates and authorizes
the Canadian Payment Agent and (ii) each US Bank hereby irrevocably (subject
to Section 10.09) appoints, designates and authorizes the Administrative
Agent and/or the Canadian Payment Agent as applicable to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, each Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor
shall the Administrative Agent have or be

71

 

	 	 	 
	 	 	
deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into
this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing
sentence, the use of the term “agent” in this Agreement with reference to
an Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties
	 
	(b)	 	
Any Issuing Bank shall act on behalf of the Banks with respect to any
Letters of Credit issued by it and the documents associated therewith, and
such Issuing Bank shall have all of the benefits and immunities (i)
provided to the Administrative Agent in this Article X with respect to any
acts taken or omissions suffered by the Issuing Bank in connection with
Letters of Credit issued by it or proposed to be issued by it and the
applications and agreements for letters of credit pertaining to such
Letters of Credit as fully as if the term “Agent” as used
in this Article
X and in the definition of “Agent-Related Person” included the Issuing
Bank with respect to such acts or omissions, and (ii) as additionally
provided herein with respect to the Issuing Bank

10.02   Delegation of Duties. An Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorney’s-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or wilful misconduct.

10.03   Liability of Agents. None of the Administrative Agent Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or wilful
misconduct in connection with duties expressly set forth herein) or (ii) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Company or any Subsidiary or Affiliate
of the Company, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by either Agent under or in
connection with, this Agreement or any other Loan Document, or for the value of
or title to any Collateral, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent Related Person shall
be under any obligation to any Bank or Participant to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company’s
Subsidiaries or Affiliates.

72

 

10.04   Reliance by Agent.

	 	 	 
	(a)	 	
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, electronic mail
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Company or Subsidiaries), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to
take any action under this Agreement or any other Loan Document unless an
Agent shall first receive such advice or concurrence of the Majority Banks
as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing
to take any such action. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or
consent of the Majority Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
	 
	(b)	 	
For purposes of determining compliance with the conditions specified in
Section 5.01, each Bank that has executed this Agreement shall be deemed
to have consented to, approved or accepted or to be satisfied with, each
document or other matter sent by the applicable Agent to such Bank for
consent, approval, acceptance or satisfaction, unless the applicable Agent
shall have received notice from such Bank prior to the Closing Date
specifying its objection.

10.05   Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Administrative Agent for the account of the Banks,
unless the Administrative
Agent shall have received written notice from a Bank or the Company referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default”. The Administrative Agent will notify the
Banks of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default or Event of Default as may be
requested by the Majority Banks in accordance with Article IX; provided,
however, that unless and until the Administrative Agent have received any such
request, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the best interest of the
Banks.

10.06   Credit Decision. Each Bank acknowledges that none of the Agent Related
Persons has made any representation or warranty to it, and that no act by the
Agents hereinafter taken, including any assignment and any review of the
affairs of the Company and its Subsidiaries or Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and

73

 

information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers
and their Subsidiaries and Affiliates, the value of and title to any
Collateral, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrowers hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company and its
Subsidiaries. Except for notices, reports and other documents expressly herein
required to be furnished to the Banks by the Administrative Agent, the
Administrative Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the Administrative Agent
Related Persons.

10.07   Indemnification of Agents. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand each
Agent-Related Person (to the extent not reimbursed by or on behalf of the
Company and its Subsidiaries and Affiliates and without limiting the obligation
of the Company or its Subsidiaries or Affiliates to do so), pro rata, and hold
harmless each Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Bank shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person’s own gross negligence or wilful misconduct; provided, however, that no
action taken in
accordance with the directions of the Majority Banks shall be deemed to
constitute gross negligence or wilful misconduct for purposes of this Section.
Without limitation of the foregoing, each Bank shall reimburse the Agents upon
demand for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agents in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein, to
the extent that the Agents are not reimbursed for such expenses by or on behalf
of the Company and its Subsidiaries (including the US Borrower). The
undertaking in this Section shall survive termination of the Commitments, the
payment of all other Obligations and the resignation of the Agents.

10.08   Agents in Individual Capacity. Bank of America, and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though Bank of America were not an Agent
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, Bank of America, or its Affiliates may
receive information regarding

74

 

a Borrower or its Affiliates (including
information that may be subject to confidentiality obligations in favour of a
Borrower or such Subsidiary or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information
to them. With respect to its Loans, Bank of America and the Canadian Payment
Agent shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Agents, and the terms
“Bank” and “Banks” include Bank of America and the Canadian Payment Agent in
their individual capacity.

10.09   Successor Agents. Each Agent may, and at the request of the Majority
Banks shall, resign as Agent upon 30 days’ notice to the Banks and the
Borrowers, provided that any such resignation by Bank of America shall also
constitute its resignation as an Issuing Bank. If an Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks. If no successor agent is appointed prior to the effective
date of the resignation of an Agent, the applicable Agent may appoint, after
consulting with the Banks and the Borrowers, a successor agent from among the
Banks, which successor agent shall be consented to by the Borrowers at all
times except during the existence of an Event of Default (which consent the
Borrowers shall not unreasonably withhold or delay). Upon the acceptance of
its appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Agent and Issuing
Bank, as may be applicable, and the respective terms “Agent” and “Issuing Bank”
shall mean such successor agent and L/C issuer as may be applicable, and the
retiring Agent’s appointment, powers and duties as Agent shall be terminated
and the retiring Issuing Bank’s rights, powers and duties as such shall be
terminated, without any other or further act or deed on the part of such
retiring Issuing Bank or any other Bank, other than the obligation of the
successor Issuing Bank to issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or to
make other arrangements satisfactory to the retiring Issuing Bank to effectively
assume the obligations of the retiring Issuing Bank with respect to such Letters
of Credit. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If
no successor agent has accepted appointment as Agent by the date which is 30
days following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Administrative Agent or Canadian Payment
Agent, as applicable hereunder until such time, if any, as the Majority Banks
appoint a successor agent as provided for above.

10.10   Withholding Tax.

     If Revenue Canada, the IRS or any other Governmental Authority of Canada
or the United States or other jurisdiction asserts a claim that an Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed,
or because such Bank failed to notify the applicable Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the
applicable Agent fully for all amounts owing and/or paid, directly or
indirectly, by such Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction

75

 

on the amounts
payable to such Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of an Agent.

10.11   Agents May File Proofs of Claim.

     In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any Subsidiaries, the applicable
Agent (irrespective of whether the principal of any Loan or L/C Obligation
shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the applicable Agent shall have made any
demand on the Borrowers) shall be entitled and empowered, by intervention in
such proceeding or otherwise

	 	 	 
	(a)	 	
to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all
other Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of
the Banks and the applicable Agents (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Banks
and the gents and their respective agents and counsel and all other
amounts due the Banks and the Agents under Article III,
2.10 and 11.04)
allowed in such judicial proceeding; and
	 
	(b)	 	
to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Bank to make such payments to the Agents and, in the event that the
applicable Agent shall consent to the making of such payments directly to the
Banks, to pay to the Agents any amount due for the reasonable compensation,
expenses, disbursements and advances of the Agents and its agents and counsel,
and any other amounts due the Agents under Sections 2.10 and 11.04.

     Nothing contained herein shall be deemed to authorize the applicable Agent
to authorize or consent to or accept or adopt on behalf of any Bank any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Bank or to authorize the Agents to vote in
respect of the claim of any Bank in any such proceeding.

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10.12   Collateral Matters.

	 	 	 
	(a)	 	
The Administrative Agent are authorized on behalf of all the Banks,
without the necessity of any notice to or further consent from the Banks,
from time to time to take any action with respect to any Collateral or the
Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
	 
	(b)	 	
Each Bank authorizes the Administrative Agent to execute on its behalf
any such Collateral Documents as may be necessary, including any notices
or documents required to register the Collateral Documents in appropriate
governmental registries or offices.
	 
	(c)	 	
The Banks irrevocably authorize the Administrative Agent, at its option
and in its discretion, to release any Lien granted to or held by the
Administrative Agent upon any Collateral (i) upon termination of the
Commitments and payment in full of all Loans and all other Obligations
known to the Administrative Agent and payable under this Agreement or any
other Loan Document; (ii) constituting property sold or to be sold or disposed
of as part of or in connection with any disposition permitted hereunder;
(iii) constituting property in which a Borrower or any Subsidiary owned no
interest at the time the Lien was granted or at any time thereafter; (iv)
constituting property leased to a Borrower or any Subsidiary under a lease
which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not
intended by a Borrower or such Subsidiary to be, renewed or extended;
(v) consisting of an instrument evidencing Indebtedness or other debt
instrument, if the indebtedness evidenced thereby has been paid in full;
or (vi) if approved, authorized or ratified in writing by the Majority Banks
or all the Banks, as the case may be, as provided in subsection 11.01(g).
Upon request by the Administrative Agent at any time, the Banks will
confirm in writing the Administrative Agent’s authority to release
particular types or items of Collateral pursuant to this subsection
10.12(b), provided that the absence of any such confirmation for whatever
reason shall not affect the Administrative Agent’s rights under this
Section 10.12.

ARTICLE XI

MISCELLANEOUS

11.01   Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by a Borrower or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Administrative Agent at the written request of the Majority Banks)
and the Borrowers, Guarantor or Pledgors, as applicable, and acknowledged by
the Administrative Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall:

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	(a)	 	
waive any condition set forth in Section 5.01 without the written consent
of each Bank;
	 
	(b)	 	
extend or increase the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 9.02) without the written
consent of such Bank;
	 
	(c)	 	
postpone any date fixed by this Agreement or any other Loan Document for
any payment of principal, interest, fees or other amounts due to the Banks
(or any of them) hereunder or under any other Loan Document without the
written consent of each Bank directly affected thereby;
	 
	(d)	 	
reduce the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing, or any fees or other amounts payable hereunder or
under any other Loan Document without the written consent of each Bank
directly affected thereby; provided, however, that only the consent of the
Majority Banks shall be necessary to amend the definition of “Default
Rate” or to waive any obligation of the Borrowers to pay interest at the
Default Rate;
	 
	(e)	 	
change Section 2.13 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Bank;
	 
	(f)	 	
change any provision of this Section or the definition of “Majority
Banks” or any other provision hereof specifying the number or percentage
of Banks required to amend, waive or otherwise modify any rights hereunder
or make any determination or grant any consent hereunder, without the
written consent of each Bank; or
	 
	(g)	 	
release all or a material part of the Collateral without the written
consent of each Bank;

provided further, that no amendment, waiver or consent shall, unless in writing
and signed by an Issuing Bank in addition to the Banks required above, affect
the rights or duties of the Issuing Bank under this Agreement or any L/C
Application relating to any L/C issued or to be issued by it; no amendment,
waiver or consent shall, unless in writing and signed by the Agents in addition
to the Banks required above, affect the rights or duties of the Administrative
Agent or the Canadian Payment Agent under this Agreement or any other Loan
Document; and the Fee Letters may be amended, or rights or privileges
thereunder waived, in writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no defaulting Bank shall have
any right to approve or disapprove any amendment, wavier or consent hereunder,
except that the Commitment of such Bank may not be increased or extended
without the extent of such Bank.

