CANADIAN SECURITY AGREEMENT

Exhibit 10.3

EXECUTION COPY

dated as of

February 2, 2006,

among

INDALEX HOLDING CORP.,

6461948 CANADA INC.,

THE SUBSIDIARY PARTIES IDENTIFIED HEREIN

and

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

TABLE OF CONTENTS

ARTICLE I	DEFINITIONS
SECTION 1.01		Credit Agreement	1
SECTION 1.02.		Other Defined Terms	1

ARTICLE II	PLEDGE OF SECURITIES
SECTION 2.01.		Pledge	6
SECTION 2.02.		Delivery of the Pledged Collateral	7
SECTION 2.03.		Representations, Warranties and Covenants	7
SECTION 2.04.		Certification of Limited Liability Company and Limited Partnership Interests	9
SECTION 2.05.		Unlimited Liability Companies	9
SECTION 2.06.		Registration in Nominee Name; Denominations	9
SECTION 2.07.		Voting Rights; Dividends and Interests	10

ARTICLE III	SECURITY INTERESTS IN PERSONAL PROPERTY
SECTION 3.01.		Security Interest	12
SECTION 3.02.		Representations and Warranties	14
SECTION 3.03.		Covenants	17
SECTION 3.04.		Other Actions	20
SECTION 3.05.		Covenants Regarding Patent, Trade-xxxx, Copyright and Industrial Design	22
SECTION 3.06.		Deposit accounts	24

ARTICLE IV	REMEDIES
SECTION 4.01.		Remedies Upon Default	26
SECTION 4.02.		Application of Proceeds	28
SECTION 4.03.		Grant of License to Use Intellectual Property	29
SECTION 4.04.		Securities Act	29
SECTION 4.05.		Registration	30
SECTION 4.06.		Other Actions	31

ARTICLE V	INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 5.01.		Indemnity and Subrogation	31
SECTION 5.02.		Contribution and Subrogation	31
SECTION 5.03.		Subordination	31

ARTICLE VI	MISCELLANEOUS
SECTION 6.01.		Notices	32
SECTION 6.02.		Waivers; Amendment	32
SECTION 6.03.		Administrative Agent’s Fees and Expenses; Indemnification	32
SECTION 6.04.		Successors and Assigns	33
SECTION 6.05.		Survival of Agreement	33
SECTION 6.06.		Counterparts; Effectiveness; Several Agreement; Maximum Liability	34
SECTION 6.07.		Severability	34
SECTION 6.08.		Compromises and Collection of Collateral	35
SECTION 6.09.		Governing Law; Jurisdiction; Consent to Service of Process	35

SECTION 6.10.	WAIVER OF JURY TRIAL	36
SECTION 6.11.	Headings	36
SECTION 6.12.	Security Interest Absolute	36
SECTION 6.13.	Termination or Release	36
SECTION 6.14.	Additional Subsidiaries	37
SECTION 6.15.	Administrative Agent Appointed Attorney-in-Fact	37
SECTION 6.16.	Intercreditor Agreement	38
SECTION 6.17	Judgment Currency	38
SECTION 6.18.	Attachment of Security Interest	39
SECTION 6.19.	Copy of Agreement; Verification Statement	39
SECTION 6.20	Amalgamation	39

Schedules

Schedule I	Subsidiary Parties
Schedule II	Pledged Stock; Debt Securities
Schedule III	Intellectual Property
Schedule IV	Receivables and Deposit Accounts

Exhibits

Exhibit A	Form of Supplement (Canadian Subsidiary Loan Party)
Exhibit B	Form of Supplement (Domestic Subsidiary Loan Party)

EXECUTION COPY

CANADIAN SECURITY AGREEMENT (this “Agreement”) dated as of February 2, 2006, among INDALEX HOLDING CORP., a Delaware corporation (the “Parent Borrower”), 6461948 CANADA INC., a Canadian corporation and a wholly-owned subsidiary of the Parent Borrower (the “Canadian Subsidiary Borrower” and, together with the Parent Borrower, the “Borrowers”), the Subsidiary Parties identified herein and JPMORGAN CHASE BANK, N.A., a national banking association, as Administrative Agent (the “Administrative Agent”).

Reference is made to the Credit Agreement dated as of February 2, 2006 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Indalex Holdings Finance Inc. (“Holdings”), the Parent Borrower, the Canadian Subsidiary Borrower, the Subsidiary Loan Parties thereto the Lenders from time to time party thereto and the Administrative Agent. The Lenders have agreed to extend credit to the Borrowers subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Subsidiary Parties, who are affiliates of the Canadian Borrower, and the Parent Borrower will derive substantial benefits from the extension of credit to the Borrowers pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Credit Agreement. All terms defined in the PPSA and not defined in this Agreement have the meanings specified in the PPSA, including without limitation, “Accessions”, “Accounts”, “Chattel Paper”, “Document of Title”, “Goods”, “Intangibles”, “Instruments”, “Inventory”, “Securities”, “financing statement”, “financing change statement” and “Proceeds”.

(b) The rules of construction specified in Section 1.03 of the Credit Agreement also apply to this Agreement.

SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“Account Debtor” means any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.

“Agreement” has the meaning assigned to such term in the preamble to

CANADIAN SECURITY AGREEMENT

this Agreement.

“Claiming Party” shall have the meaning assigned to such term in Section 5.02.

“Collateral” means Personal Property Collateral and Pledged Collateral.

“Collateral Access Agreement” means any landlord waiver or other agreement between the Administrative Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any Grantor for any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated or otherwise modified from time to time.

“Collateral Report” means any certificate (including any Borrowing Base Certificate), report or other document delivered by a Grantor to the Administrative Agent or any Lender with respect to the Collateral pursuant to any Loan Document.

“Contributing Party” shall have the meaning assigned to such term in Section 5.02.

“Copyright License” means any written agreement, now or hereafter in effect, granting any right to any third party under any copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.

“Copyrights” means all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of Canada or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in Canada or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the Canadian Intellectual Property Office, including those listed on Schedule III.

“Credit Agreement” has the meaning assigned to such term in the preliminary statement of this Agreement.

“Deposit Account Control Agreement” means an agreement, in form and substance satisfactory to the Administrative Agent, among any Grantor, a banking institution holding such Grantor’s funds and the Administrative Agent with respect to control of all deposits and balances held in a deposit account maintained by such Grantor with such banking institution.

“Domestic Security Agreement” means the Domestic Security Agreement dated as of the date hereof, among Holdings, the Parent Borrower, the subsidiary parties identified therein and JPMorgan Chase Bank, N.A., as Administrative Agent.

“First Activation Period” shall have the meaning assigned to such term in Section 3.06(c).

“First Activation Period Notice” shall have the meaning assigned to such term in Section 3.06(c).

“Grantors” means (a) the Canadian Subsidiary Borrower, (b) the Subsidiary Parties (other than any Subsidiary Party that is a Domestic Subsidiary Loan Party) and (c) solely in respect of the pledge of Pledged Stock contemplated by Section 2.01(a), the Parent Borrower and the Domestic Subsidiary Loan Parties party hereto.

“Industrial Design License” means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any Industrial Design, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any Industrial Design, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

“Industrial Designs” mean all of the following now owned or hereafter acquired by any Grantor: (a) all industrial designs, design patents and other designs that the Grantor now or hereafter owns or uses, including but not limited to all industrial designs, design patents and other designs listed on Schedule III hereto and all renewals and extensions thereof, (b) all registrations and recordings thereof and all applications that have been or shall be made or filed in the Canadian Industrial Design Office or any similar office or agency in Canada or any other country or political subdivision thereof and all records thereof and all reissues, extensions or renewals thereof, and (c) all common law and other rights in the above.

“Intangibles” means all choses in action and causes of action and all other intangible personal property of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor and all other “intangibles”, as defined in the PPSA, including corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Swap Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts.

“Intellectual Property” means all intellectual and similar property of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trade-marks, Industrial Designs, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

“Judgment Currency” has the meaning assigned to such term in Section 6.16(a).

“Judgment Currency Conversion Date” has the meaning assigned to such term in Section 6.16(a).

“License” means any Patent License, Trade-xxxx License, Copyright License or other license or sublicense agreement to which any Grantor is a party, including those listed on Schedule III.

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

“Obligation Currency” has the meaning assigned to such term in Section 6.16(a).

