Document:

Exhibit
4.2

 

 

 

TRUST
INDENTURE

 

Providing for the Issue of
Convertible Secured Debentures

 

Dated  October 11, 2006

 

 

 

250 YONGE
STREET

SUITE 2400

TORONTO, ONTARIO  M5B 2M6

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE
  1 INTERPRETATION

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Meaning of “Outstanding”

  	
  15

  
	
  1.3

  	
  Interpretation

  	
  16

  
	
  1.4

  	
  Headings, etc.

  	
  16

  
	
  1.5

  	
  Day not a Business Day

  	
  16

  
	
  1.6

  	
  Applicable Law

  	
  17

  
	
  1.7

  	
  Monetary References

  	
  17

  
	
  1.8

  	
  Invalidity, etc.

  	
  17

  
	
  1.9

  	
  Language

  	
  17

  
	
  1.10

  	
  Successors and Assigns

  	
  17

  
	
  1.11

  	
  Time of Essence

  	
  17

  
	
  1.12

  	
  All Payments Net of Taxes

  	
  17

  
	
  1.13

  	
  Schedules

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2 THE DEBENTURES

  	
  18

  
	
  2.1

  	
  Limit of Debentures

  	
  18

  
	
  2.2

  	
  Terms of Debentures of any Series

  	
  18

  
	
  2.3

  	
  Form of Debentures

  	
  20

  
	
  2.4

  	
  Form and Terms of Initial
  Debentures

  	
  20

  
	
  2.5

  	
  Certification and Delivery of Additional
  Debentures

  	
  25

  
	
  2.6

  	
  Issue of Global Debentures

  	
  26

  
	
  2.7

  	
  Execution of Debentures

  	
  26

  
	
  2.8

  	
  Certification

  	
  27

  
	
  2.9

  	
  Interim Debentures or
  Certificates

  	
  27

  
	
  2.10

  	
  Mutilation, Loss, Theft or
  Destruction

  	
  28

  
	
  2.11

  	
  Concerning Interest

  	
  28

  
	
  2.12

  	
  Debentures to Rank Pari Passu

  	
  29

  
	
  2.13

  	
  Payments of Amounts Due on
  Maturity

  	
  29

  
	
  2.14

  	
  Payment of Interest

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 LIMITATIONS ON OWNERSHIP

  	
  30

  
	
  3.1

  	
  Prohibition Against Ownership by
  Certain U.S. Retirement Plans

  	
  30

  
	
  3.2

  	
  Limitation on U.S. Resident
  Ownership

  	
  32

  
	
  3.3

  	
  Limitation on Ownership by
  Electric Utilities and Others

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP

  	
  33

  
	
  4.1

  	
  Fully Registered Debentures

  	
  33

  
	
  4.2

  	
  Global Debentures

  	
  34

  
	
  4.3

  	
  Transferee Entitled to
  Registration

  	
  36

  
	
  4.4

  	
  No Notice of Trusts

  	
  36

  
	
  4.5

  	
  Registers Open for Inspection

  	
  36

  
	
  4.6

  	
  Exchanges of Debentures

  	
  36

  
	
  4.7

  	
  Closing of Registers

  	
  37

  
	
  4.8

  	
  Charges for Registration,
  Transfer and Exchange

  	
  37

  
	
  4.9

  	
  Ownership of Debentures

  	
  38

  

 

 

	
  ARTICLE
  5 REDEMPTION AND PURCHASE OF DEBENTURES

  	
  39

  
	
  5.1

  	
  Applicability of Article

  	
  39

  
	
  5.2

  	
  Partial Redemption

  	
  39

  
	
  5.3

  	
  Notice of Redemption

  	
  40

  
	
  5.4

  	
  Debentures Due on Redemption
  Dates

  	
  40

  
	
  5.5

  	
  Deposit of Redemption Monies

  	
  41

  
	
  5.6

  	
  Failure to Surrender Debentures
  Called for Redemption

  	
  41

  
	
  5.7

  	
  Cancellation of Debentures Redeemed

  	
  41

  
	
  5.8

  	
  Purchase of Debentures by the
  Company

  	
  42

  
	
  5.9

  	
  Deposit of Maturity Monies

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6 SUBORDINATION OF DEBENTURES

  	
  43

  
	
  6.1

  	
  Applicability of Article

  	
  43

  
	
  6.2

  	
  Order of Payment

  	
  43

  
	
  6.3

  	
  Subrogation to Rights of Holders
  of Senior Secured Indebtedness

  	
  45

  
	
  6.4

  	
  Obligation to Pay Not Impaired

  	
  45

  
	
  6.5

  	
  Prohibited Payments

  	
  45

  
	
  6.6

  	
  Payment on Debentures Permitted

  	
  47

  
	
  6.7

  	
  Confirmation of Subordination

  	
  48

  
	
  6.8

  	
  Knowledge of Debenture Trustee

  	
  48

  
	
  6.9

  	
  Debenture Trustee May Hold
  Senior Secured Indebtedness

  	
  48

  
	
  6.10

  	
  Rights of Holders of Senior
  Secured Indebtedness Not Impaired

  	
  48

  
	
  6.11

  	
  Altering the Senior Secured
  Indebtedness

  	
  49

  
	
  6.12

  	
  Additional Indebtedness

  	
  49

  
	
  6.13

  	
  Right of Debentureholder to
  Convert Not Impaired

  	
  49

  
	
  6.14

  	
  Invalidated Payments

  	
  49

  
	
  6.15

  	
  Contesting Security

  	
  49

  
	
  6.16

  	
  Obligations Created by
  Article 6

  	
  50

  
	
  6.17

  	
  No Set-Off

  	
  50

  
	
  6.18

  	
  Amendments to Article 6

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7 CONVERSION OF DEBENTURES

  	
  51

  
	
  7.1

  	
  Applicability of Article

  	
  51

  
	
  7.2

  	
  Notice of Expiry of Conversion
  Privilege

  	
  51

  
	
  7.3

  	
  Revival of Right to Convert

  	
  51

  
	
  7.4

  	
  Manner of Exercise of Right to
  Convert

  	
  51

  
	
  7.5

  	
  Adjustment of Conversion Price

  	
  53

  
	
  7.6

  	
  No Requirement to Issue
  Fractional IPSs

  	
  57

  
	
  7.7

  	
  Company to Reserve IPSs

  	
  57

  
	
  7.8

  	
  Cancellation of Converted
  Debentures

  	
  57

  
	
  7.9

  	
  Certificate as to Adjustment

  	
  57

  
	
  7.10

  	
  Notice of Special Matters

  	
  58

  
	
  7.11

  	
  Protection of Debenture Trustee

  	
  58

  
	
  7.12

  	
  Allocation of IPSs

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8 COVENANTS OF THE COMPANY

  	
  59

  
	
  8.1

  	
  To Pay Principal and Interest

  	
  59

  
	
  8.2

  	
  To Pay Debenture Trustee’s
  Remuneration

  	
  59

  
	
  8.3

  	
  To Give
  Notice of Default

  	
  59

  

 

2

 

	
  8.4

  	
  Preservation of Existence, etc.

  	
  59

  
	
  8.5

  	
  Keeping of Books

  	
  59

  
	
  8.6

  	
  Reporting Requirements

  	
  60

  
	
  8.7

  	
  Performance of Covenants by
  Debenture Trustee

  	
  60

  
	
  8.8

  	
  Listing

  	
  60

  
	
  8.9

  	
  Regarding Redemption

  	
  60

  
	
  8.10

  	
  Regarding Covenants

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9 DEFAULT

  	
  60

  
	
  9.1

  	
  Events of Default

  	
  60

  
	
  9.2

  	
  Notice of Events of Default

  	
  62

  
	
  9.3

  	
  Waiver of Default

  	
  63

  
	
  9.4

  	
  Enforcement by the Debenture
  Trustee

  	
  63

  
	
  9.5

  	
  No Suits by Debentureholders

  	
  65

  
	
  9.6

  	
  Application of Monies by
  Debenture Trustee

  	
  65

  
	
  9.7

  	
  Notice of Payment by Debenture
  Trustee

  	
  66

  
	
  9.8

  	
  Debenture Trustee May Demand
  Production of Debentures

  	
  66

  
	
  9.9

  	
  Remedies Cumulative

  	
  66

  
	
  9.10

  	
  Judgment Against the Company

  	
  67

  
	
  9.11

  	
  Subordination

  	
  67

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10 SATISFACTION AND DISCHARGE

  	
  67

  
	
  10.1

  	
  Cancellation and Destruction

  	
  67

  
	
  10.2

  	
  Non-Presentation of Debentures

  	
  67

  
	
  10.3

  	
  Repayment of Unclaimed Monies

  	
  68

  
	
  10.4

  	
  Discharge

  	
  68

  
	
  10.5

  	
  Satisfaction

  	
  68

  
	
  10.6

  	
  Continuance of Rights, Duties and
  Obligations

  	
  70

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11 IPS INTEREST PAYMENT ELECTION

  	
  70

  
	
  11.1

  	
  IPS Interest Payment Election

  	
  70

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12 SUCCESSORS

  	
  73

  
	
  12.1

  	
  Restrictions on Amalgamation,
  Merger and Sale of Certain Assets, etc.

  	
  73

  
	
  12.2

  	
  Vesting of Powers in Successor

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  13 COMPULSORY ACQUISITION

  	
  75

  
	
  13.1

  	
  Definitions

  	
  75

  
	
  13.2

  	
  Offer for Debentures

  	
  76

  
	
  13.3

  	
  Offeror’s Notice to Dissenting
  Debentureholders

  	
  76

  
	
  13.4

  	
  Delivery of Debenture
  Certificates

  	
  77

  
	
  13.5

  	
  Payment of Consideration to
  Debenture Trustee

  	
  77

  
	
  13.6

  	
  Consideration to be held in Trust

  	
  77

  
	
  13.7

  	
  Completion of Transfer of
  Debentures to Offeror

  	
  77

  
	
  13.8

  	
  Demand for Payment of Fair Value

  	
  78

  
	
  13.9

  	
  Communication of Offer to the
  Company

  	
  79

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  14 MEETINGS OF DEBENTUREHOLDERS

  	
  79

  
	
  14.1

  	
  Right to Convene Meeting

  	
  79

  
	
  14.2

  	
  Notice of
  Meetings

  	
  79

  

 

3

 

	
  14.3

  	
  Chairman

  	
  81

  
	
  14.4

  	
  Quorum

  	
  81

  
	
  14.5

  	
  Power to Adjourn

  	
  81

  
	
  14.6

  	
  Show of Hands

  	
  82

  
	
  14.7

  	
  Poll

  	
  82

  
	
  14.8

  	
  Voting

  	
  82

  
	
  14.9

  	
  Proxies

  	
  82

  
	
  14.10

  	
  Persons Entitled to Attend
  Meetings

  	
  83

  
	
  14.11

  	
  Powers Exercisable by Extraordinary
  Resolution

  	
  83

  
	
  14.12

  	
  Meaning of “Extraordinary
  Resolution”

  	
  85

  
	
  14.13

  	
  Powers Cumulative

  	
  86

  
	
  14.14

  	
  Minutes

  	
  86

  
	
  14.15

  	
  Instruments in Writing

  	
  86

  
	
  14.16

  	
  Binding Effect of Resolutions

  	
  86

  
	
  14.17

  	
  Evidence of Rights Of
  Debentureholders

  	
  87

  
	
  14.18

  	
  Concerning Serial Meetings

  	
  87

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15 NOTICES

  	
  87

  
	
  15.1

  	
  Notice to the Company

  	
  87

  
	
  15.2

  	
  Notice to Debentureholders

  	
  87

  
	
  15.3

  	
  Notice to Debenture Trustee

  	
  88

  
	
  15.4

  	
  Mail Service Interruption

  	
  88

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  16 CONCERNING THE DEBENTURE TRUSTEE

  	
  88

  
	
  16.1

  	
  No Conflict of Interest

  	
  88

  
	
  16.2

  	
  Replacement of Debenture Trustee

  	
  89

  
	
  16.3

  	
  Duties of Debenture Trustee

  	
  90

  
	
  16.4

  	
  Reliance Upon Declarations,
  Opinions, etc.

  	
  90

  
	
  16.5

  	
  Evidence and Authority to
  Debenture Trustee, Opinions, etc.

  	
  90

  
	
  16.6

  	
  Debenture Trustee May Rely
  on Certificate of the Manager

  	
  91

  
	
  16.7

  	
  Experts, Advisers and Agents

  	
  91

  
	
  16.8

  	
  Debenture Trustee May Deal
  in Debentures

  	
  92

  
	
  16.9

  	
  Investment of Monies Held by
  Debenture Trustee

  	
  92

  
	
  16.10

  	
  Debenture Trustee will Disburse
  Only Monies Deposited

  	
  92

  
	
  16.11

  	
  Debenture Trustee Not Ordinarily
  Bound

  	
  93

  
	
  16.12

  	
  Debenture Trustee Not Required to
  Give Security

  	
  93

  
	
  16.13

  	
  Debenture Trustee Not Bound to
  Act on the Company’s Request

  	
  93

  
	
  16.14

  	
  Debenture Trustee Not Bound to
  Act

  	
  93

  
	
  16.15

  	
  Debenture Trustee Protected in
  Acting

  	
  94

  
	
  16.16

  	
  Conditions Precedent to Debenture
  Trustee’s Obligations to Act Hereunder

  	
  94

  
	
  16.17

  	
  Authority to Carry on Business

  	
  94

  
	
  16.18

  	
  Compensation and Indemnity

  	
  94

  
	
  16.19

  	
  Acceptance of Trust

  	
  95

  
	
  16.20

  	
  Withholding Obligation

  	
  95

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  17 SUPPLEMENTAL INDENTURES

  	
  96

  
	
  17.1

  	
  Supplemental Indentures

  	
  96

  

 

4

 

	
  ARTICLE
  18 SECURITY

  	
  97

  
	
  18.1

  	
  Security Documents

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  19 EXECUTION AND FORMAL DATE

  	
  98

  
	
  19.1

  	
  Execution

  	
  98

  
	
  19.2

  	
  Formal
  Date

  	
  98

  

 

5

 

TRUST
INDENTURE

 

THIS TRUST INDENTURE made as of the 11th day
of October,
2006,

 

BETWEEN:

 

ATLANTIC POWER CORPORATION, a
corporation continued under the laws of the Province of British Columbia

 

(hereinafter referred to as the “Company”)

 

- and -

 

COMPUTERSHARE TRUST COMPANY
OF CANADA, a trust company authorized to carry on business in
all of the provinces and territories of Canada

 

(hereinafter referred to as the “Debenture Trustee”)

 

WITNESSES THAT:

 

WHEREAS the Company deems it advisable to create and issue the
Debentures to be created and issued in the manner as herein provided;

 

AND WHEREAS the Company, under the laws relating thereto, is duly
authorized to create and issue the Debentures to be issued as herein provided;

 

AND WHEREAS all necessary steps in relation to the Company have been
duly enacted, passed and/or confirmed and other proceedings taken and
conditions complied with to make the Debentures, when certified by the
Debenture Trustee and issued as in this Indenture provided, legal, valid and
binding obligations of the Company;

 

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

 

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

 

ARTICLE 1

INTERPRETATION

 

1.1                                                                               Definitions

 

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

 

(a)                                  “90% Redemption Right”  has the meaning ascribed thereto in Section 2.4(h)(iv);

 

 

(b)                                 “Additional Debentures” means Debentures of any
one or more series, other than the first series of Debentures being the Initial
Debentures, issued under this Indenture;

 

(c)                                  “Affiliate” of any specified Person means
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person.  For purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise;

 

(d)                                 “Applicable Laws” means any and all laws,
including all federal, state, provincial and local statutes, codes, ordinances,
decrees, rules, regulations and municipal by-laws and all judicial, arbitral,
administrative, ministerial, departmental or regulatory judgments, orders,
decisions, rulings or awards or other requirements of any other governmental
entity, binding on or affecting the Person referred to in the context in which the
term was used;

 

(e)                                  “Applicable Securities Legislation” means
applicable securities laws (including rules, regulations, policies and
instruments) in each of the provinces and territories of Canada;

 

(f)                                    “Atlantic Holdings” means Atlantic Power
Holdings, LLC, a limited liability company formed under the laws of Delaware;

 

(g)                                 “Bankruptcy Law” means Title 11, United
States Code, or any similar federal or state law for the relief of debtors, or
the Bankruptcy and Insolvency Act
(Canada) or any other Canadian federal or provincial law or foreign law
relating to bankruptcy, insolvency, winding up, liquidation, reorganization or
relief of debtors;

 

(h)                                 “Beneficial Holder” means any person who holds
a beneficial interest in a Global Debenture as shown on the books of the
Depository or a Depository Participant;

 

(i)                                     “Blockage Notice” is defined in Section 6.5;

 

(j)                                     “Business Day” means any day other than a
Saturday, Sunday or statutory holiday in Toronto, Ontario;

 

(k)                                  “Canadian Dollars” or “C$” means the lawful money in Canada;

 

(l)                                     “Capitalized Lease Obligations” means, at
the time any determination thereof is to be made, the amount of the liability
in respect of a capital lease that would at such time be required to be
capitalized and reflected as a liability on a balance sheet (excluding the
footnotes thereto) in accordance with GAAP;

 

(m)                               “Capital Stock” means:  (i) in the case of a corporation,
corporate stock or equity interests, including, without limitation, corporate
stock represented by IPSs and corporate stock outstanding upon the separation
of IPSs into the securities

 

2

 

represented thereby; (ii) in the case of
an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock; (iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person;

 

(n)                                 “Cash Flow Coverage Ratio” means for the
most recently ended four full fiscal quarters of the Company for which
financial statements are available, the ratio of Company Cash Flow for such
period to the total Interest Expense of the Company plus any mandatory
principal repayments on outstanding Indebtedness of the Company for such
period;

 

(o)                                 “Certificate of the Manager” means a written
certificate signed by any one of the Chief Executive Officer or Chief Financial
Officer of the Manager;

 

(p)                                 “Change of Control” means the occurrence of
any of the following events:

 

(i)                                     the
sale, lease or transfer to any Person or group, in one or a series of related
transactions, of the Company’s or Atlantic Holdings’ assets generating more
than 66 2/3% of Company Cash Flow for the 12-month period ended on the
last day of the most recent fiscal quarter;

 

(ii)                                  the
adoption of a plan relating to the liquidation or dissolution of the Company or
Atlantic Holdings;

 

(iii)                               the
acquisition by any Person or group of a direct or indirect interest in more
than 50% of: (A) the Common Shares of the Company or the common membership
interests of Atlantic Holdings; or (B) the voting power or Voting Stock of
the Company or Atlantic Holdings; by way of purchase, merger or consolidation
or otherwise (other than a creation of a holding company that does not involve
a change in the beneficial ownership of the Company as a result of such
transaction); or

 

(iv)                              the
merger or consolidation of the Company or Atlantic Holdings with or into
another Person or the merger of another Person into the Company or Atlantic
Holdings with the effect that immediately after such transaction the shareholders
of the Company or the holders of common membership interests of Atlantic
Holdings immediately prior to such transaction hold, directly or indirectly,
less than 50% of the total Voting Stock of the Person surviving such merger or
consolidation, in each case other than the creation of a holding company that
does not involve a change in the beneficial ownership of the Company or
Atlantic Holdings as a result of such transaction;

 

(q)                                 “Change of Control Notice”  has the meaning attributed to it in Section 2.4(h)(ii);

 

(r)                                    “Collateral Agency and Intercreditor Agreement” means
that certain Second Amended and Restated
Collateral Agency and Intercreditor Agreement dated as of October 11,
2006, by and among Bank of Montreal as collateral agent, the lenders

 

3

 

party to the Existing Credit Facility, Bank of Montreal as agent under the
Existing Credit Facility, the lenders party to the Term Loan Facility, Bank of
Montreal as agent under the Term Loan Facility, the Debenture Trustee and
Computershare Trust Company of Canada as “Trustee” under the Subordinated Note
Indenture, as such agreement may be amended, restated, supplemented, or
otherwise modified from time to time and at any time;

 

(s)                                  “Collateral Agent”  means Bank of Montreal  in
its capacity as “Collateral Agent” pursuant to the Collateral Agency and
Intercreditor Agreement;

 

(t)                                    “Common Share”  means the common shares in the capital of the Company;

 

(u)                                 “Company” has the meaning attributed
to it in the recitals;

 

(v)                                 “Company’s Auditors” or “Auditors of the Company” means an independent firm
of chartered accountants duly appointed as auditors of the Company;

 

(w)                               “Company Cash Flow” means, for any period,
the difference of (i) the aggregate amount of all cash distributions
received or receivable in respect of such period, by the Company from Atlantic
Holdings or any other source during such period plus the Company’s pro rata share (based on its common
membership ownership interest in Atlantic Holdings) of any cash distributions
received by Atlantic Holdings in respect of such period and retained by
Atlantic Holdings, in each such case exclusive of any distribution attributable
to any net proceeds realized by the Company, a Significant Entity of the
Company or a project upon the sale or disposition of plant, property and
equipment, which is not disposed of in the ordinary course of business and any
other extraordinary items, minus (ii) any amounts paid in cash by the
Company in respect of expenses (other than Interest Expense), including taxes
determined on a pro forma, annual basis for a full tax year;

 

(x)                                   “Conversion Price” means (i) with
respect to the Initial Debentures, the C$12.40 amount
for which each IPS may be issued from time to time upon the conversion of the
Initial Debentures, as adjusted in accordance with the provisions of Article 7
and (ii) for any other series of Debentures which are by their terms
convertible, the amount set upon their creation, as adjusted in accordance with
the provisions of Article 7;

 

(y)                                 “Counsel” means a barrister or
solicitor or firm of barristers or solicitors retained or employed by the
Debenture Trustee or retained or employed by the Company and acceptable to the
Debenture Trustee, acting reasonably;

 

(z)                                   “Current Market Price” means the volume weighted
average price per IPS, in Canadian Dollars, for the 20 consecutive trading days
ending on the fifth trading day preceding the date of the applicable event on
the TSX (or, if not listed thereon, on such stock exchange on which IPSs are
listed or, if the IPSs are not listed on any stock exchange, then on the
over-the-counter market) or, if there is no market, fair value as determined by
an independent financial advisor;

 

4

 

(aa)                            “Date of Conversion” has the meaning ascribed
thereto in Section 7.4(b);

 

(bb)                          “Debenture Liabilities” means the indebtedness,
liabilities and obligations of the Company under Debentures issued under this
Indenture of any series, including on account of principal, interest or
otherwise;

 

(cc)                            “Debenture Trustee” means Computershare Trust
Company of Canada and includes any successor or successors or any other trustee
subsequently appointed pursuant to Section 16.2;

 

(dd)                          “Debentureholders” or “holders” means the Persons for the
time being entered in the register for Debentures as registered holders of
Debentures;

 

(ee)                            “Debentures” means the debentures,
notes or other evidence of indebtedness of the Company issued and certified
hereunder, or deemed to be issued and certified hereunder, including, without
limitation, the Initial Debentures, and for the time being outstanding, whether
in definitive or interim form or in the form of Global Debentures;

 

(ff)                                “Depository” means, with respect to the
Debentures of any series issuable or issued in the form of one or more Global
Debentures, the Person designated as depository by the Company pursuant to Section 2.6(a) until
a successor depository shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Depository” shall mean each Person who
is then a depository hereunder, and if at any time there is more than one such
Person, “Depository” as used with
respect to the Debentures of any series shall mean each depository with respect
to the Global Debentures of such series and, in the case of the Initial
Debentures, the Depository shall initially be the Canadian Depository for
Securities Limited (“CDS”);

 

(gg)                          “Depository Participant” means a broker,
dealer, bank, other financial institution or other person for whom from time to
time, a Depository effects book entries for a Global Debenture deposited with
the Depository;

 

(hh)                          “Designated Senior Secured Indebtedness”
means outstanding Senior Secured Indebtedness which requires subordinated debt
of the Company to have a forbearance provision.

 

(ii)                                  “Directors” means the directors of the
Company on the date hereof or such directors as may, from time to time, be
appointed or elected directors of the Company pursuant to the Company’s articles
and by-laws, and applicable laws, and “Director”
means any one of them, and reference to action by the Directors means action by
the Directors as a board;

 

(jj)                                  “ERISA” means the United States Employee Retirement Income Security Act of 1974, as
amended, or any successor statute;

 

(kk)                            “Event of Default” has the meaning ascribed
thereto in Section 9.1;

 

(ll)                                  “Existing Credit Facility” means the
credit agreement in connection with a revolving term credit facility dated as
of November 18, 2004, as amended to the date 

 

5

 

hereof, among, inter alia,
Atlantic Holdings, as borrower, the various financial institutions as are or
may become parties thereto, and Bank of Montreal, as agent, as amended by that
certain First Amendment to Credit Agreement dated as of April 29, 2005, as
further amended by that certain Second Amendment to Credit Agreement dated as
of November 18, 2005, as further amended by that certain Third Amendment
to Credit Agreement, dated as of September 15, 2006, as further amended by
that certain Fourth Amendment to Credit Agreement  dated as of October 11, 2006 and as may
be further modified, amended, revised, restated, supplemented, assigned or
replaced from time to time and at any time;

 

(mm)                      “Existing Investors”  means Teton Power Holdings, LLC, Epsilon Power Holdings,
LLC and Umatilla Power Holdings, LLC;

 

(nn)                          “Existing Investor
Interests” means the common membership interests and Class B
membership interests in Atlantic Holdings held by the Existing Investors;

 

(oo)                          “Extraordinary Resolution” has the meaning
ascribed thereto in Section 14.12;

 

(pp)                          “Fair Market Value” means, with respect to
any asset or property, the price which could be negotiated in an arm’s-length,
free market transaction, for cash, between a willing seller and a willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction;

 

(qq)                          “Freely Tradeable” means, in respect of any
IPSs, Common Shares, Subordinated Notes or any other securities of the Company
or any other Person, as the case may be, which securities (i) may be
issued without the necessity of filing a prospectus or any other similar
offering document (other than such prospectus or similar offering document that
has already been filed) under Applicable Securities Legislation and such issue
does not constitute a distribution (other than a distribution already qualified
by prospectus or similar offering document) under Applicable Securities
Legislation; and (ii) can be traded by the holder thereof without any
restriction under Applicable Securities Legislation, such as hold periods,
except in the case of a control distribution (as defined in the Applicable
Securities Legislation);

 

(rr)                                “Fully Registered Debentures” means Debentures
registered as to both principal and interest;

 

(ss)                            “generally accepted accounting principles  or GAAP” means generally accepted
accounting principles in Canada from time to time approved by the Canadian
Institute of Chartered Accountants;

 

(tt)                                “Global Debenture” means a Debenture that is
issued to and registered in the name of the Depository, or its nominee,
pursuant to Section 2.6 for purposes of being held by or on behalf of the
Depository as custodian for participants in the Depository’s book-entry only
registration system;

 

(uu)                          “Government Obligations” means short-term Canadian
government obligations;

 

6

 

(vv)                          “guarantee” means a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business) direct or indirect, in any manner (including, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any indebtedness or other obligations;

 

(ww)                      “Guarantee” means that certain guarantee
dated as of October 11, 2006 by each of the Guarantors listed on Schedule
1 hereto and any other guarantee of the obligations of the Company under this
Indenture by any Person in accordance with the provisions of this Indenture, in
each case, as same may from time to time be modified, amended, revised,
restated, supplemented, assigned, consolidated or replaced;

 

(xx)                              “Guarantor” means any Person that
incurs a Guarantee including the parties listed as Guarantors on Schedule 1;
provided that upon the release or discharge of such Person from its Guarantee
in accordance with this Indenture, such Person ceases to be a Guarantor;

 

(yy)                          “Incur” means issue, assume, guarantee,
incur or otherwise become liable for and “Incurred”
or “Incurrence” will have a corresponding
meaning; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Significant Entity (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Person at the time it becomes a Significant Entity;

 

(zz)                              “Indebtedness” means, with respect to any
Person:  (i) the principal of any
indebtedness of such Person, whether or not contingent: (a) in respect of
borrowed money, (b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances (or, without
duplication, reimbursement agreements in respect thereof), (c) representing
the deferred and unpaid purchase price of any property, except any such balance
that constitutes a trade payable or similar obligation to a trade creditor due
within six months from the date on which it is Incurred and Incurred in the
ordinary course of business, which purchase price is due more than six months
after the date of placing the property in service or taking delivery and title
thereto, or (d) in respect of Capitalized Lease Obligations; (ii) to
the extent not otherwise included, any obligation of such Person to be liable
for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of
another Person (other than by endorsement of negotiable instruments for
collection in the ordinary course of business); and (iii) to the extent
not otherwise included, Indebtedness of another Person secured by a Lien on any
asset owned by such Person (whether or not such Indebtedness is assumed by such
Person); provided, however, that the amount of such Indebtedness will be the
lesser of (a) the Fair Market Value of such asset at such date of
determination and (b) the amount of such Indebtedness of such other
Person; provided, further, that any obligation of the Company or any
Significant Entity in respect of account credits or participants under any
employee, director or officer compensation plan of the Company or Significant
Entity and any obligation of the Company or any Significant Entity in respect
of the Liquidity Right, will be deemed not to constitute Indebtedness;

 

(aaa)                      “Initial Debentureholders” means the
Persons for the time being entered into the register of Debentures as
registered holders of the Initial Debentures;

 

7

 

(bbb)                   “Initial Debentures” means the Debentures
designated as “6.25% Convertible Secured Debentures” and described in Section 2.4;

 

(ccc)                      “Interest Expense” means, in respect of any
Person, for any period, the total cash interest expense (including that
attributable to Capitalized Lease Obligations) of such Person for such period
with respect to all outstanding Indebtedness of such Person (including, without
limitation, all commissions, discounts and other fees and charges owed by such
Person with respect to letters of credit and bankers’ acceptance financing and
net costs of such Person under hedge agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with
GAAP);

 

(ddd)                   “Interest Obligation” means the obligation of
the Company to pay interest on the Debentures, as and when the same becomes
due;

 

(eee)                      “Interest Payment Date” means a date specified in
a Debenture as the date on which an instalment of interest on such Debenture
shall become due and payable;

 

(fff)                            “IPS” means an “income participating security”
consisting of one Common Share and C$5.767 aggregate principal amount of
Subordinated Notes, as such IPSs are constituted on the date of execution and
delivery of this Indenture and for greater certainty, upon or following a
separation of IPSs, references herein to IPSs shall mean and refer to the
component Common Share and Subordinated Notes thereof; provided that in the
event of a change or a subdivision, redivision, reduction, combination or
consolidation thereof, any reclassification, capital reorganization,
consolidation, amalgamation, arrangement, merger, sale or conveyance or
liquidation, dissolution or winding-up, or such other similar transaction, or
such successive changes, subdivisions, redivisions, reductions, combinations or
consolidations, reclassifications, capital reorganizations, consolidations,
amalgamations, arrangements, mergers, sales, conveyances, liquidations,
dissolutions, windings-up or similar transactions, then “IPSs” shall mean securities or property resulting
from such change, subdivision, redivision, reduction, combination or
consolidation, reclassification, capital reorganization, consolidation,
amalgamation, arrangement, merger, sale or conveyance or liquidation,
dissolution or winding-up or such other similar transaction;

 

(ggg)                   “IPS Bid Request”  means a request for bids to purchase IPSs (to be issued by
the Company on the IPS Delivery Date) made by the Debenture Trustee in
accordance with the IPS Interest Payment Election Notice and which shall make
the acceptance of any bid conditional upon the acceptance of sufficient bids to
result in aggregate net proceeds from such issue and sale of IPSs which,
together with the cash payments by the Company, if any, equal the Interest
Obligation;

 

(hhh)                   “IPS Delivery Date”  means a date not less than one Business Day prior to the
applicable Interest Payment Date, upon which IPSs are delivered by the Company
to the Debenture Trustee for sale pursuant to IPS Purchase Agreements (together
with the cash payments by the Company, if any, required to be made in order to
pay in full the applicable Interest Obligation);

 

8

 

(iii)                               “IPS Interest Payment Election”  means an election by the Company to raise
funds to satisfy all or part of an Interest Obligation on the applicable
Interest Payment Date by the delivery of IPSs in the manner described in the
IPS Interest Payment Election Notice;

 

(jjj)                               “IPS Interest Payment Election Amount”  means the sum of (i) the amount of
the aggregate net proceeds resulting from the sale of IPSs on the IPS Delivery
Date pursuant to acceptable bids obtained pursuant to the IPS Bid Request; and (ii) the
cash payments by the Company, if any, including any cash amount paid by the
Company in respect of fractional IPSs pursuant to Section 11.1(g), which
sum shall be equal to the aggregate amount of the Interest Obligation in
respect of which the IPS Interest Payment Election Notice was delivered;

 

(kkk)                      “IPS Interest Payment Election Notice”  means a written notice made by the Company
to the Debenture Trustee specifying:

 

(i)                                     the
Interest Obligation to which the election relates;

 

(ii)                                  the
IPS Interest Payment Election Amount;

 

(iii)                               the
investment banks, brokers or dealers (i) through which the Debenture
Trustee shall seek bids to purchase the IPSs and the conditions of such bids,
which may include the minimum number of IPSs, minimum price per IPS, timing for
closing for bids and such other matters as the Company may specify, or (ii) with
which the Company will establish an account or accounts for the purpose of
selling IPSs; and

 

(iv)                              that
the Debenture Trustee shall accept through the investment banks, brokers or
dealers selected by the Company only those bids
which comply with such notice;

 

(lll)                               “IPS Proceeds Investment”  has the meaning attributed thereto in Section 11.1(h);

 

(mmm)             “IPS Purchase Agreement”  means an agreement in customary form among the Company, the
Debenture Trustee and the Persons making acceptable bids pursuant to an IPS Bid
Request, providing for the purchase of IPSs, which complies with all applicable
laws, including the Applicable Securities Legislation and the rules and regulations
of any stock exchange on which the Debentures or IPSs are then listed;

 

(nnn)                   “Lien” means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Personal
Property Security Act (Ontario) (or equivalent statutes) of any
jurisdiction); provided that in no event will an operating lease be deemed to
constitute a Lien;

 

9

 

(ooo)                   “Liquidity Right” means the right in the
limited liability company agreement of Atlantic Holdings permitting the holders
of the Existing Investor Interests to require Atlantic Holdings to purchase for
cancellation the Existing Investor Interests;

 

(ppp)                   “Major Project Operating Entity” means a
Project Operating Entity if the cash distributions received indirectly by
Atlantic Holdings from such Project Operating Entity during the 12 month period
ended on the last day of the most recent fiscal quarter represent, in the
aggregate, 20% or more of the consolidated cash flow of Atlantic Holdings
determined in accordance with U.S. GAAP for such period;

 

(qqq)                   “Major Significant Entity” means a
Significant Entity of the Company if the cash flow of the Significant Entity
for the 12 month period ended on the last day of the most recent fiscal
quarter, on a consolidated basis, is equal to or greater than 20% of the
consolidated cash flow of the Company determined in accordance with U.S. GAAP
for such period and includes each Major Project Operating Entity;

 

(rrr)                            “Manager” means Atlantic Power
Management, LLC, the manager of the Company;

 

(sss)                      “Material Adverse Effect” means (a) a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, financial condition, or assets of (i) the Company or
(ii) Atlantic Holdings and its consolidated Significant Entities taken as
a whole; (b) a material impairment of the ability of Atlantic Holdings or
the Guarantors to pay any obligation when due or otherwise to perform its
material obligations under the Senior Credit Agreements or the Security
Documents, in each case, to which it is a party; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability of this
Indenture, the Senior Credit Agreements or the Security Documents, in each
case, against the Company, Atlantic Holdings or any Guarantor a party thereto;

 

(ttt)                            “Maturity Account” means an account or
accounts required to be established by the Company (and which shall be
maintained by and subject to the control of the Debenture Trustee) for each
series of Debentures pursuant to and in accordance with this Indenture;

 

(uuu)                   “Maturity Date” for a Debenture means the
date of maturity for such Debenture as prescribed in this Indenture or in any
supplement hereto;

 

(vvv)                   “Offering” means the public offering
by short form prospectus dated October 2, 2006 of C$60,000,000  aggregate
principal amount of Initial Debentures;

 

