FORM 16. APPLICATION FOR OPTIONAL MORTGAGE COVENANT LAND TITLES ACT, S.N.B. 1981, c.l-1.1, s.25

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1 FORM 16 APPLICATION FOR OPTIONAL MORTGAGE COVENANT LAND TITLES ACT, S.N.B. 1981, c.l-1.1, s.25 APPLICANT: Frar~k Hughes Mclnnes Cooper 644 Main Street, Suite 400 P.O. Box 1368 Moncton, NB El C 8T6 Optional Mortgage Covenant: SEE SCHEDULE "A" ATTACHED -The applicant applies for assignment of a number to the specified optional mortgage covenant. Mclnnes Cooper \ Number assigned to the optional mortgage covenant:.-. I

2 Bank of Montreal SCHEDULE "A" NEW BRUNSWICK COLLATERAL MORTGAGE Land Titles Act OPTIONAL COVENANTS AND CONDITIONS The following set of optional covenants and conditions shall be deemed to be included in every Collateral Mortgage in which the set is referred to by its filing number. 1. In the Collateral Mortgage, the following words and terms shall have the respective meanings ascribed to them as follows: (c) "Administrative Agent" means the mortgagee named in the Collateral Mortgage; "Collateral" means the specified parcel or parcels described in the Collateral Mortgage (subject to the exception as to the last day of the term of any lease or sub-lease as referred to in paragraph 6 hereof) including, without limitation, all erections, buildings, improvements, machinery, plant, furnaces, boilers, water heaters, electric light fixtures, plumbing and heating equipment machinery and apparatus and all appurtenances, accessories and equipment appurtenant thereto which are now or which shall hereafter be placed or installed upon any lands and premises, which are and shall hereafter be deemed to be fixtures and an accession to the freehold and a part of the realty as between the parties hereto and all persons claiming by through or under them; and "Collateral Mortgage" means the Form 15.1 Collateral Mortgage to which these optional covenants and conditions are included by reference, these optional covenants and conditions, all other covenants and conditions incorporated therein and all schedules attached thereto. 2. Words and phrases capitalized in the Collateral Mortgage but not defined herein shall have the meanings set forth in the Credit Agreement. To the extent that there is an inconsistency between a provision of these Optional Covenants and Conditions and a provision of any of the Statutory Covenants and Conditions included in the Collateral Mortgage, the provision of these Optional Covenants and Conditions shall govern. 3. The Collateral Mortgage is granted as general and continuing collateral security in favour of the Administrative Agent, for the benefit and on behalf of the Lenders, for the payment and performance of the Obligations. The assignments, mortgages and charges created herein or for whose creation provision is herewith made shall be effective whether the Obligations or any portion thereof arise or exist before, after or at the time of the granting of the Collateral Mortgage. 2. As security for the due payment and performance of the Obligations, and the due payment and performance of the obligations of the Mortgagor herein set forth, and subject only to Permitted Liens, the Mortgagor hereby grants, assigns, mortgages and charges the Collateral as and by way of a first fixed and specific mortgage and charge to and in favour of the Administrative Agent, for the benefit and on behalf of the Lenders. 3. In the event that any consent, approval or authorization from any third party is required to make the assignments, mortgages and charges referred to herein effective or valid in respect of certain leasehold interests, leases, licenses or other assets, those assignments, mortgages and charges shall be effective and valid in respect of those leasehold interests, leases, licenses or other assets immediately upon such consent,

3 approval or authorization being forthcoming or obtained, without any further assignments, mortgages or charges or supplemental security against those leasehold interests, leases, licenses or other assets being granted by the Mortgagor to the Administrative Agent, for the benefit and on behalf the Lenders. 4. The last day of the term of any lease or sub-lease. whether written or oral, or any agreement therefor, now held or hereafter acquired by the Mortgagor, is hereby and shall be excepted out of the assignments, mortgages and charges hereby created, but upon enforcing this security, the Mortgagor shall stand possessed of the reversion of one day remaining in respect of any such term, and shall hold it in trust to assign and dispose thereof as the Administrative Agent shall direct. 5. The Mortgagor hereby covenants and agrees with the Administrative Agent and the Lenders that it will at all times do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all and every such other acts, deeds, documents, mortgages, transfers, assignments and assurances in law as the Administrative Agent and the Lenders may reasonably require for the better assuring, mortgaging, transferring, assigning and confirming unto the Administrative Agent and the Lenders, all and singular the Collateral hereby the subject of the assignments, mortgages and charges stated herein, or intended so to be, or which the Mortgagor may hereafter become bound to mortgage, transfer, assign and charge in favour of the Administrative Agent, for the benefit and on behalf of the Lenders, and for the better accomplishing and effectuating of the intentions of the Collateral Mortgage. 6. The Mortgagor warrants and represents to the Administrative Agent and the Lenders that: it has good right, power and lawful authority to grant, assign, mortgage and charge the Collateral as provided for in the Collateral Mortgage and that the Collateral Mortgage constitutes a legal, valid and binding obligation, enforceable against the Mortgagor in accordance with its terms; and the Collateral is free and clear of any deed of trust, mortgage, lien, charge or encumbrance except for Permitted Liens, and that it will warrant and defend the title to the Collateral against the claims and demands of all Persons whomsoever. 7. The Mortgagor covenants and agrees with the Administrative Agent and the Lenders that until all Obligations are paid and performed in full and the Collateral Mortgage is discharged: (c) it will at all times comply with its obligations to the Administrative Agent and the Lenders under the Credit Agreement and those other Loan Documents, including, but not limited to, the Collateral Mortgage, to which it is a party; subject only to Permitted Liens, it will not, without the prior written consent of the Administrative Agent, make, give or create any mortgage, charge, assignment or other security interest on any of the Collateral, and that it will not permit or suffer the registration of any further lien, charge or other encumbrance, whether statutory or otherwise, on or in respect of any of the Collateral except in favour of the Administrative Agent, for the benefit and on behalf of the Lenders; subject only to Permitted Liens, it will pay and cause to be discharged all claims by and obligations to creditors of the Mortgagor which may have priority over the security interests created by the Collateral Mortgage against the Collateral;

