<PAGE>


                                                                 Exhibit 10(vii)



                                 CO-STEEL INC.

                                    - AND -

                             THE R-M TRUST COMPANY



                              --------------------

                                TRUST INDENTURE

                              --------------------


                           Providing for the Issue of
                    $125,000,000 Aggregate Principal Amount
             of 6.50% Convertible Unsecured Subordinated Debentures





                           DATED AS OF APRIL 23, 1997



<PAGE>
                                      -i-

                               TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I -- INTERPRETATION...............................................    2
     Section 1.1 -- Definitions...........................................    2
     Section 1.2 -- Number and Gender.....................................    6
     Section 1.3 -- Interpretation Not Affected by Headings, etc..........    6
     Section 1.4 -- Day Not a Business Day................................    6
     Section 1.5 -- Time of the Essence...................................    7
     Section 1.6 -- Currency..............................................    7
     Section 1.7 -- Invalidity of Provisions..............................    7
     Section 1.8 -- Applicable Law........................................    7
     Section 1.9 -- Language..............................................    7

ARTICLE II -- ISSUE OF DEBENTURES.........................................    7
     Section 2.1 -- Issue and Terms of Debentures.........................    7
     Section 2.2 -- Form of Debentures....................................    8
     Section 2.3 -- Signing of Debenture Certificates.....................    8
     Section 2.4 -- Certification by the Trustee..........................    8
     Section 2.5 -- Debentureholder not a Shareholder.....................    9
     Section 2.6 -- Issue in Substitution for Lost Debenture Certificates.    9
     Section 2.7 -- Debentures to Rank Pari Passu.........................    9
     Section 2.8 -- Registers for Debentures..............................    9
     Section 2.9 -- Transferee Entitled to Registration...................   10
     Section 2.10 -- Registers Open for Inspection........................   10
     Section 2.11 -- Exchange of Debentures...............................   10
     Section 2.12 -- Persons Entitled to Payment..........................   11
     Section 2.13 -- U.S. Legend..........................................   12
     Section 2.14 -- Concerning Interest..................................   14

ARTICLE III -- REDEMPTION AND PURCHASE FOR CANCELLATION OF DEBENTURES.....   14
     Section 3.1 -- Redemption of Debentures..............................   14
     Section 3.2 -- Limitation on Redemption..............................   15
     Section 3.3 -- Partial Redemption of Debentures......................   15
     Section 3.4 -- Notice of Redemption..................................   15
     Section 3.5 -- Debentures Due on Redemption Dates....................   16
     Section 3.6 -- Deposit of Redemption Monies..........................   16
     Section 3.7 -- Failure to Surrender Debentures Called for Redemption.   16
     Section 3.8 -- Surrender of Debentures for Cancellation..............   16
     Section 3.9 -- Purchase of Debentures................................   17
     Section 3.10 -- Share Payment Option.................................   17
     Section 3.11 -- Issue of Shares on Redemption of Debentures or
                     Maturity Date........................................   18
     Section 3.12 -- General Provisions...................................   18
<PAGE>
                                      -ii-

                                                                            PAGE

ARTICLE IV -- CONVERSION OF DEBENTURES....................................   20
     Section 4.1 -- Conversion Privilege and Conversion Price.............   20
     Section 4.2 -- Revival of Right to Convert...........................   21
     Section 4.3 -- Manner of Exercise of Right to Convert................   21
     Section 4.4 -- Adjustment Rules......................................   22
     Section 4.5 -- Proceedings Prior to any Action Requiring Adjustment..   27
     Section 4.6 -- Certificate of Adjustment.............................   27
     Section 4.7 -- Notice of Special Matters.............................   27
     Section 4.8 -- No Action after Notice................................   27
     Section 4.9 -- Protection of Trustee.................................   28
     Section 4.10 -- Accounting and Recording.............................   28
     Section 4.11 -- Cancellation of Surrendered Debenture Certificates...   28
     Section 4.12 -- Expiration...........................................   28
     Section 4.13 -- Revival of Right to Convert..........................   28
     Section 4.14 -- U.S. Legend..........................................   29

ARTICLE V -- COVENANTS ...................................................   29
     Section 5.1 -- General Covenants.....................................   29
     Section 5.2 -- Trustee's Remuneration and Expenses...................   30
     Section 5.3 -- Performance of Covenants by Trustee...................   31
     Section 5.4 -- Enforceability of Debentures..........................   31
     Section 5.5 -- No to Extend Time for Payment of Interest.............   31

ARTICLE VI -- DEFAULT AND ENFORCEMENT.....................................   31
     Section 6.1 -- Events of Default.....................................   31
     Section 6.2 -- Notice of Events of Default...........................   33
     Section 6.3 -- Waiver of Defaults....................................   33
     Section 6.4 -- Enforcement by the Trustee............................   34
     Section 6.5 -- Suits by Debentureholders.............................   35
     Section 6.6 -- Application of Monies by Trustee......................   36
     Section 6.7 -- Distribution of Proceeds..............................   37
     Section 6.8 -- Remedies Cumulative...................................   37
     Section 6.9 -- Judgment Against the Corporation......................   38
     Section 6.10 -- Immunity of Shareholders and Others..................   38
     Section 6.11 -- Trustee Appointed Attorney...........................   38

ARTICLE VII -- SATISFACTION AND DISCHARGE.................................   38
     Section 7.1 -- Cancellation..........................................   38
     Section 7.2 -- Non-Presentation of Debentures........................   38
     Section 7.3 -- Repayment of Unclaimed Monies.........................   39
     Section 7.4 -- Discharge.............................................   39

ARTICLE VIII -- MEETINGS OF DEBENTUREHOLDERS..............................   40
     Section 8.1 -- Right to Convene Meetings.............................   40
     Section 8.2 -- Notice................................................   40
<PAGE>
                                     -iii-


                                                                            PAGE

     Section 8.3 -- Chairman...............................................  40
     Section 8.4 -- Quorum.................................................  40
     Section 8.5 -- Power to Adjourn.......................................  41
     Section 8.6 -- Show of Hands..........................................  41
     Section 8.7 -- Poll and Voting........................................  41
     Section 8.8 -- Regulations............................................  42
     Section 8.9 -- Corporation, Trustee and Counsel may be Represented....  42
     Section 8.10 -- Powers Exercisable by Extraordinary Resolution........  42
     Section 8.11 -- Meaning of Extraordinary Resolution...................  44
     Section 8.12 -- Powers Cumulative.....................................  45
     Section 8.13 -- Minutes...............................................  45
     Section 8.14 -- Instruments in Writing................................  46
     Section 8.15 -- Binding Effect of Resolutions.........................  46
     Section 8.16 -- Holding by the Corporation or Subsidiaries
                     of the Corporation Disregarded........................  46
     Section 8.17 -- Evidence of Rights of Debentureholders................  46

ARTICLE IX -- SUPPLEMENTAL INDENTURES......................................  47
     Section 9.1 -- Supplemental Indentures................................  47
     Section 9.2 -- Prior Approvals........................................  48
     Section 9.3 -- Successor Corporations.................................  48
     Section 9.4 -- Vesting of Powers in Successor.........................  49

ARTICLE X -- CONCERNING THE TRUSTEE........................................  49
     Section 10.1 -- Trust Indenture Legislation...........................  49
     Section 10.2 -- Rights and Duties of Trustee..........................  49
     Section 10.3 -- Evidence, Experts and Advisers........................  50
     Section 10.4 -- Documents, Monies, etc. Held by Trustee...............  51
     Section 10.5 -- Actions by Trustee to Protect Interest................  52
     Section 10.6 -- Trustee Not Required to Give Security.................  52
     Section 10.7 -- Protection of Trustee.................................  52
     Section 10.8 -- Replacement of Trustee................................  53
     Section 10.9 -- Conflict of Interest..................................  53
     Section 10.10 -- Acceptance of Trust..................................  54
     Section 10.11 -- Trustee Not to be Appointed Receiver.................  54
     Section 10.12 -- Authorization to Carry on Business...................  54


ARTICLE XI -- SUBORDINATION OF DEBENTURES TO SENIOR OBLIGATIONS............  54
     Section 11.1 -- Subordination.........................................  54
     Section 11.2 -- Payment on Dissolution or Winding-Up..................  54
     Section 11.3 -- Senior Obligations' Default...........................  56
     Section 11.4 -- Subrogation to Senior Obligations.....................  57
     Section 11.5 -- Rights of Debentureholders Reserved...................  57
     Section 11.6 -- Exceptions to Subordination...........................  58
     Section 11.7 -- Renewal or Extension of Senior Obligations............  59
<PAGE>
                                      -iv-


                                                                            PAGE

     Section 11.8 -- Authorization to Trustee. . . . . . . . . . . . . . .   59
     Section 11.9 -- Relationship of Trustee. . . . . . . . . . . . . . . .  59
     Section 11.10 -- Restriction on Purchase of Debentures. . . . . . . .   60

ARTICLE XII -- GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . .  60
     Section 12.1 -- Notice to the Corporation and the Trustee. . . . . . .  60
     Section 12.2 -- Notice to Debentureholders. . . . . . . . . . . . . .   61
     Section 12.3 -- Mail Service Interruption. . . . . . . . . . . . . . .  61
     Section 12.4 -- Counterparts and Formal Date. . . . . . . . . . . . .   61
     Section 12.5 -- Benefit of Provisions of Indenture and Debentures. . .  61
     Section 12.6 -- Governing Law. . . . . . . . . . . . . . . . . . . . .  62

<PAGE>


                   THIS INDENTURE dated as of April 23, 1997.


B E T W E E N :

                                        CO-STEEL INC., a corporation amalgamated
                                        under the laws of Ontario and having its
                                        registered office in the City of
                                        Toronto, in the Province of Ontario
                                        (hereinafter called the "CORPORATION")

                                        - and -

                                        THE R-M TRUST COMPANY, a trust company
                                        incorporated under the laws of Canada
                                        and authorized to carry on business in
                                        all Provinces of Canada (hereinafter
                                        called the "TRUSTEE"),


     WHEREAS the Corporation proposes to issue and sell up to $125,000,000
principal amount of Debentures (as hereinafter defined) upon the terms and
conditions herein set forth;

     AND WHEREAS the Corporation is duly authorized to create and issue the
Debentures to be issued as herein provided;

     AND WHEREAS all things necessary have been done and performed to make the
Debentures, when evidenced by a certificate or certificates, issued and
certified by the Trustee and issued as in this Indenture provided, legal, valid
and binding upon the Corporation with the benefits of and subject to the terms
of this Indenture;

     AND WHEREAS the Trustee has agreed to act as Trustee for the Debentures on
the terms and conditions herein set forth;

     AND WHEREAS the foregoing recitals are made as representations and
statements of fact by the Corporation and not the Trustee;

     NOW THEREFORE THIS INDENTURE WITNESSETH that for good and valuable
consideration mutually given and received, the receipt and sufficiency of which
is hereby acknowledged, it is hereby agreed and declared as follows:

<PAGE>
                                      -2-

                                   ARTICLE I
                                 INTERPRETATION

SECTION 1.1 - DEFINITIONS

     In this Indenture, unless there is something in the subject matter or
context inconsistent therewith or except as otherwise expressly provided herein,
the following phrases and words have the following meanings:

     "AUTHORIZED INVESTMENTS" means short term interest bearing or discount debt
     obligations issued or guaranteed by the Government of Canada or a Province
     of Canada or a Canadian chartered bank (which may include an affiliated or
     related party of the Trustee, including without limitation, Mellon Bank
     Canada) provided that each such obligation is rated at least R1 (middle)
     by DBRS Inc. or an equivalent rating by Canadian Bond Rating Service
     Limited.

     "BUSINESS DAY" means a day which is not a Saturday, Sunday or civic or
     statutory holiday in Toronto, Ontario;

     "CONVERSION DATE" with respect to any Debenture means the date on which
     such Debenture is surrendered for conversion in accordance with the
     provisions of Article IV;

     "CONVERSION PRICE" means $26.25 per share in lawful money of Canada being a
     rate of approximately 38.0952 Shares for each $1,000 principal amount of
     Debenture, unless such price shall have been adjusted in accordance with
     the provisions of Article IV, in which case it shall mean the adjusted
     price in effect at that time;

     "CORPORATION" means Co-Steel Inc., a corporation incorporated under the
     laws of Ontario and any successor corporation which has complied with the
     provisions of section 9.3 hereof from time to time;

     "COUNSEL" means a barrister or solicitor or a firm of barristers or
     solicitors retained or employed by the Trustee, who may be counsel for the
     Corporation, or retained or employed by the Corporation and acceptable to
     the Trustee;

     "CURRENT MARKET PRICE" in respect of a Share at any date means the
     weighted average price per share for the Shares for the period of 20
     consecutive trading days ending on (and including) the fifth trading day
     before such date on The Toronto Stock Exchange or, if the Shares are not
     then listed on The Toronto Stock Exchange, on such other stock exchange in
     Canada on which the Shares are then listed on which the greatest volume of
     trading in Shares occurred during such period or, if the Shares are not
     then listed on any exchange in Canada, then the Current Market Price shall
     be the fair market value of the Shares at such date, as determined by an
     independent nationally

<PAGE>
                                      -3-


     recognized investment dealer selected by the Corporation for that purpose.
     The "weighted average price per share" shall be determined by dividing the
     aggregate sale price of all such Shares sold on such exchange during such
     20 consecutive trading days by the total number of such Shares so sold;

     "DATE OF CONVERSION" shall have the meaning ascribed thereto in Subsection
     4.3(2);

     "DEBENTURES" means the 6.50% Convertible Unsecured Subordinated Debentures
     of the Corporation issued or to be issued hereunder and for the time being
     outstanding;

     "DEBENTURE CERTIFICATES" means the certificates representing the Debentures
     issued hereunder;

     "DEBENTUREHOLDER" or "HOLDER" means a person whose name is entered for the
     time being in the register maintained pursuant to Section 2.8;

     "DEBENTUREHOLDERS' REQUEST" means an instrument signed in one or more
     counterparts by Debentureholders holding in the aggregate not less than 25%
     of the then outstanding principal amount of Debentures which requests the
     Trustee to take some action or proceeding specified therein;

     "DESIGNATED REPRESENTATIVE" means, with respect to any class of Senior
     Obligations which shall have been issued under an indenture, the trustee or
     trustees under such indenture, except that, if any other person shall be
     designated in writing to the Trustee by the holders of a majority of the
     outstanding principal amount of such class of Senior Obligations, such
     person shall be the Designated Representative of such class; and, with
     respect to any other class of Senior Obligations, the person designated in
     writing to the Trustee by the holders of a majority of the outstanding
     principal amount thereof, or, in the absence of such designation, the
     person designated in writing to the Trustee by the Corporation;

     "DIRECTOR" means a director of the Corporation for the time being and
     "DIRECTORS" means the board of directors of the Corporation for the time
     being, or, whenever duly empowered, the executive committee, if any, of the
     board of directors and reference without more to action by the directors or
     by the board of directors shall mean action by the directors as a board or
     by the executive committee, as such;

     "DIVIDENDS PAID IN THE ORDINARY COURSE" means dividends paid on the Shares
     in any financial year of the Corporation, whether in (1) cash, (2) shares
     of the Corporation, (3) rights, options or warrants to purchase any shares,
     property or other assets of the Corporation, or (4) in property or other
     assets of the Corporation, in each case to the extent that the amount or
     value of such dividends does not exceed, in the aggregate, the greater of:
<PAGE>
                                      -4-


     (a)  150% of the arithmetic mean of the aggregate amount or value of
          dividends paid by the Corporation on the Shares in its two immediately
          preceding financial years; or

     (b)  100% of the consolidated cash flow of the Corporation from operations
          for its immediately preceding financial year, determined in accordance
          with Generally Accepted Accounting Principles;

     and for the purpose of the foregoing, where any dividend is paid, otherwise
     than in cash, any securities, property or other assets so distributed by
     way of dividend shall be valued at the fair market value of such
     securities, property or other assets, as the case may be, as determined by
     the directors, which determination shall be conclusive;

     "EXECUTION DATE" means April 23, 1997;

     "EVENT OF DEFAULT" has the meaning ascribed thereto in Section 6.1;

     "EXPIRY TIME" shall have the meaning ascribed thereto in Section 4.1;

     "EXTRAORDINARY RESOLUTION" has the meaning ascribed thereto in
     Section 8.11;

     "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted
     accounting principles as provided in the Handbook of the Canadian Institute
     of Chartered Accountants from time to time consistently applied;

     "MATURITY DATE" has the meaning ascribed thereto in Subsection 2.1(2);

     "OFFICER'S CERTIFICATE" means a certificate signed by one or more Senior
     Officers of the Corporation;

     "PERSON" means an individual, a corporation or a company (with or without
     share capital), a partnership, a limited partnership, a joint venture, a
     syndicate, a sole proprietorship, an incorporated association, trust,
     trustee, executor, administrator or other legal personal representative,
     government or governmental authority or entity, however designated or
     constituted;

     "PRESCRIBED SECURITY" shall have the meaning attributed thereto from time
     to time pursuant to Regulation 6208 of the Income Tax Act (Canada) and
     "Prescribed Securities" shall have a corresponding meaning;

     "PUBLICLY TRADED SECURITIES" means securities of a corporation which are
     listed on any stock exchange and are entitled to share without limitation
     in a distribution of the assets of the corporation upon any liquidation,
     dissolution or winding-up of the corporation and includes any securities
     convertible or exchangeable into such securities;
<PAGE>
                                      -5-


     "REDEMPTION PRICE" has the meaning ascribed thereto in Section 3.1;

     "SENIOR OBLIGATIONS" means the principal of (and the premium, if any) and
     interest on and other amounts in respect of all indebtedness of or
     guaranteed by the Corporation (whether outstanding at the date of this
     Indenture or hereafter created, incurred, assumed or guaranteed), other
     than indebtedness to non-arm's length parties (as that term is defined in
     the Income Tax Act (Canada), indebtedness evidenced by the Debentures, and
     indebtedness which, by the terms of the contract or instrument creating or
     evidencing the indebtedness, or pursuant to which the indebtedness is
     outstanding, is expressed to be pari passu with, or subordinate in right of
     payment to, the Debentures;

     "SENIOR OFFICERS" of the Corporation means the chair of the board of
     directors, a vice-chair of the board of directors, the chief executive
     officer, a deputy chief executive officer, the president, a vice-president,
     the secretary, the treasurer or an assistant secretary of the Corporation;

     "SHAREHOLDER" means a holder of record of one or more Shares;

     "SHARES" means the fully paid and non-assessable common shares in the
     capital of the Corporation as such shares exist at the close of business on
     the date of the execution and delivery of this Indenture and, in the event
     of any adjustment under Article IV, shall mean thereafter the shares, other
     securities or other property which a Debentureholder is entitled to
     purchase after any such adjustment; provided that, in the event of any
     adjustment pursuant to Section 4.4, "SHARES" shall thereafter mean the
     shares or other securities or property resulting from any such adjustment;

     "SIGNIFICANT SUBSIDIARY" means any Subsidiary of the Corporation;

     (i)  the net assets of which, as at the end of the most recently completed
          fiscal quarter of the Corporation prior to the relevant date, exceeds
          25% of the consolidated net assets of the Corporation as at the end of
          such fiscal quarter, in each case determined on a book value basis in
          accordance with Generally Accepted Accounting Principles; or

     (ii) the revenues of which during such fiscal quarter exceeds 25% of the
          consolidated revenues of the Corporation during such quarter;

     "SUBSIDIARY OF THE CORPORATION" means any corporation of which more than
     50% of the outstanding Voting Shares are owned, directly or indirectly, by
     or for the Corporation, provided that the ownership of such shares confers
     the right to elect at least a majority of the board of directors of such
     corporation and includes any corporation in like relation to a Subsidiary
     and shall include Gallatin Steel Company if the direct or indirect
     partnership interest of the Corporation therein is equal to or
<PAGE>


                                     - 6 -

     greater than 50%; provided, however, that for the purpose of Section 6.6
     such term shall not include any corporation which has Publicly Traded
     Securities;

     "THIS TRUST INDENTURE", "THIS INDENTURE", "HEREIN", "HEREBY", and similar
     expressions mean and refer to this Indenture and any indenture, deed or
     instrument supplemental or ancillary hereto; and the expressions "Article",
     "Section" and "Subsection" followed by a number mean and refer to the
     specified Article, Section or Subsection of this Indenture;

     "TRUSTEE" means The R-M Trust Company, a corporation incorporated under the
     laws of Canada, or any successor(s) for the time being in the trusts hereby
     created that has been appointed under this Indenture;

     "VOTING SHARES" means shares of capital stock of any class of any
     corporation carrying voting rights under all circumstances, provided that,
     for the purposes of such definition, shares which only carry the right to
     vote on the happening of an event shall not be considered Voting Shares,
     whether or not such event shall have occurred, nor shall any shares be
     deemed to cease to be Voting Shares solely by reason of a right to vote
     accruing to shares of another class or classes by reason of the happening
     of such event; and

     "WRITTEN ORDER OF THE CORPORATION", "WRITTEN REQUEST OF THE CORPORATION",
     "WRITTEN CONSENT OF THE CORPORATION", "CERTIFICATE OF THE CORPORATION" and
     "ANY OTHER DOCUMENT REQUIRED TO BE SIGNED BY THE CORPORATION" mean,
     respectively, a written order, request, consent, certificate or other
     document signed by one or more Senior Officers of the Corporation, and may
     consist of one or more instruments so executed.

