Document:

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[CIBC LOGO]                                      CANADIAN IMPERIAL BANK OF
                                                 COMMERCE

                                                 Commercial Banking Centre
                                                 2nd Floor, 10102 Jasper Avenue
                                                 Edmonton, AB   T5J 1W5
                                                 Tel: (780) 420-3035
                                                 Fax: (780) 420-3099

June 21, 2004

Stantec Inc.
10160 - 112 Street
Edmonton, Alberta
T5K 2L6

Attention: Mr. Don Wilson, Vice President & CFO

Dear Sirs:

                  Re:      Credit Facility

                  Canadian Imperial Bank of Commerce ("CIBC") is pleased to
establish the following credit facility in favour of Stantec Inc. (the
"Borrower").

                              TERM REVOLVING CREDIT

Credit Limit:                       (1)      the lesser of

                                    (a) $30,000,000 .

                                    OR

                                    (b) the sum of (i) 100% of Cash Balances,
                                    and (ii) 80% of Receivable Value less
                                    Priority Claims, and (iii) 40% of Work In
                                    Progress Value, but in no event may the
                                    amount in this clause (iii) exceed
                                    $10,000,000 , less (iv) outstanding Letters
                                    of Credit under the Letter of Credit
                                    facility

                           The aggregate outstanding amount of Canadian dollar
                           loans, US dollar loans, standby L/Cs and B/As under
                           this Credit may not at any time exceed the limit of
                           this Credit set out above.

Purpose:                   All amounts obtained under this Credit are to be used
                           for general business purposes.

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                                                                         Page 2

Description and Rate:      A revolving Credit, available as follows:

                           -        Canadian dollar loans.

                                    Interest on Canadian dollar loans will be
                                    calculated at the Prime Rate.

                           -        US dollar Base Rate loans.

                                    Interest on US dollar Base Rate loans will
                                    be calculated at the US Base Rate.

                           -        US dollar LIBOR Loans.

                                    Interest on LIBOR Loans will be calculated
                                    at the LIBO Rate for each applicable LIBOR
                                    Period plus 75 bps per annum.

                           -        Canadian dollar B/As.
                                    CIBC's stamping fee for B/As will be
                                    calculated at 75 bps per annum.

Repayment:                 This Credit will terminate on July 30, 2005, and all
                           amounts under this Credit are repayable at such time.
                           CIBC may in its sole discretion, upon written request
                           by the Borrower given to CIBC not later than 60 days
                           prior to the termination date of this Credit then in
                           effect, extend such termination date for a period of
                           364 days from the date of such extension. If upon any
                           such request by the Borrower CIBC does not agree to
                           extend the termination date then in effect, then
                           notwithstanding the foregoing no additional amounts
                           may be obtained under this Credit, and this Credit
                           shall cease to be revolving, on and after the
                           termination date then in effect, and all amounts
                           under this Credit shall be repayable immediately.

                           Notwithstanding the foregoing, at any time that an
                           Event of Default is continuing all amounts under this
                           Credit are repayable immediately on demand by CIBC
                           and this Credit may be terminated in whole or in part
                           by CIBC.

                           The Borrower shall have the option to repay any
                           amount under this Credit at any time, provided that
                           LIBOR Loans may be repaid only at the end of a LIBOR
                           Period, fixed-rate loans may be repaid only at the
                           end of a fixed-rate interest period, and B/As may be
                           repaid only on their maturity.

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                                                                         Page 3

Standby Fee:               A fee calculated at the rate of 10 bps per annum on
                           the undrawn portion of the Credit, payable monthly in
                           arrears.

                         5 YEAR TERM ACQUISITION CREDIT

Credit Limit:              US $17,000,000

Purpose:                   All amounts under this Credit are to be used for
                           acquisition purposes.

Description and Rate:      A revolving Credit, available as follows:

                           -        Canadian dollar loans.

                           -        US dollar Base Rate loans.

                           -        US dollar LIBOR Loans.

                           -        Canadian dollar B/As.

Incentive Pricing:         The interest rates, stamping fees and standby fees
                           applicable under this Credit will vary as set out
                           below according to the ratio of Debt to EBITDA at the
                           end of each fiscal quarter. Each change in rates and
                           fees will be effective on the first day following the
                           expiry of the maximum period in which the Borrower is
                           permitted to deliver to CIBC its financial statements
                           as at the end of such fiscal quarter.

<TABLE>
<CAPTION>
                                               Prime Rate,      US Base Rate,     LIBO Rate, plus    Stamping Fee     Standby Fee
                                               plus bps per     plus bps per      plus bps per       (bps per         (bps per
Ratio of Debt to EBITDA                        annum            annum             annum              annum)           annum)
----------------------------------             ------------     -------------     ---------------    ------------     -----------
<S>                                            <C>              <C>               <C>                <C>              <C>
Less than or equal to 1.50 to 1.0                    0                 0                 110              110               20

Greater than 1.50 to 1.0 but                        25                25                 135              135               25
less than 2.0 to 1.0

Less than or equal to 2.50 to 1.0                   50                50                 160              160               30
</TABLE>

<PAGE>

                                                                         Page 4

Repayment:                 The limit of this Credit will revolve until July 30,
                           2005 at which time the Borrower shall begin to repay
                           any amount outstanding under this Credit over a 4
                           Year Term in 16 equal quarterly principal payments
                           plus interest.

                           Notwithstanding the foregoing, at any time that an
                           Event of Default is continuing all amounts under this
                           Credit are repayable immediately on demand by CIBC
                           and this Credit may be terminated in whole or in part
                           by CIBC.

                           The Borrower shall have the option to repay any
                           amount under this Credit at any time without penalty,
                           provided that LIBOR Loans may be repaid only at the
                           end of a LIBOR Period, fixed-rate loans may be repaid
                           only at the end of the applicable fixed-rate interest
                           period, and B/As may be repaid only on their
                           maturity.

                      4 YEAR REDUCING TERM INSTALMENT LOAN

Loan Amount:               US $23,164,122

Purpose:                   This loan is a term out of the Acquisition Facility
                           balance as at September st 2004 .

Description and Rate:      A 4 Year Reducing Term Credit, available as follows:

                           -        Canadian dollar loans.

                           -        US dollar Base Rate loans.

                           -        US dollar LIBOR Loans.

                           -        Canadian dollar B/As.

Incentive Pricing:         The interest rates, stamping fees and standby fees
                           applicable under this Credit will vary as set out
                           below according to the ratio of Debt to EBITDA at the
                           end of each fiscal quarter. Each change in rates and
                           fees will be effective on the first day following the
                           expiry of the maximum period in which the Borrower is
                           permitted to deliver to CIBC its financial statements
                           as at the end of such fiscal quarter.

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                                                                         Page 5

<TABLE>
<CAPTION>
                                          Prime Rate,     US Base Rate,    LIBO Rate,      Stamping Fee    Standby Fee
                                          plus bps per    plus bps per     plus bps per    (bps per        (bps per
Ratio of Debt to EBITDA                   annum           annum            annum           annum)          annum)
----------------------------------        ------------    -------------    ------------    ------------    -----------
<S>                                       <C>             <C>              <C>             <C>             <C>
Less than or equal to 1.50 to 1.0                0              0                 110           110             20

Greater than 1.50 to 1.0 but                    25             25                 135           135             25
less than 2.0 to 1.0

Less than or equal to 2.50 to 1.0               50             50                 160           160             30
</TABLE>

Repayment:                 Regular quarterly payments of US$1,562,500 each,
                           together with accrued interest through to October 1,
                           2008

                           Notwithstanding the foregoing, at any time that an
                           Event of Default is continuing this Instalment Loan
                           is repayable immediately on demand by CIBC.

                           The Borrower shall have the option to repay any
                           principal amount of this loan at any time without
                           penalty, provided that LIBOR Loans may be repaid only
                           at the end of a LIBOR Period, fixed-rate loans may be
                           repaid only at the end of the applicable fixed-rate
                           interest period, and B/As may be repaid only on their
                           maturity. Such optional repayment shall be applied to
                           the instalments specified above in the reverse order
                           of their maturity.

               CREDIT FOR DOCUMENTARY & STAND-BY LETTERS OF CREDIT

Credit Limit:              $10,000,000

Purpose:                   All L/Cs are to be used for business purposes.

Fees:                      Fees for all L/Cs under this Credit will be
                           calculated at 0.90% per annum. In each case the
                           Borrower shall reimburse CIBC for its out of pocket
                           expenses relative to all L/Cs under this Credit.

Documentation:             CIBC's standard L/C documentation is required.

Termination:               This Credit may be terminated in whole or in part by
                           CIBC at any time.

Conditions:                L/Cs under this Credit may not have terms to expiry
                           of more than 12 months.

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                                                                         Page 6

                        FOREIGN EXCHANGE HEDGING FACILITY

Credit limit:              US$1,500,000

Purpose:                   The Borrower may do foreign exchange and interest
                           rate hedging with foreign exchange terms to expiry of
                           not more than twelve (12) months (unless approved by
                           CIBC on an exception basis) and swaps not to exceed
                           five (5) years.

                           Use of this facility will be subject to CIBC's usual
                           requirements for notice, forms and procedures, and
                           charges and fees.

                                    SECURITY

                           The following security, which shall be in form and
                           substance satisfactory to CIBC, is required to secure
                           all present and future indebtedness and liabilities
                           of the Borrower to CIBC (including under any foreign
                           exchange contract or interest rate swap with CIBC).

                           -        A General Security Agreement in the Lender's
                                    standard form 6100 granting a first secured
                                    interest on all of the Borrowers present and
                                    after-acquired personal property, to be
                                    registered in all jurisdictions in which the
                                    company does business (currently Alberta,
                                    BC, Saskatchewan, Manitoba, and Ontario)

                           -        Guarantee and Postponement of Claim from
                                    Stantec Consulting Inc. with respect to all
                                    of the liabilities of the Borrower to CIBC,
                                    secured by a General Security Agreement.

                           -        Guarantee and Postponement of Claim from
                                    Stantec Consulting Ltd. with respect to all
                                    of the liabilities of the Borrower to CIBC,
                                    secured by a General Security Agreement.

                           -        Guarantee and Postponement of Claim from all
                                    material individual subsidiary operating
                                    entities with respect to all the liabilities
                                    of the Borrower to CIBC, secured by General
                                    Security Agreements, to ensure at least 90%
                                    of the the Borrower's and its subsidiary's
                                    accounts receivable are assigned to CIBC.

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                                                                         Page 7

                           -        Acknowledged assignment of adequate fire and
                                    other perils insurance on the property and
                                    assets of the Borrower that are subject to
                                    CIBC's security, with loss payable to CIBC.

                           -        ISDA agreement.

                           -        Multi-Party CCC Agreement.

                           CIBC acknowledges the current existence of each of
                           the above security items, with the exception of the
                           Guarantee and Postponement of Claim from all material
                           individual operating entities, which the Borrower
                           agrees to execute after execution of this agreement.

                               FINANCIAL COVENANTS

Covenants:                 The Borrower will ensure that:

Financial Covenants:       -        The Debt to EBITDA Ratio does not exceed
                                    2.50 to 1.0 at any time.

                           -        The EBITDAR to Debt Service Ratio is not
                                    less than 1.35 to 1.0 at any time.

                           -        Shareholders Equity must be greater than or
                                    equal to 90% of the prior fiscal year ending
                                    shareholder's equity plus 50% of the
                                    positive cumulative net income earned during
                                    the current fiscal year.

                           -        The Current Ratio is not less than 1.25 to
                                    1.0 at any time.

                               NEGATIVE COVENANTS

Capital Expenditures:      The total capital expenditures of the Borrower and
                           its Subsidiaries for fixed or capital assets
                           (excluding new business acquisitions) in any fiscal
                           year, calculated in accordance with GAAP, do not
                           exceed C$25,000,000 without CIBC's prior consent.

