Document:

exv10w2

 

Exhibit 10.2

[On Bank of Montreal Letterhead]

15 July 2003

HUB International Limited

55 East Jackson Street Boulevard

Chicago, IL

USA, 60604-4187

	 	 	 	 
	Attention:	 	
Dennis Pauls
	 	 	 
	Re:	 	
Swap Transaction (Our Ref. No. 300319 / 353656)

Dear Sir/Madam:

     The purpose of this letter agreement is to set forth the terms and
conditions of the Swap Transaction entered into between the BANK OF MONTREAL
(“BMO”) and HUB International Limited (“Counterparty”) on the Trade Date
specified below (the “Swap Transaction”). This letter agreement will
constitute a “Confirmation” as referred to in the Agreement specified below.

     The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern.

     This Confirmation evidences a complete binding agreement between BMO and
the Counterparty. This Confirmation constitutes a Confirmation subject to the
terms of a master agreement (the “Agreement”). The Agreement shall be in the
form of the 1992 Master Agreement (Multicurrency-Cross Border) published by the
International Swaps and Derivatives Association, Inc. (the “ISDA” Form) with
such modifications as BMO and the Counterparty shall in good faith agree.
Until BMO and the Counterparty execute and deliver the Agreement, (i) BMO and
the Counterparty shall be deemed to have entered into an agreement in the form
of the ISDA Form (without a Schedule), governed by the laws of the State of New
York and (ii) this Confirmation, together with all other documents (each an
“Other Confirmation”) confirming Specified Transactions (as defined in the ISDA
Form) (this Swap Transaction together with such Specified Transactions,
collectively, “Transactions”) heretofore, now or hereafter entered into between
BMO and the Counterparty (except any Other Confirmation that expressly provides
to the contrary), shall supplement, form a part of, and be subject to, an
agreement in the form of such ISDA Form as if BMO and the Counterparty had
executed an agreement in such form on the Trade Date of the first such
Transaction between BMO and the Counterparty. Upon such execution and delivery
of the Agreement, the terms thereof shall supercede such ISDA Form as
applicable to this Swap Transaction and the other Transactions, and this
Confirmation and the Other Confirmations shall supplement, form a part of, and
be subject to, the Agreement.

	1.	 	The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:

	 	 	 
	Trade Date:	 	
15 July 2003
	 	 	 
	Effective Date:	 	
15 June 2003
	 	 	 
	Termination Date:	 	
15 June 2013
	 	 	 
	USD Fixed Amount:	 	
As specified in Schedule I attached
initially USD 55,000,000.00
	 	 	 
	Fixed Rate Per Payer:	 	
BANK OF MONTREAL

 

 

	 	 	 
	Fixed Rate Payer Payment Dates:	 	
Subject to adjustment in
accordance with the Modified
Following Business Day Convention: The
15 December and June of
each year prior to and
including the Termination Date,
commencing with 15 December
2003.
	 	 	 
	Period End Date:	 	
Unadjusted
	 	 	 
	Fixed Rate and Fixed Rate
Day Count Fraction:	 	
6.16% for the
Initial Calculation Period and each succeeding Calculation Period
on a basis of 30/360 (Unadjusted).
	 	 	 
	Fees:	 	
Not Applicable
	 	 	 
	Business Days for USD Payment:	 	
New York, Toronto
	 	 	 
	USD Floating Amount:	 	
As specified in Schedule I attached
initially USD 55,000,000.00
	 	 	 
	Floating Rate Payer:	 	
HUB International Limited
	 	 	 
	Floating Rate Payer Payment Dates:	 	
Subject to adjustment in accordance
with the Modified Following Business Day Convention: The 15
December and June of each year prior to and including the
Termination Date, commencing with 15 December 2003.
	 	 	 
	Floating Rate for Initial

Calculation Period:	 	 
	(excluding the spread):	 	
1.11875%
	 	 	 
	Calculation Agent:	 	
BANK OF MONTREAL
	 	 	 
	Fees:	 	
Not Applicable
	 	 	 
	Floating Rate Option:	 	
USD-LIBOR-BBA
	 	 	 
	Spread:	 	
plus 2.54%
	 	 	 
	Floating Rate Day Count Fraction:	 	
Actual/360
	 	 	 
	Designated Maturity:	 	
3 MONTH
	 	 	 
	Reset Dates:	 	
First day of each Calculation Period, or
Compounding Period, if Compounding is applicable.
	 	 	 
	Compounding:	 	
FLAT
	 	 	 
	Compounding Dates:	 	
The 15 September, December, March and June of each
year subject to adjustment in accordance with the Modified
Following Business Day Convention.

 

 

	 	 	 
	Business Days for USD Payment:	 	
New York, Toronto
	 	 	 
	Business Days for Floating

Rate Reset:	 	
London

	2.	 	MUTUAL RIGHT TO TERMINATE:
	 
	 	 	Either party may, provided that no Event of Default or Potential Event of
Default exists with respects to that party, elect to terminate this Swap
Transaction on the 4th Anniversary of the Effective Date (the “Optional
Termination Date”), by providing at least 5 days prior notice to the other
party. Notice may be provided by telephone but is to be followed up with a
written notice. In the event a party, (the “Terminating Party”) elects to
terminate a Transaction pursuant to the foregoing, the Terminating Party
shall at or prior to 2:00 p.m. Toronto time on the Optional Termination
Date, determine the amount payable in respect of this Swap Transaction (the
“Market Value”) by making the calculations required by Section 6(e)(i) of
the Agreement as if the Optional Termination Date were an Early Termination
Date designated as a result of the occurrence of an Event of Default with
respect to the Terminating Party and the parties had specified Loss and the
Second Method for that purpose. The Market Value will be paid by the
relevant party on the second Business Day following the Optional Termination
Date.
	 
	 	 	If there is a dispute between the parties as to the calculation of the
Market Value,

	 	(a)	 	the parties will consult with each other in an attempt to resolve
the dispute; and
	 
	 	(b)	 	if the parties fail to resolve the dispute prior to 3:00 p.m.
Toronto time on the Optional Termination Date, then Bank of Montreal
shall recalculate the Market Value by making calculations required by
Section 6(e)(i) of the Agreement as if the Optional Termination Date
were an Early Termination Date designated as a result of the occurrence
of an Event of Default with respect to the Terminating Party and the
parties had specified Market Quotation and the Second Method for that
purpose.

	 	 	Promptly following a resolution pursuant to this paragraph, the Market Value
will be paid by the relevant party on the second Business Day following the
Optional Termination Date.
	 
	 	 	Upon Payment of such sum as provided herein, the obligations of both parties
with respect to this Transaction shall be discharged in full.
	 
	3.	 	Account Details

	 	 	 
	
Payments to HUB International Limited:	 	 
	 	 	 
	
      USD	 	 
	 	 	 
	 	 	Please Advise
	
Payments to BANK OF MONTREAL:	 	 
	 	 	 
	
      USD	 	 
	 	 	HARRIS BANK INTERNATIONAL CORPORATION

3 TIMES SQUARE

NEW YORK USA

Account #: 21077777

ATTN: DERIVATIVES OPERATIONS.

 

 

	4.	 	Address for Notices in connection with the Swap Transaction.

	 	 	 	 	 
	(a)	 	BANK OF MONTREAL:	 	 
	 	 	 	 	EMFISYS – DERIVATIVES OPERATIONS

130 ADELAIDE STREET WEST

SUITE 500

TORONTO, ON

CANADA, M5H 4E1
	 	 	 	 	 
	 	 	Attention:
	 	Senior Manager

Swap Desk
	 	 	 	 	 
	 	 	Facsimile:
	 	416-867-4778
	 	 	Telex No:
	 	0621778
	 	 	Answerback:	 	 
	 	 	 	 	 
	(b)	 	HUB International Limited:	 	 
	 	 	 	 	55 East Jackson Street Boulevard

Chicago, IL

USA, 60604-4187
	 	 	 	 	 
	 	 	Attention:
	 	Dennis Pauls
	 	 	 	 	 
	 	 	Telephone:

Facsimile:
	 	8,877-402-6601

8,877-402-6606

	5.	 	Offices:

	 	(a)	 	The Office of BANK OF MONTREAL for the Swap Transaction
is TORONTO, CANADA.
	 
	 	(b)	 	The Office of the Counterparty for the Swap Transaction
is Chicago, USA.

	 	 	 	 	 
	6.	 	
Documents to be delivered:
	 	Each party shall deliver to the other, at
the time of its execution of this Confirmation, evidence of the specimen
signature and incumbency of each person who is executing the Confirmation
on the party’s behalf, unless such evidence has previously been supplied
in connection with the Agreement and remains true and in effect.

It is the express wish of the parties that this agreement and any related
documents be drawn up and executed in
English. Les parties conviennent que la prèsente convention et tous les
documents s’y rattachant soient rèdigès et
signès en anglais.

Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation
and returning it to us.

Please contact Franca Miceli at 416-867-4083 or Kareen Sewell-Pilgrim at
416-867-7390 if you have any
questions or discrepancies.

 

 

BMO confirms and the Counterparty acknowledges that the Bank uses a
computer-based system to execute and transmit Confirmations. The parties
hereby acknowledge and accept the use and validity of Confirmations which have
been executed by means of an electronically-produced signature, and which have
been transmitted and reproduced by telecopier or similar device. The parties acknowledge that in
any legal proceedings between them respecting or in any way relating to this
Confirmation, each hereby expressly waives any right to raise any defense or
waiver of liability based upon the reproduction of this document by telecopier
for evidentiary purpose, or the execution of this document by means of an
electronically-produced signature. (Our Ref. No. 300319/353656)

Yours sincerely,

	 	 	 	 
	BANK OF MONTREAL	 
	 	 	 	 
	 
	By:
	 	 
	 
	Name:
	 	 
	 	 	/s/ Rianna Yam

Rianna Yam

Confirmed as of the date first above written:

	 	 	 	 
	HUB International Limited	 
	 	 	 	 
	 
	By:
	 	 
	 	 	/s/ Dennis Pauls

(Signature)
	 	 	 	 
	 
	Name:
	 	 
	 	 	Dennis Pauls

(Please Print)
	 	 	 	 
	 
	Title:
	 	VP & CFO

 

 

Schedule I.

Cashflow Schedule: BANK OF MONTREAL 300319/353656

Side 1

BANK OF MONTREAL pays USD FIXED to HUB International Limited

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period Beg	 	Period End	 	Days	 	Payment Date	 	Notional Amount	 	Fixed Rate %
	
	 	
	 	
	 	
	 	
	 	

	15 Jun 2003	 	
15 Dec 2003
	 	 	180	 	 	15 Dec 2003
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Dec 2003	 	
15 Jun 2004
	 	 	180	 	 	15 Jun 2004
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Jun 2004	 	
15 Dec 2004
	 	 	180	 	 	15 Dec 2004
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Dec 2004	 	
15 Jun 2005
	 	 	180	 	 	15 Jun 2005
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Jun 2005	 	
15 Dec 2005
	 	 	180	 	 	15 Dec 2005
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Dec 2005	 	
15 Jun 2006
	 	 	180	 	 	15 Jun 2006
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Jun 2006	 	
15 Dec 2006
	 	 	180	 	 	15 Dec 2006
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Dec 2006	 	
15 Jun 2007
	 	 	180	 	 	15 Jun 2007
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Jun 2007	 	
15 Dec 2007
	 	 	180	 	 	17 Dec 2007
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Dec 2007	 	
15 Jun 2008
	 	 	180	 	 	16 Jun 2008
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Jun 2008	 	
15 Dec 2008
	 	 	180	 	 	15 Dec 2008
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Dec 2008	 	
15 Jun 2009
	 	 	180	 	 	15 Jun 2009
	 	 	55,000,000.00	 	 	 	6.16	 
	15 Jun 2009	 	
15 Dec 2009
	 	 	180	 	 	15 Dec 2009
	 	 	44,000,000.00	 	 	 	6.16	 
	15 Dec 2009	 	
15 Jun 2010
	 	 	180	 	 	15 Jun 2010
	 	 	44,000,000.00	 	 	 	6.16	 
	15 Jun 2010	 	
15 Dec 2010
	 	 	180	 	 	15 Dec 2010
	 	 	33,000,000.00	 	 	 	6.16	 
	15 Dec 2010	 	
15 Jun 2011
	 	 	180	 	 	15 Jun 2011
	 	 	33,000,000.00	 	 	 	6.16	 
	15 Jun 2011	 	
15 Dec 2011
	 	 	180	 	 	15 Dec 2011
	 	 	22,000,000.00	 	 	 	6.16	 
	15 Dec 2011	 	
15 Jun 2012
	 	 	180	 	 	15 Jun 2012
	 	 	22,000,000.00	 	 	 	6.16	 
	15 Jun 2012	 	
15 Dec 2012
	 	 	180	 	 	17 Dec 2012
	 	 	11,000,000.00	 	 	 	6.16	 
	15 Dec 2012	 	
15 Jun 2013
	 	 	180	 	 	17 Jun 2013
	 	 	11,000,000.00	 	 	 	6.16	 

 

 

Side 2

HUB International Limited pays USD 3 MONTH LIBOR T3750 to BANK OF MONTREAL

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Calc Date	 	Period Beg	 	Period End	 	Days	 	Payment Date	 	Notional Amount
	
	 	
	 	
	 	
	 	
	 	

	12 Jun 2003	 	
16 Jun 2003
	 	15 Sep 2003
	 	 	91	 	 	 	 	 	55,000,000.00	 
	11 Sep 2003	 	
15 Sep 2003
	 	15 Dec 2003
	 	 	91	 	 	15 Dec 2003
	 	 	55,000,000.00	 
	11 Dec 2003	 	
15 Dec 2003
	 	15 Mar 2004
	 	 	91	 	 	 	 	 	55,000,000.00	 
	11 Mar 2004	 	
15 Mar 2004
	 	15 Jun 2004
	 	 	92	 	 	15 Jun 2004
	 	 	55,000,000.00	 
	11 Jun 2004	 	
15 Jun 2004
	 	15 Sep 2004
	 	 	92	 	 	 	 	 	55,000,000.00	 
	13 Sep 2004	 	
15 Sep 2004
	 	15 Dec 2004
	 	 	91	 	 	15 Dec 2004
	 	 	55,000,000.00	 
	13 Dec 2004	 	
15 Dec 2004
	 	15 Mar 2005
	 	 	90	 	 	 	 	 	55,000,000.00	 
	11 Mar 2005	 	
15 Mar 2005
	 	15 Jun 2005
	 	 	92	 	 	15 Jun 2005
	 	 	55,000,000.00	 
	13 Jun 2005	 	
15 Jun 2005
	 	15 Sep 2005
	 	 	92	 	 	 	 	 	55,000,000.00	 
	13 Sep 2005	 	
15 Sep 2005
	 	15 Dec 2005
	 	 	91	 	 	15 Dec 2005
	 	 	55,000,000.00	 
	13 Dec 2005	 	
15 Dec 2005
	 	15 Mar 2006
	 	 	90	 	 	 	 	 	55,000,000.00	 
	13 Mar 2006	 	
15 Mar 2006
	 	15 Jun 2006
	 	 	92	 	 	15 Jun 2006
	 	 	55,000,000.00	 
	13 Jun 2006	 	
15 Jun 2006
	 	15 Sep 2006
	 	 	92	 	 	 	 	 	55,000,000.00	 
	13 Sep 2006	 	
15 Sep 2006
	 	15 Dec 2006
	 	 	91	 	 	15 Dec 2006
	 	 	55,000,000.00	 
	13 Dec 2006	 	
15 Dec 2006
	 	15 Mar 2007
	 	 	90	 	 	 	 	 	55,000,000.00	 
	13 Mar 2007	 	
15 Mar 2007
	 	15 Jun 2007
	 	 	92	 	 	15 Jun 2007
	 	 	55,000,000.00	 
	13 Jun 2007	 	
15 Jun 2007
	 	17 Sep 2007
	 	 	94	 	 	 	 	 	55,000,000.00	 
	13 Sep 2007	 	
17 Sep 2007
	 	17 Dec 2007
	 	 	91	 	 	17 Dec 2007
	 	 	55,000,000.00	 
	13 Dec 2007	 	
17 Dec 2007
	 	17 Mar 2008
	 	 	91	 	 	 	 	 	55,000,000.00	 
	13 Mar 2008	 	
17 Mar 2008
	 	16 Jun 2008
	 	 	91	 	 	16 Jun 2008
	 	 	55,000,000.00	 
	12 Jun 2008	 	
16 Jun 2008
	 	15 Sep 2008
	 	 	91	 	 	 	 	 	55,000,000.00	 
	11 Sep 2008	 	
15 Sep 2008
	 	15 Dec 2008
	 	 	91	 	 	15 Dec 2008
	 	 	55,000,000.00	 
	11 Dec 2008	 	
15 Dec 2008
	 	16 Mar 2009
	 	 	91	 	 	 	 	 	55,000,000.00	 
	12 Mar 2009	 	
16 Mar 2009
	 	15 Jun 2009
	 	 	91	 	 	15 Jun 2009
	 	 	55,000,000.00	 
	11 Jun 2009	 	
15 Jun 2009
	 	15 Sep 2009
	 	 	92	 	 	 	 	 	44,000,000.00	 
	11 Sep 2009	 	
15 Sep 2009
	 	15 Dec 2009
	 	 	91	 	 	15 Dec 2009
	 	 	44,000,000.00	 
	11 Dec 2009	 	
15 Dec 2009
	 	15 Mar 2010
	 	 	90	 	 	 	 	 	44,000,000.00	 
	11 Mar 2010	 	
15 Mar 2010
	 	15 Jun 2010
	 	 	92	 	 	15 Jun 2010
	 	 	44,000,000.00	 
	11 Jun 2010	 	
15 Jun 2010
	 	15 Sep 2010
	 	 	92	 	 	 	 	 	33,000,000.00	 
	13 Sep 2010	 	
15 Sep 2010
	 	15 Dec 2010
	 	 	91	 	 	15 Dec 2010
	 	 	33,000,000.00	 
	13 Dec 2010	 	
15 Dec 2010
	 	15 Mar 2011
	 	 	90	 	 	 	 	 	33,000,000.00	 
	11 Mar 2011	 	
15 Mar 2011
	 	15 Jun 2011
	 	 	92	 	 	15 Jun 2011
	 	 	33,000,000.00	 
	13 Jun 2011	 	
15 Jun 2011
	 	15 Sep 2011
	 	 	92	 	 	 	 	 	22,000,000.00	 
	13 Sep 2011	 	
15 Sep 2011
	 	15 Dec 2011
	 	 	91	 	 	15 Dec 2011
	 	 	22,000,000.00	 
	13 Dec 2011	 	
15 Dec 2011
	 	15 Mar 2012
	 	 	91	 	 	 	 	 	22,000,000.00	 
	13 Mar 2012	 	
15 Mar 2012
	 	15 Jun 2012
	 	 	92	 	 	15 Jun 2012
	 	 	22,000,000.00	 
	13 Jun 2012	 	
15 Jun 2012
	 	17 Sep 2012
	 	 	94	 	 	 	 	 	11,000,000.00	 
	13 Sep 2012	 	
17 Sep 2012
	 	17 Dec 2012
	 	 	91	 	 	17 Dec 2012
	 	 	11,000,000.00	 
	13 Dec 2012	 	
17 Dec 2012
	 	15 Mar 2013
	 	 	88	 	 	 	 	 	11,000,000.00	 
	13 Mar 2013	 	
15 Mar 2013
	 	17 Jun 2013
	 	 	92	 	 	17 Jun 2013
	 	 	11,000,000.00<PAGE>

                                                                     Exhibit 4.1

================================================================================

================================================================================

                                    QLT INC.

                                       and

                              THE BANK OF NEW YORK

                                   as Trustee

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

                                    INDENTURE

                           Dated as of August 15, 2003

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

                         US$150,000,000 Principal Amount

                      3% CONVERTIBLE SENIOR NOTES DUE 2023

================================================================================

================================================================================

<PAGE>

                              CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
  TIA                                                                                   Indenture
Section                                                                                  Section
-------                                                                                 ----------
<S>                                                                                        <C>
310(a)(1)........................................................................           7.10
      (a)(2).....................................................................           7.10
      (a)(3).....................................................................           N.A.
      (a)(4).....................................................................           N.A.
      (a)(5).....................................................................           N.A.
      (b)........................................................................           7.08; 7.10; 11.02
      (c)........................................................................           N.A.
311(a)...........................................................................           7.11
      (b)........................................................................           7.11
      (c)........................................................................           N.A.
312(a)...........................................................................           2.05
      (b)........................................................................          11.03
      (c)........................................................................          11.03
313(a)...........................................................................           7.06
      (b)(1).....................................................................           N.A.
      (b)(2).....................................................................           7.06
      (c)........................................................................           7.06; 11.02
      (d)........................................................................           7.06
314(a)...........................................................................           4.03
      (b)........................................................................           N.A.
      (c)(1).....................................................................          11.04
      (c)(2).....................................................................          11.04
      (c)(3).....................................................................           N.A.
      (d)........................................................................           N.A.
      (e)........................................................................          11.05
      (f)........................................................................           N.A.
315(a)...........................................................................           7.01(B)
      (b)........................................................................           7.05; 11.02
      (c)........................................................................           7.01(A)
      (d)........................................................................           7.01(C)
      (e)........................................................................           6.11
316(a) (last sentence)...........................................................           2.09
      (a)(1)(A)..................................................................           6.05
      (a)(1)(B)..................................................................           6.04
      (a)(2).....................................................................           N.A.
      (b)........................................................................           6.07
      (c)........................................................................           N.A.
317(a)(1)........................................................................           6.08
      (a)(2).....................................................................           6.09
      (b)........................................................................           2.04
318(a)...........................................................................          11.01
</TABLE>

                                       I

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page

<S>      <C>                                                                                                     <C>
I.       DEFINITIONS AND INCORPORATION BY REFERENCE...............................................................1

         1.01 Definitions.........................................................................................1
         1.02 Other Definitions...................................................................................5
         1.03 Incorporation by Reference of Trust Indenture Act...................................................6
         1.04 Rules of Construction...............................................................................7

II.      THE SECURITIES...........................................................................................7

         2.01 Form and Dating.....................................................................................7
         2.02 Execution and Authentication........................................................................8
         2.03 Registrar, Paying Agent and Conversion Agent........................................................9
         2.04 Paying Agent to Hold Money in Trust.................................................................9
         2.05 Securityholder Lists................................................................................9
         2.06 Transfer and Exchange..............................................................................10
         2.07 Replacement Securities.............................................................................10
         2.08 Outstanding Securities.............................................................................10
         2.09 Securities Held by the Company or an Affiliate.....................................................11
         2.10 Temporary Securities...............................................................................11
         2.11 Cancellation.......................................................................................12
         2.12 Defaulted Interest.................................................................................12
         2.13 CUSIP Numbers......................................................................................12
         2.14 Deposit of Moneys..................................................................................12
         2.15 Book-Entry Provisions for Global Securities........................................................13
         2.16 Special Transfer Provisions........................................................................13
         2.17 Restrictive Legends................................................................................15
         2.18 Ranking............................................................................................15

III.     REDEMPTION..............................................................................................15

         3.01 Right of Redemption................................................................................15
         3.02 Notices to Trustee.................................................................................16
         3.03 Selection of Securities to Be Redeemed.............................................................16
         3.04 Notice of Redemption...............................................................................16
         3.05 Effect of Notice of Redemption.....................................................................17
         3.06 Deposit of Redemption Price........................................................................18
         3.07 Securities Redeemed in Part........................................................................18
         3.08 Redemption of Securities for Tax Reasons...........................................................18
         3.09 Purchase of Securities at Option of the Holder.....................................................23
         3.10 Repurchase at Option of Holder upon a Repurchase Event.............................................26
         3.11 Conversion Arrangement on Call for Redemption......................................................31

</TABLE>

                                       -i-

<PAGE>

<TABLE>
<CAPTION>
                                                                                                                Page

<S>      <C>                                                                                                    <C>
IV.      COVENANTS...............................................................................................32

         4.01 Payment of Securities..............................................................................32
         4.02 Maintenance of Office or Agency....................................................................32
         4.03 Reports............................................................................................32
         4.04 Compliance Certificate.............................................................................33
         4.05 Stay, Extension and Usury Laws.....................................................................33
         4.06 Corporate Existence................................................................................33
         4.07 Notice of Default..................................................................................33
         4.08 Payment of Additional Amounts......................................................................33

V.       SUCCESSORS..............................................................................................35

         5.01 When Company May Merge, etc........................................................................35
         5.02 Successor Substituted..............................................................................35

VI.      DEFAULTS AND REMEDIES...................................................................................36

         6.01 Events of Default..................................................................................36
         6.02 Acceleration.......................................................................................37
         6.03 Other Remedies.....................................................................................38
         6.04 Waiver of Past Defaults............................................................................38
         6.05 Control by Majority................................................................................38
         6.06 Limitation on Suits................................................................................39
         6.07 Rights of Holders to Receive Payment...............................................................39
         6.08 Collection Suit by Trustee.........................................................................39
         6.09 Trustee May File Proofs of Claim...................................................................40
         6.10 Priorities.........................................................................................40
         6.11 Undertaking for Costs..............................................................................40

VII.     TRUSTEE.................................................................................................41

         7.01 Duties of Trustee..................................................................................41
         7.02 Rights of Trustee..................................................................................41
         7.03 Individual Rights of Trustee.......................................................................43
         7.04 Trustee's Disclaimer...............................................................................43
         7.05 Notice of Defaults.................................................................................43
         7.06 Reports by Trustee to Holders......................................................................43
         7.07 Compensation and Indemnity.........................................................................44
         7.08 Replacement of Trustee.............................................................................44
         7.09 Successor Trustee by Merger, etc...................................................................45
         7.10 Eligibility; Disqualification......................................................................45
         7.11 Preferential Collection of Claims Against Company..................................................46

VIII.    DISCHARGE OF INDENTURE..................................................................................46

         8.01 Termination of the Obligations of the Company......................................................46
         8.02 Application of Trust Money.........................................................................46

</TABLE>

                                       -ii-

<PAGE>

<TABLE>
<CAPTION>
                                                                                                                Page

<S>      <C>                                                                                                    <C>
         8.03 Repayment to Company...............................................................................46
         8.04 Reinstatement......................................................................................47

IX.      AMENDMENTS..............................................................................................47

         9.01 Without Consent of Holders.........................................................................47
         9.02 With Consent of Holders............................................................................48
         9.03 Compliance with Trust Indenture Act................................................................49
         9.04 Revocation and Effect of Consents..................................................................49
         9.05 Notation on or Exchange of Securities..............................................................49
         9.06 Trustee Protected..................................................................................49

X.       CONVERSION..............................................................................................50

         10.01 Conversion Privilege; Restrictive Legends.........................................................50
         10.02 Conversion Procedure..............................................................................50
         10.03 Fractional Shares.................................................................................51
         10.04 Taxes on Conversion...............................................................................51
         10.05 Company to Provide Stock..........................................................................52
         10.06 Adjustment of Conversion Rate.....................................................................52
         10.07 No Adjustment.....................................................................................56
         10.08 Other Adjustments.................................................................................57
         10.09 Adjustments for Tax Purposes......................................................................57
         10.10 Notice of Adjustment..............................................................................57
         10.11 Notice of Certain Transactions....................................................................58
         10.12 Effect of Reclassifications, Consolidations, Amalgamations, Statutory Arrangements,
                 Mergers, Binding Share Exchanges or Sales on Conversion Privilege...............................58
         10.13 Trustee's Disclaimer..............................................................................59

XI.      MISCELLANEOUS...........................................................................................60

         11.01 Trust Indenture Act Controls......................................................................60
         11.02 Notices...........................................................................................60
         11.03 Communication by Holders with Other Holders.......................................................61
         11.04 Certificate and Opinion as to Conditions Precedent................................................61
         11.05 Statements Required in Certificate or Opinion.....................................................61
         11.06 Rules by Trustee and Agents.......................................................................62
         11.07 Legal Holidays....................................................................................62
         11.08 Duplicate Originals...............................................................................62
         11.09 Governing Law.....................................................................................62
         11.10 No Adverse Interpretation of Other Agreements.....................................................62
         11.11 Successors........................................................................................63
         11.12 Separability......................................................................................63
         11.13 Table of Contents, Headings, etc..................................................................63
         11.14 Calculations in Respect of the Securities.........................................................63
         11.15 Judgment Currency.................................................................................63
</TABLE>

                                       -iii-

<PAGE>

<TABLE>
<CAPTION>
                                                                                                                Page

<S>      <C>                                                                                                    <C>
         11.16 Appointment of Agent for Service of Process.......................................................64

Exhibit A.........-        Form of Global Security

Exhibit B-1.......-        Form of Private Placement Legend

Exhibit B-2.......-        Form of Legend for Global Security

Exhibit C.........-        Form of Notice of Transfer Pursuant to Registration Statement

Exhibit D.........-        Form of Opinion of Counsel in Connection with Registration of Securities
</TABLE>

                                       -iv-
<PAGE>

         INDENTURE, dated as of August 15, 2003 between QLT Inc., a British
Columbia company (the "COMPANY"), and The Bank of New York, a New York banking
corporation, as trustee (the "TRUSTEE").

         Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's 3% Convertible
Senior Notes due 2023 (the "SECURITIES").

              I.       DEFINITIONS AND INCORPORATION BY REFERENCE

1.01     DEFINITIONS.

         "AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
this purpose, "control" shall mean the power to direct the management and
policies of a person through the ownership of securities, by contract or
otherwise.

         "BID SOLICITATION AGENT" means a Company-appointed agent that performs
the calculations pursuant to ARTICLE X and PARAGRAPH 12 of the Securities.

         "BOARD OF DIRECTORS" means the Board of Directors of the Company or any
committee thereof authorized to act for it hereunder.

         "BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

         "CANADIAN TAX ACT" means the Income Tax Act (Canada).

         "CAPITAL STOCK" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of
such Person and all warrants or options to acquire such capital stock.

         "CLOSING SALE PRICE" means the price of a Common Share on the relevant
date, determined (a) on the basis of the closing per share sale price (or if no
closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid and the average ask
prices) on such date on the U.S. principal national securities exchange on which
the Common Shares are listed; or (b) if the Common Shares are not listed on a
U.S. national securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System; or (c) if not so quoted, as
reported by National Quotation Bureau, Incorporated or a similar organization.
In the absence of a quotation, the Closing Sale Price shall be such price as the
Company shall reasonably determine on the basis of such quotations as most
accurately reflecting the price that a fully informed buyer, acting on his own
accord, would pay to a fully informed seller, acting on his own accord in an
arms-length transaction, for a Common Share.

                                        1
<PAGE>

         "COMMON SHARE" means the common shares, without par value, of the
Company, or such other Capital Stock of the Company into which the Company's
common shares are reclassified or changed.

         "COMPANY" means the party named as such above until a successor
replaces it pursuant to the applicable provision hereof and thereafter means the
successor.

         "COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Operating Officer, its Chief
Financial Officer, any Executive Vice President or any Senior Vice President and
by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, and delivered to the Trustee.

         "CONVERSION RATE" means the number of Common Shares issuable upon
conversion of a Security per $1,000 principal amount, which Conversion Rate
shall initially be 56.1892 Common Shares per $1,000 principal amount, subject to
adjustment as provided in ARTICLE X.

         "CONVERSION PRICE" means, as of any date of determination, the dollar
amount derived by dividing $1,000 principal amount by the Conversion Rate then
in effect.

         "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in SECTION 11.02 or such other address as the Trustee may give
notice of to the Company.

         "DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default.

         "DEPOSITARY" means The Depository Trust Company, its nominees and
successors.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "HOLDER" or "SECURITYHOLDER" means a person in whose name a Security is
registered on the Registrar's books.

         "INDEBTEDNESS" means, with respect to any person, the principal of, and
premium, if any, and interest on and all other obligations in respect of (a) all
indebtedness of such person for borrowed money (including all indebtedness
evidenced by notes, bonds, debentures or other securities), (b) all obligations
(other than trade payables) incurred by such person in the acquisition (whether
by way of purchase, merger, consolidation, amalgamation, statutory arrangement
or otherwise and whether by such person or another person) of any business, real
property or other assets, (c) all reimbursement obligations of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person, (d) all capital lease obligations of such
person, (e) all net obligations of such person under interest rate swap,
currency exchange or similar agreements of such person, (f) all obligations and
other liabilities, contingent or otherwise, under any lease or related document,
including a purchase agreement, conditional sale or other title retention
agreement, in connection with the lease of real property or improvements thereon
(or any personal property included as part of any such lease) which provides
that such person is contractually obligated to purchase or cause a third party
to purchase the leased property or pay an agreed-upon residual value of the
leased property,

                                       2
<PAGE>

including such person's obligations under such lease or related document to
purchase or cause a third party to purchase such leased property or pay an
agreed-upon residual value of the leased property to the lessor, (g) guarantees
by such person of indebtedness described in CLAUSES (a) THROUGH (f) of another
person, and (h) all renewals, extensions, refundings, deferrals, restructurings,
amendments and modifications of any indebtedness, obligation, guarantee or
liability of the kind described in CLAUSES (a) THROUGH (g).

         "INDENTURE" means this Indenture as amended or supplemented from time
to time.

         "INITIAL PURCHASERS" means UBS Securities LLC and CIBC World Markets
Corp.

         "INTEREST" includes liquidated damages, unless the context otherwise
requires.

         "ISSUE DATE" means August 15, 2003.

         "LIQUIDATED DAMAGES" has the meaning ascribed to it in the Registration
Rights Agreement.

         "MATURITY DATE" means September 15, 2023.

         "NOTICE OF ELECTION UPON TAX REDEMPTION" means a Notice of Election
Upon Tax Redemption in the form set forth in the Securities.

         "OFFICER" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Operating Officer, the Chief Financial Officer, any
Executive Vice President, any Senior Vice President, the Treasurer or the
Secretary of the Company.

         "OFFICERS' CERTIFICATE" means a certificate signed by two (2) Officers
or by an Officer and an Assistant Treasurer or an Assistant Secretary of the
Company.

         "OPINION OF COUNSEL" means a written opinion from legal counsel who may
be an employee of or counsel for the Company, or other counsel reasonably
acceptable to the Trustee.

         "OPTION" means the Initial Purchasers' option to acquire up to
US$22,500,000 of additional Securities ("ADDITIONAL Securities") as provided for
in the Purchase Agreement.

         "PERSON" or "PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.

         "PURCHASE AGREEMENT" means the Purchase Agreement dated as of August
12, 2003 between the Company and the Initial Purchasers.

         "PURCHASE NOTICE" means a Purchase Notice in the form set forth in the
Securities.

         "QIB" means a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act.

                                       3
<PAGE>

         "REDEMPTION DATE" means the date specified for Redemption of the
Securities in accordance with the terms of the Securities and this Indenture.

         "REDEMPTION PRICE" means, with respect to a Security to be redeemed by
the Company in accordance with ARTICLE III, one hundred percent (100%) of the
outstanding principal amount of such Security to be redeemed.

         "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated as of the date hereof between the Company and the Initial Purchasers.

         "RESPONSIBLE OFFICER" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.

         "RESTRICTED SECURITY" means a Security that constitutes a "restricted
security" within the meaning of Rule 144(a)(3) under the Securities Act;
provided, however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Security
constitutes a Restricted Security.

         "RIGHTS AGREEMENT" means that certain Shareholder Rights Plan
Agreement, as amended and restated, between the Company and Computer Share Trust
Company of Canada, dated March 17, 2002, as the same may be amended,
supplemented or superceded.

         "RULE 144A" means Rule 144A under the Securities Act.

         "SEC" means the Securities and Exchange Commission.

         "SECURITIES" means the 3% Convertible Senior Notes due 2023 issued by
the Company pursuant to this Indenture.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SECURITY AGENT" means any Registrar, Paying Agent, Conversion Agent,
Bid Solicitation Agent or co-Registrar or co-agent.

         "SIGNIFICANT SUBSIDIARY" with respect to any person means any
subsidiary of such person that constitutes a "significant subsidiary" within the
meaning of Rule 1-02 of Regulation S-X under the Securities Act, as such
regulation is in effect on the date of this Indenture.

         "SUBSIDIARY" means (i) a corporation a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is at the
time, directly or indirectly, owned by the Company, by one or more subsidiaries
of the Company or by the Company and one or more of its subsidiaries or (ii) any
other person (other than a corporation) in which the

                                       4
<PAGE>

Company, one or more its subsidiaries or the Company and one or more its
subsidiaries, directly or indirectly, at the date of determination thereof, have
at least majority ownership interest.

         "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
SECTION 9.03.

         "TRADING DAY" means a day during which trading in securities generally
occurs on the principal national or regional securities exchange in the United
States on which the Common Shares are then listed or, if the Common Shares are
not listed on a national or regional securities exchange in the United States,
on the National Association of Securities Dealers Automated Quotation System or,
if the Common Shares are not quoted on the National Association of Securities
Dealers Automated Quotation System, on the principal other market on which the
Common Shares are then traded.

         "TRADING PRICE" means, on any date, the average of the secondary market
bid quotations for the Securities obtained by the Bid Solicitation Agent on
behalf of the Trustee for five million U.S. dollars (US$5,000,000) principal
amount of Securities at approximately 4:00 p.m., New York City time, on such
date, from three (3) independent, nationally recognized securities dealers
selected by the Company; provided, that if the Bid Solicitation Agent on behalf
of the Trustee can reasonably obtain only two (2) such bids, then the average of
such two (2) bids shall instead be used; provided further, that if the Bid
Solicitation Agent on behalf of the Trustee can reasonably obtain only one (1)
such bid, then such bid shall instead be used; provided further, that if the Bid
Solicitation Agent on behalf of the Trustee cannot reasonably obtain at least
one (1) such bid, or if, in the Company's reasonable judgment, the bid quotation
or quotations so obtained by the Bid Solicitation on behalf of the Trustee are
not indicative of the secondary market value of the Securities, then, in each
case, the Trading Price per $1,000 principal amount of Securities on the
applicable date of determination shall be deemed to be equal to the product of
(I) the Conversion Rate in effect on such date of determination and (II) ninety
five percent (95%) of the average Closing Sale Price on such date of
determination.

         "TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions hereof and thereafter
means the successor.

         "VOTING STOCK" of any Person means the total voting power of all
classes of the Capital Stock of such Person entitled to vote generally in the
election of directors of such Person.

1.02     OTHER DEFINITIONS.

<TABLE>
<CAPTION>
                   Term                                                              Defined in Section
                   ----                                                              ------------------

<S>                                                                                         <C>
          "ADDITIONAL AMOUNTS"..........................................                     4.08
          "ADDITIONAL SECURITIES".......................................                     1.01
          "AGGREGATE AMOUNT"............................................                    10.06
          "BANKRUPTCY LAW"..............................................                     6.01
          "BUSINESS DAY"................................................                    11.07
          "CANADIAN TAXES"..............................................                     4.08
          "CHANGE IN CONTROL"...........................................                     3.10
          "CONVERSION AGENT"............................................                     2.03

</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                         <C>
          "CONVERSION DATE".............................................                    10.02
          "CONVERSION SHARES"...........................................                    10.06
          "CUSTODIAN"...................................................                     6.01
          "DETERMINATION DATE"..........................................                    10.06
          "DISTRIBUTION DATE"...........................................                    10.06
          "EVENT OF DEFAULT"............................................                     6.01
          "EXPIRATION DATE".............................................                    10.06
          "EXCLUDED HOLDER".............................................                     4.08
          "EXPIRATION TIME".............................................                    10.06
          "GLOBAL SECURITY".............................................                     2.01
          "INELIGIBLE CONSIDERATION"....................................                    10.12
          "JUDGMENT CURRENCY"...........................................                    11.15
          "LEGAL HOLIDAY"...............................................                    11.07
          "NOTICE OF DEFAULT"...........................................                     6.01
          "OPTION PURCHASE DATE"........................................                     3.09
          "OPTION PURCHASE NOTICE"......................................                     3.09
          "OPTION PURCHASE PRICE".......................................                     3.09
          "PARTICIPANTS"................................................                     2.15
          "PAYING AGENT"................................................                     2.03
          "PHYSICAL SECURITIES".........................................                     2.01
          "PRESCRIBED SECURITIES".......................................                    10.12
          "PRIVATE PLACEMENT LEGEND"....................................                     2.17
          "PURCHASED SHARES"............................................                    10.06
          "RATE(s) OF EXCHANGE".........................................                    11.15
          "REDEMPTION"..................................................                     3.01
          "REGISTRAR"...................................................                     2.03
          "REPURCHASE AT HOLDER'S OPTION"...............................                     3.01
          "REPURCHASE DATE".............................................                     3.10
          "REPURCHASE EVENT"............................................                     3.10
          "REPURCHASE EVENT NOTICE".....................................                     3.10
          "REPURCHASE PRICE"............................................                     3.10
          "REPURCHASE RIGHT"............................................                     3.10
          "REPURCHASE UPON REPURCHASE EVENT"............................                     3.01
          "RESALE RESTRICTION TERMINATION DATE".........................                     2.17
          "RIGHTS"......................................................                    10.06
          "TAX REDEMPTION"..............................................                     3.01
          "TAX REDEMPTION DATE".........................................                     3.08
          "TAX REDEMPTION PRICE"........................................                     3.08
          "TERMINATION OF TRADING"......................................                     3.10

</TABLE>

1.03     INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.

         The following TIA terms used in this Indenture have the following
meanings:

                                       6
<PAGE>

         "COMMISSION" means the SEC;
         "INDENTURE SECURITIES" means the Securities;
         "INDENTURE SECURITY HOLDER" means a Securityholder or a Holder;
         "INDENTURE TO BE QUALIFIED" means this Indenture;
         "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and
         "OBLIGOR" on the indenture securities means the Company or any
         successor.

         All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
and not otherwise defined herein have the meanings so assigned to them.

1.04     RULES OF CONSTRUCTION.

         Unless the context otherwise requires:

                  (i) a term has the meaning assigned to it;

                  (ii) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with generally accepted accounting
         principles in effect from time to time;

                  (iii) "or" is not exclusive;

                  (iv) words in the singular include the plural and in the
         plural include the singular;

                  (v) provisions apply to successive events and transactions;

                  (vi) "herein," "hereof" and other words of similar import
         refer to this Indenture as a whole and not to any particular Article,
         Section or other subdivision; and

                  (vii) references to currency shall mean the lawful currency of
         the United States of America, unless expressly provided otherwise.

                               II. THE SECURITIES

2.01     FORM AND DATING.

         The Securities and the Trustee's certificate of authentication shall be
substantially in the form set forth in EXHIBIT A, which is incorporated in and
forms a part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication.

         Securities offered and sold in reliance on Rule 144A under the
Securities Act shall be issued initially in the form of one or more Global
Securities, substantially in the form set forth in EXHIBIT A (the "GLOBAL
SECURITY"), deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and bearing the legends set forth in EXHIBITS B-1 and B-2. The aggregate
principal amount of the

                                       7
<PAGE>

Global Security may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian for the Depositary, as
hereinafter provided; provided, that in no event shall the aggregate principal
amount of the Global Security or Securities exceed US$150,000,000 (or
US$172,500,000 if the Initial Purchasers elect to purchase Additional Securities
pursuant to the Option).

         Securities issued in exchange for interests in a Global Security
pursuant to SECTION 2.15 may be issued in the form of permanent certificated
Securities in registered form in substantially the form set forth in EXHIBIT A
(the "PHYSICAL SECURITIES") and, if applicable, bearing any legends required by
SECTION 2.17.

2.02     EXECUTION AND AUTHENTICATION.

         One Officer shall sign the Securities for the Company by manual or
facsimile signature.

         If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.

         A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.

         Upon a written order of the Company signed by one Officer of the
Company, the Trustee shall authenticate Securities for original issue in the
aggregate principal amount of US$150,000,000 and such additional principal
amount, if any, as shall be determined pursuant to the next sentence of this
SECTION 2.02. Upon receipt by the Trustee of an Officers' Certificate stating
that the Initial Purchasers have elected to purchase from the Company a
specified principal amount of Additional Securities, not to exceed
US$22,500,000, pursuant to the Option, the Trustee shall authenticate and
deliver such specified principal amount of Additional Securities to or upon the
written order of the Company signed as provided in the immediately preceding
sentence. Such Officers' Certificate must be received by the Trustee not later
than the proposed date for delivering of such Additional Securities. The
aggregate principal amount of Securities outstanding at any time may not exceed
US$172,500,000.

         Upon a written order of the Company signed by two (2) Officers or by an
Officer and an Assistant Treasurer of the Company, the Trustee shall
authenticate Securities not bearing the Private Placement Legend to be issued to
the transferee when sold pursuant to an effective registration statement under
the Securities Act as set forth in SECTION 2.16(B).

         The Trustee shall act as the initial authenticating agent. Thereafter,
the Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Security Agent. An
authenticating agent has the same rights as a Security Agent to deal with the
Company and its Affiliates.

         If a written order of the Company pursuant to this SECTION 2.02 has
been, or simultaneously is, delivered, any instructions by the Company to the
Trustee with respect to

                                       8
<PAGE>

endorsement, delivery or redelivery of a Security issued in global form shall be
in writing but need not comply with SECTION 11.04 hereof and need not be
accompanied by an Opinion of Counsel.

         The Securities shall be issuable only in registered form without
interest coupons and only in denominations of $1,000 principal amount and any
integral multiple thereof.

2.03     REGISTRAR, PAYING AGENT AND CONVERSION AGENT.

         The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("REGISTRAR"), an office or agency in
the Borough of Manhattan, The City of New York, where Securities may be
presented for payment ("PAYING AGENT") and an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
conversion ("CONVERSION AGENT"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may appoint or change
one or more co-Registrars, one or more additional paying agents and one or more
additional conversion agents without notice and may act in any such capacity on
its own behalf. The term "REGISTRAR" includes any co-Registrar; the term "PAYING
AGENT" includes any additional paying agent; and the term "CONVERSION AGENT"
includes any additional conversion agent.

         The Company shall enter into an appropriate agency agreement with any
Security Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Security Agent. The Company
shall notify the Trustee of the name and address of any Security Agent not a
party to this Indenture. If the Company fails to maintain a Registrar, Paying
Agent or Conversion Agent, the Trustee shall act as such.

         The Company initially appoints the Trustee as Paying Agent, Registrar,
Conversion Agent and Bid Solicitation Agent.

2.04     PAYING AGENT TO HOLD MONEY IN TRUST.

         Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all moneys held by the Paying Agent for the
payment of the Securities, and shall notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent shall have no
further liability for the money. If the Company acts as Paying Agent, it shall
segregate and hold as a separate trust fund all money held by it as Paying
Agent.

2.05     SECURITYHOLDER LISTS.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before each interest payment date and at such other times
as the Trustee may request in writing a list, in such form and as of such date
as the Trustee may reasonably require, of the names and addresses of
Securityholders.

                                       9
<PAGE>

2.06     TRANSFER AND EXCHANGE.

         Subject to SECTIONS 2.15 and 2.16 hereof, where Securities are
presented to the Registrar with a request to register their transfer or to
exchange them for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transaction are met. To permit registrations of
transfer and exchanges, the Trustee shall authenticate Securities at the
Registrar's request. The Company or the Trustee, as the case may be, shall not
be required (A) to issue, authenticate, register the transfer of or exchange any
Security (i) during a period beginning at the opening of business fifteen (15)
days before the mailing of a notice of redemption of the Securities selected for
Redemption under SECTION 3.04, or for Tax Redemption under SECTION 3.08, and
ending at the close of business on the day of such mailing or (ii) for a period
of fifteen (15) days before selecting, pursuant to SECTION 3.03, Securities to
be redeemed; or (B) to register the transfer of or exchange any Security that
has been selected for Redemption or Tax Redemption or for which a Purchase
Notice has been delivered, and not withdrawn, in accordance with this Indenture,
except the unredeemed or unrepurchased portion of Securities being redeemed or
repurchased in part.

         No service charge shall be made for any transfer, exchange or
conversion of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer, exchange or conversion of Securities, other than
exchanges pursuant to SECTIONS 2.10, 3.07, 3.08, 3.09, 3.10, 9.05 or 10.02 not
involving any transfer.

2.07     REPLACEMENT SECURITIES.

         If the Holder of a Security claims that the Security has been
mutilated, lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security upon surrender to the Trustee
of the mutilated Security, or upon delivery to the Trustee of evidence of the
loss, destruction or theft of the Security satisfactory to the Trustee and the
Company. In the case of lost, destroyed or wrongfully taken Securities, if
required by the Trustee or the Company, an indemnity bond must be provided by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee or any Security Agent from any loss which any
of them may suffer if a Security is replaced. The Trustee may charge for its
expenses in replacing a Security.

         In case any such mutilated, lost, destroyed or wrongfully taken
Security has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security when due.

         Every replacement Security is an additional obligation of the Company
only as provided in SECTION 2.08.

2.08     OUTSTANDING SECURITIES.

         Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those converted, those cancelled by it, those
delivered to it for cancellation and those described in this SECTION 2.08 as not
outstanding. Except to the extent provided in SECTION 2.09,

                                       10
<PAGE>

a Security does not cease to be outstanding because the Company or one of its
Subsidiaries or Affiliates holds the Security.

         If a Security is replaced pursuant to SECTION 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it, or a court
holds, that the replaced Security is held by a protected purchaser.

         If the Paying Agent (other than the Company) holds on an Option
Purchase Date, Redemption Date, Tax Redemption Date, Repurchase Date or Maturity
Date, money sufficient to pay the Option Purchase Price, Redemption Price, Tax
Redemption Price, Repurchase Price or principal amount, as the case may be, with
respect to a Security, plus, if applicable, accrued and unpaid interest, if any,
payable as herein provided upon Repurchase at Holder's Option, Redemption, Tax
Redemption, Repurchase Upon Repurchase Event or maturity, then on and after such
date such Security shall be deemed to be no longer outstanding, interest on such
Security shall cease to accrue, and such Security shall be deemed paid whether
or not such Security is delivered to the Paying Agent. Thereafter, all rights of
the Holder of such Security shall terminate with respect to such Security, other
than the right to receive the Option Purchase Price, Redemption Price, Tax
Redemption Price, Repurchase Price or principal amount, as the case may be,
plus, if applicable, such accrued and unpaid interest, in accordance with this
Indenture.

         If a Security is converted in accordance with ARTICLE X, then, from and
after the time of such conversion on the Conversion Date, such Security shall
cease to be outstanding, and interest, if any, shall cease to accrue on such
Security.

2.09     SECURITIES HELD BY THE COMPANY OR AN AFFILIATE.

         In determining whether the Holders of the required aggregate principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any of its Subsidiaries or Affiliates shall
be considered as though not outstanding, except that, for the purposes of
determining whether a Responsible Officer of the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee knows are so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be considered to be outstanding for purposes
of this SECTION 2.09 if the pledgee establishes, to the satisfaction of the
Trustee, the pledgee's right so to concur with respect to such Securities and
that the pledgee is not, and is not acting at the direction or on behalf of, the
Company, any other obligor on the Securities, an Affiliate of the Company or an
affiliate of any such other obligor. In the event of a dispute as to whether the
pledgee has established the foregoing, the Trustee may rely on the advice of
counsel or on an Officers' Certificate.

2.10     TEMPORARY SECURITIES.

         Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.

                                       11
<PAGE>

2.11     CANCELLATION.

         The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, Paying Agent and Conversion Agent shall forward to
the Trustee any Securities surrendered to them for transfer, exchange, payment
or conversion. The Trustee shall cancel all Securities surrendered for transfer,
exchange, payment, conversion or cancellation in accordance with its customary
procedures. The Company may not issue new Securities to replace Securities that
it has paid or delivered to the Trustee for cancellation or that any
Securityholder has converted pursuant to ARTICLE X.

2.12     DEFAULTED INTEREST.

         If and to the extent the Company defaults in a payment of interest on
the Securities, the Company shall pay the defaulted interest in any lawful
manner plus, to the extent not prohibited by applicable statute or case law,
interest payable on the defaulted interest at the rate provided in the
Securities. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix such
record date and payment date. At least fifteen (15) calendar days before the
record date, the Company shall mail to Securityholders a notice that states the
record date, payment date and amount of interest to be paid.

