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Exhibit 4.1

 
 

TRUST INDENTURE    
    

Dated
as of the 22nd day of August, 2005 

Among 

 
 

SR TELECOM INC.    
    

As
issuer 

and

 
 

COMPUTERSHARE TRUST COMPANY OF CANADA    
    

and 

 
 

MANUFACTURERS AND TRADERS TRUST COMPANY    
    

as
co-Trustees 

Providing
for the issue of

10% Secured Convertible Debentures

Due October 15, 2011 

 
 

CROSS-REFERENCE TABLE    
    

	TIA Section 
	 
	 	Indenture

Section

	310	(a)(1)	 	13.3
	 	(a)(2)	 	13.3
	 	(a)(3)	 	13.3
	 	(a)(4)	 	N.A.
	 	(a)(5)	 	N.A.
	 	(b)	 	13.2; 13.4
	 	(c)	 	N.A.
	311	(a)	 	13.20
	 	(b)	 	13.20
	 	(c)	 	N.A.
	312	(a)	 	13.21
	 	(b)	 	13.22(b)
	 	(c)	 	N.A.
	313	(a)	 	13.23
	 	(b)(1)	 	13.23
	 	(b)(2)	 	13.23
	 	(c)	 	13.23
	 	(d)	 	13.23
	314	(a)	 	5.6; 5.16; 13.24
	 	(b)	 	6.1
	 	(c)(1)	 	6.1; 13.7; 13.9
	 	(c)(2)	 	6.1; 13.7; 13.9
	 	(c)(3)	 	6.1; 13.7; 13.9
	 	(d)	 	6.1; 13.9
	 	(e)	 	13.9
	 	(f)	 	N.A.
	315	(a)	 	13.6; 13.7
	 	(b)	 	13.17
	 	(c)	 	13.6; 13.7
	 	(d)	 	8.13; 13.6; 13.7
	 	(e)	 	13.25
	316	(a)(last sentence)	 	1.2(c)
	 	(a)(1)(A)	 	8.13
	 	(a)(1)(B)	 	8.3
	 	(a)(2)	 	N.A.
	 	(b)	 	8.14
	317	(a)(1)	 	8.4
	 	(a)(2)	 	8.15
	 	(b)	 	13.16
	318	(a)	 	13.27(a)

NA means Not Applicable 

NOTE:
This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture 

  

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	Page

	ARTICLE I INTERPRETATION	 	1
	 	1.1	 	Definitions	 	1
	 	1.2	 	Meaning of "Outstanding"	 	13
	 	1.3	 	Interpretation	 	14
	 	1.4	 	Headings Etc.	 	14
	 	1.5	 	Day not a Business Day	 	14
	 	1.6	 	Applicable Law	 	14
	 	1.7	 	Monetary References	 	14
	 	1.8	 	Invalidity, Etc.	 	14
	 	1.9	 	Language	 	14
	 	1.10	 	Successors and Assigns	 	15
	 	1.11	 	Time of the Essence	 	15
	 	1.12	 	Intercreditor Agreement	 	15
	 	1.13	 	Incorporation by Reference of Trust Indenture Act.	 	15
	
ARTICLE II THE DEBENTURES	
 	

15
	 	2.1	 	Terms of Debentures and Interest	 	15
	 	2.2	 	Form and Signature of Debentures	 	17
	 	2.3	 	Issuance of Debentures	 	17
	 	2.4	 	Certification	 	17
	 	2.5	 	Debentures to Rank Pari Passu	 	18
	 	2.6	 	Global Debentures	 	18
	 	2.7	 	Transferee Entitled to Registration	 	20
	 	2.8	 	Fully Registered Debentures	 	20
	 	2.9	 	Charges for Registration, Transfer and Exchange	 	21
	 	2.10	 	Registers Open for Inspection	 	21
	 	2.11	 	Closing of Registers	 	22
	 	2.12	 	Persons Entitled to Payment	 	22
	 	2.13	 	Taxes	 	23
	 	2.14	 	Debt Accounts	 	24
	 	2.15	 	Mutilation, Loss, Theft or Destruction	 	25
	 	2.16	 	Denomination of Debentures	 	25
	 	2.17	 	U.S. 1933 Act Legend on the Debentures	 	25
	 	2.18	 	Certification and Delivery of PIK Debentures	 	26
	 	2.19	 	Transfers and Exchanges of Restricted Fully Registered Debentures	 	27
	
ARTICLE III REDEMPTION OF DEBENTURES	
 	

28
	 	3.1	 	Redemption	 	28
	 	3.2	 	Notice of Redemption	 	28
	 	3.3	 	Payment on Redemption Dates	 	29
	 	3.4	 	Deposit of Redemption Monies	 	29
	 	3.5	 	Cancellation and Destruction of Debentures	 	29
	 	3.6	 	Surrender of Debentures for Cancellation	 	30
	 	3.7	 	Purchase of Debentures for Cancellation	 	30

i

 

	 
	 	 
	 	Page

	
ARTICLE IV CONVERSION OF DEBENTURES	
 	

30
	 	4.1	 	Mandatory Conversion	 	30
	 	4.2	 	Optional Conversion	 	30
	 	4.3	 	Delivery of Certificates	 	31
	 	4.4	 	Revival of Right to Convert	 	31
	 	4.5	 	Manner of Exercise of Right to Convert	 	31
	 	4.6	 	Adjustment of Conversion Price	 	32
	 	4.7	 	No Requirement to Issue Fractional Shares	 	35
	 	4.8	 	Company to Reserve Shares	 	35
	 	4.9	 	Taxes and Charges on Conversion	 	35
	 	4.10	 	Cancellation of Converted Debentures	 	35
	 	4.11	 	Certificate as to Adjustment	 	35
	 	4.12	 	Notice of Special Matters	 	36
	 	4.13	 	Protection of Trustees	 	36
	
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY	
 	

36
	 	5.1	 	Authorization, Enforceability and Validity	 	36
	 	5.2	 	To Pay Principal and Interest	 	36
	 	5.3	 	To Comply with Law	 	37
	 	5.4	 	To Maintain Corporate Existence and Keep Proper Books	 	37
	 	5.5	 	To Pay Trustees' Remuneration	 	37
	 	5.6	 	To Provide Financial Statements	 	37
	 	5.7	 	Not to Extend Time for Payments	 	38
	 	5.8	 	Trustee May Perform Covenants	 	38
	 	5.9	 	Limitation on Incurring Additional Indebtedness	 	39
	 	5.10	 	Limitation on Restricted Payments	 	39
	 	5.11	 	Limitation on Restricted Investments	 	39
	 	5.12	 	Limitation on Indebtedness of Restricted Subsidiaries	 	39
	 	5.13	 	Limitation on Liens	 	39
	 	5.14	 	Limitations on Sale of Assets	 	39
	 	5.15	 	Limitation on Preferred Shares of Subsidiaries	 	40
	 	5.16	 	To Provide Certificates of Compliance	 	40
	 	5.17	 	To Give Notice of Default	 	40
	 	5.18	 	No Distributions on Common Shares if Event of Default	 	40
	 	5.19	 	Listing of Common Shares and Reporting Issuer Status	 	40
	 	5.20	 	Change of Control	 	40
	 	5.21	 	Controlled Foreign Corporation Status	 	41

ii

 

	 
	 	 
	 	Page

	
ARTICLE VI SECURITY	
 	

42
	 	6.1	 	Security	 	42
	
ARTICLE VII	
 	

42
	 	7.1	 	Intentionally Deleted.	 	42
	
ARTICLE VIII DEFAULT	
 	

42
	 	8.1	 	Acceleration of Maturity	 	42
	 	8.2	 	Notice of Events of Default	 	44
	 	8.3	 	Waiver of Past Defaults	 	44
	 	8.4	 	Enforcement by the Trustees	 	44
	 	8.5	 	Enforcement by Debentureholders	 	45
	 	8.6	 	Trustee Appointed Attorney	 	45
	 	8.7	 	Judgment against the Company	 	45
	 	8.8	 	Application of Monies by Trustee	 	45
	 	8.9	 	Distribution of Proceeds	 	46
	 	8.10	 	Remedies Cumulative	 	46
	 	8.11	 	Trustee Indemnification	 	47
	 	8.12	 	Delay or Omission Not Waiver	 	47
	 	8.13	 	Control by Super — Majority	 	47
	 	8.14	 	Rights of Holders to Receive Payment	 	47
	 	8.15	 	Trustees May File Proofs of Claim	 	47
	
ARTICLE IX SATISFACTION AND DISCHARGE	
 	

48
	 	9.1	 	Cancellation and Destruction	 	48
	 	9.2	 	Non-Presentation of Debentures	 	48
	 	9.3	 	Repayment of Unclaimed Monies	 	48
	 	9.4	 	Discharge	 	49
	
ARTICLE X SUCCESSOR CORPORATIONS	
 	

49
	 	10.1	 	Certain Requirements	 	49
	 	10.2	 	Vesting of Powers in Successor	 	50
	
ARTICLE XI MEETINGS OF DEBENTUREHOLDERS	
 	

50
	 	11.1	 	Right to Convene Meeting	 	50
	 	11.2	 	Notice of Meetings	 	50
	 	11.3	 	Chairman	 	50
	 	11.4	 	Quorum	 	50
	 	11.5	 	Power to Adjourn	 	51
	 	11.6	 	Poll	 	51
	 	11.7	 	Voting	 	51
	 	11.8	 	Regulations	 	51
	 	11.9	 	Persons Entitled to Attend Meetings	 	51
	 	11.10	 	Powers Exercisable by Extraordinary Resolution	 	52
	 	11.11	 	Meaning of "Extraordinary Resolution"	 	53
	 	11.12	 	Powers Cumulative	 	54
	 	11.13	 	Minutes	 	54
	 	11.14	 	Instruments in Writing	 	54
	 	11.15	 	Binding Effect of Resolutions	 	54
	 	11.16	 	Evidence of Rights of Debentureholders	 	55

iii

 

	 
	 	 
	 	Page

	
ARTICLE XII NOTICES	
 	

55
	 	12.1	 	Notice to Company	 	55
	 	12.2	 	Notice to Debentureholders	 	55
	 	12.3	 	Notice to the Trustees	 	56
	
ARTICLE XIII CONCERNING THE TRUSTEE	
 	

56
	 	13.1	 	Appointment of Trustees and Fondé de Pouvoir	 	56
	 	13.2	 	No Conflict of Interest	 	56
	 	13.3	 	U.S. Trustee Required; Eligibility	 	56
	 	13.4	 	Replacement of Trustees	 	57
	 	13.5	 	Acceptance of Appointment by Successor	 	58
	 	13.6	 	Duties of Trustees	 	58
	 	13.7	 	Rights of Trustees	 	59
	 	13.8	 	Compliance	 	61
	 	13.9	 	Evidence and Authority to Trustees, Opinions, etc; Compliance Certificate	 	61
	 	13.10	 	Experts, Advisers and Trustees	 	62
	 	13.11	 	Trustees May Deal in Debentures	 	62
	 	13.12	 	Investment of Monies Held by Trustees	 	62
	 	13.13	 	Trustee Not Ordinarily Bound	 	63
	 	13.14	 	Trustee Not to be Appointed Receiver	 	63
	 	13.15	 	Conditions Precedent to Trustees' Obligations to Act Hereunder	 	63
	 	13.16	 	Acceptance of Trust; Money for Security Payments to be Held in Trust	 	64
	 	13.17	 	Notice of Defaults	 	65
	 	13.18	 	Compensation and Reimbursement	 	65
	 	13.19	 	Merger, Conversion, Consolidation or Succession to Business	 	65
	 	13.20	 	Preferential Collection of Claims Against Company	 	66
	 	13.21	 	Company to Furnish Trustee Names and Addresses of Holders	 	66
	 	13.22	 	Preservation of Information; Communications to Holders	 	66
	 	13.23	 	Reports by Trustee	 	66
	 	13.24	 	Reports by Company	 	66
	 	13.25	 	Undertaking for Costs	 	67
	 	13.26	 	Authority to Carry on Business	 	67
	 	13.27	 	Trust Indenture Legislation	 	67
	
ARTICLE XIV SUPPLEMENTAL INDENTURES	
 	

67
	 	14.1	 	Supplemental Indentures Without Consent of Holders	 	67
	 	14.2	 	Supplemental Indentures with Consent of Holders	 	68
	 	14.3	 	Execution of Supplemental Indentures	 	68
	 	14.4	 	Effect of Supplemental Indentures	 	69
	 	14.5	 	Conformity with Applicable Trust Legislation	 	69
	 	14.6	 	Reference in Debentures to Supplemental Indentures	 	69
	
ARTICLE XV EXECUTION AND FORMAL DATE	
 	

69
	 	15.1	 	Execution	 	69
	 	15.2	 	Formal Date	 	69

iv

 

EXHIBITS  

	Exhibit A	 	Form of Fully Registered Debenture
	Exhibit B	 	Intercreditor Agreement
	Exhibit C	 	Form of Regulation S Temporary Global Debentures
	Exhibit D	 	Restructuring Termsheet
	Exhibit E	 	Form of Unrestricted Global Debenture
	Exhibit F	 	Form of Transfer Certificate for Exchange or Transfer from Restricted Fully Registered Debenture to Regulation S Temporary Global Debenture
	Exhibit G	 	Form of Transfer Certificate for Transfer From Restricted Fully Registered Debenture to Unrestricted Global Debenture Pursuant to an Effective Shelf Registration Statement
	Exhibit H	 	Form of Transfer Certificate for Transfer from Restricted Fully Registered Debenture to Unrestricted Global Debenture Pursuant to Regulations after the Exchange Date.

v

THIS
INDENTURE made as of the 22nd day of August, 2005. 

AMONG:

SR TELECOM INC., a corporation incorporated under the laws of Canada and having its head office in the City of Montreal, in the Province of
Quebec (hereinafter called the "Company") 

— and —

COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company having an office in the City of Montreal, in the Province of Quebec (hereinafter called the
"Canadian Trustee") 

— and — 

MANUFACTURERS AND TRADERS TRUST COMPANY, a trust company having its principal office in the City of Buffalo, in the State of New York
(hereinafter called the "U.S. Trustee") 

WITNESSETH
THAT: 

        WHEREAS
pursuant to the Exchange Offer, certain holders of Original Debentures have exchanged $70,535,000 principal amount of such debentures, with accrued but unpaid interest of
$4,795,761, for $75,330,761 principal amount 10% secured convertible debentures (the "Debentures"); 

        NOW
THEREFORE it is hereby covenanted, agreed and declared as follows: 

 
 

ARTICLE I
  INTERPRETATION  
    

1.1   Definitions  

        In this Indenture and in the Debentures, unless there is something in the subject matter or context inconsistent therewith, the expressions following shall have
the following meanings, namely: 

        "This Indenture", "this Trust Indenture",
"hereto", "herein", "hereby",
"hereunder", "hereof" and similar expressions refer to this Indenture and not to any particular Article,
Section, subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto; 

        "Account Debtor" means any Person who may become obligated to the Company under, with respect to, or on account of, an Account; 

        "Accounts" means all "Claims" (as defined in the Security Agreement), all "accounts," as such term is defined in the PPSA, now
owned or hereafter acquired by the Company and, in any event, including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of
obligations evidenced by chattel paper, securities or instruments) now owned or hereafter received or acquired by or belonging or owing to the Company, whether arising out of goods sold or services
rendered by it or from any other transaction (including any such obligations which may be characterized as an account or contract right under the PPSA), (b) all of the Company's rights in, to
and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, (c) all of the Company's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all monies due or to become due to
the Company under all purchase orders and contracts for the sale of goods or the performance of services or both by the Company or in connection with any other transaction (whether or not yet earned
by performance on the part of the Company) now or hereafter in existence, including the right to receive the proceeds of said purchase orders and contracts, and (e) all collateral security and
guarantees of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing; 

        "Accredited Investor" has the meaning ascribed thereto in Rule 501(a) under the U.S. 1933 Act; 

        "Applicable Securities Legislation" means applicable securities laws (including rules, regulations, policies and instruments) in each of
the provinces of Canada and in the United States; 

        "Authorized Investments" has the meaning ascribed thereto in Section 13.12; 

        "Bankruptcy Interest" means, with respect to any Indebtedness, all interest accruing thereon after the filing of a petition by or against
the Company or any of its Subsidiaries under any Insolvency Law, in accordance with 

 

and
at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in the documents evidencing or governing such Indebtedness, whether or not the
claim for such interest is allowed as a claim after such filing in any proceeding under such Insolvency Laws. 

        "Beneficial Holder" means any Person who holds a beneficial interest in a Global Debenture as shown on the books of the Depositary or a
Depositary Participant; 

        "Board of Directors" and "Directors" means the board of directors of the Company or, if
duly constituted and whenever duly empowered, the executive committee of the Board of Directors of the Company, and reference to action by the directors means action by the directors of the Company as
a board or action by the said executive committee as such committee; 

        "Business Day" means any day other than a Saturday, Sunday or statutory holiday in Toronto, Montreal, or the City of New York or
any other day that either the Canadian Trustee or the U.S. Trustee is not generally open for business; 

        "Canadian Trust Indenture Legislation" means the provisions of the Canada Business Corporations Act and any other statute of Canada or a
province thereof, and of the regulations under any such statute, relating to trust indentures and to the rights, duties and obligations of trustees under trust indentures and of corporations issuing
debt obligations under trust indentures, to the extent that such provisions are at the time in force and applicable to this Indenture or the Company; 

        "Capital Expenditures" means, with respect to any Person, all expenditures (by the expenditure of cash or the Incurrence of
Indebtedness) by such Person during any measuring period for any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one year and
that are required to be capitalized under GAAP; 

        "Capital Lease" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person; 

        "Capital Lease Obligation" means, with respect to any Capital Lease of any Person, the amount of the obligation of that Person as lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of such Person in respect of such Capital Lease; 

        "Change of Control Affiliate" means, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls,
whether beneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or more of the Stock of that Person having ordinary voting power in the election of directors of such
Person, (b) each Person that Controls, is Controlled by or is under common Control with such Person, (c) each of such Person's officers, directors, joint venturers and partners and
(d) in the case of SR Group, the immediate family members, spouses and lineal descendants of individuals who are Change of Control Affiliates of SR Group; 

        "Change of Control Notice" has the meaning ascribed thereto in Section 5.20; 

        "Charges" means all Taxes and Liens assessed, levied or imposed against the Company or its Subsidiaries or upon (a) the Collateral,
(b) the payroll, gross receipts, income, gains or capital of the Company or its Subsidiaries, (c) the Company's or its Subsidiaries' ownership or use of any properties or assets, or
(d) any other aspect of the Company's or its Subsidiaries' business or existence; 

        "Civil Code" means the Civil Code of Quebec, as amended; 

        "Close of Business" means the normal closing hour of the office of the Trustee on a Business Day; 

        "Collateral" means all of the property covered by the Security Agreement, the Mortgages and the other Collateral Documents and any other
property or assets, real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, of any nature, form or description whatsoever, wherever situated, now existing or
hereafter acquired, that may at any time be or become subject to a Lien in favour of the Trustee, on behalf of Debentureholders, to secure the Debentures; 

        "Collateral Agent" means Computershare Trust Company of Canada in its capacity as collateral agent under any Collateral Document to secure
the payment obligations under this Indenture or the Debentures. 

2

 

        "Collateral Documents" means the Security Agreement, the Mortgages and all other agreements entered into guaranteeing payment of, or
granting a Lien upon property, assets or undertaking as security for payment and performance of, the Debentures, as the same may from time to time be amended, restated, modified or supplemented; 

        "Commission" means the United States Securities and Exchange Commission, or any successor organization thereto; 

        "Common Shares" means the common shares in the capital of the Company; provided that in the event of a change or a subdivision,
redivision, reduction, combination or consolidation thereof, or successive such changes, subdivisions, redivisions, reductions, combinations or consolidations then, subject to adjustments, if any,
having been made in accordance with the provisions of Section 4.6, "Common Shares" shall thereafter mean the shares resulting from such change, subdivision, redivision, reduction, combination
or consolidation; 

        "Company" means SR Telecom Inc. and includes any Successor Company to or of the Company, which shall have complied with the
provisions of Article X; 

        "Company Accounts" means those depository bank accounts in the name of the Company; 

        "Company's Auditors" or "Auditors of the Company" means an independent firm of chartered
accountants duly appointed as auditors of the Company; 

        "Consolidated Capitalization" means the consolidated capitalization of the Company calculated in accordance with GAAP, but excluding from
such calculation Unrestricted Subsidiaries; 

        "Consolidated EBITDA" means EBITDA of the Company and its Subsidiaries, but excluding therefrom any Unrestricted Subsidiary; 

        "Consolidated Indebtedness" means the Indebtedness of the Company and of its Restricted Subsidiaries as determined by GAAP; 

        "Consolidated Interest Expense" of the Company means, for any period, the total interest expense of the Company and its consolidated
Restricted Subsidiaries calculated in accordance with GAAP; 

        "Consolidated Net Income" of the Company means, for any period, the net income of the Company and its consolidated Restricted Subsidiaries
calculated in accordance with GAAP 

        "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting Stock or by contract or otherwise and, when determining control based on ownership of voting Stock, means, with respect to control of a body corporate by a
Person, the holding (other than by way of security only) by or for the benefit of that Person, or Change of Control Affiliates of that Person of Stock of such body corporate or the right to vote or
direct the voting of Stock of such body corporate to which, in the aggregate, are attached more than fifty percent (50%) of the votes that may be cast to elect directors of the body corporate,
provided that the votes attached to such Stock are sufficient, if exercised, to elect a majority of the directors of the body corporate; 

        "conversion" means any exchange of Debentures pursuant to Section 4.1(a) or 4.2, and
"convert" and "converted" will be construed accordingly; 

        "Conversion Form" means that form on the reverse of the Debenture providing for conversion; 

        "Conversion Price" means $0.217103916601853 as the same may be adjusted from time to time in accordance with Section 4.6; 

        "Corporate Trust Office", with respect to the U.S. Trustee, means the principal corporate trust office of the U.S. Trustee
at which, at any particular time, its corporate trust business shall be administered, which office, at the date hereof, is located at 25 South Charles Street, 16th Floor,
Baltimore, Maryland 21201; and, with respect to the Canadian Trustee, means the principal corporate trust office of the Canadian Trustee at which, at any particular time, its corporate trust business
shall be administered, which office, at the date hereof, is located at 1500 University Street, Suite 700, Montreal, Quebec H3A 3S8; 

3

 

        "Counsel" means a barrister or solicitor or firm of barristers or solicitors retained or employed by either Trustee (including pursuant to
any Extraordinary Resolution) or retained or employed by the Company and acceptable to the Trustee if retained by one Trustee, or Trustees if retained by both Trustees; 

        "CTR" means Comunicación Y Telefonía Rural S.A., a sociedad anónima duly organized and
validly existing under the laws of Chile; 

        "CTR Facility" means the lending/borrowing facility between CTR and the CTR Lenders; 

        "CTR Guarantee" means the guarantee by the Company of the obligations of CTR to the CTR Lenders under the CTR Facility; 

        "CTR Lenders" means EDC and IADB and their permitted assigns; 

        "Current Market Price" has the meaning ascribed thereto in Section 4.6(d); 

        "Date of Conversion" has the meaning ascribed thereto in Section 4.5(b); 

        "Debentures" means the debentures of the Company issued and certified or to be issued and certified hereunder and includes PIK Debentures,
Global Debentures and Fully Registered Debentures; 

        "Debentureholders" or "Holders" means the several Persons currently entered in the
registers hereinafter mentioned as holders of Debentures or any transferees of such Persons by endorsement or delivery and means, in respect of any Global Debentures registered in the name of the
Depositary, the Depositary; 

        "Debt Account" means an account or accounts required to be established by the Trustees (and which shall be maintained by and
subject to the control of the Trustees), for the residual benefit of the Company, for payments in respect of the Debentures pursuant to and in accordance with this Indenture; 

        "Default" means any event which, with the giving of notice or lapse of time or both, would constitute an Event of Default; 

        "Default Rate" has the meaning ascribed thereto in Section 2.1(f); 

        "Depositary" means, with respect to the Debentures, the Canadian Depositary for Securities Limited and the Depositary Trust Company or
such other depositary as may be specified by the Company in a Written Direction of the Company with respect to the issuance of such Debentures, until a successor Depositary shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each person who is then a Depositary hereunder, and, if at any time there is more than one
such person, "Depositary" shall mean the Depositary with respect to the Debentures; 

        "Depositary Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary
effects book entry for a Global Debenture deposited with the Depositary; 

        "Depositary System" means the record entry and securities transfer system which is administered by a Depositary in accordance with the
operating rules and procedures of its depositary service for book-entry only securities in force from time to time, or any successor system; 

        "Designated Office" means the principal office of the Trustee in each of Toronto, Ontario, Montreal, Quebec, Baltimore, Maryland or
Buffalo, New York; 

        "Director" means a director of the Company; 

        "Disbursement Accounts" means those depositary accounts in the name of the Company for the purposes of receiving disbursements from the
Emergency Credit Facility or any refinancing thereof; 

        "Dividends paid in the ordinary course" means any dividends, whether in cash, in securities of the Company, in specie, in kind or
otherwise in property or other assets, declared payable or paid on the Common Shares in any Fiscal Year of the Company, to the extent that the aggregate of such cash dividends or the fair market value
thereof, as bona fide determined by the Directors of the Company, of such dividends in securities, in specie, in kind or otherwise in property or other assets declared and payable or paid from the
beginning of the Fiscal Year of the Company in which such dividend is declared to the date of declaration of such dividend, including in such 

4

 

calculation
the dividend in question, does not exceed 150% of the net after tax earnings of the Company for the immediately preceding Fiscal Year; 

        "EBITDA" of the Company for any period means the sum of Consolidated Net Income of the Company, plus the following to the extent deducted
in calculating such Consolidated Net Income: 

        (1)    all
income tax expense of the Company and its consolidated Restricted Subsidiaries; 

        (2)    Consolidated
Interest Expense; 

        (3)    depreciation
and amortization expenses of the Company and its consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid operating
activity item that was paid in cash in a prior period); and 

        (4)    all
other non-cash charges of the Company and its consolidated Restricted Subsidiaries (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future period); 

in
each case for such period. 

        Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and non-cash charges of, a Restricted
Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income of such
Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its stockholders. 

        "EDC" means Export Development Canada, a corporation established by the Export Development
Act (Canada) and any successor or permitted assigns; 

        "Emergency Credit Facility" means that credit agreement dated as of May 19, 2005 among certain holders of Original Debentures and
the Company, as the same may be amended from time to time; 

        "Equipment" means all "Equipment" (as defined in the Security Agreement), all "equipment," as such term is defined in the PPSA, now
owned or hereafter acquired by the Company or its Restricted Subsidiaries, wherever located and, in any event, including all machinery and equipment, including processing equipment, conveyors, machine
tools, data processing and computer equipment with software and peripheral equipment (other than software constituting part of the Accounts), and all engineering, processing and manufacturing
equipment, office machinery, furniture, materials handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling
stock and other equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, all whether now owned or hereafter acquired, and wherever situated, together with
all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights
with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with respect thereto; 

        "Event of Default" means any event specified in Section 8.1, continued for the period of time, if any, therein designated; 

        "Exchange" means (i) the Toronto Stock Exchange; (ii) the NASDAQ National Market, and (iii) any other exchange or
market on which the Common Shares are quoted or listed for trading; however, for the purposes of Sections 3.1(b)
and 4.6(d), "Exchange" means the exchange or market on which the greatest volume of Common Shares traded during the relevant periods
outlined in those provisions; 

        "Exchange Date" means the date on which interests in each Regulation S Temporary Global Debenture will be exchangeable for
interests in an Unrestricted Global Debenture, which shall be the fortieth (40th) day after the later of (a) the date of issuance of such Debentures (which, for the avoidance of
doubt, in the case of PIK Debentures issued in relation to any Debentures held in the form of Regulation S Temporary Global 

5

 

Debentures,
shall be the date of issuance of such PIK Debentures) and (b) the completion of the distribution (as such term is used in Regulation S under the U.S. 1933 Act)
of Debentures; 

        "Exchange Offer" means that offer dated July 19, 2005 made by the Company to holders of Original Debentures to exchange Original
Debentures for Debentures; 

        "Extraordinary Resolution" has the meaning ascribed thereto in Section 11.11; 

        "Fiscal Quarter" means any of the following quarterly accounting periods of the Company in each Fiscal Year consisting of January 1
through March 31; April 1 through June 30; July 1 through September 30; and October 1 through December 31; 

        "Fiscal Year" means the annual accounting period of the Company from January 1 through December 31 of each calendar year; 

        "Fixtures" means all "fixtures" including trace fixtures, facilities and equipment however affixed or attached to real property or
buildings or other structures; 

        "Fully Registered Debentures" means Debentures registered in the name of the Debentureholder in the register maintained by the Trustee
pursuant to Section 2.8(b), the form of which shall be substantially in the form of Exhibit A hereto; 

        "Generally Accepted Accounting Principles" or "GAAP" means the generally accepted
accounting principles from time to time approved by the Canadian Institute of Chartered Accountants; 

        "Global Debentures" means one or more Debentures issued to and registered in the name of the Depositary (or its nominee) pursuant
to Section 2.6, consisting of the Regulation S Temporary Global Debentures and the Unrestricted Global Debentures, representing (i) the aggregate principal amount of Debentures
issued under the Exchange Offer (other than any such Debentures held in the form of Fully Registered Debentures issued to Accredited Investors), and (ii) each PIK Debenture issued from time to
time (other than any such PIK Debentures held in the form of Fully Registered Debentures issued to Accredited Investors), for purposes of
being held by or on behalf of the Depositary as custodian for participants in the Depositary's book-entry only registration system; 

        "Governmental Authority" means any nation or government, any state or other political subdivision thereof, and any agency, court,
department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government; 

        "Hedging Obligations" means obligations pursuant to a foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or
matured; 

        "IADB" means the Inter-American Development Bank and any successor or permitted assigns; 

        "Incur" means, with respect to any Indebtedness or other obligation of a Person, to create, issue, incur (by conversion, exchange
or otherwise), assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or
other obligation on the balance sheet of such Person (and "incurrence," "incurred," "incurrable," and "incurring" shall each have a meaning correlative to the foregoing); provided that a change
in GAAP that results in an obligation of such Person that exists at such time becoming Indebtedness shall not be deemed an incurrence of such Indebtedness; 

        "Indebtedness" of any Person means without duplication (a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or more, but excluding obligations to trade creditors Incurred in the ordinary course of business that are not overdue by
more than six (6) months unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers' acceptances and surety bonds,
whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even 

6

 

though
the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all capital lease obligations and
the present value of future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) Hedging Obligations, (h) all indebtedness created or arising under the sale of accounts receivable at a discount,
(i) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (j) the
obligations under the Emergency Credit Facility, and (k) the obligations under the CTR Facility; 

        "Intercreditor Agreement" means that agreement dated August 22, 2005 among the Company, the Trustees, the "Collateral Agent" as
defined in and under the Emergency Credit Facility, CTR, EDC and IADB, attached hereto as Exhibit B, as the same may be amended from time to time. 

        "Interest Payment Date" means April 15 and October 15 in each year; 

        "Insolvency Laws" means any of the Bankruptcy and Insolvency Act (Canada), the  Companies' Creditors Arrangement Act
(Canada), the Winding-Up and Restructuring Act
(Canada), the Courts of Justice Act (Ontario) and Title 11 of the United States Code entitled "Bankruptcy", each as now and hereafter in effect,
any successors to such statutes and any other applicable insolvency or other similar law of any jurisdiction including any law of any jurisdiction permitting a debtor to obtain a stay or a compromise
of the claims of its creditors against it; 

        "Inventory" means any "Inventory" (as defined in the Security Agreement), any "inventory," as such term is defined in the PPSA, now
or hereafter owned or acquired by the Company or its Restricted Subsidiaries, wherever located, and in any event including inventory, merchandise, goods and other personal property which are held by
or on behalf of the Company or its Restricted Subsidiaries for sale or lease or are furnished or are to be furnished under a contract of service, or which constitute raw materials, work in process or
materials used or consumed or to be used or consumed in the Company's or the Restricted Subsidiaries' business or in the processing, production, packaging, promotion, delivery or shipping of the same,
including other supplies; 

        "Investment" in any Person means any direct or indirect advance, loan or other extensions of credit (including by way of guarantee or
similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any
purchase or acquisition of capital stock, Indebtedness or other similar instruments issued by such Person. Except as otherwise provided for herein, the amount of an Investment shall be its fair value
at the time the Investment is made and without giving effect to subsequent changes in value; 

        "Lien" means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, trust (actual or deemed), easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or
title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a
security interest under the PPSA, any publication effecting any hypothec, security interest or right under the Civil Code or comparable law of any
jurisdiction); 

        "Mandatory Conversion Date" means the earlier of (i) the Business Day after the Rights Offering Record Date and
(ii) November 30, 2005; 

        "Mandatory Redemption Price" has the meaning ascribed thereto in Section 3.1(a); 

        "Maturity Date" means the date on which the principal of a Debenture becomes due and payable therein or herein provided, whether at the
Stated Maturity Date or by declaration of acceleration or otherwise; 

        "Mortgaged Properties" means all of the owned real estate of the Company and its Subsidiaries; 

        "Mortgages" means the hypothecation of the Mortgaged Properties pursuant to the Security Agreement as well as each of the debentures,
debenture delivery agreements and other real estate/immovable property 

7

 

security/hypothecation
documents delivered by the Company and its Subsidiaries to the Canadian Trustee with respect to the Mortgaged Properties or real/immovable property acquired by the Company and
its Subsidiaries after the Closing Date, all in form and substance satisfactory to the Canadian Trustee, in its sole discretion, as each may from time to time be amended, restated, modified or
supplemented; 

        "Net Earnings" means net earnings as determined by GAAP; 

        "Non-U.S. Person" means a Person who is not a U.S. Person; 

        "Offer" has the meaning ascribed thereto in Section 5.20; 

        "Offer Price" has the meaning ascribed thereto in Section 5.20; 

        "Officers' Certificate" means a certificate of the Company made pursuant to this Indenture signed by two offices of the Company, one of
whom must be the President or the Chief Financial Officer of the Company, each in his capacity as an officer of the Company; 

        "Opinion of Counsel" means written opinion of legal counsel acceptable to the Trustees; 

        "Optional Redemption Price" has the meaning ascribed thereto in Section 3.1(b); 

        "Original Debentures" means the 8.15% Debentures due August 31, 2005 issued by the Company pursuant to the Original Indenture; 

        "Original Indenture" means the trust indenture dated April 22, 1998 between the Company and Montreal Trust Company providing for
the issue of the Original Debentures, as amended and supplemented from time to time; 

        "Permitted Indebtedness" means (i) the amounts owing under the Emergency Credit Facility (as the same may be amended,
modified, varied or replaced from time to time, if such amendment, modification, variation or replacement facility is permitted under the Intercreditor Agreement); (ii) all reimbursement and
other obligations with respect to letters of credit, banker's acceptances and surety bonds Incurred in the ordinary course of business and not evidencing or supporting Indebtedness for borrowed money;
(iii) obligations Incurred with respect to granting security to EDC in connection with EDC's performance security guarantee program; (iv) indebtedness created or arising under the sale
of accounts receivable at a discount; (v) the CTR Guarantee; and (vi) Hedging Obligations Incurred in the ordinary course of business and not for speculative purposes;
provided, however, that at no time shall the aggregate amounts outstanding under paragraphs (i) through (iv) above exceed $50,000,000; 

        "Permitted Investments" means an Investment by the Company or any Restricted Subsidiary: 

        (1)    in
the Company, a Wholly Owned Subsidiary or a Person that will, upon the making of such Investment, become a Wholly Owned Subsidiary; 

        (2)    in
cash and Temporary Cash Investments; 

        (3)    in
receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; 

        (4)    in
payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business; 

        (5)    in
CTR to the extent pursuant to and in compliance with the Restructuring Termsheet, the Support Agreement and the Intercreditor Agreement; 

        (6)    through
the holding of funds in the Company Accounts and Disbursement Accounts and investments comprised of notes payable, or stock or other securities issued by Account
Debtors to the Company pursuant to negotiated agreements with respect to settlement of such Account Debtor's Accounts in the ordinary course of business, so long as the aggregate amount of such
Accounts so settled by the Company does not exceed 

8

 

Cdn$1,000,000;
provided further that the Company may hold the investments in paragraphs (7) and (8) immediately below and the amount of such
investments shall be excluded from determining such Cdn$1,000,000 amount; 

        (7)    in
notes payable or stock or other securities issued by Telmex Argentina to the Company from time to time pursuant to negotiated agreements with respect to settlement of
Telmex Argentina's Accounts in the ordinary course of business; and 

        (8)    in
notes payable or stock or other securities issued by any Account Debtor to the Company pursuant to negotiated agreements with respect to settlement of Accounts and
which are insured by insurance or guaranteed by letters of credit or letters of guarantee. 

        "Permitted Liens" means the following encumbrances: (a) Liens for Taxes or assessments or other governmental Charges not yet due
and payable; (b) pledges or deposits of money securing statutory obligations under workmen's compensation, unemployment insurance, social security or public liability laws or similar
legislation; (c) pledges or deposits of money securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which the Company is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics', landlords' or similar Liens arising in the ordinary course of business, so long as such Liens attach only to
equipment, fixtures and/or real estate; (e) carriers', warehousemen's, suppliers' or other similar possessory liens arising in the ordinary course of business and securing liabilities in an
outstanding aggregate amount not in excess of $50,000 at any time, so long as such Liens attach only to inventory; (f) pledges or deposits of money securing letters of credit or letters of
guarantee obtained in the ordinary course of business and not in connection with Indebtedness for money borrowed; (g) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which Company is a party; (h) any attachment or judgment lien not constituting an Event of Default under Section 8.1; (i) zoning restrictions, easements, licenses,
or other restrictions on the use of any real estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or
marketability of such real estate; (j) Liens presently existing or hereinafter created securing the Emergency Credit Facility; (k) Liens presently existing or hereinafter created in
favour of EDC and/or IADB securing the CTR Guarantee or presently existing in favour of EDC and/or IADB securing the CTR Facility; (l) Liens in existence on the date hereof; (m) Liens
created after the date hereof by conditional sale or other title retention agreements (including Capital Leases) or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by the Company or its Restricted Subsidiaries in the ordinary course of business, involving the Incurrence of an aggregate amount of purchase money Indebtedness and Capital Lease
Obligations of not more than Cdn$500,000 outstanding at any one time for all such Liens; provided that such Liens attach only to the assets subject to such Indebtedness and such Indebtedness is
Incurred within twenty (20) days following such purchase and does not exceed one hundred percent (100%) of the purchase price of the subject assets; (n) Liens created after the date
hereof in connection with purchase money Indebtedness with respect to Inventory acquired by the Company or its Restricted Subsidiaries in the ordinary course of business, involving the Incurrence of
an aggregate amount of Indebtedness (and proceeds of such assets) of not more than $2,000,000 outstanding at any one time for
all such Liens; provided that such Liens attach only to the assets subject to such purchase money Indebtedness and such Indebtedness is Incurred within twenty (20) days following such purchase
and does not exceed one hundred percent (100%) of the purchase price of the subject assets; (o) Liens permitted in accordance with the Restructuring Term Sheet; (p) Liens created after
the date hereof and ranking pari passu with any Liens created in favour of the Debentureholders, the Collateral Agent, the Trustee, or the CTR
Lenders, in favour of EDC as security for any Indebtedness of the Company or any of its Restricted Subsidiaries to EDC pursuant to the performance guarantee program of EDC; and (q) the
Subordination Pledge (as defined in the Intercreditor Agreeement); 

        "Person" includes an individual, corporation, company, partnership, limited liability company, joint venture, association, trust, trustee,
unincorporated organization or government or any agency or political subdivision thereof; 

        "PIK Debenture" means a Debenture issued on account of interest due on Debentures pursuant to Section 2.1(c); 

        "PPSA" means the Personal Property Security Act (Ontario) as amended; 

9

  

        "Record Date" means, with respect to the payment of interest, April 1 and October 1 in each year; 

        "Redemption Date" has the meaning ascribed thereto in Section 3.2; 

        "Redemption Price", for a Debenture, means, either the Mandatory Redemption Price or the Optional Redemption Price, as the case may
be; 

        "Registration Rights Agreements" means those agreements among the Company, the Trustees, or one or more Beneficial Holders, providing for
registration rights in Canada and the U.S.; 

        "Regulation S" means Regulation S under the U.S. 1933 Act; 

        "Regulation S Temporary Global Debentures" means Debentures initially sold outside the United States in reliance on
Regulation S, represented by a single temporary global debenture registered in the name of the Depositary (or any nominee of the Depositary) the form of which shall be substantially in
the form of Exhibit C hereto; 

        "Responsible Officer", when used with respect to either Trustee, means any officer or other employee within its corporate trust and agency
group, including any vice president, managing director, assistant vice president, secretary, assistant secretary, treasurer, assistant treasurer, or any other officer or other employee of such Trustee
customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer or other
employee to whom such matter is referred because of such officer's or employee's knowledge of and familiarity with the particular subject. 

        "Restricted Debentures" means (i) the Regulation S Temporary Global Debentures and (ii) the Restricted Fully
Registered Debentures; 

        "Restricted Fully Registered Debentures" has the meaning ascribed thereto in Section 2.6; 

        "Restricted Investments" means any Investment other than a Permitted Investment; 

        "Restricted Payments" means (i) dividends (other than dividends payable solely in Common Shares) and other distributions on the
share capital of the Company; (ii) any repurchases of the Company's share capital; (iii) the making of any principal payment on or the purchase, defeasance, repurchase, redemption, other
acquisition or retirement for value, pursuant to any scheduled maturity, scheduled repayment or scheduled sinking fund payment, of any subordinated Indebtedness (other than payment of the CTR
Guarantee Maximum (as defined in the Intercreditor Agreement) after the end of the CTR Lenders' Standstill Period (as defined in the Intercreditor Agreement)); and
(iv) forgiveness of any Indebtedness owing to the Company or any Restricted Subsidiary by any affiliate of the Company or any Restricted Subsidiary, other than Indebtedness owing from CTR to
the Company; 

        "Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary; 

        "Restructuring Termsheet" means the SR Telecom — Amended and Restated Principles of Restructuring
term sheet dated May 10, 2005 entered into between the lenders under the Emergency Credit Facility, the Company, IADB, EDC and CTR, attached hereto as Exhibit D; 

        "Rights Offering" means the first offering following the Exchange Offer to be made by the Company to its holders of Common Shares of
rights to acquire additional Common Shares of the Company; 

        "Rights Offering Record Date" means the record date set by the Company for the Rights Offering; 

        "Security Agreement" means collectively (i) the "Deed of Hypothec to Secure Debentures" bearing formal date August 22, 2005
(as the same may from time to time be amended, restated, modified or supplemented, the "Deed of Hypothec") between the Company and Computershare
Trust Company of Canada, as Trustee and the therein defined "Fondé de Pouvoir" (for the purposes of the present paragraph, the
"Quebec Trustee"), (ii) the general security agreement of even date herewith by and between the Company, Computershare Trust Company of Canada
and others and (iii) all other agreements and/or documents now or hereafter entered into between the Company and the Quebec Trustee creating and/or with respect to any Liens, security
interests, hypothecs and/or rights in and against any of the Company's present and future property, in general, and the Collateral 

10

 

and/or
the Mortgaged Properties, in particular, as the same may from time to time be amended, restated, modified or supplemented; 

        "Shareholders' Equity" means the shareholders' equity of the Company as determined by GAAP; 

        "Shelf Registration Statement" has the meaning set forth in the Registration Rights Agreement dated as of August 22, 2005 by and
among the Company and the parties specified on the signature pages thereof; 

        "Specified Amount of Rights Offering Proceeds" means that amount equal to 50% of the net proceeds to the Company from the Rights Offering
in excess of $25,000,000 multiplied by the Specified Percentage of Rights Offering Proceeds; 

        "Specified Percentage of Rights Offering Proceeds" means a percentage equal to 100 multiplied by a fraction, of which the numerator
is all obligations owing under this Indenture, and of which the denominator is all obligations owing under the CTR Facility plus all obligations owing under this Indenture; 

        "SR Group" means collectively the Company and its Subsidiaries and means individually any one of them; 

        "Stated Maturity Date" means October 15, 2011; 

        "Stock" means "Securities" (as defined in the PPSA) as well as all shares, options, warrants, general or limited partnership
interests or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity whether voting or nonvoting, including common shares, preferred shares or any
other "equity security"; 

        "Subsidiary" means, with respect to any Person, (a) any corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of fifty percent (50%) or more of such Stock whether by proxy, agreement, operation of
law or otherwise, and (b) any partnership, limited liability company or other entity in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than fifty percent (50%) or of which any such Person is a general partner or may exercise the powers of a general partner; 

        "Successor Company" has the meaning ascribed thereto in Section 10.1; 

        "Support Agreement" has the meaning ascribed thereto in the Restructuring Termsheet; 

        "Tax" and "Taxes" includes all present and future taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments (ordinary or extraordinary), withholdings and other charges of any nature (including income, capital gains, corporate, capital (including large corporations), net
worth, sales, consumption, use, transfer, goods and services, value-added, stamp, registration, franchise, withholding, payroll, employment, health, education, employment insurance, pension, excise,
business, school, property, occupation, customs, anti-dumping and countervail taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings and other charges) imposed by
any Governmental Authority, together with any fines, interest, penalties or other additions on, to, in lieu of, for non-collection of or in respect of those taxes, surtaxes, duties,
levies, imposts, rates, fees, assessments, withholdings and other charges; 

        "Temporary Cash Investments" means any of the following: 

	(1)
	any
investment in direct obligations of the United States or America or Canada or any agency thereof or obligations guaranteed by the United States of America or Canada
or any agency thereof;

	(2)
	investments
in demand accounts, in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued
by a bank or trust company which is organized under the laws of the United States of America, any State thereof or Canada or any Province thereof, and which bank or trust company has capital,
surplus and undivided profits aggregating is excess of $500.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated 

11

 

"A"
(or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization or any money-market fund sponsored by a registered broker dealer or
mutual fund distributor; 

	(3)
	repurchase
obligations with a term of not more that 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting
the qualifications described in clause (2) above;

	(4)
	investments
in commercial paper, maturing not more that 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America or Canada with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to
Moody's or "A-1" (or higher) according to S&P; and

	(5)
	investments
in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, province, commonwealth or territory of the
United States of America or Canada, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's; 

        "Total Offer Price" has the meaning ascribed thereto in Section 5.20; 

        "Trading Day" means, with respect to an Exchange, any day on which such Exchange is open for trading or quotation; 

        "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in force at the
date as of which this instrument was executed; provided, however, that in the event the Trust Indenture
Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so
amended; 

        "Trustees" means (a) The Canadian Trustee in its capacity as (i) co-trustee on behalf of the Debentureholders
hereunder and (ii) the "Fondé de Pouvoir" of the Debentureholders for the purposes of holding hypothecs over and against all of
the company's present and future property, in general, and the Collateral and the Mortgage Properties, in particular, securing payment of the "Debenture Indebtedness" (as defined in the
Security Agreement) as envisaged by Article 2692 of the Civil Code or, in both cases, its successors appointed pursuant to
Section 13.4(a) hereof; and (b) the U.S. Trustee in its capacity as co-trustee on behalf of the Debentureholders hereunder, and
"Trustee" means either one of them; 

        "Unrestricted Global Debentures" has the meaning ascribed thereto in Section 2.6(a)(ii), the form of which shall be substantially
in the form of Exhibit E hereto; 

        "Unrestricted Subsidiary" means: 

	(1)
	any
Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below; and

	(2)
	any
Subsidiary of an Unrestricted Subsidiary; 

in
each case unless and until such Subsidiary is designated a Restricted Subsidiary for purposes of this Indenture. As of the date hereof, the only Unrestricted Subsidiaries are: (a) CTR,
(b) Rurales Telecomunicaciones Chile S.A., (c) CTR Chile Networks S.A., (d) SR (BV) Holdings Limited, (e) CTR Holdings Limited, and
(f) Servicios Rurales de Telecomunicaciones S.A. (Chile). 