SECTION 1.2 - NUMBER AND GENDER

     Unless otherwise provided herein or unless the context otherwise requires,
words importing the singular include the plural and vice versa and words
importing the masculine gender include the feminine and neuter genders.

SECTION 1.3 - INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.

     The division of this Indenture into Articles, Sections and Subsections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture.

SECTION 1.4 - DAY NOT A BUSINESS DAY

     In the event that any day on or before which any action is required to be
taken hereunder is not a Business Day, then such action shall be required to be
taken on or before the requisite time on the next succeeding day that is a
Business Day.
<PAGE>
                                      -7-


SECTION 1.5 - TIME OF THE ESSENCE

     Time shall be of the essence in all respects in this Indenture and the
Debentures.

SECTION 1.6 - CURRENCY

     All dollar amounts herein are expressed in lawful money of Canada.

SECTION 1.7 - INVALIDITY OF PROVISIONS

     Each of the provisions contained in this Indenture or the Debentures is
distinct and severable and a declaration of invalidity or unenforceability of
any such provision by a court of competent jurisdiction shall not affect the
validity or enforceability of any other provisions hereof or thereof.

SECTION 1.8 - APPLICABLE LAW

     This Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the Province of Ontario and shall be treated in all
respects as Ontario contracts.

SECTION 1.9 - LANGUAGE

     The parties hereto confirm their express wish that this Indenture and all
documents and agreements directly or indirectly relating thereto (other than the
Debenture) be drawn up in the English language. Notwithstanding such express
wish, the parties agree that any such document or agreement, or any part thereof
or of this Indenture, also may be drawn up in the French language.

     Les parties reconnaissent leur volonte expresse que le present acte de
fiducie ainsi que tous les documents et contrats s'y rattachant directement ou
indirectement soient rediges en anglais. Nonobstant cette volonte expresse, les
parties conviennent que tout document ou contrat ou toute partie de ces derniers
ou du present acte de fiducie, puissent etre rediges en francais aussi.


                                   ARTICLE II
                              ISSUE OF DEBENTURES


SECTION 2.1 - ISSUE AND TERMS OF DEBENTURES

(1)  An aggregate principal amount of $125,000,000 Debentures are hereby created
and authorized to be issued hereunder upon the terms and conditions herein set
forth and shall be executed by the Corporation and certified by or on behalf of
the Trustee and delivered by the Corporation in accordance with Sections 2.3 and
2.4. The Debentures are direct, unconditional and unsecured obligations of the
Corporation.


<PAGE>
                                     - 8 -


(2)  The Debentures shall be designated as "6.50% Convertible Unsecured
Subordinated Debentures", shall be dated the Execution Date, shall mature on
April 30, 2007 (the "Maturity Date") and shall bear interest (subject to the
provisions of Subsection 2.2(3)) from the Execution Date at the rate of 6.50%
per annum, payable after as well as before maturity, default and judgment, with
interest on amounts in default at the same rate, payable in arrears
semi-annually on April 30 and October 31, in each year, or if such day is not a
Business Day, on the immediately following Business Day, the first such payment
to fall due on October 31, 1997 and to consist of interest accrued from the
Execution Date.

SECTION 2.2 - FORM OF DEBENTURES

(1)  The Debentures shall be issued in registered form only in denominations of
$1,000 and integral multiples thereof, and the Debenture Certificates shall be
substantially in the form set out in Schedule "A" hereto, shall be dated as of
the Execution Date (regardless of their actual date of issue and including all
replacements issued in accordance with this Indenture), and shall have such
distinguishing letters and numbers as the Corporation may, with the approval of
the Trustee, prescribe, such approval by the Trustee to be evidenced by its
certification of the Debentures.

(2)  The Debentures may be engraved, printed or lithographed, or partly in one
form and partly in another, as the Corporation may determine.

SECTION 2.3 - SIGNING OF DEBENTURE CERTIFICATES

     The Debenture Certificates shall be signed by any two officers of the
Corporation and may but need not be under the corporate seal of the Corporation
or a reproduction thereof. The signatures of such persons may be manual
signature or by signature mechanically reproduced in facsimile and Debenture
Certificates bearing such facsimile signatures shall, subject to Section 2.4,
be binding upon the Corporation as if they had been manually signed by such
persons. Notwithstanding that any of the persons whose manual or facsimile
signature appears on any Debenture Certificate may no longer hold the relevant
office at the date of issue of such Debenture Certificate or at the date of
certification or delivery thereof, any Debenture Certificate signed as
aforesaid shall, subject to Section 2.4, be valid and binding upon the
Corporation and the registered holder thereof shall be entitled to the benefits
as a Debentureholder under this Indenture.

SECTION 2.4 - CERTIFICATION BY THE TRUSTEE

(1)  No Debenture Certificate shall be issued or, if issued, shall be valid for
any purpose or entitle the registered holder to the benefit hereof until it has
been certified by manual signature by or on behalf of the Trustee upon the
written order of the Corporation in the form of the certificate set out in
Schedule "A" hereto. Such certification by the Trustee upon any Debenture
Certificate shall be conclusive evidence as against the Corporation that the
Debenture Certificate so certified has been duly issued hereunder and the
holder is entitled to the benefits hereof.

(2)  The certification of the Trustee on Debenture Certificates issued
hereunder shall not be construed as a representation or warranty by the
Trustee as to the validity of this Indenture or the
<PAGE>


                                     - 9 -


Debentures (except the due certification thereof) and the Trustee shall in no
respect be liable or answerable for the use made of the Debentures or any of
them or of the consideration therefor except as otherwise specified herein.

SECTION 2.5 - DEBENTUREHOLDER NOT A SHAREHOLDER

     The holding of a Debenture shall not be construed as conferring upon a
Debentureholder any right or interest whatsoever as a Shareholder nor as
entitling the holder to any right or interest in respect thereof except as
herein and in the Debentures expressly provided.

SECTION 2.6 - ISSUE IN SUBSTITUTION FOR LOST DEBENTURE CERTIFICATES

(1)  In case any of the Debenture Certificates shall become mutilated or be
lost, destroyed or stolen, the Corporation, subject to applicable law and
Subsection 2.6(2), shall issue and thereupon the Trustee shall certify and
deliver a new Debenture Certificate of like tenor as the one mutilated, lost,
destroyed or stolen in exchange for and in place of and upon cancellation of
such mutilated certificate, or in lieu of an in substitution for such lost,
destroyed or stolen certificate, and the substituted certificate shall be in a
form approved by the Trustee and shall be entitled to the benefits hereof and
shall rank equally with all other Debenture Certificates issued or to be issued
hereunder.

(2)  The applicant for the issue of a new Debenture Certificate pursuant to
this Section 2.6 shall bear the cost of the issue thereof and in case of loss,
destruction or theft shall, as a condition precedent to the issue thereof,
furnish to the Corporation and to the Trustee such evidence of ownership and of
the loss, destruction or theft of the certificate so lost, destroyed or stolen
as shall be satisfactory to the Corporation and to the Trustee in their sole
discretion and such applicant may also be required to furnish an indemnity or
security in amount and form satisfactory to the Corporation and the Trustee in
their discretion and shall pay the reasonable charges of the Corporation and
the Trustee in connection therewith.

SECTION 2.7 - DEBENTURES TO RANK PARI PASSU

     All Debentures shall rank pari passu, whatever may be the actual date of
issue of same.

SECTION 2.8 - REGISTERS FOR DEBENTURES

(1)  The Corporation hereby appoints the Trustee as registrar and transfer
agent of the Debentures, and the Corporation shall cause to be kept by and at
the principal office of the Trustee in the City of Toronto a central register
and, in such additional place or places as the Corporation with the approval of
the Trustee may determine, a branch register in which shall be entered the
names and addresses of holders of Debentures and the other particulars,
prescribed by law, of the Debentures held by them. The Corporation shall also
cause to be kept by and at such principal office of the Trustee in the City of
Toronto the register of transfer, and may also cause to be kept by the Trustee
or such other registrar or registrars and at such other place or places as the
Corporation may designate with the approval of the Trustee, branch registers of
transfers in which shall be recorded the particulars of the transfers of
Debentures, registered in that branch register of transfers.



<PAGE>
                                     - 10 -

(2)  No transfer of a Debenture shall be valid (i) unless made by due execution
of the transfer form attached to the Debenture Certificate or any other written
notice in a form satisfactory to the Trustee by the holder and the transferee or
their respective executors, administrators, or other legal representatives or
their respective attorneys duly appointed by an instrument in writing in form
and execution satisfactory to the Trustee, which duly executed transfer form
shall be delivered to the Trustee, (ii) until, upon compliance with such
reasonable requirements as the Trustee may prescribe, such transfer is recorded
on the register maintained by the Trustee pursuant to Subsection 2.8(1), (iii)
unless such registration shall be noted on the Debenture Certificate by the
Trustee, and (iv) until all governmental or other charges arising by reason of
such transfer have been paid.

(3)  Neither the Corporation nor the Trustee shall be required (i) to transfer
or exchange any Debentures during a period of 15 Business Days immediately
preceding any interest payment date; or (ii) to transfer or exchange any
Debentures on the day of any selection by the Trustee of any Debentures to be
redeemed or purchased or during the 15 preceding Business Days or thereafter
until after the mailing of any notice of redemption or purchase; or (iii) to
transfer or exchange any Debentures selected or called for redemption in whole
or in part unless upon due presentation thereof such Debenture or part thereof
called for redemption shall not be redeemed.

SECTION 2.9 - TRANSFEREE ENTITLED TO REGISTRATION

     The transferee of a Debenture shall, after the transfer form attached to
the Debenture or any other form of transfer substantially in that form is duly
completed and the Debenture and form of transfer are lodged with the Trustee and
upon compliance with all other conditions in that regard required by this
Indenture or by law, be entitled to have his name entered on the register as the
owner of such Debenture free from all equities or rights of set-off or
counterclaim between the Corporation and his transferor or any pervious holder
of such Debenture, save in respect of equities of which the Corporation is
required to take notice by statute or by order of a court of competent
jurisdiction.

SECTION 2.10 - REGISTERS OPEN FOR INSPECTION

     The registers hereinbefore referred to shall be open at all reasonable
times for inspection by the Corporation, the Trustee or any Debentureholder.
The Trustee shall, from time to time when requested so to do by the Corporation,
furnish the Corporation with a list of the names and addresses of holders of
Debentures entered in the registers kept by the Trustee and showing the
principal amount of Debentures.

SECTION 2.11 - EXCHANGE OF DEBENTURES

(1)  Debenture Certificates may, upon compliance with the reasonable
requirements of the Trustee, be exchanged for Debenture Certificates in any
other authorized denomination representing in the aggregate the same principle
amount of Debentures. The Corporation shall sign and the Trustee shall certify,
in accordance with Sections 2.3 and 2.4, all Debenture Certificates necessary to
carry out the exchanges contemplated herein.



<PAGE>

                                     - 11 -

(2)  Debenture Certificates may be exchanged only at the principal office of
the Trustee in the City of Toronto (or at such additional place or places that
may be designated by the Corporation with the approval of the Trustee from time
to time). Any Debenture Certificates tendered for exchange shall be surrendered
by the Trustee and cancelled. The Corporation shall supply the Trustee with
sufficient copies of the Debenture Certificates to effect such exchanges.

(3)  Except as otherwise herein provided, the Trustee may charge persons
requesting an exchange a reasonable sum for each Debenture Certificate
exchanged. Payment of such charges and reimbursement of the Trustee or the
Corporation for any and all taxes or governmental or other charges required to
be paid shall be made by the party requesting such exchange as a condition
precedent to such exchange.

(4)  Debentures issued pursuant to this Section 2.11 in exchange for Debentures
which at the time of such issue have been selected or called for redemption at a
later date shall be deemed to have been selected or called for redemption and
shall have noted thereon a statement to that effect.

SECTION 2.12 - PERSONS ENTITLED TO PAYMENT

(1)  The Corporation and the Trustee may deem and treat the registered holder of
any Debenture Certificate as the absolute owner of the Debenture represented
thereby for all purposes and the Corporation and the Trustee shall not affected
by any notice or knowledge to the contrary except where the Corporation or the
Trustee is required to take notice by statute or by order of a court of
competent jurisdiction. A Debentureholder shall be entitled to the rights
evidenced by such Debenture free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate holder
thereof and all persons may act accordingly and neither the Corporation nor the
Trustee shall be bound to inquire into the title of any such holder except where
the Corporation or the Trustee is required to take notice by statute or by order
of a court of competent jurisdiction.

(2)  Payment of or on account of the principal of a Debenture shall be made only
to the person in whose name such Debenture is registered and such payment shall
be a good and sufficient discharge to the Trustee and any registrar and to the
Corporation and any paying agent for the amounts so paid.

(3)  As the interest on the Debentures becomes due (except interest payable at
maturity or on redemption which may be paid upon presentation and surrender of
such Debentures for payment), the Corporation, at least three Business Days
prior to each date on which interest on such Debentures becomes due, shall
forward or cause to be forwarded by prepaid post, to each holder for the time
being at his address appearing on a register of holders hereinbefore mentioned,
or in the case of joint holders to the one whose name appears first on such
register, a cheque for such interest (less any tax required by law to be
deducted including, without limitation, applicable withholding tax with respect
to payments as, on account or in lieu of payment of, or in satisfaction of,
interest on the Debentures to holders thereof who are not or are deemed not
resident in Canada for the purposes of the Income Tax Act (Canada)) payable to
such holder or holders and negotiable at par at each of the places at which
interest upon such Debentures is expressed to be payable. The forwarding of such
cheque shall
<PAGE>
                                      -12-

satisfy and discharge the liability for the interest on such Debentures to the
extent of the sums represented thereby (plus any amount of any tax deducted as
aforesaid) unless such cheque is not paid on presentation; provided that in the
event of the non-receipt of such cheque by the holder, or the loss or
destruction thereof, the Corporation, upon being furnished with reasonable
evidence of such non-receipt, loss or destruction and indemnity reasonably
satisfactory to it, shall issue to such holder a replacement cheque for the
amount of such cheque.

(4)  Where Debentures are registered in more than one name, the principal
monies and interest from time to time payable in respect thereof may be paid by
cheque payable to all such holders and such payment shall be a valid discharge
to the Trustee, any other registrar, the Corporation and any paying agent.

(5)  In the case of the death of one or more joint holders, the principal
monies and interest on any Debentures may be paid to the survivor or survivors
of such holders whose receipt therefor shall constitute a valid discharge to
the Trustee and any registrar and to the Corporation and any paying agent.

(6)  Except as is otherwise provided herein, the principal amount of the
Debentures and interest thereon shall be payable in lawful money of Canada at
any branch in Canada of The Bank of Nova Scotia (or such other financial
institutions as the Corporation may designate in writing to the Trustee) from
time to time at the option of the respective holders thereof.

(7)  Except as is herein otherwise provided, all sums which may at any time
become payable, whether at maturity or on redemption or otherwise, on account
of any Debenture or any interest thereon shall be payable at the option of the
holder at any of the places at which the principal of and interest on such
Debenture are payable.

SECTION 2.13 - U.S. LEGEND

     The Trustee acknowledges that the Debentures and the Shares issuable on
conversion of the Debentures or which may be issued by the Corporation in
satisfaction of its obligations under the Debentures (the "Underlying Common
Shares") have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or the securities
laws of any state of the United States and may be offered and sold only in the
United States only pursuant to an exemption from the registration requirements
of the U.S. Securities Act and U.S. state securities laws.

     Each Debenture issued to a person whose registered address is, or is
directed to be, in the United States, and all Debentures issued in exchange or
transfer therefor, whether under Section 2.6 or 2.11 hereof or otherwise, shall
bear the following legend in boldface print on the face of such certificate:

     THE SECURITIES REPRESENTED HEREBY (AND UNDERLYING COMMON SHARES) HAVE NOT
     BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
     (THE
<PAGE>
                                      -13-

     "SECURITIES ACT") OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
     PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF CO-STEEL INC. THAT
     SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
     (A) TO CO-STEEL INC., (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
     904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C) INSIDE THE UNITED
     STATES IN ACCORDANCE WITH (1) RULE 144A UNDER THE SECURITIES ACT, OR (2)
     RULE 144 or 145 UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS
     CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
     TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO
     LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED
     FROM THE R-M TRUST COMPANY AT ITS PRINCIPAL OFFICES IN TORONTO, MONTREAL,
     VANCOUVER, CALGARY, REGINA, WINNIPEG AND HALIFAX UPON DELIVERY OF THIS
     CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE
     R-M TRUST COMPANY AND CO-STEEL INC., TO THE EFFECT THAT THE SALE OF THE
     SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
     REGULATION S UNDER THE SECURITIES ACT.

provided that, if the Debentures are being sold outside the united States in
accordance with Rule 904 of Regulation S under the U.S. Securities Act, such
legend may be removed by providing a declaration to the Trustee to the
following effect (or as the Corporation may prescribe from time to time):

     The undersigned (i) acknowledges that the sale of the [IDENTIFY SECURITIES
     BY NUMBER AND TYPE], represented by certificate number [PROVIDE NUMBERS],
     to which this declaration relates is being made in reliance on Rule 904 of
     Regulation S under the United States Securities Act of 1933, as amended,
     (the "1933 Act") and certifies that (1) it is not an "affiliate" (as
     defined in Rule 405 under the 1933 Act) of Co-Steel inc., (2) the offer of
     such securities was not made to a person in the United States and either
     (a) at the time the buy order was originated, the buyer was outside the
     United States, or the seller and any person acting on its behalf reasonably
     believed that the buyer was outside the United States, or (b) the
     transaction was executed on or through the facilities of [INSERT THE NAME
     OF THE APPLICABLE CANADIAN STOCK EXCHANGES DESIGNATED IN REGULATION S] and
     neither the seller nor any person acting on its behalf knows that the
     transaction was prearranged with a buyer in the United States and (3)
     neither the seller nor any person acting on its behalf engaged in any
     directed selling efforts in connection with the offer and sale of such
     securities. (Terms used in this declaration have the meanings ascribed
     thereto in Regulation S); and
<PAGE>
                                     - 14 -

provided that, if the Debentures are being sold inside the United States in
compliance with Rule 144 or 145 under the U.S. Securities Act, if available, and
U.S. state securities laws, such legend may be removed by delivery to the
Trustee of an opinion of counsel of recognized standing satisfactory to the
Corporation acting reasonably, to the effect that such legend is no longer
required under applicable requirements of the U.S. Securities Act or state
securities laws.

SECTION 2.14 -- CONCERNING INTEREST

(1)  Every Debenture, whether issued originally or in exchange for other
     Debentures, shall bear interest from and including the date such Debenture
     is issued hereunder or from and including the last interest payment date to
     which interest shall have been paid or made available for payment on the
     Debentures, whichever shall be later.