“Patent License” means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

“Patents” means all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of Canada or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of Canada or the equivalent thereof in any other country, including registrations, recordings and pending applications in the Canadian Intellectual Property Office or any similar offices in any other country, including those listed on Schedule III, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

“Personal Property Collateral” has the meaning assigned to such term in Section 3.01.

“Pledged Collateral” has the meaning assigned to such term in Section 2.01.

“Pledged Debt Securities” has the meaning assigned to such term in Section 2.01.

“Pledged Securities” means any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

“Pledged Stock” has the meaning assigned to such term in Section 2.01.

“PPSA” means the Personal Property Security Act (Ontario), including the regulations thereto, provided that, if perfection or the effect of perfection or non-perfection or the priority of any Lien created hereunder on the Collateral is governed by the personal property security legislation or other applicable legislation with respect to personal property security as in effect in a jurisdiction other than Ontario, “PPSA” means the Personal Property Security Act or such other applicable legislation as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

“Receivables” means the Accounts, Chattel Paper, Documents of Title, Securities, Instruments and any other rights or claims to receive money that are Intangibles or otherwise Collateral.

“Receiver” has the meaning assigned to such term in Section 4.01.

“Receivables Account” shall have the meaning assigned to such term in Section 3.06(a)(i).

“Receivables Account Bank” shall have the meaning assigned to such term in Section 3.06(c).

“Second Activation Period Notice” shall have the meaning assigned to such term in Section 3.06(c).

“Secured Parties” means (a) the Lenders, (b) the Administrative Agent, (c) the Issuing Bank, (d) each counterparty to any Swap Agreement with a Loan Party, the obligations under which constitute Swap Obligations, (e) each provider of any Banking Service, the liabilities in respect of which constitute Banking Services Obligations, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and permitted assigns of each of the foregoing.

“Securities Laws” has the meaning assigned to such term in Section 4.04.

“Security Interest” has the meaning assigned to such term in Section 3.01.

“Short Form Security Agreement” has the meaning assigned to such term in Section 3.02(b).

“Sub-Agent” means a financial institution that has delivered to the Administrative Agent an executed Lock Box Agreement.

“Subsidiary Parties” means (a) the Canadian Subsidiary Loan Parties identified on Schedule I, (b) each other Canadian Subsidiary Loan Party that becomes a party to this Agreement as a Subsidiary Party after the Effective Date and (c) each Domestic Subsidiary Loan Party that becomes a party to this Agreement as a Subsidiary Party after the Effective Date.

“Termination Period” shall have the meaning assigned to such term in Section 3.06(c).

“Termination Period Notice” shall have the meaning assigned to such term in Section 3.06(c).

“Trade-xxxx License” means any written agreement, now or hereafter in effect, granting to any third party any right to use any Trade-xxxx now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trade-xxxx now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.

“Trade-marks” means all of the following now owned or hereafter acquired by any Grantor: (a) all Trade-marks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the Canadian Intellectual Property Office or any similar offices in any province or territory of Canada or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule III, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.

“ULC” has the meaning assigned to such term in Section 2.05.

“ULC Interest” has the meaning assigned to such term in Section 2.05.

ARTICLE II

Pledge of Securities

SECTION 2.01. Pledge. As security for the payment or performance, as the case may be, in full of the Canadian Secured Obligations, each Grantor hereby assigns, pledges and hypothecates to the Administrative Agent, its successors and permitted assigns, for the rateable benefit of the Secured Parties, and hereby grants and hypothecates to the Administrative Agent, its successors and permitted assigns, for the rateable benefit of the Secured Parties, a security interest in all of such Grantor’s right, title and interest in, to and under (a)(i) the Equity Interests owned by it as of the Effective Date and listed opposite the name of such Grantor on Schedule II, (ii) any Equity Interests of Foreign Subsidiaries obtained in the future by such Grantor (to the extent that such Equity Interests are not otherwise pledged pursuant to Section 2.01 of the Domestic Security Agreement) and (iii) the certificates representing all such Equity Interests (the “Pledged Stock”), (b)(i) the debt securities owned by it as of the Effective Date and listed opposite the name of such Grantor on Schedule II, (ii) any debt securities in the future issued to such Grantor and (iii) the promissory notes and any other instruments evidencing such debt securities (the “Pledged Debt Securities”), (c) all other property that

may be delivered to and held by the Administrative Agent pursuant to the terms of this Section 2.01, (d) subject to Section 2.07, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (a) and (b) above, (e) subject to Section 2.07, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Administrative Agent, its successors and assigns, for the rateable benefit of the Secured Parties, forever; subject, however, to the terms, covenants and conditions hereinafter set forth.

SECTION 2.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Administrative Agent any and all Pledged Securities.

(b) Each Grantor will cause any Indebtedness for borrowed money (i) in the case of Indebtedness owed to such Grantor by any Person other than a Loan Party in any principal amount in excess of $100,000, and (ii) in the case of Indebtedness owed to such Grantor by any Loan Party in any principal amount, to be evidenced by a duly executed promissory note that is pledged and delivered to the Administrative Agent pursuant to the terms hereof.

(c) Upon the delivery thereof to the Administrative Agent by any Loan Party, (i) any Pledged Securities shall be accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to the Administrative Agent and by such other instruments and documents as the Administrative Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Administrative Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities, which schedule shall be attached hereto as Schedule II and made a part hereof, provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

SECTION 2.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant to and with the Administrative Agent, for the benefit of the Secured Parties, that:

(a) Schedule II correctly sets forth the percentage of the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Stock issued by Holdings, the Parent Borrower or any Subsidiary and includes all Equity Interests, debt securities and promissory notes required to be pledged hereunder;

(b) in the case of Pledged Stock and Pledged Debt Securities issued by Holdings, the Parent Borrower or any Subsidiary, such Pledged Stock and Pledged Debt Securities have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged Debt Securities, are legal, valid and binding obligations of the issuers thereof, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law;

(c) except for the security interests granted hereunder, each of the Grantors (i) is and, subject to any transfers made in compliance with the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule II as owned by such Grantor, (ii) holds the same free and clear of all Liens, other than Liens created by this Agreement, Permitted Encumbrances, Liens permitted by Section 6.02(u) of the Credit Agreement and transfers made in compliance with the Credit Agreement, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens created by this Agreement, Permitted Encumbrances, Liens permitted by Section 6.02(u) of the Credit Agreement and transfers made in compliance with the Credit Agreement, and (iv) will defend its title or interest thereto or therein against any and all Liens (other than the Lien created by this Agreement and Permitted Encumbrances), however arising, of all Persons whomsoever;

(d) in the case of Pledged Collateral issued by Holdings, the Parent Borrower or any Subsidiary, except for restrictions and limitations imposed by the Loan Documents or Securities Laws generally, such Pledged Collateral is and will continue to be freely transferable and assignable, and none of such Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Administrative Agent of rights and remedies hereunder;

(e) each of the Grantors has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;

(f) no consent or approval of any Governmental Authority, any securities exchange or any other Person was or is necessary to ensure the validity of the pledge of any Pledged Collateral issued by Holdings, the Parent Borrower or any Subsidiary effected hereby (other than such as have been obtained and are in full force and effect); and

(g) by virtue of the execution and delivery by the Grantors of this Agreement, when any Pledged Securities are delivered to the Administrative Agent in accordance with this Agreement, the Administrative Agent will obtain a legal, valid and perfected Lien upon and security interest in such Pledged Securities as security for the payment and performance of the Canadian Secured Obligations, prior to any other Lien on any Pledged Securities other than Permitted Encumbrances that have priority as a matter of law.

SECTION 2.04. Certification of Limited Liability Company and Limited Partnership Interests. Each interest in any limited liability company or limited partnership, in each case controlled by any Grantor and pledged hereunder shall be represented by a certificate, shall be a “security” within the meaning of Article 8 of the New York UCC and shall be governed by Article 8 of the New York UCC.

