<Page>


                                                                   Exhibit 10.29


DEBENTURE

Issued to:        ROYNAT CAPITAL INC.
                  40 KING STREET WEST, 26TH FLOOR
                  TORONTO, ONTARIO

                  FACSIMILE NO. (416) 933-2783


                       REGAL GREETINGS & GIFTS CORPORATION
                            939 EGLINTON AVENUE EAST
                                TORONTO, ONTARIO
                                     M4G 2L6
                             FACSIMILE NO. (      )

                                    DEBENTURE
                                    ---------

$7,000,000                                                    December  14, 2001

1.       Regal Greetings & Gifts Corporation (the "Company") for value received
hereby promises to pay to RoyNat Capital Inc. ("RoyNat"), at its address
specified above, the principal amount of Seven Million Dollars ($7,000,000) in
the manner hereinafter provided, together with all other moneys which may from
time to time be owing hereunder or pursuant hereto.

2.       PRINCIPAL PAYMENTS. Subject to the provisions of this Debenture, the
principal amount of this Debenture shall become due and payable by twelve (12)
quarterly instalments, each in the amount of $150,000, payable on the 15th day
of the last month of each quarterly period from and including January 15, 2004
to and including October 15, 2006 and the balance of the said principal amount,
together with interest thereon and all other monies owing hereunder, shall
become due and payable on the 15th day of January, 2007.

3.       INTEREST. Interest shall be payable on the 15th day of each month on
the balance from time to time outstanding of the principal amount of this
Debenture, any overdue interest and any other monies due and payable hereunder,
both before and after maturity, default or judgment, at 12% per annum (the "Loan
Rate") calculated and compounded monthly, computed from the respective dates of
advance of the moneys by RoyNat to the Company until payment in full of all
moneys owing hereunder. The first interest payment date shall be the 15th day of
the month in which the first advance is made by RoyNat hereunder or, if the
first advance is made after the 15th day of a month, the first interest payment
date shall be the 15th day of the next succeeding month. At the option of
RoyNat, interest accrued may be deducted from proceeds of advances hereunder.

4.       REDEMPTION. This Debenture shall be non-redeemable, in whole or in
part, unless RoyNat, in its sole and absolute discretion and on terms
satisfactory to it in all respects, determines otherwise.

5.       PARTIAL PAYMENTS. In case less than the total principal amount of this
Debenture is redeemed at any time, the principal amount so redeemed shall be
credited against the principal payable hereunder in inverse order of maturity.

6.       SECURITY. As security for the payment of the principal, interest and
all other moneys from time to time payable under this Debenture, and the
performance by the Company of all its obligations hereunder and to better secure
the principal, interest and other monies from time to time secured hereunder,
but subject to Permitted Encumbrances and to the exception as to leaseholds
hereinafter contained, the Company hereby grants a security interest in and
grants, assigns, mortgages and charges, as and by way of a first, fixed and
specific mortgage and charge to and in favour of RoyNat:

         (a)      all real and immoveable property, both freehold and leasehold,
                  now owned or hereafter acquired by the Company, together with
                  all buildings, erections, fixed machinery and fixed equipment
                  presently situated thereon or which may at any time hereafter
                  be constructed or placed thereon or used in connection
                  therewith, including without limitation the property described
                  in Schedule "B" hereto;

         (b)      all furniture, machinery, equipment, vehicles, accessories and
                  other tangible personal property (other than Inventory) now
                  owned or hereafter acquired by the Company or in respect of
                  which the Company now or hereafter has any right, title or
                  interest, together with any proceeds of sale or disposition
                  thereof, and including without limitation the property
                  described in Schedule "C" hereto.

         And for the same consideration and purposes and subject to the same
exceptions, the Company hereby charges as and by way of a first floating charge
to and in favour of RoyNat the undertaking of the Company and all its property
and assets for the time being, both present and future, and of whatsoever nature
and wherever situate (other than property and assets from time to time
effectively subjected to the fixed and specific mortgages and charges created
hereby or by any instrument supplemental hereto).

         Provided that such floating charge shall not prevent the Company from
time to time until the security hereby constituted shall have become enforceable
from selling, leasing or otherwise disposing of the property, rights and assets
included in such floating charge or from making expenditures with a view to the
expansion of its business or from giving security constituting Permitted
Encumbrances, all in the ordinary course of its business and subject to the
provisions of this Debenture. Notwithstanding any other provision of this
Debenture except as provided in the foregoing sentence, the security interests
constituted hereby and by any supplemental security granted to RoyNat shall not
be subordinate to, nor is there any intention to subordinate such security
interests to, any Permitted Encumbrances or security interests held by others.

         All security interests created by this Debenture attach immediately
upon execution of the Debenture. The attachment of the floating charge has not
been postponed and the floating charge shall attach to any particular property
intended to be subject to it as soon as the Company has rights in such property.


<Page>
                                      -2-


         All property and assets of the Company whether specifically charged or
subjected to the floating charge are hereinafter referred to as the "Mortgaged
Premises".

7.       EXCEPTION AS TO LEASEHOLDS. It is hereby declared that the last day of
any term of years reserved by any lease or sublease, verbal or written, or any
agreement therefor, now held or hereafter acquired by the Company is excepted
out of the Mortgaged Premises, but the Company shall stand possessed of any such
reversion upon trust to assign and dispose thereof as RoyNat may direct.

8.       PAYMENTS AND NOTICE. Any payments not received by RoyNat by two o'clock
p.m. on a Business Day shall be deemed to have been received on the next
Business Day. Any notice required or desired to be given hereunder or under any
Offer of Finance or under any instrument supplemental hereto shall be in writing
and may be given by personal delivery, by facsimile or other means of electronic
communication or by sending the same by registered mail, postage prepaid, to
RoyNat or to the Company at their respective addresses set out above and, in the
case of electronic communication, to the facsimile numbers set out above. Any
notice so delivered shall be conclusively deemed given when personally delivered
and any notice sent by facsimile or other means of electronic transmission shall
be deemed to have been delivered on the Business Day following the sending of
the notice, and any notice so mailed shall be conclusively deemed given on the
third Business Day following the day of mailing, provided that in the event of a
known disruption of postal service, notice shall not be given by mail. Any
address for notice or payments herein referred to may be changed by notice in
writing given pursuant hereto.

9.       COVENANTS.

         (a)      This Debenture is issued subject to and with the benefit of
                  all the covenants, terms and conditions in Schedule "A" hereto
                  which Schedule forms a part hereof.