(2)  Interest on each Debenture shall cease to accrue from the earliest of: (i)
     the Maturity Date; or (ii) if such Debenture is called for redemption, the
     date fixed for redemption; or (iii) if such Debenture is converted, the
     date stipulated in Subsection 4.3(4), unless, in the case of (i) or (ii),
     as the case may be upon due presentation and surrender thereof for payment
     on or after the Maturity Date or the date fixed for redemption, as the case
     may be, such payment is improperly withheld or refused.


(3)  Wherever in this Indenture or the Debentures there is mention, in any
     context, of the payment of interest, such mention shall be deemed to
     include the payment of interest on amounts in default to the extent that,
     in such context, such interest is, was or would be payable pursuant to
     Subsection 2.1(2) and express mention of interest on amounts in default in
     any of the provisions hereof shall not be construed as excluding such
     interest in those provisions hereof where such express mention is not made.


                                  ARTICLE III
             REDEMPTION AND PURCHASE FOR CANCELLATION OF DEBENTURES

SECTION 3.1 -- REDEMPTION OF DEBENTURES

     Subject to Section 3.2, the Debentures shall be redeemable prior to
maturity in whole at any time or in part from time to time, at the option of the
Corporation (in the manner hereinafter provided and in accordance with and
subject to the provisions hereinafter set forth) at prices equal to the
principal amount of the Debentures to be redeemed, together with accrued and
unpaid interest on the principal amount of the Debentures, or part thereof, so
redeemed to and including the date fixed for redemption (the applicable price,
including accrued and unpaid interest, at which Debentures may be redeemed being
hereinafter referred to as the "REDEMPTION PRICE").
<PAGE>

                                     - 15 -

SECTION 3.2 - LIMITATION ON REDEMPTION

     Notwithstanding the provisions of Section 3.1, the Debentures shall not be
redeemable on or prior to April 30, 2002.

SECTION 3.3 - PARTIAL REDEMPTION OF DEBENTURES

(1)  In case less than all the Debentures are to be redeemed, the Corporation
shall in each such case, at least 15 Business Days before the date upon which
the notice of redemption is to be given, notify the Trustee in writing of its
intention to redeem Debentures and of the aggregate principal amount of
Debentures so to be redeemed. The Debentures so to be redeemed shall be selected
by the Trustee on a pro rata basis (to the nearest multiple of $1,000) in
accordance with the principal amount of Debentures registered in the name of
each holder. For this purpose, the Trustee may make, and from time to time
amend, regulations with regard to the manner in which such Debentures may be so
selected and regulations so made shall be valid and binding upon all holders
notwithstanding the fact that, as a result thereof, one or more of such
Debentures become subject to redemption in part only.

(2)  Debentures in denominations in excess of $1,000 may be selected and called
for redemption in part only (such part being $1,000 or an integral multiple
thereof) and, unless the context otherwise requires, references to Debentures in
this Article III shall be deemed to include any such part of the principal
amount of Debentures which shall have been so selected and called for
redemption. The holder of any Debenture called for redemption in part only, upon
surrender of such Debenture for payment as required herein, shall be entitled to
receive, without expense to such holder, a new Debenture Certificate for the
unredeemed part of the Debenture so surrendered, and the Corporation shall
execute and the Trustee shall certify and deliver, at the expense of the
Corporation, such new Debenture Certificate upon receipt of the Debenture
Certificate so surrendered.

SECTION 3.4 - NOTICE OF REDEMPTION

     Subject to Section 3.10, notice of the intention of the Corporation to
redeem any Debentures shall be given by or on behalf of the Corporation to the
holders of the Debentures which are to be redeemed not more than 60 days and not
less than 30 days prior to the date fixed for redemption in the manner provided
in Section 12.2. The notice of redemption shall specify the redemption date, the
Redemption Price and the places of payment and shall state that all interest on
the Debentures shall cease to accrue from and after such redemption date and
that the Debentures are convertible into Shares at any time prior to but not
after the close of business on the Business Day immediately preceding the
redemption date in the manner provided for herein. The notice of redemption
shall, unless all the Debentures then outstanding are to be redeemed, specify
the distinguishing letters and numbers of the Debenture Certificates in respect
of the Debentures which are to be redeemed and, in case a Debenture is to be
redeemed in part only, shall specify that part of the principal amount thereof
which is to be redeemed.
<PAGE>
                                     - 16 -

SECTION 3.5 - DEBENTURES DUE ON REDEMPTION DATES

(1)  Upon notice having been given as aforesaid, all Debentures called for
redemption, other than Debentures converted into Shares in accordance with the
provisions of Section 4.1, shall thereupon be and become due and payable at the
Redemption Price and on the redemption date specified in such notice, in the
same manner and with the same effect as if it were the Maturity Date specified
in such Debentures, anything therein or herein to the contrary notwithstanding,
and from and after such redemption date, if the monies necessary to redeem such
Debentures shall  have been deposited as hereinafter provided and affidavits or
other proof satisfactory to the Trustee as to the mailing of such notices shall
have been lodged with it, such Debentures shall not be considered as outstanding
hereunder and interest upon such Debentures shall cease to accrue from and after
said dates.

(2)  In case any question shall arise as to whether any notice has been given
as above provided and any deposit referred to below made, such question shall be
decided by the Trustee whose decision shall be final and binding upon all
parties in interest.

SECTION 3.6 - DEPOSIT OF REDEMPTION MONIES

     Subject to Section 3.10, upon Debentures having been called for redemption
as hereinbefore provided, the Corporation shall deposit with the Trustee or any
paying agent to the order of or for the account of the Trustee, on or before the
redemption date specified in the notice of redemption thereof, such sums as may
be sufficient to pay the Redemption Price of the Debentures so to be redeemed.
From the sums so deposited the Trustee shall pay or cause to be paid to the
holders of such Debentures so called for redemption, upon surrender of such
Debentures, the principal and interest to which they are respectively entitled
on redemption.

SECTION 3.7 - FAILURE TO SURRENDER DEBENTURES CALLED FOR REDEMPTION

     In case the holder of any Debentures so called for redemption shall within
30 days from the date fixed for redemption fail so to surrender any of its
Debenture Certificates in respect of such Debentures or shall not within such
time accept payment of the redemption monies payable in respect thereof or give
such receipt therefor, if any, as the Trustee may require, such redemption
monies shall be set aside in trust for such holder in a non-interest bearing
account with any chartered bank in Canada or any loan or trust company
authorized to accept deposits under the laws of Canada or any province thereof,
and such setting aside shall for all purposes be deemed a payment to the
Debentureholder of the sum so set aside, and to that extent the Debentureholder
shall have no right except to receive payment out of the monies so paid and
deposited upon surrender and deliver up of its Debenture or Debentures of the
Redemption Price of such Debenture or Debentures.

SECTION 3.8 - SURRENDER OF DEBENTURES FOR CANCELLATION

     If the principal monies due upon any Debenture shall become payable by
redemption or otherwise before the Maturity Date thereof, the person presenting
such Debenture for payment must surrender the same for cancellation, the
Corporation nevertheless paying or causing to be paid the
<PAGE>
                                     - 17 -


interest accrued and unpaid thereon (computed on a per diem basis if the date
fixed for payment is not an interest payment date). All Debentures so
surrendered for cancellation shall forthwith be delivered to the Trustee and
shall be cancelled by it and, subject to Section 3.3, no Debentures shall be
issued in substitution therefor.

SECTION 3.9 - PURCHASE OF DEBENTURES

(1)  Subject to applicable law, the Corporation may at any time, unless an Event
of Default hereunder has occurred and is continuing, purchase Debentures in the
market or by tender (including a dutch or reverse auction) or by private
contract. Any Debentures purchased pursuant to this Section 3.9 shall forthwith
be delivered to and cancelled by the Trustee and no Debentures shall be issued
in substitution therefor.

(2)  If, in response to an invitation to tender, more Debentures are tendered at
a price acceptable to the Corporation than the Corporation is prepared to
purchase, the Debentures to be purchased by the Corporation shall be selected by
the Trustee on a pro rata basis (to the nearest multiple of $1,000) in
accordance with the principal amount of Debentures tendered by each holder who
tendered at the same price, provided that when Debentures are tendered at
different prices, such selection shall be effected only with respect to the
Debentures tendered at the price at which more Debentures were tendered than the
Corporation is prepared to purchase after the Corporation has purchased all the
Debentures tendered at lower prices. The holder of any Debenture of which a part
only is purchased, upon surrender of such Debenture for payment, shall be
entitled to receive, without expense to such holder, one or more new Debentures
for the unpurchased part so surrendered and the Trustee shall certify and
deliver such new Debenture or Debentures upon receipt of the Debenture so
surrendered.

SECTION 3.10 - SHARE PAYMENT OPTION

     Subject to Section 3.11 and applicable law, and notwithstanding any other
provision of this Indenture, except as hereinafter provided, the Corporation, at
its option and subject to regulatory approval, on at least 30 days' and not more
than 60 days' notice given to the Trustee and to the Debentureholders in
accordance with Sections 3.12, 12.1 and 12.2 (which notice, in the case of a
redemption, may be given contemporaneously with notice of such redemption
pursuant to Section 3.4), may satisfy its obligation hereunder to pay the
aggregate principal amount payable to the holders of Debentures on redemption or
on the Maturity Date by the issue to such holders of that number of Shares
determined by dividing such amount by 95% of the Current Market Price of the
Shares. Accrued and unpaid interest on such aggregate principal amount shall be
payable in cash.

     The Corporation may not exercise this right if an Event of Default
hereunder has occurred and is continuing on the date of the notice referred to
in this Section 3.10.

     The Corporation reserves the right to satisfy its obligation hereunder to
pay the aggregate principal amount payable to the holders of Debentures on
redemption or on the Maturity Date, as the case may be, in cash instead of in
Shares as provided above, to holders of Debentures not residing in Canada, if
any.
<PAGE>
                                     - 18 -


SECTION 3.11 - ISSUE OF SHARES ON REDEMPTION OF DEBENTURES OR MATURITY DATE

(1)  If the Corporation elects under Section 3.10 to satisfy its obligation to
pay the principal amount of Debentures on the Maturity Date or the redemption
date, as the case may be, by the issue of Shares and if otherwise permitted to
do so by law, the Corporation will issue that number of Shares determined under
Section 3.10 and will deliver to the Trustee the following:

     (a)  an Officer's Certificate certifying that no Event of Default hereunder
          has occurred and is continuing as at the date of the notice referred
          to in Section 3.10;

     (b)  a certified copy of a resolution authorizing the issuance of such
          Shares; and

     (c)  an opinion of Counsel that (i) all requirements imposed by this
          Indenture or by law in connection with the proposed issue of Shares
          have been complied with including that no prospectus or similar
          document is required to be filed or authorizations of regulatory
          authorities required to be obtained under applicable legislation of
          any province of Canada (other than as may have been filed or
          obtained) before such Shares may properly and legally be issued and
          thereafter freely traded through persons registered if required under
          applicable laws, (ii) the Shares so issued have been validly issued
          and upon receipt by the Corporation of the consideration therefor will
          be outstanding as fully paid and non-assessable shares and (iii) the
          Shares so issued have been conditionally approved for listing on The
          Toronto Stock Exchange or on such other principal exchange as the
          Shares may then be listed, subject to compliance with the requirements
          of such exchange.

(2)  If the provisions of Subsections 3.11(1)(a) and (b) are not complied with,
the principal amount of the Debentures together with accrued and unpaid interest
thereon payable on the Maturity Date or on the redemption date, as the case may
be, will be payable in lawful money of Canada as otherwise provided hereunder.
If such provisions are complied with, the issue by the Corporation of that
number of Shares determined under Section 3.10 shall fully satisfy and discharge
the obligation of the Corporation to pay the principal amount of such Debentures
on the Maturity Date or on the redemption date, as the case may be.

SECTION 3.12 - GENERAL PROVISIONS

(1)  The notice to the holders of Debentures to be given by the Corporation
pursuant to Section 3.10 must:

     (a)  state that the Corporation has exercised its option to pay the
          aggregate principal amount payable to the holders of Debentures on the
          date of redemption or the Maturity Date, as the case may be, by the
          issue of Shares to the holders of Debentures and indicate the number
          of Shares issuable per $1,000 of principal amount of Debentures;

     (b)  state that to receive a certificate for the Shares and the interest to
          which the holder of a Debenture is entitled on the redemption date or
          the Maturity Date, as the case may
<PAGE>

                                     - 19 -


          be, the holders of Debentures must surrender their Debentures to the
          Trustee at its principal office in the City of Toronto;

     (c)  advise each holder of Debentures that the Shares to be issued in
          respect of such holder's Debentures will be registered in the name of
          the holder unless the Trustee, receives from such holder, on or
          before the tenth Business Day prior to the redemption date or the
          Maturity Date, as the case may be, at its principal office in the
          City of Toronto written notice in form and execution satisfactory to
          the Trustee directing the Corporation to register such Shares in some
          other name or names stating the name or names (with addresses)
          accompanied by payment to the Trustee of any transfer tax which may
          be payable by reason thereof; and

     (d)  advise each holder of Debentures that such holder may, on or after
          the redemption date or the Maturity Date, as the case may be, and on
          proof of identity satisfactory to the Trustee, take personal delivery
          of the share certificates representing that holder's Shares so issued
          and receive the interest to which such holder is entitled, at the
          principal office of the Trustee in the City of Toronto, if the
          Trustee receives from such holder at its principal office, in
          addition to any other notice or delivery required by this Subsection
          and on or before the tenth Business Day prior to the redemption date
          or the Maturity Date, as the case may be, written notice in form and
          execution satisfactory to the Trustee, stating that such holder
          wishes to take personal delivery of the Shares issued hereunder.

(2)  On the redemption date or the Maturity Date, as the case may be, the
     Corporation shall:

     (a)  subject to Subsection 3.12(1)(c) and (d), cause to be sent by prepaid
          ordinary insured mail, or in the event of mail service interruption
          by such other means as the Trustee and the Corporation will determine
          to be appropriate, share certificates for Shares issued pursuant to
          Section 3.10 to each holder of Shares in respect of which Debentures
          have been surrendered in accordance with the requirements of the
          notice given pursuant to Subsection 3.12(1), at their addresses as
          shown on the register maintained pursuant to Article II hereof; and

     (b)  make available for personal delivery, on proof of identity
          satisfactory to the Trustee, to each holder of Debentures who has
          delivered a notice to the Trustee in accordance with Subsection
          3.12(1)(d) on or before the tenth Business day prior to the
          redemption date or the Maturity Date, as the case may be, share
          certificates for Shares issued pursuant to Section 3.10 to such
          holder in respect of which Debentures have been surrendered in
          accordance with the requirements of the notice given pursuant to
          Section 3.12(1).

(3)  On or after the redemption date or the Maturity Date, as the case may be,
the Corporation will deliver or cause to be delivered share certificates
representing the Shares issued pursuant to Section 3.10 to any other registered
holder thereof, on presentation and surrender of the Debentures in respect of
which such shares were issued.


<PAGE>
                                      -20-


(4)  Each share certificate delivered pursuant to this Section 3.12 will be for
that number of Shares to which the holder is entitled in accordance with
Section 3.10.

(5)  If the holder of any Debentures, in respect of which the Corporation has
elected pursuant to Section 3.10 to satisfy its obligation to pay the aggregate
principal amount of such Debentures by the issue of Shares shall fail to
surrender any of such Debentures or shall not accept delivery of certificates
representing the Shares issuable to such holder on or before the redemption
date or the Maturity Date, as the case may be, such Debenture shall thereafter
not be considered as outstanding hereunder, and the Debenture holder shall have
no right in respect thereof except to receive certificates representing Shares
upon surrender of such Debentures.

(6)  If the Debentures which have been surrendered to the Trustee pursuant to
this Article III bear the legend referred to in Section 2.13, then the
Corporation shall cause the Trustee (or the registrar and transfer agent of the
Shares if other than the Trustee) to affix the legend set forth in Section 2.13
on the certificate or certificates of the Shares, provided that the proviso
with respect to the removal of the legend set forth in Section 2.13 shall also
apply thereto.

(7)  The Corporation shall not be required to issue fractional Shares upon the
issue of Shares pursuant to Section 3.10. If any fractional interest in a Share
would, except for the provisions of this Subsection 3.12(7), be deliverable upon
the issue of any shares pursuant to Section 3.10, the Corporation shall, in
lieu of delivering any certificate representing such fractional interest,
satisfy such fractional interest by paying to the registered holder of such
shares an amount in lawful money of Canada equal (computed to the nearest cent)
to the appropriate fraction of the value (being the last reported sale price
or, if none, the mean between the closing bid and ask quotations on The Toronto
Stock Exchange, or, if the Shares are not listed on The Toronto Stock Exchange,
on such stock exchange on which the Shares are listed, as may be selected for
such purpose by the directors and approved by the Trustee or, if the Shares are
not listed on any stock exchange, a value reasonably determined by the
directors) of a Share on the redemption date or the Maturity Date, as the case
may be.


                                   ARTICLE IV
                            CONVERSION OF DEBENTURES

SECTION 4.1 - CONVERSION PRIVILEGE AND CONVERSION PRICE

(1)  Upon and subject to the provisions and conditions of this Article and
provided the Corporation has not paid to the Trustee the principal and accrued
and unpaid interest on the Debentures pursuant to Section 6.1, the holder of
each Debenture shall have the right, at his option, at any time prior to
5:00 p.m. (Toronto time) on the earlier of April 30, 2007 and the Business Day
immediately preceding the date, if any, fixed for redemption of such Debenture
(such earlier time and date in this Article being referred to as the "EXPIRY
TIME"), to convert the whole or, in the case of a Debenture in a denomination in
excess of $1,000, any part which is $1,000 or an integral multiple
<PAGE>
                                      -21-


thereof, of the principal amount of such Debenture into fully paid and
non-assessable Shares at the Conversion Price in effect on the Date of
Conversion.

(2)  Such right of conversion shall extend only to the maximum number of whole
Shares into which the aggregate principal amount of the Debenture or Debentures
or part thereof surrendered for conversion at any one time by the holder thereof
may be converted in accordance with the foregoing provisions of this Section.
Fractional interests in Shares shall be adjusted for in the manner provided in
Subsection 4.4(10).

SECTION 4.2 - REVIVAL OF RIGHT TO CONVERT

     If the Corporation shall fail to redeem any Debenture in accordance with
the notice of redemption upon due surrender of such Debenture, any right to
convert such Debenture as provided in this Article shall revive and continue as
if such Debenture had not been called for redemption.

SECTION 4.3 - MANNER OF EXERCISE OF RIGHT TO CONVERT

(1)  The holder of a Debenture desiring to convert such Debenture into Shares
shall surrender such Debenture prior to the Expiry Time to the Trustee at its
principal office in the City of Toronto (or at such additional place or places
as the Corporation with the approval of the Trustee may determine) together with
the conversion form on the reverse side of the Debenture Certificate in respect
of such Debenture or any other written notice in a form satisfactory to the
Trustee, in either case duly executed by the holder or his executors or
administrators or other legal representatives or his or their attorney duly
appointed by an instrument in writing in form and substance satisfactory to the
Trustee and executed in a manner satisfactory to the Trustee, with signatures
medallion guaranteed or guaranteed by a Canadian chartered bank, a trust company
or a member firm of The Toronto Stock Exchange (the "EXCHANGE") or other
recognized stock exchange if Shares are to be issued to a person other than a
holder, exercising its rights to convert such Debenture in accordance with the
provisions of this Article. Thereupon such Debentureholder and/or, subject to
payment of all applicable stamp or security transfer taxes or other governmental
charges and compliance with all reasonable requirements of the Trustee, its
nominee(s) or assignee(s), shall, subject to the provisions of Subsection 4.4(6)
and Section 4.8, be entitled to be entered in the books of the Corporation as at
the Date of Conversion (or such later date as is specified in Subsection 4.3(2))
as the holder of the number of Shares into which such Debenture is convertible
in accordance with the provisions of this Article and, as soon as practicable
thereafter, the Corporation shall deliver to such Debentureholder and/or,
subject as aforesaid, its nominee(s) or assignee(s), a certificate or
certificates for such Shares and, if applicable, a cheque for any amount payable
under this Article.