11.02   Notices.

	 	 	 
	(a)	 	
General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including
by facsimile transmission). All such written notices shall be mailed,
faxed or delivered to the applicable address, facsimile number or (subject
to subsection (c) below) electronic mail

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address, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number,
as follows:

	 	(i)	 	if to the Borrowers, the Administrative Agent, the Canadian
Payment Agent, or any Issuing Bank, to the address, facsimile
number, electronic mail address or telephone number specified for
such Person on Schedule 11.02 or to such other address, facsimile
number, electronic mail address or telephone number as shall be
designated by such party in a notice to the other parties; and
	 
	 	(ii)	 	if to any other Bank, to the address, facsimile number,
electronic mail address or telephone number specified in its
Administrative Questionnaire or to such other address, facsimile
number, electronic mail address or telephone number as shall be
designated by such party in a notice to the Borrowers, the
Administrative Agent, the Canadian Payment Agent and the Issuing
Banks.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto
and (ii) (A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, six Business
Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; and (D) if
delivered by electronic mail (which form of delivery is subject to the
provisions of subsection (c) below), when delivered; provided, however, that
notices and other communications to an Agent and each Issuing Bank pursuant to
Article II shall not be effective until actually received by such Person. In
no event shall a voicemail message be effective as a notice, communication or
confirmation hereunder.

	 	 	 
	(b)	 	
Effectiveness of Facsimile Documents and Signatures. Loan Documents may
be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same
force and effect as manually-signed originals and shall be binding on the
Company and its Subsidiaries, each Agent, any Issuing Bank and the Banks.
An Agent may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however,
that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.
	 
	(c)	 	
Limited Use of Electronic Mail. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications,
such as financial statements and other information as provided in Section
7.02, and to distribute Loan Documents for execution by the parties
thereto, and may not be used for any other purpose.
	 
	(d)	 	
Reliance by Agents and Banks. The Agents and the Banks shall be entitled
to rely and act upon any notices (including telephonic Borrowing Notices)
purportedly given by or on behalf of either Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified
herein, or (ii) the terms thereof, as understood by the recipient, varied
from any confirmation thereof. Each Borrower shall indemnify each
Agent-Related Person and

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each Bank from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of such Borrower. All telephonic
notices to and other communications with the Agents may be recorded by the
Agents, and each of the parties hereto hereby consents to such recording.

11.03   No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agents or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.

11.04   Costs and Expenses. Each Borrower shall:

	 	 	 
	(a)	 	
whether or not the transactions contemplated hereby are consummated, pay
or reimburse Bank of America and/or the Canadian Payment Agent (including
in their capacity as Agents) within five Business Days after demand
(subject to subsection 5.01(f)) for all costs and expenses incurred by
Bank of America and/or the Canadian Payment Agent (including in their
capacity as Agents) in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement,
waiver or modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including all Attorney Costs incurred by
Bank of America and/or the Canadian Payment Agent (including in their
capacity as Agents) with respect thereto; and
	 
	(b)	 	
pay or reimburse the Agents and each Bank within five Business Days after
demand (subject to subsection 5.01(f)) for all costs and expenses
(including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Loan Document
(including all such costs and expenses incurred during any “workout” or
restructuring in respect of the Obligations and during any legal
proceeding, including any Insolvency Proceeding), including all Attorney
Costs. The foregoing costs and expenses shall include all search,
filing, recording, title insurance and appraisal charges and fees and
taxes related thereto, and other out-of-pocket expenses incurred by the
Administrative Agent and the cost of independent public accountants and
other outside experts retained by the Administrative Agent or any Bank.
All amounts due under this Section 11.04 shall be payable within ten
Business Days after demand therefor. The agreements in this Section
shall survive the termination of the Commitments and repayment of all
other Obligations.
	 
	(c)	 	
pay or reimburse Bank of America and/or the Canadian Payment Agent
(including in their capacity as Agents) within five Business Days after
demand for environmental inspection and review, search and filing costs,
fees and expenses, incurred or sustained by Bank of America and/or the
Canadian Payment Agent (including in their capacity as

80

 

	 	 	 
	 	 	
Agents) in
connection with the matters referred to under subsections (a) and (b) of
this Section.

11.05   Borrower Indemnification.

	 	 	 
	(a)	 	
Whether or not the transactions contemplated hereby are consummated, the
Borrowers shall indemnify and hold harmless any Agent-Related Persons, and
each Bank and their respective Affiliates, officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an “Indemnified Person”)
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time (including at any time
following repayment of the Loans and the termination, resignation or
replacement of an Agent or replacement of any Bank) be imposed on,
incurred by or asserted against any such Indemnified Person in any way
relating to or arising out of or in connection with (a) the execution,
delivery, enforcement, performance or administration of any Loan Document
or any other agreement, letter or instrument delivered in connection with
the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) any Commitment, Loan or Letter of
Credit or the use or proposed use of the proceeds therefrom (including any
refusal by any Issuing Bank to honour a demand for payment under a Letter
of Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), or (c) any
actual or alleged presence or release of Hazardous Materials on or from
any property currently or formerly owned or operated by the Borrowers or
any Subsidiary, or any Environmental Claim related in any way to the
Borrowers or any Subsidiary, or (d) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any
investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether
any Indemnitee is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities”); provided, that the Borrowers shall have no
obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or
wilful misconduct of such Indemnified Person. The agreements in this
Section shall survive payment of all other Obligations.
	 
	(b)	 	
The Borrowers shall indemnify, defend and hold harmless each Indemnified
Person, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses or
disbursements (including Attorney Costs and the allocated cost of internal
environmental audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or arising out
of any pending or threatened investigation, litigation or proceeding, or
any action taken by any Person, with respect to any Environmental Claim
arising out of or related to any property subject to a Mortgage in favour
of the Administrative Agent or any Bank. No action taken by legal counsel
chosen by the Administrative Agent or any Bank in defending against any
such investigation, litigation or proceeding or requested remedial,

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removal or response action shall vitiate or any way impair the Borrowers’
Obligations and duty hereunder to indemnify and hold harmless the
Administrative Agent and each Bank.

In no event shall any site visit, observation, or testing by the Administrative
Agent or any Bank (or any contractee of the Administrative Agent or any Bank)
be deemed a representation or warranty that Hazardous Materials are or are not
present in, on, or under, the site, or that there has been or shall be
compliance with any Environmental Law. Neither Borrower nor any other Person
is entitled to rely on any site visit, observation, or testing by the
Administrative Agent or any Bank. Neither the Agents nor any Bank owe any duty
of care to protect the Borrowers or any other Person against, or to inform the
Borrowers or any other party of, any Hazardous Materials or any other adverse
condition affecting any site or property. Neither an Agent nor any Bank shall
be obligated to disclose to the Borrowers or any other Person any report or
findings made as a result of, or in connection with, any site visit,
observation, or testing by an Agent or any Bank.

	 	 	 
	(c)	 	
Survival; Defense. The obligations in this Section shall survive payment
of all other Obligations. At the election of any Indemnified Person, the
Borrowers shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person’s sole discretion,
at the sole cost and expense of the Borrowers. All amounts owing under
this Section shall be paid within 30 days after demand.

11.06   Marshaling; Payments Set Aside. Neither the Agents nor the Banks shall
be under any obligation to marshall any assets in favour of either Borrower or
any other Person or against or in payment of any or all of the Obligations. To
the extent that either Borrower makes a payment to the Agents or the Banks, or
the Agents or the Banks exercise their right of set-off, and such payment or
the proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agents or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent of
such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and
effect as if such payment had not been made or such set-off had not occurred,
and (b) each Bank severally agrees to pay to the Agents upon demand its pro rata
share of any amount so recovered from or repaid by the Agents.

11.07   Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that neither Borrower may assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and each Bank and no Bank may
assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an Eligible Assignee in accordance with the provisions of Section 11.08,
(ii) by way of participation in accordance with the provisions of Section
11.08(c), (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in

82

 

Section 11.08(c) and, to the extent expressly contemplated
hereby, the Indemnitees) any legal or equitable right, remedy or claim under or
by reason of this Agreement.

11.08   Assignments, Participations, etc.

	 	 	 
	(a)	 	
Any Bank may at any time assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans (including for purposes
of this subsection (a), participations in L/C Obligations) at the time
owing to it); provided that (i) except in the case of an assignment of the
entire remaining amount of the assigning Bank’s Commitment and the Loans
at the time owing to it or in the case of an assignment to a Bank or an
Affiliate of a Bank or an Approved Fund with respect to a Bank, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) subject to each such assignment, determined as of
the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified in
the Assignment and Assumption, as of the Trade Date, shall not be less
than $5,000,000 unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrowers otherwise
consent (each such consent not to be unreasonably withheld or delayed);
(ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Bank’s rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned;
(iii) any assignment of a Commitment must be approved by the
Administrative Agent, the Issuing Bank and, provided no Event of Default
has occurred or is continuing, the Borrowers (such approval not to be
unreasonably withheld or delayed) unless the Person that is the proposed
assignee is itself a Bank; and (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and
Assumption, together with a processing and recordation fee of $3,500.
Subject to acceptance and recording thereof by the Administrative Agent
pursuant to subsection (b) of this Section and subject to Section
11.08(d), from and after the effective date specified in each Assignment
and Assumption,
the Eligible Assignee thereunder shall be a party to this Agreement and,
to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Bank under this Agreement, and the
assigning Bank thereunder shall, to the extent of the interest assigned
by such Assignment and Assumption, be released from its obligations under
this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Bank’s rights and obligations under this Agreement,
such Bank shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 4.01, 4.04, 4.05, 11.04 and 11.05
with respect to facts and circumstances occurring prior to the effective
date of such assignment). Upon request, the Borrowers (at their expense)
shall execute and deliver a Note to the assignee Bank. Any assignment or
transfer by a Bank of rights or obligations under this Agreement that
does not comply with this subsection shall be treated for purposes of
this Agreement as a sale by such Bank of a participation in such rights
and obligations in accordance with subsection (c) of this Section.

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	(b)	 	
The Administrative Agent, acting solely for this purpose as an agent of
the applicable Borrower, shall maintain at the Administrative Agent’s
office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Banks, and
the Commitments of, and principal amounts of the Loans and L/C Obligations
owing to, each Bank pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the
Borrowers, the Administrative Agent and the Banks may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a
Bank hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the
Borrowers and any Bank, at any reasonable time and from time to time upon
reasonable prior notice.
	 
	(c)	 	
Any Bank may at any time, without the consent of, or notice to, the
applicable Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Bank’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans (including
such Bank’s participations in L/C Obligations) owing to it); provided that
(i) such Bank’s obligations under this Agreement shall remain unchanged,
(ii) such Bank shall remain solely responsible to the other parties hereto
for the performance of such obligations and (iii) the Borrower, the
Administrative Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to
which a Bank sells such a participation shall provide that such Bank shall
retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Bank will
not, without the consent of the Participant, (such consent not to be
unreasonably withheld or delayed) agree to any amendment, waiver or other
modification described in the first proviso to Section 11.01 that directly
affects such Participant. Subject to
subsection (d) of this Section, the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 4.01, 4.04 and 4.05 to the
same extent as if it were a Bank and had acquired its interest by
assignment pursuant to subsection (a) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits
of Section 11.10 as though it were a Bank, provided such Participant
agrees to be subject to Section 2.14 and Section 11.09 as though it were
a Bank.
	 