        The
Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any capital stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated; provided, however, that either (A) the Subsidiary to be so designated has total assets of $1,000 or
less or (B) if such Subsidiary has assets greater than $1,000, such designation would be permitted as an "Investment" under Section 5.11; 

        The
Board of Directors of the Company may designate any Unrestricted Subsidiary (other than CTR) to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (A) the Company could Incur $1.00 of additional Indebtedness under Section 5.9
and (B) no Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly 

12

 

filing
with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing
provisions; 

        "U.S. 1933 Act" means the United States Securities Act of 1933, as amended; 

        "U.S. 1933 Act Legend" has the meaning ascribed thereto in Section 2.17; 

        "U.S. Person" has the meaning ascribed thereto in Rule 902(k) under the U.S. 1933 Act; 

        "Wholly Owned Subsidiary" means a Restricted Subsidiary, all the capital stock of which is owned by the Company or one or more Wholly
Owned Subsidiaries; and 

        "Written Direction of the Company" means any order, request, direction or other instrument in writing made pursuant to this Indenture
signed in the name of the Company by the President or by the Chief Financial Officer of the Company, each in his capacity as an officer of the Company. 

1.2   Meaning of "Outstanding"  

        Every Debenture certified and delivered by the Trustee hereunder shall be deemed to be outstanding until it shall be cancelled, converted or redeemed or delivered
to the Trustee for cancellation, or monies for the
payment or redemption thereof shall have been set aside under Section 3.4 or Section 9.2, or in the case of Section 3.1, the Company has effected the redemption, as the
case may be, provided that: 

	(a)
	Debentures
which have been partially redeemed, purchased or converted shall be deemed to be outstanding only to the extent of the unredeemed, unpurchased or unconverted part of the
principal amount thereof;

	(b)
	when
a new Debenture has been issued in substitution for a Debenture which has been lost, stolen or destroyed, only the new Debenture shall be counted for the purpose of determining
the aggregate principal amount of Debentures outstanding; and

	(c)
	for
the purposes of any provision of this Indenture entitling Holders of outstanding Debentures to vote, sign consents, requisitions or other instruments or take any other action
under this Indenture or to constitute a quorum of any meeting of Debentureholders, Debentures owned directly or indirectly, legally or equitably, by the Company or any Subsidiary shall be disregarded
(and Debentures owned by any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall not be disregarded) except that:

	(i)
	for
the purpose of determining whether the Trustee shall be protected in relying on any such vote, consent, requisition or other instrument or action or on the
Debentureholders present or represented at any meeting of Debentureholders only the Debentures which the Trustee knows are so owned shall be so disregarded; and

	(ii)
	Debentures
so owned which have been pledged in good faith other than to the Company or a Subsidiary shall not be so disregarded if the pledgee shall establish to the
reasonable satisfaction of the Trustee that the pledgee's right to vote such Debentures, sign consents, requisitions or other instruments or take such other action in his discretion is free from the
control of the Company or any Subsidiary. 

Notwithstanding
any applicable law or rule, Debentures owned on the date of execution hereof by accounts or funds which are managed by or over which control or direction is exercised by DDJ Capital
Management LLC shall not be disregarded so long as such Debentures are owned by accounts or funds which are managed by or over which control or direction is exercised by DDJ Capital
Management LLC. Provisions deemed included in this Indenture pursuant to TIA Section 316(a) are hereby expressly excluded to the extent inconsistent with this Section 1.2
and it is the express intent of the parties, that in the event of a direct or indirect conflict between the terms of this Section 1.2 and section 316(a) of the TIA or any
term or provision deemed to be included in this Indenture or the Debentures pursuant thereto, the terms of this Section 1.2 shall govern and control. 

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1.3   Interpretation  

        In this Indenture: 

	(a)
	words
importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa;

	(b)
	all
references to Articles and Exhibits refer, unless otherwise specified, to articles of and exhibits of this Indenture;

	(c)
	all
references to Sections, subsections or clauses refer, unless otherwise specified, to sections, subsections or clauses of this Indenture and references to subsections or clauses
refer to paragraphs in the same section as the reference, or clauses in the same subsection as the reference;

	(d)
	words
and terms denoting inclusiveness (such as "include" or "includes" or "including"), whether or not so stated, are not limited by and do not imply limitation of their context or
the words or phrases which precede or succeed them; and

	(e)
	any
reference to any statute or other legislation shall be deemed to be a reference to such legislation as now enacted or as the same may from time to time be amended,
re-enacted or replaced. 

1.4   Headings Etc.  

        The division of this Indenture into Articles and Sections, 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 or of the Debentures. 

1.5   Day not a Business Day  

        Whenever any payment to be made hereunder shall be stated to be due, any period of time would begin or end, any calculation is to be made or any other action to
be taken hereunder shall be stated to be required to be taken on a day other than a Business Day, such payment shall be made, such period of time shall begin or end, such calculation shall be made,
and such other action shall be taken on the next succeeding Business Day and no Debentureholder shall be entitled to any further interest or other payment in respect of such delay. 

1.6   Applicable Law  

        This Indenture and the Debentures shall be governed by and construed in accordance with the procedural and substantive laws of the Province of Ontario, and the
laws of Canada applicable therein, and shall be treated in all respects as Ontario contracts and the Company, the Trustee and the Debentureholders irrevocably attorn to the non-exclusive
jurisdiction of the courts of the Province of Ontario. 

1.7   Monetary References  

        Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of Canada unless otherwise expressed. 

1.8   Invalidity, Etc.  

        Each of the provisions contained in this Indenture or the Debentures is distinct and severable and any provision hereof which is prohibited or unenforceable shall
be ineffective only to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof. 

1.9   Language  

        Each of the parties hereto hereby acknowledges that it has consented to and requested that this Indenture and all documents relating thereto, including, without
limiting the generality of the foregoing, the forms of Debentures attached hereto, be drawn up in the English language only. Chacune des parties aux présentes reconnaît
par les présentes qu'elle a demandé et consent à ce que le present acte de fiducie et tous les 

14

 

documents
s'y rattachant, notamment la formule de debenture jointe aux présentes, ne soient rédigés qu'en anglais. 

1.10 Successors and Assigns  

        All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether expressed or not. 

1.11 Time of the Essence  

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

1.12 Intercreditor Agreement  

        This Indenture is subject to the terms and conditions of the Intercreditor Agreement. Notwithstanding any provision of this Indenture, if Debentureholders are
otherwise entitled to take action independently of the Trustees hereunder or otherwise, they may not take any such action that would be prohibited under the terms of the Intercreditor Agreement. 

1.13 Incorporation by Reference of Trust Indenture Act  

        This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture, except to the extent
specified herein. The following TIA terms have the following meanings: 

        "indenture
securities" means the Debentures; 

        "indenture
security holder" means a Debentureholder or a Holder; 

        "indenture
to be qualified" means this Indenture; 

        "indenture
trustee" or "institutional trustee" means the U.S. Trustee; and 

        "obligor"
on the indenture securities means the Company and any other obligor on the indenture securities. 

        All
other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statue or defined by Commission rule have the meanings assigned to them by
such definitions. 

 
 

ARTICLE II
  THE DEBENTURES  
    

2.1   Terms of Debentures and Interest  

	(a)
	The
aggregate principal amount of Debentures authorized to be issued under this Indenture is unlimited as to amount, provided, however, that Debentures may be issued only
(i) pursuant to the Exchange Offer; (ii) in exchange for 8.15% Debentures purchased by the Company outside of the Exchange Offer on the same economic terms as provided for in the
Exchange Offer; or (iii) on account of interest payable on the Debentures in accordance with Section 2.1(c). 

The
Debentures shall be designated as "10% Secured Convertible Debentures due October 15, 2011". The Debentures shall be dated as of (i) August 22, 2005 or (ii) the date
such Debentures are issued. The Debentures, including, for greater certainty, the PIK Debentures, shall mature on the Maturity Date. 

	(b)
	Subject
to Section 2.1(e) and (f), each Debenture will bear interest at the rate of 10% per annum until maturity. Interest shall be payable
semi-annually, in arrears, on an Interest Payment Date, commencing on April 15, 2006; provided that interest on PIK Debentures will begin to accrue on the respective date the PIK
Debentures in question are issued. The first payment of interest in respect of the Debentures will be such interest as has accrued from the date of the issuance of the Debentures to the next occurring
Interest Payment Date. Thereafter, the interest payable will be determined from the most recent Interest Payment Date on which interest shall have been paid or made available for payment. 

15

 

Interest
on the Debentures shall accrue from day to day, shall compound semi-annually and shall be calculated on the basis of the actual number of days elapsed and on the basis of a year
of 365 days or 366 days in a leap year and shall be payable: (i) in cash, by cheque or electronic transfer of funds in lawful money of Canada; (ii) by the issue of PIK
Debentures; or (iii) a combination thereof pursuant to section 2.1(c). The Company shall forward cash interest payments to the Trustees in accordance with Section 2.14. 

	(c)
	Subject
to subsection (d) of this Section 2.1 and Section 2.18, at the option of the Company and upon 10 Business Days prior written notice, the
Company may satisfy, in whole or in part, its obligations to pay interest on the Debentures on any Interest Payment Date by issuing PIK Debentures, the principal amount of which will be equal to the
amount of interest payable on the Debentures on the relevant Interest Payment Date less any interest then paid in cash. The PIK Debentures will have the same Maturity Date and interest rate as the
Debentures. The terms of the PIK Debentures will otherwise be identical to the terms of the Debentures. Issuance and delivery of PIK Debentures in accordance with this Section 2.1 shall
constitute full payment of the corresponding amount of interest on the Debentures;

	(d)
	Notwithstanding
subsection (c) of this Section 2.1, the Company may not issue PIK Debentures in respect of accrued interest on any Debenture upon:

	(i)
	the
occurrence of the Maturity Date;

	(ii)
	redemption
pursuant to Section 3.1 or a purchase under Section 5.20;

	(iii)
	conversion
pursuant to Article IV; or

	(iv)
	the
occurrence and continuance of a Default.

	(e)
	Each
PIK Debenture is a separate debt obligation and shall be governed by, and entitled to the benefits of, this Indenture, shall rank pari passu
with and be subject to the same terms as all other Debentures and shall have the benefit of all Liens securing the Debentures. The Company shall execute and deliver to the Trustees a Global Debenture
to evidence aggregate PIK Debentures issued on each applicable Interest Payment Date with regard to the outstanding Global Debentures, and the Company shall execute and deliver to the Trustee Fully
Registered Debentures to evidence PIK Debentures issued on each applicable Interest Payment Date with regard to outstanding Fully Registered Debentures. Each such Global Debenture shall be in the
principal amount of the aggregate PIK Debentures issued with regard to the outstanding Global Debentures, and each such Fully Registered Debenture shall be in the principal amount of the PIK
Debenture, issued on and dated as of the applicable Interest Payment Date. Each PIK Debenture shall represent the obligation of the Company to pay the amount of such PIK Debenture.

	(f)
	The
Company shall pay interest (including Bankruptcy Interest in any proceeding under the Insolvency Laws) both before and after judgment, at a rate of 12% per annum
(the "Default Rate"): (i) upon a default in the payment of interest or any other amount due under this Indenture or the Debentures, on
such overdue amounts, (ii) from and after the occurrence of an Event of Default; and (iii) upon a failure by the Company to pay liquidated damages when due under any Registration Rights
Agreement and such failure to pay is not remedied within the relevant time period, if any, provided for in such agreement; provided that the Default Rate shall be calculated on a daily basis from the
date of the default referred to in paragraphs (i) through (iii) hereof, for so long as such amount remains overdue or such Event of Default or default remains outstanding, as the
case may be, and on the basis of a year of 365 days or 366 days in a leap year. Such interest shall be payable by the Company upon demand by Trustees and shall compound
semi-annually.

	(g)
	If
any provision of this Indenture or any of the Debentures would obligate the Company to make any payment of interest or other amount payable to the Trustees or Debentureholders in
an amount or calculated at a rate which would be prohibited by law or would result in a receipt by such Trustees or Debentureholders of interest at a criminal rate (as such terms are construed
under the Criminal Code (Canada)) then, notwithstanding such provision, such amount or rate shall be deemed to have been 

16

 

adjusted
with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the Trustees or Debentureholders of
interest at a criminal rate, such adjustment to be effected, to the extent necessary, as follows: (1) firstly, by reducing the amount or rate of interest required to be paid on the Debentures;
and (2) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to the Trustee or Debentureholders which would constitute interest for purposes of
Section 347 of the Criminal Code (Canada). Any amount or rate of interest referred to in this Section 2.1(g) shall be determined in
accordance with GAAP as an effective annual rate of interest over the term that any Debenture remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of
"interest" (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be pro-rated over that
period of time and otherwise be pro-rated over the period from the date hereof to the Maturity Date and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of
Actuaries appointed by the Trustees or Debentureholders shall be conclusive for the purposes of such determination. 

2.2   Form and Signature of Debentures  

        The Debentures may be issued in any denomination; provided, however, that to the extent possible, Debentures shall be issued in denominations of $1,000 and
integral multiples of $1,000. The Debentures and the certificate of the Trustees endorsed thereon shall be in substantially the forms set forth in Exhibits A, C and E hereto. The Debentures
shall bear such distinguishing letters and numbers as the Trustee may approve. 

        The
Debentures may be typewritten, electronically reproduced, engraved, printed or lithographed, or partly in one form and partly in another, as the Company may determine and may have
imprinted or otherwise reproduced thereon such legend or legends or endorsements as may be required to comply with any applicable law or with any applicable rules or regulations pursuant thereto,
including those under Applicable Securities Legislation or the Exchange, or as may be required by the Depositary. 

        The
Debentures shall be under the seal of the Company (or a reproduction thereof which shall be deemed to be the seal of the Company) and shall be signed (either manually or by
facsimile signature) by the President or the Chief Financial Officer and any vice-president of the Company. A facsimile signature upon any of the Debentures shall for all purposes of this
Indenture be deemed to be the signature of the Person whose signature it purports to be and to have been signed at the time such facsimile signature is reproduced. Notwithstanding that any Person
whose signature, either manual or in facsimile, may appear on the Debentures is not, at the date of this Indenture or at the date of the Debentures or at the date of the certifying and delivery
thereof, the holder of the office indicated, any such Debentures shall be valid and binding upon the Company and entitled to the benefits of this Indenture. 

2.3   Issuance of Debentures  

        Any Debentures issued shall be delivered to the Trustees and shall be certified by the Trustees and delivered to or to the order of the Company pursuant to a
Written Direction of the Company without the Trustees receiving any consideration therefor. 

2.4   Certification  

        No Debenture shall be issued or, if issued, shall be obligatory or shall entitle the Holder to the benefits of this Indenture, until it has been certified by or
on behalf of the Trustee substantially in one of the forms set out in Exhibits A, C or E hereto or in some other form approved by the Trustee. Such certification on any Debenture shall be
conclusive evidence that such Debenture is duly issued and is a valid obligation of the Company and that the Holder is entitled to the benefits hereof. 

17

   
        The certificate of the Trustee signed on the Debentures shall not be construed as a representation or warranty by the Trustees as to the validity of this Indenture or of the Debentures
or as to the issuance of the Debentures and the Trustee shall in no respect be liable or answerable for the use made of the Debentures or any of them or the proceeds thereof. The certificate of the
Trustee signed on the Debentures shall, however, be a representation and warranty by the Trustee that the Debentures have been duly certified by or on behalf of the Trustee pursuant to the provisions
of this Indenture. 

2.5   Debentures to Rank Pari Passu  

        The Debentures will be direct secured obligations of the Company and may be issued in such amounts, to such Persons and on such terms not inconsistent with
Sections 2.1(a) and 2.2, as the Directors may determine. Each Debenture, as soon as issued or negotiated and certified by the Trustee shall, subject to the terms hereof, be
equally and proportionately entitled to the benefits hereof as if all of the Debentures had been issued and negotiated simultaneously. 

2.6   Global Debentures  

	(a)
	Except
as described in Section 2.8, the Debentures shall be issued as one or more Global Debentures. The Global Debentures shall be registered in the name of the Depositary
(or any nominee of the Depositary) and shall represent an aggregate amount equal to the principal amount of the outstanding Debentures other than those represented by Fully Registered
Debentures. The Global Debentures shall be issued either as Regulation S Temporary Global Debentures or Unrestricted Global Debentures.

	(i)
	Debentures
offered and sold outside of the United States in reliance on Regulation S shall be represented by a Regulation S Temporary Global
Debenture. Beneficial interests in each Regulation S Temporary Global Debenture may be held only through a Depositary Participant located outside the United States.

	(ii)
	Not
earlier than the Exchange Date, interests in each Regulation S Temporary Global Debenture shall be exchangeable for interests in the related permanent global
debenture (an "Unrestricted Global Debenture"). On or after the Exchange Date, the Trustees or other registrar shall instruct the Depositary to
reduce the principal amount of the Regulation S Temporary Global Debenture and increase the principal amount of the Unrestricted Global Debenture by the principal amount of the beneficial
interests in the Regulation S Temporary Global Debenture, and to credit or cause to be credited to the account of each Depositary Participant holding a beneficial interest in the
Regulation S Temporary Global Debenture a beneficial interest in the Unrestricted Global Debenture having a principal amount equal to the reduction in the principal amount of the beneficial
interest in the Regulation S Temporary Global Debenture held by such Depositary Participant.

	(iii)
	Upon
the exchange of the entire principal amount of a Regulation S Temporary Global Debenture for beneficial interests in an Unrestricted Global Debenture, the
Trustees shall cancel such Regulation S Temporary Global Debenture in accordance with the Trustees' policies in effect from time to time.

	(iv)
	No
interest in the Regulation S Temporary Global Debentures may be held by or transferred to a U.S. Person.

	(b)
	With
respect to the Global Debentures, the Company shall cause to be kept by the Trustees and at the Designated Office, a register in which shall be entered the name and address of
the Debentureholder of each such Global Debenture (being the Depositary, or its nominee, for such Global Debenture) as Debentureholder thereof and particulars of the Global Debenture held by it, and
of all transfers thereof. 

18

 

	(c)
	The
Global Debentures shall bear a legend substantially to the following effect: 

"THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
DEBENTURE MAY NOT BE TRANSFERRED TO OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OR TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL
DEBENTURE SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE."

	(d)
	Notwithstanding
any other provision of this Indenture, a Global Debenture may not be transferred except in whole by the Depositary to a nominee of such Depositary or by a nominee of
the Depositary to such Depositary or to another nominee of such Depositary or by a Depositary or its nominee to a successor Depositary or its nominee or as otherwise specified in a resolution of the
Board of Directors on behalf of the Company, an Officers' Certificate or, for greater certainty, in accordance with subsection (f) of this Section 2.6.

	(e)
	Each
Depositary designated for a Global Debenture must, at the time of its designation and at all times while it serves as such Depositary, be a clearing agency registered or
designated under the securities legislation of the jurisdiction where the Depositary has its principal offices.

	(f)
	A
Global Debenture may be exchanged for Debentures in registered form that are not Global Debentures, or transferred to and registered in the name of a Person other than the
Depositary (or the nominee thereof) for Global Debentures if:

	(i)
	the
Depositary for the Global Debenture (A) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Debenture or
(B) ceases to be eligible to be a Depositary under Section 2.6(e), provided that the Company has not appointed a successor Depositary for such Global Debenture within
45 days after becoming aware of (A) or (B);

	(ii)
	the
Company determines, in its sole discretion, to terminate the book-entry only registration system in respect of such Global Debenture and has
communicated such determination to the Trustee on 45 days notice in writing;

	(iii)
	the
Trustee has determined that an Event of Default has occurred and is continuing, provided that at the time of such exchange the Trustee has not waived the Event of
Default pursuant to Section 8.3, and provided further that Beneficial Holders representing, in the aggregate, not less than 25% of the aggregate principal amount of the Debentures
outstanding advise the Depositary in writing, through the Depositary Participants, that the Beneficial Holders wish to terminate the book-entry only registration system for the Debentures;

	(iv)
	if
required by applicable law; or

	(v)
	if
the book-entry only registration system ceases to exist or the Depositary System of the Depositary ceases to exist.

	(g)
	With
respect to the Global Debentures, unless and until Fully Registered Debentures have been issued to Beneficial Holders:

	(i)
	the
Company and the Trustees may deal with the Depositary for all purposes (including paying interest on the Debentures either in cash or by the issuance of PIK
Debentures) as the sole Holder of such Debentures and the authorized representative of the Beneficial Holders who hold interests in such Debentures;

	(ii)
	the
rights of such Beneficial Holders shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such
Beneficial Holders and the Depositary or the Depositary Participants;

	(iii)
	the
Depositary will make book entry transfers between Depositary Participants; and 

19

 

	(iv)
	whenever
this Indenture requires or permits actions to be taken based upon instructions or directions of Debentureholders evidencing a specified percentage of the
outstanding Debentures, the Depositary shall be deemed to be counted in that percentage only to the extent that it has received instructions to such effect from the Beneficial Holders or Depositary
Participants, and has delivered such instructions to the Trustee.

	(h)
	Whenever
a notice or other communication is required to be provided to Debentureholders, unless and until Fully Registered Debentures have been issued to Beneficial Holders, the
Trustees shall provide all such notices and communications to the Depositary and the Depositary shall deliver such notices and communications to such Beneficial Holders in accordance with Applicable
Securities Legislation. Upon the termination of the book-entry only registration system on the occurrence of one of the conditions specified in Section 2.6(f) with respect to
Debentures issued hereunder, the Trustees shall notify all applicable Beneficial Holders, through the Depositary, of the availability of definitive Debenture certificates. Upon surrender by the
Depositary of the certificate(s) representing the Global Debentures and receipt of new registration instructions from the Depositary, the Trustees shall deliver the definitive Debenture
certificates for such Debentures to the Debentureholders thereof in accordance with the new registration instructions and thereafter, the registration and transfer of such Debentures will be governed
by Section 2.8 and the remaining Sections of this Article II.

	(i)
	Debentures
in definitive form issued in exchange for a Global Debenture pursuant to this Section 2.6 shall be registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustees, provided that the aggregate principal amount of definitive Debentures is
equal to the principal amount of the Global Debenture or Global Debentures so exchanged. The Trustees shall deliver such Debentures to or as directed by the persons in whose names such Debentures are
so registered. Upon the exchange of a Global Debenture or Global Debentures for Debentures in definitive form, such Global Debenture or Global Debentures shall be cancelled by the Trustees.

	(j)
	Notwithstanding
anything herein or in the terms of the Debentures to the contrary, neither the Company nor the Trustees nor any agent thereof shall have any responsibility or
liability for (i) the records maintained by any Depositary relating to any ownership interests or any other interests in the Debentures or the Depositary System maintained by such Depositary,
or payments made on account of any ownership interest or any other interest of any Person in any Global Debenture (other than the applicable Depositary or its nominee), (ii) for maintaining,
supervising or reviewing any records of any Depositary or any Depositary Participant relating to any such interest, or (iii) any advice or representation made or given by any Depositary and
those contained herein and relating to the rules and regulations of any Depositary or any action to be taken by any Depositary on its own direction or at the discretion of any of the Depositary
Participants. 

2.7   Transferee Entitled to Registration  

        The transferee of a Debenture shall be entitled, after the appropriate form of transfer is lodged with the Trustee or other registrar and upon compliance with all
other conditions in that behalf required by this Indenture or by law, to be entered on the register as the owner of such Debenture free from all equities or rights of set-off or
counterclaim between the Company and the transferor or any previous Debentureholder, save in respect of equities of which the Company is required to take notice by statute or by order of a court of
competent jurisdiction. 

2.8   Fully Registered Debentures  

	(a)
	Any
Fully Registered Debentures issued (i) to an Accredited Investor (a "Restricted Fully Registered Debenture") or (ii) in exchange for a Global Debenture
pursuant to Section 2.6 shall be substantially in such form or forms (not inconsistent with this Indenture) as shall be established by or pursuant to one or more resolutions of the Board
of Directors, on behalf of the Company, or in one or more indentures supplemental hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted
by this Indenture and may have imprinted or otherwise reproduced thereon 

20

 

such
legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any applicable law or with rules or regulations supplemental thereto,
including any Applicable Securities Legislation or with any applicable rules or regulations of the Exchange or to conform to general usage, all as may be determined by a Director or officer of the
Company executing such Debentures, as conclusively evidenced by their execution of such Debentures. The Trustees shall not be required to ensure compliance with any law or with rules or regulations
thereto or with any rules or regulations of the Exchange or securities regulatory authority or to conform to general usage in connection with the issue, transfer or exchange of the Debentures. Each
Fully Registered Debenture shall bear such distinguishing letters and numbers as the Trustees shall approve. 

	(b)
	With
respect to (i) Restricted Fully Registered Debentures and (ii) Fully Registered Debentures in definitive form issued in exchange for a Global Debenture pursuant to
Section 2.6, the Company shall cause to be kept by the Trustee at the Designated Office, registers in which shall be entered the names and addresses of the Debentureholders of Restricted Fully
Registered Debentures and Fully Registered Debentures and particulars of the Debentures held by them respectively and of all transfers of such Debentures. Such registration shall be noted on the
Debentures by the Trustees or other registrar unless a new Debenture shall be issued upon such transfer.

	(c)
	No
transfer of a Fully Registered Debenture shall be valid unless made on such register referred to in Section 2.8(b) by the registered Debentureholder or such
Debentureholder's executors, administrators or other legal representatives or an attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustees or other
registrar upon surrender of the Debentures together with a duly executed form of transfer acceptable to the Trustees and upon compliance with such other reasonable requirements as the Trustees or
other registrar may prescribe, nor unless the name of the transferee shall have been noted on the Debenture by the Trustees or other registrar.

	(d)
	In
the event of a partial transfer or a partial redemption of a holding of Fully Registered Debentures represented by one Fully Registered Debenture, a Fully Registered Debenture
shall be issued to the transferee in respect of the part transferred and a new Fully Registered Debenture in respect of the balance of the holding not transferred or redeemed shall be issued to the
transferor or the Holder, as applicable. The cost of preparing, printing, packaging and delivering the Fully Registered Debentures shall be borne by the Company. 

2.9   Charges for Registration, Transfer and Exchange  

        For each Debenture exchanged, registered, transferred or discharged from registration, the Trustees or other registrar, except as otherwise provided herein, may
make a reasonable charge for its services and in addition may charge a reasonable sum for each new Debenture issued (such amounts to be agreed upon by the Trustees and the Company from time to time)
and payment of such charges and reimbursement of the Trustees or any other registrar for any stamp taxes or governmental or other charges required to be paid in respect of such exchange, registration,
transfer or discharge from registration shall be made by the Company as a condition precedent thereto. For greater certainty, no charge shall be made to any Debentureholder hereunder for any exchange
of a Global Debenture as contemplated in Section 2.6(f), for any exchange of any Debenture resulting from a redemption or purchase pursuant to Article III or
Section 5.20, or for any conversion of any Debenture pursuant to Article IV. 

2.10 Registers Open for Inspection  

        The registers referred to in Sections 2.6(b) and 2.8(b) shall at all reasonable times during regular business hours be open for
inspection by the Company, the Trustees or any Debentureholder. Every registrar, including the Trustees, shall from time to time when requested so to do by the Company or by the Trustees, in writing,
furnish the Company or the Trustees, as the case may be, with a list of names and addresses of registered Debentureholders entered on the register kept by them and showing the principal amount and
serial numbers of the Debentures held by each such Debentureholder provided the Trustees shall be entitled to charge a reasonable fee to provide such a list. 

21

 

2.11 Closing of Registers  

        Neither the Company nor the Trustees nor any registrar shall be required to: 

	(a)
	make
transfers or exchanges or accept conversions of Debentures during the period from a Record Date to and including the first Interest Payment Date thereafter; or

	(b)
	make
transfers or exchanges of any Debentures which have been selected or called for redemption including, without limitation, during the 15 calendar day period preceding the
date fixed for such redemption unless upon due presentation thereof for redemption such Debentures shall not have been redeemed. 

2.12 Persons Entitled to Payment  

	(a)
	The
Person in whose name any Debenture shall be registered shall be deemed and regarded as the owner thereof for all purposes of this Indenture. Subject to Section 2.14,
payment of or on account of the principal of such Debenture shall be made only by cheque payable to or to the order of such Holder thereof. Payment of or on account of interest on such Debentures
shall be made, subject to Sections 2.1(d) and 2.14, only by (i) payment in cash, by certified cheque or electronic transfer of funds in lawful money of Canada;
(ii) on any Interest Payment Date prior to the Maturity Date by the issuance of PIK Debentures; or (iii) a combination thereof pursuant to Section 2.1(c). Any such payment
or issue of PIK Debentures shall be a good and valid discharge to the Trustees, any registrar, any paying agent and the Company for the amounts so paid. Payments on, or the issuance of PIK Debentures
in respect of, any Global Debentures registered in the name of the Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner of such Global
Debentures. The forwarding of any cheque or PIK Debentures, as the case may be, in the appropriate amount in accordance with Section 2.1 shall satisfy and discharge the liability on such
Debentures to the extent of the sum or sums represented thereby unless, in the case of payment by cheque, such cheque is not paid on presentation; provided that in the event of the
non-receipt of a cheque or PIK Debenture by a Holder, or the loss or destruction thereof, the Company, upon being furnished with reasonable evidence of such non-receipt, loss
or destruction and an indemnity reasonably satisfactory to it, shall issue to such Holder a replacement cheque for the amount of such cheque or a replacement PIK Debenture, as the case may be.

	(b)
	The
Holder of any Debenture shall be entitled to the rights, including for payment, evidenced by such Debenture free from all equities or rights of set-off or counterclaim
between the Company and the original or any intermediate holder thereof, and all Persons may act accordingly and a transferee of a Debenture shall, after an appropriate form of transfer is lodged with
the Trustees or other registrar and upon compliance with all other conditions in that regard required by this Indenture or by any conditions contained in such Debenture or by applicable law, be
entitled to be entered on any of the appropriate registers as the owner of such Debenture, free from all equities or rights of set-off or counterclaim between the Company and the original
or any intermediate holder thereof, except for equities the Company is required to take notice of by statute or by order of a court of competent jurisdiction.

	(c)
	Delivery
to the Company by a Debentureholder of a Debenture in surrender for payment in full or a receipt of such Holder for any payment, shall be a good and valid discharge to the
Company, which shall not be bound to enquire into the title of such Holder, save as ordered by a court of competent jurisdiction or as required by statute. None of the Company, the Trustees nor any
registrar shall be bound to take notice of or see to the execution of any trust (other than as created by this Indenture) in respect of any Debenture whether express, implied or constructive nor be
affected by notice of any equity that may be subsisting in respect thereof and may transfer the same on the direction of the Person registered as Holder, including the Depositary, whether named as
trustee or otherwise, as though that Person were the beneficial owner thereof.

	(d)
	Where
Debentures are registered in more than one name, failing written instructions from all such Holders to the contrary: (i) in the case of the issuance of PIK Debentures,
the PIK Debentures will be 

22

 

registered
in the same names; and (ii) in the case of a payment by cheque, the cheque shall be payable to all such Holders; and (iii) in the case of conversion, Common Shares shall be
issued in the joint names of all such Holders, and such issuance or payment shall be a good and valid discharge to the Trustees, any registrar, the Company and any paying agent. In the case of the
death of one or more joint holders, any payments on the Debentures may be paid, and any PIK Debentures or Common Shares issued, as the case may be, to the survivor or survivors of such Holders whose
receipt therefor shall constitute a good and valid discharge to the Trustee, any registrar, the Company and any paying agent. 

2.13 Taxes  

	(a)
	The
Company will make any withholdings or deductions in respect of Taxes required by law or by the interpretation or administration thereof and shall remit the full amount withheld or
deducted to the relevant taxing authority in accordance with applicable law and will from time to time pay or cause to be paid all other Taxes and government fees or dues lawfully levied, assessed or
imposed upon or in respect of its property (real or personal), assets, capital and undertaking or any part thereof or upon the income and profits of the Company as and when the same become due and
payable, and will exhibit or cause to be exhibited to the Trustees when requested the receipts and vouchers establishing such payments, and will duly observe and conform to all valid requirements of
any governmental authority relative to any of its property or rights which are material to its overall undertaking, provided, however, that the Company shall have the right to contest in good faith by
legal proceedings any such Taxes and government fees or dues and, upon such contest, may delay or defer payment or discharge thereof if the Company shall have set aside on its books reserves
(segregated to the extent required by sound accounting practice) deemed by it to be adequate with respect thereto, or if in the opinion of the Directors, the failure to pay and discharge promptly the
same shall be in the interests of the Company and not disadvantageous in any material respect to any Debentureholder or Beneficial Holder (collectively referred to in this Section 2.13 as
"Tax Indemnitees").

	(b)
	Except
as required by law, any and all payments by the Company hereunder shall be made, in accordance with this Section 2.13, free and clear of and without deduction for any
and all present or future Taxes. If the Company shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder, the sum payable shall be increased as much as shall be
necessary so that after making all required withholdings and deductions (excluding Taxes imposed on or measured by the net income or profit of a Tax Indemnitee by the jurisdictions under the laws of
which it is organized or is resident or carries on business through a permanent establishment located therein or any political subdivisions thereof, but including withholdings and deductions
applicable to additional sums payable under this Section 2.13), each Tax Indemnitee shall receive an amount equal to the sum it would have received had no such withholdings or deductions been
made. Within thirty (30) days after the date of any payment of Taxes, the Company shall furnish to the Trustees the original or a certified copy of a receipt evidencing payment thereof.

	(c)
	In
addition, the Company agrees to pay any present or future Taxes that arise from any payment made under this Indenture or from the execution, sale, transfer, delivery or
registration of, or otherwise with respect to, this Indenture, any Debenture or any other agreements and instruments contemplated hereby or thereby (excluding Taxes imposed on or measured by the net
income or profit of a Tax Indemnitee by the jurisdictions under the laws of which it is organized or is resident or carries on business through a permanent establishment located therein or any
political subdivisions thereof, but including any such Taxes imposed by any jurisdiction on amounts payable by the Company under this Section 2.13). Each Tax Indemnitee agrees that, as promptly
as reasonably practicable after it becomes aware of any circumstances referred to above which would result in additional payments under this Section 2.13(c), it shall notify the Company
thereof.

	(d)
	The
Company shall indemnify each Tax Indemnitee for the full amount of the Taxes referred to in this Section 2.13 (except for Taxes imposed on or measured by the net income or
profit of a Tax Indemnitee by the jurisdictions under the laws of which it is organized or is resident or carries on business through a permanent establishment located therein or any political
subdivisions thereof, other than any such 

23

 

Taxes
imposed by any jurisdiction on amounts payable by the Company under this Section 2.13) paid or payable or alleged to be paid or payable by such Tax Indemnitee and any liability (including
for greater certainty all penalties, interest and other amounts constituting Taxes and all legal, accounting or other costs and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted. This indemnification shall be made within ten (10) days after the date the party seeking indemnification makes written demand therefor. 

	(e)
	Each
Tax Indemnitee shall act reasonably and in good faith with respect to the exercise of any rights to claim any reduction in its liability for any tax
(a "Tax Saving"), as a result of any deduction, tax credit or other tax benefit for any Tax which the Company has paid or for which the Company
has paid an indemnity pursuant to this Section 2.13 or to obtain a refund of any such Tax (a "Refund"), provided that each Tax
Indemnitee shall have an absolute discretion as to the time at which and the order and manner in which it realizes or utilizes any Tax deduction, credit or other benefit and shall not be obliged to
arrange its business or its affairs in any particular way in order to be eligible for any such deduction, credit or benefit or to claim any such Refund.

	(f)
	If
and to the extent that a Tax Indemnitee determines in good faith, but in its sole discretion, (i) that it has actually realized any Tax Saving as a result of any deduction,
tax credit or other tax benefit for any Tax which the Company has paid or for which the Company has paid an indemnity pursuant to this Section 2.13, or (ii) that it has actually
received a Refund of any such Tax, then provided such Tax Indemnitee may do so without adversely affecting its right to retain such Tax Saving or Refund, and provided that no Default or Event of
Default has occurred and is continuing, such Tax Indemnitee shall pay to the Company within sixty (60) days of such determination an amount equal to the lesser of (x) the amount of such
Tax Saving or Refund, as the case may be, minus the net amount of all Taxes payable by such Tax Indemnitee with respect to the receipt or accrual of such Refund or Tax Saving, or (y) the amount
of the Tax or indemnity payment previously paid by the Company with respect to such amount, provided that such Tax Indemnitee shall not thereby be in a less favourable position than it would have been
in if the Tax or indemnity had not been required to be paid. Any additional Tax that is imposed on a Tax Indemnitee as a result of the disallowance, loss, unavailability, recapture or reduction of any
Tax Saving or Refund for which such Tax Indemnitee made a payment to the Company pursuant to this Section 2.13(f) shall be treated as a Tax for which the Company is required to indemnify
such Tax Indemnitee pursuant to this Section 2.13 without regard to the exclusion in parentheses in Sections 2.13(b), (c) and (d).

	(g)
	A
written statement of a Tax Indemnitee as to the availability and/or amount of any Tax Saving or Refund or any additional Tax referred to in Section 2.13(f) shall be
final and conclusive, except for any manifest error, and no Tax Indemnitee shall be obliged under any circumstances to disclose any information or documents regarding its business, affairs or Tax
computation. 

2.14    Debt Accounts  

        Except as may otherwise be provided in this Indenture, payments of cash amounts due in respect of the Debentures will be made in the following manner. The
Trustees will establish and maintain for the residual benefit of the Company, Debt Accounts for the Debentures. Such Debt Accounts shall be maintained by and be subject to the control of the Trustees
for the purposes of this Indenture. On or before 11:00 a.m. (Eastern time) on the Business Day immediately prior to any date on which an amount is due and payable in respect of Debentures
outstanding from time to time under this Indenture, the Company will deposit in the Debt Accounts an amount sufficient to pay the amount payable in respect of such Debentures (including the principal
amount, if any, together with any accrued and unpaid interest (that is not being satisfied through the issuance of PIK Debentures), payable thereon, provided the Company may elect to satisfy this
requirement by an electronic funds transfer of such sums of money for value received on the Business Day immediately prior to the date on which such sums are due and payable. The Trustees, on behalf
of the Company, will pay to each Debentureholder entitled to receive payment the principal amount of and accrued and unpaid interest on the Debenture, upon surrender of the Debenture at the Designated
Office. The deposit or making available of such amounts to the applicable Debt Account will satisfy and discharge the liability of the Company for the Debentures to which the deposit or making
available of funds relates only to the extent of the amount deposited or made available and such Debentures will thereafter to that extent not be considered as outstanding under this Indenture and
such Debentureholder will have no other right in regard thereto other than to receive out of the money so deposited or made available the amount to which it is entitled. 

24

  

2.15    Mutilation, Loss, Theft or Destruction  

        In case any of the Debentures shall become mutilated or be lost, stolen or destroyed, the Company, in its discretion, may issue, and thereupon the Trustees shall
certify and deliver, a new Debenture upon surrender and cancellation of the mutilated Debenture, or in the case of a lost, stolen or destroyed Debenture, in lieu of and in substitution for the same,
and the substituted Debenture shall be in a form approved by the Trustees and shall be entitled to the benefits of this Indenture equally with all other Debentures issued or to be issued hereunder
without preference or priority one over another. In case of loss, theft or destruction the applicant for a substituted Debenture shall furnish to the Company and to the Trustees such evidence of the
loss, theft or destruction of the Debenture as shall be satisfactory to them in their discretion and shall also furnish an indemnity satisfactory to them in their discretion. The applicant shall pay
all reasonable expenses incidental to the issuance of any substituted Debenture. 

        In
case any mutilated, lost, stolen or destroyed Restricted Fully Registered Debenture has become or is about to become due and payable, or is about to be redeemed or purchased by the
Company pursuant to the provisions of this Indenture, the Company in its discretion may, instead of issuing a new Restricted Fully Registered Debenture, pay, redeem or purchase such Restricted Fully
Registered Debenture, as the case may be. 

2.16    Denomination of Debentures  

        Debentures, other than Global Debentures, of any denomination may be exchanged without cost for Debentures of any other authorized denomination or denominations
of an equivalent aggregate principal amount and bearing the same issue date, Stated Maturity Date, interest rate and other terms. Any exchange of Debentures shall be made at the Designated Offices.
The Company shall execute and the Trustee shall certify all Debentures necessary to carry out exchanges as aforesaid. Any and all Debentures tendered for exchange shall be surrendered to the Trustees
and shall be cancelled. 

        Debentures
issued 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 in the same manner and shall have noted thereon a statement to that effect. 

2.17    U.S. 1933 Act Legend on the Debentures  

	(a)
	U.S. 1933
Act Legend.    The Restricted Debentures issuable in accordance with this Indenture will be issued pursuant to an exemption
from registration under the U.S. 1933 Act. All such Debentures, as well as all Debentures issuable pursuant to the terms thereof issued in exchange for or in substitution of the foregoing
securities shall bear the following legend (the "U.S. 1933 Act Legend"): 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO SR TELECOM INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN 

25

 

EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C) OR (D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE
AND THE CORPORATION SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS. 

For
the avoidance of doubt, the Unrestricted Global Debenture shall not bear the U.S. 1933 Act Legend. 

	(b)
	Global
Debenture Legend.    Each Global Debenture shall bear a legend in substantially the Form set forth in Section 2.6(c).

	(c)
	Regulation S
Temporary Global Debenture Legend.    Each Regulation S Temporary Global Debenture shall bear a legend in the
following form: THIS DEBENTURE IS A REGULATION S TEMPORARY GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER AND IS SUBJECT TO RESTRICTIONS ON THE TRANSFER AND EXCHANGE
THEREOF. 

2.18    Certification and Delivery of PIK Debentures  

        The Company may from time to time request the Trustees to certify and deliver PIK Debentures by delivering to the Trustees the documents referred to below in this
Section 2.18 whereupon the Trustees shall certify such PIK Debentures and cause the same to be delivered in accordance with the Written Direction of the Company referred to below or pursuant to
such procedures acceptable to the Trustees as may be specified from time to time by a Written Direction of the Company. Except for the issue date, the terms of the PIK Debentures, including without
limitation, the Stated Maturity Date, interest rate and form (i.e., Fully Registered Debentures, Regulation S Temporary Global Debentures or Unrestricted Global Debentures), shall be the
same as the terms of the Debentures issued under the Exchange Offer. In certifying such PIK Debentures, the Trustees shall be entitled to receive and shall be fully protected acting upon or in relying
upon, unless and until such documents have been superseded or revoked: 

	(a)
	a
Written Direction of the Company requesting certification and delivery of such PIK Debentures in accordance with the terms of this Indenture and setting forth delivery instructions;

	(b)
	an
opinion of Counsel that all requirements imposed by this Indenture or by law in connection with the proposed issue of PIK Debentures have been complied with, subject to the
delivery of certain documents or instruments specified in such opinion; and

	(c)
	an
Officers' Certificate certifying that no Default or Event Default has occurred and is continuing or will exist upon such certification and delivery and that the terms and
conditions for the certification and delivery of PIK Debentures have been complied with, subject to the delivery of any documents or instruments specified in such Officers' Certificate. 

26

 

2.19    Transfers and Exchanges of Restricted Fully Registered Debentures  

        If a Holder of a Restricted Fully Registered Debenture wishes to sell or otherwise transfer its Restricted Fully Registered Debenture to a
Non-U.S. Person who wishes to take delivery thereof in the form of an interest in the Regulation S Temporary Global Debenture, so long as the book-entry only
registration system has not been terminated pursuant to Section 2.6(f) hereof, the Holder may, subject to the rules and procedures of the Depositary, give directions for the Trustees or
any registrar to transfer or cause the transfer of the Restricted Fully Registered Debenture for an equivalent beneficial interest in the Regulation S Temporary Global Debenture. Upon receipt
by the Trustee or any registrar of (a) instructions given in accordance with the Depositary's procedures from a Depositary Participant directing the Trustee or any registrar to credit or cause
to be credited a beneficial interest in the Regulation S Temporary Global Debenture in an amount equal to the amount of the Restricted Fully Registered Debenture to be sold or otherwise
transferred, (b) a written order given in accordance with the Depositary's procedures containing information regarding the account of the Depositary Participant located outside the
United States to be credited with the increase and the name of the account and (c) a certificate in the form required by the Trustees, given by the Holder of the Fully Registered
Debenture, the Trustees or any registrar shall cancel the Restricted Fully Registered Debenture and the Trustees or any registrar shall instruct the Depositary, concurrently with the cancellation, to
increase the principal amount of the Regulation S Temporary Global Debenture by the aggregate principal amount of the Restricted Fully Registered Debenture to be so sold otherwise transferred,
and to credit or cause to be credited to the account of the Non-U.S. Person specified in the instructions a beneficial interest in the Regulation S Temporary Global
Debenture equal to the principal amount of the cancelled Restricted Fully Registered Debenture. 

        If
a Holder of Restricted Fully Registered Debentures wishes to sell or otherwise transfer such Restricted Fully Registered Debentures (i) pursuant to a Shelf Registration
Statement, (ii) pursuant to an exemption from registration provided by Rule 144 under the 1933 Act (if available) or (iii) after the Exchange Date pursuant to
Regulation S, and the purchaser of such Debentures wishes to take delivery thereof in the form of an interest in the Unrestricted Global Debenture, so long as the book-entry
only registration system has not been terminated pursuant to Section 2.6(f) hereof, the Holder may, subject to the rules and procedures of the Depositary, give directions for the
Trustees or any registrar to transfer or cause the transfer of the Restricted Fully Registered Debenture for an equivalent beneficial interest in the Unrestricted Global Debenture. Upon receipt by the
Trustee or any registrar of (a) instructions given in accordance with the Depositary's procedures from a Depositary Participant directing the Trustees or any registrar to credit or cause to be
credited a beneficial interest in the Unrestricted Global Debenture in an amount equal to the amount of the Restricted Fully Registered Debenture to be sold or otherwise transferred, (b) a
written order given in accordance with the Depositary's procedures containing information regarding the account of the Depositary Participant to be credited with the increase and the name of the
account and (c) either (x) a certificate in the form of Exhibit B hereto (in the case of a sale pursuant to a Shelf Registration Statement),
(y) such certifications, legal opinions or other information as the Trustees or any registrar may reasonably request (in the case of a sale pursuant to an exemption from registration
provided by Rule 144 under the 1933 Act (if available)) or (z) a certificate in the form of Exhibit C hereto, (in the case of a sale pursuant to Regulation S
after the Exchange Date), given by the Holder of the Restricted Fully Registered Debenture (or its counsel, in the case of a legal opinion), the Trustees or any registrar shall cancel the
Restricted Fully Registered Debenture and the Trustees or any registrar shall instruct the Depositary, concurrently with the cancellation, to increase the principal amount of the Unrestricted Global
Debenture by the aggregate principal amount of the Fully Registered Debenture to be so sold or otherwise transferred, and to credit or cause to be credited to the account of the Person specified in
the instructions a beneficial interest in the Unrestricted Global Debenture equal to the principal amount of the cancelled Restricted Fully Registered Debenture. 

