Document:

Exhibit 10.1

Exhibit 10.1

CREDIT AGREEMENT

BETWEEN

LINENS ‘N THINGS CANADA CORP.

 as Borrower

AND

LINENS ‘N THINGS,
INC.
as Guarantor 

AND

NATIONAL CITY BANK, CANADA BRANCH

 as Administrative Agent

AND

THE FINANCIAL INSTITUTIONS 

from time to time
parties hereto 

as Lenders 

AND

NATIONAL CITY BANK, CANADA BRANCH

 as Lead Arranger

MADE AS OF

July 29, 2005 

McCarthy Tétrault LLP

	  	  	TABLE OF
      CONTENTS  	  	  

	 	 
	Article 1 -
      INTERPRETATION  	1
	                
 1.01   Definitions	1
	                
 1.02   Accounting
      Principles	12
	                
 1.03  Interest Calculations and
      Payments	12
	                
 1.04   Interest Act
      (Canada)	12
	                
 1.05   Currency  	12
	                
 1.06   Conflicts	12
	                
 1.07   Schedules  	12
	 	 
	Article 2 - THE CREDIT
      FACILITY 	13
	                
 2.01 

The Credit
      Facility	13
	                
 2.02   Swingline
      Facility  	13
	                
 2.03 

Purpose of Credit
      Facility	15
	                
 2.04 

Manner of
      Borrowing	15
	  
                2.05  Revolving Nature of Credit Facility	15
	                
 2.06 

Drawdowns, Conversions
      and Rollovers	15
	                
 2.07   Administrative Agent’s Obligations with Respect to
      Loans  	16
	                 
2.08   Lenders’ and Administrative
Agent’s Obligations with Respect to Loans  	16
	   
       
           

2.09  

Irrevocability   	16
	           
            2.10 

Cancellation
      or Reduction of Credit Facility  	16
	           
            2.11 

Account of
      Record  	16
	                
 	 
	Article
3 - DISBURSEMENT CONDITIONS  	17
	                
 3.01  Conditions
Precedent to First Advance	17
	                
 3.02   
Conditions Precedent to all Advances  	19
	                
 3.03  
Waiver  	19
	                
 	 
	Article
4 - PAYMENTS OF INTEREST AND STANDBY FEES   	 20
	                 
 4.01 

Interest on Prime Rate Loans	 20
	                 
 4.02   
Facility Fee  	
 20
	                 
 4.03   
Agency Fees  	 20
	                 
 4.04   
Structuring and Arrangement Fees	
 20
	                 
 4.05   
Upfront Fees  	 21
	                 
 4.06   
Interest on Other Amounts  	
 21
	 	 
	Article 5 - BANKERS’
ACCEPTANCES AND LETTERS OF CREDIT 	21
	                 
 5.01  
Bankers’ Acceptances  	21
	                 
 5.02  
Letters of Credit	
23
	 	 
	Article 6 - REPAYMENT 	27
	                 
 6.01  Mandatory Repayment - Credit Facility
 	
27 
 

	 	 

	 
	  - ii -  
	  
	Article 7 -
      PLACE AND APPLICATION OF PAYMENTS	27
	                
 7.01   Place of
      Payment of Principal, Interest and Fees	
27
	                
 7.02  Netting of
      Payments	27
	 	 
	Article 8 -
      REPRESENTATIONS AND WARRANTIES  	  28
	                
 8.01   Representations and Warranties  	
28
	                
 8.02  Survival and
      Repetition of Representations and Warranties	32
	 	 
	Article 9 -
      COVENANTS  	32
	                
 9.01  Positive Covenants	
32
	                
 9.02   Reporting
      Requirements	35
	                
 9.03  Negative
      Covenants  	
35
	 	 
	Article 10 -
      DEFAULT  	36
	           
             10.01 Events of
      Default  	36
	           
             10.02 Acceleration and
      Enforcement  	38
	         
               10.03 Payment of
      Bankers’ Acceptances and Letters of Credit	38
	           
             10.04 Remedies
      Cumulative 	39
	           
             10.05 Perform
      Obligations  	39
	  
	Article 11 -
      THE ADMINISTRATIVE AGENT AND THE LENDERS  	39
	           
             11.01 Payments by the
      Borrower  	39
	           
             11.02 Payments by
      Administrative Agent  	40
	           
             11.03 Administration of
      the Credits  	41
	           
             11.04 Rights of
      Administrative Agent  	43
	         
               11.05
      Representations, Acknowledgements and Covenants of Lenders
	44
	         
               11.06 Provisions
      Operative Between Lenders and Administrative Agent Only	44
	  
	Article 12 -
      GENERAL 	45
	           
             12.01 Addresses, Etc.
      for Notices    	45
	         
               12.02 Governing
      Law and Submission to Jurisdiction  	45
	           
             12.03 Judgment
      Currency  	45
	           
             12.04
      Survival   	46
	           
             12.05
      Severability  	46
	           
             12.06 Further
      Assurances    	46
	           
             12.07 Amendments and
      Waivers  	46
	           
             12.08 Time of the
      Essence  	47

CREDIT AGREEMENT

THIS AGREEMENT is made as of July 29, 2005

B E T W E E N:
LINENS ‘N THINGS CANADA
CORP., a Nova Scotia unlimited liability corporation
(the “Borrower”),

- and -

LINENS ‘N THINGS, INC., 
a
corporation incorporated under the laws of the State of Delaware (hereinafter
referred to as the  “Guarantor”)

- and -

NATIONAL CITY BANK, CANADA
BRANCH, in its capacity as agent for the Lenders
(the  “Administrative Agent”), 

- and -

THE FINANCIAL INSTITUTIONS
from time to time party to this Agreement and designated as Lenders on the
signatures pages hereto (each, a  “Lender”, and collectively, the
 “Lenders”). 

          WHEREAS the Borrower has
requested the Credit Facility and the Lenders have agreed to provide the Credit
Facility to the Borrower on the terms and conditions herein set forth; and

          WHEREAS National City Bank,
Canada Branch will be the Administrative Agent as contemplated by Section 7.1 of
Schedule A; 

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

ARTICLE 1 -
INTERPRETATION

1.01   Definitions 

          In this Agreement, unless
something in the subject matter or context is inconsistent therewith:

 “Affiliate” has the meaning
set out in Schedule A. 

- 2 -

 “Agent’s Office” means the
branch of the Administrative Agent located at 130 King Street West, Suite 2140,
Toronto, Ontario, M5X 1E3, or such other office that the Administrative Agent
may from time to time designate by notice to the Borrower and the Lenders.

 “Agreement” means this credit
agreement, including its recitals and schedules.

 “Applicable Law” has the
meaning set out in Schedule A. 

 “Applicable Margin” means the
percentage rate per annum determined in accordance with the applicable table
below: 

	Facility 	 	Prime Rate 	  	BA Stamping 	  	Standby Letter of 	  	Commercial Letter 
	Fee 	 	Margin 	  	Fee Rate 	  	Credit Fee Rate 	  	of Credit Fee Rate

	  
	0.25%	 	0%	  	1.25% 	  	1.25% 	  	0.625% 

 “Applicable Percentage” has
the meaning set out in Schedule A. 

 “BA Discount Proceeds” means,
with respect to a particular Bankers’ Acceptance, the following amount:

      
F      

1+D x T 

365 

where

	 	 	F      	means the face amount of such Bankers’
      Acceptance; 
	 
	 	 	D      	means the applicable BA Discount Rate
      for such Bankers’ Acceptance; and 
	 
	 	 	T      	means the number of days to maturity of
      such Bankers’ Acceptance, 
	 

with the amount as so determined being rounded up or down to
the fifth decimal place and 0.000005 being rounded up. 

 “BA Discount Rate” means, (a)
for Schedule I Lenders, the average (as it appears on the Reuters Screen CDOR
Page) Bankers’ Acceptance Rate of the Schedule I Reference Lenders for a period
identical to the term to maturity of the relevant Bankers’ Acceptance, and (b)
for Schedule II Lenders, the lesser of (i) the average (as determined by the
Administrative Agent) of the discount rates of the Schedule II Reference Lenders
for a period identical to the term to maturity of the relevant Bankers’
Acceptance, and (ii) the sum of (x) the BA Discount Rate for Schedule I Lenders
determined in accordance with clause (a) above and (y) 1.25% per annum.

 “BA Equivalent Note” has the
meaning set out in Section 5.01(1) . 

- 3 -

 “BA Lender” means any Lender
that is a bank chartered under the Bank
Act (Canada) and that has not notified the
Administrative Agent in writing that it is unwilling or unable to accept Drafts
as provided for in Article 5. 

 “BA Stamping Fee” means the
amount calculated by multiplying the face amount of a Bankers’ Acceptance or a
BA Equivalent Note by the BA Stamping Fee Rate and then multiplying the result
by a fraction, the numerator of which is the number of days to elapse from and
including the date of acceptance of such Bankers’ Acceptance or purchase of such
BA Equivalent Note by a Lender up to but excluding the maturity date of such
Bankers’ Acceptance or BA Equivalent Note, and the denominator of which is the
number of days in the calendar year in question. 

 “BA Stamping Fee Rate” means,
with respect to a Bankers’ Acceptance or a BA Equivalent Note, the applicable
percentage rate per annum indicated below the reference to  “BA Stamping Fee
Rate” in the definition of  “Applicable Margin”. 

 “Bankers’ Acceptance” means a
depository bill, as defined in the Depository Bills
and Notes Act (Canada), in Canadian dollars that is
in the form of a Draft signed by the Borrower and accepted by a BA Lender as
contemplated under Section 5.01, or for Lenders not participating in clearing
services as contemplated in that Act, a draft or other bill of exchange in
Canadian Dollars that is signed on behalf of the Borrower and accepted by a
Lender, and each reference to a  “banker’s acceptance” in Schedule A shall be
treated as a reference to a  “Bankers’ Acceptance”. 

 “Borrower’s Counsel” means
Minden Gross Grafstein & Greenstein LLP or such other firm of legal counsel
as the Borrower may from time to time designate and that is acceptable to the
Administrative Agent. 

 “Business Day” means a day of
the year, other than a Saturday, Sunday or statutory holiday, on which the
Administrative Agent is open for business at its executive offices in Toronto,
Ontario and Cleveland, Ohio. 

 “Canadian Dollars” and
 “Cdn.$” mean the lawful
money of Canada. 

 “Capital Lease” means a
capital lease or a lease which should be treated as a capital lease under GAAP.

 “CDOR” means, for any day and
relative to Canadian Dollar Bankers’ Acceptances or BA Equivalent Notes, the
stated average of the annual rates that appears on the Reuters Screen CDOR page
with respect to banks named in Schedule I to the Bank
Act (Canada) as of at 10:00 a.m. (Toronto time) on
such day (or, if such day is not a Business Day, as of 10:00 a.m. on the next
preceding Business Day) for bankers acceptances issued on that day for a term
equal or comparable to the term of such Canadian Dollars Bankers’ Acceptances or
BA Equivalent Notes, provided that if such rate does not appear on the Reuters
Screen CDOR page at such time on such day, CDOR for such day will be the annual
discount rate (rounded upward to the nearest whole multiple of 1/100 of 1% with
5/1,000 of 1% being rounded up) as of 10:00 a.m. on such day at which the
Administrative Agent is then offering to purchase bankers’ acceptances accepted
by it having a comparable aggregate face amount and 

- 4 -

 identical maturity date to the aggregate face amount and maturity date of such Bankers’
Acceptances or BA Equivalent Notes, as the case may be. 
 “Closing Date” means July 29,
2005.

 “Commercial Letter of Credit Fee Rate” means, for any period, with respect to a commercial Letter of
Credit, the percentage rate per annum applicable to that period as set out below
the heading  “Commercial Letter of Credit Fee Rate” in the definition of “Applicable Margin”. 

 “Commitment” means, in
respect of each Lender with respect to a particular Credit Facility, the amount
specified with respect to such Lender in Schedule B (which will be amended and
distributed to all parties by the Administrative Agent from time to time as
other persons become Lenders), being the sum of the maximum aggregate amount of
(a) Loans which such Lender is obliged to make, and (b) such Lender’s
participations in Letters of Credit, as such amount may be reduced from time to
time by such Lender’s Applicable Percentage of the amount of any permanent
repayments, reductions or prepayments required or made hereunder. 

 “Compliance Certificate”
means the certificate required pursuant to Section 9.02(3), substantially in the
form attached as Schedule 1.01(A), signed by any one of the President, a Senior
Vice-President or the Chief Financial Officer of the Borrower. 

 “Contracts” means agreements,
franchises, leases, easements, servitudes, privileges and other rights acquired
from Persons other than governments. 

 “Conversion” means a
conversion of a Loan pursuant to Section 2.06. 

 “Conversion Date” means the
date specified by the Borrower in a Conversion Notice as being the date on which
the Borrower has elected to convert one type of Loan into another type of Loan
and which will be a Business Day. 

 “Conversion Notice” means a
Notice, substantially in the form attached hereto as Schedule 1.01(B), to be
given to the Administrative Agent by the Borrower pursuant to Section 2.06.

 “Credit Facility” has the
meaning set out in Section 2.01. 

 “Default” has the meaning set
out in Schedule A. 

 “Disposition” means any sale,
assignment, transfer, conveyance, lease, license or other disposition of any
nature or kind whatsoever of any Property or of any right, title or interest in
or to any Property that is out of the ordinary course of business of the
particular Person, and the verb  “Dispose” shall have a corresponding
meaning. 

 “Draft” has the meaning set
out in Section 5.01. 
 “Drawdown” means

- 5 -

(i)    the advance of a Prime Rate Loan; 

(ii)    the issue of one or more Bankers’
      Acceptances or BA Equivalent Notes; or 

(iii)    the issue of one or more Letters of
      Credit. 

 “Drawdown Date” means the
date on which a Drawdown is made by the Borrower pursuant to the provisions
hereof. 

 “Drawdown Notice” means a
notice, substantially in the form attached hereto as Schedule 1.01(C), to be
given to the Administrative Agent by the Borrower pursuant to Section 2.06.

 “Encumbrance” means, with
respect to any Person, any mortgage, debenture, pledge, hypothec, lien, charge,
assignment by way of security, hypothecation or security interest granted or
permitted by such Person or arising by operation of law, in respect of any of
such Person’s Property, or any consignment by way of security or Capital Lease
of Property by such Person as consignee or lessee, as the case may be, or any
other security agreement, trust or arrangement having the effect of security for
the payment of any debt, liability or other obligation, and 
 “Encumbrances”,
 “Encumbrancer”,
 “Encumber” and
 “Encumbered” shall have
corresponding meanings. 

 “Environmental Laws” means
all Applicable Laws relating to the environment or occupational health and
safety, including, but not limited to (a) the protection, preservation or
remediation of the natural environment (the air, land, surface water or
groundwater); (b) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation; and (c) Hazardous Materials.

 “Environmental Liability”
means any liability of the Obligors arising from the breach of any Environmental
Laws. 

 “ERISA” means the
Employee Retirement Income Security Act of
1974 of the United States, together with the
regulations thereunder, as the same may be amended from time to
time. 

 “Event of Default” has the
meaning set out in Section 10.01. 

 “Existing Credit Facility”
means the credit facility provided by way of a credit agreement dated as of June
20, 2001 between National City Bank, Canada Branch and the Borrower. 

 “GAAP” means generally
accepted accounting principles in the United States of America. 

 “Governmental Authority” has
the meaning set out in Schedule A. 

 “Guarantee” means the
guarantee dated as of the date hereof by the Guarantor in favour of the
Administrative Agent and the Lenders as such guarantee may be amended,
supplemented, restated or replaced from time to time. 

- 6 -

 “Hazardous Materials” means
any substance, product, waste, residue, pollutant, material, chemical,
contaminant, dangerous good, constituent or other material that is or becomes
listed, regulated, defined or addressed under or subject to any Environmental
Law, including, without limitation, asbestos, petroleum, tailings, mining
residue, polychlorinated biphenyls and radioactive materials. 

 “Interbank Reference Rate”
means the interest rate expressed as a percentage per annum which is customarily
used by the Administrative Agent when calculating interest due by it or owing to
it arising from the correction of errors and other adjustments between it and
other Canadian chartered banks. 

 “Interest Payment Date”
means, with respect to each Prime Rate Loan, the first Business Day of each
calendar month. 
 “Interest Period” means

	(i)      	with respect to each Prime Rate Loan, the
period commencing on the applicable Drawdown Date or
Conversion Date, as the case may be, and ending on the date selected by the
Borrower for the Conversion of such Loan into another type of Loan or for
the repayment of such Loan; and 
	 
	(ii)      	with respect to each Bankers’
      Acceptance, the period selected by the Borrower hereunder and being of
      one, two, three or six months duration commencing on the Drawdown Date,
      Rollover Date or Conversion Date of such Loan; 

provided that in any case the last day of each Interest
Period shall be also the first day of the next Interest Period and further
provided that the last day of each Interest Period shall be a Business Day. If
the last day of an Interest Period selected by the Borrower is not a Business
Day the Borrower shall be deemed to have selected an Interest Period the last
day of which is the Business Day next following the last day of the Interest
Period otherwise selected unless such next following Business Day falls in the
next calendar month in which event the Borrower shall be deemed to have selected
an Interest Period the last day of which is the Business Day next preceding the
last day of the Interest Period otherwise selected and further provided that the
last Interest Period hereunder shall expire on or prior to the Maturity Date.

 “Issuing Bank” means that
Lender identified from time to time as the Issuing Bank in Schedule B.

 “Judgment Conversion Date”
has the meaning set out in Section 12.03(1) . 

 “Judgment Currency” has the
meaning set out in Section 12.03(1) . 

 “Lenders” means the Persons
from time to time party to this Agreement and identified as either a Lender, a
Swingline Lender or the Issuing Bank in Schedule B, and reference to
 “Lender” in this
Agreement may mean that Lender in its capacity as a Lender, Swingline Lender or
Issuing Bank, as the case may be, if the context so requires, and
 “Lender” means any one of
the Lenders. 