(2)  For the purposes of this Article, a Debenture shall be deemed to be
surrendered for conversion on the date (herein called the "DATE OF CONVERSION")
on which it is so surrendered in accordance with the provisions of this Article
and, in the case of a Debenture so surrendered by post or other means of
transmission, on the date on which it is received by the Trustee at its office
specified in Subsection (1) of this Section; provided that if a Debenture is
surrendered for conversion on a day on which the register of Shares is closed,
the person or persons entitled to receive Shares shall, except as provided in
Subsection 4.4(6), become the holder or holders of record of such Shares
<PAGE>
                                      -22-

as at the date on which such register is next reopened. If a Debenture is
surrendered for conversion on, or during the 15 Business Days preceding, any
interest payment date or the day of selection by the Trustee of any Debentures
for redemption, such Debenture shall be deemed to be surrendered for conversion
on the Business Day immediately following such interest payment date or the
date on which the Debentures are selected for redemption.

(3)  The holder of any Debenture of which part only is converted shall, upon the
exercise of his right of conversion, surrender the Debenture Certificate in
respect of said Debenture to the Trustee, and the Trustee shall cancel the same
and shall without charge to the holder forthwith certify and deliver to the
holder a new Debenture Certificate or Debenture Certificates in an aggregate
principal amount equal to the unconverted part of the principal amount of the
Debenture so surrendered.

(4)  The holder of a Debenture surrendered for conversion in accordance with
this Section 4.3 shall be entitled to receive accrued and unpaid interest in
respect thereof only for the period up to the interest payment date, if any,
which falls on the Date of Conversion or, if the Date of Conversion is not an
interest payment date, for the period up to the interest payment date
immediately preceding the Date of Conversion; and there shall be no payment or
adjustment by the Corporation on account of any interest accrued or accruing on
such Debenture from the date of the latest interest payment date. The Shares
issued upon conversion shall rank only in respect of dividends declared in
favour of holders of record of Shares on and after the Date of Conversion or
such later date as such holder shall become the holder of record of such Shares
pursuant to Subsection 4.3(2), from which applicable date they will for all
purposes by and be deemed to be issued and outstanding as fully paid and
non-assessable Shares.

SECTION 4.4 -- ADJUSTMENT RULES

     The conversion rights at any date attaching to the Debentures shall be
subject to the adjustment from time to time as follows:

(1)  If and whenever at any time prior to the Expiry Time, the Corporation
shall (i) subdivide its then outstanding Shares into a greater number of Shares
(ii) consolidate its then outstanding Shares into a lesser number of Shares, or
(iii) issue Shares or securities exchangeable for or convertible into Shares to
all or substantially all of the holders of its then outstanding Shares by way
of stock dividend or other distribution, other than an issue of Shares or
securities exchangeable for or convertible into Shares to the holders of Shares
who exercise an option to receive dividends in Shares in lieu of receiving
dividends paid in the ordinary course, or (iv) distribute any securities or
assets of any kind whatsoever to all or substantially all of the holders of
Shares (other than cash dividends and equivalent dividends in stock and other
than an issue of Shares to holders of Shares pursuant to a right granted to such
holders to receive such Shares in lieu of dividends paid in the ordinary
course) (any of the events described in (i) through (iv) being herein called a
"SHARE REORGANIZATION"), the Conversion Price shall be adjusted effective
immediately after the effective date or the record date, as the case may be, on
which the holders of shares are determined for the purpose of the Share
Reorganization by multiplying the Conversion Price in effect on such record date
by a fraction, of which the numerator shall be the number of Shares outstanding
on such record date before
<PAGE>
                                     - 23 -


giving effect to the Share Reorganization and the denominator of which shall be
the number of Shares (including, in the case where securities exchangeable for
or convertible into Shares are distributed, the number of Shares that would
have been outstanding had all securities been exchanged or converted into
Shares on such date) outstanding after the completion of such Share
Reorganization (but before giving effect to the issue of any Shares issued
after such record date otherwise than as part of such Share Reorganization).

(2)     If and whenever at any time prior to the Expiry Time the Corporation
shall fix a record date for the issuance of rights, options or warrants to all
or substantially all the holders of its outstanding Shares entitling them to
subscribe for or purchase Shares in the capital of the Corporation (or
securities exchangeable for or convertible into such Shares) within a period of
not more than 45 days after such record date (the "Rights Period") at a price
per share (or having a conversion or exchange price per share) of less than 95%
of the Current Market Price for a Share on such record date (a "Rights
Offering") the Conversion Price shall be adjusted immediately after such record
date so that it shall equal the price determined by multiplying the Conversion
Price in effect on such record date by a fraction, of which the numerator shall
be the total number of Shares outstanding on such record date plus a number of
Shares equal to the number arrived at by dividing the aggregate price of the
total number of additional shares offered for subscription or purchase (or the
aggregate conversion or exchange price of the convertible or exchangeable
securities so offered) by such Current Market Price per Share and of which the
denominator shall be the total number of Shares outstanding on such record date
plus the total number of additional Shares offered for subscription or purchase
(or into which the convertible or exchangeable securities so offered are
convertible or exchangeable). Such adjustment shall be made successively
whenever such a record date is fixed. To the extent that any such rights,
options or warrants are not so issued or any such rights, options or warrants
are not converted during the Rights Period, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect if such record
date had not been fixed or the Conversion Price which would then be in effect
based upon the number of Shares (or securities convertible into Shares)
actually issued upon the conversion of such rights, options or warrants, as the
case may be.

(3)     If and whenever at any time prior to the Expiry Time the Corporation
shall fix a record date for the making of a distribution to all or
substantially all the holders of its outstanding Shares of (i) shares of any
class other than Shares, or (ii) rights, options or warrants (excluding a
Rights Offering and also excluding rights, options or warrants entitling the
holders thereof within not more than 45 days of the date of their issuance to
acquire Shares (or securities convertible into or exchangeable for Shares) at a
price per Share (or having a conversion price per Share) equal to or greater
than 95 percent of the Current Market Price of a Share on the record date for
the issuance of such rights, options or warrants or (iii) evidences of its
indebtedness or (iv) assets (including cash dividends except cash dividends
paid in the ordinary course) (a "SPECIAL DISTRIBUTION") then, in each such
case, the Conversion Price shall be adjusted immediately after such record date
for the Special Distribution so that it shall equal the price determined by
multiplying the Conversion Price in effect on such record date by a fraction of
which the numerator shall be the total number of Shares outstanding on such
record date multiplied by the Current Market Price per Share on such record
date, less the fair market value (as determined by the auditors of the
Corporation, which determination shall be conclusive) of such shares or
evidences of indebtedness or assets so distributed, and of which the
denominator shall be the total number of Shares outstanding on such record date
multiplied by such
<PAGE>

                                      -24-

Current Market Price per Share. Such adjustment shall be made successively
whenever such a record date is fixed. To the extent that such distribution is
not so made, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon such shares or
rights, options or warrants or evidences of indebtedness or assets actually
distributed, as the case may be.

(4)  Upon any adjustment of the Conversion Price pursuant to Subsections
4.4(1), 4.4(2) or 4.4(3), the number of Shares receivable upon the conversion
of each $1,000 in principal amount of Debentures shall contemporaneously be
adjusted by multiplying the number of Shares theretofore receivable on the
conversion thereof by a fraction of which the numerator shall be the
Conversion Price in effect immediately prior to such adjustment and the
denominator shall be the Conversion Price resulting from such adjustment.

(5)  If and whenever at any time prior to the Expiry Time there is a
reclassification of the Shares or a capital reorganization of the Corporation
other than as otherwise described in this Section 4.4 or a consolidation,
amalgamation or merger of the Corporation with or into any other body corporate,
trust, partnership or other entity or a sale or conveyance of the property and
assets of the Corporation as an entirety or substantially as an entirety to any
other body corporate, trust partnership or other entity, any Debentureholder who
has not exercised his right of conversion prior to the effective date of such
reclassification, reorganization, consolidation, amalgamation, merger, sale or
conveyance, upon the exercise of such right of conversions thereafter, shall be
entitled to receive and shall accept in lieu of the number of Shares to which
such Debentureholder was theretofore entitled upon conversion, the number of
shares or other securities or property of the Corporation or of the body
corporate, trust, partnership or other entity resulting from such merger,
amalgamation or consolidation or to which such sale or conveyance may be made,
as the case may be, that such holder would have been entitled to receive on such
reclassification, capital reorganization, consolidation, amalgamation, merger,
sale or conveyance if, immediately prior to the record date or the effective
date thereof, as the case may be, he had exercised his right of conversion. To
give effect to or to evidence the provisions of this paragraph, the Corporation,
its successor or such purchasing body corporate, trust, partnership or other
entity, as the case may be, shall, prior to or contemporaneously with any such
reclassification, reorganization, consolidation, amalgamation, merger, sale or
conveyance, enter into an indenture which shall provide, to the extent possible,
that the application of the provisions set forth in this Indenture shall
thereafter correspondingly be made applicable as nearly as may reasonably be,
with respect to any shares, other securities or property to which a
Debentureholder is entitled on the conversion of his Debenture(s) thereafter.
Any indenture entered into between the Corporation and the Trustee pursuant to
the provisions of this Subsection 4.4(5) shall be a supplemental indenture
entered into pursuant to the provisions of Articles IX hereof. Any indenture
entered into between any successor to the Corporation or a purchasing body
corporate, trust, partnership or other entity shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section 4.4 and which shall apply to successive
reclassifications, capital reorganizations, amalgamation, consolidations,
mergers, sales or conveyances. Notwithstanding any provision of this Indenture,
in the event any reclassification, change, amalgamation, consolidation, merger
or sale occurs on or prior to the date which is five years from the issue of the
Debenture, a holder of Debentures who exercises the right to convert Debentures
into Shares shall be entitled to receive only shares, other securities or
property that constitute Prescribed Securities provided that the
<PAGE>


                                     - 25 -


fair market value of such Prescribed Securities shall be equal to the fair
market value of any Prescribed Securities and any other type of consideration
that the holder would have been entitled to receive had such Debentures been
converted into Shares immediately prior thereto and the Corporation shall not
undertake, permit or enter into any such reclassification, change,
amalgamation, consolidation, merger or sale on or before such date unless such
Debentureholders are provided with the right to receive Prescribed Securities
as aforesaid.

(6)  In any case in which this Section 4.4 shall require that an adjustment
shall become effective immediately after a record date for an event referred to
herein and where the application of such adjustment would result in a decrease
in the Conversion Price immediately after such record date, the Corporation may
defer, until the occurrence of such event, issuing to the holder of any
Debenture exercising his conversion rights after such record date and before the
occurrence of such event the additional Shares issuable upon such conversion by
reason of the adjustment required by such event before giving effect to such
adjustment; provided, however, that the Corporation shall deliver to such holder
an appropriate instrument evidencing such holder's right to receive such
additional Shares upon the occurrence of the event resulting in the decreased
Conversion Price and the right to receive any distributions made on such
additional Shares declared in favour of holders of record of Shares on and after
the Conversion Date or such later date as such holder would, but for the
provisions of this Subsection 4.4, have become the holder of record of such
additional Shares.

(7)  The adjustments provided for in this Section 4.4 in the Conversion Price
and in the number and classes of shares which are to be received on the
conversion of Debentures are cumulative. After any adjustment pursuant to this
Section, the term "SHARES" where used in this Indenture shall be interpreted to
mean shares of any class or classes which, as a result of all prior adjustments
pursuant to this Section, the Debentureholder is entitled to receive upon the
conversion of his Debenture, and the number of Shares indicated in any
conversion made pursuant to a Debenture shall be interpreted to mean the number
of shares of all classes which, as a result of all prior adjustments pursuant to
this Section, a Debentureholder is entitled to receive upon the full exercise of
his conversion rights.

(8)  All shares of any class which a Debentureholder is at the time in question
entitled to receive on the full exercise of the conversion rights attaching to
his Debenture, whether or not as a result of adjustments made pursuant to this
Section, shall, for the purposes of the interpretation of this Indenture, be
deemed to be shares which such Debentureholder is entitled to receive on
conversion of such Debenture.

(9)  Anything in this Section 4.4 to the contrary notwithstanding, no adjustment
shall be made in the Conversion Price and no notice shall be given (a) unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect (but in such case any adjustment that would
otherwise have been required then to be made shall be carried forward and taken
into account in any subsequent adjustment in the Conversion Price) or (b) in
respect of entitlement to acquire Shares pursuant to an employee stock purchase,
stock option or analogous plan as now or hereafter existing or as hereafter
amended, supplemented or replaced provided that each entitlement is to acquire
equity shares or securities convertible or exchangeable into equity shares at a
price as defined in such plans. In case the Shares at any time outstanding
shall, prior to the Expiry


<PAGE>

                                     - 26 -


Time, be subdivided into a greater number of Shares or consolidated into a
lesser number of Shares, the minimum adjustment aforesaid shall thereupon be
itself adjusted to such amount which shall bear the same relation to the
minimum adjustment established immediately prior to such event as the total
number of Shares outstanding immediately after such event. Any such minimum
adjustment so established shall continue in effect until the same shall again
be changed as herein provided.

(10) The Corporation shall not be required to issue fractional Shares upon
conversion of the Debenture. If any fractional interests in a Share would,
except for the provisions of this Subsection, be deliverable upon the exercise
of a Debentureholder's conversion rights, the Corporation shall make a cash
payment equal to the fair value (based on the last reported sale price or, if
none, the mean between the closing bid and ask quotations on The Toronto Stock
Exchange, or, if the Shares are not listed on The Toronto Stock Exchange, on
such stock exchange on which the Shares are listed which may be selected by the
Trustee) of the fraction of a Share not so issued. If more than one Debenture
shall be surrendered for conversion at one time by the same holder, the number
of whole Shares issuable upon conversion thereof shall be converted on the basis
of the aggregate principal amount of the Debentures to be converted.

(11) If any question arises with respect to the adjustments provided in this
Article IV such questions shall be conclusively determined by a firm of
chartered accountants (who may be the Corporation's auditors) appointed by the
Corporation and acceptable to the Trustee. Such accountants shall have access
to all necessary records of the Corporation and such determination shall be
binding upon the Corporation, the Trustee and the Debentureholders. If any such
determination is made, the Corporation shall deliver a certificate to the
Trustee describing such determination.

(12) No adjustment in the Conversion Price shall be made in respect of any event
described in this Section 4.4, other than events referred to in paragraphs
4.4(1)(i) and (ii), if Debentureholders are entitled to participate in such
event on the same terms mutatis mutandis as if Debentureholders had exercised
their rights of conversion prior to or on the effective date or record date of
such event. Any such participation will be subject to the prior approval or
consent of each Canadian stock exchange on which the Shares are listed.

(13) If, after the date of this Indenture the Corporation shall take any action
affecting the Shares other than the actions described in this Article IV which
in the opinion of the directors, acting reasonably, would materially and
adversely affect the rights of Debentureholders, the Conversion Price and the
number of Shares which may be acquired upon exercise of conversion rights
attaching to a Debenture shall be adjusted in such manner and at such time, as
may be determined by the auditors of the Corporation to be equitable in the
circumstances (having regard to the fair market value of the Debentures and the
Shares before and after such action is taken); provided that no such adjustment
will be made unless prior approval or consent of each Canadian stock exchange
on which the Shares are listed for trading, if required, have been obtained. In
the event that any such adjustment is made, the Corporation shall deliver a
certificate to the Trustee describing such adjustment.

(14) In the absence of a resolution of the directors fixing a record date for
an event described in this Section 4.4, the Corporation will be deemed to have
fixed as the record date therefor the date on which the event is effected.


<PAGE>

                                      -27-


SECTION 4.5 -- PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT

     As a condition precedent to the taking of any action which would require an
adjustment pursuant to Section 4.4, the Corporation shall take any action which
may, in the opinion of counsel, be necessary in order that the Corporation may
validly and legally issue as fully paid and non-assessable all the Shares which
the holders of the Debentures are entitled to receive on the exercise of the
conversion rights in respect thereof in accordance with the provisions hereof.

SECTION 4.6 -- CERTIFICATE OF ADJUSTMENT

     The Corporation shall from time to time immediately after the occurrence
of any event which requires an adjustment or readjustment as provided in
Section 4.4, deliver a certificate of the Corporation to the Trustee specifying
the nature of the event requiring the same and the amount of the adjustment
necessitated thereby and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, which
certificate and the amount of the adjustment specified therein shall be
verified by an opinion of the Corporation's auditors and, absent manifest
error, shall be conclusive and binding on all parties in interest. When so
verified, the Corporation shall forthwith give notice to the Debentureholders
in the manner provided in Section 12.2 specifying the event requiring such
adjustment or readjustment and the results thereof, including the resulting
Conversion Price; provided that, if the Corporation has given notice under
Section 4.7 covering all the relevant facts in respect of such event and if the
Trustee approves, no such notice need be given under this Section 4.6. The
Trustee may, for all purposes, act and rely upon any certificate or
certificates and any other document delivered by the Corporation or the
Corporation's auditors pursuant to this Section 4.6.

SECTION 4.7 -- NOTICE OF SPECIAL MATTERS

     The Corporation covenants with the Trustee that so long as any Debenture
remains outstanding, it will give at least fourteen days' notice to the Trustee
and to the Debentureholders as provided in Section 12.2, of its intention to fix
a record date for any event referred to in Subsections 4.4(1), 4.4(2) or 4.4(3)
which may give rise to an adjustment in the Conversion Price, of its intention
to take any action described in Subsection 4.4(5) or of its intention to fix a
record date for the payment of dividends on the Shares other than dividends paid
in the ordinary course, and, in each case, such notice shall specify the
particulars of such event and the record date and/or the effective date for such
event; provided that the Corporation shall only be required to specify in such
notice such particulars of such event as shall have been fixed and determined on
the date on which the notice is given. The Corporation shall forthwith upon
determining further particulars provide a subsequent notice to the Trustee and
the Debentureholders setting forth such particulars.

SECTION 4.8 -- NO ACTION AFTER NOTICE

     The Corporation covenants with the Trustee that it will not close its
transfer books or take any other corporate action which might deprive the
holder of a Debenture of the opportunity of exercising his right of conversion
pursuant thereto during the period of ten Business Days after the giving of the
notice set forth in Sections 4.6 and 4.7

<PAGE>
                                     - 28 -

SECTION 4.9 - PROTECTION OF TRUSTEE

     Subject to Subsection 10.2(1), the Trustee (i) shall not at any time be
under any duty or responsibility to any Debentureholder to determine whether any
facts exist which may require any adjustment contemplated by Section 4.4, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method  employed in making the same; (ii) shall not be
accountable with respect to validity or value (or the kind or amount) of any
Shares or of any shares or other securities or property which may at any time
be issued or delivered upon the conversion of the conversion rights attaching
to any Debenture; or (iii) shall not be responsible for any failure of the
Corporation to make any cash payment or to issue, transfer or deliver Shares or
share certificates upon the surrender of any Debentures for the purpose of the
exercise of such conversion rights or to comply with any of the covenants
contained in this Article IV.

SECTION 4.10 - ACCOUNTING AND RECORDING

(1)  The Trustee shall account to the Corporation as soon as practicable with
respect to conversion of Debentures.

(2)  The Trustee shall record the particulars of the Debentures converted which
shall include the name or names and addresses of the persons who become holders
of Shares on conversion, the Conversion Date and the Conversion Price therefor.
Within three Business Days of each Conversion Date, the Trustee shall provide
such particulars in writing to the Corporation.

SECTION 4.11 - CANCELLATION OF SURRENDERED DEBENTURE CERTIFICATES

     All Debenture Certificates surrendered to the Trustee pursuant to Section
2.6, 2.11, 3.3, 3.8 or 4.3 shall be cancelled by the Trustee. The Trustee shall,
if required by the Corporation, furnish the Corporation with a certificate
identifying the Debenture Certificates so cancelled.

SECTION 4.12 - EXPIRATION

     After the Expiry Time, all rights under any Debenture in respect of which
the right of conversion herein and therein provided for have not theretofore
been exercised shall wholly cease and terminate and such Debenture shall be void
and of no value or effect.