	(d)	 	
Neither an Eligible Assignee nor a Participant shall be entitled to
receive any greater payment under Section 4.01 or 4.04 than the applicable
Bank granting the participation or assigning its interest in the Credit
(or Commitment) to the Eligible Assignee would have been entitled to
receive with respect to the participation or assigned interest or
Commitment sold to such Eligible Assignee or Participant, unless the sale
of the participation or assignment to such Participant or Eligible
Assignee is made with the Borrower’s prior written consent. A Participant
that would be a foreign lender if it were a Bank shall not be entitled to
the benefits of Section 4.01 unless the Borrower is notified

84

 

	 	 	 
	 	 	
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 11.15 and 11.09 as
though it were a Bank.
	 
	(e)	 	
Any Bank may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Note,
if any) to secure obligations of such Bank, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that
no such pledge or assignment shall release such Bank from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Bank as a party hereto.

11.09   Confidentiality. Each Agent and each Bank agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential); (b) to the extent requested by any regulatory
authority; (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process; (d) to any other party to this
Agreement; (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee
of or Participant in, or any prospective Eligible Assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor)
to any credit derivative transaction relating to obligations of the Borrowers
or their respective Subsidiaries; (g) with the consent of the Borrowers; (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to an Agent or any
Bank on a nonconfidential basis from a source other than a Borrower; or (i) to
the National Association of Insurance Commissioners or any other similar
organization. In addition, the Agents and the Banks may disclose the existence
of this Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to the
Agents and the Banks in connection with the administration and management of
this Agreement, the other Loan Documents, the Commitments, and the Loans. For
the purposes of this Section, “Information” means all information received from
any Borrower, Guarantor or Subsidiary relating to a Borrower, Guarantor or
Subsidiary or their respective business, other than any such information that
is available to the Agents or any Bank on a nonconfidential basis prior to
disclosure by a Borrower, Guarantor or Subsidiary; provided that, in the case
of information received from a Borrower, Guarantor or Subsidiary after the date
hereof, such information is clearly identified in writing at the time of
delivery as confidential. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

85

 

11.10   Set-off. In addition to any rights and remedies of the Banks provided by
law, if an Event of Default exists or the Loans have been accelerated, each
Bank is authorized at any time and from time to time, without prior notice to a
Borrower any such notice being waived by a Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the
account of a Borrower against any and all Obligations owing to such Bank, now
or hereafter existing, irrespective of whether or not an Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Borrowers and the Administrative Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.

11.11   Notification of Addresses, Lending Offices, Etc. Each Bank shall notify
the Administrative Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Administrative Agent shall
reasonably request.

11.12   Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one
and the same instrument.

11.13   Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Agents
and each Bank,
regardless of any investigation made by the Agents or any Bank or on their
behalf and notwithstanding that the Agents or any Bank may have had notice or
knowledge of any Default at the time of any Loan or Borrowing, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.

11.14   Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

86

 

11.15   Tax Forms.

	(a)	(i)	 	Each Bank that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the
Administrative Agent, prior to receipt of any payment subject to
withholding under the Code (or upon accepting an assignment of an interest
herein), two duly signed completed copies of either IRS Form W-8BEN or any
successor thereto (relating to such Foreign Lender and entitling it to an
exemption from, or reduction of, withholding tax on all payments to be
made to such Foreign Lender by the Borrowers pursuant to this Agreement)
or IRS Form W-8ECI or any successor thereto (relating to all payments to
be made to such Foreign Lender by the Borrowers pursuant to this
Agreement) or such other evidence satisfactory to the Borrowers and the
Administrative Agent that such Foreign Lender is entitled to an exemption
from, or reduction of, U.S. withholding tax, including any exemption
pursuant to Section 881(c) of the Code. Thereafter and from time to time,
each such Foreign Lender shall (A) promptly submit to the Administrative
Agent such additional duly completed and signed copies of one of such
forms (or such successor forms as shall be adopted from time to time by
the relevant United States taxing authorities) as may then be available
under then current United States laws and regulations to avoid, or such
evidence as is satisfactory to the Borrowers and the Administrative Agent
of any available exemption from or reduction of, United States withholding
taxes in respect of all payments to be made to such Foreign Lender by the
Borrowers pursuant to this Agreement, (B) promptly notify the
Administrative Agent of any change in circumstances which would modify or
render invalid any claimed exemption or reduction, and (C) take such steps
as shall not be materially disadvantageous to it, in the reasonable
judgment of such Foreign Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any
requirement of applicable Laws that the Borrowers make any deduction or
withholding for taxes from amounts payable to such Foreign Lender.
	 
	 	(ii)	 	Each Foreign Lender, to the extent it does not act or ceases
to act for its own account with respect to any portion of any sums
paid or payable to such Bank under any of the Loan Documents (for
example, in the case of a typical participation by such Bank), shall
deliver to the Administrative Agent on the date when such Foreign
Lender ceases to act for its own account with respect to any portion
of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Administrative Agent (in the
reasonable exercise of its discretion), (A) two duly signed
completed copies of the forms or statements required to be provided
by such Bank as set forth above, to establish the portion of any
such sums paid or payable with respect to which such Bank acts for
its own account that is not subject to U.S. withholding tax, and (B)
two duly signed completed copies of IRS Form W-8IMY (or any
successor thereto), together with any information such Bank chooses
to transmit with such form, and

87

 

	 	 	 	any other certificate or statement of exemption required under the
Code, to establish that such Bank is not acting for its own account
with respect to a portion of any such sums payable to such Bank.
	 
	 	(iii)	 	The Borrowers shall not be required to pay any additional
amount to any Foreign Lender under Section 3.01 (A) with respect to
any Taxes required to be deducted or withheld on the basis of the
information, certificates or statements of exemption such Bank
transmits with an IRS Form W-8IMY pursuant to this Section 11.15(a)
or (B) if such Bank shall have failed to satisfy the foregoing
provisions of this Section 11.15(a); provided that if such Bank
shall have satisfied the requirement of this Section 11.15(a) on the
date such Bank became a Bank or ceased to act for its own account
with respect to any payment under any of the Loan Documents, nothing
in this Section 11.15(a) shall relieve the Borrower of its
obligation to pay any amounts pursuant to Section 4.01 in the event
that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Bank is
no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Bank
or other Person for the account of which such Bank receives any sums
payable under any of the Loan Documents is not subject to
withholding or is subject to withholding at a reduced rate.
	 
	 	(iv)	 	The Administrative Agent may, without reduction, withhold any
Taxes required to be deducted and withheld from any payment under
any of the Loan Documents with respect to which the Borrowers are
not required to pay additional amounts under this Section 11.15(a).

	 	 	 
	(b)	 	
Upon the request of the Administrative Agent, each Bank that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the Administrative Agent two duly signed completed copies of
IRS Form W-9. If such Bank fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable back-up withholding tax imposed by
the Code, without reduction.
	 
	(c)	 	
If any Governmental Authority asserts that the Administrative Agent did
not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Bank, such
Bank shall indemnify the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the
amounts payable to the Administrative Agent under this Section, and costs
and expenses (including Attorney Costs) of the Administrative Agent. The
obligation of the Banks under this Section shall survive the termination
of the Total Commitments, repayment of all other Obligations hereunder and
the resignation of the Administrative Agent.

88

 

11.16   No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and legal benefit of each Borrower, the Banks, the
Administrative Agent and the Administrative Agent-Related Persons, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any of the other Loan Documents.

11.17   Governing Law and Jurisdiction.

	 	 	 
	(a)	 	
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA
APPLICABLE THEREIN.
	 
	(b)	 	
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE PROVINCE OF
ONTARIO, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
BORROWERS, THE ADMINISTRATIVE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY ONTARIO LAW.

11.18   Waiver of Jury Trial. THE BORROWERS, THE BANKS AND THE AGENTS EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS CREDIT AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWERS, THE BANKS AND THE AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH
SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
CREDIT AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL

89

 

APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.

11.19   Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Borrowers,
the Banks and the Administrative Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Toronto by their proper and duly authorized
officers as of the day and year first above written.

	 	 	 	 	 	 	 
	 	
ZEMEX CORPORATION, as Company
	 
	 
	 	By:	 	
/s/ Allen J. Palmiere
	 	 	 	

	 	 	 	 
	 	Title:	 	
Vice President, Chief Financial Officer and Corporate Secretary
	 	 	 	

90

 

	 	 	 	 	 	 	 
	 	
ZEMEX U.S. CORPORATION,

as US Borrower
	 
	 
	 	By:	 	
/s/ Allen J. Palmiere
	 	 	 	

	 
	 	Title:	 	
Vice President, Chief Financial
Officer and Corporate Secretary
	 	 	 	

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
BANK OF AMERICA, N.A., acting

through its Canadian branch,

as Canadian Payment Agent
	 
	 
	 	By:	 	
/s/ Nelson Lam
	 	 	 	

	 	 	 	 
	 	Title:	 	
Vice President
	 	 	 	

	 
	 
	 	
BANK OF AMERICA N.A.,

as Administrative Agent
	 
	 
	 	By:	 	
/s/ David Price
	 	 	 	

	 
	 	Title:	 	
Vice President
	 	 	 	

91

 

	 	 	 	 	 	 	 
	 	
BANK OF AMERICA, N.A., acting

through its Canadian branch,

as a Canadian Bank
	 
	 
	 	By:	 	
/s/ Nelson Lam
	 	 	 	

	 	 	 	 
	 	Title:	 	
Vice President
	 	 	 	

	 	 	 	 
	 
	 	
BANK OF AMERICA, N.A.,

as a US Bank and an Issuing Bank
	 
	 
	 	By:	 	
/s/ Steve A. Aronowitz
	 	 	 	

	 	 	 	 
	 	Title:	 	
Managing Director
	 	 	 	

92

 

	 	 	 	 	 	 	 
	 	
HSBC BANK, U.S.A.

as a US Bank
	 	 	 	 
	 	 	 	 
	 	By:	 	
/s/ Richard J. Ward
	 	 	 	

	 	 	 	 
	 	Title:	 	
First Vice President
	 	 	 	

	 	 	 	 
	 	 	 	 
	 	By:	 	
/s/ Jeffrey Roth
	 	 	 	

	 	 	 	 
	 	Title:	 	
Assistant Vice President
	 	 	 	

93

 

SCHEDULE 1

GUARANTORS

Alumitech, Inc.

Alumitech of Cleveland, Inc.

Alumitech of West Virginia, Inc.

AWT Properties, Inc.

Alumitech of Wabash, Inc.

ETS Schaefer Corporation

Longhorn Holdings, Inc.

Suzorite Mica Products Inc.

Suzorite Mineral Products, Inc.

The Feldspar Corporation

Zemex Attapulgite, LLC

Zemex Industrial Minerals, Inc.

Zemex Mica Corporation

 

 

SCHEDULE 2

INTER-COMPANY NOTES

U.S. $16,000.000 Promissory Note dated May 25, 1999 issued by Alumitech, Inc.
payable to Zemex U.S. Corporation

U.S. $8,000,000 Promissory Note dated May 25, 1999 issued by Alumitech of
Cleveland, Inc. payable to Alumitech, Inc.