         (b)      In addition to such covenants, terms and conditions, the
                  Company covenants with RoyNat that so long as this Debenture
                  remains outstanding the Company shall:

                  (i)      execute and deliver all such documents as may be
                           necessary to maintain in force the pre-authorized
                           payment system specified in the Offer of Finance;

                  (ii)     not permit the breach of any financial or other
                           material covenant of the Company made in favour of
                           the Bank of Nova Scotia or any other senior operating
                           lender of the Company;

                  (iii)    maintain Consolidated Working Capital at a minimum
                           ratio of 1.75:1;

                  (iv)     not enter into any transaction (whether by way of
                           reconstruction, reorganization, consolidation,
                           amalgamation, merger, transfer, sale, lease or
                           otherwise) whereby all or substantially all of its
                           undertaking or assets (including all or part of the
                           Mortgaged Premises) would become the property of any
                           other person or any person resulting or continuing
                           from such transaction without the prior written
                           consent of RoyNat. For the purposes of this
                           Debenture, person is to be broadly interpreted and
                           shall include an individual, a company, a
                           partnership, a trust, an unincorporated organization,
                           a joint venture, and the executors, administrators or
                           other legal representatives of an individual in such
                           capacity;

                  (v)      not, nor shall it permit any of its subsidiaries to,
                           create, incur, assume or suffer to be created,
                           incurred or assumed, or otherwise become directly or
                           indirectly liable upon or in respect of, or suffer to
                           exist, Funded Indebtedness, unless RoyNat otherwise
                           consents in writing; and

                  (vi)     not act or fail to act in any way which would result
                           in any breach of the covenants set out in Section
                           2.1.10 of the unanimous shareholders agreement
                           between the Company, RoyNat, MDC Corporation Inc.,
                           RGG Acquisition Inc. and McGuggan LLP dated as of
                           December 14, 2001.

10.      OFFER OF FINANCE. This Debenture is being issued by the Company to
RoyNat pursuant to the terms of a certain letter agreement between RGG
Acquisition Inc. and RoyNat dated December 5, 2001 (such letter agreement
including any amendments thereto being herein called the "Offer of Finance").
All terms and conditions of the Offer of Finance shall remain in full force and
effect, except to the extent inconsistent with the provisions of this Debenture.

11.      MAXIMUM RECOVERY. If any amounts, whether on account of interest, fees,
bonus or additional consideration, becomes payable to or is received by RoyNat
pursuant to this Debenture, the Offer of Finance, any other security document or
other agreement which would exceed the maximum amount recoverable under
applicable law on moneys advanced by RoyNat:

         (a)      any amounts so payable shall be reduced and are hereby limited
                  to the maximum amount recoverable under applicable law;

         (b)      any amounts so received by RoyNat shall, at RoyNat's option,
                  either be returned to the Company or, notwithstanding Section
                  4 hereof, be deemed to have been received by RoyNat as a
                  partial redemption of this Debenture and shall be credited
                  against principal payable hereunder in inverse order of
                  maturity; and

         (c)      if paragraph (a) requires the reduction in an amount or
                  amounts payable to RoyNat, RoyNat in its sole discretion shall
                  determine which amount or amounts shall be reduced to ensure
                  compliance with this Section 11.

12.      EXTENSIONS AND AMENDMENTS. Any agreement for the extension of the time
of payment of the moneys hereby secured or any part thereof made at, before or
after maturity, and prior to the execution of a discharge or release of this
Debenture, or any agreement for altering the term, rate of interest (whether
increased or decreased), the amount of the principal payments hereunder or any
other covenant or condition hereof, need not be registered in any office of
public record but shall be effectual and binding upon the Company and upon every
subsequent mortgagee, chargee, encumbrancer or other person claiming an interest
in the Mortgaged Premises or any part thereof when executed by the Company and
delivered to RoyNat.


<Page>
                                      -3-


13.      RECEIPT. The Company hereby acknowledges receipt of a true copy of this
Debenture and, to the extent permitted by law, waives all rights to receive from
RoyNat a copy of any financing statement or financing change statement filed, or
any verification statement received, at any time in respect of this Debenture or
any supplemental or collateral security granted to RoyNat.

14.      BINDING EFFECT, GOVERNING LAW AND HEADINGS. These presents are binding
upon the parties hereto and their respective successors and assigns. This
Debenture shall be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein. The division of
this Debenture into sections and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of
this Debenture.

15.      INVALIDITY, ETC. Each of the provisions contained in this Debenture is
distinct and severable and a declaration of invalidity, illegality or
unenforceability of any such provision or part thereof by a court of competent
jurisdiction shall not affect the validity or enforceability of any other
provision of Debenture.

16.      INTEREST CALCULATION. Interest payable on the Debenture shall be
payable both before and after demand, default and judgment at the Loan Rate with
interest on overdue interest at the same rate. For the purposes of THE INTEREST
ACT (Canada), the yearly rate of interest to which the rate of interest per
annum is payable on or is in respect of amounts owing on the Debenture shall be
calculated on the basis of a 365 day year.

17.      TRANSFERS. This Debenture and the rights hereunder are transferable by
RoyNat without the consent of the Company. In the event that RoyNat effects a
partial transfer of this Debenture, RoyNat shall advise the Company of the name,
address and facsimile number of the transferee, the portion of this Debenture
transferred and the date of transfer and the Company shall forthwith thereafter
issue RoyNat and the transferee a replacement Debenture with terms identical to
this Debenture (save for the principal amount owing) without cost or charge to
RoyNat or the transferee, and this Debenture shall thereafter be deemed
surrendered. RoyNat and any transferee hereof shall be entitled to the rights
evidenced by this Debenture free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate holder
of this Debenture.

FOR ALBERTA AND SASKATCHEWAN

18.      WAIVER OF CERTAIN LEGISLATION. The Company hereby declares and
covenants that:

         (a)      THE LAND CONTRACTS (ACTIONS) ACT (Saskatchewan) shall have no
                  application to any action as defined in THE LAND CONTRACTS
                  (ACTIONS) ACT with respect to this Debenture, any of the
                  Mortgaged Premises or any supplemental or collateral security
                  granted to RoyNat;

         (b)      THE LIMITATION OF CIVIL RIGHTS ACT (Saskatchewan) shall have
                  no application to: (i) this Debenture; (ii) any indenture,
                  instrument or agreement entered into by the Company, at any
                  time hereafter, supplemental, collateral or ancillary hereto
                  or in implementation of this Debenture or the Offer of Finance
                  and involving the payment by the Company of money or the
                  liability of the Company to pay money; (iii) any mortgage,
                  charge or other security for the payment of the money made,
                  given or created by this Debenture; (iv) any instrument or
                  agreement entered into by the Company at any time hereafter,
                  renewing or extending or collateral to this Debenture or any
                  other security given to RoyNat by the Company; or (v) the
                  rights, powers or remedies of RoyNat or a Receiver or any
                  other person under this Debenture or under any other security
                  granted by the Company to RoyNat or instrument or agreement
                  collateral, supplemental or ancillary hereto or referred to in
                  this Debenture; and

         (c)      to the extent permitted by law, the Company expressly waives
                  its rights under the ALBERTA INSURANCE ACT and THE FIRE
                  PREVENTION (METROPOLIS) ACT, 1774 (GEO III, Ch. 78).