- 7 -

 “Lenders’ Counsel” means the
firm of McCarthy Tétrault LLP or such other firm of legal counsel as the
Administrative Agent may from time to time designate. 

 “Lending Office” means, with
respect to a particular Lender, the branch or office specified in Schedule B
from which such Lender makes advances and to which the Agent disburses payments
received for the benefit of such Lender. 

 “Letter of Credit” means a
standby letter of credit or a commercial letter of credit issued or deemed to be
issued by the Issuing Bank pursuant to the Credit Facility at the request and
for the account of the Borrower under this Agreement. 
 “Loan” has the meaning set out in
Schedule A.

 “Loan Documents” means (a)
this Agreement, (b) the Guarantee and (c) all present and future agreements,
documents, certificates and instruments delivered by any Obligor to the
Administrative Agent or the Lenders pursuant to or in respect of this Agreement
or the Guarantee, in each case as the same may from time to time be amended, and
 “Loan Document” means any
one of the Loan Documents. 

 “Material Adverse Change”
means, with respect to an Obligor, any change having a material adverse effect
on the business, assets, liabilities, operations, results of operations or
condition (financial or other) of such Obligor or the ability of such Obligor to
carry on its business or a significant part of its business, which would
reasonably be expected to result in, or has resulted in an impairment of the
ability of such Obligor to perform any of its Obligations, as determined by the
Required Lenders, acting reasonably. 

 “Material Contracts” means,
with respect to a particular Obligor, all contracts to which such Person is a
party or by which it is bound or may hereafter become a party or be bound, the
breach or default of which would result in a Material Adverse Change, and
 “Material Contract” means
any one thereof. 

 “Material Licenses” means,
collectively, any licence, permit or approval issued by any Governmental
Authority, or any applicable stock exchange or securities commission, to the
Borrower, and which is at any time on or after the date of this Agreement,

	(i)      	necessary or material to the business
      and operations of the Borrower or to the listing of its securities, the
      breach or default of which would result in a Material Adverse Change,
      or 
	 
	(ii)      	designated or accepted by the
      Administrative Agent, in the discretion of the Administrative Agent,
      acting reasonably as a Material License, provided that the Administrative
      Agent has notified the Borrower of its designation of the license, permit
      or approval as a Material License. 

 “Maturity Date” means July
29, 2008 being the date on which the Commitment of each Lender will expire.

- 8 -

 “Non BA Lender” means any
Lender which is not a BA Lender. 

 “Non-Schedule I Lenders”
means those banks that are chartered under the Bank
Act (Canada) and are not named in Schedule I
thereto, and  “Non-Schedule I Lender” means each such bank. 

 “Non-Schedule I Reference Lenders” means, collectively, up to three Non-Schedule I Lenders selected by
the Administrative Agent, in its discretion, as being in the opinion of the
Administrative Agent representative of the Non-Schedule I Lenders. 

 “Obligations” means all
obligations of the Borrower to the Administrative Agent, the Lenders, or any of
them, under or in connection with this Agreement or the other Loan Documents,
including all debts and liabilities, present or future, direct or indirect,
absolute or contingent, matured or not, at any time owing by the Borrower to the
Administrative Agent or the Lenders, or any of them, in any currency or
remaining unpaid by the Borrower to the Administrative Agent or the Lenders, or
any of them, under or in connection with this Agreement or the other Loan
Documents whether arising from dealings between the Administrative Agent or the
Lenders, or any of them, and the Borrower or from any other dealings or
proceedings by which the Administrative Agent or the Lenders, or any of them,
may be or become in any manner whatever a creditor of the Borrower pursuant to
this Agreement or the other Loan Documents, and wherever incurred, and whether
incurred by the Borrower alone or with another or others and whether as
principal or surety, and all interest, fees, legal and other costs, charges and
expenses and for greater certainty includes all indebtedness, liabilities and
obligations owing by the Borrower to any Lender with respect to any treasury
hedging products. 

 “Obligors” has the meaning
set out in Schedule A. 

 “Officer’s Certificate” means
a certificate signed by any one of the President, a Senior Vice-President, the
Chief Financial Officer or the Treasurer of the Borrower or the Guarantor, as
the case may be, or by any other senior officer of the Borrower or the Guarantor
acceptable to the Administrative Agent. 

 “Organizational Documents”
means, with respect to any Person, such Person’s articles, memorandum or other
charter documents, partnership agreement, joint venture agreement, declaration
of trust, trust agreement, by-laws, unanimous shareholder agreement, or any and
all other similar agreements, documents and instruments pursuant to which such
Person is constituted, organized or governed. 

 “Pension Plan” means (a) a
 “pension plan” or  “plan” which is a  “registered pension plan” as defined in the
Income Tax Act (Canada)
or is subject to the funding requirements of applicable pension benefits
legislation in any Canadian jurisdiction and is applicable to employees resident
in Canada of an Obligor, (b) a  “pension plan”, as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multi
employer plan as defined in Section 4001(a)(3) of ERISA), and to which an
Obligor may reasonably be expected to have liability, including any liability by
reason of having been a substantial employer within the meaning of Section 4063
or ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under Section 4069 of ERISA, or (c) any
other pension benefit plan or similar arrangement applicable to employees of an
Obligor. 

- 9 -

 “Permitted Encumbrances”
 “Permitted Encumbrances”
means, with respect to any Person, the following: 

	(i)      	liens for taxes, rates, assessments or
      other governmental charges or levies not yet due, or for which instalments
      have been paid based on reasonable estimates pending final assessments, or
      if due, the validity of which is being contested diligently and in good
      faith by appropriate proceedings by that Person; 
	 
	(ii)      	reservations, limitations, provisos and
      conditions expressed in any original grants from the Crown or other grants
      of real or immovable property, or interests therein, which do not
      materially affect the use of the affected land for the purpose for which
      it is used by that Person; 
	 
	(iii)     
	licences, easements, rights-of-way and
      rights in the nature of easements (including, without limiting the
      generality of the foregoing, licences, easements, rights-of-way and rights
      in the nature of easements for railways, sidewalks, public ways, sewers,
      drains, gas, steam and water mains or electric light and power, or
      telephone and telegraph conduits, poles, wires and cables) that do not
      materially impair the use of the affected land for the purpose for which
      it is used by that Person; 
	 
	(iv)      	title defects, irregularities or other
      matters relating to title which are of a minor nature and that in the
      aggregate do not materially impair the use of the affected property for
      the purpose for which it is used by that Person; 
	 
	(v)      	the right reserved to or vested in any
      municipality or governmental or other public authority by the terms of any
      lease, licence, franchise, grant or permit acquired by that Person or by
      any statutory provision to terminate any such lease, licence, franchise,
      grant or permit, or to require annual or other payments as a condition to
      the continuance thereof; 
	 
	(vi)      	the Encumbrance resulting from the
      deposit of cash or securities in connection with contracts, tenders or
      expropriation proceedings, or to secure workmen’s compensation,
      unemployment insurance, surety or appeal bonds, costs of litigation when
      required by law, liens and claims incidental to current construction,
      mechanics’, warehousemen’s, carriers’ and other similar liens, and public,
      statutory and other like obligations incurred in the ordinary course of
      business; 
	 
	(vii)     
	security given to a public utility or
      any municipality or governmental authority when required by such utility
      or authority in connection with the operations of that Person in the
      ordinary course of its business; 
	 
	(viii)     
    	the Encumbrance created by a judgement
      of a court of competent jurisdiction, as long as the judgement is being
      contested diligently and in good faith by appropriate proceedings by that
      Person and does not result in an Event of Default; 
	 
	(ix)      	any Encumbrance described in Schedule
      1.01(D); and 
	 

- 10 -

(x)     such other Encumbrances as are agreed to in writing by
the Required Lenders. 

 “Person” has the meaning set
out in Schedule A. 

 “Prime Rate” means the
greater of (a) the variable per annum reference rate of interest announced and
adjusted by the Bank of Montreal from time to time for Canadian Dollar loans in
Canada, and (b) the sum of (i) the rate of interest per annum that is equal to
the Reuters Screen CDOR Page one month BA Discount Rate of the Administrative
Agent expressed as an annual yield rate and (ii) 1.0% . 

 “Prime Rate Loan” means a
Loan in or a Conversion into Canadian Dollars made by the Lenders to the
Borrower with respect to which the Borrower has specified that interest is to be
calculated by reference to the Prime Rate. 

 “Prime Rate Margin” means,
for any period, the applicable percentage rate per annum applicable to that
period as set out below the heading  “Prime Rate Margin” in the definition of
 “Applicable Margin”. 

 “Property” means, with
respect to any Person, all or any portion of that Person’s undertaking and
property, both real and personal, including for greater certainty, any share in
the capital of a corporation or ownership interest in any other Person material
to the transactions contemplated by anyone or more of the Loan Documents.

 “Release” means the release
into the air, land, surface water or ground water. 

 “Required Lenders” means (a)
if no Loans or Letters of Credit are outstanding under this Agreement, the
Lenders holding at least 66 2/3% of the aggregate amount of Commitments, and (b)
if any Loans or Letters of Credit are outstanding under this Agreement, the
Lenders to which an amount in aggregate equal to at least 66 2/3% of such Loans
and Letters of Credit is owed, the obligation owed to the Issuing Bank in
respect of Letters of Credit being treated as an obligation owed to the
participating Lenders pro rata. 

 “Requirements of Law” means,
with respect to any Person, the Organizational Documents of such Person and any
Applicable Law or any determination of a Governmental Authority, in each case
applicable to or binding upon such Person or any of its business or Property or
to which such Person or any of its business or Property is subject and material
to the transactions contemplated by one or more of the Loan Documents.

 “Revolving Period” means the
period commencing on the Closing Date and ending on the Maturity Date.

 “Rollover” means the
acceptance of a Bankers’ Acceptance in like principal amount upon the maturity
of a Bankers’ Acceptance or a BA Equivalent Note for an additional Interest
Period. 

 “Rollover Date” means the
date of commencement of a new Interest Period applicable to a Bankers’
Acceptance or BA Equivalent Note that is being rolled over. 

- 11 -

 “Rollover Notice” means the
notice, substantially in the form attached hereto as Schedule 1.01(E), to be
given to the Administrative Agent by the Borrower in connection with the
Rollover of a Bankers’ Acceptance or BA Equivalent Note. 

 “Schedule I Lenders” means
those banks that are chartered under the Bank
Act (Canada) and named in Schedule I thereto, and
 “Schedule I Lender” means
each such bank. 

 “Schedule I Reference Lenders” means, collectively, Bank of Montreal and any other Schedule I
Lender selected by the Administrative Agent in consultation with the Borrower.

 “Standby Letter of Credit Fee” means, for any period, with respect to a Letter of Credit that is a
standby Letter of Credit, the percentage rate per annum applicable to the period
as set out below the heading  “Standby Letter of Credit Fee Rate” in the
definition of  “Applicable Margin”. 

 “Subsidiary” means, at any
time, with respect to any Person, any other Person, if at such time the first
mentioned Person owns, directly or indirectly, securities or other ownership
interests in such other Person, having ordinary voting power to elect a majority
of the board of directors or persons performing similar functions for such other
Person, and will include any other Person in like relationship to a Subsidiary
of such first mentioned Person. 

 “Swingline Facility” has the
meaning set out in Section 2.02(1) . 

 “Swingline Lender” means that
Lender identified from time to time as the Swingline Lender in Schedule B.

 “Swingline Loan” has the
meaning set out in Section 2.02(2) . 
 “Taxes”
has the meaning set out in Schedule A.

 “U.S. Compliance Certificate”
means a compliance certificate required to be delivered by the Guarantor
pursuant to Section 6.07(c) of the U.S. Credit Agreement. 

 “U.S. Credit Agreement” means
the credit agreement dated as of November 23, 2004 by and among, inter alia, the Guarantor, certain
subsidiaries of the Guarantor, the lenders party thereto from time to time and
Bank of America, N.A. as administrative agent for such lenders, as such
agreement may be amended, supplemented, restated or replaced from time to time.

 “U.S. Default” means a
 “default” or an  “event of default” as those terms are defined under the U.S.
Credit Agreement. 

 “Welfare Plan” means (a) a
 “welfare plan”, as such term is defined in Section 3(1) of ERISA, and (b) any
other medical, health, hospitalization, insurance or other employee benefit or
welfare plan, agreement or arrangement applicable to employees of an Obligor.

- 12 - 

1.02   
Accounting Principles

          Where the character or amount
of any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to be
made for the purpose of this Agreement or any Loan Document, such determination
or calculation will, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with GAAP.

1.03   Interest Calculations and
      Payments 

          Unless otherwise stated,
wherever in this Agreement reference is made to a rate of interest  “per annum”
or a similar expression is used, such interest will be calculated using the
nominal rate method of calculation and not the effective rate method of
calculation or any other method that gives effect to the principle of deemed
reinvestment of interest, and on the basis of a calendar year of 365 days or 366
days, as the case may be. Interest will continue to accrue after Maturity and
default and/or judgment, if any, until payment thereof, and interest will accrue
on overdue interest, if any.

1.04   Interest Act (Canada)

          For the purposes of this
Agreement, whenever interest to be paid hereunder is to be calculated on the
basis of 360 days or any other period of time that is less than a calendar year,
the yearly rate of interest to which the rate determined pursuant to such
calculation is equivalent is the rate so determined multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and
divided by 360 or such other number of days in such period, as the case may be.

1.05   Currency

          Unless otherwise specified in
this Agreement, all references to currency (without further description) are to
lawful money of Canada. 

1.06   Conflicts

          In the event of a conflict
between the provisions of the Agreement and the provisions of any of the other
Loan Documents, then, unless such Loan Document or an acknowledgement from the
Obligor and the Administrative Agent relative to such Loan Document expressly
states that this Section 1.06 is not applicable to such Loan Document,
notwithstanding anything else contained in such other Loan Document, the
provisions of this Agreement will prevail and the provisions of such other Loan
Document will be deemed to be amended to the extent necessary to eliminate such
conflict. 

1.07   Schedules

          The following are the
Schedules attached hereto and incorporated by reference and deemed to be part
hereof: 

- 13 - 

	Schedule A 
    	  	- 	  	  	Model Credit Agreement
      Provisions  
	Schedule B 
    	  	- 	  	  	Lenders and
      Commitments  
	Schedule
      1.01(A)  	  	- 	  	  	Compliance
      Certificate  
	Schedule
      1.01(B)  	  	- 	  	  	Conversion
      Notice  
	Schedule
      1.01(C)  	  	- 	  	  	Drawdown
      Notice  
	Schedule
      1.01(D)  	  	- 	  	  	Permitted
      Encumbrances  
	Schedule
      1.01(E)  	  	- 	  	  	Rollover
      Notice  
	Schedule C 
    	  	- 	  	  	Opinion of Borrower’s
      Counsel  
	Schedule D 
    	  	- 	  	  	Opinion of Guarantor’s
      Counsel  
	Schedule E 
    	  	- 	  	  	Opinion of Nova Scotia
      Counsel  
	Schedule F 
    	  	
-
	  	  	Pension Plan
      Disclosure  

ARTICLE 2 - THE CREDIT
FACILITY

2.01   The Credit Facility

          Subject to the terms and
conditions of this Agreement, the Lenders establish in favour of the Borrower a
revolving term facility (the  “Credit Facility”), part of which includes the Swingline
Facility, in an amount up to Cdn. $40,000,000, which facility will be available
only during the Revolving Period. 

2.02   Swingline Facility

          (1) Subject to the terms and conditions of
this Agreement, the Swingline Lender establishes in favour of the Borrower a
revolving term facility that is part of the Credit Facility on the terms set
forth in this Section 2.02 (the  “Swingline Facility”) up to the amount specified in Section
2.02(3). 

          (2) At any time that the Borrower would be
entitled to obtain Prime Rate Loans under the Credit Facility, the Borrower will
be entitled to draw cheques on its Cdn. Dollar chequing account maintained from
time to time with the Swingline Lender at the Lending Office of the Swingline
Lender specified in Schedule B (or such other accounts with the Swingline Lender
at such other Lending Office of the Swingline Lender as may be agreed upon by
the Swingline Lender and the Borrower from time to time). The debit balance from
time to time in any such account will be deemed to be a Prime Rate Loan
outstanding to the Borrower from the Swingline Lender under the Credit Facility.
If at any time the Borrower is a party to a cash concentration arrangement with
the Swingline Lender, the amount of any overdraft from time to time in the Cdn.
Dollar concentration account of the Borrower established pursuant to such
arrangement (which for greater certainty may include one of the accounts
identified above) will also be deemed to be a Prime Rate Loan outstanding to the
Borrower from the Swingline Lender under the Credit Facility. A Prime Rate Loan
from the Swingline Lender as contemplated by this Section 2.02(2), prior to such
time as such Loan is repaid as contemplated by Section 2.02(4), or purchased as
contemplated by Section 2.02(5), is referred to as a  “Swingline Loan”. 

          (3) The outstanding Cdn. Dollar amount of
all Swingline Loans at any time may not exceed the lesser of: 

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	(a)  	 	Cdn. $3,000,000, and 
	 
	(b)  	 	the amount, if any, by which the limit
      of the Credit Facility at such time exceeds the Cdn. Dollar amount of all
      Loans (other than Swingline Loans) and the face amount of all Letters of
      Credit outstanding at such time under the Credit Facility. 

          (4) At any time and from time to time in
its discretion, the Swingline Lender may (but will not be obliged to) deliver a
written notice to the Administrative Agent (which will thereupon deliver a
similar notice to each of the Lenders) and to the Borrower, requiring repayment
of a Swingline Loan. The Borrower will be deemed to have given at such time a
Drawdown Notice to the Administrative Agent requesting Prime Rate Loans under
the Credit Facility in an aggregate amount equal to the amount of such Swingline
Loan. The Lenders will thereupon (irrespective of whether any condition
precedent to a Loan has been satisfied, whether the amount of such Loan to be
made available under the Credit Facility is less than, equal to or more than the
minimum amount of a Loan required to be included in a Loan constituting such
type of Loan under this Agreement, whether any Default or Event of Default has
occurred or is continuing or whether any acceleration or enforcement action
(including any termination of the Credit Facility and the Commitments) has
occurred or commenced under any of the Loan Documents or otherwise or whether
the Maturity Date has occurred) make such Prime Rate Loan under the Credit
Facility and the Administrative Agent will apply the proceeds thereof in
repayment of such Swingline Loan. The Administrative Agent will promptly notify
the Borrower of any such Prime Rate Loans, and the Borrower
agrees to accept each such Prime Rate Loan and hereby irrevocably authorizes and
directs the Administrative Agent to apply the proceeds thereof in payment of the
applicable Swingline Loan. 