U.S. $2,000,000 Promissory Note dated May 25, 1999 issued by Alumitech of
Wabash, Inc. payable to Alumitech, Inc.

U.S. $5,500,000 Promissory Note dated May 25, 1999 issued by Zemex Industrial
Minerals, Inc. payable to Zemex U.S. Corporation

U.S. $5,500,000 Promissory Note dated May 25, 1999 issued by Zemex Mica
Corporation payable to Zemex Industrial Minerals, Inc.

U.S. $10,000,000 Promissory Note dated May 25, 1999 issued by Suzorite Mineral
Products, Inc. payable to Zemex U.S. Corporation

U.S. $7,000,000 Promissory Note dated May 25, 1999 issued by The Feldspar
Corporation payable to Zemex U.S. Corporation

U.S. $1,000,000 Promissory Note dated May 25, 1999 issued by Zemex Mica
Corporation payable to Zemex U.S. Corporation

 

 

SCHEDULE 2.01

COMMITMENTS

AND PRO RATA SHARES

	 	 	 	 	 	 	 	 	 	 
	Bank	 	Commitment	 	Pro Rata Share
	
	 	
	 	

	Facility A
	 	 	 	 	 	 	 	 
	Bank of America, N.A
	 	$	4,950,000	 	 	 	50	%
	HSBC Bank USA
	 	$	4,950,000	 	 	 	50	%
	 
	 	 	 	 	 	 	 	 
	Facility B
	 	 	 	 	 	 	 	 
	Bank of America, N.A., acting
through its Canadian Branch
	 	$	100,000	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	Facility C
	 	 	 	 	 	 	 	 
	Bank of America N.A
	 	$	10,000,000	 	 	 	50	%
	HSBC Bank USA
	 	$	10,000,000	 	 	 	50	%
	 
	 	 	
	 	 	 	 	 
	 	TOTAL
	 	$	30,000,000	 	 	 	 	 
	 
	 	 	
	 	 	 	 	 

 

 

SCHEDULE 2.18

CANADIAN RISK PARTICIPANTS

	 	 	 	 	 
	 	 	Canadian Loan
	Bank	 	Percentage Share
	
	 	

	HSBC Bank USA
	 	 	50	%

 

 

SCHEDULE 6.05

LITIGATION

Hecla Mining Company vs. Zemex Corporation, pending in the United States
District Court for the Northern District of Illinois, Eastern Division, No. 01
C 0405.

Michael Szymanowski et al. v. Aluminum Waste Technology, Inc. and Terrance J.
Hogan, United States District Court for the Western District of Pennsylvania,
C.A. No. 96-137 Erie: This is a claim for damages purported to have occurred
as a result of fumes being emitted from wet dross material brought in from
Austria in November 1994. Discoveries are anticipated to begin sometime in
1999. In November 1994, Aluminum Waste Technology, Inc. (“AWTI”) did not have
insurance coverage for this type of incident. At that time, Zemex had only a
39.53% interest in AWTI and accounted for its ownership on an equity basis.

The Feldspar Corporation — Silicosis Litigation: The Feldspar Corporation has
been named in a number of third party liability cases where the plaintiff(s)
have alleged injury from silicosis allegedly caused by feldspar produced by The
Feldspar Corporation. The following cases are currently in the hands of
counsel and are being defended by our insurance company.

	 	 	 
	1.	 	
Jesse Aleman vs U.S. Silica Co., Case 02-04-16,451-CV, Robertson County,
TX
	 
	2.	 	
Johnnie D. Cofer v. Abrasive Industries, Inc. Case 00B207, 392nd JDC
Henderson County, TX
	 
	3.	 	
George Dunning v. North American Rockwell, Case 98-4-43349, 164th JDC
Harris County, TX
	 
	4.	 	
Charles Edmonson v. U. S. Silica Co., Case 00-16-15986-CV, 82bd JDC
Robertson County, TX
	 
	5.	 	
Coy Hawley v. American Porcelein Enamel Co., Case GN201872, 261st JDC
Travis County, TX
	 
	6.	 	
Floyd Sammons v. America Porcelein Enamel Co., Case 201869, 201st JDC
Travis County, TX
	 
	7.	 	
Darrell Johnson v. Baroid Corp., Case 2001-144, 4th JDC Rush County, TX
	 
	8.	 	
Elmo Jackson v. American Standard Inc., Case 12995-16903, CDC Orleans
Parish, LA
	 
	9.	 	
Willie Jordan v. U.S. Silica Co., Case 2001-352, 4th JDC Rush County, TX
	 
	10.	 	
Larry Mumphrey v. U.S. Silica Co., Case A165065, 50th JDC Jefferson
County, TX
	 
	11.	 	
Nunziato Panzera v. C-E Minerals, Inc., Case L-07548-92, Middlesex
County, NJ
	 
	12.	 	
Eric Whitten v. Ferro Corp, Case 99-11720, Lake County, IL

 

 

	 	 	 
	13.	 	
Corbin Whitaker v. Dresser Industries, Inc., Case DV 02-04719-F, 116th
JDC Dallas County, TX

The Feldspar Corporation — Workers Compensation Litigation: The Feldspar
Corporation is defending itself through its insurance carriers in the following
two workers compensation cases.

	 	 	 
	1.	 	
Barry Hall Case. An alleged work place stress induced heart attack.
Contentions (brief of our case) were filed in November 2001 with the NC
Industrial Commission. A decision made by a Deputy Commissioner found in
favor of Mr. Hall in August, 2002. The Company has filed its appeal with
the full Industrial Commission and expects the decision to be reversed
	 
	2.	 	
Wayne Hall Case. An alleged work place silicosis case. The employee
alleged he had silicosis. The Company medical experts have found and
testified that the employee did not have silicosis. Contentions (brief of
our case) were filed in November, 2001. No decision has been rendered at
this time

Zemex Corporation  —  General Litigation:

     Jolena Sutto v. Zemex Corporation, Case 2:01CV205-C, United States
District Court (WD NC). The employee alleged sexual harassment while working
at our Murphy, North Carolina plant. This case is in process. It should be
noted that in a companion case brought by the employee before the Equal
Employment Opportunity Commission a finding was handed down in favour of the
Company.

Suzorite Mineral Products, Inc.  —  Asbestosis Litigation:

     Suzorite Minerals was named in a total of nine cases in which the
plaintiff(s) alleged injury from asbestosis allegedly caused by the Company’s
products. The Company has been dismissed from six of these cases. The
following three cases remain open and the Company fully expects to be dismissed
in due course. The Company’s insurance carrier(s) is providing for the defense
of these cases.

	1.	 	Auzenne, et al vs AC and S, Inc., Case BC267617, Los Angeles County, CA
	 
	2.	 	Bobbie Jean Dean vs AC and S. Inc., Case 97-57627, 270th JDC Harris
County, TX
	 
	3.	 	Matthew and Judith Scott vs AC and S, Inc., Case 2001-032665, Alameda
County, CA

 

 

SCHEDULE 6.07

ERISA

Nil.

 

 

SCHEDULE 6.11

PERMITTED LIABILITIES

Nil.

 

 

SCHEDULE 6.12

ENVIRONMENTAL MATTERS

Nil.

 

 

SCHEDULE 6.17

SUBSIDIARIES AND MINORITY INTERESTS

	 	 	 	 	 	 	 	 	 
	 	 	State or Country in	 	 	 	 	 	 
	 	 	Which Incorporated	 	Percentage of	 	 	 	 
	Subsidiary Name	 	or Organized	 	Shares Outstanding	 	 	 	 
	
	 	
	 	
	 	 	 	 
	Alumitech, Inc.	 	
Delaware
	 	100%
owned by Zemex U.S.
Corporation
	 	 	 	 	 
	Alumitech of Cleveland, Inc.
(formerly Aluminum Waste
Technology, Inc.)	 	
Delaware
	 	100%
owned by Alumitech, Inc.
	 	 	 	 	 
	Alumitech of West Virginia, Inc.	 	
Delaware
	 	100%
owned by Alumitech, Inc.
	 	 	 	 	 
	Alumitech of Wabash, Inc.
(formerly S&R Enterprises,
Inc.)	 	
Indiana
	 	100%
owned by Alumitech, Inc.
	 	 	 	 	 
	AWT Properties, Inc.	 	
Ohio
	 	100%
owned by Alumitech of
Cleveland, Inc.
	 	 	 	 	 
	ETS Schaefer Corporation	 	
Ohio
	 	100%
owned by Alumitech, Inc.
	 	 	 	 	 
	The Feldspar Corporation	 	
North Carolina
	 	100%
owned by Zemex U.S.
Corporation
	 	 	 	 	 
	Longhorn Holdings, Inc.	 	
Delaware
	 	100%
owned by Suzorite
Mineral Products, Inc.
	 	 	 	 	 
	Suzorite Mica Products Inc.	 	
Ontario, Canada
	 	100%
owned by Zemex U.S.
Corporation
	 	 	 	 	 
	Suzorite Mineral Products, Inc.	 	
Delaware
	 	100%
owned by Zemex U.S.
Corporation

 

 

	 	 	 	 	 	 	 	 	 
	 	 	State or Country in	 	 	 	 	 	 
	 	 	Which Incorporated	 	Percentage of	 	 	 	 
	Subsidiary Name	 	or Organized	 	Shares Outstanding	 	 	 	 
	
	 	
	 	
	 	 	 	 
	Zemex Attapulgite, LLC	 	
Georgia
	 	100%
owned by Zemex
Industrial Minerals,
Inc.
	 	 	 	 	 
	Zemex Industrial Minerals, Inc.	 	
Delaware
	 	100%
owned by Zemex U.S.
Corporation
	 	 	 	 	 
	Zemex Mica Corporation	 	
Delaware
	 	100%
owned by Zemex
Industrial Minerals,
Inc.
	 	 	 	 	 
