Document:

EXHIBIT 10.18

 

[DIRECTORS]

 

NOTICE

 

This Restricted Stock Award Agreement
(“Agreement”) will be valid only if the Grantee executes and delivers this
Agreement and the attached Stock Power of Attorney to Internet Security
Systems, Inc., Attn:                            ,
on or before                       ,
20    .

 

RESTRICTED STOCK AWARD AGREEMENT

under the

INTERNET SECURITY SYSTEMS, INC.

2005 STOCK INCENTIVE PLAN

 

THIS AGREEMENT, made and entered into as of
the          day of         ,
20    , by and between Internet Security Systems, Inc.
(“the “Company”) and                       
(“Grantee”).

 

WITNESSETH THAT:

 

WHEREAS, the Company maintains the Internet
Security Systems, Inc. 2005 Stock Incentive Plan (the “Plan”), and the Grantee
has been selected by the Committee to receive a Restricted Stock Award under
the Plan;

 

NOW, THEREFORE, IT IS AGREED, by and between
the Company and the Grantee, as follows:

 

1.             Award of Restricted Stock

 

1.1           The
Company hereby grants to the Grantee an award of                         
(              )
Shares of restricted stock (“Restricted Stock”), subject to, and in accordance
with, the restrictions, terms and conditions set forth in this Agreement.  The grant date of this award of Restricted
Stock is                ,
20     (“Grant Date”).

 

1.2           This
Agreement shall be construed in accordance and consistent with, and subject to,
the provisions of the Plan (the provisions of which are incorporated herein by
reference) and, except as otherwise expressly set forth herein, the capitalized
terms used in this Agreement shall have the same definitions as set forth in
the Plan.

 

2.             Restrictions

 

2.1           Subject
to Sections 2.2, 2.3, and 2.4 below, if the Grantee continues to perform
services as a director for the Company or a Subsidiary, the Grantee shall
become vested in the Restricted Stock over the         -year
period from the Grant Date, as follows:  [        
of the shares of Restricted Stock shall vest at the end of each                             
beginning                         
after

 

 

the Grant Date] [          
of the shares of Restricted Stock shall vest on                                 ,
           of the shares of
Restricted Stock shall vest on                                 ,
and            
of the shares of Restricted Stock shall vest on                                 ] (each such date
shall be a “Vesting Date”) such that on                ,
20     (the “Final Vesting Date”) all of the shares of
Restricted Stock shall be fully vested. 
On each Vesting Date, Grantee shall own the Vested Shares of Restricted
Stock free and clear of all restrictions imposed by this Agreement (except
those imposed by Section 3.4 below).  For
purposes of this Agreement, performance of services as a director for any
Subsidiary of the Company, or service as an employee of the Company or any
Subsidiary of the Company, shall be considered performing service as a director
for the Company, and references to performing services as a director for the
Company or termination of services for or with the Company, shall include
services as an employee of the Company or a Subsidiary.

 

2.2           In
the event prior to the Vesting Date, Grantee dies while performing services as
a director of the Company, Grantee’s service as a director is terminated by
reason of Disability or Grantee’s Retirement, the unvested Shares of Restricted
Stock shall become fully vested and non-forfeitable as of the date of Grantee’s
death, Disability or Retirement.  The
Company shall transfer vested Shares of Restricted Stock, free and clear of any
restrictions imposed by this Agreement (except for Section 3.4) to Grantee or,
if applicable, to Grantee’s surviving spouse or, if none, to his estate, as
soon as practical after his or her date of death, Disability or Retirement.

 

2.3           Except
for death, Disability or Retirement as provided in Section 2.2, a Change in
Control as provided in Section 2.4, or unless the Committee in its sole
discretion determines otherwise with respect to all or any portion of the
Shares of Restricted Stock, if Grantee’s service as a director terminates prior
to the Vesting Date, all unvested Shares of Restricted Stock shall be
immediately forfeited.

 

2.4           Notwithstanding
the other provisions of this Agreement, in the event of a Change in Control
prior to Grantee’s Final Vesting Date, the unvested shares of Restricted Stock
shall become fully vested and nonforfeitable as of the date of the Change in
Control.  On the date of the Change in
Control, the Company shall deliver to Grantee a certificate(s) for such
Restricted Stock, free and clear of any restrictions imposed by this Agreement.

 

2.5           Except
for a Permitted Transfer, the Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date Grantee becomes
vested in the Restricted Stock.  For
purposes of this Agreement, a Permitted Transfer means (i) a gratuitous
transfer of the Restricted Stock, provided and only if Grantee obtains the
Company’s prior written consent to such transfer, (ii) a transfer of title to
the Restricted Stock effected pursuant to Grantee’s will or the laws of
interstate succession following Grantee’s death or, (iii) a transfer to the
Company in pledge as security for any purchase-money indebtedness incurred by
Grantee in connection with the acquisition of the Restricted Stock.

 

3.             Stock; Dividends; Voting

 

3.1           Upon
delivery to the Company of the executed Stock Powers attached hereto, the
Company shall register on the Company books stock certificate(s) evidencing the
shares of Restricted Stock in the name of the Grantee.  Physical possession or custody of such stock

 

2

 

certificate(s) shall be retained by the
Company until such time as the shares of Restricted Stock are fully vested in
accordance with Section 2.  While in its
possession, the Company reserves the right to place a legend on the stock
certificate(s) restricting the transferability of such certificates and
referring to the terms and conditions (including forfeiture) of this Agreement
and the Plan.  Upon forfeiture of all or
a portion of the shares of Restricted Stock, the stock certificate(s) held on
behalf of the Grantee for such forfeited Restricted Stock shall be transferred
to the Company pursuant to the executed Stock Power described above.

 

3.2           During
the period the Restricted Stock is not vested (and has not been forfeited), the
Grantee shall be entitled to receive dividends and/or other distributions
declared on such Restricted Stock and Grantee shall be entitled to vote such
Restricted Stock.

 

3.3           In
the event of a change in capitalization, the number and class of shares of
Restricted Stock or other securities that Grantee shall be entitled to, and
shall hold, pursuant to this Agreement shall be appropriately adjusted or
changed to reflect the change in capitalization, provided that any such
additional shares of Restricted Stock or additional or different shares or
securities shall remain subject to the restrictions in this Agreement.  If additional shares of common stock of the
Company or another corporation, or other consideration is issued in connection
with the Restricted Stock at a time at which the restrictions specified in this
Agreement have not lapsed, the Grantee shall execute and deliver to the
Committee additional Stock Power(s) with respect to any such shares of stock,
deliver to the Committee the stock certificates representing such shares, and
forward to the Committee any such other consideration.  Such stock certificates and/or other consideration
shall be retained by the Company and shall be credited to the account of the
Grantee and shall be distributed to the Grantee, subject to forfeiture and the
other terms and conditions of this Agreement and the Plan, at the same time as
the shares of Restricted Stock are to be distributed free of all restrictions.

 

3.4           The
Grantee represents and warrants that he is acquiring the Restricted Stock for
investment purposes only, and not with a view to distribution thereof.  The Grantee is aware that the Restricted
Stock may not be registered under the federal or any state securities laws and
that, in addition to the other restrictions on the Restricted Stock, the shares
will not be able to be transferred unless an exemption from registration is
available.  By making this award of
Restricted Stock, the Company is not undertaking any obligation to register the
Restricted Stock under any federal or state securities laws.

 

4.             No Right to Continued Service

 

Nothing in this Agreement or the Plan shall
be interpreted or construed to confer upon the Grantee any right with respect
to continuance of performance of services as a director for the Company or a
Subsidiary, nor shall this Agreement or the Plan interfere in any way with the
right of the Company or a Subsidiary to terminate the Grantee’s service as a
director at any time, subject to Grantee’s rights under this Agreement.

 

5.             Taxes and Withholding

 

The Grantee shall be responsible for all
federal, state and local income taxes payable with respect to this award of
Restricted Stock and any employment taxes payable by Grantee.  The

 

3

 

Grantee shall
have the right to make such elections under the Internal Revenue Code of 1986,
as amended, as are available in connection with this award of Restricted Stock,
including a Section 83(b) election, provided, however, that Grantee
acknowledges and agrees that it is Grantee’s responsibility, and not the
Company’s, to prepare and timely file any election under Section 83(b) (even if
Grantee requests the Company to do such filing).  The Company and Grantee agree to report the
value of the Restricted Stock in a consistent manner for federal income tax
purposes.  The Company shall have the right
to retain and withhold from any payment of Restricted Stock the amount of taxes
required by any government to be withheld or otherwise deducted and paid with
respect to such payment.  The Company may
require Grantee to reimburse the Company for any such taxes required to be
withheld and may withhold any distribution in whole or in part until the
Company is so reimbursed.  In lieu
thereof, the Company shall have the right to withhold from any other cash
amounts due to Grantee an amount equal to such taxes required to be withheld or
withhold and cancel (in whole or in part) a number of shares of Restricted
Stock having a market value not less than the amount of such taxes.

 

6.             Grantee Bound By The Plan

 

The Grantee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions
thereof.

 

7.             Modification of Agreement

 

This Agreement may be modified, amended,
suspended or terminated, and any terms or conditions may be waived, but only by
a written instrument executed by the parties hereto.

 

8.             Severability

 

Should any provision of this Agreement be
held by a court of competent jurisdiction to be unenforceable or invalid for
any reason, the remaining provisions of this Agreement shall not be affected by
such holding and shall continue in full force in accordance with their terms.

 

9.             Governing Law

 

The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Delaware without giving effect to the conflicts of laws principles thereof.

 

10.          Successors in Interest

 

This Agreement shall inure to the benefit of,
and be binding upon, the Company and its successors and assigns, and upon any
person acquiring, whether by merger, consolidation, reorganization, purchase of
stock or assets, or otherwise, all or substantially all of the Company’s assets
and business.  This Agreement shall inure
to the benefit of the Grantee’s legal representatives.  All obligations imposed upon the Grantee and
all rights granted to the Company under this Agreement shall be final, binding
and conclusive upon the Grantee’s heirs, executors, administrators and
successors.

 

4

 

11.          Resolution of Disputes

 

Any dispute or disagreement which may arise
under, or as a result of, or in any way relate to the interpretation,
construction or application of this Agreement shall be determined by the
Committee.  Any determination made
hereunder shall be final, binding and conclusive on the Grantee and the Company
for all purposes.

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above written.

 

 

	
   

  	
  INTERNET SECURITY SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE:

  
	
   

  	
   

  
	
   

  	
   

  

 

5

 

STOCK POWER

 

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to                                                                                                                                         
(          ) shares of the
common stock of Internet Security Systems, Inc. (the “Company”) registered on
the books of the Company in the name of the undersigned (whether a certificate
has been issued or not), and does hereby irrevocably constitute and appoint                                                                   
attorney to transfer said stock on the books of the Company, with full power of
substitution in the premises.

 

 

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  

 

6Exhibit 4.1

 

MDC PARTNERS INC.

 

 

and

 

 

COMPUTERSHARE TRUST
COMPANY OF CANADA

 

Providing for the Issue of Debentures

 

 

 

TRUST INDENTURE

 

 

 

 

Dated as of the 28th
day of June, 2005

 

 

TABLE OF CONTENTS

 

	
   

  	
  ARTICLE 1

  	
   

  
	
   

  	
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
   

  
	
  Section 1.2

  	
  Meaning of “Outstanding”

  	
   

  
	
  Section 1.3

  	
  Incorporation by Reference of Trust
  Indenture Act

  	
   

  
	
  Section 1.4

  	
  Interpretation

  	
   

  
	
  Section 1.5

  	
  Headings, etc.

  	
   

  
	
  Section 1.6

  	
  Day not a Business Day

  	
   

  
	
  Section 1.7

  	
  Applicable Law

  	
   

  
	
  Section 1.8

  	
  Monetary References

  	
   

  
	
  Section 1.9

  	
  Invalidity, etc.

  	
   

  
	
  Section 1.10

  	
  Language

  	
   

  
	
  Section 1.11

  	
  Successors and Assigns

  	
   

  
	
  Section 1.12

  	
  Benefits of Indenture

  	
   

  
	
  Section 1.13

  	
  References to Acts of the Corporation or
  the Directors of the Corporation

  	
   

  
	
  Section 1.14

  	
  No Recourse Against Directors

  	
   

  
	
  Section 1.15

  	
  Schedules

  	
   

  
	
  Section 1.16

  	
  Trust Indenture Act Controls

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 2

  	
   

  
	
   

  	
  THE DEBENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Limit of Debentures

  	
   

  
	
  Section 2.2

  	
  Terms of Debentures of any Series

  	
   

  
	
  Section 2.3

  	
  Form of Debentures

  	
   

  
	
  Section 2.4

  	
  Form and Terms of Initial Debentures

  	
   

  
	
  Section 2.5

  	
  Certification and Delivery of Additional
  Debentures

  	
   

  
	
  Section 2.6

  	
  Issue of Global Debentures

  	
   

  
	
  Section 2.7

  	
  Execution of Debentures

  	
   

  
	
  Section 2.8

  	
  Certification

  	
   

  
	
  Section 2.9

  	
  Interim Debentures or Certificates

  	
   

  
	
  Section 2.10

  	
  Mutilation, Loss, Theft or Destruction

  	
   

  
	
  Section 2.11

  	
  Concerning Interest

  	
   

  
	
  Section 2.12

  	
  Debentures to Rank Subordinate and Pari
  Passu

  	
   

  
	
  Section 2.13

  	
  Payments of Amounts Due on Maturity

  	
   

  
	
  Section 2.14

  	
  U.S. 1933 Act Legend on the Debentures

  	
   

  
	
  Section 2.15

  	
  Payment of Interest

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 3

  	
   

  
	
   

  	
  REGISTRATION,
  TRANSFER, EXCHANGE AND OWNERSHIP

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Fully Registered Debentures

  	
   

  
	
  Section 3.2

  	
  Global Debentures

  	
   

  
	
  Section 3.3

  	
  Transferee Entitled to Registration

  	
   

  
	
  Section 3.4

  	
  No Notice of Trusts

  	
   

  
	
  Section 3.5

  	
  Registers Open for Inspection

  	
   

  

 

i

 

	
  Section 3.6

  	
  Exchanges of Debentures

  	
   

  
	
  Section 3.7

  	
  Closing of Registers

  	
   

  
	
  Section 3.8

  	
  Charges for Registration, Transfer and
  Exchange

  	
   

  
	
  Section 3.9

  	
  Ownership of Debentures

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 4

  	
   

  
	
   

  	
  REDEMPTION
  AND PURCHASE OF DEBENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Applicability of Article

  	
   

  
	
  Section 4.2

  	
  Partial Redemption

  	
   

  
	
  Section 4.3

  	
  Notice of Redemption

  	
   

  
	
  Section 4.4

  	
  Debentures Due on Redemption Dates

  	
   

  
	
  Section 4.5

  	
  Deposit of Redemption Moneys

  	
   

  
	
  Section 4.6

  	
  Right to Repay Redemption Price in Shares

  	
   

  
	
  Section 4.7

  	
  Failure to Surrender Debentures Called for
  Redemption

  	
   

  
	
  Section 4.8

  	
  Cancellation of Debentures Redeemed

  	
   

  
	
  Section 4.9

  	
  Purchase of Debentures by the Corporation

  	
   

  
	
  Section 4.10

  	
  Right to Repay Principal Amount in Shares
  at Maturity

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 5

  	
   

  
	
   

  	
  SUBORDINATION
  OF DEBENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Applicability of Article

  	
   

  
	
  Section 5.2

  	
  Order of Payment

  	
   

  
	
  Section 5.3

  	
  Subrogation to Rights of Holders of Senior
  Indebtedness

  	
   

  
	
  Section 5.4

  	
  Obligation to Pay Not Impaired

  	
   

  
	
  Section 5.5

  	
  No Payment if Senior Indebtedness in
  Default

  	
   

  
	
  Section 5.6

  	
  Payment on Debentures Permitted

  	
   

  
	
  Section 5.7

  	
  Confirmation of Subordination

  	
   

  
	
  Section 5.8

  	
  Knowledge of Trustee

  	
   

  
	
  Section 5.9

  	
  Trustee May Hold Senior Indebtedness

  	
   

  
	
  Section 5.10

  	
  Rights of Holders of Senior Indebtedness
  Not Impaired

  	
   

  
	
  Section 5.11

  	
  Altering the Senior Indebtedness

  	
   

  
	
  Section 5.12

  	
  Additional Indebtedness

  	
   

  
	
  Section 5.13

  	
  Right of Debentureholder to Convert Not
  Impaired

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 6

  	
   

  
	
   

  	
  CONVERSION OF
  DEBENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Applicability of Article

  	
   

  
	
  Section 6.2

  	
  Revival of Right to Convert

  	
   

  
	
  Section 6.3

  	
  Manner of Exercise of Right to Convert

  	
   

  
	
  Section 6.4

  	
  Adjustment of Conversion Price

  	
   

  
	
  Section 6.5

  	
  No Requirement to Issue Fractional Shares

  	
   

  
	
  Section 6.6

  	
  Corporation to Reserve Shares

  	
   

  
	
  Section 6.7

  	
  Cancellation of Converted Debentures

  	
   

  
	
  Section 6.8

  	
  Certificate as to Adjustment

  	
   

  
	
  Section 6.9

  	
  Notice of Special Matters

  	
   

  
	
  Section 6.10

  	
  Protection of Trustee

  	
   

  

 

ii

 

	
  Section 6.11

  	
  U.S. 1933 Act Legend on Shares

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 7

  	
   

  
	
   

  	
  COVENANTS
  OF THE CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  To Pay Principal and Interest

  	
   

  
	
  Section 7.2

  	
  To Pay Trustee’s Remuneration

  	
   

  
	
  Section 7.3

  	
  To Give Notice of Default

  	
   

  
	
  Section 7.4

  	
  Preservation of Existence, etc.

  	
   

  
	
  Section 7.5

  	
  Additional Covenants

  	
   

  
	
  Section 7.6

  	
  Reporting Requirements

  	
   

  
	
  Section 7.7

  	
  Delivery of Certain Information

  	
   

  
	
  Section 7.8

  	
  No Distributions on Shares if Event of
  Default

  	
   

  
	
  Section 7.9

  	
  Performance of Covenants of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 8

  	
   

  
	
   

  	
  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Events of Default

  	
   

  
	
  Section 8.2

  	
  Notice of Events of Default

  	
   

  
	
  Section 8.3

  	
  Waiver of Default

  	
   

  
	
  Section 8.4

  	
  Waiver of Declaration

  	
   

  
	
  Section 8.5

  	
  Enforcement by the Trustee

  	
   

  
	
  Section 8.6

  	
  No Suits by Debentureholders

  	
   

  
	
  Section 8.7

  	
  Application of Moneys by Trustee

  	
   

  
	
  Section 8.8

  	
  Notice of Payment by Trustee

  	
   

  
	
  Section 8.9

  	
  Trustee May Demand Production of
  Debentures

  	
   

  
	
  Section 8.10

  	
  Rights and Remedies Cumulative

  	
   

  
	
  Section 8.11

  	
  Judgement Against the Corporation

  	
   

  
	
  Section 8.12

  	
  Immunity of Trustees and Others

  	
   

  
	
  Section 8.13

  	
  Control by Holders

  	
   

  
	
  Section 8.14

  	
  Rights of Holders to Receive Payment

  	
   

  
	
  Section 8.15

  	
  Delay or Omission Not Waiver

  	
   

  
	
  Section 8.16

  	
  Undertaking for Costs

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 9

  	
   

  
	
   

  	
  SATISFACTION
  AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Cancellation and Destruction

  	
   

  
	
  Section 9.2

  	
  Non-Presentation of Debentures

  	
   

  
	
  Section 9.3

  	
  Repayment of Unclaimed Moneys or Shares

  	
   

  
	
  Section 9.4

  	
  Discharge

  	
   

  
	
  Section 9.5

  	
  Satisfaction

  	
   

  
	
  Section 9.6

  	
  Continuance of Rights, Duties and
  Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 10

  	
   

  
	
   

  	
  SHARE
  INTEREST PAYMENT ELECTION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Interest Payment Election

  	
   

  

 

iii

 

	
   

  	
  ARTICLE 11

  	
   

  
	
   

  	
  SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.1

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

  	
   

  
	
  Section 11.2

  	
  Vesting of Powers in Successor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 12

  	
   

  
	
   

  	
  COMPULSORY
  ACQUISITION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  Definitions

  	
   

  
	
  Section 12.2

  	
  Offer for Debentures

  	
   

  
	
  Section 12.3

  	
  Offeror’s Notice to Dissenting
  Debentureholders

  	
   

  
	
  Section 12.4

  	
  Delivery of Debenture(s)

  	
   

  
	
  Section 12.5

  	
  Payment of Consideration to Trustee

  	
   

  
	
  Section 12.6

  	
  Consideration to be held in Corporation

  	
   

  
	
  Section 12.7

  	
  Completion of Transfer of Debentures to
  Offeror

  	
   

  
	
  Section 12.8

  	
  Communication of Offer to Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 13

  	
   

  
	
   

  	
  MEETINGS OF
  DEBENTUREHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.1

  	
  Right to Convene Meeting

  	
   

  
	
  Section 13.2

  	
  Notice of Meetings

  	
   

  
	
  Section 13.3

  	
  Chairman

  	
   

  
	
  Section 13.4

  	
  Quorum

  	
   

  
	
  Section 13.5

  	
  Power to Adjourn

  	
   

  
	
  Section 13.6

  	
  Show of Hands

  	
   

  
	
  Section 13.7

  	
  Poll

  	
   

  
	
  Section 13.8

  	
  Voting

  	
   

  
	
  Section 13.9

  	
  Proxies

  	
   

  
	
  Section 13.10

  	
  Persons Entitled to Attend Meetings

  	
   

  
	
  Section 13.11

  	
  Powers Exercisable by Ordinary Resolution

  	
   

  
	
  Section 13.12

  	
  Meaning of “Ordinary Resolution”

  	
   

  
	
  Section 13.13

  	
  Powers Cumulative

  	
   

  
	
  Section 13.14

  	
  Minutes

  	
   

  
	
  Section 13.15

  	
  Instruments in Writing

  	
   

  
	
  Section 13.16

  	
  Binding Effect of Resolutions

  	
   

  
	
  Section 13.17

  	
  Evidence of Rights Of Debentureholders

  	
   

  
	
  Section 13.18

  	
  Concerning Serial Meetings

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 14

  	
   

  
	
   

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.1

  	
  Notice to Corporation and Trustee

  	
   

  
	
  Section 14.2

  	
  Notice to Debentureholders

  	
   

  
	
  Section 14.3

  	
  Communication by Holders with Other Holders

  	
   

  
	
  Section 14.4

  	
  Mail Service Interruption

  	
   

  
				

 

iv

 

	
   

  	
  ARTICLE 15

  	
   

  
	
   

  	
  CONCERNING THE
  TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.1

  	
  No Conflict of Interest

  	
   

  
	
  Section 15.2

  	
  Replacement of Trustee

  	
   

  
	
  Section 15.3

  	
  Duties of Trustee

  	
   

  
	
  Section 15.4

  	
  Reliance Upon Declarations, Opinions, etc.

  	
   

  
	
  Section 15.5

  	
  Evidence and Authority to Trustee,
  Opinions, etc.

  	
   

  
	
  Section 15.6

  	
  Officer’s Certificates Evidence

  	
   

  
	
  Section 15.7

  	
  Experts, Advisers and Agents

  	
   

  
	
  Section 15.8

  	
  Trustee May Deal in Debentures

  	
   

  
	
  Section 15.9

  	
  Investment of Moneys Held by Trustee

  	
   

  
	
  Section 15.10

  	
  Trustee Not Ordinarily Bound

  	
   

  
	
  Section 15.11

  	
  Trustee Not Required to Give Security

  	
   

  
	
  Section 15.12

  	
  Trustee Not Bound to Act on Corporation’s
  Request

  	
   

  
	
  Section 15.13

  	
  Conditions Precedent to Trustee’s
  Obligations to Act Hereunder

  	
   

  
	
  Section 15.14

  	
  Authority to Carry on Business

  	
   

  
	
  Section 15.15

  	
  Compensation and Indemnity

  	
   

  
	
  Section 15.16

  	
  Acceptance of Trustee

  	
   

  
	
  Section 15.17

  	
  Notice of Defaults

  	
   

  
	
  Section 15.18

  	
  Reports to Debentureholders

  	
   

  
	
  Section 15.19

  	
  Eligibility; Disqualification

  	
   

  
	
  Section 15.20

  	
  Preferential Collection of Claims Against
  Corporation

  	
   

  
	
  Section 15.21

  	
  Contents of Officer’s Certificate or
  Opinion of Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 16

  	
   

  
	
   

  	
  SUPPLEMENTAL
  INDENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 16.1

  	
  Supplemental Indentures

  	
   

  
	
  Section 16.2

  	
  Compliance with Trust Indenture Act

  	
   

  
	
  Section 16.3

  	
  Trustee to Sign Supplemental Indentures

  	
   

  
	
  Section 16.4

  	
  Effect of Supplemental Indentures

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 17

  	
   

  
	
   

  	
  EXECUTION AND
  FORMAL DATE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 17.1

  	
  Execution

  	
   

  
	
  Section 17.2

  	
  Formal Date

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADDENDA

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE “A” FORM OF
  INITIAL DEBENTURE

  	
   

  
	
  SCHEDULE “B” FORM OF
  REDEMPTION NOTICE

  	
   

  
	
  SCHEDULE “C” FORM OF
  MATURITY NOTICE

  	
   

  
	
  SCHEDULE “D” FORM OF
  NOTICE OF CONVERSION

  	
   

  
	
  SCHEDULE “E” FORM OF
  NOTICE OF EXERCISE

  	
   

  
	
  SCHEDULE “F” FORM OF
  TRANSFER CERTIFICATE

  	
   

  
				

 

v

 

THIS INDENTURE made as of the 28th day of June, 2005 between MDC PARTNERS INC., a corporation continued
under the laws of Canada, (hereinafter called the “Corporation”)
and COMPUTERSHARE TRUST COMPANY OF CANADA,
a trust company existing under the laws of Canada (hereinafter called the “Trustee”)

 

WITNESSETH
THAT:

 

WHEREAS the Corporation deems it necessary for its investment purposes to
create and issue the Debentures to be created and issued in the manner
hereinafter appearing;

 

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

 

AND WHEREAS, when certified by the Trustee and issued as provided in this Indenture,
all necessary steps in relation to the Corporation will have been duly enacted,
passed and/or confirmed and other proceedings taken and conditions complied
with to make the creation and issue of the Debentures proposed to be issued
hereunder legal, valid and binding on the Corporation in accordance with the
laws relating to the Corporation;

 

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

 

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

 

ARTICLE 1

INTERPRETATION

 

Section 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:

 

“1933 Act” means the United States Securities Act of 1933, as amended from
time to time;

 

“1934 Act” means the United States
Securities Exchange Act of 1934, as amended from time to time;

 

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

 

“Additional Amounts” has the meaning given to it in the
Registration Rights Agreement;

 

“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;

 

“Affiliate” means, in respect of any Person, any other Person that is
affiliated with such Person for the purposes of the Securities Act (Ontario), as
amended from time to time;

 

 

“Applicable
Procedures” means, with respect to any
transfer or transaction involving a Global Debenture or beneficial interest
therein, the rules and procedures of the Depositary for such Debenture, in
each case to the extent applicable to such transaction and as in effect from
time to time;

 

“Applicable
Securities Legislation” means applicable
securities laws in each of the Provinces of Canada;

 

“Authorized
Investment” has the
meaning ascribed hereto in Section 15.9;

 

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

 

“Broker” has the meaning ascribed
thereto in Section 10.1(b);

 

“Business
Day” means any day other than a Saturday,
Sunday or holiday in Toronto, Ontario or any other day that the Trustee in
Toronto, Ontario is not generally open for business;

 

“Change of
Control” means the acquisition by any
Person, or group of Persons acting jointly or in concert, of voting control or
direction of Shares, or securities convertible into or carrying the right to
acquire Shares, representing an aggregate of over 50% or more of the
outstanding Shares;

 

“Change of Control Date” has the meaning ascribed
thereto in Section 2.4(j)(i);

 

“Change of Control Notice” has the meaning ascribed thereto
in Section 2.4(j)(i);

 

“Conversion
Price” means the dollar amount for which
each Share may be issued from time to time upon the conversion of Debentures or
any series of Debentures which are by their terms convertible in accordance
with the provisions of Article 6, and in the case of the Initial
Debentures as defined in Section 2.4(f);

 

“Corporation” means MDC Partners Inc. and includes any successor to or of the
Corporation which shall have complied with the provisions of Article 11;

 

“Corporation’s
Auditors” or “Auditors of
the Corporation” means an independent firm of chartered accountants
duly appointed as auditors of the Corporation;

 

“Corporation
Offer” has the meaning ascribed thereto in Section 2.4(j)(i);

 

“Counsel” means a barrister or solicitor or firm of barristers or solicitors
retained or employed by the Trustee and acceptable to the Corporation or
retained or employed by the Corporation and acceptable to the Trustee;

 

2

 

“Current
Market Price” means the volume weighted
average trading price of the Shares for the period of 20 consecutive trading
days ending on the fifth trading day preceding the date of determination on the
TSX (or, if the Shares are not listed thereon, on such stock exchange on which
the Shares are listed as may be selected for such purpose by the directors of
the Corporation and approved by the Trustee, or if the Shares are not listed on
any stock exchange, then on the over-the-counter market; provided further that
if the Shares are not then listed on any stock exchange or traded on any
over-the-counter market, the Current Market Price shall be the fair market
value of the Shares as at such date as determined by an independent nationally-recognized
investment dealer selected by the Corporation). The weighted average price
shall be determined by dividing the aggregate sale price of all Shares sold on
the said exchange or market, as the case may be, during the said 20 consecutive
trading days by the total number of Shares so sold during such period.  For purposes of Section 2.4(d), the
Current Market Price for the 20 trading days referred to therein need not be
consecutive days;