SECTION 2.05. Unlimited Liability Companies. Notwithstanding the grant of security interest made by the Grantors in favour of the Administrative Agent, its successor and assigns, for the rateable benefit of the Secured Parties, of all of its Pledged Stock, any Grantor that controls any interest (for the purposes of this Section 2.05, “ULC Interests”) in any unlimited liability company (for the purposes of this Section 2.05, a “ULC”) pledged hereunder shall remain registered as the sole registered and beneficial owner of such ULC Interests and will remain as registered and beneficial owner until such time as such ULC Interests are effectively transferred into the name of the Administrative Agent or any other person on the books and records of such ULC. Nothing in this Agreement is intended to or shall constitute the Administrative Agent or any person as a shareholder or member of any ULC until such time as notice is given to such ULC and further steps are taken thereunder so as to register the Administrative Agent or any other person as the holder of the ULC Interests of such ULC. To the extent any provision hereof would have the effect of constituting the Administrative Agent or any other person as a shareholder or member of a ULC prior to such time, such provision shall be severed therefrom and ineffective with respect to the ULC Interests of such ULC without otherwise invalidating or rendering unenforceable this Agreement or invalidating or rendering unenforceable such provision insofar as it relates to Pledged Stock which are not ULC Interests. Except upon the exercise of rights to sell or otherwise dispose of ULC Interests following the occurrence and during the continuance of an Event of Default hereunder, no Grantor shall cause or permit, or enable any ULC in which it holds ULC Interests to cause or permit, the Administrative Agent to: (a) be registered as shareholders or members of such ULC; (b) have any notation entered in its favour in the share register of such ULC; (c) be held out as a shareholder or member of such ULC; (d) receive, directly or indirectly, any dividends, property or other distributions from such ULC by reason of the Administrative Agent holding a security interest in such ULC; or (e) act as a shareholder or member of such ULC, or exercise any rights of a shareholder or member of such ULC including the right to attend a meeting of, or to vote the shares of, such ULC.

SECTION 2.06. Registration in Nominee Name; Denominations. The Administrative Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the

name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favour of the Administrative Agent. Each Grantor will promptly give to the Administrative Agent copies of any material notices or other material communications received by it with respect to Pledged Securities registered in the name of such Grantor. Upon the occurrence and during the continuation of an Event of Default, the Administrative Agent shall at all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

SECTION 2.07. Voting Rights; Dividends and Interest. (a) Unless and until an Event of Default shall have occurred and be continuing and the Administrative Agent shall have notified the Grantors that their rights under this Section 2.07 are being suspended:

(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose not inconsistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents, provided that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights enuring to a holder of any Pledged Securities or the rights and remedies of any of the Administrative Agent or the other Secured Parties under this Agreement or the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.

(ii) The Administrative Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above (including for the purpose of reinstating any such rights and powers after the cure or waiver of any Event of Default).

(iii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws, provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Stock or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, amalgamation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by

such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and shall be forthwith delivered to the Administrative Agent in the same form as so received (with any necessary endorsement).

(b) Upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Grantors of the suspension of their rights under paragraph (a)(iii) of this Section 2.07, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 2.07 shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 2.07 shall be held in trust for the benefit of the Administrative Agent, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Administrative Agent upon demand in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this paragraph (b) shall be retained by the Administrative Agent in an account to be established by the Administrative Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived and the Parent Borrower has delivered to the Administrative Agent a certificate to that effect, the Administrative Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 2.07 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, but after the Administrative Agent shall have notified the Grantors of the suspension of their rights under paragraph (a)(i) of this Section 2.07, all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 2.07 and the obligations of the Administrative Agent under paragraph (a)(ii) of this Section 2.07 shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers, provided that, unless otherwise directed by the Required Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights.

(d) Any notice given by the Administrative Agent to the Grantors suspending their rights under paragraph (a) of this Section 2.07 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors

under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Administrative Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Administrative Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

ARTICLE III

Security Interests in Personal Property

SECTION 3.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of its Canadian Secured Obligations, each Grantor hereby assigns, pledges and hypothecates to the Administrative Agent, its successors and permitted assigns, for the benefit of the Secured Parties, and hereby grants and hypothecates to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in, all right, title or interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Personal Property Collateral”):

i) all Accounts;

ii) all Chattel Paper;

iii) all cash and Deposit Accounts;

iv) all Documents of Title;

v) all Equipment;

vi) all Intangibles;

vii) all Instruments;

viii) all Inventory;

ix) all Securities;

x) all books and records pertaining to the Personal Property Collateral; and

xi) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.

(b) Each Grantor hereby irrevocably authorizes the Administrative Agent at

any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) or financing change statements with respect to the Personal Property Collateral or any part thereof and amendments thereto that (i) indicate the Collateral as all assets of such Grantor or words of similar effect as being of an equal or lesser scope or with greater detail and (ii) contain the information required by the PPSA for the filing of any financing statement, financing change statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing or covering Personal Property Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Personal Property Collateral relates. Each Grantor agrees to provide such information to the Administrative Agent promptly upon request.

Each Grantor also ratifies its authorization for the Administrative Agent to file in any relevant jurisdiction any initial financing statements, financing change statements or amendments thereto if filed prior to the date hereof.

The Administrative Agent is further authorized to file with the Canadian Intellectual Property Office (or any successor office or any similar office in any other country) such documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest, including a notice of grant of security interest, granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Administrative Agent as secured party.

(c) The Security Interest is granted as security only and shall not subject the Administrative Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Personal Property Collateral.

(d) Notwithstanding anything herein to the contrary, (i) in no event shall the Security Interest granted hereunder attach to (x) any license, contract or agreement to which a Grantor is a party or any of its rights or interests thereunder if and for so long as the grant of such Security Interest shall constitute or result in (A) the unenforceability of any right of the Grantor therein, (B) a breach or termination pursuant to the terms of, or a default under, any such license, contract or agreement (other than to the extent any such term would be rendered ineffective pursuant to the PPSA or any other applicable law or principles of equity) or (C) the violation of any law applicable to such Grantor or (y) any property or asset of any Grantor securing Indebtedness that prohibits the granting of any other Lien on such property or asset, in each case as permitted under the Credit Agreement; provided, however, that, in the case of clauses (x) and (y), such Security Interest shall attach immediately at such time as the condition causing such unenforceability or prohibiting the granting of any other Lien, as the case may be, shall be remedied and, in the case of clause (x), to the extent severable, shall attach immediately to any portion of such license, contract or agreement that does not result in any of the consequences specified in clause (A), (B) or (C) above, including, without

limitation, any proceeds of such contract or agreement, and (ii) the term “Personal Property Collateral” shall not include any asset of any Grantor to which the Security Interest has not attached pursuant to this clause (d).

(e) The Personal Property Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest granted hereby in the Personal Property Collateral, the Grantors or any of them shall stand possessed of such last day in trust to assign the same to any person acquiring such term.

(f) The term “Goods” when used in this Agreement shall not include “consumer goods” of any Grantor as that term is defined in the PPSA.

(g) Notwithstanding Section 3.01(a), any Grantor’s grant of security in Trade-marks (as defined in the Trade-marks Act (Canada)) under this Agreement shall be limited to a grant by such Grantor of a security interest in all of such Grantor’s right, title and interest in such Trade-marks.

(h) Each Grantor and the Administrative Agent hereby acknowledge that (a) value has been given in respect of the security interests granted herein; (b) such Grantor has rights in the Collateral in which it has granted a security interest; and (c) this Agreement constitutes a security agreement as that term is defined in the PPSA.

(i) If the Collateral is realized upon and the security interest in the Collateral is not sufficient to satisfy all of the Canadian Secured Obligations, each Grantor acknowledges and agrees that, subject to the provisions of the PPSA, such Grantor shall continue to be liable for any Canadian Secured Obligations remaining outstanding and the Administrative Agent shall be entitled to pursue full payment thereof.

SECTION 3.02. Representations and Warranties. The Grantors jointly and severally represent and warrant to the Administrative Agent and the Secured Parties that:

(a) Each Grantor has good and valid rights in or title to the Personal Property Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Administrative Agent, for the benefit of the Secured Parties, the Security Interest in such Personal Property Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained.