        Restricted
Fully Registered Debentures may be exchanged or transferred for one another only in accordance with such procedures as are substantially consistent with the provisions of the
two immediately preceding paragraphs (including the certification requirements intended to ensure that the exchanges or transfers comply with Rule 144 or Regulation S, as the case may
be) and as may be from time to time adopted by the Trustees. In the event that the book-entry only registration system has been terminated pursuant to
Section 2.6(f), Restricted Fully Registered Debentures may be exchanged or transferred for unrestricted Fully Registered Debentures, without the U.S. 1933 Act Legend, only in
accordance with such procedures as are 

27

 

substantially
consistent with the provisions of the two immediately preceding paragraphs (including the certification requirements intended to ensure that the exchanges or transfers comply with
Rule 144 or Regulation S, as the case may be) and as may be from time to time adopted by the Trustees. 

        The
Trustees or any registrar shall refuse to transfer any transfer of a Restricted Debenture in violation of the foregoing restrictions. 

 
 

ARTICLE III
  
    REDEMPTION OF DEBENTURES    
    

3.1    Redemption  

	(a)
	Mandatory Redemption

Within
five Business Days after the closing of the Rights Offering, the Company shall apply the Specified Amount of Rights Offering Proceeds, if any, to redeem Debentures at a price equal to
(i) 95% of the outstanding principal amount of each such Debenture to be redeemed, plus (ii) any accrued and unpaid interest thereon to the date of redemption
(the "Mandatory Redemption Price"), provided that the Company shall not be obligated to redeem Debentures to the extent that such redemption
would, together with the exchange in Section 4.1(a), reduce the principal amount of outstanding Debentures by more than 25% of the aggregate principal amount of the outstanding
Debentures at the time they were issued. The Debentures to be redeemed pursuant to this Section 3.1(a) shall be redeemed from all Holders on a  pro rata basis according to the Debentures
outstanding at such time in accordance with the principal amount of the Debentures registered in the
name of each Debentureholder or in such other manner as the Trustees deem equitable (subject to any necessary regulatory or stock exchange approval). The Holder of any Debenture called for redemption
in part only, upon surrender of any such Debentures for payment of the Redemption Price, shall be entitled to receive, without expense to such Holder, one or more new Debentures for the unredeemed
part of the principal amount of the Debenture so surrendered and the Company shall execute and the Trustees shall certify and deliver, at the expense of the Company, such new Debenture or Debentures
upon receipt of the Debenture(s) surrendered, or with respect to a Global Debenture, the Depositary shall make notation on the Global Debenture of the principal amount so redeemed. 

	(b)
	Redemption at the Option of the Company

Subject
to Section 3.1(a) above, all Debentures issued hereunder shall be redeemable at the option of the Company at any time prior to maturity, in whole but not in part, in the manner
hereinafter provided and in accordance with and subject to the provisions hereinafter set forth, at a price (the "Optional Redemption Price")
equal to the greater of: (i) the 21 day average trading price of the Common Shares on the Exchange for the 21 Trading Days ending on the Trading Day immediately prior to the date
the Company gives notice to the Holders of such redemption notice multiplied by the number of Common Shares into which the Debentures are convertible; and (ii) all amounts owing pursuant to the
Debentures and this Indenture as at the date of payment, including, any accrued and unpaid interest thereon to the date of redemption and all fees and disbursements incurred by or on behalf of the
Holders or the Trustees to the date of payment. 

	(c)
	Unless
the context otherwise requires, the word "Debenture" or "Debentures" as used in this Article III shall be deemed to mean or include that part of the principal amount of
any Debenture which shall have become subject to redemption pursuant to the provisions hereof. 

3.2    Notice of Redemption  

        Notice of intention to redeem any Debentures ("Notice of Redemption") shall be given by or on behalf of the
Company to the holders of the Debentures which are to be redeemed (a) not less than three Business Days prior to the date fixed for redemption for a redemption under
Section 3.1(a), and (b) not less than 21 days prior to the date fixed for redemption for a redemption under Section 3.1(b) (such date fixed for
redemption, in each case, the "Redemption Date"), in the manner provided in Section 12.2. The Notice of Redemption shall specify the Redemption
Date, the Mandatory Redemption Price or the Optional Redemption Price, as the case may be, 

28

 

and
the places of payment, and shall state that Holders of Debentures called for redemption are entitled to exercise the right of conversion contained in Article IV hereof in accordance with
the provisions of this Indenture until the last Business Day immediately preceding the Redemption Date and that unless the applicable redemption price of such Debentures is not paid on presentation
thereof such Debentures shall cease to accrue interest after the Redemption Date, provided always that the non-receipt of any such Notice of Redemption by any Holder or Holders of any of
such Debentures shall not invalidate or otherwise prejudicially affect the redemption of such Debentures. 

3.3    Payment on Redemption Dates  

        Upon notice having been given as aforesaid, the Mandatory Redemption Price or the Optional Redemption Price, as the case may be, of all Debentures that are the
subject of such notice shall, for greater certainty, other than Debentures previously converted into Common Shares prior to the Redemption Date in accordance with Article IV hereof, be paid on
the Redemption Date specified in such notice, 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 after said date (unless payment of the Mandatory Redemption Price or the Optional Redemption Price, as
the case may be, shall not be made on presentation for surrender of such Debenture). The giving of such notice in conformity with the provisions hereof shall, if the Company fails to make such payment
whether such failure results from a change in the Company's intentions, or from circumstances beyond its control, or otherwise, be of no effect whatsoever, and in the event of such failure to make
payment, such notice shall be deemed to be null, void and of no effect whatsoever. 

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

3.4    Deposit of Redemption Monies  

        Upon Debentures having been called for redemption as hereinbefore provided, the Company shall deposit with the Trustees or any paying agent to the order of the
Trustees, no later than 11 a.m. (Eastern time) on the Business Day immediately prior to the Redemption Date such sums as are sufficient to pay the Mandatory Redemption Price or the Optional
Redemption Price, as the case may be, of the Debentures so to be redeemed, including accrued and unpaid interest thereon together with the estimated charges and expenses to be Incurred in connection
with such redemption, in accordance with Section 2.14. At the request of the Trustees, the Company shall also deposit with the Trustees a sum of money sufficient to pay any charges or expenses
which may be Incurred by the Trustees in connection with such redemption. From the sums so deposited the Trustees 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. The Company shall pay the interest on the Debentures called for
redemption hereunder in cash. Once the Company has indefeasibly deposited sufficient sums with the Trustees in connection with such redemption and affidavits or other proofs satisfactory to the
Trustees as to mailing of irrevocable notices of redemption have been lodged with the Trustees, the Corporation shall not have any further obligations with respect to those amounts deposited. 

3.5    Cancellation and Destruction of Debentures  

        All Debentures purchased or redeemed under this Article and whose obligations have been satisfied shall forthwith be delivered to the Trustees and shall be
cancelled and no Debentures shall be issued in substitution therefor. All matured Debentures of which the Company may be able to regain possession shall likewise be delivered to the Trustees and
cancelled and no Debentures shall be issued in substitution therefor. 

29

 

3.6    Surrender of Debentures for Cancellation  

        If the principal monies due upon any Debenture issued hereunder shall become payable by redemption or otherwise before the Maturity Date, the Person presenting
such Debenture for payment must surrender the same for cancellation, upon payment to the Holder of the principal amount thereto plus the interest accrued and unpaid thereon (computed on a  per diem basis
if the date fixed for payment is not an Interest Payment Date). 

3.7    Purchase of Debentures for Cancellation  

        At any time when no Event of Default has occurred and is continuing, the Company may purchase all or any of the Debentures in the market (which shall include a
purchase from or through an investment dealer or a firm holding membership on a recognized stock exchange) or by tender available to all Holders of Debentures or by private contract subject to
compliance with Applicable Securities Legislation, including without limitation, regarding issuer bid requirements. If, upon an invitation for tenders, more Debentures are tendered at the same lowest
price that the Company is prepared to accept, the Debentures to be redeemed pursuant to this Section 3.7 shall be redeemed from all Holders tendering at such lowest price on a  pro rata basis
according to the Debentures outstanding at such time to the nearest multiple of $1,000 in accordance with the principal amount of
the Debentures registered in the name of each Debentureholder or in such other manner as the Trustees deem equitable (subject to any necessary regulatory or stock exchange approval), from the
Debentures tendered by each tendering Debentureholder who tendered at such lowest price. For this purpose the Trustees may make, and from time to time amend, regulations with respect to the manner in
which Debentures may be so selected and regulations so made shall be valid and binding upon all Debentureholders, notwithstanding the fact that, as a result thereof, one or more of such Debentures
become subject to purchase in part only. If only part of a Debenture is purchased, the Holder of such Debenture upon surrender of such Debenture for payment shall be entitled to receive without
expense to such Holder one or more new Debentures for the part of the Debenture so surrendered which is not being purchased, and the Company shall execute and the Trustee shall certify and deliver, at
the expense of the Company, such new Debenture or Debentures upon receipt of the Debenture so surrendered. With respect to a Global Debenture, the Depositary shall make notations on the Global
Debenture of the principal amount thereof so purchased. 

        Any
call for redemption or repurchase of Debentures made by the Company shall be subject always to the right of the Holders of such Debentures to convert the same, as provided in
Article IV hereof, prior to the closing of business on the last Business Day immediately preceding the Redemption Date. 

 
 

ARTICLE IV
  
    CONVERSION OF DEBENTURES    
    

4.1    Mandatory Conversion  

	(a)
	Upon
and subject to the provisions and conditions of this Article and to applicable rules of the Exchange and Applicable Securities Legislation, $10 million principal amount of
10% Secured Convertible Debentures shall be exchanged on a pro rata basis for fully paid and non-assessable Common Shares on the
Mandatory Conversion Date. The number of Common Shares into which Debentures may be so exchanged shall be determined by dividing $10 million of principal by the Conversion Price as at the
Mandatory Conversion Date, subject to adjustment pursuant to Section 4.6. In no circumstance will the Company be required to effect a Mandatory Conversion of more than 25% of the outstanding
principal amount of Debentures.

	(b)
	On
the Mandatory Conversion Date, the Depositary shall make such notations on the Global Debentures as are appropriate to reflect the exchange in
Section 4.1(a), and the Company shall cause to be issued to the Depositary the number of Common Shares as determined in accordance with Section 4.1(a). 

4.2    Optional Conversion  

        Upon and subject to applicable rules of the Exchange and Applicable Securities Legislation, the provisions and conditions of this Article and Section 2.11,
the Holder of each Debenture shall have the right, at the option 

30

 

of
the Holder, at any time and from time to time (i) after the Mandatory Conversion Date and (ii) prior to the Close of Business on the earlier of the Stated Maturity Date, or on the
Business Day immediately preceding the Redemption Date for a Debenture, if any, to exchange the principal amount of such Debenture and accrued and unpaid interest thereon for fully paid and
non-assessable Common Shares. The number of Common Shares into which Debentures may be so exchanged shall be determined by dividing the amount of principal and interest of the Debentures
to be exchanged by the Conversion Price as at the Date of Conversion (defined below), subject to adjustment pursuant to Section 4.6. 

4.3    Delivery of Certificates  

        As promptly as practicable after the Date of Conversion, the Company shall issue or cause to be issued and deliver or cause to be delivered to the Holder whose
Debenture is so surrendered, or on his written order, a certificate or certificates in the name or names of the Person or Persons specified in such notice for the number of Common Shares deliverable
upon the conversion of such Debenture (or specified portion thereof) and provision shall be made in respect of any fraction of a share as provided in Section 4.7. Such conversion shall
be deemed to have been effected immediately prior to the Close of Business on the Date of Conversion and at such time the rights of the Holder of such Debenture (or specified portion thereof)
as such Holder shall cease and the Person or Persons in whose name or names any certificate or certificates for Common Shares shall be deliverable upon such conversion shall be deemed to have become
on such date the holder or holders of record of the Common Shares represented thereby; provided, however, that no such surrender
on any date on which the transfer registers for Common Shares of the Company or for the Debenture, shall be closed shall be effective to constitute the Person or Persons entitled to receive the Common
Shares upon such conversion as the holder or holders of record of such Common Shares on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such
Common Shares as the holder or holders of record thereof for all purposes at the Close of Business on the next succeeding date on which such transfer registers are open and such conversion shall be at
the Conversion Price in effect at the Close of Business on the next succeeding Business Day. 

4.4    Revival of Right to Convert  

        If payment of the Mandatory Redemption Price or the Optional Redemption Price, as the case may be, or the purchase price of any Debenture which has been called
for redemption or tendered in acceptance of an offer by the Company to purchase Debentures for cancellation is not made, in the case of a redemption upon due surrender of such Debenture or in the case
of a purchase on the date on which such purchase is required to be made, as the case may be, the right to convert such Debentures shall revive and continue as if such Debenture had not been called for
redemption or tendered in acceptance of the Company's offer, respectively. 

4.5    Manner of Exercise of Right to Convert  

	(a)
	The
Holder of a Debenture desiring to convert such Debenture in whole or in part into Common Shares shall surrender such Debenture to the Trustees at a Designated Office together with
the Conversion Form on the back of such Debenture or any other written notice in a form satisfactory to the Trustees, in either case duly executed by the Holder or the executors or administrators or
other legal representatives or the attorney thereof duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustees, exercising the right to convert such
Debenture in accordance with the provisions of this Article; provided that with respect to a Global Debenture, the obligation to surrender a Debenture to the Trustees shall be satisfied if the
Depositary makes notations on the Global Debenture of the principal amount thereof so converted and the Trustees are provided with all other documentation which they may request. If any of the Common
Shares into which such Debenture is to be converted are to be issued to a Person or Persons other than the Holder of such Debenture such notice shall be in form and execution satisfactory to the
Trustees and shall be accompanied by payment to the Trustees of any transfer tax which may be payable by reason thereof. Upon the surrender of such Debenture accompanied by such written notice
(i) the Holder of such Debenture shall be issued the number of Common Shares which he shall be entitled to receive on such conversion, (ii) the Holder of such Debenture releases the
Company of all liability thereon or from all 

31

 

liability
with respect to the Debenture which has been converted, as the case may be, and (iii) the Company agrees that the surrender of such Debenture constitutes the sole consideration for
the Common Shares issuable upon such conversion. Upon delivery of the requisite notice and documentation under this subsection (a), such Debentureholder or, subject to payment of all
applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustees, the nominee(s) or assignee(s) thereof, shall be
entitled to be entered in the books of the Company as at the Date of Conversion (or such later date as is specified in Section 4.5(b)) as the holder of the number of Common Shares
into which such Debenture is convertible in accordance with the provisions of this Article and, as soon as practicable thereafter, the Company shall deliver to such Debentureholder or, subject as
aforesaid, the nominee(s) or assignee(s) thereof, a certificate or certificates for such Common Shares and make or cause to be made any payment of interest to which such Debentureholder
is entitled in accordance with Section 4.5(d) hereof. 

	(b)
	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 Trustees at an office specified in subsection (a) of this Section; provided that if a Debenture is surrendered for conversion on
a day on which the register of Common Shares is closed, the Person or Persons entitled to receive Common Shares shall become the holder or holders of record of such Common Shares as at the date on
which such registers are next reopened.

	(c)
	The
Holder of any Debenture of which only a portion is converted in accordance with Section 4.2 shall, upon the exercise of his right of conversion surrender the said Debenture
to the Trustees, and the Trustees shall cancel the same and shall without charge forthwith certify and deliver to the Holder a new Debenture or Debentures in an aggregate principal amount equal to the
unconverted part of the principal amount of the Debenture so surrendered, or with respect to a Global Debenture, the Depositary shall make notations on the Global Debenture of the principal amount
thereof so converted.

	(d)
	The
Common Shares issued upon a conversion shall be entitled to receive dividends declared in favour of shareholders of record on and after the Date of Conversion or such later date
as such Holder shall become the holder of record of such Common Shares pursuant to subsection (b) of this Section 4.5, from which applicable date the Common Shares issued on
conversion will for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares. 

4.6    Adjustment of Conversion Price  

        The Conversion Price in effect at any date shall be subject to adjustment from time to time as follows: 

	(a)
	If
and whenever at any time prior to the Maturity Date the Company shall:

	(i)
	subdivide
or redivide the outstanding Common Shares into a greater number of shares;

	(ii)
	reduce,
combine or consolidate the outstanding Common Shares into a smaller number of shares; or

	(iii)
	issue
Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend, 

the
Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issue of Common Shares by way of a stock
dividend, as the case may be, shall in the case of any of the events referred to in (i) and (iii) above be decreased in proportion to the number of outstanding Common Shares resulting
from such subdivision, redivision or dividend, or shall, in the case of any of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares
resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred 

32

 

to
in this subsection (a) shall occur. Any such issue of Common Shares by way of a stock dividend shall be deemed to have been made on the record date for the stock dividend for the
purpose of calculating the number of outstanding Shares under subsections (b) and (c) of this Section 4.6. 

	(b)
	If
and whenever at any time prior to the Maturity Date the Company shall fix a record date for the issuance of rights or warrants, other than the Rights Offering, to any
holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per share (or having a conversion or exchange price per share) less than the Current Market Price of a Common Share on such record date, 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 Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the
total number of additional Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible securities so offered) by such Current Market
Price per Common Share, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for
subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such a record date is fixed. To the extent
that any such rights or warrants are not so issued or any such rights or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be re-adjusted to the
Conversion Price which would have been in effect if such record date had not been fixed or to the Conversion Price which would have been in effect based upon the number of Common Shares
(or securities convertible into Common Shares) actually issued upon the exercise of such rights or warrants, as the case may be.

	(c)
	If
and whenever at any time prior to the Maturity Date the Company shall fix a record date for the making of a distribution to any holders of its outstanding Common Shares of
(i) shares of any class other than Common Shares or (ii) rights (other than the Rights Offering), options or warrants (excluding rights, options or warrants entitling the holders thereof
for a period of not more than 45 days to subscribe for or purchase Common Shares or securities convertible into Common Shares) or (iii) evidences of its indebtedness or (iv) cash
or other assets then, in each such case, 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 Common Shares outstanding on such record date multiplied by the Current Market Price per Common Share on
such record date, less the fair market value (as determined by the Board of Directors with the approval of the Trustee, which determination shall be conclusive) of such shares or rights,
options or warrants or evidences or indebtedness or assets so distributed, and of which the denominator shall be the total number of Common Shares outstanding on such record date multiplied by such
Current Market Price per Common 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 re-adjusted to the Conversion Price which would have been in effect if such record date had not been fixed or to the Conversion Price which would have been in effect based upon such
shares or rights, options or warrants or evidences of indebtedness or assets actually distributed, as the case may be.

	(d)
	For
the purpose of any computation under subsections (b) or (c) of this Section, the current market price per Common Share at any date shall be the
weighted average price per share for Common Shares for 20 consecutive Trading Days commencing not more than 45 Trading Days and ending not less than 5 Trading Days before such
date on the Exchange (the "Current Market Price"). The weighted average price shall be determined by dividing the aggregate sale price of all
Common Shares sold on such Exchange during the said 20 consecutive Trading Days by the total number of Common Shares so sold.

	(e)
	In
the case of any reclassification or change (other than a change resulting only from consolidation or subdivision) of the Common Shares or in case of any amalgamation, consolidation
or merger of the Company with or into any other corporation, or in the case of any sale of the properties and assets of 

33

 

the
Company, as or substantially as, an entirety to any other corporation, the Conversion Price shall be adjusted so that each Debenture shall, after such reclassification, change, amalgamation,
consolidation, merger or sale, be convertible into the number of shares of the Company, or such continuing, successor or purchaser corporation, as the case may be, which the Holder thereof would have
been entitled to receive as a result of such reclassification, change, amalgamation, consolidation, merger or sale if on the effective date thereof he had been the holder of the number of Common
Shares into which the Debenture was convertible prior to the effective date of such reclassification, change, amalgamation, consolidation, merger or sale. No such reclassification, change,
amalgamation, consolidation, merger or sale shall be carried into effect unless (i) in the opinion of the Board of Directors, all necessary steps shall have been taken to ensure that the
Holders shall thereafter be entitled to receive such number of shares of the Company, or such continuing, successor or purchasing corporation, as the case may be, subject to adjustment thereafter in
accordance with provisions similar, as nearly as may be, to those contained in this Section 4.6; and (ii) such shares constitute prescribed securities for the purposes of
clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada). 

	(f)
	In
any case in which this Section 4.6 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Company may
defer, until the occurrence of such event, issuing to the Holder of any Debenture converted after such record date and before the occurrence of such event the additional Common Shares issuable upon
such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Company shall deliver to such Holder an appropriate instrument
evidencing such Holder's right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional
Common Shares declared in favour of holders of record of Common Shares on and after the Date of Conversion or such later date as such Holder would, but for the provisions of this
subsection (f), have become the holder of record of such additional Common Shares pursuant to Section 4.5.

	(g)
	The
adjustments provided for in this Section 4.6 are cumulative, will be computed to the nearest of one-tenth of one cent, and shall apply to successive
subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section, provided that,
notwithstanding any other provision of this Section, no adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect; provided however, that any adjustments which by reason of this subsection (g) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment.

	(h)
	In
the event of any question arising with respect to the adjustments provided in this Section 4.6, such question shall be conclusively determined by a firm of chartered
accountants appointed by the Company and acceptable to the Trustees (who may be the Auditors of the Company); such accountants shall have access to all necessary records of the Company and such
determination shall be binding upon the Company, the Trustees, and the Debentureholders absent manifest error. If any search determination is made, the company will deliver an Officers' Certificate to
the Trustee describing such determination.

	(i)
	In
case the Company shall take any action affecting the Common Shares other than action described in this Section 4.6, which in the opinion of the Directors of the Company
would affect the rights of Debentureholders, the Conversion Price shall be adjusted in such manner and at such time, by action of the Directors, subject to the prior written consent of the Exchange if
necessary, as the Directors in their sole discretion may determine to be equitable in the circumstances. Failure of the Directors to make such an adjustment shall be conclusive evidence that the
Directors have determined that it is equitable to make no adjustment in the circumstances.

	(j)
	No
adjustment in the Conversion Price shall be made in respect of any event described in subsections 4.6(a), 4.6(b) or 4.6(c) if the holders of the
Debentures are entitled to participate in such event on the same terms mutatis mutandis as if they had converted their Debentures prior to the effective
date or record date, as the case may be, of such event. 

34

 

4.7    No Requirement to Issue Fractional Shares  

        The Company shall not be required to issue fractional shares upon the conversion of Debentures pursuant to this Article. If more than one Debenture shall be
surrendered for conversion at one time by the same Holder, the number of whole Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of such
Debentures to be converted. If any fractional interest in a Common Share would, except for the provisions of this Section, be deliverable to any Holder upon the conversion of any principal amount of
Debentures, the Company shall, if not prohibited by any agreement to which it is a party, in lieu of delivering any certificate representing such fractional interest, make a cash payment to the Holder
in an amount equal to the fractional interest multiplied by the Conversion Price. If prohibited from doing so, it will make such cash payment as soon as reasonably practicable after such time as it is
no longer prohibited. 

4.8    Company to Reserve Shares  

        The Company covenants with the Trustees that it will at all times reserve and keep available out of its authorized Common Shares, solely for the purpose of issue
upon conversion of Debentures as in this Article provided, and conditionally allot to Debentureholders who may exercise their conversion rights hereunder, such number of Common Shares as shall then be
issuable upon the conversion of all outstanding Debentures. The Company covenants with the Trustees that all Common Shares which shall be so issuable shall be duly and validly issued as
fully-paid and non-assessable shares. 

4.9    Taxes and Charges on Conversion  

        The Company will from time to time promptly pay or make provision satisfactory to the Trustees for the payment of any and all Taxes and Charges which shall be
payable with respect to the issuance or delivery to the Holders of Debentures, upon the exercise of their right to conversion, of Common Shares of the Company pursuant to the terms of the Debentures
and of this Indenture. 

4.10    Cancellation of Converted Debentures  

        All Debentures converted in whole or in part under the provisions of this Article shall be forthwith delivered to and cancelled by the Trustees, subject to the
provisions of Section 4.3, and no Debenture shall be issued in substitution therefor. 

4.11    Certificate as to Adjustment  

        The Company shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 4.6,
deliver an Officers' Certificate to the Trustees 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 a firm of chartered
accountants appointed by the Company and acceptable to the Trustees (who may be the Auditors of the Company) and, when approved by the Trustees, shall be conclusive and binding on all parties
in interest. When so approved, the Company shall, except in respect of any subdivision, redivision, reduction, combination or consolidation of the Common Shares, 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 Company has given notice under Section 4.12 covering all the relevant facts in respect of such event and if the Trustees approve, no such notice need be given under this
Section 4.11. 

35

  

4.12 Notice of Special Matters  

        The Company covenants with the Trustees that so long as any Debenture remains outstanding, it will give notice to the Trustees, and to the Debentureholders in the
manner provided in Section 12.2, of (i) the voluntary or involuntary dissolution, liquidation or winding-up of the Company or (ii) its intention to fix a record date
for any event referred to in Section 4.6 which may give rise to an adjustment in the Conversion Price. Such notice shall specify the particulars of such event, the record date or the date the
books of the Company shall close and the effective date for such event; provided that the Company 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 such notice is given. Such notice shall be given not less than fourteen (14) days in each case prior to such applicable record date or the date on
which the Company's books are to be closed. 

4.13 Protection of Trustees  

        Subject to Section 13.4(a), the Trustees: 

	(a)
	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 in the Conversion Price, 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;

	(b)
	shall
not be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any shares or other securities or property which may at any
time be issued or delivered upon the conversion of any Debenture;

	(c)
	shall
not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver Common Shares or share certificates upon the surrender of any
Debenture for the purpose of conversion, or to comply with any of the covenants contained in this Article; and

	(d)
	shall
be entitled to act and rely on the adjustment calculation of the Company, the Company's Auditors or any investment dealer selected by the Company. 

 
 

ARTICLE V
  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY  
    

        The Company hereby represents, covenants and agrees with the Trustee for the benefit of the Trustee and the Debentureholders as follows: 

5.1   Authorization, Enforceability and Validity  

	(a)
	the
Debentures, when issued and certified as herein provided, will be valid and enforceable against the Company;

	(b)
	the
Company is duly authorized to enter into this Trust Indenture and to create and issue the Debentures; and

	(c)
	all
necessary resolutions of the Directors of the Company have been duly enacted, passed and/or confirmed and other proceedings taken and conditions complied with to make the creation
and issue of the Debentures proposed to be issued hereunder and this Indenture and the execution thereof legal, valid and binding on the Company in accordance with the laws applicable to the Company. 

5.2   To Pay Principal and Interest  

        The Company will duly and punctually pay or cause to be paid to every Debentureholder the principal of and interest accrued on the Debentures of which it is the
Holder (including, in the case of default, interest on the amount in default) on the dates, at the places and in the manner mentioned herein and in the Debentures. 

36

 

5.3   To Comply with Law  

	(a)
	the
Company will comply with the requirements of all applicable statutes, codes, ordinances, decrees, rules, regulations, by-laws, policies, including general principles
of common and civil law and equity, binding on or affecting the Company, failure to comply with which would materially adversely affect the Company or its business;

	(b)
	if
at any time any order, ruling, registration, notice or filing pursuant to any Applicable Securities Legislation is required to ensure that any Common Shares issuable upon the
conversion of the Debentures are issued in compliance with such laws or to ensure that any such Common Shares are not subject to any restriction as to the resale (other than restrictions imposed on
Persons referred to in subsection 1(c) of the definition of "distribution" under the Securities Act (Ontario) and analogous provisions of
the securities laws of such other provinces provided such Common Shares are traded through Persons registered, if required, under Applicable Securities Legislation), the Company covenants that it will
make or obtain such registration or filing, as the case may be; and

	(c)
	make
all requisite filings under Applicable Securities Legislation and rules of the Exchange to report the issue of the Debentures and the Common Shares issuable under the Debentures
and the exercise of the right to acquire Common Shares pursuant to the Debentures. 

5.4   To Maintain Corporate Existence and Keep Proper Books  

        The Company will at all times do or cause to be done all things necessary to maintain and keep in full force and effect its corporate existence and rights and
will diligently carry on and conduct its business in a proper, efficient and businesslike manner and shall not cease to operate the whole or substantially the whole of its business, and will keep, or
cause to be kept, proper books of record and account and make, or cause to be
made therein, in accordance with Generally Accepted Accounting Principles, true, full, correct and faithful entries of all dealings and transactions in relation to its assets and business and at all
reasonable times furnish, or cause to be furnished, to the Trustees or their duly authorized agents or attorneys such information relating to its business as the Trustees may reasonably require, and
such books of account shall at all reasonable times be open for inspection by the Trustees or such agents or attorneys as the Trustees may from time to time by instrument in writing for that purpose
appoint. 

5.5   To Pay Trustees' Remuneration  

        The Company will pay the Trustees' agreed remuneration for their services as Trustees hereunder (including, without limitation, the fees and disbursements of any
Counsel) and will repay to the Trustees on demand all monies which shall have been paid by the Trustees in connection with the execution of the trusts hereby created and such monies, including the
Trustees' remuneration, shall be payable out of any funds coming into the possession of the Trustees in priority to any of the Debentures or interest thereon. The said remuneration shall continue to
be payable until the trusts hereof be finally wound up and whether or not the trusts of this Indenture shall be in the course of administration by or under the direction of the court. 

5.6   To Provide Financial Statements  

	(a)
	The
Company will furnish to the Trustees and each Holder, and in the event that the Company has Global Debentures outstanding, the Depositary, copies of continuous disclosure
documents, including, without limitation, all financial statements of the Company, whether annual or interim, and the report, if any, of the Company's Auditors thereon, which are furnished to the
holders of Common Shares, and at all reasonable times will furnish or cause to be furnished to the Trustees or their agents or Counsel such information relating to its assets and business as the
Trustees may reasonably require, and will make all requisite filings under Applicable Securities Laws and applicable Exchange rules.

	(b)
	The
Company shall file with the Trustees within 15 days after the filing thereof with the Ontario Securities Commission, copies of the Company's annual report and the
information, documents and other reports that the Company is required to file with the Ontario Securities Commission and deliver to the holders of Common Shares and all copies of certification of
financial statements filed by 

37

 

executives
of the Company. The Company will provide copies of such information, documents and reports to Debentureholders. 

	(c)
	Notwithstanding
the foregoing, in the event that no documents are required to be filed with the Ontario Securities Commission and delivered to the holders of Common Shares, the
Company shall file with the Trustees:

	(i)
	unaudited
consolidated interim financial statements (excluding notes) of the Company as soon as practicable and in any event within 45 days of the end of each
Fiscal Quarter of each Fiscal Year and consisting of a balance sheet, statement of income and retained earnings and a statement of changes in financial position together with management's discussion
and analysis thereon and any other documentation which would customarily be filed with securities regulators by public companies; in each case, as at the end of and for such Fiscal Quarter and the
then elapsed portion of the Fiscal Year which includes such Fiscal Quarter, setting forth in each case in comparative form the figures for the corresponding period or periods (or in the case of
the balance sheet, as at the end of) of the previous Fiscal Year; and

	(ii)
	audited
consolidated annual financial statements of the Company as soon as practicable and in any event within 90 days of the end of each Fiscal Year, consisting
of a balance sheet, statement of income and retained earnings and a statement of changes in financial position for such Fiscal Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year together with the audit report of the Company's independent auditors on such financial statements, management's discussion and analysis and any other documentation which would
customarily be filed with securities regulators by public companies. 

5.7   Not to Extend Time for Payments  

        The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustees, but will suffer and permit the execution of every such power as though no such law had been enacted. 

        Notwithstanding
anything herein or in the Debentures contained, the Company shall not be entitled in case of default hereunder to the benefits of this Indenture except subject to the
prior payment in full of the principal of the Debentures issued hereunder and then outstanding, and of all interest on such Debentures the payment of which has not been so extended, and of all other
monies payable hereunder. 

5.8   Trustee May Perform Covenants  

        If the Company shall fail to perform any covenant on its part herein contained, the Trustee may in its discretion, but (subject to Section 8.2) need not,
notify the Debentureholders of such failure and itself may perform any of said covenants capable of being performed by it and, if any such covenant requires the payment or expenditure of money, it may
make such payment or expenditure with its own funds, or with money borrowed by or advanced to it for such purposes, but shall be under no obligation so to do and all sums so expended or advanced shall
be repayable by the Company in the manner provided in Section 5.5, but no such performance or payment shall be deemed to relieve the Company from any default hereunder. 

38

 

5.9   Limitation on Incurring Additional Indebtedness  

        The Company will not and will not permit its Restricted Subsidiaries to, directly or indirectly, Incur additional Indebtedness (other than Permitted Indebtedness)
unless, after giving effect to the Incurring of such Indebtedness and the receipt and application of the proceeds thereof: 

	(a)
	Consolidated
Indebtedness to Consolidated EBITDA for the period comprised of the four consecutive completed Fiscal Quarters ended immediately prior to the Incurrence of such
Indebtedness, would be less than 3:1; and

	(b)
	Consolidated
Indebtedness as a percentage of Consolidated Capitalization would be less than 50%; 

provided
further, that no Event of Default shall have occurred and be continuing at the time or as a consequence of the Incurrence of such Indebtedness. 

5.10 Limitation on Restricted Payments  

        The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, at any time, declare or make, any Restricted Payment,
except as permitted pursuant to the Restructuring Term Sheet, the Support Agreement, the Emergency Credit Facility and the Intercreditor Agreement (including, for greater certainty, any permitted
payment of the CTR Guarantee under the terms of the Intercreditor Agreement). 

5.11 Limitation on Restricted Investments  

        The Company will not, and will not permit any of its Restricted Subsidiaries, to make any Restricted Investment if after giving effect to such Restricted
Investment the aggregate amount of Restricted Investments (each valued at the time originally made) exceeds $500,000. 

5.12 Limitation on Indebtedness of Restricted Subsidiaries  

        The Company will not permit its Restricted Subsidiaries to become liable in respect of any Indebtedness if, at the time of Incurrence thereof (or, in the
case of revolving Indebtedness, at the time the commitment is granted), the sum of such Indebtedness (treating any revolving commitment as fully drawn) exceeds in the aggregate 10% of Consolidated
Capitalization. 

5.13 Limitation on Liens  

        The Company will not, and will not permit any of its Restricted Subsidiaries to assign, pledge or otherwise grant a security interest in their assets in favour of
any Indebtedness, or to create, Incur or assume any Lien to secure Indebtedness on or with respect to any assets of the Company or any Restricted Subsidiary, whether now owned or hereafter acquired,
or with respect to any interest therein or any income or profits therefrom, except for Permitted Liens. 

5.14 Limitations on Sale of Assets  

        The Company will not, and will not permit any of its Restricted Subsidiaries to sell, transfer, convey, assign or otherwise dispose of any assets, other than in
the ordinary course of business, except where: (i) such sale, transfer, conveyance, assignment or disposition is of all or substantially all of the shares of CTR or any Unrestricted Subsidiary
where the net proceeds thereof are used to repay and satisfy in full all of the outstanding obligations under the CTR Facility; (ii) the sale, transfer, assignment or disposition is of obsolete
inventory; (iii) the sale, transfer, assignment or disposition by the Company or its Restricted Subsidiaries is of assets that are obsolete or no longer used or useful in the Company's or the
Restricted Subsidiaries' business where such sale, transfer or disposition does not exceed $1,000,000 per annum in the aggregate; (iv) the sale, transfer, assignment or disposition is by the
Company of assets or businesses associated with the support or manufacturing of discontinued product lines as at the date hereof; (v) the sale, transfer, assignment or disposition by the
Company is of accounts receivable in accordance with the limitations set forth in the definition of Permitted Indebtedness, or (vi) the Company has offered to use the net proceeds of such sale,
transfer, 

39

 

assignment
or disposition to prepay all or part of the amounts owing under the Emergency Credit Facility and the lenders thereunder have accepted such offer. 

5.15 Limitation on Preferred Shares of Subsidiaries  

        The Company will not permit any Restricted Subsidiary to issue any preferred shares (except preferred shares issued to the Company or a Restricted Subsidiary) or
permit any Person (other than the Company or a Restricted Subsidiary) to hold any such preferred shares unless the Company or such Restricted Subsidiary would be entitled to Incur or assume
Indebtedness pursuant to Section 5.9 hereof in the aggregate principal amount equal to the aggregate liquidation value of the preferred shares to be issued and, the covenant described in
Section 5.12 hereof would be respected if such preferred shares were treated as Indebtedness. 

5.16 To Provide Certificates of Compliance  

        On or before June 30 and December 31 of each year (or such other dates as may correspond with the Company's financial year end and the end of
its 3 month interim financial period) and at any other time if requested by the Trustees, the Company will furnish to the Trustee an Officers' Certificate stating that the Company has complied
with all covenants, conditions and other requirements contained in this Indenture, non-compliance with which would, with the giving of notice or the lapse of time or both, constitute an
Event of Default hereunder or, if such is not the case, specifying the covenant, condition or other requirement which has not been complied with and giving particulars of such
non-compliance and the action, if any, the Company proposes to take with respect thereto to eliminate such circumstances and remedy such Default or Event of Default, as the case may be. 

5.17 To Give Notice of Default  

        The Company shall immediately notify the Trustees in writing upon obtaining knowledge of any Default or Event of Default hereunder or any event which, with the
giving of notice or lapse of time, or both, would constitute an Event of Default, including, for greater certainty, becoming aware of any acceleration of amounts owing or enforcement steps taken by
creditors or their representatives under any instrument to which the Company or any Subsidiary is a party. 

5.18 No Distributions on Common Shares if Event of Default  

        The Company shall not declare or make any dividend or other distribution to the holders of its issued and outstanding Common Shares or redeem, repurchase or
otherwise retire or make any capital distribution on or with respect to its Common Shares after the occurrence of an Event of Default unless and until such default shall have been cured or waived or
shall have ceased to exist or all such interest shall have been paid in cash. 

5.19 Listing of Common Shares and Reporting Issuer Status  

	(a)
	The
Company will ensure that the Common Shares outstanding or issuable from time to time (including without limitation the Common Shares issuable on the conversion of the Debentures)
continue to be listed and posted for trading on the Toronto Stock Exchange; and

	(b)
	provided
that the Company has not completed any transaction contemplated by Section 10.1 hereof where the Successor Company is not a reporting issuer in any province or
territory of Canada, the Company will maintain its status as a reporting issuer, or the equivalent thereof in the provinces of Canada where it is, as of the date hereof, a reporting issuer, not in
default of the requirements of the Applicable Securities Legislation. 

5.20 Change of Control  

	(a)
	Except
for a change of Control resulting from a conversion of Debentures pursuant to Article IV, within 30 days following the occurrence of a change of Control, the
Company shall deliver to the Trustee, and the Trustee shall promptly deliver to the Holders of Debentures a notice stating that there has been a change of Control and specifying the circumstances
surrounding such event (a "Change of  

40

 

 Control Notice"), together with an offer, made in accordance with the requirements of Applicable Securities Legislation and applicable rules of the Exchange, to purchase all
then outstanding Debentures (an "Offer") at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, on
such Debentures up to, but excluding, the date of acquisition by the Company (the "Offer Price") which Offer shall, unless otherwise provided
under Applicable Securities Legislation or applicable rules of the Exchange, be open for acceptance thereof for a period of not less than 35 days and not more than 60 days and shall
provide for payment to all Debentureholders who accept the Offer not later than the 60th day after the making of the Offer (collectively, the "Total Offer
Price"). 

	(b)
	The
Company shall, on or before 11:00 a.m., (Toronto time), on the Business Day immediately prior to the date an Offer expires, deposit in the Debt Account such sums of money
as may be sufficient to pay the Offer Price for each Debenture to be purchased or redeemed by the Company under the expiry of the Offer, in accordance with Section 2.14. The Company shall also
deposit in the Debt Account a sum of money sufficient to pay any charges or expenses which may be incurred by the Trustee in connection with such purchase. Every such deposit shall be irrevocable.
From the sums so deposited, the Trustee shall pay or cause to be paid to the Holders of such Debentures, the Offer Price for each such Debenture to which they are entitled on the Company's purchase or
redemption.

	(c)
	In
the event that one or more of such Debentures being purchased in accordance with this Section 5.20 becomes subject to purchase in part only, upon surrender of such
Debentures for payment of the Offer Price for each such Debenture, the Company shall execute and the Trustee shall certify and deliver, at the Company's expense, to the Holder thereof or upon the
Holder's order, one or more Debentures for the portion of the principal amount of the Debentures not purchased.

	(d)
	Debentures
for which Holders have accepted the Offer shall be repaid at the Offer Price for each such Debenture on the date of expiry of the Offer, in the same manner and with the
same effect as if it were the Maturity Date in respect of such Debentures, anything therein or herein to the contrary notwithstanding, and from and after such date of expiry of the Offer, if the money
necessary to purchase or redeem the Debentures shall have been deposited as provided in Section 5.20(b) and affidavits or other proofs satisfactory to the Trustee as to the
publication and/or mailing of such notices shall have been lodged with it, interest on the Debentures shall cease and Sections 9.2 and 9.3 shall apply mutatis
mutandis to the non-presentation and non-payment of Debentures. If any question shall arise as to whether any notice has been given as above provided
and such deposit made, such question shall be decided by the Trustee whose decision shall be final and binding upon all parties in interest.

	(e)
	Subject
to the provisions above related to Debentures purchased in part, all Debentures purchased under this Section 5.20 shall forthwith be delivered to the Trustee and
cancelled and no Debentures shall be issued in substitution therefor.

	(f)
	The
Company shall be obligated to make an Offer pursuant to Section 5.20(a) notwithstanding any delisting of Common Shares from the Exchange which occurs
contemporaneously with a change of Control. For greater certainty, notwithstanding any offer made pursuant to Section 5.20(a), any delisting of Common Shares from the Exchange shall
remain an Event of Default pursuant to Section 8.1. 

5.21 Controlled Foreign Corporation Status  

        Upon a written request from a holder of Debentures that is also a potential "United States shareholder" (as that term is defined in
Section 951(b) of the Internal Revenue Code of 1986, as amended (the "Code")) of the Company, the Company will use reasonable best efforts to determine whether it is properly
treated as a "controlled foreign corporation" ("CFC") within the meaning of Section 957 of the Code and to inform such person of its determination. Each holder of Debentures or Common Shares
acquired upon conversion of Debentures shall, on an annual basis, provide to the Company information regarding their ownership of Debentures and Common Shares and generally cooperate with the Company
so that the Company can make a determination as to its CFC status. If the Company determines that it is properly treated as a CFC in any Fiscal 

41

 

Year,
(i) the Company shall promptly, but in any case no later than 30 days after the end of the applicable Fiscal Year, notify each requesting holder described in the first sentence of
this Section 5.21 of the Company's CFC status and (ii) the Company shall, no later than March 1 of the following Fiscal Year, provide each such holder holding Common Shares on the
last day of such Fiscal Year on which the Company was a CFC a written report of the amount of income per Common Share required to be included in the gross income of a "United States
shareholder" pursuant to Section 951(a) of the Code and shall generally cooperate with any reasonable request of such holder of Common Shares to facilitate such holder's
U.S. federal income tax reporting requirements relating to the Company. 

 
 

ARTICLE VI
  SECURITY  
    

6.1   Security  

        The Debentures will be secured pursuant to the terms of the Security Agreement. 

        The
Company shall comply with the provisions of Section 314(b) and, as applicable Sections 314(c), (d) and (e) of the Trust Indenture
Act. 

        In
connection with the release of Collateral, the U.S. Trustee shall determine whether it has received all documentation required by Section 314(d) of the Trust
Indenture Act. 

 
 

ARTICLE VII    
    

7.1   Intentionally Deleted.  

 
 

ARTICLE VIII
  DEFAULT  
    

8.1   Acceleration of Maturity  

	(a)
	Upon
the happening of any one or more of the following events each an "Event of Default", namely:

	(i)
	if
the Company fails to pay interest on the Debentures when due and such default continues for two (2) days;

	(ii)
	if
the Company fails to pay the principal amount of the Debentures when required or agreed upon either at maturity, at a Redemption Date or pursuant to a declaration of
acceleration or otherwise or fails to pay the Offer Price in accordance with the terms of such Offer;

	(iii)
	if
the Company fails to comply with any covenant contained in Sections 5.9 through 5.15 and such default continues for thirty (30) days;

	(iv)
	if
the Company shall fail to observe or perform to any material extent any other covenant or condition contained in this Indenture on its part to be observed or
performed and, after notice in writing has been given by the Trustees to the Company specifying such default and requiring the Company to put an end to the same (which said notice may be given by the
Trustees, in their discretion) the Company shall fail to make good such default within a period of thirty (30) days, unless the Trustees (having regard to the subject matter of the default)
shall have agreed to a longer period, and in such event, within the period agreed to by the Trustees;

	(v)
	any
representation or warranty of the Company contained herein, or any statement of the Company in any certificate, financial statement or other document or instrument
delivered pursuant to this Indenture, proves to be inaccurate to any material extent;

	(vi)
	if
a decree or order of a court having jurisdiction in the premises is entered adjudging the Company a bankrupt or insolvent under any Insolvency Laws, or issuing
sequestration of process of execution against, or against any substantial part of the property of, the Company, or ordering the winding-up or liquidation of its affairs; 

42

 

	(vii)
	if
the Company institutes proceedings to be adjudicated a bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it
under any Insolvency Laws, or consents to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar Person) of, or of
any substantial part of, the property of the Company or makes an assignment for the benefit of creditors generally, or admits in writing its inability to pay its debts generally as they become due, or
any corporate action shall be taken by the Company in furtherance of any of the aforesaid actions;

	(viii)
	if
a resolution is passed for the winding-up or liquidation of the Company;

	(ix)
	if
creditors or their representatives, as a result of a breach by the Company of an obligation thereunder have accelerated amounts owing or have taken steps to enforce
under any instrument to which the Company or any Subsidiary is a party;

	(x)
	if
the CTR Lenders, as a result of a breach by the Company of an obligation thereunder have taken any step or action against the Company in respect of the CTR Facility
or the CTR Guarantee;

	(xi)
	property
or assets of the Company or any of its Restricted Subsidiaries with a fair market value in the aggregate of Cdn$250,000 or more shall be attached, seized,
levied upon or subjected to execution, garnishment, distress or any other similar process, or come within the possession of any trustee, interim receiver, receiver, receiver and manager, liquidator,
administrator, custodian, sequestrator, agent, examiner, monitor, sheriff, bailiff or other similar official or assignee for the benefit of creditors of the Company or any of its Restricted
Subsidiaries and such condition continues for 30 days or more;

	(xii)
	any
Collateral Document ceases to be in full force and effect (other than in accordance with its terms) by reason of having become unlawful or having been changed by
virtue of legislation or by a court, statutory board or commission, any obligor under any Collateral Documents denies or disaffirms its obligations thereunder, or by reason of having become unlawful
or having been changed by virtue of legislation or by a court, statutory board or commission, any Lien purported to be created under any collateral document shall cease to be enforceable or shall
cease to be of the same effect and priority as purported to be created by such Collateral Document (other than in accordance with its terms);

	(xiii)
	if
the Common Shares cease to be listed for trading on the Toronto Stock Exchange, regardless of whether an Offer has been made by the Company pursuant to
Section 5.20(a); 

then
in each and every such event the Trustees may, in their 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 8.3, by notice in writing to the Company declare the principal of and interest on all Debentures then outstanding and all other
monies outstanding hereunder or secured hereby to be due and payable and the same shall forthwith become immediately due and payable to the Trustees, anything therein or herein to the contrary
notwithstanding, and the Company shall forthwith pay to the Trustees for the benefit of the Debentureholders such principal, accrued and unpaid interest and all other monies outstanding hereunder or
secured hereby, together with subsequent interest at the rate borne by the Debentures pursuant to Section 2.1(f) on such principal, interest and other monies from the date of the said
declaration until payment is received by the Trustees, such subsequent interest to be payable at the times and places and in the monies prescribed for payments of principal pursuant to the terms of
the
Debenture. Such payment when made shall be deemed to have been made in discharge of the Company's obligations hereunder and any monies so received by the Trustees shall be applied in the manner
provided in Section 8.8. 