 

“Debentureholders” or “holders” means the Persons for the
time being entered in the register for Debentures as registered holders of
Debentures payable to a named payee;

 

“Debentures” means the debentures, notes or other evidence of indebtedness of
the Corporation issued and certified under this Trust Indenture, or deemed to
be issued and certified under this Trust Indenture, including, without
limitation, the Initial Debentures, and for the time being outstanding, whether
in definitive or interim form;

 

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

 

“Default” means any event
which is, or after notice or passage of time or both would be, an Event of
Default;

 

“Depositary” 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
Depositary by the Corporation pursuant to Section 3.2 until a successor
Depositary shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Depositary”
shall mean each person who is then a Depositary hereunder, and if at any time
there is more than one such person, “Depositary” as
used with respect to the Debentures of any series shall mean each Depositary
with respect to the Global Debenture(s) of such series and, in the case of the
Initial Debentures, the Depositary shall initially be The Canadian Depository
for Securities Limited;

 

“Designated
Office” means the principal stock trading
office of the Trustee in Toronto, Ontario;

 

“directors” means the directors of the Corporation from time to time or,
whenever duly empowered, an officer of the Corporation for the time being duly
empowered by resolution of the Directors of the Corporation and reference to
action “by the directors” means action by the directors of the Corporation as a
board;

 

3

 

“Event of
Default” has the meaning ascribed thereto in
Section 8.1;

 

“Freely
Tradeable” means, in respect of the shares
of any class in the capital of the Corporation, which (i) are issuable
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 to a person in
compliance with Regulation S and Rule 144 under the Securities Act without
any restriction under Applicable Securities Legislation such as hold periods,
except in the case of a distribution by a control person (as defined in the
Applicable Securities Legislation);

 

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

 

“generally
accepted accounting principles” means United
States or Canadian generally accepted accounting principles;

 

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

 

“Government
Obligations” means securities issued or
guaranteed by the Government of Canada or any province thereof;

 

“Government
of Canada Yield” has the meaning ascribed
thereto in Section 2.4(j)(i);

 

“Initial Debentures”
means the Debentures designated as “8.00% Convertible Unsecured Subordinate Debentures” and described
in Section 2.4;

 

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

 

“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;

 

“Interest
Payment Election” means an election by the
Corporation to raise funds to satisfy all or part of an Interest Obligation on
the applicable Interest Payment Date in the manner described in the Interest
Payment Election Notice;

 

“Interest
Payment Election Amount” means the sum of
the amount of the aggregate proceeds resulting from the sale of Shares on the
Share Delivery Date pursuant to acceptable bids obtained pursuant to the Bid
Requests (together with the cash payments by the Corporation, if any), together
with any amount paid by the Corporation in respect of fractional Shares
pursuant to Section 10.1(g) or otherwise paid in cash, that is 

 

4

 

equal to the aggregate amount of the
Interest Obligation in respect of which the Interest Payment Election Notice
was delivered;

 

“Interest
Payment Election Notice” means a written
notice made by the Corporation to the Trustee specifying:

 

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

 

(b)                                 the Interest Payment Election Amount;

 

(c)                                  the investment banks, brokers or dealers through which: (i) the
Trustee shall seek bids to purchase the Shares and the conditions of such bids,
which may include the minimum number of Shares, minimum price per Share, timing
for closing for bids, hold periods and such other matters as the Corporation
may specify, or (ii) which the Corporation will establish an account or
accounts with for the purpose of selling Shares; and

 

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

 

“Legended Debentures”
means Debentures bearing the legend provided for in Section 2.14(a);

 

“Maturity Date”
has the meaning ascribed thereto in Section 4.10;

 

“Maturity Notice”
has the meaning ascribed thereto in Section 2.4(g);

 

“Ordinary Resolution”
has the meaning ascribed thereto in Section 13.12;

 

“Offering” means
the public offering by short form prospectus of $40,000,000 aggregate principal
amount of Initial Debentures;

 

“Officer’s Certificate”
means a certificate of the Corporation signed by any one authorized officer or
director of the Corporation in his capacity as officer or director of the
Corporation, as the case may be, and not in his personal capacity;

 

“Opinion of Counsel”
means a written opinion containing the information specified in Section 15.21,
if applicable, from Counsel.  The counsel
may be an employee of, or counsel to, the Corporation or the Trustee;

 

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

 

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

 

5

 

“Post-June 30, 2008
Price” has the meaning ascribed thereto in Section 2.4(j)(i);

 

“Pre-June 30, 2008
Price” has the meaning ascribed thereto in Section 2.4(j)(i);

 

“Property Account”
means a segregated deposit account with a financial institution referred to in Section 15.9;

 

“Redemption Date”
has the meaning ascribed thereto in Section 4.3;

 

“Redemption Notice”
has the meaning ascribed thereto in Section 4.3;

 

“Redemption Price”
means, in respect of a Debenture, the amount, excluding interest, payable on
the Redemption Date fixed for such Debenture, which amount may be payable, in
whole or in part, by the issuance of Freely Tradeable Shares as provided for in
Section 4.6 and, in the case of the Initial Debentures, as defined in Section 2.4(d);

 

“Registration Rights
Agreement” has the meaning ascribed thereto in Section 2.4(c);

 

“Regulation S”
means Regulation S adopted by the SEC under the 1933 Act, as amended from time
to time;

 

“Responsible Officer” has the meaning ascribed thereto in Section 15.17;

 

“Restricted
Debenture” means a Debenture required to bear the U.S. 1933 Act
Legend;

 

“Restricted Shares”
means Shares required to bear the U.S.
1933 Act Legend;

 

“Rule 144”
means Rule 144 under the 1933 Act (or any successor rule having
substantially similar provisions), as it may be amended from time to time;

 

“Rule 144A”
means Rule 144A under the 1933 Act (or any successor rule having
substantially similar provisions), as it may be amended from time to time;

 

“SEC” means the United State Securities and
Exchange Commission;

 

“Senior Indebtedness”
shall mean any and all indebtedness, liabilities and other obligations of the Corporation (other than indebtedness, liabilities and other
obligations evidenced by the Debentures), (whether
outstanding on the date of this Indenture or thereafter created, incurred, assumed or
guaranteed by the Corporation or for which the Corporation is otherwise
responsible or liable, whether absolutely or contingently, including, for greater certainty and without limitation, claims of
trade creditors of the Corporation and any and all mortgages, debentures,
charges or other encumbrances or financings in respect of the personal or real
property of the Corporation, including without limitation, any such indebtedness, liabilities and
other obligations in respect of (a) 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), (b) any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or 

 

6

 

securities, or
economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions and (c) any agreement or arrangement relating to any
treasury, depository and cash management services or in connection with any
automated clearing house transfers of funds, which in
each or all cases by the terms of the instrument creating or evidencing such
indebtedness is not expressed to be pari passu with
or subordinate in right of payment to the Debentures;

 

“Serial Meeting” has the meaning ascribed thereto in Section 13.2(b)(i);

 

“Shares” means Class A
Subordinate Voting Shares of the Corporation, as such Class A Subordinate
Voting Shares are constituted on the date of execution and delivery of this
Indenture, issued by the Corporation; provided that in the event of a change or
a subdivision, revision, reduction, combination or consolidation thereof, any
reclassification, capital reorganization, consolidation, amalgamation,
arrangement, merger, sale or conveyance or liquidation, dissolution or
winding-up, or such successive changes, subdivisions, redivisions, reductions,
combinations or consolidations, reclassifications, capital reorganizations,
consolidations, amalgamations, arrangements, mergers, sales or conveyances or
liquidations, dissolutions or windings-up, then, subject to adjustments, if
any, having been made in accordance with the provisions of Section 6.4, “Shares”
shall mean the shares or other securities or property resulting from such
change, subdivision, redivision, reduction, combination or consolidation or
reclassification, capital reorganization, consolidation, amalgamation,
arrangement, merger, sale or conveyance or liquidation, dissolution or
winding-up;

 

“Share Delivery Date”
means a date not less than one Business Day prior to the applicable Interest
Payment Date, upon which Shares are issued by the Corporation and delivered to
the Trustee for sale pursuant to Share Purchase Agreements (together with the
cash payments by the Corporation, if any);

 

“Share Proceeds Investment”
has the meaning attributed thereto in Section 10.1(h);

 

“Share Purchase Agreement”
means an agreement in customary form among the Corporation, the Trustee and the
Persons making acceptable bids pursuant to a Bid Request, 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 Shares are then
listed;

 

“Share Redemption Right”
has the meaning ascribed thereto in Section 4.6(a);

 

“Share Repayment Right”
has the meaning ascribed thereto in Section 4.10(a);

 

“Subsidiary” has
the meaning ascribed thereto in the Canada Business Corporations Act, as
amended, and, in relation to any Person other than a body corporate, is to be
interpreted as if such Person were a body corporate for the purposes of the
Canada Business Corporations Act;

 

7

 

“this Indenture”,
“this Trust Indenture”, “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar expressions refer to this Indenture,
including the provisions of the TIA that are deemed to be a part hereof, and
not to any particular Article, Section, subsection, clause, subdivision or
other portion hereof and include any and every instrument supplemental or
ancillary hereto;

 

“TIA” means the U.S. Trust Indenture Act of 1939
as in effect on the date of the Indenture; provided, that in the event the TIA
is amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended;

 

“Time of Expiry”
means the time of expiry of certain rights with respect to the conversion of
Debentures under Article 6, such Time of Expiry to be set forth for each
series of Debentures which by their terms are to be convertible;

 

“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;

 

“Trustee” means
Computershare Trust Company of Canada and includes any successor or successors
or any other trustee subsequently appointed pursuant to Section 15.2;

 

“TSX” means the
Toronto Stock Exchange or its successor or successors or any other stock
exchange on which the Shares are then traded;

 

“U.S. 1933 Act Legend”
has the meaning ascribed thereto in Section 2.14;

 

“U.S.
Person” has the meaning ascribed thereto under Regulation S;

 

“United States”
means the United States of America, its territories and possessions, any State
of the United States and the District of Columbia; and

 

“Written Direction of the
Corporation” means an instrument in writing signed in the name of
the Corporation by any one officer or director of the Corporation.

 

Section 1.2                                   Meaning
of “Outstanding”

 

Every
Debenture certified and delivered by the Trustee hereunder shall be deemed to
be outstanding until it is cancelled, converted or redeemed or delivered to the
Trustee for cancellation, conversion or redemption for moneys or Shares, as the
case may be, or the payment thereof shall have been set aside under Section 9.2,
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 the new Debenture shall be counted
for the purpose of determining the aggregate principal amount of Debentures
outstanding; and

 

8

 

(c)                        for the purposes of any provision of this Indenture entitling
holders of outstanding Debentures to vote, sign consents, requisitions or other
instruments or take any other action under this Indenture, or to constitute a
quorum of any meeting of Debentureholders, Debentures owned directly or
indirectly, legally or equitably, by the Corporation shall be disregarded
except that:

 

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

 

(ii)                                  Debentures so owned which have been pledged in good faith other than
to the Corporation or a Subsidiary of the Corporation shall not be so
disregarded if the pledgee has established to the satisfaction of the Trustee
the pledgee’s right to vote such Debentures, sign consents, requisitions or
other instruments or take such other actions in his discretion free from the
control of the Corporation or a Subsidiary of the Corporation.

 

(d)                       If the paying agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following the repurchase date of any
Debentures, or on the Maturity Date, money or securities, if permitted
hereunder, sufficient to pay Debentures payable on that date, then on or as of
such Redemption Date, repurchase date, or Maturity Date, as the case may be,
such Debentures shall cease to be outstanding and interest (if any) on such
Debentures shall cease to accrue; provided, that if such Debentures are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture.

 

(e)                        If a Debenture is converted in accordance with Article 6, then
from and after the time of conversion on the date of such conversion, such
Debenture shall cease to be outstanding and interest (if any) shall cease to
accrue on such Debenture.

 

(f)                          The Corporation shall, forthwith following a request in writing from
the Trustee, provide the Trustee with an Officer’s Certificate confirming the
principal amount of outstanding Debentures owned directly or indirectly,
legally or equitably, by the Corporation.

 

Section 1.3                                   Incorporation
by Reference of Trust Indenture Act

 

Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.  The following TIA terms used in this
Indenture have the following meanings:

 

“Commission” means the
SEC.

 

“indenture securities” means the Debentures.

 

“indenture security holder” means a Debentureholder.

 

9

 

“indenture to be qualified” means this
Indenture.

 

“indenture trustee” or “institutional trustee” means the Trustee.

 

“obligor” on the indenture
securities means the Corporation or any other obligor on the indenture
securities.

 

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

 

Section
1.4                                   Interpretation

 

In this
Indenture:

 

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

 

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

 

Section
1.5                                   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.

 

Section 1.6                                   Day
not a Business Day

 

In the
event that any day on or before 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.

 

Section
1.7                                   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, save as regards matters provided
for in such provisions of the TIA as are required under the TIA to be part of
and to govern indentures qualified under the TIA, which matters shall be
performed in accordance with and be governed by United States federal laws
governing the TIA.

 

10

 

Section 1.8                                   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.

 

Section
1.9                                   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.

 

Section 1.10                            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.  Chacune des parties aux présentes reconnaît
par les présentes qu’elle a demandé et consent ce que le présent acte de
fiducie et tous les documents s’y rattachant, notamment la formule de débenture
jointe aux présentes en tant qu’annexe A, ne soient rédigés qu’en anglais.

 

Section 1.11                            Successors
and Assigns

 

All
covenants and agreements in this Indenture by the Corporation or a
Debentureholder (including pursuant to Article 12) shall bind its
respective successors and assigns, whether expressed or not.

 

Section 1.12                            Benefits
of Indenture

 

Nothing
in this Indenture or in the Debentures, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, any
paying agent, the holders of Debentures (and each such person who becomes a
holder of Debentures), the directors and (to the extent provided in Section 1.14
and Section 8.11) the holders of Shares, any benefit or any legal or
equitable right, remedy or claim under this Indenture.

 

Section 1.13                            References
to Acts of the Corporation or the Directors of the Corporation

 

For
greater certainty, where any reference is made in this Indenture, or in any
other instrument executed pursuant hereto or contemplated hereby to which the
Corporation is party, to an act to be performed by, an obligation or liability
of, an asset or right of, or a covenant by, the Corporation, such reference
shall be construed and applied for all purposes as if it referred to an act to
be performed by, an obligation or liability of, or a covenant by, the directors.  Further, where any reference is made in this
Indenture, or in any other instrument executed pursuant hereto or contemplated
hereby to which the Corporation is party, to a resolution of the directors of
the Corporation, such reference shall be construed and applied for all purposes
as if it referred to a resolution of the directors.

 

Section 1.14                            No
Recourse Against Directors

 

Any
liability or obligation of the Corporation or the directors in their capacity
as directors of the Corporation pursuant to this Indenture shall be satisfied
only out of the property of the Corporation and, notwithstanding anything
contained in this Indenture to the contrary, the representations, covenants,
liabilities and obligations of the Corporation 

 

11

 

(including of the directors in their capacity as directors of the
Corporation) set out in this Indenture or in any document delivered in
connection herewith, shall not be personally binding upon, resort shall not be
had to, nor shall satisfaction or recourse be sought from, the private property
of the holders of Shares or annuitants under a plan of which a holder of Shares
acts as a trustee or carrier or the directors of the Corporation, or from the
officers, employees or agents of the Corporation.

 

Section 1.15                            Schedules

 

The
following Schedules form part of this Indenture:

 

	
  Schedule “A”

  	
   

  	
  -

  	
   

  	
  Form of
  Initial Debenture

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule “B”

  	
   

  	
  -

  	
   

  	
  Form of
  Redemption Notice

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule “C”

  	
   

  	
  -

  	
   

  	
  Form of
  Maturity Notice

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule “D”

  	
   

  	
  -

  	
   

  	
  Form of
  Notice of Conversion

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule “E”

  	
   

  	
  -

  	
   

  	
  Form of
  Exercise Notice

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule “F”

  	
   

  	
  -

  	
   

  	
  Form of Transfer Certificate

  

 

Section 1.16                            Trust
Indenture Act Controls

 

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

 

ARTICLE 2

THE DEBENTURES

 

Section 2.1                                   Limit
of Debentures

 

Subject
to the limitation in respect of the Initial Debentures set out in Section 2.4(a),
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.

 

Section 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, prior
to the initial issuance of Debentures of any particular series:

 

(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

 

12

 

exchange for, or in lieu of, other Debentures
of the series pursuant to Section 2.9, Section 2.10, Section 3.2,
Section 3.3 and Section 3.6);

 

(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, the manner of such payment, and
where any Debentures of the series may be surrendered for registration of
transfer or exchange;

 

(f)                          the right, if any, of the Corporation 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 and any terms and conditions upon which,
Debentures of the series may be so redeemed, pursuant to any sinking fund or
otherwise, in whole or in part;

 

(g)                       the obligation, if any, of the Corporation to redeem, purchase or
repay Debentures of the series pursuant to any mandatory redemption, sinking
fund or analogous provisions, in whole or in part, 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 directors,
Depositories, authenticating or paying agents, transfer agents or registrars or
any other agents with respect to the Debentures of the series;

 

(j)                           any additional 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
Depositary or 

 

13

 

Depositories for such Global Debentures in
whose name the Global Debentures will be registered, and any circumstances
other than or in addition to those set forth in Section 2.9 or Section 3.2
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, in whole or
in part, for Fully Registered Debentures, or transferred, in whole or in part,
to and registered in the name of a person other than the Depositary 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;

 

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

 

(p)                       any stock exchange on which the series of the Debentures may be
listed at the time of issuance.

 

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, an
Officer’s Certificate or an indenture supplemental hereto. All 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, Officer’s Certificate or in an indenture supplemental hereto.

 

Section 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 an Officer’s Certificate
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 applicable 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 executing such Debentures, as
conclusively evidenced by their execution of such Debentures.

 

Section 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 $50,000,000 and shall be designated
as “8.00% Convertible Unsecured Subordinate
Debentures”.

 

(b)                       The Initial Debentures shall be dated as of June 28, 2005 shall
mature on June 30, 2010 and shall bear interest from the date of issue at
the rate of 8.00% per annum, payable in equal semi-annual payments on June 30
and December 31 in each year 

 

14

 

to holders of record at the close of business
on the Business Day immediately preceding such interest payment date, except
the first payment will include in arrears, accrued and unpaid interest for the
period from the date of this Indenture to, but excluding, December 31,
2005 and the last such payment to fall due on June 30, 2010, 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.

 

(c)                        Additional Amounts may become payable in respect of the Debentures
pursuant to the terms of a separate registration rights agreement, dated as of June 28,
2005, among the Corporation and Scotia Capital Inc., CIBC World Markets Inc.,
TD Securities Inc. and GMP Securities Ltd. (the “Registration Rights Agreement”).

 

(d)                       The Initial Debentures will be redeemable by the Corporation in
accordance with the terms of Article 4, provided that the Initial
Debentures will not be redeemable at any time prior to June 30, 2008,
except in the event of the satisfaction of certain conditions after a Change of
Control has occurred as outlined herein. 
On and after June 30, 2008 and prior to June 30, 2009, the
Initial Debentures may be redeemed in whole at any time or in part from time to
time at the option of the Corporation on notice as provided for in Section 4.3
and, in such case, the Redemption Price for the Initial Debentures will be a
price equal to their principal amount plus accrued and unpaid interest provided
that the volume weighted average trading price of the Shares on the TSX for at
least 20 trading days in any consecutive 30-day period ending on the fifth day
prior to the date on which such notice of redemption is given is at least 125%
of the Conversion Price and the Corporation shall have provided to the Trustee
an Officer’s Certificate confirming such Current Market Price. Subsequent to July 1,
2009 and prior to June 30, 2010, the Initial Debentures may be redeemed by
the Corporation in whole at any time or in part from time to time at the option
of the Corporation on notice as provided for in Section 4.3 and, in such
case, the Redemption Price for the Initial Debentures will be a price equal to
their principal amount plus accrued and unpaid interest. The Redemption Notice
for the Initial Debentures shall be in the form of Schedule “B”.

 

(e)                        The Initial Debentures will be subordinated to the Senior
Indebtedness of the Corporation in accordance with the provisions of Article 5;
provided, however, that nothing contained in this Indenture shall in any way or
manner restrict the Corporation from incurring, directly or indirectly, any
additional indebtedness.

 

(f)                          Upon and subject to the provisions and conditions of Article 6,
the holder of each Initial Debenture shall have the right, at such holder’s
option, at any time prior to 5 p.m. Toronto time on the earlier of June 30,
2010 and the last Business Day immediately preceding the date specified by the
Corporation for redemption of the Initial Debentures by notice to the holders
of Initial Debentures in accordance with Section 2.4(d) and Section 4.3
(the earlier of which will be the “Time of
Expiry” for the purposes of Article 6 in respect of the Initial
Debentures), to convert the whole or, in the case of a Debenture of a
denomination in excess of 

 

15

 

$1,000, any part which is $1,000 or an
integral multiple thereof, of the principal amount of such Debenture into
Shares at the Conversion Price in effect on the Date of Conversion (as defined
in Section 6.3(b)).

 

The Conversion Price in effect on the date
hereof for each Share to be issued upon the conversion of Initial Debentures
shall be equal to $14.00 such that approximately 71.4286 Shares shall be issued
for each $1,000 principal amount of Initial Debentures so converted. No
adjustment will be made for distributions on Shares issuable upon conversion.
Holders converting their Initial Debentures shall be entitled to receive, in
addition to the applicable number of Shares, accrued and unpaid interest in
respect thereof for the period up to but excluding the Date of Conversion from
the day immediately following the latest Interest Payment Date. The Conversion
Price applicable to and the Shares, securities or other property receivable on
the conversion of the Initial Debentures is subject to adjustment pursuant to
the provisions of Section 6.4.

 

(g)                       On redemption or on maturity of the Initial Debentures, the
Corporation may, at its option and subject to the provisions of Section 4.6
and Section 4.10 as applicable, and subject to regulatory approval, if
required, elect to satisfy its obligation to pay the principal amount of the
Initial Debentures, in whole or in part, by issuing and delivering to the
holders of Initial Debentures that number of Freely Tradeable Shares obtained
by dividing the principal amount of the Initial Debentures by 95% of the
Current Market Price. If the Corporation elects to exercise such option, it
shall deliver a Redemption Notice or a maturity notice (the “Maturity Notice”), as the case may be, to
the holders of the Initial Debentures in the form of Schedule “B” or Schedule “C”,
as applicable.

 

(h)                       The Initial Debentures shall be issued as one or more Global
Debentures in denominations of $1,000 and integral multiples of $1,000 and the
Trustee is hereby appointed as registrar and transfer agent for the Initial
Debentures. Each Initial Debenture and the certificate of the 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 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 of the
Corporation executing such Initial Debenture in accordance with Section 2.7
hereof, as conclusively evidenced by their execution of an Initial Debenture.
Each Initial Debenture shall additionally bear such distinguishing letters and
numbers as the 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 an Officer’s
Certificate. The Initial Debentures may be engraved, lithographed, printed,
mimeographed or typewritten or partly in one form and partly in another.

 

16

 

The Initial Debentures shall be issued as
Global Debentures and the Depositary or Depositories for such Global Debentures
in whose name the Global Debentures will be registered (and the Global
Debentures may be registered in the name of a nominee of the Depositary), and
any circumstances other than or in addition to those set forth in Section 3.2
in which any such Global Debenture may be exchanged for Debentures in
registered form that are not Global Debentures, or transferred to and
registered in the name of a person other than the Depositary for such Global
Debentures or a nominee thereof, shall be determined by the Corporation at the
time of issue.

 

(i)                           Upon and subject to the provisions and conditions of Article 10,
the Corporation may elect, from time to time, to satisfy its Interest
Obligation, in whole or in part, to the extent specified herein and applicable
Regulatory Approval, on the Initial Debentures on any Interest Payment Date by
delivering Shares to the Trustee.

 

(j)                           The following terms and conditions apply in the case of a Change of
Control:

 

(i)                                     Upon the occurrence of a Change of Control, prior to June 30,
2008, the Corporation shall be required to make an offer to purchase (the “Corporation Offer”)
all of the then outstanding Debentures on the date which is not later than 30
days following the date upon which the Trustee delivers a Change of Control
Notice (as defined below) to the holders of Initial Debentures (such date being
referred to as the “Change of
Control Date”) at a price equal to the principal
amount thereof plus an amount equal to the interest payments not yet received
on the Debentures calculated from the date of the Change of Control to June 30,
2008, discounted at the Government of Canada Yield (as defined below)
(the “Pre-June 30, 2008
Price”). Upon the occurrence of a Change of Control on or after June 30,
2008, the Corporation shall be required to make the Corporation Offer for all
of the then outstanding Debentures on the Change of Control Date at a price
equal to the principal amount thereof plus accrued and unpaid interest to the
purchase date (the “Post-June 30,
2008 Price”).  The term “Government of Canada Yield” on any
date shall mean the average of the yields determined by two registered Canadian
investment dealers (as selected by the Corporation) as being the yield to
maturity on such date, compounded semi-annually and calculated in accordance
with generally accepted financial practice, that a non-callable Government of
Canada Bond would carry if issued in Canadian dollars in Canada at 100% of its
principal on such date with a maturity date of June 30, 2008.

 

(ii)                                  The Corporation 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 Trustee of the Change of Control. Such written notice of
the Corporation shall state whether the Pre-June 30, 2008 Price or Post-June 30,
2008 Price, as the case may be, will be payable in cash or satisfied, in whole
or in part, by the issuance of Shares as contemplated in 

 

17

 

Section 2.4(j)(xiii). The Trustee will,
as soon as practicable thereafter, and in any event no later than two Business
Days after receiving notice from the Corporation of the Change of Control,
provide written notice to the holders of Initial Debentures of the Change of
Control (the “Change of Control Notice”).
The Change of Control Notice shall be prepared by the Corporation and shall
include a description of the Change of Control, details of the Corporation
Offer under the terms of the Indenture, details regarding whether the Pre-June 30,
2008 Price or Post-June 30, 2008 Price, as the case may be, is to be paid
in cash or, in whole or in part, in Shares, a statement that each holder will
be entitled to withdraw his Initial Debentures tendered to the Offer if the
Trustee receives, no later than the close of business on the third Business Day
immediately preceding the Change of Control Date, a facsimile transmission or
letter setting forth the name of such holder, the principal amount of the
Initial Debentures delivered for purchase and a statement that such holder is
withdrawing his Initial Debentures tendered to the Offer and a description of
the rights of the Corporation to redeem untendered Initial Debentures in
accordance with Section 2.4(j)(iv) hereof.

 

(iii)                               In order to tender to the Corporation Offer and exercise the right
to require the Corporation to purchase its Initial Debentures, the
Debentureholder must deliver to the Trustee, not less than five Business Days
prior to the Change of Control Date, written notice of the holder’s exercise of
such right in the form attached as Schedule “E” together with the Initial
Debentures with respect to which the right is being exercised, duly endorsed
for transfer.

 

(iv)                              If 90% or more in aggregate principal amount of Initial Debentures
outstanding on the date the Corporation provides notice of a Change of Control
to the Trustee have been tendered for purchase under the Corporation Offer on
the Change of Control Date, the Corporation has the right upon written notice
provided to the Trustee prior to the Change of Control Date, to redeem all the
remaining outstanding Initial Debentures on the Change of Control Date at the
Pre-June 30, 2008 Price or Post-June 30, 2008 Price, as the case may
be (the “90% Redemption Right”).

 

(v)                                 Upon receipt of written notice that the Corporation will exercise
the 90% Redemption Right and acquire the remaining Initial Debentures, the
Trustee shall as soon as reasonably possible provide written notice to all
Debentureholders that did not previously tender their Initial Debentures to the
Corporation  that:

 

(A)                              The Corporation has exercised the 90% Redemption Right and will
purchase all outstanding Initial Debentures on the Change of Control Date at
the Pre-June 30, 2008 Price or Post-June 30, 2008 Price, as the case
may be, including a calculation of such holder’s 

 

18

 

Pre-June 30, 2008 Price or Post-June 30,
2008 Price, as the case may be;

 

(B)                                Each such holder must transfer their Initial Debentures to the
Trustee on the same terms as those holders that tendered their Initial
Debentures to the Corporation Offer and must send their respective Initial
Debentures, duly endorsed for transfer, or their duly endorsed form of
transfer, as applicable, to the Trustee within 10 days after sending of such
notice; and

 

(C)                                The rights of such holder under the terms of the Initial Debentures
cease as of the Change of Control Date provided the Corporation has paid the
Pre-June 30, 2008 Price or Post-June 30, 2008 Price, as the case may
be, to, or to the order of, the 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 Pre-June 30, 2008 Price or Post-June 30,
2008 Price, as the case may be, upon surrender and delivery of such holder’s
Initial Debentures in accordance with the Indenture.

 

(vi)                              Subject to Section 2.4(j)(xiii), the Corporation shall, on or
before 11:00 a.m. Toronto time on the Business Day immediately prior to
the Change of Control Date, deposit with the Trustee or any paying agent to the
order of the Trustee, such sums of money as may be, sufficient to pay the Pre-June 30,
2008 Price or Post-June 30, 2008 Price, as the case may be of the Initial
Debentures to be purchased or redeemed by the Corporation on the Change of
Control Date, provided the Corporation may elect to satisfy this requirement by
providing the Trustee with a certified cheque for such amounts required under
this Section 2.4(j)(vi) post-dated to the Change of Control Date or
the Corporation may satisfy this requirement by an electronic funds transfer of
such sums of money on the Change of Control Date.  To the extent requested by the Trustee, the
Corporation shall also deposit with the Trustee a sum of money sufficient to
pay any charges or expenses which may be incurred by the 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 Trustee shall pay or
cause to be paid to the holders of such Initial Debentures, the Pre-June 30,
2008 Price or the Post-June 30, 2008 Price, as the case may be, and
interest, if any, to which they are entitled on the Corporation’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(j) becomes subject to
purchase in part only, upon surrender of such Initial Debentures for payment of
the Pre-June 30, 2008 Price or Post-June 30, 2008 Price, as the case
may be, the Corporation shall execute and the Trustee shall certify and deliver
without charge to the holder thereof or upon the holder’s order, one or 

 

19

 

more new Initial Debentures for the portion
of the principal amount of the Global Debentures not purchased.

