Document:

Exhibit 4.4

                                                                  EXECUTION COPY

                                                                    CONFIDENTIAL

                         RECEIVABLES PURCHASE AGREEMENT

                                     between

                           mitel networks corporation

                             as Seller and Servicer

                                     - and -

                              MITEL NETWORKS, INC.

                                    as Seller

                                     - and -

                         MITEL NETWORKS SOLUTIONS, INC.

                                    as Seller

                                     - and -

                            THE CANADA TRUST COMPANY
                           in its capacity as trustee
                               of ENDURANCE Trust

                                  as Purchaser

                                     - and -

                          EFFICIENT CAPITAL CORPORATION

                             as Securitization Agent

                            Made as of April 16, 2004

                       Davies Ward Phillips & Vineberg LLP

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                TABLE OF CONTENTS

                                    ARTICLE 1
                                 INTERPRETATION

1.1      Certain Defined Terms................................................2
1.2      Extended Meanings...................................................19
1.3      Headings, Sections, Etc.............................................19
1.4      Accounting Principles...............................................19
1.5      Currency............................................................20
1.6      Payments............................................................20
1.7      Non-Business Days...................................................20
1.8      Computation of Time Periods.........................................20
1.9      Months; Days........................................................20
1.10     Exhibits............................................................20

                                    ARTICLE 2
                                    PURCHASES

2.1      Purchases...........................................................21
2.2      Quebec Receivables..................................................23
2.3      List of Obligors and Credit Limits and Daily Program Operation......24

                                    ARTICLE 3
                              PAYMENTS AND ACCOUNTS

3.1      Collection Account..................................................24
3.2      Reserve Accounts....................................................26
3.3      Disbursement Account................................................28
3.4      Dilutions...........................................................29
3.5      Repurchases for Breach of Representations and Warranties............29
3.6      Deemed Collections..................................................30

                                    ARTICLE 4
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

4.1      Representations and Warranties of the Sellers.......................30
4.2      Representations and Warranties of the Purchaser.....................34
4.3      Affirmative Covenants of the Sellers................................36
4.4      Affirmative Covenants of the Canadian Seller........................37
4.5      Negative Covenants of the Sellers...................................38
4.6      Affirmative Covenants of the Purchaser..............................39

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                      -ii-

                                    ARTICLE 5
                          ADMINISTRATION AND COLLECTION

5.1      Designation of the Servicer.........................................40
5.2      Standard of Care....................................................40
5.3      Authorization of Servicer...........................................41
5.4      Enforcement of Receivables..........................................41
5.5      Assignment for Purpose of Enforcement...............................41
5.6      Description of Services.............................................42
5.7      Additional Covenants of the Servicer................................44
5.8      Negative Covenants of the Servicer..................................46
5.9      Servicer Termination Events.........................................47
5.10     Notice of Servicer Termination Events...............................48
5.11     Effecting a Service Transfer........................................48
5.12     Appointment of Stand-By Servicer....................................48
5.13     Collection and Remittance of Taxes..................................48
5.14     Additional Seller Covenants Following a Service Transfer............49
5.15     Purchaser Rights Following a Service Transfer.......................50
5.16     Power of Attorney...................................................50
5.17     Execution of Additional Powers......................................51
5.18     Restrictions on Use.................................................51

                                    ARTICLE 6
                              CONDITIONS PRECEDENT

6.1      Conditions Precedent to Initial Purchase............................52
6.2      Conditions Precedent to All Purchases...............................53
6.3      Undertaking of Purchaser............................................54

                                    ARTICLE 7
                               Amortization EVENTS

7.1      Meaning of Amortization Event.......................................54
7.2      Action Upon an Amortization Event...................................58
7.3      Seller Designated Amortization Commencement Date....................59
7.4      Early Amortization Commencement Date Fee............................59

                                    ARTICLE 8
                  MATTERS RELATING TO THE SECURITIZATION AGENT

8.1      Delegation to the Securitization Agent..............................60
8.2      Limitation of Liability of the Securitization Agent and Issuer
           Trustee...........................................................60
8.3      Responsibilities of the Sellers.....................................60
8.4      Other Dealings......................................................61

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                     -iii-

8.5      Lockbox Fees........................................................61

                                    ARTICLE 9
                                 INDEMNIFICATION

9.1      Indemnities by the Sellers..........................................61
9.2      Payment of Indemnified Amounts......................................64
9.3      Litigation..........................................................65
9.4      Notification........................................................65

                                   ARTICLE 10
                                  MISCELLANEOUS

10.1     Costs, Expenses and Taxes...........................................65
10.2     Further Assurances..................................................67
10.3     Failure to Perform..................................................67
10.4     Entire Agreement....................................................67
10.5     Amendments, Waivers, Etc............................................67
10.6     No Waiver; Remedies.................................................68
10.7     No Set-Off..........................................................68
10.8     Non-Merger..........................................................68
10.9     Time of the Essence.................................................68
10.10    Agreement of Purchase and Sale......................................69
10.11    Notices.............................................................69
10.12    Binding Effect; Assignability, Etc..................................70
10.13    Governing Law.......................................................71
10.14    Severability........................................................71
10.15    Confidentiality.....................................................71
10.16    Financial Reporting.................................................72
10.17    Consent to Jurisdiction; Waiver of Immunities.......................72
10.18    Remedies............................................................72
10.19    Counterparts........................................................73
10.20    Business Disruption.................................................73

                                    EXHIBITS

         Exhibit A         -        Form of Assignment Agreement
         Exhibit B         -        Form of Purchase Notice
         Exhibit C         -        Form of Officer's Certificate
         Exhibit D         -        List of Offices Where Records Are Kept
         Exhibit E         -        Form of Periodic Report
         Exhibit F         -        Form of Quebec Assignment

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                         RECEIVABLES PURCHASE AGREEMENT

            THIS  RECEIVABLES  PURCHASE  AGREEMENT  made as of the  16th  day of
April, 2004.

B E T W E E N:

                        MITEL NETWORKS CORPORATION,

                        a corporation existing under the
                        laws of Canada,

                        (hereinafter  referred to as the
                        "Canadian    Seller"    or   the
                        "Servicer"),

                                     - and -

                        MITEL    NETWORKS,    INC.,    a
                        corporation  existing  under the
                        laws of Delaware,

                        (hereinafter   referred   to  as
                        "MNI"),

                                     - and -

                        MITEL NETWORKS SOLUTIONS,  INC.,
                        a corporation existing under the
                        laws of Delaware

                        (hereinafter   referred   to  as
                        "MNSI"),

                                     - and -

                        THE CANADA TRUST COMPANY,

                        a  trust   company   amalgamated
                        under the laws of Canada, in its
                        capacity as trustee of ENDURANCE
                        TRUST, a trust established under
                        the  laws  of  the  Province  of
                        Ontario,

                        (hereinafter  referred to as the
                        "Purchaser"),

                                     - and -

                        EFFICIENT CAPITAL CORPORATION,

                        a corporation existing under the
                        laws of the Province of Ontario,

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 2 -

                                                                    CONFIDENTIAL

                        (hereinafter referred to as the
                        "Securitization Agent").

            WHEREAS the Sellers generate Receivables in the ongoing operation of
the Sellers' general business of providing business  communications hardware and
software  solutions  and the  Sellers are  desirous  of selling  certain of such
Receivables  that are Eligible  Receivables  and certain other property  related
thereto to the Purchaser  from time to time and the Canadian  Seller is desirous
of  collecting  and  otherwise  servicing  the  Purchased  Assets so sold by the
Sellers to the Purchaser as hereinafter set forth;

            AND  WHEREAS the  Purchaser  is willing to  purchase  the  Purchased
Assets,  including  Eligible  Receivables  and certain  other  property  related
thereto,  from the Sellers  from time to time on a  fully-serviced  basis on the
terms and conditions hereinafter set forth;

            AND WHEREAS the Purchaser has appointed the Securitization  Agent to
provide  certain  administrative  services in respect of the on-going  sales and
purchases of the Purchased Assets hereunder;

            NOW THEREFORE THIS AGREEMENT  WITNESSES that in consideration of the
premises and the covenants and  agreements of the parties  herein  contained and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby  acknowledged by each party, the parties hereby covenant and agree as
follows:

                                   ARTICLE 1
                                 INTERPRETATION

1.1 Certain Defined Terms

            In this Agreement,  including the recitals, the following terms have
the following meanings:

"Affiliate",  in respect of a specified Person,  means any other Person which is
either more than 20% owned by a common  entity  which also owns or controls  the
specified Person, or where a common entity controls the day-to-day operations or
has effective  management  control of both the  specified  Person and such other
Person.

"Aggregate  Discretionary Limit" means CAD18,000,000 or the equivalent in United
States  Dollars,  as the case may be,  representing  the  aggregate  Outstanding
Principal Balance for all Discretionary Obligors.

"Agreement" means this agreement, together with the Exhibits hereto, as the same
may be amended, modified, supplemented,  revised, restated or replaced from time
to time.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 3 -

                                                                    CONFIDENTIAL

"Amortization Commencement Date" means the earliest of:

      (a)   April 15,  2007,  which date may be  extended  from time to time for
            successive  six month  periods  upon the  written  agreement  of the
            Sellers and the Purchaser;

      (b)   the date on which the  Amortization  Commencement  Date is declared,
            designated or deemed to have occurred pursuant to Article 7; and

      (c)   the date designated by the Canadian Seller or the Purchaser provided
            the Canadian  Seller or the Purchaser,  as  applicable,  provides at
            least  60  days  prior  written  notice  of such  date to the  other
            parties.

"Amortization Event" has the meaning ascribed thereto in Section 7.1.

"Annual  Policy  Amount" means CAD3 million in respect of Purchased  Receivables
denominated  in  Canadian  Dollars  and USD17  million in  respect of  Purchased
Receivables denominated in United States Dollars.

"Assignment" means a written assignment  agreement  substantially in the form of
the agreement annexed hereto as Exhibit A.

"Base  Interest  Rate" means the Base  Interest  Rate (CDN) or the Base Interest
Rate (USD), as the context requires.

"Base  Interest Rate (CDN)"  means,  on any day, that per annum rate (based on a
year of 365 days)  expressed as a percentage,  equal to the average "BA 2 Month"
interest rates for Canadian dollar bankers acceptances  displayed and identified
as such on the "Moneyline/Telerate  Page", Screen 3197 as of 10:00 a.m., Toronto
time, on such day; if such rates do not appear thereon as contemplated, then the
"BA 2 Month  Rate" shall be  calculated  based upon the  arithmetic  mean of the
applicable rates for 60-day Canadian dollar bankers  acceptances  quoted by four
major  Canadian  Schedule I chartered  banks as of 10:00 a.m.,  Toronto time, on
such day; if less than four such quotations are available,  then the "BA 2 Month
Rate"  will  be the  arithmetic  mean of such  available  quotations;  provided,
however, that if fewer than two quotations are available,  the "BA 2 Month Rate"
will be the  arithmetic  mean of the bid rates quoted by major banks in Toronto,
selected by the Purchaser,  for Canadian dollar bankers  acceptances as of 10:00
a.m., Toronto time, on such day.

"Base  Interest Rate (USD)"  means,  on any day, that per annum rate (based on a
year of 360 days)  expressed as a  percentage,  equal to the "USD LIBOR 2 Month"
interest rate for the USD London Interbank Offered Rate displayed and identified
as such on the "Moneyline/Telerate  Page", Screen 3750 as of 11:00 a.m., London,
England time, on such day.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 4 -

                                                                    CONFIDENTIAL

"BoC Daily Noon Rate" means,  on any day,  the daily noon rate  published by the
Bank of Canada on its website for such day.

"Business  Day" means any day,  other than a Saturday,  Sunday or  statutory  or
civic holiday, on which banks in Toronto, Ontario are open for business.

"Canadian Dollars" or "CAD" means the lawful currency of Canada.

"Canadian  GAAP" means  Canadian  generally  accepted  accounting  principles as
adopted by the Canadian  Institute of Chartered  Accountants  from time to time,
consistently applied.

"Cheque Deposit  Agreement" means the agreement dated April 19, 2004 between the
Canadian Seller, the Purchaser and The Toronto-Dominion Bank.

"Collections" means,  without duplication,  all payments made by or on behalf of
Obligors in respect of  Purchased  Assets,  and all other cash  collections  and
other cash proceeds received in respect of the Purchased Assets,  including cash
proceeds of any contract of insurance  (including the Insurance  Policy) paid in
respect of any of the  Purchased  Receivables,  all other cash  proceeds  of any
Related  Security  related to Purchased  Receivables,  including  cash  proceeds
realized through the enforcement of a Contract related to Purchased  Receivables
or other Related Security related to Purchased  Receivables  against an Obligor,
and any Collections deemed to have been received by the Sellers or the Servicer,
as the case may be, pursuant hereto.

"Collection Account" has the meaning ascribed thereto in Section 3.1(a).

"Consolidated  Assets"  means,  at any date, the total assets of the Sellers and
their  consolidated  subsidiaries  as at such date in accordance  with generally
accepted accounting principles.

"Consolidated Liabilities" means, at any date, the sum of all obligations of the
Sellers and their  consolidated  subsidiaries as at such date in accordance with
generally accepted accounting principles.

"Consolidated  Shareholders'  Equity"  means,  on any date, the remainder of (a)
Consolidated  Assets on such date,  minus (b)  Consolidated  Liabilities on such
date.

"Contract" means any document originating and evidencing a Receivable, including
any written  invoice or bill,  statement of account or other written  account or
agreement  between  the  relevant  Seller and an Obligor  pursuant  to which the
Obligor is obligated to pay one or more Receivables to such Seller.

"Coupon  Reserve  Amount"  means,  on any  day  and in  respect  of  Receivables
denominated  in the same  currency,  an amount  equal to the  product of (a) the
Program Amount as at the open of business on such day, (b) the rate of interest,
expressed as an annualized rate, equal to the sum of

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 5 -

                                                                    CONFIDENTIAL

the  Base  Interest  Rate  for  such day in  respect  of such  currency  and the
Purchaser Spread, (c) DSO and (d) 2/360 in respect of Purchased Receivables that
are  denominated  in United  States  Dollars  and 2/365 in respect of  Purchased
Receivables that are denominated in Canadian Dollars.

"Credit and Collection Policies" means the Sellers' customary credit, collection
and  administration   guidelines,   policies  and  procedures  relating  to  the
evaluation of the  creditworthiness  of Obligors;  Receivables;  Contracts;  and
Related  Security  owned  or  administered  by the  Sellers  from  time to time,
including  the Purchased  Receivables  serviced by the Servicer on behalf of the
Purchaser   hereunder,   as  such  policies  and   procedures  may  be  amended,
supplemented or replaced from time to time in accordance with Section 5.8(a).

"Credit  Enhancer" means the Insurer and any Person who by any means whatsoever,
including  pursuant  to any  letter of  credit,  surety  bond,  cash  collateral
account,  spread account,  guaranteed rate agreement,  refinancing facility, tax
protection  agreement,  credit  default swap  agreement,  secondary  receivables
purchase agreement, or other similar arrangement, provides credit enhancement in
respect of the Purchased Assets; provided,  however, that the Insurer shall have
a  long-term  debt rating of at least "A" from  Standard & Poor's or  equivalent
unless otherwise approved by the Purchaser and the Rating Agency.

"Credit Enhancement  Agreement" means any agreement,  acceptable to the Canadian
Seller,  acting  reasonably,  including the Insurance  Policy,  between a Credit
Enhancer and one or more of the parties to this Agreement, as such agreement may
be amended, supplemented, revised or restated from time to time.

"Credit Losses" has the meaning ascribed thereto in the Insurance Policy.

"Default  Ratio"  means,  on any day and in  respect  of  Purchased  Receivables
denominated  in the same  currency,  the ratio  calculated  by dividing  (a) the
aggregate  Outstanding  Principal  Balance of all Purchased  Receivables in that
currency that became Defaulted  Receivables during the preceding 90 days, by (b)
the average daily  balance of all  Outstanding  Principal  Balances of Purchased
Receivables in that currency during the preceding 90 days.

"Defaulted  Receivable"  means any Receivable (a) that, in whole or in part, has
remained  unpaid for more than 60 days from the relevant due date,  (b) that has
been,  or in  accordance  with the Credit  and  Collection  Policies  should be,
written off as  uncollectable  or designated as a bad or doubtful account or (c)
in respect of which the Obligor is subject to any Insolvency Proceeding.

"Delinquent Receivable" means any Receivable, other than a Defaulted Receivable,
that in whole or in part has  remained  unpaid  for more  than 50 days  from the
relevant due date or has been, or in accordance  with the Credit and  Collection
Policies should be, classified as delinquent.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 6 -

                                                                    CONFIDENTIAL

"Dilution"  means,  with respect to any Purchased  Receivable,  any reduction or
adjustment in the  Outstanding  Principal  Balance of such Purchased  Receivable
granted to an  Obligor by the  relevant  Seller on  account of (a)  disputes  or
set-offs (whether such claims arise out of the same or a related  transaction or
an unrelated transaction),  (b) discounts,  incorrect billings,  credits, volume
rebates,  allowances,  chargebacks,  allowances or discounts for early payments,
advertising incentives or other reductions or similar adjustments granted in the
ordinary  course of such  Seller's  business  or (c)  returned,  repossessed  or
foreclosed  goods that,  in each case,  are  unrelated  to the  inability of the
Obligor of such Purchased Receivable to pay such Purchased Receivable.

"Dilution Amount" means, in respect of any Dilution, the amount of such Dilution
multiplied  by the sum of (a) one and (b) the product of (i) the number by which
the number of days from the date on which the relevant Receivable was originated
to the date on which such Dilution was  recognized by the  Securitization  Agent
exceeds DSO and (ii) the Base  Interest  Rate  relevant  to the  currency of the
relevant  Receivable  plus Purchaser  Spread divided by 360 if the Receivable is
denominated in United States Dollars and 365 if the Receivable is denominated in
Canadian Dollars.

"Dilution  Ratio"  means,  on any day and in  respect of  Purchased  Receivables
denominated  in the  same  currency,  the  ratio of (a) the  aggregate  Dilution
Amounts of all Dilutions in that currency occurring during the preceding 90 days
to (b) all Purchased  Receivables  denominated in the same currency purchased by
the Purchaser during the preceding 90 days.

"Dilution  Reserve  Amount"  means,  on any  day  and in  respect  of  Purchased
Receivables  denominated in the same currency,  the product of (a) the aggregate
Outstanding  Principal Balance of all such Purchased Receivables on such day and
(b) the greater of (i) the product of 1.5 and the  highest  Dilution  Ratio over
the  twelve-month  period  preceding  such day and (ii) the product of 2 and the
average Dilution Ratio over the twelve-month period preceding such day.

"Disbursement Account" has the meaning ascribed thereto in Section 3.3(a).

"Discretionary Limit" means CAD100,000 in respect of Receivables  denominated in
Canadian Dollars and USD100,000 in respect of Receivables  denominated in United
States Dollars.

"Discretionary Obligor" means any Obligor who is not a Named Obligor.

"DSO" means,  on any day and in respect of  Receivables  denominated in the same
currency,   the  aggregate   Outstanding  Principal  Balance  of  all  Purchased
Receivables  as at the open of business on such day divided by the average daily
dollar  volume of Eligible  Receivables  purchased  by the  Purchaser  hereunder
during the preceding 90 days.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 7 -

                                                                    CONFIDENTIAL

"Eligible  Institution"  means a depositary  institution  in Canada which at all
times has either:  (i) a long-term  unsecured debt rating of at least Aa3 by the
Rating Agency; or (ii) a short-term rating of at least P1 by the Rating Agency.

"Eligible  Investments"  means, at any particular date,  book-based  securities,
negotiable  instruments  or securities  represented  by instruments in bearer or
registered form which evidence any of:

      (a)   direct  obligations  of, or obligations  fully  guaranteed as to the
            timely  payment of  principal  and interest  by, the  government  of
            Canada or the government of the United States of America;

      (b)   direct  obligations  of, or obligations  fully  guaranteed as to the
            timely  payment of principal  and interest by, the  government  of a
            province  of Canada or one of the  states  of the  United  States of
            America, in each case with a short-term debt rating of not less than
            R-1 (middle) by the Rating Agency;

      (c)   demand  deposits,  term deposits or certificates of deposits (having
            original  maturities  of no more  than  365  days) of banks or trust
            companies  chartered  or  licensed  under  the laws of Canada or any
            province  thereof  provided  that, at the time of the  investment or
            contractual commitment to invest therein, the short-term debt rating
            of such bank or trust company shall have the highest rating from the
            Rating Agency;

      (d)   commercial  paper  (having  original  maturities of no more than 365
            days) and any other securities  (having a remaining term to maturity
            of no more than 365 days) having,  at the time of the  investment or
            contractual  commitment to invest  therein,  the highest rating from
            the Rating Agency;

      (e)   notes  issued by or  bankers'  acceptances  (in either  case  having
            original  maturities of no more than 365 days)  accepted by any bank
            or trust company referred to in (c) above;

      (f)   any  security  having the highest  rating from the Rating  Agency or
            otherwise approved in writing by the Rating Agency;

      (g)   term deposits with an entity,  the commercial paper of which has the
            highest rating from the Rating Agency; and

      (h)   any other  class of  investments  approved  in writing by the Rating
            Agency (other than those set out in paragraphs (a) to (g) above),

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 8 -

                                                                    CONFIDENTIAL

and,  without  limiting  the  generality  of  the  foregoing,  if so  qualified,
securities of the Issuer  Trustee,  the  Securitization  Agent and the Indenture
Trustee and any affiliate thereof may be considered Eligible Investments for the
purposes of this definition.

"Eligible  Receivable"  means, at any time unless  otherwise  specified below in
this definition,  a Receivable  which meets all of the following  criteria as of
the Purchase Date applicable to such Receivable:

      (a)   the Obligor of the Receivable is a Person  resident in Canada or the
            United States and is not (i) an  Affiliate,  Parent or Subsidiary of
            the Sellers or (ii) a Governmental Authority in Canada or the United
            States (other than those specifically  approved by the Purchaser and
            the Insurer);

      (b)   if the Outstanding  Principal Balance of the Receivable,  when added
            to the  aggregate  Outstanding  Principal  Balance of all  Purchased
            Receivables  owed by the same  Obligor,  exceeds  the  Discretionary
            Limit, such Obligor is on the Named Obligor List;

      (c)   if the Obligor of the Receivable is a  Discretionary  Obligor,  such
            Obligor is on the list of  Discretionary  Obligors  provided  to the
            Purchaser  pursuant  to Section  2.3(a) and such  Obligor  meets the
            requirements of a Discretionary Obligor under the Insurance Policy;

      (d)   unless  otherwise  approved  by the  Purchaser,  the  Obligor of the
            Receivable   is  not  an  Obligor  with  respect  to  any  Defaulted
            Receivables;

      (e)   the Receivable is not a Delinquent Receivable;

      (f)   the Receivable is not a Defaulted Receivable;

      (g)   the Receivable is required to be paid in full in accordance with the
            Credit and Collection Policies;

      (h)   the Receivable is payable in Canada or the United States only and is
            denominated and payable either in Canadian  Dollars or United States
            Dollars;

      (i)   the  Receivable  was originated no more than seven days prior to the
            relevant  Purchase  Date  and the due date of the  Receivable  is at
            least 20 days from such Purchase Date;

      (j)   the Receivable  arises under a valid Contract issued by the relevant
            Seller in the  ordinary  course  of such  Seller's  business  and in
            accordance  with all applicable  policies of such Seller,  including
            the Credit and Collection Policies, which

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 9 -

                                                                    CONFIDENTIAL

            Contract,together  with such  Receivable,  has been duly authorized,
            executed and  delivered by the parties  thereto and is in full force
            and effect and constitutes the legal,  valid and binding  obligation
            of  the  Obligor  thereof   enforceable   against  such  Obligor  in
            accordance  with  its  terms,  subject  to  applicable   bankruptcy,
            insolvency, reorganization, winding-up, moratorium and other similar
            laws  affecting the rights of creditors  generally and the fact that
            specific performance and injunction are equitable remedies available
            only in the discretion of the court;

      (k)   the  Receivable  constitutes  an  "account",  "claim" or "book debt"
            within the meaning of the PPSA;

      (l)   the Receivable is not subject to any offset, counterclaim,  asserted
            dispute or defence whatsoever and is free and clear of any Lien;

      (m)   if the Contract  under which such  Receivable is payable is governed
            by Canadian law,  neither the  Receivable  nor such Contract nor the
            Related  Security  is  subject  to any  restriction  on the  sale or
            assignment  thereof  hereunder  and if such  Contract is governed by
            United States law, the Receivable is not subject to any  restriction
            on the sale or assignment thereof hereunder;

      (n)   the relevant Seller has good and marketable  title to the Receivable
            and the Related  Security  related  thereto  (including any proceeds
            thereof) free of any Lien;

      (o)   the Receivable and the related  Contract do not contravene any laws,
            rules  or  regulations  applicable  thereto,  and,  to the  relevant
            Seller's  knowledge,  no party to such  Contract is, with respect to
            such Receivable, in violation of any such law, rule or regulation;

      (p)   the  Receivable:  (i) satisfies all applicable  requirements  of the
            Credit and  Collection  Policies;  and (ii)  complies with all other
            criteria and requirements  specified by the Securitization  Agent to
            the Sellers;

      (q)   the  Obligor  in respect of such  Receivable  is not  subject to any
            Insolvency  Proceeding  and,  to the best of the  relevant  Seller's
            knowledge,  there  are no  such  proceedings  pending  against  such
            Obligor;

      (r)   the Outstanding  Principal Balance of the Receivable,  when added to
            the  aggregate   Outstanding  Principal  Balance  of  all  Purchased
            Receivables  denominated  in the  same  currency  owed  by the  same
            Obligor,  would not  exceed  the  applicable  credit  limit for such
            Obligor established pursuant to Section 2.3(a);

      (s)   if the Obligor of the  Receivable is a  Discretionary  Obligor,  the
            Outstanding  Principal Balance of the Receivable,  when added to the
            Outstanding Principal

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 10 -

                                                                    CONFIDENTIAL

            Balance  of  all  Purchased  Receivables  denominated  in  the  same
            currency owed by all  Discretionary  Obligors,  would not exceed the
            Aggregate Discretionary Limit;

      (t)   the Outstanding  Principal Balance of the Receivable,  when added to
            the  aggregate   Outstanding  Principal  Balance  of  all  Purchased
            Receivables owed by all Obligors denominated in the same currency as
            the Receivable,  would not cause the aggregate Outstanding Principal
            Balance of all  Purchased  Receivables  (including  the  Receivable)
            denominated  in the  same  currency  as the  Receivable  owed by all
            Obligors  to exceed  the  Purchase  Limit  applicable  to  Purchased
            Receivables denominated in the same currency as the Receivable;

      (u)   as to which  the  relevant  Seller  has  satisfied  in all  material
            respects  all of its  obligations  with  respect to such  Receivable
            required to be satisfied by such Seller thereunder;

      (v)   as to which the relevant  Seller has not taken or failed to take any
            action  that  would  impair  the  rights  of the  Purchaser  in such
            Receivable;

      (w)   in respect of which all filings or  recordings  with  respect to the
            relevant Seller's  interest in the Related Security  necessary under
            applicable  law  to  preserve,  perfect  or  protect  such  Seller's
            interest therein have been made; and

      (x)   the Receivable is not payable from any jurisdiction in Canada or the
            United  States  in which  (i) all  registrations  and  other  action
            required by Section  4.3(f) have not been  completed  or taken,  and
            (ii) where required by the Rating Agency,  upon prior written notice
            to the Canadian Seller, a local counsel opinion relating to the laws
            of such jurisdiction  either has been provided previously or will be
            provided in connection with the related Purchase.

"Final   Collection  Date"  means  the  first  day  following  the  Amortization
Commencement  Date on or by which every Purchased  Receivable has been collected
in full (whether  through the receipt of Collections  or the  enforcement of the
Related  Security),  fully written off as  uncollectable  in accordance with the
Credit and Collection  Policies then in effect, or assigned by the Purchaser for
value (paid in cash) to any Person, including the Credit Enhancer.

"Governmental   Authority"   means   any   government,   regulatory   authority,
governmental  department,  agency,  commission,  board, tribunal,  bureau, crown
corporation, arbitration panel, or court or other law, rule or regulation-making
entity having jurisdiction on behalf of any nation,  country,  province or state
or  other  subdivision  thereof  or any  municipality,  district,  city or other
subdivision thereof.

"Indebtedness" means (without duplication),  with respect to any Person, (i) all
obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds,

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 11 -

                                                                    CONFIDENTIAL

debentures, notes or other similar instruments; (ii) all obligations, contingent
or  otherwise,  relative to the face  amount of all  letters of credit,  whether
drawn or  undrawn,  and  bankers'  acceptances  issued  for the  account of such
Person;  (iii) all  obligations of such Person as lessee under leases which have
been or should be, in accordance with Canadian GAAP, recorded as capital leases,
including  liabilities in respect of capital  leases  incurred by such Person in
connection with sale/leaseback transactions; (iv) net liabilities of such Person
under all hedging  obligations or net liabilities of such Person under currency,
swap, forward or other foreign exchange hedging  agreements;  (v) whether or not
so included as liabilities in accordance  with Canadian GAAP, all obligations of
such Person to pay the  deferred  purchase  price of property or  services,  and
indebtedness  (excluding  prepaid  interest  thereon),  secured by a lien on the
property owned or being purchased by such Person (including indebtedness arising
under  conditional  sales or other title retention  agreements),  whether or not
such  indebtedness  shall  have been  assumed  by such  Person or is  limited in
recourse; (vi) all agreements, undertakings or arrangements by which such Person
guarantees,  endorses  or  otherwise  becomes  or is  contingently  liable  for,
directly  or  indirectly,  the  indebtedness  for  borrowed  monies of any other
Person; and (vii) all indebtedness of any Person that is acquired by such Person
directly or  indirectly;  and for all purposes  hereof,  the  Indebtedness  of a
Person shall include the  Indebtedness  of any  partnership  or joint venture in
which such Person is a general partner or a joint venturer.

"Indemnified Amounts" has the meaning ascribed thereto in Section 9.1.

"Indemnified Parties" has the meaning ascribed thereto in Section 9.1.

"Indenture Trustee" means BNY Trust Company of Canada.

"Initial  Purchase" means the first Purchase made under the terms and conditions
of this Agreement pursuant to the first Purchase Notice.

"Initial Purchase Date" means the date of the Initial Purchase.

"Insolvency  Proceeding" means the commencement or filing of a petition,  notice
or  application  by or against a Person of any  proceedings  to  adjudicate it a
bankrupt  or  insolvent  or  seeking  liquidation,  winding-up,  reorganization,
arrangement,  adjustment,  protection,  relief or composition of it or its debts
under any law of any  jurisdiction,  whether  in  effect  at the date  hereof or
thereafter, relating to the dissolution,  liquidation or winding-up, bankruptcy,
insolvency,  reorganization  of  insolvent  debtors,  arrangement  of  insolvent
debtors,  readjustment of debt or moratorium of debts, or to obtain an order for
relief  by the  appointment  of a  receiver,  receiver  manager,  administrator,
inspector,  liquidator  or trustee or other  similar  official for it or for any
substantial part of its property.

"Insurance  Policy",  at any  time,  means  any  insurance  policy  or  policies
maintained  by the Purchaser in respect of the  Purchased  Receivables,  as such
policy or policies may be amended

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 12 -

                                                                    CONFIDENTIAL

from  time to  time,  and  any  replacement  insurance  policy  approved  by the
Purchaser  and the  Rating  Agency  and shall  initially  mean the trade  credit
insurance  policy  maintained by the Purchaser with Euler Hermes American Credit
Indemnity Company.

"Insurance  Premium  Limit" means a premium of CAD0.30 per CAD100 or USD0.30 per
USD100, as applicable.

"Insurer" means the insurer under the Insurance  Policy from time to time, which
shall initially be Euler Hermes American Credit Indemnity Company.

"Issuer Trustee" means The Canada Trust Company.

"Law" means any law, code,  treaty,  rule or regulation or  determination  of an
arbitrator  or  Governmental  Authority,  whether  federal,  provincial,  state,
territorial  or local and,  when used with respect to any Person,  shall include
the  certificate of  incorporation  and by-laws or other charter,  constating or
governing documents of such Person.

"Lawsuit" has the meaning ascribed thereto in Section 9.1.

"Lien"  means  any  lien,  security  interest,  charge,  encumbrance,  mortgage,
hypothec, lease, title retention agreement, hypothecation,  deposit arrangement,
claim,  pledge,  deed of trust,  priority,  assignment (whether or not by way of
security),  ownership  interest,  participation  interest,  right of  set-off or
preferential  arrangement  or other  security  agreement or other right or claim
(including statutory liens, deemed trusts or other encumbrances),  including any
filing or registration made in respect thereof of any kind or nature whatsoever,
of any Person, other than Permitted Encumbrances.

"Lockbox" has the meaning ascribed thereto in Section 3.1(c).

"Loss Reserve Amount" means, on any day, the sum of:

      (a)   the  product  of two  and the  highest  total  rolling  twelve-month
            Non-Qualifying   Losses  since  March  1,  2002  of  all   Purchased
            Receivables denominated in the same currency;

      (b)   the amount of the Policy  Deductible  if the  Policy  Deductible  is
            denominated in the relevant currency; and

      (c)   the  product  of: (i) 0.10 and (ii) the lesser of (A) the  aggregate
            Outstanding   Principal   Balance  of  all   Purchased   Receivables
            denominated in the same currency minus the Policy  Deductible if the
            Policy  Deductible is denominated  in the relevant  currency and (B)
            the Annual Policy Amount in respect of such currency

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 13 -

                                                                    CONFIDENTIAL

            minus such Policy Deductible if the Policy Deductible is denominated
            in the relevant currency.

"Material  Adverse  Effect"  means any effect (a) with respect to the Sellers or
the  Purchaser,  upon the business,  property,  operations or financial or other
condition  of the Sellers or the  Purchaser,  or (b) solely with  respect to the
Sellers,  on the Purchased Assets,  whether as a result of any act or failure to
act by any Seller or otherwise,  that,  in the case of either (a) or (b),  could
reasonably be expected to materially  and adversely  affect (i) the interests of
the  Purchaser  in the  Purchased  Assets  and under  this  Agreement,  (ii) the
collectibility  of  the  Purchased  Assets,  (iii)  the  enforceability  of  the
Purchased Assets, or (iv) the Sellers' or the Purchaser's  ability to perform in
all material  respects each of their respective  obligations  hereunder or under
any Related Document, as the case may be.

"Named Obligor" means any Obligor who is listed on a Named Obligor List.

"Named Obligor List" has the meaning ascribed thereto in Section 2.3(a).

"Non-Qualifying  Loss" means, in respect of any Purchased  Receivable,  a Credit
Loss of up to  CAD5,000  in  respect of  Purchased  Receivables  denominated  in
Canadian  Dollars  and  up to  USD4,000  in  respect  of  Purchased  Receivables
denominated in United States Dollars.

"Non-Quebec  Eligible  Receivables" means Eligible Receivables other than Quebec
Eligible Receivables.

"Non-Quebec Purchased Receivables" means, at any time, any Receivable other than
Quebec  Receivables  owned by the Purchaser at such time which the Purchaser has
purchased from the Sellers pursuant hereto.

"Noteholders" means the holders of the Notes.

"Notes" means notes or other debt  obligations  of the  Purchaser  issued by the
Purchaser from time to time for the purposes of funding Purchases hereunder.

"Obligor" means, in respect of a Receivable, any corporation or other Person who
owes payment of, or is otherwise  obligated to make  payments in respect of, the
Receivable  or  Receivables  owing  from time to time under or  pursuant  to the
related Contract or the Related  Security and includes any guarantor,  surety or
similar Person with respect to such Receivable,  but excludes the Insurer in its
capacity as an insurer of such Receivable or any portion thereof.

"Outstanding Principal Balance" means, at any time in respect of a Receivable or
a Purchased Receivable, the amount of the payment obligation represented thereby
that is  outstanding  and owing by the Obligor  thereunder,  including an amount
representing the amount of all Taxes payable thereunder.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 14 -

                                                                    CONFIDENTIAL

"Parent",  in respect of a specified Person, means any other Person that owns at
least 50% of the  voting  securities  of the  specified  Person or of which such
Person  controls day to day operations of the specified  Person or of which such
Person has effective management control of the specified Person.

"Payment" has the meaning given to it in Section 2.1(c).

"Payment Price" has the meaning given to it in Section 2.1(c).

"Periodic Report" means a report substantially in the form of Exhibit E, whether
in electronic format or otherwise.

"Permitted Encumbrances" means (a) statutory liens or deemed trusts securing the
payment of Taxes,  assessments,  governmental  charges and other amounts payable
pursuant  to  statutes  which  are  either  (i) not  delinquent,  or (ii)  being
contested in good faith by  appropriate  proceedings  and for which the relevant
Seller has set aside  adequate  reserves in respect  thereof in accordance  with
Canadian GAAP or US GAAP from time to time approved by the relevant Seller;  and
(b) any encumbrances  created through, by, or in favour of, the Purchaser or the
Credit Enhancer.

"Person" means an individual,  partnership,  limited  partnership,  corporation,
trust, joint venture,  unincorporated association,  board or body established by
statute,  government (or any agency or political  subdivision  thereof) or other
entity of similar nature.

"Policy  Deductible"  means the "Policy  Deductible" as defined in the Insurance
Policy.

"PPSA" means the personal  property  security  legislation,  assignment  of book
debts legislation,  or uniform  commercial code or other similar  legislation in
Canada  or  the  United  States  in  which  the  filing  or  registration  of an
assignment,  financing  statement  or other  document is  required to  preserve,
protect and perfect the Purchaser's  right,  title and interest in, to and under
any of the Purchased Assets.

"Proceeds"  includes "proceeds" as defined in the Personal Property Security Act
(Ontario).

"Program  Amount"  means,  at any  time and in  respect  of each  currency,  the
aggregate of all Outstanding  Principal  Balances for all Purchased  Receivables
denominated in such currency purchased by the Purchaser  hereunder prior to such
time, less the aggregate amount of Collections  theretofore paid to and received
by the Purchaser.

"Program  Fee"  means,  on any date and in respect of each  currency,  an amount
equal to the  quotient  of (a) the  product  of (i)  0.80%,  (ii) the  aggregate
Outstanding Principal Balance of all Purchased  Receivables  denominated in such
currency  as at the open of  business  on such date and (iii) the number of days
since  the last date on which  Program  Fees were  deposited  to the  applicable
Disbursement  Account in accordance with Section 2.1(d)(iv),  divided by (b) 360
in

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 15 -

                                                                    CONFIDENTIAL

respect of the  Purchased  Receivables  that are  denominated  in United  States
Dollars and 365 in respect of the Purchased  Receivables that are denominated in
Canadian Dollars.

"Program  Year"  means each year  ending on the annual  anniversary  of the date
hereof.

"Purchase" means a purchase of or, with respect to Quebec Receivables Payment in
respect of, Purchased Assets made pursuant to Section 2.1.

"Purchase  Amount"  means,  on any day and in respect of an Eligible  Receivable
subject to a Purchase,  the number  determined in accordance  with the following
formula:

                                       FV
                             ----------------------
                                   (1 + r/n)d

                  Where:

                        FV =  the then  Outstanding  Principal  Balance of the
                              Eligible Receivable;

                        r  =  the rate of interest, expressed as an annualized
                              rate,  equal to the sum of (a) the  Base  Interest
                              Rate in respect of the  currency  of the  Eligible
                              Receivable and (b) the Purchaser Spread;

                        n  =  360 if the Eligible Receivable is denominated in
                              United  States  Dollars  or 365  if  the  Eligible
                              Receivable is denominated in Canadian Dollars; and

                        d  =  DSO,

and, when used in the context of more than one Eligible  Receivable,  shall mean
the aggregate Purchase Amount of such Eligible Receivables.

"Purchase  Date" means the date specified in the  Securitization  Agent Purchase
Confirmation on which: (i) Non-Quebec  Eligible  Receivables are to be purchased
by the Purchaser from the Canadian  Seller  hereunder;  or (ii) Payment is to be
made by the Purchaser in respect of certain Quebec  Eligible  Receivables to the
Canadian Seller hereunder.

"Purchase Limit" has the meaning ascribed thereto in Section 2.1(e).

"Purchase Notice" has the meaning ascribed thereto in Section 2.1(a).

"Purchase Price" has the meaning ascribed thereto in Section 2.1(b).

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 16 -

                                                                    CONFIDENTIAL

"Purchased  Assets"  means,  collectively,  all  Purchased  Receivables  and the
Related Security and Collections with respect thereto, and all Proceeds of, from
or with respect to any or all of the foregoing.

"Purchased  Receivable" means, at any time, any Non-Quebec  Purchased Receivable
owned by the Purchaser at such time which the  Purchaser has purchased  from the
relevant Seller pursuant  hereto,  or a Quebec Eligible  Receivable owned by the
Purchaser at such time in respect of which the  Purchaser  has made a Payment to
the Canadian Seller pursuant hereto.

"Purchaser  Spread"  means  0.30% or such other  percentage  as may be agreed in
writing by the parties from time to time.

"Quebec Amortization Commencement Date" has the meaning ascribed to such term in
the Quebec Assignment.

"Quebec  Eligible  Receivables"  means  Quebec  Receivables  which are  Eligible
Receivables.

"Quebec Purchased  Receivables" means, at any time, a Quebec Eligible Receivable
with  respect to which  Payment has been made by the  Purchaser  to the Canadian
Seller in  accordance  with  Section 2.1 and which is owned by the  Purchaser at
such time.

"Quebec  Receivable" means any Receivable where one of the following  conditions
is satisfied:

      (a)   the Obligor of such Receivable is located in the Province of Quebec;
            or

      (b)   such Receivable is payable at a location in the Province of Quebec,

provided,  however,  that Quebec  Receivables  shall not include any  Receivable
owing by: (i) an  Affiliate,  Parent or  Subsidiary  of the  Sellers;  or (ii) a
Governmental Authority.

"Rating Agency" means Moody's  Investors  Service,  Inc. or any other nationally
recognized  credit rating agency  designated as the "Rating Agency" for purposes
of this Agreement by the Purchaser and the Credit Enhancer,  notice of which has
been delivered to the Seller.

"Receivable"  means all amounts  payable by a Person to the  relevant  Seller in
respect of the sale of goods and services to such Person from time to time under
any document  originating  and  evidencing  the  obligation to pay such amounts,
including all scheduled periodic payments, extra charges,  interest and fees and
other amounts payable to the relevant Seller thereunder including all Taxes.

"Records"  means  all  Contracts,   books,   records  and  other  documents  and
information  (including  computer and electronic records,  computer  programmes,
tapes, diskettes,  data processing software and related property and rights and,
to the extent obtainable by way of existing software

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 17 -

                                                                    CONFIDENTIAL

controlled by the Seller,  hard copies of such information)  maintained by or on
behalf of the Sellers  evidencing  or  otherwise  relating  to any  Receivables,
Related  Security or any other  Purchased  Assets sold or intended to be sold by
the Sellers to the Purchaser,  or relating to the related  Obligors,  and, after
the purchase of any such Receivables, Related Security or other Purchased Assets
by the  Purchaser,  shall  include all such  records,  information  and material
maintained or required to be  maintained  by the Servicer in respect  thereof by
the Credit and Collection Policies or otherwise.

"Related  Document" means any Periodic Report,  any Purchase Notice,  any Credit
Enhancement  Agreement  and  any  other  written  communication  that  has  been
delivered  by the  Sellers  to the  Purchaser  or the  Securitization  Agent  in
connection herewith.

"Related Security" means, with respect to a Receivable:

      (a)   all of the related Seller's right,  title and interest in and to the
            goods or services  (including  returned  goods,  if any),  the sale,
            provision or distribution of which gave rise to such Receivable;

      (b)   all security interests, hypothecs or liens, and all property subject
            thereto,  from time to time securing or purporting to secure payment
            of the  Receivable,  whether  pursuant  to the  related  Contract or
            otherwise;

      (c)   all of the related  Seller's  right,  title and  interest in, to and
            under  all  guarantees,  indemnities,  letter of  credit,  insurance
            policies  (including  any  insurance  policy  or other  contract  of
            insurance  issued by the Insurer or any other Person),  all payments
            and proceeds made or received under any such  guarantee,  indemnity,
            letter of credit or insurance  policy,  and all other  agreements or
            arrangements of whatsoever character from time to time supporting or
            securing payment of the Receivable,  whether pursuant to the related
            Contract or otherwise;

      (d)   all Records  relating to the  Receivable or to any of the foregoing;
            and

      (e)   all  proceeds  of or  relating to the  foregoing,  including  to the
            Receivable.

"Required  Balance"  means,  on any day and in  respect  of each  currency,  the
greater of: (i) the sum of the Loss Reserve Amount, the Dilution Reserve Amount,
the Coupon Reserve Amount and the Servicing Fee Reserve Amount;  and (ii) 40% of
the highest amount calculated in accordance with clause (i) hereof on any day in
the 12 months prior thereto.

"Reserve Account" has the meaning ascribed thereto in Section 3.2(a).

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 18 -

                                                                    CONFIDENTIAL

"Securitization  Agent" means Efficient Capital Corporation,  in its capacity as
Securitization  Agent  of the  Purchaser,  its  successors  and any  replacement
Securitization Agent that may be appointed by the Purchaser from time to time.

"Securitization Agent Purchase Confirmation" has the meaning ascribed thereto in
Section 2.1(a).

"Sellers" means the Canadian Seller,  MNI and MNSI and "Seller" means any one of
the Sellers.

"Seller's Account" means with respect to the Canadian Seller account *Subject to
Request for Confidential Treatment;  Separately Filed with the Commission*; with
respect  to  MNI  account  *Subject  to  Request  for  Confidential   Treatment;
Separately Filed with the Commission*; and with respect to MNSI account *Subject
to Request for Confidential  Treatment;  Separately Filed with the Commission*or
such other accounts  designated by notice from a Seller to the Purchaser as such
Seller's Account for the purposes hereof.

"Sellers' Amounts" has the meaning ascribed thereto in Section 3.1(e).

"Sellers'  Auditors"  means  Deloitte  &  Touche  LLP or such  other  nationally
recognized firm of chartered accountants acting as the Sellers' auditors.

"Service Transfer" has the meaning specified in Section 5.11.

"Servicer"  means the Canadian Seller until a Service  Transfer and, at any time
thereafter, shall mean the Stand-By Servicer.

"Servicer Termination Event" has the meaning ascribed thereto in Section 5.9.

"Servicing  Fee  Reserve  Amount"  means,  on any  day  and in  respect  of each
currency,  an  amount  equal to the  product  of (a) the  aggregate  Outstanding
Principal Balance of all Purchased  Receivables  denominated in such currency as
at the open of business on such day,  (b) 2% and (c) the  quotient of the DSO on
such day for the related currency divided by 365.

"Stand-By Servicer" means Canadian Bonded Credits Limited or such other servicer
as may be designated by the Purchaser in accordance  with Section 5.12 from time
to time, and its successors and permitted assigns.

"Subsidiary",  in respect of a specified Person,  means any other Person that is
either  more than 20% owned by the  specified  Person or of which the  specified
Person  controls  day-to-day  operations  or of which the  specified  Person has
effective management control of the Person.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 19 -

                                                                    CONFIDENTIAL

"Tax" and  "Taxes"  means any  withholding,  stamp,  income,  business,  general
corporation,  large corporations,  property, capital, excise, customs, goods and
services,  sales,  consumption,  value  added,  harmonized  or other tax,  duty,
impost,  fee, levy,  assessment or other  governmental  charge,  and any related
penalties or interest.

"US GAAP" means  United  States  Generally  Accepted  Accounting  Principles  as
adopted  by  the  Financial  Accounting  Standards  Board  from  time  to  time,
consistently applied.

"United  States"  means the United  States of  America,  any State of the United
States,  the  District of  Columbia,  Puerto Rico and the United  States  Virgin
Islands.

"United States Dollars" or "USD" means the lawful currency of the United States.

1.2 Extended Meanings

            Words  importing  the  singular  shall  include  the plural and vice
versa,  words  importing  gender shall include all genders,  and words importing
natural  persons  shall include all Persons.  Every use of the word  "including"
herein shall be construed as meaning "including, without limitation".

1.3 Headings, Sections, Etc.

            The division of this Agreement into Articles, Sections and Exhibits,
the  insertion  of headings  and the  provision  of a table of contents  are for
convenience  of  reference  only  and  shall  not  affect  the  construction  or
interpretation  of  this  Agreement.  The  terms  "this  Agreement",   "hereof",
"herein", "hereunder" and similar expressions refer to this Agreement (including
the Exhibits  hereto) and not to any  particular  Article,  Section,  Exhibit or
other portion of this  Agreement  and shall  include any agreement  supplemental
hereto.  Unless  something  in the  subject  matter or context  is  inconsistent
therewith, or except where otherwise specifically provided, references herein to
Articles, Sections or Exhibits are references to the specific Articles, Sections
and Exhibits of or to this Agreement.

1.4 Accounting Principles

            Where the  character  or amount of any asset or liability or item of
revenue or expense is required to be determined for accounting purposes,  or any
consolidation  or other  accounting  computation  is required to be made for the
purposes of this  Agreement,  such  determination  or calculation  shall, to the
extent  applicable  and except as  otherwise  specified  herein or as  otherwise
agreed in writing by the parties,  be made in accordance with generally accepted
accounting  principles applied on a consistent basis. Wherever in this Agreement
reference is made to generally accepted  accounting  principles,  such reference
shall be deemed to be Canadian  GAAP,  except  that in the case of the  Canadian
Seller,  on a  consolidated  basis,  such  reference  may be to US  GAAP  in the
circumstance where the Canadian Seller, on a consolidated

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 20 -

                                                                    CONFIDENTIAL

basis,  has elected to use US GAAP and not Canadian  GAAP,  applicable as at the
date on which such calculation is made or required to be made in accordance with
generally accepted accounting principles.

1.5 Currency

            All amounts stated herein are in Canadian Dollars,  unless otherwise
expressly stated.

1.6 Payments

            Unless otherwise  indicated,  all amounts required hereby to be paid
to any party or  deposited  to any account are to be paid or  deposited,  as the
case may be, in  immediately  available  funds at the place  specified  for such
payment or deposit.

1.7 Non-Business Days

            Unless  provided to the contrary  herein,  if any payment to be made
hereunder  shall be due, any period of time would begin or end, any  calculation
is to be made or any other  action is to be taken on, or as of, or from a period
ending on, a day other than a Business  Day,  such payment  shall be made,  such
period of time shall begin or end, such calculation shall be made and such other
actions  shall be  taken,  as the case may be,  on or as of the next  succeeding
Business Day.

1.8 Computation of Time Periods

            Unless otherwise  indicated,  in the computation of a period of time
from a specified date to a later specified date, the word "from" means "from and
including" and each of the words "to" and "until" means "to but excluding".

1.9 Months; Days

            When reference is made herein to a month or a day, unless  otherwise
stated it shall be construed to mean a calendar  month or a calendar day, as the
case may be.

