Document:

exv10w2

Exhibit 10.2

Execution Version

PLEDGE, SECURITY AND SUBORDINATION AGREEMENT

     This PLEDGE, SECURITY AND SUBORDINATION AGREEMENT (as amended, restated, modified, revised,
supplemented, extended, continued or replaced from time to time, this “Agreement”), dated
as of January 20, 2010, is by ROYAL GOLD, INC., a corporation organized and existing under the laws
of Delaware (“Royal Gold” or “Borrower”) in favor of HSBC BANK USA, NATIONAL
ASSOCIATION (“HSBC Bank”), a national banking association organized under the laws of the
United States, in its capacity as administrative agent for the Lenders (the “Secured
Party”).

Recitals

     A. Pursuant to that certain Term Loan Facility Agreement (as amended, restated, modified,
revised, supplemented, extended, continued or replaced from time to time in accordance with its
terms, the “Loan Agreement”) dated as of January 20, 2010 by and among Royal Gold, as a
borrower, Royal Gold Chile Limitada, a Chilean limited liability company, as a guarantor, High
Desert Mineral Resources, Inc., a corporation organized and existing under the laws of Delaware, as
a guarantor, RGLD Gold Canada , Inc., a corporation organized and existing under the laws of
British Columbia, Canada, as a guarantor (“RGLD Canada”), HSBC Bank, as a lender, and those
banks and financial institutions identified as a “Lender” on the signature pages hereto and such
other banks or financial institutions as may from time to time become parties to this Agreement, as
lenders (the “Additional Lenders”) (with each of HSBC Bank and the Additional Lenders
individually referred to herein as a “Lender” and collectively as “Lenders”), the
Secured Party, as administrative agent for the Lenders thereunder and HSBC Securities (USA) Inc., a
corporation incorporated and existing under the laws of the United States, as the sole lead
arranger. Capitalized terms not otherwise defined herein shall have the meanings set forth in the
Loan Agreement.

     B. As a condition to the Lenders making the Loan to the Borrower under the Loan Agreement,
Royal Gold has agreed to execute and deliver this Agreement to the Secured Party in its capacity as
administrative agent under the Loan Agreement for and on behalf of the Lenders. Royal Gold is
entering into this Agreement to secure its obligations under the Loan Agreement and the other
Credit Documents on the terms provided herein.

Agreement

     NOW, THEREFORE, Royal Gold and the Lenders hereby agree as follows:

     1. Pledge and Grant of Security Interest.

	 	(a)	 	For value received, in order to induce the Lenders to enter into the Loan
Agreement and to extend the Loan to Royal Gold, and to secure the payment and
performance of all present and future obligations, indebtedness and liabilities of all
kinds of Royal Gold to the Lenders under the Loan Agreement, the other Credit
Documents, hereunder or otherwise, whether incurred by Royal Gold as maker, endorser,
drawer, acceptor, guarantor, accommodation party or otherwise, and whether due or to
become due, secured or unsecured, absolute or contingent, joint or several, and

 

 

	 	 	 	howsoever and whensoever incurred by Royal Gold or acquired by the Secured Party or the
Lenders (collectively referred to as the “Secured Obligations”), Royal Gold
hereby pledges, assigns, and grants a security interest to the Secured Party, for its
own benefit and for the benefit of the Lenders, and places a charge over all of its
right, title and interest in and to the following:

          (A) all of the issued and outstanding shares in the capital of RGLD Canada that are
legally and beneficially owned by Royal Gold, as such shares in the capital of RGLD Canada
are further described on Schedule 1 hereto, and (B) all other equity interests in
RGLD Canada whether now existing or hereafter acquired and all replacement or additional shares in the capital of RGLD Canada from time to time received or acquired by Royal Gold by
purchase, stock dividend, stock split, distribution or otherwise (all such shares of stock
of RGLD Canada pledged hereunder being referred to collectively as the “Pledged
Shares”);

          all certificates representing any of the Pledged Shares, whether currently existing or
hereafter issued;

          all Indebtedness of RGLD Canada or any successor or assign of a RGLD Canada (including,
without limitation, any receiver or trustee in bankruptcy) (each, a “Subordinated
Party”) now or hereafter owed by any such Subordinated Party to Royal Gold whether now
existing or hereafter arising, of whatsoever kind or nature, expressly including, without
limitation, all indebtedness of the Subordinated Parties to Royal Gold as of the date
hereof, which is identified as “Subordinated Debt” in Schedule 2 hereto; and

          except as otherwise provided in Section 5 hereof, any and all dividends, cash,
securities, instruments, warrants, options and other property, proceeds and distributions
from time to time received, receivable, paid or otherwise distributed in respect of, in
substitution for, in addition to or in exchange for, or otherwise evidencing any of the
Pledged Shares or Subordinated Debt and all proceeds thereof

	 	(b)	 	The Pledged Shares together with all other property, rights and interests
described in this Section 1, whether now existing or hereafter acquired,
obtained or created, are referred to herein collectively as the “Collateral.”

     2. Attachment; No Obligation to Advance. Royal Gold confirms that value has been
given by the Lenders to Royal Gold, that Royal Gold has rights in the Collateral existing at the
date of this Agreement and that Royal Gold and the Secured Party have not agreed to postpone the
time for attachment of the Security Interests to any of the Collateral. The Security Interests
will have effect and be deemed to be effective whether or not the Secured Obligations or any part
thereof are
owing or in existence before or after or upon the date of this Agreement. Neither the
execution and delivery of this Agreement nor the provision of any financial accommodation by any
Lender shall oblige any Lender to make any financial accommodation or further financial
accommodation available to Royal Gold or any other Person.

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     3. Delivery of Pledged Share Certificates; Registry Notations.

	 	(a)	 	All certificates or instruments representing or evidencing the Collateral have
previously been delivered or are being delivered to the Secured Party through its
solicitors Blake, Cassels & Graydon LLP concurrently with the execution of this
Agreement, and are in suitable form for transfer by delivery, endorsed in blank or
accompanied by duly executed undated instruments of transfer or assignments in blank,
having attached thereto or to such certificates all requisite stock transfer tax
stamps, notarizations or other notations required by Requirements of Law, all in form
and substance satisfactory to the Secured Party.
	 
	 	(b)	 	All necessary and appropriate entries, notations and written descriptions in
the books, accounts or share registries of RGLD Canada that evidence, and which are
necessary or desirable to authenticate and perfect, the pledge of the Collateral
pursuant hereto have been or will be made concurrently with the execution of this
Agreement, and Royal Gold shall pay all requisite fees, taxes or other amounts payable
therefore pursuant to Requirements of Law. All consents, authorizations and approvals
of, or filings or registrations with, appropriate Governmental Authorities have been
obtained, made or completed, as necessary or appropriate to authenticate and perfect
the pledge of the Collateral pursuant hereto. Royal Gold shall forthwith take all
other actions and pay all fees, taxes and amounts, necessary, appropriate or desirable
pursuant to applicable law to authenticate, perfect, maintain and preserve the pledge
of the Collateral.

     4. Subordination Agreement.

	 	(a)	 	On the terms and conditions hereof, the payment and performance of the
Subordinated Debt, and Royal Gold’s right to receipt thereof, is hereby subordinated to
payment and performance of the Senior Debt (as defined below), and to the right of the
Lenders to receipt thereof. Upon the occurrence and during the continuance of an Event
of Default, until the Senior Debt has been paid or otherwise satisfied in full, unless
otherwise directed by the Secured Party, Royal Gold will not ask, demand, sue for, take
or receive from any Subordinated Party, by setoff or in any other manner, the whole or
any part of any monies which may now or hereafter be owing by such Subordinated Party
to Royal Gold, and Royal Gold will not act to foreclose or otherwise realize upon any
collateral security therefor.
	 
	 	(b)	 	For purposes hereof, “Senior Debt” is defined as all indebtedness of
Royal Gold or RGLD Canada, and their successors and assigns, to the Lenders, whether
now existing or hereafter arising, of whatsoever kind or nature under the Loan
Agreement and the other Credit Documents. In the event of the bankruptcy or insolvency
of
Royal Gold, Royal Gold agrees promptly to take such actions with respect thereto as
the Secured Party may reasonably request in order to insure that the foregoing
agreements of Royal Gold are recognized and reflected in the manner in which the
assets of Royal Gold are distributed to its creditors and other claimants.

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	 	(c)	 	All payments received by Royal Gold with respect to the Subordinated Debt while
an Event of Default is outstanding under the Loan Agreement, will be held in trust by
Royal Gold for the benefit of the Lenders, and will promptly be remitted by Royal Gold
to the Secured Party for its own benefit and for the benefit of the Lenders.
	 
	 	(d)	 	Royal Gold agrees not to transfer, assign, pledge or hypothecate the
Subordinated Debt to any third person, or to convert any of the Subordinated Debt into
capital stock or other equity interests in the Subordinated Parties unless such capital
stock or other equity interests are subject to this Agreement and pledged to the
Secured Party for its own benefit and for the benefit of the Lenders.

     5. Representations, Warranties, Covenants and Agreements of Royal Gold. Royal Gold
represents, warrants, covenants and agrees that:

	 	(a)	 	Royal Gold legally and beneficially owns all of the issued and outstanding
shares in the capital of RGLD Canada, including any other equity interest of or in RGLD
Canada.
	 
	 	(b)	 	The Pledged Shares listed on Schedule 1 hereto constitute all of the
issued and outstanding shares in the capital of, or other equity interests in, RGLD
Canada owned or controlled by Royal Gold.
	 
	 	(c)	 	Each of the Pledge Shares are Certificated Securities (as that term is defined
in the Personal Property Security Act in effect in the Province of British Columbia (as
amended from time to time, the “PPSA”). Royal Gold shall at all times ensure
that all of the Pledge Shares are and remain Certificated Securities (as that term is
defined in the PPSA) and that any portion of the Collateral that constitutes a Security
(as that term is defined in the PPSA) is a Certificated Security (as that term is
defined in the PPSA). Royal Gold will do all such things and take all such steps as may
be required from time to time to provide the Secured Party with control over all such
Certificated Securities in the manner provided under section 23 of the Securities
Transfer Act (British Columbia) or such equivalent provision as may come into force
from time to time. At the request of the Secured Party, Royal Gold will cause all such
certificates of such Certificated Securities to be registered in the name of the
Secured Party or its nominee.
	 
	 	(d)	 	The Pledged Shares have been duly authorized and are validly issued, fully paid
and non-assessable.
	 
	 	(e)	 	Except for the security interests granted hereby, Royal Gold is, and as to
Collateral acquired after the date hereof Royal Gold shall and will be at the time of
acquisition,
the record and beneficial owner and holder of the Collateral free from any adverse
claim, security interest, pledge, encumbrance, lien, charge, or other right, title
or interest of any Person other than the Secured Party and the Lenders. Royal Gold
covenants that at all times the Collateral will remain free of all such adverse
claims, security interests, pledges, encumbrances, liens, charges or other adverse
interests by third parties. The Pledged Shares are free from and not otherwise
subject to any

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	 	 	 	voting agreements, shareholder agreements, voting trusts, proxies,
options, preferential purchase rights or other right of any party to acquire all or
any portion of the Pledged Shares.
	 
	 	(f)	 	None of the Pledged Shares bears any legend restricting their transfer, and
there are no other restrictions on the transfer of the Pledged Shares except as have
been complied with.
	 
	 	(g)	 	Royal Gold has full power and lawful authority to enter into this Agreement and
to pledge the Collateral to the Secured Party and to grant to the Secured Party a first
and prior security interest therein as herein provided, all of which have been duly
authorized by all necessary corporate action.
	 
	 	(h)	 	The execution and delivery and the performance hereof are not in contravention
of any charter, articles of incorporation or bylaw provision, or of any Instrument or
undertaking to which Royal Gold is a party or by which Royal Gold or its property is
bound.
	 
	 	(i)	 	This Agreement constitutes the valid and legally binding obligation of Royal
Gold enforceable in accordance with its terms.
	 
	 	(j)	 	Royal Gold will defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein. Any officer or
representative acting for or on behalf of Royal Gold in connection with this Agreement
or any aspect hereof, or entering into or executing this Agreement on behalf of Royal
Gold, has been duly authorized to do so, and is fully empowered to act for and
represent Royal Gold in connection with this Agreement and all matters related thereto
or in connection therewith.
	 
	 	(k)	 	Royal Gold’s principal place of business and chief executive office is in
Denver, Colorado. Royal Gold shall not change the location of its principal place of
business or chief executive office without the prior written consent of the Lenders,
not to be unreasonably withheld.
	 
	 	(l)	 	The preamble hereof states the correct legal name of Royal Gold and Royal Gold
does not conduct business under any other name. Royal Gold shall not change its
corporate name, nor do business under any name other than its current name, unless
Royal Gold has delivered to Secured Party written notice of such other names at least
thirty (30) days prior to the date of first use thereof by Royal Gold.
	 
	 	(m)	 	Royal Gold has not heretofore agreed to or signed any pledge, charge, general
security agreement or financing statement which covers any of the Collateral, and no
such pledge, charge, financing statement, or general security agreement is now on file
in any public office, and Royal Gold has not heretofore filed or inserted any entries
or notations in the books or share registry of any Subsidiary or Royal Gold evidencing
any pledge of the Collateral.