(b) The Canadian Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name of each Grantor, is correct and complete as of the Effective Date. The financing statements (including fixture filings, as applicable), financing change statements or other appropriate filings, recordings or registrations prepared by the Administrative Agent based upon the

information provided to the Administrative Agent in the Canadian Perfection Certificate for filing in each governmental office, federal, provincial or municipal, or other office specified in Schedule 2 to the Canadian Perfection Certificate (or specified by notice from the Parent Borrower to the Administrative Agent after the Effective Date in the case of filings, recordings or registrations required by Section 5.12 of the Credit Agreement or Section 3.03 hereof), are all the filings, recordings and registrations (other than filings required to be made in the Canadian Intellectual Property Office in order to perfect the Security Interest in Personal Property Collateral consisting of Patents, Trade-marks, Copyrights and Industrial Designs) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favour of the Administrative Agent (for the benefit of the Secured Parties) in respect of all Personal Property Collateral in which the Security Interest may be perfected by filing, recording or registration in Canada (or any political subdivision thereof) and its provinces and territories and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements or financing change statements for renewals. Each Grantor shall ensure that a fully executed agreement in a form reasonably satisfactory to the Administrative Agent (a “Short Form Security Agreement”) that contains a description of all Personal Property Collateral consisting of the applicable type of Intellectual Property shall have been received by the Administrative Agent (i) within three months after the execution of this Agreement with respect to Patents, Trade-marks, Copyrights and Industrial Designs for recording by the Canadian Intellectual Property Office to protect the validity of and to establish a legal, valid and perfected security interest in favour of the Administrative Agent (for the benefit of the Secured Parties) in respect of all Personal Property Collateral consisting of Patents, Trade-marks, Copyrights and Industrial Designs in which a security interest may be perfected by filing, recording or registration in Canada (or any political subdivision thereof) and its provinces or territories and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Personal Property Collateral consisting of Patents, Trade-marks, Copyrights and Industrial Designs (or registration or application for registration thereof) acquired or developed after the date hereof).

(c) The Security Interest constitutes (i) a legal and valid security interest in all the Personal Property Collateral securing the payment and performance of the Canadian Secured Obligations, (ii) subject to the filings described in Section 3.02(b), a perfected security interest in all Personal Property Collateral in which a security interest may be perfected by filing, recording or registering a financing statement, financing change statement or analogous document in Canada (or any political subdivision thereof) and its provinces or territories pursuant to the PPSA and (iii) a security interest that shall be perfected in all Personal Property Collateral in which a security interest may be perfected upon the receipt of an executed Short Form Security Agreement from the applicable Grantor and the recording of such Short Form Security Agreement by the Administrative Agent with the Canadian Intellectual Property Office within the applicable three month period (commencing as of the date hereof). The Security Interest is and shall be prior to any other Lien on any of the Personal Property Collateral, other than Permitted

Encumbrances that have priority as a matter of law and Liens expressly permitted to be prior to the Security Interest pursuant to Section 6.02 of the Credit Agreement.

(d) The Personal Property Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement. None of the Grantors has filed or consented to the filing of (i) any financing statement, financing change statement or analogous document under the PPSA or any other applicable laws covering any Personal Property Collateral, (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Personal Property Collateral with the Canadian Intellectual Property Office or (iii) any assignment in which any Grantor assigns any Personal Property Collateral or any security agreement or similar instrument covering any Personal Property Collateral with any foreign governmental, federal, provincial or municipal, or other office, which financing statement, financing change statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement.

(e) As of the date of any such delivery, the names of the obligors, amounts owing, due dates and other information with respect to the Accounts and Chattel Paper are and will be correctly stated in all material respects in all invoices and the Collateral Reports most recently delivered to the Administrative Agent with respect thereto furnished to the Administrative Agent by such Grantor from time to time. As of the time when each Account or each item of Chattel Paper arises, the Grantor shall be deemed to have represented and warranted that such Account or Chattel Paper, as the case may be, are genuine.

(f) With respect to any Inventory of any Grantor scheduled or listed on the most recent Collateral Report, (i) such Inventory (other than Inventory in transit, Inventory that is being processed or used as a sample offsite and Inventory that is the subject of consignment) is located at one of the Grantors’ locations set forth in Section 2 of the Canadian Perfection Certificate, (ii) no material amount of Inventory (other than Inventory in transit, Inventory that is being processed or used as a sample offsite and Inventory that is the subject of consignment) is now, or shall at any time or times hereafter be, stored at any other location except as permitted by Section 3.04(g), (iii) each Grantor has good, indefeasible and merchantable title to its Inventory and such Inventory is not subject to any Lien or security interest or document whatsoever except for the Lien granted to the Administrative Agent, for the benefit of the Administrative Agent and Lenders, and except for Liens permitted under Section 6.02 of the Credit Agreement, (iv) no material portion of such Inventory is subject to any licensing, patent, royalty, Trade-xxxx, trade name or copyright agreements with any third parties which would require any consent of any third party upon sale or disposition of that Inventory or the payment of any monies to any third party upon such sale or other disposition, and (v) the completion of manufacture, sale or other disposition of such Inventory by the Administrative Agent following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any contract or agreement to which the applicable Grantor is a party or to which such Inventory is subject.

SECTION 3.03. Covenants. (a) Each Grantor agrees promptly to notify the Administrative Agent in writing of any change in (i) within 30 days, its legal name, (ii) within 30 days, the location or address of its chief executive office, its principal place of business, any office in which it maintains books or records relating to Personal Property Collateral owned by it or any office or facility at which Personal Property Collateral owned by it is located (including the establishment of any such new office or facility), (iii) its identity or type of organization or corporate structure, (iv) its Federal Taxpayer Identification Number or organizational identification number or (v) its jurisdiction of organization, incorporation or amalgamation. Each Grantor agrees to promptly provide the Administrative Agent with certified organizational documents reflecting any of the changes described in the first sentence of this paragraph. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the PPSA or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Personal Property Collateral.

(b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records with respect to the Personal Property Collateral owned by it in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to include accounting records that are complete in all material respects and indicate all payments and proceeds received with respect to any part of the Personal Property Collateral, and, at such time or times as the Administrative Agent may reasonably request, promptly to prepare and deliver to the Administrative Agent a duly certified schedule or schedules in form and detail satisfactory to the Administrative Agent showing the identity, amount and location of any and all Personal Property Collateral.

(c) At the time of delivery of financial statements pursuant to Section 5.01(a) of the Credit Agreement, the Canadian Subsidiary Borrower shall deliver to the Administrative Agent a certificate executed by a Financial Officer (i) setting forth the information required by the Canadian Perfection Certificate or confirming that there has been no change in such information since the date of the Canadian Perfection Certificate delivered on the Effective Date or the date of the certificate most recently delivered pursuant to this Section 3.03(c), as applicable, and (ii) certifying that all PPSA financing statements and financing change statements (including fixture filings), or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental office, federal, provincial or municipal, or other appropriate office in each jurisdiction identified pursuant to clause (a) of this Section 3.03 to the extent necessary to protect or perfect the Security Interest for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). Each certificate delivered pursuant to this Section 3.03(c) shall identify in the format of Schedule III all Intellectual Property of any Grantor in existence on the date thereof and not then listed on such Schedules or previously so identified to the Administrative Agent.

(d) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Personal Property Collateral against all Persons and to defend the Security Interest of the Administrative Agent in the Personal Property Collateral and the priority thereof, in each case, against any Lien not expressly permitted pursuant to Section 6.02 of the Credit Agreement.

(e) Subject to any specific limitation contained herein, each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Administrative Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or financing change statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Personal Property Collateral shall be or become evidenced by any promissory note or other instrument, subject to Section 3.04 such note or instrument shall be immediately pledged and delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent.

Without limiting the generality of the foregoing, each Grantor hereby authorizes the Administrative Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule III or adding additional schedules hereto to specifically identify any asset or item that may constitute Copyrights, Licenses, Patents, Trade-marks or Industrial Designs, provided that any Grantor shall have the right, exercisable within 10 days after it has been notified by the Administrative Agent of the specific identification of such Collateral, to advise the Administrative Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Collateral. Each Grantor agrees that it will use its best efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Collateral within 30 days after the date it has been notified by the Administrative Agent of the specific identification of such Collateral.

(f) At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Personal Property Collateral and not permitted pursuant to Section 6.02 of the Credit Agreement, and may pay for the maintenance and preservation of the Personal Property Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Administrative Agent on demand for any payment made or any expense incurred by the Administrative Agent pursuant to the foregoing authorization, provided that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and

maintenance as set forth herein or in the other Loan Documents.

(g) If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person with a fair market value in excess of $100,000 to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Administrative Agent. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.

(h) Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Personal Property Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Administrative Agent and the Secured Parties from and against any and all liability for such performance.

(i) None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Personal Property Collateral or shall grant any other Lien in respect of the Personal Property Collateral, except as permitted by the Credit Agreement. None of the Grantors shall make or permit to be made any transfer of the Personal Property Collateral and each Grantor shall remain at all times in possession of the Personal Property Collateral owned by it, except that unless and until the Administrative Agent shall notify the Grantors that an Event of Default shall have occurred and be continuing and that during the continuance thereof the Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Personal Property Collateral, the Grantors may use, transfer and dispose of the Personal Property Collateral in any lawful manner not inconsistent with the provisions of this Agreement, the Credit Agreement or any other Loan Document.