1.10 Exhibits

            The following are the Exhibits attached to this Agreement, which are
incorporated herein by reference and are deemed to be part of this Agreement:

         Exhibit A         -        Form of Assignment Agreement
         Exhibit B         -        Form of Purchase Notice
         Exhibit C         -        Form of Officer's Certificate

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 21 -

                                                                    CONFIDENTIAL

         Exhibit D         -        List of Offices Where Records Are Kept
         Exhibit E         -        Form of Periodic Report
         Exhibit F         -        Form of Quebec Assignment

                                    ARTICLE 2
                                    PURCHASES

2.1 Purchases

      (a) Subject to the terms and conditions hereof, from time to time prior to
the Amortization  Commencement  Date, the Canadian Seller may, for and on behalf
of the Sellers,  by delivering a notice  substantially  in the form of Exhibit B
(the "Purchase Notice") to the  Securitization  Agent on behalf of the Purchaser
at or before 8:00 a.m. on the Business Day prior to the proposed  Purchase  Date
specified in such Purchase Notice,  require the Purchaser to: (i) in the case of
Non-Quebec  Eligible  Receivables,   purchase  from  the  Sellers  and/or  their
respective  Subsidiaries the Non-Quebec  Eligible  Receivables,  and the Related
Security and Collections  relating  thereto,  specified in such Purchase Notice;
and (ii) in the case of Quebec  Eligible  Receivables,  require the Purchaser to
pay the  Canadian  Seller  and/or its  Subsidiaries  an amount in respect of all
Quebec  Receivables  which have become  Quebec  Eligible  Receivables  since the
immediately preceding Purchase Date or, in respect of the first Purchase Notice,
shall be an  amount in  respect  of all  Quebec  Receivables  which  are  Quebec
Eligible  Receivables on the Initial  Purchase Date.  Each Purchase Notice shall
state  the  amount  of the  Outstanding  Principal  Balance  of each  Non-Quebec
Eligible  Receivable to be purchased by the  Purchaser on the proposed  Purchase
Date and each  Quebec  Eligible  Receivable  in respect of which  payment by the
Purchaser shall be made on the proposed  Purchase Date. On or prior to the first
Business  Day  following  the date  that the  Securitization  Agent  receives  a
Purchase  Notice,  the  Securitization  Agent shall, on behalf of the Purchaser,
deliver a notice  (the  "Securitization  Agent  Purchase  Confirmation")  to the
Canadian  Seller,  for and on behalf of the Sellers,  confirming the purchase or
upcoming  Payment,  respectively,  by the  Purchaser  and  specifying  that  the
Purchase  Date  of  the  related  Receivables,  and  the  Related  Security  and
Collections  relating thereto,  specified in the  Securitization  Agent Purchase
Confirmation   shall  be  the  date  of  such   Securitization   Agent  Purchase
Confirmation. Each such Securitization Agent Purchase Confirmation shall confirm
the Outstanding  Principal  Balance of each Receivable to be purchased by, or in
respect  of  which  Payment  is to be made by,  the  Purchaser  on the  relevant
Purchase Date, the aggregate Purchase Amount and the amounts to be deducted from
such aggregate  Purchase Amount pursuant to Sections 2.1(b) and (c). It shall be
a condition  precedent to any Purchase  pursuant to a Purchase Notice that there
is sufficient cash on deposit in the applicable  Collection  Account  (excluding
any Sellers' Amounts and after the payment in full of the amounts referred to in
Section 3.1(f)) which,  together with other amounts  available to the Purchaser,
is sufficient to pay the Purchase  Price or Payment Price,  as  applicable,  for
such Purchase.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 22 -

                                                                    CONFIDENTIAL

      (b)  Provided  that no  Purchase  Limit  would  be  exceeded  and that the
conditions  precedent set out in Sections 6.1 and 6.2 have been satisfied,  upon
receipt by the  Securitization  Agent on behalf of the Purchaser of the Purchase
Notice  there shall exist a binding  agreement  between  the  Purchaser  and the
Sellers for the purchase and sale on a  fully-serviced  basis of the  Non-Quebec
Eligible Receivables, and the Related Security and Collections relating thereto,
specified in such Purchase  Notice,  at a purchase price (the "Purchase  Price")
comprised of (i) an immediate  cash payment to the Canadian  Seller in an amount
equal to the aggregate  Purchase Amount of the Non-Quebec  Eligible  Receivables
specified  in the  Purchase  Notice (to be paid in the  appropriate  currency or
currencies,  as applicable) minus the amounts referred to in Sections  2.1(d)(i)
to (vi) plus (ii) a deferred  amount to be paid to the Canadian Seller from time
to time in accordance with Sections 3.2(b) and 9.2.

      (c)  Provided  that no  Purchase  Limit  would  be  exceeded  and that the
conditions  precedent set out in Sections 6.1 and 6.2 have been satisfied,  upon
receipt by the  Securitization  Agent on behalf of the  Purchaser  of a Purchase
Notice the  Purchaser  shall pay (the  "Payment") a payment  price (the "Payment
Price")  comprised of (i) an immediate  cash payment to the Sellers in an amount
equal to the  aggregate  Purchase  Amount  of the  Quebec  Eligible  Receivables
specified  in the  Purchase  Notice (to be paid in the  appropriate  currency or
currencies,  as applicable) minus the amounts referred to in Sections  2.1(d)(i)
to (vi) plus (ii) a deferred  amount to be paid to the Sellers from time to time
in accordance with Sections 3.2(b) and 9.2.

      (d) On each  Purchase  Date under this Section  2.1,  subject to the terms
hereof, the Purchaser shall pay to the applicable Sellers the Purchase Amount in
respect of the  Purchase by  depositing  to the  Sellers'  Accounts  the related
Purchase  Amount,   less  the  following  amounts  which  the  Sellers,   hereby
irrevocably  direct the  Purchaser to deduct from the amounts to be deposited to
the Sellers'  Accounts and to deposit or pay such deducted amounts in accordance
with the following, and in the following order:

            (i)   deposit to the applicable Disbursement Account an amount equal
                  to any fees or premium  then due under any Credit  Enhancement
                  Agreement due to the relevant Credit Enhancer;

            (ii)  deposit to the applicable  Reserve  Account an amount equal to
                  the amount  necessary  to maintain on deposit in such  Reserve
                  Account the Required Balance;

            (iii) deposit to the  applicable  Collection  Account the  aggregate
                  Dilution  Amounts for all Dilutions  recognized  prior to such
                  Purchase  Date in respect of which  Dilution  Amounts have not
                  yet been deposited to such Collection Account;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 23 -

                                                                    CONFIDENTIAL

            (iv)  deposit to the applicable Disbursement Account an amount equal
                  to the Program Fee in respect of such Purchase Date,  together
                  with the Program Fees in respect of prior Purchases which have
                  not  yet  been  deposited  to  such  Disbursement  Account  as
                  required pursuant to this Section 2.1(d)(iv);

            (v)   pay to the Securitization Agent any of the fees referred to in
                  Section 8.5 which  remain  unpaid for a period in excess of 30
                  days from the due date thereof; and

            (vi)  deposit to the applicable Disbursement Account an amount equal
                  to any  expenses due to third  parties  that are  specifically
                  attributable  to Purchases made hereunder  including  expenses
                  relating to renewals,  filings and other  registrations and of
                  the Rating Agency, provided, however, that the Canadian Seller
                  has,  for and on behalf  of the  Sellers,  provided  its prior
                  written  approval (which may be withheld in its discretion) of
                  other  third  party   expenses  where  such  expenses  in  the
                  aggregate exceed CAD35,000.

Upon such payments and deposits being made, all of the Sellers' right, title and
interest in, to and under the  Non-Quebec  Purchased  Receivables  listed in the
Securitization Agent Purchase Confirmation in respect of such Purchase,  and all
of the Related Security and Collections  with respect thereto,  and all Proceeds
of,  from or with  respect to any or all of the  foregoing,  shall,  without any
further action on the part of the Sellers or the Purchaser, be sold, transferred
and assigned to, and vested in, the Purchaser and the Sellers shall be deemed to
represent and warrant to the Purchaser that each of the (i) Non-Quebec Purchased
Receivables sold by the Sellers to the Purchaser pursuant to such Purchase is an
Eligible Receivable on the Purchase Date and (ii) Quebec Purchased  Receivables,
in respect  of which  Payment  has been made by the  Purchaser  to the  Canadian
Seller, is an Eligible Receivable on the Purchase Date.

      (e) No Purchase of a  Receivable  may be made  hereunder  if, after giving
effect  thereto,  the  Program  Amount in respect of all  Purchased  Receivables
denominated in Canadian  Dollars would exceed CAD6 million or the Program Amount
in respect of Purchased  Receivables  denominated in United States Dollars would
exceed USD34 million, or such greater amounts as may be approved in writing from
time to time by each of the  Securitization  Agent, the Purchaser and the Credit
Enhancer (the "Purchase Limit").

2.2 Quebec Receivables

            The  Canadian  Seller  shall,  on the date of the Initial  Purchase,
execute  the  Quebec  Assignment.   Forthwith  after  the  Quebec   Amortization
Commencement  Date,  the  Purchaser  shall  amend,  or cause to be amended,  any
registrations  in  respect of the  Quebec  Assignment  so that it will no longer
apply to Quebec Receivables arising after the Quebec Amortization

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 24 -

                                                                    CONFIDENTIAL

Commencement  Date.  For  greater  certainty,  to the  extent  that there is any
inconsistency  between  this  Agreement  and the Quebec  Assignment,  the Quebec
Assignment shall govern.

2.3 List of Obligors and Credit Limits and Daily Program Operation

      (a) On the date hereof,  the Canadian Seller shall provide,  and from time
to time the Canadian Seller may provide,  for and on behalf of the Sellers,  the
Securitization  Agent  with a list of  Obligors  in  respect of which the credit
limit for each such Obligor is to exceed the  Discretionary  Limit setting forth
the name,  address and  proposed  credit  limit for each such Named  Obligor for
approval  by the  Securitization  Agent  (any  such  list,  as  approved  by the
Securitization  Agent and as  amended  from  time to time by the  Securitization
Agent,  shall be a "Named  Obligor List" for the purposes  hereof) and a list of
Discretionary  Obligors setting forth the name and address of each Discretionary
Obligor.  The  credit  limit  for  each  Discretionary   Obligor  shall  be  the
Discretionary Limit unless the list of Discretionary  Obligors specifies a lower
credit limit in respect of such Discretionary  Obligor in which case such credit
limit shall apply to such Discretionary Obligor.

      (b) Following the Initial  Purchase Date and prior to the  termination  of
the Canadian Seller as Servicer hereunder, from time to time on a periodic basis
agreed to by the Canadian Seller and the Purchaser (which shall be not less than
monthly),  the Canadian  Seller shall  provide the  Securitization  Agent with a
Periodic Report.

                                   ARTICLE 3
                              PAYMENTS AND ACCOUNTS

3.1 Collection Account

      (a) The  Securitization  Agent shall establish and maintain in the name of
the Purchaser,  a Canadian  Dollar account and a United States Dollar account at
an Eligible  Institution in Toronto to be designated as the collection  accounts
(each a "Collection  Account")  which  accounts shall be separate and segregated
from the  Securitization  Agent's own assets.  If at any time the institution at
which  the  Collection   Accounts  are  maintained  ceases  to  be  an  Eligible
Institution,   the  Securitization  Agent  shall,  within  10  days  thereafter,
establish substitute accounts at an Eligible Institution in Toronto and transfer
any funds in the Collection Accounts to such substitute  accounts,  and from the
date any such substitute account is established and funds are transferred,  such
substitute account shall be a Collection Account hereunder.

      (b) The Collection  Accounts shall be administered  by the  Securitization
Agent pursuant to the terms hereof.

      (c)  On the  date  of the  initial  Purchase  of  Receivables  owing  by a
particular  Obligor,  and until the Final  Collection  Date,  the Servicer shall
direct such Obligor to make payments in

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                     - 25 -

                                                                    CONFIDENTIAL

respect of all  Receivables  owing by such Obligor to the relevant Seller or the
Purchaser,  including Purchased Receivables, by delivery of cheques directly to,
in the case of the Canadian  Seller,  for "Dispatch"  related  invoices,  "Mitel
Networks Corporation, *Subject to Request for Confidential Treatment; Separately
Filed with the  Commission*"  and for "SAP"  related  invoices  "Mitel  Networks
Corporation,  *Subject to Request for Confidential  Treatment;  Separately Filed
with the  Commission*",  in the case of MNI, "Mitel Networks,  Inc.  *Subject to
Request for Confidential Treatment;  Separately Filed with the Commission*" and,
in the case of MNSI,  "Mitel Networks  Solutions,  Inc.  *Subject to Request for
Confidential  Treatment;  Separately  Filed with the Commission*" (or such other
P.O. box or account  addresses as may be designated in writing from time to time
by the Securitization Agent)  (collectively,  the "Lockbox") or by way of direct
deposit into the applicable  Collection Account. The Sellers hereby covenant and
agree that, to the best of their  ability,  they will cause all Obligors to make
payments in respect of Receivables in accordance with the preceding sentence and
in the event that the Sellers  receive any such payments,  they shall  forthwith
upon receipt,  and in any event by no later than 4:00 p.m. (Toronto time) on the
next  following  Business Day after the date of receipt  thereof by the relevant
Seller,  deliver to the  Purchaser  all such  payments  by way of deposit to the
Lockbox.  Any Collections received by the Sellers shall be held in trust for the
benefit of the Purchaser.

      (d) Except as otherwise  required by Law or Contract,  any payment made by
an Obligor in respect of Receivables shall be applied to the Receivable to which
such  payment  is  specifically  attributable.   If  any  such  payment  is  not
specifically attributable to any particular Receivable:

            (i)   if the Canadian Seller is the Servicer hereunder, such payment
                  shall be applied in accordance  with the Credit and Collection
                  Policies  provided that if the Credit and Collection  Policies
                  do not specify any such  application,  such  payment  shall be
                  applied to the oldest outstanding  Receivable  (denominated in
                  the same  currency as such payment) owed by such Obligor until
                  the same has been paid in full; and

            (ii)  if the  Canadian  Seller is not the Servicer  hereunder,  such
                  payment shall be applied (a) in accordance  with the Obligor's
                  remittance advice, (b) provided that such remittance advice is
                  silent or does not apply, then in accordance with an agreement
                  reasonably  made between the  relevant  Seller and the Obligor
                  regarding payment,  or (c) provided that there is no agreement
                  between the Seller and the Obligor regarding payment,  then to
                  the oldest  outstanding  Receivable  (denominated  in the same
                  currency as such  payment) owed by such Obligor until the same
                  has been paid in full.

      (e)  Promptly,  following the receipt by the  Securitization  Agent of the
Periodic  Report  and the prompt  verification  of the  accuracy  thereof by the
Securitization Agent, all amounts

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OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                     - 26 -

                                                                    CONFIDENTIAL

applied in accordance with Section 3.1(d) to Receivables which are not Purchased
Receivables ("Sellers' Amounts") shall be transferred to the Sellers' Accounts.

      (f) Amounts on deposit in the Collection  Accounts (excluding any Sellers'
Amounts)  that  relate  to  Purchased   Receivables  shall  be  applied  by  the
Securitization Agent in the following order of priority from time to time:

            (i)   the  amount  of any  interest  on the  Notes  shall be paid to
                  Noteholders when due;

            (ii)  the  amount  of any  fees or  premium  due  under  any  Credit
                  Enhancement  Agreement  shall be transferred to the applicable
                  Disbursement Account when due;

            (iii) the  amount of any  principal  on the  Notes  shall be paid to
                  Noteholders when due;

            (iv)  the  amount of any fees due to the  Stand-By  Servicer  or any
                  other  replacement  Servicer  hereunder  shall  be paid to the
                  Stand-By Servicer or such other replacement Servicer when due;

            (v)   prior to the Amortization Commencement Date, the amount of any
                  Program  Fee shall be paid to the  Securitization  Agent  when
                  due; and

            (vi)  to the  extent  that an  amount  has been  transferred  from a
                  Reserve  Account to a Collection  Account  pursuant to Section
                  3.2(c)(iii) on a prior date,  such amount shall be transferred
                  back to such Reserve Account.

3.2 Reserve Accounts

      (a) The  Securitization  Agent shall establish and maintain in the name of
the  Canadian  Seller  and  MNI,  accounts  at  an  Eligible  Institution  to be
designated as the reserve  accounts (each a "Reserve  Account"),  which accounts
shall be separate and  segregated  from the  Securitization  Agent's own assets.
Each of the Canadian  Seller and MNI hereby  grants to the  Purchaser a security
interest in all of its right,  title and interest in and to the Reserve Accounts
to secure the due and timely  payment of the amounts  required to be paid out of
the Reserve Accounts to the Purchaser or otherwise payable by the Sellers to the
Purchaser  hereunder.  If at any  time the  institution  at  which  the  Reserve
Accounts are maintained ceases to be an Eligible Institution, the Securitization
Agent shall,  within 10 days  thereafter,  establish  substitute  accounts at an
Eligible  Institution  and  transfer  any funds in the Reserve  Accounts to such
substitute  accounts,   and  from  the  date  any  such  substitute  account  is
established  and funds  are  transferred,  such  substitute  account  shall be a
Reserve Account hereunder.  All funds deposited in the Reserve Accounts shall be
invested by the Securitization Agent in Eligible Investments.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

      (b) Until the Amortization Commencement Date, other than the occurrence of
an Amortization Commencement Date set out in Sections 7.1(i), (j) or (t) or as a
result of the Canadian  Seller  designating an  Amortization  Commencement  Date
pursuant to clause (c) of the definition of "Amortization Commencement Date", on
each Purchase Date, after the completion of all Purchases on such Purchase Date,
an amount  equal to the  amount by which (i) the  amount on deposit in a Reserve
Account on such Purchase Date after the payment and  distribution of all amounts
provided  for under  Section  2.1  exceeds  (ii) the  Required  Balance  on such
Purchase Date,  shall be paid to the Canadian Seller or MNI, as the case may be,
by  transferring  such  amount  to the  applicable  Sellers'  Account.  Upon the
occurrence of an Amortization Commencement Date that results from the occurrence
of an Amortization  Event set out in Sections 7.1(i),  (j) or (t) or as a result
of the Canadian Seller designating an Amortization Commencement Date pursuant to
clause (c) of the  definition  of  "Amortization  Commencement  Date" and to the
Final  Collection  Date,  amounts shall be paid to the Canadian  Seller provided
that the amount  remaining in each Reserve Account is equal to the lesser of (i)
the Required  Balance in the same currency as the Reserve  Account and (ii) 110%
of the aggregate  Outstanding  Principal Balance of all Purchased Receivables in
the same  currency as the  Reserve  Account.  On the  Business  Day  immediately
following the Final  Collection  Date,  all amounts  remaining on deposit in the
Reserve Account after the payment in full of all amounts  referred to in Section
3.2(c)  shall be paid to the  Canadian  Seller  or MNI,  as the case may be,  by
transferring such amount to the applicable Sellers' Account.

      (c)  Amounts on deposit in the  Reserve  Accounts  shall be applied by the
Securitization Agent to satisfy the following:

            (i)   if the Servicer or the  Securitization  Agent  determines that
                  there is a Credit Loss that is not a Non-Qualifying  Loss, (A)
                  the full amount of such Credit Loss shall be transferred  from
                  the Reserve Account to the applicable Collection Account up to
                  a maximum  aggregate amount of CAD150,000 or the equivalent in
                  United States Dollars (as the case may be) in any Program Year
                  and (B) 10% of such Credit Loss shall be transferred from such
                  Reserve  Account to such  Collection  Account to the extent of
                  any  Credit  Losses  in any  Program  Year in  excess  of such
                  maximum aggregate amount;

            (ii)  payments  equal  to  the  aggregate  of all  then  outstanding
                  Non-Qualifying Losses;

            (iii) to the extent  that the  amount on  deposit in the  applicable
                  Collection   Account   (excluding  any  Sellers'  Amounts)  is
                  insufficient  to pay interest  (imputed or  otherwise)  on the
                  Notes when due, an amount  equal to such  deficiency  shall be
                  transferred  from  the  applicable  Reserve  Account  to  such
                  Collection Account;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                     - 28 -

                                                                    CONFIDENTIAL

            (iv)  on or after the Amortization  Commencement  Date, the Dilution
                  Amount in respect of any Dilution  shall be  transferred  from
                  the applicable  Reserve  Account to the applicable  Collection
                  Account;

            (v)   prior to the Amortization  Commencement  Date and on the Final
                  Collection  Date,  to the extent that the amount on deposit in
                  the  applicable  Collection  Account  (excluding  any Sellers'
                  Amounts) is  insufficient  to pay the Program Fee when due, an
                  amount equal to such deficiency  shall be transferred from the
                  applicable Reserve Account to such Collection Account; and

            (vi)  to pay the fees of any replacement Servicer.

3.3 Disbursement Account

      (a) The  Securitization  Agent shall establish and maintain in the name of
the Purchaser accounts at an Eligible Institution in Toronto to be designated as
the disbursement accounts (each a "Disbursement Account"),  which accounts shall
be separate and segregated from the Securitization Agent's own assets. If at any
time the institution at which the Disbursement Accounts are maintained ceases to
be an Eligible  Institution,  the  Securitization  Agent  shall,  within 10 days
thereafter, establish substitute accounts at an Eligible Institution in Toronto,
Ontario and transfer any funds in the  Disbursement  Accounts to such substitute
accounts, and from the date any such substitute account is established and funds
are  transferred,  such  substitute  account shall be the  Disbursement  Account
hereunder.

      (b) The Disbursement  Accounts shall be administered by the Securitization
Agent pursuant to the terms hereof.

      (c)  Amounts  shall  be  deposited  into  the  Disbursement   Accounts  in
accordance with Sections 2.1(d)(i), (iv) and (vi).

      (d) Amounts on deposit in the  Disbursement  Accounts  shall be applied by
the Securitization Agent in the following manner from time to time:

            (i)   the  amount  of any fees or  premiums  due  under  any  Credit
                  Enhancement  Agreement  shall be paid to the  relevant  Credit
                  Enhancer when due;

            (ii)  any expenses of the  Purchaser  due to third  parties that are
                  specifically   attributable   to  Purchases  made   hereunder,
                  including  expenses  relating to  renewals,  filings and other
                  registrations and of the Rating Agency,  shall be paid to such
                  third parties when due; provided,  however,  that the Canadian
                  Seller has,  for and on behalf of the  Sellers,  provided  its
                  prior written

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 29 -

                                                                    CONFIDENTIAL

                  approval  (which may be withheld in its  discretion)  of other
                  third party  expenses  where such  expenses  in the  aggregate
                  exceed CAD35,000; and

            (iii) prior to the Amortization Commencement Date, the amount of any
                  Program Fee due to the  Securitization  Agent shall be paid to
                  the Securitization Agent when due.

3.4 Dilutions

      (a) If on any day prior to the Amortization  Commencement  Date there is a
Dilution,  the relevant  Dilution Amount shall be deducted from Purchase Amounts
on  subsequent  Purchase  Dates in accordance  with Section  2.1(b) and shall be
transferred  from the applicable  Reserve  Account to the applicable  Collection
Account  pursuant to Section  3.2(c)(iv).  Each Seller shall treat the amount of
any such  deductions  as a refund of a portion of the Purchase  Price or Payment
Price,  as  applicable,  paid by the  Purchaser to such Seller in respect of the
relevant Purchased Receivable to which the Dilution relates.

      (b) Any Collection in respect of a Dilution for which the Dilution  Amount
has  been  deducted  from  Purchase  Amounts  or the  Dilution  Amount  has been
transferred  from a Reserve Account to a Collection  Account pursuant to Section
3.2(c)(iv) shall be deemed to be a Collection in respect of a Receivable that is
not a Purchased  Receivable for the purposes of Sections  3.1(d) and (f) and the
amount of any such Collection shall be transferred from such Collection  Account
to the applicable Sellers' Account.

3.5 Repurchases for Breach of Representations and Warranties

      (a) If any  representation  or  warranty  in Section  4.1(k) or (l) is not
true,  or is  determined  not to have been true as of any  Purchase  Date,  with
respect  to a  Purchased  Receivable,  or  the  Contract,  Related  Security  or
Collections  related  thereto,  such  Receivable  shall  cease to be a Purchased
Receivable  and,  together  with the Related  Security and  Collections  related
thereto,  shall  thereupon be sold,  assigned and  transferred to the applicable
Seller without recourse or warranty (expressed, implied, statutory or otherwise)
and  without the need for any formal or other  instrument  of  assignment  for a
purchase  price equal to the  Outstanding  Principal  Balance of such  Purchased
Receivable,  which  amount  shall  for all  purposes  hereof  be  deemed to be a
Collection of such Purchased Receivable.

      (b) The parties  acknowledge  that,  notwithstanding  any other  provision
hereof,  the  Sellers  shall  have no  authority  to reduce,  amend,  extend the
maturity of or otherwise  modify or waive any term of any  Purchased  Receivable
(other  than in  accordance  with the terms of the  Contract  or the  Credit and
Collection  Policy or in the Canadian Seller's capacity as Servicer as permitted
by  this  Agreement)  in  any  manner  that  materially  adversely  affects  the
collectibility  of  such  Purchased   Receivable  or  the  Related  Security  or
Collections  with  respect  thereto.  Insofar as the Sellers so reduce,  extend,
amend or otherwise modify a Purchased Receivable or related

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

Contract in breach of this Section 3.5(b) without the Purchaser's prior consent,
the relevant Seller will be obliged to repurchase the Purchased  Receivable at a
purchase price equivalent to the Outstanding  Principal Balance thereof prior to
any such reduction, extension, amendment or other modification.

3.6 Deemed Collections

            The parties  acknowledge  that the deemed receipt of a Collection of
all or part of a Purchased Receivable pursuant to Sections 3.4 and 3.5 shall not
in any way impair or  otherwise  affect any  contractual  or other  right of the
relevant  Seller or the  Purchaser  as against  the  Obligor  of such  Purchased
Receivable  or  any  other  Person  (other  than  the  relevant  Seller  or  the
Purchaser),  and no such  Obligor or other  Person  shall  derive any benefit by
virtue of such deemed receipt.

                                   ARTICLE 4
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

4.1 Representations and Warranties of the Sellers

            Each Seller  hereby  represents  and warrants to the  Purchaser on a
continuous  basis,  and  acknowledges  that the  Purchaser  is  relying  on such
representations  and  warranties in entering  into this  Agreement and in making
each Purchase hereunder, notwithstanding any investigations or otherwise, that:

      (a)   each Seller is a corporation  validly  organized and existing and in
            good standing under the laws of its  jurisdiction of  incorporation,
            has full  corporate  power and authority to own its  properties  and
            assets and is duly  qualified to do business and is in good standing
            in each  jurisdiction  where the  failure to so qualify or  maintain
            such good  standing,  singularly or in the  aggregate,  could have a
            Material Adverse Effect;

      (b)   each Seller has full  corporate  power and  authority to execute and
            deliver this  Agreement and the Related  Documents (to which it is a
            party) and to do all acts and things  required or contemplated to be
            done by it hereunder or thereunder;

      (c)   each Seller has taken all  necessary  corporate  action to authorize
            the  execution  and  delivery  of this  Agreement  and  the  Related
            Documents (to which it is a party) and the  performance by it of its
            obligations   hereunder  and  thereunder  and  of  the  transactions
            contemplated hereby and thereby;

      (d)   the execution and delivery by each Seller of this  Agreement and the
            Related  Documents (to which it is a party) and the  performance  by
            each Seller of its

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

            obligations   hereunder  and  thereunder  and  of  the  transactions
            contemplated  hereby and  thereby,  do not and will not  contravene,
            breach, constitute a default under, violate or conflict with:

            (i)   each   Seller's   constating   documents  or  by-laws  or  any
                  resolution   passed   by  its  board  of   directors   or  its
                  shareholders;

            (ii)  any Law  applicable to the relevant  Seller which could have a
                  Material Adverse Effect;

            (iii) any  material  indenture,  loan or  credit  agreement,  lease,
                  mortgage,  security  agreement,  bond, note, contract or other
                  agreement  or  instrument  to which the  relevant  Seller is a
                  party or by which it or its property is bound; or

            (iv)  any order, writ, judgment, award, injunction or decree binding
                  on the relevant Seller or affecting its properties,

            and do not and will not result in or  require  the  creation  of any
            Lien upon or with respect to any of its properties;

      (e)   each of this  Agreement and the Related  Documents (to which it is a
            party) has each been duly executed and delivered by each Seller;

      (f)   each of this  Agreement and the Related  Documents (to which it is a
            party) is a legal,  valid and binding  obligation of each Seller and
            is  enforceable  against each Seller by the other parties hereto and
            thereto  in  accordance   with  its  respective   terms  subject  to
            bankruptcy, insolvency,  reorganization,  winding-up, moratorium and
            other laws generally  affecting the rights of creditors and the fact
            that specific  performance  and  injunction  are equitable  remedies
            available only in the discretion of the court;

      (g)   no transaction  contemplated by this Agreement  requires  compliance
            with any bulk sales act or similar Law;

      (h)   no  authorization,  approval or other action by, and no notice to or
            filing with, any  Governmental  Authority is necessary in connection
            with the execution and delivery by each Seller of this Agreement and
            the Related  Documents (to which it is a party),  or the performance
            by each Seller of its obligations  hereunder or thereunder or of the
            transactions contemplated hereby or thereby, or to give legal effect
            to the same,  except  for the filing of the  assignments,  financing
            statements and similar instruments referred to in Section 6.1(g);

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 32 -

                                                                    CONFIDENTIAL

      (i)   the Records are current in all material  respects to their  relevant
            date and reflect all material  transactions  between each Seller and
            the Obligors under the related  Purchased  Receivables and any other
            Person  in  respect  thereof  in  accordance  with  the  Credit  and
            Collection Policies;

      (j)   other than the provision to Obligors of the Purchased Receivables or
            the Obligors under the Related  Security  related  thereto of actual
            notice  of  the  sale,   transfer  and  assignment  thereof  to  the
            Purchaser, all filings, recordings, notifications,  registrations or
            other actions under all applicable  Laws,  including the PPSA,  have
            been made or taken, and all approvals obtained, in each jurisdiction
            where  necessary or appropriate  (and where  permitted by applicable
            Law) to give legal effect to the  transactions  contemplated by this
            Agreement  and the  Related  Documents  and to  validate,  preserve,
            perfect and protect the Purchaser's ownership interest in and rights
            to collect any and all of the Purchased Assets,  including the right
            to enforce the Related Security related thereto;

      (k)   upon the Purchase  thereof  under this  Agreement,  each  Receivable
            which is subject to such Purchase is an Eligible Receivable and each
            Eligible  Receivable and the related  Contract and Related  Security
            related thereto will be owned by the Purchaser free and clear of any
            Lien  including any lien referred to in clause (a) of the definition
            of "Permitted Encumbrances";

      (l)   no financing  statement,  registration,  recording,  filing or other
            document similar in effect against,  or naming,  the relevant Seller
            as debtor, seller,  transferor or assignor relating to any Purchased
            Receivable  or any Contract or  Collections  relating  thereto is on
            file except in favour of the Purchaser;

      (m)   there are no actions,  suits or proceedings  existing or pending, or
            to the  knowledge of the  relevant  Seller,  threatened,  against or
            affecting  the  relevant  Seller or any of its  property  at law, in
            equity or before any Governmental  Authority or arbitration tribunal
            or  alternative  dispute  resolution  mechanism  that,  if adversely
            determined, could have a Material Adverse Effect, and each Seller is
            not in default with respect to any Law or order of any  Governmental
            Authority, which default could have a Material Adverse Effect;

      (n)   no default has  occurred  and is  outstanding  under any  agreement,
            instrument,  indenture or trust deed to which the relevant Seller is
            a party, which default could have a Material Adverse Effect;

      (o)   the Canadian  Seller's  chief place of business and chief  executive
            office is located at 350 Legget Drive, Ottawa, Ontario K2K 2W7;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 33 -

                                                                    CONFIDENTIAL

      (p)   there is no  federal,  provincial  or local Law or  ordinance  under
            which any Taxes  (other than Taxes on income of the  Purchaser)  are
            required to be paid or remitted by the  Purchaser  in respect of any
            of the Purchased Assets,  nor will the Purchaser be required to make
            any  deduction,  withholding  or remittance of Taxes with respect to
            any  payment or  remittance  to be made by or on behalf of it on its
            own behalf, on behalf of the Purchaser or on behalf of any Obligor;

      (q)   all factual information,  including all Periodic Reports,  furnished
            by or on behalf of the Sellers to the Purchaser, the Credit Enhancer
            or the Securitization  Agent for purposes of, or in connection with,
            this Agreement or any transaction contemplated hereby is, when taken
            as a whole, and all other factual information hereafter furnished by
            or on behalf of the Sellers to the Purchaser, the Credit Enhancer or
            the  Securitization  Agent will be, when taken as a whole,  true and
            accurate  in all  material  respects  on the date as of  which  such
            information  is  dated  or  certified  and (in the  case of any such
            information  furnished  prior  to the  date  hereof)  as of the date
            hereof (unless such information relates to an earlier date, in which
            case  such  information,  when  taken as a whole,  shall be true and
            accurate in all material  respects as of such earlier date),  and is
            not,  or shall  not be, as the case may be,  when  taken as a whole,
            incomplete by omitting to state any material fact  necessary to make
            such information not misleading;

      (r)   the Sellers are treating the sale,  transfer and  assignment  of the
            Purchased Assets to the Purchaser under this Agreement as a sale for
            all purposes;

      (s)   the  financial  statements  furnished to the  Purchaser  pursuant to
            Section  5.6(q) have been  prepared  in  accordance  with  generally
            accepted  accounting  principles  and  present  fairly  the  assets,
            liabilities and financial  position of the Sellers on a consolidated
            basis as at the date thereof, and there has been no material adverse
            change in the  financial  position of the Sellers on a  consolidated
            basis from that  reflected in the most recent  financial  statements
            provided by Sellers to the Purchaser;

      (t)   to the knowledge of the relevant Seller,  no Amortization  Event has
            occurred and is continuing;

      (u)   the  transactions  contemplated  by  this  Agreement  comply  in all
            material  respects with all laws and  regulations  in Canada and the
            United  States  regarding  the  collection,  use and  disclosure  of
            personal  information,  including for greater certainty the Personal
            Information  Protection and  Electronic  Documents Act (Ontario) and
            all other privacy laws and  regulations of the individual  Provinces
            and the Federal Government of Canada and the United States;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

      (v)   the Canadian Seller is duly licensed to collect provincial sales Tax
            and harmonized Tax in all applicable provinces of Canada and each of
            MNI and MNSI are duly  licensed  to collect  any  similar Tax in the
            United States; and

      (w)   each Seller:  (i) is acting for its own  account;  (ii) has made its
            own   independent   decisions   to  enter   into  the   transactions
            contemplated   hereby  and  as  to  whether  such  transactions  are
            appropriate  or proper for it based upon its own  judgement and upon
            advice from such advisers as it has deemed  necessary;  (iii) is not
            relying on any communication (written or oral) of the Securitization
            Agent or the Purchaser as investment  advice;  and (iv)  understands
            that  no   communication   (written  or  oral)   received  from  the
            Securitization  Agent  or the  Purchaser  will  be  deemed  to be an
            assurance  or   guarantee  as  to  the  expected   results  of  such
            transactions.

4.2 Representations and Warranties of the Purchaser

            The  Purchaser  hereby  represents  and warrants to the Sellers on a
continuous  basis,  and  acknowledges  that  the  Sellers  are  relying  on such
representations  and  warranties in entering into this  Agreement and making any
sales hereunder, notwithstanding any investigations or otherwise, that:

      (a)   the Purchaser is a trust  established under the laws of the Province
            of Ontario;

      (b)   the  Purchaser  has full power and  authority to execute and deliver
            this  Agreement  and the Related  Documents (to which it is a party)
            and to do all acts and things required or contemplated to be done by
            it hereunder or thereunder;

      (c)   the  Purchaser  has taken all  necessary  action  to  authorize  the
            execution and delivery of this  Agreement and the Related  Documents
            (to which it is a party),  and the  performance  by the Purchaser of
            its  obligations  hereunder and thereunder  and of the  transactions
            contemplated hereby and thereby;

      (d)   this  Agreement  and the Related  Documents (to which it is a party)
            have been duly executed and delivered by the Purchaser;

      (e)   each of this  Agreement and the Related  Documents (to which it is a
            party) is the legal,  valid and binding  obligation of the Purchaser
            and is  enforceable  against  the  Purchaser  by the  other  parties
            thereto  in  accordance   with  its  terms  subject  to  bankruptcy,
            insolvency,  reorganization,  winding-up,  moratorium and other laws
            generally  affecting  the  rights  of  creditors  and the fact  that
            specific performance and injunction are equitable remedies available
            only in the discretion of the court;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

      (f)   the Purchaser is not, and no beneficiary of the Purchaser will be, a
            non-resident  of Canada  within  the  meaning  of the Income Tax Act
            (Canada);

      (g)   the execution  and delivery by the  Purchaser of this  Agreement and
            the Related Documents (to which it is a party),  and the performance
            by it of  its  obligations  hereunder  and  thereunder  and  of  the
            transactions  contemplated  hereby and thereby,  do not and will not
            contravene,  breach, constitute a default under, violate or conflict
            with:

            (i)   the Purchaser's declaration of trust;

            (ii)  any  Law  applicable  to  the  Purchaser  which  could  have a
                  Material Adverse Effect;

            (iii) any  material  indenture,  loan or  credit  agreement,  lease,
                  mortgage,  security  agreement,  bond, note, contract or other
                  material  agreement or  instrument to which the Purchaser is a
                  party or by which it or its property is bound; or

            (iv)  any order, writ, judgment, award, injunction or decree binding
                  on it or affecting the Purchaser's property;

      (h)   no  authorization,  approval or other action by, and no notice to or
            filing with, any  Governmental  Authority is necessary in connection
            with the execution  and delivery by the Purchaser of this  Agreement
            or  the  Related  Documents  (to  which  it  is  a  party),  or  the
            performance  by the  Purchaser  of  its  obligations  hereunder  and
            thereunder or of the transactions contemplated hereby or thereby, or
            to give  legal  effect  to the same  other  than  such as have  been
            obtained;

      (i)   there are no actions,  suits or proceedings  existing or pending, or
            to the knowledge of the Purchaser,  threatened, against or affecting
            the Purchaser or any of its property at law, in equity or before any
            Governmental   Authority  or  arbitration  tribunal  or  alternative
            dispute resolution  mechanism that, if adversely  determined,  could
            have a Material Adverse Effect,  and the Purchaser is not in default
            with  respect  to any Law or  order of any  Governmental  Authority,
            which default could have a Material Adverse Effect; and

      (j)   no default has  occurred  and is  outstanding  under any  agreement,
            instrument,  indenture  or trust  deed to which the  Purchaser  is a
            party, which default could have a Material Adverse Effect.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

4.3 Affirmative Covenants of the Sellers

            From the date of this  Agreement  until the Final  Collection  Date,
unless  each of the  Purchaser  and the  Credit  Enhancer  otherwise  consent in
writing, each Seller covenants to:

      (a)   comply with all Laws  applicable  to all or any of it, its business,
            its properties,  the Purchased  Receivables and the Related Security
            and Contracts related thereto, where the failure to do so could have
            a Material Adverse Effect;

      (b)   preserve and maintain its corporate  existence,  rights,  franchises
            and privileges and qualify and remain qualified to carry on business
            in each  jurisdiction  in which the  failure  to do so could  have a
            Material Adverse Effect;

      (c)   promptly  notify  the  Purchaser  of any  amendment,  limitation  or
            restriction  of any  licence  issued  to the  relevant  Seller  by a
            Governmental  Authority  relating to the carrying on by the relevant
            Seller of its business if such amendment,  limitation or restriction
            could have a Material Adverse Effect;

      (d)   timely and fully  perform and comply in all material  respects  with
            all terms,  covenants and other provisions  required to be performed
            and observed by it under this  Agreement  and the Related  Documents
            (to  which it is a  party)  and  under  and in  connection  with all
            Eligible Receivables and Contracts;

      (e)   notify the  Purchaser in writing at least 30 Business  Days prior to
            (i) any change of address of the  relevant  Seller's  chief place of
            business  and/or  chief  executive  office or (ii) any change in its
            corporate name;

      (f)   other  than  notifications  to  Obligors,  from  time to time at the
            relevant  Seller's   expense,   promptly  execute  and  deliver  all
            instruments,  documents  and make all  renewals,  filings  and other
            registrations  deemed  necessary by the relevant Seller or requested
            by the Purchaser,  acting reasonably, to maintain,  perfect, protect
            or more fully  evidence the  Purchaser's  interest in the  Purchased
            Assets under this  Agreement as against  third  parties or to enable
            the Purchaser to exercise or enforce any of its rights thereunder or
            under this Agreement;

      (g)   treat the sale,  transfer and assignment of the Purchased  Assets to
            the  Purchaser  under this  Agreement as a sale for all purposes and
            indicate in its books and records,  including the Records,  that the
            Purchased  Assets have been sold to the  Purchaser  pursuant to this
            Agreement;

      (h)   take all  reasonable  necessary  steps to (i) perfect or protect the
            Purchasers'  ownership of the  Purchased  Assets and (ii) obtain all
            discharges and releases

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 37 -

                                                                    CONFIDENTIAL

            necessary to  discharge  or release any  security  interest or other
            rights or interests of any Person in the Purchased Assets other than
            those in favour of the Purchaser;

      (i)   promptly upon becoming  aware  thereof,  notify the Purchaser of (i)
            any Credit Losses, and (ii) litigation or other court or arbitration
            proceeding  brought  against the relevant  Seller which could have a
            Material Adverse Effect; and

      (j)   remain  responsible  and liable under the  Contracts  related to the
            Purchased  Receivables  and to fully perform each of its obligations
            and covenants thereunder.

4.4 Affirmative Covenants of the Canadian Seller

      (a)   furnish to the  Securitization  Agent, the Purchaser (and the Credit
            Enhancer with respect to (i) only):

            (i)   forthwith  upon the  occurrence of, or upon becoming aware of,
                  any  Amortization  Event or any event or the  existence of any
                  fact  which,  with the  giving  of  notice or lapse of time or
                  both, may constitute an Amortization Event, notice of any such
                  Amortization Event or any such event or fact,  together with a
                  statement  of  its  senior  financial  officer  or  accounting
                  officer, on its behalf and without personal liability, setting
                  forth details as to such Amortization Event or as to such fact
                  or event and the action which it has taken and is proposing to
                  take with respect thereto; and

            (ii)  promptly,  from time to time, such other  documents,  records,
                  information or reports with respect to the Purchased Assets or
                  the  conditions or operations,  financial or otherwise,  of it
                  (including,  without  limitation,  reports with respect to the
                  remittance  of Taxes) as the  Purchaser or the  Securitization
                  Agent may from time to time reasonably request;

      (b)   on each 15th Business Day of each month or, upon receiving notice by
            the  Purchaser  within  two  days of the 15th  Business  Day of each
            month, no later than five days after receiving such notice,  deliver
            to the Purchaser a certificate of the Canadian Seller in the form of
            Exhibit  C dated as of such  date and  signed  on its  behalf by its
            Chief Financial Officer, Treasurer,  Secretary, Corporate Controller
            or other officer as  designated by the Canadian  Seller from time to
            time;  provided  that such  designee has some  familiarity  with the
            transactions contemplated hereby; and

      (c)   perform all of the duties and  covenants of the  Servicer  hereunder
            for so long as it may be designated as the Servicer.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

4.5 Negative Covenants of the Sellers

            From the date of this  Agreement  until the Final  Collection  Date,
without the Purchaser's and the Credit  Enhancer's prior written  consent,  each
Seller covenants that it will not:

      (a)   take any action that may cause the validity or  effectiveness of the
            sales,  transfers and  assignments of the Purchased  Assets provided
            for in this  Agreement  to be impaired or to take any action or omit
            to take any steps  that may result in, or create or suffer to exist,
            any Lien extending to or otherwise arising upon the Purchased Assets
            or any part thereof or any interest therein or the proceeds thereof;

      (b)   except as otherwise  provided herein,  purport to sell,  transfer or
            assign (by operation of law or  otherwise)  or otherwise  dispose of
            any  Purchased  Assets or any account to which any  Collections  are
            deposited,  or assign any right to receive  income in respect of any
            thereof; or

      (c)   enter  into  any  transaction  of   reorganization,   consolidation,
            amalgamation, merger or arrangement or sell all or substantially all
            of its undertaking, property and assets (any of the foregoing events
            being  referred  to in this  Section  as a  "Transaction"),  without
            providing at least that number of days prior written notice equal to
            the lesser of (i) 60 days and (ii) the then current weighted average
            DSO  calculated  in accordance  with Section  7.1(p) plus 15 days to
            each of the Purchaser,  the Credit  Enhancer and the  Securitization
            Agent and, if such Transaction could have a Material Adverse Effect,
            the  Purchaser  shall have the right upon  receiving  notice of such
            Transaction to designate the Amortization Commencement Date to occur
            effective  on the  date  specified  by the  Securitization  Agent by
            notice in writing to the Canadian Seller;  provided,  however,  that
            the Canadian  Seller shall have the right to provide  written notice
            to the Purchaser,  the Credit Enhancer and the Securitization  Agent
            on or before 5:00 p.m.  (Toronto  time) on the second  Business  Day
            after the  receipt  by the  Canadian  Seller  of the  Securitization
            Agent's notice to inform the  Securitization  Agent that as a result
            of the  Securitization  Agent's  notice the Sellers will not proceed
            with the  Transaction  in which  event  the  Securitization  Agent's
            notice  and the  Seller's  notice of the  Transaction  shall both be
            deemed to be  retracted,  null and void.  If such notice is given by
            the  Securitization  Agent,  none of the Sellers shall complete such
            Transaction earlier than the date that the Transaction was specified
            to occur in the  notice  of such  Transaction  sent by the  relevant
            Seller to the Purchaser.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 39 -

                                                                    CONFIDENTIAL

4.6 Affirmative Covenants of the Purchaser

            Each of the Purchaser and the Securitization Agent covenants that it
will, in accordance with and subject to the terms of this Agreement:

      (a)   duly and punctually  perform each of its  agreements,  covenants and
            obligations under this Agreement;

      (b)   promptly following receipt thereof, provide the Canadian Seller with
            copies of any notices received from the Insurer;

      (c)   co-operate   with   the   Servicer   to   diligently   resolve   any
            reconciliation discrepancy arising from Section 5.7(e)(i);

      (d)   (i) use  its  reasonable  commercial  efforts  to  ensure  that  the
            Canadian Seller receives  favourable  off-balance  sheet  treatment;
            (ii) ensure that the Canadian Seller will not be in a position where
            it will be required to  consolidate  more than its own assets  under
            Canadian and United States generally accepted accounting  principles
            as such principles exist at the date hereof;  and (iii) use its best
            efforts to ensure that the Canadian Seller will not be in a position
            where it will be required to consolidate more than its own assets as
            a result of a change in Canadian or United States generally accepted
            accounting principles from those that exist on the date hereof;

      (e)   promptly notify the Canadian Seller in writing of:

            (i)   the  occurrence  of any event which results in the assets sold
                  by the  Sellers  to the  Purchaser  and  forming  part  of the
                  Purchaser's   Assets   representing   less  than  50%  of  the
                  Purchaser's total assets;

            (ii)  from and  after  the  occurrence  of an event  referred  to in
                  Section  4.6(e)(i),  the  occurrence  of any event which would
                  result in the assets sold by the Sellers to the  Purchaser and
                  forming part of the Purchaser's Assets  representing more than
                  50%  of  the  Purchaser's  total  assets,  such  notice  to be
                  provided as far as possible  in advance of the  occurrence  of
                  such event; and

            (iii) any change in Canadian or United States  accounting  rules and
                  regulations  that would have an adverse  effect on the balance
                  sheet treatment of the transactions contemplated hereby; and

      (f)   not make any amendment to the trust  indenture  dated April 19, 2004
            between The Canada Trust Company, as trustee,  and BNY Trust Company
            of Canada that

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 40 -

                                                                    CONFIDENTIAL

            could  adversely  affect the Sellers in respect of the  transactions
            contemplated hereby.

                                    ARTICLE 5
                          ADMINISTRATION AND COLLECTION

5.1 Designation of the Servicer

            By executing and delivering this  Agreement,  the Canadian Seller is
designated as the Servicer until the first Service  Transfer,  and hereby agrees
to perform  the duties and  obligations  of the  Servicer  pursuant to the terms
hereof.  It is  understood  and agreed that the Purchaser has agreed to purchase
the Purchased  Receivables from the Sellers on a fully-serviced  basis and that,
so long as the Canadian  Seller is the Servicer,  payment of the purchase prices
for the Purchased Receivables to the Sellers in the amounts, at the times and in
the manner provided for in this Agreement shall constitute the Canadian Seller's
full  consideration  therefor.  Subject to the provisions  hereof,  the Servicer
shall  administer,  service and  collect the  Purchased  Assets,  including  the
Purchased  Receivables,  as agent for the Purchaser  until the Final  Collection
Date. The Servicer may, with the prior written consent of the Purchaser,  Credit
Enhancer,  and the Rating  Agency,  as may be applicable,  subcontract  with any
Person for the  administration  and  collection  of the  Purchased  Receivables;
provided, however, that:

      (a)   subject to prudent  business  practice,  if the Servicer  chooses to
            subcontract all or part of its servicing  obligations  hereunder,  a
            first right of refusal to be appointed as the subcontractor shall be
            granted to Canadian  Bonded Credits  Limited of Toronto,  Ontario or
            another  replacement  servicer  acceptable  to the Purchaser and the
            Securitization Agent, acting reasonably; and

      (b)   upon appointment of any Person as subcontractor,  the Servicer shall
            remain  fully  liable  for  the   performance   of  the  duties  and
            obligations so subcontracted and all other duties and obligations of
            the Servicer pursuant to the terms of this Agreement.

5.2 Standard of Care

            The Servicer,  as agent for the  Purchaser  (to the extent  provided
herein),  shall perform its duties hereunder with reasonable care and diligence,
using  that  degree  of skill  and  attention  that the  Servicer  exercises  in
managing,  servicing,  administering,   collecting  on  and  performing  similar
functions  relating to  comparable  receivables  that it services  for itself or
other Persons.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

5.3 Authorization of Servicer

            Without  limiting the  generality  of the  authority  granted by the
designation  of any Person as  Servicer,  and  subject  to the other  provisions
hereof, the Servicer is hereby authorized and empowered by the Purchaser to take
any  and all  reasonable  steps  in its  name  and on its  behalf  necessary  or
desirable and not inconsistent with the ownership of the Purchased Assets by the
Purchaser  to collect all amounts due under any and all  Purchased  Receivables,
including to execute and deliver,  on behalf of the Purchaser and any subsequent
assignees,   including  the  Credit   Enhancer,   any  and  all  instruments  of
satisfaction or cancellation,  or partial or full release or discharge,  and all
other comparable  instruments,  with respect to the Purchased Receivables or the
Related  Security  related thereto and, after  delinquency of any such Purchased
Receivables and to the extent  permitted under and in compliance with applicable
law and regulations,  to commence  proceedings with respect to enforcing payment
of such Purchased  Receivables,  and the Related Security and Contracts  related
thereto, and adjusting, settling or compromising the account or payment thereof,
to the same extent as each Seller could have done if it had continued to own the
Purchased  Assets.  The Purchaser  shall furnish the Servicer with any powers of
attorney  and other  documents  that are within the ability of the  Purchaser to
furnish and which are reasonably necessary or appropriate to enable the Servicer
to carry out its servicing and  administrative  duties hereunder as agent of the
Purchaser.

5.4 Enforcement of Receivables

            The Servicer is  authorized  to enforce and protect the  Purchaser's
rights and interests in, to and under the Purchased  Assets and the  Purchaser's
right to receive payment under the Contracts  related thereto,  and the Servicer
may commence or defend  proceedings  in the name of the  Purchaser (or any agent
thereof,  including the Servicer) for the purpose of enforcing or protecting any
rights under any Purchased Assets or against an Obligor personally.  In no event
shall the Servicer be entitled to take any action that would make the  Purchaser
a party to any litigation without the Purchaser's  express prior written consent
except  only to the extent  necessarily  incidental  to the  enforcement  by the
Servicer of any of the Purchased Assets.

5.5 Assignment for Purpose of Enforcement

            If the Servicer  shall  commence a legal  proceeding  to enforce any
rights under any of the  Purchased  Assets or against an Obligor  personally  in
accordance   herewith,   the  Purchaser   shall  thereupon  be  deemed  to  have
automatically  assigned the applicable  Purchased Receivable or Related Security
related  thereto  to the  Servicer,  solely  for the  purpose of and only to the
extent necessarily incidental to the enforcement by the Servicer of such rights.
The Servicer shall hold such assigned  Purchased  Receivable or Related Security
related  thereto in trust for the Purchaser and the same shall be deemed to have
been  automatically  re-assigned  to the  Purchaser  when the  assignment to the
Servicer  ceases to be  necessary  for the  enforcement  by the Servicer of such
rights. If in any enforcement suit or legal proceeding it shall be held that the
Servicer may not

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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enforce a right under a Purchased Receivable on the grounds that it shall not be
a real party in  interest or a holder  entitled to enforce  rights in respect of
the Purchased  Receivable or Related  Security  related  thereto,  the Purchaser
shall, at the Servicer's  expense and direction,  take steps as are necessary to
enforce the Purchased Receivable.