2.13     CUSIP NUMBERS.

         The Company in issuing the Securities may use one or more "CUSIP"
numbers, and, if so, the Trustee shall use the CUSIP numbers in notices of
redemption or exchange as a convenience to Holders; provided, however, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of the CUSIP numbers printed on the notice or on the Securities;
provided further, that reliance may be placed only on the other identification
numbers printed on the Securities, and the effectiveness of any such notice
shall not be affected by any defect in, or omission of, such CUSIP numbers. The
Company shall promptly notify the Trustee of any change in the CUSIP numbers.

2.14     DEPOSIT OF MONEYS.

         Prior to 10:00 A.M., New York City time, on each interest payment date,
Maturity Date, Redemption Date, Tax Redemption Date, Option Purchase Date or
Repurchase Date, the Company shall have deposited with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust in
accordance with SECTION 2.04) money, in immediately available funds, sufficient
to make cash payments, if any, due on such interest payment date, Maturity Date,
Redemption Date, Tax Redemption Date, Option Purchase Date or Repurchase Date,
as the case may be, in a timely manner which permits the Paying Agent to remit
payment to the Holders on such interest payment date, Maturity Date, Redemption
Date, Tax Redemption Date, Option Purchase Date or Repurchase Date, as the case
may be.

                                       12
<PAGE>

2.15     BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.

         (A) The Global Securities initially shall (i) be registered in the name
of the Depositary or the nominee of such Depositary, (ii) be delivered to the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
SECTION 2.17.

         Members of, or participants in, the Depositary ("PARTICIPANTS") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and Participants, the operation of customary practices governing the exercise of
the rights of a Holder of any Security.

         (B) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depositary, its successors or their respective
nominees. In addition, Physical Securities shall be transferred to all
beneficial owners, as identified by the Depositary, in exchange for their
beneficial interests in Global Securities only if (i) the Depositary notifies
the Company that it is unwilling or unable to continue as depositary for any
Global Security (or the Depositary ceases to be a "clearing agency" registered
under Section 17A of the Exchange Act) and a successor Depositary is not
appointed by the Company within ninety (90) days of such notice or cessation or
(ii) an Event of Default has occurred and is continuing and the Registrar has
received a written request from the Depositary to issue Physical Securities.

         (C) In connection with the transfer of a Global Security in its
entirety to beneficial owners pursuant to SECTION 2.15(B), such Global Security
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall upon written instructions from the
Company authenticate and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in such Global Security, an
equal aggregate principal amount of Physical Securities of authorized
denominations.

         (D) Any Physical Security constituting a Restricted Security delivered
in exchange for an interest in a Global Security pursuant to SECTION 2.15(B)
shall, except as otherwise provided by SECTION 2.16, bear the Private Placement
Legend.

         (E) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Securities.

2.16     SPECIAL TRANSFER PROVISIONS.

         (A) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

                                       13
<PAGE>

         (B) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar or co-Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of a Security
bearing the Private Placement Legend, the Registrar or co-Registrar shall
deliver only a Security or Securities that bear the Private Placement Legend
unless (i) the requested transfer is after the Resale Restriction Termination
Date, (ii) there is delivered to the Trustee and the Company an opinion of
counsel reasonably satisfactory to the Company and addressed to the Company to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act or, if such requested transfer is in Canada or to or for the benefit of a
resident of Canada, applicable securities laws of a province or territory of
Canada or (iii) such Security has been sold pursuant to an effective
registration statement under the Securities Act and the Holder selling such
Securities has delivered to the Registrar or co-Registrar a notice in the form
of EXHIBIT C hereto (provided, however, that if Box B of such notice in the form
of EXHIBIT C hereto has been checked, then paragraph 4 of the Private Placement
Legend shall not be removed before the date that is four (4) months plus one day
after the distribution date of such Security). Upon the effectiveness of the
Shelf Registration Statement (as defined in the Registration Rights Agreement),
the Company shall deliver to the Trustee a notice of effectiveness, a Global
Security or Global Securities, which do not bear the Private Placement Legend,
an authentication order in accordance with SECTION 2.02 and an Opinion of
Counsel in the form of EXHIBIT D hereto, and, if required by the Depositary, the
Company shall deliver to the Depositary a letter of representations in a form
reasonably acceptable to the Depositary. Upon any sale, pursuant to such Shelf
Registration Statement, of a beneficial interest in a Global Security that
constitutes a Restricted Security and delivery of appropriate evidence thereof
to the Trustee, and upon any sale or transfer of a beneficial interest in
connection with which the Private Placement Legend will be removed in accordance
with this Indenture, the Trustee shall increase the principal amount of the
Global Security that does not constitute a Restricted Security by the principal
amount of such sale or transfer and likewise reduce the principal amount of the
Global Security that does constitute a Restricted Security.

         (C) GENERAL. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.

         The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to SECTION 2.15 or this SECTION 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.

         (D) TRANSFERS OF SECURITIES HELD BY AFFILIATES. Any certificate (i)
evidencing a Security that has been transferred to an Affiliate within two (2)
years after the Issue Date, as evidenced by a notation on the assignment form
for such transfer or in the representation letter delivered in respect thereof
or (ii) evidencing a Security that has been acquired from an Affiliate (other
than by an Affiliate) in a transaction or a chain of transactions not involving
any public offering, shall, until two (2) years after the last date on which the
Company or any Affiliate was an owner of such Security (or such longer period of
time as may be required under the Securities

                                       14
<PAGE>

Act or applicable state securities laws), in each case, bear the Private
Placement Legend, unless otherwise agreed by the Company (with written notice
thereof to the Trustee).

2.17     RESTRICTIVE LEGENDS.

         Each Global Security and Physical Security that constitutes a
Restricted Security shall bear the legend (the "PRIVATE PLACEMENT LEGEND") as
set forth in EXHIBIT B-1 on the face thereof until after the second anniversary
of the later of (i) the Issue Date and (ii) the last date on which the Company
or any Affiliate was the owner of such Security (or any predecessor security)
(or such shorter period of time as permitted by Rule 144(k) under the Securities
Act or any successor provision thereunder) (or such longer period of time as may
be required under the Securities Act or applicable state securities laws, as set
forth in an Opinion of Counsel delivered to the Trustee, unless otherwise agreed
between the Company and the Holder thereof) (such date, the "RESALE RESTRICTION
TERMINATION DATE").

         Notwithstanding the foregoing, paragraph 4 and the phrase "AND
PROVINCIAL AND TERRITORIAL SECURITIES LAWS IN CANADA" in the last paragraph of
the Private Placement Legend shall only be required to appear on a Restricted
Security until the date that is four (4) months plus one day after the
distribution date of such Restricted Security. Any Restricted Security issued or
replaced after such date may exclude such paragraph and phrase of the Private
Placement Legend.

         Each Global Security shall also bear the legend as set forth in EXHIBIT
B-2.

2.18     RANKING.

         The indebtedness of the Company arising under or in connection with
this Indenture and every outstanding Security issued under this Indenture from
time to time constitutes and will constitute a senior unsecured obligation of
the Company, ranking equally with other existing and future senior unsecured
Indebtedness of the Company and ranking senior to any future subordinated
Indebtedness of the Company.

                                III. REDEMPTION

3.01     RIGHT OF REDEMPTION.

         Redemption of the Securities, as permitted by any provision of this
Indenture, shall be made in accordance with PARAGRAPHS 7 AND 8 of the Securities
(a "REDEMPTION"), with respect to a redemption for tax reasons, PARAGRAPH 9 of
the Securities (a "TAX REDEMPTION"), with respect to a repurchase at the
Holder's option, PARAGRAPH 10 of the Securities (a "REPURCHASE AT HOLDER'S
Option"), and with respect to any repurchase upon a Repurchase Event, PARAGRAPH
11 of the Securities (a "REPURCHASE UPON REPURCHASE EVENT"), in each case in
accordance with the applicable provisions of this ARTICLE III.

         The Company will comply with all federal and state securities laws, and
the applicable laws of any foreign jurisdiction, in connection with any offer to
sell or solicitations of offers to buy Securities pursuant to this ARTICLE III.

                                       15
<PAGE>

         Except as provided in SECTION 3.08, the Company will not have the right
to redeem any Securities prior to September 15, 2008. On or after September 15,
2008, the Company will have the right to redeem all or any part of the
Securities at the Redemption Price plus accrued and unpaid interest, if any, to,
but excluding, the Redemption Date.

3.02     NOTICES TO TRUSTEE.

         If the Company elects to redeem Securities pursuant to PARAGRAPH 7 of
the Securities, it shall notify the Trustee at least fifteen (15) days prior to
the mailing of the notice of Redemption (unless a shorter notice period shall be
satisfactory to the Trustee) of the Redemption Date and the aggregate principal
amount of Securities to be redeemed.

3.03     SELECTION OF SECURITIES TO BE REDEEMED.

         If less than all the Securities are to be redeemed pursuant to
PARAGRAPH 7 of the Securities, the Trustee shall, within five (5) Business Days
after receiving the notice specified in SECTION 3.02, select the Securities to
be redeemed by lot, on a pro rata basis or in accordance with any other method
the Trustee considers fair and appropriate. The Trustee shall make such
selection from Securities outstanding not previously called for Redemption. The
Trustee may select for Redemption portions of the principal amount of Securities
that have denominations larger than $1,000 principal amount. Securities and
portions of them the Trustee selects for Redemption shall be in amounts of
$1,000 principal amount or integral multiples of $1,000 principal amount. The
Trustee shall promptly notify the Company in writing of the Securities selected
for Redemption and the principal amount thereof to be redeemed.

         The Registrar need not transfer or exchange any Securities selected for
Redemption or Tax Redemption, except the unredeemed portion of the Securities
redeemed in part. The Registrar need not transfer or exchange any Securities for
a period of fifteen (15) days before selecting Securities to be redeemed.

3.04     NOTICE OF REDEMPTION.

         At least thirty (30) days but not more than sixty (60) days before a
Redemption Date, the Company shall mail, or cause to be mailed, by first-class
mail a notice of Redemption to each Holder whose Securities are to be redeemed,
at the address of such Holder appearing in the security register.

         The notice shall identify the Securities and the aggregate principal
amount thereof to be redeemed pursuant to a Redemption and shall state:

                  (i) the Redemption Date;

                  (ii) the Redemption Price plus accrued and unpaid interest, if
         any, to, but excluding, the Redemption Date;

                  (iii) the Conversion Rate and the Conversion Price;

                  (iv) the names and addresses of the Paying Agent and the
         Conversion Agent;

                                       16
<PAGE>

                  (v) that the right to convert the Securities called for
         Redemption will terminate at the close of business on the Business Day
         immediately preceding the Redemption Date;

                  (vi) the place or places where such Securities may be
         surrendered for conversion;

                  (vii) that Holders who want to convert Securities must satisfy
         the requirements of ARTICLE X;

                  (viii) the paragraph of the Securities pursuant to which the
         Securities are to be redeemed;

                  (ix) that Securities called for Redemption must be surrendered
         to the Paying Agent to collect the Redemption Price plus accrued and
         unpaid interest, if any, payable as herein provided upon Redemption;

                  (x) that, unless the Company shall default in the payment of
         the Redemption Price, or accrued and unpaid interest, if any, payable
         as herein provided upon Redemption, interest on Securities called for
         Redemption ceases to accrue on and after the Redemption Date, such
         Securities will cease to be convertible after the close of business on
         the Business Day immediately preceding the Redemption Date, and all
         rights of the Holders of such Securities shall terminate on and after
         the Redemption Date, other than the right to receive, upon surrender of
         such Securities and in accordance with the Indenture, the Redemption
         Price and such accrued and unpaid interest; and

                  (xi) the CUSIP number or numbers, as the case may be, of the
         Securities.

         The right, pursuant to ARTICLE X, to convert Securities called for
Redemption shall terminate at the close of business on the Business Day
immediately preceding the Redemption Date.

         At the Company's request, upon reasonable prior notice, the Trustee
shall give the notice of Redemption in the Company's name and at the Company's
expense; provided that the form and content of such notice shall be prepared by
the Company.

3.05     EFFECT OF NOTICE OF REDEMPTION.

         Once notice of Redemption is mailed, Securities called for Redemption
become due and payable on the Redemption Date at the Redemption Price plus
accrued and unpaid interest to, but excluding, the Redemption Date, and, on and
after such Redemption Date (unless the Company shall default in the payment of
the Redemption Price or such accrued and unpaid interest), such Securities shall
cease to bear interest, and all rights of the Holders of such Securities shall
terminate, other than the right to receive, upon surrender of such Securities
and in accordance with the next sentence, the Redemption Price and such accrued
and unpaid interest. Upon surrender to the Paying Agent of a Security subject to
Redemption, such Security shall be paid at the Redemption Price plus accrued and
unpaid interest to, but excluding, the Redemption Date,

                                       17
<PAGE>

unless the Redemption Date is an interest payment date, in which case such
accrued and unpaid interest will instead be paid on such interest payment date
to the Holder of such Security at the close of business on the record date for
such interest payment.

         If any Security shall not be paid upon surrender thereof for
Redemption, the principal of, and accrued and unpaid interest on, such Security
shall, until paid, bear interest from the Redemption Date at the rate borne by
such Security on the principal amount of such Security, and such Security shall
continue to be convertible pursuant to ARTICLE X.

         Notwithstanding anything herein to the contrary, there shall be no
purchase of any Securities pursuant to a Redemption if there has occurred (prior
to, on or after, as the case may be, the mailing of the notice of Redemption
specified in SECTION 3.04) and is continuing an Event of Default (other than a
default in the payment of the Redemption Price or accrued and unpaid interest,
if any, payable as herein provided upon Redemption). The Paying Agent will
promptly return to the respective Holders thereof any Securities held by it
during the continuance of an Event of Default (other than a default in the
payment of the Redemption Price or accrued and unpaid interest, if any, payable
as herein provided upon Redemption) of which the Paying Agent has actual
knowledge.

3.06     DEPOSIT OF REDEMPTION PRICE.

         Prior to 10:00 A.M., New York City time on the Redemption Date, the
Company shall deposit with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust in accordance with SECTION 2.04)
money in funds immediately available on the Redemption Date sufficient to pay
the Redemption Price, plus accrued and unpaid interest to, but excluding, the
Redemption Date, of all Securities to be redeemed on that date. The Paying Agent
shall return to the Company, as soon as practicable, any money not required for
that purpose

3.07     SECURITIES REDEEMED IN PART.

         Any Security to be submitted for Redemption only in part shall be
delivered pursuant to SECTION 3.05 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or its attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for delivery to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, of the same tenor and in
aggregate principal amount equal to the portion of such Security not submitted
for Redemption.

         If any Security selected for partial Redemption is converted in part,
the converted portion of such Security shall be deemed to be the portion
selected for Redemption.

3.08     REDEMPTION OF SECURITIES FOR TAX REASONS.

         (A) The Company may, at its option, redeem the Securities, in whole but
not in part, at one hundred percent (100%) of the principal amount of the
Securities (the "TAX REDEMPTION PRICE"), plus accrued and unpaid interest, if
any, to, but excluding, the Tax Redemption Date if:

                                       18
<PAGE>

                  (i) the Company has become, or would become, obligated to pay
         to the Holders Additional Amounts that, in the aggregate, are more than
         de minimis as a result of any amendment or change occurring after
         August 12, 2003 in the laws or any regulations of Canada or any
         Canadian political subdivision or taxing authority or any change
         occurring after August 12, 2003 in the interpretation or application of
         any such laws or regulations by any legislative body, court,
         governmental agency, taxing authority or regulatory authority
         (including the enactment of any legislation and the publication of any
         judicial decision or regulatory or administrative determination);

                  (ii) the Company cannot avoid the obligation to pay such
         non-de minimis Additional Amounts by taking reasonable measures
         available to it;

                  (iii) the Company delivers to the Trustee an opinion of
         Canadian legal counsel specializing in taxation and an Officers'
         Certificate attesting to (I) such change in such laws, regulations,
         interpretation or application and (II) the obligation of the Company to
         pay such non-de minimis Additional Amounts; and

                  (iv) at least thirty (30) days but not more than sixty (60)
         days before the date (the "TAX REDEMPTION DATE") the Securities are to
         be redeemed pursuant to this SECTION 3.09, the Company mails, or causes
         to be mailed, by first-class mail to each Holder, at the address of
         such Holder appearing in the security register, a written notice of Tax
         Redemption containing the information specified in SECTION 3.08(E);
         provided, however, that (I) the Company shall not mail, or cause to be
         mailed, a notice of Tax Redemption earlier than sixty (60) Business
         Days prior to the earliest date on or from which the Company would be
         obligated to pay any such non-de minimis Additional Amounts and (II)
         the Company shall not mail, or cause to be mailed, a notice of Tax
         Redemption unless, at the time of such mailing, the circumstances
         creating the Company's obligation to pay such non-de minimis Additional
         Amounts are in effect.

         (B) Except in respect of Excluded Holders, the Company shall not, and
shall not cause any Paying Agent or the Trustee to, deduct from the Tax
Redemption Price, or from the accrued and unpaid interest payable as herein
provided upon Tax Redemption, any amounts on account of, or in respect of, any
Canadian withholding taxes.

         (C) The right, pursuant to ARTICLE X, to convert Securities called for
Tax Redemption shall terminate at the close of business on the Business Day
immediately preceding the Tax Redemption Date.

         (D) A Holder may elect not to have its Securities, or a portion
thereof, redeemed pursuant to a Tax Redemption by delivering to the Paying
Agent, no later than the close of business on the Business Day immediately
preceding the Tax Redemption Date, a duly completed and signed Notice of
Election Upon Tax Redemption (or any other form of written notice substantially
similar thereto); provided, however, that no Additional Amounts shall be payable
by the Company on any payment of interest or principal with respect to
Securities for which such a Notice of Election Upon Tax Redemption is so
delivered, and all payments by the Company with respect to such Securities shall
be subject to the deduction or withholding of any

                                       19
<PAGE>

Canadian Taxes required to be deducted or withheld. A Holder that has not so
delivered such a Notice of Election Upon Tax Redemption shall have its
Securities redeemed pursuant to the Tax Redemption without further action.
Notwithstanding anything herein to the contrary, a Holder may withdraw its
Notice of Election Upon Tax Redemption by delivering to the Paying Agent a
written notice of withdrawal prior to the close of business on the Business Day
immediately preceding the Tax Redemption Date, which notice of withdrawal must
contain the information specified in SECTION 3.08(E)(x). The Paying Agent shall
promptly notify the Company of the receipt by it of any such written notice of
withdrawal thereof.

         (E) The notice of Tax Redemption specified in SECTION 3.08(A)(IV) shall
state:

                  (i) the Tax Redemption Date;

                  (ii) the Tax Redemption Price plus accrued and unpaid
         interest, if any, to, but excluding, the Tax Redemption Date;

                  (iii) a description of any Canadian withholding taxes, if any,
         that shall be deducted from the Tax Redemption Price, or such accrued
         and unpaid interest, to be paid to Excluded Holders pursuant to the Tax
         Redemption;

                  (iv) that the right to convert the Securities will terminate
         at the close of business on the Business Day immediately preceding the
         Tax Redemption Date;

                  (v) the Conversion Rate and the Conversion Price;

                  (vi) that Holders who want to convert Securities must satisfy
         the requirements of ARTICLE X;

                  (vii) the names and addresses of the Paying Agent and the
         Conversion Agent;

                  (viii) that a Holder may elect not to have its Securities, or
         a portion thereof, redeemed pursuant to a Tax Redemption by delivering
         to the Paying Agent, no later than the close of business on the
         Business Day immediately preceding the Tax Redemption Date, a duly
         completed and signed Notice of Election Upon Tax Redemption (or any
         other form of written notice substantially similar thereto); provided,
         however, that no Additional Amounts shall be payable by the Company on
         any payment of interest or principal with respect to Securities for
         which such a Notice of Election Upon Tax Redemption is so delivered,
         and all payments by the Company with respect to such Securities shall
         be subject to the deduction or withholding of any Canadian Taxes
         required to be deducted or withheld;

                  (ix) that a Holder that has not so delivered such a Notice of
         Election Upon Tax Redemption shall have its Securities redeemed
         pursuant to the Tax Redemption without further action;

                  (x) that a Holder will be entitled to withdraw its Notice of
         Election Upon Tax Redemption if the Paying Agent receives, prior to the
         close of business on the Business Day immediately preceding the Tax
         Redemption Date, or such longer period as may be

                                       20
<PAGE>

         required by law, a letter or telegram, telex or facsimile transmission
         (receipt of which is confirmed and promptly followed by a letter)
         setting forth (I) the name of such Holder, (II) a statement that such
         Holder is withdrawing its Notice of Election Upon Tax Redemption, (III)
         the principal amount of the Securities of such Holder to be so
         withdrawn, which amount must be $1,000 or an integral multiple thereof,
         (IV) the certificate number of such Securities to be so withdrawn, (V)
         the principal amount, if any, of the Securities of such Holder that
         remain subject to the Notice of Election Upon Tax Redemption delivered
         by such Holder in accordance with this SECTION 3.08, which amount must
         be $1,000 or an integral multiple thereof;

                  (xi) the paragraph of the Securities pursuant to which the
         Securities are to be redeemed;

                  (xii) that Securities called for Tax Redemption must be
         surrendered to the Paying Agent to collect the Tax Redemption Price
         plus accrued and unpaid interest, if any, payable as herein provided
         upon Tax Redemption;

                  (xiii) that, unless the Company shall default in the payment
         of the Tax Redemption Price, or accrued and unpaid interest, if any,
         payable as herein provided upon Tax Redemption, and except to the
         extent the Holder of such Securities elects, pursuant to SECTION
         3.08(D), not to have such Securities, or a portion thereof, redeemed
         pursuant to the Tax Redemption, interest on Securities called for Tax
         Redemption ceases to accrue on and after the Tax Redemption Date, such
         Securities will cease to be convertible after the close of business on
         the Business Day immediately preceding the Tax Redemption Date, and all
         rights of the Holders of such Securities shall terminate on and after
         the Tax Redemption Date, other than the right to receive, upon
         surrender of such Securities and in accordance with the Indenture, the
         Tax Redemption Price and such accrued and unpaid interest; and

                  (xiv) the CUSIP number or numbers, as the case may be, of the
         Securities.

         At the Company's request, upon reasonable prior written notice, the
Trustee shall give such notice of Tax Redemption in the Company's name and at
the Company's expense; provided that the form and content of such notice shall
be prepared by the Company.

         (F) If the Company elects to redeem Securities pursuant to this SECTION
3.08, it shall notify the Trustee at least fifteen (15) days prior to the
mailing of the notice of Tax Redemption specified in SECTION 3.08(A)(IV) (unless
a shorter notice period shall be satisfactory to the Trustee) of the Tax
Redemption Date.

         (G) Except to the extent Holders elect, pursuant to SECTION 3.08(D),
not to have their Securities, or a portion thereof, redeemed pursuant to the Tax
Redemption, once the notice of Tax Redemption specified in SECTION 3.08(A)(IV)
is mailed, the Securities shall become due and payable on the Tax Redemption
Date at the Tax Redemption Price plus accrued and unpaid interest to, but
excluding, the Tax Redemption Date, and, on and after such Tax Redemption Date
(unless the Company shall default in the payment of the Tax Redemption Price or
such accrued and unpaid interest), the Securities shall cease to bear interest,
and all rights of the

                                       21
<PAGE>

Holders of such Securities shall terminate, other than the right to receive,
upon surrender of such Securities and in accordance with the next sentence, the
Tax Redemption Price and such accrued and unpaid interest. Upon surrender to the
Paying Agent of a Security subject to Tax Redemption, such Security shall be
paid at the Tax Redemption Price plus accrued and unpaid interest to, but
excluding, the Tax Redemption Date, unless the Tax Redemption Date is an
interest payment date, in which case such accrued and unpaid interest will
instead be paid on such interest payment date to the Holder of such Security at
the close of business on the record date for such interest payment.

         (H) If the Company elects to redeem Securities pursuant to this SECTION
3.08, it shall notify the Trustee in writing at least fifteen (15) days prior to
the mailing of the notice of Tax Redemption specified in SECTION 3.08(A)(IV)
(unless a shorter notice period shall be satisfactory to the Trustee) of the Tax
Redemption Date.

         (I) Prior to 10:00 A.M., New York City time on the Tax Redemption Date,
the Company shall deposit with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust in accordance with SECTION
2.04) money in funds immediately available on the Tax Redemption Date sufficient
to pay the Tax Redemption Price, plus accrued and unpaid interest to, but
excluding, the Tax Redemption Date, of all Securities to be redeemed on that
date. The Paying Agent shall return to the Company, as soon as practicable, any
money not required for that purpose.

         (J) If any Security shall not be paid upon surrender thereof for Tax
Redemption, the principal of, and accrued and unpaid interest on, such Security
shall, until paid, bear interest from the Tax Redemption Date at the rate borne
by such Security on the principal amount of such Security, and such Security
shall continue to be convertible pursuant to ARTICLE X.

         (K) Any Security which is to be redeemed pursuant to a Tax Redemption
only in part shall be delivered pursuant to this SECTION 3.09 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or its attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Security without service charge, a new Security
or Securities, of any authorized denomination as requested by such Holder, of
the same tenor and in aggregate principal amount equal to the portion of such
Security not submitted for Tax Redemption.

         (L) Notwithstanding anything herein to the contrary, there shall be no
purchase of any Securities pursuant to a Tax Redemption under this SECTION 3.08
if there has occurred (prior to, on or after, as the case may be, the mailing of
the notice of Tax Redemption specified in SECTION 3.08(A)(IV)) and is continuing
an Event of Default (other than a default in the payment of the Tax Redemption
Price or accrued and unpaid interest, if any, payable as herein provided upon
Tax Redemption). The Paying Agent will promptly return to the respective Holders
thereof any Securities held by it during the continuance of an Event of Default
(other than a default in the payment of the Tax Redemption Price or accrued and
unpaid interest, if any, payable as herein provided upon Tax Redemption) of
which the Paying Agent has actual knowledge.