	Zemex U.S. Corporation	 	
Delaware
	 	100% owned by
Zemex Corporation

2

 

SCHEDULE 8.01

PERMITTED LIENS

	 	 	 	 	 	 	 
	I.	 	U.S.: UCC Registrations
	 
	1.	 	Alumitech of Cleveland, Inc. (Delaware Corporation)
	 	 	 	 	 	 	 
	(a)	 	
Jurisdiction:
	 	 
	 	Ohio Secretary of State
	 
	 	 	
(i)
	 	Date of registration:
	 	12 June 2000
	 	 	 	 	File #:
	 	AP0247246
	 	 	 	 	Secured Party:
	 	Southeastern Equipment Co., Inc.
	 	 	 	 	Collateral:
	 	“Case 95XT Skid Steer” (used) and proceeds of
collateral
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	23 June 2000
	 	 	 	 	File #:
	 	AP0250642
	 	 	 	 	Secured Party:
	 	Caterpillar Financial Services Corporation
	 	 	 	 	Collateral:
	 	new Caterpillar Wheel Loader and proceeds of
collateral
	 	 	 	 	 	 	 
	 	 	
(iii)
	 	Date of registration:
	 	11 December 2001
	 	 	 	 	File #:
	 	OH00042544981
	 	 	 	 	Secured Party:
	 	Caterpillar Financial Services Corporation
	 	 	 	 	Collateral:
	 	new Caterpillar Lift Truck and proceeds of
collateral
	 	 	 	 	 	 	 
	 	 	
(iv)
	 	Date of registration:
	 	27 December 2001
	 	 	 	 	File #:
	 	OH00043219327
	 	 	 	 	Secured Party:
	 	Caterpillar Financial Services Corporation
	 	 	 	 	Collateral:
	 	new Caterpillar Wheel Loader and proceeds of
collateral
	 	 	 	 	 	 	 
	(b)	 	
Jurisdiction:
	 	 
	 	Cuyahoga County, Ohio
	 
	 	 	
(i)
	 	Date of registration:
	 	26 June 2000
	 	 	 	 	File #:
	 	200006269072
	 	 	 	 	Secured Party:
	 	Caterpillar Financial Services Corporation
	 	 	 	 	Collateral:
	 	new Caterpillar Wheel Loader and proceeds of
collateral

 

 

	 	 	 	 	 	 	 
	2.	 	Alumitech of Wabash, Inc. (Indiana Corporation)
	 	 	 	 	 	 	 
	(a)	 	
Jurisdiction:
	 	 
	 	Indiana Secretary of State
	 
	 	 	
(i)
	 	Date of registration:
	 	9 July 1999
	 	 	 	 	File #:
	 	2267356
	 	 	 	 	Secured Party:
	 	NMHG Financial Services, Inc.
	 	 	 	 	Collateral:
	 	New Hyster Forklift and proceeds of collateral
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	2 August 2001
	 	 	 	 	File #:
	 	200100004529750
	 	 	 	 	Secured Party:
	 	NMHG Financial Services Inc.
	 	 	 	 	Collateral:
	 	unspecified leased equipment and proceeds of
it
	 	 	 	 	 	 	 
	3.	 	ETS Schaefer Corporation (Ohio Corporation)
	 	 	 	 	 	 	 
	(a)	 	
Jurisdiction:
	 	 
	 	Ohio Secretary of State
	 
	 	 	
(i)
	 	Date of registration:
	 	23 August 2001
	 	 	 	 	File #:
	 	OH00037673624
	 	 	 	 	Secured Party:
	 	Toyota Motor Credit Corp.
	 	 	 	 	Collateral:
	 	new Toyota Forklift Truck
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	31 October 2001
	 	 	 	 	File #:
	 	20013050392 (Amendment)
	 	 	 	 	Secured Party:
	 	Williams Toyota Lift, Inc. [added]
	 	 	 	 	Collateral:
	 	new Toyota Forklift Truck
	 	 	 	 	 	 	 
	4.	 	The Feldspar Corporation (North Carolina Corporation)
	 	 	 	 	 	 	 
	(a)	 	
Jurisdiction:
	 	 
	 	Florida Secretary of State
	 
	 	 	
(i)
	 	Date of registration:
	 	15 May 2000
	 	 	 	 	File #:
	 	200000113384
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	one Volvo Wheel Loader with bucket

2

 

	 	 	 	 	 	 	 
	(b)	 	
Jurisdiction:
	 	 
	 	Georgia Central Authority
	 
	 	 	
(i)
	 	Date of registration:
	 	20 August 1998
	 	 	 	 	File #:
	 	07919980219 (Jasper)
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	one L. B. Smith, Inc. electric conveyor
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	20 August 1998
	 	 	 	 	File #:
	 	07919980220 (Jasper)
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	one Kolberg Model 271B Screening Plant
	 	 	 	 	 	 	 
	 	 	
(iii)
	 	Date of registration:
	 	18 August 2000
	 	 	 	 	File #:
	 	442000006775 (De Kalb County)
	 	 	 	 	Secured Party:
	 	The CIT Group/Equipment Financing, Inc.
	 	 	 	 	Collateral:
	 	one Kawasaki Wheel Loader and proceeds of the
collateral
	 	 	 	 	 	 	 
	(c)	 	
Jurisdiction:
	 	 
	 	Jasper County, Georgia

(see Georgia Central Authority above)
	 	 	 	 	 	 	 
	(d)	 	
Jurisdiction:
	 	 
	 	North Carolina Secretary of State
	 
	 	 	
(i)
	 	Date of registration:
	 	20 August 1998
	 	 	 	 	File #:
	 	19980058172
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	271B Screening Plant
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	24 August 1998
	 	 	 	 	File #:
	 	19980059366
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	one Volvo Wheel Loader with bucket
	 	 	 	 	 	 	 
	 	 	
(iii)
	 	Date of registration:
	 	30 November 1998
	 	 	 	 	File #:
	 	19980089872
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Screening Plant

3

 

	 	 	 	 	 	 	 
	 	 	
(iv)
	 	Date of registration:
	 	30 November 1998
	 	 	 	 	File #:
	 	19980089873
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Hydraulic Radial Stacker
	 	 	 	 	 	 	 
	 	 	
(v)
	 	Date of registration:
	 	6 August 1999
	 	 	 	 	File #:
	 	19990076649
	 	 	 	 	Secured Party:
	 	Interstate Equipment Company
	 	 	 	 	Assignee of Secured
Party:
	 	The CIT Group/Equipment Financing, Inc.
	 	 	 	 	Collateral:
	 	Kawaski Wheel Loader and proceeds of
collateral
	 	 	 	 	 	 	 
	(e)	 	
Jurisdiction:
	 	 
	 	Mitchell County, NC
	 
	 	 	
(i)
	 	Date of registration:
	 	20 August 1998
	 	 	 	 	File #:
	 	98-141
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Screening Plant
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	30 November 1998
	 	 	 	 	File #:
	 	98-184
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Hydraulic Radial Stacker
	 	 	 	 	 	 	 
	 	 	
(iii)
	 	Date of registration:
	 	30 November 1998
	 	 	 	 	File #:
	 	98-185
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Screening Plant
	 	 	 	 	 	 	 
	 	 	
(iv)
	 	Date of registration:
	 	29 March 1999
	 	 	 	 	File #:
	 	99-50
	 	 	 	 	Secured Party:
	 	Interstate Equipment Company
	 	 	 	 	Collateral:
	 	Kawasaki Loader

4

 

	 	 	 	 	 	 	 
	 	 	
(v)
	 	Date of registration:
	 	6 August 1999
	 	 	 	 	File #:
	 	99-145A
	 	 	 	 	Secured Party:
	 	Interstate Equipment Company
	 	 	 	 	Assignee of Secured
	 	The CIT Group/Equipment Financing, Inc.
	 	 	 	 	Party:	 	 
	 	 	 	 	Collateral:
	 	Kawaski Wheel Loader and proceeds of
collateral
	 	 	 	 	 	 	 
	5.	 	Zemex Industrial Minerals, Inc. (Delaware Corporation)
	 	 	 	 	 	 	 
	(a)	 	
Jurisdiction:
	 	 
	 	Georgia Central Authority
	 
	 	 	
(i)
	 	Date of registration:
	 	21 June 1999
	 	 	 	 	File #:
	 	07919990147
	 	 	 	 	Secured Party:
	 	Celtic Leasing Corp.
	 	 	 	 	Assignee:
	 	Banc One Leasing Corporation
	 	 	 	 	Collateral:
	 	a schedule lists equipment leased
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	6 July 1999
	 	 	 	 	File #:
	 	441999005701
	 	 	 	 	Secured Party:
	 	Celtic Leasing Corp.
	 	 	 	 	Assignee:
	 	Banc One Leasing Corporation
	 	 	 	 	Collateral:
	 	a schedule lists equipment leased
	 	 	 	 	 	 	 
	(b)	 	
Jurisdiction:
	 	 
	 	De Kalb County
	 
	 	 	
(i)
	 	Date of registration:
	 	6 July 1999
	 	 	 	 	File #:
	 	044-199-05701
	 	 	 	 	Secured Party:
	 	Celtic Leasing Corp.
	 	 	 	 	Collateral:
	 	Telephone system and computer network
	 	 	 	 	 	 	 
	(c)	 	
Jurisdiction:
	 	 
	 	Jasper County
	 
	 	 	
(i)
	 	Date of registration:
	 	21 June 1999
	 	 	 	 	File #:
	 	079-1999-0147
	 	 	 	 	Secured Party:
	 	Celtic Leasing Corp.
	 	 	 	 	Collateral:
	 	Telephone system and computer network

5

 

	 	 	 	 	 	 	 
	6.	 	Zemex Mica Corporation (North Carolina Corporation)
	 	 	 	 	 	 	 
	(a)	 	
Jurisdiction:
	 	 
	 	North Carolina Secretary of State
	 
	 	 	
(i)
	 	Date of registration:
	 	15 January 1999
	 	 	 	 	File #:
	 	19990004416
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Screen Plant
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	15 January 1999
	 	 	 	 	File #:
	 	19990004417
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Hydraulic Conveyor
	 	 	 	 	 	 	 
	 	 	
(iii)
	 	Date of registration:
	 	26 March 1999
	 	 	 	 	File #:
	 	19990029843
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Volvo Wheel Loader
	 	 	 	 	 	 	 
	 	 	
(iv)
	 	Date of registration:
	 	11 May 1999
	 	 	 	 	File #:
	 	19990046225
	 	 	 	 	Secured Party:
	 	Vesco Industrial Trucks
	 	 	 	 	Assignee of Secured
Party:
	 	Toyota Motor Credit Corp.
	 	 	 	 	Collateral:
	 	various equipment
	 	 	 	 	 	 	 
	 	 	
(v)
	 	Date of registration:
	 	13 May 1999
	 	 	 	 	File #:
	 	19990046603
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Assignee of Secured
Party:
	 	Associates Commercial Corporation
	 	 	 	 	Collateral:
	 	Volvo Wheel Loader
	 	 	 	 	 	 	 
	 	 	
(vi)
	 	Date of registration:
	 	9 September 1999
	 	 	 	 	File #:
	 	19990088186
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Assignee of Secured
Party:
	 	Associates Commercial Corporation
	 	 	 	 	Collateral:
	 	Screen Plant; Conveyor

6

 

	 	 	 	 	 	 	 
	(b)	 	
Jurisdiction:
	 	 
	 	Mitchell County, NC
	 
	 	 	
(i)
	 	Date of registration:
	 	20 March 1998
	 	 	 	 	File #:
	 	98-047
	 	 	 	 	Secured Party:
	 	Interstate Equipment Company
	 	 	 	 	Collateral:
	 	Kawasaki Loader
	 	 	 	 	 	 	 
	 	 	
(ii)
	 	Date of registration:
	 	18 January 1999
	 	 	 	 	File #:
	 	99-010 [76501]
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Hydraulic Conveyor
	 	 	 	 	 	 	 
	 	 	
(iii)
	 	Date of registration:
	 	18 January 1999
	 	 	 	 	File #:
	 	99-011 [76505]
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Screening Plant
	 	 	 	 	 	 	 
	 	 	
(iv)
	 	Date of registration:
	 	23 March 1999
	 	 	 	 	File #:
	 	99-047 [34586]
	 	 	 	 	Secured Party:
	 	L. B. Smith, Inc.
	 	 	 	 	Collateral:
	 	Volvo Wheel Loader
	 

	 	 	 	 	 	 	 
	II.	 	Canada:
Ontario PPSA Registrations
	 
	1.	 	
Zemex Corporation
	 	 	 	 	 
	(a)	 	
Jurisdiction:
	 	 
	 	Ontario
	 
	 	 	
(i)
	 	Date of registration:
	 	2 February 1998
	 	 	 	 	File #:
	 	837968616
	 	 	 	 	Registration #:
	 	19980202 1446 1146 2730
	 	 	 	 	Term:
	 	6 years
	 	 	 	 	Secured Party:
	 	OE Financial Services Inc.
	 	 	 	 	Collateral
Classification:
	 	Equipment
	 	 	 	 	Collateral
Description:
	 	Canon Equipment and Accessories

7

 

	III.	 	Other

Liens arising under leases with GE Capital Inc. in respect of not more than
10 automobiles leased to the Borrowers and their Subsidiaries.