FOR BRITISH COLUMBIA

19.      RIGHT OF CONSOLIDATION.

         (a)      The right of consolidation shall apply to this Debenture
                  notwithstanding Section 31 of the PROPERTY LAW ACT of British
                  Columbia or any similar statutory provision in force from time
                  to time.

         (b)      For the purposes of Section 203 of the LAND TITLE ACT (British
                  Columbia), the floating charge hereby created over the
                  Borrower's real and immovable property, both freehold and
                  leasehold, shall become a fixed charge thereon upon the
                  earlier of:

                  (i)      the occurrence of an event described in Sections
                           9(e), (f), (g) or (h) of Schedule "A" hereto; or

                  (ii)     RoyNat taking any action pursuant to Section 10 of
                           Schedule "A" hereto to enforce and realize on the
                           security hereby constituted.

         IN WITNESS WHEREOF the Company has executed this Debenture.

                                             REGAL GREETINGS & GIFTS CORPORATION


                                             By:
                                                --------------------------------
                                                Name:  Anthony R. Calandra
                                                Title: Vice-President

<Page>


                                  SCHEDULE "A"
                                  ------------

1.       THE COMPANY HEREBY DECLARES, COVENANTS AND AGREES THAT IT:

         (a)      AS TO TITLE - is the sole legal and beneficial owner of the
                  Mortgaged Premises and owns the same free of all encumbrances
                  other than Permitted Encumbrances;

         (b)      FURTHER ASSURANCES - shall at its expense on the request of
                  RoyNat, execute and deliver to RoyNat such further assurances
                  and documents as RoyNat may require to perfect RoyNat's
                  security on all or any part of the Mortgaged Premises, or to
                  specifically charge any or all of the property then subject to
                  the floating charge created hereby;

         (c)      PAY COSTS - shall pay all costs and expenses (including legal
                  fees and disbursements on a solicitor and own client basis) of
                  RoyNat incidental to or which in any way relates to this
                  Debenture or its enforcement including (i) the preparation,
                  execution and filing of this Debenture and any instruments
                  postponing, discharging, amending, extending or supplemental
                  to this Debenture or any security required by any Offer of
                  Finance ("RoyNat's Security"); (ii) perfecting and keeping
                  perfected RoyNat's Security; (iii) maintaining the intended
                  priority of RoyNat's Security on all or any part of the
                  Mortgaged Premises; (iv) taking, recovering or possessing the
                  Mortgaged Premises; (v) taking any actions or other
                  proceedings to enforce the remedies provided herein or
                  otherwise in relation to this Debenture or the Mortgaged
                  Premises, or by reason of a default hereunder or the
                  non-payment of the moneys hereby secured; (vi) taking
                  proceedings, giving notices and giving responses required
                  under any applicable law concerning or relating to RoyNat's
                  Security, including compliance with the provisions of
                  applicable bankruptcy, insolvency, personal property security
                  and mortgage enforcement legislation; (vii) any inspections
                  required to be made to the Mortgaged Premises, or the review
                  of any plans, specifications or other documentation which may
                  require the approval or consent of RoyNat; (viii) responding
                  to or participating in proceedings in the nature of those
                  described in Sections 9(e), (f) and (g) hereof; and (ix)
                  obtaining the advice of counsel and other advisors in relation
                  to the foregoing;

                  all such costs and expenses and other monies payable
                  hereunder, together with interest at the Loan Rate, shall be
                  payable on demand and shall upon being incurred by RoyNat be
                  secured hereby and constitute a charge on the Mortgaged
                  Premises and any proceeds of realization;

         (d)      TO PAY RENTS AND TAXES - shall pay all rents, taxes and
                  assessments lawfully imposed upon the Mortgaged Premises or
                  any part thereof and upon the income and profits of the
                  Company when the same become due and payable, shall show to
                  RoyNat on request receipts for such payment;

         (e)      TO MAINTAIN CORPORATE EXISTENCE AND SECURITY - shall maintain
                  its corporate existence, shall keep the Mortgaged Premises in
                  good condition and repair, shall maintain the security hereby
                  created as a valid and effective security at all times so long
                  as any moneys are outstanding hereunder, shall carry on and
                  conduct its business in a proper and efficient manner and in
                  accordance with all applicable law, shall not materially alter
                  the kind of business carried on by it, shall advise RoyNat
                  promptly in writing of any proposed change in its name, shall
                  observe and perform all of its obligations under leases,
                  licences and other agreements to which it is a party so as to
                  preserve and protect the Mortgaged Premises and the income
                  therefrom, and shall keep proper books of accounts with
                  correct entries of all transactions in relation to its
                  business. The Company acknowledges, covenants and agrees that
                  if it amalgamates with any other company or companies, then
                  (i) the Mortgaged Premises and the security interests created
                  by this Debenture will extend to and include all the property
                  and assets of the amalgamated Company and to any property or
                  assets of the amalgamated Company thereafter owned or
                  acquired, (ii) the term "Company", where used in this
                  Debenture, will extend to and include the amalgamated Company;

         (f)      NOT TO SELL - shall not, except as otherwise permitted
                  hereunder, remove, destroy, lease, sell or otherwise dispose
                  of any of the Mortgaged Premises; provided that the Company
                  may sell or otherwise dispose of furniture, machinery,
                  equipment, vehicles and accessories which have become worn out
                  or damaged or otherwise unsuitable for their purposes on
                  condition that it shall substitute therefor, subject to the
                  lien hereof and free from prior liens or charges, property of
                  equal value so that the security hereby constituted shall not
                  thereby be in any way reduced or impaired;

         (g)      NO OTHER LIENS - shall not create, assume or suffer to exist
                  any charge, lien, security interest or encumbrance upon any
                  Mortgaged Premises ranking or purporting to rank in priority
                  to or pari passu with the security interest created hereunder,
                  other than Permitted Encumbrances; provided that no provision
                  hereof shall be construed as a subordination or postponement
                  of the security interest created hereunder to or in favour of
                  any other charge, lien, security interest or encumbrance,
                  whether or not it is a Permitted Encumbrance;