5.6 Description of Services

            Until the Final  Collection  Date,  the Servicer  shall,  unless the
Purchaser and the Credit  Enhancer direct  otherwise,  take or cause to be taken
all such  reasonable  actions as may be necessary or advisable from time to time
to administer and service the Purchased Assets in accordance with this Agreement
and applicable Laws, and without  limiting the generality of the foregoing,  and
in  accordance  with the Credit and  Collection  Policies,  if  applicable,  the
Servicer shall:

      (a)   keep an account with respect to each  Purchased  Receivable and post
            to it all  payments  received  under  or in  respect  of  each  such
            Purchased Receivable;

      (b)   fully perform and comply with each of its  covenants and  agreements
            under Section  3.1(c),  regardless of any defence,  set-off right or
            counterclaim;

      (c)   give timely notice to the Obligor of any Purchased Receivable of any
            payment  default or other default  thereunder,  or under the related
            Contract;

      (d)   record any Purchased  Receivable as being delinquent or defaulted in
            accordance with the Credit and Collection Policies;

      (e)   investigate  all  delinquencies  and  defaults  under any  Purchased
            Receivable and will use its reasonable  commercial efforts to pursue
            payment thereof;

      (f)   respond to all  reasonable  enquiries  of any Obligor of a Purchased
            Receivable or under the Related Security related thereto;

      (g)   take all steps as are  necessary  to  maintain  the  perfection  and
            priority,  as the case may be, of all  security  interests,  if any,
            created  pursuant  to the  Purchased  Receivables  and  the  Related
            Security  related  thereto,  and, subject to Sections 5.6(l) and (m)
            below, refrain from releasing any such security interest in whole or
            in part except to the extent that the Servicer would have done so in
            a similar  situation with respect to receivables  administered by it
            on its own behalf;

      (h)   subject  to  Section  5.13,   make  all  payments  to   Governmental
            Authorities and others where a statutory lien, prior claim or deemed
            trust having priority over the Purchaser's interest in any Purchased
            Assets has arisen,  provided that nothing  herein shall preclude the
            Servicer from contesting any claim in the ordinary

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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            CONFIDENTIAL

      courseof business and in good faith,  and remit all amounts of Taxes owing
            in respect of any such Purchased Assets;

      (i)   until the time at which a Purchased  Receivable  is determined to be
            written off as a  Defaulted  Receivable  and  assigned to the Credit
            Enhancer,  as  determined  by  the  Credit  Enhancement   Agreement,
            determine, together with the Insurer or with the Insurer's approval,
            as required,  the  advisability of taking any action and instituting
            and carrying  out legal  proceedings  with respect to any  Purchased
            Receivable and the Related  Security  pertaining  thereto in case of
            any default by an Obligor under any such  Purchased  Receivable  and
            take such action and institute and carry out such legal  proceedings
            determined by it and the Insurer, if required, to be advisable;

      (j)   maintain  Records with respect to each Purchased  Receivable and the
            Related Security  relating thereto and on three Business Days' prior
            notice grant  representatives of the Purchaser  reasonable access to
            examine and make copies of the Records and a reasonable  opportunity
            to discuss matters relating to the  administration  and servicing of
            each Purchased  Receivable and the Related Security relating thereto
            with personnel of the Servicer involved in such  administration  and
            servicing during normal business hours, including the opportunity to
            see and review the  Servicer's  information  systems and software in
            operation;

      (k)   hold as trust property for and on behalf of the  Purchaser,  free of
            any Lien,  all Records with respect to the  Purchased  Receivable at
            any one or more of the  offices  identified  in  Exhibit D until the
            Final Collection Date;

      (l)   execute and deliver all such assignments, releases and discharges of
            the Purchased  Receivables  as are required by the terms thereof and
            the related Contracts upon receipt of all amounts due thereunder;

      (m)   settle,  compromise  and otherwise deal with any claims under any of
            the Purchased Receivables or the Related Security related thereto as
            permitted in accordance with the Credit and Collection Policies;

      (n)   maintain prudent  administrative  and operating  procedures and keep
            and maintain all books,  records,  documents  and other  information
            reasonably   necessary  or  advisable  for  the  collection  of  the
            Purchased Assets;

      (o)   timely  and  fully  perform  and  comply  with all  material  terms,
            covenants  and other  provisions  of the  Contracts  required  to be
            performed by and observed by the relevant Seller thereunder;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 44 -

                                                                    CONFIDENTIAL

      (p)   furnish  at the  request  of the  Purchaser  and the  Securitization
            Agent,  at least 5 days  prior to the  date in which  the  Purchased
            Receivable would become a Defaulted  Receivable,  all  documentation
            required  under  the  Insurance  Policy  to make a claim  under  the
            Insurance Policy in respect of such default;

      (q)   furnish,  to the Purchaser and the  Securitization  Agent as soon as
            practicable  and, in any event,  (i) within 60 days  following  each
            fiscal  quarter  of  the  Servicer,  quarterly  unaudited  financial
            statements;  and (ii) within 120 days  following each fiscal year of
            the Servicer,  annual audited financial statements or, in each case,
            such shorter time periods as may be required by applicable law;

      (r)   take all  necessary  steps to obtain  all  discharges  and  releases
            necessary to discharge or release all security  interests  and other
            rights or interests of any Person in the Purchased Assets other than
            those in favour of the Purchaser; and

      (s)   otherwise  take or  cause to be taken  all  such  actions  as may be
            necessary or desirable to collect each of the Purchased Receivables.

5.7 Additional Covenants of the Servicer

            From the date of this Agreement until the Final Collection Date, the
Servicer covenants and agrees that it will, unless the Securitization Agent, the
Purchaser and the Credit Enhancer shall each otherwise consent in writing:

      (a)   comply with all Laws  applicable  to all or any of it, its business,
            its properties,  the Purchased Assets and Contracts related thereto,
            where the failure to do so could have a Material Adverse Effect;

      (b)   fully  comply with the Credit and  Collection  Policies in regard to
            the Purchased Assets and the Related Security related thereto and in
            performing its covenants hereunder;

      (c)   to the  extent the  Records  related  to the  Purchased  Receivables
            consist in whole or in part of computer  programs which are licensed
            by the Servicer, the Servicer will, forthwith upon the occurrence of
            a Servicer  Termination Event, either (i) use reasonable  commercial
            efforts to arrange for the license or sublicense of such programs to
            the Stand-By Servicer, the Securitization Agent or the Purchaser for
            the limited purpose of permitting the Purchaser,  the Securitization
            Agent or the Stand-By Servicer to collect the Purchased  Receivables
            and to enforce the rights  acquired by the  Purchaser  in respect of
            the Related Security  related thereto,  or (ii) if acceptable to the
            Purchaser and the Credit Enhancer,  perform data processing services
            for the Stand-By  Servicer for the same  purposes as set out in part
            (i) for a fee equal to the market rate for such services;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 45 -

                                                                    CONFIDENTIAL

      (d)   to the  extent  that  the  Records  relate  not  only  to  Purchased
            Receivables but also assets of the Sellers not sold to the Purchaser
            hereunder,  ensure  that the  Servicer  is in a position to promptly
            make duplicate copies of such Records reserved solely for the use of
            the Purchaser  hereunder and comprising part of the Records relating
            to the Purchased  Receivables and ensure that no Records that belong
            to the  Purchaser  are  permitted  to be seized  under any  security
            interest  granted to any third party;  provided that  information in
            such Records that does not pertain to the Purchased  Receivables may
            be redacted therefrom;

      (e)   on each Purchase Date:

            (i)   to  attempt  to  reconcile  all  reports   received  from  the
                  Securitization  Agent with those corresponding  reports of the
                  Sellers,  and promptly notify the Securitization  Agent of any
                  reconciliation discrepancy; and

            (ii)  upon  the   reasonable   request  of  any  of  the  Purchaser,
                  Securitization  Agent or Credit Enhancer therefor,  provide to
                  the Purchaser and/or Credit Enhancer,  as the case may be, any
                  other  information or documentation  relating to any Purchased
                  Receivable  that may be in  existence  in written  form or, if
                  available in Records  maintained by the Servicer,  that may be
                  produced with the Servicer's existing software,  provided that
                  there shall always be in written form or  producible  with the
                  Servicer's  existing  software  from the  Records  information
                  indicating  as  to  each  Purchased   Receivable  the  Obligor
                  thereunder,  the amount owing  thereunder  and the location of
                  the Records relating thereto;

      (f)   cooperate  with,  and offer such  assistance  as may  reasonably  be
            requested  by, the chartered  accountants  selected by the Purchaser
            and/or  Credit  Enhancer  to  furnish  reports  in  respect  of  the
            Purchaser and/or the Credit  Enhancer,  the Purchased Assets and the
            servicing of the Purchased  Receivables and Related Security related
            thereto under this Agreement,  and furnish in respect of, and within
            30 days after the date of, its preceding  fiscal year,  addressed to
            the  Securitization  Agent,  the Purchaser,  the Credit Enhancer and
            such other  Persons as the  Purchaser  and/or  Credit  Enhancer  may
            reasonably  designate,  a certificate  of an officer of the Servicer
            (on  behalf of the  Servicer,  without  personal  liability)  who is
            familiar with this  Agreement  certifying  that, to the knowledge of
            such  officer,  the  Servicer  complied in such fiscal year with its
            obligations hereunder except to the extent non-compliance  therewith
            did not materially  adversely  affect the interests of the Purchaser
            and/or  Credit  Enhancer  and  except as  further  set forth in such
            certificate;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 46 -

                                                                    CONFIDENTIAL

      (g)   upon request of the  Purchaser  or the Credit  Enhancer and with the
            Servicer's  consent,  such consent not to be unreasonably  withheld,
            direct the Servicer's chartered  accountants to assist the chartered
            accountants  of the Purchaser  and/or Credit  Enhancer to the extent
            and in such manner as is  reasonably  required  for the  Purchaser's
            chartered   accountants   to  report  on  the  status  of  Purchased
            Receivables hereunder;

      (h)   promptly after the Servicer becomes aware thereof,  but in any event
            no later than two  Business  Days  thereafter,  provide  each of the
            Securitization  Agent,  the Purchaser  and the Credit  Enhancer with
            notice of the occurrence of any Servicer Termination Event;

      (i)   ensure  that all  information  related  to the  Purchased  Assets is
            maintained,  accessed and  transmitted in compliance in all material
            respects  with all laws and  regulations  in  Canada  regarding  the
            collection,  use and disclosure of personal  information,  including
            for  greater  certainty  the  Personal  Information  Protection  and
            Electronic  Documents  Act (Canada)  and all other  privacy laws and
            regulations of the individual  Provinces and the Federal  Government
            of Canada; and

      (j)   in the event of a  reconciliation  discrepancy  arising from Section
            5.7(e)(i),  to co-operate  with the Purchaser to diligently  resolve
            such issue in a timely manner.

5.8 Negative Covenants of the Servicer

            From the date of this  Agreement  until the Final  Collection  Date,
unless each of the Purchaser and the Credit Enhancer shall otherwise  consent in
writing, the Servicer covenants and agrees that it will not:

      (a)   make any material change to the Credit and Collection Policies;

      (b)   extend,  amend  or  otherwise  modify  the  terms  of any  Purchased
            Receivable  (other  than  adjusting,  settling or  compromising  the
            account or payment of a Purchased  Receivable in the ordinary course
            of  business  and in  accordance  with  the  Credit  and  Collection
            Policies),  or amend,  modify or waive any term or  condition of any
            Contract related thereto except in the case of any such Contracts or
            any amendments, modifications or waivers that: (i) do not affect the
            payment  terms of any  Purchased  Receivable;  (ii) do not adversely
            affect the quality or  collectibility  of any Purchased  Receivable;
            and (iii) are in accordance with the Credit and Collection Policies;

      (c)   sell,  assign or  otherwise  encumber  any of the  Purchased  Assets
            except in accordance with the terms of this Agreement;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

      (d)   release  any   security,   guarantee  or   insurance   securing  any
            Indebtedness under any of the Purchased  Receivables,  except to the
            extent  that  granting  such  release  is in  accordance  with  this
            Agreement,  the Credit and  Collection  Policies and the  Servicer's
            usual  practices  as an  obligee  or  such  security,  guarantee  or
            insurance is replaced in a form acceptable to the Purchaser,  acting
            reasonably; and

      (e)   take or omit to take any  action if the taking or  omitting  to take
            such  action  by the  Servicer  would  constitute  a  breach  in any
            material respect by the Servicer of any representation,  warranty or
            covenant  herein or in any other  document  delivered  hereunder  or
            thereunder or contemplated hereby or thereby.

5.9 Servicer Termination Events

            The  occurrence or existence of one or more of the following  events
or facts which is continuing  shall  constitute a "Servicer  Termination  Event"
hereunder:

      (a)   the  Servicer  fails to make any payment or deposit to be made by it
            hereunder within two Business Days of being due;

      (b)   the  Servicer  fails to  perform  or  observe  any term,  condition,
            covenant or  agreement  to be  performed or observed by it hereunder
            (other than as specified in Section 5.9(a)) which failure could have
            a Material Adverse Effect,  and any such failure remains  unremedied
            for 30 days after notice  thereof to the Servicer  (and the Canadian
            Seller, if the Canadian Seller is not the Servicer);

      (c)   any  representation  or warranty made by the Servicer in or pursuant
            to this  Agreement,  or any  Related  Document,  proves to have been
            false or incorrect in any material respect when made and, if capable
            of being cured, is not cured within 30 days of the Servicer becoming
            aware thereof;

      (d)   the  Servicer  (if  not  the  Canadian  Seller)  fails  to  pay  any
            Indebtedness  when due  (whether  by  scheduled  maturity,  required
            prepayment,  acceleration,  demand or  otherwise)  and such  failure
            continues after the applicable  grace period,  if any,  specified in
            any agreement or instrument  relating to such  Indebtedness;  or any
            other  default  under any  agreement or  instrument  relating to any
            Indebtedness,  or any other event, shall occur if the effect of such
            default  or event  would  result  in the  occurrence  of a  Material
            Adverse Effect; or

      (e)   the Servicer  shall  generally not pay its debts as they become due,
            or shall admit in writing its inability to pay its debts  generally,
            or shall make a general assignment for the benefit of creditors;  or
            any  proceedings  shall be  instituted  by or against  the  Servicer
            seeking  to  adjudicate   it  bankrupt  or  insolvent,   or  seeking
            liquidation,  winding-up,  reorganization,  arrangement, adjustment,
            protection, relief or

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

            composition of it or its debts under any law relating to bankruptcy,
            insolvency,  reorganization  or relief of  debtors,  or seeking  the
            entry of an order  for  relief  by the  appointment  of a  receiver,
            trustee or other similar official for it or for any substantial part
            of its property and, if such proceeding has been instituted  against
            the  Servicer,  either  such  proceeding  has  not  been  stayed  or
            dismissed  within  45  days  or any of the  actions  sought  in such
            proceeding  (including  the  entry of an  order  for  relief  or the
            appointment  of a  receiver,  trustee,  custodian  or other  similar
            official) are granted in whole or in part, or the Servicer takes any
            corporate  action to authorize any of the actions  described in this
            Section 5.9(e).

5.10 Notice of Servicer Termination Events

            The  giving by the  Canadian  Seller of notice to the  Purchaser  as
required  hereunder of any event,  fact or circumstance that constitutes or with
the  giving  of  notice,  lapse of time or both,  would  constitute  a  Servicer
Termination  Event,  shall be deemed to  constitute  the giving of notice by the
Purchaser to the  Servicer of the same on the same date as the  Canadian  Seller
gives such notice.

5.11 Effecting a Service Transfer

            Upon the occurrence of a Servicer  Termination Event, the Purchaser,
either alone or at the request of the Credit Enhancer,  may effect a termination
of the Servicer's  designation as Servicer  hereunder (a "Service  Transfer") by
giving  written  notice  to  the  Servicer  of its  decision  to  terminate  the
Servicer's  engagement as Servicer,  which  termination shall take effect at the
time specified in such notice.

5.12 Appointment of Stand-By Servicer

            At any time upon the occurrence of a Servicer Termination Event, the
Securitization  Agent on behalf of the  Purchaser  may by  instrument in writing
appoint the Stand-By Servicer as the Servicer hereunder.

5.13 Collection and Remittance of Taxes

      (a)   To the extent that any Taxes have not been financed by the Purchaser
            upon the Purchase of the related Receivable,  the Seller while it is
            the  Servicer  shall be entitled to any amounts  paid by Obligors in
            respect  of  such  Taxes  payable  in  connection   with   Purchased
            Receivables that are deposited to a Collection  Account or otherwise
            held by the Purchaser,  and the Purchaser  shall  forthwith remit or
            cause to be remitted all such amounts to the Servicer.

      (b)   The Sellers  (including  the Canadian  Seller  whether acting in its
            personal  capacity or as  Servicer)  covenant  and agree to make all
            payments relating to the Purchased  Receivables  required to be made
            to Governmental Authorities and other Persons where a statutory lien
            or

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

deemed trust might arise having priority over the Purchaser's  interest  therein
and, where a portion of the Purchased Receivables  represents an amount owing in
respect of federal or  provincial  Taxes,  to remit the amount of Taxes owing in
respect of such Receivables.

      (c) After the  appointment  of the first Stand-By  Servicer,  the Stand-By
Servicer  shall,  unless it is remitting  such Taxes  directly to the applicable
Governmental  Authority, by notice to the Canadian Seller, remit to the Canadian
Seller  out of  Collections  the  amount of any Taxes  owing in  respect  of the
Purchased Receivables,  in which event the Canadian Seller shall comply with the
remittance  obligations set out in Section 5.6(h) as if the same were amended so
that the word "Servicer" read "Canadian Seller".

5.14 Additional Seller Covenants Following a Service Transfer

            From and after a Service  Transfer until the Final  Collection Date,
each Seller  covenants  and agrees that it shall  forthwith,  in addition to any
other  obligations,  upon  the  request  of the  Purchaser  and at the  Sellers'
expense:

      (a)   instruct  the Obligor of each  Purchased  Receivable  (and any other
            Persons, if applicable,  in the case of the Related Security related
            thereto) to remit all payments due under the Purchased Assets to the
            Stand-By Servicer;

      (b)   remit to the Stand-By  Servicer all payments received by each Seller
            from Obligors of Purchased  Receivables  and from other Persons,  if
            applicable, under the Related Security related thereto;

      (c)   segregate  all  cash,  cheques  and other  instruments  constituting
            Collections  received by the relevant Seller in a manner  acceptable
            to the  Purchaser  and the Credit  Enhancer  and,  immediately  upon
            receipt,  deliver  all such  cash,  cheques  and  instruments,  duly
            endorsed  or  with  duly  executed   instruments  of  transfer,   in
            accordance with Section 3.1(c);

      (d)   co-operate   fully  with  the   Stand-By   Servicer  in  the  prompt
            preparation and delivery to the Purchaser and the Credit Enhancer of
            the report and notices to be delivered by the Servicer under Section
            5.6 and provide the Purchaser with such other reports,  information,
            documents  and  records  as the  Purchaser  may  reasonably  request
            promptly following each such request;

      (e)   deliver  up copies  or  originals  of all  Records  relating  to the
            Purchased   Receivables   (including  computer  diskettes  or  tapes
            containing  all  information  necessary or  reasonably  desirable to
            enable the Purchaser or its agent to collect the amounts owing under
            the  Purchased   Receivables,   together  with  a  printed  copy  or
            microfiche  of all such  information)  to the Purchaser or as it may
            direct in writing  (or retain the same in  segregated  storage if so
            directed), and provide the Purchaser

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                     - 50 -

                                                                    CONFIDENTIAL

            or its agent with all  reasonable  assistance  necessary to decipher
            the information contained on the computer diskettes or tapes; and

      (f)   perform  any  and all  acts  and  execute  and  deliver  any and all
            documents as may  reasonably  be requested by the Purchaser in order
            to effect the  purposes of this  Agreement or to enable the Stand-By
            Servicer to collect and enforce the  Purchased  Receivables  and any
            Related Security or Contract related thereto.

5.15 Purchaser Rights Following a Service Transfer

            Upon a Service Transfer,  the Purchaser may, but is not required to,
at any time,  directly  or  through  the  Securitization  Agent or the  Stand-By
Servicer, without limitation:

      (a)   perform the  services,  duties and  functions  specified in Sections
            5.6, 5.7, 5.13 and 5.14 with respect to the Purchased  Assets in any
            manner the Purchaser reasonably deems fit;

      (b)   notify any Obligor of the  purchase by the  Purchaser  and the sale,
            transfer and  assignment by the Sellers of any Purchased  Receivable
            under this Agreement;

      (c)   contact  any Obligor of  Purchased  Receivables  for any  reasonable
            purpose,  including for the  performance of audits and  verification
            analyses,  and the  determination of account balances and other data
            maintained by the Canadian Seller in its capacity as Servicer;

      (d)   direct any Obligor to make all payments on account of any  Purchased
            Receivables  directly to the  Purchaser at an address  designated by
            the Purchaser or to such third party  (including the  Securitization
            Agent or the  Stand-By  Servicer)  or bank or  depositary  as may be
            designated by the Purchaser; and

      (e)   proceed  directly  against  any  Obligor  and take any and all other
            actions,  in the relevant  Seller's name or otherwise,  necessary or
            reasonably  desirable  to  collect  any of the  Purchased  Assets or
            effect any related result.

5.16 Power of Attorney

            Each Seller, subject to Section 5.18, hereby grants to the Purchaser
an irrevocable power of attorney and hereby  irrevocably  appoints the Purchaser
as each Seller's attorney-in-fact, with full power of substitution and expressly
coupled  with an interest in favour of the  Purchaser,  to take in the place and
stead of and in the name of each Seller or in the Purchaser's own name from time
to time at the Purchaser's  discretion,  acting reasonably,  such actions as the
Sellers  may be  obligated  to  take  hereunder  or as the  Purchaser  may  deem
necessary or advisable to collect,  endorse,  negotiate or otherwise  realize on
any Purchased Receivable, the Related Security related

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

thereto or any part thereof,  any negotiable  instrument,  or other right of any
kind, held or owned by the Sellers and sold, transferred,  assigned or delivered
to or received by the Purchaser as payment on account or otherwise in respect of
any of the Purchased Assets, including:

      (a)   to  evidence or protect the  Purchaser's  ownership  interest in the
            Purchased  Assets and to execute and file, in each Seller's name and
            on each Seller's behalf, such recording, registration,  financing or
            similar   statements   (including  any   amendments,   renewals  and
            continuation  statements) under applicable Laws,  including,  in any
            personal property registry office,  in such  jurisdictions  where it
            may be  necessary to  validate,  perfect or protect the  Purchaser's
            position as owner of the Purchased Assets;

      (b)   to ask, demand,  collect,  sue for, recover,  compound,  receive and
            give  acquittance  and  receipts for monies due and to become due in
            connection  with the Purchased  Receivables or otherwise owed to the
            Purchaser;

      (c)   to  receive,  endorse  and  collect  any  cheques,  drafts  or other
            instruments,  documents and chattel paper in connection  with monies
            due and to become due in connection  with the Purchased  Receivables
            or otherwise owed to the Purchaser;

      (d)   to file any claims or take any action or institute  any  proceedings
            that the  Purchaser  may deem to be necessary  or desirable  for the
            collection of any Purchased Receivable; and

      (e)   to execute and  deliver,  in the relevant  Seller's  name and on the
            relevant Seller's behalf, such instruments and documents  (including
            assignments) necessary or desirable in furtherance of the foregoing.

5.17 Execution of Additional Powers

            Subject to Section  5.18,  the  Sellers,  following a request by the
Purchaser to do so, shall  promptly  execute and deliver to the  Purchaser  such
other  powers  of  attorney  in such  form and  having  such  content  as may be
necessary  or  reasonably  appropriate  to enable the  Purchaser to exercise the
powers described in Section 5.16.

5.18 Restrictions on Use

            The  Purchaser  covenants and agrees with the Sellers not to use the
powers  granted by Section  5.16 or  pursuant  to Section  5.17 unless the first
Service Transfer shall have occurred.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

                                    ARTICLE 6
                              CONDITIONS PRECEDENT

6.1 Conditions Precedent to Initial Purchase

            On or prior to the Initial  Purchase Date, the following  shall have
occurred,  or each Seller shall have  delivered or caused to be delivered to the
Purchaser,  the Securitization  Agent and/or the Credit Enhancer,  as may apply,
the following documents, in each case, in form and substance satisfactory to the
Purchaser, the Securitization Agent and/or the Credit Enhancer:

      (a)   executed  copies of this  Agreement,  the Assignment and the Related
            Documents  required to be delivered in  connection  with the Initial
            Purchase,  including a certified  copy of the Credit and  Collection
            Policies;

      (b)   a  certificate  of an  officer  of  each  Seller  providing  for and
            certifying the resolutions of the board of directors or shareholders
            of such Seller approving and authorizing the execution, delivery and
            performance  of  this  Agreement  and  the  other  documents  to  be
            delivered by the relevant Seller hereunder and the assignment of the
            Receivables,  and  the  Related  Security  and  Collections  related
            thereto, hereunder;

      (c)   an incumbency  certificate of the officers of each Seller  executing
            this  Agreement  and the other  documents  to be  delivered  by each
            Seller   hereunder   showing  their  names,   offices  and  specimen
            signatures  on  which  certificate  the  Purchaser  and  the  Credit
            Enhancer shall be entitled to  conclusively  rely until such time as
            each  Seller   delivers  a  replacement   certificate   meeting  the
            requirements of this Section 6.1(c);

      (d)   certified  copies of the  constating  documents  and by-laws of each
            Seller;

      (e)   for each  Seller,  certificates  of status,  of good  standing or of
            compliance,   as   appropriate,   issued  by  its   jurisdiction  of
            incorporation  and by each  jurisdiction  where  registrations  have
            been, or are to be, effected in respect of the Purchaser's ownership
            interest  in  the   Purchased   Assets   evidencing   each  Seller's
            registration and good standing as a registered corporation therein;

      (f)   reports showing the results of the searches conducted in each of the
            Provinces and  Territories  in Canada and the States of Virginia and
            Delaware in the United States  against the relevant  Seller and each
            predecessor of such Seller on the Business Day immediately preceding
            the Initial  Purchase  Date (or as near as  practicable  thereto) to
            determine  the  existence of any Liens in the assets of the relevant
            Seller or in the  Receivables,  the Related  Security or Collections
            related  thereto,  together with a certificate  of an officer of the
            relevant Seller certifying that the

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

            aforementioned  searches  disclosed no Liens  registered or recorded
            against the relevant Seller or its predecessors with respect to, and
            then  applicable  to,  the  Receivables,  the  Related  Security  or
            Collections  related  thereto,  prior to the date shown as the "file
            currency date" (or similar designation) on the search reports, other
            than those for which  discharges  or releases  have been provided in
            accordance  with  Section  6.1(h),  and,  if  required by the Rating
            Agency,  an  opinion  of  counsel  in  each  of  the  Provinces  and
            Territories in Canada and the States of Virginia and Delaware in the
            United States on the due  registration  within such  jurisdiction of
            the  Purchaser's  purchase of, and its  interest  in, the  Purchased
            Assets;

      (g)   copies of properly completed and duly registered  assignments and/or
            financing  statements  or  verification  statements  for each of the
            Provinces and  Territories  in Canada and the States of Virginia and
            Delaware in the United  States,  with the  registration  particulars
            stamped thereon,  dated prior to (where permitted by applicable Law)
            the  Initial  Purchase  Date naming the  relevant  Seller as seller,
            assignor  or debtor and the  Purchaser  as  purchaser,  assignee  or
            secured party, and/or such other similar instruments or documents as
            may be necessary  and/or,  in the  Purchaser's  reasonable  opinion,
            advisable  under any applicable  PPSA to perfect,  record or protect
            the Purchaser's ownership interest in the Purchased Assets;

      (h)   executed copies of all discharges and releases,  if any,  reasonably
            required by the  Purchaser  or necessary to discharge or release all
            Liens or interests of any Person in the Purchased  Receivables,  the
            Contracts,  the Related Security and the Collections related thereto
            previously granted by the relevant Seller;

      (i)   an opinion of  counsel to each  Seller  dated as of the date of this
            Agreement; and

      (j)   such other  documentation as may be required by (i) the Purchaser or
            its counsel,  (ii) the  relevant  Seller or its counsel or (iii) the
            Credit Enhancer or its counsel, in each case, acting reasonably.

6.2 Conditions Precedent to All Purchases

            Prior to each Purchase  hereunder  (including the Initial Purchase),
the following  conditions precedent shall have been satisfied by each Seller, as
the  case  may be,  in each  case,  in form and  substance  satisfactory  to the
Purchaser and the Credit Enhancer:

      (a)   the  Securitization  Agent shall have  received the Purchase  Notice
            and,  for any  Purchase  other than the Initial  Purchase,  the most
            recent Periodic Report;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

      (b)   the  representations  and  warranties  of the Sellers  contained  in
            Section 4.1 shall be true and correct on and as of the Purchase Date
            as though made on and as of such date;

      (c)   no event shall have occurred and be continuing, or would result from
            the Purchase,  which would constitute an Amortization Event or would
            constitute an Amortization Event but for the requirement that notice
            be given or lapse of time or both;

      (d)   all  documents,  instruments  and  agreements  required by the terms
            hereof to be delivered to the Purchaser,  the  Securitization  Agent
            and the  Credit  Enhancer  on the date of the  Purchase  shall be so
            delivered  and shall be  satisfactory  in form and  substance to the
            Purchaser and the Credit Enhancer, acting reasonably; and

      (e)   the Insurance Policy shall be in full force and effect.

            6.3   Undertaking of Purchaser

            If  requested  by the  Canadian  Seller,  for and on  behalf  of the
Sellers,  the Purchaser  shall,  prior to each Purchase  (including  the Initial
Purchase), execute and deliver any agreement which in the opinion of the Sellers
and the Purchaser is reasonably required to evidence the respective interests of
the  Purchaser  and any creditor of or purchaser  from the Sellers in and to any
Receivables,  provided  such  agreement  shall  be in form  satisfactory  to the
Purchaser and the Sellers, each acting reasonably.

                                    ARTICLE 7
                               AMORTIZATION EVENTS

7.1 Meaning of Amortization Event

            The term "Amortization  Event" means any one of the following events
or circumstances:

      (a)   the Sellers or the Servicer  (if the  Canadian  Seller) fail to make
            any  payment  or  deposit  to be made  by it  hereunder  within  two
            Business Days of being due;

      (b)   the  Sellers  or the  Servicer  (if the  Canadian  Seller)  fails to
            perform or observe any term, condition,  covenant or agreement to be
            performed or observed by it  hereunder  or under the Cheque  Deposit
            Agreement or any other  agreement  relating  hereto (other than that
            specified in Section 7.1(a)),  which failure,  in the opinion of the
            Securitization  Agent,  acting  reasonably,  could  have a  Material
            Adverse Effect,  and any such failure remains unremedied for 30 days
            after notice thereof to the Seller and the Servicer;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

      (c)   the occurrence of any Servicer Termination Event;

      (d)   any  representation  or warranty made by the relevant Seller (or any
            of its  officers)  in or pursuant to this  Agreement,  any  Periodic
            Report or any other  Related  Document  proves to have been false or
            incorrect in any material respect when made and, if capable of being
            cured,  is not cured  within 30 days of such Seller  becoming  aware
            thereof;

      (e)   the Sellers shall fail to pay any amount in respect of  Indebtedness
            in  excess  of  CAD3.5  million  (or  the  equivalent  in any  other
            currency) in the aggregate,  or any interest or premium thereon,  in
            any such case,  when due  (whether by scheduled  maturity,  required
            prepayment,  acceleration,  demand or  otherwise)  and such  failure
            shall continue after the applicable grace period, if any,  specified
            in any agreement or instrument  relating to such Indebtedness or any
            other  default  under any  agreement or  instrument  relating to any
            Indebtedness  in excess of CAD5  million (or the  equivalent  in any
            other currency) in the aggregate, or any other event, shall occur if
            the effect of such default or event is to accelerate the maturity of
            any Indebtedness;  or any Indebtedness in excess of CAD5 million (or
            the  equivalent in any other  currency)  shall be declared to be due
            and  payable,  or required to be prepaid  (other than by a regularly
            scheduled required prepayment),  redeemed, purchased or defeased, or
            an  offer  to  prepay,   redeem,   purchase   or  defease  any  such
            Indebtedness  shall be required to be made, in any such case,  prior
            to the stated maturity thereof;

      (f)   except as permitted hereby,  any Purchase ceases to create or result
            in legal and equitable  title to and  ownership of all right,  title
            and interest in, to and under the related Purchased Assets in favour
            of the  Purchaser  free and clear of any Lien,  and any such failure
            remains  unremedied for 10 days after notice thereof to the Canadian
            Seller;

      (g)   the relevant Seller shall generally not pay its debts as they become
            due,  or shall  admit in  writing  its  inability  to pay its  debts
            generally,  or shall make a general  assignment  for the  benefit of
            creditors; or any proceedings shall be instituted by or against such
            Seller  seeking to adjudicate  it bankrupt or insolvent,  or seeking
            liquidation,  winding-up,  reorganization,  arrangement, adjustment,
            protection,  relief or  composition of it or its debts under any law
            relating  to  bankruptcy,  insolvency,  reorganization  or relief of
            debtors,  or  seeking  the  entry  of an  order  for  relief  by the
            appointment of a receiver,  trustee or other similar official for it
            or for any substantial  part of its property and, if such proceeding
            has been instituted against such Seller,  either such proceeding has
            not been  stayed or  dismissed  within 45 days or any of the actions
            sought  in such  proceeding  (including  the  entry of an order  for
            relief or the appointment of a receiver, trustee, custodian or

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

            other  similar  official)  is granted  in whole or in part,  or such
            Seller takes any  corporate  action to authorize  any of the actions
            described in this Section 7.1(g);

      (h)   in  the  reasonable  opinion  of  the  Securitization  Agent,  after
            consultation  with the Purchaser and the Credit Enhancer,  (i) there
            shall be  evidence  of fraud on the part of the  relevant  Seller or
            (ii) there shall have occurred a material adverse change, other than
            as a result of an event  already  listed in this Section 7.1, in the
            financial condition or operations of the relevant Seller which could
            have a Material Adverse Effect;

      (i)   the  Insurance  Policy is not renewed or is  otherwise  cancelled or
            terminated  and  no  replacement  Credit  Enhancer  provides  credit
            enhancement  acceptable  to the  Purchaser  and  the  Securitization
            Agent;

      (j)   there shall come into  existence any  prohibition at law against the
            Seller selling, or the Purchaser purchasing, the Receivables, or the
            Related Security and Collections relating thereto,  pursuant to this
            Agreement;

      (k)   denial of any claim under the terms of the  Insurance  Policy due to
            negligence  with  respect to  failing to comply  with the Credit and
            Collection  Policies  or fraud on the  part of the  Servicer  or any
            improper record keeping or servicing practices of the Servicer;

      (l)   the  aggregate  Credit  Losses  since the  commencement  of the then
            current program year exceeds CAD5,000,000 converted, if required, at
            the BoC Daily  Noon Rate in  effect at the time of the  Credit  Loss
            original invoice date;

      (m)   the aggregate Credit Losses with respect to  Discretionary  Obligors
            since the  commencement  of the then  current  program  year exceeds
            CAD2,500,000  converted,  if required, at the BoC Daily Noon Rate in
            effect at the time of the Credit Loss original invoice date;

      (n)   the weighted  average Dilution Ratio exceeds 19.8% for a period of 7
            consecutive days, calculated as the quotient of:

            (i)   the sum of:

                  (A)   Dilution Ratio for Purchased Receivables  denominated in
                        United  States  Dollars on that day,  multiplied  by the
                        Outstanding  Principal Balance of Purchased  Receivables
                        denominated  in  United  States  Dollars  on  that  day,
                        converted to Canadian Dollars at the BoC Daily Noon Rate
                        on that day; and

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

                  (B)   Dilution Ratio for Purchased Receivables  denominated in
                        Canadian   Dollars  on  that  day,   multiplied  by  the
                        Outstanding  Principal Balance of Purchased  Receivables
                        denominated in Canadian Dollars on that day; over

            (ii)  the Outstanding Principal Balance of all Purchased Receivables
                  on that day, with Purchased Receivables  denominated in United
                  States Dollars  converted to Canadian Dollars at the BoC Daily
                  Noon Rate on that day;

      (o)   the weighted  average  Default Ratio exceeds 15.0% for a period of 7
            consecutive days, which on any day is equal to the quotient of:

            (i)   the sum of:

                  (A)   Default Ratio for Purchased  Receivables  denominated in
                        United  States  Dollars on that day,  multiplied  by the
                        Outstanding  Principal Balance of Purchased  Receivables
                        denominated  in  United  States  Dollars  on  that  day,
                        converted to Canadian Dollars at the BoC Daily Noon Rate
                        on that day; and

                  (B)   Default Ratio for Purchased  Receivables  denominated in
                        Canadian   Dollars  on  that  day,   multiplied  by  the
                        Outstanding  Principal Balance of Purchased  Receivables
                        denominated in Canadian Dollars on that day; over

            (ii)  the Outstanding Principal Balance of all Purchased Receivables
                  on that day, with Purchased Receivables  denominated in United
                  States Dollars  converted to Canadian Dollars at the BoC Daily
                  Noon Rate on that day;

      (p)   the  weighted  average  DSO  exceeds  85  days  for  a  period  of 7
            consecutive days, which on any day is equal to the quotient of:

            (i)   the sum of:

                  (A)   DSO for  Purchased  Receivables  denominated  in  United
                        States   Dollars   on  that  day,   multiplied   by  the
                        Outstanding  Principal Balance of Purchased  Receivables
                        denominated  in  United  States  Dollars  on  that  day,
                        converted to Canadian Dollars at the BoC Daily Noon Rate
                        on that day; and

                  (B)   DSO for Purchased  Receivables  denominated  in Canadian
                        Dollars  on  that  day,  multiplied  by the  Outstanding
                        Principal Balance of

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

                        Purchased Receivables denominated in Canadian Dollars on
                        that day; over

            (ii)  the Outstanding Principal Balance of all Purchased Receivables
                  on that day, with Purchased Receivables  denominated in United
                  States Dollars  converted to Canadian Dollars at the BoC Daily
                  Noon Rate on that day;

      (q)   if  greater  than  10%  of  the  Outstanding  Principal  Balance  of
            Purchased  Receivables  owing by the  Obligors  thereunder  during a
            calendar  month are not  deposited  into the  Collection  Account as
            required by Section 3.1(c);

      (r)   the  balance  of the  applicable  Reserve  Account  is less than the
            Required  Balance in the same currency as the Reserve  Account for a
            period of 7 consecutive days;

      (s)   if the Sellers'  Consolidated  Shareholders' Equity, plus the value,
            at the time of issuance,  of any  preference  shares  (including any
            series  thereof)  issued to the  shareholders of the Canadian Seller
            and not  included in the  Consolidated  Shareholders'  Equity  falls
            below CAD40 million; and

      (t)   any of (i) the  long-term  debt rating of the Insurer falls below A-
            by Standard & Poors  Corporation,  and the  Insurance  Policy is not
            replaced with another Insurer within 30 Business Days.

7.2 Action Upon an Amortization Event

            Upon the occurrence of any Amortization  Event described in Sections
7.1(b),  (c), (d), (h), (i), (j) or (k), the Purchaser or its  authorized  agent
may, by notice to the Canadian  Seller,  declare the  Amortization  Commencement
Date to have occurred on the date specified in such notice,  which date shall be
not less than two Business  Days  subsequent to the date such notice is given to
the Canadian  Seller.  If the Canadian Seller gives notice to the Purchaser that
any Amortization Event described in Sections 7.1(l) through (o), inclusive,  has
occurred,  or if the  Purchaser  gives  notice to the  Canadian  Seller that the
Purchaser has  determined  that any such  Amortization  Event has occurred,  the
Amortization Commencement Date shall occur automatically upon the giving of such
notice  by the  Canadian  Seller to the  Purchaser  or by the  Purchaser  to the
Canadian  Seller,  as the case may be,  without  the  necessity  of any  further
notice. Upon the occurrence of any other Amortization Event described in Section
7.1, the Amortization  Commencement Date will occur  automatically,  without the
necessity of any notice;  provided,  however,  that the  Purchaser  will provide
notice  of  such  occurrence  promptly  upon  having  actual  knowledge  of  the
occurrence  of such event and provided that the  Purchaser's  failure to provide
any such notice shall not derogate from its rights and remedies hereunder.  Upon
any such  declaration  or automatic  occurrence,  the  Purchaser  shall have, in
addition to its rights and remedies  hereunder and under the Related  Documents,
all other rights and remedies under applicable laws and otherwise,  which rights
and remedies will be cumulative. Notwithstanding

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

the above, the Purchaser, with the consent of the Credit Enhancer, may waive any
Amortization Event in its sole discretion.

7.3 Seller Designated Amortization Commencement Date

            The  Canadian   Seller  may   designate  any  Business  Day  as  the
Amortization  Commencement  Date if the Sellers'  Auditors,  acting  reasonably,
determine that any purchase proposed to be made pursuant to Section 2.1 will not
result in the relevant  Purchased Assets being removed from the Sellers' balance
sheet under  Canadian  GAAP or US GAAP,  and the Canadian  Seller has provided a
letter from the Sellers' Auditors addressed to each of the Purchaser, the Credit
Enhancer and the Securitization Agent setting out the rationale therefor.

7.4 Early Amortization Commencement Date Fee

            If an Amortization Commencement Date results from the designation by
the  Canadian  Seller  thereof  pursuant  to  clause  (c) of the  definition  of
Amortization  Commencement  Date and such  Amortization  Commencement Date falls
within  three years of the date hereof,  the Canadian  Seller shall pay a fee to
the Securitization  Agent on behalf of the Purchaser equal to the product of (a)
0.80%, (b) the Purchase Limit, (c) 0.50 if the declaration  occurs less than two
years  after the date hereof or 0.25 if the  declaration  occurs on or after two
years  from the date  hereof  and (d) the number of days  between  the  original
Amortization  Commencement  Date and the  designated  Amortization  Commencement
Date,  divided by 365; provided,  however,  that no such fee shall be payable in
circumstances where the Canadian Seller's  designation is a direct result of (i)
repeated  aberrations in the Purchaser's  ability to raise the funds required to
effect Purchases, (ii) the premiums due under the Insurance Policy exceeding the
Insurance Premium Limit,  (iii) the Insurance Policy being materially amended or
terminated,  (iv) the Canadian  Seller being unable to achieve off balance sheet
treatment  according to Canadian  GAAP or US GAAP by December  31,  2004,  (v) a
business  disruption to the Sellers as provided for in Section  10.20,  (vi) the
payment of a third party  expense  that  exceeds  CAD35,000  as provided  for in
Section  2.1(d)(vi) or 3.3(d)(ii),  (vii) an assignment of this Agreement by the
Purchaser  where the  assignment is reasonably  likely to result in a materially
higher cost to the Sellers; or (viii) the Securitization  Agent or the Purchaser
failing to perform or observe any term,  condition,  covenant or agreement to be
performed or observed by it hereunder or any other agreement relating hereto and
any such failure  remains  unremedied  for 30 days after  notice  thereof by the
Canadian Seller to the Purchaser and Securitization Agent.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

                                   ARTICLE 8
                  MATTERS RELATING TO THE SECURITIZATION AGENT

8.1 Delegation to the Securitization Agent

            The Purchaser may delegate to the Securitization Agent all or any of
its powers,  rights and discretion  hereunder,  and the Securitization Agent may
from time to time take such actions and  exercise  such powers for and on behalf
of the  Purchaser  as are  delegated to it or  contemplated  hereby and all such
actions and powers as are reasonably  incidental  thereto.  The Sellers shall be
entitled to and be fully protected in relying on any  instruction  made or given
by the Securitization  Agent in accordance with this Section 8.1, and shall have
no liability to the Purchaser in respect of such reliance.

8.2 Limitation of Liability of the Securitization Agent and Issuer Trustee

            This  Agreement  shall be deemed and  construed  for all purposes as
being made by the Securitization Agent in, and only in, its capacity as agent of
the Purchaser.  This Agreement shall be deemed and construed for all purposes as
made by the Issuer  Trustee,  in, and only in,  its  capacity  as trustee of the
Purchaser  through its agent,  the  Securitization  Agent.  Except for the gross
negligence or wilful  misconduct on the part of the  Securitization  Agent,  the
Securitization Agent and its directors, officers, agents, employees, consultants
and shareholders  shall have no liability under this Agreement and any liability
of the Issuer Trustee under this Agreement is non-recourse to the Issuer Trustee
in its personal capacity and limited solely to the property of the Purchaser. No
property  of the  Securitization  Agent and no other  property  or assets of the
Issuer Trustee, whether owned by it in its personal capacity or otherwise,  will
be subject to levy, execution or other enforcement  procedure with regard to any
obligation  under  this  Agreement.  Without  limiting  the  generality  of  the
foregoing, and notwithstanding any term or provision hereof to the contrary, the
Sellers hereby acknowledge and agree that the Securitization Agent acts as agent
for the Purchaser and has no duties or  obligations  to, will incur no liability
to, and does not act as an agent in any capacity for, the Sellers.

8.3 Responsibilities of the Sellers

            The  parties   acknowledge   that  the  Sellers  are  not   selling,
transferring or assigning to the Purchaser their rights or obligations under any
Contract  except to the extent  necessary for the collection and  enforcement of
the  Purchased  Receivables  arising out of the  Contract.  In this regard,  and
notwithstanding anything contained herein to the contrary:

      (a)   each Seller shall remain  responsible and liable under the Purchased
            Receivables,   the  Related   Security  and  any  Contract  for  the
            performance of all such Seller's duties and  obligations  thereunder
            notwithstanding the sale to the Purchaser of the Receivables payable
            thereunder;

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

      (b)   the   exercise   by  the   Purchaser   (directly   or  through   the
            Securitization  Agent)  of any of its  rights  hereunder  shall  not
            release the Sellers  from any of their  duties or  obligations  with
            respect  to,  or  under,  the  Purchased  Receivables,  the  Related
            Security or any Contract; and

      (c)   neither the  Purchaser  nor the  Securitization  Agent will have any
            duty or obligation with respect to any Receivables or Contracts, nor
            will the  Purchaser  or the  Securitization  Agent be  obligated  to
            perform any of the duties or obligations of the Sellers thereunder.

8.4 Other Dealings

            The Purchaser and its agents,  including the  Securitization  Agent,
the  Stand-By  Servicer  and each of their  respective  Affiliates,  if any, may
generally  engage in any kind of business with the Sellers,  the Purchaser,  any
Obligor,  any of their respective  Affiliates and any Person who may do business
with or own  securities  of any  thereof,  all as if they did not have rights or
obligations  hereunder or under any related deed or  agreement,  and without any
duty to account  therefor  hereunder to the Sellers,  the Purchaser or any other
Person.

8.5 Lockbox Fees

            The Sellers  agree to pay the fees  relating to the Lockbox (and the
services  of Symcor  Inc.  and  Harris  Trust  and  Savings  Bank in  connection
therewith) to the Securitization  Agent forthwith upon receipt by the Sellers of
an invoice from the Securitization Agent for such fees. If such fees are, in the
opinion of the Sellers,  acting  reasonably,  not competitive with other lockbox
service providers,  the parties agree to take all reasonably  necessary steps to
put in place alternative lockbox arrangements.

                                   ARTICLE 9
                                 INDEMNIFICATION

9.1 Indemnities by the Sellers

            Without prejudice to any other rights of the Purchaser  hereunder or
under any applicable  Law, the Sellers  (which,  in this Article 9 shall include
the Canadian Seller in its capacity as Servicer),  jointly and severally, hereby
agree to indemnify each of the Securitization  Agent (in its own capacity and in
trust for each of its shareholders,  officers,  employees,  agents and permitted
assigns)  and the  Purchaser  (in its own  capacity and in trust for each of its
beneficiaries,  the Issuer  Trustee and permitted  assigns)  (collectively,  the
"Indemnified  Parties")  and to save them  harmless from and against any and all
damages, losses, claims,  liabilities,  costs and expenses (including reasonable
legal fees and  disbursements  on a solicitor  and client  basis,  but excluding
consequential, indirect, punitive or exemplary damages and any loss of future

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

profit  or  fees)  (all  of the  foregoing  being  collectively  referred  to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
or as a result of:

      (a)   the sale, transfer and assignment by the Sellers to the Purchaser of
            a Receivable,  other than a Quebec Receivable,  which at the time of
            such transfer was not an Eligible Receivable;

      (b)   the Payment by the Purchaser to the Sellers,  in respect of a Quebec
            Receivable,  which at the time of such Payment,  was not an Eligible
            Receivable;

      (c)   reliance on any representation or warranty made or deemed to be made
            by the Sellers (or any of their  directors  and  officers)  in or in
            connection with this  Agreement,  any Periodic Report or any Related
            Document  which was  incorrect in any material  respect when made or
            deemed made or delivered;

      (d)   the failure by the Sellers to comply  with any  applicable  Law with
            respect  to  any  Receivable  that  would   constitute  an  Eligible
            Receivable hereunder and any Contract or Related Security in respect
            thereof,  or to  perform  its  material  obligations  under any such
            Contract, or the non-conformity of any such Receivable,  Contract or
            Related Security with any applicable Law;

      (e)   the failure to sell,  assign,  transfer and convey absolutely to the
            Purchaser either legal or equitable ownership in, and to vest in and
            maintain  vested in the Purchaser  such  Receivables  as are, or are
            intended  to be,  Purchased  Receivables  and  all  Collections  and
            Related  Security  related  thereto,  and/or the failure to transfer
            such Collections received by the Sellers to the Securitization Agent
            for the  benefit  of the  Purchaser,  all free and clear of any Lien
            (whether  existing at the time of the purchase  under this Agreement
            or intended purchase thereof or arising at any time thereafter);

      (f)   the  failure to file in a timely  fashion  financing  statements  or
            other  similar   instruments   or  documents,   or   instruments  of
            assignment,  under any applicable Law with respect to this Agreement
            or any  Purchase  under this  Agreement,  whether at the time of any
            Purchase or at any time thereafter;

      (g)   the payment by the  Purchaser  of any amount of  Collections  to the
            Sellers which, for any reason whatsoever,  should not have been paid
            to the Sellers;

      (h)   any dispute,  claim, set-off or defence of an Obligor (other than as
            a result of the  Obligor's  discharge in  bankruptcy  or a statutory
            limitation  on the  rights of  secured  parties  to  exercise  their
            remedies) to the payment of any  Purchased  Receivable,  including a
            defence based on the Purchased  Receivables not being a legal, valid
            and  binding  obligation  of the  Obligor,  enforceable  against the
            Obligor in

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 63 -

                                                                    CONFIDENTIAL

            accordance  with its terms,  or any other claim  resulting  from the
            sale of any goods or services relating to such Purchased  Receivable
            or the furnishing or failure to furnish any such goods or services;

      (i)   any products liability claim, suit or other similar or related claim
            or action of whatsoever  sort arising out of or in  connection  with
            any  goods  or  services  that  are  the  subject  of any  Purchased
            Receivable or Contract related thereto;

      (j)   any  failure of the  Sellers  to  perform  or  observe  any of their
            duties,  covenants or obligations  under this Agreement,  the Cheque
            Deposit  Agreement  or  any  other  agreement   relating  hereto  or
            contemplated hereby;

      (k)   any Canadian, foreign, federal, provincial,  state, municipal, local
            or other Tax of any kind or nature whatsoever that may be imposed on
            the Securitization  Agent or the Purchaser on account of any payment
            made under this  Article 9;  provided  that,  in respect of any such
            Taxes for which the  Purchaser  may be  liable,  the  Sellers  shall
            indemnify  and hold  harmless the  Purchaser  only in respect of any
            such Taxes imposed after the date of this Agreement;

      (l)   any Canadian, foreign, federal, provincial,  state, municipal, local
            or other Tax of any kind or nature whatsoever that may be imposed on
            the Purchaser or the Purchased  Assets  (except for Taxes on the net
            income, profits or capital of the Purchaser and any additional Taxes
            that result solely by virtue of an assignment by the Purchaser to or
            the exercise of any rights under this Agreement by a non-resident of
            Canada) with  respect to, or  resulting  from any delay in paying or
            any  omission to pay,  any Taxes  required  to be paid,  deducted or
            withheld and remitted,  in connection with the execution,  delivery,
            filing,   recording  and  enforcement  hereof  and  of  the  Related
            Documents or in connection with the consummation of the transactions
            (including  any Purchase by the  Purchaser of Purchased  Receivables
            and  Related   Security  related  thereto)  or  performance  of  the
            obligations  contemplated  hereby  and  thereby;  provided  that the
            Purchaser   shall  first   provide  the  Sellers   with   reasonable
            documentary  evidence  that such Taxes or payments are due and owing
            by the Purchaser and further provided that no such gross-up shall be
            required,  or,  as the  case  may be,  any  such  payment  otherwise
            required  shall be  reduced,  in  either  case,  to the  extent  of,
            determined  in the sole  discretion of the  Purchaser,  any benefit,
            deduction,  credit  or  other  reduction  in  Taxes  received  by or
            otherwise  allowed to the  Purchaser in respect of any such payment;
            or

      (m)   any  remittance  from  Collections  which  may  be  required  by the
            Minister  of  National  Revenue  pursuant  to  the  Excise  Tax  Act
            (Canada),  provided  that any payment  required  under this  Section
            9.1(m) shall be reduced to the extent of,

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 64 -

                                                                    CONFIDENTIAL

            determined  in the sole  discretion of the  Purchaser,  any benefit,
            deduction,  credit  or  other  reduction  in  Taxes  received  by or
            otherwise allowed to the Purchaser in respect of any such payment,

excluding,  however,  in each case,  Indemnified Amounts to the extent resulting
from:  (i) the failure of any  Obligor to pay an amount  owing under a Purchased
Receivable or any Related Security; (ii) the gross negligence, wilful misconduct
or breach of  contract  on the part of any  Indemnified  Party;  (iii)  recourse
(except as otherwise  specifically provided in this Agreement) for uncollectable
Receivables;  (iv) any overall net income  taxes or franchise  taxes  imposed on
such  Indemnified  Party  by the  jurisdiction  under  the  laws of  which  such
Indemnified Party is organized or any political  subdivision thereof; or (v) any
consequential, punitive or exemplary damages. If indemnification is to be sought
hereunder,  then the Indemnified  Party shall promptly notify the Sellers of the
commencement of any lawsuit,  investigation,  claim or dispute to be made by the
Indemnified Party or by any other Person (collectively, a "Lawsuit");  provided,
however,  that the failure to notify the  Sellers  shall not relieve the Sellers
from any  liability  or  obligation  that it may have  hereunder,  except to the
extent the Sellers are actually prejudiced thereby. Following such notification,
the Sellers  may elect in writing to assume the defence of any Lawsuit  (and the
costs related thereto)  commenced by a third party and the Indemnified Party and
the Sellers shall reasonably  co-operate in connection  therewith and, upon such
election,  the  Sellers  shall not be liable  for any legal  costs  subsequently
incurred by such  Indemnified  Party (other than costs of  investigation  or the
production  of  documents  or  witnesses)  unless (i) the Sellers have failed to
provide legal counsel  reasonably  satisfactory to such  Indemnified  Party in a
timely  manner or (ii) such  Indemnified  Party shall have been advised by legal
counsel that (A) the  representation  of such Indemnified Party by legal counsel
selected  by the  Sellers  would be  inappropriate  due to actual  or  potential
conflicts of interest or (B) there may be significant  legal defences  available
to such  Indemnified  Party  that  are  different  from or  additional  to those
available  to the Sellers or any other  Indemnified  Party  represented  by such
legal counsel. In no event,  however,  shall the Sellers, in connection with any
one  action or  proceeding  or  separate  but  substantially  similar or related
actions or proceedings in the same jurisdiction  arising out of the same general
allegations or  circumstances,  be liable for the fees and expenses of more than
one law firm  (together with any  appropriate  local counsel) at any time acting
for all Indemnified Parties hereunder.  Notwithstanding anything to the contrary
contained herein,  the Sellers shall not have any obligation to hold harmless or
indemnify  any  Indemnified  Party  hereunder  or pay any  legal  costs  for any
Indemnified  Party if such  Indemnified  Party enters into any  settlement  of a
Lawsuit  without the prior  consent of the Sellers,  which  consent shall not be
unreasonably withheld.