 

(viii)                        Initial Debentures for which holders have tendered to the
Corporation Offer and Initial Debentures which the Corporation has elected to
redeem in accordance with this Section 2.4(j) shall become due and payable
at the Pre-June 30, 2008 Price or Post-June 30, 2008 Price, as the
case may be, on the Change of Control 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 Change of Control Date, if the money necessary to purchase
or redeem the Initial Debentures shall have been deposited as provided in this Section 2.4(j)
and affidavits or other proofs satisfactory to the Trustee as to the
publication and/or mailing of such notices shall have been lodged with it,
interest on the Initial Debentures shall cease. If any question shall arise as
to whether any notice has been given as above provided and such deposit made,
such question shall be decided by the Trustee whose decision shall be final and
binding upon all parties in interest.

 

(ix)                                In case the holder of any Initial Debenture to be purchased or
redeemed in accordance with this Section 2.4(j) shall fail on or before
the Change of Control Date so to surrender such holder’s Initial Debenture or
duly endorsed form of transfer or shall not within such time accept payment of
the moneys payable, or take delivery of certificates representing any Shares
issuable in respect thereof, or give such receipt therefor, if any, as the
Trustee may require, such moneys may be set aside in trust, or such
certificates may be held in trust without interest, either in the deposit
department of the 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 moneys so paid and deposited, or to take
delivery of the certificates so deposited, upon surrender and delivery up of
such holder’s Initial Debenture, of the Pre-June 30, 2008 Price or Post-June 30,
2008 Price, as the case may be.  In the event
that any money, or certificates, required to be deposited hereunder with the
Trustee or any depositary or paying agent on account of principal, premium, if
any, or interest, if any, on Initial Debentures issued hereunder shall remain
so deposited for a period of ten years from the Change of Control Date, then
such moneys, or certificates, together with any accumulated interest thereon,
shall at the end of such period be paid over or delivered over by the Trustee
or such depositary or paying agent to the Corporation and the Trustee shall not
be responsible to Debentureholders for any amounts owing to them.
Notwithstanding the foregoing, the Trustee will pay any remaining funds
deposited hereunder prior to the expiry of ten years after the Change of Control
Date to the 

 

20

 

Corporation upon receipt from the
Corporation, or one of its Subsidiaries, of an uncontested letter of credit
from a Canadian chartered bank in an amount equal to or in excess of the amount
of the remaining funds. If the remaining funds are paid to the Corporation
prior to the expiry of ten years after the Change of Control Date, the
Corporation shall reimburse the Trustee for any amounts required to be paid by
the Trustee to a holder of a Debenture after the date of such payment of the
remaining funds to the Corporation but prior to ten years after the Change of
Control Date and such letter of credit shall be reduced to the extent of the
required amount of such reimbursement. 
If the Corporation fails to so reimburse the Trustee, the Trustee may
draw on the letter of credit.

 

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

 

(xi)                                The Corporation will publicly announce the results of the purchases
made pursuant to Section 2.4(j) as soon as practicable after the Change of
Control Date.

 

(xii)                             The Corporation will comply with all Applicable Securities
Legislation and the United States securities laws and regulations to the extent
such laws and regulations are applicable in the event that the Corporation is
required to repurchase Initial Debentures pursuant to Article 12.

 

(xiii)                          Unless an Event of Default has occurred and is continuing, the
Corporation shall be entitled at its option, subject to regulatory approval, to
deposit with the Trustee or any paying agent to the order of the Trustee, in
lieu of all or any portion of the cash which would otherwise be required to be
deposited with the Trustee hereunder, Freely Tradeable Shares for purposes of
making payment of all or any portion of the Pre-June 30, 2008 Price or
Post-June 30, 2008 Price, as the case may be, the number of such Freely
Tradeable Shares to be obtained by dividing the Pre-June 30, 2008 Price or
Post-June 30, 2008 Price, as the case may be, by 95% of the Current Market
Price in effect on the Change of Control Date. 
No fractional Shares shall be issued as payment of the Pre-June 30,
2008 Price or Post-June 30, 2008 Price, as the case may be, but in lieu
thereof the Corporation shall satisfy fractional interests by a cash payment
equal to the Current Market Price in effect on the Change of Control Date.  In all other respects, in paying the Pre-June 30,
2008 Price or Post-June 30, 2008 Price, as the case may be, the
Corporation shall be subject to the requirements of Section 2.4(j) and the
Trustee shall, in making payment to holders of such Initial Debentures pursuant
to Section 2.4(j) of the Pre-June 30, 2008 Price or Post-June 30,
2008 Price, as the case may be, make payment using such Freely Tradeable
Shares.  Solely for purposes of this Section 2.4(j)(xiii),
the term “Current Market Price” as
set forth in 

 

21

 

Section 1.1 shall be modified to provide
that in the event the Shares are not at the relevant time listed on any stock
exchange or traded on the over-the-counter market, the Current Market Price
shall be the fair market value of the Shares as determined by the Corporation,
acting reasonably.  In the event the
Corporation exercises its right pursuant to this Section 2.4(j)(xiii) to
deliver Freely Tradeable Shares, the provisions of paragraphs (c) to (i) inclusive
of Section 4.10 shall apply, mutatis mutandis.

 

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

 

Section 2.5                                   Certification
and Delivery of Additional Debentures

 

The
Corporation may from time to time request the Trustee to certify and deliver
Additional Debentures of any series, including any Additional Debentures issued
as Global Debentures, by delivering to the Trustee the documents referred to
below in this Section 2.5 whereupon the Trustee shall certify such
Additional Debentures and cause the same to be delivered in accordance with the
Written Direction of the Corporation referred to below or pursuant to such
procedures acceptable to the Trustee as may be specified from time to time by a
Written Direction of the Corporation. 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 or determined by or pursuant to such Written Direction of
the Corporation and procedures. In certifying such Additional Debentures, the
Trustee shall be entitled to receive and shall be fully protected in acting and
relying upon, unless and until such documents have been superseded or revoked:

 

(a)                        an Officer’s Certificate and/or an executed supplemental indenture
by or pursuant to which the form and terms of such Additional Debentures were
established;

 

(b)                       a Written Direction of the Corporation 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 Corporation may be delivered by the
Corporation to the Trustee prior to the delivery to the Trustee of such
Additional Debentures of such series for certification and delivery,

 

(ii)                                  the 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 Corporation or pursuant to
procedures acceptable to the Trustee as may be specified from time to time by a
Written Direction of the Corporation,

 

22

 

(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 Corporation or pursuant to such procedures, and

 

(iv)                              if provided for in such procedures, such Written Direction of the
Corporation may authorize certification and delivery pursuant to oral or
electronic instructions from the Corporation which oral or electronic
instructions shall be promptly confirmed in writing (for greater certainty, the
Trustee shall not be obligated to accept oral or electronic instructions unless
it is satisfied, in its sole discretion, with the procedures therefor);

 

(c)                        an Opinion of Counsel that the issue
and sale of the Additional Debentures do not and will
not result in a breach (whether after notice or lapse of time or both) of:

 

(i)                                     any of the terms, conditions or provisions of the Corporation’s
articles, or

 

(ii)                                  any statute, rule or regulation of the Province of Ontario or
the federal laws of Canada applicable therein and which are applicable to the
Corporation,

 

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

 

(d)                       an Officer’s Certificate certifying that the Corporation 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 15.5), have been complied with subject to the delivery of any
documents or instruments specified in such Officer’s Certificate and that no
Event of Default exists or will exist upon such certification and delivery.

 

Section 2.6                                   Issue
of Global Debentures

 

(a)                        The Corporation 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 Depositary, or its nominee, designated by the Corporation in the
Written Direction of the Corporation delivered to the Trustee at the time of
issue of such Debentures, and in such event the Corporation shall execute and
the 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 by the Trustee to such Depositary or pursuant to such
Depositary’s instructions or held by the Trustee as custodian for such
Depositary;

 

23

 

(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 Depositary
or a nominee thereof. This Debenture may not be transferred to or exchanged for
Debentures registered in the name of any person other than the Depositary or a
nominee thereof and no such transfer may be registered except in the limited
circumstances described in the Indenture. Every Debenture authenticated and
delivered upon registration 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”; and

 

(iv)                              bear legends substantially to the effect of Section 3.2(c) and,
to the extent required, Section 2.14.

 

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

 

Section 2.7                                   Execution
of Debentures

 

All
Debentures shall be signed (either manually or by facsimile signature) by any
one authorized director, the Chief Executive Officer, the Chief Financial
Officer, Executive Vice President or the Secretary of the Corporation 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 person whose
signature, either manual or in facsimile, appears on a Debenture as a trustee,
the Chief Executive Officer, the Chief Financial Officer or the Secretary 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 Corporation and entitled to the benefits of this Indenture.

 

Section 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 Trustee substantially in the form set out in this Indenture,
in the relevant supplemental indenture, or in some other form approved by the
Trustee. Such certification on any Debenture shall be conclusive evidence that
such Debenture is duly issued, is a valid obligation of the Corporation and the
holder is entitled to the benefits hereof.

 

The
certificate of the Trustee signed on the Debentures, or interim Debentures
hereinafter mentioned, shall not be construed as a representation or warranty
by the 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 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 Trustee signed on the Debentures or interim
Debentures shall, however, be a representation and warranty by the Trustee that
the Debentures or interim 

 

24

 

Debentures have been duly certified by or on behalf of the Trustee
pursuant to the provisions of this Indenture.

 

Section 2.9                                   Interim
Debentures or Certificates

 

Pending
the delivery of definitive Debentures of any series to the Trustee, the
Corporation may issue and the Trustee 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 Corporation may execute and the
Trustee certify a temporary Debenture for the whole principal amount of
Debentures of the series then authorized to be issued hereunder and deliver the
same to the Trustee and thereupon the 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
Corporation and the 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 Corporation shall have delivered
the definitive Debentures to the Trustee, the 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 Corporation or the 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.

 

Section 2.10                            Mutilation,
Loss, Theft or Destruction

 

In case
any of the Debentures issued hereunder shall become mutilated or be lost,
stolen or destroyed, the Corporation, in its discretion, may issue, and
thereupon the 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 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. In case
of loss, theft or destruction the applicant for a substituted Debenture shall
furnish to the Corporation and to the Trustee such evidence of the loss, theft
or destruction of the Debenture as shall be satisfactory to them in their
discretion and shall also furnish an indemnity and surety bond satisfactory to
them in their discretion. The applicant shall pay all reasonable expenses
incidental to the issuance of any substituted Debenture.

 

Section 2.11                            Concerning
Interest

 

(a)                        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 

 

25

 

issued hereunder, whether originally or upon
exchange or in substitution for previously issued Debentures which are interest
bearing, shall bear interest from their issue date or from the last Interest
Payment Date to which interest shall have been paid or made available for
payment on the outstanding Debentures of that series and date of maturity,
whichever shall be the later, or, in respect of Debentures subject to a
Periodic Offering, from their issue date or from the last Interest Payment Date
to which interest shall have been paid or made available for payment on such
Debentures; provided that, in respect of the first interest payment after the
original issuance thereof, each Debenture of a series shall bear interest from
the later of the issue date of such Debenture and the last Interest Payment
Date preceding the issuance of such Debenture.

 

(b)                       Unless otherwise specifically provided in the terms of the
Debentures of any series, interest for any period of less than six months shall
be computed on the basis of a year of 365 days. 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.

 

Section 2.12                            Debentures
to Rank Subordinate and Pari Passu

 

The
Debentures will be direct unsecured obligations of the Corporation. All
Debentures issued regardless of the series, will rank pari passu with
each other Debenture (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 5, be subordinated in
right of payment to all Senior Indebtedness (including all payments
thereunder).

 

Section 2.13                            Payments
of Amounts Due on Maturity

 

Except
as may otherwise be provided in any supplemental indenture in respect of any
series of Debentures and except as otherwise provided in this Indenture,
payments of amounts due upon maturity of the Debentures will be made in the
following manner. The Trustee will establish and maintain for the residual
benefit of the Corporation, a Debt Account for each series of Debentures. Each
such Debt Account shall be maintained by and be subject to the control of the
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 Corporation will
deposit in the applicable Debt Account an amount sufficient to pay the amount
payable in respect of such Debentures, (less any tax required by law to be
deducted) provided the Corporation may elect to satisfy this requirement by
providing the Trustee with a certified cheque for such amounts required under
this Section 2.13 post-dated to the applicable maturity date or the
Corporation may satisfy this requirement by an electronic funds transfer of
such sums of money on the applicable maturity date. The Trustee, on behalf of
the Corporation will pay to each holder entitled to receive payment the principal
amount of and premium (if any) on the Debenture, upon surrender of the 

 

26

 

Debenture at the Designated Office. The deposit or making available of
such amounts to the applicable Debt Account will satisfy and discharge the
liability of the Corporation 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 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 it is entitled.  Any
paying agent with respect to the Debentures shall hold in trust for the benefit
of the Debentureholders or the Trustee all sums held by such paying agent for
the payment of principal of the Debentures, and shall give to the Trustee
notice of any default by any obligor upon the Debentures in the making of any
such payment.

 

Section 2.14                            U.S. 1933
Act Legend on the Debentures

 

(a)                        The Debentures and the Shares issuable pursuant to the terms thereof
have not been and, except as provided in the Registration Rights Agreement,
will not be registered under the 1933 Act. All Debentures and the Shares
issuable pursuant to the terms thereof issued and sold in the United States in
reliance on Rule 144A under the 1933 Act, as well as all Debentures and
the Shares issuable pursuant to the terms thereof issued in exchange for or in
substitution of the foregoing securities, until otherwise permitted pursuant to
the requirements of Section 3.1 or Section 3.2 below shall bear the
following legend (the “U.S. 1933 Act Legend”):

 

“This Security (or its predecessor) has not been
registered under the Securities Act of 1933, as amended (the “Securities Act”)
or the securities laws of any state of the United States, and accordingly,
neither this Security nor any interest or participation herein may be offered,
sold, assigned, pledged, encumbered or otherwise transferred or disposed of in
the absence of such registration within the United States or to, or for the
account or benefit of, U.S. Persons except as set forth in the next sentence.  By its acquisition hereof or of a beneficial
interest herein, the holder (1) acknowledges that this Security is a “restricted
security” that has not been registered under the Securities Act and agrees for
the benefit of MDC Partners Inc. (“MDC”) that this Security may be offered,
sold, pledged or otherwise transferred only in compliance with the Securities
Act and other applicable laws of the state of the United States governing the
offer and sale of the Security; (2) represents that it is (a) not a
U.S. Person and is acquiring this Security in an offshore transaction in
compliance with Regulation S under the Securities Act or (b) a qualified
institutional buyer (“QIB”) (as defined in Rule 144A under the Securities
Act); (3) agrees that it will not within two years after the original
issuance of this Security resell or otherwise transfer this Security except (a) to
MDC or any subsidiary thereof, (b) to persons other than U.S. Persons
outside the United States (including on the Toronto Stock Exchange) in compliance
with Rules 903, 904 and 905 of Regulation S, (c) to a QIB in
compliance with Rule 144A under the Securities Act (if available), (d) pursuant
to the exemption from registration provided by Rule 144 adopted under the
Securities Act (if available) or another available exemption under the
Securities Act (and based upon an opinion of U.S. counsel acceptable to MDC),
or (e) pursuant to an effective registration statement under the
Securities Act, in each case subject to MDC’s and the Trustee’s right prior to
any such offer, sale or transfer to require the certification and/or other
information satisfactory to each of them to the extent specified in the
instrument governing this Security; and (4) agrees that it will, prior to
any transfer of this Security 

 

27

 

within two years after the original issuance of this
Security, deliver to the Debenture Trustee and MDC such certifications, legal
opinions or other information as may be required pursuant to the indenture to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.  As used herein, the terms “offshore
transaction,” “United States” and “U.S. Person” have the meanings given to them
by Regulation S under the Securities Act. 
In any case the holder hereof agrees and acknowledges that it shall not,
directly or indirectly, engage in any hedging transaction with regard to this
Security except as permitted by the Securities Act.”

 

If Debentures are issued upon the registration of
transfer, exchange or replacement of Debentures subject to restrictions on
transfer and bearing the legends set forth on the form of Debenture attached
hereto as Schedule “A” setting forth the U.S. 1933 Act Legend, or if a
request is made to remove the U.S. 1933 Act Legend on a Debenture, the
Debentures so issued shall bear the U.S. 1933 Act Legend, or the U.S. 1933 Act
Legend shall not be removed, as the case may be, unless there is delivered to
the Corporation and the registrar such satisfactory evidence, which shall
include an Opinion of Counsel, as may be reasonably required by the
Corporation, that neither the U.S. 1933 Act Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A or Rule 144 or that such Debentures
are not “restricted” within the meaning of Rule 144.  Upon (i) provision of such satisfactory
evidence or (ii) notification by the Corporation to the Trustee and
Registrar of the sale of such Debenture pursuant to a registration statement
that is effective at the time of such sale, the Trustee, upon receipt of a
written direction of the Corporation, shall authenticate and deliver a
Debenture that does not bear the U.S. 1933 Act Legend, which Debenture, if a
Global Debenture, to be in the form of an unrestricted Global Debenture.  If the U.S. 1933 Act Legend is removed from
the face of a Debenture and the Debenture is subsequently held by an Affiliate
of the Corporation, the Corporation shall use its reasonable best efforts to
reinstate the U.S. 1933 Act Legend.

 

The Trustee and the registrar shall have no obligation
or duty to monitor, determine or inquire as to compliance with any restrictions
on transfer imposed under this Indenture or under applicable law with respect
to any transfer of any interest in any Debenture (including any transfers
between or among Depositary participants or beneficial owners of interests in
any Global Debenture) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so if
and when expressly required by the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.

 

Notwithstanding any provision to the contrary herein,
so long as a Global Debenture remains outstanding and is held by or on behalf
of the Depositary, transfers of a Global Debenture, in whole or in part, shall be
made only in accordance with Section 3.2. 
Transfers of a Global Debenture shall be limited to transfers of such
Global Security in whole, or in part, to the Depositary, to 

 

28

 

nominees of the Depositary or to a successor of the Depositary or such
successor’s nominee.

 

Section 2.15                            Payment of
Interest

 

The
following provisions shall apply to Debentures, except as otherwise provided in
Section 2.4(b) or in Article 10 of this Indenture or specified
in a resolution of the directors, Officer’s Certificate or supplemental
indenture relating to a particular series of Additional Debentures:

 

(a)                        As interest becomes due on each Debenture (except at maturity or on
redemption, when interest may at the option of the Corporation be paid upon
surrender of such Debenture) the Corporation, either directly or through the
Trustee or any agent of the Trustee, shall send or forward by prepaid ordinary
mail, electronic transfer of funds or such other means as may be agreed to by
the Trustee and the Debentureholder, payment of such interest (less any tax
required to be withheld therefrom) to the order of the registered holder of
such Debenture appearing on the registers maintained by the Trustee at the
close of business on the Business Day prior to the applicable Interest Payment
Date and 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 as soon as practicable following the 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 tax withheld as aforesaid, satisfy and discharge all liability
for interest on such Debenture, unless in the case of payment by cheque, such
cheque be 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 Corporation 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 Corporation 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 Corporation may make payment of
such interest or make such interest available for payment in any other manner
acceptable to the Trustee with the same effect as though payment had been made
in the manner provided above.

 

(b)                       None of the Corporation, the Trustee or any agent of the 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.  Any paying agent with respect to the
Debentures shall hold in trust for the benefit of the Debentureholders or the
Trustee all sums held by such paying agent for the 

 

29

 

payment of interest on the Debentures, and
shall give to the Trustee notice of any default by any obligor upon the
Debentures in the making of any such payment.

 

ARTICLE 3

REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP

 

Section 3.1                                   Fully
Registered Debentures

 

(a)                        Notwithstanding any other provisions of this Indenture or the
Debentures, (A) transfers of a Global Debenture, in whole or in part,
shall be made only in accordance with Section 2.6, Section 2.14 and Section 3.2(b) below,
(B) transfer of a beneficial interest in a Global Debenture for a Fully
Registered Debenture shall comply with Section 2.6, Section 2.14 and Section 3.2(b) below,
(C) transfers of a Fully Registered Debenture in such form shall comply
with Section 2.14 and this Section 3.1, and (D) transfer of a
Fully Registered Debenture for a beneficial interest in a Global Debenture
shall comply with Section 2.6, Section 2.14 and Section 3.2(b) below.

 

(b)                       With respect to each series of Debentures issuable as Fully
Registered Debentures, the Corporation shall cause to be kept by and at the
Designated Office, a register in which shall be entered the names and addresses
of the holders of Fully Registered Debentures and particulars of the Debentures
held by them respectively and of all transfers of Fully Registered
Debentures.  Such registration shall be
noted on the Debentures by the Trustee or other registrar unless a new
Debenture shall be issued upon such transfer.

 

(c)                        No transfer of a Fully Registered Debenture shall be valid unless
made on such register referred to in Section 3.1(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 Trustee or other registrar upon
surrender of the Debentures together with a duly executed form of transfer
acceptable to the Trustee and upon compliance with such other reasonable
requirements as the Trustee or other registrar may prescribe, nor unless the
name of the transferee shall have been noted on the Debenture by the Trustee or
other registrar.

 

(d)                       So long as such Debentures are Restricted Debentures, such
Debentures are being transferred or exchanged pursuant to an effective
registration statement under the 1933 Act or, if being transferred pursuant to
clause (i), (ii) or (iii) below, are accompanied by the additional
information and documents specified in each clause, as applicable:

 

(i)                                     if such Fully Registered Debentures are being delivered to the
registrar by a Debentureholder for registration in the name of such
Debentureholder, without transfer, a certification from such Debentureholder to
that effect; or

 

30

 

(ii)                                  if such Fully Registered Debentures are being transferred to the
Corporation or a subsidiary of the Corporation, a certification to that effect;
or

 

(iii)                               if such Fully Registered Debentures are being transferred pursuant
to an exemption from registration (i) a certification from the transferee
to that effect (in a form available from the Trustee substantially in the form
of Schedule “F” hereto) and (ii) if the Corporation so requests, an
Opinion of Counsel or other evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the U.S. 1933 Act Legend.

 

Section 3.2                                   Global
Debentures

 

(a)                        With respect to each series of Debentures issuable in whole or in
part as one or more Global Debentures, the Corporation shall cause to be kept
by and at the Designated Office, a register in which shall be entered the name
and address of the holder of each such Global Debenture (being the Depositary,
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 3.1 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 except in the
following circumstances or as otherwise specified in the resolution of the
directors, Officer’s Certificate or supplemental indenture relating to a
particular series of Additional Debentures:

 

(i)                                     the Global Debenture may be transferred by a Depositary to a nominee
of such Depositary or by a nominee of a Depositary to such Depositary or to
another nominee of such Depositary or by a Depositary or its nominee to a
successor Depositary or its nominee;

 

(ii)                                  the Global Debenture may be transferred at any time after the
Depositary for such Global Debenture (A) has notified the Corporation that
it is unwilling or unable to continue as Depositary for such Global Debenture,
or (B) ceases to be eligible to be a Depositary under Section 2.6(b),
provided that at the time of such transfer the Corporation has not appointed a
successor Depositary for such Global Debenture;

 

(iii)                               the Global Debenture may be transferred at any time after the
Corporation has determined that the Depository is no longer willing or able or
qualified to discharge properly its responsibility as depository and the
Corporation is unable, using reasonable efforts, to locate a qualified
successor, and has determined to terminate the book-entry only registration
system in respect of such Global Debenture and has communicated such
determination to the Trustee in writing; and

 

31

 

(iv)                              the Global Debenture may be transferred at any time after the
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 at the time of such transfer the Trustee has not waived the Event
of Default pursuant to Section 8.3.

 

(c)                        Each Global Debenture shall bear the following legend:

 

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE CANADIAN DEPOSITORY FOR SECURITIES LIMITED (“CDS”) TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS, OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS
MADE TO CDS 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 THE REGISTERED HOLDER HEREOF,
CDS, HAS AN INTEREST HEREIN”

 

(d)                       A beneficial interest in a Global Debenture may not be exchanged for
a Fully Registered Debenture except upon satisfaction of the requirements set
forth below and elsewhere in this Section 3.2.  Upon receipt by the Trustee of a request for
transfer of a beneficial interest in a Global Debenture in accordance with
Applicable Procedures for a Fully Registered Debenture, in the form reasonably
satisfactory to the Trustee, together with:

 

(i)                                     so long as the Debentures are Restricted Debentures, a certification
(in a form available from the Trustee substantially in the form of Schedule “F” hereto), that such Fully Registered
Debenture is being transferred in accordance with Rule 144A, Regulation S
or Rule 144;

 

(ii)                                  written instructions to the Trustee to make, or direct the registrar
to make, an adjustment on its books and records with respect to such Global
Debenture to reflect a decrease in the aggregate Principal Amount of the
Debentures represented by the Global Debenture, such instructions to contain
information regarding the Depositary account to be credited with such decrease;
and

 

(iii)                               if the Corporation so requests, an Opinion of Counsel or other
evidence reasonably satisfactory to it as to the compliance with the
restrictions set forth in the U.S. 1933 Act Legend,

 

then the Trustee shall cause, or direct the registrar to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the registrar, the aggregate principal amount of Debentures
represented by the Global Debenture to be decreased by the aggregate principal
amount of the Fully Registered Debenture to be issued, shall authenticate and
deliver such Fully 

 

32

 

Registered Debenture and shall debit or cause to be debited to the
account of the Person specified in such instructions a beneficial interest in
the Global Debenture equal to the principal amount of the Fully Registered
Debenture so issued.

 

(e)                        A Fully Registered Debenture may not be exchanged for a beneficial
interest in a Global Debenture except upon satisfaction of the requirements set
forth below.  Upon receipt by the Trustee
of a Fully Registered Debenture, duly endorsed or accompanied by appropriate
instruments of transfer, in form reasonably satisfactory to the Trustee,
together with:

 

(i)                                     so long as the Debentures are Restricted Debentures, a
certification, in a form available from the Trustee substantially in the form
of Schedule “F” hereto, that such
Fully Registered Debenture is being transferred in accordance with Rule 144A,
Regulation S or Rule 144; and

 

(ii)                                  written instructions directing the Trustee to make, or to direct the
Registrar to make, an adjustment on its books and records with respect to such
Global Debenture to reflect an increase in the aggregate principal amount of
the Debentures represented by the Global Debenture, such instructions to
contain information regarding the Depositary account to be credited with such
increase,

 

then the Trustee shall cancel such Fully Registered Debenture and
cause, or direct the registrar to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the registrar,
the aggregate principal amount of Debentures represented by the Global
Debenture to be increased by the aggregate principal amount of the Fully
Registered Debenture to be exchanged, and shall credit or cause to be credited
to the account of the Person specified in such instructions a beneficial
interest in the Global Debenture equal to the principal amount of the Fully
Registered Debenture so cancelled.  If no
Global Debentures are then outstanding, the Corporation shall issue and the
Trustee, upon receipt of an order from the Corporation, shall certify a new
Global Debenture in the appropriate principal amount.

 

(f)                          Subject to Section 3.2(g), every Restricted Debenture shall be
subject to the restrictions on transfer provided in the U.S. 1933 Act Legend
including the requirement of the delivery of an Opinion of Counsel, if so
provided.  Whenever any Restricted
Debenture that is a Fully Registered Debenture or a Global Debenture is
presented or surrendered for registration of transfer or for exchange for a
Debenture registered in a name other than that of the Debentureholder, such
Debenture must be accompanied by a certificate in a form available from the
Trustee substantially in the form of Schedule “F” hereto, dated the date of such surrender and signed by the
transferee of such Debenture, as to compliance with such restrictions on
transfer.  The registrar shall not be
required to accept for such registration of transfer or exchange any Fully
Registered Debenture or Global Debenture not so accompanied by a properly
completed certificate.

 

33

 

(g)                       The restrictions imposed by the U.S. 1933 Act Legend upon the
transferability of any Restricted Debenture shall cease and terminate when such
Debenture has been transferred pursuant to an effective registration statement
under the 1933 Act or transferred in compliance with Rule 144 or, if
earlier, upon the expiration of the holding period applicable to sales thereof
under paragraph (k) of Rule 144. 
Any Debenture as to which such restrictions on transfer shall have
expired in accordance with their terms or shall have terminated may, upon a
surrender of such Debenture for exchange to the registrar in accordance with
the provisions of this Section 3.2 (accompanied, in the event that such
restrictions on transfer have terminated by reason of a transfer in compliance
with Rule 144, by an Opinion of Counsel having substantial experience in
practice under the 1933 Act and otherwise reasonably acceptable to the
Corporation, addressed to the Corporation, the Trustee and the registrar and in
form acceptable to the Corporation, to the effect that the transfer of such Debenture
has been made in compliance with Rule 144), be exchanged for a new
Debenture, of like tenor and aggregate principal amount, which shall not bear
the restrictive U.S. 1933 Act Legend, which Debenture, if a Global Debenture,
to be in the form of an unrestricted Global Debenture.  The Corporation shall inform the Trustee of
the effective date of any registration statement registering the Debentures
under the 1933 Act.  The Trustee and the
registrar shall not be liable for any action taken or omitted to be taken by it
in good faith in accordance with the aforementioned Opinion of Counsel or
registration statement.

 

(h)                       As used in the preceding two paragraphs of this Section 3.2,
the term “transfer” encompasses any sale, pledge, transfer, hypothecation or
other disposition of any Debenture.

 

Section 3.3                                   Transferee
Entitled to Registration

 

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

 

Section 3.4                                   No
Notice of Trusts

 

Neither
the Corporation nor the 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.