Amalgamations, etc.:       None of the Borrower and its Subsidiaries will enter
                           into any amalgamation or consolidation or merger or
                           liquidate, wind-up or dissolve itself (or permit any
                           liquidation, winding-up or dissolution or any
                           proceedings therefor) or continue itself under the
                           laws of any other

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                                                                         Page 8

                           statute or jurisdiction, except that, subject to the
                           Borrower and its Subsidiaries taking such action, and
                           executing and delivering to CIBC such agreements and
                           other documents as CIBC may require, acting
                           reasonably, to assure the continued validity,
                           enforceability and effectiveness of the Security and
                           the covenants, agreements and obligations of the
                           Borrower under the Credits, and provided that there
                           does not then exist any failure by the Borrower to
                           perform or observe any of its covenants in this
                           Agreement and no such failure would be created
                           thereby, any wholly-owned Subsidiary may be
                           amalgamated or consolidated or merged or liquidated,
                           wound-up or dissolved with or into the Borrower,
                           provided that the Borrower shall be the continuing
                           corporation, or with or into any one or more other
                           wholly-owned Subsidiaries.

Dispositions of Property:  None of the Borrower and its Subsidiaries will sell,
                           transfer or otherwise dispose of, in one transaction
                           or a series of transactions, all or any material part
                           of its property, whether now owned or hereafter
                           acquired, except that each of the Borrower and
                           its Subsidiaries:

                                    (i)      may sell in the normal course of
                                             its business for the purpose of
                                             carrying on the same, for fair
                                             market value, in accordance with
                                             customary trade terms, any property
                                             that would reasonably be considered
                                             to be the subject matter of sales
                                             by it in the normal course of its
                                             business for the purpose of
                                             carrying on the same; and

                                    (ii)     may sell, transfer or otherwise
                                             dispose of any property that is
                                             worn out or obsolete or of no
                                             material value.

Restriction on             None of the Borrower and its Subsidiaries will make
Investments & New          any Investment or New Business Acquisition in excess
Business Acquisitions:     of $15,000,000 without CIBC's prior consent.

Hostile Take-Overs:        None of the Borrower and its Subsidiaries will use
                           any amount obtained by the Borrower under any of the
                           Credits to finance a bid for any securities of any
                           corporation in circumstances where the board of
                           directors of such corporation has recommended (or is
                           reasonably expected to recommend) rejection of
                           such bid.

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                                                                         Page 9

Transactions with          Except as specifically permitted hereunder, none of
Affiliates:                the Borrower and its Subsidiaries will enter into any
                           transaction, including the purchase, sale or exchange
                           of any property or the rendering of any services,
                           with any of its shareholders or with any of its
                           Affiliates, or with any of its or their directors or
                           officers, or enter into, assume or permit to exist
                           any employment, consulting or analogous agreement or
                           arrangement with any such shareholder or Affiliate or
                           with any of its directors or officers, except a
                           transaction or agreement or arrangement which is in
                           the ordinary course of business of the Borrower or
                           such Subsidiary and which is upon fair and reasonable
                           terms not less favourable to the Borrower or its
                           applicable Subsidiary than it would obtain in a
                           comparable arms-length transaction.

                             REPORTING REQUIREMENTS

Reporting Requirements:    The Borrower will provide to CIBC:

                           -        Within 120 days after the end of each fiscal
                                    year, the audited consolidated financial
                                    statements of the Borrower for such year,
                                    prepared in accordance with GAAP.

                           -        Within 60 days after the end of each fiscal
                                    quarter, the unaudited consolidated
                                    financial statements of the Borrower for
                                    such quarter, prepared in accordance with
                                    GAAP.

                           -        Within 120 days after the end of each fiscal
                                    year, a business plan/forecast for the
                                    Borrower for its next fiscal year, including
                                    operating and capital budgets.

                           -        Within 30 days of each month, a Borrowing
                                    Base Certificate is to be provided if
                                    borrowing under the Term Revolving Credit is
                                    in excess of $6,000,000. Borrowing Base
                                    Certificate to include an aged accounts
                                    receivable listing by region, and
                                    work-in-progress and priority claims.

                           -        Promptly after obtaining knowledge thereof,
                                    particulars of any failure by any of the
                                    Borrower and its Subsidiaries to perform or
                                    observe any of its covenants or agreements
                                    in favour of CIBC. Such other information
                                    relative to the Borrower and
<PAGE>

                                                                        Page 10

                                    its Subsidiaries, and any guarantor, as
                                    CIBC may reasonably require.

                                      FEES

Monitoring:                Waived

Set-Up:                    Waived

Annual Fee:                A fee of $25,000, payable in arrears on each
                           anniversary date of this letter.

                                OTHER PROVISIONS

Schedule A:                The attached Schedule A, which contains certain
                           additional provisions applicable to the Credits, and
                           certain definitions, forms part of this Agreement.

Amendment to               The following term(s) in the attached Schedule A are
Schedule A:                redefined below:

                           "EBITDAR" means, in respect of any period, an amount
                           equal to: EBITDA plus triple net building operating
                           lease expenses.

                           "Debt Service Requirements" means (i) all permanent
                           principal payments in respect of Debt made or
                           required to be made during such period except for
                           payments on promissory notes due to vendors of
                           acquired businesses, (ii) Interest Expense for such
                           period, (iii) all dividends paid during such period
                           on all preferred shares of the Borrower, and (iv) all
                           triple net building operating lease expenses.

Notice of Borrowing:       Whenever the Borrower desires to obtain any amount
                           under a Credit (other than by way of a permitted
                           overdraft), it will give to CIBC irrevocable prior
                           written notice as specified in Schedule A hereto.

Notice of Repayment:       Whenever the Borrower desires to make one or more
                           repayments under one or more Credits in an aggregate
                           amount exceeding $10,000,000 (or the equivalent in
                           any other currency) on any day, it will give to CIBC
                           irrevocable prior written notice as specified in
                           Schedule A hereto.

Interest on Excess         The interest rate applicable to any outstanding
Amounts:                   amount under a Credit which is in excess of the limit
                           of such

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                                                                        Page 11

                           Credit shall be the Interest Rate Applicable to
                           Credit Limit Excesses specified in Schedule A hereto.

Interest on Overdue        Interest on overdue amounts is payable as specified
Amounts:                   in Schedule A hereto.

Interest Payment Dates:    Except with respect to interest on amounts in
                           default, which is payable on demand, or as otherwise
                           specified herein or in Schedule A hereto, interest
                           and fees will be calculated and payable monthly in
                           arrears on such day in each month as CIBC requires.

Authorized Debits:         The Borrower authorizes CIBC to debit its Operating
                           Account for any interest, fees or other amounts that
                           are payable by the Borrower to CIBC with respect to
                           the Credits, as and when such amounts are payable.

Communications:            Any communication or notice to be given with respect
                           to the Credits may be effectively given by delivering
                           the same at the addresses set out on the signature
                           page hereof, or by sending the same by facsimile or
                           prepaid registered mail to the parties at such
                           addresses. Any notice so mailed will be deemed to
                           have been received on the tenth day next following
                           the mailing thereof, provided that postal service is
                           in normal operation during such time. Any facsimile
                           notice will be deemed to have been received on
                           transmission if sent on a Business Day and, if not,
                           on the next Business Day following transmission.
                           Either party may from time to time notify the other
                           party, in accordance with this section, of any change
                           of its address, which thereafter will be the address
                           of such party for all purposes of the Credits.

Replacements:              This letter supersedes and replaces all prior
                           discussions, letters and agreements (if any)
                           describing the terms and conditions of any credit
                           facility established by CIBC in favour of the
                           Borrower.

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                                                                        Page 12

                  Please indicate your acceptance of the foregoing by signing
and returning to the undersigned prior to, August 31, 2004 the enclosed
duplicate copy of this letter.

                                    Yours truly,
                                    CANADIAN IMPERIAL BANK OF COMMERCE

                                    By: /s/  Joan MacGillivray
                                        ---------------------------------------
                                    Name: Joan MacGillivray
                                    Title: Manager Commercial Credit
                                    CIBC Commercial Banking
                                    Commerce Place
                                    10102 Jasper Ave.
                                    Edmonton, AB
                                    T5J 1W5
                                    Fax (780) 420-3099

                Accepted this 5 day of August, 2004.

                                    Stantec Inc.
                                    #200, 10160 1 112 Street
                                    Edmonton, AB
                                    T5K 2L6
                                    Fax (780) 917-7330

                                    By: /s/  Anthony P. Franceschini
                                        ---------------------------------------
                                    name: Anthony P. Franceschini
                                    Title: President & CEO

                                    By: /s/  Donald W. Wilson
                                        ---------------------------------------
                                    name: Donald W. Wilson
                                    title: Vice President & CFO
<PAGE>

               SCHEDULE A - ADDITIONAL DEFINITIONS AND PROVISIONS

1.       GENERAL

1.1      USE OF FUNDS, RETURNS. The Borrower will use the Credits only for the
purposes specified in this Agreement. The Borrower may not at any time exceed
the limit of any Credit, and CIBC may, without notice to the Borrower, return
any item that, if paid, would result in the limit of any Credit being exceeded.
If, on the other hand, CIBC in its sole discretion elects to pay any such item,
the Borrower will pay to CIBC immediately the amount by which the limit of the
applicable Credit has been exceeded.

1.2      NOTICE OF FAILURE. The Borrower will promptly notify CIBC of the
occurrence of any failure to perform or observe any of its covenants in this
Agreement.

1.3      CONFIDENTIALITY. The terms of this Agreement are confidential between
the Borrower and CIBC, and accordingly the Borrower will not disclose the
contents of this Agreement to anyone except its professional advisors.

1.4      APPLYING MONEY RECEIVED. At any time that the Borrower has failed
(beyond any period of grace permitted by CIBC) to perform or observe of any of
its covenants in this Agreement, all moneys received by CIBC from the Borrower
or from any Security may be applied on such parts of the Borrower's liabilities
to CIBC as CIBC may determine.

1.5      RIGHT OF SET-OFF. At any time that the Borrower has failed (beyond any
period of grace permitted by CIBC) to perform or observe any of its covenants in
this Agreement, CIBC is authorized at any time to set-off and apply any deposits
held by it and any other amounts owed by it to or for the credit of the Borrower
against any and all of the obligations of the Borrower with respect to the
Credits, irrespective of whether or not CIBC has made any demand and even though
any such obligations may not yet be due and payable.

1.6      REGISTRATION OF SECURITY. The Security will be registered or filed in
all jurisdictions and in all offices as CIBC considers necessary or advisable
from time to time to create, perfect or protect any Lien created thereby.

1.7      EXPENSES. The Borrower will reimburse CIBC for all reasonable fees
(including legal fees) and out-of-pocket expenses incurred in preparing and
registering any Security, in responding to requests from the Borrower for
waivers, amendments and other matters, and in enforcing CIBC's rights under this
Agreement or any Security.

1.8      FURTHER INFORMATION REQUIREMENTS. The Borrower will provide such
further information about its business and its Subsidiaries as is reasonably
requested by CIBC from time to time, and such information shall be in a form
acceptable to CIBC.

1.9      CONSENT TO RELEASE INFORMATION. CIBC may from time to time give any
credit or other information about the Borrower to, or receive such information
from, (i) any financial institution, credit reporting agency, rating agency or
credit bureau, (ii) any person, firm or corporation with

<PAGE>

                                      -2-

whom the Borrower may have or proposes to have financial dealings, and (iii) any
person, firm or corporation in connection with any dealings the Borrower has or
proposes to have with CIBC. The Borrower agrees that CIBC may use that
information to establish and maintain the Borrower's relationship with CIBC and
to offer any services as permitted by law, including services and products
offered by CIBC's Subsidiaries when it is considered that this may be suitable
to the Borrower.

1.10     FURTHER ASSURANCES. The Borrower will from time to time promptly upon
request by CIBC do and execute all such acts and documents as may be reasonably
required by CIBC to give effect to the Credits and the Security, and to any
transfer pursuant to section 1.14 of this Schedule.

1.11     INSURANCE. The Borrower will maintain insurance on its assets and
property, in amounts and against risks as are customarily insured for by similar
companies, acting prudently, owning or operating similar property or business in
Canada, determined to be appropriate by CIBC acting prudently, and furnish to
CIBC, on written request, satisfactory evidence of the insurance carried.