          (5) Without limiting Section 2.02(4), on
the Maturity Date, or if an Event of Default has occurred and is continuing,
each of the Lenders, other than the Swingline Lender, agrees that it will
purchase from the Swingline Lender, and the Swingline Lender will sell to such
Lenders, for cash, at par, without representation or warranty from or recourse
against the Swingline Lender (and irrespective of whether any condition
precedent to a Loan has been satisfied, any Default or Event of Default has
occurred or is continuing or whether any acceleration or enforcement action
(including any termination of the Credit Facility and the Commitments) has
occurred or commenced under any of the Loan Documents or otherwise or whether
the Maturity Date has occurred), on a pro
rata basis, an undivided interest in all Swingline
Loans then outstanding. The Administrative Agent, upon consultation with the
applicable Lenders, will have the power to settle any documentation required to
evidence any such purchase and, if deemed advisable by the Administrative Agent,
to execute any document as attorney for any Lender in order to complete any such
purchase. The Borrower and the Lenders acknowledge that the foregoing
arrangements are to be settled by the Lenders among themselves, and the Borrower
expressly consents to the foregoing arrangements between such Lenders.

          (6) Each of the Lenders agrees to indemnify
and save harmless the Swingline Lender on a pro
rata basis against all liabilities, obligations,
losses, damages, penalties, actions, judgements, suits, costs, expenses,
payments or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against the Swingline Lender in any way related to
or arising out of any Swingline Loan made by the Swingline Lender 

- 15 -

 (except for any such liabilities to the extent that they result from the gross
negligence or wilful misconduct of the Swingline Lender). 

2.03   Purpose of Credit Facility

          Loans under the Credit
Facility will only be used to (i) permanently repay, on the Closing Date, the
obligations of the Borrower under the Existing Credit Facility, (ii) to finance
working capital associated with store expansions and (iii) for working capital
and general corporate requirements in the ordinary course of business of the
Borrower. 

2.04   Manner of Borrowing

          The Borrower may (i) make
Drawdowns, Conversions and Rollovers under the Credit Facility of Prime Rate
Loans, Bankers’ Acceptances and BA Equivalent Notes and (ii) make Drawdowns and
Conversions of Letters of Credit, provided that the face amount of all
outstanding Letters of Credit may not exceed Cdn. $10,000,000. 

2.05   Revolving Nature of Credit Facility 

          Subject to the terms and
conditions hereof, the Borrower may increase or decrease the amount of
Obligations outstanding under the Credit Facility by making Drawdowns,
repayments and further Drawdowns. 

2.06   Drawdowns, Conversions and Rollovers

          (1) Subject to the provisions of this Agreement, the Borrower may (i)
make Drawdowns hereunder, (ii) convert the whole or any part of
any type of Loan into any other type of Loan, or (iii) rollover any Bankers’
Acceptances or BA Equivalent Note on the last day of the applicable Interest
Period therefor, by giving the Administrative Agent a Drawdown Notice,
Conversion Notice or Rollover Notice, as the case may be. 

          (2) The Borrower must give the
Administrative Agent a Drawdown Notice, Conversion Notice or Rollover Notice, as
the case may be, two (2) Business Days prior to the proposed Drawdown Date,
Conversion Date or Rollover Date, as the case may be. A Drawdown Date,
Conversion Date and Rollover Date must be a Business Day. 

          (3) Each Drawdown Notice, Conversion Notice
or Rollover Notice, as the case may be, must be delivered to the Administrative
Agent by the Borrower on or prior to 1:00 p.m. (Toronto time) on a Business Day.

          (4) Each Drawdown, Conversion or Rollover must: 

	
(i)
	 	in the case of Prime Rate Loans, be in a
      minimum principal amount of Cdn.$1,000,000 and increments of Cdn.$100,000;
      and 
	 

- 16 -

	
(ii)
	 	in the case of Banker’s Acceptances, be
      in a minimum face amount of Cdn.$1,000,000 and increments of
      Cdn.$100,000. 

          (5) The provisions of Sections 2.06(1),
(2), (3) and (4) do not apply to Swingline Loans. 

2.07   Administrative Agent’s Obligations with Respect
to Loans

          Upon receipt of a Drawdown
Notice, Conversion Notice or Rollover Notice, as the case may be, the
Administrative Agent will forthwith notify the Lenders of the proposed Drawdown
Date, Conversion Date or Rollover Date, as the case may be, of each Lender’s
Applicable Percentage of such Loan or Letter of Credit, as the case may be, and,
if applicable, the account of the Administrative Agent to which each Lender’s
Applicable Percentage is to be credited. 

2.08   Lenders’ and Administrative
      Agent’s Obligations with Respect to Loans 

          Each Lender will, prior to
1:00 p.m. (Toronto time) on the Drawdown Date, Conversion Date or Rollover Date,
as the case may be, specified by the Borrower in a Drawdown Notice, Conversion
Notice or Rollover Notice, as the case may be, credit the Administrative Agent’s
account specified in the Administrative Agent’s notice given under Section 2.07
with such Lender’s Applicable Percentage of any Loan to be advanced thereunder
and by 1:00 p.m. (Toronto time) on the same date the Administrative Agent will
advance to the Borrower the full amount of the amounts so credited. 

2.09   Irrevocability
  

          Each Drawdown Notice,
Conversion Notice and Rollover Notice given by the Borrower hereunder is
irrevocable and will oblige the Borrower to take the action contemplated on the
date specified therein.

2.10   Cancellation or Reduction of
      Credit Facility 

          The Borrower may, at any time,
upon giving at least two Business Days’ prior notice to the Administrative
Agent, cancel in full or, from time to time, reduce in part the Credit Facility.
If the Credit Facility is so reduced, the Commitments of each of the Lenders
will be reduced pro rata
in the same proportion that the amount of the reduction in the Credit Facility
bears to then current Commitment of the Lenders in respect of the Credit
Facility in effect immediately prior to such reduction; provided, however, that
any reduction will be in a minimum amount of Cdn.$1,000,000 and increments of
Cdn.$1,000,000. 

2.11   Account of Record
    

          The
Administrative Agent (and the Swingline Lender in respect of the Swingline
Loans) will open and maintain books of account evidencing all Loans and all
other amounts owing by the Borrower to the Lenders hereunder. The Administrative
Agent (and the Swingline Lender in respect of the Swingline Loans) will enter in
the foregoing accounts  

- 17 -

details of all amounts from time to time owing, paid or repaid by the
Borrower hereunder. The information entered in the foregoing accounts will
constitute prima facie evidence of the obligations of the Borrower to the
Lenders hereunder with respect to all Loans and all other amounts owing by the
Borrower to the Lenders hereunder. After a request by the Borrower, the
Administrative Agent (and the Swingline Lender in respect of the Swingline
Loans) will promptly advise the Borrower of such entries made in the
Administrative Agent’s or the Swingline Lender’s books of account, as
applicable. 

ARTICLE 3- DISBURSEMENT
CONDITIONS

3.01   Conditions Precedent to First
Advance

          The obligation of each Lender
to make an advance hereunder by way of a Loan or the issuance of a Letter of
Credit is subject to and conditional upon the prior satisfaction of the
following conditions precedent: 

	
(a)
	 	the Administrative Agent shall
      have received a Drawdown Notice by the time required under Section
      2.07(2); 
	 
	
(b)
	 	the Administrative Agent shall
      have received certified copies of each Obligor’s Organizational Documents,
      the resolutions authorizing the execution, delivery and performance of
      each Obligor’s obligations under the Loan Documents and the transactions
      contemplated herein, the incumbency of the officers of each of the
      Obligors and any documents to be provided pursuant to the provisions
      hereof; 
	 
	
(c)
	 	except as otherwise agreed by
      the Administrative Agent, a certificate of status from the Province of
      Nova Scotia of the Borrower shall have been delivered to the
      Administrative Agent; 
	 
	
(d)
	 	except as otherwise agreed by
      the Administrative Agent, Certificates of Good Standing (or equivalent
      thereof) from the State of Delaware and the State of New Jersey of the
      Guarantor shall have been delivered to the Administrative Agent;
  
	 
	
(e)
	 	the Lenders shall have
      completed their due diligence with respect to the Obligors, including, but
      not limited to a review of: 
	 
	 	 	(i)      	the most recent financial statements of
      the Obligors; and 
	 
	 	 	(ii)      	all Material Contracts and Material
      Licenses of the Obligors; 
	 
	
(f)
	 	except as otherwise agreed by
      the Administrative Agent, the Administrative Agent shall have received
      copies, if any, of all required shareholder, regulatory, governmental and
      other approvals required as of the date of the first Drawdown and shall
      have provided copies, certified by the Borrower to be true, to the
      Administrative Agent; 
	 

- 18 -

	(g) 	 	if the first Drawdown is not on the
      Closing Date, a currently dated certificate of the Borrower that the
      representations and warranties set forth in Section 8.01 are true and
      correct in all material respects as at such time, shall have been
      delivered to the Administrative Agent; 
	 
	(h) 	 	if the first Drawdown is not on the
      Closing Date, a currently dated certificate of the Guarantor that the
      representations and warranties set forth in Section 4 of the U.S. Credit
      Agreement are true and correct in all material respects as at such time,
      shall have been delivered to the Administrative Agent; 
	 
	(i)  	 	no Event of Default, Pending Event of
      Default or U.S. Default has occurred and is continuing on the Drawdown
      Date, or would result from making the Drawdown and the Obligors shall have
      certified the same to the Administrative Agent; 
	 
	(j)  	 	payment of amounts of fees payable to
      the Administrative Agent, the Lenders and counsel to the Administrative
      Agent and the Lenders, that are due and payable on or before the date this
      Agreement becomes effective shall have been paid; 
	 
	(k)  	 	duly executed copies of the Loan
      Documents shall have been delivered to the Administrative Agent;
  
	 
	(l)  	 	a currently dated letter of opinion of
      Borrower’s Counsel addressed to the Administrative Agent and the Lenders,
      substantially in the form attached as Schedule C shall have been delivered
      to the Administrative Agent; 
	 
	(m)  	 	a currently dated Letter of Opinion of
      Guarantor’s counsel addressed to the Administrative Agent and the Lenders,
      substantially in the form attached as Schedule D shall have been delivered
      to the Administrative Agent; 
	 
	(n)  	 	a currently dated letter of opinion of
      Borrower’s Nova Scotia counsel addressed to the Administrative Agent and
      the Lenders, substantially in the form attached as Schedule E shall have
      been delivered to the Administrative Agent; 
	 
	(o)  	 	there shall not exist or have occurred a
      Material Adverse Change and, if the first Drawdown is not on the Closing
      Date, a senior officer of the Borrower shall have provided a certificate
      to the Administrative Agent certifying as to the same; 
	 
	(p)  	 	the Administrative Agent shall have
      received such additional evidence, documents or undertakings as it shall
      reasonably request to establish the consummation of the transactions
      contemplated hereby and be satisfied, acting reasonably, as to the taking
      of all proceedings in connection herewith in compliance with the
      conditions set forth in this Agreement; 

provided that all documents delivered pursuant to this
Section 3.01 must be in full force and effect, and in form and substance
satisfactory to the Lenders, acting reasonably. 

- 19 -

3.02   Conditions Precedent to all
Advances

          (1) The obligation of each Lender to
      make any advance hereunder by way of a Loanor the issuance of a Letter of Credit is subject to and
conditional upon the prior satisfaction of the following conditions precedent:  

	(a)	 	the Administrative Agent shall have
      received a Drawdown Notice by the time required under Section
      2.06(2); 
	 
	(b)	 	the representations and warranties
      deemed to be repeated pursuant to Section 8.01 shall continue to be true
      and correct as if made on and as of the Drawdown Date and the Borrower
      shall have provided a certificate to such effect; 
	 
	(c)	 	no Default or Event of Default shall
      have occurred and be continuing on the Drawdown Date, or would result from
      making the requested advance; 
	 
	(d)	 	no U.S. Default under Section 8.01 of
      the U.S. Credit Agreement shall have occurred and is continuing on the
      Drawdown Date, or would result from making the requested advance;
    
	 
	(e)	 	there shall not exist or have occurred a
      Material Adverse Change, and a senior officer of each Obligor shall have
      been provided a certificate certifying as to the same; and 
	 
	(f)	 	all other terms and conditions of this
      Agreement upon which the Borrower may obtain a Loan or require the
      issuance of a Letter of Credit that have not been waived shall have been
      fulfilled. 
	 

          (2) In connection with the condition
precedent set forth in Section 3.02(1)(d), the Administrative Agent may at any
time, acting reasonably and prior to the making of a Loan or issuance of a
Letter of Credit, request an officer’s certificate from the Guarantor confirming
those matters set forth in Section 3.02(1)(d) . 

3.03   Waiver

          The conditions set forth in
Sections 3.01 and 3.02 are inserted for the sole benefit of the Lenders and may
be waived by the Lenders, in whole or in part (with or without terms or
conditions), in respect of any Drawdown without prejudicing the right of the
Lenders at any time to assert such conditions in respect of any subsequent
Drawdown. 

- 20 -

ARTICLE 4 - PAYMENTS OF
INTEREST
AND STANDBY
FEES 

4.01   Interest on Prime Rate Loans

          The Borrower will pay interest
on each Prime Rate Loan during each Interest Period applicable thereto in
Canadian Dollars at a rate per annum equal to the sum of (i) the Prime Rate plus
(ii) the Prime Rate Margin, in each case, in effect from time to time during
such Interest Period. Each determination by the Administrative Agent of the
Prime Rate and the Prime Rate Margin applicable from time to time during an
Interest Period will, in the absence of manifest error, be binding upon the
Borrower. Such interest will be payable in arrears on each Interest Payment Date
for such Loan for the period from and including the Drawdown Date, Conversion
Date or the preceding Interest Payment Date, as the case may be, for such Loan
to but excluding such Interest Payment Date (or, if such Interest Payment Date
follows the repayment of such Loan or the Conversion of such Loan, to but
excluding the date of such repayment or Conversion) and will be calculated on
the principal amount of the Prime Rate Loan outstanding during such period and
on the basis of the actual number of days elapsed in a year of 365 days or 366
days, as the case may be. Changes in the Prime Rate will cause an immediate
adjustment of the interest rate applicable to such Loan without the necessity of
any notice to the Borrower.

4.02   Facility Fee 

          The Borrower will pay to the
Administrative Agent for the account of the Lenders a facility fee calculated at
the rate per annum specified as the  “Facility Fee” in the table contained in the
definition of  “Applicable Margin” on the full amount of the Credit Facility. The
facility fee will be determined daily beginning on the date hereof and will be
calculated on the basis of a calendar year of 365 or 366 days, as the case may
be, for each day until the Maturity Date, and will be payable by the Borrower
quarterly in arrears on the last Business Day of each quarter following the
Closing Date. 

4.03   Agency Fees

          In consideration of the
Administrative Agent acting as Administrative Agent under the Loan Documents,
the Borrower will pay to the Administrative Agent an agency fee in an amount, and
on the terms and conditions, agreed to in writing by the Administrative Agent
and the Borrower. All such written arrangements will constitute Loan Documents.

4.04   Structuring and Arrangement Fees

          In consideration of the
Administrative Agent structuring the Credit Facility, the Borrower will pay to
the Administrative Agent a structuring fee in an amount, and on the terms and
conditions, agreed to in writing by the Administrative Agent (or any of its
Affiliates) and the Borrower (or any of its Affiliates). All such written
arrangements will constitute Loan Documents. 

- 21 -

4.05   Upfront Fees

          The Borrower will pay to each
Lender on the Closing Date an upfront fee in an amount equal to 15 basis points
of its Commitment hereunder on the Closing Date. 

4.06   Interest on Other Amounts

          If any amount owed by the
Borrower to the Administrative Agent or any Lender under any of the Loan
Documents is not paid when due and payable, and there is no other provision in
any Loan Document specifying the interest payable on such overdue amount, such
overdue amount shall bear interest (as well as before judgement), payable on
demand at a rate per annum equal at all times to the Prime Rate plus 2%, in each
case from the date of non-payment until paid in full. 

ARTICLE 5 - BANKERS’ ACCEPTANCES AND
LETTERS OF CREDIT

5.01   Bankers’ Acceptances

          (1) To facilitate the issuance of Bankers’
Acceptances pursuant to this Agreement, the Borrower irrevocably appoints each
Lender from time to time as the attorney-in-fact of the Borrower to execute,
endorse and deliver on behalf of the Borrower drafts in the forms prescribed by
such Lender (if such Lender is a BA Lender) for bankers’ acceptances denominated
in Canadian Dollars (each such executed draft that has not yet been accepted by
a Lender being referred to as a  “Draft”) or non interest-bearing
promissory notes of the Borrower in favour of such Lender (if such Lender is a
Non BA Lender) (each such promissory note being referred to as a  “BA Equivalent Note”). Each Bankers’
Acceptance and BA Equivalent Note executed and delivered by a Lender on behalf
of the Borrower as provided for in this Section 5.01 will be as binding upon the
Borrower as if it had been executed and delivered by a duly authorized officer
of the Borrower. 