9.2 Payment of Indemnified Amounts

            At the Purchaser's  option, any payment required to be made pursuant
to  Section  9.1 on  account  of an  Indemnified  Amount by the  Sellers  to the
Purchaser shall be made either by the Purchaser deducting the Indemnified Amount
from amounts owing by the Purchaser to the

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
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                                                                    CONFIDENTIAL

Sellers hereunder or by way of deposit by the Sellers to the Purchaser's Account
forthwith following a claim therefor by or on behalf of the Purchaser on its own
behalf and in trust for the other Indemnified Parties.

9.3 Litigation

            At the request of the  Purchaser or the  Securitization  Agent,  the
Sellers shall, at their expense, assist and co-operate with the Purchaser in any
action,  suit  or  proceeding  brought  by  or  against,  or  any  investigation
involving,   the  Indemnified  Parties  relating  to  any  of  the  transactions
contemplated  by this  Agreement or to any of the Purchased  Assets or Contracts
(other than an action,  suit or proceeding by the Sellers  against the Purchaser
or the  Securitization  Agent).  In  addition,  the Sellers  agree to notify the
Securitization Agent and the Purchaser,  at the Sellers' expense,  promptly upon
learning of any pending or threatened action, suit,  proceeding or investigation
if any damages,  losses,  claims,  liabilities,  costs or expenses in connection
with any such action,  suit,  proceeding or investigation or the defence thereof
could be  Indemnified  Amounts and (except for an action,  suit,  proceeding  or
investigation by the Sellers against the Purchaser or the Securitization  Agent)
to consult with the Purchaser  concerning  the defence  thereof and prior to any
settlement  thereof;  provided,  however,  that if (i) the  Sellers  shall  have
acknowledged  in writing that any such  damages,  losses,  claims,  liabilities,
costs or expenses would be Indemnified  Amounts,  and (ii) in the Securitization
Agent's and the Purchaser's joint determination,  the Sellers have the financial
ability to satisfy such damages, losses, claims, liabilities, costs or expenses,
then the Sellers shall have the right, on the Indemnified Parties' behalf but at
the Sellers' expense, to defend such action,  suit,  proceeding or investigation
with  counsel  selected  by the  Sellers  and shall have sole  discretion  as to
whether to litigate, appeal or enter into an exclusively monetary settlement.

9.4 Notification

            The Sellers  shall  promptly  notify the  Purchaser  of any claim or
threatened  claim which may, in the Sellers'  reasonable  opinion,  give rise to
indemnification pursuant to this Article 9.

                                   ARTICLE 10
                                  MISCELLANEOUS

10.1 Costs, Expenses and Taxes

      (a) In addition to the rights of indemnification provided for in Article 9
and the  fees  payable  by the  Sellers  hereunder,  the  Sellers,  jointly  and
severally,  hereby agree to pay on demand all  reasonable  costs and expenses of
the Purchaser and the Securitization  Agent,  including the legal fees and other
reasonable  expenses of counsel to the  Purchaser and the  Securitization  Agent
(including goods and services taxes and disbursements), in connection with:

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

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                                                                    CONFIDENTIAL

(i) any  amendment  to this  Agreement  or any waiver of any  provision  of this
Agreement  requested  by the Sellers or required or  initiated  by any action or
failure to act by the Sellers  (including  any  amendment or waiver that, in the
opinion  of the  Securitization  Agent,  requires  the  Securitization  Agent to
perform a credit review of the  transaction or event  associated  with or giving
rise to such amendment or waiver but excluding any amendment(s)  relating solely
to the  structure  of the  Trust and  unrelated  to the  Sellers);  and (ii) the
enforcement of this Agreement or any Related  Document.  For greater  certainty,
all costs and expenses of the Purchaser and the  Securitization  Agent  incurred
after the occurrence of an Amortization  Event in connection with  administering
and  collecting  the  Purchased  Receivables  shall be  deemed  to be costs  and
expenses  incurred in connection  with the enforcement of this Agreement and the
Related Documents.

      (b)   The Sellers shall:

            (i)   jointly  and  severally,  pay on  demand  any and  all  stamp,
                  filing,   recording  and  other  Taxes  and  fees  payable  or
                  determined  to be payable in  connection  with the  execution,
                  delivery,  filing,  recording or enforcement of this Agreement
                  or any Related  Document,  provided  that no payment  shall be
                  required  to  be  made  by  the  Sellers  under  this  Section
                  10.1(b)(i)  in respect of Taxes on the net income,  profits or
                  capital of the Purchaser or any  additional  Taxes that result
                  solely by virtue of an  assignment by the Purchaser to, or the
                  exercise of any rights hereunder by, a non-resident of Canada;
                  and

            (ii)  reimburse on demand the Purchaser for any overpayment  made to
                  the  Sellers  or any loss in respect  of any  Purchase  Amount
                  resulting  from  a  miscalculation  by  the  Purchaser  or the
                  Securitization   Agent  in  determining   the  Purchase  Price
                  (including  any  Purchase   Amount)  or  Payment   Price,   as
                  applicable,  in  respect  of a  Purchased  Receivable  or  any
                  component thereof or any other amount; provided, however, that
                  the Purchaser will request such  reimbursement  in writing and
                  will explain, in reasonable detail, such  miscalculation,  and
                  further provided that the amount of such  reimbursement  shall
                  not exceed the amount which should initially have been paid to
                  the  Purchaser but for such  miscalculation,  plus interest at
                  the applicable Base Interest Rate plus 0.30%.

      (c)  The  Purchaser   shall  reimburse  on  demand  the  Sellers  for  any
overpayment  made  to the  Purchaser  or for the  failure  by the  Purchaser  to
transfer  funds to the  Sellers  pursuant  to  Section  3.1(e)  or on the  Final
Collection Date; provided,  however, that the Canadian Seller, for and on behalf
of the Sellers,  will request such reimbursement in writing and will explain, in
reasonable  detail,  such  overpayment,  and further provided that the amount of
such

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 67 -

                                                                    CONFIDENTIAL

reimbursement  shall not exceed the amount which should initially have been paid
to the Sellers, plus interest at the applicable Base Interest Rate plus 0.30%.

10.2 Further Assurances

            Each of the  parties  hereto  upon the  request  of  another  party,
whether  before or after the  closing of any  transaction  contemplated  hereby,
shall  do,  execute,  acknowledge  and  deliver  or cause to be done,  executed,
acknowledged or delivered all such further acts, deeds, documents,  assignments,
transfers,  conveyances  and  assurances  as  may  be  reasonably  necessary  or
desirable to effect complete consummation of the objects of and the transactions
contemplated  by  this  Agreement.   Without  limiting  the  generality  of  the
foregoing,  upon an Amortization  Commencement Date, the Purchaser shall, at the
expense and request of the  Canadian  Seller,  for and on behalf of the Sellers,
without any  representations,  warranties  or  recourse of any kind  whatsoever,
enter into such  agreements,  acknowledgements,  releases and other  instruments
that in the Canadian Seller's sole discretion,  acting reasonably, are necessary
to release  any  Receivables  (which,  for  greater  certainty,  shall  under no
circumstances  include any Purchased  Receivables)  that are generated after the
Amortization Commencement Date from any liens in favour of the Purchaser.

10.3 Failure to Perform

            If  the  Servicer   fails  to  perform  any  of  its  agreements  or
obligations  hereunder,  the Securitization  Agent and/or the Purchaser may (but
will not be required to) perform,  or cause to be performed,  such  agreement or
obligation,  and the reasonable expenses of the Securitization  Agent and/or the
Purchaser,  as the case may be, incurred in connection therewith will be payable
by the Sellers as provided in Section 10.1.

10.4 Entire Agreement

            This Agreement,  together with all Related  Documents,  contains the
entire agreement by the parties hereto with respect to the subject matter hereof
and shall  constitute  the entire and only  agreement  between the parties  with
respect  to  the  subject   matter  hereof,   superseding   any  and  all  prior
negotiations,  understandings  and  agreements,  written  or oral.  There are no
representations,  warranties,  terms,  conditions,  undertakings  or  collateral
agreements,  express,  implied or  statutory,  between  the  parties,  except as
expressly set forth herein.

10.5 Amendments, Waivers, Etc.

            No  amendment  or  waiver of any  provision  of this  Agreement  nor
consent to any  departure by the Sellers,  the  Servicer,  the  Purchaser or the
Securitization Agent therefrom shall be effective in whole or in part unless the
amendment, waiver or consent is in writing and signed by (a) the Sellers and the
Purchaser (with respect to an amendment), (b) the Purchaser or any

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 68 -

                                                                    CONFIDENTIAL

agent on its  behalf  (with  respect  to a waiver  or  consent  by it),  (c) the
relevant  Seller (with  respect to a waiver or consent by the relevant  Seller),
(d) the Securitization  Agent (with respect to a waiver or consent by it), or to
the extent it affects the rights,  duties or obligations  of the  Securitization
Agent,  and then,  in any such case,  such waiver or consent  shall be effective
only in the  specific  instance  and for the  specific  purpose for which it was
given.  In each case,  the Credit  Enhancer  shall  have  consented  to any such
amendments,  waivers or  consents.  For greater  certainty,  the  provisions  of
Article 9 may be amended without the consent of those Indemnified  Parties whose
interest therein is held in trust by the Securitization  Agent or the Purchaser,
as the case may be.

10.6 No Waiver; Remedies

            No failure on the part of the Purchaser to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder  preclude any other or further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are  cumulative  and not  exclusive  of any  remedies  provided by Law.
Without  limiting  the  generality  of the  foregoing,  the  Purchaser is hereby
authorized  by the  Sellers  at any time and from time to time,  to the  fullest
extent  permitted  by Law,  to set off and apply any and all amounts at any time
held and other  indebtedness  at any time owing by the  Purchaser  to or for the
credit or the account of the Sellers in respect of the transactions contemplated
by this Agreement against any and all of the obligations of the Sellers,  now or
hereafter existing under this Agreement and the Related Documents.

10.7 No Set-Off

            The Sellers  (including  the Canadian  Seller  whether acting in its
personal capacity or as Servicer) shall make all payments required to be made by
it  hereunder  without  deduction  or  set-off,  regardless  of any  defence  or
counterclaim  (whether  based on any Law or policy  now or  hereafter  issued or
enacted by any Governmental Authority).

10.8 Non-Merger

            Each party hereby agrees that all  provisions of this  Agreement are
material  and shall  survive the  execution,  delivery and  performance  of this
Agreement,  the  closing  of  any  transactions   contemplated  hereby  and  the
execution,  delivery  and  performance  of any and all  documents  delivered  in
connection herewith.

10.9 Time of the Essence

            Time  shall  be of the  essence  of  this  Agreement  and  of  every
provision hereof.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 69 -

                                                                    CONFIDENTIAL

10.10 Agreement of Purchase and Sale

            Each of the Sellers and the Purchaser hereby expressly  acknowledges
that this  Agreement,  except as is  specifically  provided  with respect to the
duties and obligations of the Servicer,  is intended to create a relationship of
purchaser  and vendor.  Each of the Sellers and the Purchaser  hereby  expressly
disclaims  any  intention to  establish a trust  relationship  or,  except as is
specifically  provided  with  respect  to  the  duties  and  obligations  of the
Servicer,  or by Section 5.16 or 5.17, to  constitute  either the Sellers or the
Purchaser  as the agent of the  other.  Each of the  Sellers  and the  Purchaser
covenants with each other that it will not, at any time,  allege or claim that a
relationship of trust or agency is created hereby, except as otherwise expressly
provided for herein.

10.11 Notices

            All notices, consents or other communications authorized or required
to be given  pursuant  to this  Agreement,  or  pursuant  to which any rights or
obligations  may  arise  hereunder,  shall be in  writing  (including  facsimile
communication  and such other method of recorded  communications as to which the
parties  may  hereafter  agree to in  writing)  and shall be  either  personally
delivered or sent by facsimile as follows:

      (a)   in the case of communication to the Sellers:

            Mitel Networks Corporation
            350 Legget Drive
            Ottawa, ON K2K 2W7

            Attention: Treasurer

            Facsimile No.: 613-592-7838
            Telephone No: 613-592-2122 ext. 4431

            with a copy, for any default-related communication, to:

            Attention: Legal Department

            Facsimile No.: 613-592-7802

            with a copy to:

            Osler, Hoskin & Harcourt LLP
            1 First Canadian Place
            PO Box 50, Stn. 1st Can. Pl.
            Toronto, ON M5X 1B8

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 70 -

                                                                    CONFIDENTIAL

            Attention: Richard Borins

            Facsimile No.: 416-862-6666
            Telephone No.: 416-362-2111

      (b)   in the  case of  communication  to the  Securitization  Agent or the
            Purchaser:

            Efficient Capital Corporation
            1601 - 18 King Street East
            Toronto, Ontario M5C 1C4

            Attention: Chief Operating Officer

            Facsimile No.: (416) 868-9458
            Telephone No: (416) 868-4322

Any  notice  or  other   communication   given  by  personal  delivery  will  be
conclusively  deemed  to have  been  given  and  received  on the day of  actual
delivery thereof and, if given by facsimile,  on the day of transmittal  thereof
if given  during  the normal  business  hours of the  recipient  and on the next
Business  Day if not given  during such  business  hours on any day. A party may
change its address for receipt of notices or other  communications  hereunder by
giving notice thereof to the other party in the manner aforesaid.

10.12 Binding Effect; Assignability, Etc.

      (a) This  Agreement  shall be binding upon and inure to the benefit of the
Sellers,  the Purchaser and their respective  successors and assigns.  Except as
otherwise  permitted  hereby,  no party may assign its rights  hereunder  or any
interest herein without the prior consent of the other parties, such consent not
to be unreasonably  withheld, and provided that any assignee hereunder agrees to
be  bound  by  Section  10.15  to  the  same  extent  as  the  assigning  party.
Notwithstanding any other provision of this Agreement, upon the occurrence of an
Amortization  Event,  the Purchaser  may,  subject to the  provisions of Section
10.15,  sell, assign and transfer any Purchased Assets (in whole or in part) to,
or encumber or grant any security  interest in or over any Purchased  Assets (in
whole or in part) in favour of, any Person,  without consent of or notice to the
Sellers and the Purchaser may also sell,  assign, or transfer to any such Person
any of its rights hereunder or interest herein on the same basis for the purpose
of giving effect to any such sale, assignment or transfer of Purchased Assets or
encumbrance  or grant of a  security  interest.  Upon any  sale,  assignment  or
transfer  referred to in the  preceding  sentence,  such  Person  shall be fully
subrogated to all rights, benefits and privileges of the Purchaser hereunder and
shall be bound by all terms and  provisions  of this  Agreement  with respect to
such  Purchased  Assets.  If  this  Agreement  and  the  Related  Documents  and
agreements are assigned by the Purchaser,  the assignee shall be responsible for
any additional costs and expenses arising as a direct result of such assignee.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 71 -

                                                                    CONFIDENTIAL

      (b)  Notwithstanding  Section 10.12(a),  the Purchaser may, subject to the
provisions of Section 10.15,  (i) assign by way of security  and/or  subrogation
its rights hereunder to the Indenture Trustee and/or the Insurer and (ii) assign
to the Insurer the benefit of the representations and warranties provided by the
Sellers  hereunder  and the benefit of Article 9 with respect  thereto,  in each
case without the prior written consent of the Sellers.

10.13 Governing Law

            This  Agreement  shall be governed by, and  construed in  accordance
with,  the laws of the  Province  of  Ontario  and the  federal  laws of  Canada
applicable therein.

10.14 Severability

            Any provision hereof that is prohibited or unenforceable in whole or
in part in any jurisdiction  shall, as to such provision and such  jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  of this  Agreement  or  affecting  the
validity or enforceability of such provision in any other jurisdiction.

10.15 Confidentiality

            The  Purchaser,  the  Sellers  and  the  Securitization  Agent  each
acknowledge that this Agreement, agreements and documents related hereto and all
data and  information  delivered  hereunder  by one party to  another,  shall be
considered  as non-public  information  of the party making  delivery,  and each
party shall make all reasonable efforts to hold all such non-public  information
in the  strictest  confidence  in  accordance  with best  prudent  practice  for
handling  confidential  information  of such  nature  and  shall  only  use such
information in connection with the transactions contemplated hereunder; provided
that,  notwithstanding  the  foregoing,  the  Purchaser,  the  Sellers  and  the
Securitization Agent each may make disclosure of such non-public information (i)
to its accountants, lawyers, bankers and other advisors on a need-to-know basis,
(ii)  as  requested  or  required  by  any  Governmental  Authority,  securities
regulatory  authority or representative  thereof or pursuant to legal process or
when required under  applicable Law, (iii) to the Credit  Enhancer,  (iv) to the
institutional  shareholder  of the  Securitization  Agent,  (v) to implement the
terms of this  Agreement  or to enforce any rights  which it may have to collect
any Purchased Receivable or to enforce its respective rights with respect to any
Related Security,  (vi) to the Stand-By Servicer  (provided,  however,  that the
Purchaser  shall  require  the  Stand-By  Servicer  to  agree to be bound by the
provisions of this Section  10.15 to the same extent as the  Purchaser) or (vii)
with the consent of the other parties hereto. Unless specifically  prohibited by
applicable  Law, each party hereto shall notify the other parties  hereto of any
request  by any  Governmental  Authority,  securities  regulatory  authority  or
representative  thereof or other Person for  disclosure  of any such  non-public
information prior to disclosure of such information to permit the party affected
to contest such disclosure,  if possible. In no event shall the Purchaser or the
Securitization  Agent be obligated or required to return any materials furnished
by the

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 72 -

                                                                    CONFIDENTIAL

Sellers. Nothing in this Agreement shall obligate the Sellers or the Servicer to
disclose  (whether in any Related  Document or otherwise) all or any part of any
Records  if  such  disclosure  or the  manner  or  form  thereof  could,  in the
reasonable  opinion of the Sellers or the  Servicer,  constitute a breach of any
Law or any duty of secrecy or confidentiality applicable to it.

10.16 Financial Reporting

            The Sellers and the  Purchaser  hereby  covenant and agree that they
will not at any time prepare any financial statements (other than those prepared
for internal reporting purposes) that account for the transactions  contemplated
hereby in a manner that is  inconsistent  with the sale to the  Purchaser of the
Purchased Assets except to the extent required by Canadian GAAP or US GAAP.

10.17 Consent to Jurisdiction; Waiver of Immunities

      (a) The parties hereby irrevocably submit to the jurisdiction of any court
sitting  in  Toronto,  Ontario  in any action or  proceeding  arising  out of or
relating to this Agreement,  and the parties hereby  irrevocably  agree that all
claims in respect of such action or  proceeding  may be heard and  determined in
such court.  The parties hereby  irrevocably  waive, to the extent  permitted by
law, the defense of an  inconvenient  forum to the maintenance of such action or
proceeding.  The  parties  hereby  agree that a final  judgment in any action or
proceeding  shall be conclusive  and may be enforced in other  jurisdictions  by
suit on the judgment or in any other manner provided by law.

      (b) Nothing in this  Section  10.17 shall affect the right of any party to
serve legal process in any other manner permitted by law, or affect its right to
enforce any action,  proceeding  or judgment  against the other parties or their
property in the courts of other jurisdictions.

      (c) To the extent  that the  Sellers  have or  hereafter  may  acquire any
immunity  from  jurisdiction  of any  court or from any legal  process  (whether
through service or notice,  attachment  prior to judgment,  attachment in aid of
execution,  execution or otherwise) with respect to itself or its property,  the
Sellers hereby  irrevocably waive, to the extent permitted by law, such immunity
in respect of its obligations hereunder.

10.18 Remedies

            The remedies provided for herein are cumulative and not exclusive of
any remedies provided by law.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 73 -

                                                                    CONFIDENTIAL

10.19 Counterparts

            This Agreement may be executed in any number of counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same  instrument.  For all purposes of this Agreement and
all other  documents and agreements  contemplated  hereby,  the signature of any
party hereto or thereto, evidenced by a telecopy showing such signature or other
electronically   transmitted   version  of  such  signature,   shall  constitute
conclusive  proof  for all  purposes  of the  signature  of such  person to such
documents and  agreements,  to the same extent in all respects as a copy of such
documents and agreements showing the original signature of such party.

10.20 Business Disruption

            The Canadian  Seller,  for and on behalf of the Sellers,  may,  upon
providing  60  days  notice  to  the   Purchaser,   designate  an   Amortization
Commencement  Date, where, in the reasonable opinion of the Canadian Seller, the
requests  made by the  Purchaser and directed to the Sellers with respect to the
production of any information or documentation  related to the Seller hereunder,
become materially disruptive to the Sellers' business.

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 74 -

                                                                    CONFIDENTIAL

            IN WITNESS  WHEREOF,  the parties have executed this Agreement as of
the day and year first written above.

                                  MITEL NETWORKS CORPORATION

                                  by    _______________________________________
                                  Name: Douglas McCarthy
                                  Title: Treasurer

                                  MITEL NETWORKS, INC.

                                  by    _______________________________________
                                  Name: Paul Butcher
                                  Title: President

                                  MITEL NETWORKS SOLUTIONS, INC.

                                  by    _______________________________________
                                  Name: Paul Butcher
                                  Title: President

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>
                                     - 75 -

                                                                    CONFIDENTIAL

                                  THE CANADA TRUST COMPANY, in its
                                  capacity as trustee of ENDURANCE
                                  TRUST, by Efficient Capital
                                  Corporation, in its capacity as
                                  Securitization Agent

                                  by    ________________________________________
                                  Name: Colin Kilgour
                                  Title: President and Chief Executive Officer

                                  EFFICIENT CAPITAL CORPORATION, in its
                                  capacity as Securitization Agent

                                  by  __________________________________________
                                  Name: Colin Kilgour
                                  Title: President and Chief Executive Officer

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                    EXHIBIT A

                          FORM OF ASSIGNMENT AGREEMENT

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                    EXHIBIT B

                             FORM OF PURCHASE NOTICE

TO:               ENDURANCE TRUST c/o Efficient Capital Corporation

Facsimile No.: 416-868-9458

            This Purchase Notice is delivered to you pursuant to the receivables
purchase  agreement  made  as of  April  16,  2004  (the  "Receivables  Purchase
Agreement")  between  Mitel  Networks  Corporation,  as Canadian  Seller,  Mitel
Networks,  Inc., as Seller, and Mitel Networks  Solutions,  Inc., as Seller, and
collectively,  the Sellers, Endurance Trust, as Purchaser, and Efficient Capital
Corporation, as Securitization Agent.

            The Canadian Seller, for and on behalf of the Sellers,  hereby gives
notice  to the  Purchaser  that:  (i) in  respect  of  the  Non-Quebec  Eligible
Receivables  set out in the  attached  Schedule  it offers  for sale on the date
below such  Eligible  Receivables;  and (ii) in  respect of the Quebec  Eligible
Receivables  set out in the  attached  Schedule,  it  requires  payment for such
Eligible  Receivables,  all in  accordance  with the  terms  of the  Receivables
Purchase Agreement.

Purchase Date:

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                          SCHEDULE A TO PURCHASE NOTICE

                               LIST OF RECEIVABLES

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  Invoice Number   Date of Issue   Due Date    Obligor    Outstanding Amount
-------------------------------------------------------------------------------

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     DATED the ______________ day of _____________________, ______________.

                                      MITEL NETWORKS CORPORATION

                                      By________________________________________
                                        (Authorized Officer)

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                    EXHIBIT c

                          FORM OF OFFICERS' CERTIFICATE

                  The undersigned Canadian Seller hereby certifies for itself
and on behalf of the Sellers to Endurance Trust that no event has occurred and
is continuing which constitutes, or but for the requirement that notice be given
or lapse of time or both would constitute, an Amortization Event (as defined in
the Receivables Purchase Agreement between the Sellers, the Purchaser and the
Securitization Agent made as of April 16, 2004).

     DATED the ______________ day of _____________________, ______________.

                                      MITEL NETWORKS CORPORATION

                                      By________________________________________
                                        (Authorized Officer)

                                      Title_____________________________________

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                    EXHIBIT D

                     LIST OF OFFICES WHERE RECORDS ARE KEPT

            The undersigned  Canadian Seller hereby  certifies for itself and on
behalf of the Sellers,  to Endurance  Trust that the following list includes all
locations  where all  records  required  under the terms and  conditions  of the
Receivables  Purchase  Agreement  between  Mitel  Networks  Corporation,   Mitel
Networks,  Inc., Mitel Networks Solutions,  Inc. and Endurance Trust, made as of
April 16, 2004 are kept.

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     OFFICE                              ADDRESS
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Seller:

By:

Title:

                                      DATE:

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                    EXHIBIT E

                             FORM OF PERIODIC REPORT

             TO: ENDURANCE TRUST c/o Efficient Capital Corporation

            This Periodic Report is delivered to you pursuant to the receivables
purchase  agreement  made  as of  April  16,  2004  (the  "Receivables  Purchase
Agreement")  between  Mitel  Networks  Corporation,  as Canadian  Seller,  Mitel
Networks,  Inc., as Seller, and Mitel Networks  Solutions,  Inc., as Seller, and
collectively,  the Sellers, Endurance Trust, as Purchaser, and Efficient Capital
Corporation, as Securitization Agent.

                  The Canadian Seller, for and on behalf of the Sellers, hereby
gives notice to the Purchaser that on the date hereof the Servicer has applied
the following payments, dilutions and defaults:

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  Obligor ID    Invoice Number  Payment Date   Payment Amount  Transaction Type
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THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.

<PAGE>

                                                                    CONFIDENTIAL

                                    EXHIBIT F

                            FORM OF QUEBEC ASSIGNMENT

THIS DOCUMENT AND ANY COPIES THEREOF,  ELECTRONIC OR OTHERWISE, ARE THE PROPERTY
OF EFFICIENT CAPITAL  CORPORATION.  UNAUTHORIZED  DISTRIBUTION OF THIS DOCUMENT,
ELECTRONIC OR OTHERWISE, IS PROHIBITED WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF  EFFICIENT  CAPITAL  CORPORATION.  THIS  DOCUMENT  AND  ANY  COPIES  THEREOF,
ELECTRONIC  OR  OTHERWISE,  ARE TO BE  RETURNED  UPON THE  REQUEST OF  EFFICIENT
CAPITAL CORPORATION.CDN. $30,000,000
                            revolving credit facility

                           mitel networks corporation,
                                   As Borrower

                                     - and -

                                bank of montreal,
                            As Administrative Agent,
                            Lead Arranger and Lender

                                     - and -

                          the lenders from time to time
                                 parties hereto

                 -----------------------------------------------
                      Amended and Restated Credit Agreement
                            Made as of April 21, 2004
                 -----------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

                                    Article 1
                                 INTERPRETATION

         1.1      Definitions..................................................2
         1.2      Headings....................................................17
         1.3      Extended Meanings...........................................17
         1.4      References to the Administrative Agent and Lenders..........17
         1.5      Accounting Terms and Practices..............................18
         1.6      Non-Banking Days............................................18
         1.7      References to Time of Day...................................18
         1.8      Severability................................................18
         1.9      Currency....................................................18
         1.10     References to Statutes......................................18
         1.11     References to Agreements....................................18
         1.12     Consents and Approvals......................................19
         1.13     Schedules...................................................19

                                    Article 2
                                  THE FACILITY

         2.1      The Facility................................................19
         2.2      Purpose.....................................................19
         2.3      Availability................................................20
         2.4      Making of an Advance........................................21
         2.5      Participation of Each Lender................................21
         2.6      Repayment of the Facility...................................21
         2.7      Cancellation or Reduction of the Facility...................23
         2.8      Application of Repayments...................................23
         2.9      Interest on Prime Rate Advances.............................24
         2.10     Interest on U.S. Base Rate Advances.........................25
         2.11     Libor Advances..............................................25
         2.12     Method and Place of Payment.................................26
         2.13     Commitment Fees.............................................27
         2.14     Conversion Options..........................................27
         2.15     Execution of Notices........................................29
         2.16     Evidence of Indebtedness....................................29
         2.17     Interest on Unpaid Costs and Expenses.......................30
         2.18     Criminal Rate of Interest...................................30
         2.19     Compliance with the Interest Act (Canada)...................30
         2.20     Nominal Rate of Interest....................................30

                                      -i-
<PAGE>

                                    Article 3
                                LETTERS OF CREDIT

         3.1      Term and Availability.......................................31
         3.2      Reimbursement...............................................31
         3.3      Indemnity for Costs.........................................32
         3.4      Fees........................................................32

                                    Article 4
                 BANKERS' ACCEPTANCES AND BA EQUIVALENT ADVANCES

         4.1      Form of Bankers' Acceptance Advance and Interest............32
         4.2      Minimum Amount..............................................33
         4.3      Term and Interest Periods...................................33
         4.4      Purchase of Drafts, Acceptance Fee and Interest.............33
         4.5      Payment on Maturity.........................................34
         4.6      Waiver of Days of Grace.....................................34
         4.7      No Market...................................................34

                                    Article 5
                   CHANGE OF CIRCUMSTANCES AND INDEMNIFICATION

         5.1      Increased Costs.............................................34
         5.2      Illegality..................................................36

                                    Article 6
                        CONDITIONS PRECEDENT TO DRAWDOWN

         6.1      Conditions for Closing......................................36
         6.2      Conditions for Subsequent Drawdowns.........................39

                                    Article 7
                         REPRESENTATIONS AND WARRANTIES

         7.1      Representations and Warranties..............................39
         7.2      Survival of Representations and Warranties..................44

                                    Article 8
                                    COVENANTS

         8.1      Affirmative Covenants.......................................45
         8.2      Negative Covenants..........................................51
         8.3      Financial Covenants.........................................53

                                      -ii-
<PAGE>

                                    Article 9
                                   GUARANTEES

         9.1      Guarantors to Provide Guarantees............................54

                                   Article 10
                                    SECURITY

         10.1     Borrower's Security Documents...............................54
         10.2     Guarantors' Security Documents..............................55

                                   Article 11
                            DEFAULT AND ACCELERATION

         11.1     Events of Default...........................................56
         11.2     Acceleration................................................58
         11.3     Remedies Cumulative and Waivers.............................59
         11.4     Suspension of Lenders' Obligations..........................59
         11.5     Application of Payments After an Event of Default...........59

                                   Article 12
                               SUCCESSOR COMPANIES

         12.1     Certain Requirements in Respect of Merger, Etc..............60
         12.2     Vesting of Powers in Successor..............................61

                                   Article 13
                       COSTS, EXPENSES AND INDEMNIFICATION

         13.1     Costs and Expenses..........................................62
         13.2     Indemnification by the Borrower.............................62
         13.3     Funds.......................................................63
         13.4     General Indemnity...........................................63
         13.5     Environmental Claims........................................64

                                   Article 14
                            THE ADMINISTRATIVE AGENT

         14.1     The Administrative Agent....................................65
         14.2     The Administrative Agent's Responsibility...................66
         14.3     Administrative Agent's Duties...............................67
         14.4     Protection of Administrative Agent..........................67
         14.5     Indemnification of Administrative Agent.....................68
         14.6     Termination or Resignation of Administrative Agent..........68
         14.7     Rights of Administrative Agent as Lender....................69

                                      -iii-
<PAGE>

         14.8     Authorized Waivers, Variations and Omissions................69
         14.9     Financial Information Concerning Borrower...................69
         14.10    Knowledge of Financial Situation of Borrower................70
         14.11    Legal Proceedings...........................................70
         14.12    Capacity as Administrative Agent............................70
         14.13    Capacity as Lead Arranger...................................70
         14.14    Deposits or Loans Respecting the Borrower...................70

                                   Article 15
                                     GENERAL

         15.1     Term........................................................71
         15.2     Survival....................................................71
         15.3     Benefit of the Agreement....................................71
         15.4     Notices.....................................................71
         15.5     Amendment and Waiver........................................72
         15.6     Governing Law...............................................72
         15.7     Further Assurances..........................................73
         15.8     Enforcement and Waiver by the Lenders.......................73
         15.9     Execution in Counterparts...................................73
         15.10    Assignment by the Borrower..................................73
         15.11    Assignments and Transfers by the Lenders....................73
         15.12    Set-Off.....................................................74
         15.13    Time of the Essence.........................................75
         15.14    Judgment Currency...........................................75
         15.15    Equal Ranking of Lenders....................................75
         15.16    Sharing of Information......................................76
         15.17    Continuing Obligations and Liabilities......................76

SCHEDULE A - BORROWING BASE CERTIFICATE
SCHEDULE B - DRAWDOWN NOTICE
SCHEDULE C - CONVERSION NOTICE
SCHEDULE D - ROLLOVER NOTICE
SCHEDULE E -  [Intentionally deleted]
SCHEDULE F - PERMITTED ENCUMBRANCES
SCHEDULE G - LITIGATION
SCHEDULE H - NON-COMPLIANCE MATTERS
SCHEDULE I - SUBSIDIARIES
SCHEDULE J - TRANSFER AGREEMENT
SCHEDULE K - COMMITTED AMOUNTS
SCHEDULE L - FINANCIAL FORECAST

                                      -iv-
<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

      MEMORANDUM OF AGREEMENT made as of the 21st day of April, 2004.

B E T W E E N:

                   MITEL NETWORKS CORPORATION,
                   a  corporation  incorporated  under  the laws of  Canada,  as
                   borrower

                   (hereinafter referred to as the "Borrower"),

                             - and -

                   THE LENDERS FROM TIME TO TIME PARTIES HERETO,

                   (hereinafter referred to as the "Lenders"),

                             - and -

                   BANK OF MONTREAL,
                   a Canadian  chartered bank, as Administrative  Agent and Lead
                   Arranger

                   (hereinafter  referred to in its own capacity as "BMO" and in
                   its  capacity  as  administrative  agent  on  behalf  of  the
                   Lenders, as the "Administrative Agent"),

      WHEREAS  pursuant to an amended and restated  credit  agreement made as of
the 27th day of February,  2003, as amended by amending agreement made as of the
12th day of June, 2003,  second amending  agreement made as of February 24, 2004
and  third  amending  agreement  made as of April  19,  2004  (collectively,  as
amended, the "Existing Credit Agreement"),  a revolving credit facility was made
available to the Borrower upon and subject to the terms and  conditions  therein
set forth;

      AND WHEREAS the Borrower and the Lenders have agreed to further  amend and
restate  the  Existing  Credit   Agreement  by  executing  and  delivering  this
Agreement;

      NOW THEREFORE  THIS  AGREEMENT  WITNESSES  that, in  consideration  of the
premises, the covenants herein contained and other valuable  consideration,  the
parties hereto agree as follows:

<PAGE>
                                     - 2 -

                                   Article 1
                                 INTERPRETATION

1.1   Definitions

      In this Agreement:

      "Acceptance Fee" means, with respect to each Bankers'  Acceptance drawn by
      the Borrower as borrower hereunder,  an amount equal to the product of (i)
      the  Applicable  Margin,  (ii)  the  Face  Amount  of each  such  Bankers'
      Acceptance purchased by a Lender on the relevant Drawdown Date and (iii) a
      fraction  (x) the  numerator of which is the number of days in the term to
      maturity of such Bankers'  Acceptance and (y) the  denominator of which is
      365 days;

      "Accounts" means the accounts kept by the Administrative Agent pursuant to
      Section 2.16(a) to record the Borrower's liabilities to the Administrative
      Agent and each Lender under this Agreement;

      "Additional Compensation" has the meaning specified in Section 5.1;

      "Administrative  Agent" means BMO, in its capacity as administrative agent
      for the Lenders hereunder, or any successor Administrative Agent appointed
      pursuant to Section 14.6;

      "Administrative  Agent's Counsel" means the firm of Davies Ward Phillips &
      Vineberg LLP, Toronto, Ontario, or such other firm of legal counsel as the
      Administrative Agent may from time to time designate;

      "Advance" means a Prime Rate Advance, a Bankers' Acceptance Advance, Libor
      Advance  or a U.S.  Base Rate  Advance or the issue of a Letter of Credit,
      and "Advances" means all of them;

      "Affiliate" means an affiliated body corporate, partnership, joint venture
      or other  entity and,  for the  purposes of this  Agreement,  (i) one body
      corporate,  partnership,  joint venture or other entity is affiliated with
      another if one such body  corporate,  partnership,  joint venture or other
      entity  is the  Subsidiary  of or is  Controlled  by the other or both are
      Subsidiaries  of the same body  corporate,  partnership,  joint venture or
      other entity or each of them is  Controlled by the same Person and (ii) if
      two bodies corporate,  partnerships,  joint ventures or other entities are
      affiliated  with the same body  corporate,  partnership,  joint venture or
      other entity at the same time,  they are deemed to be affiliated with each
      other;

      "Agreement" means this agreement and all Schedules attached hereto, as the
      same from time to time may be amended, restated, replaced or superseded;

      "Agreement Currency" shall have the meaning specified in Section 15.14;

<PAGE>
                                     - 3 -

      "Applicable Law" means, with respect to any Person, property,  transaction
      or event, all present or future  applicable laws,  statutes,  regulations,
      rules,  orders,   codes,   treaties,   conventions,   judgments,   awards,
      determinations  and  decrees of any  governmental,  regulatory,  fiscal or
      monetary  authority or court of competent  jurisdiction  in any applicable
      jurisdiction;

      "Applicable  Margin"  means,  (i)  until  such  time as the  Borrower  has
      received  proceeds of $20,000,000  from the issue of equity  pursuant to a
      subscription  agreement dated on or about April 22, 2004 between Edgestone
      Capital  Equity Fund II-A,  L.P. and the  Borrower,  2.5% per annum in the
      case of a Prime Rate Advance or a U.S. Base Rate  Advance,  3.5% per annum
      in the case of a Libor Advance or a Bankers' Acceptance Advance,  and (ii)
      thereafter,  1.5% per annum in the case of a Prime Rate  Advance or a U.S.
      Base  Rate  Advance,  2.5% per annum in the case of a Libor  Advance  or a
      Bankers' Acceptance Advance;

      "Arm's  Length" has the meaning  ascribed  thereto for the purposes of the
      Income Tax Act (Canada) in effect as of the date hereof;

      "Available  Amount"  means,  at any time, the lesser of: (a) the Committed
      Amount or its  Equivalent  Amount in U.S.  Dollars,  and (b) the Borrowing
      Base;

      "BA Purchase  Price" means the difference  between (i) the result (rounded
      to the nearest  whole cent,  with  one-half of one cent being  rounded up)
      obtained by dividing the Face Amount of such  Bankers'  Acceptance  by the
      sum of one  plus  the  product  of (x)  the  BA  Reference  Discount  Rate
      multiplied by (y) a fraction, the numerator of which is the number of days
      in the term to maturity of such Bankers'  Acceptance,  and the denominator
      of which is 365 and (ii) the Acceptance Fee;

      "BA Reference Discount Rate" means the average rate applicable to bankers'
      acceptances  denominated  in Canadian  Dollars for the  applicable  period
      appearing  on  the   "Reuters   Screen  CDOR  Page"  (as  defined  in  the
      International  Swaps and Derivatives  Association,  Inc. 2000 Definitions)
      rounded up to the nearest 1/100th of 1% at approximately 10:00 a.m. on the
      relevant Drawdown Date;  provided that if such rate is not available,  the
      "BA Reference  Discount  Rate" shall mean the  arithmetic  mean of the bid
      rates  quoted  by Bank of  Montreal  and the  other  Lenders,  if any,  at
      approximately 10:00 a.m. for the purchase,  on the relevant Drawdown Date,
      of bankers' acceptances or drafts having an aggregate Face Amount equal to
      and with a term to maturity  the same as the  Bankers'  Acceptances  to be
      purchased by the Lenders on such Drawdown Date;

      "Bankers'  Acceptance" means a draft or other bill of exchange in Canadian
      Dollars drawn by the Borrower and accepted by a Lender in accordance  with
      Article 4;

      "Bankers'  Acceptance  Advance" means the advance of funds to the Borrower
      as borrower by way of creation  and  issuance of Bankers'  Acceptances  in
      accordance with the provisions of Article 4;

<PAGE>
                                     - 4 -

      "Banking Day" means a day,  other than a Saturday or a Sunday or other day
      on which banks are  required  or  authorized  to close in either  Toronto,
      Canada or New York,  New York and,  where  used in the  context of a Libor
      Advance, which is also a day on which banks are not required or authorized
      to close in London,  England  and  dealings  are  carried on in the London
      interbank market;

      "Base  Rate" means the greater of (i) the  variable  rate of interest  per
      annum,  expressed  on the basis of a year of 365 or 366 days,  as the case
      may be,  established  or quoted from time to time by BMO as the  reference
      rate of interest  then in effect for  determining  interest  rates on U.S.
      Dollar  denominated  commercial  loans made by it in Canada;  and (ii) the
      Federal Funds  Effective Rate  multiplied by a fraction,  the numerator of
      which is the  actual  number  of days in the year and the  denominator  of
      which is 360, plus 1/2 of 1% per annum;

      "BMO" means Bank of Montreal, a Canadian Schedule I chartered bank and any
      successor;

      "Borrower" means Mitel Networks  Corporation,  a corporation  incorporated
      under the Canada Business  Corporations Act, and its permitted  successors
      and assigns;

      "Borrower's Security" has the meaning specified in Section 10.1;

      "Borrower's Security Documents" has the meaning specified in Section 10.1;

      "Borrowing Base" shall mean, at any time, the sum of:

            (i)   60% of Eligible Accounts Receivable; plus

            (ii)  90% of EDC Receivables; plus

            (iii) 100% of trade  accounts  of the  Borrower  and the  Guarantors
                  which are  secured  by bank  letters  of  credit or  guarantee
                  satisfactory  to the  Required  Lenders  which bank letters of
                  credit  or   guarantees   shall  have  been  assigned  to  the
                  Administrative  Agent if so  requested  by the  Administrative
                  Agent;

      For  purposes  of  calculating  the  Borrowing  Base,   Eligible  Accounts
      Receivable and EDC Receivables of the Borrower and the Guarantors shall be
      expressed in Canadian Dollars based on the Equivalent  Amount of the value
      of any such amounts in U.S. Dollars, Sterling or Euros;

      "Borrowing  Base  Certificate"  shall mean a certificate to be executed by
      the Borrower and  delivered  by the Borrower to the  Administrative  Agent
      from time to time in the form attached to this Agreement as Schedule A;

<PAGE>
                                     - 5 -

      "Business" means the communications  systems business,  including research
      and development of  communications  and related products carried on, or to
      be carried on, by the Borrower and its Subsidiaries;

      "Canadian  Dollars"  and "Cdn.  $" mean the lawful  currency  of Canada in
      immediately available funds;

      "change in law" has the meaning specified in Section 5.1;

      "Claims" has the meaning specified in Section 13.4(a);

      "Closing Date" means April 21, 2004;

      "Commitment"  means,  with  respect  to a  Lender,  the  amount  set forth
      opposite the name of such Lender on Schedule K, or the  Equivalent  Amount
      in U.S. Dollars, subject to reduction pursuant to Section 2.7;

      "Committed  Amount" means Cdn.  $30,000,000,  or the Equivalent  Amount in
      U.S. Dollars, subject to reduction pursuant to Section 2.7;

      "Control"  and  its  derivatives  means,  with  respect  to  control  of a
      corporation by a Person,  the holding (other than by way of security only)
      by or for the  benefit of that  Person,  or  affiliates  of that Person or
      others with whom that Person does not deal at Arm's  Length of  securities
      of such  corporation  or the  right  to  vote  or  direct  the  voting  of
      securities of such  corporation to which,  in the aggregate,  are attached
      more  than 50% of the  votes  that may be cast to elect  directors  of the
      corporation,  provided  that the votes  attached to those  securities  are
      sufficient,  if  exercised,  to elect a majority of the  directors  of the
      corporation  and means,  with  respect to control of a Person other than a
      corporation,  the power to direct or cause the direction of the management
      and policies of such Person,  directly or indirectly,  and whether through
      the ownership or control of voting securities,  voting rights, contract or
      otherwise, without the cooperation of others;

      "Conversion" means the conversion of an Advance pursuant to Section 2.14;

      "Conversion  Notice" means a notice  substantially  in the form set out in
      Schedule C;

      "Corporate Distribution" has the meaning specified in Section 8.2(h);

      "Counsel to the Borrower" means Osler, Hoskin & Harcourt LLP or such other
      firm of legal counsel as the Borrower may from time to time designate with
      the  approval  of  the  Administrative  Agent,  such  approval  not  to be
      unreasonably withheld;

      "Debt" of any Person  means,  at any date,  without  duplication,  (i) all
      obligations  of such Person for borrowed  money,  (ii) all  obligations of
      such Person evidenced by bonds,  debentures,  notes,  letters of credit or
      other similar instruments, (iii) all obligations of such Person to pay the
      deferred  purchase  price of property or services,  except trade  accounts

<PAGE>
                                     - 6 -

      payable within 90 days that arise in the ordinary course of business, (iv)
      all  obligations  of such  Person  as  lessee  which  are  capitalized  in
      accordance  with GAAP, (v) all  indebtedness,  liabilities and obligations
      secured by a Lien on any asset of such Person,  whether or not the same is
      otherwise  indebtedness,  liabilities or obligations of such Person,  (vi)
      all indebtedness, liabilities and obligations of others which is, directly
      or  indirectly,  guaranteed by such Person or which such Person has agreed
      (contingently  or otherwise) to purchase or otherwise  acquire,  (vii) all
      indebtedness,   liabilities   and  obligations  in  respect  of  financial
      instruments  which are  classified  as a liability on the balance sheet of
      such Person, and (viii) all obligations of such Person to otherwise assure
      a creditor against loss;

      "Default"  means an event which,  with the giving of notice or the passage
      of time or the making of any  determination or any combination  thereof as
      provided for herein, could become an Event of Default;

      "Drawdown" means a drawdown of an Advance;

      "Drawdown Date" means, in relation to any Advance,  the date,  which shall
      be a Banking  Day, on which the  Drawdown  of such  Advance is made by the
      Borrower pursuant to a Drawdown Notice;

      "Drawdown  Notice"  means a  notice  substantially  in the form set out in
      Schedule B;

      "EBITDA" means, for any Person on a consolidated basis and for any period,
      without duplication,  the amount equal to net income less interest income,
      income tax  recoveries  and any  non-cash  income  included in net income,
      plus,  to  the  extent  deducted  from  net  income,   interest   expense,
      depreciation expense,  amortization  expense,  other non-cash expenses and
      income tax expenses;  provided that foreign  exchange  gains or losses and
      extraordinary or unusual gains or losses, including gains or losses on the
      disposition  of  assets  outside  the  ordinary  course  of  business  and
      restructuring charges, shall not be included in EBITDA;

      "EDC" means Export Development Canada and its successors;

      "EDC  Facility"  means  the  credit  facility  in  the  aggregate  maximum
      principal  amount  of  Sterling  4,100,000  made  available  to MNL by EDC
      pursuant to a loan agreement dated February 27, 2003;

      "EDC Indemnity  Obligations"  means all obligations and liabilities of any
      kind  whatsoever of the Borrower to EDC in connection  with or relating to
      indemnity  agreements  entered into, or which may in the future be entered
      into,  by the  Borrower  in  favour  of  EDC  in  respect  of  surety  and
      performance  bonds issued or to be issued by surety  companies  (including
      ACE-INA Insurance) with EDC's full or partial  indemnity,  for the account
      of the Borrower;

<PAGE>
                                     - 7 -

      "EDC Indemnity Obligations Cash Collateral" means the sum of US$837,393.00
      deposited  by the  Borrower  with  EDC as  cash  collateral  for  the  EDC
      Indemnity Obligations plus any accrued interest thereon, as the same shall
      be  automatically  reduced by amounts which are applied by EDC against the
      EDC Indemnity Obligations;

      "EDC Receivables"  means trade accounts of the Borrower and MNI insured by
      EDC;

      "Eligible Accounts Receivable" means the combined Canadian,  United States
      and United  Kingdom trade  accounts of the Borrower and the  Guarantors as
      determined in accordance with GAAP, but excluding the following:

      (a)   any trade accounts which are  outstanding for more than 90 days from
            the date of  invoice,  except a  limited  number  of  extended  term
            accounts  agreed by the  Required  Lenders to be  Eligible  Accounts
            Receivable;

      (b)   trade accounts if the account  debtors are located in a jurisdiction
            other  than  Canada,  the  United  States  or in the  case of  trade
            accounts of MNL only, the United Kingdom;

      (c)   trade  accounts  which are payable in a currency other than Canadian
            Dollars, U.S. Dollars, Sterling or Euros;

      (d)   trade accounts if the account debtors are Affiliates of the Borrower
            or the  Guarantors  including,  for greater  certainty,  Breconridge
            Manufacturing Solutions,  Inc., Breconridge  Manufacturing Solutions
            Corporation and Breconridge Manufacturing Solutions Limited;

      (e)   accounts  subject to a right of  set-off  if a claim of set-off  has
            been asserted by the account debtor;