(www)             “Ordinary Resolution” has the same meaning as “Extraordinary
Resolution” except that references in the latter to “662/3%” shall become
references to “a majority” for the purposes of defining “Ordinary Resolution”;

 

(xxx)                         “Payment Blockage Period” is defined in Section 6.5;

 

(yyy)                   “Periodic Offering” means an offering of
Debentures of a series from time to time, the specific terms of which
Debentures, including, without limitation, the rate or rates of interest, if
any, thereon, the stated maturity or maturities thereof and the 

 

10

 

redemption and conversion provisions, if any, with respect thereto, are
to be determined by the Company upon the issuance of such Debentures from time
to time;

 

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

 

(aaaa)                “Pledge Agreements” means those amended and
restated pledge agreements dated the date of this Indenture between the
Pledgors and the Collateral Agent, as set out in Schedule 2, as same may from
time to time be modified, amended, revised, restated, supplemented, assigned,
consolidated or replaced and “Pledge Agreement”
means any one of such agreements;

 

(bbbb)            “Pledgor” means any Person that
enters into a Pledge Agreement including the parties listed as Pledgors on
Schedule 2;

 

(cccc)                “Proceedings” means any action, suit,
remedy or proceeding (whether judicial or extra-judicial) against the Company
or any of its Significant Entities, or any of their respective property, assets
or undertaking, to collect or enforce payment of the principal of, premium, if
any, and interest on any or all of the Debentures or any other amounts owing
under the Debentures or this Indenture or to enforce performance of any other
covenants or obligations of the Company under this Indenture or any of the
Debentures (including, without limitation, any action or proceedings for
payment under the Debentures, the appointment of a liquidator or receiver of
the Company or any of its Significant Entities or any of its property, assets
or undertaking or the winding up of the Company or any of its Significant
Entities or any proceeding to petition the Company or any of its Significant
Entities into bankruptcy);

 

(dddd)            “Project
Operating Entity” means a limited partnership,
corporation or other entity that directly owns the Projects;

 

(eeee)                “Projects”
means the projects described in the Prospectus as well
as any other power generation or transmission projects, energy-related
projects, utility or infrastructure projects or other projects in which the
Company has a direct or indirect investment;

 

(ffff)                        “Prospectus” means the final prospectus
of the Company dated October 2, 2006 and filed with the securities
regulatory authorities in each province and territory of Canada;

 

(gggg)            “Put Date”  has the meaning ascribed thereto in Section 2.4(h)(i);

 

(hhhh)            “Put Price”  has the meaning ascribed thereto in Section 2.4(h)(i);

 

(iiii)                            “Put Right”  has the meaning ascribed thereto in Section 2.4(h)(i);

 

(jjjj)                            “Redemption Date” has the meaning ascribed
thereto in Section 5.3;

 

(kkkk)                “Redemption Notice” has the meaning ascribed
thereto in Section 5.3;

 

11

 

(llll)                            “Redemption Price” means, in respect of a
Debenture, the amount, excluding interest, payable on the Redemption Date fixed
for such Debenture;

 

(mmmm)                                                    “Representative” means the trustee, agent or
representative (if any) for an issue of Senior Secured Indebtedness;

 

(nnnn)            “Security Documents” means the Pledge
Agreements and the Guarantees;

 

(oooo)            “Securityholder” means the Person in whose
name a security is registered on the registrar’s books;

 

(pppp)            “Senior Credit Agreements” means the
Existing Credit Facility and the Term Loan Facility;

 

(qqqq)            “Senior Creditor” means a holder or holders
of Senior Secured Indebtedness and includes any agent or agents or
representative or representatives or trustee or trustees of any such holder or
holders;

 

(rrrr)                        “Senior Secured Indebtedness” shall mean the
principal of and the interest and premium (or any other amounts payable
thereunder), if any, on:

 

(i)                                     all
secured Indebtedness, liabilities and obligations of the Company, Atlantic
Holdings and any other Guarantor, whether outstanding on the date of this
Indenture or thereafter created, incurred, assumed or guaranteed whether or not
in connection with an acquisition by the Company, Atlantic Holdings or any
other Guarantor of any businesses, properties or other assets or for monies
borrowed or raised by whatever means (including, without limitation, by means
of commercial paper, bankers’ acceptances, letters of credit, debt instruments,
bank debt and financial leases, and any other secured liability evidenced by
bonds, debentures, notes or similar instruments) or whether or not in
connection with an acquisition of any businesses, properties or other assets or
for monies borrowed or raised by whatever means (including, without limitation,
by means of commercial paper, bankers’ acceptances, letters of credit, debt
instruments, bank debt and financial leases, and any other secured liability
evidenced by bonds, debentures, notes or similar instruments) by others
including, without limitation, any Significant Entity of the Company or any
Guarantor, for payment of which the Company, Atlantic Holdings or such other
Guarantor is responsible or liable, whether absolutely or contingently;

 

(ii)                                  all
secured obligations of the Company, Atlantic Holdings, any other Guarantor or
any Significant Entity under (A) currency exchange, interest rate or
commodity swap agreements, currency exchange, interest rate or commodity cap
agreements and currency exchange, interest rate or commodity collar agreements,
and (B) other agreements or arrangements designed to manage or hedge
fluctuations in currency exchange, interest rates or commodity prices;

 

(iii)                               all
Indebtedness, liabilities and obligations under the guarantee(s) now or at
any time hereafter granted by the Company, Atlantic Holdings, any other
Guarantor or any of their Significant Entities in respect of the obligations, 

 

12

 

liabilities and indebtedness under either or both of the Senior Credit
Agreements; and

 

(iv)                              amendments,
restatements, modifications, renewals, extensions, restructurings, refinancings
and refundings of any such indebtedness, liabilities or obligations,

 

unless in each case it is provided by the terms of the instrument
creating or evidencing such secured indebtedness, liabilities or obligations
that such secured indebtedness, liabilities or obligations are not superior in
right of payment to Debentures; and “Senior Secured
Indebtedness” shall, in all events, exclude the Subordinated Notes
but include all of the obligations of the borrower, issuer and/or guarantor
under either or both of the Senior Credit Agreements;

 

(ssss)                “Senior Security” means all mortgages,
liens, pledges, charges (whether fixed or floating), security interests or
other encumbrances of any kind, contingent or absolute, granted by the Company
and its Significant Entities, including without limitation Atlantic Power
Holdings and the Guarantors and held by or on behalf of any Senior Creditor and
in any manner securing any Senior Secured Indebtedness;

 

(tttt)                        “Significant Entity” means, with respect to any
Person, (i) any corporation, association or other business entity (other
than a partnership, joint venture or limited liability company) of which 40% or
more of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned
or controlled, directly or indirectly, by such Person or one or more of the
other Significant Entities of that Person or a combination thereof and (ii) any
partnership, joint venture or limited liability company of which 40% or more of
the capital accounts, distribution rights, total equity and voting interests or
general and limited partnership interests, as applicable, are owned or
controlled, directly or indirectly, by such Person or one or more of the other
Significant Entities of that Person or a combination thereof, whether in the
form of membership, general, special or limited partnership interests or
otherwise and, in the case of a general or limited partnership, such Person
owns or controls, directly or indirectly, 40% or more of the total equity and
voting rights of the general partner of such entity;

 

(uuuu)            “Subordinated Indebtedness”  means, with respect to the Company, any Guarantor or any
Significant Entity, (i) all indebtedness which is not Senior Indebtedness
or pari passu indebtedness, (ii) the
Subordinated Notes, (iii) all unsecured indebtedness or obligations of the
Company, any Guarantor or any Significant Entity, and (iv) any
indebtedness of the Company, any Guarantor or any Significant Entity that is
subordinated pursuant to the terms of the instrument creating or evidencing such
indebtedness;

 

(vvvv)            “Subordinated Notes”
means the 11.0% secured, subordinated notes issued and to be issued from time
to time by the Company pursuant to the Subordinated Note Indenture;

 

13

 

(wwww)                                                 “Subordinated Note Indenture” means the
indenture dated November 18, 2004 between the Company, Atlantic Holdings,
Computershare Trust Company of Canada and certain other parties;

 

(xxxx)    “Tax Act” means the Income Tax Act (Canada) and the regulations
thereunder, as amended from time to time;

 

(yyyy)            “Term Loan Facility”  means the term loan credit facility
established pursuant to a credit agreement dated September 15, 2006 by and among Atlantic
Holdings, the various financial institutions as are or may become parties
thereto and Bank of Montreal, as administrative agent, as amended by that
certain First Amendment to Term Loan Credit Agreement dated as of October 11,
2006 and as may be further modified, amended, revised, restated, supplemented,
assigned or replaced from time to time and at any time;

 

(zzzz)                    “Teton Funding” means Teton Power Funding,
LLC;

 

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

 

(bbbbb)                                                     “Time of Expiry” means the time of expiry
of certain rights with respect to the conversion of Debentures under Article 7
which is to be set forth for each series of Debentures which by their terms are
to be convertible;

 

(ccccc)          “Total Put Price”  has the meaning ascribed thereto in Section 2.4(h)(i);

 

(ddddd)                                                     “trading day” means, with respect to the
TSX or other market for securities, any day on which such exchange or market is
open for trading or quotation;

 

(eeeee)          “TSX” means the Toronto Stock Exchange or its
successor or successors;

 

(fffff)                    “Underwriters” means, with respect to the
Initial Debentures, BMO Nesbitt Burns Inc., National Bank
Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc., CIBC World
Markets Inc., TD Securities Inc. and Dundee Securities Corporation, and
with respect to any Additional Debentures of the Company, those Persons or that
Person that agrees to purchase, as a security issue, on a fixed date at a fixed
price, Additional Debentures of the Company with a view to public distribution
of such Additional Debentures;

 

(ggggg)                                                     “Underwriting Agreement” means the
underwriting agreement dated September 22, 2006  by and among the Company,
Atlantic Holdings and the Underwriters with respect to, among other securities,
the Initial Debentures;

 

(hhhhh)                                                     “U.S.” means the United
States of America, its territories and possessions and States of the U.S.;

 

(iiiii)                           “U.S. Dollars” or “US$” means the lawful money in the U.S.;

 

14

 

(jjjjj)                           “U.S. Plan Assets” means any underlying
assets described in clause (iii) of the definition of “U.S. Retirement Plan” and any assets of any “employee
benefit plan” or “plan” described in clause (i) or (ii) of such
definition;

 

(kkkkk)            “U.S. Retirement Plan” means (i) any “employee
benefit plan”, as defined in Section 3 of ERISA that is subject to Title I
of ERISA, (ii) any “plan”, as defined in and subject to Section 4975
of the U.S. Tax Code, and (iii) any other entity which may be deemed
(pursuant to ERISA, regulations of the United States Department of Labor or
otherwise) to hold at any time assets of any such “employee benefit plan” or “plan”
for any purpose of ERISA or Section 4975 of the U.S. Tax Code;

 

(lllll)                           “U.S. Retirement Plan Debentures”  has the meaning ascribed thereto in Section 3.1;

 

(mmmmm)                                             “U.S. Retirement Plan Holder”  has the meaning ascribed thereto in Section 3.1;

 

(nnnnn)       “U.S. Retirement Plan Prohibition”  has the meaning ascribed thereto in Section 3.1;

 

(ooooo)       “U.S. Tax Code” means the United States Internal Revenue
Code of 1986, as amended, or any successor statute;

 

(ppppp)       “Voting Stock” of any Person as of any date
means the Capital Stock of such Person that is at the time entitled to vote in
the election of the board of directors, managers or trustees, as the case may
be, of such Person;

 

(qqqqq)                                                     “Written Direction of the Manager” means an
instrument in writing signed by any one of the Chief Executive Officer or Chief
Financial Officer of the Manager.

 

1.2                                                                               Meaning of “Outstanding”

 

Every Debenture certified and delivered by the Debenture Trustee
hereunder shall be deemed to be outstanding until it is cancelled, converted,
redeemed or delivered to the Debenture Trustee for cancellation, conversion or
redemption or monies and/or IPSs or other securities or property, as the case
may be, for the payment thereof shall have been set aside under Section 10.2,
provided that:

 

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

 

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

 

(c)                                  for
the purposes of any provision of this Indenture entitling holders of
outstanding Debentures to vote, sign consents, requisitions or other instruments
or take any other action under this Indenture, or to constitute a quorum of any
meeting of 

 

15

 

Debentureholders, Debentures owned directly
or indirectly, legally or equitably, by the Company or a Significant Entity of
the Company shall be disregarded except that:

 

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

 

(ii)                                  Debentures
so owned which have been pledged in good faith other than to the Company or a
Significant Entity of the Company shall not be so disregarded if the pledgee
shall establish to the satisfaction of the Debenture Trustee the pledgee’s
right to vote such Debentures, sign consents, requisitions or other instruments
or take such other actions in his or her discretion free from the control of
the Company or a Significant Entity of the Company; and

 

(iii)                               Debentures
so owned shall not be disregarded if they are the only Debentures outstanding.

 

1.3                                                                               Interpretation

 

In this Indenture:

 

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

 

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

 

(c)                                  all
references to Sections, subsections or clauses refer, unless otherwise
specified, to sections, subsections or clauses of this Indenture; and

 

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

 

1.4                                                                               Headings, etc.

 

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

 

1.5                                                                               Day not a Business Day

 

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

 

16

 

1.6                                                                               Applicable Law

 

This Indenture and the Debentures shall be construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein
and shall be treated in all respects as Ontario contracts.  The Company hereby irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario.

 

1.7                                                                               Monetary References

 

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

 

1.8                                                                               Invalidity, etc.

 

Any provision hereof which is prohibited or unenforceable shall be
ineffective only to the extent of such prohibition or unenforceability, without
invalidating the remaining provisions hereof.

 

1.9                                                                               Language

 

Each of the parties hereto hereby acknowledges that it has consented to
and requested that this Indenture and all documents relating thereto,
including, without limiting the generality of the foregoing, the form of
Debenture attached hereto as Schedule A, be drawn up in the English language
only.

 

Les parties aux présentes reconnaissent avoir accepté  et demandé  que le présent acte de fiducie et tous les documents s’y
rapportant, y compris, sans restreindre la portée générale de ce qui précède,
le formulaire de débenture joint aux présentes à titre d’annexe A, soient
rédigés en langue anglaise seulement.

 

1.10                                                                        Successors and Assigns

 

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

 

1.11                                                                        Time of Essence

 

Time shall be of the essence of this Indenture.

 

1.12                                                                        All Payments Net of Taxes

 

For greater certainty, any and all payments to be made pursuant to this
Indenture of or on account of principal, premium, if any, and interest or any
deemed interest on the Debentures (including upon redemption, purchase or
conversion of the Debentures) or of any other amount, whether paid or payable
in money, IPSs or other securities or property, shall be made subject to the
deduction of any and all applicable taxes or withholdings.

 

1.13                                                                        Schedules

 

The following Schedules form part of this Indenture:

 

17

 

	
  Schedule “A”

  	
  —

  	
  Form of Debenture

  
	
  Schedule “B”

  	
  —

  	
  Form of Redemption Notice

  
	
  Schedule “C”

  	
  —

  	
  Form of Maturity Notice

  
	
  Schedule “D”

  	
  —

  	
  Form of Notice of Conversion

  
	
  Schedule “E”

  	
  —

  	
  Form of Put Exercise Notice

  
	
  Schedule 
  1

  	
  —

  	
  Guarantors

  
	
  Schedule 
  2

  	
  —

  	
  Pledgors, Pledge Agreements and Security Agreement

  

 

ARTICLE 2

THE DEBENTURES

 

2.1                                                                               Limit of Debentures

 

The aggregate principal amount of Debentures authorized to be issued
under this Indenture is unlimited; provided, however that Debentures may be
issued only upon and subject to the conditions and limitations herein set
forth.

 

2.2                                                                               Terms of Debentures of any Series

 

The Debentures may be issued in one or more series.  There shall be established herein or in or
pursuant to one or more indentures supplemental hereto or pursuant to the
Written Direction of the Manager, prior to the initial issuance of Debentures
of any particular series (other than the Initial Debentures, which are provided
for in Section 2.4):

 

(a)                                  the
designation of the Debentures of the series (which need not include the term “Debentures”), which shall distinguish
the Debentures of the series from the Debentures of all other series;

 

(b)                                 any
limit upon the aggregate principal amount of the Debentures of the series that
may be certified and delivered under this Indenture (except for Debentures
certified and delivered upon registration of, transfer of, amendment of, or in
exchange for, or in lieu of, other Debentures of the series pursuant to
Sections 2.9, 2.10, 4.2, 4.3 and 4.6);

 

(c)                                  the
date or dates on which the principal of the Debentures of the series is
payable;

 

(d)                                 the
rate or rates at which the Debentures of the series shall bear interest, if any,
the date or dates from which such interest shall accrue, on which such interest
shall be payable and on which a record, if any, shall be taken for the
determination of holders to whom such interest shall be payable and/or the
method or methods by which such rate or rates or date or dates shall be
determined;

 

(e)                                  the
place or places where the principal of and any interest on Debentures of the
series shall be payable or where any Debentures of the series may be
surrendered for registration of transfer or exchange;

 

(f)                                    the
right, if any, of the Company to redeem Debentures of the series, in whole or
in part, at its option and the period or periods within which, the price or
prices at which 

 

18

 

and any terms and conditions upon which,
Debentures of the series may be so redeemed, pursuant to any sinking fund or
otherwise;

 

(g)                                 the
obligation, if any, of the Company to redeem, purchase or repay Debentures of
the series pursuant to any mandatory redemption, sinking fund or analogous
provisions or at the option of a holder thereof and the price or prices at
which, the period or periods within which, the date or dates on which, and any
terms and conditions upon which, Debentures of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligations;

 

(h)                                 if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which Debentures of the series shall be issuable;

 

(i)                                     subject
to the provisions of this Indenture, any trustees, Depositories, authenticating
or paying agents, transfer agents or registrars or any other agents with
respect to the Debentures of the series;

 

(j)                                     any
other events of default or covenants with respect to the Debentures of the series;

 

(k)                                  whether
and under what circumstances the Debentures of the series will be convertible
into or exchangeable, in whole or in part, for securities of any Person;

 

(l)                                     the
form and terms of the Debentures of the series;

 

(m)                               if
applicable, that the Debentures of the series shall be issuable in whole or in
part as one or more Global Debentures and, in such case, the Depository or
Depositories for such Global Debentures in whose name, or whose nominee’s name,
the Global Debentures will be registered, and any circumstances other than or
in addition to those set forth in Section 2.9 or 4.2 or those applicable
with respect to any specific series of Debentures, as the case may be, in which
any such Global Debenture may be exchanged for Fully Registered Debentures, or
transferred to and registered in the name of a person other than the Depository
for such Global Debentures or a nominee thereof;

 

(n)                                 if
other than Canadian currency, the currency in which the Debentures of the
series are issuable; and

 

(o)                                 any other
terms of the Debentures of the series (which terms shall not be inconsistent
with the provisions of this Indenture).

 

All Debentures of any one series shall be substantially identical,
except as may otherwise be established herein or by or pursuant to a resolution
of the Directors, Certificate of the Manager or in an indenture supplemental
hereto.  Debentures of any one series
need not be issued at the same time and may be issued from time to time,
including pursuant to a Periodic Offering, consistent with the terms of this
Indenture, if so provided herein, by or pursuant to such resolution of the
Directors, Certificate of the Manager or in an indenture supplemental hereto.

 

19

 

2.3                                                                               Form of Debentures

 

Except in respect of the Initial Debentures,
the form of which is provided for herein, the Debentures of each series shall
be substantially in such form or forms (not inconsistent with this Indenture)
as shall be established herein or by or pursuant to one or more resolutions of
the Directors (as set forth in a resolution of the Directors or to the extent
established pursuant to, rather than set forth in, a resolution of the
Directors, in a Certificate of the Manager detailing such establishment) or in
one or more indentures supplemental hereto, in each case, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have imprinted or otherwise reproduced
thereon such legend or legends or endorsements, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law, or
with any rules or regulations pursuant thereto or with any rules or
regulations of any securities exchange or securities regulatory authority or to
conform to general usage, all as may be determined by the Directors or
authorized officer(s) of the Manager executing such Debentures, as
conclusively evidenced by his or her execution of such Debentures.  The Debenture Trustee shall not be required
to ensure compliance with any law or with any rules or regulations
pursuant thereto or with any rules or regulations of any securities
exchange or securities regulatory authority or to conform to general usage in
connection with the issue, transfer or conversion of the Debentures.  The responsibility for compliance with the
foregoing shall be that of the Company or the holder, as applicable.

 

2.4                                                                               Form and Terms of Initial
Debentures

 

(a)                                  The
first series of Debentures (the “Initial Debentures”)
authorized for issue immediately is limited to an aggregate principal amount of
$60,000,000  and
shall be designated as “6.25% Convertible Secured
Debentures”.

 

(b)                                 The
Initial Debentures shall be dated as of the date of closing of the Offering,
shall mature on October 31,
2011 and shall bear interest from the date of issue at
the rate of 6.25% per annum, payable semi-annually in arrears on April 30  and October 31 in each year, the
first such payment to fall due on
April 30, 2007 and the last such
payment (representing interest payable from and including the last Interest
Payment Date to, but excluding, the Maturity Date or the earlier date of
redemption or conversion of the Initial Debentures) to fall due on the Maturity
Date or the earlier date of redemption or conversion, payable after as well as
before maturity and after as well as before default, with interest on amounts
in default at the same rate, compounded semi-annually.  For certainty, the first interest payment will
include interest accrued and unpaid from and including October 11, 2006
to, but excluding, April 30, 2007, which will be equal to $34.42 for
each $1,000 principal amount of the Initial Debentures.

 

(c)                                  The
Initial Debentures will be redeemable at the option of the Company in
accordance with the terms of Article 5, provided that the Initial
Debentures will not be redeemable on or prior to October 31, 2009.  After October 31, 2009 and prior to the
Maturity Date, the Initial Debentures may be redeemed in whole or in part from
time to time at the option of the Company on notice as provided for in Section 5.3,
provided that the Current Market Price is at least 125% of the Conversion Price
and the Company  shall have
provided to the Debenture Trustee a Certificate of the Manager  confirming such Current Market Price.  In such circumstances, the Initial Debentures
will be redeemable at a price equal to their principal amount plus accrued 

 

20

 

and unpaid interest.  The Redemption Notice for the Initial Debentures
shall be substantially in the form of Schedule B.

 

(d)                                 The
Initial Debentures will be subordinated to the Senior Secured Indebtedness
(including indebtedness outstanding under either or both of the Senior Credit
Agreements) in accordance with the provisions of Article 6.  The Company covenants and agrees that the
Initial Debentures will be senior to any Subordinated Indebtedness, including
the Subordinated Notes, such that no payment of principal on any such debt
shall be made nor shall any trustee or holders thereof be entitled to demand,
accelerate, institute Proceedings, or receive any payment or benefit (including
without limitation by set-off, combination of accounts or otherwise in any
manner whatsoever) on account of payment of principal until such time as: (i) the
obligations under the Initial Debentures shall have been indefeasibly paid in
full in cash; or (ii) all of the Initial Debentures have been converted in
accordance with Article 7.

 

(e)                                  Upon
and subject to the provisions and conditions of Article 7, the holder of
each Initial Debenture shall have the right, at such holder’s option, at any
time prior to the earlier of the close of business on the Maturity Date and the
last Business Day immediately preceding the Redemption Date specified by the
Company for redemption of the Initial Debentures by notice to the holders of
Initial Debentures in accordance with Sections 2.4(c) and 5.3 (the earlier
of which will be the “Time of Expiry”
for the purposes of Article 7 in respect of the Initial Debentures), to
convert the whole or, in the case of a Debenture of a denomination in excess of
$1,000, any part which is $1,000 or an integral multiple thereof, of the
principal amount of such Debenture into Freely Tradeable IPSs at the Conversion
Price in effect on the Date of Conversion (as defined in Section 7.4(b)).

 

The Conversion Price in effect on the date hereof
for each IPS to be issued upon the conversion of Initial Debentures shall be
equal to $12.40 per IPS being a conversion ratio of approximately 80.6452
IPSs for each $1,000 principal amount of Initial Debentures so
converted.  No adjustment to the
Conversion Price will be made for dividends or distributions on Common Shares
and interest on Subordinated Notes issuable upon conversion or for interest
accrued or accruing on Initial Debentures surrendered for conversion.  Holders converting their Initial Debentures
will receive interest which has accrued but not been paid from the date of the
most recent Interest Payment Date on which interest was paid in full in
accordance with this Indenture to, but not including, the Date of
Conversion.  The Conversion Price
applicable to, and the IPSs, securities or other property receivable on the
conversion of, the Initial Debentures is subject to adjustment pursuant to the
provisions of Section 7.5.

 

(f)                                    The
Initial Debentures shall be issued in denominations of $1,000 and integral
multiples of $1,000 and the Debenture Trustee is hereby appointed as registrar
and transfer agent for the Initial Debentures. 
Each Initial Debenture and the certificate of the Debenture Trustee
endorsed thereon shall be issued in substantially the form set out in Schedule
A, with such insertions, omissions, substitutions or other variations as shall
be required or permitted by this Indenture, and may have imprinted or otherwise
reproduced thereon such legend or legends or endorsements, not inconsistent
with the provisions of this Indenture, as may be required to comply with any
law or with any 

 

21

 

rules or regulations pursuant thereto or
with any rules or regulations of any securities exchange or securities
regulatory authority or to conform with general usage, all as may be determined
by the Directors or an officer of the Manager executing such Initial Debenture
in accordance with Section 2.7 hereof, as conclusively evidenced by his or
her execution of an Initial Debenture. 
Each Initial Debenture shall additionally bear such distinguishing
letters and numbers as the Debenture Trustee shall approve.  Notwithstanding the foregoing, an Initial
Debenture may be in such other form or forms as may, from time to time, be,
approved by a resolution of the Directors or as specified in a Certificate of
the Manager.  The Initial Debentures may
be engraved, lithographed, printed, mimeographed or typewritten or partly in
one form and partly in another.

 

The Initial Debentures shall be issued as one or
more Global Debentures and the Global Debentures will be registered in the name
of the Depository (or any nominee of the Depository).  No Beneficial Holder will receive definitive
certificates representing its interest in Debentures except as provided in Section 4.2.  A Global Debenture may be exchanged for
Debentures in registered form that are not Global Debentures, or transferred to
and registered in the name of a Person other than the Depository for such
Global Debentures or a nominee thereof as provided in Section 4.2.

 

(g)                                 Upon
and subject to the provisions and conditions of Article 11, the Company
may elect, from time to time, to raise funds to satisfy all or part of an
Interest Obligation on the Initial Debentures on any Interest Payment Date by
delivering IPSs to the Debenture Trustee for sale through the facilities of a
registered broker/dealer.

 

(h)                                 Subject
to Applicable Securities Legislation and any required regulatory approval, upon
the occurrence of a Change of Control and subject to the provisions and
conditions of this Section 2.4(h) and Article 6,
Debentureholders have a right to require the Company to purchase their Initial
Debentures.  The terms and conditions of
such right are set forth below.

 

(i)                                     Upon
the occurrence of a Change of Control, each holder of Initial Debentures shall
have the right (the “Put Right”)
to require the Company to purchase, on the date (the “Put Date”) which is 30 days
following the date upon which the Debenture Trustee delivers a Change of
Control Notice (as defined below) to the holders of Initial Debentures, all or
any part of such holder’s Initial Debentures at a price equal to 101% of the
principal amount thereof (the “Put Price”)
plus accrued and unpaid interest, if any, on such Initial Debenture up to, but
excluding, the Put Date (collectively, the “Total Put Price”).

 

(ii)                                  The
Company will, as soon as practicable, and in any event no later than two
Business Days after the occurrence of a Change of Control, give written notice
to the Debenture Trustee of the Change of Control.  The Debenture Trustee will, as soon as practicable
thereafter, and in any event no later than four Business Days after receiving
notice from the Company of the Change of Control, provide written notice to the
holders of Initial Debentures of the Change of Control (a “Change of Control Notice”).  The Change of Control 

 

22

 

Notice shall include a description of the
Change of Control, details of the Debentureholders’ Put Right under the terms
of the Indenture, a statement that each holder will be entitled
to withdraw his election to require the Company to purchase if the Debenture
Trustee receives, no later than the close of business on the  third
Business Day immediately preceding the Put Date, a facsimile transmission or
letter setting forth the name of such holder, the principal amount of the Initial
Debentures tendered for purchase and a statement that such holder is
withdrawing his election to have the Initial Debentures purchased and
a description of the rights of the Company to redeem untendered Initial
Debentures in accordance with Section 2.4(h)(iv) hereof.

 

(iii)                               To
exercise the Put Right the Debentureholder must deliver to the Debenture
Trustee, not less than five Business Days prior to the Put Date, written notice
of the holder’s exercise of such right in the form attached as Schedule E.

 

(iv)                              If
90% or more in aggregate principal amount of Initial Debentures outstanding on
the date the Company provides notice of a Change of Control to the Debenture
Trustee have been tendered for purchase pursuant to the Put Right on the Put
Date, the Company shall have the right upon written notice provided to the
Debenture Trustee prior to the Put Date, to redeem all the remaining
outstanding Initial Debentures on the Put Date at the Total Put Price (the “90% Redemption Right”).

 

(v)                                 Upon
receipt of notice that the Company shall exercise the 90% Redemption Right and
acquire the remaining Initial Debentures, the Debenture Trustee shall as soon
as reasonably practicable provide written notice to all Debentureholders that
did not previously exercise the Put Right that:

 

(A)                              the
Company has exercised the 90% Redemption Right and will purchase all
outstanding Initial Debentures on the Put Date at the Total Put Price,
including a calculation of such holder’s Total Put Price;

 

(B)                                they
must transfer their Initial Debentures to the Debenture Trustee on the same
terms as those holders that exercised the Put Right and the Depository shall
make notations on the Global Debenture of the principal amount thereof so
transferred; and

 

(C)                                the
rights of such holder under the terms of the Initial Debentures shall cease as
of the Put Date provided the Company has paid the Total Put Price to, or to the
order of, the Debenture Trustee and thereafter the Initial Debentures shall not
be considered to be outstanding and the holder shall not have any right except
to receive the Total Put Price upon surrender and delivery of such holder’s
Initial Debentures in accordance with the Indenture.

 

(vi)                              The
Company shall, on or before 11:00 a.m. (Toronto time) on the Business Day
immediately prior to the Put Date, deposit with the Debenture Trustee or any
paying agent to the order of the Debenture Trustee, by electronic transfer of
funds, such sums of money as may be sufficient to pay the Total Put Price of
the Initial Debentures to be purchased or redeemed by the Company on the 

 

23

 

Put Date, provided the Company may elect to
satisfy this requirement by providing the Debenture Trustee with a certified
cheque for such amounts required under this Section 2.4(h)(vi).  The Company shall also deposit with the
Debenture Trustee a sum of money sufficient to pay any charges or expenses that
may be incurred by the Debenture Trustee in connection with such purchase
and/or redemption, as the case may be.  Every
such deposit shall be irrevocable.  From
the sums so deposited, the Debenture Trustee shall pay or cause to be paid to
the holders of such Initial Debentures, the Total Put Price to which they are
entitled on the Company’s purchase or redemption.

 

(vii)                           In
the event that one or more of such Initial Debentures being purchased in
accordance with this Section 2.4(h) becomes subject to purchase in
part only, upon surrender of such Initial Debentures for payment of the Total
Put Price, the Depository shall make notations on the Global Debenture of the
principal amount thereof so purchased.

 

(viii)                        Initial
Debentures for which holders have exercised the Put Right and Initial
Debentures which the Company has elected to redeem in accordance with the 90%
Redemption Right shall become due and payable at the Total Put Price on the Put
Date, in the same manner and with the same effect as if it were the date of
maturity specified in such Initial Debentures, anything therein or herein to
the contrary notwithstanding, and from and after such Put Date, if the money
necessary to purchase or redeem the Initial Debentures shall have been
deposited as provided in this Section 2.4(h) and affidavits or other
proofs satisfactory to the Debenture Trustee as to the publication and/or
mailing of such notices shall have been lodged with it, interest on the Initial
Debentures shall cease.  If any question
shall arise to whether any notice has been given as above provided and such
deposit made, such question shall be decided by the Debenture Trustee whose
decision shall be final and binding upon all parties in interest.

 

(ix)                                In
case the holder of any Initial Debenture to be purchased or redeemed in
accordance with this Section 2.4(h) shall fail on or before the Put
Date to surrender such holder’s Initial Debenture or shall not within such time
accept payment of the money payable; or give such receipt therefor, if any, as
the Debenture Trustee may require, such monies may be set aside in trust,
either in the deposit department of the Debenture Trustee or in a chartered
bank, and such setting aside shall for all purposes be deemed a payment to the
Debentureholder of the sum so set aside and, to that extent, the Initial
Debenture shall thereafter not be considered as outstanding hereunder and the
Debentureholder shall have no other right except to receive payment of the
monies so paid and deposited, upon surrender and delivery up of such holder’s
Initial Debenture, of the Total Put Price. 
In the event that any money required to be deposited hereunder with the
Debenture Trustee or any depository or paying agent on account of the Total Put
Price shall remain so deposited for a period of ten years from the Put Date,
then such monies shall at the end of such period be paid over or delivered over
by the Debenture Trustee or such depository or paying agent to the Company and
the Debenture Trustee shall not be responsible to Debentureholders for any
amounts owing to them.

 

24

 

(x)                                   Subject
to the provisions above related to Initial Debentures purchased in part, all
Initial Debentures redeemed and paid under this Section 2.4(h) shall
forthwith be delivered to the Debenture Trustee and cancelled and no Initial
Debentures shall be issued in substitution therefor.

 

(i)                                     The
Debenture Trustee shall be provided with the documents and instruments referred
to in Sections 2.5(b), (c) and (d) with respect to the Initial Debentures
prior to the issuance of the Initial Debentures.

 

2.5                                                                               Certification and Delivery of
Additional Debentures

 

The Company may from time to time request the
Debenture Trustee to certify and deliver Additional Debentures of any series by
delivering to the Debenture Trustee the documents referred to below in this Section 2.5
whereupon the Debenture Trustee shall certify such Additional Debentures and
cause the same to be delivered in accordance with the Written Direction of the
Manager referred to below or pursuant to such procedures acceptable to the
Debenture Trustee as may be specified from time to time by a Written Direction
of the Manager.  The maturity date, issue
date, interest rate (if any) and any other terms of the Additional Debentures
of such series shall be set forth in a supplemental indenture or determined by
or pursuant to such Written Direction of the Manager.  In certifying such Additional Debentures, the
Debenture Trustee shall be entitled to receive and shall be fully protected in
relying upon, unless and until such documents have been superseded or revoked:

 

(a)                                  a
Certificate of the Manager and/or executed supplemental indenture by or
pursuant to which the form and terms of such Additional Debentures are
established;

 

(b)                                 a
Written Direction of the Manager, addressed to the Debenture Trustee,
requesting certification and delivery of such Additional Debentures and setting
forth delivery instructions, provided that, with respect to Additional
Debentures of a series subject to a Periodic Offering:

 

(i)                                     such
Written Direction of the Manager may be delivered by the Company to the
Debenture Trustee prior to the delivery to the Debenture Trustee of such
Additional Debentures of such series for certification and delivery;

 

(ii)                                  the
Debenture Trustee shall certify and deliver Additional Debentures of such
series for original issue from time to time, in an aggregate principal amount
not exceeding the aggregate principal amount, if any, established for such
series, pursuant to a Written Direction of the Manager or pursuant to
procedures acceptable to the Debenture Trustee as may be specified from time to
time by a Written Direction of the Manager; and

 

(iii)                               the
maturity date or dates, issue date or dates, interest rate or rates (if any)
and any other terms of Additional Debentures of such series shall be determined
by an executed supplemental indenture or by Written Direction of the Manager or
pursuant to such procedures;

 

(c)                                  an
opinion of Counsel that all requirements imposed by this Indenture or by law in
connection with the proposed issue of Additional Debentures have been complied 

 

25

 

with, subject to the
delivery of certain documents or instruments specified in such opinion; and

 

(d)                                 a
Certificate of the Manager, addressed to Debenture Trustee, certifying that the
Company is not in default under this Indenture, that the terms and conditions
for the certification and delivery of Additional Debentures (including those
set forth in Section 16.5), have been complied with subject to the
delivery of any documents or instruments specified in such Certificate of the
Manager and that no Event of Default exists or will exist upon such
certification and delivery.