SECTION 4.13 - REVIVAL OF RIGHT TO CONVERT

     If the Corporation shall fail to redeem any Debenture which has been called
for redemption upon due surrender of such Debenture, any right to convert such
Debenture as provided in this Article IV shall revive and continue as if such
Debenture had not been called for redemption.



<PAGE>

                                     - 29 -

SECTION 4.14 - U.S. LEGEND

     In the event any Debenture(s) which have been delivered to the Trustee
pursuant to Section 4.3 hereof bears the U.S. Securities Act legend referred to
in Section 2.13, the Corporation shall cause the certificates in respect of the
Shares issuable upon the conversion of such Debenture(s) to be affixed with the
same legend set forth in Section 2.13 and the proviso with respect to the
removal of the legend set forth in Section 2.13 shall apply thereto.

                                   ARTICLE V
                                   COVENANTS

SECTION 5.1 - GENERAL COVENANTS

     The Corporation covenants with the Trustee that so long as any Debentures
remain outstanding;

(1)  It will duly and punctually pay or cause to be paid to every
Debentureholder the principal of, and interest accrued on, the Debentures of
which he is the holder on the dates, at the places, in the monies or Shares; as
the case may be, and in the manner mentioned herein;

(2)  It will at all times maintain its corporate existence, provided that
subject to Section 9.3 nothing herein contained shall prevent the amalgamation,
consolidation or merger of the Corporation or any Subsidiary of the Corporation
if, in the reasonable opinion of the directors or officers of the Corporation,
it would be advisable and in the best interest of the Corporation so to do, and
will keep or cause to be kept proper books of account in accordance with
generally accepted accounting practice and will file with the Trustee copies of
all financial statements and other material furnished to the holders of Shares
after the date of this Indenture;

(3)  It will use its best efforts to ensure that it maintains, until one year
after the Expiry Time, its status as a reporting issuer not in default (or the
equivalent) under the securities laws of each Canadian province;

(4)  It will at all times carry on and conduct and will cause to be carried on
and conducted its business in the same general manner as hereto before carried
on and conducted, provided, however, that, subject to Section 9.3, the
Corporation or any Subsidiary of the Corporation may cease to carry on a
business or may purchase or dispose of any business, premises, assets, property
or operation if, in the opinion of the directors or officers of the Corporation
or any Subsidiary of the Corporation, as the case may be, it would be advisable
and in the best interest of the Corporation or any Subsidiary of the Corporation
so to do, or if the purchase or disposition is required by law or is made
pursuant to a partnership or shareholder agreement, arrangements with respect to
a joint venture, or buy-sell, shotgun, rights of first refusal or similar
arrangements entered into by the Corporation or a Subsidiary;
<PAGE>

                                      -30-


(5)  It will reserve out of its authorized capital a sufficient number of Shares
to satisfy the rights of conversion provided for herein and it will
conditionally issue to holders of Debentures such number of Shares as shall be
issuable on the conversion of all outstanding Debentures;

(6)  It will cause the Shares from time to time issued upon the conversion of
Debentures or upon exercise by the Corporation of its right to issue Shares in
satisfaction of its obligations at redemption or maturity, and the certificates
representing such Shares, to be duly issued and delivered in accordance with the
Debentures and the terms hereof;

(7)  All Shares which shall be issued upon exercise of the right to convert
Debentures provided for herein shall be issued as fully-paid and non-assessable
and the holders thereof shall not be liable to the Corporation or its creditors
in respect of the issue of such Shares;

(8)  It will use its best efforts to maintain the listing of the Shares on The
Toronto Stock Exchange, to complete all necessary requirements in connection
with the listing and posting for trading of the Shares issuable upon conversion
of the Debentures on such exchange as soon as practicable following the
Execution Date, and to secure the listing of the Debentures on the exchange as
soon as is practicable following the Execution Date and thereafter to maintain
such listing;

(9)  If at any time any registration or filing pursuant to any securities laws
of Canada or any province thereof is required to ensure that the Shares issuable
upon the conversion of the Debentures are issued in compliance with all such
laws or to ensure that any Shares, once issued, are not subject to any
restriction as to resale thereof (other than restrictions that apply to a holder
of Shares solely as a result of that holder holding or being part of a group
that holds a sufficient number of securities to control the Corporation), it
will promptly take all necessary action to make or obtain such registration or
filing, as the case may be;

(10) On or before December 31 in each year commencing December 31, 1997, it will
furnish to the Trustee a certificate stating that it has complied with all
covenants, conditions, or other requirements contained in this Indenture, the
non-compliance with which would, with the giving of notice or lapse of time,
constitute an Event of Default; and

(11) It will well and truly perform and carry out all of the acts or things to
be done by it as provided in this Indenture, and will execute, acknowledge, and
deliver or cause to be executed, acknowledged and delivered all other acts,
deeds and assurances in law as the Trustee may reasonably require for the better
accomplishing and effecting of the provisions of this Indenture.

SECTION 5.2 - TRUSTEE'S REMUNERATION AND EXPENSES

     The Corporation covenants that it will pay to the Trustee from time to time
reasonable remuneration for its services hereunder and will pay or reimburse the
Trustee upon its request for all reasonable expenses and disbursements of the
Trustee in the administration or execution of the trusts hereby created
(including the reasonable compensation and disbursements of its counsel and all
other advisers and assistants not regularly in its employ) until all duties of
the Trustee hereunder shall be
<PAGE>
                                      -31-


finally and fully performed, except any such expense or disbursement in
connection with or related to or required to be made as a result of the
negligence, wilful misconduct or bad faith of the Trustee.

SECTION 5.3 - PERFORMANCE OF COVENANTS BY TRUSTEE

     If the Corporation shall fail to perform any of its covenants contained in
this Indenture and the Corporation has not rectified such failure within ten
Business Days after receiving notice from the Trustee of such failure, the
Trustee may notify the Debentureholders of such failure on the part of the
Corporation or may itself perform any of the said covenants capable of being
performed by it, but shall be under no obligation to perform said covenants or
to notify the Debentureholders of such performance by it. All sums expended or
disbursed by the Trustee in so doing shall be repayable as provided in Section
5.2. No such performance, expenditure or disbursement by the Trustee shall be
deemed to relieve the Corporation of any default hereunder or of its continuing
obligations under the covenants herein contained.

SECTION 5.4 - ENFORCEABILITY OF DEBENTURES

     The Corporation covenants and agrees that it is duly authorized to create
and issue the Debentures to be issued hereunder and that the Debentures, when
issued and countersigned as herein provided, will be valid and enforceable
against the Corporation in accordance with the provisions hereof and the terms
thereof.

SECTION 5.5 - NOT TO EXTEND TIME FOR PAYMENT OF INTEREST

     In order to prevent any accumulation after maturity of unpaid interest, the
Corporation will not directly or indirectly extent or assent to the extension of
time for payment of any interest upon any Debenture and it will not directly or
indirectly be or become a party to or approve any such arrangement in any
manner; and the Corporation shall deliver to the Trustee all Debentures when
paid as evidence of such payment. In case the time for the payment of any such
interest shall be so extended, whether or not such extension be by or with the
consent of the Corporation notwithstanding anything herein or in the Debenture
Certificates contained, such interest shall not be entitled in case of default
hereunder to the benefits of this Trust Indenture except subject to the prior
payment in full of all interest on Debentures the payment of which has not been
so extended.


                                   ARTICLE VI
                            DEFAULT AND ENFORCEMENT

SECTION 6.1 - EVENTS OF DEFAULT

     Upon the happening of one or more of the following events (herein
sometimes referred to as an "EVENT OF DEFAULT"), namely:
<PAGE>
                                      -32-


     (i)     if the Corporation makes default in payment of the principal of any
             Debenture when the same becomes due under any provision hereof;

     (ii)    if the Corporation makes default in payment of any interest due on
             any Debenture hereof and any such default shall have continued for
             a period of five days after receipt by the Corporation of notice
             from the Trustee setting forth the default and requiring the
             Corporation to rectify the same;

     (iii)   if a decree or order of a court having jurisdiction in the premises
             is entered adjudicating the Corporation or a Significant Subsidiary
             a bankrupt or insolvent under the Bankruptcy and Insolvency Act
             (Canada) or any other bankruptcy, insolvency or analogous laws or
             issuing sequestration or process of execution against all or
             substantially all of the property of the Corporation or a
             Significant Subsidiary or appointing a receiver of such property,
             or ordering the winding-up or liquidation of the affairs of the
             Corporation or a Significant Subsidiary and enforcement of any such
             aforesaid decree or order continues unstayed and in effect for a
             period of 60 days after notice of such decree or order is received
             by the Corporation;

     (iv)    if a resolution is passed for the winding-up or liquidation of the
             Corporation (except in the course of carrying out or pursuant to a
             transaction in respect of which the conditions or Article IX are
             duly observed and performed) or if the Corporation or a Significant
             Subsidiary institutes proceedings to be adjudicated a bankrupt or
             insolvent or consents to the filing of any such petition or to the
             appointment of a receiver of all or substantially all of the
             property of the Corporation or a Significant Subsidiary or makes a
             general assignment for the benefit of creditors or admits in
             writing its inability to pay its debts generally as they become due
             or takes corporate action in furtherance of any of the aforesaid
             purposes;

     (v)     if the Corporation shall neglect to carry out or observe any other
             covenant or condition herein to be observed or performed and, after
             notice in writing has been given by the Trustee to the Corporation
             specifying such default and requiring the Corporation to put an
             end to the same (which said notice may be given by the Trustee in
             its discretion and shall be given by the Trustee upon receipt of a
             request in writing signed by the holders of not less than 25% in
             principal amount of the Debentures then outstanding), the
             Corporation shall fail to make good such default within a period of
             30 days unless the Trustee (having regard to the subject matter of
             the neglect or non-observance) shall have agreed to a longer period
             and, in such event, the Corporation shall not have made good the
             default within the period agreed to by the Trustee; or

     (vi)    if an encumbrancer takes possession of all or substantially all of
             the property of the Corporation or a Significant Subsidiary, or if
             any process or execution is levied or enforced upon or against all
             or substantially all of the property of the Corporation or a
             Significant Subsidiary and remains unsatisfied for such period as
             would permit any such property to be sold thereunder, unless the
             Corporation or the Significant Subsidiary, as the case may be,
             actively and diligently contests in good faith such
<PAGE>
                                     - 33 -

             process, but in that event the Corporation or the Significant
             Subsidiary shall, if the Trustee so requires, give security which,
             in the discretion of the Trustee, is sufficient to pay in full the
             amount thereby claimed in case the claim is held to be valid;

then in such and every such event the Trustee may in its discretion and shall
upon receipt of a request in writing signed by the holders of not less than 25%
in principal amount of the Debentures then outstanding, subject to the
provisions of Section 6.3, by notice in writing to the Corporation declare the
principal of and interest on all Debentures then outstanding and all other
monies outstanding hereunder to be due and payable and the same shall forthwith
become immediately due and payable to the Trustee, anything therein or herein to
the contrary notwithstanding, and the Corporation shall forthwith pay to the
Trustee for the benefit of the Debentureholders the principal of the Debentures
and accrued and unpaid interest on the Debentures to, but not including, the
date payment is received by the Trustee. Such payment when made shall be deemed
to have been made in discharge of the Corporation's obligations hereunder and
any monies so received by the Trustee shall be applied in the manner provided in
Section 6.6.

SECTION 6.2 -- NOTICE OF EVENTS OF DEFAULT

(1)  If an Event of Default shall occur and is continuing, the Trustee shall,
within a reasonable time but not exceeding 15 days after it becomes aware of the
occurrence of such Event of Default give notice of such Event of Default to the
Debentureholders in the manner provided in Section 12.2, provided that,
notwithstanding the foregoing, unless the Trustee shall have been requested to
do so by the holders of at least 255 of the principal amount of the Debentures
then outstanding, the Trustee shall not be required to give such notice if the
Trustee reasonably believes that the withholding of such notice is in the best
interests of the Debentureholders and shall have so advised the Corporation in
writing.

(2)  When notice of the occurrence of an Event of Default has been given and the
Event of Default is thereafter cured, notice that the Event of Default is no
longer continuing shall be given by the Trustee to the Debentureholders in the
manner provided in Section 12.2 within a reasonable time, but not exceeding 15
days, after the Trustee becomes aware that the Event of Default has been cured.

SECTION 6.3 -- WAIVER OF DEFAULTS

     Upon the happening of any Event of Default hereunder otherwise than default
in payment of any principal monies at maturity:

     (i)  the holders of more than 50% of the principal amount of the
          Debentures then outstanding shall have the power (in addition to the
          powers exercisable by Extraordinary Resolution as hereinafter
          provided) by requisition in writing to instruct the Trustee to waiver
          any default hereunder and/or to cancel any declaration made by the
          Trustee pursuant to Section 6.1 and the Trustee shall thereupon waive
          the default or cancel such declaration upon such terms and conditions
          as shall be prescribed in such requisition; and
<PAGE>

                                     - 34 -

     (ii)    the Trustee, so long as it has not become bound to declare the
             principal of and interest on the Debentures then outstanding to be
             due and payable or to obtain or enforce payment of the same, shall
             have the power to waive any default hereunder if, in the Trustee's
             opinion, the same shall have been cured or adequate satisfaction
             made therefor, and in such event to cancel any such declaration
             theretofore made by the Trustee in the exercise of its discretion,
             upon such terms and conditions as the Trustee may deem advisable;

provided that no delay or omission of the Trustee or of the Debentureholders to
exercise any right of power shall impair any such right or power or shall be
construed to be a waiver of any Event of Default and provided no act or
omission either of the Trustee or of the Debentureholders in the premises shall
extend to or be taken in any manner whatsoever to affect any subsequent default
hereunder or the rights resulting therefrom.

SECTION 6.4 - ENFORCEMENT BY THE TRUSTEE

(1)  Subject to the provisions of Section 6.3 and to the provisions of any
Extraordinary Resolution that may be passed by the Debentureholders, in case
the Corporation shall fail to pay to the Trustee, forthwith after the same
shall have been declared to be due and payable under Section 6.1, the principal
of and interest on all Debentures then outstanding, together with any other
amounts due hereunder, the Trustee may in its discretion and shall upon receipt
of a request in writing signed by the holders of not less than 25% in principal
amount of the Debentures then outstanding and upon being indemnified to its
reasonable satisfaction against all costs, expenses and liabilities to be
incurred, and upon receiving such funds as it reasonably considers necessary,
proceed in its name as Trustee hereunder to obtain or enforce payment of the
said principal of and interest on all the Debentures then outstanding together
with any other amounts due hereunder by such proceedings authorized by this
Indenture or by law or equity as the Trustee in such request shall have been
directed to take, or if such request contains no such direction, or if the
Trustee shall act without such request, then by such proceedings authorized by
this Indenture or by suit at law or in equity as the Trustee shall deem
expedient.

(2)  The Trustee shall be entitled and empowered, either in its own name or as
trustee of an express trust, or as attorney-in-fact for the holders of the
Debentures, or in any one or more of such capacities, to file such proof of
debt, amendment of proof of debt, claim, petition or other document as may be
necessary or advisable in order to have the claims of the Trustee and of the
holders of the Debentures allowed in any insolvency, bankruptcy, liquidation,
winding-up or other judicial proceeding relative to the Corporation or its
creditors or relative to or affecting its property. The Trustee is hereby
irrevocably appointed (and the successive holders of the Debentures by taking
and holding the same shall be conclusively deemed to have so appointed the
Trustee) the true and lawful attorney-in-fact of the holders of the Debentures
with authority to make or file in the names of the holders of the Debentures as
a class, subject to deduction from any such claims of the amounts of any claim
filed by any of the holders of the Debentures themselves, any proof of debt,
amendment of proof of debt, claim, petition or other document in any such
proceedings and to receive payment of any sums becoming distributable on
account thereof, and to execute any such other papers and documents and to do
and perform any and all such acts and things for and on behalf of such holders
<PAGE>

                                      -35-

of the Debentures, as may be necessary or advisable in the opinion of the
Trustee or Counsel, in order to have the respective claims of the Trustee and of
the holders of the Debentures against the Corporation or its property allowed in
any such proceeding, and to receive payment of or on account of such claims;
provided, however, that nothing contained in this Indenture shall be deemed to
give to the Trustee, unless so authorized by Extraordinary Resolution, any right
to accept or consent to any plan of reorganization or otherwise by action of any
character in such proceeding to waive or change in any way any right of any
Debentureholder.

(3)  The Trustee shall also have power at any time and from time to time to
institute and to maintain such suits and proceedings as it may be advised shall
be necessary or advisable to preserve and protect its interests and the
interests of the Debentureholders.

(4)  Any rights of action hereunder may be enforced by the Trustee without the
possession of any of the Debentures or the production thereof on the trial or
other proceedings relative thereto. Any such suit or proceeding instituted by
the Trustee shall be brought in the name of the Trustee as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Debentures subject to the provisions of this Indenture. In
any proceeding brought by the Trustee (and also any preceding in which a
declaratory judgment of a court may be sought as to the interpretation or
construction of any provision of this Indenture, to which the Trustee shall be
a party) the Trustee shall be held to represent all the holders of the
Debentures, and it shall not be necessary to make any holders of the Debentures
parties to any such proceeding.

SECTION 6.5 - SUITS BY DEBENTUREHOLDERS

     No holder of any Debenture shall have any right to institute any action,
suit or proceeding at law or in equity for the purpose of enforcing payment of
the principal of or interest on the Debentures or for the execution of any
trust or power hereunder of for the appointment of a liquidator or receiver or
for a receiving order under the Bankruptcy and Insolvency Act (Canada) or to
have the Company wound up or to file or prove a claim in any liquidation or
bankruptcy proceeding or for any other remedy hereunder, unless:

     (i)    such holder shall previously have given to the Trustee written
            notice of the happening of an Event of Default hereunder;

     (ii)   the Debentureholders by Extraordinary Resolution or by written
            instrument signed by holders of at least 25% in principal amount of
            the Debentures then outstanding shall have made a request to the
            Trustee and the Trustee shall have been afforded reasonable
            opportunity either itself to proceed to exercise the power
            hereinbefore granted or to institute an action, suit or proceeding
            in its name for such purposes;

     (iii)  the Debentureholders or any of them shall have furnished to the
            Trustee, when so requested by the Trustee, sufficient funds and
            securities and indemnity satisfactory to it against the costs,
            expenses and liabilities to be incurred herein or thereby; and
<PAGE>
                                     - 36 -


     (iv)    the Trustee shall have failed to act within a reasonable time after
             such notification, request and offer of indemnity and such
             notification, request and offer of indemnity may, at the option of
             the Trustee, constitute a condition precedent to any other
             proceedings.

     In such event, but not otherwise, any Debentureholder acting on behalf of
himself and all other Debentureholders, shall be entitled to take proceedings in
any court of competent jurisdiction such as the Trustee might have taken under
Section 6.5, but in no event shall any Debentureholder or combination of
Debentureholders have any right to take any other remedy or proceedings out of
court; it being understood and intended that no one or more holders of
Debentures shall have any right in any manner whatsoever to enforce any right
hereunder or under any Debenture except subject to the conditions and in the
manner herein provided, and that all powers and trusts hereunder shall be
exercised and all proceedings at law shall be instituted, had and maintained by
the Trustee, except only as herein provided, and in any event for the equal
benefit of all holders of outstanding Debentures.