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	 	(n)	 	As long as any amount remains unpaid on any of the Secured Obligations or under
any agreement entered into in connection with the Secured Obligations, except as
expressly permitted by any such agreement, (A) Royal Gold will not enter into or
execute any pledge, charge, security agreement, or financing statement covering the
Collateral, other than those pledges, charges, security agreements and financing
statements in favor of the Secured Party hereunder, (B) Royal Gold shall not file or
consent to the filing of any pledge, charge, security agreement or financing statement
(or any documents or papers filed as such) covering the Collateral, other than
financing statements in favor of the Lenders hereunder, unless in any case the prior
written consent of the Lenders shall have been obtained, and further (C) Royal Gold
shall not insert, file or make any notations in the books or share registry of Royal
Gold or any Subsidiary evidencing any pledge of the Collateral, other than such entries
and notations in favor of the Secured Party hereunder.
	 
	 	(o)	 	Royal Gold authorizes the Secured Party to file, in its discretion, in
jurisdictions where this authorization will be given effect, a financing statement or
other Instrument for filing required by any jurisdiction applicable to the Collateral
unsigned or signed only by the Lenders, as appropriate, covering the Collateral, and
hereby appoints the Secured Party as Royal Gold’s attorney-in-fact to sign and file any
such financing statements or other Instruments covering the Collateral. At the request
of the Secured Party, Royal Gold will join the Secured Party in executing such
Instruments as the Secured Party may determine from time to time to be necessary or
desirable under provisions of any applicable Personal Property Security Act [of any
Province in Canada] or other applicable Requirements of Law in effect where the
Collateral is located or where Royal Gold or any Subsidiary is located or conducts
business; without limiting the generality of the foregoing, Royal Gold agrees to join
the Secured Party, at the Secured Party’s request, in executing one or more financing
statements or other Instruments in form satisfactory to the Secured Party, and Royal
Gold will pay the costs of filing or recording the same in all public offices at any
time and from time to time whenever filing or recording of any such financing statement
or other Instrument is deemed by the Secured Party to be necessary or desirable.
	 
	 	(p)	 	In the event that Royal Gold receives any promissory notes or evidences of
Indebtedness owed to Royal Gold, Royal Gold shall hold the same in trust as property of
the Secured Party and forthwith assign, pledge and deliver the same to the Secured
Party.
	 
	 	(q)	 	Royal Gold shall cause RGLD Canada to execute and deliver the Acknowledgement,
Consent and Undertaking set forth in Schedule 3 hereto.
	 
	 	(r)	 	All representations and warranties made by Royal Gold in this Agreement (a) are
material, (b) will be considered to have been relied on by the Secured Party and the
Lenders, and (c) will survive the execution and delivery of this Agreement or any
investigation made at any time by or on behalf of the Secured Party or any Lender and
any disposition or payment of the Secured Obligations.

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     6. Rights of the Lenders and Royal Gold Related to Collateral.

	 	(a)	 	The Secured Party may from time to time following the occurrence of an Event of
Default and during the continuance thereof:

          (i) Transfer any of the Collateral into the name of the Secured Party or its
nominee.

          (ii) Notify parties obligated on any of the Collateral to make payment to the
Secured Party of any amounts due or to become due thereunder.

          (iii) Enforce collection of any of the Collateral by suit or otherwise;
surrender, release or exchange all or any part thereof, or compromise or extend or
renew for any period (whether or not longer than the original period) any obligation
of any nature of any party with respect thereto; and exercise all other rights of
Royal Gold in any of the Collateral, except as hereinafter provided with respect to
income from or interest on the Collateral.

          (iv) Take possession or control of any proceeds of the Collateral.

	 	(b)	 	Until the occurrence of an Event of Default, Royal Gold shall have the right to
receive all income from or interest on the Collateral, and if the Secured Party
receives any such income or interest prior to the occurrence of an Event of Default,
the Secured Party shall pay the same promptly to Royal Gold, except that in the case of
securities or other property distributed by way of a dividend or otherwise with respect
to the Collateral, such securities or other property shall be promptly delivered to the
Secured Party to be held as Pledged Shares or other Collateral hereunder. Upon the
occurrence of an Event of Default, Royal Gold will not demand or receive any income
from or interest on the Collateral, and if Royal Gold receives any such income or
interest without any demand by it, the same shall be held by Royal Gold in trust for
the Secured Party (for its own benefit and for the benefit of the Lenders) in the same
medium in which received, shall not be commingled with any assets of Royal Gold and
shall be delivered to the Secured Party (for its own benefit and for the benefit of the
Lenders) in the form received, properly endorsed to permit collection, not later than
the next business day following the day of its receipt. The Secured Party may apply
the net cash received from such income or interest to payment of any of the Secured
Obligations, provided that the Secured Party shall account for and pay over to Royal
Gold any such income or interest remaining after payment in full of the Secured
Obligations then outstanding.
	 
	 	(c)	 	So long as no Event of Default shall have occurred, Royal Gold shall be
entitled to exercise its voting and consensual rights with respect to any Collateral
constituting voting securities or any part thereof for any purpose not inconsistent
with the terms of this Agreement or the Loan Agreement; provided,
however, that Royal Gold shall not exercise or refrain from exercising any such
right if, in the Secured Party’s judgment, such action would have a Material Adverse
Effect on the value of the Collateral or any part thereof; and, provided,
further, that Royal Gold shall give the

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	 	 	 	Secured Party at least five (5) days’
written notice of the manner in which it intends to exercise, or the reasons for
refraining from exercising, any such rights.
	 
	 	(d)	 	The Secured Party shall never be under any obligation to collect, attempt to
collect, protect or enforce the Collateral or any security therefor, which Royal Gold
agrees and undertakes to do at Royal Gold’s expense, but the Secured Party may do so in
its discretion at any time after the occurrence of an Event of Default and at such time
the Lenders shall have the right to take any steps by judicial process or otherwise as
it may deem proper to effect the collection of all or any portion of the Collateral or
to protect or to enforce the Collateral or any security therefor. All expenses
(including, without limitation, reasonable attorneys’ fees and expenses) incurred or
paid by the Secured Party in connection with or incident to any such collection or
attempt to collect the Collateral or actions to protect or enforce the Collateral or
any security therefor shall be borne by Royal Gold or reimbursed by Royal Gold to the
Secured Party upon demand. The proceeds received by the Secured Party as a result of
any such actions in collecting or enforcing or protecting the Collateral shall be
utilized by the Secured Party for its own benefit and for the benefit of the Lenders in
accordance with Section 10 hereof.
	 
	 	(e)	 	In the event the Secured Party, after giving notice to Royal Gold thereof and a
period of five (5) days after notifying Royal Gold within which to make payment
thereon, shall pay any taxes, assessments, interests, costs, penalties or expenses
incident to or in connection with the collection of the Collateral or protection or
enforcement of the Collateral or any security therefor, Royal Gold, upon demand of the
Secured Party, shall pay to the Secured Party (for its own benefit and for the benefit
of the Lenders) the full amount thereof with interest at a rate per annum (based on a
360-day year for the actual number of days involved) from the date expended by the
Secured Party until repaid equal to the Default Rate. So long as the Secured Party
shall be entitled to any such payment, this Agreement shall operate as security
therefor as fully and to the same extent as it operates as security for payment of the
other Secured Obligations secured hereunder, and for the enforcement of such repayment,
the Secured Party shall have every right and remedy provided hereunder for enforcement
of payment of the Secured Obligations.

     7. Further Assurances. Royal Gold agrees to take such actions and to execute such
stock or bond powers or other Instruments and such other or different writings as the Secured Party
may reasonably request further to perfect, confirm, maintain and assure the Secured Party’s
security interest in the Collateral and irrevocably authorizes the Secured Party, as Royal Gold’s
agent and attorney-in-fact, to assist the Secured Party’s realization thereon upon the occurrence
of an Event of
Default, including, without limitation, the right to receive, indorse, and collect all
instruments made payable to Royal Gold representing any dividend, interest payment or other
distribution in respect of the Pledged Shares or any part thereof or representing any indebtedness
owed to Royal Gold.

     8. Events of Default. The occurrence of an Event of Default under the Loan Agreement
or any other Credit Document shall constitute an “Event of Default” hereunder.

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     9. Notices. Royal Gold will advise the Secured Party promptly, in reasonable detail,
of any:

	 	(a)	 	acquisition after the date of this Agreement of any right, title or interest in
any Pledged Shares;
	 
	 	(b)	 	Lien (other than Permitted Liens) on, or claim asserted against, any of the
Collateral; or
	 
	 	(c)	 	occurrence of any event, claim or occurrence that could reasonably be expected
to have a Material Adverse Effect on the value of the Collateral.
	 
	 	(d)	 	The Debtor will not effect or permit any change in the location of the
jurisdiction of incorporation or amalgamation, chief executive office, or domicile of
Royal Gold or of RGLD Canada, any change of name of, or any; merger, consolidation or
amalgamation of Royal Gold or RGLD Canada with any other Person unless all filings have
been made and all other actions taken that are required in order for the Secured Party
to continue at all times following such change to have a valid and perfected first
priority Security Interest in respect of all of the Collateral.

     10. Rights and Remedies of the Lenders Upon Default. If an Event of Default shall
have occurred:

	 	(a)	 	The Lenders shall have and may exercise with reference to the Collateral and
the Secured Obligations any and all of the rights and remedies of a secured party under
the PPSA and under any other Governmental Requirement applicable to the Collateral,
and as otherwise granted herein or under any other applicable Governmental Requirement
or under any other Credit Document now or hereafter in effect executed by Royal Gold,
including, without limitation, the right and power to sell, at public or private sale
or sales, or otherwise dispose of, or otherwise utilize the Collateral and any part or
parts thereof in any manner authorized or permitted under the PPSA or other applicable
law after default by a debtor, and to apply the proceeds thereof toward payment of any
costs and expenses and attorneys’ fees and expenses thereby incurred by the Secured
Party and toward payment of the Secured Obligations in such order or manner as
permitted by law. Specifically and without limiting the foregoing, the Secured Party
shall have the right to take possession of all or any part of the Collateral, any
certificate therefor or any security therefor and of all books, records, papers and
documents of Royal Gold or in Royal Gold’s possession or control relating to the
Collateral which are not already in the Secured Party’s
possession, and for such purpose may enter upon any premises upon which any of the
Collateral or any security therefor or any of said books, records, papers and
documents are situated and remove the same therefrom without any liability for
trespass or damages thereby occasioned. To the extent permitted by law, Royal Gold
expressly waives any notice of sale or other disposition of the Collateral and all
other rights or remedies of Royal Gold or formalities prescribed by law relative to
sale or disposition of the Collateral or exercise of any other right or remedy of
the Lenders existing after default hereunder. The Secured Party shall have and may
exercise (for

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	 	 	 	its own benefit and for the benefit of the Lenders) all other rights
and remedies available, whether at law or in equity.
	 
	 	(b)	 	Upon written notice by the Secured Party to Royal Gold, the Secured Party or
its nominee or nominees shall have the sole and exclusive right to exercise all voting
and consensual powers pertaining to the Collateral or any part thereof and may exercise
such powers in such manner as the Lenders may elect.
	 
	 	(c)	 	All dividends, payments of interest and other distributions of every character
made upon or in respect of the Pledged Shares or any part thereof shall be deemed to be
Collateral, and will be held in trust by Royal Gold for the benefit of the Lenders, and
will promptly be remitted by Royal Gold to the Secured Party for its own benefit and
for the benefit of the Lenders.
	 
	 	(d)	 	All rights to marshaling of assets of Royal Gold, including any such right with
respect to the Collateral, are hereby waived by Royal Gold.
	 
	 	(e)	 	All rights and remedies of the Secured Party set out in this Agreement, the
Loan Agreement and each other Credit Document are cumulative, and no right or remedy
contained in this Agreement, the Loan Agreement or any other Credit Document is
intended to be exclusive, but each shall be in addition to every other right or remedy
contained in this Agreement, the Loan Agreement and the other Credit Documents or in
any existing or future agreement or now or in the future existing at law, in equity or
by statute, or under any other agreement between Royal Gold and the Secured Party that
may be in effect from time to time.
	 
	 	(f)	 	All recitals in any instrument of assignment or any other instrument executed
by the Secured Party incident to sale, lease, transfer, assignment or other
disposition, lease or utilization of the Collateral or any part thereof hereunder shall
be full proof of the matters stated therein and no other proof shall be requisite to
establish full legal propriety of the sale or other action taken by the Secured Party
or of any fact, condition or thing incident thereto, and all requisites of such sale or
other action or of any fact, condition or thing incident thereto shall be presumed
conclusively to have been performed or to have occurred.