 

Section 3.5                                   Registers
Open for Inspection

 

(a)                        The registers referred to in Section 3.1 and Section 3.2
shall at all reasonable times be open for inspection by the Corporation, the
Trustee or any Debentureholder. Every registrar, including the Trustee, shall
from time to time when requested so 

 

34

 

to do by the Corporation or by the Trustee,
in writing, furnish the Corporation or the 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 trustee shall be entitled
to charge a reasonable fee to provide such a list.

 

(b)                       The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Debentureholders.  If the Trustee is not
the registrar, the Corporation shall cause to be furnished to the Trustee a
listing of Debentureholders, in writing at least seven Business Days before
each Interest Payment Date and at such other times as the Trustee may request
in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Debentureholders.

 

Section 3.6                                   Exchanges
of Debentures

 

(a)                        Subject to Section 3.7, 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 3.6(a),
Debentures of any series may be exchanged only at the Designated Office. Any
Debentures tendered for exchange shall be surrendered to the Trustee. The
Corporation shall execute and the 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 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.

 

Section 3.7                                   Closing
of Registers

 

Neither
the Corporation nor the Trustee nor any registrar shall be required to:

 

(a)                        make transfers, exchanges or accept conversions of Fully Registered
Debentures on any Interest Payment Date for such Debentures or during the
period from the close of business on the 10th Business Day preceding the Interest
Payment Date to and including such date;

 

(b)                       make transfers, exchanges or accept conversions of any Debentures on
the day of any selection by the Trustee of Debentures to be redeemed or during
the period from the close of business on the 10th Business Day preceding the
Interest Payment Date to and including such date; or

 

35

 

(c)                        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.

 

Section 3.8                                   Charges
for Registration, Transfer and Exchange

 

For
each Debenture exchanged, registered, transferred or discharged from
registration, the 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 to be
agreed upon by the Trustee and the Corporation from time to time), and payment
of such charges and reimbursement of the 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;

 

(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 3.2;

 

(d)                       for any exchange of any Debenture resulting from a partial
redemption under Section 4.2; or

 

(e)                        for any conversion or exchange of Debentures under Section 6.3.

 

Section 3.9                                   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, in the case of a Fully
Registered Debenture, interest thereon shall be made to such registered holder.

 

(b)                       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 Corporation 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 Corporation and/or the Trustee for the same and neither the
Corporation nor the Trustee shall be bound to inquire into the title of any
such registered holder.

 

36

 

(c)                        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 Trustee, any registrar and to the Corporation.

 

(d)                       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 Trustee and any registrar and to the
Corporation.

 

ARTICLE 4

REDEMPTION AND PURCHASE OF DEBENTURES

 

Section 4.1                                   Applicability
of Article

 

The
Corporation shall have the right at its option to redeem, either in whole at
any time or in part from time to time 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 an Officer’s Certificate, 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 Corporation requesting the certification and
delivery thereof.

 

Section 4.2                                   Partial
Redemption

 

If less
than all the Debentures of any series for the time being outstanding are at any
time to be redeemed, the Corporation shall, at least 15 days before the date
upon which the Redemption Notice is to be given, notify the Trustee by a
Written Direction of the Corporation of its intention to redeem such Debentures
and of the aggregate principal amount of Debentures to be redeemed.  The Debentures to be so redeemed shall be
selected by the Trustee on a pro rata basis to the nearest multiple of $1,000
in accordance with the principal amount of the Debentures registered in the
name of each holder.  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 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.  If a portion of a holder’s
Debentures is selected for partial redemption and the holder converts a portion
of the Debentures prior to such redemption, the converted portion will be deemed
to be the portion selected for redemption. 
In the event that one or more of such Debentures becomes subject to
redemption in part only, upon surrender of any such Debentures for payment of
the Redemption Price, together with interest accrued to but excluding the
Redemption Date, with 

 

37

 

respect to a Global Debenture, the Depositary shall make notations on
the Global Debenture of the principal amount thereof so redeemed, or if the
Debentures are not in the form of a Global Debenture, the Corporation shall
execute and the 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.  Unless the context
otherwise requires, the terms “Debenture” or “Debentures” as used in this Article 4 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.

 

Section 4.3                                   Notice
of Redemption

 

Notice
of redemption (the “Redemption Notice”)
of any series of Debentures shall be given to the Trustee at least 30 days and
not more than 60 days prior to the date fixed for redemption (the “Redemption Date”) in the manner provided in Section 14.2.
Within five days of its receipt of the Redemption Notice, the Trustee shall
give such Redemption Notice to the holders of Debentures to be redeemed.  Every such notice from the Corporation shall
specify the aggregate principal amount of Debentures called for redemption, the
Redemption Date, the Redemption Price, the right of the holders to convert such
Debentures as provided for in Article 6, the places of payment and shall
state that interest upon the principal amount of Debentures called for
redemption shall cease to 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)                        if applicable, 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, if applicable, the distinguishing
letters and numbers of the Debentures which are to be redeemed or, if such
Debentures are selected by terminal digit or other similar system, such
particulars as may be sufficient to identify the Debentures so selected;

 

(c)                        in the case of a Global Debenture, that the redemption will take
place in such manner as may be agreed upon by the Depositary, the Trustee and
the Corporation; and

 

(d)                       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.

 

Section 4.4                                   Debentures
Due on Redemption Dates

 

Provided
that a Redemption Notice has been provided to Debentureholders in accordance
with Section 4.3, all the Debentures so called for redemption shall
thereupon be and become due and payable at the Redemption Price, together with
accrued interest to but excluding the Redemption Date, 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 moneys necessary to redeem, or the Shares to be issued to redeem,
such Debentures shall have been deposited as provided in Section 4.5 (unless
payment of the 

 

38

 

Redemption Price shall not be made on presentation for surrender of
such Debenture), 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 made, such question shall be decided by the Trustee whose decision
shall be final and binding upon all parties in interest.

 

Section 4.5                                   Deposit
of Redemption Moneys

 

Redemption
of Debentures shall be provided for by the Corporation depositing with the
Trustee or any paying agent to the order of the 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
interest thereon up to but excluding the Redemption Date, provided the
Corporation may elect to satisfy this requirement by providing the Trustee with
a certified cheque for such amounts required under this Section 4.5 post
dated to the Redemption Date or by an electronic funds transfer of such funds
on the Redemption Date. At the request of the Trustee, the Corporation shall
also deposit with the Trustee a sum of money sufficient to pay any charges or
expenses which may be reasonably incurred by the Trustee in connection with
such redemption. Every such deposit shall be irrevocable. From the sums so
deposited, the Trustee shall pay or cause to be paid to the holders of such
Debentures so called for redemption, upon surrender of such Debentures, the
principal and premium (if any) to which they are respectively entitled on
redemption.  The Corporation may pay the
interest hereunder in accordance with Article 10.

 

Section 4.6                                   Right
to Repay Redemption Price in Shares

 

(a)                        Subject to the other provisions of this Section 4.6, the
Corporation may, at its option, unless an Event of Default has occurred and is
continuing, elect to satisfy its obligation to pay the Redemption Price in
whole or in part by issuing and delivering to holders on the Redemption Date
that number of Freely Tradeable Shares obtained by dividing the aggregate
principal amount of Debentures being redeemed by 95% of the then Current Market
Price of the Shares on the Redemption Date (the “Share Redemption Right”).

 

(b)                       The Corporation shall exercise the Share Redemption Right by so
specifying in the Redemption Notice and shall specify the aggregate principal
amount of Debentures in respect of which it is exercising the Share Redemption
Right in such Notice.  The Redemption
Notice shall be delivered to the Trustee and the holders of Debentures not more
than 60 days and not less than 30 days prior to the Redemption Date.

 

(c)                        The Corporation’s right to exercise the Share Redemption Right shall
be conditional upon the following conditions being met on the Business Day
preceding the Redemption Date:

 

(i)                                     the qualification of the Shares to be issued on exercise of the
Share Redemption Right as Freely Tradeable;

 

(ii)                                  the listing of such additional Shares on each stock exchange on
which the Shares are then listed;

 

39

 

(iii)                               the Corporation being a reporting issuer (or its equivalent) in good
standing (or equivalent) under Applicable Securities Legislation where the
distribution of such Shares occurs (provided that where Debentures are
represented by one or more Global
Debenture certificates such distribution will be deemed to occur in
jurisdictions where beneficial holders are resident notwithstanding the
residency of the registered holder;

 

(iv)                              no Event of Default shall have occurred and be continuing;

 

(v)                                 the receipt by the Trustee of an Officer’s Certificate stating that
conditions (i), (ii), (iii) and (iv) above have been satisfied and
setting forth the number of Shares to be delivered for each $1,000 principal
amount of Debentures and the Current Market Price of the Shares on the
Redemption Date; and

 

(vi)                              the receipt by the Trustee of an Opinion of Counsel to the effect
that such Shares have been duly authorized and, when issued and delivered
pursuant to the terms of this Indenture in payment of the Redemption Price,
will be validly issued as fully paid and non assessable, that conditions (i) and
(ii) above have been satisfied and that, relying exclusively on
certificates of good standing or no default issued by the relevant securities
authorities, condition (iii) above is satisfied, except that the opinion
in respect of condition (iii) need not be expressed with respect to those
provinces where certificates are not issued.

 

If the foregoing conditions are not satisfied at or prior to 11:00 a.m.
(Toronto time) of business on the Business Day preceding the Redemption Date,
the Corporation shall pay in cash the Redemption Price that would otherwise
have been satisfied in Shares in accordance with Section 4.5 unless the
Debentureholder waives the conditions which are not satisfied.

 

(d)                       In the event that the Corporation duly exercises its Share
Redemption Right, upon presentation and surrender of the Debentures for payment
on the Redemption Date, at any place where a register is maintained pursuant to
Article 3 or any other place specified in the Redemption Notice, the
Corporation shall on or before 11:00 a.m. (Toronto time) on the Business
Day immediately prior to the Redemption Date make the delivery to the Trustee
for delivery to and on account of the holders, of certificates representing the
number of whole Shares and a cheque representing accrued and unpaid interest to
which such holders are entitled.  Such
Shares shall be in fully registered, definitive form.

 

(e)                        No fractional Shares shall be delivered upon the exercise of the
Share Redemption Right but, in lieu thereof, the Corporation shall pay to the
Trustee for the account of the holders, at the time contemplated in Section 4.6(d),
the cash equivalent thereof determined on the basis of the Current Market Price
of the Shares on the Redemption Date (less any tax required to be deducted, if
any).

 

40

 

(f)                          A holder shall be treated as the shareholder of record of the Shares
issued on due exercise by the Corporation of its Share Redemption Right
effective immediately after the close of business on the Redemption Date, and
shall be entitled to all substitutions therefor, all income earned thereon or
accretions thereto and all dividends or distributions (including share
distributions and dividends or distributions in kind) thereon and arising
thereafter, and in the event that the Trustee or any paying agent receives the
same, it shall hold the same in trust for the benefit of such holder.

 

(g)                       The Corporation shall issue to Debentureholders to whom Shares will
be issued pursuant to exercise of the Share Redemption Right, such number of
Shares as shall be issuable in such event. All such Shares which shall be so
issuable shall be duly and validly issued as fully paid and non-assessable.

 

(h)                       The Corporation shall comply with all Applicable Securities
Legislation regulating the issue and delivery of Shares upon exercise of the
Share Redemption Right and shall cause to be listed and posted for trading such
Shares on each stock exchange on which the Shares are then listed.

 

(i)                           The Corporation shall from time to time promptly pay, or make
provision satisfactory to the Trustee for the payment of, all taxes and charges
which may be imposed by the laws of Canada or any province thereof (except
income tax, withholding tax or security transfer tax, if any) which shall be
payable with respect to the issuance or delivery of Shares to holders upon
exercise of the Share Redemption Right pursuant to the terms of the Debentures
and of this Indenture.

 

(j)                           If the Corporation elects to satisfy its obligation to pay the
Redemption Price by issuing Shares in accordance with this Section 4.6 and
if the Redemption Price (or any portion thereof) to which a holder is entitled
is subject to withholding taxes, the Trustee, on the Written Direction of the
Corporation but for the account of the holder, shall sell, through the
investment banks, brokers or dealers selected by the Corporation, out of the
Shares issued by the Corporation for this purpose, such number of Shares that
is sufficient to yield net proceeds (after payment of all costs) to cover the
amount of taxes required to be withheld, and shall remit same on behalf of the
Corporation to the proper tax authorities within the period of time prescribed
for this purpose under applicable laws. In the event the Trustee sells such
Shares pursuant to this Section 4.6(j), the procedures set forth in Article 10
of this Indenture shall apply mutatis mutandis to such sale.

 

(k)                        Absent registration of any such Shares pursuant to the 1933 Act,
each certificate representing Shares issued in payment of the Redemption Price
of Debentures bearing the U.S. 1933 Act Legend, as well as all certificates
issued in exchange for or in substitution of the foregoing Shares, shall bear
the U.S. 1933 Act Legend set forth below:

 

“This Security (or its predecessor) has not been registered under the
Securities Act of 1933, as amended (the “Securities Act”) or the securities
laws of any state of the United States, and accordingly, neither this Security
nor any interest or participation herein may 

 

41

 

be offered, sold, assigned, pledged, encumbered or otherwise
transferred or disposed of in the absence of such registration within the
United States or to, or for the account or benefit of, U.S. Persons except as
set forth in the next sentence.  By its
acquisition hereof or of a beneficial interest herein, the holder (1) acknowledges
that this Security is a “restricted security” that has not been registered
under the Securities Act and agrees for the benefit of MDC Partners Inc. (“MDC”)
that this Security may be offered, sold, pledged or otherwise transferred only
in compliance with the Securities Act and other applicable laws of the state of
the United States governing the offer and sale of the Security; (2) represents
that it is (a) not a U.S. Person and is acquiring this Security in an
offshore transaction in compliance with Regulation S under the Securities Act
or (b) a qualified institutional buyer (“QIB”) (as defined in Rule 144A
under the Securities Act); (3) agrees that it will not within two years
after the original issuance of the Debenture from which this Security was
converted, resell or otherwise transfer this Security except (a) to MDC or
any subsidiary thereof, (b) to persons other than U.S. Persons outside the
United States (including on the Toronto Stock Exchange)  in compliance with Rules 903, 904 and
905 of Regulation S, (c) to a QIB in compliance with Rule 144A under
the Securities Act (if available), (d) pursuant to the exemption from
registration provided by Rule 144 adopted under the Securities Act (if
available) or another available exemption under the Securities Act (and based
upon an opinion of U.S. counsel acceptable to MDC), or (e) pursuant to an
effective registration statement under the Securities Act, in each case subject
to MDC’s and the transfer agent’s right prior to any such offer, sale or
transfer to require the certification and/or other information satisfactory to
each of them to the extent specified in the instrument governing this Security;
and (4) agrees that it will, prior to any transfer of this Security within
two years after the original issuance of the Debenture from which this Security
was converted, deliver to the transfer agent and MDC such certifications, legal
opinions or other information as may be required pursuant to the indenture to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.  As used herein, the terms “offshore
transaction,” “United States” and “U.S. Person” have the meanings given to them
by Regulation S under the Securities Act. 
In any case the holder hereof agrees and acknowledges that it shall not,
directly or indirectly, engage in any hedging transaction with regard to this
Security except as permitted by the Securities Act.”

 

If Shares issued in payment of the Redemption Price of Debentures
subject to restrictions on transfer and bearing the legends set forth above, or
if a request is made to remove the U.S. 1933 Act Legend on such Shares, the
Shares so issued shall bear the U.S. 1933 Act Legend, or the U.S. 1933 Act
Legend shall not be removed, as the case may be, unless there is delivered to
the Corporation and the registrar for the Shares such satisfactory evidence, which
shall include an Opinion of Counsel, as may be reasonably required by the
Corporation, that neither the U.S. 1933 Act Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A or Rule 144 or that such Shares are
not “restricted” within the meaning of Rule 144.  Upon (i) provision of such satisfactory
evidence or (ii) notification by the Corporation to the registrar for the
Shares of the sale of such Shares pursuant to a registration statement that is
effective at the time of such sale, the registrar, upon receipt of an order
from the Corporation, shall authenticate and deliver Shares that do not bear
the U.S. 1933 Act Legend.  If the U.S.
1933 Act Legend is removed from the face of a Share certificate and the Share
certificate is

 

42

 

subsequently held by an “affiliate” (as such term is defined in the
1933 Act) of the Corporation, the Corporation shall use its reasonable best
efforts to reinstate the U.S. 1933 Act Legend. 
Provided that the Trustee obtains confirmation from the Corporation that
such counsel is satisfactory to it, it shall be entitled to rely on such
Opinion of Counsel without further inquiry.

 

(l)                           The Corporation shall at all times reserve and keep available out of
its authorized Shares (if the number thereof becomes limited) solely for the
purpose of issue and delivery upon the exercise of the Share Redemption Right
as provided herein, and shall issue to Debentureholders to whom the Shares will
be issued pursuant to exercise of the Share Redemption Right, such number of
Shares as shall be issuable in such event.

 

Section 4.7                                   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 Trustee may require, such redemption moneys
may be set aside in trust, without interest, either in the deposit department
of the 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 moneys so paid and deposited, upon surrender and
delivery of such holder’s Debenture of the Redemption Price of such Debenture.
In the event that any money, or certificates, required to be deposited
hereunder with the Trustee or any depositary 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 moneys, together with any accumulated interest thereon, shall at the
end of such period be paid over or delivered over by the Trustee or such
depositary or paying agent to the Corporation on its written demand, and
thereupon the 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 Corporation
shall have no rights in respect thereof except to obtain payment of the money
due from the Corporation, subject to any limitation period provided by the laws
of the province of Ontario.

 

Section 4.8                                   Cancellation
of Debentures Redeemed

 

Subject
to the provisions of Section 4.2 and Section 4.9 as to Debentures
redeemed or purchased in part, all Debentures redeemed and whose obligations
have been satisfied under this Article 4 shall forthwith be delivered to
the Trustee and cancelled and no Debentures shall be issued in substitution
therefor.

 

Section 4.9                                   Purchase
of Debentures by the Corporation

 

Unless
otherwise specifically provided with respect to a particular series of
Debentures, the Corporation may, provided no Event of Default has occurred and
is continuing, at any time and from time to time, purchase Debentures in the
market (which shall include purchase 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, subject to compliance with Applicable 

 

43

 

Securities Legislation and applicable United States securities laws
regarding issuer bid requirements.  If an
Event of Default has occurred and is continuing, the Corporation may purchase
all or any of the Debentures as aforesaid, except by private contract. All
Debentures so purchased may, at the option of the Corporation, be delivered to
the Trustee and shall be cancelled and no Debentures shall be issued in
substitution therefor.

 

If,
upon an invitation for tenders, more Debentures are tendered at the same lowest
price than the Corporation is prepared to accept, the Debentures to be
purchased by the Corporation shall be selected by the Trustee on a pro rata
basis from the Debentures tendered by each tendering Debentureholder who
tendered at such lowest price. For this purpose the 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. 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 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 Depositary
shall make notations on the Global Debenture of the principal amount thereof so
purchased.

 

Section 4.10                            Right to
Repay Principal Amount in Shares at Maturity

 

(a)                        Subject to the other provisions of this Section 4.10, the
Corporation may, unless an Event of Default has occurred and is continuing, at
its option, elect to satisfy its obligation to repay the principal amount of
the Debentures outstanding, in whole or in part, by issuing and delivering to
holders on the maturity of such Debentures (the “Maturity Date”) that number of Freely Tradeable Shares
obtained by dividing the aggregate principal amount of the Debentures by 95% of
the Current Market Price of the Shares on the Maturity Date (the “Share Repayment Right”).

 

(b)                       The Corporation shall exercise the Share Repayment Right by so
specifying in the Maturity Notice set forth in Schedule “C”, and shall
specify the aggregate principal amount of Debentures in respect of which it is
exercising the Share Redemption Right in such Notice.  The Redemption Notice shall be delivered to
the Trustee and the holders of Debentures not more than 60 days and not less
than 30 days prior to the Maturity Date.

 

(c)                        The Corporation’s right to exercise the Share Repayment Right shall
be conditional upon the following conditions being met on the Business Day
preceding the Maturity Date:

 

(i)                                     the qualification of the Shares to be issued on exercise of the
Share Repayment Right as Freely Tradeable;

 

(ii)                                  the listing of such additional Shares on each stock exchange on
which the Shares are then listed;

 

44

 

(iii)                               the Corporation being a reporting issuer (or its equivalent) in good
standing (or equivalent) under Applicable Securities Legislation where the
distribution of such Shares occurs (provided that where Debentures are
represented by one or more Global Debenture certificates such distribution will
be deemed to occur in jurisdictions where beneficial holders are resident
notwithstanding by the residency of the registered holder(s);

 

(iv)                              no Event of Default shall have occurred and be continuing;

 

(v)                                 the receipt by the Trustee of an Officer’s Certificate stating that
conditions (i), (ii), (iii) and (iv) above have been satisfied and
setting forth the number of Shares to be delivered for each $1,000 principal
amount of Debentures and the Current Market Price of the Shares on the Maturity
Date; and

 

(vi)                              the receipt by the Trustee of an Opinion of Counsel to the effect
that such Shares have been duly authorized and, when issued and delivered
pursuant to the terms of this Indenture in payment, in whole or in part, of the
principal amount of the Debentures outstanding will be validly issued as fully
paid and non- assessable, that conditions (i) and (ii) above have
been satisfied and that, relying exclusively on certificates of good standing
or no default issued by the relevant securities authorities, condition (iii) above
is satisfied, except that the opinion in respect of condition (iii) need
not be expressed with respect to those provinces where certificates are not
issued.

 

If the foregoing conditions are not satisfied prior to 11:00 a.m.
(Toronto time) on the Business Day preceding the Maturity Date, the Corporation
shall pay in cash 100% of the principal amount of the Debentures that would
otherwise have been payable in accordance with Section 4.5, unless the
Debentureholder waives the conditions which are not satisfied.

 

(d)                       In the event that the Corporation duly exercises its Share Repayment
Right, upon presentation and surrender of the Debentures for payment on the
Maturity Date, at any place where a register is maintained pursuant to Article 3
or any other place specified in the Maturity Notice, the Corporation shall on
or before 11:00 a.m. Toronto time on the Business Day immediately prior to
the Maturity Date make the delivery to the Trustee for delivery to and on
account of the holders of certificates representing the Shares and a cheque
representing accrued and unpaid interest to which such holders are
entitled.  Such shares shall be in fully
registered definitive form.

 

(e)                        No fractional Shares shall be delivered upon the exercise of the
Share Repayment Right but, in lieu thereof, the Corporation shall pay to the
Trustee for the account of the holders, at the time contemplated in Section 4.10(d),
the cash equivalent thereof determined on the basis of the Current Market Price
of the Shares on the Maturity Date (less any tax required to be deducted, if
any).

 

45

 

(f)                          A holder shall be treated as the shareholder of record of the Freely
Tradeable Shares issued on due exercise by the Corporation of its Share
Repayment Right effective immediately after the close of business on the
Maturity Date, and shall be entitled to all substitutions therefor, all income
earned thereon or accretions thereto and all dividends or distributions
(including share distributions and dividends or distributions in kind) thereon
and arising thereafter, and in the event that the Trustee or any paying agent
receives the same, it shall hold the same in trust for the benefit of such
holder.

 

(g)                       The Corporation shall issue to Debentureholders to whom Shares will
be issued pursuant to exercise of the Share Repayment Right, such number of
Shares as shall be issuable in such event. All such Shares which shall be so
issuable shall be duly and validly issued as fully paid and non-assessable.

 

(h)                       The Corporation shall comply with all Applicable Securities
Legislation regulating the issue and delivery of Shares upon exercise of the
Share Repayment Right and shall cause to be listed and posted for trading such
Shares on each stock exchange on which the Shares are then listed.

 

(i)                           The Corporation shall from time to time promptly pay, or make
provision satisfactory to the Trustee for the payment of, all taxes and charges
which may be imposed by the laws of Canada or any province thereof (except income
tax, withholding tax or security transfer tax, if any) which shall be payable
with respect to the issuance or delivery of Shares to holders upon exercise of
the Share Repayment Right pursuant to the terms or the Debentures and of this
Indenture.

 

(j)                           If the Corporation elects to satisfy its obligation, in whole or in
part, to pay the principal amount on maturity by issuing Shares in accordance
with this Section 4.10, and if the principal amount (or any portion
thereof) to which a holder is entitled is subject to withholding taxes, the
Trustee, on the written direction of the Corporation but for the account of the
holder, shall sell, through the investment banks, brokers or dealers selected
by the Corporation, out of the Shares issued by the Corporation for this
purpose, such number of Shares that is sufficient to yield net proceeds (after
payment of all costs) to cover the amount of taxes required to be withheld, and
shall remit same on behalf of the Corporation to the proper tax authorities
within the period of time prescribed for this purpose under applicable laws.

 

(k)                        Absent registration of any such Shares pursuant to the 1933 Act,
each certificate representing Shares issued in payment of the Redemption Price
of Debentures bearing the U.S. 1933 Act Legend, as well as all certificates
issued in exchange for or in substitution of the foregoing Shares, shall bear
the U.S. 1933 Act Legend set forth below:

 

“This Security (or its predecessor) has not
been registered under the Securities Act of 1933, as amended (the “Securities
Act”) or the securities laws of any state of the United States, and
accordingly, neither this Security nor any interest or participation herein may
be offered, sold, assigned, pledged, encumbered or otherwise transferred or
disposed of 

 

46

 

in the absence of such registration within
the United States or to, or for the account or benefit of, U.S. Persons except
as set forth in the next sentence.  By
its acquisition hereof or of a beneficial interest herein, the holder (1) acknowledges
that this Security is a “restricted security” that has not been registered
under the Securities Act and agrees for the benefit of MDC Partners Inc. (“MDC”)
that this Security may be offered, sold, pledged or otherwise transferred only
in compliance with the Securities Act and other applicable laws of the state of
the United States governing the offer and sale of the Security; (2) represents
that it is (a) not a U.S. Person and is acquiring this Security in an offshore
transaction in compliance with Regulation S under the Securities Act or (b) a
qualified institutional buyer (“QIB”) (as defined in Rule 144A under the
Securities Act); (3) agrees that it will not within two years after the
original issuance of the Debenture from which this Security was converted,
resell or otherwise transfer this Security except (a) to MDC or any
subsidiary thereof, (b) to persons other than U.S. Persons outside the
United States (including on the Toronto Stock Exchange)  in compliance with Rules 903, 904 and
905 of Regulation S, (c) to a QIB in compliance with Rule 144A under
the Securities Act (if available), (d) pursuant to the exemption from
registration provided by Rule 144 adopted under the Securities Act (if
available) or another available exemption under the Securities Act (and based
upon an opinion of U.S. counsel acceptable to MDC), or (e) pursuant to an
effective registration statement under the Securities Act, in each case subject
to MDC’s and the transfer agent’s right prior to any such offer, sale or
transfer to require the certification and/or other information satisfactory to
each of them to the extent specified in the instrument governing this Security;
and (4) agrees that it will, prior to any transfer of this Security within
two years after the original issuance of the Debenture from which this Security
was converted, deliver to the transfer agent and MDC such certifications, legal
opinions or other information as may be required pursuant to the indenture to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.  As used herein, the terms “offshore
transaction,” “United States” and “U.S. Person” have the meanings given to them
by Regulation S under the Securities Act. 
In any case the holder hereof agrees and acknowledges that it shall not,
directly or indirectly, engage in any hedging transaction with regard to this
Security except as permitted by the Securities Act.”

 

If Shares issued in payment of the Redemption Price of Debentures
subject to restrictions on transfer and bearing the legends set forth above, or
if a request is made to remove the U.S. 1933 Act Legend on such Shares, the
Shares so issued shall bear the U.S. 1933 Act Legend, or the U.S. 1933 Act
Legend shall not be removed, as the case may be, unless there is delivered to
the Corporation and the registrar for the Shares such satisfactory evidence,
which shall include an Opinion of Counsel, as may be reasonably required by the
Corporation, that neither the U.S. 1933 Act Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A or Rule 144 or that such Shares are
not “restricted” within the meaning of Rule 144.  So long as such Shares are Restricted Shares,
each subsequent transferee of such Shares, or any beneficial interest therein,
will be required to deliver a certificate substantially in the form of Schedule “F” hereto in connection with such
transfer.  Upon (i) provision of
such satisfactory evidence or (ii) notification by the Corporation to the
registrar for the Shares of the sale of such Shares pursuant to a registration
statement that is effective at the time of such sale, the registrar, upon
receipt of an order from the Corporation, shall 

 

47

 

authenticate and deliver Shares that do not bear the U.S. 1933 Act
Legend.  If the U.S. 1933 Act Legend is
removed from the face of a Share certificate and the Share certificate is
subsequently held by an “affiliate” (as such term is defined in the 1933 Act)
of the Corporation, the Corporation shall use its reasonable best efforts to
reinstate the U.S. 1933 Act Legend. 
Provided that the Trustee obtains confirmation from the Corporation that
such counsel is satisfactory to it, it shall be entitled to rely on such
Opinion of Counsel without further inquiry.

 

(l)                           The Corporation shall at all times reserve and keep available out of
its authorized Shares (if the number thereof becomes limited) solely for the
purpose of issue and delivery upon the exercise of the Share Repayment Right as
provided herein, and shall issue to Debentureholders to whom the Shares will be
issued pursuant to exercise of the Share Repayment Right, such number of Shares
as shall be issuable in such event.

 

ARTICLE 5

SUBORDINATION OF DEBENTURES

 

Section 5.1                                   Applicability
of Article

 

The
indebtedness, liabilities and other obligations evidenced by any Debentures issued
hereunder, including the principal thereof and interest thereon, shall be
subordinate and subject in right of payment, to the extent and in the manner
hereinafter set forth in the following sections of this Article 5, to all
Senior Indebtedness (including all payments thereunder) of the Corporation and
each holder of any such Debenture by his acceptance thereof agrees to and shall
be bound by the provisions of this Article 5.