          (2) Notwithstanding Section 5.01(1), the
Borrower will from time to time as required by the applicable Lender provide to
each BA Lender an appropriate number of Drafts drawn by the Borrower upon such
BA Lender and either payable to a clearing service (if such BA Lender is a
member thereof) or payable to the Borrower and endorsed in blank by the Borrower
(if such BA Lender is not a member of such clearing service), and (ii) each Non
BA Lender an appropriate number of BA Equivalent Notes in favour of such Non BA
Lender. The dates, maturity dates and principal amounts of all Drafts and BA
Equivalent Notes delivered by the Borrower must be left blank, to be completed
by the Lenders as required by this Agreement. Each Lender to which a Draft or BA
Equivalent Note has been delivered by the Borrower will exercise the same degree
of care in the custody of such Draft or BA Equivalent Note as such Lender would
exercise with respect to its own property kept at the place at which the Drafts
or BA Equivalent Notes are ordinarily kept by such Lender. Each Lender, upon the
written request of the Borrower, will promptly advise the Borrower of the number
and designation, if any, of the Drafts and BA Equivalent Notes then held by it.
No Lender will be liable for its failure to accept a Draft or purchase a BA
Equivalent Note as required by this Agreement if the cause of such failure is,
in whole or in part, due to the failure of the Borrower to provide on a timely
basis appropriate Drafts or BA Equivalent Notes to the applicable
Lender as requested by such Lender on a timely basis.

- 22 -

          (3) The Administrative Agent, promptly
following receipt of a Drawdown Notice requesting Bankers’ Acceptances, will (i)
advise each BA Lender of the face amount and the term of the Draft to be
accepted by it, and (ii) advise each applicable Non BA Lender of the face amount
and term of the BA Equivalent Note to be purchased by it. All Drafts to be
accepted from time to time by each BA Lender that is a member of a clearing
service will be payable to such clearing service. The term of all Bankers’
Acceptances and BA Equivalent Notes issued pursuant to any Drawdown Notice must
be identical. Each Bankers’ Acceptance and BA Equivalent Note must be dated the
Drawdown Date on which it is issued and will be for a term of one, two, three or
six months, provided that in no event will the term of a Bankers’ Acceptance or
a BA Equivalent Note extend beyond the Maturity Date. The face amount of the
Draft (or the aggregate face amount of the Drafts) to be accepted at any time by
each Lender that is a BA Lender, and the face amount of the BA Equivalent Notes
to be purchased at any time by each Lender that is a Non BA Lender, will be
determined by the Administrative Agent based upon the amounts of their
respective Commitments under the Credit Facility. 

          (4) Each BA Lender will complete and accept
on the applicable Drawdown Date a Draft having a face amount (or Drafts having
the face amounts) and term advised by the Administrative Agent pursuant to
Section 5.01(3) . Each applicable BA Lender will purchase on the applicable
Drawdown Date the Bankers’ Acceptance or Bankers’ Acceptances accepted by it,
for an aggregate price equal to the BA Discount Proceeds of such Bankers’
Acceptance (or Bankers’ Acceptances). The Borrower will ensure that there is
delivered to each applicable BA Lender that is a member of a clearing service,
and such BA Lender is hereby authorized to release, the Bankers’ Acceptance
accepted by it to such clearing service upon receipt of confirmation that such
clearing service holds such Bankers’ Acceptance for the account of such BA
Lender. 

          (5) Each Non BA Lender, in lieu of
accepting Drafts or purchasing Bankers’ Acceptances on any Drawdown Date, will
complete and purchase from the Borrower on such Drawdown Date a BA Equivalent
Note in a face amount and for a term identical to the face amount and term of
the Draft or Drafts which such Non BA Lender would have been required to accept
on such Drawdown Date if it were a BA Lender, for a price equal to the BA
Discount Proceeds of such BA Equivalent Note (determined as if such BA
Equivalent Note were a Bankers’ Acceptance). Each Non BA Lender will be
entitled, without charge, to exchange any BA Equivalent Note held by it for two
or more BA Equivalent Notes of identical date and aggregate face amount, and the
Borrower will execute and deliver to such Non BA Lender such replacement BA
Equivalent Notes and such Non BA Lender will return the original BA Equivalent
Note to the Borrower for cancellation. 

          (6) The Borrower will pay to each BA Lender
in respect of each Draft tendered by the Borrower to and accepted by such BA
Lender, and to each Non BA Lender in respect of each BA Equivalent Note tendered
to and purchased by such Non BA Lender, as a condition of such acceptance or
purchase, the BA Stamping Fee. A Lender is entitled to deduct and retain for its
own account the amount of such fee from the amount to be transferred by such
Lender 

- 23 -

to the Administrative Agent for the account of the Borrower
pursuant to this Agreement in respect of the sale of the related Bankers’
Acceptance or of such BA Equivalent Note. 

          (7) On the date of maturity of each
Bankers’ Acceptance or BA Equivalent Note, the Borrower will pay to the
Administrative Agent, for the account of the holder of such Bankers’ Acceptance
or BA Equivalent Note, in Canadian Dollars an amount equal to the face amount of
such Bankers’ Acceptance or BA Equivalent Note, as the case may be. The
obligation of the Borrower to make such payment will not be prejudiced by the
fact that the holder of such Bankers’ Acceptance is the Lender that accepted
such Bankers’ Acceptances. No days of grace may be claimed by the Borrower for
the payment at maturity of any Bankers’ Acceptance or BA Equivalent Note. If the
Borrower does not make such payment from the proceeds of a Loan obtained under
this Agreement or otherwise, the amount of such required payment will be deemed
to be a Prime Rate Loan to the Borrower from the Lender that accepted such
Banker’s Acceptance or purchased such BA Equivalent Note. 

          (8) The signature of any duly authorized
officer of the Borrower on a Draft or a BA Equivalent Note may be mechanically
reproduced in facsimile, and all Drafts and BA Equivalent Notes bearing such
facsimile signature will be as binding upon the Borrower as if they had been
manually signed by such officer, notwithstanding that such Person whose manual
or facsimile signature appears on such Draft or BA Equivalent Note may no longer
hold office at the date of such Draft or BA Equivalent Note or at the date of
acceptance of such Draft by a BA Lender or at any time thereafter. 

5.02   Letters of Credit

          (1) If the Borrower wishes to request that
a Letter of Credit be issued under the Credit Facility, the Borrower will, at
the time it delivers a Drawdown Notice pursuant to Section 2.06, execute and
deliver to the Issuing Bank the Issuing Bank’s usual documentation relating to
the issuance and administration of letters of credit. In the event of any
inconsistency between the terms of such documentation and this Agreement, the
terms of this Agreement will prevail. 

          (2) Each Lender that has a Commitment under
the Credit Facility (each reference to a Lender in this Section 5.02 being to
such a Lender only) shall be deemed to have purchased, without recourse, a
participation from the Issuing Bank, in each Letter of Credit issued by the
Issuing Bank, in each case equal to such Lender’s Applicable Percentage of each
such Letter of Credit. Each such Lender will indemnify and save harmless the
Issuing Bank based on its Applicable Percentage against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, payments or disbursements of any and every kind or nature whatsoever
which may be imposed on, made or incurred by or asserted against the Issuing
Bank in any way related to or arising out of any issuance of a Letter of Credit
by the Issuing Bank (including any payment made under any such Letter of Credit
and any Prime Rate Loan deemed to have been made available by the Issuing Bank
pursuant to Section 5.02(6)), except for any such liabilities resulting from the
gross negligence or wilful misconduct of the Issuing Bank. 

- 24 - 

          (3) Each Letter of Credit issued by the
Issuing Bank will be in a form and on such terms as determined by the Issuing
Bank in its sole and unfettered discretion. 

          (4) No Letter of Credit may be issued for a
period in excess of 364 days or beyond the Maturity Date. 

          (5) If, at any time, a demand for payment
(the amount so demanded being herein referred to as a  “relevant amount”) is made under any
Letter of Credit and notification thereof is given by the Issuing Bank to the
Administrative Agent, then: 

	(a)	 	the Administrative Agent
      will: 
	 
	 	 	(i)      	promptly notify the Borrower and each of
      the Lenders of such demand; and 
	 
	 	 	(ii)      	make demand on each Lender for an amount
      equal to its Applicable Percentage of the relevant amount; 
	 
	(b)	 	on the second Business Day
      following the date of the demand made by the Administrative Agent under
      (a) above, each Canadian Lender will pay to the Administrative Agent the
      amount demanded of it pursuant to (a)(ii) above; and 
	 
	(c)	 	the Administrative Agent will
      pay the relevant amount to the Issuing Bank and the Issuing Bank will pay
      the relevant amount together with the balance of the amount demanded to
      the Person entitled thereto on the date upon which the relevant amount
      becomes payable under the Letter of Credit or as soon as possible
      thereafter. 
	 

          (6) The Borrower will be deemed to have
requested a Prime Rate Loan in an amount equal to the sum of the relevant amount
and all charges and expenses incurred by the Issuing Bank and the other Lenders
in connection with payment under the Letter of Credit. 

          (7) The
Borrower hereby undertakes to indemnify and hold harmless the Administrative Agent, the Issuing Bank and each of the
Lenders from time to time on demand by the Administrative Agent from and against
all liabilities and costs (including, without limitation, any costs incurred in
funding any amount which falls due from the Issuing Bank or any other Lender
under any Letter of Credit hereunder) to the extent that such liabilities or
costs are not satisfied or compensated by the payment of interest on sums due
pursuant to this Agreement in connection with any Letter of Credit except where
such liabilities or costs result from the gross negligence or wilful misconduct
of the person claiming indemnification. 

- 25 -

          (8) The Issuing Bank will at all times be
entitled, and is irrevocably authorized by the Borrower, to make any payment
under a Letter of Credit for which a request or demand has been made in the
required form without any further reference to the Borrower and any
investigation or enquiry, need not concern itself with the propriety or validity
of any claim made or purported to be made under the terms of such Letter of
Credit (except as to compliance with the payment conditions of such Letters of
Credit) and will be entitled to assume that any Person expressed in such Letter
of Credit as being entitled to make demand or receive payments thereunder is so
entitled. Accordingly, so long as a request or demand has been made as
aforementioned, it will not be a defence to any demand made of the Borrower
hereunder, nor will the obligations of the Borrower hereunder be impaired by the
fact (if it be the case) that the Issuing Bank was or might have been justified
in refusing payment, in whole or in part, of the amounts so claimed. 

          (9) A certificate of the Administrative
Agent or the Issuing Bank or both of them as to the amounts paid by any Lender
pursuant to this Section 5.02 or the amount paid under any Letter of Credit
will, in the absence of manifest error, be prima facie evidence of the existence
and amount of such payment in any legal action or proceeding arising out of or
in connection herewith. 

          (10) While any Letter of Credit is
outstanding, the Borrower will pay to the Administrative Agent, for the benefit
of the Issuing Bank, a fee at the Standby Letter of Credit Fee Rate or the
Commercial Letter of Credit Fee Rate, as applicable, calculated on the amount of
such Letter of Credit on the basis of a calendar year and the number of days
that the Letter of Credit will be outstanding during such period. 

          (11) If any Letter of Credit is outstanding
upon the occurrence of an Event of Default or on the Maturity Date, the Borrower
will forthwith pay to the Administrative Agent an amount (the  “deposit amount”) equal to the undrawn
principal amount of the outstanding Letter of Credit, which deposit amount will
be held by the Administrative Agent for application against the indebtedness
owing by the Borrower to the Issuing Bank in respect of any draw on the
outstanding Letter of Credit. In the event that the Issuing Bank is not called
upon to make full payment on the outstanding Letter of Credit prior to its
expiry date, the deposit amount, or any part thereof that has not been paid out,
will, so long as no Event of Default then exists, be returned to the Borrower.

          (12) The obligations of the Borrower with
respect to Letters of Credit will be unconditional and irrevocable, and must be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:

	      
(i)  
	any lack of validity or enforceability of
any Loan Document or the Letters of Credit; 
	 
	       (ii)      	any amendment or waiver of or any consent
to or actual departure from this Agreement; 

 

- 26 -

	      
(iii)     
	the existence of any claim, set-off,
defence or other right which the Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons for
which any such beneficiary or any such transferee may be acting), the
Issuing Bank or any other Person or entity, whether in connection with this
Agreement, the transactions contemplated herein or in any other agreements
or any unrelated transactions; 
	 
	       (iv)      	any document presented under a Letter of
      Credit proving to be forged, fraudulent, invalid or insufficient in any
      respect or any statement therein being untrue or inaccurate in any respect
      except for non-compliance with the payment conditions of such Letter of
      Credit; or 
	 
	       (v)      	any other circumstance whatsoever,
      whether or not similar to any of the foregoing. 

The Uniform Customs and
Practice for documentary credits of the
International Chamber of Commerce current on the issue of each Letter of Credit
will be binding on the Borrower, the Lenders and the Issuing Bank with respect
to each such Letter of Credit. The Borrower assumes all risks of the acts or
omissions of the beneficiary of each Letter of Credit with respect to such
Letter of Credit. In furtherance of, and not in limitation of the Issuing Bank’s
rights and powers under such Uniform Customs and
Practice, but subject to all other provisions of
this Section 5.02, it is understood and agreed that the Issuing Bank will not
have any liability for, and that the Borrower assumes all responsibility for:
(i) the genuineness of any signature, (ii) the form, validity, genuineness,
falsification and legal effect of any draft, certification or other document
required by a Letter of Credit or the authority of the Person signing the same,
(iii) the failure of any instrument to bear any reference or adequate reference
to a Letter of Credit or the failure of any Persons to note the amount of any
instrument on the reverse of a Letter of Credit or to surrender a Letter of
Credit, (iv) the good faith or acts of any Person other than the Issuing Bank
and its agents and employees, (v) the existence, form or sufficiency or breach
or default under any agreement or instruments of any nature whatsoever, (vi) any
delay in giving or failure to give any notice, demand or protest, and (vii) any
error, omission, delay in or nondelivery of any notice or other communication,
however sent. The determination as to whether the required documents are
presented prior to the expiration of a Letter of Credit and whether such other
documents are in proper and sufficient form for compliance with a Letter of
Credit will be made by the Issuing Bank in its sole discretion, which
determination will be conclusive and binding upon the Borrower absent manifest
error. It is agreed that the Issuing Bank may honour, as complying with the
terms of a Letter of Credit and this Agreement, any documents otherwise in order
and signed or issued by the beneficiary thereof. Any action, inaction or
omission on the part of the Issuing Bank under or in connection with the Letters
of Credit or any related instruments or documents, if in good faith and in
conformity with such laws, regulations or commercial or banking customs as the
Issuing Bank may reasonably deem to be applicable, will be binding upon the
Borrower, and will not affect, impair or prevent the vesting of any of the
Issuing Bank’s rights or powers hereunder or the Borrower’s obligation to make
full reimbursement of amounts drawn under the Letters of 

- 27 -

Credit. Notwithstanding the provisions of this Section 5.02(12), the Borrower will not be responsible,
and no Person will be relieved of responsibility, for any gross negligence or
wilful misconduct of such Person. 

ARTICLE 6 -
REPAYMENT

6.01   Mandatory Repayment - Credit
      Facility 

          The Borrower will repay in
full the outstanding principal amount of all Loans and other Obligations under
the Credit Facility on or before the Maturity Date. 

ARTICLE 7 - PLACE AND APPLICATION OF
PAYMENTS

7.01   Place of Payment of Principal,
      Interest and Fees 

          All payments of principal,
interest, fees and other amounts to be made by the Borrower to the
Administrative Agent and the Lenders pursuant to this Agreement will be made in
the currency in which a Loan is outstanding for value on the day such amount is
due or, if such day is not a Business Day, on the Business Day next following
with interest, by deposit or transfer thereof to the account of the
Administrative Agent maintained at the Administrative Agent’s Office in Toronto
or at such other place as the Borrower and the Administrative Agent may from
time to time agree.

7.02   Netting of Payments

          If, on any date, amounts would
be due and payable under this Agreement in the same currency by an Obligor to
the Lenders, or any one of them, and by the Lenders, or such Lender, to an
Obligor, then, on such date, upon notice from the Administrative Agent or such
Lender stating that netting is to apply to such payments, the obligations of
each such party to make payment of any such amount will be automatically
satisfied and discharged and, if the aggregate amount that would otherwise have
been payable by an Obligor to the Lenders, or such Lender, exceeds the aggregate
amount that would otherwise have been payable by the Lenders, or such Lender, to
an Obligor or vice versa,
such obligations will be replaced by an obligation upon whichever of an Obligor
or the Lenders, or such Lender, would have had to pay the larger aggregate
amount, to pay to the other the excess of the larger aggregate amount over the
smaller aggregate amount. For greater certainty, prior to acceleration of
repayment pursuant to Section 10.02, this Section 7.02 will not permit any
Lender to exercise a right of set-off, combination or similar right against any
amount which an Obligor may have on deposit with such Lender in respect of any
amount to which netting is to apply pursuant to this Section 7.02, but will
apply only to determine the net amount to be payable by the Lenders or one of
them to an Obligor, or by an Obligor to the Lenders or one of them. 

- 28 -

ARTICLE 8 - REPRESENTATIONS AND
WARRANTIES

8.01   Representations and
      Warranties 

          Each Obligor represents and
warrants to the Administrative Agent and each of the Lenders and acknowledges
and confirms that the Administrative Agent and each of the Lenders are relying
upon such representations and warranties: 

          (1) Existence and
Qualification. It (i) has been duly incorporated and
is validly subsisting as an unlimited liability corporation under the laws of
the Province of Nova Scotia in the case of the Borrower and under the laws of
the State of Delaware in the case of the Guarantor; and (ii) is duly qualified
and has all Material Licenses. 

          (2) Power and Authority. It has the corporate authority, (i) to enter into, and to exercise
its rights and perform its obligations under, the Loan Documents to which it is
a party, and (ii) to own its Property and carry on its business as currently
conducted and as currently proposed to be conducted by it. 

          (3) Execution, Delivery, Performance and
Enforceability of Documents. The execution, delivery
and performance of each of the Loan Documents to which it is a party, has been
duly authorized by all actions required on its part and its shareholders and
directors (or where applicable partners, members or managers), and each of such
documents has been duly executed and delivered. 