         (h)      TO HOLD PROCEEDS OF UNAUTHORIZED SALE IN TRUST - in the event
                  the Mortgaged Premises or any part thereof are sold or
                  disposed of prior to the full discharge of this Debenture by
                  RoyNat, in any manner not authorized by this Debenture, shall
                  hold all proceeds of such sale or disposition received by the
                  Company as trustee for RoyNat until the Company has been fully
                  released from this Debenture by RoyNat;

         (i)      TO INSURE - shall keep insured the Mortgaged Premises with
                  reputable insurers approved by RoyNat in such amounts against
                  loss or damage by fire and other causes or perils as RoyNat
                  may reasonably require and shall pay all premiums necessary
                  for such purposes as the same shall become due. All policies
                  of insurance issued in respect of the Mortgaged Premises and
                  all proceeds thereof are hereby assigned to RoyNat as security
                  for the Company's obligations hereunder. Each policy of
                  insurance shall show RoyNat as loss payee, as its interest may
                  appear, shall contain such mortgage clauses as RoyNat may
                  require, shall be in terms satisfactory to RoyNat and, at the
                  request of RoyNat, shall be delivered to and held by RoyNat
                  subject to the rights of holders of Permitted Encumbrances;


<Page>
                                      -2-


         (j)      TO FURNISH PROOFS - shall forthwith on the happening of any
                  loss or damage furnish at its expense all necessary proofs and
                  do all necessary acts to enable RoyNat to obtain payment of
                  the insurance moneys subject to the rights of holders of
                  Permitted Encumbrances;

         (k)      INSPECTION BY ROYNAT - shall allow any employees or third
                  parties retained by RoyNat at any reasonable time to enter the
                  premises of the Company to inspect the Mortgaged Premises,
                  including without limitation the right to undertake soil,
                  ground water, environmental or other tests, measurements or
                  surveys in, on or below the Mortgaged Premises, and to inspect
                  the books and records of the Company and make extracts
                  therefrom, and shall permit RoyNat prompt access to such other
                  persons as RoyNat may deem necessary or desirable for the
                  purposes of inspecting or verifying any matters relating to
                  any part of the Mortgaged Premises or the books and records of
                  the Company, provided that any information so obtained shall
                  be kept confidential, save as required by RoyNat in exercising
                  its rights hereunder or pursuant to any applicable law or
                  court order. The Company shall pay all costs and expenses of
                  third parties (including legal fees and disbursements on a
                  solicitor and own client basis) retained by RoyNat for
                  purposes of inspection under this Section 1(k);

         (l)      DELIVER FINANCIAL STATEMENTS - shall deliver to RoyNat within
                  90 days of the close of each financial year of the Company one
                  copy of the audited annual financial statements for that year,
                  including the balance sheet and statements of income, retained
                  earnings and changes in financial position accompanied by the
                  report of the Company's auditors, and such other statements or
                  reports as may be required by RoyNat in the Offer of Finance,
                  and within 15 days after each month, one copy of the interim
                  financial statements signed by an authorized officer of the
                  Company, all of which financial statements shall be prepared
                  in accordance with generally accepted accounting principles;
                  and shall at the same time deliver to RoyNat copies of all
                  management reports prepared by the auditors of the Company
                  together with any other statements stipulated in the Offer of
                  Finance;

         (m)      NOT TO CREATE CERTAIN CHARGES - without the prior written
                  consent of RoyNat, shall not create or suffer to exist any
                  charge or encumbrance over all or any portion of the Mortgaged
                  Premises ranking or purporting to rank prior to or pari passu
                  with the charges hereof, other than Permitted Encumbrances,
                  and shall not permit any subsidiary to mortgage, charge or
                  otherwise encumber any of its property or assets or issue any
                  bonds, debentures, shares or other securities, except to the
                  Company;

         (n)      NOT TO REMOVE - prior to the removal of any of the Mortgaged
                  Premises from the province in which it is situated at the date
                  of this Debenture or to leasehold property, the Company shall
                  effect such further registrations and obtain such other
                  consents and give such other security, at the sole cost and
                  expense of the Company, as may be required or desirable to
                  protect or preserve the security hereby created, and the
                  Company shall forthwith notify RoyNat of the intended removal
                  and the action proposed to be taken.

         (o)      NO ACTIONS - has received no notice of and has no knowledge of
                  any pending, potential or threatened litigation or claim for
                  judicial or administrative action which would adversely affect
                  the Mortgaged Premises or their use or market value;

         (p)      COMPLIANCE WITH ENVIRONMENTAL LAWS -

                  (i)      shall conduct and maintain its business, operations
                           and the Mortgaged Premises so as to comply in all
                           respects with all applicable Environmental Laws,
                           including obtaining all necessary licenses, permits,
                           consents and approvals required to own or operate the
                           Mortgaged Premises and the business carried out on,
                           at or from the Mortgaged Premises;

                  (ii)     except as specifically permitted by RoyNat in
                           writing, the Company shall not permit or suffer to
                           exist, Contaminants or dangerous or potentially
                           dangerous conditions in, on or below the Mortgaged
                           Premises including, without limitation, any
                           polychlorinated biphenyls, radio-active substances,
                           underground storage tanks, asbestos or urea
                           formaldehyde foam insulation;

                  (iii)    has no knowledge of the existence of Contaminants or
                           dangerous or potentially dangerous conditions at, on
                           or under the Mortgaged Premises or any properties in
                           the vicinity of the Mortgaged Premises which could
                           affect the Mortgaged Premises or the market value
                           thereof or in levels that exceed the standards in
                           Environmental Laws;

                  (iv)     has no knowledge of the Mortgaged Premises, or any
                           portion thereof, having been used for the disposal of
                           waste;

                  (v)      has not given or received, nor does it have an
                           obligation to give, any notice, claim, communication
                           or information regarding any past, present, planned
                           or threatened treatment, storage, disposal, presence,
                           release or spill of any Contaminant at, on, under or
                           from the Mortgaged Premises or any property in the
                           vicinity of the Mortgaged Premises, including any
                           notice pursuant to any Environmental Laws or any
                           environmental report or audit. The Company shall
                           notify RoyNat promptly and in reasonable detail upon
                           receipt of any such claim, notice, communication or
                           information or if the Company becomes aware of any
                           violation or potential violation of the Company of
                           any Environmental Laws and shall describe therein the
                           action which the Company intends to take with respect
                           to such matter;

                  (vi)     shall at the Company's expense establish and maintain
                           a system to assure and monitor continued compliance
                           with, and to prevent the contravention of,
                           Environmental Laws, which system shall include
                           periodic reviews of such compliance system and the
                           Company shall provide an annual report to RoyNat
                           regarding the Company's environmental performance,
                           and the effectiveness of such system;