SECTION 6.6 - APPLICATION OF MONIES BY TRUSTEE

     Except as herein otherwise expressly provided, any monies received by the
Trustee from the Corporation pursuant to the foregoing provisions of this
Article, or as a result of legal or other proceedings or from any trustee in
bankruptcy or liquidator of the Corporation, shall be applied, together with any
other monies in the hands of the Trustee available for such purpose, as follows:

     (i)     first, in payment or in reimbursement to the Trustee of its
             reasonable compensation, costs, charges, expenses, borrowings,
             advances or other monies furnished or provided by or at the
             instance of the Trustee in or about the execution of its trusts
             under, or otherwise in relation to, this Indenture, with interest
             thereon as herein provided;

     (ii)    second, subject as otherwise herein provided, in payment rateably
             and proportionately to the holders of Debentures of the principal
             of and accrued and unpaid interest and interest on amounts in
             default on the Debentures which shall then be outstanding in the
             priority of principal first and then accrued and unpaid interest
             and interest on amounts in default unless otherwise directed by
             Extraordinary Resolution and, in that case, in such order of
             priority as between principal and interest as may be directed by
             such resolution; and

     (iii)   third, in payment of the surplus, if any, of such monies to the
             Corporation or its assigns;

provided, however, that no payment shall be made pursuant to clause (ii) above
in respect of the principal, premium, if any, of, or interest on, any Debenture
held, directly or indirectly, by or for the benefit of the Corporation or any
Subsidiary of the Corporation provided that only those Debentures which have
been certified to the Trustee as so owned shall be disregarded (other than any
Debenture pledged for value and in good faith to a person other than the
Corporation or any Subsidiary but only to the extent of such person's interest
therein) except subject to the prior payment in full of the principal and
interest on all Debentures which are not so held.
<PAGE>


                                     - 37 -


SECTION 6.7 - DISTRIBUTION OF PROCEEDS

     Payments to holders of Debentures pursuant to clause (ii) of Section 6.6
shall be made as follows:

     (i)    at least 15 days' notice of every such payment shall be given in the
            manner provided in Section 12.2 specifying the time when and the
            place or places where the Debentures are to be presented and the
            amount of the payment and the application thereof as between
            principal and interest;

     (ii)   payment on any Debenture shall be made upon presentation thereof at
            any one of the places specified in such notice and any such
            Debenture thereby paid in full shall be surrendered, otherwise a
            memorandum of such payment shall be endorsed thereon; but the
            Trustee may in its discretion dispense with presentation and
            surrender or endorsement in any special case upon such indemnity
            being given as it shall deem sufficient;

     (iii)  from and after the date of payment specified in the notice,
            interest shall accrue only on the amount owing on each Debenture
            after giving credit for the amount of the payment specified in such
            notice unless the Debenture in respect of which such amount is owing
            be duly presented on or after the date so specified and payment of
            such amount is not made; and

     (iv)   the Trustee shall not be bound to apply or make any partial or
            interim payment of any monies coming into its hands if the amount so
            received by it, after reserving therefrom such amount as the
            Trustee may think necessary to provide for the payments mentioned in
            clause (i) of Section 6.6, is insufficient to make a distribution of
            at least 5% of the aggregate principal amount of the outstanding
            Debentures, but it may retain the monies so received by it and
            invest or deposit the same as provided in Section 10.4 until the
            monies or the investments representing the same, with the income
            derived therefrom, together with any other monies for the time being
            under its control, shall be sufficient for the said purpose or until
            it shall consider it advisable to apply the same in the manner
            hereinbefore set forth. The foregoing in this clause (iv) shall,
            however, not apply to a final payment in distribution hereunder.

SECTION 6.8 - REMEDIES CUMULATIVE

     No remedy herein conferred upon or reserved to the Trustee or upon or to
the holders of Debentures is intended to be exclusive of any other remedy, but
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now existing or hereafter to exist by law
or by statute.

<PAGE>
                                     - 38 -

SECTION 6.9 - JUDGMENT AGAINST THE CORPORATION

     The Corporation covenants and agrees with the Trustee that, in case of any
judicial or other proceeding to enforce the rights of the Debentureholders,
judgment may be rendered against it in favour of the Debentureholders or in
favour of the Trustee, as trustee for the Debentureholders, for any amount which
may remain due in respect of the Debentureholders and the interest thereon and
any other monies owing hereunder.

SECTION 6.10 - IMMUNITY OF SHAREHOLDERS AND OTHERS

     Subject to the applicable laws, the Debentureholders and the Trustee hereby
waive and release any right, cause of action or remedy now or hereafter
existing in any jurisdiction against any past, present or future incorporator,
shareholder, director or officer or agent of the Corporation or of any successor
company for the payment of the principal of or interest on any of the Debentures
or on any covenant, agreement, representation or warranty by the Corporation
herein or in the Debenture Certificates contained.

SECTION 6.11 - TRUSTEE APPOINTED ATTORNEY

     The Corporation hereby irrevocably appoints the Trustee to be the attorney
of the Corporation in the name and on behalf of the Corporation to execute any
instruments and do any acts and things which the Corporation ought to execute
and do, and has not executed or done, under the covenants and provisions
contained in this Indenture and generally to use the name of the Corporation in
the exercise of all or any of the powers hereby conferred on the Trustee, with
full powers of substitution and revocation.


                                  ARTICLE VII
                           SATISFACTION AND DISCHARGE

SECTION 7.1 - CANCELLATION

     All Debentures shall forthwith after full payment thereof be cancelled by
the Trustee and, if required by the Corporation, the Trustee shall furnish to
the Corporation a certificate in respect of the Debentures so cancelled.

SECTION 7.2 - NON-PRESENTATION OF DEBENTURES

     If the holder of any Debenture shall fail to present the Debentures either
for payment or for satisfaction by way of issuance of Shares pursuant to Section
3.10 on the date on which the principal thereof and/or the interest thereon or
represented thereby becomes payable either at maturity or on redemption or
otherwise or shall not accept payment or satisfaction thereof and give such
receipt therefor (if any) as the Trustee may require:
<PAGE>
                                      -39-

     (a)  the Corporation shall be entitled to pay or deliver to the Trustee and
          direct it to set aside; or

     (b)  in respect of monies in the hands of the Trustee which may or should
          be applied to the payment of the Debentures, the Corporation shall be
          entitled to direct the Trustee to set aside;

the principal monies, Shares and/or the interest, as the case may be, in trust
to be paid or delivered to the holder of such Debenture, without further
interest, upon due presentation and surrender thereof in accordance with the
provisions of this Indenture; and thereupon the principal monies, Shares and/or
the interest payable on or represented by each Debenture in respect whereof
such monies and/or Shares have been set aside shall be deemed to have been paid
or issued and thereafter such Debentures shall not be considered as outstanding
hereunder and the holders thereof shall thereafter have no right in respect
thereof except that of receiving payment of the monies or delivery of Shares
(together with any distributions or dividends received by the Trustee in
respect of such Shares), as the case may be, so set aside by the Trustee
(without any interest) upon due presentation and surrender thereof, subject
always to the provisions of Section 7.3.

SECTION 7.3 -- REPAYMENT OF UNCLAIMED MONIES

     Any monies and/or Shares set aside under Section 7.2 and not claimed by and
paid to holders of Debentures as provided in Section 7.2 within two years after
the date of such setting aside shall be repaid to the Corporation by the Trustee
and thereupon the Trustee shall be released from all further liability with
respect to such monies and thereafter the holders of the Debentures in respect
of which such monies and/or Shares were so repaid to the Corporation shall have
no rights in respect thereof except to obtain payment of the monies due thereon
or the delivery of Shares (without interest) from the Corporation up to such
time as the right to proceed against the Corporation for recovery of such
monies has become statute barred under the laws of the Province of Ontario.
Interest earned on any such monies shall be paid from time to time by the
Trustee to the Corporation.

SECTION 7.4 -- DISCHARGE

     The Trustee shall at the request of the Corporation release and discharge
this Indenture and execute and deliver such instruments as it shall be advised
by Counsel are requisite for that purpose and to release the Corporation from
its covenants herein contained (other than the provisions relating to the
indemnification of the Trustee) upon proof being given to the reasonable
satisfaction of the Trustee that the principal of and interest (including
interest on amounts in default, if any) on all the Debentures and all other
monies payable hereunder have been paid or satisfied or that, all the Debentures
having matured or having been duly called for redemption, payment of the
principal of and interest (including interest on amounts in default, if any) on
such Debentures and of all other monies payable hereunder has been duly and
effectually provided for in accordance with the provisions hereof.

<PAGE>

                                     - 40 -


                                  ARTICLE VIII
                          MEETINGS OF DEBENTUREHOLDERS


SECTION 8.1 - RIGHT TO CONVENE MEETINGS

     The Trustee may at any time and from time to time, and shall on receipt of
a written request of the Corporation or of a Debentureholders' Request, convene
a meeting of the Debentureholders provided that the Trustee is indemnified to
its reasonable satisfaction and receives reasonable funding by and from the
Corporation or by and from the Debentureholders signing such Debentureholders'
Request against the costs which may be incurred in connection with the calling
and holding of such meeting. If the Trustee fails to convene a meeting within 30
days after the receipt of a written request of the Corporation or
Debentureholders' Request and indemnity and funding given as aforesaid, the
Corporation or such Debentureholders, as the case may be, may convene such
meeting. Every such meeting shall be held in the City of Toronto or at such
other place as may be approved or determined by the Trustee.

SECTION 8.2 - NOTICE

     At least 15 days' prior notice of any meeting of Debentureholders shall be
given to the Debentureholders in the manner provided for in Section 12.2 and a
copy of such notice shall be delivered to the Trustee unless the meeting has
been called by it, and to the Corporation unless the meeting has been called by
it. Such notice shall state the time and place of the meeting, the general
nature of the business to be transacted and shall contain such information as is
reasonably necessary to enable the Debentureholders to make a reasoned decision
on any matter to be voted on but it shall not be necessary for any such notice
to set out any of the provisions of this Article VIII. The notice convening any
such meeting may be signed by an appropriate officer of the Trustee or of the
Corporation or the person designated by such Debentureholders, as the case may
be.

SECTION 8.3 - CHAIRMAN

     The Trustee may nominate in writing an individual to be Chairman of the
meeting and if no individual is so nominated, or if the individual so nominated
is not present within 15 minutes after the time fixed for the holding of the
meeting, the Debentureholders present in person or by proxy shall appoint an
individual present to be Chairman. The Chairman of the meeting need not be a
Debentureholder.

SECTION 8.4 - QUORUM

     Subject to the provisions of Section 8.11, at any meeting of the
Debentureholders a quorum shall consist of Debentureholders present in person or
represented by proxy and holding at least 25% in principal amount of the
Debentures then outstanding, provided that at least two persons entitled to vote
thereat are personally present. If a quorum of the Debentureholders shall not be
present within one half-hour from the time fixed for holding any meeting, the
meeting, if summoned by the Debentureholders or on a Debentureholders' Request,
shall be dissolved. In any other case the
<PAGE>
                                     - 41 -

meeting shall be adjourned to the same day in the next week (unless such day is
a non-Business Day in which case it shall be adjourned to the next following
Business Day) at the same time and place to the extent possible and, subject to
the provisions of Section 8.11, no notice of the adjournment need be given. Any
business may be brought before or dealt with at an adjourned meeting which could
have been dealt with at the original meeting in accordance with the notice
calling the same. At the adjourned meeting the Debentureholders present in
person or represented by proxy shall from a quorum and may transact the business
for which the meeting was originally convened, notwithstanding that they may not
hold at least 25% in principal amount of the Debentures then outstanding. No
business shall be transacted at any meeting unless a quorum is present at the
commencement of business.

SECTION 8.5 - POWER TO ADJOURN

     The Chairman of any meeting at which a quorum of the Debentureholders is
present may, with the consent of the meeting, adjourn any such meeting, and no
notice of such adjournment need be given except such notice, if any, as the
meeting may prescribe.

SECTION 8.6 - SHOW OF HANDS

     Every question submitted to a meeting shall be decided in the first place
by a majority of the votes given on a show of hands except that votes on an
Extraordinary Resolution shall be given in the manner hereinafter provided. At
any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the Chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.

SECTION 8.7 - POLL AND VOTING

     On every Extraordinary Resolution, and when demanded by the Chairman or by
one or more of the Debentureholders acting in person or by proxy on any other
question submitted to a meeting and after a vote by show of hands, a poll shall
be taken in such manner as the Chairman shall direct. Questions other than those
required to be determined by Extraordinary Resolution shall be decided by a
majority of the votes cast on the poll. On a show of hands, every person who is
present and entitled to vote, whether as a Debentureholder or as proxy for one
or more absent Debentureholders, or both, shall have one vote. On a poll, each
Debentureholder present in person or represented by a proxy duly appointed by
instrument in writing shall be entitled to one vote in respect of each $1,000
principal amount of Debentures then held by him. A proxy need not be a
Debentureholder. The Chairman of any meeting shall be entitled, both on a show
of hands and on a poll, to vote in respect of the Debentures, if any, held or
presented by him.
<PAGE>
                                     - 42 -


SECTION 8.8 - REGULATIONS

(1)  Subject to the provisions of this Indenture, the Trustee or the Corporation
with the approval of the Trustee may from time to time make and from time to
time vary such regulations as it shall consider necessary for:

     (a)  the deposit of instruments appointing proxies at such place and time
          as the Trustee, the Corporation or the Debentureholders convening the
          meeting, as the case may be, may in the notice convening the meeting
          direct;

     (b)  the deposit of instruments appointing proxies at some approved place
          other than the place at which the meeting is to be held and enabling
          particulars of such instruments appointing proxies to be mailed,
          cabled or telegraphed or telecopied before the meeting to the
          Corporation or to the Trustee at the place where the same is to be
          held and for the voting of proxies so deposited as though the
          instruments themselves were produced at the meeting;

     (c)  the form of the instrument of proxy; and

     (d)  generally for the calling of meetings of Debentureholders, including
          setting a record date for determining Debentureholders entitled to
          receive notice of the meeting and the conduct of business thereat.

(2)  Any regulations so made shall be binding and effective and the votes given
in accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as a Debentureholder, or be entitled to vote or be present at the meeting in
respect thereof (subject to Section 8.9), shall be Debentureholders or persons
holding proxies of Debentureholders.

SECTION 8.9 - CORPORATION, TRUSTEE AND COUNSEL MAY BE REPRESENTED

     The Corporation and the Trustee, by their respective directors, officers
and employees, and the counsel for each of the Corporation, the Debentureholders
and the Trustee may attend any meeting of the Debentureholders, but shall have
no vote as such.

SECTION 8.10 - POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION

     In addition to all other power conferred upon them by any other provisions
of this Indenture or by law, the Debentureholders at a meeting shall have the
power, exercisable from time to time by Extraordinary Resolution:

     (a)  to sanction any change of any provision of the Debentures or of this
          Indenture or to any modification, alteration, compromise or
          arrangement of the rights of Debentureholders and/or the Trustee in
          its capacity as trustee hereunder or on behalf of the
<PAGE>
                                      -43-

          Debentureholders against the Corporation, whether such rights arise
          under this Indenture or the Debentures or otherwise;

     (b)  to amend or repeal any Extraordinary Resolution previously passed or
          sanctioned by the Debentureholders;

     (c)  to direct or authorize the Trustee, subject to funding and
          indemnification, to enforce any of the covenants on the part of the
          Corporation contained in this Indenture or the Debenture Certificates
          or to enforce any of the rights of the Debentureholders in any manner
          specified in such extraordinary resolution or to refrain from
          enforcing any such covenant or right;

     (d)  to waive and direct the Trustee to waive any default on the part of
          the Corporation in complying with any provisions of this Indenture or
          the Debenture Certificates either unconditionally or upon any
          conditions specified in such extraordinary resolution;

     (e)  to restrain any Debentureholder from taking or instituting any suit,
          action or proceeding against the Corporation for the enforcement of
          any of the covenants on the part of the Corporation contained in this
          Indenture or the Debenture Certificate or to enforce any of the rights
          of the Debentureholders;

     (f)  to direct any Debentureholder who, as such, has brought any suit,
          action or proceeding to stay or discontinue or otherwise deal with any
          such suit, action or proceeding, upon payment of the costs, charges
          and expenses reasonably and properly incurred by such Debentureholder
          in connection therewith;

     (g)  power to assent to any judgment, compromise or arrangement with any
          creditor or creditors or any class or classes of creditors, whether
          secured or otherwise, and with holders of any shares or other
          securities of the Corporation;

     (h)  power to appoint a committee with power and authority (subject to such
          limitations, if any, as may be prescribed in the resolution) to
          exercise, and to direct the Trustee to exercise, on behalf of the
          Debentureholders, such of the powers of the Debentureholders as are
          exercisable by extraordinary or other resolutions as shall be included
          in the resolution appointing the committee. The resolution making such
          appointment may provide for payment of the expenses and disbursements
          of and compensation to such committee. Such committee shall consist of
          such number of persons as shall be prescribed in the resolution
          appointing it and the members need not be themselves Debentureholders.
          Subject to the terms of the resolution appointing it, every such
          committee may elect its chairman and may make regulations respecting
          its quorum, the calling of meetings, the filling of vacancies
          occurring in its number and its procedure generally. Such regulations
          may provide that the committee may act at a meeting at which a quorum
          is present or may act by instrument signed by the number of members
          thereof necessary to constitute a quorum. All acts of any such
          committee within the authority delegated to it shall be binding upon
          all Debentureholders. Neither
<PAGE>


                                      -44-


          the committee nor any member thereof shall be liable for any loss
          arising from or in connection with any action taken or omitted to be
          taken by them in good faith;

     (i)  power to sanction the exchange of the Debentures for or the conversion
          thereof into shares, bonds, debentures or other securities or
          obligations of the Corporation or of any company formed or to be
          formed;

     (j)  power, notwithstanding Section 5.5, to authorize the Corporation and
          the Trustee to grant extensions of time for payment of interest on
          any of the Debentures, whether or not the interest of which payment
          is extended is at the time due or overdue;

     (k)  power to amend, alter or repeal any extraordinary resolution
          previously passed or sanctioned by the Debentureholders or by any
          committee appointed pursuant to clause (h) of this Section 8.10; and

     (l)  power to remove the Trustee from office and appoint a new Trustee; and

     (m)  power to sanction any scheme for the reconstruction or reorganization
          of the Corporation or for the consolidation, amalgamation or merger
          of the Corporation with any other corporation or for the sale,
          leasing, transfer or other disposition of the undertaking, property
          and assets of the Corporation or any part hereof, provided that no
          such sanction shall be necessary in respect of any such transaction
          if the provisions of Section 9.3 shall have been complied with.

SECTION 8.11 - MEANING OF EXTRAORDINARY RESOLUTION

(1)  The expression "EXTRAORDINARY RESOLUTION" when used in this Indenture
means, subject as hereinafter in this Section 8.11 and in Section 8.14
provided, a resolution proposed at a meeting of Debentureholders duly convened
for that purpose and held in accordance with the provision of this Article VIII
at which there are present in person or represented by proxy Debentureholders
holding at least 50% of the aggregate principal amount of Debentures then
outstanding and passed by the affirmative votes of Debentureholders not less
than 66-2/3% of the aggregate principal amount of Debentures that are
represented at the meeting and voted on the poll upon such resolution.

(2)  If, at any meeting called for the purpose of passing an extraordinary
resolution, Debentureholders holding at least 50% in principal amount of the
Debentures then outstanding are not present in person or by proxy within one
half-hour after the time appointed for the meeting, then the meeting shall be
adjourned to such day, being no less than five and no more than 10 days later,
and to such place and time as may be appointed by the Chairman. Not less than
three days' prior notice shall be given of the time and place of such adjourned
meeting in the manner provided in Section 12.1 and 12.2. Such notice shall
state that at the adjourned meeting the Debentureholders present in person or
represented by proxy shall form a quorum but it shall not be necessary to set
forth the purposes for which the meeting was originally called or any other
particulars. At the adjourned meeting the Debentureholders present in person or
represented by proxy shall form a quorum and may transact the business for
which the meeting was originally convened and a resolution proposed at such
adjourned

<PAGE>
                                     - 45 -

meeting and passed by the requisite vote as provided in Subsection 8.11(1) shall
be an extraordinary resolution within the meaning of this Indenture
notwithstanding that Debentureholders holding at least 50% in principal amount
of the aggregate number of Debentures then outstanding may not be present in
person or represented by proxy at such adjourned meeting.

(3)  Votes on an Extraordinary Resolution shall be given on a poll and no
demand for a poll on an extraordinary resolution shall be necessary.

(4)  Notwithstanding anything contained in this Indenture, any Extraordinary
Resolution:


     (a)  to modify the percentage or number of Debentureholders that are
     required under this Indenture to sign a resolution or affirmatively vote at
     a meeting of Debentureholders to pass a resolution to approve a
     modification of this Indenture or the Debentures, or

     (b)  to modify the percentage or number of Debentureholders required to
     constitute a quorum for meeting called to approve a resolution referred to
     in Subsection 8.11(4)(a),

must, in addition to any other approval required in this Indenture, be approved
in writing by the holders of at least 90% of the aggregate principal amount of
all Debentures then outstanding.