 

2.6                                                                               Issue of Global Debentures

 

(a)                                  The
Company may specify that the Debentures of a series are to be issued in whole
or in part as one or more Global Debentures registered in the name of a
Depository, or its nominee, designated by the Company in the Written Direction
of the Manager delivered to the Debenture Trustee at the time of issue of such
Debentures, and in such event the Company shall execute and the Debenture
Trustee shall certify and deliver one or more Global Debentures that shall:

 

(i)                                     represent
an aggregate amount equal to the principal amount of the outstanding Debentures
of such series to be represented by one or more Global Debentures;

 

(ii)                                  be
delivered to such Depository or pursuant to such Depository’s instructions; and

 

(iii)                               bear
a legend substantially to the following effect:

 

“This Debenture is a Global
Debenture within the meaning of the Indenture hereinafter referred to and is
registered in the name of a Depository or a nominee thereof.  This Debenture may not be transferred to or
exchanged for Debentures registered in the name of any person other than the
Depository or a nominee thereof and no such transfer may be registered except
in the limited circumstances described in the Indenture.  Every Debenture authenticated and delivered
upon registration of, transfer of, or in exchange for, or in lieu of, this
Debenture shall be a Global Debenture subject to the foregoing, except in such
limited circumstances described in the Indenture.”

 

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

 

2.7                                                                               Execution of Debentures

 

All Debentures shall be signed (either manually or
by facsimile signature) by any one Director of the Company or authorized
officer or director of the Manager holding office at the time of signing.  A facsimile signature upon a Debenture shall
for all purposes of this Indenture be deemed to be the signature of the person
whose signature it purports to be. 
Notwithstanding that any 

 

26

 

person whose signature, either manual or in
facsimile, appears on a Debenture as a Director of the Company or authorized
officer or director of the Manager may no longer hold such office at the date
of the Debenture or at the date of the certification and delivery thereof, such
Debenture shall be valid and binding upon the Company and entitled to the
benefits of this Indenture.

 

2.8                                                                               Certification

 

No Debenture shall be issued or, if issued, shall be
obligatory or shall entitle the holder to the benefits of this Indenture, until
it has been manually certified by or on behalf of the Debenture Trustee
substantially in the form set out in this Indenture, in the relevant supplemental
indenture, or in some other form approved by the Debenture Trustee.  Such certification on any Debenture shall be
conclusive evidence that such Debenture is duly issued, is a valid obligation
of the Company and the holder is entitled to the benefits hereof.

 

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

 

2.9                                                                               Interim Debentures or Certificates

 

Pending the delivery of definitive Debentures of any
series to the Debenture Trustee, the Company may issue and the Debenture
Trustee may certify in lieu thereof interim Debentures in such forms and in
such denominations and signed in such manner as provided herein, entitling the
holders thereof to definitive Debentures of the series when the same are ready
for delivery; or the Company may execute and the Debenture Trustee may certify
a temporary Debenture for the whole principal amount of Debentures of the
series then authorized to be issued hereunder and the Company may deliver the
same to the Debenture Trustee and thereupon the Debenture Trustee may issue its
own interim certificates in such form and in such amounts, not exceeding in the
aggregate the principal amount of the temporary Debenture so delivered to it,
as the Company, and the Debenture Trustee may approve entitling the holders
thereof to definitive Debentures of the series when the same are ready for
delivery; and, when so issued and certified, such interim or temporary
Debentures or interim certificates shall, for all purposes but without
duplication, rank in respect of this Indenture equally with Debentures duly
issued hereunder and, pending the exchange thereof for definitive Debentures,
the holders of the interim or temporary Debentures or interim certificates
shall be deemed without duplication to be Debentureholders and entitled to the
benefit of this Indenture to the same extent and in the same manner as though
the said exchange had actually been made. 
Forthwith after the Company shall have delivered the definitive
Debentures to the Debenture Trustee, the Debenture Trustee shall cancel such temporary
Debentures, if any, and shall call in for exchange all interim Debentures or
certificates that shall have been issued and forthwith after such exchange
shall cancel the same.  No charge shall
be made by the Company or the Debenture Trustee to the holders of such interim
or temporary Debentures or interim certificates for the exchange thereof.  All interest paid upon interim or temporary
Debentures or interim certificates shall be noted thereon as a condition precedent
to such payment unless paid by cheque to the registered holders thereof.

 

27

 

2.10                                                                        Mutilation, Loss, Theft or Destruction

 

In case any of the Debentures issued hereunder shall
become mutilated or be lost, stolen or destroyed  and in the absence of the Company’s receipt of any notice
that such Debenture has been acquired by a bona
fide purchaser, the Company, in its discretion, may issue, and
thereupon the Debenture Trustee shall certify and deliver, a new Debenture upon
surrender and cancellation of the mutilated Debenture, or in the case of a
lost, stolen or destroyed Debenture, in lieu of and in substitution for the
same, and the substituted Debenture shall be in a form approved by the
Debenture Trustee and shall be entitled to the benefits of this Indenture and
rank equally in accordance with its terms with all other Debentures issued or
to be issued hereunder.  The new or
substituted Debenture may have endorsed upon it the fact that it is in replacement
of a previous Debenture.  In case of
loss, theft or destruction the applicant for a substituted Debenture shall
furnish to the Company and to the Debenture Trustee such evidence of the loss,
theft or destruction of the Debenture and such other documents as shall be
satisfactory to them in their discretion and shall also furnish an indemnity
and surety bond satisfactory to them in their discretion.  The applicant shall pay all reasonable
expenses incidental to the issuance of any substituted Debenture.

 

2.11                                                                        Concerning Interest

 

(a)                                  Except
as may otherwise be provided in this Indenture or in any supplemental indenture
or Written Direction of the Manager in respect of a series of Debentures and
subject to Section 2.4(b) with respect to the calculation of interest
in respect of the initial interest payment to be paid on the Initial
Debentures, all Debentures issued hereunder, whether originally or upon
exchange or in substitution for previously issued Debentures which are interest
bearing, shall bear interest (i) from their issue date, or (ii) from
and including the last Interest Payment Date in respect of which interest shall
have been paid or made available for payment on the outstanding Debentures of
that series, whichever shall be the later, or, in respect of Debentures subject
to a Periodic Offering, from their issue date or from and including  the last Interest Payment Date in respect of which
interest shall have been paid or made available for payment on such Debentures,
in all cases, to but excluding the next Interest Payment Date.  All interest shall accrue from day to day and
shall be payable in arrears for the actual number of days lapsed in the
relevant interest period. Interest payable in a calendar year shall be payable
semi-annually in arrears. Interest on all Debentures issued hereunder shall
cease to accrue on, but not including, the Maturity Date, Redemption Date or
Date of Conversion, as applicable, for such Debentures, unless, upon due
presentation, payment of principal or delivery of amounts, securities or other
property payable or deliverable hereunder and payment of any accrued and unpaid
interest or other amounts payable hereunder is improperly withheld or refused.

 

(b)                                 Subject
to Section 2.4(b) in respect of the method for calculating the amount
of interest to be paid on the Initial Debentures on the first Interest Payment
Date in respect thereof, with respect to any series of Debentures, whenever
interest is computed on a basis of a year (the “deemed year”) which contains fewer days
than the actual number of days in the calendar year of calculation, such rate
of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such
rate of interest by the actual number of days in the calendar year of
calculation and dividing it by the number of days in the deemed year.

 

28

 

2.12                                                                        Debentures to Rank Pari Passu

 

The Debentures will be direct secured obligations of
the Company.  Each Debenture of the same
series of Debentures will rank pari passu with
each other Debenture of the same series (regardless of their actual date or
terms of issue).  The payment of the
principal of, and interest on,  the
Debentures shall, as provided in Article 6, be subordinated and postponed
in right of payment to all Senior Secured Indebtedness.

 

2.13                                                                        Payments of Amounts Due on Maturity

 

Except as may otherwise be provided in this
Indenture or any supplemental indenture in respect of any series of Debentures,
payments of amounts due upon maturity of the Debentures will be made in the
following manner.  The Company will
establish and maintain with the Debenture Trustee a Maturity Account for each
series of Debentures.  Each such Maturity
Account shall be maintained by and be subject to the control of the Debenture
Trustee for the purposes of this Indenture. 
On or before 11:00 a.m. (Toronto time) on the Business Day
immediately prior to each Maturity Date for Debentures outstanding from time to
time under this Indenture, the Company will deposit in the applicable Maturity
Account an amount sufficient to pay the cash amount payable in respect of such
Debentures (including the principal amount and premium (if any), together with
any accrued and unpaid interest thereon less any withholding tax required or
permitted by law to be deducted or withheld), provided the Company may elect to
satisfy this requirement by providing the Debenture Trustee with one or more
certified cheques, or with funds by electronic transfer, for such amounts
required under this Section 2.13. 
The Debenture Trustee, on behalf of the Company, will pay to each holder
entitled to receive payment the principal amount of and premium (if any) and
accrued and unpaid interest on the Debenture (less applicable withholding
taxes, if any), upon surrender of the Debenture at any branch of the Debenture
Trustee designated for such purpose from time to time by the Company and the
Debenture Trustee.  The deposit or the
making available of such amounts to the applicable Maturity Account will
satisfy and discharge the liability of the Company for the Debentures to which
the deposit or making available of funds relates to the extent of the amount
deposited or made available (plus the amount of any withholding tax deducted as
aforesaid) and such Debentures will thereafter to that extent not be considered
as outstanding under this Indenture and such holder will have no other right in
regard thereto other than to receive out of the money so deposited or made
available the amount to which such holder is entitled.

 

2.14                                                                        Payment of Interest

 

The following provisions shall apply to Debentures,
except as otherwise provided in Section 2.4(b) or permitted by Article 11
or specified in a resolution of the Directors, a Certificate of the Manager or
a supplemental indenture relating to a particular series of Additional
Debentures:

 

(a)                                  As
interest becomes due on each Debenture (except at maturity, on redemption or
conversion, when interest may at the option of the Company be paid upon
surrender of such Debenture) the Company, either directly or through the
Debenture Trustee or any agent of the Debenture Trustee, shall send or forward
by prepaid ordinary mail, electronic transfer of funds or such other means as
may be agreed to by the Debenture Trustee, payment of such interest (less any
withholding tax required or permitted to be withheld therefrom) to the order of
the registered holder of such Debenture appearing on the registers maintained
by the Debenture Trustee at the close of business on the fifth Business Day
prior to the applicable Interest Payment Date and 

 

29

 

addressed to the holder at
the holder’s last address appearing on the register, unless such holder
otherwise directs.  If payment is made by
cheque, such cheque shall be forwarded at least three days prior to each date
on which interest becomes due and if payment is made by other means (such as
electronic transfer of funds), such payment shall be made in a manner whereby
the holder receives credit for such payment on the date such interest on such
Debenture becomes due.  The mailing of
such cheque or the making of such payment by other means shall, to the extent
of the sum represented thereby, plus the amount of any withholding tax withheld
as aforesaid, satisfy and discharge all liability for interest on such
Debenture, unless in the case of payment by cheque, such cheque is not paid at
par on presentation.  In the event of
non-receipt of any cheque for or other payment of interest by the person to
whom it is so sent as aforesaid, the Company or the Debenture Trustee will
issue to such person a replacement cheque or other payment for a like amount
upon being furnished with such evidence of non-receipt as it shall reasonably
require and upon being indemnified to its satisfaction.  Notwithstanding the foregoing, if the Company
is prevented by circumstances beyond its control (including, without
limitation, any interruption in mail service) from making payment of any
interest due on each Debenture in the manner provided above, the Company may
make payment of such interest or make such interest available for payment in
any other manner acceptable to the Debenture Trustee with the same effect as
though payment had been made in the manner provided above.

 

(b)                                 Notwithstanding
Section 2.14(a), if a series of Debentures is represented by a Global
Debenture, then all payments of interest on the Global Debenture shall be made
by electronic funds transfer or cheque made payable to the Depository or its
nominee for subsequent payment (less applicable withholding taxes, if any) to
Beneficial Holders of interests in that Global Debenture, unless the Company
and the Depository otherwise agree.  None
of the Company, the Debenture Trustee or any agent of the Debenture Trustee for
any Debenture issued as a Global Debenture will be liable or responsible to any
person for any aspect of the records related to or payments made on account of
beneficial interests in any Global Debenture or for maintaining, reviewing, or
supervising any records relating to such beneficial interests.

 

ARTICLE 3

LIMITATIONS ON OWNERSHIP

 

3.1                                                                               Prohibition Against Ownership by
Certain U.S. Retirement Plans

 

U.S. Retirement Plans are prohibited from purchasing
or otherwise acquiring or holding, directly or indirectly, beneficial ownership
of any Debentures at any time, and each purchaser or other acquirer of any
Debentures (including any subsequent purchaser or other acquirer), by its
purchasing or acquiring Debentures, shall be deemed to have represented to the
Company, the Manager and any underwriters of such Debentures that (a) it
is not investing assets of a U.S. Retirement Plan in order to acquire or hold
the Debentures and will not otherwise hold the Debentures as U.S. Plan Assets
and (b) prior to any transfer of the Debentures, it will inform any
transferee thereof (other than a transferee in a transaction consummated on the
TSX) of the foregoing prohibitions and the representations which such
transferee will be deemed to make by purchasing or acquiring the Debentures.  The foregoing prohibition and deemed
representations are hereinafter 

 

30

 

referred to as the “U.S. Retirement Plan Prohibition”.  Each purchaser or other acquirer of any
Debentures at any time (including any subsequent purchaser or other acquirer)
shall also be deemed to have agreed to indemnify the Company, the Manager, any
underwriters of such Debentures, their Affiliates and their respective
directors and employees (including their respective successors and assigns)
against any loss, cost or damage caused by any breach by such Person of the
U.S. Plan Prohibition (a “Deemed Indemnity”).

 

The Manager may require any purchaser or other
acquirer of Debentures to file a declaration to the effect that it has not
violated the U.S. Retirement Plan Prohibition. 
If the Manager determines, as a result of any such declaration or
otherwise, that a violation of the U.S. Retirement Plan Prohibition has
occurred or that, after giving effect to any proposed subscription, issue or
transfer of Debentures to any Person, a violation of the U.S. Retirement Plan
Prohibition would occur, the Manager may instruct the Debenture Trustee not to
accept any subscription for any Debentures from such Person, issue any
Debentures to such Person or register or otherwise recognize the transfer of
any Debentures to such Person, unless such Person shall provide a declaration
that it has not violated the U.S. Retirement Plan Prohibition.  If, notwithstanding the foregoing, the
Manager determines that one or more Debentures were acquired or are being held
in violation of the U.S. Retirement Plan Prohibition, the Manager may instruct
the Debenture Trustee to send a written notice prepared by the Manager (a “U.S. Retirement Plan Notice”) to the
appropriate holder of record to be delivered to the applicable beneficial owner
of the Debentures (a “U.S. Retirement Plan
Holder”).  The U.S. Retirement
Plan Notice shall require such U.S. Retirement Plan Holder to sell all of its
Debentures (collectively, “U.S. Retirement
Plan Debentures”) to a Person whose ownership does not violate the
U.S. Retirement Plan Prohibition within the period stipulated in the U.S.
Retirement Plan Notice.  The U.S.
Retirement Plan Notice shall be given by registered prepaid mail to the holder
of record for such U.S. Retirement Plan Holder and shall specify a date, which
shall not be less than 10 days, within which the U.S. Retirement Plan
Debentures must be sold to a Person whose ownership does not violate the U.S.
Retirement Plan Prohibition.  The U.S.
Retirement Plan Notice shall also require the U.S. Retirement Plan Holder to
notify the Manager forthwith after the required sale has been completed.

 

If the U.S. Retirement Plan Debentures have not been
sold by the U.S. Retirement Plan Holder on or before the date stipulated in the
U.S. Retirement Plan Notice and the U.S. Retirement Plan Holder has not
provided evidence satisfactory to the Manager to the effect that U.S.
Retirement Plan Holder’s ownership does not violate the U.S. Retirement Plan
Prohibition before such date, the Manager may instruct the Debenture Trustee,
without further notice, to effect the transfer of the U.S. Retirement Plan
Debentures on behalf of the U.S. Retirement Plan Holder on and subject to the
terms herein contained and, in the interim, to suspend the rights of such U.S.
Retirement Plan Holder to receive interest payments or receive distributions in
respect of the U.S. Retirement Plan Debentures, to exercise the voting rights
of the U.S. Retirement Plan Debentures or to convert the U.S. Retirement Plan
Debentures to IPSs.  The provisions of Section 8.1
shall be applicable mutatis mutandis
with respect to any such transfer by the Debenture Trustee, except that such
U.S. Retirement Plan Holder shall only have the right to receive the net
proceeds of such sale and shall have no right to receive any unpaid interest or
distributions in respect of such U.S. Retirement Plan Debentures.  Notwithstanding the immediately preceding two
sentences, the Debenture Trustee will have no obligation to carry out any
actions contemplated in the immediately preceding two sentences unless it is
satisfied (relying on the opinion of Counsel), acting reasonably, that taking
such actions will not expose the Debenture Trustee to any liability.

 

31

 

Notwithstanding the foregoing, if the Manager makes
a public announcement that the Manager has determined that the U.S. Retirement
Plan Prohibition and the Deemed Indemnity are not then in the best interests of
the Company, the U.S. Retirement Plan Prohibition and the Deemed Indemnity
shall thereafter be immediately suspended until such time as the Manager
reinstates the U.S. Retirement Plan Prohibition and the Deemed Indemnity by
issuing a public announcement of such reinstatement.  Unless otherwise determined by the Manager,
certificates, representing the Debentures, and any certificates issued in
exchange therefor or in substitution thereof, shall bear an appropriate legend
referring to the U.S. Retirement Plan Prohibition and the Deemed Indemnity,
provided that any such legend may be removed at such time as the Manager shall
determine.

 

3.2                                                                               Limitation on U.S. Resident Ownership

 

The articles of incorporation of the Company provide
that at no time may more than 100 U.S. persons (as determined by the Company)
be the beneficial owners of the Company’s securities, nor may any U.S. person
be the beneficial owner of more than 10% of the IPSs, the Subordinated Notes or
the Common Shares.  The Company may
require declarations as to the jurisdictions in which beneficial owners of the
Company’s securities are resident.  If
the Company becomes aware that either of the foregoing limitations may be
contravened, the transfer agent and registrar of the Company will make a public
announcement and will not accept a subscription for the Company’s securities
from or issue or register a transfer of the Company’s securities to a person
unless the person provides a declaration that the person is not a U.S.
person.  If, notwithstanding the
foregoing, the Company determines that more than 100 U.S. persons are
beneficial owners of any class of the Company’s securities (on either a
non-diluted or fully-diluted basis), the Company may send a notice to the U.S.
holders of such securities, chosen in inverse order to the order of acquisition
or registration or in any manner as the Company may consider equitable and
practicable, requiring them to sell their securities or a portion of their
securities within a specified period of not less than 10 days.  If the holders of the Company’s securities
receiving the notice have not sold the specified number of securities, or
provided the Company with satisfactory evidence that they are not U.S. persons
within that time period, the Company may, on behalf of those holders of the
Company’s securities, sell those securities, and, in the interim, will suspend
the voting and distribution rights attached to those securities.  Upon that sale, the affected holders will
cease to be holders of the securities, and their rights will be limited to
receiving the net proceeds of the sale.

 

3.3                                                                               Limitation on Ownership by Electric
Utilities and Others

 

The Company’s power generation projects (the “Projects”) include qualifying facilities (“QFs”) under the United States Federal Power Act (“FPA”) as amended by the Public Utility Regulatory Policies
Act of 1978 (“PURPA”) that qualify under the rules of
the United States Federal Energy Regulatory Commission (“FERC”)
implementing PURPA and exempt wholesale generators (“EWGs”)
under the Public Utility Holding Company Act of 1935 (“PUHCA”)
with market-based rates on file with FERC pursuant to the FPA.  The articles of incorporation of the Company
provide that no U.S. entity (other than entities that have made certain
regulatory filings such as Teton Power Holdings LLC) may hold more than 10% of
the IPSs or Common Shares.  In addition,
should any entity wish to hold more than 5% but less than 10% of the IPSs or
Common Shares, that entity must agree to cooperate with the Company and provide
information necessary to make any filings with FERC that may be required
pursuant to the FPA.  Further, the
articles of incorporation of the Company provide that no person may own IPSs or
Common Shares if such person (i) is engaged primarily in the electric or
gas business; (ii) is otherwise affiliated with any franchised electric
utility; (iii) has controlling ownership interests in any electric
generating, 

 

32

 

transmission, or distribution facilities; (iv) is
affiliated with any power marketers; (v) is a “public-utility company” or
a “holding company” or an “associate company”, “affiliate”, or “subsidiary
company” of a “holding company” as each term is defined in section 2(a) of
PUHCA; (vi) is subject to regulation under PUHCA; (vii) is subject to
regulation as a “public utility” under the FPA; or (viii) is subject to
regulation with respect to rates or to financial or organizational matters as
an electric utility, public utility, or public service company or corporation
under the laws of any state unless such person satisfies the Company that the
ownership of the IPSs or Common Shares by such person will not adversely affect
the Projects’ qualification for QF status under FERC’s rules implementing
PURPA, the order issued under the FPA with respect to certain Projects, or the
Projects’ qualification for market-based rates under the FPA. Determination of
such potential adverse effect is at the sole discretion of the Company, and the
Company may elect to strictly enforce any or all of the restrictions set forth
above against such entity.  If the
Company becomes aware that any of the foregoing restrictions may be
contravened, the transfer agent and registrar of the Company will make a public
announcement and will not accept a subscription for IPSs or Common Shares or
any other securities of the Company from or issue or register a transfer of
IPSs, Common Shares or any other securities of the Company to a person unless
the person provides a declaration that the person is not an entity described
above.  If, notwithstanding the
foregoing, the Company determines that an owner of IPS, Common Shares or any
other securities of the Company violates the foregoing restrictions, the Company
may send a notice to such owner of IPSs, Common Shares or other securities
requiring it to provide specified information to the Company such that the
Company can determine whether such person’s ownership may have an adverse
effect upon the Company.  Upon such
determination, the Company may send a further notice requiring such owner to
sell its IPS, Common Shares or other securities within a specified period of
not less than 10 days.  If the holder of
IPS, Common Shares or other securities receiving the notice has not sold the
IPSs, Common Shares or other securities, as applicable, or provided the Company
with satisfactory evidence that it does not contravene the foregoing
restrictions, the Company may, on behalf of that holder of IPSs, Common Shares
or other securities, sell those IPSs, Common Shares or other securities, and,
in the interim, will suspend the voting and distribution rights attached to
those IPS, Common Shares or other securities. 
Upon that sale, the affected holder will cease to be a holder of the
IPSs, Common Shares or other securities, as applicable, and its rights will be
limited to receiving the net proceeds of the sale.

 

The ownership restrictions set out above in
Sections 3.1, 3.2 and 3.3 apply equally to IPSs.

 

ARTICLE 4

REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP

 

4.1                                                                               Fully Registered Debentures

 

(a)                                  With respect to each series of Debentures issuable as Fully Registered
Debentures, the Company shall cause to be kept by and at the principal offices
of the Debenture Trustee in Toronto and by the Debenture Trustee or such other
registrar as the Company, with the approval of the Debenture Trustee, may
appoint at such other place or places, if any, as may be specified in the
Debentures of such series or as the Company may designate with the approval of
the Debenture Trustee, a register in which shall be entered the names and last
known addresses of the holders of Fully Registered Debentures and particulars
of the Debentures held by them respectively 

 

33

 

and of all transfers
of Fully Registered Debentures.  Such
registration shall be noted on the Debentures by the Debenture Trustee or other
registrar unless a new Debenture shall be issued upon such transfer.

 

(b)                                 No transfer of a Fully Registered Debenture shall be valid unless made
on such register referred to in Section 4.1(a) by
the registered holder or such holder’s executors, administrators or other legal
representatives or an attorney duly appointed by an instrument in writing in
form and execution satisfactory to the Debenture Trustee or other registrar
upon surrender of the Debentures together with a duly executed form of transfer
acceptable to the Debenture Trustee and upon compliance with such other
reasonable requirements as the Debenture Trustee or other registrar may
prescribe, nor unless the name of the transferee shall have been noted on the
Debenture by the Debenture Trustee or other registrar.

 

4.2                                                                               Global Debentures

 

(a)                                  With
respect to each series of Debentures issuable in whole or in part as one or
more Global Debentures, the Company shall cause to be kept by and at the
principal offices of the Debenture Trustee in Toronto and by the Debenture
Trustee or such other registrar as the Company, with the approval of the
Debenture Trustee, may appoint at such other place or places, if any, as the
Company may designate with the approval of the Debenture Trustee, a register in
which shall be entered the name and address of the holder of each such Global
Debenture (being the Depository, or its nominee, for such Global Debenture) as
holder thereof and particulars of the Global Debenture held by it, and of all
transfers thereof.  If any Debentures of
such series are at any time not Global Debentures, the provisions of Section 4.1
shall govern with respect to registrations and transfers of such Debentures.

 

(b)                                 Notwithstanding
any other provision of this Indenture, a Global Debenture may not be
transferred by the registered holder thereof and accordingly, no definitive
certificates shall be issued to Beneficial Holders of Debentures, except in the
following circumstances or as otherwise specified in a resolution of the
Directors, Certificate of the Manager or supplemental indenture relating to a
particular series of Additional Debentures:

 

(i)                                     Global
Debentures may be transferred by a Depository to a nominee of such Depository
or by a nominee of a Depository to such Depository or to another nominee of
such Depository or by a Depository or its nominee to a successor Depository or
its nominee;

 

(ii)                                  Global
Debentures may be transferred at any time after the Depository for such Global
Debentures (i) has notified the Company that it is unwilling or unable to
continue as Depository in connection with Global Debentures, or (ii) if at
any time the Depository ceases to be a clearing agency or otherwise ceases to
be eligible to be a Depository under Section 2.6(b) and the Company
has not appointed a successor;

 

(iii)                               Global
Debentures may be transferred at any time after the Company has determined, in
its sole discretion, to terminate the book-entry only registration

 

34

 

system in respect of such
Global Debentures and has communicated such determination to the Debenture
Trustee in writing;

 

(iv)                              Global
Debentures may be transferred at any time after the Debenture Trustee has
determined that an Event of Default has occurred and is continuing with respect
to the Debentures of the series issued as a Global Debenture, provided that
Beneficial Holders of the Debentures representing, in the aggregate, not less
than 25% of the aggregate principal amount of the Debentures of such series
advise the Depository in writing, through the Depository Participants, that the
continuation of the book-entry only registration system for such series of
Debentures is no longer in their best interest and also  provided that at the time of such transfer the
Debenture Trustee has not waived the Event of Default pursuant to Section 9.3;

 

(v)                                 Global
Debentures may be transferred if required by applicable law; and

 

(vi)                              Global
Debentures may be transferred if the book-entry only registration system ceases
to exist.

 

(c)                                  With
respect to the Global Debentures, unless and until definitive certificates have
been issued to Beneficial Holders pursuant to subsection 4.2(b):

 

(i)                                     the
Company and the Debenture Trustee may deal with the Depository for all purposes
(including paying interest on the Debentures) as the sole holder of such series
of Debentures and the authorized representative of the Beneficial Holders;

 

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

 

(iii)                               the
Depository will make book entry transfers among the Depository Participants;
and

 

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

 

(d)                                 Whenever
a notice or other communication is required to be provided to Debentureholders,
unless and until definitive certificate(s) have been issued to Beneficial
Holders pursuant to this Section 4.2, the Debenture Trustee shall provide
all such notices and communications to the Depository and the Depository shall
deliver such notices and communications to such Beneficial Holders in
accordance with Applicable Securities Legislation.  Upon the termination of the book-entry only
registration system on the occurrence of one of the conditions specified in Section 4.2(b) with
respect to a series of Debentures issued hereunder, the Debenture Trustee shall
notify all applicable Beneficial Holders, through the Depository, of the
availability of definitive Debenture certificates.  Upon surrender by the Depository of 

 

35

 

the certificate(s) representing
the Global Debentures and receipt of new registration instructions from the
Depository, the Debenture Trustee shall deliver the definitive Debenture
certificates for such Debentures to the holders thereof in accordance with the
new registration instructions and thereafter, the registration and transfer of
such Debentures will be governed by Section 4.1 and the remaining Sections
of this Article 4.

 

4.3                                                                               Transferee Entitled to Registration

 

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

 

4.4                                                                               No Notice of Trusts

 

Neither the Company, the Debenture Trustee nor any
registrar shall be bound to take notice of or see to the execution of any trust
(other than that created by this Indenture) whether express, implied or
constructive, in respect of any Debenture, and may transfer the same on the
direction of the person registered as the holder thereof, whether named as
trustee or otherwise, as though that person were the beneficial owner thereof.

 

4.5                                                                               Registers Open for Inspection

 

The registers referred to in Sections 4.1 and 4.2
shall, during regular business hours of the Debenture Trustee, be open for
inspection by the Company, the Debenture Trustee or any Debentureholder,
subject to applicable laws.  Every
registrar, including the Debenture Trustee, shall from time to time when
requested so to do by the Company or by the Debenture Trustee, in writing,
furnish the Company or the Debenture Trustee, as the case may be, with a list
of names and addresses of holders of registered Debentures entered on the
register kept by them and showing the principal amount and serial numbers of
the Debentures held by each such holder, provided the Debenture Trustee shall
be entitled to charge a reasonable fee to provide such a list.

 

4.6                                                                               Exchanges of Debentures

 

(a)                                  Subject
to Section 4.7, Debentures in any authorized form or denomination, other
than Global Debentures, may be exchanged for Debentures in any other authorized
form or denomination, of the same series and date of maturity, bearing the same
interest rate and of the same aggregate principal amount as the Debentures so
exchanged.

 

(b)                                 In
respect of exchanges of Debentures permitted by Section 4.6(a), Debentures
of any series may be exchanged only at the principal offices of the Debenture
Trustee in Toronto or at such other place or places, if any, as may be
specified in the Debentures of such series and at such other place or places as
may from time to time be designated by the Company with the approval of the
Debenture Trustee.  Any Debentures
tendered for exchange shall be surrendered to the Debenture Trustee.  

 

36

 

The Company shall execute
and the Debenture Trustee shall certify all Debentures necessary to carry out
exchanges as aforesaid.  All Debentures
surrendered for exchange shall be cancelled.

 

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

 

4.7                                                                               Closing of Registers

 

(a)                                  Neither
the Company nor the Debenture Trustee nor any registrar shall be required to:

 

(i)                                     make
transfers or exchanges of Fully Registered Debentures on any Interest Payment
Date for such Debentures or during the five preceding Business Days;

 

(ii)                                  make
transfers or exchanges of any Debentures on the day of any selection by the
Debenture Trustee of Debentures to be redeemed or during the five preceding
Business Days; or

 

(iii)                               make
exchanges of any Debentures which will have been selected or called for
redemption unless upon due presentation thereof for redemption such Debentures
shall not be redeemed.

 

(b)                                 Subject
to any restriction herein provided, the Company with the approval of the
Debenture Trustee may at any time close any register for any series of
Debentures, other than those kept at the principal offices of the Debenture
Trustee in Toronto, and transfer the registration of any Debentures registered
thereon to another register (which may be an existing register) and thereafter
such Debentures shall be deemed to be registered on such other register.  Notice of such transfer shall be given to the
holders of such Debentures.

 

4.8                                                                               Charges for Registration, Transfer and
Exchange

 

For each Debenture exchanged, registered,
transferred or discharged from registration, the Debenture Trustee or other
registrar, except as otherwise herein provided, may make a reasonable charge
for its services and in addition may charge a reasonable sum for each new
Debenture issued (such amounts as agreed upon by the Debenture Trustee and the
Company from time to time), and payment of such charges and reimbursement of
the Debenture Trustee or other registrar for any stamp taxes or governmental or
other charges required to be paid shall be made by the party requesting such
exchange, registration, transfer or discharge from registration as a condition
precedent thereto.  Notwithstanding the
foregoing provisions, no charge shall be made to a Debentureholder hereunder:

 

(a)                                  for
any exchange, registration, transfer or discharge from registration of any
Debenture applied for within a period of two months from the date of the first
delivery of Debentures of that series or, with respect to Debentures subject to
a Periodic Offering, within a period of two months from the date of delivery of
any such Debenture;

 

37

 

(b)                                 for
any exchange of any interim or temporary Debenture or interim certificate that
has been issued under Section 2.9 for a definitive Debenture;

 

(c)                                  for
any exchange of a Global Debenture as contemplated in Section 4.2;

 

(d)                                 for
any conversion of any Debenture resulting from a partial redemption under Section 5.2;

 

(e)                                  for
any conversion of any Debenture resulting from a partial conversion under Section 7.4(d);
or

 

(f)                                    for
any conversion of any Debenture resulting from a partial purchase under Section 2.4(h).

 

4.9                                                                               Ownership of Debentures

 

(a)                                  Unless
otherwise required by law, the person in whose name any registered Debenture is
registered shall for all the purposes of this Indenture be and be deemed to be
the owner thereof and payment of or on account of the principal of and premium,
if any, on such Debenture and, interest thereon, shall be made to such
registered holder.

 

(b)                                 None
of the Company, any Underwriters nor the Debenture Trustee shall have any
liability for:

 

(i)                                     any
aspect of the records relating to the beneficial ownership of the Debentures
held by a Depository or of the payments relating thereto; or

 

(ii)                                  maintaining,
supervising or reviewing any such records relating to the Debentures.

 

The rules governing
Depositories provide that they act as the agent and depository for Depository
Participants.  As a result, such
Depository Participants must look solely to the Depository and Beneficial
Holders of Debentures must look solely to the Depository Participants for the
payment of principal and interest on the Debentures paid by or on behalf of the
Company to the Depository.

 

(c)                                  Beneficial
Holders of Debentures:

 

(i)                                     may
not have Debenture certificates registered in their name;

 

(ii)                                  may
not have physical certificates representing their interest in the Debentures;

 

(iii)                               may
not be able to sell the Debentures to institutions required by law to hold
certificates for securities they own; and

 

(iv)                              may
be unable to pledge Debentures as security.

 

(d)                                 The
registered holder for the time being of any registered Debenture shall be
entitled to the principal, premium, if any, and/or interest evidenced by such
instruments, respectively, free from all equities or rights of set-off or
counterclaim between the 

 

38

 

Company and the original or
any intermediate holder thereof and all Persons may act accordingly and the
receipt of any such registered holder for any such principal, premium or
interest shall be a good discharge to the Company and/or the Debenture Trustee
for the same and neither the Company nor the Debenture Trustee shall be bound
to inquire into the title of any such registered holder.

 

(e)                                  Where
Debentures are registered in more than one name, the principal, premium, if
any, and interest (in the case of Fully Registered Debentures) from time to
time payable in respect thereof may be paid to the order of all such holders,
failing written instructions from them to the contrary, and the receipt of any
one of such holders therefor shall be a valid discharge, to the Debenture Trustee,
any registrar and to the Company.

 

(f)                                    In
the case of the death of one or more joint holders of any Debenture the
principal, premium, if any, and interest from time to time payable thereon may
be paid to the order of the survivor or survivors of such registered holders
and the receipt of any such survivor or survivors therefor shall be a valid
discharge to the Debenture Trustee and any registrar and to the Company.

 

ARTICLE 5

REDEMPTION AND PURCHASE OF DEBENTURES

 

5.1                                                                               Applicability of Article

 

Subject to Applicable Laws and any required
regulatory approval, the Company shall have the right at its option to redeem,
either in whole or in part before maturity by payment of money any Debentures
issued hereunder of any series which by their terms are made so redeemable
(subject, however, to any applicable restriction on the redemption of
Debentures of such series) at such rate or rates of premium, if any, and on
such date or dates and in accordance with such other provisions as shall have
been determined at the time of issue of such Debentures and as shall have been
expressed in this Indenture, in the Debentures, in a Certificate of the
Manager, or in a supplemental indenture authorizing or providing for the issue
thereof, or in the case of Additional Debentures issued pursuant to a Periodic
Offering, in the Written Direction of the Manager requesting the certification
and delivery thereof.