	(b)
	Upon
the happening of any one or more of the following events, namely:

	(i)
	if
a decree or order of a court having jurisdiction in the premises is entered adjudging the Company a bankrupt or insolvent under any Insolvency Laws, or appointing a
receiver of, all or substantially of the property of the Company; 

43

 

	(ii)
	if
the Company institutes proceedings to be adjudicated a bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under
any Insolvency Laws, or consents to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar Person) of all or
substantially all of the property of the Company, or any corporate action shall be taken by the Company in furtherance of any of the aforesaid actions; 

the
principal of and interest on all Debentures then outstanding and all other monies outstanding hereunder or secured hereby shall become immediately due and payable to the Trustees, anything therein
or herein to the contrary notwithstanding, and the Company shall forthwith pay to the Trustees for the benefit of the Debentureholders such principal, accrued and unpaid interest and all other monies
outstanding hereunder or secured hereby, together with subsequent interest at the rate borne by the Debentures pursuant to Section 2.1(f) on such principal, interest and other monies
from the date of the said declaration until payment is received by the Trustees, such subsequent interest to be payable at the times and places and in the monies prescribed for payments of principal
pursuant to the terms of the Debenture. Such payment when made shall be deemed to have been made in discharge of the Company's obligations hereunder and any monies so received by the Trustees shall be
applied in the manner provided in Section 8.8. 

8.2   Notice of Events of Default  

        If an Event of Default shall occur and be continuing the Trustees shall, within 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 Trustees shall have been requested
to do so by the holders of at least 25% of the principal amount of the Debentures then outstanding, the Trustees shall not be required to give such notice if the Trustees acting reasonably and in
good faith shall have determined that the withholding of such notice is in the best interests of the Debentureholders and shall have so advised the Company in writing. 

        Where
notice of the occurrence of an Event of Default has been given and the Event of Default is, in the Opinion of Counsel, thereafter cured, notice that such Event of Default is no
longer continuing shall be given by the Trustees to the Debentureholders within 15 days after the Trustees become aware that the Event of Default has been cured. 

8.3   Waiver of Past Defaults  

        The Holders of not less than 662/3% of principal amount of outstanding Debentures by notice to the Trustees may waive an existing Default and its
consequences except (i) a Default in the payment of the principal or interest on a Debenture, (ii) a Default arising from the failure to redeem or purchase any Debenture when required
pursuant to this Indenture or a Debenture or (iii) a Default in respect of a provision that cannot be amended without the consent of each holder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or impair any consequence right. 

        No
such act or omission or delay either of the Trustees or of the Debentureholders to exercise any right or power occurring upon a default by the Company hereunder shall constitute a
waiver of default or extend to or be taken in any manner whatsoever to affect any subsequent default or the rights resulting therefrom. 

8.4   Enforcement by the Trustees  

        The rights of enforcement by the Trustees are provided for in the Security Agreement. If an Event of Default described in
Section 8.1(a)(i) or (ii) occurs and is continuing, the Trustees may recover judgment in their own name and as trustees of an express trust against the Company for the
whole amount owing with respect to the Debentures. 

44

 

8.5   Enforcement by Debentureholders  

        No Debentureholder shall have any right to institute any action or proceeding or to exercise any other remedy authorized by this Trust Indenture or by law or by
equity for the purpose of enforcing payment of principal or interest or of realizing the security, or by reason of jeopardy of security, or for the execution of
any trust or power hereunder, unless the appropriate steps have been taken by the Debentureholders under the Section 8.13 hereof and the Canadian Trustee shall have failed to act within a
reasonable time thereafter; in such circumstances 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 8.4 but in no event shall any Debentureholder or combination of Debentureholders have any right to exercise the
power of sale conferred by the Security Agreement on the Trustee or to appoint a receiver or receiver and manager or to exercise or 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 affect, disturb or prejudice the security created by the Security Agreement, or 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 such outstanding Debentures. Nothing herein
shall prevent or impair any Debentureholder from pursuing the claim for relief under Section 241 of the CBCA or any similar applicable legislation for so long as the applicants with respect to
such claim hold, in the aggregate, no less than 331/3% of the outstanding Debentures. This Section 8.5 is subject to Section 8.14. 

8.6   Trustee Appointed Attorney  

        The Company hereby irrevocably appoints the Trustee to be the attorney of the Company in the name and on behalf of the Company to execute and do any deeds,
transfers, conveyances, assignments, assurances and things which the Company ought to execute and do, and has not executed or done, under the covenants and provision contained in this Trust Indenture
and generally to use the name of the Company in the exercise of all or any of the powers hereby conferred on the Trustee. 

8.7   Judgment against the Company  

        The Company covenants and agrees with the Trustee that, in case of any judicial or other proceedings to enforce the rights of Debentureholders hereunder and/or
the security hereby created, 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 Debentures and the interest thereon and any other monies owing hereunder after the application to the payment thereof of the proceeds of any sale of the Secured Interests or any part
thereof. 

8.8   Application of Monies by Trustee  

        Except as herein otherwise expressly provided, any monies received by the Trustee from the Company pursuant to the enforcement of the rights of the Trustee, or as
a result of legal or other proceedings (including, without limitation, from any trustee in bankruptcy or liquidator of the Company), including without limitation any monies arising from any
enforcement or any sale or other realization of the whole or
any part of the Collateral, shall be applied, together with any other monies then or thereafter in the hands of the Trustees available for such purpose, as follows: 

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

45

  

	(b)
	second,
but subject as hereinafter in this Section 8.8 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 or priority as between principal and interest as may be directed by such resolution; and

	(c)
	third,
in payment of the surplus, if any, of such monies to the Company or its assigns or any other Person entitled thereto; 

provided,
however, that no payment shall be made pursuant to subsection (b) above in respect of the principal of or interest on any Debenture held, directly or indirectly, by or for the
benefit of the Company or any Subsidiary (other than any Debenture pledged for value and in good faith to a Person other than the Company 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. 

8.9   Distribution of Proceeds  

        Payments to Holders of Debentures pursuant to Section 8.8(b) shall be made as follows: 

	(a)
	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.

	(b)
	Payment
of 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 for endorsement in any special case upon such indemnity
being given as it shall deem sufficient.

	(c)
	From
and after the date of payment specified in the notice, unless payment shall have been demanded in accordance with the terms of this Indenture and refused, 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.

	(d)
	The
Trustees shall not be required to apply or make any partial or interim payment to Debentureholders of any monies coming into its hands if the amount so received by it, after
reserving thereout such amount as the Trustee may think necessary to provide for the payments mentioned in Section 8.8(a), is insufficient to make a distribution of at least 2% of the
aggregate principal amount of the outstanding Debentures, but it may retain the money so received by it and invest or deposit the same as provided in Section 13.12 until the money or the
investments representing the same, with the income derived therefrom, together with any other monies 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 shall, however, not apply to a final payment in distribution hereunder. 

8.10 Remedies Cumulative  

        No remedy herein conferred upon or reserved to the Trustees, 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. 

46

 

8.11 Trustee Indemnification  

        Where there is reference in this Indenture (other than Section 11.1 hereof) or in the Security Agreement to the provision of an indemnity to the Trustees,
the following indemnity shall be sufficient for such purpose, unless both the Trustees and the indemnifying party agree otherwise: 

"The Trustee, its officers, directors and employees (collectively, the "Indemnitees") shall be indemnified and held harmless in respect of all losses, liabilities, damages,
costs, legal fees or expenses (including, without limitation, the costs and expenses of any action, suit, proceeding, demand, assessment, judgment, settlement or compromise relating thereto and all
interest, damages, fines and penalties and legal fees and expenses incurred in connection therewith) (collectively, the "Trustee's Liabilities") relating to, resulting from or arising out of any act
or omission of the relevant Indemnitee taken or omitted to be taken except, with respect to the relevant Indemnitee, such Trustee's Liabilities as are occasioned by that person's or its officers',
directors' or employees' own wilful neglect or default or wrongful conduct. Such indemnity shall be the obligation of the trust administered by the Trustee, but shall extend as well to proceeds
received by the Debentureholders individually and not through the Trustee."

        It
is understood and agreed that this indemnification shall survive termination or discharge of this Indenture or the resignation or removal of the Trustees. 

8.12 Delay or Omission Not Waiver  

        No delay or omission of the Trustees or of any Debentureholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustees or to the Debentureholders may be
exercised from time to time, and as often as may be deemed expedient, by the Trustees or by the Debentureholders, as the case may be. 

8.13 Control by Super — Majority  

        Notwithstanding any other provision of this Indenture or the Debentures, the holders of not less than 662/3% in principal amount of the outstanding
Debentures are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustees or of exercising any trust or power conferred on the Trustees.
However, the Trustees may refuse to follow any direction that conflicts with law or this Indenture or, that the Trustees determine is unduly prejudicial to the rights of other Debentureholders or
would involve the Trustees in personal liability; provided, however, that the Trustees may take any other action deemed proper by the Trustees
that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustees shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action. 

8.14 Rights of Holders to Receive Payment  

        Notwithstanding any provision of this Indenture (other than Section 1.12) or the Debentures, the right of any holder to receive payment of principal
and interest on the Debentures held by such holder, on or after the respective due dates expressed in the Debentures, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such holder. 

8.15 Trustees May File Proofs of Claim  

        In case of any judicial proceeding relative to the Company (or any other obligor upon the Debentures), its property or its creditors, the Canadian Trustee
shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Canadian Trust Indenture Legislation and the U.S. Trustee
shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and such
Trustee allowed in any such proceeding. In particular, the Trustees shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute
the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments
to the Trustees and, in the event that 

47

 

the
Trustees shall consent to the making of such payments directly to the Holders, to pay to the Trustees any amount due them for the reasonable compensation, expenses, disbursements and advances of
the Trustees, their agents and counsel, and any other amounts due the Trustees. 

        No
provision of this Indenture shall be deemed to authorize either Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Debentures or the rights of any Holder thereof or to authorize either Trustee to vote in respect of the claim of any Holder in any such proceeding. 

 
 

ARTICLE IX
  SATISFACTION AND DISCHARGE  
    

9.1   Cancellation and Destruction  

        All Debentures shall forthwith after payment thereof be delivered to the Trustees and cancelled by it. All Debentures cancelled or required to be cancelled under
this or any other provision of this Indenture shall be destroyed by the Trustees and, if required by the Company, the Trustee shall furnish to it a destruction certificate setting out the designating
numbers of the Debentures so destroyed. 

9.2   Non-Presentation of Debentures  

        In case the Holder of any Debenture shall fail, within 30 days from the Maturity Date to present the same for payment on the date on which the principal
thereof or the interest thereon or represented thereby becomes payable either at maturity, upon redemption, or otherwise or shall not within such time accept payment on account thereof and give such
receipt therefor, if any, as the Trustee may require: 

	(a)
	the
Company shall be entitled to pay to the Trustees and direct the Trustees to set aside, or

	(b)
	with
respect to monies in the possession or control of the Trustees which may or should be applied to the payment of the Debentures, the Company shall be entitled to direct the
Trustee to set aside, or

	(c)
	if
the redemption was pursuant to notice given by the Trustees, the Trustees may themselves set aside, 

the
principal monies and/or the interest (including redemption monies), as the case may be, in trust to be paid to the Holder of such Debenture upon due presentation or surrender thereof in accordance
with the provisions of this Indenture; and thereupon the principal monies and/or the interest payable on or represented by each Debenture in respect whereof such monies have been set aside shall be
deemed to have been paid and the Holder thereof shall thereafter have no right in respect thereof except that of receiving delivery and payment of the monies so set aside by the Trustees (with
interest thereon) upon due presentation and surrender thereof, subject always to the provisions of Section 9.3. 

9.3   Repayment of Unclaimed Monies  

        Any monies set aside in accordance with Section 9.2 (i) shall bear such rate of interest as the Depositary may allow, (ii) shall be set aside
either in the deposit department of the Trustees or in such chartered bank in Canada as the Trustees may determine and (iii) may, and if remaining unclaimed for 60 days shall be invested
by the Trustee in accordance with Section 13.12. Any interest earned on such monies shall be paid to the Debentureholder. 

        Subject
to applicable law, any monies set aside under Section 9.2 and not claimed by and paid to Holders of Debentures as provided in Section 9.2 within two years
after the date of such setting aside shall be paid over and delivered to the Company by the Trustees on demand and thereupon the Trustees 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 were so repaid to the Company shall have no rights in respect thereof except to obtain payment and delivery of
the monies due thereon from the Company up to such time as the right to proceed against the Company for recovery of such monies has become statute barred as a result of any limitation provided by the
laws of the Province of Ontario. 

48

 

9.4   Discharge  

        The Trustees shall at the Written Direction of the Company release and discharge this Indenture and execute and deliver such instruments as they shall be advised
by Counsel are requisite for that purpose and to release the Company from its covenants herein contained (other than the provisions relating to the indemnification of the Trustees), upon proof being
given to the reasonable satisfaction of the Trustees 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 or otherwise become due, 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. 

 
 

ARTICLE X
  SUCCESSOR CORPORATIONS  
    

10.1 Certain Requirements  

        The Company shall not enter into any transaction (including by way of reconstruction, re-organization, consolidation, amalgamation (except for a
short-form amalgamation with one or more wholly-owned subsidiaries pursuant to the Canada Business Corporations Act), plan of arrangement,
merger, liquidation, transfer, sale (including by way of lease or license or otherwise), whereby all or substantially all of its undertaking, property and assets would become the property of any other
Person, or, in the case of any such amalgamation, of the continuing corporation resulting therefrom, unless: 

	(a)
	such
other Person or continuing corporation (herein called "Successor Company") is a corporation incorporated under the laws of Canada
or under the laws of one of the provinces of Canada;

	(b)
	the
Debentures will be valid and binding obligations of the Successor Company entitling the Debentureholders, as against the Successor Company, to all the rights they have as
Debentureholders under this Indenture;

	(c)
	the
Successor Company shall be in compliance with the terms of the Debentures;

	(d)
	the
Successor Company shall, prior to or contemporaneously with the consummation of such transaction, perform such acts and execute such instruments, if any, as are, in the opinion of
Counsel, necessary or advisable to evidence the assumption by the Successor Company of liability for the due and punctual payment of all the Debentures, interest thereon and all other monies payable
hereunder, the covenant of the Successor Company to pay the same and the agreement of the Successor Company to assume, observe and perform all the covenants and obligations of the Company under this
Indenture;

	(e)
	such
transaction, in the opinion of Counsel, shall be upon such terms as to substantially preserve and not impair any of the rights and powers of the Trustees or the Debentureholders
hereunder;

	(f)
	no
condition or event shall exist in respect of the Company or the Successor Company at the time of such transaction or upon giving effect thereto which constitutes or would after the
giving of notice or the lapse or time or both, constitute an Event of Default hereunder or which could result in the acceleration of payment of any amount hereunder or under any Debenture;

	(g)
	the
Company shall have delivered to the Trustees an Officers' Certificate and an Opinion of Counsel each stating that such reconstruction, re-organization, consolidation,
amalgamation, arrangement, merger, liquidation, transfer, sale or other transaction and such supplemental indenture, if any, comply with this Article X and that all conditions precedent
herein provided for relating to such transaction have been complied with; and

	(h)
	following
such transaction, the obligations of the Company, the Trustee and the Debentureholders in respect of Taxes, including without limitation, under applicable laws and
Section 2.13, shall not be increased as a consequence thereof. 

49

 

10.2 Vesting of Powers in Successor  

        Whenever the conditions of Section 10.1 have been duly observed and performed, the Trustees shall execute and deliver a supplemental indenture and
thereupon: the Successor Company shall possess and from time to time may exercise each and every right and power of the Company under this Indenture in the name of the Company 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 Company may be done and performed with like force and effect by the directors or
officers of such Successor Company. 

 
 

ARTICLE XI
  MEETINGS OF DEBENTUREHOLDERS  
    

11.1 Right to Convene Meeting  

        The Trustees or the Company may at any time and from time to time, and the Trustees shall, on receipt of a written request of the Company or a written request
signed by the Holders of not less than 25% of the principal amount of the Debentures then outstanding and upon being indemnified to its reasonable satisfaction by the Company or by the
Debentureholders signing such request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Debentureholders. In the event of the
Trustees failing within 10 days after receipt of any such request and such indemnity to give notice convening a meeting, the Company or such Debentureholders, as the case may be, may convene
such meeting. Every such meeting shall be held at such place as may be approved or determined by the Trustees. 

11.2 Notice of Meetings  

        At least 15 days' notice of any meeting shall be given to the Debentureholders in the manner provided in Section 12.2 and a copy of such
notice shall be sent by post to the Trustees, unless the meeting has been called by it and to the Company unless the meeting has been called by it. Such notice shall state the time when and the place
where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat and it shall not be necessary for any such notice to set out the terms of any
resolution to be proposed or any of the provisions of this Article. The accidental omission to give notice of a meeting to any Holder of Debentures shall not invalidate any resolution passed at any
such meeting. 

11.3 Chairman  

        Some Person, who need not be a Debentureholder, nominated in writing by the Trustees shall be chairman of the meeting and if no Person is so nominated, or if the
Person so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, the Debentureholders present in Person or by proxy shall choose some Person present to
be chairman. 

11.4 Quorum  

        Subject to the provisions of Section 11.2, at any meeting of the Debentureholders a quorum shall consist of Debentureholders present in Person or by proxy
and representing at least 25% in principal amount of the outstanding Debentures. If a quorum of the Debentureholders shall not be present within 30 minutes from the time fixed for holding any
meeting, the meeting, if summoned by the Debentureholders or pursuant to a request of the Debentureholders, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in
the next week (unless such day is a not a Business Day in which case it shall be adjourned to the next following Business Day thereafter) at the same time and place and no notice shall be required to
be given in respect of such adjourned meeting. At the adjourned meeting the Debentureholders present in Person or by proxy shall form a quorum and may transact the business for which the
meeting was originally convened notwithstanding that they may not represent 25% of the principal amount of the outstanding Debentures. Any business may be brought before or dealt with at an adjourned
meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless the required
quorum be present at the commencement of business. 

50

 

11.5 Power to Adjourn  

        The chairman of any meeting at which a quorum of the Debentureholders is present may, with the consent of the Holders of a majority in principal amount of the
Debentures represented thereat adjourn any such
meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe. 

11.6 Poll  

        On every Extraordinary Resolution, and on any other question submitted to a meeting, when demanded by the chairman or by one or more Debentureholders or proxies
for Debentureholders, a poll shall be taken in such manner and either at once or after an adjournment as the chairman shall direct. Questions other than Extraordinary Resolutions shall, if a poll be
taken, be decided by the votes of the Holders of a majority in principal amount of the Debentures represented at the meeting and voted on the poll. 

11.7 Voting  

        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 Debentureholders or both, shall have
one vote. On a poll each Debentureholder present in Person or represented by a proxy duly appointed by an instrument in writing shall be entitled to one vote in respect of each $1,000 principal amount
of Debentures of which he shall then be the Holder. A proxy need not be a Debentureholder. In the case of joint registered Holders of a Debenture, any one of them present in Person or by proxy at the
meeting may vote in the absence of the other or others but in case more than one of them be present in Person or by proxy, they shall vote together in respect of the Debentures of which they are joint
registered Holders. 

11.8 Regulations  

        The Trustees, or the Company with the approval of the Trustees, may from time to time make and from time to time vary or revoke such regulations as it shall from
time to time think fit providing for and governing: 

	(a)
	the
form of the instrument appointing a proxy, which shall be in writing, and the manner in which the same shall be executed and the production of the authority of any Person signing
on behalf of a Debentureholder;

	(b)
	the
deposit of instruments appointing proxies at such place as the Trustees, the Company or the Debentureholder convening the meeting, as the case may be, may, in the notice convening
the meeting, direct and the time, if any, before the holding of the meeting or any adjournment thereof by which the same must be deposited; and

	(c)
	the
deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments
appointing proxies to be mailed, couriered, or sent by facsimile before the meeting to the Company or to the Trustees 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. 

        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 the Holders of any Debentures, or as entitled to vote or be present at the meeting in respect thereof, shall be Debentureholders and Persons whom
Debentureholders have by instrument in writing duly appointed as their proxies. 

11.9 Persons Entitled to Attend Meetings  

        The Company, the Trustees and the Debentureholders, by their respective officers and directors, the Auditors of the Company and the legal advisers of each of the
foregoing may attend any meeting of the Debentureholders, but shall have no vote as such unless they are Debentureholders. 

51

 

11.10 Powers Exercisable by Extraordinary Resolution  

        In addition to the powers conferred upon them by any other provisions of this Indenture or by law, a meeting of the Debentureholders shall have the following
powers exercisable from time to time by Extraordinary Resolution, subject to Sections 8.13 and 8.14 and Article XIV: 

	(a)
	power
to sanction any modification, abrogation, alteration, compromise or arrangement of the rights of the Debentureholders or the Trustees against the Company, or against its
property, whether such rights arise under this Indenture or the Debentures or otherwise;

	(b)
	power
to assent to any modification of or change in or addition to or omission from the provisions contained in this Indenture or any Debenture and to authorize the Trustees to concur
in and execute any indenture supplemental hereto embodying any modification, change, addition or omission;

	(c)
	power
to sanction any scheme for the restructuring, reconstruction or reorganization of the Company or for the consolidation, amalgamation or merger of the Company with any other
corporation or for the sale, leasing, transfer or other disposition of the undertaking, property and assets of the Company or any part thereof;

	(d)
	power
to direct or authorize the Trustees to exercise any power, right, remedy or authority given to it by this Indenture in any manner specified in any such Extraordinary Resolution
or to refrain from exercising any such power, right, remedy or authority;

	(e)
	power
to waive, and direct the Trustees to waive, any default hereunder or to cancel any declaration made by the Trustee pursuant to Section 8.1 either unconditionally or upon
any condition specified in such Extraordinary Resolution;

	(f)
	power
to restrain any Debentureholder from taking or instituting any suit, action or proceeding 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 in accordance with Section 8.5;

	(g)
	power
to direct any Debentureholder who, as such, has brought any action, suit or proceeding to stay or discontinue or otherwise deal with the same upon payment, if the taking
of such suit, action or proceeding shall have been permitted by Section 8.5, of the costs, charges and expenses reasonably and properly incurred by such Debentureholder in connection therewith;

	(h)
	power
to assent to any 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 Company;

	(i)
	power
to appoint a committee (and to remove any committee so appointed) to consult with the Trustees and 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
Resolution or other resolution 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.
Every such committee may elect its chairman and may make regulations respecting its quorum, the calling of its 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 minutes 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 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;

	(j)
	power
to authorize the distribution in specie of any shares, bonds, debentures or other securities or obligations or cash or other consideration received hereunder or the use or
disposal of the whole or any part of such shares, bonds, debentures or other securities or obligations or cash or other 

52

 

consideration
in such manner and for such purpose as may be deemed advisable and specified in such Extraordinary Resolution; 

	(k)
	power
to authorize the Trustees or any other Person or Persons to bid at any sale of the Company's properties or assets or any part thereof and to borrow the monies required to make
any deposit at said sale or pay the balance of the purchase price and to hypothecate, mortgage, pledge, charge, cede and transfer the property or assets so purchased as security for the repayment of
the monies so borrowed and interest thereon, or itself, himself or themselves, as the case may be, to advance such monies (in which event it, he or they shall have a Lien upon the property or
assets so purchased for the amount so advanced and interest thereon) and to hold any property or assets so purchased (subject to any hypothec, mortgage, pledge, charge or Lien to secure any monies so
borrowed or advanced) in trust for all the Holders of the Debentures outstanding at the time of such sale pro rata in proportion to the amounts due to them thereon respectively for principal
and interest before such sale, and to sell, transfer and convey the whole or any part or parts of the property or assets so purchased for such consideration in cash or in the shares, bonds, debentures
or other securities or obligations of any company formed or to be formed, or partly in cash and partly in such securities or obligations, and upon such terms and conditions as may be determined by
such Extraordinary Resolution of the Debentureholders and, subject to such terms and conditions, to dispose of such cash, shares, bonds, debentures or other securities or obligations pursuant to the
provisions of Subsection 11.10(j), and until the sale, transfer or conveyance of the whole of such property or assets so purchased to maintain and operate such part of said
property and assets as has not been disposed of, and for such purposes to borrow monies and to hypothecate, mortgage, pledge, charge and cede and transfer the property and assets so purchased, or any
part thereof, as security for the repayment of the monies so borrowed, with interest thereon, or itself, himself or themselves, as the case may be, to advance such monies (in which event it, he
or they shall have a Lien or charge upon the property and assets so purchased for the amounts so advanced and interest thereon) and otherwise deal with such property and assets and the proceeds of any
sale, transfer or conveyance thereof as the Debentureholders may by such Extraordinary Resolution direct;

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

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

	(n)
	power,
notwithstanding Section 5.7, to authorize the Company and the Trustees to grant extensions of time for payment of interest on any of the Debentures, whether or
not the interest the payment in respect of which is extended, is at the time due or overdue;

	(o)
	power
to approve any amendments to the Intercreditor Agreement and the Registration Rights Agreement that would have a material adverse effect on the rights of Debentureholders;

	(p)
	power
to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Debentureholders or by any committee appointed pursuant to
Subsection 11.10(i); and

	(q)
	Except
as otherwise provided in this Indenture, all other powers of and matters to be determined by Debentureholders may be exercised and determined by ordinary resolution. 

11.11 Meaning of "Extraordinary Resolution"  

	(a)
	The
expression "Extraordinary Resolution" when used in this Indenture means, subject as hereinafter in this Article provided, a resolution proposed to be passed as an Extraordinary
Resolution at a meeting of Debentureholders (including an adjourned meeting) duly convened for the purpose and held in accordance with the provisions of this Article at which the Holders of not less
than 50% in principal amount of the Debentures then outstanding are present in Person or by proxy and passed by the favourable votes of the Holders of not less than 662/3% of the
principal amount of Debentures represented at the meeting and voted on a poll upon such resolution. 

53

 

	(b)
	If,
at any such meeting, the Holders of not less than 50% in principal amount of the Debentures outstanding are not present in Person or by proxy within 30 minutes after the
time appointed for the meeting, then the meeting, if convened by or on the requisition of Debentureholders, shall be dissolved; but in any other case it shall stand adjourned to such date, being not
less than 21 nor more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 10 days' notice shall be given of the time and place of
such adjourned meeting in the manner provided in Section 12.2. Such notice shall state that at the adjourned meeting the Debentureholders present in Person or by proxy shall form a
quorum. At the adjourned meeting the Debentureholders present in Person or 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 meeting and passed by the requisite vote as provided in subsection (a) of this Section shall be an Extraordinary Resolution within the meaning of
this Indenture, notwithstanding that the Holders of not less than 50% in principal amount of the Debentures then outstanding are not present in Person or by proxy at such adjourned meeting.

	(c)
	Votes
on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary. 

11.12 Powers Cumulative  

        It is hereby declared and agreed that any one or more 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 from time to time shall not be deemed to exhaust the rights of the Debentureholders to exercise the
same or any other such power or powers thereafter from time to time. 

11.13 Minutes  

        Minutes of all resolutions and proceedings at every meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose
by the Trustees at the expense of the Company, and any such minutes as aforesaid, if signed by the chairman of the meeting at which such resolutions were passed or proceedings had, 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 held and convened, and all resolutions passed thereat or proceedings taken
thereat to have been duly passed and taken. 

11.14 Instruments in Writing  

        All actions which may be taken and all powers that may be exercised by the Debentureholders at a meeting held as hereinbefore in this Article provided may also be
taken and exercised by the Holders of 662/3% of the principal amount of all the outstanding Debentures, by an instrument in writing signed in one or more counterparts and the expression
"Extraordinary Resolution" when used in this Indenture shall include an instrument so signed. 

11.15 Binding Effect of Resolutions  

        Subject to Article XIV, every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article 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 11.14 shall be binding upon all the Debentureholders, whether signatories thereto or not, and each and every Debentureholder and the Trustees (subject to the provisions for its
indemnity herein contained) shall be bound to give effect accordingly to every such resolution, Extraordinary Resolution and instrument in writing. 

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11.16 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 or other instrument or of a writing appointing any such attorney or (subject to the provisions of this Article with regard to voting at meetings of Debentureholders) of the holding by any
Person of Debentures shall be sufficient for any purpose of this Indenture if made in the following manner, namely, the fact and date of execution by any Person of such request or other instrument or
writing may be proved 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 or other instrument in 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. 

 
 

ARTICLE XII
  NOTICES  
    

12.1 Notice to Company  

        Any notice to the Company under the provisions of this Indenture shall be valid and effective if delivered to the Company at: Investor Relations,
8150 Trans Canada Highway, St. Laurent, Quebec, H4S 1M5, Attention: President, with a copy addressed to Fasken Martineau LLP, Stock Exchange Tower, PO Box 242,
Suite 3400, 800 Place Victoria, Montreal, Quebec H4Z 1E9, Attention: Gilles Leclerc,, or if given by facsimile to the attention of the President of the Company at
(514) 956-4405 and to Gilles Leclerc at (514) 397-7400 to such office and shall be deemed to have been received at the date and time of receipt,
unless after 4 p.m. on the day of delivery or on a day which is not a Business Day, in which case notice shall be deemed to be received at 9 a.m. on the next Business Day. The Company
may from time to time notify the Trustee in writing of a change of address which thereafter, until changed by like notice, shall be the address of the Company for all purposes of this Indenture. 

12.2 Notice to Debentureholders  

        All notices to be given hereunder with respect to the Debentures shall be deemed to be validly given to the Holders if sent by mail, postage prepaid, by letter or
circular addressed to such Holders at the respective post office addresses appearing in any of the registers hereinbefore mentioned and shall be deemed to have been effectively given 3 days
following the day of mailing. Accidental error or omission in giving notice or accidental failure to mail notice to any Debentureholder or the inability of the Company to give or mail any notice due
to anything beyond the reasonable control of the Company shall not invalidate any action or proceeding founded thereon. 

        If
any notice given in accordance with the foregoing paragraph would be unlikely to reach the Debentureholders to whom it is addressed in the ordinary course of post by reason of an
interruption in, or threatened interruption in, mail service, whether at the place of dispatch or receipt or both, the Company shall give such notice by publication at least once in each of two
successive weeks, in each of The Globe and Mail and The National Post, or if both do not exist at the relevant time, such other English language daily newspapers of general circulation in Canada as
the Trustee may choose, in The Toronto Star, or if it does not exist at the relevant time, such other English language daily newspaper of general circulation in the City of Toronto, as the Trustee may
chose, and in La Presse or if it does not exist at the relevant time, such other French language newspaper of general circulation in the City of Montreal as the Trustee may chose (or in such of
those cities as, in the opinion of the Trustee, is sufficient in the particular circumstances), each such publication to be made in a daily newspaper of general circulation in the designated city. 

        Any
notice given to Debentureholders by mail shall be deemed to have been given on the day of mailing. Any notice given to Debentureholders by publication shall be deemed to have been
given on the day on which publication shall have been effected at least once in each of the newspapers in which publication was required. 

55

 

        All
notices with respect to any Debenture may be given to whichever one of the Holders thereof (if more than one) is named first in the registers hereinbefore mentioned, and any
notice so given shall be sufficient notice to all Holders of and Persons interested in such Debenture. 

12.3 Notice to the Trustees  

        Any notice to the U.S. Trustee under the provisions of this Indenture shall be valid and effective if delivered to the U.S. Trustee at its office
located at 25 South Charles Street, 16th Floor, Baltimore, Maryland 21201, or if given by facsimile, to the attention of the Corporate Trust Department at
(410) 244-4236 to such office received at the date and time of receipt, unless after 4 p.m. on the day of delivery or on a day
which is not a Business Day, in which case notice shall be deemed to be received at 9 a.m. on the next Business Day. The U.S. Trustee may from time to time notify the Depositary in
writing of a change of address which thereafter, until changed by like notice, shall be the address of the U.S. Trustee for all purposes of this Indenture. 

        Any
notice to the Canadian Trustee under the provisions of this Indenture shall be valid and effective if delivered to the Canadian Trustee at its office located at
1500 University Street, Suite 700, Montreal, Quebec H3A 3S8, Attention: General Manager, Corporate Trust or if given by facsimile, to the attention of the General Manager,
Corporate Trust at (514) 982-7677 to such office received at the date and time of receipt, unless after 4 p.m. on the day of delivery or on a day which is not a
Business Day, in which case notice shall be deemed to be received at 9 a.m. on the next Business Day. The Canadian Trustee may from time to time notify the Depositary in writing of a change of
address which thereafter, until changed by like notice, shall be the address of the Canadian Trustee for all purposes of this Indenture. 

 
 

ARTICLE XIII
  CONCERNING THE TRUSTEE  
    

13.1 Appointment of Trustees and Fondé de Pouvoir  

        Computershare Trust Company of Canada is hereby appointed to act on behalf of all Debentureholders as Canadian Trustee hereunder and Manufacturers and Traders
Trust Company is hereby appointed to act on behalf of all Debentureholders as U.S. Trustee hereunder. Computershare Trust Company of Canada is also appointed to act as the secured party,
Collateral Agent, power of attorney and the "Fondé de Pouvoir" of the Debentureholders for the purposes of holding hypothecs over and
against all of the Company's present and future property, in general, and the Collateral and the Mortgage Properties, in particular, securing payment of the Debenture Indebtedness (as defined
in the Security Agreement) as envisaged by Article 2692 of the Civil Code. In both such capacities, Computershare Trust Company of Canada shall
be entitled to all protections, rights and powers as provided hereunder and shall be subject to all of the obligations as provided hereunder. 

13.2 No Conflict of Interest  

        If a Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act or a material conflict of interest within the meaning of
the Canadian Trust Indenture Legislation, such Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act, Canadian Trust Indenture Legislation and this Indenture. 

13.3 U.S. Trustee Required; Eligibility.  

	(a)
	There
shall at all times be a U.S. Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and
surplus of at least U.S.$50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the
purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the U.S. Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article. 

56

 

	(b)
	This
Indenture shall always have a Trustee who satisfies the requirements of the Canadian Trust Indenture Legislation and of TIA
Section 310(a)(1), (2) and (5). Such Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met.

	(c)
	The
Canadian Trustee represents to the Company that at the date of execution and delivery of this Indenture, it is authorized to carry on the business of a trust company in each of
the provinces of Ontario and Quebec. For so long as required by Canadian Trust Indenture Legislation, there shall be a Canadian Trustee under this Indenture. The Canadian Trustee shall at all times be
a corporation organized under the laws of Canada or any province thereof and authorized under the laws of Ontario to carry on trust business therein. If at any time the Canadian Trustee shall cease to
be eligible in accordance with this Section, it shall immediately notify the Company and the U.S. Trustee.

	(d)
	The
rights, powers, duties and obligations conferred or imposed upon the Canadian Trustee shall be conferred or imposed upon and may be exercised or performed by the
U.S. Trustee, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the U.S. Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by the Canadian Trustee. 

13.4 Replacement of Trustees.  

	(a)
	No
resignation or removal of either Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the
successor Trustee under Section 13.5.

	(b)
	Each
Trustee may resign at any time with respect to the Debentures by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may at the expense of the Company petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Debentures.

	(c)
	Subject
to Section 13.3, each Trustee may be removed at any time with respect to the Debentures by decision of the Holders of a majority in principal amount of the Debentures,
delivered to the Trustee and to the Company.

	(d)
	If
at any time:

	(i)
	either
Trustee shall fail to comply with Section 13.3 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a
Debenture for at least six months, or

	(ii)
	either
Trustee shall cease to be eligible under Section 13.3 and shall fail to resign after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Debenture for at least six months, or

	(iii)
	either
Trustee shall become incapable of acting or shall be adjudged bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation 

then,
in any such case, (A) the Company by a resolution of the Board of Directors may remove such Trustee with respect to all Debentures, or (B) any Holder who has been a bona fide
Holder of a Debenture for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of such Trustee with respect to
all Debentures and the appointment of a successor Trustee or Trustees. 

	(e)
	If
a Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the U.S. Trustee or the Canadian Trustee for any cause, with
respect to the Debentures, the 

57

 

Company,
by a resolution of the Board of Directors, shall promptly appoint a successor U.S. Trustee or Canadian Trustee, as the case may be, with respect to the Debentures (it being
understood that at any time there shall be no more than one U.S. Trustee and one Canadian Trustee with respect to the Debentures). If, within six months after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor U.S. Trustee or Canadian Trustee with respect to the Debentures shall be appointed by decision of the Holders of a majority in
principal amount of the Debentures delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor
Trustee with respect to the Debentures and supersede the successor Trustee appointed by the Company. If no successor U.S. Trustee or Canadian Trustee with respect to the Debentures shall have
been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Debenture for at least six months may, on
behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debentures. 

	(f)
	The
Company shall give notice of each resignation and each removal of the Trustee with respect to the Debentures and each appointment of a successor Trustee with respect to the
Debentures to all Holders of Debentures in the manner provided in Section 12.2. Each notice shall include the name of the successor Trustee with respect to the Debentures and the address of its
Corporate Trust Office.

	(g)
	The
resignation or removal of a Trustee with respect to the Debentures pursuant to this Section shall not affect the obligation of the Company to indemnify such Trustee pursuant to
Section 13.18 in connection with the exercise or performance by such Trustee prior to its resignation or removal of any of its powers or duties hereunder.

	(h)
	No
Trustee under this Indenture shall be liable for any action or omission of any successor Trustee. 

13.5 Acceptance of Appointment by Successor.  

	(a)
	In
case of the appointment hereunder of a successor Trustee with respect to all Debentures, every such successor Trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property, records, Collateral and money held by such retiring Trustee hereunder.

	(b)
	Upon
request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in paragraph (a) above.

	(c)
	No
successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. 

13.6 Duties of Trustees.  

	(a)
	If
an Event of Default has occurred and is continuing, each Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and
skill in its exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs.

	(b)
	Except
during the continuance of an Event of Default:

	(i)
	the
duties of each Trustee shall be determined solely by the express provisions of this Indenture and, with respect to the Canadian Trustee, as specifically set forth in
Canadian Trust Indenture Legislation and each Trustee need perform only those duties that are specifically set forth in this 

58

 

Indenture
and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustees; and 

	(ii)
	in
the absence of bad faith on its part, the Trustees may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to each Trustee and conforming to the requirements of this Indenture. However, each Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.

	(c)
	A
Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

	(i)
	this
paragraph does not limit the effect of paragraph (b) of this Section;

	(ii)
	a
Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is conclusively determined by a court of competent
jurisdiction that such Trustee was negligent in ascertaining the pertinent facts; and

	(iii)
	a
Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to
Section 8.13 hereof.

	(d)
	Whether
or not therein expressly so provided, every provision of this Indenture that in any way relates to a Trustee is subject to
paragraphs (a), (b), and (c) of this Section.

	(e)
	No
provision of this Indenture or the Security Agreement shall require the Trustees to expend or risk their own funds or incur any liability. The Trustees shall be under no obligation
to exercise any of their rights and powers under this Indenture or the Security Agreement at the request of any Holders, unless such Holder shall have offered to the Trustees security and indemnity
satisfactory to them against any loss, liability or expense.

	(f)
	The
Trustees shall not be liable for interest on any money received by them except as each Trustee may agree in writing with the Company. Money held in trust by each Trustee need not
be segregated from other funds except to the extent required by law.

	(g)
	Every
provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the U.S. Trustee shall be subject to the provisions of this
Section and to the provisions of the Trust Indenture Act.

	(h)
	The
duties and responsibilities of the Canadian Trustee shall be as provided by Canadian Trust Indenture Legislation. Every provision of this Indenture that by its terms relieves the
Trustees of liability or entitles them to rely upon any evidence submitted to them is subject to the provisions of the Canadian Trust Indenture Legislation to the extent that such provisions are at
the time in force and applicable to this Indenture or the Company. 

13.7 Rights of Trustees.  

	(a)
	Subject
to the provisions of Section 13.6(a) hereof, each Trustee may rely upon any document believed by it to be genuine and to have been signed or presented by the
proper Person. No Trustee need investigate any fact or matter stated in the document.

	(b)
	Before
a Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. A Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. A Trustee may consult with counsel and the oral or written advice of such counsel or any Opinion of Counsel with
respect to legal matters relating to this Indenture, the Security Agreement and the Debentures shall be full and complete authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

	(c)
	A
Trustee may act through attorneys, agents, custodians or nominees and shall not be responsible for the misconduct or negligence of any attorney, agent, custodian or nominee
appointed with due care. 

59

 

	(d)
	No
Trustee shall be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture;
provided, however, that such Trustee's conduct does not constitute willful misconduct or negligence.

	(e)
	No
Trustee shall be under obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall
have offered to such Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.

	(f)
	Except
with respect to Section 5.2 hereof, the Trustees shall have no duty to inquire as to the performance of the Company's covenants in Article 5 hereof. In addition,
no Trustee shall be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 8.1(a)(i) or 8.1(a)(ii), or
(ii) any Default or Event of Default of which a Responsible Officer of any Trustee shall have received written notification; provided that the Trustees shall comply with the "automatic stay"
provisions contained in U.S. bankruptcy laws, if applicable.

	(g)
	Prior
to the occurrence of an Event of Default hereunder and after the curing and waiving of all Events of Default, the Trustees shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document unless requested in writing to do so by the Holders of not less than a majority in aggregate principal amount of the Debentures then outstanding; provided that if the payment
within a reasonable time to the Trustees of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustees not reasonably assured
to the Trustees by the security afforded to it by the terms of this Indenture, the Trustees may require indemnity satisfactory to them against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such examination shall be paid by the Company or, if advanced by the Trustees, shall be repaid by the Company upon demand. The Trustees shall not be bound
to ascertain or inquire as to the performance or observance of any covenants, conditions, or agreements on the part of the Company, except as otherwise set forth herein, but the Trustees may, in their
discretion, make such further inquiry or investigation into such facts or matters as they may see fit and if the Trustees shall determine to make such further inquiry or investigation, they shall be
entitled to examine the books, records and premises of the Company personally or by agent or attorney.

	(h)
	No
Trustee shall be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

	(i)
	The
permissive rights of a Trustee to do things enumerated in this Indenture shall not be construed as a duty.

	(j)
	No
Trustee shall be liable for or by reason of any statements of fact or recitals in this Indenture or in the Debentures.

	(k)
	No
Trustee shall be in any way responsible for the consequence of any breach on the part of the Company of any of the covenants contained in this Indenture or of any acts of the
agents or servants of the Company.

	(l)
	No
Trustee shall be liable by reason of the statements or implications of fact or law contained in or arising out of anything contained in this Indenture or any offering document or
in the Debentures or be required to verify the same, but all statements or implications shall be deemed to have been made by the Company only.

	(m)
	A
Trustee may, in the exercise of all or any of the trusts, powers and discretion vested in it under this Indenture, act by the responsible officers of a Trustee; a Trustee may
delegate to any Person the performance of any of the trusts and powers vested in it by this Indenture, and any delegation may be made upon such terms and conditions and subject to such regulations as
a Trustee may think to be in the best interest of the Holders. 

60

 

	(n)
	No
Trustee shall be bound to act in accordance with any direction or request of the Company until an executed copy of the document containing the direction or request has been
delivered to a Trustee, and a Trustee shall be fully empowered to act and shall be fully protected from all liability in acting upon any document purporting to be a Debenture and believed by a Trustee
to be genuine.

	(o)
	No
Trustee shall be responsible for any error made or act done by it resulting from reliance upon the signature of any Person on behalf of the Company or of any Person on whose
signature a Trustee may be called upon to act or refrain from acting under this Indenture. 

13.8 Compliance.  

	(a)
	The
Trustees hereby direct the Company to deliver to them evidence of compliance as may be required pursuant to the Canadian Trust Indenture Legislation and the Trust Indenture Act at
the times and in the manner provided pursuant thereto.

	(b)
	Neither
Trustee nor any related Person to a Trustee shall be appointed a receiver or receiver and manager or liquidator of all or any part of the assets or undertaking of the Company.

	(c)
	Each
Trustee shall send to the other Trustee a copy of any notice or other communication that such Trustee has sent to the Company.

	(d)
	In
no event shall the U.S. Trustee have any obligation to monitor Canadian law or the Canadian Trust Indenture Legislation or the compliance by the Canadian Trustee of any of
its obligations set forth herein or in the Canadian Trust Indenture Legislation.

	(e)
	In
no event shall the Canadian Trustee have any obligation to monitor the compliance by the U.S. Trustee of any of its obligations set forth herein or in the Trust Indenture
Act.

	(f)
	In
the event that any Trustee is also acting as authenticating agent, paying agent or security registrar hereunder, the rights and protections afforded to the Trustee pursuant to this
Article shall also be afforded to it in such capacity. 

13.9 Evidence and Authority to Trustees, Opinions, etc; Compliance Certificate  

        The Company shall furnish to the Trustees evidence of compliance with the conditions precedent provided for in this Indenture relating to any action or step
required or permitted to be taken by the Company or the Trustee under this Indenture or as a result of any obligation imposed under this Indenture, including without limitation, the certification and
delivery of Debentures hereunder, the satisfaction and discharge of this Indenture and the taking of any other action to be taken by the Trustee at the request of or upon the application of the
Company, forthwith if and when (a) such evidence is required by any other Section of this Indenture to be furnished by the Trustee in accordance with the terms of this Section or (b) the
Trustee, in the exercise of its rights and duties under this Indenture, gives the Company written notice requiring it to furnish such evidence in relation to any particular action or obligation
specified in such notice. 