          (4) Loan Documents Comply with
Applicable Laws and Contractual Obligations. None of
the execution or delivery of, the consummation of the transactions contemplated
in, or compliance with the terms, conditions and provisions of any of, the Loan
Documents, by it, conflicts with or will conflict with, or results or will
result in any breach of, or constitutes a default under or contravention of, any
Requirement of Law applicable to it or any of its Organizational Documents
(except, in each case, where such conflict, breach, default, or contravention
would not, individually or in the aggregate, have, or be reasonably likely to
result in a Material Adverse Change), or results or will result in the creation
or imposition of any Encumbrance upon any of its Property. 

          (5) Consent Respecting Loan
Documents. It has obtained, made or taken all
consents, approvals, authorizations, declarations, registrations, filings,
notices and other actions whatsoever required as to the date as of which this
representation is given in connection with the execution and delivery by it of
each of the Loan Documents to which it is a party and the consummation of the
transactions contemplated in the Loan Documents. 

     (6) Taxes.
It has paid or made adequate provision for the payment of all Taxes levied on it
or on its Property or income which are due and payable, including interest and
penalties, or has accrued such amounts in its financial statements for the
payment of such Taxes except for charges, fees or dues which are not material in
amount, which are not delinquent or if delinquent are being contested, and in
respect of which non-payment would not individually or in the aggregate have, or
be reasonably likely to cause, a Material Adverse Change, and there is no
material action, suit, proceeding, investigation, audit or claim now pending, or
to 

- 29 -

its knowledge, threatened by any Governmental Authority regarding any Taxes
nor has it agreed to waive or extend any statute of limitations with respect to
the payment or collection of Taxes. 

          (7) Judgments, etc. It is not subject to any judgment, order, writ, injunction, decree
or award, or to any restriction, rule or regulation (other than customary or
ordinary course restrictions, rules and regulations consistent or similar with
those imposed on other Persons engaged in similar businesses) which has not been
stayed or of which enforcement has not been suspended and which individually or
in the aggregate has, or is reasonably likely to cause a Material Adverse
Change. 

          (8) Absence of
Litigation. There are no actions, suits or
proceedings pending or, to the best of its knowledge and belief, after due
inquiry and all reasonable investigation, threatened against or affecting it
that are reasonably likely to cause, either separately or in the aggregate, a
Material Adverse Change. It is not in default with respect to any Applicable Law
or Applicable Order in a manner or to an extent that could reasonably be
expected to cause a Material Adverse Change. 

          (9) Title to Assets. It has good title to its
Property, free and clear of all Encumbrances, except Permitted Encumbrances and no Person
has any agreement or right to acquire an interest in either of the Obligors
assets other than in the ordinary course of its business. 

          (10) Use of Real Property. All real property owned or leased by it may be used in all material
respects by it pursuant to Applicable Law for the present use and operation of
the material elements of the business conducted, or intended to be conducted, on
such real property by it except where any such non compliance with any
Applicable Law would not individually or in the aggregate have, or be reasonably
likely to cause a Material Adverse Change. 

          (11) Compliance with Laws. It is not in default under any Applicable Law where such default
could reasonably be expected to cause a Material Adverse Change or affect its
ability to perform any of its obligations under any Loan Document to which it is
a party. 

          (12) No Event of Default, Pending Event
of Default or U.S. Default. No Event of Default,
Pending Event of Default or U.S. Default have occurred and no events have
occurred that (with the giving of notice, the lapse of time or both) would
constitute an Event of Default, Pending Event of Default or U.S. Default. It is
not in default under any agreement, guarantee, indenture or instrument to which
it is a party or by which it is bound the breach of which could reasonably be
expected to cause a Material Adverse Change or affect its ability to perform any
of its obligations under, any Loan Document to which it is a party. 

          (13) Material Contracts and Material
Licences. No event has occurred and is continuing
that would constitute a breach of or a default under any Material Contract or
Material Licence and each Material Contract to which an Obligor is a party is
binding upon it and, to the Borrower’s knowledge, is a binding agreement of each
other Person who is a party thereto. 

- 30 -

          (14) Financial Statements. All of the quarterly and annual financial statements which have
been furnished to the Administrative Agent and the Lenders in connection with
this Agreement are complete in all material respects and such financial
statements fairly present the financial position of such Obligor as of the dates
referred to therein and have been prepared in accordance with GAAP. Neither of
the Obligors have any liabilities (contingent or other) or other obligations of
the type required to be disclosed in accordance with GAAP which are not fully
disclosed on (i) the consolidated financial statements of the Guarantor provided
to the Administrative Agent and the Lenders for the fiscal period ended
immediately prior to the Closing Date, (ii) the quarterly financial statements
of the Guarantor provided to the Administrative Agent and the Lenders for the
fiscal quarter ended immediately prior to the Closing Date, and (iii) the
financial statements of the Borrower provided to the Administrative Agent and
the Lenders for the fiscal period ended immediately prior to the Closing Date,
other than liabilities and obligations incurred in the ordinary course of its
business, and the Obligations. 

          (15) No Material Adverse
Change. Since the date of the Guarantor’s most
recent annual audited financial statements provided to the Administrative Agent
and the Lenders, there has been no condition (financial or otherwise), event or
change in any Obligor’s business, liabilities, operations, results of
operations, assets or prospects which constitutes or has, or could reasonably be
expected to constitute, or cause, a Material Adverse Change. 
          (16) Environmental Matters.

	(a)	 	The assets of the Borrower and its
      operations are in full compliance in all respects with all Environmental
      Laws; the Borrower is not aware of, nor has it received notice of, any
      past, present or future conditions, events, activities, practices or
      incidents which may interfere with or prevent the compliance or continued
      compliance of it in all respects with all Environmental Laws; and the
      Borrower has obtained all licences, permits and approvals that are
      currently required under all Environmental Laws and is in full compliance
      with the provisions of such licences, permits and approvals, in each case
      except to the extent that the non- compliance would not or could not
      reasonably be expected to cause a Material Adverse Change. 
	 
	(b)	 	The Borrower is not aware that any
      Hazardous Materials exist on, about or within or have been used,
      generated, stored, transported, disposed of on, or released from any of
      its Property other than in material accordance and compliance with all
      Environmental Laws, except to the extent that the non-compliance would not
      or could not reasonably be expected to cause a Material Adverse
      Change. 
	 
	(c)	 	The use which the Borrower has made and
      intends to make of its Property will not result in the use, generation,
      storage, transportation, accumulation, disposal, or release of any
      Hazardous Materials on, in or from any such property except in material
      accordance and compliance with all Environmental Laws, except to the
      extent that the non-compliance would not or could not reasonably be
      expected to have a Material Adverse Effect. 
	 

- 31 -

	(d)  	 	There is no action, suit or proceeding,
      or, to its knowledge, any investigation or inquiry, before any
      Governmental Authority pending or, to its knowledge, threatened against
      the Borrower relating in any way to any Environmental Law that would or
      could reasonably be expected to cause a Material Adverse Change.
  
	 
	(e)  	 	The Borrower has not (i) incurred any
      current and outstanding liability for any clean-up or remedial action
      under any Environmental Law in respect to both current and past
      operations, events, activities, practices, incidents or the condition or
      use of any Property owned currently or in the past, (ii) received any
      outstanding written request for information (other than information to be
      provided in the normal course in connection with applications for
      licences, permits or approvals) by any Person under any Environmental Law
      with respect to the condition, use or operation of its Property, or (iii)
      received any outstanding written notice or claim under any Environmental
      Law with respect to any material violation of or liability under any
      Environmental Law or relating to the presence of Hazardous Material on or
      originating from its Property, that, in any such case, would or could
      reasonably be expected to cause a Material Adverse Change. 
	 

          (17) CERCLA No portion of any Property of the Guarantor has been listed,
designated or identified in the National Priorities List or the CERCLA
Information System both as published by the United States Environmental
Protection Agency, or any similar list of sites published by any federal, state
or local authority proposed for requiring clean up or remedial or corrective
action under any Requirements of Laws. 

          (18) Pension Plans With respect to Pension Plans (a) no steps have been taken to
terminate any Pension Plan (wholly or in part) that could result in either of
the Obligors being required to make an additional contribution to the Pension
Plan in excess of Cdn.$1,000,000, (b) no contribution failure has occurred with
respect to any Pension Plan of an Obligor (for this purpose as provided in
clause (b) of the definition of  “Pension Plan”) sufficient to give rise to a
lien or charge under Section 302(f) of ERISA or any applicable pension benefits
laws of any other jurisdiction, (c) no condition exists and no event or
transaction has occurred with respect to any Pension Plan that is reasonably
likely to result in either Obligor incurring any material liability, fine or
penalty; and (d) no Obligor has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan that is material to the Borrower on
a consolidated basis. Except as disclosed on Schedule F, (i) Each Pension Plan
of Obligor is in compliance in all material respects with all applicable pension
benefits and tax laws, (ii) all contributions (including employee contributions
made by authorized payroll deductions or other withholdings) required to be made
to the appropriate funding agency in accordance with all applicable laws and the
terms of each such Pension Plan have been made in accordance with all applicable
laws and the terms of each such Pension Plan, (iii) all liabilities under each
such Pension Plan are funded, on a going concern and solvency basis, in
accordance with the terms of the respective Pension Plans, the requirements of
applicable pension benefits laws and of applicable regulatory authorities and
the most recent actuarial report filed with respect to the Pension Plan, and
(iv) no event has occurred and no conditions exist with respect to any Pension
Plan that have resulted or could reasonably be expected to result in any Pension
Plan having its registration revoked or refused for the purposes of any
administration of any relevant pension benefits regulatory 

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authority or being required to pay any taxes or penalties
under any applicable pension benefits or tax laws, except for any exceptions to
clauses (ii) through (iv) above that, individually or in the aggregate, could
not reasonably be expected to cause or result in a Material Adverse Change.

          (19) Full Disclosure. All information provided or to be provided to the Administrative
Agent and the Lenders in connection with the Credit Facility is, to its
knowledge, true and correct and none of the documentation furnished to the
Administrative Agent and the Lenders by or on behalf of it, to its knowledge,
omits a material fact necessary to make the statements contained therein not
misleading in any material way. 

8.02   Survival and Repetition of
      Representations and Warranties 

          The representations and
warranties set out in Section 8.01 survive the execution and delivery of this
Agreement and all other Loan Documents and will be deemed to be repeated by the
Borrower as of each Drawdown Date (other than with respect to Loans under the
Swingline Facility), except to the extent that on or prior to such date (a) the
Borrower has advised the Administrative Agent in writing of a variation in any
such representation or warranty, and (b) if such variation, in the opinion of
the Lenders, acting reasonably, is material to the Property, liabilities,
affairs, business, operations, prospects or condition (financial or otherwise)
of any Obligor considered as a whole or could have, or be reasonably likely to
result in, a Material Adverse Change, the Lenders have approved such variation.

ARTICLE 9 -
COVENANTS

9.01   Positive Covenants
    

          So long as this Agreement is
in force and except as otherwise permitted by the prior written consent of the
Required Lenders, each Obligor will: 

          (1) Timely Payment. Make due and timely payment of the Obligations required to be paid
by it hereunder. 

          (2) Conduct of Business and Maintenance
of Existence. Engage in business of the same general
type as now conducted by it; carry on and conduct its business and operations in
a proper, efficient and businesslike manner, in accordance with good business
practice; preserve, renew and keep in full force and effect its existence; and
except to the extent that the failure to comply therewith would not individually
or in the aggregate have, or be reasonably likely to cause a Material Adverse
Change take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business and
comply with all Material Licenses and Requirements of Law. 

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          (3) Further Assurances Use reasonable efforts to provide the Administrative Agent and the
Lenders with such other documents, opinions, consents, acknowledgments and
agreements as are reasonably necessary to implement this Agreement and the other
Loan Documents from time to time. 

          (4) Access to Information
Promptly provide the Administrative Agent with all
information reasonably requested by the Administrative Agent from time to time
concerning its financial condition and Property, and during normal business
hours and from time to time upon reasonable notice, permit representatives of
the Administrative Agent and the Lenders to inspect any of its Property and to
examine and take extracts from its financial records, including records stored
in computer data banks and computer software systems, and to discuss its
financial condition with its senior officers and (in the presence of such of its
representatives as it may designate) its auditors, the reasonable expense of all
of which will be paid by the Borrower. 

          (5) Obligations and
Taxes. Pay or discharge, or cause to be paid or
discharged, before the same shall become delinquent (i) all Taxes imposed upon
it or upon its income or profits or in respect of its business or Property and
file all tax returns in respect thereof, (ii) all lawful claims for labour,
materials and supplies (iii) all required payments under any of its funded debt,
and (iv) all other obligations; provided, however that it shall not be required
to pay or discharge or to cause to be paid or discharged any such amount so long
as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and a reserve in accordance with GAAP and satisfactory
to the Administrative Agent, acting reasonably, have been established in its
books and records. 

          (6) Use of Credit
Facility. Use the proceeds of the Credit Facility
only for the purposes specified in Section 2.03. 

          (7) Insurance Maintain insurance on all its Property with financially sound and
reputable insurance companies or associations including all-risk property
insurance, comprehensive general liability insurance and business interruption
insurance, in amounts and against risks that are determined by it to be
appropriate and which are prudent in the circumstances. 

          (8) Notice of Event of Default, Pending
Event of Default or U.S. Default. Promptly notify
the Administrative Agent of any Event of Default, Pending Event of Default or
U.S. Default (as applicable) under this Agreement or the U.S. Credit Agreement
that would apply to it of which it becomes aware, using reasonable diligence.

          (9) Notice of Material Adverse
Change. Promptly notify the Administrative Agent of
any Material Adverse Change that would apply to it of which it becomes aware,
using reasonable diligence. 

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          (10) Notice of Litigation. Promptly notify the Administrative Agent on becoming aware of the
occurrence of any litigation, dispute, arbitration, proceeding or other
circumstance the result of which if determined adversely would be a judgement or
award against it which would result in a Material Adverse Change to it, and from
time to time provide the Administrative Agent with all reasonable information
requested by the Administrative Agent concerning the status of any such
proceeding. 

          (11) Environmental Compliance
Operate all Property owned, leased or otherwise used
by it in a manner such that no obligation, including a clean-up or remedial
obligation, will arise under any Environmental Law, which obligations
individually or in the aggregate would have, or would be reasonably likely to
cause, a Material Adverse Change; provided, however, that if any such claim is
made or any such obligation arises, will or will cause the applicable Obligor to
immediately satisfy or contest such claim or obligation at its own cost and
expense, and promptly notify the Administrative Agent upon learning of (i) the
existence of Hazardous Materials located on, above or below the surface of any
land that it occupies or controls (except those being stored, used or otherwise
handled in substantial compliance with Environmental Law), or contained in the
soil or water constituting such land, or (ii) the occurrence of any reportable
release of Hazardous Materials into the air, land surface water or ground water
that has occurred on or from such land that, as to either (i) or (ii), would be
reasonably likely to result in a Material Adverse Change. 

          (12) Maintenance of Property
Keep all Property useful and necessary for its
business in good working order and condition, normal wear and tear excepted,
except to the extent that the failure to do so would not individually or in the
aggregate be reasonably likely to cause a Material Adverse Change. 

          (13) Pension and ERISA Matters
Promptly notify the Administrative Agent on becoming
aware of (a) the institution of any steps by any Person to terminate any Pension
Plan, (b) the failure to make a required contribution to any Pension Plan if
such failure is sufficient to give rise to an Encumbrance under Section 302(f)
of ERISA, (c) the taking of any action with respect to a Pension Plan that is
reasonably likely to result in the requirement that either Obligor furnish a
bond or other security to the Pension Benefit Guaranty Corporation under ERISA
or such Pension Plan, or (d) the occurrence of any event with respect to any
Pension Plan that is reasonably likely to result in the incurrence by either
Obligor of any material liability, fine or penalty, and in the notice to the
Administrative Agent thereof, provide copies of all documentation relating
thereto. 

          (14) U.S. Credit
Agreement. If the U.S. Credit Agreement is
terminated for any reason other than as a result of the occurrence of a U.S.
Default, enter into a new credit agreement with the Administrative Agent and the
Lenders, on terms and conditions satisfactory to the Administrative Agent and
the Lenders, acting reasonably within 60 days of the date of such termination.

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9.02   Reporting
      Requirements 

          So long as this Agreement is
in force and except as otherwise permitted by the prior written consent of the
Required Lenders, the Borrower will deliver to the Administrative Agent (in
sufficient quantities for the Administrative Agent and each of the Lenders):

          (1) Guarantor’s Quarterly and Annual
Report. Simultaneously with the delivery pursuant to
Section 6.07(a) and (b) of the U.S. Credit Agreement, the Guarantor’s financial
statements and all other documentation required to be delivered pursuant to such
provisions of the U.S. Credit Agreement. 

          (2) Borrower’s Annual
Reports. As soon as available and in any event
within 90 days after the end of its fiscal years the unaudited non-consolidated
financial statements of the Borrower including a balance sheet, statement of
income and retained earnings, statement of changes in financial position and
source and application of funds, for such fiscal year, which will be reviewed by
an internationally recognized accounting firm, and will be prepared in
accordance with GAAP and certified by an officer of the Borrower. 

          (3) Compliance
Certificate. Simultaneously with the delivery of the
financial statements required by clause (2) above, the Compliance Certificate of
the Borrower and simultaneously with the delivery pursuant to the terms of the
U.S. Credit Agreement, the U.S. Compliance Certificate of the Guarantor.

9.03   Negative Covenants
    

          So long as this Agreement is
in force and except as otherwise permitted by the prior written consent of the
Required Lenders, the Obligors (other than in respect of Section 9.03(7) which
will only be applicable to the Borrower) will not: 

          (1) Disposition of Property
Dispose of, in one transaction or a series of
transactions, all or any part of its Property, whether now owned or hereafter
acquired, except that it may, in the normal course of its business, for fair
market value, and in accordance with customary trade terms, Dispose of any
tangible personal Property that would reasonably be considered to be the subject
matter of sales by it in the normal course of its business for the purpose of
carrying on the same, or that is worn out, obsolete or no longer useful for the
purpose of carrying on its business. 

          (2) Operation of
Business. Operate its business, in a manner that
would reasonably be expected to result in a Material Adverse Change in the
Obligors’ ability to perform its obligations under the Loan Documents to which
it is a party. 