<Page>
                                      -3-



                  (vii)    shall promptly advise RoyNat in writing of any
                           material adverse change in the environmental or other
                           legal requirements affecting the Company or the
                           Mortgaged Premises upon the Company becoming aware of
                           any such change, and the Company shall provide RoyNat
                           with a copy of any of the orders, by-laws, agreements
                           or other documents pursuant to which any such change
                           is effected or documented;

                  (viii)   shall at the Company's expense promptly take or cause
                           to be taken any and all necessary remedial or
                           clean-up action in response to the presence, storage,
                           use, disposal, transportation, release or discharge
                           of any Contaminant in, on, under or about any of the
                           Mortgaged Premises, or used by the Company, in
                           compliance with all material laws including, without
                           limitation, Environmental Laws, and in accordance
                           with the orders and directions of all applicable
                           federal, state, provincial, municipal and local
                           governmental authorities;

                  (ix)     shall deliver to RoyNat a true and complete copy of
                           all environmental audits, evaluations, assessments,
                           studies or tests relating to the Mortgaged Premises
                           or the Company now in its possession or control or
                           forthwith after the completion thereof, or upon such
                           materials coming into the Company's possession or
                           control;

                  (x)      shall at the Company's expense, if reasonably
                           requested by RoyNat in writing, retain an
                           environmental consultant acceptable to RoyNat, acting
                           reasonably, to undertake environmental tests and to
                           prepare a report or audit with respect to the
                           Mortgaged Premises and deliver same to RoyNat for its
                           review; and

                  (xi)     shall indemnify and save harmless RoyNat, its
                           officers, directors, employees, agents and
                           shareholders from and against all losses,
                           liabilities, damages or costs (including legal fees
                           and disbursements on a solicitor and own client
                           basis) suffered including, without limitation, the
                           cost or expense of any environmental investigation,
                           the preparation of any environmental or similar
                           report, and the costs of any remediation arising from
                           or relating to any breach of the foregoing covenants
                           of this Section 1(p), any breach by the Company or
                           any other person now or hereafter having an interest
                           in the Mortgaged Premises which is asserted or
                           claimed against RoyNat; the presence, in any form, of
                           any Contaminant on or under the Mortgaged Premises,
                           or the discharge, release, spill or disposal of any
                           contaminant by the Company, which is asserted or
                           claimed against any of these indemnified persons.
                           This indemnity shall survive the payment in full of
                           all amounts secured hereunder and the discharge of
                           this Debenture. RoyNat shall hold the benefit of this
                           indemnity in trust for those indemnified persons who
                           are not parties to this Debenture.

2.       WAIVER OF COVENANTS. RoyNat may waive in writing any breach by the
Company of any of the provisions contained in this Debenture or any default by
the Company in the observance or performance of any covenant or condition
required to be observed or performed by the Company hereunder, provided that no
such waiver or any other act, failure to act or omission by RoyNat shall extend
to or be taken in any manner to affect any subsequent breach or default or the
rights of RoyNat resulting therefrom.

3.       PERFORMANCE OF COVENANTS BY ROYNAT. If the Company shall fail to
perform any covenant on its part herein contained, RoyNat may in its absolute
discretion perform any such covenant capable of being performed by it, but
RoyNat shall be under no obligation to do so. If any such covenant requires the
payment of money or if the Mortgaged Premises or any part thereof shall become
subject to any charge ranking in priority to the lien hereof, RoyNat may in its
absolute discretion make such payment and/or pay or discharge such charge, but
shall be under no obligation to do so. All sums so paid by RoyNat, together with
interest at the Loan Rate, shall be payable by the Company on demand and shall
constitute a charge upon the Mortgaged Premises. No such performance or payment
shall relieve the Company from any default hereunder or any consequences of such
default.

4.       APPOINTMENT OF MONITOR. If in the opinion of RoyNat, acting reasonably,
a material adverse change has occurred in the financial condition of the
Company, or if RoyNat in good faith believes that the ability of the Company to
pay any of its obligations to RoyNat or to perform any other covenant contained
herein has become impaired or if an event of default has occurred, RoyNat may by
written notice to the Company, appoint a monitor (the "Monitor") to investigate
any or a particular aspect of the Company or its business and affairs for the
purpose of reporting to RoyNat. The Company shall give the Monitor its full
co-operation, including full access to facilities, assets and records of the
Company and to its creditors, customers, contractors, officers, directors,
employees, auditors, legal counsel and agents. The Monitor shall have no
responsibility for the affairs of the Company nor shall it participate in the
management of the Company's affairs and shall incur no liability in respect
thereof or otherwise in connection with the Company, its business and affairs or
the Mortgaged Premises. The Monitor shall act solely on behalf of RoyNat and
shall have no contractual relationship with the Company as a consultant or
otherwise. The appointment of a Monitor shall not be regarded as an act of
enforcement of this Debenture. All reasonable fees and expenses of the Monitor
(including legal fees and disbursements on a solicitor and own client basis)
shall be paid by the Company upon submission to it of a written invoice
therefor. RoyNat may at its option upon the occurrence of an event of default
appoint or seek to have appointed the Monitor as Receiver, receiver and manager,
liquidator, or trustee in bankruptcy of the Company or the Mortgaged Premises or
any part thereof.

5.       APPLICATION OF INSURANCE PROCEEDS. Any insurance moneys received by
RoyNat pursuant to Sections 1(i) and/or 1(j) above may at the option of RoyNat
be applied to rebuilding or repairing the Mortgaged Premises, or be paid to the
Company, or any such moneys or any insurance moneys received by RoyNat upon the
death of any person whose life is insured under any policy of insurance assigned
to RoyNat as security for the obligations of the Company hereunder may be
applied in the sole discretion of RoyNat, in whole or in part, to the repayment
of the principal amount hereby secured or any part thereof whether then due or
not, with any partial payments to be credited against principal instalments
payable hereunder in inverse order of their maturity dates.

6.       NO MERGER OR NOVATION. The taking of any judgment or the exercise of
any power of seizure or sale shall not operate to extinguish the liability of
the Company to perform its obligations hereunder or to pay the moneys hereby
secured, shall not operate as a merger of any covenant herein contained or
affect the right of RoyNat to interest at the Loan Rate in effect from time to
time hereunder, and the acceptance of any payment or other security shall not
constitute or create any novation. The execution and delivery of this Debenture
or of any instruments or documents supplemental hereto shall not operate as a
merger of any representation,

<Page>
                                      -4-


warranty, term, condition or other provision contained in any other obligation
or indebtedness of the Company to RoyNat or under any Offer of Finance.