        Such
evidence shall consist of: 

	(a)
	an
Officers' Certificate stating that any such condition precedent has been complied with in accordance with the terms of this Indenture;

	(b)
	in
the case of a condition precedent compliance with which is, by the terms of this Indenture, made subject to review or examination by a solicitor or attorney, an opinion of Counsel
that such condition precedent has been complied with in accordance with the terms of this Indenture; and

	(c)
	in
the case of any such condition precedent compliance with which is subject to review or examination by auditors or accountants, an opinion or report of the Auditors of the Company
whom the Trustee for such purposes hereby approves, that such condition precedent has been complied with in accordance with the terms of this Indenture. 

        Whenever
such evidence relates to a matter other than the certificates and delivery of Debentures and the satisfaction and discharge of this Indenture, and except as otherwise
specifically provided herein, such evidence 

61

 

may
consist of a report or opinion of any solicitor, auditor, accountant, engineer or appraiser or any other person whose qualifications give authority to a statement made by him, provided that if
such report or opinion is furnished by a Director, officer or employee of the Company it shall be in the form of a statutory declaration. Such evidence shall be, so far as appropriate, in accordance
with the immediately preceding paragraph of this Section. 

        Each
statutory declaration, certificate, opinion or report with respect to compliance with a condition precedent provided for in this Indenture shall include (a) a statement by
the person giving the evidence that he or she has read and is familiar with those provisions of this Indenture relating to the condition precedent
in question, (b) a brief statement of the nature and scope of the examination or investigation upon which the statements or opinions contained in such evidence are based, (c) a statement
that, in the belief of the person giving such evidence, he has made such examination or investigation as is necessary to enable him to make the statements or give the opinions contained or expressed
therein, (d) a statement whether in the opinion of such person the conditions precedent in question have been complied with or satisfied and, (e) a statement to the effect that no
default or Event of Default has occurred or will occur by reason of the action to be taken. 

        The
Company shall furnish to the Trustees, in accordance with Section 5.16 and at any other time if the Trustee reasonably so requires, its certificate that the Company 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 the lapse of time, or both, or
otherwise, constitute an Event of Default, or if such is not the case, specifying the covenant, condition or other requirement which has not been complied with and giving particulars of such
non-compliance. The Company shall, whenever the Trustee so requires, furnish the Trustee with evidence by way of statutory declaration, opinion, report or certificate as specified by the
Trustee as to any action or step required or permitted to be taken by the Company or as a result of any obligation imposed by this Indenture. 

13.10 Experts, Advisers and Trustees  

        The Trustees may: 

	(a)
	employ
or retain and act on the opinion or advice of or information obtained from any solicitor or attorney, auditor, valuer, engineer, surveyor, appraiser or other expert, whether
obtained by the Trustees or by the Company, or otherwise, and shall not be liable for acting in good faith on any such opinion or advice and may pay proper and reasonable compensation for all such
legal and other advice or assistance as aforesaid; and

	(b)
	employ
such agents and other assistants as they may reasonably require for the proper discharge of their duties hereunder, and may pay reasonable remuneration for all services
performed for them (and shall be entitled to receive reasonable remuneration for all services performed by them) in the discharge of the trusts hereof or their obligations under the Collateral
Documents and compensation for all disbursements, costs and expenses made or incurred by them in the discharge of their duties hereunder and in the management of the trusts hereof. Any solicitors
employed or consulted by the Trustees may, but need not be, solicitors for the Company. 

13.11 Trustees May Deal in Debentures  

        Subject to Sections 13.1 and 13.6, the Trustees may, in their personal or other capacity, buy, sell, lend upon and deal in the Debentures and
generally contract and enter into financial transactions with the Company or otherwise, without being liable to account for any profits made thereby. 

13.12 Investment of Monies Held by Trustees  

        Upon receipt of a Written Direction from the Company to invest funds held by the Trustees pursuant to this Indenture in investments, authorized by the Directors
("Authorized Investments"), the Trustee shall invest such funds in Authorized Investments in their name in accordance with such direction, provided such
funds have not been already invested by the Trustees. 

62

  

        Unless otherwise provided in this Indenture, any monies held by the Trustees pursuant to this Indenture, which, under the trusts of this Indenture, may or ought to be invested or which
may be on deposit with the Trustees or which may be in the hands of the Trustees, may be invested and reinvested in the name, or under the control, of the Trustees, provided that such securities are
expressed to mature within two years after their purchase by the Trustees, and unless and until the Trustees shall have declared the principal of and interest on the Debentures to be due and payable,
the Trustees shall so invest such monies at the request of the Company. 

        Pending
the investment of any monies as hereinbefore provided, such monies may be deposited in the name of the Trustees in any chartered bank of Canada or, with the consent of the
Company, in the deposit department of the Trustees or any other loan or trust company authorized to accept deposits under the laws of Canada or any Province thereof at the rate of interest then
current on similar deposits. 

        Unless
and until the Trustees shall have declared the principal of and interest on the Debentures to be due and payable, the Trustees shall pay over to the Company all interest or other
income received by the Trustees in respect of any investments or deposits made pursuant to the provisions of this Section. 

        The
Trustees shall not be liable for any losses incurred in the Investment of any funds in Authorized Investments. The Trustees shall be accountable only for reasonable diligence in the
investment of monies under this Section. The Trustees shall not be liable for any loss or losses realized on such investment, negligence, wilful acts or defaults only excepted. 

13.13 Trustee Not Ordinarily Bound  

        Except as provided in Section 8.2 and as otherwise specifically provided herein, the Trustees shall not, subject to Section 13.6, be bound to
give notice to any Person of the execution hereof, nor to do, observe or perform or see to the observance or performance by the Company of any of the obligations herein imposed upon the Company or of
the covenants on the part of the Company herein contained, nor in any way to supervise or interfere with the conduct of the Company's business, unless the Trustees shall have been required to do so in
writing by the Holders of not less than 25% of the aggregate principal amount of the Debentures then outstanding or by any Extraordinary Resolution of the Debentureholders passed in accordance with
the provisions contained in Article XI, and then only after they shall have been indemnified to their satisfaction against all actions, proceedings, claims and demands to which they may
render themselves liable and all costs, charges, damages and expenses which they may incur by so doing. 

13.14 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 Company. 

13.15 Conditions Precedent to Trustees' Obligations to Act Hereunder  

        Subject to Section 13.6 and Canadian Trust Indenture Legislation, the obligation of the Trustees to commence or continue any act, action or
proceeding for the purpose of enforcing the rights of the Trustee and of the Debentureholders hereunder shall be conditional upon the Debentureholders furnishing, when required by notice in writing by
the Trustees, sufficient funds to commence or continue such act, action or proceeding and indemnification reasonably satisfactory to the Trustees to protect and hold harmless the Trustees against the
costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. 

        The
Trustees shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on them hereby unless and until they shall have been
required so to do under the terms hereof; nor shall the Trustees be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall
distinctly specify the default desired to be brought to the attention of the Trustees and in the absence of any such notice the Trustees 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 

63

 

way
limit any discretion herein given the Trustees to determine whether or not the Trustees shall take action with respect to any default. 

        None
of the provisions contained in this Indenture shall require the Trustees to expend or risk its own funds or otherwise incur financial liability in the performance of any of their
duties or in the exercise of any of their rights or powers unless indemnified as aforesaid. 

        The
Trustees 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 Trustees the Debentures held by them for which Debentures the Trustees shall issue receipts. 

13.16 Acceptance of Trust; Money for Security Payments to be Held in Trust  

        Each of the Trustees hereby accepts its appointment as Trustee hereunder and the trusts in this Indenture declared and provided for and agrees to perform the same
upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be
Debentureholders, subject to all the terms and conditions herein set forth. 

        If
the Company shall at any time act as its own paying agent, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Debentures,
segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustees of its action or failure so to act. 

        Whenever
the Company shall have one or more paying agents, it will, prior to each due date of the principal of (and premium, if any) or interest on any Debentures, deposit with a
paying agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such paying agent is the Trustee acting as security registrar) the Company will promptly notify the Trustee acting as security registrar of its action or failure so to
act. 

        The
Company will cause each paying agent other than the Trustee acting as security registrar to execute and deliver to the Trustee acting as security registrar an instrument in which
such paying agent shall agree with the Trustee acting as security registrar, subject to the provisions of this Section, that such paying agent will: 

	(a)
	hold
all sums held by it for the payment of the principal of (and premium, if any) or interest on Debentures in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided;

	(b)
	give
the Trustees notice of any default by the Company (or any other obligor upon the Debentures) in the making of any payment of principal (and premium, if any) or
interest; and

	(c)
	at
any time during the continuance of any such default, upon the written request of the Trustee acting as security registrar, forthwith pay to the Trustee acting as security registrar
all sums so held in trust by such paying agent. 

        The
Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Written Direction direct any paying agent
to pay, to the Trustee acting as security registrar all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee acting as security registrar upon the same trusts as
those upon which such sums were held by the Company or such paying agent; and, upon such payment by any paying agent to the Trustee acting as security registrar, such paying agent shall be released
from all further liability with respect to such money. 

        Any
money deposited with the Trustees or any paying agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any
Debenture and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Written Direction of the
Company, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Debenture shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustees or such paying agent with respect to such trust 

64

 

money,
and all liability of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustees or such paying agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation in each of the City of New York, the City of Toronto and the City of Montreal, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to
the Company. 

13.17 Notice of Defaults  

        Each Trustee shall promptly give the other Trustee notice of any Default or Event of Default actually known to a Responsible Officer of such Trustee. A Trustee
shall give the Holders notice of any Default hereunder of which a Responsible Officer of such Trustee has actual knowledge as and to the extent and in accordance with the time limitations provided by
the Trust Indenture Act and, with respect to the Canadian Trustee, the Canadian Trust Indenture Legislation. 

13.18 Compensation and Reimbursement  

        The Company agrees: 

	(a)
	to
pay to each Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);

	(b)
	except
as otherwise expressly provided herein, to reimburse each Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by such Trustee in
accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its advisors, agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and

	(c)
	to
indemnify each Trustee, their respective directors, officers, agents and employees for, and to hold them harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of the Trustees' powers or duties hereunder. This indemnity shall survive resignation or removal of a Trustee and the discharge of this
Indenture. 

        The
Trustees shall have a Lien prior to the Debentures as to all property and funds held by them hereunder for any amount owing to them pursuant to this Section except with respect to
funds held in trust for the benefit of the Holders of Debentures. 

        When
a Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 8.1(a)(vi) or 8.1(a)(vii), the expenses (including the
reasonable charges and expenses of its advisors, agents and counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable bankruptcy,
insolvency or other similar law. 

        Each
Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. 

13.19 Merger, Conversion, Consolidation or Succession to Business  

        Any corporation into which a Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which a Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of a Trustee, shall be the successor of such Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties
hereto. In case any Debentures shall have been authenticated, but not delivered, by a Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication 

65

 

and
deliver the Debentures so authenticated with the same effect as if such successor Trustee had itself authenticated such Debentures. 

13.20 Preferential Collection of Claims Against Company  

        If and when the U.S. Trustee shall be or become a creditor of the Company (or any other obligor upon the Debentures), the U.S. Trustee shall
be subject to the provisions of the Trust Indenture Act and Canadian Trust Indenture Legislation regarding the collection of claims against the Company (or any such other obligor). 

13.21 Company to Furnish Trustee Names and Addresses of Holders  

        The Company will furnish or cause to be furnished to the Trustees: 

	(a)
	semiannually,
not later than June 30 and December 31 in each year, a list, each in such form as the Trustees may reasonably require, of the names and addresses of the
Holders of Debentures of such series as of the preceding June 15 or December 15; and

	(b)
	at
such other times as the Trustees may request in writing, as soon as possible but in no event later than 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the relevant Trustee in its
capacity as security registrar. 

13.22 Preservation of Information; Communications to Holders  

	(a)
	Each
Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to it as provided in
Section 13.21 and the names and addresses of Holders received by it in its capacity as security registrar. Each Trustee may destroy any list furnished to it as provided in
Section 13.21 upon receipt of a new list so furnished.

	(b)
	The
rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Debentures and the corresponding rights and duties of the
Trustees, shall be provided by the Trust Indenture Act and the Canadian Trust Indenture Legislation.

	(c)
	Every
Holder of Debentures, by receiving and holding the same, agrees with the Company and the Trustees that neither the Company nor the Trustees nor any agent of any of them shall be
held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act and the Canadian Trust Indenture Legislation. 

13.23 Reports by Trustee  

	(a)
	Within
60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as the Debentures remain outstanding, each
Trustee shall mail to the Holders of the Debentures a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted) and, with respect to the Canadian Trustee, the Canadian Trust Indenture
Legislation. The Trustees also shall comply with TIA Section 313(b). The Trustees shall also transmit by mail all reports as required by TIA Section 313(c) or, with respect
to the Canadian Trustee, the Canadian Trust Indenture Legislation.

	(b)
	A
copy of each such report shall, at the time of such transmission to Holders, be filed by such Trustee with each stock exchange upon which the Debentures are listed, with the
Commission and with the Company. The Company will notify the Trustees when the Debentures are listed on any stock exchange. 

13.24 Reports by Company  

        The Company shall file with the Trustees and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof,
as may be required pursuant to the Trust Indenture Act and the Canadian Trust Indenture Legislation at the times and in the manner provided pursuant to such Act 

66

 

and
such Legislation; provided that any such information, documents or reports required to be filed with Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be
filed with the Trustees within 15 days after the same is so required to be filed with the Commission. 

13.25 Undertaking for Costs  

        In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against a Trustee for any action taken, suffered or omitted by it as
Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent
provided in the Trust Indenture Act; provided, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment
in any suit instituted by the Company. This Section 13.25 does not apply to a suit by a Trustee, a suit by a Holder pursuant to Section 8.14 or a suit by Holders of more than 10%
in principal amount of the Debentures. 

13.26 Authority to Carry on Business  

        The Canadian Trustee represents to the Company that at the date of execution and delivery by it of this Indenture it is authorized to carry on the business of a
trust company in all Provinces of Canada but if, notwithstanding the provisions of this Section it ceases to be so authorized to carry on business, the validity and enforceability of this Indenture
and the securities issued hereunder shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on
the business of a trust company in the Provinces of Ontario and Quebec either become so authorized or resign in the manner and with the effect specified in Section 13.4. 

13.27 Trust Indenture Legislation  

	(a)
	If
any provision hereof limits, qualifies or conflicts with a provision of the Canadian Trust Indenture Legislation or the Trust Indenture Act (giving effect to
Rule 4d-9 thereunder), in each case that is required thereunder to be part of and govern this Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision thereof that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case
may be;

	(b)
	At
all times in relation to this Indenture and any action to be taken hereunder, the Company and the Trustees each shall observe and comply with the Canadian Trust Indenture
Legislation or the Trust Indenture Act and the Company, each Trustee and each Debentureholder shall be entitled to the benefits of the Canadian Trust Indenture Legislation or the Trust Indenture Act;
and

	(c)
	Every
provision of this Indenture that by its terms relieves the Trustees of liability or entitles them to rely upon any evidence submitted to them is subject to the provisions of
Canadian Trust Indenture Legislation or the Trust Indenture Act. 

 
 

ARTICLE XIV
  SUPPLEMENTAL INDENTURES  
    

14.1 Supplemental Indentures Without Consent of Holders  

        Without the consent of any Holders but subject to the prior approval of the Toronto Stock Exchange if required, the Company, when authorized by a resolution of
the Board of Directors and the Trustees, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustees, for any of the following
purposes: 

	(a)
	to
evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Debentures;

	(b)
	to
add to the covenants of the Company for the benefit of the Holders of all of the Debentures, or to surrender any right or power herein conferred upon the Company;

	(c)
	to
provide additional security for the Debentures; or 

67

 

	(d)
	to
comply with any requirements of the Commission or any other applicable governmental authority in order to effect and maintain the qualification of this Indenture under the Trust
Indenture Act or the Canadian Trust Indenture Legislation;

	(e)
	to
add additional Events of Default;

	(f)
	to
evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debentures and to add or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or

	(g)
	to
cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or to make any other provisions with respect to matters
or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action pursuant to this
Section (g) shall not adversely affect the interests of the Holders in any material respect. 

14.2 Supplemental Indentures with Consent of Holders  

        With the consent of the Holders of not less than 662/3% of principal amount of the outstanding Debentures and subject to the approval of the
Toronto Stock Exchange if required, the Company, when authorized by a resolution of the Board of Directors and the Trustees may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Debentures under this
Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each outstanding Debenture affected thereby, 

	(a)
	change
the maturity of the principal of, or any installment of interest on, any Debenture, or reduce the principal amount thereof or the rate of interest thereon or any premium
payable thereon, or change the place of payment where, or the coin or currency in which, any Debenture or any premium or the interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the maturity thereof (or, in the case of redemption, on or after the Redemption Date or, in the case of an Offer which has been made, on or after the
applicable purchase date), or

	(b)
	reduce
the percentage in principal amount of the outstanding Debentures, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders
is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or

	(c)
	modify
any of the provisions of this Section, Section 8.3 or Section 8.13, except to increase any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Debenture affected thereby, or

	(d)
	following
the mailing of an offer with respect to an Offer, modify the provisions of this Indenture with respect to such Offer in a manner adverse to any Holder, or

	(e)
	to
make any change in the Security Agreement that would adversely affect the Holders or terminate the Liens of the Security Agreement on any property at any time subject thereto or
deprive the Holders of the security afforded by the Liens of the Security Agreement. 

        It
shall not be necessary for any resolution of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such
resolution shall approve the substance thereof. 

14.3 Execution of Supplemental Indentures  

        In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustees shall be entitled to receive, and (subject to Section 13.6) shall be fully protected in relying upon, an Opinion of Counsel stating that 

68

 

the
execution of such supplemental indenture is authorized or permitted by this Indenture. Each Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects
such Trustee's own rights, duties or immunities under this Indenture or otherwise. 

14.4 Effect of Supplemental Indentures  

        Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of Debentures theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. 

14.5 Conformity with Applicable Trust Legislation  

        Every supplemental indenture executed pursuant to this Article shall conform to the applicable requirements of the Canadian Trust Indenture Legislation and the
Trust Indenture Act as then in effect. 

14.6 Reference in Debentures to Supplemental Indentures  

        Debentures authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall, if required by either Trustee,
bear a notation in form approved by the Trustees as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debentures so modified as to conform, in the
opinion of the Trustees and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee acting as security registrar in
exchange for Outstanding Debentures. 

 
 

ARTICLE XV
  EXECUTION AND FORMAL DATE  
    

15.1 Execution  

        This Indenture may be simultaneously 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. Each party shall be entitled to rely on the delivery of a facsimile copy of this Indenture and acceptance by any party of such facsimile shall be
legally effective to create a valid and binding agreement between the parties in accordance with the terms hereof. 

15.2 Formal Date  

        Notwithstanding the date of execution hereof, this Indenture may be referred to as bearing formal date August 22, 2005. 

        [Remainder of page intentionally left blank]

69

 

        IN
WITNESS whereof the parties hereto have executed this Indenture as of the date written on page 1 hereof under their respective corporate seals and the hands of their proper
officers in that behalf. 

	 	 	SR TELECOM INC.
	
 	
 	

By:	

/s/  DAVID L. ADAMS      
 David L. Adams
	
 	
 	

By:	

/s/  WILLIAM E. AZIZ      
 William E. Aziz
	
 	
 	
COMPUTERSHARE TRUST COMPANY OF CANADA
	
 	
 	

By:	

/s/  CHARLES ERIC GAUTHIER      
 Charles Eric Gauthier
	
 	
 	

By:	

/s/  RANNY SAUND      
 Ranny Saund
	
 	
 	
MANUFACTURERS AND TRADERS TRUST COMPANY
	
 	
 	

By:	

/s/  JAY SMITH      
 Jay Smith
	
 	
 	

By:	

/s/  ROBERT D. BROWN      
 Robert D. Brown

70

  

 
 

EXHIBIT A
  
    FORM OF FULLY REGISTERED DEBENTURE    
    

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A) OF REGULATION D UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE
OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO SR TELECOM INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE
TO THE TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C) OR (D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE CORPORATION SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS. 

A-1

 

	 
	 	 

	No.             	 	[CUSIP No:            ]
	 	 	 
	 	 	[ISIN No.:             ]

10%
Secured Convertible Debentures due October 15, 2011 

 
 

SR TELECOM INC.    

promises
to pay to                                     , or registered
assigns, the principal sum of
                                     Canadian Dollars on
October 15, 2011.
 

Interest
Payment Dates: April 15 and October 15. 

Record
Dates: April 1 and October 1. 

Additional
provisions of this Debenture are set forth on the other side of this Debenture. 

	 	 	Dated:                         , 20      
	

 	
 	

SR TELECOM INC.
	 	 	By:	(1)
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

	 	 	 	 
	 	 	[Add Company Seal]

	(1)
	Must
be signed by President or CFO and any vice-president as required by Indenture Section 2.2. 

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Certificate of Certification: 

    •    (2)

By:
                                         
       

        Authorized Signatory 

Dated:
                                         
       , 20       

	(2)
	Either
Trustee may certify the Debenture 

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10%
Secured Convertible Debentures due October 15, 2011 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 

        1.    Interest.    SR Telecom Inc., a corporation incorporated under the laws of Canada
(the "Company"), promises to pay interest on the principal amount of this Debenture at 10% per annum from the date of issuance until maturity;
provided, however, that at the option of the Company, so long as no Default is then continuing, interest payments prior to the Maturity Date (other than interest payments in respect of accrued
interest on any Debenture upon redemption pursuant to Section 3.1 of the Indenture, a purchase under Section 5.20 of the Indenture or conversion pursuant to Article IV of the
Indenture), may be paid by the issuance of PIK Debentures at a rate of 10% per annum in lieu of cash. The Company will pay interest semi-annually on April 15 and October 15
of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date") to the holder of record on
the immediately preceding April 1 or October 1 (each, a "Record Date"). Interest on the Debentures will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the date of issuance, provided, further, that the first Interest Payment Date shall be April 15, 2006. The Company shall
pay interest on the principal amount (including Bankruptcy Interest in any proceeding under the Insolvency Laws) both before and after judgment at a rate of 12% per annum
(the "Default Rate"): (i) upon a default in the payment of interest or any other amount due under the Indenture or the Debentures, on such
overdue amounts, (ii) from and after the occurrence of an Event of Default; and (iii) upon a failure by the Company
to pay liquidated damages when due under any Registration Rights Agreement and such failure to pay is not remedied within the relevant time period, if any, provided for in such agreement. Interest
shall accrue on a daily basis, shall be calculated on the basis of a year of 365 days or 366 days in a leap year, and shall compound semi-annually. Default Rate interest
shall be payable by the Company upon demand by Trustees. 

        2.    Method of Payment.    The Company will pay interest on the Debentures to the Persons who are registered Holders
of Debentures at the close of business on the Record Date next preceding the Interest Payment Date, even if such Debentures are cancelled after such Record Date and on or before such Interest Payment
Date. Subject to exceptions set forth in the Indenture, payment of or on account of the principal of a Debenture shall be made only by cheque payable to or to the order of such Holder thereof. Payment
of or on account of interest on such Debentures shall be made, subject to exceptions set forth in the Indenture, only by (i) payment in cash, by cheque or electronic transfer of funds in lawful
money of Canada; (ii) on any Interest Payment Date prior to the Maturity Date by the issuance of PIK Debentures; or (iii) a combination thereof. 

        Subject
to the limitations and conditions set forth in the Indenture, at the option of the Company and upon 10 Business Days prior written notice, the Company may satisfy, in
whole or in part, its obligations to pay interest on the Debentures on any Interest Payment Date by issuing PIK Debentures, the principal amount of which will be equal to the amount of interest
payable on the Debentures on the relevant Interest Payment Date less any interest then paid in cash. The PIK Debentures will have the same Maturity Date and interest rate as the Debentures. The terms
of the PIK Debentures will otherwise be identical to the terms of the Debentures. Issuance and delivery of PIK Debentures in accordance with the Indenture shall constitute full payment of the
corresponding amount of interest on the Debentures. The Company may not issue PIK Debentures in respect of accrued interest on any debenture upon: 

	(i)
	the
occurrence of the Maturity Date;

	(ii)
	redemption
pursuant to Section 3.1 or a purchase under Section 5.20 of the Indenture;

	(iii)
	conversion
pursuant to Article IV of the Indenture; or

	(iv)
	the
occurrence and continuance of a Default. 

        Each
PIK Debenture is a separate debt obligation and shall be governed by, and entitled to the benefits of, the Indenture, shall rank pari passu with
and be subject to the same terms as all other Debentures and shall have the benefit of all Liens securing the Debentures. The Company shall execute and deliver to the Trustees a Global Debenture to
evidence aggregate PIK Debentures issued on each applicable Interest Payment Date with regard to the outstanding Global Debentures, and the Company shall execute and deliver to the Trustee Fully 

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Registered
Debentures to evidence PIK Debentures issued on each applicable Interest Payment Date with regard to outstanding Fully Registered Debentures. 

        3.    Indenture.    The Company issued the Debentures under an Indenture dated as of August 22, 2005 between
the Company and the co-Trustees (as such may be amended or supplemented from time to time, the "Indenture"). The terms of the
Debentures include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb). The Debentures are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Debentures are
secured obligations of the Company. The aggregate principal amount of the Debentures is unlimited; provided, however that Debentures may be issued only (i) pursuant to the Exchange Offer,
(ii) in exchange for 8.15% Debentures purchased by the Company outside of the Exchange Offer, or (iii) to make interest payments in the form of PIK Debentures. 

        4.    Optional Redemption.    The Company shall have the option to redeem the Debentures, in whole or in part, at any
time and from time to time, at the redemption price equal to the greater of: (i) the 21 day average trading price of the Common Shares on the exchange or market on which the greatest
volume of Common Shares traded during the 21 Trading Days ending on the Trading Day immediately prior to the date the Company gives notice to the Holders of such redemption notice multiplied by
the number of Common Shares into which the Debentures are convertible; and (ii) all amounts owing pursuant to the Debentures and the Indenture as at the date of payment, including, any accrued
and unpaid interest thereon to the date of redemption and all fees and disbursements incurred by or on behalf of the Holders or the Trustees to the date of payment. 

        Notice
of optional redemption will be mailed at least 21 days before the redemption date to each Holder whose Debentures are to be redeemed at its registered address. Holders of
Debentures called for redemption are entitled to exercise the right of conversion contained in Article IV of the Indenture in accordance with the provisions of the Indenture until the last
Business Day immediately preceding the Redemption Date. On and after the redemption date interest ceases to accrue on Debentures or portions thereof called for redemption. 

        5.    Mandatory Redemption.    Within five Business Days after the closing of the Rights Offering, the Company shall
apply an amount, if any, equal to (i) 50% of the net proceeds to the Company from the Rights Offering in excess of $25,000,000 multiplied by (ii) a percentage equal to
100 multiplied by a fraction, of which the numerator is all obligations owing under the Indenture, and of which the denominator is (a) all obligations owing under the CTR Facility plus
(b) all obligations owing under the Indenture, to redeem Debentures at a price equal to (i) 95% of the outstanding principal amount of each such Debenture to be redeemed, plus
(ii) any accrued and unpaid interest thereon to the date of redemption (the "Mandatory Redemption Price"), provided that the Company shall
not be obligated to redeem Debentures to the extent that such redemption would, together with the exchange due to the mandatory conversion of the Debentures under Section 4.1(a) of the
Indenture, reduce the principal amount of outstanding Debentures by more than 25% of the aggregate principal amount of the outstanding Debentures at the time they were issued. The Debentures to be
redeemed pursuant to a mandatory redemption shall be redeemed from all Holders on a pro rata basis according to the Debentures outstanding at
such time in accordance with the principal amount of the Debentures registered in the name of each Debentureholder or in such other manner as the Trustees deem equitable (subject to any necessary
regulatory or stock exchange approval). The Holder of any Debenture called for redemption in part only, upon surrender of any such Debentures for payment of the Redemption Price, shall be entitled to
receive, without expense to such Holder, one or more new Debentures for the unredeemed part of the principal amount of the Debenture so surrendered and the Company shall execute and the one of the
Trustees shall certify and deliver, at the expense of the Company, such new Debenture or Debentures upon receipt of the Debenture(s) surrendered, or with respect to a Global Debenture, the
Depositary shall make notation on the Global Debenture of the principal amount so redeemed. 

        Notice
of mandatory redemption will be given at least 3 Business Days before the redemption date to each Holder whose Debentures are to be redeemed at its registered address.
Holders of Debentures called for mandatory redemption are entitled to exercise the right of conversion contained in Article IV of the Indenture in accordance with the provisions of the
Indenture until the last Business Day immediately preceding the 

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Redemption
Date. On and after the redemption date interest ceases to accrue on Debentures or portions thereof called for redemption. 

        6.    Optional Conversion.    Upon and subject to applicable rules of the Exchange and Applicable Securities
Legislation, and the provisions and conditions of the Indenture, the Holder of each Debenture shall have the right, at the option of the Holder, at any time and from time to time (i) after the
earlier of (a) the Business Day after the Rights Offering Record Date and (b) November 30, 2005 (the "Mandatory Conversion
Date") and (ii) prior to the Close of Business on the earlier of the Stated Maturity Date, or on the Business Day immediately preceding the Redemption Date for a
Debenture, if any, to exchange the principal amount of such Debenture and accrued and unpaid interest thereon for fully paid and non-assessable Common Shares of the Company. The number of
Common Shares into which Debentures may be so exchanged shall be determined by dividing the amount of principal and interest of the Debentures to be exchanged by the Conversion Price as at the Date of
Conversion, subject to adjustment pursuant to Section 4.6 of the Indenture. 

        7.    Mandatory Conversion.    Upon and subject to the provisions and conditions of the Indenture and to applicable
rules of the Exchange and Applicable Securities Legislation, $10 million principal amount of the Debentures shall be exchanged on a  pro rata basis for fully paid and non-assessable Common
Shares on the Mandatory Conversion Date. The number of Common Shares into
which Debentures may be so exchanged shall be determined by dividing $10 million of principal by the Conversion Price as at the Mandatory Conversion Date, subject to adjustment pursuant to
Section 4.6 of the Indenture. In no circumstance will the Company be required to effect a Mandatory Conversion of more than 25% of the outstanding principal amount of Debentures. 

        8.    Conversion Mechanics    (a) The Company shall not be required to issue fractional shares upon the
conversion of Debentures. If more than one Debenture shall be surrendered for conversion at one time by the same Holder, the number of whole Common Shares issuable upon conversion thereof shall be
computed on the basis of the aggregate principal amount of such Debentures to be converted. If any fractional interest in a Common Share would, except for the provisions of the previous sentence, be
deliverable to any Holder upon the conversion of any principal amount of Debentures, the Company shall, in lieu of delivering any certificate representing such fractional interest, make a cash payment
to the Holder in an amount equal to the fractional interest multiplied by the Conversion Price. 

        (b)   If
payment of the Mandatory Redemption Price or the Optional Redemption Price, as the case may be, or the purchase price of any Debenture which has been called for
redemption or tendered in acceptance of an offer by the Company to purchase Debentures for cancellation is not made, in the case of a redemption upon due surrender of such Debenture or in the case of
a purchase on the date on which such purchase is required to be made, as the case may be, the right to convert such Debentures shall revive and continue as if such Debenture had not been called for
redemption or tendered in acceptance of the Company's offer, respectively. 

        (c)   The
Company shall from time to time immediately after the occurrence of any event which requires an adjustment of the Conversion Price, deliver an Officers' Certificate
to the Trustees 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. 

        9.    Change of Control Offer.    Except for a change of Control resulting from a conversion of Debentures pursuant to
Article IV of the Indenture, within 30 days following any change of Control, the Company shall deliver to the Trustee, and the Trustee shall promptly deliver a notice to each Holder
stating that there has been a change of Control, specifying the circumstances surrounding such event, together with an offer to repurchase Debentures
(the "Offer") for an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to the
date of purchase (the "Change of Control Payment"). The Offer shall, unless otherwise provided under Applicable Securities Legislation or
applicable rules of the Exchange, be open for acceptance thereof for a period of not less than 35 days and not more than 60 days, and shall provide for the Change of Control Payment to
all Holders who accept the Offer not later than the 60th day after the date of the Offer. 

        10.    Denominations, Transfer, Exchange.    The Debentures may be issued in any denomination; provided, however, that
to the extent possible, Debentures shall be issued in denominations of $1,000 and integral 

A-6

 

multiples
of $1,000. The transfer of Debentures may be registered and Debentures may be exchanged as provided in the Indenture. The Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Trustee may require a Holder to pay any taxes and fees required by law and permitted by the Indenture. Neither the Company nor the Trustees nor
any registrar shall be required to (i) make transfers or exchanges or accept conversions of Debentures on any Interest Payment Date for such Debentures or during the 15 calendar days
preceding the record date for payment of interest on the Debentures, or (ii) make transfers or exchanges of any Debentures which have been selected or called for redemption including, without
limitation, during the 15 calendar day period preceding the date fixed for such redemption unless upon due presentation thereof for redemption such Debentures shall not have been redeemed. 

        11.    Amendment, Supplement and Waiver.    Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of at least 662/3% in principal amount of the then outstanding Debentures, and any existing Default or Event of Default (other
than (i) a Default or Event of Default in the payment of the principal of, or interest, on the Debentures, (ii) a Default arising from the failure to redeem or purchase any Debenture
when required pursuant to the Indenture or a Debenture or (iii) a Default in respect of a provision that under Section 14.2 of the Indenture that cannot be amended without the consent of
each holder affected) may be waived with the consent of the Holders of not less than 662/3% of the principal amount of the then outstanding Debentures. Without the consent of any Holder
of a Debenture, the Indenture and the Debentures may be amended or supplemented to: (i) evidence the succession of another Person to the Company and the assumption by any such successor of the
covenants of the Company in the Indenture and in the Debentures; (ii) add to the covenants of the Company for the benefit of the Holders of all of the Debentures or surrender any right or power
herein conferred upon the Company; (iii) provide additional security for the Debentures; (iv) comply with any requirements of the Commission or any other applicable governmental
authority in order to effect and maintain the qualification of this Indenture under the Trust Indenture Act or the Canadian Trust Indenture Legislation; (v) add additional Events of Default;
(vi) evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee with respect to the Debentures and to add or change any of the provisions of the Indenture
as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one Trustee; or (vii) cure any ambiguity, correct or supplement any provision in the
Indenture which may be inconsistent with any other provision therein or make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with
the provisions of the Indenture, provided that such action pursuant to this subsection (vii) shall not adversely affect the interests of the
Holders in any material respect. 

        Notwithstanding
any other provision in the Indenture or the Debentures, the holders of not less than 662/3% in principal amount of the outstanding Debentures are given the
right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustees or of exercising any trust power conferred on the Trustees. 

        12.    Defaults and Remedies.    Each of the following constitutes an Event of Default under the Indenture:
(i) if the Company fails to pay interest on the Debentures when due and such default continues for two (2) days; (ii) if the Company shall fail to pay the principal amount of the
Debentures when required or agreed upon either at maturity, at a Redemption Date or pursuant to a declaration of acceleration or otherwise or fails to pay the Offer Price in accordance with the terms
of such Offer; (iii) if the Company fails to comply with any covenant contained in Sections 5.9 through 5.15 of the Indenture and such default continues for thirty
(30) days; (iv) if the Company fails to observe or perform to any material extent any other covenant or condition contained in the Indenture on its part to be observed or performed and,
after notice in writing has been given by the Trustees to the Company specifying such default and requiring the Company to put an end to the same (which said notice may be given by the Trustees, in
their discretion) the Company shall fail to make good such default within a period of thirty (30) days, unless the Trustees (having regard to the subject matter of the default) shall have
agreed to a longer period, and in such event, within the period agreed to by the Trustees; (v) any representation or warranty of the Company contained in the Indenture or any statement of the
Company in any certificate, financial statement or other document or instrument delivered pursuant to the Indenture, proves to be inaccurate to any material extent; (vi) if a resolution is
passed for the winding-up or liquidation of the Company; (vii) if creditors or their representatives, as a result of a breach by the Company of an obligation thereunder have
accelerated amounts owing or have taken steps to enforce under any instrument to which the Company or 

A-7

 

any
Subsidiary is a party; (viii) if the CTR Lenders, as a result of a breach by the Company of an obligation thereunder have taken any step or action against the Company in respect of the CTR
Facility or the CTR Guarantee; (ix) property or assets of the Company or any of its Restricted Subsidiaries with a fair market value in the aggregate of Cdn$250,000 or more shall be attached,
seized, levied upon or subjected to execution, garnishment, distress or any other similar process, or come within the possession of any trustee, interim receiver, receiver, receiver and manager,
liquidator, administrator, custodian, sequestrator, agent, examiner, monitor, sheriff, bailiff or other similar official or assignee for the benefit of creditors of the Company or any of its
Restricted Subsidiaries and such condition continues for 30 days or more; (x) any Collateral Document ceases to be in full force and effect (other than in accordance with its terms) by
reason of having become unlawful or having been changed by virtue of legislation or by a court, statutory board or commission, any obligor under any Collateral Documents denies or disaffirms its
obligations thereunder, or by reason of having become unlawful or having been changed by virtue of legislation or by a court, statutory board or commission, any Lien purported to be created under any
collateral document shall cease to be enforceable or shall cease to be of the same effect and priority as purported to be created by such Collateral Document (other than in accordance with its terms);
(xi) if the Common Shares cease to be listed for trading on the Toronto Stock Exchange, regardless of whether an Offer has been made by the Company pursuant to
Section 5.20(a); and (xii) certain events of bankruptcy or insolvency with respect to the Company. Holders may not enforce the Indenture or the Debentures except as provided in
the Indenture. Subject to certain limitations, Holders of not less than 25% in principal amount of the then outstanding Debentures may direct the Trustees to declare the principal of and interest on
all Debentures then outstanding and all other monies outstanding under the Indenture to be due and payable and the same shall forthwith become immediately due and payable; provided, that upon the
occurrence of certain events of bankruptcy or insolvency the principal of and interest on all Debentures then outstanding and all other monies outstanding under the Indenture shall become immediately
due and payable. Unless it is directed by the Holders of at least 25% in principal amount of the then outstanding Debentures to deliver a notice of Default, the Trustees may withhold from Holders of
the Debentures notice of any continuing Default or Event of Default if it determines that withholding notice is in their best interest. On or before June 30 and December 31 of each
calendar year, the Company is required to deliver to the Trustees a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of
Default, to deliver to the Trustees a statement specifying such Default or Event of Default. 

        13.    Security.    The Debentures are the direct secured obligations of the Company. The Debentures are secured by
Liens on certain of the Company's property. 

        14.    Trustee Dealings with Company.    Subject to the limitations contained in Sections 13.1 and 13.6
of the Indenture, the Trustees may, in their personal or other capacity, buy, sell, lend upon and deal in the Debentures and generally contract and enter into financial transactions with the Company
or otherwise, without being liable to account for any profits made thereby. 

        15.    Certification.    This Debenture shall not be valid until certified by on or behalf of the Trustees. 

        16.    Abbreviations.    Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act). 

        17.    Additional Rights of Holders of Transfer Restricted Debentures.    In addition to the rights provided to
Holders of Debentures under the Indenture, certain Beneficial Holders may have all the rights set forth in the Registration Rights Agreements dated as of the Issue Date, among the Company and one or
more Beneficial Holders, providing for registration rights in Canada and the U.S. 

        18.    CUSIP Numbers.    Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Debentures and the Trustees may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Debentures or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

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        19.    Intercreditor Agreement.    This Indenture is subject to the terms and conditions of the Intercreditor
Agreement. Notwithstanding any provision of this Indenture, if Debentureholders are otherwise entitled to take action independently of the Trustees hereunder or otherwise, they may not take any such
action that would be prohibited under the terms of the Intercreditor Agreement. 

        20.    Applicable Law.    The Indenture and the Debentures shall be governed by and construed in accordance with the
procedural and substantive laws of the Province of Ontario, and the laws of Canada applicable therein, and shall be treated in all respects as Ontario contracts and the Company, the Trustee and the
Debentureholders irrevocably attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario. 

        21.    Monetary References.    Whenever any amounts of money are referred to herein, such amounts shall be deemed to
be in lawful money of Canada unless otherwise expressed. 

        22.    Language.    Each of the parties hereto hereby acknowledges that it has consented to and requested that the
Indenture and all documents relating thereto, including, without limiting the generality of the foregoing, the form of Debenture attached thereto as Exhibit A, and all Debentures issued
pursuant thereto, be drawn up in the English language only. Chacune des parties aux présentes reconnaît par les présentes qú'elle a
demandé et consent à ce que le present acte de fiducie et tous les documents s'y rattachant, incluant la formule de débenture jointe aux
présentes en tant qu'Annexe A, ne soient rédigés en anglais seulement. 

        The
Company will furnish to any Holder upon written request and without charge a copy of the Indenture, the Intercreditor Agreement, all security documents and the Registration Rights
Agreements. Requests may be made to: 

SR
Telecom Inc.

Investor Relations

8150 Trans Canada Highway

St. Laurent, Quebec, H4S 1M5

Attention: President

Telephone No.:                  

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ASSIGNMENT FORM    

To
assign this Debenture, fill in the form below: (I) or (we) assign and transfer this Debenture to 

(Insert
assignee's social security, social insurance or tax I.D. no.) 

(Print
or type assignee's name, address and zip code/postal code) 

and
irrevocably appoint
                                         
                                to transfer this Debenture on the books of the Company. The
agent may substitute another to act for him. 

Date:
                                         
        

Your
Signature:
                                         
                                          
                          

                           (Sign exactly as your name appears on the face of this Debenture) 

Signature
Guarantee. 

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FORM OF ELECTION TO CONVERT    

The
undersigned owner of this Debenture hereby irrevocably exercises the option to convert this Debenture, or the portion below designated, into for fully paid and non-assessable Common
Shares in accordance with the terms of the Indenture referred to in this Debenture, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned registered Holder hereof, unless a different name has been indicated in the assignment below. If shares are to be issued in
the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid by the undersigned on account of interest
accompanies this Debenture. 

Dated:
                                 

Portion
of Debenture to be

converted: 

$

	 
	 	 

	 	 	                                        
        
	 	 	Signature (for conversion only)
	 	 	If shares of Common Stock are to be issued and registered otherwise than to the registered Holder named above, please print or typewrite name and address, including zip code/postal code, and social security, social
insurance or other taxpayer identification number.
	
	 	 
	
	 	 
	
	 	 

A-11

  

 
 

Exhibit B
  
    INTERCREDITOR AGREEMENT  
    

B-1

  

 
 

EXHIBIT C
  
    FORM OF REGULATION S TEMPORARY GLOBAL DEBENTURE    
    

THIS
DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE
TRANSFERRED TO OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OR TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL DEBENTURE
SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO SR TELECOM INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFER IS PURSUANT TO CLAUSE (C) OR (D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE CORPORATION SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS. 

C-1

 

THIS
DEBENTURE IS A REGULATION S TEMPORARY GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER AND IS SUBJECT TO RESTRICTIONS ON THE TRANSFER AND EXCHANGE THEREOF. 

	No.             	 	[CUSIP No:                             ]
	 	 	[ISIN No.:                             ]

10%
Secured Convertible Debentures due October 15, 2011 

SR
TELECOM INC. 

promises
to pay to
                                         
                                          
   , or registered assigns, the principal sum of
                                         
                  Canadian Dollars or such greater or lesser
amount as may from time to time be endorsed on the Schedule of Increases or Decreases in Global Debenture attached hereto (but in no event may such amount exceed the aggregate principal amount
of Debentures certified pursuant to Sections 2.4 and 2.18 of the Indenture referred to below on October 15, 2011. 

Interest
Payment Dates: April 15 and October 15. 

Record
Dates: April 1 and October 1. 

Additional
provisions of this Debenture are set forth on the other side of this Debenture. 

	 	 	Dated:
                                    ,
20        	 
	

 	
 	

SR TELECOM INC.	

 
	

 	
 	

By:	

 	

3
	 	 	 	
	 
	 	 	Name:	 	 
	 	 	 	
	 
	 	 	Title:	 	 
	 	 	 	
	 

3    Must be signed by President or CFO and any vice-president as required by Indenture Section 2.2. 

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	 	 	 	Name:	 	 
	 	 	 	 	
	 
	 	 	 	Title:	 	 
	 	 	 	 	
	 
	 	 	 	By:	 	 
	 	 	 	 	
	 
	
 	

 	
 	

[Add Company Seal]	

 
	 Certificate of Certification:	 	 	 	 
	
            •            4	
 	

 	

 	

 
	
 By:	

 	
 	

 	

 	

 
	 	
 Authorized Signatory	 	 	 	 
	
  Dated:
                                         
                 , 20        

	
 	

 	

 	

 

4    Either
Trustee may certify the Debenture 

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10% Secured Convertible Debentures due October 15, 2011 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 

        1.    Interest.    SR Telecom Inc., a corporation incorporated under the laws of Canada
(the "Company"), promises to pay interest on the principal amount of this Debenture at 10% per annum from the date of issuance until maturity;
provided, however, that at the option of the Company, so long as no Default is then continuing, interest payments prior to the Maturity Date (other than interest payments in respect of accrued
interest on any Debenture upon redemption pursuant to Section 3.1 of the Indenture, a purchase under Section 5.20 of the Indenture or conversion pursuant to Article IV of the
Indenture), may be paid by the issuance of PIK Debentures at a rate of 10% per annum in lieu of cash. The Company will pay interest semi-annually on April 15 and October 15
of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date") to the holder of record on
the immediately preceding April 1 or October 1 (each, a "Record Date"). Interest on the Debentures will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the date of issuance, provided, further, that the first Interest Payment Date shall be April 15, 2006. The Company shall
pay interest on the principal amount (including Bankruptcy Interest in any proceeding under the Insolvency Laws) both before and after judgment at a rate of 12% per annum
(the "Default Rate"): (i) upon a default in the payment of interest or any other amount due under the Indenture or the Debentures, on such
overdue amounts, (ii) from and after the occurrence of an Event of Default; and (iii) upon a failure by the Company to pay liquidated damages when due under any Registration Rights
Agreement and such failure to pay is not remedied within the relevant time period, if any, provided for in such agreement. Interest shall accrue on a daily basis, shall be calculated on the basis of a
year of 365 days or 366 days in a leap year, and shall compound semi-annually. Default Rate interest shall be payable by the Company upon demand by Trustees. 

        2.    Method of Payment.    The Company will pay interest on the Debentures to the Persons who are registered Holders
of Debentures at the close of business on the Record Date next preceding the Interest Payment Date, even if such Debentures are cancelled after such Record Date and on or before such Interest Payment
Date. Subject to exceptions set forth in the Indenture, payment of or on account of the principal of a Debenture shall be made only by cheque payable to or to the order of such Holder thereof. Payment
of or on account of interest on such Debentures shall be made, subject to exceptions set forth in the Indenture, only by (i) payment in cash, by cheque or electronic transfer of funds in lawful
money of Canada; (ii) on any Interest Payment Date prior to the Maturity Date by the issuance of PIK Debentures; or (iii) a combination thereof. 