 

Section 5.2                                   Order of Payment

 

Upon
any distribution of the assets of the Corporation on any dissolution, winding
up, total liquidation or reorganization of the Corporation (whether in
bankruptcy, insolvency or receivership proceedings, or upon an “assignment for
the benefit of creditors” or any other marshalling of the assets and
liabilities of the Corporation, or otherwise):

 

(a)                        all Senior Indebtedness shall first be paid in full in cash before
any payment is made on account of the principal of or interest on the
indebtedness evidenced by the Debentures; and

 

(b)                       any payment or distribution of assets of the Corporation, whether in
cash, property or securities, to which the holders of the Debentures or the
Trustee on behalf of such holders would be entitled except for the provisions
of this Article 5, 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 Senior 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 Indebtedness may have been issued, to the extent
necessary to pay all Senior Indebtedness in full after giving effect to any
concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness.

 

48

 

Section 5.3                                   Subrogation
to Rights of Holders of Senior Indebtedness

 

Subject
to the payment in full in cash of all Senior Indebtedness, the holders of the
Debentures shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Corporation
to the extent of the application thereto of such payments or other assets which
would have been received by the holders of the Debentures but for the
provisions hereof until the principal of and interest on the Debentures shall
be paid in full, and no such payments or distributions to the holders of the
Debentures of cash, property or securities, which otherwise would be payable or
distributable to the holders of the Senior Indebtedness, shall, as between the
Corporation, its creditors other than the holders of Senior Indebtedness, and
the holders of Debentures, be deemed to be a payment by the Corporation to the
holders of the Senior Indebtedness or on account of the Senior Indebtedness, it
being understood that the provisions of this Article 5 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 Indebtedness, on
the other hand.

 

Section 5.4                                   Obligation
to Pay Not Impaired

 

Nothing
contained in this Article 5 or elsewhere in this Indenture or in the
Debentures is intended to or shall impair, as between the Corporation, its
creditors other than the holders of Senior Indebtedness, and the holders of the
Debentures, the obligation of the Corporation, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of and
interest on the Debentures, as and when the same shall become due and payable
in accordance with their terms, or affect the relative rights of the holders of
the Debentures and creditors of the Corporation other than the holders of the
Senior Indebtedness, provided that until the payment in full in cash of all Senior
Indebtedness, neither the Trustee nor the holders of the Debentures shall be
entitled to demand or otherwise attempt to enforce in any manner, institute
proceedings for the collection of, or institute any proceedings against the
Corporation including, without limitation, by way of any bankruptcy, insolvency
or similar proceedings or any proceeding for the appointment of a receiver,
liquidator, trustee or other similar official (it being understood and agreed
that the Trustee and/or the holders of the Debentures shall be permitted to
take any steps necessary to preserve the claims of the holders of Debentures in
any such proceeding and any steps necessary to prevent the extinguishment or
other termination of a claim or potential claim as a result of the expiry of a
limitation period under applicable law), or receive any payment or benefit in
any manner whatsoever on account of indebtedness represented by the Debentures
at any time when an event of default (howsoever designated) has occurred and is
continuing under any Senior Indebtedness and is continuing and notice of such
event of default has been given by or on behalf of the lender or lenders party
to such Senior Indebtedness to the Corporation or an Affiliate thereof that is
the borrower pursuant to such Senior Indebtedness.

 

Section 5.5                                   No
Payment if Senior Indebtedness in Default

 

Upon
the maturity of any Senior Indebtedness by lapse of time, acceleration or
otherwise, then, except as provided in Section 5.1, all principal of,
premium, if any, and interest, if any, on all such matured Senior Indebtedness
shall first be paid in full in cash before any payment is made on account of
principal of or interest on the Debentures.

 

49

 

In case
of default with respect to any Senior Indebtedness permitting the holders thereof
to accelerate the maturity thereof, unless and until such default shall have
been cured or waived or shall have ceased to exist, no payment (by purchase of
Debentures or otherwise) shall be made by the Corporation with respect to the
principal of, or premium, if any, or interest, if any, on the Debentures after
the happening of such a default (except as provided in Section 5.2, and
unless and until such default shall have been cured or waived or shall have
ceased to exist, such payments shall be held in trust for the benefit of, and,
if and when such Senior Indebtedness shall have become due and payable, shall
be paid over to, the holders of the Senior Indebtedness or their representative
or representatives or to the trustee or directors under any indenture or any
instruments evidencing Senior Indebtedness remaining unpaid, until all such
Senior Indebtedness shall have been paid in full in cash, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Indebtedness.

 

The fact
that any payment hereunder is prohibited by this Section 5.5 shall not
prevent the failure to make such payment from being an Event of Default
hereunder.

 

Section 5.6                                   Payment
on Debentures Permitted

 

Nothing
contained in this Article 5 or elsewhere in this Indenture, or in any of
the Debentures, shall affect the obligation of the Corporation to make, or
prevent the Corporation from making, at any time except during the pendency of
any dissolution, winding up or liquidation of the Corporation or reorganization
proceedings specified in Section 5.2 affecting the affairs of the
Corporation, and except in the circumstances specified in Section 5.5, any
payment of principal of or interest on the Debentures.  The fact that any such payment is prohibited
by this Section 5.6 shall not prevent the failure to make such payment
from being an Event of Default hereunder. 
Nothing contained in this Article 5 or elsewhere in this Indenture,
or in any of the Debentures, shall prevent the conversion of the Debentures
pursuant to Article 6. 
Notwithstanding the provisions of this Article 5 or any provision
in this Indenture or in the Debentures contained, the Trustee shall not be
charged with knowledge of the existence of any Senior Indebtedness or of any
default in the payment thereof, unless and until the Trustee shall have
received written notice thereof from the Corporation or from the holder of
Senior Indebtedness or from the representative of any such holder.

 

Section 5.7                                   Confirmation
of Subordination

 

Each
holder of Debentures by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article 5 and appoints
the Trustee his attorney-in-fact for any and all such purposes. Upon the
written request of the Corporation, and upon being furnished an Officer’s
Certificate stating that one or more named persons are holders of Senior
Indebtedness, or the representative or representatives of such holders, or the
director or directors under which any instrument evidencing such Senior
Indebtedness may have been issued, and specifying the amount and nature of such
Senior Indebtedness, the Trustee shall enter into a written agreement or
agreements with the Corporation and the person or persons named in such Officer’s
Certificate providing that such person or persons are entitled to all the
rights and benefits of this Article 5 as the holder or holders,
representative or representatives, or trustee or trustees of the Senior
Indebtedness specified in such Officer’s Certificate and in such agreement.
Such agreement shall be conclusive evidence that the indebtedness specified
therein 

 

50

 

is Senior Indebtedness, however, nothing herein shall impair the rights
of any holder of Senior Indebtedness who has not entered into such an
agreement.

 

Section 5.8                                   Knowledge
of Trustee

 

Notwithstanding
the provisions of this Article 5, the Trustee will not be charged with
knowledge of the existence of any fact that would prohibit the making of any
payment of moneys to or by the Trustee, or the taking of any other action by
the Trustee, unless and until the Trustee has received written notice thereof
from the Corporation, any Debentureholder or any holder or representative of
any class of Senior Indebtedness or on its behalf.

 

Section 5.9                                   Trustee
May Hold Senior Indebtedness

 

The
Trustee is entitled to all the rights set forth in this Article 5 with
respect to any Senior Indebtedness at the time held by it or for which it acts
as trustee, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture deprives the Trustee of any of its rights as such
holder.

 

Section 5.10                            Rights of
Holders of Senior Indebtedness Not Impaired

 

No
right of any present or future holder of any Senior Indebtedness to enforce the
subordination herein will at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Corporation or by any non
compliance by the Corporation 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.

 

Section 5.11                            Altering
the Senior Indebtedness

 

The
holders of the Senior Indebtedness have the right to extend, renew, modify or
amend the terms of the Senior Indebtedness or any security therefor and to
release, sell or exchange such security and otherwise to deal freely with the
Corporation, all without notice to or consent of the Debentureholders or the
Trustee and without affecting the liabilities and obligations of the parties to
this Indenture or the Debentureholders or the Trustee.

 

Section 5.12                            Additional
Indebtedness

 

This
Indenture does not, and shall not, restrict the Corporation from incurring
additional Senior Indebtedness at anytime or from time to time or other
indebtedness or otherwise or mortgaging, pledging or charging its real or
personal property or properties to secure any indebtedness or other financing.

 

Section 5.13                            Right of
Debentureholder to Convert Not Impaired

 

The
subordination of the Debentures to the Senior Indebtedness and the provisions
of this Article 5 do not impair in any way the right of a Debentureholder
to convert its Debentures pursuant to Article 6.

 

51

 

ARTICLE 6

CONVERSION OF DEBENTURES

 

Section 6.1                                   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 Shares or other securities,
at such conversion 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 an Officer’s Certificate, 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 Shares
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 Shares shall be adjusted for in the manner provided
in Section 6.4.

 

Section 6.2                                   Revival
of Right to Convert

 

If the
redemption of any Debenture called for redemption by the Corporation is not
made or the payment of the purchase price of any Debenture which has been
tendered in acceptance of an offer by the Corporation 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, provided the Time of Expiry
has not passed, the right to convert such Debentures shall revive and continue
as if such Debenture had not been called for redemption or tendered in
acceptance of the Corporation’s offer, respectively.

 

Section 6.3                                   Manner
of Exercise of Right to Convert

 

(a)                        The holder of a Debenture desiring to convert such Debenture in
whole or in part into Shares shall, subject to Section 6.3(d), surrender
such Debenture to the Trustee at the Designated Office together with the
conversion form on the back of such Debenture or any other written notice in a
form satisfactory to the Trustee, in either case duly executed by the holder or
his executors or administrators or other legal representatives or his or their
attorney duly appointed by an instrument in writing in form and executed in a
manner satisfactory to the Trustee, exercising his right to convert such
Debenture in accordance with the provisions of this Article.  The holder of the Debentures shall also
furnish appropriate endorsements and transfer documents, if required by the
Trustee.  Thereupon such Debentureholder
or, subject to payment of all applicable stamp or security transfer taxes or
other governmental charges and compliance with all reasonable requirements of
the Trustee, his nominee(s) or assignee(s), shall be entitled to be entered in
the books of the Corporation as at the Date of Conversion (or such later date
as is specified in Section 6.3(b)) as the holder of the number of Shares
into which such Debenture is convertible in accordance with the provisions of
this Article and, as soon as practicable thereafter, the Corporation shall
deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or
assignee(s), a certificate or certificates for such 

 

52

 

Shares and make or cause to be made any
payment of interest to which such Debentureholder is entitled to under Section 6.3(f).

 

(b)                       For the purposes of this Article, a Debenture shall be deemed to be
surrendered for conversion on the date (herein called the “Date of Conversion”) on which it is so
surrendered in accordance with the provisions of this Article and, in the
case of a Debenture so surrendered by post or other means of transmission, on
the date on which it is received by the Trustee at one of its offices specified
in Section 6.3(a); provided that if a Debenture is surrendered for
conversion on a day on which the register of Shares is closed, the person or
persons entitled to receive Shares shall become the holder or holders of record
of such Shares as at the date on which such registers are next reopened.

 

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

 

(d)                       Debentureholders may surrender a Debenture for conversion by means
of book-entry delivery in accordance with the regulations of the applicable
book-entry facility.  If a
Debentureholder converts more than one Debenture at the same time, the number
of Shares issuable upon conversion thereof shall be base don the aggregate
principal amount of the Debentures converted.

 

(e)                        The holder of any Debenture of which only a part is converted shall,
upon the exercise of his right of conversion surrender the said Debenture to
the Trustee, and the 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.

 

(f)                          The holder of a Debenture surrendered for conversion in accordance
with this Section 6.3 shall be entitled to receive accrued and unpaid
interest in respect thereof up to but excluding the Date of Conversion of such
Debenture and the Shares issued upon such conversion shall rank only in respect
of distributions or dividends declared in favour of share holders of record on
and after the Date of Conversion or such later date as such holder shall become
the holder of record of such Shares pursuant to Section 6.3(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 Shares.

 

Section 6.4                                   Adjustment
of Conversion Price

 

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

 

(a)                        If and whenever at any time prior to the Time of Expiry the Corporation
shall (i) subdivide or redivide the outstanding Shares into a greater
number of shares, (ii) 

 

53

 

reduce, combine or consolidate the
outstanding Shares into a smaller number of shares, or (iii) issue Shares
or securities convertible into or exchangeable for Shares to the holders of all
or substantially all of the outstanding Shares by way of a dividend or
distribution (other than the issue of Shares to holders of Shares who have
elected to receive dividends or distributions in the form of Shares in lieu of
cash dividends or cash distributions paid in the ordinary course), 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 Shares 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 Shares resulting from
such subdivision, redivision or dividend (including, in the case which
securities convertible into or exchangeable for Shares are distributed, the
number of Shares that would have been outstanding had all such securities been
exchanged for or converted into Shares on such effective date or record date),
or shall, in the case of any of the events referred to in (ii) above, be
increased in proportion to the number of outstanding Shares resulting from such
reduction, combination or consolidation. Such adjustment shall be made
successively whenever any event referred to in this Section 6.4(a) shall
occur. Any such issue of Shares 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 Shares under
subsections (b) and (c) of this Section 6.4.

 

(b)                       If and whenever at any time prior to the Time of Expiry the
Corporation shall fix a record date for the issuance of options, rights or
warrants to all or substantially all the holders of its outstanding Shares
entitling them, for a period expiring not more than 45 days after such record
date, to subscribe for or purchase Shares (or securities convertible or
exchangeable into Shares) at a price per share (or having a conversion or
exchange price per share) less than 95% of the Current Market Price of a Share
on such record date, the Conversion Price shall be adjusted immediately after
such record date so that it shall equal the price determined by multiplying the
Conversion Price in effect on such record date by a fraction, of which the
numerator shall be the total number of Shares outstanding on such record date
plus a number of Shares equal to the number arrived at by dividing the
aggregate price of the total number of additional Shares offered for
subscription or purchase (or the aggregate conversion or exchange price of the
convertible or exchangeable securities so offered) by such Current Market Price
per Share, and of which the denominator shall be the total number of Shares
outstanding on such record date plus the total number of additional Shares
offered for subscription or purchase (or into which the convertible or
exchangeable securities so offered are convertible). 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 Shares (or securities
convertible or 

 

54

 

exchangeable into Shares) 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
Corporation shall fix a record date for the making of a distribution to all or
substantially all the holders of its outstanding Shares of (i) shares of
any class other than Shares (other than shares distributed to holders of Shares
who have elected to receive dividends or distributions in the form of such
shares in lieu of dividends or distributions paid in the ordinary course), (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 Shares or securities convertible into Shares), (iii) evidences of
its indebtedness, or (iv) other assets (including cash dividends or
distributions paid 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 Shares outstanding on such record date multiplied by the Current
Market Price per Share on such record date, less the fair market value (as
determined by the directors, which determination shall be conclusive) of such
shares or rights, options or warrants or evidences or indebtedness or assets so
distributed, and of which the denominator shall be the total number of Shares
outstanding on such record date multiplied by such Current Market Price per
Share. Such adjustment shall be made successively whenever such a record date
is fixed.  To the extent that such
distribution is not so made, the Conversion Price shall be 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
shares or rights, options or warrants or evidences of indebtedness or assets
actually distributed, as the case may be.

 

(d)                       If and whenever at any time prior to the Time of Expiry, there is a
reclassification of the Shares or a capital reorganization of the Corporation
other than as described in Section 6.4(a) or a consolidation,
amalgamation, arrangement or merger of the Corporation with or into any other
Person or other entity; or a sale or conveyance of the property and assets of
the Corporation as an entirety or substantially as an entirety to any other Person
or other entity or a liquidation, dissolution or winding up of the Corporation,
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, upon the exercise of such right
thereafter, shall be entitled to receive and shall accept, in lieu of the
number of Shares then sought to be acquired by it, the number of shares, shares
or other securities or property of the Corporation or of the Person or other
entity resulting from such merger, amalgamation or consolidation, or to which
such sale or conveyance may be made or which holders of Shares receive pursuant
to such liquidation, dissolution or winding up, as the case may be, that such
holder of a Debenture would have been entitled 

 

55

 

to receive on such reclassification, capital
reorganization, consolidation, amalgamation, arrangement or merger, sale or
conveyance or liquidation, dissolution or winding-up, 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 Shares sought to be acquired by it and to
which it was entitled to acquire upon the exercise of the conversion right. If
determined appropriate by the directors to give effect to or to evidence the
provisions of this Section 6.4(d), the Corporation, 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; 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 any shares 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 Corporation and the
Trustee pursuant to the provisions of this Section 6.4(d) shall be a
supplemental indenture entered into pursuant to the provisions of Article 16
hereof. Any indenture entered into between the Corporation, any successor to
the Corporation or such purchasing Person or other entity and the Trustee shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this Section 6.4(d) and
which shall apply to successive reclassifications, capital reorganizations,
amalgamations, consolidations, mergers, sales or conveyances.

 

(e)                        In any case in which this Section 6.4 shall require that an
adjustment shall become effective immediately after a record date for an event
referred to herein, the Corporation 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 Shares issuable upon
such conversion by reason of the adjustment required by such event before
giving effect to such adjustment; provided, however, that the Corporation shall
deliver to such holder an appropriate instrument evidencing such holder’s right
to receive such additional Shares upon the occurrence of the event requiring
such adjustment and the right to receive any distributions made on such
additional Shares declared in favour of holders of record of Shares on and
after the Date of Conversion or such later date as such holder would, but for
the provisions of this Section 6.4(e), have become the holder of record of
such additional Shares pursuant to Section 6.3(b).

 

(f)                          The adjustments provided for in this Section 6.4 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 

 

56

 

Conversion Price then in effect; provided
however, that any adjustments which by reason of this  Section 6.4(f) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.

 

(g)                       For the purpose of calculating the number of Shares of the
Corporation outstanding, Shares owned by or for the benefit of the Corporation
shall not be counted.

 

(h)                       In the event of any question arising with respect to the adjustments
provided in this Section 6.4, such question shall be conclusively
determined by a firm of chartered accountants appointed by the Corporation (who
may be the Auditors of the Corporation); such accountants shall have access to
all necessary records of the Corporation and such determination shall be
binding upon the Corporation, the Trustee, and the Debentureholders.

 

(i)                           In case the Corporation shall take any action affecting the Shares
other than action described in this Section 6.4, which in the opinion of
the directors would materially adversely affect the rights of Debentureholders,
the Conversion Price shall be adjusted in such manner and at such time, by
action of the directors, subject to the prior written consent of the TSX, or
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 the directors have determined that it is equitable to make no
adjustment in the circumstances.

 

(j)                           Subject to the prior written consent of the TSX, or 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 Section 6.4(a),
Section 6.4(b) or Section 6.4(c) if the holders of the
Debentures are entitled to participate in such event on the same terms mutatis
mutandis as if they had converted their Debentures prior to the effective date
or record date, as the case may be, of such event.

 

(k)                        Except as stated above in this Section 6.4, no adjustment will
be made in the Conversion Price for any Debentures as a result of the issuance
of Shares at less than the Current Market Price for such Shares on the date of
issuance or the then applicable Conversion Price.

 

Section 6.5                                   No
Requirement to Issue Fractional Shares

 

The
Corporation shall not be required to issue fractional Shares upon the
conversion of Debentures pursuant to this Article. If more than one Debenture
shall be surrendered for conversion at one time by the same holder, the number
of whole Shares issuable upon conversion thereof shall be computed on the basis
of the aggregate principal amount of such Debentures to be converted. If any
fractional interest in a Share would, except for the provisions of this
Section, be deliverable upon the conversion of any principal amount of
Debentures, the Corporation shall, in lieu of delivering any certificate
representing such fractional interest, make 

 

57

 

a cash payment to the holder of such Debenture of an amount equal to
the fractional interest which would have been issuable multiplied by the
Conversion Price.

 

Section 6.6                                   Corporation
to Reserve Shares

 

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

 

Section 6.7                                   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 Trustee and no Debenture shall
be issued in substitution therefor.

 

Section 6.8                                   Certificate
as to Adjustment

 

The
Corporation shall from time to time immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in Section 6.4,
deliver an Officer’s Certificate to the Trustee specifying the nature of the
event requiring the same and the amount of the adjustment necessitated thereby
and setting forth in reasonable detail the method of calculation, the facts
upon which such calculation is based and the resulting Conversion Price, which
certificate and the amount of the adjustment specified therein shall be
verified by an opinion of a firm of chartered accountants appointed by the
Corporation and acceptable to the Trustee (who may be the Auditors of the
Corporation) and shall be conclusive and binding on all parties in interest.
When so approved, the Corporation shall, except in respect of any subdivision,
redivision, reduction, combination or consolidation of the Shares, forthwith
give notice to the Debentureholders in the manner provided in Section 14.2
specifying the event requiring such adjustment or readjustment and the results
thereof, including the resulting Conversion Price; provided that, if the
Corporation has given notice under this Section 6.8 covering all the
relevant facts in respect of such event and if the Trustee approves, no such
notice need be given under this Section 6.8.

 

Section 6.9                                   Notice
of Special Matters

 

The
Corporation covenants with the Trustee that so long as any Debenture remains
outstanding, it will give notice to the Trustee, and to the Debentureholders in
the manner provided in Section 14.2, of its intention to fix a record date
for any event referred to in Section 6.4(a), Section 6.4(b) or Section 6.4(c) (other
than the subdivision, redivision, reduction, combination or consolidation of
its Shares) 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
Corporation shall only be required to specify in such notice such particulars
of such event as shall have been fixed and determined on the date on which such
notice is given. Such notice shall be given not less than 14 days in each case
prior to such applicable record date.

 

58

 

Section 6.10                            Protection
of Trustee

 

Subject
to Section 15.3, the Trustee, and any conversion agent appointed with
respect to the Indenture:

 

(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 Shares or of any shares or other securities or
property which may at any time be issued or delivered upon the conversion of
any Debenture;

 

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

 

(d)                       shall be entitled to act and rely on any adjustment calculation of
the Corporation, the directors or the Corporation’s Auditors.

 

Section 6.11                            U.S. 1933
Act Legend on Shares

 

Absent
registration of any such Shares pursuant to the 1933 Act, each certificate
representing Shares issued upon conversion of Debentures bearing the U.S. 1933
Act Legend, as well as all certificates issued in exchange for or in
substitution of the foregoing Shares, shall bear the U.S. 1933 Act Legend set
forth below:

 

“This Security (or its predecessor) has not been
registered under the Securities Act of 1933, as amended (the “Securities Act”)
or the securities laws of any state of the United States, and accordingly,
neither this Security nor any interest or participation herein may be offered,
sold, assigned, pledged, encumbered or otherwise transferred or disposed of in
the absence of such registration within the United States or to, or for the
account or benefit of, U.S. Persons except as set forth in the next
sentence.  By its acquisition hereof or
of a beneficial interest herein, the holder (1) acknowledges that this
Security is a “restricted security” that has not been registered under the
Securities Act and agrees for the benefit of MDC Partners Inc. (“MDC”) that
this Security may be offered, sold, pledged or otherwise transferred only in
compliance with the Securities Act and other applicable laws of the state of
the United States governing the offer and sale of the Security; (2) represents
that it is (a) not a U.S. Person and is acquiring this Security in an
offshore transaction in compliance with Regulation S under the Securities Act
or (b) a qualified institutional buyer (“QIB”) (as defined in Rule 144A
under the Securities Act); (3) agrees that it will not within two years
after the original issuance of the Debenture from which this Security was
converted, resell or otherwise transfer this Security except (a) to MDC or
any subsidiary thereof, (b) to persons other than U.S. Persons outside the
United States (including on the Toronto Stock Exchange)  in compliance with Rules 903, 904 and
905 of Regulation S, (c) to a QIB in compliance with Rule 144A under
the Securities Act (if available), (d) pursuant to the exemption from
registration provided by Rule 144 adopted under the Securities Act (if
available) or another available exemption under the Securities Act (and based
upon an opinion of U.S. counsel acceptable to MDC),

 

59

 

or (e) pursuant to an effective registration
statement under the Securities Act, in each case subject to MDC’s and the
transfer agent’s right prior to any such offer, sale or transfer to require the
certification and/or other information satisfactory to each of them to the
extent specified in the instrument governing this Security; and (4) agrees
that it will, prior to any transfer of this Security within two years after the
original issuance of the Debenture from which this Security was converted,
deliver to the transfer agent and MDC such certifications, legal opinions or
other information as may be required pursuant to the indenture to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act.  As used herein, the terms “offshore
transaction,” “United States” and “U.S. Person” have the meanings given to them
by Regulation S under the Securities Act. 
In any case the holder hereof agrees and acknowledges that it shall not,
directly or indirectly, engage in any hedging transaction with regard to this
Security except as permitted by the Securities Act.”

 

If
Shares issued upon conversion of Debentures subject to restrictions on transfer
and bearing the legends set forth above, or if a request is made to remove the
U.S. 1933 Act Legend on such Shares, the Shares so issued shall bear the U.S.
1933 Act Legend, or the U.S. 1933 Act Legend shall not be removed, as the case
may be, unless there is delivered to the Corporation and the registrar for the
Shares such satisfactory evidence, which shall include an Opinion of Counsel,
as may be reasonably required by the Corporation, that neither the U.S. 1933
Act Legend nor the restrictions on transfer set forth therein are required to
ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144
or that such Shares are not “restricted” within the meaning of Rule 144.  So long as such Shares are Restricted Shares,
each subsequent transferee of such Shares, or any beneficial interest therein,
will be required to deliver a certificate substantially in the form of Schedule “F” hereto in connection with such
transfer.  Upon (i) provision of
such satisfactory evidence or (ii) notification by the Corporation to the
registrar for the Shares of the sale of such Shares pursuant to a registration
statement that is effective at the time of such sale, the registrar, upon
receipt of an order from the Corporation, shall authenticate and deliver Shares
that do not bear the U.S. 1933 Act Legend. 
If the U.S. 1933 Act Legend is removed from the face of a Share
certificate and the Share certificate is subsequently held by an “affiliate”
(as such term is defined in the 1933 Act) of the Corporation, the Corporation
shall use its reasonable best efforts to reinstate the U.S. 1933 Act Legend.
Provided that the Trustee obtains confirmation from the Corporation that such
counsel is satisfactory to it, it shall be entitled to rely on such Opinion of
Counsel without further inquiry.

 

ARTICLE 7

COVENANTS OF THE CORPORATION

 

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

 

Section 7.1                                   To
Pay Principal and Interest

 

The
Corporation 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 and pursuant to the Registration Rights Agreement,
subject to the provisions hereof.

 

60

 

Section 7.2                                   To
Pay Trustee’s Remuneration

 

The
Corporation will pay the Trustee reasonable remuneration for its services as
Trustee hereunder and will repay to the Trustee on demand all moneys which
shall have been paid by the Trustee in connection with the execution of the
trusts hereby created and such moneys including the Trustee’s remuneration,
shall be payable out of any funds coming into the possession of the Trustee in
priority to any of the Debentures or interest thereon. The said remuneration
shall continue to be payable until the trusts hereof be finally wound up and
whether or not the trusts of this Indenture shall be in the course of
administration by or under the direction of the court.

 

Section 7.3                                   To
Give Notice of Default

 

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

 

Section 7.4                                   Preservation
of Existence, etc.

 

Subject
to the express provisions hereof, the Corporation will carry on and conduct its
activities, and cause its Subsidiaries to carry on and conduct their
businesses, in a proper, efficient and business-like manner and in accordance
with good business practices; and, subject to the express provisions hereof, it
will do or cause to be done all things necessary to preserve and keep in full
force and effect its and its Subsidiaries respective existences and rights.

 

Section 7.5                                   Additional
Covenants

 

The
Corporation covenants and agrees with the Trustee for the benefit of
Debentureholders that:

 

(a)                        The Corporation 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 Corporation in accordance with
generally accepted accounting principles;

 

(b)                       The Corporation will take all reasonable steps and actions and do
all such acts and things as may be required to: (i) maintain (as long as
it meets the minimum listing requirements of such institution) the listing and
posting for trading of the Initial Debentures and the Shares on the TSX, and (ii) maintain
its status as a reporting issuer, or the equivalent thereof, in good standing
and not in default of the requirements of Applicable Securities Legislation;

 

(c)                        The Corporation shall maintain or cause the related registrar or the
related paying agent, as the case may be, to maintain an office or agency at
each place of payment for any Debentures where the Debentures may be presented
or surrendered for payment, or for registration of transfer or exchange, and
where notices and demands to or upon the Corporation in respect of such
Debentures and this Indenture may be served. 
The Corporation will give prompt written notice to the Trustee of the
location, and any change in the location, of any such office or agency.  If at any time the Corporation shall fail to
maintain such required office or agency or shall fail to furnish to the Trustee
the address of any such office or agency, such presentations, surrenders,
notices and demands may 

 

61

 

be made or served at the principal corporate
trust office of the Trustee in Toronto, Ontario and the Corporation hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands;

 

(d)                       The Corporation shall deliver to the Trustee within 90 days after
the end of each fiscal year of the Corporation (and at any other reasonable
time upon demand by the Trustee) an Officer’s Certificate stating that the
Corporation has complied with, in all material respects, all requirements of
the Corporation contained in this Indenture that, if not complied with, in all
material respects, would, with the giving of notice, lapse of time, or
otherwise, constitute an Event of Default. 
If an Event of Default shall have occurred, the certificate shall
describe the nature and particulars of the Event of Default and its current
status and steps taken or proposed to be taken to eliminate such circumstances
and remedy such Event of Default, as the case may be; and

 

(e)                        The Corporation will, at the relevant times and upon exercise of the
relevant rights or elections, comply and take all reasonable measures necessary
to comply at all times with Section 4.6(c) and Section 4.10(c) including,
without limitation, make application for any order, ruling, registration or
filing or give any notice required under Applicable Securities Legislation.