                                       22
<PAGE>

3.09     PURCHASE OF SECURITIES AT OPTION OF THE HOLDER.

         (A) At the option of the Holder thereof, Securities (or portions
thereof that are integral multiples of $1,000) shall be purchased by the Company
pursuant to PARAGRAPH 10 of the Securities on September 15, 2008, September 15,
2013 and September 15, 2018 (each, an "OPTION PURCHASE DATE"), at a purchase
price, payable in cash, equal to one hundred percent (100%) of the principal
amount of the Securities (or such portions thereof) to be so purchased (the
"OPTION PURCHASE PRICE"), plus accrued and unpaid interest, if any, to, but
excluding, the applicable Option Purchase Date, upon:

                  (i) delivery to the Paying Agent, by the Holder, of a Purchase
         Notice, or any other form of written notice substantially similar
         thereto, at any time from the opening of business on the date that is
         twenty (20) Business Days prior to the Option Purchase Date until the
         close of business on the Business Day immediately preceding the
         applicable Option Purchase Date, stating:

                           (A) the certificate number of the Securities which
                  the Holder will deliver to be purchased;

                           (B) the principal amount of Securities to be
                  purchased, which must be $1,000 or an integral multiple
                  thereof; and

                           (D) that such Principal amount of Securities shall be
                  purchased as of the applicable Option Purchase Date pursuant
                  to the terms and conditions specified in PARAGRAPH 10 of the
                  Securities and in this Indenture;

                  (ii) delivery of such Securities (together with all necessary
         endorsements) to the Paying Agent after delivery of the Purchase Notice
         at the offices of the Paying Agent, such delivery being a condition to
         receipt by the Holder of the Option Purchase Price therefor plus
         accrued and unpaid interest thereon, if any, to, but excluding, the
         applicable Option Purchase Date; provided, however, that such Option
         Purchase Price and such accrued and unpaid interest shall be so paid
         pursuant to this SECTION 3.09 only if the Securities so delivered to
         the Paying Agent shall conform in all respects to the description
         thereof in the related Purchase Notice, as determined by the Company.

         Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Purchase Notice contemplated by this SECTION 3.09(A)
shall have the right to withdraw such Purchase Notice by delivery, at any time
prior to the close of business on the Business Day prior to the applicable
Option Purchase Date, of a written notice of withdrawal to the Paying Agent,
which notice shall contain the information specified in SECTION 3.09(B)(VIII).

         The Paying Agent shall promptly notify the Company of the receipt by it
of any Purchase Notice or written notice of withdrawal thereof.

         (B) The Company shall give notice (the "OPTION PURCHASE NOTICE") on a
date not less than twenty (20) Business Days prior to each Option Purchase Date
to all Holders at their addresses shown in the register and to beneficial owners
as required by applicable law. Such notice shall state:

                                       23
<PAGE>

                  (i) the Option Purchase Price plus accrued and unpaid
         interest, if any, to, but excluding, such Option Purchase Date and the
         Conversion Rate;

                  (ii) the names and addresses of the Paying Agent and the
         Conversion Agent;

                  (iii) that Securities with respect to which a Purchase Notice
         is given by a Holder may be converted pursuant to ARTICLE X, if
         otherwise convertible in accordance with ARTICLE X, only if such
         Purchase Notice has been withdrawn in accordance with this SECTION
         3.10;

                  (iv) that Securities must be surrendered to the Paying Agent
         to collect payment of the Option Purchase Price plus accrued and unpaid
         interest, if any, to, but excluding, such Option Purchase Date;

                  (v) that the Option Purchase Price, plus accrued and unpaid
         interest, if any, to, but excluding, such Option Purchase Date, for any
         Security as to which a Purchase Notice has been given and not withdrawn
         will be paid as promptly as practicable, but in no event more than
         three (3) Business Days, following the later of such Option Purchase
         Date or the time of delivery of the Security as described in (iv)
         above;

                  (vi) the procedures the Holder must follow to exercise rights
         under this SECTION 3.09 and a brief description of those rights;

                  (viii) that a Holder will be entitled to withdraw its election
         if the Company (if acting as its own Paying Agent), or the Paying Agent
         receives, at any time prior to the close of business on the Business
         Day prior to the applicable Option Purchase Date, or such longer period
         as may be required by law, a letter or telegram, telex or facsimile
         transmission (receipt of which is confirmed and promptly followed by a
         letter) setting forth (I) the name of such Holder, (II) a statement
         that such Holder is withdrawing its election to have Securities
         repurchased, (III) the principal amount of the Securities of such
         Holder to be so withdrawn, which amount must be $1,000 or an integral
         multiple thereof, (IV) the certificate number of such Securities to be
         so withdrawn, and (V) the principal amount, if any, of the Securities
         of such Holder that remain subject to the Purchase Notice delivered by
         such Holder in accordance with this SECTION 3.09, which amount must be
         $1,000 or an integral multiple thereof;

                  (ix) that, on and after the applicable Option Purchase Date
         (unless the Company defaults in the payment of such Option Purchase
         Price or such accrued and unpaid interest), interest on Securities
         subject to Repurchase at Holder's Option will cease to accrue, such
         Securities shall cease to be convertible pursuant to ARTICLE X, and all
         rights of the Holders of such Securities shall terminate, other than
         the right to receive, upon surrender of such Securities and in
         accordance with this SECTION 3.09, the Option Purchase Price and such
         accrued and unpaid interest; and

                  (x)      the CUSIP number of the Securities.

                                       24
<PAGE>

         At the Company's request, the Trustee shall give such notice in the
Company's name and at the Company's expense; provided, however, that, in all
cases, the text of such notice shall be prepared by the Company.

         Subject to the provisions of this SECTION 3.09, the Company shall pay,
or cause to be paid, the Option Purchase Price, plus accrued and unpaid
interest, if any, to, but excluding, the applicable Option Purchase Date, with
respect to each Security subject to Repurchase at Holder's Option to the Holder
thereof as promptly as practicable, but in no event more than three (3) Business
Days, following the later of the applicable Option Purchase Date and the time
such Security is surrendered to the Paying Agent. Any purchase by the Company
contemplated pursuant to the provisions of this SECTION 3.09 shall be
consummated by such payment.

         Prior to 10:00 A.M., New York City time on the applicable Option
Purchase Date, the Company shall deposit with a Paying Agent (or, if the Company
is acting as its own Paying Agent, segregate and hold in trust in accordance
with SECTION 2.04) money in funds immediately available on the applicable Option
Purchase Date sufficient to pay the Option Purchase Price, plus accrued and
unpaid interest, if any, to, but excluding, such Option Purchase Date, of all of
the Securities subject to Repurchase at Holder's Option. The Paying Agent shall
return to the Company, as soon as practicable, any money not required for that
purpose.

         Once the Purchase Notice has been duly given as specified in this
SECTION 3.09, the Securities to be repurchased pursuant to the Repurchase at
Holder's Option shall, on the applicable Option Purchase Date, become due and
payable at the Option Purchase Price (plus accrued and unpaid interest, if any,
to, but excluding, such Option Purchase Date) applicable thereto, and, on and
after such date (unless there shall be a default in the payment of the Option
Purchase Price or such accrued and unpaid interest), such Securities shall cease
to bear interest and shall cease to be convertible, and all rights of the
Holders of such Securities shall terminate, other than the right to receive, in
accordance with this SECTION 3.09, the Option Purchase Price and such accrued
and unpaid interest.

         If any Security shall not be paid upon surrender thereof for Repurchase
at Holder's Option, the principal of, and accrued and unpaid interest on, such
Security shall, until paid, bear interest from the applicable Option Purchase
Date at the rate borne by such Security on the principal amount of such
Security, and such Security shall continue to be convertible pursuant to ARTICLE
X.

         Any Security which is to be submitted for Repurchase at Holder's Option
only in part shall be delivered pursuant to this SECTION 3.09 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or its attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Security without service charge, a new Security
or Securities, of any authorized denomination as requested by such Holder, of
the same tenor and in aggregate principal amount equal to the portion of such
Security not submitted for Repurchase at Holder's Option.

                                       25
<PAGE>

         Notwithstanding anything herein to the contrary, there shall be no
purchase of any Securities pursuant to this SECTION 3.09 if there has occurred
(prior to, on or after, as the case may be, the giving, by the Holders of such
Securities, of the required Purchase Notice) and is continuing an Event of
Default (other than a default in the payment of the Option Purchase Price or
accrued and unpaid interest, if any, payable as herein provided upon Repurchase
at Holder's Option). The Paying Agent will promptly return to the respective
Holders thereof any Securities held by it during the continuance of an Event of
Default (other than a default in the payment of the Option Purchase Price or
such accrued and unpaid interest) of which the Paying Agent has actual
knowledge, in which case, upon such return, the Purchase Notice with respect to
the Repurchase at Holder's Option shall be deemed to have been withdrawn.

         Notwithstanding anything herein to the contrary, if the option granted
to Securityholders to require the repurchase of the Securities on the applicable
Option Purchase Date is determined to constitute a tender offer, the Company
will comply with all applicable tender offer rules under the Exchange Act,
including Rules 13e-4 and 14e-1, and with all other applicable laws, and will
file a Schedule TO or any other schedules required under the Exchange Act or any
other applicable laws.

3.10     REPURCHASE AT OPTION OF HOLDER UPON A REPURCHASE EVENT.

         Upon any Repurchase Event (as defined below), each Holder of Securities
shall have the right (the "REPURCHASE RIGHT"), at the Holder's option, to
require the Company to repurchase all of such Holder's Securities, or a portion
thereof which is $1,000 in principal amount or any integral multiple thereof, on
a date selected by the Company (the "REPURCHASE DATE") no later than thirty (30)
days after the date the Repurchase Event Notice (as defined below) is mailed in
accordance with the immediately succeeding paragraph, at a price, payable in
cash, equal to one hundred percent (100%) of the principal amount of the
Securities (or portions thereof) to be so repurchased (the "REPURCHASE PRICE"),
plus accrued and unpaid interest, if any, to, but excluding, the Repurchase
Date.

         Within thirty (30) days after the occurrence of a Repurchase Event, the
Company shall mail, or cause to be mailed, to all Holders of record of the
Securities at their addresses shown in the register of the Registrar, and to
beneficial owners as required by applicable law, a notice (the "REPURCHASE EVENT
NOTICE") of the occurrence of such Repurchase Event and the Repurchase Right
arising as a result thereof. The Company shall deliver a copy of the Repurchase
Event Notice to the Trustee and shall cause a copy to be published at the
expense of the Company in THE NEW YORK TIMES or THE WALL STREET JOURNAL or
another newspaper of national circulation.

         Each Repurchase Event Notice shall state:

                  (i) the events causing the Repurchase Event;

                  (ii) the date of such Repurchase Event;

                  (iii) the Repurchase Date;

                  (iv) the date by which the Repurchase Right must be exercised;

                                       26
<PAGE>

                  (v) the Repurchase Price plus accrued and unpaid interest, if
         any, to, but excluding, the Repurchase Date;

                  (vi) the names and addresses of the Paying Agent and the
         Conversion Agent;

                  (vii) a description of the procedure which a Holder must
         follow to exercise the Repurchase Right;

                  (viii) that, in order to exercise the Repurchase Right, the
         Securities must be surrendered for payment of the Repurchase Price plus
         accrued and unpaid interest, if any, payable as herein provided upon
         Repurchase Upon Repurchase Event;

                  (ix) that the Repurchase Price, plus accrued and unpaid
         interest, if any, to, but excluding, the Repurchase Date, for any
         Security as to which a Purchase Notice has been given and not withdrawn
         will be paid as promptly as practicable, but in no event more than
         three (3) Business Days, following the later of the Repurchase Date or
         the time of delivery of the Security as described in (viii);

                  (x) that, on and after the Repurchase Date (unless the Company
         defaults in the payment of such Repurchase Price or such accrued and
         unpaid interest), interest on Securities subject to Repurchase Upon
         Repurchase Event will cease to accrue, such Securities shall cease to
         be convertible pursuant to ARTICLE X, and all rights of the Holders of
         such Securities shall terminate, other than the right to receive, upon
         surrender of such Securities, the Repurchase Price and such accrued and
         unpaid interest;

                  (xi) that a Holder will be entitled to withdraw its election
         if the Company (if acting as its own Paying Agent), or the Paying Agent
         receives, prior to the close of business on the Business Day
         immediately preceding the Repurchase Date, or such longer period as may
         be required by law, a letter or telegram, telex or facsimile
         transmission (receipt of which is confirmed and promptly followed by a
         letter) setting forth (I) the name of such Holder, (II) a statement
         that such Holder is withdrawing its election to have Securities
         repurchased, (III) the principal amount of the Securities of such
         Holder to be so withdrawn, which amount must be $1,000 or an integral
         multiple thereof, (IV) the certificate number of such Securities to be
         so withdrawn, and (V) the principal amount, if any, of the Securities
         of such Holder that remains subject to the Purchase Notice delivered by
         such Holder in accordance with this SECTION 3.10, which amount must be
         $1,000 or an integral multiple thereof;

                  (xii) the Conversion Rate and any adjustments to the
         Conversion Rate that will result from the Repurchase Event;

                  (xiii) that Securities with respect to which a Purchase Notice
         is given by a Holder may be converted pursuant to ARTICLE X, if
         otherwise convertible in accordance with ARTICLE X, only if such
         Purchase Notice has been withdrawn in accordance with this SECTION
         3.10;

                  (xiv) the place or places where such Securities may be
         surrendered for conversion; and

                                       27
<PAGE>

                  (xv) the CUSIP number or numbers, as the case may be, of the
         Securities.

         No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a Repurchase Right.

         To exercise a Repurchase Right, a Holder shall deliver to the Company
(if it is acting as its own Paying Agent), or to a Paying Agent designated by
the Company for such purpose in the Repurchase Event Notice, (i) no later than
the close of business on the Business Day immediately preceding the Repurchase
Date, a Purchase Notice, in the form set forth in the Securities or any other
form of written notice substantially similar thereto, in each case, duly
completed and signed, with appropriate signature guarantee, and stating (A) the
certificate number of the Security which the Holder will deliver to be
repurchased, (B) the principal amount of Securities to be repurchased, which
must be $1,000 or an integral multiple thereof, and (C) that such Security is
being tendered for repurchase pursuant to the terms and conditions specified in
PARAGRAPH 11 of the Securities and in this Indenture; and (ii) at any time after
the delivery of such Purchase Notice, such Securities with respect to which the
Repurchase Right is being exercised, duly endorsed for transfer to the Company.
Upon such delivery of Securities to the Company (if it is acting as its own
Paying Agent) or such Paying Agent, such Holder shall be entitled to receive
from the Company or such Paying Agent, as the case may be, a nontransferable
receipt of deposit evidencing such delivery.

         In the event a Repurchase Right shall be exercised in accordance with
the terms hereof, the Company shall pay, or cause to be paid, the Repurchase
Price, plus accrued and unpaid interest, if any, to, but excluding, the
Repurchase Date, with respect to each Security as to which the Repurchase Right
shall have been exercised to the Holder thereof as promptly as practicable, but
in no event more than three (3) Business Days, following the later of the
Repurchase Date and the time such Security is surrendered to the Paying Agent,
subject to the provisions of the immediately preceding paragraph.

         Prior to 10:00 A.M., New York City time on a Repurchase Date, the
Company shall deposit with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust in accordance with SECTION 2.04)
money, in funds immediately available on the Repurchase Date, sufficient to pay
the Repurchase Price, plus accrued and unpaid interest, if any, to, but
excluding, the Repurchase Date, of all of the Securities which are to be
repurchased on that date. The Paying Agent shall return to the Company, as soon
as practicable, any money not required for that purpose.

         Both the Repurchase Event Notice and the Purchase Notice having been
duly given as specified in this SECTION 3.10, the Securities to be so
repurchased shall, on the Repurchase Date, become due and payable at the
Repurchase Price (plus accrued and unpaid interest, if any, to, but excluding,
the Repurchase Date) applicable thereto, and, on and after such date (unless
there shall be a default in the payment of the Repurchase Price or such accrued
and unpaid interest), such Securities shall cease to bear interest and shall
cease to be convertible, and all rights of the Holders of such Securities shall
terminate, other than the right to receive, in accordance with this SECTION
3.10, the Repurchase Price and such accrued and unpaid interest.

                                       28
<PAGE>

         If any Security shall not be paid upon surrender thereof for Repurchase
Upon Repurchase Event, the principal of, and accrued and unpaid interest on,
such Security shall, until paid, bear interest from the Repurchase Date at the
rate borne by such Security on the principal amount of such Security, and such
Security shall continue to be convertible pursuant to ARTICLE X.

         Any Security which is to be submitted for Repurchase Upon Repurchase
Event only in part shall be delivered pursuant to this SECTION 3.10 (with, if
the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or its attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, of the same tenor and in aggregate principal amount equal to the portion
of such Security not submitted for Repurchase Upon Repurchase Event.

         Notwithstanding anything herein to the contrary, there shall be no
purchase of any Securities pursuant to this SECTION 3.10 if there has occurred
(prior to, on or after, as the case may be, the giving, by the Holders of such
Securities, of the required Repurchase Event Notice) and is continuing an Event
of Default (other than a default in the payment of the Repurchase Price or
accrued and unpaid interest, if any, payable as herein provided upon Repurchase
Upon Repurchase Event). The Paying Agent will promptly return to the respective
Holders thereof any Securities held by it during the continuance of an Event of
Default (other than a default in the payment of the Repurchase Price or such
accrued and unpaid interest) of which the Paying Agent has actual knowledge, in
which case, upon such return, the Purchase Notice with respect to the Redemption
Upon Repurchase Event shall be deemed to have been withdrawn.

         Notwithstanding anything herein to the contrary, if the option granted
to Securityholders to require the repurchase of the Securities upon the
occurrence of a Repurchase Event is determined to constitute a tender offer, the
Company will comply with all applicable tender offer rules under the Exchange
Act, including Rules 13e-4 and 14e-1, and with all other applicable laws, and
will file a Schedule TO or any other schedules required under the Exchange Act
or any other applicable laws.

         As used in this SECTION 3.10 and in the Securities:

         A "REPURCHASE EVENT," which shall constitute an "event of failure"
under this Indenture within the meaning of subparagraph 212(1)(b)(vii)(C) of the
Canadian Tax Act, shall be deemed to have occurred upon the occurrence of either
a "Change in Control" or a "Termination of Trading."

         A "CHANGE IN CONTROL" shall be deemed to have occurred at such time as:

                  (i) any "person" or "group" (as such terms are used for
         purposes of Sections 13(d) and 14(d) of the Exchange Act) is or becomes
         the "beneficial owner" (as such term is used in Rule 13d-3 under the
         Exchange Act), directly or indirectly, of fifty percent (50%) or more
         of the total voting power of all classes of the Company's Capital Stock
         entitled to vote generally in the election of directors; or

                                       29
<PAGE>
                  (ii) at any time the following persons cease for any reason to
         constitute a majority of the Company's Board of Directors:

                           (1) individuals who on the Issue Date constituted the
                  Company's Board of Directors; and

                           (2) any new directors whose election to the Company's
                  Board of Directors or whose nomination for election by the
                  Company's shareholders was approved by at least a majority of
                  the directors of the Company then still in office who were
                  either directors of the Company on the Issue Date or whose
                  election or nomination for election was previously so
                  approved; or

                  (iii) the Company consolidates with, or amalgamates or merges
          with or into, another person or any person consolidates with, or
          amalgamates or merges with or into, the Company (including, in each of
          the foregoing cases, pursuant to a statutory arrangement), in any such
          event other than pursuant to a transaction in which the persons that
          "beneficially owned," directly or indirectly, the shares of the
          Company's Voting Stock immediately prior to such transaction,
          "beneficially own," directly or indirectly, immediately after such
          transaction, shares of the surviving or continuing corporation's
          Voting Stock representing at least a majority of the total voting
          power of all outstanding classes of the Voting Stock of the continuing
          or surviving corporation in substantially the same proportion as such
          ownership immediately prior to the transaction; or

                  (iv) the sale, lease, transfer or other conveyance or
         disposition of all or substantially all of the assets or property of
         the Company (including, in any such case, pursuant to a statutory
         arrangement) to any "person" or "group" (as such terms are used in
         Sections 13(d) and 14(d) of the Exchange Act), including any group
         acting for the purpose of acquiring, holding, or disposing of
         securities within the meaning of Rule 13d-5(b)(1) under the Exchange
         Act; or

                  (v) the Company is liquidated or dissolved or the holders of
         the Company's Capital Stock approve any plan or proposal for the
         liquidation or dissolution of the Company;

         provided, however, that a Change in Control will not be deemed to have
         occurred if either:

                           (1) the Closing Sale Price for each of any twenty
                  (20) Trading Days during the thirty (30) Trading Days
                  immediately preceding the Change in Control is equal to at
                  least one hundred and five percent (105%) of the Conversion
                  Price in effect on such Trading Day; or

                           (2) in the case of a merger, consolidation,
                  amalgamation or statutory arrangement (involving a business
                  combination) all of the consideration (other than cash
                  payments for fractional shares and pursuant to statutory
                  appraisal rights) in the merger, consolidation, amalgamation
                  or statutory arrangement constituting the Change in Control
                  consists of common stock and any associated rights traded on a
                  U.S. national securities exchange or quoted on The Nasdaq
                  National Market

                                       30
<PAGE>

                  (or which will be so traded or quoted when issued or exchanged
                  in connection with such Change in Control), and, as a result
                  of such transaction or transactions, the Securities become
                  convertible solely into such common stock and associated
                  rights.

          A "TERMINATION OF TRADING" shall occur if the Common Shares of the
Company (or other common stock into which the Securities are then convertible)
are neither listed for trading on a U.S. national securities exchange nor
approved for trading on an established automated over-the-counter trading market
in the United States.

3.11     CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.

         In connection with a Redemption of Securities, the Company may arrange,
in lieu of Redemption, for the purchase and conversion of any Securities called
for Redemption by an agreement with one or more investment bankers or other
purchasers to purchase all or a portion of such Securities by paying to the
Paying Agent in trust for the Holders whose Securities are to be so purchased,
on or before the close of business on the Redemption Date, an amount that,
together with any amounts deposited with the Paying Agent by the Company for
Redemption of such Securities, is not less than the Redemption Price, together
with accrued and unpaid interest, if any, to, but excluding, the Redemption
Date, of such Securities. Notwithstanding anything to the contrary contained in
this ARTICLE III, the obligation of the Company to pay the Redemption Price of
such Securities, including all accrued interest, if any, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers, but no such agreement shall relieve the Company of its obligation to
pay such Redemption Price or such accrued and unpaid interest, if any. If such
an agreement is entered into, any Securities not duly surrendered for conversion
by the Holders thereof may, at the option of the Company, be deemed, to the
fullest extent permitted by law, acquired by such purchasers from such Holders
and (notwithstanding anything to the contrary contained in ARTICLE X)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the Redemption Date, subject to payment of the above
amount as aforesaid. Upon receipt from the Company of a copy of such agreement,
along with a Company Request directing the Paying Agent to accept money
deposited with it by such investment bank(s) and/or purchaser(s) pursuant to
such agreement and an Officers' Certificates stating that all conditions
precedent specified in this SECTION 3.11 have been satisfied, the Paying Agent
shall hold and pay to the Holders whose Securities are selected for Redemption
any such amount paid to it for purchase and conversion in the same manner as it
would moneys deposited with it by the Company for the Redemption of Securities.
Without the prior written consent of the Trustee and the Paying Agent, no
arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, rights, immunities, responsibilities or obligations of the
Trustee or Paying Agent as set forth in this Indenture, and the Company agrees
to indemnify the Trustee and Paying Agent from, and hold them harmless against,
any and all loss, liability or expense arising out of or in connection with any
such arrangement for the purchase and conversion of any Securities between the
Company and such purchasers, including the costs and expenses (including counsel
fees and expenses) incurred by the Trustee or Paying Agent in the defense of any
claim or liability arising out of or in connection with the exercise or
performance of any of their powers, duties, responsibilities or obligations
under this Indenture except to the extent arising from their bad faith, willful
misconduct or negligence.

                                       31
<PAGE>

                                 IV. COVENANTS

4.01     PAYMENT OF SECURITIES.

         The Company shall pay all amounts due with respect to the Securities on
the dates and in the manner provided in the Securities. All such amounts shall
be considered paid on the date due if the Paying Agent holds (or, if the Company
is acting as Paying Agent, the Company has segregated and holds in trust in
accordance with SECTION 2.04) on that date money (and/or Common Shares, if
applicable as provided in, and in accordance with, PARAGRAPH 12 of the
Securities) sufficient to pay the amount then due with respect to the
Securities.

         The Company shall pay interest on any overdue amount (including, to the
extent permitted by applicable law, overdue interest) at the rate borne by the
Securities.

4.02     MAINTENANCE OF OFFICE OR AGENCY.

         The Company will maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-Registrar) where Securities may be surrendered
for registration of transfer or exchange or conversion and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.

         The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

         The Company hereby designates the Corporate Trust Office of the Trustee
as an agency of the Company in accordance with SECTION 2.03.

4.03     REPORTS.

         (A) The Company will promptly provide to the Trustee and shall, upon
request, provide to any Holder or beneficial owner of Securities or prospective
purchaser of Securities that so requests, the information required to be
delivered pursuant to Rule 144A(d)(4) until such time as the Securities and the
underlying Common Shares have been registered, in accordance with the
Registration Rights Agreement, by the Company for resale pursuant to a
registration statement under the Securities Act declared effective by the SEC.
In addition, the Company will furnish such Rule 144A(d)(4) information if, at
any time while the Securities or the Common Shares issuable upon conversion of
the Securities are restricted securities within the meaning of

                                       32
<PAGE>

the Securities Act, the Company is not subject to the informational requirements
of the Exchange Act.

         (B) The Company will comply with the provisions of TIA Section 314(a).

4.04     COMPLIANCE CERTIFICATE.

         The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company, an Officers' Certificate stating whether or
not the signers know of any Default or Event of Default by the Company in
performing any of its obligations under this Indenture or the Securities. If
they do know of any such Default or Event of Default, the certificate shall
describe the Default or Event of Default and its status.

4.05     STAY, EXTENSION AND USURY LAWS.

         The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury 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 (in each case, 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, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.

4.06     CORPORATE EXISTENCE.

         Subject to ARTICLE V, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of its Subsidiaries in accordance
with the respective organizational documents of each Subsidiary and the rights
(charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate existence of any
Subsidiary, if in the good faith judgment of the Company (i) such preservation
or existence is not material to the conduct of business of the Company and (ii)
the loss of such right, license or franchise or the dissolution of such
Subsidiary does not have a material adverse impact on the Holders.

4.07     NOTICE OF DEFAULT.

         In the event that any Default or Event of Default shall occur, the
Company will give prompt written notice of such Default or Event of Default to
the Trustee, and any remedial action proposed to be taken.