1.12     ENVIRONMENTAL. The Borrower will carry on its business, and maintain
its assets and property in accordance with all applicable environmental laws and
regulations. If there is any release, deposit, discharge or disposal of
pollutants of any sort (collectively, a "Discharge") in connection with either
the Borrower's business or its property, and CIBC pays any fines or for any
clean-up suffers any loss or damage as a result of the Discharge, the Borrower
will reimburse CIBC, its directors, officers, employees and agents for any and
all losses, damages, fines, costs and other amounts (including amounts spent
preparing any necessary environmental assessment or other reports, or defending
any lawsuits) that result. If CIBC asks, the Borrower will defend any lawsuits,
investigations or prosecutions brought against CIBC or any of its directors,
officers, employees and agents in connection with any Discharge. The Borrower's
obligation under this section continues even after all Credits have been repaid
and this Agreement has terminated.

1.13     WAIVER. No delay on the part of CIBC in exercising any right or
privilege will operate as a waiver thereof, and no waiver of any failure or
default will operate as a waiver thereof unless made in writing and signed by an
authorized officer of CIBC, or will be applicable to any other failure or
default.

1.14     ASSIGNMENT. CIBC may assign, sell or participate (herein referred to as
a "transfer") all or any part of its rights and obligations under all or any of
the Credits to any third party, and the Borrower agrees to sign any documents
and take any actions that CIBC may reasonably require in connection with any
such transfer. Upon completion of the transfer, the third party will have the
same rights and obligations under this Agreement as if it were a party to it,
with respect to all rights and obligations included in the transfer. The
Borrower may not assign any of its rights or obligations under any of the
Credits.

<PAGE>

                                      -3-

1.15     APPLICATION TO SUBSIDIARIES. The Borrower will ensure that each of its
Subsidiaries complies with sections 1.10, 1.11 and 1.12 of this Schedule, as if
the references to the Borrower therein were references to each such Subsidiary.

1.16     GOVERNING LAW. This Agreement shall be governed by the laws of Alberta,
and the Borrower submits itself to the jurisdiction of any competent federal or
provincial court in such jurisdiction.

1.17     COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and all of such counterparts shall constitute the same agreement.

1.18     CERTAIN DEFINITIONS. In this Agreement the following terms have the
following meanings:

         "Affiliate" means, with respect to any person, any other person who
         directly or indirectly controls, is controlled by, or is under direct
         or indirect common control with, such person, and includes any person
         in like relation to an Affiliate. A person shall be deemed to control
         another person if the first 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, by contract or otherwise.

         "Agreement" means the attached letter agreement between CIBC and the
         Borrower, including this Schedule and any other Schedules thereto, as
         the same may be amended or supplemented from time to time.

         "Business Day" means (i) with respect to any amount denominated in
         Canadian dollars and all matters pertaining thereto, any day excluding
         Saturday, Sunday and any day which is a legal holiday in Toronto,
         Canada; (ii) with respect to any amount denominated in US dollars
         (except as provided below) and all matters pertaining thereto, any day
         excluding Saturday, Sunday or any day which is a legal holiday in New
         York, U.S.A. or Toronto, Canada, and (iii) with respect to any LIBOR
         Loan and all matters pertaining thereto, any day which is a day for
         dealings by and between banks in US dollars in the London interbank
         market, excluding Saturday, Sunday or any day which is a legal holiday
         in London, England or New York, U.S.A. or Toronto, Canada.

         "Compliance Certificate" means an Officer's Certificate stating, as of
         the applicable date, (i) that the Borrower is not in default of the
         observance or performance of any of its covenants in this Agreement (or
         describing any default then existing), (ii) that all representations
         and warranties contained in this Agreement are true and accurate as if
         made on and as of such date (or describing any thereof that are not
         then true and accurate), (iii) the particulars and calculation of all
         financial covenants of the Borrower contained in this Agreement, and
         (iv) where applicable, the amount and particulars of calculation of
         Receivable Value, Priority Claims and work in progress value, and the
         resulting maximum available amount and undrawn amount of any Credit, as
         of such date.

<PAGE>

                                      -4-

         Unless otherwise prescribed by CIBC, a Compliance Certificate shall be
         substantially in the form attached to this Schedule A.

         "Event of Default" means any of the following events or circumstances:

         (i)      if the Borrower fails to pay any principal amount when due and
                  payable;

         (ii)     if the Borrower fails to pay any interest, fee or other amount
                  (except principal) when due and payable and such failure
                  continues for three Business Days or more;

         (iii)    if the Borrower defaults in the performance or observance of
                  any negative covenant contained in this Agreement;

         (iv)     if the Borrower defaults in the performance or observance of
                  any other term or covenant contained in this Agreement or the
                  Security and such default continues for 30 days or more after
                  the earlier of the date on which the Borrower first has actual
                  knowledge of such default and the date on which written notice
                  of such default is given to it by CIBC;

         (v)      if any representation or warranty contained in this Agreement
                  or the Security or in any certificate delivered to CIBC by or
                  on behalf of the Borrower is untrue in any material respect on
                  the date as of which it was made;

         (vi)     if there is outstanding any amount or amounts exceeding an
                  aggregate of $1,000,000 (or the equivalent amount in any other
                  currency) which any of the Borrower and its Subsidiaries has
                  failed to pay when due and payable, or if any amount or
                  amounts exceeding an aggregate of $1,000,000 (or the
                  equivalent amount in any other currency) may then be declared
                  to be due and payable by any of the Borrower and its
                  Subsidiaries prior to the stated maturity date thereof or
                  prior to the regularly scheduled date for payment thereof;

         (vii)    if it is or will become unlawful for any of the Borrower and
                  its Subsidiaries to perform or comply with any of its
                  obligations under this Agreement or the Security, or if any
                  obligation of any of the Borrower and its Subsidiaries under
                  this Agreement or the Security ceases to be its legal, valid,
                  binding and enforceable obligation, or if the enforceability
                  of this Agreement or any of the Security is disputed by any of
                  the Borrower and its Subsidiaries, or if any of the Security
                  ceases to constitute a Lien of the nature and priority
                  contemplated by this Agreement;

         (viii)   if any of the Borrower and its Subsidiaries commits an act of
                  bankruptcy under the Bankruptcy and Insolvency Act (Canada),
                  or institutes proceedings for its winding up, liquidation or
                  dissolution, or takes action to become a voluntary bankrupt,
                  or consents to the filing of a bankruptcy proceeding against
                  it, or files a

<PAGE>

                                      -5-

                  petition or other proceeding seeking reorganization,
                  readjustment, arrangement, composition or similar relief under
                  any bankruptcy law or insolvency law or consents to the filing
                  of any such petition or other proceeding, or consents to the
                  appointment of a receiver, liquidator, trustee or assignee in
                  bankruptcy or insolvency of the whole or any material part of
                  its property, or makes an assignment for the benefit of
                  creditors, or publicly announces or admits in writing its
                  inability to pay its debts generally as they become due, or
                  suspends or threatens to suspend transaction of all or any
                  substantial part of its usual business, or any action is taken
                  by any of the Borrower and its Subsidiaries or any shareholder
                  of any of them in furtherance of any of the foregoing;

         (ix)     if proceedings are instituted in any court of competent
                  jurisdiction by any person (other than any of the Borrower and
                  its Subsidiaries or a shareholder of any of them) for the
                  winding up, liquidation or dissolution of any of the Borrower
                  and its Subsidiaries, or for any reorganization, readjustment,
                  arrangement, composition or similar relief with respect to any
                  of the Borrower and its Subsidiaries under any bankruptcy law
                  or any other applicable insolvency law, or for the appointment
                  of a receiver, liquidator, trustee or assignee in bankruptcy
                  or insolvency of the whole or any material part of the
                  property of any of the Borrower and its Subsidiaries, and at
                  any time thereafter such proceeding is not contested in good
                  faith, or if any order sought in any such proceeding is
                  granted;

         (x)      if an encumbrancer (including without limitation an execution
                  creditor) takes possession of any property of any of the
                  Borrower and its Subsidiaries which in the opinion of CIBC is
                  material;

         (xi)     if there exists for any period of three consecutive Business
                  Days one or more non-appealable judgements of a court of
                  competent jurisdiction against any of the Borrower and its
                  Subsidiaries for an aggregate amount exceeding $1,000,000 (or
                  the equivalent amount in any other currency) which has not
                  been satisfied in full (exclusive of any amount adequately
                  covered by insurance as to which the insurer has acknowledged
                  coverage);

         (xii)    if in the reasonable opinion of CIBC there has occurred any
                  event which has had a Material Adverse Effect; or

         (xiii)   if in the reasonable opinion of CIBC there is any change in
                  the effective control of the Borrower.

         "GAAP" means those accounting principles which are recognized as being
         generally accepted in Canada from time to time as set out in the
         handbook published by the Canadian Institute of Chartered Accountants.

<PAGE>

                                      -6-

         "Inventory Value" means, at any time, the inventory of the Borrower and
         its Subsidiaries (which shall not include any work-in-process for the
         purpose of this definition) then existing, less any inventory that (i)
         is not located in Canada, (ii) is not subject to the applicable duly
         perfected Liens created by the Security, (iii) is subject to any Lien
         other than as specifically permitted by CIBC, (iv) is located in or on
         leased premises unless the applicable lessor has waived all Liens that
         may at any time be held by such lessor in respect of any inventory, (v)
         is obsolete or not readily saleable in the ordinary course of business,
         all valued at the lower of cost and market on a first-in, first-out
         basis, (vi) that has not been paid for in full and is subject to a
         right of repossession by the seller thereof; or (vii) that is otherwise
         excluded by CIBC in its reasonable discretion.

         "Investment" means, with respect to any person, any direct or indirect
         investment in or purchase or other acquisition of the securities of or
         any equity interest in any other person, any loan or advance to, or
         arrangement for the purpose of providing funds or credit to (excluding
         extensions of trade credit in the ordinary course of business in
         accordance with customary commercial terms), or capital contribution
         to, any other person, or any purchase or other acquisition of all or
         substantially all of the property of any other person.

         "Lien" includes without limitation a mortgage, charge, lien, security
         interest or encumbrance of any sort on any property or asset, and
         includes conditional sales contracts, title retention agreements,
         capital trusts and capital leases.

         "Material Adverse Effect" means a material adverse effect on the
         business, property, condition (financial or otherwise) or prospects of
         the Borrower and its Subsidiaries, considered as a whole, or a material
         adverse effect on the ability of any of the Borrower and its
         Subsidiaries to perform its obligations under any of this Agreement and
         the Security to which it is a party.

         "Normal Course Lien" means, at any time, the following:

         (i)      Liens for taxes not overdue, or which are being contested if
                  adequate reserves with respect thereto are maintained by the
                  Borrower and its Subsidiaries in accordance with GAAP and the
                  enforcement of any related Lien is stayed;

         (ii)     undetermined or inchoate Liens arising in the ordinary course
                  of business which relate to obligations not overdue or a claim
                  for which has not been filed or registered pursuant to
                  applicable law;

         (iii)    carriers', warehousemens', mechanics', materialmens',
                  repairmens', construction or other similar Liens arising in
                  the ordinary course of business which relate to obligations
                  not overdue;

         (iv)     easements, rights-of-way, restrictions and other similar
                  encumbrances incurred in the ordinary course of business
                  which, in the aggregate, are not substantial in

<PAGE>

                                      -7-

                  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 business of the Borrower or its
                  Subsidiaries;

         (v)      zoning and building by-laws and ordinances and municipal
                  by-laws and regulations so long as the same are complied with;

         (vi)     statutory Liens incurred or deposits made in the ordinary
                  course of business in connection with workers' compensation,
                  unemployment insurance and other social security legislation;

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

         (viii)   Liens created by the Security; and

         (ix)     Liens in respect of which CIBC has given its specific written
                  consent.

         "Officer's Certificate" means a certificate, in form satisfactory to
         CIBC, signed by a senior officer of the Borrower.