4 (d) (e) it will maintain all obligations and liabilities secured by Permitted Liens in good standing so that it is not in breach or default in regard thereto; and it will not sell, transfer, assign, or otherwise dispose of any of its assets other than as permitted by the Credit Agreement. 8. The Collateral Mortgage shall terminate upon the payment and performance in full of all of the Obligations, the payment and performance in full of all of the obligations of the Mortgagor hereunder and the termination of all of the rights to receive credit facilities and accommodations under the Credit Agreement and all other Loan Documents, and the Administrative Agent shall execute such discharge, release or other instrument as may be necessary to fully discharge and release the Collateral Mortgage upon the written request of the Mortgagor and the payment to the Administrative Agent of a reasonable discharge fee to be fixed by the Administrative Agent and all costs, charges, expenses and legal fees and disbursements (on a solicitor and his own client basis) incurred by the Administrative Agent and the Lenders in connection with such discharge and release. 9. The security constituted by the Collateral Mortgage shall become enforceable in each and every of the following events: if any default in the payment or the performance of any of the Obligations occurs; or if any other Event of Default occurs. 10. Whenever the security hereby constituted becomes enforceable, the Administrative Agent may enforce its rights by: (c) (d) entry; proceedings in any court of competent jurisdiction for the appointment of a receiver or receiver and manager; the appointment by instrument in writing of any Person or Persons, whether an officer or officers or any employee or employees of the Administrative Agent or not, to be a receiver or receivers of all or any part of the Collateral, and may remove any receiver or receivers so appointed and it may appoint another or others in his or their stead; or any other action, suit, remedy or proceeding authorized or permitted hereby or by law or equity. Any such receiver, whether appointed by the court or by instrument in writing, shall, so far as concerns responsibility for his acts, be deemed the agent of the Mortgagor and in no event the agent of the Administrative Agent or any of the Lenders, and the Administrative Agent and the Lenders shall not be in any way responsible for misconduct, negligence or nonfeasance on the part of any such receiver. Any such receiver or receivers so appointed shall have power to: 6) take possession of and use, occupy and possess the Collateral or any part thereof, without hindrance or interruption by the Mortgagor; (ii) (iii) carry on the business of the Mortgagor; borrow money for the maintenance, preservation or protection of the Collateral or any part thereof or the carrying on of the business of the Mortgagor;