     11. Special Provisions for Pledged Shares. Royal Gold hereby acknowledges that the
sale by the Secured Party of any of the Pledged Shares pursuant to the terms hereof in compliance
with federal and applicable state or provincial securities laws or the securities laws of any other
applicable
jurisdiction exercising valid jurisdiction over the Pledged Shares, and the rules and
regulations of any applicable securities regulatory body thereunder (as now in effect or as
hereafter amended, or any similar statute hereafter adopted with similar purpose or effect, the
“Securities Laws”) may require strict limitations as to the manner in which the Secured
Party or any subsequent transferee of the Pledged Shares may dispose of such securities. Royal
Gold understands that in order to protect the Secured Party’s interest it may be necessary to sell
the Pledged Shares at a price less than the maximum price attainable if a sale were delayed or were
made in another manner, such as a public offering requested under the Securities Laws. Royal Gold
has no, and waives any, objection to a sale in such a manner. The Secured Party is authorized, in
connection with any offer

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or sale of any Pledged Shares or rights thereto, to comply with any
limitation or restriction as it may be advised by counsel is necessary to comply with applicable
Securities Law, including compliance with procedures that may restrict the number of prospective
bidders and purchasers, requiring that prospective bidders and purchasers have certain
qualifications, and restricting prospective bidders and purchasers to Persons who will represent
and agree that they are purchasing for their own account or investment and not with a view to the
distribution or resale of such securities. Royal Gold further agrees that compliance with any such
limitation or restriction will not result in a sale being considered or deemed not to have been
made in a commercially reasonable manner, and the Secured Party will not be liable or accountable
to Royal Gold for any discount allowed by reason of the fact that such Pledged Shares or rights
therein are sold in compliance with any such limitation or restriction. If the Secured Party
chooses to exercise its right to sell any or all Pledged Shares or rights therein, upon written
request, Royal Gold will cause each applicable Issuer (as that term is defined in the Securities
Transfer Act (British Columbia) of the Pledged Shares to furnish to the Secured Party all such
information as the Secured Party may request in order to determine the number of shares and other
instruments included in the Collateral which may be sold by the Secured Party in exempt
transactions under any Securities Laws.

     12. Application of Proceeds by the Lenders.

          (a) In the event the Lenders sell or otherwise dispose of the Collateral in the
course of exercising the remedies provided for in Sections 8 or 9
hereof, any amounts held, realized or received by the Secured Party pursuant to the
provisions hereof, including the proceeds of the sale of any of the Collateral or
any part thereof, shall be applied by the Secured Party (for its own benefit and for
the benefit of the Lenders), first toward the payment of any costs and expenses
incurred by the Lenders in enforcing this Agreement, in realizing on or protecting
any Collateral and in enforcing or collecting any Secured Obligations or any
guaranty thereof, including, without limitation, the actual attorneys’ fees and
expenses incurred by the Secured Party (all of which costs and expenses are secured
by the Collateral), all of which costs and expenses Royal Gold agrees to pay, and
then as provided in the Loan Agreement pursuant to Section 2.6 of the Loan
Agreement. Any amounts and any Collateral remaining after such application and
after payment to the Secured Party of all of the Secured Obligations in full shall
be paid or delivered as required by law, or as a court of competent jurisdiction may
direct.

          (b) The Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which the Secured Party accords its
own property, it being understood that the Secured Party shall not have any
responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral.

11

 

     13. Continuing Liability of Debtor. Royal Gold will remain liable for any Secured
Obligations that are outstanding following realization of all or any part of the Collateral and the
application of the proceeds thereof.

     14. Absolute Interest.

	 	(a)	 	All rights of the Secured Party hereunder, and all obligations of Royal Gold
hereunder, shall be absolute and unconditional irrespective of (i) any lack of validity
or enforceability of any provision of the Loan Agreement or any other Credit Document,
any agreement with respect to the Secured Obligations or any other agreement or
instrument relating to any of the foregoing, (ii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from the Loan
Agreement, any Credit Document, or any other agreement or instrument, (iii) any
exchange, release or non-perfection of any Collateral or any other security for or
Collateral securing the Secured Obligations, or any release or amendment or waiver of
or any consent to or departure from any guarantee or any other security, for all or any
of the Secured Obligations, or (iv) any other circumstance which might constitute a
defense available to, or a discharge of, Royal Gold in respect of the Secured
Obligations or this Agreement, other than tender of payment in full of the Secured
Obligations.

	 	(b)	 	Royal Gold is hereby subrogated to all of the Secured Party’s interests, rights
and remedies in respect to the Collateral and all security now or hereafter existing
with respect thereto and all guaranties and endorsements thereof and with respect
thereto.

     15. Termination. This Agreement and the security interests created hereunder shall
terminate when all the Secured Obligations have been indefeasibly paid in full and when the Lenders
have no further obligation or right or option to extend the Loan under the Loan Agreement or any
other agreement relating to Secured Obligations, at which time the Secured Party shall execute and
deliver to Royal Gold all documents which Royal Gold shall reasonably request to evidence
termination of such security interest and shall return physical possession of any Collateral then
held by the Secured Party to Royal Gold; provided, however, that all indemnities of
Royal Gold contained in this Agreement shall survive, and remain in full force and effect
regardless of the termination of the security interest of this Agreement.

     16. Additional Information. Royal Gold agrees to furnish the Secured Party from time
to time such additional information and copies of such documents relating to this Agreement, the
Collateral, the Secured Obligations and Royal Gold’s financial condition as the Secured Party may
reasonably request.

     17. Notices. Any notice, request or other communication in connection with this
Agreement shall be in writing and shall be made and delivered in accordance with the provisions of
Section 10.3 of the Loan Agreement and at the addresses as set forth therein.

     18. Indemnity and Expenses. Royal Gold agrees to indemnify the Secured Party, the
Lenders, and the officers, directors, members, partners, employees and agents of the Secured Party

12

 

and the Lenders (with the foregoing referred to collectively as the “Indemnified Parties”),
for, and to hold each Indemnified Party harmless against, any loss, liability, claim judgment,
settlement, compromise, obligation, damage or penalty of any kind or nature, including the costs
and expenses of the Indemnified Party incurred in defending itself against any claim of liability
in connection with or arising out of this Agreement, unless arising from the gross negligence or
willful misconduct of such Indemnified Party.

     19. Rights of Secured Party; Limitations on Secured Party’s Obligations.

	 	(a)	 	Neither the Secured Party nor any other Lender will be liable to Royal Gold or
any other Person for any failure or delay in exercising any of the rights of Royal Gold
under this Agreement (including any
failure to take possession of, collect, sell, lease or otherwise dispose of any
Collateral, or to preserve rights against prior parties). Neither the Secured Party
nor any other Lender nor any agent thereof (including, in Alberta or British
Columbia, any sheriff) is required to take, or will have any liability for any
failure to take or delay in taking, any steps necessary or advisable to preserve
rights against other Persons under any Collateral in its possession. Neither the
Secured Party, any other Lender nor any agent thereof will be liable for any, and
Royal Gold will bear the full risk of all, loss or damage to any and all of the
Collateral (including any Collateral in the possession of the Secured Party, any
other Lender or any agent thereof) caused for any reason other than the gross
negligence or wilful misconduct of the Agent or such agent of the Secured Party,
such other Lender or such agent thereof.

	 	(b)	 	The Secured Party may perform any of its rights or duties under this Agreement
by or through agents and is entitled to retain counsel and to act in reliance on the
advice of such counsel concerning all matters pertaining to its rights and duties under
this Agreement.

     20. Dealings by Secured Party. The Secured Party will not be obliged to exhaust its
recourse against Royal Gold or any other Person or against any other security it may hold in
respect of the Secured Obligations or any part thereof before realizing upon or otherwise dealing
with the Collateral in such manner as the Agent may consider desirable. The Secured Party and the
other Lenders may grant extensions of time and other indulgences, take and give up security, accept
compositions, grant releases and discharges and otherwise deal with Royal Gold and any other
Person, and with any or all of the Collateral, and with other security and sureties, as they may
see fit, all without prejudice to the Secured Obligations or to the rights and remedies of the
Secured Party under this Agreement. The powers conferred on the Secured Party under this Agreement
are solely to protect the interests of the Secured Party in the Collateral and will not impose any
duty upon the Secured Party to exercise any such powers.

     21. Performance by Secured Party of Debtor’s Obligations. If Royal Gold fails to
perform or comply with any of the obligations of Royal Gold under this Agreement, the Secured Party
may, but need not, perform or otherwise cause the performance or compliance of such obligation,
provided that such performance or compliance will not constitute a waiver, remedy or satisfaction
of such failure. The expenses of the Secured Party incurred in connection with any such

13

 

performance or compliance will be payable by Royal Gold to the Secured Party immediately on demand,
and until paid, any such expenses will form part of the Secured Obligations.

     22. Interest. If any amount payable by Royal Gold to the Secured Party under this
Agreement is not paid when due, Royal Gold will pay to the Secured Party, immediately on demand,
interest on such amount from the date due until paid, at a nominal annual rate equal at all times
to the rate then outstanding under the Credit Agreement. All amounts payable by Royal Gold to the
Secured Party under this Agreement, and all interest on all such amounts, compounded monthly on the
last Business Day of each month, will form part of the Secured Obligations.

     23. No Waiver; Cumulative Rights. No failure on the part of the Secured Party or any
Lender to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise by the Secured Party or any Lender of
any right, remedy or power hereunder preclude any other or future exercise of any other right,
remedy or power. Each and every right, remedy and power hereby granted to the Secured Party (for
its own benefit and for the benefit of the Lenders) or allowed it by law or other agreement shall
be cumulative and not exclusive of any other and may be exercised by the Secured Party from time to
time.

     24. Governing Law. This Agreement and the rights and obligations of the parties
hereunder, shall be governed by, and construed in accordance with the laws of the Province of
British Columbia, Canada and the federal laws of Canada applicable therein, except to the extent
that the validity or perfection of the pledge and security interest hereunder, or any rights or
remedies hereunder, in respect of any particular collateral, is governed by the laws of a
jurisdiction other than the Province of British Columbia.

     25. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall together constitute
one and the same agreement. Each of the parties to this Agreement will be entitled to rely upon
delivery by facsimile or other electronic transmission of an
executed copy of this Agreement and acceptance of such facsimile copy or a copy otherwise
electronically transmitted will be legally effective to create a valid and binding agreement
between the parties in accordance with the terms hereof.

     26. Severability. If any one or more provisions of this Agreement should be declared
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected, impaired or prejudiced
thereby.

[ REMAINDER OF THIS PAGE INTENTIONALLY BLANK ]

14

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date
first above written.

	 	 	 	 	 
	 	

ROYAL GOLD:

ROYAL GOLD, INC.,

a Delaware corporation

 	 
	 	By:  	/s/
Stefan Wenger 	 
	 	 	Name:  	Stefan Wenger 	 
	 	 	Title:  	Chief
Financial Officer and Treasurer	 
	 
	 	SECURED PARTY:

HSBC BANK USA, NATIONAL
 ASSOCIATION, as
administrative agent for the
 Lenders
 	 
	 
	 	By:  	/s/
William Edge
	 
	 	 	Name:  	William Edge	 
	 	 	Title:  	Managing
Director	 
	 

Signature Page to Pledge, Security and Subordination Agreement

 

 

SCHEDULE 1

DESCRIPTION OF PLEDGED SHARES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	percentage of
	 	 	 	 	 	 	 	 	 	 	 	 	shares outstanding
	issuer	 	class	 	certificate number	 	number of shares	 	owned by royal gold
	RGLD Gold Canada,
Inc.

	 	Common
	 	 	1	 	 	 	28,500	 	 	 	100	%

Schedule 1

 

 

SCHEDULE 2

Subordinated Party

Royal Gold, Inc.

Existing Subordinated Debt

U.S. Fifty — Seven Million ($57,000,000.00) owing by RGLD Gold Canada, Inc. pursuant to the Loan
Agreement dated as of August 18, 2008, as amended by the Amending Agreement dated as of September
30, 2009 between Royal Gold, Inc., as Lender and RGLD Gold Canada, Inc, as Borrower.

Schedule 2

 

 

Execution Version

SCHEDULE 3

Acknowledgment, Consent and Undertaking of

RGLD Gold Canada, Inc.

TO: HSBC Bank USA, National Association, as administrative agent

     In consideration of the payment to the undersigned, RGLD Gold Canada, Inc. (the
“Company”), of the sum of $10 and for other good and valuable consideration by the Secured
Party (the receipt and sufficiency of which is acknowledged), the Company hereby:

     (a) acknowledges receipt of a copy of the Pledge, Security and Subordination Agreement dated
as of January 20, 2010 between Royal Gold, Inc., a corporation organized and existing under the
laws of Delaware in favor of HSBC Bank USA National Association, a national banking association
organized under the laws of the United States, in its capacity as administrative agent for the
Lenders (the “Secured Party”).;

     (b) covenants and agrees with the Secured Party (i) to be bound by the terms of the Agreement
and to comply with the terms thereof insofar as such terms are applicable to it; (ii) to take all
necessary actions, undertakings and proceedings as may be required of it to ensure that the Secured
Party obtains the benefit of Sections 2(b), 4(m), 4(n), 4(o), 5(a), 6 and 8; (iii) to maintain its
separate corporate existence and not to merge or consolidate with any Person; and (iv) not to sell,
assign or alienate any of its assets or create or permit to exist any Lien over any of its assets;
and

     (c) at the request of the Secured Party, agrees to execute such documents and instruments and
shall do all such further acts and things as may be reasonably necessary or desirable by the
Secured Party to carry out the intent of the Agreement.