         "Operating Account" means Canadian dollar accounts no. 81-13017 and
         87-05313 of the Borrower with CIBC, or US dollar account no. 02-45011
         of the Borrower with CIBC, or any such other account as is agreed upon
         by the Borrower and CIBC from time to time for the purposes
         hereof.

         "Priority Claims" means, at any time, any liability of any of the
         Borrower and its Subsidiaries that ranks, in right of payment in any
         circumstances, equal to or in priority to any liability of the Borrower
         or such Subsidiary to CIBC, and may include unpaid wages, salaries and
         commissions, unremitted source deductions for vacation pay, arrears of
         rent, unpaid taxes, amounts owed in respect of worker's compensation,
         amounts owed to unpaid vendors who have a right of repossession, and
         amounts owing to creditors which may claim priority by statute or under
         a Purchase Money Lien.

         "Purchase Money Lien" means any Lien which secures a Purchase Money
         Obligation permitted by this Agreement, provided that such Lien is
         created not later than 30 days after such Purchase Money Obligation is
         incurred and does not affect any asset other than the asset financed by
         such Purchase Money Obligation.

         "Purchase Money Obligation" means any Debt (including without
         limitation a capitalized lease obligation) incurred or assumed to
         finance all or any part of the acquisition price of any asset acquired
         by any of the Borrower and its Subsidiaries or to finance all or any
         part of the cost of any improvement to any asset of any of the Borrower
         and its

<PAGE>

                                      -8-

         Subsidiaries, provided that such obligation is incurred or assumed
         prior to or within 30 days after the acquisition of such asset or the
         completion of such improvement and does not exceed the lesser of the
         acquisition price payable by the Borrower or such Subsidiary for such
         asset or improvement and the fair market value of such asset or
         improvement; and includes any extension, renewal or refunding of any
         such obligation so long as the principal amount thereof outstanding on
         the date of such extension, renewal or refunding is not increased.

         "Receivable Value" means, at any time, the receivables of the Borrower
         and its Subsidiaries then existing, less any receivable that (i) is not
         then subject to the applicable duly perfected Liens created by the
         Security, (ii) is subject to any Lien other than as specifically
         permitted by CIBC, (iii) is payable more than 30 days after the date of
         shipment of the inventory or the provision of the service that created
         such receivable, (iv) has been outstanding for 90 days or more, (v) is
         subject to any offset or counterclaim by the applicable account debtor,
         (vi) is owed by any person whose principal place of business is located
         outside Canada or the United States of America, (vii) is payable in a
         currency other than Canadian or US$, (viii) is owed by an Affiliate of
         the Borrower or any employee, agent or representative of the Borrower
         or of any such Affiliate, (ix) with respect to which a cheque, note,
         draft or other payment instrument has not been honoured in accordance
         with its terms, or (x) has been specifically identified by CIBC as an
         excluded receivable for the purpose hereof or is owed by any person
         that is insolvent or is otherwise doubtful of collection in the
         reasonable opinion of CIBC.

         "Security" means, collectively, all of the items of security held by
         CIBC for the indebtedness and liabilities, or any part or parts
         thereof, of the Borrower to CIBC.

         "Subsidiary" of any person means any other person of which shares or
         other equity units having ordinary voting power to elect a majority of
         the board of directors or other individuals performing comparable
         functions, or which are entitled to or represent more than 50% of the
         owners' equity or capital or entitlement to profits, are owned
         beneficially or controlled, directly or indirectly, by any one or more
         of such first person and the Subsidiaries of such first person, and
         shall include any other person in like relationship to a Subsidiary of
         such first person.

2.       INTEREST RATES; PAYMENTS; CALCULATIONS

2.1      INTEREST RATES. Interest is payable with respect to:

(i)      excess amounts (provided that nothing herein shall be deemed to imply
         that the Borrower is entitled to obtain any such excess amount, or that
         the limit of a Credit is to be increased in any circumstance) above the
         limit of a Credit or a part of a Credit, as described in section 2.4 of
         this Schedule,

<PAGE>

                                      -9-

(ii)     amounts that are not paid when due, at the Interest Rate Applicable to
         Credit Limit Excesses, and

(iii)    any other amounts, at the rate specified in this Agreement.

2.2      VARIABLE INTEREST. Each variable interest rate provided for in this
Agreement will change automatically, without notice, whenever the Prime Rate or
the US Base Rate, as the case may be, changes.

2.3      PAYMENT OF INTEREST. Interest is calculated on the applicable balance
at the end of each day. Interest is payable in arrears once a month on the day
required by CIBC, unless otherwise specified in this Agreement.

2.4      INTEREST RATE APPLICABLE TO CREDIT LIMIT EXCESSES. To determine whether
the Interest Rate Applicable to Credit Limit Excesses is to be charged, the
following rules apply:

(a)      The Interest Rate Applicable to Credit Limit Excesses will be charged
on the amount that exceeds the limit of any particular Credit.

(b)      If there are several parts of a Credit, the Interest Rate Applicable to
Credit Limit Excesses will be charged if the limit of a particular part is
exceeded. For example, if Credit A's limit is $250,000, and the limit of one
part of Credit A is $100,000 and the limit of that part is exceeded by $25,000,
the Interest Rate Applicable to Credit Limit Excesses will be charged on that
$25,000 excess, even if the total amount outstanding under Credit A is less than
$250,000.

(c)      To determine if the limit of a Credit has been exceeded, any amounts in
a currency other than the currency in which the limit is designated will be
converted into that currency, as described in section 2.11 of this Schedule.

2.5      INTEREST ON OVERDUE AMOUNTS. Except as otherwise specified herein, if
any principal is not paid when due, such overdue principal will bear interest
(as well after as before judgement), payable on demand, at the interest rate
applicable to such principal prior to default, and interest will be payable on
overdue interest (as well after as before judgement) at the same rate as is
applicable to the related principal. If any amount is not paid by the Borrower
when due and there is no interest otherwise applicable to such amount specified
herein, such overdue amount will bear interest (as well after as before
judgement), payable on demand, at a rate per annum equal at all times to the
Prime Rate plus 5% (in the case of any such amount payable in Canadian dollars)
or the US Base Rate plus 5% (in the case of any such amount payable in US
dollars) from the date of non-payment until paid in full.

2.6      REDUCTIONS OF LIMIT OF CREDITS. On or prior to each date on which the
limit of any Credit is reduced, the Borrower will repay such outstanding amounts
thereunder, if any, as are necessary so that, after giving effect to the
repayment, the total of all amounts outstanding under such Credit does not
exceed the limit as so reduced.

<PAGE>

                                      -10-

2.7      PAYMENTS. If any payment is due on a day other than a Business Day,
such payment will be due on the next Business Day.

2.8      CIBC'S PRICING POLICY. The fees, interest rates and other charges for
the Borrower's banking arrangements with CIBC are dependent upon each other.
Accordingly, if the Borrower cancels or does not follow through with, in the
manner originally contemplated, any of these arrangements, CIBC reserves the
right to require payment by the Borrower of increased or added fees, interest
rates and charges as a condition of the continuation of the Borrower's banking
arrangements.

2.9      CALCULATIONS. The following terms apply to all calculations under the
Credits:

(a)      CDOR, Federal Funds Rate, Bankers' Acceptance Yield, LIBO Rate, Prime
         Rate and US Base Rate shall be determined by CIBC if and whenever such
         determination is required for the purpose of this Agreement, and such
         determination by CIBC shall be conclusive evidence of such rate.

(b)      Except as provided in the next sentence, all interest and fees
         hereunder shall be computed on the basis of the actual number of days
         elapsed divided by 365. Interest on each LIBOR Loan shall be computed
         on the basis of the actual number of days elapsed divided by 360. Any
         such applicable interest rate, expressed as an annual rate of interest
         for the purpose of the Interest Act (Canada), shall be equivalent to
         such applicable interest rate multiplied by the actual number of days
         in the calendar year in which the same is to be determined and divided
         by 365 or 360, as the case may be.

(c)      In calculating interest or fees payable hereunder for any period,
         unless otherwise specifically stated, the first day of such period
         shall be included and the last day of such period shall be excluded.

2.10     CIBC'S RECORDS. CIBC's loan accounting records will provide conclusive
evidence of all terms and conditions of the Credits such as principal loan
balances, interest calculations, and payment dates.

2.11     FOREIGN CURRENCY CONVERSION. If it is necessary for any purpose
relating to the Credits that an amount denominated in a currency other than
Canadian dollars be expressed in or equated to an amount of Canadian dollars
(such as, for example, to determine whether amounts denominated in US dollars
that are outstanding under a Credit which has a limit specified in Canadian
dollars exceed the limit of such Credit so as to make applicable the Interest
Rate Applicable to Credit Limit Excesses), the applicable amount of Canadian
dollars shall be determined by CIBC in accordance with its normal practice.

2.12     DEEMED RE-INVESTMENT PRINCIPLE. For the purpose of the Interest Act
(Canada) and any other purpose, the principle of deemed re-investment of
interest is not applicable to any calculation under this Agreement, and the
rates of interest and fees specified in this Agreement are intended to be
nominal rates and not effective rates or yields.

<PAGE>

                                      -11-

2.13     CERTAIN DEFINITIONS. If and whenever required for the purpose of this
Agreement, the following terms have the following definitions:

         "CDOR" means, for any day, the average of the annual discount rates for
         bankers' acceptances denominated in Canadian dollars of certain banks
         named in Schedule 1 to the Bank Act (Canada) for a specified term and
         face amount that appears on the CDOR page of the Reuters Screen as of
         10:00 a.m. on such day (or, if such day is not a Business Day, as of
         10:00 a.m. on the next preceding Business Day).

         "Federal Funds Rate" means, for any day, an annual interest rate equal
         to the weighted average of the rates on overnight United States federal
         funds transactions with members of the Federal Reserve System arranged
         by United States federal funds brokers, as published for such day (or,
         if such day is not a business day in New York, for the next preceding
         business day in New York) by the Federal Reserve Bank of New York, or
         for any such business day on which such rate is not so published, the
         arithmetic average of the quotations for such day on such transactions
         received by CIBC from three United States federal funds brokers of
         recognized standing selected by it.

         "Interest Rate Applicable to Credit Limit Excesses" means the annual
         interest rate generally established by CIBC from time to time for the
         purpose of calculating interest on overdrafts in accounts maintained
         with CIBC in Canada.

         "Prime Rate" means a fluctuating annual interest rate equal at all
         times to the greater of (i) the reference rate of interest (however
         designated) of CIBC for determining interest chargeable by it on loans
         in Canadian dollars made in Canada and (ii) 3/4 of 1% per annum above
         the CDOR for 30-day bankers' acceptances from time to time.

         "US Base Rate" means a fluctuating annual interest rate equal at all
         times to the greater of (i) the reference rate of interest (however
         designated) of CIBC for determining interest chargeable by it on loans
         in US dollars made in Canada, and (ii) 3/4 of 1% per annum above the
         Federal Funds Rate from time to time.

3.       NOTICE OF BORROWING; NOTICE OF REPAYMENT; OVERDRAFTS

3.1      NOTICE OF BORROWING. Whenever the Borrower desires to obtain any amount
under a Credit (other than a loan by way of a permitted overdraft), it will give
to CIBC irrevocable prior written notice (a "Notice of Borrowing") specifying
the Credit under which such amount is to be obtained and the particulars of such
amount including the term of any Bankers' Acceptances, the term of any LIBOR
Period, the particulars of all maturing Bankers' Acceptances in the case of a
rollover or conversion of Bankers' Acceptances, and the Business Day on which
such amount is to be obtained. No amount shall be obtained if the term thereof
or any LIBOR Period applicable thereto would mature beyond any scheduled
repayment or reduction date for the applicable Credit and all or any part of
such amount will be required to be repaid on such date. The amount

<PAGE>

                                      -12-

to be obtained under any Credit at any time shall not exceed the undisbursed
amount of that Credit at such time. CIBC will not be obliged to make available
at any time LIBOR Loans in an aggregate amount less than US $1,000,000. A notice
requesting any loan in an amount exceeding $10,000,000 or US $10,000,000 (other
than a LIBOR Loan) must be given not later than 10:00 a.m. on the Business Day
preceding the applicable borrowing date; a notice requesting any Bankers'
Acceptances in an amount exceeding $10,000,000 must be given not later than
10:00 a.m. on the second Business Day preceding the applicable borrowing date;
and a notice requesting any LIBOR Loan must be given not later than 10:00 a.m.
on the third Business Day preceding the applicable borrowing date.