(j) Each Grantor irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, upon the occurrence and during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Personal Property Collateral under policies of insurance, endorsing the name of such Grantor on any cheque, money order, note, order, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required under the Credit Agreement or to pay any premium in whole or part relating thereto, the Administrative Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Administrative Agent deems advisable. All sums disbursed by the Administrative Agent in connection with this paragraph, including reasonable legal fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Administrative

Agent and shall be additional Canadian Secured Obligations secured hereby.

(k) No Grantor will make or agree to make any discount, credit, rebate or other reduction in the original amount owing on a Receivable or accept in satisfaction of a Receivable less than the original amount thereof, except that, prior to the occurrence of an Event of Default, any Grantor may reduce the amount of Accounts arising from the sale of Inventory in the ordinary course of business. Except as otherwise provided in this Agreement, each Grantor will collect and enforce, at such Grantor’s sole expense, all amounts due or hereafter due to such Grantor under the Receivables to the extent such collection or enforcement is commercially warranted. Each Grantor will deliver to the Administrative Agent immediately upon its request after the occurrence and during the continuation of an Event of Default duplicate invoices with respect to each of its Account bearing such language of assignment as the Administrative Agent shall specify. Each Grantor shall send the Administrative Agent a copy of any credit memorandum in excess of $100,000 as soon as issued, and the Parent Borrower shall promptly report each credit memorandum and each of the facts required to be disclosed to the Administrative Agent in accordance with this clause (k) on the Borrowing Base Certificates submitted by it.

(l) In the event any Account Debtor returns Inventory to any Grantor when an Event of Default has occurred and is continuing, such Grantor, upon the request of the Administrative Agent, shall (i) hold the returned Inventory in trust for the Administrative Agent, (ii) segregate all returned Inventory from all its other property, (iii) dispose of the returned Inventory solely according to the Administrative Agent’s written instructions and (iv) not issue any credits or allowances with respect thereto without the Administrative Agent’s prior written consent.

SECTION 3.04. Other Actions. In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, the Security Interest, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Personal Property Collateral:

(a) Instruments. If any Grantor shall at any time hold or acquire any Instrument (other than items deposited for collection) evidencing an amount in excess of $100,000, such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.

(b) Deposit Accounts. Schedule IV identifies each deposit account of each Grantor as of the Effective Date. For each deposit account that any Grantor at any time opens or maintains, the applicable Grantor shall provide to the Administrative Agent a Deposit Account Control Agreement duly executed on behalf of each financial institution holding a deposit account of such Grantor as set forth in Section 3.06, (x) in the case of each deposit account set forth on Schedule IV, on or prior to the date that is 30 days after the Effective Date (or such later date as is acceptable to the Administrative Agent in its sole discretion), and (y) in the case of each deposit account opened after the Effective

Date, on the date such deposit account is opened, provided that the Administrative Agent may, in its sole discretion, defer delivery of any such Deposit Account Control Agreement required to be delivered hereunder, establish a Reserve with respect to any deposit account for which the Administrative Agent has not received such Deposit Account Control Agreement or require any Grantor to open and maintain a new deposit account with a financial institution subject to a Deposit Account Control Agreement. The provisions of this clause (b) will not apply to (i) any deposit account for which any Grantor, the depositary bank and the Administrative Agent have entered into a cash collateral agreement specially negotiated among such Grantor, the depositary bank and the Administrative Agent for the specific purpose set forth therein, (ii) any deposit account for which the Administrative Agent is the depositary and (iii) any deposit account specifically and exclusively used for payroll, payroll taxes or other employee wage or benefit payments to or for the benefit of the applicable Grantor’s employees.

(c) Securities. Except to the extent otherwise provided in Article II, if any Grantor shall at any time hold or acquire any certificated securities with a value in excess of $100,000, such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time specify. If any securities now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall immediately notify the Administrative Agent thereof and, at the Administrative Agent’s reasonable request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) cause the issuer to agree to comply with instructions from the Administrative Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Administrative Agent to become the registered owner of the securities or (iii) take appropriate steps under applicable foreign law to effectuate perfection. Other than securities or investment property held by any Grantor or its nominee through a securities intermediary or commodities intermediary as described in clause (d) of the definition of “Permitted Encumbrances” in the Credit Agreement or in connection with any hedging agreement permitted under the Credit Agreement, if any securities with a value in excess of $100,000, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Grantor are held by such Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall immediately notify the Administrative Agent thereof and, at the Administrative Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from the Administrative Agent to such securities intermediary as to such security entitlements, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Administrative Agent to such commodity intermediary, in each case without further consent of any Grantor or such nominee, or (ii) in the case of financial assets or other Securities held through a securities intermediary, arrange for the Administrative Agent to become the entitlement holder with respect to such investment property, with the Grantor being permitted, only with the

consent of the Administrative Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Administrative Agent agrees with each of the Grantors that the Administrative Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Administrative Agent is the securities intermediary.

(d) Letter-of-Credit Rights. If any Grantor is at any time a beneficiary under a letter of credit with a face amount in excess of $100,000 now or hereafter issued in favour of such Grantor, such Grantor shall promptly notify the Administrative Agent thereof and, at the request and option of the Administrative Agent, such Grantor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Administrative Agent of the proceeds of any drawing under the letter of credit or (ii) arrange for the Administrative Agent to become the transferee beneficiary of the letter of credit, with the Administrative Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be paid to the applicable Grantor unless an Event of Default has occurred or is continuing.

(e) Collateral Access Agreements. Each Grantor shall use commercially reasonable efforts to obtain a Collateral Access Agreement from the lessor of each leased property, mortgagee of each owned property or bailee or consignee with respect to each warehouse, processor and converter facility and any other location where Collateral is stored or located, which agreement shall be reasonably satisfactory in form and substance to the Administrative Agent.

(f) Government Claims. Each Grantor shall promptly notify the Administrative Agent of any Collateral which constitutes a claim in excess of $100,000 against the Canadian federal government or any provincial, territorial, municipal or local government or any instrumentality or agency thereof, the assignment of which claim is restricted by any federal, provincial, territorial or municipal law of Canada or any part thereof.

SECTION 3.05. Covenants Regarding Patent, Trade-xxxx, Copyright and Industrial Design Collateral. (a) Each Grantor agrees that it (i) will not do any act or omit to do any act (and will exercise commercially reasonable efforts to prevent its licensees from doing any act or omitting to do any act), whereby any Patent that is material to the conduct of such Grantor’s business may become invalidated or dedicated to the public, and (ii) shall continue to xxxx any products covered by a Patent with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws.

(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trade-xxxx material to the conduct of such Grantor’s business, (i) maintain such Trade-xxxx in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trade-xxxx, (iii) display such Trade-xxxx with notice of Canadian federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law and (iv) not knowingly use or knowingly permit the use of such Trade-xxxx in violation of any third party rights.

(c) Each Grantor (either itself or through its licensees or sublicensees) will, for each work covered by a material Copyright, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws.

(d) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Industrial Design material to the conduct of such Grantor’s business, (i) maintain such Industrial Design in full force free from any claim of abandonment or invalidity for non use, (ii) maintain the quality of products and services offered under such Industrial Design, (iii) not do any act or omit to do any act (and will exercise commercially reasonable efforts to prevent its licensees from doing any act or omitting to do any act), whereby any Industrial Design may become invalidated or dedicated to the public, and (iv) continue to xxxx any products covered by a Industrial Design with the relevant number as necessary and sufficient to establish and preserve its maximum rights under applicable laws.

(e) Each Grantor shall notify the Administrative Agent promptly if it knows or has reason to know that any Patent, Trade-xxxx, Copyright or Industrial Design material to the conduct of its business may become abandoned, lost or dedicated to the public, or of any materially adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the Canadian Intellectual Property Office or any court or similar office of any country) regarding such Grantor’s ownership of any such Patent, Trade-xxxx, Copyright or Industrial Design, its right to register the same, or its right to keep and maintain the same.

(f) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for any Patent, Trade-xxxx, Copyright or Industrial Design (or for the registration of any Trade-xxxx, Copyright or Industrial Design) with the Canadian Intellectual Property Office or any office or agency in any political subdivision of the United States, Canada or in any other country or any political subdivision thereof, unless it promptly informs the Administrative Agent, provides to the Administrative Agent a revised Schedule III to supplement this Agreement and, upon request of the Administrative Agent, executes and delivers any and all agreements, instruments, documents and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Patent, Trade-xxxx, Copyright or Industrial Design, and each Grantor hereby appoints the Administrative Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes,

all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable.