     Capitalized terms not otherwise defined herein shall have the meanings set forth in the Loan
Agreement (as defined in the Agreement).

     Executed and Delivered by the Company on January 20, 2010.

	 	 	 	 	 
	 	RGLD Gold Canada, Inc.

 	 
	 	By:  	/s/ Stefan Wenger	 
	 	 	Name:  	Stefan Wenger	 
	 	 	Title:  	Vice President and Treasurer	 
	 

Schedule 3exv10w3

Exhibit 10.3

Execution Version

GENERAL SECURITY AGREEMENT

This General Security Agreement is made as of January 20, 2010.

	TO: 	 	Name: HSBC Bank USA, National Association

Address: 452 Fifth Avenue, New York, New York 10018

Attention: Mr. Bill Edge

Facsimile: (212) 525-6581

E-mail: bill.edge@us.hsbc.com

RECITALS:

A. RGLD GOLD CANADA, INC., a corporation incorporated and existing under the laws of British
Columbia (the “Debtor”) is, or may become, indebted and liable to HSBC BANK USA, NATIONAL
ASSOCIATION, a national banking association organized under the laws of the United States, as
administrative agent (the “Agent”) pursuant to the terms of that certain Term Loan Facility
Agreement, dated as of January 20, 2010 by and among ROYAL GOLD, INC., a corporation organized and
existing under the laws of the State of Delaware, as a borrower (“Royal Gold”), ROYAL GOLD
CHILE LIMITADA, a Chilean limited liability company, as a guarantor, HIGH DESERT MINERAL RESOURCES,
INC., a corporation organized and existing under the laws of Delaware, as a guarantor, those
additional guarantors from time to time party thereto, as guarantors, the Agent, as a lender, and
those banks and financial institutions identified as a “Lender” on the signature pages hereto and
such other banks or financial institutions as may from time to time become parties to this
Agreement, as lenders (the “Additional Lenders”) (with each of the Agent (in its capacity
as a lender) and the Additional Lenders individually referred to therein as a “Lender” and
collectively the “Lenders”), the Agent, as administrative agent for the Lenders hereunder,
HSBC SECURITIES (USA) Inc., a corporation organized under the laws of the United States, as the
sole lead arranger (as amended, modified, extended, renewed, replaced, restated, supplemented or
refinanced from time to time and including any agreement extending the maturity of, refinancing or
restructuring all or any portion of, the indebtedness under such agreement or any successor
agreements, whether or not with the same Agent, the “Credit Agreement”) or otherwise.

B. To secure the payment and performance of the Secured Liabilities, the Debtor has agreed to grant
to the Agent (for its own benefit and for the benefit of the other Lenders) the Security Interests
in respect of the Collateral in accordance with the terms of this Agreement.

     For good and valuable consideration, the receipt and adequacy of which are acknowledged by the
Debtor, the Debtor agrees with and in favour of the Agent (for its own benefit and for the benefit
of the other Lenders) as follows:

1. Definitions. In this Agreement capitalized terms used but not otherwise defined in this
Agreement shall have the meanings given to them in the Credit Agreement, and the following terms
have the following meanings:

General Security Agreement

 

 

“Accessions”, “Account”, “Chattel Paper”, “Certificated Security”,
“Consumer Goods”, “Document of Title”, “Equipment”, “Futures
Account”, “Futures Contract”, “Futures Intermediary”, “Goods”,
“Instrument”, “Intangible”, “Inventory”, “Investment Property”,
“Money”, “Proceeds”, “Securities Account”, “Securities
Intermediary”, “Security”, “Security Certificate”, “Security
Entitlement”, and “Uncertificated Security” have the meanings given to them in the
PPSA.

“Agent” means HSBC BANK USA, National Association, in its capacity as administrative agent
for the lenders under the Credit Agreement, or any successor administrative agent appointed
pursuant to the Credit Agreement..

“Agreement” means this agreement, including the schedules and recitals to this
agreement, as it or they may be amended, supplemented, restated or replaced from time to time, and
the expressions “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer
to this Agreement and not to any particular section or other portion of this Agreement.

“Books and Records” means all books, records, files, papers, disks, documents and other
repositories of data recording in any form or medium, evidencing or relating to the Personal
Property of the Debtor which are at any time owned by the Debtor or to which the Debtor (or any
Person on the Debtor’s behalf) has access.

“Credit Agreement” has the meaning set out in the recitals hereto.

“Collateral” means all of the present and future:

	 	(a)	 	undertaking;
	 
	 	(b)	 	Personal Property (including any Personal Property that may be described in any
schedule to this Agreement or any schedules, documents or listings that the Debtor may
from time to time provide to the Agent in connection with this Agreement); and
	 
	 	(c)	 	real property (including any real property that may be described in any
schedule to this Agreement or any schedules, documents or listings that the Debtor may
from time to time provide to the Agent in connection with this Agreement and including
all fixtures, improvements, buildings and other structures placed, installed or erected
from time to time on any such real property)

of the Debtor (including Books and Records, Contracts, Intellectual Property Rights and Permits),
including all such property in which the Debtor now or in the future has any right, title or
interest whatsoever, whether owned, leased, licensed, possessed or otherwise held by the Debtor,
and all Proceeds thereof, wherever located.

“Contracts” means all contracts and agreements to which the Debtor is at any time a party
or pursuant to which the Debtor has at any time acquired rights, and includes (i) all rights of the
Debtor to receive money due and to become due to it in connection with a contract or agreement,
(ii) all rights of the Debtor to damages arising out of, or for breach or default in respect of, a

General Security Agreement

-2-

 

contract or agreement, and (iii) all rights of the Debtor to perform and exercise all remedies in
connection with a contract or agreement.

“Control” means, in respect of a particular Person, the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of such Person, whether
through the ability to exercise voting power, by contract or otherwise. “Controlled” has
meanings correlative thereto.

“Debtor” has the meaning set out in the recitals hereto.

“Event of Default” means any “Event of Default” as defined in the Credit Agreement.

“Intellectual Property Rights” means all industrial and intellectual property rights of the
Debtor or in which the Debtor has any right, title or interest, including copyrights, patents,
inventions (whether or not patented), trade-marks, get-up and trade dress, industrial designs,
integrated circuit topographies, plant breeders’ rights, know how and trade secrets, registrations
and applications for registration for any such industrial and intellectual property rights, and all
Contracts related to any such industrial and intellectual property rights.

“Issuer” has the meaning given to that term in the STA.

“Laws” means all federal, provincial, municipal, foreign and international statutes, acts,
codes, ordinances, decrees, treaties, rules, regulations, municipal by-laws, judicial or arbitral
or administrative or ministerial or departmental or regulatory judgments, orders, decisions,
rulings or awards or any provisions of the foregoing, including general principles of common and
civil law and equity, and all policies, practices and guidelines of any Governmental Authority
binding on or affecting the Person referred to in the context in which such word is used
(including, in the case of tax matters, any accepted practice or application or official
interpretation of any relevant taxation authority); and “Law” means any one or more of the
foregoing.

“Lender” and “Lenders” have the meaning set out in the recitals hereto.

“Organizational Documents” means, with respect to any Person, such Person’s articles
or other charter documents, by-laws, unanimous shareholder agreement, partnership agreement or
trust agreement, as applicable, and any and all other similar agreements, documents and instruments
relative to such Person.

“Permits” means all permits, licences, waivers, exemptions, consents, certificates,
authorizations, approvals, franchises, rights-of-way, easements and entitlements that the Debtor
has, requires or is required to have, to own, possess or operate any of its property or to operate
and carry on any part of its business.

“Permitted Liens” means the Security Interests and all other Liens permitted in writing by
the Agent.

“Person” includes any natural person, corporation, company, limited liability company,
unlimited liability company, trust, joint venture, association, incorporated organization,
partnership, Governmental Authority or other entity.

General Security Agreement

-3-

 

“Personal Property” means personal property and includes Accounts, Chattel Paper, Documents
of Title, Equipment, Goods, Instruments, Intangibles, Inventory, Investment Property, Money and
rights in respect of Contracts and Royalty Agreements.

“Pledged Certificated Securities” means any and all Collateral that is a Certificated
Security.

“Pledged Futures Contracts” means any and all Collateral that is a Futures Contract.

“Pledged Futures Accounts” means any and all Collateral that is a Futures Account.

“Pledged Futures Intermediary” means, at any time, any Person which is at such time a
Futures Intermediary at which a Pledged Futures Account is maintained.

“Pledged Futures Intermediary’s Jurisdiction” means, with respect to any Pledged Futures
Intermediary, its jurisdiction as determined under section 7.1(4) of the PPSA.

“Pledged Issuer” means, at any time, any Person which is at such time an Issuer with
respect to any Pledged Securities or Pledged Security Entitlements.

“Pledged Issuer’s Jurisdiction” means, with respect to any Pledged Issuer, its jurisdiction
as determined under section 44 of the STA.

“Pledged Security Certificates” means any and all Security Certificates representing the
Pledged Certificated Securities.

“Pledged Securities” means any and all Collateral that is a Security.

“Pledged Securities Accounts” means any and all Collateral that is a Securities Account.

“Pledged Securities Intermediary” means, at any time, any Person which is at such time is a
Securities Intermediary at which a Pledged Securities Account is maintained.

“Pledged Securities Intermediary’s Jurisdiction” means, with respect to any Securities
Intermediary, its jurisdiction as determined under section 45(2) of the STA.

“Pledged Security Entitlements” means any and all Collateral that is a Security
Entitlement.

“Pledged Uncertificated Securities” means any and all Collateral that is an Uncertificated
Security.

“PPSA” means the Personal Property Security Act of the Province referred to in the
“Governing Law” section of this Agreement, as such legislation may be amended, renamed or replaced
from time to time, and includes all regulations from time to time made under such legislation.

“Receiver” means a receiver, a manager or a receiver and manager.

“Release Date” means the earlier of (i) the date on which all the Secured Liabilities have
been indefeasibly paid and discharged in full and no Lender has any further obligations to the
Debtor under the Credit Documents pursuant to which further Secured Liabilities might arise; and
(ii)

General Security Agreement

-4-

 

the date this Agreement is released by the Agent pursuant to Section 4.5 of the Credit Agreement.

“Secured Liabilities” means all present and future indebtedness, liabilities and
obligations of any and every kind, nature and description (whether direct or indirect, joint or
several, absolute or contingent, matured or unmatured) of the Debtor to the Lenders (or any of
them) under, in connection with or with respect to the Credit Agreement and any Credit Document,
and any unpaid balance thereof.

“Security Interests” means the Liens created by the Debtor in favour of the Agent (for its
own benefit and for the benefit of the other Lenders) under this Agreement.

“STA” means the Securities Transfer Act of the Province referred to in the “Governing Law”
section of this Agreement, as such legislation may be amended, renamed or replaced from time to
time, and includes all regulations from time to time made under such legislation.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
other Person (a) of which securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than
50% of the general partnership interests are, as of such date, owned, controlled or held, or (b)
that is, as of such date, otherwise Controlled, by the parent or one or more Subsidiaries of the
parent or by the parent and one or more Subsidiaries of the parent.

“ULC” means an Issuer that is an unlimited company or unlimited liability company.

“ULC Laws” means the Companies Act (Nova Scotia), the Business Corporations Act (Alberta),
the Business Corporations Act (British Columbia), and any other present or future Laws governing
ULCs.

“ULC Shares” means shares or other equity interests in the capital stock of a ULC.

2. Grant of Security Interests. As general and continuing collateral security for the due
payment and performance of the Secured Liabilities, the Debtor pledges, mortgages, charges and
assigns (by way of security) to the Agent (for its own benefit and for the benefit of the other
Lenders), and grants to the Agent (for its own benefit and for the benefit of the other Lenders) a
security interest in, the Collateral.

3. Limitations on Grant of Security Interests. If the grant of the Security Interests in
respect of any Contract, Intellectual Property Right or Permit under Section 2 would result in the
termination or breach of such Contract, Intellectual Property Right or Permit or is otherwise
prohibited or ineffective (whether by the terms thereof or under applicable Law), then such
Contract, Intellectual Property Right or Permit will not be subject to the Security Interests but
will be held in trust by the Debtor for the benefit of the Agent (for its own benefit and for the
benefit of the other Lenders)and, on the exercise by the Agent of any of its rights or remedies
under this Agreement following an Event of Default will be assigned by the Debtor as directed by
the Agent; provided that: (a) the Security Interests shall attach to such Contract, Intellectual
Property Right or Permit, or applicable portion thereof, immediately at such time as the condition
causing such termination or breach is remedied, and (b) if a term in a Contract that prohibits or

General Security Agreement

-5-

 

restricts the grant of the Security Interests in the whole of an Account or Chattel Paper forming
part of the Collateral is unenforceable against the Agent under applicable Law, then the exclusion
from the Security Interests set out above shall not apply to such Account or Chattel Paper. In
addition, the Security Interests do not attach to Consumer Goods or extend to the last day of the
term of any lease or agreement for lease of real property. Such last day will be held by the
Debtor in trust for the Agent (for its own benefit and for the benefit of the other Lenders) and,
on the exercise by the Agent of any of its rights or remedies under this Agreement following an
Event of Default, will be assigned by the Debtor as directed by the Agent. For greater certainty,
no Intellectual Property Right in any trade-mark, get-up or trade dress is presently assigned to
the Agent by sole virtue of the grant of the Security Interests contained in Section 2.