          (3) No Consolidation, Amalgamation,
etc. Consolidate, amalgamate or merge with any other
Person, enter into any corporate reorganization or other transaction intended to
effect or otherwise permit a change in its existing corporate or capital
structure, liquidate, wind-up or dissolve itself, or permit any liquidation,
winding-up or dissolution. 

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          (4) No Continuance Continue into any other
jurisdiction. 

          (5) Amendments to Organizational
Documents. Will not amend any of its Organizational
Documents in a manner that would be prejudicial to the interests of the Lenders
under the Loan Documents. 

          (6) Amendments to Other Documents
Amend, vary or alter in any way, consent to any
assignment or transfer of, or waive or surrender any of its rights or
entitlements under, any Material Contracts. 

          (7) No Encumbrances Create, incur, assume or permit to exist any Encumbrance upon any of
its Property except Permitted Encumbrances. 

ARTICLE 10 -
DEFAULT

10.01 Events of Default
    

          The occurrence of any one or
more of the following events (each such event being referred to as an
 “Event of Default”) will
constitute a default under this Agreement: 

	(a)  	 	if the Borrower fails to pay any amount
      of principal of any Loan when due; 
	 
	(b)  	 	if the Borrower fails to pay any
      interest, fees or other Obligations (other than any principal amount) when
      due and such default continues for five Business Days after notice of such
      default has been given by the Administrative Agent to the Borrower;
    
	 
	(c)  	 	if the Borrower or the Guarantor fails
      to observe or perform any covenant (other than the covenant set forth in
      Section 9.01(14)) or obligation herein contained on its part to be
      observed or performed (other than a covenant or condition whose breach or
      default in performance is specifically dealt with elsewhere in this
      Section 10.01) and the Borrower or the Guarantor fails to remedy such
      default within the earlier of 30 days from the date (i) the Borrower or
      the Guarantor becomes aware of such default and (ii) the Administrative
      Agent delivers written notice of the default to the Borrower or the
      Guarantor unless the Required Lenders have agreed to a longer period, and
      in such event, within the period agreed to by the Required Lenders;
    
	 
	(d)  	 	if the Obligors fail to observe or
      perform the covenant set forth in Section 9.01(14); 
	 
	(e)  	 	if any representation or warranty made
      by the Borrower or the Guarantor in this Agreement, any Loan Document or
      in any certificate or other document at any time delivered hereunder to
      the Administrative Agent shall prove to have been incorrect or misleading
      in any material respect on and as of the date thereof; 
	 

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	(f)  	 	if the Borrower or the Guarantor ceases
      or threatens to cease to carry on business generally or admits in writing
      its inability or fails to pay its debts generally as they become
      due; 
	 
	(g)  	 	if the Borrower or the Guarantor denies,
      to any material extent, its obligations under any Loan Document or claims
      any of the Loan Documents to be invalid or withdrawn in whole or in
      part; 
	 
	(h)  	 	if a decree or order of a court of
      competent jurisdiction is entered adjudging the Borrower or the Guarantor
      bankrupt or insolvent or approving as properly filed a petition seeking
      the winding-up of the Borrower under the Companies’ Creditors Arrangement Act (Canada), the Bankruptcy and
      Insolvency Act (Canada), the United States Bankruptcy Code or
      the Winding Up and Restructuring Act
    (Canada) or any other bankruptcy,
      insolvency or analogous laws or issuing sequestration or process of
      execution against any substantial part of the assets of either Obligor or
      ordering the winding up or liquidation of its affairs, and any such decree
      or order continues unstayed and in effect for a period of 10 Business
      Days;
    
	 
	(i)  	 	if either Obligor becomes insolvent,
      makes any assignment in bankruptcy or makes any other assignment for the
      benefit of creditors, makes any proposal under the Bankruptcy and Insolvency Act (Canada) or any comparable law, seeks relief under the
      Companies’ Creditors Arrangement Act
      (Canada), the United States Bankruptcy Code, the
      Winding Up and Restructuring Act
      (Canada) or any other bankruptcy, insolvency
      or analogous law, is adjudged bankrupt, files a petition or proposal to
      take advantage of any act of insolvency, consents to or acquiesces in the
      appointment of a trustee, receiver, receiver and manager, interim
      receiver, custodian, sequestrator or other Person with similar powers of
      itself or of all or any substantial portion of its assets, or files a
      petition or otherwise commences any proceeding seeking any reorganization,
      arrangement, composition or readjustment under any applicable bankruptcy,
      insolvency, moratorium, reorganization or other similar law affecting
      creditors’ rights or consents to, or acquiesces in, the filing of such a
      petition; 
	 
	(j)  	 	if an encumbrancer takes possession by
      appointment of a receiver, receiver and manager, or otherwise of all or a
      substantial portion of the Property of either Obligor; 
	 
	(k)  	 	if proceedings are commenced for the
      dissolution, liquidation or voluntary winding-up of either Obligor, or for
      the suspension of the operations of either Obligor unless such proceedings
      are being actively and diligently contested in good faith; 
	 
	
(l)  
	 	if a final judgment or decree for the
      payment of money due shall have been obtained or entered against either
      Obligor in an amount equal to or greater than Cdn. $10,000,000 and such
      judgment or decree shall not have been and remain vacated, discharged or
      stayed pending appeal within the applicable appeal period; 
	 

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	(m)  	 	if there occurs a U.S. Default under the
      U.S. Credit Agreement; 
	 
	(n)  	 	if an event of default occurs under any
      Material Contract of either Obligor (other than an event of default
      specifically dealt with in this Section 10.01) resulting in, or which may
      result in, a Material Adverse Change to an Obligor and such event of
      default is not remedied within 15 days after such Obligor becomes aware of
      such event of default; or 
	 
	(o)  	 	in the opinion of the Required Lenders,
      acting reasonably, there shall have occurred a Material Adverse Change in
      the Borrower. 

10.02 Acceleration and
      Enforcement 

          If any Event of Default shall
occur, all Obligations shall, at the option of the Administrative Agent or (i)
if there are one or two Lenders at the time of the occurrence of such Event of
Default, upon the request of any Lender, or (ii) if there are more than two
Lenders at the time of the occurrence of such Event of Default, upon the request
of the Required Lenders, become immediately due and payable with interest
thereon, at the rate or rates determined as herein provided, to the date of
actual payment thereof, all without notice, presentment, protest, demand, notice
of dishonour or any other demand or notice whatsoever, all of which are hereby
expressly waived by the Obligors. In such event either such Lender or the
Required Lenders, as applicable, or the Administrative Agent on its or their
behalf may, in its or their sole discretion, exercise any right or recourse
and/or proceed by any action, suit, remedy or proceeding against any Obligor,
authorized or permitted by law for the recovery of all the Obligations of the
Obligors to the Lenders and proceed to exercise any and all rights hereunder and
no such remedy for the enforcement of the rights of the Lenders shall be
exclusive of or dependent on any other remedy but any one or more of such
remedies may from time to time be exercised independently or in combination.

10.03 Payment of Bankers’ Acceptances
      and Letters of Credit 

          If the Borrower does not pay
to the Administrative Agent for the account of the Lenders the principal amount
of any unmatured Bankers’ Acceptance or BA Equivalent Note or the face amount of
any unexpired Letter of Credit required to be paid pursuant to Section 10.01(a),
the Administrative Agent on behalf of the Lenders may at is option at any time
without notice to the Borrower give notice to the Lenders to make a Loan to the
Borrower equal to the principal amount of all unmatured Bankers’ Acceptances and
the face amount of all unexpired Letters of Credit, such Loan not to bear
interest. The proceeds of such Loan will be held by each Lender in a
non-interest bearing cash collateral account for the benefit of the Borrower and
will be applied in payment of such Bankers’ Acceptances as they mature and such
Letters of Credit if payment is required thereunder or otherwise as the Lender
may require. The Borrower will execute and deliver as security for such Loan all
such security as the Lender may deem necessary or advisable including, without
limitation, an assignment of credit balance in respect of such cash collateral
account. 

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10.04 Remedies Cumulative
    

          For greater certainty, it is
expressly understood and agreed that the respective rights and remedies of the
Lenders and the Administrative Agent hereunder or under any other Loan Document
or 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 Lenders or by the
Administrative Agent of any right or remedy for a default or breach of any term,
covenant, condition or agreement contained in this Agreement or any other Loan
Document will 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 any one or more
of the Lenders and the Administrative Agent may be lawfully entitled for such
default or breach. 

10.05 Perform Obligations
    

          If an Event of Default has
occurred and is continuing and if any Obligor has failed to perform any of its
covenants or agreements in the Loan Documents, the Required Lenders, may, but
will be under no obligation to, instruct the Administrative Agent on behalf of
the Lenders to perform any such covenants or agreements in any manner deemed fit
by the Required Lenders without thereby waiving any rights to enforce the Loan
Documents. The reasonable expenses (including any legal costs) paid by the
Administrative Agent and the Lenders in respect of the foregoing will be an
Obligation. 

ARTICLE 11 - THE ADMINISTRATIVE AGENT AND
THE LENDERS

11.01  Payments by the
      Borrower 

          (1) Prior to an Event of Default that is
continuing, all payments made by or on behalf of the Borrower pursuant to this
Agreement will be made to and received by the Administrative Agent on behalf of
the Lenders and will be distributed by the Administrative Agent to the Lenders,
as the case may be, as soon as possible upon receipt by the Administrative
Agent. Subject to Sections 7.02 and 11.02, the Administrative Agent will
distribute to the Lenders in accordance with each Lender’s Applicable
Percentage: 

	(a)  	 	payments of interest, Letter of Credit
      fees and standby fees; 
	 
	(b)  	 	costs and expenses; 
	 
	(c)  	 	repayments of principal; 
	 
	(d)  	 	prepayments of principal; 
	 
	(e)  	 	amounts to be received by the exercise
      of any right of set-off, consolidation of accounts, or by counterclaim or
      cross-action; and 
	 
	(f)  	 	all other payments received by the
      Administrative Agent. 
	 

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          (2) Notwithstanding the foregoing, any such
distribution that would otherwise be made pursuant to Section 11.01(1)(c) or (d)
on account of any outstanding Bankers’ Acceptances, BA Equivalent Notes or
Letters of Credit will be set aside in a separate collateral account for the
primary benefit of the Lenders who have issued such Bankers’ Acceptances, BA
Equivalent Notes or Letters of Credit (and for the secondary benefit of the
Lenders in respect of other Obligations) until and to the extent that such
Obligations become matured and not contingent, at which time such distributions
will be made to the Lenders for whose primary benefit such amounts are held, at
which time such application will be made in accordance with Section 11.01(1)(c)
or (d). 

          (3) Subject to Section 11.02, if the
Administrative Agent does not distribute a Lender’s Applicable Percentage of a
payment made by the Borrower to or for the benefit of a Lender for value on the
day that payment is made to the Administrative Agent, provided that such payment
is received by the Administrative Agent no later than 1:00 p.m. (Toronto time)
on such day, the Administrative Agent will pay to such Lender on demand an
amount equal to the product of (i) the Interbank Reference Rate per annum
multiplied by (ii) the amount received by the Administrative Agent from the
Borrower and not so distributed to such Lender, multiplied by (iii) a fraction,
the numerator of which is the number of days that have elapsed from and
including the date of receipt of the payment by the Administrative Agent to but
excluding the date on which the payment is made by the Administrative Agent to
such Lender, and the denominator of which is 365. 

11.02 Payments by Administrative
      Agent 

          (1) For greater certainty, the following
provisions will apply to any and all payments made by the Administrative Agent
to the Lenders hereunder: 

	(a)  	 	the Administrative Agent will be under
      no obligation to make any payment (whether in respect of principal,
      interest, fees or otherwise) to any Lender until an amount in respect of
      such payment has been received by the Administrative Agent from the
      Borrower; 
	 
	(b)  	 	if the Administrative Agent receives
      less than the full amount of any payment of principal, interest, fees or
      other amount owing by the Borrower under this Agreement, then, subject to
      Section 7.02, the Administrative Agent will have no obligation to remit to
      each Lender any amount other than such Lender’s Applicable Percentage of
      the amount actually received by the Administrative Agent; 
	 
	(c)  	 	if any Lender advances more or less than
      its Applicable Percentage of the Credit, such Lender’s entitlement to such
      payment will be increased or reduced, as the case may be, in proportion to
      the amount actually advanced by such Lender; 
	 
	(d)  	 	the Administrative Agent acting
      reasonably and in good faith will, after consultation with the Lenders in
      the case of any dispute, determine in all cases the amount of all payments
      to which each Lender is entitled and such determination will, in the
      absence of manifest error, be binding and conclusive; 
	 

- 41 -

	(e)  	 	upon request, the Administrative Agent
      will deliver a statement detailing any of the payments to the Lenders
      referred to herein; and 
	 
	(f)  	 	all payments by the Administrative Agent
      to a Lender hereunder will be made to such Lender at its address set forth
      on the signature pages on this Agreement or on the applicable Assignment
      Agreement unless notice to the contrary is received by the Administrative
      Agent from such Lender. 
	 

          (2) Unless the Administrative Agent shall
have received notice from the Borrower prior to the date on which any payment is
due to the Administrative Agent for the account of any Lender hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute the amount due to the Lenders. If
the payment by the Borrower is in fact not received by the Administrative Agent
on the required date and the Administrative Agent has made available
corresponding amounts to the Lenders, the Borrower will, without limiting its
other obligations under this Agreement, indemnify the Administrative Agent
against any and all liabilities, obligations, losses (other than loss of
profit), damages, penalties, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on or incurred by the Administrative Agent
as a result. A certificate of the Administrative Agent with respect to any amount owing by the
Borrower under this Section 11.02(2) will be prima facie evidence of the amount
owing in the absence of manifest error. 

11.03 Administration of the
      Credits 
          (1) Unless otherwise specified herein, the
Administrative Agent will perform the 
following
duties under this Agreement: 

	(a)  	 	prior to an advance to the Borrower
      hereunder, ensure that all conditions precedent have been fulfilled in
      accordance with the terms of this Agreement; 
	 
	(b)  	 	take delivery of each Lender’s
      Applicable Percentage of a Loan and make all Loans hereunder in accordance
      with the provisions set forth herein; 
	 
	(c)  	 	use reasonable efforts to collect
      promptly all sums due and payable by the Borrower pursuant to this
      Agreement; 
	 
	(d)  	 	make all payments to the Lenders in
      accordance with the provisions hereof; 
	 
	(e)  	 	hold all legal documents relating to the
      Credit Facility, maintain complete and accurate records showing all Loans
      made by, and all Letters of Credit issued on behalf of, the Lenders, all
      remittances and payments made by the Borrower to the Administrative Agent,
      all remittances and payments made by the Administrative Agent to the
      Lenders and all fees or any other sums received by the Administrative
      Agent and allow each Lender and their respective advisors to examine such
      accounts, records and documents at their own expense, and provide any
      Lender, upon reasonable notice, with such copies thereof as such Lender
      may reasonably require from time to time at its expense; 
	 

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	(f)  	 	except as otherwise specifically
      provided for in this Agreement, promptly advise each Lender upon receipt
      of each notice and deliver to each Lender, promptly upon receipt, all
      other written communications furnished by the Borrower to the
      Administrative Agent pursuant to this Agreement, including copies of
      financial reports and certificates which are to be furnished to the
      Administrative Agent; 
	 
	(g)  	 	forward to each of the Lenders, one copy
      each of this Agreement and other Loan Documents; 
	 
	(h)  	 	promptly forward to each Lender, upon
      request, an up-to-date loan status report and any other information
      respecting the Obligors reasonably requested by such Lender; and
  
	 
	(i)  	 	upon learning of same, promptly advise
      each Lender in writing of the occurrence of a Default or Event of Default
      or the occurrence of any event, condition or circumstance which would
      result in a Material Adverse Change to an Obligor or of any material
      adverse information relative to an Obligor or of the occurrence of any
      change which would result in a Material Adverse Change. 

          (2) The Administrative Agent may take the
following actions only with the prior consent of the Required Lenders, unless
otherwise specified in this Agreement: 

	(a)  	 	subject to Section 11.03(3), exercise
      any and all rights of approval conferred upon the Lenders by this
      Agreement; 
	 
	(b)  	 	amend, modify or waive any of the terms
      of this Agreement (including waiver of an Event of Default or Default) if
      such amendment, modification or waiver would not have a material adverse
      effect on the rights of the Lenders thereunder and if such action is not
      otherwise provided for in Section 11.03(3); 
	 
	(c)  	 	engage professionals, experts and agents
      as permitted by Section 11.04(1); and 
	 
	(d)  	 	declare an Event of Default, take action
      to enforce performance of the Obligations, including without
      limitation, to enforce the Guarantee, and pursue any other legal remedy
      necessary or advisable to protect the interests of the Lenders
      hereunder. 

          (3) The Administrative Agent may take the
following actions only with the prior unanimous consent of the Lenders, unless
otherwise specified herein: 

	(a)  	 	amend, modify, discharge, terminate or
      waive any of the terms of this Agreement if such amendment, modification,
      discharge, termination or waiver would increase the amount of the Credit
      Facility, reduce the interest rate applicable to either of the Credit
      Facility, reduce the fees payable with respect to the Credit Facility,
      extend any date fixed for payment of principal or interest relating to the
      Credit Facility or change the definition of Required Lenders;

	 

- 43 -

	(b)  	 	amend, modify, discharge, terminate or
      waive any terms of the Guarantee otherwise than pursuant to the terms
      hereof or thereof; 
	 
	(c)  	 	amend this Section 11.03(3);
  
	 
	(d)  	 	amend any provision of Article 6;
    
	 
	(e)  	 	amend Section 9.01(1); 
	 
	(f)  	 	amend Section 12.01; and 
	 
	(g)  	 	amend any provision of Schedule
      A. 