(g) Each Grantor will take all necessary steps that are consistent with the practice in any proceeding before the Canadian Intellectual Property Office or any office or agency in any political subdivision of the United States or Canada or in any other country or any political subdivision thereof, to maintain and pursue each material application relating to the Patents, Trade-marks, Copyrights and/or Industrial Designs (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trade-marks, Copyrights and Industrial Designs that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancellation proceedings against third parties.

(h) In the event that any Grantor becomes aware that any Personal Property Collateral consisting of a Patent, Trade-xxxx, Copyright or Industrial Design material to the conduct of any Grantor’s business has been or is about to be infringed, misappropriated or diluted by a third party in any material respect, such Grantor promptly shall notify the Administrative Agent and shall, if consistent with good business judgment, promptly xxx for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Personal Property Collateral.

(i) Upon the occurrence and during the continuance of an Event of Default, each Grantor shall use its best efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License, Trade-xxxx License or Industrial Design License to effect the assignment of all such Grantor’s right, title and interest thereunder to the Administrative Agent or its designee.

SECTION 3.06. Deposit accounts.

(a) Collection of Receivables. (i) On or before the Effective Date, each Grantor shall execute and deliver to the Administrative Agent a Deposit Account Control Agreement for each deposit account it maintains into which all cash, cheques, orders, notes, drafts or other similar payments relating to or constituting payments made in respect of Receivables and Inventory will be deposited (each, a “Receivables Account”), which Receivables Accounts are identified as such on Schedule IV. After the Effective Date, each Grantor will comply with the terms of clause (b) of this Section.

(ii) Each Grantor shall direct all of its Account Debtors to forward payments directly to Receivables Accounts subject to the Deposit Account Control Agreements. If any Grantor should refuse or neglect to notify any Account Debtor to forward payments directly to a Receivables Account subject to a Deposit Account Control Agreement after notice from the Administrative Agent, the Administrative Agent shall be entitled to make

such notification directly to Account Debtor. If notwithstanding the foregoing instructions, any Grantor receives any proceeds of any Receivables or Inventory, such Grantor shall receive such payments as the Administrative Agent’s trustee, and shall immediately deposit all cash, cheques, orders, notes, drafts or other similar payments related to or constituting payments made in respect of Receivables received by it to a Receivables Account.

(b) New Deposit Accounts. Before any Grantor opens or replaces any Receivables Account or any other deposit account, such Grantor shall (i) obtain the Administrative Agent’s consent in writing to the opening of such deposit account or Receivables Account and (ii) cause each bank or financial institution in which it seeks to open (A) a deposit account to enter into a Deposit Account Control Agreement with the Administrative Agent in order to give the Administrative Agent control of such deposit account or (B) a Receivables Account to enter into a Deposit Account Control Agreement with the Administrative Agent in order to give the Administrative Agent control of the Receivables Account. In the case of deposit accounts or Receivables Account maintained with Lenders, the terms of such letter shall be subject to the provisions of the Credit Agreement regarding set-offs.

(c) Activation Periods. Pursuant to each Deposit Account Control Agreement, all amounts deposited in each Receivables Account shall be in the control of the Administrative Agent. The applicable Grantor may operate and transact business through its Receivables Account in its normal fashion, including making withdrawals, provided that (i) if, at any time, Availability falls below $20,000,000, the Administrative Agent shall (A) send a notice (the “First Activation Period Notice”) to each bank where any Grantor maintains a Receivables Account (each, a “Receivables Account Bank”) that commences a period (the “First Activation Period”) during which the applicable Receivables Account Bank shall cease complying with any instructions originated by the applicable Grantor and shall comply with instructions originated by the Administrative Agent directing disposition of funds, without further consent of the applicable Grantor and (B) apply (and allocate) the funds in each Receivables Account pursuant to Section 2.10(b) of the Credit Agreement, (ii) if, during the First Activation Period, Availability exceeds $35,000,000 for a period of 60 consecutive days, the Administrative Agent shall send a notice to each Receivables Account Bank (the “Termination Notice”) that terminates the First Activation Period and commences a period (the “Termination Period”) in which the applicable Grantor may transact business through each Receivables Account in its normal fashion, including making withdrawals from each Receivables Account, (iii) if, at any point during the Termination Period, Availability falls below $20,000,000, the Administrative Agent shall send a notice to each Receivables Account Bank (the “Second Activation Period Notice”) that the applicable Receivables Account Bank shall cease complying with any instructions originated by the applicable Grantor and shall comply with instructions originated by the Administrative Agent directing disposition of funds, without further consent of the applicable Borrower. Administrative Agent has sole control over each Receivables Account and the Grantors cannot make any withdrawals from any Receivables Account.

ARTICLE IV

Remedies

SECTION 4.01. Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Administrative Agent on demand, and it is agreed that the Administrative Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Personal Property Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Personal Property Collateral by the applicable Grantors to the Administrative Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Personal Property Collateral throughout the world on such terms and conditions and in such manner as the Administrative Agent shall determine (other than in violation of any applicable laws or regulations or then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Personal Property Collateral and without liability for trespass to enter any premises where the Personal Property Collateral may be located for the purpose of taking possession of or removing the Personal Property Collateral and, generally, to exercise any and all rights afforded to a secured party under the PPSA or other applicable law (including, without limitation, giving notice of sole control or any other instruction under any Deposit Account Control Agreement or any other control agreement with any securities intermediary and take any action therein with respect to such Collateral). Without limiting the generality of the foregoing, each Grantor agrees that the Administrative Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate. The Administrative Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale of Collateral shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Administrative Agent shall give the applicable Grantors 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of the PPSA) of the Administrative Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or

exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion) determine. The Administrative Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Administrative Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Administrative Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Canadian Secured Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercially reasonable standards as provided in the PPSA.

The Administrative Agent may appoint, remove or reappoint by instrument in writing, any Person or Persons, whether an officer or officers or an employee or employees of any Grantor or not, to be an interim receiver, receiver or receivers (hereinafter called a “Receiver”, which term when used herein shall include a receiver and manager) of such Collateral (including any interest, income or profits therefrom). Any such Receiver shall, to the extent permitted by applicable law, be deemed the agent of such Grantor and not of the Administrative Agent, and the Administrative Agent shall not be in any way responsible for any misconduct, negligence or non-feasance on the part

of any such Receiver or its servants, agents or employees. Subject to the provisions of the instrument appointing it, any such Receiver shall (i) have such powers as have been granted to the Administrative Agent under this Article IV and (ii) shall be entitled to exercise such powers at any time that such powers would otherwise be exercisable by the Administrative Agent under this Article IV, which powers shall include, but are not limited to, the power to take possession of the Collateral, to preserve the Collateral or its value, to carry on or concur in carrying on all or any part of the business of such Grantor and to sell, lease, licence or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of the Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including any Grantor, enter upon, use and occupy all premises owned or occupied by such Grantor wherein the Collateral may be situate, maintain the Collateral upon such premises, borrow money on a secured or unsecured basis and use the Collateral directly in carrying on such Grantor’s business or as security for loans or advances to enable the Receiver to carry on such Grantor’s business or otherwise, as such Receiver shall, in its reasonable discretion, determine. Except as may be otherwise directed by the Administrative Agent, all money received from time to time by such Receiver in carrying out his/her/its appointment shall be received in trust for and be paid over to the Administrative Agent and any surplus shall be applied in accordance with applicable law. Every such Receiver may, in the discretion of the Administrative Agent, be vested with, in addition to the rights set out herein, all or any of the rights and powers of the Administrative Agent described in the Credit Agreement, the PPSA or the Bankruptcy and Insolvency Act (Canada).

SECTION 4.02. Application of Proceeds. The Administrative Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Administrative Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Canadian Secured Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent hereunder or under any other Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;

SECOND, to the payment in full of any other Canadian Secured Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of such other Canadian Secured Obligations owed to them on the date of any such distribution); and

THIRD, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Administrative Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any

sale of Collateral by the Administrative Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Administrative Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Administrative Agent or such officer or be answerable in any way for the misapplication thereof.

SECTION 4.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Administrative Agent to exercise rights and remedies under this Agreement at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Administrative Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sublicense any of the Personal Property Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Administrative Agent may be exercised, at the option of the Administrative Agent, upon the occurrence and during the continuation of an Event of Default, provided that any license, sublicense or other transaction entered into by the Administrative Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.