4. Attachment; No Obligation to Advance. The Debtor confirms that value has been given by
the Lenders to the Debtor, that the Debtor has rights in the Collateral existing at the date of
this Agreement and that the Debtor and the Agent have not agreed to postpone the time for
attachment of the Security Interests to any of the Collateral. The Security Interests will have
effect and be deemed to be effective whether or not the Secured Liabilities or any part thereof are
owing or in existence before or after or upon the date of this Agreement. Neither the execution
and delivery of this Agreement nor the provision of any financial accommodation by any Lender shall
oblige any Lender to make any financial accommodation or further financial accommodation available
to the Debtor or any other Person, except as expressly provided by the Credit Agreement.

5. Representations and Warranties. The Debtor represents and warrants to the Agent (for
its own benefit and for the benefit of the other Lenders) that, as of the date of this Agreement:

	 	(a)	 	Debtor Information. All of the information set out in Schedule A is
accurate and complete.
	 
	 	(b)	 	Title; No Other Security Interests. Except for Permitted Liens, the
Debtor owns (or, with respect to any leased or licensed property forming part of the
Collateral, holds a valid leasehold or licensed interest in) the Collateral free and
clear of any Liens. The Debtor is the record and beneficial owner of all Collateral
that is Investment Property. No security agreement, financing statement or other
notice with respect to any or all of the Collateral is on file or on record in any
public office, except for filings with respect to Permitted Liens.
	 
	 	(c)	 	Royalty Agreements. Except for Permitted Liens, the Debtor holds each
of the Royalty Agreements of the Debtor free and clear of any and all claims, rights,
entitlements, Liens or other encumbrances. Each of the Royalty Agreements of the Debtor
remain in full force and affect, and have not been assigned, modified, waived,
terminated, or otherwise altered except as disclosed to the Agent in writing.

	 	(d)	 	Amount of Accounts. The amount represented by the Debtor to the Agent
from time to time as owing by each account debtor or by all account debtors in respect
of its Accounts will at such time be the correct amount so owing by such account debtor
or debtors and, unless disclosed in writing by the Debtor to the Agent at

General Security Agreement

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	 	 	 	that time, will be owed free of any dispute, set-off or counterclaim. Except as
disclosed in writing by the Debtor to the Agent, neither the Debtor nor (to the best
of the Debtor’s knowledge) any other party to any Account of the Debtor or Contract
is in default or is likely to become in default in the performance or observance of
any of the terms of such Account or Contract where such default is or could
reasonably be expected to be materially adverse to the Debtor or the Agent.

	 	(e)	 	Consents. Except for any consent that has been obtained and is in full
force and effect, no consent of any Person (including any counterparty in respect of
any Contract or Royalty Agreement, any account debtor in respect of any Account, or any
Governmental Authority in respect of any Permit) is required, or is purported to be
required, for the execution, delivery, performance and enforcement of this Agreement
(this representation being given without reference to the exclusions contained in
Section 3). For the purposes of complying with any transfer restrictions contained in
the Organizational Documents of any Pledged Issuer, the Debtor hereby irrevocably
consents to any transfer of the Pledged Securities of such Pledged Issuer.
	 
	 	(f)	 	Execution and Delivery. This Agreement has been duly authorized,
executed and delivered by the Debtor and is a valid and binding obligation of the
Debtor enforceable against the Debtor in accordance with its terms, subject only to
bankruptcy, insolvency, liquidation, reorganization, moratorium and other similar Laws
generally affecting the enforcement of creditors’ rights, and to the fact that
equitable remedies (such as specific performance and injunction) are discretionary
remedies.
	 
	 	(g)	 	No Consumer Goods. The Debtor does not own any Consumer Goods which
are material in value or which are material to the business, operations, property,
condition or prospects (financial or otherwise) of the Debtor.
	 
	 	(h)	 	Intellectual Property Rights. All registrations and applications for
registration pertaining to any Intellectual Property Rights, all other material
Intellectual Property Rights, and the nature of the Debtor’s right title or interest
therein, are described in Schedule A to this Agreement. Each Intellectual Property
Right is valid, subsisting, unexpired, enforceable, and has not been abandoned. In the
case of copyright works, the Debtor has obtained full and irrevocable waivers of all
moral rights or similar rights pertaining to such works. Except as set out in Schedule
A to this Agreement, none of the Intellectual Property Rights have been licensed or
franchised by the Debtor to any Person or, to the best of the Debtor’s knowledge,
infringed or otherwise misused by any Person. Except as set out in Schedule A to this
Agreement, the exercise of any Intellectual Property Right, or any licensee or
franchisee thereof, has not infringed or otherwise misused any intellectual property
right of any other Person, and the Debtor has not received and is not aware of any
claim of such infringement or other misuse.

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	 	(i)	 	Partnerships, Limited Liability Companies. The terms of any interest
in a partnership or limited liability company that is Collateral expressly provide that
such interest is a “security” for the purposes of the STA.
	 
	 	(j)	 	Due Authorization. The Pledged Securities have been duly authorized
and validly issued and are fully paid and non-assessable.
	 
	 	(k)	 	Pledged Securities. The Pledged Securities make up 100% of the
Debtor’s ownership in each Pledged Issuer.
	 
	 	(l)	 	Warrants, Options, etc. There are no outstanding warrants, options or
other rights to purchase, or other agreements outstanding with respect to, or property
that is now or hereafter convertible into, or that requires the issuance or sale of,
any Pledged Securities.
	 
	 	(m)	 	No Required Disposition. There is no existing agreement, option, right
or privilege capable of becoming an agreement or option pursuant to which the Debtor
would be required to sell or otherwise dispose of any Pledged Securities or under which
any Pledged Issuer thereof has any obligation to issue any Securities of such Pledged
Issuer to any Person.

6. Survival of Representations and Warranties. All representations and warranties made by
the Debtor in this Agreement (a) are material, (b) will be considered to have been relied on by the
Lenders, and (c) will survive the execution and delivery of this Agreement or any investigation
made at any time by or on behalf of the Lenders and any disposition or payment of the Secured
Liabilities until the Release Date.

7. Covenants. The Debtor covenants and agrees with the Agent (for its own benefit and for
the benefit of the other Lenders) that:

	 	(a)	 	Further Documentation. The Debtor will from time to time, at the
expense of the Debtor, promptly and duly authorize, execute and deliver such further
instruments and documents, and take such further action, as the Agent may request for
the purpose of obtaining or preserving the full benefits of, and the rights and powers
granted by, this Agreement (including the filing of any financing statements or
financing change statements under any applicable legislation with respect to the
Security Interests). The Debtor acknowledges that this Agreement has been prepared
based on the existing Laws in the Province referred to in the “Governing Law” section
of this Agreement and that a change in such Laws, or the Laws of other jurisdictions,
may require the execution and delivery of different forms of security documentation.
Accordingly, the Debtor agrees that the Agent will have the right to require that this
Agreement be amended, supplemented, restated or replaced, and that the Debtor will
immediately on request by the Agent authorize, execute and deliver any such amendment,
supplement, restatement or replacement (i) to reflect any changes in such Laws, whether
arising as a result of statutory amendments, court decisions or otherwise, (ii) to
facilitate the creation and registration of appropriate security in all appropriate
jurisdictions, or (iii) if the

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	 	 	 	Debtor merges or amalgamates with any other Person or enters into any corporate
reorganization, in each case in order to confer on the Agent Liens similar to, and
having the same effect as, the Security Interests.

	 	(b)	 	Maintenance of Records. The Debtor will keep and maintain accurate and
complete records of the Collateral, including a record of all payments received and all
credits granted with respect to the Accounts and Contracts. At the written reasonable
request of the Agent, the Debtor will mark any Collateral specified by the Agent to
evidence the existence of the Security Interests.
	 
	 	(c)	 	Right of Inspection. The Agent may, at all times during normal
business hours, without charge, examine and make copies of all Books and Records, and
may discuss the affairs, finances and accounts of the Debtor with its officers and
accountants. The Agent may also, without charge, enter the premises of the Debtor
where any of the Collateral is located for the purpose of inspecting the Collateral,
observing its use or otherwise protecting its interests in the Collateral. The Debtor,
at its expense, will provide the Agent with such clerical and other assistance as may
be reasonably requested by the Agent to exercise any of its rights under this
paragraph.
	 
	 	(d)	 	Limitations on Modifications, Waivers, Extensions. Other than as not
prohibited by paragraph (e) below, the Debtor will not (i) amend, modify, terminate,
permit to expire or waive any provision of any Permit, Contract or any document giving
rise to an Account in any manner which is or could reasonably be expected to be
materially adverse to the Debtor or any of the Lenders, or (ii) fail to exercise
promptly and diligently its rights under each Contract and each document giving rise to
an Account if such failure is or could reasonably be expected to be materially adverse
to the Debtor or any of the Lenders.
	 
	 	(e)	 	Limitations on Discounts, Compromises, Extensions of Accounts. Other
than in the ordinary course of business of the Debtor consistent with previous
practices, the Debtor will not (i) grant any extension of the time for payment of any
Account, (ii) compromise, compound or settle any Account for less than its full amount,
(iii) release, wholly or partially, any Person liable for the payment of any Account,
or (iv) allow any credit or discount of any Account.
	 
	 	(f)	 	Maintenance of Collateral. The Debtor will maintain all tangible
Collateral in good operating condition, ordinary wear and tear excepted, and the Debtor
will provide all maintenance, service and repairs necessary for such purpose. The
Debtor shall maintain in good standing all registrations and applications with respect
to the Intellectual Property Rights except to the extent that any failure to do so
could not reasonably be expected to be materially adverse to the Debtor or the Agent.
	 
	 	(g)	 	Further Identification of Collateral. The Debtor will promptly furnish
to the Agent such statements and schedules further identifying and describing the
Collateral, and such other reports in connection with the Collateral, as the Agent

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	 	 	 	may from time to time reasonably request, including an updated list of any motor
vehicle or other “serial number” good with an individual book value of $100,000 or
more owned by the Debtor and classified as Equipment, including vehicle
identification numbers.

	 	(h)	 	Amalgamation, Merger or Consolidation. The Debtor will not permit any
Pledged Issuer to amalgamate, merge or consolidate unless all of the outstanding
capital stock of the surviving or resulting corporation is, upon such amalgamation,
merger or consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent corporation.
	 
	 	(i)	 	Agreements re Intellectual Property Rights. Promptly upon request from
time to time by the Agent, the Debtor will authorize, execute and deliver any and all
agreements, instruments, documents and papers that the Agent may request to evidence
the Security Interests in any Intellectual Property Rights and, where applicable, the
goodwill of the business of the Debtor connected with the use of, and symbolized by,
any such Intellectual Property Rights.
	 
	 	(j)	 	Instruments; Documents of Title; Chattel Paper. Promptly upon request
from time to time by the Agent, the Debtor will deliver to the Agent, endorsed and/or
accompanied by such instruments of assignment and transfer in such form and substance
as the Agent may reasonably request, any and all Instruments, Documents of Title and
Chattel Paper included in or relating to the Collateral as the Agent may specify in its
request.
	 
	 	(k)	 	Pledged Certificated Securities. The Debtor will deliver to the Agent
any and all Pledged Security Certificates and other materials as may be required from
time to time to provide the Agent with control over all Pledged Certificated Securities
in the manner provided under section 23 of the STA. At the request of the Agent, the
Debtor will cause all Pledged Security Certificates to be registered in the name of the
Agent or its nominee.
	 
	 	(l)	 	Pledged Uncertificated Securities. The Debtor will deliver to the
Agent any and all such documents, agreements and other materials as may be required
from time to time to provide the Agent with control over all Pledged Uncertificated
Securities in the manner provided under section 24 of the STA.
	 
	 	(m)	 	Pledged Security Entitlements. The Debtor will deliver to the Agent
any and all such documents, agreements and other materials as may be required from time
to time to provide the Agent with control over all Pledged Security Entitlements in the
manner provided under section 25 or 26 of the STA.
	 
	 	(n)	 	Pledged Futures Contracts. The Debtor will deliver to the Agent any
and all such documents, agreements and other materials as may be required from time to
time to provide the Agent with control over all Pledged Futures Contracts in the manner
provided under subsection 1(2) of the PPSA.

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	 	(o)	 	Partnerships, Limited Liability Companies. The Debtor will ensure that
the terms of any interest in a partnership or limited liability company that is
Collateral will expressly provide that such interest is a “security” for the purposes
of the STA.
	 