          (4) As between the Obligors, on the one
hand, and the Administrative Agent and the Lenders, on the other hand:

	(a)	 	all statements, certificates, consents
      and other documents which the Administrative Agent purports to deliver
      on behalf of the Lenders or the Required Lenders will be binding on each
      of the Lenders, and the Obligors will not be required to ascertain or
      confirm the authority of the Administrative Agent in delivering such
      documents; 
	 
	(b) 	 	all certificates, statements, notices
      and other documents which are delivered by the Obligors to the
      Administrative Agent in accordance with this Agreement will be deemed to
      have been delivered to each of the Lenders; and 
	 
	(c)  	 	all payments which are made by the
      Obligors to the Administrative Agent in accordance with this Agreement
      will be deemed to have been duly made to each of the Lenders.

11.04 Rights of Administrative Agent

          (1) In administering the Credit Facility,
the Administrative Agent may retain, at the expense of the Lenders if such
expenses are not recoverable from the Borrower, such counsel, auditors and other
experts as the Administrative Agent may select, in its sole discretion, acting
reasonably, and is entitled to rely upon the advice of such counsel, auditors
and other experts in the performance of its duties hereunder. 

          (2) Except in its own right as a Lender,
the Administrative Agent will not be required to advance its own funds for any
purpose hereunder. 

          (3) The Administrative Agent may round the
amount of a Loan that a Lender is obliged to advance hereunder to the nearest
$1,000 in Canadian Dollars. 

- 44 -

11.05 Representations, Acknowledgements
      and Covenants of Lenders 

          (1) Each Lender represents and warrants to
the Borrower and the Administrative Agent that it has the legal capacity, power
and authority to enter into this Agreement and has not contravened its constating
documents or any Applicable Law by so doing. 

          (2) Each of the Lenders acknowledges and
confirms that in the event that the Administrative Agent does not receive
payment in accordance with this Agreement, it will not be the obligation of the
Administrative Agent to maintain the Credit Facility in good standing nor will any
Lender have recourse to the Administrative Agent in respect of any amounts owing
to such Lender under this Agreement. 

          (3) Each Lender acknowledges and agrees
that its obligation to advance its Applicable Percentage of Loans and to
participate in any Letter of Credit in accordance with the terms of this Agreement
is independent and in no way related to the obligation of any other Lender
hereunder. 

          (4) Each Lender agrees that it will notify
the Administrative Agent of any Default Event of Default of which it becomes
aware. 

          (5) Each Lender hereby acknowledges receipt
of a copy of this Agreement and the Loan Documents and acknowledges that it is
satisfied with the form and content of such documents. 

          (6) Each Lender will respond promptly to
each request by the Administrative Agent for the consent of such Lender required
hereunder. 

          (7) Each Lender that assigns all or a
portion of its rights and obligations under this Agreement shall pay to the
Administrative Agent a processing and recordation fee of Cdn. $3,500 with
respect to each such assignment in accordance with Section 10(b)(vi) of Schedule
A. 

11.06 Provisions Operative Between
      Lenders and Administrative Agent Only 

          Except for the provisions of
Sections 11.03(2), (3) and (4), Sections 11.05(1), (3) and (6) and the first
sentence of Section 11.01(1), the provisions of this Article 11 relating to the
rights and obligations of the Lenders and the Administrative Agent inter se will
be operative as between the Lenders and the Administrative Agent only, and the
Borrower will not have any rights or obligations under or be entitled to rely
for any purpose upon such provisions. 

- 45 -

ARTICLE 12 -
GENERAL

12.01 Addresses, Etc. for
      Notices 

          The addresses and telecopier
numbers for the purposes of notices and other communications to the Borrower and
the Administrative Agent are set out on the signature pages of this Agreement.

12.02 Governing Law and Submission to
      Jurisdiction 

         Ontario is the Province for the purposes of
Sections 11(a) and (b) of Schedule A. 

12.03 Judgment Currency
    

          (1) If for the purpose of obtaining or
enforcing judgement against the Borrower in any court in any jurisdiction, it
becomes necessary to convert into any other currency (such other currency being
hereinafter in this Section 12.03 referred to as the  “Judgment Currency”) an amount due in
Canadian Dollars under this Agreement, the conversion will be made at the rate
of exchange prevailing on the Business Day immediately preceding: 

	(a)  	 	the date of actual payment of the amount
      due, in the case of any proceeding in the courts of the Province of
      Ontario or in the courts of any other jurisdiction that will give effect
      to such conversion being made on such date; or 
	 
	(b)  	 	the date on which the judgement is
      given, in the case of any proceeding in the courts of any other
      jurisdiction (the date as of which such conversion is made pursuant to
      this Section 12.03(1)(b) being hereinafter in this Section 12.03 referred
      to as the  “Judgment Conversion Date”). 

          (2) If, in the case of any proceeding in
the court of any jurisdiction referred to in Section 12.03(1)(b), there is a
change in the rate of exchange prevailing between the Judgment Conversion Date
and the date of actual payment of the amount due, the Borrower will pay such
additional amount (if any, but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Canadian Dollars which could have been purchased with the
amount of Judgment Currency stipulated in the judgement or judicial order at the
rate of exchange prevailing on the Judgment Conversion Date. 

          (3) Any amount due from the Borrower under
the provisions of Section 12.03(2) will be due as a separate debt and will not
be affected by judgement being obtained for any other amounts due under or in
respect of this Agreement. 

          (4) The
term  “rate of exchange” in this Section 12.03 means:

- 46 -

	(a)  	 	for a conversion of Canadian Dollars to
      the Judgment Currency, the reciprocal of the official noon rate of
      exchange published by the Bank of Canada for the date in question for the
      conversion of the Judgment Currency to Canadian Dollars; or 
	 
	(b)  	 	if a required rate is not so published
      by the Bank of Canada for any such date, the spot rate quoted by the
      Administrative Agent at the Agent’s Office at approximately noon (Toronto
      time) on that date in accordance with its normal practice for the
      applicable currency conversion in the wholesale market. 

12.04 Survival

          The provisions of Section 9 of
Schedule A shall survive the repayment of all Loans and all obligations with
respect to Letters of Credit, whether on account of principal, interest or fees,
and the termination of this Agreement, unless a specific release of such
provisions by the Administrative Agent, on behalf of the Lenders, is delivered
to the Borrower.

12.05 Severability 

          Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction will not
invalidate the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render unenforceable
such provision in any other jurisdiction. 

12.06 Further Assurances
    

          Each Obligor, each Lender and
the Administrative Agent will promptly cure any default by it in the execution
and delivery of this Agreement, the Loan Documents or of any the agreements
provided for hereunder to which it is a party. Each Obligor, at its expense,
will promptly execute and deliver to the Administrative Agent, upon request by
the Administrative Agent, all such other and further documents, agreements,
opinions, certificates and instruments in compliance with, or accomplishment of
the covenants and agreements of such Obligor hereunder or more fully to state
the obligations of such Obligor as set forth herein or to make any recording,
file any notice or obtain any consent, all as may be reasonably necessary or
appropriate in connection therewith. 

12.07 Amendments and
      Waivers 

          No amendment to this Agreement
will be valid or binding unless set forth in writing and duly executed by the
Borrower and the Agent for and on behalf of the Lenders or the Required Lenders,
as the case may be. No waiver of any breach of any provision of this Agreement
and no consent required hereunder will be effective or binding unless made in
writing and signed by the party purporting to give the same. Unless otherwise
provided, any waiver or consent given hereunder will be limited to the specific
breach waived or matter consented to, as the case may be, and may be subject to
such conditions as the party giving such waiver or consent considers
appropriate. 

- 47 -

12.08    Time of the Essence
    

             Time is of the essence of this
      Agreement. 

[Signature
pages follow]

 

 

 

S-1

IN WITNESS WHEREOF the parties have executed
this Agreement. 

	BORROWER:  	  	LINENS ‘N
      THINGS CANADA CORP.  
	  
	Address:  	  	  	  	  	  	  
	111 Richmond Street
      West   	By:  	  	/s/
      William T. Giles  
	Suite 700 
    	  	  	  	Name: William
      T. Giles  
	Toronto,
      Ontario  	  	  	  	Title:  	  	Executive Vice
      President, Chief  
	M5H 2H5 
	  	  	  	  	  	Financial
      Officer  
	Attention: Robert
      Beattie 	  	  	  	  	  
	Facsimile: (416)
      864-9223  	  	  	  	  	  
	  	  	By:  	  	/s/ David
      J. Dick  
	  	  	  	  	Name:  	  	David J.
      Dick  
	  	  	  	  	Title:  	  	Vice
      President  

	 	 	 
	 	 	 
	 	 	 
	GUARANTOR:  	  	LINENS ‘N
      THINGS, INC.  
	  
	Address:  	  	  	  	  	  	  
	6 Brighton
      Road  	  	By:  	  	/s/
      William T. Giles  
	Clifton, New Jersey
      07015	  	  	  	Name: William
      T. Giles  
	U.S.A.  	  	  	  	Title:  	  	Executive Vice
      President, Chief  
	  	  	  	  	  	  	Financial
      Officer  
	Attention: Barbara L.
      Smith  	  	  	  	  	  	  
	Facsimile: (973)
      249-4330  	  	  	  	  	  	  
	  	  	By:  	  	/s/ David
      J. Dick  
	  	  	  	  	Name:  	  	David J.
      Dick  
	  	  	  	  	Title:  	  	Vice
      President  

	 	 	 
	 	 	 
	ADMINISTRATIVE
      AGENT 	  	NATIONAL
      CITY BANK, CANADA BRANCH  
	  
	Address:
    	  	  	  	  
	c/o National City
      Bank, Agent Services 	  	By:  	  	/s/ Caroline
      Stade  
	629 Euclid
      Avenue 	  	  	  	Name: Caroline
      Stade  
	Locator 01-3028
    	  	  	  	Title:   Vice
      President  
	Cleveland, Ohio
    	  	  	  	  
	44114,
USA	  	  	  	  
		  	By:  	  	/s/ G. W.
      Hins  
	Attention: Jennifer
      Piechowski 	  	  	  	Name: G.W.
      Hins  
	
Facsimile: (216)
      222-0012 
	  	  	  	Title:   Senior Vice
      President  

S-2

	LENDERS:  	  	NATIONAL
      CITY BANK, CANADA BRANCH  
	  
	Address:  	  		  	  	  	  	  	  
	130 King
      Street West  	  	By:  	  	/s/ Caroline
      Stade  
	Suite 2140,
      Exchange Tower  	  	  	  	Name: Caroline
      Stade  
	Toronto,
      Ontario  	  	  	  	Title: Vice
      President  
	M5X 1E4  	  		  	  	  	  	  	  
	  
	Attention: 
    	  	  
Caroline Stade	  	By:  	  	/s/ G. W.
      Hins  
	Facsimile: 
    	  	   (416) 361-0085  	  	  	  	Name: G.W.
      Hins  
	  	  		  	  	  	  	  	Title: Senior Vice
      President  
	  
	  
	  	  		  	  	  	BANK OF
      MONTREAL  
	  
	Address:  	  		  	  	  	  	  	  
	  	  		  	  	  	By:  	  	/s/ Gordon
      Card  
	100 King
      Street West  	  	  	  	Name: Gordon
      Card  
	11th Floor, First Canadian Place  	  	  	  	Title:
      Director  
	Toronto,
      Ontario  	  	  	  	  
	M5X 1A1  	  		  	  	  	  	  	  
	  
	Attention: 
    	  	  Vice-President,
      Corporate Finance  
	Facsimile: 
    	  	   (416) 360-7168  

Schedule A

Model Credit Agreement
Provisions1

The attached model credit agreement provisions, which have
been revised under the direction of the Canadian Bankers’ Association Secondary
Loan Market Specialist Group from provisions prepared by The Loan Syndications
and Trading Association, Inc., form part of this Agreement, except for the
footnotes to the model credit agreement provisions and subject to the following
variations:

1.   Section 10(b)(iv) is hereby
      amended by deleting the first two lines thereof and replacing it with the
      following:    

 “any
assignment must be approved by the Administrative Agent 

and so long as no Event of Default has occurred and is
continuing,
the Borrower on behalf of itself and the
Guarantor (each such 
approval not to be unreasonably
withheld or delayed) unless:” 

2.    Notwithstanding any provision
      contained in Schedule A, all reference to  “Base Rate Loans”,  “LIBO Rate”
      and  “LIBO Rate Loans” in Schedule A are inapplicable, and, for
      greater certainty, Base Rate
      Loans and LIBO Rate Loans shall not be available to the Borrower
      under the Credit Facility
      at any time.     

 

 

 
__________________________1 CBA Amended
 “Stapled-on” Version of LSTA Model Credit Agreement Provisions dated November 1,
2004 

Schedule B

Lenders and
Commitments

	Lender and Lending
      Office  	  	Commitment  
	 	 	 
	National City Bank, Canada
      Branch  	  	Cdn.
      $20,000,000  
	130 King Street
      West  	  	  
	Suite 2140, Exchange
      Tower  	  	  
	Toronto, Ontario 
    	  	  
	M5X 1E4  	  	  
	Bank of
      Montreal  	  	Cdn.
      $20,000,000  
	100 King Street
      West  	  	  
	11th Floor, First
      Canadian Place  	  	  
	Toronto,
      Ontario  	  	  
	M5X 1A1 
	  	  
			
      

    
	Total  	  	Cdn.
      $40,000,000  

	Swingline Lender: 
    	  	Bank of Montreal 
    
	Issuing Bank:  	  	National City Bank, Canada
      Branch  

 

Schedule
      1.01(A) 

 

Compliance
      Certificate

(Section 9.02(3))

	TO:  	  	National City Bank,
      Canada Branch 	 
	  	  	c/o National City
      Bank, Agent Services 	 
	  	  	629 Euclid
      Avenue 	 
	  	  	Locator 01-3028
    	 
	  	  	Cleveland, Ohio
    	 
	  	  	44114,
USA	 
	  	  	Attention: Jennifer
      Piechowski 	 
	 	 	Facsimile: (216)
      222-0012	 
	
 

	FROM:  	  	Linens ‘N Things Canada
      Corp. 	 
	  	  	(the  “Borrower”) 	 
	  
	DATE:  	  	 	 

     The undersigned
[name], as the
[title] of the Borrower,
hereby certifies for and on behalf of the Borrower and not in its personal
capacity that: 

1.       Purpose

          This Compliance Certificate is
delivered to you, as Administrative Agent pursuant to Section 9.02(4) of the
credit agreement made as of July 29, 2005 between, inter alia, the Borrower, you, as
Administrative Agent, and the financial institutions from time to time parties
thereto as Lenders, as amended to the date hereof (the  “Credit Agreement”). All terms used in
this Compliance Certificate that are defined in the Credit Agreement have the
same meanings herein. 

2.       Representations and
      Warranties 

          All of the representations and
warranties of the Borrower set forth in Section 8.01 of the Credit Agreement are
true and correct as of the date hereof (except in the case of representations
stated to be as of a specific date for any Compliance Certificate delivered
after July 29, 2005) with the same force and effect as if made at and as of such
date. 

3.       Terms, Covenants and
      Conditions 

          All of the terms, covenants
and conditions of the Credit Agreement and each of the other Loan Documents to
be performed or complied with by the Borrower at or prior to the date hereof
have been performed or complied with. 

- 2 -

4.       Events of Default and Pending
      Events of Default 

          No Event of Default or Pending
Event of Default under the Credit Agreement has occurred and is continuing on
the date hereof. 

5.       Financial
      Statements 

          Attached hereto as Exhibit 2
are the financial statements of most recent date referred to (as applicable) in
Section 10.03(4) of the Credit Agreement. 

	LINENS ‘N THINGS CANADA
      CORP.  
	  
	Per: 
                                        

	        Name:  
	       
Title:  
	  
	Per:                                          

	       
Name:  
	        Title: 
  

Schedule 1.01(B) 

Conversion Notice 

	TO:  	  	National City Bank,
      Canada Branch 
	  	  	c/o National City
      Bank, Agent Services 
	 	 	629 Euclid
      Avenue
	  	  	Locator 01-3028
    
	  	  	Cleveland, Ohio
    
	  	  	44114, USA 
	  	  	Attention: Jennifer
      Piechowski 
	  	  	Facsimile: (216)
      222-0012 
	  
	FROM:  	  	Linens ‘N Things
      Canada Corp. 
	 	 	(the
       “Borrower”) 
	  
	DATE:  	  	 

 1.    This Conversion Notice is
      delivered to you, as Administrative Agent, pursuant to the credit agreement
      made as of July 29, 2005 between, inter
      alia, the Borrower, you, as Administrative
      Agent, and the financial institutions from time to time parties thereto as
      Lenders, as amended to the
      date hereof (the  “Credit Agreement”). All terms used in this
      Conversion Notice that are
      defined in the Credit Agreement have the same meanings
      herein. 

2.    The Borrower hereby requests a
      Conversion under the Credit Facility as follows: 
  

        (a)    Type and amount of
      each Loan to be converted (check appropriate boxes):  

	  	  	 	  	  	
Amount  
	 	 	  
	 	 	 	 	 	 	 	 	 
	 	   (  
)  	 	 Prime Rate
      Loan:  	  	
Cdn.$  __________
	  	 	  
			 					 	
       
	 	   (   )  	 Bankers’ Acceptances (BA Equivalent Notes):  	  	 	  
	 	 	 	 	 	 
	  	  	 	
 Amount  
	  	
Term in
      Months  
	  	Rollover
      Amount  
	 	 	 	 	 	 	 	 	 
	  	  	
Cdn.$  
	 _______________	  	_______________	  	
Cdn.$ 
	 ___________
	 	 	 	
_______________	 	
_______________	 	 	 ___________
	 	 	 	
_______________	 	
_______________	 	 	 ___________
	 	 	 	 	 	 	 	 	 

  

  

- 2 - 

    (b)    Type and amount of
      each Loan resulting from Conversion (check appropriate boxes): 

	  	  	 	  	  	
Amount  
	 	 	  
	 	 	 	 	 	
 	 	 	 
	 	   (   )  	 	 Prime Rate
      Loan:  	  	
Cdn.$  __________
	  	 	  
			 					 	
       
	 	   (   )  	 Bankers’ Acceptances (BA Equivalent Notes):  	  	 	  
	 	 	 	 	 	 
	  	  	 	
 Amount  
	  	
Term in
      Months  
	  	Rollover
      Amount  
	 	 	 	 	 	 	 	 	 
	  	  	
Cdn.$  
	 _______________	  	_______________	  	
Cdn.$ 
	 ___________
	 	 	 	
_______________	 	
_______________	 	 	 ___________
	 	 	 	
_______________	 	
_______________	 	 	 ___________
	 	 	 	 	 	 	 	 	 

   

3.    No Default or Event of Default has occurred and is
continuing or will have occurred and be continuing on the date of the above Conversion(s), or will result from the above Conversion(s). 