      (f)   Governmental  Receivables,  unless expressly permitted in writing by
            the Administrative Agent;

      (g)   doubtful or disputed accounts;

      (h)   EDC Receivables;

      (i)   those  accounts  referred to in sub-part  (iii) of the definition of
            Borrowing Base; and

      (j)   any accounts, including any account not specifically excluded above,
            determined  by  any  Lender,  in  its  sole  discretion,  not  to be
            eligible;

      "Environmental Claims" means any and all enforcement, clean-up, removal or
      other   governmental  or  regulatory   actions,   orders,   directions  or
      proceedings  instituted,  pending  or  completed  or,  to the  best of the
      knowledge of the Borrower and the  Guarantors,

<PAGE>
                                     - 8 -

      threatened  or  anticipated  pursuant  to any  Environmental  Laws and all
      claims  made or,  to the best of the  knowledge  of the  Borrower  and the
      Guarantors,  threatened, by any third party against the Borrower or any of
      the  Guarantors,  any property of the Borrower or any of the Guarantors or
      any of their  Subsidiaries  or any  party  having  charge,  management  or
      control of any property of any of the  Borrower,  the  Guarantors or their
      Subsidiaries   relating   to   damage,   contribution,    cost   recovery,
      compensation,  loss or injury  resulting  from any  violation  or  alleged
      violation of Environmental Laws;

      "Environmental  Laws"  means any  present  or future  applicable  federal,
      provincial,  state,  municipal or other local law, statute,  regulation or
      by-law, code, ordinance, decree, directive, standard, policy, rule, order,
      treaty, convention, judgment, award or determination for the protection of
      the environment or human health and safety, present or future;

      "Equivalent  Amount"  on any  given  date  in  one  currency  (the  "first
      currency")  of any amount  denominated  in another  currency  (the "second
      currency") means the amount of the first currency which could be purchased
      with such amount of the second  currency at the rate of exchange quoted by
      BMO at 11:00  a.m.  (Toronto  time) on such date for the  purchase  of the
      first currency with the second currency;

      "Euro"  means the lawful  currency  of the member  states of the  European
      Union that have adopted the single  currency in accordance with the Treaty
      establishing the European Community,  as amended by the Treaty on European
      Union;

      "Event of Default" means any of the events described in Section 11.1;

      "Existing  Credit  Agreement"  shall  have the  meaning  specified  in the
      recitals to this Agreement;

      "Face  Amount"  means,  in respect of a  Bankers'  Acceptance,  the amount
      payable  to the holder  thereof  on the  maturity  thereof  and means,  in
      respect of a Letter of Credit, the maximum amount payable to a beneficiary
      thereunder;

      "Facility" means the revolving  credit facility in an aggregate  principal
      amount  of up to  Cdn.  $30,000,000  (or  the  Equivalent  Amount  in U.S.
      Dollars) to be made  available to the Borrower by the Lenders as set forth
      in Article 2;

      "Federal Funds Effective Rate" means, for any particular day, the variable
      rate of interest per annum,  calculated  on the basis of a 360-day year as
      determined by BMO for the actual number of days elapsed, equal to:

            (i)   the weighted  average of the rates on overnight  federal funds
                  transactions  with  members  of  the  Federal  Reserve  System
                  arranged by federal  funds  brokers as published  for such day
                  (or, if such day is not a Banking Day, for the next  preceding
                  Banking Day) by the Federal Reserve Bank of New York, or

<PAGE>
                                     - 9 -

            (ii)  for any Banking Day on which such rate is not so  published by
                  the  Federal  Reserve  Bank of New York,  the  average  of the
                  quotations for such day for such transactions  received by BMO
                  from  three  federal  funds  brokers  of  recognized  standing
                  selected by BMO in consultation with the Borrower;

      "Fee Letter" means the letter  agreement  dated April 21, 2004 between the
      Borrower and the Administrative Agent;

      "GAAP" means those generally accepted accounting  principles  consistently
      applied in Canada;

      "Governmental  Receivables" means trade accounts of the Borrower where the
      account debtors are the federal government of Canada, the United States of
      America,  or any other country or nation or any  provincial  government or
      any  state  government  or any  territorial  government  or any  political
      subdivision  thereof,  or of  any  political  subdivision  of a  political
      subdivision  thereof,  and any entity exercising  executive,  legislative,
      judicial, regulatory, administrative or other function of or pertaining to
      government;

      "Guarantees" means,  collectively,  (i) the amended and restated guarantee
      and  security  agreement  dated as of January 21, 2002 between MNI and the
      Administrative  Agent, (ii) the second amended and restated  guarantee and
      security  agreement  dated as of  February  27,  2003  between MNI and the
      Administrative  Agent,  (iii)  the  amended  and  restated  guarantee  and
      security  agreement  dated as of January  21,  2002  between  MNSI and the
      Administrative  Agent, (iv) the second amended and restated  guarantee and
      security  agreement  dated as of February  27, 2003  between  MNSI and the
      Administrative  Agent,  and (v) the guarantee and indemnity dated July 25,
      2001  between  MNL  and  the  Administrative  Agent  as  confirmed  by the
      confirmation  of guarantee  and security  dated as of February 27, 2003 by
      MNL, and, in each case, as may be amended,  supplemented  or restated from
      time to time and "Guarantee" means any of them;

      "Guarantors" means, collectively,  MNI, MNSI and MNL, and their respective
      permitted successors and assigns and "Guarantor" means any of them;

      "Guarantors' Security" has the meaning specified in Section 10.2;

      "Guarantors'  Security  Documents"  has the meaning  specified  in Section
      10.2;

      "Hazardous  Material" means any  contaminant,  pollutant or substance that
      causes harm or  degradation  to the  surrounding  environment or injury to
      human health and,  without  restricting  the  generality of the foregoing,
      includes any pollutant,  contaminant,  waste, hazardous waste, deleterious
      substance  or  dangerous  good  present in such  quantity or state that it
      contravenes or is regulated under any Environmental  Laws or gives rise or
      could give rise to any  liability or  obligation  under any  Environmental
      Law;

      "Indemnifying Party" has the meaning specified in Section 13.4(c);

<PAGE>
                                     - 10 -

      "Indemnitee" has the meaning specified in Section 13.4(a);

      "Intercreditor  Agreement" means the intercreditor  agreement made between
      the  Administrative  Agent,  for and on behalf of the  Lenders,  EDC,  the
      Borrower and the Guarantors, dated February 27, 2003;

      "Interest Date" means the first day of each calendar month;

      "Interest  Period"  means,  with  respect  to a Libor  Advance,  a  period
      commencing  (i) in the  case  of the  initial  Interest  Period  for  such
      Advance,  on the  date  of  such  Advance;  and  (ii)  in the  case of any
      subsequent  Interest  Period  for  such  Advance,  on the  last day of the
      immediately  preceding  Interest Period applicable  thereto and ending, in
      either  case,  on the last day of such  period as shall be selected by the
      Borrower  pursuant to the  provisions  hereof;  provided that if any Libor
      Advance  arises as a result of a  Conversion  of  another  type of Advance
      pursuant to the provisions  hereof,  the initial  Interest Period for such
      Libor Advance  after such  Conversion  shall  commence on the date of such
      Conversion;

      "Lenders"  means the Persons listed as lenders on Schedule K and any other
      Person that shall have become a party hereto in accordance  with the terms
      of Section 14.11;

      "Letter of Credit" means a term letter of credit,  sight letter of credit,
      standby  letter  of  credit or  documentary  letter of credit  issued by a
      Lender at the request of the Borrower pursuant to Section 3.1;

      "Libor  Advance"  means a loan  made by a Lender to the  Borrower  in U.S.
      Dollars on which interest is payable at the Libor Rate plus the Applicable
      Margin;

      "Libor  Interest  Payment  Date"  has the  meaning  specified  in  Section
      2.11(c);

      "Libor Rate" means,  for each Interest  Period for each Libor  Advance,  a
      rate of interest per annum, calculated on the basis of a year of 360 days,
      equal to the London interbank offered rate for U.S. Dollars, at 11:00 a.m.
      (London,  England  time) on the day that is two Banking  Days prior to the
      first  day of such  Interest  Period,  and  having  a term  equal  to such
      Interest  Period,  as such rate is reported on the display  designated  as
      "page  3750"  (or any  replacement  page)  by  "Telerate  - the  Financial
      Information  Network"  published by Telerate Systems,  Inc. (or such other
      company or service as may be nominated by the British Bankers' Association
      as the information  vendor for the purpose of displaying  British Bankers'
      Association  Interest  Settlement Rates for deposits in U.S. Dollars) and,
      if such  rate is not  available,  then the  rate of  interest  per  annum,
      calculated  on the  basis of a year of 360 days,  at which BMO is  offered
      deposits in U.S.  Dollars by prime banks in the London interbank market at
      approximately 11:00 a.m. (London,  England time) two Banking Days prior to
      the first day of such  Interest  Period  for a period  comparable  to such
      Interest Period and in an amount  approximately equal to the amount of the
      Libor Advance to be outstanding during such Interest Period;

<PAGE>
                                     - 11 -

      "Liens" means mortgages,  pledges,  liens,  hypothecs,  charges,  security
      agreements or other  encumbrances or other  arrangements that in substance
      secure  payment  or  performance  of an  obligation,  statutory  and other
      non-consensual liens or encumbrances and includes the interest of a vendor
      or lessor under any  conditional  sale  agreement,  capital lease or other
      title retention agreement;

      "Loan  Documents"  means,  collectively,  this  Agreement and the Security
      Documents;

      "Losses" has the meaning specified in Section 13.4(a);

      "Material  Agreement"  means any agreement,  contract or document which is
      material to the  Business or to the  operations,  financial  condition  or
      prospects of the Borrower or any of the Guarantors;

      "Maturity Date" means June 30, 2005;

      "MNI" means Mitel  Networks,  Inc., a corporation  incorporated  under the
      laws of Delaware and an indirect wholly-owned Subsidiary of the Borrower;

      "MNL" means Mitel Networks  Limited,  a private  company limited by shares
      incorporated in England and Wales under number 1309629,  whose  registered
      office  is at  Portskewett,  Monmouthshire,  NP2G  5YR,  and  an  indirect
      wholly-owned Subsidiary of the Borrower;

      "MNSI" means Mitel Networks  Solutions,  Inc., a corporation  incorporated
      under  the laws of the  State of  Delaware  and an  indirect  wholly-owned
      Subsidiary of the Borrower;

      "Notice of Amount" has the meaning specified in Section 5.1;

      "Notification Date" has the meaning specified in Section 13.5(c);

      "Officer's  Certificate"  means  a  certificate  signed  by any one of the
      following officers of the Borrower:  (i) the Chief Executive Officer, (ii)
      the Chief Operating Officer,  (iii) the Chief Financial  Officer,  or (iv)
      the Treasurer;

      "Other  Taxes" means any present or future stamp or  documentary  taxes or
      any other excise or property taxes,  charges or similar levies which arise
      from any  payment  made  hereunder  or from  the  execution,  delivery  or
      registration  of, or  otherwise  with respect to, this  Agreement,  or any
      other document in connection herewith;

      "Outstanding Amount" has the meaning specified in Section 2.6(b);

      "Participation"  of a Lender  means the  percentage  which  such  Lender's
      Commitment  with  respect to the  Facility is of the  aggregate  Committed
      Amount,  as such percentage may be adjusted pursuant to this Agreement and
      subject to the Administrative  Agent's authority to make allocations among
      the  Lenders  as  herein  provided,  or,  as  the  context

<PAGE>
                                     - 12 -

      requires,  the  percentage  determined  as aforesaid of such Lender in any
      issue of Bankers' Acceptances,  in any Advance or in any repayment thereof
      or, as the  context  may  require,  in any  payment of interest or fees or
      other payment;

      "Permits" has the meaning specified in Section 7.1(i);

      "Permitted Debt" means:

            (i)   Debt owing hereunder and under the Security Documents;

            (ii)  Subordinated Debt;

            (iii) trade debt and similar unsecured  indebtedness incurred in the
                  ordinary  course of business (but excluding  indebtedness  for
                  borrowed money outstanding for more than 90 days);

            (iv)  certain   indebtedness   of  MNL   owing  to  Mitel   Networks
                  International Limited on account of royalties;

            (v)   intercorporate  Debt owed by any Subsidiary to the Borrower or
                  any of the Guarantors;

            (vi)  intercorporate Debt between the Borrower and the Guarantors;

            (vii) intercorporate Debt owed by any wholly-owned Subsidiary of the
                  Borrower (other than the  Guarantors) to another  wholly-owned
                  Subsidiary of the Borrower;

            (viii)Debt in an aggregate  amount not  exceeding  Cdn.  $15,000,000
                  (or its  Equivalent  Amount in another  currency)  incurred in
                  connection  with the  obligations  of a Person as lessee which
                  are capitalized in accordance with GAAP;

            (ix)  Debt incurred  pursuant to  performance  bonds,  bid bonds and
                  other similar  instruments entered into in the ordinary course
                  of business;

            (x)   Debt for borrowed  money in an aggregate  amount not exceeding
                  (pound)15,000,000  incurred  pursuant  to  overdraft,  working
                  capital  credit  facilities and any other form of financing by
                  Subsidiaries  of the  Borrower  carrying  on  business  in the
                  United Kingdom and Europe (including a (pound)7.5 million real
                  estate  mortgage  dated  January  24,  2002  granted by MNL in
                  favour of  Barclays  Bank plc and a (pound)5  million  chattel
                  mortgage  dated  October 31, 2001  granted by MNL in favour of
                  Barclays   Bank  plc,  as  each  may  be  amended,   restated,
                  supplemented or replaced from time to time with the consent of
                  the Required Lenders);

<PAGE>
                                     - 13 -

            (xi)  Debt pursuant to letters of credit in an aggregate face amount
                  not  exceeding  Cdn.   $800,000   issued  in  respect  of  the
                  Borrower's supplemental executive retirement plan;

            (xii) Debt incurred or assumed in connection with Permitted Purchase
                  Money Security Interests;

            (xiii)Debt secured by assets or  properties  at the time of entering
                  into an  agreement  with  respect to the  acquisition  of such
                  assets or  properties  and  assumed  in  connection  with such
                  acquisition  and Debt of a  corporation  existing  at the time
                  such   corporation   becomes  a  Subsidiary  of  the  Borrower
                  provided,  in either case,  that such Debt was not incurred in
                  anticipation  of such  acquisition or in  anticipation of such
                  corporation becoming a Subsidiary and excluding any extensions
                  or renewals of any such Debt;

            (xiv) unsecured  Debt  incurred  in  connection  with   transactions
                  entered into for the purpose of hedging foreign  exchange risk
                  of the  Borrower  and its  Subsidiaries  or for the purpose of
                  hedging  interest  rate  exposure on Permitted  Debt (but,  in
                  either case not for speculative purposes);

            (xv)  unsecured  Debt in an  aggregate  amount  not  exceeding  U.S.
                  $25,000,000  (or its  Equivalent  Amount in another  currency)
                  pursuant to a daylight  overdraft  facility incurred solely to
                  facilitate the clearance of inter-corporate Debt;

            (xvi) secured  Debt  pursuant  to  a  daylight   overdraft  facility
                  incurred with Harris Bank solely to  facilitate  the clearance
                  of inter-corporate Debt;

            (xvii)Debt  represented  by  obligations  of MNL in  respect  of its
                  defined benefit pension plan; and

           (xviii)unsecured  Debt not included in any of  the foregoing and  not
                  exceeding Cdn. $5,000,000 (or its Equivalent Amount in another
                  currency), in the aggregate;

      "Permitted Encumbrances" has the meaning specified in Schedule F;

      "Permitted  Purchase  Money  Security  Interest"  means  any  Lien  on any
      property  or asset  created,  issued or assumed to secure  Debt  incurred,
      assumed or issued to satisfy,  in whole or in part,  the purchase price of
      such property or asset  (including  installation  costs) and  expenditures
      made  for  any  repairs,   alterations,   construction,   development   or
      improvements performed thereon or added thereto,  provided that such Lien,
      or any agreement or other instrument under which such Lien is constituted,
      is  limited to the  property  or asset  acquired  in  connection  with the
      assumption,  issuance or incurring of

<PAGE>
                                     - 14 -

      such  Debt  and is  created,  issued  or  assumed  concurrently  with  the
      acquisition of such property or assets;

      "Permitted  Securitization  Transactions" means any transaction  providing
      for the sale,  securitization  or other  asset-backed  financing  of trade
      accounts  receivable arising in Canada or the United States of or owing to
      the  Borrower  or  a  Subsidiary  of  the  Borrower,  provided  that  such
      disposition  of  accounts   receivable   pursuant  to  the  securitization
      transactions  are without  recourse to the Borrower or such Subsidiary and
      provided  that  the  terms  and  conditions  of  all  such  securitization
      transactions  shall  be on an  Arm's  Length  basis  and  on  commercially
      reasonable terms;

      "Person" means an individual,  company, partnership (whether or not having
      separate legal  personality),  corporation  (including a business  trust),
      joint stock company, trust, unincorporated  association,  joint venture or
      other entity, or a government,  state or political  subdivision thereof or
      any agency of such government, state or political subdivision;

      "Prime Rate" means the greater of (i) the arithmetic  mean of the variable
      rates of interest  per annum,  expressed  on the basis of a year of 365 or
      366 days, as the case may be,  established  or quoted from time to time by
      BMO and the other Lenders,  if any, as the reference rate of interest then
      in effect for determining  interest rates on Canadian  Dollar  denominated
      commercial loans made by it in Canada and (ii) the sum of (x) the rate per
      annum for Canadian  Dollar bankers'  acceptances  having a term of 30 days
      that  appears  on the  display  page  designated  as the CDOR Page (or any
      replacement page) by Reuters Money Market Service (or its successor) as of
      10:00 a.m. on the date of determination as reported by the  Administrative
      Agent, and (y) 1.0% per annum;

      "Prime  Rate  Advance"  means a loan  made by a Lender  to a  Borrower  in
      Canadian  Dollars on which  interest is payable at the Prime Rate plus the
      Applicable Margin;

      "Priority Claims" means, at any time, the aggregate of any amounts due and
      payable  prior to such time, to the extent not paid by the Borrower or any
      of the Guarantors in respect of:

      (a)   wages, salaries, commissions or other remunerations;

      (b)   vacation pay;

      (c)   deductions at source for employees,  federal and  provincial  income
            taxes, Canada Pension Plan and Employment Insurance;

      (d)   GST and PST (net of input tax credits);

      (e)   Workers' Compensation Board premiums or similar premiums;

<PAGE>
                                     - 15 -

      (f)   all taxes  under the  federal  and state laws of the  United  States
            including,  but not limited to, all  federal,  state or local net or
            gross income, gross receipts, net proceeds,  sales, use, ad valorem,
            value added, franchise,  withholding,  payroll, employment,  excise,
            sales, use, property,  alternative or add-on minimum,  environmental
            or  other  taxes,   assessments,   duties,  fees,  levies  or  other
            governmental  charges of any nature  whatever,  whether  disputed or
            not,  together  with any  interest,  penalties,  additions to tax or
            additional amounts with respect thereto;

      (g)   all payments in connection  with an employee  benefit plan,  program
            and arrangement including, without limitation, any "employee benefit
            plan" as defined in Section 3(3) of the Employee  Retirement  Income
            Security  Act  of  1974,   as  amended   ("ERISA"),   maintained  or
            contributed  to by the  Borrower  or any of the  Guarantors,  or any
            other  applicable law covering  employee  benefit plans  (including,
            without  limitation,  the Internal Revenue Code of 1986, as amended)
            or  any  applicable  agreement  controlling  such  employee  benefit
            plan(s);

      (h)   all payments in  connection  with  workers'  compensation,  workers'
            disability  insurance,  or any  similar  program as  required by any
            applicable state or federal law, such as, for example,  the New York
            State  "Workers'  Compensation  Law"  (New  York  Consolidated  Laws
            Chapter 67, ss.ss.1 et seq.);

      (i)   property taxes;

      (j)   rent;

      (k)   value  added tax  (VAT)  and all  deductions,  taxes,  premiums  and
            payments  which may be payable  by MNL and which are  similar to the
            deductions,  taxes,  premiums and payments referred to in paragraphs
            (c),  (d),  (e),  (f), (g) and (h) of this  definition  of "Priority
            Claims"; and

      (l)   claims  which may rank in  priority  to the  Administrative  Agent's
            security interest in respect of accounts receivable.

      "rate of exchange" has the meaning specified in Section 15.14;

      "Release" has the meaning specified in Section 7.1(j);

      "Reorganization" has the meaning specified in Section 12.1;

      "Required Lenders" means, at any time, Lenders having undrawn  Commitments
      or outstanding  Advances  representing  more than two-thirds of the sum of
      the total Committed Amount or outstanding Advances at such time;

<PAGE>
                                     - 16 -

      "Rollover"  means  a  rollover  of a  Libor  Advance  pursuant  to  and in
      accordance  with  Section  2.11 or a  rollover  of a  Bankers'  Acceptance
      Advance pursuant to and in accordance with Section 4.5;

      "Rollover Notice" means a notice substantially in the form of Schedule D;

      "RPA" has the meaning specified in Section 8.2(j);

      "Security"   means,   collectively,   the  Borrower's   Security  and  the
      Guarantors' Security;

      "Security   Documents"  means,   collectively,   the  Borrower's  Security
      Documents and the Guarantors' Security Documents;

      "Sterling"  means the lawful currency of the United Kingdom in immediately
      available funds;

      "Stock"  shall  mean all  shares,  options,  warrants,  general or limited
      partnership interests or other equivalents  (regardless of how designated)
      of or in a  corporation,  partnership,  limited  partnership or equivalent
      entity whether voting or non-voting or participating or non-participating;

      "Subordinated  Debt" shall mean Debt of the  Borrower or any  Guarantor or
      Subsidiary  subordinated  to all amounts at any time due and payable under
      any of the  Loan  Documents  in a  manner  and  form  satisfactory  to the
      Required Lenders in their sole discretion, as to right and time of payment
      and as to any other rights and remedies thereunder;

      "Subsidiary"  means any corporation  more than 50% of the Voting Shares of
      which at the time of  determination  are beneficially  owned,  directly or
      indirectly, by the Borrower or any corporation, joint venture, partnership
      or other entity which is subject to the direct or indirect  Control of the
      Borrower;

      "Successor Corporation" has the meaning specified in Section 12.1;

      "Take-Over  Bid"  means  an  offer  to  acquire  made by the  Borrower,  a
      Guarantor or a Subsidiary of the Borrower,  alone or acting  jointly or in
      concert with any other Person or Persons (collectively, the "Offeror"), to
      any holder of Voting Shares or  securities  convertible,  exchangeable  or
      exercisable  into  Voting  Shares  (the  "Target  Shares")  of the offeree
      issuer,  which has not been  solicited  by or made at the  request  of the
      board of  directors  of the offeree  issuer,  or with respect to which the
      board of directors of the offeree issuer has not  recommended  acceptance,
      where the Target Shares subject to the offer to acquire, together with the
      Target  Shares  held by or on  behalf  of the  offeror  on the date of the
      offer,  constitute,  in aggregate, 20% (or such lesser percentage as would
      require compliance with the formal  requirements  governing take-over bids
      (such as the delivery of circulars or equivalent  disclosure  documents to
      shareholders  under  Applicable  Law)) or more of the  outstanding  Target
      Shares at the date of the offer to acquire,  but

<PAGE>
                                     - 17 -

      excluding  any  such  offer  which,   under  the  Applicable  Law  of  the
      jurisdiction in which such offer is made, would be exempt from such formal
      requirements;

      "Taxes"  includes  all present  and future  income,  corporation,  capital
      gains, capital and value-added, and goods and services taxes and all stamp
      and other  taxes and  levies,  imposts,  deductions,  duties,  charges and
      withholdings  whatsoever together with interest thereon and penalties with
      respect thereto, if any, and charges, fees and other amounts made on or in
      respect thereof;

      "Transferee" has the meaning specified in Section 15.11(a);

      "U.S.  Base Rate Advance" means a loan made by a Lender to the Borrower on
      which interest is payable at the Base Rate plus the Applicable Margin;

      "U.S.  Dollars" and "U.S. $" mean the lawful currency of the United States
      of America in immediately available funds; and

      "Voting  Shares"  means  shares of any class of any  corporation  carrying
      voting rights under all  circumstances,  provided that, for the purpose of
      this definition,  shares which only carry the right to vote  conditionally
      on the happening of an event shall not be considered  Voting Shares unless
      such right has become exercisable.

1.2   Headings

      The  division  of  this  Agreement  into  Articles  and  Sections  and the
insertion  of an index and headings are for  convenience  of reference  only and
shall not affect the  construction  or  interpretation  hereof.  The terms "this
Agreement",   "hereof",  "hereunder"  and  similar  expressions  refer  to  this
Agreement and not to any particular Article, Section, paragraph or other portion
hereof and include any agreement supplemental hereto. Save as expressly provided
herein,  references herein to Articles and Sections are to Articles and Sections
of this Agreement.

1.3   Extended Meanings

      Words importing the singular number only shall include the plural and vice
versa,  and words  importing  any gender  shall  include all  genders.  The term
"including" means "including without limitation".

1.4   References to the Administrative Agent and Lenders

      Any reference in this Agreement to the Administrative Agent and any Lender
shall be construed so as to include its successors and permitted  transferees or
assigns hereunder in accordance with its respective interests.

<PAGE>
                                     - 18 -

1.5   Accounting Terms and Practices

      Unless otherwise  provided herein, all accounting terms referred to herein
shall be construed in accordance with Canadian GAAP as established  from time to
time by the Canadian  Institute of Chartered  Accountants and all financial data
submitted  pursuant to this Agreement  shall be prepared in accordance with such
principles,  consistently  applied  except  for  the  absence  of  footnotes  in
unaudited statements.

1.6   Non-Banking Days

      Whenever any payment to be made hereunder shall be stated to be due or any
action to be taken hereunder shall be stated to be required to be taken on a day
other than a Banking  Day,  such  payment  shall be made or such action shall be
taken on the next succeeding  Banking Day and, in the case of the payment of any
monetary  amount,  the  extension  of time shall be included for the purposes of
computation of interest or fees thereon.

1.7   References to Time of Day

      Except as otherwise  specified herein, a time of day shall be construed as
a reference to Toronto, Canada time.

1.8   Severability

      In the  event  that  one or  more  of the  provisions  contained  in  this
Agreement shall be invalid,  illegal or  unenforceable  in any respect under any
applicable  law,  the  validity,  legality or  enforceability  of the  remaining
provisions hereof shall not be affected or impaired thereby.

1.9   Currency

      All monetary  amounts in this Agreement  refer to Canadian  Dollars unless
otherwise specified.

1.10  References to Statutes

      Except as otherwise  provided herein, any reference in this Agreement to a
statute  shall be  construed  to be a reference  to such statute as the same may
have been, or may from time to time be, amended or re-enacted.

1.11  References to Agreements

      Except  as  otherwise  provided  herein,  any  reference  herein  to  this
Agreement  or any  other  agreement  or  document  shall  be  construed  to be a
reference to this Agreement or such other agreement or document, as the case may
be, as the same may have  been,  or may from time to time be,  amended,  varied,
novated or supplemented.

<PAGE>
                                     - 19 -

1.12  Consents and Approvals

      Whenever  the  consent or  approval  of a party  hereto is  required  in a
particular  circumstance,  unless otherwise expressly provided for therein, such
consent or approval shall not be unreasonably withheld or delayed by such party.

1.13  Schedules

      The  following  are the  Schedules  attached  hereto and  incorporated  by
reference and deemed to be part hereof:

      Schedule A     -     Borrowing Base Certificate
      Schedule B     -     Drawdown Notice
      Schedule C     -     Conversion Notice
      Schedule D     -     Rollover Notice
      Schedule E     -     [Intentionally deleted]
      Schedule F     -     Permitted Encumbrances
      Schedule G     -     Litigation
      Schedule H     -     Non-Compliance Matters
      Schedule I     -     Subsidiaries
      Schedule J     -     Transfer Agreement
      Schedule K     -     Committed Amounts
      Schedule L     -     Financial Forecast

                                   Article 2
                                  THE FACILITY

2.1   The Facility

      Upon the terms and subject to the conditions  hereof,  each of the Lenders
hereby severally agrees to make the Facility available to the Borrower up to the
maximum  amount  of  its  Participation.  For  greater  certainty,  any  amounts
outstanding  under the  Existing  Credit  Agreement on the Closing Date shall be
deemed to be and the parties  hereto  confirm that such amounts are  outstanding
hereunder.  The  failure of any Lender to make an  Advance  required  to be made
available  hereunder by it shall not relieve any other Lender of its obligations
hereunder;  provided that the obligations of each Lender  hereunder with respect
to its  Participation  are several and no Lender  shall be  responsible  for any
other Lender's failure to make Advances as required hereunder.

2.2   Purpose

      The  Facility is being made  available  to the  Borrower by the Lenders to
finance the  Borrower's  working  capital  requirements  and  general  corporate
purposes.

<PAGE>
                                     - 20 -

2.3   Availability

      (a) The  Facility  shall be  available by way of Drawdown of an Advance by
the Borrower in a minimum  amount of Cdn.  $1,000,000  (or such lesser amount as
may from time to time be agreed to by the Lenders at their sole  discretion) and
integral  multiples  of Cdn.  $100,000  in  excess  thereof  (or,  if not such a
multiple,  the then remaining  Available Amount), at the option of the Borrower,
by way of Prime Rate  Advance or Bankers'  Acceptance  Advance or the issue of a
Letter  of  Credit  or in a  minimum  amount  of Cdn.  $1,000,000  and  integral
multiples of Cdn.  $100,000 in excess  thereof (or, if not such a multiple,  the
then remaining  Available  Amount) (a minimum amount of Cdn. $10,000 in the case
of Letters of Credit  denominated in Canadian  Dollars) or, at the option of the
Borrower,  by way of Libor  Advance or U.S.  Base Rate Advance or the issue of a
Letter of Credit in a minimum amount of U.S.  $1,000,000 and integral  multiples
of U.S.  $100,000  in  excess  thereof  (or,  if not such a  multiple,  the then
remaining  Available  Amount) (a minimum  amount of U.S.  $10,000 in the case of
Letters of Credit  denominated in U.S. Dollars),  or any combination  thereof by
irrevocable Drawdown Notice given to the Administrative Agent not later than (i)
10:00 a.m. on the Banking Day prior to the Drawdown  Date in the case of a Prime
Rate Advance or a Bankers'  Acceptance  Advance in an amount not exceeding  Cdn.
$10,000,000  or a U.S.  Base Rate  Advance  or issue of a Letter of Credit in an
amount not exceeding U.S. $10,000,000; (ii) 10:00 a.m. on the second Banking Day
prior to the  Drawdown  Date in the case of a Prime  Rate  Advance or a Bankers'
Acceptance  Advance in an amount exceeding Cdn.  $10,000,000 or a U.S. Base Rate
Advance in an amount  exceeding  U.S.  $10,000,000;  or (iii)  10:00 a.m. on the
third  Banking Day prior to the  relevant  Drawdown  Date in the case of a Libor
Advance.  Subject to the terms and  conditions  contained  herein,  the Borrower
shall  have the  right  and  option  to  determine  in which of these  forms the
Facility  shall be utilized  from time to time and the  Borrower  shall have the
right to convert the manner in which the  Facility is utilized  from one form to
another as it sees fit, subject to Section 2.14.

      (b) The  Borrower  may not make a  Drawdown  under the  Facility  if, as a
result of such  Drawdown,  the aggregate of (i) the aggregate  principal  amount
outstanding  under the Facility and (ii) the maximum  amount  payable  under all
outstanding Letters of Credit, in each case expressed in Canadian Dollars (based
on the Equivalent Amount of any obligations in U.S.  Dollars),  would exceed the
Available  Amount.  The Lenders  shall have no obligation to make any Advance or
issue any  Letters of Credit  hereunder  at any time after  demand has been made
pursuant to Section  11.2 hereof or at any time that the  Borrower or any of the
Guarantors  has failed to observe or perform any of its covenants or obligations
hereunder or under any of the Security Documents and such default is continuing,
regardless of whether the  Administrative  Agent or the Lenders have made demand
pursuant to Section 11.2 hereof.

      (c) All or any portion of the amount outstanding under the Facility may be
repaid and reborrowed  from time to time.  The Facility  shall  terminate on the
Maturity Date.

      (d)  Notwithstanding  Section  2.3(a),  the Borrower  may, by delivering a
Drawdown  Notice to the  Administrative  Agent not later than 10:00 a.m.  on any
Drawdown  Date,  make a Drawdown  on such  Drawdown  Date by way of a Prime Rate
Advance in an amount not exceeding Cdn. $2,000,000 or by way of a U.S. Base Rate
Advance in an amount not exceeding U.S. $2,000,000.

<PAGE>
                                     - 21 -

2.4   Making of an Advance

      If the Borrower delivers a Drawdown Notice in accordance with Section 2.3,
the  Administrative  Agent shall  promptly  notify each Lender in writing of the
amount of the Advance and such Lender's  portion thereof and, if on the proposed
Drawdown  Date the amount of such Advance is equal to or less than the Available
Amount, then:

      (i)   each Lender shall,  not later than 11:00 a.m. on the Drawdown  Date,
            make, or procure to be made, its portion of the Advance available to
            the Administrative Agent; and

      (ii)  the Agent shall, not later than 4:00 p.m. on the Drawdown Date, make
            such Advance available to the Borrower.

2.5   Participation of Each Lender

      (a) The amount of the Participation of each Lender in any Advance or issue
of Bankers'  Acceptances  shall be  determined  by the  Administrative  Agent by
reference,  subject to the Administrative  Agent's authority pursuant to Section
2.5(b),  to each such Lender's  Participation,  as such  Participation  shall be
immediately  prior to the  making of the  Advance  or the issue of the  Bankers'
Acceptances.

      (b) The Administrative Agent is authorized by the Borrower and each Lender
to  allocate  amongst  the Lenders  the  Bankers'  Acceptances  to be issued and
purchased  in such  manner  and  amounts  as the  Agent  may,  in its  sole  and
unfettered  discretion acting  reasonably,  consider  necessary,  rounding up or
down,  so as to ensure  that no Lender is  required  to accept  and  purchase  a
Bankers'  Acceptance  for a fraction of Cdn.  $100,000,  and in such event,  the
Lenders'  respective   Participations  in  any  such  Bankers'  Acceptances  and
repayments  thereof shall be altered  accordingly.  Further,  the Administrative
Agent is  authorized  by the  Borrower  and  each  Lender  to cause  one or more
Lenders'  Commitment  to be  exceeded by not more than Cdn.  $100,000  each as a
result of such  allocations  provided that the principal  amount of Advances and
Bankers'  Acceptances   outstanding  shall  not  thereby  exceed  the  aggregate
Committed Amount.

2.6   Repayment of the Facility

      (a) Provided that the Facility is not prepaid or accelerated in accordance
with Article 11, the Borrower  shall repay the principal  amount of all Advances
outstanding  under the  Facility,  together  with  accrued  and unpaid  interest
thereon, on the Maturity Date.

      (b) In the event  that the sum of (i) the  aggregate  principal  amount of
Prime Rate  Advances,  (ii) the Face Amount of Bankers'  Acceptances,  (iii) the
maximum amount which may be drawn in Canadian Dollars and the Equivalent  Amount
in Canadian  Dollars of the maximum  amount  which may be drawn in U.S.  Dollars
under  Letters of Credit  which have been issued and

<PAGE>
                                     - 22 -

are outstanding, (iv) the Equivalent Amount in Canadian Dollars of the aggregate
principal  amount of Libor Advances,  and (v) the Equivalent  Amount in Canadian
Dollars of the aggregate  principal  amount of U.S. Base Rate Advances,  in each
case  outstanding  under the Facility  (such  amount  being  referred to in this
Section 2.6 as the "Outstanding Amount"), exceeds the amount allowed pursuant to
Section  2.3(b) for any reason  whatsoever  (including  changes in the  Canadian
Dollar/U.S.  Dollar  exchange  rate),  then any  Lender  may,  by  notice to the
Borrower,  require the Borrower to repay,  within two Banking Days of receipt of
such notice,  that portion of the  Outstanding  Amount which is in excess of the
maximum amount allowed pursuant to Section 2.3(b) determined on the date of such
notice; provided,  however, that if the Outstanding Amount exceeds the Available
Amount solely  because of changes in the Canadian  Dollar/U.S.  Dollar  exchange
rate (and does not exceed the amount of the  Borrowing  Base),  then  unless the
amount by which the Outstanding  Amount exceeds the Available  Amount is greater
than Cdn.  $750,000,  the  Borrower  shall not be  obliged  to make a  repayment
hereunder  until  the next  following  Interest  Date,  Drawdown  Date,  date of
Rollover  or date of  Conversion  (whichever  is the  first to  occur  following
receipt of such notice) and provided further that if such repayment would result
in the repayment of a Bankers'  Acceptance Advance prior to its maturity date or
the repayment of a Libor  Advance prior to the last day of its Interest  Period,
the  Borrower  may,  at its option and in lieu of  repayment  of such  Advances,
deposit with the Administrative  Agent cash collateral in an amount equal to the
required repayment amount to be held by the Administrative Agent as repayment of
a Bankers'  Acceptance  Advance on its  maturity  date or  repayment  of a Libor
Advance on the last day of its then current Interest Period, as the case may be.
Notwithstanding the foregoing,  in the event that the Outstanding Amount exceeds
the amount  allowed  pursuant  to Section  2.3(b)  because of a decrease  in the
amount of the  Borrowing  Base,  the  Borrower  shall repay,  concurrently  with
delivery of the Borrowing Base Certificate pursuant to Section 8.1(a)(iv),  that
portion  of the  Outstanding  Amount  which is in excess of the  maximum  amount
pursuant to Section 2.3(b)  determined on the date of delivery of such Borrowing
Base Certificate  without any requirement for notice of a required payment to be
given by the Administrative Agent or any Lender to the Borrower.

      (c) Without limiting the obligations of the Borrower under Section 2.3(b),
the Borrower may, upon giving the Administrative Agent three Banking Days' prior
written notice, repay any outstanding Advances,  provided further, however, that
repayment of Libor  Advances shall be subject to the provisions of Section 2.11.
All repayments of the Facility by the Borrower,  other than repayments  pursuant
to paragraphs  (a) and (b) of this Section 2.6,  shall be in a minimum amount of
Cdn.  $100,000 or the  Equivalent  Amount in U.S.  Dollars and amounts in excess
thereof in integral  multiples  of Cdn.  $100,000  (or, if less,  the  remaining
amount of the relevant  Advance) and shall be made to the  Administrative  Agent
for the ratable  account of the Lenders.  Repayments of any Advance  outstanding
under the  Facility  shall be made in the  currency  in which  such  Advance  is
denominated.

      (d) If the  Required  Lenders,  at any  time,  become  concerned  with the
payment  of  Priority  Claims  by the  Borrower  or any of the  Guarantors,  the
Administrative Agent may, at the direction of the Required Lenders but otherwise
in its  absolute  sole  discretion,  reduce the  Borrowing  Base by the Priority
Claims.  Priority  Claims from time to time shall be deducted from the Borrowing
Base for the purpose of  determining  the  Available  Amount  until the Required
Lenders otherwise direct.

<PAGE>
                                     - 23 -

2.7   Cancellation or Reduction of the Facility

      (a) The Borrower may at any time, upon giving at least three Banking Days'
prior notice to the Administrative  Agent, cancel in full or, from time to time,
cancel in part any  undrawn  portion of the  Facility  and reduce the  Committed
Amount of the Facility accordingly;  provided,  however, that any such reduction
shall be in minimum  amounts of Cdn.  $1,000,000 and integral  multiples of Cdn.
$100,000 in excess thereof.  Any such cancellation  shall permanently reduce the
Facility and may not be reinstated. In the event that the Facility is reduced to
zero or cancelled and no other indebtedness or liabilities  (including indemnity
obligations)  of the  Borrower  are  owing  to the  Administrative  Agent or the
Lenders hereunder,  the Administrative  Agent and the Lenders shall, at the sole
expense of the Borrower, agree to terminate this Agreement with the exception of
those  provisions  of  the  Agreement  which  survive  the  termination  of  the
Agreement.

      (b) In the event that the Borrower's EBITDA  (determined on a consolidated
basis in  accordance  with GAAP as in effect on the date of this  Agreement  and
measured  as at the last day of each  fiscal  quarter of the  Borrower  for such
fiscal  quarter  then  ending,  commencing  with the first  such  quarter to end
following  the date of this  Agreement  and,  to the  extent  that any assets or
liabilities  of  Endurance  Trust are  included  in the  consolidated  financial
statements  of the  Borrower,  calculated  without  reference  to the assets and
liabilities  of  Endurance  Trust) for a fiscal  quarter is less than 80% of the
projected  EBITDA in the Financial  Forecast  attached hereto as Schedule L, the
Committed  Amount  shall be  temporarily  reduced  to Cdn.  $20,000,000,  or the
Equivalent  Amount  in U.S.  Dollars  if such  amount  is less  than the  actual
Committed Amount  hereunder.  Notwithstanding  the foregoing,  if the Borrower's
EBITDA in any  subsequent  fiscal quarter is equal to or greater than 80% of the
projected  EBITDA in the Financial  Forecast  attached hereto as Schedule L, the
Committed  Amount  shall be  equal to the  lesser  of (i) the  actual  Committed
Amount,  subject to any subsequent  reduction  pursuant to Section 2.7(a) above,
prior to the temporary  reduction of the Committed  Amount  provided  under this
Section  2.7(b);  and (ii) Cdn.  $30,000,000,  or the Equivalent  Amount in U.S.
Dollars.

2.8   Application of Repayments

      (a)  Except  as  otherwise  indicated  herein,  all  payments  made to the
Administrative  Agent by or for the  Borrower  for the account of the Lenders in
connection  herewith  shall be  distributed  the same day by the  Administrative
Agent,  in accordance with its normal  practice,  in funds having same day value
among the Lenders to the  accounts  last  designated  in writing by such Lenders
respectively  to the  Administrative  Agent pro rata in  accordance  with  their
respective  Participations.  Amounts  so  distributed  shall be  applied  by the
Lenders as follows:

            (i)   to amounts due hereunder in respect of Bankers' Acceptances;

<PAGE>
                                     - 24 -

            (ii)  to amounts  (other than  principal or interest)  due under any
                  Loan Document in respect of fees, expenses and other amounts;

            (iii) to  amounts  due  hereunder  in  respect  of  interest  on any
                  outstanding Advances; and

            (iv)  to the principal amount of any outstanding Advances.

Further,  payments  of interest or  principal  received by the Lenders  shall be
applied against Advances in order of:

            (v)   in the case of Prime Rate Advances or U.S. Base Rate Advances,
                  their respective Drawdown Dates or dates of Conversion, as the
                  case may be, commencing with the earlier or earliest thereof;

            (vi)  in the case of Libor Advances,  the day following the last day
                  of their  respective  Interest  Periods,  commencing  with the
                  earlier or earliest thereof; and

            (vii) in the case of Bankers' Acceptances, their respective maturity
                  dates, commencing with the earlier or earliest thereof.

Payments received by the  Administrative  Agent on the Maturity Date of Bankers'
Acceptances  shall be  distributed  pro rata  among the  Lenders  based on their
Participation   in  each   Bankers'   Acceptance.   Payments   received  by  the
Administrative  Agent on account of the Principal Amount of Bankers' Acceptances
which are  maturing  or which  have  previously  matured,  whether  pursuant  to
enforcement of remedies or otherwise, shall also be so distributed.

      (b) Where a sum is to be paid  hereunder  by the Borrower or any Lender to
the  Administrative   Agent  for  the  account  of  another  party  hereto,  the
Administrative  Agent  shall not be obliged to make the same  available  to that
other party hereto, whether such party is the Borrower or a Lender, until it has
been able to establish  that it has actually  received  such sum, but if it does
pay out a sum and it proves to be the case that it had not actually received the
sum it paid out,  then the party hereto to whom such sum was so made  available,
whether such party is the Borrower or a Lender, shall on request ensure that the
amount so made available is refunded to the  Administrative  Agent, and shall on
demand indemnify the  Administrative  Agent against any cost or loss it may have
suffered  or  incurred  by reason of its  having  paid out such sum prior to its
having  received such sum;  provided  that nothing in this Section  2.8(b) shall
limit any rights or remedies  that the  Borrower  may  otherwise  have against a
defaulting  Lender or the rights and remedies that a Lender may  otherwise  have
against the Borrower or a defaulting Lender.

2.9   Interest on Prime Rate Advances

      Interest on each Prime Rate Advance shall accrue at a rate per annum equal
to the Applicable  Margin plus the Prime Rate in effect from time to time during
the period of time that the Prime Rate  Advance is  outstanding.  Such  interest
shall be payable in Canadian  Dollars

<PAGE>
                                     - 25 -

monthly in arrears on the Interest Date of each calendar month  commencing  with
the Interest Date occurring in the calendar month following the initial Drawdown
Date for the period from and  including  the Drawdown Date for such Advance (or,
if  applicable,  the date on which such Advance was converted  into a Prime Rate
Advance) or the preceding Interest Date for such Prime Rate Advance, as the case
may be, to and  including  the day  preceding  such  Interest  Date and shall be
calculated on the principal amount of the Prime Rate Advance  outstanding during
such period and on the basis of the actual  number of days  elapsed in a year of
365 or 366 days,  in the case of an  Interest  Date  occurring  in a leap  year.
Changes in the Prime Rate shall cause an automatic and  immediate  adjustment of
the interest  rate payable on Prime Rate  Advances  without the necessity of any
notice to the Borrower.

2.10  Interest on U.S. Base Rate Advances

      Interest on each U.S.  Base Rate Advance  shall accrue at a rate per annum
equal to the  Applicable  Margin  plus the Base Rate in effect from time to time
during the period of time that the U.S. Base Rate Advance is  outstanding.  Such
interest  shall be payable in U.S.  Dollars  monthly in arrears on the  Interest
Date of each calendar month  commencing  with the Interest Date occurring in the
calendar  month  following  the  initial  Drawdown  Date for the period from and
including  the Drawdown  Date for such Advance (or, if  applicable,  the date on
which such Advance was converted into a U.S. Base Rate Advance) or the preceding
Interest  Date for such  U.S.  Base  Rate  Advance,  as the case may be,  to and
including  the day  preceding  such Interest Date and shall be calculated on the
principal  amount of the U.S. Base Rate Advance  outstanding  during such period
and on the basis of the  actual  number of days  elapsed in a year of 365 or 366
days, in the case of an Interest Date  occurring in a leap year.  Changes in the
U.S. Base Rate shall cause an automatic and immediate adjustment of the interest
rate payable on U.S. Base Rate  Advances  without the necessity of any notice to
the Borrower.

2.11  Libor Advances

      (a)  Libor  Advances  shall be  available  in U.S.  Dollars  in a  minimum
principal amount of U.S.  $1,000,000 and integral  multiples of U.S. $100,000 in
excess thereof. The Drawdown Notice and each Conversion Notice or Rollover shall
specify the applicable  Interest  Period for the Libor Advance.  The duration of
each such Interest Period shall be for periods of approximately  one, two, three
or six  months  (or  such  other  period  as may be  agreed  to by the  Required
Lenders),  as the  Borrower  may  select  in  the  applicable  Drawdown  Notice,
Conversion  Notice or  Rollover  Notice.  No Libor  Advance may have an Interest
Period ending after the Maturity Date. If any Interest Period would end on a day
which is not a Banking Day, such  Interest  Period shall be extended to the next
succeeding Banking Day unless such next succeeding Banking Day falls in the next
calendar  month, in which case such Interest Period shall be shortened to end on
the immediately preceding Banking Day.

      (b) If a Lender  determines that deposits of the necessary  amount for the
relevant  Interest Period are not available in the London interbank market or if
for any other reason a Lender,  acting  reasonably,  is unable to determine  the
applicable  Libor Rate,  then the relevant Libor Advance will not be made to the
Borrower,   such  Lender   shall  notify  the   Administrative

<PAGE>
                                     - 26 -

Agent and the  Administrative  Agent  will  notify  the  Borrower  of such event
forthwith and will discuss with the Borrower the  particular  circumstances  and
implications  of such event. In the event that such  determination  is made by a
Lender in the case of a proposed  Rollover  of an  existing  Libor  Advance or a
proposed  Conversion  of a U.S.  Base Rate  Advance  into a Libor  Advance,  the
proposed  Libor  Advance  will  automatically  be deemed to be a U.S.  Base Rate
Advance.

      (c) Interest on any Libor  Advance shall be calculated at a rate per annum
equal to the Libor Rate plus the Applicable Margin, shall accrue from day to day
and shall be  calculated  on the  basis of the  actual  number  of days  elapsed
(including  the first day of each  Interest  Period but  excluding  the last day
thereof) and divided by 360.  Interest on any Libor  Advance shall be payable in
U.S. Dollars in arrears on the last day of the Interest Period relating thereto;
provided,  however, that if the Interest Period is for a term of more than three
months,  interest  shall be  payable  on the last day of the  first  three-month
period and on the last day of each three-month period thereafter,  as well as on
the last day of the  Interest  Period  (each such  payment date being the "Libor
Interest Payment Date").

      (d) If a Libor  Advance is neither  repaid on the last day of an  Interest
Period nor  converted  into  another  type of Advance on such date  pursuant  to
Section 2.14, and if the Administrative Agent has not received a Rollover Notice
or a Conversion  Notice specifying the term of the next Interest Period for such
Libor Advance on or before 10:00 a.m. on the third Banking Day prior to the last
day of the then current  Interest  Period,  then the  outstanding  Libor Advance
shall be deemed to be  converted,  by way of  Conversion  on the last day of the
then current Interest Period, to a U.S. Base Rate Advance.

      (e) Except as  otherwise  provided  herein,  Libor  Advances  shall not be
repaid, prepaid or converted into another type of Advance except on the last day
of any  Interest  Period  relating  thereto  unless  the  Borrower  pays  to the
Administrative  Agent  for the  account  of a Lender  any  amounts  which may be
payable under Section 13.2.

2.12  Method and Place of Payment

      All payments of principal,  interest and fees hereunder  shall be made for
value at or  before  12:00  noon on the day such  amount  is due by  deposit  or
transfer  thereof to an  account of the  Borrower  maintained  at the  principal
office  of the  Administrative  Agent  in  Toronto  or such  other  place as the
Borrower  and the  Administrative  Agent may from time to time  agree.  Payments
received after such time shall be deemed to have been made on the next following
Banking Day. Each payment to be made by the Borrower under this Agreement  shall
be made without  deduction,  set-off or counterclaim.  Repayments of any Advance
and  payments of interest on any Advance  shall be made in the currency in which
such Advance is  denominated.  The Borrower  hereby  irrevocably  authorizes and
directs the  Administrative  Agent to deduct and set-off  from such  account all
amounts due to the Administrative Agent from time to time hereunder.

<PAGE>
                                     - 27 -

2.13  Commitment Fees

      The Borrower shall pay to the Administrative Agent for the ratable account
of the Lenders a commitment fee calculated  monthly for the period commencing on
the Closing Date and ending on the Maturity Date at the rate per annum specified
below in this Section 2.13 on the average daily undrawn  Committed Amount of the
Facility, determined on the basis of the number of days elapsed in a year of 365
days or 366 days in the case of a period ending in a leap year.  Such commitment
fee shall accrue daily and be due and payable monthly,  in arrears, on the first
Banking  Date of each  calendar  month.  The  applicable  rate per annum for the
commitment fee shall be as follows:

      (i)   if the daily average outstanding  principal amount of Advances under
            the  Facility  for any  month is less  than or equal to 33.3% of the
            Committed Amount of the Facility, then 0.70%;

      (ii)  if the daily average outstanding  principal amount of Advances under
            the  Facility  for any month is greater  than 33.3% but less than or
            equal to 66.7% of the Committed Amount of the Facility,  then 0.60%;
            and

      (iii) if the daily average outstanding  principal amount of Advances under
            the Facility  for any month is greater  than 66.7% of the  Committed
            Amount of the Facility, then 0.50%.