	 	(p)	 	Transfer Restrictions. If the constating documents of any Pledged
Issuer (other than a ULC) restrict the transfer of the Securities of such Pledged
Issuer, then the Debtor will deliver to the Agent a certified copy of a resolution of
the directors, shareholders, unitholders or partners of such Pledged Issuer, as
applicable, consenting to the transfer(s) contemplated by this Agreement, including any
prospective transfer of the Collateral by the Agent upon a realization on the Security
Interests.
	 
	 	(q)	 	Notices. The Debtor will advise the Agent promptly, in reasonable
detail, of any:

	 	(i)	 	change to a Pledged Securities Intermediary’s Jurisdiction,
Pledged Issuer’s Jurisdiction, or Pledged Future Intermediary’s Jurisdiction;
	 
	 	(ii)	 	change in the location of the jurisdiction of incorporation or
amalgamation, chief executive office or domicile of the Debtor;
	 
	 	(iii)	 	change in the name of the Debtor;
	 
	 	(iv)	 	merger, consolidation or amalgamation of the Debtor with any
other Person;
	 
	 	(v)	 	additional jurisdiction in which the Debtor carries on business
or has tangible Personal Property;
	 
	 	(vi)	 	additional jurisdiction in which material account debtors of
the Debtor are located;
	 
	 	(vii)	 	acquisition of any right, title or interest in real property
by the Debtor;
	 
	 	(viii)	 	acquisition of any Investment Property by the Debtor;
	 
	 	(ix)	 	acquisition of any Intellectual Property Rights which are the
subject of a registration or application with any governmental intellectual
property or other governing body or registry, or which are material to the
Debtor’s business;
	 
	 	(x)	 	acquisition of any Instrument, Document of Title or Chattel
Paper;
	 
	 	(xi)	 	acquisition, amendment, or termination of or entry into any
Royalty Agreement;
	 
	 	(xii)	 	creation or acquisition of any Subsidiary of the Debtor;

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	 	(xiii)	 	Lien (other than Permitted Liens) on, or claim asserted against, any of the
Collateral; or
	 
	 	(xiv)	 	occurrence of any event, claim or occurrence that could
reasonably be expected to have a material adverse effect on the value of the
Collateral or on the Security Interests.
	 
	 	The Debtor will not effect or permit any of the changes referred to in clauses (ii)
through (ix) above unless all filings have been made and all other actions taken
that are required in order for the Agent to continue at all times following such
change to have a valid and perfected first priority Security Interest in respect of
all of the Collateral.

8. Voting Rights. Unless an Event of Default has occurred and is continuing, the Debtor
will be entitled to exercise all voting power from time to time exercisable in respect of the
Pledged Securities and Pledged Security Entitlements and give consents, waivers and ratifications
in respect thereof; provided, however, that no vote will be cast or consent, waiver or ratification
given or action taken which would be, or would have a reasonably likelihood of being, prejudicial
to the interests of the Lenders or which would have the effect of reducing the value of the
Collateral as security for the Secured Liabilities or imposing any restriction on the
transferability of any of the Collateral. Unless an Event of Default has occurred and is
continuing the Agent shall, from time to time at the request and expense of the Debtor, execute or
cause to be executed, in respect of all Pledged Securities that are registered in the name of the
Agent or its nominee, valid proxies appointing the Debtor as its (or its nominee’s) proxy to
attend, vote and act for and on behalf of the Agent or such nominee, as the case may be, at any and
all meetings of the applicable Pledged Issuer’s shareholders or debt holders, all Pledged
Securities that are registered in the name of the Agent or such nominee, as the case may be, and to
execute and deliver, consent to or approve or disapprove of or withhold consent to any resolutions
in writing of shareholders or debt holders of the applicable Pledged Issuer for and on behalf of
the Agent or such nominee, as the case may be. Immediately upon the occurrence and during the
continuance of any Event of Default, all such rights of the Debtor to vote and give consents,
waivers and ratifications will cease and the Agent or its nominee will be entitled to exercise all
such voting rights and to give all such consents, waivers and ratifications.

9. Dividends; Interest. Unless an Event of Default has occurred and is continuing, the
Debtor will be entitled to receive any and all cash dividends, interest, principal payments and
other forms of cash distribution on the Pledged Securities or Pledged Security Entitlements which
it is otherwise entitled to receive, but any and all stock and/or liquidating dividends,
distributions of property, returns of capital or other distributions made on or in respect of the
Pledged Securities or Pledged Security Entitlements, whether resulting from a subdivision,
combination or reclassification of the outstanding capital stock of any Pledged Issuer or received
in exchange for the Pledged Securities, Pledged Security Entitlements or any part thereof or as a
result of any amalgamation, merger, consolidation, acquisition or other exchange of property to
which any Pledged Issuer may be a party or otherwise, and any and all cash and other property
received in exchange for any Pledged Securities or Pledged Security Entitlements will be and become
part of the Collateral subject to the Security Interests and, if received by the Debtor, will
forthwith be delivered to the Agent or its nominee (accompanied, if appropriate, by proper

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instruments of assignment and/or stock powers of attorney executed by the Debtor in accordance with
the Agent’s instructions) to be held subject to the terms of this Agreement; and if any of the
Pledged Security Certificates have been registered in the name of the Agent or its nominee, the
Agent will execute and deliver (or cause to be executed and delivered) to the Debtor all such
dividend orders and other instruments as the Debtor may request for the purpose of enabling the
Debtor to receive the dividends, distributions or other payments which the Debtor is authorized to
receive and retain pursuant to this Section. If an Event of Default has occurred and is
continuing, all rights of the Debtor pursuant to this Section will cease and the Agent will have
the sole and exclusive right and authority to receive and retain the cash dividends, interest,
principal payments and other forms of cash distribution which the Debtor would otherwise be
authorized to retain pursuant to this Section. Any money and other property paid over to or
received by the Agent pursuant to the provisions of this Section will be retained by the Agent as
additional Collateral hereunder and be applied in accordance with the provisions of this Agreement.

10. Rights on Event of Default. If an Event of Default has occurred and is continuing,
then and in every such case the Security Interests shall become enforceable and the Agent, in
addition to any rights now or hereafter existing under applicable Law may, personally or by agent,
at such time or times as the Agent in its discretion may determine, do any one or more of the
following:

	 	(a)	 	Rights under PPSA, etc. Exercise all of the rights and remedies
granted to secured parties under the PPSA and any other applicable statute, or
otherwise available to the Agent by contract, at law or in equity.
	 
	 	(b)	 	Demand Possession. Demand possession of any or all of the Collateral,
in which event the Debtor will, at the expense of the Debtor, immediately cause the
Collateral designated by the Agent to be assembled and made available and/or delivered
to the Agent at any place designated by the Agent.
	 
	 	(c)	 	Take Possession. Enter on any premises where any Collateral is located
and take possession of, disable or remove such Collateral.
	 
	 	(d)	 	Deal with Collateral. Hold, store and keep idle, or operate, lease or
otherwise use or permit the use of, any or all of the Collateral for such time and on
such terms as the Agent may determine, and demand, collect and retain all earnings and
other sums due or to become due from any Person in respect of any of the Collateral.
	 
	 	(e)	 	Carry on Business. Carry on, or concur in the carrying on of, any or
all of the business or undertaking of the Debtor and enter on, occupy and use (without
charge by the Debtor) any of the premises, buildings, plant and undertaking of, or
occupied or used by, the Debtor.
	 
	 	(f)	 	Enforce Collateral. Seize, collect, receive, enforce or otherwise deal
with any Collateral in such manner, on such terms and conditions and at such times as
the Agent deems advisable.
	 
	 	(g)	 	Dispose of Collateral. Realize on any or all of the Collateral and
sell, lease, assign, give options to purchase, or otherwise dispose of and deliver any
or all of

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	 	 	 	the Collateral (or contract to do any of the above), in one or more parcels at any
public or private sale, at any exchange, broker’s board or office of the Agent or
elsewhere, with or without advertising or other formality, except as required by
applicable Law, on such terms and conditions as the Agent may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery.

	 	(h)	 	Court-Approved Disposition of Collateral. Obtain from any court of
competent jurisdiction an order for the sale or foreclosure of any or all of the
Collateral.
	 
	 	(i)	 	Purchase by Agent. At any public sale, and to the extent permitted by
Law on any private sale, bid for and purchase any or all of the Collateral offered for
sale and, upon compliance with the terms of such sale, hold, retain, sell or otherwise
dispose of such Collateral without any further accountability to the Debtor or any
other Person with respect to such holding, retention, sale or other disposition, except
as required by Law. In any such sale to the Agent, the Agent may, for the purpose of
making payment for all or any part of the Collateral so purchased, use any claim for
any or all of the Secured Liabilities then due and payable to it as a credit against
the purchase price.
	 
	 	(j)	 	Collect Accounts. Notify (whether in its own name or in the name of
the Debtor) the account debtors under any Accounts of the Debtor of the assignment of
such Accounts to the Agent and direct such account debtors to make payment of all
amounts due or to become due to the Debtor in respect of such Accounts directly to the
Agent and, upon such notification and at the expense of the Debtor, enforce collection
of any such Accounts, and adjust, settle or compromise the amount or payment of such
Accounts, in such manner and to such extent as the Agent deems appropriate in the
circumstances.
	 
	 	(k)	 	Transfer of Collateral. Transfer any Collateral that is Investment
Property into the name of the Agent or its nominee.
	 
	 	(l)	 	Voting. Vote any or all of the Pledged Securities (whether or not
transferred to the Agent or its nominee) and Pledged Security Entitlements and give or
withhold all consents, waivers and ratifications in respect thereof and otherwise act
with respect thereto as though it were the outright owner thereof.
	 
	 	(m)	 	Exercise Other Rights. Exercise any and all rights, privileges,
entitlements and options pertaining to any Collateral that is Investment Property as if
the Agent were the absolute owner of such Investment Property.
	 
	 	(n)	 	Dealing with Contracts and Permits. Deal with any and all Contracts and
Permits to the same extent as the Debtor might (including the enforcement,
realization, sale, assignment, transfer and requirement for continued performance), all
on such terms and conditions and at such time or times as may seem advisable to the
Agent.
	 
	 	(o)	 	Payment of Liabilities. Pay any liability secured by any Lien against
any Collateral. The Debtor will immediately on demand reimburse the Agent for all

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	 	 	 	such payments and, until paid, any such reimbursement obligation shall form part of
the Secured Liabilities and shall be secured by the Security Interests.

	 	(p)	 	Borrow and Grant Liens. Borrow money for the maintenance, preservation
or protection of any Collateral or for carrying on any of the business or undertaking
of the Debtor and grant Liens on any Collateral (in priority to the Security Interests
or otherwise) as security for the money so borrowed. The Debtor will immediately on
demand reimburse the Agent for all such borrowings and, until paid, any such
reimbursement obligations shall form part of the Secured Liabilities and shall be
secured by the Security Interests.
	 
	 	(q)	 	Appoint Receiver. Appoint by instrument in writing one or more
Receivers of the Debtor or any or all of the Collateral with such rights, powers and
authority (including any or all of the rights, powers and authority of the Agent under
this Agreement) as may be provided for in the instrument of appointment or any
supplemental instrument, and remove and replace any such Receiver from time to time.
To the extent permitted by applicable Law, any Receiver appointed by the Agent will
(for purposes relating to responsibility for the Receiver’s acts or omissions) be
considered to be the agent of the Debtor and not of the Agent.
	 
	 	(r)	 	Court-Appointed Receiver. Obtain from any court of competent
jurisdiction an order for the appointment of a Receiver of the Debtor or of any or all
of the Collateral.
	 
	 	(s)	 	Consultants. Require the Debtor to engage a consultant of the Agent’s
choice, or engage a consultant on its own behalf, such consultant to receive the full
cooperation and support of the Debtor and its agents and employees, including
unrestricted access to the premises of the Debtor and the Books and Records; all
reasonable fees and expenses of such consultant shall be for the account of the Debtor
and the Debtor hereby authorizes any such consultant to report directly to the Agent
and to disclose to the Agent any and all information obtained in the course of such
consultant’s employment.

The Agent may exercise any or all of the foregoing rights and remedies without demand of
performance or other demand, presentment, protest, advertisement or notice of any kind (except as
required by applicable Law) to or on the Debtor or any other Person, and the Debtor hereby waives
each such demand, presentment, protest, advertisement and notice to the extent permitted by
applicable Law. None of the above rights or remedies will be exclusive of or dependent on or merge
in any other right or remedy, and one or more of such rights and remedies may be exercised
independently or in combination from time to time. The Debtor acknowledges and agrees that any
action taken by the Agent hereunder following the occurrence and during the continuance of an Event
of Default shall not be rendered invalid or ineffective as a result of the curing of the Event of
Default on which such action was based.