8

 

	IV.	 	Quebec: Register of Personal and Moveable Real Rights

	I.	 	ASSIGNMENT OF CLAIMS

	 	 	 
	Assignor:	 	
Suzorite Mica Products Inc.
	 	 	 
	Assignee:	 	
GE Capital Vendor Financial Services

doing business under the name General

Electric Capital Corporation
	 	 	 
	Registration No:	 	
00-0164264-0001
	 	 	 
	Date of Registration:	 	
June 15, 2000
	 	 	 
	Description of Property (Summary):	 	
Assignment of the universality of all
present and future claims owing to
Suzorite Mica Products Inc. pursuant to
invoices issued to Honeywell
International Corporation designated
from time to time by Honeywell
International Corporation to General
Electric Capital Corporation.

	2.	 	RIGHTS OF OWNERSHIP OF THE LESSOR

	 	 	 
	Lessor:	 	
CitiCapital Financement de Technologie Ltée
	 	 	 
	Lessee:	 	
Les Produits Mica Suzorite Inc.
	 	 	 
	Registration No:	 	
01-0481664-0001
	 	 	 
	Date of Registration:	 	
December 28, 2001
	 	 	 
	Expiration Date of Registration:	 	
December 28, 2005 
	 	 	 
	Description of Property (Summary):	 	
All equipment, apparels, accessories and
other movable property relating to or
composing the telephone system provided by
Bell Canada to the Lessee and located in
the Lessee’s places of business.

The rights under a lease covering only road vehicles described under the
heading “Véhicule routier” of the appropriate form as well as the transfer of
such rights registered since April 10, 2000, published only under the name of
the lessee and under the identification number of such vehicles.

9

 

SCHEDULE 8.05

PERMITTED INDEBTEDNESS AND CONTINGENT OBLIGATIONS

The following is a complete and correct list of all outstanding debt of the
Company and its Subsidiaries as of August 15, 2002 (excluding, for greater
certainty, all intercompany indebtedness).

Capital Leases (refer to Schedule 8.01 for details)

 

 

SCHEDULE 11.02

LENDING OFFICES,

ADDRESSES FOR NOTICES

PART I

	 	 	 
	For Borrowings and Conversions:
	Bank of America, N.A., acting through its Canadian branch
	200 Front Street West
	Suite 2700
	Toronto, Ontario
	M5V 3L2
	 
	Attention:	 	Loans Department (Clara McGibbon)
	 
	Phone:	 	(416) 349-4100
	Fax:	 	(416) 349-4283

PART II

	 	 	 
	For Borrowings and Conversions:
	Bank of America, N.A
	Agency Administrative Services #5596
	1850 Gateway Boulevard, 5th Floor
	Concord, California 94520
	 
	Attention:	 	Corwin Lewis

Vice President
	 
	Phone:	 	(925) 675-8365
	Fax:	 	(925) 675-8500
	 
	For Letters of Credit:
	Bank of America, N.A. as Issuing Bank
	CA9-0703-19-23
	333 South Beaudry St., 19th Floor
	Los Angeles, CA 99071
	 
	Attention:	 	Sandra Leon, V.P.
	Phone:	 	(213) 345-5231
	Fax:	 	(213) 345-0265

 

 

	 	 	 
	For all other Notices:
	 
	Bank of America, N.A. as Administrative Agent
	335 Madison Avenue
	New York, New York 10017
	 
	Attention:	 	Steve Aronowitz
	Telephone:	 	(212) 503-7950
	Fax:	 	(212) 503-7060
	 
	Bank of America, N.A., as Administrative Agent
	555 South Flower St., 17th Floor
	Los Angeles, CA 90071
	 
	Attention:	 	Alexandra Bax
	Telephone:	 	(213) 345-1301
	Fax:	 	(415) 503-5081
	e-mail:	 	alexandra.bax@bankofamerica.com

 

 

EXHIBIT A

FORM OF NOTICE OF BORROWING/CONVERSION OR CONTINUATION

Date: ___________ , _____

To:   Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of August 15, 2002 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among Zemex Corporation,
Zemex U.S. Corporation (together, the “Borrowers”), the Lenders from time to
time party thereto, Bank of America, N.A., as Administrative Agent, and Bank of
America, N.A. acting through its Canadian branch.

	 	 	 	 	 	 	 
	The undersigned hereby requests (select one):
	 
	 	o	 	A Borrowing	o	 	A conversion or continuation of Loans
	 
	1.	 	 	On
_________________________________________ (a Business Day).
	 
	2.	 	 	In the amount of
$ _________________________________________ .
	 
	3.	 	 	Comprised of _________________________________________ .

                         [Type of Committed Loan requested]
	 
	4.	 	 	For LIBO Rate
Loans: with an Interest Period of ______ months.

	 	 	 	 
	 	 	
[BORROWER]
	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	 
	 	 	Name:	 
	 	 	 	

	 	 	 	 
	 	 	Title:	 
	 	 	 	

 

 

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:
_____________ ,

To:   Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of August 15, 2002
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among Zemex Corporation and Zemex US Corporation (the
“Borrowers”), the Banks from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, and L/C Issuer and Bank of America, NA, acting
through its Canadian Bank, as Canadian Payment Agent.

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the _________________________________________ of the Company, and that,
as such, he/she is authorized to
execute and deliver this Certificate to the Administrative Agent on the behalf
of the Company, but without personal liability, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1.   Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 7.01(a) of the Agreement for the fiscal year of the Company
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1.   Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 7.01(b) of the Agreement for the fiscal quarter of the
Company ended as of the above date. Such financial statements fairly present
the financial condition, results of operations and cash flows of the Company
and its Subsidiaries in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of
footnotes.

2.   The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the
Company during the accounting period covered by the attached financial
statements as the undersigned considered necessary to deliver this certificate
in respect of the accounting period.

3.   A review of the activities of the Company during such fiscal period has been
made under the supervision of the undersigned with a view to determining
whether during such fiscal period the Company performed and observed all its
Obligations under the Loan Documents, and

 

 

[select one:]

[to the best knowledge of the undersigned during such fiscal period, the
Company performed and observed each covenant and condition of the Loan
Documents applicable to it.]

— or —

     [the following covenants or conditions have not been performed or observed
and the following is a list of each such Default and its nature and status:]

4.     The representations
and warranties of the Borrowers contained in Article VI
of the Agreement, or which are contained in any document furnished at any time
under or in connection with the Loan Documents, are true and correct on and as
of the date hereof, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and except that for purposes of this
Compliance Certificate, the representations and warranties contained in
subsections (a) and (b) of Section 6.11 of the Agreement shall be deemed to
refer to the most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 7.01 of the Agreement, including the statements in
connection with which this Compliance Certificate is delivered.

5.   The financial covenant analyses
and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this
Certificate.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of _____________________ , ____________________ .

	 	 	 	 
	 	 	
ZEMEX CORPORATION
	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	 
	 	 	Name:	 
	 	 	 	

	 	 	 	 
	 	 	Title:	 
	 	 	 	

2

 

EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations as a Bank under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including, without limitation, Letters of Credit and Guarantees included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Bank) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above (the
rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as, the “Assigned Interest”). Such sale
and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor.

	 	 	 	 	 
	1.	 	Assignor: ______________________________
	 
	2.	 	Assignee: ______________________________ [and is an Affiliate/Approved Fund of [identify Bank]]
	 
	3.	 	Borrower(s): ______________________________
	 
	4.	 	Administrative
Agent: ______________________, as the administrative agent under the
Credit Agreement
	 
	5.	 	
Credit Agreement:
	 	[The Credit Agreement, dated as of August 15,
2002, among Zemex Corporation, Zemex US
Corporation, the Banks parties thereto, Bank of
America, N.A., as Administrative Agent and Bank
of America, N.A. acting through its Canadian
branch, as Canadian Payment Agent]

 

 

	 	 	 	 	 
	6.	 	
Assigned Interest:

	 	 	 	 	 	 	 
	 	 	Aggregate	 	 	 	 
	 	 	Amount of	 	Amount of	 	Percentage
	 	 	Commitment/Loans	 	Commitment/Loans	 	Assigned of
	Facility Assigned	 	for all Banks	 	Assigned	 	Commitment/Loans
	
	 	
	 	
	 	

	 	 	
$ 
	 	$ 
	 	 %
	 	 	
$ 
	 	$ 
	 	 %
	 	 	
$ 
	 	$ 
	 	 %

	 	 	 
	[7.	 	
Trade Date: ______________________________]

Effective Date:
______________________________ , 20  __________ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

	 	 	 	 
	 	 	
ASSIGNOR

[NAME OF ASSIGNOR]
	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	Title:
	 
	 
	 
	 	 	
ASSIGNEE

[NAME OF ASSIGNEE]
	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	Title:

	 	 	 
	[Consent
to and] Accepted:	 
	 
	[NAME
OF ADMINISTRATIVE AGENT], as Administrative Agent
	 
	By:	 
	 	

	 	Title:
	 
	 
	 
	
[Consented to:]
	 	 	 	 
	By:	 
	 	

	 	Title:

2

 

ANNEX 1 TO ASSIGNMENT AND
ASSUMPTION

[ ___________________ ]

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

     1.   Representations and Warranties.

     1.1.   Assignor. The Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with
respect to (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrowers, any of their Subsidiaries or Affiliates or any
other Person obligated in respect of any Loan Document or (iv) the performance
or observance by the Borrowers, any of their Subsidiaries or Affiliates or any
other Person of any of their respective obligations under any Loan Document.

     1.2.   Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Bank under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit
Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Bank thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Bank thereunder, (iv) it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to
Section _____  thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Bank, and (v) if it is a Foreign
Lender, attached hereto is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, and (ii) it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Bank.

     2.   Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned interest (including payments
of principal, interest, fees and other amounts) to the Assignee whether such
amounts have accrued prior to or on or

 

 

after the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Administrative Agent for periods
prior to the Effective Date or with respect to the making of this assignment
directly between themselves.

     3.   General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument.
Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption
shall be governed by, and construed in accordance with, the law of the Province
of Ontario [confirm that choice of law provision parallels the Credit
Agreement].