	LINENS ‘N THINGS
      CANADA CORP.  
	  
	By: 
                               

	     
Name:  
	     
Title: 

Schedule 1.01(C)

Drawdown Notice 

	TO:  	  	National City Bank,
      Canada Branch 
	  	  	c/o National City
      Bank, Agent Services 
	 	 	629 Euclid
      Avenue
	  	  	Locator 01-3028
    
	  	  	Cleveland, Ohio
    
	  	  	44114, USA 
	  	  	Attention: Jennifer
      Piechowski 
	  	  	Facsimile: (216)
      222-0012 
	  
	FROM:  	  	Linens ‘N Things
      Canada Corp. 
	 	 	(the
       “Borrower”) 
	  
	DATE:  	  	 

 1.    This Drawdown Notice is
      delivered to you, as Administrative Agent, pursuant to the credit agreement
      made as of July 29, 2005, between, inter
      alia, the Borrower, you, as 
Administrative
      Agent, and the financial institutions from time to time parties thereto as
      Lenders, as amended to the
      date hereof (the  “Credit Agreement”). All terms used in this
      Drawdown Notice that are
      defined in the Credit Agreement have the same meanings
      herein. 

2.    The Borrower hereby requests
      the following Loan(s) and Letter(s) of Credit: 

    (a)    Drawdown Date:
______________________________

    (b)    Type and Amount of
      each Loan or Letter of Credit (check appropriate boxes) 

	  	  	 	  	  	
Amount  
	 	  
	 	 	 	 	 	 	 	 
	 	   (   )  	 	 Prime Rate
      Loan:  	  	
Cdn.$  __________
	  	  
			 					
       
	 	   (   )  	           Bankers’ Acceptances (BA Equivalent Notes):  	  	  
	 	 	 	 	 
	  	  	 	
 Amount  
	  	
Term in Months   
	  	Maturity
      Date 
	 	 	 	 	 	 	 	 
	  	  	
Cdn.$  
	 _______________	  	_______________	  	 ___________
	 	 	 	
_______________	 	
_______________	 	 ___________
	 	 	 	
_______________	 	
_______________	 	 ___________
	 	 	 	 	 	 	 	 

   

 

- 2 -

	  	 (   ) 	Letter of Credit: 
    	  	  
	 	 	
 	 	
 
	  	  	
Amount  
	  	
Expiry
      Date  

	  	  	 Cdn.$:  __________	  	  ___________________
					
       
	Total
      Cdn.$ _______________ 	  	  

3.    Representations
      and Warranties All of the representations and
      warranties of the Borrower contained
      in Section 8.01 of the Credit Agreement are true and correct on and as of
      the date hereof as
      though made on and as of the date hereof, subject to changes
      thereto:  

	(a)  	  	given to the Administrative
Agent by the Borrower and accepted in writing by the 
Administrative Agent; and 
	  	  	 
	(b)  	  	expressly contemplated by the
      terms of the Credit Agreement and disclosed to the Administrative Agent in
      writing.  
	 	 	 

4.    All of the
      conditions precedent to the Loan(s) and Letter(s) of Credit requested
      hereby that have not been
      properly waived in writing by or on behalf of the Lenders have been
      satisfied.   
5.    No Default or Event
      of Default has occurred and is continuing or will have occurred
      and  be continuing on the
      Drawdown Date, or will result from the Loan(s) and Letter(s) of
      Credit requested hereby.

	LINENS ‘N THINGS
      CANADA CORP.  
	  
	By: 
                               

	     
Name:  
	     
Title: 

Schedule 1.01(E) 

Rollover Notice 

	TO:  	  	National City Bank,
      Canada Branch 
	  	  	c/o National City
      Bank, Agent Services 
	 	 	629 Euclid
      Avenue
	  	  	Locator 01-3028
    
	  	  	Cleveland, Ohio
    
	  	  	44114, USA 
	  	  	Attention: Jennifer
      Piechowski 
	  	  	Facsimile: (216)
      222-0012 
	  
	FROM:  	  	Linens ‘N Things
      Canada Corp. 
	 	 	(the
       “Borrower”) 
	  
	DATE:  	  	 

 1.   
This Rollover Notice is
      delivered to you, as Administrative Agent, pursuant to the
      credit agreement made as of July 29, 2005, between, 
inter alia, the Borrower, you, as Administrative Agent, and the
      financial institutions from time to time parties thereto as Lenders, as
      amended to the date hereof (the
       “Credit Agreement”). All capitalized terms used in this Rollover
      Notice that are defined in
      the Credit Agreement have the same meanings herein.  

2.    The Borrower hereby requests
      the Rollover of the following Loan(s): 

    (a)    Drawdown Date:
______________________________

    (b)    Type and Amount of
      each Loan or Letter of Credit (check appropriate boxes) 

	 	
 (   )  
	 Bankers’ Acceptances (BA Equivalent Notes):  	  	  
	 	 	 	 	 
	  	  	 	
 Amount  
	  	
Term in
      Days  
	  	Maturity
      Date 
	 	 	 	 	 	 	 	 
	  	  	
Cdn.$  
	 _______________	  	_______________	  	 ___________
	 	 	 	
_______________	 	
_______________	 	 ___________
	 	 	 	
_______________	 	
_______________	 	 ___________
	 	 	 	 	 	 	 	 

  

	LINENS ‘N THINGS
      CANADA CORP.  
	  
	By: 
                               

	     
Name:  
	     
Title:Exhibit 10.2

Exhibit 10.2

GUARANTEE

THIS GUARANTEE is made as of July 29, 2005.

WHEREAS Linens ‘N Things, Inc., a Delaware corporation (the “Guarantor”), has agreed to provide National City Bank, Canada Branch (the “Administrative Agent”) for and on behalf of itself as agent and the Lenders (as defined below), with its guarantee of the Obligations (as hereinafter defined) of Linens ‘N Things Canada Corp. (hereinafter referred to as the “Borrower”) under that certain credit agreement between the Administrative Agent, National City Bank, Canada Branch, Bank of Montreal and the other financial institutions named therein or as from time to time become lenders thereunder, as lenders (the “Lenders”), the Borrower and the Guarantor, dated as of the date hereof (the “Credit Agreement”);

AND WHEREAS the Guarantor has agreed that if the guarantee is not enforceable, the Guarantor will indemnify the Administrative Agent and the Lenders or be liable as primary obligor;

AND WHEREAS terms used in this Guarantee that are defined herein will have the same meaning as in the Credit Agreement;

NOW THEREFORE THIS GUARANTEE WITNESSES that in consideration of the premises and the covenants and agreements herein contained, the sum of $1.00 now paid by the Administrative Agent to the Guarantor and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Guarantor covenants with the Administrative Agent as follows:

Article 1 GUARANTEE

	
            1.01
 	
            

Guarantee
 

The Guarantor hereby unconditionally and irrevocably guarantees payment of all the debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by Borrower to the Administrative Agent or the Lenders pursuant to the Loan Documents (hereinafter collectively referred to as the “Obligations”).

	
            1.02
 	
            
Indemnity
 

If any or all of the Obligations are not duly paid by the Borrower and are not recoverable under Section 1.01 for any reason whatsoever, the Guarantor will, as a separate and distinct obligation, indemnify and save harmless the Administrative Agent and the Lenders from and against all losses resulting from the failure of the Borrower to pay such Obligations.

 

-2-

 

	
            1.03
 	
            
Primary Obligation
 

If any or all of the Obligations are not duly paid by the Borrower and are not recoverable under Section 1.01 or the Administrative Agent or the Lenders is not indemnified under Section 1.02, in each case, for any reason whatsoever, such Obligations will, as a separate and distinct obligation, be recoverable from the Guarantor as if it was the primary obligor.

	
            1.04
 	
            
Obligations Absolute
 

The liability of the Guarantor hereunder will be absolute and unconditional and will not be affected by:

	
            (a)
 	
            any lack of validity or enforceability of any agreement between the Borrower and the Administrative Agent or the Lenders;
 
	
            (b)
 	
            any impossibility, impracticability, frustration of purpose, illegality, force majeure or act of government;
 

	
            (c)
 	
            the bankruptcy, winding-up, liquidation, dissolution or insolvency of the Borrower or any other person or the amalgamation of or any change in the status, function, control or ownership of the Borrower, the Guarantor, the Administrative Agent, the Lenders or any other Person;
 
	
            (d)
 	
            any lack or limitation of power, incapacity or disability on the part of the Borrower or of the directors, partners or agents thereof or any other irregularity, defect or informality on the part of the Borrower in its obligations to the Administrative Agent or the Lenders;
 
	
            (e)
 	
            any other law, regulation or other circumstance that might otherwise constitute a defence available to, or a discharge of, the Borrower in respect of any or all of the Obligations.
 

Article 2 DEALINGS WITH BORROWER AND OTHERS

	
            2.01
 	
            
No Release
 

The liability of the Guarantor hereunder will not be released, discharged, limited or in any way affected by anything done, suffered or permitted by the Administrative Agent or the Lenders, in connection with any duties or liabilities of the Borrower to the Administrative Agent or the Lenders or any security therefor including any loss of or in respect of any security received by the Administrative Agent or the Lenders from the Borrower or others. Without limiting the generality of the foregoing and without releasing, discharging, limiting or otherwise affecting in whole or in part the Guarantor’s liability hereunder, without obtaining the consent of or giving notice to the Guarantor, the Administrative Agent or the Lenders may:

 

-3-

  

	
            (a)
 	
            discontinue, reduce, increase or otherwise vary the credit of the Borrower in any manner whatsoever;
 
	
            (b)
 	
            make any change in the time, manner or place of payment under, or in any other term of, any agreement between the Borrower and the Administrative Agent or the Lenders or the failure on the part of the Borrower to carry out any of its obligations under any such agreement;
 

	
            (c)
 	
            grant time, renewals, extensions of time, indulgences, releases and discharges to the Borrower;
 

	
            (d)
 	
            take or abstain from taking or enforcing securities or collateral from the Borrower or from perfecting securities or collateral of the Borrower;
 

	
            (e)
 	
            accept compromises from the Borrower;
 

	
            (f)
 	
            apply all money at any time received from the Borrower or from securities upon such part of the Obligations as the Administrative Agent or the Lenders may see fit or change any such application in whole or in part from time to time as the Administrative Agent or the Lenders may see fit; and
 
	
            (g)
 	
            otherwise deal with the Borrower and its securities and collateral as the Administrative Agent or the Lenders may see fit.
 

	
            2.02
 	
            
No Exhaustion of Remedies
 

The Administrative Agent or the Lenders will not be bound or obligated to exhaust its recourse against the Borrower or other persons or any securities or collateral it may hold or take any other action before being entitled to demand payment from the Guarantor hereunder.

	
            2.03
 	
            
Prima Facie Evidence
 

Any account settled or stated in writing by or between the Borrower and the Administrative Agent or the Lenders will be prima facie evidence that the balance or amount thereof appearing due to the Lenders is so due.

 

 

-4-

 

	
            2.04
 	
            
Continuing Guarantee
 

The obligations of the Guarantor hereunder will constitute and be continuing obligations and will apply to and secure any ultimate balance due or remaining due to the Administrative Agent or the Lenders and will not be considered as wholly or partially satisfied by the payment or liquidation at any time of any sum of money representing a part only of the amount then due or remaining unpaid to the Administrative Agent or the Lenders. This Guarantee will continue to be effective even if at any time any payment of any of the Obligations is rendered unenforceable or is rescinded or must otherwise be returned by the Administrative Agent or the Lenders upon the occurrence of any action or event including the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made.

Article 3 DEMAND

	
            3.01
 	
            
Demand
 

Upon the occurrence of an Event of Default (as defined in the Credit Agreement) that has not been either cured or waived in accordance with the provisions of the Credit Agreement, the Administrative Agent will be entitled to make demand upon the Guarantor for payment of all Obligations. The Guarantor will make payment to the Administrative Agent of all Obligations forthwith after demand is made to the Guarantor. The Guarantor will make payment to the Administrative Agent forthwith upon demand of all costs and expenses incurred by the Administrative Agent in enforcing this Guarantee.

	
            3.02
 	
            
Interest
 

The Guarantor will pay interest to the Administrative Agent or the Lenders at the Prime Rate of the Bank of Montreal plus 2% per annum on the unpaid portion of all amounts payable by the Guarantor under this Guarantee, such interest to accrue from and including the date of demand by the Administrative Agent on the Guarantor. For the purposes of this Guarantee “Prime Rate” means the greater of (a) the variable per annum reference rate of interest announced and adjusted by the Bank of Montreal from time to time for Canadian Dollar loans in Canada and (b) the sum of (i) the rate of interest per annum that is equal to the Reuters Screen CDOR Page one month BA Discount Rate of the Administrative Agent expressed as an annual yield rate and (ii) 1.0%.

 

 

-5-

Article 4 ASSIGNMENT, POSTPONEMENT AND SUBROGATION

	
            4.01
 	
            
Assignment and Postponement
 

All debts and liabilities, present and future, of the Borrower to the Guarantor are hereby assigned to the Administrative Agent and postponed to the Obligations, and all money received by the Guarantor in respect thereof will be held in trust for the Administrative Agent and forthwith upon receipt will be paid over to the Administrative Agent, the whole without in any way lessening or limiting the liability of the Guarantor hereunder and this assignment and postponement is independent of the Guarantee and will remain in full force and effect until, in the case of the assignment, the liability of the Guarantor under this Guarantee has been discharged or terminated and, in the case of the postponement, until all Obligations are performed and paid in full.

	
            4.02
 	
            
Subrogation
 

The Guarantor will not be entitled to subrogation until (i) the Guarantor performs or makes payment to the Administrative Agent and the Lenders of all amounts owing by the Guarantor to the Administrative Agent or the Lenders under this Guarantee and (ii) the Obligations are performed and paid in full. Thereafter, the Administrative Agent or the Lenders will, at the Guarantor’s request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and without representation and warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Obligations and any security held therefor resulting from such performance or payment by the Guarantor.

Article 5 GENERAL

	
            5.01
 	
            
Binding Effect of the Guarantee
 

This Guarantee will be binding upon the heirs, executors, administrators and successors of the Guarantor and will enure to the benefit of the Administrative Agent and the Lenders and its successors and assigns.

	
            5.02
 	
            
Entire Agreement
 

  

This Agreement cancels and supersedes any prior understandings and agreements between such parties with respect thereto. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the Administrative Agent, the Lenders and the Guarantor with respect to the subject matter hereof except as expressly set forth herein.

 

-6-

	
            5.03
 	
            
Amendments and Waivers
 

No amendment to this Guarantee will be valid or binding unless set forth in writing and executed and delivered by the Guarantor and the Administrative Agent. No waiver of any breach or default of any provision of this Guarantee will be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided in the written waiver, will be limited to the specific breach waived.

	
            5.04
 	
            
Severability
 

If any provision of this Guarantee is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability will attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof will continue in full force and effect.

	
            5.05
 	
            
Notices
 

Any demand, notice or other communication to be given in connection with this Guarantee must be given in writing and may be given by personal delivery or by certified, return receipt requested mail or by electronic means of communication, addressed to the Guarantor as follows:

 

Linens ‘N Things, Inc.

6 Brighton Road

Clifton, New Jersey

07015

	
            Fax No.:
 	
            (973) 249-4330 
 
	
            Attention:
 	
            Barbara L. Smith, Assistant Treasurer
 
				

or such other address, individual or electronic communication number as may be designated by notice given by the Guarantor to the Administrative Agent. Any demand, notice or other communication given by personal delivery will be conclusively deemed to have been given on the day of actual delivery thereof and, if given by registered certified, return receipt requested mail, on the third business day following the deposit thereof in the mail and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the next business day during which such normal business hours next occur if not given during such hours on any day. If the party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such demand, notice or other
communication must not be mailed but must be given by personal delivery or by electronic communication.

 

-7-

 

	
            5.06
 	
            
Discharge
 

The Guarantor will not be discharged from any of its obligations hereunder except by a release or discharge signed in writing by the Administrative Agent.

	
            5.07
 	
            
Governing Law
 

This Guarantee will be governed by and construed in accordance with the laws of the State of New Jersey applicable therein.

	
            5.08
 	
            
Headings
 

The division of this Guarantee into Articles and Sections and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Guarantee. The terms “hereof”, “hereunder” and similar expressions refer to this Guarantee and not to any particular Article, Section or other portion hereof and include any agreement supplemental hereto. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Guarantee.

	
            5.09
 	
            
Extended Meanings
 

In this Guarantee words importing the singular number only include the plural and vice versa, words importing any gender include all genders and words importing persons or entities shall include all persons.

	
            5.10
 	
            
Executed Copy
 

The Guarantor acknowledges receipt of a fully executed copy of this Guarantee.

 

 

 

IN WITNESS WHEREOF the Guarantor has signed, sealed, executed, and delivered this Guarantee.

	
             
 	
             
 
	
             
 	
            LINENS ‘N THINGS, INC.
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 	
            By:
 	
            /s/ William T. Giles
 
	
             
 	
             
 	
            

 
	
             
 	
             
 	
            Name:   William T. Giles
 
	
             
 	
             
 	
             
 	
            Title      Executive Vice President, Chief Financial Officer
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            By:
 	
            /s/ David J. Dick
 
	
             
 	
             
 	
             
 	
            

 
	
             
 	
             
 	
             
 	
            Name: David J. Dick
 
	
             
 	
             
 	
             
 	
            Title:   Vice President

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