3.2      NOTICE OF REPAYMENT. Whenever the Borrower desires to make any
repayment or repayments under one or more of the Credits in an aggregate amount
exceeding $10,000,000 (or an equivalent amount in any other currency) on any
day, it will give to CIBC irrevocable written notice specifying the particulars
of such repayment not later than 10:00 a.m. on the Business Day preceding the
applicable repayment date.

3.3      OVERDRAFTS. If the Borrower is entitled under any Credit to obtain
loans in Canadian dollars or US dollars by way of overdraft, the debit balance
in the Borrower's applicable Operating Account from time to time will be deemed
to be a loan in Canadian dollars or US dollars, as the case may be, outstanding
to the Borrower under such Credit and bearing interest as set out in this
Agreement for loans in such currency under such Credit. If at any time the
Borrower is a party to a cash concentration arrangement with CIBC, the amount of
any overdraft from time to time in the Canadian dollar or US dollar
concentration account of the Borrower established pursuant to such arrangement
will also be deemed to be a loan in Canadian dollars or US dollars, as
applicable, outstanding to the Borrower under the applicable Credit and bearing
interest as set out above on the basis of the Prime Rate or the US Base Rate, as
the case may be.

4.       INDEMNITIES

4.1      RESERVE INDEMNITY. If subsequent to the date of this Agreement any
change in or introduction of any applicable law, or compliance by CIBC with any
request or directive by any central bank, superintendent of financial
institutions or other comparable authority, shall subject CIBC to any tax with
respect to the Credits or change the basis of taxation of payments to CIBC of
any amount payable under the Credits (except for changes in the rate of tax on
the overall net income of CIBC), or impose any capital maintenance or capital
adequacy requirement, reserve requirement or similar requirement with respect to
the Credits, or impose on CIBC or the London interbank market (in the case of
any matter relating to any actual or requested LIBOR Loan), any other condition
or restriction, and the result of any of the foregoing is to increase the cost
to CIBC of making or maintaining the Credits or any amount thereunder or to
reduce any amount otherwise received by CIBC under the Credits, CIBC will
promptly notify the Borrower of such event and the Borrower will pay to CIBC
such additional amount calculated by CIBC as is necessary to compensate CIBC for
such additional cost or reduced amount received. A certificate of CIBC as to any
such additional amount payable to it and containing reasonable details of the
calculation thereof shall be conclusive evidence thereof.

<PAGE>

                                      -13-

4.2      CURRENCY INDEMNITY. Interest and fees hereunder shall be payable in the
same currency as the principal to which they relate. Any payment on account of
an amount payable in a particular currency (the "proper currency") made to or
for the account of CIBC in a currency (the "other currency") other than the
proper currency, whether pursuant to a judgement or order of any court or
tribunal or otherwise and whether arising from the conversion of any amount
denominated in one currency into another currency for any purpose, shall
constitute a discharge of the Borrower's obligation only to the extent of the
amount of the proper currency which CIBC is able, in the normal course of its
business within one Business Day after receipt by it of such payment, to
purchase with the amount of the other currency so received. If the amount of the
proper currency which CIBC is able to purchase is less than the amount of the
proper currency due to CIBC, the Borrower shall indemnify and save CIBC harmless
from and against any loss or damage arising as a result of such deficiency.

4.3      TAX INDEMNITY. All payments by the Borrower under this Agreement shall
be made free and clear of, and without reduction for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, other than taxes imposed on the
overall net income of CIBC or franchise taxes, taxes on doing business or taxes
measured by the capital or net worth of CIBC (collectively "Excluded Taxes"),
now or hereafter imposed, levied, collected, withheld or assessed by any country
or any political subdivision thereof (collectively "Taxes"); provided, however,
that if any Taxes are required to be withheld from any interest or other amount
payable to the CIBC hereunder, the amount so payable to the CIBC shall be
increased to the extent necessary to yield to CIBC, on a net basis after payment
of all Taxes and after payment of all Excluded Taxes imposed by any relevant
jurisdiction on any additional amounts payable under this section, interest or
any such other amount payable hereunder at the rate or in the amount specified
in this Agreement. The Borrower shall be fully liable and responsible for and
shall, promptly following receipt of a request from CIBC, pay to CIBC any and
all sales, goods and services taxes payable under the laws of Canada or any
political subdivision thereof with respect to any and all goods and services
made available hereunder to the Borrower by CIBC, and such taxes shall be
included in the definition of "Taxes" for all purposes hereof. Whenever any
Taxes are payable by the Borrower, as promptly as possible thereafter it shall
send to CIBC, a certified copy of an original official receipt showing payment
thereof. If the Borrower fails to pay any Taxes when due or fails to remit to
CIBC as aforesaid the required documentary evidence thereof, the Borrower shall
indemnify and save harmless CIBC from any incremental taxes, interest, penalties
or other liabilities that may become payable by CIBC or to which CIBC may be
subjected as a result of any such failure. A certificate of CIBC as to the
amount of any such taxes, interest or penalties and containing reasonable
details of the calculation thereof shall be prima facie evidence thereof.

4.4      DEFAULT INDEMNITY. The Borrower shall indemnify and save harmless CIBC
from all claims, demands, liabilities, damages, losses, costs, charges and
expenses, including any loss or expense arising from interest or fees payable by
CIBC to lenders of funds obtained by it in order to make or maintain any amount
under the Credits and any loss or expense incurred in

<PAGE>

                                      -14-

liquidating or re-employing deposits from which such funds were obtained, which
may be incurred by CIBC as a consequence of (i) default by the Borrower in the
payment when due of any amount hereunder or the occurrence of any other default
relative to any of the Credits, (ii) default by the Borrower in obtaining any
amount after the Borrower has given notice hereunder that it desires to obtain
such amount, (iii) default by the Borrower in making any optional repayment of
any amount after the Borrower has given notice hereunder that it desires to make
such repayment, or (iv) the repayment by the Borrower of any LIBOR Loan
otherwise than on the expiration of any applicable LIBOR Period, or the
repayment of any loan on which interest is payable at a fixed annual rate
otherwise than on the expiration of the fixed interest rate period applicable
thereto, or the repayment of any other amount otherwise than on any specified
maturity date thereof. A certificate of CIBC as to any such loss or expense and
containing reasonable details of the calculation thereof shall be prima facie
evidence thereof.

5.       CONDITIONS PRECEDENT

5.1      CONDITIONS PRECEDENT TO THE INITIAL AMOUNT

         CIBC shall not be obliged to make available the initial amount under
         the Credits unless:

(a)      CIBC shall have received the Security, which shall have been duly
         registered and filed as required hereby

(b)      CIBC shall have received such financial and other information relating
         to the Borrower and its Subsidiaries, and any guarantor, as it shall
         have reasonably requested.

(c)      CIBC shall have received confirmation of all insurance maintained by
         the Borrower and its Subsidiaries, and such insurance shall comply with
         the requirements of this Agreement.

(d)      The Borrower shall have paid to CIBC all fees and other amounts which
         shall have become due and payable by it to CIBC on or prior to the
         initial borrowing date.

(e)      The following documents in form, substance and execution acceptable to
         CIBC shall have been delivered to CIBC:

         (i)      a certified copy of the constating documents and by-laws of
                  each of the Borrower and its Subsidiaries, and of each
                  corporate guarantor, and of all corporate proceedings taken
                  and required to be taken by each of them to authorize the
                  execution and delivery of such of this Agreement and the
                  Security to which it is a party and the performance of the
                  transactions by it contemplated therein;

         (ii)     a certificate of incumbency for each of the Borrower and its
                  Subsidiaries, and for each corporate guarantor, setting forth
                  specimen signatures of the persons authorized to execute such
                  of this Agreement and the Security to which it is a party;

<PAGE>

                                      -15-

         (iii)    such legal opinions addressed to CIBC relative to the
                  Borrower, this Agreement and the Security as CIBC may require;
                  and

         (iv)     such other documents relative to this Agreement and the
                  transactions contemplated herein as CIBC may reasonably
                  require.

5.2      CONDITIONS PRECEDENT TO ALL AMOUNTS

         CIBC shall not be obliged to make available any amount under the
         Credits unless:

(a)      CIBC shall have received any applicable Notice of Borrowing.

(b)      On the applicable borrowing date the Borrower shall not have failed to
         observe or perform any of its covenants in this Agreement, and the
         Borrower shall have delivered to CIBC, if so requested by CIBC, an
         Officers' Certificate to such effect.

(c)      The representations and warranties contained in this Agreement shall be
         true on and as of the applicable borrowing date with the same effect as
         if such representations and warranties had been made on and as of the
         applicable borrowing date, and the Borrower shall have delivered to
         CIBC, if so requested by CIBC, an Officers' Certificate to such effect.

(d)      All other conditions specified herein, to the extent not previously
         satisfied for any reason, other shall have been satisfied.

(e)      In respect of any amount that would result in the aggregate amount
         outstanding under the Credits being increased, there shall not have
         occurred subsequent to the date of last annual financial statements of
         the Borrower, in the opinion of CIBC, any event which (individually or
         with any other events) has had, or which has a reasonable possibility
         of having, a Material Adverse Effect.

6        REPRESENTATIONS AND WARRANTIES

6.1      REPRESENTATIONS AND WARRANTIES. To induce CIBC to establish and
maintain the Credits, the Borrower represents and warrants as follows:

(a)      Each of the Borrower and its Subsidiaries has all necessary power and
         authority to own its property, to carry on the business carried on by
         it, to enter into and perform its obligations under such of this
         Agreement and the Security to which it is a party, and in the case of
         the Borrower to obtain amounts under the Credits. Each of the Borrower
         and its Subsidiaries is in compliance with all applicable laws except
         to the extent that the failure to comply therewith would not, in the
         aggregate, have, or reasonably be expected to have, a Material Adverse
         Effect.

<PAGE>

                                      -16-

(b)      The Borrower has taken all action necessary to be taken to authorize
         the execution and delivery of and the performance of its obligations
         under this Agreement and the Security, and the obtaining of amounts
         under the Credits. Except as has been obtained and is in full force and
         effect, no consent, waiver or authorization of, or filing with or
         notice to, any person is required to be obtained in connection with the
         execution and delivery of and the performance by each of the Borrower
         and its Subsidiaries of its obligations under this Agreement and the
         Security, or the obtaining by the Borrower of amounts under the
         Credits. This Agreement and the Security have been duly executed and
         delivered by each of the Borrower and its Subsidiaries as are parties
         thereto, and constitute the legal, valid and binding obligation of each
         of them enforceable in accordance with their terms.

(c)      The execution and delivery by the Borrower and its Subsidiaries of this
         Agreement and the Security and the performance by them of their
         obligations thereunder, and the obtaining by the Borrower of amounts
         under the Credits, will not conflict with or result in a breach of any
         applicable law, and will not conflict with or result in a breach of or
         constitute a default under, or permit the termination of, or cause any
         material right of any of the Borrower and its Subsidiaries to be
         adversely affected under, any of the provisions of its constating
         documents or by-laws or any agreement, permit, instrument, judgement,
         injunction or other contractual obligation to which it is a party or by
         which it is bound, or result in the creation or imposition of any Lien
         (other than the Security) upon any of its property or assets.

(d)      Except as disclosed in writing by the Borrower to CIBC prior to the
         date of this Agreement with specific reference to this paragraph or,
         with respect to events occurring subsequent to the date of this
         Agreement, as the Borrower has otherwise disclosed in writing to CIBC
         with specific reference to this paragraph, there is no action, suit or
         proceeding (whether or not purportedly on behalf of any of the Borrower
         and its Subsidiaries) pending or, to the knowledge of the Borrower,
         threatened, against or affecting any of its Borrower and its
         Subsidiaries before any court or before or by any governmental
         department, commission or agency, in Canada or elsewhere, or before any
         arbitrator or board, that would have, or reasonably be expected to
         have, a Material Adverse Effect, and none of the Borrower and its
         Subsidiaries is in default with respect to any order or award of any
         arbitrator or government department, commission or agency, that would
         have, or reasonably be expected to have, a Material Adverse Effect.