        Subject
to the limitations and conditions set forth in the Indenture, at the option of the Company and upon 10 Business Days prior written notice, the Company may satisfy, in
whole or in part, its obligations to pay interest on the Debentures on any Interest Payment Date by issuing PIK Debentures, the principal amount of which will be equal to the amount of interest
payable on the Debentures on the relevant Interest Payment Date less any interest then paid in cash. The PIK Debentures will have the same Maturity Date and interest rate as the Debentures. The terms
of the PIK Debentures will otherwise be identical to the terms of the Debentures. Issuance and delivery of PIK Debentures in accordance with the Indenture shall constitute full payment of the
corresponding amount of interest on the Debentures. The Company may not issue PIK Debentures in respect of accrued interest on any debenture upon: 

	(i)
	the
occurrence of the Maturity Date;

	(ii)
	redemption
pursuant to Section 3.1 or a purchase under Section 5.20 of the Indenture;

	(iii)
	conversion
pursuant to Article IV of the Indenture; or

	(iv)
	the
occurrence and continuance of a Default. 

Each
PIK Debenture is a separate debt obligation and shall be governed by, and entitled to the benefits of, the Indenture, shall rank pari passu with and be subject
to the same terms as all other Debentures and shall have the benefit of all Liens securing the Debentures. The Company shall execute and deliver to the Trustees a Global Debenture to evidence
aggregate PIK Debentures issued on each applicable Interest Payment Date with regard to the outstanding Global Debentures, and the Company shall execute and deliver to the Trustee Fully Registered
Debentures to evidence PIK Debentures issued on each applicable Interest Payment Date with regard to outstanding Fully Registered Debentures. 

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        3.    Indenture.    The Company issued the Debentures under an Indenture dated as of August 22, 2005 between
the Company and the co-Trustees (as such may be amended or supplemented from time to time, the "Indenture"). The terms of the
Debentures include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb). The Debentures are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Debentures are
secured obligations of the Company. The aggregate principal amount of the Debentures is unlimited; provided, however that Debentures may be issued only (i) pursuant to the Exchange Offer,
(ii) in exchange for 8.15% Debentures purchased by the Company outside of the Exchange Offer, or (iii) to make interest payments in the form of PIK Debentures. 

        4.    Optional Redemption.    The Company shall have the option to redeem the Debentures, in whole or in part, at any
time and from time to time, at the redemption price equal to the greater of: (i) the 21 day average trading price of the Common Shares on the exchange or market on which the greatest
volume of Common Shares traded during the 21 Trading Days ending on the Trading Day immediately prior to the date the Company gives notice to the Holders of such redemption notice multiplied by
the number of Common Shares into which the Debentures are convertible; and (ii) all amounts owing pursuant to the Debentures and the Indenture as at the date of payment, including, any accrued
and unpaid interest thereon to the date of redemption and all fees and disbursements incurred by or on behalf of the Holders or the Trustees to the date of payment. 

        Notice
of optional redemption will be mailed at least 21 days before the redemption date to each Holder whose Debentures are to be redeemed at its registered address. Holders of
Debentures called for redemption are entitled to exercise the right of conversion contained in Article IV of the Indenture in accordance with the provisions of the Indenture until the last
Business Day immediately preceding the Redemption Date. On and after the redemption date interest ceases to accrue on Debentures or portions thereof called for redemption. 

        5.    Mandatory Redemption.    Within five Business Days after the closing of the Rights Offering, the Company shall
apply an amount, if any, equal to (i) 50% of the net proceeds to the Company from the Rights Offering in excess of $25,000,000 multiplied by (ii) a percentage equal to
100 multiplied by a fraction, of which the numerator is all obligations owing under the Indenture, and of which the denominator is (a) all obligations owing under the CTR Facility plus
(b) all obligations owing under the Indenture, to redeem Debentures at a price equal to (i) 95% of the outstanding principal amount of each such Debenture to be redeemed, plus
(ii) any accrued and unpaid interest thereon to the date of redemption (the "Mandatory Redemption Price"), provided that the Company shall
not be obligated to redeem Debentures to the extent that such redemption would, together with the exchange due to the mandatory conversion of the Debentures under Section 4.1(a) of the
Indenture, reduce the principal amount of outstanding Debentures by more than 25% of the aggregate principal amount of the outstanding Debentures at the time they were issued. The Debentures to be
redeemed pursuant to a mandatory redemption shall be redeemed from all Holders on a pro rata basis according to the Debentures outstanding at
such time in accordance with the principal amount of the Debentures registered in the name of each Debentureholder or in such other manner as the Trustees deem equitable (subject to any necessary
regulatory or stock exchange approval). The Holder of any Debenture called for redemption in part only, upon surrender of any such Debentures for payment of the Redemption
Price, shall be entitled to receive, without expense to such Holder, one or more new Debentures for the unredeemed part of the principal amount of the Debenture so surrendered and the Company shall
execute and the one of the Trustees shall certify and deliver, at the expense of the Company, such new Debenture or Debentures upon receipt of the Debenture(s) surrendered, or with respect to a
Global Debenture, the Depositary shall make notation on the Global Debenture of the principal amount so redeemed. 

        Notice
of mandatory redemption will be given at least 3 Business Days before the redemption date to each Holder whose Debentures are to be redeemed at its registered address.
Holders of Debentures called for mandatory redemption are entitled to exercise the right of conversion contained in Article IV of the Indenture in accordance with the provisions of the
Indenture until the last Business Day immediately preceding the Redemption Date. On and after the redemption date interest ceases to accrue on Debentures or portions thereof called for redemption. 

C-5

 

        6.    Optional Conversion.    Upon and subject to applicable rules of the Exchange and Applicable Securities
Legislation, and the provisions and conditions of the Indenture, the Holder of each Debenture shall have the right, at the option of the Holder, at any time and from time to time (i) after the
earlier of (a) the Business Day after the Rights Offering Record Date and (b) November 30, 2005 (the "Mandatory Conversion
Date") and (ii) prior to the Close of Business on the earlier of the Stated Maturity Date, or on the Business Day immediately preceding the Redemption Date for a
Debenture, if any, to exchange the principal amount of such Debenture and accrued and unpaid interest thereon for fully paid and non-assessable Common Shares of the Company. The number of
Common Shares into which Debentures may be so exchanged shall be determined by dividing the amount of principal and interest of the Debentures to be exchanged by the Conversion Price as at the Date of
Conversion, subject to adjustment pursuant to Section 4.6 of the Indenture. 

        7.    Mandatory Conversion.    Upon and subject to the provisions and conditions of the Indenture and to applicable
rules of the Exchange and Applicable Securities Legislation, $10 million principal amount of the Debentures shall be exchanged on a  pro rata basis for fully paid and non-assessable Common
Shares on the Mandatory Conversion Date. The number of Common Shares into
which Debentures may be so exchanged shall be determined by dividing $10 million of principal by the Conversion Price as at the Mandatory Conversion Date, subject to adjustment pursuant to
Section 4.6 of the Indenture. In no circumstance will the Company be required to effect a Mandatory Conversion of more than 25% of the outstanding principal amount of Debentures. 

        8.    Conversion Mechanics    (a) The Company shall not be required to issue fractional shares upon the
conversion of Debentures. If more than one Debenture shall be surrendered for conversion at one time by the same Holder, the number of whole Common Shares issuable upon conversion thereof shall be
computed on the basis of the aggregate principal amount of such Debentures to be converted. If any fractional interest in a Common Share would, except for the provisions of the previous sentence, be
deliverable to any Holder upon the conversion of any principal amount of Debentures, the Company shall, in lieu of delivering any certificate representing such fractional interest, make a cash payment
to the Holder in an amount equal to the fractional interest multiplied by the Conversion Price. 

        (b)    If
payment of the Mandatory Redemption Price or the Optional Redemption Price, as the case may be, or the purchase price of any Debenture which has been called for
redemption or tendered in acceptance of an offer by the Company to purchase Debentures for cancellation is not made, in the case of a redemption upon due surrender of such Debenture or in the case of
a purchase on the date on which such purchase is required to be made, as the case may be, the right to convert such Debentures shall revive and continue as if such Debenture had not been called for
redemption or tendered in acceptance of the Company's offer, respectively. 

        (c)    The
Company shall from time to time immediately after the occurrence of any event which requires an adjustment of the Conversion Price, deliver an Officers' Certificate
to the Trustees 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. 

        9.    Change of Control Offer.    Except for a change of Control resulting from a conversion of Debentures pursuant to
Article IV of the Indenture, within 30 days following any change of Control, the Company shall deliver to the Trustee, and the Trustee shall promptly deliver a notice to each Holder
stating that there has been a change of Control, specifying the circumstances surrounding such event, together with an offer to repurchase Debentures
(the "Offer") for an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to the
date of purchase (the "Change of Control Payment"). The Offer shall, unless otherwise provided under Applicable Securities Legislation or
applicable rules of the Exchange, be open for acceptance thereof for a period of not less than 35 days and not more than 60 days, and shall provide for the Change of Control Payment to
all Holders who accept the Offer not later than the 60th day after the date of the Offer. 

        10.    Denominations, Transfer, Exchange.    The Debentures may be issued in any denomination; provided, however, that
to the extent possible, Debentures shall be issued in denominations of $1,000 and integral multiples of $1,000. The transfer of Debentures may be registered and Debentures may be exchanged as provided
in the Indenture. The Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Trustee may require a Holder to pay any taxes and fees
required 

C-6

 

by
law and permitted by the Indenture. Neither the Company nor the Trustees nor any registrar shall be required to (i) make transfers or exchanges or accept conversions of Debentures on any
Interest Payment Date for such Debentures or during the 15 calendar days preceding the record date for payment of interest on the Debentures, or (ii) make transfers or exchanges of any
Debentures which have been selected or called for redemption including, without limitation, during the 15 calendar day period preceding the date fixed for such redemption unless upon due
presentation thereof for redemption such Debentures shall not have been redeemed. 

        11.    Amendment, Supplement and Waiver.    Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of at least 662/3% in principal amount of the then outstanding Debentures, and any existing Default or Event of Default (other
than (i) a Default or Event of Default in the payment of the principal of, or interest, on the Debentures, (ii) a Default arising from the failure to redeem or purchase any Debenture
when required pursuant to the Indenture or a Debenture or (iii) a Default in respect of a provision that under Section 14.2 of the Indenture that cannot be amended
without the consent of each holder affected) may be waived with the consent of the Holders of not less than 662/3% of the principal amount of the then outstanding Debentures. Without
the consent of any Holder of a Debenture, the Indenture and the Debentures may be amended or supplemented to: (i) evidence the succession of another Person to the Company and the assumption by
any such successor of the covenants of the Company in the Indenture and in the Debentures; (ii) add to the covenants of the Company for the benefit of the Holders of all of the Debentures or
surrender any right or power herein conferred upon the Company; (iii) provide additional security for the Debentures; (iv) comply with any requirements of the Commission or any other
applicable governmental authority in order to effect and maintain the qualification of this Indenture under the Trust Indenture Act or the Canadian Trust Indenture Legislation; (v) add
additional Events of Default; (vi) evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee with respect to the Debentures and to add or change any of
the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one Trustee; or (vii) cure any ambiguity, correct or
supplement any provision in the Indenture which may be inconsistent with any other provision therein or make any other provisions with respect to matters or questions arising under the Indenture which
shall not be inconsistent with the provisions of the Indenture, provided that such action pursuant to this subsection (vii) shall not adversely
affect the interests of the Holders in any material respect. 

        Notwithstanding
any other provision in the Indenture or the Debentures, the holders of not less than 662/3% in principal amount of the outstanding Debentures are given the
right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustees or of exercising any trust power conferred on the Trustees. 

        12.    Defaults and Remedies.    Each of the following constitutes an Event of Default under the Indenture:
(i) if the Company fails to pay interest on the Debentures when due and such default continues for two (2) days; (ii) if the Company shall fail to pay the principal amount of the
Debentures when required or agreed upon either at maturity, at a Redemption Date or pursuant to a declaration of acceleration or otherwise or fails to pay the Offer Price in accordance with the terms
of such Offer; (iii) if the Company fails to comply with any covenant contained in Sections 5.9 through 5.15 of the Indenture and such default continues for thirty
(30) days; (iv) if the Company fails to observe or perform to any material extent any other covenant or condition contained in the Indenture on its part to be observed or performed and,
after notice in writing has been given by the Trustees to the Company specifying such default and requiring the Company to put an end to the same (which said notice may be given by the Trustees, in
their discretion) the Company shall fail to make good such default within a period of thirty (30) days, unless the Trustees (having regard to the subject matter of the default) shall have
agreed to a longer period, and in such event, within the period agreed to by the Trustees; (v) any representation or warranty of the Company contained in the Indenture or any statement of the
Company in any certificate, financial statement or other document or instrument delivered pursuant to the Indenture, proves to be inaccurate to any material extent; (vi) if a resolution is
passed for the winding-up or liquidation of the Company; (vii) if creditors or their representatives, as a result of a breach by the Company of an obligation thereunder have
accelerated amounts owing or have taken steps to enforce under any instrument to which the Company or any Subsidiary is a party; (viii) if the CTR Lenders, as a result of a breach by the
Company of an obligation thereunder have taken any step or action against the Company in respect of the CTR Facility or the CTR Guarantee; (ix) property or assets of the Company or any of its
Restricted Subsidiaries with a fair market value 

C-7

 

in
the aggregate of Cdn$250,000 or more shall be attached, seized, levied upon or subjected to execution, garnishment, distress or any other similar process, or come within the possession of any
trustee, interim receiver, receiver, receiver and manager, liquidator, administrator, custodian, sequestrator, agent, examiner, monitor, sheriff, bailiff or other similar official or assignee for the
benefit of creditors of the Company or any of its Restricted Subsidiaries and such condition continues for 30 days or more; (x) any Collateral Document ceases to be in full force and
effect (other than in accordance with its terms) by reason of having become unlawful or having been changed by virtue of legislation or by a court, statutory board or commission, any obligor under any
Collateral Documents denies or disaffirms its obligations thereunder, or by reason of having become unlawful or having been changed by virtue of legislation or by a court, statutory board or
commission, any Lien purported to be created under any collateral document shall cease to be enforceable or shall cease to be of the same effect and priority as purported to be created by such
Collateral Document (other than in accordance with its terms); (xi) if the Common Shares cease to be listed for trading on the Toronto Stock Exchange, regardless of whether an Offer has been
made by the Company pursuant to Section 5.20(a); and (xii) certain events of bankruptcy or insolvency with respect to the Company. Holders may not enforce the Indenture or the
Debentures except as provided in the Indenture. Subject to certain limitations, Holders of not less than 25% in principal amount of the then outstanding Debentures may direct the Trustees to declare
the principal of and interest on all Debentures then outstanding and all other monies outstanding under the Indenture to be due and payable and the same shall forthwith become immediately due and
payable; provided, that upon the occurrence of certain events of bankruptcy or insolvency the principal of and interest on all Debentures then outstanding and all other monies outstanding under the
Indenture shall become immediately due and payable. Unless it is directed by the Holders of at least 25% in principal amount of the then outstanding Debentures to deliver a notice of Default, the
Trustees may withhold from Holders of the Debentures notice of any continuing Default or Event of Default if it determines that withholding notice is in their best interest. On or before
June 30 and December 31 of each calendar year, the Company is required to deliver to the Trustees a statement regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustees a statement specifying such Default or Event of Default. 

        13.    Security.    The Debentures are the direct secured obligations of the Company. The Debentures are secured by
Liens on certain of the Company's property. 

        14.    Trustee Dealings with Company.    Subject to the limitations contained in Sections 13.1 and 13.6
of the Indenture, the Trustees may, in their personal or other capacity, buy, sell, lend upon and deal in the Debentures and generally contract and enter into financial transactions with the Company
or otherwise, without being liable to account for any profits made thereby. 

        15.    Certification.    This Debenture shall not be valid until certified by on or behalf of the Trustees. 

        16.    Abbreviations.    Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act). 

        17.    Additional Rights of Holders of Transfer Restricted Debentures.    In addition to the rights provided to
Holders of Debentures under the Indenture, certain Beneficial Holders may have all the rights set forth in the Registration Rights Agreements dated as of the Issue Date, among the Company and one or
more Beneficial Holders, providing for registration rights in Canada and the U.S. 

        18.    CUSIP Numbers.    Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Debentures and the Trustees may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Debentures or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

        19.    Intercreditor Agreement.    This Indenture is subject to the terms and conditions of the Intercreditor
Agreement. Notwithstanding any provision of this Indenture, if Debentureholders are otherwise entitled to take action independently of the Trustees hereunder or otherwise, they may not take any such
action that would be prohibited under the terms of the Intercreditor Agreement. 

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        20.    Applicable Law.    The Indenture and the Debentures shall be governed by and construed in accordance with the
procedural and substantive laws of the Province of Ontario, and the laws of Canada applicable therein, and shall be treated in all respects as Ontario contracts and the Company, the Trustee and the
Debentureholders irrevocably attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario. 

        21.    Monetary References.    Whenever any amounts of money are referred to herein, such amounts shall be deemed to
be in lawful money of Canada unless otherwise expressed. 

        22.    Language.    Each of the parties hereto hereby acknowledges that it has consented to and requested that the
Indenture and all documents relating thereto, including, without limiting the generality of the foregoing, the form of Debenture attached thereto as Exhibit C, and all Debentures issued
pursuant thereto, be drawn up in the English language only. Chacune des parties aux présentes reconnaît par les présentes qú'elle a
demandé et consent à ce que le present acte de fiducie et tous les documents s'y rattachant, incluant la formule de débenture jointe aux
présentes en tant qu'Annexe C, ne soient rédigés en anglais seulement. 

The
Company will furnish to any Holder upon written request and without charge a copy of the Indenture, the Intercreditor Agreement, all security documents and the Registration Rights Agreements.
Requests may be made to: 

SR
Telecom Inc.

Investor Relations

8150 Trans Canada Highway

St. Laurent, Quebec, H4S 1M5

Attention: President

Telephone No.:                          

C-9

 
ASSIGNMENT
FORM 

To
assign this Debenture, fill in the form below: (I) or (we) assign and transfer this Debenture to 

(Insert assignee's social security, social insurance. or tax I.D. no.) 

(Print or type assignee's name, address and zip code/postal code) 

and
irrevocably appoint
                                         
                                          
                                 to transfer this Debenture on the books of the
Company. The agent may substitute another to act for him.
 

Date:
                                         
                                          
                                          
          

Your
Signature:
                                         
                                          
                                

                            (Sign exactly as your name appears on the face of this Debenture) 

Signature
Guarantee. 

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FORM
OF ELECTION TO CONVERT 

The
undersigned owner of this Debenture hereby irrevocably exercises the option to convert this Debenture, or the portion below designated, into for fully paid and non-assessable Common
Shares in accordance with the terms of the Indenture referred to in this Debenture, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned registered Holder hereof, unless a different name has been indicated in the assignment below. If shares are to be issued in
the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid by the undersigned on account of interest
accompanies this Debenture. 

Dated:
                                         
                 

 

Portion
of Debenture to be converted: 

$

	 	 	
 Signature (for conversion only)

If shares of Common Stock are to be issued and registered otherwise than to the registered Holder named above, please print or typewrite name and address, including zip code/postal code, and social insurance, social security or other taxpayer
identification number.
	
	 	 
	

	
 	

 
	

	
 	

 

C-11

 
SCHEDULE
OF INCREASES OR DECREASES IN REGULATION S TEMPORARY GLOBAL DEBENTURE 

The
following increases or decreases in this Regulation S Temporary Global Debenture have been made: 

	Date of Exchange	 	Amount of decrease in principal amount of this Global Debenture	 	Amount of increase in principal amount of this Global Debenture	 	Principal amount of this Global Debenture following such decrease or increase	 	Signature of authorized officer of Trustee or Debenture Custodian

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Exhibit D
  
    RESTRUCTURING TERMSHEET  
    

D-1

  

 
 

EXHIBIT E
  
    FORM OF UNRESTRICTED GLOBAL DEBENTURE    
    

THIS
DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE
TRANSFERRED TO OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OR TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL DEBENTURE
SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. 

	 
	 	 

	No.             	 	[CUSIP No:            ]
	 	 	 
	 	 	[ISIN No.:             ]

10%
Secured Convertible Debentures due October 15, 2011 

 
 

SR TELECOM INC.    

promises
to pay to                         , or registered assigns, the principal sum of
                         Canadian Dollars or such greater or lesser
amount as may from time to time be endorsed on the Schedule of Increases or Decreases in Global Debenture attached hereto (but in no event may such amount exceed the aggregate principal amount
of Debentures certified pursuant to Sections 2.4 and 2.18 of the Indenture referred to below on October 15, 2011. 

Interest
Payment Dates: April 15 and October 15. 

Record
Dates: April 1 and October 1. 

Additional
provisions of this Debenture are set forth on the other side of this Debenture. 

	 	 	Dated:                         , 20      
	

 	
 	

SR TELECOM INC.
	

 	
 	

By:	

	 	 	Name:	

	 	 	Title:	

	 	 	 	 
	 	 	By:	

	 	 	Name:	

	 	 	Title:	

	 	 	 	 
	 	 	[Add Company Seal]

	(5)
	Must
be signed by President or CFO and any vice-president as required by Indenture Section 2.2. 

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Certificate of Certification: 

    •    (6)

By:
                                         
       

        Authorized Signatory 

Dated:
                                         
       , 20       

	(6)
	Either
Trustee may certify the Debenture 

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10%
Secured Convertible Debentures due October 15, 2011 

Capitalized
terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 

        1.    Interest.    SR Telecom Inc., a corporation incorporated under the laws of Canada
(the "Company"), promises to pay interest on the principal amount of this Debenture at 10% per annum from the date of issuance until maturity;
provided, however, that at the option of the Company, so long as no Default is then continuing, interest payments prior to the Maturity Date (other than interest payments in respect of accrued
interest on any Debenture upon redemption pursuant to Section 3.1 of the Indenture, a purchase under Section 5.20 of the Indenture or conversion pursuant to Article IV of the
Indenture), may be paid by the issuance of PIK Debentures at a rate of 10% per annum in lieu of cash. The Company will pay interest semi-annually on April 15 and October 15
of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date") to the holder of record on
the immediately preceding April 1 or October 1 (each, a "Record Date"). Interest on the Debentures will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the date of issuance, provided, further, that the first Interest Payment Date shall be April 15, 2006. The Company shall
pay interest on the principal amount (including Bankruptcy Interest in any proceeding under the Insolvency Laws) both before and after judgment at a rate of 12% per annum
(the "Default Rate"): (i) upon a default in the payment of interest or any other amount due under the Indenture or the Debentures, on such
overdue amounts, (ii) from and after the occurrence of an Event of Default; and (iii) upon a failure by the Company to pay liquidated damages when due under any Registration Rights
Agreement and such failure to pay is not remedied within the relevant time period, if any, provided for in such agreement. Interest shall accrue on a daily basis, shall be calculated on the basis of a
year of 365 days or 366 days in a leap year, and shall compound semi-annually. Default Rate interest shall be payable by the Company upon demand by Trustees. 

        2.    Method of Payment.    The Company will pay interest on the Debentures to the Persons who are registered Holders
of Debentures at the close of business on the Record Date next preceding the Interest Payment Date, even if such Debentures are cancelled after such Record Date and on or before such Interest Payment
Date. Subject to exceptions set forth in the Indenture, payment of or on account of the principal of a Debenture shall be made only by cheque payable to or to the order of such Holder thereof. Payment
of or on account of interest on such Debentures shall be made, subject to exceptions set forth in the Indenture, only by (i) payment in cash, by cheque or electronic transfer of funds in lawful
money of Canada; (ii) on any Interest Payment Date prior to the Maturity Date by the issuance of PIK Debentures; or (iii) a combination thereof. 

        Subject
to the limitations and conditions set forth in the Indenture, at the option of the Company and upon 10 Business Days prior written notice, the Company may satisfy, in
whole or in part, its obligations to pay interest on the Debentures on any Interest Payment Date by issuing PIK Debentures, the principal amount of which will be equal to the amount of interest
payable on the Debentures on the relevant Interest Payment Date less any interest then paid in cash. The PIK Debentures will have the same Maturity Date and interest rate as the Debentures. The terms
of the PIK Debentures will otherwise be identical to the terms of the Debentures. Issuance and delivery of PIK Debentures in accordance with the Indenture shall constitute full payment of the
corresponding amount of interest on the Debentures. The Company may not issue PIK Debentures in respect of accrued interest on any debenture upon: 

	(i)
	the
occurrence of the Maturity Date;

	(ii)
	redemption
pursuant to Section 3.1 or a purchase under Section 5.20 of the Indenture;

	(iii)
	conversion
pursuant to Article IV of the Indenture; or

	(iv)
	the
occurrence and continuance of a Default. 

Each
PIK Debenture is a separate debt obligation and shall be governed by, and entitled to the benefits of, the Indenture, shall rank pari pass with and be subject
to the same terms as all other Debentures and shall have the benefit of all Liens securing the Debentures. The Company shall execute and deliver to the Trustees a Global Debenture to evidence
aggregate PIK Debentures issued on each applicable Interest Payment Date with regard to the outstanding Global Debentures, and the Company shall execute and deliver to the Trustee Fully 

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Registered
Debentures to evidence PIK Debentures issued on each applicable Interest Payment Date with regard to outstanding Fully Registered Debentures. 

        3.    Indenture.    The Company issued the Debentures under an Indenture dated as of August 22, 2005 between
the Company and the co-Trustees (as such may be amended or supplemented from time to time, the "Indenture"). The terms of the
Debentures include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb). The Debentures are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Debentures are
secured
obligations of the Company. The aggregate principal amount of the Debentures is unlimited; provided, however that Debentures may be issued only (i) pursuant to the Exchange Offer,
(ii) in exchange for 8.15% Debentures purchased by the Company outside of the Exchange Offer, or (iii) to make interest payments in the form of PIK Debentures. 

        4.    Optional Redemption.    The Company shall have the option to redeem the Debentures, in whole or in part, at any
time and from time to time, at the redemption price equal to the greater of: (i) the 21 day average trading price of the Common Shares on the exchange or market on which the greatest
volume of Common Shares traded during the 21 Trading Days ending on the Trading Day immediately prior to the date the Company gives notice to the Holders of such redemption notice multiplied by
the number of Common Shares into which the Debentures are convertible; and (ii) all amounts owing pursuant to the Debentures and the Indenture as at the date of payment, including, any accrued
and unpaid interest thereon to the date of redemption and all fees and disbursements incurred by or on behalf of the Holders or the Trustees to the date of payment. 

        Notice
of optional redemption will be mailed at least 21 days before the redemption date to each Holder whose Debentures are to be redeemed at its registered address. Holders of
Debentures called for redemption are entitled to exercise the right of conversion contained in Article IV of the Indenture in accordance with the provisions of the Indenture until the last
Business Day immediately preceding the Redemption Date. On and after the redemption date interest ceases to accrue on Debentures or portions thereof called for redemption. 

        5.    Mandatory Redemption.    Within five Business Days after the closing of the Rights Offering, the Company shall
apply an amount, if any, equal to (i) 50% of the net proceeds to the Company from the Rights Offering in excess of $25,000,000 multiplied by (ii) a percentage equal to
100 multiplied by a fraction, of which the numerator is all obligations owing under the Indenture, and of which the denominator is (a) all obligations owing under the CTR Facility plus
(b) all obligations owing under the Indenture, to redeem Debentures at a price equal to (i) 95% of the outstanding principal amount of each such Debenture to be redeemed, plus
(ii) any accrued and unpaid interest thereon to the date of redemption (the "Mandatory Redemption Price"), provided that the Company shall
not be obligated to redeem Debentures to the extent that such redemption would, together with the exchange due to the mandatory conversion of the Debentures under Section 4.1(a) of the
Indenture, reduce the principal amount of outstanding Debentures by more than 25% of the aggregate principal amount of the outstanding Debentures at the time they were issued. The Debentures to be
redeemed pursuant to a mandatory redemption shall be redeemed from all Holders on a pro rata basis according to the Debentures outstanding at
such time in accordance with the principal amount of the Debentures registered in the name of each Debentureholder or in such other manner as the Trustees deem equitable (subject to any necessary
regulatory or stock exchange approval). The Holder of any Debenture called for redemption in part only, upon surrender of any such Debentures for payment of the Redemption Price, shall be entitled to
receive, without expense to such Holder, one or more new Debentures for the unredeemed part of the principal amount of the Debenture so surrendered and the Company shall execute and the one of the
Trustees shall certify and deliver, at the expense of the Company, such new Debenture or Debentures upon receipt of the Debenture(s) surrendered, or with respect to a Global Debenture, the
Depositary shall make notation on the Global Debenture of the principal amount so redeemed. 

        Notice
of mandatory redemption will be given at least 3 Business Days before the redemption date to each Holder whose Debentures are to be redeemed at its registered address.
Holders of Debentures called for mandatory redemption are entitled to exercise the right of conversion contained in Article IV of the Indenture in accordance with the provisions of the
Indenture until the last Business Day immediately preceding the 

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Redemption
Date. On and after the redemption date interest ceases to accrue on Debentures or portions thereof called for redemption. 

        6.    Optional Conversion.    Upon and subject to applicable rules of the Exchange and Applicable Securities
Legislation, and the provisions and conditions of the Indenture, the Holder of each Debenture shall have the right, at the option of the Holder, at any time and from time to time (i) after the
earlier of (a) the Business Day after the Rights Offering Record Date and (b) November 30, 2005 (the "Mandatory Conversion
Date") and (ii) prior to the Close of Business on the earlier of the Stated Maturity Date, or on the Business Day immediately preceding the Redemption Date for a
Debenture, if any, to exchange the principal amount of such Debenture and accrued and unpaid interest thereon for fully paid and non-assessable Common Shares of the Company. The number of
Common Shares into which Debentures may be so exchanged shall be determined by dividing the amount of principal and interest of the Debentures to be exchanged by the Conversion Price as at the Date of
Conversion, subject to adjustment pursuant to Section 4.6 of the Indenture. 

        7.    Mandatory Conversion.    Upon and subject to the provisions and conditions of the Indenture and to applicable
rules of the Exchange and Applicable Securities Legislation, $10 million principal amount of the Debentures shall be exchanged on a  pro rata basis for fully paid and non-assessable Common
Shares on the Mandatory Conversion Date. The number of Common Shares into
which Debentures may be so exchanged shall be determined by dividing $10 million of principal by the Conversion Price as at the Mandatory Conversion Date, subject to adjustment pursuant to
Section 4.6 of the Indenture. In no circumstance will the Company be required to effect a Mandatory Conversion of more than 25% of the outstanding principal amount of Debentures. 

        8.    Conversion Mechanics    (a) The Company shall not be required to issue fractional shares upon the
conversion of Debentures. If more than one Debenture shall be surrendered for conversion at one time by the same Holder, the number of whole Common Shares issuable upon conversion thereof shall be
computed on the basis of the aggregate principal amount of such Debentures to be converted. If any fractional interest in a Common Share would, except for the provisions of the previous sentence, be
deliverable to any Holder upon the conversion of any principal amount of Debentures, the Company shall, in lieu of delivering any certificate representing such fractional interest, make a cash payment
to the Holder in an amount equal to the fractional interest multiplied by the Conversion Price. 

	(b)
	If
payment of the Mandatory Redemption Price or the Optional Redemption Price, as the case may be, or the purchase price of any Debenture which has been called for redemption or
tendered in acceptance of an offer by the Company to purchase Debentures for cancellation is not made, in the case of a redemption upon due surrender of such Debenture or in the case of a purchase on
the date on which such purchase is required to be made, as the case may be, the right to convert such Debentures shall revive and continue as if such Debenture had not been called for redemption or
tendered in acceptance of the Company's offer, respectively.

	(c)
	The
Company shall from time to time immediately after the occurrence of any event which requires an adjustment of the Conversion Price, deliver an Officers' Certificate to the
Trustees 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. 

        9.    Change of Control Offer.    Except for a change of Control resulting from a conversion of Debentures pursuant to
Article IV of the Indenture, within 30 days following any change of Control, the Company shall deliver to the Trustee, and the Trustee shall promptly deliver a notice to each Holder
stating that there has been a change of Control, specifying the circumstances surrounding such event, together with an offer to repurchase Debentures
(the "Offer") for an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to the
date of purchase (the "Change of Control Payment"). The Offer shall, unless otherwise provided under Applicable Securities Legislation or
applicable rules of the Exchange, be open for acceptance thereof for a period of not less than 35 days and not more than 60 days, and shall provide for the Change of Control Payment to
all Holders who accept the Offer not later than the 60th day after the date of the Offer. 

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        10.    Denominations, Transfer, Exchange.    The Debentures may be issued in any denomination; provided, however, that
to the extent possible, Debentures shall be issued in denominations of $1,000 and integral multiples of $1,000. The transfer of Debentures may be registered and Debentures may be exchanged as provided
in the Indenture. The Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Trustee may require a Holder to pay any taxes and fees
required by law and permitted by the Indenture. Neither the Company nor the Trustees nor any registrar shall be required to (i) make transfers or exchanges or accept conversions of Debentures
on any Interest Payment Date for such Debentures or during the 15 calendar days preceding the record date for payment of interest on the Debentures, or (ii) make transfers or exchanges
of any Debentures which have been selected or called for redemption including, without limitation, during the 15 calendar day period preceding the date fixed for such redemption unless upon due
presentation thereof for redemption such Debentures shall not have been redeemed. 

        11.    Amendment, Supplement and Waiver.    Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of at least 662/3% in principal amount of the then outstanding Debentures, and any existing Default or Event of Default (other
than (i) a Default or Event of Default in the payment of the principal of, or interest, on the Debentures, (ii) a Default arising from the failure to redeem or purchase any Debenture
when required pursuant to the Indenture or a Debenture or
(iii) a Default in respect of a provision that under Section 14.2 of the Indenture that cannot be amended without the consent of each holder affected) may be waived with the consent of
the Holders of not less than 662/3% of the principal amount of the then outstanding Debentures. Without the consent of any Holder of a Debenture, the Indenture and the Debentures may be
amended or supplemented to: (i) evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company in the Indenture and in the
Debentures; (ii) add to the covenants of the Company for the benefit of the Holders of all of the Debentures or surrender any right or power herein conferred upon the Company;
(iii) provide additional security for the Debentures; (iv) comply with any requirements of the Commission or any other applicable governmental authority in order to effect and maintain
the qualification of this Indenture under the Trust Indenture Act or the Canadian Trust Indenture Legislation; (v) add additional Events of Default; (vi) evidence and provide for the
acceptance of appointment under the Indenture by a successor Trustee with respect to the Debentures and to add or change any of the provisions of the Indenture as shall be necessary to provide for or
facilitate the administration of the trusts thereunder by more than one Trustee; or (vii) cure any ambiguity, correct or supplement any provision in the Indenture which may be inconsistent with
any other provision therein or make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with the provisions of the Indenture,  provided
that such action pursuant to this subsection (vii) shall not adversely affect the interests of the Holders in any material respect. 

        Notwithstanding
any other provision in the Indenture or the Debentures, the holders of not less than 662/3% in principal amount of the outstanding Debentures are given the
right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustees or of exercising any trust power conferred on the Trustees. 

        12.    Defaults and Remedies.    Each of the following constitutes an Event of Default under the Indenture:
(i) if the Company fails to pay interest on the Debentures when due and such default continues for two (2) days; (ii) if the Company shall fail to pay the principal amount of the
Debentures when required or agreed upon either at maturity, at a Redemption Date or pursuant to a declaration of acceleration or otherwise or fails to pay the Offer Price in accordance with the terms
of such Offer; (iii) if the Company fails to comply with any covenant contained in Sections 5.9 through 5.15 of the Indenture and such default continues for thirty
(30) days; (iv) if the Company fails to observe or perform to any material extent any other covenant or condition contained in the Indenture on its part to be observed or performed and,
after notice in writing has been given by the Trustees to the Company specifying such default and requiring the Company to put an end to the same (which said notice may be given by the Trustees, in
their discretion) the Company shall fail to make good such default within a period of thirty (30) days, unless the Trustees (having regard to the subject matter of the default) shall have
agreed to a longer period, and in such event, within the period agreed to by the Trustees; (v) any representation or warranty of the Company contained in the Indenture or any statement of the
Company in any certificate, financial statement or other document or instrument delivered pursuant to the Indenture, proves to be inaccurate to any material extent; (vi) if a resolution is
passed for the winding-up or liquidation of the Company; 

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(vii) if
creditors or their representatives, as a result of a breach by the Company of an obligation thereunder have accelerated amounts owing or have taken steps to enforce under any
instrument to which the Company or any Subsidiary is a party; (viii) if the CTR Lenders, as a result of a breach by the Company of an obligation thereunder have taken any step or action against
the Company in respect of the CTR Facility or the CTR Guarantee; (ix) property or assets of the Company or any of its Restricted Subsidiaries with a fair market value in the aggregate of
Cdn$250,000 or more shall be attached, seized, levied upon or subjected to execution, garnishment, distress or any other similar process, or come within the possession of any trustee, interim
receiver, receiver, receiver and manager, liquidator, administrator, custodian, sequestrator, agent, examiner, monitor, sheriff, bailiff or other similar official or assignee for the benefit of
creditors of the Company or any of its Restricted Subsidiaries and such condition continues for 30 days or more; (x) any Collateral Document ceases to be in full force and effect (other
than in accordance with its terms) by reason of having become unlawful or having been changed by virtue of legislation or by a court, statutory board or commission, any obligor under any Collateral
Documents denies or disaffirms its obligations thereunder, or by reason of having become unlawful or having been changed by virtue of legislation or by a court, statutory board or commission, any Lien
purported to be created under any collateral document shall cease to be enforceable or shall cease to be of the same effect and priority as purported to be created by such Collateral Document (other
than in accordance with its terms); (xi) if the Common Shares cease to be listed for trading on the Toronto Stock Exchange, regardless of whether an Offer has been made by the Company pursuant
to Section 5.20(a); and (xii) certain events of bankruptcy or insolvency with respect to the Company. Holders may not enforce the Indenture or the Debentures except as provided in
the Indenture. Subject to certain limitations, Holders of not less than 25% in principal amount of the then outstanding Debentures may direct the Trustees to declare the principal of and interest on
all Debentures then outstanding and all other monies outstanding under the Indenture to be due and payable and the same shall forthwith become immediately due and payable; provided, that upon the
occurrence of certain events of bankruptcy or insolvency the principal of and interest on all Debentures then outstanding and all other monies outstanding under the Indenture shall become immediately
due and payable. Unless it is directed by the Holders of at least 25% in principal amount of the then outstanding Debentures to deliver a notice of Default, the Trustees may withhold from Holders of
the Debentures notice of any continuing Default or Event of Default if it determines that withholding notice is in their best interest. On or before June 30 and December 31 of each
calendar year, the Company is required to deliver to the Trustees a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of
Default, to deliver to the Trustees a statement specifying such Default or Event of Default. 

        13.    Security.    The Debentures are the direct secured obligations of the Company. The Debentures are secured by
Liens on certain of the Company's property. 

        14.    Trustee Dealings with Company.    Subject to the limitations contained in Sections 13.1 and 13.6
of the Indenture, the Trustees may, in their personal or other capacity, buy, sell, lend upon and deal in the Debentures and generally contract and enter into financial transactions with the Company
or otherwise, without being liable to account for any profits made thereby. 

        15.    Certification.    This Debenture shall not be valid until certified by on or behalf of the Trustees. 

        16.    Abbreviations.    Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act). 

        17.    Additional Rights of Holders of Transfer Restricted Debentures.    In addition to the rights provided to
Holders of Debentures under the Indenture, certain Beneficial Holders may have all the rights set forth in the Registration Rights Agreements dated as of the Issue Date, among the Company and one or
more Beneficial Holders, providing for registration rights in Canada and the U.S. 

        18.    CUSIP Numbers.    Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Debentures and the Trustees may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Debentures or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

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        19.    Intercreditor Agreement.    This Indenture is subject to the terms and conditions of the Intercreditor
Agreement. Notwithstanding any provision of this Indenture, if Debentureholders are otherwise entitled to take action independently of the Trustees hereunder or otherwise, they may not take any such
action that would be prohibited under the terms of the Intercreditor Agreement. 

        20.    Applicable Law.    The Indenture and the Debentures shall be governed by and construed in accordance with the
procedural and substantive laws of the Province of Ontario, and the laws of Canada applicable therein, and shall be treated in all respects as Ontario contracts and the Company, the Trustee and the
Debentureholders irrevocably attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario. 

        21.    Monetary References.    Whenever any amounts of money are referred to herein, such amounts shall be deemed to
be in lawful money of Canada unless otherwise expressed. 

        22.    Language.    Each of the parties hereto hereby acknowledges that it has consented to and requested that the
Indenture and all documents relating thereto, including, without limiting the generality of the foregoing, the form of Debenture attached thereto as Exhibit E, and all Debentures issued
pursuant thereto, be drawn up in the English language only. Chacune des parties aux présentes reconnaît par les présentes qú'elle a
demandé et consent à ce que le present acte de fiducie et tous les documents s'y rattachant, incluant la formule de débenture jointe aux
présentes en tant qu'Annexe E, ne soient rédigés en anglais seulement. 

        The
Company will furnish to any Holder upon written request and without charge a copy of the Indenture, the Intercreditor Agreement, all security documents and the Registration Rights
Agreements. Requests may be made to: 

SR
Telecom Inc.

Investor Relations

8150 Trans Canada Highway

St. Laurent, Quebec, H4S 1M5

Attention: President

Telephone No.:                          

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ASSIGNMENT FORM    
    

To
assign this Debenture, fill in the form below: (I) or (we) assign and transfer this Debenture to 

(Insert
assignee's social security, social insurance or tax I.D. no.) 

(Print
or type assignee's name, address and zip code/postal code) 

and
irrevocably appoint
                                         
                                to transfer this Debenture on the books of the Company. The
agent may substitute another to act for him.
 

Date:
                                         
        

Your
Signature:
                                         
                                          
                          

                           (Sign exactly as your name appears on the face of this Debenture) 

Signature
Guarantee. 

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FORM OF ELECTION TO CONVERT    

The
undersigned owner of this Debenture hereby irrevocably exercises the option to convert this Debenture, or the portion below designated, into for fully paid and non-assessable Common
Shares in accordance with the terms of the Indenture referred to in this Debenture, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned registered Holder hereof, unless a different name has been indicated in the assignment below. If shares are to be issued in
the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid by the undersigned on account of interest
accompanies this Debenture. 

Dated:
                                 

Portion
of Debenture to be

converted: 

$

	 
	 	 

	 	 	                                        
        
	 	 	Signature (for conversion only)
	 	 	If shares of Common Stock are to be issued and registered otherwise than to the registered Holder named above, please print or typewrite name and address, including zip code/postal code, and social security, social
insurance or other taxpayer identification number.
	
	 	 
	
	 	 
	
	 	 

E-10

 

        SCHEDULE
OF INCREASES OR DECREASES IN UNRESTRICTED GLOBAL DEBENTURE 

        The
following increases or decreases in this Unrestricted Global Debenture have been made: 

	Date of Exchange	 	Amount of decrease in principal amount of this Global Debenture	 	Amount of increase in principal amount of this Global Debenture	 	Principal amount of this Global Debenture following such decrease or increase	 	Signature of authorized officer of Trustee or Debenture Custodian

E-11

  

 
 

Exhibit F
  
    FORM OF
  TRANSFER CERTIFICATE FOR EXCHANGE OR
  TRANSFER FROM RESTRICTED FULLY REGISTERED DEBENTURE
  TO REGULATION S TEMPORARY GLOBAL DEBENTURE  
    

[Name of Trustee]

as Trustee
 [Address]
[City, State/Province, Zip Code/Postal Code]

Attention:

[                                         
  ]

	Re:
	10%
Secured Convertible Debentures (the "Debentures") issued pursuant to the Trust Indenture, dated as of
August             , 2005 (as supplemented, the "Indenture"), between SR Telecom Inc. (the "Issuer") and  [name of Trustee]
 (the "Trustee"). 

        Capitalized
terms used but not defined herein shall have the meanings given to them in the Indenture. 

        This
letter relates to $                         principal amount of Debentures that are held as Fully Registered Debentures
registered in the name of  [insert name of transferor] (the "Transferor"). The Transferor has requested a sale or transfer of the beneficial
interest for an interest in the Regulation S Temporary Global Debenture (CUSIP No.                         )
to be held with the Depositary through a
Depositary Participant [other than the Depository Trust Company/located outside the United States]. 

        In
connection with the request, the Transferor does hereby certify that the sale or transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and
the Debentures and: 

	(a)
	pursuant
to and in accordance with Regulation S under the U.S. 1933 Act, and accordingly the Transferor does hereby certify that:

	(i)
	the
offer of the Debentures was not made to a person in the United States of America,

	(ii)
	either
(A) at the time the buy order was originated, the transferee was outside the United States of America or the Transferor and any person acting on
its behalf reasonably believed that the transferee was outside the United States of America, or (B) the transaction was executed in, on or through the facilities of a designated offshore
securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States of America,

	(iii)
	no
directed selling efforts have been made in contravention of the requirements of Rule 903 or 904 of Regulation S, as applicable, and the other
conditions of Rule 903 or Rule 904 of Regulation S, as applicable, have been satisfied and

	(iv)
	the
transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. 

        This
certification and the statements contained herein are made for your benefit and the benefit of the Issuer. 

Dated:

	 	 	[Insert name of Transferor]
	
 	
 	

By:	

 Name:

Title:

F-1

  

 
 

Exhibit G
  
    FORM OF
  TRANSFER CERTIFICATE FOR TRANSFER FROM
  RESTRICTED FULLY REGISTERED DEBENTURE
  TO UNRESTRICTED GLOBAL DEBENTURE
  PURSUANT TO AN EFFECTIVE SHELF REGISTRATION
STATEMENT  
    

[Name of Trustee]

as Trustee
 [Address]
[City, State/Province, Zip Code/Postal Code]

Attention:  [                        ]

	 
	 	 

	Re:	 	10% Secured Convertible Debentures (the "Debentures") issued pursuant to the Trust Indenture, dated as of August     , 2005 (as supplemented, the "Indenture"), between SR
Telecom Inc. (the "Issuer") and [name of Trustee] (the "Trustee").

        Capitalized
terms used but not defined herein shall have the meanings given to them in the Indenture. 

        This
letter relates to $                         principal amount of Debentures that are held as Fully Registered Debentures
registered in the name of  [insert name of transferor] (the "Transferor"). The Transferor has requested a sale or transfer of the Fully Registered
Debenture for an interest in the Unrestricted Global Debenture (CUSIP No.                         ) to be held with the
Depositary through a Depositary Participant. 

        In
connection with the request, the Transferor does hereby certify that the sale or transfer has been effected pursuant to an effective Shelf Registration Statement and that the
Transferor delivered the prospectus contained in the Shelf Registration Statement to the purchaser prior to such sale or transfer. 