7.       SECURITY IN ADDITION. The security hereby constituted is in addition to
any other security now or hereafter held by RoyNat. The taking of any action or
proceedings or refraining from so doing, or any other dealings with any other
security for the moneys secured hereby, shall not release or affect the charges
created hereby.

8.       PARTIAL DISCHARGES. RoyNat may in its sole discretion grant partial
discharges or releases of security in respect of any of the Mortgaged Premises
on such terms and conditions as it shall deem fit and no such partial discharges
or releases shall affect the remainder of the security constituted hereby nor
shall it alter the obligations of the Company hereunder.

9.      EVENTS OF DEFAULT. The whole of the principal balance remaining unpaid
together with interest and all other moneys secured by this Debenture shall, at
the option of RoyNat, become immediately due and payable and the security hereby
created shall become enforceable in each of the following events (each event
being herein called an "event of default"):

         (a)      if the Company defaults in payment of the principal of or
                  interest on this Debenture or on any other indebtedness of the
                  Company to RoyNat when the same becomes due;

         (b)      if the Company defaults in the performance or observance of
                  any of the covenants contained in Section 9(b) of the
                  Debenture or in Sections 1(f), (g), (k), (m) or (n) of this
                  Schedule or Section 4 of this Schedule;

         (c)      if the Company defaults in the performance or observance of
                  any other covenant or condition herein contained and such
                  default shall continue for 10 days after written notice
                  thereof to the Company by RoyNat;

         (d)      if there is any material misrepresentation or misstatement
                  contained in any certificate or document delivered by an
                  officer or director of the Company in connection with this
                  Debenture or in connection with any other agreement, document,
                  certificate or instrument of any kind whatsoever delivered at
                  any time by the Company to RoyNat;

         (e)      if the Company institutes any proceeding or takes any
                  corporate action or executes any agreement or notice of
                  intention to authorize its participation in or commencement of
                  any proceeding (i) seeking to adjudicate it a bankrupt or
                  insolvent, or (ii) seeking liquidation, dissolution, winding
                  up, restructuring, reorganization, arrangement, protection,
                  relief or composition of it or any of its property or debt or
                  making a proposal with respect to it under any law relating to
                  bankruptcy, insolvency, reorganization or compromise of debts
                  or other similar laws (including, without limitation, any
                  application under the COMPANIES' CREDITORS ARRANGEMENT ACT or
                  any reorganization, arrangement or compromise of debt under
                  the laws of its jurisdiction of incorporation or
                  organization);

         (f)      the Company becomes bankrupt or insolvent or commits an act of
                  bankruptcy, or any proceeding is commenced against or
                  affecting the Company:

                  (i)      seeking to adjudicate it a bankrupt or insolvent;

                  (ii)     seeking liquidation, dissolution, winding up,
                           restructuring, reorganization, arrangement,
                           protection, relief or composition of it or any of its
                           property or debt or making a proposal with respect to
                           it under any law relating to bankruptcy, insolvency,
                           reorganization or compromise of debts or other
                           similar laws (including, without limitation, any
                           reorganization, arrangement or compromise of debt
                           under the laws of its jurisdiction of incorporation
                           or organization); or

                  (iii)    seeking appointment of a receiver, receiver and
                           manager, liquidator, trustee, agent, custodian or
                           other similar official for it or for any part of its
                           properties and assets, including the Mortgaged
                           Premises or any part thereof;

         (g)      any order or judgment is issued by a court granting any of the
                  relief referred to in Section 9(f) hereof;

         (h)      if an encumbrancer or secured creditor shall appoint a
                  receiver or agent or other similar official over any part of
                  the Mortgaged Premises, or take possession of any part of the
                  Mortgaged Premises or if any execution, distress or other
                  process of any court becomes enforceable against any of the
                  property of the Company, or a distress or like process is
                  levied upon any of such property;

         (i)      if the Company takes any corporate proceedings for its
                  dissolution, liquidation or amalgamation with another company
                  or if the corporate existence of the Company shall be
                  terminated by expiration, forfeiture or otherwise;

         (j)      if a default occurs under any agreement supplemental hereto or
                  under any other security previously, now or hereafter granted
                  to RoyNat by the Company or any guarantor of the obligations
                  of the Company or should any party to any agreement
                  supplemental or collateral hereto fail to carry out or observe
                  any covenant or condition on its part to be observed or
                  performed and such default continues for 10 days after written
                  notice thereof to the Company by RoyNat;

         (k)      if RoyNat, in good faith and upon commercially reasonable
                  grounds, believes that the prospect of payment or performance
                  of any of the obligations is or is about to be impaired or
                  that the Mortgaged Premises or any part thereof is or is about
                  to be placed in jeopardy;

         (l)      if Voting Control of the Company shall change without the
                  prior written consent of RoyNat; or

         (m)      if a default, breach, material misrepresentation or material
                  misstatement occurs or is made, or is permitted to occur or to
                  be made, under any agreement, promissory note, debt
                  obligation, guarantee or otherwise now or hereafter granted by
                  or entered into by the Company to or with RoyNat, any other
                  bank, financial institution or other lender.


<Page>
                                      -5-


10.      ENFORCEMENT. Upon the happening of any event of default, RoyNat may
exercise any rights, powers or remedies available to RoyNat at law or in equity
or under applicable legislation and, in addition, shall have the following
rights, powers and remedies:

         (a)      to enter upon and take possession of all or any part of the
                  Mortgaged Premises;

         (b)      to hold, use, repair, preserve and maintain all or any part of
                  the Mortgaged Premises and make such replacements thereof and
                  additions thereto as RoyNat shall deem advisable;

         (c)      to exercise all powers necessary to the performance of all
                  functions provided for herein including without limitation the
                  powers to purchase on credit, to borrow money in the Company's
                  name or in its own name and to advance its own money to the
                  Company at such rates of interest as it may deem reasonable;

         (d)      to sell, for cash or credit or part cash and part credit,
                  lease or dispose of or otherwise realize upon all or any part
                  of the Mortgaged Premises whether by public auction or by
                  private sale for New Brunswick, (whether pursuant to the Power
                  of Sale contained in the PROPERTY ACT, 1973 R.S.N.B., c-P-19,
                  or otherwise) or lease in such manner as RoyNat in its
                  absolute discretion may determine, provided that it shall not
                  be incumbent on RoyNat to sell, lease or dispose of the said
                  property but that it shall be lawful for RoyNat peaceably to
                  use and possess the same without hindrance or interruption by
                  the Company, or any other person or persons whomsoever, and to
                  receive income from such property and to convey, transfer and
                  assign to a purchaser or purchasers the title to any
                  undertaking, property and assets so sold and provided further
                  that in the case of a sale on credit RoyNat shall only be
                  liable to account to the Company, any subsequent encumbrancers
                  and others for moneys actually received by RoyNat;

         (e)      to appoint by instrument in writing any person or persons to
                  be a Receiver of all or any portion of the undertaking,
                  property and assets hereby charged, to fix the Receiver's
                  remuneration and to remove any Receiver so appointed and
                  appoint another or others in his stead; and

         (f)      to apply to any court of competent jurisdiction for the
                  appointment of a Receiver of all or any portion of the
                  undertaking, property and assets hereby charged.