 

5.2                                                                               Partial Redemption

 

If less than all the Debentures of any series for
the time being outstanding are at any time to be redeemed, the Debentures to be
so redeemed shall be selected by the Debenture Trustee on a pro rata basis to the nearest multiple of
$1,000 in accordance with the principal amount of the Debentures registered in
the name of each holder, or in such other manner as the Debenture Trustee deems
equitable, subject to the approval of the TSX confirmed in a Certificate of the
Manager as required.  Unless otherwise
specifically provided in the terms of any series of Debentures, no Debenture
shall be redeemed in part unless the principal amount redeemed is $1,000 or a
multiple thereof.  For this purpose, the
Debenture Trustee may make, and from time to time vary, regulations with
respect to the manner in which such Debentures may be drawn for redemption and
regulations so made shall be valid and binding upon all holders of such
Debentures notwithstanding the fact that as a result thereof one or more of
such Debentures may become subject to redemption in part only.  In the event that one or more of such
Debentures becomes subject to redemption in part only, upon 

 

39

 

surrender of any such Debentures for payment
of the Redemption Price, together with interest accrued to but excluding the
Redemption Date, the Company shall execute and the Debenture Trustee shall
certify and deliver without charge to the holder thereof or upon the holder’s
order one or more new Debentures for the unredeemed part of the principal
amount of the Debenture or Debentures so surrendered or, with respect to a
Global Debenture, the Depository shall make notations on the Global Debenture
of the principal amount thereof so redeemed. 
Unless the context otherwise requires, the terms “Debenture” or “Debentures” as used in this Article 5 shall be deemed to mean
or include any part of the principal amount of any Debenture which in
accordance with the foregoing provisions has become subject to redemption.

 

5.3                                                                               Notice of Redemption

 

Notice of redemption (the “Redemption Notice”) of Debentures of any
series shall be given to the holders of the Debentures so to be redeemed not
more than 60 days nor less than 30 days prior to the date fixed for redemption
(the “Redemption Date”) in the
manner provided in Section 15.2. 
Every such notice shall specify the aggregate principal amount of
Debentures called for redemption, the Redemption Date, the Redemption Price,
together with accrued and unpaid interest to but excluding the Redemption Date,
and the places of payment and shall state that interest upon the principal amount
of Debentures called for redemption shall cease to accrue and be payable from
and after the Redemption Date.  In
addition, unless all the outstanding Debentures are to be redeemed, the
Redemption Notice shall specify:

 

(a)                                  the
distinguishing letters and numbers of the registered Debentures which are to be
redeemed (or of such thereof as are registered in the name of such
Debentureholder);

 

(b)                                 in
the case of a published notice, the distinguishing letters and numbers of the
Debentures which are to be redeemed or, if such Debentures are selected pro rata or by other similar system,
such particulars as may be sufficient to identify the Debentures so selected;
and

 

(c)                                  in
all cases, the principal amounts of such Debentures or, if any such Debenture
is to be redeemed in part only, the principal amount of such part.

 

In the event that all Debentures to be redeemed are
registered Debentures, publication shall not be required.

 

5.4                                                                               Debentures Due on Redemption Dates

 

Notice having been given as aforesaid, all the Debentures
so called for redemption shall thereupon be and become due and payable at the
Redemption Price, together with accrued and unpaid interest to but excluding
the Redemption Date (less any withholding taxes required or permitted to be
deducted or withheld), on the Redemption Date specified in such notice, in the
same manner and with the same effect as if it were the date of maturity
specified in such Debentures, anything therein or herein to the contrary
notwithstanding, and from and after such Redemption Date, if the monies
necessary to redeem such Debentures shall have been deposited as provided in Section 5.5
and affidavits or other proof satisfactory to the Debenture Trustee as to the
publication and/or mailing of such notices shall have been lodged with it,
interest upon the Debentures shall cease. 
If any question shall arise as to whether any notice has been given as
above provided and such deposit 

 

40

 

made, such question shall be decided by the Debenture
Trustee whose decision shall be final and binding upon all parties in interest.

 

5.5                                                                               Deposit of Redemption Monies

 

Redemption of Debentures shall be provided for by
the Company depositing with the Debenture Trustee or any paying agent to the
order of the Debenture Trustee, on or before 11:00 a.m. (Toronto) time on
the Business Day immediately prior to the Redemption Date specified in such
notice, such sums of money as may be sufficient to pay the Redemption Price of
the Debentures so called for redemption, plus accrued and unpaid interest
thereon up to but excluding the Redemption Date, provided the Company may elect
to satisfy this requirement by providing the Debenture Trustee with one or more
certified cheques  for such amounts
required under this Section 5.5 post-dated to the Redemption Date, or by
providing the Debenture Trustee with such funds through electronic transfer of
funds on the Business Day immediately prior to the Redemption Date.  The Company shall also deposit with the
Debenture Trustee a sum of money sufficient to pay any charges or expenses that
may be incurred by the Debenture Trustee in connection with such
redemption.  Every such deposit shall be
irrevocable.  From the sums so deposited,
the Debenture Trustee shall pay or cause to be paid, or issue or cause to be
issued, to the holders of such Debentures so called for redemption, upon
surrender of such Debentures, the principal, premium (if any) and interest (if
any) to which they are respectively entitled on redemption, less applicable
withholding taxes, if any.  The Company
may pay the interest hereunder in accordance with Article 11.

 

5.6                                                                               Failure to Surrender Debentures Called
for Redemption

 

In case the holder of any Debenture so called for
redemption shall fail on or before the Redemption Date to so surrender such
holder’s Debenture, or shall not within such time accept payment of the
Redemption Price payable or give such receipt therefor, if any, as the
Debenture Trustee may require, such redemption monies may be set aside in
trust, without interest, or such certificates may be held in trust, either in
the deposit department of the Debenture Trustee or in a chartered bank, and
such setting aside shall for all purposes be deemed a payment to the
Debentureholder of the sum so set aside and, to that extent, the Debenture
shall thereafter not be considered as outstanding hereunder and the
Debentureholder shall have no other right except to receive payment out of the
monies so paid and deposited upon surrender and delivery up of such holder’s
Debenture of the Redemption Price plus accrued interest and unpaid interest to
the Redemption Date.  In the event that
any money required to be deposited hereunder with the Debenture Trustee or any
depository or paying agent on account of principal, premium, if any, or
interest, if any, on Debentures issued hereunder shall remain so deposited for
a period of ten years from the Redemption Date, then such monies shall at the
end of such period be paid over or delivered over by the Debenture Trustee or
such depository or paying agent to the Company on its demand, and thereupon the
Debenture Trustee shall not be responsible to Debentureholders for any amounts
owing to them and subject to applicable law, thereafter the holder of a
Debenture in respect of which such money was so repaid to the Company shall
have no rights in respect thereof except to obtain payment of the money due
from the Company, subject to any limitation period provided by the laws of the
Province of Ontario.

 

5.7                                                                               Cancellation of Debentures Redeemed

 

Subject to the provisions of Sections 5.2 and 5.8 as
to Debentures redeemed or purchased in part, all Debentures redeemed and paid
whose obligations have been satisfied under this 

 

41

 

Article 5 shall forthwith be delivered
to the Debenture Trustee and cancelled and no Debentures shall be issued in
substitution therefor.

 

5.8                                                                               Purchase of Debentures by the Company

 

Unless otherwise specifically provided with respect
to a particular series of Debentures, the Company or an Affiliate may, if the
Company is not at the time in default hereunder, at any time and from time to
time, purchase Debentures in the market (which shall include purchases from or
through an investment dealer or a firm holding membership on a recognized stock
exchange) or by tender or by private contract, at any price.  All Debentures so purchased may, at the
option of the Company or such Affiliate, be delivered to the Debenture Trustee
and shall be cancelled and no Debentures shall be issued in substitution
therefor.

 

If, upon an invitation for tenders, more Debentures
than the Company or an Affiliate is prepared to accept are tendered at the same
lowest price, the Debentures to be purchased by the Company or such Affiliate
shall be selected by the Debenture Trustee, in such manner (which may include
selection by lot, selection on a pro rata basis,
random selection by computer or any other method) consented to by the TSX, as
required, which the Debenture Trustee considers appropriate, from the
Debentures tendered by each tendering Debentureholder who tendered at such
lowest price.  For this purpose the
Debenture Trustee may make, and from time to time amend, regulations with
respect to the manner in which Debentures may be so selected, and regulations
so made shall be valid and binding upon all Debentureholders, notwithstanding
the fact that as a result thereof one or more of such Debentures become subject
to purchase in part only or not subject to purchase at all.  The holder of a Debenture of which a part
only is purchased, upon surrender of such Debenture for payment, shall be
entitled to receive, without expense to such holder, one or more new Debentures
for the unpurchased part so surrendered, and the Debenture Trustee shall certify
and deliver such new Debenture or Debentures upon receipt of the Debenture so
surrendered or, with respect to a Global Debenture, the Depository shall make
notations on the Global Debenture of the principal amount thereof so purchased.

 

5.9                                                                               Deposit of Maturity Monies

 

Payment on maturity of Debentures shall be provided
for by the Company depositing with the Debenture Trustee or any paying agent to
the order of the Debenture Trustee, on or before 11:00 a.m. (Toronto time)
on the Business Day immediately prior to the Maturity Date such sums of money
as may be sufficient to pay the principal amount of the Debentures, together
with accrued and unpaid interest thereon up to but excluding the Maturity Date,
provided the Company may elect to satisfy this requirement by providing the
Debenture Trustee with one or more certified cheques or with funds by
electronic transfer, for such amounts required under this Section 5.9.  The Company shall also deposit with the
Debenture Trustee a sum of money sufficient to pay any charges or expenses
which may be incurred by the Debenture Trustee in connection therewith.  Every such deposit shall be irrevocable.  From the sums so deposited, the Debenture
Trustee shall pay or cause to be paid to the holders of such Debentures, upon
surrender of such Debentures, the principal, premium (if any) and interest (if
any) to which they are respectively entitled on maturity.

 

42

 

ARTICLE 6

SUBORDINATION OF DEBENTURES

 

6.1                                                                               Applicability of Article

 

The Debenture Liabilities of the Company under any
Debentures issued hereunder of any series, shall be subordinated and postponed
and subject in right of payment, to the extent and in the manner hereinafter
set forth in the following sections of this Article 6, to the prior
indefeasible payment in full in cash of all existing and future Senior Secured
Indebtedness and the termination of all related commitments and the expiration
or termination of any letters of credit or other similar instruments issued in
connection therewith and each holder of any such Debenture by his acceptance
thereof agrees to and shall be bound by the provisions of this Article 6.

 

6.2                                                                               Order of Payment

 

Upon the distribution of the assets of the Company,
Atlantic Holdings or of any other Guarantor upon any dissolution, winding-up,
liquidation, bankruptcy, insolvency, receivership, creditor enforcement or
realization or other similar proceedings relating to the Company, Atlantic
Holdings or any other Guarantor or any of their property (whether voluntary or
involuntary, partial or complete) or any other marshalling of the assets and
liabilities of the Company, Atlantic Holdings or of any other Guarantor:

 

(a)                                  all
existing and future Senior Secured Indebtedness shall first be paid indefeasibly
in full in cash and all related commitments shall have been terminated and all
letters of credit or other similar instruments issued in connection therewith
shall have expired or shall have been terminated before any payment is made on
account of Debenture Liabilities;

 

(b)                                 the
Debentures shall in all aspects rank senior in right of payment to all existing
and future Subordinated Indebtedness (including trade payables);

 

(c)                                  no
future indebtedness of the Company, Atlantic Holdings or any other Guarantor
shall rank pari passu with the
Debentures unless the instrument creating such future indebtedness expressly
states that it ranks pari passu
with the Debentures (and, for the avoidance of doubt, the Company and the
Guarantors shall be entitled to include such language in such instrument
provided that the underlying indebtedness may be incurred hereunder);

 

(d)                                 any
payment or distribution of assets of the Company (including without limitation
payments or distributions made by or on behalf of Atlantic Holdings or any
other Guarantor), whether in cash, property or securities, to which the holders
of the Debentures or the Debenture Trustee on behalf of such holders would be
entitled except for the provisions of this Article 6, shall be paid or
delivered by the trustee in bankruptcy, receiver, assignee for the benefit of
creditors, or other liquidating agent making such payment or distribution,
directly to the holders of such Senior Secured Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Secured Indebtedness may have been issued, to the extent necessary to pay all
Senior Secured Indebtedness in full after giving effect to any concurrent
payment or 

 

43

 

distribution, or provision
therefor, to the holders of such Senior Secured Indebtedness; and

 

(e)                                  the
Senior Creditors or a receiver or a receiver-manager of the Company or of all
or part of its assets (including without limitation any equity or other
ownership interests in or property or collateral of any or all of Atlantic
Holdings or any other Guarantor) or any other enforcement agent may sell,
mortgage, or otherwise dispose of the Company assets (including without
limitation any equity or other ownership interests in or property or collateral
of any or all of Atlantic Holdings or any other Guarantor) in whole or in part,
free and clear of all Liens securing the Debenture Liabilities and without the
approval of the Debentureholders or the Debenture Trustee, but subject to the
requirement to account to the Debenture Trustee or the Debentureholders for any
surplus from any such disposition.

 

The rights and priority of
the Senior Secured Indebtedness and the subordination pursuant hereto shall not
be affected by:

 

(a)                                  the
time, sequence or order of creating, granting, executing, delivering of, or
registering, perfecting or failing to register or perfect any security notice,
caveat, financing statement or other notice in respect of the Senior Security;

 

(b)                                 the
time or order of the attachment, perfection or crystallization of any security
constituted by the Senior Security;

 

(c)                                  the
taking of any collection, enforcement or realization proceedings pursuant to
the Senior Security or any release of any Senior Security;

 

(d)                                 the
date of obtaining of any judgment or order of any bankruptcy court or any court
administering bankruptcy, insolvency or similar proceedings as to the
entitlement of the Senior Creditors, or any of them or the Debentureholders or
any of them to any money or property of the Company (including without
limitation any equity or other ownership interests in or property or collateral
of any or all of Atlantic Holdings or any other Guarantor);

 

(e)                                  the
failure to exercise any power or remedy reserved to the Senior Creditors under
the Senior Security or to insist upon a strict compliance with any terms
thereof;

 

(f)                                    whether
any Senior Security is now perfected, hereafter ceases to be perfected, is
avoidable by any trustee in bankruptcy or like official or is otherwise set
aside, invalidated or lapses;

 

(g)                                 the
date of giving or failing to give notice to or making demand upon the Company;
or

 

(h)                                 any
amendment, modification, increase, extension, renewal, replacement of any
Senior Secured Indebtedness or Senior Security.

 

44

 

6.3                                                                               Subrogation to Rights of Holders of
Senior Secured Indebtedness

 

After all Senior Secured Indebtedness of the Company
is paid in full and all related commitments are terminated and letters of
credit or other similar instruments issued in connection therewith have expired
or terminated and until the Debentures are paid in full, the Debentureholders’
rights hereunder and under the Security Documents shall be subrogated to the
rights of the existing and future holders of such Senior Secured Indebtedness to
receive payments or distributions of assets of the Company (including without
limitation any equity or other ownership interests in or property or collateral
of any or all of Atlantic Holdings or any other Guarantor) applicable to Senior
Secured Indebtedness. A distribution made under this Article 6 and Article 4
of the Guarantee to the existing and future holders of such Senior Secured
Indebtedness of the Company which otherwise would have been made to
Debentureholders is not, as between the Company and the Debentureholders, a
payment by the Company to such Debentureholders, it being understood that the
provisions of this Article 6 and Article 4 of the Guarantee are and
are intended solely for the purpose of defining the relative rights of the
holders of the Debentures, on the one hand, and the holders of Senior Secured
Indebtedness, on the other hand.

 

The Debenture Trustee, on behalf of each of the
Debentureholders, hereby waives any and all rights to require a Senior Creditor
to pursue or exhaust any rights or remedies with respect to the Company,
Atlantic Holdings or any other Guarantor or any property and assets subject to
the Senior Security or in any other manner to require the marshalling of
property, assets or security in connection with the exercise by the Senior
Creditors of any rights, remedies or recourses available to them.

 

6.4                                                                               Obligation to Pay Not Impaired

 

Subject at all times to the terms and provisions of
this Article 6 and Article 4 of the Guarantee, nothing contained in
this Indenture or in the Debentures is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior Secured
Indebtedness, and the holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debentures
the principal, premium, if any, and interest on the Debentures, as and when the
same shall become due and payable in accordance with their terms, or affect the
relative rights of the holders of the Debentures and creditors of the Company
other than the holders of the Senior Secured Indebtedness and Subordinated
Indebtedness, nor, subject to the terms and provisions of this Article 6
and Article 4 of the Guarantee, shall anything herein or therein prevent
the Debenture Trustee or the holder of any Debenture from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article 6
of the holders of Senior Secured Indebtedness in respect of cash, property or
securities of the Company (including without
limitation any equity or other ownership interests in or property or collateral
of any or all of Atlantic Holdings or any other Guarantor) received
upon the exercise of any such remedy.

 

6.5                                                                               Prohibited Payments

 

Upon the maturity of any Senior Secured Indebtedness
by lapse of time, acceleration or otherwise, all obligations in respect of such
Senior Secured Indebtedness shall first be paid in full, or shall first have
been duly provided for, and all related commitments have been terminated and
all letters of credit or other similar instruments issued in connection
therewith have been terminated or otherwise expired before any payment is made
on account of the Debenture Liabilities.

 

45

 

If (A) a default in the payment of the
principal of, premium, if any, or interest on any Senior Secured Indebtedness
occurs and is continuing or any other amount owing in respect of any Senior
Secured Indebtedness is not paid when due, or (B) any other default on
Senior Secured Indebtedness occurs and the maturity of such Senior Secured
Indebtedness is accelerated in accordance with its terms, no payment of
principal or interest or otherwise (by purchase of Debentures or otherwise)
shall be made by the Company with respect to any and all of the Debenture
Liabilities unless the default has been cured or waived and any such
acceleration has been rescinded or such Senior Secured Indebtedness has been
paid in full and all related commitments have been terminated and all letters
of credit or other similar instruments issued in connection therewith have been
terminated or otherwise expired. 
However, the Company may make payments with respect to any and all of
the Debenture Liabilities without regard to the foregoing if the Company and
the Debenture Trustee receive written notice approving such payment from the
Representative or Representatives, as the case may be, of such Senior Secured
Indebtedness with respect to which either of the events set forth in clause (A) or
(B) of the immediately preceding sentence has occurred and is continuing.

 

During the continuance of a default (other than a
default described in clause (A) or (B), of the second preceding sentence)
with respect to any Senior Secured Indebtedness pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company may not make any payments with respect to
any and all of the Debenture Liabilities for a period (a “Payment
Blockage Period”) commencing upon the receipt by the Debenture
Trustee (with a copy to the Company) of written notice (a “Blockage
Notice”) of such default from any Representative of such Senior
Secured Indebtedness specifying an election to effect a Payment Blockage Period
and ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Debenture Trustee and the Company
from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full of such Senior Secured Indebtedness and the termination of
all related commitments and the termination or expiration of all letters of
credit or other similar instruments issued in connection therewith or (iii) because
the default giving rise to such Blockage Notice is no longer continuing).  Notwithstanding the provisions described in
the immediately preceding sentence (but subject to the provisions contained in
the first sentence of this Section 6.5 and Section 6.2), unless the
holders of such Senior Secured Indebtedness or a Representative of such holders
shall have accelerated the maturity of such Designated Senior Secured
Indebtedness, the Company may resume making any payments on any and all of the
Debenture Liabilities after the end of such Payment Blockage Period.  In no event may the total number of days
during which any Payment Blockage Period or Periods is in effect exceed 179
days in the aggregate during any 360 consecutive day period.  For purposes of this Section 6.5, no
default or event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Senior Secured
Indebtedness initiating such Payment Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Payment Blockage Period by the
Representative of such Designated Senior Secured Indebtedness, whether or not
within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.

 

After the occurrence of an Event of Default
hereunder or a default under the Guarantee, the Company or the Debenture
Trustee shall promptly notify the holders of the Senior Secured Indebtedness
(or their respective Representatives) of such occurrence.  If any Senior Secured Indebtedness is
outstanding, the Company may not make any payments on any and all of the
Debenture Liabilities until five Business Days after such holders or a
Representative of the Senior 

 

46

 

Secured Indebtedness receives notice of such
occurrence and, thereafter, may make payments on any and all of the Debenture
Liabilities only if the provisions of this Article 6 otherwise permit
payment at that time.

 

In the event that, after the happening of such
default or Event of Default or default under the Guarantee and notwithstanding
the foregoing paragraph, any payment on account of the Debenture Liabilities or
any “Guaranty Liabilities” (as defined in the Guarantee) shall be made and be
received by the Debenture Trustee or the holders of Debentures before all
Senior Secured Indebtedness is paid in full and all related commitments have
been terminated and all letters of credit or other similar instruments issued
in connection therewith have been terminated or otherwise expired, (other than
any payment by issuance of IPSs upon any conversion pursuant to Article 7
or other securities in accordance with Article 7), unless and until such
an Event of Default shall have been cured or waived or shall have ceased to
exist or the Payment Blockage Period shall have expired, such payment shall be
held in trust for the benefit of, and, if and when such Senior Secured
Indebtedness shall have become due and payable, shall be paid over to, the
holders of such Senior Secured Indebtedness or their representative(s), or to
the trustee(s) under any loan agreement indenture or other similar
agreement under which any instruments evidencing any of such Senior Secured
Indebtedness may have been issued, as their respective interests may appear,
for application to the payment of all Senior Secured Indebtedness remaining
unpaid until all such Senior Secured Indebtedness shall have been paid in full
(and all related commitments have been terminated and all letters of credit or
other similar instruments issued in connection therewith have been terminated
or otherwise expired) after giving effect to any concurrent payment or
distribution to the holders of such Senior Secured Indebtedness in respect
thereof; provided, however, subject to the terms and conditions of this Article 6,
that the foregoing shall in no way prohibit, restrict or prevent the Debenture
Trustee from taking such actions as may be necessary to preserve claims of the
Debenture Trustee and/or the holders of the Debentures under this Indenture in
any bankruptcy, reorganization or insolvency proceeding (including, without
limitation, the filing of proofs of claim in any such bankruptcy,
reorganization or insolvency proceedings by or against the Company, Atlantic
Holdings or any other Guarantor and exercising its rights to vote as an
unsecured creditor under any such bankruptcy, reorganization or insolvency
proceedings commenced by or against the Company, Atlantic Holdings or any other
Guarantor).

 

The fact that any payment hereunder is prohibited by
this Section 6.5 shall not prevent the failure to make such payment from
being an Event of Default hereunder.

 

6.6                                                                               Payment on Debentures Permitted

 

Except as provided by Section 6.5, nothing
contained in this Article 6 or elsewhere in this Indenture, or in any of
the Debentures, shall affect the obligation of the Company to make, or prevent
the Company from making, at any time except during the pendency of any
dissolution, winding up or liquidation of the Company or reorganization
proceeding specified in Section 6.2 affecting the affairs of the Company
any payment of principal of or interest on the Debentures.  For greater certainty, except as provided in Section 6.5,
the Company shall not be prevented from making any
payment of principal of or interest on the Debentures on each Interest Payment
Date, on the Maturity Date or on the Redemption Date.  The fact that any payment in
respect of the Debentures is prohibited by this Article 6 or under any
instrument relating to Senior Secured Indebtedness shall not prevent the
failure to make such payment from being an Event of Default hereunder.  Nothing contained in this Article 6 or
elsewhere in this Indenture, or in any of the Debentures, shall prevent the
conversion of the Debentures or, except as prohibited by Section 6.5, the
application by the 

 

47

 

Debenture Trustee of any monies deposited
with the Debenture Trustee hereunder for the purpose, to the payment of or on
account of the Debenture Liabilities.

 

6.7                                                                               Confirmation of Subordination

 

Each holder of Debentures by his acceptance thereof
authorizes and directs the Debenture Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 6 and Article 4 of the Guarantee and appoints the
Debenture Trustee his attorney-in-fact for any and all such purposes.  This power of attorney, being coupled with an
interest and rights, shall be irrevocable. 
Upon request of the Company or any Guarantor, and upon being furnished a
Certificate of the Manager stating that one or more named persons are Senior Creditors
and specifying the amount and nature of the Senior Secured Indebtedness of such
Senior Creditor, the Debenture Trustee shall enter into a written
acknowledgement, confirmation and/or agreement with the Company, any such
Guarantor and/or the person or persons named in such Certificate of the Manager
acknowledging, confirming and/or providing that such person or persons are
entitled to all the rights and benefits of this Article 6 and Article 4
of the Guarantee as a Senior Creditor. 
Such instruments shall be conclusive evidence that the indebtedness
specified therein is Senior Secured Indebtedness.  However, nothing herein or in the Guarantee
shall impair the rights of any Senior Creditor who has not entered into such an
agreement or instrument including without limitation any Senior Creditor that
is a holder of Indebtedness with respect to either or both of the Senior Credit
Agreements.

 

6.8                                                                               Knowledge of Debenture Trustee

 

Notwithstanding the provisions of this Article 6
or any provision in this Indenture or in the Debentures, the Debenture Trustee
will not be charged with knowledge of any Senior Secured Indebtedness or of any
default in the payment thereof or any other default or event of default, or of
the existence of any other fact that would prohibit the making of any payment
of monies to or by the Debenture Trustee, or the taking of any other action by
the Debenture Trustee, unless and until the Debenture Trustee has received
written notice thereof from the Company, any Debentureholder, any Senior
Creditor or a trustee on behalf of anyone or more Senior Creditors, and such
notice to the Debenture Trustee shall be deemed to be notice to holders of the
Debentures; provided, however, that the Debenture Trustee agrees and
acknowledges that each of the Senior Credit Agreements and the Indebtedness
incurred in connection therewith are and shall be Senior Secured
Indebtedness.  It is acknowledged that
any Event of Default hereunder constitutes a default under each of the Senior
Credit Agreements.  The Debenture Trustee
will notify holders of Debentures as soon as reasonably practical of such
notice.

 

6.9                                                                               Debenture Trustee May Hold Senior
Secured Indebtedness

 

The Debenture Trustee is entitled to all the rights
set forth in this Article 6 with respect to any Senior Secured
Indebtedness at the time held by it, to the same extent as any other holder of
Senior Secured Indebtedness, and nothing in this Indenture deprives the
Debenture Trustee of any of its rights as such holder.

 

6.10                                                                        Rights of Holders of Senior Secured
Indebtedness Not Impaired

 

No right of any present or future holder of any
Senior Secured Indebtedness to enforce the subordination herein will at any
time or in any way be prejudiced or impaired by any act 

 

48

 

or failure to act on the part of the Company
or by any non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with.

 

6.11                                                                        Altering the Senior Secured
Indebtedness

 

The holders of the Senior Secured Indebtedness have
the right to extend, renew, increase, modify or amend the terms of the Senior
Secured Indebtedness (including increasing the principal amount of the Senior Secured
Indebtedness) or the Senior Security and to release, sell or exchange the
Senior Security and otherwise to deal freely with each of the Company, Atlantic
Holdings and the Company’s other Significant Entities, all without notice to or
consent of the Debentureholders or the Debenture Trustee and without affecting
the liabilities and obligations of the parties to this Indenture or the
Debentureholders or the Debenture Trustee.

 

6.12                                                                        Additional Indebtedness

 

This Indenture does not restrict the Company from
incurring additional indebtedness for borrowed money or otherwise or
mortgaging, pledging or charging its real or personal property or properties to
secure any indebtedness or other financing.

 

6.13                                                                        Right of Debentureholder to Convert Not
Impaired

 

The subordination of the Debentures to the Senior
Secured Indebtedness and the provisions of this Article 6 do not impair in
any way the right of a Debentureholder to convert its Debentures pursuant to Article 7.

 

6.14                                                                        Invalidated Payments

 

In the event that any of the
Senior Secured Indebtedness shall be paid in full and any related commitments
shall be terminated and any letters of credit or other similar instruments
issued in connection therewith shall have been terminated or otherwise expired
and subsequently, for whatever reason, such formerly paid or satisfied Senior
Secured Indebtedness becomes unpaid or unsatisfied, such commitments are
reinstated or such letters of credit or other instruments become effective and
are outstanding, the terms and conditions of this Article 6 shall be
reinstated and the provisions of this Article shall again be operative
until all Senior Secured Indebtedness is repaid in full and any related
commitments shall be terminated and any letters of credit or other similar
instruments issued in connection therewith shall have been terminated or
otherwise expired, provided that such reinstatement shall not give the Senior
Creditors any rights or recourses against the Debenture Trustee or the
Debentureholders for amounts paid to the Debentureholders subsequent to such
payment or satisfaction in full and prior to such reinstatement.

 

6.15                                                                        Contesting Security

 

The Debenture Trustee, for itself and on behalf of
the Debentureholders, agrees that it shall not contest or bring into question
the validity, perfection or enforceability of any of the Senior Security or
Senior Secured Indebtedness, or the relative priority of the Senior Security or
Senior Secured Indebtedness including, without limitation, pursuant to this
Indenture, any Debentures or any Guarantee.

 

49

 

6.16                                                                        Obligations Created by Article 6

 

The Company and the
Debenture Trustee, in its capacity as trustee hereunder and not in its
corporate personal capacity, agree, and each holder by its acceptance of a
Debenture likewise agrees, that:

 

(a)                                  the
provisions of this Article 6 and/or Article 4 of the Guarantee are an
inducement and consideration to each holder of Senior Secured Indebtedness to
give or continue credit to the Company, Atlantic Holdings, the Company’s other
Significant Entities or others or to acquire Senior Secured Indebtedness;

 

(b)                                 each
holder of Senior Secured Indebtedness may accept the benefit of this Article 6
and/or Article 4 of the Guarantee on the terms and conditions set forth in
this Article 6 and/or Article 4 of the Guarantee, by giving or
continuing credit to the Company, Atlantic Holdings, the Company’s other
Significant Entities or others or by acquiring or having outstanding as of the
date hereof Senior Secured Indebtedness, in each case without notice to the
Debenture Trustee and without establishing actual reliance on this Article 6
and/or Article 4 of the Guarantee; and

 

(c)                                  each
obligation created by this Article 6 and/or Article 4 of the
Guarantee is created for the benefit of the holders of Senior Secured
Indebtedness and is hereby declared to be created in trust for those holders by
the Company, the Debenture Trustee and each holder of a Debenture and shall be
binding on the Company, the Debenture Trustee and each holder of a Debenture
whether or not any confirmation described in Section 6.7 or in Article 4
of the Guarantee is requested, executed or delivered.

 

6.17                                                                        No Set-Off

 

Each of the Company and the Debenture Trustee
agrees, and each holder of a Debenture, by his acceptance thereof, likewise
agrees, that it shall have no rights of set-off or counterclaim with respect to
the principal of, premium, if any, and interest on the Debentures at any time
when any payment of, or in respect of, such amounts to the Debenture Trustee or
the holder of a Debenture is prohibited by this Article 6 or is otherwise
required to be paid to the holders of Senior Secured Indebtedness or their
representative or to the trustee under any indenture under which any
instruments evidencing any of such Senior Secured Indebtedness may have been
issued, as their respective interests may appear.

 

6.18                                                                        Amendments to Article 6

 

Each of the Company and the Debenture Trustee
(relying on the opinion of Counsel) agrees, and each holder of a Debenture, by
his acceptance thereof, likewise agrees, not to make any changes to this
Indenture or the Debentures, including this Article 6 or Article 4 of
the Guarantee or the definition of Senior Secured Indebtedness, which prejudice
the rights of the holders of Senior Secured Indebtedness under this Article 6
or Article 4 of the Guarantee without the consent of the holders of Senior
Secured Indebtedness, including the Senior Creditors under either or both of
the Senior Credit Agreements, or their representative or the trustee under any
indenture under which any instruments evidencing any of such Senior Secured
Indebtedness may have been issued.

 

50

 

ARTICLE 7

CONVERSION OF DEBENTURES

 

7.1                                                                               Applicability of Article

 

Any Debentures issued hereunder of any series which
by their terms are convertible (subject, however, to any applicable restriction
of the conversion of Debentures of such series) will be convertible into Freely
Tradeable IPSs or other securities, at such exchange rate or rates, and on such
date or dates and in accordance with such other provisions as shall have been
determined at the time of issue of such Debentures and shall have been
expressed in this Indenture, in such Debentures, in a Certificate of the
Manager, or in a supplemental indenture authorizing or providing for the issue
thereof.

 

Such right of conversion shall extend only to the
maximum number of whole IPSs into which the aggregate principal amount of the
Debenture or Debentures surrendered for conversion at any one time by the
holder thereof may be converted. 
Fractional interests in IPSs shall be adjusted for in the manner
provided in Section 7.6.

 

7.2                                                                               Notice of Expiry of Conversion
Privilege

 

Notice of the expiry of the conversion privileges of
the Debentures shall be given by or on behalf of the Company, not more than 60
days and not less than 30 days prior to the date fixed for the Time of Expiry,
in the manner provided in Section 15.2.

 

7.3                                                                               Revival of Right to Convert

 

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

 

7.4                                                                               Manner of Exercise of Right to Convert

 

(a)                                  The
holder of a Debenture desiring to convert such Debenture in whole or in part into
IPSs shall surrender such Debenture to the Debenture Trustee at its principal
offices in Toronto together with the conversion form attached hereto as
Schedule D duly executed by the holder or his or her executors or
administrators or other legal representatives or his, her or their attorney
duly appointed by an instrument in writing in form and executed in a manner
satisfactory to the Debenture Trustee, exercising his or her right to convert
such Debenture in accordance with the provisions of this Article 7;
provided that with respect to a Global Debenture, the obligation to surrender a
Debenture to the Debenture Trustee shall be satisfied if the Debenture Trustee
makes notation on the Global Debenture of the principal amount thereof so
converted and the Debenture Trustee is provided with all other documentation
which it may request.  Thereupon, subject
to payment of all applicable stamp or security transfer, income, withholding or
other taxes or other governmental charges and 

 

51

 

compliance with all
reasonable requirements of the Debenture Trustee (including, for greater
certainty, the withholding obligation of the Debenture Trustee pursuant to Section 16.20
hereof), the Conversion Price shall have been paid and such Debentureholder or
his or her nominee(s) or assignee(s) shall be entitled to be entered
in the books of the Company on the Business Day immediately after the Date of
Conversion (or such later date as is specified in Section 7.4(b)), as the
holder of the number of IPSs into which such Debenture is convertible, net of
applicable withholding taxes, if any, in accordance with the provisions of this
Article and, as soon as practicable thereafter, the Company shall deliver
a certificate or certificates for such IPSs and the Company shall (i) deliver
or cause to be delivered to the Debentureholder, or subject as aforesaid, his
or her nominee(s) or assignee(s) such certificate or certificates for
such IPSs; and (ii) make or cause to be made any payment of interest to
which such holder is entitled in accordance with Section 7.4(e) hereof
or in respect of fractional IPSs as provided in Section 7.6.

 

(b)                                 For
the purposes of this Article, a Debenture shall be deemed to be surrendered for
conversion on the date on which it is so surrendered in proper form when the
register of the Debenture Trustee is open and in accordance with the provisions
of this Article or, in the case of a Global Debenture, on the date on
which the Debenture Trustee received notice of and all necessary documentation
in respect of the exercise of the conversion rights and, in the case of a
Debenture so surrendered by post or other means of transmission, on the date on
which it is received in proper form by the Debenture Trustee at its office
specified in Section 7.4(a); provided that if a Debenture is surrendered
for conversion on a day on which the register of IPSs is closed, the Person or
Persons entitled to receive IPSs shall become the holder or holders of record
of such IPSs as at the date on which such registers are next reopened (in each
case the “Date of Conversion”).

 

(c)                                  Any
part, being $1,000 (in the currency of the applicable Debenture) or an integral
multiple thereof, of a Debenture in a denomination in excess of $1,000 (in the currency
of the applicable Debenture) may be converted as provided in this Article 7
and all references in this Indenture to conversion of Debentures shall be
deemed to include conversion of such parts.

 

(d)                                 The
holder of any Debenture of which only a part is converted shall, upon the
exercise of his or her right of conversion, surrender such Debenture to the
Debenture Trustee, and the Debenture Trustee shall cancel the same and shall
without charge forthwith certify and deliver to the holder a new Debenture or
Debentures in an aggregate principal amount equal to the unconverted part of
the principal amount of the Debenture so surrendered or, with respect to a
Global Debenture, the Depository shall make notations on the Global Debentures
of the principal amount thereof so converted.