 

Section 7.6                                   Reporting
Requirements

 

(a)                        The Corporation shall file with the Trustee within 15 days after the
filing thereof with the Ontario Securities Commission, copies of the
Corporation’s annual and interim financial statements.  If the Corporation is not required to remain
subject to the reporting requirements of the Ontario Securities Commission, the
Corporation shall provide to the Trustee (a) within 90 days after the end
of each fiscal year, an annual financial statement of the Corporation, and (b) within
45 days after the end of each of the first three fiscal quarters of each fiscal
year, interim financial statements of the Corporation which shall, at a
minimum, contain such information as is required to be provided in financial
statements under the laws of Canada or any province thereof to security holders
of a company with securities listed on the TSX, whether or not the Corporation
has any of its securities so listed. 
Each such statement will be prepared in accordance with Canadian
disclosure requirements, if any, and generally accepted accounting principles.  The Corporation will provide copies of such
statements to holders of Debentures upon request.  The Corporation also shall comply with the
provisions of TIA Section 314(a). 
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee’s receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Corporation’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer’s Certificates).

 

(b)                       The Corporation shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Corporation (beginning with the fiscal year
ending on December 31, 2005) an Officer’s Certificate, stating whether or
not to the best 

 

62

 

knowledge of the signers thereof the
Corporation is in Default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to any period
of grace or requirement of notice provided hereunder) and if the Corporation
shall be in Default, specifying all such Defaults and the nature and status
thereof of which they may have knowledge.

 

Section 7.7                                   Delivery
of Certain Information

 

At any
time when the Corporation is not subject to Section 13 or 15(d) of
the 1934 Act, upon the request of a Debentureholder or any beneficial holder of
Debentures or Shares which are restricted securities issued thereunder, the
Corporation will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such holder or any beneficial holder of
Debentures or holder of Shares issued upon conversion of Debentures, or to a
prospective purchaser of any such security designated by any such holder, as
the case may be, to the extent required to permit compliance by such
Debentureholder or holder with Rule 144A under the 1933 Act in connection
with the resale of any such security.  “Rule 144A
Information” shall be such information as is specified pursuant to Rule 144A(d)(4) under
the 1933 Act.

 

Section 7.8                                   No
Distributions on Shares if Event of Default

 

The
Corporation shall not declare or make any distribution to the holders of its
issued and outstanding Shares or make any repurchases of Shares for cash after
the occurrence of an Event of Default unless and until such default shall have
been cured or waived or shall have ceased to exist.

 

Section 7.9                                   Performance
of Covenants of Trustee

 

If the
Corporation shall fail to perform any of its covenants contained in this
Indenture and such failure has not been cured or rectified within the time
permitted by this Indenture, the Trustee may notify the Debentureholders of
such failure on the part of the Corporation or may itself perform any of the
covenants capable of being performed by it, but shall be under no obligation to
do so or to notify the Debentureholders. All sums so expended or advanced by
the Trustee shall be repayable as provided in Section 7.2. No such
performance, expenditure or advance by the Trustee shall be deemed to relieve
the Corporation of any default hereunder.

 

ARTICLE 8

DEFAULT

 

Section 8.1                                   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;

 

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

 

(c)                        if a decree or order of a court having jurisdiction is entered adjudging
the Corporation a bankrupt or insolvent under the Bankruptcy and Insolvency Act 

 

63

 

(Canada) or any other bankruptcy, insolvency
or analogous laws of Canada or any province thereof, or issuing sequestration
or process of execution against, or against any substantial part of, the
property of the Corporation, or appointing a receiver of, or of any substantial
part of, the property of the Corporation or ordering the winding-up or
liquidation of its affairs, and any such decree or order continues unstayed and
in effect for a period of 45 days or any substantial part of the property of
the Corporation shall be sequestered or attached and shall not be returned to
the possession of the Corporation or released from such attachment, as the case
may be, whether by filing of a bond or stay or otherwise within 45 consecutive
days thereafter;

 

(d)                       if the Corporation institutes proceedings to be adjudicated a
bankrupt or insolvent, or consents to the institution of bankruptcy or
insolvency proceedings against it under the Bankruptcy and Insolvency Act
(Canada) or any other bankruptcy, insolvency or analogous laws of Canada or any
province thereof, or consents to the filing of any such petition or to the
appointment of a receiver, or liquidator or trustee or assignee in bankruptcy
or insolvency for it, or of any substantial part of the property of the
Corporation or makes a general assignment for the benefit of creditors, or is
unable to or admits in writing its inability to pay its debts generally as they
become due, or any corporate action shall be taken by the Corporation in
furtherance of any of the aforesaid actions;

 

(e)                        if a resolution is passed for the winding-up or liquidation of the
Corporation except in the course of carrying out or pursuant to a transaction
in respect of which the conditions of Section 11.1 are duly observed and
performed; or

 

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

 

in each and
every such event the Trustee may, in its discretion, and shall, upon receipt of
a request in writing signed by the holders of not less than 25% in principal
amount of the Debentures then outstanding, subject to the provisions of Section 8.3,
by notice in writing to the Corporation declare the principal of, and premium,
if any, and accrued interest on, all Debentures then outstanding and all other
moneys outstanding hereunder to be due and payable and the same shall forthwith
become immediately due and payable to the Trustee, anything therein or herein
to the contrary notwithstanding, and the Corporation shall forthwith pay to the
Trustee for the benefit of the Debentureholders such principal of, and premium,
if any, accrued and unpaid interest and interest on amounts in default on, such
Debenture (and, where such a declaration is based upon a voluntary winding-up
or liquidation of the Corporation, the premium, if any, on the Debentures then
outstanding which would have been payable upon the redemption thereof by the
Corporation on the date of such declaration) and all other moneys outstanding
hereunder, together with subsequent interest at the rate borne by the
Debentures on such principal, interest and such other moneys from the date of
the said declaration until payment is received by the Trustee, such subsequent
interest to be payable at the times and places and in the moneys mentioned in
and according to the tenor of the 

 

64

 

Debentures.
Such payment when made shall be deemed to have been made in discharge of the
Corporation’s obligations hereunder and any moneys so received by the Trustee
shall be applied in the manner provided in Section 8.7.

 

Section 8.2                                   Notice
of Events of Default

 

If an Event of Default shall occur and be
continuing the 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 to the Debentureholders in the manner provided in Section 14.2,
provided that notwithstanding the foregoing, unless the 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 Trustee shall not be required to give such
notice, except in the case of a payment default, if the Trustee reasonably and
in good faith shall have determined on the advice of Counsel that the
withholding of such notice is in the best interests of the Debentureholders and
shall have so advised the Corporation in writing.

 

Section 8.3                                   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 Debentureholders 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 13 hereof, to instruct the Trustee
to waive any Event of Default except a default in the payment of the principal
of, or premium, if any, or interest on any Debentures, or in respect of a
covenant or provision hereof that under the Indenture cannot be modified or
amended without the consent of the holder of each outstanding Debenture of such
series of Debentures affected and the Trustee shall thereupon waive the Event
of Default 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
Corporation of any covenant applicable only to one or more series of
Debentures, then the holders of not less than a majority of the principal
amount of the outstanding Debentures of those series shall be entitled to
exercise the foregoing power and the 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 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 Trustee’s reasonable opinion, the same shall
have been cured or adequate satisfaction made therefor, and in such event to
cancel any such declaration theretofore made by the Trustee in the exercise of its
discretion, upon such terms and conditions as the Trustee may deem advisable.

 

65

 

No such act or
omission either of the 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.

 

Section 8.4                                   Waiver
of Declaration

 

At any
time after a declaration of acceleration with respect to the Debentures has
been made pursuant to Section 8.1 and before a judgement or decree for
payment of the money due has been obtained by the Trustee as hereinafter
provided, the holders of a majority of the principal amount of outstanding
Debentures, by written notice to the Corporation and the Trustee, may thereupon
rescind and annul such declaration and its consequences if the Corporation has
paid or deposited with the Trustee a sum sufficient to pay:

 

(a)                        all overdue interest on all Debentures;

 

(b)                       the principal of (and premium, if any) any of the Debentures which
have become due otherwise than by such declaration of acceleration, and
interest thereon at the rate or rates prescribed therefor in such Debentures;
and

 

(c)                        to the extent that payment of such interest is lawful and
applicable, interest upon overdue instalments of interest at the rate or rates
prescribed therefor in such Debentures; and

 

all Events of
Default with respect to the Debentures, other than the non-payment of the
principal of (and premium, if any), and interest on, such Debentures which have
become due solely by such declaration of acceleration, have been cured or
waived in accordance with the provisions of this Indenture.

 

Section 8.5                                   Enforcement
by the Trustee

 

Subject
to the provisions of Section 8.3 and to the provisions of any Ordinary
Resolution that may be passed by the Debentureholders, if the Corporation shall
fail to pay to the Trustee, forthwith after the same shall have been declared
to be due and payable under Section 8.1, the principal of and premium (if
any) and interest on all Debentures then outstanding, together with any other
amounts due hereunder, the Trustee may in its discretion and shall upon receipt
of a request in writing signed by the holders of not less than 25% in principal
amount of the Debentures then outstanding and upon being funded and indemnified
to its reasonable satisfaction against all costs, expenses and liabilities to
be incurred, proceed in its name as Trustee hereunder and as trustee of an
express trust to obtain or enforce payment of the said 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 Trustee in such request shall have been directed to
take, or if such request contains no such direction, or if the Trustee shall
act without such request, then by such proceedings authorized by this Indenture
or by suit at law or in equity as the Trustee shall deem expedient.  If an Event of Default with respect to the
Debentures occurs and is continuing, the Trustee may in its discretion proceed
to protect and enforce its rights and the rights of the Debentureholders to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.

 

66

 

The
Trustee shall be entitled and empowered, either in its own name or as trustee
of an express trust, or as attorney-in-fact for the holders of the Debentures,
or in any one or more of such capacities, to file such proof of debt, amendment
of proof of debt, claim, petition or other document as may be necessary or
advisable in order to have the claims of the Trustee and of the holders of the
Debentures allowed in any insolvency, bankruptcy, liquidation or other judicial
proceedings relative to the Corporation or its creditors or relative to or
affecting its property and to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same. The
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 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 Trustee, in order to have the respective claims of the
Trustee and of the holders of the Debentures against the Corporation or its
property allowed in any such proceeding, and to receive payment of or on
account of such claims; provided, however, that nothing contained in this
Indenture shall be deemed to give to the Trustee, unless so authorized by
Ordinary 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
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 Trustee without the
possession of any of the Debentures or the production thereof on the trial or
other proceedings relating thereto. Any such suit or proceeding instituted by
the Trustee shall be brought in the name of the Trustee as trustee of an
express trust, and any recovery of judgement 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 Trustee (and also any proceeding in which a
declaratory judgement of a court may be sought as to the interpretation or
construction of any provision of this Indenture, to which the Trustee shall be
a party) the Trustee shall be held to represent all the holders of the
Debentures, and it shall not be necessary to make any holders of the Debentures
parties to any such proceeding.

 

Section 8.6                                   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 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 to have the
Corporation wound up or to file or prove a claim in any liquidation or
bankruptcy proceeding or for any other remedy hereunder, unless (a) such 

 

67

 

holder shall previously have given to the Trustee written notice of the
happening (or continuance) of an Event of Default hereunder; (b) the
Debentureholders by Ordinary 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 Trustee and the 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; (c) the Debentureholders or any of them shall have
furnished to the Trustee, when so requested by the Trustee, sufficient funds
and security and indemnity satisfactory to it against the costs, expenses and
liabilities to be incurred therein or thereby; (d) the Trustee shall have
failed to act within 30 days 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 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; and (e) during such 30 day period,
the holders of a majority of the principal amount of Debentures do not give the
Trustee a direction inconsistent with the request.

 

No one
or more Debentureholders shall have any right in any manner whatever by virtue
of, or by availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other of such Debentureholders, or to obtain or to
seek to obtain priority or preference over any other of such Debentureholders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and rateable benefit of all of such
Debentureholders.  For the protection and
enforcement of the provisions of this Section 8.6, each and every
Debentureholder and the Trustee shall be entitled to such relief as can be
given at law or in equity.

 

Section 8.7                                   Application
of Moneys by Trustee

 

(a)                        Except as herein otherwise expressly provided, any moneys received
by the Trustee from the Corporation pursuant to the foregoing provisions of
this Article 8, or as a result of legal or other proceedings or from any
trustee in bankruptcy or liquidator of the Corporation, shall be applied,
together with any other moneys in the hands of the Trustee available for such
purpose, as follows:

 

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

 

(ii)                                  second, but subject as hereinafter in this Section 8.7
provided, in payment, rateably and proportionately to 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 Ordinary 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

 

68

 

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

 

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

 

(b)                       The Trustee shall not be bound to apply or make any partial or
interim payment of any moneys coming into its hands if the amount so received
by it, after reserving thereout such amount as the Trustee may think necessary
to provide for the payments mentioned in Section 8.7(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 15.9 until the money or
the investments representing the same, with the income derived therefrom,
together with any other moneys 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 in distribution hereunder.

 

Section 8.8                                   Notice
of Payment by Trustee

 

Not
less than 15 days’ notice shall be given in the manner provided in Section 14.2
by the Trustee to the Debentureholders of any payment to be made under this Article 8.
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 moneys,
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.

 

Section 8.9                                   Trustee
May Demand Production of Debentures

 

The
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 8
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 Trustee may, in its discretion, dispense with
such production and endorsement, upon such indemnity being given to it and to
the Corporation as the Trustee shall deem sufficient.

 

Section 8.10                            Rights and
Remedies Cumulative

 

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

 

69

 

Section 8.11                            Judgement
Against the Corporation

 

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

 

Section 8.12                            Immunity
of Trustees and Others

 

The
Debentureholders and the Trustee hereby waive and release any right, cause of
action or remedy now or hereafter existing in any jurisdiction against any
past, present or future officer, director, employee and agent or holder of
Shares or any of its Affiliates or of any successor or any of them or any of
their respective directors, officers, employees and agents for the payment of
the principal of or premium or interest on any of the Debentures or on any
covenant, agreement, representation or warranty by the Corporation herein or in
the Debentures contained.

 

Section 8.13                            Control by
Holders

 

The
Holders of at least a majority in principal amount of the outstanding
Debentures, may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it with respect to the Debentures; and take any other action
authorized to be taken by or on behalf of the holders of any specified
aggregate principal amount of Debentures under any provisions of this Indenture
or under all applicable laws.

 

The
Trustee may refuse, however, to follow any direction that conflicts with law or
this Indenture.

 

Section 8.14                            Rights of
Holders to Receive Payment

 

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

 

Section 8.15                            Delay or
Omission Not Waiver

 

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

 

Section 8.16                            Undertaking
for Costs

 

In any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, a court may require any party litigant in such suit to file an
undertaking to pay the costs of such suit, and 

 

70

 

may assess costs against any such party litigant, in the manner and to
the extent provided in the TIA; provided that neither this Section nor the
TIA shall be deemed to authorize any court to require such an undertaking or to
make such an assessment in any suit instituted by the Corporation or by the
Trustee.

 

ARTICLE 9

SATISFACTION AND DISCHARGE

 

Section 9.1                                   Cancellation
and Destruction

 

All
Debentures shall forthwith after payment thereof be delivered to the 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 Trustee
and, if required by the Corporation, the Trustee shall furnish to it a
destruction certificate setting out the designating numbers of the Debentures
so destroyed.

 

Section 9.2                                   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 fails to
accept payment on account thereof and give such receipt therefor, if any, as
the Trustee may require:

 

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

 

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

 

(c)                        if the redemption was pursuant to notice given by the Trustee, the
Trustee may itself set aside;

 

the principal,
premium (if any) or the interest, as the case may be, 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 moneys or Shares, if applicable, 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 moneys or Shares plus distributions on Shares, if
applicable, so set aside by the Trustee upon due presentation and surrender
thereof, subject always to the provisions of Section 9.3.

 

Section 9.3                                   Repayment
of Unclaimed Moneys or Shares

 

Subject
to applicable law, any moneys or Shares, if applicable, set aside under Section 9.2
and not claimed by and paid to holders of Debentures as provided in Section 9.2
within ten years after the date of such setting aside shall be repaid and
delivered to the Corporation by the Trustee and thereupon the Trustee shall be
released from all further liability with respect to such moneys or Shares, if
applicable, and thereafter the holders of the Debentures in respect of 

 

71

 

which such moneys or Shares, if applicable, were so repaid to the
Corporation shall have no rights in respect thereof except to obtain payment
and delivery of the moneys or Shares, if applicable, from the Corporation
subject to any limitation provided by the laws of the Province of Ontario.

 

Section 9.4                                   Discharge

 

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

 

Section 9.5                                   Satisfaction

 

(a)                        The Corporation shall be deemed to have fully paid, satisfied and
discharged all of the outstanding Debentures of any series and the Trustee, at
the expense of the Corporation, 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 Corporation has deposited or caused to be deposited with the
Trustee (or the paying agent, if not the Trustee, or the conversion agent, if
applicable) as trust funds or property in trust for the purpose of making
payment on such Debentures, an amount in money or Shares, if applicable,
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 Corporation has deposited or caused to be deposited with the
Trustee (or the paying agent, if not the Trustee, or the conversion agent, if
applicable) 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 Shares, if
applicable; or

 

(B)                                if the Debentures are issued in a currency or currency share other
than Canadian dollars, cash in the currency or currency share in 

 

72

 

which the Debentures are payable and/or such
amount in such currency or currency share of direct obligations of, or
obligations the principal and interest of which are guaranteed by, the Government
of Canada or the government that issued the currency or currency share in which
the Debentures are payable, or Shares, if applicable;

 

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;

 

and in either event:

 

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

 

(iv)                              the Corporation has delivered to the Trustee an Officer’s
Certificate 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 Trustee referred to in this Section 9.5
shall be irrevocable, subject to Section 9.3 and Section 9.6, and
shall be made under the terms of an escrow and/or trust agreement in form and
substance satisfactory to the Trustee and which provides for the due and
punctual payment of the principal of, and interest and premium, if any, on the
Debentures being satisfied.

 

(b)                       Upon the satisfaction of the conditions set forth in this Section 9.5
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 and Article 4
and the provisions of Article 1 pertaining to Article 2 and Article 4)
shall no longer be binding upon or applicable to the Corporation.

 

(c)                        Any funds or obligations deposited with the Trustee pursuant to this
Section 9.5 shall be denominated in the currency or denomination of the
Debentures in respect of which such deposit is made.

 

(d)                       If the Trustee is unable to apply any money or securities in
accordance with this Section 9.5 by reason of any legal proceeding or any
order or judgement of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Corporation’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 9.5 until such time as the 

 

73

 

Trustee is permitted to apply all such money
or securities in accordance with this Section 9.5, provided that if the
Corporation 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 Corporation shall be subrogated to the rights of the
holders of such Debentures to receive such payment from the money or securities
held by the Trustee.

 

Section 9.6                                   Continuance
of Rights, Duties and Obligations

 

Where
trust funds or trust property have been deposited pursuant to Section 9.5,
the holders of Debentures and the Corporation shall continue to have and be
subject to their respective rights, duties and obligations under Article 2
and Article 4 hereof.

 

ARTICLE 10

SHARE INTEREST PAYMENT ELECTION

 

Section 10.1                            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 Shares are
then listed), the Corporation shall have the right, at any time and from time
to time, to make an Interest Payment Election in respect of any Interest
Obligation, in whole or in part, by delivering an Interest Payment Election
Notice to the 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 Shares are then listed, and (ii) the day which is 15
Business Days prior to the Interest Payment Date to which the Interest Payment
Election relates.

 

(b)                       Upon receipt of an Interest Payment Election Notice, the Trustee
shall, as agent of the Corporation, in accordance with this and such Interest
Payment Election Notice deliver Bid Requests to the investment banks, brokers
or dealers (each, a “Broker”)
identified by the Corporation, in its absolute discretion, in the Interest
Payment Election Notice. In connection with the Interest Payment Election, the
Trustee shall have the power to: (i) accept delivery of the Shares from
the Corporation and process the Shares in accordance with the Interest Payment
Election Notice, (ii) accept bids with respect to, and consummate sales
of, such Shares, each as the Corporation shall direct in its absolute
discretion through the Broker identified by the Corporation in the Interest
Payment Election Notice, (iii) invest the proceeds of such sales in
accordance with the provisions of Section 15.9 hereof, (iv) deliver
proceeds to holders of Debentures sufficient to satisfy the Corporation’s
Interest Obligations, and (v) perform any other action necessarily
incidental thereto as directed by the Corporation in its absolute discretion.
The Interest Payment Election Notice shall, where the Trustee delivers Bid
Requests, direct the Trustee to solicit and accept only, and each Bid Request
shall provide that the acceptance of any bid is conditional on the acceptance
of, sufficient bids to result in aggregate proceeds from such issue and sale of
Shares which, together with the cash payments by the Corporation, if any, equal
the Interest Obligation on the Share Delivery Date.

 

74

 

(c)                        The Interest Payment Election Notice shall provide confirmation from
the Corporation 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 Corporation, by delivering written notice to the Trustee at any time prior
to the consummation of such delivery and sale of the Shares on the Share
Delivery Date, to withdraw the Interest Payment Election (which shall have the
effect of withdrawing each related Bid Request), whereupon the Corporation
shall be obliged to pay in cash the Interest Obligation in respect of which the
Interest Payment Election Notice has been delivered.

 

(d)                       Any sale of Shares pursuant to this Article 10 may be made to
one or more Persons whose bids are solicited.

 

(e)                        The amount receivable 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 Corporation elects to satisfy the Interest Obligation pursuant to an
Interest Payment Election.

 

(f)                          The Trustee shall inform the Corporation promptly following receipt
of any bid or bids for Shares solicited pursuant to the Bid Requests. The
Trustee shall accept such bid or bids as the Corporation, in its absolute
discretion, shall direct by Written Direction of the Corporation, provided that
the aggregate proceeds of all sales of Shares resulting from the acceptance of
such bids, together with the amount of any cash payment by the Corporation, on
the Share Delivery Date, must be equal to the related Interest Payment Election
Amount.  In connection with any bids so
accepted, the Corporation, the Trustee (if required by the Corporation in its
absolute discretion) and the applicable bidders shall, not later than the Share
Delivery Date, enter into Share Purchase Agreements and shall comply with all
Applicable Securities Legislation, including the securities rules and
regulations of any stock exchange on which the Debentures or Shares are then
listed, and subject to any restrictions imposed by Section 4.6 hereof. The
Corporation shall pay all fees and expenses in connection with the Share
Purchase Agreements including the fees and commissions charged by the
investment banks, brokers and dealers and the fees of the Trustee.

 

(g)                       Provided that (i) all conditions specified in each Share
Purchase Agreement to the closing of all sales thereunder have been satisfied,
other than the delivery of the Shares to be sold thereunder against payment of
the purchase price thereof, and (ii) the purchasers under each Share
Purchase Agreement shall be ready, willing and able to perform thereunder, in
each case on the Share Delivery Date, the Corporation shall, on the Share
Delivery Date, deliver to the Trustee the Shares to be sold on such date, an
amount in cash equal to the value of any fractional Shares and an Officer’s
Certificate to the effect that all conditions precedent to such sales,
including those set forth in this Indenture (including Section 4.6 hereof)
and in each Share Purchase Agreement, have been satisfied. Upon such
deliveries, the Trustee shall consummate such sales on such Share Delivery Date
by the delivery of the Shares to such purchasers against payment 

 

75

 

to the Trustee in immediately available funds
of the purchase price therefor in an aggregate amount equal to the Interest
Payment Election Amount (less any amount attributable to any fractional
Shares), whereupon the sole right of a holder of Debentures to receive such
holder’s portion of the Interest Payment Election Amount will be to receive
same from the Trustee out of the proceeds of such sales of Shares plus any
amount received by the Trustee from the Corporation attributable to any
fractional Shares in full satisfaction of the Interest Obligation and the
holder will have no further recourse to the Corporation in respect of the
Interest Obligation.

 

(h)                       The Trustee shall, on the Share Delivery Date, use the sale proceeds
of the Shares (together with any cash received from the Corporation) to
purchase, on the direction of the Corporation in writing, Government Obligations
which mature prior to the applicable Interest Payment Date and which the
Trustee is required to hold until maturity (the “Share Proceeds Investment”) and shall, on such date, deposit
the balance, if any, of such sale proceeds in the Property Account for such
Debentures. The Trustee shall hold such Share 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 Trustee shall deposit amounts from the
proceeds of the Share Proceeds Investment in the Property Account to bring the
balance of the Property Account to the Interest Payment Election Amount. On the
Interest Payment Date, the Trustee shall pay the funds 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 deducted, if any) and,
provided that there is no Event of Default, shall remit amounts, if any, in
respect of income earned on the Share Proceeds Investment or otherwise in
excess of the Interest Payment Election Amount to the Corporation.

 

(i)                           Notwithstanding any other provision of this Indenture, neither the
making of a Share Payment Election nor the consummation of sales of Shares on a
Share 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 amount equal to the Interest Obligation payable on such date or (ii) entitle
such holders to receive any Shares in satisfaction of such Interest Obligation.

 

(j)                           No fractional Shares will be issued in satisfaction of interest but
in lieu thereof the Corporation will satisfy such fractional interest by a cash
payment equal to the Current Market Price of such fractional interest (less any
tax required to be deducted, if any).

 

ARTICLE 11

SUCCESSORS

 

Section 11.1                            Restrictions
on Amalgamation, Merger and Sale of Certain Assets, etc.

 

Subject
to the provisions of Article 12, the Corporation shall not enter into any
transaction or series of transactions whereby all or substantially all of its
undertaking, property 

 

76

 

or assets would become the property of any other Person (herein called
a “Successor”) whether by way of
reorganization, consolidation, amalgamation, arrangement, merger, transfer,
sale or otherwise, unless:

 

(a)                        prior to or contemporaneously with the consummation of such
transaction the Corporation and the Successor shall have executed such
instruments and done such things as, in the Opinion of Counsel, are necessary
or advisable to establish that upon the consummation of such transaction:

 

(i)                                     the Successor will have assumed all the covenants and obligations of
the Corporation under this Indenture in respect of the Debentures;

 

(ii)                                  the Debentures will be valid and binding obligations of the
Successor entitling the holders thereof, as against the Successor, to all the
rights of Debentureholders under this Indenture; and

 

(iii)                               in the case of the entity organized otherwise than under the laws of
the Province of Ontario, the successor shall attorn to the jurisdiction of the
courts of the Province of Ontario;

 

(b)                       such transaction, in the Opinion of Counsel, shall be on such terms
as to substantially preserve and not materially and adversely impair any of the
rights and powers of the Trustee or of the Debentureholders hereunder; and

 

(c)                        no condition or event shall exist as to the Corporation (at the time
of such transaction) or the Successor (immediately after such transaction) and
after giving full effect thereto or immediately after the Successor shall
become liable to pay the principal monies, premium, if any, interest and other
monies due or which may become due hereunder, which constitutes or would
constitute an Event of Default hereunder.

 

Section 11.2                            Vesting of
Powers in Successor

 

Whenever
the conditions of Section 11.1 hereof 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 Corporation under this Indenture with the same effect as though the
Successor had been named as the Corporation herein and thereafter, except in
the case of a lease or other similar disposition of property to the Successor,
the Corporation shall be relieved of all obligations and covenants under this
Indenture and the Debentures forthwith upon the Corporation delivering to the
Trustee an Opinion of Counsel to the effect that the transaction shall not
result in any material adverse tax consequences to the Corporation or the
Successor. The 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.

 

77

 

ARTICLE 12

COMPULSORY ACQUISITION

 

Section 12.1         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 12.2;

 

(c)                        “Offer”
means an offer to acquire outstanding Debentures (other than Debentures held by
or on behalf of the Offeror or an Associate or Affiliate of the Offeror) 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 acceptance of an 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;

 

(f)                          “Offeror’s Notice”
means the notice described in Section 12.3; and

 

(g)                       “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 company
acting jointly or in concert with the Offeror.

 

Section 12.2         Offer for Debentures

 

If an Offer is made and:

 

(a)                        within the time
provided in the Offer for its acceptance or within 45 days after the date the
Offer is made, whichever period is the shorter, 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 Section 12.3 and Section 12.5;

 

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.

 

78

 

The Corporation will comply with all Applicable Securities
Legislation and the United States securities laws and regulations to the extent
such laws and regulations are applicable in the event that the Corporation is
required to repurchase Initial Debentures pursuant to Article 12.

 

Section 12.3         Offeror’s Notice to Dissenting Debentureholders

 

Where an Offeror is entitled to acquire Debentures held by
Dissenting Debentureholders pursuant to Section 12.2 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 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; and

 

(d)                       Dissenting
Debentureholders must send their respective Debenture(s) to the Trustee within
21 days after the date of the sending of the Offeror’s Notice.

 

Section 12.4         Delivery of Debenture(s)

 

A Dissenting Debentureholder to whom an Offeror’s Notice is
sent pursuant to Section 12.3 shall, within 21 days after the sending of
the Offeror’s Notice, send his Debenture(s) to the Trustee duly endorsed for
transfer or, if the Debentures are represented by a Global Certificate, cause
the Depositary to be instructed through one or more Depositary Participants to
facilitate the transfer of Debentures Beneficiary held by such person.

 

Section 12.5         Payment of Consideration to Trustee

 

Within 21 days after the Offeror sends an Offeror’s Notice
pursuant to Section 12.3, the Offeror shall pay or transfer to the
Trustee, or to such other person as the Trustee may direct, the cash or other
consideration that is payable to Dissenting Debentureholders pursuant to Section 12.2.

 

Section 12.6         Consideration to be held in Corporation

 

The Trustee, or the person directed by the Trustee, shall
hold in trust for the Dissenting Debentureholders the cash or other
consideration they or it receives under Section 12.5. Interest shall not
accrue or be paid by the Offeror or the Trustee to persons depositing
Debentures on the purchase price for Debentures purchased by the Offeror,
regardless of any delay in making such payment.