4.08     PAYMENT OF ADDITIONAL AMOUNTS.

         All payments made by or on behalf of the Company under or with respect
to the Securities shall be made free and clear of, and without withholding or
deduction for, or on account of, any present or future tax, duty, levy, impost,
assessment or other governmental charge imposed or levied by or on behalf of the
Government of Canada or of any province or

                                       33
<PAGE>

territory thereof or by any authority or agency therein or thereof having power
to tax, including without limitation any taxes imposed under Part XIII of the
Canadian Tax Act ("CANADIAN TAXES"), unless the Company is required to withhold
or deduct any amounts for, or on account of, Canadian Taxes pursuant to any
applicable law or by virtue of the interpretation or administration thereof. If
the Company is so required to withhold or deduct any amount for, or on account
of, Canadian Taxes from any payment made under or with respect to the
Securities, the Company shall pay, in cash, as additional interest such
additional amounts (such payments, together with the similar payments to be made
by the Company pursuant to the immediately succeeding sentence, "ADDITIONAL
AMOUNTS") as may be necessary so that the net amount received by each Holder
(including Additional Amounts) after such withholding or deduction (including
any withholding or deduction required to be made in respect of Additional
Amounts) will not be less than the amount the Holder would have received if such
Canadian Taxes had not been withheld or deducted. The Company shall make a
similar payment to Holders, other than Excluded Holders (as defined below), that
are exempt from withholding but are required to pay tax directly on amounts
otherwise subject to withholding; provided, that no Additional Amounts shall be
payable with respect to a payment made to a Holder in respect of a beneficial
owner of Securities (an "EXCLUDED HOLDER") (i) with which the Company does not
deal at arm's length (within the meaning of the Canadian Tax Act) at the time of
making such payment, (ii) which is subject to such Canadian Taxes by reason of
its failure to comply with any certification, identification, information,
documentation or other reporting requirement if compliance is required by law,
regulation, administrative practice or an applicable treaty as a precondition to
exemption from, or a reduction in the rate of deduction or withholding of, such
Canadian Taxes, (iii) which has executed a Notice of Election Upon Tax
Redemption and has not withdrawn such Notice of Election Upon Tax Redemption or
(iv) which is subject to such Canadian Taxes by reason of any connection between
such beneficial owner and Canada or any province or territory thereof other than
the mere holding of Securities or the receipt of payments thereunder. If the
Company shall be required to make such withholding or deduction, the Company
shall remit the full amount deducted or withheld to the relevant tax or
receiving authority in accordance with, and within the time required by,
applicable law. The Company shall furnish to the Trustee, within 30 days after
the date the payment of any Canadian Taxes are due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by the Company. The
Company shall indemnify and hold harmless each Holder (other than Excluded
Holders), and, upon written request, reimburse such Holder, for the amount of
(I) any Canadian Taxes not withheld or deducted by the Company and levied or
imposed on and paid by such Holder or beneficial owner as a result of payments
made under or with respect to the Securities, (II) any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto and
(III) any Canadian Taxes imposed with respect to any payment made under clauses
(I) or (II) above. The Company shall indemnify the Trustee against, and
reimburse the Trustee for, any loss, liability or expense related to the
aforementioned.

         At least thirty (30) days prior to each date on which any payment under
or with respect to the Securities is due and payable, if the Company is aware
that it will be obligated to pay any Additional Amounts with respect to such
payment, the Company shall deliver to the Trustee an Officers' Certificate
stating the fact that such Additional Amounts will be payable and the amounts so
payable and setting forth such other information necessary to enable the Trustee
to pay such Additional Amounts to Holders on the relevant payment date.

                                       34
<PAGE>

         Whenever in this Indenture there is reference, in any context, to the
payment of principal and interest or any other amount payable under or with
respect to any Security, such reference shall be deemed to include the payment
of Additional Amounts provided for in this SECTION 4.08 to the extent that, in
such context, Additional Amounts are, were or would be payable in respect of
such payment. Without limiting the generality of the foregoing, references
herein to the Option Purchase Price, Redemption Price, Tax Redemption Price,
Repurchase Price, principal amount, interest (including, without limitation,
interest payable as herein provided on a scheduled interest payment date and
accrued and unpaid interest payable as herein provided upon Repurchase at
Holder's Option, Redemption, Tax Redemption, Repurchase Upon Repurchase Event or
maturity), such reference shall be deemed to include, in each case, Additional
Amounts to the extent Additional Amounts are or would be payable with respect
thereto.

                                 V. SUCCESSORS

5.01     WHEN COMPANY MAY MERGE, ETC.

         The Company shall not consolidate with, or amalgamate or merge with or
into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to, another person (including, in
any such case, pursuant to a statutory arrangement), whether in a single or
series of related transactions, unless (i) such other person is a corporation
organized under the laws of the United States, any State thereof or the District
of Columbia or the laws of Canada or any province or territory thereof; (ii)
such person assumes by supplemental indenture all the obligations of the
Company, under the Securities and this Indenture; and (iii) immediately after
giving effect to the transaction, no Default or Event of Default shall exist.

         The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel, which may rely upon such Officers' Certificate as to the
absence of Defaults and Events of Default and stating that the proposed
transaction and such supplemental indenture will, upon consummation of the
proposed transaction, comply with this Indenture.

5.02     SUCCESSOR SUBSTITUTED.

         Upon any consolidation, amalgamation, statutory arrangement or merger
or sale, conveyance, transfer, lease, or other disposition of all or
substantially all of the assets of the Company, the successor person formed by
such consolidation, amalgamation, statutory arrangement or into which the
Company is merged or to which such sale, conveyance, transfer, lease, or other
disposition is made shall succeed to, and, except in the case of a lease, be
substituted for, and may exercise every right and power of, and shall assume
every duty and obligation of, the Company under this Indenture with the same
effect as if such successor had been named as the Company herein. When the
successor assumes all obligations of the Company hereunder, except in the case
of a lease, all obligations of the predecessor shall terminate.

                                       35
<PAGE>

                           VI. DEFAULTS AND REMEDIES

6.01     EVENTS OF DEFAULT.

         An "EVENT OF DEFAULT" occurs if:

                  (i) the Company fails to pay the principal of or premium, if
         any, in each case including Additional Amounts, of any Security when
         the same becomes due and payable, whether at maturity, upon Redemption
         or Tax Redemption, on an Option Purchase Date with respect to a
         Repurchase at Holder's Option, on a Repurchase Date with respect to a
         Repurchase Upon Repurchase Event or otherwise;

                  (ii) the Company fails to pay an installment of interest or
         liquidated damages, in each case including Additional Amounts, on the
         Securities when due, if such failure continues for thirty (30) days
         after the date when due;

                  (iii) the Company fails to timely provide a Repurchase Event
         Notice, or an Option Purchase Notice, as required by the provisions of
         this Indenture;

                  (iv) the Company fails to comply with any other term,
         covenant, or agreement set forth in the Securities or this Indenture
         and such failure continues for the period, and after the notice,
         specified below;

                  (v) the Company or any of its Subsidiaries defaults in the
         payment when due, after the expiration of any applicable grace period,
         of principal of, or premium, if any, or interest on Indebtedness for
         money borrowed, in the aggregate principal amount then outstanding of
         ten million U.S. dollars (US$10,000,000) or more, or the acceleration
         of indebtedness for money borrowed in such aggregate principal amount
         so that it becomes due and payable prior to the date on which it would
         otherwise become due and payable and such acceleration is not rescinded
         or such default is not cured within thirty (30) days after notice to
         the Company by the Trustee or to the Company and the Trustee by holders
         of not less than twenty five percent (25%) in the aggregate principal
         amount of the Securities then outstanding, each in accordance with this
         Indenture;

                  (vi) the Company or any of its Subsidiaries fails to pay final
         judgments, the uninsured portion of which aggregates in excess of
         twenty five million U.S. dollars (US$25,000,000), and such judgments
         are not paid, discharged or stayed for a period of thirty (30) days;

                  (vii) the Company or any of its Significant Subsidiaries or
         any group of Subsidiaries that in the aggregate would constitute a
         Significant Subsidiary of the Company pursuant to, or within the
         meaning of, any Bankruptcy Law:

                           (A) commences a voluntary case or assignment,

                           (B) consents to the entry of an order for relief
                  against it in an involuntary case or assignment,

                                       36
<PAGE>

                           (C) consents to the appointment of a Custodian of it
                  or for all or substantially all of its property, or

                           (D) makes a general assignment for the benefit of its
                  creditors; or

                  (viii) a court of competent jurisdiction enters an order or
         decree under any Bankruptcy Law that:

                           (A) is for relief against the Company or any of its
                  Significant Subsidiaries or any group of Subsidiaries that in
                  the aggregate would constitute a Significant Subsidiary of the
                  Company in an involuntary case, assignment or proceeding, or
                  adjudicates the Company or any of its Significant Subsidiaries
                  or any group of Subsidiaries that in the aggregate would
                  constitute a Significant Subsidiary of the Company insolvent
                  or bankrupt,

                           (B) appoints a Custodian of the Company or any of its
                  Significant Subsidiaries or any group of Subsidiaries that in
                  the aggregate would constitute a Significant Subsidiary of the
                  Company for all or substantially all of the property of the
                  Company or any such Significant Subsidiary or any group of
                  Subsidiaries that in the aggregate would constitute a
                  Significant Subsidiary of the Company, as the case may be, or

                           (C) orders the winding up or liquidation of the
                  Company or any of its Significant Subsidiaries or any group of
                  Subsidiaries that in the aggregate would constitute a
                  Significant Subsidiary of the Company, and the order or decree
                  remains unstayed and in effect for ninety (90) consecutive
                  days.

         The term "BANKRUPTCY LAW" means Title 11, U.S. Code, any similar
Federal or State law for the relief of debtors or the Bankruptcy and Insolvency
Act, R.S.C. 1985, C.B-3, as amended. The term "CUSTODIAN" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.

         A default under CLAUSE (IV) is not an Event of Default until (I) the
Trustee notifies the Company or the Holders of at least twenty five percent
(25%) in aggregate principal amount of the Securities then outstanding notify
the Company and the Trustee of the default and (II) the default is not cured
within thirty (30) days after receipt of the notice. The notice must specify the
default, demand that it be remedied and state that the notice is a "NOTICE OF
DEFAULT". If the Holders of twenty five percent (25%) in aggregate principal
amount of the outstanding Securities request the Trustee to give such notice on
their behalf, the Trustee shall do so. When a default is cured, it ceases.

6.02     ACCELERATION.

         If an Event of Default (other than an Event of Default specified in
SECTION 6.01(VII) or (VIII) with respect to the Company) as to which the Trustee
has received notice pursuant to the provisions of this Indenture occurs and is
continuing, the Trustee by notice to the Company or the Holders of at least
twenty five percent (25%) in principal amount of the Securities then outstanding
by notice to the Company and the Trustee may declare the Securities to be due
and

                                       37
<PAGE>

payable. Upon such declaration such principal and interest shall be due and
payable immediately. If an Event of Default specified in SECTION 6.01(VII) or
(VIII) with respect to the Company occurs, the principal of and accrued interest
on all the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any
Securityholder. The Holders of a majority in aggregate principal amount of the
Securities then outstanding by written notice to the Trustee may rescind or
annul an acceleration and its consequences if the rescission would not conflict
with any order or decree and if all existing Events of Default have been cured
or waived except nonpayment of principal or interest that has become due solely
because of the acceleration and if all amounts due to the Trustee under SECTION
7.07 have been paid.

6.03     OTHER REMEDIES.

         Notwithstanding any other provision of this Indenture, if an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of amounts due with
respect to the Securities or to enforce the performance of any provision of the
Securities or this Indenture.

         The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative.

6.04     WAIVER OF PAST DEFAULTS.

         Subject to SECTIONS 6.07 and 9.02, the Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may waive any past Default or Event of Default and its consequences,
other than (A) a Default or Event of Default in the payment of the principal of,
premium, if any, interest, liquidated damages or Additional Amounts, on any
Security, or in the payment of the Redemption Price, the Tax Redemption Price,
the Option Purchase Price or the Repurchase Price (or accrued and unpaid
interest, if any, payable as herein provided upon Redemption, Tax Redemption,
Repurchase at Holder's Option or Repurchase Upon Repurchase Event), (B) a
Default or Event of Default arising from a failure by the Company to convert any
Securities into Common Shares or (C) any Default or Event of Default in respect
of any provision of this Indenture or the Securities which, under SECTION 9.02,
cannot be modified or amended without the consent of the Holder of each Security
affected. When a Default or an Event of Default is waived, it is cured and
ceases for every purpose of this Indenture.

6.05     CONTROL BY MAJORITY.

         The Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability unless the

                                       38
<PAGE>

Trustee is offered indemnity reasonably satisfactory to it; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

6.06     LIMITATION ON SUITS.

         Except as provided in SECTION 6.07, a Securityholder may not pursue a
remedy with respect to this Indenture or the Securities unless:

                  (i) the Holder gives to the Trustee written notice of a
         continuing Event of Default;

                  (ii) the Holders of at least twenty five percent (25%) in
         aggregate principal amount of the Securities then outstanding make a
         written request to the Trustee to pursue the remedy;

                  (iii) such Holder or Holders offer and, if requested, provide
         to the Trustee indemnity reasonably satisfactory to the Trustee against
         any loss, liability or expense;

                  (iv) the Trustee does not comply with the request within sixty
         (60) days after receipt of notice, the request and the offer of
         indemnity; and

                  (v) during such sixty (60) day period, the Holders of a
         majority in aggregate principal amount of the Securities then
         outstanding do not give the Trustee a direction inconsistent with the
         request.

         A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.

6.07     RIGHTS OF HOLDERS TO RECEIVE PAYMENT.

         Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of all amounts due with respect to the Securities, on
or after the respective due dates expressed in the Securities, 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 the Holder.

         Notwithstanding any other provision of this Indenture, the right of any
Holder to bring suit for the enforcement of the right to convert the Security in
accordance with this Indenture shall not be impaired or affected without the
consent of the Holder.

6.08     COLLECTION SUIT BY TRUSTEE.

         If an Event of Default specified in SECTION 6.01(i) or (II) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount due with respect to
the Securities, including any unpaid and accrued interest.

                                       39
<PAGE>

6.09     TRUSTEE MAY FILE PROOFS OF CLAIM.

         The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee, any
predecessor Trustee and the Securityholders allowed in any judicial proceedings
relative to the Company or its creditors or properties.

         The Trustee may 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 similar
official in any judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under SECTION 7.07.

         Nothing herein contained shall be deemed to authorize the 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 Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

6.10     PRIORITIES.

         If the Trustee collects any money pursuant to this ARTICLE VI, it shall
pay out the money in the following order:

         First:   to the Trustee for amounts due under SECTION 7.07;

         Second:  to Securityholders for all amounts due and unpaid on the
                  Securities, without preference or priority of any kind,
                  according to the amounts due and payable on the Securities;
                  and

         Third:   to the Company.

         The Trustee, upon prior written notice to the Company may fix a record
date and payment date for any payment by it to Securityholders pursuant to this
SECTION 6.10.

6.11     UNDERTAKING FOR COSTS.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit other than the Trustee of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This SECTION 6.11 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to SECTION 6.07 or a suit by Holders of more than ten
percent (10%) in aggregate principal amount of the outstanding Securities.

                                       40
<PAGE>

                                  VII. TRUSTEE

7.01     DUTIES OF TRUSTEE.

         (A) If an Event of Default has occurred and is continuing, the 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 their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.

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

                  (i) the Trustee need perform only those duties that are
         specifically set forth in this Indenture and no implied covenants or
         obligations shall be read into this Indenture against the Trustee; and

                  (ii) in the absence of bad faith, willful misconduct or
         negligence on its part, the Trustee may conclusively rely, as to the
         truth of the statements and the correctness of the opinions expressed
         therein, upon certificates or opinions furnished to the Trustee and
         conforming to the requirements of this Indenture; but in the case of
         any such certificates or opinions which by any provision hereof are
         specifically required to be furnished to the Trustee, the Trustee shall
         examine the certificates and opinions to determine whether or not they
         conform to the requirements of this Indenture (but need not confirm or
         investigate the accuracy of mathematical calculations or other facts
         stated therein).

         (C) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (i) the Trustee shall not be liable for any error of judgment
         made in good faith by a Responsible Officer, unless it is proved that
         the Trustee was negligent in ascertaining the pertinent facts; and

                  (ii) the 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 6.05.

         (D) Every provision of this Indenture that in any way relates to the
Trustee is subject to the provisions of this SECTION 7.01.

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

7.02     RIGHTS OF TRUSTEE.

         (A) Subject to SECTION 7.01, the Trustee may conclusively rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document; if, however, the Trustee

                                       41
<PAGE>

shall determine to make such further inquiry or investigation, it shall be
entitled during normal business hours to examine the relevant books, records and
premises of the Company, personally or by agent or attorney upon reasonable
prior notice.

         (B) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and/or an Opinion of Counsel. The 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.

         (C) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution.

         (D) The Trustee may consult with counsel of its choice and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.

         (E) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney appointed
with due care.

         (F) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its discretion,
rights or powers conferred upon it by this Indenture.

         (G) The Trustee shall have no duty to inquire as to the performance of
the Company with respect to the covenants contained in ARTICLE IV. In addition,
the Trustee shall not be deemed to have knowledge of an Event of Default except
(i) any Default or Event of Default occurring pursuant to SECTIONS 6.01(i) and
(II) or (ii) any Default or Event of Default of which a Responsible Officer of
the Trustee shall have received written notification or obtained actual
knowledge. Delivery of reports, information and documents to the Trustee under
ARTICLE IV (other than SECTIONS 4.04 and 4.07) is for informational purposes
only and the Trustee's receipt of the foregoing shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).

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

         (I) The rights, privileges, protections, immunities and benefits given
to the Trustee, including without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act hereunder.

         (J) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified

                                       42
<PAGE>

actions pursuant to this Indenture, which Officers' Certificate may be signed by
any person authorized to sign an Officers' Certificate, including any person
specified as so authorized in any such certificate previously delivered and not
superseded.

         (K) Except to the extent such special, indirect or consequential loss
or damage arises from the Trustee's bad faith, willful misconduct or negligence,
the Trustee shall not be responsible or liable for special, indirect or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) regardless of whether the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

         (L) The Trustee shall be entitled to request from the Company written
instructions setting forth any action proposed to be taken or omitted by the
Trustee under this Indenture and the date on which such action shall be taken or
such omission effected.

7.03     INDIVIDUAL RIGHTS OF TRUSTEE.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any of
its Affiliates with the same rights it would have if it were not Trustee. Any
Security Agent may do the same with like rights. The Trustee, however, must
comply with SECTIONS 7.10 and 7.11.

7.04     TRUSTEE'S DISCLAIMER.

         The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities; it shall not be accountable for the Company's
use of the proceeds from the Securities; and it shall not be responsible for any
statement in the Securities other than its certificate of authentication.

7.05     NOTICE OF DEFAULTS.

         If a Default or Event of Default occurs and is continuing as to which
the Trustee has received written notice pursuant to the provisions of this
Indenture, the Trustee shall mail to each Securityholder, as its name appears in
the security register, a notice of the Default or Event of Default within thirty
(30) days after the date such Default or Event of Default occurs or fifteen (15)
days after such Default or Event of Default becomes known to the Trustee,
whichever is later, unless such Default or Event of Default has been cured or
waived. Except in the case of a Default or Event of Default in payment of any
amounts due with respect to any Security, the Trustee may withhold the notice
if, and so long as it in good faith determines that, withholding the notice is
in the interests of Securityholders.

7.06     REPORTS BY TRUSTEE TO HOLDERS.

         Within sixty (60) days after each May 15 beginning with May 15, 2004,
the Trustee shall mail to each Securityholder if required by TIA Section 313(a)
a brief report dated as of such May 15 that complies with TIA Section 313(c). In
such event, the Trustee also shall comply with TIA Section 313(b).

                                       43
<PAGE>

         A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed by the Trustee with the SEC and each
stock exchange, if any, on which the Securities are listed. The Company shall
promptly notify the Trustee when the Securities are listed on any stock
exchange.

7.07     COMPENSATION AND INDEMNITY.

         The Company shall pay to the Trustee from time to time such
compensation for its services as shall be agreed upon in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
out-of-pocket expenses incurred by it. Such expenses shall include the
compensation and out-of-pocket expenses of the Trustee's agents and counsel.

         The Company shall indemnify the Trustee, the Paying Agent and their
officers, employees, agents and contractors against any and all loss, liability,
damage, claim or expense (including the reasonable fees and expenses of counsel
and taxes other than those based upon the income of the Trustee) incurred by it
in connection with the acceptance or administration of this trust and the
performance of its duties hereunder, including the reasonable costs and expenses
of defending itself against any claim (whether asserted by the Company, any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers and duties hereunder. The Company need not pay
for any settlement made without its consent. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnification. The Company
need not reimburse any expense or indemnify against any loss or liability
incurred by the Trustee through the Trustee's negligence, bad faith or willful
misconduct.

         To secure the Company's payment obligations in this SECTION 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay amounts due on
particular Securities.

         The indemnity obligations of the Company with respect to the Trustee
provided for in this SECTION 7.07 shall survive any resignation or removal of
the Trustee and any discharge or termination of this Indenture.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in SECTION 6.01(VII) or (VIII) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

7.08     REPLACEMENT OF TRUSTEE.

         A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this SECTION 7.08.

         The Trustee may resign by so notifying the Company in writing thirty
(30) Business Days prior to such resignation. The Holders of a majority in
aggregate principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and the Company in writing and may appoint a
successor Trustee with the Company's consent. The Company may remove the Trustee
if:

                                       44
<PAGE>

                  (i) the Trustee fails to comply with SECTION 7.10;

                  (ii) the Trustee is adjudged a bankrupt or an insolvent;

                  (iii) a receiver or other public officer takes charge of the
         Trustee or its property; or

                  (iv) the Trustee becomes incapable of acting.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.

         If a successor Trustee does not take office within thirty (30) days
after the retiring Trustee resigns or is removed, the retiring Trustee (at the
Company's expense), the Company or the Holders of at least ten percent (10%) in
aggregate principal amount of the outstanding Securities may petition any court
of competent jurisdiction for the appointment of a successor Trustee.

         If the Trustee fails to comply with SECTION 7.10, the Company or any
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in SECTION 7.07.

7.09     SUCCESSOR TRUSTEE BY MERGER, ETC.

         If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee, if such successor corporation is otherwise eligible
hereunder.

7.10     ELIGIBILITY; DISQUALIFICATION.

         There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least US$50
million as set forth in its most recent published annual report of condition.
The Trustee shall comply with TIA Section 310(b). Nothing in this Indenture
shall prevent the Trustee from filing with the SEC the application referred to
in the penultimate paragraph of TIA Section 310(b).

                                       45
<PAGE>

7.11     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

         The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.

                          VIII. DISCHARGE OF INDENTURE

8.01     TERMINATION OF THE OBLIGATIONS OF THE COMPANY.

         This Indenture shall cease to be of further effect if (a) either (i)
all outstanding Securities (other than Securities replaced pursuant to SECTION
2.07 hereof) have been delivered to the Trustee for cancellation or (ii) all
outstanding Securities have become due and payable at their scheduled maturity
or upon Repurchase at Holder's Option, Redemption, Tax Redemption or Repurchase
Upon Repurchase Event, and in either case the Company irrevocably deposits with
the Trustee or the Paying Agent (if the Paying Agent is not the Company or any
of its Affiliates) cash sufficient to pay all amounts due and owing on all
outstanding Securities (other than Securities replaced pursuant to SECTION 2.07
hereof) on the Maturity Date or an Option Purchase Date, Redemption Date, Tax
Repurchase Date or Repurchase Date, as the case may be; (b) the Company pays to
the Trustee all other sums payable hereunder by the Company; (c) no Default or
Event of Default with respect to the Securities shall exist on the date of such
deposit; (d) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound; and (e) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for herein relating to the
satisfaction and discharge of this Indenture have been complied with; provided,
however, that SECTIONS 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.15, 2.16,
2.17, 3.05, 3.09, 3.10, 4.01, 4.02, 4.05, 7.07 and 7.08 and ARTICLES VIII and X
shall survive any discharge of this Indenture until such time as the Securities
have been paid in full and there are no Securities outstanding.

8.02     APPLICATION OF TRUST MONEY.

         The Trustee shall hold in trust money deposited with it pursuant to
SECTION 8.01. It shall apply the deposited money through the Paying Agent and in
accordance with this Indenture to the payment of the principal of and any unpaid
and accrued interest on the Securities.

8.03     REPAYMENT TO COMPANY.

         The Trustee and the Paying Agent shall promptly notify the Company of,
and pay to the Company upon the request of the Company, any excess money held by
them at any time. The Trustee and the Paying Agent shall pay to the Company upon
the written request of the Company any money held by them for the payment of the
principal of and any unpaid and accrued interest that remains unclaimed for two
(2) years; provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may, at the expense and request of
the Company, cause to be published once in a newspaper of general circulation in
the City of New York or cause to be mailed to each Holder, notice stating that
such money remains and that, after a date specified therein, which shall not be
less than thirty (30) days from the date of such

                                       46
<PAGE>

publication or mailing, any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Securityholders entitled
to the money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person and all liability of
the Trustee and the Paying Agent shall, subject to applicable law, cease.

8.04     REINSTATEMENT.

         If the Trustee or Paying Agent is unable to apply any money in
accordance with SECTIONS 8.01 and 8.02 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the
obligations of the Company under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to SECTIONS
8.01 and 8.02 until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with SECTIONS 8.01 and 8.02; provided,
however, that if the Company has made any payment of amounts due with respect to
any Securities because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money held by the Trustee or Paying Agent.

                                 IX. AMENDMENTS

9.01     WITHOUT CONSENT OF HOLDERS.

         The Company, with the consent of the Trustee, may amend or supplement
this Indenture or the Securities without notice to or the consent of any
Securityholder:

                  (i) to comply with SECTIONS 5.01 and 10.12;

                  (ii) to make any changes or modifications to this Indenture
         necessary in connection with the registration of the Securities under
         the Securities Act pursuant to the Registration Rights Agreement and
         the qualification of the Indenture under the TIA;

                  (iii) to secure the obligations of the Company in respect of
         the Securities;

                  (iv) to add to the covenants of the Company described in this
         Indenture for the benefit of Securityholders or to surrender any right
         or power conferred upon the Company; and

                  (v) to make provisions with respect to adjustments to the
         Conversion Rate as required by this Indenture or to increase the
         Conversion Rate in accordance with this Indenture.