 

(e)                                  The
holder of a Debenture surrendered for conversion in accordance with this Section 7.4
shall be entitled (subject to any applicable restriction on the right to
receive interest on conversion of Debentures of any series) to receive accrued
and unpaid interest in respect thereof from and including the most recent
Interest Payment Date to which interest has been paid to, but not including,
the Date of Conversion of such Debenture (less applicable withholding taxes, if
any)  and the IPSs issued upon
such 

 

52

 

conversion shall be entitled
to distributions or dividends declared in favour of holders of IPSs of record
on and after the Date of Conversion or such later date as such holder shall
become the holder of record of such IPSs pursuant to Section 7.4(b), from
which applicable date they will for all purposes be and be deemed to be issued
and outstanding as fully paid and non-assessable Common Shares and fully-paid
Subordinated Notes.

 

(f)                                    The
security granted in respect of the Debentures pursuant to Article 18 shall
terminate as of the Date of Conversion in respect of each Debenture converted
in accordance with this Article 7 with no further formality.

 

(g)                                 The
Subordinated Notes forming part of the IPSs issued to a Debentureholder upon
conversion of a Debenture pursuant to this Article 7 shall be secured
pursuant to the Subordinated Note Indenture and ancillary security
documentation.

 

7.5                                                                               Adjustment of Conversion Price

 

The Conversion Price in
effect at any date shall be subject to adjustment from time to time as set
forth below.

 

(a)                                  If
and whenever at any time prior to the Time of Expiry the Company shall (i) subdivide
or redivide the outstanding IPSs into a greater number of IPSs, (ii) reduce,
combine or consolidate the outstanding IPSs into a smaller number of IPSs, or (iii) issue
IPSs (or securities convertible into or exchangeable for IPSs) to the holders
of all or substantially all of the outstanding IPSs by way of a dividend or
distribution or otherwise, the Conversion Price in effect on the effective date
of such subdivision, redivision, reduction, combination or consolidation or on
the record date for such issue of IPSs by way of a dividend or distribution, as
the case may be, shall in the case of any of the events referred to in (i) and
(iii) above be decreased in proportion to the number of outstanding IPSs
resulting from such subdivision, redivision or dividend or distribution, or
shall, in the case of any of the events referred to in (ii) above, be
increased in proportion to the number of outstanding IPSs resulting from such
reduction, combination or consolidation. 
Such adjustment shall be made successively whenever any event referred
to in this Section 7.5(a) shall occur.  Any such issue of IPSs by way of a dividend
or distribution shall be deemed to have been made on the record date for the
dividend or distribution for the purpose of calculating the number of
outstanding IPSs under subsections (b) and (c) of this Section 7.5.  Upon any adjustment to the Conversion Price
as set out in this Section 7.5(a), the number of IPSs to be issued upon
conversion shall in the case of any of the events referred to in (i) or (iii) above
be increased in proportion to the number of outstanding IPSs resulting from
such subdivision, redivision, dividend or distribution, or shall in the case of
any of the events referred to in (ii) above, be decreased in proportion to
the number of outstanding IPSs resulting from such reduction, combination or
consolidation.

 

(b)                                 If
and whenever at any time prior to the Time of Expiry, the Company shall fix a
record date for the issuance of options, rights or warrants to all or
substantially all the holders of its outstanding IPSs entitling them, for a
period expiring not more than 45 days after such record date, to subscribe for
or purchase IPSs (or securities 

 

53

 

convertible into or
exchangeable for IPSs) at a price per IPS (or having a conversion price per IPS)
less than 95% of the Current Market Price of the IPSs on such record date, the
Conversion Price shall be adjusted immediately after such record date so that
it shall equal the price determined by multiplying the Conversion Price in
effect on such record date by a fraction, of which the numerator shall be the
total number of IPSs outstanding on such record date plus a number of IPSs
equal to the number arrived at by dividing the aggregate price of the total
number of additional IPSs offered for subscription or purchase (or the
aggregate conversion price of the convertible or exchangeable securities so
offered) by such Current Market Price per IPS, and of which the denominator
shall be the total number of IPSs outstanding on such record date plus the total
number of additional IPSs offered for subscription or purchase (or into which
the convertible or exchangeable securities so offered are convertible or
exchangeable).  Such adjustment shall be
made successively whenever such a record date is fixed.  To the extent that any such options, rights
or warrants are not so issued or any such options, rights or warrants are not
exercised prior to the expiration thereof, the Conversion Price shall be
re-adjusted to the Conversion Price which would then be in effect if such
record date had not been fixed or to the Conversion Price which would then be
in effect based upon the number of IPSs (or securities convertible into or
exchangeable for IPSs) actually issued upon the exercise of such options,
rights or warrants, as the case may be.

 

(c)                                  If
and whenever at any time prior to the Time of Expiry, the Company shall fix a
record date for the making of a distribution to all or substantially all the
holders of its outstanding IPSs of (i) securities of any class other than
IPSs, (ii) rights, options or warrants (excluding rights, options or
warrants entitling the holders thereof for a period of not more than 45 days to
subscribe for or purchase IPSs or securities convertible into or exchangeable
for IPSs), (iii) evidences of its indebtedness, or (iv) assets
(excluding dividends or distributions paid (including payments on the
Subordinated Notes) in the ordinary course) then, in each such case, the
Conversion Price shall be adjusted immediately after such record date so that
it shall equal the price determined by multiplying the Conversion Price in
effect on such record date by a fraction, of which the numerator shall be the
total number of IPSs outstanding on such record date multiplied by the Current
Market Price per IPS on such record date, less the fair market value (as
determined by the Directors, which determination shall be conclusive) of such
IPSs, securities other than IPSs, or rights, options or warrants or evidences
of indebtedness or assets so distributed, and of which the denominator shall be
the total number of IPSs outstanding on such record date multiplied by such
Current Market Price per IPS.  Such
adjustment shall be made successively whenever such a record date is fixed.  To the extent that such distribution is not
so made, the Conversion Price shall be re-adjusted to the Conversion Price
which would then be in effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon such IPSs, securities
other than IPSs, or rights, options or warrants or evidences of indebtedness or
assets actually distributed, as the case may be.  In clause (iv) of this Section 7.5(c) the
term “dividends or distributions paid in the ordinary course” shall include the
value of any securities or other property or assets distributed in lieu of cash
dividends or distributions paid in the ordinary course at the option of holders
of IPSs.

 

54

 

(d)                                 If
and whenever at any time prior to the Time of Expiry, there is a
reclassification of the IPSs (or either of the Common Shares or Subordinated
Notes comprising the IPSs) or a capital reorganization of the Company other
than as described in Section 7.5(a) or a consolidation, amalgamation,
arrangement or merger of the Company with or into any other Person or other
entity, or a sale or conveyance of the property and assets of the Company as an
entirety or substantially as an entirety to any other Person or other entity or
a liquidation, dissolution or winding-up of the Company, any holder of a
Debenture who has not exercised its right of conversion prior to the effective
date of such reclassification, capital reorganization, consolidation,
amalgamation, arrangement or merger, sale or conveyance or liquidation,
dissolution or winding-up or other similar transaction, upon the exercise of
such right thereafter, shall be entitled to receive and shall accept, in lieu
of the number of IPSs then sought to be acquired by it, the kind and amount of
securities or property of the Company or of the Person or other entity
resulting from such merger, amalgamation or consolidation or other similar
transaction, or to which such sale or conveyance may be made or which holders
of IPSs receive pursuant to such liquidation, dissolution or winding-up, as the
case may be, that such holder of a Debenture would have been entitled to
receive on such reclassification, capital reorganization, consolidation,
amalgamation, arrangement or merger, sale or conveyance or liquidation,
dissolution or winding-up or other similar transaction, if, on the record date
or the effective date thereof, as the case may be, the holder had been the
registered holder of the number of IPSs sought to be acquired by it and to
which it was entitled to acquire upon the exercise of the conversion right
prior to the effective date of such reclassification, capital reorganization,
consolidation, amalgamation, arrangement or merger, sale or conveyance or
liquidation, dissolution or winding-up or other similar transaction.  If determined appropriate by the Directors,
to give effect to or to evidence the provisions of this Section 7.5(d),
the Company, its successor, or such purchasing Person or other entity, as the
case may be, shall, prior to or contemporaneously with any such
reclassification, capital reorganization, consolidation, amalgamation,
arrangement, merger, sale or conveyance or liquidation, dissolution or
winding-up or other similar transaction, enter into an indenture which shall
provide, to the extent possible, for the application of the provisions set
forth in this Indenture with respect to the rights and interests thereafter of
the holder of Debentures to the end that the provisions set forth in this Indenture
shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, with respect to the kind and amount of securities or property of
the Company or other securities or property to which a holder of Debentures is
entitled on the exercise of its acquisition rights thereafter.  Any indenture entered into between the
Company and the Debenture Trustee pursuant to the provisions of this Section 7.5(d) shall
be a supplemental indenture entered into pursuant to the provisions of Article 17.
 Any indenture entered into between the
Company, any successor to the Company or such purchasing Person or other
entity, the Company and the Debenture Trustee shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section 7.5(d) and which shall apply to successive
reclassifications, capital reorganizations, amalgamations, consolidations,
mergers, sales or conveyances or other similar transactions.

 

(e)                                  In
any case in which this Section 7.5 shall require that an adjustment shall
become effective immediately after a record date for an event referred to
herein, the Company 

 

55

 

may defer, until the
occurrence of such event, issuing to the holder of any Debenture converted
after such record date and before the occurrence of such event the additional
IPSs or other securities or property issuable upon such conversion by reason of
the adjustment required by such event before giving effect to such adjustment;
provided, however, that the Company shall deliver to such holder an appropriate
instrument evidencing such holder’s right to receive such additional IPSs or
other securities or property upon the occurrence of the event requiring such
adjustment and the right to receive any distributions made on such additional
IPSs or other securities or property declared in favour of holders of record of
IPSs on and after the Date of Conversion or such later date as such holder
would, but for the provisions of this Section 7.5(e), have become the
holder of record of such additional IPSs pursuant to Section 7.4(b).

 

(f)                                    The
adjustments provided for in this Section 7.5 are cumulative and shall
apply to successive subdivisions, redivisions, reductions, combinations,
consolidations, distributions, issues or other events resulting in any
adjustment under the provisions of this Section, provided that, notwithstanding
any other provision of this Section, no adjustment of the Conversion Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Conversion Price then in effect; provided however, that
any adjustments which by reason of this Section 7.5(f) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.

 

(g)                                 In
the event of any question arising with respect to the adjustments provided in
this Section 7.5, such question shall be conclusively determined by a firm
of chartered accountants appointed by the Company and acceptable to the
Debenture Trustee (who may be the auditors of the Company); such accountants
shall have access to all necessary records of the Company and such
determination shall be binding upon the Company,  the Debenture Trustee, and the Debentureholders.

 

(h)                                 In
case the Company shall take any action, or any event shall occur, affecting the
IPSs other than action described in this Section 7.5, which in the opinion
of the Directors, would materially affect the rights of Debentureholders, the
Conversion Price and the IPSs, Common Shares, Subordinated Notes or other
securities or property issuable or deliverable upon a conversion of Debentures,
as applicable, shall be adjusted in such manner and at such time, by action of
the Directors, subject to, as required, the prior written consent of the TSX
(or, if the Debentures are not listed thereon, such other exchange on which the
Debentures are then listed), as the Directors, in their sole discretion may
determine to be equitable in the circumstances. 
Failure of the Directors to make such an adjustment shall be conclusive
evidence that they have determined that it is equitable to make no adjustment
in the circumstances.

 

(i)                                     Subject
to, as required, the prior written consent of the TSX (or, if the Debentures
are not listed thereon, such other exchange on which the Debentures are then
listed), no adjustment in the Conversion Price shall be made in respect of any
event described in Sections 7.5(a), 7.5(b) or 7.5(c) other than the
events described in 7.5(a)(i) or 7.5(a)(ii) if the holders of the
Debentures are entitled to participate in such event on the same terms mutatis mutandis as though and with the same
effect as if they had 

 

56

 

converted their Debentures
prior to the effective date or record date, as the case may be, of such event.

 

(j)                                     Except
as stated above in this Section 7.5, no adjustment will be made in the
Conversion Price for any Debentures as a result of the issuance of IPSs at less
than the Current Market Price for such IPSs on the date of issuance.

 

7.6                                                                               No Requirement to Issue Fractional IPSs

 

The Company shall not be required to cause the
issuance of fractional IPSs upon the conversion of Debentures pursuant to this
Article.  If more than one Debenture shall
be surrendered for conversion at one time by the same holder, the number of
whole IPSs issuable upon conversion thereof shall be computed on the basis of
the aggregate principal amount of such Debentures to be converted.  If any fractional interest in an IPS would,
except for the provisions of this Section, be deliverable upon the conversion
of any principal amount of Debentures, the Company shall, in lieu of
delivering, or causing the delivery of, any certificate representing such
fractional interest, make a cash payment to the holder of such Debenture of an
amount equal to the Current Market Price of such fractional interest.

 

7.7                                                                               Company to Reserve IPSs

 

The Company covenants with the Debenture Trustee
that it will at all times reserve and keep available out of its authorized IPSs
(if the number thereof is or becomes limited), solely for the purpose of
issuing such IPSs in connection with a conversion of Debentures, such number of
IPSs as shall then be deliverable by the Company upon the conversion of all
outstanding Debentures at that time, to enable and permit the Company to
perform its obligation hereunder to deliver the requisite number of IPSs to
Debentureholders who exercise their conversion rights hereunder.  The Company covenants with the Debenture
Trustee that all IPSs, which shall be so issuable, shall be duly and validly
issued as fully-paid and non-assessable upon receipt by the Company of the
Conversion Price.  The Company further
covenants with the Debenture Trustee that it shall take all actions and do all
things necessary or desirable to enable and permit the Company, in accordance
with applicable law, to perform all of its obligations hereunder.

 

7.8                                                                               Cancellation of Converted Debentures

 

All Debentures converted in whole or in part under the
provisions of this Article shall be forthwith delivered to and cancelled
by the Debenture Trustee and, subject to the provisions of Section 7.4 as
to Debentures converted in part, no Debenture shall be issued in substitution
therefor.

 

7.9                                                                               Certificate as to Adjustment

 

The Company shall from time to time immediately
after it has acquired actual knowledge of the occurrence of any event which
requires an adjustment or readjustment as provided in Section 7.5, deliver
a Certificate of the Manager to the Debenture Trustee specifying the nature of
the event requiring the same and the amount of the adjustment necessitated
thereby and setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based, which certificate and the
amount of the adjustment specified therein may be relied upon by the Debenture
Trustee and shall be verified by an opinion of a nationally recognized firm of
chartered accountants appointed by the Company and acceptable to the Debenture
Trustee (who may be the 

 

57

 

auditors of
the Company) and shall be conclusive and binding on all parties in
interest.  When so approved, the Company
shall, except in respect of any subdivision, redivision, reduction, combination
or consolidation of IPSs, forthwith give notice to the Debentureholders in the
manner provided in Section 15.2 specifying the event requiring such
adjustment or readjustment and the results thereof, including the resulting
Conversion Price.

 

7.10                                                                        Notice of Special Matters

 

The Company covenants with the Debenture Trustee
that so long as any Debenture remains outstanding, it will give written notice
to the Debenture Trustee, and to the Debentureholders in the manner provided in
Section 15.2, of its intention to fix a record date for any event referred
to in Section 7.5(a), (b) or (c) or (d) (other than the
subdivision, redivision, reduction, combination or consolidation of its IPSs)
which may give rise to an adjustment in the Conversion Price, and, in each
case, such notice shall specify the particulars of such event and the record
date and the effective date for such event; provided that the Company shall
only be required to specify in such notice such particulars of such event as
shall have been fixed and determined on the date on which such notice is
given.  Such notice shall be given not
less than fourteen (14) days in each case prior to such applicable record date.

 

7.11                                                                        Protection of Debenture Trustee

 

Subject to Section 16.3,
the Debenture Trustee:

 

(a)                                  shall
not at any time be under any duty or responsibility to any Debentureholder to
determine whether any facts exist which may require any adjustment in the
Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed in making the
same;

 

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

 

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

 

7.12                                                                        Allocation of IPSs

 

Upon the conversion of Debentures into IPSs pursuant
to this Article 7, the Company
will allocate the fair market value of such Debentures between the Common
Shares and Subordinated Notes represented by IPSs acquired on the conversion on
a reasonable basis.  Such determinations
will be disclosed in the continuous disclosure documentation of the Company as
filed with the applicable securities regulators from time to time.  By purchasing a Debenture, the holder (i) is
deemed to agree to such allocation, which shall be incorporated into this
Indenture by reference and binding upon the parties hereto and all holders, and
(ii) agrees not to take a contrary position for any purpose.

 

58

 

ARTICLE 8

COVENANTS OF THE COMPANY

 

The Company hereby covenants and agrees with the
Debenture Trustee for the benefit of the Debenture Trustee and the
Debentureholders, that so long as any Debentures remain outstanding:

 

8.1                                                                               To Pay Principal and Interest

 

Subject at all times to the provisions of Article 6
hereof, the Company will duly and punctually pay or cause to be paid to every
Debentureholder the principal of and interest accrued on the Debentures of
which it is the holder on the dates, at the places and in the manner mentioned
herein and in the Debentures.

 

8.2                                                                               To Pay Debenture Trustee’s Remuneration

 

The Company will pay the Debenture Trustee
reasonable remuneration for its services as Debenture Trustee hereunder and will
repay to the Debenture Trustee on demand all monies which shall have been paid
by the Debenture Trustee in connection with the execution of the trusts hereby
created and such monies including the Debenture Trustee’s remuneration, shall
be payable out of any funds coming into the possession of the Debenture Trustee
in priority to any of the Debentures or interest thereon.  Any amount due under this Section and
unpaid thirty days after written request for such payment shall bear interest
from the expiration of such thirty days at a rate per annum equal to the then
rate charged by the Debenture Trustee under similar indentures from time to
time, payable on demand.  Such
remuneration shall continue to be payable until the trusts hereof be finally
wound up and whether or not the trusts of this Indenture shall be in the course
of administration by or under the direction of a court of competent
jurisdiction.

 

8.3                                                                               To Give Notice of Default

 

The Company shall notify the Debenture Trustee in
writing immediately upon obtaining knowledge of any Event of Default hereunder.

 

8.4                                                                               Preservation of Existence, etc.

 

Subject to Article 12 hereof, the Company
shall, and shall cause each Significant Entity in which it directly or
indirectly owns more than 50% of the total voting or equity interests and (to
the extent that the Company has any direct or indirect contractual or other
approval rights over the actions of such Significant Entity) any of its other
Significant Entities, to preserve, renew and maintain in full force and effect
its legal existence and good standing under the laws of the jurisdiction of its
organization; and, except where failure to do so would not have a Material
Adverse Effect, take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct
of its business.

 

8.5                                                                               Keeping of Books

 

The Company will keep or cause to be kept proper
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of the Company in
accordance with generally accepted accounting principles.

 

59

 

8.6                                                                               Reporting Requirements

 

In the event that the Company has Global Debentures
outstanding, the Company  will
provide the Depository with copies of continuous disclosure documents furnished
to holders of its IPSs under Applicable Securities Legislation.

 

8.7                                                                               Performance of Covenants by Debenture
Trustee

 

If the Company shall fail to perform any of its
covenants contained in this Indenture, the Debenture Trustee may notify the
Debentureholders of such failure on the part of the Company or may itself
perform any of the covenants capable of being performed by it, but (subject to
Sections 9.2 and 16.3) shall be under no obligation to do so or to notify the
Debentureholders.  All sums so expended
or advanced by the Debenture Trustee shall be repayable as provided in Section 8.2.  No such performance, expenditure or advance
by the Debenture Trustee shall be deemed to relieve the Company of any default
hereunder or from its continuing indebtedness.

 

8.8                                                                               Listing

 

The Company shall use commercially reasonable
efforts to ensure that the IPSs and the Debentures, respectively, are listed
and posted for trading on the TSX (and the Common Shares forming part of IPSs
are listed on the TSX), and shall maintain such listing and posting for trading
of the IPSs and the Debentures, respectively, and the Common Shares, on the
TSX, and to maintain the Company’s status as a “reporting issuer” not in
default of Applicable Securities Legislation.

 

8.9                                                                               Regarding Redemption

 

The Company shall not exercise its redemption rights
under Article 3 of the Subordinated Note Indenture until such time as
there are no longer any Debentures outstanding unless the Company redeems the
Debentures concurrently with the Subordinated Notes.

 

8.10                                                                        Regarding Covenants

 

Notwithstanding anything to
the contrary contained herein, none of the covenants listed herein shall
operate as being more restrictive than the analogous covenants in the
Subordinated Note Indenture and Senior Credit Agreements.

 

ARTICLE 9

DEFAULT

 

9.1                                                                               Events of Default

 

Each of the following events
constitutes, and is herein sometimes referred to as, an “Event of Default”:

 

(a)                                  failure
for 30 days to pay interest on the Debentures when due;

 

60

 

(b)                                 failure
to pay principal or premium, if any, on the Debentures when due whether at
maturity, upon redemption, by declaration or otherwise;

 

(c)                                  the
Company fails to comply with Article 12 hereof;

 

(d)                                 the
Company or any Major Significant Entity of the Company pursuant to or within
the meaning of any Bankruptcy Law:

 

(i)                                     commences a
voluntary case or proceeding;

 

(ii)                                  consents to
the entry of an order for relief against it in an involuntary case or
proceeding;

 

(iii)                               consents to
the appointment of a custodian of it or for any substantial part of its
property; or

 

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

 

or takes any
comparable action under any foreign laws relating to insolvency;

 

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

 

(i)                                     is for
relief against the Company or any Major Significant
Entity of the Company in an involuntary case;

 

(ii)                                  appoints a
custodian of the Company or any Major Significant
Entity of the Company or for any substantial part of the property of the
Company or any Major Significant
Entity of the Company; or

 

(iii)                               orders the
winding up or liquidation of the Company or any Major Significant
Entity of the Company;

 

or any
similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 90 days;

 

(f)                                    if a
resolution is passed for the winding-up or liquidation of the Company except in
the course of carrying out or pursuant to a transaction in respect of which the
conditions of Section 12.1 are duly observed and performed;

 

(g)                                 if,
after the date of this Indenture, any proceedings with respect to the Company
are taken with respect to a compromise or arrangement, with respect to
creditors of the Company generally, under the applicable legislation of any
jurisdiction;

 

(h)                                 default
in the observance or performance of any material covenant or condition of this
Indenture by the Company for a period of 30 days after notice in writing has
been given by the Debenture Trustee to the Company, as applicable, specifying
such default and requiring the Company, as applicable, to remedy such default;
or

 

61

 

(i)                                     failure
by the Company or any Significant Entity of the Company to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) inclusive of any grace, extension, forbearance or similar
period, in respect of any Indebtedness having an aggregate principal amount
(including undrawn or unavailable amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
U.S. $10,000,000 or failure to observe or perform any other agreement or
condition relating to any Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs
for a period beyond the applicable grace, cure, extension, forbearance or other
similar period the effect of which default or other event is to cause, or to
permit the holder or holders of such indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased or
redeemed (automatically or otherwise) prior to its stated maturity.

 

In each and every such event the Debenture Trustee
may, in its discretion, and shall, upon receipt of a request in writing signed
by the holders of not less than 25% in principal amount of the Debentures then
outstanding, and upon being indemnified to its reasonable satisfaction against
all fees, costs, expenses and liabilities to be incurred, subject to the provisions
of Section 9.3, by notice in writing to the Company declare the principal
of (and premium, if any) and interest on all Debentures then outstanding and
all other monies outstanding hereunder to be due and payable and the same shall
forthwith become immediately due and payable to the Debenture Trustee, and the
Company shall subject to Article 6 forthwith pay to the Debenture Trustee
for the benefit of the Debentureholders such principal, premium, if any,
accrued and unpaid interest and interest on amounts in default on such
Debenture and all other monies outstanding hereunder, together with subsequent
interest at the rate borne by the Debentures on such principal, interest and
such other monies from the date of such declaration until payment is received
by the Debenture Trustee, such subsequent interest to be payable at the times
and places and in the monies mentioned in and according to the tenor of the
Debentures.  Such payment when made shall
be deemed to have been made in discharge of the Company’s obligations hereunder
and any monies so received by the Debenture Trustee shall be applied in the
manner provided in Section 9.6.  For
greater certainty, for the purposes of this Section 9.1, a series of
Debentures shall be in default in respect of an Event of Default if such Event
of Default relates to a default in the payment of principal, premium, if any,
or interest on the Debentures of such series in which case references to
Debentures in this Section 9.1 refer to Debentures of that particular
series.  For purposes of this Article 9,
where the Event of Default refers to an Event of Default with respect to a
particular series of Debentures as described in this Section 9.1, then
this Article 9 shall apply mutatis
mutandis to the Debentures of such series and references in this Article 9
to the Debentures shall mean Debentures of the particular series and references
to the Debentureholders shall refer to the Debentureholders of the particular
series, as applicable.

 

9.2                                                                               Notice of Events of Default

 

If an Event of Default shall occur and be continuing
the Debenture Trustee shall, within 30 days after it receives written notice of
the occurrence of such Event of Default, give notice of such Event of
Default:  (i) to the
Debentureholders in the manner provided in Section 15.1; and (ii) relying
upon contact information provided by the Company from time to time, to the
agent(s) under the Senior Credit Agreements, provided that the Debenture
Trustee shall be entitled to rely on such notice and shall not be subject to
any liability as a result of its inadvertent failure to provide such 

 

62

 

notice. 
Notwithstanding the foregoing, unless the Debenture Trustee shall have
been requested to do so by the holders of at least 25% of the principal amount
of the Debentures then outstanding, the Debenture Trustee shall not be required
to give such notice if the Debenture Trustee in good faith shall have
determined that the withholding of such notice is in the best interests of the
Debentureholders and shall have so advised the Company in writing.

 

When notice of the occurrence of an Event of Default
has been given and the Event of Default is thereafter cured, notice that the
Event of Default is no longer continuing shall be given by the Debenture
Trustee to the Debentureholders within 15 days after the Debenture Trustee
receives written notice that the Event of Default has been cured.

 

9.3                                                                               Waiver of Default

 

Upon the happening of any
Event of Default hereunder:

 

(a)                                  the
holders of the Debentures shall have the power (in addition to the powers
exercisable by Extraordinary Resolution as hereinafter provided) by requisition
in writing by the holders of a majority of the principal amount of Debentures
then outstanding or by Ordinary Resolution of Debentureholders at a meeting
held in accordance with Article 14 hereof, to instruct the Debenture
Trustee to waive any Event of Default and to cancel any declaration made by the
Debenture Trustee pursuant to Section 9.1 and the Debenture Trustee shall
thereupon waive the Event of Default and cancel such declaration, or either,
upon such terms and conditions as shall be prescribed in such requisition;
provided that notwithstanding the foregoing, if the Event of Default has
occurred by reason of the non-observance or non-performance by the Company of
any covenant applicable only to one or more series of Debentures, then the
holders of a majority of the principal amount of the outstanding Debentures of
that series shall be entitled to exercise the foregoing power and the Debenture
Trustee shall so act and it shall not be necessary to obtain a waiver from the
holders of any other series of Debentures; and

 

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

 

No such act or omission either of the
Debenture Trustee or of the Debentureholders shall extend to or be taken in any
manner whatsoever to affect any subsequent Event of Default or the rights
resulting therefrom.

 

9.4                                                                               Enforcement by the Debenture Trustee

 

Subject to the provisions of Section 9.3 and to
the provisions of any Extraordinary Resolution that may be passed by the
Debentureholders, if the Company shall fail to pay to the Debenture Trustee,
forthwith after the same shall have been declared to be due and payable under 

 

63

 

Section 9.1, the principal of and
premium (if any) and interest on all Debentures then outstanding, together with
any other amounts due hereunder, the Debenture Trustee may in its discretion
and shall upon receipt of a request in writing signed by the holders of not
less than 25% in principal amount of the Debentures then outstanding and upon
being funded and indemnified to its reasonable satisfaction against all costs,
expenses and liabilities to be incurred, proceed in its name as trustee
hereunder to obtain or enforce payment of such principal of and premium (if
any) and interest on all the Debentures then outstanding together with any
other amounts due hereunder by such proceedings authorized by this Indenture or
by law or equity as the Debenture Trustee in such request shall have been
directed to take, or if such request contains no such direction, or if the
Debenture Trustee shall act without such request, then by such proceedings authorized
by this Indenture or by suit at law or in equity as the Debenture Trustee shall
deem expedient.

 

The Debenture Trustee shall be entitled and
empowered, either in its own name or as trustee of an express trust, or as
attorney-in-fact for the holders of the Debentures, or in any one or more of
such capacities, to file such proof of debt, amendment of proof of debt, claim,
petition or other document as may be necessary or advisable in order to have
the claims of the Debenture Trustee and of the holders of the Debentures
allowed in any insolvency, bankruptcy, liquidation or other judicial
proceedings relative to the Company or its creditors or relative to or
affecting its property.  The Debenture
Trustee is hereby irrevocably appointed (and the successive respective holders
of the Debentures by taking and holding the same shall be conclusively deemed
to have so appointed the Debenture Trustee) the true and lawful
attorney-in-fact of the respective holders of the Debentures with authority to
make and file in the respective names of the holders of the Debentures or on
behalf of the holders of the Debentures as a class, subject to deduction from
any such claims of the amounts of any claims filed by any of the holders of the
Debentures themselves, any proof of debt, amendment of proof of debt, claim,
petition or other document in any such proceedings and to receive payment of
any sums becoming distributable on account thereof, and to execute any such
other papers and documents and to do and perform any and all such acts and
things for and on behalf of such holders of the Debentures, as may be necessary
or advisable in the opinion of the Debenture Trustee, in order to have the
respective claims of the Debenture Trustee and of the holders of the Debentures
against the Company or its property allowed in any such proceeding, and to
receive payment of or on account of such claims; provided, however, that
subject to Section 9.3,  nothing
contained in this Indenture shall be deemed to give to the Debenture Trustee,
unless so authorized by Extraordinary Resolution, any right to accept or
consent to any plan of reorganization or otherwise by action of any character
in such proceeding to waive or change in any way any right of any
Debentureholder.

 

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

 

All rights of action hereunder may be enforced by
the Debenture Trustee without the possession of any of the Debentures or the
production thereof at the trial or other proceedings relating thereto.  Any such suit or proceeding instituted by the
Debenture Trustee shall be brought in the name of the Debenture Trustee as
trustee of an express trust, and any recovery of judgment shall be for the
rateable benefit of the holders of the Debentures subject to the provisions of
this Indenture.  In any proceeding
brought by the Debenture Trustee (and also any proceeding in which a
declaratory judgment of a court may be sought as to the interpretation or
construction of any provision of this Indenture, to which the Debenture Trustee
shall be a party) the Debenture Trustee shall be held to 

 

64

 

represent all the holders of the Debentures,
and it shall not be necessary to make any holders of the Debentures parties to
any such proceeding.

 

9.5                                                                               No Suits by Debentureholders

 

No holder of any Debenture shall have any right to
institute any action, suit or proceeding at law or in equity for the purpose of
enforcing payment of the principal of or premium (if any) or interest on the
Debentures or for the execution of any trust or power hereunder or for the
appointment of a liquidator or receiver or for a receiving order under the Bankruptcy and Insolvency Act (Canada) or
any other bankruptcy, insolvency or analogous laws, or to have the Company
wound up or to file or prove a claim in any liquidation or bankruptcy
proceeding or for any other remedy hereunder, unless: (a) such holder
shall previously have given to the Debenture Trustee written notice of the
happening of an Event of Default hereunder; and (b) the Debentureholders
by Extraordinary Resolution or by written instrument signed by the holders of
at least 25% in principal amount of the Debentures then outstanding shall have
made a request to the Debenture Trustee and the Debenture Trustee shall have
been afforded reasonable opportunity either itself to proceed to exercise the
powers hereinbefore granted or to institute an action, suit or proceeding in
its name for such purpose; and (c) the Debentureholders or any of them
shall have furnished to the Debenture Trustee, when so requested by the
Debenture Trustee, sufficient funds and security and indemnity satisfactory to
it against the costs, expenses and liabilities to be incurred therein or
thereby; and (d) the Debenture Trustee shall have failed to act within a
reasonable time after such notification, request and offer of indemnity and
such notification, request and offer of indemnity are hereby declared in every
such case, at the option of the Debenture Trustee, to be conditions precedent
to any such proceeding or for any other remedy hereunder by or on behalf of the
holder of any Debentures.

 

9.6                                                                               Application of Monies by Debenture
Trustee

 

(a)                                  Except
as herein otherwise expressly provided, any monies received by the Debenture
Trustee from the Company pursuant to the foregoing provisions of this Article 9,
or as a result of legal or other proceedings or from any trustee in bankruptcy
or liquidator of the Company, shall be applied, together with any other monies
in the hands of the Debenture Trustee available for such purpose, as follows:

 

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

 

(ii)                                  second,
but subject as hereinafter in this Section 9.6 provided, in payment,
rateably and proportionately to (and in the case of applicable withholding taxes,
if any, on behalf of) the holders of Debentures, of the principal of and
premium (if any) and accrued and unpaid interest and interest on amounts in
default on the Debentures which shall then be outstanding in the priority of
principal first and then premium and then accrued and unpaid interest and
interest on amounts in default unless otherwise directed by Extraordinary
Resolution and in that case in such order or priority as between principal,
premium (if any) and interest as may be directed by such resolution; and

 

65

 

(iii)                               third,
in payment of the surplus, if any, of such monies to the Company or its
assigns; provided, however, that no payment shall be made pursuant to clause (ii) above
in respect of the principal, premium or interest on any Debenture held,
directly or indirectly, by or for the benefit of the Company or any of its
Significant Entities (other than any Debenture pledged for value and in good
faith to a person other than the Company or any of its Significant Entities but
only to the extent of such person’s interest therein) except subject to the
prior payment in full of the principal, premium (if any) and interest (if any)
on all Debentures which are not so held.

 

(b)                                 The
Debenture Trustee shall not be bound to apply or make any partial or interim
payment of any monies coming into its hands if the amount so received by it,
after reserving thereout such amount as the Debenture Trustee may think
necessary to provide for the payments mentioned in Section 9.6(a), is
insufficient to make a distribution of at least 2% of the aggregate principal
amount of the outstanding Debentures, but it may retain the money so received
by it and invest or deposit the same as provided in Section 16.9 until the
money or the investments representing the same, with the income derived
therefrom, together with any other monies for the time being under its control
shall be sufficient for the said purpose or until it shall consider it
advisable to apply the same in the manner hereinbefore set forth.  The foregoing shall, however, not apply to a
final payment or distribution hereunder.

 

9.7                                                                               Notice of Payment by Debenture Trustee

 

Not less than 15 days notice shall be given in the
manner provided in Section 15.2 by the Debenture Trustee to the
Debentureholders of any payment to be made under this Article 9.  Such notice shall state the time when and
place where such payment is to be made and also the liability under this
Indenture to which it is to be applied. 
After the day so fixed, unless payment shall have been duly demanded and
have been refused, the Debentureholders will be entitled to interest only on
the balance (if any) of the principal monies, premium (if any) and interest due
(if any) to them, respectively, on the Debentures, after deduction of the
respective amounts payable in respect thereof on the day so fixed.

 

9.8                                                                               Debenture Trustee May Demand
Production of Debentures

 

The Debenture Trustee shall have the right to demand
production of the Debentures in respect of which any payment of principal,
interest or premium required by this Article 9 is made and may cause to be
endorsed on the same a memorandum of the amount so paid and the date of
payment, but the Debenture Trustee may, in its discretion, dispense with such
production and endorsement, upon such indemnity being given to it and to the
Company as the Debenture Trustee shall deem sufficient.

 

9.9                                                                               Remedies Cumulative

 

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

 

66

 

9.10                                                                        Judgment Against the Company

 

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

 

9.11                                                                        Subordination

 

This Article 9 and the powers, rights and
authority granted to the Debenture Trustee hereunder, are subject to the terms
and provisions of Article 6 and Article 4 of the Guarantee.