SECTION 8.12 - POWERS CUMULATIVE

     It is hereby declared and agreed that any one or more of the powers or any
combination of the powers in this Indenture stated to be exercisable by the
Debentureholders by extraordinary resolution or otherwise may be exercised from
time to time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust the right
of the Debentureholders to exercise such powers or combination of powers then or
thereafter from time to time.

SECTION 8.13 - MINUTES

     Minutes of all resolutions and proceedings at every meeting of
Debentureholders shall be made and duly entered in books to be from time to time
provided for that purpose by the Trustee at the expense of the Corporation, and
any such minutes as aforesaid, if signed by the Chairman of the meeting at which
such resolutions were passed or proceedings taken or by the Chairman of the next
succeeding meeting of the Debentureholders, shall be prima facie evidence of the
matters therein stated and, until the contrary is proved, every such meeting in
respect of the proceedings of which minutes shall have been made shall be deemed
to have been duly convened and held, and all resolutions passed thereat or
proceedings taken shall be deemed to have been duly passed and taken.
<PAGE>
                                     - 46 -


SECTION 8.14 - INSTRUMENTS IN WRITING

     All actions which may be taken and all powers that may be exercised by the
Debentureholders at a meeting held as provided in this Article VIII may also be
taken and exercised by Debentureholders holding at least 66 2/3% of the
principal amount of Debentures then outstanding by an instrument in writing
signed in one or more counterparts by such Debentureholders in person or by
attorney duly appointed in writing, and the expression "EXTRAORDINARY
RESOLUTION" when used in this Indenture shall include an instrument so signed.

SECTION 8.15 - BINDING EFFECT OF RESOLUTIONS

     Every resolution and every Extraordinary Resolution passed in accordance
with the provisions of this Article VIII at a meeting of Debentureholders shall
be binding upon all the Debentureholders, whether present at or absent from such
meeting, and every instrument in writing signed by Debentureholders in
accordance with Section 8.14 shall be binding upon all the Debentureholders,
whether signatories thereto or not, and each and every Debentureholder and the
Trustee (subject to the provisions for indemnity and funding herein contained)
shall be bound to give effect to every such resolution and instrument in
writing. In the case of an instrument in writing the Trustee shall give notice
in the manner contemplated in Section 12.2 of the effect of the instrument in
writing to all Debentureholders and the Corporation as soon as is reasonably
practicable.

SECTION 8.16 - HOLDINGS BY THE CORPORATION OR SUBSIDIARIES OF THE CORPORATION
DISREGARDED

     In determining whether Debentureholders holding the requisite number of
Debentures are present at a meeting of Debentureholders for the purpose of
determining a quorum or have concurred in any consent, waiver, extraordinary
resolution, Debentureholders' Request or other action under this Indenture,
Debentures owned legally or beneficially by the Corporation or any Subsidiary of
insider of the Corporation, as defined in the Securities Act (Ontario), shall be
disregarded.

SECTION 8.17 - EVIDENCE OF RIGHTS OF DEBENTUREHOLDERS

     Any request, direction, notice, consent or other instrument which this
Indenture may require or permit to be signed or executed by the Debentureholders
may be in any number of concurrent instruments of similar tenor and may be
signed or executed by such Debentureholders in person or by attorney duly
appointed in writing. Proof of the execution of any such request, direction,
notice, consent or other instrument or of a writing appointing any such attorney
shall be sufficient for any purpose of this Indenture if made in the following
manner, namely, the fact and date of the execution by a person of such request,
direction, notice, consent or other instrument or writing may be provided by the
certificate of any notary public, or other officer authorized to take
acknowledgements of deeds to be recorded at the place where such certificate is
made, that the person signing such request, direction, notice, consent or other
instrument or writing acknowledged to him the execution thereof, or by an
affidavit of a witness of such execution or in any other manner which the
Trustee may consider adequate.
<PAGE>
                                     -47-

     The Trustee may, nevertheless, in its discretion require further proof in
cases where it considers further proof is desirable or may accept such other
proof as it shall consider proper.

                                   ARTICLE IX
                            SUPPLEMENTAL INDENTURES

SECTION 9.1 -- SUPPLEMENTAL INDENTURES

     From time to time the Corporation and the Trustee may, subject to the
provisions of this Indenture, and they shall, when so directed pursuant to this
Indenture, execute and deliver by their proper officers, indentures, or
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more of the following purposes:

     (a)  adding to the provisions hereof such additional covenants and
          enforcement provisions as in the opinion of counsel are necessary or
          advisable, for the protection of the Debentureholders;

     (b)  giving effect to any Extraordinary Resolution passed as provided in
          Article VIII;

     (c)  making such provisions not inconsistent with this Indenture as may be
          necessary or desirable with respect to matters or questions arising
          hereunder provided that such provisions are not, in the opinion of
          the Trustee and in the opinion of Counsel, prejudicial to the
          interests of the Debentureholders or inconsistent with the terms of
          this Indenture;

     (d)  adding to or amending the provisions hereof in respect of the
          transfer of Debentures, making provision for the redemption or
          conversion of the Debentures, and making any modification in the form
          of the certificates for the Debentures which does not affect the
          substance thereof; and

     (e)  for any other purpose not inconsistent with the terms of this
          Indenture, including the correction or rectification of any
          ambiguities, defective or inconsistent provisions, errors or
          omissions herein, provided that, in the opinion of the Trustee and in
          the opinion of Counsel, the rights of the Trustee and of the
          Debentureholders are in no way prejudiced thereby.

Notwithstanding the foregoing, no amendment or supplement to this Indenture may
be made which would have the effect of denying exemption from withholding tax
provided in Subparagraph 212(1)(b)(vii) of the Income Tax Act (Canada) and the
Trustee may at its sole discretion decline to enter into any supplemental
indenture which in its opinion may not afford adequate protection to the
Trustee when the same shall become operative.


<PAGE>
                                      -48-

SECTION 9.2 -- PRIOR APPROVALS

     Notwithstanding anything to the contrary in this Indenture, no supplement
or amendment to this Indenture or to the terms of the Debentures may be made
without the consent of The Toronto Stock Exchange if, at the time, the
Debentures or the Shares are listed on such exchange.

SECTION 9.3 -- SUCCESSOR CORPORATIONS

     The Corporation shall not, directly or indirectly, sell, transfer or
otherwise dispose of all or substantially all of its property and assets as an
entirety to any other corporation and shall not amalgamate or merge with or
into any other corporation (any such other corporation being herein referred to
as a "SUCCESSOR CORPORATION") unless:

     (i)     the successor corporation is a corporation incorporated:

             (A)  under the laws of Canada or any province thereof, or

             (B)  in the United States, Australia, New Zealand or any country
                  in the European Union as of the date hereof if, in the opinion
                  of the Trustee, acting reasonably, the Debentureholders are
                  not economically disadvantaged in any material respect as a
                  result of such transaction (including, without limitation, as
                  a result of the fact that the successor corporation is
                  incorporated or resident in a jurisdiction outside Canada).
                  For purposes of rendering its opinion under this paragraph
                  9.3(i)(B), the Trustee shall be entitled to hire such experts
                  or advisors as it deems necessary and to rely upon the advice
                  of such experts and advisors in supporting its opinion;

     (ii)    the successor corporation shall execute, prior to or
             contemporaneously with the consummation of any such transaction, an
             indenture supplemental hereto together with such other instruments
             as are satisfactory to the Trustee and in the opinion of Counsel
             are necessary or advisable to evidence the assumption by the
             successor corporation of the due and punctual payment of all the
             Debentures and the interest thereon and all other moneys payable
             hereunder and the covenant of the successor corporation to pay the
             same and its agreement to observe and perform all the covenants and
             obligations of the Corporation under this Indenture:

     (iii)   such transaction shall to the satisfaction of the Trustee and in
             the opinion of Counsel be upon such terms as substantially to
             preserve and not to impair any of the rights and powers of the
             Trustee or of the Debentureholders hereunder and will not have the
             effect of denying the exemption from withholding tax provided in
             Subparagraph 212(1)(b)(vii) of the Income Tax Act (Canada); and

     (iv)    no condition or event shall exist as to the Corporation or the
             successor corporation either at the time of or immediately after
             the consummation of any such transaction and after giving full
             effect thereto or immediately after the successor corporation
             complying
<PAGE>
                                      -49-


             with the provisions of clause (i) above which constitute or would
             constitute an event of default hereunder.

SECTION 9.4 - VESTING OF POWERS IN SUCCESSOR

     Whenever the conditions of Section 9.3 have been duly observed and
performed, the successor corporation shall possess and from time to time may
exercise each and every right and power of the Corporation under this Indenture
in the name of the Corporation or otherwise and any act or proceeding by any
provision of this Indenture required to be done or performed by any directors or
officers of the Corporation may be done and performed with like force and effect
by the directors or officers of such successor corporation.


                                   ARTICLE X
                             CONCERNING THE TRUSTEE

SECTION 10.1 - TRUST INDENTURE LEGISLATION

(1)  In this Article, the term "APPLICABLE LEGISLATION" means the provisions of
any statute of Canada or a province thereof, and of regulations under any such
named or other statute, relating to trust indentures and/or to the rights,
duties and obligations of trustees and of corporations under trust indentures,
to the extent that such provisions are at the time in force and applicable to
this Indenture.

(2)  If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with a mandatory requirement of Applicable Legislation, such
mandatory requirement shall prevail.

(3)  The Corporation and the Trustee agree that each will at all times in
relation to this Indenture and any action to be taken hereunder observe and
comply with and be entitled to the benefit of Applicable Legislation.

SECTION 10.2 - RIGHTS AND DUTIES OF TRUSTEE

(1)  In the exercise of the rights and duties prescribed or conferred by the
terms of this Indenture, the Trustee shall act honestly and in good faith with a
view to the best interests of the Debentureholders and shall exercise that
degree of care, diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances. No provision of this Indenture shall be
construed to relieve the Trustee from, or require any other person to indemnify
the Trustee against, liability for its own negligence, wilful misconduct or bad
faith.

(2)  The Trustee shall not be bound to give any notice or do or take any act,
action or proceeding by virtue of the powers conferred on it hereby unless and
until it shall have been required so to do under the terms hereof; nor shall the
Trustee be required to take notice of any default hereunder, unless and until
notified in writing of such default, which notice shall distinctly specify the
<PAGE>
                                      -50-


default desired to be brought to the attention of the Trustee and in the absence
of any such notice the Trustee may for all purposes of this Indenture
conclusively assume that no default has been made in the observance or
performance of any of the representations, warranties, covenants, agreements or
conditions contained herein. Any such notice shall in no way limit any
discretion herein given the Trustee to determine whether or not the Trustee
shall take action with respect to any default.

(3)  Subject only to Subsection 10.2(1), the Trustee shall not be bound to do or
take any act, action or proceeding for the enforcement of any of the obligations
of the Corporation under this Indenture unless and until it shall have received
a Debentureholders' Request specifying the act, action or proceeding which the
Trustee is requested to take. The obligation of the Trustee to commence or
continue any act, action or proceeding for the purpose of enforcing any rights
of the Trustee or the Debentureholders hereunder shall be conditional upon the
Debentureholders furnishing, when required by notice in writing by the Trustee,
sufficient funds to commence or continue such act, action or proceeding and an
indemnity reasonably satisfactory to the Trustee to protect and hold harmless
the Trustee against the costs, charges and expenses and liabilities to be
incurred thereby and any loss and damage it may suffer by reason thereof. None
of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers unless indemnified as aforesaid.

(4)  The Trustee may, before commencing or at any time during the continuance of
any such act, action or proceeding, require the Debentureholders, at whose
instance it is acting, to deposit with the Trustee the Debentures held by them,
for which Debentures the Trustee shall issue receipts.

(5)  Every provision of this Indenture that by its terms relieves the Trustee of
liability or entitles it to rely upon any evidence submitted to it is subject to
the provisions of Applicable Legislation, of this Section 10.2 and of Section
10.3.

SECTION 10.3 - EVIDENCE, EXPERTS AND ADVISERS

(1)  In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Corporation shall furnish to the Trustee such
additional evidence of compliance with any provision hereof in such form as may
be prescribed by Applicable Legislation, or as the Trustee may reasonably
require by written notice to the Corporation.

(2)  In the exercise of its rights and duties hereunder, the Trustee may, if it
is acting in good faith, act and rely as to the truth of the statements and the
accuracy of the opinions expressed therein, upon statutory declarations,
opinions, reports, written requests, consents, or orders of the Corporation,
certificates of the Corporation or other evidence furnished to the Trustee,
provided that such evidence complies with Applicable Legislation and the Trustee
examines the same and determines that such evidence complies with the applicable
requirements of this Indenture.

(3)  Whenever Applicable Legislation requires the evidence referred to in
Subsection 10.3(1) to be in the form of a statutory declaration, the Trustee may
accept such statutory declaration in lieu
<PAGE>
                                      -51-


of a certificate of the Corporation required by any provision hereof. Any such
statutory declaration may be made by one or more of the president or a
vice-president of the Corporation.

(4)  Proof of the execution of an instrument in writing, including a
Debentureholders' Request, by any Debentureholder may be made by the certificate
of a notary public, or other officer with similar powers, that the person
signing such instrument acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution or in any other manner which the
Trustee may consider adequate.

(5)  The Trustee may employ or retain such counsel, accountants, appraisers or
other experts or advisers as it may reasonably require for the purpose of
determining and discharging its duties hereunder and may pay reasonable
remuneration for all services so performed by any of them, without taxation of
costs of any counsel, and shall not be responsible for any misconduct on the
part of any of them. Any remuneration so paid by the Trustee shall be repaid to
the Trustee by the Corporation in accordance with Section 5.2.

SECTION 10.4 - DOCUMENTS, MONIES, ETC. HELD BY TRUSTEE

(1)  Any securities, documents or title or other instruments that may at any
time be held by the Trustee subject to the trusts hereof may be placed in the
deposit vaults of the Trustee or of any Canadian chartered bank or trust company
or deposited for safekeeping with any such bank or trust company.

(2)  Unless otherwise provided in this Indenture, any monies held by or on
behalf of the Trustee which under the terms of this Indenture may or ought to be
invested or which may be on deposit with the Trustee or which may be in the
hands of the Trustee, may be invested and reinvested in the name or under the
control of the Trustee in Authorized Investments, provided such securities are
expressed to mature within 90 days after their purchase by the Trustee, on the
written direction of the Corporation until the Trustee shall have declared the
principal of and interest on the Debentures to be due and payable. Any direction
by the Corporation to the Trustee as to the investment of the monies shall be in
writing and shall be provided to the Trustee no later than 9:00 a.m. on the day
on which the investment is to be made. Any such direction received by the
Trustee after 9:00 a.m. or received on a non-Business Day, shall be deemed to
have been given prior to 9:00 a.m. the next Business Day.

(3)  Pending the investment of any monies as hereinbefore provided, such monies
may be deposited in the name of the Trustee in any chartered bank in Canada or
any loan or trust company authorized to accept deposits under the laws of Canada
or any province thereof at the rate of interest (if any) then current on similar
deposits.

(4)  Unless and until the Trustee shall have declared the principal of and
interest on the Debentures to be due and payable, the Trustee shall pay over to
the Corporation all interest received by the Trustee in respect of any
investments or deposits made pursuant to the provisions of this Section.
<PAGE>
                                      -52-

SECTION 10.5 -- ACTIONS BY TRUSTEE TO PROTECT INTERESTS

     Subject to the provisions of this Indenture and applicable law, the Trustee
shall have the power to institute and to maintain such actions and proceedings
as it may consider necessary or expedient to preserve, protect or enforce its
interests and the interests of the Debentureholders.

SECTION 10.6 -- TRUSTEE NOT REQUIRED TO GIVE SECURITY

     The Trustee shall not be required to give any bond or security in respect
of the execution of the trusts and powers of this Indenture or otherwise.

SECTION 10.7 -- PROTECTION OF TRUSTEE

     By way of supplement to the provisions of any law for the time being
relating to trustees, it is expressly declared and agreed as follows, subject to
Subsection 10.2(1):

(1)  The Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture or in the Debenture Certificates (except the
representations contained in Sections 10.9 and 10.12 or in the certificate of
the Trustee on the Debenture Certificates) or be required to verify the same,
but all such statements or recitals are and shall be deemed to be made by the
Corporation.

(2)  Nothing herein contained shall impose any obligation on the Trustee to see
to or to require evidence of the registration or filing (or renewal thereof) of
this Indenture or any instrument ancillary or supplemental hereto.

(3)  The Trustee shall not be bound to give notice to any person of the
execution hereof.

(4)  The Trustee shall not incur any liability or responsibility whatsoever or
be in any way responsible for the consequence of any breach on the part of the
Corporation of any of the covenants herein contained or of any acts of any
directors, officers, employees, agents or servants of the Corporation.

(5)  The Corporation hereby indemnifies and saves harmless the Trustee and its
officers from and against any and all liabilities, losses, costs, claims,
actions or demands whatsoever which may be brought against the Trustee or which
it may suffer or incur as a result of or arising out of the performance of its
duties and obligations under this Indenture, save only in the event of the
negligent action, the negligent failure to act, or the wilful misconduct or bad
faith of the Trustee. It is understood and agreed that this indemnification
shall survive the termination or discharge of this Indenture or the resignation
or replacement of the Trustee.
<PAGE>
                                      -53-


SECTION 10.8 - REPLACEMENT OF TRUSTEE

     (1)  The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder by giving to the Corporation not less than 30
days' prior notice in writing or such shorter prior notice as the Corporation
may accept as sufficient. The Debentureholders by extraordinary resolution shall
have the power at any time to remove the existing Trustee and to appoint a new
trustee. In the event of the Trustee resigning or being removed as aforesaid or
being dissolved, becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, the Corporation shall forthwith appoint a new
trustee unless a new trustee has already been appointed by the Debentureholders.
Failing such appointment by the Corporation, the retiring Trustee at the
expense of the Corporation or any Debentureholder may apply to a justice of the
Ontario Court of Justice (General Division), on such notice as such justice may
direct, for the appointment of a new trustee. Any new trustee so appointed by
the Corporation or by the Court shall be subject to removal as aforesaid by the
Debentureholders. Any new trustee appointed under any provision of this Section
10.8 shall be a corporation authorized to carry on the business of a trust
company in each of the Provinces of Canada. On any such appointment the new
trustee shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as Trustee without
any further assurance, conveyance, act or deed. There shall be immediately
executed, at the expense of the Corporation, all such conveyances or other
instruments as may, in the opinion of counsel, be necessary or advisable for the
purpose of assuring the same to the new trustee. Any resignation or removal of
the Trustee and appointment of a successor trustee shall not become effective
until the successor trustee shall have executed an appropriate instrument
accepting such appointment and, at the request of the Corporation, the
predecessor Trustee, upon payment of its outstanding remuneration and expenses,
shall execute and deliver to the successor trustee an appropriate instrument
transferring to such successor trustee all rights and powers of the Trustee
hereunder and all securities, documents of title, or other instruments and all
monies and property held by the Trustee hereunder.

     (2)  Upon the appointment of a successor trustee, the Corporation shall
promptly notify the Debentureholders thereof in the manner provided for in
Section 12.2.

     (3)  Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation succeeding to the trust
business of the Trustee, shall be the successor to the Trustee hereunder
without any further act on its part or of any of the parties hereto provided
that such corporation would be eligible for appointment as a new Trustee under
Subsection 10.8(1).

     (4)  Any Debentures certified but not delivered by a predecessor Trustee
may be certified by the successor trustee in the name of the predecessor or
successor trustee.

SECTION 10.9 - CONFLICT OF INTEREST

     (1)  The Trustee represents to the Corporation that at the time of
execution and delivery hereof no material conflict of interest exists in the
Trustee's role as a fiduciary hereunder and agrees that in the event of a
material conflict of interest arising hereafter it will, within 90 days after
ascertaining that it has such a material conflict of interest, either eliminate
the same or resign its trust hereunder to a successor trustee approved by the
Corporation. If any such material conflict of interest

<PAGE>
                                      -54-

exists or hereafter shall exist, the validity and enforceability of this
Indenture and the Debenture Certificates shall not be affected in any manner
whatsoever by reason thereof.