         In addition, the Company and the Trustee may enter into a supplemental
indenture without the consent of Holders of the Securities to cure any
ambiguity, defect, omission or inconsistency in this Indenture in a manner that
does not adversely affect the rights of any Holder.

                                       47
<PAGE>

9.02     WITH CONSENT OF HOLDERS.

         The Company, with the consent of the Trustee, may amend or supplement
this Indenture or the Securities without notice to any Securityholder but with
the written consent of the Holders of at least a majority in aggregate principal
amount of the outstanding Securities. Subject to SECTION 6.07, the Holders of a
majority in aggregate principal amount of the outstanding Securities may waive
compliance by the Company with any provision of this Indenture or the Securities
without notice to any other Securityholder. However, without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver
pursuant to SECTION 6.04, may not:

                  (a) change the stated maturity of the principal of, or the
         payment date of any installment of interest or Additional Amounts, on,
         any Security;

                  (b) reduce the principal amount of, or any premium or
         interest, liquidated damages or Additional Amounts on, any Security;

                  (c) change the place or currency of payment of principal of,
         or any premium or interest, liquidated damages or Additional Amounts
         on, any Security;

                  (d) impair the right to institute suit for the enforcement of
         any payment on, or with respect to, any Security;

                  (e) modify the provisions with respect to the right of Holders
         pursuant to ARTICLE III to require the Company to purchase Securities
         on an Option Purchase Date or to repurchase Securities upon the
         occurrence of Repurchase Event in a manner adverse to Holders;

                  (f) modify the provisions of SECTION 2.18 in a manner adverse
         to Holders;

                  (g) adversely affect the right of Holders to convert
         Securities other than as provided in or under ARTICLE X;

                  (h) reduce the percentage of the aggregate principal amount of
         the outstanding Securities whose Holders must consent to a modification
         to or amendment of any provision of this Indenture;

                  (i) reduce the percentage of the aggregate principal amount of
         the outstanding Securities whose Holders must consent to a waiver of
         compliance with any provision of this Indenture or a waiver of any
         Default or Event of Default; or

                  (j) modify the provisions of this Indenture with respect to
         modification and waiver (including waiver of Events of Default), except
         to increase the percentage required for modification or waiver or to
         provide for consent of each affected Holder.

         Promptly after an amendment, supplement or waiver under SECTION 9.01 or
this SECTION 9.02 becomes effective, the Company shall mail, or cause to be
mailed, to Securityholders a notice briefly describing such amendment,
supplement or waiver. Any failure

                                       48
<PAGE>

of the Company to mail such notice shall not in any way impair or affect the
validity of such amendment, supplement or waiver.

         It shall not be necessary for the consent of the Holders under this
SECTION 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

9.03     COMPLIANCE WITH TRUST INDENTURE ACT.

         Every amendment, waiver or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.

9.04     REVOCATION AND EFFECT OF CONSENTS.

         Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to its Security or portion of a Security if the Trustee receives the
notice of revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Securityholder.

         After an amendment, supplement or waiver becomes effective with respect
to the Securities, it shall bind every Securityholder unless it makes a change
that requires, pursuant to SECTION 9.02, the consent of each Securityholder
affected. In that case, the amendment, supplement or waiver shall bind each
Holder of a Security who has consented to it and, provided that notice of such
amendment, supplement or waiver is reflected on a Security that evidences the
same debt as the consenting Holder's Security, every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the consenting
Holder's Security.

9.05     NOTATION ON OR EXCHANGE OF SECURITIES.

         If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security as directed and
prepared by the Company about the changed terms and return it to the Holder.
Alternatively, if the Company so determines and directs the Trustee pursuant to
a Company Order, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.

9.06     TRUSTEE PROTECTED.

         The Trustee shall sign any amendment, supplemental indenture or waiver
authorized pursuant to this ARTICLE IX; provided, however, that the Trustee need
not sign any amendment, supplement or waiver authorized pursuant to this ARTICLE
IX that adversely affects the Trustee's rights, duties, liabilities or
immunities. Before signing any amendment, supplemental indenture or waiver, the
Trustee shall be entitled to receive and conclusively rely upon an Opinion of

                                       49
<PAGE>

Counsel and an Officers' Certificate that such amendment, supplemental indenture
or waiver is permitted or authorized pursuant to this Indenture.

                                 X. CONVERSION

10.01    CONVERSION PRIVILEGE; RESTRICTIVE LEGENDS.

         Subject to the provisions of SECTIONS 3.04, 3.07, 3.09 and 3.10, a
Holder may convert a Security into Common Shares under the circumstances set
forth in, and pursuant to, PARAGRAPH 12 of the Securities upon the satisfaction
of the applicable conditions set forth in PARAGRAPH 12 of the Securities. The
initial Conversion Rate is 56.1892 Common Shares per $1,000 principal amount.
The Conversion Rate is subject to adjustment in accordance with SECTIONS 10.06
through 10.12.

         To the extent a Holder receives Common Shares upon conversion of a
Security, such Holder shall receive, in addition to the Common Shares so
received, the rights (whether or not such rights have been separated from the
Common Shares prior to the time of conversion) pursuant to the Rights Agreement
and all shareholders' rights plans the Company may hereafter implement.

         A Holder may convert a portion of the principal of such Security if the
portion is $1,000 principal amount or an integral multiple of $1,000 principal
amount. Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of it.

         Any Common Shares issued upon conversion of a Security shall bear the
Private Placement Legend until after the second anniversary of the later of the
Issue Date and the last date on which the Company or any Affiliate was the owner
of such shares or the Security (or any predecessor security) from which such
shares were converted (or such shorter period of time as permitted by Rule
144(k) under the Securities Act or any successor provision thereunder) (or such
longer period of time as may be required under the Securities Act or applicable
state securities laws in the Opinion of Counsel for the Company, unless
otherwise agreed by the Company and the Holder thereof).

10.02    CONVERSION PROCEDURE.

         To convert a Security, a Holder must satisfy the requirements of
PARAGRAPH 12 of the Securities. As soon as practicable following the date (the
"CONVERSION DATE") on which the Holder satisfies all those requirements, the
Company shall deliver to the Holder through the Conversion Agent a certificate
for the number of full Common Shares issuable upon the conversion, as provided
in PARAGRAPH 12 of the Securities, and a check for the amount of cash payable in
lieu of any fractional share. On and after the Conversion Date, the person in
whose name such certificate is to be registered shall be treated as a
shareholder of record of the Company, and all rights of the Holder of the
Security to be converted shall terminate, other than the right to receive the
Common Shares and cash deliverable as provided in the preceding sentence. A
Holder of Securities is not entitled to any rights of a holder of Common Shares
until such Holder has converted its Securities into Common Shares, or is deemed
to be a shareholder of record of the Company, as provided in this paragraph, and
then only to the extent such

                                       50
<PAGE>

Securities are deemed to have been so converted or such Holder is so deemed to
be a shareholder of record. Upon delivery of the cash, if any, and Common Shares
issuable upon conversion of the Securities to the Holder(s) thereof, the Company
shall have discharged in full its obligations with respect to such Securities so
converted.

         Except as provided in this ARTICLE X, no payment or adjustment will be
made for accrued interest on, or liquidated damages with respect to, a converted
Security or for dividends on any Common Shares issued on or prior to conversion.
If any Holder surrenders a Security for conversion after the close of business
on the record date for the payment of an installment of interest and prior to
the related interest payment date, then, notwithstanding such conversion, the
interest payable with respect to such Security on such interest payment date
shall be paid on such interest payment date to the Holder of such Security at
the close of business on such record date; provided, however, that such
Security, when surrendered for conversion, must be accompanied by payment by the
Holder(s) thereof to the Trustee on behalf of the Company of an amount equal to
the interest payable on such interest payment date on the portion so converted;
provided further, however, that such payment to the Trustee described in the
immediately preceding proviso in respect of a Security surrendered for
conversion shall not be required if such Security is either (A) called for
Redemption pursuant to SECTION 3.04 and PARAGRAPHS 7 AND 8 of the Securities or
(B) called for Tax Redemption pursuant to SECTION 3.08 and PARAGRAPH 9 of the
Securities

         If a Holder converts more than one Security at the same time, the
number of full shares issuable upon the conversion shall be based on the total
principal amount of the Securities converted.

         Upon surrender of a Security that is converted in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unconverted portion of the Security surrendered.

         If the last day on which a Security may be converted is a Legal Holiday
in a place where a Conversion Agent is located, the Security may be surrendered
to that Conversion Agent on the next succeeding Business Day.

10.03    FRACTIONAL SHARES.

         The Company will not issue fractional Common Shares upon conversion of
Securities and instead will deliver a check in an amount equal to the value of
such fraction computed on the basis of the Closing Sale Price on the Conversion
Date (or, if the Conversion Date is not a Trading Day, the Trading Day
immediately before the Conversion Date).

10.04    TAXES ON CONVERSION.

         If a Holder converts its Security, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue, if any, of
Common Shares upon the conversion. However, the Holder shall pay any such tax
which is due because such shares are issued in a name other than such Holder's
name. The Conversion Agent may refuse to deliver a certificate representing the
Common Shares to be issued in a name other than such Holder's name until the
Conversion Agent receives a sum sufficient to pay any tax which will be due
because such shares

                                       51
<PAGE>

are to be issued in a name other than such Holder's name. Nothing herein shall
preclude any tax withholding required by law or regulation.

10.05    COMPANY TO PROVIDE STOCK.

         The Company shall reserve out of its authorized but unissued Common
Shares or Common Shares held in its treasury enough Common Shares to permit the
conversion of all of the Securities into Common Shares.

         All Common Shares which may be issued upon conversion of the Securities
shall be validly issued, fully paid and non-assessable and shall be free of
preemptive rights and free of any lien or adverse claim created by the Company.

         The Company shall comply with all securities laws regulating the offer
and delivery of Common Shares upon conversion of Securities and shall list such
shares on each national securities exchange, automated quotation system or other
stock exchange on which the Common Shares are listed. Upon any adjustment to the
Conversion Rate, the Company shall cause any additional Common Shares that shall
be issuable upon conversion of the outstanding Notes to be listed on each
national securities exchange, automated quotation system or other stock exchange
on which the Common Shares are listed immediately before such adjustment.

10.06    ADJUSTMENT OF CONVERSION RATE.

         The Conversion Rate shall be subject to adjustment from time to time as
follows:

                  (a) In case the Company shall (1) pay a dividend in Common
         Shares to all holders of Common Shares, (2) make a distribution in
         Common Shares to all holders of Common Shares, (3) subdivide the
         outstanding Common Shares into a greater number of Common Shares or (4)
         combine the outstanding Common Shares into a smaller number of Common
         Shares, the Conversion Rate in effect immediately prior to such action
         shall be adjusted so that the holder of any Security thereafter
         surrendered for conversion shall be entitled to receive the number of
         Common Shares which he would have owned immediately following such
         action had such Securities been converted immediately prior thereto.
         Any adjustment made pursuant to this SECTION 10.06(a) shall become
         effective immediately after the record date in the case of a dividend
         or distribution and shall become effective immediately after the
         effective date in the case of a subdivision or combination.

                  (b) In case the Company shall issue rights or warrants to all
         or substantially all holders of Common Shares, as the case may be,
         entitling them, for a period commencing on the record date for the
         determination of holders of Common Shares entitled to receive such
         rights or warrants and expiring not more than sixty (60) days after
         such record date, to subscribe for or purchase Common Shares (or
         securities convertible into Common Shares), at a price per share less
         than the then current market price (as determined pursuant to SECTION
         10.06(g)) of Common Shares on such record date, the Conversion Rate
         shall be increased by multiplying the Conversion Rate in effect
         immediately prior to such record date by a fraction of which the
         numerator shall be the number of Common Shares outstanding on such
         record date, plus the number of Common

                                       52
<PAGE>

         Shares so offered for subscription or purchase, and the denominator of
         which shall be the number of Common Shares outstanding at the close of
         business on such record date plus the number of Common Shares which the
         aggregate of the offering price of the total number of Common Shares so
         offered for subscription or purchase would purchase at such current
         market price. Such adjustments shall become effective immediately after
         such record date.

                  (c) In case the Company shall dividend or distribute to all or
         substantially all holders of Common Shares shares of Capital Stock of
         the Company (other than Common Shares), evidences of Indebtedness or
         other assets (other than cash dividends), or shall dividend or
         distribute to all or substantially all holders of Common Shares rights
         or warrants to subscribe for securities (other than those referred to
         in SECTION 10.06(b)), then in each such case the Conversion Rate shall
         be increased by multiplying the Conversion Rate in effect immediately
         prior to the close of business on the record date for the determination
         of shareholders entitled to such distribution by a fraction of which
         the numerator shall be the current market price of Common Shares (as
         determined pursuant to SECTION 10.06(g)) on such date and the
         denominator shall be such current market price less the fair market
         value (as determined in good faith by the Board of Directors whose
         determination shall be conclusive and described in a Board Resolution)
         on such date of the portion of the shares of Capital Stock, evidences
         of Indebtedness and other assets to be distributed or of such rights or
         warrants applicable to one Common Share, such increase to become
         effective immediately prior to the opening of business on the day
         following such record date; provided, however, that if such denominator
         is equal to or less than zero, then, in lieu of the foregoing
         adjustment to the Conversion Rate, adequate provision shall be made so
         that each Holder shall have the right to receive upon conversion of its
         Securities, in addition to the Common Shares issuable (and cash, if
         any, payable) upon such conversion, an amount of shares of Capital
         Stock, evidences of Indebtedness, assets, rights and/or warrants that
         such Holder would have received had such Holder converted each Security
         on such record date. Notwithstanding the foregoing, in the event that
         the Company shall distribute rights or warrants (other than those
         referred to in SECTION 10.06(b)) ("RIGHTS") pro rata to holders of
         Common Shares, the Company may, in lieu of making any adjustment
         pursuant to this SECTION 10.06(c), make proper provision so that each
         Holder of a Security who converts such Security (or any portion
         thereof) after the record date for such distribution and prior to the
         expiration or redemption of the Rights shall be entitled to receive
         upon such conversion, in addition to the Common Shares issuable (and
         cash, if any, payable) upon such conversion (the "CONVERSION SHARES"),
         a number of Rights to be determined as follows: (i) if such conversion
         occurs on or prior to the date for the distribution to the holders of
         Rights of separate certificates evidencing such Rights (the
         "DISTRIBUTION DATE"), the same number of Rights to which a holder of a
         number of Common Shares equal to the number of shares of Conversion
         Shares would be entitled at the time of such conversion in accordance
         with the terms and provisions of and applicable to the Rights; and (ii)
         if such conversion occurs after the Distribution Date, the same number
         of Rights to which a holder of the number of Common Shares into which
         the principal amount of the Security so converted was convertible
         immediately prior to the Distribution Date would have been entitled on
         the Distribution Date in accordance with the terms and provisions of
         and applicable to the Rights. In the event that the Company implements
         a shareholders'

                                       53
<PAGE>

         rights plan after the date hereof or amends, supplements or supercedes
         the Rights Agreement, the Company shall provide that the Holders will
         receive upon conversion of their Securities, in addition to Common
         Shares issuable (and cash, if any, payable) upon such conversion, the
         rights described therein (whether or not the rights have been separated
         from the Common Shares prior to the time of conversion), subject to the
         limitations set forth in such shareholders' rights plan. Any
         distribution of rights or warrants pursuant to a shareholders' rights
         plan complying with the requirements set forth in the two preceding
         sentences of this paragraph shall not constitute a distribution of
         rights or warrants pursuant to this SECTION 10.06(c).

                  (d) In case the Company shall, by dividend or otherwise, at
         any time make a distribution of cash (excluding any cash that is
         distributed as part of a distribution requiring a Conversion Rate
         adjustment pursuant to SUBSECTION (e) below) to all or substantially
         all holders of Common Shares, the Conversion Rate shall be increased by
         multiplying the Conversion Rate in effect immediately prior to the
         close of business on the record date for the determination of holders
         of Common Shares entitled to such distribution by a fraction (A) whose
         numerator shall be the current market price per Common Share (as
         determined pursuant to SECTION 10.06(g)) on such record date and (B)
         whose denominator shall be an amount equal to (a) such current market
         price per Common Share less (b) the lesser of (i) the amount of the
         distribution per Common Share and (ii) such current market price per
         Common Share; provided, however, that the Conversion Rate shall not be
         adjusted pursuant to this SECTION 10.06(d) to the extent, and only to
         the extent, such adjustment would cause the Conversion Price to be less
         than one cent ($0.01); provided further that, if the denominator of
         such fraction shall be zero, the Conversion Rate shall be instead
         adjusted so that the Conversion Price is equal to one cent ($0.01). An
         adjustment to the Conversion Rate pursuant to this SECTION 10.06(d)
         shall become effective immediately prior to the opening of business on
         the day immediately following such record date.

                  (e) In case the Company or any Subsidiary shall distribute
         cash or other consideration in respect of a tender offer or exchange
         offer made by the Company or any Subsidiary for all or any portion of
         the Common Shares where the sum of the aggregate amount of such cash
         distributed and the aggregate fair market value (as determined in good
         faith by the Board of Directors, whose determination shall be
         conclusive and set forth in a Board Resolution), as of the Expiration
         Date (as defined below), of such other consideration distributed (such
         sum, the "AGGREGATE AMOUNT") expressed as an amount per Common Share
         validly tendered or exchanged, and not withdrawn, pursuant to such
         tender offer or exchange offer as of the Expiration Time (as defined
         below) (such tendered or exchanged Common Shares, the "PURCHASED
         SHARES") exceeds the current market price per Common Share (as
         determined pursuant to SECTION 10.06(g)) on the last date (such last
         date, the "EXPIRATION DATE") on which tenders or exchanges could have
         been made pursuant to such tender offer or exchange offer (as the same
         may be amended through the Expiration Date), then the Conversion Rate
         shall be increased by multiplying the Conversion Rate in effect
         immediately prior to the close of business on the Expiration Date by a
         fraction (A) whose numerator is equal to the sum of (I) the Aggregate
         Amount and (II) the product of (a) the current market price per Common
         Share (as determined pursuant to SECTION 10.06(g)) on the Expiration
         Date and (b) an amount equal to (i) the

                                       54
<PAGE>

         number of Common Shares outstanding as of the last time (the
         "EXPIRATION TIME") at which tenders or exchanges could have been made
         pursuant to such tender offer or exchange offer less (ii) the Purchased
         Shares and (B) whose denominator is equal to the product of (I) the
         number of Common Shares outstanding as of the Expiration Time
         (including all Purchased Shares) and (II) the current market price per
         Common Share on the Expiration Date.

          An adjustment, if any, to the Conversion Rate pursuant to this SECTION
          10.06(e) shall become effective immediately prior to the opening of
          business on the Business Day following the Expiration Date. In the
          event that the Company or a Subsidiary is obligated to purchase Common
          Shares pursuant to any such tender offer or exchange offer, but the
          Company or such Subsidiary is permanently prevented by applicable law
          from effecting any such purchases, or all such purchases are
          rescinded, then the Conversion Rate shall again be adjusted to be the
          Conversion Rate which would then be in effect if such tender offer or
          exchange offer had not been made. If the application of this SECTION
          10.06(e) to any tender offer or exchange offer would result in a
          decrease in the Conversion Rate, no adjustment shall be made for such
          tender offer or exchange offer under this SECTION 10.06(e).

                  (f) In addition to the foregoing adjustments in SUBSECTIONS
         (a), (b), (c), (d) AND (e) above, the Company, from time to time and to
         the extent permitted by law, may increase the Conversion Rate by any
         amount for a period of at least twenty (20) days or such longer period
         as may be required by law, if the Board of Directors has made a
         determination, which determination shall be conclusive, that such
         increase would be in the best interests of the Company. Such Conversion
         Rate increase shall be irrevocable during such period. The Company
         shall give notice to the Trustee and cause notice of such increase to
         be mailed to each Holder of Securities at such Holder's address as the
         same appears on the registry books of the Registrar, at least fifteen
         (15) days prior to the date on which such increase commences.

                  (g) For the purpose of any computation under SUBSECTIONS (a),
         (b), (c) AND (d) above of this SECTION 10.06, the current market price
         per Common Share on the date fixed for determination of the
         shareholders entitled to receive the issuance or distribution requiring
         such computation (the "DETERMINATION DATE") shall be deemed to be the
         average of the Closing Sale Prices for the ten (10) consecutive Trading
         Days immediately preceding the Determination Date, and, for the purpose
         of any computation under SECTION 10.06(e) the current market price per
         Common Share on the Expiration Date for the tender offer or exchange
         offer requiring such computation shall be deemed to be the average of
         the Closing Sale Price for the ten (10) consecutive Trading Days
         immediately preceding the Expiration Date; provided, however, that (i)
         if the "ex" date for any event (other than the event requiring such
         computation) that requires an adjustment to the Conversion Rate
         pursuant to SUBSECTION (a), (b), (c), (d) OR (e) above occurs on or
         after the tenth (10th) Trading Day prior to the Determination Date,
         Expiration Date, whichever is applicable, and prior to the "ex" date
         for the issuance or distribution requiring such computation, the
         Closing Sale Price for each Trading Day prior to the "ex" date for such
         other event shall be adjusted by multiplying such Closing Sale Price by
         the reciprocal of the fraction by which the Conversion Rate is so
         required to be adjusted as a result of such

                                       55
<PAGE>

         other event, (ii) if the "ex" date for any event (other than the event
         requiring such computation) that requires an adjustment to the
         Conversion Rate pursuant to SUBSECTION (a), (b), (c), (d) OR (e) above
         occurs on or after the "ex" date for the issuance or distribution
         requiring such computation and on or prior to the Determination Date or
         the Expiration Date, whichever is applicable, the Closing Sale Price
         for each Trading Day on and after the "ex" date for such other event
         shall be adjusted by multiplying such Closing Sale Price by the same
         fraction by which the Conversion Rate is so required to be adjusted as
         a result of such other event, and (iii) if the "ex" date for the event
         requiring such computation is on or prior to the Determination Date or
         Expiration Date, whichever is applicable, after taking into account any
         adjustment required pursuant to CLAUSE (i) OR (II) of this proviso, the
         Closing Sale Price for each Trading Day on and after such "ex" date
         shall be adjusted by adding thereto the amount of any cash and the fair
         market value (as determined in good faith by the Board of Directors in
         a manner consistent with any determination of such value for the
         purposes of this SECTION 10.06, whose determination shall be conclusive
         and described in a Resolution of the Board of Directors) of the
         evidences of Indebtedness, shares of Capital Stock or other securities
         or assets or cash being distributed (in the event requiring such
         computation) applicable to one Common Share as of the close of business
         on the day before such "ex" date.

         For purposes of this subsection, the term "ex" date, (i) when used with
         respect to any issuance or distribution, means the first date on which
         the Common Shares trade the regular way on the relevant exchange or in
         the relevant market from which the Closing Sale Price was obtained
         without the right to receive such issuance or distribution, (ii) when
         used with respect to any subdivision or combination of Common Shares,
         means the first date on which the Common Shares trade the regular way
         on such exchange or in such market after the time at which such
         subdivision or combination becomes effective, and (iii) when used with
         respect to any tender offer or exchange offer means the first date on
         which the Common Share trades the regular way on such exchange or in
         such market after the expiration time of such tender offer or exchange
         offer (as it may be amended or extended).

10.07    NO ADJUSTMENT.

         No adjustment in the Conversion Rate shall be required until cumulative
adjustments amount to one percent (1%) or more of the Conversion Price as last
adjusted; provided, however, that any adjustments which by reason of this
SECTION 10.07 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this ARTICLE X
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.

         If any rights, options or warrants issued by the Company as described
in SECTION 10.06 are only exercisable upon the occurrence of certain triggering
events, then the Conversion Rate will not be adjusted as provided in SECTION
10.06 until the earliest of such triggering event occurs. Upon the expiration or
termination of any rights, options or warrants without the exercise of such
rights, options or warrants, the Conversion Rate then in effect shall be
adjusted immediately to the Conversion Rate which would have been in effect at
the time of such

                                       56
<PAGE>

expiration or termination had such rights, options or warrants,
to the extent outstanding immediately prior to such expiration or termination,
never been issued.

         If any dividend or distribution is declared and the Conversion Rate is
adjusted pursuant to SECTION 10.06 on account of such dividend or distribution,
but such dividend or distribution is thereafter not paid or made, the Conversion
Rate shall again be adjusted to the Conversion Rate which would then be in
effect had such dividend or distribution not been declared.

         No adjustment need be made for a transaction referred to in this
ARTICLE X if Securityholders are to participate in the transaction without
conversion on a basis and with notice that the Board of Directors determines in
good faith to be fair and appropriate in light of the basis and notice on which
holders of Common Shares participate in the transaction.

         Except as otherwise provided in this Indenture, no adjustment to the
Conversion Rate shall be required for the issuance of Common Shares or the right
to purchase Common Shares or any convertible or exchangeable securities.

10.08    OTHER ADJUSTMENTS.

         In the event that, as a result of an adjustment made pursuant to
SECTION 10.06 hereof, the Holder of any Security thereafter surrendered for
conversion shall become entitled to receive any shares of Capital Stock other
than Common Shares, thereafter the Conversion Rate of such other shares so
receivable upon conversion of any Security shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Shares contained in this ARTICLE X.

10.09    ADJUSTMENTS FOR TAX PURPOSES.

         The Company may make such increases in the Conversion Rate, in addition
to those required by SECTION 10.06 hereof, as it determines to be advisable in
order that any stock dividend, subdivision of shares, distribution or rights to
purchase stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company or to its shareholders will not be
taxable to the recipients thereof.

10.10    NOTICE OF ADJUSTMENT.

         Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to Holders at the addresses appearing on the Registrar's books a notice of
the adjustment and file with the Trustee an Officers' Certificate briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence of the correctness of such adjustment.

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<PAGE>

10.11    NOTICE OF CERTAIN TRANSACTIONS.

         In the event that:

                  (1) the Company takes any action which would require an
         adjustment in the Conversion Rate;

                  (2) the Company takes any action that would require a
         supplemental indenture pursuant to SECTION 10.12; or

                  (3) there is a dissolution or liquidation of the Company;

the Company shall mail to Holders at the addresses appearing on the Registrar's
books and the Trustee a notice stating the proposed record or effective date, as
the case may be, of any transaction referred to in CLAUSE (1), (2) or (3) of
this SECTION 10.11. The Company shall mail such notice at least fifteen (15)
days before such date; however, failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in CLAUSE
(1), (2) or (3) of this SECTION 10.11.