2.14  Conversion Options

      Subject  to  the   provisions  of  this  Agreement   (including,   without
limitation, Sections 2.11 and 4.7), the Borrower may convert any type of Advance
outstanding under the Facility into another type of Advance as follows:

      (i)   provided that no Event of Default has occurred and is continuing,  a
            Prime Rate Advance or a portion  thereof into a Bankers'  Acceptance
            Advance by giving the  Administrative  Agent a Conversion  Notice no
            later than 10:00 a.m.  on the  Banking  Day prior to the date of the
            proposed Conversion;

      (ii)  the Face Amount of a Bankers' Acceptance or a portion thereof into a
            Prime Rate Advance on the maturity  date of the Bankers'  Acceptance
            by giving the Administrative Agent a Conversion Notice no later than
            10:00  a.m.  on the  Banking  Day prior to the date of the  proposed
            Conversion;

      (iii) provided that no Event of Default has occurred and is continuing,  a
            U.S. Base Rate Advance or a portion  thereof into a Libor Advance by
            giving the  Administrative  Agent a Conversion  Notice no later than
            10:00 a.m.  three  Banking  Days  prior to the date of the  proposed
            Conversion;

      (iv)  a Libor  Advance or a portion  thereof into a U.S. Base Rate Advance
            on the last day of the Interest Period of the relevant Libor Advance
            by giving

<PAGE>
                                     - 28 -

            the  Administrative  Agent a  Conversion  Notice no later than 10:00
            a.m.  on  the  Banking  Day  prior  to  the  date  of  the  proposed
            Conversion;

      (v)   a Prime Rate  Advance  or a portion  thereof  into a U.S.  Base Rate
            Advance in the Equivalent Amount by giving the Administrative  Agent
            a  Conversion  Notice no later than 10:00 a.m.  on the  Banking  Day
            prior to the date of the proposed Conversion;

      (vi)  provided that no Event of Default has occurred and is continuing,  a
            Prime Rate Advance or a portion  thereof into a Libor Advance in the
            Equivalent  Amount by giving the  Administrative  Agent a Conversion
            Notice no later than 10:00 a.m. three Banking Days prior to the date
            of the proposed Conversion;

      (vii) the Face Amount of a Bankers' Acceptance or a portion thereof into a
            U.S. Base Rate Advance in the Equivalent Amount on the maturity date
            of the  Bankers'  Acceptance  by giving the  Administrative  Agent a
            Conversion  Notice no later than 10:00 a.m. on the Banking Day prior
            to the date of the proposed Conversion;

      (viii)provided  that no Event of Default has occurred  and is  continuing,
            the Face Amount of a Bankers' Acceptance or a portion thereof into a
            Libor Advance in the  Equivalent  Amount on the maturity date of the
            Bankers' Acceptance by giving the Administrative  Agent a Conversion
            Notice no later than 10:00 a.m. three Banking Days prior to the date
            of the proposed Conversion;

      (ix)  a U.S.  Base Rate  Advance  or a portion  thereof  into a Prime Rate
            Advance in the Equivalent Amount by giving the Administrative  Agent
            a  Conversion  Notice no later than 10:00 a.m.  on the  Banking  Day
            prior to the date of the proposed Conversion;

      (x)   provided no Event of Default has occurred and is continuing,  a U.S.
            Base Rate Advance or a portion  thereof  into a Bankers'  Acceptance
            Advance by giving the  Administrative  Agent a Conversion  Notice no
            later than 10:00 a.m.  on the  Banking  Day prior to the date of the
            proposed Conversion;

      (xi)  a Libor  Advance or a portion  thereof  into a Prime Rate Advance in
            the Equivalent  Amount on the last day of the Interest Period of the
            relevant  Libor  Advance  by  giving  the  Administrative   Agent  a
            Conversion  Notice no later than 10:00 a.m. on the Banking Day prior
            to the date of the proposed Conversion; and

      (xii) provided no Event of Default has occurred and is continuing, a Libor
            Advance or a portion thereof into a Bankers'  Acceptance  Advance in
            the Equivalent  Amount on the last day of the Interest Period of the
            relevant

<PAGE>
                                     - 29 -

            Libor Advance by giving the Administrative Agent a Conversion Notice
            no later than 10:00 a.m. on the Banking Day prior to the date of the
            proposed Conversion.

Notwithstanding  the foregoing,  if a Default has occurred and is continuing,  a
Conversion  pursuant  to  clause  (i),  (iii),  (vi),  (viii),  (x) or (xii) and
conversions  into a different  currency of Advance will be permitted only in the
discretion of the Required Lenders. For purposes of Conversions of Advances from
Canadian Dollars into U.S.  Dollars or from U.S. Dollars into Canadian  Dollars,
the  Equivalent  Amount  shall  be the  Equivalent  Amount  on the  date  of the
Conversion.  For greater certainty,  Conversions of Advances into the Equivalent
Amount  in  a  different  currency  are  permitted   notwithstanding  that  such
Equivalent  Amount may not be in amounts  required in connection with a Drawdown
of an Advance in such currency.

      2.15  Execution of Notices

      Each Drawdown  Notice,  Conversion  Notice,  Rollover Notice and notice of
repayment, prepayment or cancellation and, unless otherwise provided herein, all
other  notices,  requests,  demands or other  communications  to be given to the
Administrative  Agent by the  Borrower  hereunder  shall be  executed by any one
officer or director of the Borrower.

      2.16  Evidence of Indebtedness

      (a) The  Administrative  Agent shall open and maintain in accordance  with
its usual  practice  books of  account  evidencing  all  Advances  and all other
amounts  owing by the  Borrower  to the  Administrative  Agent  and the  Lenders
hereunder.  The  Administrative  Agent  shall  enter in the  foregoing  accounts
details of every  Drawdown  Date,  date of  Rollover  or date of  Conversion  in
respect of each  Advance and of all  amounts  from time to time owing or paid by
the Borrower to the Administrative Agent, and the amounts of principal, interest
and fees payable from time to time  hereunder.  The  information  entered in the
foregoing  accounts shall  constitute,  in the absence of manifest error,  prima
facie evidence of the  obligations of the Borrower to the  Administrative  Agent
and the Lenders  hereunder,  the date each Lender made each Advance available to
the  Borrower and the amounts the Borrower has paid from time to time on account
of the principal of, interest on and fees related to the Advances.

      (b) Each  Lender  shall open and  maintain  in  accordance  with its usual
practice books of account evidencing all Advances and all other amounts owing by
the Borrower to such Lender hereunder.  Such Lender shall enter in the foregoing
accounts  details of every Drawdown Date, date of Rollover or date of Conversion
in respect of each Advance by such Lender hereunder and of all amounts from time
to time  owing  or paid by the  Borrower  to such  Lender,  and the  amounts  of
principal, interest and fees payable to such Lender from time to time hereunder.
The  information  entered in the foregoing  accounts  shall  constitute,  in the
absence of manifest  error,  prima  facie  evidence  of the  obligations  of the
Borrower  to the  Lender  hereunder,  the date such  Lender  made  each  Advance
available  to the  Borrower  and the amounts the  Borrower has paid from time to
time on  account  of the  principal  of,  interest  on and fees  related  to the
Advances made by such Lender hereunder.  These accounts shall constitute (in the
absence of manifest

<PAGE>
                                     - 30 -

error or of contradictory  entries in the accounts of the  Administrative  Agent
referred to in Section  2.16(a)) prima facie  evidence of their content  against
the Borrower and the Guarantors.

2.17  Interest on Unpaid Costs and Expenses

      Unless the payment of  interest is  otherwise  specifically  provided  for
herein,  where the Borrower  fails to pay any amount  required to be paid by the
Borrower hereunder when due, having received notice that such amount is due, the
Borrower shall pay interest on such unpaid amount,  including  overdue  interest
from the time such  amount is due until paid at an annual  rate equal to the sum
of (i) 1%, plus (ii) the  Applicable  Margin,  plus (iii) the Prime Rate, in the
case of amounts payable in Canadian Dollars, and the U.S. Base Rate, in the case
of amounts  payable in U.S.  Dollars.  Such interest shall be determined  daily,
compounded  monthly in arrears on the last Banking Day of each calendar month in
each year and payable on demand.

2.18  Criminal Rate of Interest

      Notwithstanding  the foregoing  provisions of this Article 2, the Borrower
shall in no event be obliged to make any  payments of interest or other  amounts
payable  to the  Administrative  Agent or any Lender  hereunder  in excess of an
amount or rate which would be  prohibited  by law or would result in the receipt
by the  Administrative  Agent or any Lender of interest  at a criminal  rate (as
such terms are construed under the Criminal Code (Canada)).

2.19  Compliance with the Interest Act (Canada)

      For the purposes of this Agreement, whenever any interest is calculated on
the basis of a period of time  other than a calendar  year,  the annual  rate of
interest to which each rate of interest  determined pursuant to such calculation
is  equivalent  for the purposes of the Interest Act (Canada) is such rate as so
determined multiplied by the actual number of days in the calendar year in which
the same is to be  ascertained  and  divided  by the  number of days used in the
basis of such determination.

2.20  Nominal Rate of Interest

      The parties  acknowledge and agree that all calculations of interest under
this  Agreement  are to be  made  on the  basis  of the  nominal  interest  rate
described  herein and not on the basis of effective yearly rates or on any other
basis which gives effect to the  principle of deemed  reinvestment  of interest.
The parties  acknowledge that there is a material  difference between the stated
nominal  interest rates and the effective yearly rates of interest and that they
are capable of making the  calculations  required to  determine  such  effective
yearly rates of interest.

<PAGE>
                                     - 31 -

                                   Article 3
                                LETTERS OF CREDIT

3.1   Term and Availability

      Upon the terms and subject to the  conditions  hereof,  BMO shall,  at the
request  of the  Borrower,  issue as  Advances  under the  Facility  irrevocable
Letters of Credit in BMO's usual form and  expiring  no later than the  Maturity
Date and having a Face Amount which,  together  with the aggregate  undrawn Face
Amount of all outstanding Letters of Credit,  would not exceed Cdn.  $10,000,000
(or its Equivalent Amount in U.S. Dollars).  The Borrower may request Letters of
Credit to be denominated  in Canadian  Dollars or in U.S.  Dollars.  Each Lender
severally  agrees to  participate in Letters of Credit issued for the account of
the Borrower in accordance with the terms of this Agreement.  Accordingly,  each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from BMO a  participation  in any Letter of Credit  outstanding  on the
Closing Date which was issued by BMO pursuant to the  provisions of the Existing
Credit  Agreement or issued at any time following the Closing Date in accordance
with  the  terms  of  this  Agreement  in  an  amount  equal  to  such  Lender's
Participation,  multiplied  by the amount of such Letter of Credit.  Each Lender
hereby  severally  agrees to indemnify and hold harmless BMO with respect to any
loss,  cost,  expense,  damages or claim asserted by any Person against BMO as a
result  of the  issuance  by BMO of any such  Letter  of  Credit  and  agrees to
reimburse BMO on a pro rata basis with the other Lenders for any amounts paid by
BMO  under  any  such  Letter  of  Credit  and to make  funds  available  to the
Administrative  Agent for the account of BMO in accordance  with Section 2.4(i).
Each  Lender's  obligation  to make  Advances to reimburse BMO for amounts drawn
under such Letters of Credit,  as  contemplated  by this  Section 3.1,  shall be
absolute  and  unconditional  and shall  not be  affected  by any  circumstance,
including  (A) any  set-off,  counterclaim,  recoupment,  defence or other right
which such Lender may have against BMO, the Borrower or any other Person for any
reason  whatsoever;  (B) the occurrence or continuance of a Default;  or (C) any
other  occurrence,  event or  condition,  whether  or not  similar to any of the
foregoing.  Any such  reimbursement  shall not relieve or  otherwise  impair the
obligation  of the Borrower to reimburse  BMO for the amount of any payment made
by BMO under any such  Letter of Credit,  together  with  interest  as  provided
herein.

3.2   Reimbursement

      In the event that BMO is called upon by a  beneficiary  to honour a Letter
of Credit,  BMO shall  forthwith  give notice  thereof to the  Borrower  and the
Administrative  Agent.  Unless the Borrower has made other arrangements with BMO
with  respect  to  payment  to BMO of an  amount  sufficient  to  permit  BMO to
discharge its  obligations  under the Letter of Credit plus that amount equal to
any and all charges  and  expenses  which BMO may pay or incur  relative to such
Letter of Credit,  any such payment so payable  shall be deemed to be a Drawdown
in accordance with Sections 2.3 and 2.4 of a Prime Rate Advance if payment under
such Letter of Credit was made in  Canadian  Dollars and shall be deemed to be a
Drawdown of a U.S.  Base Rate Advance if payment under such Letter of Credit was
made in U.S.  Dollars;  provided that the provisions of Section 2.3(a) regarding
Drawdown  Notice,  the  provisions  of  Section  6.2  regarding  conditions  for
subsequent Drawdowns and the provisions of Section 11.2

<PAGE>
                                     - 32 -

relieving the Lenders of the obligation to make further Advances shall not apply
to such  Advances.  Such drawdown shall be deemed to be made on a pro rata basis
by all of the  Lenders.  In the event that any amount so payable by BMO  exceeds
the amount  available  to be drawn down by the  Borrower  under the  Facility in
accordance with the provisions of Section  2.3(b),  then BMO shall so notify the
Borrower and the Administrative Agent and forthwith upon receipt of such notice,
the Borrower  shall provide to BMO an amount equal to such excess amount and any
amount so payable  shall be deemed to be a Prime Rate  Advance  (if such  excess
amount is in  Canadian  Dollars)  or a U.S.  Base Rate  Advance  (if such excess
amount is in U.S. Dollars), payable on demand.

3.3   Indemnity for Costs

      The Borrower shall indemnify BMO and the other Lenders against any and all
actions,  proceedings,  costs,  damages,  expenses,  taxes  (other than taxes on
overall net income,  assets or capital),  claims and demands which BMO may incur
or sustain by reason of or arising in any way whatsoever in connection  with the
operating,  establishing  or paying of the amounts  payable under each Letter of
Credit or arising in  connection  with any amounts  payable by BMO and the other
Lenders  thereunder  save and except for amounts  which have  resulted  from the
gross negligence or the wilful misconduct of BMO.

3.4   Fees

      (a) At the time of issue of a Letter of Credit  following  syndication  of
the  Facility by BMO, the  Borrower  shall pay to BMO,  for its own  account,  a
fronting fee of 0.125%  calculated on the Face Amount of the Letter of Credit on
the basis of the actual  number of days in the year for the period from the date
of issue of such Letter of Credit to the expiry date thereof.

      (b) The  Borrower  shall pay to the  Administrative  Agent for the ratable
account of the  Lenders an issuance  fee on each  Letter of Credit  equal to the
Applicable  Margin for Bankers'  Acceptance  Advances  calculated on the undrawn
portion  of the Face  Amount of the  Letter of Credit on the basis of the actual
number of days in the year for the period from the date of issue  thereof to the
expiry date thereof.  Such fee shall be paid quarterly in advance  commencing on
the date of issuance of each Letter of Credit and  thereafter  on the  quarterly
anniversary of the date of issuance.

      (c) The Borrower  shall pay to BMO for its own account an amendment fee in
respect of each amendment to any Letter of Credit in such manner as is customary
for BMO to charge its customers at the time of request for such amendment.

                                   Article 4
                 BANKERS' ACCEPTANCES AND BA EQUIVALENT ADVANCES

4.1   Form of Bankers' Acceptance Advance and Interest

      Bankers'  Acceptance Advances shall be available to the Borrower under the
Facility by way of Drawdown or Rollover or Conversion by the Borrower delivering
to the

<PAGE>
                                     - 33 -

Administrative  Agent a Drawdown Notice or Rollover Notice or Conversion Notice,
as the case may be.  To  facilitate  the  procedures  contemplated  herein,  the
Borrower hereby irrevocably  appoints each of the Lenders as attorney-in-fact of
the Borrower to execute,  endorse and deliver on behalf of the Borrower,  drafts
in the form  prescribed by it for Bankers'  Acceptances  denominated in Canadian
Dollars.  Each Bankers'  Acceptance executed and delivered by a Lender on behalf
of the  Borrower as provided  herein shall be binding upon the Borrower as if it
had been executed and delivered by a duly authorized  officer or officers of the
Borrower. The dates, maturity dates and principal amounts of all drafts shall be
completed by the Lenders as required hereby.

4.2   Minimum Amount

      The  aggregate  of the Face  Amounts  of any drafts  presented  under this
Article 4 for any Drawdown or Conversion shall be not less than Cdn.  $1,000,000
and integral  multiples  of Cdn.  $100,000 in excess  thereof.  The minimum Face
Amount of any draft shall be Cdn. $100,000 or any integral multiple thereof.

4.3   Term and Interest Periods

      The term of any Bankers' Acceptance shall be specified in the draft and in
the Drawdown Notice or Rollover Notice or Conversion  Notice and the term of any
Bankers'  Acceptance  shall be for  periods of  approximately  30, 60, 90 or 180
days,  unless  otherwise  agreed to by the  Lenders.  The term of each  Bankers'
Acceptance  shall mature on a Banking  Day.  The  Borrower  shall ensure that no
Bankers'  Acceptance  issued  hereunder  shall  have a  maturity  date after the
Maturity Date.

4.4   Purchase of Drafts, Acceptance Fee and Interest

      Each Drawdown of a Bankers' Acceptance Advance shall be made pursuant to a
Drawdown Notice,  Conversion  Notice or Rollover Notice given by the Borrower to
the Administrative  Agent not later than 10:00 a.m. one Banking Day prior to the
applicable Drawdown Date, or date of Conversion or Rollover;  provided, however,
that in the case of a Drawdown of a Bankers' Acceptance Advance in a Face Amount
in  excess  of Cdn.  $10,000,000,  the  Drawdown  Notice  shall  be given by the
Borrower to the Administrative  Agent not later than 10:00 a.m. two Banking Days
prior to the applicable  Drawdown Date.  Each Drawdown Notice or Rollover Notice
or Conversion  Notice shall be irrevocable and binding on the Borrower and shall
specify the Drawdown  Date or date of Rollover,  the sum of the  aggregate  Face
Amount of the Bankers'  Acceptances  to be purchased  and the maturity  date for
such drafts.  Not later than 12 noon on the applicable  Drawdown Date or date of
Conversion  or  Rollover,  the  Lenders  shall  complete  one or more  drafts in
accordance with the Drawdown  Notice,  Conversion  Notice or Rollover Notice and
the Lenders  accept such drafts and purchase the  Bankers'  Acceptances  thereby
created for the BA Purchase Price.  Bankers'  Acceptances  purchased by a Lender
hereunder  may be held by it for its own account until the maturity date or sold
by it at any time prior thereto in any relevant market therefor, in the Lender's
sole discretion.

<PAGE>
                                     - 34 -

4.5   Payment on Maturity

      The Borrower shall pay to the Administrative  Agent for the account of the
Lenders on the  maturity of a Bankers'  Acceptance  an amount  equal to the Face
Amount of such maturing Bankers' Acceptance;  provided that the Borrower may, at
its option, so reimburse the Lenders,  in whole or in part, by delivering to the
Administrative  Agent no later  than  10:00 a.m.  one  Banking  Day prior to the
maturity date of a maturing  Bankers'  Acceptance,  a Rollover Notice specifying
the term of the Bankers'  Acceptances  and presenting  drafts to the Lenders for
acceptance  and  purchase  having,  in the  case of  reimbursement  in  whole by
replacement  Bankers'  Acceptances,  an aggregate  Face Amount equal to the Face
Amount of the  maturing  Bankers'  Acceptances.  In the event that the  Borrower
fails  to  deliver  a  Rollover   Notice  and  fails  to  make  payment  to  the
Administrative Agent in respect of the maturing Bankers'  Acceptances,  the Face
Amount of the maturing Bankers' Acceptances shall be deemed to be converted to a
Prime Rate Advance on the relevant  maturity date. The Borrower shall pay to the
Administrative  Agent for the account of the Lenders on the maturity date of the
maturing  Bankers'  Acceptance  the  difference  between  the Face Amount of the
maturing  Bankers'  Acceptance  and the BA Purchase  Price for such  replacement
Bankers' Acceptances.

4.6   Waiver of Days of Grace

      The  Borrower  renounces  and  shall  not  claim any days of grace for the
payment of any Bankers' Acceptance.

4.7   No Market

      If a Lender determines in good faith, by reason of circumstances affecting
the Canadian money market,  which determination  shall be final,  conclusive and
binding upon the  Borrower,  that there is no market for  Bankers'  Acceptances,
such Lender shall notify the  Administrative  Agent.  The  Administrative  Agent
shall then notify the Borrower that there is no market for Bankers' Acceptances,
and the right of the Borrower to request the Bankers'  Acceptance Advances shall
be  suspended  until  such  Lender,  acting  reasonably,   determines  that  the
circumstances  causing such  suspension  no longer exist and the  Administrative
Agent  so  notifies  the  Borrower  and any  notice  of  drawing  of a  Bankers'
Acceptance  Advance  which is  outstanding  shall be  cancelled  and the drawing
requested therein shall, at the option of the Borrower, either not be made or be
made as a Prime Rate Advance. The Administrative Agent shall promptly notify the
Borrower  of the  suspension  of the  Borrower's  right to  request  a  Bankers'
Acceptance Advance and of the termination of any such suspension.

                                   Article 5
                   CHANGE OF CIRCUMSTANCES AND INDEMNIFICATION

5.1   Increased Costs

      In the event of (i) any  Applicable  Law coming  into force after the date
hereof  or  (ii)  any  change  in  any  existing   Applicable  Law,  or  in  the
interpretation  or application  thereof by any court or by any  governmental  or
other  authority  or entity  charged  with the  administration

<PAGE>
                                     - 35 -

thereof  or  (iii)  compliance  by a  Lender  with  any  direction,  request  or
requirement  (whether  or not  having the force of law) of any  governmental  or
other authority or entity charged with the  administration of any Applicable Law
(each such event being  hereinafter  referred to as a "change in law") which now
or hereafter:

      (a)   subjects  (whether  directly,  or as a result of any  withholding or
            deduction by the  Borrower) a Lender to any Tax or changes the basis
            of taxation, or increases any existing Tax (in each case, except for
            the coming  into force of any tax or change in the basis of taxation
            or manner of  collection  of any tax in  respect of or the change in
            the rate of Tax  charged on income or capital of a Lender as a whole
            and  including  any Other  Tax that is  payable  by a Lender  on, or
            required by Applicable  Law to be withheld by the Borrower from, any
            Additional  Compensation,  as hereinafter  defined),  on payments of
            principal,  interest or other amounts payable by the Borrower to the
            Administrative  Agent for the account of such Lender hereunder or on
            or by reference to the amount of any Advances  made or to be made by
            such Lender  hereunder or on or by reference  to the  commitment  of
            such Lender hereunder, or

      (b)   imposes,  modifies or deems applicable any reserve,  special deposit
            or similar requirements or otherwise imposes any cost on a Lender in
            funding or maintaining all or any of the Advances hereunder,  or (c)
            will have the effect of  increasing  the  amount of overall  capital
            required  to be  maintained  by a Lender,  taking  into  account the
            existence of such Lender's  participation  in any Advance  hereunder
            (including, without limitation, all or any part of its commitment),

and the result of any of the  foregoing  is to increase the cost to such Lender,
reduce the income receivable by it or reduce the effective return on the capital
of such Lender in respect of any  Advances  and/or its  Commitment  to an extent
which such Lender believes to be material, such Lender shall give notice thereof
to the  Borrower and to the  Administrative  Agent  (herein  called a "Notice of
Amount")  stating  the event by reason of which it  believes  it is  entitled to
Additional   Compensation  (as  hereinafter  defined),  such  cost  and/or  such
reduction  in such return (or such  proportion  of such  reduction as is, in the
reasonable and bona fide opinion of such Lender, attributable to its obligations
hereunder),  the amount of such Additional Compensation (as hereinafter defined)
incurred by such Lender and supplying reasonable supporting evidence (including,
in the event of change of  Applicable  Law, a photocopy  of the  Applicable  Law
evidencing such change) together with a certificate of a duly authorized officer
of such  Lender  setting  forth  the  Additional  Compensation  and the basis of
calculation of such Additional Compensation; provided that such Lender shall not
be required to disclose  any  information  required to be kept  confidential  by
Applicable  Law. In the event such Lender  subsequently  recovers all or part of
the Additional Compensation paid by the Borrower, it shall repay an equal amount
to the  Borrower.  The Borrower  shall pay to the  Administrative  Agent for the
account of such  Lender,  within 10  Banking  Days of the date of receipt of any
Notice of Amount, the amount specified in such Notice of Amount (in this Article
5  referred  to as  "Additional

<PAGE>
                                     - 36 -

Compensation").   The  obligation  to  pay  such  Additional   Compensation  for
subsequent periods will continue until the earlier of termination of the Advance
or the Commitment affected by the change in law or the lapse or cessation of the
change in law giving rise to the initial  Additional  Compensation.  Each Lender
shall make  reasonable  efforts to limit the  incidence  of any such  Additional
Compensation  and  seek  recovery  for the  account  of the  Borrower  upon  the
Borrower's  request  at  the  Borrower's  expense,  provided  a  Lender  in  its
reasonable  determination suffers no appreciable economic,  legal, regulatory or
other  disadvantage.  Notwithstanding the foregoing  provisions,  a Lender shall
only be entitled to rely upon the  provisions  of this Section 5.1 if and for so
long as it is not treating the  Borrower in any  materially  different or in any
less favourable manner than is applicable to any other customers of such Lender,
where such other  customers  are bound by similar  provisions  to the  foregoing
provisions of this Section 5.1.

      5.2   Illegality

      If, with respect to a Lender, the implementation of any existing provision
of Applicable Law or the adoption of any  Applicable  Law, or any change therein
or in the interpretation or application thereof by any court or by any statutory
board or commission now or hereafter  makes it unlawful for such Lender to make,
fund or maintain all or any portion of an outstanding  Advance,  to maintain all
or any part of its commitment  hereunder or to give effect to its obligations in
respect of all or any  portion of an  outstanding  Advance,  such Lender may, by
written notice thereof to the Borrower (supported, at the request and expense of
the Borrower,  by an opinion of such Lender's counsel),  declare the obligations
of such Lender under this  Agreement to be  terminated  whereupon the same shall
forthwith  terminate,  and the Borrower shall repay to the Administrative  Agent
for the  account  of such  Lender  within the time  required  by such law (or as
promptly as practicable if already unlawful or at the end of such longer period,
if any, as such Lender,  in its bona fide  opinion,  may agree) the principal of
the  Advances  made by such  Lender.  If any such change  shall affect only that
portion of such Lender's  obligations  under this Agreement that is, in the bona
fide opinion of such Lender,  severable  from the remainder of this Agreement so
that the  remainder of this  Agreement may be continued in full force and effect
without  otherwise  affecting  any of the  obligations  of  such  Lender  or the
Borrower  hereunder,  such Lender shall declare its obligations  under only that
portion so terminated.

                                   Article 6
                        CONDITIONS PRECEDENT TO DRAWDOWN

6.1   Conditions for Closing

      The following conditions shall be satisfied by the Borrower on the Closing
Date:

      (a)   this Agreement and the Borrower's Security Documents, in form and on
            terms  satisfactory to the Lenders,  acting  reasonably,  shall have
            been duly authorized,  executed and delivered to the  Administrative
            Agent by the Borrower and shall constitute legal,  valid and binding
            obligations of the Borrower;

<PAGE>
                                     - 37 -

      (b)   the Guarantees and the Guarantors'  Security Documents,  in form and
            on terms satisfactory to the Lenders, acting reasonably,  shall have
            been duly authorized, executed and delivered by the Guarantors party
            thereto  to the  Administrative  Agent and shall  constitute  legal,
            valid and binding obligations of the Guarantors party thereto;

      (c)   the  Borrower  shall  have  delivered  to the  Administrative  Agent
            certified  copies of its  constating  documents and by-laws,  all as
            amended to date, the resolution  authorizing  this Agreement and the
            Borrower's Security Documents and the incumbency of officers signing
            this  Agreement  and  the  Borrower's  Security  Documents  and  any
            documents  to be  provided  pursuant  to the  provisions  hereof  or
            thereof  and a  certificate  of  compliance,  good  standing or like
            certificate  with  respect  to the  Borrower  issued by  appropriate
            government officials of the jurisdiction of its incorporation;

      (d)   each of the Guarantors  shall have  delivered to the  Administrative
            Agent  certified  copies of its  certificate  of  incorporation  and
            by-laws,  all as amended to date,  the  resolution  authorizing  the
            Guarantees  and the  Guarantors'  Security  Documents  to which such
            Guarantor  is a party and the  incumbency  of  officers  signing the
            Guarantee  and the  Guarantors'  Security  Documents  to which  such
            Guarantor is a party and any  documents  to be provided  pursuant to
            the provisions  hereof or thereof and a certificate of status,  good
            standing or like  certificate  with respect to such Guarantor issued
            by  appropriate  government  officials  of the  jurisdiction  of its
            incorporation  (except  for  the  certificate  of the  Registrar  of
            Companies  of England  and Wales in respect of MNL,  which  shall be
            delivered  on a  date  occurring  not  more  than  15  Banking  Days
            following the Closing Date);

      (e)   each of the Guarantors  shall have  delivered to the  Administrative
            Agent such consent or acknowledgement  regarding the continuation of
            the security and applicability of the Guarantor's Security Documents
            to which it is a party, and the Security granted thereunder,  to the
            obligations of the Borrower under this Agreement notwithstanding the
            amendment to the terms of the Existing Credit  Agreement in form and
            on terms satisfactory to the Lenders, acting reasonably;

      (f)   the representations and warranties set forth in Section 7.1 shall be
            true and correct in all  material  respects on and as of the Closing
            Date by reference to the facts and  circumstances  then existing and
            the Borrower shall have  delivered an Officer's  Certificate to such
            effect;

      (g)   no Default or Event of Default shall have occurred and be continuing
            and the Borrower  shall have  delivered an Officer's  Certificate to
            such effect;

      (h)   the Security and all necessary  financing  change  statements  shall
            have been duly registered,  filed and recorded in all  jurisdictions
            where such registration,  filing or recording, in the opinion of the
            Lenders,  is necessary  or  advantageous  to  preserve,

<PAGE>
                                     - 38 -

            protect and perfect the  charges and  security  interest  created or
            intended to be created by the Security Documents;

      (i)   the  Borrower  shall  have  delivered  to the  Administrative  Agent
            evidence of a policy of  insurance  by EDC in favour of the Borrower
            in  form  and   substance   satisfactory   to  the  Lenders  and  an
            acknowledgement  by EDC of the  direction  to pay  delivered  by the
            Borrower as part of the Borrower's Security Documents;

      (j)   the  Borrower  shall  have  delivered  to the  Administrative  Agent
            satisfactory   evidence  that  customary  insurance  coverage  (with
            adequate  and  customary  limits and  deductibles)  for business and
            operations  of the type and size of the Borrower and the  Guarantors
            is in place, with (i) the Administrative  Agent being named as first
            loss payee  mortgagee  (together with the standard  mortgage  clause
            from the  Insurance  Bureau of Canada) and each of the Lenders being
            named as additional  insureds and (ii) an  endorsement  that 30 days
            notice  shall  be  provided  to the  Administrative  Agent  for  any
            cancellation, modification or waiver thereunder;

      (k)   all fees and expenses  payable in connection  with the  transactions
            contemplated  hereby shall be paid in full,  to the extent that such
            fees and expenses shall then be due and payable;

      (l)   opinions of Counsel to the Borrower  and counsel to the  Guarantors,
            addressed to the  Administrative  Agent and the Lenders from time to
            time  party  hereto,  in  form  and  substance  satisfactory  to the
            Administrative  Agent and each Lender,  shall have been delivered to
            the  Administrative  Agent (except (i) for the opinion of counsel to
            MNI and MNSI,  which shall be delivered on a date occurring not more
            than 5 Banking  Days  following  the  Closing  Date and (ii) for the
            opinion  of  counsel  to MNL,  which  shall be  delivered  on a date
            occurring not more than 15 Banking Days following the Closing Date);

      (m)   there  shall have been no  material  adverse  change in the  assets,
            liabilities,   business,   operations,   condition   (financial   or
            otherwise)  or  prospects  of the  Borrower  and  its  Subsidiaries,
            considered  as a whole,  which has occurred  since January 25, 2004,
            the end of the Borrower's third quarter of its 2004 fiscal year;

      (n)   on or prior to the Closing Date,  all amounts owing by MNL under the
            EDC Facility  shall have been fully repaid and such EDC Facility and
            the Intercreditor Agreement shall have been terminated and cancelled
            and shall cease to be of any further force and effect;

      (o)   the Borrower  shall have  delivered to the  Administrative  Agent an
            acknowledgement and acceptance to the Fee Letter; and

      (p)   the  Administrative   Agent  shall  have  received  such  additional
            evidence,  documents or  undertakings  as the Lenders may reasonably
            request  to  establish   the   consummation   of  the   transactions
            contemplated hereby.

<PAGE>
                                     - 39 -

      In each case where a document  shall be  delivered  to the  Administrative
Agent, the Borrower shall provide a sufficient  number of copies for delivery of
an originally  executed copy of each document to each Lender. The conditions set
forth in this  Section 6.1 are  inserted for the sole benefit of each Lender and
may be  waived  by each  Lender in whole or in part,  with or  without  terms or
conditions.

      6.2   Conditions for Subsequent Drawdowns

      The following conditions shall be satisfied by the Borrower at or prior to
the time of each Drawdown of an Advance (other than a deemed Drawdown of a Prime
Rate  Advance  pursuant  to the  provisions  of  Section  3.2 or 4.5 or a deemed
Drawdown  of a U.S.  Base Rate  Advance  pursuant to the  provisions  of Section
2.11(b)  or (d) or  Section  3.2)  under the  Facility  subsequent  to the first
Drawdown:

      (a)   the Borrower shall have given to the Administrative Agent a Drawdown
            Notice in accordance with the provisions of Section 2.3(a);

      (b)   the representations and warranties set forth in Section 7.1 shall be
            deemed to have been given on the Drawdown Date and shall be, mutatis
            mutandis, true and correct in all material respects on and as of the
            Drawdown  Date,  both before and after giving effect to the Drawdown
            of such Advance and to the  application  of proceeds  therefrom,  by
            reference to the facts and circumstances  then existing and assuming
            that each of such  representations  and warranties and the Schedules
            referred to therein had been amended to reflect any notices provided
            by the  Borrower  to the  Administrative  Agent  in  respect  of the
            matters dealt with therein and,  with respect to the  representation
            set forth in Section  7.1(g),  the reference to the date January 25,
            2004 shall be deemed to be a reference to the date of the  financial
            statements  of the  Borrower  most  recently  delivered  pursuant to
            Section 8.1(a) and, with respect to unaudited financial  statements,
            that such statements  fairly present the financial  condition of the
            Borrower  and its  Subsidiaries  as at such date and the  results of
            their  operations for the financial period then ended, in accordance
            with GAAP  consistently  applied,  subject to normal  year end audit
            adjustments; and

      (c)   no  Default  or  Event  of  Default   shall  have  occurred  and  be
            continuing, nor shall any such event occur as a result of making the
            Advances or the application of proceeds therefrom.

                                   Article 7
                         REPRESENTATIONS AND WARRANTIES

      7.1   Representations and Warranties

      The  Borrower  represents  and  warrants as follows to the  Administrative
Agent and each Lender and  acknowledges  and  confirms  that the  Administrative
Agent and each Lender is relying upon such representations and warranties:

<PAGE>
                                     - 40 -

      (a)   Corporate  Status.  The Borrower is a corporation duly  incorporated
            and  validly  existing  under  the  laws  of  Canada,  each  of  the
            Guarantors  other than MNL is a corporation  duly  incorporated  and
            validly  existing  under  the  laws of  Delaware,  MNL is a  private
            company  limited by shares duly  incorporated  and validly  existing
            under the laws of England and Wales, and each of their  Subsidiaries
            is a  corporation  duly  incorporated,  amalgamated  or  is  validly
            existing as a  partnership  or is  otherwise  organized  and validly
            existing under the laws of the jurisdiction of its incorporation and
            the Borrower,  each Guarantor and each of their Subsidiaries has all
            necessary  corporate  power and authority to conduct its business as
            presently conducted and to own or lease its properties and assets in
            each  jurisdiction  where such properties and assets are situated or
            such business is conducted.

      (b)   Corporate  Power and Authority.  The Borrower and each Guarantor has
            full corporate power and authority to enter into the Loan Documents,
            to which they are a party, and to do all acts and things and execute
            and deliver all documents as are required hereunder or thereunder to
            be done,  observed or performed by it in  accordance  with the terms
            hereof or thereof.

      (c)   Authorization  and  Enforceability.  This  Agreement and each of the
            other  Loan  Documents  to which  the  Borrower  is a party has been
            delivered  by the  Borrower  and  constitutes  a valid  and  legally
            binding  obligation  of  the  Borrower  enforceable  against  it  in
            accordance  with  its  terms,  subject  to  applicable   bankruptcy,
            insolvency  and other laws  affecting the  enforcement of creditors'
            rights  generally and, when delivered by a Guarantor,  the Guarantee
            and  each  of the  Guarantor's  Security  Documents  to  which  such
            Guarantor  is a party will  constitute  a valid and legally  binding
            obligation of such  Guarantor  enforceable  against it in accordance
            with its terms,  subject to applicable  bankruptcy,  insolvency  and
            other laws affecting the enforcement of creditors'  rights generally
            and general principles of equity.

      (d)   Conflict  with  Constating  Documents  and  Agreements.  Neither the
            execution and delivery of the Loan Documents nor the consummation by
            the Borrower or any Guarantor of any of the transactions  herein and
            therein  contemplated,  nor  compliance  by  the  Borrower  and  the
            Guarantors with the terms, conditions and provisions,  will conflict
            with or  result  in a  breach  of any of the  terms,  conditions  or
            provisions of:

            (i)   the  constating   documents,   certificates   or  articles  of
                  incorporation  or by-laws of the Borrower and any Guarantor or
                  any unanimous shareholders' agreement relating to any of them;

            (ii)  any resolution of the shareholders, directors or any committee
                  of directors of the Borrower or any Guarantor;

<PAGE>
                                     - 41 -

            (iii) in  any  material  respect,   any  agreement,   instrument  or
                  arrangement  to  which  the  Borrower,  any  Guarantor  or any
                  Subsidiary  is now a party or by which it,  or its  properties
                  are,  or  may  be,  bound,   or  will   constitute  a  default
                  thereunder,  or will result in the creation or  imposition  of
                  any Lien (other than Permitted  Encumbrances)  upon any of the
                  properties  or assets of the  Borrower,  any  Guarantor or any
                  Subsidiary;

            (iv)  any  judgment  or  order,  writ,  injunction  or decree of any
                  court; or

            (v)   any Applicable Law presently in effect.

      (e)   No Other Authorization or Consents Necessary.  No action (including,
            without  limitation,  the  giving of any  consent,  licence,  right,
            approval,  authorization,  registration,  order or  permit)  of,  or
            filing  with,  any  governmental  or  public  body or  authority  is
            required to authorize,  or is otherwise required in connection with,
            the  execution,  delivery  and  performance  by the  Borrower or any
            Guarantor of the Loan Documents or in order to render this Agreement
            and the Security Documents legal, valid,  binding or enforceable and
            no  consents,  approvals  or other  authorizations  are  required in
            connection  with the assignment of accounts  receivable  pursuant to
            the Security Documents except those actions which have been obtained
            or filings  which  have been made and such  consents,  approvals  or
            authorizations   which  may  be  required  in  connection  with  the
            assignment  of  Governmental  Receivables  pursuant to the Financial
            Administration  Act (Canada),  federal laws of the United States and
            comparable   provincial,   state  or   territorial   legislation  or
            legislation in any political subdivision thereof.

      (f)   No Third Party  Consents.  No consent or approval of any other party
            is  required  in  connection   with  the  execution,   delivery  and
            performance  by the Borrower or any Guarantor of the Loan  Documents
            or in  order  to  render  this  Agreement  or any  of  the  Security
            Documents legal, valid, binding or enforceable except those consents
            or approvals which have been obtained.

      (g)   Financial Statements.  The audited consolidated financial statements
            of the Borrower for the year ended April 30, 2003 and the  unaudited
            consolidated  financial  statements  of the  Borrower for the period
            ended January 25, 2004 present fairly, in all material respects, the
            financial  position of the Borrower as at each such respective date,
            subject,  in the case of the  financial  statements  for the  period
            ended  January 25, 2004, to normal year end  adjustments;  and since
            January 25, 2004,  there has been no material  adverse change in the
            assets,   liabilities,   condition  (financial  or  otherwise),   or
            prospects of the Borrower  and its  Subsidiaries,  taken as a whole,
            other than changes disclosed in writing to the Administrative Agent.

      (h)   Litigation.  Other  than (i) as  disclosed  in  Schedule  G, or (ii)
            actions,  suits or proceedings  claiming solely payment  (whether by
            way of an amount  owing,

<PAGE>
                                     - 42 -

            damages or otherwise) of an amount not  exceeding  Cdn.  $500,000 in
            respect of any one matter or Cdn. $1,000,000 in the aggregate, there
            are no actions,  suits or proceedings pending or, to the best of the
            knowledge  and  belief  of  the  Borrower,   threatened  against  or
            affecting the Borrower,  any Guarantor or any of their  Subsidiaries
            or any of their undertaking,  property and assets, at law, in equity
            or  before  any   arbitrator  or  before  or  by  any   governmental
            department,    body,   commission,    board,   bureau,   agency   or
            instrumentality  in respect of which the Borrower has  determined in
            good faith that there is a reasonable possibility of a determination
            adverse to the  Borrower,  any  Guarantor  or  Subsidiary  and which
            could, if determined adversely,  materially and adversely affect the
            legality,  validity  or  enforceability  of  this  Agreement  or the
            Security  Documents or the ability of the Borrower or any  Guarantor
            to perform its  obligations  under this  Agreement  and the Security
            Documents and none of the Borrower,  any Guarantor or any Subsidiary
            is in default with respect to any Applicable Law or any order, writ,
            injunction or award of any government,  commission,  board,  agency,
            court,  arbitrator  or  instrumentality  which  would  have any such
            effect.

      (i)   Licences,  etc. and Compliance with Laws. Other than as disclosed in
            Schedule  H,  all  licences,  franchises,   certificates,  consents,
            rights,   rights-of-way,    easements,   entitlements,    approvals,
            authorizations,  registrations,  orders and  permits  (collectively,
            "Permits") required to enable the Borrower,  the Guarantors and each
            of their Subsidiaries to carry on their respective businesses as now
            conducted by them and to own, lease and operate their properties and
            assets have been duly obtained and are currently  subsisting in good
            standing,  except for such Permits, the absence of which has not had
            and would not  reasonably  be expected to have,  a material  adverse
            effect on the  business,  operations  or financial  condition of the
            Borrower and its Subsidiaries  taken as a whole.  The Borrower,  the
            Guarantors  and  each of their  Subsidiaries  have  complied  in all
            material respects with all terms and provisions  presently  required
            to be  complied  with by them  in all  such  Permits  and  with  all
            Applicable Law (other than  Environmental  Laws) and they are not in
            violation of any of the respective provisions thereof and in respect
            of which there is a reasonable  possibility that such non-compliance
            or violation  could  materially  and adversely  affect the business,
            operations   or   financial   condition  of  the  Borrower  and  its
            Subsidiaries,  taken as a whole,  or the ability of the Borrower and
            the  Guarantors  to  perform  their   obligations   under  the  Loan
            Documents.

      (j)   Compliance  with  Environmental  Laws.  Other than as  disclosed  in
            Schedule H:

            (i)   the  Borrower,  each  of the  Guarantors  and  each  of  their
                  Subsidiaries and, to the best of the knowledge of the Borrower
                  and the  Guarantors  after  due  inquiry,  those of any  party
                  having  charge,  management or control of any real property of
                  any of the Borrower,  the  Guarantors  and their  Subsidiaries
                  have been and are in compliance with  Environmental Laws which
                  are currently  applicable to their operations and the release,
                  emission,  deposit,

<PAGE>
                                     - 43 -

                  issuance, discharge, transportation or disposal ("Release") of
                  any Hazardous  Materials;  the Borrower,  the  Guarantors  and
                  their   Subsidiaries   have  no  contingent   liabilities   in
                  connection  with any  Release  or likely  Release  and have no
                  conditions on any property,  which now, or with the passage of
                  time or the  giving  of  notice  or  both,  may  give  rise to
                  liability,  and in  respect  of which  there  is a  reasonable
                  possibility that such non-compliance,  contingent  liabilities
                  or  conditions  could  have a material  adverse  effect on the
                  Business,  operations  or financial  condition of the Borrower
                  and its Subsidiaries, taken as a whole;

            (ii)  neither  the  Borrower,   the   Guarantors   nor  any  of  the
                  Subsidiaries  of the  foregoing  has  received  notice  of any
                  judicial or administrative  proceeding  alleging the violation
                  of or any potential liability under any Environmental Laws and
                  none  of  the  Borrower,  the  Guarantors  nor  any  of  their
                  Subsidiaries  has  received  notice  of or is  subject  to any
                  Environmental Claim; and

            (iii) neither  of  the  Borrower,  the  Guarantors,   any  of  their
                  Subsidiaries  or, to the best of the knowledge of the Borrower
                  and the  Guarantors  after due  inquiry,  or any party  having
                  charge,  management  or control of any of their real  property
                  has ever  caused or  permitted  any  Hazardous  Material to be
                  placed,  held,  located,  stored or disposed of on, in, under,
                  through or at any such property or any part thereof  except in
                  compliance with Environmental Laws.

      (k)   Encumbrances.   The  Borrower,   the  Guarantors  and  each  of  its
            Subsidiaries  has good and  valid  title  to all of its  assets  and
            property and there are no Liens on any of the assets or  undertaking
            of the Borrower,  the  Guarantors or their  Subsidiaries  other than
            Permitted Encumbrances.

      (l)   No Default or Event of  Default.  No Default or Event of Default has
            occurred and is continuing.

      (m)   No Action for Winding-Up or Bankruptcy.  There has been no voluntary
            or involuntary  action taken either by or against the Borrower,  any
            Guarantor or any Subsidiary for any such  corporation's  winding-up,
            dissolution,  liquidation, bankruptcy, receivership,  administration
            or similar or  analogous  events in respect of such  corporation  or
            partnership or all or any material part of its assets or revenues.

      (n)   Taxes.  The  Borrower,  each of the  Guarantors  and  each of  their
            Subsidiaries  has filed all tax  returns  which were  required to be
            filed,  paid all Taxes (including  interest and penalties) which are
            due and  payable  other  than any Tax the  payment of which is being
            contested  in good faith and for which  adequate  reserves are being
            maintained.

<PAGE>
                                     - 44 -

      (o)   Subsidiaries.  Schedule I describes all of the material Subsidiaries
            of the  Borrower  and its  interests  therein as at the date of this
            Agreement.  Each of MNI,  MNSI and MNL is an  indirect  wholly-owned
            Subsidiary of the Borrower.  Neither the Borrower nor the Guarantors
            have any  material  investment  or material  equity  interest in any
            other  Person  other than those  entities  described  in the note to
            Schedule I and any such  investment or equity acquired in accordance
            with Section 8.2(e).

      (p)   Location of Business.  The chief executive office of the Borrower is
            located in Ottawa,  Ontario;  the principal office of MNI is located
            in  Herndon,  Virginia  and  payments  in respect of MNI's  accounts
            receivable  are made to an  account  of MNI at Bank One in  Detroit,
            Michigan or Harris Bank in Chicago,  Illinois;  the principal office
            of MNSI is located in Herndon,  Virginia  and payments in respect of
            its accounts  receivable  are made to an account of MNSI at Bank One
            in  Belleville,  Michigan or Harris Bank in Chicago,  Illinois;  the
            principal office of MNL is located at Portskewett, Monmouthshire and
            payments in respect of its accounts  receivable are made to accounts
            of MNL at Barclays  Bank plc located at  Corporate  Banking  Centre,
            Windsor Court, Windsor Place, Cardiff, Wales CF10 3ZL.

      (q)   Location of Collateral.  With the exception of inventory in transit,
            at least  95% (on a net book  value  basis) of all  tangible  assets
            comprising the Borrower's Collateral (as that term is defined in the
            Borrower's  Security  Documents)  are  situate  in the  Province  of
            Ontario.  None of the tangible  assets  comprising the collateral of
            each of MNI and  MNSI are  situate  outside  the  United  States  of
            America.

      (r)   Registrations.  All  registrations,  filings and  recordings  as are
            necessary to preserve,  protect and perfect the charges and security
            interest  created,  or  intended  to be  created  by,  the  Security
            Documents have been made.

      (s)   Pension  Plans.  All  material  obligations  of the Borrower and the
            Guarantors   (including   fiduciary,    funding,    investment   and
            administrative  obligations)  required to be performed in connection
            with the pension  plans of the  Borrower or any  Guarantor,  and the
            funding agreements therefore, have been performed on a timely basis.

7.2   Survival of Representations and Warranties

      The representations and warranties set out in this Article 7 shall survive
the execution  and delivery of this  Agreement and the making of any Advances to
the Borrower,  notwithstanding  any  investigations or examinations which may be
made by the  Administrative  Agent,  any  Lender or the  Administrative  Agent's
Counsel to any of them.

<PAGE>
                                     - 45 -

                                   Article 8
                                    COVENANTS

8.1   Affirmative Covenants

      The Borrower covenants and agrees with the  Administrative  Agent and each
Lender that, unless the Administrative  Agent and the Required Lenders otherwise
consent in writing, so long as any amount payable hereunder is outstanding:

      (a)   Financial  Reporting.  The Borrower  shall  deliver,  or cause to be
            delivered,  to the  Administrative  Agent, with sufficient  original
            copies for each Lender:

            (i)   not later  than May 31,  2004,  draft  EBITDA  calculation  in
                  writing for the fiscal quarter ended April 25, 2004;

            (ii)  within 45 days after the end of each of the first three fiscal
                  quarters of the Borrower in each fiscal year,  commencing with
                  the  fiscal  quarter  on the last  Sunday in April  2004,  the
                  unaudited  consolidated  financial statements of the Borrower,
                  including  balance  sheet,  income  statement and statement of
                  cash flow,  all prepared in  accordance  with GAAP (except for
                  the absence of footnotes); and

            (iii) within  120  days  after  the end of each  fiscal  year of the
                  Borrower  (commencing  with the fiscal year ending on the last
                  Sunday  in April  2004)  the  audited  consolidated  financial
                  statements  of the Borrower for such year,  including  balance
                  sheet,  income  statement  and statement of cash flow together
                  with  the  report  thereon  of  an   independent   auditor  of
                  recognized national standing;

            each of such  financial  statements  referred to in clauses (ii) and
            (iii)  above to be  prepared  in  accordance  with GAAP and,  to the
            extent  that any  assets  or  liabilities  of  Endurance  Trust  are
            included in the consolidated  financial  statements of the Borrower,
            shall be submitted both with and without reference to the assets and
            liabilities of Endurance Trust;

            (iv)  together with the financial  statements  delivered pursuant to
                  Sections  8.1(a)(ii)  and (iii),  a  certificate  of the Chief
                  Financial  Officer  of the  Borrower  to the  effect  that the
                  information  contained  in such  statements  is  prepared  and
                  presented in  accordance  with GAAP (except for the absence of
                  footnotes in unaudited  statements) and in a manner consistent
                  with  the  past  practices  of  the  Borrower  and  that  such
                  financial  statements  are true and  correct  in all  material
                  respects,  subject to normal year-end audit adjustments in the
                  case of unaudited financial statements, and present fairly the
                  results of operations and changes in the financial position of
                  the  Borrower  as  of  and  to  the  date  of  such  financial
                  statements,  stating that the Borrower is in  compliance  with
                  the  covenants  set  forth in  Article  8

<PAGE>
                                     - 46 -

                  including,  without limitation,  those financial covenants set
                  forth  in  Section  8.3  and,  in  respect  of such  financial
                  covenants   providing   detailed    calculations    evidencing
                  compliance  therewith,  that each of the  representations  and
                  warranties  of the  Borrower  set forth in Section 7.1 is true
                  and correct in all material respects by reference to the facts
                  and circumstances existing on the date of such certificate (or
                  specifying  inaccuracies therein), that no Default or Event of
                  Default has occurred and is  continuing  (or  specifying  such
                  non-compliance or Default or Event of Default and stating what
                  action, if any, the Borrower, a Guarantor or any Subsidiary is
                  taking in connection  therewith)  and confirming the EBITDA of
                  the  Borrower  together  with the  calculation  as provided in
                  Section 2.7(b); and

            (v)   within 10 days of the end of each calendar  month, a Borrowing
                  Base  Certificate  together with a detailed report on accounts
                  receivable of the Borrower and each Guarantor.