SECTION 4.04. Securities Act. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect in the United States or Canada or any province or territory thereof (such Act and any such similar statute as from time to time in effect being called the “Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Securities Laws might very strictly limit the course of conduct of the Administrative Agent if the Administrative Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Administrative Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable “blue sky” or other state securities laws or similar laws analogous in purpose or effect in the United States or Canada or any province or territory thereof. Each Grantor recognizes that in light of such restrictions and limitations the Administrative Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Administrative Agent, in its sole and absolute discretion (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part

thereof shall have been filed under the Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favourable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Administrative Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Administrative Agent, in its sole and absolute discretion, may in good xxxxx xxxx reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 4.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Administrative Agent sells.

SECTION 4.05. Registration. Each Grantor agrees that, upon the occurrence and during the continuance of an Event of Default, if for any reason the Administrative Agent desires to sell any of the Pledged Collateral at a public sale, it will, at any time and from time to time, upon the written request of the Administrative Agent, use its best efforts to take or to cause the issuer of such Pledged Collateral to take such action and prepare, distribute and/or file such documents, as are required or advisable in the reasonable opinion of counsel for the Administrative Agent to permit the public sale of such Pledged Collateral. Each Grantor further agrees to indemnify, defend and hold harmless (in the manner and to the extent provided by Section 9.03 of the Credit Agreement) the Administrative Agent, each other Secured Party, any underwriter and their respective officers, directors, affiliates and controlling persons from and against all loss, liability, expenses, costs of counsel (including, without limitation, reasonable fees and expenses of legal counsel to the Administrative Agent), and claims (including the costs of investigation) that they may incur insofar as such loss, liability, expense or claim directly or indirectly arises out of or is based upon any alleged untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) or in any notification or offering circular, or directly or indirectly arises out of or is based upon any alleged omission to state a material fact required to be stated therein or necessary to make the statements in any thereof not misleading, except insofar as the same may have been caused by any untrue statement or omission based upon information furnished in writing to such Grantor or the issuer of such Pledged Collateral by the Administrative Agent or any other Secured Party expressly for use therein. Each Grantor further agrees, upon such written request referred to above, to use its best efforts to qualify, file or register, or cause the issuer of such Pledged Collateral to qualify, file or register, any of the Pledged Collateral under the “blue sky” or other analogous securities laws of such states or any of the provinces or territories of Canada as may be requested by the Administrative Agent and keep effective, or cause to be kept effective, all such qualifications, filings or registrations. Each Grantor will bear all costs and expenses of carrying out its obligations under this Section 4.05. Each Grantor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section 4.05 and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section 4.05 may be specifically enforced.

SECTION 4.06. Other Actions. After the occurrence of an Event of Default, each Grantor will, at its own expense, cause the independent certified public or chartered accountants then engaged by such Grantor to prepare and deliver to the Administrative Agent and each Lender, at any time and from time to time, promptly upon the request of the Administrative Agent, the following reports with respect to such Grantor: (a) a reconciliation of all Accounts; (b) an aging of such Accounts; (c) trial balances in respect of such Accounts; and (d) a test verification of such Accounts.

ARTICLE V

Indemnity, Subrogation and Subordination

SECTION 5.01. Indemnity and Subrogation. The Borrowers agree that in the event any assets of any Grantor shall be sold pursuant to this Agreement or any other Collateral Document to satisfy in whole or in part an obligation owed to any Secured Party, the Borrowers shall indemnify such Grantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

SECTION 5.02. Contribution and Subrogation. Each Grantor (a “Contributing Party”) agrees (subject to Section 5.03) that, in the event a payment shall be made by any other Grantor hereunder in respect of any Canadian Secured Obligation or assets of any other Grantor shall be sold pursuant to any Collateral Document to satisfy any Canadian Secured Obligation owed to any Secured Party and such other Grantor (the “Claiming Party”) shall not have been fully indemnified by the Borrowers as provided in Section 5.01, the Contributing Party shall indemnify the Claiming Party in an amount equal to such Contributing Party’s Foreign Applicable Percentage (as such term is defined in Section 10.10 of the Credit Agreement) of such payment or the greater of the book value or the fair market value of such assets, as the case may be. Any Contributing Party making any payment to a Claiming Party pursuant to this Section 5.02 shall be subrogated to the rights of such Claiming Party under Section 5.01 to the extent of such payment. Nothing in this provision shall affect any Grantor’s several liability for the entire amount of the Canadian Secured Obligations (up to such Grantor’s Maximum Liability).

SECTION 5.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Grantors under Sections 5.01 and 5.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Canadian Secured Obligations. No failure on the part of any Grantor to make the payments required by Sections 5.01 and 5.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Grantor with respect to its obligations hereunder, and each Grantor shall remain liable for the full amount of the obligations of such Grantor hereunder.

(b) Each Grantor hereby agrees that all Indebtedness and other monetary obligations owed by it to any other Grantor or any other Subsidiary shall be fully

subordinated to the indefeasible payment in full in cash of the Canadian Secured Obligations.

ARTICLE VI

Miscellaneous

SECTION 6.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Subsidiary Party shall be given to it in care of the Parent Borrower as provided in Section 9.01 of the Credit Agreement.

SECTION 6.02. Waivers; Amendment. (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Grantor herefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 6.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan, the acceptance and purchase of a B/A or the issuance, amendment, renewal or extension of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. No notice or demand on any Grantor in any case shall entitle any Grantor to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement.

SECTION 6.03. Administrative Agent’s Fees and Expenses; Indemnification. (a) The parties hereto agree that the Administrative Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in Section 9.03 of the Credit Agreement.

(b) Without limitation of its indemnification obligations under the other Loan Documents, each Grantor jointly and severally agrees to indemnify the Administrative Agent and the other Indemnitees against, and hold each Indemnitee harmless from, any

and all losses, claims, damages, penalties, liabilities and related expenses, including the reasonable fees, charges and disbursements of one counsel for the Indemnitees (in addition to one local counsel in each relevant jurisdiction, including Canadian local counsel) except in the case where there is a divergent or conflicting interest between the Administrative Agent and the Lenders, in which case there shall be one separate counsel for the Administrative Agent, on the one hand, and the Lenders as a group, on the other hand, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of, the execution, delivery or performance of this Agreement or any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing agreements or instruments contemplated hereby, or to the Collateral (including any such claim, litigation, investigation or proceeding brought by or on behalf of any Grantor or any Related Party of a Grantor), whether based on contract, tort or any theory, regardless of whether or not any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties, liabilities or related expenses are determined by a court of competent jurisdiction by final judgment to have resulted from the gross negligence, bad faith or wilful misconduct of such Indemnitee or any of its Related Parties.

(c) Any such amounts payable as provided hereunder shall be additional Canadian Secured Obligations secured hereby and by the other Security Documents. The provisions of this Section 6.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Canadian Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent or any other Secured Party. All amounts due under this Section 6.03 shall be payable on written demand therefor.

SECTION 6.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

SECTION 6.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Grantors in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the execution and delivery of the Loan Documents and the making of any Loans, the acceptance and purchase of any B/As and issuance, amendment, renewal or extension of any Letters of Credit, regardless of any investigation made by any Lender or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan, the face amount of any B/A or any fee or any other amount

payable under any Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.

SECTION 6.06. Counterparts; Effectiveness; Several Agreement; Maximum Liability. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Grantor and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Grantor, the Administrative Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder. In any action or proceeding involving any United States or Canadian federal, state, provincial, territorial or foreign corporate law, or any United States or Canadian federal, state, provincial, territorial or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Grantor under this Agreement would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Grantor’s liability under this Agreement, then, notwithstanding any other provision of this Agreement to the contrary, the amount of such liability shall, without any further action by the Grantors or the Administrative Agent, be automatically limited and reduced to such Grantor’s Maximum Liability. This Section 6.06 with respect to the Maximum Liability of each Grantor is intended solely to preserve the rights of the Administrative Agent and the Lenders to the maximum extent not subject to avoidance under applicable law, and no Grantor nor any other person or entity shall have any right or claim under this Section 6.06 with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Grantor hereunder shall not be rendered voidable under applicable law. Each Grantor agrees that the Canadian Secured Obligations may at any time and from time to time exceed the Maximum Liability of each Grantor without impairing this Agreement or affecting the rights and remedies of the Administrative Agent and the Lenders hereunder, provided that nothing in this sentence shall be construed to increase any Grantor’s obligations hereunder beyond its Maximum Liability.