 

ARTICLE 10

SATISFACTION AND DISCHARGE

 

10.1                                                                        Cancellation and Destruction

 

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

 

10.2                                                                        Non-Presentation of Debentures

 

In case the holder of any Debenture shall fail to
present the same for payment on the date on which the principal, premium (if
any) or the interest thereon or represented thereby becomes payable either at
maturity or otherwise or shall not accept payment on account thereof and give such
receipt therefor, if any, as the Debenture Trustee may require:

 

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

 

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

 

the principal, premium (if any) or the interest, as
the case may be (after deduction of any applicable withholding taxes), in trust
to be paid or delivered to the holder of such Debenture upon due presentation
or surrender thereof in accordance with the provisions of this Indenture; and
thereupon the principal, premium (if any) or the interest payable on or represented
by each Debenture in respect whereof such monies have been set aside shall be
deemed to have been paid and the holder thereof shall thereafter have no right
in respect thereof except that of receiving delivery and payment of the monies
(less applicable withholding taxes, if any), so set aside by the Debenture
Trustee upon due presentation and surrender thereof, subject always to Section 10.4.

 

67

 

10.3                                                                        Repayment of Unclaimed Monies

 

Subject to applicable law,
any monies set aside under Section 10.2 and not claimed by and paid to
holders of Debentures as provided in Section 10.2 within ten years after
the date of such setting aside shall be repaid and delivered to the Company by
the Debenture Trustee and thereupon the Debenture Trustee shall be released
from all further liability with respect to such monies and thereafter the
holders of the Debentures in respect of which such monies were so repaid to the
Company shall have no rights in respect thereof except to obtain payment and
delivery of the monies from the Company subject to any limitation provided by
the laws of the Province of Ontario.

 

10.4                                                                        Discharge

 

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

 

10.5                                                                        Satisfaction

 

(a)                                  The
Company shall be deemed to have fully paid, satisfied and discharged all of the
outstanding Debentures of any series and the Debenture Trustee, at the expense
of the Company, shall execute and deliver proper instruments acknowledging the
full payment, satisfaction and discharge of such Debentures, when, with respect
to all of the outstanding Debentures or all of the outstanding Debentures of any
series, as applicable, either:

 

(i)                                     the
Company has deposited or caused to be deposited with the Debenture Trustee as
trust funds or property in trust for the purpose of making payment on such
Debentures, an amount in money sufficient to pay, satisfy and discharge the
entire amount of principal, premium, if any, and interest, if any, to maturity
or any repayment date or Redemption Dates, as the case may be, of such
Debentures; or

 

(ii)                                  the
Company has deposited or caused to be deposited with the Debenture Trustee as
trust property in trust for the purpose of making payment on such Debentures:

 

(A)                              if
the Debentures are issued in Canadian dollars, such amount in Canadian dollars
of direct obligations of, or obligations the principal and interest of which are
guaranteed by, the Government of Canada; or

 

(B)                                if
the Debentures are issued in a currency other than Canadian Dollars, cash in
the currency in which the Debentures are payable and/or such amount in such
currency of direct obligations of, or 

 

68

 

obligations the
principal and interest of which are guaranteed by, the Government of Canada or
the government that issued the currency in which the Debentures are payable,

 

as will, together with the
income to accrue thereon and reinvestment thereof, be sufficient to pay and
discharge the entire amount of principal and accrued and unpaid interest to
maturity or any repayment date, as the case may be, of all such Debentures,
provided that, for the purposes of Section 10.5(a)(ii)(B), the Debenture
Trustee will be entitled to rely on an opinion of Counsel or such other advisor
satisfactory to it in making such a determination;

 

and in either
event:

 

(iii)                               the
Company has paid, caused to be paid or made provisions to the satisfaction of
the Debenture Trustee for the payment of all other sums payable with respect to
all of such Debentures (together with all applicable expenses of the Debenture
Trustee in connection with the payment of such Debentures); and

 

(iv)                              the
Company has delivered to the Debenture Trustee a Certificate of the Manager
stating that all conditions precedent herein provided relating to the payment,
satisfaction and discharge of all such Debentures have been complied with.

 

Any deposits with the Debenture
Trustee referred to in this Section 10.5 shall be irrevocable, subject to Section 10.6,
and shall be made under the terms of an escrow and/or trust agreement in form
and substance satisfactory to the Debenture Trustee and the Company and which
provides for the due and punctual payment of the principal of, and interest and
premium, if any, on the Debentures being satisfied.  In the event that the Debenture Trustee
enters into any such agreement contemplated by this Section 10.5(a), the
Debenture Trustee shall be deemed to have completely and satisfactorily
discharged its duties and obligations under this indenture with respect to the
Debentures being satisfied and all future duties and obligations of the
Debenture Trustee with respect to the satisfied Debentures shall be governed
solely pursuant to the terms of the new escrow and/or trust agreement, as
applicable.

 

(b)                                 Notwithstanding
anything to the contrary in Section 10.5(a), the Debenture Trustee shall
not be obligated to accept holdings of any nature or kind which it does not
hold for its clients in the ordinary course of business.

 

(c)                                  Upon
the satisfaction of the conditions set forth in this Section 10.5 with
respect to all the outstanding Debentures, or all the outstanding Debentures of
any series, as applicable, the terms and conditions of the Debentures,
including the terms and conditions with respect thereto set forth in this
Indenture (other than those contained in Article 2, Article 5, Section 16.18
and the other provisions of this Indenture pertaining to the foregoing
provisions) shall no longer be binding upon or applicable to the Company.

 

(d)                                 Any
funds or obligations deposited with the Debenture Trustee pursuant to this Section 10.5
shall be denominated in the currency or denomination of the Debentures in
respect of which such deposit is made.

 

69

 

(e)                                  If
the Debenture Trustee is unable to apply any money or securities in accordance
with this Section 10.5 by reason of any legal proceeding or any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company’s obligations under this
Indenture and the affected Debentures shall be revived and reinstated as though
no money or securities had been deposited pursuant to this Section 10.5
until such time as the Debenture Trustee is permitted to apply all such money
or securities in accordance with this Section 10.5, provided that if the
Company has made any payment in respect of principal, premium or interest on
Debentures or, as applicable, other amounts because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of
such Debentures to receive such payment from the money or securities held by
the Debenture Trustee.

 

10.6                                                                        Continuance of Rights, Duties and
Obligations

 

Where trust funds or trust property have been
deposited pursuant to Section 10.5, the holders of Debentures and the
Company shall continue to have and be subject to their respective rights,
duties and obligations under Article 2, Article 5, Section 16.18
and the other provisions of this Indenture pertaining to the foregoing
provisions.

 

ARTICLE 11

IPS INTEREST PAYMENT ELECTION

 

11.1                                                                        IPS Interest Payment Election

 

(a)                                  Provided
that no Event of Default has occurred and is continuing and that all necessary
regulatory approvals have been obtained (including any required approval of any
stock exchange on which the Debentures or IPSs are then listed), the Company
shall have the right, at any time and from time to time, to make an IPS
Interest Payment Election in respect of any Interest Obligation, in whole or in
part, by delivering an IPS Interest Payment Election Notice to the Debenture
Trustee no later than the earlier of: (i) the date required by applicable
law or the rules of any stock exchange on which the Debentures or IPSs are
then listed, and (ii) the day which is 15 Business Days prior to the
Interest Payment Date to which the IPS Interest Payment Election relates.

 

(b)                                 Upon
receipt of an IPS Interest Payment Election Notice, the Debenture Trustee
shall, as directed in writing by the Company, as agent of the Company, in
accordance with this Article 11 and such IPS Interest Payment Election
Notice: (i) deliver IPS Bid Requests to the investment banks, brokers or
dealers (each, a “Broker”)
identified by the Company, in its absolute discretion, in the IPS Interest
Payment Election Notice, or (ii) agree to the Company establishing an
account or accounts (in the name of the Debenture Trustee, if necessary) with a
Broker identified by the Company, in its absolute discretion, in the IPS
Interest Payment Election Notice for the purpose of such Broker selling Freely
Tradeable IPSs on behalf of the Company in accordance with the terms hereof
(which Broker shall notify the Company and the Debenture Trustee as such IPSs
are sold and the settlement rules prescribed by securities regulatory
policies shall apply in respect of the payment for such IPSs).  The Broker shall send copies of the monthly
statements and transaction slips in respect of all 

 

70

 

sales of IPSs to the Company
(with a duplicate copy to the Debenture Trustee, or as it may otherwise in
writing direct), as soon as reasonably practicable after preparation
thereof.  All fees payable in respect of
such accounts shall be paid by the Company; provided, however, that it shall be
a condition precedent to the Company establishing such an account with one or
more Brokers that all necessary legal, regulatory and other requirements have
been satisfied by the Company and the Debenture Trustee, if applicable, and the
Company shall assume, to the maximum extent permitted herein and at law, all
responsibility for administering such account(s).  In connection with the IPS Interest Payment
Election, the Debenture Trustee shall have the power to: (i) accept
delivery of the IPSs from the Company and process the IPSs in accordance with
the IPS Interest Payment Election Notice, (ii) accept bids with respect
to, and consummate sales of, such IPSs, each as the Company shall direct in its
absolute discretion through the Broker identified by the Company in the IPS
Interest Payment Election Notice, (iii) invest the proceeds of such sales
in Canadian Government Obligations which mature prior to the applicable
Interest Payment Date, (iv) deliver proceeds to holders of Debentures to
satisfy all or a portion of the Company’s Interest Obligations, as directed by
the Company in the IPS Interest Payment Election Notice, and (v) perform
any other action necessarily incidental thereto as directed by the Company in
its absolute discretion.  The IPS
Interest Payment Election Notice shall, where the Debenture Trustee delivers
IPS Bid Requests, direct the Debenture Trustee to solicit and accept only, and
each IPS Bid Request shall provide that the acceptance of any bid is
conditional on the acceptance of, sufficient bids to result in aggregate net
proceeds from such issue and sale of IPSs which, together with the cash payments
to be made by the Company, if any, equal the Interest Obligation on the IPS
Delivery Date.

 

(c)                                  The
IPS Interest Payment Election Notice shall provide confirmation from the
Company that all necessary regulatory approvals have been obtained and shall
also provide for, and all bids, if any, shall be subject to, the right of the
Company, by delivering written notice to the Debenture Trustee at any time
prior to the consummation of such delivery and sale of the IPSs on the IPS
Delivery Date, to withdraw the IPS Interest Payment Election (which shall have
the effect of withdrawing each related IPS Bid Request), whereupon the Company
shall be obliged to pay in cash the Interest Obligation in respect of which the
IPS Interest Payment Election Notice has been delivered.

 

(d)                                 Any
sale of IPSs pursuant to this Article 11 may be made to one or more
Persons whose bids are solicited.

 

(e)                                  The
amount receivable in cash by a holder of a Debenture in respect of the Interest
Obligation or the entitlement thereto will not be affected by whether or not
the Company elects to satisfy the Interest Obligation pursuant to an IPS
Interest Payment Election.

 

(f)                                    The
Debenture Trustee shall inform the Company promptly following receipt of any
bid or bids for IPSs solicited pursuant to the IPS Bid Requests.  The Debenture Trustee shall accept such bid
or bids as the Company, in its absolute discretion, shall direct by Written
Direction of the Manager, provided that the aggregate net proceeds of all sales
of IPSs through the facilities of a registered broker/dealer resulting from 

 

71

 

the acceptance of such bids,
together with the amount of any cash payment by the Company, on the IPS
Delivery Date, must be equal to the related IPS Interest Payment Election
Amount in connection with any bids so accepted. 
The Company, the Debenture Trustee (if required by the Company in its
absolute discretion) and the applicable bidders shall, not later than the IPS
Delivery Date, enter into IPS Purchase Agreements in a form satisfactory to the
Debenture Trustee and shall comply with all Applicable Securities Legislation,
including the securities rules and regulations of any stock exchange on
which the Debentures or IPSs are then listed. 
The Company shall pay all fees and expenses in connection with the IPS
Purchase Agreements including the fees and commissions charged by the
investment banks, brokers and dealers and the fees of the Debenture Trustee.

 

(g)                                 Provided
that (i) all conditions specified in each IPS Purchase Agreement to the
closing of all sales thereunder have been satisfied, other than the delivery of
the IPSs to be sold thereunder against payment of the purchase price thereof,
and (ii) the purchasers under each IPS Purchase Agreement shall be ready,
willing and able to perform thereunder, in each case on the IPS Delivery Date,
the Company shall, on the IPS Delivery Date, deliver to the Debenture Trustee
the IPSs to be sold on such date through the facilities of a registered
broker/dealer, an amount in cash equal to the value of any fractional IPSs and
a Certificate of the Manager to the effect that all conditions precedent to
such sales, including those set forth in this Indenture and in each IPS
Purchase Agreement, have been satisfied. 
Upon such deliveries, the Debenture Trustee shall consummate such sales
through the facilities of a registered broker/dealer on such IPS Delivery Date
by the delivery of the IPSs to such purchasers against payment to the Debenture
Trustee in immediately available funds of the purchase price therefor.

 

(h)                                 The
Debenture Trustee shall, on the IPS Delivery Date, use the sale proceeds of the
IPSs (together with any cash received from the Company) to purchase, on the
direction of the Company in writing, Canadian Government Obligations which
mature prior to the applicable Interest Payment Date and which the Debenture
Trustee is required to hold until maturity (the “IPS Proceeds Investment”) and shall, on such date,
deposit the balance, if any, of such sale proceeds in the Property Account for
such Debentures.  The Debenture Trustee
shall hold such IPS Proceeds Investment (but not income earned thereon) under
its exclusive control in an irrevocable trust for the benefit of the holders of
the Debentures.  At least one Business
Day prior to the Interest Payment Date, the Debenture Trustee shall deposit
amounts from the proceeds of the IPS Proceeds Investment in the Property
Account to bring the balance of the Property Account to the IPS Interest
Payment Election Amount.  On the Interest
Payment Date, the Debenture Trustee shall pay the amount held in the Property
Account to the holders of record of the Debentures on the record date of such
Interest Payment Date (less any tax required to be withheld, if any) and,
provided that there is no Event of Default, shall remit amounts, if any, in
respect of income earned on the IPS Proceeds Investment or otherwise in excess
of the IPS Interest Payment Election Amount to the Company.

 

(i)                                     Neither
the making of an IPS Payment Election nor the consummation of sales of IPSs on
an IPS Delivery Date shall (i) result in the holders of the Debentures not
being entitled to receive on the applicable Interest Payment Date cash in an
aggregate 

 

72

 

amount equal to the Interest
Obligation payable on such date or (ii) entitle or require such holders to
receive any Freely Tradeable IPSs in satisfaction of such Interest Obligation.

 

ARTICLE 12

SUCCESSORS

 

12.1                                                                        Restrictions on Amalgamation, Merger
and Sale of Certain Assets, etc.

 

(a)                                  The
Company will not consolidate or merge with or into or wind up into (whether or
not the Company is the surviving corporation) or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to any Person unless:

 

(i)                                     the
Company is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been
made is a corporation, partnership or limited liability company organized or
existing under the laws of Canada or any province or territory thereof (the
Company or such Person, as the case may be, being herein called the “Successor Company”);

 

(ii)                                  the
Successor Company (if other than the Company) expressly assumes all the
obligations of the Company under this Indenture, the Debentures and any related
security pursuant to a supplemental indenture or other documents or instruments
in form reasonably satisfactory to the Debenture Trustee;

 

(iii)                               all
of the Guarantees of the Debentures, Security Documents, and related security,
remain in full force and effect or replacement guarantees and security reasonably
satisfactory to the Debenture Trustee are provided;

 

(iv)                              immediately
after giving effect to such transaction (and treating any indebtedness which
becomes an obligation of the Successor Company or any of its Significant
Entities as a result of such transaction as having been incurred by the
Successor Company or such Significant Entity at the time of such transaction)
no Default or Event of Default shall have occurred and be continuing;

 

(v)                                 immediately
after giving pro forma effect to such transaction, as if such transaction had
occurred at the beginning of the applicable four-quarter period the Cash Flow
Coverage Ratio for the Successor Company and its Significant Entities would be
greater than or equal to such ratio for the Company and its Significant
Entities immediately prior to such transaction;

 

(vi)                              each
party to the Debentures and Security Documents, unless they are the other party
to the transactions described above, will have by supplemental securities and
guarantees confirmed that such securities and guarantees will apply to such
Person’s obligations under the Debentures and Security Documents (or, such
parties will have entered into guarantees of the 

 

73

 

Debentures in form and
substance substantially the same as the Security Documents); and

 

(vii)                           the
Company will have delivered to the Debenture Trustee a Certificate of the
Manager and an opinion of Counsel stating that such consolidation, merger or
transfer and such supplemental debentures, security documents and indenture (if
any) (or guarantees of the Debentures) comply with this Indenture.

 

The Successor Company shall succeed to, and be
substituted for, the Company under this Indenture and the Debentures.
Notwithstanding the foregoing Sections 12.1(a)(iii) and 12.1(a)(iv), (a) any
Significant Entity of the Company may consolidate with, merge into or transfer
all or part of its properties and assets to the Company or to another
Significant Entity of the Company, and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another province or territory of Canada so long as the amount of indebtedness
of the Company and its Significant Entities is not increased thereby.

 

(b)                                 Subject
to the provisions of a Guarantee governing the release of the Guarantee upon
the sale or disposition of a Guarantor that is a Significant Entity of the
Company, each Guarantor shall not, and the Company shall not permit a Guarantor
to, consolidate or merge with or into or wind up into (whether or not such
Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, any Person unless:

 

(i)                                     such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation, partnership or limited liability company organized
or existing under the laws of Canada or the United States or any province or
territory of Canada or state of the United States (such Guarantor or such
Person, as the case may be, being herein called the “Successor Guarantor”);

 

(ii)                                  the
Successor Guarantor (if other than such Guarantor) expressly assumes all the
obligations of such Guarantor under this Indenture and such Guarantor’s
Guarantee and related security pursuant to a supplemental indenture or other
documents or instruments in form reasonably satisfactory to the Trustee;

 

(iii)                               immediately
after giving effect to such transaction (and treating any indebtedness which
becomes an obligation of the Successor Guarantor or any of its Significant
Entities as a result of such transaction as having been incurred by the
Successor Guarantor or such Significant Entity at the time of such transaction)
no Default or Event of Default shall have occurred and be continuing; and

 

(iv)                              the
Guarantor shall have delivered or caused to be delivered to the Trustee a
Certificate of the Manager and an opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.

 

74

 

Subject to the provisions of a Guarantee governing
the release of the Guarantee, the Successor Guarantor shall succeed to, and be
substituted for, such Guarantor under this Indenture and such Guarantor’s
Guarantee. Notwithstanding the foregoing Section 12.1(b)(iii), a Guarantor
may merge with an Affiliate incorporated solely for the purpose of
reincorporating such Guarantor in another state of the United States or
province or territory of Canada so long as the amount of indebtedness of the
Guarantor is not increased thereby.

 

12.2                                                                        Vesting of Powers in Successor

 

Notwithstanding Section 12.1, whenever the
conditions of Section 12.1 shall have been duly observed and performed,
any Successor formed by or resulting from such transaction shall succeed to,
and be substituted for, and may exercise every right and power of the Company
under this Indenture with the same effect as though the Successor had been
named as the Company herein and thereafter, except in the case of a lease or
other similar disposition of property to the Successor or the disposition of
less than all of the Company’s undertaking, property and assets to the
Successor, the Company shall be relieved of all obligations and covenants under
this Indenture and the Debentures forthwith upon the Company delivering to the
Debenture Trustee an opinion of Counsel to the effect that the transaction
shall not result in any material adverse tax consequences to the Company or the
Successor.  The Debenture Trustee will,
at the expense of the Successor, execute any documents which it may be advised
by Counsel are necessary or advisable for effecting or evidencing such release
and discharge.

 

ARTICLE 13

COMPULSORY ACQUISITION

 

13.1                                                                        Definitions

 

In this Article:

 

(a)                                  “Affiliate” and “Associate” shall have their
respective meanings set forth in the Securities Act (Ontario);

 

(b)                                 “Dissenting Debentureholders” means a
Debentureholder who does not accept an Offer referred to in Section 13.2
and includes any assignee of the Debenture of a Debentureholder to whom such an
Offer is made, whether or not such assignee is recognized under this Indenture;

 

(c)                                  “Offer” means an offer to acquire outstanding
Debentures where, as of the date of the offer to acquire, the Debentures that
are subject to the offer to acquire, together with the Offeror’s Debentures,
constitute in the aggregate 20% or more of the outstanding principal amount of
the Debentures;

 

(d)                                 “offer to acquire” includes an offer to
purchase, or a satisfaction of an offer to sell, an acceptance of an offer to
sell whether or not such offer to sell has been solicited or any combination
thereof and the Person accepting an offer to sell shall be deemed to be making
an offer to acquire to the Person that made the offer to sell;

 

(e)                                  “Offeror” means a Person, or two or
more Persons acting jointly or in concert, who make an Offer to acquire
Debentures;

 

75

 

(f)                                    “Offeror’s Debentures” means Debentures
beneficially owned, or over which control or direction is exercised, on the
date of an Offer by the Offeror, any Affiliate or Associate of the Offeror or
any person or the Company acting jointly or in concert with the Offeror; and

 

(g)                                 “Offeror’s Notice” means the notice described
in Section 13.3.

 

13.2                                                                        Offer for Debentures

 

If an Offer for outstanding Debentures of a
series (other than Debentures held by or on behalf of the Offeror or an
Affiliate or Associate of the Offeror) is made and:

 

(a)                                  within
at least 35 days but not more than 4 months after the date the Offer is made,
the Offer is accepted by Debentureholders representing at least 90% of the
outstanding principal amount of the Debentures, other than the Offeror’s
Debentures;

 

(b)                                 the
Offeror is bound to take up and pay for, or has taken up and paid for the
Debentures of the Debentureholders who accepted the Offer; and

 

(c)                                  the
Offeror complies with Sections 13.3 and 13.5;

 

the Offeror is entitled to
acquire, and the Dissenting Debentureholders are required to sell to the
Offeror, the Debentures held by the Dissenting Debentureholder for the same
consideration per Debenture payable or paid, as the case may be, under the
Offer.

 

13.3                                                                        Offeror’s Notice to Dissenting
Debentureholders

 

Where an Offeror is entitled to acquire
Debentures held by Dissenting Debentureholders pursuant to Section 13.2
and the Offeror wishes to exercise such right, the Offeror shall send by
registered mail within 30  days
after the date of termination of the Offer a notice (the “Offeror’s Notice”) to each Dissenting
Debentureholder stating that:

 

(a)                                  Debentureholders
holding at least 90% of the principal amount of all outstanding Debentures,
other than Offeror’s Debentures, have accepted the Offer;

 

(b)                                 the
Offeror is bound to take up and pay for, or has taken up and paid for, the
Debentures of the Debentureholders who accepted the Offer;

 

(c)                                  Dissenting
Debentureholders must elect to:

 

(i)                                     transfer
their respective Debentures to the Offeror on the terms on which the Offeror
acquired the Debentures of the Debentureholders who accepted the Offer within
21  days after the date of the
sending of the Offeror’s Notice; or

 

(ii)                                  demand
payment of fair value for their Debentures pursuant to Section 13.8 hereof
by notifying the Offeror within 21 days after the date of receiving the Offeror’s
Notice; and

 

(d)                                 any
Dissenting Debentureholders who fails to notify the Offeror of its election as
described under Section 13.3(c) will be deemed to have elected to transfer
his or her 

 

76

 

Debentures to the Offeror on
the same terms on which the Offeror acquired Debentures from Debentureholders
who accepted the Offer.

 

13.4                                                                        Delivery of Debenture Certificates

 

A Dissenting Debentureholder to whom an
Offeror’s Notice is sent pursuant to Section 13.3 shall, within 21  days after the date of receiving the
Offeror’s Notice with respect to the election in Section 13.3(c), in
the case of Fully Registered Debentures, send his or her Debenture certificate(s) to
the Debenture Trustee duly endorsed for transfer.

 

13.5                                                                        Payment of Consideration to Debenture
Trustee

 

Within 21  days
after the Offeror sends an Offeror’s Notice pursuant to Section 13.3, the
Offeror shall pay or transfer to the Debenture Trustee, or to such other person
as the Debenture Trustee may direct, the cash or other consideration that would
be payable if all Dissenting Debentureholders elected to accept the Offer in
accordance with Section 13.3.  The
acquisition by the Offeror of all Debentures held by all Dissenting
Debentureholders shall be effective as of the time of such payment or transfer.

 

13.6                                                                        Consideration to be held in Trust

 

The Debenture Trustee, or the person directed
by the Debenture Trustee, shall hold in trust for the Dissenting
Debentureholders the cash or other consideration they or it receives under Section 13.5.  The Debenture Trustee, or such person, shall
deposit cash in a separate account in a Canadian chartered bank, or other body
corporate, which may include an Affiliate of the Debenture Trustee, any of
whose deposits are insured by the Canada Deposit Insurance Corporation, and
shall place other consideration in the custody of a Canadian chartered bank or
such other body corporate.

 

13.7                                                                        Completion of Transfer of Debentures to
Offeror

 

Within 30  days
after the date of the sending of an Offeror’s Notice pursuant to Section 13.3,
the Debenture Trustee, if the Offeror has complied with Section 13.5,
shall:

 

(a)                                  do
all acts and things and execute and cause to be executed all instruments as in
the Debenture Trustee’s opinion may be necessary or desirable to cause the
transfer of the Debentures of the Dissenting Debentureholders to the Offeror;

 

(b)                                 send
to each Dissenting Debentureholder who has made or deemed to have made an
election and, if applicable has complied with Section 13.4, the
consideration to which such Dissenting Debentureholder is entitled under this Article 13
net of applicable withholding taxes, if applicable; and

 

(c)                                  send
to each Dissenting Debentureholder a notice stating that:

 

(i)                                     his
or her Debentures have been transferred to the Offeror;

 

(ii)                                  the
Debenture Trustee or some other Person designated in such notice are holding in
trust the consideration to which the Dissenting Debentureholder is entitled to
receive for such Debentures if the Debentureholder elected to receive the
consideration payable or paid under the Offer; and

 

77

 

(iii)                               the
Debenture Trustee, or such other Person, will send the consideration to such
Dissenting Debentureholder as soon as possible after receiving such Dissenting
Debentureholder’s Debenture certificate(s) or such other documents as the
Debenture Trustee or such other Person may require in lieu thereof,

 

and the Debenture Trustee is
hereby appointed the agent and attorney, and is granted power of attorney with
respect to the Debentures, of the Dissenting Debentureholders for the purposes
of giving effect to the foregoing provisions, including, without limitation,
the power and authority to execute such transfers as may be necessary or
desirable in respect of the book-entry only registration system of the
Depository.

 

13.8                                                                        Demand for Payment of Fair Value

 

(a)                                  If a
Dissenting Debentureholder has elected to demand payment of the fair value for
his or her Debentures pursuant to Section 13.3, the Offeror
may, within 21 days after it has paid the cash or transferred the other
consideration to the Debenture Trustee under Section 13.5, apply to a
court to fix the fair value of the Debentures of that Dissenting
Debentureholder.

 

(b)                                 If
the Offeror fails to apply to a court under Section 13.8(a), a Dissenting
Debentureholder may apply to a court for the same purpose within a further
period of 21 days.

 

(c)                                  Where
no application is made to a court under Section 13.8(b) within the
period set out in that Section, a Dissenting Debentureholder is deemed to have
elected to transfer his or her Debentures to the Offeror on the same terms on
which the Offeror acquired Debentures of the applicable series from
Debentureholders who accepted the Offer.

 

(d)                                 An
application under Section 13.8(a), or 13.8(b), shall be made to a court
having jurisdiction in the Province of Ontario.

 

(e)                                  A
Dissenting Debentureholder is not required to give security for costs in an
application made under Section 13.8(a) or 13.8(b).

 

(f)                                    On
an application under Section 13.8(a) or 13.8(b):

 

(i)                                     all
Dissenting Debentureholders that have elected pursuant to Section 13.3  shall
be joined as parties and are bound by the decision of the court; and

 

(ii)                                  the
Offeror shall notify each affected Dissenting Debentureholder of the date,
place and consequences of the application and of their right to appear and be
heard in person or by legal counsel.

 

(g)                                 On
an application to a court under Section 13.8(a) or 13.8(b) the
court may determine whether any other Person is a Dissenting Debentureholder
who should be joined as a party, and the court shall then fix a fair value for
each series of Debentures held by the Dissenting Debentureholders.

 

78

 

(h)                                 A
court may in its discretion appoint one or more appraisers to assist the court
in fixing a fair value for each series of Debentures of a Dissenting
Debentureholder.

 

(i)                                     The
final order of the court shall be made against the Offeror in favour of each
Dissenting Debentureholder in the amount for each series of Debentures as fixed
by the court.

 

(j)                                     In
connection with proceedings under this Section 13.8, a court may make any
order it thinks fit and, without limiting the generality of the foregoing, it
may:

 

(i)                                     fix
the amount of money or other consideration that is required to be held in trust
under Section 13.6;

 

(ii)                                  order
that money or other consideration be held in trust by a Person other than the
Debenture Trustee; and

 

(iii)                               allow
a reasonable rate of interest on the amount payable to each Dissenting
Debentureholder from the date they send or deliver notice to the Offeror under Section 13.4
until the date of payment.

 

13.9                                                                        Communication of Offer to the Company

 

An Offeror cannot make an Offer for
Debentures unless, concurrent with the communication of the Offer to any
Debentureholder, a copy of the Offer is provided to the Company.

 

ARTICLE 14

MEETINGS OF DEBENTUREHOLDERS

 

14.1                                                                        Right to Convene Meeting

 

The Debenture Trustee or the Company may at
any time and from time to time, and the Debenture Trustee shall, on receipt of
a written request of the Company or a written request signed by the holders of
not less than 25% of the principal amount of the Debentures then outstanding
and upon receiving funding and being indemnified to its reasonable satisfaction
by the Company or by the Debentureholders signing such request against the
costs which may be incurred in connection with the calling and holding of such
meeting, convene a meeting of the Debentureholders.  In the event of the Debenture Trustee
failing, within 30  days after
receipt of any such request and such funding and indemnification, to give
notice convening a meeting, the Company or such Debentureholders, as the case
may be, may convene such meeting.  Every
such meeting shall be held in the City of Toronto or at such other place as may
be approved or determined by the Debenture Trustee.

 

14.2                                                                        Notice of Meetings

 

(a)                                  At least
21 days notice of any meeting shall be given to the Debentureholders in the
manner provided in Section 15.2 and a copy of such notice shall be sent by
post to the Debenture Trustee, unless the meeting has been called by it.  Such notice shall state the time when and the
place where the meeting is to be held and shall state briefly the general
nature of the business to be transacted thereat and it shall not be necessary
for 

 

79

 

any such notice to set out
the terms of any resolution to be proposed or any of the provisions of this
Article.  The accidental omission to give
notice of a meeting to any holder of Debentures shall not invalidate any
resolution passed at any such meeting.  A
holder may waive notice of a meeting either before or after the meeting.

 

(b)                                 If
the business to be transacted at any meeting by Extraordinary Resolution or
otherwise, or any action to be taken or power exercised by instrument in
writing under Section 14.15, especially affects the rights of holders of
Debentures of one or more series in a manner or to an extent differing in any
material way from that in or to which the rights of holders of Debentures of
any other series are affected (determined as provided in Sections 14.2(c) and
(d)), then:

 

(i)                                     a
reference to such fact, indicating each series of Debentures in the opinion of
the Debenture Trustee, as advised by counsel, so especially affected
(hereinafter referred to as the “especially affected series”)
shall be made in the notice of such meeting, and in any such case the meeting
shall be and be deemed to be and is herein referred to as a “Serial Meeting”; and

 

(ii)                                  the
holders of Debentures of an especially affected series shall not be bound by
any action taken at a Serial Meeting or by instrument in writing under Section 14.15
unless in addition to compliance with the other provisions of this Article 14:

 

(A)                              at
such Serial Meeting: (I) there are Debentureholders present in person or
by proxy and representing at least 25% in principal amount of the Debentures
then outstanding of such series, subject to the provisions of this Article 14
as to quorum at adjourned meetings; and (II) the resolution is passed by the
affirmative vote of the holders of more than 50% (or in the case of an
Extraordinary Resolution not less than 66 2/3%) of the principal amount of the
Debentures of such series then outstanding voted on the resolution; or

 

(B)                                in
the case of action taken or power exercised by instrument in writing under Section 14.15,
such instrument is signed in one or more counterparts by the holders of not
less than 66 2/3% in principal amount of the Debentures of such series then
outstanding.

 

(c)                                  Subject
to Section 14.2(d), the determination as to whether any business to be
transacted at a meeting of Debentureholders, or any action to be taken or power
to be exercised by instrument in writing under Section 14.15, especially
affects the rights of the Debentureholders of one or more series in a manner or
to an extent differing in any material way from that in or to which it affects
the rights of Debentureholders of any other series (and is therefore an
especially affected series) shall be determined by an opinion of Counsel, which
shall be binding on all Debentureholders, the Debenture Trustee and the Company
for all purposes hereof.

 

(d)                                 A
proposal:

 

(i)                                     to
extend the maturity of Debentures of any particular series or to reduce the
principal amount thereof, the rate of interest or any redemption premium
thereon or to impair any conversion right thereof;

 

80

 

(ii)                                  to
modify or terminate any covenant or agreement which by its terms is effective
only so long as Debentures of a particular series are outstanding; or

 

(iii)                               to
reduce with respect to Debentureholders of any particular series any percentage
stated in this Section 14.2 or Sections 14.4, 14.12 and 14.15,

 

shall be deemed
to especially affect the rights of the Debentureholders of such series in a
manner differing in a material way from that in which it affects the rights of
holders of Debentures of any other series, whether or not a similar extension,
reduction, modification or termination is proposed with respect to Debentures
of any or all other series.

 

14.3                                                                        Chairman

 

Some person, who need not be a
Debentureholder, nominated in writing by the Company (in case it convenes the
meeting) or the Debenture Trustee (in any other case) shall be chairman of the
meeting and if no person is so nominated, or if the person so nominated is not
present within 15 minutes from the time fixed for the holding of the meeting, a
majority of the Debentureholders present in person or by proxy shall choose
some person present to be chairman.

 

14.4                                                                        Quorum

 

Subject to the provisions of Section 14.12,
at any meeting of the Debentureholders a quorum shall consist of not less than
two Debentureholders present in person or by proxy and representing at least
25% in principal amount of the outstanding Debentures and, if the meeting is a
Serial Meeting, at least 25% of the Debentures then outstanding of each
especially affected series.  If a quorum
of the Debentureholders shall not be present within 30 minutes from the time
fixed for holding any meeting, the meeting, if summoned by the Debentureholders
or pursuant to a request of the Debentureholders, shall be dissolved, but in
any other case the meeting shall be adjourned to the same day in the next week
(unless such day is not a Business Day in which case it shall be adjourned to
the next following Business Day thereafter) at the same time and place, to the
extent possible, and no notice shall be required to be given in respect of such
adjourned meeting.  At the adjourned
meeting, the Debentureholders present in person or by proxy shall, subject to
the provisions of Section 14.12, constitute a quorum and may transact the
business for which the meeting was originally convened notwithstanding that
they may not represent 25% of the principal amount of the outstanding
Debentures or of the Debentures then outstanding of each especially affected
series.  Any business may be brought
before or dealt with at an adjourned meeting which might have been brought
before or dealt with at the original meeting in accordance with the notice
calling the same.  No business shall be
transacted at any meeting unless the required quorum be present at the
commencement of business.

 

14.5                                                                        Power to Adjourn

 

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

 

81

 

14.6                                                                        Show of Hands

 

Every question submitted to a meeting shall,
subject to Section 14.7, be decided in the first place by a majority of
the votes given on a show of hands except that votes on Extraordinary
Resolutions shall be given in the manner hereinafter provided.  At any such meeting, unless a poll is duly
demanded as herein provided, a declaration by the chairman that a resolution
has been carried or carried unanimously or by a particular majority or lost or
not carried by a particular majority shall be conclusive evidence of the
fact.  The chairman of any meeting shall
be entitled, both on a show of hands and on a poll, to vote in respect of the
Debentures, if any, held by him.