2exv10w2

 

Exhibit 10.2

October 15, 2002          

Mr. Allen Palmiere

R.R. #5

Georgetown, Ontario

L7G 4S8

Dear Allen:

     This letter (the “Agreement”) shall serve to set forth our mutual
understanding and agreement as at October 15, 2002 (the “Effective Date”)
regarding your continued employment as Vice President, Chief Financial Officer,
of Zemex Corporation (the “Corporation”), pursuant to the following terms and
conditions:

	1.	 	Definitions. Unless otherwise defined herein, capitalized terms have the
meaning set out in Schedule “A” annexed to this Agreement.
	 
	2.	 	Term. This Agreement and your employment shall continue from the
Effective Date for an indefinite term unless terminated in accordance with
the terms and conditions set forth in this Agreement.
	 
	3.	 	Duties. Subject always to the control and direction of the Board in
accordance with the Corporation’s corporate governance practices from time
to time, you shall:

	 	(a)	 	faithfully serve the Corporation and carry out those
responsibilities as are necessary to perform the functions
associated with the position of Vice President, Chief Financial
Officer;
	 
	 	(b)	 	devote all of your working time, skill, experience and
attention to carry out the responsibilities consistent with the
position of Vice President, Chief Financial Officer and not at any
time engage in conduct which would significantly interfere with the
performance of your duties or which would constitute a conflict with
the interest of the Corporation or its affiliates;

 

 

	 	(c)	 	comply with all applicable laws, rules and regulations, and
all requirements of all applicable regulatory, self-regulatory and
administrative bodies; comply with the Corporation’s rules,
procedures, policies, requirements and directions; and not engage in
any other business or employment without the written consent of the
President, except as otherwise specifically provided herein, it is
being understood that the management of your personal investment and
affairs not relating to the business shall not contravene your
obligations under this Agreement.

	4.	 	Remuneration. As compensation for the performance of your duties
hereunder:

	 	(a)	 	the Corporation shall pay to you a salary at the rate of
Cdn$264,000.00 per annum (the “Base Salary”), payable bi-weekly in
arrears less those deductions, withholdings or contributions which
are required by law. Your Base Salary shall be reviewed by the
Chief Executive Officer and may be increased by such amount as the
Chief Executive Officer in his or her sole discretion shall
determine; and
	 
	 	(b)	 	you shall be entitled to participate in any incentive
compensation plan which is implemented by the Corporation in the
manner and to the extent that senior executives of the Corporation
are permitted to participate as determined by the Board.

	5.	 	Expenses. The Corporation shall reimburse you for all out-of-pocket
expenses reasonably and properly incurred by you in connection with your
duties hereunder, provided that you shall furnish in a timely manner to
the Corporation statements and reports for all such expenses.
	 
	6.	 	Benefits. You shall be entitled to continue to participate in all of the
employee Benefit Plans for senior management of the Corporation resident
in Canada in effect from time to time (the “Benefit Plans”) in accordance
with the terms of such Benefit Plans. It is understood and agreed that
the Benefit Plans may be amended by the Corporation from time to time.
Your vacation entitlement will continue to be covered by company policy in
effect as of the Effective Date.
	 
	7.	 	Stock Options. In addition to any Options held by you as at the
Effective Date, you shall be eligible for consideration to participate in
and receive Options pursuant to the Stock Option Plan and any other share
compensation arrangements of the Corporation in effect from time to time
in which senior management of the Corporation resident in Canada are
generally eligible to participate.

- 2 -

 

	8.	 	Pension and Supplemental Pension Arrangement. With respect to your
eligibility for participation in the U.S. Pension Plan, the Corporation is
prepared to make the following arrangements:

	 	(a)	 	the Corporation will use its best efforts to include you as a
participant in the U.S. Pension Plan in accordance with the terms
thereof, as such may be amended from time to time. In addition, the
Corporation shall provide you with a one time lump sum payment of
U.S. $150,000.00 within ten (10) days of the Effective Date; or,
	 
	 	(b)	 	in the alternative that the Corporation is unable to include
you in the U.S. Pension Plan, the parties agree that you shall
retain the above lump sum payment and any further consideration to
which the parties mutually agree. For further clarity, should the
Corporation be unable to include you in the U.S. Pension Plan, only
this Article 8 will be renegotiated. The remaining terms and
conditions shall remain in force.

	9.	 	Termination.
	 
	9.1	 	Your employment hereunder may be terminated by either the Corporation or
by you, as the case may be, exercised by notice in writing at any time
upon the happening of any of the following events, in which event your
employment shall terminate upon the date specified in such notice:

	 	(a)	 	by the Corporation for Cause;
	 
	 	(b)	 	by the Corporation in the event of your death;
	 
	 	(c)	 	by the Corporation without Cause (and other than for the
circumstances in paragraph 9.1(b) or 9.1(d) or 9.1(e) or 9.2), in
which case you will receive the following:

				
	 	(i)	 	a lump sum equivalent to eighteen (18) months
(the “Notice Period”) Base Salary payable at the date of
termination;
	 
	 	(ii)	 	an amount in lieu of the value of any bonus
contemplated under paragraph 4(b) that you would have earned
had you been employed for the length of the Notice Period
(calculated based on an average of the annual bonus, if any,
payable to you in respect of each of the three fiscal years of
the Corporation ending immediately prior to your termination
date);
	 
	 	(iii)	 	continuation, during the Notice Period or until
such time as you secure alternate comparable benefits, of your
participation in the Benefit Plans (excluding short-term
disability, long-term disability

- 3 -

 

				
	 	 	 	and life insurance benefits which shall cease on the date of
termination) in which you participated at the date of
termination or if a plan or program does not permit the
continuance of all or some of the benefits for some or all of
the Notice Period, the Corporation shall make other
arrangements at its own expense to make substantially similar
benefits available to you. The Corporation’s obligation
hereunder is conditional on you continuing to pay your share,
if any, of the premiums;
	 
	 	(iv)	 	all Options will vest immediately upon the date
of termination and will cease to be exercisable at the later
of the expiry date of the Option and the end of the Notice
Period provided that the maximum term of any such Option shall
not exceed the period permitted by the Stock Option Plan; and,
	 
	 	(v)	 	entitlement to suitable outplacement counselling
services selected by the Corporation for which the Corporation
shall pay reasonable costs, up to a maximum of 10% of your
annual Base Salary in effect immediately prior to your
dismissal. Notwithstanding the foregoing provisions of this
Section 9.1(c)(v), at your option, the cost to the Corporation
of such outplacement counselling services shall be converted
to a lump sum amount and shall be paid to you immediately.

	 	(d)	 	by the Corporation, in the event of your Disability, in which
case, you shall be entitled, to the extent you continue to qualify,
to receive the long term disability benefits for executives of the
Corporation in effect at such time in lieu of any other compensation
whatsoever, together with all amounts owing to the effective date of
termination; or
	 
	 	(e)	 	by you, by giving two (2) month’s written notice to the
Corporation.

	9.2	 	In lieu of and not in addition to the termination payments and benefits
provided in paragraph 9.1 herein, if a Change in Control occurs and if, a
Triggering Event occurs on or before the Expiry Date, you shall be
entitled to elect to terminate your employment with the Corporation and to
receive the following:

	 	(a)	 	an amount equal to 200% of your annual Base Salary in effect
immediately prior to the Triggering Event;
	 
	 	(b)	 	200% of the average of the annual bonus, if any, payable to
you in respect of each of the three fiscal years of the Corporation
ending immediately prior to the Triggering Event;

- 4 -

 

	 	(c)	 	continuation of the Benefit Plans, as they exist immediately
prior to the Triggering Event for a period of twenty-four (24)
months after your election to terminate your employment pursuant to
paragraph 9.2 or until such time as you secure comparable alternate
benefits, whichever first occurs. Notwithstanding the provisions of
this paragraph 9.2(c), at your option on the date of termination,
the cost to the Corporation of such Benefit Plans, or any part of
the benefits under such Benefit Plans as shall be specified by you,
shall be converted to a lump sum amount and shall be paid to you
effective immediately; and
	 
	 	(d)	 	entitlement to suitable outplacement counselling services
selected by the Corporation for which the Corporation shall pay
reasonable costs, up to a maximum of 10% of your annual Base Salary
in effect immediately prior to your dismissal. Notwithstanding the
foregoing provisions of this paragraph 9.2(d), at your option, the
cost to the Corporation of such outplacement counselling services
shall be converted to a lump sum amount and shall be paid to you
immediately.

	9.3	 	The terms and conditions contained in 9.2 shall not apply if the
Triggering Event follows a Change in Control which involves the sale of
securities or assets of the Corporation with which you are involved as a
purchaser in any manner, whether directly or indirectly (by way of
participation in a corporation or partnership that is a purchaser or by
provision of debt, equity or purchase – leaseback financing).
	 
	9.4	 	All termination rights provided for in paragraph 9.2 are conditional upon
you electing to exercise such rights by notice given to the Corporation up
to six (6) months after the Expiry Date and are exercisable only if you do
not resign from your employment with the Corporation or the subsidiary
(other than at the request of the Corporation or the subsidiary) and do
not actively seek alternate employment, in each case for at least 180 days
following the date of the Change in Control.
	 
	9.5	 	Any payment to be made by the Corporation pursuant to the terms of
paragraph 9 shall be made by the Corporation in cash in a lump sum within
five (5) business days of the giving of notice by you pursuant to
paragraph 9.2 or within five (5) business days of the dismissal from your
employment as referred to in paragraph 9.1(c). Notwithstanding the
foregoing provisions of this paragraph 9.5, at your option, a payment, or
any part thereof as shall be specified by you, to be made to you shall be
deferred to such date or dates as shall be designated in writing by you.
The Corporation shall list the items making up a payment calculated as
provided for in paragraph 9 and shall support the calculation of such
amount.

- 5 -

 

	10.	 	Mitigation. You shall not be required to mitigate the amount of any
payments provided for under paragraph 9.1(c) or 9.2 by seeking other
employment or otherwise, nor shall the amount of any payment provided for
in such paragraph be reduced by any compensation earned by you as a result
of employment by another employer after the effective date of termination,
or otherwise.
	 
	11.	 	Release. Each of the Corporation and you confirm that the provisions of
paragraph 9.1(c) or 9.2 are reasonable and the total amount payable as
outlined therein is an amount which has been agreed between them to be
payable hereunder and is a reasonable estimate of the damages which will
be suffered by you in the event of a termination without Cause and shall
not be construed as a penalty. You agree to accept the payment provided
for in paragraph 9.1(c) or 9.2 in full satisfaction of any and all claims
you have or may have against the Corporation and you agree to release the
Corporation with respect to same upon payment of said sum.
	 
	12.	 	Confidential Information. You agree that all right, title and interest
in and to the Confidential Information shall remain the exclusive property
of the Corporation and the Confidential Information shall be held in trust
by you for the benefit of the Corporation. You shall not, directly or
indirectly, use or exploit the Confidential Information for any
operational, commercial or other purpose whatsoever or in any manner
detrimental to the Corporation or disclose, disseminate, impart or grant
access to the Confidential Information to any person for any purpose.
	 