(e)      The Borrower has delivered to CIBC a true and complete copy of its most
         recent financial statements, and such financial statements present
         fairly the financial position of the Borrower, in accordance with GAAP,
         as of the date thereof and for the fiscal period then ended. All
         financial statements of the Borrower delivered by the Borrower to CIBC
         after the date of this Agreement will present fairly the financial
         position of the Borrower, in accordance with GAAP, as of the dates
         thereof and for the fiscal periods then ended.

<PAGE>

                                      -17-

(f)      Since the date of the most recent financial statements of the Borrower
         delivered to CIBC, there has occurred no event which (individually or
         with any other events) has had, or which may reasonably be expected to
         have, a Material Adverse Effect.

(g)      The Borrower has not failed to observe or perform (beyond any period of
         grace permitted by CIBC) any of its covenants in this Agreement.

(h)      Except as disclosed in writing by the Borrower to CIBC prior to the
         date of this Agreement with specific reference to this paragraph, to
         the best knowledge of the Borrower, (i) the business carried on and the
         property owned or used at any time by any of the Borrower and its
         Subsidiaries and their respective predecessors (including the lands
         owned or occupied by any of them and the waters on or under such lands)
         have at all times been carried on, owned or used in compliance with all
         environmental laws; (ii) none of the Borrower and its Subsidiaries is
         subject to any proceeding alleging the violation of any environmental
         law, and no part of its business or property is the subject of any
         proceeding to evaluate whether remedial action is needed as a result of
         the release from or presence of any hazardous substance on any lands
         owned or occupied by it; (iii) there are no circumstances that could
         reasonably be expected to give rise to any civil or criminal
         proceedings or liability regarding the release from or presence of any
         hazardous substance on any lands used in or related to the business or
         property of any of the Borrower and its Subsidiaries or on any lands on
         which any of the Borrower and its Subsidiaries has disposed or arranged
         for the disposal of any materials arising from the business carried on
         by it, or regarding the violation of any environmental law by any of
         the Borrower and its Subsidiaries or by any other person for which it
         is responsible; (iv) all hazardous substances disposed of, treated or
         stored on lands owned or occupied by any of the Borrower and its
         Subsidiaries have been disposed of, treated and stored in compliance
         with all environmental laws; (v) there are no proceedings and there are
         no circumstances or material facts which could give rise to any
         proceeding in which it is or could be alleged that any of the Borrower
         and its Subsidiaries is responsible for any domestic or foreign clean
         up or remediation of lands contaminated by hazardous substances or for
         any other remedial or corrective action under any environmental laws;
         (vi) each of the Borrower and its Subsidiaries has maintained all
         environmental and operating documents and records relating to its
         business and property in the manner and for the time periods required
         by any environmental laws and has never had conducted an environmental
         audit of its business or property; and (vii) the Borrower is not aware
         of any pending or proposed change to any environmental law which would
         render illegal or materially adversely affect its business or property.

(i)      No representation or warranty made by the Borrower herein or in any
         other document furnished to CIBC from time to time contains or will
         contain any untrue statement of a material fact or omits or will omit
         to state any material fact necessary to make the statements herein or
         therein, in light of the circumstances under which they are made, not
         misleading. All projections and pro forma information delivered to CIBC
         from time to time by the Borrower were prepared in good faith based on
         assumptions believed by the

<PAGE>

                                      -18-

         Borrower to be reasonable at the time of delivery. There is no fact
         known to the Borrower on the date of this Agreement which has had, or
         which has a reasonable possibility of having, a Material Adverse
         Effect.

6.2      SURVIVAL. All representations and warranties contained in this
Agreement shall survive the execution and delivery of this Agreement and the
obtaining of amounts under the Credits, and the delivery of each Notice of
Borrowing and the obtaining of any amount under any Credit shall constitute a
reaffirmation on and as of such delivery date and such borrowing date, in each
case by reference to the then-existing facts and circumstances, of all
representations and warranties contained in this Agreement.

7.       FINANCIAL COVENANTS

7.1      CALCULATION. All financial covenants will be calculated including the
Borrower and its Subsidiaries on a consolidated basis, and each amount derived
from the Borrower's profit and loss statement shall be calculated as the total
of such amount during the Borrower's four most recently-completed fiscal
quarters (or, if agreed upon by CIBC in its sole discretion, during the
Borrower's most recently-completed fiscal year), as shown in the Borrower's most
recent financial statements delivered to CIBC.

7.2      CERTAIN DEFINITIONS. In this Agreement the following terms have the
following meanings:

         "Current Assets" means assets that would be shown as current assets on
         a consolidated balance sheet of the Borrower prepared in accordance
         with GAAP, and would include such assets as cash, accounts receivable,
         inventory and other assets that are likely to be converted into cash,
         sold, exchanged or expended in the normal course of business within one
         year or less, but shall exclude for the purpose of this definition all
         amounts due from Affiliates.

         "Current Liabilities" means liabilities that would be shown as current
         liabilities on a consolidated balance sheet of the Borrower prepared in
         accordance with GAAP, and would include such liabilities as Debt that
         is or will become payable within one year or one operating cycle,
         whichever is longer, accounts payable, accrued expenses and deferred
         revenue.

         "Current Ratio" means the ratio of Current Assets to Current
         Liabilities.

         "Debt" means, with respect to any person, (i) an obligation of such
         person for borrowed money, (ii) an obligation of such person evidenced
         by a note, bond, debenture or other similar instrument, (iii) an
         obligation of such person for the deferred purchase price of property
         or services, excluding trade payables and other accrued current
         liabilities incurred in the ordinary course of business in accordance
         with customary commercial

<PAGE>

                                      -19-

         terms, (iv) a capitalized lease obligation of such person, (v) a
         guarantee, indemnity, or financial support obligation of such person,
         determined in accordance with GAAP, (vi) an obligation of such person
         or of any other person secured by a Lien on any property of such
         person, even though such person has not otherwise assumed or become
         liable for the payment of such obligation, (vii) an obligation arising
         in connection with an acceptance facility or letter of credit issued
         for the account of such person, or (viii) a share in the capital of
         such person that is redeemable by such person either at a fixed time or
         on demand by the holder of such share (valued at the maximum purchase
         price at which such person may be required to redeem, repurchase or
         otherwise acquire such share), less any cash held by such person.

         "Debt to EBITDA Ratio" means the ratio of all Debt of the Borrower and
         its Subsidiaries on a consolidated basis, to EBITDA.

         "EBITDAR to Debt Service Ratio" means the ratio of EBITDAR to Debt
         Service Requirements.

         "EBITDA" means, for any period, Net Income for such period plus all
         amounts deducted in the calculation thereof on account of Interest
         Expense, income taxes, depreciation and amortization.

         "Intangible" includes without limitation such personal property as
         goodwill; copyrights, patents and trademarks; franchises; licences,
         leases; research and development costs; and deferred development costs.

         "Interest Expense" means, for any period, the aggregate amount accrued
         (whether or not payable or paid) during such period in accordance with
         GAAP on account of (i) interest expense including amortization of debt
         discount and debt issuance costs, capitalized interest, standby fees,
         commissions, discounts and other fees and charges owed with respect to
         letters of credit and bankers' acceptances and (ii) the interest
         expense components of all capitalized lease obligations.

         "Net Income" means, for any period, the consolidated net income (loss)
         of the Borrower for such period, calculated in accordance with GAAP
         [before extraordinary items] [but excluding (i) the income (or loss) of
         any person accrued prior to the date it becomes a Subsidiary of the
         Borrower or is amalgamated with or consolidated into the Borrower or
         into any of its Subsidiaries or such person's property is acquired by
         the Borrower or any of its Subsidiaries, and (ii) any after-tax gains
         (but not pre-tax losses) attributable to dispositions of property out
         of the ordinary course of business].

         "Postponed Debt" means any Debt for borrowed money of any of the
         Borrower and its Subsidiaries that is incurred at such time as no
         failure by the Borrower to perform or observe any of its covenants in
         this Agreement is continuing or would be created by the incurrence
         thereof (to be evidenced by pro forma financial statements delivered to
         CIBC)

<PAGE>

                                      -20-

         and which has the following attributes: (i) no principal thereof is
         repayable so long as any amount is owed by the Borrower to CIBC (or
         until such earlier date as CIBC may agree upon in writing), (ii) no
         covenant with respect to such Debt is more onerous than or in addition
         to the covenants specified herein, and (iii) all rights of the holder
         of such Debt are postponed and subordinated to all rights of CIBC under
         or in respect of the Credits pursuant to a subordination agreement
         containing payment and non-payment default standstills and other
         provisions satisfactory in form and substance to CIBC.

         "Shareholders' Equity" means the amount which would, in accordance with
         GAAP, then be included as shareholders' equity on a consolidated
         balance sheet of the Borrower, excluding any portion of shareholders'
         equity that is represented by the cumulative translation account.

         "Tangible Net Worth" means Shareholders' Equity less all amounts that
         would be included on a consolidated balance sheet of the Borrower as
         amounts owed by any Affiliate of the Borrower or as Intangibles.

         "Total Liabilities to Tangible Net Worth Ratio" means the ratio of all
         amounts that would be included as liabilities on a consolidated balance
         sheet of the Borrower, to Tangible Net Worth.

         "Working Capital" means the excess of Current Assets over Current
         Liabilities.

8.       BANKERS' ACCEPTANCES

8.1      POWER OF ATTORNEY. To facilitate the issuance of Bankers' Acceptances
under the Credits, the Borrower appoints CIBC to execute, endorse and deliver on
behalf of the Borrower drafts in the form or forms prescribed by CIBC for
bankers' acceptances denominated in Canadian dollars (each such executed draft
which has not yet been accepted by CIBC is referred to herein as a "Draft").
Each Bankers' Acceptance executed and delivered by CIBC on behalf of the
Borrower as provided herein shall be binding upon the Borrower as if it had been
executed and delivered by a duly authorized officer or officers of the Borrower.

8.2      DRAFTS. Notwithstanding the above section, the Borrower will from time
to time provide to CIBC if so required by CIBC an appropriate number of Drafts
drawn by the Borrower upon CIBC and payable and endorsed as specified by CIBC.
The dates, maturity dates and face amounts of all Drafts delivered by the
Borrower shall be left blank, to be completed by CIBC as required. All such
Drafts shall be held by CIBC subject to the same degree of care as if they were
such Lender's own property. CIBC will, upon written request by the Borrower,
advise the Borrower of the number and designations, if any, of the Drafts of the
Borrower then held by it. CIBC shall not be liable for its failure to accept a
Draft as required hereby if the cause of such failure is, in whole or in part,
due to the failure of the Borrower to provide appropriate Drafts to CIBC on a
timely basis.

<PAGE>

                                      -21-

8.3      TERM AND AMOUNT. The term of all Bankers' Acceptances issued pursuant
to any Notice of Borrowing must be identical. Each Bankers' Acceptance shall be
in a face amount of $100,000 or any whole multiple thereof, and the aggregate
face amount of Bankers' Acceptances issued pursuant to any Notice of Borrowing
must not be less than $1,000,000. Each Bankers' Acceptance will be dated the
date on which it is issued, and will be for a term of one, two, three or six
months or such other period as may be agreed to by CIBC.

8.4      CALCULATION OF FEE. The fee for any Bankers' Acceptance will be
calculated, at the rate specified, on the basis of the face amount and term of
such Bankers' Acceptance.

8.5      PAYMENT OF FEE. Upon acceptance of a Draft the Borrower will pay to
CIBC the related fee specified in this Agreement, and to facilitate payment CIBC
will be entitled to deduct and retain for its own account the amount of such fee
from the amount to be paid by CIBC to the Borrower as the purchase price for the
resulting Bankers' Acceptance.