        This
certification and the statements contained herein are made for your benefit and the benefit of the Issuer. 

        Dated:                        

	 	 	[Insert name of Transferor]
	
 	
 	

By:	

 
	 	 	 	
 Name:

Title:

G-1

  

 
 

Exhibit H    
    

 
 

FORM OF
  TRANSFER CERTIFICATE FOR TRANSFER FROM
  RESTRICTED FULLY REGISTERED DEBENTURE
  TO UNRESTRICTED GLOBAL DEBENTURE
  PURSUANT TO REGULATION S AFTER THE EXCHANGE DATE  
    

[Name of Trustee]

as Trustee
 [Address]
[City, State/Province, Zip Code/Postal Code]

Attention:
[                   ]

	Re:
	10%
Secured Convertible Debentures (the "Debentures") issued pursuant to the Trust Indenture, dated as of August     , 2005
(as supplemented, the "Indenture"), between SR Telecom Inc. (the "Issuer") and [name of Trustee]
(the "Trustee"). 

        Capitalized
terms used but not defined herein shall have the meanings given to them in the Indenture. 

        This
letter relates to $               principal amount of Debentures that are held as Fully Registered Debentures registered in the name of  [insert name
of transferor] (the "Transferor"). The Transferor has requested a sale or transfer of the Fully Registered
Debenture for an interest in the Unrestricted Global Debenture (CUSIP No.               ) to be held with the Depositary through a Depositary Participant  [other than the Depository Trust Company/located outside the United States].
 

        In
connection with the request, the Transferor does hereby certify that the sale or transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and
the Debentures and: 

	(a)
	pursuant
to and in accordance with Regulation S under the U.S. 1933 Act, and accordingly the Transferor does hereby certify that:

	(i)
	the
offer of the Debentures was not made to a person in the United States of America,

	(ii)
	either
(A) at the time the buy order was originated, the transferee was outside the United States of America or the Transferor and any person acting on
its behalf reasonably believed that the transferee was outside the United States of America, or (B) the transaction was executed in, on or through the facilities of a designated offshore
securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States of America,

	(iii)
	no
directed selling efforts have been made in contravention of the requirements of Rule 903 or 904 of Regulation S, as applicable, and the other
conditions of Rule 903 or Rule 904 of Regulation S, as applicable, have been satisfied and

	(iv)
	the
transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. 

H-1

 

        This
certification and the statements contained herein are made for your benefit and the benefit of the Issuer. 

Dated:

	 	 	[Insert name of Transferor]
	
 	
 	

By:	

	 	 	Name:

Title:

	 

H-2

QuickLinks

TRUST INDENTURE

SR TELECOM INC.

COMPUTERSHARE TRUST COMPANY OF CANADA

MANUFACTURERS AND TRADERS TRUST COMPANY

CROSS-REFERENCE TABLE

TABLE OF CONTENTS

ARTICLE I INTERPRETATION

ARTICLE II THE DEBENTURES

ARTICLE III REDEMPTION OF DEBENTURES

ARTICLE IV CONVERSION OF DEBENTURES

ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

ARTICLE VI SECURITY

ARTICLE VII

ARTICLE VIII DEFAULT

ARTICLE IX SATISFACTION AND DISCHARGE

ARTICLE X SUCCESSOR CORPORATIONS

ARTICLE XI MEETINGS OF DEBENTUREHOLDERS

ARTICLE XII NOTICES

ARTICLE XIII CONCERNING THE TRUSTEE

ARTICLE XIV SUPPLEMENTAL INDENTURES

ARTICLE XV EXECUTION AND FORMAL DATE

EXHIBIT A FORM OF FULLY REGISTERED DEBENTURE

SR TELECOM INC.

ASSIGNMENT FORM

FORM OF ELECTION TO CONVERT

Exhibit B INTERCREDITOR AGREEMENT

EXHIBIT C FORM OF REGULATION S TEMPORARY GLOBAL DEBENTURE

Exhibit D RESTRUCTURING TERMSHEET

EXHIBIT E FORM OF UNRESTRICTED GLOBAL DEBENTURE

SR TELECOM INC.

ASSIGNMENT FORM

FORM OF ELECTION TO CONVERT

Exhibit F FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR TRANSFER FROM RESTRICTED FULLY REGISTERED DEBENTURE TO REGULATION S TEMPORARY GLOBAL DEBENTURE

Exhibit G FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM RESTRICTED FULLY REGISTERED DEBENTURE TO UNRESTRICTED GLOBAL DEBENTURE PURSUANT TO AN EFFECTIVE SHELF REGISTRATION STATEMENT

Exhibit H

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM RESTRICTED FULLY REGISTERED DEBENTURE TO UNRESTRICTED GLOBAL DEBENTURE PURSUANT TO REGULATION S AFTER THE EXCHANGE DATEQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 4.2

 
 

INTER-CREDITOR AGREEMENT    
    

        THIS INTER-CREDITOR AGREEMENT is made the 22nd day of August, 2005 

        AMONG:

SR
Telecom Inc. ("SRT") 

– and –

BNY
Trust Company of Canada as administrative agent and collateral agent for the ECF Lenders (the "Agent") 

– and – 

BNY
Trust Company of Canada as payment agent on behalf of the ECF Lenders, the Convertible Debentureholders and the CTR Lenders (the "Payment
Agent") 

– and –

Computershare
Trust Company of Canada (the "Canadian Trustee") and Manufacturers and Traders Trust Company
(the "U.S. Trustee"; collectively with the Canadian Trustee, the "Trustees") as trustees
for the Convertible Debentureholders 

– and – 

Export
Development Canada ("EDC") and Inter-American Development Bank ("IADB"; collectively with EDC,
the "CTR Lenders") 

– and –

Comunicación
y Telefonia, Rural S.A. ("CTR") 

WHEREAS:  

	1.
	each
of the Creditors is a secured creditor of SRT;

	2.
	EDC
and IADB are also, collectively, secured creditors of CTR which is an indirect subsidiary of SRT;

	3.
	SRT,
EDC, IADB, CTR and certain of the holders of SRT's then existing 8.15% Debentures (as proposed ECF Lenders and as proposed Convertible Debentureholders) have previously
entered into the Restructuring Term Sheet to, inter alia, set out the principal terms and features of a proposed restructuring of SRT between
them as to, inter alia, the obligations due by SRT to the Creditors and the security granted by SRT for the payment and performance of such
obligations;

	4.
	approximately
Cdn$70,535,000 of the principal amount of the 8.15% Debentures have been exchanged for Convertible Debentures, and approximately Cdn$465,000 of the principal amount of
the 8.15% Debentures have not been so exchanged and continue as unsecured debt obligations of SRT;

	5.
	the
Payment Agent has been appointed, with respect to SRT only, as payment agent for the ECF Lenders, the Convertible Debentureholders and the CTR Lenders as holders of the CTR
Guarantee, under the terms of this Inter-Creditor Agreement;

	6.
	the
Agent has been appointed as agent for the ECF Lenders, and the Indebtedness due by SRT to the ECF Lenders as at the date hereof is approximately US$21,997,023.39, and may increase
and/or revolve from time to time pursuant to the ECF Credit Agreement;

	7.
	the
Trustees have been appointed as trustees for the Convertible Debentureholders, the Canadian Trustee has been designated as collateral agent for the Convertible Debentureholders,
and the Indebtedness due by SRT to the Convertible Debentureholders as at the date hereof is Cdn$75,330,761;

	8.
	the
CTR Guarantee Maximum as at the date hereof is US$12,000,000; and 

 
	9.
	without
derogating from the provisions of the Restructuring Term Sheet, the Parties wish to more completely set out certain specific rights and obligations between SRT, CTR and the
Creditors within this Inter-Creditor Agreement; 

NOW THEREFORE for good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the Parties make the following
covenants, acknowledgements and agreements: 

1.     Capitalized Terms and Interpretation  

For
the purposes of this Inter-Creditor Agreement (including the recitals), the following capitalized terms shall have the following defined meanings: 

"8.15% Debentures" means the 8.15% debentures of SRT due October 15, 2011 issued pursuant to the trust indenture dated April 22, 1998
between SRT and Montreal Trust Company of Canada (now Computershare Trust Company of Canada), as amended pursuant to a supplemental indenture dated August 22, 2005; 

"Agent" means BNY Trust Company of Canada, as administrative agent and collateral agent for the ECF Lenders, or any successor or assign duly appointed
as agent under the ECF Credit Agreement; 

"BIA" means the Bankruptcy and Insolvency Act (Canada); 

"Canadian Trustee" means Computershare Trust Company of Canada, as a Trustee under the Trust Indenture, and as designated secured party and collateral
agent under the Trust Indenture, or any successor or assign duly appointed under the Trust Indenture; 

"CCAA" means the Companies' Creditors Arrangement Act (Canada); 

"Chilean Holdco" means Servicios Rurales De Telecomunicaciones SA; 

"Civil Code" means the Civil Code of Quebec; 

"Collateral" means the assets, undertaking and property of SRT that are charged and encumbered as security for the ECF Obligations, the Convertible
Debenture Obligations and the CTR Guarantee Obligations; 

"Collateral Sale Proceeds" means any Proceeds derived from a sale of Collateral required to be consented to in writing by the ECF Lenders pursuant to
the terms of the ECF Credit Agreement; 

"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting stock or by contract or otherwise and, when determining control based on ownership of voting stock, means, with respect to control of a body corporate by a Person,
the holding (other than by way of security only) by or for the benefit of that Person, or affiliates of that Person of stock of such body corporate or the right to vote or direct the voting of stock
of such body corporate to which, in the aggregate, are attached more than fifty percent (50%) of the votes that may be cast to elect directors of the body corporate, provided that the votes attached
to such stock are sufficient, if exercised, to elect a majority of the directors of the body corporate; 

"Convertible Debentures" means the 10% secured convertible debentures due October 15, 2011, issued pursuant to the Trust Indenture, including all
PIK Debentures; 

"Convertible Debenture Documents" means the documents listed in Schedule "A", together with any permitted amendments
and supplemental agreements from time to time; 

"Convertible Debenture Maturity Date" means October 15, 2011; 

"Convertible Debenture Obligations" means all Indebtedness of SRT due to the Convertible Debentureholders and all payment and performance obligations
owed by SRT pursuant to the Convertible Debenture Documents; 

"Convertible Debenture Security" means the security documents listed in Schedule "A", together with any permitted
amendments and supplemental agreements from time to time; 

2

 

"Convertible Debentureholders" means (as the context may require) the Trustees and/or each of the beneficial holders of Convertible Debentures
from time to time; 

"Convertible Debentureholders' Standstill Period" has the meaning ascribed to it in
Section 8(b), and subject to the terms of Section 8(c); 

"Credit Documents" means the documents describing the Obligations of SRT to each of the Creditors, being the ECF Documents, the Convertible Debenture
Documents, and the CTR Guarantee Documents; 

"Creditors" means the ECF Lenders, the Convertible Debentureholders, and the CTR Lenders, as holders of the CTR Guarantee, being the secured creditors
of SRT; 

"CTR" means Comunicación y Telefonia, Rural S.A.; 

"CTR Guarantee" means the guarantee dated as of May 19, 2005 between SRT and the CTR Lenders, guaranteeing payment and performance by SRT of the
CTR Obligations, but limited in amount to the CTR Guarantee Maximum; 

"CTR Guarantee Documents" means the documents listed under the heading "CTR Guarantee Documents" in Schedule "B",
together with any permitted amendments and supplemental agreements from time to time. For certainty, "CTR Guarantee Documents" does not include the Support Agreement or the Subordination Pledge; 

"CTR Guarantee Maximum" means the lesser of (a) US$12,000,000, and (b) US$12,000,000 less (i) any
amounts paid after the date of the CTR Guarantee by SRT (as opposed to CTR) or the Payment Agent to the CTR Lenders (or either of them) as contemplated in
Paragraphs 16(b)(ii), 18(i) or 18(l) of the Restructuring Term Sheet and (ii) any
cash amounts provided by SRT to CTR after the date of the CTR Guarantee and which are paid directly to the Payment Agent or to the CTR Lenders (or either of them) (other than any cash amounts
required to be paid by SRT to CTR in accordance with the Support Agreement), in each case to the extent such amounts would be (and the CTR Lenders hereby acknowledge that such amounts will be)
applied in accordance with Schedule B to the Restructuring Term Sheet to the payment of principal amounts outstanding under the CTR Loan Documents; 

"CTR Guarantee Obligations" means the obligation of SRT to pay the CTR Obligations to a maximum amount of the CTR Guarantee Maximum; 

"CTR Guarantee Security" means the security documents listed under the heading "CTR Guarantee Documents" in
Schedule "B", together with any permitted amendments and supplemental agreements from time to time; 

"CTR Lenders" means each of EDC and IADB and their permitted successors and assigns; 

"CTR Lenders Pledged Collateral" means, collectively: 

	(a)
	the
Subordinated Debt and all promissory notes or other instruments evidencing the Subordinated Debt including, without limitation, the notes and instruments listed on
Schedule A to the Subordination Pledge;

	(b)
	all
payments of principal or interest or other amounts, cash, instruments and other property from time to time received, receivable or otherwise distributed, in respect of, in
exchange for or upon the conversion of the Subordinated Debt; and

	(c)
	all
proceeds of any of the foregoing. 

"CTR Lenders' Standstill Period" means the period that began on May 17, 2005 and ending on the earliest to occur of the following dates: 

	(a)
	the
CTR Maturity Date;

	(b)
	the
earliest to occur of (1) the date an initial order is made under Section 11 of the CCAA with respect to SRT, (2) the date on
which SRT becomes a bankrupt pursuant to the BIA and (3) the date on which SRT initiates proceedings under Part III of the BIA; 

3

 

	(c)
	the
date upon which acceleration occurs or enforcement proceedings are initiated by the Agent to enforce the ECF Obligations or the ECF Security; or

	(d)
	the
date upon which acceleration occurs or enforcement proceedings are initiated by either or both of the Trustees, as trustees for the Convertible Debentureholders, to enforce the
Convertible Debenture Obligations or by the Canadian Trustee, to enforce the Convertible Debenture Security; 

"CTR Loan Documents" means the documents listed under the heading "CTR Loan Documents" described in Schedule "B", as
may be amended, supplemented, superseded or replaced from time to time; 

"CTR Maturity Date" means May 17, 2008, or such later date as may be agreed by the CTR Lenders in their sole discretion; 

"CTR Obligations" means all payment and performance obligations of CTR to the CTR Lenders pursuant to the CTR Loan Documents, which obligations are
guaranteed in part by SRT pursuant to the CTR Guarantee; 

"Default" means any event which, with the giving of notice and/or lapse of time and/or a determination being made under the provisions of the
Convertible Debenture Documents, the CTR Loan Documents and the ECF Documents, as the context may require, would or could constitute or result in an Event of Default; 

"ECF Credit Agreement" means the Credit Agreement dated as of May 19, 2005 among SRT, as borrower, the Agent, as administrative agent and
collateral agent, and the Lenders as may be amended, supplemented, superseded or replaced from time to time; 

"ECF Documents" means the documents listed in Schedule "C", as may be amended, supplemented, superseded or replaced
from time to time; 

"ECF Lenders" means (as the context may require) the Agent/or and the Lenders under the ECF Credit Agreement from time to time; 

"ECF Maturity Date" means October 2, 2011; 

"ECF Obligations" means all Indebtedness of SRT due to the ECF Lenders and all payment and performance obligations owed by SRT pursuant to the ECF
Documents; 

"ECF Security" means the security documents listed in Schedule "C", as may be amended, supplemented, superseded or
replaced from time to time; 

"EDC" means Export Development Canada; 

"Event of Default" means an event of default (or any other event howsoever defined that would permit the applicable Party to demand, accelerate
or enforce payment of its Obligations) under and as defined in the Convertible Debenture Documents, the CTR Guarantee Documents and the ECF Documents, as the context may require; 

"Extraordinary Pro Rata" means the proportionate allocation of relevant funds from time to time between the Convertible Debentureholders
(as to the CD Pro Rata Share) and the CTR Lenders (as to the L Pro Rata Share) to be allocated between them, calculated on the following basis: 

F =
funds to be allocated; 

CD =
Convertible Debenture Obligations then outstanding; 

L =
CTR Obligations then outstanding; 

CD
Pro Rata Share = [CD / CD + L] *F; and 

L
Pro Rata Share = [L / CD + L] *F; 

"IADB" means Inter-American Development Bank; 

"Indebtedness" means any and all loans, obligations, liabilities and indebtedness of any kind, nature and description owed by SRT to a given Creditor or
group of Creditors, as applicable, including principal, 

4

 

interest,
charges, fees, costs, and expenses, whether as principal, surety, endorser, guarantor or otherwise arising under any of the Credit Documents delivered to such Creditor or Creditors, as
applicable, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured
or unsecured, and however acquired by such Creditor or Creditors, as applicable, and shall include all interest and costs of collection (including, without limitation, all legal, accounting and
receiver fees), enforcement of the Security granted to such Creditor or Creditors, as applicable, or preservation and protection of the Collateral which may at any time accrue with respect to such
Indebtedness, and any post-judgment or post-petition interest due under the relevant Credit Documents, whether or not allowed in any claim or petition approved by a court of
competent jurisdiction; 

"Inter-Creditor Agreement" means this inter-creditor agreement, as may be amended, supplemented, superseded or replaced from time to time; 

"Intercreditor Agreement Assignment and Assumption Agreement" means an agreement in the form attached as
Schedule "D"; 

"Lien" means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, trust
(actual or deemed), easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention
agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest
under the PPSA, and any publication effecting any hypothec, security interest or right under the Civil Code or comparable law of any jurisdiction); 

"Notice" has the meaning ascribed to it in Section 29(d); 

"Obligations" means the ECF Obligations and/or the Convertible Debenture Obligations and/or the CTR Guarantee Obligations, as the context may require; 

"Parties" means the parties to this Inter-Creditor Agreement and "Party" means any one of them; 

"Payment Agent" means BNY Trust Company of Canada, as payment agent for each of the Creditors pursuant to the terms of
Section 5; 

"Permitted Payments" means the following payments which may be made by SRT to the Subordinate Creditors or CTR, or to the benefit of the Subordinate
Creditors or CTR, as and when permitted pursuant to Section 9: 

	(a)
	subject
to the terms of Section 9(b);

	(i)
	scheduled
cash interest payments on the outstanding amount of the Convertible Debentures which interest, for greater certainty, shall not exceed 10% per annum
(or 12% per annum where required under the Trust Indenture) based on the outstanding principal amount of the Convertible Debentures (which outstanding principal shall include, for greater
certainty, the principal amount of PIK Debentures issued by SRT, all capitalized interest and fees) and, for greater certainty, may include payments of accrued interest so long as the annual rate of
interest does not exceed the amount hereinbefore provided;

	(ii)
	fees
provided for in the Trust Indenture and out-of-pocket costs and expenses actually incurred by the Convertible Debentureholders prior to or
concurrent with the completion of the transaction contemplated under the Convertible Debenture Documents to the date hereof; and

	(iii)
	cash
repayments of the outstanding principal amount of the Convertible Debentures;

	(b)
	subject
to the terms of Section 9(c):

	(i)
	issuance
of PIK Debentures as and when contemplated under the Trust Indenture;

	(ii)
	payments
under the Support Agreement as and when contemplated under the Support Agreement; 

5

 

	(iii)
	permitted
repayment or prepayment of the CTR Guarantee Obligations and the Convertible Debenture Obligations from the proceeds of the Rights Offering by SRT, as
permitted under Section 15(e);

	(iv)
	permitted
repayment or prepayment of the CTR Guarantee Obligations as permitted under Section 15(f);

	(v)
	scheduled
payments of interest under the 8.15% Debentures;

	(vi)
	fees
and disbursements payable by SRT to the Convertible Debentureholders;

	(vii)
	fees
and disbursements payable by SRT to the CTR Lenders as permitted under Section 20 of the Restructuring Term Sheet;

	(viii)
	fees,
costs and expenses payable to the Trustees pursuant to the Trust Indenture; and

	(ix)
	the
issuance of Common Shares of SRT upon conversion of the Convertible Debentures; and

	(c)
	subject
to Sections 4, 6, 7, 8,
and 9 (including, without limitation, Section 9(d)), (i) payments permitted or required for the permitted voluntary
redemption by SRT of the Convertible Debentures, if such voluntary redemption is consented to by the Agent, or (ii) payments permitted or required upon a change of Control of SRT; 

"Person" means any individual, partnership, joint venture, trust, corporation, limited liability company, unlimited liability company or other legal
entity, whether or not a Party to this Inter-Creditor Agreement; 

"PIK Debentures" means debentures issued as "payment in kind" of interest obligations under the Trust Indenture, which would otherwise be payable in
cash; 

"Pro Rata" means the proportionate allocation of relevant funds from time to time between the Convertible Debentureholders (as to the CD
Pro Rata Share) and the CTR Lenders (as to the G Pro Rata Share) to be allocated between them, calculated on the following basis: 

F =
funds to be allocated; 

CD =
Convertible Debenture Obligations then outstanding; 

G =
CTR Guarantee Obligations then outstanding, being the lesser of US$12,000,000 and the CTR Guarantee Maximum then outstanding; 

CD
Pro Rata Share = [CD / CD + G] *F; and 

G
Pro Rata Share = [G / CD + G] *F; 

"Proceeds" means all identifiable or traceable property in any form derived directly or indirectly from any of the Collateral or any dealing with the
Collateral or the proceeds therefrom (including, without limitation, money, choses in action, securities, assets and other property) including, without limitation, Collateral Sale Proceeds and
proceeds derived from any sale or disposition of, or other enforcement or realization proceedings with respect to, any of the Collateral (a) after the acceleration or maturity of any
Indebtedness, (b) upon any dissolution, liquidation, winding-up, reorganization (including any proposal under the BIA and any reorganization or restructuring under the CCAA,
bankruptcy, insolvency or receivership of SRT or any other arrangement or marshalling of the Collateral that is similar thereto), (c) upon the enforcement of, or any action taken with respect
to, any Security over any of the Collateral, (d) as insurance or expropriation proceeds or any other payment representing indemnity or compensation for loss of, damage to or interruption in the
business, operation or enjoyment of all or any part of the Collateral or any proceeds thereof (including, without limitation, money, choses in action, securities, assets and other property), or
(e) as a result of the exercise of any right of set off or other similar right or remedy, in each case net of all costs, charges and expenses or liabilities incurred in connection with such
sale, disposition, enforcement or realization, including legal fees and all proper costs, charges, expenses and liabilities of any receiver; 

6

 

"Restricted Payments" means (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's stock, (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of a
Person's stock or any other payment or distribution made in respect thereof, either directly or indirectly, (c) any payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to, any Subordinate Creditors;
(d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire stock of such Person now or hereafter
outstanding; (e) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of such Person's stock or of a
claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; (f) any payment, loan, contribution, or other transfer of funds
or other property to any employee or holder of stock of such Person other than payment of compensation in the ordinary course to employees or holders of stock who are employees of such Person; and
(g) any payment of management fees (or other fees of a similar nature) by such Person to any holder of stock of such Person or their Affiliates; 

"Restructuring Term Sheet" means the agreement entitled "SR Telecom — Amended and Restated Principles of
Restructuring" dated as of May 16, 2005 among SRT, CTR, the Lending Debentureholders as defined therein, EDC and IADB, as amended by a letter agreement dated July 19, 2005, and as may be
further amended from time to time by an agreement in writing between the Parties; 

"Rights Offering" has the meaning ascribed to that term in Section 16 of the Restructuring Term Sheet; 

"Security" means the ECF Security and/or the Convertible Debenture Security and/or the CTR Guarantee Security, as the context may require; 

"SRT" means SR Telecom Inc.; 

"Subordinate Creditors" means (a) the Convertible Debentureholders, and (b) the CTR Lenders in their capacity as Creditors of SRT; 

"Subordinated Debt" means all indebtedness and obligations of CTR to SRT and Chilean Holdco presently and hereafter existing and all interest and
premiums, if any, thereon and other amounts payable in respect thereof, in respect of: (i) certain amounts in connection with previous intercompany loans and intercompany receivables made
and/or delivered by SRT and by Chilean Holdco to CTR in the aggregate total amount as of the date hereof of US$59,407,885 and (ii) the indebtedness of CTR from time to time to SRT and Chilean
Holdco for future intercompany loans made from SRT or Chilean Holdco to CTR; 

"Subordination Pledge" means the agreements listed in Schedule "E", together with any permitted amendments and
supplemental agreements from time to time; 

"Support Agreement" means the agreement listed in Schedule "F", together with any permitted amendments and
supplemental agreements from time to time; 

"Trust Indenture" means the trust indenture between the Trustees and SRT dated August 22, 2005, providing for the issuance by SRT of the
Convertible Debentures and the PIK Debentures, and further designating the Canadian Trustee to act as secured party under the Convertible Debenture Security; 

"Trustees" means the Canadian Trustee and the U.S. Trustee, and "Trustee" means either of them,
as the context may require; and 

"U.S. Trustee" means Manufacturers and Traders Trust Company, as a Trustee under the Trust Indenture, or any successor or assign duly appointed
under the Trust Indenture. 

All
capitalized terms used in this Inter-Creditor Agreement and not otherwise defined in this Inter-Creditor Agreement shall have the meanings ascribed thereto in the ECF Credit Agreement as at
May 19, 2005. Unless otherwise specified, references in this Inter-Creditor Agreement to a Section, Subsection, Paragraph or Schedule refer to such Section, Subsection, Paragraph or Schedule as
contained in, or attached to, this Inter-Creditor Agreement. References herein to any statute or any provision thereof include such statute or 

7

 

provision
as amended, revised, re-enacted and/or consolidated from time to time and any successor statute thereto. 

The
recitals to this Inter-Creditor Agreement shall be an integral part of this Inter-Creditor Agreement and shall be construed as representations by each of the Parties to whom such recitals relate. 

Persons
who are party to or affected by this Inter-Creditor Agreement may be affected in more than one capacity. A Person will be entitled to the benefit of this Inter-Creditor Agreement in each such
capacity. Any action taken by a Person in one capacity will not affect such Person in any other capacity, unless the Person expressly agrees in writing. 

2.     Restructuring Term Sheet  

This
Inter-Creditor Agreement does not replace, vary, supersede, or revoke the Restructuring Term Sheet, which continues in full force and effect between the Parties. This Inter-Creditor Agreement
shall be interpreted and shall be read in the context that it is intended as a companion agreement to the Restructuring Term Sheet, to more fully set out certain terms, rights and obligations between
the Parties with respect to those provisions of the Restructuring Term Sheet which address certain particular issues between the Creditors. It is understood and agreed that the Restructuring Term
Sheet addresses issues in addition to those addressed in this Inter-Creditor Agreement, including, without limitation, the mutual non-admission provisions set out in
Section 24 of the Restructuring Term Sheet. In the case of any direct conflict or inconsistency between the provisions of the Restructuring Term Sheet dealing with
the issues more specifically addressed in this Inter-Creditor Agreement, and the provisions of this Inter-Creditor Agreement, the provisions of this Inter-Creditor Agreement shall govern and be
paramount. 

3.     Consent  

Each
of the Parties hereby consents to the creation, issue, execution, delivery, priority, validity, registration, filing, existence and perfection of the Credit Documents, and agrees: (i) that
the creation, issue, execution, delivery, priority, validity, registration, filing, existence and perfection of the same shall not constitute an Event of Default under any of the Credit Documents; and
(ii) not to contest, challenge or seek to avoid (or to support any Person that contests, challenges or seeks to avoid) the creation, issue, execution, delivery, priority, validity,
registration, filing, existence, perfection, extent and enforceability of the Credit Documents. 

4.     Subordination and Postponement  

	(a)
	The
Trustees hereby covenant and agree in favour of the ECF Lenders, subject to the provisions of Sections 6, 8,
and 9, that: (i) all claims, rights, liens, charges, pledges, hypothecs, security interests and other security agreements of any nature or kind now or
hereafter granted by SRT under the Convertible Debenture Security are hereby postponed and subordinated fully, completely and in all respects by the Trustees to the claims, rights, liens, charges,
pledges, hypothecs, security interests and other security agreements of any nature or kind now or hereafter granted by SRT under the ECF Security; and (ii) the payment and performance of the
Convertible Debenture Obligations is hereby deferred and postponed fully, completely and in all respects to the prior payment and performance in full of the ECF Obligations.

	(b)
	The
CTR Lenders hereby covenant and agree in favour of the ECF Lenders, subject to the provisions of Sections 7,
8 and 9, that: (i) all claims, rights, liens, charges, pledges, hypothecs, security interests and other security agreements of
any nature or kind now or hereafter granted by SRT under the CTR Guarantee Security are hereby postponed and subordinated fully, completely and in all respects by the CTR Lenders to the claims,
rights, liens, charges, pledges, hypothecs, security interests and other security agreements of any nature or kind now or hereafter granted by SRT under the ECF Security; (ii) prior to expiry
of the CTR Lenders' Standstill Period, the CTR Lenders may not demand, request, enforce or accept payment by SRT of the CTR Guarantee, and (iii) any payment due to the CTR Lenders from Proceeds
shall be subordinated in accordance with the payment provisions of Section 10. 

8

  

	(c)
	SRT
acknowledges notice of and agrees to the subordination and postponement obligations and agreements described in
Sections 4(a) and 4(b) above and Section 4(d) below.

	(d)
	Each
of the Agent, the ECF Lenders and the Trustees hereby covenant and agree in favour of the CTR Lenders that all claims, rights, liens, charges, pledges, hypothecs, security
interests and other security agreements of any nature or kind now or hereafter granted by SRT and/or Chilean Holdco under the ECF Security or the Convertible Debenture Security, as the case may be,
are hereby postponed and subordinated fully, completely and in all respects by each of the Agent, the ECF Lenders and the Trustees, respectively, to the claims, rights, liens, charges, pledges,
hypothecs, security interests and other security agreements of any nature or kind now or hereafter granted by SRT and Chilean Holdco under the Subordination Pledge, but only with respect to the CTR
Lenders Pledged Collateral. 

5.     Appointment of Payment Agent  

        Each of ECF Lenders, the Trustees, the CTR Lenders and SRT hereby appoints BNY Trust Company of Canada as the Payment Agent under this Inter-Creditor Agreement,
to perform the following duties with respect to collection and distribution of funds: 

	(a)
	collection
of:

	(i)
	all
Proceeds;

	(ii)
	Collateral
Sale Proceeds;

	(iii)
	50%
of the proceeds of the Rights Offering in excess of Cdn$25,000,000 (if any);

	(iv)
	funds
payable by SRT for and related to any voluntary redemption of the Convertible Debentures;

	(v)
	funds
payable by SRT for and related to any offer to redeem the Convertible Debentures upon a change of Control of SRT; and

	(vi)
	funds
payable by SRT for and related to any proposed cash payments of interest or principal on the Convertible Debentures (and companion payments against the CTR
Guarantee), 

For
certainty, the Payment Agent shall not collect the fees payable, or PIK Debentures issued, pursuant to the Trust Indenture, or the scheduled payments of interest under the 8.15% Debentures, which
amounts shall be paid by SRT to the Trustees; 

	(b)
	distribution
of:

	(i)
	any
Proceeds on the terms of Section 10;

	(ii)
	any
Collateral Sale Proceeds to ECF Obligations then due and payable and if there are no such ECF Obligations then due and payable, such funds shall be returned to SRT;

	(iii)
	the
proceeds of any Rights Offering on the terms of Section 15(e);

	(iv)
	the
funds related to and received on account of a voluntary redemption of the Convertible Debentures, if permitted to be paid under
Section 9(d);

	(v)
	the
funds related to and received on account of an offer to redeem the Convertible Debentures upon a change of Control of SRT, if permitted to be paid under
Section 9(d); and

	(vi)
	the
funds received on account of proposed cash payments of interest or principal on the Convertible Debentures (and companion payments against the CTR Guarantee)
on the terms of Section 15(f). 

Any
payments made by the Payment Agent to the CTR Lenders or the Trustees shall be deemed to have been made by SRT. 

9

 

6.     Enforcement by the Trustees  

	(a)
	Subject
to the provisions of Section 8, prior to the maturity date of the Convertible Debenture Obligations, the Trustees agree that they shall not take any steps
whatsoever to accelerate or enforce against SRT payment of the Convertible Debenture Obligations or to enforce the Convertible Debenture Security (including, without limitation, exercising rights of
set-off, commencing bankruptcy or insolvency proceedings, initiating an action, appointing or making application to a court for an order appointing an agent or a receiver or receiver
manager or by any other means of enforcement whatsoever), other than to enforce payment (without acceleration) of Permitted Payments, until:

	(i)
	the
ECF Obligations shall have been paid and performed in full; or

	(ii)
	the
ECF Lenders shall have consented in writing to the payment of the Convertible Debenture Obligations and/or the enforcement of the Convertible Debenture Security.

	(b)
	Nothing
in this Inter-Creditor Agreement or the Restructuring Term Sheet shall preclude the Trustees from:

	(i)
	filing
a proof of claim in connection with any bankruptcy or similar proceedings with respect to SRT or exercising any voting right or other privilege that they may have
from time to time in any of the actions or proceedings described in Section 14 provided any such exercise is in accordance with the terms of
Section 14;

	(ii)
	exercising,
or enforcing the exercise of, conversion rights set forth in the Convertible Debenture Documents; or

	(iii)
	demanding,
enforcing payment of, and receiving Permitted Payments. 

7.     Enforcement by CTR Lenders  

	(a)
	Prior
to the expiry of the CTR Lenders' Standstill Period, the CTR Lenders agree that they shall not take any steps whatsoever to accelerate or enforce against SRT payment of the CTR
Guarantee Obligations or CTR Obligations or to enforce the CTR Guarantee Security (including, without limitation, exercising rights of set-off, commencing bankruptcy or insolvency
proceedings, initiating an action, appointing or making application to a court for an order appointing an agent or a receiver or receiver manager or by any other means of enforcement whatsoever),
provided that nothing in this sentence shall affect the CTR Lenders' enforcement rights under the terms of the Support Agreement or the Subordination Pledge.

	(b)
	Notwithstanding
any term of this Inter-Creditor Agreement, following expiry of the CTR Lenders' Standstill Period, as between SRT and the CTR Lenders, the CTR Lenders may claim on or
enforce against SRT the CTR Guarantee Obligations or the CTR Guarantee Security in accordance with the provisions of the CTR Guarantee Documents, subject to
Sections 9 and 11.

	(c)
	Nothing
in this Inter-Creditor Agreement or the Restructuring Term Sheet shall preclude the CTR Lenders from:

	(i)
	filing
a proof of claim in connection with any bankruptcy or similar proceedings with respect to SRT or exercising any voting right or other privilege that they may have
from time to time in any of the actions or proceedings described in Section 14 provided any such exercise is in accordance with the terms of
Section 14;

	(ii)
	enforcing
any right arising under the Support Agreement, in the manner provided in Section 7(d) below, or the
Subordination Pledge;

	(iii)
	enforcing
the CTR Obligations against CTR; or

	(iv)
	demanding,
enforcing payment of, and receiving Permitted Payments.

	(d)
	Each
of the Parties acknowledges that the CTR Lenders have taken an assignment of CTR's contractual right to receive commercial support from SRT under the Support Agreement. If SRT 

10

 

defaults
under the Support Agreement, nothing in this Section 7 shall prevent the CTR Lenders from seeking to step into CTR's rights to enforce those rights by
making an unsecured contractual claim against SRT. 

	(e)
	Other
than those rights arising pursuant to the Support Agreement and the Subordination Pledge, no rights or claims shall be enforceable by the CTR Lenders against SRT or enforced
against or payable by SRT, until the expiry of the CTR Lenders' Standstill Period; provided that the CTR Lenders and SRT agree that during the
Subordination Period (as defined in the Restructuring Term Sheet), no payments shall be made by CTR on account of the Subordinated Debt and none of the CTR Lenders, SRT or Chilean Holdco shall
be entitled to receive any payments made on account of the Subordinated Debt. 

8.     Convertible Debentureholders' Standstill Period  

	(a)
	The
enforcement by any Creditor of any Credit Documents (including any power of attorney in this Inter-Creditor Agreement) is subject to
Section 11.

	(b)
	Notwithstanding
Sections 4 and 6(a), upon the occurrence of an Event of Default under the Convertible
Debenture Documents and for so long as such Event of Default is continuing, if, on the date which is 150 days after receipt by the ECF Lenders of a written Notice of such Event of Default (such
150 day period shall be a "Convertible Debentureholders' Standstill Period"), the Agent has not taken any steps to enforce payment of the ECF
Obligations or to enforce the ECF Security or to realize on the Collateral under the ECF Security, as the case may be, then the Trustees may, at any time after the termination or expiration of
Convertible Debentureholders' Standstill Period, subject to the terms of this Inter-Creditor Agreement, take action in accordance with the rights and remedies under the Convertible Debenture Documents
to enforce their rights, including issuance of a demand and acceleration in respect of the Convertible Debenture Obligations; provided that a Convertible Debentureholders' Standstill Period shall
terminate and expire upon any date that the CTR Lenders, subject to the terms of this Inter-Creditor Agreement, make a claim on or enforce against SRT the CTR Guarantee Obligations or the CTR
Guarantee Security in accordance with the provisions of the CTR Guarantee Documents. If, at any time after the termination or expiration of a Convertible Debentureholders' Standstill Period, the ECF
Lenders take any steps to demand, accelerate or enforce payment of the ECF Obligations or to enforce the ECF Security or to seek to realize upon the Collateral subject to the ECF Security, the ECF
Lenders may, by written Notice require the Trustees to suspend the exercise of their rights and remedies until the date upon which the ECF Obligations are indefeasibly repaid in full, and the Trustees
agree to act in accordance with such requirement for so long as the ECF Lenders are taking steps to demand, accelerate or enforce payment of the ECF Obligations or to enforce the ECF Security or to
seek to realize upon the Collateral subject to the ECF Security; provided that the reasonable out-of-pocket costs and
expenses incurred by the Trustees in connection with the exercise of their rights and remedies in accordance with this Section 8(b) prior to such
suspension shall be dealt with in accordance with Paragraph second of Section 10.

	(c)
	Notwithstanding
the terms of Section 8(b), the Parties agree that the Trustees and the CTR Lenders may issue a demand for payment and may
accelerate the payment of the Obligations due to the Convertible Debentureholders or the CTR Lenders, as the case may be, at any time on or after the date upon which the Agent accelerates the ECF
Obligations or commences proceedings to enforce the ECF Security. 

9.     Restricted Payments and Permitted Payments; Offer to Prepay  

	(a)
	Unless
SRT has received the prior written consent of the Agent, SRT may not make Restricted Payments, and none of CTR, the Convertible Debentureholders or the CTR Lenders may accept
Restricted Payments from SRT. 

11

 

	(b)
	Notwithstanding
Section 9(a), SRT may make the Permitted Payments described in Paragraph (a) of
the definition of Permitted Payments, and the Convertible Debentureholders may accept such Permitted Payments, provided that, in all such cases:

	(i)
	not
less than 10 Business Days prior to the proposed date of payment by SRT of such a Permitted Payment, the Agent shall receive written Notice from SRT of the
proposed Permitted Payment, as well as other information which the Agent may reasonably require;

	(ii)
	within
the said 10 Business Days Notice period, the Agent may assess whether the making of the proposed Permitted Payment would be in compliance with the
provisions of the ECF Documents and this Inter-Creditor Agreement. In making such an assessment the Agent may consider whether a Default or an Event of Default shall have occurred and be continuing
under the ECF Credit Agreement, and whether any Default or Event of Default would occur as a result of SRT making any such proposed Permitted Payment;

	(iii)
	if,
within the said 10 Business Days Notice period, the Agent objects in writing to the proposed Permitted Payment on the basis described in
Subsection (b)(ii) above, SRT shall not pay such Permitted Payment, and the other Parties to this Inter-Creditor Agreement shall not receive such Permitted
Payment; and

	(iv)
	if,
within the said 10 Business Days Notice period, the Agent consents to the proposed Permitted Payment, or fails to object in writing to the proposed Permitted
Payment, SRT may pay such Permitted Payment and the relevant Party or Parties to this Inter-Creditor Agreement may receive such Permitted Payment in the manner and to the extent set out in the
relevant Notice; provided further that nothing in this Section 9(b) shall require the Notice to or
consent of the Agent with respect to the application of payments and companion payments as between the Subordinate Creditors in accordance with
Sections 15(e) and 15(f).

	(c)
	Notwithstanding
Section 9(a), as between SRT, a Subordinate Creditor and CTR, a payment described in
Paragraph (b) of the definition of Permitted Payments may be made by SRT and the applicable Subordinate Creditor or CTR (only in respect of payments to be
made by SRT under Paragraph (b)(ii) of the definition of Permitted Payments) may accept such Permitted Payments at any time without the requirement of prior Notice to, or consent of the
Agent, however reserving the rights and remedies of the ECF Lenders if such payment (other than payments contemplated under
Paragraph (b)(i), (ii), (iii),
(v) and (ix) of the definition of Permitted Payments) should be contrary to the ECF Credit Documents.

	(d)
	A
proposed Permitted Payment on account of:

	(i)
	a
voluntary redemption by SRT of Convertible Debentures shall require a Notice to the Agent requesting a waiver from the Agent to allow payment of the amount payable as
a consequence thereof by SRT, which request shall be considered by the Agent in its sole and absolute discretion; provided that nothing in
this Section 9(d) shall require the Notice to or consent of the Agent with respect to the application of payments and companion payments by the Payment Agent
as between the Subordinate Creditors in accordance with Section 15(f); and

	(ii)
	an
offer by SRT to redeem the Convertible Debentures upon a change of Control, shall require the Notice and consent contemplated by
Section 9(b) and the compliance with the other provisions of Section 9(b), and compliance with
Section 1.16 of the ECF Credit Agreement. The Agent may accept an offer to prepay the ECF Obligations under Section 1.16 of the ECF Credit Agreement if, and
only if, the Agent consents to such proposed Permitted Payment (as a payment subsequent in priority to the ECF Obligations).

	(e)
	Neither
the CTR Lenders nor CTR may indirectly collect any payment which, if collected from SRT directly, would be a Restricted Payment; provided
that nothing in this Section 9(e) shall affect the rights of the CTR Lenders or CTR under the Support Agreement or the
Subordination Pledge. 

12

 

	(f)
	Upon
payment and satisfaction in full of the ECF Obligations, the definition of "Restricted Payment" in this Inter-Creditor Agreement shall be amended to conform to the meaning of
such term as set out within the Trust Indenture as at August 22, 2005.

	(g)
	The
Parties acknowledge that a payment by SRT under the CTR Guarantee (i) as between SRT and the ECF Lenders, is restricted under the ECF Documents as a "Restricted Payment"
thereunder at all times; and (ii) as between SRT and the CTR Lenders is permitted under the terms of the CTR Guarantee after the expiry of the CTR Lenders' Standstill Period.

	(h)
	Notwithstanding
the definition of "Restricted Payments" in this Inter-Creditor Agreement, the Parties agree that the conversion of Convertible Debentures to Common Shares of SRT
pursuant to the terms of the Trust Indenture shall not be restricted under this Inter-Creditor Agreement; and

	(i)
	Notwithstanding
any provision of any Credit Document:

	(i)
	any
objection by the Agent or the ECF Lenders under this Inter-Creditor Agreement to a Restricted Payment or any failure by the Agent or the ECF Lenders to give a
consent under this Inter-Creditor Agreement in respect of a Restricted Payment or a Permitted Payment requiring the consent of the Agent or the ECF Lenders under this Inter-Creditor Agreement shall
not, of itself, constitute a breach by SRT of any obligation or an event of failure or default under any such Credit Document; and

	(ii)
	any
such objection by the Agent or the ECF Lenders or failure to give a consent by the Agent or the ECF Lenders shall not, of itself, create any entitlement by any
Creditor to accelerate or enforce any obligations under their respective Credit Documents, 

provided
that this Section 9(i) shall not prevent the ECF Lenders, the Trustees or the CTR Lenders from accelerating or
enforcing any obligation if otherwise permitted under their respective Credit Documents including, without limitation, as a result of any action or inaction of SRT. 

10.   Proceeds of Collateral  

        Subject to Sections 5 and 11(b), prior to indefeasible payment and performance in
full of the ECF Obligations and the termination of the ECF Credit Agreement, all Proceeds shall be received by the Payment Agent and shall be applied as follows, in declining order of priority: 

first,
to costs and expenses of the Payment Agent; 

second,
to costs and expenses of the ECF Lenders (and to reasonable out-of-pocket costs and expenses incurred by the Trustees in connection
with the suspended exercise of their rights and remedies in accordance with Section 8(b), if any, on a  pro rata basis with the costs and expenses of the ECF Lenders); 

third,
to all amounts then due and payable to the ECF Lenders, other than principal and interest, in such order as the ECF Lenders may elect; 

fourth,
to default interest then due and payable to the ECF Lenders; 

fifth,
to interest then due and payable to the ECF Lenders; 

sixth,
to principal then due and payable to the ECF Lenders; 

seventh,
Pro Rata to the Convertible Debentureholders and the CTR Lenders (to be applied by the CTR Lenders in accordance with
Schedule B to the Restructuring Term Sheet) on account of costs, expenses, default interest, interest and principal then due and payable; and 

eighth,
the balance, if any, to SRT or as otherwise required by applicable law. 

Subject
to Sections 5 and 11(b), after indefeasible payment and performance in full of the ECF Obligations and the termination
of the ECF Credit Agreement, all Proceeds shall be received by the Payment Agent and shall be applied in accordance with Paragraphs first,
seventh and eighth above, in declining order of priority. 

13

 

11.   Multiple Enforcement Proceedings  

	(a)
	The
ECF Lenders, the Trustees, the CTR Lenders and SRT agree that, prior to an Event of Default under any Credit Documents, no Creditor may independently enforce a contractual power
of attorney from SRT, but the Payment Agent shall be the attorney in fact for all such Creditors and for SRT (and each of the ECF Lenders, the Trustees, the CTR Lenders and SRT hereby appoint
the Payment Agent as its respective attorney in fact) with respect to the exercise of any power of attorney set out in any Credit Documents, and the Payment Agent may exercise any such power of
attorney to collect and distribute funds as provided in Section 5.

	(b)
	Any
insurance proceeds received by SRT and/or any Creditor shall be treated as if such proceeds were of the same nature as the Collateral in respect of which they were received, and
shall either be applied to replace or repair such Collateral, or, if same is not practical or desirable in the reasonable judgment of SRT and the ECF Lenders, shall be delivered and/or endorsed by
such Party in favour of the Payment Agent and applied pursuant to Section 10.