      (b)   Corporate Status.  Subject to Section 12.1, the Borrower will remain
            a corporation  duly continued and validly  subsisting under the laws
            of Canada or a province  thereof and the  Borrower  shall cause each
            Guarantor and Subsidiary to remain a corporation  duly  incorporated
            or organized and validly  subsisting  under the laws of its existing
            jurisdiction  of  incorporation  or the laws of  Canada or any other
            province  thereof  and,  in  each  case,   registered  or  otherwise
            qualified  in all  material  respects  to carry on  business in each
            jurisdiction where necessary to conduct its business.

      (c)   Conduct  of  Business.  The  Borrower  will,  and  will  cause  each
            Guarantor  and each other  Subsidiary  to,  continue  its  business,
            except as the board of directors or duly authorized  officers of the
            Borrower  may  otherwise,  in good faith,  determine  is in the best
            interests of the  Borrower,  and will not  materially  and adversely
            affect  the  business,  operations  or  financial  condition  of the
            Borrower and its  Subsidiaries,  taken as a whole, or the ability to
            perform  any  of  their  obligations  under  this  Agreement  or the
            Security Documents. The Borrower will, and will cause each Guarantor
            and each  other  Subsidiary  to,  manage its  business  in a proper,
            prudent  and  efficient  manner  (as the board of  directors  of the
            Borrower may determine in good faith) in all material respects.

      (d)   Notice  of  Event of  Default.  The  Borrower  will  deliver  to the
            Administrative  Agent,  forthwith upon becoming aware of any Default
            or Event of Default,  a  certificate  of an officer of the  Borrower
            specifying  such  Default  or  Event  of  Default  together  with  a
            statement of an officer of the  Borrower  setting  forth  details of
            such Default or Event of Default and the action  which has been,  or
            is proposed to be, taken with respect thereto.

<PAGE>
                                     - 47 -

      (e)   Other   Notifications.   The  Borrower  shall  promptly  notify  the
            Administrative Agent of:

            (i)   any change in the name or  jurisdiction  of  incorporation  or
                  organization  of  the  Borrower  or any  Guarantor  and of any
                  change  in the  location  of the  registered  office  or chief
                  executive  office or material  assets of any of them which are
                  subject to a Lien in favour of the Administrative Agent;

            (ii)  any action,  suit,  proceeding,  complaint,  notice,  order or
                  material  Environmental  Claim which is commenced or issued or
                  of which it becomes aware (and which has not been disclosed in
                  Schedule G or H) which is pending or issued against or, to the
                  best of its information,  knowledge and belief,  affecting the
                  Borrower, any Guarantor or any of their Subsidiaries or any of
                  their  undertaking,  property  and assets at law, in equity or
                  before  any  arbitrator  or  before  or  by  any  governmental
                  department,   body,  commission,   board,  bureau,  agency  or
                  instrumentality in respect of which the Borrower determines in
                  good  faith  that  there  is  a  reasonable  possibility  of a
                  determination  adverse to the  Borrower,  any Guarantor or any
                  other  Subsidiary   which  would,  if  determined   adversely,
                  reasonably be expected to materially and adversely  affect the
                  business,  operations or condition (financial or otherwise) of
                  the Borrower and its  Subsidiaries,  taken as a whole,  or the
                  ability  to  perform  any  of  their  obligations  under  this
                  Agreement or the Security  Documents or the  enforceability of
                  the  Security,  and any action,  suit or  proceeding  claiming
                  payment  (whether  by  way  of an  amount  owing,  damages  or
                  otherwise) of an amount exceeding Cdn.  $500,000 in respect of
                  any one matter or Cdn. $1,000,000 in the aggregate;

            (iii) any  reduction in the  Borrowing  Base such that the Borrowing
                  Base equals to or falls below $25,000,000,  provided that such
                  notification  is only  required if the aggregate of the amount
                  outstanding under the Facility and any amount requested by the
                  Borrower under a Drawdown Notice exceeds Cdn. $10,000,000;

            (iv)  any cancellation, termination, amendment or restatement of the
                  funding  agreement  between  Her Majesty The Queen in right of
                  Canada,  the Borrower,  March Networks  Corporation  and Mitel
                  Knowledge  Corporation,   under  the  Technology  Partnerships
                  Canada  program,  signed in  October,  2002  (the  "Technology
                  Partnerships Canada Agreement);

            (v)   the issuance by the Borrower or any of the  Guarantors  of any
                  equity or Subordinated  Debt, other than any such issuances by
                  the Borrower or the  Guarantors  to the Borrower or any of its
                  wholly-owned subsidiaries, including details thereof and gross
                  proceeds and costs and expenses of issue;

<PAGE>
                                     - 48 -

            (vi)  any trade account of the Borrower or the  Guarantors  becoming
                  secured by way of a bank letter or guarantee,  with the notice
                  including a statement  that such security shall be assigned by
                  the Borrower and/or  Guarantors,  as applicable,  in favour of
                  the  Administrative  Agent,  if the  Administrative  Agent  so
                  requests;

            (vii) the results of any report providing an actuarial  valuation or
                  other  assessment  of any pension  plan of the Borrower or any
                  Guarantor,  upon any such report  being made  available to the
                  Borrower,   including,   without  limitation,   the  actuarial
                  valuation  report on the pension  plan of MNL as of August 31,
                  2003;

            (viii)any default  under the EDC Indemnity  Obligations  in writing,
                  but in any event within three  Banking Days after the Borrower
                  becomes aware of the occurrence of the default; and

            (ix)  the full  payment,  satisfaction  and  termination  of the EDC
                  Indemnity Obligations in writing.

      (f)   Compliance with Applicable Laws. The Borrower shall, and shall cause
            each of the Guarantors  and each other  Subsidiary to, comply in all
            material respects with all Applicable Laws, including  Environmental
            Laws, the  non-compliance  with which would materially and adversely
            affect  the  business,  operations  or  financial  condition  of the
            Borrower and its  Subsidiaries,  taken as a whole, or the ability to
            perform  any  of  their  obligations  under  this  Agreement  or the
            Security  Documents  or the  enforceability  of the Security and the
            Borrower  shall,  and shall cause each  Guarantor  to, comply in all
            material  respects  with the  terms of and  maintain  all  consents,
            licences,  franchises,  certificates,  consents,  rights, approvals,
            authorizations, registrations, orders or permits from, and make such
            filings with,  any  governmental  or public  authority and to comply
            with  such  Applicable  Laws as may be  necessary  to  carry  on its
            respective businesses,  to own, lease and operate its properties and
            to enable the Borrower and each of the  Guarantors to enter into and
            perform  their  obligations  under Loan  Documents or to render this
            Agreement  or  the  Security  Documents  legal,  valid,  binding  or
            enforceable.

      (g)   Payment of Taxes. The Borrower shall, and shall cause each Guarantor
            and each other Subsidiary to, pay or cause to be paid, when due, all
            Taxes,  property taxes,  business taxes,  social security  premiums,
            assessments  and  governmental  charges or levies imposed upon it or
            upon its income,  sales, capital or profit or any property belonging
            to it unless any such Tax,  social  security  premiums,  assessment,
            charge or levy is  contested  by it in good faith  with  appropriate
            reserves,  and to  collect  and  remit  when  due  all  payroll  and
            withholding taxes.

      (h)   Insurance.  The Borrower shall maintain,  or cause to be maintained,
            on behalf  of the  Borrower  and its  Subsidiaries,  insurance  with
            responsible  and reputable

<PAGE>
                                     - 49 -

            insurance  companies  or  associations  in such amounts and covering
            such  risks as would be  prudent  for  companies  engaged in similar
            businesses  and  owning  similar  properties  and assets in the same
            general  areas in which the  Borrower or such  Subsidiaries  (as the
            case may be) operate.

      (i)   Visitation  Rights.  The Borrower  shall  permit the  Administrative
            Agent and each  Lender,  at any  reasonable  time or  times,  within
            normal business hours,  following reasonable notice to the Borrower,
            to (provided the Administrative Agent and each Lender is accompanied
            by a senior  officer of the  Borrower)  visit the  properties of and
            examine and make copies of and abstracts  from the books and records
            of  the  Borrower,  the  Guarantors  and  their  Subsidiaries.   All
            information  received shall be held by the Administrative  Agent and
            each Lender in confidence  for use in respect of the  administration
            of the Facility and for no other purpose.

      (j)   Keeping of Books. The Borrower shall, and shall cause each Guarantor
            and each  other  Subsidiary  to,  keep  proper  books of record  and
            account,  in which  full and  correct  entries  shall be made of all
            financial  transactions  and the assets and business of the Borrower
            and each of its  Subsidiaries in accordance with generally  accepted
            accounting  principles  consistently applied. To the extent that the
            records  relate not only to  accounts  receivable  sold  pursuant to
            Permitted  Securitization  Transactions  but also to  assets  of the
            Borrower not sold thereunder, the Borrower shall be in a position to
            promptly make duplicate  copies of such records  reserved solely for
            the use of the  Administrative  Agent,  provided that information in
            such records that pertains to accounts  receivable  sold pursuant to
            Permitted Securitization  Transactions may be redacted therefrom and
            that  no  records   (other  than  those  that  pertain  to  accounts
            receivable sold pursuant to Permitted  Securitization  Transactions)
            are permitted to be seized by any third party before such copies are
            made.

      (k)   Compliance with Material Leases, Contracts and Other Agreements. The
            Borrower  shall,  and shall  cause  each  Guarantor  and each  other
            Subsidiary  to,  comply in all  material  respects  and  perform its
            obligations  under all leases  (whether real or personal  property),
            contracts and other agreements to which it is a party or by which it
            is bound if the  non-compliance  or  non-performance  of obligations
            thereunder  could  reasonably be expected to have a material adverse
            effect on the  business,  operations  or financial  condition of the
            Borrower and its  Subsidiaries,  taken as a whole, or the ability to
            perform  any  of  their  obligations  under  this  Agreement  or the
            Security Documents.

      (l)   Dividends to Borrower.  The Borrower will cause its  Subsidiaries to
            pay,  to the  extent  they  are  legally  able to do so,  dividends,
            interest,  amounts  due in respect  of  inter-company  accounts  and
            capital  or other  distributions  to the  Borrower  in an  aggregate
            amount  sufficient  and as may be required to enable the Borrower to
            satisfy its obligations  under this Agreement and to pay all amounts
            due and owing hereunder.

<PAGE>
                                     - 50 -

      (m)   Registrations. The Borrower shall, and shall cause each Guarantor to
            maintain  all such  registrations,  filings  and  recordings  as are
            necessary to preserve,  protect and perfect the charges and security
            interest  created,  or  intended  to be  created,  by  the  Security
            Documents.

      (n)   Dealings with Collateral.  The Borrower shall not, without the prior
            written consent of the Administrative  Agent,  locate any Collateral
            (as such term is defined in the  Borrower's  Security  Documents) in
            any  province  other than the  Province  of Ontario if, as a result,
            less than 95% (on a net book  value  basis) of all  tangible  assets
            comprising such Collateral, are situate in the Province of Ontario.

      (o)   MNI, MNSI and MNL to Remain  Subsidiaries.  The Borrower shall cause
            each of the  Guarantors to remain a direct or indirect  wholly-owned
            Subsidiary of the Borrower.

      (p)   Governmental  Receivables.  Upon request by the Administrative Agent
            or the Required  Lenders at any time  following the  occurrence of a
            default in payment obligations hereunder by the Borrower or Event of
            Default, the Borrower shall promptly deliver specific assignments of
            all or any part of its Governmental  Receivables as requested by the
            Administrative  Agent or the Required  Lenders and shall obtain such
            consents, acknowledgements and approvals or authorizations as may be
            required in  connection  with  enforcement  of the Lien against such
            Governmental  Receivables granted by the Borrower and the Guarantors
            to the  Administrative  Agent pursuant to the Security  Documents as
            may be required by applicable law including, without limitation, the
            Financial  Administration  Act (Canada),  federal laws of the United
            States and comparable provincial,  state or territorial  legislation
            or legislation in any political subdivision thereof.

      (q)   Budget.  The Borrower shall deliver a business budget for the fiscal
            year 2004 for the  Borrower  and its  Subsidiaries  approved  by the
            board of  directors  of the  Borrower,  within 5 days of the board's
            approval but no later than June 30, 2004.

      (r)   Endorsement on Insurance  Policy.  The Borrower shall deliver to the
            Administrative   Agent  prior  to  July  31,  2004  a   continuation
            endorsement  on policy  number  GG1-06202  dated  December  21, 2000
            provided  by EDC  pursuant  to  which  the  term of such  policy  is
            extended to the Maturity Date.

      (s)   Replacement Insurance Certificate. The Borrower shall deliver to the
            Administrative  Agent prior to June 1, 2004 a replacement  insurance
            certificate (with (i) the Administrative  Agent being named as first
            loss payee  mortgagee  (together with the standard  mortgage  clause
            from the  Insurance  Bureau of Canada) and each of the Lenders being
            named as additional  insureds and (ii) an  endorsement  that 30 days
            notice  shall  be  provided  to the  Administrative  Agent  for  any
            cancellation,  modification  or  waiver  thereunder)  for  insurance
            certificate  no.

<PAGE>
                                     - 51 -

            2003-214-REV-1  issued by Marsh Canada Limited pursuant to which the
            term of such insurance certificate is extended to the Maturity Date.

8.2   Negative Covenants

      The Borrower  covenants and agrees with the  Administrative  Agent and the
Lenders that, unless the Administrative Agent and the Required Lenders otherwise
consent in writing, so long as any amount payable hereunder is outstanding:

      (a)   No Merger, Amalgamation,  etc. The Borrower shall not, and shall not
            permit any Guarantor or other Subsidiary to, directly or indirectly,
            sell, lease, transfer, assign, convey or otherwise dispose of all or
            substantially all of its property and assets,  and will not merge or
            amalgamate  pursuant to statutory  authority  or otherwise  with any
            other Person except upon compliance with Article 12.

      (b)   Negative  Pledge.  The Borrower  shall not, and shall not permit any
            Guarantor or other Subsidiary to, create, incur, assume or permit to
            exist any Lien,  other than  Permitted  Encumbrances,  on any of its
            property, undertaking or assets now owned or hereafter acquired.

      (c)   Restriction  on Debt.  The Borrower  shall not, and shall not permit
            any  Guarantor or other  Subsidiary  to,  create,  incur,  assume or
            otherwise  become liable upon or suffer to exist (after knowledge of
            the existence thereof) any Debt other than Permitted Debt.

      (d)   Restriction on Disposition of Property.  The Borrower shall not, and
            shall not permit any  Guarantor or other  Subsidiary  to, enter into
            sale and leaseback  transactions or  securitization  transactions or
            sell,  exchange,  lease,  release or abandon or otherwise dispose of
            any of its fixed  property or other  assets to any Person other than
            (i) bona fide sales, exchanges,  leases,  releases,  abandonments or
            other  dispositions  in the  ordinary  course  of  business  for the
            purpose of  carrying  on the same,  including,  without  limitation,
            sales  of  inventory  in  the  ordinary   course;   (ii)   Permitted
            Securitization   Transactions;   and   (iii)   sale  and   leaseback
            transactions   completed  by  the  Borrower,   its   Guarantors  and
            Subsidiaries  taken together,  in an aggregate  amount not exceeding
            Cdn. $15,000,000 (or its Equivalent Amount in another currency).

      (e)   Restriction    on   Financial    Assistance   to    Non-Wholly-Owned
            Subsidiaries.  The  Borrower  shall  not,  and shall not  permit any
            Guarantor or other  Subsidiary to, directly or indirectly,  make any
            investment  in (other than as  permitted  in this  Section  8.2(e)),
            advances to, capital contributions to, loans to or guarantees to, or
            give any  financial  assistance  to or for the benefit of any Person
            other  than (i)  financial  assistance  (including  investments  in,
            advances to, capital  contributions to or loans or guarantees to) to
            the Borrower or a direct or indirect wholly-owned  Subsidiary of the
            Borrower,  or (ii) financial assistance  (including  investments in,

<PAGE>
                                     - 52 -

            advances to, capital  contributions to or loans or guarantees to) to
            Tianchi-Mitel  Telecommunications  Corp.  or any other Persons in an
            amount not  exceeding  U.S.  $5,000,000 in the  aggregate,  it being
            acknowledged  by the  Administrative  Agent and the Lenders that the
            existing  investments  by MNL and MNI in preference  shares of Mitel
            Knowledge Corporation shall be permitted investments for purposes of
            this Section  8.2(e),  including  the  transfer of such  investments
            within members of the Mitel group of companies.

      (f)   Restriction on Take-Over Bids. The Borrower shall not, and shall not
            permit any Guarantor or other Subsidiary to, directly or indirectly,
            make any  Take-Over Bid which is financed in full or in part by this
            Facility and make  investments  in or  acquisition  of other Persons
            which are in excess of U.S.  $5,000,000 in respect of any one matter
            or U.S. $10,000,000 in the aggregate over the term of the Facility.

      (g)   Transactions with Affiliates.  The Borrower shall not, and shall not
            permit  any  Guarantor  or  other  Subsidiary  to,  enter  into  any
            transaction or series of related  transactions with any Person which
            is  Controlled  by T.H.  Matthews,  or any Affiliate of such Person,
            other than transactions  between the Borrower and one or more of the
            Guarantors or  transactions  between two or more of the  Guarantors,
            except on terms and  conditions no less  favourable to the Borrower,
            the Guarantor or the Subsidiary of the Borrower as could  reasonably
            be obtained by the Borrower, Guarantor or Subsidiary at that time in
            a comparable  transaction entered into at Arm's Length with a Person
            at Arm's Length with the Borrower and provided that the Borrower,  a
            Guarantor  or  any   Subsidiary  of  the  Borrower  may  enter  into
            employment agreements with respect to the procurement of services of
            their  respective  officers and employees in the ordinary  course of
            business, including executive compensation arrangements.

      (h)   Restriction on Distributions.  The Borrower shall not, and shall not
            permit any Guarantor or other Subsidiary to, declare,  make,  permit
            or pay (i) any  dividend  or other  distribution  on  issued  shares
            (other  than  dividends  in kind  paid by the issue of shares of the
            Borrower); (ii) the purchase,  redemption or retirement price of any
            issued  shares,  warrants or any other  options or rights to acquire
            shares of the Borrower, the Guarantors or any of the Subsidiaries of
            the  Borrower  redeemed or  purchased  by the Borrower or any of its
            Subsidiaries; (iii) loans to any shareholders thereof; (iv) loans to
            any directors or officers  thereof on terms more  favourable to such
            directors  or officers  than  normal  commercial  terms;  or (v) any
            similar  distributions (each a "Corporate  Distribution") other than
            (vi) any  Corporate  Distribution  made  only to the  Borrower  or a
            Guarantor, provided that no Default or Event of Default would result
            therefrom  and provided  further  that each of the  covenants of the
            Corporation  set forth in Section  8.3 would be  satisfied  on a pro
            forma basis after giving effect to such Corporate Distribution.

      (i)   Pension Plan  Compliance.  The Borrower shall not (a) terminate,  or
            permit a Guarantor to  terminate,  any pension plan in a manner,  or
            take any other action

<PAGE>
                                     - 53 -

            with respect to any pension plan, which would reasonably be expected
            to result in any material  liability of the Borrower or a Guarantor,
            or (b) fail to make,  or permit a  Guarantor  to fail to make,  full
            payment when due of all amounts  which,  under the provisions of any
            pension plan,  agreement  relating  thereto or  applicable  law, the
            Borrower or a Guarantor is required to pay as contributions thereto.
            In addition,  the Borrower  shall  promptly pay, and shall cause the
            Guarantors  to  promptly  pay,  not less  than the  minimum  funding
            requirement  from time to time  established by any actuarial  report
            with respect to any pension plan of the Borrower or any Guarantor.

      (j)   Restriction on Reserve Account. Without the prior written consent of
            the  Administrative  Agent,  the  Borrower  shall not, and shall not
            permit MNI to,  deposit or cause to be deposited in the bank account
            of the Borrower being account  *Subject to Request for  Confidential
            Treatment;  Separately  Filed  with  the  Commission*  and the  bank
            account  of  MNI  being  account  number  *Subject  to  Request  for
            Confidential  Treatment;  Separately  Filed with the  Commission* an
            amount (i) greater than $Cdn.  $30,000,000,  in the aggregate,  (ii)
            not  required  to be  deposited  in such  accounts  pursuant  to the
            reserve account  requirements  contained in the receivables purchase
            agreement  (the "RPA") dated as of April 16, 2004 between  Endurance
            Trust, the Borrower,  MNI and MNSI and Efficient Capital Corporation
            and (iii) not derived  solely  from the net  proceeds of the sale of
            accounts receivable by the Borrower,  MNI or MNSI to Endurance Trust
            or the  collections  relating  to  accounts  receivable  sold by the
            Borrower,  MNI or MNSI to Endurance  Trust  pursuant to the terms of
            the RPA.

      (k)   Restriction on Cash Collateral. Without the prior written consent of
            the  Administrative  Agent,  the  Borrower  shall not, and shall not
            permit any Guarantor or other Subsidiary to, deposit any amount with
            any  Person  as  cash  collateral   other  than  the  EDC  Indemnity
            Obligations Cash Collateral.

8.3   Financial Covenant

      The Borrower  covenants and agrees with the  Administrative  Agent and the
Lenders that, unless the Administrative Agent and the Required Lenders otherwise
consent in writing, so long as any amount payable hereunder is outstanding,  the
Borrower  shall not permit its EBITDA  (determined  on a  consolidated  basis in
accordance  with GAAP as in effect on the date of this Agreement and measured as
at the last day of each fiscal  quarter of the Borrower for such fiscal  quarter
then ending, commencing with the fiscal quarter ending July 25, 2004 and, to the
extent that any assets or  liabilities  of  Endurance  Trust are included in the
consolidated financial statements of the Borrower,  calculated without reference
to the assets  and  liabilities  of  Endurance  Trust)  for any  fiscal  quarter
commencing  with the fiscal  quarter  ending  July 25, 2004 to be less than Cdn.
$3,000,000.

<PAGE>
                                     - 54 -

                                   Article 9
                                   GUARANTEES

9.1      Guarantors to Provide Guarantees

      (a) Each Guarantor  shall  guarantee to the  Administrative  Agent and the
Lenders the due and punctual  payment of all debts,  liabilities and obligations
of the Borrower arising hereunder and shall duly authorize,  execute and deliver
to the  Administrative  Agent and the Lenders the Guarantee and the  Guarantors'
Security  Documents,  in  substantially  the  form  of the  Borrower's  Security
Documents  or  in  such  other  form  and  terms  as  are  satisfactory  to  the
Administrative Agent and the Lenders, acting reasonably.

      (b) Each  Guarantor  shall  deliver  to the  Administrative  Agent and the
Lenders  certified copies of its constating  documents and borrowing by-laws (if
any),  a resolution  authorizing  the  Guarantee  and the  Guarantor's  Security
Documents  to which it is a party  and the  incumbency  of the  officers  of the
Guarantor signing the Guarantee and the Guarantor's  Security  Documents and any
other documents or instruments to be provided pursuant to the provisions thereof
and the provisions of this Agreement and a certificate of status,  good standing
or like  certificate  with  respect  to such  Guarantor  issued  by  appropriate
government officials of its jurisdiction of incorporation.

      (c) Each  Guarantor  shall  deliver  to the  Administrative  Agent and the
Lenders a confirmation and acknowledgement, in form and on terms satisfactory to
the Lenders,  confirming the continuing  obligations of such Guarantor under the
Guarantee and the Guarantor's Security Documents  notwithstanding the amendments
to the Existing  Credit  Agreement or any subsequent  amendments,  restatements,
renewals or extensions of this Agreement and the Facility.

      (d) The Guarantors shall deliver an opinion of their counsel, addressed to
the Administrative Agent and each Lender from time to time party hereto, in form
and substance satisfactory to the Administrative Agent and each Lender.

                                   Article 10
                                    SECURITY

10.1  Borrower's Security Documents

      (a) As security  for all  Advances  made to it and as security for all its
other  liability  or  indebtedness,  both  present  and future,  hereunder,  the
Borrower shall assign, by way of security (the "Borrower's  Security") in favour
of the  Administrative  Agent as Agent for  itself and each  Lender,  all of its
present and after-acquired  personal property and shall deliver,  or cause to be
delivered, the following documents (collectively called the "Borrower's Security
Documents")  all in form  satisfactory  to the  Administrative  Agent  and  each
Lender:

            (i)   a general security agreement of the Borrower;

<PAGE>
                                     - 55 -

            (ii)  a direction to pay addressed to EDC respecting the receivables
                  of the Borrower insured by EDC acknowledged by EDC;

            (iii) a general assignment of receivables of the Borrower;

            (iv)  an  assignment  by the Borrower  under section 427 of the Bank
                  Act; and

            (v)   such  other  documents  as the  Administrative  Agent and each
                  Lender may now or hereafter  reasonably require to give effect
                  to, register and perfect the security interests created by the
                  Borrower's  Security  Documents in the jurisdiction where such
                  charged assets are located.

      (b) So  long as no  Default  or  Event  of  Default  has  occurred  and is
continuing,  any amounts received by the Administrative  Agent from EDC pursuant
to the direction to pay referred to in Section  10.1(a)(ii) shall be paid to, or
to the order of, the Borrower.

      (c) The Borrower  hereby  confirms and agrees that each of the  Borrower's
Security  Documents  previously  delivered  by  the  Borrower  and  all  of  the
Borrower's  Security continues as security for all Advances made to the Borrower
under this Agreement and as security for all of the Borrower's  liabilities  and
indebtedness,  both present and future, hereunder notwithstanding any amendments
to the  Existing  Credit  Agreement  or  any  future  amendments,  restatements,
extensions or renewals of this Agreement or the Facilities.

      10.2  Guarantors' Security Documents

      As security for all Advances  made to it and as security for all its other
liability  or  indebtedness,  both  present and future,  hereunder,  each of the
Guarantors,  as applicable,  shall assign,  by way of security (the "Guarantors'
Security")  in favour of the  Administrative  Agent as Agent for itself and each
Lender, (i) all of its present and after-acquired  personal property in the case
of MNI and MNSI and (ii) all of its receivables  howsoever arising in connection
with the sale or lease of goods or services by MNL to  customers  located in the
United Kingdom in the case of MNL, and shall deliver,  or cause to be delivered,
the  following  documents   (collectively   called  the  "Guarantor's   Security
Documents")  all in form  satisfactory  to the  Administrative  Agent  and  each
Lender:

      (a)   the Guarantee;

      (b)   a general  security  agreement  of the  Guarantor  (except  for with
            respect to MNL);

      (c)   a general assignment of receivables of the Guarantor; and

      (d)   such other documents as the Administrative Agent and each Lender may
            now or hereafter  reasonably require to give effect to, register and
            perfect the security  interests created by the Guarantor's  Security
            Documents in the jurisdiction where such charged assets are located.

<PAGE>
                                     - 56 -

                                   Article 11
                            DEFAULT AND ACCELERATION

11.1  Events of Default

      The occurrence of any one or more of the following events (each such event
and the expiry of the cure period,  if any,  provided in  connection  therewith,
being herein  referred to as an "Event of Default")  shall  constitute a default
under this Agreement:

      (a)   if the  Borrower  shall fail to pay the  principal of any Advance as
            and when the same becomes due and payable;

      (b)   if the Borrower  shall fail to pay interest on any Advance or to pay
            any other amount due hereunder  within three Banking Days  following
            the due date;

      (c)   if the  Borrower,  any  Guarantor  or  any  other  Subsidiary  shall
            encumber  any of its assets  contrary to the  provisions  of Section
            8.2(b) hereof and fails to discharge such Lien within a period of 15
            days after  notice in writing  has been given by the  Administrative
            Agent to the Borrower requiring such discharge;

      (d)   if the Borrower  shall default in the  observance or  performance of
            any agreement, covenant or condition contained in Section 8.1(a) and
            such  failure  shall remain  unremedied  for 15 days after notice in
            writing has been given by the Administrative Agent to the Borrower;

      (e)   if the Borrower  shall,  or shall permit any  Guarantor or any other
            Subsidiary  to,  default in the  observance  or  performance  of any
            agreement,  covenant or  condition  contained  in Section 8.2 (other
            than Section 8.2(b)) or 8.3;

      (f)   if the Borrower, any Guarantor or any other Subsidiary shall default
            in any material  respect in the  observance  or  performance  of any
            agreement,  covenant or condition contained in this Agreement (other
            than a covenant or condition  whose breach or default in performance
            is elsewhere in this Section 11.1 specifically  dealt with) and such
            default shall not be remedied, if capable of remedy, within a period
            of 15  days  after  notice  in  writing  thereof  is  given  by  the
            Administrative Agent to the Borrower;

      (g)   if any one or more of the  Borrower,  the  Guarantors  or any  other
            Subsidiary  shall  fail to pay  the  principal  of,  or  premium  or
            interest on, any Debt outstanding in a principal amount which,  when
            aggregated with the principal amount of all other Debt in respect of
            which any of them has failed to pay the  principal of, or premium or
            interest on, exceeds Cdn.  $2,000,000  (or the Equivalent  Amount in
            any other currency) (excluding Debt due to the Lenders hereunder and
            Debt  owing  by  the   Borrower  or  a  Guarantor   to  any  of  its
            Subsidiaries)  when the same  becomes  due and  payable  (whether by
            scheduled maturity,  required  prepayment,  acceleration,  demand or
            otherwise)  and such failure  shall  continue  after the  applicable
            grace  period,  if any,  specified in the  agreement  or  instrument
            relating  to such  Debt,  or any  other  event of  default  or early
            termination event (howsoever described or designated) shall occur or
            condition shall exist, and shall continue after the

<PAGE>
                                     - 57 -

            applicable  grace  period,  if any,  specified  in any  agreement or
            instrument relating to any such Debt and the effect of such event is
            to accelerate, or permit the acceleration of, Debt of either of them
            in a principal  amount  which,  when  aggregated  with the principal
            amount  of all  other  Debt  of any of  them  which  is,  or may be,
            declared due and payable prior to its specified maturity as a result
            of an event of default,  exceeds Cdn.  $2,000,000 (or the Equivalent
            Amount in any other currency);

      (h)   if the Borrower or any  Guarantor or any material  Subsidiary or any
            other  Subsidiary  which owns shares of a Guarantor  shall generally
            not pay its  debts as such  debts  become  due,  or  shall  admit in
            writing its inability to pay its debts  generally as they become due
            or shall make a general assignment for the benefit of creditors;  or
            any proceeding shall be instituted by or against the Borrower or any
            Guarantor or any material  Subsidiary or any other  Subsidiary which
            owns shares of a Guarantor  seeking to  adjudicate  it a bankrupt or
            insolvent,   or  seeking   liquidation,   dissolution,   winding-up,
            reorganization,   arrangement,  adjustment,  protection,  relief  or
            composition of it or its debts under any law relating to bankruptcy,
            insolvency or  reorganization  or relief of debtors,  or seeking the
            entry of an order  for  relief  or the  appointment  of a  receiver,
            trustee or other similar official for it or for any substantial part
            of its property and, in the case of any such  proceeding  instituted
            against it (but not instituted by it), either such proceeding  shall
            remain undismissed or unstayed for a period of 30 days or any of the
            actions sought in such proceeding  (including,  without  limitation,
            the entry of an order for relief against it or the  appointment of a
            receiver, trustee, custodian or other similar official for it or for
            any  substantial  part of its property) shall occur; or the Borrower
            or any Guarantor or any material  Subsidiary or any other Subsidiary
            which owns shares of a Guarantor  shall take any action to authorize
            any of the actions set forth above in this Section 11.1(h);

      (i)   if any judgment or order or series of  judgments or orders  (whether
            or not related)  for the payment of money in an aggregate  amount in
            excess of Cdn.  $1,000,000  (or the  Equivalent  Amount in any other
            currency), other than any judgment or order for which one or more of
            the Borrower,  the  Guarantors and their  Subsidiaries  will recover
            under a policy of  insurance,  shall be rendered  against any one or
            more of the Borrower,  the Guarantors and their Subsidiaries and (i)
            such  judgment  or order or series of  judgments  and/or  orders are
            final  with no  further  right of appeal  and the  Borrower  has not
            satisfied the Required Lenders, acting reasonably, that the Borrower
            or the  relevant  Guarantor  or  Subsidiary  is able to satisfy such
            judgment  or order or series of  judgments  and/or  orders;  or (ii)
            enforcement  proceedings  shall have been  commenced by any creditor
            upon such judgment or order or series of judgments and/or orders, as
            the  case  may  be;  or  (iii)  there  shall  be  any  period  of 20
            consecutive days during which a stay of

<PAGE>
                                     - 58 -

            enforcement of such judgment or order or series of judgments  and/or
            orders,  as the  case may be,  by  reason  of a  pending  appeal  or
            otherwise, shall not be in effect;

      (j)   if any  representation  or warranty made or deemed to be made by the
            Borrower or any Guarantor in any of the Loan  Documents  shall prove
            to have been  incorrect or misleading  in any material  respect when
            made or deemed to be made;

      (k)   if the Borrower,  any Guarantor or any other Subsidiary shall be the
            subject  of  any  proceeding  or  investigation  pertaining  to  the
            discovery of any  Hazardous  Material on any property or the Release
            by such entity of any  Hazardous  Material or any  violation  of any
            Environmental  Law shall occur which, in each case, could reasonably
            be expected to have a material and adverse  effect on the  financial
            condition or position of the Borrower and its Subsidiaries  taken as
            a whole;

      (l)   if the  obligations  of the Borrower or any  Guarantor  hereunder or
            under any other Loan Document  shall cease to constitute  the legal,
            valid and binding  obligations  of the Borrower or the Guarantors or
            shall  cease to be in full force and effect or the  Borrower  or any
            Guarantor  shall  have  contested  the  validity  of any of the Loan
            Documents or denied that it had any liability  under any of the Loan
            Documents;

      (m)   if  Dr.  Terence  H.  Matthews   ceases  to  Control   (directly  or
            indirectly)  the Borrower or if any of MNI, MNSI or MNL ceases to be
            a direct or indirect wholly-owned Subsidiary of the Borrower;

      (n)   if any of the Security shall cease to be a valid and perfected first
            priority  security  interest  relative to third parties  (subject to
            Permitted Encumbrances) and such Security is not restored to being a
            valid and perfected  first priority  security  interest  within five
            Banking Days after the earlier of (i) the Borrower or any  Guarantor
            becoming aware thereof, or (ii) notice from the Administrative Agent
            or any Lender; or

      (o)   if the  Technology  Partnerships  Canada  Agreement  (as  defined in
            Section  8.1(e)(iv))  is cancelled or terminated or any event occurs
            (other than  expiration in accordance with its terms) which entitles
            or permits the  Government  of Canada not to provide  funding  under
            such  agreement or such  agreement is amended in any manner which is
            adverse to the Borrower.

11.2  Acceleration

      Upon the  occurrence  of an Event of  Default  and at any time  thereafter
while an Event of Default is continuing,  the Administrative Agent may or, if so
directed  by the  Required  Lenders,  shall by  written  notice to the  Borrower
declare the  Advances  made to the  Borrower to be  immediately  due and payable
(whereupon  the same shall  become so payable  together  with  accrued  interest
thereon and any other sums then owed by the Borrower  hereunder) or declare such
Advances  to be due and  payable  on demand  of the  Administrative  Agent.  If,
pursuant to

<PAGE>
                                     - 59 -

this Section 11.2,  the  Administrative  Agent declares any Advances made to the
Borrower to be due and payable on demand, then, and at any time thereafter,  the
Administrative Agent may by written notice to the Borrower call for repayment of
such Advances on such date or dates as it may specify in such notice  (whereupon
the same  shall  become  due and  payable  on such date  together  with  accrued
interest thereon and any other sums then owed by the Borrower  hereunder and the
provisions of Section 11.4 shall apply) or withdraw its declaration  with effect
from such date as it may specify in such notice.

11.3  Remedies Cumulative and Waivers

      It is expressly  understood and agreed that the rights and remedies of the
Administrative  Agent and the Lenders  hereunder  or under any other  instrument
executed  pursuant to this  Agreement are  cumulative and are in addition to and
not in substitution for any rights or remedies provided by law or by equity; and
any single or partial exercise by the Administrative  Agent or any Lender of any
right or remedy  for a default  or breach of any term,  covenant,  condition  or
agreement  contained in this Agreement  shall not be deemed to be a waiver of or
to alter,  affect or  prejudice  any  other  right or remedy or other  rights or
remedies  to which  the  Administrative  Agent  or any  Lender  may be  lawfully
entitled for such default or breach. Any waiver by the Administrative  Agent and
the Lenders of the strict  observance,  performance or compliance with any term,
covenant, condition or other matter contained herein and any indulgence granted,
either expressly or by course of conduct,  by the  Administrative  Agent and the
Lenders shall be effective only in the specific instance and for the purpose for
which it was  given and shall be  deemed  not to be a waiver of any  rights  and
remedies of the  Administrative  Agent or any Lender  under this  Agreement as a
result of any other default or breach hereunder or thereunder.

      11.4 Suspension of Lenders' Obligations

      Without  prejudice to the rights  which arise out of this  Agreement or by
law, the occurrence of a Default or Event of Default  shall,  while such Default
or Event of Default shall be continuing,  relieve the Lenders of all obligations
to make any Advances  hereunder  (whether or not a Drawdown Notice in respect of
any such Advance shall have been received by the  Administrative  Agent prior to
the occurrence of a Default or Event of Default) or to accept or comply with any
Drawdown  Notice or to convert  any Advance  into a Libor  Advance or a Bankers'
Acceptance  Advance  or to accept  any  Rollover  Notice in  respect  of a Libor
Advance or to accept or comply with any Conversion  Notice converting an Advance
into an Advance in a different currency.

11.5  Application of Payments After an Event of Default

      If any Event of Default shall occur and be  continuing,  all payments made
by the Borrower hereunder shall be applied in the following order:

            (a)   to  amounts  due  hereunder  as  costs  and  expenses  of  the
                  Administrative Agent;

            (b)   to amounts due hereunder as fees;

<PAGE>
                                     - 60 -

            (c)   to any  other  amounts  (other  than  amounts  in  respect  of
                  interest or principal) due hereunder;

            (d)   to amounts due hereunder as interest;

            (e)   rateably to amounts due hereunder as principal; and

            (f)   any  balance  to  the  Borrower  or as a  court  of  competent
                  jurisdiction shall determine.

                                   Article 12
                               SUCCESSOR COMPANIES

12.1  Certain Requirements in Respect of Merger, Etc.

      The Borrower shall not, and shall not permit the Guarantors to, enter into
any   transaction   (whether   by   way   of   reconstruction,   reorganization,
consolidation, amalgamation, merger, transfer, sale or otherwise) whereby all or
substantially  all of its  undertaking,  property  and assets  would  become the
property of any other  Person or, in the case of any such  amalgamation,  of the
continuing company (collectively,  a "Reorganization")  resulting therefrom,  or
whereby the obligation of the Borrower to pay amounts under this Agreement would
become  subject to novation or assumed or undertaken by any other such Person or
continuing  company,  provided that (i) this Section 12.1 is not applicable to a
Reorganization  involving  the Borrower  and a  wholly-owned  Subsidiary  of the
Borrower;  provided,  however,  in the  event  of  such a  Reorganization  which
involves an amalgamation or merger of the Borrower with any of its Subsidiaries,
the  Successor  Corporation  shall  be  required  to  execute  and  deliver  the
supplemental  agreement and opinion referred to in Section 12.1(a) and take such
other  actions  and  deliver  such  other  documents  and  agreements  as may be
necessary  to ensure that the  perfection  and  priority of the  Security is not
impaired;  and (ii) it may do so and such  Person  or  continuing  company  (the
"Successor Corporation") shall become a party to this Agreement if:

      (a)   the  Successor  Corporation  shall  execute  and/or  deliver  to the
            Administrative  Agent  an  agreement  supplemental  hereto  in  form
            reasonably  satisfactory to the Administrative Agent and the Lenders
            and execute and/or deliver such other instruments,  if any, which to
            the  reasonable  satisfaction  of the  Lenders and in the opinion of
            Counsel to the Borrower  addressed to the  Administrative  Agent and
            the  Lenders,  are  necessary  to  evidence  the  agreement  of  the
            Successor  Corporation  to observe and perform all the covenants and
            obligations  of the Borrower under this Agreement and any other Loan
            Document and to be bound by all the terms of this  Agreement and any
            other Loan  Document  so far as they relate to the  Borrower,  which
            instruments, if any, shall be in form reasonably satisfactory to the
            Administrative Agent and the Lenders;

      (b)   such  transaction  shall,  to  the  reasonable  satisfaction  of the
            Administrative  Agent and the  Lenders and in the opinion of Counsel
            to the  Borrower  addressed  to the  Administrative  Agent  and  the
            Lenders,  be upon such terms as to preserve and not

<PAGE>
                                     - 61 -

            to impair any of the rights and powers of the  Administrative  Agent
            and the Lenders;

      (c)   the perfection and priority of the Security shall not be impaired;

      (d)   all Other Taxes  payable as a result of such  transaction  have been
            paid by such Successor Corporation;

      (e)   such  transaction  will not result in any claim for increased  costs
            pursuant  to  Section  5.1 or result  in any Tax being  levied on or
            payable by the Administrative  Agent or any Lender (except for Taxes
            on the overall net income or capital of the Administrative  Agent or
            any Lender  provided  there is no increase in such Taxes as a result
            of such transaction);

      (f)   such  transaction  will  not  cause,  or  have  the  result  of  the
            Administrative   Agent  or  any  Lender  being  in  default   under,
            non-compliance with, or violation of, any Applicable Law;

      (g)   an opinion of counsel to the Successor Corporation  substantially in
            the form and as to matters  addressed  in the  opinion of Counsel to
            the  Borrower  delivered  pursuant  to  Section  6.1 shall have been
            delivered to the Administrative Agent and the Lenders;

      (h)   the creditworthiness of the Successor  Corporation (as determined by
            the  Administrative  Agent and each  Lender in its sole  discretion)
            shall not be less than the  creditworthiness  of the Borrower or the
            relevant  Guarantor  immediately  prior  to  giving  effect  to such
            transaction; and

      (i)   no Default or Event of Default shall have occurred and be continuing
            or will occur as a result of such transaction.

12.2  Vesting of Powers in Successor

      Except in the case of an  amalgamation  or other  transaction  pursuant to
which the  Successor  Corporation  is liable for all of the  obligations  of the
Borrower by operation of law, whenever the conditions of Section 12.1 above have
been duly observed and performed, the Administrative Agent and each Lender shall
execute and deliver the supplemental  agreement  provided for in Section 12.1(a)
and thereupon:

      (a)   the  Successor  Corporation  shall possess and from time to time may
            exercise  each and every right and power of the Borrower  under this
            Agreement  in its  own  name  or in the  name  of  the  Borrower  or
            otherwise  and  any  act or  proceeding  by any  provision  of  this
            Agreement  or  the  Security  Documents  required  to  be  done  and
            performed  with like  force  and  effect  by the like  directors  or
            officers of the Successor Corporation; and

<PAGE>
                                     - 62 -

      (b)   at the request of the Borrower,  the Borrower shall be released from
            its  liability  and   obligations   under  this  Agreement  and  the
            Administrative  Agent and the  Lenders,  at the  request  and at the
            expense of the  Borrower,  shall execute and deliver to the Borrower
            such  instruments as shall  reasonably be requisite to evidence such
            release.

                                   Article 13
                       COSTS, EXPENSES AND INDEMNIFICATION

13.1  Costs and Expenses

      The Borrower shall pay promptly,  upon request by the Administrative Agent
accompanied  by  reasonable  supporting  documentation  or other  evidence,  all
reasonable  costs  and  expenses  in  connection  with  preparation,   printing,
execution and delivery of this Agreement and the other documents to be delivered
hereunder including,  without limitation,  the reasonable fees and out-of-pocket
expenses of the Administrative Agent's Counsel with respect thereto.  Except for
ordinary  expenses  of the  Administrative  Agent  relating  to  the  day-to-day
administration  of  this  Agreement,  the  Borrower  further  agrees  to pay all
reasonable  costs  and  expenses  (including  reasonable  fees and  expenses  of
counsel,  accountants and other experts) in connection with the  interpretation,
preservation  or  enforcement  of  rights of the  Administrative  Agent and each
Lender  under this  Agreement  and the  Security  Documents  including,  without
limitation,  all reasonable costs and expenses  sustained by them as a result of
any  failure by the  Borrower  or any  Guarantor  to  perform  or observe  their
obligations  contained in this  Agreement  and all costs  incurred in connection
with obtaining any required consents,  approvals or authorizations  contemplated
by Section 8.1(p) and otherwise in enforcing and realizing upon the Security.

13.2  Indemnification by the Borrower

      In addition to any liability of the Borrower to the  Administrative  Agent
and each Lender under any other provision  hereof,  the Borrower shall indemnify
the Administrative  Agent and each Lender and hold the Administrative  Agent and
each Lender harmless  against any reasonable  costs or expenses  incurred by the
Administrative  Agent and each  Lender  as a result  (i) of any  failure  by the
Borrower or any  Guarantor  to fulfil any of its  obligations  hereunder  in the
manner  provided  herein  including,  without  limitation,  any cost or  expense
incurred by reason of the  liquidation or  re-employment  in whole or in part of
deposits or other funds required by the Administrative  Agent and each Lender to
fund or  maintain  any  Advance as a result of the  failure of the  Borrower  to
complete  a  Drawdown  or to make any  repayment  or other  payment  on the date
required  hereunder  or  specified  by it in any  notice  given  hereunder  (but
excluding costs arising solely out of loss of anticipated  profits); or (ii) the
failure of the Borrower to pay any other amount including,  without  limitation,
any interest or fee due  hereunder on its due date;  or (iii) as a result of the
prepayment  or repayment by the Borrower of any Libor  Advance prior to its date
of maturity or the last day of the then current  Interest  Period for such Libor
Advance,  including,  without  limiting the  generality  of the  foregoing,  any
repayment or prepayment resulting from the circumstances  referred to in Section
2.6(b).

<PAGE>
                                     - 63 -

13.3  Funds

      Each amount advanced, made available, disbursed or paid hereunder shall be
advanced, made available,  disbursed or paid, as the case may be, in immediately
available  funds or, after notice from the  Administrative  Agent, in such other
form of funds as may from time to time be customarily used in Toronto, Canada in
the  settlement  of banking  transactions  similar to the  banking  transactions
required  to give effect to the  provisions  of this  Agreement  on the day such
advance, disbursement or payment is to be made.

13.4  General Indemnity

      (a) Indemnity.  Subject to paragraphs (b), (c) and (d) below, the Borrower
agrees to indemnify and save harmless the Administrative  Agent, each Lender and
each of their  respective  officers,  directors,  employees,  agents,  advisors,
representatives   and   affiliates   (collectively,    the   "Indemnitees"   and
individually, an "Indemnitee") from and against any and all liabilities,  costs,
claims, damages, penalties, losses and expenses (including reasonable legal fees
and  disbursements  of counsel but excluding  loss of profits and  consequential
damages)  (collectively,  the  "Losses")  as a result of any claims,  actions or
proceedings  ("Claims")  asserted against the Indemnitees by a Person other than
the Indemnitees in connection with the agreement of the Administrative Agent and
each Lender to provide the Facility,  the commitment of the Lenders to establish
the Facility and the Advances made by the Lenders including, without limitation:
(i) the costs of defending and/or counterclaiming or claiming over against third
parties in respect of any Claim; and (ii) subject to the provisions set forth in
paragraph (d) below, any Losses arising out of a settlement of any Claim made by
the Indemnitees.

      (b) Limitations to Indemnity. The foregoing obligations of indemnification
shall not apply to any Losses  suffered by the  Indemnitees or any of them or to
any Claim  asserted  against the  Indemnitees  or any of them to the extent such
Loss or Claim has resulted from the gross negligence or wilful misconduct of the
Indemnitees or any of them.

      (c) Notification. Whenever an Indemnitee shall have received notice that a
Claim has been commenced or threatened,  which, if successful, would subject the
Borrower (the "Indemnifying  Party") to the indemnity provisions of this Section
13.4,  the  Indemnitee  shall,  as soon as reasonably  possible,  notify (to the
extent permitted by law) the  Indemnifying  Party in writing of the Claim and of
all relevant  information the Indemnitee  possesses relating thereto;  provided,
however,  that failure to so notify the  Borrower  shall not release it from any
liability  which it may  have on  account  of the  indemnity  set  forth in this
Section 13.4,  except to the extent that the Indemnifying  Party shall have been
materially prejudiced by such failure.

      (d) Defence and Settlement.  The Indemnifying  Party shall have the right,
but not the obligation,  to assume the defence of any Claim in any  jurisdiction
with legal  counsel of  reputable  standard  in order to protect  the rights and
interest of the Indemnitees.  In such respect,  (i) the Indemnifying Party shall
require  the  consent  of the  Indemnitees  of the  choice of legal  counsel  in
connection with the Claim,  which consent shall not be unreasonably  withheld or
delayed;  and (ii) without  prejudice to the rights of the Indemnitees to retain
counsel and

<PAGE>
                                     - 64 -

participate  in the  defence  of the  Claim,  the  Indemnifying  Party  and  the
Indemnitees  shall make all reasonable  efforts to  co-ordinate  their course of
action in  connection  with the  defence of such Claim.  The  related  costs and
expenses sustained in such respect by the Indemnitees shall be at the expense of
the  Indemnifying  Party,  provided  that the  Indemnifying  Party shall only be
liable for the costs and expenses of one firm of separate counsel in addition to
the cost of any local counsel that may be required.  If the  Indemnifying  Party
fails to assume defence of the Claim,  the Indemnitees will (upon further notice
to the Borrower) have the right to undertake, at the expense of the Borrower and
the Guarantors, the defence, compromise or settlement of the Claim on behalf and
for the account and risk of the Indemnifying Party,  subject to the right of the
Indemnifying  Party to assume  the  defence  of the  Claim at any time  prior to
settlement, compromise or final determination thereof.

      Notwithstanding  the  foregoing,  in  the  event  the  Indemnitee,  acting
reasonably,  does not agree  with the  manner or  timeliness  in which the legal
counsel of the  Indemnifying  Party is carrying on the defence of the Claim, or,
pursuant to the opinion of a reputable counsel retained by the Indemnitee, there
may be one or more legal defences available different from the one carried on by
the legal counsel of the Indemnifying Party, the Indemnitee shall have the right
to assume its own defence in the Claim by appointing its own legal counsel.  The
costs and the expenses  sustained by the  Indemnitee  shall be at the expense of
the Indemnifying Party provided that the Indemnifying Party shall only be liable
for the costs and expenses of one firm of separate  counsel,  in addition to the
costs of any local counsel that may be required.

      The Indemnifying Party shall not be liable for any settlement of any Claim
effected  without its written consent (which shall not be unreasonably  withheld
or delayed).  In addition,  the  Indemnifying  Party will not, without the prior
written  consent of the  Indemnitee  (which  consent  shall not be  unreasonably
withheld or delayed), settle, compromise or consent to the entry of any judgment
in or otherwise  seek to terminate any Claim or  threatened  Claim in respect of
which indemnification or contribution may be sought hereunder.

      If  an  offer  for  settlement  made  to  any  Indemnitee  and  which  the
Indemnifying  Party has recommended for acceptance is rejected by the Indemnitee
and the final  liability  of the  Indemnitee  in respect of such  action and all
related  damages is greater than such offer,  the liability of the  Indemnifying
Party will only be to indemnify the Indemnitee up to the amount of such offer.

13.5  Environmental Claims

      (a) Indemnity.  Subject to paragraphs (b), (c) and (d) below, the Borrower
agrees to indemnify and save harmless each of the  Indemnitees  from and against
any and all Losses as a result of any Claims asserted against the Indemnitees by
a Person other than the Indemnitees with respect to any material presence or the
Release on, into,  onto, under or from any property which at any time was owned,
used,  occupied,  operated  or under the  control  of any of the  Borrower,  the
Guarantors or any of the  Subsidiaries  of any of the foregoing of any Hazardous
Material (as  hereinafter  defined) or which arises out of or in connection with
any action of, or failure to act by,  the  Borrower,  a  Guarantor  or any other
Subsidiary  or any  predecessor or

<PAGE>
                                     - 65 -

successor  thereof in  contravention  of any  Environmental  Laws  including,
without  limitation:  (i) the  costs  of  defending  and/or  counterclaiming  or
claiming over against third parties in respect of any Claim; and (ii) subject to
the  provisions  set forth in paragraph (d) below,  any Losses  arising out of a
settlement of any Claim made by the Indemnitees.