5 (iv) (v) further assign, mortgage and charge the Collateral in priority to the assignments, mortgages and charges created by the Collateral Mortgage as security for money so borrowed; and sell, lease or otherwise dispose of all or any part of the Collateral. Except as may be otherwise directed by the Administrative Agent, all monies from time to time received by such receiver shall be applied by him as follows: Firstly, in discharge of all rents, taxes, rates, insurance premiums and other liabilities which in the Administrative Agent's opinion should be discharged to preserve the Collateral; Secondly, in keeping in good standing all charges and liens on the Collateral having priority over the security hereby constituted including, without limitation, Permitted Liens; Thirdly, in payment of all costs in respect of the receivership, including legal fees on a solicitor and client basis; Fourthly, in payment to the Administrative Agent and the Lenders of the principal, interest and other sums, if any, due and payable hereunder and under the other Loan Documents, including, but not limited to, the Obligations; AND the residue, if any, of such monies shall be paid to the Mortgagor. The rights and powers conferred by this paragraph are in addition to and not in substitution for any rights or powers the Administrative Agent may from time to time have as holder of the Collateral Mortgage including, without limiting the generality of the foregoing, the rights and remedies provided for under the Property Act (New Brunswick), and every such receiver may, in the discretion of the Administrative Agent, be vested with all or any of the rights and powers of the Administrative Agent. The term "receiver" as used in this paragraph includes a receiver and manager. 11. If the security hereby constituted shall become enforceable, the Administrative Agent may, either before or after any entry, lease, sell and dispose of the Collateral, either as a whole or in separate parcels, and any such sale hereunder may be made by public auction or by tender or by private sale at such time or times as the Administrative Agent may determine, and any such sale may be either for cash or part cash and part credit, and with or without advertisement, and with or without a reserve bid as the Administrative Agent may deem proper, and the Administrative Agent may also rescind or vary any contract of sale that may have been entered into and resell with or under any of the powers conferred hereunder and adjourn any such sale from time to time and may execute and deliver to the purchaser or purchasers of the said property or any part thereof good and sufficient deeds, conveyances or transfers for the same, the Administrative Agent being hereby constituted the irrevocable attorney of the Mortgagor for the purpose of making such sale and executing such deeds, conveyances and transfers, and any such sale made as aforesaid shall be a perpetual bar both in law and in equity against the Mortgagor and all other Persons claiming the said property or any part thereof, by, from, through or under the Mortgagor. Without limitation, if such sale is pursuant to the Property Act (New Brunswick) then, subject to applicable law, the Administrative Agent may, on giving four weeks' notice in writing to the Mortgagor or on notice being published once in one of the public newspapers published in the Province of New Brunswick once in each week for four consecutive weeks, absolutely sell and dispose of the Collateral or any part thereof, either by public auction or private contract, or part thereof one way and part of the other, at such price or prices as to the Administrative Agent may seem reasonable, with power to the Administrative Agent or any Lender to bid and buy in any such public auction, and all contracts that shall be

6 entered into and all conveyances which shall be executed by the Administrative Agent for the purpose of effecting any such sale shall be valid and effectual, notwithstanding that the Mortgagor shall not join therein or assent thereto, and it shall not be incumbent on the purchaser or respective purchasers of the said Parcel or any part thereof to ascertain or enquire whether such notice of sale has been given. 12. The Mortgagor agrees to pay to the Administrative Agent forthwith upon demand all costs, charges, expenses and fees (including legal fees on a solicitor and client basis) of or incurred by the Administrative Agent or any of the Lenders in connection with the preparation, perfection and enforcement of the Collateral Mortgage, or incurred in connection with the Collateral or any part thereof, or the recovery or enforcement of payment of any of the monies owing hereunder, including all such costs, charges, expenses and fees (including, without limiting the generality of the foregoing, the fees and expenses of any receiver and legal fees on a solicitor and client basis) of or incurred in connection with taking possession, protecting, preserving, collecting or realizing upon any part of the Collateral, together with interest thereon at the highest rate of interest payable under the Credit Agreement from time to time, payable monthly in arrears on the last day of each and every month, from the date of incurring such costs, charges, expenses and fees. All such sums, including interest, shall be obligations secured hereunder. 13. This security is in addition to and not in substitution for any other security now or hereafter held by the Administrative Agent, for the benefit and on behalf of the Lenders. 14. Except as otherwise provided herein, all communications provided for or permitted hereunder shall be given or delivered in accordance with Section of the Credit Agreement and shall be deemed to have been validly and effectively given or delivered as set out in such Section. 15. The Administrative Agent, without exonerating in whole or in part the Mortgagor, may grant time, renewals, extensions, indulgences, releases and discharges to, may take securities from and give the same and any or all existing securities up to, may abstain from taking securities from or from perfecting securities of, may accept compositions from, and may otherwise deal with the Mortgagor and all other Persons and securities as they may see fit. 16. The Administrative Agent may assign, transfer and deliver to any transferee any of the indebtedness or liabilities secured by the Collateral Mortgage or any security or any documents or instruments held by any of them in respect thereof, provided that no such assignment, transfer or delivery shall release the Mortgagor from any of the indebtedness and liabilities secured by the Collateral Mortgage; and thereafter the assignor shall be fully discharged from all responsibility with respect to such indebtedness and liabilities, security, documents and instruments so assigned, transferred or delivered. Such transferee shall be vested with all powers and rights of the assignor under such security, documents or instruments but the assignor shall retain all rights and powers with respect to any such security, documents or instruments not so assigned or transferred or delivered. The Mortgagor shall not assign any of its rights or obligations hereunder without the prior written consent of the Administrative Agent. 17. The Collateral Mortgage shall be interpreted in accordance with the laws of the Province of New Brunswick. Without prejudice to the rights of the Administrative to commence any proceedings with respect to the Collateral Mortgage in any other proper jurisdiction, the parties hereby irrevocably and unconditionally attorn and submit to the jurisdiction of the courts of the Province of New Brunswick. 18. The Mortgagor hereby acknowledges receiving a copy of the Collateral Mortgage.

7 19. The Collateral Mortgage shall be binding upon the Mortgagor and its successors and permitted assigns. and shall enure to the benefit of the Administrative Agent and the Lenders and their successors and assigns; "successors" includes any corporation resulting from the amalgamation of any party with any other corporation.