 

79

 

Section 12.7         Completion of Transfer of Debentures to Offeror

 

Within 30 days after the date of the sending of an Offeror’s
Notice pursuant to Section 12.3, the Trustee, if the Offeror has complied
with Section 12.5, shall:

 

(a)                        do all acts and things
and execute and cause to be executed all instruments as in the Trustee’s
opinion, relying on the advice of Counsel, 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 complied with Section 12.4 the
consideration to which such Dissenting Debentureholder is entitled under this Article 12;
and

 

(c)                        send to each
Dissenting Debentureholder who has not complied with Section 12.4 a notice
stating that:

 

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

 

(ii)                                  the Trustee or some
other person designated in such notice are holding in trust the consideration
for such Debentures; and

 

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

 

and the Trustee is hereby appointed the agent and attorney of the
Dissenting Debentureholders for the purposes of giving effect to the foregoing
provisions.

 

Section 12.8         Communication of Offer to Corporation

 

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 Corporation.

 

ARTICLE 13

MEETINGS OF DEBENTUREHOLDERS

 

Section 13.1         Right to Convene Meeting

 

The Trustee or the Corporation may at any time and from time
to time, and the Trustee shall, on receipt of a written request of the
Corporation 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 Corporation
or by the Debentureholders signing such request, as the case may be, 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
Trustee failing, within 30 days after receipt of any such request and such
funding and indemnity, to give notice convening a meeting, the Corporation or
such Debentureholders, as the case may be, may convene such meeting. Every

 

80

 

such meeting shall be held in
the City of Toronto or at such other place as may be approved or determined by
the Trustee.

 

Section 13.2         Notice of Meetings

 

(a)                        At least 21 days’
notice of any meeting shall be given to the Debentureholders in the manner
provided in Section 14.2 and a copy of such notice shall be sent by post
to the 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 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 Ordinary Resolution or otherwise, or any action to
be taken or power exercised by instrument in writing under Section 13.15,
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 Section 13.2(c) and Section 13.2(d)),
then:

 

(i)                                     a reference to such
fact, indicating each series of Debentures 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 13.15
unless in addition to compliance with the other provisions of this Article 13
(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 13
as to quorum at adjourned meetings; and (II) the resolution is passed by the
affirmative vote of the holders of more than 50% of the principal amount of the
Debentures of such series then outstanding voted on the resolution; or (B) in
the case of any action taken or power exercised by instrument in writing under Section 13.15,
such instrument is signed in one or more counterparties by holders of not less
than 50% of the principal amount of the Debentures of such Shares then
outstanding.

 

(c)                        Subject to Section 13.2(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 13.15, especially affects the rights
of the Debentureholders of one or more series in a manner or to an

 

81

 

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 Trustee and the Corporation 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 redemption premium thereon or to impair any
conversion right thereof;

 

(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 13.2
or Section 13.4, Section 13.12 and Section 13.15;

 

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.

 

Section 13.3         Chairman

 

Some person, who need not be a Debentureholder, nominated in
writing by the Trustee 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.

 

Section 13.4         Quorum

 

Subject to the provisions of Section 13.12, at any
meeting of the Debentureholders a quorum shall consist of Debentureholders
present in person or by proxy and representing at least 25% in principal amount
of the outstanding Debentures 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 13.12, 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

 

82

 

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.

 

Section 13.5         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.

 

Section 13.6         Show of Hands

 

Every question submitted to a meeting shall, subject to Section 13.7,
be decided in the first place by a majority of the votes given on a show of
hands. 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.

 

Section 13.7         Poll

 

On any 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 shall, if a poll be taken, be decided
by the votes of the holders of a majority in principal amount of the Debentures
represented at the meeting and voted on the poll.

 

Section 13.8         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 shall then be the holder. In the case of any
Debenture denominated in a currency or currency share other than Canadian
dollars, the principal amount thereof for these purposes shall be computed in
Canadian dollars on the basis of the conversion of the principal amount thereof
at the applicable spot buying rate of exchange for such other currency or
currency share as reported by the Bank of Canada at the close of business on
the Business Day next preceding the meeting. Any fractional amounts resulting
from such conversion shall be rounded to the nearest $100. A proxy 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 is present in person or by
proxy, they shall vote together in respect of the Debentures of which they are
joint holders.

 

Section 13.9         Proxies

 

A Debentureholder may be present and vote at any meeting of
Debentureholders by an authorized representative. The Corporation (in case it
convenes the meeting) or the Trustee (in any other case) for the purpose of
enabling the Debentureholders to be present and vote at any

 

83

 

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 Trustee, the Corporation or
the Debentureholder convening the meeting, as the case may be, may, in the
notice convening the meeting, direct and the time, if any, before the holding
of the meeting or any adjournment thereof by which the same must be deposited;
and

 

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

 

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.

 

Section 13.10       Persons Entitled to Attend Meetings

 

The Corporation and the Trustee, by their respective
officers and directors, the Auditors of the Corporation and the legal advisers
of the Corporation, the Trustee or any Debentureholder may attend any meeting
of the Debentureholders, but shall have no vote as such.

 

Section 13.11       Powers Exercisable by Ordinary Resolution

 

In addition to the powers conferred upon them by any other
provisions of this Indenture or by law, a meeting of the Debentureholders shall
have the following powers exercisable from time to time by Ordinary Resolution,
subject in the case of the matters in paragraphs (a), (b), (c), (d), (f), (g), (h) and
(1) to receipt of any required prior approval of the TSX and limitations
imposed by the TIA:

 

(a)                        power to authorize the
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;

 

84

 

(b)                       power to sanction any
modification, abrogation, alteration, compromise or arrangement of the rights
of the Debentureholders or the Trustee against the Corporation, 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
Corporation and to authorize the 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
Corporation or for the consolidation, amalgamation or merger of the Corporation
with any other Person or for the sale, leasing, transfer or other disposition
of all or substantially all of the undertaking, property and assets of the
Corporation or any part thereof, provided that no such sanction shall be
necessary in respect of any such transaction if the provisions of Section 11.1
shall have been complied with;

 

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

 

(f)                          power to waive and
direct the Trustee to waive any default hereunder and/or cancel any declaration
made by the Trustee pursuant to Section 8.1 either unconditionally or upon
any condition specified in such Ordinary 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 8.6,
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
shares or other securities of the Corporation;

 

(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 Trustee to
exercise, on behalf of the Debentureholders, such of the powers of the
Debentureholders as are exercisable by Ordinary 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

 

85

 

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
Trustee from office and to appoint a new Trustee or Trustees provided that no
such removal shall be effective unless and until a new Trustee or Trustees
shall have become bound by this Indenture;

 

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

 

(m)                     power to authorize the distribution in
specie of any shares or securities received pursuant to a transaction
authorized under the provisions of Section 13.11(i);

 

(n)                       power to require the
Trustee to exercise any power, right or remedy or authority given to it by this
Indenture in any manner specified in such Ordinary Resolution, or to refrain
from exercising any such power, right, remedy or authority;

 

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

 

(p)                       power to amend, alter
or repeal any Ordinary Resolution previously passed or sanctioned by the
Debentureholders or by any committee appointed pursuant to Section 13.11(j).

 

Notwithstanding
the foregoing provision of this Section 13.11, the Corporation and the
Trustee may amend this Indenture or the Debentures for certain purposes,
without the consent of the Debentureholders including to (i) cure any
ambiguity, defect or inconsistency, provided, however, that the amendment to
cure such ambiguity, defect or inconsistency does not materially  adversely affect the rights of the
Debentureholders; (ii) provide for the assumption by a successor of the
Corporation’s or Trustee’s obligations under this Indenture; (iii) make
any change to comply with any applicable laws or requirements of any
governmental authority relating to trust indentures; or (iv) add to the
Corporation’s covenants or the Corporation’s obligations under this Indenture
for the protection of Debentureholders.

 

86

 

Section 13.12       Meaning of “Ordinary Resolution”

 

(a)                        The expression “Ordinary
Resolution” when used in this Indenture means, subject as hereinafter in this Article provided,
a resolution proposed to be passed as an Ordinary 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 50% 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 50% 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 until 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 and no notice shall be
required to be given in respect of such adjourned meeting. At the adjourned
meeting the Debentureholders present in person or by proxy shall form a quorum
and may transact the business for which the meeting was originally convened and
a resolution proposed at such adjourned meeting and passed thereat by the
affirmative vote of holders of not less than 50% 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 50% 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 Ordinary 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.

 

Section 13.13       Powers Cumulative

 

Any one or more of the powers in this Indenture stated to be
exercisable by the Debentureholders by Ordinary 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.

 

87

 

Section 13.14       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 Trustee at the expense of the Corporation, and
any such minutes as aforesaid, if signed by the chairman of the meeting at
which such resolutions were passed or proceedings 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.

 

Section 13.15       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 50% 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 50% 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 “Ordinary Resolution” when used in this Indenture shall include an
instrument so signed.

 

Section 13.16       Binding Effect of Resolutions

 

Every resolution and every Ordinary 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 13.15 shall be binding upon
all the Debentureholders, whether signatories thereto or not, and each and
every Debentureholder and the Trustee (subject to the provisions for its
indemnity herein contained) shall be bound to give effect accordingly to every
such resolution, Ordinary Resolution and instrument in writing.

 

Section 13.17       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 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.

 

Section 13.18       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 13.15, does not adversely affect the
rights of the holders of Debentures of one or more series, the provisions of
this Article 13 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

 

88

 

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 14

NOTICES

 

Section 14.1         Notice to Corporation and Trustee

 

Unless herein otherwise expressly provided, any notice to be
given hereunder to the Corporation or the Trustee shall be deemed to be validly
given if delivered by hand courier or if transmitted by telecopier to:

 

	
  (i)

  	
   

  	
  if to the Corporation:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MDC Partners Inc.

  45 Hazelton Avenue

  Toronto, Ontario

  M5R 2E3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  General Counsel

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  (416)
  960-9595

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Stikeman Elliott LLP

  Suite 5300

  Commerce Court West

  Toronto, Ontario

  M5L 1B9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Dee Rajpal

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  (416) 947-0866

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  if to the Trustee:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Computershare Trust Company of Canada

  
	
   

  	
   

  	
  100 University Avenue

  9th Floor

  Toronto, Ontario

  M5J 2Y1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Manager, Corporate Trust

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  (416) 981-9777

  
											

 

89

 

and any such notice delivered in accordance with the foregoing shall be
deemed to have been received on the date of delivery or, if telecopied the day
of transmission or, if such day is not a Business Day, on the first Business
Day following the day of transmission; provided that if such notice is
delivered or telecopied after 4 p.m. Toronto time, such notice will be
deemed to be received on the next Business Day. The Corporation or Trustee, as
the case may be, may from time to time notify the other in the manner provided
in this Section 14.1 of a change of address which from the effective date
of such notice and until changed by like notice, shall be the address of the
Corporation or Trustee, as the case may be, for all purposes of this Indenture.

 

Section 14.2         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 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
Business Days following the day of mailing. Accidental error or omission in
giving notice or accidental failure to mail notice to any Debentureholder or
the inability of the Corporation to give or mail any notice due to anything
beyond the reasonable control of the Corporation 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 Corporation
shall give such notice by publication at least once in the City of Toronto (or
in such of those cities as, in the opinion of the Corporation, 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 of any persons interested in such Debenture.

 

In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.

 

Failure to mail a notice or communication to a
Debentureholder or any defect in it shall not affect its sufficiency with
respect to other Debentureholders. If a notice or communication is mailed in
the manner provided above, it is duly given, whether or not received by the
addressee.

 

If the Corporation mails a notice or communication to the
Debentureholders, it shall mail a copy to the Trustee and each registrar,
paying agent or conversion agent.

 

90

 

Section 14.3         Communication by Holders with Other Holders

 

Debentureholders may communicate pursuant to TIA Section 312(b) with
other Debentureholders with respect to their rights under this Indenture or the
Debentures. The Corporation, the Trustee, the registrar, the paying agent, the
conversion agent and anyone else shall have the protection of TIA Section 312(c).

 

Section 14.4         Mail Service Interruption

 

If by reason of any interruption of mail service, actual or
threatened, any notice to be given to the Trustee would reasonably be unlikely
to reach its destination by the time notice by mail is deemed to have been
given pursuant to Section 14.1, such notice shall be valid and effective
only if delivered at the appropriate address in accordance with Section 14.1.

 

ARTICLE 15

CONCERNING THE TRUSTEE

 

Section 15.1         No Conflict of Interest

 

The Trustee represents to the Corporation 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 Trustee as a fiduciary hereunder but
if, notwithstanding the provisions of this Section 15.1, 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 Trustee shall, within 60 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 15.2.

 

Section 15.2         Replacement of Trustee

 

Subject to the terms hereof, the Trustee may resign its
trust and be discharged from all further duties and liabilities hereunder by
giving to the Corporation two months notice in writing or such shorter notice
as the Corporation may accept as sufficient. The Corporation shall have the
power at any time on notice in writing to the Trustee to, and the
Debentureholders by Ordinary
Resolution shall have the power at any time to, remove the existing Trustee and
to appoint a new or successor Trustee. If at any time a material conflict of
interest exists in the Trustee’s role as a fiduciary hereunder the Trustee
shall, within 60 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 15.2. 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 Trustee
resigning or being removed or being dissolved, becoming bankrupt, going into
liquidation or otherwise becoming incapable of acting hereunder, the
Corporation shall forthwith appoint a new Trustee unless a new Trustee has
already been appointed by the Debentureholders. Failing such appointment by the
Corporation, the retiring Trustee 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 Corporation’s expense, for the appointment of a new Trustee but
any new Trustee so appointed by the Corporation or by such court shall be
subject to removal as aforesaid and the appointment of such new Trustee shall
be effective only upon such new Trustee becoming bound by this Indenture. Any new
Trustee appointed under any

 

91

 

provision of this Section 15.2
shall be a corporation authorized to carry on the business of a trust company
in all of the Provinces of Canada. On any new appointment the new Trustee shall
be vested with the same powers, rights, duties and responsibilities as if it
had been originally named herein as Trustee.

 

Any company into which the Trustee may be merged or with
which it may be consolidated or amalgamated or any company resulting from any
merger, consolidation or amalgamation to which the Trustee shall be a party,
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 Trustee or of the Corporation, the Trustee ceasing to act shall
execute and deliver an instrument assigning and transferring to such successor
Trustee, upon the trusts herein expressed, all the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver all
property and money held by such Trustee to the successor Trustee so appointed
in its place. Should any deed, conveyance or instrument in writing from the
Corporation be required by any new Trustee for more fully and certainly vesting
in and confirming to it such estates, properties, rights, powers and trusts,
then any and all such deeds, conveyances and instruments in writing shall on
request of said new Trustee, be made, executed, acknowledged and delivered by
the Corporation.

 

Section 15.3         Duties of Trustee

 

Other than as set forth in Section 15.3
below, in the exercise of the rights, duties and obligations prescribed or
conferred by the terms of this Indenture, the Trustee shall act honestly and in
good faith with a view to the best interests of the holders and shall exercise
that degree of care, diligence and skill that a reasonably prudent corporate
trustee would exercise in comparable circumstances, provided that, if an Event
of Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of
care and skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person’s own affairs. The Trustee need
perform only those duties that are specifically set forth in this Indenture and
no others and no implied covenants or obligations shall be read into this
Indenture against the Trustee.

 

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

 

(i)                                     this paragraph (a) does
not limit the effect of Section 15.4;

 

(ii)                                  the Trustee shall not
be liable for the error of judgment made in good faith by a responsible officer
unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts;

 

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

 

(iv)                              the Trustee may refuse
to perform any duty or exercise any right or power or extend or risk its own
funds or otherwise incur any financial

 

92

 

liability
unless it receives indemnity satisfactory to it against any loss, liability or
expense.

 

Subparagraphs (a)(i), (ii) and (iii) shall be in
lieu of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and
such Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby
expressly excluded from this Indenture, as permitted by the TIA.

 

(b)                       Every provision of
this Indenture that in way related to the Trustee is subject to paragraphs (a) and
(b) of this Section 15.3 and Section 15.4.

 

Section 15.4         Reliance Upon Declarations, Opinions, etc.

 

In the exercise of its rights, duties and obligations
hereunder the Trustee may, if acting in good faith, 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 Trustee
to be furnished to it in the exercise of its rights and duties hereunder, if
the Trustee examines such statutory declarations, opinions, reports or
certificates and determines that they comply with Section 15.5, if
applicable, and with any other applicable requirements of this Indenture. The
Trustee may nevertheless, in its discretion, require further proof in cases
where it deems further proof desirable. Without restricting the foregoing, the
Trustee may act and rely on an Opinion of Counsel satisfactory to the Trustee
notwithstanding that it is delivered by a solicitor or firm which acts as
solicitors for the Corporation. This Section 15.4 shall be in lieu of Section 315(a) of
the TIA and such Section 315(a) is hereby expressly excluded from
this Indenture, as permitted by the TIA.

 

Section 15.5         Evidence and Authority to Trustee, Opinions, etc.

 

The Corporation shall furnish to the 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
Corporation or the Trustee under this Indenture or as a result of any
obligation imposed under this Indenture, including without limitation, the
certification and delivery of Debentures hereunder, the satisfaction and
discharge of this Indenture and the taking of any other action to be taken by
the Trustee at the request of or on the application of the Corporation,
forthwith if and when (a) such evidence is required by any other Section of
this Indenture to be furnished by the Trustee in accordance with the terms of
this Section 15.5 or (b) the Trustee, in the exercise of its rights
and duties under this Indenture, gives the Corporation 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 made by
any one officer or director of the Corporation 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

 

93

 

of
Counsel that such condition precedent has been complied with in accordance with
the terms of this Indenture; and

 

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

 

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

 

Section 15.6         Officer’s Certificates Evidence

 

Except as otherwise specifically provided or prescribed by
this Indenture, whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, the
Trustee, if acting in good faith and subject to the requirements of Section 15.4,
may rely upon an Officer’s Certificate.

 

94

 

Section 15.7         Experts, Advisers and Agents

 

The Trustee may:

 

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

 

(b)                       employ such agents and
other assistants as it may reasonably require for the proper determination and
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 any solicitors employed or consulted by the Trustee may,
but need not be, solicitors for the Corporation; and

 

(c)                        retain Counsel and
employ agents in connection with the fulfilment of its duties and obligations
under Section 15.18 and Section 15.19, the reasonable fees and
expenses of such Counsel and agents shall be paid by the Corporation.

 

Section 15.8         Trustee May Deal in Debentures

 

Subject to Section 15.1 and Section 15.3, the
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 Corporation or otherwise, without being liable to account for any
profits made thereby.

 

Section 15.9         Investment of Moneys Held by Trustee

 

Upon receipt of a written direction from the Corporation,
the Trustee shall invest the funds in an Authorized Investment in its name in
accordance with such direction. Any direction from the Corporation to the
Trustee shall be in writing and shall be provided to the Trustee no later than
9:00 a.m. Toronto time on the day on which the investment is to be made. Any
such direction received by the Trustee after 9:00 a.m. Toronto time or
received on a non-Business Day, shall be deemed to have been given prior to
noon the next Business Day. In the event that the Trustee does not receive a
direction or only a partial direction, the Trustee may hold cash balances
constituting part or all of the escrow fund and may, but need not, invest same
in its deposit department or the deposit department of one of its Affiliates;
but the Trustee and its Affiliates shall not be liable to account for any
profit to any parties to this Trust Indenture or to any person or entity other
than at a rate, if any, established from time to time by the Trustee or one of
its Affiliates. For the purpose hereof, “Authorized
Investments” means short term interest bearing or discount
debt obligations issued or guaranteed by the Government of Canada or a Province
or a Canadian chartered bank (which may include an Affiliate or related party
of the Trustee) provided that such obligation is rated at least R1 (middle) by
DBRS Inc. or an equivalent rating service.

 

95

 

In addition to any written direction to invest cash in an
Authorized Investment, the Trustee may hold cash balances constituting part or
all of the fund and may, but need not, invest same in its deposit department or
the deposit department of one of its Affiliates.

 

The Trustee shall not be held liable for any losses incurred
in the investment of any funds in Authorized Investments, other than in the
event of the negligence, or the wilful misconduct or bad faith of the Trustee.

 

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

 

Section 15.10       Trustee Not Ordinarily Bound

 

Except as provided in Section 8.2 and as otherwise
specifically provided herein, the Trustee shall not, subject to Section 15.3,
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 Corporation
of any of the obligations herein imposed upon the Corporation or of the
covenants on the part of the Corporation herein contained, nor in any way to
supervise or interfere with the conduct of the Corporation’s business, unless
the 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 Ordinary Resolution of the Debentureholders passed in
accordance with the provisions contained in Article 13, 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.

 

Section 15.11       Trustee Not Required to Give Security

 

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

 

Section 15.12       Trustee Not Bound to Act on Corporation’s Request

 

Except as in this Indenture otherwise specifically provided,
the Trustee shall not be bound to act in accordance with any direction or
request of the Corporation 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 Trustee, and the Trustee shall be empowered to act upon
any such copy purporting to be authenticated and believed by the Trustee to be
genuine.

 

Upon any request or application by the Corporation to the
Trustee to take any action under this Indenture (other than the initial
authentication of Debentures under this Indenture), the Corporation shall
furnish to the Trustee if reasonably requested:

 

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

 

96

 

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

 

Section 15.13       Conditions Precedent to Trustee’s Obligations to Act Hereunder

 

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

 

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

 

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

 

Section 15.14       Authority to Carry on Business

 

The Trustee represents to the Corporation 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 each of the Provinces of Canada but if,
notwithstanding the provisions of this Section 15.14, it ceases to be so
authorized to carry on business, the validity and enforceability of this
Indenture and the securities issued hereunder shall not be affected in any
manner whatsoever by reason only of such event but the Trustee shall, within 90
days after ceasing to be authorized to carry on the business of trust company
in any of the Provinces of Canada either become so authorized or resign in the
manner and with the effect specified in Section 15.2.

 

Section 15.15       Compensation and Indemnity

 

(a)                        The Corporation shall
pay to the Trustee from time to time compensation for its services hereunder as
agreed separately by the Corporation and the Trustee, and shall pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in the
administration or execution of its duties under this Indenture (including 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 Trustee under this
Indenture shall be finally and fully performed. The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust. Any amount owing hereunder to the Trustee and remaining unpaid after 30
days from the invoice date will bear interest at the then currency rate changes
by the Trustee against unpaid invoices and shall be payable on demand.

 

97

 

(b)                       The Corporation hereby
indemnifies and saves harmless the Trustee and its directors, officers,
employees and agents, and its and their respective successors and assigns from
and against any and all loss, damages, charges, reasonable expenses, claims, demands,
actions or liability whatsoever (other than loss of profits) which may be
brought against the Trustee or which it may suffer or incur as a result of or
arising out of the performance of its duties and obligations hereunder save
only in the event of the negligence, or the wilful misconduct or bad faith by
the Trustee, or the reckless disregard of the Trustee’s duties hereunder. The
Trustee shall notify the Corporation promptly of any claim for which it may
seek indemnity. The Corporation shall be entitled (but not required) to assume
the defence of any claim and the Trustee shall co-operate in the defence. The
Corporation need not pay for any settlement made without its written consent,
which consent must not be unreasonably withheld. This indemnity shall survive
the resignation or removal of the Trustee or the discharge of this Indenture.

 

(c)                        In any claim for
indemnity hereunder, the Trustee shall have the right to retain other Counsel
to act on its behalf, provided that the fees and disbursements of such Counsel
shall be paid by the Trustee unless: (i) the Corporation and the Trustee
shall have mutually agreed to the retention of the other Counsel; (ii) the
Corporation has not assumed the defence of the claim within 15 days of
receiving notice of such claim; or (iii) the named parties to any such
claim (including any added third or impleaded party) include both the Trustee
and the Corporation and the representation of both parties by the same Counsel
would be inappropriate due to the actual or potential differing interests
between them.

 

(d)                       The Corporation need
not reimburse any expense or indemnify against any loss or liability incurred
by the Trustee through the negligence, wilful misconduct or bad faith by the
Trustee, or the reckless disregard of the Trustee’s duties hereunder.

 

Section 15.16       Acceptance of Trustee

 

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

 

Section 15.17       Notice of Defaults

 

If a Default occurs and if it is known to a
responsible officer of the Trustee, the Trustee shall give to each
Debentureholder notice of the Default within 30 days after such responsible
officer obtains knowledge of such Default unless such Default shall have been
cured or waived before the giving of such notice, except in the case of an
Event of Default described in Section 8.1(a) or Section 8.1(b).  Except in the case of a Default described in Section 8.1(a) or
(b), the Trustee may withhold the notice if and so long as a committee of its
responsible officers in good faith determines that withholding the notice is in
the interests of Debentureholders.  The
second sentence of this Section 15.17 shall be in lieu of the proviso to Section 315(b) of
the TIA and such proviso is hereby expressly excluded from this Indenture, as
permitted by the TIA.

 

98

 

The Trustee shall not be deemed
to have knowledge of a Default unless a responsible officer of the Trustee has
received written notice of such Default. 
A “responsible officer” means,
when used with respect to the Trustee, any officer assigned to administer
corporate trust matters or to whom any corporate trust matter is referred
because of such person’s knowledge of and familiarity with the particular
subject and who, in each case, shall have direct responsibility for the
administration of this Indenture.

 

Section 15.18       Reports to Debentureholders

 

Within 60 days after each May 15 beginning
with the May 15 following the date of this Indenture, the Trustee shall
mail to each Debentureholder a brief report dated as of such May 15 that
complies with TIA Section 313(a), if required by such Section 313(a).  The Trustee also shall comply with TIA Section 313(b)(2).

 

So long as the Debentures have been registered
under the 1933 Act, a copy of each report at the time of its mailing to
Debentureholders shall be filed with the SEC and each securities exchange, if
any, on which the Debentures are listed. 
The Corporation agrees to promptly notify the Trustee whenever the
Debentures become listed on any securities exchange and of any delisting
thereof.

 

Section 15.19       Eligibility; Disqualification

 

The Trustee shall at all times satisfy the
requirements of TIA Sections 310(a)(1), 310(a)(5) and 310(b).  The Trustee (or its parent holding company)
shall have a combined capital and surplus of at least US$50,000,000 as set
forth in its most recent published annual report of condition.  Nothing herein contained shall prevent the
Trustee from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b). 
The Corporation shall remove the Trustee if the Trustee fails to comply
with this Section 15.19.  If the
Trustee fails to comply with this Section 15.19, any Debentureholder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

 

Section 15.20       Preferential Collection of Claims Against Corporation

 

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

 

Section 15.21       Contents of Officer’s Certificate or Opinion of Counsel

 

Each Officer’s Certificate or Opinion of Counsel
with respect to compliance with a covenant or condition provided for in this
Indenture shall include to the extent required by the Trustee:

 

(i)                                     a statement that each
person making such Officer’s Certificate or Opinion of Counsel has read such
covenant or condition;

 

(ii)                                  a brief statement as
to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such Officer’s Certificate or Opinion of
Counsel are based;

 

99

 

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

 

(iv)                              a statement that, in
the opinion of such person, such covenant or condition has been complied with.

 

ARTICLE 16

SUPPLEMENTAL INDENTURES

 

Section 16.1         Supplemental Indentures

 

From time to time the Trustee and, when authorized
by a resolution of the directors, the Corporation, may, and they shall when
required by this Indenture, execute, acknowledge and deliver by their 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 Corporation 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 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 Corporation and the covenants of
and obligations assumed by any such successor in accordance with the provisions
of this Indenture;

 

(e)                        giving effect to any
Ordinary Resolution passed as provided in Article 13;

 

(f)                          approving amendments
to this Indenture which, in the opinion of the Trustee relying on the advice of
Counsel, are necessary or desirable to prevent the assets of the Corporation
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
Corporation or any Affiliate of the Corporation 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;

 

(g)                       to correct or supplement any provision herein which may be inconsistent
with any other provision herein or to make any other provisions with respect to

 

100

 

matters or questions arising under this Indenture, provided such action
shall not adversely affect the interests of holders of any Debenture in any
material respect; and

 

(h)                       for any other purpose
not inconsistent with the terms of this Indenture.

 

Unless the supplemental indenture states that
the consent or concurrence of Debentureholders by Ordinary Resolution is
required, the consent or concurrence of Debentureholders shall not be required
in connection with the execution, acknowledgement or delivery of a supplemental
indenture for the foregoing purposes. Further, the Corporation and the Trustee
may without the consent or concurrence of the Debentureholders, 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 Corporation providing for
the issue of Debentures, providing that in the opinion of the Trustee (relying
upon an Opinion of Counsel) the rights of the Debentureholders are in no way
prejudiced thereby.

 

If the TIA is amended after the date of the
Indenture so as to require changes to the Indenture or so as to permit changes
to, or the elimination of, provisions which, at the date of the Indenture or at
any time thereafter, were required by the TIA to be contained in the Indenture,
or the Indenture is otherwise required to be amended to comply with the TIA,
the Indenture will be deemed to have been amended so as to conform to such
amendment or to effect such changes or elimination, and the Corporation and the
Trustee may, without the consent of any holders, enter into one or more
supplemental indentures to effect or evidence such amendment.

 

Section 16.2         Compliance with Trust Indenture Act

 

Every supplemental indenture executed pursuant
to this Article 16 shall comply with the TIA.

 

Section 16.3         Trustee to Sign Supplemental Indentures

 

The Trustee shall sign any supplemental
indenture authorized pursuant to this Article 16 if the amendment
contained therein does not adversely affect the rights, duties, liabilities or
immunities of the Trustee.  If it does,
the Trustee may, but need not, sign such supplemental indenture.  In signing such supplemental indenture the
Trustee shall receive, and shall be protected in relying upon an Officer’s
Certificate and an Opinion of Counsel stating that such amendment is authorized
or permitted by this Indenture.

 

Section 16.4         Effect of Supplemental Indentures

 

Upon the execution of any supplemental indenture
under this Article 16, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture
for all purposes; and every Debentureholder theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.

 

101

 

ARTICLE 17

EXECUTION AND FORMAL DATE

 

Section 17.1         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.