      (b) Limitations to Indemnity. The foregoing obligations of indemnification
shall not apply to any Losses  suffered by the  Indemnitees or any of them or to
any  Claim  asserted  against  the  Indemnitees  or any of them  which  relates,
directly or  indirectly,  to any action or  omission  of any of the  Indemnitees
while in possession or control of the property of the Borrower, any Guarantor or
any  other  Subsidiary  which  is  grossly   negligent  or  constitutes   wilful
misconduct.

      (c) Notification. Whenever an Indemnitee shall have received notice that a
Claim has been commenced or threatened,  which, if successful, would subject the
Borrower to the indemnity provisions of this Section 13.5, the Indemnitee shall,
as soon as  reasonably  possible and in any event on or before the expiry of the
date (the "Notification Date") which is the earlier of (i) the tenth Banking Day
after the receipt of such notice by the Administrative Agent, and (ii) such date
as will  afford  sufficient  time for the  Borrower to prepare and file a timely
answer to the  Claim,  notify  the  Borrower  of the  Claim and of all  relevant
information the Indemnitee  possesses relating thereto.  If the Indemnitee shall
fail to so notify the Borrower and provide it with such information on or before
the  Notification  Date, the Borrower shall not have any liability  hereunder in
respect of any Losses  suffered by the  Indemnitees  in respect of such Claim to
the extent such Losses may be  reasonably  attributable  to such  failure by the
Indemnitee.

      (d) Defence and Settlement.  The provisions of Section 13.4(d) shall apply
to any Claims under this Section 13.5.

                                   Article 14
                            THE ADMINISTRATIVE AGENT

14.1  The Administrative Agent

      Each Lender hereby irrevocably appoints the Administrative Agent to act as
its Administrative Agent in connection with this Agreement,  the Loan Documents,
and  any  matter  contemplated   hereunder,   and  authorizes   irrevocably  the
Administrative  Agent to exercise  such rights,  powers and  discretions  as are
delegated  to the  Administrative  Agent  pursuant to this  Agreement,  the Loan
Documents,  and any  matter  contemplated  thereunder,  together  with  all such
rights, powers and discretions as are incidental hereto or thereto. The Borrower
may in all  respects  assume  that the  Administrative  Agent has  obtained  all
necessary  authorities  from the Lenders and is acting in full  conformity  with
this  Article 14 at all times.  The  Administrative  Agent shall have only those
duties and responsibilities which are expressly specified in this Agreement, and
it may perform such duties by or through its agents or employees. This Agreement
shall not place the  Administrative  Agent under any fiduciary duties in respect
of any Lender.

<PAGE>
                                     - 66 -

14.2  The Administrative Agent's Responsibility

      The Administrative Agent may:

      (a)   assume that:

            (i)   any  representation  made by the Borrower in or in  connection
                  with any of this Agreement or any Drawdown Notice is true;

            (ii)  no Event of Default has occurred; and

            (iii) the  Borrower  is not in  breach  of or in  default  under its
                  obligations  under  any of  this  Agreement  or  any  Bankers'
                  Acceptances;

            and the Administrative Agent may also:

      (b)   unless it has actual  knowledge  or actual  notice to the  contrary,
            assume  that  each  Lender's  address  is that  identified  with its
            signature  below  until it has  received  from such  Lender a notice
            designating  some other office of such Lender as its address and act
            upon any such notice until the same is  superseded by a further such
            notice;

      (c)   engage  and  pay  for  the  advice  or  services  of  any   lawyers,
            accountants or other experts whose advice or services may to it seem
            necessary,  expedient  or  desirable  and rely  upon any  advice  so
            obtained;

      (d)   unless it has actual  knowledge  or actual  notice to the  contrary,
            rely as to matters of fact which might  reasonably be expected to be
            within the knowledge of the Borrower  upon a statement  signed by or
            on behalf of the Borrower;

      (e)   unless it has actual  knowledge  or actual  notice to the  contrary,
            rely  upon  any  communication  or  document  believed  by  it to be
            genuine;

      (f)   refrain from  exercising  right,  power or  discretion  vested in it
            under this  Agreement  unless and until  instructed  by the Required
            Lenders as to whether or not such right,  power or  discretion is to
            be  exercised  and,  if it is to be  exercised,  as to the manner in
            which it should be exercised;

      (g)   refrain from exercising any right,  power or discretion vested in it
            which  would or might in its  opinion be  contrary to any law of any
            jurisdiction  or any directive or otherwise  render it liable to any
            Person,  and may do anything  which is in its opinion  necessary  to
            comply with any such law or directive;

      (h)   retain for its own  benefit,  and without  liability to account for,
            any fee or other sum receivable by it for its own account;

<PAGE>
                                     - 67 -

      (i)   accept  deposits from,  lend money to, provide any advisory or other
            services to or engage in any kind of banking or other  business with
            any party (including any Affiliate thereof) to this Agreement; and

      (j)   refrain  from  acting in  accordance  with any  instructions  of the
            Required Lenders to begin any legal action or proceeding arising out
            of or in  connection  with  any of this  Agreement  or any  Bankers'
            Acceptance  until it shall have  received  such  security  as it may
            require (whether by way of payment in advance or otherwise)  against
            all costs,  claims,  expenses (including legal fees) and liabilities
            which  it will  or may  expend  or  incur  in  complying  with  such
            instruction.

14.3  Administrative Agent's Duties

      The Administrative Agent shall:

      (a)   promptly upon receipt thereof, inform each Lender of the contents of
            any notice, document, request or other information received by it in
            its capacity as Administrative Agent hereunder from the Borrower;

      (b)   promptly  notify  each  Lender  of the  occurrence  of any  Event of
            Default or any default by the Borrower in the due performance of its
            obligations under this Agreement or any document  incidental thereto
            to  which  it  is   expressed  to  be  a  party  and  of  which  the
            Administrative Agent has actual knowledge or actual notice;

      (c)   each time the  Borrower  requests the prior  written  consent of the
            Required Lenders,  use its best efforts to obtain and communicate to
            the Borrower  the  response of the Required  Lenders in a reasonable
            and timely manner having due regard to the nature and  circumstances
            of the request;

      (d)   subject to the foregoing  provisions  of this Section  14.3,  act in
            accordance  with  any  instructions  given  to  it by  the  Required
            Lenders; and

      (e)   if so instructed by the Required  Lenders,  refrain from  exercising
            any right,  power or discretion vested in it under this Agreement or
            any document incidental thereto.

14.4  Protection of Administrative Agent

      Notwithstanding  anything to the contrary expressed or implied herein, the
Administrative Agent shall not:

      (a)   be bound to enquire as to:

            (i)   whether  any  representation  made  by the  Borrower  in or in
                  connection  with this  Agreement  or any  document  incidental
                  thereto is true;

<PAGE>
                                     - 68 -

            (ii)  the occurrence of any Event of Default;

            (iii) the performance by the Borrower of its  obligations  under any
                  of this Agreement or any document incidental thereto;

            (iv)  any  breach  of or  default  by the  Borrower  of or under its
                  obligations  under this  Agreement or any document  incidental
                  thereto; or

            (v)   the use or  application by the Borrower of any of the proceeds
                  of the Facility;

      (b)   be bound to account to any Lender for any sum or the profit  element
            of any sum received by it for its own account;

      (c)   be bound to disclose to any Person any  information  relating to the
            Borrower if such disclosure would or might in its opinion constitute
            a breach of any law or regulation or be otherwise  actionable at the
            suit of any Person; or

      (d)   accept any  responsibility  for the accuracy and/or  completeness of
            any information supplied in connection herewith or for the legality,
            validity,   effectiveness,   adequacy  or   enforceability  of  this
            Agreement, any Bankers' Acceptance or any document incidental hereto
            or  thereto  and the  Administrative  Agent  shall  not be under any
            liability  to any Lender as a result of taking or  omitting  to take
            any action in relation to the Agreement,  any Bankers' Acceptance or
            any document  incidental hereto or thereto save in the case of gross
            negligence or wilful misconduct, and each of the Lenders agrees that
            it will not assert or seek to assert against any director,  officer,
            employee  or agent of the  Administrative  Agent  any claim it might
            have  against any of them in respect of the  matters  referred to in
            this Section 14.4.

14.5  Indemnification of Administrative Agent

      Each Lender shall, on demand by the  Administrative  Agent,  indemnify the
Administrative   Agent  pro  rata  in   accordance   with  each  such   Lender's
Participation  at the time of such  demand  against  any and all costs,  claims,
reasonable   expenses   (including   legal  fees)  and  liabilities   which  the
Administrative  Agent may  incur  (and  which  have not been  reimbursed  by the
Borrower),  otherwise  than by  reason  of its own  gross  negligence  or wilful
misconduct,  in  acting in its  capacity  as  Administrative  Agent  under  this
Agreement, any Bankers' Acceptance or any document incidental hereto or thereto.

14.6  Termination or Resignation of Administrative Agent

      (a)  Notwithstanding  the  irrevocable  appointment of the  Administrative
Agent,  the  Required  Lenders may (with the consent of the  Borrower  not to be
unreasonably  withheld),  upon  giving the  Administrative  Agent 90 days' prior
written notice to such effect,  terminate the

<PAGE>
                                     - 69 -

Administrative   Agent's   appointment   hereunder  provided  that  a  successor
Administrative Agent has been appointed at or prior to expiry of such notice.

      (b) The Administrative  Agent may resign its appointment  hereunder at any
time without  assigning  any reason  therefor by giving  written  notice to such
effect  to each of the  other  parties  hereto.  Such  resignation  shall not be
effective until a successor Administrative Agent has been appointed.

      (c) In the event of any such  termination  or  resignation,  the  Required
Lenders  shall  appoint  a  successor  Administrative  Agent  acceptable  to the
Borrower,  deliver  copies of the  Accounts to such  successor  and the retiring
Administrative  Agent shall be discharged from any further obligation  hereunder
but shall remain  entitled to the benefit of the  provisions  of this Article 14
and the  Administrative  Agent's  successor and each of the other parties hereto
shall have the same rights and obligations  among  themselves as they would have
had if such  successor  originally  had been a party  hereto  as  Administrative
Agent.

14.7  Rights of Administrative Agent as Lender

      With respect to its portion of the Committed Amount and its Participation,
and to Bankers' Acceptances, the Administrative Agent shall have the same rights
and powers  under  this  Agreement  and any  Bankers'  Acceptances  as any other
Lender,  and it may  exercise  such  rights  and  powers  as  though it were not
performing  the duties and  functions  delegated to it as  Administrative  Agent
hereunder,  and the term  "Lender" or any other  similar term shall,  unless the
context otherwise requires,  include the Administrative Agent in its capacity as
a Lender.

14.8  Authorized Waivers, Variations and Omissions

      If so authorized in writing by the Required  Lenders,  the  Administrative
Agent may grant  waivers,  consents,  vary the terms of this Agreement and do or
omit to do all such acts and things in connection herewith or therewith.  Except
with the prior  written  agreement of all the  Lenders,  nothing in this Section
14.8 shall  authorize (i) any decrease in the  Applicable  Margin,  the Stamping
Fee, the Standby Fee or the Libor Margin, (ii) any extension of the date for, or
alteration in the amount,  currency or mode of calculation or computation of any
payment of  principal  or interest or other  amount,  (iii) any  increase in the
Committed Amount of a Lender (other than as referred to in Section 2.6(b)), (iv)
any  extension  of the  Final  Maturity  Date,  (v) any  change  in the terms of
Articles 9, 10 or 13,  (vi) any change in the  definition  of  Required  Lenders
(vii) the release of the Borrower or any Guarantor  from its  obligations  under
any Loan Document or (viii) any amendments to this Section 14.8.

14.9  Financial Information Concerning Borrower

      Subject to Section 14.3(a),  the  Administrative  Agent shall not have any
duty or responsibility  either initially or on a continuing basis to provide any
Lender  with any  credit or other  information  with  respect  to the  financial
condition and affairs of the Borrower.

<PAGE>
                                     - 70 -

14.10 Knowledge of Financial Situation of Borrower

      Each of the Lenders  represents and warrants to the  Administrative  Agent
that it has made its own independent  investigation  of the financial  condition
and affairs of the Borrower in connection  with the making and  continuation  of
its  Participation  in  this  Agreement  and  that  it  has  not  relied  on any
information provided to it by the Administrative Agent in connection herewith or
therewith,  and each Lender represents and warrants to the Administrative  Agent
that it shall continue to make its own appraisal of the  creditworthiness of the
Borrower from time to time.

14.11 Legal Proceedings

      The  Administrative  Agent  shall  not be  obligated  to  take  any  legal
proceedings  against the  Borrower or any other  Person for the  recovery of any
amount due under this  Agreement  or under any Bankers'  Acceptances.  No Lender
shall bring legal proceedings against the Borrower or any other Person hereunder
or in  connection  herewith,  or  exercise  any right  arising  hereunder  or in
connection  herewith  over the  property and assets of the Borrower or any other
Person without the prior written consent of the Required Lenders.

14.12 Capacity as Administrative Agent

      In  performing  its  functions  and  duties  under  this  Agreement,   the
Administrative Agent shall act solely as the Administrative Agent of the Lenders
and shall not assume, and shall not be deemed to have assumed, any obligation as
agent or trustee for the Borrower or any other Person. The Administrative  Agent
shall not be under any liability or  responsibility of any kind to the Borrower,
the Lenders, or to any other Person arising out of or in relation to any failure
or delay in  performance  or breach by any Lender or Lenders or, as the case may
be, by the Borrower or any other Person  pursuant to or in any way in connection
with this Agreement.

14.13 Capacity as Lead Arranger

      The Borrower and the Lenders and the Administrative Agent hereby agree and
confirm that BMO has performed  its functions and duties in connection  with the
arrangement   of  the  Facility  and  shall  not  be  under  any   liability  or
responsibility  of any kind to the  Borrower,  the Lenders,  the  Administrative
Agent or any of them  arising out of or in relation  to the  arrangement  of the
Facility or this Agreement.

14.14 Deposits or Loans Respecting the Borrower

      The Administrative Agent and each of the Lenders may accept deposits from,
lend money to and generally engage in any kind of banking or other business with
the Borrower  without  liability to account to the  Administrative  Agent or any
Lender.

<PAGE>
                                     - 71 -

                                   Article 15
                                     GENERAL

15.1  Term

      The Facility shall expire on the Maturity Date.

15.2  Survival

      All covenants,  agreements,  representations and warranties made herein or
in  certificates  delivered  in  connection  herewith  by or on  behalf  of  the
Borrower, the Guarantors or any other Subsidiary shall survive the execution and
delivery of this  Agreement  and the making of the Drawdown  hereunder and shall
continue  in full  force and  effect so long as there is any  obligation  of the
Borrower to the Administrative Agent or any Lender hereunder.

15.3  Benefit of the Agreement

      This  Agreement  shall  enure to the  benefit of and be  binding  upon the
successors  and  permitted  assigns  of the  Borrower  and  the  successors  and
permitted assigns of the Administrative Agent and the Lenders.

15.4  Notices

      All  notices,  requests,  demands or other  communications  to or from the
parties  hereto  shall be in writing  and shall be given by  overnight  delivery
service, by hand delivery or by telecopy to the addressee as follows:

      (i) If to the Borrower:

          Mitel Networks Corporation
          350 Legget Drive
          Ottawa, Ontario K2K 2W7

          Attention:  Treasurer

          Telecopier: 613-591-2320
          Telephone:  613-591-2122, ext. 4431

          and with respect to any matters  relating to an Event
          of Default,  a copy to the  Corporate  Counsel of the
          Borrower at Telecopier: 613-592-7802;

<PAGE>
                                     - 72 -

      (ii) If to the Administrative Agent:

           BMO Nesbitt Burns Inc.
           Structured and Project Lending
           1 First Canadian Place
           4th Floor, P.O. Box 150
           Toronto, Ontario
           M5X 1H3

           Attention:   Genga T. Arulampalam

           Telecopier:  416-867-6977
           Telephone:   416-359-6996

      (iii) If to a Lender:

            To the address set forth next to its signature on the signature page
            of this Agreement

or at such  other  address  or to such  other  individual  as the  Borrower  may
designate by notice to the Administrative  Agent or the Administrative Agent may
designate by notice to the  Borrower.  If any notice,  request,  demand or other
communication  is delivered or  transmitted on a day other than a Banking Day or
after  3:00  p.m.  on any  Banking  Day,  the same  shall be deemed to have been
effectively given and received on the next following Banking Day.

15.5  Amendment and Waiver

      This Agreement and documents  collateral hereto may be modified or amended
and a waiver of any breach of any term or provision of this  Agreement  shall be
effective  only if the  Borrower and the  Administrative  Agent and the Required
Lenders or each Lender, as the case may be, so agree in writing. A waiver of any
breach  of any term or  provision  of this  Agreement  shall be  limited  to the
specific breach waived.

15.6  Governing Law

      This Agreement  shall be governed by and construed in accordance  with the
laws of the  Province  of  Ontario  and the  federal  laws of Canada  applicable
therein.  Each of the  Administrative  Agent, the Lenders and the Borrower agree
that any legal suit,  action or proceeding  arising out of this Agreement may be
instituted in the courts of Ontario,  and each of the Administrative  Agent, the
Lenders  and  the  Borrower  hereby  accepts  and  irrevocably  submits  to  the
non-exclusive  jurisdiction of said courts and acknowledges their competence and
agrees to be bound by any judgment thereof.

<PAGE>
                                     - 73 -

15.7  Further Assurances

      The Borrower shall promptly cure any default in its execution and delivery
of this  Agreement.  The Borrower,  at its expense,  will  promptly  execute and
deliver, or cause to be executed and delivered,  to the Administrative Agent and
the Lenders,  upon request,  all such other and further  documents,  agreements,
certificates  and  instruments  in  compliance  with, or  accomplishment  of the
covenants and agreements of the Borrower and the  Guarantors  hereunder or under
the Security  Documents or more fully to state the  obligations  of the Borrower
and the Guarantors as set out herein or therein or to make any  recording,  file
any notice or obtain any  consents,  all as may be necessary or  appropriate  in
connection  therewith.  The Borrower  covenants and agrees to, and covenants and
agrees to cause MNI and MNSI to, use reasonable  efforts to execute and deliver,
within a reasonable time after the Closing Date, to the Administrative Agent all
such  documents,  agreements,  certificates  and  instruments  or  to  make  any
recording,  file any notice or obtain any consents in order to grant Harris Bank
pari  passu  security  with the  Administrative  Agent  over the  assets  of the
Borrower, MNI and MNSI.

15.8  Enforcement and Waiver by the Lenders

      The Administrative Agent and the Lenders shall have the right at all times
to enforce the  provisions  of this  Agreement  and  agreements  to be delivered
pursuant  hereto  in  strict  accordance  with the  terms  hereof  and  thereof,
notwithstanding  any conduct or custom on the part of the  Administrative  Agent
and the Lenders in refraining from so doing at any time or times. The failure of
the  Administrative  Agent and the  Lenders at any time or times to enforce  its
rights under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom or in any way or manner  modified or waived
the same.  All rights and remedies of the  Administrative  Agent and the Lenders
are  cumulative and concurrent and the exercise of one right or remedy shall not
be deemed a waiver or release of any other right or remedy.

15.9  Execution in Counterparts

      This  Agreement  may be executed in  counterparts,  each of which shall be
considered an original and all of which taken together shall constitute a single
agreement.

15.10 Assignment by the Borrower

      The rights and  obligations  of the Borrower  under this Agreement are not
assignable to any other Person,  except in accordance  with Article 12,  without
the prior  written  consent of the  Administrative  Agent and the Lenders in its
sole discretion.

15.11 Assignments and Transfers by the Lenders

      (a) With the prior written consent of the Borrower, such consent not to be
unreasonably withheld or delayed, any Lender may, at any time, assign all or any
of its rights and  benefits  hereunder  or transfer in  accordance  with Section
15.11(b) all or any of its rights, benefits and obligations hereunder to another
Person (the  "Transferee");  provided  that any partial  assignment  or transfer
shall be with respect to a minimum  commitment of Cdn.

<PAGE>
                                     - 74 -

$5,000,000  and integral  multiples of Cdn.  $100,000 in excess  thereof or such
lesser amount as will result in each of the Lender and the  Transferee  having a
minimum  commitment  of Cdn.  $5,000,000.  Notwithstanding  the  foregoing,  the
consent of the Borrower is not required in  connection  with the  assignment  or
transfer of all or any of the rights,  benefits and obligations hereunder to (i)
any  Subsidiary  or Affiliate of the Lender,  provided (A) that, in either case,
any such  assignment  or  transfer  does not give rise to a claim for  increased
costs pursuant to Article 5 and (B) that the Lender shall notify the Borrower in
the event such  Subsidiary  or Affiliate is a  non-resident  for purposes of the
Income  Tax  Act  (Canada)  to  permit  the  Borrower  to  make  any  applicable
withholding tax remittances,  if any, or (ii) to any financial institution or to
any other Person if an Event of Default has occurred and is continuing.

      (b) If a Lender assigns all or any of its rights and benefits hereunder in
accordance  with Section  15.11(a),  then,  unless and until the  Transferee has
agreed  with the  Lender  and the  Borrower  pursuant  to a  transfer  agreement
substantially  in the form of  Schedule  J hereto  (or such other form as may be
agreed to by the Lender and the Borrower) that the Transferee  shall be bound by
the same  obligations of the Lender as the  Transferee  would have been under if
the  Transferee  had been an original  party hereto,  the Borrower  shall not be
obliged to recognize  such  Transferee as having the rights against the Borrower
which the  Transferee  would  have had if the  Transferee  had been such a party
hereto.

      (c) A Lender may  participate  all or any part of its interest  hereunder,
provided that any such participation does not give rise to a claim for increased
costs  pursuant to Article 5. The  Borrower  shall not be obligated to deal with
any  participant  and shall be  entitled  to deal solely with the Lender and the
Lender shall not be released from any of its  obligations to the Borrower or the
Guarantors  as a result  of such  participation  except to the  extent  that the
participant has fulfilled such obligations.  Such participants shall be bound to
the same  confidentiality  provisions  with  respect to the  Facilities  and the
Borrower and each Guarantor as are applicable to the Lender.

15.12 Set-Off

      If an Event of Default has occurred and is  continuing,  each Lender shall
have the right to set off against any accounts,  credits or balances  maintained
by the  Borrower  or any of the  Guarantors  with  the  Lender  any  amount  due
hereunder.  Except for payments to a Lender from the Administrative  Agent which
were  received  by the  Administrative  Agent for the  account of such Lender in
accordance  with the  provisions of this  Agreement,  if any Lender shall at any
time receive  payment or  satisfaction  of all or a part of any amounts  payable
hereunder,  whether by set-off or otherwise,  in a proportion which, in relation
to any  amounts  received  by any other  Lender  or  Lenders  at the same  time,
represents more than its pro rata  Participation,  then such Lender shall notify
the  Administrative  Agent thereof and pay to the  Administrative  Agent for the
account of the other  Lenders  such  amount as will ensure that each Lender will
receive  a  proportion   of  such  payment  equal  to  such  Lender's  pro  rata
Participation.  In the event that at any time any Lender  shall be  required  to
refund  any  amount  which  has been paid to or  received  by it by  set-off  or
otherwise on account of any part of the Advances,  interest thereon or any other
amount payable hereunder and which has been paid to any other Lender pursuant to
this Section

<PAGE>
                                     - 75 -

15.12,  such other Lender shall repay a  proportionate  amount of the amounts so
refunded  without  interest.  If a Lender is required to make any payment to any
other Lender  pursuant to this Section  15.12,  then,  subject to the  foregoing
sentence,  the liability of the Borrower to the Lender making such payment under
this Agreement shall be treated as not having been reduced by the amount of such
payment and the liability of the Borrower to any Lender  receiving  such payment
shall be treated as having been reduced by the amount of the payment received by
such Lender.

15.13 Time of the Essence

      Time shall be of the essence in this Agreement.

15.14 Judgment Currency

      To the extent  permitted  by  applicable  law, if any judgment or order is
rendered and  expressed in a currency  other than the currency  (the  "Agreement
Currency")  in which  amounts are payable under the Facility (i) for the payment
of any  amount  owing  by the  Borrower  in  respect  of the  Facility  or  this
Agreement,  or (ii) in respect of a judgment  or order of another  court for the
payment of any amount described in (i) above, the Administrative  Agent and each
Lender,   after  recovery  in  full  of  the  aggregate   amount  to  which  the
Administrative  Agent and each  Lender is entitled  pursuant to the  judgment or
order, will be entitled to receive  immediately from the Borrowers the amount of
any shortfall in the Agreement Currency received by the Administrative Agent and
each Lender as a consequence of sums paid in such other currency and will refund
promptly to the Borrower any excess of the  Agreement  Currency  received by the
Administrative Agent and each Lender as a consequence of sums paid in such other
currency if such  shortfall or such excess  arises or results from any variation
between the rate of exchange at which the Agreement  Currency is converted  into
the currency of the judgment or order for the purposes of such judgment or order
and the rate of  exchange at which the  Administrative  Agent and each Lender is
able, acting in a reasonable manner and in good faith in converting the currency
received into the Agreement  Currency,  to purchase the Agreement  Currency with
the amount of the  currency of the  judgment or order  actually  received by the
Administrative  Agent and each  Lender.  The term "rate of  exchange"  includes,
without  limitation,  any premiums and costs of exchange  payable in  connection
with the purchase of or conversion into the Agreement  Currency.  Any amount due
from the Borrower  under the  provisions of this Section 15.14 shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of the Facility or this Agreement.

15.15 Equal Ranking of Lenders

      The Lenders, and to the extent necessary,  the Borrower,  agree as between
themselves that any indebtedness of the Borrower  towards any Lender  hereunder,
in respect of any Advance or any Bankers'  Acceptance,  or  otherwise  hereunder
shall at all times rank equally and without  preference or distinction  with the
indebtedness of the Borrower towards any other Lender hereunder.

<PAGE>
                                     - 76 -

15.16 Sharing of Information

      The  Borrower  agrees  that the  Administrative  Agent and the Lenders may
share  amongst  themselves  any  information  which  any  of  them  may  possess
concerning the Borrower in respect of the Borrower's  undertakings,  obligations
or indebtedness  towards any Lender pursuant to this Agreement,  any Advance and
any Bankers'  Acceptance,  as well as any payment  received from the Borrower by
any Lender.

15.17 Continuing Obligations and Liabilities

      Each  of  the  Borrower  and  BMO  agrees  and  confirms  that  all of its
liabilities and obligations under the Existing Credit Agreement  existing on the
Closing  Date are amended and  restated by this  Agreement  and continue in full
force and effect hereunder, except to the extent amended by this Agreement.

<PAGE>
                                     - 77 -

      IN WITNESS WHEREOF the parties hereto have executed this Agreement.

                                          MITEL NETWORKS CORPORATION

                                          by
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                           BANK OF MONTREAL, as

                                           Administrative Agent And Lead
                                           Arranger
                                           by
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                           BANK OF MONTREAL, as Lender

                                           by
                                                  ------------------------------
                                                  Name:
                                                  Title:

Address:

BMO Nesbitt Burns Inc.
Structured and Project Financing
1 First Canadian Place
4th Floor, P.O. Box 150
Toronto, Ontario
M5X 1H3

<PAGE>

                     SCHEDULE A - BORROWING BASE CERTIFICATE

<PAGE>

                          SCHEDULE B - DRAWDOWN NOTICE

To:   Bank of Montreal
      Structured and Project Lending
      100 King Street West
      1 First Canadian Place
      4th Floor, P.O. Box 150
      Toronto, Ontario
      M5X 1H3

      Attention:  Manager

      This  Drawdown  Notice is being  delivered  pursuant  to the  amended  and
restated loan agreement made as of April |X|, 2004 (the "Credit Agreement") made
between the  Borrower,  the  Administrative  Agent and the Lenders.  Capitalized
terms used herein but not defined  herein  shall have the  meanings  ascribed to
such terms in the Credit Agreement.

      We hereby request the following  Advance on  __________________,  _______.
The Advance shall be pursuant to:

      check the applicable boxes

      O     Prime Rate Advance in the principal amount of Cdn.$____________.

      O     Bankers'  Acceptance  Advance  in  the  aggregate  Face  Amount  and
              principal amount of Cdn.$__________ having a term of _____ days.

      O     Libor  Advance  in the  amount of  U.S.$____________  and  having an
              Interest Period of _____ months.

      O     U.S. Base Rate Advance in the amount of U.S.$____________.

      O     Letter  of Credit in the Face  Amount  of  Cdn.$____________  and/or
              U.S.$____________  with  ________________  as beneficiary having a
              term of days.

                  Payment instructions:   _____________________________________

                                          _____________________________________

                                          _____________________________________

<PAGE>
                                     - 2 -

      The  representations and warranties set forth in Section 7.1 of the Credit
Agreement are, mutatis  mutandis,  true and correct in all material  respects on
and as of the date hereof,  both before and after giving  effect to the Drawdown
of the  requested  Advance  and to the  application  of proceeds  therefrom,  by
reference to the facts and  circumstances now existing and assuming that each of
such  representations  and warranties and the Schedules  referred to therein had
been   amended  to  reflect  any  notices   provided  by  the  Borrower  to  the
Administrative  Agent in respect of the matters  dealt with  therein  and,  with
respect  to the  representation  set  forth  in  Section  7.1(g)  of the  Credit
Agreement,  the  reference  to the date January 25, 2004 shall be deemed to be a
reference to the date of the financial  statements of the Borrower most recently
delivered  pursuant to Section 8.1(a) of the Credit  Agreement and, with respect
to unaudited  financial  statements,  that such  statements  fairly  present the
financial condition of the Borrower and its Subsidiaries as at such date and the
results of their  operations for the financial  period then ended, in accordance
with GAAP consistently applied, subject to normal year end audit adjustments.

      No Default or Event of Default has occurred and is  continuing,  nor shall
any  such  event  occur as a result  of  making  the  requested  Advance  or the
application of proceeds therefrom.

      DATED this _____ day of _____________________, ________.

                                          MITEL NETWORKS CORPORATION

                                          by
                                                  -----------------------------
                                                  Name:     |X|
                                                  Title:    |X|

                                          by
                                                  -----------------------------
                                                  Name:     |X|
                                                  Title:    |X|

<PAGE>

                         SCHEDULE C - CONVERSION NOTICE

To:   Bank of Montreal
      100 King Street West
      1 First Canadian Place
      4th Floor, P.O. Box 150
      Toronto, Ontario
      M5X 1H3

      Attention:Manager

      This  Conversion  Notice is being  delivered  pursuant  to the amended and
restated loan agreement made as of April |X|, 2004 (the "Credit Agreement") made
between the  Borrower,  the  Administrative  Agent and the Lenders.  Capitalized
terms used herein but not defined  herein  shall have the  meanings  ascribed to
such terms in the Credit Agreement.

      We  hereby  request  the  following  Conversions  on   __________________,
_______. The Conversions shall be as set forth below:

      check the applicable boxes

      0     Prime Rate  Advance  in the  principal  amount of  Cdn.$____________
              shall be  converted into a Bankers'  Acceptance  Advance  having a
              term/Interest Period of _____ days.

      0     Prime Rate  Advance  in the  principal  amount of  Cdn.$____________
              shall be  converted  into  an  Equivalent  Amount U.S.  Base  Rate
              Advance.

      0     Prime  Rate  Advance  in the  principal  amount  of  Cdn.$  shall be
              converted  __________________  into  an  Equivalent  Amount  Libor
              Advance having an Interest Period of months.

      0     Bankers'    Acceptance   in   the    aggregate    Face   Amount   of
              Cdn.$____________ shall be converted into a Prime Rate Advance.

      0     Bankers'    Acceptance   in   the    aggregate    Face   Amount   of
              Cdn.$__________  shall be converted into an Equivalent Amount U.S.
              Base Rate Advance.

      0     Bankers'    Acceptance   in   the    aggregate    Face   Amount   of
              Cdn.$__________ shall be converted into an Equivalent Amount Libor
              Advance having an Interest Period of months.

<PAGE>
                                     - 2 -

      0     Libor Advance in the principal amount of U.S.$____________  shall be
              converted into a U.S. Base Rate Advance.

      0     Libor Advance in the principal amount of U.S.$____________  shall be
              converted into an Equivalent Amount Prime Rate Advance.

      0     Libor Advance in the  principal  amount of U.S. $ shall be converted
              into an  Equivalent  Amount  Bankers' Acceptance Advance  having a
              term/Interest Period of days.

      0     U.S. Base Rate Advance in the principal amount of  U.S.$____________
              shall be converted into a Libor Advance having an Interest  Period
              of _____ months.

      0     U.S. Base Rate Advance in the principal amount of  U.S.$____________
              shall be converted into an Equivalent Amount Prime Rate Advance.

      0     U.S.  Base Rate  Advance in the  principal  amount of U.S.$ shall be
              ----------------------   converted   into  an  Equivalent   Amount
              Bankers' Acceptance Advance having a term/Interest Period of days.

      No Default or Event of Default has occurred and is  continuing,  nor shall
any such event occur as a result of making the requested conversion.

      DATED this _____ day of _____________________, ________.

                                         MITEL NETWORKS CORPORATION

                                         by
                                                 -----------------------------
                                                 Name:     |X|
                                                 Title:    |X|

                                         by
                                                 -----------------------------
                                                 Name:     |X|
                                                 Title:    |X|

<PAGE>

                          SCHEDULE D - ROLLOVER NOTICE

To:    Bank of Montreal
       Structured and Project Lending
       100 King Street West
       1 First Canadian Place
       4th Floor, P.O. Box 150
       Toronto, Ontario
       M5X 1H3

       Attention: Manager

      This  Rollover  Notice is being  delivered  pursuant  to the  amended  and
restated loan agreement made as of April |X|, 2004 (the "Credit Agreement") made
between the  Borrower,  the  Administrative  Agent and the Lenders.  Capitalized
terms used herein but not defined shall have the meanings ascribed to such terms
in the Credit Agreement.

      We hereby request the following:

      check the applicable box

      0     Rollover in respect of the Libor Advance  currently  outstanding  in
            the amount of  U.S.$____________  and with an Interest Period ending
            on  _____________,  ______.  The next Interest Period for such Libor
            Advance commencing on such date is to be _____ months.

      0     Acceptance of Bankers'  Acceptances in the aggregate Face Amount and
            principal amount of Cdn.$____________ having a term of _____ days.

      No Default or Event of Default has occurred and is  continuing,  nor shall
any such event occur as a result of making the requested rollover.

      DATED this _____ day of _____________________, ________.

                                           MITEL NETWORKS CORPORATION

                                           by
                                                  -----------------------------
                                                  Name:     |X|
                                                  Title:    |X|

<PAGE>

                      SCHEDULE E - [Intentionally deleted]

<PAGE>

                       SCHEDULE F - PERMITTED ENCUMBRANCES

"Permitted Encumbrances" means the following types of Encumbrances:

      (i)   liens in respect of taxes,  assessments or  governmental  charges or
            claims the payment of which is not, at the time, overdue;

      (ii)  statutory liens of landlords, statutory liens of banks and rights of
            set-off,  statutory  liens  of  carriers,  warehousemen,  mechanics,
            repairmen,  workmen and materialmen, and other liens imposed by law,
            in each case  incurred in the  ordinary  course of business  (a) for
            amounts not yet overdue or (b) for amounts that are overdue and that
            (in the case of any such  amounts  overdue for a period in excess of
            five  days)  are  being  contested  in  good  faith  by  appropriate
            proceedings,  so long as (1)  such  reserves  or  other  appropriate
            provisions,  if any,  as shall be  required  by  generally  accepted
            accounting  principles as applied in Canada shall have been made for
            any  such  contested  amounts,  and (2) in the  case of a lien  with
            respect  to any  portion of the  collateral  in respect of which the
            Lenders,  or  the  Administrative  Agent  on  their  behalf,  have a
            security  interest  in respect of the  obligations  of the  Borrower
            hereunder (the "Collateral"),  such contest proceedings conclusively
            operate to stay the sale of any portion of the Collateral on account
            of such lien;

      (iii) liens  incurred or deposits made in the ordinary  course of business
            in connection with workers' compensation, unemployment insurance and
            other  types of social  security,  or to secure the  performance  of
            tenders,  statutory  obligations,  surety  and appeal  bonds,  bids,
            leases,  government  contracts,  trade  contracts,  performance  and
            return-of-money  bonds and other similar  obligations  (exclusive of
            obligations  for  the  payment  of  borrowed  money),  so long as no
            foreclosure,  sale or similar  proceedings  have been commenced with
            respect to any portion of the Collateral on account thereof;

      (iv)  any  attachment or judgment lien not involving (i) in any individual
            case an amount in excess of $1,000,000,  or (ii) in the aggregate at
            any time  outstanding  an amount in excess of $2,500,000  (in either
            case  to the  extent  such  amount  is  not  adequately  covered  by
            insurance as to which a solvent and unaffiliated  insurance  company
            has acknowledged coverage) except if any such attachment or judgment
            lien shall remain undischarged, undisputed (in the case of a writ in
            the United Kingdom), unvacated, unbonded or unstayed for a period of
            60 days (or in any event  later  than five days prior to the date of
            any proposed sale thereunder);

<PAGE>
                                     - 2 -

      (v)   leases or subleases  granted to third parties which do not interfere
            in any material respect with the ordinary conduct of the business of
            the  Borrower  or any of its  subsidiaries  or result in a  material
            diminution in the value of any of the Collateral;

      (vi)  easements,  rights-of-way,  restrictions,  encroachments,  and other
            minor defects or  irregularities in title, in each case which do not
            and will not  interfere  in any  material  respect with the ordinary
            conduct of the business of the  Borrower or any of its  subsidiaries
            or  result  in a  material  diminution  in the  value  of any of the
            Collateral;

      (vii) any (a)  interest  or title  of a  lessor  or  sublessor  under  any
            operating  lease in  respect  of which  the  Borrower  or any of its
            subsidiaries  shall be,  or become  liable  whether  directly  or by
            assignment or as a guarantor or other surety for the  obligations of
            the lessee under any such  operating  lease,  to the extent that the
            aggregate   annual   rental   payments  of  the   Borrower  and  its
            subsidiaries  in  respect  of all such  operating  leases  shall not
            exceed $25,000,000, (b) restriction or encumbrance that the interest
            or title of such  lessor  or  sublessor  may be  subject  to, or (c)
            subordination  of the interest of the lessee or sublessee under such
            lease to any restriction or encumbrance referred to in the preceding
            clause (b), so long as the holder of such restriction or encumbrance
            agrees to  recognize  the rights of such lessee or  sublessee  under
            such lease;

      (viii)liens  arising  from the filing of Personal  Property  Security  Act
            (Ontario) or UCC financing statements, relating solely to leases;

      (ix)  liens in  favour  of EDC  arising  out of  certain  obligations  and
            liabilities of the Borrower to EDC in connection with or relating to
            indemnity  agreements  entered  into,  or which may in the future be
            entered  into, by the Borrower in favour of EDC in respect of surety
            and  performance  bonds  issued or to be issued by surety  companies
            (including  ACE-INA  Insurance) with EDC's full or partial indemnity
            for the  account  of the  Borrower,  for so long as such  liens  are
            subject to the postponement and subordination  agreement dated April
            20, 2004 between the Administrative Agent and EDC;

      (x)   liens in favour of The  Canada  Trust  Company  in its  capacity  as
            trustee of Endurance  Trust under the RPA over bank  accounts of the
            Borrower  and  of  MNI  being   account   *Subject  to  Request  for
            Confidential  Treatment;  Separately  Filed with the Commission* and
            *Subject to Request for  Confidential  Treatment;  Separately  Filed
            with the  Commission*,  respectively,  provided that the funds to be
            deposited  in such  accounts  are

<PAGE>
                                     - 3 -

            limited to the amounts  which the  Borrower  or MNI are  required to
            deposit  in  such   accounts   pursuant  to  the   reserve   account
            requirements  contained  in the RPA and  provided  further that such
            deposited funds are derived solely from the net proceeds of the sale
            of accounts  receivable  by the  Borrower,  MNI or MNSI to Endurance
            Trust or the collections relating to accounts receivable sold by the
            Borrower,  MNI or MNSI to Endurance  Trust  pursuant to the terms of
            the RPA unless otherwise  permitted in writing by the Administrative
            Agent;

      (xi)  liens in favour of  customs  and  revenue  authorities  arising as a
            matter of law to secure payment of customs duties in connection with
            the importation of goods;

      (xii) any  zoning or  similar  law or right  reserved  to or vested in any
            governmental  office or agency to control or regulate the use of any
            real property;

      (xiii)liens  against  owners' or  sublessors'  interest  in any  leasehold
            property   used  or  occupied   by  the   Borrower  or  any  of  its
            subsidiaries;

      (xiv) liens  securing  obligations  (other than  obligations  representing
            indebtedness  for  borrowed  money)  under   operating,   reciprocal
            easement or similar  agreements  entered into in the ordinary course
            of business of the Borrower or any of its subsidiaries;

      (xv)  licences  of patents,  trademarks  and other  intellectual  property
            rights  granted by the  Borrower or any of its  subsidiaries  in the
            ordinary  course of business  and not  interfering  in any  material
            respect with the ordinary conduct of the business of the Borrower or
            such subsidiary;

      (xvi) liens granted to evidence the security interests of the Lenders,  or
            the Administrative Agent on their behalf, in the Collateral;

      (xvii) Permitted Purchase Money Security Interests;

      (xviii) Liens granted in connection with obligations  incurred pursuant to
            clause (x) or (xi) of the definition of Permitted Debt;

      (xix) Liens not included in any of the foregoing in respect of obligations
            not exceeding Cdn.  $5,000,000 (or its Equivalent  Amount in another
            currency) in the aggregate; and

<PAGE>
                                     - 4 -

      (xx)  certain  rights of the  Government  of  Canada  in the  intellectual
            property of the  Borrower  pursuant to the  Technology  Partnerships
            Canada Agreement,

      For  greater  certainty,  the  registration  of a financing  statement  in
      respect  of the  absolute  assignment  of  accounts  receivable  under the
      Personal Property Security Act (Ontario) or UCC does not constitute a lien
      for so long as such  registration  does not  constitute  a lien  under the
      Personal Property Security Act (Ontario) or UCC.

<PAGE>

                             SCHEDULE G - LITIGATION

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* - Subject to Request for Confidential Treatment; Separately Filed with the
    Commission

<PAGE>

                       SCHEDULE H - NON-COMPLIANCE MATTERS

Nil.

<PAGE>

                            SCHEDULE I - SUBSIDIARIES

<PAGE>

                         SCHEDULE J - TRANSFER AGREEMENT

TO:   MITEL NETWORKS CORPORATION

      WHEREAS the Borrower  entered into an amended and restated loan  agreement
dated April |X|, 2004 (the "Credit Agreement") with the Administrative Agent and
the Lenders  whereby the Lenders agreed to provide the Borrower with a revolving
credit facility in an aggregate principal amount not exceeding Cdn.  $30,000,000
or the  Equivalent  Amount in United  States  Dollars for the general  corporate
purposes of the Borrower;

      AND WHEREAS pursuant to and in accordance with Section 15.11 of the Credit
Agreement,  any Lender  may,  with the prior  written  consent of the  Borrower,
assign or transfer all or any of its rights,  benefits and obligations under the
Credit   Agreement  by  duly   completing,   executing  and  delivering  to  the
Administrative Agent and to the Borrower this Transfer Certificate;

      AND WHEREAS any Lender (the "Transferor")  wishes to assign or transfer to
__________________  (the  "Transferee") the rights,  benefits and obligations of
the Transferor under the Credit Agreement specified herein;

      AND WHEREAS the Borrower has  consented in writing to such  assignment  or
transfer;

      NOW  THEREFORE in  consideration  of the  foregoing and of $1.00 and other
good and valuable  consideration,  the receipt of which is hereby  acknowledged,
the signatories hereto agree as follows:

All capitalized  terms defined in the Credit Agreement and not otherwise defined
    herein have the same meaning as in the Credit Agreement.

The Transferor  assigns and transfers to the  Transferee  the following  rights,
    benefits and obligations (the "Transfer"):

                  [description   of  the   Transferred   Rights,   Benefits  and
                  Obligations,   indicating   retained   interest  or  fees,  if
                  applicable, and Transferee's commitment and Participation]

      (the "Transferred  Rights", the "Transferred  Benefits",  the "Transferred
Obligations",  as applicable, and collectively the "Transferred Rights, Benefits
and Obligations").

The Transferee accepts the Transfer and (if applicable)  assumes the Transferred
Obligations (the "Assumption").

<PAGE>
                                     - 2 -

The Transferee agrees  with  the  Administrative  Agent and the Borrower that it
      shall be bound by the same  obligations  of the Lenders as the  Transferee
      would have been under if the  Transferee had been an original party to the
      Credit Agreement.

The Transfer  and  the  Assumption  are governed by and subject to Section 15.11
      of the Credit Agreement.

The Transferee  acknowledges and confirms that it  has not  relied upon and that
      the  Transferor  and/or the  Administrative  Agent  has/have  not made any
      representation or warranty  whatsoever as to the due execution,  legality,
      effectiveness,  validity or  enforceability of the Credit Agreement or any
      other documentation or information  delivered by the Transferor and/or the
      Administrative  Agent to the Transferee in connection therewith or for the
      performance  thereof by any party  thereto or for the  performance  of any
      Guarantee by any Guarantor or for the financial  condition of the Borrower
      or of  any  Guarantor.  All  representations,  warranties  and  conditions
      expressed or implied by law or otherwise are hereby excluded.

The Transferee  represents and  warrants  that it is not a  non-resident  within
      the meaning of the Income Tax Act  (Canada)  and that it has itself  been,
      and will continue to be, solely responsible for making its own independent
      appraisal   of   and   investigation   into   the   financial   condition,
      creditworthiness,  affairs,  status and nature of the Borrower and has not
      relied  and  will  not  hereafter  rely  on  the  Transferor   and/or  the
      Administrative  Agent to appraise  or keep under  review on its behalf the
      financial condition,  creditworthiness,  affairs,  status or nature of the
      Borrower.

Each of the  Transferor  and  the  Transferee  represents  and  warrants  to the
      Borrower  and the  Guarantors  that it has the capacity and power to enter
      into the Transfer and the  Assumption in accordance  with the terms hereof
      and to perform its obligations arising therefrom,  and all action required
      to authorize the execution and delivery hereof and the performance of such
      obligations has been duly taken.

This Transfer  Certificate shall be governed by and construed in accordance with
      the laws of the Province of Ontario, Canada.

            DATED this __________ day of _____________________, 200__

..

                                               BANK OF MONTREAL
                                               by
                                                      --------------------------
                                                      Name:     |X|
                                                      Title:    |X|

<PAGE>
                                     - 3 -

                                               [TRANSFEREE]
                                               by
                                                      --------------------------
                                                      Name:     |X|
                                                      Title:    |X|

                                               MITEL NETWORKS CORPORATION
                                               by
                                                      --------------------------
                                                      Name:     |X|
                                                      Title:    |X|

<PAGE>

                         SCHEDULE K - COMMITTED AMOUNTS

                     LENDER
                     Bank of Montreal        Cdn. $30,000,000

<PAGE>

                         SCHEDULE L - FINANCIAL FORECAST

<PAGE>

                               AMENDING AGREEMENT

               MEMORANDUM OF AGREEMENT made as of the 24 day of July, 2004.

BETWEEN:

      MITEL NETWORKS CORPORATION,

      a corporation incorporated under the laws of Canada, as borrower

      (hereinafter referred to as the "Borrower")

                                     - and -

      THE LENDERS FROM TIME TO TIME PARTIES TO THE CREDIT AGREEMENT,

      (hereinafter referred to as the "Lenders")

                                     - and -

      BANK OF MONTREAL,
      a Canadian chartered bank, as Administrative Agent and Lead Arranger

      (hereinafter  referred to in its own capacity as "BMO" and in its capacity
      as administrative  agent on behalf of the Lenders,  as the "Administrative
      Agent").

      WHEREAS  pursuant to an amended and restated  credit  agreement made as of
the 21st day of  April,  2004  (the  "Credit  Agreement"),  a  revolving  credit
facility was made  available  to the Borrower  upon and subject to the terms and
conditions therein set forth;

      AND WHEREAS the  Borrower  and the Lenders have agreed to amend the Credit
Agreement by executing and delivering this Amending Agreement;

      NOW THEREFORE  THIS  AGREEMENT  WITNESSES  that, in  consideration  of the
premises, the covenants herein contained and other valuable  consideration,  the
parties hereto agree as follows:

1.    The Credit Agreement is hereby amended in the following respects:

      (a)   Section 2.7(c) is added to the Credit Agreement as follows:

<PAGE>

            "(c) In the  event  that  the  Borrower's  EBITDA  (determined  on a
            consolidated  basis in accordance with GAAP as in effect on the date
            of this  Agreement  and  measured  as at the last day of the  fiscal
            quarter of the Borrower  ending July 25, 2004 and the fiscal quarter
            of the Borrower  ending October 24, 2004 and, to the extent that any
            assets  or  liabilities  of  Endurance  Trust  are  included  in the
            consolidated  financial  statements  of  the  Borrower,   calculated
            without  reference to the assets and liabilities of Endurance Trust)
            for a fiscal  quarter  ending July 25,  2004 and the fiscal  quarter
            ending October 24, 2004 is less than Cdn. $3,000,000,  the Committed
            Amount  shall be  temporarily  reduced to Cdn.  $15,000,000,  or the
            Equivalent  Amount in U.S.  Dollars if such  amount is less than the
            actual Committed Amount hereunder. Notwithstanding the foregoing, if
            the Borrower's  EBITDA in the fiscal quarter ending October 24, 2004
            is equal to or greater than Cdn.  $3,000,000,  the Committed  Amount
            shall be equal to the  lesser of (i) the  actual  Committed  Amount,
            subject to any  subsequent  reduction  pursuant  to  Section  2.7(a)
            above,  prior to the  temporary  reduction of the  Committed  Amount
            provided under this Section 2.7(c);  and (ii) Cdn.  $30,000,000,  or
            the Equivalent Amount in U.S. Dollars."; and

      (b)   Section 8.3 of the Credit Agreement is deleted and replaced with the
            following:

            "8.3 Financial Covenant

                  The  Borrower  covenants  and agrees  with the  Administrative
            Agent and the Lenders that, unless the Administrative  Agent and the
            Required Lenders otherwise consent in writing, so long as any amount
            payable hereunder is outstanding,  the Borrower shall not permit its
            EBITDA  (determined on a consolidated  basis in accordance with GAAP
            as in effect on the date of this  Agreement  and  measured as at the
            last day of each  fiscal  quarter of the  Borrower  for such  fiscal
            quarter then ending,  commencing with the fiscal quarter ending July
            25,  2004 and,  to the  extent  that any  assets or  liabilities  of
            Endurance   Trust  are  included  in  the   consolidated   financial
            statements  of the  Borrower,  calculated  without  reference to the
            assets  and  liabilities  of  Endurance  Trust)  to be less than the
            following  amounts  for the  relevant  fiscal  quarter  as set forth
            below:

                  (i) for the fiscal quarter ending July 25, 2004, negative Cdn.
            $5,000,000;

                  (ii) for the fiscal  quarter  ending  October 24,  2004,  Cdn.
            $0.00;

                  (iii) for the fiscal  quarter  ending  January 23, 2005,  Cdn.
            $3,000,000; and

                  (iv) for the  fiscal  quarter  ending  April  24,  2005,  Cdn.
            $6,000,000."

2. This Amending Agreement may be executed in counterparts,  each of which shall
be considered  an original and all of which taken  together  shall  constitute a
single agreement.

<PAGE>

3. This  Amending  Agreement  shall be governed  by the laws of the  Province of
Ontario and the federal laws of Canada applicable therein.

4. The Credit Agreement, as amended, is hereby confirmed.

      IN  WITNESS  WHEREOF  the  parties  hereto  have  executed  this  Amending
Agreement.

                                          MITEL NETWORKS CORPORATION

                                          by

                                            ------------------------------------
                                            Name:
                                            Title:

                                          BANK OF MONTREAL, as Administrative
                                          Agent And Lead Arranger
                                          by

                                            ------------------------------------
                                            Name:
                                            Title:

                                          BANK OF MONTREAL, as Lender
                                          by

                                            ------------------------------------
                                            Name:
                                            Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]