8.6      PURCHASE BY CIBC. Each Bankers' Acceptance will be purchased by CIBC
for a price which produces a yield thereon equal to the Bankers' Acceptance
Yield then in effect. Such price will be credited by CIBC to the applicable
Operating Account.

8.7      NO MARKET. If CIBC determines in good faith, which determination will
be conclusive and binding on the Borrower, and so notifies the Borrower, that
there does not exist at the applicable time a normal market in Canada for the
purchase and sale of bankers' acceptances, then notwithstanding any other
provision hereof any obligation of CIBC to purchase Bankers' Acceptances will be
suspended until CIBC determines that such market does exist and gives notice
thereof to the Borrower, and any Notice of Borrowing requesting Bankers'
Acceptances will be deemed to be a Notice of Borrowing requesting Loans in
Canadian dollars in a similar aggregate principal amount.

8.8      PAYMENT ON MATURITY. On the maturity of each Bankers' Acceptance the
Borrower will pay to CIBC, for the account of the holder of such Bankers'
Acceptance, Canadian dollars in an amount equal to the face amount of such
Bankers' Acceptance. The obligation of the Borrower to make such payment is
absolute and unconditional, and will not be prejudiced by the fact that the
holder of any such Bankers' Acceptance is CIBC. No days of grace may be claimed
by the Borrower for the payment at maturity of any Bankers' Acceptance. If the
Borrower does not make such payment, the amount of such payment shall be deemed
to be a loan in Canadian dollars made to the Borrower by CIBC and payable on
demand. The Borrower hereby confirms the application of the proceeds of such
loan in payment of the liability of the Borrower with respect to the related
Bankers' Acceptance.

8.9      CASH COLLATERALIZATION. If any Bankers' Acceptance is outstanding at
any time that an Event of Default occurs, the Borrower will forthwith upon
demand by CIBC pay to CIBC, for the account of the holder of such Bankers'
Acceptance, Canadian dollars in an amount equal to the face amount thereof. Such
funds shall be held by CIBC for payment of the liability of the Borrower in
respect of such Bankers' Acceptance on the maturity thereof.

<PAGE>

                                      -22-

8.10     SIGNATURES ON DRAFTS. The signature of any duly authorized officer of
the Borrower on a Draft may be mechanically reproduced in facsimile, and all
Drafts bearing such facsimile signature shall be binding upon the Borrower as if
they had been manually signed by such officer, notwithstanding that such person
whose manual or facsimile signature appears on such Draft may no longer hold
office at the date thereof or at the date of acceptance of such Draft by CIBC or
at any time thereafter.

8.11     UNDISBURSED CREDIT. For the purpose of calculating the undisbursed
amount of any Credit and for any other relevant provision of this Agreement, the
amount constituted by any Bankers' Acceptance shall be the face amount thereof.

8.12     CERTAIN DEFINITIONS. In this Agreement the following terms shall have
the following meanings:

         "Bankers' Acceptance" or "B/A" means a Draft which has been accepted by
         CIBC pursuant to a Credit.

         "Bankers Acceptance Yield" means, with respect to any Bankers'
         Acceptance to be purchased by CIBC at any time, the annual yield
         resulting from the price at which CIBC is offering to purchase at such
         time bankers' acceptances accepted by it having a term identical to
         such Bankers' Acceptance and in a comparable face amount to the
         Bankers' Acceptances to be purchased by CIBC from the Borrower at such
         time.

         "face amount" means, with respect to any Bankers' Acceptance, the
         principal amount thereof payable on the maturity thereof.

9.       LETTERS OF CREDIT

9.1      PAYMENT OF FEE. Upon issuance of a Letter of Credit, the Borrower will
pay to CIBC the related fee specified in this Agreement.

9.2      REIMBURSEMENT. The Borrower will pay to CIBC on demand, in the currency
of the applicable Letter of Credit, an amount equal to any amount paid or
required to be paid by CIBC pursuant thereto (including pursuant to an L/C
Acceptance created thereunder). The obligation of the Borrower to make such
payment is absolute and unconditional. If the Borrower does not make such
payment, the amount of such payment shall be deemed to be a loan in the amount
and currency of such payment, made to the Borrower by CIBC under the applicable
Credit and payable on demand. The Borrower hereby confirms the application of
the proceeds of such loan in payment of the aforesaid liability of the Borrower
with respect to the related Letter of Credit.

9.3      CASH COLLATERALIZATION. If any Letter of Credit is outstanding at any
time that the Borrower has failed to perform or observe (beyond any period of
grace permitted by CIBC) any of its covenants in this Agreement, the Borrower
will forthwith pay to CIBC, in the currency of such Letter of Credit, funds in
an amount equal to the total maximum actual and contingent liability of CIBC
pursuant thereto. Such funds will be held by CIBC for payment of the liability

<PAGE>

                                      -23-

of the Borrower in respect of such Letter of Credit, and any excess thereof will
be applied to any other liabilities of the Borrower pursuant to the Credits or
will be returned to the Borrower at such time as no such liabilities exist or
may arise.

9.4      UNDISBURSED CREDIT. For the purpose of calculating the undisbursed
amount of any Credit and for any other relevant provision of this Agreement, the
amount constituted by any Letter of Credit shall be the total maximum actual and
contingent liability of CIBC pursuant thereto.

9.5      DEFINITIONS. In this Agreement, the following terms shall have the
following meanings:

         "Letter of Credit" or "L/C" means a documentary or standby letter of
         credit, a letter of guarantee or a similar instrument, in form and
         substance satisfactory to CIBC.

         "L/C Acceptance" means an outstanding bill of exchange drawn by the
         beneficiary of a documentary L/C and which CIBC has accepted and is
         therefore obligated to pay at maturity.

10.      INSTALMENT LOANS

10.1     INSTALMENT LOANS. The following terms apply to each Instalment Loan:

(a)      NON-REVOLVING LOANS. Unless otherwise stated in this Agreement, any
Instalment Loan is non-revolving. This means that any principal repayment is not
available to be re-borrowed, and permanently reduces the amount of such
Instalment Loan.

(b)      FLOATING RATE INSTALMENT LOANS. Floating Rate Instalment Loans may have
either (i) blended payments or (ii) payments of fixed principal amounts, plus
interest, as described below:

         (i)      BLENDED PAYMENTS. If a Floating Rate Instalment Loan has
         blended payments, the amount of the monthly payments is fixed for the
         term of such Loan, but the interest rate will vary with changes in the
         Prime Rate on the US Base Rate (as the case may be). If the Prime Rate
         or the US Base Rate during any month is lower than it was at the
         outset, a larger portion of the monthly payment will be allocated to
         principal and as a result such Loan may be repaid prior to its original
         maturity. If, however, the Prime Rate or the US Base Rate is higher
         than it was at the outset, the amount of principal that is repaid will
         be reduced, and as a result there may remain principal outstanding on
         the original maturity date.

         (ii)     PAYMENTS OF PRINCIPAL PLUS INTEREST. If a Floating Rate
         Instalment Loan has specified principal payments, in addition to
         interest, such principal payments are due on each specified payment
         date. The interest payment is also due on the same date, and will
         usually be a different amount each month due to the reducing balance of
         the Loan, the number of days in the month, and changes in the Prime
         Rate or the US Base Rate (as the case may be) during the month and from
         month to month.

<PAGE>

                                      -24-

(c)      PREPAYMENT. Unless otherwise specified in this Agreement:

         (i)      all or part of a Floating Rate Instalment Loan may be prepaid
         at any time without penalty; and

         (ii)     all (but not part) of a Fixed Rate Instalment Loan may be
         prepaid provided that the Borrower also pays to CIBC, on the prepayment
         date, any amount determined by CIBC pursuant to clause 4.4(iv) of this
         Schedule.

(d)      DEMAND OF FIXED RATE INSTALMENT LOANS. Upon demand for payment of a
Fixed Rate Instalment Loan the Borrower will pay to CIBC the prepayment fee
specified in clause 10.1(c)(ii) above.

(e)      CERTAIN DEFINITIONS. In this Agreement the following terms have the
following meanings:

         "Fixed Rate Instalment Loan" means an Instalment Loan with respect to
         which interest is payable at a fixed annual rate of interest (as
         opposed to being payable on the basis of the Prime Rate or the US Base
         Rate).

         "Floating Rate Instalment Loan" means an Instalment Loan with respect
         to which interest is payable on the basis of the Prime Rate or the US
         Base Rate.

         "Instalment Loan" means a loan that is repayable either in fixed
         instalments of principal, plus interest, or in blended instalments of
         both principal and interest, and that (notwithstanding any such
         specified instalments) is repayable on demand by CIBC at any time if so
         specified in this Agreement.

11.      LIBO RATES AND LIBOR LOANS

11.1     SELECTION OF LIBOR PERIODS. The Borrower shall select the term of each
LIBOR Period with respect to each LIBOR Loan made or to be made available to it
by telephone notice (to be confirmed the same day in writing) or facsimile
received by CIBC not later than 10:00 a.m. on the third Business Day prior to
the commencement of such LIBOR Period. The first LIBOR Period for each LIBOR
Loan will commence on (and include) the date of advance of such LIBOR Loan, and
each LIBOR Period occurring thereafter for such LIBOR Loan will commence on (and
include) the last day of the immediately preceding LIBOR Period for such LIBO
Loan. In each case, a LIBOR Period will end on the day in the last calendar
month included therein that numerically corresponds to the first day of such
LIBOR Period. Notwithstanding the foregoing: (i) if CIBC has not received due
notice of renewal of the LIBOR Period with respect to any outstanding LIBOR Loan
in accordance with the first sentence of this section, such LIBOR Loan will be
automatically converted on the expiry of such existing LIBOR Period to a Loan
bearing interest on the basis of the US Base Rate; (ii) any LIBOR Period that
begins on the last Business Day in a calendar month, or on a day for which there
is no numerically corresponding day in the calendar month in which such LIBOR
Period would

<PAGE>

                                      -25-

otherwise end, will end on the last Business Day in the calendar month in which
such LIBOR Period would otherwise end; (iii) if any LIBOR Period would otherwise
end on a day that is not a Business Day, such LIBOR Period will end on the next
Business Day; provided, however, that if such next Business Day falls in the
next calendar month, such LIBOR Period will end on the preceding Business Day;
(iv) all LIBOR Periods in effect at any time must end on not more than five
different days; and (v) if, on the day that the Borrower delivers a Notice of
Borrowing or otherwise notifies CIBC of the selection of a LIBOR Period with
respect to any LIBOR Loan made or to be made to the Borrower, or on the day that
any such LIBOR Period is to become effective, there exists any failure by the
Borrower (beyond any period of grace permitted by CIBC) to perform or observe
any of its covenants in this Agreement, then, at the option of CIBC, in the case
of any Loan then outstanding as a LIBOR Loan, on the last day of the LIBOR
Period then applicable thereto the interest thereon shall cease to be calculated
hereunder on the basis of a LIBO Rate and shall commence to be calculated
hereunder on the basis of the US Base Rate, and in the case of any LIBOR Loan to
be made hereunder, the applicable Notice of Borrowing shall be deemed to request
instead a Loan in US dollars in the same amount bearing interest on the basis of
the US Base Rate.

11.2     FAILURE OF THE LIBO RATE. If at any time CIBC determines (which
determination shall be conclusive and binding) that by reason of circumstances
affecting the London interbank market or any other relevant financial market or
the position of CIBC therein (i) adequate and reasonable means do not exist for
ascertaining the LIBO Rate to be applicable during any LIBOR Period, or (ii) the
LIBO Rate does not adequately reflect the effective cost to CIBC of the funds to
be used by it to make or continue the applicable Loan for any LIBOR Period, or
(iii) US dollars in the amount of the applicable Loan are not readily available
to CIBC for the applicable LIBOR Period in the London interbank market, then
CIBC shall give notice thereof (by telephone to be confirmed the same day in
writing) or by facsimile to the Borrower. On the last day of the LIBOR Period
then applicable thereto, the interest on each Loan then outstanding from CIBC as
a LIBOR Loan shall cease to be calculated hereunder on the basis of a LIBO Rate
and shall commence to be calculated hereunder on the basis of the US Base Rate.
Any Notice of Borrowing which has been delivered to CIBC requesting a LIBOR Loan
on a day on or subsequent to such notification date will be deemed to request
instead a Loan in US dollars in the same amount bearing interest on the basis of
the US Base Rate. The Borrower will not be entitled to obtain any LIBOR Loan
from CIBC so long as any such condition shall continue to exist, and any Loan
that would otherwise have been made by CIBC as a LIBOR Loan shall instead be
made by CIBC as a Loan in US dollars bearing interest on the basis of the US
Base Rate.