 

14.7                                                                        Poll

 

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

 

14.8                                                                        Voting

 

On a show of
hands every person who is present and entitled to vote, whether as a
Debentureholder or as proxy for one or more Debentureholders or both, shall
have one vote.  On a poll each
Debentureholder present in person or represented by a proxy duly appointed by
an instrument in writing shall be entitled to one vote in respect of each
$1,000 principal amount of Debentures of which he or she shall then be the
holder. A proxyholder need not be a Debentureholder.  In the case of joint holders of a Debenture,
any one of them present in person or by proxy at the meeting may vote in the
absence of the other or others but in case more than one of them be present in
person or by proxy, they shall vote together in respect of the Debentures of
which they are joint holders.

 

14.9                                                                        Proxies

 

A Debentureholder may be present and vote at
any meeting of Debentureholders by an authorized representative.  The Company (in case it convenes the meeting)
or the Debenture Trustee (in any other case) for the purpose of enabling the
Debentureholders to be present and vote at any meeting without producing their
Debentures, and of enabling them to be present and vote at any such meeting by
proxy and of lodging instruments appointing such proxies at some place other
than the place where the meeting is to be held, may from time to time make and
vary such regulations as it shall think fit providing for and governing any or
all of the following matters:

 

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

 

(b)                                 the
deposit of instruments appointing proxies at such place as the Debenture
Trustee, the Company or the Debentureholder convening the meeting, as the case
may be, may, in the notice convening the meeting, direct and the time, if any,
before the 

 

82

 

holding of the meeting or
any adjournment thereof by which the same must be deposited; and

 

(c)                                  the
deposit of instruments appointing proxies at some approved place or places
other than the place at which the meeting is to be held and enabling
particulars of such instruments appointing proxies to be mailed, faxed or sent
by other electronic means before the meeting to the Company or to the Debenture
Trustee at the place where the same is to be held and for the voting of proxies
so deposited as though the instruments themselves were produced at the meeting.

 

Any regulations so made
shall be binding and effective and the votes given in accordance therewith
shall be valid and shall be counted. 
Save as such regulations may provide, the only persons who shall be
recognized at any meeting as the holders of any Debentures, or as entitled to
vote or be present at the meeting in respect thereof, shall be Debentureholders
and persons whom Debentureholders have by instrument in writing duly appointed
as their proxies.

 

14.10                                                                 Persons Entitled to Attend Meetings

 

The Company, the Manager and the Debenture
Trustee, by their respective officers, directors, employees and agents (as
applicable), the Auditors of the Company and the legal advisers of the Company,
the Debenture Trustee or any Debentureholder may attend any meeting of the
Debentureholders, but shall have no vote as such.

 

14.11                                                                 Powers Exercisable by Extraordinary
Resolution

 

In addition to the powers conferred upon them
by any other provisions of this Indenture or by applicable law, a meeting of
the Debentureholders shall have the following powers exercisable from time to
time by Extraordinary Resolution, subject in the case of the matters in
paragraphs (a), (b), (c), (d) and (l) to receipt of the prior
approval of the TSX or such other exchange on which the Debentures are then
listed:

 

(a)                                  power
to authorize the Debenture Trustee to grant extensions of time for payment of
any principal, premium or interest on the Debentures, whether or not the
principal, premium, or interest, the payment of which is extended, is at the
time due or overdue;

 

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

 

(c)                                  power
to assent to any modification of or change in or addition to or omission from
the provisions contained in this Indenture or any Debenture which shall be
agreed to by the Company and to authorize the Debenture Trustee to concur in
and execute any indenture supplemental hereto embodying any modification,
change, addition or omission;

 

(d)                                 power
to sanction any scheme for the reconstruction, reorganization or
recapitalization of the Company or for the consolidation, amalgamation or
merger of the Company with any other Person or for the sale, leasing, transfer
or other 

 

83

 

disposition of all or
substantially all of the undertaking, property and assets of the Company or any
part thereof, provided that no such sanction shall be necessary in respect of
any such transaction if the provisions of Section 12.1 shall have been
complied with;

 

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

 

(f)                                    power
to waive, and direct the Debenture Trustee to waive, any default hereunder
and/or cancel any declaration made by the Debenture Trustee pursuant to Section 9.1
either unconditionally or upon any condition specified in such Extraordinary
Resolution;

 

(g)                                 power
to restrain any Debentureholder from taking or instituting any suit, action or
proceeding for the purpose of enforcing payment of the principal, premium or
interest on the Debentures, or for the execution of any trust or power
hereunder;

 

(h)                                 power
to direct any Debentureholder who, as such, has brought any action, suit or
proceeding to stay or discontinue or otherwise deal with the same upon payment,
if the taking of such suit, action or proceeding shall have been permitted by Section 9.5,
of the costs, charges and expenses reasonably and properly incurred by such
Debentureholder in connection therewith;

 

(i)                                     power
to assent to any compromise or arrangement with any creditor or creditors or
any class or classes of creditors, whether secured or otherwise, and with
holders of any IPSs or other securities of the Company;

 

(j)                                     power
to appoint a committee with power and authority (subject to such limitations,
if any, as may be prescribed in the resolution) to exercise, and to direct the
Debenture Trustee to exercise, on behalf of the Debentureholders, such of the
powers of the Debentureholders as are exercisable by Extraordinary Resolution
or other resolution as shall be included in the resolution appointing the
committee.  The resolution making such
appointment may provide for payment of the expenses and disbursements of and
compensation to such committee.  Such
committee shall consist of such number of persons as shall be prescribed in the
resolution appointing it and the members need not be themselves
Debentureholders.  Every such committee
may elect its chairman and may make regulations respecting its quorum, the
calling of its meetings, the filling of vacancies occurring in its number and
its procedure generally.  Such
regulations may provide that the committee may act at a meeting at which a
quorum is present or may act by minutes signed by the number of members thereof
necessary to constitute a quorum.  All
acts of any such committee within the authority delegated to it shall be
binding upon all Debentureholders. 
Neither the committee nor any member thereof shall be liable for any
loss arising from or in connection with any action taken or omitted to be taken
by them in good faith;

 

(k)                                  power
to remove the Debenture Trustee from office and to appoint a new Debenture
Trustee or Debenture Trustees provided that no such removal shall be effective
unless 

 

84

 

and until a new Debenture
Trustee or Debenture Trustees shall have become bound by this Indenture;

 

(l)                                     power
to sanction the conversion of the Debentures for or the conversion thereof into
IPSs, bonds, debentures or other securities or obligations of the Company or of
any other Person formed or to be formed;

 

(m)                               power
to authorize the distribution in specie of
any securities received pursuant to a transaction authorized under the
provisions of Section 14.11(l); and

 

(n)                                 power
to amend, alter or repeal any Extraordinary Resolution previously passed or
sanctioned by the Debentureholders or by any committee appointed pursuant to Section 14.11(j).

 

Notwithstanding the
foregoing provisions of this Section 14.11, none of such provisions shall
in any manner allow or permit any amendment, modification, abrogation or
addition to the provisions of Article 6 which could reasonably be expected
to detrimentally affect the rights, remedies or recourse of the priority of the
Senior Creditors.

 

14.12                                                                 Meaning of “Extraordinary Resolution”

 

(a)                                  The
expression “Extraordinary Resolution”
when used in this Indenture means, subject as hereinafter in this Article provided,
a resolution proposed to be passed as an Extraordinary Resolution at a meeting
of Debentureholders (including an adjourned meeting) duly convened for the
purpose and held in accordance with the provisions of this Article at
which the holders of not less than 25% of the principal amount of the
Debentures then outstanding, and if the meeting is a Serial Meeting, at which
holders of not less than 25% of the principal amount of the Debentures then
outstanding of each especially affected series, are present in person or by
proxy and passed by the favourable votes of the holders of not less than 662/3% of
the principal amount of the Debentures, and if the meeting is a Serial Meeting
by the affirmative vote of the holders of not less than 662/3% of
each especially affected series, in each case present or represented by proxy
at the meeting and voted upon on a poll on such resolution.

 

(b)                                 If,
at any such meeting, the holders of not less than 25% of the principal amount
of the Debentures then outstanding and, if the meeting is a Serial Meeting, 25%
of the principal amount of the Debentures then outstanding of each especially
affected series, in each case are not present in person or by proxy within 30
minutes after the time appointed for the meeting, then the meeting, if convened
by or on the requisition of Debentureholders, shall be dissolved but in any
other case it shall stand adjourned to such date, being not less than 14 nor
more than 60 days later, and to such place and time as may be appointed by the
chairman.  Not less than 10 days notice
shall be given of the time and place of such adjourned meeting in the manner
provided in Section 15.2.  Such
notice shall state that at the adjourned meeting the Debentureholders present
in person or by proxy shall form a quorum. 
At the adjourned meeting the Debentureholders present in person or by
proxy shall form a quorum and may transact the business for which the meeting
was originally convened and a resolution proposed at such adjourned meeting and
passed thereat by the

 

85

 

affirmative vote
of holders of not less than 662/3% of
the principal amount of the Debentures and, if the meeting is a Serial Meeting,
by the affirmative vote of the holders of not less than 662/3% of
the principal amount of the Debentures of each especially affected series, in
each case present or represented by proxy at the meeting voted upon on a poll
shall be an Extraordinary Resolution within the meaning of this Indenture,
notwithstanding that the holders of not less than 25% in principal amount of the
Debentures then outstanding, and if the meeting is a Serial Meeting, at which
holders of not less than 25% of the principal amount of the Debentures then
outstanding of each especially affected series, are not present in person or by
proxy at such adjourned meeting.

 

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

 

14.13                                                                 Powers Cumulative

 

Any one or more of the powers in this
Indenture stated to be exercisable by the Debentureholders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of
any one or more of such powers from time to time shall not be deemed to exhaust
the rights of the Debentureholders to exercise the same or any other such power
or powers thereafter from time to time.

 

14.14                                                                 Minutes

 

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

 

14.15                                                                 Instruments in Writing

 

All actions which may be taken and all powers
that may be exercised by the Debentureholders at a meeting held as hereinbefore
in this Article provided may also be taken and exercised by the holders of
662/3% of
the principal amount of all the outstanding Debentures and, if the meeting at
which such actions might be taken would be a Serial Meeting, by the holders of
662/3% of
the principal amount of the Debentures then outstanding of each especially
affected series, by an instrument in writing signed in one or more counterparts
and the expression “Extraordinary Resolution”
when used in this Indenture shall include an instrument so signed.

 

14.16                                                                 Binding Effect of Resolutions

 

Every resolution and every Extraordinary
Resolution passed in accordance with the provisions of this Article at a
meeting of Debentureholders shall be binding upon all the Debentureholders,
whether present at or absent from such meeting, and every instrument in writing
signed by Debentureholders in accordance with Section 14.15 shall be
binding upon all the 

 

86

 

Debentureholders, whether
signatories thereto or not, and each and every Debentureholder and the
Debenture Trustee (subject to the provisions for its indemnity herein
contained) shall be bound to give effect accordingly to every such resolution,
Extraordinary Resolution and instrument in writing.

 

14.17                                                                 Evidence of Rights Of Debentureholders

 

(a)                                  Any
request, direction, notice, consent or other instrument which this Indenture
may require or permit to be signed or executed by the Debentureholders may be
in any number of concurrent instruments of similar tenor signed or executed by
such Debentureholders.

 

(b)                                 The
Debenture Trustee may, in its discretion, require proof of execution in cases
where it deems proof desirable and may accept such proof as it shall consider
proper.

 

14.18                                                                 Concerning Serial Meetings

 

If in the opinion of Counsel any business to
be transacted at any meeting, or any action to be taken or power to be
exercised by instrument in writing under Section 14.15, does not adversely
affect the rights of the holders of Debentures of one or more series, the provisions
of this Article 14 shall apply as if the Debentures of such series were
not outstanding and no notice of any such meeting need be given to the holders
of Debentures of such series.  Without
limiting the generality of the foregoing, a proposal to modify or terminate any
covenant or agreement which is effective only so long as Debentures of a
particular series are outstanding shall be deemed not to adversely affect the
rights of the holders of Debentures of any other series.

 

ARTICLE 15

NOTICES

 

15.1                                                                        Notice to the Company

 

Any notice to the Company or any Guarantor or
to the Debenture Trustee (on its own account or on behalf of the
Debentureholders) under the provisions of this Indenture shall be valid and
effective if delivered to the Company at 355 Burrard Street, Suite 1900, Vancouver, BC, V6C 2G8,
Attention: Chief Executive Officer, Fax (604) 682-7131, with a copy delivered to
the  Manager at:  200 Clarendon Street, 55th Floor, Boston, MA, 02117, Attention: Chief
Executive Officer, Fax: (617)
531-6370  a copy delivered to Goodmans
LLP, 250 Yonge Street, Suite 2400, Toronto, Ontario, M5B 2M6,
Attention: Bill Gorman, Fax: (416) 979-1234 and a copy delivered to the
Debenture Trustee at 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, Attention:
Manager, Corporate Trust, Fax: (416) 981-9777 or if given by registered letter,
postage prepaid, or facsimile transmission to such offices and so addressed and
if mailed, shall be deemed to have been effectively given three days following
the mailing thereof or if sent by facsimile transmission on the first Business
Day after confirmed transmission.  The
Company may from time to time notify the Debenture Trustee in writing of a
change of address which thereafter, until changed by like notice, shall be the address
of the Company for all purposes of this Indenture.

 

15.2                                                                        Notice to Debentureholders

 

All notices to be given hereunder with
respect to the Debentures shall be deemed to be validly given to the holders
thereof if sent by first class mail, postage prepaid, by letter or circular 

 

87

 

addressed to such holders at
their post office addresses appearing in any of the registers hereinbefore
mentioned and shall be deemed to have been effectively given three days
following the day of mailing.  Any notice
to be given hereunder with respect to the Debentures delivered or served by
telecopier or courier shall be deemed to have been given or served on the day
upon which it is delivered.  Accidental
error or omission in giving notice or accidental failure to mail or otherwise
deliver notice to any Debentureholder or the inability of the Company to give
or mail or otherwise deliver any notice due to any event beyond the reasonable
control of the Company shall not invalidate any action or proceeding founded
thereon.

 

If any notice given in accordance with the
foregoing paragraph would be unlikely to reach the Debentureholders to whom it
is addressed in the ordinary course of post by reason of an interruption in
mail service, whether at the place of dispatch or receipt or both, the Company
shall give such notice by publication at least once in the City of Toronto,
Ontario (or in such of those cities as, in the opinion of the Debenture
Trustee, is sufficient in the particular circumstances), such publication to be
made in a daily newspaper of general circulation in the designated city.

 

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

 

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

 

15.3                                                                        Notice to Debenture Trustee

 

Any notice to the Debenture Trustee under the
provisions of this Indenture shall be valid and effective if delivered to the
Debenture Trustee at its principal office in the City of Toronto, 100 University Avenue, 9th Floor,
Toronto, Ontario M5J 2Y1,  Attention: Director, Corporate Trust Department or if given
by registered letter, postage prepaid, to such office and so addressed and, if
mailed, shall be deemed to have been effectively given three days following the
mailing thereof.  The Debenture Trustee
may from time to time notify the Company in writing of a change of address
which thereafter, until by like notice shall be the address of the Debenture
Trustee to receive notices from the Company.

 

15.4                                                                        Mail Service Interruption

 

If by reason of any interruption of mail
service, actual or threatened, any notice to be given to the Debenture Trustee
would reasonably be unlikely to reach its destination by the time notice by
mail is deemed to have been given pursuant to Section 15.3, such notice
shall be valid and effective only if delivered at the appropriate address in
accordance with Section 15.3.

 

ARTICLE 16

CONCERNING THE DEBENTURE TRUSTEE

 

16.1                                                                        No Conflict of Interest

 

The Company acknowledges that the Debenture
Trustee is acting as indenture trustee with respect to the Subordinated
Notes.  Accordingly, the Debenture
Trustee may have or appear to 

 

88

 

have a conflict of
interest.  The Company hereby agrees and
consents to the appointment of the Debenture Trustee pursuant to this
indenture.

 

Other than as disclosed above in this Section 16.1,
the Debenture Trustee represents to the Company that at the date of execution
and delivery by it of this Indenture there exists no material conflict of
interest in the role of the Debenture Trustee as a fiduciary hereunder but if,
notwithstanding the provisions of this Section 16.1, such a material conflict
of interest exists, or hereafter arises, the validity and enforceability of
this Indenture, and the Debentures issued hereunder, shall not be affected in
any manner whatsoever by reason only that such material conflict of interest
exists or arises but the Debenture Trustee shall, within 30 days after
ascertaining that it has a material conflict of interest, either eliminate such
material conflict of interest or resign in the manner and with the effect
specified in Section 16.2.

 

16.2                                                                        Replacement of Debenture Trustee

 

The Debenture Trustee may resign its trust
and be discharged from all further duties and liabilities hereunder by giving
to the Company 30 days’ notice in writing or such shorter notice as the Company
may accept as sufficient.  If at any time
a material conflict of interest exists in the Debenture Trustee’s role as a
fiduciary hereunder the Debenture Trustee shall, within 30 days after
ascertaining that such a material conflict of interest exists, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in this Section 16.2.  The
validity and enforceability of this Indenture and of the Debentures issued
hereunder shall not be affected in any manner whatsoever by reason only that
such a material conflict of interest exists. 
In the event of the Debenture Trustee resigning or being removed or
being dissolved, becoming bankrupt, going into liquidation or otherwise
becoming incapable of acting hereunder, the Company shall forthwith appoint a
new Debenture Trustee unless a new Debenture Trustee has already been appointed
by the Debentureholders.  Failing such
appointment by the Company, the retiring Debenture Trustee or any
Debentureholder may apply to a Judge of the Ontario Superior Court of Justice, on
such notice as such Judge may direct at the Company’s expense, for the
appointment of a new Debenture Trustee but any new Debenture Trustee so
appointed by the Company or by the Court shall be subject to removal as
aforesaid by the Debentureholders and the appointment of such new Debenture
Trustee shall be effective only upon such new Debenture Trustee becoming bound
by this Indenture.  Any new Debenture
Trustee appointed under any provision of this Section 16.2 shall be a
corporation authorized to carry on the business of a trust company in all of
the provinces and territories of Canada. 
On any new appointment the new Debenture Trustee shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named herein as Debenture Trustee.

 

Any company into which the Debenture Trustee
may be merged or, with or to which it may be consolidated, amalgamated or sold,
or any company resulting from any merger, consolidation, sale or amalgamation
to which the Debenture Trustee shall be a party, or any company succeeding to
the corporate trust business of the Debenture Trustee shall be the successor
trustee under this Indenture without the execution of any instrument or any
further act.  Nevertheless, upon the
written request of the successor Debenture Trustee or of the Company, the
Debenture Trustee ceasing to act shall execute and deliver an instrument
assigning and transferring to such successor Debenture Trustee, upon the trusts
herein expressed, all the rights, powers and trusts of the Debenture Trustee so
ceasing to act, and shall duly assign, transfer and deliver all property and
money held by such Debenture Trustee to the successor Debenture Trustee so
appointed in its place.  Should any deed,
conveyance or instrument in writing from the Company be required by any new
Debenture Trustee for more fully and certainly vesting in and confirming to it
such estates, 

 

89

 

properties, rights, powers
and trusts, then any and all such deeds, conveyances and instruments in writing
shall on request of said new Debenture Trustee, be made, executed, acknowledged
and delivered by the Company.

 

16.3                                                                        Duties of Debenture Trustee

 

In the exercise of the rights, duties and
obligations prescribed or conferred by the terms of this Indenture, the
Debenture Trustee shall act honestly and in good faith and exercise that degree
of care, diligence and skill that a reasonably prudent trustee would exercise
in comparable circumstances.

 

16.4                                                                        Reliance Upon Declarations, Opinions,
etc.

 

In the exercise of its rights, duties and
obligations hereunder the Debenture Trustee may, if acting in good faith, act
and rely, as to the truth of the statements and accuracy of the opinions
expressed therein, upon statutory declarations, opinions, reports or
certificates furnished pursuant to any covenant, condition or requirement of
this Indenture or required by the Debenture Trustee to be furnished to it in
the exercise of its rights and duties hereunder, if the Debenture Trustee
examines such statutory declarations, opinions, reports or certificates and
determines that they comply with Section 16.5, if applicable, and with any
other applicable requirements of this Indenture.  The Debenture Trustee may nevertheless, in
its discretion, require further proof in cases where it deems further proof
desirable.  Without restricting the
foregoing, the Debenture Trustee may act and rely on an opinion of Counsel
satisfactory to the Debenture Trustee notwithstanding that it is delivered by a
solicitor or firm which acts as solicitors for the Company.

 

16.5                                                                        Evidence and Authority to Debenture
Trustee, Opinions, etc.

 

The Company shall furnish to the Debenture
Trustee evidence of compliance with the conditions precedent provided for in
this Indenture relating to any action or step required or permitted to be taken
by the Company or the Debenture Trustee under this Indenture or as a result of
any obligation imposed under this Indenture, including without limitation, the
certification and delivery of Debentures hereunder, the satisfaction and
discharge of this Indenture and the taking of any other action to be taken by
the Debenture Trustee at the request of or on the application of the Company,
forthwith if and when (a) such evidence is required by any other Section of
this Indenture to be furnished to the Debenture Trustee in accordance with the
terms of this Section 16.5, or (b) the Debenture Trustee, in the
exercise of its rights and duties under this Indenture, gives the Company
written notice requiring it to furnish such evidence in relation to any
particular action or obligation specified in such notice.

 

Such evidence shall consist of:

 

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

 

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

 

90

 

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

 

Whenever such evidence relates to a matter
other than the certificates and delivery of Debentures and the satisfaction and
discharge of this Indenture, and except as otherwise specifically provided
herein, such evidence may consist of a report or opinion of any solicitor,
auditor, accountant, engineer or appraiser or any other person whose
qualifications give authority to a statement made by him, provided that if such
report or opinion is furnished by a trustee, officer or employee of the Company
it shall be in the form of a statutory declaration.  Such evidence shall be, so far as appropriate,
in accordance with the immediately preceding paragraph of this Section.

 

Each statutory declaration, certificate,
opinion or report with respect to compliance with a condition precedent
provided for in the Indenture shall include (a) a statement by the person
giving the evidence that he has read and is familiar with those provisions of
this Indenture relating to the condition precedent in question, (b) a brief
statement of the nature and scope of the examination or investigation upon
which the statements or opinions contained in such evidence are based, (c) a
statement that, in the belief of the person giving such evidence, he has made
such examination or investigation as is necessary to enable him to make the statements
or give the opinions contained or expressed therein, and (d) a statement
whether in the opinion of such person the conditions precedent in question have
been complied with or satisfied.

 

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

 

16.6                                                                        Debenture Trustee May Rely on
Certificate of the Manager

 

Except as otherwise specifically provided or
prescribed by this Indenture, whenever in the administration of the provisions
of this Indenture the Debenture Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, the Debenture Trustee, if acting in good faith, may act and rely
upon a Certificate of the Manager.

 

16.7                                                                        Experts, Advisers and Agents

 

The Debenture Trustee may:

 

(a)                                  employ
or retain and act and rely on the opinion or advice of or information obtained
from any solicitor, auditor, valuator, engineer, surveyor, appraiser or other
expert or 

 

91

 

advisor, whether
obtained by the Debenture Trustee or by the Company, or otherwise, and shall
not be liable for acting, or refusing to act, in good faith on any such opinion
or advice and may pay proper and reasonable compensation for all such legal and
other advice or assistance as aforesaid; and

 

(b)                                 employ
such agents and other assistants as it may reasonably require for the proper
discharge of its duties hereunder, and may pay reasonable remuneration for all
services performed for it (and shall be entitled to receive reasonable
remuneration for all services performed by it) in the discharge of the trusts
hereof and compensation for all disbursements, costs and expenses made or
incurred by it in the discharge of its duties hereunder and in the management
of the trusts hereof, and any solicitors employed or consulted by the Debenture
Trustee may, but need not be, solicitors for the Company.

 

16.8                                                                        Debenture Trustee May Deal in
Debentures

 

Subject to Sections 16.1 and 16.3, the
Debenture Trustee may, in its personal or other capacity, buy, sell, lend upon
and deal in the Debentures and generally contract and enter into financial
transactions with the Company or otherwise, without being liable to account for
any profits made thereby.

 

16.9                                                                        Investment of Monies Held by Debenture
Trustee

 

Upon receipt of a Written Direction of the
Manager, the Debenture Trustee shall invest the funds in Government Obligations
in its name in accordance with such direction. 
Any direction from the Manager to the Debenture Trustee shall be in
writing and shall be provided to the Debenture Trustee no later than 9:00 a.m.
on the day on which the investment is to be made.  Any such direction received by Debenture
Trustee after 9:00 a.m. or received on a non-Business Day, shall be deemed
to have been given prior to 9:00 a.m. the next Business Day.  For the purpose of this Section, “Business Day” shall not include any day on
which banks are not open for business in Toronto, Ontario.

 

In addition to any Written Direction of the
Manager to invest cash in Government Obligations, the Debenture Trustee may
hold cash balances constituting part or all of the funds and may, but need not,
invest same in its deposit department or the deposit department of one of its
Affiliates; provided that the Debenture Trustee and its Affiliates shall not be
liable to account for any profit to any parties to this Indenture or to any
other person or entity other than at a rate, if any, established from time to
time by the Debenture Trustee or one of its Affiliates.  For the purpose of this Section, “Affiliate” means affiliated companies
within the meaning of the Business
Corporations Act (Ontario) (“OBCA”);
and includes Computershare Investor Services Inc. and each of their affiliates
within the meaning of the OBCA.

 

The Debenture Trustee shall not be held
liable for any losses incurred in the investment of any funds in Government
Obligations.

 

16.10                                                                 Debenture Trustee will Disburse Only
Monies Deposited

 

The Debenture Trustee will disburse monies
according to this Indenture only to the extent that monies have been deposited
with it.

 

92

 

16.11                                                                 Debenture Trustee Not Ordinarily Bound

 

Except as provided in Section 9.2 and as
otherwise specifically provided herein, the Debenture Trustee shall not,
subject to Section 16.3, be bound to give notice to any person of the
execution hereof, nor to do, observe or perform or see to the observance or
performance by the Company of any of the obligations herein imposed upon the
Company or of the covenants on the part of the Company herein contained, nor in
any way to supervise or interfere with the conduct of the Company’s business,
unless the Debenture Trustee shall have been required to do so in writing by
the holders of not less than 25% of the aggregate principal amount of the
Debentures then outstanding or by any Extraordinary Resolution of the
Debentureholders passed in accordance with the provisions contained in Article 14,
and then only after it shall have been funded and indemnified to its
satisfaction against all actions, proceedings, claims and demands to which it
may render itself liable and all costs, charges, damages and expenses which it
may incur by so doing.

 

16.12                                                                 Debenture Trustee Not Required to Give
Security

 

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

 

16.13                                                                 Debenture Trustee Not Bound to Act on
the Company’s Request

 

Except as in this Indenture otherwise
specifically provided, the Debenture Trustee shall not be bound to act in
accordance with any direction or request of the Company or of the Directors
until a duly authenticated copy of the instrument or resolution containing such
direction or request shall have been delivered to the Debenture Trustee, and
the Debenture Trustee shall be empowered to act upon any such copy purporting
to be authenticated and believed by the Debenture Trustee to be genuine.

 

16.14                                                                 Debenture Trustee Not Bound to Act

 

The Debenture Trustee shall retain the right
not to act and shall not be liable for refusing to act if, due to a lack of
information or for any other reason whatsoever, the Debenture Trustee, in its
sole judgment and acting reasonably, determines that such act might cause it to
be in non-compliance with any applicable anti-money laundering or
anti-terrorist legislation, regulation or guideline.  Further, should the Debenture Trustee, in its
sole judgment and acting reasonably, determine at any time that its acting
under this Indenture has resulted in its being in non-compliance with any
applicable anti-money laundering or anti-terrorist legislation, regulation or
guideline, then it shall have the right to resign on 30 days’ written notice to
the Company or any shorter period of time as agreed to by the Company,
notwithstanding the provisions of Section 16.2 of this Indenture, provided
that:

 

(a)                                  the
Debenture Trustee’s written notice shall describe, if permissible by applicable
legislation, the circumstances of such non-compliance; and

 

(b)                                 if
such circumstances are rectified to the Debenture Trustee’s satisfaction within
such 30 day period, then such resignation shall not be effective.

 

93

 

16.15                                                                 Debenture Trustee Protected in Acting

 

The Debenture Trustee may act and rely, and
shall be protected in acting and relying absolutely, upon any resolution,
Certificate of the Manager, statement, instrument, opinion, report, notice,
request, consent, order, letter, facsimile transmission, directions or other
paper document believed in good faith by it to be genuine and to have been
signed, sent or presented by or on behalf of the proper party or parties.  The Debenture Trustee shall be protected in
acting and relying upon any written notice, request, waiver, consent,
certificate, receipt, statutory declaration, affidavit or other paper or
document furnished to it, not only as to its due execution and the validity and
the effectiveness of its provisions but also as to the truth and acceptability
of any information therein contained which it in good faith believes to be
genuine and what it purports to be.

 

16.16                                                                 Conditions Precedent to Debenture
Trustee’s Obligations to Act Hereunder

 

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

 

None of the provisions contained in this
Indenture shall require the Debenture Trustee to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers.

 

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

 

16.17                                                                 Authority to Carry on Business

 

The Debenture Trustee represents to the
Company that at the date of execution and delivery by it of this Indenture it
is authorized to carry on the business of a trust company in all of the
provinces and territories of Canada but if, notwithstanding the provisions of
this Section 16.13, it ceases to be so authorized to carry on business,
the validity and enforceability of this Indenture and the securities issued
hereunder shall not be affected in any manner whatsoever by reason only of such
event but the Debenture Trustee shall, within 90 days after ceasing to be
authorized to carry on the business of a trust company in any of the provinces
or territories of Canada either become so authorized or resign in the manner
and with the effect specified in Section 16.2.

 

16.18                                                                 Compensation and Indemnity

 

(a)                                  The
Company shall pay to the Debenture Trustee from time to time compensation for
its services hereunder as agreed separately by the Company and the Debenture
Trustee, and shall pay and reimburse the Debenture Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Debenture Trustee in the administration or execution of its duties under this
Indenture (including 

 

94

 

the reasonable
and documented compensation and disbursements of its Counsel and all other
advisers and assistants not regularly in its employ), both before any default
hereunder and thereafter until all duties of the Debenture Trustee under this
Indenture shall be finally and fully performed. 
The Debenture Trustee’s compensation shall not be limited by any law on
compensation of a trustee of an express trust.

 

(b)                                 The
Company hereby indemnifies and saves harmless the Debenture Trustee and its
directors, officers and employees and agents (collectively, the “Indemnified Parties” and each an “Indemnified Party”) from and against any and
all loss, damages, charges, expenses, claims, demands, actions or liability
whatsoever which may be brought against an Indemnified Party or which it may
suffer or incur as a result of or arising out of the performance of its duties
and obligations hereunder save only in the event of the negligent failure to
act, or the wilful misconduct or bad faith of an Indemnified Party.  This indemnity will survive the termination
or discharge of this Indenture and the resignation or removal of the Debenture
Trustee.  An Indemnified Party shall
notify the Company promptly of any claim for which it may seek indemnity.  The Company shall defend the claim and the Indemnified
Party shall co-operate in the defence. 
An Indemnified Party may have separate counsel and the Company shall pay
the reasonable fees and expenses of such Counsel.  The Company need not pay for any settlement
made without its consent, which consent must not be unreasonably withheld.  This indemnity shall survive the resignation
or removal of the Debenture Trustee or the discharge of this Indenture.

 

(c)                                  The
Company need not reimburse any expense or indemnify against any loss or
liability incurred by any Indemnified Party through any of such party’s
negligence, wilful misconduct or bad faith.

 

16.19                                                                 Acceptance of Trust

 

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

 

16.20                                                                 Withholding Obligation

 

(a)                                  For
greater certainty, the Debenture Trustee shall, as directed by the Company,
withhold, from any payment made to a holder of a Debenture pursuant to the
terms of this Indenture, whether of interest or other amounts, and including
with respect to delivery of IPSs or other securities or property upon
conversion of Debentures, the amount of any applicable withholding taxes
required or permitted to be withheld in respect of such payment, and the
Debenture Trustee shall remit such withheld amounts to the appropriate
governmental authority, as and when required.

 

(b)                                 In
connection with the Debenture Trustee’s obligation to withhold pursuant to Section 16.20(a) above,
to the extent any payment to be made to a holder of a Debenture pursuant to the
terms of this Indenture is to be satisfied by the Company delivering, or
causing the delivery of, IPSs or other securities or property to the 

 

95

 

Debentureholder
(including, without limitation, the delivery of IPSs or other securities or
property upon a conversion of Debentures pursuant to Article 7), the
Debenture Trustee shall, subject to Applicable Laws, upon the written direction
of the Company but for the account of the Debentureholder, sell, through the
investment banks, registered brokers or registered dealers or other Persons
selected by the Company, out of the IPSs or other securities or property issued
on conversion pursuant to Article 7 or otherwise, such number of IPSs or
other securities that is sufficient to yield net proceeds (after payment of all
costs) to cover the amount of applicable withholding taxes required to be
withheld, and the Debenture Trustee shall withhold such net proceeds and remit
such amounts to the appropriate governmental authority, as and when
required.  Any amounts of net proceeds
(after payment of all costs) in excess of the amount required to cover
applicable withholding taxes will be remitted to the Debentureholder.

 

(c)                                  For
the purposes of determining the appropriate withholdings to be made from any
payment to be made to a holder of a Debenture, the Company and the Debenture
Trustee agree to co-operate and to provide each other with any relevant
information they have with respect to the holders of the Debentures.  For greater certainty, the parties
acknowledge and agree that the withholding tax obligations with respect to a
conversion of Debentures may be different than those in connection with
interest or other payments on the Debentures.

 

ARTICLE 17

SUPPLEMENTAL INDENTURES

 

17.1                                                                        Supplemental Indentures

 

From time to time the Debenture Trustee and,
when authorized by a resolution of the Directors, the Company, may, and shall
when required by this Indenture, subject to the prior written approval of the
TSX, as required, execute, acknowledge and deliver by its proper officers,
deeds or indentures supplemental hereto which thereafter shall form part
hereof, for any one or more of the following purposes:

 

(a)                                  providing
for the issuance of Additional Debentures under this Indenture;

 

(b)                                 adding
to the covenants of the Company herein contained for the protection of the
Debentureholders, or of the Debentures of any series, or providing for events
of default, in addition to those herein specified;

 

(c)                                  making
such provisions not inconsistent with this Indenture as may be necessary or
desirable with respect to matters or questions arising hereunder, including the
making of any modifications in the form of the Debentures which do not affect
the substance thereof and which in the opinion of the Debenture Trustee
(relying on an opinion of Counsel), will not be prejudicial to the interests of
the Debentureholders;

 

(d)                                 evidencing
the succession, or successive successions, of others to the Company and the
covenants of and obligations assumed by any such successor in accordance with
the provisions of this Indenture;

 

96

 

(e)                                  giving
effect to any Extraordinary Resolution passed as provided in Article 14;

 

(f)                                    approving
amendments to this Indenture which, in the opinion of the Debenture Trustee
relying on the advice of Counsel, are necessary or desirable to prevent the
assets of the Company from being treated for any purpose of ERISA or Section 4975
of the U.S. Tax Code as assets of any “employee benefit plan”,
as defined in Section 3 of ERISA, that is subject to Title I of
ERISA, or of any “plan” as
defined in, and subject to, Section 4975 of the U.S. Tax Code or to
prevent the Company or any Affiliate of the Company from engaging in a “prohibited transaction” described in Section 406
of ERISA or as defined in Section 4975(c) of the U.S. Tax Code; and

 

(g)                                 for
any other purpose not inconsistent with the terms of this Indenture, provided
that, in the opinion of the Debenture Trustee (relying on an opinion of
Counsel), the rights of the Debentureholders are in no way prejudiced thereby.