11.      POWERS OF RECEIVER.

         (a)      Any Receiver shall have all of the powers of RoyNat set out in
                  Section 10 of this Schedule and, in addition, shall have the
                  following powers:

                  (i)      to carry on the business of the Company and to enter
                           into any compromise or arrangement on behalf of the
                           Company; and

                  (ii)     with the prior written consent of RoyNat to borrow
                           money in his name or in the Company's name, for the
                           purpose of carrying on the business of the Company
                           and for the preservation and realization of the
                           undertaking, property and assets of the Company
                           including, without limitation, the right to pay
                           persons having prior charges or encumbrances on
                           properties on which the Company may hold charges or
                           encumbrances, with any amount so borrowed and any
                           interest thereon to be a charge upon the Mortgaged
                           Premises in priority to this Debenture;

         (b)      Any Receiver appointed pursuant to the provisions hereof shall
                  be deemed to be an agent of the Company for the purposes of:

                  (i)      carrying on and managing the business and affairs of
                           the Company, and

                  (ii)     establishing liability for all of the acts or
                           omissions of the Receiver while acting in any
                           capacity hereunder and RoyNat shall not be liable for
                           such acts or omissions,

provided that, without restricting the generality of the foregoing, the Company
irrevocably authorizes RoyNat to give instructions to the Receiver relating to
the performance of its duties as set out herein.

12.      APPLICATION OF MONEYS. All moneys actually received by RoyNat or by the
Receiver pursuant to Sections 10 and 11 of this Schedule shall be applied:

         (a)      first, in payment of claims, if any, of secured creditors of
                  the Company, including any claim of the Receiver pursuant to
                  Section 11(a), ranking in priority to the charges created by
                  this Debenture as directed by RoyNat or the Receiver;

         (b)      second, in payment of all costs, charges and expenses of and
                  incidental to the appointment of the Receiver (including legal
                  fees and disbursements on a solicitor and its own client
                  basis) and the exercise by the Receiver or RoyNat of all or
                  any of the powers granted to them under this Debenture,
                  including the reasonable remuneration of the Receiver or any
                  agent or employee of the Receiver or any agent of RoyNat and
                  all outgoings properly paid by the Receiver or RoyNat in
                  exercising their powers as aforesaid;

         (c)      third, in or towards the payment to RoyNat of all moneys due
                  to it by the Company in such order as RoyNat in its sole
                  discretion may determine;

         (d)      fourth, in or towards the payment of the obligation of the
                  Company to persons, if any, with charges or security interests
                  against the Mortgaged Premises ranking subsequent to those in
                  favour of RoyNat; and

         (e)      fifth, subject to applicable law, any surplus shall be paid to
                  the Company.

13.      RESTRICTION ON COMPANY AND ITS OFFICERS AND DIRECTORS. Upon the Company
receiving notice from RoyNat of the taking of possession of the Mortgaged
Premises or the appointment of a Receiver, all the powers, functions, rights and
privileges of each of

<Page>
                                      -6-


the directors and officers of the Company with respect to the properties,
business and undertaking of the Company shall cease unless specifically
continued by the written consent of RoyNat.

14.      DISCHARGE AND SATISFACTION. Upon payment by the Company to RoyNat of
all moneys hereby secured, these presents shall cease and become null and void
and the Mortgaged Premises shall revest in the Company without any
acknowledgement or formality, but RoyNat shall upon the request and at the
expense of the Company, execute and deliver to the Company a full release and
discharge.

15.      NO OBLIGATION TO ADVANCE. Neither the issue and delivery of this
Debenture nor the advance of any funds hereunder shall obligate RoyNat to
advance any further funds hereunder or otherwise make credit available to the
Company, nor will RoyNat have any liability for any failure or delay on its part
to exercise any rights hereunder.

16.      LIMITED POWER OF ATTORNEY. The Company hereby appoints RoyNat as the
Company's attorney, with full power of substitution, in the name and on behalf
of the Company, to execute, deliver and do all such acts, deeds, leases,
documents, transfers, demands, conveyances, assignments, contracts, assurances,
consents, financing statements and things as the Company has agreed to execute,
deliver and do hereunder, under any Offer of Finance or otherwise, or as may be
required by RoyNat or any Receiver to give effect to this Debenture or in the
exercise of any rights, powers or remedies hereby conferred on RoyNat or any
Receiver, and generally to use the name of the Company in the exercise of all or
any of the rights, powers or remedies hereby conferred on RoyNat or any
Receiver. This appointment, being coupled with an interest, shall not be revoked
by the insolvency, bankruptcy, dissolution, liquidation or other termination of
the existence of the Company or for any other reason.

17.      INTERPRETATION. As used herein the following expressions shall have the
following meanings:

         (a)      "Business Day" means any day except Saturday, Sunday or a
                  statutory holiday.

         (b)      "Capital Lease Obligations" means the obligations of the
                  Company to pay rent or other amounts under a lease of (or
                  other agreement conveying the right to use) real or personal
                  property, which obligations are to be paid over a term
                  (including the initial term and the term of all renewal
                  options) which could (if all such renewal options were to be
                  exercised) exceed 36 months, or which obligations are required
                  to be classified and accounted for as a capital lease on a
                  balance sheet of the Company under generally accepted
                  accounting principles;

         (c)      "Contaminant" means any solid, liquid, gas, odour, heat,
                  sound, smoke, waste, vibration, radiation or combination of
                  any of them resulting directly or indirectly from human
                  activities that may cause: (i) impairment of the quality of
                  the natural environment for any use that can be made of it,
                  (ii) injury or damage to property or to plant or animal life,
                  (iii) harm or material discomfort to any person, (iv) an
                  adverse affect on the health of any person, (v) impairment of
                  the safety of any person, (vi) rendering any property or plant
                  or animal life unfit for use by man, (vii) loss of enjoyment
                  of normal use of property, or (viii) interference with the
                  normal conduct of business, and includes any pollutant or
                  contaminant as defined in any applicable Environmental Laws
                  and any biological, chemical or physical agent which is
                  regulated, prohibited, restricted or controlled.