11.3     INTEREST PAYMENT DATES. Interest on each LIBOR Loan is payable on the
last day of each LIBOR Period applicable thereto and also, with respect to each
LIBOR Period of a term longer than three months, at the end of each three-month
period included therein.

11.4     CERTAIN DEFINITIONS. In this Agreement the following terms have the
following definitions:

<PAGE>

                                      -26-

         "LIBO Rate" means, with respect to each LIBOR Period for each LIBOR
         Loan, an annual interest rate equal to the rate at which CIBC is
         offered deposits of US dollars by leading banks in the London interbank
         market as of 11:00 a.m. (London time) on the second Business Day prior
         to the commencement of such LIBOR Period, for delivery on the first day
         of such LIBOR Period for a period equal to the number of months
         comprised therein and in an amount equal to the amount of such LIBOR
         Loan.

         "LIBOR Loan" means any loan with respect to which interest is
         calculated hereunder for the time being on the basis of the LIBO Rate.

         "LIBOR Period" means, from time to time with respect to a LIBOR Loan,
         the applicable interest period of one, two, three or six months, as
         selected in accordance with the provisions hereof.Exhibit 10.1 

INCENTIVE STOCK OPTION AGREEMENT 

        THIS INCENTIVE STOCK OPTION AGREEMENT is made as of June 20, 2005 between YDI WIRELESS, INC., a corporation organized under the laws of the State of Delaware (hereinafter called the “Corporation”), and Leonard J. Golyzniak (hereinafter referred to as the “Employee”). 

        WHEREAS, the Employee is in the employ of the Corporation or one of its affiliates and the Corporation considers it desirable and in its best interests to encourage the Employee as an eligible employee under its 2004 Stock Plan (the “Plan”) to remain in such employ and to motivate the Employee to exert the Employee’s best efforts on behalf of the Corporation and its affiliates; 

        NOW, THEREFORE, it is agreed as follows: 

        1.        Grant of Option. The Corporation hereby grants to the Employee as of the date of this Agreement (“Date of Grant”) the right, privilege and option to purchase not more than 75,000 shares (the “Grant Number”) of the Common Stock of the Corporation, par value $.01 per share, as constituted on the date of this Agreement pursuant to the terms, provisions and conditions of the Plan which is incorporated herein and made a part hereof by reference as if fully set forth herein at length and subject to the terms, provisions and conditions set forth below. 

        2.        Option Price. The option price per share of Common Stock as constituted on the date of this Agreement, as determined in accordance with the Plan, shall be $2.35 per share. 

        3.        Time of Exercise; Acceleration. This option will vest as to (a) ten percent (10%) of the Grant Number on September 18, 2005, (b) twenty-two and one-half percent (22.5%) of the Grant Number on the first annual anniversary of the Date of Grant, and (c) then as to five and five-eighths percent (5.625%) of the Grant Number on each quarterly anniversary of the Date of Grant (after the first annual anniversary of the Date of Grant) until the option has vested in full (the day on which any options are scheduled to vest under this Agreement is referred to in this Agreement as a “Vesting Date”); provided, however, that upon the event of (i) the completion of a merger or consolidation of the Corporation with any other entity (other than a merger or consolidation in which the Corporation is the surviving entity and is owned at least 50%
collectively by persons who were stockholders of the Corporation before the transaction), (ii) the sale of substantially all of the Corporation’s assets to another entity, or (iii) the sale of more than 50% of the outstanding capital stock of the Corporation to an unrelated person or group of persons acting collectively in one or a series of transactions, all unvested options will be immediately vested. Notwithstanding the foregoing sentence, (a) the number of options that will vest on each Vesting Date, if other than a whole number, will be rounded down to the nearest whole number and (b) any fractional options resulting from the preceding clause will vest on the fourteenth Vesting Date. 

        Only vested stock options may be exercised. This option may be exercised in whole or in part as to shares which have vested for not in excess of the difference between (i) the total number of shares then vested and (ii) the total number of shares as to which the option has been previously exercised. No partial exercise of this option within any year may be for less than 100 shares (or the remaining shares purchasable under this option if less than 100 shares). 

        4.        Method of Exercise. This option shall be exercisable from time to time as provided above by written notice in the form of Exhibit “A”, signed by the person entitled to exercise the option, setting forth in terms of shares of Stock as constituted on the date of this Agreement, the number of shares as to which this option is being exercised. Such notice shall be delivered to the Corporation at its principal place of business and be accompanied by the purchase price. Alternatively, the person entitled to exercise the option may exercise the option and pay the purchase price by any other method that may be authorized by the Corporation from time to time. The Corporation shall make prompt delivery of the shares of Stock as to which the option is exercised against payment of the purchase price; provided, however, that if any law or regulation
requires the Corporation to take any action with respect to the Stock before the issuance thereof, then the date of delivery of the Stock shall be extended for the period necessary to take such action. 

        5.        Further Limitations on Exercise. 

	 	  A.	Termination of Employment. 

                  (i)        If Employee’s employment with or service to the Corporation terminates other than by reason of death or Disability, (a) no further vesting of this option will occur subsequent to the
date of termination, and (b) this option will terminate on the date three months after the date of termination or on the option’s specified expiration date, if earlier. Nothing in this Agreement will be deemed to give the Employee the right to continued employment with the Corporation. 

                  (ii)        If Employee’s employment or other service to the Corporation is terminated due to the Employee’s death or Disability, this option may be exercised, up to
that portion of the option which the Employee could have exercised on the date of death or Disability, by the Employee, or in the case of death, the Employee’s estate, personal representative or any beneficiary who has acquired the option by will or by the laws of descent and distribution, at any time prior to the earlier of the specified expiration date of this option or one year after the Employee’s death or Disability. 

                   B.        Condition to Exercise. As a condition of the Corporation’s obligation to issue Stock upon exercise of this option, the Employee or other person
entitled to exercise this option, if requested by the Corporation, shall concurrently with the exercise of this option execute an Agreement Not to Compete with the Corporation (in such form as adopted by the Corporation from time to time), which obligates the Employee to refrain from certain activities (if the person exercising the option has not already executed such an agreement). 

                   C.        Payment. The option price shall be paid as follows: (i) by check, and/or (ii) to the extent the Stock is publicly traded,
by delivery to the Corporation by the Employee of Stock already owned by such Employee, properly endorsed and having a fair market value equal to the purchase price (if permitted by the Corporation) and/or (iii) in any other manner permitted by the Corporation from time to time. For purposes of this Section 5(C), the market value of such stock to be delivered to the Corporation in payment of the
option price shall be determined in accordance with the Plan. 

2

                   D.        Non-Transferability. This option is not transferable by the Employee, except by will or
by laws of descent and distribution, and is exercisable during the Employee’s lifetime only by the Employee. 

                   E.        Adjustment. If a dividend is declared upon the Stock
payable in Stock, then the shares of Stock then subject to this option (and the number of shares reserved for issuance) shall be increased proportionately without any change in the aggregate purchase price. If the outstanding Stock is changed into or exchanged for a different
number or class of shares of stock of the Corporation or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then (i) there shall be substituted for each such share of Stock then subject to this option (and for each share reserved for issuance) the number and class of shares of Stock into which each outstanding share of Stock is so
changed or exchanged, all without any change in the aggregate purchase
price for the shares then subject to this option and (ii) the vesting schedule set forth in Section 3 above shall also be adjusted proportionately to reflect the impact of such reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation. 

                   F.        Withholding Taxes. Whenever under this Agreement Stock is to be issued, the Corporation shall have the right to require the recipient to remit to the Corporation an amount sufficient to satisfy federal, state and local withholding tax requirements prior to delivery of any certificate or certificates representing the Stock. 

        6.        Stock Ownership. An optionee shall be entitled to the privilege of stock ownership only as to such shares of Stock as are issued upon exercise of this option. 

        7.        Requirements of Law. The granting of this option and issuance of shares of Stock upon the exercise of this option shall be subject to compliance with all of the applicable requirements of law with respect to the issuance and sale of such shares. 

        8.        Expiration Date. This option and all rights granted in this Agreement shall, in all events, expire five (5) years from the Date of Grant. 

        9.        Legend. The Employee hereby agrees that the stock certificates delivered upon exercise of this option may bear a legend or legends in the form designated by the Corporation to ensure compliance with legal or contractual restrictions. 

        10.        Definitions. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the same meanings as in the Plan. The term “Stock” shall mean shares of Common Stock of the Corporation as constituted on the date of this Agreement and such other stock as shall be substituted therefor or issued thereon as provided in Section 5(E) above or as shall be substituted for or issued upon or in exchange for Stock issued pursuant to the options. 

3

        11.        Disposition of Stock. The Employee acknowledges that the “incentive stock option” rules set forth in Section 422 of the Internal Revenue Code of 1986, as amended, will not be applicable to any Stock issued to the Employee pursuant to this Agreement if such Stock is disposed of either within two (2) years of the Date of Grant or within one (1) year of the issuance of such Stock to the Employee. The Employee shall give the Corporation prompt notice of a Disqualifying Disposition. 

        12.        Notices. All notices under this Agreement shall be sufficient if in writing and delivered in hand or mailed, registered or certified mail, postage prepaid, and addressed to the Corporation at YDI WIRELESS, INC., 8000 Lee Highway, Falls Church, VA 22042, Attn: Chief Financial Officer or to the Employee at the address set forth under the Employee’s signature below. Either party may change the address to which notices shall be delivered by like notice given at least ten (10) days before the effective date of such change of address. 

        13.        Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and the Employee, his legal representatives, heirs, legatees and assigns. 

        14.        Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. 

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument all as of the date and year first above written. 

		
		
		YDI WIRELESS, INC.
	 	
	 	
		By:    /s/ Thomas C. Bennett 

		Title:    President/COO

	 	
		EMPLOYEE
	 	
	 	/s/ Leonard J. Golyzniak
		

	 	
		Name:  Leonard J. Golyzniak
		      
      2212 W. Fairview Avenue 
		      
      Johnsburg, IL  60050

4

EXHIBIT A 

		
		

(date)

YDI WIRELESS, INC.
20 Industrial Drive East

South Deerfield, MA 01373 

Ladies and Gentlemen: 

        I wish to exercise my option to purchase ____________ shares of common stock, par value $.01 per share (the “Securities”) at a price of $2.35 per share pursuant to the Incentive Stock Option Agreement dated as of June 20, 2005 (the “Agreement”) under the Corporation’s 2004 Stock Plan. 

Check one of the following boxes:  

	 ̈	
   I have enclosed a check for $_____________________ (the exercise amount). 

	 ̈	
   I am paying the exercise price by the following means which has been approved by the
Corporation: ________________________________________________________ 

	
	 
__________________________________________________________________________________________________________________________________________.  

        I understand that prior to exercising any options I must have signed an Agreement Not to Compete with the Corporation (if requested by the Corporation) in the form adopted by the Corporation from time to time. 

        I further agree that I will not make any sales or other transfers or dispositions of the securities covered by this letter during the time period following the closing of any public offering by the Corporation of its securities requested by the underwriter or, in the absence of such request, ninety (90) days. 

				
	 	 	 	 
			Very truly yours, 
	 			
	 			
			By:	
	
			 

	Employee Social Security Number			Employee Signature (on line above)
				Employee Name (printed):_____________________________
		 		
	 
Employee's Home Address:			Address to which certificates are to be sent 
(complete ONLY if different than home address):
	 			
	
			 

	 			
	
			 

	 			
	
			 

	 			
	
			 

5

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