11. Realization Standards. To the extent that applicable Law imposes duties on the Agent
to exercise remedies in a commercially reasonable manner and without prejudice to the ability of
the Agent to dispose of the Collateral in any such manner, the Debtor acknowledges and agrees

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that it is not commercially unreasonable for the Agent to (or not to) (a) incur expenses reasonably
deemed significant by the Agent to prepare the Collateral for disposition or otherwise to complete
raw material or work in process into finished goods or other finished products for disposition, (b)
fail to obtain third party consents for access to the Collateral to be disposed of, (c) fail to
exercise collection remedies against account debtors or other Persons obligated on the Collateral
or to remove Liens against the Collateral, (d) exercise collection remedies against account debtors
and other Persons obligated on the Collateral directly or through the use of collection agencies
and other collection specialists, (e) dispose of Collateral by way of public auction, public tender
or private contract, with or without advertising and without any other formality, (f) contact other
Persons, whether or not in the same business of the Debtor, for expressions of interest in
acquiring all or any portion of the Collateral, (g) hire one or more professional auctioneers to
assist in the disposition of the Collateral, whether or not the Collateral is of a specialized
nature or an upset or reserve bid or price is established, (h) dispose of the Collateral by
utilizing internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of
assets, (i) dispose of assets in wholesale rather than retail markets, (j) disclaim disposition
warranties, such as title, possession or quiet enjoyment, (k) purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or disposition of the Collateral
or to provide to the Agent a guaranteed return from the collection or disposition of the
Collateral, (l) the extent deemed appropriate by the Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral, (m) dispose of Collateral in whole or in part,
(n) to dispose of Collateral to a customer of the Agent, and (o) establish an upset or reserve bid
price in respect of Collateral.

12. Grant of Licence. For the purpose of enabling the Agent to exercise its rights and
remedies under this Agreement when the Agent is entitled to exercise such rights and remedies, and
for no other purpose, the Debtor grants to the Agent an irrevocable, non-exclusive licence
(exercisable without payment of royalty or other compensation to the Debtor) to use, assign or
sublicense any or all of the Intellectual Property Rights, including in such licence reasonable
access to all media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout of the same. For any trade-marks, get-up
and trade dress and other business indicia, such licence includes an obligation on the part of the
Agent to maintain the standards of quality maintained by the Debtor or, in the case of trade-marks,
get-up and trade dress or other business indicia licensed to the Debtor, the standards of quality
imposed upon the Debtor by the relevant licence. For copyright works, such licence shall include
the benefit of any waivers of moral rights and similar rights.

13. Securities Laws. The Agent is authorized, in connection with any offer or sale of any
Pledged Securities or Pledged Security Entitlements, to comply with any limitation or restriction
as it may be advised by counsel is necessary to comply with applicable Law, including compliance
with procedures that may restrict the number of prospective bidders and purchasers, requiring that
prospective bidders and purchasers have certain qualifications, and restricting prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing for their own
account or investment and not with a view to the distribution or resale of such Securities. In
addition to and without limiting Section 11, the Debtor further agrees that compliance with any
such limitation or restriction will not result in a sale being considered or

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deemed not to have been made in a commercially reasonable manner, and the Agent will not be liable
or accountable to the Debtor for any discount allowed by reason of the fact that such Pledged
Securities or Pledged Security Entitlements are sold in compliance with any such limitation or
restriction. If the Agent chooses to exercise its right to sell any or all Pledged Securities or
Pledged Security Entitlements, upon written request, the Debtor will cause each applicable Pledged
Issuer to furnish to the Agent all such information as the Agent may request in order to determine
the number of shares and other instruments included in the Collateral which may be sold by the
Agent in exempt transactions under any Laws governing securities, and the rules and regulations of
any applicable securities regulatory body thereunder, as the same are from time to time in effect.

14. ULC Shares. The Debtor acknowledges that certain of the Collateral may now or in the
future consist of ULC Shares, and that it is the intention of the Agent and the Debtor that neither
the Agent nor any other Lender should under any circumstances prior to realization thereon be held
to be a “member” or a “shareholder”, as applicable, of a ULC for the purposes of any ULC Laws.
Therefore, notwithstanding any provisions to the contrary contained in this Agreement, the Credit
Agreement or any other Loan Document, where the Debtor is the registered owner of ULC Shares which
are Collateral, the Debtor will remain the sole registered owner of such ULC Shares until such time
as such ULC Shares are effectively transferred into the name of the Agent, any other Lender, or any
other Person on the books and records of the applicable ULC. Accordingly, the Debtor shall be
entitled to receive and retain for its own account any dividend on or other distribution, if any,
in respect of such ULC Shares (except for any dividend or distribution comprised of Pledged
Security Certificates, which shall be delivered to the Agent to hold hereunder) and shall have the
right to vote such ULC Shares and to control the direction, management and policies of the
applicable ULC to the same extent as the Debtor would if such ULC Shares were not pledged to the
Agent pursuant hereto. Nothing in this Agreement, the Credit Agreement or any other Loan Document
is intended to, and nothing in this Agreement, the Credit Agreement or any other Loan Document
shall, constitute the Agent, any other Lender, or any other Person other than the Debtor, a member
or shareholder of a ULC for the purposes of any ULC Laws (whether listed or unlisted, registered or
beneficial), until such time as notice is given to the Debtor and further steps are taken pursuant
hereto or thereto so as to register the Agent, any other Lender, or such other Person, as specified
in such notice, as the holder of the ULC Shares. To the extent any provision hereof would have the
effect of constituting the Agent or any other Lender as a member or a shareholder, as applicable,
of any ULC prior to such time, such provision shall be severed herefrom and shall be ineffective
with respect to ULC Shares which are Collateral without otherwise invalidating or rendering
unenforceable this Agreement or invalidating or rendering unenforceable such provision insofar as
it relates to Collateral which is not ULC Shares. Except upon the exercise of rights of the Agent
to sell, transfer or otherwise dispose of ULC Shares in accordance with this Agreement, the Debtor
shall not cause or permit, or enable a Pledged Issuer that is a ULC to cause or permit, the Agent
or any other Lender to: (a) be registered as a shareholder or member of such Pledged Issuer; (b)
have any notation entered in their favour in the share register of such Pledged Issuer; (c) be held
out as shareholders or members of such Pledged Issuer; (d) receive, directly or indirectly, any
dividends, property or other distributions from such Pledged Issuer by reason of the Agent holding
the Security Interests over the ULC Shares; or (e) act as a shareholder of such Pledged Issuer, or
exercise any rights of a shareholder including the right to attend a meeting of shareholders of
such Pledged Issuer or to vote its ULC Shares.

General Security Agreement

- 17 -

 

15. Application of Proceeds. All Proceeds of Collateral received by the Agent or a
Receiver may be applied to discharge or satisfy any expenses (including the Receiver’s remuneration
and other expenses of enforcing the Agent’s rights under this Agreement), Liens on the Collateral
in favour of Persons other than the Agent, borrowings, taxes and other outgoings affecting the
Collateral or which are considered advisable by the Agent or the Receiver to protect, preserve,
repair, process, maintain or enhance the Collateral or prepare it for sale, lease or other
disposition, or to keep in good standing any Liens on the Collateral ranking in priority to any of
the Security Interests, or to sell, lease or otherwise dispose of the Collateral. The balance of
such Proceeds may, at the sole discretion of the Agent, be held as collateral security for the
Secured Liabilities or be applied to such of the Secured Liabilities (whether or not the same are
due and payable) in such manner and at such times as the Agent considers appropriate and thereafter
will be accounted for as required by Law.

16. Continuing Liability of Debtor. The Debtor will remain liable for any Secured
Liabilities that are outstanding following realization of all or any part of the Collateral and the
application of the Proceeds thereof.

17. Agent’s Appointment as Attorney-in-Fact. Effective upon the occurrence and during the
continuance of an Event of Default, the Debtor hereby irrevocably constitutes and appoints the
Agent and any officer or agent of the Agent, with full power of substitution, as the Debtor’s true
and lawful attorney-in-fact with full power and authority in the place of the Debtor and in the
name of the Debtor or in its own name, from time to time in the Agent’s discretion, to take any and
all appropriate action and to execute any and all documents and instruments as, in the opinion of
such attorney, may be necessary or desirable to accomplish the purposes of this Agreement. Without
limiting the effect of this Section, the Debtor grants the Agent an irrevocable proxy to vote the
Pledged Securities and Pledged Security Entitlements and to exercise all other rights, powers,
privileges and remedies to which a holder thereof would be entitled (including giving or
withholding written consents of shareholders, calling special meetings of shareholders and voting
at such meetings), which proxy shall be effective, automatically and without the necessity of any
action (including any transfer of any Pledged Securities or Pledged Security Entitlements on the
books and records of a Pledged Issuer or Pledged Securities Intermediary, as applicable), upon the
occurrence and continuance of an Event of Default. These powers are coupled with an interest and
are irrevocable until the Release Date. Nothing in this Section affects the right of the Agent as
secured party or any other Person on the Agent’s behalf, to sign and file or deliver (as
applicable) all such financing statements, financing change statements, notices, verification
statements and other documents relating to the Collateral and this Agreement as the Agent or such
other Person considers appropriate. The Debtor hereby ratifies and confirms, and agrees to ratify
and confirm, whatever lawful acts the Agent or any of the Agent’s sub-agents, nominees or attorneys
do or purport to do in exercise of the power of attorney granted to the Agent pursuant to this
Section.

18. Performance by Agent of Debtor’s Obligations. If the Debtor fails to perform or comply
with any of the obligations of the Debtor under this Agreement, the Agent may, but need not,
perform or otherwise cause the performance or compliance of such obligation, provided that such
performance or compliance will not constitute a waiver, remedy or satisfaction of such failure.
The expenses of the Agent incurred in connection with any such performance or compliance will be
payable by the Debtor to the Agent immediately on demand, and until paid,

General Security Agreement

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any such expenses will form part of the Secured Liabilities and will be secured by the Security
Interests.

19. Interest. If any amount payable by the Debtor to the Agent under this Agreement is not
paid when due, the Debtor will pay to the Agent, immediately on demand, interest on such amount
from the date due until paid, at a nominal annual rate equal at all times to Default Rate All
amounts payable by the Debtor to the Agent under this Agreement, and all interest on all such
amounts, compounded monthly on the last Business Day of each month, will form part of the Secured
Liabilities and will be secured by the Security Interests. For the purposes of the Interest Act
(Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in
connection herewith is to be calculated on the basis of a 360-day or 365-day year, the yearly rate
of interest to which the rate used in such calculation is equivalent is the rate so used multiplied
by the actual number of days in the calendar year in which the same is to be ascertained and
divided by 360 or 365, as applicable. The rates of interest under this Agreement are nominal
rates, and not effective rates or yields. The principle of deemed reinvestment of interest does
not apply to any interest calculation under this Agreement.

20. Severability. Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such prohibition or
unenforceability and will be severed from the balance of this Agreement, all without affecting the
remaining provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

21. Rights of Agent; Limitations on Agent’s Obligations.

	 	(a)	 	Limitations on Liability of Lenders. Neither the Agent nor any Lender
will be liable to the Debtor or any other Person for any failure or delay in exercising
any of the rights of the Debtor under this Agreement (including any failure to take
possession of, collect, sell, lease or otherwise dispose of any Collateral, or to
preserve rights against prior parties). Neither the Agent nor any Lender, a Receiver
nor any agent of the Agent (including, in Alberta or British Columbia, any sheriff) is
required to take, or will have any liability for any failure to take or delay in
taking, any steps necessary or advisable to preserve rights against other Persons under
any Collateral in its possession. Neither the Agent nor any Lender, any Receiver nor
any agent of the Agent will be liable for any, and the Debtor will bear the full risk
of all, loss or damage to any and all of the Collateral (including any Collateral in
the possession of the Agent or any Lender, any Receiver or any agent thereof) caused
for any reason other than the gross negligence or wilful misconduct of the Agent, such
Receiver or such agent thereof.
	 
	 	(b)	 	Debtor Remains Liable under Accounts and Contracts. Notwithstanding
any provision of this Agreement, the Debtor will remain liable under each of the
documents giving rise to the Accounts of the Debtor and under each of the Contracts to
observe and perform all the conditions and obligations to be observed and performed by
the Debtor thereunder, all in accordance with the terms of each such document and
Contract. Neither the Agent nor any Lender will have any

General Security Agreement

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			 	obligation or liability under any Account of the Debtor (or any document giving rise
thereto) or Contract by reason of or arising out of this Agreement or the receipt by
the Agent of any payment relating to such Account or Contract pursuant hereto, and
in particular (but without limitation), neither the Agent nor any Lender will be
obligated in any manner to perform any of the obligations of the Debtor under or
pursuant to any Account (or any document giving rise thereto) or under or pursuant
to any Contract to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any document giving rise thereto) or
under any Contract, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time.
	 
	 	(c)	 	Collections on Accounts and Contracts. The Debtor shall be authorized
to, at any time that an Event of Default is not continuing, collect its Accounts and
payments under the Contracts in the normal course of the business of the Debtor and for
the purpose of carrying on the same. If any Event of Default has occurred and is
continuing, and if required by the Agent at any time, any payments of Accounts or under
Contracts, when collected by the Debtor, will be forthwith (and, in any event, within
two (2) Business Days) deposited by the Debtor in the exact form received, duly
endorsed by the Debtor to the Agent if required, in a special collateral account
maintained by the Agent, and until so deposited, will be held by the Debtor in trust
for the Agent, segregated from the other funds of the Debtor. All such amounts while
held by the Agent (or by the Debtor in trust for the Agent) and all income in respect
thereof will continue to be collateral security for the Secured Liabilities and will
not constitute payment thereof until applied as hereinafter provided. If an Event of
Default has occurred and is continuing, the Agent may apply all or any part of the
amounts on deposit in such special collateral account on account of the Secured
Liabilities in such order as the Agent may elect. At the Agent’s request, the Debtor
will deliver to the Agent any documents evidencing and relating to the agreements and
transactions which gave rise to its Accounts and the Contracts, including all original
orders, invoices and shipping receipts.
	 