         (d)      "Contingent Liabilities" of the Company at any time means the
                  amount of all indebtedness and liabilities, contingent or
                  otherwise, of any other person at such time,

                           (i) guaranteed, directly or indirectly, in any manner
                           by the Company including, without limitation, (A) by
                           procuring the issue of letters of credit or other
                           similar instruments for the benefit of that other
                           person, (B) by endorsement of bills of exchange
                           (otherwise than for collection or deposit in the
                           ordinary course of business), or (C) by the other
                           person assigning debts of the Company (whether or not
                           represented by an instrument) with recourse to the
                           Company;

                           (ii) in effect guaranteed, directly or indirectly, by
                           the Company through an agreement, contingent or
                           otherwise:

                                    (A) to purchase such indebtedness or
                                    liabilities or to advance or supply funds
                                    for the payment or purchase of such
                                    indebtedness or liabilities;

                                    (B) to purchase, sell or lease (as lessee or
                                    lessor) property, products, materials or
                                    supplies or to purchase or sell services in
                                    circumstances where it can reasonably be
                                    assumed that the purpose of such agreement
                                    was to provide funds to the debtor to enable
                                    the debtor to make payment of such
                                    indebtedness or liabilities or to provide
                                    goods or services to the debtor to enable it
                                    to satisfy other liabilities, regardless of
                                    the delivery or non-delivery of the
                                    property, products, materials or supplies or
                                    the provision or non-provision of the
                                    services, including take or pay or
                                    throughput agreements; or

                                    (C) to make any loan, advance, capital
                                    contribution to or other investment in the
                                    other Person for the purpose of assuring a
                                    minimum equity, asset base, working capital
                                    or other balance sheet condition at any date
                                    or to provide funds for the payment of any
                                    liability, dividend or return of capital; or

                           (iii) secured by any lien upon property owned by the
                           Company, even though the Company has not assumed or
                           become liable for the payment of such indebtedness or
                           liabilities.

         (e)      "Environmental Laws" means the common law and all applicable
                  federal, provincial, local, municipal, governmental or
                  quasi-governmental laws, rules, regulations, licences, orders,
                  permits, decisions or requirements concerning Contaminants,
                  occupational or public health and safety or the environment
                  and any other order, injunction, judgment, declaration, notice
                  or demand issued thereunder;
<Page>
                                      -7-


         (f)      "Funded Indebtedness" means, with respect to the Company at
                  any particular time, the following:

                           (i) indebtedness for money borrowed and indebtedness
                           represented by notes payable and drafts accepted
                           representing extensions of credit (including, as
                           regards any note or draft issued at a discount, the
                           face amount of such note or draft);

                           (ii) all obligations (whether or not with respect to
                           the borrowing of money) which are evidenced by bonds,
                           debentures, notes or other similar instruments or not
                           so evidenced but which would be considered to be
                           indebtedness for borrowed money in accordance with
                           generally accepted accounting principles;

                           (iii) all indebtedness upon which interest charges
                           are customarily paid;

                           (iv) Capital Lease Obligations and all other
                           indebtedness issued or assumed as full or partial
                           payment for property or services or by way of capital
                           contribution;

                           (v) any Contingent Liability relating to an
                           obligation of a type referred to in (a) to (d) above;
                           and

                           (vi) any of the foregoing amounts in respect of any
                           subsidiary of the Company;

                  other than indebtedness owing to (i) RoyNat under the
                  Debenture or under any security agreements and instruments
                  granted by the Company to RoyNat as security for same, (ii)
                  Bank of Nova Scotia in connection with the operating facility
                  granted to the Company pursuant to a Commitment Letter dated
                  December, 2001 and (iii) MDC Corporation Inc. under a
                  promissory note dated December 14, 2001; for greater
                  certainty, trade payables, expenses accrued in the ordinary
                  course of business, customer advance payments and deposits
                  received in the ordinary course of business do not constitute
                  Funded Indebtedness;

         (g)      "Inventory" means property of the Company held for sale
                  including products purchased for resale, finished goods, work
                  in process and raw materials but not including any property
                  not intended to be directly incorporated in finished goods or
                  products to be sold."

         (h)      "Loan Rate" means the rate of interest specified in Section 3
                  of the Debenture.

         (i)      "Permitted Encumbrances" means any of the following:

                  (i)      liens for taxes, assessments, governmental charges or
                           levies not at the time due;

                  (ii)     easements, rights of way or other similar rights in
                           land existing at the date of this Debenture which in
                           the aggregate do not materially impair the usefulness
                           in the business of the Company of the property
                           subject thereto;

                  (iii)    rights reserved to or vested in any municipality or
                           governmental or other public authority by the terms
                           of any lease, licence, franchise, grant or permit, or
                           by any statutory provision, to terminate the same or
                           to require annual or other periodic payments as a
                           condition to the continuance thereof;

                  (iv)     any lien or encumbrance the validity of which is
                           being contested by the Company in good faith and in
                           respect of which either there shall have been
                           deposited with RoyNat cash in an amount sufficient to
                           satisfy the same or RoyNat shall be otherwise
                           satisfied that its interests are not prejudiced
                           thereby;

                  (v)      any reservations, limitations, provisos and
                           conditions expressed in any original grant from the
                           Crown;

                  (vi)     title defects or irregularities which, in the opinion
                           of counsel to RoyNat, are of a minor nature and in
                           the aggregate shall not materially impair the
                           usefulness in the business of the Company of the
                           property subject thereto; and

                  (vii)    validly perfected security given by the Company to
                           any senior operating lender of the Company to which
                           this Debenture has been subordinated on any assets of
                           the Company.

         (j)      "Receiver" shall include one or more of a receiver,
                  receiver-manager or receiver and manager of all or a portion
                  of the undertaking, property and assets of the Company
                  appointed by RoyNat pursuant to this Debenture or by a court
                  of competent jurisdiction.

         (k)      "RoyNat" means RoyNat Inc., its successors and assigns and,
                  where applicable, includes those for whom it acts as nominee
                  or agent.

         (l)      "Voting Control" means the ownership of a sufficient number of
                  outstanding shares of a corporation to elect a majority of its
                  directors; and "Voting Control of the Company" means the
                  Voting Control of the Company stated in the Offer of Finance
                  or such different Voting Control as shall have been effected
                  with the prior written consent of RoyNat.

         (m)      "Working Capital" of a company means the ratio of its current
                  assets to its current liabilities calculated in accordance
                  with generally accepted accounting principles with any dissent
                  as to the calculation thereof being conclusively resolved by
                  RoyNat; and "Consolidated Working Capital" means the Working
                  Capital of the Company and all its subsidiaries calculated on
                  a consolidated basis.