	(c)
	Prior
to indefeasible payment and performance in full of the ECF Obligations and the termination of the ECF Credit Agreement, the ECF Lenders, being the senior ranking
creditors of SRT under this Inter-Creditor Agreement, may, subject to this Section 11:

	(i)
	assume
control of, or direct any or all actions taken or to be taken with respect to, any enforcement proceedings commenced by another Creditor (other than an
enforcement proceeding commenced by the CTR Lenders on the basis of, and in accordance with, their rights under the Support Agreement or the Subordination Pledge);

	(ii)
	subject
to Section 8(b), require another Creditor to suspend or discontinue any enforcement proceedings commenced by such
Creditor (other than an enforcement proceeding commenced by the CTR Lenders on the basis of, and in accordance with, their rights under the Support Agreement or the Subordination Pledge) so long as
any enforcement proceedings of the ECF Lenders are continuing; and

	(iii)
	commence
its own enforcement proceedings, 

and
each Party agrees to forthwith, from time to time, execute and do all deeds, documents and things which may be necessary or advisable, in the reasonable opinion of counsel to the ECF Lenders, to
give full effect to this Section 11(c). 

12.   Obligations Amongst the Creditors  

	(a)
	The
ECF Lenders, the Trustees, the CTR Lenders, SRT and CTR (to the extent it is a party to any documents described in this section) represents, covenants and agrees, for the
benefit of the ECF Lenders:

	(i)
	copies
of each of the Convertible Debenture Documents identified in Schedule "A", the CTR Loan Documents identified in
Schedule "B", the CTR Guarantee Documents identified in Schedule "B", the Support Agreement identified in
Schedule "F", and the Subordination Pledge identified in Schedule "E", have been delivered to the ECF Lenders, the
Trustees and/or the CTR Lenders (to the extent not a party thereto), and each such Party which is a party to such documents represents, covenants and agrees that such copies are full, accurate
and complete copies of all such documents as at the date hereof;

	(ii)
	if
any amendments or supplemental agreements to the documents described in Subsection (i) above are completed, the Parties
which are party to such documents shall forthwith deliver to the ECF Lenders, the Trustees and/or the CTR Lenders (to the extent not a party thereto), certified true copies of any such amended
or supplemental agreements, and will immediately upon the request of any Creditor provide details as to the outstanding amount of the associated Indebtedness or, in the case of the CTR Lenders, the
CTR Guarantee Maximum; 

14

 

	(iii)
	each
of SRT, the Trustees and the CTR Lenders may not:

	(A)
	obtain
additional Liens or otherwise make the Convertible Debenture Documents or the CTR Guarantee Documents, when considered on a per item basis or as a whole, materially less
favourable to SRT than is the case as at the date hereof, or make the position of the ECF Lenders as at the date hereof materially less favourable (except as adjusted in accordance herewith with the
prior written consent of the ECF Lenders);

	(B)
	subject
to the permitted issuance of PIK Debentures, make any new loans to SRT or readvance any of the existing loans made pursuant to the Convertible Debenture Documents or the CTR
Guarantee Documents (and, for greater certainty, the parties hereto agree that capitalizing interest, payment of default interest as permitted under the Restructuring Term Sheet and the Trust
Indenture and payment of permitted fees, shall not constitute new loans); or

	(C)
	shorten
any scheduled payment date, commitment reduction date or shorten the final maturity date of the Convertible Debenture Obligations or the expiry of the CTR Lenders' Standstill
Period or a Convertible Debentureholders' Standstill Period;

	(iv)
	until
the ECF Obligations shall have been indefeasibly paid and performed in full and the ECF Documents shall have been terminated, SRT shall not be required to act or
refrain from acting in any manner which would result in a Default or an Event of Default under the ECF Documents or a breach of the terms of this Inter-Creditor Agreement;
provided that nothing in this Section 12(a)(iv) shall prevent:

	(A)
	the
CTR Lenders from making a claim on or enforcing against SRT the CTR Guarantee Obligations or the CTR Guarantee Security in accordance with the terms of the CTR Guarantee Documents
following expiry of the CTR Lenders' Standstill Period; and

	(B)
	the
Trustees from making a claim on or enforcing against SRT the Convertible Debenture Obligations or the Convertible Debenture Security in accordance with the terms of the
Convertible Debenture Documents following expiry of the Convertible Debentureholders' Standstill Period;

	(v)
	the
ECF Lenders, the Trustees and the CTR Lenders recognize that the acceleration by one Creditor of the Obligations due to it from SRT, or the enforcement under its
Security, may result in cross-acceleration or cross-default of the Obligations of SRT to another Creditor, or the Security granted by SRT to another Creditor; and

	(vi)
	unless
the prior written consent of the ECF Lenders has been received, or unless specifically permitted under this Inter-Creditor Agreement or under the Restructuring
Term Sheet (including pursuant to the Rights Offering), the Trustees shall not accept voluntary redemption of any Convertible Debenture, nor the purchase of any Convertible Debenture by SRT for
cancellation under Article III of the Trust Indenture, but, for avoidance of doubt, this Subsection (vi) shall not prohibit (i) mandatory
redemption of the Convertible Debentures upon consummation of the Rights Offering, or (ii) conversion of the Convertible Debentures pursuant to the terms of the Trust Indenture.

	(b)
	SRT
and the ECF Lenders represent, covenant and agree, for the benefit of the Subordinate Creditors, that:

	(i)
	copies
of each of the ECF Documents identified in Schedule "C" have been delivered to each of the Trustees and CTR Lenders, and each
such Party which is a party to such documents represents, covenants and agrees that such copies are full, accurate and complete copies of all such documents as at the date hereof; and

	(ii)
	if
any amendments or supplemental agreements to the ECF Documents are completed, the Parties which are party to such documents shall forthwith deliver to each of the
Trustees and CTR Lenders, certified true copies of any such amendments or supplemental agreements, and will 

15

 

immediately
upon the request of any of the Trustees or the CTR Lenders provide details as to the outstanding amount of the associated Indebtedness. 

13.   ECF Lenders  

        The Trustees and the CTR Lenders agree that the ECF Lenders, in their sole and absolute discretion, and without diminishing the obligations of each of the
Trustees and the CTR Lenders under this Inter-Creditor Agreement, may: 

	(a)
	grant
time or other indulgences to SRT and any other Person or Persons now or hereafter liable to the ECF Lenders in respect of the payment of the ECF Obligations;

	(b)
	give
up, modify, vary, exchange, renew or abstain from taking advantage of the ECF Security in whole or in part and may discharge part or parts of or accept any composition or
arrangements or realize upon the ECF Security when and in such manner as the ECF Lenders may think expedient;

	(c)
	permit
SRT to refinance the ECF Obligations, provided that the principal amount of the refinanced ECF Obligations does not increase beyond the amount of US$39,625,000 (together with
any capitalized interest, loans or fees) provided for in the ECF Credit Agreement; and

	(d)
	except
as otherwise expressly provided in this Inter-Creditor Agreement, deal with SRT as they see fit in their sole and absolute discretion, 

and
in no such case shall the ECF Lenders be responsible to the Convertible Debentureholders or the CTR Lenders for any neglect or omission with respect to the ECF Security or any part thereof. 

14.   Liquidation, Dissolution, Bankruptcy, etc.  

	(a)
	In
the event of distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of SRT, or the
proceeds thereof, to creditors in connection with the bankruptcy, insolvency, liquidation or winding-up of SRT or in connection with any composition with creditors or scheme of arrangement
to which SRT is a party, the ECF Lenders shall be entitled to receive payment in full of the ECF Obligations before any of the Convertible Debentureholders or the CTR Lenders is entitled to receive
any direct or indirect payment from SRT or distribution of any cash or other assets of SRT on account of the Convertible Debenture Obligations (other than payments through the issuance of PIK
Debentures, and payments in the form of conversion of Convertible Debentures into Common Shares), the CTR Obligations or the CTR Guarantee Obligations. The ECF Lenders shall be entitled to receive
directly, for application in payment of such ECF Obligations (to the extent necessary to pay all ECF Obligations in full after giving effect to any substantially concurrent payment or
distribution to the ECF Lenders in respect of the ECF Obligations), any payment or distribution of any kind or character, whether in cash or other assets, which shall be payable or deliverable upon or
with respect to the Convertible Debenture Obligations, the CTR Obligations or the CTR Guarantee Obligations in violation of the preceding sentence. Without limitation, the ECF Lenders shall be
permitted to elect as between cash consideration and non-cash consideration in satisfaction of the ECF Obligations, and SRT and each of the CTR Lenders and the Trustees consents to any
such election by the ECF Lenders.

	(b)
	To
the extent that any payment of any Creditor's Obligations (whether by or on behalf of SRT, as Proceeds or enforcement of any right of set-off or otherwise) is declared
by a court of competent jurisdiction to be void or voidable (including, without limitation, as a consequence of being declared to be a fraudulent preference or otherwise preferential), or is set aside
or required to be paid to a trustee, receiver or other similar Person under any bankruptcy, insolvency, receivership or similar law, then if such payment is recoverable by, or paid over to, such
trustee, receiver or other Person, such Obligations or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred, and the
provisions of this Inter-Creditor Agreement shall continue to apply to such Obligations which are so reinstated. 

16

  

	(c)
	In
order to enable the ECF Lenders to enforce their respective rights under this Inter-Creditor Agreement in any of the actions or proceedings described in this
Section 14, upon the failure of the Trustees or the CTR Lenders to make and present on a timely basis a proof of claim against SRT on account of the Convertible
Debenture Obligations or the CTR Guarantee Obligations or other motion or pleading, as may be expedient or proper to establish the Convertible Debentureholders' and the CTR Lenders' entitlement to
payment of any Convertible Debenture Obligations or the CTR Guarantee Obligations, the ECF Lenders are hereby irrevocably authorized and empowered (until the ECF Obligations have been indefeasibly
paid and performed in full and the ECF Credit Agreement has been terminated), in their discretion and at SRT's sole expense, to make and present for and on behalf of the Convertible Debentureholders
and the CTR Lenders such proofs of claims or other motions or pleadings and to demand, receive and collect any and all dividends or other payments or disbursements made thereon in whatever form the
same may be paid or issued and to apply the same on account of the ECF Obligations. The Trustees and the CTR Lenders hereby covenant and agree not to exercise any voting right or other privilege that
they may have from time to time in any of the actions or proceedings described in this Section 14 in favour of any plan, proposal, compromise, arrangement or
similar transaction that does not provide for the payment of the ECF Obligations prior to the Convertible Debenture Obligations and the CTR Guarantee Obligations or which otherwise may defeat,
restrict or impair: (i) the right of the ECF Lenders to receive payments and distributions otherwise payable or deliverable upon or with respect to the Convertible Debenture Obligations or the
CTR Guarantee Obligations in violation of Paragraph (a) of this Section 14 so long as any ECF Obligations remains
outstanding; or (ii) the obligation of the Convertible Debentureholders and the CTR Lenders to receive, hold in trust, and pay over to the ECF Lenders certain payments and distributions as
contemplated by this Section 14. If and to the extent that amounts payable to the Subordinate Creditors are applied on account of the ECF Obligations in accordance
with this Section 14, the Subordinate Creditors shall be subrogated to the rights of the ECF Lenders as against SRT; provided
that no Subordinate Creditor shall have any right to be subrogated to the rights of the ECF Lenders until the ECF Obligations have been indefeasibly paid and performed in
full and the ECF Credit Agreement has been terminated. 

15.   Additional Rights Between Convertible Debentureholders and the CTR Lenders  

        The Trustees and the CTR Lenders agree that: 

	(a)
	recognizing
that the CTR Guarantee Maximum may reduce from time to time pursuant to the terms of the CTR Guarantee and the Restructuring Term Sheet, if the CTR Guarantee Maximum is
reduced to nil, the CTR Guarantee will be released (subject to the reinstatement provisions set out in Section 2.03 of the CTR Guarantee and
Section 14(b)) and the CTR Guarantee Security shall be released and terminated (subject to the reinstatement provisions set out in
Section 8 of the security agreement listed as item 2 under the heading "CTR Guarantee Documents" in Schedule "B"), in
each case without any requirement for further action by the CTR Lenders, and any registrations related thereto shall be promptly discharged by the CTR Lenders, failing which such registrations may be
discharged by SRT or by the ECF Lenders or the Trustees as agents for the CTR Lenders;

	(b)
	although
the remedies and claims of the CTR Lenders against CTR will be otherwise unaffected, the CTR Lenders shall provide SRT from time to time with Notice of any default and/or
intended enforcement with respect to the CTR Obligations, and SRT shall thereafter have an opportunity to cure any default (other than the defaults relating to bankruptcy filings and actions taken to
challenge the validity of the CTR Loan Documents) for 10 Business Days before any such enforcement by the CTR Lenders against CTR commences;

	(c)
	except
as provided in Sections 4, 8 and 9 of this Inter-Creditor Agreement, the
CTR Guarantee Obligations and the Convertible Debenture Obligations shall rank pari passu with each other as to priority of payment;

	(d)
	the
Subordinate Creditors' rights under the CTR Guarantee Documents, and under the Convertible Debenture Documents, shall rank  pari passu with each other as to priority of security; 

17

 

	(e)
	in
the event that SRT proceeds with the Rights Offering and such Rights Offering raises in excess of Cdn$25,000,000, the first Cdn$25,000,000 so raised shall be retained by SRT for
working capital and general corporate purposes, 50% of the amount so raised in excess of Cdn$25,000,000 shall be distributed to SRT, and 50% of the amount so raised in excess of Cdn$25,000,000 shall
be paid to the Payment Agent. Within five (5) Business Days of the receipt of such funds by the Payment Agent, the Payment Agent shall distribute same in accordance with the formula in the
definition of "Extraordinary Pro Rata" and such funds shall be applied by the Trustees and the CTR Lenders at a redemption/reduction price of 95% of the principal amount of each such
Subordinate Creditor's Obligations plus any accrued and unpaid interest thereon and to the extent that amounts referred to in this Section 15(e) would, according to
Schedule B to the Restructuring Term Sheet be applied on account of principal, they will be so applied by the CTR Lenders, and the CTR Guarantee Maximum
Amount shall be reduced permanently by such amounts and such amounts shall be deemed to have been paid pursuant to the CTR Guarantee. Notwithstanding the prior sentence, not more than the amount set
out in Section 3.1(a) of the Trust Indenture shall be required to be paid to the Convertible Debentureholders (and in the event that the Convertible
Debentureholders receive less than their pro rata share in accordance with such limitation, the CTR Lenders shall not be prevented from receiving their pro rata share in accordance with
the provisions of this Section 15(e)), and not more than the CTR Guarantee Maximum may be so paid to the CTR Lenders (and in the event that the CTR
Lenders receive less than their pro rata share in accordance with such limitation, the Convertible Debentureholders shall not be prevented from receiving their pro rata share in
accordance with the provisions of this Section 15(e)). Should the Payment Agent retain any funds after the distributions contemplated above, any such funds shall be
distributed to SRT; and

	(f)
	in
the event that, at any time after the date hereof, SRT proposes to make a cash payment of principal or interest to the Convertible Debentureholders (but, for certainty, not
including the issue of a PIK Debenture or a payment as a consequence of a Rights Offering) where permitted under the terms of Sections 9(a)
and (b), SRT shall pay such amount to the Payment Agent together with the amount calculated as the "L Pro Rata
Share" in the formula in the definition of "Extraordinary Pro Rata" using the amount to be paid to the Convertible
Debentureholders as the "CD Pro Rata Share", and the Payment Agent shall pay such amounts to the Trustees and the CTR Lenders within five
(5) Business Days of receipt of such funds, and to the extent that amounts referred to in this Section 15(f) would, according to
Schedule B to the Restructuring Term Sheet be applied on account of principal, they will be so applied by the CTR Lenders, and the CTR Guarantee Maximum
Amount shall be reduced permanently by such amounts and such amounts shall be deemed to have been paid pursuant to the CTR Guarantee. 

16.   Payments Received in Contravention of this Agreement  

	(a)
	Except
for Permitted Payments which are properly made and received pursuant to the terms of this Inter-Creditor Agreement, if, prior to the indefeasible repayment and performance in
full of the ECF Obligations, the Payment Agent, the Trustees, CTR or the CTR Lenders shall receive any payment from or distribution of assets of SRT or on account of the Convertible Debenture
Obligations or the CTR Guarantee Obligations (including, without limitation, any Proceeds or prepayments), then the Payment Agent, the Trustees, CTR or the CTR Lenders shall, and SRT shall cause CTR
to, receive and hold such payment or distribution in trust for the benefit of the ECF Lenders and promptly pay the same over or deliver the same to the ECF Lenders in precisely the form received by
the Payment Agent, the Trustees, CTR or the CTR Lenders or such other Person on its behalf, (except for any necessary endorsement or assignment) and such payment or distribution may be applied by the
ECF Lenders to the repayment of the ECF Obligations then due and payable, in such manner as the ECF Lenders see fit in their sole discretion, and any surplus thereafter shall be allocated in the same
priority as is set out in Section 10.

	(b)
	For
greater certainty, SRT and each of the Trustees and the CTR Lenders agree that, if all or any part of any payment made on account of the ECF Obligations, or due by SRT to the ECF
Lenders, is recovered by a Subordinate Creditor as a preference, fraudulent transfer or similar payment under any 

18

 

insolvency
legislation or other law, any payment or distribution received by such Subordinate Creditor on the Subordinate Obligations (other than a Permitted Payment) will be deemed to have been
received by such Subordinate Creditor in trust for the ECF Lenders (and not received for the account of such Subordinate Creditor) and will promptly be paid over to the ECF Lenders until the
satisfaction in full in cash (unless the ECF Lenders have agreed to non-cash consideration in satisfaction of payment in full of the ECF Obligations) of all ECF Obligations then due and
payable, and any surplus thereafter shall be allocated in the same priority as is set out in Section 10. 

	(c)
	Nothing
contained herein shall limit the right of the Subordinate Creditors to receive and retain, for their own benefit, Permitted Payments where permitted under this Inter-Creditor
Agreement. 

17.   No Release  

        This Inter-Creditor Agreement shall remain in full force and effect without regard to, and the obligations of the Parties under this Inter-Creditor Agreement
shall not be released or otherwise affected or impaired by: 

	(a)
	any
exercise or non-exercise by the ECF Lenders of any right, remedy, power or privilege in the ECF Documents;

	(b)
	any
waiver, consent, extension, indulgence or other action, inaction or omission by the ECF Lenders under or in respect of this Inter-Creditor Agreement or the ECF Documents;

	(c)
	any
irregularity or other defect in the Credit Documents;

	(d)
	the
lack of authority or revocation thereof by any other Party;

	(e)
	the
failure of the ECF Lenders to file or enforce a claim of any kind;

	(f)
	any
defence based upon an election of remedies by the ECF Lenders which destroys or otherwise impairs the subrogation rights of the Convertible Debentureholders or the CTR Lenders
under this Inter-Creditor Agreement or the right of the Convertible Debentureholders or the CTR Lenders to proceed against SRT for reimbursement, or both;

	(g)
	any
merger, consolidation or amalgamation of any of the Convertible Debentureholders, the CTR Lenders, the ECF Lenders or SRT into or with any other Person;

	(h)
	any
insolvency, bankruptcy, liquidation, reorganization, arrangement, composition, winding-up, dissolution or similar proceeding involving or affecting any of the
Convertible Debentureholders, the CTR Lenders or SRT;

	(i)
	any
irregularity or defect in the creation, grant, execution, delivery, validity or enforceability of the Security;

	(j)
	attachment
or perfection of the encumbrances, liens and charges under the Security;

	(k)
	registration
of or in respect of the Security or the filing of financing statements or other instruments and documents with respect thereto, and the Parties acknowledge and agree that
the Security shall be encumbrances, liens and charges upon the assets of SRT in the same manner and to the same extent as if they had been executed, delivered, registered and/or filed for the purpose
of perfecting the security represented thereby and/or crystallized in the order of the respective priorities as indicated in Section 4;

	(l)
	default
in respect of, or crystallization of any encumbrances, liens and charges under, the Security;

	(m)
	any
notice to or demand upon SRT or to any other Person (or the failure to give any notice or demand);

	(n)
	any
loan(s), advance or advances of money or money's worth made to SRT; or

	(o)
	delivery
to SRT of any property, assets or undertaking subject to the Security. 

19

 

18.   Sales of Collateral in the Province of Quebec  

        In the event that any of the Creditors or any of the Parties becomes entitled to enforce and realize upon its Security in accordance with the terms, conditions
and provisions of this Inter-Creditor Agreement and any of the Collateral situated in the Province of Quebec is sold and/or otherwise disposed of: 

	(a)
	by
such Creditor or such Party pursuant to its exercise of any hypothecary rights arising from its Security in the Province of Quebec; or

	(b)
	by
any bankruptcy trustee, proposal trustee, monitor, receiver, interim receiver, liquidator, sequestrator or any other similar appointee, acting with the consent of such Creditor or
Party, 

then
such Collateral so sold and/or otherwise disposed of shall be deemed, for all purposes, to have been sold and/or otherwise disposed of free and clear of all hypothecs, pledges and/or security
interests of all of the other Creditors and all of the other Parties and such other Creditors and other Parties shall be deemed, for all purposes, to have released and discharged their respective
hypothecs, pledges and/or security interests from and against such Collateral so sold and/or otherwise disposed of, subject always to the entitlement of such other Creditors and other Parties to share
and participate in the resulting Proceeds in accordance with the terms, conditions and provisions of this Inter-Creditor Agreement. 

19.   No Debtor Rights  

        Nothing contained in this Inter-Creditor Agreement shall confer any rights or benefits on either SRT or CTR. 

20.   No Further Creditor Rights  

        As between SRT and each of the Creditors, nothing set out in this Inter-Creditor Agreement shall confer in favour of any such Creditor greater rights than, or
additional rights to, those rights granted by SRT in favour of such Creditor pursuant to the applicable Credit Documents. 

21.   Further Assurances  

        The Parties shall forthwith, and from time to time, execute and do all deeds, documents and things which may be necessary or advisable, in the reasonable opinion
of counsel to the ECF Lenders, to give full effect to the subordination contained in this Inter-Creditor Agreement and the rights and remedies of the ECF Lenders under this Inter-Creditor Agreement,
in accordance with the intent of this Inter-Creditor Agreement. 

22.   Successors and Assigns  

	(a)
	This
Inter-Creditor Agreement is binding upon each of the Parties and their respective successors and assigns and, subject to Subsection 22(b)
below, shall enure to the benefit of each of the Parties, and their respective successors and permitted assigns.

	(b)
	None
of the Parties shall be entitled to sell, assign, transfer or encumber all or any part of its rights and obligations under this Inter-Creditor Agreement or the ECF Obligations or
the Convertible Debenture Obligations or the CTR Guarantee Obligations or (but only until the end of the CTR Lenders' Standstill Period) the CTR Obligations unless, prior to entering into such
sale, assignment or transfer, the proposed assignor or transferor and the proposed assignee or transferee, as applicable, enters into a written agreement in substantially the form of the Intercreditor
Agreement Assignment and Assumption Agreement attached as Schedule "D". For greater certainty, the prior sentence does not apply to trades by individual
Convertible Debentureholders of Convertible Debentures in the ordinary course, nor to assignments of commitments or other interests of the ECF Lenders where contemplated under the ECF Credit
Agreement. Without limiting the generality of the foregoing, each of the Parties agrees to cause each document, agreement and instrument (to the extent it is a party thereto) 

20

 

evidencing
the ECF Obligations, the Convertible Debenture Obligations or the CTR Guarantee Obligations to be endorsed with a statement/legend (completed as required) substantially as follows: 

"This
[document, agreement, instrument] is subject to the terms and conditions of an Inter-Creditor Agreement dated
August 22, 2005, between SR Telecom Inc., BNY Trust Company of Canada, as Agent, BNY Trust Company of Canada as Payment Agent, Computershare Trust Company of Canada and Manufacturers and
Traders Trust Company, as Trustees, Export Development Canada, Inter-American Development Bank and Comunicación y Telefonia, Rural S.A."; 

	(c)
	Except
in accordance with Subsections 22(a) and 22(b) above, third parties shall have no rights or benefits
under this Inter-Creditor Agreement. 

23.   Governing Law  

        The validity, interpretation and enforcement of this Inter-Creditor Agreement and any dispute arising out of the relationship between the parties hereto, whether
in contract, tort, equity or otherwise, shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. Notwithstanding the foregoing, the enforcement of
this Inter-Creditor Agreement in respect of any Collateral situated in the Province of Quebec shall be subject to and governed by the laws of the Province of Quebec and the federal laws of Canada
applicable therein. 

24.   Attornment  

        The Parties irrevocably consent and submit to the non-exclusive jurisdiction of the Ontario Court (General Division) and the courts of the Province of
Quebec and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Inter-Creditor
Agreement or in any way connected with or related or incidental to the dealings of the Parties in respect of this Inter-Creditor Agreement or the transactions related hereto, in each case whether now
existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except
that each of the ECF Lenders, the Trustees and the CTR Lenders shall have the right to bring any action or proceeding against SRT or its property in the courts of any other jurisdiction which they
deem necessary or appropriate in order to realize on the Collateral or to otherwise enforce their rights against SRT or its property). 

25.   Acknowledgement  

        SRT hereby acknowledges receipt of a copy of this Inter-Creditor Agreement and accepts and further agrees with the other Parties to give effect to all of the
provisions of this Inter-Creditor Agreement. 

26.   Termination  

	(a)
	Subject
to Section 14(b), upon indefeasible payment and performance in full of the ECF Obligations:

	(i)
	the
Agent shall transfer and deliver to the Payment Agent any share certificates pledged by SRT or other Collateral for which its security interest was perfected by
possession, thereafter to be held by the Payment Agent as security for the Convertible Debenture Obligations and also as collateral agent for the CTR Lenders with respect to the CTR Guarantee
Obligations, subject to the terms of this Inter-Creditor Agreement; and

	(ii)
	the
provisions of this Inter-Creditor Agreement relating to consent by or notice to the Agent shall be of no force or effect and the remaining provisions shall apply to
the Trustees, the CTR Lenders, SRT and CTR mutatis mutandis.

	(b)
	Subject
to Section 14(b), this Inter-Creditor Agreement shall terminate upon the full and indefeasible payment and performance in full of all of
the ECF Obligations, the Convertible Debenture Obligations and the CTR Guarantee Obligations. 

21

  

	(c)
	Subject
to Section 14(b) and save and except for Section 7(a), with respect to each of the ECF Lenders, the
Convertible Debentureholders and the CTR Lenders, the rights and obligations of each such Person under this Inter-Creditor Agreement shall expire upon payment and satisfaction of all Obligations owing
to such Person, and subject to Section 26(a) above, the release and discharge of all its Security, provided that no Default or Event of
Default then exists under this Inter-Creditor Agreement or its Credit Documents.

	(d)
	In
the event that the transactions contemplated by the closing agenda entitled "SR Telecom Inc. Restructuring Stage II: Exchange of 8.15% Debentures due 2005 for 10%
Secured Debentures due 2011" dated August [    •    ], 2005 do not close on August 24,
2005 or a later date agreed to in writing by the Parties (not to be later than August 31, 2005), the Convertible Debenture Security and the CTR Guarantee Security shall be released and
terminated in each case without any requirement for further action by the Subordinate Creditors, and any registrations related thereto shall be promptly discharged by the applicable Subordinate
Creditor, failing which such registrations may be discharged by SRT or by the ECF Lenders as agents for the applicable Subordinate Creditor. 

27.   Counterparts  

        This Inter-Creditor Agreement may be executed in one or more counterparts, by original or facsimile signature, each of which when so executed shall be deemed to
be an original and such counterparts together shall constitute one and the same Inter-Creditor Agreement. 

28.   Most Favoured Creditor  

        SRT hereby agrees that, subsequent to the date of this Inter-Creditor Agreement, save and except for the unrestricted right to enter into agreements with the ECF
Lenders, it shall not enter into any standstill, forbearance or restructuring agreement (of any type or nature) in favour of the Convertible Debentureholders, the CTR Lenders (as secured
parties under the CTR Guarantee Documents), CTR or any third party creditor which contains any terms, provisions or treatment that are more favourable to any such creditor, in the reasonable opinion
of the Creditor not being offered such terms, provisions or treatment, than the terms of the Convertible Debenture Documents and the CTR Guarantee Documents as at the date
of this Inter-Creditor Agreement, as identified in Schedule "A" and "B" respectively, unless each Creditor, or the other
Creditor, as the case may be, shall be entitled to be accorded substantially similar benefits of any such terms, provisions or treatment, and SRT shall be required immediately to take any and all
actions necessary to accord them substantially similar benefits of such terms, provisions or treatment, including, without limitation, revisions to the Convertible Debenture Documents or the CTR
Guarantee Documents, as applicable. SRT's obligations under this Inter-Creditor Agreement shall not be exhausted by any one exercise of this clause, but shall survive for the term of this
Inter-Creditor Agreement. 

29.   Notices  

	(a)
	The
ECF Lenders, the Trustees and the CTR Lenders agree to provide to each other any written Notice of any Default or Event of Default under their respective Indebtedness or Security.
However, nothing shall require any Party to declare a default or to take any action (including, without limitation, acceleration) as a result thereof.

	(b)
	The
ECF Lenders, the Trustees and the CTR Lenders agree to provide each other with written Notice of any acceleration or other enforcement action taken under the terms of their
respective Indebtedness or Security at the same time such Notice is provided to SRT. However, nothing shall require any Party to declare a default or to take any action (including, without limitation,
acceleration) as a result thereof.

	(c)
	SRT
agrees to provide the ECF Lenders, the Trustees and the CTR Lenders, as applicable, with any written Notice received from any Creditor of any Default, Event of Default,
acceleration or other enforcement action immediately upon receipt (including, without limitation, any Notice received pursuant to Section 15(b). 

22

 

	(d)
	Except
as otherwise provided in this Inter-Creditor Agreement, whenever it is provided in this Inter-Creditor Agreement that any notice, demand, request, consent, approval,
declaration or other communication (a "Notice") shall or may be given or delivered to or served upon any of the Parties by any other Parties, or
whenever any of the Parties desires to give, deliver or serve upon any other Parties any Notice with respect to this Inter-Creditor Agreement, each such Notice shall be in writing and shall be deemed
to have been validly given, delivered or served (1) upon the earlier of actual receipt and three (3) Business Days after deposit with Canada Post or US Mail, registered mail, return
receipt requested, with proper postage prepaid, (2) upon transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or Canada Post or US Mail as otherwise provided in this Section 29), (3) one (1) Business Day after deposit
for next day delivery with a reputable overnight courier with all charges prepaid or (4) when delivered, if hand-delivered by messenger, all of which shall be addressed to the Party
to be notified and sent to the address or facsimile number indicated in Schedule "G" or to such other address (or facsimile number) as may be
substituted by Notice given as provided in this Section 29. The giving of any Notice required under this Inter-Creditor Agreement may be waived in writing by the
Party entitled to receive such Notice. Failure or delay in delivering copies of any Notice to any Party designated in Schedule "G" to receive copies shall in
no way adversely affect the effectiveness of such Notice. 

30.   Role of Agents and Trustees  

	(a)
	BNY
Trust Company of Canada, in its capacity as Agent, has entered into this Inter-Creditor Agreement as collateral agent and administrative agent for the ECF Lenders, with the
consent of the Requisite Lenders under the ECF Credit Agreement, and each of the ECF Lenders will be bound to the terms of this Inter-Creditor Agreement as if it was a signatory hereto. In granting or
withholding consents under this Inter-Creditor Agreement or otherwise exercising its discretion, the Agent shall seek the instructions and approval of the ECF Lenders as and when required by the ECF
Documents.

	(b)
	Computershare
Trust Company of Canada has entered into this Inter-Creditor Agreement as Canadian Trustee and as collateral agent and administrative agent for the Convertible
Debentureholders and Manufacturers and Traders Trust Company has entered into this Inter-Creditor Agreement as U.S. Trustee for the Convertible Debentureholders, in each case as provided in the
Trust Indenture. Computershare Trust Company of Canada, as successor to Montreal Trust Company of Canada, will also continue as trustee for the holders of the 8.15% Debentures. This Inter-Creditor
Agreement does not create any rights or obligations with respect to the 8.15% Debentures or the holders thereof.

	(c)
	BNY
Trust Company of Canada in its capacity as Payment Agent, has entered into this Inter-Creditor Agreement as Payment Agent for the Creditors on the terms described in
Section 5. The duties of the Payment Agent are non-discretionary and if the Payment Agent is required to exercise any discretion in the exercise of its
duties, it may refuse to act unless and until it receives the consent of all the ECF Lenders, the Trustees and the CTR Lenders, or receives advice satisfactory to the Payment Agent as to the proper
exercise of its duties.

	(d)
	Each
of the ECF Lenders, the Trustees and the CTR Lenders shall provide to the Payment Agent an incumbency certificate setting out the names and sample signatures of Persons
authorized to give instructions on their behalf to the Payment Agent under this Inter-Creditor Agreement. The Payment Agent shall be entitled to rely on such incumbency certificates until a revised
certificate is provided to it under this Inter-Creditor Agreement. The Payment Agent shall be entitled to refuse to act upon any instructions given by a Party which are signed by any Person other than
a Person described in the incumbency certificate provided to it pursuant to this Section 30(d). The Payment Agent shall be entitled to rely on, and act upon, any
direction, order, instruction, notice or other communication provided to it under this Inter-Creditor Agreement which is sent to it by facsimile transmission. 

23

 

31.   Language  

        The parties hereby confirm their express wish that this Inter-Creditor Agreement and all related documents be drawn up in English, but without prejudice to any
such documents which may from time to time be drawn up in French only, or in both English and French; 

        Les
parties confirment leur volonté expresse que la présente entente et tous les documents connexes soient rédigés en anglais,
mais sans préjudice cependant à tous tels documents qui pourront à l'occasion être rédigés en
français seulement, ou à la fois en anglais et en français. 

32.   CTR Lenders  

        To the extent anything in this Inter-Creditor Agreement purports to affect the rights of the CTR Lenders, it shall also equally and similarly affect any and all
rights (including rights of CTR) they might purport to be able to exercise, including, without limitation, derivately through CTR or as secured creditors of CTR; the intention being that the CTR
Lenders not be able to do indirectly that which they are agreeing not to do directly. Nothing in this paragraph shall have any effect on the rights of CTR or the CTR Lenders pursuant to the Support
Agreement. 

33.   Registrations  

        The ECF Lenders, the Trustees and the CTR Lenders confirm that each has made only the registrations and filings in respect of its Security, the Support Agreement
and the Subordination Pledge as set forth on the applicable Schedules to this Inter-Creditor Agreement. 

        [SIGNATURE PAGES FOLLOW]

24

        IN WITNESS WHEREOF the Parties hereto have executed this Inter-Creditor Agreement as of the date first written above. 

	 	 	SR TELECOM INC.
	
 	
 	

Per:	

/s/  WILLIAM AZIZ      
 Name: William Aziz

Title: Acting CEO
	
 	
 	

Per:	

/s/  DAVID L. ADAMS      
 Name: David L. Adams

Title: Sr. VP, Finance and CFO

	 	 	BNY TRUST COMPANY OF CANADA, as Agent for the ECF Lenders
	
 	
 	

Per:	

/s/  HENRY HAMILTON      
 Name: Henry Hamilton

Title: Authorized Officer
	
 	
 	

Per:	

 Name:

Title:

	 	 	BNY TRUST COMPANY OF CANADA, as Payment Agent on behalf of the ECF Lenders, the Convertible Debentureholders and the CTR Lenders
	
 	
 	

Per:	

/s/  HENRY HAMILTON      
 Name: Henry Hamilton

Title: Authorized Officer
	
 	
 	

Per:	

 Name:

Title:

	 	 	COMPUTERSHARE TRUST COMPANY OF CANADA, as Canadian Trustee for the Convertible Debentureholders
	
 	
 	

Per:	

/s/  CHARLES ERIC GAUTHIER      
 Name: Charles Eric Gauthier

Title: Manager, Corporate Trust
	
 	
 	

Per:	

/s/  RANNY SAUND      
 Name: Ranny Saund

Title: Administrator

	 	 	MANUFACTURERS AND TRADERS TRUST COMPANY, as U.S. Trustee for the Convertible Debentureholders
	
 	
 	

Per:	

/s/  JAY SMITH      
 Name: Jay Smith

Title: Vice-President
	
 	
 	

Per:	

/s/  ROBERT D. BROWN      
 Name: Robert D. Brown

Title: Vice-President

	 	 	EXPORT DEVELOPMENT CANADA, as a CTR Lender and as a Subordinate Creditor
	
 	
 	

Per:	

/s/  SEAN MITCHELL      
 Name: Sean Mitchell

Title: Manager, Special Risks
	
 	
 	

Per:	

/s/  ROBERT HODGES      
 Name: Robert Hodges

Title: Special Risks

	 	 	INTER-AMERICAN DEVELOPMENT BANK, as a CTR Lender and as a Subordinate Creditor
	
 	
 	

Per:	

/s/  HIROSHI TOYODA      
 Name: Hiroshi Toyoda

Title: Manager, Private Sector Development
	
 	
 	

Per:	

 Name:

Title:

	 	 	COMUNICACIÓN Y TELEFONIA, RURAL S.A.
	
 	
 	

Per:	

/s/  DAVID L. ADAMS      
 Name: David L. Adams

Title: Director
	
 	
 	

Per:	

 Name:

Title:

 
 

SCHEDULE "A"
  
    CONVERTIBLE DEBENTURE DOCUMENTS    
    

	1.
	Trust
Indenture dated August 22, 2005 among SRT and the Trustees, providing, inter alia, for the issue of 10% secured
convertible debentures by SRT.

	2.
	Global
Convertible Secured Debenture in the amount of [Cdn$    •    ] dated
August 22, 2005.

	3.
	Security
Agreement dated August 22, 2005 by SRT in favour of the Canadian Trustee.

	4.
	Hypothec
dated August 22, 2005 by SRT in favour of the Canadian Trustee.

	5.
	Form
of Regulation S Temporary Global Debentures in the amount of  [Cdn$    •    ] dated August 22, 2005.

	6.
	Form
of Unrestricted Global Debentures in the amount of [Cdn$    •    ] dated
August 22, 2005.

	7.
	Form
of Fully Registered Debenture in the amount of [Cdn$    •    ] dated
August 22, 2005. 

Registrations/Filings: 

[NTD: To be inserted.]

 
 

SCHEDULE "B"
  
    CTR GUARANTEE DOCUMENTS    
    

	1.
	Guarantee
Agreement dated as of May 19, 2005 between SRT and the CTR Lenders.

	2.
	Security
Agreement dated as of August 22, 2005 between SRT and the CTR Lenders.

	3.
	Deed
of Hypothec dated as of August 22, 2005 between SRT and the CTR Lenders. 

 
 

CTR LOAN DOCUMENTS    
    

	1.
	EDC
Senior Loan Agreement.

	2.
	IDB
Senior Loan Agreement.

	3.
	Common
Agreement.

	4.
	Performance
Undertaking.

	5.
	Project
Funds Agreement.

	6.
	Direct
Agreement.

	7.
	Support
Agreement.

	8.
	Subordination
Pledge. 

Registrations/Filings: 

[NTD: To be inserted.]

 
 

SCHEDULE "C"
  
    ECF DOCUMENTS    
    

	1.
	Credit
Agreement dated as of May 19, 2005 between SRT, the Agent and the Lenders as amended pursuant to a First Amendment to the Credit Agreement dated July 29, 2005 and
a Second Amendment to the Credit Agreement dated August 5, 2005.

	2.
	Security
Agreement dated as of May 19, 2005 between SRT and the Collateral Agent.

	3.
	Hypothec
dated as of May 19, 2005 by SRT in favour of the Agent. 

Registrations/Filings: 

	1.
	Financing
statement registered under the PPSA on May 5, 2005 as reference file no. 614831472 (registration number 200505 0933 1862 8434) against SRT in favour of
BNY Trust Company of Canada.

	2.
	Deed
of hypothec dated May 12, 2005 granted by SRT in favour of BNY Trust Company of Canada and registered at the Register of Personal and Movable Real Rights of Quebec on
May 13, 2005 under numbers 05-0277642-0002 and 05-0277642-0001 and at the Land Register of the registration division
of Montreal on May 13, 2005 under number 12 302 109. 

 
 

SCHEDULE "D"
  
    INTERCREDITOR AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT    
    

        Reference is made to the Inter-Creditor Agreement dated as of August 22, 2005 (as amended, supplemented, waived, modified or restated from time to
time, the "Inter-Creditor Agreement"), among SR Telecom Inc. ("SRT"), BNY Trust Company of Canada
(as the "Agent") as agent for the ECF Lenders, BNY Trust Company of Canada as payment agent (as the "Payment
Agent") on behalf of the ECF Lenders, the Convertible Debentureholders and the CTR Lenders, Computershare Trust Company of Canada (the "Canadian
Trustee") and Manufacturers and Traders Trust Company (the "U.S. Trustee" and, collectively with the Canadian
Trustee, the "Trustees") as trustees for the Convertible Debentureholders, Export Development Canada
("EDC") and Inter-American Development Bank ("IADB" and, collectively with EDC, the
"CTR Lenders"), and Comunicación y Telefonia, Rural S.A. ("CTR"). Capitalized
terms used and not defined herein, shall have the meanings set forth in the Inter-Creditor Agreement. 

        [                        ]
(the "Assignor") and [                        ]

(the "Assignee") hereby agree as follows: 

	1.
	The
Assignor will irrevocably sell and assign to the Assignee, and the Assignee will irrevocably purchase and assume from the Assignor [Describe
Obligations and/or Credit Documents assigned] in accordance with the [describe and attach assignment
agreement] (the Obligations and/or Credit Documents so sold and assigned being herein called the "Assigned
Interest")

	2.
	The
Assignor hereby irrevocably sells and assigns the Assignor's rights and obligations related to such Assigned Interest as a Creditor under the Inter-Creditor Agreement.

	3.
	The
Assignor:

	(a)
	represents
and warrants that it is not aware of any claim or dispute with respect to the Inter-Creditor Agreement and has not received any Notice thereunder, save and except for the
following matters: ["Nil" or list if necessary]

	(b)
	represents
and warrants that it has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim;

	(c)
	represents
and warrants that it has caused each of the relevant documents to bear the legend required by Section 22(b) of the Inter-Creditor
Agreement to indicate that such documents are subject to the Inter-Creditor Agreement; and

	(d)
	makes
no representation or warranty and assumes no responsibility with respect to the financial condition of SRT or the performance or observance by SRT of any of its respective
obligations under the Inter-Creditor Agreement, any Credit Documents, or any other instrument or document furnished pursuant hereto or thereto.

	4.
	The
Assignee:

	(a)
	represents
and warrants that it is legally authorized to enter into this Intercreditor Agreement Assignment and Assumption Agreement (this
"Agreement");

	(b)
	confirms
that it has received a copy of the Inter-Creditor Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision
to enter into this Agreement; and

	(c)
	agrees
that it will be bound by the provisions of the Inter-Creditor Agreement as if it was a party thereto in place of the Assignor, and will perform in accordance with their terms
all the obligations which by the terms of the Inter-Creditor Agreement are required to be performed by it in place of the Assignor.

	5.
	The
effective date of the assignment and assumption described in this Agreement shall be                         ,
            
(the "Effective Date"). Following the execution of this Agreement, a Notice thereof will be delivered to the Payment Agent for acceptance,
effective as of the Effective Date (which shall not, unless otherwise agreed to by the Payment Agent, be earlier than five (5) Business Days after the date of such acceptance and recording by
the Agent). The Assignor and the Assignee invite the Payment Agent, the Creditors and SRT to rely on the assumption by the Assignee hereunder of obligations due by it in place of the Assignor under
the Inter-Creditor Agreement. 

 
	6.
	From
and after the Effective Date,

	(a)
	the
Assignee shall be a party to the Inter-Creditor Agreement and, to the extent provided thereunder, shall have the rights and obligations in place of the Assignor thereunder and
shall be bound by the provisions thereof; and

	(b)
	the
Assignor shall, to the extent provided in this Agreement, relinquish its rights and be released from its obligations under the Inter-Creditor Agreement except as to matters
relating to periods prior to the Effective Date.

	7.
	This
Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each of the parties to the
Inter-Creditor Agreement is an intended third-party beneficiary of this Agreement. 

[Signature page follows]

2

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written by their respective duly authorized officers. 

	 	 	[Name of Assignor]
	
 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	
 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	
 	
 	
[Name of Assignee]
	
 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	
 	
 	

By:	

 
	 	 	 	
 Name:

Title:

ACKNOWLEDGED
THIS      day of                         ,
             

SR TELECOM INC.

	
 	

 	

 
	By:	 	 
	 	
 Name:

Title:	 
	
 	

 	

 
	By:	 	 
	 	
 Name:

Title:	 

3

 
 

SCHEDULE "E"
  
    SUBORDINATION PLEDGE    
    

	1.
	Intercompany
Loans Subordination Agreement dated as of May 15, 2002, as amended by a letter agreement dated March 29, 2005 between SRT, Chilean Holdco, CTR and the CTR
Lenders.

	2.
	Subordinated
Debt Pledge Agreement dated as of August 22, 2005 among SRT, Chilean Holdco, CTR and the CTR Lenders providing,  inter alia, a pledge by SRT and Chilean Holdco to the CTR Lenders of any
accounts due from CTR. 

Registrations/Filings: 

[NTD: To be inserted.]

 
 

SCHEDULE "F"
  
    SUPPORT AGREEMENT    
    

	1.
	Agreement
dated as of May 19, 2005 between CTR, SRT, EDC and IADB providing, inter alia, for technical and financial
support by SRT to CTR. 

Registrations/Filings: 

[NTD: To be inserted.]

 
 

SCHEDULE "G"
  
    ADDRESSES FOR NOTICE    
    

	Party
 
	 	Address
 
	 	Facsimile Number
 

	SR Telecom Inc.	 	8150 Trans-Canada Highway

St. Laurent, Quebec

H4S 1M5

ATTN: David Adams

Senior Vice-President and CFO	 	(514) 956-4405
	
 BNY Trust Company of Canada	
 	

4 King Street West

Suite 1101

Toronto, Ontario

M5H 1B6

ATTN: Senior Trust Officer	
 	

(416) 360-1711
	
 Computershare Trust Company of Canada	
 	

1500, University Street

Suite 700

Montréal, Quebec

H3A 3S8

ATTN: General Manager Corporate Trust	
 	

(514) 982-7677
	
 Manufacturers and Traders Trust Company	
 	

25 South Charles Street

16th Floor

Baltimore, Maryland

21201

ATTN: Corporate Trust Department	
 	

(410) 244-4236
	
 Export Development Canada	
 	

151 O'Connor Street

Ottawa, Ontario

K1A 1K3

ATTN: Sean Mitchell	
 	

(613) 598-3186
	
 Inter-American Development Bank	
 	

1300 New York Avenue, NW

Washington, DC

20577

ATTN: Manager, Private Sector Department	
 	

(202) 312-4135
	
 Comunicación y Telefonia, Rural S.A.	
 	
[•]

ATTN: •	
 	
[•]

QuickLinks

INTER-CREDITOR AGREEMENT

SCHEDULE "A" CONVERTIBLE DEBENTURE DOCUMENTS

SCHEDULE "B" CTR GUARANTEE DOCUMENTS

CTR LOAN DOCUMENTS

SCHEDULE "C" ECF DOCUMENTS

SCHEDULE "D" INTERCREDITOR AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT

SCHEDULE "E" SUBORDINATION PLEDGE

SCHEDULE "F" SUPPORT AGREEMENT

SCHEDULE "G" ADDRESSES FOR NOTICE

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