10.12 EFFECT OF RECLASSIFICATIONS, CONSOLIDATIONS, AMALGAMATIONS, STATUTORY
ARRANGEMENTS, MERGERS, BINDING SHARE EXCHANGES OR SALES ON CONVERSION PRIVILEGE.

         If any of the following shall occur, namely: (i) any reclassification
or change in the Common Shares issuable upon conversion of Securities (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), (ii) any
consolidation, amalgamation, statutory arrangement, merger or binding share
exchange to which the Company is a party other than a merger in which the
Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in name, or par value, or
from par value to no par value, or from no par value to par value or as a result
of a subdivision or combination) in, the Common Shares or (iii) any sale or
conveyance of all or substantially all of the property or business of the
Company, then the Company or such successor or purchasing corporation, as the
case may be, shall, as a condition precedent to such reclassification, change,
consolidation, amalgamation, statutory arrangement, merger, binding share
exchange, sale or conveyance, execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee providing that the
Holder of each Security then outstanding shall have the right to convert such
Security into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification, change,
consolidation, amalgamation, statutory arrangement, merger, binding share
exchange, sale or conveyance by a holder of the number of Common Shares
deliverable upon conversion of such Security immediately prior to such
reclassification, change, consolidation, amalgamation, statutory arrangement,
merger, binding share exchange, sale or conveyance, assuming that such Holder
would not have exercised any rights of election that such Holder would have had
as a holder of Common Shares to select a particular type of consideration. Such
supplemental indenture shall provide for adjustments of the Conversion Rate
which shall be as nearly equivalent as may be practicable to the adjustments of
the Conversion Rate provided for in this ARTICLE X. The foregoing, however,
shall not in any way

                                       58
<PAGE>

affect the right a Holder of a Security may otherwise have, pursuant to CLAUSE
(II) of the last sentence of the first paragraph of SECTION 10.06(c) hereof, to
receive Rights upon conversion of a Security. If, in the case of any such
consolidation, amalgamation, statutory arrangement, merger, binding share
exchange, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of Common Shares includes
shares of stock or other securities and property of a corporation other than the
successor or purchasing corporation, as the case may be, in such consolidation,
amalgamation, statutory arrangement, merger, binding share exchange, sale or
conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the Holders of the Securities as the Board of Directors shall
reasonably consider necessary by reason of the foregoing. The provision of this
SECTION 10.12 shall similarly apply to successive consolidations, amalgamations,
statutory arrangements, mergers, binding share exchanges, sales or conveyances.

         Notwithstanding the foregoing, if, prior to the date that is five (5)
years plus one (1) day from the Issue Date, Holders would otherwise be entitled
to receive, upon conversion of the Securities, any property (including cash) or
securities of a company ("INELIGIBLE CONSIDERATION") that would not constitute
"prescribed securities" for the purpose of clause 212(1)(b)(vii)(E) of the
Canadian Tax Act ("PRESCRIBED SECURITIES"), such Holders shall not be entitled
to receive such Ineligible Consideration; provided, however, that the Company or
the successor or acquiror, as the case may be, shall have the right (at the sole
option of the Company or the successor or acquiror, as the case may be) to
deliver either such Ineligible Consideration or Prescribed Securities with a
market value comparable to such Ineligible Consideration (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and set
forth in a Board Resolution). The Company shall give notice to Holders at least
thirty (30) days prior to the effective date of such transaction in writing and
by release to a business newswire stating the consideration into which the
Securities will be convertible after the effective date of such transaction.
After such notice is given, the Company or the successor or acquiror, as the
case may be, may not change the consideration to be delivered upon conversion of
the Securities, except in accordance with any provision of this Indenture other
than this SECTION 10.12.

         In the event the Company shall execute a supplemental indenture
pursuant to this SECTION 10.12, the Company shall promptly file with the Trustee
an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or securities or property (including cash) receivable
by Holders of the Securities upon the conversion of their Securities after any
such reclassification, change, consolidation, amalgamation, statutory
arrangement, merger, binding share exchange, sale or conveyance and any
adjustment to be made with respect thereto.

10.13    TRUSTEE'S DISCLAIMER.

         The Trustee has no duty to determine when an adjustment under this
ARTICLE X should be made, how it should be made or what such adjustment should
be, but may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying upon the Officers' Certificate
with respect thereto which the Company is obligated to file with the Trustee
pursuant to SECTION 10.10 hereof. The Trustee shall not be accountable for, and
makes no

                                       59
<PAGE>

representation as to, the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
failure by the Company to comply with any provisions of this ARTICLE X.

         The Trustee shall not be under any responsibility to determine whether
a supplemental indenture must be executed pursuant to this ARTICLE X nor shall
the Trustee have any responsibility to determine the correctness of any
provisions contained in any supplemental indenture executed pursuant to SECTION
10.12 but may accept as conclusive evidence of the correctness thereof, and
shall be protected in relying upon, the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
SECTION 10.12 hereof.

                               XI. MISCELLANEOUS

11.01    TRUST INDENTURE ACT CONTROLS.

         If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision of the TIA shall control.

11.02    NOTICES.

         Any notice or communication by the Company or the Trustee to one or
both of the others is duly given if in writing and delivered in person, mailed
by first-class mail or by express delivery or facsimile transmission to the
other parties' addresses stated in this SECTION 11.02. The Company or the
Trustee by notice to the others may designate additional or different addresses
for subsequent notices or communications.

         Any notice or communication to a Securityholder shall be mailed or sent
by facsimile transmission to its address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders.

         If a notice or communication is mailed in the manner provided above, it
is duly given, whether or not the addressee receives it.

         If the Company mails a notice or communication to Securityholders, it
shall mail or send by facsimile transmission a copy to the Trustee and each
Security Agent at the same time.

         All notices or communications shall be in writing.

                                       60
<PAGE>

         The Company's address is:

         QLT Inc.
         887 Great Northern Way
         Vancouver, B.C. V5T 4T5
         Canada
         Facsimile: (604) 707-7001

         The Trustee's address is:

         The Bank of New York
         101 Barclay Street, Floor 21-West
         New York, New York 10286
         Attn: Corporate Trust Administration
         Facsimile: (212) 815-5802

11.03    COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

         Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).

11.04    CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

         Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

                  (i) an Officers' Certificate stating that, in the opinion of
         the signers, all conditions precedent, if any, provided for in this
         Indenture relating to the proposed action have been complied with; and

                  (ii) an Opinion of Counsel stating that, in the opinion of
         such counsel, all such conditions precedent have been complied with.

         Each signer of an Officers' Certificate or an Opinion of Counsel may
(if so stated) rely, effectively, upon an Opinion of Counsel as to legal matters
and an Officers' Certificate or certificates of public officials as to factual
matters if such signer reasonably and in good faith believes in the accuracy of
the document relied upon.

11.05    STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

         Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:

                  (i) a statement that the person making such certificate or
         opinion has read such covenant or condition;

                                       61
<PAGE>

                  (ii) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

                  (iii) a statement that, in the opinion of such person, he or
         she has made such examination or investigation as is necessary to
         enable him or her to express an informed opinion as to whether or not
         such covenant or condition has been complied with; and

                  (iv) a statement as to whether or not, in the opinion of such
         person, such condition or covenant has been complied with.

11.06    RULES BY TRUSTEE AND AGENTS.

         The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules and set reasonable requirements for their respective functions.

11.07    LEGAL HOLIDAYS.

         A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the City of New York, in the State
of New York or in the city in which the Trustee administers its corporate trust
business. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on that payment for the intervening
period.

         A "BUSINESS DAY" is a day other than a Legal Holiday.

11.08    DUPLICATE ORIGINALS.

         The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement. Delivery of an executed counterpart by facsimile shall be effective
as delivery of a manually executed counterpart thereof.

11.09    GOVERNING LAW.

         The laws of the State of New York, without regard to principles of
conflicts of law, shall govern this Indenture and the Securities.

11.10    NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

         This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.

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<PAGE>

11.11    SUCCESSORS.

         All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.

11.12    SEPARABILITY.

         In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and a Holder shall have no claim therefor against any party hereto.

11.13    TABLE OF CONTENTS, HEADINGS, ETC.

         The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.

11.14    CALCULATIONS IN RESPECT OF THE SECURITIES.

         The Company and its agents (including, without limitation, the Bid
Solicitation Agent) shall make all calculations under this Indenture and the
Securities in good faith. In the absence of manifest error, such calculations
shall be final and binding on all Holders. The Company shall provide a copy of
such calculations to the Trustee as required hereunder.

11.15    JUDGMENT CURRENCY.

         The Company hereby covenants and agrees that the following provisions
shall apply to conversion of currency in the case of this Agreement:

         (A) If for the purpose of obtaining judgment in, or enforcing the
judgment of, any court in any country other than the United States, it becomes
necessary to convert into any other currency (the "JUDGMENT CURRENCY") an amount
due in United States Dollars, then the conversion shall be made at the rate of
exchange prevailing on the Business Day before the day which judgment is given
or the order of enforcement is made, as the case may be. The term "RATE(s) OF
EXCHANGE" shall mean the rate at which the Trustee is able or would have been
able on the relevant date to purchase, at such money center bank in the City of
New York as the Trustee designates at such time, United States Dollars with
judgment currency above and includes any premiums and costs of exchange payable.

         (B) The Company hereby agrees to indemnify the Holders and the Trustee
against any loss incurred by any of them as a result of any judgment or order
being given or made for any amount due under this Indenture and such judgment or
order being expressed and paid in the judgment currency and as a result of any
variation as between (i) the rate of exchange at which the United States Dollar
amount is converted into the judgment currency for the purpose of such judgment
or order and (ii) the spot rate of exchange in the City of New York at which the
Company on the date of payment of judgment or order is able to purchase United
States Dollars with the amount of the judgment currency actually paid by the
Company. The foregoing indemnity

                                       63
<PAGE>

shall continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term "spot rate of exchange" shall include any premiums
and costs of exchange payable in connection with the purchase of, or conversion
into, United States Dollars.

         (C) All calculations under this Indenture based on amounts which are
initially in Canadian Dollars will be converted into United States Dollars based
on the rate of exchange in effect on the date of calculation, and vice versa.

11.16    APPOINTMENT OF AGENT FOR SERVICE OF PROCESS.

         The Company hereby appoints, without power of revocation, CT
Corporations System, as its agent to accept and acknowledge on its behalf
service of any and all process which may be served in any action, proceeding or
counterclaim in any way relating to or arising out of this Indenture.

                                       64
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first above written.

                                     QLT, INC.

                                     By: /s/ Paul J. Hastings
                                         --------------------------------------
                                         Name: Paul J. Hastings
                                         Title: President and Chief
                                                Executive Officer

                                     THE BANK OF NEW YORK, as Trustee

                                     By: /s/ Thomas E. Tabor
                                         --------------------------------------
                                         Name: Thomas E. Tabor
                                         Title: Vice President

<PAGE>

                                                                       EXHIBIT A

                               [Face of Security]

                                    QLT INC.

Certificate No.
                -------

    [INSERT PRIVATE PLACEMENT LEGEND AND GLOBAL SECURITY LEGEND AS REQUIRED]

                       3% Convertible Senior Note due 2023
                             CUSIP No.
                                       ------------

         QLT Inc., a British Columbia company (herein called the "COMPANY"), for
value received, hereby promises to pay to Cede & Co., or its registered assigns,
the principal sum of ______________ U.S. dollars (US$__________) on September
15, 2023 and to pay interest thereon, as provided on the reverse hereof, until
the principal and any unpaid and accrued interest are paid or duly provided for.

         Interest Payment Dates: March 15 and September 15, with the first
payment to be made on March 15, 2004.

         Record Dates: March 1 and September 1.

         The provisions on the back of this certificate are incorporated as if
set forth on the face hereof.

         IN WITNESS WHEREOF, QLT INC. has caused this instrument to be duly
signed.

                                       QLT INC.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

Dated:
       ----------------

                                      A-1
<PAGE>

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities referred to
in the within-mentioned Indenture.

THE BANK OF NEW YORK, as Trustee

By:
   ---------------------------------
         Authorized Signatory

Dated:
       ------------------

                                      A-2
<PAGE>

                              [REVERSE OF SECURITY]

                                    QLT INC.

                       3% CONVERTIBLE SENIOR NOTE DUE 2023

         1. INTEREST. QLT Inc., a British Columbia company (the "COMPANY"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semi-annually on March 15
and September 15 of each year, with the first payment to be made on March 15,
2004. Interest on the Securities will accrue on the principal amount from, and
including, the most recent date to which interest has been paid or provided for
or, if no interest has been paid, from, and including, August 15, 2003. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.

         2. MATURITY. The Securities will mature on September 15, 2023.

         3. METHOD OF PAYMENT. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered Holders of
Securities at the close of business on the record date set forth on the face of
this Security next preceding the applicable interest payment date; provided,
however, that accrued and unpaid interest payable, as provided in the Indenture,
on a Security upon Repurchase at Holder's Option or Repurchase Upon Repurchase
Event shall instead be paid to the Holder surrendering such Security for
Repurchase at Holder's Option or Repurchase Upon Repurchase Event, as the case
may be. Holders must surrender Securities to a Paying Agent to collect the
principal, Redemption Price, Tax Redemption Price, Option Purchase Price or
Repurchase Price of the Securities, plus, if applicable, accrued and unpaid
interest, if any, payable as herein provided upon Redemption, Tax Redemption,
Repurchase at Holder's Option or Repurchase Upon Repurchase Event, as the case
may be. The Company will pay all amounts due with respect to the Securities in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. If this Security is in global form, the
Company will pay interest on the Securities by wire transfer of immediately
available funds to the account specified by the Holder. With respect to
securities held other than in global form, the Company will make payments by
wire transfer of immediately available funds to the account specified by the
Holders thereof or, if no such account is specified with respect to a Holder, by
mailing a check to the Holder's registered address.

         4. PAYING AGENT, REGISTRAR, CONVERSION AGENT. Initially, The Bank of
New York (the "TRUSTEE"), will act as Paying Agent, Registrar, Bid Solicitation
Agent and Conversion Agent. The Company may change any Paying Agent, Registrar,
Bid Solicitation Agent or Conversion Agent without notice.

         5. INDENTURE. The Company issued the Securities under an Indenture
dated as of August 15, 2003 (the "INDENTURE") between the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code Sections 77aaa-77bbbb) (the "ACT") as in effect on the date of the
Indenture. The Securities are subject to all such terms, and Securityholders are

                                      A-3
<PAGE>

referred to the Indenture and the Act for a statement of such terms. The
Securities are general unsecured senior obligations of the Company limited to
US$150,000,000 aggregate principal amount (US$172,500,000 if the Initial
Purchasers have elected to exercise the Option to purchase an additional
US$22,500,000 of the Securities), except as otherwise provided in the Indenture
(except for Securities issued in substitution for destroyed, mutilated, lost or
stolen Securities). Terms used herein which are defined in the Indenture have
the meanings assigned to them in the Indenture.

         6. ADDITIONAL AMOUNTS. The Company will pay to the Holders such
Additional Amounts as may become payable under SECTION 4.08 of the Indenture.

         7. OPTIONAL REDEMPTION. The Securities will be redeemable prior to
maturity at the option of the Company, in whole or in part, at any time on or
after September 15, 2008 (the date of such time, the "REDEMPTION DATE"), at a
redemption price equal to one hundred percent (100%) of the principal amount of
the Securities to be redeemed, plus any accrued and unpaid interest to, but
excluding, the Redemption Date; provided, that if such Redemption Date is also
an interest payment date, such accrued and unpaid interest with respect to a
Security called for Redemption will be paid on such interest payment date to the
Holder of record of such Security at the close of business on the relevant
record date; provided further, that the Company will make at least ten (10)
semi-annual interest payments with respect to the Securities prior to redeeming
any Securities under this PARAGRAPH 7.

         If the Paying Agent (other than the Company) holds on the Redemption
Date money sufficient to pay the aggregate Redemption Price, and accrued and
unpaid interest, if any, to, but excluding, the Redemption Date, payable on the
Redemption Date with respect to a Security, then (unless the Company defaults in
the payment of the Redemption Price or such accrued and unpaid interest) on and
after the Redemption Date such Security shall be deemed to be no longer
outstanding, interest on such Security shall cease to accrue, and such Security
shall be deemed paid whether or not such Security is delivered to the Paying
Agent. Thereafter, all rights of the Holder of such Security shall terminate
with respect to such Security, other than the right to receive the Redemption
Price plus such accrued and unpaid interest.

         8. NOTICE OF REDEMPTION. Notice of Redemption will be mailed at least
thirty (30) days but not more than sixty (60) days before the Redemption Date to
each Holder of Securities to be redeemed at its registered address. Securities
in denominations larger than $1,000 principal amount may be redeemed in part but
only in integral multiples of $1,000 principal amount.

         9. REDEMPTION FOR TAX REASONS. The Company may, at its option, redeem
the Securities, in whole but not in part, at one hundred percent (100%) of the
principal amount of the Securities, plus accrued and unpaid interest, if any,
to, but excluding, the Tax Redemption Date if:

                  (i) the Company has become, or would become, obligated to pay
         to the Holders Additional Amounts that, in the aggregate, are more than
         de minimis as a result of any amendment or change occurring after
         August 12, 2003 in the laws or any regulations of Canada or any
         Canadian political subdivision or taxing authority or any change
         occurring after August 12, 2003 in the interpretation or application of
         any

                                      A-4
<PAGE>

         such laws or regulations by any legislative body, court, governmental
         agency, taxing authority or regulatory authority (including the
         enactment of any legislation and the publication of any judicial
         decision or regulatory or administrative determination);

                  (ii) the Company cannot avoid the obligation to pay such
         non-de minimis Additional Amounts by taking reasonable measures
         available to it;

                  (iii) the Company delivers to the Trustee an opinion of
         Canadian legal counsel specializing in taxation and an Officers'
         Certificate attesting to (I) such change in such laws, regulations,
         interpretation or application and (II) the obligation of the Company to
         pay such non-de minimis Additional Amounts; and

                  (iv) at least thirty (30) days but not more than sixty (60)
         days before the date (the "TAX REDEMPTION DATE") the Securities are to
         be redeemed pursuant a Tax Redemption, the Company mails, or causes to
         be mailed, by first-class mail to each Holder, at the address of such
         Holder appearing in the security register, a notice of Tax Redemption
         containing the information specified in SECTION 3.08(E) of the
         indenture; provided, however, that (I) the Company shall not mail, or
         cause to be mailed, a notice of Tax Redemption earlier than sixty (60)
         Business Days prior to the earliest date on or from which the Company
         would be obligated to pay any such non-de minimis Additional Amounts
         and (II) the Company shall not mail, or cause to be mailed, a notice of
         Tax Redemption unless, at the time of such mailing, the circumstances
         creating the Company's obligation to pay such non-de minimis Additional
         Amounts are in effect.

         Except in respect of Excluded Holders, the Company shall not, and shall
not cause any Paying Agent or the Trustee to, deduct from the Tax Redemption
Price, or from the accrued and unpaid interest payable as herein provided upon
Tax Redemption, any amounts on account of, or in respect of, any Canadian
withholding taxes.

         The right, pursuant to ARTICLE X, to convert Securities called for Tax
Redemption shall terminate at the close of business on the Business Day
immediately preceding the Tax Redemption Date.

         A Holder may elect not to have its Securities, or a portion thereof,
redeemed pursuant to a Tax Redemption by delivering to the Paying Agent, no
later than the close of business on the Business Day immediately preceding the
Tax Redemption Date, a duly completed and signed Notice of Election Upon Tax
Redemption (or any other form of written notice substantially similar thereto);
provided, however, that no Additional Amounts shall be payable by the Company on
any payment of interest or principal with respect to Securities for which such a
Notice of Election Upon Tax Redemption is so delivered, and all payments by the
Company with respect to such Securities shall be subject to the deduction or
withholding of any Canadian Taxes required to be deducted or withheld. A Holder
that has not so delivered such a Notice of Election Upon Tax Redemption shall
have its Securities redeemed pursuant to the Tax Redemption without further
action. Notwithstanding anything herein to the contrary, a Holder may withdraw
its Notice of Election Upon Tax Redemption by delivering to the Paying Agent a
written notice of withdrawal prior to the close of business on the Business Day
immediately

                                      A-5
<PAGE>

preceding the Tax Redemption Date, which notice of withdrawal must contain the
information specified in SECTION 3.08(E)(x). The Paying Agent shall promptly
notify the Company of the receipt by it of any such written notice of withdrawal
thereof.

         10. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER. Subject to the
terms and conditions of the Indenture, the Company shall become obligated to
purchase, at the option of the Holder, the Securities held by such Holder on
September 15, 2008, September 15, 2013 and September 15, 2018 (each, an "OPTION
PURCHASE DATE") at an Option Purchase Price, payable in cash, equal to one
hundred percent (100%) of the Principal Amount at Maturity of Securities to be
purchased, plus accrued and unpaid interest, if any, to, but excluding,
applicable Option Purchase Date, upon delivery of a Purchase Notice containing
the information set forth in the Indenture, at any time from the opening of
business on the date that is twenty (20) Business Days prior to the applicable
Option Purchase Date until the close of business on the Business Day immediately
preceding the applicable Option Purchase Date and upon delivery of the
Securities to the Paying Agent by the Holder as set forth in the Indenture.

         Holders have the right to withdraw any Purchase Notice by delivering to
the Paying Agent a written notice of withdrawal in accordance with the
provisions of the Indenture.

         If the Paying Agent (other than the Company) holds on the applicable
Option Purchase Date money and/or Common Shares, if applicable and as provided
in the Indenture, sufficient to pay the aggregate Option Purchase Price, and
accrued and unpaid interest, if any, to, but excluding, such Option Purchase
Date, payable in respect of Securities on such Option Purchase Date, then on and
after such Option Purchase Date such Securities shall be deemed to be no longer
outstanding and interest on them shall cease to accrue, and such Securities
shall be deemed paid whether or not such Securities are delivered to the Paying
Agent. Thereafter, all other rights of the Holders of such Securities shall
terminate with respect to such Securities, other than the right to receive the
Option Purchase Price plus such accrued and unpaid interest.

         11. REPURCHASE AT OPTION OF HOLDER UPON A REPURCHASE EVENT. Subject to
the terms and conditions of the Indenture, in the event of a Repurchase Event,
each Holder of the Securities shall have the right, at the Holder's option, to
require the Company to repurchase such Holder's Securities including any portion
thereof which is $1,000 in principal amount or any integral multiple thereof on
a date selected by the Company (the "REPURCHASE DATE") no later than thirty (30)
days after the date on which notice of such Repurchase Event is mailed in
accordance with the immediately succeeding paragraph, at a price equal to one
hundred percent (100%) of the outstanding principal amount of such Security,
plus accrued and unpaid interest to, but excluding, the Repurchase Date.

         Within thirty (30) days after the occurrence of the Repurchase Event,
the Company is obligated to give notice of the occurrence of such Repurchase
Event to each Holder. Such notice shall include, among other things, the date by
which the Holder must notify the Company of such Holder's intention to exercise
the Repurchase Right and of the procedure which such Holder must follow to
exercise such right. To exercise the Repurchase Right, a Holder of Securities
must, in accordance with the provisions of the Indenture, (i) deliver, no later
than the close of business on the Business Day immediately preceding the
Repurchase Date, written notice to the Paying Agent of the Holder's exercise of
such right; and (ii) deliver, at any time after the

                                      A-6
<PAGE>

delivery of such written notice, the Securities with respect to which the Holder
is exercising its Repurchase Right, duly endorsed for transfer to the Company.

         A "REPURCHASE EVENT," which shall constitute an "event of failure"
under the Indenture within the meaning of subparagraph 212(1)(b)(vii)(C) of the
Canadian Tax Act, shall be deemed to have occurred upon the occurrence of either
a "Change in Control" or a "Termination of Trading."

         A "CHANGE IN CONTROL" shall be deemed to have occurred at such time as:

                  (v) any "person" or "group" (as such terms are used for
         purposes of Sections 13(d) and 14(d) of the Exchange Act) is or becomes
         the "beneficial owner" (as such term is used in Rule 13d-3 under the
         Exchange Act), directly or indirectly, of fifty percent (50%) or more
         of the total voting power of all classes of the Company's Capital Stock
         entitled to vote generally in the election of directors; or

                  (vi) at any time the following persons cease for any reason to
         constitute a majority of the Company's Board of Directors:

                           (1) individuals who on the Issue Date constituted the
                  Company's Board of Directors; and

                           (2) any new directors whose election to the Company's
                  Board of Directors or whose nomination for election by the
                  Company's shareholders was approved by at least a majority of
                  the directors of the Company then still in office who were
                  either directors of the Company on the Issue Date or whose
                  election or nomination for election was previously so
                  approved; or

                  (vii) the Company consolidates with, or amalgamates or merges
         with or into, another person or any person consolidates with, or
         amalgamates or merges with or into, the Company (including, in each of
         the foregoing cases, pursuant to a statutory arrangement), in any such
         event other than pursuant to a transaction in which the persons that
         "beneficially owned," directly or indirectly, the shares of the
         Company's Voting Stock immediately prior to such transaction,
         "beneficially own," directly or indirectly, immediately after such
         transaction, shares of the surviving or continuing corporation's Voting
         Stock representing at least a majority of the total voting power of all
         outstanding classes of the Voting Stock of the continuing or surviving
         corporation in substantially the same proportion as such ownership
         immediately prior to the transaction; or

                  (viii) the sale, lease, transfer or other conveyance or
         disposition of all or substantially all of the assets or property of
         the Company (including, in any such case, pursuant to a statutory
         arrangement) to any "person" or "group" (as such terms are used in
         Sections 13(d) and 14(d) of the Exchange Act), including any group
         acting for the purpose of acquiring, holding, or disposing of
         securities within the meaning of Rule 13d-5(b)(1) under the Exchange
         Act; or

                                      A-7
<PAGE>

                  (ix) the Company is liquidated or dissolved or the holders of
         the Company's Capital Stock approve any plan or proposal for the
         liquidation or dissolution of the Company;

         provided, however, that a Change in Control will not be deemed to have
         occurred if either:

                           (1) the Closing Sale Price for each of any twenty
                  (20) Trading Days during the thirty (30) Trading Days
                  immediately preceding the Change in Control is equal to at
                  least one hundred and five percent (105%) of the Conversion
                  Price in effect on such Trading Day; or

                           (2) in the case of a merger, consolidation,
                  amalgamation or statutory arrangement (involving a business
                  combination) all of the consideration (other than cash
                  payments for fractional shares and pursuant to statutory
                  appraisal rights) in the merger, consolidation, amalgamation
                  or statutory arrangement constituting the Change in Control
                  consists of common stock and any associated rights traded on a
                  U.S. national securities exchange or quoted on The Nasdaq
                  National Market (or which will be so traded or quoted when
                  issued or exchanged in connection with such Change in
                  Control), and, as a result of such transaction or
                  transactions, the Securities become convertible solely into
                  such common stock and associated rights.