	 	(d)	 	Analysis of Accounts. At any time and from time to time, the Agent
will have the right to analyze and verify the Accounts of the Debtor in any manner and
through any medium that it reasonably considers advisable, and the Debtor will furnish
all such assistance and information as the Agent may require in connection therewith.
At any time and from time to time, the Agent may in its own name or in the name of
others (including the Debtor) communicate with account debtors on the Accounts of the
Debtor and parties to the Contracts to verify with them to its satisfaction the
existence, status, amount and terms of any Account or any Contract. At any time and
from time to time, upon the Agent’s reasonable request and at the expense of the
Debtor, the Debtor will furnish to the Agent reports showing reconciliations, aging and
test verifications of, and trial balances for, its Accounts.

General Security Agreement

- 20 -

 

	 	(e)	 	Use of Agents. The Agent may perform any of its rights or duties under
this Agreement by or through agents and is entitled to retain counsel and to act in
reliance on the advice of such counsel concerning all matters pertaining to its rights
and duties under this Agreement.

22. Dealings by Agent. The Agent will not be obliged to exhaust its recourse against the
Debtor or any other Person or against any other security it may hold in respect of the Secured
Liabilities or any part thereof before realizing upon or otherwise dealing with the Collateral in
such manner as the Agent may consider desirable. The Agent and the other Lenders may grant
extensions of time and other indulgences, take and give up security, accept compositions, grant
releases and discharges and otherwise deal with the Debtor and any other Person, and with any or
all of the Collateral, and with other security and sureties, as they may see fit, all without
prejudice to the Secured Liabilities or to the rights and remedies of the Agent under this
Agreement. The powers conferred on the Agent under this Agreement are solely to protect the
interests of the Agent in the Collateral and will not impose any duty upon the Agent to exercise
any such powers.

23. Communication. Any notice or other communication required or permitted to be given
under this Agreement will be made in accordance with the terms of the Credit Agreement.

24. Release of Information. The Debtor authorizes the Agent to provide a copy of this
Agreement and such other information as may be requested of the Agent (i) to the extent necessary
to enforce the Agent’s rights, remedies and entitlements under this Agreement, (ii) to any assignee
or prospective assignee of all or any part of the Secured Liabilities, and (iii) as required by
applicable Law.

25. Expenses; Indemnity; Waiver.

	 	(a)	 	The Debtor shall pay (i) all reasonable out-of-pocket expenses incurred by the
Lenders, including the reasonable fees, charges and disbursements of counsel for the
Lenders and all applicable taxes, in connection with the preparation and administration
of this Agreement, (ii) all reasonable out-of-pocket expenses incurred by the Lenders,
including the reasonable fees, charges and disbursements of counsel for the Lenders and
applicable taxes, in connection with any amendments, modifications or waivers of the
provisions hereof, and (iii) all out-of-pocket expenses incurred by the Lenders,
including the fees, charges and disbursements of any counsel for the Lenders and all
applicable taxes, in connection with the assessment, enforcement or protection of their
rights in connection with this Agreement, including its rights under this Section,
including all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of the Secured Liabilities.
	 
	 	(b)	 	The Debtor shall indemnify the Lenders against, and hold the Lenders harmless
from, any and all losses, claims, cost recovery actions, damages, expenses and
liabilities of whatsoever nature or kind and all reasonable out-of-pocket expenses and
all applicable taxes to which the Lenders may become subject arising out of or in
connection with (i) the execution or delivery of this Agreement and the

General Security Agreement

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	 	 	 	performance by the Debtor of its obligations hereunder, (ii) any actual or
prospective claim, litigation, investigation or proceeding relating to this
Agreement or the Secured Liabilities, whether based on contract, tort or any other
theory and regardless of whether any Lenders is a party thereto, (iii) any other
aspect of this Agreement, or (iv) the enforcement of the Lenders’s rights hereunder
and any related investigation, defence, preparation of defence, litigation and
enquiries; provided that such indemnity shall not, as to any Lender, be
available to the extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence (it being
acknowledged that ordinary negligence does not necessarily constitute gross
negligence) or wilful misconduct of or material breach of this Agreement by such
Lender.

	 	(c)	 	The Debtor shall not assert, and hereby waives (to the fullest extent permitted
by applicable Law), (i) any claim against any Lender (or any director, officer or
employee thereof), on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, and (ii) all of the rights, benefits and
protections given by any present or future statute that imposes limitations on the
rights, powers or remedies of a secured party or on the methods of, or procedures for,
realization of security, including any “seize or sue” or “anti-deficiency” statute or
any similar provision of any other statute.
	 
	 	(d)	 	All amounts due under this Section shall be payable to the Agent for the
benefit of the Lenders not later than three Business Days after written demand
therefor.
	 
	 	(e)	 	The indemnifications set out in this Section will survive the Release Date and
the release or extinguishment of the Security Interests.

26. Release of Debtor. Upon the written request of the Debtor given at any time on or
after the Release Date, the Agent shall, at the expense of the Debtor, release the Debtor and the
Collateral from the Security Interests and such release shall serve to terminate any licence
granted in this Agreement. Upon such release, and at the request and expense of the Debtor, the
Agent shall execute and deliver to the Debtor such releases and discharges as the Debtor may
reasonably request.

27. Additional Security. This Agreement is in addition to, and not in substitution of, any
and all other security previously or concurrently delivered by the Debtor or any other Person to
any Lender, all of which other security shall remain in full force and effect.

28. Alteration or Waiver. None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument executed by the Agent.
The Lenders will not, by any act or delay, be deemed to have waived any right or remedy hereunder
or to have acquiesced in any Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single

General Security Agreement

- 22 -

 

or partial exercise of any right, power or privilege hereunder will preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A waiver by any Lender of
any right or remedy hereunder on any one occasion will not be construed as a bar to any right or
remedy which the Agent would otherwise have on any future occasion. Neither the taking of any
judgment nor the exercise of any power of seizure or sale will extinguish the liability of the
Debtor to pay the Secured Liabilities, nor will the same operate as a merger of any covenant
contained in this Agreement or of any other liability, nor will the acceptance of any payment or
other security constitute or create any novation.

29. Environmental License and Indemnity. The Debtor hereby grants to the Agent and its
employees and agents an irrevocable and non-exclusive license, subject to the rights of tenants, or
landlords, to enter any of the premises of the Debtor to conduct audits, testing and monitoring
with respect to hazardous substances and to remove and analyze any hazardous substance at the cost
and expense of the Debtor (which cost and expense will form part of the Secured Liabilities and
will be payable immediately on demand and secured by the Security Interests created by this
Agreement). The Debtor will indemnify the Lenders and hold the Lenders harmless against and from
all losses, costs, damages and expenses which the Lenders may sustain, incur or be or become liable
at any time whatsoever for by reason of or arising from the past, present or future existence,
clean-up, removal or disposal of any hazardous substance on or about any property owned or occupied
by any Lender or compliance with environmental Laws or environmental orders relating thereto,
including any clean-up, decommissioning, restoration or remediation of any premises owned or
occupied by the Debtor or other affected lands or property. This indemnification will survive the
Release Date.

30. Amalgamation. The Debtor acknowledges that if it amalgamates or merges with any other
corporation or corporations, then (i) the Collateral and the Security Interests will extend to and
include all the property and assets of the amalgamated corporation and to any property or assets of
the amalgamated corporation thereafter owned or acquired, (ii) the term “Debtor”, where used in
this Agreement, will extend to and include the amalgamated corporation, and (iii) the term “Secured
Liabilities”, where used in this Agreement, will extend to and include the Secured Liabilities of
the amalgamated corporation.

31. Governing Law; Attornment. This Agreement will be governed by and construed in
accordance with the Laws of the Province of British Columbia. Without prejudice to the ability of
the Agent to enforce this Agreement in any other proper jurisdiction, the Debtor irrevocably
submits and attorns to the non-exclusive jurisdiction of the courts of such Province. To the
extent permitted by applicable Law, the Debtor irrevocably waives any objection (including any
claim of inconvenient forum) that it may now or hereafter have to the venue of any legal proceeding
arising out of or relating to this Agreement in the courts of such Province.

32. Interpretation. The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. The word “or” is
disjunctive; the word “and” is conjunctive. The word “shall” is mandatory; the word “may” is
permissive. Unless the context requires otherwise (a) any definition of or reference to any

General Security Agreement

- 23 -

 

agreement, instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or modifications set out
herein), (b) any reference herein to any statute or any section thereof shall, unless otherwise
expressly stated, be deemed to be a reference to such statute or section as amended, restated or
re-enacted from time to time, (c) any reference herein to any Person shall be construed to include
such Person’s successors and permitted assigns, (d) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, and (e) all references herein to Sections and Schedules shall
be construed to refer to Sections and Schedules to, this Agreement, Section headings are for
convenience of reference only, are not part of this Agreement and shall not affect the construction
of, or be taken into consideration in interpreting, this Agreement. Any reference in this
Agreement to a Permitted Lien is not intended to subordinate or postpone, and shall not be
interpreted as subordinating or postponing, or as any agreement to subordinate or postpone, any
Security Interest to any Permitted Lien. In accordance with the Property Law Act (British
Columbia), the doctrine of consolidation applies to this Agreement.

33. Successors and Assigns. This Agreement will enure to the benefit of, and be binding on,
the Debtor and its successors and permitted assigns, and will enure to the benefit of, and be
binding on, the Agent and its successors and assigns. The Debtor may not assign this Agreement, or
any of its rights or obligations under this Agreement. The Agent may assign this Agreement and any
of its rights and obligations hereunder to any Person. If the Debtor or the Agent is an
individual, then the term “Debtor” or “Agent”, as applicable, will also include his or her heirs,
administrators and executors.

34. Acknowledgment of Receipt/Waiver. The Debtor acknowledges receipt of an executed copy
of this Agreement and, to the extent permitted by applicable Law, waives the right to receive a
copy of any financing statement or financing change statement registered in connection with this
Agreement or any verification statement issued in respect of any such financing statement or
financing change statement.

35. Enforcement by Agent. This Agreement and the Security Interests may be enforced only by
the action of the Agent acting on behalf of the Lenders and no other Lender shall have any rights
individually to enforce or seek to enforce this Agreement or any of the Security Interests, it
being understood and agreed that such rights and remedies may be exercised by the Agent for the
benefit of the Lenders upon the terms of this Agreement.

36. Electronic Signature. Delivery of an executed signature page to this Agreement by the
Debtor by facsimile or other electronic form of transmission shall be as effective as delivery by
the Debtor of a manually executed copy of this Agreement by the Debtor.

36. Conflict with Credit Agreement. In the event of any conflict or inconsistency
between any provision of this Agreement and the provisions of the Credit Agreement, the
provisions of the Credit Agreement shall prevail.

General Security Agreement

- 24 -

 

[signatures on the next following page]

General Security Agreement

- 25 -

 

     IN WITNESS WHEREOF the undersigned has caused this Agreement to be duly executed as of the
date first written above.

	 	 	 	 	 
	 	

RGLD GOLD CANADA, INC.,

a Canadian corporation

 	 
	Address: 	By:  	/s/ Stefan Wenger	 
	 	 	Name:  	Stefan Wenger	 
	 	 	Title:  	Vice President and Treasurer	 
	 

Attention:

Facsimile:

E-mail:

Signature page

General Security Agreement

 

 

SCHEDULE A

DEBTOR INFORMATION

Full legal name: RGLD Gold Canada, Inc.

Prior names: None

Predecessor companies: None

Jurisdiction of incorporation or organization: British Columbia

Address of chief executive office:

c/o Davis LLP

666 Burrard Street

2800 Park Place, Vancouver, BC V6C 2Z7

Addresses of all places where business is carried on or tangible Personal Property is kept:

c/o Davis LLP

666 Burrard Street

2800 Park Place, Vancouver, BC V6C 2Z7

Jurisdictions in which all material account debtors are located: British Columbia

Addresses of all owned real property: Not applicable

Addresses of all leased real property: Not applicable

Description of all material Permits: Not applicable

Subsidiaries of the Debtor: None

Instruments, Documents of Title and Chattel Paper of the Debtor: Not applicable

Pledged Certificated Securities: None

 

 

Pledged Securities Accounts: None

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Securities	 	Pledged Securities	 	 
	Pledged Securities	 	Account	 	Intermediary’s	 	Pledged Security
	Intermediary	 	Number	 	Jurisdiction	 	Entitlements
	 	 	 	 	 	 	 

Pledged Uncertificated Securities: None

Pledged Futures Accounts: None

Registered trade-marks and applications for trademark registrations: None

Patents and patent applications: None

Copyright registrations and applications for copyright registrations: None

Industrial designs/registered designs and applications for registered designs: None

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