	 	 	You shall not copy, reproduce in any form or store in any retrieval
system or database the Confidential Information without the prior written
consent of the Corporation, except for such copies, reproductions and
storage as may be reasonably required internally by you for the purpose
for which you receive the Confidential Information. You shall return all
Confidential Information to the Corporation on the termination of your
employment or at any other time as may be requested.
	 
	13.	 	Non-solicitation. You shall not during the term of this Agreement and
for a period of twelve (12) months following termination of employment for
any reason on your own behalf or on behalf of any Person, whether directly
or indirectly, in any capacity whatsoever, alone or through or in
connection with any Person:

	 	(a)	 	contact, deal with, pursue, accept, receive or solicit any
business from any person who you know to be a prospective, current
or former client (a “Client”) of the Corporation for the purpose of
selling to the Client any products or services that are the same as
or substantially similar to, or in

- 6 -

 

	 	 	 	any way competitive with, the products or services sold or intended
to be sold by the Corporation, to your knowledge;
	 
	 	(b)	 	solicit the employment or engagement of or otherwise entice
away from the employment of the Corporation or any affiliate any
individual who is employed by the Corporation or any affiliate at
the relevant time;
	 
	 	(c)	 	procure or assist any Person to solicit the employment or
engagement of or otherwise entice away from the employment of the
Corporation or any affiliate any individual who is employed by the
Corporation. It is understood, however, that the giving of a
reference, whether verbal or written, by you to a potential third
party, on behalf of an employee will not constitute a breach of
paragraph 13(b).

	14.	 	Survival. Notwithstanding the termination of this Agreement, (a) neither
party shall be released from any obligation that accrued prior to the date
of termination and more; and (b) each party shall remain bound by the
provisions of this Agreement which by their terms impose obligations upon
that party that extend beyond the termination of this Agreement and more
particularly, but not limited to, paragraphs 9, 12 and 13 hereof.
	 
	15.	 	Assignment. Except as otherwise expressly provided herein, neither this
Agreement nor any rights or obligations shall be assignable by either
party without the prior written consent of the other party hereto.
	 
	16.	 	Amendment and Waiver. No supplement, modification, amendment or waiver
of this Agreement shall be binding unless executed in writing by both
parties. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar) nor
shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
	 
	17.	 	Successors and Assigns. This Agreement shall enure to the benefit of and
be binding upon the parties and their respective heirs, executors and
administrators or successors and permitted assigns, as the case may be.
	 
	18.	 	Severability. If any provision in this Agreement is determined to be
invalid, void or unenforceable by the decision of any court of competent
jurisdiction, which determination is not appealed or appealable for any
reason whatsoever, the provision in question shall not be deemed to affect
or impair the validity or enforceability of any other provision of this
Agreement and such invalid or unenforceable provision or portion thereof
shall be severed from the remainder of this Agreement.
	 
	19.	 	Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter contemplated herein
and supersedes

- 7 -

 

	 	 	and replaces any provision of any other document heretofore entered into
by them with respect to the subject matter of this Agreement, including
but not limited to the Supplemental Retirement Plan for key employees
dated January 1, 2001 and the Change in Control Agreement dated October
1, 1999.
	 
	20.	 	Independent Legal Advice. You acknowledge that you have been advised to
obtain, and that you have obtained or have been afforded the opportunity
to obtain, independent legal advice with respect to this Agreement and
that you understand the nature and consequences of this Agreement.
	 
	21.	 	Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
	 
	22.	 	Counterparts. This Agreement may be executed by the parties in one or
more counterparts, each of which when so executed and delivered shall be
deemed to be an original and such counterparts shall together constitute
one and the same instrument.

     If the foregoing correctly sets forth your understanding with respect to
your employment by the Corporation, please so indicate by signing where
indicated below.

	 	 	 	 	 
	 
	 	ZEMEX CORPORATION
	 
	 
	 
	 	By:	 	/s/  Richard L. Lister
	 
	 	 	 	

	 
	 	 	 	Name: Dr. Richard Lister
	 
	 	 	 	Title:   President and Chief Executive Officer
	 
	AGREED AND ACCEPTED

as of the date first written above	 	 	 	 
	 
	 
	/s/  Allen J. Palmiere	 	 	 	 
	
	 	 	 	 
	Allen Palmiere	 	 	 	 

- 8 -

 

SCHEDULE “A”

Definitions

     In this Agreement, unless the context otherwise requires, the following
terms shall have the following meanings:

		
	 	“Affiliate” shall have the meaning ascribed thereto in the Securities Act
(Ontario).
	 
	 	“Board” shall mean the board of directors of the Corporation.
	 
	 	“Business Day” means a day other than a Saturday, Sunday, statutory
holiday or other day on which banks are generally closed in Toronto.
	 
	 	“Cause” shall mean any act or omission by you which would in law permit
an employer to, without notice or payment in lieu of notice, terminate
the employment of an Executive.
	 
	 	“Change of Control” means a transaction or series of transactions whereby
directly or indirectly:

				
	 	(i)	 	any person or combination of persons (other than
Dundee Bancorp Inc. or any affiliate thereof) acting jointly
or in concert obtains a sufficient number of securities of the
Corporation to affect materially the control of the
Corporation;
	 
	 	(ii)	 	if the Executive is primarily employed by the
Corporation, the Corporation shall consolidate or merge with
or into, amalgamate with, or enter into a statutory
arrangement with, any other person (other than a subsidiary of
the Corporation) or any other person (other than a subsidiary
of the Corporation) shall consolidate or merge with or into,
or amalgamate with or enter into a statutory arrangement with,
the Corporation, and, in connection therewith, all or part of
the outstanding voting shares shall be changed in any way,
reclassified or converted into, exchanged or otherwise
acquired for shares or other securities of the Corporation or
any other person or for cash or any other property;
	 
	 	(iii)	 	if the Executive is primarily employed by the
Corporation, the Corporation shall be liquidated or dissolved
or shall sell or otherwise transfer, including by way of the
grant of a leasehold interest (or one or more of its
subsidiaries shall sell or otherwise transfer, including by
way of the grant of a leasehold interest) property or assets
(A) aggregating more than 50% of the

 

				
	 	 	 	consolidated assets (measured by either book value or fair
market value) of the Corporation and its subsidiaries as at
the end of the most recently completed financial year of the
Corporation or (B) which during the most recently completed
financial year of the Corporation generated, or during the
then current financial year of the Corporation are expected
to generate, more than 50% of the consolidated operating
income or cash flow of the Corporation and its subsidiaries,
to any other person or persons (other than the Corporation or
one or more of its subsidiaries);
	 
	 	(iv)	 	if the Executive is primarily employed by a
Subsidiary, the Subsidiary shall be liquidated or dissolved or
shall sell or otherwise transfer, including by way of the
grant of a leasehold interest (or one or more of its
subsidiaries shall sell or otherwise transfer, including by
way of the grant of a leasehold interest) property or assets
(A) aggregating more than 50% of the consolidated assets
(measured by either book value or fair market value) of the
Subsidiary and its subsidiaries as at the end of the most
recently completed financial year of the Subsidiary or (B)
which during the most recently completed financial year of the
Subsidiary generated, or during the then current financial
year of the Subsidiary are expected to generate, more than 50%
of the consolidated operating income or cash flow of the
Subsidiary and its subsidiaries, to any other person or
persons (other than the Corporation, the Subsidiary or one or
more of its subsidiaries);
	 
	 	(v)	 	if the Executive is primarily employed by the
Corporation, the Corporation shall issue common shares from
the treasury of the Corporation to any person or company other
than Dundee Bancorp Inc. or any affiliate thereof in a
sufficient number to affect materially the control of the
Corporation;
	 
	 	(vi)	 	if the Executive is primarily employed by a
Subsidiary, (A) a transfer of shares of the Subsidiary or (B)
the issue of treasury shares of the Subsidiary, in either case
having the result that any person or combination of persons
acting jointly or in concert beneficially owns shares or other
securities in excess of the number which, directly or
following conversion thereof, would entitle the holders
thereof to cast 49.9% or more of the votes attaching to all
shares of the Subsidiary which may be cast to elect directors
of the Subsidiary;
	 
	 	(vii)	 	the Incumbent Directors cease to represent a
majority of the members of the Board of Directors.

- 2 -

 

		
	 	for the purposes of (i) and (v) above, a person or combination of persons
acting jointly or in concert or beneficially owning common shares or
other securities in excess of the number which, directly or following
conversion thereof, would entitle the holders thereof to cast 20% or more
of the votes attaching to all shares of the Corporation which may be cast
to elect directors of the Corporation, (the “Voting Shares”) shall be
deemed to be in a position to affect materially the control of the
Corporation.
	 
	 	“Confidential Information” means non-public information not generally
known about the Corporation and/or its affiliates, which the Corporation
and/or any of its affiliates desires to protect and keep secret and
confidential (including information and trade secrets conceived,
originated, discovered or developed by the officers, executives or
consultants either employed by or retained by the Corporation or its
affiliates) concerning the business and affairs of the Corporation and/or
its affiliates including, without limitation:

	 	(a)	 	knowledge of all business or financial opportunities which
are or may be available to the Corporation and/or its affiliates;
	 
	 	(b)	 	all inventions and product enhancements and developments; or
	 
	 	(c)	 	the present and contemplated plans, strategies, costs,
prices, systems, pricing policies and financial information used by
the Corporation or its affiliates in connection with its business
and client lists and information concerning the customers of the
Corporation and/or its affiliates, their names, addresses, needs and
preferences.

		
	 	It is understood, however, that Confidential Information shall not
include Confidential Information that becomes part of the public domain
by publication or otherwise, not due to any unauthorized act or omission
by you.
	 
	 	“Disability” shall mean your inability to substantially fulfil your
duties on behalf of the Corporation such that you have been approved for
long term disability benefits pursuant to the Corporation’s long term
disability plan.
	 
	 	“Expiry Date” means thirty months after a Change in Control occurs.
	 
	 	“Incumbent Directors” means the members of the Board holding office at
the Effective Date and any additional directors appointed by or with the
consent of a majority of the Incumbent Directors.
	 
	 	“Options” means those options granted to the Executive pursuant to the
Stock Option Plan.
	 
	 	“Stock Option Plan” means the Corporation’s stock option plan as the same
is in effect at any relevant time.

- 3 -

 

		
	 	“Subsidiary” shall have the meaning ascribed thereto in the Securities
Act (Ontario).
	 
	 	“Triggering Event” means any one of the following events which occurs
without the express or original agreement of the Executive:

				
	 	(i)	 	an adverse change in any of the duties, rights,
discretion, salary or benefits of the Executive as they exist
at the date of this Agreement; or
	 
	 	(ii)	 	a diminution of the title of the Executive as it
exists at the date of this Agreement; or
	 
	 	(iii)	 	a change in the person or body to whom the
Executive reports at the date of this Agreement, except if
such person or body is of equivalent rank or stature or such
change is as a result of the resignation or removal of such
person or persons comprising such body, as the case may be,
provided that this shall not include a change resulting from a
promotion in the normal course of business; or

		
	 	a change in the municipality at which the Executive is regularly required
to carry out the terms of this employment with the Corporation at the
date of this Agreement unless the Executive’s terms of employment include
the obligation to receive geographic transfers from time to time in the
normal course of business.

- 4 -

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