         A "TERMINATION OF TRADING" shall occur if the Common Shares of the
Company (or other common stock into which the Securities are then convertible)
is neither listed for trading on a U.S. national securities exchange nor
approved for trading on an established automated over-the-counter trading market
in the United States.

         12. CONVERSION.

         Conversion Based on Closing Sale Price of Common Shares. Subject to
earlier Redemption, Tax Redemption, Repurchase at Holder's Option or Repurchase
Upon Repurchase Event, Holders may surrender Securities in integral multiples of
$1,000 principal amount for conversion into shares of the Company's Common
Shares on any Business Day of a calendar quarter, beginning with the quarter
ending December 31, 2003, if the Closing Sale Price of the Company's Common
Shares for at least twenty (20) consecutive Trading Days in a period of thirty
(30) consecutive Trading Days ending on the last Trading Day of the immediately
preceding calendar quarter exceeds one hundred and twenty percent (120%) of the
Conversion Price in effect on such last Trading Day.

         Conversion Upon Satisfaction of Trading Price Condition. If the
Securities are not otherwise then convertible, Securities in integral multiples
of $1,000 principal amount may be surrendered for conversion into Common Shares
any time during the five (5) Business Day period after any nine (9) consecutive
Trading Day period (such nine (9) consecutive Trading Day Period, the
"MEASUREMENT PERIOD") in which the average Trading Price per $1,000 principal
amount of the Securities during the Measurement Period was equal to or less than
ninety five percent (95%) of the average Conversion Value (as defined below)
during the Measurement

                                      A-8
<PAGE>

Period (such condition, the "TRADING PRICE CONDITION"). In connection with any
conversion, the Bid Solicitation Agent shall not have any obligation to
determine the Trading Price unless the Company has requested such determination,
and the Company shall have no obligation to make such request unless a Holder
provides the Company with reasonable evidence that the Trading Price per $1,000
principal amount of the Securities would be equal to or less than ninety five
percent (95%) of the Conversion Value. Upon receipt of such evidence, the
Company shall instruct the Bid Solicitation Agent to determine the Trading Price
per $1,000 principal amount of the Securities for each of the nine (9)
successive Trading Days immediately after the Company receives such evidence and
on each Trading Day thereafter until the first Trading Day on which the Trading
Price Condition is no longer satisfied. Notwithstanding anything to the contrary
in this paragraph, no Securities shall be converted pursuant to this paragraph
after September 15, 2018 if the Closing Sale Price on any Trading Day during the
most recent Measurement Period during which the Trading Price Condition is
satisfied is greater than the Conversion Price in effect during such Trading Day
and less than or equal to 120% of such Conversion Price. For purposes of this
paragraph, the "Conversion Value," on a given Trading Day, means the product of
Closing Sale Price on such Trading Day and the Conversion Rate in effect on such
Trading Day.

         Conversion Based on Redemption. A Security, or portion of a Security,
which has been called for Redemption pursuant to PARAGRAPH 7, or for Tax
Redemption pursuant to PARAGRAPH 9, may be surrendered in integral multiples of
$1,000 principal amount for conversion into Common Shares; provided, however,
that such Security or portion thereof may be surrendered for conversion pursuant
to this paragraph only until the close of business on the Business Day
immediately preceding the Redemption Date or the Tax Redemption Date, as the
case may be.

         Conversion Upon Certain Distributions. If the Securities are not
otherwise convertible, in the event that the Company takes any action that would
require an adjustment to the Conversion Rate pursuant to SECTIONS 10.06(b),
10.06(c), 10.06(d), OR 10.06(e) of the Indenture, the Securities may be
surrendered for conversion in integral multiples of $1,000 principal amount into
Common Shares beginning on the date the Company gives notice to the Holders of
such event as provided in SECTION 10.11 of the Indenture and at any time
thereafter until the close of business on the Business Day immediately preceding
the record date with respect to, or the effective date of, the applicable
transaction or until the Company announces that such transaction will not take
place.

         Conversion Upon Occurrence of Certain Corporate Transactions. If the
Securities are not otherwise convertible, in the event the Company is a party to
a consolidation, amalgamation, statutory arrangement, merger or binding share
exchange pursuant to which the Common Shares would be converted into cash,
securities or other property as set forth in SECTION 10.12 of the Indenture, or
a sale or conveyance of all or substantially all of the property or business of
the Company, the Securities may be surrendered in integral multiples of $1,000
principal amount for conversion into Common Shares at any time from and after
the date which is fifteen (15) days prior to the date announced by the Company
as the anticipated effective date of such transaction until the date that is
fifteen (15) days after the actual effective date of such transaction, and, at
the effective date of such transaction, the right to convert a Security into
Common Shares will be deemed to have changed into a right to convert it into the
kind and amount of cash, securities or other property which the Holder thereof
would have received if such Holder had converted such

                                      A-9
<PAGE>

Holder's Security immediately prior to the transaction, assuming that such
Holder would not have exercised any rights of election that such Holder would
have had as a holder of Common Shares to select a particular type of
consideration. Notwithstanding the foregoing, if, prior to the date that is five
(5) years plus one (1) day from the Issue Date, Holders would otherwise be
entitled to receive, upon conversion of the Securities, any property (including
cash) or securities of a company ("INELIGIBLE CONSIDERATION") that would not
constitute "prescribed securities" for the purpose of clause 212(1)(b)(vii)(E)
of the Canadian Tax Act ("PRESCRIBED SECURITIES"), such Holders shall not be
entitled to receive such Ineligible Consideration; provided, however, that the
Company or the successor or acquiror, as the case may be, shall have the right
(at the sole option of the Company or the successor or acquiror, as the case may
be) to deliver either such Ineligible Consideration or Prescribed Securities
with a market value comparable to such Ineligible Consideration (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and set forth in a Board Resolution). The Company shall give notice to Holders
at least thirty (30) days prior to the effective date of such transaction in
writing and by release to a business newswire stating the consideration into
which the Securities will be convertible after the effective date of such
transaction. After such notice is given, the Company or the successor or
acquiror, as the case may be, may not change the consideration to be delivered
upon conversion of the Securities, except in accordance with any provision of
the Indenture other than SECTION 10.12.

         The initial Conversion Rate is 56.1892 Common Shares per $1,000
principal amount of Securities, or an effective initial Conversion Price of
approximately $17.80 per share, subject to adjustment in the event of certain
circumstances as specified in the Indenture. The Company will deliver a check in
lieu of any fractional share. On conversion, no payment or adjustment for any
unpaid and accrued interest, or liquidated damages with respect to, the
Securities will be made, except as otherwise provided in the Indenture. If a
Holder surrenders a Security for conversion between the record date for the
payment of interest and prior to the related interest payment date, such
Security, when surrendered for conversion, must be accompanied by payment of an
amount equal to the interest thereon which the registered Holder at the close of
business on such record date is to receive, unless such Security has been called
for Redemption or Tax Redemption as described in the Indenture.

         To convert a Security, a Holder must (1) complete and sign the
Conversion Notice, with appropriate signature guarantee, on the back of the
Security, (2) surrender the Security to a Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Registrar or
Conversion Agent, (4) pay the amount of interest, if any, the Holder must pay as
provided in the last sentence of the immediately preceding paragraph and (5) pay
any transfer or similar tax if required. A Holder may convert a portion of a
Security if the portion is $1,000 principal amount or an integral multiple of
$1,000 principal amount.

         Except as provided in the Indenture, any Common Shares issued upon
conversion of a Security shall bear the Private Placement Legend until after the
second anniversary of the later of the Issue Date and the last date on which the
Company or any Affiliate was the owner of such shares or the Security (or any
predecessor security) from which such shares were converted (or such shorter
period of time as permitted by Rule 144(k) under the Securities Act or any
successor provision thereunder) (or such longer period of time as may be
required under the Securities Act

                                      A-10
<PAGE>

or applicable state securities laws, as set forth in an Opinion of Counsel,
unless otherwise agreed by the Company and the Holder thereof).

         13. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 principal amount and integral
multiples of $1,000 principal amount. The transfer of Securities may be
registered and Securities may be exchanged as provided in the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents. No service charge shall be made for any
such registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Registrar need not exchange or register the transfer
of any Security selected for Redemption or Tax Redemption in whole or in part,
except the unredeemed portion of Securities to be redeemed in part. Also, it
need not exchange or register the transfer of any Securities for a period of
fifteen (15) days before the mailing of a notice of Redemption or Tax Redemption
and in certain other circumstances provided in the Indenture.

         14. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as the owner of such Security for all purposes.

         15. MERGER OR CONSOLIDATION. The Company shall not consolidate with, or
amalgamate or merge with or into, or sell, convey, transfer, lease or otherwise
dispose of all or substantially all of its properties and assets to, another
person (including, in any such case, pursuant to a statutory arrangement),
whether in a single or series of related transactions, unless (i) such other
person is a corporation organized under the laws of the United States, any State
thereof or the District of Columbia or the laws of Canada or any province or
territory thereof; (ii) such person assumes by supplemental indenture all the
obligations of the Company, under the Securities and the Indenture; and (iii)
immediately after giving effect to the transaction, no Default or Event of
Default shall exist.

         16. AMENDMENTS, SUPPLEMENTS AND WAIVERS. Subject to certain exceptions,
the Indenture or the Securities may be amended or supplemented with the consent
of the Holders of at least a majority in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. In accordance with the terms of the
Indenture, without notice to or the consent of any Securityholder, the Indenture
or the Securities may be amended or supplemented to (i) comply with SECTIONS
5.01 AND 10.12 of the Indenture; (ii) make any changes or modifications to the
Indenture necessary in connection with the registration of the Securities under
the Securities Act pursuant to the Registration Rights Agreement and the
qualification of the Indenture under the TIA; (iii) secure the obligations of
the Company in respect of the Securities; (iv) add to covenants of the Company
described in the Indenture for the benefit of Securityholders; (v) surrender any
right or power conferred upon the Company; (vi) make provisions with respect to
adjustments to the Conversion Rate as required by the Indenture or increase the
Conversion Rate in accordance with the Indenture; and (vii) cure any ambiguity,
defect, omission or inconsistency in the Indenture in a manner that does not
adversely affect the rights of any Holder.

                                      A-11
<PAGE>

         17. DEFAULTS AND REMEDIES. Subject to the provisions of the Indenture,
an Event of Default includes the occurrence of any of the following: (i) default
in payment of principal or premium, in each case including Additional Amounts,
whether at maturity, upon Redemption or Tax Redemption, on an Option Purchase
Date with respect to a Repurchase at Holder's Option, on a Repurchase Date with
respect to a Repurchase Upon Repurchase Event or otherwise; (ii) default for
thirty (30) days in payment of interest or liquidated damages, in each case
including Additional Amounts; (iii) failure to timely provide, as required, an
Option Purchase Notice or a Repurchase Event Notice; (iv) failure by the Company
for thirty (30) days after notice is given, as specified in the Indenture, to it
to comply with any of its other agreements in the Indenture or the Securities;
(v) certain payment defaults or the acceleration of other Indebtedness of the
Company and its Subsidiaries or certain payment defaults on final judgments; and
(vi) certain events of bankruptcy or insolvency involving the Company or its
Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of the Securities then
outstanding may declare all the Securities to be due and payable immediately,
except as provided in the Indenture. If an Event of Default specified in SECTION
6.01(VII) or (VIII) of the Indenture with respect to the Company occurs, the
principal of and accrued interest on all the Securities shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholder. Securityholders may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity reasonably satisfactory to it before it enforces the Indenture
or the Securities. Subject to certain limitations, Holders of a majority in
aggregate principal amount of the Securities then outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment) if it determines that withholding notice
is in the interests of the Securityholders. The Company must furnish an annual
compliance certificate to the Trustee.

         18. REGISTRATION RIGHTS. The Holders are entitled to registration
rights as set forth in the Registration Rights Agreement. The Holders shall be
entitled to receive liquidated damages in certain circumstances, all as set
forth in the Registration Rights Agreement.

         19. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee under the Indenture,
or any banking institution serving as successor Trustee thereunder, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.

         20. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee or shareholder, as such, of the Company shall have any
liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.

         21. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

                                      A-12
<PAGE>

         22. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entirety), 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).

         THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:

                                    QLT Inc.
                             887 Great Northern Way
                             Vancouver, B.C. V5T 4T5
                                     Canada

                                      A-13
<PAGE>

                              [FORM OF ASSIGNMENT]

I or we assign to

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER

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

--------------------------------------------------------------------------------
(please print or type name and address)

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

--------------------------------------------------------------------------------
the within Security and all rights thereunder, and hereby irrevocably
constitutes and appoints

--------------------------------------------------------------------------------
Attorney to transfer the Security on the books of the Company with full power of
substitution in the premises.

Dated:
      -------------------------------   ----------------------------------------

                                        NOTICE: The signature on this assignment
                                        must correspond with the name as it
                                        appears upon the face of the within
                                        Security in every particular without
                                        alteration or enlargement or any change
                                        whatsoever and be guaranteed by a
                                        guarantor institution participating in
                                        the Securities Transfer Agents Medallion
                                        Program or in such other guarantee
                                        program acceptable to the Trustee.

Signature Guarantee:
                    ---------------------------------------------------------

         In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Security (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) the Resale Restriction Termination Date, the undersigned
confirms that it is making, and it has not utilized any general solicitation or
general advertising in connection with, the transfer:

                                      A-14
<PAGE>

                                   [Check One]

(1)    ____    to the Company or any Subsidiary thereof; or

(2)    ____    pursuant to and in compliance with Rule 144A under the Securities
               Act of 1933, as amended; or

(3)    ____    pursuant to the exemption from registration provided by Rule 144
               under the Securities Act of 1933, as amended; or

(4)    ____    pursuant to the exemption from registration under the Securities
               Act of 1933, as amended, other than under Rule 144A or Rule 144;
               or

(5)    ____    pursuant to an effective registration statement under the
               Securities Act of 1933, as amended,

and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):

       [  ]   The transferee is an Affiliate of the Company. (If the Security is
transferred to an Affiliate, the restrictive legend must remain on the Security
for at least two (2) years following the date of the transfer.)

              Unless one of the items is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if
item (3) or (4) is checked, the Company or the Trustee may require, prior to
registering any such transfer of the Securities, in their sole discretion, such
written legal opinions, certifications and other information as the Trustee or
the Company have reasonably requested 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 of 1933, as amended.

              If none of the foregoing items are checked, the Trustee or
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in the Indenture shall have been
satisfied.

Dated:                                  Signed:
       ----------------------------            ---------------------------------
                                               (Sign exactly as name appears on
                                                the other side of this Security)

Signature Guarantee:
                    ------------------------------------------------------------

                                      A-15
<PAGE>

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

         The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A and acknowledges
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.

Dated:
      --------------------------  ----------------------------------------------
                                  NOTICE: To be executed by an executive officer

                                      A-16
<PAGE>

                                CONVERSION NOTICE
To convert this Security into Common Shares of the, check the box:

To convert only part of this Security, state the principal amount to be
converted (must be in multiples of $1,000):

                               $
                                ------------------

If you want the stock certificate made out in another person's name, fill in the
form below:

--------------------------------------------------------------------------------
(Insert other person's soc. sec. or tax I.D. no.)

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

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

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

--------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)

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

Date:                    Signature(s):
     ------------------               ------------------------------------------
                                      (Sign exactly as your name(s) appear(s) on
                                       the other side of this Security)

Signature(s) guaranteed by:
                           ----------------------------------------------------
                           (All signatures must be guaranteed by a guarantor
                            institution participating in the Securities Transfer
                            Agents Medallion Program or in such other guarantee
                            program acceptable to the Trustee.)

                                      A-17
<PAGE>

                                 PURCHASE NOTICE

Certificate No. of Security:
                              -----------

         If you want to elect to have this Security purchased by the Company
pursuant to SECTION 3.09 of the Indenture, check the box: [  ]

         If you checked the above box, then check the box below corresponding to
the date on which you elect to have all or part of this Security purchased by
the Company:

         September 15, 2008: [  ]
         September 15, 2013: [  ]
         September 15, 2018: [  ]

         If you want to elect to have this Security purchased by the Company
pursuant to SECTION 3.10 of the Indenture, check the box: [  ]

         If you want to elect to have only part of this Security purchased by
the Company pursuant to SECTIONS 3.09 OR 3.10 of the Indenture, as applicable,
state the principal amount to be so purchased by the Company:

                      $
                       ----------------------------------
                       (in an integral multiple of $1,000)

Date:                              Signature(s):
     ------------------                          -------------------------------

                                   ---------------------------------------------
                                   (Sign exactly as your name(s) appear(s) on
                                    the other side of this Security)

Signature(s) guaranteed by:
                                   ---------------------------------------------

                                  (All signatures must be guaranteed by a
                                   guarantor institution participating in the
                                   Securities Transfer Agents Medallion Program
                                   or in such other guarantee program
                                   acceptable to the Trustee.)

                                      A-18
<PAGE>

                     NOTICE OF ELECTION UPON TAX REDEMPTION

Certificate No. of Security:
                              -----------

         If you want to elect not to have this Security purchased by the Company
pursuant to SECTION 3.08 of the Indenture, check the box: [  ]

         NOTE THAT NO ADDITIONAL AMOUNTS SHALL BE PAYABLE BY THE COMPANY ON ANY
PAYMENT OF INTEREST OR PRINCIPAL WITH RESPECT TO THIS SECURITY IF THE BOX ABOVE
IS CHECKED, AND ALL PAYMENTS BY THE COMPANY WITH RESPECT TO THIS SECURITY SHALL
BE SUBJECT TO THE DEDUCTION OR WITHHOLDING OF ANY CANADIAN TAXES REQUIRED TO BE
DEDUCTED OR WITHHELD.

         If you want to elect to have only part of this Security purchased by
the Company pursuant to SECTION 3.08 of the Indenture, as applicable, state the
principal amount to be so purchased by the Company:

                      $ ----------------------------------
                       (in an integral multiple of $1,000)

Date:                                 Signature(s):
     ------------------                            -----------------------------

                                      ------------------------------------------
                                     (Sign exactly as your name(s) appear(s) on
                                      the other side of this Security)

Signature(s) guaranteed by:
                                      ------------------------------------------
                                     (All signatures must be guaranteed by a
                                      guarantor institution participating in the
                                      Securities Transfer Agents Medallion
                                      Program or in such other guarantee program
                                      acceptable to the Trustee.)

                                      A-19
<PAGE>

                                   SCHEDULE A

           SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY 1

         The following exchanges of a part of this Global Security for an
interest in another Global Security or for Securities in certificated form, have
been made:

<TABLE>
<CAPTION>

<S>                        <C>                   <C>                      <C>                       <C>
                                                                          Principal amount of
                           Amount of decrease    Amount of increase in        this Global           Signature or
                           in Principal amount    Principal amount of     Security following    authorized signatory
                             of this Global       this Global Security       such decrease       of Trustee or Note
    Date of Exchange            Security                                     (or increase)            Custodian
</TABLE>

--------------------
1 This is included in Global Securities only.

                                      A-20
<PAGE>

                                                                     EXHIBIT B-1

                        FORM OF PRIVATE PLACEMENT LEGEND

         THIS SECURITY AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
         SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
         OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING
         SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
         THE ACQUIRER

         (1)  REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A
              "QUALIFIED INSTITUTIONAL BUYER" (WITHIN THE MEANING OF RULE 144A
              UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT
              DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND

         (2)  AGREES THAT IT WILL NOT DIRECTLY OR INDIRECTLY ENGAGE IN ANY
              HEDGING TRANSACTIONS INVOLVING THIS SECURITY OR THE COMMON SHARES
              ISSUABLE UPON CONVERSION OF THIS SECURITY UNLESS IN COMPLIANCE
              WITH THE SECURITIES ACT, AND

         (3)  AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER,
              SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL
              INTEREST HEREIN, PRIOR TO THE DATE THAT IS THE LATER OF (X) TWO
              YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
              LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS
              THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
              OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER
              THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y)
              SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW,
              EXCEPT ONLY

                  (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,

                  (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME
                      EFFECTIVE UNDER THE SECURITIES ACT,

                  (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
                      RULE 144A UNDER THE SECURITIES ACT, OR

                  (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
                      BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER
                      AVAILABLE EXEMPTION FROM THE REGISTRATION
                      REQUIREMENTS OF THE SECURITIES ACT; AND

         (4)  AGREES THAT UNLESS PERMITTED UNDER CANADIAN SECURITIES
              LEGISLATION, THE SECURITY AND THE COMMON SHARES ISSUABLE UPON
              CONVERSION OF THE SECURITY MAY NOT BE TRANSFERRED OR SOLD IN
              CANADA OR TO OR FOR THE BENEFIT OF A RESIDENT OF CANADA PRIOR TO
              [INSERT DATE THAT IS FOUR MONTHS AFTER DATE OF ISSUE OF NOTE].

         PRIOR TO THE REGISTRATION OF ANY SUCH TRANSFER IN ACCORDANCE WITH THE
         FOREGOING, THE COMPANY AND THE TRUSTEE AND TRANSFER AGENT RESERVE THE
         RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR
         OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN

                                     B-1-1
<PAGE>

         ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN
         COMPLIANCE WITH APPLICABLE U.S. FEDERAL AND STATE SECURITIES LAWS AND
         PROVINCIAL AND TERRITORIAL SECURITIES LAWS IN CANADA.

                                     B-1-2
<PAGE>

                                                                     EXHIBIT B-2

                       FORM OF LEGEND FOR GLOBAL SECURITY

         Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:

                  THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
         INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
         DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS
         SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
         PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED
         CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
         SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
         DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
         DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
         BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
         INDENTURE.

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
         REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
         ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
         EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
         NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
         AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
         OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
         OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
         OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
         OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
         TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A
         SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS
         OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
         ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE
         INDENTURE.

                                     B-2-1
<PAGE>

                                                                       EXHIBIT C

          Form of Notice of Transfer Pursuant to Registration Statement

QLT Inc.
887 Great Northern Way
Vancouver, B.C. V5T 4T5
Canada
Attention: General Counsel

The Bank of New York
101 Barclay Street, Floor 21-West
New York, New York 10286
Attention: Corporate Trust Administration

   Re:  QLT Inc. (the "COMPANY") 3% Convertible Senior Notes due 2023 (the
        "SECURITIES")

Ladies and Gentlemen:

         Please be advised that _____________ has transferred $___________
aggregate principal amount of the Securities or ________ Common Shares, without
par value, of the Company issuable on conversion of the Securities ("STOCK")
pursuant to an effective Shelf Registration Statement on Form S-3 (File No.
333-________).

         We hereby certify that the prospectus delivery requirements, if any, of
the Securities Act of 1933 as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the
Securities or Stock is named as a "SELLING SECURITY HOLDER" in the Prospectus
dated _________, or in amendments or supplements thereto, and that the aggregate
principal amount of the Securities, or number of shares of Stock transferred are
[a portion of] the Securities or Stock listed in such Prospectus, as amended or
supplemented, opposite such owner's name.

         We certify that:[check one only]

         [  ]     A.       We are NOT in Canada or resident in a province or
                           territory of Canada, and we do NOT hold the
                           Securities or the Stock for the account or benefit of
                           a person in Canada or a resident of a province or
                           territory of Canada; or

         [  ]     B.       We are in Canada or are resident in a province or
                           territory of Canada or we hold the Securities or the
                           Stock for the account or benefit of a person in
                           Canada or a resident of a province or territory of
                           Canada.

                                      C-1
<PAGE>

                                      Very truly yours,

                                      -------------------------
                                              (Name)

                                      C-2
<PAGE>

                                                                       EXHIBIT D

    Form of Opinion of Counsel in Connection with Registration of Securities

The Bank of New York
101 Barclay Street, Floor 21-West
New York, New York 10286
Attention: Corporate Trust Administration

Re:      QLT Inc. (the "COMPANY") 3% Convertible Senior Notes due 2023 (the
         "SECURITIES")

Ladies and Gentlemen:

         Reference is made to the Securities issued pursuant to a certain
Indenture dated as of August 15, 2003 by and between the Company and The Bank of
New York, as trustee (the "TRUSTEE"). The Company issued US$150,000,000
principal amount of Securities on August 15, 2003 [and an additional
US$_______________ on _________, 2003 [IF THE INITIAL PURCHASERS' OPTION IS
EXERCISED]] in transactions exempt from registration under the Securities Act of
1933, as amended (the "SECURITIES ACT"). The Company has filed with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-3 (File No. 333-______) (the "REGISTRATION STATEMENT") relating to the
registration under the Securities Act of US$______________ principal amount of
the Securities and the Common Shares of the Company (the "SHARES") issuable upon
conversion of the Securities being registered. The Registration Statement was
declared effective by order of the SEC dated _____________.

         We have acted as counsel for the Company in connection with the
issuance of the Securities and the preparation and filing of the Registration
Statement and are familiar with the Securities, the Indenture, the Registration
Statement, the above-mentioned SEC order and such other documents as are
necessary to render this opinion.

         Based on the foregoing, it is our opinion that (1) the Registration
Statement has become effective under the Securities Act and, to our knowledge,
no stop order suspending the effectiveness of the Registration Statement has
been issued, (2) assuming that the Securities covered by the Registration
Statement and the Shares issuable upon conversion of such Securities are sold by
a relevant Holder specified in the Registration Statement in a manner specified
in the Registration Statement, such sale of the Securities and Shares issuable
upon conversion of the Securities will have been duly registered under the
Securities Act and (3) the Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended.

Yours truly,

                                      D-1

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