 

Section 17.2         Formal Date

 

For the purpose of convenience this Indenture
may be referred to as bearing the formal date of June 28, 2005, irrespective
of the actual date of execution hereof.

 

IN WITNESS whereof the parties hereto have
executed these presents under their respective corporate seals and the hands of
their proper officers in that behalf.

 

	
   

  	
   

  	
  MDC PARTNERS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  (signed) “Steven
  Berns”

  
	
   

  	
   

  	
   

  	
  Name:Steven
  Berns

  
	
   

  	
   

  	
   

  	
  Title:Executive
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  (signed)
  “Mitchell Gendel”

  
	
   

  	
   

  	
   

  	
  Name:Mitchell
  Gendel

  
	
   

  	
   

  	
   

  	
  Title:General
  Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPUTERSHARE TRUST COMPANY

  OF CANADA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  (signed)
  “Mircho Mirchev”

  
	
   

  	
   

  	
   

  	
  Name:Mircho
  Mirchev

  
	
   

  	
   

  	
   

  	
  Title:Professional,
  CorporateTrust

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  (signed)
  “Cheryl Davidson”

  
	
   

  	
   

  	
   

  	
  Name:Cheryl
  Davidson

  
	
   

  	
   

  	
   

  	
  Title:Administrator,
  Corporate Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  I/We have authority to bind the Corporation

  

 

102

 

SCHEDULE “A”

 

TO THE TRUST
INDENTURE BETWEEN

 

MDC PARTNERS
INC.

 

AND

 

COMPUTERSHARE
TRUST COMPANY OF CANADA

 

FORM OF
INITIAL DEBENTURE

 

 

SCHEDULE “A”

FORM OF INITIAL DEBENTURE

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE CANADIAN DEPOSITORY FOR SECURITIES LIMITED (“CDS”)
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS,
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
(AND ANY PAYMENT IS MADE TO CDS 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 THE REGISTERED HOLDER
HEREOF, CDS, HAS AN INTEREST HEREIN.

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER
WILL DELIVER TO THE TRUSTEE, REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND
OTHER INFORMATION AS SUCH TRUSTEE, REGISTRAR OR TRANSFER AGENT, AS THE CASE MAY BE,
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOLLOWING RESTRICTIONS.

 

THIS SECURITY (OR ITS PREDECESSOR) HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND
ACCORDINGLY, NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED OR
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE NEXT
SENTENCE.  BY ITS ACQUISITION HEREOF OR
OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) ACKNOWLEDGES THAT THIS
SECURITY IS A “RESTRICTED SECURITY” THAT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT AND AGREES FOR THE BENEFIT OF MDC PARTNERS INC. (“MDC”) THAT
THIS SECURITY MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OF THE STATE OF
THE UNITED STATES GOVERNING THE OFFER AND SALE OF THE SECURITY; (2) REPRESENTS
THAT IT IS (A) NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (B) A QUALIFIED INSTITUTIONAL BUYER (“QIB”) (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT); (3) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO MDC OR ANY SUBSIDIARY THEREOF, (B) TO PERSONS
OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES (INCLUDING ON THE TORONTO
STOCK EXCHANGE) IN COMPLIANCE WITH RULES 903, 904 AND 905 OF REGULATION S, (C) TO
A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT (IF AVAILABLE), (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE
SECURITIES ACT (IF AVAILABLE) OR ANOTHER AVAILABLE EXEMPTION UNDER THE
SECURITIES ACT (AND BASED UPON AN OPINION OF U.S. COUNSEL ACCEPTABLE TO MDC),
OR (E) PURSUANT TO AN EFFECTIVE

 

 

REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE SUBJECT TO MDC’S AND THE
DEBENTURE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE
THE CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM TO THE
EXTENT SPECIFIED IN THE INSTRUMENT GOVERNING THIS SECURITY; AND (4) AGREES
THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, DELIVER TO THE DEBENTURE TRUSTEE AND MDC
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE
REQUIRED PURSUANT TO THE INDENTURE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. 
IN ANY CASE THE HOLDER HEREOF AGREES AND ACKNOWLEDGES THAT IT SHALL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.

 

THE FOREGOING LEGEND MAY BE REMOVED FROM
THIS SECURITY ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.

 

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

 

2

 

MDC PARTNERS INC.

8.00% CONVERTIBLE UNSECURED SUBORDINATE
DEBENTURES

DUE JUNE 30, 2010

 

	
  No.

  	
   

  	
  CUSIP
  552697AB0

  

 

MDC Partners Inc. (the “Corporation”) for value received hereby
acknowledges itself indebted and, subject to the provisions of the Trust
Indenture (the “Indenture”) dated as of June 28, 2005 between the Corporation and Computershare
Trust Company of Canada (the “Trustee”), promises to pay to the registered
holder hereof on June 30, 2010 (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  • DOLLARS in lawful money of Canada on presentation and
surrender of this Initial Debenture at the main branch of the 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 8.00% per annum, in like money in arrears in equal semi-annual
instalments (less any tax required by law to be deducted) on June 30 and December 31
in each year to holders of record at the close of business on the Business Day
immediately preceding such interest payment date, except the first payment will
include, in arrears, accrued and unpaid interest for the period from June •, 2005 to, but excluding, December 31, 2005
and, should the Corporation at any time make default in the payment of any
principal or interest, to pay interest on the amount in default at the same
rate, in like money and on the same dates.

 

The Corporation shall also pay Additional
Amounts as set forth in the Registration Rights Agreement.

 

Interest hereon shall be payable by cheque or
electronic funds transfer to the registered holder hereof and, subject to the
provisions of the Indenture, the mailing of such cheque or the making of such
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 Corporation issued or issuable in one or more series under the
provisions of the Indenture.  The Initial
Debentures are limited to an aggregate principal amount of $50,000,000 in
lawful money of Canada.  Reference is
hereby expressly made to the Indenture and the Registration Rights Agreement
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 Corporation and of the Trustee, all to the
same effect as if the provisions of the Indenture and Registration Rights
Agreement were herein set forth to all of which provisions the holder of this
Initial Debenture by acceptance hereof assents.

 

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

 

3

 

The whole, or if this Initial Debenture is in a
denomination in excess of $1,000 any part of which is $1,000 or an integral
multiple thereof, of the principal of this Initial Debenture is convertible, at
the option of the holder hereof, upon surrender of this Initial Debenture at
the principal office of the Trustee in the City of Toronto, at any time but not
after the close of business on the last Business Day immediately preceding the
earlier of the Maturity Date and the date specified for redemption of this
Initial Debenture, into Shares of the Corporation (without adjustment for dividends
or distributions on Shares issuable upon conversion) at a conversion price of
$14.00 (the “Conversion Price”) per Share, being a rate of 71.4286 Shares for
each $1,000 principal amount of Initial Debentures, 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 Shares
will be issued on any conversion but in lieu thereof, the Corporation will
satisfy such fractional interest by a cash payment equal to the market price of
such fractional interest as determined in accordance with the Indenture.

 

The Initial Debenture may be redeemed at the
option of the Corporation on the terms and conditions set out in the Indenture
at the redemption price therein set out. 
This Initial Debenture is not redeemable on or before June 30,
2008, except in the event of the satisfaction of certain conditions after a
Change of Control (as defined below) has occurred.  After June 30, 2008 and prior to June 30,
2009 this Initial Debenture is redeemable at the option of the Corporation
provided that the Corporation files with the Trustee on the day that notice of
redemption of this Initial Debenture is first given an Officer’s Certificate of
the Corporation certifying that the volume weighted average price of the Shares
on the Toronto Stock Exchange (or elsewhere in accordance with the Indenture)
for at least 20 trading days in any consecutive 30 day period, ending on the
fifth trading day preceding the date on which such notice is given, is not less
than 125% of the Conversion Price.  From July 1,
2009 until the Maturity Date, the Debentures may by redeemed by the Corporation
at a price equal to the principal amount thereof plus accrued and unpaid
interest, if any, on not more than 60 days’ and not less than 30 days’ prior
written notice.

 

Upon the occurrence of a change of control of
the Corporation involving the acquisition of voting control or direction of the
Shares or securities convertible into or carrying the right to acquire shares,
representing an aggregate of over 50% or more of the outstanding Shares (“Change
of Control”), prior to June 30, 2008, the Corporation shall be required to
make an offer to purchase (the “Corporation Offer”) all of the then outstanding
Debentures on the date which is not later than 30 days following the date upon
which the Trustee delivers a Change of Control Notice (as defined below) to the
holders of Initial Debentures (such date being referred to as the “Change of
Control Date”) at a price equal to the principal amount thereof plus an amount
equal to the interest payments not yet received on the Debentures calculated
from the date of the Change of Control to June 30, 2008, discounted at the
Government of Canada Yield (as defined below) (the ”Pre-June 30,
2008 Price”). Upon the occurrence of a Change of Control on or after June 30,
2008, the Corporation shall be required to make the Corporation Offer for all
of the then outstanding Debentures on the Change of Control Date at a price
equal to the principal amount thereof plus accrued and unpaid interest to the
purchase date (the ”Post-June 30, 2008 Price”).  The term “Government of Canada Yield” on any
date shall mean the average of the yields determined by two registered Canadian
investment dealers (as selected by the Corporation) as being the yield to
maturity on such date, compounded semi-annually and calculated in

 

4

 

accordance with generally accepted
financial practice, that a non-callable Government of Canada Bond would carry
if issued in Canadian dollars in Canada at 100% of its principal on such date
with a maturity date of June 30, 2008.

 

If 90% or more in aggregate principal amount of
Initial Debentures outstanding on the date the Corporation provides notice of a
Change of Control to the Trustee have been tendered for purchase under the
Corporation Offer on the Change of Control Date, the Corporation has the right
upon written notice provided to the Trustee prior to the Change of Control
Date, to redeem all the remaining outstanding Initial Debentures on the Change
of Control Date at the Pre-June 30, 2008 Price or Post-June 30, 2008
Price, as the case may be.

 

Unless an Event of Default has occurred and is
continuing, the Corporation may elect, from time to time, subject to applicable
regulatory approval and on the conditions expressed in the Indenture, to issue
and deliver Shares to the Trustee in order to raise funds to satisfy all or any
part of the Corporation’s obligations to pay interest on the Initial Debentures
in accordance with the Indenture in which event holders of the Debentures will
be entitled to receive a cash payment equal to the interest payable from the
proceeds of the sale of such Shares by the Trustee.

 

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 unsecured obligation of the
Corporation, 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
Indebtedness and indebtedness to trade creditors, 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.

 

The Indenture contains provisions making binding
upon all holders of Debentures outstanding hereunder (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 Debentures or the Indenture.

 

The Indenture contains provisions disclaiming
any personal liability on the part of holders of Shares or the directors,
officers or agents of the Corporation in respect of any obligation or claim
arising out of the Indenture or this Initial Debenture.

 

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

 

5

 

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 office of the Trustee in Toronto, Ontario
and in such other place or places and/or by such other registrars (if any) as
the Corporation with the approval of the Trustee may designate.  No transfer of this Initial Debenture shall
be valid unless made on the register by the registered holder hereof or his
executors or administrators or other legal representatives, or his or their
attorney duly appointed by an instrument in form and substance satisfactory to
the Trustee or other registrar, and upon compliance with such reasonable
requirements as the 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.

 

This Initial Debenture 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 an Ontario contract,
save as regards matters provided for in such provisions of the TIA as are
required under the TIA to be part of and to govern indentures qualified under
the TIA, which matters shall be performed in accordance with and be governed by
United States federal laws governing the TIA.

 

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

 

The holders of the Debentures and Shares
issuable thereunder are entitled to the benefits of a Registration Rights
Agreement, dated as of June 28, 2005, among the company and the
Underwriters named therein, including the receipt of liquidated damages upon a
Registration Default (as defined in the Registration Rights Agreement) and
which are referred to therein and in the Indenture as “Additional Amounts”.

 

6

 

The terms of the Debentures include those stated
in the Indenture and those made part of the Indenture by reference to the
United States Trust Indenture Act of 1939, as in effect from time to time (the “TIA”).  The Debentures are subject to all such terms,
and holders of Debenture are referred to the Indenture and the TIA for a
statement of those terms.  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.

 

IN WITNESS WHEREOF • has caused this Debenture to be signed by its authorized
signatories as of June 28, 2005.

 

 

	
   

  	
   

  	
  MDC PARTNERS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: •

  	
   

  
	
   

  	
   

  	
  Title: •

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: •

  	
   

  
	
   

  	
   

  	
  Title: •

  	
   

  
					

 

7

 

	
  TRUSTEE’S
  CERTIFICATE

  
	
   

  
	
  This Initial Debenture is one of the
  8.00% Convertible Unsecured Subordinate Debentures due June 30, 2010
  referred to in the Indenture within mentioned.

  
	
   

  
	
  Computershare Trust Company of Canada

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  (Authorized
  Officer)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REGISTRATION
  PANEL

  
	
   

  
	
  (No writing
  hereon except by Trustee or other registrar)

  

 

	
  Date of Registration

  	
   

  	
  In Whose Name Registered

  	
   

  	
  Signature of Trustee or Registrar

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  ASSIGNMENT

  	
   

  	
  CONVERSION
  NOTICE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
  transfers unto                                    ,
  whose address and social insurance number, if applicable, are set forth
  below, this Initial Debenture (or $                              principal amount hereof”) of MDC Partners Inc. standing in the name(s) of the
  undersigned in the register maintained by MDC Partners Inc. with respect to
  such Initial Debenture and does hereby irrevocably authorize and direct the
  Trustee to transfer such Initial Debenture in such register, with full power
  of substitution in the premises.

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TO:

  	
   

  
	
   

  	
  Note:

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

  
	
   

  	
   

  	
   

  
	
   

  	
  The undersigned registered holder of 8.00%
  Convertible Unsecured Subordinate Debentures bearing Certificate
  No.           irrevocably
  elects to convert such Debentures (or principal $                                amount thereof) in accordance with the terms of the Indenture and tenders
  herewith the Debentures, and, if applicable, directs that the Shares of MDC Partners Inc. issuable upon
  a conversion be issued and delivered to the person indicated below.

  
	
  Date:

  	
   

  	
   

  	
   

  
	
  Address of Transferee:

  	
   

  	
  Dated:

  	
  (Signature of Registered Holder)

  
	
  (Street
  Address, City, Province and Postal 
  Code)

  	
   

  	
   

  
	
   

  	
   

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

  
	
  Social Insurance Number of Transferee, if
  applicable:

  	
   

  
						

 

 

	
  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 $1,000 or an integral multiple
  thereof, unless you hold an Initial Debenture in a non—integral multiple of
  $1,000, in which case such Initial Debenture is transferable only in its
  entirety) to be transferred.  

  	
   

  	
  NOTE: 
  If Shares are to be issued in the name of a person other than the
  holder, (A) the signature must be guaranteed by a chartered bank, a
  trust company or a member firm of a recognized stock exchange in Canada and
  (B) all requisite transfer taxes must be tendered by the
  undersigned.  

  
	
   

  	
   

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

  
	
  1.

  	
  The signature(s) to this assignment must
  correspond with the name(s) as written upon the face of this Initial
  Debenture in every particular without alteration or any change
  whatsoever.  The signature must be
  guaranteed by an authorized officer of a Schedule 1 Canadian chartered bank
  or of a major Canadian trust company, or by a medallion signature guarantee
  from a member of a recognized Medallion Signature Guarantee Program.

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  (Address)

  	
  (City, Province and Postal Code)  

  
	
   

  	
   

  
	
   

  	
  Name of guarantor:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized signature:

  
	
  2.

  	
  The registered holder of this Initial
  Debenture is responsible for the payment of any documentary, stamp or other
  transfer taxes that may be payable in respect of the transfer of this Initial
  Debenture.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Guarantor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized Officer

  	
  Signature of transferring registered holder

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Institution

  	
   

  	
   

  
						

 

2

 

SCHEDULE “B”

 

TO THE TRUST
INDENTURE BETWEEN

 

MDC PARTNERS
INC.

 

AND

 

COMPUTERSHARE
TRUST COMPANY OF CANADA

 

FORM OF
REDEMPTION NOTICE

 

 

SCHEDULE “B” 

FORM OF REDEMPTION NOTICE

 

MDC PARTNERS
INC.

 

8.00%
CONVERTIBLE UNSECURED SUBORDINATE DEBENTURES

 

REDEMPTION
NOTICE

 

To:                              Holders
of 8.00% Convertible
Unsecured Subordinate Debentures (the ”Debentures”) of MDC Partners Inc.
(the “Corporation”)

 

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 4.3 of the Trust
Indenture (the “Indenture”) dated as of June 28, 2005 between the Corporation and Computershare
Trust Company of Canada (the “Trustee”), that the aggregate principal amount of
all Debentures outstanding (or the $• aggregate
principal amount thereof) will be redeemed as of • (the “Redemption
Date”), upon payment of a redemption amount of $• for
each $1,000 principal amount of Debentures, being equal to the aggregate of (i) $1,000,
and (ii) all accrued and unpaid interest hereon to but excluding the
Redemption Date (collectively, the “Redemption Price”).

 

The 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
Avenue

9th Floor

Toronto, Ontario

M5J 2Y1

 

Attention: Manager, Corporate Trust

 

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.

 

[Pursuant to Section 4.6 of the
Indenture, the Corporation hereby irrevocably elects to satisfy its obligation
to pay to holders of Debentures the Redemption Price by issuing and delivering
to the holders that number of Freely Tradeable Shares obtained by dividing the
aggregate principal amount of Debentures by 95% of the Current Market Price of
the Shares on the Redemption Date.]

 

[No fractional Shares shall be delivered upon
the exercise by the Corporation of the Share Redemption Right but, in lieu thereof,
the Corporation shall pay the cash equivalent thereof

 

 

determined on the basis of the Current Market
Price of Shares on the Redemption Date (less any tax required to be deducted,
if any).]

 

In this connection, upon presentation and surrender of the Debentures
for payment on the Redemption Date, the Corporation shall, on the Redemption
Date, make delivery to the Trustee, at the above-mentioned corporate trust
office, for delivery to and on account of the holders, the number of Freely
Tradeable Shares (in book-based or certificated form) to which holders are
entitled and cash equal to all accrued and unpaid interest to the Redemption
Date together with the cash equivalent in lieu of all fractional Shares.

 

	
  DATED: 
  •

  	
   

  	
    MDC PARTNERS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
    (Authorized Director or
  Officer)

  

 

2

 

SCHEDULE “C”

 

TO THE TRUST
INDENTURE BETWEEN

 

MDC PARTNERS
INC.

 

AND

 

COMPUTERSHARE
TRUST COMPANY OF CANADA

 

FORM OF
MATURITY NOTICE

 

 

SCHEDULE “C”

FORM OF MATURITY NOTICE

MDC PARTNERS
INC.

 

8.00%
CONVERTIBLE UNSECURED SUBORDINATE DEBENTURES

 

MATURITY
NOTICE

 

To:                              Holders
of 8.00% Convertible
Unsecured Subordinate Debentures (the “Debentures”) of MDC Partners Inc. (the “Corporation”)

 

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 4.10(b) of the
Trust Indenture (the “Indenture”) dated as of June 28, 2005 between the Corporation and Computershare
Trust Company of Canada, as trustee (the “Trustee”), that the Debentures are
due and payable as of June 30, 2010 (the “Maturity Date”) and the
Corporation hereby advises the holders of Debentures that it will deliver to
holders of Debentures that number of Freely Tradeable Shares equal to the
number obtained by dividing the aggregate principal amount of such Debentures
by 95% of the Current Market Price of Shares on the Maturity Date or in lieu
thereof, a cash payment or any combination thereof. Upon presentation and
surrender of the Debentures, the Corporation shall pay or cause to be paid in
cash to the holder all accrued and unpaid interest to the Maturity Date,
together with the cash equivalent representing fractional Shares, and shall, on
the Maturity Date, send to the Trustee Freely Tradeable Shares (in book-based
or certificated form) to which the holder is entitled.

 

	
  DATED: 
  •

  	
   

  	
    MDC PARTNERS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
    (Authorized Director or
  Officer)

  

 

 

SCHEDULE “D”

 

TO THE TRUST
INDENTURE BETWEEN

 

MDC PARTNERS
INC.

 

AND

 

COMPUTERSHARE
TRUST COMPANY OF CANADA

 

FORM OF
NOTICE OF CONVERSION

 

 

SCHEDULE “D”

FORM OF NOTICE OF CONVERSION

 

CONVERSION
NOTICE

 

To:                              MDC Partners Inc.

 

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

 

The undersigned registered holder of 8.00% Convertible Unsecured Subordinate Debentures
bearing Certificate No. •
irrevocably elects to convert such Debentures (or $•
principal amount thereof) in accordance with the terms of the Trust Indenture
dated as of June •, 2005 between the Corporation
and Computershare Trust Company of Canada and tenders herewith the Debentures,
and, if applicable, directs that the Shares issuable upon a conversion be
issued and delivered to the person indicated below.

 

	
  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 $1,000 or integral multiples
thereof.

 

NOTE:                            If
Shares are to be issued in the name of a person other than the holder, (A) the
signature must be guaranteed by a chartered bank, a trust company or a member
firm of a recognized stock exchange in Canada and (B) all requisite
transfer taxes must be tendered by the undersigned.

 

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

 

 

	
   

  	
   

  	
   

  
	
  (Address)

  	
   

  	
    (City,
  Province and Postal Code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized
  signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of
  guarantor:

  	
   

  	
   

  

 

 

SCHEDULE “E”

 

TO THE TRUST
INDENTURE BETWEEN

 

MDC PARTNERS
INC.

 

AND

 

COMPUTERSHARE
TRUST COMPANY OF CANADA

 

FORM OF
EXERCISE NOTICE

 

 

SCHEDULE “E”

FORM OF NOTICE OF EXERCISE

 

EXERCISE
NOTICE

 

To:                              MDC Partners Inc. (the “Corporation”)

 

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

 

The undersigned registered holder of 8.00% Convertible Unsecured
Subordinate Debentures bearing Certificate No. •
irrevocably elects to require the Corporation to purchase such Debentures (or $•
principal amount thereof*) on the Change
of Control Date in accordance with the terms of the Trust
Indenture dated as of June •, 2005 between the Corporation
and Computershare Trust Company of Canada at the price indicated in the Change
of Control Notice delivered by the Corporation.

 

	
  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 $1,000 or integral multiples
thereof.

 

The Total Put Price 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
Avenue

9th Floor

Toronto, Ontario

M5J 2Y1

 

Attention: Manager, Corporate Trust

 

The interest upon the principal amount of Debentures sold to the
Corporation shall cease to be payable from and after the Change of Control
Date.

 

 

SCHEDULE “F”

FORM OF TRANSFER CERTIFICATE

 

[Letterhead of Purchaser]

 

[date]

 

For Debentures:

 

Computershare
Trust Company of Canada

100 University
Avenue

9th Floor

Toronto, Ontario

M5J 2Y1

Attention: Manager, Corporate
Trust

 

For Shares:

 

CIBC Mellon Trust Company

320 Bay Street

P.O. Box 1

Toronto, Ontario  M5H 4A6

 

MDC Partners Inc.

45 Hazelton Avenue

Toronto, Ontario  M5R 2E3

Attention:  Corporate Secretary
and General Counsel

 

Re:                                  Purchase
of [aggregate principal amount of or number of] [Debentures][Shares] (the “Securities”)
of MDC Partners Inc. (the “Company”)

 

Dear Sirs:

 

In connection with its purchase of the
Securities, the undersigned (“Undersigned”) hereby:

 

1.                                       acknowledges that the Securities have not been
registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), or under any state securities laws and, unless so registered, that they
may not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons except as set forth below;

 

2.                                       represents that the Undersigned is, or if the
Undersigned is acting on behalf of a beneficial owner of Securities, the
Undersigned has received a written certification from such beneficial owner to
the effect that such beneficial owner is:

 

 

(a)                                  not a “U.S. person” as defined in Regulation S
under the Securities Act, or is acquiring Securities for the account or benefit
of one or more non-U.S. person(s) (other than a distributor), is acquiring
Securities in an offshore transaction in accordance with Regulation S under the
Securities Act, and has not engaged in any directed selling efforts (as defined
in Regulation S) in the United States with respect to the Securities; or

 

(b)                                 with respect to Securities that are Debentures,
a “qualified institutional buyer,” or “QIB,” as defined in Rule 144A under
the Securities Act, is aware that the sale of the Debentures to it is being
made in reliance on Rule 144A, and is acquiring Securities for its own
account or for a discretionary account or accounts on behalf of one or more
QIBs (as to which it has been instructed as described herein and has the
authority to make the statements contained herein).

 

3.                                       agrees that it shall not, within two years after
the original issuance of the Debentures, resell or otherwise transfer any such
Securities except (A) to the Company or any subsidiary thereof, (B) to
Canadians and other non-U.S. purchasers on the Toronto Stock Exchange (“TSX”)
or elsewhere outside the United States in compliance with Rules 903, 904
and 905 of Regulation S, (C) to a QIB in compliance with Rule 144A
under the Securities Act (if available), (D) pursuant to the exemption
from registration provided by Rule 144 adopted under the Securities Act
(if available) or another available exemption under the Securities Act (based
upon an opinion of U.S. counsel acceptable to the Company), or (E) pursuant
to an effective registration statement under the Securities Act, and, in each
case, subject to the Company’s and the Trustee’s (in the case of Securities
that are Debentures) or Transfer Agent’s (in the case of Securities that are
Shares) right prior to any such offer, sale or transfer to require the
certification and/or other information satisfactory to each of them to the
extent specified in the indenture governing this Security and, in each case, in
compliance with applicable state securities laws and securities laws of any
other jurisdiction;

 

4.                                       agrees that it shall not, directly or
indirectly, engage in any hedging transaction with regard to the Securities
except as permitted by the Securities Act, and that it will give to each person
to whom it transfers Securities notice of any restrictions on transfer of such
Securities;

 

5.                                       if it is acquiring Securities in an offshore
transaction pursuant to Regulation S under the Securities Act, agrees that
transfers thereof are subject to certain restrictions and conditions set forth
in the Securities, and agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such restrictions
and conditions and the Securities Act, as amended;

 

6.                                       understands that all of the Securities will bear
a legend substantially to the following effect, unless otherwise agreed by the
Company and the holder thereof:

 

“This Security (or its predecessor) has not
been registered under the Securities Act of 1933, as amended (the “Securities
Act”) or the securities laws of any state of the United States, and
accordingly, neither this Security nor any interest or participation herein may
be offered, sold, assigned, pledged, encumbered or otherwise transferred or
disposed of in the absence of such

 

2

 

registration within the United States or to,
or for the account or benefit of, U.S. Persons except as set forth in the next
sentence.  By its acquisition hereof or
of a beneficial interest herein, the holder (1) acknowledges that this
Security is a “restricted security” that has not been registered under the
Securities Act and agrees for the benefit of the Company that this Security may
be offered, sold, pledged or otherwise transferred only in compliance with the
Securities Act and other applicable laws of the state of the United States
governing the offer and sale of the Security; (2) represents that it is (a) not
a U.S. Person and is acquiring this Security in an offshore transaction in
compliance with Regulation S under the Securities Act or (b) a qualified
institutional buyer (“QIB”) (as defined in Rule 144A under the Securities
Act); (3) agrees that it will not within two years after the original
issuance of this Security resell or otherwise transfer this Security except (a) to
the Company or any subsidiary thereof, (b) to persons other than U.S.
Persons outside the United States (including on the Toronto Stock Exchange) in
compliance with Rules 903, 904 and 905 of Regulation S, (c) to a QIB
in compliance with Rule 144A under the Securities Act (if available), (d) pursuant
to the exemption from registration provided by Rule 144 adopted under the
Securities Act (if available) or another available exemption under the
Securities Act (and based upon an opinion of U.S. counsel acceptable to the
Company), or (e) pursuant to an effective registration statement under the
Securities Act, in each case subject to the Company’s and the [Trustee’s][Transfer
Agent’s] right prior to any such offer, sale or transfer to require the
certification and/or other information satisfactory to each of them to the
extent specified in the instrument governing this Security; and (4) agrees
that it will, prior to any transfer of this Security within two years after the
original issuance of this Security, deliver to the [Trustee][Transfer Agent]
and the Company such certifications, legal opinions or other information as may
be required pursuant to the indenture to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.  As used herein, the terms “offshore
transaction,” “United States” and “U.S. Person” have the meanings given to them
by Regulation S under the Securities Act. 
In any case the holder hereof agrees and acknowledges that it shall not,
directly or indirectly, engage in any hedging transaction with regard to this
Security except as permitted by the Securities Act.”;

 

7.                                       acknowledges that the Company and others will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements, and agrees that if any of the representations
or agreements deemed to have been made by it by its acquisition of Securities
are no longer accurate, it shall promptly notify the Company.  Each of the Company and the Transfer Agent is
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with
respect to the matters covered hereby.  
If it is acquiring Securities as a fiduciary or agent for one or more
investor accounts, it represents that it has sole investment discretion with
respect to each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of each such account;

 

8.                                       acknowledges that it has not purchased the
Securities as a result of any “general solicitation” or “general advertising”,
as such terms are defined in Rule 502(c) of Regulation D under the
Securities Act, including advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar media, or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising; and

 

3

 

9.                                       acknowledges that the Trustee or the Transfer
Agent, as the case may be, will not be required to accept for registration of
transfer any Securities acquired by it, except upon presentation of evidence
satisfactory to the Company and the Transfer Agent that the restrictions set
forth herein have been complied with.

 

Please check one of the following boxes
to confirm whether the Undersigned, or the beneficial owner on behalf of which
the Undersigned is acting is:

 

o             a
person other than a “U.S. person” outside the “United States” acquiring any
Securities in an offshore transaction (as defined above), and represents,
warrants and agrees as set forth in paragraph (2) on page 1;

 

o             an
“qualified institutional buyer” and represents, warrants and agrees as set
forth in paragraph (2) on page 1. 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name of Investor)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:]

  

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}]]