(2)  The Trustee, in its personal or any other capacity, may buy, lend upon and
deal in securities of the Corporation and generally may contract and enter into
financial transactions with the Corporation or any Subsidiary of the
Corporation without being liable to account for any profit made thereby.

SECTION 10.10 -- ACCEPTANCE OF TRUST

     The Trustee hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth.

SECTION 10.11 -- TRUSTEE NOT TO BE APPOINTED RECEIVER

     The Trustee and any person related to the Trustee shall not be appointed a
receiver or receiver and manager or liquidator of all or any part of the assets
or undertaking of the Corporation.

SECTION 10.12 -- AUTHORIZATION TO CARRY ON BUSINESS

     The Trustee represents to the Corporation that it is duly authorized and
qualified to carry on the business of a trust company in each of the Provinces
of Canada.

                                   ARTICLE XI
               SUBORDINATION OF DEBENTURES TO SENIOR OBLIGATIONS

SECTION 11.1 -- SUBORDINATION

     The payment of the principal of and interest payable on the Debentures
shall be subordinate and rank junior, to the extent and in the manner set forth
in this Article XI, to the prior payment in full of all Senior Obligations,
whether outstanding on the date of this Indenture or thereafter incurred. This
Indenture shall not restrict the Corporation from incurring additional
indebtedness or from mortgaging, pledging or charging its properties to secure
any indebtedness.

SECTION 11.2 -- PAYMENT ON DISSOLUTION OR WINDING-UP

(1)  In the event of any payment or distribution of assets of the Corporation
upon any liquidation, dissolution or winding-up (or similar proceeding) of the
Corporation, whether or not pursuant to any bankruptcy, insolvency,
receivership proceedings or upon any assignment for the benefit of any creditor
thereof, subject to the provisions of Section 11.6:

     (a)  the holders of all Senior Obligations shall first be entitled to
          receive payment in full of the principal thereof, and premium, if any,
          and interest thereon and all other amounts
<PAGE>
                                     - 55 -


          owing in respect thereof, or such payment shall be duly provided for,
          before the holders of the Debentures shall be entitled to receive any
          payment of or upon the principal of or interest on the Debentures;

     (b)  the Debentureholders by their acceptance of Debentures assign to the
          holders of Senior Obligations or the Designated Representatives
          thereof, for the purposes and to the extent set forth in this clause
          (b), all their right and title and interest to and in any payment or
          distribution of assets of the Corporation of any kind or character,
          whether in cash, property or securities, to which the Debentureholders
          or the Trustee (for their benefit) would be entitled but for the
          provisions of this Section 11.2, and the Trustee shall take such steps
          as may be necessary or appropriate to entitle the holders of Senior
          Obligations or the Designated Representatives thereof to receive such
          payment or distribution directly from the liquidating trustee or agent
          or other person making such payment or distribution, whether a trustee
          in bankruptcy, a receiver or other liquidating agent, rateably
          according to the aggregate amounts remaining unpaid on the Senior
          Obligations held or represented by each, all to the extent necessary
          to provide for payment of all Senior Obligations in full (after giving
          effect to any concurrent payment or distribution to the holders of
          such Senior Obligations or provision therefor), prior to any payment
          upon the principal of or interest on the Debentures; and

     (c)  in the event, notwithstanding the provisions of clauses (a) and (b) of
          this Subsection (1), any payment or distribution of assets of the
          Corporation of any kind or character (other than Shares or cash duly
          delivered upon the conversion of Debentures pursuant to Article IV
          hereof) in respect of the principal of or interest on the Debentures,
          whether in cash, property or securities, shall be received by the
          Trustee or by any Debentureholder before all Senior Obligations shall
          have been paid in full or duly provided for, such payment or
          distribution shall be held by the recipient in trust (which trust is
          hereby declared) for the benefit of, and shall be paid over to, the
          holders of Senior Obligations or the Designated Representatives
          thereof, rateably according to the aggregate amount remaining unpaid
          on such Senior Obligations represented by each, to the extent
          necessary to pay all Senior Obligations in full (after giving effect
          to any concurrent payment or distribution to the holders of such
          Senior Obligations or provision thereof).

The consolidation or amalgamation of the Corporation with, or the merger of the
Corporation into, another corporation or the sale, lease or other transfer of
its undertaking, property and assets as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided in
Article IX, shall be deemed not to be a winding-up for the purposes of this
Section 11.2 if such consolidation, amalgamation, merger, or the sale, lease or
other transfer is carried out in compliance with the conditions set forth in
Article IX.

(2)  For the purposes of ascertaining the persons entitled to participate in
any payment or distribution, the holders of Senior Obligations and other
indebtedness, the amount thereof or payable thereon, the amount or amounts
distributed thereon and all other facts pertinent thereto, the Trustee and the
Debentureholders shall be entitled to act and rely upon a certificate
addressed to the Trustee

<PAGE>
                                     - 56 -


and the Debentureholders of a trustee in bankruptcy or other liquidating agent
or of any other person making such payment or distribution.

SECTION 11.3 - SENIOR OBLIGATIONS' DEFAULT

     At any time that a default in the payment of an amount outstanding in
respect of Senior Obligations has occurred and is continuing, and the amount so
outstanding in the aggregate represents in excess of five percent (5%) of the
shareholders' equity of the Corporation determined in accordance with Generally
Accepted Accounting Principles, (any such event being in this Article XI
referred to as a "Senior Obligations' Default") and written notice of such
Senior Obligations' Default, containing reasonable particulars thereof
(including the detail of any calculation required to determine that there is a
Senior Obligations' Default), shall have been received by the Trustee and the
Corporation from the holder or holders of the affected Senior Obligations or the
Designated Representatives thereof, subject to Section 11.6:

     (a)  the Corporation shall not purchase or redeem any Debentures or make
          any payment of the principal of or interest on the Debentures; and

     (b)  if the Trustee shall receive from the Corporation or shall hold any
          amount for payment of the principal of or interest on the Debentures,

          (i)     the Trustee shall hold such amount in trust for the benefit of
                  the holders of Senior Obligations or the Designated
                  Representatives thereof rateably according to, and to the
                  extent of, the aggregate principal amount of each class of
                  such Senior Obligations remaining unpaid at either the time of
                  receipt by the Trustee of such amount from the Corporation or
                  the time of the occurrence of such Senior Obligations'
                  Default, whichever is later, and

          (ii)    the Trustee shall from time to time pay over to the holders
                  of each class of Senior Obligations or the Designated
                  Representatives thereof, from the amount so held in trust for
                  the benefit of such class, so much as shall at the time of
                  such payment by the Trustee have become due, and remain
                  unpaid, of the principal of, and premium, if any, and interest
                  on and all other amounts owing in respect of such class, or,
                  if the amount so due and unpaid shall be greater than the
                  amount so held in trust for the benefit of such class, then
                  the entire amount so held,

provided, however, that if such Senior Obligations' Default shall be cured or
waived, or all amounts that shall have become due for principal of, and premium,
if any, and interest on and all other amounts owing in respect of all Senior
Obligations shall have been paid or duly provided for (whether by the
Corporation or by application by the Trustee as aforesaid or otherwise), and the
Trustee shall have received a certificate of the Corporation to that effect from
the Corporation and either (x) shall have received a similar certificate from
the holder or holders of each class of Senior Obligations which
<PAGE>
                                     -57-

constitutes indebtedness of the Corporation incurred for monies borrowed by the
Corporation or others, or the Designated Representatives thereof, as to the
payment in full or due provision for the payment of all amounts due in respect
of such class, or (y) shall not, within 10 days after written request by the
Trustee to each such holder or the Designated Representative thereof, have
received a statement to the contrary from any such holder or Designated
Representative, such trust for the benefit of the holders of Senior Obligations
and the Designated Representatives thereof shall terminate and any amount still
held by the Trustee shall be applied by it for the purposes for which such
amount shall have been received from the Corporation as aforesaid. In the event
that the Trustee shall make any payment to any Debentureholder contrary to the
provisions of this clause (b), then such Debentureholder shall repay any amount
so received to the Trustee, to be held and applied by the Trustee in accordance
with the provisions of this clause (b). The Trustee shall not have any
obligation to institute a suit, action or proceeding to recover such amount
unless the holder or holders of any such class of Senior Obligations or the
Designated Representative thereof shall have made written request upon the
Trustee to institute such suit, action or proceeding and shall have offered to
the Trustee reasonable indemnity, funding and security against the costs,
expenses and liabilities to be incurred thereon or thereby.

SECTION 11.4 -- SUBROGATION TO SENIOR OBLIGATIONS

     Subject to the payment in full of all Senior Obligations or the making of
due provision for such payment, the holders of the Debentures shall be
subrogated to the rights of the holders of the Senior Obligations to receive
payments or distributions of assets of the Corporation applicable to such Senior
Obligations, to the extent of the application thereto of monies or other assets
which would have been received by the holders of Debentures but for the
provisions of this Article XI, until the principal of and all accrued and
unpaid interest on the Debentures shall be paid in full or duly provided for.

SECTION 11.5 -- RIGHTS OF DEBENTUREHOLDERS RESERVED

     The provisions of this Article XI are and are intended solely for the
purpose of defining the relative rights of the holders of the Debentures and
the holders of Senior Obligations. Nothing in this Article XI or elsewhere in
this Indenture or in the Debentures is intended to or shall impair the
obligation of the Corporation, subject to the rights of the holders of the
Senior Obligations, to pay to the holders of the Debentures the principal of
and interest on the Debentures as and when the same shall become due and
payable in accordance herewith, or affect the relative rights of the holders of
the Debentures and creditors of the Corporation other than the holders of Senior
Obligations, nor shall anything herein or in the Debentures prevent the Trustee
or the holder of any Debenture from exercising all remedies otherwise permitted
by this Indenture upon default under the Debentures or this Indenture, subject
to the rights (if any), under this Article XI, of the holders of Senior
Obligations in respect of any payment or distribution of cash, property or
securities of the Corporation received upon the exercise of any such remedy.

<PAGE>
                                      -58-

SECTION 11.6 - EXCEPTIONS TO SUBORDINATION

     Notwithstanding any other provision of this Article XI or any provision of
the Debentures relating to subordination:

     (a)  if notice of redemption of any Debentures has been mailed, the amount
          necessary to provide for the redemption of such Debentures may be paid
          to the Trustee by the Corporation;

     (b)  any amounts (other than the amounts referred to in clause (c) of this
          Section 11.6) received by the Trustee from the Corporation in
          accordance with the provisions of this Indenture for the purpose of
          making any payments to holders of the Debentures shall be held in
          trust solely for the purpose of making such payments and the Trustee
          may pay or make, and any such holder may receive, any payment or
          distribution from any such amounts and the holders of the Senior
          Obligations and their Designated Representatives shall have no right
          to, or claim in respect of, such amounts, payments or distributions,
          either against the Trustee or such holders, if,

          (i)     in case of a redemption of Debentures, the Trustee shall not
                  have received, prior to the mailing of notice of such
                  redemption, from the Corporation or from the holders of any
                  Senior Obligations or the Designated Representative thereof,
                  written notice that (A) any liquidation, dissolution,
                  winding-up or assignment referred to in Subsection 11.2 has
                  commenced or (B) a Senior Obligations' Default has occurred
                  and is continuing, or

          (ii)    in the case of a deposit for the purposes of any other payment
                  to such holders, the Trustee shall not have received, on or
                  before the tenth day prior to the date on which such payment
                  to such holders is to be made, from the Corporation or from
                  the holders of any Senior Obligations or the Designated
                  Representative thereof, written notice that (A) any
                  liquidation, dissolution, winding-up or assignment referred to
                  in Subsection 11.2(1) has commenced or (B) a Senior
                  Obligations' Default has occurred and is continuing;

     (c)  this Article XI shall not be applicable to any funds which are
          deposited with the Trustee for the purposes of the redemption or
          retirement of Debentures and which constitute the proceeds of the
          substantially concurrent issuance of other debentures or notes
          maturing not earlier than the Debentures which have subordination
          provisions and sinking fund provisions (if any) not less favourable to
          the holders of Senior Obligations than those contained herein or the
          substantially concurrent sale by the Corporation of shares of its
          capital, or both; and

     (d)  this Article XI shall not be applicable to any cash received by the
          Trustee or the holder of any Debenture as a holder of Senior
          Obligations.
<PAGE>
                                      -59-


Notwithstanding this Article XI or any other provision of this Indenture or the
Debenture Certificates, unless and until the Trustee shall have received
written notice thereof as provided in this Article XI, the Trustee shall not be
charged with knowledge of (1) the existence of any facts which would prohibit
the making of any payment of monies by the Trustee or the application of such
monies by the Trustee in accordance with the terms hereof, or (2) the existence
or identification of Senior Obligations or the holders thereof. For such
purpose, the Trustee may act or rely on certificates or other documents filed
by the Corporation, a holder or holders of the Senior Obligations or their
Designated Representatives.

SECTION 11.7 - RENEWAL OR EXTENSION OF SENIOR OBLIGATIONS

(1)   The holders of any Senior Obligations may at any time in their
discretion renew or extend the time of payment of the Senior Obligations so
held or exercise any other of their rights under the Senior Obligations,
including, without limitation, the waiver of default thereunder, all without
notice to or assent from the holders of the Debentures or the Trustee.

(2)  No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of an indenture other agreement under which any class
of Senior Obligations shall have been issued or created or which evidences any
Senior Obligations, shall in any way alter or affect any of the provisions of
this Article XI or of the Debentures relating to the subordination thereof or
shall be construed as a waiver of an Event of Default under this Indenture.

SECTION 11.8 - AUTHORIZATION TO TRUSTEE

     Each holder of Debentures by his acceptance thereof irrevocably authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to assure the subordination provided for in this Article XI, and
appoints the Trustee his agent for any and all such purposes. Without
limitation of the foregoing, the Trustee, for and on behalf of the holders from
time to time of all the Debentures, is authorized and directed, at the expense
of the Corporation, to execute deeds or agreements of subordination from time
to time upon receipt of a written request of the Corporation to that effect.
Any deed or agreement of subordination executed pursuant to this Section 11.8
shall be conclusive evidence that the indebtedness therein specified is Senior
Obligations. The Trustee shall keep on file at its principal office in Toronto,
and shall deliver to the Corporation, a copy of each deed or agreement of
subordination executed and delivered by it pursuant to this Section 11.8.
Nothing contained in this Section 11.8 shall impair the rights of any holders
of Senior Obligations in whose favour a deed or agreement or subordination has
not been so executed and delivered.

SECTION 11.9 - RELATIONSHIP OF TRUSTEE

     The Trustee shall not have any duty or obligation to the holders of Senior
Obligations other than to perform such duties and obligations, and only such
duties and obligations, as are specifically set forth in this Article XI for
the benefit of the holders of Senior Obligations.

<PAGE>

                                     - 60 -


SECTION 11.10 - RESTRICTION ON PURCHASE OF DEBENTURES

     Subject to Section 11.6, the Corporation shall not purchase any Debentures
or make any payment of the principal of or interest on the Debentures or make
any other payments or distributions to any person with respect thereto if,
after giving effect to such action, there would exist any Senior Obligations'
Default or an event which permits the holder or holders of any Senior
Obligations to declare such Senior Obligations due and payable prior to the
stated maturity thereof.


                                  ARTICLE XII
                                    GENERAL

SECTION 12.1 - NOTICE TO THE CORPORATION AND THE TRUSTEE

(1)  Unless herein otherwise expressly provided, any notice to be given
hereunder to the Corporation or the Trustee shall be in writing and shall be
deemed to be validly given if personally delivered or if sent by facsimile or
telecopy:

     (a)  if to the Corporation:

          Co-Steel Inc.
          Scotia Plaza
          Suite 5010, P.O. Box 130
          40 King Street West
          Toronto, Ontario
          M5S 1R1
          Fax: (416) 963-8512

          Attention: Chief Financial Officer

     (b)  if to the Trustee:

          The R-M Trust Company
          393 University Avenue
          Fifth Floor
          Toronto, Ontario
          M5G 2M7
          Fax: (416) 813-4555

          Attention: Vice-President, Corporate Trust Services

and any such notice delivered in accordance with the foregoing shall be deemed
to have been received when delivered or, if telecopied, on the Business Day
following the date such notice has been telecopied.


<PAGE>
                                     -61 -

(2)  The Corporation or the Trustee, as the case may be, may from time to time
notify the other in the manner provided in Subsection 12.1(1) of a change of
address which, from the effective date of such notice and until changed by like
notice, shall be the address of the Corporation or the Trustee, as the case may
be, for all purposes of this Indenture. A copy of any notice of change of
address given pursuant to this Subsection 12.1(2) shall be available for
inspection at the principal office of the Trustee in the City of Toronto by
Debentureholders during normal business hours.

SECTION 12.2 - NOTICE TO DEBENTUREHOLDERS

     Any notice to Debentureholder(s) under the provisions of this Indenture
shall be deemed to be validly given, subject to Section 12.3, if delivered or if
sent by first class mail, postage prepaid, to the holder(s) at their addresses
appearing in one of the registers hereinbefore mentioned. Any notice so
delivered shall be deemed to have been received on the date of delivery or the
Business Day following the date of delivery if such date is not a Business Day,
or if mailed, on the fifth Business Day following the date on which it was
mailed. Accidental error or omission in giving notice or accidental failure to
give notice to any Debentureholder shall not invalidate any action or proceeding
founded thereon.

SECTION 12.3 - MAIL SERVICE INTERRUPTION

(1)  If by reason of any interruption of mail service, actual or threatened, any
notice to be given to the Debentureholders would reasonably be unlikely to reach
its destination in the ordinary course of mail, such notice shall be valid and
effective only if published once (i) in the Cities of Montreal, Toronto,
Winnipeg and Vancouver, such publication to be made in the national edition of
The Globe & Mail or in a daily newspaper of general circulation published in
such cities; and (ii) in such other place or places and manner, if any, as the
Trustee may require.

(2)  Any notice given to the Debentureholders by publication shall be deemed to
have been given on the last day on which publication shall have been effected in
all of the cities in which publication is required pursuant to Subsection
12.3(1).

SECTION 12.4 - COUNTERPARTS AND FORMAL DATE

     This Indenture may be executed in several counterparts, each of which when
so executed shall be deemed to be an original and such counterparts together
shall constitute one and the same instrument and notwithstanding their date of
execution shall be deemed to be dated as of the Execution Date.

SECTION 12.5 - BENEFIT OF PROVISIONS OF INDENTURE AND DEBENTURES

     Except as specifically provided in Section 2.9 and 2.12, nothing in this
Indenture or the Debentures, expressed or implied, shall give or be construed to
give any person other than the parties hereto and the registered holders of the
Debentures any legal or equitable right, remedy or claim under this Indenture,
or under any covenant or provision therein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and the
Debentureholders.
<PAGE>

                                     - 62 -


SECTION 12.6 - GOVERNING LAW

     This Indenture shall be governed and construed in accordance with the laws
of Ontario and the federal laws of Canada applicable therein. Each of the
parties irrevocably attorns to the non-exclusive jurisdiction of the courts of
the Province of Ontario with respect to all matters arising out of this
Indenture.


     IN WITNESS WHEREOF the parties hereto have executed this Indenture under
the hands of their proper signing officers in that behalf.




                                        CO-STEEL INC.


                                        By: /s/ Ronald P. Fournier
                                            ------------------------------------
                                            Ronald P. Fournier
                                            Vice-Chairman and Deputy Chief
                                            Executive Officer


                                        By: /s/ Edward G. Reilly
                                            ------------------------------------
                                            Edward G. Reilly
                                            Vice-President
                                            and Chief Financial Officer




                                        THE R-M TRUST COMPANY


                                        By: /s/ Mahomed Limbada
                                            ------------------------------------
                                            Mahomed Limbada
                                            Account Manager


                                        By: /s/ Geralyn Krowles
                                            ------------------------------------
                                            Geralyn Krowles
                                            Account Officer