 

Unless the supplemental indenture requires
the consent or concurrence of Debentureholders or the holders of a particular
series of Debentures, as the case may be, by Extraordinary Resolution, the
consent or concurrence of Debentureholders or the holders of a particular
series of Debentures, as the case may be, shall not be required in connection
with the execution, acknowledgement or delivery of a supplemental
indenture.  The Company and the Debenture
Trustee (relying on the opinion of Counsel) may amend any of the provisions of
this Indenture related to matters of United States law or the issuance of
Debentures into the United States in order to ensure that such issuances can be
properly done in accordance with applicable law in the United States without
the consent or approval of the Debentureholders.  Further, the Company  and the Debenture Trustee may without the
consent or concurrence of the Debentureholders or the holders of a particular
series of Debentures, as the case may be, by supplemental indenture or
otherwise, make any changes or corrections in this Indenture which it shall
have been advised by Counsel are required for the purpose of curing or
correcting any ambiguity or defective or inconsistent provisions or clerical
omissions or mistakes or manifest errors contained herein or in any indenture
supplemental hereto or any Written Direction of the Company provided for the
issue of Debentures, providing that in the opinion of the Debenture Trustee
(relying upon an opinion of Counsel) the rights of the Debentureholders and the
Senior Creditors are in no way prejudiced thereby.

 

ARTICLE 18

SECURITY

 

18.1                                                                        Security Documents

 

The Company
hereby agrees to, and agrees to cause the Guarantors to, execute and deliver
the Security Documents, to the extent not already delivered, in form and
substance satisfactory to the Collateral Agent acting reasonably, as continuing
collateral security for the due, prompt and complete payment, performance and
satisfaction by the Company and the Guarantors of all of their indebtedness,
liabilities and obligations of every nature whatsoever (whether present or
future, direct or indirect, absolute or contingent, matured or unmatured, at
any time due or accruing due, wheresoever and howsoever incurred, including any
ultimate unpaid balance thereof, in any currency, and whether incurred prior
to, at the time of or subsequent to the execution of this Indenture)
to the Debenture Trustee, the Collateral Agent and the Securityholders, in
connection with this Indenture and the Security Documents.

 

97

 

ARTICLE 19

EXECUTION AND FORMAL DATE

 

19.1                                                                        Execution

 

This Indenture may be simultaneously executed
in several counterparts, each of which when so executed shall be deemed to be
an original and such counterparts together shall constitute one and the same
instrument.

 

19.2                                                                        Formal Date

 

For the purpose of convenience this Indenture
may be referred to as bearing the formal date of October 11, 2006
irrespective of the actual date of execution hereof.

 

98

 

IN WITNESS whereof the parties hereto have
executed these presents by the hands of their proper officers.

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

 

	
  Per:

  	
  /s/ Mircho Mirchev

  	
   

  	
   

  
	
   

  	
  Name: Mircho
  Mirchev

  	
   

  	
   

  
	
   

  	
  Title: Professional, Corporate Trust

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ Ann Samuel

  	
   

  	
   

  
	
   

  	
  Name: Ann
  Samuel

  	
   

  	
   

  
	
   

  	
  Title: Administrator, Corporate Trust

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATLANTIC
  POWER CORPORATION, by its manager, ATLANTIC POWER MANAGEMENT, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ Barry Welch

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Barry
  Welch

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  	
   

  	
   

  

 

 

Signature Page – Trust
Indenture

 

99

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

SCHEDULE “A” TO THE TRUST INDENTURE

 

Form of Debenture

 

 

SCHEDULE “A”

 

This Debenture is a Global Debenture within the
meaning of the Indenture hereinafter referred to and is registered in the name
of a Depository or a nominee thereof. 
This Debenture may not be transferred to or exchanged for Debentures
registered in the name of any person other than the Depository or a nominee
thereof and no such transfer may be registered except in the limited
circumstances described in the Indenture. 
Every Debenture authenticated and delivered upon registration of,
transfer of, or in exchange for, or in lieu of, this Debenture shall be a
Global Debenture subject to the foregoing, except in such limited circumstances
described in the Indenture.

 

Unless this certificate is presented by an
authorized representative of The Canadian Depository for Securities Limited (“CDS”) to the Company or its transfer agent
for registration of transfer, exchange or payment, and any certificate issued
in respect thereof is registered in the name of CDS & CO., or in such
other name as is requested by an authorized representative of CDS, (and any
payment is made to CDS & Co. or to such other entity as is requested by
an authorized representative of CDS) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since as the registered
holder hereof, CDS & CO. has an interest herein.

 

	
  Certificate No. 1

  	
   

  
	
   

  	
   

  
	
  CUSIP No. 04878QAH6

  	
  CDN$60,000,000

  

 

ATLANTIC POWER CORPORATION

(A corporation continued under and governed by the
laws of the Province of British Columbia)

 

6.25% CONVERTIBLE SECURED DEBENTURE

DUE October 31, 2011

 

ATLANTIC POWER CORPORATION (“the Company”) for value received hereby
acknowledges itself indebted and, subject to the provisions of the trust
indenture (the “Indenture”) dated
as of October 11, 2006 between the Company and Computershare Trust Company
of Canada (the “Debenture Trustee”),
promises to pay to the registered holder hereof on October 31, 2011 (the “Maturity Date”) or on such earlier date as
the principal amount hereof may become due in accordance with the provisions of
the Indenture the principal sum of sixty million dollars (CDN$60,000,000) in
lawful money of Canada (CDN$60,000,000) on presentation and surrender of this
Initial Debenture at the principal offices of the Debenture Trustee in Toronto,
Ontario in accordance with the terms of the Indenture and, subject as
hereinafter provided, to pay interest on the principal amount hereof from the
date hereof, or from the last Interest Payment Date to which interest shall
have been paid or made available for payment hereon, whichever is later, at the
rate of 6.25% per annum, in like money, in arrears semi-annually (less any
withholding tax required or permitted by law to be deducted) on April 30
and October 31 in each year commencing on April 30, 2007 and the last
payment (representing interest payable from the last Interest Payment Date to,
but excluding, the Maturity Date or the earlier date of redemption) to fall due
on the Maturity Date and, should the Company at any time make default in the
payment of any principal, premium or interest, to pay interest on the amount in
default at the same rate, in like money and on the same dates.  For certainty,

 

 

the first interest payment will include
interest accrued from October 11,
2006 to, but excluding, April 30, 2007, which will be equal to CDN$34.42 for each
CDN$1,000 principal amount of the Initial Debentures.

 

Interest hereon shall be payable by electronic
transfer of funds to the registered holder hereof or such other means provided
in the Indenture and, subject to the provisions of the Indenture, the sending
of such electronic transfer of funds shall, to the extent of the sum
represented thereby (plus the amount of any tax withheld), satisfy and
discharge all liability for interest on this Initial Debenture.

 

This Initial Debenture is one of the Debentures of
the Company issued or issuable in one or more series under the provisions of
the Indenture.  The Initial Debentures
authorized for issue immediately are limited to an aggregate principal amount
of CDN$60,000,000 in lawful money of Canada. 
Reference is hereby expressly made to the Indenture for a description of
the terms and conditions upon which the Initial Debentures are or are to be
issued and held and the rights and remedies of the holders of the Initial
Debentures and of the Company and of the Debenture Trustee, all to the same
effect as if the provisions of the Indenture were herein set forth, and to all
of which provisions the holder of this Initial Debenture by acceptance hereof
assents.

 

The Initial Debentures are issuable only in
denominations of CDN$1,000 and integral multiples thereof.  Upon compliance with the provisions of the
Indenture, Debentures of any denomination may be exchanged for an equal
aggregate principal amount of Debentures in any other authorized denomination
or denominations.

 

Any part, being CDN$1,000 or an integral multiple
thereof, of the principal of this Initial Debenture, provided that the
principal amount of this Initial Debenture is in a denomination in excess of
CDN$1,000, is convertible, at the option of the holder hereof, upon surrender
of this Initial Debenture at the principal offices of the Debenture Trustee in
the City of Toronto, Ontario, at any time prior to the close of business on the
Maturity Date or, if this Initial Debenture is called for redemption on or
prior to such date, then up to but not after the close of business on the last
Business Day immediately preceding the date specified for redemption of this
Initial Debenture, into IPSs (without adjustment for interest accrued hereon or
for dividends, distributions or interest payments on the IPSs issuable upon conversion)  at a conversion price of CDN$12.40 per IPS (the “Conversion Price”), being a conversion ratio of
approximately 80.6452 for each CDN$1,000 principal amount
of Debentures so converted, all subject to the terms and
conditions and in the manner set forth in the Indenture.  The Indenture makes provision for the
adjustment of the Conversion Price in the events therein specified.  No fractional IPSs will be issued on any
conversion but in lieu thereof, the Company will satisfy such fractional
interest by a cash payment equal to the market price of such fractional
interest determined in accordance with the Indenture.  No adjustment in the number of IPSs to be
issued upon conversion will be made for distributions, dividends or interest
payments on IPSs issuable upon conversion or for interest accrued on Initial
Debentures surrendered for conversion. 
Holders converting their Initial Debentures will receive interest which
has accrued and is unpaid in respect thereof from the most recent Interest
Payment Date to which interest has been paid to, but not including, the Date of
Conversion.

 

This Initial Debenture may be redeemed at the option
of the Company on the terms and conditions set out in the Indenture at the
Redemption Price therein and herein set out provided that this Initial
Debenture is not redeemable prior to or on October 31, 2009.  After October 31, 2009 and prior to the
Maturity Date, this Initial Debenture is redeemable at the Redemption Price at
the option of the Company provided that the Company files with the Debenture
Trustee on the day 

 

2

 

preceding the day on which notice of
redemption of this Initial Debenture is first given, a Certificate of the
Manager certifying that the weighted average price of the IPSs on the Toronto
Stock Exchange (or elsewhere in accordance with the Indenture) for 20
consecutive trading days, ending on the fifth trading day preceding the day
prior to the date on which such notice is given, is at least 125% of the Conversion
Price then in effect.

 

Upon the occurrence of a Change of Control, each
holder of Initial Debentures may subject to the terms and provisions of Section 2.4(h) and
Article 6 of the Indenture require the Company to purchase the whole or
any part of such holder’s Initial Debentures at a price equal to 101% of the
principal amount of such Initial Debentures plus accrued and unpaid interest up
to, but excluding, the date the Initial Debentures are so repurchased (the “Put Right”).  The Company shall satisfy such purchase price
by payment in cash.  If 90% or more of
the principal amount of all Initial Debentures outstanding on the date the
Company provides notice of a Change of Control to the Debenture Trustee have
been tendered for purchase pursuant to the Put Right, the Company has the right
to redeem all the remaining outstanding Initial Debentures on the same date and
at the same price.

 

If an Offer for outstanding Debentures of a series
(other than Debentures held by or on behalf of the Offeror, Associates or
Affiliates of the Offeror or anyone acting jointly or in concert with the
Offeror) is made and 90% or more of the outstanding principal amount of the
Debentures is taken up and paid for by the Offeror, the Offeror wil1 be
entitled to acquire the Debentures of those holders who did not accept the
offer on the same terms as the Offeror acquired the first 90% of the principal
amount of the Debentures.

 

The indebtedness evidenced by this Initial
Debenture, and by all other Initial Debentures now or hereafter certified and
delivered under the Indenture, is a direct secured obligation of the Company,
and is subordinated in right of payment, to the extent and in the manner
provided in the Indenture, to the prior payment of all Senior Secured
Indebtedness, whether outstanding at the date of the Indenture or thereafter
created, incurred, assumed or guaranteed.

 

The principal hereof may become or be declared due
and payable before the stated maturity in the events, in the manner, with the
effect and at the times provided in the Indenture.

 

Any payment of money to any holder of Debentures
will be reduced by the amount of applicable withholding taxes, if any.  The Indenture contains provisions making
binding upon all holders of Debentures outstanding thereunder (or in certain
circumstances specific series of Debentures) resolutions passed at meetings of
such holders held in accordance with such provisions and instruments signed by
the holders of a specified majority of Debentures outstanding (or specific
series), which resolutions or instruments may have the effect of amending the
terms of this Initial Debenture or the Indenture.

 

This Initial Debenture may only be transferred, upon
compliance with the conditions prescribed in the Indenture, in one of the
registers to be kept at the principal offices of the Debenture Trustee in
Toronto and in such other place or places and/or by such other registrars (if
any) as the Company with the approval of the Debenture Trustee may
designate.  No transfer of this Initial
Debenture shall be valid unless made on the register by the registered holder
hereof and upon compliance with such reasonable requirements as the Debenture
Trustee and/or other registrar may prescribe and upon surrender of this Initial
Debenture for cancellation.  Thereupon a
new Initial Debenture or Initial Debentures in the same aggregate principal
amount shall be issued to the transferee in exchange hereof.

 

3

 

The following ownership restrictions apply to this
Debenture (as well as to the IPSs of the Company) and are set out in Article 3
of the Indenture: “Prohibition Against Ownership by Certain United States
Retirement Plans”; “Limitation on United States Resident Ownership”; and “Limitation
on Ownership by Electric Utilities and Others”.

 

This Initial Debenture shall not become obligatory
for any purpose until it shall have been certified by the Debenture Trustee
under the Indenture.

 

The Indenture and this Debenture shall be governed
by, and construed in accordance with, the laws of the Province of Ontario and
the federal laws of Canada applicable therein.

 

Capitalized words or expressions used in this
Initial Debenture shall, unless otherwise defined herein, have the meaning
ascribed thereto in the Indenture.  In the event that the terms and conditions stated in
this Debenture conflict, or are inconsistent, with the terms and conditions of
the Indenture, the Indenture shall prevail and take priority.

 

[remainder of page intentionally left blank]

 

4

 

IN WITNESS WHEREOF ATLANTIC POWER CORPORATION has
caused this Debenture to be signed by its authorized signatories as of the 11th day of October, 2006.

 

	
   

  	
  ATLANTIC POWER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

5

 

(FORM OF DEBENTURE TRUSTEE’S CERTIFICATE)

 

This Initial Debenture is one of the 6.25% Convertible
Secured Debentures due October 31, 2011 referred to in
the Indenture within mentioned.

 

	
   

  	
  COMPUTERSHARE TRUST COMPANY OF CANADA

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  (Authorized Officer)

  	
   

  

 

 

(FORM OF REGISTRATION PANEL)

 

(No writing hereon except by Debenture Trustee or
other registrar)

 

	
   

  	
  Signature of Debenture Trustee or Registrar

  
	
   

  	
   

  
	
   

  	
   

  

 

 

CDS & Co.

85 Richmond Street West

Toronto, Ontario

M5H 2C9

 

	
   

  	
  Date of Registration:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  In Whose Name Registered:   CDS & Co.

  

 

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto ·,
whose address, if applicable, is set forth below, this Initial Debenture (or $· principal amount
hereof*) of ATLANTIC POWER CORPORATION standing in the name(s) of the
undersigned in the register maintained by ATLANTIC POWER CORPORATION with
respect to such Initial Debenture and does hereby irrevocably authorize and
direct the Debenture Trustee to transfer such Initial Debenture in such
register, with full power of substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  

 

	
  Address of Transferee:

  	
   

  	
   

  
	
   

  	
  (Street Address, City, Province and Postal Code):

  

 

(*) If less than the full
principal amount of the within Initial Debenture is to be transferred, indicate
in the space provided the principal amount (which must be CDN$1,000 or an
integral multiple thereof, unless you hold an Initial Debenture in a
non-integral multiple of CDN$1,000, in which case such Initial Debenture is
transferable only in its entirety) to be transferred.

 

 

	
   

  	
   

  
	
   

  	
  Signature of transferring registered holder

  

 

 

EXHIBIT “1”

TO CDS GLOBAL DEBENTURE

ATLANTIC POWER CORPORATION

 

6.25% CONVERTIBLE SECURED
DEBENTURES

 

	
  Initial Principal
  Amount:   CDN$60,000,000

  	
  CUSIP: 04878QAH6

  
	
   

  	
   

  
	
  Signature of the Debenture
  Trustee:

  	
   

  	
   

  
				

 

ADJUSTMENTS

 

	
  Date

  	
   

  	
  Amount of

  Increase

  	
   

  	
  Amount of

  Decrease

  	
   

  	
  New Principal

  Amount

  	
   

  	
  Authorization

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY
OF CANADA

 

SCHEDULE “B” TO THE TRUST
INDENTURE

 

Form of Redemption
Notice

 

 

SCHEDULE “B”

 

FORM OF REDEMPTION
NOTICE

 

To:                              Holders
of 6.25% Convertible Secured Debentures (the “Debentures”)
of Atlantic Power Corporation (the “Company”)

 

Note:                   All
capitalized terms used herein have the meaning ascribed thereto in the
Indenture mentioned below, unless otherwise indicated.

 

Notice is hereby given
pursuant to Section 5.3 of the trust indenture (the “Indenture”) dated as of October 11,
2006, 2006 between the Company and Computershare Trust Company of Canada (the “Debenture Trustee”), that the aggregate
principal amount of CDN$60,000,000 of the CDN$· of Debentures
outstanding will be redeemed as of ·, 20·
(the “Redemption Date”), upon
payment of a redemption amount of CDN$· for
each CDN$1,000 principal amount of Debentures, being equal to the aggregate of (i) CDN$· (the “Redemption Price”), and (ii) accrued
and unpaid interest on such redeemed Debentures to but excluding the Redemption
Date, in each case less any withholding taxes required to be deducted
(collectively, the “Total Redemption Price”).

 

The Total Redemption Price
will be payable upon presentation and surrender of the Debentures called for
redemption at the following corporate trust office:

 

Computershare
Trust Company of Canada

100 University Ave., 9th Floor

Toronto, Ontario, M5J 2Y1

Attention:  ·

 

The interest upon the
principal amount of Debentures called for redemption shall cease to be payable
from and after the Redemption Date, unless payment of the Redemption Price
shall not be made on presentation for surrender of such Debentures at the
above-mentioned corporate trust office on or after the Redemption Date or prior
to the setting aside of the Redemption Price pursuant to the Indenture.

 

 

	
  DATED:

  	
   

  	
   

  
	
   

  	
   

  
	
  ATLANTIC POWER
  CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  
				

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY
OF CANADA

 

SCHEDULE “C” TO THE TRUST
INDENTURE

 

Form of Maturity Notice

 

 

SCHEDULE “C”

 

FORM OF MATURITY
NOTICE

 

TO:                                                                                Holders
of  6.25% Convertible
Secured Debentures due October 31, 2011 (the “Debentures”)
of Atlantic Power Corporation (the “Company”)

 

AND TO:                                             Computershare
Trust Company of Canada, as Debenture Trustee

 

NOTE:                                                            All
capitalized terms used herein have the meaning ascribed thereto in the
Indenture mentioned below, unless otherwise indicated.

 

Notice is hereby given pursuant
to the Trust Indenture (the “Indenture”)
dated as of October 11th, 2006 between the Company and Computershare Trust
Company of Canada, as debenture trustee (the “Debenture
Trustee”), that the Debentures are due and payable as of October 31,
2011 (the “Maturity Date”) and the Company
hereby advises the holders of Debentures that it will deliver to holders of
Debentures a cash payment upon presentation and surrender of the Debentures
representing any principal amount and all accrued and unpaid interest to the
Maturity Date, to which the holder is entitled.

 

DATED:            ·

 

 

	
   

  	
   

  	
  ATLANTIC
  POWER CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY
OF CANADA

 

SCHEDULE “D” TO THE TRUST
INDENTURE

 

Form of Notice of Conversion

 

 

SCHEDULE “D”

 

FORM OF NOTICE OF
CONVERSION

 

TO:                            ATLANTIC
POWER CORPORATION

 

Note:                   All
capitalized terms used herein have the meaning ascribed thereto in the
Indenture mentioned below, unless otherwise indicated.

 

The undersigned registered holder
of 6.25% Convertible Secured Debentures in the principal amount of CDN$·  irrevocably
elects to convert such Debentures (or CDN$· principal amount
thereof*) in accordance with the terms of the Indenture referred to in such
Debentures and tenders herewith the Debentures, and, if applicable, directs
that the IPSs of Atlantic Power
Corporation issuable upon a conversion (net of
applicable withholding taxes, if any) be issued and delivered to the person
indicated below.  (If IPSs are to be
issued in the name of a person other than the holder, all requisite transfer
taxes must be tendered by the undersigned.)

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Registered
  Holder)

  

 

(*) If less than the full
principal amount of the Debentures, indicate in the space provided the principal
amount (which must be CDN$1,000 or integral multiples thereof).

 

(Print name in which IPSs
are to be issued, delivered and registered)

 

	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (City, Province and Postal
  Code)

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of guarantor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized signature:

  	
   

  	
   

  

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY
OF CANADA

 

SCHEDULE “E” TO THE TRUST
INDENTURE

 

Form of Notice of Put
Exercise

 

 

SCHEDULE “E”

 

FORM OF NOTICE OF PUT
EXERCISE

 

(Change of Control)

 

PUT
EXERCISE

 

TO:                            ATLANTIC
POWER CORPORATION (the “Company”)

 

Note:                   All
capitalized terms used herein have the meaning ascribed thereto in the
Indenture mentioned below, unless otherwise indicated.

 

The undersigned registered
holder of 6.25% Convertible Secured Debentures in the principal amount of
CDN$60,000,000 irrevocably elects to put such Debentures (or CDN$· principal amount
thereof*) to the Company to be purchased by the Company on · (the “Put Date”) in accordance with the terms of
the Indenture referred to in such Debentures at a price of CDN$· for
each CDN$1,000 principal amount of Debentures plus all accrued and unpaid
interest thereon to, but excluding, the Put Date (collectively, the “Total Put Price”) and tenders herewith the
Debentures,

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature of Registered
  Holder)

  

 

*                                         If
less than the full principal amount of the Debentures, indicate in the space
provided the principal amount (which
must be CDN$1,000 or integral multiples thereof).

 

The total Put Price (after
deduction of applicable taxes) will be payable upon presentation and surrender
of the Debentures with this form on or after the Put Date at the following
corporate trust office:

 

Computershare
Trust Company of Canada

100 University Ave., 9th Floor

Toronto, Ontario M5J 2Y1

 

The interest upon the
principal amount of Debentures put to the Company shall cease to be payable
from and after the Put Date unless payment of the Total Put Price shall not be
made on presentation for surrender of such Debentures at the above mentioned
corporate trust office on or after the Put Date or prior to the setting aside
of the Total Put Price pursuant to the Indenture dated October 11th, 2006
between the Company and Computershare Trust Company of Canada as trustee.

 

 

SCHEDULE 1

 

GUARANTORS

 

Atlantic Power Holdings, LLC

 

Teton Power Funding, LLC

 

Epsilon Power Funding, LLC

 

Teton New Lake, LLC

 

Onondaga Cogeneration
Limited Partnership

 

MP Power LLC

 

Teton East Coast Generation
LLC

 

Teton Fuels Mid-Georgia LLC

 

Teton Selkirk LLC

 

Badger Power Generation I
LLC

 

Badger Power Generation II
LLC

 

Baker Lake Hydro LLC

 

Dade Investment, L.P.

 

Geddes II Company LLC

 

Geddes Cogeneration Company
LLC

 

MEP Rumford, LLC

 

NCP Dade Power LLC

 

NCP Houston Power LLC

 

NCP Pasco LLC

 

NCP Perry LLC

 

Olympia Hydro LLC

 

Orlando Power Generation I
LLC

 

Orlando Power Generation II
LLC

 

Stockton CoGen (II) LLC

 

Teton Operating Services,
LLC

 

 

SCHEDULE 2

 

PLEDGORS

 

Atlantic Power Corporation

 

Atlantic Power Holdings, LLC

 

Teton Power Funding, LLC

 

Epsilon Power Funding, LLC

 

NCP Dade Power LLC

 

NCP Pasco LLC

 

Teton East Coast Generation
LLC

 

Geddes II Company LLC

 

Geddes Cogeneration Company
LLC

 

Onondaga Cogeneration
Limited Partnership

 

PLEDGE AGREEMENTS

 

Pledge Agreement by the
Company in respect of its membership interest in Atlantic Power Holdings, LLC

 

Pledge Agreement by Atlantic
Power Holdings, LLC in respect of its membership interests in Teton
Power Funding, LLC and Epsilon Power Funding, LLC

 

Pledge Agreement by Epsilon
Power Funding, LLC in respect of its membership interest in MP Power LLC

 

Pledge Agreement by Teton
Power Funding, LLC in respect of its membership interests in Baker Lake Hydro
LLC, Badger Power Generation I LLC, Badger Power Generation II LLC, Stockton
CoGen (II) LLC, Orlando Power Generation I LLC, Orlando Power Generation
II LLC, Rockfort Power - Cayman Islands LLC and MEP Rumford, LLC

 

Pledge Agreement by Teton
East Coast Generation LLC in respect of its membership interest in NCP Houston
Power LLC, NCP Perry LLC, NCP Dade Power LLC, NCP Pasco LLC, Geddes II Company
LLC, Geddes Cogeneration Company LLC, Teton Selkirk LLC, Teton Fuels
Mid-Georgia LLC and Teton New Lake, LLC

 

Pledge Agreement by NCP Dade
Power LLC in respect of its partnership interest in Dade Investment, L.P.

 

Pledge Agreement by NCP
Pasco LLC in respect of its partnership interest in Dade Investment, L.P.

 

 

Pledge Agreement by Geddes
II Company, LLC in respect of its partnership interest in Onondaga Cogeneration
Limited Partnership

 

Pledge Agreement by Geddes
Cogeneration Company LLC in respect of its partnership interest in Onondaga
Cogeneration Limited Partnership

 

Pledge Agreement by Onondaga
Cogeneration Limited Partnership in respect of its membership interest in
Onondaga Power Swap Holdings, LLC

 

SECURITY AGREEMENT

 

Security Agreement by
Onondaga Cogeneration Limited Partnership in respect of substantially all of
its assets

 

2Exhibit
4.3

 

 

 

FIRST
SUPPLEMENTAL INDENTURE

TO THE

TRUST INDENTURE

 

Providing for the Issue of
Convertible Secured Debentures

 

Dated  November 27, 2009

 

 

 

250 YONGE
STREET

SUITE 2400

TORONTO, ONTARIO  M5B 2M6

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE 1 INTERPRETATION

  	
  2

  
	
  1.1

  	
  Interpretation of Supplemental
  Indenture

  	
  2

  
	
  1.2

  	
  Definitions

  	
  2

  
	
  1.3

  	
  Headings. Etc.

  	
  2

  
	
  1.4

  	
  Applicable Law

  	
  2

  
	
  1.5

  	
  Language

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2 INDENTURE SUPPLEMENTAL TO ORIGINAL INDENTURE

  	
  2

  
	
  2.1

  	
  Incorporation with the Original
  Indenture

  	
  2

  
	
  2.2

  	
  Supplemental of Original
  Indenture

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 SUPPLEMENTS TO ORIGINAL INDENTURE

  	
  3

  
	
  3.1

  	
  Supplements

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4 ACCEPTANCE OF TRUSTS BY THE TRUSTEE

  	
  4

  
	
  4.1

  	
  Acceptance of Trusts

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5 GENERAL

  	
  4

  
	
  5.1

  	
  No Further Amendment

  	
  4

  
	
  5.2

  	
  Enurement

  	
  5

  
	
  5.3

  	
  Governing Law

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6 EXECUTION

  	
  5

  
	
  6.1

  	
  Execution

  	
  5

  

 

 

FIRST
SUPPLEMENTAL INDENTURE

 

THIS FIRST SUPPLEMENTAL INDENTURE made as of the 27th day
of November, 2009,

 

BETWEEN:

 

ATLANTIC POWER CORPORATION, a
corporation continued under the laws of the Province of British Columbia

 

(hereinafter referred to as the “Company”)

 

- and -

 

COMPUTERSHARE TRUST COMPANY
OF CANADA, a trust company authorized to carry on business in
all of the provinces and territories of Canada

 

(hereinafter referred to as the “Debenture Trustee”)

 

WITNESSES THAT:

 

WHEREAS the Company and the Trustee are parties to a trust indenture
dated as of October 11, 2006 (the “Original Indenture”)
providing for the creation and issue of convertible secured debentures of the
Company;

 

AND WHEREAS the Company has undertaken and implemented a plan of
arrangement under Division 5 of Part 9 of the Business
Corporations Act (British Columbia) (the “Arrangement”)
to convert the Company’s income participating security structure to a
traditional common share structure as more particularly described in the notice
of special meeting of the holders of 6.25% convertible secured debentures and
management information circular (the “Circular”)
dated October 16, 2009;

 

AND WHEREAS the parties hereto are desirous of supplementing and
amending the Original Indenture in accordance with the terms hereof;

 

AND WHEREAS this supplemental indenture is being entered into by the
parties hereto pursuant to Article 17 of the Original Indenture;

 

AND WHEREAS all necessary proceedings of the Debentureholders (as
defined in the Original Indenture) and the directors of the Company have been
duly passed and all other necessary proceedings have been taken to execute this
supplemental indenture and to make the execution hereof legal, valid and
binding and in accordance with all laws respectively relating to the Company
and with all other laws and regulations in respect thereof;

 

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

 

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

 

 

ARTICLE 1

INTERPRETATION

 

1.1                                                                               Interpretation of Supplemental
Indenture

 

In this supplemental indenture “this supplemental indenture”, “hereof”,
“herein”, “hereby”, “hereunder”, and similar expressions refer to this
supplemental indenture and not to any particular Article, Section or other
portion hereof, and include any and every instrument supplemental or ancillary
hereto or in implementation hereof.

 

1.2                                                                               Definitions

 

All terms contained in this supplemental indenture, including, without
limitation, the recitals hereto, which are defined in the Original Indenture
shall, for all purposes hereof, have the meanings given to such terms in the
Original Indenture, as amended hereby, unless the context otherwise specifies
or requires.

 

1.3                                                                               Headings. Etc.

 

The division of this Indenture into Articles and Sections, the
provision of a Table of Contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this supplemental indenture, the Original Indenture or of the
Debentures.

 

1.4                                                                               Applicable Law

 

This supplemental indenture shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein and
shall be treated in all respects as Ontario contracts.  The Company hereby irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario.

 

1.5                                                                               Language

 

Each of the parties hereto hereby acknowledges that it has consented to
and requested that this Indenture and all documents relating thereto,
including, without limiting the generality of the foregoing, the form of
Debenture attached hereto as Schedule A, be drawn up in the English language only.

 

Les parties aux présentes reconnaissent avoir accepté  et demandé  que le présent acte de fiducie et tous les documents s’y
rapportant, y compris, sans restreindre la portée générale de ce qui précède,
le formulaire de débenture joint aux présentes à titre d’annexe A, soient
rédigés en langue anglaise seulement.

 

ARTICLE 2

INDENTURE SUPPLEMENTAL TO ORIGINAL INDENTURE

 

2.1                                                                               Incorporation with the Original
Indenture

 

This supplemental indenture is a supplemental indenture within the
meaning of the Original Indenture, and the Original Indenture shall henceforth
be read in conjunction with this

 

2

 

supplemental indenture and shall together have
effect so far as practicable as if all the provisions of the Original Indenture
and this supplemental indenture were contained in one instrument.

 

2.2                                                                               Supplemental of Original Indenture

 

The Original Indenture is hereby supplemented and amended by the
addition of the provisions hereof.

 

ARTICLE 3

SUPPLEMENTS TO ORIGINAL INDENTURE

 

3.1                                                                               Supplements

 

The Original Indenture is hereby supplemented and amended as follows:

 

(a)                                  by
deleting the words “, including, without limitation, corporate stock
represented by IPSs and corporate stock outstanding upon the separation of IPSs
into the securities represented thereby” in the definition of “Capital Stock”
in Section 1.1(m) of the Original Indenture;

 

(b)                                 by
adding the words “(other than any such sale, lease or transfer to any such
Person or group that does not involve a change in the beneficial ownership of
the Company as a result of any such sale, lease or transfer)” after the words “the
last day of the most recent fiscal quarter” in paragraph (i) of the
definition of “Change of Control” in Section 1.1(p) of the Original
Indenture;

 

(c)                                  by
deleting the words “IPSs,” in the definition of “Freely Tradeable” in Section 1.1(qq)
of the Original Indenture;

 

(d)                                 by
deleting the definitions of “IPS”, “U.S. Plan Assets”, “U.S. Retirement Plan”, “U.S.
Retirement Plan Debentures”, “U.S. Retirement Plan Holder”, “U.S. Retirement
Plan Prohibition” and “U.S. Tax Code” in Sections 1.1(fff), (jjjjj), (kkkkk),
(lllll), (mmmmm), (nnnnn) and (ooooo), respectively, of the Original Indenture
in their entirety;

 

(e)                                  by
deleting Article 3 and Sections 7.4(g) and 7.12 of the Original
Indenture in their entirety;

 

(f)                                    by
deleting the words “and fully-paid Subordinated Notes” from Section 7.4(e) of
the Original Indenture;

 

(g)                                 by
deleting the words “(or either of the Common Shares or Subordinated Notes
comprising the IPSs)” in Section 7.5(d) of the Original Indenture;

 

(h)                                 by
deleting the words “IPSs, Common Shares” in Section 7.5(h) of the
Original Indenture and replacing it with “Common Shares and”;

 

(i)                                     by
deleting the words “(and the Common Shares forming part of the IPSs are listed
on the TSX),” and “and the Common Shares,” in Section 8.8 of the Original
Indenture;

 

3

 

(j)                                     by
deleting paragraph (f) of Section 17.1 in its entirety;

 

(k)                                  by
deleting the words “(without adjustment for interest accrued hereon or for
dividends, distributions or interest payments on the IPSs issuable upon
conversion)” and replacing them with the words “(without adjustment for
interest accrued hereon or for dividends or distributions on the Common Shares
issuable upon conversion)” in the seventh paragraph of Schedule “A” to the
Original Indenture;

 

(l)                                     by
deleting the words “No adjustment in the number of IPSs to be issued upon
conversion will be made for distributions, dividends or interest payments on
IPSs issuable upon conversion or for interest accrued on Initial Debentures
surrendered for conversion” and replacing them with “No adjustment in the
number of Common Shares to be issued upon conversion will be made for
distributions or dividends on Common Shares issuable upon conversion or for
interest accrued on Initial Debentures surrendered for conversion.” in the
seventh paragraph of Schedule “A” to the Original Indenture;

 

(m)                               after
giving effect to the foregoing, by deleting the words “IPS” and “IPSs” in the
Original Indenture and replacing them with the words “Common Share” and “Common
Shares”, respectively;

 

(n)                                 by
deleting all references to an interest rate of 6.25% for the Initial Debentures
in the Original Indenture and replacing it with an interest rate of 6.50%; and

 

(o)                                 by
deleting the words “October 31, 2011” in the Original Indenture and
replacing them with the words “October 31, 2014”.

 

ARTICLE 4

ACCEPTANCE OF TRUSTS BY THE TRUSTEE

 

4.1                                                                               Acceptance of Trusts

 

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

 

ARTICLE 5

GENERAL

 

5.1                                                                               No Further Amendment

 

The Original Indenture is amended as provided herein, and any changes
necessary to implement the amendments intended hereby are hereby made to any
other provisions of the Original Indenture where necessary, mutatis
mutandis.  Save as amended hereby, the
Original Indenture is unamended and in full force and effect, in accordance
with its terms.

 

4

 

5.2                                                                               Enurement

 

Subject to the express terms of the Original Indenture, this
supplemental indenture shall be binding upon the parties hereto and their
respective successors and assigns and shall enure to the benefit of the parties
hereto and their respective successors and permitted assigns.

 

5.3                                                                               Governing Law

 

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND SHALL BE TREATED IN
ALL RESPECTS AS AN ONTARIO CONTRACT.

 

ARTICLE 6

EXECUTION

 

6.1                                                                               Execution

 

This supplemental indenture may be simultaneously executed in several
counterparts, each of which when so executed shall be deemed to be an original
and such counterparts together shall constitute one and the same instrument.

 

[Remainder of this page left
intentionally blank.]

 

5

 

IN WITNESS whereof the parties hereto have executed these presents by
the hands of their proper officers.

 

 

	
   

  	
  ATLANTIC POWER CORPORATION, by its manager,
  ATLANTIC POWER MANAGEMENT, LLC

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Barry
  Welch

  
	
   

  	
   

  	
  Barry Welch

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPUTERSHARE TRUST COMPANY OF CANADA  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/
  Chris Nitsis

  
	
   

  	
   

  	
  Name: Chris Nitsis

  
	
   

  	
   

  	
  Title: Professional, Corporate Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/
  David Ha

  
	
   

  	
   

  	
  Name: David Ha

  
	
   

  	
   

  	
  Title: Professional, Corporate Trust

  

 

6

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