SECTION 6.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the

invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 6.08. Compromises and Collection of Collateral. The Grantors and the Administrative Agent recognize that set-offs, counterclaims, defenses and other claims may be asserted by obligors with respect to certain of the Receivables, that certain of the Receivables may be or become uncollectible in whole or in part and that the expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may be expected to be recovered with respect to a Receivable. In view of the foregoing, each Grantor agrees that the Administrative Agent may, at any time and from time to time, if an Event of Default has occurred and is continuing, compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount as the Administrative Agent in its sole discretion shall determine or abandon any Receivable, and any such action by the Administrative Agent shall be commercially reasonable so long as the Administrative Agent acts in good faith based on information known to it at the time it takes any such action.

SECTION 6.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

(b) Each Grantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the Province of Ontario in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Province of Ontario. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Grantor or its properties in the courts of any jurisdiction.

(c) Each Grantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section 6.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in

the manner provided for notices in Section 6.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 6.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.10.

SECTION 6.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 6.12. Security Interest Absolute. All rights of the Administrative Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Canadian Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Canadian Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Canadian Secured Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Canadian Secured Obligations or this Agreement.

SECTION 6.13. Termination or Release. (a) This Agreement, the Security Interest and all other security interests granted hereby shall terminate when all the Canadian Obligations have been indefeasibly paid in full and the Lenders have no further commitment to lend under the Credit Agreement, the Total L/C Exposure has been reduced to zero and the Issuing Bank has no further obligations to issue Letters of Credit under the Credit Agreement.

(b) A Subsidiary Party shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Subsidiary Party shall be automatically released upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Subsidiary Party ceases to be a Subsidiary Loan Party, provided that the Lenders shall have consented to such transaction (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise.

(c) Upon any sale or other transfer by any Grantor of any Collateral that is permitted under the Credit Agreement, or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 9.02 of the Credit Agreement, the security interest in such Collateral shall be automatically released.

(d) In connection with any termination or release pursuant to paragraph (a), (b) or (c) above, the Administrative Agent shall execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 6.13 shall be without recourse to or warranty by the Administrative Agent.

SECTION 6.14. Additional Subsidiaries. (a) Pursuant to Section 5.12 of the Credit Agreement, each Canadian Subsidiary Loan Party that was not in existence or not a Canadian Subsidiary Loan Party on the Effective Date is required to enter into this Agreement as a Subsidiary Party upon becoming such a Canadian Subsidiary Loan Party. Upon execution and delivery by the Administrative Agent and a Canadian Subsidiary Loan Party of an instrument in the form of Exhibit A hereto, such Canadian Subsidiary Loan Party shall become a Subsidiary Party hereunder with the same force and effect as if originally named as a Subsidiary Party herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any Canadian Subsidiary Loan Party as a party to this Agreement.

(b) Pursuant to Section 5.12 of the Credit Agreement, each Domestic Subsidiary Loan Party that at any time acquires any Equity Interests in a Foreign Subsidiary that is organized under the laws of Canada of any territory or province thereof is required to enter into this Agreement as a Subsidiary Party. Upon execution and delivery by the Administrative Agent and a Domestic Subsidiary Loan party of an instrument in the form of Exhibit B hereto, such Domestic Subsidiary Loan Party shall become a Subsidiary Party hereunder with the same force and effect as if originally named as a Subsidiary Party herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any Domestic Subsidiary Loan Party as a party to this Agreement.

SECTION 6.15. Administrative Agent Appointed Attorney-in-Fact. Each Grantor

hereby appoints the Administrative Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable until the payment in full of the Canadian Secured Obligations and coupled with an interest. Without limiting the generality of the foregoing, the Administrative Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Administrative Agent’s name or in the name of such Grantor (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, cheques, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof, (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral, (c) to sign the name of any Grantor on any invoice or xxxx of lading relating to any of the Collateral, (d) to send verifications of Receivables to any Account Debtor, (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral, (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral, (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Administrative Agent, and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Administrative Agent were the absolute owner of the Collateral for all purposes, provided that nothing herein contained shall be construed as requiring or obligating the Administrative Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Administrative Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Administrative Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct.

SECTION 6.16. Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Lien and Security Interest granted to the Administrative Agent pursuant to this Agreement and the exercise of any right of remedy by the Administrative Agent hereunder are subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern.

SECTION 6.17. Judgment Currency. (a) The obligations of any Grantor hereunder and under the other Loan Documents to make payments in U.S. Dollars or in Canadian Dollars, as the case may be (for the purposes of this Section 6.16, the “Obligation Currency”), shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the

Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent or a Lender of the full amount of the Obligation Currency expressed to be payable to the Administrative Agent or a Lender under this Agreement or the other Loan Documents. If, for the purpose of obtaining or enforcing judgment against any Grantor or any other Loan Party in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (for the purposes of this Section 6.16, such other currency being hereinafter referred to as the “Judgment Currency”) an amount due in the Obligation Currency, the conversion shall be made, at the rate of exchange prevailing, in each case, as of the date immediately preceding the day on which the judgment is given (for the purposes of this Section 6.16, such Business Day being hereinafter referred to as the “Judgment Currency Conversion Date”).

(b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, each Grantor covenants and agrees to pay, or cause to be paid, such additional amounts, 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 the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date.

(c) For purposes of determining the prevailing rate of exchange, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency.

SECTION 6.18. Attachment of Security Interest. The security interest created hereby is intended to attach, in respect of Collateral in which any Grantor has rights at the time this Agreement is signed by such Grantor and delivered to the Administrative Agent, at the time this Agreement is signed by such Grantor and delivered to the Administrative Agent and, in respect of Collateral in which any Grantor subsequently acquires rights, at the time such Grantor subsequently acquires such rights. The Grantors acknowledge and confirm that value has been given by the Administrative Agent and the Lenders to the Grantors.

SECTION 6.19. Copy of Agreement; Verification Statement. The Grantors hereby acknowledge receipt of a signed copy of this Agreement and hereby waive the requirement to be provided with a copy of any verification statement issued in respect of a financing statement or financing change statement filed under the PPSA in connection with this Agreement to perfect the security interest created herein.

SECTION 6.20 Amalgamation. The Canadian Subsidiary Borrower acknowledges and agrees that upon its amalgamation with Indalex Limited, it is the intention of the parties hereto that the term the “Canadian Subsidiary Borrower” shall apply to each of the amalgamating corporations and to the amalgamated corporation, such that the Security Interest and Lien granted hereby:

(a) shall extend to all of the Collateral owned by each of the amalgamating corporations and the amalgamated corporation at the time of amalgamation and to any Collateral thereafter owned or acquired by the amalgamated corporation; and

(b) shall secure the Secured Obligations of each of the amalgamating corporations and the amalgamated corporation to any Secured Party at the time of amalgamation and any Secured Obligation of the amalgamated corporation to any Secured Party thereafter arising. The Security Interest shall attach to Collateral owned by the corporation amalgamating with the Canadian Subsidiary Borrower, and by the amalgamated corporation, at the time of the amalgamation, and shall attach to any Collateral thereafter owned or acquired by the amalgamated corporation when such becomes owned or is acquired.

[SIGNATURE PAGES TO FOLLOW]

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

	INDALEX HOLDING CORP.
	By
		/s/ Xxxxxxx Xxxxx
		Name: Xxxxxxx Xxxxx
		Title: CFO

	INDALEX LIMITED
	By
		/s/ Xxxxxxx Xxxxx
		Name: Xxxxxxx Xxxxx
		Title: CFO

	6461948 CANADA INC.
	By
		/s/ Xxxxxxx Xxxxx
		Name: Xxxxxxx Xxxxx
		Title: CFO

	INDALEX HOLDINGS (B.C.) LTD.
	By
		/s/ Xxxxxxx Xxxxx
		Name: Xxxxxxx Xxxxx
		Title: CFO

	NOVAR INC.
	By
		/s/ Xxxxxxx Xxxxx
		Name: Xxxxxxx Xxxxx
		Title: CFO

	6326765 CANADA INC.
	By
		/s/ Xxxxxxx Xxxxx
		Name: Xxxxxxx Xxxxx
		Title: CFO

	JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT
	By
		/s/ Xxxx X. Xxxxxxx
		Name: Xxxx X. Xxxxxxx
		Title: Vice President

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Table of Contents

CANADIAN SECURITY AGREEMENT

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